Business Context and Reporting Period
ProMIS Neurosciences Inc. is a Canada-based, pre-revenue biotechnology company developing antibody therapies and vaccines for neurodegenerative and protein-misfolding diseases, including Alzheimer’s disease, multiple system atrophy and ALS. Lead candidates are PMN310, PMN442 and PMN267. This unaudited Form 10-Q covers the three months ended March 31, 2023, with comparisons to the three months ended March 31, 2022. The filing was signed May 15, 2023.
Financial Highlights
| Metric | Q1 2023 | Q1 2022 | Change |
|---|---|---|---|
| Revenue | $0 | $0 | No revenue generated |
| Research and development expense | $3.51 million | $1.90 million | +$1.61 million, or 84% |
| General and administrative expense | $1.46 million | $2.04 million | -$0.58 million, or 28% |
| Total operating expenses | $4.97 million | $3.94 million | +$1.03 million, or 26% |
| Loss from operations | $(4.97) million | $(3.94) million | Loss increased by $1.03 million |
| Net loss | $(4.96) million | $(2.09) million | Loss increased by $2.86 million |
| Net loss per share | $(0.58) | $(0.29) | Loss per share increased |
| Net cash used in operating activities | $(2.56) million | $(3.37) million | Cash use decreased by $0.81 million |
| Cash at period end | $3.33 million | $13.75 million | Down from $5.88 million at Dec. 31, 2022 |
Because the Company has no revenue, a revenue-based gross or operating margin is not meaningful. Operating expenses represented the full operating loss. The accumulated deficit was $85.21 million at March 31, 2023, compared with $80.25 million at December 31, 2022.
Total assets were $4.43 million, while total liabilities were $10.61 million. Current liabilities were $8.71 million, including accounts payable of $6.99 million and accrued liabilities of $1.72 million. The Company had a shareholders’ deficit of $6.18 million and negative working capital of approximately $4.3 million. The filing does not show outstanding conventional debt at March 31, 2023; interest expense on convertible debt was zero in Q1 2023 versus $147,773 in Q1 2022.
Material Changes Versus the Prior Comparable Period
- Research and development expense increased 84%, primarily because PMN310 spending rose by approximately $1.39 million to $2.38 million as the Company completed cGMP manufacturing and prepared its FDA IND submission. Consulting and personnel costs also increased.
- General and administrative expense declined 28%, primarily because Q1 2022 included approximately $0.8 million of one-time Nasdaq listing costs and lower consulting costs in 2023.
- Net loss increased to $4.96 million from $2.09 million. Q1 2022 benefited from approximately $2.0 million of favorable changes in the fair value of financial instruments; Q1 2023 recorded a $41,665 unfavorable change in fair value.
- Cash used in operations improved to $2.56 million from $3.37 million, partly because accounts payable and accrued liabilities increased by approximately $2.27 million on a net basis.
- The warrant liability increased to $1.90 million from $1.86 million at year-end 2022, principally from a $41,665 fair-value loss and foreign-exchange effects.
Guidance, Outlook, Risks and Unusual Items
- Management expects continuing net losses for the foreseeable future and does not expect significant product revenue in the near term, if ever.
- The Company stated that its $3.3 million of cash at March 31, 2023 was not sufficient to fund operating expenses for at least 12 months from the issuance of the financial statements. Management concluded that substantial doubt exists about the Company’s ability to continue as a going concern.
- Additional financing will be required for clinical activities and ongoing operations. Potential sources include equity or debt financings, collaborations, strategic alliances and licensing arrangements. No assurance is provided that funding will be obtained on acceptable terms or at all.
- PMN310 drug product was manufactured under cGMP conditions. The Company filed an FDA IND application in April 2023 and received clearance on May 5, 2023. It planned to initiate a Phase 1a trial, subject to sufficient resources.
- In May 2023, a vendor agreement provided an option to defer approximately $5.3 million of accounts payable and accrued liabilities until March 31, 2024. The deferred balance accrues interest at 5.5% annually, payable monthly.
- Key risks include financing and going-concern risk, clinical and regulatory uncertainty, dependence on key personnel, foreign-currency exposure, warrant-liability valuation volatility, inflation and interest rates, financial-services disruptions and potential delays or reductions in research programs.
- The Company reported no material litigation. It also reported no accrued milestone or royalty obligations through March 31, 2023, although future payments may arise under research, development and license agreements.
Important Facts for Investors to Verify
- Confirm the Company’s post-quarter-end financing activities and whether available liquidity has materially improved.
- Assess the terms, enforceability and interest cost of the $5.3 million vendor payment-deferral arrangement.
- Track PMN310 Phase 1a initiation, enrollment, funding and regulatory developments following FDA IND clearance.
- Review dilution exposure from 1.87 million warrants, 1.04 million options, 1.17 million Series 1 convertible preferred share equivalents and other equity-linked instruments.
- Monitor accounts payable, accrued liabilities and the $1.90 million warrant liability, including potential foreign-exchange and fair-value changes.
- Evaluate whether additional capital can support the planned clinical and preclinical programs without material delays, reductions or program cancellations.