Milestone Pharmaceuticals Inc. — Q3 2019 Form 10-Q
Reporting period: Three and nine months ended September 30, 2019. All amounts are in U.S. dollars; financial statement amounts are generally in millions unless noted. Milestone is a clinical-stage biopharmaceutical company developing etripamil, a self-administered nasal spray, principally for paroxysmal supraventricular tachycardia (PSVT). It has no approved products and reported no revenue.
Key financial metrics
| Metric | Q3 2019 | Q3 2018 | Nine months 2019 | Nine months 2018 |
|---|---|---|---|---|
| Research and development expense, net | $9.5 | $3.9 | $27.8 | $9.6 |
| General and administrative expense | $2.1 | $0.6 | $4.7 | $1.8 |
| Commercial expense | $2.1 | $1.2 | $6.4 | $2.3 |
| Total operating expenses / operating loss | $13.7 | $5.8 | $39.0 | $13.7 |
| Net loss | $12.8 | $5.7 | $36.9 | $13.5 |
| Basic and diluted loss per share | $0.52 | $20.16 | $2.87 | $48.46 |
At September 30, 2019, cash and cash equivalents were $106.5 million and short-term investments were $30.0 million, totaling $136.5 million. Current assets were $141.0 million, total liabilities $9.1 million, and accumulated deficit $95.2 million. The company reported no debt. Profit margins are not meaningful because the company had no revenue.
For the first nine months of 2019, operating cash use was $34.5 million; investing cash use was $30.3 million, mainly reflecting purchases of short-term investments; and financing provided $85.4 million, principally net IPO proceeds. Cash and cash equivalents increased by $20.6 million over the period.
Material changes versus prior comparable periods
- Q3 net loss increased to $12.8 million from $5.7 million; nine-month net loss increased to $36.9 million from $13.5 million.
- Nine-month R&D expense rose 191%, primarily due to advancing Phase 3 trials and related personnel costs. G&A and commercial costs also increased with hiring, public-company expenses, market research and patient-awareness activities.
- The May 2019 IPO issued 6.325 million shares at $15 per share and generated $85.4 million in net proceeds. Outstanding preferred shares converted into common shares. The company said it had not used IPO proceeds by quarter-end.
- Cash and short-term investments were $136.5 million, compared with cash and cash equivalents of $85.9 million and short-term investments of $0.03 million at December 31, 2018.
Outlook, commentary and risks
- Management expected existing cash, cash equivalents and short-term investments to fund operations for at least 12 months from the filing’s assessment, assuming development and commercial-planning activities progress as planned. It expects significant losses and rising expenses for the foreseeable future and may need additional financing.
- NODE-301, the Phase 3 PSVT efficacy trial, had a target of 150 adjudicated PSVT events; management expected top-line results in the middle of the first half of 2020. Blinded data collection beyond the target event count was expected to support a secondary dataset, NODE-301B.
- NODE-303, an additional open-label safety study, began in October 2019. The FDA had allowed enrollment without the in-office safety test dose used in NODE-301 and agreed to a broader patient population. The company also planned a proof-of-concept trial for atrial fibrillation with rapid ventricular rate in 2020 and was assessing development in angina.
- The company cited clinical-trial execution and enrollment, potential safety findings, regulatory approval uncertainty, reliance on contract manufacturers and a single-source nasal-spray device supplier, and future funding needs as significant risks. The filing notes that an additional efficacy trial could be required, notwithstanding FDA discussions supporting the planned single-trial approach.
- Management reported no material legal proceedings or off-balance-sheet arrangements. It adopted the lease accounting standard in 2019; the adoption did not materially affect results or cash flows. Disclosure controls were assessed as effective at a reasonable-assurance level; internal-control effectiveness was not evaluated in this quarterly report.
Important facts for investors to verify
- Whether NODE-301 reaches its 150-event target and whether top-line results arrive on the stated timeline; assess the final efficacy and safety data, not interim expectations.
- Whether regulators accept the single-efficacy-trial evidence and the proposed study design, and whether additional trials or conditions are required.
- Cash burn, investment balances and the assumptions behind the stated minimum 12-month runway, including whether additional financing will be needed.
- Clinical and commercial readiness of etripamil, including manufacturing capacity, nasal-device supply continuity and prospects for approval and reimbursement.
- Potential dilution from equity financing and share-based compensation; the filing reported 2.635 million outstanding options at September 30, 2019.