UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________to _______________
Commission
file number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number (including area code):
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading symbol | Name of each exchange on which registered | ||
| The
|
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 ☐
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company. See definition 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 | ☐ |
| ☒ | 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 13, 2024 , there were shares of company common stock issued and outstanding.
EXPLANATORY NOTE
MIRA Pharmaceuticals, Inc.
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
MIRA PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS
AS OF JUNE 30, 2024 AND DECEMBER 31, 2023
| June 30, | December 31, | |||||||
2024 (unaudited) | 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Other receivables | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Operating lease, right of use assets | ||||||||
| Due from related parties | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable and accrued liabilities | $ | $ | ||||||
| Related party accrued interest | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ Deficit | ||||||||
| Preferred Stock, $ par value, shares authorized and issued or outstanding. | ||||||||
| Common Stock, $ par value; shares authorized, shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
See notes to condensed financial statements
| 1 |
MIRA PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023
(Unaudited)
| Three months ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Operating costs: | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Related party travel costs | ||||||||||||||||
| Research and development expenses | ( | ) | ||||||||||||||
| Total operating costs | ||||||||||||||||
| Interest income (expense), net | ( | ) | ( | ) | ||||||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted loss per share | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average common stock shares outstanding | ||||||||||||||||
See notes to condensed financial statements
| 2 |
MIRA PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023
(Unaudited)
| Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity (Deficit) | ||||||||||||||||
| Balances, March 31, 2024 | $ | $ | ( | ) | $ | |||||||||||||||
| Payment of Short Swing Disgorgement by Bay Shore Trust | - | |||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balances, June 30, 2024 | ( | ) | ||||||||||||||||||
| Balances, March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | |||||||||||||
| Stock-based compensation | - | |||||||||||||||||||
| Issuance of warrants | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balances, June 30, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity (Deficit) | ||||||||||||||||
| Balances, January 1, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Payment of Short Swing Disgorgement by Bay Shore Trust | - | $ | ||||||||||||||||||
| Stock-based compensation | - | $ | ||||||||||||||||||
| Net loss | - | $ | ( | ) | ( | ) | ||||||||||||||
| Balances, June 30, 2024 | $ | ( | ) | $ | ||||||||||||||||
| Balances, January 1, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Stock-based compensation | - | |||||||||||||||||||
| Sale of common stock, net | - | |||||||||||||||||||
| Issuance of warrants | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balances, June 30, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||
See notes to condensed financial statements
| 3 |
MIRA PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from Operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash from operations | ||||||||
| Interest expense | ||||||||
| Amortization of debt issuance costs | ||||||||
| Stock-based compensation expense | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Prepaid expenses | ( | ) | ||||||
| Other receivables | ||||||||
| Net cash flows used in operating activities | ( | ) | ( | ) | ||||
| Financing activities: | ||||||||
| Advances (to) from affiliates | ( | ) | ||||||
| Deferred offering costs | ( | ) | ||||||
| Repayments under related party line of credit | ( | ) | ||||||
| Bayshore Trust short-swing disgorgement | ||||||||
| Net cash flows provided (used) by financing activities | $ | $ | ||||||
| Net change in cash | $ | ( | ) | $ | ( | ) | ||
| Cash, beginning of year | ||||||||
| Cash, end of period | $ | $ | ||||||
See notes to condensed financial statements
| 4 |
MIRA PHARMACEUTICALS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023
(Unaudited)
Note 1. Description of business and summary of significant accounting policies:
Overview
MIRA Pharmaceuticals, Inc., a Florida corporation (“we,” “us,” “our,” “MIRA,” or the “Company”), is a pre-clinical-stage pharmaceutical development company with two neuroscience programs targeting a broad range of neurologic and neuropsychiatric disorders. The Company holds exclusive license rights in the U.S., Canada and Mexico for Ketamir-2, a novel, patent pending oral ketamine analog under pre-clinical investigation to potentially deliver ultra-rapid antidepressant effects, providing hope for individuals battling treatment-resistant depression (“TRD”), major depressive disorder with suicidal ideation (“MDSI”), and potentially post-traumatic stress disorder (“PTSD”).
Additionally, the Company’s novel oral pharmaceutical marijuana, MIRA-55, is currently under investigation for its potential to alleviate neuropathic pain, as well as anxiety and cognitive decline, symptoms often associated with early-stage dementia. MIRA-55, if approved by the U.S. Food and Drug Administration (“FDA”), could mark a significant advancement in addressing various neuropsychiatric, inflammatory, and neurologic diseases and disorders.
The U.S. Drug Enforcement Administration’s (“DEA”) scientific reviews of both Ketamir-2 and MIRA-55 concluded that they would not be considered a controlled substance or listed chemical under the Controlled Substances Act (“CSA”) and its governing regulations.
The Company is incorporated under the laws of the State of Florida in September 2020 and commenced substantive operations, including our pharmaceutical development program, in late 2020. The Company’s accounting and reporting policies conform to accounting principles generally accepted in the United States of America (“GAAP”).
As used herein, the Company’s Common Stock, par value $ per share, is referred to as the “Common Stock” and the Company’s preferred stock, par value $ per share, is referred to as the “Preferred Stock”.
Operating Updates
In early February 2024, the Company made a significant discovery during the manufacturing and scale-up process of its patented molecule known as “MIRA1a,” which the Company believed was the molecule used in its pre-clinical trials and had been synthesized by a contract manufacturer. Through this process, the Company identified a novel and improved version of the molecule, which the Company calls MIRA-55.
As part of the Company’s due diligence and subsequent testing, which began in late 2023, the Company discovered that the pre-clinical studies the Company conducted, previously attributed to MIRA1a, were in fact performed on MIRA-55. Following this revelation, in early March 2024, the Company promptly filed a provisional patent for MIRA-55, which encompasses all pre-clinical studies. If such patent is issued, the Company will own the patent rights to both MIRA1a and MIRA-55.
Moreover, based on the Company’s pre-clinical analyses to date, the Company believes that MIRA-55 is an improvement over MIRA1a in that it displays enhanced potency and potential for efficacy.
Based on the Company’s discoveries and pre-clinical studies to date, the Company has decided to advance MIRA-55 as its lead compound for the Company’s oral pharmaceutical marijuana drug candidate while still retaining its rights to MIRA1a. As such, the Company’s decided not to move MIRA1a forward.
| 5 |
Significant Accounting Policies
There have been no material changes in the Company’s significant accounting policies from those previously disclosed in the 2023 Annual Report.
Note 2. Liquidity and capital resources:
In
accordance with Accounting Standards Codification 205-40, Going Concern, the Company has evaluated whether there are conditions
and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern
within one year after the date the financial statements are issued. As of June 30, 2024, the Company had cash of approximately $
Historically, the Company has been primarily engaged in developing MIRA-55 and, more recently, has also been focusing on the development of Ketamir-2. During these activities, the Company sustained substantial losses. The Company’s ability to fund ongoing operations and future pre-clinical and clinical trials required for FDA approval is dependent on the Company’s ability to obtain significant additional external funding in the near term. Since inception, the Company financed its operations through the sale of Common Stock, and related party financings. Additional sources of financing are being sought by the Company, including, but not limited to, sales of Common Stock. The Company expects to be able to fund operations through the fourth quarter of 2024, with available borrowings from the related-party loan described in Note 4 below. Additional financing will be needed by the Company to fund its operations after such date to continue and complete pre-clinical and clinical development activities and to commercially develop and ultimately launch its product candidates. However, and particularly given the early-stage nature of the Company and the significant time and capital required to implement the Company’s business plan, there can be no assurance that any fundraising will be achieved on commercially reasonable terms, if at all.
The Company expects to continue to generate losses in the foreseeable future. The Company’s liquidity needs will be determined largely by the budgeted operational expenditures incurred in regard to the progression of its product candidates. The Company does not have sufficient cash and cash equivalents as of the date of filing this Report to support its operations for at least the 12 months following the date the financial statements are issued. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through 12 months after the date the accompanying financial statements are issued.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 3. License agreement, related party:
MIRALOGX
On November 15, 2023, the Company and MIRALOGX, LLC, a Florida limited liability company (“MIRALOGX”) which is a related-party owned by Bay Shore Trust, a significant stockholder of the Company (“Bay Shore Trust”), entered into an exclusive license agreement (the “License Agreement”) to develop and commercialize Ketamir-2, a drug product containing 2-(2- chlorophenyl)-2-(methylamino) cyclopentan-1-one as an active agent in the United States, Canada and Mexico (the “Territory”). The exclusive license in the License Agreement includes the right of the Company to sublicense the licensed intellectual property.
Pursuant
to the terms of the License Agreement, and subject to the conditions set forth therein, the Company paid MIRALOGX a one-time, nonrefundable
payment of $
| 6 |
The Company and MIRALOGX have made customary representations and warranties in the License Agreement and have agreed to certain other customary covenants, including confidentiality, cooperation, and indemnity provisions. Either party may terminate the License Agreement for cause if the other party materially breaches or defaults in the performance of its obligations, and, if curable, such material breach remains uncured for 120 days. Unless earlier terminated, the License Agreement will continue in effect until the last to expire of the patent rights licensed pursuant to the License Agreement, unless earlier terminated.
Note 4. Debt, related party:
On November 15, 2023, the Company entered into a Promissory Note and Loan Agreement (the “Loan Agreement”) with MIRALOGX.
Pursuant
to the Loan Agreement, the Company may borrow up to $
Together with any Advance Request, the Company shall deliver to the Lender a budget for the requested Advance (the “Budget”). The Budget may only include costs directly associated with preparing an Investigational New Drug (“IND”) application for Ketamir-2, exclusive of personnel costs. Any Advances made by MIRALOGX to the Company pursuant to this Loan may be repaid by the Company (together with any and all interest accrued thereon) at any time without penalty or premium in accordance with the terms hereof. Amounts repaid under the Loan may not be reborrowed
The
Loan Agreement has a one-year term, and all outstanding principal and accrued but unpaid interest must be repaid in full on November
15, 2024. Interest on the amounts borrowed under the Loan Agreement accrues at an annual fixed rate of
Bay Shore Trust
In
April 2023, the Company entered into a Promissory Note and Loan Agreement with the Bay Shore Trust. Under this Promissory Note and Loan
Agreement (the “Bay Shore Note”), the Company had the right to borrow up to an aggregate of $
On
July 20, 2023, the Company entered into a conversion agreement with the Bay Shore Trust under which the Bay Shore Trust had converted,
at the time of the IPO, $
Note 5. Related party transactions:
Due
from related parties – During the six months ended June 30, 2024, the Company paid payables on behalf of a related party in
the amount of $
Shared
management- Historically, the Company has shared management with related parties on an as-needed basis, to collaborate and pool resources
efficiently. For the six months ended June 30, 2024, the Company incurred $
Shared lease costs- On April 1, 2023 the Company entered into an Agreement For Shared Lease Costs with MIRALOGX, LLC, (the “Shared Agreement”) who is a related party for the jet usage. Under the Shared Agreement, the Company agrees to make monthly contributions or payments in accordance with its monthly use of shared aircraft toward rent payments. However, the Company has not used the aircraft after the termination of the lease on March 31, 2023 and there are no minimum payments due without usage
| 7 |
License agreement - See Note 3.
Debt, related party - See Note 4.
Stock settlement agreement - See Note 7
Note 6. Leases:
The Company’s former corporate headquarters was located in Baltimore, Maryland, which included a lease for office space. This lease began in November 2021 and ended April 2024. The lease was not renewed after April 2024.
Variable lease costs
Variable lease costs primarily include utilities, property taxes, and other operating costs that are passed on from the lessor. Variable lease costs related to the aircraft include usage expenses, which includes pilot expenses, jet fuel and general flight expenses.
The components of lease expense were as follows:
| Six months ended June 30, | ||||||||
| Lease Costs | 2024 | 2023 | ||||||
| Operating Lease Cost | ||||||||
| Operating Lease | $ | $ | ||||||
| Variable Lease Costs | ||||||||
| Total Lease Cost | $ | $ | ||||||
Supplemental cash flow information related to leases were as follows:
| Six months ended June 30, | ||||||||
| Other Lease Information | 2024 | 2023 | ||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
Note 7. Stockholders’ equity:
Stock-based compensation
The fair value of each option award is estimated on the grant date using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected price volatility is based on the historical volatilities of a peer group as the Company does not have a multi-year trading history for its shares. Industry peers consist of several public companies in the biotech industry similar to the Company in size, stage of life cycle and product indications. The Company intends to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of the Company’s own stock price becomes available, or unless circumstances change such that the identified companies are no longer similar to the Company, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.
| 8 |
Expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus contract term. The risk-free rate is based on the 5-year U.S. Treasury yield curve in effect at the time of grant. The Company recognizes forfeitures as they occur.
During
the six months ended June 30, 2024, a total of options to purchase Common Stock, with an aggregate fair market value of approximately
$
Number of shares | Weighted average exercise price per share | Aggregate intrinsic value | ||||||||||
| Outstanding as January 1, 2024 | $ | |||||||||||
| Options granted | $ | |||||||||||
| Forfeitures | ( | ) | $ | |||||||||
| Outstanding as June 30, 2024 | $ | $ | ||||||||||
The estimated fair value of stock options on date of grant was $ million. As of June 30, 2024, options exercisable totaled . There are approximately $ million of unrecognized compensation costs related to non-vested share-based compensation awards, which will be expensed through 2025.
| Expected volatility | %- | % | ||
| Risk-free interest rate | %- | % | ||
| Exercise price | $ | - $ | ||
| Expected term (in years) | - years | |||
| Dividend yield |
Warrants
The Company has granted warrants to purchase shares of Common Stock. Warrants may be granted to affiliates in connection with certain agreements.
As
of June 30, 2024, a cumulative total of
Earnings Per Share
During the three months and six months ended June 30, 2024 and 2023, outstanding stock options and warrants of and , respectively, were not included in the computation of diluted earnings per share, because to do so would have had an antidilutive effect.
| 9 |
Stock Settlement Agreement
On
April 24, 2024 the Company settled a claim submitted by certain shareholders under Section 16 of the Securities Exchange Act involving
the Company that claimed illegal profits were earned on stock transactions involving insiders of the Company. After investigation, the
Company informed the insider, Bayshore Trust, of the claim and came to agreement with the shareholders, whereby requiring the disgorgement
of profits by the insider back to the Company in the amount of $
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Report contains “forward-looking statements” (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act) that reflect our current expectations and views of future events. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential”, or “continue” or the negative of these terms or other similar expressions. In particular, statements about our pre-clinical and clinical trials and expectations regarding such trials, the markets in which we operate, including growth of such markets, and our expectations, beliefs, plans, strategies, objectives, prospects, assumptions, or future events or performance contained in this Report generally under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements.
We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed in this Report under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may cause our actual results, performance, or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements, or could affect our share price. Important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements include, but are not limited to, the following:
| ● | our reliance on related parties for potential funding and our license for Ketamir-2; | |
| ● | our ability to obtain and maintain regulatory approval of our product candidates; | |
| ● | our ability to successfully commercialize and market our product candidates, if approved; | |
| ● | our ability to contract with third-party suppliers, manufacturers and other service providers and their ability to perform adequately; | |
| ● | the potential market size, opportunity, and growth potential for our product candidates, if approved; |
| ● | our ability to obtain additional funding for our operations and development activities; | |
| ● | the accuracy of our estimates regarding expenses, capital requirements and needs for additional financing; | |
| ● | the initiation, timing, progress and results of our pre-clinical studies and clinical trials, and our research and development programs; | |
| ● | the timing of anticipated regulatory filings; | |
| ● | the timing of availability of data from our clinical trials; |
| 10 |
| ● | our future expenses, capital requirements, need for additional financing, and the period over which we believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements; | |
| ● | our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals; | |
| ● | our ability to advance product candidates into, and successfully complete, clinical trials; | |
| ● | our ability to recruit and enroll suitable patients in our clinical trials; | |
| ● | the timing or likelihood of the accomplishment of various scientific, clinical, regulatory, and other product development objectives; |
| ● | the pricing and reimbursement of our product candidates, if approved; | |
| ● | the rate and degree of market acceptance of our product candidates, if approved; | |
| ● | the implementation of our business model and strategic plans for our business, product candidates, and technology; | |
| ● | the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology; | |
| ● | developments relating to our competitors and our industry; | |
| ● | the development of major public health concerns and the future impact of such concerns on our clinical trials, business operations and funding requirements; and | |
| ● | other risks and factors listed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and elsewhere in this Report. |
Given the risks and uncertainties set forth in this Report, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this Report are not guarantees of future performance and our actual results of operations, financial condition, and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements contained in this Report. In addition, even if our results of operations, financial condition and liquidity, and events in the industry in which we operate, are consistent with the forward-looking statements contained in this Report, they may not be predictive of results or developments in future periods. In evaluating our business, you should carefully consider the information set forth under the heading “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 1, 2024.
Any forward-looking statement that we make in this Report speaks only as of the date of such statement. Except as required by federal securities laws, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Report
| 11 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the Condensed Financial Statements and Notes thereto included elsewhere in this Quarterly Report. This discussion contains certain forward-looking statements that involve risks and uncertainties. The Company’s actual results and the timing of certain events could differ materially from those discussed in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth herein and elsewhere in this Quarterly Report and in the Company’s other filings with the SEC. See “Cautionary Note Regarding Forward Looking Statements” above.
As used in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, unless otherwise indicated, the terms “the Company”, “we”, “us”, “our” and similar terminology refer to MIRA Pharmaceuticals, Inc.
Background of the Company
We are a pre-clinical-stage pharmaceutical development company with two neuroscience programs targeting a broad range of neurologic and neuropsychiatric disorders. We hold exclusive license rights in the U.S., Canada and Mexico for Ketamir-2, a novel, patent pending oral ketamine analog under pre-clinical investigation to potentially deliver ultra-rapid antidepressant effects, providing hope for individuals battling TRD, MDSI and potentially PTSD.
Additionally, our novel oral pharmaceutical marijuana molecule, MIRA-55, is being studied for its potential to alleviate neuropathic pain, as well as anxiety and cognitive decline, symptoms commonly associated with early-stage dementia. MIRA-55, if approved by the FDA, could mark a significant advancement in addressing various neuropsychiatric, inflammatory, and neurologic diseases and disorders.
The DEA’s scientific review of Ketamir-2 and MIRA-55 concluded that both would not be considered a controlled substance or listed chemical under the CSA and its governing regulations.
We were incorporated under the laws of the State of Florida in September 2020 and commenced substantive operations, including our pharmaceutical development program, in late 2020.
Critical Accounting Estimates
See Note 1 of the Notes to Condensed Financial Statements included in Item 1 of this Report for a summary of significant accounting policies and information on recently issued accounting pronouncements.
Results of Operations
For the three months ended June 30, 2024 compared to the three months ended June 30, 2024
Research and Development Expenses. During the three months ended June 30, 2024, we incurred $0.6 million in research and development expenses, which were primarily related to initial payments for pre-clinical research projects for Ketamir. We incurred $0.3 million in research and development expenses during the three months ended June 30, 2023, which were offset by $0.4 million in research and development credits. The credits were primarily related to toxicology expenses for projects and milestones that were not performed by our vendors.
General and Administrative Expenses. We incurred $1.1 million and $1.0 million in general and administrative expenses during the three months ended June 30, 2024 and June 30, 2023, respectively. General and administrative expenses are composed primarily of compensation, insurance, professional fees, stock-based compensation, administration and other related costs. The decrease is due primarily to a decrease in stock-based compensation expense in 2023.
Interest income (expense). We earned $0.04 million in interest income related to money market accounts in the three months ended June 30, 2024 and incurred $0.3 million in interest expense during the three months ended June 30, 2023. Interest expense during 2023 included $0.3 million of debt issuance costs.
For the six months ended June 30, 2024 compared to the six months ended June 30, 2023
Research and Development Expenses. During the six months ended June 30, 2024, we incurred $1.4 million in research and development expenses, which were primarily related to the initial payments for pre-clinical research projects for Ketamir. We incurred $0.6 million in research and development expenses during the six months ended June 30, 2023, which were offset by $0.4 million in research and development credits. The credits were primarily related to toxicology expenses for projects and milestones that were not performed by our vendors.
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General and Administrative Expenses. We incurred general and administrative expenses of $2.1 million and $1.7 million during the six months ended June 30, 2024 and June 30, 2023, respectively. General and administrative expenses consists of payroll, consulting fees, IT-related costs, legal and accounting costs, office and rent expenses, investor relations and stock-based compensation expenses. The increase is primarily related to stock compensation expense.
Related Party Travel Costs. We incurred $0.0 million and $0.5 million in related party travel costs during the six months ended June 30, 2024 and June 30, 2023, respectively. Related party travel costs consisted of a lease and use of an airplane with an entity under common control. The decrease in related party travel costs is due to the termination of the lease in March 2023.
Interest income (expense). We recognized $0.09 million in interest income from money market accounts and $0.3 million in interest expense during the six months ended June 30, 2024 and June 30, 2023, respectively. Interest expense during 2023 included $0.3 million of debt issuance costs.
Liquidity and Capital Resources
Sources of Liquidity and Going Concern
Since our inception in September 2020, we have financed our operations primarily through an unsecured line of credit with a major shareholder and an affiliated company, through a private placement of shares of our common stock that occurred during the fourth quarter 2021 and during 2022, and by the proceeds from our completed initial public offering in August 2023. We intend to finance our clinical development programs and working capital needs from existing cash, and potentially new sources of debt and equity financing. We may enter into new licensing and commercial partnership agreements.
Historically, we have been primarily engaged in developing MIRA-55 and, more recently, have also been focusing on the development of Ketamir-2. During these activities, we have sustained substantial losses. Our ability to fund ongoing operations and future pre-clinical and clinical trials required for FDA approval is dependent on our ability to obtain significant additional external funding in the near term. We expect to be able to fund operations through the fourth quarter of 2024, with available borrowings from the related-party loan described in Note 5 in the accompanying financial statements. We will require additional financing and equity raises to fund our operations, to continue and complete pre-clinical and clinical development activities and to commercially develop and ultimately launch our product candidates. However, and particularly given our early-stage nature and the significant time and capital required to implement our business plan, there can be no assurance that any fundraising will be achieved on commercially reasonable terms, if at all.
On August 12, 2024, the Company filed a shelf registration statement on Form S-3 with the SEC. The terms of any offering under the shelf registration statement will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to completion of any such offering
We expect to continue to generate losses in the foreseeable future. Our liquidity needs will be determined largely by the budgeted operational expenditure incurred in regard to the progression of our product candidates. We do not have sufficient cash and cash equivalents as of the date of filing this Report to support our operations for at least the 12 months. These conditions raise substantial doubt about our ability to continue as a going concern through 12 months after the date the financial statements included in this Report are issued.
Cash Flows
The following table provides information regarding our cash flows for the periods presented:
| Six months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Net cash flows from: | ||||||||
| Operating activities | $ | (1,913,465 | ) | $ | (1,736,119 | ) | ||
| Financing activities | 134,690 | 1,409,964 | ||||||
| Net change in cash | $ | (1,788,785 | ) | $ | (326,155 | ) | ||
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Net Cash Flows from Operating Activities
For the six months ended June 30, 2024, operating activities used $1.9 million of cash, primarily due to a net loss of $3.4 million, offset by $1.1 million in stock-based compensation expense and $0.3 million in accounts payable, accrued and prepaid expenses. Accounts payable, accrued and prepaid expenses were primarily composed of research and development payables, consultant costs, and insurance costs.
For the six months ended June 30, 2023, operating activities used $1.7 million of cash, primarily due to a net loss of $2.6 million and $0.2 million change in accounts payable, offset by $0.3 million in debt issuance cost and accrued expenses and $0.9 million in stock-based compensation expense. Accounts payable, accrued and prepaid expenses were primarily composed of research and development payables, consultant costs, insurance costs and legal expenses.
Net Cash Flows from Financing Activities
For the six months ended June 30, 2024, financing activities used $0.1 million of cash, resulting from $0.02 million in advances to affiliates.
For the six months ended June 30, 2023, financing activities provided $1.4 million of cash, resulting primarily from $1.7 million in advances from affiliate, offset by $0.1 million of repayments under related party line of credit, offset by $0.2 million paid in deferred offering costs.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, and therefore are not required to provide the information under this item per Item 305(e) of Regulation S-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report, our management, with the participation of our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer) (the “Certifying Officers”), conducted evaluations of our disclosure controls and procedures. As defined under Sections 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including the Certifying Officers, to allow timely decisions regarding required disclosures.
Readers are cautioned that our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our control have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any control design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
During 2024, the Company has designed and implemented new and enhanced controls to strengthen the Company’s internal controls over financial reporting, including hiring additional experienced accounting personnel, among other enhancements. Management believes these enhancements will be sufficient to remediate previously identified material weaknesses. However, the new and enhanced controls have not operated for a sufficient amount of time to conclude that the Company’s disclosure controls and procedures were effective. Accordingly, based on this assessment , the Certifying Officers have concluded that our disclosure controls and procedures were not effective as of June 30, 2024
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, during our second quarter of 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting other than those described above.
Limitations on the Effectiveness of Internal Controls
Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this Report that our disclosure controls and procedures were not effective to provide reasonable assurance that the objectives of our disclosure control system were met. The Company plans to remediate the ineffectiveness of its disclosure controls and procedures through implementation of additional levels of review and personnel with increased technical accounting expertise.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be named in claims arising in the ordinary course of business. Currently, no legal proceedings, government actions, administrative actions, investigations, or claims are pending against us or involve us that, in the opinion of our management, could reasonably be expected to have a material adverse effect on our business and financial condition.
We anticipate that we will expend significant financial and managerial resources in the defense of our intellectual property rights in the future if we believe that our rights have been violated. We also anticipate that we will expend significant financial and managerial resources to defend against claims that our products and services infringe upon the intellectual property rights of third parties.
Item 1A. Risk Factors.
Our business, financial condition, results of operations and cash flows are subject to, and could be materially adversely affected by, various risks and uncertainties, including, without limitation, those set forth below, any one of which could cause our actual results to vary materially from recent results or our anticipated future results.
We expect to rely on third parties to conduct our pre-clinical trials and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials or failing to comply with regulatory requirements or our pre-clinical protocols.
We currently rely on CROs to conduct our pre-clinical trials, as we currently do not plan to independently conduct pre-clinical trials of any of our product candidates. Our agreements with these CROs, and other third parties might terminate for a variety of reasons, including a failure to perform by the third parties. If we were ever to need to enter into alternative arrangements or if we were to need to change a CRO for an ongoing pre-clinical trial, we might experience delays in our pre-clinical development activities.
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Our reliance on CROs for research and development activities will reduce our control over these activities but will not relieve us of our responsibilities for how these activities are performed. Moreover, the FDA requires compliance with standards, commonly referred to as GCPs, for conducting, recording and reporting the results of pre-clinical trials to assure that data and reported results are credible and accurate. Further, these CROs may have relationships with other entities, some of which may be our peers or competitors. If the CROs with whom we work do not successfully carry out their contractual duties, or meet expected deadlines, for any reason, we may be delayed in filing our IND with our product candidates. Our failure or the failure of these third parties to comply with applicable regulatory requirements could also subject us to enforcement action. Moreover, our business may be implicated if any of these third parties violates federal or state laws, regulations and security laws.
We also currently rely on certain foreign or foreign-owned third-party vendors to conduct certain pre-clinical trials of our product candidates. Our engagement with these foreign and foreign-owned vendors may be subject to new U.S. legislation or investigations, such as the proposed BIOSECURE Act, sanctions, trade restrictions and other foreign regulatory requirements, which could cause us to need to identify alternate service providers, or delay our pre-clinical trials, which could adversely affect our financial condition and business prospects.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
ATM Agreement
On August 12, 2024, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with Rodman & Renshaw LLC (the “Manager”), under which the Company may offer and sell shares of its common stock, par value $0.0001 per share (the “common stock”), having an aggregate offering price of up to $19,268,571, from time to time through the Manager, as the Company’s sales agent. Sales of shares of the Company’s common stock through the Manager, if any, will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, including without limitation sales made directly on the Nasdaq Stock Market LLC or any other existing trading market for the Company’s common stock. The Manager will use commercially reasonable efforts consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations and the rules of the Nasdaq Stock Market LLC to sell shares of the Company’s common stock from time to time, based on instructions from the Company (including any price, time or size limits or other parameters or conditions the Company may impose). The Company will pay the Manager a commission of up to 3.0% of the aggregate gross proceeds from the sales of shares of the Company’s common stock sold through the Manager under the ATM Agreement. The Company also provided the Manager with customary indemnification and contribution rights.
The Company is not obligated sell any shares of its common stock under the ATM Agreement. The offering of shares of the Company’s common stock under the ATM Agreement will terminate upon the earlier of (i) the sale of all shares of common stock pursuant to the prospectus related to the offering of the shares of common stock pursuant to the ATM Agreement filed with the Registration Statement (as defined below) or (ii) termination of the ATM Agreement by the Company or the Manager pursuant to the terms therein.
The foregoing description of the ATM Agreement is not complete and is qualified in its entirety by reference to the full text of the ATM Agreement, a copy of which is filed as an exhibit to this report and is incorporated herein by reference. A copy of the legal opinion of Pearl Cohen Zedek Latzer Baratz LLP, relating to the legality of the shares of common stock that may be issued pursuant to the ATM Agreement was filed as Exhibit 5.1 to the Company’s registration statement on Form S-3 (File No. 333-281467), initially filed with the Securities and Exchange Commission on August 12, 2024 (the “Registration Statement”).
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Item 6. Exhibits.
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SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| MIRA PHARMACEUTICALS, INC. | ||
| Date: August 16, 2024 | By: | /s/ Erez Aminov |
| Erez Aminov | ||
|
Chairmain & Chief Executive Officer (Principal Executive Officer) | ||
| Date: August 16, 2024 | By: | /s/ Michelle Yanez |
Michelle Yanez | ||
Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer) | ||
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