MyMD Pharmaceuticals, Inc. (Nasdaq: MYMD) — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter report; quarterly results are not provided in the supplied filing text. MyMD is a clinical-stage pharmaceutical company developing MYMD-1, an immunometabolic drug candidate, and Supera-CBD, a synthetic CBD analog. Neither candidate had generated product revenue.
Financial results and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $9.07 million | $6.75 million |
| General and administrative expense | $5.52 million | $6.42 million |
| Total operating expenses | $15.28 million | $28.81 million |
| Operating loss | $15.28 million | $28.81 million |
| Net loss | $15.20 million | $29.89 million |
| Basic and diluted loss per share | $0.39 | $0.85 |
| Net cash used in operating activities | $12.27 million | $19.52 million |
- R&D expense increased 34.4%, principally because regulatory and clinical-trial-related costs rose by $3.06 million; development-program costs fell by $1.09 million as certain studies were completed.
- The lower 2022 net loss largely reflects the absence of $15.04 million in merger-related stock-option modification expense recorded in 2021, as well as lower G&A and other expenses. Stock-based compensation was $0.70 million in 2022.
- At year-end, cash and cash equivalents were $0.75 million and marketable securities were $4.09 million, versus $0.56 million and $11.00 million, respectively, in 2021. Working capital was $2.63 million; total assets were $17.54 million, total liabilities $2.84 million, and stockholders’ equity $14.70 million.
- Investing activities provided $6.91 million, primarily reflecting $11.75 million of marketable securities sold, partly offset by $4.84 million purchased. Financing activities provided $5.55 million in net proceeds from common-stock issuance.
- The company reported no product gross profit or operating margin because it had no product revenue. It reported no funded debt at December 31, 2022; liabilities included $2.67 million in trade and other payables and $0.14 million in operating lease liabilities.
- Accumulated deficit was $93.76 million. Management said resources available as of the financial-statement issuance date were expected to fund its current operating budget and contractual obligations for the next 12 months. The auditor identified management’s going-concern assessment as a critical audit matter, while issuing an unqualified opinion on the financial statements.
Material developments and outlook
- MYMD-1: The Phase 2 aging/sarcopenia trial was in progress, with 30 of a planned 40 participants randomized and dosed as described in the filing. Final efficacy data were expected in Q2 2023, followed by an end-of-Phase-2 discussion with FDA. Management planned to submit an IND for rheumatoid arthritis in Q2 2023, with a Phase 2 trial to follow. These are stated plans, not reported outcomes.
- A Phase 1 study reported a statistically significant TNF-α decrease in one treated cohort, with no change in the placebo group. This is early-stage evidence and does not establish clinical efficacy.
- Supera-CBD: The candidate remained preclinical. Management planned further development and IND-enabling work; on March 2, 2023, the company announced that DEA review determined Supera-CBD would not be a controlled substance or listed chemical under the Controlled Substances Act.
- Subsequent financing: In February 2023, MyMD issued Series F convertible preferred stock and warrants for approximately $14.04 million in net proceeds. The preferred stock carries a 10% annual dividend and is redeemable in 12 monthly installments beginning July 1, 2023; payments may be made in cash or, subject to limits and stockholder approval, common shares. The 6.65 million warrants have a $2.255 exercise price and full-ratchet price adjustment provisions. The financing creates potential cash demands and substantial dilution.
- MyMD holds a 13% interest in Oravax and rights to a 2.5% royalty on future net sales. Its $1.50 million Oravax investment was not deemed impaired at year-end based on management’s qualitative assessment; the auditor also treated that assessment as a critical audit matter. No Oravax impairment was recorded.
Risks, contingencies, and unusual items
- MyMD has no approved products or product-sales revenue and expects continuing losses and substantial R&D spending. Clinical, regulatory, manufacturing, financing, and commercialization outcomes remain uncertain; early or preclinical results may not predict later trial success.
- The company depends on third parties for clinical trials and drug manufacturing. Delays, supply problems, trial enrollment challenges, or regulatory setbacks could disrupt development.
- Financing may dilute shareholders. At year-end, the filing listed 13.89 million potentially dilutive shares excluded from diluted loss per share; the February 2023 preferred stock and warrants add further potential dilution. Preferred-stock installment terms also expose cash or share resources to scheduled obligations.
- The company disclosed a 2021 email-compromise wire-fraud loss of $1.26 million, net of recoveries. It reported a $4,442 recovery in 2022 and described enhanced payment-verification and email-security procedures.
- A shareholder-related whistleblower/contract action was in discovery as of December 31, 2022; the company stated it believed the action was without merit. The filing also describes 8% royalties on relevant product sales and certain milestone or sublicense revenue payable under patent agreements with founder-affiliated entities.
- Other material risks include competition, uncertain reimbursement and pricing, intellectual-property challenges, potential Nasdaq listing issues, and the possibility that capital markets conditions impair access to funding. Management reported effective disclosure controls and effective internal control over financial reporting as of year-end; the auditor did not attest to internal-control effectiveness.
Investor verification priorities
- Check subsequent filings for actual MYMD-1 Phase 2 results, FDA feedback, and whether the planned rheumatoid-arthritis IND and trials proceeded.
- Review cash burn, available cash and securities, and liquidity against scheduled Series F redemptions and dividends; confirm the financing proceeds and any subsequent share or warrant issuances.
- Assess the preferred-stock conversion and anti-dilution terms, stockholder approval status, and resulting fully diluted share count.
- Verify the Oravax investment’s carrying value, development progress, and any impairment indicators or changes to the company’s ownership or royalty rights.
- Review updates on the pending litigation, related-party royalty obligations, cybersecurity controls, and Nasdaq listing compliance.