Business Context and Reporting Period
ProMIS Neurosciences Inc. is a Canadian pre-revenue biotechnology company developing antibody therapies, vaccines and other antibody-based products for neurodegenerative and misfolded-protein diseases, including Alzheimer’s disease, ALS and synucleinopathies. The filing covers the unaudited three and six months ended June 30, 2022, reported in U.S. dollars.
The lead programs are PMN310 for Alzheimer’s disease, PMN267 for ALS and PMN442 for alpha-synuclein-related diseases. The company began trading its common shares on Nasdaq under PMN on July 8, 2022, while continuing to trade on the TSX.
Financial Metrics
| Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $3.23 million | $5.13 million |
| General and administrative expense | $1.64 million | $3.67 million |
| Loss from operations | $(4.86) million | $(8.80) million |
| Net loss | $(2.75) million | $(4.84) million |
| Net loss per common share | $(0.38) | $(0.67) |
| Net cash used in operating activities | Not separately provided | $(7.84) million |
- Cash and cash equivalents were $8.90 million at June 30, 2022, compared with $16.94 million at December 31, 2021. Short-term investments were $0.03 million.
- Total assets were $10.19 million and total liabilities were $3.48 million at June 30, 2022.
- The company had no convertible debt or derivative liability at June 30, 2022. Warrant liability was $1.61 million.
- Accumulated deficit was $67.03 million at June 30, 2022.
- No operating margin or revenue-based profitability metric is meaningful because the company has not generated product revenue.
Material Changes Versus Prior Comparable Period
- Six-month research and development expense increased $4.16 million, or 427%, to $5.13 million, primarily due to higher PMN310 preclinical and external research costs, increased ALS spending, additional personnel and consulting expenses.
- Six-month general and administrative expense increased $2.97 million, or 425%, to $3.67 million. The increase included approximately $1.1 million of one-time Nasdaq-listing costs, higher consulting, investor-relations, legal, recruiting and personnel costs.
- Six-month net loss improved from $6.33 million to $4.84 million, despite substantially higher operating expenses, primarily because 2022 included favorable changes in financial-instrument fair values and a $1.31 million gain on extinguishment of convertible debt and the related derivative liability.
- Operating cash use increased from $2.23 million to $7.84 million, while 2022 had no financing proceeds compared with $6.88 million of convertible-debt proceeds in the first half of 2021.
- Between June 17 and June 19, 2022, holders converted the entire $7.0 million of outstanding convertible debentures into 70 million Series 1 Convertible Preferred Shares. The preferred shares are initially convertible into approximately 1.17 million common shares, subject to the stated terms.
- The company effected a 60-for-1 reverse share split on June 28, 2022; share and per-share information was retrospectively adjusted in the financial statements.
Guidance, Outlook, Risks and Unusual Items
- Management expects available funds to cover operating expenses for at least 12 months from the issuance date of the financial statements, but states that additional funding will be required for future research, preclinical and clinical activities.
- Potential funding sources include public or private equity, debt, collaborations, strategic alliances and licensing transactions. There is no assurance that financing will be available on acceptable terms or at all.
- PMN310 producer-cell-line development was completed, GLP toxicology and related studies were being advanced, and cGMP material was planned for potential initial clinical trials. Formulation work was expected to be completed in the third quarter of 2022.
- PMN267 was selected as the lead ALS candidate and was undergoing humanization. PMN442 remained in preclinical development, with mouse-model results expected in the second half of 2022.
- The company expects continuing losses for the foreseeable future and increased research, development, regulatory, public-company and potential commercialization costs.
- Material risks include the need for additional capital, preclinical and clinical failure, inability to obtain regulatory approvals, uncertainty regarding commercialization, dependence on third-party research providers, intellectual-property risks, foreign-exchange exposure and increased U.S. public-company compliance costs.
- COVID-19-related delays, supply-chain and vendor timing risks, conference disruptions and financing-market volatility could affect development activities and access to capital.
- Research, development and license agreements may require future milestone payments and royalties, but no milestone or royalty amounts required accrual through June 30, 2022.
- As of June 30, 2022, the company had 7.20 million common shares outstanding, 1.56 million warrants, 0.83 million options and preferred-share conversion rights representing approximately 1.17 million common-share equivalents.
Important Facts for Investors to Verify
- Whether the company can raise sufficient additional capital before cash resources are depleted and on terms that do not cause substantial dilution or unfavorable obligations.
- The timing, cost and results of PMN310 GLP toxicology, manufacturing, formulation and potential IND-enabling activities.
- Whether PMN267 and PMN442 generate reproducible preclinical efficacy and safety data sufficient to support clinical development.
- The conversion, voting, liquidation and mandatory-conversion provisions of the 70 million Series 1 Convertible Preferred Shares.
- The potential dilution and cash proceeds associated with 1.56 million outstanding warrants, 0.83 million options and other reserved common-share equivalents.
- The extent to which Nasdaq listing, compliance, legal, investor-relations and other public-company costs continue to increase general and administrative spending.
- The valuation sensitivity of the remaining warrant liability and the effect of future non-cash fair-value changes on reported earnings.