0001558370-21-011282 | 10-Q | XBRL Viewer | Milestone Pharmaceuticals INC

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2021	Aug. 09, 2021
Document and Entity Information
Document Type	10-Q
Document Period End Date	Jun. 30, 2021
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-38899
Entity Registrant Name	Milestone Pharmaceuticals Inc.
Entity Incorporation, State or Country Code	CA
Entity Tax Identification Number	00-0000000
Entity Address, Address Line One	1111 Dr. Frederik-Philips Boulevard
Entity Address, Address Line Two	Suite 420
Entity Address, City or Town	Montréal
Entity Address, State or Province	QC
Entity Address, Postal Zip Code	H4M 2X6
City Area Code	514
Local Phone Number	336-0444
Title of 12(b) Security	Common Shares
Trading Symbol	MIST
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		29,846,000
Entity Central Index Key	0001408443
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Current assets
Cash and cash equivalents	$ 97,794	$ 72,310
Short-term investment (note 4)	38,000	70,000
Research and development tax credits receivable	903	725
Prepaid expenses	7,447	5,428
Other receivables	242	223
Total current assets	144,386	148,686
Operating lease right-of-use assets	847	980
Property and equipment	262	308
Total assets	145,495	149,974
Current liabilities
Accounts payable and accrued liabilities (note 5)	5,069	5,914
Current portion of operating lease liabilities	259	245
Total current liabilities	5,328	6,159
Operating lease liabilities	573	696
Total liabilities	5,901	6,855
Shareholders' Equity (note 6)
Common shares, no par value, unlimited shares authorized 29,846,000 shares issued and outstanding as of June 30, 2021, 29,827,997 shares issued and outstanding as of December 31, 2020	251,716	251,682
Pre-funded warrants - 12,327,780 issued and outstanding as of June 30, 2021 and 11,417,034 as of December 31, 2020	52,927	48,007
Additional paid-in capital	11,795	8,530
Cumulative translation adjustment	(1,634)	(1,634)
Accumulated deficit	(175,210)	(163,466)
Total shareholders' equity	139,594	143,119
Total liabilities and shareholders' equity	$ 145,495	$ 149,974

Condensed Consolidated Statements of Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Condensed Consolidated Statements of Income (Loss)
Collaboration revenue (note 3)	$ 15,000		$ 15,000
Operating expenses
Research and development, net of tax credits	9,427	$ 8,622	18,022	$ 20,493
General and administrative	3,018	2,956	5,651	5,659
Commercial	1,843	1,527	3,209	3,710
Income (Loss) from operations	712	(13,105)	(11,882)	(29,862)
Interest income, net of bank charges	58	126	138	540
Net income (loss) for the period	$ 770	$ (12,979)	$ (11,744)	$ (29,322)
Weighted average number of shares and pre-funded warrants outstanding, basic	41,673,370	24,628,049	41,465,961	24,588,413
Net income (loss) per share, basic (note 8)	$ 0.02	$ (0.53)	$ (0.28)	$ (1.20)
Weighted average number of shares and pre-funded warrants outstanding, diluted	44,530,121	24,628,049	41,465,961	24,588,413
Net income (loss) per share, diluted (note 8)	$ 0.02	$ (0.53)	$ (0.28)	$ (1.20)

Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Common Shares	Pre-funded warrants	Additional paid-in capital	Cumulative translation adjustment	Accumulated deficit	Total
Beginning balance at Dec. 31, 2019	$ 226,245		$ 3,805	$ (1,634)	$ (113,499)	$ 114,917
Balance at the beginning of period (in shares) at Dec. 31, 2019	24,505,748
Increase (Decrease) in Stockholders' Equity and Temporary Equity
Net income (loss)					(16,343)	(16,343)
Exercise of stock options (note 7)	$ 133		(56)			77
Exercise of stock options (note 7) (in shares)	53,722
Share-based compensation (note 7)			981			981
Ending balance at Mar. 31, 2020	$ 226,378		4,730	(1,634)	(129,842)	99,632
Balance at the end of period (in shares) at Mar. 31, 2020	24,559,470
Beginning balance at Dec. 31, 2019	$ 226,245		3,805	(1,634)	(113,499)	114,917
Balance at the beginning of period (in shares) at Dec. 31, 2019	24,505,748
Increase (Decrease) in Stockholders' Equity and Temporary Equity
Net income (loss)						(29,322)
Exercise of stock options (note 7)			(182)
Share-based compensation (note 7)			2,172
Ending balance at Jun. 30, 2020	$ 226,676		5,795	(1,634)	(142,821)	88,016
Balance at the end of period (in shares) at Jun. 30, 2020	24,692,953
Beginning balance at Mar. 31, 2020	$ 226,378		4,730	(1,634)	(129,842)	99,632
Balance at the beginning of period (in shares) at Mar. 31, 2020	24,559,470
Increase (Decrease) in Stockholders' Equity and Temporary Equity
Net income (loss)					(12,979)	(12,979)
Exercise of stock options (note 7)	$ 298		(126)			172
Exercise of stock options (note 7) (in shares)	133,483
Share-based compensation (note 7)			1,191			1,191
Ending balance at Jun. 30, 2020	$ 226,676		5,795	(1,634)	(142,821)	$ 88,016
Balance at the end of period (in shares) at Jun. 30, 2020	24,692,953
Increase (Decrease) in Stockholders' Equity and Temporary Equity
Number of warrants		11,417,034				11,417,034
Beginning balance at Dec. 31, 2020	$ 251,682	$ 48,007	8,530	(1,634)	(163,466)	$ 143,119
Balance at the beginning of period (in shares) at Dec. 31, 2020	29,827,997					29,827,997
Increase (Decrease) in Stockholders' Equity and Temporary Equity
Net income (loss)					(12,514)	$ (12,514)
Exercise of stock options (note 7)	$ 34		(15)			19
Exercise of stock options (note 7) (in shares)	18,003
Share-based compensation (note 7)			1,368			1,368
Ending balance at Mar. 31, 2021	$ 251,716	48,007	9,883	(1,634)	(175,980)	131,992
Balance at the end of period (in shares) at Mar. 31, 2021	29,846,000
Beginning balance at Dec. 31, 2020	$ 251,682	48,007	8,530	(1,634)	(163,466)	$ 143,119
Balance at the beginning of period (in shares) at Dec. 31, 2020	29,827,997					29,827,997
Increase (Decrease) in Stockholders' Equity and Temporary Equity
Net income (loss)						$ (11,744)
Exercise of stock options (note 7)			(15)
Share-based compensation (note 7)			3,280
Ending balance at Jun. 30, 2021	$ 251,716	$ 52,927	11,795	(1,634)	(175,210)	$ 139,594
Balance at the end of period (in shares) at Jun. 30, 2021	29,846,000					29,846,000
Increase (Decrease) in Stockholders' Equity and Temporary Equity
Number of warrants		11,417,034
Beginning balance at Mar. 31, 2021	$ 251,716	$ 48,007	9,883	(1,634)	(175,980)	$ 131,992
Balance at the beginning of period (in shares) at Mar. 31, 2021	29,846,000
Increase (Decrease) in Stockholders' Equity and Temporary Equity
Net income (loss)					770	770
Share-based compensation (note 7)			1,912			1,912
Private placement (note 7)		$ 4,920				4,920
Private placement (note 7) (in shares)		910,746
Ending balance at Jun. 30, 2021	$ 251,716	$ 52,927	$ 11,795	$ (1,634)	$ (175,210)	$ 139,594
Balance at the end of period (in shares) at Jun. 30, 2021	29,846,000					29,846,000
Increase (Decrease) in Stockholders' Equity and Temporary Equity
Number of warrants		12,327,780				12,327,780

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Operating activities
Net loss for the period	$ (11,744)	$ (29,322)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of property and equipment	46	49
Share-based compensation expense (note 7)	3,280	2,172
Changes in operating assets and liabilities:
Other receivables	(19)	(60)
Research and development tax credits receivable	(178)	48
Prepaid expenses	(2,019)	(4,287)
Operating lease right of use asset, net	24	(78)
Accounts payable and accrued liabilities	(845)	(3,163)
Net cash used in operating activities	(11,455)	(34,641)
Investing Activities
Acquisition of short-term investments		(32,000)
Redemption of short-term investments	32,000
Cash provided by (used in) investing activities	32,000	(32,000)
Financing activities
Issuance of common shares on exercise of share options (note 7)	19	249
Net proceeds from issuance of pre-funded warrants in a private placement (note 6)	4,920
Cash provided by financing activities	4,939	249
Net increase (decrease) in cash and cash equivalents during the period	25,484	(66,392)
Cash and cash equivalents - Beginning of period	72,310	119,818
Cash and cash equivalents - End of period	$ 97,794	$ 53,426

Summary of significant accounting policies

6 Months Ended

Jun. 30, 2021

Summary of significant accounting policies

Summary of significant accounting policies

2 Summary of significant accounting policies

a) Basis of consolidation

The consolidated financial statements include the accounts of the Company and Milestone Pharmaceuticals USA, Inc. All intercompany transactions and balances have been eliminated.

b) Basis of presentation and use of accounting estimates and significant accounting policies

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. 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, 2020.

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 balance sheet as of June 30, 2021, and its statements of income (loss), shareholders’ equity for the three and six months ended June 30, 2021 and 2020 and its statement of cash flows for the six months ended June 30, 2021.

The condensed consolidated balance sheet as of December 31, 2020, was derived from audited annual consolidated financial statements, but does not contain all 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 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, progress of activities performed by the Contract Resource Organizations (CROs) and Contract Manufacturing Organizations (CMOs) which are used to calculate the research and development expense incurred, and share-based compensation. Accordingly, actual results may differ from those estimates and such differences may be material.

The Company’s significant accounting policies are described in Note 2—Summary of Significant Accounting Policies, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. There has been no material change to the significant accounting policies during the six months ended June 30, 2021, except for the addition of the new policies described below.

Collaborative Arrangements

The Company considers the nature and contractual terms of arrangements and assesses whether an arrangement involves a joint operating activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards dependent on the commercial success of the activity. If the Company is an active participant and is exposed to significant risks and rewards dependent on the commercial success of the activity, the Company accounts for such an arrangement as a collaborative arrangement under Accounting Standards Codification (ASC) 808, Collaborative Arrangements (ASC 808), which requires that certain transactions between the Company and collaborators be recorded in its consolidated statements of comprehensive income (loss) on either a gross basis or net basis, depending on the characteristics of the collaborative relationship, and requires enhanced disclosure of collaborative relationships. The Company evaluates its collaboration agreements for proper classification in its consolidated statements of comprehensive income (loss) based on the nature of the underlying activity. If payments to and from collaborative partners are not within the scope of other authoritative accounting literature, the consolidated statements of income (loss) classification for the payments is based on a reasonable, rational analogy to authoritative accounting literature that is applied in a consistent manner. If the Company concludes that it has a customer relationship with one of its collaborators, the Company follows the guidance in Accounting Standards Codification (ASC) Topic 606, Revenue From Contracts With Customers (ASC 606).

Please refer to note 3, “Collaboration Revenue” for additional details regarding the Company’s License and Collaboration Agreement (the License Agreement) with Ji Xing Pharmaceuticals, Limited (Ji Xing).

Revenue from Contracts with Customers

In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for these goods and services. To achieve this core principle, the Company applies the following five steps: 1) identify the customer contract; 2) identify the contract’s performance obligations; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when or as a performance obligation is satisfied. The Company evaluates all promised goods and services within a customer contract and determines which of such goods and services are separate performance obligations. This evaluation includes an assessment of whether the good or service is capable of being distinct and whether the good or service is separable from other promises in the contract. In assessing whether promised goods or services in licensing arrangements are distinct, the Company considers factors such as the stage of development of the underlying intellectual property and the capabilities of the customer to develop the intellectual property on their own or whether the required expertise is readily available. Licensing arrangements are analyzed to determine whether the promised goods or services, which often include licenses, research and development services and governance committee services, are distinct or whether they must be accounted for as part of a combined performance obligation. If the license is considered not to be distinct, the license would then be combined with other promised goods or services as a combined performance obligation. If the Company is involved in a governance committee, it assesses whether its involvement constitutes a separate performance obligation. When governance committee services are determined to be separate performance obligations, the Company determines the fair value to be allocated to this promised service. Certain contracts contain optional and additional items, which are considered marketing offers and are accounted for as separate contracts with the customer if such option is elected by the customer, unless the option provides a material right which would not be provided without entering into the contract. An option that is considered a material right is accounted for as a separate performance obligation. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and services to the customer. A contract may contain variable consideration, including potential payments for both milestone and research and development services. For certain potential milestone payments, the Company estimates the amount of variable consideration by using the most likely amount method. In making this assessment, the Company evaluates factors such as the clinical, regulatory, commercial and other risks that must be overcome to achieve the milestone. Each reporting period the Company re-evaluates the probability of achievement of such variable consideration and any related constraints. Milestone will include variable consideration, without constraint, in the transaction price to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price among the performance obligations on a relative standalone selling price basis unless a portion of the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation.

The Company allocates the transaction price based on the estimated standalone selling price of the underlying performance obligations or in the case of certain variable consideration to one or more performance obligations. The Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. The Company utilizes key assumptions to determine the stand-alone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs to complete the respective performance obligation. Certain variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated to each performance obligation are consistent with the amount the Company would expect to receive for each performance obligation.

When a performance obligation is satisfied, revenue is recognized for the amount of the transaction price, excluding estimates of variable consideration that are constrained, that is allocated to that performance obligation on a relative standalone selling price basis. Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations under an arrangement.

For performance obligations consisting of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non- refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company will recognize revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.

c) Significant Risks and Uncertainties

The COVID-19 pandemic has had an impact on our business, operations and clinical development timelines. Government orders and restrictions in order to control the spread of the disease have impacted patient recruitment, enrollment and follow-up visits at clinical sites. 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 evolution of new variants, 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, 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.

d) Recent Accounting Pronouncements

The Company has considered recent accounting pronouncements and concluded that they are either not applicable to the business or that the effect is not expected to be material to the unaudited condensed consolidated financial statements as a result of future adoption.

e) Sources of Liquidity and Funding Requirements

On May 15, 2021, the Company entered into the License Agreement with Ji Xing, which is an entity affiliated with RTW Investments, LP, (RTW) a beneficial owner of approximately 14% of the Company’s common shares. Under the License Agreement, the Company granted Ji Xing exclusive development and commercialization rights to any pharmaceutical product that uses a device to deliver the Company’s proprietary calcium channel blocker known as etripamil by nasal spray for all prophylactic and therapeutic uses in humans in the following territories: People’s Republic of China, including mainland China, Hong Kong Special Administrative Region, Macau Special Administrative Region, and Taiwan (the Territory). Ji Xing will be responsible for development and regulatory activities in the Territory, and the Company will remain responsible for certain manufacturing activities in the Territory, subject to the supply agreement subsequently entered into by the Company and Ji Xing as contemplated by the License Agreement (the Supply Agreement). The Company received a non-refundable upfront cash payment of $15 million (see note 3) and the right to future payments of up to $107.5 million in total development and sales milestone payments. In addition, the Company is entitled to receive tiered royalty payments ranging from a percentage in the low double digits to the high double digits of Net Sales (as defined in the License Agreement) of all products sold in the Territory.

The Company has incurred operating losses in all periods except the three months ended June 30, 2021 and has experienced negative operating cash flows since its inception with the exception of the three months ended June 30, 2021 and anticipates to continue to incur losses for at least the next several years. As of June 30, 2021, the Company had cash, cash equivalents and short-term investments of $135.8 million and an accumulated deficit of $175.2 million.

Collaboration revenue

6 Months Ended

Jun. 30, 2021

Collaboration revenue

Collaboration revenue

3 Collaboration revenue

General

To date, the Company has not generated revenue from product sales. During the quarter ended June 30, 2021, the Company recognized collaboration revenue of $15 million, in the form of a non-refundable upfront cash payment in connection with the License Agreement, explained in more detail below.

Under the License Agreement, the Company could receive the following potential milestone payments in addition to the $15 million recognized during the second quarter of 2021:



	Development Milestones		Sales Milestones
Ji Xing License and Collaboration Agreement	$	15,500	$	92,000
Total Potential Milestone Payments	$	15,500	$	92,000

Strategic Partnerships

Ji Xing

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

Ji Xing will be responsible for development and regulatory activities in the Territory, and the Company will remain responsible for certain manufacturing activities in the Territory, subject to the Supply Agreement.

Milestone received a non-refundable upfront cash payment consisting of $15 million, and the right to receive up to $107.5 million in future milestone payments and royalties on any sales of etripamil in the Territory.

The Company has determined that the License Agreement is within the scope of ASC 808 as the Company and Ji Xing are both active participants in the development and manufacturing activities and are exposed to significant risks and rewards that are dependent on commercial success of the activities of the arrangement. Further, Milestone determined that Ji Xing is not a customer for goods or services resulting from ordinary activities of the Company. The Company has concluded that the License Agreement is within the scope of ASC 808, which defines collaborative arrangements and addresses the presentation of the transactions between the two parties in the income statement and related disclosures. However, ASC 808 does not provide guidance on the recognition of consideration exchanged or accounting for the obligations that may arise between the parties. The Company has concluded that ASC 606, Revenue from Contracts with Customers, should be applied by analogy.

Management evaluated all of the promised goods or services within the contract and determined which such goods and services were separate performance obligations. The Company determined that the license granted was a separate performance obligation as Ji Xing can benefit from the license granted on its own after the transfer of the license, as it does not require any significant development, regulatory or commercialization activities from Milestone. Ji Xing is responsible for all development, regulatory and commercialization activities in the Territory, including the performance of clinical trials necessary for regulatory approval, and is responsible for all such related costs. Supply of the product can be provided by another entity, as Milestone currently uses a CMO for the production of etripamil without subsequent significant modification or customization by the Company, therefore the Company determined the obligation to supply product is a separate and distinct obligation. The Company concluded that the obligation for participation on the various governance committees was distinct as the services could be performed by an outside party, however it was determined to be immaterial after estimating the stand alone cost compared to the License Agreement as a whole. As a result, the Company concluded there were two material and distinct performance obligations to account for under ASC 606 at the inception of the License Agreement.

The Company determined that the transaction price consists of the $15 million non-refundable upfront cash payment and the constrained variable consideration of the development milestone payments. As the development milestones are contingent on occurrences out of the direct control of the Company, the estimate of the variable consideration is $0. Variable constraint does not apply to sales- or usage-based royalties derived from the licensing of Intellectual property; rather, consideration from such royalties is only recognized as revenue at the later of when the performance obligation is satisfied or when the uncertainty is resolved (e.g., when subsequent sales or usage occurs), therefore the sales and royalty milestones are not included in the transaction price. The Company will re-evaluate the transaction price at the end of each reporting period and as uncertain events are resolved, or other changes in circumstances occur, adjust its estimate of the transaction price if necessary. As of June 30, 2021, the Company has recognized the non-refundable upfront payment as collaboration revenue, for the reasons described in the preceding paragraph.

In conjunction with the License Agreement, Ji Xing acquired $5 million of pre-funded warrants (see note 6). The Company evaluated whether this equity investment should be considered a component of the ASC 606 transaction price, and concluded that the fair value of the shares on a per share basis was equal to the fair value of the shares underlying the warrant, therefore there was no premium paid for the shares and was not included in the transaction price. The Company accounted for the pre-funded warrants as equity and included in earnings per share in the accompanying financial statements. See note 6 for additional details.

For Ji Xing’s subsequent purchases of product pursuant to the Supply Agreement, each order will be accounted for as a separate purchase and the order price will be allocated to the products based on the standalone selling price of the products. Under this methodology, the order price will be allocated to the single performance obligation to supply the products. As Milestone has not previously licensed a product for a territory, the residual approach was used by deducting the estimated stand-alone selling price of the other obligations from the total transaction price to determine the stand-alone selling price of the remaining goods and services, which consisted of the transfer of intellectual property pursuant to the license. Therefore, the remaining transaction price of $15 million was allocated to the technology transfer and recognized at a point in time when the technology has been transferred. The technology transfer was completed on June 22, 2021, and the $15

million was recognized at that point in time as collaboration revenue in the related statement of comprehensive income (loss).

Share-based compensation

6 Months Ended

Jun. 30, 2021

Share-based compensation

Share-based compensation

7 Shareholders’ equity

Under the Company’s 2019 Equity Incentive Plan (the 2019 Plan) and the Company’s Stock Option Plan (the 2011 Plan), unless otherwise decided by the Board of Directors, options vest and are exercisable as follows: 25% vest and are exercisable on the one year anniversary of the grant date and one thirty-sixth (1/36^th) of the remaining options vest and are exercisable each month thereafter, such that options are vested in full on four-year anniversary of the grant date.

On January 1, 2021, the number of the Company’s common shares reserved for issuance under the 2019 Plan increased by 1,193,119 common shares. In addition, 72,186 options have been forfeited under the 2011 Plan after adoption of the 2019 Plan and became available for issuance under the 2019 Plan. As of June 30, 2021, there were 4,566,467 shares available for issuance under the 2019 Plan, of which 805,027 shares were available for future grants.

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


	2021							2020
						Weighted							Weighted
		Number				average			Number				average
		of shares				exercise			of shares				exercise
		2019 Plan		2011 Plan	Total	price			2019 Plan		2011 Plan	Total	price
Outstanding at beginning of year - 2011 Plan		—		2,080,087	2,080,087	$	2.15		—		2,364,526	2,364,526	$	2.15
Outstanding at beginning of year - 2019 Plan		1,706,190		—	1,706,190		13.55		220,140		—	220,140		20.78
Granted - 2019 Plan		2,055,250		—	2,055,250		6.24		1,474,460		—	1,474,460		12.91
Exercised - 2011 Plan		—		(16,753)	(16,753)		0.88		—		(187,205)	(187,205)		1.33
Exercised - 2019 Plan		(1,250)		—	(1,250)		3.74		—		—	—		—
Forfeited - 2011 Plan		—		—	—		—		—		(28,478)	(28,478)		2.57
Forfeited - 2019 Plan		(1,167)		—	(1,167)		21.48		(16,910)		—	(16,910)		21.44
Cancelled - 2019 Plan		(2,833)		—	(2,833)		21.48		—		—	—		—
Outstanding at end of period		3,756,190		2,063,334	5,819,524	$	6.93		1,677,690		2,148,843	3,826,533	$	7.34
Outstanding at end of period - Weighted average exercise price	$	9.55	$	2.16				$	13.89	$	2.22
Exercisable at end of period		750,626		1,706,309	2,456,935	$	5.12		44,124		1,363,103	1,407,227	$	2.11
Exercisable at end of period - Weighted average exercise price	$	12.07	$	2.06				$	7.46	$	1.94

The weighted average remaining contractual life was 8.3 and 8.4 years for outstanding options as of June 30, 2021 and 2020, respectively. The weighted average remaining contractual life was 7.0 and 7.2 years for vested options, as of June 30, 2021 and 2020, respectively.

There was $19,381 and $18,873 total unrecognized compensation cost related to non-vested share options as of June 30, 2021 and 2020, respectively. The share options are expected to be recognized over a remaining weighted average vesting period of 2.8 years and 2.5 years as of June 30, 2021 and 2020, respectively.

Options granted are valued using the Black-Scholes option pricing model. Amortization of the fair value of the options over vesting years has been expensed and credited to additional paid-in capital in shareholders’ equity.

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


	2021							2020
		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 year - 2011 Plan		—		543,192	543,192	$	1.81		—		1,152,300	1,152,300	$	1.88
Non-vested share options at beginning of year - 2019 Plan		1,438,026		—	1,438,026	$	10.28		218,975		—	218,975	$	14.44
Granted - 2019 Plan		2,055,250		—	2,055,250		4.72		1,474,460		—	1,474,460		7.88
Vested, outstanding 2011 Plan		—		(186,167)	(186,167)		1.61		—		(338,082)	(338,082)		2.23
Vested, outstanding 2019 Plan		(484,879)		—	(484,879)		10.04		(42,959)		—	(42,959)		4.98
Forfeited - 2011 Plan		—		—	—		—		—		(28,478)	(28,478)		1.84
Forfeited - 2019 Plan		(2,833)		—	(2,833)		15.25		(16,910)		—	(16,910)		15.16
Non-vested share options at end of period		3,005,564		357,025	3,362,589	$	6.02		1,633,566		785,740	2,419,306	$	6.48
Non-vested share options at end of period - Weighted average fair value	$	6.51	$	1.91				$	6.83	$	1.74

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:


	Three months ended June 30,						Six months ended June 30,
	2021			2020			2021			2020
Exercise price	$	5.56		$	3.74		$	6.24		$	12.91
Share price	$	5.56		$	3.74		$	6.24		$	12.91
Volatility		92	%		87	%		94	%		84	%
Risk-free interest rate		0.86	%		0.47	%		1.04	%		1.06	%
Expected life		5.32			5.51			6.01			5.89
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:


	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Administration	$	750	$	516	$	1,323	$	915
Research and development		825		456		1,405		842
Commercial activities		337		219		552		415
	$	1,912	$	1,191	$	3,280	$	2,172

Summary of significant accounting policies (Policies)	6 Months Ended
Summary of significant accounting policies (Policies)	Jun. 30, 2021
Summary of significant accounting policies
Basis of consolidation	a) Basis of consolidation The consolidated financial statements include the accounts of the Company and Milestone Pharmaceuticals USA, Inc. All intercompany transactions and balances have been eliminated.
Basis of presentation and use of accounting estimates and significant accounting policies	b) Basis of presentation and use of accounting estimates and significant accounting policies 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. 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, 2020. 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 balance sheet as of June 30, 2021, and its statements of income (loss), shareholders’ equity for the three and six months ended June 30, 2021 and 2020 and its statement of cash flows for the six months ended June 30, 2021. The condensed consolidated balance sheet as of December 31, 2020, was derived from audited annual consolidated financial statements, but does not contain all 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 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, progress of activities performed by the Contract Resource Organizations (CROs) and Contract Manufacturing Organizations (CMOs) which are used to calculate the research and development expense incurred, and share-based compensation. Accordingly, actual results may differ from those estimates and such differences may be material. The Company’s significant accounting policies are described in Note 2—Summary of Significant Accounting Policies, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. There has been no material change to the significant accounting policies during the six months ended June 30, 2021, except for the addition of the new policies described below. Collaborative Arrangements The Company considers the nature and contractual terms of arrangements and assesses whether an arrangement involves a joint operating activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards dependent on the commercial success of the activity. If the Company is an active participant and is exposed to significant risks and rewards dependent on the commercial success of the activity, the Company accounts for such an arrangement as a collaborative arrangement under Accounting Standards Codification (ASC) 808, Collaborative Arrangements (ASC 808), which requires that certain transactions between the Company and collaborators be recorded in its consolidated statements of comprehensive income (loss) on either a gross basis or net basis, depending on the characteristics of the collaborative relationship, and requires enhanced disclosure of collaborative relationships. The Company evaluates its collaboration agreements for proper classification in its consolidated statements of comprehensive income (loss) based on the nature of the underlying activity. If payments to and from collaborative partners are not within the scope of other authoritative accounting literature, the consolidated statements of income (loss) classification for the payments is based on a reasonable, rational analogy to authoritative accounting literature that is applied in a consistent manner. If the Company concludes that it has a customer relationship with one of its collaborators, the Company follows the guidance in Accounting Standards Codification (ASC) Topic 606, Revenue From Contracts With Customers (ASC 606). Please refer to note 3, “Collaboration Revenue” for additional details regarding the Company’s License and Collaboration Agreement (the License Agreement) with Ji Xing Pharmaceuticals, Limited (Ji Xing). Revenue from Contracts with Customers In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for these goods and services. To achieve this core principle, the Company applies the following five steps: 1) identify the customer contract; 2) identify the contract’s performance obligations; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when or as a performance obligation is satisfied. The Company evaluates all promised goods and services within a customer contract and determines which of such goods and services are separate performance obligations. This evaluation includes an assessment of whether the good or service is capable of being distinct and whether the good or service is separable from other promises in the contract. In assessing whether promised goods or services in licensing arrangements are distinct, the Company considers factors such as the stage of development of the underlying intellectual property and the capabilities of the customer to develop the intellectual property on their own or whether the required expertise is readily available. Licensing arrangements are analyzed to determine whether the promised goods or services, which often include licenses, research and development services and governance committee services, are distinct or whether they must be accounted for as part of a combined performance obligation. If the license is considered not to be distinct, the license would then be combined with other promised goods or services as a combined performance obligation. If the Company is involved in a governance committee, it assesses whether its involvement constitutes a separate performance obligation. When governance committee services are determined to be separate performance obligations, the Company determines the fair value to be allocated to this promised service. Certain contracts contain optional and additional items, which are considered marketing offers and are accounted for as separate contracts with the customer if such option is elected by the customer, unless the option provides a material right which would not be provided without entering into the contract. An option that is considered a material right is accounted for as a separate performance obligation. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and services to the customer. A contract may contain variable consideration, including potential payments for both milestone and research and development services. For certain potential milestone payments, the Company estimates the amount of variable consideration by using the most likely amount method. In making this assessment, the Company evaluates factors such as the clinical, regulatory, commercial and other risks that must be overcome to achieve the milestone. Each reporting period the Company re-evaluates the probability of achievement of such variable consideration and any related constraints. Milestone will include variable consideration, without constraint, in the transaction price to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price among the performance obligations on a relative standalone selling price basis unless a portion of the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation. The Company allocates the transaction price based on the estimated standalone selling price of the underlying performance obligations or in the case of certain variable consideration to one or more performance obligations. The Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. The Company utilizes key assumptions to determine the stand-alone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs to complete the respective performance obligation. Certain variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated to each performance obligation are consistent with the amount the Company would expect to receive for each performance obligation. When a performance obligation is satisfied, revenue is recognized for the amount of the transaction price, excluding estimates of variable consideration that are constrained, that is allocated to that performance obligation on a relative standalone selling price basis. Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations under an arrangement. For performance obligations consisting of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non- refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company will recognize revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.
Significant Risks and Uncertainties	c) Significant Risks and Uncertainties The COVID-19 pandemic has had an impact on our business, operations and clinical development timelines. Government orders and restrictions in order to control the spread of the disease have impacted patient recruitment, enrollment and follow-up visits at clinical sites. 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 evolution of new variants, 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, 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.
Recent accounting pronouncement not yet adopted	d) Recent Accounting Pronouncements The Company has considered recent accounting pronouncements and concluded that they are either not applicable to the business or that the effect is not expected to be material to the unaudited condensed consolidated financial statements as a result of future adoption.
Sources of Liquidity and Funding Requirements	e) Sources of Liquidity and Funding Requirements On May 15, 2021, the Company entered into the License Agreement with Ji Xing, which is an entity affiliated with RTW Investments, LP, (RTW) a beneficial owner of approximately 14% of the Company’s common shares. Under the License Agreement, the Company granted Ji Xing exclusive development and commercialization rights to any pharmaceutical product that uses a device to deliver the Company’s proprietary calcium channel blocker known as etripamil by nasal spray for all prophylactic and therapeutic uses in humans in the following territories: People’s Republic of China, including mainland China, Hong Kong Special Administrative Region, Macau Special Administrative Region, and Taiwan (the Territory). Ji Xing will be responsible for development and regulatory activities in the Territory, and the Company will remain responsible for certain manufacturing activities in the Territory, subject to the supply agreement subsequently entered into by the Company and Ji Xing as contemplated by the License Agreement (the Supply Agreement). The Company received a non-refundable upfront cash payment of $15 million (see note 3) and the right to future payments of up to $107.5 million in total development and sales milestone payments. In addition, the Company is entitled to receive tiered royalty payments ranging from a percentage in the low double digits to the high double digits of Net Sales (as defined in the License Agreement) of all products sold in the Territory. The Company has incurred operating losses in all periods except the three months ended June 30, 2021 and has experienced negative operating cash flows since its inception with the exception of the three months ended June 30, 2021 and anticipates to continue to incur losses for at least the next several years. As of June 30, 2021, the Company had cash, cash equivalents and short-term investments of $135.8 million and an accumulated deficit of $175.2 million.

Share-based compensation (Tables)

6 Months Ended

Jun. 30, 2021

Share-based compensation

Schedule of outstanding and exercisable options


	2021							2020
						Weighted							Weighted
		Number				average			Number				average
		of shares				exercise			of shares				exercise
		2019 Plan		2011 Plan	Total	price			2019 Plan		2011 Plan	Total	price
Outstanding at beginning of year - 2011 Plan		—		2,080,087	2,080,087	$	2.15		—		2,364,526	2,364,526	$	2.15
Outstanding at beginning of year - 2019 Plan		1,706,190		—	1,706,190		13.55		220,140		—	220,140		20.78
Granted - 2019 Plan		2,055,250		—	2,055,250		6.24		1,474,460		—	1,474,460		12.91
Exercised - 2011 Plan		—		(16,753)	(16,753)		0.88		—		(187,205)	(187,205)		1.33
Exercised - 2019 Plan		(1,250)		—	(1,250)		3.74		—		—	—		—
Forfeited - 2011 Plan		—		—	—		—		—		(28,478)	(28,478)		2.57
Forfeited - 2019 Plan		(1,167)		—	(1,167)		21.48		(16,910)		—	(16,910)		21.44
Cancelled - 2019 Plan		(2,833)		—	(2,833)		21.48		—		—	—		—
Outstanding at end of period		3,756,190		2,063,334	5,819,524	$	6.93		1,677,690		2,148,843	3,826,533	$	7.34
Outstanding at end of period - Weighted average exercise price	$	9.55	$	2.16				$	13.89	$	2.22
Exercisable at end of period		750,626		1,706,309	2,456,935	$	5.12		44,124		1,363,103	1,407,227	$	2.11
Exercisable at end of period - Weighted average exercise price	$	12.07	$	2.06				$	7.46	$	1.94

Schedule of non-vested share options activity


	2021							2020
		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 year - 2011 Plan		—		543,192	543,192	$	1.81		—		1,152,300	1,152,300	$	1.88
Non-vested share options at beginning of year - 2019 Plan		1,438,026		—	1,438,026	$	10.28		218,975		—	218,975	$	14.44
Granted - 2019 Plan		2,055,250		—	2,055,250		4.72		1,474,460		—	1,474,460		7.88
Vested, outstanding 2011 Plan		—		(186,167)	(186,167)		1.61		—		(338,082)	(338,082)		2.23
Vested, outstanding 2019 Plan		(484,879)		—	(484,879)		10.04		(42,959)		—	(42,959)		4.98
Forfeited - 2011 Plan		—		—	—		—		—		(28,478)	(28,478)		1.84
Forfeited - 2019 Plan		(2,833)		—	(2,833)		15.25		(16,910)		—	(16,910)		15.16
Non-vested share options at end of period		3,005,564		357,025	3,362,589	$	6.02		1,633,566		785,740	2,419,306	$	6.48
Non-vested share options at end of period - Weighted average fair value	$	6.51	$	1.91				$	6.83	$	1.74

Schedule of weighted average assumptions for the options granted


	Three months ended June 30,						Six months ended June 30,
	2021			2020			2021			2020
Exercise price	$	5.56		$	3.74		$	6.24		$	12.91
Share price	$	5.56		$	3.74		$	6.24		$	12.91
Volatility		92	%		87	%		94	%		84	%
Risk-free interest rate		0.86	%		0.47	%		1.04	%		1.06	%
Expected life		5.32			5.51			6.01			5.89
Dividend		0	%		0	%		0	%		0	%

Schedule of share-based compensation expense


	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Administration	$	750	$	516	$	1,323	$	915
Research and development		825		456		1,405		842
Commercial activities		337		219		552		415
	$	1,912	$	1,191	$	3,280	$	2,172

Share-based compensation - Outstanding and exercisable options (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Outstanding and exercisable options, number of shares
Cancelled			(2,833)
Exercisable at end of period		1,407,227		1,407,227
Outstanding and exercisable options, weighted average exercise price
Forfeited				$ 2.57
Cancelled			$ 21.48
Weighted average remaining contractual life (in years)			8 years 3 months 18 days	8 years 4 months 24 days
Weighted average remaining contractual life for vested options (in years)			7 years	7 years 2 months 12 days
Share-based compensation expense	$ 1,912	$ 1,191	$ 3,280	$ 2,172
Unrecognized compensation cost	$ 19,381	$ 18,873	$ 19,381	$ 18,873
Expected period for recognition			2 years 9 months 18 days	2 years 6 months
Option Plans 2011 and 2019
Outstanding and exercisable options, number of shares
Outstanding at end of period	5,819,524	3,826,533	5,819,524	3,826,533
Exercisable at end of period	2,456,935		2,456,935
Outstanding and exercisable options, weighted average exercise price
Outstanding at end of period	$ 6.93	$ 7.34	$ 6.93	$ 7.34
Exercisable at end of period	$ 5.12	$ 2.11	$ 5.12	$ 2.11
2011 Plan
Outstanding and exercisable options, number of shares
Outstanding at beginning of period			2,080,087	2,364,526
Exercised			(16,753)	(187,205)
Forfeited				(28,478)
Outstanding at end of period	2,063,334	2,148,843	2,063,334	2,148,843
Exercisable at end of period	1,706,309	1,363,103	1,706,309	1,363,103
Outstanding and exercisable options, weighted average exercise price
Outstanding at beginning of period			$ 2.15	$ 2.15
Exercised			0.88	1.33
Outstanding at end of period	$ 2.16	$ 2.22	2.16	2.22
Exercisable at end of period	$ 2.06	$ 1.94	$ 2.06	$ 1.94
2019 Plan
Outstanding and exercisable options, number of shares
Outstanding at beginning of period			1,706,190	220,140
Granted			2,055,250	1,474,460
Exercised			(1,250)
Forfeited			(1,167)	(16,910)
Cancelled			(2,833)
Outstanding at end of period	3,756,190	1,677,690	3,756,190	1,677,690
Exercisable at end of period	750,626	44,124	750,626	44,124
Outstanding and exercisable options, weighted average exercise price
Outstanding at beginning of period			$ 13.55	$ 20.78
Granted			6.24	12.91
Exercised			3.74
Forfeited			21.48	21.44
Outstanding at end of period	$ 9.55	$ 13.89	9.55	13.89
Exercisable at end of period	$ 12.07	$ 7.46	12.07	7.46
Weighted average fair values of options granted			$ 4.72	$ 7.88

Summary of significant accounting policies - Sources of Liquidity and Funding Requirements (Details) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended
	May 15, 2021	Jun. 30, 2021	Jun. 30, 2021	Dec. 31, 2020
Class of Warrant or Right
Cash, cash equivalents and short-term investments		$ 135,800	$ 135,800
Accumulated deficit		(175,210)	(175,210)	$ (163,466)
Ji Xing Pharmaceuticals Limited \| RTW Investments LP
Class of Warrant or Right
Percentage of beneficial owner	14.00%
Pre-funded warrants
Class of Warrant or Right
Proceeds received	$ 4,900
Ji Xing
Class of Warrant or Right
Upfront cash payment		15,000	15,000
Potential milestone payments		$ 107,500	$ 107,500

Accounts payable and accrued liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Accounts payable and accrued liabilities
Trade accounts payable	$ 3,880	$ 4,641
Accrued research and development liabilities	101	152
Other accrued liabilities	348	164
Accrued compensation and benefits payable	740	957
Accounts payable and accrued liabilities	$ 5,069	$ 5,914

Shareholders' equity - Authorized share capital (Details) - shares	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Authorized share capital
Common shares, Shares issued (in shares)	29,846,000	29,827,997
Common shares, Shares outstanding (in shares)	29,846,000	29,827,997
Employee Stock Purchase Plan
Authorized share capital
Number of common shares available for issuance	822,100
Number of shares issued under the ESPP	0

Shareholders' equity - Pre-funded warrants (Details) - Pre-funded warrants $ / shares in Units, $ in Millions	May 15, 2021 USD ($) $ / shares shares
Shareholders' equity
Purchase price \| $ / shares	$ 5.48
Net proceeds from issuance of common shares in a public offering (note 7) \| $	$ 4.9
Warrants exercisable \| shares	1
Warrants exercise price \| $ / shares	$ 0.01
Maximum
Shareholders' equity
Warrants issued to purchase shares \| shares	910,746

Share-based compensation - Weighted average assumptions for the options granted (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Shareholders' equity
Exercise price	$ 5.56	$ 3.74	$ 6.24	$ 12.91
Share price (in dollars per share)	$ 5.56	$ 3.74	$ 6.24	$ 12.91
Volatility (as a percent)	92.00%	87.00%	94.00%	84.00%
Risk-free interest rate (as a percent)	0.86%	0.47%	1.04%	1.06%
Expected life (in years)	5 years 3 months 25 days	5 years 6 months 3 days	6 years 3 days	5 years 10 months 20 days
Dividend (as a percent)	0.00%	0.00%	0.00%	0.00%

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Condensed Consolidated Balance Sheets
Common shares, par value (in dollars per share)	$ 0	$ 0
Common shares, Shares authorized (in shares)	Unlimited	Unlimited
Common shares, Shares issued (in shares)	29,846,000	29,827,997
Common shares, Shares outstanding (in shares)	29,846,000	29,827,997
Warrants issued	12,327,780	11,417,034
Warrants outstanding	12,327,780	11,417,034

Collaboration revenue (Details) $ in Thousands	3 Months Ended	6 Months Ended
Collaboration revenue (Details) $ in Thousands	Jun. 30, 2021 USD ($)	Jun. 30, 2021 USD ($) Counterparty item	Dec. 31, 2020 USD ($)
Collaboration revenue
Recognized collaboration revenue	$ 15,000	$ 15,000
Warrants	52,927	52,927	$ 48,007
Development Milestones
Collaboration revenue
Potential milestone payments	15,500
Sales Milestones
Collaboration revenue
Potential milestone payments	92,000
Ji Xing
Collaboration revenue
Recognized collaboration revenue		15,000
Potential milestone payments	107,500	107,500
Upfront cash payment	15,000	$ 15,000
Number of parties in the collaboration strategic partnership \| Counterparty		2
Number of performance obligations \| item		2
Variable consideration of development milestone payments		$ 0
Transaction price		15,000
Ji Xing \| Pre-funded warrants
Collaboration revenue
Warrants	5,000	$ 5,000
Ji Xing \| Development Milestones
Collaboration revenue
Potential milestone payments	15,500
Ji Xing \| Sales Milestones
Collaboration revenue
Potential milestone payments	$ 92,000

Shareholders' equity - Additional paid-in capital (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020
Additional paid-in capital
Beginning balance	$ 131,992	$ 143,119	$ 99,632	$ 114,917	$ 143,119	$ 114,917
Share-based compensation expense	1,912	1,368	1,191	981
Exercise of stock options		19	172	77
Ending balance	139,594	131,992	88,016	99,632	139,594	88,016
Additional paid-in capital
Additional paid-in capital
Beginning balance	9,883	8,530	4,730	3,805	8,530	3,805
Share-based compensation expense	1,912	1,368	1,191	981	3,280	2,172
Exercise of stock options		(15)	(126)	(56)	(15)	(182)
Ending balance	$ 11,795	$ 9,883	$ 5,795	$ 4,730	$ 11,795	$ 5,795

Share-based compensation (Details) - shares	6 Months Ended	12 Months Ended
Share-based compensation (Details) - shares	Jun. 30, 2021	Dec. 31, 2018	Jan. 01, 2021	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019
2011 Plan
Share-based compensation
Options outstanding	2,063,334			2,080,087	2,148,843	2,364,526
Number of options forfeited after termination of one plan		72,186
2019 Plan
Share-based compensation
Options outstanding	3,756,190			1,706,190	1,677,690	220,140
Shares reserved for issuance	4,566,467		1,193,119
Shares available for future grants	805,027
Options \| 2011 Plan
Share-based compensation
Vesting period	4 years
Options \| 2011 Plan \| Share-based Compensation Award, Tranche One
Share-based compensation
Percentage of shares to vest	25.00%
Options \| 2019 Plan
Share-based compensation
Vesting period	4 years
Options \| 2019 Plan \| Share-based Compensation Award, Tranche One
Share-based compensation
Percentage of shares to vest	25.00%

Net income (loss) per share (Details) - shares	3 Months Ended	6 Months Ended
Net income (loss) per share (Details) - shares	Jun. 30, 2021	Jun. 30, 2021	Jun. 30, 2020
Share options and unvested restricted share awards
Net income (loss) per share
Share-based compensation options exercisable and in the money	2,856,751	5,819,524	3,826,533