Full Press Release Details
Report of Independent Registered
Public Accounting Firm
To the Shareholders and Board of Directors of Milestone Pharmaceuticals Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Milestone
Pharmaceuticals Inc. and its subsidiary (together, the Company) as of December 31, 2020 and 2019, and the related consolidated statements
of loss and comprehensive loss, shareholders' equity and convertible preferred shares and of cash flows for the years then ended,
including the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results
of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United
Change in Accounting Principle
As discussed in Note 4 to the consolidated financial statements, the
Company changed the manner in which it accounts for leases in 2019.
These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements
in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we
are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for
/s/ PricewaterhouseCoopers LLP1
Montr al, Qu bec, Canada
We have served as the Company's auditor since 2016.
1 CPA auditor, CA, public accountancy permit No.125677
Milestone Pharmaceuticals
Consolidated Balance
(in thousands of US dollars, except share data)
| December 31, 2020 | December 31, 2019 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 72,310 | $ | 119,818 | ||||
| Short-term investments (note 3) | 70,000 | - | ||||||
| Research and development tax credits receivable | 725 | 578 | ||||||
| Prepaid expenses | 5,428 | 1,845 | ||||||
| Other receivables | 223 | 258 | ||||||
| Total current assets | 148,686 | 122,499 | ||||||
| Operating lease right-of-use assets (note 4) | 980 | 524 | ||||||
| Property and equipment (note 5) | 308 | 405 | ||||||
| Total assets | $ | 149,974 | $ | 123,428 | ||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities (note 6) | $ | 5,914 | $ | 7,997 | ||||
| Current portion of operating lease liabilities | 245 | 330 | ||||||
| Total current liabilities | 6,159 | 8,327 | ||||||
| Operating lease liabilities | 696 | 184 | ||||||
| Total liabilities | 6,855 | 8,511 | ||||||
| Shareholders' Equity (note 1, note 7) | ||||||||
| Share capital | ||||||||
| Common shares, no par value, unlimited shares authorized, 29,827,997 shares issued and outstanding as of December 31, 2020, 24,505,748 shares issued and outstanding as of December 31, 2019. | 251,682 | 226,245 | ||||||
| Pre-funded warrants - 11,417,034 issued and outstanding at December 31, 2020, nil at December 31, 2019 | 48,007 | - | ||||||
| Additional paid-in capital | 8,530 | 3,805 | ||||||
| Cumulative translation adjustment | (1,634 | ) | (1,634 | ) | ||||
| Accumulated deficit | (163,466 | ) | (113,499 | ) | ||||
| Total shareholders' equity | 143,119 | 114,917 | ||||||
| Total liabilities and shareholders' equity | $ | 149,974 | $ | 123,428 |
The accompanying notes are an integral part of
these consolidated financial statements.
Milestone Pharmaceuticals
Consolidated Statements
of Loss and Comprehensive Loss
(in thousands of US dollars,
except share and per share data)
| Year ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| Operating expenses | ||||||||
| Research and development, net of tax credits (note 10) | $ | 34,488 | $ | 41,985 | ||||
| General and administrative | 10,285 | 7,004 | ||||||
| Commercial | 5,937 | 8,892 | ||||||
| Loss from operations | $ | (50,710 | ) | $ | (57,881 | ) | ||
| Interest income, net of bank charges | 726 | 2,596 | ||||||
| Loss before income taxes | (49,984 | ) | (55,285 | ) | ||||
| Income tax recovery (note 9) | (17 | ) | (56 | ) | ||||
| Net loss and comprehensive loss for the year | $ | (49,967 | ) | $ | (55,229 | ) | ||
| Weighted average number of shares and pre-funded warrants outstanding, basic and diluted | 29,344,993 | 15,784,750 | ||||||
| Net loss per share, basic and diluted (note 8) | $ | (1.70 | ) | $ | (3.50 | ) |
The accompanying notes are an integral part of
these consolidated financial statements.
Milestone Pharmaceuticals Inc.
Consolidated Statements of Shareholders' Equity and Convertible
(in thousands of US dollars, except share data)
| Convertible Preferred Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares | Class A1 | Class A2 | Class B | Class C | Class D1 | Class D2 | Pre-funded warrants | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Number of shares | Amount | Number of shares | Amount | Number of shares | Amount | Number of shares | Amount | Number of shares | Amount | Number of shares | Amount | Number of shares | Amount | Number of warrants | Amount | Additional paid-in capital | Cumulative translation adjustment | Accumulated deficit | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2018 | 596,787 | $ | 2,039 | 372,211 | $ | 2,027 | 2,443,914 | $ | 12,643 | 2,830,907 | $ | 17,198 | 3,786,878 | $ | 27,236 | 6,893,236 | 64,719 | 1,223,656 | 14,935 | - | $ | - | $ | 2,655 | $ | (1,634 | ) | $ | (58,270 | ) | $ | 83,548 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Transactions in 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss and comprehensive loss | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (55,229 | ) | (55,229 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options (note 7) | 33,159 | 85 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (41 | ) | - | - | 44 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation (note 7) | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 1,191 | - | - | 1,191 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Initial public offering (note 7) | 6,325,000 | 85,363 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 85,363 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred share conversion (note 7) | 17,550,802 | 138,758 | (372,211 | ) | (2,027 | ) | (2,443,914 | ) | (12,643 | ) | (2,830,907 | ) | (17,198 | ) | (3,786,878 | ) | (27,236 | ) | (6,893,236 | ) | (64,719 | ) | (1,223,656 | ) | (14,935 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2019 | 24,505,748 | $ | 226,245 | - | $ | - | - | $ | - | - | $ | - | - | $ | - | - | $ | - | - | $ | - | - | $ | - | $ | 3,805 | $ | (1,634 | ) | $ | (113,499 | ) | $ | 114,917 | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2019 | 24,505,748 | $ | 226,245 | - | $ | - | - | $ | - | - | $ | - | - | $ | - | - | $ | - | - | $ | - | - | $ | - | $ | 3,805 | $ | (1,634 | ) | $ | (113,499 | ) | $ | 114,917 | ||||||||||||||||||||||||||||||||||||||||||||||
| Transactions in 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss and comprehensive loss | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (49,967 | ) | (49,967 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options (note 7) | 226,352 | 520 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | (220 | ) | - | - | 300 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation (note 7) | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 4,945 | - | - | 4,945 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Private Placement (note 7) | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 6,655,131 | 24,771 | - | - | - | 24,771 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Public Offering | 5,095,897 | 24,917 | - | - | - | - | - | - | - | - | - | - | - | - | 4,761,903 | 23,236 | - | - | - | 48,153 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2020 | 29,827,997 | $ | 251,682 | - | $ | - | - | $ | - | - | $ | - | - | $ | - | - | $ | - | - | $ | - | 11,417,034 | $ | 48,007 | $ | 8,530 | $ | (1,634 | ) | $ | (163,466 | ) | $ | 143,119 |
The accompanying notes are an integral part of
these consolidated financial statements.
Milestone Pharmaceuticals
Consolidated Statements
(in thousands of US dollars)
| Year ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| Cash flows from | ||||||||
| Operating activities | ||||||||
| Net loss for the year | $ | (49,967 | ) | $ | (55,229 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization of property and equipment (note 5) | 97 | 38 | ||||||
| Share-based compensation expense (note 7) | 4,945 | 1,191 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Other receivables | 35 | 119 | ||||||
| Research and development tax credits receivable | (147 | ) | (288 | ) | ||||
| Prepaid expenses | (3,583 | ) | (447 | ) | ||||
| Operating lease right of use asset, net | (29 | ) | - | |||||
| Accounts payable and accrued liabilities | (2,083 | ) | 3,520 | |||||
| Income taxes payable (receivable) | - | (56 | ) | |||||
| Net cash used in operating activities | (50,732 | ) | (51,152 | ) | ||||
| Investing Activities | ||||||||
| Acquisition of property and equipment | - | (413 | ) | |||||
| Acquisition of short-term investments | (90,000 | ) | (35,000 | ) | ||||
| Maturity of short-term investments | 20,000 | 35,029 | ||||||
| Net cash used in investing activities | (70,000 | ) | (384 | ) | ||||
| Financing activities | ||||||||
| Net proceeds from issuance of common shares in Initial Public Offering | - | 85,363 | ||||||
| Issuance of common shares on exercise of share options (note 7) | 300 | 44 | ||||||
| Net proceeds from issuance of common shares in a public offering (note 7) | 24,917 | - | ||||||
| Net proceeds from issuance of pre-funded warrants in a public offering (note 7) | 23,236 | - | ||||||
| Net proceeds from issuance of pre-funded warrants in a private placement (note 7) | 24,771 | - | ||||||
| Net cash provided by financing activities | 73,224 | 85,407 | ||||||
| Net increase (decrease) in cash and cash equivalents during the year | (47,508 | ) | 33,871 | |||||
| Cash and cash equivalents - Beginning of year | 119,818 | 85,947 | ||||||
| Cash and cash equivalents - End of year | $ | 72,310 | $ | 119,818 |
The accompanying notes are an integral part of
these consolidated financial statements.
1 Organization and nature of operations
Pharmaceuticals Inc. (Milestone or the Company) is a biopharmaceutical company incorporated under the Business Corporations Act of
Qu bec. Milestone is focused on the development and commercialization of innovative cardiovascular medicines. Milestone's
lead product candidate, etripamil, is a novel, potent short acting calcium channel blocker that the Company designed and is developing
as a rapid onset nasal spray to be -administered by patients. The Company is developing etripamil to treat paroxysmal supraventricular
tachycardia, atrial fibrillation, and other cardiovascular indications.
2 Summary of significant accounting policies
a) Basis of consolidation
The consolidated financial statements include the
accounts of the Company and Milestone Pharmaceuticals USA, Inc. Milestone Pharmaceuticals USA, Inc. began its operations on
March 3, 2017. All intercompany transactions and balances have been eliminated.
b) Basis of presentation and use of accounting estimates
These consolidated financial statements of the Company have been presented
in United States dollars (USD) and have been prepared in accordance with accounting principles generally accepted in the United States
of America (U.S. GAAP), including the applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding financial
The preparation of consolidated financial statements in conformity
with US GAAP requires the Company to make estimates and judgments that affect certain reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue
and expenses during the period. The Company bases its estimates and assumptions on current facts, historical experience and various other
factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not
readily apparent from other sources. Significant estimates and judgments include, but are not limited to, research and development tax
credits recoverable, progress of activities performed by the CROs and CMOs which are used to calculate the research and development expense
incurred, and share-based compensation. Accordingly, actual results may differ from those estimates and such differences may be material.
COVID-19 pandemic has had an impact on the Company's business, operations and clinical development timelines. Government orders
and restrictions in order to control the spread of the disease have impacted patient recruitment, enrollment and follow-up visits at clinical
sites The Company will continue to evaluate the COVID-19 pandemic impact on the development timelines of its clinical programs.
Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise
of judgment. As of the date of issuance of these consolidated financial statements, the Company is not aware of any specific event or
circumstance that would require the Company to update its estimates, assumptions and judgments. These estimates may change as new events
occur and additional information is obtained and are recognized in the consolidated financial statements as soon as they become known.
Actual results could differ from those estimates and any such differences may be material to the Company's consolidated financial
c) Segment information
Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions
while focusing on the development and commercialization of innovative cardiovascular medicines.
d) Cash and cash equivalents
Cash and cash equivalents consist of cash and highly
liquid investments that are readily convertible into cash with original maturities of three months or less at acquisition date.
e) Short term investments
Short term investments are classified as held-to-maturity, are initially
recognised at fair value and are subsequently accounted for at amortized cost. They are comprised of guaranteed investment certificates
with a maturity greater than 90 days but less than one year and, as such, are classified as current assets.