MIRA Pharmaceuticals, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023; unaudited. MIRA is a preclinical-stage pharmaceutical company developing MIRA1a, a synthetic THC analog under investigation for anxiety, cognitive decline and neuropathic pain. It had no revenue in the periods presented.
Financial performance and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Operating costs | $970,220 | $2,420,664 | $2,309,612 | $3,891,849 |
| Net loss | $1,266,107 | $2,422,979 | $2,607,152 | $3,898,026 |
| Loss per share, basic and diluted | $0.10 | $0.19 | $0.20 | $0.30 |
Margins: Not meaningful because the company reported no revenue. Q2 2023 operating costs include research and development credits that exceeded reported R&D expense, resulting in negative R&D expense of $101,019 in the statements.
- Cash and liquidity: Cash was $24,823 at June 30, 2023, versus $350,978 at December 31, 2022. Operating cash use was $1.74 million for the first half, compared with $3.31 million a year earlier. Management said additional external funding is needed to support operations and future clinical trials.
- Debt and liabilities: The balance sheet showed $1.80 million due on a related-party line of credit and $39,611 of related-party accrued interest. Total liabilities were $2.63 million. Total assets were $3.83 million, including $3.22 million of deferred financing costs. No material conventional debt or liquidity ratios are provided.
- Equity: Stockholders’ equity was $1.20 million, compared with a deficit of $596,232 at year-end 2022. The first-half net loss was partly offset by stock-based compensation and warrant-related additional paid-in capital.
Changes versus prior comparable periods
- First-half net loss narrowed to $2.61 million from $3.90 million; Q2 net loss narrowed to $1.27 million from $2.42 million.
- First-half general and administrative expense declined to $1.69 million from $2.20 million, primarily due to lower stock-based compensation.
- Related-party travel costs fell to $453,550 for the first half from $935,700; the company terminated the related aircraft lease in March 2023. Q2 2023 had no such costs, versus $560,800 in Q2 2022.
- First-half R&D expense was $170,587 net of credits, versus $751,740 in 2022. The company attributed the credits primarily to toxicology work and milestones not performed by vendors.
- Interest expense rose to $297,540 for the first half from $6,177, largely due to approximately $293,000 of amortized debt issuance costs related to the Bay Shore Trust financing.
Outlook, risks and unusual items
- The company anticipated filing an Investigational New Drug application with the FDA by the end of Q3 2024. This is a stated target, not a guarantee; MIRA1a remained preclinical at quarter-end.
- After quarter-end, MIRA completed an IPO on August 7, 2023, selling 1,275,000 shares at $7.00 per share. The filing reports differing net proceeds: approximately $8.1 million in one note and approximately $7.61 million in the use-of-proceeds disclosure. It also reports $8.93 million of gross proceeds. The proceeds were intended primarily for development, toxicology, manufacturing/CMC work, the IND and Phase 1 studies, plus working capital.
- After the IPO, $1.1 million of Bay Shore Trust principal converted into 157,170 shares; the company also reported paying $1.0 million of the debt and approximately $30,000 of interest in August, with $3,000 of interest still payable as of the report date.
- Bay Shore Trust is a related party associated with the company’s founder. It provided an unsecured loan facility of up to $5 million and received a warrant for 1,000,000 shares at $5.00 per share. The warrant was valued at approximately $3.5 million and recorded as deferred financing costs and additional paid-in capital.
- Other notable items include a June 2023 1-for-5 reverse stock split and an amended related-party license for use of MyMD’s Supera-CBD compound as an intermediate in manufacturing MIRA1a; the license requires no cash payments but includes reciprocal information and improvement rights.
- The company cited funding availability, regulatory approval, clinical development, third-party performance, intellectual property protection and commercialization as key risks. It reported no material legal proceedings and concluded disclosure controls were effective as of June 30, 2023.
Important facts for investors to verify
- Reconcile the reported IPO net proceeds of approximately $8.1 million versus $7.61 million and confirm deductions and actual use of proceeds.
- Review post-IPO cash, debt repayments and conversion, and the remaining related-party obligations; quarter-end cash was only $24,823.
- Assess the basis and accounting for the $3.5 million Bay Shore warrant valuation, deferred financing costs and related interest expense.
- Confirm the timing and funding plan for the IND filing and subsequent clinical development; these remained future milestones.
- Evaluate related-party travel, financing and license arrangements, including their terms and potential conflicts of interest.