10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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 September 30, 2024


☐	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.

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 28, 2024, the registrant had 73,331,690 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	26
Item 4.	Controls and Procedures	26

PART II	OTHER INFORMATION	28

Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
Signatures		30

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 (LSD), 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, if approved and commercialized;

•

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 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, 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)


	September 30, 2024 (Unaudited)			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	295,284		$	99,704
Prepaid and other current assets		4,074			4,168
Total current assets		299,358			103,872
Goodwill		19,918			19,918
Intangible assets, net		—			527
Other non-current assets		493			224
Total assets	$	319,769		$	124,541

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	2,149		$	4,136
Accrued expenses		8,796			11,634
2022 USD Financing Warrants		22,320			16,476
Total current liabilities		33,265			32,246
Credit facility, long-term		24,311			14,129
Other liabilities, long-term		—			32
Total liabilities		57,576			46,407

Commitments and contingencies (Note 9)
Shareholders' Equity:
Common shares, no par value, unlimited authorized as of September 30, 2024 and December 31, 2023; 81,590,491 and 41,101,303 issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		—			—
Additional paid-in capital		625,510			367,991
Accumulated other comprehensive income		821			343
Accumulated deficit		(364,138	)		(290,200	)
Total shareholders' equity		262,193			78,134
Total liabilities and shareholders' equity	$	319,769		$	124,541

See accompanying notes to unaudited condensed consolidated financial statements.

Mind Medicine (MindMed) Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Operating expenses:
Research and development	$	17,188		$	13,203		$	43,538		$	40,578
General and administrative		7,604			8,413			27,916			31,083
Total operating expenses		24,792			21,616			71,454			71,661
Loss from operations		(24,792	)		(21,616	)		(71,454	)		(71,661	)
Other income/(expense):
Interest income		3,507			1,491			8,279			4,240
Interest expense		(727	)		(328	)		(1,627	)		(481	)
Foreign exchange loss, net		(32	)		(439	)		(589	)		(244	)
Change in fair value of 2022 USD Financing Warrants		8,360			3,020			(11,088	)		(3,671	)
Gain on extinguishment of contribution payable		—			—			2,541			—
Other expense		—			(51	)		—			(51	)
Total other income/(expense), net		11,108			3,693			(2,484	)		(207	)
Net loss		(13,684	)		(17,923	)		(73,938	)		(71,868	)
Other comprehensive loss
(Loss)/gain on foreign currency translation		(12	)		415			478			150
Comprehensive loss	$	(13,696	)	$	(17,508	)	$	(73,460	)	$	(71,718	)
Net loss per common share, basic	$	(0.18	)	$	(0.45	)	$	(1.12	)	$	(1.85	)
Net loss per common share, diluted	$	(0.27	)	$	(0.45	)	$	(1.12	)	$	(1.85	)
Weighted-average common shares, basic		77,909,441			39,720,007			65,938,025			38,798,374
Weighted-average common shares, diluted		80,238,688			39,720,007			65,938,025			38,798,374

See accompanying notes to unaudited condensed consolidated financial statements.

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 and warrants, net of share issuance costs		38,624,064		—		234,267			—		—			234,267
Issuance of common shares upon settlement of restricted share unit awards, net of shares withheld for tax		650,801		—		(54	)		—		—			(54	)
Exercise of 2022 USD Financing Warrants		1,042,523		—		9,675			—		—			9,675
Stock-based compensation expense		—		—		12,960			—		—			12,960
Exercise of stock options, net of options withheld for tax		171,800		—		671			—		—			671
Net loss and comprehensive loss		—		—		—			478		(73,938	)		(73,460	)

Balance, September 30, 2024		81,590,491	$	—	$	625,510		$	821	$	(364,138	)	$	262,193

Balance, December 31, 2022		37,979,136	$	—	$	344,758		$	627	$	(194,468	)	$	150,917
Issuance of common shares, net of share issuance costs		1,402,598		—		4,943			—		—			4,943
Exercise of 2022 USD Financing Warrants		27,000		—		178			—		—			178
Exercise of stock options		13,333		—		49			—		—			49
Settlement of restricted share unit awards		672,641		—		—			—		—			—
Stock-based compensation expense		—		—		11,610			—		—			11,610
Net loss and comprehensive loss		—		—		—			150		(71,868	)		(71,718	)
Balance, September 30, 2023		40,094,708	$	—	$	361,538		$	777	$	(266,336	)	$	95,979


	Common Shares
	Shares		Amount		Additional Paid-In Capital		Accumulated OCI			Accumulated Deficit			Total

Balance, June 30, 2024		72,075,076	$	—	$	551,668	$	833		$	(350,454	)	$	202,047
Issuance of common shares and warrants, net of share issuance costs		9,285,511		—		69,969		—			—			69,969
Issuance of common shares upon settlement of restricted share unit awards, net of shares withheld for tax		205,999		—		—		—			—			—
Stock-based compensation expense		—		—		3,841		—			—			3,841
Exercise of stock options, net of options withheld for tax		23,905		—		32		—			—			32
Net loss and comprehensive loss		—		—		—		(12	)		(13,684	)		(13,696	)
Balance, September 30, 2024		81,590,491		—		625,510		821			(364,138	)		262,193

Balance, June 30, 2023		38,807,159	$	—	$	354,023	$	362		$	(248,413	)	$	105,972
Issuance of common shares, net of share issuance costs		800,700		—		3,086		—			—			3,086
Settlement of restricted share unit awards		446,516		—		—		—			—			—
Exercise of 2022 USD Financing Warrants		27,000		—		178		—			—			178
Exercise of stock options		13,333		—		49		—			—			49
Stock-based compensation expense		—		—		4,202		—			—			4,202
Net loss and comprehensive loss		—		—		—		415			(17,923	)		(17,508	)
Balance, September 30, 2023		40,094,708	$	—	$	361,538	$	777		$	(266,336	)	$	95,979

See accompanying notes to unaudited condensed consolidated financial statements.

Mind Medicine (MindMed) Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Nine Months Ended September 30,
	2024			2023
Cash flows from operating activities
Net loss	$	(73,938	)	$	(71,868	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		13,468			11,818
Amortization of intangible assets		527			2,372
Change in fair value of 2022 USD Financing Warrants		11,088			3,671
Gain on extinguishment of contribution payable		(2,541	)		—
Unrealized foreign exchange		509			—
Other non-cash adjustments		228			128
Changes in operating assets and liabilities:
Prepaid and other current assets		(532	)		1,575
Other noncurrent assets		115			60
Accounts payable		(1,987	)		5,535
Accrued expenses		(683	)		3,742
Other liabilities, long-term		(32	)		(835	)
Net cash used in operating activities		(53,778	)		(43,802	)
Cash flows from financing activities
Proceeds from the August Offering		74,999			—
Payment of issuance costs from the August Offering		(5,030	)		—
Proceeds from the March Offering and Private Placement		175,000			—
Payment of issuance costs from the March Offering and Private Placement		(11,060	)		—
Proceeds from credit facility		10,000			15,000
Payment of credit facility issuance costs		(128	)		(802	)
Proceeds from the 2022 ATM net of issuance costs		984			4,943
Payment of deferred financing fees related to 2024 ATM		(424	)		—
Proceeds from exercise of 2022 USD Financing Warrants		4,431			114
Proceeds from exercise of options		671			—
Withholding taxes paid on vested RSUs		(54	)		—
Net cash provided by financing activities		249,389			19,255
Effect of exchange rate changes on cash		(31	)		104
Net increase/(decrease) in cash and cash equivalents		195,580			(24,443	)
Cash and cash equivalents, beginning of period		99,704			142,142
Cash and cash equivalents, end of period	$	295,284		$	117,699

Supplemental Cash Flow Information
Cash paid for interest	$	1,541		$	100
Supplemental Noncash Disclosures
Conversion of 2022 USD Financing Warrants to common shares upon exercise of warrants	$	5,244		$	64
Deferred financing fees related to 2024 ATM included in accrued expenses	$	6		$	—
Reclass of deferred financing fees related to 2022 ATM to additional paid-in capital	$	332		$	—
Unpaid issuance costs for credit facility	$	—		$	170
Proceeds from exercise of options in prepaid and other current assets	$	—		$	49

See accompanying notes to unaudited condensed consolidated financial statements.

Mind Medicine (MindMed) Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(In thousands, except share and per share amounts)

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 September 30, 2024, the Company had an accumulated deficit of $364.1 million. Through September 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”), 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 (the "Securities Act") 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.

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 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's 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 September 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 $293.3 million as of September 30, 2024, and $96.7 million as of December 31, 2023.

Net Loss per Share

For the three-month period ended September 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 September 30, 2024 as follows:


	Three Months Ended September 30,
	2024
Numerator:
Net loss attributable to common shareholders, basic	$	(13,684	)
Change in fair value of 2022 USD Financing Warrants		(8,360	)
Net loss attributable to common shareholders, diluted	$	(22,044	)

Denominator:
Weighted-average shares used in computing net loss per share attributable to common shareholders, basic		77,909,441
Incremental shares from 2022 USD Financing Warrants		2,329,247
Weighted-average shares used in computing net loss per share attributable to common shareholders, diluted		80,238,688

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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Options issued and outstanding under stock option plan		3,698,252		2,234,288		3,698,252		2,234,288
Restricted Share Units		1,552,862		2,524,721		1,552,862		2,524,721
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		—		7,031,823		5,989,300		7,031,823
Estimated shares issuable under the ESPP		37,370		—		37,370		—
Total		6,285,990		13,203,004		12,275,290		13,203,004

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the 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.

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, 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.


	September 30, 2024
	Level 1		Level 2		Level 3		Total
Financial assets:
Cash equivalents	$	293,259	$	—	$	—	$	293,259
Financial liabilities:
Directors' Deferred Share Unit Liability	$	878	$	—	$	—	$	878
2022 USD Financing Warrant Liability	$	—	$	—	$	22,320	$	22,320
	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 nine months ended September 30, 2024 and the year ended December 31, 2023.

The fair value of the warrant liability is measured at fair value on a recurring basis. The warrants to purchase 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 September 30, 2024	As of December 31, 2023
Share price	$5.69	$3.66
Expected volatility	91.77%	94.72%
Risk-free rate	3.52%	3.87%
Expected life	3.00 years	3.75 years

GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

During the nine months ended September 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 nine months ended September 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 $2.4 million for the nine months ended September 30, 2024 and 2023, respectively, and $0 and $0.8 million for the three months ended September 30, 2024 and 2023, respectively.

ACCRUED EXPENSES

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


	September 30, 2024		December 31, 2023
Accrued compensation	$	3,839	$	4,139
Accrued clinical and manufacturing costs		2,458		1,884
Professional services		1,310		2,022
Directors' Deferred Share Unit Liability		878		387
Other accruals		311		361
Contribution payable		—		2,841
Total accrued expenses	$	8,796	$	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 nine months ended September 30, 2024.

SHAREHOLDERS’ EQUITY

Common Shares

The Company is authorized to issue an unlimited number of Common Shares, which have no par value. As of September 30, 2024, the Company had 81,590,491 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 “2022 Registration Statement”), as well as an accompanying prospectus supplement ("Prior ATM Prospectus"). In connection with the filing of the 2022 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 could issue and sell Common Shares for an aggregate offering price of up to $100.0 million in accordance with the Prior ATM Prospectus 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 nine months ended September 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 Common Shares under the 2024 ATM as of September 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.

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 both closed on March 11, 2024.

The August Offering

On August 9, 2024, the Company entered into an underwriting agreement with Leerink Partners LLC and Evercore Group L.L.C., as representatives of the several underwriters named therein, in connection with an underwritten public offering (the “August Offering”) of (i) 9,285,511 Common Shares (the “Shares”), and (ii) to certain investors, pre-funded warrants (the “Pre-Funded Warrants”) to purchase 1,428,775 Common Shares (the "Pre-Funded Warrant Shares"). The offering price for the Shares was $7.00 per share, less underwriting discounts and commissions. The offering price for the Pre-Funded Warrants was $6.999 per Pre-Funded Warrant, which represents the per share public offering price for the Shares less a $0.001 per share exercise price for each such Pre-Funded Warrant.

The net proceeds to the Company from the August Offering were approximately $70.0 million, after deducting underwriting discounts and commissions and other offering expenses payable by the Company. The August Offering closed on August 12, 2024.

The Company intends to use the net proceeds from the August Offering to fund the research and development of its product candidates and for working capital and general corporate purposes.

The Pre-Funded Warrants are exercisable at any time after the date of issuance. The exercise price and the number of Pre-Funded Warrant Shares are subject to appropriate adjustment in the event of certain share dividends and distributions, share splits, share combinations, reclassifications or similar events affecting the Common Shares as well as upon any distribution of assets, including cash, securities or other property, to the Company’s shareholders. The Pre-Funded Warrants will not expire and are exercisable in cash or by means of a cashless exercise. A holder of Pre-Funded Warrants may not exercise such Pre-Funded Warrants if the aggregate number of Common Shares beneficially owned by such holder, together with its affiliates, would exceed more than 4.99% or 9.99% (at the initial election of the holder) of the number of Common Shares outstanding following such exercise, as such percentage ownership is determined in accordance with the terms of the Pre-Funded Warrants. A holder of Pre-Funded Warrants may increase or decrease this percentage not in excess of 19.99% by providing at least 61 days’ prior notice to the Company. As of September 30, 2024, there were no exercises of the Pre-Funded Warrants.

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 nine months ended September 30, 2024:


	2022 USD Financing Warrants
Balance at December 31, 2023		7,031,823
Exercised		(1,042,523	)
Expired		—
Balance at September 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 nine months ended September 30, 2024 (in thousands):


	As of September 30, 2024
Balance at December 31, 2023	$	16,476
Warrant exercise		(5,244	)
Change in fair value of the warrant liability		11,088
Balance at September 30, 2024	$	22,320

STOCK-BASED COMPENSATION

Stock Incentive Plans

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 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 September 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 such number of stock options equal to 15% of the Company’s issued and 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 and ESPP.

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