MyMD Pharmaceuticals, Inc. — Form 10-Q Summary
Reporting period: Quarter ended March 31, 2021. The statements primarily reflect the former Akers Biosciences business; the merger that transformed the company into MyMD Pharmaceuticals closed on April 16, 2021, after quarter-end. The company’s post-merger business is focused on drug development.
Key financial metrics
| Metric | Q1 2021 | Q1 2020 or prior balance-sheet date |
|---|---|---|
| Revenue from continuing operations | $0 | $0 |
| Research and development expense | $(19,365) credit | $2,483,057 expense |
| Administrative expense | $1,508,336 | $1,055,148 |
| Operating loss | $1,488,971 | $3,544,455 |
| Net loss | $1,482,663 | $3,538,536 |
| Operating cash flow | $(2,482,947) | $(1,966,983) |
| Cash and cash equivalents | $569,366 | $18,617,955 at Dec. 31, 2020 |
| Marketable securities | $30,480,537 | $16,718,452 at Dec. 31, 2020 |
| Working capital | $31,923,792 | Not stated for comparison |
| Total liabilities | $2,374,059 | $2,263,295 at Dec. 31, 2020 |
Gross margin is not meaningful because continuing operations had no revenue. The company reported no income tax benefit. The quarter’s R&D credit reflected reversals/waivers related to the advisory board and vaccine-license obligations, not recurring operating income.
Changes and business developments
- Net loss narrowed year over year, principally because Q1 2020 included substantial COVID-19 vaccine license and development costs. Administrative expense rose 43%, mainly due to professional fees, investor and regulatory costs, and restricted-stock-unit expense.
- Cash declined sharply, while marketable securities increased. Investing activities used $15.6 million, including $15.3 million of securities purchases and $1.8 million advanced under the MyMD Florida bridge loan. The loan and accrued interest became intercompany balances and were eliminated after the merger.
- On April 16, 2021, the merger closed; former MyMD Florida holders owned approximately 77.05% and former Akers holders approximately 22.95% on a fully diluted basis. The company changed its name and ticker to MyMD Pharmaceuticals and MYMD and effected a 1-for-2 reverse stock split.
- The company contributed substantially all COVID-19 vaccine assets to Oravax in exchange for 390,000 shares, representing approximately 13% of Oravax, and future royalties of 2.5% of qualifying net sales. It committed $1.5 million in cash to Oravax.
Outlook, risks, and unusual items
- Management stated that resources available at the financial-statement issuance date were expected to fund the current operating budget and contractual obligations for at least 12 months. The filing also cautions that substantial additional funding will be needed to develop the product candidates; future financing may be unavailable or dilutive.
- Post-merger priorities are MyMD-1, a clinical-stage candidate for inflammatory and autoimmune conditions, and Supera-CBD, a preclinical-stage candidate. Management discussed planned Phase 2 development for MyMD-1 and IND-enabling work for Supera-CBD; no revenue or quantified financial guidance was provided.
- Material risks include clinical and regulatory failure or delay, reliance on third parties for trials and manufacturing, competition, intellectual-property challenges, financing needs, stock-price volatility and dilution, and possible COVID-19-related disruption.
- Eight of nine merger-related stockholder lawsuits had been dismissed by May 17, 2021; one remained pending. The company said it considered the claim without merit and did not expect a material adverse effect. A separate whistleblower-retaliation lawsuit was filed in April 2021; the company had not yet been served and likewise did not expect a material adverse effect.
- Merger pro forma results are illustrative: they show no revenue and a combined Q1 2021 net loss from continuing operations of approximately $4.44 million. The filing says purchase-price allocation and certain transaction estimates were preliminary.
Most important facts for investors to verify
- Post-merger cash, marketable securities, actual cash burn, and runway, including the effect of merger-related payments and commitments.
- Clinical-trial timelines, regulatory milestones, and funding requirements for MyMD-1 and Supera-CBD.
- Final merger accounting and purchase-price allocation, plus actual transaction costs and any contingent consideration or dilution.
- Progress and value of the Oravax investment and whether its vaccine program generates royalties.
- Status and potential costs of the remaining merger litigation and the separate lawsuit.