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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the quarterly period ended
September 30,
2022
OR
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
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Commission File Number
001-40360
Mind Medicine (MindMed) Inc.
(Exact name of Registrant as specified in its Charter)
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British Columbia,
Canada
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98-1582538
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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One World Trade Center,
Suite 8500
New York,
New York
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10007
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
(650)
208-2454
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Trading
Symbol(s)
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Name of each exchange on which registered
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Common Shares, no par value per share
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MNMD
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The Nasdaq Stock Market LLC
(The Nasdaq Capital Market)
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes
☒
No
☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes
☒
No
☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☒
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Smaller reporting company
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☐
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Emerging growth company
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☒
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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
October 31, 2022, the registrant had
37,571,139
Common Shares outstanding.
Table of Contents
115405326v4
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking
statements about us and our industry that involve substantial risks
and uncertainties. All statements other than statements of
historical facts contained in this Quarterly Report on Form 10-Q,
including statements regarding our future results of operations or
financial condition, business strategy and plans and objectives of
management for future operations, are forward-looking statements.
In some cases, you can identify forward-looking statements because
they contain words such as “anticipate,” “believe,” “contemplate,”
“continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“potential,” “predict,” “project,” “should,” “target,” “will” or
“would” or the negative of these words or other similar terms or
expressions. These forward-looking statements include, but are not
limited to, statements concerning the following:
•
the timing, progress and results of our investigational MM-120 or a
proprietary, pharmaceutically optimized form of lysergide ("LSD"),
MM-402 or a R(-)-MDMA and MM-110 or zolunicant product candidates
(together, our “lead product candidates”), including statements
regarding the timing of initiation and completion of trials or
studies and related preparatory work, the period during which the
results of the trials will become available and our research and
development programs;
•
our reliance on the success of our investigational MM-120 or LSD
product candidate;
•
the timing, scope or likelihood of regulatory filings and approvals
and ability to obtain and maintain regulatory approvals for product
candidates for any indication;
•
our expectations regarding the size of the eligible patient
populations for our lead product candidates;
•
our ability to identify third-party therapy sites to conduct our
trials and our ability to identify and train appropriately
qualified therapists to administer our treatments;
•
our ability to implement our business model and our strategic plans
for our product candidates;
•
our ability to identify new indications for our lead product
candidates beyond our current primary focuses;
•
our ability to identify, develop or acquire digital technologies to
enhance our administration of our product candidates;
•
our ability to achieve profitability and then sustain such
profitability;
•
our commercialization, marketing and manufacturing capabilities and
strategy;
•
the pricing, coverage and reimbursement of our lead product
candidates, if approved;
•
the rate and degree of market acceptance and clinical utility of
our lead product candidates, in particular, and controlled
substances, in general;
•
future investments in our business, our anticipated capital
expenditures and our estimates regarding our capital
requirements;
•
our ability to establish or maintain collaborations or strategic
relationships or obtain additional funding;
•
our expectations regarding potential benefits of our
investigational lead product candidates and our therapeutic
approach generally;
•
our ability to obtain and maintain effective patent rights and
other intellectual property protection for our product candidates
or any future product candidates, and to prevent competitors from
using technologies we consider important in our successful
development and commercialization of our product
candidates;
•
infringement or alleged infringement on the intellectual properly
rights of third parties;
•
regulatory developments in the United States, under the laws and
regulations of England and Wales, and other
jurisdictions;
•
the effectiveness of our internal control over financial
reporting;
•
the effect of the ongoing and evolving COVID-19 pandemic, including
mitigation efforts and economic effects, on any of the foregoing or
other aspects of our business or operations;
•
our expectations regarding our revenue, expenses and other
operating results;
115405326v4
•
the costs and success of our marketing efforts, and our ability to
promote our brand;
•
our reliance on key personnel and our ability to identify, recruit
and retain skilled personnel;
•
our ability to effectively manage our growth; and
•
our ability to compete effectively with existing competitors and
new market entrants.
You should not rely on forward-looking statements as predictions of
future events. We have based the forward-looking statements
contained in this Quarterly Report on Form 10-Q primarily on our
current expectations and projections about future events and trends
that we believe may affect our business, financial condition and
operating results. The outcome of the events described in these
forward-looking statements is subject to risks, uncertainties and
other factors described in the section titled “Risk Factors”
previously disclosed in Part I, Item 1A. in our Annual Report on
Form 10-K, as filed with the SEC on March 28, 2022 (the "2021
Annual Report") and in Part II, Item 1A in this Quarterly Report on
Form 10-Q. Moreover, we operate in a very competitive and rapidly
changing environment. New risks and uncertainties emerge from time
to time, and it is not possible for us to predict all risks and
uncertainties that could have an impact on the forward-looking
statements contained in this Quarterly Report on Form 10-Q. The
results, events and circumstances reflected in the forward-looking
statements may not be achieved or occur, and actual results, events
or circumstances could differ materially from those described in
the forward-looking statements.
In addition, statements that “we believe” and similar statements
reflect our beliefs and opinions on the relevant subject. These
statements are based on information available to us as of the date
of this Quarterly Report on Form 10-Q. And while we believe that
information provides a reasonable basis for these statements, that
information may be limited or incomplete. Our statements should not
be read to indicate that we have conducted an exhaustive inquiry
into, or review of, all relevant information. These statements are
inherently uncertain, and investors are cautioned not to unduly
rely on these statements.
The forward-looking statements made in this Quarterly Report on
Form 10-Q relate only to events as of the date on which the
statements are made. We undertake no obligation to update any
forward-looking statements made in this Quarterly Report on Form
10-Q to reflect events or circumstances after the date of this
Quarterly Report on Form 10-Q or to reflect new information or the
occurrence of unanticipated events, except as required by law. We
may not actually achieve the plans, intentions or expectations
disclosed in our forward-looking statements, and you should not
place undue reliance on our forward-looking statements. Our
forward-looking statements do not reflect the potential impact of
any future acquisitions, mergers, dispositions, joint ventures or
investments.
We may announce material business and financial information to our
investors using our investor relations website
(https://mindmed.co/investor-resources/). We therefore encourage
investors and others interested in our company to review the
information that we make available on our website. Our website and
information included in or linked to our website are not part of
this Quarterly Report on Form 10-Q.
115405326v4
PART
I—FINANCIAL INFORMATION
Item 1. Financial
Statements.
Mind Medicine (MindMed) Inc.
Condensed
Consolidated Balance Sheets
(In thousands, except share amounts)
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September 30, 2022
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December 31, 2021
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(unaudited)
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Assets
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Current assets:
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Cash and cash equivalents
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$
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154,519
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$
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133,539
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Prepaid and other current assets
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1,826
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3,676
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Right of use asset
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165
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—
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Total current assets
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156,510
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137,215
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Goodwill
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19,918
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19,918
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Intangible assets, net
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4,479
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6,869
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Total assets
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$
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180,907
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$
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164,002
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Liabilities and Shareholders’ Equity
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Current liabilities:
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Accounts payable
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$
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824
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$
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4,178
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Accrued expenses
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7,467
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6,230
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2022 USD Financing Warrants
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17,747
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—
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Total current liabilities
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26,038
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10,408
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Other liabilities, long-term
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1,276
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1,930
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Total liabilities
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27,314
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12,338
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Commitments and contingencies (Note
11)
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Shareholders' Equity:
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Common shares,
no par
value,
unlimited authorized
as of September 30, 2022 and December 31, 2021;
37,541,115 and
28,126,414 issued
and outstanding as of September 30, 2022 and December 31, 2021,
respectively
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—
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—
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Additional paid-in capital
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342,415
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288,290
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Accumulated other comprehensive (loss)/income
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743
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1,046
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Accumulated deficit
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(189,565
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)
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(137,672
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)
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Total shareholders' equity
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153,593
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151,664
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Total liabilities and shareholders' equity
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$
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180,907
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$
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164,002
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See accompanying notes to unaudited condensed consolidated
financial statements.
4
Mind Medicine (MindMed) Inc.
Condensed Consolidated Statements of Operations and
Comprehensive
Loss
(Unaudited)
(In thousands, except share and per share amounts)
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Three Months
Ended September 30,
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Nine Months
Ended September 30,
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2022
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2021
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2022
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2021
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Operating expenses:
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Research and development
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$
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7,772
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$
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9,019
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$
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27,339
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$
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23,906
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General and administrative
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9,211
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8,208
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25,092
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52,390
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Total operating expenses
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16,983
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17,227
|
|
|
|
52,431
|
|
|
|
76,296
|
|
|
Loss from operations
|
|
|
(16,983
|
)
|
|
|
(17,227
|
)
|
|
|
(52,431
|
)
|
|
|
(76,296
|
)
|
|
Other income/(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income/(expense), net
|
|
|
360
|
|
|
|
(64
|
)
|
|
|
443
|
|
|
|
(220
|
)
|
|
Foreign exchange gain/(loss), net
|
|
|
138
|
|
|
|
(40
|
)
|
|
|
94
|
|
|
|
94
|
|
|
Other income
|
|
|
—
|
|
|
|
135
|
|
|
|
1
|
|
|
|
215
|
|
|
Total other income
|
|
|
498
|
|
|
|
31
|
|
|
|
538
|
|
|
|
89
|
|
|
Loss before income taxes
|
|
|
(16,485
|
)
|
|
|
(17,196
|
)
|
|
|
(51,893
|
)
|
|
|
(76,207
|
)
|
|
Income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net loss
|
|
|
(16,485
|
)
|
|
|
(17,196
|
)
|
|
|
(51,893
|
)
|
|
|
(76,207
|
)
|
|
Other comprehensive gain/(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/gain on foreign currency translation
|
|
|
(107
|
)
|
|
|
(383
|
)
|
|
|
(303
|
)
|
|
|
380
|
|
|
Comprehensive loss
|
|
$
|
(16,592
|
)
|
|
$
|
(17,579
|
)
|
|
$
|
(52,196
|
)
|
|
$
|
(75,827
|
)
|
|
Net loss per common share, basic and diluted
|
|
$
|
(0.56
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(1.82
|
)
|
|
$
|
(2.81
|
)
|
|
Weighted-average common shares, basic and diluted
|
|
|
29,296,333
|
|
|
|
28,013,809
|
|
|
|
28,566,161
|
|
|
|
27,124,297
|
|
See accompanying notes to unaudited condensed consolidated
financial statements.
5
Mind Medicine (MindMed) Inc.
Condensed Consolidated Statements of
Shareholders’ Equity
(Unaudited)
(In thousands, except share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Additional Paid-In Capital
|
|
|
Accumulated OCI
|
|
|
Accumulated Deficit
|
|
|
Total
|
|
|
Balance, December 31, 2021
|
|
|
28,126,414
|
|
|
$
|
—
|
|
|
$
|
288,290
|
|
|
$
|
1,046
|
|
|
$
|
(137,672
|
)
|
|
$
|
151,664
|
|
|
Issuance of common shares and warrants net of share issuance
costs
|
|
|
9,014,371
|
|
|
|
—
|
|
|
|
41,350
|
|
|
|
—
|
|
|
|
—
|
|
|
|
41,350
|
|
|
Exercise of warrants
|
|
|
76,021
|
|
|
|
—
|
|
|
|
708
|
|
|
|
—
|
|
|
|
—
|
|
|
|
708
|
|
|
Exercise of stock options
|
|
|
38,276
|
|
|
|
—
|
|
|
|
206
|
|
|
|
—
|
|
|
|
—
|
|
|
|
206
|
|
|
Settlement of restricted share unit awards
|
|
|
286,033
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Withholding taxes paid on vested restricted share units
|
|
|
—
|
|
|
|
—
|
|
|
|
(407
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(407
|
)
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
12,268
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,268
|
|
|
Net loss and comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(303
|
)
|
|
|
(51,893
|
)
|
|
|
(52,196
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2022
|
|
|
37,541,115
|
|
|
$
|
—
|
|
|
$
|
342,415
|
|
|
$
|
743
|
|
|
$
|
(189,565
|
)
|
|
$
|
153,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020
|
|
|
24,075,677
|
|
|
$
|
—
|
|
|
$
|
120,220
|
|
|
$
|
284
|
|
|
$
|
(44,636
|
)
|
|
$
|
75,868
|
|
|
Issuance of common shares for vested director
compensation
|
|
|
119,016
|
|
|
|
—
|
|
|
|
190
|
|
|
|
—
|
|
|
|
—
|
|
|
|
190
|
|
|
Vesting of restricted stock units
|
|
|
117,079
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Issuance of common shares and warrants net of share issuance
costs
|
|
|
1,795,333
|
|
|
|
—
|
|
|
|
81,924
|
|
|
|
—
|
|
|
|
—
|
|
|
|
81,924
|
|
|
HealthMode acquisition
|
|
|
543,313
|
|
|
|
—
|
|
|
|
27,159
|
|
|
|
—
|
|
|
|
—
|
|
|
|
27,159
|
|
|
Exercise of warrants
|
|
|
533,645
|
|
|
|
—
|
|
|
|
11,185
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11,185
|
|
|
Exercise of stock options
|
|
|
796,093
|
|
|
|
—
|
|
|
|
5,588
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,588
|
|
|
Share-based settlement payment
|
|
|
100,000
|
|
|
|
—
|
|
|
|
4,869
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,869
|
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
33,315
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33,315
|
|
|
Net loss and comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
380
|
|
|
|
(76,207
|
)
|
|
|
(75,827
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2021
|
|
|
28,080,156
|
|
|
$
|
—
|
|
|
$
|
284,450
|
|
|
$
|
664
|
|
|
$
|
(120,843
|
)
|
|
$
|
164,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to unaudited condensed consolidated
financial statements.
6
Mind Medicine (MindMed) Inc.
Condensed Consolidated Statements of Shareholders’
Equity
(Unaudited)
(In thousands, except share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Additional Paid-In Capital
|
|
|
Accumulated OCI
|
|
|
Accumulated Deficit
|
|
|
Total
|
|
|
Balance, June 30, 2022
|
|
|
28,445,948
|
|
|
$
|
—
|
|
|
$
|
296,734
|
|
|
$
|
850
|
|
|
$
|
(173,080
|
)
|
|
$
|
124,504
|
|
|
Issuance of common shares and warrants, net of issuance
cost
|
|
|
9,014,371
|
|
|
|
—
|
|
|
|
41,350
|
|
|
|
—
|
|
|
|
—
|
|
|
|
41,350
|
|
|
Exercise of stock options
|
|
|
8,762
|
|
|
|
—
|
|
|
|
42
|
|
|
|
—
|
|
|
|
—
|
|
|
|
42
|
|
|
Settlement of restricted share unit awards
|
|
|
72,034
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
4,289
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,289
|
|
|
Net loss and comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(107
|
)
|
|
|
(16,485
|
)
|
|
|
(16,592
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2022
|
|
|
37,541,115
|
|
|
$
|
—
|
|
|
$
|
342,415
|
|
|
$
|
743
|
|
|
$
|
(189,565
|
)
|
|
$
|
153,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2021
|
|
|
27,820,905
|
|
|
$
|
—
|
|
|
$
|
274,233
|
|
|
$
|
1,047
|
|
|
$
|
(103,647
|
)
|
|
$
|
171,633
|
|
|
Issuance of common shares for vested director
compensation
|
|
|
36,024
|
|
|
|
—
|
|
|
|
57
|
|
|
|
—
|
|
|
|
—
|
|
|
|
57
|
|
|
Vesting of restricted stock units
|
|
|
972
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Issuance of share capital net of share issuance costs
|
|
|
—
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
Exercise of warrants
|
|
|
48,033
|
|
|
|
—
|
|
|
|
509
|
|
|
|
—
|
|
|
|
—
|
|
|
|
509
|
|
|
Exercise of stock options
|
|
|
74,222
|
|
|
|
—
|
|
|
|
315
|
|
|
|
—
|
|
|
|
—
|
|
|
|
315
|
|
|
Share-based settlement payment
|
|
|
100,000
|
|
|
|
—
|
|
|
|
4,869
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,869
|
|
|
Stock-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
4,471
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,471
|
|
|
Net loss and comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(383
|
)
|
|
|
(17,196
|
)
|
|
|
(17,579
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2021
|
|
|
28,080,156
|
|
|
$
|
—
|
|
|
$
|
284,450
|
|
|
$
|
664
|
|
|
$
|
(120,843
|
)
|
|
$
|
164,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to unaudited condensed consolidated
financial statements.
7
Mind Medicine (MindMed) Inc.
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended September 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(51,893
|
)
|
|
$
|
(76,207
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
12,331
|
|
|
|
38,373
|
|
|
Amortization of intangible assets
|
|
|
2,390
|
|
|
|
1,828
|
|
|
Non-cash lease expense
|
|
|
30
|
|
|
|
—
|
|
|
Issuance costs on liability classified warrants
|
|
|
1,500
|
|
|
|
—
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Prepaid and other current assets
|
|
|
1,837
|
|
|
|
927
|
|
|
Accounts payable
|
|
|
(3,329
|
)
|
|
|
634
|
|
|
Accrued expenses
|
|
|
622
|
|
|
|
(2,891
|
)
|
|
Contribution payable
|
|
|
(778
|
)
|
|
|
(655
|
)
|
|
Net cash used in operating activities
|
|
|
(37,290
|
)
|
|
|
(37,991
|
)
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
Acquisition, net of cash acquired
|
|
|
—
|
|
|
|
(297
|
)
|
|
Other investing activities
|
|
|
—
|
|
|
|
(113
|
)
|
|
Net cash used in financing activities
|
|
|
—
|
|
|
|
(410
|
)
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
Proceeds from issuance of common shares, net of issuance
costs
|
|
|
41,567
|
|
|
|
81,924
|
|
|
Proceeds from issuance of 2022 USD Financing Warrants
|
|
|
17,747
|
|
|
|
—
|
|
|
Payment of 2022 USD Financing Warrants issuance costs
|
|
|
(1,186
|
)
|
|
|
—
|
|
|
Proceeds from exercise of warrants
|
|
|
708
|
|
|
|
11,185
|
|
|
Proceeds from exercise of options
|
|
|
206
|
|
|
|
5,588
|
|
|
Withholding taxes paid on vested restricted stock units
|
|
|
(407
|
)
|
|
|
—
|
|
|
Net cash provided by financing activities
|
|
|
58,635
|
|
|
|
98,697
|
|
|
Effect of exchange rate changes on cash and cash
equivalents
|
|
|
(365
|
)
|
|
|
5,529
|
|
|
Net increase in cash and cash equivalents
|
|
|
20,980
|
|
|
|
65,825
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
133,539
|
|
|
|
80,094
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
154,519
|
|
|
$
|
145,919
|
|
|
|
|
|
|
|
|
|
|
Supplemental Noncash Disclosures
|
|
|
|
|
|
|
|
Unpaid issuance cost for common shares
|
|
$
|
217
|
|
|
|
—
|
|
|
Unpaid issuance cost for 2022 USD Financing Warrants
|
|
$
|
314
|
|
|
|
—
|
|
|
Right-of-use assets obtained in exchange of operating lease
liabilities
|
|
$
|
194
|
|
|
|
—
|
|
See accompanying notes to unaudited condensed consolidated
financial statements.
8
Mind Medicine (MindMed) Inc.
Notes to Unaudited Condensed Consolidated Financial
Statements
(In thousands, except share and per share amounts)
1.
DESCRIPTION OF THE BUSINESS
Mind Medicine (MindMed) Inc. (formerly Broadway Gold Mining Ltd.)
(the “Company” or “MindMed”) is incorporated under the laws of the
Province of British Columbia. Its wholly owned subsidiaries, Mind
Medicine, Inc. (“MindMed US”), HealthMode, Inc., MindMed Pty Ltd.,
and MindMed GmbH, are incorporated in Delaware, Delaware, Australia
and Switzerland respectively. Prior to February 27, 2020, the
Company’s operations were conducted through MindMed US.
MindMed US was incorporated on May 30, 2019. On February 27, 2020,
MindMed US completed a reverse takeover transaction with Broadway
Gold Mining Ltd. (“Broadway”) by way of a plan of arrangement (the
“Arrangement”) which resulted in Broadway becoming the legal parent
company of MindMed US. MindMed US is deemed to be the accounting
acquirer in the reverse takeover transaction. The reverse takeover
transaction was accounted for as a reverse recapitalization and
Broadway was treated as the “acquired” company for accounting
purposes. The reverse takeover transaction was accounted as the
equivalent of MindMed issuing stock for the net assets of Broadway,
accompanied by a recapitalization. Accordingly, all historical
financial information for all periods prior to the reverse takeover
transaction are the consolidated financial statements of MindMed
US, “as if” MindMed US is the predecessor to the Company. As a
result, the consolidated balance sheets are presented as a
continuance of MindMed US and the comparative figures presented are
those of MindMed US.
MindMed is a clinical stage biopharmaceutical company developing
novel products to treat brain health disorders. The Company's
mission is to be the global leader in the development and delivery
of treatments that unlock new opportunities to improve patient
outcomes. The Company is developing a pipeline of innovative
product candidates, with and without acute perceptual effects,
targeting the serotonin, dopamine and acetylcholine systems. This
specifically includes pharmaceutically optimized drug products
derived from the psychedelic and empathogen drug classes including
LSD, R(-)-MDMA and zolunicant, or 18-MC, a congener of
ibogaine.
As of September 30, 2022, the Company had an accumulated
deficit
of $189.6
million. Through
September 30, 2022, all the Company’s financial support has
primarily been provided by proceeds from the issuance of Common
Shares and warrants to purchase Common Shares.
As the Company continues its expansion, it may seek additional
financing and/or strategic investments however, there can be no
assurance that any additional financing or strategic investments
will be available to the Company on acceptable terms, if at all. If
events or circumstances occur such that the Company does not obtain
additional funding, it will most likely be required to reduce its
plans and/or certain discretionary spending, which could have a
material adverse effect on the Company’s ability to achieve its
intended business objectives. The accompanying condensed
consolidated financial statements do not include any adjustments
that might be necessary if it were unable to continue as a going
concern. Management believes that it has sufficient working capital
on hand to fund operations through at least the next twelve months
from the date of the issuance of these financial
statements.
COVID-19
To the knowledge of the Company’s management as of the date hereof,
COVID-19 does not present, at this time, any specific known impacts
to the Company in relation to the Company's business objectives or
milestones related thereto. The Company relies on third parties to
conduct and monitor the Company’s pre-clinical studies and clinical
trials. However, to the knowledge of Company’s management, the
ability of these third parties to conduct and monitor pre-clinical
studies and clinical trials has not been and is not anticipated to
be impacted by COVID-19. The Company is not currently aware of any
changes in laws, regulations or guidelines, including tax and
accounting requirements, arising from COVID-19 which would be
reasonably anticipated to materially affect the Company’s
business.
Emerging Growth Company Status
The
Company is an emerging growth company, as defined in the Jumpstart
Our Business Startups Act of 2012 (the "JOBS Act"). Under the JOBS
Act, emerging growth companies can delay adopting new or revised
accounting standards issued subsequent to the enactment of the JOBS
Act until such time as those standards apply to private companies.
The Company has elected to use the extended transition period for
complying with new or revised accounting standards, and as a result
of this election, the condensed
9
consolidated
financial statements may not be comparable to companies that comply
with public company FASB standards’ effective dates. The Company
may take advantage of these exemptions up until the last day of the
fiscal year following the fifth anniversary of an offering or such
earlier time that it is no longer an EGC.
2.
BASIS OF pRESENTATION AND Summary of Significant Accounting
Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements should be read in conjunction with the audited financial
statements and the related notes thereto for the year ended
December 31, 2021, which are included in the Company’s 2021 Annual
Report. The Company’s significant accounting policies are disclosed
in the audited financial statements for the periods ended December
31, 2021 and 2020, included in the Company’s 2021 Annual Report.
Since the date of those financial statements, there have been no
changes to its significant accounting policies, except as noted
below.
The accompanying condensed consolidated financial statements have
been prepared in conformity with generally accepted accounting
principles in the United States of America (“U.S. GAAP”). Any
reference in these notes to applicable guidance is meant to refer
to the authoritative U.S. GAAP as found in the Accounting Standards
Codification (“ASC”) and as amended by Accounting Standards Updates
of the Financial Accounting Standards Board (“FASB”).
The preparation of financial statements in conformity with U.S.
GAAP requires management to make a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities at the dates of
the financial statements and the reported amounts of expenses
during the reporting periods. Actual results could differ from
those estimates under different assumptions or
conditions.
Intercompany balances and transactions, and any unrealized income
and expenses arising from intercompany transactions, are eliminated
in preparing the condensed consolidated financial
statements.
The
Company’s Board approved a reverse share split of the Company’s
Common Shares on a 15-for-1 basis, which was effected on August 26,
2022
and which brought the bid price of the Company’s Common Shares
above the minimum bid price requirement under the Nasdaq Listing
Rules. No fractional Common Shares were issued as a result of the
August Share Split. Each fractional Common Share remaining upon the
August Share Split that was less than
1/2
of a Common Share was cancelled and each fractional Common Share
that was at least
1/2
of a Common Share was changed to one whole Common Share. The August
Share Split affected all Common Shares outstanding immediately
prior to the effective time of the August Share Split, as well as
the number of Common Shares available under the Company’s stock
option plan and equity incentive plan. In addition, the August
Share Split effected a reduction in the number of Common Shares
issuable upon exercise of stock options, vesting of Restricted
Share Units and exercise of warrants outstanding immediately prior
to the effectiveness of the August Share Split.
All references to Common Shares, options to purchase Common Shares,
share data, per share data, and related information contained in
this report have been retrospectively adjusted to reflect the
effect of the August Share Split for all periods
presented.
Foreign Currency
The Company’s reporting currency is the U.S. dollar. The Company's
functional currency is the Canadian dollar (“CAD”).
The local currency of the Company’s foreign affiliates is generally
their functional currency. Accordingly, the assets and liabilities
of the foreign affiliates and the parent entity, are translated
from their respective functional currency to U.S. dollars using
fiscal year-end exchange rates, income and expense accounts are
translated at the average rates in effect during the fiscal year
and equity accounts are translated at historical rates.
Transactions denominated in currencies other than the functional
currency are remeasured to the functional currency at the exchange
rate on the transaction date. Monetary assets and liabilities
denominated in currencies other than the functional currency are
remeasured at period-end using the period-end exchange
rate.
Cash and Cash Equivalents
The Company considers all investments with an original maturity
date at the time of purchase of three months or less to be cash and
cash equivalents. Cash equivalents consist primarily of money
market funds. The Company’s accounts, at times, may exceed
federally insured limits. The Company had cash equivalents of
$140.6
million as of September 30, 2022, and
no
cash equivalents as of December 31, 2021.
10
2022 USD Financing Warrants
The 2022 USD Financing Warrants are liability classified due to
being denominated in USD and not the Company's functional currency.
Accordingly, the 2022 USD Financing Warrants are recognized at fair
value upon issuance and are adjusted to fair value at the end of
each reporting period. Any change in fair value is recognized in
general and administrative expense on the condensed consolidated
statements of operations. Issuance costs related to warrants were
expensed within general and
administrative expense on the condensed consolidated statements of
operations.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the
Financial Accounting Standards Board (“FASB”) or other standard
setting bodies and adopted by the Company as of the specified
effective date. Unless otherwise discussed, the impact of recently
issued standards that are not yet effective will not have a
material impact on the Company’s financial position, results of
operations, or cash flows upon adoption.
In February 2016, the FASB issued Accounting Standards Update
(“ASU”) No. 2016-02,
Leases (Topic 842),
which requires lessees to recognize the following for all leases
(with the exception of short-term leases) at the commencement date:
a lease liability, which is a lessee’s obligation to make lease
payments arising from a lease, measured on a discounted basis; and
a right-of-use asset, which is an asset that represents the
lessee’s right to use, or control the use of, a specified asset for
the lease term. In July 2018, the FASB issued ASU 2018-11 to amend
certain aspects of Topic 842. These amendments provide entities
with an additional (and optional) transition method to adopt Topic
842. Under this transition method, an entity initially applies the
transition requirements in Topic 842 at that Topic’s effective date
with the effects of initially applying Topic 842 recognized as a
cumulative effect adjustment to the opening balance of retained
earnings (or other components of equity or net assets, as
appropriate) in the period of adoption. On April 8, 2020, the FASB
changed the effective date of this standard applicable to the
Company as an emerging growth company to January 1,
2022.
The Company
adopted
this standard effective
January 1, 2022,
the adoption had
no
impact on the consolidated financial statements.
HealthMode Acquisition
On
February 26, 2021
the Company acquired
100%
of the issued and outstanding shares of HealthMode Inc.
(“HealthMode”), a developer of technologies using Artificial
Intelligence (AI)-enabled digital measurement to increase the
precision and speed of clinical research and patient monitoring.
The Company plans to utilize these technologies in its clinical
trials to enhance the quality of the data that is collected during
the Company’s clinical trials.
The consideration paid for the acquisition of HealthMode was
$27.6
million, and consisted of $0.5
million cash,
5,433
Multiple Voting Shares (equivalent to
543,313
Common Shares), valued at approximately $27.0
million based upon the closing price of the Company's Common Shares
on the acquisition date, and $0.1
million in stock options (2,241
stock options), which are convertible into Common Shares of the
Company.
The Company incurred acquisition costs of $0.3
million in connection with the acquisition, primarily related to
legal, accounting, and other professional services, which were
recorded to general and administrative expense in the accompanying
condensed consolidated statements of operations and comprehensive
loss for the nine months ended September 30, 2021.
The Company recognized this transaction as a business combination.
The Company recognized approximately $9.5
million of identifiable finite-lived intangible assets and
$19.9
million of goodwill related to the acquisition of HealthMode. The
identifiable finite-lived intangible assets are expected to be
amortized over their useful lives which are estimated to be
three years.
The Company did
not
make adjustments to the purchase price during the measurement
period.
Actual and pro forma results for this acquisition have not been
presented as the financial impact to the Company’s condensed
consolidated statement of operations is not material.
The goodwill is attributable to the value of the assembled
workforce, and the related expertise and developed business
function. Further, the acquisition is expected to allow the Company
to streamline its product development processes.
None
of the goodwill is expected to be deductible for tax
purposes.
11
4.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents information about the Company’s assets
and liabilities measured at fair value on a recurring basis as of
September 30, 2022 and the fair value hierarchy of the valuation
techniques utilized.
The Company classifies its assets and liabilities as either short-
or long-term based on maturity and anticipated realization dates.
The Company had
no
assets measured at fair value on a recurring basis as of December
31, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents
|
|
$
|
140,563
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
140,563
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors' Deferred Share Unit Liability
|
|
$
|
142
|
|
|