Milestone Pharmaceuticals Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Financial statements are unaudited and in U.S. dollars. Milestone is a clinical-stage biopharmaceutical company developing etripamil, a self-administered nasal spray, primarily for PSVT and also for AFib-RVR. It has no approved products.
Financial highlights
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $15.0 million | $0 |
| Operating expenses | $14.3 million | $12.1 million | $41.2 million | $41.9 million |
| Net loss | $14.2 million | $12.0 million | $26.0 million | $41.3 million |
| Net loss per share | $0.34 | $0.40 | $0.62 | $1.57 |
| Operating cash used | Not provided for quarter | Not provided for quarter | $20.8 million | $42.0 million |
- Q3 R&D expense rose 18.3% to $9.7 million, reflecting higher clinical and CRO costs and personnel expense. Commercial expense increased 74.5% to $1.6 million; G&A was nearly unchanged at $3.0 million.
- Nine-month operating expenses declined 1.9%. The lower net loss primarily reflects the $15.0 million collaboration payment recognized as revenue; the company remained loss-making.
- At September 30, cash and cash equivalents were $111.4 million and short-term investments were $15.0 million, totaling $126.4 million. Total assets were $133.8 million; total liabilities were $6.4 million, including lease liabilities. No borrowings are reported.
- Nine-month cash used in operations was $20.8 million. Cash increased by $39.1 million, largely reflecting $55.0 million net proceeds from short-term investment redemptions, not positive operating cash flow. Financing provided $5.0 million, mainly from a private placement.
- No meaningful product margin is reported because there were no product sales. Interest income was $0.05 million for Q3 and $0.2 million for nine months, down year over year.
Material changes and business developments
- Under a May 2021 license and collaboration agreement, Ji Xing received exclusive etripamil development and commercialization rights in mainland China, Hong Kong, Macau and Taiwan. Milestone recognized the $15.0 million nonrefundable upfront payment when technology transfer was completed on June 22, 2021.
- The agreement also provides for up to $107.5 million in future development and sales milestones and tiered royalties. These are contingent; no future milestone or royalty revenue was recognized in the period.
- Ji Xing-affiliated purchasers also bought $5.0 million of pre-funded warrants; net proceeds were approximately $4.9 million. The warrants are immediately exercisable at $0.01 per share, subject to ownership limits. At September 30, 12.3 million pre-funded warrants and 5.8 million options were outstanding.
- Q3 2021 net loss increased 18.8% from Q3 2020, while nine-month net loss narrowed 37.1%, mainly due to the collaboration revenue and lower R&D spending.
Outlook, commentary and risks
- Management expected existing resources and financing access to fund operations into mid-2023, and stated there was no substantial doubt about the company’s ability to continue as a going concern for at least 12 months from filing. The company expects continuing losses and may need additional capital; no profitability or product-sales timing is assured.
- Management expected RAPID PSVT trial topline data in the second half of 2022. The trial was being expanded and amended, with repeat dosing permitted. The FDA indicated RAPID and completed NODE-301 could potentially together fulfill the efficacy requirement for a planned NDA.
- NODE-301 did not meet its original primary endpoint over five hours. A retrospective analysis using an updated 30-minute endpoint found conversion in 54% of etripamil patients versus 35% on placebo (HR 1.87; p=0.02). This reanalysis does not change the original trial result.
- The Phase 2 ReVeRA AFib-RVR study was expected to enroll about 50 patients; recruitment was affected by COVID-related hospital and emergency-department constraints. Management anticipated reporting results after RAPID topline results.
- COVID-19 had delayed site activation, enrollment and assessments, and could further affect trials, timelines, supply, regulatory interactions and access to capital. Other key risks include clinical and regulatory uncertainty, manufacturing and vendor execution, intellectual property, competition and future financing needs.
- There is no formal financial guidance in the filing. Management anticipated higher R&D and commercial spending as development and potential launch preparation progress.
- The filing reports no material legal proceedings, no material changes to previously disclosed risk factors, and no material changes to contractual obligations. Disclosure controls were assessed as effective at a reasonable-assurance level.
Important facts for investors to verify
- RAPID enrollment, trial execution and the targeted second-half 2022 topline timing, along with how regulators will assess the combined evidence following NODE-301’s original endpoint miss.
- Cash burn, spending plans and the assumptions supporting management’s mid-2023 runway estimate; assess potential financing and dilution needs.
- Terms, conditions and timing of Ji Xing’s future milestones and royalties, and the company’s ongoing supply responsibilities under the collaboration.
- The filing’s market-risk section states cash, cash equivalents and short-term investments of $135.8 million at September 30, while the balance sheet and liquidity discussion total $126.4 million. This discrepancy is not reconciled in the supplied filing text and should be checked against the filed statements.