Milestone Pharmaceuticals Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Amounts below are in U.S. dollars. Milestone is a clinical-stage biopharmaceutical company developing etripamil, a self-administered nasal spray, principally for paroxysmal supraventricular tachycardia (PSVT); it has no approved products or product-sale revenue.
Financial performance and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $0 | $15.0 million | $0 | $15.0 million |
| Operating expenses | $16.8 million | $14.3 million | $30.9 million | $26.9 million |
| Operating income (loss) | $(16.8) million | $0.7 million | $(30.9) million | $(11.9) million |
| Net income (loss) | $(16.6) million | $0.8 million | $(30.7) million | $(11.7) million |
| Operating cash flow | Not provided for quarter | Not provided for quarter | $(28.0) million | $(11.5) million |
- Q2 R&D expense was $10.7 million, up 13.1%; G&A was $3.9 million, up 29.8%; and commercial expense was $2.2 million, up 21.1% year over year. Six-month operating expenses rose 14.8%.
- At June 30, cash and cash equivalents were $63.2 million and short-term investments were $23.0 million, totaling $86.2 million, versus $114.1 million in cash and cash equivalents at December 31, 2021. The company reported an accumulated deficit of $237.0 million.
- Total liabilities were $4.6 million, including accounts payable and accrued liabilities and operating lease liabilities. The filing reports no borrowings or debt balance. No meaningful operating margin comparison is available given the absence of product sales.
- Six-month investing cash outflow was $23.1 million, primarily the purchase of short-term investments; financing cash inflow was $0.2 million. Cash and cash equivalents declined by $50.9 million over the period.
Material changes and business developments
- Revenue fell to zero from $15.0 million in the comparable 2021 periods. The prior-year amount was a non-refundable upfront payment under the Ji Xing license agreement; it was not recurring product revenue. The change drove the shift from Q2 2021 net income to a Q2 2022 net loss.
- R&D expense growth reflected clinical personnel, consulting and CRO costs as the PSVT Phase 3 program advanced; lower drug manufacturing and formulation costs partly offset the increase. G&A increases were primarily personnel-related and consulting costs.
- After quarter-end, in July 2022, the RAPID Phase 3 trial reached its target of 180 confirmed PSVT events for its primary efficacy analysis. Management expected topline results in the middle of the second half of 2022.
- Management reported NODE-302 open-label results: 60.2% conversion at 30 minutes among treated episodes, median conversion time of 15.5 minutes, and low reported need for emergency-department intervention. These are trial results, not evidence of regulatory approval.
- Ji Xing announced first-patient enrollment in its China Phase 3 PSVT study on July 1, 2022. Milestone’s Phase 2 ReVeRA study of etripamil for AFib with rapid ventricular rate was ongoing.
Outlook, risks and contingencies
- Management expected existing resources and potential financing sources to support operations for at least 12 months from the filing date, and stated that cash resources at June 30 were expected to fund operations into the second half of 2023. The company expects continued losses and negative operating cash flows for at least several years.
- Management expects R&D, G&A and commercial expenses to rise as development and potential commercialization preparations proceed. Commercial expenses are expected to increase substantially approximately six months to one year before an FDA NDA filing, if pursued. The filing provides no specific future expense or revenue guidance.
- Key uncertainties include clinical-trial outcomes and regulatory approval, financing needs, manufacturing and supply, intellectual property, and the ability to commercialize etripamil. COVID-19 continued to affect enrollment and clinical-site operations; further delays were possible. Management also cited market volatility, inflation and the war in Ukraine as potential financing-market risks.
- The completed NODE-301 trial did not meet its original primary endpoint, based on time to conversion over five hours. Under a later, FDA-discussed 30-minute endpoint analysis, the company reported a retrospective NODE-301 conversion rate of 54% for etripamil versus 35% for placebo (p=0.02); the filing states that RAPID was intended to provide additional efficacy data.
- No material change to previously disclosed risk factors was reported. The company reported no material legal proceedings, no material changes in contractual obligations, and no off-balance-sheet arrangements. Management concluded disclosure controls were effective at a reasonable assurance level.
Important facts for investors to verify
- Whether RAPID topline results were delivered on the expected timeline, and the full efficacy and safety findings and their regulatory implications.
- Whether the safety dataset and trial design for NODE-303 meet FDA requirements for a potential NDA.
- Actual cash burn and financing runway relative to management’s expectation of funding into the second half of 2023; potential need for additional capital and resulting dilution.
- Further COVID-19 or other operational impacts on PSVT and AFib-RVR enrollment, trial timelines, and study-drug supply.
- Progress and results of Ji Xing’s China trial and Milestone’s ReVeRA Phase 2 study.