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Milestone Pharmaceuticals(MIST) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The company reported a significant net loss in Q1 2025, driven by higher operating expenses, leading to a shareholders' deficit Condensed Consolidated Balance Sheets Total assets decreased while liabilities increased by March 31, 2025, leading to a shareholders' deficit from prior equity Condensed Consolidated Balance Sheet Highlights (in thousands of US dollars) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $45,085 | $25,314 | | Short-term investments | $10,873 | $44,381 | | Total Assets | $61,885 | $75,499 | | Total current liabilities | $12,963 | $8,126 | | Senior secured convertible notes | $54,287 | $53,352 | | Total Liabilities | $68,008 | $62,352 | | Total shareholders' (deficit) equity | ($6,123) | $13,147 | Condensed Consolidated Statements of Loss Net loss doubled in Q1 2025, primarily driven by a significant increase in operating expenses, especially commercial costs Condensed Consolidated Statements of Loss (in thousands of US dollars) | Category | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Revenue | $— | $— | | Research and development, net | $4,978 | $3,639 | | General and administrative | $5,167 | $3,953 | | Commercial | $10,378 | $2,884 | | Loss from operations | ($20,523) | ($10,476) | | Net loss | ($20,761) | ($10,354) | | Net loss per share, basic and diluted | ($0.31) | ($0.21) | Condensed Consolidated Statements of Shareholders' (Deficit) Equity Shareholders' equity transitioned to a deficit by March 31, 2025, primarily due to the net loss incurred during the quarter - The company's total shareholders' equity decreased from $13,147 thousand at the end of 2024 to a deficit of $(6,123) thousand as of March 31, 202520 - The primary driver for the decrease in equity was the net loss of $20,761 thousand for the three-month period ended March 31, 202520 Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was offset by investing activities, resulting in a net increase in cash and cash equivalents for Q1 2025 Cash Flow Summary (in thousands of US dollars) | Activity | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($13,952) | ($8,934) | | Net cash provided (used in) by investing activities | $33,583 | ($27,014) | | Cash provided by financing activities | $140 | $32,319 | | Net increase (decrease) in cash | $19,771 | ($3,629) | | Cash and cash equivalents – End of period | $45,085 | $10,131 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the company's lead product etripamil, its cash position deemed sufficient for 12 months, and key financial agreements - The company's lead product candidate is etripamil, a nasal spray being developed to treat paroxysmal supraventricular tachycardia (PSVT), atrial fibrillation, and other cardiovascular indications24 - As of March 31, 2025, the company had cash, cash equivalents, and short-term investments of $56.0 million and an accumulated deficit of $388.3 million Management believes these funds are sufficient to support operations for at least the next 12 months3637 - The company has a Royalty Purchase Agreement with RTW, which agreed to purchase royalty rights for $75.0 million following FDA approval of etripamil on or prior to September 30, 202566 - In March 2023, the company issued $50.0 million in 6.0% Convertible Senior Notes due 2029 to RTW Investments As of March 31, 2025, the net carrying amount of the notes was $54.3 million4041 Management's Discussion and Analysis of Financial Condition and Results of Operations The company received an FDA Complete Response Letter for CARDAMYST, impacting launch plans and increasing Q1 2025 operating expenses - In March 2025, the company received a Complete Response Letter (CRL) from the FDA for its New Drug Application (NDA) for CARDAMYST (etripamil) for PSVT7790 - The CRL cited two key CMC issues: a request for more information on nitrosamine impurities and the need for an inspection at a manufacturing facility The FDA did not raise concerns about clinical safety or efficacy90181 - The company has paused the ramp-up of operational expenditures related to the launch of CARDAMYST following the CRL but maintains the capability to launch quickly upon approval128 - Management expects existing cash and investments ($56.0 million as of March 31, 2025) to be sufficient to fund operations for at least the next 12 months133137 Results of Operations Total operating expenses nearly doubled in Q1 2025, driven by increased commercial expenses, significantly widening the net loss Comparison of Results of Operations (in thousands) | Category | Three months ended March 31, 2025 | Three months ended March 31, 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Research and development, net | $4,978 | $3,639 | $1,339 | 36.8% | | General and administrative | $5,167 | $3,953 | $1,214 | 30.7% | | Commercial | $10,378 | $2,884 | $7,494 | 259.9% | | Total operating expenses | $20,523 | $10,476 | $10,047 | 95.9% | | Net loss | ($20,761) | ($10,354) | ($10,407) | 100.5% | - The increase in R&D expenses was primarily due to higher consulting costs in drug manufacturing and regulatory areas125 - The increase in commercial expenses resulted from additional personnel, professional costs, and other operational expenses in preparation for the launch of CARDAMYST128 Liquidity and Capital Resources The company's liquidity includes cash and investments deemed sufficient for 12 months, supplemented by prior offerings and contingent future funding - The company had cash, cash equivalents and short-term investments of $56.0 million as of March 31, 2025133 - In February 2024, the company received net proceeds of $31.9 million from an underwritten public offering of common shares and pre-funded warrants134135 - A contingent future source of funding includes a $75.0 million payment from RTW upon FDA approval of etripamil on or before September 30, 2025138140 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate fluctuations on its investment portfolio and foreign currency exposure to the Canadian dollar - The company is exposed to interest rate risk on its $56.0 million portfolio of cash, cash equivalents, and short-term investments161 - The company is subject to foreign exchange risk from transactions in Canadian dollars, with a net monetary exposure of $3.6 million as of March 31, 2025162 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level165166 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the internal controls167 PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings and is unaware of any pending or threatened actions - The company is not currently a party to any material legal proceedings169 Risk Factors Material changes to risk factors include international trade policy impacts on the supply chain and updated risks concerning etripamil's FDA CRL - A new risk factor was added concerning international trade policies, including tariffs and sanctions, which could adversely affect the business, particularly as some active pharmaceutical ingredients (APIs) for etripamil are manufactured in China171173175 - The risk related to dependency on etripamil has been updated to include the March 2025 CRL from the FDA It highlights the uncertainty of satisfactorily addressing the FDA's concerns regarding nitrosamine impurities and a required facility inspection179181 - Disruptions at the FDA and other government agencies due to funding shortages, layoffs, or other factors could negatively impact the review and approval timelines for product candidates185 Unregistered Sales of Equity Securities and Use of Proceeds Not applicable for this reporting period - Not applicable186 Other Information No directors or executive officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the quarter - No directors or executive officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter ended March 31, 2025187 Exhibits The report lists several exhibits filed with the Form 10-Q, including the Amended and Restated Open Market Sale Agreement and required certifications - Key exhibits filed include the Amended and Restated Open Market Sale Agreement, CEO/CFO certifications (Sections 302 and 906), and XBRL data files188