MIRA PHARMACEUTICALS INC

Previous wording

The following discussion and analysis should be read in conjunction with the Condensed Financial Statements and Notes thereto included elsewhere in this Quarterly Report. This discussion contains certain forward-looking statements that involve risks and uncertainties. The Company’s actual results and the timing of certain events could differ materially from those discussed in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth herein and elsewhere in this Quarterly Report and in the Company’s other filings with the SEC. See “Cautionary Note Regarding Forward Looking Statements” above.

Current wording

The following discussion and analysis should be read in conjunction with the Condensed Financial Statements and Notes thereto included elsewhere in this Quarterly Report. This discussion contains certain forward-looking statements that involve risks and uncertainties. The Company’s actual results and the timing of certain events could differ materially from those discussed in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth herein and elsewhere in this Quarterly Report and in the Company’s other filings with the SEC. See “Cautionary Note Regarding Forward Looking Statements” below.

Previous wording

We are a pre-clinical-stage pharmaceutical development company with two neuroscience programs targeting a broad range of neurologic and neuropsychiatric disorders. We hold exclusive license rights in the U.S., Canada and Mexico forKetamir-2, a novel, patent pending oral ketamine analog under pre-clinical investigation to potentially deliver ultra-rapid antidepressant effects, providing hope for individuals battling TRD, MDSI and potentially PTSD.

Current wording

We are a pre-clinical-stage pharmaceutical development company with two neuroscience programs targeting a broad range of neurologic and neuropsychiatric disorders. We hold exclusive license rights in the U.S., Canada and Mexico forKetamir-2, a novel, patent pending oral ketamine analog under pre-clinical investigation to potentially deliver ultra-rapid antidepressant effects, providing hope for individuals battling NP, TRD, MDSI and potentially PTSD.

Previous wording

The DEA’s scientific review of Ketamir-2 and MIRA-55 concluded that both would not be considered a controlled substance or listed chemical under the CSA and its governing regulations.

Current wording

The DEA’s scientific review of Ketamir-2 and MIRA-55 concluded that neither would be considered a controlled substance or listed chemical under the CSA and its governing regulations.

Previous wording

See Note 1 of the Notes to Condensed Financial Statements included in Item 1 of this Report for a summary of significant accounting policies and information on recently issued accounting pronouncements.

Current wording

See Note 1 of the Notes to Condensed Financial Statements included in Item 1 of this Quarterly Report for a summary of significant accounting policies and information on recently issued accounting pronouncements.

Previous wording

For the three months endedJune 30, 2024 compared to the three months ended June 30, 2024

Current wording

For the three months endedSeptember 30, 2024 compared to the three months ended September 30, 2023

Previous wording

Research and Development Expenses. During the three months ended June 30, 2024, we incurred $0.6 million in research and development expenses, which were primarily related to initial payments for pre-clinical research projects for Ketamir. We incurred $0.3 million in research and development expenses during the three months ended June 30, 2023, which were offset by $0.4 million in research and development credits. The credits were primarily related to toxicology expenses for projects and milestones that were not performed by our vendors.

Current wording

Research and Development Expenses. During the three months ended September 30, 2024, we incurred $1.1 million in research and development expenses, which were primarily related to initial payments for pre-clinical research projects. We incurred $1.0 million in research and development expenses during the three months ended September 30, 2023, relating to initial payment for toxicology study costs. Research and development expenses include pre-clinical, toxicology and consultant expenses.

Previous wording

General and Administrative Expenses. We incurred $1.1 million and $1.0 million in general and administrative expenses during the three months ended June 30, 2024 and June 30, 2023, respectively. General and administrative expenses are composed primarily of compensation, insurance, professional fees, stock-based compensation, administration and other related costs. The decrease is due primarily to a decrease in stock-based compensation expense in 2023.

Current wording

General and Administrative Expenses. We incurred $1.0 million and $2.1 million in general and administrative expenses during the three months ended September 30, 2024 and September 30, 2023, respectively. General and administrative expenses are composed primarily of compensation, insurance, professional fees, stock-based compensation, administration and other related costs. The decrease is primarily due to stock-based compensation, debt issuance costs, and compensation related to the IPO efforts of the executive team that occurred in 2023 and is not reoccurring.

Previous wording

Interest income (expense). We earned $0.04 million in interest income related to money market accounts in the three months ended June 30, 2024 and incurred $0.3 million in interest expense during the three months ended June 30, 2023. Interest expense during 2023 included $0.29 of debt issuance costs.

Current wording

Interest income (expense), net. We earned $0.04 million in interest income (expense), net during the three months ended September 30, 2024 and incurred $(0.43) million interest income (expense), net during the three months September 30, 2023, respectively. Interest income in during 2024 related primarily to money market account interest whereas interest expense during 2023 included $0.44 million of debt issuance costs and $0.02 million of interest income.

Previous wording

For the six months endedJune 30, 2024 compared to the six months ended June 30, 2023

Current wording

For the nine months endedSeptember 30, 2024 compared to the nine months ended September 30, 2023

Previous wording

Research and Development Expenses. During the six months ended June 30, 2024, we incurred $1.4 million in research and development expenses, which were primarily related to the initial payments for pre-clinical research projects for Ketamir. We incurred $0.6 million in research and development expenses during the six months ended June 30, 2023, which were offset by $0.4M in research and development credits. The credits were primarily related to toxicology expenses for projects and milestones that were not performed by our vendors.

Current wording

Research and Development Expenses. During the nine months ended September 30, 2024, we incurred $2.4 million in research and development expenses which were primarily related to initial payments for pre-clinical research projects. We incurred $1.2 million in research and development expenses during the nine months ended September 30, 2023, relating to initial payments for several toxicology projects. Research and development expenses include pre-clinical, toxicology and consultant expenses and we expect our 2024 costs to be consistent going forward.

Previous wording

*General and Administrative Expenses.*We incurred general and administrative expenses of $2.1 million and $1.7 million during the six months ended June 30, 2024 and June 30, 2023, respectively. General and administrative expenses consists of payroll, consulting fees, IT-related costs, legal and accounting costs, office and rent expenses, investor relations and stock-based compensation expenses. The increase is primarily related to stock compensation expense

Current wording

*General and Administrative Expenses.*We incurred general and administrative expenses of $3.1 million and $3.8 million during the nine months ended September 30, 2024 and September 30, 2023, respectively. General and administrative expenses consists of payroll, consulting fees, IT-related costs, legal and accounting costs, office and rent expenses, investor relations and stock-based compensation expenses. The decrease is due primarily to stock-based compensation, debt issuance costs, and compensation related to the IPO efforts of the executive team that occurred in 2023. We would expect our 2024 costs to be consistent going forward.

Previous wording

Related Party Travel Costs. We incurred $0.0 million and $0.5 million in related party travel costs during the six months ended June 30, 2024 and June 30, 2023, respectively. Related party travel costs consisted of a lease and use of an airplane with an entity under common control. The decrease in related party travel costs is due to the termination of the lease in March 2023.

Current wording

Related Party Travel Costs. We incurred no in related party travel costs during the nine months ended September 30, 2024, compared to $0.5 million in September 30, 2023. The related party travel costs incurred in 2023 consisted of a lease and use of an airplane with an entity under common control. The airplane lease was terminated in March 2023 and no further costs are expected to be incurred.

Previous wording

Interest income (expense). We recognized $0.09 million in interest income from money market accounts and $0.3 million in interest expense during the six months ended June 30, 2024 and June 30, 2023, respectively. Interest expense during 2023 included $0.3 of debt issuance costs.

Current wording

Interest income (expense), net. We earned $0.13 million in interest income (expense), net during the nine months ended September 30, 2024 and incurred $0.73 million in interest income (expense), net during the nine months ended September 30, 2023, respectively. Interest expense during 2023 included $0.74 million of debt issuance costs and $0.02 million of interest income. Whereas in 2024 the Company earned $0.13 million in interest income from to money market accounts.

Previous wording

Since our inception in September 2020, we have financed our operations primarily through an unsecured line of credit with a major shareholder and an affiliated company, through a private placement of shares of our common stock that occurred during the fourth quarter 2021 and during 2022, and by the proceeds from our completed initial public offering in August 2023. We intend to finance our clinical development programs and working capital needs from existing cash, and potentially new sources of debt and equity financing. We may enter into new licensing and commercial partnership agreements.

Current wording

Since our inception in September 2020, we have financed our operations primarily through an unsecured line of credit with a major shareholder and an affiliated company, through a private placement of shares of our common stock that occurred during the fourth quarter 2021 and during 2022, by the proceeds from our completed initial public offering in August 2023 and through the proceeds of an ATM offering during the third quarter of 2024. We intend to finance our clinical development programs and working capital needs from existing cash, and potentially new sources of debt and equity financing. We may enter into new licensing and commercial partnership agreements.

Previous wording

Historically, we have been primarily engaged in developing MIRA-55 and, more recently, have also been focusing on the development of Ketamir-2. During these activities, we have sustained substantial losses. Our ability to fund ongoing operations and future pre-clinical and clinical trials required for FDA approval is dependent on our ability to obtain significant additional external funding in the near term. We expect to be able to fund operations through the fourth quarter of 2024, with available borrowings from the related-party loan described in Note 5 in the accompanying financial statements. We will require additional financing and equity raises to fund our operations, to continue and complete pre-clinical and clinical development activities and to commercially develop and ultimately launch our product candidates. However, and particularly given our early-stage nature and the significant time and capital required to implement our business plan, there can be no assurance that any fundraising will be achieved on commercially reasonable terms, if at all.

Current wording

Historically, we have been primarily engaged in developing MIRA-55 and, more recently, have also been focusing on the development of Ketamir-2. During these activities, we have sustained substantial losses. Our ability to fund ongoing operations and future pre-clinical and clinical trials required for FDA approval is dependent on our ability to obtain significant additional external funding in the near term. We expect to be able to fund operations through the fourth quarter of 2025, with the issuance of common stock under our shelf registration as described in Note 7 of the accompanying financial statements.

Previous wording

We expect to continue to generate losses in the foreseeable future. Our liquidity needs will be determined largely by the budgeted operational expenditure incurred in regard to the progression of our product candidates. We do not have sufficient cash and cash equivalents as of the date of filing this Report to support our operations for at least the 12 months. These conditions raise substantial doubt about our ability to continue as a going concern through 12 months after the date the financial statements included in this Report are issued.

Current wording

We expect to continue to generate losses in the foreseeable future. Our liquidity needs will be determined largely by the budgeted operational expenditure incurred in regard to the progression of our product candidates. We do not have sufficient cash and cash equivalents as of the date of filing this Report to support our operations for at least 12 months. These conditions raise substantial doubt about our ability to continue as a going concern through 12 months after the date the financial statements included in this Report are issued.

Previous wording

For the six months ended June 30, 2024, operating activities used $1.9 million of cash, primarily due to a net loss of $3.4 million, offset by $1.1 million in stock-based compensation expense and $0.3 million in accounts payable, accrued and prepaid expenses. Accounts payable, accrued and prepaid expenses were primarily composed of research and development payables, consultant costs, and insurance costs.

Current wording

For the nine months ended September 30, 2024, operating activities used $3.8 million of cash, primarily due to a net loss of $5.5 million, offset by $1.4 million in stock-based compensation expense and $0.3 million in change in accounts payable, accrued and prepaid expenses. Accounts payable, accrued and prepaid expenses were primarily composed of research and development payables, consultant costs, insurance costs and investor relations expenses.

Previous wording

For the six months ended June 30, 2023, operating activities used $1.7 million of cash, primarily due to a net loss of $2.6 million and $0.2 million change in accounts payable, offset by $0.3 million in debt issuance cost and accrued expenses and $0.9 million in stock-based compensation expense. Accounts payable, accrued and prepaid expenses were primarily composed of research and development payables, consultant costs, insurance costs and legal expenses.

Current wording

For the nine months ended September 30, 2023, operating activities used $3.5 million of cash, primarily due to a net loss of $6.2 million, a $0.4 million change in accounts payable, accrued and prepaid expenses, offset by $2.3 million in stock-based compensation expense and $0.7 million in amortization of debt issuance costs. Accounts payable, accrued and prepaid expenses were primarily composed of research and development payables, consultant costs, insurance costs and investor relations expense.

Previous wording

For the six months ended June 30, 2023, financing activities provided $1.4 million of cash, resulting primarily from $1.7 million in advances from affiliate, offset by $0.1 million of repayments under related party line of credit, offset by $0.2 million paid in deferred offering costs.

Current wording

For the nine months ended September 30, 2023, financing activities provided $9.0 million of cash, resulting primarily from $7.7 million in proceeds from sale of common stock, less offering costs, $1.4 million of issuance of common stock for conversion of debt and issuance of common stock in lieu of investor relation fees, and offset by $0.1 million of repayments under related party line of credit.