What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-20 compared with 2025-03-13 · 240 added, 140 removed, 593 unchanged (39% of the section changed)

42 unchanged sentences

Short-term investments

License receivable

Research and development tax credits receivable

Prepaid expenses

Inventory, net

Other receivables

1 unchanged sentence

Operating lease right-of-use assets

Property and equipment

Property and equipment, net

Liabilities, and Shareholders' Equity

2 unchanged sentences

Operating lease liabilities

Other current liabilities

Total current liabilities

1 unchanged sentence

Senior secured convertible notes

Other long-term liabilities

Total liabilities

21 unchanged sentences

Milestone Pharmaceuticals Inc.

Consolidated Statements of Shareholders’ Equit y

Consolidated Statements of Shareholders’ Equity

(in thousands of US dollars, except share data)

4 unchanged sentences

Exercise of stock options

Pre-funded warrants - Private Placement, net of issuance costs

Pre-funded warrants, net of issuance costs

Share-based compensation

Exchange of common shares

( 1,059,000 )

Issuance of common shares, net of issuance costs

Employee stock purchase plan purchases

5 unchanged sentences

Share-based compensation

Issuance of common shares, vesting of performance stock units

Issuance of common shares, net of issuance costs

Issuance of Series A common stock warrants, net of issuance costs

Issuance of Series B common stock warrants, net of issuance costs

Exercise of Series A common stock warrants, net of issuance costs

Exercise of Series B common stock warrants, net of issuance costs

Employee stock purchase plan purchases

10 unchanged sentences

Accretion of investment discount

Non-cash interest expense related to debt

Non-cash interest expense related to Senior Secured Convertible Note

Share-based compensation expense

1 unchanged sentence

Changes in operating assets and liabilities:

License receivable

Other receivables

4 unchanged sentences

Net cash used in operating activities

Cash provided by (used in) investing activities

Cash provided by investing activities

Acquisition of property and equipment

4 unchanged sentences

Proceeds from exercise of options

Proceeds from issuance of senior secured convertible debt

Proceeds from issuance of common shares, net of issuance costs

Proceeds from issuance of pre-funded warrants, net of issuance costs

Proceeds from issuance of series A common stock warrants, net of issuance costs

Proceeds from issuance of series B common stock warrants, net of issuance costs

Proceeds from exercise of series A warrants, net of issuance costs

Proceeds from exercise of series B warrants, net of issuance costs

Proceeds from employee stock purchase plan

Payment of debt issuance costs

Cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents – Beginning of year

Cash and cash equivalents – End of year

Cash and cash equivalents – Beginning of period

Cash and cash equivalents – End of period

The accompanying notes are an integral part of these consolidated financial statements.

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Organization and Nature of Operations

Milestone Pharmaceuticals Inc., or “Milestone,” or the “Company,” is a biopharmaceutical company incorporated under the Business Corporations Act of Québec.

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.

Milestone Pharmaceuticals Inc., or “Milestone,” or the “Company,” is a biopharmaceutical company incorporated under the Business Corporations Act (Québec).

Milestone’s headquarters is currently located in Montréal (Québec), Canada.

The Company’s common shares began trading on The Nasdaq Global Select Market on May 9, 2019, and trade under the symbol “MIST”.

Milestone is focused on the development and commercialization of cardiovascular medicines.

Milestone’s lead product candidate, etripamil, is a novel, potent rapid-onset calcium channel blocker that the Company designed and is developing as a rapid-onset nasal spray to be administered by patients.

On December 12, 2025, CARDAMYST™ (etripamil) was approved by the U.S.

Food and Drug Administration, or “FDA,” to treat paroxysmal supraventricular tachycardia, or “PSVT.” The Company is also developing etripamil for the treatment of atrial fibrillation, or “AFib,” and other cardiovascular indications.

Summary of Significant Accounting Policies

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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 reporting.

18 unchanged sentences

The Company considers the nature and contractual terms of arrangements and assesses whether an arrangement involves a joint operating activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards dependent on the commercial success of the activity.

If the Company is an active participant and is exposed to significant risks and rewards dependent on the commercial success of the activity, the Company accounts for such an arrangement as a collaborative arrangement under Accounting Standards Codification (ASC) 808, Collaborative Arrangements (ASC 808), which requires that certain transactions between the Company and collaborators be recorded in its consolidated statements of loss on either a gross basis or net basis, depending on the characteristics of the collaborative relationship, and requires enhanced disclosure of collaborative relationships.

If the Company is an active participant and is exposed to significant risks and rewards dependent on the commercial success of the activity, the Company accounts for such an arrangement as a collaborative arrangement under Accounting Standards Codification, or “ASC” 808, Collaborative Arrangements , or “ASC 808,” which requires that certain transactions between the Company and collaborators be recorded in its consolidated statements of loss on either a gross basis or net basis, depending on the characteristics of the collaborative relationship, and requires enhanced disclosure of collaborative relationships.

The Company evaluates its collaboration agreements for proper classification in its consolidated statements of loss based on the nature of the underlying activity.

If payments to and from collaborative partners are not within the scope of other authoritative accounting literature, the consolidated statements of loss classification for the payments is based on a reasonable, rational analogy to authoritative accounting literature that is applied in a consistent manner.

If the Company concludes that it has a customer relationship with one of its collaborators, the Company follows the guidance in Accounting Standards Codification (ASC) Topic 606, Revenue From Contracts With Customers (ASC 606).

If the Company concludes that it has a customer relationship with one of its collaborators, the Company follows the guidance in ASC Topic 606, Revenue From Contracts With Customers , or “ASC 606.”

Revenue from Contracts with Customers

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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.

g) Concentration of Credit Risk

g) Concentration Risks

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents and investment securities classified as held-to-maturity.

The Company maintains deposits at major financial institutions.

Additionally, the Company has adopted an investment policy that includes guidelines relative to credit quality, diversification of maturities and liquidity.

The Company maintains deposits at major financial institutions and such amounts may exceed those amounts insured by the Federal Deposit Insurance Corporation, or the “FDIC.” The Company has not experienced any losses on its deposits since inception, and the Company believes

Milestone Pharmaceuticals Inc.

1 unchanged sentence

(in thousands of US dollars, except share and per share data)

that minimal credit risk exists with respect to these financial institutions.

Additionally, the Company has adopted an investment policy that includes guidelines relative to credit quality, diversification of maturities and liquidity.

Concentration of Supplier Risk

The Company relies on a single source manufacturer for starting materials and active pharmaceutical ingredient, or “API,” packaging components, and packaged pharmaceutical product ready for commercial sale.

h) Currency Risk

1 unchanged sentence

The Company is exposed to the Canadian dollar currency risk and does not enter into arrangements to hedge its currency risk exposure.

i) Property and Equipment

Property and equipment is stated at historical cost less accumulated amortization.

Inventory is stated at the lower of cost or net realizable value, with cost determined on a first‑in, first‑out, or “FIFO,” basis.

Inventory costs include raw materials, work‑in‑process, finished goods, and applicable manufacturing overhead.

Raw materials include starting materials used to manufacture the API.

Work‑in‑process includes API, intermediate compounding steps, and bulk drug product.

Finished goods include packaging components and the packaged pharmaceutical product ready for commercial sale.

Prior to the FDA’s approval of CARDAMYST on December 12, 2025, costs associated with manufacturing pre‑approval commercial batches and clinical materials were expensed as research and development expenses in accordance with our accounting policy and SAB Topic 5A, as the product had not yet received regulatory approval and therefore did not meet the criteria for capitalization.

Following FDA approval, we began capitalizing inventory related to CARDAMYST manufactured after the approval date.

Inventory produced prior to approval and previously expensed as research and development remains recorded at a zero‑cost basis and is excluded from the inventory balance.

Because our inventory is subject to expiration, the Company evaluates its carrying value each reporting period and records allowances for any estimated excess, obsolete, short‑dated, or otherwise unmarketable inventory.

In accordance with regulatory requirements and current Good Manufacturing Practices, or “cGMP,” our inventory is also subject to strict quality control and monitoring throughout the manufacturing process.

If certain batches or units do not meet quality specifications, we would write down the related inventory to its estimated net realizable value and record the expense as a cost of production in the Consolidated Statement of Loss.

Inventory valuation adjustments require judgment and consideration of various factors, including forecasted demand, remaining shelf life, and quality assessments, among others.

j) Property and Equipment

Property and equipment is stated at historical cost less accumulated depreciation.

Expenditures for maintenance and repairs are recorded to expense as incurred.

The Company reviews its property and equipment whenever events or changes in circumstances indicate that the carrying value of certain assets might not be recoverable and recognizes an impairment loss when it is probable that an asset’s realizable value is less than the carrying value.

To date, no such impairment losses have been recorded.

Amortization is calculated using the straight-line method over the following estimated useful lives of the assets:

To date, no such impairment losses

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

(in thousands of US dollars, except share and per share data)

have been recorded.

Depreciation is calculated using the straight-line method over the following estimated useful lives of the assets:

Computer hardware and software

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Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew.

k) Pre-funded Warrants

l) Pre-funded Warrants

Pre-funded warrants allow the holder to pay little or no consideration to receive the shares upon exercise of the warrant.

The pre-funded warrants do not meet the definition of a derivative under ASC 815 because their fair value at issuance is equal to the fair value of the shares underlying the warrant.

The pre-funded warrants do not meet the definition of a derivative under ASC 815, Derivatives and Hedging, because their fair value at issuance is equal to the fair value of the shares underlying the warrant.

As such, they have the characteristics of a prepaid forward sale of equity.

As a result, the pre-funded warrants are accounted for as equity instruments.

l) Share Issuance Costs

Share issuance costs applicable to the issuance of equity instruments are recorded as a reduction of the financing equity proceeds.

m) Share and Debt Issuance Costs

Share issuance costs include legal fees, accounting fees, sales agent commissions, broker and underwriting fees, and other direct costs incurred in connection with the issuance of equity instruments.

Share issuance costs are recorded as a reduction of the financing equity proceeds.

Debt issuance costs include legal fees, accounting fees, and other direct costs incurred in connection with the execution of our debt financing.

Debt discounts represent costs paid to the lenders.

Debt issuance costs and debt discounts are deducted from the carrying amount of the debt liability and are amortized to interest expense over the term of the related debt using the effective interest method.

Milestone Pharmaceuticals Inc.

1 unchanged sentence

(in thousands of US dollars, except share and per share data)

m) Research and Development and Investment Tax Credits

n) Research and Development and Investment Tax Credits

Research and development costs are charged to expense as costs are incurred in performing research and development activities.

The Company’s research and development costs consist primarily of salaries and fees paid to CROs and to CMOs.

The Company’s research and development costs consist primarily of salaries and fees paid to contract research organizations, or “CROs” and non-capitalizable costs paid to contract manufacturing organizations, or “CMOs.”

Clinical trial expenses include direct costs associated with CROs, direct CMO costs for the formulation and packaging of clinical trial material, as well as investigator and patient related costs at sites at which the Company’s trials are being conducted.

6 unchanged sentences

The Company recognizes the benefit of Canadian research and development tax credits as a reduction of research and development costs for fully refundable investment tax credits and as a reduction of income taxes for investment tax credits that can only be claimed against income taxes payable when there is reasonable assurance that the claim will be recovered.

n) Income Taxes

o) Income Taxes

The provision for income taxes is computed using the liability method.

3 unchanged sentences

Tax benefits related to tax positions not deemed to meet the “more likely than not” threshold are not permitted to be recognized in the consolidated financial statements.

o) Foreign Currency Translation and Transactions

p) Foreign Currency Translation and Transactions

The functional currency of the Company is the U.S.

3 unchanged sentences

Any gains or losses arising on remeasurement are included in the consolidated statement of loss.

p) Share-Based Compensation

The Company has a share-based compensation plan which is described in detail in note 8 and records all share-based payments, including grants of employee share options, at their fair values.

q) Share-Based Compensation

The Company has a share-based compensation plan which is described in detail in Note 9, “Shareholders’ Equity,” and records all share-based payments, including grants of employee share options, performance stock options, or “PSOs,” restricted stock units, or “RSUs,” and performance stock units, or “PSUs, based on the fair value of the awards as of the grant date.

The fair value of share options granted to employees and non-employees is estimated at the date of grant using the Black-Scholes option pricing model.

The Company recognizes share-based compensation expense over the requisite service period of the individual grants, which equals the vesting period, using the straight-line method.

Forfeitures, if any, are recorded as they occur.

Any consideration paid by employees on exercising share options and the corresponding portion previously credited to contributed surplus are credited to share capital.

The Black-Scholes option pricing model used by the Company to calculate option values was developed to estimate fair value.

The fair value of RSUs and PSUs with performance-based vesting conditions is calculated using the closing price of the Company’s common stock on the date of grant.

Milestone Pharmaceuticals Inc.

1 unchanged sentence

(in thousands of US dollars, except share and per share data)

The Company approved an employee share purchase plan in April 2019, which became effective on May 8, 2019, and is described in note 9.

The plan provides a means by which eligible employees of the Company may be given an opportunity to purchase common shares.

The Company recognizes share-based compensation expense over the requisite service period of the award, which equals the vesting period, using the straight-line method, with expense for PSUs and PSOs with performance-based vesting conditions, adjusted based on the likelihood of future achievement of the performance metrics.

Forfeitures, if any, are recorded as they occur.

Any consideration paid by employees on exercising share options and the corresponding portion previously credited to contributed surplus are credited to share capital.

The Black-Scholes option pricing model used by the Company to calculate option values was developed to estimate fair value.

The Company approved an employee share purchase plan in April 2019, which became effective on May 8, 2019, and is described in Note 10, “Share-Based Compensation.” The plan provides a means by which eligible employees of the Company may be given an opportunity to purchase common shares.

The plan permits the Company to grant a series of purchase rights to eligible employees under an employee stock purchase plan.

q) Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board, or “FASB,” issued Accounting Standard Update, or “ASU 2023-07,” Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted ASU 2023-07 for the year ended December 31, 2024, as documented in Note 19, “Segment Reporting”.

r) Recent Accounting Pronouncements

New Accounting Pronouncements - Issued and Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

2 unchanged sentences

ASU 2023-09 is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The Company is currently evaluating this guidance to determine the impact it may have on its financial statement disclosures.

The Company adopted ASU 2023-09 for the year ended December 31, 2025, as documented in Note 13, “Income Taxes.”

New Accounting Pronouncements - Issued but Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03 “Income Statement:

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The Company is currently evaluating this guidance to determine the impact it may have on its financial statement disclosures.

r) Significant Risks and Uncertainties

s) Significant Risks and Uncertainties

The Company is subject to challenges and risks specific to its business and its ability to execute on its strategy, as well as risks and uncertainties common to companies in the pharmaceutical industry, including, without limitation, risks and uncertainties associated with:

obtaining regulatory approval of its product candidate;

delays or problems in the supply of its study drug or failure to comply with manufacturing regulations;

commercializing CARDAMYST;

procuring inventory given our reliance on a concentrated supplier base, delays or problems in the supply of its study drug or failure to comply with manufacturing regulations;

identifying, acquiring or in-licensing product candidates;

3 unchanged sentences

Further, the Company may be impacted by general economic, political, and market conditions, including deteriorating market conditions due to investor concerns regarding inflation, armed conflicts, and overall fluctuations in the financial markets in the U.S.

s) Sources of Liquidity and Funding Requirements

The Company has incurred operating losses and experienced negative operating cash flows since its inception and anticipates continuing to incur losses for at least the next several years.

Further, in connection with the revised timeline for our New Drug Application, or “NDA,” submission, we took certain cash conservation measures to reduce spending

Milestone Pharmaceuticals Inc.

1 unchanged sentence

(in thousands of US dollars, except share and per share data)

through program deferrals and team restructuring.

These cash conservation measures are substantially completed and have been partially offset by $ 1.1 million in termination benefits paid as a result of the team restructuring.

t) Sources of Liquidity and Funding Requirements

The Company has incurred operating losses and experienced negative operating cash flows since its inception and expect to incur additional costs in connection with commercialization in 2026.

The Company intends to finance its commercialization and working capital needs from existing cash, potential proceeds from the commercialization of CARDAMYST, royalty revenue, the exercise of outstanding common stock options and warrants to purchase common stock, and existing and future licensing and commercial partnership agreements.

As of December 31, 2025, the Company had cash and cash equivalents and short-term investments of $ 106.0 million and an accumulated deficit of $ 430.6 million.

3 unchanged sentences

Management expects operating losses and negative cash flows from operations to continue for the foreseeable future.

The Company currently plans to raise additional funding as required based on the status of its clinical trials, progress of New Drug Application, or “NDA,” filing, and projected cash flows.

There can be no assurance that, in the event the Company requires additional financing, such financing will be available at terms acceptable to the Company, if at all.

Failure to generate sufficient cash flows from operations, raise additional capital and reduce discretionary spending should additional capital not become available could have a material adverse effect on the Company’s ability to achieve its business objectives.

The Company recorded no revenue for the year ended December 31, 2024, and revenue of $ 1.0 million for the year ended December 31, 2023.

This revenue was the result of having reached a milestone pursuant to our License and Collaboration Agreement, dated May 15, 2021, with Corxel Pharmaceuticals, or “Corxel,” formerly known as Ji Xing Pharmaceuticals Limited (such party “Ji Xing” and, such agreement, the “Ji Xing License Agreement”) due upon the successful initiation of a Phase 1 Clinical Trial of a pharmaceutical product that uses a device to deliver etripamil by nasal spray by or on behalf of Corxel for the treatment of PSVT in the People’s Republic of China (the “Territory”), including mainland China, Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan.

The Company recorded license revenue of $ 1.5 million for the year ended December 31, 2025, and no revenue for the year ended December 31, 2024.

The license revenue for the year ended December 31, 2025 was the result of having reached a milestone pursuant to our License and Collaboration Agreement, dated May 15, 2021, with Corxel Pharmaceuticals, or “Corxel,” formerly known as Ji Xing Pharmaceuticals Limited (such party “Ji Xing” and, such agreement, the “Ji Xing License Agreement”) due upon approval of the NDA for CARDAMYST by the FDA in the United States.

Strategic Partnerships

1 unchanged sentence

On May 15, 2021, the Company entered into the License Agreement with Corxel, which is an entity affiliated with RTW Investments, LP, or “RTW,” a beneficial owner of approximately 2.9 % of the Company’s common shares, as of December 31, 2025.

Under the License Agreement, the Company granted Corxel exclusive development and commercialization rights to any pharmaceutical product that uses a device to deliver etripamil by nasal spray for all prophylactic and therapeutic uses in humans in the People’s Republic of China, or the “Territory,” including mainland China, Hong Kong Special Administrative Region, Macau Special Administrative Region, and Taiwan.

Corxel will be responsible for development and regulatory activities in the Territory, and the Company will remain responsible for certain manufacturing activities in the Territory, subject to the supply agreement subsequently entered into by the Company and Corxel as contemplated by the License Agreement (the Supply Agreement).

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Corxel is responsible for all development, regulatory and commercialization activities in the Territory, including the performance of clinical trials necessary for regulatory approval, and is responsible for all such related costs.

Supply of the product can be provided by another entity, as the Company currently uses a CMO for the production of etripamil without subsequent significant modification or customization by the Company, therefore the Company determined the obligation to supply product is a separate and distinct obligation.

The Company concluded that the obligation for participation on the various governance committees was distinct as the services could be performed by an outside party, however it was determined to be immaterial

Supply of the product can be provided by another entity, as the Company currently uses a CMO for the production of etripamil without subsequent significant

Milestone Pharmaceuticals Inc.

1 unchanged sentence

(in thousands of US dollars, except share and per share data)

after estimating the stand-alone cost compared to the License Agreement as a whole.

modification or customization by the Company, therefore the Company determined the obligation to supply product is a separate and distinct obligation.

As a result, the Company concluded there were two material and distinct performance obligations to account for under ASC 606 at the inception of the License Agreement.

Short-term Investments

As of December 31, 2024, short-term investments of $ 44.4 million were comprised of term deposits issued in US currency, earning interest between 4.72 % and 5.32 %, maturing between February 7, 2025 and April 11, 2025.

As of December 31, 2025, short-term investments of $ 32.9 million were comprised of term deposits issued in US currency, earning interest between 2.75 % and 4.48 %, maturing between March 10, 2026 and April 21, 2026.

These short-term investments were in scope of ASC 320, Investments-Debt Securities .

2 unchanged sentences

The Company had short-term investments of $ 44.4 million as of December 31, 2024.

On May 20, 2022, the Company entered into a new lease arrangement for a 62-month term for new office space located in Charlotte, NC.

As of December 31, 2025, $ 0.9 million in short-term investments were pledged as collateral for a letter of credit.

Following FDA approval in December 2025, the Company began capitalizing inventory costs related to CARDAMYST manufactured after the approval date.

The components of inventory are as follows:

December 31, 2025

December 31, 2024

Raw materials

Work-in-process

Finished goods

Total inventory

Inventory manufactured prior to FDA approval was expensed through research and development costs, and therefore, this inventory has a zero-cost basis and is not included in the inventory balance.

On May 20, 2022, the Company entered into a lease arrangement for a 62-month term for new office space located in Charlotte, NC.

The Company recognized the operating lease right-of-use asset and operating lease liabilities at the lease commencement date on August 1, 2022.

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Lease expenses are recognized on a straight-line basis over the lease term, which is accomplished by increasing the amortization of the right-of-use asset as interest expense on the lease liability declines over the lease term.

On July 1, 2020, the Company entered into an arrangement for the lease renewal for its headquarters located in Ville Saint-Laurent, Quebec.

On August 12, 2025, the Company entered into an arrangement for the lease renewal for its headquarters located in Ville Saint-Laurent, Quebec.

The 2-year lease term is from December 1, 2025, expiring on November 30, 2027.

The Company recorded the operating lease right-of-use asset and operating lease liabilities at the effective lease arrangement date of July 1, 2020.

The Company recorded the operating lease right-of-use asset and operating lease liabilities at the effective lease arrangement date of August 12, 2025.

The Company’s examined credit ratings for similar companies, assumed equivalency between the Canadian and U.S.

markets for collateralized debt and used rates for the remaining lease term of 28 months .

This resulted in an incremental borrowing rate of 5.26 %.

This resulted

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

(in thousands of US dollars, except share and per share data)

in an incremental borrowing rate of 5.2 %.

2 unchanged sentences

Opening balance

Right-of-use adjustment, renewal August 2025

Amortization of right-of-use asset

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The following table summarizes the future minimum lease payments of right-of-use assets operating leases as of December 31, 2025:

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

(in thousands of US dollars, except share and per share data)

January 1, 2026 to December 31, 2026

January 1, 2027 to September 30, 2027

January 1, 2027 to November 30, 2027

Less interest

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Property and equipment, net

During the year ended December 31, 2024, the Company recorded an immaterial amount of disposals and losses on disposals.

No disposal was recorded for the year ended December 31, 2023.

No disposal was recorded for the year ended December 31, 2025, and an immaterial amount of disposals and losses on disposals was recorded for the year ended December 31, 2024.

For the years ended December 31, 2025 and 2024, depreciation expense was $ 114 and $ 105 , respectively.

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

(in thousands of US dollars, except share and per share data)

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities comprised the following as of December 31:

December 31, 2024

December 31, 2023

Trade accounts payable

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Accrued commercial liabilities

Accrued underwriting fees

Accrued legal liabilities

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As of December 31, 2025, there were 2,286,603 common shares available for issuance under the Employee Stock Purchase Plan, or the “ESPP,” of which 1,785,097 are available for future purchases.

On February 28, 2024, the Company entered into an underwriting agreement, or the “Underwriting Agreement,” related to an underwritten public offering, or the “Offering,” of 16,666,667 of our common shares, without par value, at a public offering price of $ 1.50 per share and, in lieu of common shares to certain investors, pre-funded warrants to purchase 3,333,333 Shares at a public offering price of $ 1.499 per pre-funded warrant.

On July 11, 2025, the Company entered into an underwriting agreement, or the “Underwriting Agreement,” related to an underwritten public offering, or the “2025 Offering,” of (i) 31,500,000 of the Company’s common shares, without par value, accompanying Series A common warrants, or the “Series A Common Warrants,” to purchase an aggregate of 31,500,000 common shares and accompanying Series B common warrants, or the “Series B Common Warrants,” to purchase an aggregate of 31,500,000 common shares, at a combined public offering price of $ 1.50 per share and accompanying Series A Common Warrant and Series B Common Warrant and (ii) in lieu of common shares to certain investors that so chose, pre-funded warrants to purchase 3,502,335 common shares, or the “2025 Pre-Funded Warrants” and, together with the Series A Common Warrants and the Series B Common Warrants, the “Warrants,” accompanying Series A Common Warrants to purchase an aggregate of 3,502,335 common shares and accompanying Series B Common Warrants to purchase an aggregate of 3,502,335 common shares, at a combined public offering price of $ 1.499 per Pre-Funded Warrant and accompanying Series A Common Warrant and Series B Common Warrant, which represented the combined public offering price for the Shares and accompanying common warrants less the $ 0.001 per share exercise price for each such Pre-Funded Warrant.

All the Securities sold in the 2025 Offering were sold by the Company.

The net proceeds to the Company from the 2025 Offering were $ 48.6 million after deducting underwriting commissions and other offering expenses payable by the Company, in the amount of $ 3.9 million.

On February 28, 2024, the Company entered into an underwriting agreement, or the “Underwriting Agreement,” related to an underwritten public offering, or the “February 2024 Offering,” of 16,666,667 of our common shares, without par value, at a public offering price of $ 1.50 per share and, in lieu of common shares to certain investors, pre-funded warrants to purchase 3,333,333 Shares at a public offering price of $ 1.499 per pre-funded warrant.

Each pre-funded warrant has an exercise price of $ 0.001 per share.

The pre-funded warrants were exercisable immediately upon issuance, subject to certain beneficial ownership limitations.

Under the terms of the Underwriting Agreement, the Company granted the underwriters party thereto, or the “Underwriters,” an option to purchase up to an additional 3,000,000 common shares at the same price per share as the other common shares sold in the February 2024 Offering, which was exercised by the Underwriters in full on February 29, 2024.

Milestone Pharmaceuticals Inc.

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(in thousands of US dollars, except share and per share data)

per share as the other common shares sold in the Offering, which was exercised by the Underwriters in full on February 29, 2024.

On March 22, 2023, the Company entered into an exchange agreement, or the “Exchange Agreement,” with entities affiliated with RTW, or the “Exchanging Stockholders,” pursuant to which the Company exchanged an aggregate of 1,059,000 shares of the Company’s common shares owned by the Exchanging Stockholders for pre-funded warrants, or the “Exchange Warrants”, to purchase an aggregate of 1,059,000 common shares, with an exercise price of $ 0.001 per share and no expiration date.

The Exchange Warrants are exercisable immediately and no additional cash consideration was rendered in exchange for the warrants.

A holder of the Exchange Warrants (together with its affiliates and other attribution parties) may not exercise any portion of an Exchange Warrant to the extent that immediately prior to or after giving effect to such exercise the holder, together with its affiliates, would beneficially own more than 9.99 % of the Company’s outstanding common shares immediately after exercise, which percentage may be increased or decreased to any other percentage specified not in excess of 9.99 % at the holder's election upon 61 days ' notice to the Company subject to the terms of the Exchange Warrants.

On July 29, 2020, the Company entered into an Open Market Sale Agreement SM , or the “Original Sale Agreement,” with respect to an at-the-market offering program, or the “ATM Program,” under which the Company could issue and sell its common shares having an aggregate offering price of up to $ 50.0 million.

On March 18, 2025, the Company entered into an Amended and Restated Open Market Sale Agreement SM , or the “Amended Agreement.” Under the Amended Agreement, the Company may issue and sell its common shares, no par value per share, for an aggregate offering price of up to $ 77.8 million (which includes the approximately $ 2.8 million of sales previously made pursuant to the Original Sale Agreement through the date the Amended Agreement was entered into), or the “ATM Shares.” The Company issued 5,690,920 shares under the amended agreement resulting in net proceeds of $ 14.5 million, after deducting sales agent commissions payable by the Company of $ 0.4 million during the year ended December 31, 2025.

The Company determines the accounting classification of warrants that are issued, as either liability or equity, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity , and then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock.

Under ASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate the issuer to settle the warrants or the underlying shares by paying cash or other assets, or must or may require settlement by issuing a variable number of shares.

If warrants do not meet liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature.

If the warrants do not require liability classification under ASC 815-40, in order to conclude equity classification, the Company assesses whether the warrants are indexed to its common stock and whether the warrants are classified as equity under ASC 815-40 or other applicable U.S.

After all relevant assessments are made, the Company concludes whether the warrants are classified as liability or equity.

The Company's outstanding common stock warrants are classified as equity and recorded in additional paid-in capital, or “APIC,” based on an allocation of the proceeds from the 2025 Offering, which was based on the relative fair value of the Series A and B Common Warrants at the issuance date and is not subject to change after the issuance date.

The fair value used for the relative fair value allocation was calculated using the Black-Scholes Model for the Series A Warrants and the Monte-Carlo simulation method for the Series B Warrants.

During the year ended December 31, 2025, 13,630,007 Series A and 666,666 Series B Warrants were exercised for net proceeds of $ 19.2 million and $ 1.2 million, respectively, after deducting underwriting commissions payable by the Company of $ 1.2 million and $ 0.01 million, respectively.

As of December 31, 2025, 21,372,328 Series A Common Warrants and 34,335,669 Series B Common Warrants remained outstanding.

Share-Based Compensation

Stock Options

Under the Company’s 2019 Equity Incentive Plan (the 2019 Plan) and the Company’s Stock Option Plan (the 2011 Plan), unless otherwise decided by the Board of Directors, options vest and are exercisable as follows:

Under the Company’s 2019 Equity Incentive Plan, or the “2019 Plan,” and the Company’s Stock Option Plan, or the “2011 Plan,” unless otherwise decided by the Board of Directors, options vest and are exercisable as follows:

25 % vest and are exercisable on the one year anniversary of the grant date and one thirty-sixth (1/36 th ) of the remaining options vest and are exercisable each month thereafter, such that options are vested in full on four-year anniversary of the grant date.

On January 1, 2025, the number of the Company’s common shares reserved for issuance under the 2019 Plan automatically increased by 2,134,159 common shares.

In addition, 125,323 options have been forfeited under the 2011 Plan since the adoption of the 2019 Plan and have become available for issuance under the 2019 Plan.

Further, since the adoption of the plan, 561,000 of previously issued options were cancelled and were made available for future grants.

Further, on June 10, 2025 at the Company’s 2025 annual meeting of shareholders, the Company’s shareholders approved an amendment to the 2019 Plan to (i) remove the evergreen provision, which previously triggered an automatic annual increase to the option pool equal to four percent of outstanding common shares at year-end, and (ii) increase the number of common shares authorized for issuance by 4,000,000 shares.

In addition, 183,349 options have been forfeited or expired under the 2011 Plan since the adoption of the 2019 Plan and have become available for issuance under the 2019 Plan.

Further, since the adoption of the plan, 561,000 of previously issued options

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

(in thousands of US dollars, except share and per share data)

were cancelled and were made available for future grants.

As of December 31, 2025, there were 15,714,455 common shares available for issuance under the 2019 Plan, of which 5,205,860 common shares were available for future grants.

On November 10, 2021, the Company established a 2021 Inducement Plan under Nasdaq Marketplace Rules through the granting of awards.

This 2021 Inducement Plan is intended to help the Company provide an inducement material for certain individuals to enter into employment with the Company, incentives for such persons to exert maximum efforts for the success of the Company and provide a means by which employees may benefit from increases in value of the common shares.

On November 10, 2021, the Company established a 2021 Inducement Plan, or the “Inducement Plan.” The Inducement Plan is intended to help the Company provide an inducement for certain individuals to enter employment with the Company, incentives for such persons to exert maximum efforts for the success of the Company and a means by which employees may benefit from increases in value of the common shares.

As of December 31, 2025, there were 1,000,000 shares available for issuance under the 2021 Inducement Plan, of which 290,000 shares were available for future grants.

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Granted - 2019 Plan

Granted - Inducement Plan

Exercised - 2011 Plan

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Expired - 2011 Plan

Expired - Inducement Plan

Outstanding at end of year

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Granted - 2019 Plan

Granted - Inducement Plan

Exercised - 2011 Plan

Forfeited - Inducement Plan

Forfeited - 2019 Plan

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Expired - 2011 Plan

Cancelled - 2019 Plan

Outstanding at end of year

Expired - Inducement Plan

Outstanding at end of period

Outstanding at end of year - Weighted average exercise price

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The share options are expected to be recognized over a remaining weighted average vesting period of 1.88 years and 1.48 years as of December 31, 2025 and 2024, respectively.

Options granted are valued using the Black-Scholes option pricing model.

This model also requires assumptions, including expected option life, volatility, risk-free interest rate and dividend yield, which greatly affect the calculated values.

Milestone Pharmaceuticals Inc.

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(in thousands of US dollars, except share and per share data)

Options granted are valued using the Black-Scholes option pricing model.

Amortization of the fair value of the options over vesting years has been expensed and credited to additional paid-in capital in shareholders’ equity.

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Granted - 2019 Plan

Granted - Inducement Plan

Vested, outstanding - 2019 Plan

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Non-vested share options at end of year

Non-vested share options at end of year - Weighted average fair value

Non-vested share options at end of period - Weighted average fair value

Inducement Plan

Non-vested share options at beginning of year - 2019 Plan

Non-vested share options at beginning of year - Inducement Plan

Granted - 2019 Plan

Granted - Inducement Plan

Vested, outstanding - 2019 Plan

( 1,690,368 )

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Vested, outstanding - Inducement Plan

Forfeited - Inducement Plan

Forfeited - 2019 Plan

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(in thousands of US dollars, except share and per share data)

The fair value of options is measured using Black-Scholes valuation model.

This model also requires assumptions, including expected option life, volatility, risk-free interest rate and dividend yield, which greatly affect the calculated values:

The fair value of options granted for the 2011 Plan, 2019 Plan, and Inducement Plan were estimated using Black-Scholes option pricing model, resulting in the following weighted average assumptions for the options granted:

Year ended December 31,

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Expected life

Expected volatility is determined using comparable companies for which the information is publicly available.

Expected volatility is determined using the Company’s historical volatility.

Prior to establishing sufficient historical volatility, the Company used comparable companies for which the information is publicly available.

The risk-free interest rate is determined based on the U.S.

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Compensation expense for performance-based stock options is only recognized when management determines it is probable that the awards will vest.

The vesting of the performance-based stock options is conditional upon the U.S.

Food and Drug Administration, or “FDA,” approval of etripamil.

The vesting of the performance-based stock options is conditional upon the FDA approval of etripamil for the treatment of PSVT.

Subject to the option holders continuous service as of each such date, 50 % of the option shares will vest on the six-month anniversary of the approval date and the remaining 50 % of the option shares will vest on the one-year anniversary of such approval date.

The expense for the performance-based stock options is not recognized until the performance conditions are deemed probable of achievement.

The Company did not record any expense related to the performance-based stock options during the year ended December 31, 2024, as the performance conditions were not deemed probable of being met.

The Company recorded $ 0.8 million of expense related to the performance-based stock options during the year ended December 31, 2025, as the performance conditions were met with FDA approval of etripamil for the treatment of PSVT on December 12, 2025.

The weighted average grant date fair value of the performance stock options awarded during the year ended December 31, 2025, was $ 1.38 per option.

Employee Stock Purchase Plan

On July 15, 2022, the Company offered an ESPP, in which participation is available to our employees in the United States and Canada who meet certain service eligibility requirements.

On July 15, 2022, the Company offered an employee stock purchase plan, or “ESPP,” in which participation is available to our employees in the United States and Canada who meet certain service eligibility requirements.

Eligible employees may authorize an amount up to 15 % of their salary to purchase common stock at the lower of a 15 % discount to the beginning price of the participation period or a 15 % discount to the ending price of each six-month purchase interval.

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Performance Share Units

On May 6, 2024, the Company, pursuant to the 2019 Plan, awarded 924,000 Performance Share Units, or “PSUs,” to employees.

On May 6, 2024, the Company, pursuant to the 2019 Plan, awarded 924,000 Performance Stock Units, or “PSUs,” to employees.

The PSUs vest subject to the satisfaction of certain performance conditions established by the Company’s Compensation Committee.

The FDA approval of etripamil represents the performance condition for the vesting of these performance share units.

A summary of the Company’s PSU activity for the years ended December 31 is as follows:

Beginning balance

Ending balance

The FDA approval of etripamil represents the performance condition for the vesting of these PSUs.

The number of PSUs granted represents the total number of common shares that may be earned.

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Stock-based compensation costs associated with these PSUs are reassessed each reporting period based on estimated performance achievement.

The Company did not record any expense related to the PSUs during the year ended December 31, 2024, as the performance conditions were not deemed probable of being met.

The weighted average grant date fair value of the PSUs granted during the year ended December 31, 2024, was $ 1.74 .

As a result of the FDA approval on December 12, 2025, 100 % of the outstanding PSUs vested at a grant date fair value of $ 1.74 per share.

The Company recorded $ 1.6 million of expense related to the PSUs during the year ended December 31, 2025.

Restricted Stock Units

Pursuant to the 2019 Plan, the Company issues Restricted Stock Units, or “RSUs,” to employees which vest based on a service criteria.

When vested, the RSUs represent the right to be issued a number of shares of the Company’s common stock equal to the number of RSUs granted.

The grant date fair value for RSUs is based on the market price of the Company’s common stock on the date of the grant.

The fair value is then amortized to compensation expense over the requisite service period or vesting term.

The Company issued 988,850 RSUs for the year ended December 31, 2025.

The weighted average grant date fair value for the RSUs issued during the year ended December 31, 2025, was $ 2.02 per share.

No RSUs were issued for the year ended December 31, 2024.

The total unrecognized compensation cost related to the non-vested RSUs as of December 31, 2025, was $ 1.5 million and will be recognized over a weighted average period of approximately 3.07 years.

Share-Based Compensation Expense

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Commercial activities

On March 27, 2023, we entered into a note purchase agreement, or the “Note Purchase Agreement,” with RTW Investments LP and certain of its affiliates, or collectively, “RTW” .

On March 29, 2023, we closed the transactions contemplated by the Note Purchase Agreement, and issued and sold $ 50.0 million principal amount of 6.0 % Convertible Senior Notes due 2029, or the “2029 Convertible Notes,” to the holders.

The 2029 Convertible Notes are senior secured obligations and are guaranteed on a senior secured basis by our wholly owned subsidiary, Milestone Pharmaceuticals USA, Inc.

Interest at the annual rate of 6.0 % is payable quarterly in cash or, at our option, payable in kind for the first three years .

The maturity date for the 2029 Convertible Notes is March 31, 2029, the “Maturity Date”.

The obligations under the 2029 Convertible Notes are secured by substantially all of our and our subsidiary guarantor’s assets.

Each $ 1,000 of principal of the 2029 Convertible Notes (including any interest added thereto as payment in kind) is convertible into 191.0548 common shares, equivalent to an initial conversion price of approximately $ 5.23 per share, subject to customary anti-dilution and other adjustments.

In addition, following a notice of redemption or certain corporate

On March 27, 2023, the Company entered into a note purchase agreement, or the “Note Purchase Agreement,” with RTW Investments LP and certain of its affiliates, or collectively, “RTW.”

On March 29, 2023, the Company closed the transactions contemplated by the Note Purchase Agreement, and issued and sold $ 50.0 million principal amount of 6.0 % Convertible Senior Notes due 2029, or the “2029 Convertible Notes,” to the holders.

The 2029 Convertible Notes are senior secured obligations and are guaranteed on a senior secured basis by the Company’s wholly owned subsidiary, Milestone Pharmaceuticals USA, Inc.

Interest at the annual rate of 6.0 % is payable quarterly in

Milestone Pharmaceuticals Inc.

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(in thousands of US dollars, except share and per share data)

events that occur prior to the Maturity Date, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2029 Convertible Notes in connection with such notice of redemption or corporate event.

On or after March 27, 2027, the 2029 Convertible Notes are redeemable by us, subject to certain conditions, if the closing sale price of the common shares exceeds 150 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100 % of the principal amount of the 2029 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

cash or, at our option, payable in kind for the first three years .

The maturity date for the 2029 Convertible Notes is March 31, 2029, the “Maturity Date”.

The obligations under the 2029 Convertible Notes are secured by substantially all of the Company’s and the Company’s subsidiary guarantor’s assets.

In addition, following a notice of redemption or certain corporate events that occur prior to the Maturity Date, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2029 Convertible Notes in connection with such notice of redemption or corporate event.

On or after March 27, 2027, the 2029 Convertible Notes are redeemable by the Company, subject to certain conditions, if the closing sale price of the common shares exceeds 150 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100 % of the principal amount of the 2029 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

In accounting for the issuance of the 2029 Convertible Notes, the Company determined there were no embedded features, which require bifurcation between debt and equity components.

As a result, the 2029 Convertible Notes are accounted for as a liability.

As of December 31, 2024, the estimated fair value of the 2029 Convertible Notes was approximately $ 56.07 million based on level 2 inputs.

As of December 31, 2025, the estimated fair value of the 2029 Convertible Notes was approximately $ 62.3 million based on level 2 inputs, including volatility and credit spread.

The net carrying amount of the 2029 Convertible Note were as follows:

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Total interest expense

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

(in thousands of US dollars, except share and per share data)

Net loss per share

1 unchanged sentence

In addition to the conversion feature on the 2029 Convertible Notes described above, which the Company reviewed and concluded that if-converted would be anti-dilutive due to the facts surrounding the feature, the following potentially dilutive securities have also been excluded from the computation of diluted weighted average shares outstanding as of December 31, as they would be anti-dilutive:

Share options and performance share units

Stock options and RSUs

Amounts in the table above reflect the common share equivalents of the noted instruments.

Upon adoption of ASU No.

2023-09, for the year ended December 31, 2025, the provision for income taxes differs from the expense that would be obtained by applying the Canadian federal statutory income tax rate as a result of the following:

Loss before income taxes

Canadian federal statutory tax rate (1)

Provincial and local taxes (2)

Foreign tax effects

United States

Statutory tax rate difference

Non-taxable item:

share based compensation

Changes in Valuation Allowances

Changes in unrecognized tax benefits

Non-taxable or non-deductible items

Share-based compensation

Effective Tax Rate

(1) We apply the federal tax rate of 15 % which is the federal statutory rate of Canada of 38 %, net of the general rate reduction of 10 % and tax abatement of 13 %.

(2) We apply the provincial tax rate in Quebec of 11.5 % to the net loss before income taxes attributable to the Canadian entity.

Our provincial tax is Quebec only.

For the year ended December 31, 2025, loss before income taxes was $ 20.4 million and $ 42.7 million for the Canadian and United States entities, respectively.

For the year ended December 31, 2024, loss before income taxes was $ 20.8 million and $ 20.7 million for the Canadian and United States entities, respectively.

Milestone Pharmaceuticals Inc.

1 unchanged sentence

(in thousands of US dollars, except share and per share data)

12 Income taxes

A reconciliation between tax expense and the product of accounting income multiplied by the basic income tax rate for the years ended December 31, 2024 and 2023 is as follows:

Prior to the adoption of ASU No.

2023-09, for the year ended December 31, 2024, the provision for income taxes differs from the expense that would be obtained by apply the Canadian statutory income tax rate as result of the following:

Loss before income taxes

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Effect on income tax rate resulting from

Accounting charges not deductible for tax purposes

Non‑deductible share‑based compensation

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(1) Our Canadian corporate tax rate is comprised of a basic Part I federal tax rate of 38 %, net 15 % after federal tax abatement and general tax reduction, plus the additional provincial tax of 11.5 %.

The Company has incurred Canadian federal and provincial net operating losses (NOLs) from inception.

The Company has incurred Canadian federal and provincial net operating losses, or “NOLs,” from inception.

As of December 31, 2025, the Company has NOL carry-forwards of approximately $ 230.7 million and $ 226.6 million, respectively, for Canadian federal and Québec purposes, available to reduce future taxable income, which expire beginning in 2026 through 2045.

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(in thousands of US dollars, except share and per share data)

The Company’s deferred tax assets consist of the following for the years ended December 31, 2024 and 2023:

The Company’s net deferred tax assets consist of the following for the years ended December 31:

Net operating loss carry‑forwards

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The Company is subject to Canada Revenue Agency and Revenu Québec examination for fiscal years 2020 to 2025 due to unexpired statute of limitation periods and is subject to US Federal and state income tax examination for fiscal years 2022 to 2025.

On July 4, 2025, the President of the United States signed H.R.

1, the “One Big Beautiful Bill Act,” into law.

The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense.

These changes were reflected in the income tax provision for the period ended December 31, 2025, as enactment occurred after the balance sheet date.

The Company has elected to continue capitalizing domestic R&D expenditures and will continue to amortize prior year R&D expenditures that were capitalized.

Government assistance

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These amounts have been recorded as a reduction of research and development expenditures in the years ended December 31, 2025 and 2024 for an amount of $ 316 and $ 259 , respectively.

14 Commitments

In the normal course of business, the Company enters into contracts with clinical research organizations, drug manufacturers and other vendors for preclinical and clinical research studies, research and development supplies and other services and products for operating purposes.

These contracts generally provide for termination with reasonable notice or upon certain circumstances, and therefore are cancellable contracts.

Therefore, as of December 31, 2024, there are no contractual commitments, except for office leases (see note 5).

Therefore, as of December 31, 2025, there are no contractual commitments, except for office leases (see Note 6, “Leases”).

Currency risk

The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates and the degree of volatility of those rates.

The foreign currency risk is limited to the portion of the Company’s business transactions denominated in currency other than US dollars.

The foreign currency risk is limited to the portion of the Company’s business transactions denominated in

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

(in thousands of US dollars, except share and per share data)

currency other than US dollars.

The following table provides an indication of the Company’s exposure to the Canadian dollar, which is expressed in US dollars as of December 31:

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The Company does not enter into arrangements to hedge its currency risk exposure.

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

(in thousands of US dollars, except share and per share data)

Fair value of financial instruments

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The carrying amounts of certain financial instruments, including cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued expenses approximate their fair values due to the short-term nature of such instruments.

Refer to Note 10, “Debt,” for details surrounding the fair value of the Convertible Notes.

Refer to Note 11, “Debt,” for details surrounding the fair value disclosures of the Convertible Notes.

Royalty Purchase Agreement

On March 27, 2023, we entered into a purchase and sale agreement, or the “Royalty Purchase Agreement,” with RTW and certain of its affiliates.

On March 27, 2023, the Company entered into a purchase and sale agreement, or the “Royalty Purchase Agreement,” with RTW and certain of its affiliates.

Pursuant to the Royalty Purchase Agreement, RTW agreed to purchase, following the U.S.

Food and Drug Administration approval of etripamil (subject to certain conditions), in exchange for a purchase price of $ 75.0 million, the right to receive a tiered quarterly royalty payments, or the “Royalty Interest,” on the annual net product sales of etripamil in the United States in an amount equal to:

Food and Drug Administration approval of etripamil (subject to certain conditions), at a purchase price of $ 75.0 million, the right to receive a tiered quarterly royalty payments, or the “Royalty Interest,” on the net product sales of etripamil in the United States in an amount equal to:

(i) 7 %, or the “Initial Tier Royalty,” of annual net sales up to $ 500 million, (ii) 4 % of annual net sales greater than $ 500 million and less than or equal to $ 800 million, and (iii) 1 % of annual net sales greater than $ 800 million.

If certain revenue thresholds for aggregate annual net sales are not met, the Initial Tier Royalty will increase to 9.5 % beginning on January 1 of the following calendar year until a subsequent sales threshold is attained, at which time the Initial Tier Royalty would revert back to 7 %.

Based on the Company’s assessment of the terms and conditions under the Royalty Purchase Agreement, there is no accounting recognition required in these financial statements.

R efer to Note 21, “Subsequent Events.”

Milestone Pharmaceuticals Inc.

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Clinical receivable

Employee withholding taxes receivable

Other current receivable

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The measure of segment assets is reported on the balance sheet as total consolidated assets.

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

(in thousands of US dollars, except share and per share data)

Subsequent Events

Closing of sale of royalty interest

As previously disclosed, on March 27, 2023, the Company entered into the Royalty Purchase Agreement with RTW, pursuant to which RTW agreed to purchase, following FDA approval of etripamil (subject to certain conditions) for the treatment of PSVT, at a purchase price of $ 75.0 million, the right to receive tiered quarterly royalty payments on net product sales of etripamil in the United States.

On January 12, 2026, the Company closed the sale of Royalty interest under the Royalty Purchase Agreement and received cash of $ 75.0 million from RTW.

Sale of common shares under 2025 Offering and Open Market Sale Agreement SM

Subsequent to the year ended December 31, 2025, through to the date of issuance of the financial statements, the Company raised aggregate gross proceeds of $ 19.7 million from the sale of common shares through Milestone’s Open Market Sale Agreement SM and the exercise of Warrants issued in connection with the 2025 Offering.

Specifically, 5,526,590 shares were sold through the Open Market Sale Agreement SM for net proceeds of $ 10.9 million, after deducting sales agent commissions payable by the Company of $ 0.3 million.

In addition, 5,666,666 Series A Warrants were exercised for net proceeds of $ 8.0 million, after deducting underwriting commissions payable by the Company of $ 0.5 million.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data