MyMD Pharmaceuticals, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. The company is a clinical-stage biopharmaceutical developer with no product revenue. Its common stock trades on Nasdaq under MYMD.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $1.20 million | $0.77 million |
| Administrative expense | $1.07 million | $0.99 million |
| Operating loss | $2.78 million | $2.59 million |
| Net loss | $9.80 million | $1.51 million |
| Net loss attributable to common stockholders | $11.00 million | $1.67 million |
| Net cash used in operating activities | $1.91 million | $3.97 million |
- Gross profit and operating margins are not meaningful because the company had no revenue.
- Q1 net loss included a $7.09 million noncash loss associated with changes in the fair value of warrant liabilities. Preferred stock dividends were $1.20 million.
- At March 31, cash was $226,000 and marketable securities were $1.51 million, down from a combined $4.92 million at year-end 2023. The company reported negative working capital of $1.51 million.
- Total liabilities were $4.25 million, including $3.97 million of current liabilities. Series F preferred stock is presented as mezzanine equity; 4,988 shares remained outstanding, with a $4.99 million liquidation preference plus dividends. It carries a 10% annual dividend, compounded monthly.
- Stockholders’ equity was $9.94 million. No income tax benefit was recorded.
Changes versus the prior comparable period
- Net loss increased substantially, primarily reflecting the warrant fair-value loss; Q1 2023 instead included a $1.18 million warrant fair-value gain. Operating expenses rose to $2.78 million from $2.59 million.
- R&D expense increased 56%, mainly from development-program costs, while administrative expense rose modestly. Stock-based compensation increased to $517,000 from $69,000.
- Operating cash use improved year over year, but cash and marketable securities declined sharply from December 2023. The company used $1.28 million in financing cash, primarily for Series F redemptions, dividends and premiums.
Outlook, risks and notable developments
- Going concern: Management says available liquidity is insufficient to fund operations for at least the next 12 months and that substantial doubt exists about the company’s ability to continue as a going concern. It is evaluating debt and equity financing; there is no assurance financing will be available on acceptable terms. Additional equity may dilute existing holders. The financial statements include no adjustments for a potential failure to continue as a going concern.
- Outlook: No financial guidance is provided. Management expects expenses to increase as it advances MYMD-1 and Supera-CBD and states that substantial additional funding will be needed. Without financing, it may reduce spending or delay, scale back or discontinue development.
- Pipeline: MYMD-1 is being developed for inflammatory and age-related conditions. The company planned to submit the Phase II sarcopenia/frailty clinical safety report to the FDA by the end of Q2 2024. Management reported no serious adverse events or adverse-event-related dropouts in that study; these safety observations do not establish efficacy. A Phase II rheumatoid arthritis study had FDA authorization to proceed. Supera-CBD remains in development, with preclinical work reported.
- Preferred-stock obligations: The company entered an April 5, 2024 agreement deferring the March and April Series F installments to May 1 and waiving related breaches. The preferred stock has redemption, dividend and potential cash-redemption provisions upon specified triggering events.
- Warrants: A May 14, 2024 amendment, effective as of March 31, modified warrant terms and resulted in equity classification. The quarter included a material noncash warrant fair-value loss. The filing’s fair-value roll-forward and reported loss amounts are not fully consistent on their face.
- Other events: A 1-for-30 reverse stock split occurred February 14, 2024; Nasdaq notified the company on March 4 that it had regained listing compliance. The company reincorporated in Delaware on March 4. Its three-month merger milestone-payment period expired April 16, 2024. The Chief Scientific Officer’s departure was effective April 15.
- Risks and contingencies: Key risks include financing needs, clinical and regulatory uncertainty, dilution, intellectual-property protection and possible delisting. A whistleblower-related lawsuit remained in discovery at March 31. The company also disclosed royalty obligations on certain future product sales or other revenue; no related revenue was received in the quarter.
Important facts for investors to verify
- Cash runway, near-term payment requirements and the status and terms of any financing raised after the filing.
- Whether the deferred Series F installments were paid, and the preferred stock’s remaining redemption schedule, accrued dividends and potential triggering-event obligations.
- The warrant amendment’s accounting: the filing reports a $7.094 million fair-value loss, while the warrant-liability roll-forward shows a $7.064 million fair-value change and a separate reclassification amount.
- Progress and timing of the FDA submission for the sarcopenia/frailty safety report and any subsequent clinical or regulatory updates.
- Share-count and dilution exposure: 2,157,632 common shares were outstanding at March 31, while 2,307,632 were reported outstanding as of May 12; also review the preferred conversion terms and outstanding warrants.