Milestone Pharmaceuticals Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS ​ INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ​ Report of Independent Registered Public Accounting Firm (PCAOB ID: 271 ) 97 Consolidated Balance Sheets 98 Consolidated Statements of Loss 99 Consolidated Statements of Shareholders’ Equity 100 Consolidated Statements of Cash Flows 101 Notes to Consolidated Financial Statements 102 ​ ​ ​ 96 Table of Contents Report of Independent Registered Public Accounting Firm ​ 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 (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. ​ Basis for Opinion ​ These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the 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. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. ​ Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for 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 Montreal, Canada March 13, 2025 ​ We have served as the Company's auditor since 2016 ​ ​ ​ 97 Table of Contents Milestone Pharmaceuticals Inc. Consolidated Balance Sheets (in thousands of US dollars, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 December 31, 2023 Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ Cash and cash equivalents ​ $ 25,314 $ 13,760 Short-term investments ​ ​ 44,381 ​ ​ 52,243 Research and development tax credits receivable ​ ​ 901 ​ 643 Prepaid expenses ​ ​ 1,840 ​ 3,178 Other receivables ​ ​ 1,490 ​ 3,208 Total current assets ​ ​ 73,926 ​ 73,032 Operating lease right-of-use assets ​ ​ 1,376 ​ ​ 1,917 Property and equipment ​ ​ 197 ​ 277 Total assets ​ $ 75,499 $ 75,226 ​ ​ ​ ​ ​ ​ ​ Liabilities, and Shareholders' Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ Accounts payable and accrued liabilities ​ $ 7,555 $ 6,680 Operating lease liabilities ​ ​ 571 ​ 546 Total current liabilities ​ ​ 8,126 ​ 7,226 Operating lease liabilities, net of current portion ​ ​ 874 ​ 1,457 Senior secured convertible notes ​ ​ 53,352 ​ ​ 49,772 Total liabilities ​ ​ 62,352 ​ 58,455 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shareholders’ Equity ​ ​ ​ ​ Common shares, no par value, unlimited shares authorized 53,353,984 shares issued and outstanding as of December 31, 2024, 33,483,111 shares issued and outstanding as of December 31, 2023 ​ ​ 288,048 ​ 260,504 Pre-funded warrants - 12,910,590 issued and outstanding as of December 31, 2024 and 9,577,257 as of December 31, 2023 ​ ​ 53,076 ​ ​ 48,459 Additional paid-in capital ​ ​ 39,568 ​ 33,834 Accumulated deficit ​ ​ ( 367,545 ) ​ ( 326,026 ) ​ ​ ​ ​ ​ ​ ​ Total shareholders’ equity ​ ​ 13,147 ​ 16,771 ​ ​ ​ ​ ​ ​ ​ Total liabilities and shareholders’ equity ​ $ 75,499 $ 75,226 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 98 Table of Contents Milestone Pharmaceuticals Inc. Consolidated Statements of Loss (in thousands of US dollars, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ ​ December 31, ​ ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ ​ Revenue ​ ​ $ — ​ $ 1,000 ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ ​ Research and development, net of tax credits ​ ​ $ 14,357 $ 31,052 General and administrative ​ ​ ​ 16,742 ​ 15,932 Commercial ​ ​ ​ 11,003 ​ 15,114 ​ ​ ​ ​ ​ ​ ​ ​ Loss from operations ​ ​ ​ ( 42,102 ) ​ ( 61,098 ) ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ ​ ​ 4,164 ​ 3,967 Interest expense ​ ​ ​ ( 3,581 ) ​ ​ ( 2,554 ) ​ ​ ​ ​ ​ ​ ​ ​ Net loss and comprehensive loss ​ ​ $ ( 41,519 ) $ ( 59,685 ) ​ ​ ​ ​ ​ ​ ​ ​ Weighted average number of shares and pre-funded warrants outstanding, basic and diluted ​ ​ ​ 62,210,702 ​ ​ 42,955,779 ​ ​ ​ ​ ​ ​ ​ ​ Net loss per share, basic and diluted ​ ​ $ ( 0.67 ) $ ( 1.39 ) ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 99 Table of Contents Milestone Pharmaceuticals Inc. Consolidated Statements of Shareholders’ Equit y (in thousands of US dollars, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Shares ​ Pre-funded warrants ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of shares Amount Number of warrants Amount Additional paid-in capital Accumulated deficit Total Balance as of December 31, 2022 ​ 34,286,002 ​ $ 273,900 ​ 8,518,257 ​ $ 34,352 ​ $ 24,437 ​ $ ( 266,341 ) ​ $ 66,348 Transactions during 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 59,685 ) ​ ​ ( 59,685 ) Exercise of stock options ​ 114,103 ​ ​ 326 ​ — ​ ​ — ​ ​ ( 137 ) ​ ​ — ​ ​ 189 Pre-funded warrants - Private Placement, net of issuance costs ​ — ​ ​ — ​ 1,059,000 ​ ​ 14,107 ​ ​ — ​ ​ — ​ ​ 14,107 Share-based compensation ​ — ​ ​ — ​ — ​ ​ — ​ ​ 9,534 ​ ​ — ​ ​ 9,534 Exchange of common shares ​ ( 1,059,000 ) ​ ​ ( 14,115 ) ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 14,115 ) Employee stock purchase plan purchases ​ 142,006 ​ ​ 393 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 393 Balance as of December 31, 2023 ​ 33,483,111 ​ $ 260,504 ​ 9,577,257 ​ $ 48,459 ​ $ 33,834 ​ $ ( 326,026 ) ​ $ 16,771 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2023 ​ 33,483,111 ​ $ 260,504 ​ 9,577,257 ​ $ 48,459 ​ $ 33,834 ​ $ ( 326,026 ) ​ $ 16,771 Transactions during 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 41,519 ) ​ ​ ( 41,519 ) Exercise of stock options ​ 50,476 ​ ​ 95 ​ — ​ ​ — ​ ​ ( 42 ) ​ ​ — ​ ​ 53 Pre-funded warrants, net of issuance costs ​ — ​ ​ — ​ 3,333,333 ​ ​ 4,617 ​ ​ — ​ ​ — ​ ​ 4,617 Share-based compensation ​ — ​ ​ — ​ — ​ ​ — ​ ​ 5,776 ​ ​ — ​ ​ 5,776 Issuance of common shares, net of issuance costs ​ 19,666,667 ​ ​ 27,258 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 27,258 Employee stock purchase plan purchases ​ 153,730 ​ ​ 191 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 191 Balance as of December 31, 2024 ​ 53,353,984 ​ $ 288,048 ​ 12,910,590 ​ $ 53,076 ​ $ 39,568 ​ $ ( 367,545 ) ​ $ 13,147 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 100 Table of Contents Milestone Pharmaceuticals Inc. Consolidated Statements of Cash Flows (in thousands of US dollars) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2024 2023 Cash flows used in operating activities ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 41,519 ) ​ $ ( 59,685 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Depreciation of property and equipment ​ ​ 105 ​ ​ 92 Amortization of debt costs ​ ​ 370 ​ ​ 244 Accretion of investment discount ​ ​ ( 454 ) ​ ​ ( 162 ) Non-cash interest expense related to debt ​ ​ 3,210 ​ ​ 2,310 Share-based compensation expense ​ ​ 5,776 ​ ​ 9,534 Loss on disposals of property and equipment ​ ​ 8 ​ ​ — Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Other receivables ​ ​ 1,718 ​ ​ ( 2,326 ) Research and development tax credits receivable ​ ​ ( 258 ) ​ ​ ( 312 ) Prepaid expenses ​ ​ 1,338 ​ ​ 2,827 Operating lease assets and liabilities ​ ​ ( 17 ) ​ ​ 18 Accounts payable and accrued liabilities ​ ​ 875 ​ ​ 1,036 ​ ​ ​ ​ ​ ​ ​ Net cash used in operating activities ​ ​ ( 28,848 ) ​ ​ ( 46,424 ) ​ ​ ​ ​ ​ ​ ​ Cash provided by (used in) investing activities ​ ​ ​ ​ ​ ​ Acquisition of property and equipment ​ ​ ( 33 ) ​ ​ ( 112 ) Acquisition of short-term investments ​ ​ ( 113,554 ) ​ ​ ( 137,132 ) Redemption of short-term investments ​ ​ 121,870 ​ ​ 142,000 ​ ​ ​ ​ ​ ​ ​ Net cash provided by investing activities ​ ​ 8,283 ​ ​ 4,756 ​ ​ ​ ​ ​ ​ ​ Cash provided by financing activities ​ ​ ​ ​ ​ ​ Proceeds from exercise of options ​ ​ 53 ​ ​ 189 Proceeds from issuance of senior secured convertible debt ​ ​ — ​ ​ 50,000 Proceeds from issuance of common shares, net of issuance costs ​ ​ 27,258 ​ ​ — Proceeds from issuance of pre-funded warrants, net of issuance costs ​ ​ 4,617 ​ ​ ( 8 ) Proceeds from employee stock purchase plan ​ ​ 191 ​ ​ 393 Payment of debt issuance costs ​ ​ — ​ ​ ( 2,782 ) ​ ​ ​ ​ ​ ​ ​ Cash provided by financing activities ​ ​ 32,119 ​ ​ 47,792 ​ ​ ​ ​ ​ ​ ​ Net increase in cash and cash equivalents ​ ​ 11,554 ​ ​ 6,124 ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents – Beginning of year ​ ​ 13,760 ​ ​ 7,636 ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents – End of year ​ $ 25,314 ​ $ 13,760 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 101 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ 1 Organization and Nature of Operations Milestone Pharmaceuticals Inc., or “Milestone,” or the “Company,” is a biopharmaceutical company incorporated under the Business Corporations Act of Québec. Milestone is focused on the development and commercialization of innovative cardiovascular medicines. Milestone’s lead product candidate, etripamil, is a novel, potent short-acting calcium channel blocker that the Company designed and is developing as a rapid-onset nasal spray to be administered by patients. The Company is developing etripamil to treat paroxysmal supraventricular tachycardia, atrial fibrillation, and other cardiovascular indications. ​ 2 Summary of Significant Accounting Policies a) Basis of consolidation The consolidated financial statements include the accounts of the Company and Milestone Pharmaceuticals USA, Inc. All intercompany transactions and balances have been eliminated. b) Basis of Presentation and Use of Accounting Estimates These consolidated financial statements of the Company have been presented in United States dollars (USD) and have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP), including the applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding financial reporting. ​ The preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and judgments that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the year. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other sources. Significant estimates and judgments include, but are not limited to, • Estimates of the percentage of work completed of the total work over the life of the individual trial in accordance with agreements established with clinical research organizations, or “CROs,” contract manufacturing organizations, or “CMOs,” and clinical trial sites which in turn impact the research & development expenses. • Estimate of the grant date fair value of share options granted to employees, consultants and directors, and the resulting share-based compensation expense, using the Black Scholes option pricing model. Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. As of the date of issuance of these consolidated financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments. These estimates may change as new events occur and additional information is obtained and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s consolidated financial statements. c) Segment Information 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.” ​ 102 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ d) Revenue Recognition Collaborative Arrangements The Company considers the nature and contractual terms of arrangements and assesses whether an arrangement involves a joint operating activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards dependent on the commercial success of the activity. If the Company is an active participant and is exposed to significant risks and rewards dependent on the commercial success of the activity, the Company accounts for such an arrangement as a collaborative arrangement under Accounting Standards Codification (ASC) 808, Collaborative Arrangements (ASC 808), which requires that certain transactions between the Company and collaborators be recorded in its consolidated statements of loss on either a gross basis or net basis, depending on the characteristics of the collaborative relationship, and requires enhanced disclosure of collaborative relationships. The Company evaluates its collaboration agreements for proper classification in its consolidated statements of loss based on the nature of the underlying activity. If payments to and from collaborative partners are not within the scope of other authoritative accounting literature, the consolidated statements of loss classification for the payments is based on a reasonable, rational analogy to authoritative accounting literature that is applied in a consistent manner. If the Company concludes that it has a customer relationship with one of its collaborators, the Company follows the guidance in Accounting Standards Codification (ASC) Topic 606, Revenue From Contracts With Customers (ASC 606). Revenue from Contracts with Customers In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for these goods and services. To achieve this core principle, the Company applies the following five steps: 1) identify the customer contract; 2) identify the contract’s performance obligations; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when or as a performance obligation is satisfied. The Company evaluates all promised goods and services within a customer contract and determines which of such goods and services are separate performance obligations. This evaluation includes an assessment of whether the good or service is capable of being distinct and whether the good or service is separable from other promises in the contract. In assessing whether promised goods or services in licensing arrangements are distinct, the Company considers factors such as the stage of development of the underlying intellectual property and the capabilities of the customer to develop the intellectual property on their own or whether the required expertise is readily available. Licensing arrangements are analyzed to determine whether the promised goods or services, which often include licenses, research and development services and governance committee services, are distinct or whether they must be accounted for as part of a combined performance obligation. If the license is considered not to be distinct, the license would then be combined with other promised goods or services as a combined performance obligation. If the Company is involved in a governance committee, it assesses whether its involvement constitutes a separate performance obligation. When governance committee services are determined to be separate performance obligations, the Company determines the fair value to be allocated to this promised service. Certain contracts contain optional and additional items, which are considered marketing offers and are accounted for as separate contracts with the customer if such option is elected by the customer, unless the option provides a material right which would not be provided without entering into the contract. An option that is considered a material right is accounted for as a separate performance obligation. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and services to the customer. A contract may contain variable consideration, including potential payments for both milestone and research and development services. For certain potential milestone payments, the Company estimates the amount of variable consideration by using the most likely amount method. In making this assessment, the Company evaluates factors such as the clinical, regulatory, commercial and other risks that must be overcome to achieve the milestone. Each reporting period the Company re-evaluates the probability of achievement of such variable consideration and any related constraints. Milestone will include variable consideration, without constraint, in the transaction price to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. 103 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price among the performance obligations on a relative standalone selling price basis unless a portion of the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation. The Company allocates the transaction price based on the estimated standalone selling price of the underlying performance obligations or in the case of certain variable consideration to one or more performance obligations. The Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. The Company utilizes key assumptions to determine the stand-alone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs to complete the respective performance obligation. Certain variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated to each performance obligation are consistent with the amount the Company would expect to receive for each performance obligation. When a performance obligation is satisfied, revenue is recognized for the amount of the transaction price, excluding estimates of variable consideration that are constrained, that is allocated to that performance obligation on a relative standalone selling price basis. Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations under an arrangement. For performance obligations consisting of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non- refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company will recognize revenue from non-refundable, up-front fees allocated to the license at the point in time when the license is transferred to the customer and the customer is able to use and benefit from the license. e) Cash and Cash Equivalents Cash and cash equivalents consist of cash and highly liquid investments that are readily convertible into cash with original maturities of 90 days or less at acquisition date. f) Short-Term Investments Short-term investments are classified as held-to-maturity, are initially recognized at fair value and are subsequently accounted for at amortized cost. They are comprised of guaranteed investment certificates with a maturity greater than 90 days but less than one year and, as such, are classified as current assets. g) Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents and investment securities classified as held-to-maturity. The Company maintains deposits at major financial institutions. Additionally, the Company has adopted an investment policy that includes guidelines relative to credit quality, diversification of maturities and liquidity. 104 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ h) Currency Risk The Company is exposed to currency risk due to financial instruments denominated in foreign currencies. The Company is exposed to the Canadian dollar currency risk and does not enter into arrangements to hedge its currency risk exposure. i) Property and Equipment Property and equipment is stated at historical cost less accumulated amortization. Expenditures for maintenance and repairs are recorded to expense as incurred. The Company reviews its property and equipment whenever events or changes in circumstances indicate that the carrying value of certain assets might not be recoverable and recognizes an impairment loss when it is probable that an asset’s realizable value is less than the carrying value. To date, no such impairment losses have been recorded. Amortization is calculated using the straight-line method over the following estimated useful lives of the assets: ​ ​ ​ ​ Computer hardware and software 3 years Office equipment 5 years Furniture and fixtures 5 years Leasehold improvements over the lease term ​ j) Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable. The Company does not have financing leases. Operating lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over the expected remaining lease term. Right-out-use assets are subsequently accounted for as long-lived assets, including evaluating for indicators of impairment. Certain adjustments to the right-of-use asset may be required for items such as incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. Prospectively, the Company will adjust the right-of-use assets for straight-line rent expense, or any incentives received and remeasure the lease liability at the net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date. ​ The Company has elected not to recognize leases with an original term of one year or less on the balance sheet. The Company typically only includes an initial lease term in its assessment of a lease arrangement. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew. ​ k) Pre-funded Warrants ​ Pre-funded warrants allow the holder to pay little or no consideration to receive the shares upon exercise of the warrant. The pre-funded warrants do not meet the definition of a derivative under ASC 815 because their fair value at issuance is equal to the fair value of the shares underlying the warrant. As such, they have the characteristics of a prepaid forward sale of equity. As a result, the pre-funded warrants are accounted for as equity instruments. ​ l) Share Issuance Costs Share issuance costs applicable to the issuance of equity instruments are recorded as a reduction of the financing equity proceeds. 105 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ m) Research and Development and Investment Tax Credits Research and development costs are charged to expense as costs are incurred in performing research and development activities. The Company’s research and development costs consist primarily of salaries and fees paid to CROs and to CMOs. 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. Direct costs associated with the Company’s CROs and CMOs are generally payable on a time and materials basis, or when milestones are achieved. The invoicing from clinical trial sites can lag several months. The Company records expenses for its clinical trial activities performed by third parties based upon estimates of the percentage of work completed of the total work over the life of the individual study in accordance with agreements established with CROs and clinical trial sites. The Company determines the estimates through discussions with internal clinical personnel, CROs and CMOs as to the progress or stage of completion of trials or services and the agreed upon fee to be paid for such services based on facts and circumstances known to the Company as of each consolidated balance sheet date. The actual costs and timing of clinical trials are highly uncertain, subject to risks and may change depending upon a number of factors, including the Company’s clinical development plan. If the actual timing of the performance of services of the level of effort varies from the estimate, the Company will adjust the accrual accordingly. The Company recognizes the benefit of Canadian research and development tax credits as a reduction of research and development costs for fully refundable investment tax credits and as a reduction of income taxes for investment tax credits that can only be claimed against income taxes payable when there is reasonable assurance that the claim will be recovered. n) Income Taxes The provision for income taxes is computed using the liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is recorded to reduce the carrying amount of deferred income tax assets until when it is more likely than not that these assets will be realized. Tax benefits related to tax positions not deemed to meet the “more likely than not” threshold are not permitted to be recognized in the consolidated financial statements. o) Foreign Currency Translation and Transactions The functional currency of the Company is the U.S. dollar. 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. At each consolidated balance sheet date, monetary assets and liabilities denominated in currencies other than the functional currency are remeasured using the exchange rate in effect at that date. Non-monetary assets and liabilities and revenue and expense items denominated in foreign currencies are translated into the functional currency using the exchange rate prevailing at the dates of the respective transactions. Any gains or losses arising on remeasurement are included in the consolidated statement of loss. p) Share-Based Compensation The Company has a share-based compensation plan which is described in detail in note 8 and records all share-based payments, including grants of employee share options, at their fair values. The fair value of share options granted to employees and non-employees is estimated at the date of grant using the Black-Scholes option pricing model. The Company recognizes share-based compensation expense over the requisite service period of the individual grants, which equals the vesting period, using the straight-line method. Forfeitures, if any, are recorded as they occur. Any consideration paid by employees on exercising share options and the corresponding portion previously credited to contributed surplus are credited to share capital. The Black-Scholes option pricing model used by the Company to calculate option values was developed to estimate fair value. 106 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ The Company approved an employee share purchase plan in April 2019, which became effective on May 8, 2019, and is described in note 9. The plan provides a means by which eligible employees of the Company may be given an opportunity to purchase common shares. The plan permits the Company to grant a series of purchase rights to eligible employees under an employee stock purchase plan. ​ q) Recent Accounting Pronouncements In November 2023, the Financial Accounting Standards Board, or “FASB,” issued Accounting Standard Update, or “ASU 2023-07,” Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-07 for the year ended December 31, 2024, as documented in Note 19, “Segment Reporting”. ​ In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): 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. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating this guidance to determine the impact it may have on its financial statement disclosures. ​ 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 The Company is subject to challenges and risks specific to its business and its ability to execute on its strategy, as well as risks and uncertainties common to companies in the pharmaceutical industry, including, without limitation, risks and uncertainties associated with: obtaining regulatory approval of its product candidate; delays or problems in the supply of its study drug or failure to comply with manufacturing regulations; identifying, acquiring or in-licensing product candidates; pharmaceutical product development and the inherent uncertainty of clinical success; and the challenges of protecting and enhancing its intellectual property rights; and complying with applicable regulatory requirements. ​ Further, the Company may be impacted by general economic, political, and market conditions, including deteriorating market conditions due to investor concerns regarding inflation, armed conflicts, and overall fluctuations in the financial markets in the U.S. and abroad. ​ s) Sources of Liquidity and Funding Requirements The Company has incurred operating losses and experienced negative operating cash flows since its inception and anticipates continuing to incur losses for at least the next several years. Further, in connection with the revised timeline for our New Drug Application, or “NDA,” submission, we took certain cash conservation measures to reduce spending 107 Table of Contents 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. 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. Management expects operating losses and negative cash flows from operations to continue for the foreseeable future. The Company currently plans to raise additional funding as required based on the status of its clinical trials, progress of New Drug Application, or “NDA,” filing, and projected cash flows. There can be no assurance that, in the event the Company requires additional financing, such financing will be available at terms acceptable to the Company, if at all. Failure to generate sufficient cash flows from operations, raise additional capital and reduce discretionary spending should additional capital not become available could have a material adverse effect on the Company’s ability to achieve its business objectives. 3 Revenue 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 ​ 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. In addition, the Company is entitled to receive tiered royalty payments ranging from a percentage in the low double digits to the high double digits of Net Sales (as defined in the License Agreement) of all products sold in the Territory. ​ 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 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 108 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ after estimating the stand-alone cost compared to the License Agreement as a whole. 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. The Company had short-term investments of $ 52.2 million as of December 31, 2023. ​ 5 Leases On May 20, 2022, the Company entered into a new lease arrangement for a 62-month term for new office space located in Charlotte, NC. The Company recognized the operating lease right-of-use asset and operating lease liabilities at the lease commencement date on August 1, 2022. The interest rate implicit in lease contracts is not readily determinable and the Company does not have a public credit rating and carries no debt. As such, several factors were considered in the determination of the Company’s incremental borrowing rate used in determining the present value of lease payments. The Company’s examined credit ratings for similar companies, assumed equivalency between the Canadian and U.S. markets for collateralized debt and used rates near the 62-month period. This resulted in an incremental borrowing rate of 7.55 %. Lease expenses are recognized on a straight-line basis over the lease term, which is accomplished by increasing the amortization of the right-of-use asset as interest expense on the lease liability declines over the lease term. On July 1, 2020, the Company entered into an arrangement for the lease renewal for its headquarters located in Ville Saint-Laurent, Quebec. The 5-year lease term is from December 1, 2020, expiring on November 30, 2025. The Company recorded the operating lease right-of-use asset and operating lease liabilities at the effective lease arrangement date of July 1, 2020. The Company’s examined credit ratings for similar companies, assumed equivalency between the Canadian and U.S. markets for collateralized debt and used rates for the remaining lease term of 65 months . This resulted in an incremental borrowing rate of 5.26 %. Lease expenses are recognized on a straight-line basis over the lease term, which is accomplished by increasing the amortization of the right-of-use asset as interest expense on the lease liability declines over the lease term. The Company is not reasonably certain of renewing the lease following the current renewal option and recognized the right-of-use asset and operating lease liabilities to November 30, 2025. The Company's operating office leases right-of-use assets as at December 31 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Opening balance $ 1,917 ​ $ 2,423 Amortization of right-of-use asset ​ ​ ( 541 ) ​ ​ ( 506 ) Closing balance ​ $ 1,376 ​ $ 1,917 ​ 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 of December 31, 2024: ​ ​ ​ ​ 109 Table of Contents 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 ​ $ 658 January 1, 2026 to December 31, 2026 ​ ​ 530 January 1, 2027 to September 30, 2027 ​ ​ 406 Total ​ ​ 1,594 Less interest ​ ​ ( 149 ) Total net of interest ​ $ 1,445 ​ ​ 6 Property and equipment Property and equipment consist of the following at December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Computer hardware and software ​ $ 238 ​ $ 226 Office equipment ​ 165 ​ 157 Leasehold improvements ​ 85 ​ 85 Total ​ $ 488 ​ $ 468 Less accumulated depreciation ​ ( 291 ) ​ ( 191 ) Property and equipment, net ​ $ 197 ​ $ 277 ​ 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. For the years ended December 31, 2024 and 2023, depreciation expense was $ 105 and $ 92 , respectively. ​ 7 Accounts payable and accrued liabilities Accounts payable and accrued liabilities comprised the following as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ December 31, 2023 ​ ​ ​ Trade accounts payable $ 1,932 ​ $ 3,981 Accrued compensation and benefits payable ​ 2,501 ​ ​ 712 Accrued research and development liabilities ​ 631 ​ ​ 894 Accrued commercial liabilities ​ ​ 1,935 ​ ​ 710 Accrued legal liabilities ​ ​ 76 ​ ​ 131 Other accrued liabilities ​ 480 ​ ​ 252 Total $ 7,555 ​ $ 6,680 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 8 Shareholders’ Equity Authorized Share Capital 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, 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 110 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ per share as the other common shares sold in the Offering, which was exercised by the Underwriters in full on February 29, 2024. ​ On March 22, 2023, the Company entered into an exchange agreement, or the “Exchange Agreement,” with entities affiliated with RTW, or the “Exchanging Stockholders,” pursuant to which the Company exchanged an aggregate of 1,059,000 shares of the Company’s common shares owned by the Exchanging Stockholders for pre-funded warrants, or the “Exchange Warrants”, to purchase an aggregate of 1,059,000 common shares, with an exercise price of $ 0.001 per share and no expiration date. The Exchange Warrants are exercisable immediately and no additional cash consideration was rendered in exchange for the warrants. A holder of the Exchange Warrants (together with its affiliates and other attribution parties) may not exercise any portion of an Exchange Warrant to the extent that immediately prior to or after giving effect to such exercise the holder, together with its affiliates, would beneficially own more than 9.99 % of the Company’s outstanding common shares immediately after exercise, which percentage may be increased or decreased to any other percentage specified not in excess of 9.99 % at the holder's election upon 61 days ' notice to the Company subject to the terms of the Exchange Warrants. ​ 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. This 2021 Inducement Plan is intended to help the Company provide an inducement material for certain individuals to enter into employment with the Company, incentives for such persons to exert maximum efforts for the success of the Company and provide a means by which employees may benefit from increases in value of the common shares. 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. 111 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ The total outstanding and exercisable options from the 2011 Plan, 2019 Plan and Inducement Plan as of December 31 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ Number ​ ​ ​ average ​ ​ of shares ​ ​ ​ exercise ​ 2019 Plan Inducement Plan ​ 2011 Plan Total price Outstanding at beginning of year - 2011 Plan ​ — ​ — ​ 1,694,233 1,694,233 $ 2.09 Outstanding at beginning of year - 2019 Plan ​ ​ 6,406,897 ​ — ​ ​ — ​ 6,406,897 ​ ​ 5.82 Outstanding at beginning of year - Inducement Plan ​ ​ — ​ 625,000 ​ ​ — ​ 625,000 ​ ​ 5.74 Granted - 2019 Plan ​ ​ 1,652,000 ​ — ​ ​ — ​ 1,652,000 ​ ​ 1.62 Exercised - 2011 Plan ​ ​ — ​ — ​ ​ ( 50,476 ) ​ ( 50,476 ) ​ ​ 1.04 Forfeited - Inducement Plan ​ ​ — ​ ( 98,250 ) ​ ​ — ​ ( 98,250 ) ​ ​ 4.33 Forfeited - 2019 Plan ​ ​ ( 386,053 ) ​ — ​ ​ — ​ ( 386,053 ) ​ ​ 4.42 Expired - 2019 Plan ​ ​ ( 68,238 ) ​ — ​ ​ — ​ ( 68,238 ) ​ ​ 7.42 Expired - 2011 Plan ​ ​ — ​ — ​ ​ ( 11,272 ) ​ ( 11,272 ) ​ ​ 4.01 Expired - Inducement Plan ​ ​ — ​ ( 30,750 ) ​ ​ — ​ ( 30,750 ) ​ ​ 6.22 Outstanding at end of year ​ 7,604,606 ​ 496,000 ​ ​ 1,632,485 ​ 9,733,091 ​ $ 4.54 Outstanding at end of year - Weighted average exercise price ​ $ 4.97 $ 5.99 ​ $ 2.11 ​ ​ ​ ​ ​ Exercisable at end of year ​ ​ 4,850,552 ​ 319,291 ​ ​ 1,632,485 ​ 6,802,328 ​ $ 5.14 Exercisable at end of year - Weighted average exercise price $ 6.09 $ 6.24 ​ $ 2.11 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ Number ​ ​ ​ average ​ ​ of shares ​ ​ ​ exercise ​ ​ 2019 Plan Inducement Plan ​ 2011 Plan Total price Outstanding at beginning of year - 2011 Plan ​ — ​ — ​ ​ 1,802,672 ​ 1,802,672 ​ $ 2.05 Outstanding at beginning of year - 2019 Plan ​ 5,314,312 ​ — ​ ​ — ​ 5,314,312 ​ ​ 8.35 Outstanding at beginning of year - Inducement Plan ​ ​ — ​ 503,000 ​ ​ — ​ 503,000 ​ ​ 6.41 Granted - 2019 Plan ​ ​ 1,875,400 ​ — ​ ​ — ​ 1,875,400 ​ ​ 3.61 Granted - Inducement Plan ​ ​ — ​ 122,000 ​ ​ — ​ 122,000 ​ ​ 2.98 Exercised - 2019 Plan ​ ​ ( 7,000 ) ​ — ​ ​ — ​ ( 7,000 ) ​ ​ 3.74 Exercised - 2011 Plan ​ ​ — ​ — ​ ​ ( 107,103 ) ​ ( 107,103 ) ​ ​ 1.52 Forfeited - 2019 Plan ​ ​ ( 156,198 ) ​ — ​ ​ — ​ ( 156,198 ) ​ ​ 6.13 Expired - 2019 Plan ​ ​ ( 58,617 ) ​ — ​ ​ — ​ ( 58,617 ) ​ ​ 11.52 Expired - 2011 Plan ​ ​ — ​ — ​ ​ ( 1,336 ) ​ ( 1,336 ) ​ ​ 0.91 Cancelled - 2019 Plan ​ ​ ( 561,000 ) ​ — ​ ​ — ​ ( 561,000 ) ​ ​ 21.73 Outstanding at end of year ​ ​ 6,406,897 ​ 625,000 ​ ​ 1,694,233 ​ 8,726,130 ​ $ 5.09 Outstanding at end of year - Weighted average exercise price ​ $ 5.82 $ 5.74 ​ $ 2.09 ​ ​ ​ ​ ​ Exercisable at end of year ​ ​ 3,228,422 ​ 221,833 ​ ​ 1,694,233 ​ 5,144,488 ​ $ 5.32 Exercisable at end of year - Weighted average exercise price ​ $ 6.93 ​ 6.42 ​ $ 2.09 ​ ​ ​ ​ ​ ​ 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 $ 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. 112 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ Options granted are valued using the Black-Scholes option pricing model. Amortization of the fair value of the options over vesting years has been expensed and credited to additional paid-in capital in shareholders’ equity. The non-vested options as of December 31 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ ​ Number ​ ​ ​ Weighted ​ ​ of options ​ ​ ​ average ​ ​ 2019 Plan Inducement Plan 2011 Plan Total fair value Non-vested share options at beginning of year - 2019 Plan ​ ​ 3,178,475 ​ ​ — ​ ​ — ​ 3,178,475 ​ 3.64 Non-vested share options at beginning of year - Inducement Plan ​ ​ — ​ ​ 403,167 ​ ​ — ​ 403,167 ​ ​ 4.07 Granted - 2019 Plan ​ 1,652,000 ​ ​ — ​ ​ — ​ 1,652,000 ​ ​ 1.26 Vested, outstanding - 2019 Plan ​ ​ ( 1,690,368 ) ​ ​ — ​ ​ — ​ ( 1,690,368 ) ​ ​ 3.48 Vested, outstanding - Inducement Plan ​ ​ — ​ ​ ( 128,208 ) ​ ​ — ​ ( 128,208 ) ​ ​ 4.48 Forfeited - Inducement Plan ​ ​ — ​ ​ ( 98,250 ) ​ ​ — ​ ( 98,250 ) ​ ​ 3.31 Forfeited - 2019 Plan ​ ​ ( 386,053 ) ​ ​ — ​ ​ — ​ ( 386,053 ) ​ ​ 3.47 Non-vested share options at end of year ​ 2,754,054 ​ ​ 176,709 ​ ​ — ​ 2,930,763 $ 2.45 Non-vested share options at end of year - Weighted average fair value ​ $ 2.33 ​ $ 4.19 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ ​ Number ​ ​ ​ Weighted ​ ​ of options ​ ​ ​ average ​ 2019 Plan Inducement Plan 2011 Plan Total fair value Non-vested share options at beginning of year - 2011 Plan ​ — ​ ​ — ​ ​ 2,126 ​ 2,126 $ 6.64 Non-vested share options at beginning of year - 2019 Plan ​ ​ 2,923,763 ​ ​ — ​ ​ — ​ 2,923,763 ​ 5.30 Non-vested share options at beginning of year - Inducement Plan ​ ​ — ​ ​ 503,000 ​ ​ — ​ 503,000 ​ ​ 4.84 Granted - 2019 Plan ​ 1,875,400 ​ ​ — ​ ​ — ​ 1,875,400 ​ ​ 2.87 Granted - Inducement Plan ​ ​ — ​ ​ 122,000 ​ ​ — ​ 122,000 ​ ​ 2.30 Vested, outstanding - 2011 Plan ​ ​ — ​ ​ — ​ ​ ( 2,126 ) ​ ( 2,126 ) ​ 6.64 Vested, outstanding - 2019 Plan ​ ​ ( 1,504,329 ) ​ ​ — ​ ​ — ​ ( 1,504,329 ) ​ ​ 5.88 Vested, outstanding - Inducement Plan ​ ​ — ​ ​ ( 221,833 ) ​ ​ — ​ ( 221,833 ) ​ ​ 4.85 Forfeited - 2019 Plan ​ ​ ( 116,359 ) ​ ​ — ​ ​ — ​ ( 116,359 ) ​ ​ 3.96 Non-vested share options at end of year ​ 3,178,475 ​ ​ 403,167 ​ ​ — ​ 3,581,642.00 $ 3.69 Non-vested share options at end of year - Weighted average fair value ​ $ 3.64 ​ $ 4.07 ​ $ — ​ ​ ​ ​ ​ ​ The following table summarizes information with respect to share options outstanding as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options outstanding ​ Options exercisable ​ ​ Weighted ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ average ​ Weighted ​ ​ ​ average ​ Weighted ​ ​ ​ ​ remaining ​ average ​ ​ ​ remaining ​ average ​ ​ Number ​ contractual ​ exercise ​ Number ​ contractual ​ exercise Exercise price ​ of options ​ life (years) ​ price ​ of options ​ life (years) ​ price $ 0.84 -$ 1.73 1,623,845 ​ 5.74 ​ ​ 1.46 ​ 1,089,175 ​ 3.83 ​ ​ 1.46 $ 1.74 -$ 3.2 1,725,554 ​ 7.06 ​ ​ 2.16 ​ 733,262 ​ 4.04 ​ ​ 2.61 $ 3.21 -$ 5.25 2,128,500 ​ 7.40 ​ ​ 3.67 ​ 1,393,090 ​ 7.02 ​ ​ 3.70 $ 5.26 -$ 6.36 3,368,756 ​ 6.68 ​ ​ 5.90 ​ 2,857,032 ​ 6.63 ​ ​ 5.95 $ 6.37 -$ 8.5 527,000 ​ 7.06 ​ ​ 6.82 ​ 379,083 ​ 6.98 ​ ​ 6.80 $ 8.51 -$ 15.5 ​ 53,086 ​ 5.49 ​ ​ 9.08 ​ 44,336 ​ 5.06 ​ ​ 9.19 $ 15.51 -$ 20.5 ​ 65,100 ​ 4.84 ​ ​ 17.21 ​ 65,100 ​ 4.84 ​ ​ 17.21 $ 20.51 -$ 22.45 ​ 241,250 ​ 5.06 ​ ​ 21.48 ​ 241,250 ​ 5.06 ​ ​ 21.48 Total 9,733,091 6.71 ​ $ 4.54 6,802,328 5.92 ​ $ 5.14 ​ 113 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ The fair value of options is measured using Black-Scholes valuation model. This model also requires assumptions, including expected option life, volatility, risk-free interest rate and dividend yield, which greatly affect the calculated values: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ 2024 2023 Exercise price ​ $ 1.62 $ 3.58 ​ Share price ​ $ 1.62 $ 3.58 ​ Volatility ​ 96 % ​ 97 % Risk-free interest rate ​ 4.17 % ​ 3.97 % Expected life ​ 5.66 years ​ 6.01 years ​ Dividend ​ 0 % ​ 0 % ​ Expected volatility is determined using comparable companies for which the information is publicly available. The risk-free interest rate is determined based on the U.S. sovereign rates benchmark in effect at the time of grant with a remaining term equal to the expected life of the option. Expected option life is determined based on the simplified method as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The simplified method is an average of the contractual term of the options and its ordinary vesting period. Dividend yield is based on the share option’s exercise price and expected annual dividend rate at the time of grant. 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 114 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Beginning balance $ — ​ $ — Granted 924,000 ​ — Vested ​ ​ — ​ ​ — Forfeited ​ ​ — ​ ​ — Ending balance $ 924,000 ​ $ — ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Administration ​ $ 3,171 $ 4,849 Research and development ​ ​ 1,874 ​ 3,281 Commercial activities ​ ​ 731 ​ 1,404 Total ​ $ 5,776 $ 9,534 ​ ​ 10 Debt ​ On March 27, 2023, we entered into a note purchase agreement, or the “Note Purchase Agreement,” with RTW Investments LP and certain of its affiliates, or collectively, “RTW” . On March 29, 2023, we closed the transactions contemplated by the Note Purchase Agreement, and issued and sold $ 50.0 million principal amount of 6.0 % Convertible Senior Notes due 2029, or the “2029 Convertible Notes,” to the holders. The 2029 Convertible Notes are senior secured obligations and are guaranteed on a senior secured basis by our wholly owned subsidiary, Milestone Pharmaceuticals USA, Inc. Interest at the annual rate of 6.0 % is payable quarterly in cash or, at our option, payable in kind for the first three years . The maturity date for the 2029 Convertible Notes is March 31, 2029, the “Maturity Date”. The obligations under the 2029 Convertible Notes are secured by substantially all of our and our subsidiary guarantor’s assets. Each $ 1,000 of principal of the 2029 Convertible Notes (including any interest added thereto as payment in kind) is convertible into 191.0548 common shares, equivalent to an initial conversion price of approximately $ 5.23 per share, subject to customary anti-dilution and other adjustments. In addition, following a notice of redemption or certain corporate 115 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ events that occur prior to the Maturity Date, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2029 Convertible Notes in connection with such notice of redemption or corporate event. On or after March 27, 2027, the 2029 Convertible Notes are redeemable by us, subject to certain conditions, if the closing sale price of the common shares exceeds 150 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100 % of the principal amount of the 2029 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. In accounting for the issuance of the 2029 Convertible Notes, the Company determined there were no embedded features, which require bifurcation between debt and equity components. As a result, the 2029 Convertible Notes are accounted for as a liability. As of December 31, 2024, the estimated fair value of the 2029 Convertible Notes was approximately $ 56.07 million based on level 2 inputs. ​ The net carrying amount of the 2029 Convertible Note were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ December 31, 2023 Original principal $ 50,000 ​ $ 50,000 Paid in kind (PIK) interest ​ ​ 5,520 ​ ​ 2,310 Unamortized debt discount ​ ​ ( 468 ) ​ ​ ( 547 ) Unamortized debt issuance costs ​ ( 1,700 ) ​ ​ ( 1,991 ) Total $ 53,352 ​ $ 49,772 ​ The following table presents the total amount of interest cost recognized relating to the 2029 Convertible Notes: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ 2024 2023 ​ ​ Contractual interest expense ​ ​ $ 3,210 $ 2,310 ​ ​ Amortization of debt discount ​ ​ ​ 80 ​ ​ 53 ​ ​ Amortization of debt issuance costs ​ ​ ​ 291 ​ 191 ​ ​ Total interest expense ​ ​ $ 3,581 $ 2,554 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 11 Net loss per share Basic and diluted net loss per common share is determined by dividing net loss applicable to common shareholders by the weighted average number of common shares and pre-funded warrants outstanding during the period. 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: ​ ​ ​ ​ ​ ​ ​ 2024 2023 Share options and performance share units 10,657,091 8,726,130 ​ Amounts in the table above reflect the common share equivalents of the noted instruments. ​ 116 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ 12 Income taxes A reconciliation between tax expense and the product of accounting income multiplied by the basic income tax rate for the years ended December 31, 2024 and 2023 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Loss before income taxes ​ $ ( 41,519 ) ​ $ ( 59,685 ) ​ Canadian statutory rate (1) ​ ​ 26.50 % 26.50 % Computed income tax recovery ​ ​ ( 11,003 ) ( 15,817 ) ​ Effect on income tax rate resulting from ​ ​ ​ ​ ​ Accounting charges not deductible for tax purposes ​ ​ — 4 ​ Non‑deductible share‑based compensation ​ ​ 1,637 4,663 ​ Other permanent differences ​ ​ 21 ​ ​ — ​ Tax benefits of current period losses and other tax assets, subject to full valuation allowance ​ ​ 8,074 10,945 ​ Valuation allowance for prior year adjustment ​ ​ 136 ​ ​ — ​ Foreign income tax rate difference ​ ​ 1,114 ​ ​ — ​ Other ​ 21 ​ 205 ​ 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. As of December 31, 2024, the Company has NOL carry-forwards of approximately $ 220.0 million and $ 216.0 million, respectively, for Canadian federal and Québec purposes, available to reduce future taxable income, which expire beginning in 2027 through 2044. The Company also has scientific research and experimental development expenditures of approximately $ 29.5 million and $ 35.2 million, respectively, for Canadian federal and Québec income tax purposes, which have not been deducted. These expenditures are available to reduce future taxable income and have an unlimited carry-forward period. Research and development tax credits and expenditures are subject to verification by the tax authorities, and, accordingly, these amounts may vary. The Company has incurred NOLs for U.S. tax purposes. As of December 31, 2024, the Company has carry-forwards of approximately $ 67.0 million related to U.S. NOLs that may be carried forward indefinitely and are available to reduce future taxable income. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The net deferred tax assets have not been recognized in these financial statements because the criteria for recognition of these assets were not met. 117 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ The Company’s deferred tax assets consist of the following for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ 2024 ​ 2023 Net operating loss carry‑forwards $ 72,775 $ 66,656 Tax basis of property and equipment in excess of carrying values 78 ​ 67 Tax basis of right of use assets ​ ( 298 ) ​ ( 421 ) Tax basis of lease liability ​ 311 ​ 438 Tax basis of reserves ​ 5 ​ 6 Federal SR&ED investment tax credits 4,170 ​ 3,735 Taxation of federal SR&ED investment tax credits ( 1,105 ) ​ ( 990 ) Research and development expenditures 8,472 ​ 7,643 Financing costs 447 ​ 186 Stock based compensation ​ 3,752 ​ 2,850 Others 745 ​ 45 Total Net deferred tax assets 89,353 ​ 80,215 Less Valuation allowance ​ ( 89,353 ) ​ ( 80,215 ) Net deferred tax assets $ — $ — ​ The Company files income tax returns in Canada and in the United States. The Company is subject to Canada Revenue Agency and Revenu Québec examination for fiscal years 2019 to 2024 due to unexpired statute of limitation periods and is subject to US Federal and state income tax examination for fiscal years 2021 to 2024. 13 Government assistance The Company incurs research and development expenditures that are eligible for investment tax credits. 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 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 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 The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates and the degree of volatility of those rates. The foreign currency risk is limited to the portion of the Company’s business transactions denominated in currency other than US dollars. The following table provides an indication of the Company’s exposure to the Canadian dollar, which is expressed in US dollars as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Cash and cash equivalents ​ $ 1,222 ​ $ 2,441 Short-term investments ​ ​ 487 ​ ​ — Other receivables ​ ​ 210 ​ ​ 263 Operating lease assets ​ ​ 153 ​ ​ 311 Accounts payable and accrued liabilities ​ ​ ( 280 ) ​ ​ ( 52 ) Operating lease liabilities ​ ​ ( 138 ) ​ ​ ( 306 ) Net financial position exposure ​ $ 1,654 ​ $ 2,657 ​ The Company does not enter into arrangements to hedge its currency risk exposure. 118 Table of Contents Milestone Pharmaceuticals Inc. Notes to Consolidated Financial Statements (in thousands of US dollars, except share and per share data) ​ ​ 16 Fair value of financial instruments Pursuant to the accounting guidance for fair value measurement and its subsequent updates, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the exit price) in an orderly transaction between market participants at the measurement date. The accounting guidance establishes a hierarchy for inputs used in measuring fair value that minimizes the use of unobservable inputs by requiring the use of observable market data when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on active market data. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. The fair value hierarchy is broken down into the three input levels summarized below: ​ ​ ​ Level 1 — Valuations are based on quoted prices in active markets for identical assets or liabilities and readily accessible by the Company at the reporting date. Level 2 — Valuations based on inputs other than the quoted prices in active markets that are observable either directly or indirectly in active markets. Level 3 — Valuations based on unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. ​ 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 On March 27, 2023, we entered into a purchase and sale agreement, or the “Royalty Purchase Agreement,” with RTW and certain of its affiliates. Pursuant to the Royalty Purchase Agreement, RTW agreed to purchase, following the U.S. Food and Drug Administration approval of etripamil (subject to certain conditions), in exchange for a purchase price of $ 75.0 million, the right to receive a tiered quarterly royalty payments, or the “Royalty Interest,” on the annual net product sales of etripamil in the United States in an amount equal to: (i) 7 %, or the “Initial Tier Royalty,” of annual net sales up to $ 500 million, (ii) 4 % of annual net sales greater than $ 500 million and less than or equal to $ 800 million, and (iii) 1 % of annual net sales greater than $ 800 million. If certain revenue thresholds for aggregate annual net sales are not met, the Initial Tier Royalty will increase to 9.5 % beginning on January 1 of the following calendar year until a subsequent sales threshold is attained, at which time the Initial Tier Royalty would revert back to 7 %. Based on the Company’s assessment of the terms and conditions under the Royalty Purchase Agreement, there is no accounting recognition required in these financial statements. ​ ​ ​ 119 Table of Contents 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 $ 604 ​ $ 528 Sales tax receivable 210 ​ 264 Clinical receivable ​ ​ 674 ​ ​ 2,400 Other current receivable ​ ​ 2 ​ ​ 16 ​ $ 1,490 ​ $ 3,208 ​ ​ ​ ​ 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) 2024 2023 ​ Revenue ​ $ — ​ $ 1,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: ​ ​ ​ ​ ​ ​ ​ Research and development, net of tax credits, excluding share-based compensation ​ ​ 12,483 ​ ​ 27,771 ​ General and administrative, excluding share-based compensation ​ 13,571 ​ 11,083 ​ Commercial, excluding share-based compensation ​ 10,272 ​ 13,710 ​ Share-based compensation expense ​ ​ 5,776 ​ ​ 9,534 ​ Interest income ​ ( 4,164 ) ​ ​ ( 3,967 ) ​ Interest expense ​ ​ 3,581 ​ ​ 2,554 ​ Net loss ​ $ ( 41,519 ) ​ $ ( 59,685 ) ​ ​ The measure of segment assets is reported on the balance sheet as total consolidated assets. ​ ​ ​ ​ ​ ​ 120 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.