SEC Form 10-Q filed by MIRA Pharmaceuticals Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
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by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
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As of November 12, 2024, there were shares of company common stock issued and outstanding.
MIRA Pharmaceuticals, Inc.
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
| i |
MIRA PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS
AS OF SEPTEMBER 30, 2024 AND DECEMBER 31, 2023
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | |||||||
| Other receivables | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Operating lease, right of use assets | ||||||||
| Due from related party | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable and accrued liabilities | $ | |||||||
| Related party accrued interest | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred stock, $ par value, shares authorized and issued or outstanding. | ||||||||
| Common stock, $ par value; shares authorized, and shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See notes to condensed financial statements.
| 1 |
MIRA PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Unaudited)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Operating costs: | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Related party travel costs | ||||||||||||||||
| Research and development expenses | ||||||||||||||||
| Total operating costs | ||||||||||||||||
| Interest income(expense), net | ( | ) | ( | |||||||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted loss per share | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average common stock shares outstanding | ||||||||||||||||
See notes to condensed financial statements.
| 2 |
MIRA PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Unaudited)
| Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balances, June 30, 2024 | ( | ) | ||||||||||||||||||
| Issuance of common stock, ATM | ||||||||||||||||||||
| Stock- based compensation | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balances, September 30, 2024 | $ | $ | ( | ) | $ | |||||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balances, June 30, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||
| Issuance of common stock, IPO | ||||||||||||||||||||
| Issuance of common stock, debt conversion | ||||||||||||||||||||
| Issuance of common stock | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balances, September 30, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ Equity | |||||||||||||||||
| Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||
| Balances, January 1, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Issuance of common stock, ATM | ||||||||||||||||||||
| Payment of Short Swing Disgorgement by Bay Shore Trust | - | |||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balances, September 30, 2024 | $ | ( | ) | $ | ||||||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ Equity | |||||||||||||||||
| Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||
| Balances, January 1, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Stock-based compensation | - | $ | $ | |||||||||||||||||
| Issuance of common stock. IPO | ||||||||||||||||||||
| Issuance of common stock, debt conversion | ||||||||||||||||||||
| Issuance of common stock | ||||||||||||||||||||
| Issuance of warrants | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balances, September 30, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||
See notes to condensed financial statements.
| 3 |
MIRA PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Unaudited)
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from Operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash from operations | ||||||||
| Interest expense, net | ( | ) | ||||||
| Amortization of debt issuance costs | ||||||||
| Stock-based compensation expense | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Other receivables | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Prepaid expenses | ( | ) | ||||||
| Net cash flows from operating activities | ( | ) | ( | ) | ||||
| Financing activities: | ||||||||
| Advances from (to) affiliates | ( | ) | ||||||
| Deferred offering costs | ||||||||
| Repayments under related party line of credit | ( | ) | ( | ) | ||||
| Proceeds from sale of common stock, less offering costs | ||||||||
| Issuance of common stock conversion of debt | ||||||||
| Issuance of common stock in lieu of fees | ||||||||
| Bayshore Trust short-swing disgorgement | ||||||||
| Net cash flows provided by financing activities | ||||||||
| Net change in cash | ( | ) | ||||||
| Cash, beginning of year | ||||||||
| Cash, end of period | $ | $ | ||||||
| Cash paid for interest | ||||||||
See notes to condensed financial statements
SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash Operating, Financing and Investing Activities:
The
Company recorded the fair value of a total of shares of common stock issued to Bay Shore Trust during the nine months ended
September 30, 2023 totaling approximately $
The
Company recorded the fair value of a total of shares of common stock issued to Bay Shore Trust during the nine months ended September
30, 2023 totaling approximately $
The
Company recorded the fair value of a total of shares of common stock issued to the MZ Group during the nine months ended September
30, 2023 totaling $
| 4 |
MIRA PHARMACEUTICALS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Unaudited)
Note 1. Description of business and summary of significant accounting policies:
Overview
MIRA Pharmaceuticals, Inc. (“MIRA,” or the “Company”), is a pre-clinical-stage pharmaceutical development company with two neuroscience programs targeting a broad range of neurologic and neuropsychiatric disorders. The Company holds exclusive license rights in the U.S., Canada and Mexico for Ketamir-2, a novel, patent pending oral ketamine analog under pre-clinical investigation to potentially deliver ultra-rapid antidepressant effects, providing hope for individuals battling neuropathic pain (“NP”), treatment-resistant depression (“TRD”), major depressive disorder with suicidal ideation (“MDSI”), and potentially post-traumatic stress disorder (“PTSD”).
Additionally, the Company’s novel oral pharmaceutical marijuana, MIRA-55, is currently under investigation for its potential to alleviate neuropathic pain, as well as anxiety and cognitive decline, symptoms often associated with early-stage dementia. MIRA-55, if approved by the U.S. Food and Drug Administration (“FDA”), could mark a significant advancement in addressing various neuropsychiatric, inflammatory, and neurologic diseases and disorders.
The U.S. Drug Enforcement Administration’s (“DEA”) scientific reviews of both Ketamir-2 and MIRA-55 concluded that they would not be considered a controlled substance or listed chemical under the Controlled Substances Act (“CSA”) and its governing regulations.
As used herein, the Company’s Common Stock, par value $ per share, is referred to as the “Common Stock” and the Company’s preferred stock, par value $ per share, is referred to as the “Preferred Stock.”
Basis of Accounting
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, all adjustments considered necessary for the fair presentation of the financial statements for the periods presented have been included. The results of operations for the nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for future periods
Operating Updates
In early February 2024, the Company made a significant discovery during the manufacturing and scale-up process of its patented molecule known as “MIRA1a,” which the Company believed was the molecule used in its pre-clinical trials and had been synthesized by a contract manufacturer. Through this process, the Company identified a novel and improved version of the molecule, which the Company calls MIRA-55.
As part of the Company’s due diligence and subsequent testing, which began in late 2023, the Company discovered that the pre-clinical studies the Company conducted, previously attributed to MIRA1a, were in fact performed on MIRA-55. Following this revelation, in early March 2024, the Company promptly filed a provisional patent for MIRA-55, which encompasses all pre-clinical studies. If such patent is issued, the Company will own the patent rights to both MIRA1a and MIRA-55.
Moreover, based on the Company’s pre-clinical analyses to date, the Company believes that MIRA-55 is an improvement over MIRA1a in that it displays enhanced potency and potential for efficacy.
| 5 |
Based on the Company’s discoveries and pre-clinical studies to date, the Company has decided to advance MIRA-55 as its lead compound for the Company’s oral pharmaceutical marijuana drug candidate while still retaining its rights to MIRA1a. As such, the Company has decided not to move MIRA1a forward.
Significant Accounting Policies
There have been no material changes in the Company’s significant accounting policies from those previously disclosed in the 2023 Annual Report.
Note 2. Liquidity and capital resources:
In
accordance with Accounting Standards Codification 205-40, Going Concern, The Company has evaluated whether there are conditions
and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern
within one year after the date the financial statements are issued. As of September 30, 2024, the Company had cash of approximately $
Historically, the Company has been primarily engaged in developing MIRA-55 and, more recently, has also been focusing on the development of Ketamir-2. During these activities, the Company sustained substantial losses. The Company’s ability to fund ongoing operations and future pre-clinical and clinical trials required for FDA approval is dependent on the Company’s ability to obtain significant additional external funding in the near term. Since inception, the Company financed its operations through the sale of Common Stock, and related party financings. The Company maintains an effective shelf registration statement with the SEC for the issuance of shares of common stock under various types of equity offerings, including shares of common stock under our ATM equity program (Note 6). The Company expects to be able to fund operations through the fourth quarter of 2025, with the cash on hand. However, the Company has the ability to issue common stock under its shelf registration statement to assist in liquidity needs.
The Company expects to continue to generate losses in the foreseeable future. The Company’s liquidity needs will be determined largely by the budgeted operational expenditures incurred in regard to the progression of its product candidates. The Company does not have sufficient cash and cash equivalents as of the date of filing this Report to support its operations for at least the 12 months following the date the financial statements are issued. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through 12 months after the date the accompanying financial statements are issued..
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern
Note 3. Debt, related party:
MIRALOGX
On November 15, 2023, the Company entered into a Promissory Note and Loan Agreement (the “Loan Agreement”) with MIRALOGX, LLC, a Florida limited liability company (“MIRALOGX”) which is a related-party owned by Bay Shore Trust, a significant stockholder of the Company (“Bay Shore Trust”).
Pursuant
to the Loan Agreement, the Company may borrow up to $
Together with any Advance Request, the Company shall deliver to the Lender a budget for the requested Advance (the “Budget”). The Budget may only include costs directly associated with preparing an Investigational New Drug (“IND”) application for Ketamir-2, exclusive of personnel costs. Any Advances made by MIRALOGX to the Company pursuant to this Loan may be repaid by the Company (together with any and all interest accrued thereon) at any time without penalty or premium in accordance with the terms hereof. Amounts repaid under the Loan may not be reborrowed
| 6 |
The
Loan Agreement has a one-year term, and all outstanding principal and accrued but unpaid interest must be repaid in full on November
15, 2024. Interest on the amounts borrowed under the Loan Agreement accrues at an annual fixed rate of
Bay Shore Trust
In
April 2023, the Company entered into a Promissory Note and Loan Agreement with the Bay Shore Trust. Under this Promissory Note and Loan
Agreement (the “Bay Shore Note”), the Company had the right to borrow up to an aggregate of $
On
July 20, 2023, the Company entered into a conversion agreement with the Bay Shore Trust under which the Bay Shore Trust had converted,
at the time of the IPO, $
Note 4. Related party transactions:
Due
from related parties – During the nine months ended September 30, 2024, the Company received payment from a related party in
the amount of $
Shared
management- Historically, the Company has shared management with related parties on an as-needed basis, to collaborate and pool resources
efficiently. For the nine months ended September 30, 2024, the Company incurred $
Shared lease costs- On April 1, 2023 the Company entered into an Agreement For Shared Lease Costs with MIRALOGX, LLC, (the “Shared Agreement”) who is a related party for the jet usage. Under the Shared Agreement, the Company agrees to make monthly contributions or payments in accordance with its monthly use of shared aircraft toward rent payments. However, the Company has not used the aircraft after the termination of the lease on March 31, 2023 and there are no minimum payments due without usage.
Debt, related party - See Note 3.
Stock settlement agreement - See Note 6
Note 5. Leases:
The Company’s former corporate headquarters were located in Baltimore, Maryland, which included a lease for office space. This lease began in November 2021 and ended April 2024. The lease was not renewed after April 2024. In April 2024, the company moved to a virtual office model and does not have a physical office space.
| 7 |
Variable lease costs
Variable lease costs primarily include utilities, property taxes, and other operating costs that are passed on from the lessor. Variable lease costs related to the aircraft include usage expenses, which includes pilot expenses, jet fuel and general flight expenses.
The components of lease expense were as follows:
| Nine months ended September 30, | ||||||||
| Lease Costs | 2024 | 2023 | ||||||
| Operating Lease Cost | ||||||||
| Operating Lease | $ | $ | ||||||
| Variable Lease Costs | ||||||||
| Total Lease Cost | $ | $ | ||||||
Supplemental cash flow information related to leases were as follows:
| Nine months ended September 30, | ||||||||
| Other Lease Information | 2024 | 2023 | ||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
Note 6. Stockholders’ equity:
Common Stock Issuances
On
August 12, 2024, the Company filed a shelf registration statement with the SEC to facilitate the issuance of our common stock and entered
into an At The Market Offering Agreement (the “ATM Agreement”) with Rodman & Renshaw LLC (the “Manager”),
under which the Company may offer and sell shares of its Common Stock, with an aggregate offering amount sold of up to $
Stock-based compensation
The fair value of each option award is estimated on the grant date using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected price volatility is based on the historical volatilities of a peer group as the Company does not have a multi-year trading history for its shares. Industry peers consist of several public companies in the biotech industry similar to the Company in size, stage of life cycle and product indications. The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company’s own stock price becomes available, or unless circumstances change such that the identified companies are no longer similar to the Company, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.
Expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The Company recognizes forfeitures as they occur.
During
the nine months ended September 30, 2024, a total of options to purchase Common Stock, with an aggregate fair market value
of approximately $
| 8 |
Number of shares | Weighted average exercise price per share | Aggregate intrinsic value | ||||||||||
| Outstanding as January 1, 2024 | $ | |||||||||||
| Options granted | $ | |||||||||||
| Forfeitures | ( | ) | $ | |||||||||
| Outstanding as September 30, 2024 | $ | $ | ||||||||||
As of September 30, 2024, options exercisable totaled . There are approximately $ million of unrecognized compensation costs related to non-vested share-based compensation awards, which will be expensed through 2025.
| Expected price volatility | %- | % | ||
| Risk-free interest rate | %- | % | ||
| Exercise price | $ | - $ | ||
| Expected term (in years) | - years | |||
| Dividend yield |
Warrants
The
Company has granted warrants to purchase shares of Common Stock. Warrants may be granted to affiliates in connection with certain agreements.
As of September 30, 2024, a cumulative total of
Earnings Per Share
During the three and nine months ended September 30, 2024 and September 30, 2023, outstanding stock options and warrants of and respectively, were not included in the computation of diluted earnings per share, because to do so would have had an antidilutive effect.
Stock Settlement Agreement
On
April 24, 2024 the Company settled a claim submitted by certain shareholders under Section 16 of the Securities Exchange Act involving
the Company that claimed illegal profits were earned on stock transactions involving insiders of the Company. After investigation, the
Company informed the insider, Bayshore Trust, of the claim and came to agreement with the shareholders, whereby requiring the disgorgement
of profits by the insider back to the Company in the amount of $
Note 7. Subsequent Events:
The Company evaluates subsequent events until the date the accompanying unaudited condensed financial statements are issued. Significant subsequent events are described below:
ATM Offering
From
October 1, 2024 through November 12, 2024, under the ATM Agreement, the Company sold and issued shares of Common Stock at an
average price per share of $, and received net proceeds of approximately $
| 9 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the Condensed Financial Statements and Notes thereto included elsewhere in this Quarterly Report. This discussion contains certain forward-looking statements that involve risks and uncertainties. The Company’s actual results and the timing of certain events could differ materially from those discussed in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth herein and elsewhere in this Quarterly Report and in the Company’s other filings with the SEC. See “Cautionary Note Regarding Forward Looking Statements” below.
As used in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, unless otherwise indicated, the terms “the Company”, “we”, “us”, “our” and similar terminology refer to MIRA Pharmaceuticals, Inc.
Background of the Company
We are a pre-clinical-stage pharmaceutical development company with two neuroscience programs targeting a broad range of neurologic and neuropsychiatric disorders. We hold exclusive license rights in the U.S., Canada and Mexico for Ketamir-2, a novel, patent pending oral ketamine analog under pre-clinical investigation to potentially deliver ultra-rapid antidepressant effects, providing hope for individuals battling NP, TRD, MDSI and potentially PTSD.
Additionally, our novel oral pharmaceutical marijuana molecule, MIRA-55, is being studied for its potential to alleviate neuropathic pain, as well as anxiety and cognitive decline, symptoms commonly associated with early-stage dementia. MIRA-55, if approved by the FDA, could mark a significant advancement in addressing various neuropsychiatric, inflammatory, and neurologic diseases and disorders.
The DEA’s scientific review of Ketamir-2 and MIRA-55 concluded that neither would be considered a controlled substance or listed chemical under the CSA and its governing regulations.
We were incorporated under the laws of the State of Florida in September 2020 and commenced substantive operations, including our pharmaceutical development program, in late 2020.
Critical Accounting Estimates
See Note 1 of the Notes to Condensed Financial Statements included in Item 1 of this Quarterly Report for a summary of significant accounting policies and information on recently issued accounting pronouncements.
Results of Operations
For the three months ended September 30, 2024 compared to the three months ended September 30, 2023
Research and Development Expenses. During the three months ended September 30, 2024, we incurred $1.1 million in research and development expenses, which were primarily related to initial payments for pre-clinical research projects. We incurred $1.0 million in research and development expenses during the three months ended September 30, 2023, relating to initial payment for toxicology study costs. Research and development expenses include pre-clinical, toxicology and consultant expenses.
| 10 |
General and Administrative Expenses. We incurred $1.0 million and $2.1 million in general and administrative expenses during the three months ended September 30, 2024 and September 30, 2023, respectively. General and administrative expenses are composed primarily of compensation, insurance, professional fees, stock-based compensation, administration and other related costs. The decrease is primarily due to stock-based compensation, debt issuance costs, and compensation related to the IPO efforts of the executive team that occurred in 2023 and is not reoccurring.
Interest income (expense), net. We earned $0.04 million in interest income (expense), net during the three months ended September 30, 2024 and incurred $(0.43) million interest income (expense), net during the three months September 30, 2023, respectively. Interest income in during 2024 related primarily to money market account interest whereas interest expense during 2023 included $0.44 million of debt issuance costs and $0.02 million of interest income.
For the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023
Research and Development Expenses. During the nine months ended September 30, 2024, we incurred $2.4 million in research and development expenses which were primarily related to initial payments for pre-clinical research projects. We incurred $1.2 million in research and development expenses during the nine months ended September 30, 2023, relating to initial payments for several toxicology projects. Research and development expenses include pre-clinical, toxicology and consultant expenses and we expect our 2024 costs to be consistent going forward.
General and Administrative Expenses. We incurred general and administrative expenses of $3.1 million and $3.8 million during the nine months ended September 30, 2024 and September 30, 2023, respectively. General and administrative expenses consists of payroll, consulting fees, IT-related costs, legal and accounting costs, office and rent expenses, investor relations and stock-based compensation expenses. The decrease is due primarily to stock-based compensation, debt issuance costs, and compensation related to the IPO efforts of the executive team that occurred in 2023. We would expect our 2024 costs to be consistent going forward.
Related Party Travel Costs. We incurred no in related party travel costs during the nine months ended September 30, 2024, compared to $0.5 million in September 30, 2023. The related party travel costs incurred in 2023 consisted of a lease and use of an airplane with an entity under common control. The airplane lease was terminated in March 2023 and no further costs are expected to be incurred.
Interest income (expense), net. We earned $0.13 million in interest income (expense), net during the nine months ended September 30, 2024 and incurred $0.73 million in interest income (expense), net during the nine months ended September 30, 2023, respectively. Interest expense during 2023 included $0.74 million of debt issuance costs and $0.02 million of interest income. Whereas in 2024 the Company earned $0.13 million in interest income from to money market accounts.
Liquidity and Capital Resources
Sources of Liquidity
Since our inception in September 2020, we have financed our operations primarily through an unsecured line of credit with a major shareholder and an affiliated company, through a private placement of shares of our common stock that occurred during the fourth quarter 2021 and during 2022, by the proceeds from our completed initial public offering in August 2023 and through the proceeds of an ATM offering during the third quarter of 2024. We intend to finance our clinical development programs and working capital needs from existing cash, and potentially new sources of debt and equity financing. We may enter into new licensing and commercial partnership agreements.
Historically, we have been primarily engaged in developing MIRA-55 and, more recently, have also been focusing on the development of Ketamir-2. During these activities, we have sustained substantial losses. Our ability to fund ongoing operations and future pre-clinical and clinical trials required for FDA approval is dependent on our ability to obtain significant additional external funding in the near term. We expect to be able to fund operations through the fourth quarter of 2025, with the issuance of common stock under our shelf registration as described in Note 7 of the accompanying financial statements.
| 11 |
On August 12, 2024, the Company filed a shelf registration statement on Form S-3 with the SEC. The terms of any offering under the shelf registration statement will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to completion of any such offering.
We expect to continue to generate losses in the foreseeable future. Our liquidity needs will be determined largely by the budgeted operational expenditure incurred in regard to the progression of our product candidates. We do not have sufficient cash and cash equivalents as of the date of filing this Report to support our operations for at least 12 months. These conditions raise substantial doubt about our ability to continue as a going concern through 12 months after the date the financial statements included in this Report are issued.
Cash Flows
The following table provides information regarding our cash flows for the periods presented:
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Net cash flows from: | ||||||||
| Operating activities | $ | (3,755,576 | ) | $ | (3,497,388 | ) | ||
| Financing activities | 3,297,570 | 9,014,740 | ||||||
| Net change in cash | $ | (458,006 | ) | $ | 5,517,352 | |||
Net Cash Used in Operating Activities
For the nine months ended September 30, 2024, operating activities used $3.8 million of cash, primarily due to a net loss of $5.5 million, offset by $1.4 million in stock-based compensation expense and $0.3 million in change in accounts payable, accrued and prepaid expenses. Accounts payable, accrued and prepaid expenses were primarily composed of research and development payables, consultant costs, insurance costs and investor relations expenses.
For the nine months ended September 30, 2023, operating activities used $3.5 million of cash, primarily due to a net loss of $6.2 million, a $0.4 million change in accounts payable, accrued and prepaid expenses, offset by $2.3 million in stock-based compensation expense and $0.7 million in amortization of debt issuance costs. Accounts payable, accrued and prepaid expenses were primarily composed of research and development payables, consultant costs, insurance costs and investor relations expense.
Net Cash Provided by Financing Activities
For the nine months ended September 30, 2024, financing activities provided $3.3 million of cash, resulting primarily from $3.1 million in proceeds from sale of common stock, less offering costs from the ATM agreement, and $0.2 million in proceeds from short swing disgorgement and related party advances.
For the nine months ended September 30, 2023, financing activities provided $9.0 million of cash, resulting primarily from $7.7 million in proceeds from sale of common stock, less offering costs, $1.4 million of issuance of common stock for conversion of debt and issuance of common stock in lieu of investor relation fees, and offset by $0.1 million of repayments under related party line of credit.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, and therefore are not required to provide the information under this item per Item 305(e) of Regulation S-K.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer) (the “Certifying Officers”), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) as of June 30, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Certifying officers have concluded, based on their evaluation as of the end of the period covered by this Report that our disclosure controls and procedures were not effective to provide reasonable assurance that the objectives of our disclosure control system were met. Management is in process of implementing plans to remediate the ineffectiveness of its disclosure controls and procedures through enhancements to its internal control environment as more fully described below.
Changes in Internal Control over Financial Reporting
During 2024, the Company has designed and implemented new and enhanced controls to strengthen the Company’s internal controls over financial reporting, including hiring additional experienced accounting personnel, among other enhancements. Management believes these enhancements will be sufficient to remediate previously identified material weaknesses. However, the new and enhanced controls have not operated for a sufficient amount of time to conclude that the Company’s disclosure controls and procedures were effective.
Other than as described above, there were no additional changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) of the Exchange Act) that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential”, or “continue” or the negative of these terms or other similar expressions. In particular, statements about the markets in which we operate, including growth of our various markets, and our expectations, beliefs, plans, strategies, objectives, prospects, assumptions, or future events or performance contained in this quarterly report under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” are forward-looking statements. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed in this quarterly report under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” may cause our actual results, performance, or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements, or could affect our share price. Important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements include, but are not limited to, the following:
● our use of the net proceeds from our offerings;
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● our ability to obtain and maintain regulatory approval of our product candidates;
● our ability to successfully commercialize and market our product candidates, if approved;
● our ability to contract with third-party suppliers, manufacturers and other service providers and their ability to perform adequately;
● the potential market size, opportunity, and growth potential for our product candidates, if approved;
● our ability to obtain additional funding for our operations and development activities;
● the accuracy of our estimates regarding expenses, capital requirements and needs for additional financing;
● the initiation, timing, progress and results of our pre-clinical studies and clinical trials, and our research and development programs;
● the timing of anticipated regulatory filings;
● the timing of availability of data from our clinical trials;
● our future expenses, capital requirements, need for additional financing, and the period over which we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will be sufficient to fund our operating expenses and capital expenditure requirements;
● our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;
● our ability to advance product candidates into, and successfully complete, clinical trials;
● our ability to recruit and enroll suitable patients in our clinical trials;
● the timing or likelihood of the accomplishment of various scientific, clinical, regulatory, and other product development objectives;
● the pricing and reimbursement of our product candidates, if approved;
● the rate and degree of market acceptance of our product candidates, if approved;
● the implementation of our business model and strategic plans for our business, product candidates, and technology;
● the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;
● developments relating to our competitors and our industry;
● the development of major public health concerns, including the novel coronavirus outbreak or other pandemics arising globally, and the future impact of it and COVID-19 on our clinical trials, business operations and funding requirements; and
● other risks and factors listed under “Risk Factors” and elsewhere in this quarterly report.
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Given the risks and uncertainties set forth in this quarterly report, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this quarterly report are not guarantees of future performance and our actual results of operations, financial condition, and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements contained in this quarterly report. In addition, even if our results of operations, financial condition and liquidity, and events in the industry in which we operate, are consistent with the forward-looking statements contained in this quarterly report, they may not be predictive of results or developments in future periods.
Any forward-looking statement that we make in this quarterly report speaks only as of the date of such statement. Except as required by federal securities laws, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this quarterly report.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be named in claims arising in the ordinary course of business. Currently, no legal proceedings, government actions, administrative actions, investigations, or claims are pending against us or involve us that, in the opinion of our management, could reasonably be expected to have a material adverse effect on our business and financial condition.
We anticipate that we will expend significant financial and managerial resources in the defense of our intellectual property rights in the future if we believe that our rights have been violated. We also anticipate that we will expend significant financial and managerial resources to defend against claims that our products and services infringe upon the intellectual property rights of third parties.
Item 1A. Risk Factors.
Our business, financial condition, results of operations and cash flows are subject to, and could be materially adversely affected by, various risks and uncertainties, including, without limitation, those set forth below, any one of which could cause our actual results to vary materially from recent results or our anticipated future results.
We expect to rely on third parties to conduct our pre-clinical trials and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials or failing to comply with regulatory requirements or our pre-clinical protocols.
We currently rely on contract research organizations (CROs) to conduct our pre-clinical trials, as we currently do not plan to independently conduct pre-clinical trials of any of our product candidates. Our agreements with these CROs, and other third parties might terminate for a variety of reasons, including a failure to perform by the third parties. If we were ever to need to enter into alternative arrangements or if we were to need to change a CRO for an ongoing pre-clinical trial, we might experience delays in our pre-clinical development activities
Geopolitical events and global economic conditions, such as the Israel-Hamas war may impact our third parties that we engage to supply any materials or to manufacture any products for our preclinical tests and clinical trials, which increases the risk of potential delay of development efforts, as applicable.
If the third parties that we engage to supply any materials or to manufacture any products for our preclinical tests and clinical trials should cease to continue to do so for any reason, including due to the effects of global economic conditions, including the Israel-Hamas war, we likely would experience delays in advancing these tests and trials while we identify and qualify replacement suppliers or manufacturers and we may be unable to obtain replacement supplies on terms that are favorable to us. In addition, if we are not able to obtain adequate supplies of our product, or the substances used to manufacture them, it will be more difficult for us to develop our product, and compete effectively.
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Our current and anticipated dependence upon third-party suppliers may adversely affect our ability to develop our product, and product candidates and could delay our clinical trials and development programs as well as marketing and commercialization efforts, and otherwise harm our operations and financial condition and increase our costs and expenses.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits.
| Number | Description | |
| 31.1 | Certification of Chief Executive Officer Pursuant to Sarbanes-Oxley Section 302 | |
| 31.2 | Certification of Chief Financial Officer Pursuant to Sarbanes-Oxley Section 302 | |
| 32.1 | Certification Pursuant To 18 U.S.C. Section 1350 (*) | |
| 32.2 | Certification Pursuant To 18 U.S.C. Section 1350 (*) | |
| 101.ins | Inline XBRL Instance Document | |
| 101.sch | Inline XBRL Taxonomy Extension Schema Document | |
| 101.cal | Inline XBRL Taxonomy Calculation Linkbase Document | |
| 101.def | Inline XBRL Taxonomy Definition Linkbase Document | |
| 101.lab | Inline XBRL Taxonomy Label Linkbase Document | |
| 101.pre | Inline XBRL Taxonomy Presentation Linkbase Document | |
| 104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL. | |
| * | A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. |
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SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| MIRA PHARMACEUTICALS, INC. | ||
| Date: November 12, 2024 | By: | /s/ Erez Aminov |
| Erez Aminov | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: November 12, 2024 | By: | /s/ Michelle Yanez |
| Michelle Yanez | ||
| Chief Financial Officer, Treasurer and Secretary | ||
| (Principal Financial Officer) | ||
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