Milestone Pharmaceuticals Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. The filing is an annual report, not a separate fourth-quarter report. Amounts are in U.S. dollars unless noted.
Business context
Milestone is a clinical-stage biopharmaceutical company developing etripamil, a short-acting calcium channel blocker nasal spray intended for patient self-administration. Its lead program targets paroxysmal supraventricular tachycardia (PSVT); it is also studying etripamil for atrial fibrillation with rapid ventricular rate (AFib-RVR). The company had no approved products and no product-sales revenue in 2021.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $15.0 million | None |
| Research and development expense, net of tax credits | $38.7 million | $34.5 million |
| General and administrative expense | $12.4 million | $10.3 million |
| Commercial expense | $7.0 million | $5.9 million |
| Operating loss | $43.1 million | $50.7 million |
| Net loss | $42.9 million | $50.0 million |
| Net loss per share | $1.02 | $1.70 |
| Cash used in operating activities | $33.2 million | $50.7 million |
Revenue was the $15 million upfront payment from Ji Xing under an exclusive regional license; it was not product-sale revenue. Net loss narrowed year over year, chiefly reflecting this license revenue, while total operating expenses rose 14.5% to $58.1 million. R&D increased 12.1%, principally with ongoing clinical work, including RAPID. With no product sales, conventional product gross margins are not meaningful; the filing does not provide a clear product-margin measure.
Cash and cash equivalents were $114.1 million at year-end, versus $72.3 million in 2020; 2020 also included $70.0 million of short-term investments, while none remained at December 31, 2021. The company reported total liabilities of $7.2 million, including operating lease liabilities, and no borrowings are identified in the provided financial statements. Shareholders’ equity was $112.6 million, down from $143.1 million. Management expected available cash and financing sources to fund operations into mid-2023; it also stated there was no substantial doubt about continuing as a going concern for at least 12 months from filing.
Material changes and notable items
- Revenue increased from zero to $15 million through the Ji Xing license. Ji Xing received exclusive development and commercialization rights for etripamil nasal-spray products in mainland China, Hong Kong, Macau and Taiwan. Milestone may receive up to $107.5 million in development and sales milestones, plus tiered royalties; these future amounts are contingent, not guaranteed.
- Milestone received approximately $5.0 million from a 2021 private placement of pre-funded warrants. At year-end it had 29.9 million common shares and 12.3 million pre-funded warrants outstanding. The prior year included $73.2 million of financing cash inflows, compared with $5.1 million in 2021.
- Cash from operations improved year over year, but the company continued to incur substantial losses and expects losses to continue. Its $206.3 million accumulated deficit reflects its development-stage status.
- NODE-301, the first Phase 3 PSVT efficacy study, failed its original primary endpoint over five hours. A retrospective analysis using a revised 30-minute endpoint found conversion in 54% of etripamil patients versus 35% of placebo patients (p=0.02). FDA discussions indicated NODE-301 and the ongoing RAPID study could potentially fulfill the efficacy requirement; this is not an assurance of approval.
Outlook, commentary and risks
- Management expected RAPID topline results in the “mid-second half” of 2022. NODE-303 was ongoing to contribute safety data for a potential filing. ReVeRA, a Phase 2 AFib-RVR study, had slower-than-expected enrollment amid COVID-related hospital and site pressures.
- The company expects spending to rise as it advances clinical development and prepares for potential commercialization. It anticipated increased general and administrative and commercial costs in 2022. It had not established a commercial organization or secured formal commercial-scale manufacturing agreements.
- COVID-19 disrupted site activation, enrollment and follow-up; inflation, market volatility and geopolitical uncertainty were also identified as potential business and financing risks. Milestone expects to need additional funding and warns that financing may dilute shareholders or require reduced or delayed programs.
- Key risks include clinical-trial failure or delay, regulatory uncertainty, reliance on third-party manufacturers and research organizations, a single-source nasal-spray device, reimbursement and market-acceptance uncertainty, and dependence on etripamil as its only clinical product candidate.
- No material legal proceedings were reported. The independent auditor issued an unqualified opinion on the financial statements. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor did not attest to internal controls.
Important facts for investors to verify
- Whether RAPID results and subsequent FDA feedback support an NDA, particularly given NODE-301’s missed original primary endpoint and the revised analysis.
- Current cash runway and financing needs versus the filing’s mid-2023 estimate, including clinical, manufacturing and potential launch costs.
- Actual terms, timing and collectability of Ji Xing milestone payments and royalties, and the related-party relationship disclosed for Ji Xing’s affiliate RTW.
- Enrollment, safety findings and regulatory relevance of NODE-303 and ReVeRA, including any continuing COVID-related delays.
- Potential dilution from outstanding pre-funded warrants, options and any future equity financing; also verify commercial supply arrangements and device-source alternatives.