Milestone Pharmaceuticals(MIST) - 2025 Q2 - Quarterly Report

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The report contains forward-looking statements regarding the company's strategy, financial condition, operations, and market growth, subject to substantial risks and uncertainties - Forward-looking statements are based on current expectations and projections about future events and financial trends, but are subject to known and unknown risks, uncertainties, and assumptions[9][10] - Key risks include clinical trial outcomes for etripamil (PSVT, AFib-RVR), commercialization ability, financing needs, regulatory approvals, market acceptance, intellectual property, government regulations, and competitive environment[10][13] - The company operates in a competitive and rapidly changing environment, with new risk factors emerging, and cannot guarantee future results[11][12] PART I. FINANCIAL INFORMATION This part presents unaudited interim condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures Item 1. Financial Statements (Unaudited) This section provides unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Loss, Shareholders' (Deficit) Equity, and Cash Flows, with detailed notes Condensed Consolidated Balance Sheets The balance sheets show a decrease in total assets and a shift to a shareholders' deficit as of June 30, 2025, driven by reduced short-term investments and accumulated deficit Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $42,499 | $25,314 | | Short-term investments | $918 | $44,381 | | Total current assets | $46,168 | $73,926 | | Total assets | $47,417 | $75,499 | | Total current liabilities | $9,283 | $8,126 | | Senior secured convertible notes | $55,238 | $53,352 | | Total liabilities | $65,162 | $62,352 | | Total shareholders' (deficit) equity | $(17,745) | $13,147 | Condensed Consolidated Statements of Loss Milestone Pharmaceuticals Inc. reported increased net losses for the three and six months ended June 30, 2025, due to higher operating expenses and decreased interest income Condensed Consolidated Statements of Loss | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $— | $— | $— | $— | | R&D, net of tax credits | $3,669 | $2,815 | $8,647 | $6,454 | | G&A | $3,759 | $5,046 | $8,926 | $8,999 | | Commercial | $5,103 | $1,801 | $15,481 | $4,685 | | Loss from operations | $(12,531) | $(9,662) | $(33,054) | $(20,138) | | Interest income | $516 | $1,186 | $1,213 | $2,180 | | Interest expense | $(951) | $(887) | $(1,886) | $(1,759) | | Net loss | $(12,966) | $(9,363) | $(33,727) | $(19,717) | | Net loss per share | $(0.20) | $(0.14) | $(0.51) | $(0.34) | Condensed Consolidated Statements of Shareholders' (Deficit) Equity The statements show a significant increase in accumulated deficit, resulting in a total shareholders' deficit of $17.7 million as of June 30, 2025, primarily due to net losses Condensed Consolidated Statements of Shareholders' (Deficit) Equity | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Common Shares | $288,263 | $288,048 | | Pre-funded warrants | $53,076 | $53,076 | | Additional paid-in capital | $42,188 | $39,568 | | Accumulated deficit | $(401,272) | $(367,545) | | Total shareholders' (deficit) equity | $(17,745) | $13,147 | - Net loss for the six months ended June 30, 2025, was $(33.7 million), contributing to the accumulated deficit[20] - Share-based compensation expense for the six months ended June 30, 2025, was $2.7 million[20] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, cash and cash equivalents increased, primarily from investing activities (redemption of short-term investments), despite significant cash used in operations Condensed Consolidated Statements of Cash Flows | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(26,518) | $(14,987) | | Net cash provided by (used in) investing activities | $43,527 | $(17,532) | | Net cash provided by financing activities | $176 | $32,021 | | Net increase (decrease) in cash and cash equivalents | $17,185 | $(498) | | Cash and cash equivalents – End of period | $42,499 | $13,262 | - Operating activities used $26.5 million in cash for the six months ended June 30, 2025, primarily due to a net loss of $33.7 million[163] - Investing activities provided $43.5 million in cash, mainly from the redemption of $44.5 million in short-term investments[165] Notes to Unaudited Condensed Consolidated Financial Statements These notes detail the company's organization, accounting policies, risks, liquidity, revenue, investments, debt, equity, share-based compensation, net loss per share, royalty agreements, and subsequent events - Milestone Pharmaceuticals Inc. is a biopharmaceutical company focused on developing and commercializing cardiovascular medicines, with etripamil as its lead product candidate for PSVT and AFib-RVR[24] - The company incurred operating losses and had an accumulated deficit of $401.3 million as of June 30, 2025, but expects to support operations for at least the next 12 months with existing cash and proceeds from a July 2025 offering[35][37] - No revenue was recorded for the three and six months ended June 30, 2025 and 2024, as license revenue is recognized only when milestones are reached under the agreement with Corxel Pharmaceuticals[38] - The company issued $50.0 million principal amount of 6.0% Convertible Senior Notes due 2029, with a net carrying amount of $55.2 million as of June 30, 2025[41][42] - Total share-based compensation expense for all plans was $1.3 million for the three months ended June 30, 2025, and $2.7 million for the six months ended June 30, 2025[67] - On July 11, 2025, the company completed an underwritten public offering, generating approximately $48.7 million in net proceeds, and amended its Royalty Purchase Agreement with RTW, extending the marketing approval deadline for etripamil to December 31, 2025, for a potential $75.0 million purchase price[79][81][82] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operations, detailing etripamil's status, market overviews, regulatory updates, operating expenses, and liquidity - Milestone Pharmaceuticals is focused on developing and commercializing CARDAMYST (etripamil) nasal spray for PSVT and AFib-RVR[84] - The FDA issued a Complete Response Letter (CRL) for CARDAMYST's NDA for PSVT in March 2025, citing CMC issues; the company submitted its response on June 13, 2025, which was accepted, and a new PDUFA target date of December 13, 2025, has been assigned[85][97][115] - Etripamil demonstrated positive Phase 2 data for AFib-RVR, showing rapid and statistically superior ventricular rate reduction and improved symptom relief; a Phase 3 study protocol has been finalized, but enrollment is delayed due to the PSVT NDA CRL[86][106][107] - The PSVT market is estimated to affect over two million Americans, with a target addressable market for CARDAMYST of 500,000 to 800,000 patients, potentially treating 2.5 million to 4 million episodes per year[89][90] - The AFib-RVR market affects an estimated 10 million Americans, with a target addressable market of up to four to five million patients by 2030 for etripamil[94] - The company incurred net losses of $13.0 million and $33.7 million for the three and six months ended June 30, 2025, respectively, and expects significant losses to continue as it pursues regulatory approvals and commercialization[112][113] - Commercial expenses increased significantly by 183.3% (three months) and 230.4% (six months) in 2025 compared to 2024, due to preparations for CARDAMYST launch, though ramping up was temporarily paused after the CRL[143][144][145] - The company's cash, cash equivalents, and short-term investments totaled $43.4 million as of June 30, 2025, and it expects these resources, along with recent offering proceeds, to fund operations for at least the next 12 months[149][153] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to market risks, primarily interest rate and foreign exchange rate risk, noting minimal impact due to short-term investments and low foreign currency transactions - The company's primary investment objective is to preserve principal and liquidity, with cash, cash equivalents, and short-term investments totaling $43.4 million as of June 30, 2025[176] - An immediate 10% change in interest rates is not expected to materially affect the fair market value of the investment portfolio or operating results due to its short-term nature[176][177] - The company is exposed to foreign exchange rate risk due to transactions in Canadian dollars, with a net monetary exposure of $2.1 million in Canadian dollars as of June 30, 2025[178] - The company does not use derivative instruments or a formal hedging program for foreign exchange risk due to the low volume of foreign currency transactions[178] Item 4. Controls and Procedures Management evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, concluding they were effective, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated as effective at a reasonable assurance level as of June 30, 2025[181] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[182] - Management acknowledges that control systems provide only reasonable, not absolute, assurance and are subject to inherent limitations such as human error, circumvention, and management override[183] PART II. OTHER INFORMATION This part covers other information not included in the financial statements, such as legal proceedings, updated risk factors, unregistered sales of equity securities, and exhibits Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings and is unaware of any pending or threatened legal actions that could adversely affect its business or financial condition - No material legal proceedings are currently ongoing or threatened against the company[185] Item 1A. Risk Factors This section updates risk factors, focusing on new risks from international trade policies and reiterating substantial dependence on etripamil's successful clinical development and regulatory approval, especially after the FDA Complete Response Letter - International trade policies, including tariffs and trade barriers, could adversely affect the business by increasing R&D expenses, disrupting supply chains (e.g., APIs from China), and hindering commercialization[187][188][190] - The company's future success is substantially dependent on obtaining regulatory approval for etripamil, its only product candidate; the FDA issued a CRL for etripamil's NDA for PSVT, citing CMC issues, and there's no assurance of approval even after the response submission[194][198] - Healthcare legislative reforms, such as the 'One Big Beautiful Bill Act' (OBBBA) and the Inflation Reduction Act (IRA), could negatively impact the business by reducing healthcare costs, limiting market access, and increasing governmental scrutiny over drug pricing[201][203][204] - Future changes to tax laws, including the OBBBA's impact on R&E expenditures, could increase tax liability and adversely affect profitability[207][208] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is marked as 'Not applicable,' indicating no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[210] Item 3. Defaults Upon Senior Securities This item is marked as 'Not applicable,' indicating no defaults upon senior securities to report for the period - No defaults upon senior securities to report[210] Item 4. Mine Safety Disclosures This item is marked as 'Not applicable,' indicating no mine safety disclosures to report for the period - No mine safety disclosures to report[210] Item 5. Other Information None of the company's directors or executive officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by directors or executive officers during the quarter ended June 30, 2025[211] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including organizational documents, equity incentive plans, certifications from executive officers, and XBRL-related documents - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1)[212] - XBRL (eXtensible Business Reporting Language) documents are provided for structured data reporting (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[212]