UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended March 31, 2023


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

Commission File Number 001-41429

PROMIS NEUROSCIENCES INC.

(Exact name of Registrant as specified in its Charter)


Canada		98-0647155
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Suite 200, 1920 Yonge Street

Toronto, Ontario		M4S 3E2
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 416-847-6898

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

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Shares, no par value per share

PMN

The Nasdaq Capital Market

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

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

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

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

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

As of May 15, 2023, the registrant had 8,579,284 Common Shares outstanding.

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Table of Contents

		Page
PART I	FINANCIAL INFORMATION	3
Item 1.	Condensed Consolidated Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss	4
	Condensed Consolidated Statements of Changes in Shareholders’ Deficit	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23

PART II	OTHER INFORMATION	24
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27
Signatures		28

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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that we believe are, or may be considered to be, “forward-looking statements.” Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on current beliefs, expectations or assumptions regarding the future of the business, future plans and strategies, operational results and other future conditions of the Company. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q regarding the prospects of our industry or our prospects, plans, financial position or business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking words such as “plans,” “expects” or “does not expect,” “is expected,” “look forward to,” “budget,” “scheduled,” “estimates,” “forecasts,” “will continue,” “intends,” “the intent of,” “have the potential,” “anticipates,” “does not anticipate,” “believes,” “should,” “should not,” or variations of such words and phrases that indicate that certain actions, events or results “may,” “could,” “would,” “might,” or “will,” “be taken,” “occur,” or “be achieved,” or the negative of these terms or variations of them or similar terms. Furthermore, forward-looking statements may be included in various filings that we make with the Securities and Exchange Commission (“SEC”) or press releases or oral statements made by or with the approval of one of our authorized executive officers. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements.

Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to:

●

the anticipated amount, timing and accounting of contingent, milestone, royalty and other payments under licensing or collaboration agreements;

●

tax positions and contingencies; research and development costs; compensation and other selling, general and administrative expense;

●

amortization of intangible assets;

●

foreign currency exchange risk;

●

estimated fair value of assets and liabilities; and impairment assessments;

●

patent terms, patent term extensions, patent office actions and expected availability and period of regulatory exclusivity;

●

our plans and investments in our portfolio as well as implementation of our corporate strategy;

●

the risk that the Company will maintain enough liquidity to execute its business plan and its ability to continue as a going concern;

●

the drivers for growing our business, including our plans and intention to commit resources relating to discovery, research and development programs and business development opportunities as well as the potential benefits and results of, and the anticipated completion of, certain business development transactions;

●

the expectations, development plans and anticipated timelines, including costs and timing of potential clinical trials, filings and approvals, of our products candidates and pipeline programs, including collaborations with third-parties, as well as the potential therapeutic scope of the development and commercialization of our and our collaborators’ pipeline product candidates, if approved;

●

the timing, outcome and impact of administrative, regulatory, legal and other proceedings related to our patents and other proprietary and intellectual property rights, tax audits, assessments and settlements, pricing matters, sales and promotional practices, product liability and other matters;

●

our ability to finance our operations and business initiatives and obtain funding for such activities;

●

the direct and indirect impact of the COVID-19 pandemic on our business and operations, including expenses, reserves and allowances, the supply chain, manufacturing, cyber-attacks or other privacy or data security incidents, research and development costs, clinical trials and employees;

●

inflation, market volatility and rising interest rates;

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●

the potential impact of healthcare reform in the United States (U.S.) and measures being taken worldwide designed to reduce healthcare costs and limit the overall level of government expenditures, including the impact of pricing actions and reduced reimbursement for our product candidates, if approved;

●

the impact of the continued uncertainty of the credit and economic conditions in certain countries and our collection of accounts receivable in such countries;

●

the risk that we become characterized as a passive foreign investment company;

●

lease commitments, purchase obligations and the timing and satisfaction of other contractual obligations; and

●

the impact of new laws (including tax), regulatory requirements, judicial decisions and accounting standards.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution readers not to place undue reliance on these statements as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. Risks, uncertainties and other factors which may cause the actual results, performance or achievements of ProMIS Neurosciences Inc. (the “Company”), as applicable, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information and statements include, but are not limited to, the risks described under the heading “Risk Factors Summary” and in Item 1A—“Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 8, 2023 (the “Form 10-K”), the section entitled “Risk Factors” in the Company’s Post-Effective Amendment No. 1 to Form S-1 filed with the SEC on March 17, 2023 as well as the risks described in Item 1A—“Risk Factors” in this Quarterly Report on Form 10-Q.

Readers are cautioned not to place undue reliance on any forward-looking statements contained in this Quarterly Report on Form 10-Q, which reflect management’s opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements. You are advised, however, to consult any additional disclosures we make in our reports to the SEC. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this Quarterly Report on Form 10-Q.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PROMIS NEUROSCIENCES INC.

Condensed Consolidated Balance Sheets

(expressed in US dollars, except share amounts)

(Unaudited)


	March 31,		December 31,
	2023		2022
Assets
Current assets:
Cash	$	3,331,801	$	5,875,796
Short-term investments		31,134		31,009
Prepaid expenses and other current assets		1,045,671		996,682
Total current assets		4,408,606		6,903,487
Property and equipment, net		—		321
Intangible assets, net		19,668		20,838
Total assets	$	4,428,274	$	6,924,646
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable	$	6,987,026	$	2,975,398
Accrued liabilities		1,718,573		3,437,646
Total current liabilities		8,705,599		6,413,044
Warrant liability		1,901,722		1,859,374
Total liabilities		10,607,321		8,272,418

Commitments and contingencies (Note 10)
Shareholders' deficit:
Series 1 Convertible Preferred Shares, no par value, 70,000,000 shares authorized, 70,000,000 shares issued and outstanding as of March 31, 2023 and December 31, 2022		—		—
Common shares, no par value, unlimited shares authorized, 8,579,284 shares issued and outstanding as of March 31, 2023 and December 31, 2022		—		—
Additional paid-in capital		79,233,571		79,101,061
Accumulated other comprehensive loss		(199,723)		(195,369)
Accumulated deficit		(85,212,895)		(80,253,464)
Total shareholders' deficit		(6,179,047)		(1,347,772)
Total liabilities and shareholders' deficit	$	4,428,274	$	6,924,646

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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PROMIS NEUROSCIENCES INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(expressed in US dollars, except share amounts)

(Unaudited)


	March 31,		March 31,
	2023		2022
Operating expenses:
Research and development	$	3,510,252	$	1,902,832
General and administrative		1,460,419		2,035,686
Total operating expenses		4,970,671		3,938,518
Loss from operations		(4,970,671)		(3,938,518)

Other income (expense):
Change in fair value of financial instruments		(41,665)		1,980,672
Interest expense on convertible debt		—		(147,773)
Other income		52,905		10,774
Total other income (expense), net		11,240		1,843,673

Net loss		(4,959,431)		(2,094,845)
Other comprehensive loss
Foreign currency translation adjustment		(4,354)		47,841
Comprehensive loss	$	(4,963,785)	$	(2,047,004)

Net loss per share, basic and diluted	$	(0.58)	$	(0.29)

Weighted-average shares outstanding of common shares, basic and diluted		8,579,284		7,195,529

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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PROMIS NEUROSCIENCES INC.

Condensed Consolidated Statements of Changes in Shareholders’ Deficit

(expressed in US dollars, except share amounts)

(Unaudited)


									Accumulated
	Series 1 Convertible						Additional		Other
	Preferred Shares			Common Shares			Paid-in		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Capital		Income (Loss)		Deficit		Total
Balance, January 1, 2022	—	$	—	7,195,529	$	—	$	68,039,178	$	(187,919)	$	(62,191,201)	$	5,660,058
Share-based compensation	—		—	—		—		124,865		—		—		124,865
Foreign currency translation	—		—	—		—		—		47,841		—		47,841
Net loss	—		—	—		—		—		—		(2,094,845)		(2,094,845)
Balance, March 31, 2022	—	$	—	7,195,529	$	—	$	68,164,043	$	(140,078)	$	(64,286,046)	$	3,737,919

Accumulated

Series 1 Convertible

Additional

Other

Preferred Shares

Common Shares

Paid-in

Comprehensive

Accumulated

Shares

Amount

Shares

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company