Milestone Pharmaceuticals Inc. — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020; filed May 14, 2020. Financial statements are unaudited and amounts are in U.S. dollars unless stated otherwise.
Business context
Milestone is a clinical-stage biopharmaceutical company developing etripamil, a self-administered nasal spray, primarily for paroxysmal supraventricular tachycardia (PSVT). The company had no approved products or product revenue and remained dependent on external financing and clinical-development progress.
Financial and operating results
| Metric | Q1 2020 | Q1 2019 |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense, net | $11.9 million | $7.8 million |
| General and administrative expense | $2.7 million | $1.0 million |
| Commercial expense | $2.2 million | $2.2 million |
| Operating loss | $16.8 million | $10.9 million |
| Net loss | $16.3 million | $10.5 million |
| Basic and diluted loss per share | $0.67 | $17.32 |
| Net cash used in operating activities | $18.1 million | $14.7 million |
Cash and cash equivalents were $101.8 million at March 31, 2020, down from $119.8 million at year-end 2019. The company reported total liabilities of $5.5 million, including $5.2 million of accounts payable and accrued liabilities and $0.4 million of operating lease liabilities. No borrowings or other debt were disclosed. Total assets were $105.2 million; accumulated deficit was $129.8 million. Operating margin is not meaningful given the absence of revenue.
Changes versus prior period
- Net loss increased 56.4%, reflecting higher R&D spending and increased G&A costs; R&D rose 52.9% and G&A rose 176.1% year over year.
- R&D spending chiefly supported Phase 3 PSVT trials. G&A growth reflected increased administrative headcount, public-company insurance, consulting and professional fees.
- Operating cash use increased by $3.3 million year over year. Cash declined by $18.0 million during Q1 2020; financing provided $77,000, mainly from option exercises.
Clinical outlook, management commentary and risks
- NODE-301 setback: The first part of the Phase 3 pivotal trial did not meet its primary endpoint for time to conversion over five hours: median conversion time was 25 minutes for etripamil versus 50 minutes for placebo (p=0.12). Conversion within 45 minutes was 61% versus 45% (p=0.02). Treatment-satisfaction secondary measures favored etripamil; fewer etripamil patients reported rescue medical intervention, but the difference was not statistically significant (15% versus 27%; p=0.12).
- NODE-301B was continuing; management planned to analyze its results separately. The company expected FDA guidance early in Q3 2020 on whether NODE-301 and NODE-301B data could support the registration plan. The filing does not establish the FDA’s eventual position or the final development pathway.
- NODE-302, an open-label safety extension, had enrolled more than 150 patients as of May 1, 2020 and was planned for completion in 2020. NODE-303 was also an ongoing open-label safety trial. The company planned a Phase 2 proof-of-concept trial for atrial fibrillation in 2020.
- Management expected current cash and its operating plan to fund operations for at least 12 months, with no conditions identified that raised substantial doubt about going concern. The company nevertheless expected continuing losses and stated it may need additional financing; no committed external funding source was disclosed.
- Management expected R&D expenses to remain relatively flat and planned to reduce operating expenses by 20%–25% during the remainder of 2020, primarily by curtailing pre-commercialization activities while focusing on an optimized etripamil development path. Spending and timing remained subject to regulatory feedback and clinical-development uncertainty.
- COVID-19 had begun affecting recruitment, enrollment and follow-up visits at clinical sites. The company warned of possible clinical delays, disruption to vendors and supply, remote-work productivity and cybersecurity risks, and potential difficulty accessing capital. The ultimate impact was uncertain.
- Other material risks include the failed NODE-301 primary endpoint, regulatory approval and clinical safety/efficacy uncertainty, reliance on third-party manufacturers and CROs, single-source nasal-device supply, future financing needs, and commercialization, reimbursement and intellectual-property risks. No material legal proceedings or material changes to contractual obligations were reported. Disclosure controls were assessed as effective at a reasonable-assurance level.
Investor verification priorities
- Confirm FDA feedback and the resulting pivotal-trial and registration strategy, including whether NODE-301B can contribute to an NDA.
- Review final NODE-301 and NODE-301B efficacy and safety results, and the status, enrollment and completion timing of NODE-302 and NODE-303.
- Track actual cash burn, cash runway, expense reductions and any need for additional capital against management’s 12-month funding assessment.
- Assess the operational and timeline effects of COVID-19 on trial enrollment, follow-up, study-drug supply and third-party execution.
- Monitor progress on reliable nasal-spray device supply and the regulatory requirements for the drug-device combination.