Relmada Shares Plummet After $100M Offering Swamps Market Cap
Capital raise, larger than the biotech's entire market value, is set to fund a strategic pivot after its lead depression drug was recently discontinued.
Shares of Relmada Therapeutics (NASDAQ: RLMD) fell sharply in Tuesday trading after the clinical-stage biotechnology company announced the pricing of a $100 million stock and warrant offering—a capital raise that significantly exceeds its recent market capitalization of approximately $75 million.
The offering, priced at $2.20 per share, introduces a massive number of new shares into the market, signaling substantial dilution for existing investors and raising questions about the company's valuation. The move comes at a critical juncture for Relmada as it abandons its former lead drug candidate and pivots its clinical focus.
According to the company's announcement Tuesday morning, the offering consists of 40,142,000 shares of common stock and pre-funded warrants to purchase up to 5,315,000 additional shares. The total of 45.46 million new securities set to be issued will more than double the company's approximately 33.2 million shares outstanding, a dramatic expansion of the share base that will significantly reduce the ownership percentage of current stockholders.
The financing is a stark necessity for Relmada, which is navigating a major strategic overhaul. The company recently discontinued the development of its former flagship asset, REL-1017 for Major Depressive Disorder, after the treatment failed to meet its primary endpoints in multiple late-stage trials. The termination of the license agreement for the drug in July marked the end of a costly chapter for the company and its investors.
With its lead program shelved, Relmada is now channeling its resources into a new pipeline candidate, NDV-01, for non-muscle invasive bladder cancer. Coinciding with the offering news, Relmada also announced it had received positive feedback from the U.S. Food and Drug Administration that supports two potential registrational study paths for NDV-01, providing a glimmer of regulatory clarity for its new direction.
The $100 million raise, expected to close around November 5, is essential to fund this pivot. The company's balance sheet showed a dwindling cash position, with cash and short-term investments falling to around $20.6 million as of its last quarterly report. Without a significant infusion of capital, its ability to fund the costly, multi-year process of clinical development for a new drug was in serious jeopardy.
While the financing provides a critical lifeline and a path forward for the development of NDV-01, the market's immediate reaction reflects the steep price of that survival. For investors who held stock prior to the announcement, the value of their holdings is now tied to a much larger pool of shares, making the path to a meaningful return on investment dependent on the long-shot success of an early-stage cancer therapy. The future for Relmada is now reset, with a fortified balance sheet but a long and uncertain clinical road ahead.