ProMIS Neurosciences Inc. — FY2023 Form 10-K Summary
Business context and reporting period
ProMIS Neurosciences is a Canadian clinical-stage biotechnology company developing antibody therapies, therapeutic vaccines and related products for neurodegenerative diseases involving misfolded proteins. Its principal programs are PMN310 for Alzheimer’s disease, PMN267 for ALS and PMN442 for multiple system atrophy and other synucleinopathies. The filing covers the fiscal year ended December 31, 2023; it is an annual report rather than a quarterly filing.
ProMIS has no approved products, has never generated product-sale revenue and operates primarily through external financing. Its common shares trade on Nasdaq under the symbol PMN. The company had six full-time and one part-time employees at December 31, 2023, with additional scientific and operating support provided by consultants.
Key financial metrics
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Revenue | $0 | $0 | No product revenue in either period |
| Research and development expense | $7.9 million | $16.1 million | Down $8.2 million, or 51% |
| General and administrative expense | $6.4 million | $7.3 million | Down $0.9 million, or 13% |
| Total operating expenses | $14.3 million | $23.4 million | Down $9.1 million |
| Loss from operations | $(14.3) million | $(23.4) million | Improved by $9.1 million |
| Net loss | $(13.2) million | $(18.1) million | Improved by $4.8 million |
| Basic and diluted loss per share | $(1.07) | $(2.41) | Improved |
| Net cash used in operating activities | $(10.8) million | $(17.0) million | Improved by $6.2 million |
| Net cash from financing activities | $17.7 million | $6.5 million | Increased by $11.3 million |
| Cash at year-end | $12.6 million | $5.9 million | Increased by $6.7 million |
| Accumulated deficit | $93.5 million | $80.3 million | Increased by $13.2 million |
Year-end total assets were $13.6 million, total liabilities were $9.9 million and shareholders’ equity was $3.8 million. Current liabilities included $7.8 million of accounts payable and $1.5 million of accrued liabilities. The filing states that approximately $5.7 million owed to a vendor was deferred until March 31, 2024 and accrued interest at 5.5% annually.
The company reported no debt outstanding at December 31, 2023. Its remaining warrant liability was $94,185, and its share-based compensation liability was $422,002.
Material changes versus the prior comparable period
- R&D spending declined primarily because FY2022 included substantial PMN310 drug-substance manufacturing and preclinical costs related to the IND filing. PMN310 spending fell from $10.5 million to $4.8 million.
- PMN310’s FDA IND was cleared in May 2023, and its Phase 1a single-ascending-dose trial began in November 2023 in healthy volunteers at doses ranging from 2.5 to 40 mg/kg, with potential escalation to 60 mg/kg.
- The company raised approximately $20.5 million gross in an August 2023 private placement of common shares and pre-funded warrant units, generating approximately $17.7 million of net financing cash after issuance costs and related transactions.
- In December 2023, 70 million Series 1 convertible preferred shares were exchanged for 1,166,667 Series 2 convertible preferred shares. The Series 2 shares convert one-for-one into common shares and automatically convert upon a qualifying equity financing of at least $14.0 million.
- The company’s functional currency changed from the Canadian dollar to the U.S. dollar effective July 1, 2023 following its voluntary Toronto Stock Exchange delisting. This resulted in reclassification of certain historical warrants and options between equity and liability classifications.
- The 2023 net loss benefited from $1.1 million of net other income, including an $866,738 gain from changes in fair value of financial instruments. FY2022 included a larger $5.3 million net other-income benefit, including a $1.3 million gain on extinguishment of convertible debt and derivative liabilities.
Guidance, outlook and management commentary
- Management expects continued net losses and negative operating cash flow for at least the next several years.
- For 2024, the company planned to complete the PMN310 Phase 1a study in healthy volunteers, prepare for a Phase 1b study in Alzheimer’s patients and conduct additional preclinical work on pipeline candidates.
- Phase 1a PMN310 data were expected in mid-2024. Subject to FDA feedback and additional funding, the company expected to initiate the Phase 1b multiple-ascending-dose study in the second half of 2024.
- In January 2024, ProMIS entered into an at-the-market offering program permitting sales of up to $25.0 million of common shares. As of the financial statement issuance date, it had sold 75,862 shares for approximately $194,000 of gross proceeds.
- Management intends to rely on third-party collaborators or strategic partners for future manufacturing, marketing and sales, and expects potential future revenue to come from licensing fees, milestones, research funding, royalties or product sales.
Liquidity, going concern and principal risks
The auditor included a going-concern uncertainty paragraph. Management stated that the $12.6 million of cash at December 31, 2023 would not be sufficient to fund operating expenses for at least 12 months from issuance of the financial statements. The filing states that there is substantial doubt about the company’s ability to continue as a going concern within that period. Additional equity, debt, collaboration or licensing financing is required, and failure to obtain funding could delay, reduce or terminate development programs and other operations.
- PMN310, PMN267 and PMN442 remain early-stage candidates, and none has demonstrated clinical efficacy or received regulatory approval.
- Preclinical and early clinical results may not predict later clinical outcomes. Alzheimer’s disease development carries particularly high scientific, regulatory and execution risk.
- PMN310’s proposed safety advantage from avoiding plaque binding and potentially reducing ARIA remains an unproven hypothesis pending human clinical data.
- The company depends substantially on contract research organizations, clinical sites, manufacturers, licensors and potential commercialization partners.
- Product candidates have not been manufactured at commercial scale, creating process, cost, supply, reproducibility and regulatory risks.
- The company faces intense competition from approved and investigational Alzheimer’s therapies, including lecanemab and other anti-amyloid programs.
- Future financing may substantially dilute existing shareholders. At December 31, 2023, the company had 13.6 million warrants, 1.2 million convertible preferred shares and approximately 0.9 million options outstanding or reserved for issuance, subject to the terms described in the filing.
- The company’s UBC license requires annual fees and future low-to-high-single-digit royalties on revenue, and could be terminated for specified breaches or other events.
- No material cybersecurity incident was identified, and management assessed disclosure controls and internal control over financial reporting as effective; however, the company remains exposed to cyber, privacy and third-party system risks.
Most important facts for an investor to verify
- Whether PMN310 Phase 1a results demonstrate acceptable safety, tolerability, CSF exposure and target engagement, and whether the FDA permits the planned Phase 1b design.
- Actual cash usage after December 31, 2023, including settlement of the approximately $5.7 million deferred vendor balance and proceeds from the $25.0 million ATM program.
- The timing and terms of additional financing required to fund PMN310 and other programs, including potential dilution from common shares, preferred shares and warrants.
- Whether the company can maintain Nasdaq listing compliance and satisfy its near-term liquidity and going-concern requirements.
- Clinical evidence supporting PMN310’s proposed differentiation from plaque-binding anti-amyloid antibodies, including whether ARIA risk and cognitive benefit are improved.
- Progress toward IND-enabling studies for PMN267 and PMN442 and the availability of sufficient manufacturing capacity and third-party support.
- The status and enforceability of the UBC license and patent portfolio, including any milestone, royalty or maintenance obligations.