Milestone Pharmaceuticals Inc. — Q3 2020 Form 10-Q
Reporting period: Three and nine months ended September 30, 2020. 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 had no approved products and reported no product revenue.
Financial results and liquidity
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Research and development, net | $8.2 million | $9.5 million | $28.7 million | $27.8 million |
| General and administrative | $3.0 million | $2.1 million | $8.6 million | $4.7 million |
| Commercial | $0.9 million | $2.1 million | $4.6 million | $6.4 million |
| Operating loss | $12.1 million | $13.7 million | $41.9 million | $39.0 million |
| Net loss | $12.0 million | $12.8 million | $41.3 million | $36.9 million |
| Net loss per share, basic and diluted | $0.40 | $0.52 | $1.57 | $2.87 |
- Revenue and margins: No product revenue was reported; profitability and conventional operating margins are therefore not meaningful.
- Cash and liquidity: At September 30, cash and cash equivalents were $46.9 million and short-term investments were $56.0 million, totaling $102.9 million. Current assets were $107.4 million versus current liabilities of $5.9 million. Accumulated deficit was $154.8 million.
- Cash flow, nine months: $42.0 million used in operating activities; $56.0 million used in investing activities, primarily net purchases of short-term investments; and $25.1 million provided by financing activities, including $24.8 million net proceeds from July pre-funded warrants. Cash and cash equivalents declined $72.9 million to $46.9 million.
- Debt and obligations: The filing reports no debt. Lease liabilities totaled approximately $0.95 million, including $0.23 million current; a five-year headquarters lease renewal begins December 2020.
Changes versus prior periods
- Q3 operating expenses fell 12% and net loss narrowed 7% year over year, mainly as commercial spending declined 56% and R&D spending declined 14%. G&A rose 40%.
- For the first nine months, operating expenses rose 8% and net loss increased 12%. G&A increased 82%, reflecting public-company costs, higher headcount and share-based compensation; commercial expense fell 28% following cuts to pre-commercialization activity.
- Interest income declined substantially: to $0.1 million in Q3 from $0.8 million, and to $0.6 million for nine months from $2.0 million, due to lower rates and cash balances.
- Share-based compensation was $3.5 million for nine months, compared with $0.8 million in 2019, contributing to higher reported G&A and R&D-related costs.
Outlook, development and key risks
- Clinical program: The first part of the Phase 3 NODE-301 trial did not meet its original primary endpoint over five hours. Under an FDA-discussed revised analysis measuring conversion within 30 minutes, the company reported 54% conversion with etripamil versus 35% with placebo (p=0.02). The FDA indicated that NODE-301 and the ongoing RAPID trial could potentially fulfill the efficacy requirement for an NDA; approval is not assured.
- RAPID and other trials: RAPID is expected to enroll up to 500 patients and reach 180 confirmed SVT events. Management expected topline results in late 2021 or early 2022. NODE-302 and NODE-303 are safety studies; NODE-303 enrollment was affected by COVID-19 and its expected size was being reduced. The filing also described a planned Phase 2 study for atrial fibrillation, with data expected after RAPID topline results.
- Funding and dilution: Management expected existing resources and financing access to fund operations for at least 12 months from the financial statements’ issuance. Separately, an October 2020 public offering closed with $51.7 million gross proceeds through common shares and pre-funded warrants. A $50 million ATM program had not been used as of the filing. Future capital needs, equity dilution and access to financing remain risks.
- Spending outlook: Management expected continued losses and significant expenses for years, with R&D spending increasing as etripamil development advances. It planned a 20%–25% reduction in operating expenses during the remainder of 2020, primarily affecting pre-commercialization activity; commercial spending may increase substantially ahead of a potential launch.
- COVID-19 and other risks: COVID-19 had disrupted site initiation, enrollment and follow-up, including at NODE-303; further delays, supply issues and regulatory interaction disruptions were possible. Other material risks include the failed original NODE-301 endpoint, dependence on etripamil, regulatory uncertainty, clinical and manufacturing execution, reliance on third parties, and the possibility of needing additional funding.
- Unusual/subsequent items: July’s $24.8 million net private placement was issued as pre-funded warrants exercisable at $0.01 per share, subject to ownership limits. The October offering occurred after quarter-end. Management reported effective disclosure controls and no material legal proceedings.
Important facts for investors to verify
- Whether RAPID meets its primary endpoint and whether FDA discussions support an NDA filing, including the final required efficacy and safety dataset.
- Final trial timelines, enrollment and COVID-19 impacts, especially for RAPID and NODE-303.
- Cash use and runway, including the net proceeds and dilution from the October offering, exercise of pre-funded warrants, and any ATM sales.
- Changes in R&D, G&A and share-based compensation as clinical activity and public-company costs evolve.
- Whether etripamil can demonstrate safety, regulatory approvability and commercial demand; the company had no approved products or product revenue at quarter-end.