What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-13 compared with 2024-03-21 · 182 added, 130 removed, 551 unchanged (36% of the section changed)

8 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Milestone Pharmaceuticals Inc.

To the Board of Directors and Shareholders of Milestone Pharmaceuticals Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Milestone Pharmaceuticals Inc.

and its subsidiary (together, the Company) as of December 31, 2023 and 2022, and the related consolidated statements of loss, shareholders’ equity and cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements).

and its subsidiary (the Company) as of December 31, 2024 and 2023, and the related consolidated statements of loss, of shareholders’ equity and of cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

5 unchanged sentences

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

5 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

We determined there are no critical audit matters.

/s/ PricewaterhouseCoopers LLP

53 unchanged sentences

Exercise of stock options

Exercise of prefunded warrants, net of issuance costs

( 3,809,523 )

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

Share-based compensation

Issuance of common shares, net of issuance costs

Exchange of common shares

( 1,059,000 )

Employee stock purchase plan purchases

Balance as of December 31, 2023

2 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

4 unchanged sentences

(in thousands of US dollars)

Years ended December 31,

Year ended December 31,

Cash flows used in operating activities

17 unchanged sentences

Redemption of short-term investments

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Cash provided by financing activities

Proceeds from exercise of options

Proceeds from exercise of warrants

Proceeds from issuance of senior secured convertible debt

Issuance of common shares, net of issuance costs

Pre-funded warrants issuance costs

Proceeds from issuance of common shares, net of issuance costs

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

Proceeds from employee stock purchase plan

1 unchanged sentence

Cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents – Beginning of year

5 unchanged sentences

1 Organization and Nature of Operations

Milestone Pharmaceuticals Inc.

(Milestone or the Company) is a biopharmaceutical company incorporated under the Business Corporations Act of Québec.

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.

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c) Segment Information

The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions while focusing on the development and commercialization of innovative cardiovascular medicines.

The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions.

See Note 19, “Segment Reporting.”

Milestone Pharmaceuticals Inc.

4 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 comprehensive 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 comprehensive loss based on the nature of the underlying 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.

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.

88 unchanged sentences

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 contract research organizations (CROs) and to contract manufacturing organizations (CMOs).

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

13 unchanged sentences

o) Foreign Currency Translation and Transactions

The functional currency of the Company is the US dollar.

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

Accordingly, transactions denominated in currencies other than the functional currency are measured and recorded in the functional currency at the exchange rate in effect on the date of the transactions.

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

q) Recently Adopted Accounting Pronouncements

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

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.

Early adoption is permitted.

The Company is evaluating the effect of adopting this new accounting guidance on its financial statements, but does not intend to early adopt.

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

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

Improvements to Income Tax Disclosures (“ASU 2023-09”).

The amendments in this update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income [or loss] by the applicable statutory income tax rate).

Improvements to Income Tax Disclosures, or “ASU 2023-09.” The amendments in this update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate).

The amendments also require entities on an annual basis to disclose disaggregated amounts of income taxes paid.

1 unchanged sentence

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

The Company is evaluating the effect of adopting this new accounting guidance on its financial statements, but does not intend to early adopt.

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

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

Reporting Comprehensive Income— Expense Disaggregation Disclosures,” which requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the income statement, as well as disclosures about selling expenses.

This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements.

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

r) Significant Risks and Uncertainties

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s) Sources of Liquidity and Funding Requirements

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

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.

Notes to Consolidated Financial Statements

(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.

As of December 31, 2024, the Company had cash and cash equivalents and short-term investments of $ 69.7 million and an accumulated deficit of $ 367.5 million.

Management has evaluated the Company’s operating plan against its existing cash and cash equivalents and determined that the Company expects to be able to support its operations for at least the next 12 months from the date of issuance of these consolidated financial statements.

The Company has historically financed its operations primarily through the sale of equity securities, convertible notes and, to a lesser extent from cash received pursuant to its license agreement.

The Company believes that its cash, cash equivalents and short-term investments as of December 31, 2024, will be sufficient to allow the Company to fund its planned operations for at least the next 12 months from the date of this Annual Report on Form 10-K.

The Company has historically financed its operations primarily through the sale of equity securities, convertible notes, short-term investments, and from cash received pursuant to its license agreement.

To date, the Company has not generated any revenue from product sales.

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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

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

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

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 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 “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 Ji Xing 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 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.

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.

Strategic Partnerships

On May 15, 2021, the Company entered into the License Agreement with Ji Xing, which is an entity affiliated with RTW Investments, LP, or RTW, a beneficial owner of approximately 9.7 % of the Company’s common shares, as of December 31, 2023.

Under the License Agreement, the Company granted Ji Xing exclusive development and commercialization rights to any pharmaceutical product that uses a device to deliver the Company’s proprietary calcium channel blocker known as etripamil by nasal spray for all prophylactic and therapeutic uses in humans in the Territory.

Ji Xing 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 Ji Xing as contemplated by the License Agreement (the Supply Agreement).

Corxel Pharmaceuticals

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 6.1 % of the Company’s common shares, as of December 31, 2024.

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 Territory.

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).

The Company received a non-refundable upfront cash payment of $ 15 million and the right to future payments of up to $ 107.5 million in total development and sales milestone payments.

1 unchanged sentence

Management evaluated all of the promised goods or services within the contract and determined that such goods and services were separate performance obligations.

The Company determined that the license granted was a separate performance obligation as Ji Xing can benefit from the license granted on its own after the transfer of the license, as it does not require any significant development, regulatory or commercialization activities from Milestone.

Ji Xing 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.

The Company determined that the license granted was a separate performance obligation as Corxel can benefit from the license granted on its own after the transfer of the license, as it does not require any significant development, regulatory or commercialization activities from Milestone.

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

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.

4 Short-term Investments

As of December 31, 2023, short-term investments of $ 52.2 million were comprised of term deposits issued in US currency, earning interest between 5.53 % and 5.95 %, maturing between January 16, 2024 and June 19, 2024.

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

The short-term investments maturity is greater than

Milestone Pharmaceuticals Inc.

1 unchanged sentence

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

90 days but less than one year, and they were classified as held to maturity, recorded as current assets and were accounted for at amortized cost.

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

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.

4 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.

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

The short-term investments maturity is greater than 90 days but less than one year, and they were classified as held to maturity, recorded as current assets and were accounted for at amortized cost.

Interest income earned on short-term investments is reported in interest income.

18 unchanged sentences

Opening balance

New operating lease right-of-use asset

Amortization of right-of-use asset

1 unchanged sentence

Operating lease expenses of $ 697 and $ 681 are included in general and administrative operating expenses in the consolidated statement of loss, and within operating activities in the statement of cash flows for the years ended December 31, 2024 and 2023, respectively and are comprised of two operating lease right-of-use assets and one operating lease of less than 12 months.

The following table summarizes the future minimum lease payments of right-of-use assets operating leases as at December 31, 2023:

January 1, 2024 to December 31, 2024

The following table summarizes the future minimum lease payments of right-of-use assets operating leases as of December 31, 2024:

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

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

January 1, 2025 to December 31, 2025

2 unchanged sentences

Less interest

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

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

Total net of interest

6 Property and equipment

5 unchanged sentences

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.

During the year ended December 31, 2022, the Company recorded a disposal of $ 348 , which resulted in a loss of $ 141 .

For the years ended December 31, 2024 and 2023, depreciation expense was $ 105 and $ 92 , respectively.

1 unchanged sentence

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

December 31, 2024

December 31, 2023

Trade accounts payable

2 unchanged sentences

Accrued commercial liabilities

Accrued legal liabilities

Other accrued liabilities

2 unchanged sentences

The Company has authorized and issued common shares, voting and participating, without par value, of which unlimited shares were authorized, and 53,353,984 shares were issued and outstanding as of December 31, 2024.

As of December 31, 2023, there were 1,463,936 common shares available for issuance under the Employee Stock Purchase Plan, or the “ESPP”.

The Company has issued 142,006 shares of common stock pursuant to the ESPP as of December 31, 2023.

In August 2022, the Company issued and sold 361,236 common shares under the Open Market Sale Agreement SM , or the Sales Agreement, with Jefferies LLC with respect to an at-the-market offering program, or the ATM Program, for proceeds of $ 2.6 million (net of issuance costs of $ 0.1 million).

Shelf Registration

On November 12, 2021, the Company entered into an agreement and the Company may sell any combination of the securities described in this prospectus in one or more offerings up to a total aggregate offering price of $ 250,000,000 .

As of December 31, 2024, there were 1,798,766 common shares available for issuance under the Employee Stock Purchase Plan, or the “ESPP,” of which 1,503,030 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.

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

Milestone Pharmaceuticals Inc.

1 unchanged sentence

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

Pre-funded Warrants – Exchange Agreement

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.

1 unchanged sentence

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.

Open Market Sale Agreement

On July 29, 2020, the Company entered into an Open Market Sale Agreement℠ with respect to an at-the-market offering program (ATM Program) under which the Company may issue and sell its common shares having an aggregate offering price of up to $ 50 million.

The Company has sold 361,236 shares under the ATM program as of the date of this filing.

9 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:

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, 2024, the number of the Company’s common shares reserved for issuance under the 2019 Plan automatically increased by 1,339,324 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.

As of December 31, 2024, there were 9,522,270 common shares available for issuance under the 2019 Plan, of which 922,575 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.

1 unchanged sentence

As of December 31, 2024, there were 1,000,000 shares available for issuance under the 2021 Inducement Plan, of which 504,000 shares were available for future grants.

On January 1, 2023 and on January 1, 2022, the number of the Company’s common shares reserved for issuance under the 2019 Plan increased by 1,371,440 and 1,195,902 common shares, respectively.

Further, on July 5, 2022, the number of the Company’s common shares reserved for issuance under the 2019 Plan increased by 1,000,000 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.

As of December 31, 2023, 561,000 of previously issued options had been cancelled under the 2019 Plan and were available for future grants.

As of December 31, 2023, there were 8,182,946 common shares available for issuance under the 2019 Plan, of which 1,704,960 common shares were available for future grants.

On July 15, 2022, the Company offered an Employee Share Purchase Plan, or ESPP, in which participation is available to substantially all of our employees in the United States and Canada who meet certain service eligibility requirements.

As of December 31, 2023, the Company has 1,463,936 common shares available under the ESPP.

As of December 31, 2023, the Company has issued 142,006 shares of common stock pursuant to the ESPP.

Milestone Pharmaceuticals Inc.

7 unchanged sentences

Granted - 2019 Plan

Granted - Inducement Plan

Exercised - 2011 Plan

Forfeited - Inducement Plan

Forfeited - 2019 Plan

1 unchanged sentence

Expired - 2011 Plan

Cancelled - 2019 Plan

Outstanding at end of period

Outstanding at end of period - Weighted average exercise price

Exercisable at end of period

Exercisable at end of period - Weighted average exercise price

Expired - Inducement Plan

Outstanding at end of year

Outstanding at end of year - Weighted average exercise price

Exercisable at end of year

Exercisable at end of year - Weighted average exercise price

Inducement Plan

1 unchanged sentence

Outstanding at beginning of year - 2019 Plan

Outstanding at beginning of year - Inducement Plan

Granted - 2019 Plan

2 unchanged sentences

Exercised - 2011 Plan

Forfeited - Inducement Plan

Forfeited - 2019 Plan

Forfeited - 2011 Plan

Expired - 2019 Plan

Outstanding at end of period

Outstanding at end of period - Weighted average exercise price

Exercisable at end of period

Exercisable at end of period - Weighted average exercise price

Expired - 2011 Plan

Cancelled - 2019 Plan

Outstanding at end of year

Outstanding at end of year - Weighted average exercise price

Exercisable at end of year

Exercisable at end of year - Weighted average exercise price

The weighted average remaining contractual life was 6.71 and 6.55 years for outstanding options as of December 31, 2024 and 2023, respectively.

The weighted average remaining contractual life was 5.92 and 5.93 years for vested options, as of December 31, 2024 and 2023, respectively.

There was $ 11.4 million and $ 15.7 million total unrecognized compensation cost related to non-vested share options as of December 31, 2023 and 2022, respectively.

There was $ 5.1 million and $ 11.4 million of total unrecognized compensation cost related to non-vested share options as of December 31, 2024 and 2023, respectively.

The share options are expected to be recognized over a remaining weighted average vesting period of 1.48 years and 2.27 years as of December 31, 2024 and 2023, respectively.

For the year ending December 31, 2023, there were 561,000 shares cancelled under the 2019 plan, which resulted in additional share-based compensation expense of $ 0.6 million.

Milestone Pharmaceuticals Inc.

6 unchanged sentences

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

Vested, outstanding 2019 Plan

( 1,690,368 )

1 unchanged sentence

Vested, outstanding - Inducement Plan

Forfeited - Inducement Plan

Forfeited - 2019 Plan

Non-vested share options at end of period

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

Non-vested share options at end of year

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

Inducement Plan

1 unchanged sentence

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

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

Granted - 2019 Plan

1 unchanged sentence

Vested, outstanding - 2011 Plan

Forfeited - 2011 Plan

Forfeited - Inducement Plan

Forfeited - 2019 Plan

Vested, outstanding - 2019 Plan

1 unchanged sentence

( 1,504,329 )

Non-vested share options at end of period

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

Vested, outstanding - Inducement Plan

Forfeited - 2019 Plan

Non-vested share options at end of year

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

The following table summarizes information with respect to share options outstanding as of December 31, 2024:

25 unchanged sentences

Dividend yield is based on the share option’s exercise price and expected annual dividend rate at the time of grant.

The Company recognized share-based compensation expense as follows for the years ended December 31:

The total grant date fair value for options granted during the year ended December 31, 2024 and 2023 was $ 2.1 million and $ 5.5 million, respectively.

Performance Stock Options

On May 6, 2024, the Company, pursuant to the 2019 Plan, awarded 924,000 performance stock options to employees.

The performance stock options were granted “at-the-money” and have a term of 10 years .

The original grant-date fair value of each option was estimated on the date of grant using the same option valuation model used for the options outlined above.

The original grant-date fair value of $ 1.3 million was determined using an expected volatility of 98.5 %, term of 5.82 years, strike price of $ 1.74 , and risk-free rate of 4.43 %.

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.

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 weighted average grant date fair value of the performance stock options awarded during the year ended December 31, 2024, 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.

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.

The ESPP also provides for an automatic reset feature to start participants on a new twelve-month participation period in the event that the common stock market value on a purchase date is less than the common stock value on the first day of the twelve-month offering period.

On January 1, 2024, the number of common shares reserved for issuance under the ESPP automatically increased by 334,831 shares.

As of December 31, 2024, the Company has 1,798,766 common shares available for issuance under the ESPP, of which 295,736 shares of common stock have been issued.

Compensation expense for purchase rights under the

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

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

ESPP related to the purchase discount and the “look-back” option was determined using a Black-Scholes option pricing model.

Performance Share Units

On May 6, 2024, the Company, pursuant to the 2019 Plan, awarded 924,000 Performance Share 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 number of PSUs granted represents the total number of common shares that may be earned.

However, the actual number of shares earned will be based on the satisfaction of the performance criteria.

Upon satisfaction of the performance criteria, 100 % of the earned shares will vest.

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 .

Share-Based Compensation Expense

The Company recognized share-based compensation expense for all plans as follows for the years ended December 31:

Administration

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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 shares of our 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 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.

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

Milestone Pharmaceuticals Inc.

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

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.

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.

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.

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

As of December 31,

December 31, 2024

December 31, 2023

Original principal

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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

Share options and performance share units

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

5 unchanged sentences

Loss before income taxes

Basic income tax rate

Canadian statutory rate (1)

Computed income tax recovery

2 unchanged sentences

Non‑deductible share‑based compensation

Share issue costs

Accretion of investments

Tax benefits of current period losses and other tax assets

Other permanent differences

Tax benefits of current period losses and other tax assets, subject to full valuation allowance

Valuation allowance for prior year adjustment

Foreign income tax rate difference

Income tax expense (recovery) reported in the consolidated statements of loss

(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.

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Stock based compensation

Change in tax rates

Total Net deferred tax assets

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The investment tax credits recorded are based on management’s estimates of amounts expected to be recovered and are subject to audit by the taxation authorities.

These amounts have been recorded as a reduction of research and development expenditures the years ended December 31, 2023 and 2022 for an amount of $ 312 and $ 456 , respectively.

These amounts have been recorded as a reduction of research and development expenditures in the years ended December 31, 2024 and 2023 for an amount of $ 259 and $ 312 , 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 on notice, and therefore are cancellable contracts.

Therefore, as at December 31, 2023 there are no contractual commitments, except for office leases (see note 5).

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).

15 Currency risk

2 unchanged sentences

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:

Cash and cash equivalents

Short-term investments

Other receivables

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For the years ending December 31, 2024 and December 31, 2023, there were no financial instruments measured at fair value on a recurring or non-recurring basis.

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.

17 Royalty Purchase Agreement

5 unchanged sentences

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.

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

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

18 Other receivables

Other receivables comprised the following as of December 31:

December 31, 2024

December 31, 2023

Interest receivable

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Other current receivable

Milestone Pharmaceuticals Inc.

Notes to Consolidated Financial Statements

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

For the year ended December 31, 2023, the Company recognized a clinical receivable of $ 2.4 million for clinical upfront payments made to the CRO that completed the NODE-303 trial.

The Company recognized no clinical receivables for the year ended December 31, 2022.

19 Subsequent Events

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.

19 Segment Reporting

The Company manages its operations as a single operating segment for the purpose of assessing performance and making operating decisions while focusing on the development and commercialization of innovative cardiovascular medicines.

These operations are focused on a single product, which are reported on a consolidated basis.

The accounting policies of the single operating segment are the same as those described in the summary of significant accounting policies.

The chief operating decision maker, or “CODM,” assesses performance of the Company’s single operating segment based on consolidated net loss.

Net loss is used by the CODM to evaluate budget to actual analytics, which are used to monitor the single segment spend and confirm the Company is meeting established budgetary goals.

The CODM is the principal officer group, which includes the Company’s chief executive officer and chief financial officer.

The following table presents information about the Company’s significant expenses, as provided to the Company’s CODM, and includes a reconciliation to consolidated net loss:

Year ended December 31,

(in thousands)

Research and development, net of tax credits, excluding share-based compensation

General and administrative, excluding share-based compensation

Commercial, excluding share-based compensation

Share-based compensation expense

Interest income

Interest expense

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

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