18 February 2015 Relmada has a full pipeline of four programmes that treat all segments of the pain spectrum. The current lead programme, LevoCap ER, which should enter Phase III within the next 12-18 months, is an extended release version of a powerful narcotic and could be used in a large variety of areas. d-Methadone, BuTab ER and MepiGel each have unique qualities that could differentiate them in a crowded pain market. We value Relmada at $601m or $11.56 per basic share.

Year end Revenue (US$m)

PBT* (US$m)

EPS* (US$)

DPS (US$)

P/E (x)

Yield (%)

12/14e 0.0 (55.5) (1.43) 0.0 N/A N/A 12/15e 0.0 (33.5) (0.63) 0.0 N/A N/A 12/16e 0.0 (38.9) (0.70) 0.0 N/A N/A 12/17e 0.0 (45.5) (0.79) 0.0 N/A N/A

Note: *PBT and EPS are normalised, excluding intangible amortisation, exceptional items and share-based payments.

LevoCap ER targets the $8.3bn narcotics market LevoCap ER is an extended release, abuse deterrent and tamper-resistant form of levorphanol, a narcotic analgesic that has been available in the US for more than 60 years. As an opioid with a non-opioid mechanism (inhibits serotonin and norepinephrine reuptake and is an NMDA antagonist), LevoCap ER has the potential for efficacy in multiple pain indications, as well as drug-sparing. They should be able to enter Phase III within the next 12-18 months.

A pipeline with promise BuTab ER, d-Methadone and MepiGel are earlier stage with large unknowns associated with their therapeutic profiles. d-Methadone, which will be developed for neuropathic pain, is the highest-risk highest potential reward product. BuTab ER and MepiGel are, like LevoCap ER, reformulations of old drugs with decent-sized market potential and hence, lower risk. Importantly, depending on its precise pharmacokinetic profile, BuTab ER does have the potential to leapfrog LevoCap ER. We should start receiving readouts from early-stage trials in these programmes later this year.

Valuation: $11.56 per basic share Using a risk-adjusted NPV model, we value the company at $601m or $11.56 per basic share. On a fully diluted basis we value the company at $627m or $9.66 per share. Note that these share counts do not include the additional shares that would be issued in an equity raise. The bulk of the value of the company (~62%) is in LevoCap ER, as it is about to enter Phase III and has broad market potential in the severe pain market.

Relmada Therapeutics Initiation of coverage

Multiple shots on goal, only one has to score

Price US$2.71 Market cap US$141m

Net cash ($m) at December 2014 32.2

Shares in issue 52.0m

Free float 95%

Code RLMD

Primary exchange OTC Bulletin Board

Secondary exchange N/A

Share price performance

% 1m 3m 12m

Abs (3.9) (8.4) N/A

Rel (local) N/A N/A N/A

52-week high/low US$3.58 US$1.5

Business description

Relmada is an emerging pharmaceutical product company focusing on the treatment of pain. It has four key products, LevoCap ER, d-Methadone, BuTab ER and MepiGel that focus on large and lucrative segments of the pain market. LevoCap ER is the most advanced and should enter Phase III this year.

Next events

BuTab ER initiation of Phase I study

Q115

d-Methadone completion of Phase I study

Q215

LevoCap FDA meeting Q315

Analysts Maxim Jacobs, CFA +1 646 653 7027

Dr Mick Cooper +44 (0)20 3077 5734

healthcare@edisongroup.com

Edison profile page

Pharma & biotech

Relmada Therapeutics is a research client of Edison Investment Research Limited

Investment summary

Company description: Emerging pain portfolio Relmada Therapeutics, an emerging pain therapeutics company, went public through a reverse merger in May 2014, raising a total of $28m in the associated capital raise. It currently trades on the bulletin boards, but plans an uplisting to NASDAQ in H215. It is a low overhead company with 11 employees as of December 2014. It is a combination of the assets of two private companies, TheraQuest Biosciences and Medeor, Inc.

Relmada has a total of four products in development. LevoCap ER is a once-a-day extended release formulation of levorphanol, a potent opioid which is also an SNRI and NMDA antagonist. It should enter Phase III within the next 12-18 months. d-Methadone is a d-isomer of methadone but, unlike the parent molecule, inhibits pain through antagonism at the NMDA receptor, is substantially devoid of opioid activity and should enter Phase II in H116. BuTab ER, if approved, would be the only orally absorbed buprenorphine on the market and should enter Phase I in 2015. MepiGel is a topical non-greasy dosage form of the local anesthetic mepivacaine and should enter Phase I in late 2015.

Valuation: $601m represents significant upside potential We value Relmada at $601m or $11.56 per basic share based on a risk-adjusted NPV of its pipeline products, assuming a 12.5% WACC and no value past patent/exclusivity expiration. On a fully diluted basis we value the company at $627m or $9.66 per share. The bulk of the value (~62%) of the company is in LevoCap ER, as it is due to begin Phase III and has broad market potential in the severe pain market. Key catalysts that would affect our valuation would be proof-of-concept data for BuTab ER in H215, proving that it has successfully formulated an orally bioavailable version of buprenorphine. A licensing deal for LevoCap ER would decrease the company’s funding requirements and substantially lower the risk profile of the programme and the company financially. As we currently have no visibility on such a deal, these would give upside to our current forecasts.

Financials: Funding is the bottleneck We project that Relmada will have $32.3m in cash and cash equivalents at the end of 2014. It will require additional financing as the Phase III programme for LevoCap ER alone may require much of the cash it currently has. Our model currently assumes it will need to raise ~$130m by 2017 ($30m in 2015 and $40m in 2016) in the absence of a licensing deal, after which it should have enough capital to achieve profitability. Its ability to raise such capital will be dependent on newsflow and investor sentiment.

Sensitivities: Formulation risk dominates Relmada is subject to various sensitivities common to emerging pharmaceutical companies, including formulation, development, commercialisation, manufacturing and financing risks. Formulation risk is a key sensitivity for the company as it is essentially just reformulating very old molecules in an extremely competitive area. The biggest risk to the further development of its pipeline is not the formulation or the clinical trials themselves, but the financing of the company. According to a survey of industry executives by Cutting Edge Information, the per-patient cost of a Phase III trial is ~$50,000. Therefore, if Relmada needs to conduct two 300-person trials, it would have to spend approximately $30m, which would require a debt or equity raise. Another key risk is execution risk as this is a new company and the management does not have a track record of working together (although the CSO built essentially the same team of scientists at Relmada).

Relmada Therapeutics | 18 February 2015 2

Outlook: Entering the $13bn/year prescription pain market

Relmada has a full pipeline of four programmes (see Exhibit 1) that treat all parts of the pain spectrum, from the mild to the severe, covering almost all aspects of the $13bn a year prescription pain market (see Exhibit 2). The target market is large and well defined, hence if even one of Relmada’s products reaches the market, the current valuation could be easily justified.

Exhibit 1: Relmada pipeline Product Stage in

next 12-18 months

Class Indication Key differentiating factors over other members of class

LevoCap ER Phase III Opioid Moderate to severe pain Effective in multiple pain types, including neuropathic pain due to multiple modes of action. Reverses tolerance to morphine. Abuse-resistant once-a-day extended release formulation.

d-Methadone Phase I/II NMDA antagonist Neuropathic pain/psychiatric disorders Potential for wider therapeutic window than other NMDA antagonists. May restore pain relief to opioid-tolerant patients. Improved tolerability compared to other medications.

BuTab ER Phase I Opioid Moderate chronic pain, opioid abuse More convenient than other formulations of buprenorphine. Telephone/fax prescriptions and refills allowed due to better scheduling than other opioids. Less risk of abuse and dependence than other opioids.

MepiGel Phase I Local anesthetic gel Neuropathic pain Potential for improved efficacy vs lidocaine patch. More convenient delivery to extremities than patches. Longer lasting effect than other local anesthetics.

Source: Relmada Therapeutics

The lead programme, LevoCap ER, which should enter Phase III next year, is an extended release version of a powerful but little used “forgotten” narcotic, which is eight to 12 times more potent than morphine. d-Methadone is currently in Phase I trials. However, given it shows little to no opioid activity and is an NMDA receptor antagonist, it should show efficacy in neuropathic pain and some depression-related disorders. If these benefits are established, it could have the largest addressable market. If approved, BuTab ER would be the only traditional tablet in the $1.6bn buprenorphine market and MepiGel would provide a better delivery system for the topical treatment of neuropathic pain disorders. Both BuTab ER and MepiGel are earlier stage, but each one has unique qualities that would differentiate it in a crowded pain market.

Exhibit 2: Relmada’s products and the pain spectrum

Source: Relmada Therapeutics

LevoCap ER: Strong enough to challenge OxyContin? LevoCap ER is an extended release, abuse deterrent and tamper-resistant form of levorphanol, an immediate release narcotic analgesic that has been available in the US since 8 January 1953. In

Relmada Therapeutics | 18 February 2015 3

developing an ER version of levorphanol, Relmada is following a tried and true model of reformulating very old pain therapeutics. Note that oxycodone (the backbone of OxyContin ER and its $2.5bn in sales) was first approved in 1926, fentanyl was approved in 1964 and oxymorphone was approved in 1959.

Levorphanol has a couple of advantages over other opioids, including OxyContin, which has 2.5% prescription share and 30% revenue share of the opioid market:

It has both an opioid mechanism and a non-opioid mechanism (it is also a serotonin-norepinephrine reuptake inhibitor and an NMDA antagonist), allowing for increased analgesia from multiple routes, efficacy in multiple types of pain including neuropathic pain and the potential for drug sparing.

It is 8-12x more potent than morphine, more potent than oxycodone, although less potent than fentanyl.

Levorphanol has shown evidence of efficacy in those with morphine tolerance due to its ability to bind to multiple opioid receptors (see Exhibit 3).

Exhibit 3: Opioid receptor agonism of select opioids Drug Mu (µ) Delta (δ) Kappa (κ) Morphine Agonist Weak agonist Codeine Weak agonist Weak agonist Fentanyl Agonist Meperidine Agonist Methadone Agonist Agonist Oxycodone Agonist Levorphanol Agonist Agonist Agonist Source: Pain Physician Journal, Clinical and Translational Oncology, Support Care Cancer, Relmada Therapeutics

It is unclear exactly why levorphanol never became widely used in the US. The company speculates that it is because the original developer of the drug, Roche, had never properly detailed levorphanol. One has to remember that at the time of approval in 1951, Roche was not the pharmaceutical powerhouse it is today and was heavily dependent on its vitamin business. Also, levorphanol required dosing 3-4x per day and had only one dose level (2mg). This led to a heavy pill burden, especially in patients needing a greater dose than 2mg (patients might have needed to take 8+ pills per day for one drug), which is not consumer friendly. Now that it is generic, there is zero detailing and only one generic manufacturer of the drug, Roxane Laboratories (a division of Boehringer Ingelheim). With such limited supply it may not be available in all localities. Finally, the heavy use of opioids in the US market is a relatively new phenomenon.

As levorphanol is a legitimate opiate, with proven efficacy, and making it extended release makes a lot of sense (one pill per day is a significant advantage compared to four, eight or 12 pills), the foundation of LevoCap ER as an approvable product is secure. The biggest unknowns facing the drug are the timing of the completion of the final formulation (the company is validating its compliance with the abuse-resistant opioid draft guidance from the FDA) and the precise design of Phase III (to be finalised after a meeting with the FDA in H215). Relmada is utiliising the 505(b)2 approval pathway so it is able to reference data from the original levorphanol applications.

Based on recent opioid 505(b)2 development plans (eg Zohydro ER and BEMA Buprenorphine), approval of LevoCap ER might require one or two efficacy studies of 300 to 500 patients each. The exact size will depend on assumptions for dropouts (Zogenix enrolled 510 subjects to get 183 to complete the treatment phase in its one Zohydro ER efficacy trial versus placebo), as well as exactly how many patients the FDA will want to see on the drug for at least six and 12 months. Enrollment should not be a problem as there are few products in Phase III or pivotal trials with which to compete for patients (see Exhibit 4).

Relmada Therapeutics | 18 February 2015 4

Exhibit 4: Pain products in Phase III and registration Company name (originator)

Product Latest stage of development

Partners Indication details Description Molecular target

BioDelivery Sciences International

BEMA Buprenorphine

Registration Endo Treat chronic pain; treat moderate to severe chronic pain; treat pain

Buprenorphine formulated with the BEMA transmucosal delivery system

Mu opioid receptor (MOR) (OPRM1)

Collegium Pharmaceutical

COL-003 Registration Treat chronic pain; treat moderate to severe chronic low back pain; treat moderate to severe pain

Extended release oral oxycodone formulated with DETERx tamper-resistance technology

Opioid receptor (OPR)

Egalet Corporation Egalet-001 Pivotal Treat moderate to severe chronic pain

Abuse-deterrent, extended release, oral formulation of morphine

Mu opioid receptor (MOR) (OPRM1)

KemPharm KP201 Phase III Treat acute moderate to moderately severe pain

Abuse-deterrent formulation of benzhydrocodone, a hydrocodone prodrug, and acetaminophen

Scilex Pharmaceuticals

Ztilido Pivotal Treat pain associated with post-herpetic neuralgia (PHN)

Transdermal lidocaine patch formulation

Source: BioCentury

There are three active patent applications that would cover the product as late as 2030, assuming they are issued. In addition, based on current FDA guidance on abuse-deterrent opioids, even generic manufacturers may have to prove their generic versions have abuse-deterrent properties through a clinical trial. As most generic manufacturers do not have the capability of conducting human clinical trials and have slim operating margins, this requirement would deter most manufacturers from developing a generic, at least based on what the guidance is today.

We currently assume peak sales of $842m for LevoCap ER and peak market share of 0.5% of the narcotic prescription market on a prescription basis (~10% on a dollar basis). We believe the company will initially price the product at a ~25% discount to OxyContin ER to obtain greater acceptance and formulary access. Our revenue estimates would put LevoCap ER at the upper end of opioids (though still a fraction of OxyContin’s $2.5bn in 2013 sales), which we believe is reasonable given its broad applicability.

d-Methadone: A lot of potential and a lot of unknowns The highest risk product in Relmada’s portfolio, with potentially the highest reward, is d-Methadone. d-Methadone is the d-isomer of methadone, which was first approved in the US in 1947. Unlike racemic methadone, however, d-Methadone is believed to have little or no opioid activity and instead has analgesic effect through antagonism of the NMDA receptor. Relmada recently initiated a pharmacokinetic/pharmacodynamics study of d-Methadone in opioid naïve healthy volunteers, with a readout coming in Q3 or Q4 of 2015. They are developing it for with neuropathic pain, a multi-billion dollar indication (see Exhibit 5)

Exhibit 5: Approved and late stage drugs for neuropathic pain Product name 2013 sales Active

ingredient Mechanism of

action Latest stage of

development Dosage form Approved

indications Neurontin $2.7bn (peak) Gabapentin GABA receptor

agonist Marketed Tablet PHN

Lidoderm $948m (peak) Lidocaine Na channel blocker Marketed Patch PHN Qutenza N/A Capsaicin Transient receptor

potential vanilloid 1 (TRPV1) (VR1)

agonist

Marketed Patch PHN + PDN

Cymbalta $5.1bn Duloxetine SNRI Marketed Capsule PDN Lyrica $4.6bn Pregabalin GABA receptor

agonist Marketed Capsule PHN

Ztilido N/A Lidocaine Na channel blocker Pivotal Patch Source: Relmada Therapeutics, BioCentury

Relmada Therapeutics | 18 February 2015 5

Despite the plethora of approved and unapproved drugs for neuropathic pain, there continues to be plenty of room for additional therapies. Current therapies tend to take four to eight weeks to show efficacy, require titration and have a variety of side effects. Cymbalta has 22% of patients reporting nausea, gabapentin has 24% of patients reporting dizziness and Lyrica has 7-28% reporting dizziness. A drug with a faster onset or a cleaner toxicity profile would have a decided advantage over the competition.

Mechanistically it is unclear whether d-Methadone will have efficacy in neuropathic pain. There have been dozens of trials over the years of NMDA receptor antagonists in neuropathic pain and only ketamine has consistently been efficacious, although it has been held back by a narrow therapeutic window and was never approved for this indication. Others, including memantine, amantadine, riluzole, dextromethorphan, GV196771 and CNS 5161 have had mixed results, at best.

Also, there is very little clinical history of d-Methadone in pain. d-Methadone has a very different dominant mode of action compared to racemic methadone, so none of racemic methadone’s efficacy studies can be referred to for hints of efficacy. There has only been one open-label Phase I study of one dose level of d-Methadone at Memorial Sloan Kettering Cancer center in cancer patients who were taking an average of five different drugs and had persistent pain despite strong opioids and other analgesics being on board. As this study was short term (12 days) and only used one dose level in a heavily pre-treated population, it was not really designed to discern any efficacy (although the good news is that there were no safety issues in this very sick population).

With so little evidence of efficacy and safety and no reference product to refer to reliably, the FDA will require a full battery of clinical trials for approval and the accelerated 505(b)2 process cannot be used for this product. This increases the cost and extends the timelines of the d-Methadone programme. We currently estimate a 2020 launch for the product.

Another question is about drug exclusivity and intellectual property. Currently there is only one patent (number 6,008,258) and it expires on 20 January 2018, well before d-Methadone is likely to hit the market. However, Relmada is likely to get seven-year orphan drug exclusivity in two neuropathic pain subtypes, post-herpetic neuralgia and HIV-associated neuropathy.

We currently assume peak sales of $925m for d-Methadone in the neuropathic pain market, a relatively conservative estimate as it is unclear how efficacious d-Methadone is. Note that the other branded oral medications for neuropathic pain sell between $2.7-5.1bn (see Exhibit 5), so there is room for upward revision if it has an attractive therapeutic profile.

Could d-Methadone work in psychiatric disorders? However, neuropathic pain is not the entire d-Methadone story; it also has potential (as well as a much longer period of patent protection) in psychiatric, especially depressive, disorders. In a trial of ketamine, which is also an NMDA receptor antagonist, in a heavily pre-treated population of patients suffering from major depression, efficacy was seen as early as 40 minutes after treatment and on average 110 minutes after treatment and lasted for a week (see Exhibits 6 and 7). Note that with the current standard of care, efficacy is normally not seen for two to three weeks. Due to psychotomimetic side effects related to ketamine, it is not a viable candidate for a broad indication like depression. However, if another NMDA receptor antagonist without those side effects (which are considered to be independent of the efficacy in depression) works even close to how well ketamine works in depression, it will be a blockbuster.

Relmada Therapeutics | 18 February 2015 6

Exhibit 6: Ketamine HDRS score Exhibit 7: Ketamine responder %

Source: Archives of General Psychiatry Source: Archives of General Psychiatry

However, once again the question is “what kind of NMDA receptor antagonist is d-Methadone?”. Ketamine has shown remarkable and practically miraculous efficacy, but other NMDA receptor antagonists like memantine have little or no anti-depressive capabilities. d-Methadone has shown some initial hints of efficacy in psychiatric disorders in the Phase I pain trial at Memorial Sloan Kettering. Patients in that trial used the Edmonton Symptom Assessment System (ESAS) to grade their levels of discomfort on a variety of subscales from 1-10, with 10 being the worst. In three of the psychiatric-related subscales, patients did seem to improve after two weeks on therapy (see Exhibit 8). “Tiredness” was defined as decreased energy levels but not necessarily sleepiness, “anxiety” was defined as nervousness or restlessness and “well-being” was overall comfort, answering the question “how are you?”. Note that the dose was not optimised for efficacy in depression and we have no idea what the optimal dose would be. Patients were simply given 40mg every 12 hours for 12 days.

Exhibit 8: d-Methadone efficacy in psychiatric-related subscales in cancer patients Patient Tiredness Anxiety Well-being Baseline Day 12 Baseline Day 12 Baseline Day 12 1 4 5 4 3 5 0 56 9 4 1 4 0 2 117 8 7 0 0 0 0 258 8 6 0 0 4 3 301 0 0 3 1 6 1 302 5 5 0 0 2 1 303 6 0 5 2 6 9 305 7 2 7 2 10 7 Average 5.9 3.6 2.5 1.5 4.1 2.9 Source: Relmada Therapeutics, Patent Application US 13/803,375

While the trial is definitely early, it is promising that we are seeing some efficacy in these very difficult patients, as their depression likely stems from having advanced cancer rather than any sort of chemical imbalance. As mentioned before, another advantage d-Methadone would have in this indication is that Relmada has a very new patent estate in psychiatric disorders, with a patent being filed only in March 2013, which would extend its patent life until 2033. While we are not giving Relmada any credit for this indication as it would be a massive undertaking and timing is unclear, it should be highlighted that this could be a major source of upside going forward.

BuTab ER: The first traditional tablet on the market? BuTab ER is an extended release tablet form of buprenorphine, a popular drug for the treatment of opioid addiction and chronic pain. Relmada will be initiating a five-arm PK study at the end of Q115 with proof-of-concept data available around Q315. It will also be formulating a version in combination with naloxone for the opioid dependence market.

There are currently four branded, as well as several generic, forms available (see Exhibit 9), none of which are traditional tablets.

Relmada Therapeutics | 18 February 2015 7

Exhibit 9: Marketed products containing buprenorphine Product Indication Form Manufacturer Annual sales Suboxone (buprenorphine + naloxone) Opioid dependence Sublingual film Indivior $1.1bn Zubsolv (buprenorphine + naloxone) Opioid dependence Sublingual tablet Orexo $30m Bunavail (buprenorphine + naloxone) Opioid dependence Buccal film BioDelivery Sciences Just launched Butrans (buprenorphine) Chronic pain Patch Purdue $160m Source: Company reports, Edison Investment Research

Despite the fact that the sublingual, buccal or patch approach has had to be used, the buprenorphine market is still worth well over $1bn a year (see Exhibit 10). While generics have been eroding the branded business (mostly at the expense of Suboxone), BuTab ER does have the potential of expanding the market due to its superior delivery method. According to BioDelivery Sciences, which has developed Bunavail, only 22% of those diagnosed as opioid dependent have actually been prescribed products containing buprenorphine, leaving quite a bit of room to grow.

Exhibit 10: US Sales of Buprenorphine Treating Addiction

Source: Relmada Therapeutics

Another reason that BuTab ER may reinvigorate buprenorphine sales is that Relmada is developing it for chronic pain, which can be an especially attractive market. Buprenorphine is a Schedule III drug unlike the other opioids, which are Schedule II, as it has less risk of psychological and physical addiction. However, one thing to keep in mind is that the exact formulation of BuTab ER (by itself and in combination with naloxone for the opioid dependence market) will be paramount as the buprenorphine market is extremely competitive currently from both branded and generic competitors. Any inferiority to currently available formulations could severely diminish the prospects for this product. We should have a very good idea of its potential once we receive readout from the five-arm PK study in Q315. If the PK profile is very similar to some of the marketed buprenorphine products, it could potentially enter the opioid dependence market after a small bioequivalence study. That said, given the opioid dependence market is crowded among several branded and generic players, we believe BuTab ER’s greatest potential will be in the chronic pain market, where a Phase III trial would be necessary to gain approval.

We currently assume peak sales of $217m for BuTab ER, 6.25% of the buprenorphine market. While a fraction of Suboxone sales (see Exhibit 9), this estimate is higher than current sales of the Butrans patch, the only branded buprenorphine product in the chronic pain market. We believe that an orally bioavailable product should be able to gain more market share than a patch.

MepiGel MepiGel is a topical gel form of the local anesthetic mepivacaine and is being developed for the treatment of neuropathic pain. It would compete directly with Lidoderm, a lidocaine patch, which peaked at almost $1bn in sales in 2012 (see Exhibit 11), just before generic competition hit. Lidoderm currently has quite a few weaknesses, providing an opening for MepiGel:

Adhesion is difficult on hairy or contoured surfaces.

Relmada Therapeutics | 18 February 2015 8

It is not appropriate for painful diabetic neuropathy and painful HIV-neuropathy, which involve the feet and sometimes the hands.

Exhibit 11: Lidoderm sales

Source: Relmada Therapeutics, Endo Pharmaceuticals

As a non-greasy topical gel, MepiGel has the potential to incorporate all the positives of Lidoderm (lack of systemic impact, an alternative to those who cannot handle oral medication) without the inconvenient negatives that come from patch form. As long as MepiGel has similar or lower levels of skin irritation, it should be the local anesthetic of choice on approval. We expect MepiGel to enter Phase I in H215, although the exact timing of this trial is likely to depend heavily on the timing and success of additional financing for the company.

We currently estimate peak sales of $415m for MepiGel, a conservative estimate given that Lidoderm sales peaked at $948m and MepiGel would have broader applicability to neuropathic pain in the extremities. Further clarity on the therapeutic profile could lead to upward revisions to our estimates.

Sensitivities

With multiple products in the pipeline, Relmada has the advantage of its investment case not being dependent on one product. Given its late stage, LevoCap ER is of primary importance to the company currently, representing ~3/5 of our risk-adjusted NPV valuation. As the active ingredient, levorphanol, has been approved in the US since 1953, the risk of a surprise safety or efficacy issue is reduced. The biggest risk is with the formulation, with any missteps or mishaps forcing the company to “go back to the drawing board”. The same goes for BuTab ER and MepiGel, as both are just reformulations of very old drugs.

Also, it is important not to underestimate the financing risk that the company faces. We currently expect the company to need to raise an additional $130m in capital before reaching profitability in 2019. If the proof-of-concept data for BuTab ER and d-Methadone are positive, the FDA has no surprises for the LevoCap development pathway and/or it signs a strategic partner for LevoCap, the resulting dilution is likely to be less than if there are bumps along the way. Based on our estimates, Relmada does not have the cash to fund more than LevoCap ER’s Phase III programme. As mentioned above, Relmada will have the ability to find alternative non-dilutive financing through potential strategic partnerships, but there is currently very limited visibility on the potential for such partnerships.

Relmada Therapeutics | 18 February 2015 9

Valuation

We value Relmada at $601m or $11.56 per basic share based on a risk-adjusted NPV of its four pipeline products, assuming a 12.5% WACC and no value past patent expiration. On a fully diluted basis, we value the company at $627m or $9.66 per share. As Relmada is targeting large markets and should have high operating leverage with four products in one area, we believe it could hit 40% net margin in 2022. The bulk of the value of the company is in LevoCap ER, as it is on the verge of Phase III and has broad market potential in the severe pain market. We assign little value to d-Methadone, due to the high-risk nature of the programme and lack of clinical data. This could change as we receive greater clarity on its patent estate as it progresses through human clinical trials. BuTab ER and MepiGel are both early, but worth a little over $2 per share combined. We currently do not value the ex-US opportunity for any of Relmada’s products as it is focusing on the US market right now, although that opportunity could be the source of upside to shares through out-licensing revenue with strategic partners.

Exhibit 12: Relmada valuation Product Main

indication Status Probability

of success Launch

year Peak sales

($m) Patent

protection Royalty rNPV

LevoCap ER Chronic pain Phase III 40% 2018 $842 2030 Fully own $350 d-Methadone Neuropathic

pain Phase II 20% 2020 $925 2026 Fully own $102

BuTab ER Pain & opioid dependence

Phase I 20% 2019 $217 2029 Fully own $35

MepiGel Topical analgesia

Phase I 25% 2020 $415 2031 Fully own $81

Total $569 Cash and cash equivalents (year end 2014) ($m) $32.3 Total firm value ($m) $601 Total basic shares (m) 52.0 Value per basic share ($) $11.56 Stock options (12/2014, m) 12.9 Weighted average exercise price ($) $2.00 Cash on exercise ($m) $25.7 Total firm value ($m) $627 Total number of shares 64.9 Diluted value per share ($) $9.66 Source: Edison Investment Research

Financials

We project that Relmada will have $32.3m in cash and cash equivalents at the end of 2014. This is not enough to advance all four of its programmes without additional financing as the Phase III programme for LevoCap ER alone is likely to require more cash than it currently has. According to a survey of industry executives by Cutting Edge Information, the per-patient cost of a Phase III trial is ~$50,000 (although it is likely less for pain trials). So if Relmada needs to conduct two 300-person trials, it would have to spend approximately $30m. Our model currently assumes it will need to raise $30m by the end of 2015, another $40m in 2016 and $60m in 2017, after which it should have enough capital to achieve profitability. Its ability to raise such capital will be dependent on newsflow and the general appetite for investors to take product development risk. Any negative newsflow or macroeconomic issues could either curtail its fund-raising ability, lead to very high dilution of current investors, or lead to extended delays in product development (and possibly all three).

Relmada Therapeutics | 18 February 2015 10

Exhibit 13: Financial summary $'000s 2014e 2015e 2016e 2017e Year end 31 December IFRS IFRS IFRS IFRS PROFIT & LOSS Revenue 0 0 0 0 Cost of Sales 0 0 0 0 Gross Profit 0 0 0 0 EBITDA (21,019) (33,607) (36,676) (40,029) Operating Profit (before GW and except.) (21,019) (33,607) (36,676) (40,029) Intangible Amortisation 0 0 0 0 Other 0 0 0 0 Exceptionals 0 0 0 0 Operating Profit (21,019) (33,607) (36,676) (40,029) Net Interest (435) 100 (2,265) (5,458) Other (34,070) 0 0 0 Profit Before Tax (norm) (55,524) (33,507) (38,942) (45,487) Profit Before Tax (FRS 3) (55,524) (33,507) (38,942) (45,487) Tax 0 0 0 0 Deferred tax (0) (0) (0) (0) Profit After Tax (norm) (55,524) (33,507) (38,942) (45,487) Profit After Tax (FRS 3) (55,524) (33,507) (38,942) (45,487) Average Number of Shares Outstanding (m) 38.7 53.5 55.6 57.8 EPS - normalised (c) (143.4) (62.7) (70.0) (78.7) EPS - FRS 3 (c) (143.4) (62.7) (70.0) (78.7) Dividend per share (c) 0.0 0.0 0.0 0.0 Gross Margin (%) N/A N/A N/A N/A EBITDA Margin (%) N/A N/A N/A N/A Operating Margin (before GW and except.) (%) N/A N/A N/A N/A BALANCE SHEET Fixed Assets 38 59 78 92 Intangible Assets 0 0 0 0 Tangible Assets 26 47 66 80 Other 12 12 12 12 Current Assets 32,312 29,284 30,823 45,822 Stocks 0 0 0 0 Debtors 0 0 0 0 Cash 32,312 29,284 30,823 45,822 Other 0 0 0 0 Current Liabilities (773) (773) (773) (773) Creditors (625) (625) (625) (625) Short term borrowings (148) (148) (148) (148) Long Term Liabilities (100) (30,100) (70,100) (130,100) Long term borrowings 0 (30,000) (70,000) (130,000) Other long term liabilities (100) (100) (100) (100) Net Assets 31,477 (1,530) (39,972) (84,959) CASH FLOW Operating Cash Flow (8,650) (33,099) (36,165) (39,514) Net Interest 0 100 (2,265) (5,458) Tax 0 0 0 0 Capex (29) (29) (30) (30) Acquisitions/disposals 0 0 0 0 Financing 24,229 0 0 0 Dividends 0 0 0 0 Other 0 0 0 0 Net Cash Flow 15,550 (33,028) (38,461) (45,001) Opening net debt/(cash) (15,427) (32,164) 864 39,325 HP finance leases initiated 0 0 0 0 Exchange rate movements 0 0 0 0 Other 1187 0 0 0 Closing net debt/(cash) (32,164) 864 39,325 84,326 Source: Company reports, Edison Investment Research

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Contact details Revenue by geography 546 Fifth Avenue 14th Floor New York, NY 10036 US 212-702-7169 www.relmada.com

N/A

CAGR metrics Profitability metrics Balance sheet metrics Sensitivities evaluation EPS 2013-17e N/A EPS 2015-17e N/A EBITDA 2013-17e N/A EBITDA 2015-17e N/A Sales 2013-17e N/A Sales 2015-17e N/A

ROCE 15e N/A Avg ROCE 2013-17e N/A ROE 15e N/A Gross margin 15e N/A Operating margin 15e N/A Gr mgn / Op mgn 15e N/A

Gearing 15e N/A ## Interest cover 15e N/A ## CA/CL 15e N/A ## Stock days 15e N/A ## Debtor days 15e N/A ## Creditor days 15e N/A ##

Litigation/regulatory Pensions Currency Stock overhang Interest rates Oil/commodity prices

Management team Chief Executive Officer: Sergio Traversa President and Chief Scientific Officer: Eliseo Salinas Before joining Relmada, Dr Traversa was the co-founder and CEO of Medeor Inc, a spin-off pharmaceutical company from Cornell University. Dr Traversa has more than 25 years' experience in the healthcare sector in the US and Europe, ranging from management positions in the pharmaceutical industry to investing and strategic advisory roles.

Eliseo Salinas joined Relmada in February 2014. He has more than 20 years' experience developing therapeutic products for CNS disorders in many key jurisdictions worldwide, including the US, Canada, the EU and Japan. Under his leadership, 15 programmes obtained regulatory approval in the US and other major international markets. He has had senior roles at StemCells, Elan Pharmaceuticals, Adolor Corporation, Shire and Wyeth Pharmaceuticals.

Chief Financial Officer: Douglas Beck SVP of Finance and Corporate Development: Michael Becker Douglas J Beck joined Relmada in December 2013. He has been the CFO of iBio, Inc, a publicly traded biotech company, from May 2011 to February 2013. He was also CFO of Lev Pharmaceuticals, a publicly traded biotech company from May 2005 to February 2009 (the company was acquired by ViroPharma in October 2008 for $617m.)

Michael Becker joined Relmada in November 2014. Mr. Becker brings more than 20 years of experience as a C-level industry executive and Wall Street securities analyst. Most recently, he was founder and president of the consulting firm MDB Communications LLC. In this position, he acted as a strategic advisor and partner servicing the life sciences industry by providing a full range of investor relations and public relations services to enhance client visibility and branding.

Principal shareholders (%) Southern Biotech, Inc. 9.1 Sergio Traversa 2.3

Companies named in this report Zogenix (ZGNX); BioDelivery Sciences (BDSI); Indivior (INDV); Orexo (ORX); Purdue

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