Milestone Pharmaceuticals Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Unaudited financial statements are in U.S. dollars; financial figures below are in millions unless stated otherwise. Milestone is a clinical-stage cardiovascular drug developer; it had no approved products or product-sale revenue.
Financial performance and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $1.5 | $1.0 | $1.5 |
| Operating expenses | $15.4 | $16.5 | $48.3 | $47.4 |
| Operating loss | $15.4 | $15.0 | $47.3 | $45.9 |
| Net loss | $15.1 | $14.6 | $46.1 | $45.2 |
| Net loss per share | $0.35 | $0.34 | $1.07 | $1.07 |
| Operating cash used | Not stated for quarter | Not stated for quarter | $36.6 | $39.6 |
- Q3 revenue was zero. The $1.0 million nine-month revenue was a milestone payment from Ji Xing after initiation of a Phase 1 PSVT trial in its territory; the prior-year $1.5 million was a separate Ji Xing milestone.
- Q3 R&D expense fell 31.6% to $6.7 million, mainly as Phase 3 clinical work concluded. Nine-month R&D declined 12.5% to $25.6 million. Commercial expense rose 65.2% in Q3 and 55.1% for nine months as the company prepared for potential commercialization.
- At September 30, cash and cash equivalents were $9.9 million and short-term investments were $65.9 million, totaling $75.7 million in cash, cash equivalents and short-term investments. Management expected these resources and its operating plan to fund operations for at least 12 months from the filing’s issuance date.
- Cash used in investing activities was $8.9 million for the first nine months; financing provided $47.8 million, principally from the convertible-note issuance. Cash and cash equivalents increased $2.2 million over the period to $9.9 million.
- Senior secured convertible notes had a $48.9 million net carrying value at quarter-end, against $50.0 million principal plus $1.5 million of payment-in-kind interest, before unamortized discounts and issuance costs. The notes bear 6% interest, mature March 31, 2029, are convertible initially at about $5.23 per share, and are secured by substantially all company and subsidiary-guarantor assets. Interest may be paid in kind at the company’s option during the first three years.
- Shareholders’ equity was $28.5 million, down from $66.3 million at year-end 2022; accumulated deficit was $312.4 million. The filing reported 33.5 million common shares outstanding at September 30 and 33,483,111 as of November 13, 2023. Pre-funded warrants and options are additional potential sources of dilution.
Material changes and business developments
- PSVT: The company submitted an NDA to the FDA on October 23, 2023, seeking approval of etripamil nasal spray for PSVT. The filing describes positive Phase 3 RAPID results: 64.3% of etripamil patients versus 31.2% of placebo patients converted to sinus rhythm within 30 minutes; median conversion time was 17.2 versus 53.3 minutes. The earlier NODE-301 trial did not meet its five-hour primary endpoint, although analyses at earlier time points showed treatment effects.
- AFib-RVR: On November 11, 2023, the company announced positive Phase 2 ReVeRA results. Etripamil’s maximum ventricular-rate reduction was 29.91 beats per minute greater than placebo (p<0.0001). The filing reports two serious adverse events in one etripamil-treated patient, including transient severe bradycardia and syncope, which resolved without sequelae. Management planned to propose a Phase 3 at-home study to the FDA in Q1 2024; a study might begin in mid-2024 and take about two years to report top-line results. These are forward-looking plans, not guaranteed timelines.
- The company entered into a conditional royalty sale agreement under which RTW would pay $75 million after FDA approval of etripamil, subject to conditions including approval by September 30, 2025. In return, RTW would receive tiered royalties on U.S. net sales. This was not recognized as funding in the quarter.
Outlook, risks and other notable items
- Management expects continued operating losses and significant spending for the foreseeable future, including on development, regulatory review and preparations for a potential U.S. launch. The company cannot reliably estimate development costs or when, if ever, it will achieve product revenue or profitability.
- Management said there were no conditions casting substantial doubt on the company’s ability to continue as a going concern for at least 12 months from filing. If additional financing is needed, equity could dilute shareholders and debt could add repayment obligations or restrictive covenants; failure to obtain funding could force spending cuts or program delays.
- Key risks include clinical and regulatory uncertainty, manufacturing and supply requirements, commercialization and market acceptance, payer coverage and reimbursement, competition, intellectual-property protection, and healthcare reform and drug-pricing changes. The filing also cites inflation, interest rates, geopolitical events and financial-market conditions as potential pressures.
- The filing reported no material legal proceedings and no material changes to previously disclosed risk factors other than the added discussion of healthcare legislative reform. Management concluded disclosure controls were effective at a reasonable-assurance level and reported no material change in internal control over financial reporting.
Investor verification priorities
- FDA acceptance and review of the PSVT NDA, regulatory timeline, and any additional data or manufacturing requirements.
- Whether cash, investments and operating burn support the stated runway, and how spending changes as potential launch preparations and AFib-RVR development proceed.
- Conditions and deadline for the contingent $75 million royalty transaction, and the long-term cost of the associated sales royalties if completed.
- Convertible-note terms and potential dilution, including payment-in-kind interest, conversion provisions and the broad collateral package.
- ReVeRA safety findings and the design, FDA alignment, funding and timing of any AFib-RVR Phase 3 trial.