What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-21 compared with 2023-03-29 · 188 added, 118 removed, 185 unchanged (62% of the section changed)

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Our lead product candidate, etripamil, is a novel and potent calcium channel blocker that we designed as a rapid-onset nasal spray to be self-administered by patients.

We are developing etripamil for the treatment of specific arrhythmias with a lead indication to treat paroxysmal supraventricular tachycardia, or PSVT, and a subsequent indication to treat atrial fibrillation with rapid ventricular rate, or AFib-RVR.

Etripamil - Pivotal Clinical Program in PSVT

PSVT is a rapid heart rate condition characterized by episodes of supraventricular tachycardia, or SVT, that start and stop without warning.

Episodes of SVT are often experienced by patients with symptoms including palpitations, sweating, chest pressure or pain, shortness of breath, sudden onset of fatigue, lightheadedness or dizziness, fainting and anxiety.

We are developing etripamil for the treatment of specific arrhythmias with a lead indication to treat paroxysmal supraventricular tachycardia, or PSVT, and an indication to treat atrial fibrillation with rapid ventricular rate, or AFib-RVR.

On October 23, 2023, we submitted the New Drug Application, or NDA, to the U.S.

Food and Drug Administration, or FDA, seeking approval to sell and market etripamil for the treatment of paroxysmal supraventricular tachycardia, or PSVT.

PSVT is a condition characterized by an abnormality in the electrical system of the heart causing patients to have unexpected, often severely symptomatic episodes of rapid heart rate.

Patients experiencing episodes of supraventricular tachycardia, or SVT, often experience symptoms including palpitations, sweating, chest pressure or pain, shortness of breath, sudden onset of fatigue, lightheadedness or dizziness, fainting and anxiety.

Calcium channel blockers have long been approved for the treatment of PSVT as well as other cardiac conditions.

Calcium channel blockers available in oral form are frequently used prophylactically to control the frequency and duration of future episodes of SVT.

Calcium channel blockers available in oral form are sometimes used prophylactically to attempt to control the frequency and duration of future episodes of SVT.

For treatment of episodes of SVT, approved calcium channel blockers are administered intravenously under medical supervision, usually in the emergency department.

The combination of convenient nasal-spray delivery, rapid-onset and short duration of action of etripamil has the potential to shift the current treatment paradigm for episodes of SVT away from the burdensome and costly emergency department setting.

We believe the combination of convenient nasal-spray delivery and rapid-onset of etripamil has the potential to shift the current treatment paradigm for episodes of SVT away from the burdensome and costly emergency department setting.

We announced that we received a refuse-to-file, or RTF, letter from the FDA on December 26, 2023.

Upon preliminary review, the FDA determined that the NDA was not sufficiently complete to permit substantive review.

The FDA requested clarification about the data recorded for the time of adverse events in Phase 3 clinical trials;

FDA did not express concerns about the nature or severity of adverse events.

In February 2024, Milestone held a Type A Meeting with the FDA to determine next steps for the filing for marketing approval.

The Agency indicated that the adverse events, or AEs, hourly timing data in question had minimal impact on the overall characterization of the etripamil safety profile.

As a result, data sets that capture timing of AEs reported in the Phase 3 pivotal studies will be revised to align with FDA requests and resubmitted.

This approach will address the requests from the FDA in their December 2023 RTF letter.

The original NDA submission will be reviewed, and no additional clinical efficacy or safety trials have been requested.

The Company expects a standard NDA review following the resubmission.

The resubmission is planned for the second quarter of 2024.

If approved, we believe that etripamil will be the first self-administered therapy for the rapid termination of episodes of SVT wherever and whenever they occur.

On October 17, 2022, we announced positive and statistically significant topline efficacy and safety data from the Phase 3 RAPID clinical trial of etripamil in patients with PSVT.

These results were further presented shortly thereafter, on November 7, 2022, as a Late-Breaking Clinical Trial at the American Heart Association Scientific Meetings (Chicago, IL).

On October 17, 2022, we announced positive and statistically significant topline efficacy and safety data from our Phase 3 RAPID clinical trial evaluating etripamil in patients with PSVT.

These results from the RAPID trial were presented on November 7, 2022, as a Late-Breaking Clinical Trial at the American Heart Association Scientific Sessions (Chicago, IL).

These results were also published in the Lancet on July 8, 2023.

RAPID, our multi-center, randomized, double-blind, placebo-controlled, event-driven Phase 3 trial, enrolled 706 patients across clinical sites in North America and Europe.

Patients were randomized 1:1 to a regimen of self-administering a first dose etripamil nasal spray, with a repeat dose 10 minutes later if symptoms persisted, or a matching placebo regimen.

Self-administration was prompted by a patient’s customary symptoms and was performed in the at-home setting without medical supervision.

The RAPID trial achieved its primary endpoint, with patients taking the etripamil regimen demonstrating a highly statistically significant and clinically meaningful difference in time to SVT conversion as compared to placebo.

A Kaplan Meier analysis demonstrated a significantly greater proportion of patients who took etripamil converted within thirty minutes compared to placebo (64.3% vs.

Patients were randomized 1:1 using a self-administered regimen consisting of a first dose of study drug, and a repeat dose 10 minutes later if symptoms persisted.

Self-administration was prompted by a patient’s symptoms and performed in the at-home setting without medical supervision.

The RAPID trial achieved its primary endpoint with etripamil demonstrating a highly statistically significant and clinically meaningful difference in time to SVT conversion as compared to placebo.

A Kaplan Meier analysis demonstrated a significantly greater proportion of patients who took etripamil converted to sinus

rhythm within thirty minutes compared to patients that took placebo (64.3% vs.

hazard ratio, or HR, 2.62;

95% CI 1.66, 4.15;

By 90 minutes post-study drug administration, 80.6% of etripamil patients converted versus 60.7% of placebo patients (HR = 1.93;

By 90 minutes post-study drug administration, 80.6% of patients taking etripamil converted to sinus rhythm compared to 60.7% of patients taking placebo (HR = 1.93;

95% CI 1.349, 2.752;

p<0.001) and statistical significance was maintained throughout the 5-hour observation window.

Statistically significant reductions in time to conversion in patients who took etripamil were evident early and persisted throughout the observation window of the study compared to placebo.

The median time to conversion for patients in RAPID who self-administered etripamil was 17.2 minutes compared to 53.3 minutes for patients on placebo.

The safety and tolerability data from the RAPID trial continue to support the potential self-administration use of etripamil, with findings consistent with those observed in prior trials.

The most common randomized-treatment emergent adverse events, or RTEAEs, adverse events, or AEs, which occurred within 24 hours of etripamil administration, were related to the nasal local administration site.

Statistically significant reductions in time to conversion in patients who took etripamil were evident early and persisted throughout the observation window of the trial compared to patients that took placebo.

The median time-to-conversion for patients in the RAPID trial who self-administered etripamil was 17.2 minutes compared to 53.3 minutes for patients taking placebo.

The safety and tolerability data from the RAPID trial supports the potential self-administration of etripamil, with findings consistent with those observed in prior trials.

The most common randomized-treatment emergent adverse events, or RTEAEs, and adverse events, or AEs, occurred within 24 hours of etripamil administration and were related to the nasal local administration site.

Overall, the majority of RTEAEs were reported as mild (68%) or moderate (31%).

There were no serious AEs related to etripamil.

The use of additional medical interventions and emergency department utilization were important secondary measures of efficacy for both the RAPID and NODE-301 studies, although with the understanding that neither study was individually powered to expect statistical differences.

In a pre-planned analysis across both studies, patients who self-administered etripamil sought additional medical interventions 43% less frequently (15% vs.

p=0.013) and had 39% fewer emergency department visits (14% vs.

No serious adverse effects related to etripamil were reported.

The use of additional medical interventions and emergency department utilization were key secondary endpoints for both the RAPID and NODE-301 trials.

In a pre-planned pooled analysis across both trials, patients who self-administered etripamil sought additional medical interventions 43% less frequently (15% vs.

p=0.013) and had 39% fewer visits to the emergency department (14% vs.

p=0.035) than patients in the placebo arm.

NODE-303 is a Phase 3, multi-center, open-label safety trial, evaluating primarily the safety of etripamil when self-administered without medical supervision over multiple, separate SVT episodes.

After consultation with the regulatory authorities, it was concluded that the test dose procedure was an unnecessary step for the self-administration of etripamil and it was removed from the requirements of the NODE-303 safety study.

The NODE-303 trial was initiated with an etripamil 70 mg single-dose regimen and the 70 mg optional repeat-dose regimen was introduced into the trial starting in the second half of 2021 following FDA acceptance of the protocol amendment.

The trial was sized in order to add to the safety data from the remainder of the development program, including those data already obtained from the RAPID, NODE-301 and NODE-302 trials, in order to fulfill the safety and exposure dataset needed for NDA filing.

Following the results from the RAPID study, initially obtained in October 2022, and the assessment of the total exposures to etripamil in the development program to date, we believe we have the safety dataset needed for review of the NDA for PSVT and have closed the NODE-303 study.

We are conducting patient access programs to provide further access to etripamil to patients who have participated in the clinical development registration trials to treat their future SVT episodes.

These programs are tailored to meet the regulatory requirements in the territories in which the clinical sites are located.

The NODE-301 trial is a placebo-controlled Phase 3 safety and efficacy trial and the first trial ever conducted to treat attacks of PSVT in the at-home setting.

NODE-301 enrolled 431 patients across 65 sites in the United States and Canada.

Although the study did not meet its primary endpoint of time to conversion of SVT to sinus rhythm compared to placebo over the five-hour period following study drug administration in which patients wore a cardiac monitor, both prespecified and post hoc analyses at earlier time periods, namely at 30 minutes, showed significant treatment effects in favor of etripamil.

For example, in a post hoc analysis of the NODE-301 data, 54% of etripamil patients vs.

35% of placebo patients converted within 30 minutes (HR 1.87, p=0.02).

The safety and tolerability data from the NODE-301 trial support the potential self-administration use of etripamil, with the most common randomized treatment emergent adverse events, or RTEAEs, adverse events, or AEs, which occurred within 24 hours of etripamil administration, being related to the nasal local administration site.

Overall, the majority of RTEAEs were reported as mild (85%) to moderate (15%).

There were no serious AEs related to etripamil.

After reviewing the data from NODE-301 with the FDA in July 2020, the Agency indicated that an analysis period shorter than 5 hours would be appropriate to measure the efficacy of etripamil.

The FDA indicated that two trials, the RAPID and NODE-301 trials could potentially fulfill the efficacy requirement for our planned NDA for etripamil in patients with PSVT, both using time to conversion over the first 30 minutes with a target p-value of less than 0.05 as the primary endpoint.

AFIB RVR Phase 2 Proof of Concept Trial

The Phase 2, double-blind, placebo-controlled, proof-of-concept study, Reduction of Ventricular Rate in Patients with Atrial Fibrillation (ReVeRA), in patients with atrial fibrillation with rapid ventricular response (AFib/RVR), is being conducted in Canada and the Netherlands in collaboration with the Montreal Heart Institute, the WCN network, and other research centers.

The ReVeRA study is expected to enroll approximately 50 patients randomized 1:1 to receive either 70 mg of etripamil nasal spray or placebo to patients presenting with symptomatic AFib/RVR.

The primary endpoint will assess reduction in ventricular rate, with key secondary endpoints including the time to achieve the maximum reduction in rate and the duration of the effect.

The trial is being conducted in the emergency department setting under medical supervision.

We believe that PSVT is a large and under-recognized market that we estimate affects approximately two million Americans and results in over 150,000 emergency department visits and hospital admissions and up to 80,000 ablations per year.

From this diagnosed population, we define the target addressable market for etripamil as 40 to 60% of patients who experience frequent and longer, moderate to severe episodes each year.

After being exposed to the data from the RAPID clinical study in market research, Cardiologists reported a willingness to prescribe etripamil to approximately 50% of the patients with PSVT in their care, which suggests 500,000 to 800,000 patients can potentially be treated with etripamil in the peak year.

Additionally, we believe that these target patients will use etripamil to treat a median of five episodes per year based on the projected number of longer or more intense episodes (self-reported) experienced by the patient.

This implies demand in the US for etripamil of 2.5 million to 4 million episodes treated in the peak year.

AFib RVR Phase 2 Trial

In mid-2023, we held a pre-IND meeting with FDA and received guidance indicating that we could follow a supplemental NDA, or sNDA, regulatory pathway for the marketing approval for etripamil for the indication of AFib-RVR.

The sNDA pathway potentially permits a single pivotal efficacy study to be sufficient for filing for marketing approval if etripamil is already approved for PSVT.

In the first quarter of 2024, we met with the FDA in a Type A meeting.

In this meeting FDA reiterated its prior guidance regarding the availability of an sNDA pathway.

FDA further concurred with respect to key study elements including powering, inclusion criteria, patient population, and statistical analyses, and offered clarification with respect to the endpoints to guide the design of the Phase 3 study.

We anticipate progressing to an End of Phase 2 meeting in mid-2024 as an important step to finalize the registrational study protocol.

On November 11, 2023, we presented positive Phase 2 data from the ReVeRA study, as a Featured Science Presentation at the American Heart Association Scientific Meetings (Philadelphia, PA) and as simultaneously published in Circulation:

Arrhythmia and Electrophysiology.

The data reflected that patients with AFib-RVR receiving etripamil nasal spray experienced rapid and statistically superior ventricular rate reduction and improved symptom-relief compared to placebo.

In summary, the data demonstrated that etripamil NS was effective in patients with AF-RVR in substantially reducing VR (difference between etripamil vs.

placebo in maximum reduction from baseline:

The median time to maximum reduction in VR was 13 min, and the duration of effect (reduction in VR from baseline) was at least 150 min.

The median duration of maintaining a VR <100 bpm was 45.5 min in the first 60 min following drug in the etripamil arm.

Etripamil treatment was associated with significant improvement in symptom relief and in treatment satisfaction as measured by the TSQM-9 patient-reported outcome instrument.

Safety and tolerability reported in the 56-patient safety population who received etripamil was generally consistent with that observed in our PSVT program.

The majority of common AEs were localized to the drug-administration site, and there was a low incidence of serious adverse events.

The randomized, placebo controlled Phase 2 ReVeRA trial enrolled 87 patients and dosed 56 patients aged 18 years and older with AFib who experienced a ventricular rate of 110 or more beats per minute (bpm) prior to receiving etripamil

The trial was designed to assess the reduction in ventricular rate (primary endpoint), the time to achieve maximum reduction in ventricular rate, duration of effect, and patient satisfaction with treatment using the Treatment Satisfaction Questionnaire 9 (TSQM-9) patient reported outcome (PRO) tool (key secondary endpoints).

Data from ReVeRA trial showed that delivery of etripamil nasal spray significantly and rapidly reduced ventricular rate, consistent with the drug’s pharmacologic profile.

Etripamil achieved the primary endpoint with high statistical significance with patients experiencing a ventricular rate reduction of 29.91 bpm (95% confidence interval:

-40.31, -19.52;

p<0.0001) in the etripamil arm compared to placebo.

The maximum reduction in rate reported by a patient taking etripamil was 34.97 bpm.

The median time to maximum reduction in ventricular rate was 13 minutes in patients taking etripamil.

A greater number of patients taking etripamil achieved a ventricular rate of less than 100 bpm (58.3%) than those taking placebo (4%).

Furthermore, 67% of patients taking etripamil achieved ventricular rate reductions of more than 20% and 96% of patients receiving etripamil achieved more than 10% in ventricular rate reductions in the first 60 minutes compared to 0% and 20% in patients taking placebo, respectively.

Using the TSQM-9, compared to placebo, patients treated with etripamil demonstrated significant improvements in two satisfaction ratings:

effectiveness (p<0.0001) and relief of symptoms (p=0.0002).

Treatment-emergent serious adverse events, or TESAEs, were rare, with two occurring in one patient in the etripamil arm (3.7%) and four occurring in two patients in the placebo arm (6.9%).

The TESAEs in the etripamil arm (transient severe bradycardia and syncope, assessed as due to hyper-vagotonia occurred in a patient with a history of vagal events, and fully resolved by placing the patient supine and was without sequelae.

The most common (≥ 5%) adverse events were mild or moderate in intensity and included nasal discomfort, rhinorrhea, increased lacrimation, throat irritation and dizziness.

An estimated five million Americans suffer from AFib.

The Centers for Disease Control projects the prevalence of AFib will grow to an estimated 10 million patients by 2030.

A subset of AFib patients experience episodes of abnormally high heart rate most often accompanied by palpitations, shortness of breath, dizziness, and weakness.

While these episodes, known as AFib-RVR, may be treated by oral calcium channel blockers and/or beta blockers, patients frequently seek acute care in the emergency department to resolve symptoms.

In 2016, nearly 800,000 patients were admitted to the emergency department due to AFib symptoms.

Treatment for such symptoms typically includes medically supervised intravenous administration of calcium channel blockers or beta blockers, or electrical cardioversion.

Planned Clinical Development for AFib-RVR

In mid-2023, we met with the FDA for a pre-IND meeting.

In this meeting, we received guidance from the FDA on a potential development path for etripamil in AFib-RVR.

The FDA agreed that to gain a labelled indication via supplemental NDA, or sNDA, a Phase 3, randomized, placebo controlled, double blind clinical trial using a dosing regimen with self-administration of etripamil in an at-home setting could be acceptable with the support of the already existing safety database from our PSVT trials.

The primary endpoint can be the reduction of ventricular rate, and the primary analysis would be on the intent to treat, or ITT, population.

In addition, the study would have to show statistical significance (p<0.05) on the key secondary endpoint of symptom relief as a patient benefit, also in the ITT population.

The secondary endpoint could use a patient-reported outcomes measure, or PRO, and the application of a seven-point anchored scale was discussed with the FDA.

In the first quarter of 2024, we met with the FDA in a Type A meeting.

In this meeting we confirmed prior FDA guidance on a single-study supplemental New Drug Application (sNDA) pathway.

We further confirmed key study elements including powering, inclusion criteria, patient population, and statistical analyses, and we clarified the endpoints which will guide the design of the Phase 3 study.

We anticipate progressing to an End of Phase 2 meeting in mid-2024, an important step to finalize the registrational study protocol.

We plan to propose to the FDA a Phase 3 clinical study for AFib-RVR conducted in the at-home setting consisting of patients with a history of symptomatic episodes and using a repeat-dose regimen of 70mg per dose similar to what was studied in the RAPID trial in patients with PSVT.

Our target population would be patients with verified AFib-RVR, and the ITT population would be all patients self-administering the study drug for perceived AFib-RVR.

The primary endpoint being considered is the mean change from baseline ventricular rate to nadir ventricular rate for patients treated with etripamil vs placebo, as was studied in the ReVeRA trial.

Our key secondary endpoint would be based on a PRO acceptable to the FDA and the same or similar to ones we have used in our PSVT and AFib-RVR programs.

We estimate that the study size would be approximately 150 to 200 unique patients treating an episode.

This study may begin in 2024 and have an approximate two-year duration to report top-line data.

Operations Overview

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Our net losses may fluctuate significantly from period to period, depending on the timing of our planned clinical trials and expenditures on other research and development activities.

We expect our expenses will increase substantially over time as we:

● continue our ongoing and planned development of etripamil, including our Phase 3 clinical trials of etripamil for the treatment of PSVT and our Phase 2 clinical trial of etripamil for the treatment of AFib-RVR;

We expect our expenses will increase over time as we:

● continue our ongoing and planned development of etripamil, including and potentially future Phase 4 clinical trials for the treatment of PSVT and future Phase 3 clinical trials for the treatment of AFib-RVR;

● seek marketing approvals for etripamil for the treatment of PSVT, AFib-RVR and other cardiovascular indications;

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Recent Developments

Board Appointment

On March 21, 2023, the board of directors voted to elect Seth H.Z.

Fischer to the Board, effective as of March 21, 2023.

Fischer brings to the Board over 40 years of experience in the pharmaceutical and medical device industry, including 29 years in various leadership roles at Johnson & Johnson.

Fischer currently serves as a member of the Board of Directors of Agile Therapeutics, Inc.

(AGRX), Marinus Pharmaceuticals, Inc.

(MRNS), Spectrum Pharmaceuticals, Inc.

(SPPI), and Esperion Therapeutics, Inc.

Exchange Agreement

On March 22, 2023, we 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.

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 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.

Strategic Financing Transactions

On March 27, 2023, we entered into a purchase and sale agreement, or the Royalty Purchase Agreement, and a note purchase agreement, or the Note 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:

(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 in the United States 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%.

The Royalty Purchase Agreement contains various representations and warranties, covenants, indemnification obligations and other provisions customary for transactions of this nature, including the grant of a back-up security interests in the purchased royalties and certain assets related to etripamil and restrictions on the incurrence of additional indebtedness.

Pursuant to the Note Purchase Agreement, we will issue and sell $50 million principal amount of 6.0% Convertible Senior Notes due 2029, or the 2029 Convertible Notes, to the holders, which is expected to close on March 29, 2023.

The 2029 Convertible Notes will be our senior secured obligations and will be 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 will be March 31, 2029, or the Maturity Date.

The obligations under the 2029 Convertible Notes will be 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 shares of our common shares, equivalent to an initial conversion price of approximately $5.23 per share, subject to customary anti-dilution adjustments.

In addition, following a notice of redemption or certain corporate 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.

Subject to specified conditions, on or after March 27, 2027, the 2029 Convertible Notes are redeemable by us 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.

The Note Purchase Agreement contains customary terms and covenants, including negative covenants, such as limitations on indebtedness, liens, disposition of royalty interest and mergers.

The Note Purchase Agreement also contains customary events of default, including defaults related to payment compliance, material inaccuracy of representations and warranties, covenant compliance, bankruptcy and insolvency proceedings, cross defaults to certain other agreements, judgment default and certain clinical trial failures.

The descriptions of the Royalty Purchase Agreement and the Note Purchase Agreement are not complete and are qualified in its entirety by reference to the complete text of the Royalty Purchase Agreement and the Note Purchase Agreement, which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2023.

New Drug Application Status

In October 2023 we submitted a New Drug Application, or NDA, for marketing approval in the United States for etripamil for the treatment of PSVT.

On December 26, 2023, we announced that we received an RTF letter from the FDA.

Upon preliminary review, the FDA determined that the NDA was not sufficiently complete to permit substantive review.

The FDA requested clarification about the time of data recorded for adverse events in our Phase 3 clinical trials;

FDA did not express concerns about the nature or severity of AEs.

In February 2024, we held a Type A Meeting with the FDA to determine next steps for the filing for marketing approval.

The FDA indicated that the timing of AEs in question had minimal impact on the overall characterization of the etripamil safety profile, based on the FDA’s review of the affected data which was mainly related to AEs associated with local drug administration site tolerability and, importantly, did not appear to affect the assessment of serious adverse events and/or AEs of special interest for a calcium channel blocker.

To align with the FDA’s guidance in preliminary response to our questions presented to the FDA in our Type A Meeting request, we plan to restructure the data sets that capture timing of reported AEs, reformat certain data files to facilitate FDA’s analyses, and resubmit the NDA.

Based on the guidance received during the Type A Meeting, we expect that this approach will address the RTF from the FDA.

The FDA has not requested that we complete additional clinical efficacy or safety trials prior to resubmitting the NDA.

We expect a standard NDA review period following resubmission of the NDA for etripamil for PSVT.

The resubmission is planned for the second quarter of 2024.

In connection with the revised timeline for NDA submission, we have undertaken certain cash conservation measures to reduce spend through program deferrals and team restructuring and expect that our existing cash resources will fund operations into 2026, including through the expected Prescription Drug User Fee Act date for the NDA resubmission.

We expect the implementation of these cash conservation measures to be substantially completed in the first quarter of 2024.

If FDA approval is granted, we expect to receive a $75 million payment under an existing royalty agreement, which is intended to fund the potential commercial launch of etripamil for PSVT.

Strategic Financing Transaction

On February 28, 2024, we 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.

Under the terms of the Underwriting Agreement, we granted 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 Offering, which was exercised by the Underwriters in full on February 29, 2024.

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.

The net proceeds to the Company from the Offering, including the proceeds from the exercise by the Underwriters of their option to purchase the additional 3,000,000 common shares in full, was approximately $32.4 million after deducting underwriting commissions and offering expenses payable by the Company.

The Offering closed on March 4, 2024.

The Macroeconomic Climate

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Rising interest and inflation rates also present a recent challenge impacting the U.S.

economy and could make it more difficult for us to obtain traditional financing on acceptable terms, if at all, in the future.

Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates continue to rise) on our operating costs, including our labor, due to supply chain constraints, consequences associated with COVID-19 and the Russia-Ukraine war, and employee availability and wage increases, which may result in additional stress on our working capital resources.

economy and could make it more difficult for us to obtain traditional financing on acceptable terms, if at all, in the future, the Russia-Ukraine war, unrest and/or further escalation in Israel and Gaza, recent banking instabilities and other U.S.

geopolitical issues affecting other territories and employee availability and wage increases, and economic markets all of which may result in additional stress on our working capital resources.

Components of Results of Operations

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and third, we want to engage our target patient, physician, and payer stakeholders with evidence-based and compliant educational materials that serve to increase the awareness and understanding of the impact of PSVT and AFib-RVR on patients and the overall healthcare system.

We anticipate our commercial expenses will increase substantially as we invest in the infrastructure, personnel, and operational expenses required to launch our first product in the United States, if approved.

If the FDA approves the NDA, we anticipate our commercial expenses will increase as we invest in the infrastructure, personnel, and operational expenses required to launch our first product in the United States.

Interest Income

Interest income primarily consists of interest income from our cash equivalents and short-term investments.

Interest Expense

Interest expense primarily consists of contractual debt interest expense and the amortization of debt costs.

Results of Operations

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Loss from operations

Interest income, net

We generated revenue of $5.0 million for the year ended December 31, 2022 compared to $15.0 million for the year ended December 31, 2021.

This revenue is from the license agreement with Ji Xing and is comprised of upfront and milestone payments.

Interest income

Interest expense

We recorded 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 Ji Xing Pharmaceuticals Limited, such party being referred to as Ji Xing and such agreement as 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 Ji Xing for the treatment of PSVT in the People’s Republic of China, or the Territory, including mainland China, Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan.

We recorded revenue of $5.0 million for the year ended December 31, 2022.

This revenue was related to two milestones reached as a result of the first patient dosed in a Phase 3 Clinical Trial for the treatment of PSVT in the Territory pursuant

to the Ji Xing License Agreement and the successful completion of a Phase 3 clinical trial for the treatment of PSVT in the United States.

Research and Development Expenses

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Total R&D expenses

Research and development expenses increased by $1.2 million, or 3% for the year ended December 31, 2022 compared to the year ended December 31, 2021.

Clinical expenses increased by $4.3 million mainly due to an increase of $4.2 million in clinical consulting fees and CRO costs due to the conduct of the RAPID Phase 3 trial.

This increase was partially offset by a $2.1 million decrease in drug manufacturing and formulation mainly due to a decrease of $2 million in drug manufacturing and formulation consulting and CMO cost and further offset by a $1.0 million decrease in regulatory costs mainly due to $0.8 million decrease in regulatory consulting and employee related expenses.

Research and development expenses decreased by $8.8 million, or 22.0% for the year ended December 31, 2023 compared to the year ended December 31, 2022.

The decrease was primarily due to lower clinical expenses.

This decrease in clinical expenses was driven by lower clinical development costs and clinical personnel-related costs as a result of the completion of phase 3 studies.

The decrease in clinical costs was partially offset by an increase in drug manufacturing consulting costs, drug manufacturing personnel costs and regulatory consulting costs.

General and Administrative

General and administrative expenses increased by $3.3 million, or 26.8% for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The primary contributors to the increase was due to the increase of personnel related costs and an increase in professional and consulting costs.

Personnel related costs increased by $2.3 million, including a $1.6 million increase in non-cash compensation, as a result of hiring more full-time employees.

Further, professional and consulting fees also increased by $1 million to meet the needs of the our growing operations.

Commercial expenses increased by $2.1 million, or 29.9%, for the year ended December 31, 2022, compared to the same period in the December 31, 2021.

The increase is due to marketing and personnel related costs, which includes an increase in non-cash compensation costs related to share-based compensation expense.

This increase is a result of additional personnel and professional costs required to expand operations in anticipation of the potential market approval and commercialization.

Interest Income, net

Interest income, net, was $1.3 million and $0.2 million for the year ended December 31, 2022 and 2021, respectively.

General and administrative expenses remained consistent for the year ended December 31, 2023 compared to the year ended December 31, 2022.

Commercial expenses increased by $6.0 million, or 66.2%, for the year ended December 31, 2023, compared to the same period in 2022.

This increase is a result of additional personnel and professional costs required to expand capabilities and operations in anticipation of potential commercialization.

Interest Income

Interest income was $4.0 million and $1.3 million for the year ended December 31, 2023 and 2022, respectively.

The increase in interest income was due to higher interest rates earned on investments in 2023 when compared to 2022.

Interest Expense

Interest expense was $2.6 million for the year ended December 31, 2023 compared to no interest expense for the year ended December 31, 2022.

The increase in interest expense was due to the issuance of the 2029 Convertible Notes in the first quarter of 2023.

Liquidity and Capital Resources

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We have incurred operating losses and experienced negative operating cash flows since our inception, and we anticipate continuing to incur losses for at least the next several years.

As of December 31, 2022, we had cash and cash equivalents of $7.6 million, short-term investments of $56.9 million and an accumulated deficit of $266.3 million.

On May 15, 2021, pursuant to the License Agreement, we and affiliates of RTW Investments, LP, (RTW), or the Purchasers, entered into a securities purchase agreement pursuant to which we issued to the Purchasers, in a private placement, pre-funded warrants to purchase up to an aggregate of 910,746 of our common shares at a purchase price of $5.48 per pre-funded warrant, or the Private Placement.

The gross proceeds to us from the Private Placement, excluding proceeds from the exercise price of the warrants, were approximately $5.0 million.

On July 29, 2020, we entered into an Open Market Sale Agreement℠, or the Sales Agreement, with Jefferies LLC, or Jefferies, with respect to an at-the-market offering program, or the ATM Program, under which we may issue and sell our common shares having an aggregate offering price of up to $50 million through Jefferies as our sales agent or principal.

The common shares to be sold under the Sales Agreement, if any, will be offered and sold pursuant to our shelf registration statement on Form S-3 (File No.

333-239318), which was declared effective by the Securities and Exchange Commission on July 6, 2020.

As of December 31, 2023, we had cash, cash equivalents and short-term investments of $66.0 million and an accumulated deficit of $326.0 million.

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.

On March 27, 2023, we entered into a purchase and sale agreement, or the Royalty Purchase Agreement, and 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 transaction contemplated by the Note Purchase Agreement and issued and sold the $50 million principal amount of 6.0% Convertible Senior Notes due 2029, or the 2029 Convertible Notes, to the holders in a private placement transaction.

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 will be March 31, 2029.

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

Subject to specified conditions, on or after March 27, 2027, the 2029 Convertible Notes are redeemable by us subject to certain conditions, 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.

On July 29, 2020, we entered into an Open Market Sale Agreement SM , or the Sales Agreement, with respect to an at-the-market offering program, or the ATM Program, under which the Company may issue and sell its common shares having an aggregate offering price of up to $50 million through Jefferies as its sales agent or principal.

The common shares to be sold under the Sales Agreement, are offered and sold pursuant to our shelf registration statement on Form S-3 (File No.

333-239318), which was declared effective by the SEC on July 6, 2020.

During the year ended December 31, 2022, we issued 361,236 shares under the Sales Agreement, resulting in net proceeds of $2.6 million (net of issuance costs of $0.1 million).

We expect that our current operating plan, existing cash and cash equivalents and the $50 million in funding contained within the Strategic Financing Agreement signed on March 27, 2023 to be sufficient to fund our operations for at least the next 12 months and determined that there are no events or conditions that may cast substantial doubt on our ability to continue as a going concern for at least the next 12 months from the date of this filing.

We expect that our operating plan, existing cash and cash equivalents and short-term investments to be sufficient to fund our operations for at least the next 12 months from the date of issuance of this Annual Report on Form 10-K for the year ending December 31, 2023 and that there are no events or conditions that may cast substantial doubt on our ability to continue as a going concern for at least the next 12 months from the date of this filing.

Contingent future source of funding

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

Food and Drug Administration (FDA) 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 “royalty interest”, on the annual net product sales of etripamil in the United States.

This represents a contingent future source of funding, in order for the Company to receive the $75 million, the closing conditions specified in the Royalty Purchase Agreement, which includes the Company receiving marketing approval from the FDA on or prior to September 30, 2025, must be met.

Funding Requirements

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We expect our research and development expenses to increase as we continue the development of etripamil and prepare to pursue regulatory approval.

We expect to incur an increase in general and administrative expenses, and an increase in expenses related to commercial activities in 2023 as we focus our efforts on the clinical pathway and potential commercialization of etripamil.

We expect to incur increasing operating losses for the foreseeable future as we continue the clinical development of our product candidate.

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We may also consider entering into collaboration arrangements or selectively partnering for clinical development and commercialization.

The sale of additional equity would result in additional dilution to our shareholders.

The sale of additional equity would result in

additional dilution to our shareholders.

The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that restrict our operations or our ability to incur additional indebtedness or pay dividends, among other items.

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Operating Activities

Net cash used in operating activities during the year ended December 31, 2023 was $46.4 million, which consisted primarily of a net loss of $59.7 million.

The net loss was partially offset by a net cash increase of $1.2 million related to the change in assets and liabilities, non-cash charges of $9.5 million related to share based compensation and non-cash interest charges of $2.3 million related to the convertible note.

Net cash used in operating activities during the year ended December 31, 2022 was $52.5 million, which consisted of a net loss of $58.4 million and a net cash decrease of $3.3 million in our operating assets and liabilities, in addition to non-cash charges of $9.2 million primarily related to share-based compensation.

Net cash used in operating activities during the year ended December 31, 2021 was $33.2 million, which consisted of a net loss of $42.9 million and a net change of $2.6 million in our operating assets and liabilities, in addition to non-cash charges of $7.4 million related to share-based compensation and depreciation expenses.

Investing Activities

During the year ended December 31, 2023, we redeemed $142.0 million of short-term investments and we acquired $137.1 million of short-term investments, in addition we acquired $0.1 million in property and equipment.

These short-term investment acquisitions resulted in a growth of $4.8 million in short term investments for the year ended December 31, 2023.

In the year ended December 31, 2022, we redeemed $29.0 million of short-term investments and we acquired $85.9 million of short-term investments, in addition we acquired $0.3 million in property and equipment.

These short-term investment acquisitions resulted in a growth of $56.9 million in short term investments for the year ended December 31, 2022.

In the year ended December 31, 2021, we redeemed $85.0 million of short-term investments and we acquired $15.0 million of short-term investments

Financing Activities

In the year ended December 31, 2023, our financing activities provided cash proceeds of $47.8 million.

These proceeds were primarily a result of the $50 million received from the issuance of convertible notes under the Note Purchase Agreement, which was partially offset by $2.8 million in debt costs, and $0.6 million in cash proceeds from the exercise of share options and issuance of common shares under the employee stock purchase plan.

In the year ended December 31, 2022, our financing activities provided cash of $3.1 million from the issuance of common shares under the Sales Agreement for proceeds of $2.6 million (net of issuance costs of $0.1 million) and a de minimis amount of proceeds from the exercise of share options and warrants.

In the year ended December 31, 2021, our financing activities provided $5.0 million, consisting of net proceeds from the Private Placement and a de minimis amount of proceeds from the exercise of share options.

Contractual Obligations

We enter into contracts in the normal course of business with clinical research organizations, or CROs, contract manufacturing organizations, or CMOs, and other third parties for clinical trials, preclinical research studies and testing and manufacturing services.

and manufacturing services.

These contracts are generally cancelable at our option with various notice requirements as defined in the contract.

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March 21, 2022

March 24, 2021

April 1, 2022

June 14, 2021

August 30, 2021

September 13, 2021

October 1, 2021

November 1, 2021

January 4, 2022

February 15, 2022

March 21, 2022

April 11, 2022

July 18, 2022

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November 8, 2022

The intrinsic value of all outstanding options as of December 31, 2022 was $3.8 million, based on the fair value of our common shares of $3.96 per share at December 31, 2022.

January 16, 2023

February 16, 2023

February 27, 2023

March 14, 2023

March 21, 2023

June 19, 2023

July 24, 2023

July 25, 2023

August 1, 2023

October 2, 2023

October 16, 2023

Recent Accounting Pronouncements

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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 7. Management’s Discussion and Analysis