ProMIS Neurosciences (PMN) - 2023 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Condensed Consolidated Financial Statements (unaudited) The company reported a significant increase in net loss to $5.0 million, decreased cash, and increased liabilities, raising substantial doubt about its ability to continue as a going concern Condensed Consolidated Balance Sheets Balance Sheet Summary | Financial Metric | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash | $3,331,801 | $5,875,796 | | Total Current Assets | $4,408,606 | $6,903,487 | | Total Assets | $4,428,274 | $6,924,646 | | Liabilities & Shareholders' Deficit | | | | Total Current Liabilities | $8,705,599 | $6,413,044 | | Total Liabilities | $10,607,321 | $8,272,418 | | Total Shareholders' Deficit | ($6,179,047) | ($1,347,772) | - Cash decreased by approximately 43% from $5.9 million at the end of 2022 to $3.3 million as of March 31, 2023[15] - Total liabilities increased by 28% to $10.6 million, primarily driven by a significant rise in accounts payable from $3.0 million to $7.0 million[15] Condensed Consolidated Statements of Operations and Comprehensive Loss Operations and Comprehensive Loss Summary | Metric | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Research and development | $3,510,252 | $1,902,832 | | General and administrative | $1,460,419 | $2,035,686 | | Loss from operations | ($4,970,671) | ($3,938,518) | | Net loss | ($4,959,431) | ($2,094,845) | | Net loss per share, basic and diluted | ($0.58) | ($0.29) | - Net loss more than doubled to $5.0 million in Q1 2023 from $2.1 million in Q1 2022, driven by an 84% increase in research and development expenses[18] Condensed Consolidated Statements of Cash Flows Cash Flow Summary | Cash Flow Activity | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($2,561,654) | ($3,366,768) | | Net cash used in investing activities | $0 | ($2,057) | | Net decrease in cash | ($2,543,995) | ($3,189,694) | | Cash at end of quarter | $3,331,801 | $13,754,211 | - The company used $2.6 million in cash for operating activities during the first three months of 2023[24] Notes to Unaudited Condensed Consolidated Financial Statements - The company's focus is on developing antibody therapies for neurodegenerative diseases, with lead candidates PMN310 for Alzheimer's, PMN442 for multiple system atrophy, and PMN267 for ALS[27][28] - Management has identified a substantial doubt about the company's ability to continue as a going concern due to recurring net losses ($5.0 million in Q1 2023) and an accumulated deficit of $85.2 million Additional funding is required to continue operations[32] - In May 2023, the company entered an agreement to defer payment on approximately $5.3 million of current accounts payable and accrued liabilities until March 31, 2024, with interest accruing at 5.5% annually[81] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses increased R&D expenses and a $5.0 million net loss, highlighting insufficient cash for 12 months and substantial doubt about going concern without additional financing Program Updates - The lead program, PMN310 for Alzheimer's Disease, progressed significantly with the successful manufacturing of the drug product and the filing of an Investigational New Drug (IND) application with the FDA in April 2023, which was cleared in May 2023[93][94] - Expenditures for the PMN310 program in Q1 2023 were approximately $2.4 million[94] - Other key programs, including PMN267 for ALS and PMN442 for multiple system atrophy, have been humanized and are ready for IND-enabling studies[95][96] Result of Operations Operating Expenses Summary | Expense Category | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $3,510,252 | $1,902,832 | $1,607,420 | | General and administrative | $1,460,419 | $2,035,686 | ($575,267) | | Total operating expenses | $4,970,671 | $3,938,518 | $1,032,153 | - Research and development expenses increased by $1.6 million (139%) in Q1 2023 compared to Q1 2022, primarily due to a $1.4 million increase in spending on the lead program, PMN310, related to manufacturing and IND submission activities[110] - General and administrative expenses decreased by $0.6 million (28%), mainly due to a $0.8 million reduction in one-time costs related to the initial Nasdaq listing in 2022[112] Liquidity and Capital Resources - The company is a development-stage entity with no revenue and has financed operations through equity and debt sales. As of March 31, 2023, it had an accumulated deficit of $85.2 million[114][115] - Management believes the company's financial condition raises substantial doubt about its ability to continue as a going concern for the next 12 months, as additional funding is necessary to fund future clinical activities[115] - In May 2023, the company arranged to defer payment on approximately $5.3 million of current liabilities until March 31, 2024, providing some short-term liquidity relief[114] Quantitative and Qualitative Disclosures About Market Risk The company is exposed to credit, liquidity, and foreign currency exchange risks, with a 10% USD exchange rate change impacting net loss by $0.6 million - The company's primary market risks are credit risk, liquidity risk, and foreign currency exchange risk[126] - The company is exposed to foreign exchange risk on its US dollar denominated cash and liabilities. As of March 31, 2023, a 10% change in the USD exchange rate would impact net loss by approximately $0.6 million[129] - Liquidity risk is significant as the company is pre-revenue and relies on external fundraising to sustain operations[128] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2023, with no material changes in internal control over financial reporting - Management concluded that as of March 31, 2023, the company's disclosure controls and procedures were effective[132] - There were no material changes in the company's internal control over financial reporting during the quarter ended March 31, 2023[133] PART II OTHER INFORMATION Legal Proceedings The company is not currently a party to any material litigation or legal proceedings likely to have a material adverse effect on its business - As of the filing date, the company is not involved in any material legal proceedings[135] Risk Factors The company highlights significant risks including substantial doubt about its going concern ability, negative working capital, and the urgent need for additional financing - The company has incurred losses since inception and has substantial doubt about its ability to continue as a going concern, requiring additional financing to continue its development programs[137] - The company had negative working capital of approximately $4.3 million as of March 31, 2023[138] - There is a risk of adverse effects from instability in the financial services industry, as exemplified by the recent failures of Silicon Valley Bank and Signature Bank, which could impair access to funding or affect business partners[140] Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None[149] Defaults Upon Senior Securities There were no defaults upon senior securities during the period - None[150] Mine Safety Disclosures This item is not applicable to the company - Not applicable[151] Other Information There is no other information to report for the period - None[151] Exhibits The report includes several exhibits, primarily certifications from the Chief Executive Officer and Chief Financial Officer as required by the Sarbanes-Oxley Act, along with Inline XBRL documents - Exhibits filed with the report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, and various XBRL data files[152]