Milestone Pharmaceuticals Inc. — Q2 2020 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2020. Milestone is a clinical-stage biopharmaceutical company developing etripamil, a self-administered nasal spray for cardiovascular conditions. It had no products approved for sale and reported no revenue.
Financial results and liquidity
| Metric (US$ millions, except per-share data) | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Research and development, net | 8.6 | 10.5 | 20.5 | 18.3 |
| General and administrative | 3.0 | 1.6 | 5.7 | 2.6 |
| Commercial | 1.5 | 2.2 | 3.7 | 4.4 |
| Net loss | 13.0 | 13.7 | 29.3 | 24.1 |
| Net loss per share | $0.53 | $1.04 | $1.20 | $3.48 |
| Operating cash used | — | — | 34.6 | 26.3 |
- Q2 operating expenses fell 8.6% year over year, but first-half expenses rose 18.2%; first-half net loss increased 21.6%. The reported lower Q2 loss per share reflects a larger weighted-average share count.
- At June 30, cash and cash equivalents were $53.4 million and short-term investments were $32.0 million, totaling $85.4 million. Current assets were $92.4 million and current liabilities $5.0 million. Accumulated deficit was $142.8 million.
- Total liabilities were $5.1 million, mainly accounts payable, accrued liabilities and operating lease liabilities; the filing reports no debt borrowings. Operating margins are not meaningful because the company had no revenue.
- First-half investing cash use was $32.0 million, primarily purchase of short-term investments; financing provided $0.2 million. Cash and cash equivalents declined by $66.4 million, partly reflecting transfers into short-term investments.
Material changes, outlook and risks
- Clinical results and regulatory pathway: The first part of the Phase 3 NODE-301 trial did not meet its primary endpoint using the original five-hour analysis (p=0.12). Under an FDA-discussed 30-minute reanalysis, 54% of etripamil patients versus 35% of placebo patients converted within 30 minutes (HR 1.87, p=0.02). The FDA indicated that NODE-301 and the amended RAPID study could potentially fulfill the efficacy requirement for an NDA; approval is not assured.
- RAPID was to reopen enrollment with an optional repeat dose for patients without symptom relief after 10 minutes. The company expected data by early 2022. COVID-19 had disrupted site initiation, enrollment and follow-up, including at NODE-303 sites.
- Management planned to reduce operating expenses by 20–25% during the remainder of 2020, mainly by cutting pre-commercialization spending. Executive base salaries were temporarily reduced by 20% (25% for the CEO) for one year. The company also said R&D spending could rise as development advances.
- In July 2020, the company received $25 million from a private placement of pre-funded warrants exercisable at $0.01 per share. It also established an at-the-market program of up to $50 million; no shares had been sold under it as of the filing. These actions provide funding but may dilute shareholders.
- Management expected existing resources and the July financing to fund operations for at least 12 months from issuance. The company nevertheless expects continued losses and may need additional financing; management cited potential dilution, financing access and program-reduction risks.
- Other key risks include clinical-trial failure or delay, regulatory uncertainty, COVID-19 effects, dependence on third-party clinical and manufacturing providers, and the single-source nasal-spray device supply. The filing reported no material legal proceedings and no material change in contractual obligations.
Important facts for investors to verify
- Final and complete NODE-301 results, including the 30-minute reanalysis, and whether regulators accept the analysis and two-study plan.
- RAPID enrollment, repeat-dose design, timing and results; any further effects of COVID-19 on trials and the expected data timeline.
- Cash burn and runway after the $25 million warrant financing, and any use of the $50 million ATM program or other financing.
- Execution and financial effects of the planned expense reductions, particularly on clinical development and the company’s ability to meet milestones.
- Potential dilution from the pre-funded warrants, outstanding options and any future equity issuance.