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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-Q


(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to

Commission File Number: 001-38899


Milestone Pharmaceuticals Inc.

(Exact Name of Registrant as Specified in its Charter)


Quebec

    

Not applicable

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

1111 Dr. Frederik-Philips Boulevard, Suite 420

Montréal, Québec CA H4M 2X6

(514) 336-0444

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)


Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

Common Shares

MIST

The Nasdaq Stock Market LLC

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) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate 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 was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of August 3, 2020, the registrant had 24,706,080 common shares, no par value per share, outstanding.


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Page

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

1

PART I.

FINANCIAL INFORMATION

3

Item 1.

Financial Statements (Unaudited)

3

Condensed Consolidated Balance Sheets

3

Condensed Consolidated Statements of Loss and Comprehensive Loss

4

Condensed Consolidated Statements of Shareholders’ Equity and Convertible Preferred Shares

5

Condensed Consolidated Statements of Cash Flows

6

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

13

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

Controls and Procedures

25

PART II.

OTHER INFORMATION

25

Item 1.

Legal Proceedings

25

Item 1A.

Risk Factors

26

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

67

Item 3.

Defaults Upon Senior Securities

67

Item 4.

Mine Safety Disclosures

67

Item 5.

Other Information

67

Item 6.

Exhibits

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“Milestone Pharmaceuticals” and the Milestone logo appearing in this Quarterly Report on Form 10-Q are unregistered trademarks of Milestone Pharmaceuticals Inc. All other trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Quarterly Report on Form 10-Q may be referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert their rights thereto.

This Quarterly Report on Form 10-Q contains references to United States dollars and Canadian dollars. All dollar amounts referenced, unless otherwise indicated, are expressed in United States dollars. References to “$” are to United States dollars and references to “C$” are to Canadian dollars.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "aim," "anticipate," "assume," "believe," "contemplate," "continue," "could," "design," "due," "estimate," "expect," "goal," "intend," "may," "objective," "plan," "predict," "positioned," "potential," "seek," "should," "target," "will," "would" and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q, regarding, among other things:

the initiation, timing, progress and results of our current and future clinical trials of etripamil, including our Phase 3 clinical trials of etripamil for the treatment of paroxysmal supraventricular tachycardia, or PSVT, and of our research and development programs;
our plans to develop and commercialize etripamil and any future product candidates;
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
our ability to successfully acquire or in-license additional product candidates on reasonable terms;
our ability to establish collaborations or obtain additional funding;
our ability to obtain regulatory approval of our current and future product candidates;
our ability to finalize the registration plan for etripamil in PSVT, which is dependent on future discussions with the U.S. Food and Drug Administration, or FDA and other regulatory agencies;
our expectations regarding the potential market size and the rate and degree of market acceptance of etripamil and any future product candidates;
our ability to fund our working capital requirements and expectations regarding the sufficiency of our capital resources;
the implementation of our business model and strategic plans for our business, etripamil and any future product candidates;

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our intellectual property position and the duration of our patent rights;
developments or disputes concerning our intellectual property or other proprietary rights;
our expectations regarding government and third-party payor coverage and reimbursement;
our ability to compete in the markets we serve;
the impact of government laws and regulations;
the impact of the COVID-19 pandemic, or other public health emergencies, and their effects on our operations, clinical trials and financial position, and potential effects on the operations of third-parties with whom we conduct business;
developments relating to our competitors and our industry; and
the factors that may impact our financial results.

The foregoing list of risks is not exhaustive. Other sections of this Quarterly Report on Form 10-Q may include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements.

In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to the section titled "Risk Factors" for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Milestone Pharmaceuticals Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands of US dollars, except share data)

    

June 30, 2020

    

December 31, 2019

Assets

  

 

  

Current assets

  

 

  

Cash and cash equivalents

$

53,426

 

$

119,818

Short-term investments (note 3)

32,000

Research and development tax credits receivable

530

 

578

Prepaid expenses

6,132

 

1,845

Other receivables

318

 

258

Total current assets

92,406

 

122,499

Operating lease right-of-use assets

377

524

Property and equipment

356

 

405

Total assets

$

93,139

 

$

123,428

Liabilities

  

 

  

Current liabilities

  

 

  

Accounts payable and accrued liabilities (note 4)

$

4,834

 

$

7,997

Current portion of operating lease liabilities

157

 

330

Total current liabilities

4,991

 

8,327

Operating lease liabilities

132

 

184

Total liabilities

5,123

 

8,511

Shareholders’ Equity (note 5, note 8)

  

 

  

Share capital

  

 

  

Common shares, no par value, unlimited shares authorized, 24,692,953 shares issued and outstanding as of June 30, 2020, 24,505,748 shares issued and outstanding as of December 31, 2019

226,676

 

226,245

Additional paid-in capital

5,795

 

3,805

Cumulative translation adjustment

(1,634)

 

(1,634)

Accumulated deficit

(142,821)

 

(113,499)

Total shareholders’ equity

88,016

 

114,917

Total liabilities, and shareholders’ equity

$

93,139

 

$

123,428

Subsequent Events (note 8)

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

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Milestone Pharmaceuticals Inc.

Condensed Consolidated Statements of Loss and Comprehensive Loss

(Unaudited)

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

Three months ended June 30, 

Six months ended June 30, 

    

2020

   

2019

   

2020

   

2019

Operating expenses

 

  

 

  

  

 

  

Research and development, net of tax credits (note 7)

 

$

8,622

 

$

10,527

$

20,493

 

$

18,292

General and administrative

 

2,956

 

1,641

5,659

 

2,620

Commercial

 

1,527

 

2,166

3,710

 

4,352

Loss from operations

 

$

(13,105)

 

$

(14,334)

$

(29,862)

 

$

(25,264)

Interest income, net of bank charges

 

126

 

672

540

 

1,172

Loss and comprehensive loss before income taxes

 

(12,979)

 

(13,662)

(29,322)

 

(24,092)

Income tax expense

 

 

(4)

 

18

Net loss and comprehensive loss for the period

 

$

(12,979)

 

$

(13,658)

$

(29,322)

 

$

(24,110)

Weighted average number of shares outstanding, basic and diluted

24,628,049

13,190,638

24,588,413

6,931,611

Net loss per share, basic and diluted (note 6)

 

$

(0.53)

 

$

(1.04)

$

(1.20)

 

$

(3.48)

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

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Milestone Pharmaceuticals Inc.

Condensed Consolidated Statements of Shareholders’ Equity and Convertible Preferred Shares

(Unaudited)

(thousands of US dollars, except per share data)

Convertible Preferred Shares

Common Shares

Class A1

Class A2

Class B

Class C

Class D1

Class D2

Number
of shares

Amount

Number
of shares

Amount

Number
of shares

Amount

Number
of shares

Amount

Number
of shares

Amount

Number
of shares

Amount

Number
of shares

Amount

Additional
paid-in
capital

Cumulative
translation
adjustment

Accumulated
deficit

Total

Balance as of December 31, 2018

    

596,787

$

2,039

372,211

$

2,027

2,443,914

$

12,643

2,830,907

$

17,198

3,786,878

$

27,236

6,893,236

64,719

1,223,656

14,935

$

2,655

$

(1,634)

$

(58,270)

$

83,548

Transactions in three-month period ended March 31, 2019

 

Net loss and comprehensive loss

(10,452)

(10,452)

Exercise of stock options (note 5)

18,153

51

(26)

25

Share-based compensation (note 5)

211

211

Balance at March 31, 2019

614,940

$

2,090

372,211

$

2,027

2,443,914

$

12,643

2,830,907

$

17,198

3,786,878

$

27,236

6,893,236

64,719

1,223,656

14,935

$

2,840

$

(1,634)

(68,722)

$

73,332

Transactions in three-month period ended June 30, 2019

Net loss and comprehensive loss

(13,658)

(13,658)

Exercise of stock options (note 5)

Share-based compensation (note 5)

276

276

Initial public offering

6,325,000

85,363

85,363

Preferred share Conversion (note 5)

17,550,802

138,758

(372,211)

(2,027)

(2,443,914)

(12,643)

(2,830,907)

(17,198)

(3,786,878)

(27,236)

(6,893,236)

(64,719)

(1,223,656)

(14,935)

Balance at June 30, 2019

24,490,742

$

226,211

$

$

$

$

$

3,116

$

(1,634)

$

(82,380)

$

145,313

Balance as of December 31, 2019

24,505,748

$

226,245

$

$

$

$

$

3,805

$

(1,634)

(113,499)

$

114,917

Transactions in three-month period ended March 31, 2020

Net loss and comprehensive loss

(16,343)

(16,343)

Exercise of stock options (note 5)

53,722

133

(56)

77

Share-based compensation (note 5)

981

981

Balance at March 31, 2020

 

24,559,470

$

226,378

 

 

$

 

 

$

 

 

$

 

 

$

 

$

$

 

$

4,730

 

$

(1,634)

 

$

(129,842)

 

$

99,632

Transactions in three-month period ended June 30, 2020

Net loss and comprehensive loss

(12,979)

(12,979)

Exercise of stock options (note 5)

133,483

298

(126)

172

Share-based compensation (note 5)

1,191

1,191

Balance at June 30, 2020

24,692,953

$

226,676

$

$

$

$

$

5,795

$

(1,634)

$

(142,821)

$

88,016

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

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Milestone Pharmaceuticals Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(thousands of US dollars)

Six months ended June 30, 

2020

    

2019

Cash flows from

Operating activities

Net loss for the period

$

(29,322)

$

(24,110)

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of property and equipment

49

5

Share-based compensation expense (note 5)

2,172

487

Changes in operating assets and liabilities:

Other receivables

(60)

49

Research and development tax credits receivable

48

(67)

Prepaid expenses

(4,287)

(3,634)

Operating lease right of use asset, net

(78)

(7)

Accounts payable and accrued liabilities

(3,163)

1,082

Income taxes payable (receivable)

(56)

Net cash used in operating activities

(34,641)

(26,251)

Investing Activities

Acquisition of property and equipment

(18)

Acquisition of short-term investments

(32,000)

(35,000)

Redemption of short-term investments

29

Net cash used in investing activities

(32,000)

(34,989)

Financing activities

Net proceeds from issuance of common shares in Initial Public Offering

86,092

Issuance of common shares on exercise of share options (note 5)

249

25

Net cash provided by financing activities

249

86,117

Net increase (decrease) in cash and cash equivalents during the period

(66,392)

24,877

Cash and cash equivalents – Beginning of period

119,818

85,947

Cash and cash equivalents – End of period

$

53,426

$

110,824

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

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Milestone Pharmaceuticals Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

1    Organization and nature of operations

Milestone Pharmaceuticals Inc. (Milestone or the Company) is a biopharmaceutical company incorporated under the Business Corporations Act of Québec. Milestone 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. Milestone Pharmaceuticals USA, Inc. began its operations on March 3, 2017. All intercompany transactions and balances have been eliminated.

b)  Basis of presentation and use of accounting estimates

These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) and on a basis consistent with those accounting principles followed by the Company and disclosed in note 2 of its most recent annual consolidated financial statements except for new standard described in note 2 c). Certain information, in particular the accompanying notes normally included in the annual financial statements prepared in accordance with US GAAP have been omitted or condensed. Accordingly, the unaudited interim condensed consolidated financial statements do not include all the information required for full annual financial statements, and therefore, should be read in conjunction with the annual consolidated financial statements and the notes thereto for the year ended December 31, 2019.

In the opinion of the Company's management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of  June 30, 2020, and its results of operations for the three and six months ended June 30, 2020 and 2019.

The condensed consolidated balance sheet as of December 31, 2019, was derived from audited annual consolidated financial statements, but does not contain all of the footnote disclosures required by accounting principles generally accepted in the United States of America.

These unaudited interim condensed consolidated financial statements are presented in US dollars, which is the Company’s functional currency.

The preparation of unaudited interim condensed consolidated financial statements in conformity with US 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 unaudited interim condensed consolidated financial statements and the reported amounts of revenue and expenses during the period. 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, research and development tax credits recoverable, research and development expenses, and share-based compensation. Accordingly, actual results may differ from those estimates and such differences may be material.

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Milestone Pharmaceuticals Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

The Company anticipates that the COVID-19 pandemic will continue to impact the development timelines of its clinical programs. 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 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 financial statements.

c) Recently adopted accounting pronouncement

New Accounting Policies - Financial Instruments - Credit Losses

In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. The Company adopted ASU 2016-13 effective January 1, 2020 and the adoption did not have an impact on the measurement of credit losses.

d) Significant Risks and Uncertainties

With the global spread of the ongoing COVID-19 pandemic, the Company has implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic on its business. The Company anticipates that the COVID-19 pandemic will continue to have an impact on the development timelines for its clinical programs. The extent to which the COVID-19 pandemic continues to impact its business, its clinical development and regulatory efforts, its corporate development objectives and the value of and market for its common shares, will depend on future developments that remain highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements in the U.S., Europe and other countries, and the effectiveness of actions taken globally to contain and treat the disease. The global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic could have a material adverse effect on the Company’s business, financial condition, results of operations and growth prospects.

In addition, the Company is subject to other 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 with development, 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. In addition, to the extent the ongoing COVID-19 pandemic adversely affects the Company’s business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties discussed above.

e) Sources of Liquidity and Funding Requirements

Since inception, the Company incurred significant operating losses. Prior to May 2019, the Company financed its operations primarily through sales of convertible preferred shares to accredited investors generating net proceeds of $138.8 million. In May 2019, the Company received net proceeds of $85.4 million from its Initial Public Offering (IPO).

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Milestone Pharmaceuticals Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

The Company has incurred operating losses and experienced negative operating cash flows since its inception and anticipates to continue to incur losses for at least the next several years. As of June 30, 2020, the Company had cash, cash equivalents and short-term investments of $85.4 million and an accumulated deficit of $142.8 million. In July 2020, the Company received $25 million of proceeds from the private placement of pre-funded warrants to existing shareholders (note 8).

Management expects the Company’s current operating plan and existing cash, cash equivalents and short-term investments to be sufficient to fund its operations and determined that there are no events or conditions that may cast substantial doubt on the Company’s ability to continue as a going concern for at least the next 12 months from the date of issuance of these unaudited interim financial statements.

3 Short-term investments

Short-term investments are comprised of term deposits issued in US currency, earning interest between 0.71% and 0.86%, maturing between September 1, 2020 and March 30, 2021.

4     Accounts payable and accrued liabilities

Accounts payable and accrued liabilities comprised the following:

    

June 30, 2020

December 31, 2019

Trade accounts payable

 

$

2,203

$

4,376

Accrued research and development liabilities

 

1,862

1,513

Other accrued liabilities

 

181

331

Accrued compensation and benefits payable

 

588

1,777

 

$

4,834

$

7,997

5      Shareholders’ equity

Authorized share capital

An unlimited number of common shares, voting and participating, without par value.

As of June 30, 2020, 523,821 common shares were available and no common shares have been issued under the ESPP. The first offering period has not yet been decided by the Company's board of directors.

During the six-month period ended June 30, 2020, the Company issued a total of 133,483 common shares [2019 –18,153] for a total cash consideration of $249 [2019 - $25] pursuant to the exercise of 133,483 stock options [2019 – 18,153] at an average exercise price of US$1.33 per option [2019 – US$1.32]. As a result, an amount of $126 [2019 - $26] previously included in additional paid-in capital related to the exercised options has been credited to share capital and deducted from additional paid-in capital.

Additional paid-in capital

Three months ended June 30, 

Six months ended June 30, 

2020

    

2019

2020

    

2019

Opening balance

$

4,730

 

$

2,840

$

3,805

 

$

2,655

Share-based compensation expense

1,191

 

276

2,172

 

487

Exercise of stock options

(126)

 

(182)

 

(26)

Closing balance

$

5,795

 

$

3,116

$

5,795

 

$

3,116

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Milestone Pharmaceuticals Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

Share-based compensation

Under the 2019 Plan and 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 grant date and one thirty-sixth (1/36th) of the remaining options vest and are exercisable each month thereafter, such that vested in full on four-year anniversary of grant date. In the six-month period ended on June 30, 2020, the Company granted stock options under the 2019 Plan that vest and are exercisable in equal monthly installments either over a 48-month period or over a 12-month period.

On January 1, 2020, the number of the Company’s common shares reserved for issuance under the 2019 Plan increased by 980,229 common shares.  In addition, 42,576 options forfeited under the 2011 Plan after adoption of the 2019 Plan and became available for issuance under the 2019 Plan. As of June 30, 2020, there were 3,339,738 shares available for issuance under the 2019 Plan, of which 1,662,048 shares were available for future grants.

The total outstanding and exercisable options from the 2011 Plan and 2019 Plan as at June 30 were as follows:

2020

2019

Number

Weighted

Number

Weighted

of shares

average

of shares

average

exercise

exercise

    

2019 Plan

   

2011 Plan

   

Total

   

price

   

2019 Plan

   

2011 Plan

   

Total

   

price

Outstanding at beginning of period - 2011 Plan

 

2,364,526

2,364,526

$

2.15

 

2,295,045

2,295,045

$

1.77

Outstanding at beginning of period - 2019 Plan

220,140

220,140

20.78

Granted - 2011 Plan

 

 

116,742

116,742

9.42

Granted - 2019 Plan

1,474,460

1,474,460

12.91

46,995

46,995

15.00

Exercised - 2011

(187,205)

(187,205)

1.33

(18,153)

(18,153)

1.32

Forfeited - 2011

 

(28,478)

(28,478)

2.57

 

Forfeited - 2019

(16,910)

(16,910)

21.44

Outstanding - 6/30/2020

 

1,677,690

2,148,843

3,826,533

$

7.34

 

46,995

2,393,634

2,440,629

$

2.40

Outstanding - 6/30/2020 - Weighted average exercise price

$

13.89

$

2.22

$

15.00

$

2.15

Exercisable at end of period

44,124

1,363,103

1,407,227

$

2.11

771,478

771,478

$

1.38

Exercisable at end of period - Weighted average exercise price

 

$

7.46

$

1.94

 

$

$

1.38

As of June 30, 2020, the weighted average remaining contractual life was 8.4 [2019 – 8.3 years]. The weighted average remaining contractual life was 7.2 years for vested options [2019 – 6.6 years]. There were 45,388 options forfeited for the six-month period ended June 30, 2020 [2019 – nil].

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 weighted average fair values of options granted in the six-month period ended June 30, 2020 was $9.14 per share [2019 - $7.85]. Share-based compensation expense recognized for the six-month period ended June 31, 2020 was $2,172 [2019 - $487].

As of June 30, 2020, there was $18,873 [2019 – $3,434] of total unrecognized compensation cost, related to non-vested share options, which is expected to be recognized over a remaining weighted average vesting period of 2.5 years [2019 – 2.9 years].

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Milestone Pharmaceuticals Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

The non-vested options as at June 30 were as follows:

2020

2019

Number

Weighted

Number

Weighted

of options

average

of options

average

    

2019 Plan

    

2011 Plan

    

Total

    

fair value

    

    

2019 Plan

    

2011 Plan

    

Total

    

fair value

Non-vested share options at beginning of period - 2011 Plan

 

1,152,300

1,152,300

 

$

1.88

 

 

1,706,303

1,706,303

 

$

1.35

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

218,975

218,975

 

$

14.44

 

$

Granted - 2011 Plan

 

 

 

 

116,742

116,742

 

6.65

Granted - 2019 Plan

 

1,474,460

1,474,460

7.88

 

46,995

46,995

10.77

Vested, outstanding

(338,082)

(338,082)

 

2.23

 

 

1.18

Vested, outstanding

(42,959)

(42,959)

4.98

(200,889)

(200,889)

Forfeited - 2011

 

(28,478)

(28,478)

 

1.84

 

 

 

Forfeited - 2019

(16,910)

(16,910)

15.16

Non-vested share options at end of period

 

1,633,566

785,740

2,419,306

 

$

6.48

 

 

46,995

1,622,156

1,669,151

 

$

2.00

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

$

6.83

$

1.74

$

15.00

$

2.15

The fair value of share-based payment transaction is measured using Black-Scholes valuation model. This model also requires assumptions, including expected option life, volatility, risk-free interest rate and dividend yield, which greatly affect the calculated values.

The fair value of options granted was estimated using the Black-Scholes option pricing model, resulting in the following weighted average assumptions for the options granted for the three and six months ended June 30:

Three months ended June 30, 

Six months ended June 30, 

    

2020

    

2019

    

2020

    

2019

 

Exercise price

$

3.74

 

$

12.05

$

12.91

 

$

11.02

Share price

$

3.74

 

$

12.05

$

12.91

 

$

11.02

Volatility

 

87

%  

82

%  

 

84

%  

81

%

Risk-free interest rate

 

0.47

%  

2.36

%  

 

1.06

%  

2.41

%

Expected life

 

5.51

 

6.25

 

 

5.89

 

6.25

Dividend

 

0

%  

0

%  

 

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 Company recognized share-based compensation expense as follows for the three months ended June 30:

Three months ended June 30, 

Six months ended June 30, 

    

2020

    

2019

    

2020

    

2019

Administration

 

$

516

$

133

$

915

 

$

203

Research and development

 

456

109

842

 

234

Commercial activities

 

219

34

415

 

50

 

$

1,191

$

276

$

2,172

 

$

487

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Milestone Pharmaceuticals Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

6     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 outstanding during the period. The outstanding convertible preferred shares and share-based compensation have been excluded from the calculation because their effects would be anti-dilutive. Therefore, the weighted average number of shares used to calculate both basic and diluted loss per share are the same.

The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as of June 30 as they would be anti-dilutive:

    

2020

    

2019

Redeemable convertible preferred shares

 

 

Share options and unvested restricted share awards

 

3,826,533

 

2,440,629

 

3,826,533

 

2,440,629

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

7     Government assistance

The Company incurred 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 for an amount of $178 for the six-month period ended June 30, 2020 [2019 - $171].

8     Subsequent events

On July 23, 2020, the Company entered into a securities purchase agreement with affiliates of RTW Investments LP, an existing shareholder (the Purchasers), to sell and issue to the Purchasers in a private placement, pre-funded warrants to purchase up to an aggregate of 6,655,131 of the Company’s common shares, at a purchase price of $3.7465 per pre-funded warrant for aggregate proceeds of $25 million (the Private Placement).  The Private Placement closed on July 24, 2020. Each pre-funded warrant is exercisable for one of the Company’s common shares at an exercise price of $0.01 per share, has no expiration date, and is immediately exercisable, subject to certain beneficial ownership limitations.

 

In addition, on July 29, 2020, the Company entered into an Open Market Sale Agreement℠ (the Sales Agreement) with Jefferies LLC (Jefferies) with respect to an at-the-market offering program (ATM Program) under which the Company may issue and sell its common shares having an aggregate offering price of up to $50 million through Jefferies as the Company’s sales agent or principal. The common shares to be sold under the Sales Agreement, if any, will be offered and sold pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-239318), which was declared effective by the Securities and Exchange Commission on July 6, 2020. Under the shelf registration statement, the Company may offer and sell, in one or more offerings, up to an aggregate of $100 million of any combination of securities registered thereunder, consisting of common shares, preferred shares, debt securities and warrants. The Company has not sold shares under the ATM program as of the date of this filing.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following information should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the Securities and Exchange Commission, or SEC, on March 6, 2020. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in “Risk Factors” and in other parts of this Quarterly Report on Form 10-Q.

Overview

We are a biopharmaceutical company focused on the development and commercialization of innovative cardiovascular medicines. Our lead product candidate etripamil is a novel, potent and short-acting calcium channel blocker that we designed as a rapid-onset nasal spray to be self-administered by patients. We are developing etripamil to treat paroxysmal supraventricular tachycardia, or PSVT, atrial fibrillation, and other cardiovascular indications.

PSVT is a rapid heart rate condition characterized by episodes of supraventricular tachycardia, or SVT, that start and stop without warning. Episodes of SVT are often experienced by patients with symptoms including palpitations, sweating, chest pressure or pain, shortness of breath, sudden onset of fatigue, lightheadedness or dizziness, fainting and anxiety. Calcium channel blockers have long been approved for the treatment of PSVT as well as other cardiac conditions. Calcium channel blockers available in oral form are frequently used prophylactically to control the frequency and duration of future episodes of SVT. For treatment of episodes of SVT, approved calcium channel blockers are administered intravenously under medical supervision, usually in the emergency department. The combination of convenient nasal-spray delivery, rapid-onset and short duration of action of etripamil has the potential to shift the current treatment paradigm for episodes of SVT away from the burdensome and costly emergency department setting. If approved, we believe that etripamil will be the first self-administered therapy for the rapid termination of episodes of SVT wherever and whenever they occur.

In March 2020, we reported topline results of the first part of the NODE-301 pivotal trial of etripamil for the treatment of PSVT, which is a placebo-controlled Phase 3 safety and efficacy trial. The first part of NODE-301, which enrolled a total of 431 patients across 65 sites in the United States and Canada, did not meet its primary endpoint of time to conversion of SVT to sinus rhythm compared to placebo over the five hour period following study drug administration. The median time to conversion for etripamil was 25 minutes (95% CI: 16, 43) compared to 50 minutes (95% CI: 31,101) for placebo (p=0.12). Despite early activity, including the conversion of 59% of etripamil patients compared to 45% of placebo patients within 45 minutes after study drug administration (p=0.02), a time period consistent with etripamil's pharmacological activity, results from the latter part of the analysis confounded the statistical analysis of the primary endpoint. Patients were monitored during five hours after study drug administration. In post-hoc discussions with the FDA, they have agreed to allow reanalysis and submission of the NODE-301 study, which can serve as as one of two efficacy studies supporting a future New Drug Application, or NDA, for etripamil in PSVT, with the primary analysis conducted at 30 minutes instead of 5 hours.

The NODE-301study demonstrated statistically significant improvements in patients taking etripamil compared to those taking placebo in the secondary endpoint of patient reported treatment satisfaction, as measured by a treatment satisfaction questionnaire for medication (TSQM-9), including global satisfaction (p=0.0069) and effectiveness scores (p=0.0015). Additionally, there was a trend toward improvement in the percentage of patients seeking rescue medical intervention, including in the emergency department, with 15% and 27% etripamil and placebo patients, respectively, reporting such intervention (p=0.12).

We believe the safety and tolerability data from the first part of the NODE-301 trial will be supportive of at-home use of etripamil, with adverse events (AE) consistent with those observed in prior trials. The most common AEs observed in patients receiving etripamil were nasal irritation and congestion, and these events were typically transient in nature and most commonly characterized by patients as mild in severity. There were no significant differences in incidences of severe adverse events or adverse events of interest, such as atrioventricular nodal blocks or blood pressure-related symptoms, across the etripamil and placebo groups.

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In July 2020, we announced a clinical and regulatory update for our pivotal program with etripamil following recent interactions with the FDA.

The FDA indicated that two studies, the second part of NODE-301, which we have renamed to the RAPID study, or RAPID, and the completed NODE-301 study, could potentially fulfill the efficacy requirement for our NDA for etripamil in patients with PSVT. We proposed, and the FDA agreed to, the following program changes:

Both the RAPID and NODE-301 studies will assess the time to conversion over the first 30 minutes after drug administration as the primary endpoint. Under an updated statistical analysis plan, or SAP, the primary efficacy endpoint for both the RAPID and NODE- 301 studies will be defined as time to conversion over the first 30 minutes, with a target p- value of less than 0.05 for each study. This endpoint supports the desire of patients to rapidly address their PSVT symptoms during an episode and ideally avoid visiting a hospital’s emergency department. Later and earlier time points will also be assessed as part of secondary analyses to more fully characterize the efficacy profile of etripamil.

When employing the updated SAP, results from NODE-301 show that 54% of etripamil patients vs. 35% of placebo patients converted within 30 minutes (HR 1.87, p=0.02). Assuming a statistically significant and clinically meaningful outcome in the RAPID study, these data could be expected to fulfill the efficacy requirement for the NDA.

RAPID study to reopen enrollment with tailored dosing regimen to optimize clinical utility. The RAPID study, which was originally designed to collect double-blind data from randomized patients who had not yet experienced an SVT event after the NODE-301 study reached its target number of adjudicated SVT events, will be amended and expanded to serve as a pivotal efficacy and safety study. The study will include the 170 patients who are already enrolled, and will be completed after a total of 180 confirmed SVT events are reached, including those that have already occurred in the study to date. Additional patients enrolled in the RAPID study will be randomized 1:1.

Based on discussions with the FDA regarding maximizing the treatment effect of etripamil, the RAPID study will allow for an optional repeat administration of study drug (either 70 mg of etripamil or placebo) for patients who have not experienced symptom relief within 10 minutes of the first study drug administration. This tailored regimen, which is similar to current PSVT treatment practices in the emergency department setting, is enabled by the favorable safety data from the NODE-301 study. We expect that the repeat administration could benefit a broader group of patients, including those with more persistent episodes. In the NODE-301 study, 32% of etripamil patients and 14% of placebo patients converted to sinus rhythm within 10 minutes. The FDA agreed that the single and repeat administrations of etripamil will be pooled and compared to placebo for the primary analysis, resulting in no increase in the sample size.

We expect to reopen enrollment in the RAPID study later this year, with data anticipated by early 2022.

In addition to RAPID, the clinical development program for etripamil for PSVT consists of two other ongoing Phase 3 clinical trials, as well as completed Phase 2 and Phase 1 trials. NODE-302 is our ongoing Phase 3 open-label safety extension trial. NODE-302 is a multi-center, open label study designed to evaluate the safety of etripamil nasal spray when self-administered by patients without medical supervision for spontaneous episodes of SVT in an outpatient setting. All patients randomized in NODE-301 were eligible for NODE-302 after having successfully dosed with the study drug and completed a study closure visit. Eligibility was also contingent on satisfying all inclusion and exclusion criteria, including not experiencing a serious adverse event related to the study drug or the study procedure that precludes the self-administration of etripamil. We initiated NODE-302 in December 2018 and as of May 1, 2020 the trial has enrolled more than 150 patients and the trial is planned to be completed in 2020. Trial safety results will contribute to the etripamil safety database.

NODE-303 is a Phase 3, multi-center, open-label safety trial, evaluating the safety of etripamil when self-administered without medical supervision, and to evaluate the treatment safety and efficacy of etripamil on multiple SVT episodes. The trial was originally designed to enroll enough patients to collect data on approximately 1,000 patients taking etripamil in an at-home setting. With the expanded size of the RAPID study, the size of the NODE-303 study is expected

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to be reduced. A more accurate sizing of the trial will be determined once an overall size of the safety dataset is determined for NDA filing following future discussions with the FDA and other regulatory authorities. Based on a review of the NODE-301 safety data available in June 2019, the FDA and multiple European and Latin American regulatory authorities agreed to allow patient enrollment in NODE-303 without an in-office safety test dose, which is required in the NODE-301 trial, and in a broad patient population including patients taking concomitant beta-blockers and calcium channel blockers.

We completed our Phase 2 clinical trial of etripamil for the treatment of PSVT in the United States and Canada in the electrophysiology lab, with results published in the Journal of the American College of Cardiology. Investigators reported an 87% termination rate of induced episodes of SVT within 15 minutes at the dose selected for our Phase 3 trials versus a 35% termination rate for placebo.

We have completed two Phase 1 clinical trials in healthy volunteers, characterizing the pharmacokinetics and pharmacodynamic effect of etripamil. Our most recent Phase 1 trial (NODE-102) demonstrated no significant differences in etripamil plasma levels or pharmacodynamic outcomes between Caucasian volunteers or subjects of Japanese descent, which was the primary objective of the study. In secondary analyses of all patients, the study showed that the relevant pharmacodynamic effect of etripamil for PSVT, as measured by PR interval prolongation, is in the range of 25 to 50 minutes. This period of time is consistent with data on time to conversion of SVT and data on heart rate reductions observed in NODE-301.

As with PSVT, calcium channel blockers are also approved for use in intravenous form for the treatment of some episodes of atrial fibrillation in which patients experience rapid ventricular rates. We plan to initiate a Phase 2 proof-of-concept clinical trial in the second half of 2020 to evaluate the potential effectiveness of etripamil to reduce ventricular rate in atrial fibrillation.

As we generate more data on the safety and efficacy profile of etripamil in PSVT, we will continue to assess whether etripamil could be developed for the treatment of atrial fibrillation, angina, and other areas of unmet medical need.

Since the commencement of our operations in 2003, we have devoted substantially all of our resources to performing research and development activities in support of our product development efforts, hiring personnel, raising capital to support and expand such activities, providing general and administrative support for these operations and, more recently preparing for commercialization. We operate our business using a significant outsourcing model. As such, our team is composed of a relatively smaller core of employees who direct a significantly larger number of team members who are outsourced in the forms of vendors and consultants to enable execution of our operational plans. We do not currently have any products approved for sale, and we continue to incur significant research and development and general administrative expenses related to our operations, although we expect to reduce planned operating expenses by 20-25% during the reminder of 2020, as we refocus our efforts and reduce pre-commercial activity spend.

Since inception, we have incurred significant operating losses. For the six months ended June 30, 2020 and 2019, we recorded net losses of $29.3 million and $24.1 million, respectively. As of June 30, 2020, we had an accumulated deficit of $142.8 million. We expect to continue to incur significant losses for the foreseeable future. We anticipate that a substantial portion of our capital resources and efforts in the foreseeable future will be focused on completing the necessary development activities required for obtaining regulatory approval and preparing for potential commercialization of our product candidates. We had $85.4 million of cash, cash equivalents and short-term investments at June 30, 2020, and in July 2020, we received $25 million of proceeds from the private placement of pre-funded warrants to existing shareholders.

Although we implemented certain cost-cutting measure, we nevertheless expect to continue to incur significant expenses and increasing operating losses for at least the next several years. Our net losses may fluctuate significantly from period to period, depending on the timing of our planned clinical trials and expenditures on other research and development activities. We expect our expenses will increase substantially over time as we:

continue our ongoing and planned development of etripamil, including our Phase 3 clinical trials of etripamil for the treatment of PSVT;

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seek marketing approvals for etripamil for the treatment of PSVT and other cardiovascular indications;

establish a sales, marketing, manufacturing and distribution capability, either directly or indirectly through third parties, to commercialize etripamil or any future product candidate for which we may obtain marketing approval;

build a portfolio of product candidates through development, or the acquisition or in-license of drugs, product candidates or technologies;

initiate preclinical studies and clinical trials for etripamil for any additional indications we may pursue, including the clinical trials for the treatment of atrial fibrillation with rapid ventricular rate and angina, and for any additional product candidates that we may pursue in the future;

maintain, protect and expand our intellectual property portfolio;

hire additional clinical, regulatory and scientific personnel;

add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts; and

incur additional legal, accounting and other expenses associated with operating as a public company.

COVID-19 Business Update

While we are experiencing limited business or financial impact from the ongoing COVID-19 pandemic at this time, given the global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic, our business, financial condition, results of operations and growth prospects could be materially adversely affected. In March 2020, our global workforce transitioned to working remotely and this may otherwise adversely impact our business (see below for discussion on Clinical Development impacts). In addition, working at home policies could increase cybersecurity risk and communication disruptions. While certain governments have begun rolling back restrictions and implementing phased re-openings, there is no certainty that such plans will continue, and that prior or new and additional restrictions, will not be imposed. We continue to closely monitor the COVID-19 situation as we evolve our business continuity plans and response strategy.

Clinical Development

With respect to clinical development, we have taken measures to maintain patient safety and trial continuity and to preserve study integrity. For our clinical development programs, we have experienced disruptions or delays in our ability to initiate trial sites and enroll and assess patients, and such disruptions or delays may continue. Since our last quarterly filing, the COVID-19 pandemic has impacted our ability to maintain patient enrollment in our NODE-303 study as some of the initated clinical sites have closed their practices to further enrollment. We believe that the corresponding overall impact on the etripamil PSVT program will be lessened as we downsize the NODE-303 study and allocate resources to the new RAPID study that is planned to re-open to enrollment starting later this year. Given the uncertainty and differing and evolving restrictions applicable to clinical trial sites and participants, additional disruptions and delays are possible. We will continue to monitor the impact of COVID-19 on our planned clinical sites and patient enrollment activities. We could also see an impact on the ability to supply study drug, report trial results, or interact with regulators, ethics committees or other important agencies due to limitations in regulatory authority employee resources or otherwise. In addition, we rely on contract research organizations or other third parties to assist us with clinical trials, and we cannot guarantee that they will continue to perform their contractual duties in a timely and satisfactory manner as a result of the COVID-19 pandemic. If the COVID-19 pandemic continues and persists for an extended period of time, and if phased reopenings stall or are limited due to continued spread of COVID-19, we could experience significant disruptions to our clinical development timelines, which would adversely affect our business, financial condition, results of operations and growth prospects.

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Table of Contents

Corporate Development

We expect that our current operating plan and existing cash and cash equivalents and short-term investments will be sufficient to fund our operations and determined that there are no events or conditions that may cast substantial doubt on our ability to continue as a going concern for at least the next 12 months.

However, our operating plan has changed as we focus our efforts on the development of etripamil PSVT program and may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, third-party funding, marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches. Furthermore the COVID-19 pandemic continues to evolve and has resulted in a significant disruption of global financial markets. It is not possible to reliably estimate the length and severity of this disruption. If the disruption persists and deepens, we could experience an inability to access additional capital, which could in the future negatively affect our operations.

Other Financial and Corporate Impacts

While we expect the COVID-19 pandemic to adversely affect our business operations and financial results, the extent of the impact on our clinical development and regulatory efforts, our corporate development objectives and the value of and market for our common stock, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements in the United States, Canada, Europe and other countries, and the effectiveness of actions taken globally to contain and treat the disease. For example, if remote work policies for certain portions of our business, or that of our business partners, are extended longer than we currently expect, we may need to reassess our priorities and our corporate objectives for the year.

Components of Results of Operations

Research and Development Expenses

Research and development expenses consist primarily of salaries and fees paid to external service providers and also include personnel costs, including share-based compensation expense and other related compensation expenses. We expense research and development costs in the periods in which they are incurred. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors, collaborators and third-party service providers.

To date, substantially all of our research and development expenses have been related to the preclinical and clinical development of etripamil. As we advance etripamil or other product candidates for other indications, we expect to allocate our direct external research and development costs across each of the indications or product candidates. Further, while we expect our research and development costs for the development of etripamil in atrial fibrillation with rapid ventricular rate to increase for initiation of our proof of concept clinical trial, we expect our research and development expenses related to the development of etripamil for PSVT to remain a very large majority of our total research and development expenses. The following table shows our research and development expenses by type of activity for the three months ended June 30, 2020 and 2019.

Three months ended June 30, 

Six months ended June 30, 

(in thousands)

    

2020

    

2019

    

2020

    

2019

Clinical and pre-clinical

$

6,911

$

8,463

$

16,620

$

15,212

Drug manufacturing and formulation

 

1,117

 

1,638

 

2,741

 

2,268

Regulatory and other costs

 

667

 

519

 

1,310