MyMD Pharmaceuticals, Inc. (Nasdaq: MYMD) — Form 10-Q summary
Reporting period: Quarter and nine months ended September 30, 2023; filed November 14, 2023. MyMD is a clinical-stage biopharmaceutical company developing MYMD-1 and Supera-CBD. It reported no product revenue; gross profit and margins are therefore not meaningful for the period.
Key financial metrics
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| Revenue | $0 in 2023 and 2022 | $0 in 2023 and 2022 |
| Operating expenses | $3.84 million vs. $3.71 million | $12.21 million vs. $11.47 million |
| Operating loss | $3.84 million vs. $3.71 million | $12.21 million vs. $11.47 million |
| Net income (loss) | $4.04 million vs. $(3.69) million | $(1.64) million vs. $(11.45) million |
| Net income (loss) attributable to common stockholders | $2.88 million vs. $(3.69) million | $(3.33) million vs. $(11.45) million |
| Cash used in operating activities | Not separately stated for the quarter | $11.05 million vs. $10.02 million |
Third-quarter net income reflected $7.92 million of gains from changes in the fair value of warrant and derivative liabilities, partly offset by other items. For the nine-month period, $10.42 million of such gains substantially reduced the reported net loss; these are noncash valuation changes, not operating revenue. Preferred-stock dividends were $1.69 million for the nine months.
At September 30, cash and cash equivalents were $0.30 million and marketable securities were $8.17 million. Working capital was $4.04 million; total assets were $21.83 million, total liabilities $5.72 million, and stockholders’ equity $15.50 million. The filing reports no conventional borrowings, but Series F preferred stock carries monthly redemption installments and a 10% annual dividend, compounded monthly. Lease liabilities totaled approximately $0.09 million.
Material changes versus comparable periods
- Quarterly operating expenses increased 4% year over year. For the nine months, expenses increased 6%, including $2.34 million of stock-based compensation and $0.76 million of warrant-issuance expense.
- Nine-month R&D expense declined to $4.91 million from $6.60 million, principally because some costs previously reported as regulatory expense were allocated to development programs; management also cited completion of the sarcopenia Phase 2 study and preparation of results.
- Operating cash use rose to $11.05 million from $10.02 million. The company raised $14.69 million net from the February 2023 Series F preferred-stock offering; investing activities used $4.09 million, primarily reflecting purchases of marketable securities.
- Common shares outstanding rose from 39.47 million at December 31, 2022 to 47.00 million at September 30, 2023. The filing reports 50.90 million shares outstanding as of November 10, 2023. Preferred-stock conversions and potential future share payments create further dilution risk.
Outlook, risks and unusual items
- Management said financial resources were sufficient for its current operating budget and obligations for 12 months from issuance of the statements. It also said substantial additional funding will be needed to support its broader development and growth plans. If Series F payments due over the following 12 months were made entirely in cash, the company estimated payments could reach $14.3 million; alternatively, share settlement could require up to 4.4 million shares at the stated assumptions. Actual amounts or shares may be higher under the terms.
- The company has no product sales and expects no near-term product revenue. MYMD-1 is in development for inflammatory conditions; the filing describes Phase 2 sarcopenia results and FDA acceptance of an investigational application for evaluation in rheumatoid arthritis. Development, regulatory approval, financing, commercialization and intellectual-property protection remain material risks. These program descriptions include company-reported claims, not assurance of future results.
- On October 11, 2023, Nasdaq notified the company that its share price had failed the $1.00 minimum bid-price requirement. It had until April 8, 2024 to regain compliance; delisting was not immediate, but failure to comply could affect liquidity and future financing.
- In October 2023, the company eliminated three of its ten employees, with approximately $104,000 in expected severance expense. In November, it reduced or deferred certain executive and director compensation and disclosed an executive separation. These post-quarter actions indicate cost containment and should be considered alongside management’s liquidity assessment.
- The company recorded a $178,198 loss from wire fraud involving a compromised email account. An insurance claim was filed November 9, 2023; investigation and recovery remained pending. A whistleblower-related lawsuit was in discovery as of September 30, 2023.
- The Series F preferred stock and related warrants include redemption, dividend, price-adjustment and other provisions. The company classifies associated warrants and embedded features as liabilities using Level 3 valuation models; changes in estimates can materially affect reported earnings.
Important facts for investors to verify
- Cash runway and upcoming Series F installment, dividend and redemption obligations, including whether payments will be settled in cash or shares.
- Potential dilution from preferred conversions, warrants, options and the post-quarter increase in shares outstanding.
- Nasdaq bid-price compliance progress and any proposed measures to regain or maintain listing.
- Clinical-trial plans, timing, costs and regulatory feedback for MYMD-1 and Supera-CBD, as well as the evidence supporting management’s development claims.
- Status of the wire-fraud insurance claim and litigation, and the effect of workforce and compensation reductions on operating plans.