Milestone Pharmaceuticals Inc.

1 Organization and Nature of Operations

Milestone Pharmaceuticals Inc., or “Milestone,” or the “Company,” is a biopharmaceutical company incorporated under theBusiness Corporations Act (Québec). Milestone’s headquarters is currently located in Montréal (Québec), Canada. Our common shares began trading on The Nasdaq Global Select Market on May 9, 2019. Our common shares trade under the symbol “MIST”. Milestone is focused on the development and commercialization of cardiovascular medicines. Milestone’s lead product candidate, etripamil, is a novel, potent rapid-onset calcium channel blocker that the Company designed and is developing as a rapid-onset nasal spray to be administered by patients. The Company is developing etripamil to treat paroxysmal supraventricular tachycardia, atrial fibrillation, and other cardiovascular indications.

2 Summary of Significant Accounting Policies

a) Basis of Consolidation

The condensed consolidated financial statements include the accounts of the Company and Milestone Pharmaceuticals USA, Inc. All intercompany transactions and balances have been eliminated.

b) Basis of Presentation and Use of Accounting Estimates and Significant Accounting Policies

These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or “U.S. GAAP,” pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC) for interim financial information, 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. Certain information, in particular the accompanying notes normally included in the annual financial statements prepared in accordance with U.S. GAAP have been omitted or condensed. Accordingly, these 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, 2024.

In the opinion of the Company's management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its condensed consolidated balance sheet as of September 30, 2025, and its condensed consolidated statements of loss and shareholders’ equity for the three and nine months ended September 30, 2025 and 2024, and its condensed consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024.

The condensed consolidated balance sheet as of December 31, 2024, was derived from the audited annual consolidated financial statements, but does not contain all the footnote disclosures required by accounting principles generally accepted in the United States of America.

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 U.S. 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 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,

c) Significant Risks and Uncertainties

The Company is subject to challenges and risks specific to its business and its ability to execute on its strategy, as well as risks and uncertainties common to companies in the pharmaceutical industry, including, without limitation, risks and uncertainties associated with: obtaining regulatory approval of its product candidate; delays or problems in the supply of its study drug or failure to comply with manufacturing regulations; identifying, acquiring or in-licensing product candidates; pharmaceutical product development and the inherent uncertainty of clinical success; and the challenges of protecting and enhancing its intellectual property rights; and complying with applicable regulatory requirements.

Further, the Company may be impacted by general economic, political, and market conditions, including deteriorating market conditions due to investor concerns regarding inflation, tariffs, armed conflicts, and overall fluctuations in the financial markets in the U.S. and abroad.

d) Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, or “ASU 2023-09.” The amendments in this update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). The amendments also require entities on an annual basis to disclose disaggregated amounts of income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating this guidance for impacts on its annual income tax disclosures.

In November 2024, the FASB issued ASU 2024-03 “Income Statement: Reporting Comprehensive Income— Expense Disaggregation Disclosures,” which requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the income statement, as well as disclosures about selling expenses. This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating this guidance to determine the impact it may have on its financial statement disclosures.

e) Sources of Liquidity and Funding Requirements

The Company continues to incur operating losses, has experienced negative operating cash flows since its inception, and anticipates continuing to incur losses for the immediate future. As of September 30, 2025, the Company had cash, cash equivalents and short-term investments of $82.6 million and an accumulated deficit of $413.2 million. As a result of the Complete Response Letter, or the “CRL,” received in March 2025 from the Food and Drug Administration, the Company temporarily paused the ramping up of operational expenditures related to the commercialization of etripamil and is monitoring its cash flows. Management has evaluated the Company’s operating plan and future cash flow requirements

against its existing cash and cash equivalents and short-term investments and expects its available liquidity will be sufficient to support its operations for at least the next 12 months from the date of issuance of these unaudited interim condensed consolidated financial statements.

3 Revenues

The Company recordedno revenue for the three and nine months ended September 30, 2025 and 2024, respectively. We earn license revenue when milestones are reached pursuant to our License and Collaboration Agreement, dated May 15, 2021, with Corxel Pharmaceuticals, or “Corxel,” formerly known as Ji Xing Pharmaceuticals Limited (such party “Ji Xing,” and such agreement, the “Ji Xing License Agreement”). During the three and nine months ended September 30, 2025 and 2024, no milestones were achieved under this agreement. For details on the arrangement with Corxel, see Note 3 to our audited consolidated financial statements for the year ended December 31, 2024, filed on Form 10-K.

4 Short-term Investments

Short-term investments are classified as held-to-maturity, are initially recognized at fair value and are subsequently accounted for at amortized cost. They are comprised of guaranteed investment certificates and U.S. treasury bills with a maturity greater than 90 days but less than one year and, as such, are classified as current assets.

As of September 30, 2025, $0.9 million in short-term investments were pledged as collateral for a letter of credit.

5** Debt**

On March 29, 2023, we closed the transactions contemplated by a note purchase agreement, or the “Note Purchase Agreement,” with RTW Investments LP and certain of its affiliates, or collectively, “RTW,” and issued and sold $50.0 million principal amount of 6.0% Convertible Senior Notes due 2029, or the “2029 Convertible Notes,” to the holders. For more details on the agreement with RTW, see Note 10 to our audited consolidated financial statements for the year ended December 31, 2024, filed on Form 10-K.

In accounting for the issuance of the 2029 Convertible Notes, the Company determined there were no embedded features, which require bifurcation between debt and equity components. As a result, the 2029 Convertible Notes are accounted for as a liability. As of September 30, 2025, the estimated fair value of the Convertible Notes was approximately $60.3 million based on level 2 inputs.

The net carrying amount of the Convertible Note is as follows:

The following table presents the total amount of interest cost recognized relating to the 2029 Convertible Notes:

6 Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities are comprised of the following:

7 Shareholders’ Equity

Authorized Share Capital

The Company has authorized and issued common shares, voting and participating, without par value, of which unlimited shares were authorized, and 85,169,344 shares were issued and outstanding as of September 30, 2025.

As of September 30, 2025, there were 2,332,305 common shares available for issuance under the Employee Stock Purchase Plan, or the “ESPP,” of which 1,830,799 are available for future purchases.

On July 11, 2025, the Company entered into an underwriting agreement, or the “Underwriting Agreement,” related to an underwritten public offering, or the “2025 Offering,” of (i)31,500,000 of the Company’s common shares, without par value, accompanying Series A common warrants, or the “Series A Common Warrants,” to purchase an aggregate of 31,500,000 common shares and accompanying Series B common warrants, or the “Series B Common Warrants,” to purchase an aggregate of 31,500,000 common shares, at a combined public offering price of $1.50 per share and accompanying Series A Common Warrant and Series B Common Warrant and (ii) in lieu of common shares to certain investors that so choose, pre-funded warrants to purchase 3,502,335 common shares, or the “2025 Pre-Funded Warrants” and, together with the Series A Common Warrants and the Series B Common Warrants, the “Warrants,” accompanying Series A Common Warrants to purchase an aggregate of 3,502,335 common shares and accompanying Series B Common Warrants to purchase an aggregate of 3,502,335 common shares, at a combined public offering price of $1.499 per Pre-Funded Warrant and accompanying Series A Common Warrant and Series B Common Warrant, which represented the combined public offering price for the Shares and accompanying common warrants less the $0.001 per share exercise price for each such Pre-Funded Warrant. All the Securities sold in the 2025 Offering were sold by the Company.

The net proceeds to the Company from the 2025 Offering were $48.6 million after deducting underwriting commissions and estimated offering expenses payable by the Company.

On February 28, 2024, we entered into an underwriting agreement related to an underwritten public offering of 16,666,667 of our common shares, without par value, at a public offering price of $1.50 per share and, in lieu of common shares to certain investors, pre-funded warrants to purchase 3,333,333 common shares at a public offering price of $1.499 per pre-funded warrant. Each pre-funded warrant has an exercise price of $0.001 per share. The pre-funded warrants were exercisable immediately upon issuance, subject to certain beneficial ownership limitations. Under the terms of the agreement, we granted the underwriters party an option to purchase up to an additional 3,000,000 common shares at the same price per share as the other common shares sold in this offering, which was exercised by such underwriters in full on February 29, 2024.

The Company determines the accounting classification of warrants that are issued, as either liability or equity, by first assessing whether the warrants meet liability classification in accordance with ASC 480-10,Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, and then in accordance with ASC 815-40,Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock. Under ASC 480, warrants are considered liability classified if the warrants are mandatorily redeemable, obligate the issuer to settle the warrants or the underlying shares by paying cash or other assets, or must or may require settlement by issuing a variable number of shares.

If warrants do not meet liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the warrants do not require liability classification under ASC 815-40, in order to conclude equity classification, the Company assesses whether the warrants are indexed to its common stock and whether the warrants are classified as equity under ASC 815-40 or other applicable U.S. GAAP. After all relevant assessments are made, the Company concludes whether the warrants are classified as liability or equity. The Company's outstanding common stock warrants are classified as equity and recorded in APIC, based on an allocation of the proceeds from the 2025 Offering, which was based on the relative fair value of the Series A and B common warrants at the issuance date and is not subject to change after the issuance date. The fair value used for the relative fair value allocation was calculated using the Black-Scholes Model for the Series A warrants and the Monte-Carlo simulation method for the Series B warrants. As of September 30, 2025,35,002,335 Series A Common Warrants and 35,002,335 Series B Common Warrants remained outstanding.

8 Share-Based Compensation

Stock Options

Under the Company’s 2019 Equity Incentive Plan, or the “2019 Plan,” and the Company’s Stock Option Plan, or the “2011 Plan,” unless otherwise decided by the Board of Directors, options vest and are exercisable as follows:25%vest and are exercisable on the one year anniversary of the grant date andone thirty-sixth (1/36 th) of theremaining options vest and are exercisable each month thereafter, such that options are vested in full onfour-year anniversary of the grant date.

On January 1, 2025, the number of the Company’s common shares reserved for issuance under the 2019 Plan automatically increased by 2,134,159 common shares. Further, on June 10, 2025, the number of the Company’s common shares reserved for issuance under the 2019 Plan increased by an additional 4,000,000 shares, which was approved during the Annual General Meeting of Shareholders. In addition,125,323 options have been forfeited under the 2011 Plan since the adoption of the 2019 Plan and have become available for issuance under the 2019 Plan. Further, since the adoption of the plan,561,000 of previously issued options were cancelled and were made available for future grants. As of September 30, 2025, there were 15,656,429 common shares available for issuance under the 2019 Plan, of which 4,730,684 common shares were available for future grants.

On November 10, 2021, the Company established a 2021 Inducement Plan, or the “Inducement Plan,” through the granting of awards. This 2021 Inducement Plan is intended to help the Company provide an inducement for certain individuals to enter employment with the Company, incentives for such persons to exert maximum efforts for the success of the Company and a means by which employees may benefit from increases in value of the common shares. As of September 30, 2025, there were 1,000,000 shares available for issuance under the 2021 Inducement Plan, of which 362,000 shares were available for future grants.

The total outstanding and exercisable options from the 2011 Plan, 2019 Plan and Inducement Plan as of and for the nine-month period ending September 30 were as follows:

The weighted average remaining contractual life was 6.3 and 6.6 years for outstanding options as of September 30, 2025 and 2024, respectively. The weighted average remaining contractual life was 5.5 and 6.0 years for vested options, as of September 30, 2025 and 2024, respectively.

There was $4.4 million and $6.5 million of total unrecognized compensation cost related to non-vested share options as of September 30, 2025 and 2024, respectively. The share options are expected to be recognized over a remaining weighted average vesting period of 1.8 years and 1.6 years as of September 30, 2025 and 2024, respectively.

Options granted are valued using the Black-Scholes option pricing model. This model also requires assumptions, including expected option life, volatility, risk-free interest rate and dividend yield, which greatly affect the calculated values. Amortization of the fair value of the options over vesting years has been expensed and credited to additional paid-in capital in shareholders’ equity.

The non-vested options as of and for the nine-month period ending September 30 were as follows:

The fair value of options granted for the 2011 Plan, 2019 Plan and Inducement Plan were estimated using the Black-Scholes option pricing model, resulting in the following weighted average assumptions for the options granted:

Expected volatility is determined using the Company’s historical volatility. Prior to establishing sufficient historical volatility, the Company used comparable companies for which the information is publicly available. The risk-free interest rate is determined based on the U.S. 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. The total grant date fair value for options granted during the nine months ended September 30, 2025 and 2024 was $2.7 million and $2.0 million, respectively.

Performance Stock Options

On May 6, 2024, the Company, pursuant to the 2019 Plan, awarded 924,000 performance stock options to employees. The performance stock options were granted “at-the-money” and have a term of 10 years.

The original grant-date fair value of each option was estimated on the date of grant using the same option valuation model used for the options outlined above. The original grant-date fair value of $1.3 million was determined using an expected volatility of 98.5%, term of 5.82 years, strike price of $1.74, and risk-free rate of 4.43%. Compensation expense for performance-based stock options is only recognized when management determines it is probable that the awards will vest.

The vesting of the performance-based stock options is conditional upon the U.S. Food and Drug Administration, or “FDA,” approval of etripamil. Subject to the option-holder’s continuous service as of each such date,50% of the option shares will vest on thesix-month anniversary of the approval date and the remaining 50% of the option shares will vest on theone-year anniversary of such approval date. The expense for the performance-based stock options is not recognized until the performance conditions are deemed probable of achievement. The Company did not record any expense related to the performance-based stock options during the three or nine months ended September 30, 2025, as the performance conditions were not deemed probable of being met. The weighted average grant date fair value of the performance stock options awarded was $1.38 per option. No performance stock options were awarded for the three or nine months ended September 30, 2025.

Employee Stock Purchase Plan

On July 15, 2022, the Company offered an ESPP, in which participation is available to our employees in the United States and Canada who meet certain service eligibility requirements. Eligible employees may authorize an amount up to 15% of their salary to purchase common stock at the lower of a 15% discount to the beginning price of the participation period or a 15% discount to the ending price of eachsix-month purchase interval. The ESPP also provides for an automatic reset

feature to start participants on a newtwelve-month participation period in the event that the common stock market value on a purchase date is less than the common stock value on the first day of thetwelve-month offering period.

On January 1, 2025, the number of common shares reserved for issuance under the ESPP automatically increased by 533,539 shares. As of September 30, 2025, the Company has 2,332,305 common shares available for issuance under the ESPP, of which 501,506 shares of common stock have been issued. Compensation expense for purchase rights under the ESPP related to the purchase discount and the “look-back” option was determined using a Black-Scholes option pricing model.

Performance Share Units

On May 6, 2024, the Company, pursuant to the 2019 Plan, awarded 924,000 Performance Share Units, or “PSUs,” to employees. The PSUs vest subject to the satisfaction of certain performance conditions established by the Company’s Compensation Committee. The FDA approval of etripamil represents the performance condition for the vesting of these PSUs.

The number of PSUs granted represents the total number of common shares that may be earned. However, the actual number of shares earned will be based on the satisfaction of the performance criteria. Upon satisfaction of the performance criteria,100% of the earned shares will vest. Stock-based compensation costs associated with these PSUs are reassessed each reporting period based on estimated performance achievement. The weighted average grant date fair value of the PSUs granted was $1.74 per share. The Company did not record any expense related to the PSUs during the three and nine months ended September 30, 2025, as the performance conditions were not deemed probable of being met. Further, no additional performance stock units were awarded for the three or nine months ended September 30, 2025.

Restricted Stock Units

Pursuant to the 2019 Plan, the Company issues restricted stock units, or “RSUs,” to employees which vest based on a service criteria. When vested, the RSUs represent the right to be issued a number of shares of the Company’s common stock equal to the number of RSUs granted. The grant date fair value for RSUs is based on the market price of the Company’s common stock on the date of the grant. The fair value is then amortized to compensation expense over the requisite service period or vesting term. The Company issuedno RSUs and 988,850 RSUs for the three and nine months ended September 30, 2025, respectively. The weighted average grant date fair value for the RSUs issued during the nine months ended September 30, 2025, was $2.02 per share. No RSUs were issued for the three or nine months ended September 30, 2024.

The total unrecognized compensation cost related to the non-vested RSUs as of September 30, 2025, was $1.7 million and will be recognized over a weighted average period of approximately 3.32 years.

Share-based Compensation Expense

The Company recognized total share-based compensation expense for all plans as follows:

9 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 and pre-funded warrants outstanding during the period. In addition to the conversion feature on the 2029 Convertible Notes described above and common warrants described above, which the Company reviewed and concluded that if-converted or exercised would be anti-dilutive due to the facts surrounding the instruments, the following potentially dilutive securities have also been excluded from the computation of diluted weighted average shares outstanding as of September 30, as they would be anti-dilutive:

Amounts above reflect the common share equivalents of the noted instruments.

On March 27, 2023, we entered into a purchase and sale agreement, or, as amended, the “Royalty Purchase Agreement,” with RTW. On July 10, 2025, the Company entered into an amendment, or the “RTW Amendment,” to the Royalty Purchase Agreement. Pursuant to the RTW Amendment, the marketing approval deadline for etripamil has been extended from September 30, 2025 to December 31, 2025.

Pursuant to the Royalty Purchase Agreement, RTW has agreed to purchase, following the FDA approval of etripamil on or prior to December 31, 2025 (subject to certain conditions), in exchange for a purchase price of $75.0 million, the right to receive a tiered quarterly royalty payments, or the “Royalty Interest,” on the annual net product sales of etripamil in the United States in an amount equal to: (i)7%, or the “Initial Tier Royalty,” of annual net sales up to $500 million, (ii)4% of annual net sales greater than $500 million and less than or equal to $800 million, and (iii)1% of annual net sales greater than $800 million. If certain revenue thresholds for aggregate annual net sales are not met, the Initial Tier Royalty will increase to 9.5% beginning on January 1 of the following calendar year until a subsequent sales threshold is attained, at which time the Initial Tier Royalty would revert back to 7%.

Based on the Company’s assessment of the terms and conditions under the Royalty Purchase Agreement, there is no accounting recognition required in these interim financial statements.

11 Other** Receivables**

Other receivables are comprised of the following:

12 Segment Reporting

The Company manages its operations as asingle operating segment for the purpose of assessing performance and making operating decisions while focusing on the development and commercialization of innovative cardiovascular medicines. These operations, which are reported on a consolidated basis, are focused on a single product. The accounting policies of the single operating segment are the same as those described in the summary of significant accounting policies. The chief operating decision maker, or “CODM,” assesses performance of the Company’s single operating segment based on

consolidated net loss. Net loss is used by the CODM to evaluate budget to actual analytics, which are used to monitor expenditures and ensure the Company is meeting established budgets. The CODM is the principal officer group, which includes the Company’s chief executive officer and chief financial officer.

The following table presents information about the Company’s significant expenses, as provided to the Company’s CODM, and includes a reconciliation to consolidated net loss:

The measure of segment assets is reported on the balance sheet as total consolidated assets.

13 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:

For the three and nine months ended September 30, 2025 and 2024, there wereno financial instruments measured at fair value on a recurring or non-recurring basis. The carrying amounts of certain financial instruments, including cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued expenses approximate their fair values due to the short-term nature of such instruments. Refer to Note 5, “Debt,” for disclosure of the fair value of the Convertible Notes.