Milestone Pharmaceuticals Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Unaudited financial statements are presented in U.S. dollars. Milestone is a clinical-stage biopharmaceutical company developing etripamil, a self-administered nasal spray for cardiovascular arrhythmias; it had no approved products or product-sale revenue.
Financial results and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $1.5 million | — | $1.5 million | $15.0 million |
| Operating expenses | $16.5 million | $14.3 million | $47.4 million | $41.2 million |
| Operating loss | $15.0 million | $14.3 million | $45.9 million | $26.2 million |
| Net loss | $14.6 million | $14.2 million | $45.2 million | $26.0 million |
| Net loss per share | $0.34 | $0.34 | $1.07 | $0.62 |
- Q3 revenue was a license-agreement milestone payment. Nine-month 2021 revenue included a $15 million upfront license payment; therefore, the year-over-year decline is not a comparison of product sales.
- Research and development expense was $29.3 million for the first nine months, up 5.4%; general and administrative expense rose 34.6% to $11.6 million, and commercial expense rose 36.5% to $6.5 million. Higher personnel, consulting and commercial analytics costs contributed to increases.
- At September 30, cash and cash equivalents were $37.3 million and short-term investments were $39.9 million, or $77.2 million combined. Management expected existing resources to support its current operating plan through 2023.
- Operating cash use was $39.6 million for the first nine months, versus $20.8 million in 2021. Investing activities used $40.1 million, largely reflecting net purchases of short-term investments; financing provided $2.9 million, including $2.6 million net proceeds from an at-the-market share issuance.
- Total liabilities were $8.6 million, including $2.6 million of operating lease liabilities. The company reported no debt. Accumulated deficit was $251.5 million. No profit margin is meaningful given the absence of product sales and continuing losses.
Material changes and business developments
- For the nine months, net loss increased to $45.2 million from $26.0 million, while operating expenses rose 15.1%. Revenue fell from the prior-year period because 2021 included a substantial upfront license payment.
- In October 2022, after quarter-end, Milestone reported positive topline results from the Phase 3 RAPID trial in PSVT. Etripamil patients had a median conversion time of 17.2 minutes versus 53.3 minutes with placebo; 64.3% versus 31.2% converted within 30 minutes. The company said the results, together with NODE-301, could support the efficacy component of an NDA.
- The company reported it had earned a further $3.5 million license milestone following RAPID results; it expected to recognize that revenue in Q4 2022. This is separate from Q3’s $1.5 million revenue.
- After quarter-end, 3,809,523 pre-funded warrants were exercised at $0.01 per share. Common shares outstanding were 34,286,002 as of November 10, 2022, compared with 30,388,109 at September 30.
- Ji Xing, the company’s China and Taiwan partner, began enrolling patients in its Phase 3 PSVT trial in China in July 2022.
Outlook, commentary and risks
- Management expected continued losses and negative operating cash flows for at least several years, with increasing spending on etripamil development, regulatory preparation and potential commercialization. Commercial expenses could rise substantially beginning approximately six to twelve months before an NDA filing.
- Milestone planned to submit a PSVT NDA in mid-2023, subject to agency feedback. Following RAPID, it said it believed the necessary safety dataset was available and began closing the open-label NODE-303 safety trial.
- The Phase 2 ReVeRA trial for atrial fibrillation with rapid ventricular rate had slow enrollment, which the company attributed in part to emergency-department and clinical-site pressures; it was expanding to additional regions and sites.
- Key uncertainties include FDA review and approval, clinical and manufacturing execution, future financing needs and potential shareholder dilution, commercialization and reimbursement, and evolving healthcare pricing and regulatory policies. COVID-19 had affected trial enrollment and could cause further delays. The company also cited broader market volatility and financing-access risks.
- The filing reported no material legal proceedings and no material changes in contractual obligations during the nine-month period. Management concluded disclosure controls were effective at a reasonable-assurance level.
Important facts for investors to verify
- Review the full RAPID results and subsequent regulatory discussions; the positive topline announcement occurred after the September 30 reporting date.
- Confirm the timing and accounting of the additional $3.5 million milestone and assess the terms and ongoing economics of the Ji Xing license.
- Track cash burn, investment maturities and whether the stated runway through 2023 remains adequate as trial, NDA and commercialization costs rise.
- Assess dilution from warrant exercises, outstanding options and any further ATM share sales or financing.
- Monitor ReVeRA enrollment, regulatory feedback and the planned mid-2023 NDA timing, which the company described as subject to agency feedback.