Milestone Pharmaceuticals (MIST) 10-Q 19 Jun 19 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Jun. 14, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	Milestone Pharmaceuticals Inc.
Entity Central Index Key	0001408443
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		24,490,742
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Entity Shell Company	false

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 71,239	$ 85,947
Short-term investments	29	29
Research and development tax credits receivable	264	290
Prepaid expenses (note 3)	5,482	1,398
Other receivables (note 4)	265	387
Total current assets	77,279	88,051
Operating lease right-of use asset (note 2)	282
Property and equipment	27	30
Total assets	77,588	88,081
Current liabilities
Accounts payable and accrued liabilities (note 5)	3,906	4,477
Current portion of operating lease liabilities (note 2)	168
Income taxes payable	78	56
Total current liabilities	4,152	4,533
Operating lease liabilities (note 2)	104
Total liabilities	4,256	4,533
Convertible Preferred Shares
Convertible preferred shares	138,758	138,758
Shareholders' Deficit (note 6)
Common shares, no par value, unlimited shares authorized, 614,940 shares issued and outstanding as of March 31, 2019 596,787 shares issued and outstanding as of December 31, 2018	2,090	2,039
Additional paid-in capital	2,840	2,655
Cumulative translation adjustment	(1,634)	(1,634)
Accumulated deficit	(68,722)	(58,270)
Total shareholders' deficit	(65,426)	(55,210)
Total liabilities, convertible preferred shares and shareholders' deficit	77,588	88,081
Class A-1 preferred shares
Convertible Preferred Shares
Convertible preferred shares	2,027	2,027
Class A-2 preferred shares
Convertible Preferred Shares
Convertible preferred shares	12,643	12,643
Class B preferred shares
Convertible Preferred Shares
Convertible preferred shares	17,198	17,198
Class C preferred shares
Convertible Preferred Shares
Convertible preferred shares	27,236	27,236
Class D-1 preferred shares
Convertible Preferred Shares
Convertible preferred shares	64,719	64,719
Class D-2 preferred shares
Convertible Preferred Shares
Convertible preferred shares	$ 14,935	$ 14,935

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Common shares, par value (in dollars per share)	$ 0	$ 0
Common shares, Shares authorized (in shares)	Unlimited	Unlimited
Common shares, Shares issued (in shares)	614,940	596,787
Common shares, Shares outstanding (in shares)	614,940	596,787
Class A-1 preferred shares
Preferred shares, par value (in dollars per share)	$ 0
Preferred shares, Shares authorized (in shares)	Unlimited
Preferred shares, Shares issued (in shares)	372,211
Class A-2 preferred shares
Preferred shares, par value (in dollars per share)	$ 0
Preferred shares, Shares authorized (in shares)	Unlimited
Preferred shares, Shares issued (in shares)	2,443,914
Class B preferred shares
Preferred shares, par value (in dollars per share)	$ 0
Preferred shares, Shares authorized (in shares)	Unlimited
Preferred shares, Shares issued (in shares)	2,830,907
Class C preferred shares
Preferred shares, par value (in dollars per share)	$ 0
Preferred shares, Shares authorized (in shares)	Unlimited
Preferred shares, Shares issued (in shares)	3,786,878
Class D-1 preferred shares
Preferred shares, par value (in dollars per share)	$ 0
Preferred shares, Shares authorized (in shares)	Unlimited
Preferred shares, Shares issued (in shares)	6,893,236
Class D-2 preferred shares
Preferred shares, par value (in dollars per share)	$ 0
Preferred shares, Shares authorized (in shares)	Unlimited
Preferred shares, Shares issued (in shares)	1,223,656

Condensed Consolidated Statemen

Condensed Consolidated Statements of Loss and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating expenses
Research and development, net of tax credits (note 8)	$ 7,765	$ 3,091
General and administrative	979	439
Commercial	2,186	725
Loss from operations	(10,930)	(4,255)
Interest income, net of bank charges	500	90
Loss and comprehensive loss before income taxes	(10,430)	(4,165)
Income tax expense	22	16
Net loss and comprehensive loss for the period	$ (10,452)	$ (4,181)
Weighted average number of shares outstanding, basic and diluted	603,040	268,525
Net loss per share, basic and diluted (note 7)	$ (17.32)	$ (15.57)

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Shareholders' Deficit and Convertible Preferred Shares - USD ($) $ in Thousands	Common shares	Class A-1 preferred shares	Class A-2 preferred shares	Class B preferred shares	Class C preferred shares	Class D-1 preferred shares	Class D-2 preferred shares	Additional paid-in capital	Cumulative translation adjustment	Accumulated deficit	Total
Balance at the beginning of period at Dec. 31, 2017	$ 1,228							$ 2,372	$ (1,634)	$ (35,085)
Balance at the beginning of period (in shares) at Dec. 31, 2017	239,990
Temporary Equity, Balance at the beginning of period at Dec. 31, 2017		$ 2,027	$ 12,643	$ 17,198	$ 27,236
Temporary Equity, Balance at the beginning of period (in shares) at Dec. 31, 2017		372,211	2,443,914	2,830,907	3,786,878
Total Equity, Balance at the beginning of period at Dec. 31, 2017											$ 25,985
Increase (Decrease) in Stockholders' Equity and Temporary Equity [Roll Forward]
Net loss and comprehensive loss										(4,181)	(4,181)
Exercise of stock options (note 6)	$ 55							(25)			$ 30
Exercise of stock options (note 6) (in shares)	37,675										37,675
Share-based compensation (note 6)								125			$ 125
Balance at the end of period at Mar. 31, 2018	$ 1,283							2,472	(1,634)	(39,266)
Balance at the end of period (in shares) at Mar. 31, 2018	277,665
Temporary Equity, Balance at the end of period at Mar. 31, 2018		$ 2,027	$ 12,643	$ 17,198	$ 27,236
Temporary Equity, Balance at the end of period (in shares) at Mar. 31, 2018		372,211	2,443,914	2,830,907	3,786,878
Total Equity, Balance at the end of period at Mar. 31, 2018											21,959
Balance at the beginning of period at Dec. 31, 2018	$ 2,039							2,655	(1,634)	(58,270)	$ (55,210)
Balance at the beginning of period (in shares) at Dec. 31, 2018	596,787										596,787
Temporary Equity, Balance at the beginning of period at Dec. 31, 2018		$ 2,027	$ 12,643	$ 17,198	$ 27,236	$ 64,719	$ 14,935				$ 138,758
Temporary Equity, Balance at the beginning of period (in shares) at Dec. 31, 2018		372,211	2,443,914	2,830,907	3,786,878	6,893,236	1,223,656
Total Equity, Balance at the beginning of period at Dec. 31, 2018											83,548
Increase (Decrease) in Stockholders' Equity and Temporary Equity [Roll Forward]
Net loss and comprehensive loss										(10,452)	(10,452)
Exercise of stock options (note 6)	$ 51							(26)			$ 25
Exercise of stock options (note 6) (in shares)	18,153										18,153
Share-based compensation (note 6)								211			$ 211
Balance at the end of period at Mar. 31, 2019	$ 2,090							$ 2,840	$ (1,634)	$ (68,722)	$ (65,426)
Balance at the end of period (in shares) at Mar. 31, 2019	614,940										614,940
Temporary Equity, Balance at the end of period at Mar. 31, 2019		$ 2,027	$ 12,643	$ 17,198	$ 27,236	$ 64,719	$ 14,935				$ 138,758
Temporary Equity, Balance at the end of period (in shares) at Mar. 31, 2019		372,211	2,443,914	2,830,907	3,786,878	6,893,236	1,223,656
Total Equity, Balance at the end of period at Mar. 31, 2019											$ 73,332

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating activities
Net loss for the period	$ (10,452)	$ (4,181)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of property and equipment	3	2
Share-based compensation expense (note 6)	211	125
Changes in operating assets and liabilities:
Other receivables	122	(25)
Research and development tax credits receivable	26	119
Prepaid expenses	(4,100)	(644)
Accounts payable and accrued liabilities	(571)	(135)
Unrealized foreign exchange	6
Income taxes payable	22	16
Net cash used in operating activities	(14,733)	(4,723)
Investing activities
Acquisition of property and equipment		(5)
Redemption of short-term investments		7,001
Net cash provided by investing activities		6,996
Financing activities
Issuance of common shares on exercise of share options (note 6)	25	30
Net cash provided by financing activities	25	30
Net (decrease) increase in cash and cash equivalents during the period	(14,708)	2,303
Cash and cash equivalents - Beginning of period	85,947	10,880
Cash and cash equivalents - End of period	$ 71,239	$ 13,183

Organization and nature of oper

Organization and nature of operations	3 Months Ended
	Mar. 31, 2019
Organization and nature of operations
Organization and nature of operations	1 Organization and nature of operations Milestone Pharmaceuticals Inc. (Milestone or the Company) is a Phase 3 clinical-stage biopharmaceutical company incorporated under the Business Corporations Act of Quebec. Milestone is dedicated to developing and commercializing etripamil for the treatment of cardiovascular indications. Etripamil is a novel, potent short-acting calcium channel blocker that the Company designed and is developing as a rapid-onset nasal spray to be administered by the patient to terminate episodes of paroxysmal supraventricular tachycardia as they occur. Reverse stock split On April 26, 2019, the Company’s Board of Directors approved an amendment to the Company’s articles of incorporation to effect a 1-for-5.3193 reverse stock split of the Company’s common shares, convertible preferred shares and the share options of the Company. Accordingly, all common shares, convertible preferred shares, share options and per share amounts in these unaudited interim consolidated financial statements have been retroactively adjusted for all periods presented to give effect to the reverse stock split. The reverse stock split was effected on April 26, 2019.

Summary of significant accounti

Summary of significant accounting policies	3 Months Ended
	Mar. 31, 2019
Summary of significant accounting policies
Summary of significant accounting policies	2 Summary of significant accounting policies a) Basis of consolidation The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Milestone Pharmaceuticals USA, Inc. Milestone Pharmaceuticals USA, Inc. began its operations on March 3, 2017. All intercompany transactions and balances have been eliminated. b) Basis of presentation and use of accounting estimates These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) and on a basis consistent with those accounting principles followed by the Company and disclosed in note 2 of its most recent annual consolidated financial statements, except for the adoption of ASC 842 “Leases” described in c) below. Certain information, in particular the accompanying notes normally included in the annual financial statements prepared in accordance with US GAAP have been omitted or condensed. Accordingly, the unaudited interim condensed consolidated financial statements do not include all the information required for full annual financial statements, and therefore, should be read in conjunction with the annual consolidated financial statements and the notes thereto for the year ended December 31, 2018. In the opinion of the Company, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2019, and its results of operations for the three months ended March 31, 2019 and 2018. The condensed consolidated balance sheet as of December 31, 2018, was derived from audited annual consolidated financial statements, but does not contain all of the footnote disclosures from the annual consolidated financial statements. These unaudited interim condensed consolidated financial statements are presented in US dollars, which is the Company’s functional currency. The preparation of unaudited interim condensed consolidated financial statements in conformity with US GAAP requires the Company to make estimates and judgments that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim condensed consolidated financial statements and the reported amounts of revenue and expenses during the period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other sources. Significant estimates and judgments include, but are not limited to, research and development tax credits recoverable, research and development expenses, and share-based compensation. Accordingly, actual results may differ from those estimates and such differences may be material. c) Adoption of FASB Accounting Standards Effective January 1, 2019, the Company adopted Accounting Standards Update (ASU) No. 2016-02, “Leases”. This ASU requires substantially all leases to be recorded on the balance sheet as right-of-use asset and lease obligations. The Company elected the package of practical expedients permitted under the transition guidance and applied the modified retrospective approach which allowed the Company to carry forward the historical lease classification. Adoption of this standard resulted in the recording of an operating lease right-of-use asset and corresponding operating lease liabilities of $0.3 million. The Company’s condensed consolidated balance sheets for reporting periods beginning on January 1, 2019 are presented under the new guidance, while prior period amounts were not adjusted and continue to be reported in accordance with previous guidance. The Company does not record an operating lease right-of-use asset and corresponding lease liability for leases with an initial term of twelve months or less and recognizes lease expense for these leases as incurred over the lease term. Upon adoption date, the Company had only one operating lease with a remaining term of less than 12 months for its offices located in Charlotte, NC, which will terminate on July 31, 2019, and for which the Company is not reasonably certain of renewing the lease. The remaining operating lease payments are $22. As of March 31, 2019, the Company has not entered into any additional lease arrangements. Operating lease right-of-use asset and operating lease liabilities are recognized upon the adoption date based on the present value of lease payments over the remaining lease term. The Company does not have a public credit rating and carries no debt. As such, several factors were considered in the determination of its incremental borrowing rate used in determining the present value of lease payments. The Company examined the Bloomberg credit ratings for similar companies; assumed equivalency between the Canadian and US markets for collateralized debt; factored in the cumulative dividend rate on convertible preferred shares; and used short-term rates for the remaining lease term of 23 months. This resulted in electing to use 8% as its incremental borrowing rate. Lease expense is recognized on a straight-line basis over the lease term. The Company’s lease arrangement does not have lease and non-lease component which are accounted for separately. Upon adoption and as at March 31, 2019, the Company had one operating lease right-of-use asset and approximately $39 of the operating lease right-of-use asset had been amortized. The adoption of the accounting standard did not materially impact the Company’s consolidated statement of operations or its consolidated statement of cash flows for the three months ended March 31, 2019. The Company operating lease right-of-use asset is as follows as at March 31, 2019: Adoption as at January 1, 2019 $ 321 Recognition of right-of-use asset in the three-month period ending March 31, 2019 (39) $ 282 Operating lease expenses of $44 are included in general and administrative operating expenses in the consolidated statement loss and comprehensive loss, and within operating activities in the statement of cash flows for the three-month period ended March 31, 2019. The following table summarizes the future minimum lease payments of right-of-use assets operating lease as at March 31, 2019: April 1, 2019 to March 31, 2020 $ 183 April 1, 2020 to November 30, 2020 107 290 Less interest (18) $ 272 As at December 31, 2018, the Company had a lease commitment for its headquarters located in Ville Saint-Laurent, Quebec, expiring on November 30, 2020 with an option to renew for an additional three years and a commitment for its office located in Charlotte, North Carolina, expiring on July 30, 2019. The minimum lease payments as at December 31, 2018 were as follows: Lease Lease operating base rent Total lease expenses expenses commitment 2019 $ 86 $ 130 $ 216 2020 79 85 164 $ 165 $ 215 $ 380 Total rental expense under operating leases for the year ended December 31, 2018 was $232.

Prepaid expenses

Prepaid expenses	3 Months Ended
	Mar. 31, 2019
Prepaid expenses
Prepaid expenses	3 Prepaid expenses Prepaid expenses consisted of the following: March 31, 2019 December 31, 2018 Contract research 4,066 1,136 Costs related to initial public offering 1,244 187 Other prepaid expenses 172 75 5,482 1,398

Other receivables

Other receivables	3 Months Ended
	Mar. 31, 2019
Other receivables
Other receivables	4 Other receivables Other receivables are comprised of: March 31, 2019 December 31, 2018 Interest receivable $ 162 $ 178 Sales tax receivable 103 209 $ 265 $ 387

Accounts payable and accrued li

Accounts payable and accrued liabilities	3 Months Ended
	Mar. 31, 2019
Accounts payable and accrued liabilities
Accounts payable and accrued liabilities	5 Accounts payable and accrued liabilities Accounts payable and accrued liabilities comprised the following: March 31, 2019 December 31, 2018 Trade accounts payable $ 2,040 $ 2,603 Accrued research & development liabilities 982 1,012 Other accrued liabilities 593 164 Accrued compensation and benefits payable 291 698 $ 3,906 $ 4,477

Shareholders' deficit

Shareholders' deficit	3 Months Ended
	Mar. 31, 2019
Shareholders' deficit
Shareholders' deficit	6 Shareholders’ deficit Authorized share capital An unlimited number of common shares, voting and participating, without par value During the three-month period ended March 31, 2019, the Company issued a total of 18,153 common shares [2018 – 37,675] for a total cash consideration of $25 [2018 - $30] pursuant to the exercise of 18,153 stock options [2018 – 37,675] at an average exercise price of US$1.3225 per option [2018 – US$1.06 per option]. As a result, an amount of $26 [2018 - $25] previously included in additional paid-in capital related to the exercised options has been credited to share capital and deducted from additional paid-in capital. Additional paid-in capital Three months ended March 31, 2019 2018 Opening balance $ 2,655 $ 2,372 Share-based compensation expense 211 125 Exercise of stock options (26) (25) Closing balance $ 2,840 $ 2,472 Share-based compensation On October 15, 2018, the Company amended for a third time and restated the share option plan (the 2011 Plan) whereby options to purchase common shares of the Company’s shares may be granted to directors, officers, employees, consultants and members of the scientific advisory board. The 2011 Plan is administered by the Board of Directors. The Board of Directors determines the number of options to be granted, the vesting period and the exercise price of new options. It is the Company’s policy to establish the exercise price at an amount that approximates the fair value of the underlying shares on the date of grant as determined by the Board of Directors. Under the 2011 Plan, unless otherwise decided by the Board of Directors, options vest and are exercisable as follows: 25% are exercisable from the first anniversary of grant date and 2.0833% become available at the end of each month after the first anniversary of grant date. As of March 31, 2019, there were 3,238,943 options available for awards under the 2011 Plan, of which 2,898,351 options were granted, 49,845 were cancelled/forfeited, leaving 390,437 available for future grants. The outstanding and exercisable options as at March 31 were as follows: 2019 2018 Weighted Weighted average average Number exercise Number exercise of shares price of shares price Outstanding at beginning of period 2,295,045 $ 1.7714 968,782 $ 1.1330 Forfeited/expired — — (12,198) 1.0958 Granted 116,742 9.4152 820,450 1.5426 Exercised (18,153) 1.3225 (37,675) 0.8458 Outstanding at end of period 2,393,634 $ 1.9850 1,739,359 $ 1.3351 Exercisable at end of period 670,168 $ 1.3511 521,926 $ 1.0053 As of March 31, 2019, the weighted average remaining contractual life was 8.5 years [2018 – 8.7 years]. The weighted average remaining contractual life was 6.6 years for vested options [2018 – 6.9 years]. There were no options forfeited for the three-month period ended March 31, 2019 (2018 –12,198). Options granted are valued using the Black-Scholes option pricing model. Amortization of the fair value of the options over vesting years has been expensed and credited to additional paid-in capital in shareholders’ deficit. The weighted average fair values of options granted in the three-month period ended March 31, 2019 was $6.6493 per share [2018 - $1.5426]. Share-based compensation expense recognized for the three-month period ended March 31, 2019 was $211 [2018 - $125]. As of March 31, 2019, there was $3,047 [2018 - $1,333] of total unrecognized compensation cost, related to non-vested share options, which is expected to be recognized over a remaining weighted average vesting period of 3.0 years [2018 – 3.4 years]. The non-vested options as at March 31 were as follows: 2019 2018 Weighted Weighted Number average Number average of options fair value of options fair value Non-vested at beginning of period 1,706,303 $ 1.3458 451,113 $ 1.0266 Forfeited/expired — — (12,198) 1.0639 Granted 116,742 6.6491 820,450 1.1117 Vested, outstanding (99,579) $ 1.1809 (41,932) $ 1.1915 Non-vested share options at end of period 1,723,466 $ 1.7181 1,217,433 $ 1.0798 The fair value of share-based payment transaction is measured using Black-Scholes valuation model. This model also requires assumptions, including expected option life, volatility, risk-free interest rate and dividend yield, which greatly affect the calculated values. The fair value of options granted was estimated using the Black-Scholes option pricing model, resulting in the following weighted average assumptions for the options granted for the three-month periods ended March 31: 2019 2018 Exercise price $ 9.42 $ Share price $ 9.42 $ Volatility 80 % 82 % Risk-free interest rate 2.50 % % Expected life 6.25 years 6.25 years Dividend 0 % 0 % Expected volatility is determined using comparable companies for which the information is publicly available. The risk-free interest rate is determined based on the US sovereign rates benchmark in effect at the time of grant with a remaining term equal to the expected life of the option. Expected option life is determined based on the simplified method as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The simplified method is an average of the contractual term of the options and its ordinary vesting period. Dividend yield is based on the share option’s exercise price and expected annual dividend rate at the time of grant. Share-based payment awards with performance targets attainable after the requisite service period are treated as performance conditions that affect vesting. No compensation expense is recorded related to an award for which the transfer to the employee is contingent on the attainment of a performance target until it becomes probable that the performance target will be met. The Company recognized share-based compensation expense as follows for the three months ended March 31: 2019 2018 Administration $ 70 $ Research and development 125 Commercial activities 16 $ 211 $

Net loss per share

Net loss per share	3 Months Ended
	Mar. 31, 2019
Net loss per share
Net loss per share	7 Net loss per share Basic and diluted net loss per common share is determined by dividing net loss applicable to common shareholders by the weighted average number of common shares outstanding during the period. The outstanding convertible preferred shares and share-based compensation have been excluded from the calculation because their effects would be anti-dilutive. Therefore, the weighted average number of shares used to calculate both basic and diluted loss per share are the same. The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as of March 31, as they would be anti-dilutive: 2019 2018 Convertible preferred shares 17,550,802 9,433,910 Share options and unvested restricted share awards 2,955,936 2,017,007 20,506,738 11,450,917 Amounts in the table above reflect the common share equivalents of the noted instruments.

Government assistance

Government assistance	3 Months Ended
	Mar. 31, 2019
Government assistance
Government assistance	8 Government assistance The Company incurred research and development expenditures that are eligible for investment tax credits. The investment tax credits recorded are based on management’s estimates of amounts expected to be recovered and are subject to audit by the taxation authorities. These amounts have been recorded as a reduction of research and development expenditures for an amount of $78 for the three-month period ended March 31, 2019 [2018 - $82].

Fair value of financial instrum

Fair value of financial instruments	3 Months Ended
	Mar. 31, 2019
Fair value of financial instruments
Fair value of financial instruments	9 Fair value of financial instruments Pursuant to the accounting guidance for fair value measurement and its subsequent updates, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the exit price) in an orderly transaction between market participants at the measurement date. The accounting guidance establishes a hierarchy for inputs used in measuring fair value that minimizes the use of unobservable inputs by requiring the use of observable market data when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on active market data. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances. The fair value hierarchy is broken down into the three input levels summarized below: Level 1 – Valuations are based on quoted prices in active markets for identical assets or liabilities and readily accessible by the Company at the reporting date. Level 2 – Valuations based on inputs other than the quoted prices in active markets that are observable either directly or indirectly in active markets. Level 3 – Valuations based on unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. The Company has determined that the carrying values of its short-term financial assets and liabilities were measured using Level 1 inputs and approximate their fair value given the short-term nature of these instruments.

Subsequent events

Subsequent events	3 Months Ended
	Mar. 31, 2019
Subsequent events
Subsequent events	10 Subsequent events Initial Public Offering On May 13, 2019, the Company completed its initial public offering (“IPO”), whereby the Company issued 5,500,000 common shares at a public offering price of $15.00 per share. The shares began trading on The Nasdaq Global Select Market on May 9, 2019. On May 15, 2019, the underwriters fully exercised their option to purchase an additional 825,000 common shares at the public offering price of $15.00 per share. The gross proceeds received by the Company from the offering were approximately $94.9 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. Upon the closing of the IPO, all outstanding shares of Class A1, A2, B, C, D1 and D2 preferred shares converted into 17,550,802 common shares. Stock Incentive Plans The Company’s board of directors adopted and its shareholders approved the 2019 Equity Incentive Plan (the “2019 Plan”) in April 2019, which then became effective on May 8, 2019 in connection with the IPO. Initially, the maximum number of the Company’s common shares that may be issued under the 2019 Plan is 4,710,564 shares, which is the sum of (1) 1,923,501 new shares, plus (2) the number of shares (not to exceed 2,787,063 shares) (i) that remained available for the issuance of awards under the 2011 Plan at the time the 2019 Plan became effective, and (ii) any shares subject to outstanding options or other share awards that were granted under the 2011 Plan that terminate, expire or are otherwise forfeited, reacquired or withheld. In addition, the number of the Company’s common shares reserved for issuance under the 2019 Plan will automatically increase on January 1 of each calendar year, starting on January 1, 2020 through January 1, 2029, in an amount equal to 4% of the total number of the Company’s capital shares outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the Company’s board of directors. As of May 8, 2019, the Company’s 2011 Plan was terminated and no further option grants will be made under the 2011 Plan. Additionally, the Company’s board of directors adopted and its shareholders approved the 2019 Employee Share Purchase Plan (“ESPP”) in April 2019, which then became effective on May 8, 2019. The number of common shares initially reserved for issuance under the ESPP was 278,734 common shares. The number of shares reserved for issuance will automatically increase on January 1 of each calendar year, beginning on January 1, 2020 through January 1, 2029, by the lesser of (1) 1% of the total number of shares of the Company’s share capital outstanding on the last day of the calendar month before the date of the automatic increase and (2) 487,837 shares; provided that before the date of any such increase, the Company’s board of directors may determine that such increase will be less than the amount set forth in clauses (1) and (2). As of the date hereof, no shares of the Company’s share capital have been purchased under the ESPP.

Summary of significant accoun_2

Summary of significant accounting policies (Policies)	3 Months Ended
	Mar. 31, 2019
Summary of significant accounting policies
Basis of consolidation	a) Basis of consolidation The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Milestone Pharmaceuticals USA, Inc. Milestone Pharmaceuticals USA, Inc. began its operations on March 3, 2017. All intercompany transactions and balances have been eliminated.
Basis of presentation and use of accounting estimates	b) Basis of presentation and use of accounting estimates These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) and on a basis consistent with those accounting principles followed by the Company and disclosed in note 2 of its most recent annual consolidated financial statements, except for the adoption of ASC 842 “Leases” described in c) below. Certain information, in particular the accompanying notes normally included in the annual financial statements prepared in accordance with US GAAP have been omitted or condensed. Accordingly, the unaudited interim condensed consolidated financial statements do not include all the information required for full annual financial statements, and therefore, should be read in conjunction with the annual consolidated financial statements and the notes thereto for the year ended December 31, 2018. In the opinion of the Company, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2019, and its results of operations for the three months ended March 31, 2019 and 2018. The condensed consolidated balance sheet as of December 31, 2018, was derived from audited annual consolidated financial statements, but does not contain all of the footnote disclosures from the annual consolidated financial statements. These unaudited interim condensed consolidated financial statements are presented in US dollars, which is the Company’s functional currency. The preparation of unaudited interim condensed consolidated financial statements in conformity with US GAAP requires the Company to make estimates and judgments that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited interim condensed consolidated financial statements and the reported amounts of revenue and expenses during the period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other sources. Significant estimates and judgments include, but are not limited to, research and development tax credits recoverable, research and development expenses, and share-based compensation. Accordingly, actual results may differ from those estimates and such differences may be material.
Adoption of FASB Accounting Standards	c) Adoption of FASB Accounting Standards Effective January 1, 2019, the Company adopted Accounting Standards Update (ASU) No. 2016-02, “Leases”. This ASU requires substantially all leases to be recorded on the balance sheet as right-of-use asset and lease obligations. The Company elected the package of practical expedients permitted under the transition guidance and applied the modified retrospective approach which allowed the Company to carry forward the historical lease classification. Adoption of this standard resulted in the recording of an operating lease right-of-use asset and corresponding operating lease liabilities of $0.3 million. The Company’s condensed consolidated balance sheets for reporting periods beginning on January 1, 2019 are presented under the new guidance, while prior period amounts were not adjusted and continue to be reported in accordance with previous guidance. The Company does not record an operating lease right-of-use asset and corresponding lease liability for leases with an initial term of twelve months or less and recognizes lease expense for these leases as incurred over the lease term. Upon adoption date, the Company had only one operating lease with a remaining term of less than 12 months for its offices located in Charlotte, NC, which will terminate on July 31, 2019, and for which the Company is not reasonably certain of renewing the lease. The remaining operating lease payments are $22. As of March 31, 2019, the Company has not entered into any additional lease arrangements. Operating lease right-of-use asset and operating lease liabilities are recognized upon the adoption date based on the present value of lease payments over the remaining lease term. The Company does not have a public credit rating and carries no debt. As such, several factors were considered in the determination of its incremental borrowing rate used in determining the present value of lease payments. The Company examined the Bloomberg credit ratings for similar companies; assumed equivalency between the Canadian and US markets for collateralized debt; factored in the cumulative dividend rate on convertible preferred shares; and used short-term rates for the remaining lease term of 23 months. This resulted in electing to use 8% as its incremental borrowing rate. Lease expense is recognized on a straight-line basis over the lease term. The Company’s lease arrangement does not have lease and non-lease component which are accounted for separately. Upon adoption and as at March 31, 2019, the Company had one operating lease right-of-use asset and approximately $39 of the operating lease right-of-use asset had been amortized. The adoption of the accounting standard did not materially impact the Company’s consolidated statement of operations or its consolidated statement of cash flows for the three months ended March 31, 2019. The Company operating lease right-of-use asset is as follows as at March 31, 2019: Adoption as at January 1, 2019 $ 321 Recognition of right-of-use asset in the three-month period ending March 31, 2019 (39) $ 282 Operating lease expenses of $44 are included in general and administrative operating expenses in the consolidated statement loss and comprehensive loss, and within operating activities in the statement of cash flows for the three-month period ended March 31, 2019. The following table summarizes the future minimum lease payments of right-of-use assets operating lease as at March 31, 2019: April 1, 2019 to March 31, 2020 $ 183 April 1, 2020 to November 30, 2020 107 290 Less interest (18) $ 272 As at December 31, 2018, the Company had a lease commitment for its headquarters located in Ville Saint-Laurent, Quebec, expiring on November 30, 2020 with an option to renew for an additional three years and a commitment for its office located in Charlotte, North Carolina, expiring on July 30, 2019. The minimum lease payments as at December 31, 2018 were as follows: Lease Lease operating base rent Total lease expenses expenses commitment 2019 $ 86 $ 130 $ 216 2020 79 85 164 $ 165 $ 215 $ 380 Total rental expense under operating leases for the year ended December 31, 2018 was $232.

Summary of significant accoun_3

Summary of significant accounting policies (Tables)	3 Months Ended
	Mar. 31, 2019
Summary of significant accounting policies
Schedule of operating lease right-of-use asset	The Company operating lease right-of-use asset is as follows as at March 31, 2019: Adoption as at January 1, 2019 $ 321 Recognition of right-of-use asset in the three-month period ending March 31, 2019 (39) $ 282
Schedule of future minimum lease payments of right-of-use assets operating lease	The following table summarizes the future minimum lease payments of right-of-use assets operating lease as at March 31, 2019: April 1, 2019 to March 31, 2020 $ 183 April 1, 2020 to November 30, 2020 107 290 Less interest (18) $ 272
Schedule of minimum lease payments	The minimum lease payments as at December 31, 2018 were as follows: Lease Lease operating base rent Total lease expenses expenses commitment 2019 $ 86 $ 130 $ 216 2020 79 85 164 $ 165 $ 215 $ 380

Prepaid expenses (Tables)

Prepaid expenses (Tables)	3 Months Ended
	Mar. 31, 2019
Prepaid expenses
Schedule of prepaid expenses	March 31, 2019 December 31, 2018 Contract research 4,066 1,136 Costs related to initial public offering 1,244 187 Other prepaid expenses 172 75 5,482 1,398

Other receivables (Tables)

Other receivables (Tables)	3 Months Ended
	Mar. 31, 2019
Other receivables
Schedule of other receivables	March 31, 2019 December 31, 2018 Interest receivable $ 162 $ 178 Sales tax receivable 103 209 $ 265 $ 387

Accounts payable and accrued _2

Accounts payable and accrued liabilities (Tables)	3 Months Ended
	Mar. 31, 2019
Accounts payable and accrued liabilities
Schedule of accounts payable and accrued liabilities	March 31, 2019 December 31, 2018 Trade accounts payable $ 2,040 $ 2,603 Accrued research & development liabilities 982 1,012 Other accrued liabilities 593 164 Accrued compensation and benefits payable 291 698 $ 3,906 $ 4,477

Shareholders' deficit (Tables)

Shareholders' deficit (Tables)	3 Months Ended
	Mar. 31, 2019
Shareholders' deficit
Schedule of additional paid-in capital	Three months ended March 31, 2019 2018 Opening balance $ 2,655 $ 2,372 Share-based compensation expense 211 125 Exercise of stock options (26) (25) Closing balance $ 2,840 $ 2,472
Schedule of outstanding and exercisable options	The outstanding and exercisable options as at March 31 were as follows: 2019 2018 Weighted Weighted average average Number exercise Number exercise of shares price of shares price Outstanding at beginning of period 2,295,045 $ 1.7714 968,782 $ 1.1330 Forfeited/expired — — (12,198) 1.0958 Granted 116,742 9.4152 820,450 1.5426 Exercised (18,153) 1.3225 (37,675) 0.8458 Outstanding at end of period 2,393,634 $ 1.9850 1,739,359 $ 1.3351 Exercisable at end of period 670,168 $ 1.3511 521,926 $ 1.0053
Schedule of non-vested share options activity	The non-vested options as at March 31 were as follows: 2019 2018 Weighted Weighted Number average Number average of options fair value of options fair value Non-vested at beginning of period 1,706,303 $ 1.3458 451,113 $ 1.0266 Forfeited/expired — — (12,198) 1.0639 Granted 116,742 6.6491 820,450 1.1117 Vested, outstanding (99,579) $ 1.1809 (41,932) $ 1.1915 Non-vested share options at end of period 1,723,466 $ 1.7181 1,217,433 $ 1.0798
Schedule of weighted average assumptions for the options granted	The fair value of options granted was estimated using the Black-Scholes option pricing model, resulting in the following weighted average assumptions for the options granted for the three-month periods ended March 31: 2019 2018 Exercise price $ 9.42 $ Share price $ 9.42 $ Volatility 80 % 82 % Risk-free interest rate 2.50 % % Expected life 6.25 years 6.25 years Dividend 0 % 0 %
Schedule of share-based compensation expense	The Company recognized share-based compensation expense as follows for the three months ended March 31: 2019 2018 Administration $ 70 $ Research and development 125 Commercial activities 16 $ 211 $

Net loss per share (Tables)

Net loss per share (Tables)	3 Months Ended
	Mar. 31, 2019
Net loss per share
Schedule of potentially dilutive securities excluded from the computation of diluted weighted average shares	The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as of March 31, as they would be anti-dilutive: 2019 2018 Convertible preferred shares 17,550,802 9,433,910 Share options and unvested restricted share awards 2,955,936 2,017,007 20,506,738 11,450,917

Organization and nature of op_2

Organization and nature of operations (Details)	Apr. 26, 2019
Organization and nature of operations
Reverse stock split	0.1880

Summary of significant accoun_4

Summary of significant accounting policies - Adoption of ASU 2016-02 (Details) $ in Thousands	Jan. 01, 2019USD ($)	Mar. 31, 2019USD ($)leaseitem
Adoption of FASB Accounting Standards
Operating lease right-of use asset	$ 321	$ 282
Operating Lease, Liability		272
Carrying value of debt		$ 0
Remaining lease term		23 months
Incremental borrowing rate		8.00%
Number of operating lease ROU assets | item		1
Charlotte, NC
Adoption of FASB Accounting Standards
Short-term lease commitment		true
Number of short-term leases | lease		1
Remaining Operating lease payments		$ 22
ASU 2016-02, Leases
Adoption of FASB Accounting Standards
Election of practical expedients package	true
ASU 2016-02, Leases | Adjustment
Adoption of FASB Accounting Standards
Operating lease right-of use asset	$ 300
Operating Lease, Liability	$ 300

Summary of significant accoun_5

Summary of significant accounting policies - Changes in ROU assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Jan. 01, 2019
Changes in operating lease right-of-use asset
Recognition of right-of-use asset in the three-month period ending March 31, 2019	$ (39)
Operating lease right-of use asset	282	$ 321
Operating lease expenses	$ 44

Summary of significant accoun_6

Summary of significant accounting policies - Future minimum lease payments (Details) $ in Thousands	Mar. 31, 2019USD ($)
Future minimum lease payments
April 1, 2019 to March 31, 2020	$ 183
April 1, 2020 to November 30, 2020	107
Total future minimum lease payments	290
Less interest	(18)
Operating lease liability	$ 272

Summary of significant accoun_7

Summary of significant accounting policies - Minimum lease payments (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018USD ($)
Summary of significant accounting policies
Renewal additional term (in years)	3 years
Lease operating expenses
2019	$ 86
2020	79
Total	165
Lease base rent expenses
2019	130
2020	85
Total	215
Total lease commitment
2019	216
2020	164
Total	380
Rental expense under operating leases	$ 232

Prepaid expenses (Details)

Prepaid expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Prepaid expenses
Contract research	$ 4,066	$ 1,136
Costs related to initial public offering	1,244	187
Other prepaid expenses	172	75
Total	$ 5,482	$ 1,398

Other receivables (Details)

Other receivables (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Other receivables
Interest receivable	$ 162	$ 178
Sales tax receivable	103	209
Other receivables	$ 265	$ 387

Accounts payable and accrued _3

Accounts payable and accrued liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Accounts payable and accrued liabilities
Trade accounts payable	$ 2,040	$ 2,603
Accrued research & development liabilities	982	1,012
Other accrued liabilities	593	164
Accrued compensation and benefits payable	291	698
Accounts payable and accrued liabilities	$ 3,906	$ 4,477

Shareholders' deficit - Authori

Shareholders' deficit - Authorized share capital (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Authorized share capital
Cash consideration	$ 25	$ 30
Exercise of stock options (in shares)	18,153	37,675
Average exercise price (in dollar per share)	$ 1.3225	$ 0.8458
Amount reclassified from APIC to share capital	$ (26)	$ (25)
Common shares
Authorized share capital
Number of shares issued during the period	18,153	37,675
Exercise of stock options (in shares)	18,153	37,675

Shareholders' deficit - Additio

Shareholders' deficit - Additional paid-in capital (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Additional paid-in capital
Balance at the beginning of period	$ (55,210)
Share-based compensation expense	211	$ 125
Exercise of stock options	25	30
Balance at the end of period	(65,426)
Additional paid-in capital
Additional paid-in capital
Balance at the beginning of period	2,655	2,372
Share-based compensation expense	211	125
Exercise of stock options	(26)	(25)
Balance at the end of period	$ 2,840	$ 2,472

Shareholders' deficit - Share-b

Shareholders' deficit - Share-based compensation -Summary (Details) - 2011 Plan - shares	Oct. 15, 2018	Mar. 31, 2019
Share-based compensation
Aggregate number of shares granted		2,898,351
Aggregate number of shares cancelled/forfeited		49,845
Options
Share-based compensation
Total number of shares available for awards under the plan		3,238,943
Available for future grants		390,437
Options | Share-based Compensation Award, Tranche One
Share-based compensation
Percentage of shares to vest	25.00%
Options | Share-based Compensation Award, Tranche Two
Share-based compensation
Percentage of shares to vest	2.0833%

Shareholders' deficit - Share_2

Shareholders' deficit - Share-based compensation - Outstanding and exercisable options (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Outstanding and exercisable options, number of shares
Outstanding at beginning of period	2,295,045	968,782
Forfeited/expired		(12,198)
Granted	116,742	820,450
Exercised	(18,153)	(37,675)
Outstanding at end of period	2,393,634	1,739,359
Exercisable at end of period	670,168	521,926
Outstanding and exercisable options, weighted average exercise price
Outstanding at beginning of period	$ 1.7714	$ 1.1330
Forfeited/expired		1.0958
Granted	9.4152	1.5426
Exercised	1.3225	0.8458
Outstanding at end of period	1.9850	1.3351
Exercisable at end of period	$ 1.3511	$ 1.0053
Weighted average remaining contractual life (in years)	8 years 6 months	8 years 8 months 12 days
Weighted average remaining contractual life for vested options (in years)	6 years 7 months 6 days	6 years 10 months 24 days
Options forfeited	0	12,198
Weighted average fair values of options granted	$ 6.6491	$ 1.1117
Share-based compensation expense	$ 211	$ 125
Unrecognized compensation cost	$ 3,047	$ 1,333
Expected period for recognition	3 years	3 years 4 months 24 days

Shareholders' deficit - Share_3

Shareholders' deficit - Share-based compensation - Non-vested share options (Details) - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Number of options
Non-vested at beginning of period	1,706,303	451,113
Forfeited/expired		(12,198)
Granted	116,742	820,450
Vested, outstanding	(99,579)	(41,932)
Non-vested share options at end of period	1,723,466	1,217,433
Weighted average fair value
Non-vested at beginning of period	$ 1.3458	$ 1.0266
Forfeited/expired		1.0639
Granted	6.6491	1.1117
Vested, outstanding	1.1809	1.1915
Non-vested at end of period	$ 1.7181	$ 1.0798

Shareholders' deficit - Share_4

Shareholders' deficit - Share-based compensation - Weighted average assumptions for the options granted (Details) - Options - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Share-based compensation
Exercise price (in dollar per share)	$ 9.42	$ 1.54
Share price (in dollar per share)	$ 9.42	$ 1.54
Volatility (as a percent)	80.00%	82.00%
Risk-free interest rate (as a percent)	2.50%	2.78%
Expected life (in years)	6 years 3 months	6 years 3 months
Dividend (as a percent)	0.00%	0.00%

Shareholders' deficit - Share_5

Shareholders' deficit - Share-based compensation - Recognized share-based compensation expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Share-based compensation
Share-based compensation expense	$ 211	$ 125
Administration
Share-based compensation
Share-based compensation expense	70	29
Research and development
Share-based compensation
Share-based compensation expense	125	77
Commercial activities
Share-based compensation
Share-based compensation expense	$ 16	$ 19

Net loss per share (Details)

Net loss per share (Details) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Net loss per share
Potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding	20,506,738	11,450,917
Convertible preferred shares
Net loss per share
Potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding	17,550,802	9,433,910
Share options and unvested restricted share awards
Net loss per share
Potentially dilutive securities excluded from the computation of diluted weighted average shares outstanding	2,955,936	2,017,007

Government assistance (Details)

Government assistance (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Government assistance
Research and development expenditures eligible for investment tax credits	$ 78	$ 82

Subsequent events - Initial Pub

Subsequent events - Initial Public Offering (Details) - USD ($) $ / shares in Units, $ in Millions	May 15, 2019	May 13, 2019	Mar. 31, 2019	Mar. 31, 2018
Common shares
Subsequent events
Number of shares issued during the period			18,153	37,675
Subsequent events | Initial public offering
Subsequent events
Number of shares issued during the period		5,500,000
Public offering price		$ 15
Gross proceeds of initial public offering		$ 94.9
Subsequent events | Initial public offering | Common shares
Subsequent events
Number of shares issued upon conversion of preferred shares		17,550,802
Subsequent events | Underwriters option
Subsequent events
Number of shares issued during the period	825,000
Public offering price	$ 15

Subsequent events - Stock Incen

Subsequent events - Stock Incentive Plans (Details) - Subsequent events - shares	May 08, 2019	May 07, 2019
2019 Plan
Subsequent events
Total number of shares available for awards under the plan	4,710,564
Number of new shares available for awards under the plan	1,923,501
Percentage of capital shares outstanding	4.00%
2011 Plan
Subsequent events
Total number of shares available for awards under the plan		2,787,063
ESPP
Subsequent events
Percentage of capital shares outstanding	1.00%
Number of shares of the Company's share capital purchased	0
Shares reserved for issuance	278,734
Increase shares reserved for issuance	487,837