Milestone Pharmaceuticals Inc. — Q2 2019 Form 10-Q
Reporting period: Three and six months ended June 30, 2019. The company is a Phase 3 clinical-stage biopharmaceutical developer focused on etripamil, a self-administered nasal spray candidate for paroxysmal supraventricular tachycardia (PSVT). It had no approved products or product revenue.
Financial results and position
| Metric | Q2 2019 | Q2 2018 | Six months 2019 | Six months 2018 |
|---|---|---|---|---|
| Revenue | None reported | None reported | None reported | None reported |
| Research and development expense, net | $10.5 million | $2.6 million | $18.3 million | $5.6 million |
| General and administrative expense | $1.6 million | $0.8 million | $2.6 million | $1.2 million |
| Commercial expense | $2.2 million | $0.4 million | $4.4 million | $1.1 million |
| Net loss | $13.7 million | $3.6 million | $24.1 million | $7.8 million |
| Net loss per share | $1.04 | $12.71 | $3.48 | $28.20 |
At June 30, 2019, cash and cash equivalents were $110.8 million and short-term investments were $35.0 million, totaling $145.8 million in cash, cash equivalents and short-term investments. Current assets were $151.6 million; total liabilities were $6.5 million; and accumulated deficit was $82.4 million. The company reported no debt. Operating cash use was $26.3 million in the first half; investing activities used $35.0 million, primarily for short-term investments; financing activities provided $86.1 million, principally from the IPO. No operating margin is meaningful because the company had no revenue.
Management estimated that available cash, cash equivalents and short-term investments would fund operations into the third quarter of 2021, based on its current plan and assumptions. It expected significant losses and rising expenses to continue.
Changes and notable transactions
- R&D spending rose 313% year over year in Q2 and 224% for the first half, primarily reflecting Phase 3 PSVT studies, related personnel costs and trial support. Higher commercial spending reflected increased headcount, market research and patient-awareness work; G&A rose with staffing, IPO-related professional fees and public-company insurance costs.
- In May 2019, the company completed its IPO, issuing 6.325 million shares at $15 per share, including the fully exercised over-allotment. Net proceeds were $85.4 million. Preferred shares converted into 17.551 million common shares. The filing said IPO proceeds had not yet been used and were held in cash equivalents and short-term securities.
- The company adopted the lease accounting standard effective January 1, 2019, recording a $0.3 million right-of-use asset and corresponding lease liabilities. It reported no material effect on results or cash flows.
- Short-term investments were $35.0 million at June 30, 2019, consisting of U.S.-dollar term deposits earning 2.47%–2.48% and maturing in September–October 2019.
Outlook, development and risks
- Management expected top-line results from the NODE-301 Phase 3 PSVT trial in the first half of 2020. Following FDA agreement, the trial target increased from 100 to 150 adjudicated PSVT events; the company said event rates were ahead of its initial projections. Blinded data collection was to continue for a separate secondary dataset, NODE-301B.
- The FDA agreed that enrollment in the planned NODE-303 open-label safety study could begin without the in-office safety test dose used in NODE-301 and include a broader patient population. The company expected to start NODE-303 before year-end 2019, and planned a Phase 2 atrial-fibrillation trial in Q4 2019, followed by an angina proof-of-concept trial.
- The company cited Phase 2 results showing termination of induced PSVT within 15 minutes in 87% of patients at the 70 mg dose versus 35% with placebo. It cautioned that Phase 2 results may not translate to Phase 3’s outpatient, self-administration setting. It also disclosed three Phase 2 serious adverse events considered possibly related to etripamil, including a second-degree AV block that resolved.
- Material development risks include the uncertainty of completing the pivotal trial and obtaining approval; the possibility that regulators may require additional efficacy trials; episodic events and patient enrollment or self-administration challenges; and potential safety or device issues. Etripamil’s nasal device came from a single-source supplier, and the company did not yet have commercial supply agreements for drug product, drug substance or device.
- Management said additional funding may be needed sooner than forecast if assumptions prove incorrect. The company had no committed external funding source and noted that future financing could dilute shareholders or constrain operations. Other risks include uncertain commercialization, reimbursement, competition, intellectual-property protection and dependence on contract manufacturers and research organizations.
Investor facts to verify
- Track NODE-301 enrollment, adjudicated-event progress, data timing and final efficacy and safety results against the first-half 2020 expectation.
- Confirm whether the FDA requires further trials or changes to the NDA evidence plan, including the implications of the single-efficacy-trial design.
- Monitor cash burn, trial and commercialization spending, and whether the projected runway into Q3 2021 remains achievable.
- Check progress on backup nasal-device suppliers and commercial manufacturing and supply agreements.
- Review adverse-event updates and the effect of the expanded NODE-303 population and protocol on safety findings.
Other filing notes: Management reported disclosure controls were effective at a reasonable assurance level; internal-control effectiveness was not evaluated in this newly public company’s 10-Q. The company reported no material legal proceedings and no off-balance-sheet arrangements.