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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2024

OR

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

For the transition period from to

Commission File Number 001-40360

Mind Medicine (MindMed) Inc.

(Exact name of Registrant as specified in its Charter)

British Columbia, Canada

98-1582438

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

One World Trade Center, Suite 8500

New York, New York

10007

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (212) 220-6633

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Shares, no par value per share

 

MNMD

 

The Nasdaq Stock Market LLC

(The Nasdaq Global Select Market)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

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

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

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

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

As of July 24, 2024, the registrant had 72,144,970 Common Shares outstanding.

 


 

Table of Contents

 

Page

PART I

FINANCIAL INFORMATION

4

Item 1.

Financial Statements

4

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

5

 

Condensed Consolidated Statements of Shareholders' Equity

6

 

Condensed Consolidated Statements of Cash Flows

7

 

Notes to Condensed Consolidated Financial Statements

8

Item 2.

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

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

29

 

PART II

OTHER INFORMATION

30

 

 

 

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

Item 3.

Defaults Upon Senior Securities

31

Item 4.

Mine Safety Disclosures

31

Item 5.

Other Information

31

Item 6.

Exhibits

32

Signatures

 

33

 

 

 


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) 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, 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 programs for MM120, a proprietary, pharmaceutically optimized form of lysergide D-tartrate, MM402, also referred to as R(-)-MDMA (together, our “lead product candidates”) and any other product candidates (together with our lead product candidates, our “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 MM120 product candidate;
our expectations regarding our cash runway;
the protocols and timing of the initiation and availability of data from our proposed Phase 3 clinical program for MM120 orally disintegrating tablet in generalized anxiety disorder (“GAD”);
the protocol and timing of the initiation and availability of data from our proposed Phase 3 clinical program for MM120 in major depressive disorder (“MDD”);
the timing, scope or likelihood of regulatory filings and approvals and our 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 treatment sites to conduct our trials and our ability to identify and train appropriate qualified healthcare practitioners (“HCPs”) 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, if they should become approved and commercialized;
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 and commercialized;
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 to obtain additional funding;
our expectations regarding potential benefits of our lead product candidates;
our ability to maintain effective patent rights and other intellectual property protection for our 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 property rights of third parties;
legislative and regulatory developments in the United States, including individual states, Canada, the United Kingdom, and other jurisdictions;
the effectiveness of our internal control over financial reporting;
actions of activist shareholders against us have been and could be disruptive and costly and may result in litigation and have an adverse effect on our business and stock price;

 

 


 

the impact of adverse global economic conditions, including public health crises (such as the COVID-19 pandemic), geopolitical conflicts, fluctuations in interest rates, supply-chain disruptions and inflation, on our financial condition and operations;
our Loan Agreement (as defined herein) contains certain covenants that could adversely affect our operations and, if an event of default were to occur, we could be forced to repay any outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation;
our expectations regarding our revenue, expenses and other operating results;
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 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 U.S. Securities and Exchange Commission ("SEC") on February 28, 2024 (the “2023 Annual Report”) and in Part II, Item 1A in this Quarterly Report. 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. 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. 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 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 to reflect events or circumstances after the date of this Quarterly Report 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://ir.mindmed.co/). We therefore encourage investors and others interested in our company to review the information that we make available on our website, in addition to following our filings with the SEC, webcasts, press releases and conference calls. Our website and information included in or linked to our website are not part of this Quarterly Report. Unless otherwise noted or the context indicates otherwise, references in this Quarterly Report to the “Company,” “MindMed,” “we,” “us,” and “our” refer to Mind Medicine (MindMed) Inc. and its consolidated subsidiaries.

 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

 

Mind Medicine (MindMed) Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)

 

 

June 30, 2024
(unaudited)

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

243,132

 

 

$

99,704

 

Prepaid and other current assets

 

 

4,561

 

 

 

4,168

 

Total current assets

 

 

247,693

 

 

 

103,872

 

Goodwill

 

 

19,918

 

 

 

19,918

 

Intangible assets, net

 

 

 

 

 

527

 

Other non-current assets

 

 

534

 

 

 

224

 

Total assets

 

$

268,145

 

 

$

124,541

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,936

 

 

$

4,136

 

Accrued expenses

 

 

8,231

 

 

 

11,634

 

2022 USD Financing Warrants

 

 

30,680

 

 

 

16,476

 

Total current liabilities

 

 

41,847

 

 

 

32,246

 

Credit facility, long-term

 

 

24,251

 

 

 

14,129

 

Other liabilities, long-term

 

 

 

 

 

32

 

Total liabilities

 

 

66,098

 

 

 

46,407

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

 

 

Common shares, no par value, unlimited authorized as of June 30, 2024 and December 31, 2023; 72,075,076 and 41,101,303 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

551,668

 

 

 

367,991

 

Accumulated other comprehensive income

 

 

833

 

 

 

343

 

Accumulated deficit

 

 

(350,454

)

 

 

(290,200

)

Total shareholders' equity

 

 

202,047

 

 

 

78,134

 

Total liabilities and shareholders' equity

 

$

268,145

 

 

$

124,541

 

 

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)

 

 

Three Months
Ended June 30,

 

 

Six Months
Ended June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

14,645

 

 

$

14,777

 

 

$

26,350

 

 

$

27,375

 

General and administrative

 

 

9,813

 

 

 

14,407

 

 

 

20,312

 

 

 

22,670

 

Total operating expenses

 

 

24,458

 

 

 

29,184

 

 

 

46,662

 

 

 

50,045

 

Loss from operations

 

 

(24,458

)

 

 

(29,184

)

 

 

(46,662

)

 

 

(50,045

)

Other income/(expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

3,116

 

 

 

1,388

 

 

 

4,772

 

 

 

2,748

 

Interest expense

 

 

(466

)

 

 

(77

)

 

 

(900

)

 

 

(153

)

Foreign exchange gain/(loss), net

 

 

(32

)

 

 

247

 

 

 

(557

)

 

 

195

 

Change in fair value of 2022 USD Financing Warrants

 

 

13,445

 

 

 

(1,504

)

 

 

(19,448

)

 

 

(6,690

)

Gain on extinguishment of contribution payable

 

 

2,541

 

 

 

 

 

 

2,541

 

 

 

 

Total other income/(expense), net

 

 

18,604

 

 

 

54

 

 

 

(13,592

)

 

 

(3,900

)

Net loss

 

 

(5,854

)

 

 

(29,130

)

 

 

(60,254

)

 

 

(53,945

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

Gain/(loss) on foreign currency translation

 

 

(3

)

 

 

(279

)

 

 

490

 

 

 

(265

)

Comprehensive loss

 

$

(5,857

)

 

$

(29,409

)

 

$

(59,764

)

 

$

(54,210

)

Net loss per common share, basic

 

$

(0.08

)

 

$

(0.76

)

 

$

(1.01

)

 

$

(1.41

)

Net loss per common share, diluted

 

$

(0.26

)

 

$

(0.76

)

 

$

(1.01

)

 

$

(1.41

)

Weighted-average common shares, basic

 

 

71,912,323

 

 

 

38,576,394

 

 

 

59,886,540

 

 

 

38,329,919

 

Weighted-average common shares, diluted

 

 

75,304,101

 

 

 

38,576,394

 

 

 

59,886,540

 

 

 

38,329,919

 

 

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, 2023

 

 

41,101,303

 

 

$

 

 

$

367,991

 

 

$

343

 

 

$

(290,200

)

 

$

78,134

 

Issuance of common shares, net of share issuance costs

 

 

29,338,553

 

 

 

 

 

 

164,298

 

 

 

 

 

 

 

 

 

164,298

 

Issuance of common shares upon settlement of restricted share unit awards, net of shares withheld for tax

 

 

444,802

 

 

 

 

 

 

(54

)

 

 

 

 

 

 

 

 

(54

)

Exercise of 2022 USD Financing Warrants

 

 

1,042,523

 

 

 

 

 

 

9,675

 

 

 

 

 

 

 

 

 

9,675

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

9,119

 

 

 

 

 

 

 

 

 

9,119

 

Exercise of stock options

 

 

147,895

 

 

 

 

 

 

639

 

 

 

 

 

 

 

 

 

639

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

490

 

 

 

(60,254

)

 

 

(59,764

)

Balance, June 30, 2024

 

 

72,075,076

 

 

$

 

 

$

551,668

 

 

$

833

 

 

$

(350,454

)

 

$

202,047

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2022

 

 

37,979,136

 

 

$

 

 

$

344,758

 

 

$

627

 

 

$

(194,468

)

 

$

150,917

 

Issuance of common shares, net of share issuance costs

 

 

601,898

 

 

 

 

 

 

1,857

 

 

 

 

 

 

 

 

 

1,857

 

Settlement of restricted share unit awards

 

 

226,125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

7,408

 

 

 

 

 

 

 

 

 

7,408

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(265

)

 

 

(53,945

)

 

 

(54,210

)

Balance, June 30, 2023

 

 

38,807,159

 

 

$

 

 

$

354,023

 

 

$

362

 

 

$

(248,413

)

 

$

105,972

 

 

 

Common Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional Paid-In Capital

 

 

Accumulated OCI

 

 

Accumulated Deficit

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2024

 

 

71,163,720

 

 

$

 

 

$

539,823

 

 

$

836

 

 

$

(344,600

)

 

$

196,059

 

Issuance of common shares upon settlement of restricted share unit awards, net of shares withheld for tax

 

 

239,834

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of 2022 USD Financing Warrants

 

 

642,523

 

 

 

 

 

 

6,306

 

 

 

 

 

 

 

 

 

6,306

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

5,430

 

 

 

 

 

 

 

 

 

5,430

 

Exercise of stock options

 

 

28,999

 

 

 

 

 

 

109

 

 

 

 

 

 

 

 

 

109

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

(5,854

)

 

 

(5,857

)

Balance June 30, 2024

 

 

72,075,076

 

 

 

 

 

 

551,668

 

 

 

833

 

 

 

(350,454

)

 

 

202,047

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2023

 

 

38,290,111

 

 

$

 

 

$

348,986

 

 

$

641

 

 

$

(219,283

)

 

$

130,344

 

Issuance of common shares, net of share issuance costs

 

 

403,785

 

 

 

 

 

 

1,274

 

 

 

 

 

 

 

 

 

1,274

 

Settlement of restricted share unit awards

 

 

113,263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,763

 

 

 

 

 

 

 

 

 

3,763

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(279

)

 

 

(29,130

)

 

 

(29,409

)

Balance, June 30, 2023

 

 

38,807,159

 

 

$

 

 

$

354,023

 

 

$

362

 

 

$

(248,413

)

 

$

105,972

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

6


 

Mind Medicine (MindMed) Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

Six Months
Ended June 30,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(60,254

)

 

$

(53,945

)

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

 

 

 

 

 

 

Stock-based compensation

 

 

9,698

 

 

 

7,592

 

Amortization of intangible assets

 

 

527

 

 

 

1,581

 

Change in fair value of 2022 USD Financing Warrants

 

 

19,448

 

 

 

6,690

 

Gain on extinguishment of contribution payable

 

 

(2,541

)

 

 

 

Unrealized foreign exchange

 

 

510

 

 

 

(337

)

Other non-cash adjustments

 

 

152

 

 

 

28

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid and other current assets

 

 

(1,019

)

 

 

1,017

 

Other noncurrent assets

 

 

90

 

 

 

35

 

Accounts payable

 

 

(1,453

)

 

 

6,466

 

Accrued expenses

 

 

(1,713

)

 

 

3,889

 

Other liabilities, long-term

 

 

(32

)

 

 

(192

)

Net cash used in operating activities

 

 

(36,587

)

 

 

(27,176

)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from the March Offering and Private Placement

 

 

175,000

 

 

 

 

Payment of issuance costs from the March Offering and Private Placement

 

 

(10,807

)

 

 

 

Proceeds from credit facility

 

 

10,000

 

 

 

 

Payment of credit facility issuance costs

 

 

(128

)

 

 

 

Proceeds from the 2022 ATM net of issuance costs

 

 

984

 

 

 

1,857

 

Payment of deferred financing fees related to 2024 ATM

 

 

(30

)

 

 

 

Proceeds from exercise of 2022 USD Financing Warrants

 

 

4,431

 

 

 

 

Proceeds from exercise of options

 

 

639

 

 

 

 

Withholding taxes paid on vested RSUs

 

 

(54

)

 

 

 

Net cash provided by financing activities

 

 

180,035

 

 

 

1,857

 

Effect of exchange rate changes on cash

 

 

(20

)

 

 

72

 

Net increase/(decrease) in cash and cash equivalents

 

 

143,428

 

 

 

(25,247

)

Cash and cash equivalents, beginning of period

 

 

99,704

 

 

 

142,142

 

Cash and cash equivalents, end of period

 

$

243,132

 

 

$

116,895

 

 

 

 

 

 

 

 

Supplemental Cash Flow Information

 

 

 

 

 

 

Cash paid for interest

 

$

873

 

 

$

-

 

Supplemental Noncash Disclosures

 

 

 

 

 

 

Conversion of 2022 USD Financing Warrants to common shares upon exercise of warrants

 

$

5,244

 

 

$

-

 

Unpaid issuance costs for the March Offering and Private Placement

 

$

253

 

 

$

-

 

Deferred financing fees related to 2024 ATM included in accrued expenses

 

$

400

 

 

$

-

 

Reclass of deferred financing fees related to 2022 ATM to additional paid-in capital

 

$

332

 

 

$

-

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

7


 

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. (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. MindMed US was incorporated on May 30, 2019.

MindMed is a clinical stage biopharmaceutical company developing novel product candidates to treat brain health disorders. The Company’s mission is to be the global leader in the development and delivery of treatments for brain health disorders 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 neurotransmitter pathways that play key roles in brain health disorders. This specifically includes pharmaceutically optimized product candidates derived from the psychedelic and empathogen drug classes, including MM120 and MM402, the Company’s lead product candidates.

As of June 30, 2024, the Company had an accumulated deficit of $350.5 million. Through June 30, 2024, the Company’s financial support has primarily been provided by proceeds from the issuance of its common shares, no par value per share (“Common Shares”), and warrants to purchase Common Shares, and the Company’s credit facility.

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 unaudited 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.

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 unaudited condensed consolidated financial statements may not be comparable to companies that comply with public company Financial Accounting Standards Board (“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 the first sale of its common equity securities under an effective Securities Act of 1933 registration statement or such earlier time that it is no longer an emerging growth company.

In the opinion of management, these unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of our financial position and results of operations and cash flows for the periods presented.

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, 2023, which are included in the Company’s 2023 Annual Report on Form 10-K filed with the SEC on February 28, 2024 (the “2023 Annual Report”). The Company’s significant accounting policies are disclosed in the audited financial statements for the periods ended December 31, 2023 and 2022, included in the 2023 Annual Report. Since the date of those financial statements, there have been no changes to the Company's significant accounting policies.

The accompanying unaudited 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 and as amended by Accounting

8


 

Standards Updates of 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 unaudited condensed consolidated financial statements.

Foreign Currency

Prior to April 1, 2024, the Company’s functional currency was the Canadian dollar (“CAD”). Translation gains and losses from the application of the U.S. dollar (“USD”) as the reporting currency during the period that the Canadian dollar was the functional currency were included as part of cumulative currency translation adjustment, which is reported as a component of shareholders’ equity as accumulated other comprehensive income.

Following the Company’s voluntary delisting from Cboe Canada in April 2024, the Company reassessed its functional currency and determined that, as of April 1, 2024, its functional currency had changed from the CAD to the USD. The Company analysis included various factors, including: the Company’s cash flows and expenses denominated primarily in USD, and the primary market for the Company’s Common Shares trading in USD. The change in functional currency was accounted for prospectively from April 1, 2024, and the unaudited condensed consolidated financial statements prior to and including the period ended March 31, 2024 were not restated for the change in functional currency.

For periods commencing April 1, 2024, monetary assets and liabilities denominated in currencies other than USD are remeasured at period-end using the period-end exchange rate. Opening balances related to non-monetary assets and liabilities are based on prior period translated amounts, and non-monetary assets acquired, and non-monetary liabilities incurred after April 1, 2024, are translated at the approximate exchange rate prevailing at the date of the transaction. Income and expense accounts are translated at the average rates in effect during the fiscal year. Foreign exchange gains and losses are included in the unaudited condensed consolidated statements of operations and comprehensive loss.

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. As of June 30, 2024, the Company’s cash equivalents consisted of U.S. government money market funds at a high-credit quality and federally insured financial institution. The Company’s accounts, at times, may exceed federally insured limits. The Company had cash equivalents of $242.4 million as of June 30, 2024, and $96.7 million as of December 31, 2023.

Net Loss per Share

For the three month period ended June 30, 2024, the Company determined that the 2022 USD Financing Warrants had a dilutive impact to the calculation of net loss per share. As a result, the Company calculated diluted net loss per common share for the three months ended June 30, 2024 as follows:

 

Three Months
Ended June 30,

 

 

 

2024

 

Numerator:

 

 

 

Net loss attributable to common shareholders, basic

 

$

(5,854

)

Change in fair value of 2022 USD Financing Warrants

 

 

(13,445

)

Net loss attributable to common shareholders, diluted

 

$

(19,299

)

 

 

 

 

Denominator:

 

 

 

Weighted-average shares used in computing net loss per share attributable
   to common shareholders, basic

 

 

71,912,323

 

Incremental shares from 2022 USD Financing Warrants

 

 

3,391,778

 

Weighted-average shares used in computing net loss per share attributable
   to common shareholders, diluted

 

 

75,304,101

 

 

9


 

The following potentially dilutive securities have been excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:

Three Months
Ended June 30,

 

 

Six Months
Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Options issued and outstanding under stock option plan

 

3,532,174

 

 

 

2,301,688

 

 

 

3,532,174

 

 

 

2,301,688

 

Restricted Share Units

 

1,740,809

 

 

 

2,780,467

 

 

 

1,740,809

 

 

 

2,780,467

 

CAD Compensation Warrants

 

 

 

 

125,890

 

 

 

 

 

 

125,890

 

CAD Financing Warrants

 

 

 

 

1,286,282

 

 

 

 

 

 

1,286,282

 

Conversion Shares

 

997,506

 

 

 

 

 

 

997,506

 

 

 

 

2022 USD Financing Warrants

 

 

 

 

7,058,823

 

 

 

5,989,300

 

 

 

7,058,823

 

Total

 

6,270,489

 

 

 

13,553,150

 

 

 

12,259,789

 

 

 

13,553,150

 

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by 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 November 2023, the FASB issued ASU 2023-07, Segment Reporting (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within the segment measure of profit or loss. This guidance will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024. The Company does not expect implementation of the new guidance to have a material impact on its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09"). ASU 2023-09 requires annual disclosures of specific categories in the rate reconciliation, additional information for reconciling items that meet a quantitative threshold and a disaggregation of income taxes paid, net of refunds. ASU 2023-09 also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. ASU 2023-09 is effective for the annual reporting periods in fiscal years beginning after December 31, 2024. Early adoption is permitted. ASU 2023-09 should be applied prospectively. Retrospective adoption is permitted. The Company is currently assessing the impact this standard will have on the Company’s consolidated financial statements.

3.
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 June 30, 2024 and December 31, 2023 (in thousands), 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.

 

 

June 30, 2024

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

242,431

 

 

$

 

 

$

 

 

$

242,431

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Directors' Deferred Share Unit Liability

 

$

966

 

 

$

 

 

$

 

 

$

966

 

2022 USD Financing Warrant Liability

 

$

 

 

$

 

 

$

30,680

 

 

$

30,680

 

 

 

December 31, 2023

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

96,682

 

 

$

 

 

$

 

 

$

96,682

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Directors' Deferred Share Unit Liability

 

$

387

 

 

$

 

 

$

 

 

$

387

 

2022 USD Financing Warrant Liability

 

$

 

 

$

 

 

$

16,476

 

 

$

16,476

 

 

There were no transfers into or out of Level 1, Level 2, or Level 3 during the six months ended June 30, 2024 and the year ended December 31, 2023.

10


 

The fair value of the warrant liability is measured at fair value on a recurring basis. The warrants to purchase 7,058,823 Common Shares issued in our underwritten public offering that closed on September 30, 2022 (the “2022 USD Financing Warrants”) are classified as Level 3 in the fair value hierarchy and are determined using the Black-Scholes option pricing model using the following assumptions:

 

As of June 30, 2024

 

As of December 31, 2023

Share price

 

$7.21

 

$3.66

Expected volatility

 

89.00%

 

94.72%

Risk-free rate

 

4.50%

 

3.87%

Expected life

 

3.25 years

 

3.75 years

 

4.
GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

During the six months ended June 30, 2024, the Company has made no additions to its outstanding goodwill. There were no triggering events identified, no indication of impairment of the Company’s goodwill and long-lived assets, and no impairment charges recorded during the three and six months ended June 30, 2024 and 2023, respectively.

Intangible assets, net

As of December 31, 2023, the Company’s developed technology intangible assets had a gross carrying value of $9.5 million, accumulated amortization of $9.0 million, and a net carrying value of $0.5 million. The Company's developed technology intangible assets were fully amortized as of March 31, 2024.

Amortization expense included in research and development expense was $0.5 million and $1.6 million for the six months ended June 30, 2024 and 2023, respectively, and $0 and $0.8 million for the three and six months ended June 30, 2024 and 2023, respectively.

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5.
ACCRUED EXPENSES

At June 30, 2024 and December 31, 2023, accrued expenses consisted of the following (in thousands):

 

 

June 30,
2024

 

 

December 31,
2023

 

Accrued compensation

 

$

2,757

 

 

$

4,139

 

Accrued clinical and manufacturing costs

 

 

2,374

 

 

 

1,884

 

Professional services

 

 

1,449

 

 

 

2,022

 

Directors' Deferred Share Unit Liability

 

 

966

 

 

 

387

 

Other accruals

 

 

685

 

 

 

361

 

Contribution payable

 

 

-

 

 

 

2,841

 

Total accrued expenses

 

$

8,231

 

 

$

11,634

 

 

In June 2024, the Company made a lump sum payment of $0.3 million in full satisfaction of its remaining obligations of the contribution payable liability. As a result, both parties were subsequently released from any further commitments from the agreement. The difference between the fair value of the lump sum payment of $0.3 million, and the carrying value of the contribution payable prior to the settlement of $2.8 million, resulted in a gain on extinguishment of $2.5 million recognized by the Company in the unaudited condensed consolidated statements of operations and comprehensive loss during the three and six months ended June 30, 2024.

6.
SHAREHOLDERS’ EQUITY

Common Shares

The Company is authorized to issue an unlimited number of Common Shares, which have no par value. As of June 30, 2024, the Company had 72,075,076 Common Shares issued and outstanding.

At-The-Market Facilities

2022 ATM

On May 4, 2022, the Company filed a shelf registration statement on Form S-3 (the “Registration Statement”). In connection with the filing of the Registration Statement, the Company also entered into a sales agreement (the “Prior Sales Agreement”) with Cantor Fitzgerald & Co. and Oppenheimer & Co. Inc. as sales agents (together, the “Prior Agents”), pursuant to which the Company may issue and sell Common Shares for an aggregate offering price of up to $100.0 million under an at-the-market offering program (the “2022 ATM”). Pursuant to the 2022 ATM, the Company paid the Prior Agents a commission rate equal to 3.0% of the gross proceeds from the sale of any Common Shares. The Company was not obligated to make any sales of its Common Shares under the 2022 ATM. During the six months ended June 30, 2024, the Company sold 171,886 Common Shares for net proceeds of $0.7 million under the 2022 ATM. As of March 7, 2024, the Company had raised an aggregate of $40.9 million under the 2022 ATM and had the remaining availability of $59.1 million. On March 7, 2024, the Company announced that it had delivered written notice to the Prior Agents that it was suspending and terminating the 2022 ATM prospectus, dated May 16, 2022. On May 28, 2024, the Company delivered written notice to the Prior Agents that it was terminating the Prior Sales Agreement.

2024 ATM

On June 28, 2024, the Company filed a shelf registration statement on Form S-3 (the “2024 Registration Statement”), as well as an accompanying prospectus supplement (“New ATM Prospectus”). In connection with the filing of the 2024 Registration Statement and the New ATM Prospectus, the Company entered into a Sales Agreement (the "Sales Agreement") with Leerink Partners LLC (the “Agent”) pursuant to which the Company may issue and sell from time to time Common Shares for an aggregate offering price of up to $150.0 million in accordance with the New ATM Prospectus under an at-the-market offering program (the "2024 ATM"). Pursuant to the 2024 ATM, the Company will pay the Sales Agent a commission rate of up to 3.0% of the gross proceeds from the sale of any Common Shares. The Company is not obligated to make any sales of its Common Shares under the 2024 ATM. The Company has not sold any of its Common Shares under the 2024 ATM as of June 30, 2024.

The March Offering and Private Placement

On March 7, 2024, the Company entered into an underwriting agreement with Leerink Partners LLC and Cantor Fitzgerald & Co., as representatives of the underwriters named therein, in connection with the issuance and sale by the Company in an underwritten offering (the “March Offering”) of 16,666,667 Common Shares (the “Offering Shares”), at an offering price of $6.00 per Offering Share, less underwriting discounts and commissions.

12


 

The net proceeds to the Company from the March Offering were $93.5 million, after deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company.

Also on March 7, 2024, the Company entered into a securities purchase agreement with certain investors, pursuant to which the investors agreed to purchase, and the Company agreed to sell 12,500,000 Common Shares (the “Private Placement Shares”), at a price of $6.00 per Private Placement Share, in a private placement transaction (the “Private Placement”).

The net proceeds to the Company from the Private Placement were $70.1 million, after deducting fees and expenses payable by the Company.

The Company intends to use the net proceeds from the March Offering and the Private Placement for (i) the research and development of the Company’s product candidates and (ii) working capital and general corporate purposes.

The March Offering and the Private Placement closed on March 11, 2024.

 

7.
WARRANTS

CAD Financing Warrants and CAD Compensation Warrants

 

Between 2020 through 2021, in conjunction with equity offerings, the Company issued units at varying prices per unit in CAD, with each unit comprised of one Common Share and one-half of one Common Share financing warrant (each whole warrant, a “CAD Financing Warrant”). The Company also issued compensation warrants to its underwriters (the “CAD Compensation Warrants”). All CAD Financing Warrants and the CAD Compensation Warrants expired as of March 9, 2024.

2022 USD Financing Warrants

On September 30, 2022, the Company closed an underwritten public offering of 7,058,823 Common Shares and accompanying 2022 USD Financing Warrants to purchase 7,058,823 Common Shares. Each 2022 USD Financing Warrant is immediately exercisable for one Common Share at an initial exercise price of $4.25 per Common Share, subject to certain adjustments, and will expire on September 30, 2027.

The below table represents the activity associated with the Company's 2022 USD Financing Warrants for the six months ended June 30, 2024:

 

2022 USD Financing
Warrants

 

Balance at December 31, 2023

 

 

7,031,823

 

Exercised

 

 

(1,042,523

)

Expired

 

 

 

Balance at June 30, 2024

 

 

5,989,300

 

Under the guidance in ASC 815-40, the Company's 2022 USD Financing Warrants do not meet the criteria for equity treatment. Therefore, the Company accounts for the 2022 USD Financing Warrants as liabilities and recognized them at fair value upon issuance and adjusts them to fair value at the end of each reporting period. Any change in fair value is recognized on the condensed consolidated statements of operations and comprehensive loss.

The below table summarizes the activity of the outstanding liability for the 2022 USD Financing Warrants for the six months ended June 30, 2024 (in thousands):

 

As of June 30, 2024

 

Balance at December 31, 2023

 

$

16,476

 

Warrant exercise

 

 

(5,244

)

Change in fair value of the warrant liability

 

 

19,448

 

Balance at June 30, 2024

 

$

30,680

 

 

8.
STOCK-BASED COMPENSATION

Stock Incentive Plan

Effective March 7, 2023, the Company amended the definitions of “Fair Market Value” and “Market Value” under the MindMed Stock Option Plan (the “Stock Option Plan”) and the Performance and Restricted Share Unit Plan (the “RSU Plan”), respectively, to be based upon the closing price of the Company's Common Shares as traded on the Nasdaq Stock Market on the last trading day on which Common Shares traded prior to the day on which an equity award is granted (the “Amendments”). This change is only applicable for equity compensation awards granted subsequent to the Amendments. Accordingly, stock options granted after

13


 

March 7, 2023 ("USD Options") are denominated in USD, and the grant date fair value of restricted share units granted after March 7, 2023 ("USD RSUs") is denominated in USD. The fair value of both USD Options and USD RSUs is based upon the closing price of the Company's Common Shares as traded on the Nasdaq Stock Market.

As of June 30, 2024, in conjunction with the voluntary Cboe Canada delisting on April 1, 2024, all of the Company's Common Shares are only traded on the Nasdaq Stock Market. All equity awards have their exercise prices denominated in USD based upon the USD value on the day on which the equity award was granted.

Stock Options

On February 27, 2020, the Company adopted the Stock Option Plan to advance the interests of the Company by providing employees, contractors and directors of the Company a performance incentive for continued and improved service with the Company. The Stock Option Plan sets out the framework for determining eligibility as well as the terms of any stock-based compensation granted. The Stock Option Plan was approved by the shareholders as part of the terms of an arrangement agreement (the “Arrangement”) entered into by the Company on October 15, 2019 in connection with the completion of its reverse acquisition, which completed on February 27, 2020. The Company is authorized to issue 15% of the Company’s outstanding Common Shares under the terms of the Stock Option Plan, together with Common Shares that are issuable pursuant to outstanding awards or grants under any other compensation or incentive mechanism involving the issuance or potential issuance of Common Shares, including the RSU Plan.

The following table summarizes the Company’s stock option activity:

 

 

Number of Options

 

 

Weighted Average Exercise Price

 

 

Weighted Average Remaining Contractual Life (Years)

 

 

Aggregate Intrinsic
Value

 

Options outstanding at December 31, 2023

 

 

2,161,734

 

 

$

18.67

 

 

 

 

 

$

 

Issued

 

 

1,788,780

 

 

 

5.08

 

 

 

 

 

 

 

Exercised

 

 

(147,895

)

 

 

4.39

 

 

 

 

 

 

 

Forfeited

 

 

(253,044

)

 

 

7.00

 

 

 

 

 

 

 

Expired

 

 

(17,401

)

 

 

14.55

 

 

 

 

 

 

 

Options outstanding at June 30, 2024

 

 

3,532,174

 

 

$

13.25

 

 

 

6.2

 

 

$

4,858,410

 

Options vested and exercisable at June 30, 2024

 

 

1,524,669

 

 

$

19.73

 

 

 

3.5

 

 

$

1,387,487

 

 

The expense recognized related to options was $2.7 million and $1.6 million for the three months ended June 30, 2024 and 2023, respectively, and $4.3 million and $3.3 million for the six months ended June 30, 2024 and 2023, respectively.

Restricted Share Units

The Company adopted the RSU Plan to advance the interests of the Company by providing employees, contractors and directors of the Company a performance incentive for continued and improved service with the Company. The RSU Plan sets out the framework for determining eligibility as well as the terms of any stock-based compensation granted. The RSU Plan was approved by the shareholders as part of the Arrangement. The fair value has been estimated based on the closing price of the Common Shares on the day prior to the grant.

 

 

Number of RSUs

 

 

Weighted Average Grant Date Fair Value

 

Balance at December 31, 2023

 

 

2,288,726

 

 

$

7.20

 

Granted

 

 

156,800

 

 

 

7.45

 

Vested and issued

 

 

(445,032

)

 

 

9.75

 

Cancelled

 

 

(259,685

)

 

 

5.36

 

Balance at June 30, 2024

 

 

1,740,809

 

 

$

6.84

 

 

The expense recognized related to RSUs was $2.7 million and $2.1 million for the three months ended June 30, 2024 and 2023, respectively, and $4.8 million and $4.1 million for the six months ended June 30, 2024 and 2023, respectively.

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Directors' Deferred Share Unit Plan

On April 16, 2021, the Company adopted the MindMed Director's Deferred Share Unit Plan (the "DDSU Plan"). The DDSU Plan sets out a framework to grant non-executive directors deferred share units (“DDSUs”) which are cash settled awards. Effective June 8, 2023, the Company amended the definition of “Fair Market Value” under the DDSU Plan to be based upon the volume weighted average trading price of the Company’s Common Shares as traded on the Nasdaq Stock Market for the five business days on which Common Shares are traded on Nasdaq immediately preceding the applicable date. This change is only applicable for DDSUs granted subsequent to June 8, 2023. Accordingly, DDSUs granted after June 8, 2023 are denominated in USD. The DDSU Plan states that the fair market value of one DDSU shall be equal to the volume weighted average trading price of a Common Share on the Nasdaq Stock Market for the five business days immediately preceding the valuation date. The DDSUs generally vest ratably over twelve months after grant and are settled within 90 days of the date the director ceases service to the Company.

 

For the six months ended June 30, 2024, stock-based compensation expense of $0.6 million was recognized relating to the revaluation of the vested DDSUs, recorded in general and administrative expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. The Company recognized a decrease of stock-based compensation expense of $0.2 million relating to the revaluation of the vested DDSUs for the three months ended June 30, 2024. During the six months ended June 30, 2024, the Company did not issue any additional DDSUs. There were 133,745 DDSUs vested as of June 30, 2024. The liability associated with the outstanding vested DDSU’s was $1.0 million as of June 30, 2024, and was recorded to accrued expenses in the accompanying unaudited condensed consolidated balance sheets.

Employee Share Purchase Plan

On April 16, 2024, the Company’s Board of Directors approved the Mind Medicine (MindMed) Inc. Employee Share Purchase Plan (the “ESPP”), subject to its approval by the Company’s shareholders. On June 10, 2024, the Company's shareholders approved the ESPP at the Company’s 2024 Annual General and Special Meeting of Shareholders. A total of 750,000 Common Shares were reserved for future issuance under the ESPP. As of June 30, 2024, no Common Shares had been issued pursuant to the ESPP.

Stock-based Compensation Expense

Stock-based compensation expense for all equity arrangements for the three and six months ended June 30, 2024 and 2023 was as follows (in thousands):

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Research and development