ProMIS Neurosciences (PMN) - 2023 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (unaudited) The company's financial statements reflect a sharp cash decline, increased liabilities, and a growing net loss, raising going concern doubts Condensed Consolidated Balance Sheets Total assets declined significantly due to decreased cash, while liabilities and the shareholders' deficit substantially increased Condensed Consolidated Balance Sheets (as of June 30, 2023 and December 31, 2022) | | June 30, 2023 (USD) | December 31, 2022 (USD) | | :--- | :--- | :--- | | Assets | | | | Cash | $1,222,660 | $5,875,796 | | Total current assets | $1,479,224 | $6,903,487 | | Total assets | $1,498,068 | $6,924,646 | | Liabilities and Shareholders' Deficit | | | | Accounts payable | $7,963,108 | $2,975,398 | | Total current liabilities | $8,738,960 | $6,413,044 | | Total liabilities | $10,026,360 | $8,272,418 | | Total shareholders' deficit | $(8,528,292) | $(1,347,772) | Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss significantly increased due to a sharp decline in other income, despite a reduction in operating expenses Operating Results Comparison (Six Months Ended June 30) | | 2023 (USD) | 2022 (USD) | | :--- | :--- | :--- | | Research and development | $4,515,967 | $5,132,416 | | General and administrative | $3,354,588 | $3,670,751 | | Loss from operations | $(7,870,555) | $(8,803,167) | | Total other income (expense), net | $599,150 | $3,963,284 | | Net loss | $(7,271,405) | $(4,839,883) | | Net loss per share, basic and diluted | $(0.85) | $(0.67) | Operating Results Comparison (Three Months Ended June 30) | | 2023 (USD) | 2022 (USD) | | :--- | :--- | :--- | | Research and development | $1,005,715 | $3,229,584 | | General and administrative | $1,894,169 | $1,635,065 | | Loss from operations | $(2,899,884) | $(4,864,649) | | Net loss | $(2,311,974) | $(2,745,038) | | Net loss per share, basic and diluted | $(0.27) | $(0.38) | Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficit) Shareholders' deficit significantly expanded, primarily driven by the net loss and foreign currency translation adjustments Changes in Shareholders' Deficit (For the Six Months Ended June 30, 2023) | Description | Amount (USD) | | :--- | :--- | | Balance, January 1, 2023 | $(1,347,772) | | Share-based compensation | $266,701 | | Foreign currency translation | $(175,816) | | Net loss | $(7,271,405) | | Balance, June 30, 2023 | $(8,528,292) | Condensed Consolidated Statements of Cash Flows Net cash used in operations improved, yet the overall cash balance significantly decreased with no investing or financing activities Cash Flow Summary (Six Months Ended June 30) | | 2023 (USD) | 2022 (USD) | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,708,976) | $(7,844,557) | | Net cash used in investing activities | $— | $(2,048) | | Net decrease in cash | $(4,653,136) | $(8,040,129) | | Cash at end of period | $1,222,660 | $8,903,776 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the company's business focus, significant going concern doubt, accounting policies, equity, and R&D commitments - The company is focused on developing antibody therapies for neurodegenerative diseases, including Alzheimer's (AD), multiple system atrophy (MSA), and amyotrophic lateral sclerosis (ALS), using its proprietary technology platform[29] - Management has identified conditions that raise substantial doubt about the Company's ability to continue as a going concern. The company had a net loss of $7.3 million for the six months ended June 30, 2023, and an accumulated deficit of $87.5 million. Additional funding is required to continue operations[34] - In May 2023, the Company entered into an agreement with a vendor 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[50] - Subsequent to the quarter end, in July 2023, the company voluntarily delisted from the Toronto Stock Exchange (TSX) to consolidate its shares on Nasdaq and re-domiciled from federal Canadian jurisdiction to the Province of Ontario[81] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's neurodegenerative disease focus, significant losses, insufficient cash for 12 months, and dependence on future funding - The company's lead product candidate is PMN310 for Alzheimer's Disease. An Investigational New Drug (IND) application was filed with the FDA in April 2023 and cleared in May 2023. A Phase 1a clinical trial is planned, contingent on securing sufficient funding[85][91] - The company's cash of $1.2 million as of June 30, 2023, is not sufficient to fund operating expenses for at least 12 months, raising substantial doubt about its ability to continue as a going concern[90][116] R&D Expenses by Program (Six Months Ended June 30) | Program | 2023 (USD) | 2022 (USD) | | :--- | :--- | :--- | | PMN310 | $2,603,786 | $2,835,605 | | ALS | $— | $404,058 | | Platform and other programs | $298,915 | $308,030 | | Total R&D Expenses | $4,515,967 | $5,132,416 | General & Administrative Expenses (Six Months Ended June 30) | Category | 2023 (USD) | 2022 (USD) | | :--- | :--- | :--- | | Professional and consulting fees | $2,573,814 | $2,807,125 | | Employee salaries and benefits | $421,933 | $378,770 | | Share-based compensation | $188,683 | $141,273 | | Total G&A Expenses | $3,354,588 | $3,670,751 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces significant liquidity and foreign currency exchange risks, with a 10% USD change impacting net loss by $0.8 million - The company's primary market risk is foreign currency exchange risk, as its functional currency is the Canadian dollar (C$) but it holds U.S. dollar (US$) denominated cash and liabilities[130] - As of June 30, 2023, a 10% change in the USD exchange rate would impact the net loss by approximately $0.8 million[130] - Liquidity risk is a major concern, as the company is pre-revenue and depends on external fundraising to support operations and meet commitments[129] Item 4. Controls and Procedures Management concluded disclosure controls were effective with no material changes to internal control over financial reporting - Management concluded that as of June 30, 2023, the company's disclosure controls and procedures were effective[133] - There were no material changes in the company's internal control over financial reporting during the quarter ended June 30, 2023[134] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings - The company is not currently involved in any material legal proceedings[136] Item 1A. Risk Factors Primary risk is financial viability, with substantial doubt about going concern due to recurring losses and need for additional funding - The company has incurred losses since inception and expects them to continue, raising substantial doubt about its ability to continue as a going concern[138] - The company had negative working capital of approximately ($7.3) million as of June 30, 2023, and will require substantial additional funds for R&D, clinical testing, and regulatory approvals[139] - A failure to obtain necessary capital could force the company to delay, limit, reduce, or terminate its development programs and commercialization efforts[138][140] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the period - None[141] Item 3. Defaults Upon Senior Securities No defaults upon senior securities occurred during the period - None[142] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[143] Item 5. Other Information No other information to report for the period - None[143] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report, including CEO/CFO certifications and XBRL data - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and Inline XBRL documents (101 series)[145]