MyMD Pharmaceuticals, Inc. — Q2 2022 Form 10-Q
Business context and reporting period
Quarter and six months ended June 30, 2022. MyMD is a clinical-stage biopharmaceutical company with no product revenue. Its lead candidate, MYMD-1, was in a Phase 2 study for sarcopenia and frailty; Supera-CBD remained in preclinical development. The 2021 merger is accounted for as a reverse recapitalization, with MyMD Florida as the accounting acquirer.
Key financial metrics
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Revenue | $0 in 2022 and 2021 | $0 in 2022 and 2021 |
| Research and development | $2.16 million in 2022; $1.66 million in 2021 | $4.79 million in 2022; $3.01 million in 2021 |
| Administrative expenses | $1.35 million in 2022; $1.54 million in 2021 | $2.74 million in 2022; $2.62 million in 2021 |
| Net loss | $3.64 million in 2022; $18.09 million in 2021 | $7.76 million in 2022; $21.18 million in 2021 |
| Basic and diluted loss per share | $(0.09) in 2022; $(0.50) in 2021 | $(0.20) in 2022; $(0.66) in 2021 |
- For the six months, operating cash used was $5.93 million, compared with $8.26 million in 2021. Investing activities provided $6.49 million, primarily from $6.50 million of marketable-security sales; financing cash flow was zero.
- At June 30, cash was $1.12 million and marketable securities were $4.51 million. Working capital was $4.09 million; total assets were $19.16 million, total liabilities $3.04 million, and shareholders’ equity $16.12 million. Accumulated deficit was $86.32 million.
- No product gross profit or margin was reported. The balance sheet lists trade payables and operating lease liabilities; it reports no conventional outstanding borrowings at quarter-end.
Material changes versus prior comparable periods
- Q2 R&D expense rose 30%; six-month R&D rose 59%, principally reflecting higher regulatory costs as the MYMD-1 Phase 2 study began. Management also cited completion of required animal toxicology studies, which reduced development-program costs.
- Net loss narrowed substantially year over year, largely because 2021 included $15.04 million of stock-option modification expense related to the merger. Excluding that unusual item, the headline loss comparison is less pronounced.
- Cash and marketable securities together declined from $11.56 million at December 31, 2021 to $5.62 million at June 30, 2022. The company sold $6.50 million of securities during the first half.
Outlook, risks and unusual items
- Management said resources, including funding under the August 15, 2022 offering agreement, were expected to cover the current operating budget and contractual obligations for twelve months from issuance of the statements. The filing does not provide formal revenue or earnings guidance; substantial additional funding is expected to support development.
- The August offering was for 1,411,764 common shares at $4.25 per share and warrants for up to an equal number of shares at $5.25. Expected gross proceeds were approximately $6.0 million and net proceeds approximately $5.4 million; closing was expected August 17, after the reporting date. Proceeds were intended for working capital and general corporate purposes.
- Management disclosed delays in obtaining clinical supplies from an Indian manufacturer and difficulty recruiting trial participants, affecting development timelines. COVID-19-related disruption, clinical and regulatory uncertainty, dependence on third parties, financing needs, competition, and intellectual-property protection are identified risks.
- A shareholder’s whistleblower/contract-related lawsuit remained pending: the court dismissed time-barred tort claims but allowed contract-based claims to proceed. The company said it believed the action lacked merit.
- Related-party patent agreements provide for royalties of 8% of applicable product sales and, without duplication, milestone or sublicense revenue. MyMD also reported a 13% interest in Oravax and rights to 2.5% of its future net sales; the company was evaluating options for that investment.
- Potential dilution is material: at June 30, 12.54 million potentially dilutive shares were excluded from loss-per-share calculations as anti-dilutive, including options, warrants and restricted stock units. The August offering added warrants for up to 1.41 million shares.
Important facts for investors to verify
- Current Phase 2 trial enrollment, progress, timelines, and remaining costs for MYMD-1, as well as the status of Supera-CBD preclinical work.
- Whether the August 2022 offering closed on its stated terms and the company’s updated cash runway, burn rate, and financing requirements.
- Outstanding and potentially issuable shares, including offering warrants, options, restricted stock units, and merger-related milestone consideration.
- Developments in the pending litigation, clinical-supply and enrollment delays, and the terms and future implications of royalty and Oravax arrangements.