Q1 FY 2025 earnings beat our projections
MIRA Pharmaceuticals reported financial results for the quarter ended March 31, 2025. Revenue was $0, on par with our estimate. Q1 2025 net loss was $1.78 million, or $(0.11) per share on 16.65 million weighted average common shares outstanding, beating our $(0.14) EPS estimate due to lower than expected R&D costs.
We note that stock-based compensation expense for the quarter was $874,812, constituting 58.68% of total G&A expense of $1.49 million. Common shares outstanding increased from 16.56 million on December 31, 2024, to 16.92 million on May 14, 2025, representing 2.17% dilution. MIRA’s cash position declined from $2.83 million on December 31, 2024 to $1.21 million on March 31, 2025, highlighting the need for additional capital to continue operations. Nonetheless, the company’s current ratio increased from 4.0x to 12.9x, due to a reduction in accounts payable and accruedliabilities.
On March 19, 2025, MIRA signed a binding letter of intent to acquire SKNY Pharmaceutcals, Inc., a privately-held Delaware corporation, through a stock exchange transaction. The SKNY acquisition would provide MIRA with $5 million in cash or cash equivalents, while adding a preclinical-stage oral drug candidate targeting weight loss and smoking cessation toMIRA’s development pipeline. A $5 million cash infusion would provide MIRA with runway into 2026.
On May 8, 2025, MIRA announced that its Board of Directors had approved the planned acquisition ofSKNY Pharmaceuticals, following the completion of independent valuation reports on both companies, which valued SKNY Pharmaceuticals at $30.5 million and MIRA at $30.0 million. The merger remains subject to shareholder approval of both companies. If approved, the transaction will result in over 100% dilution of MIRA’s existing shareholders via the issuance of shares from the company’s treasury.
We note the numerous uncertain?es associated with the proposed transaction given the black box nature of the target: SKNY has no publicly available business description, website, financial information, or information regarding owners, principals, or management. In addition, purchase price and share exchange ratio have yet to be determined. To date, no Form S-4 has been filed with the SEC, but MIRA’s Form 10K, filed with the SEC on March 28, 2025, indicated that SKNY, the proposed acquisition target, and MIRA’s largest shareholder are related parties. Much rides on the success of the proposed acquisition for MIRA: not only would it refill the company’s coffers and secure the ability to continue development of its clinical assets, it would also allow MIRA to regain compliance with Nasdaq Listing Rule 5550(b)(1), which requires listed companies to maintain a minimum of $2.5 million in stockholders’ equity.
With $1.3 million in stockholders’ equity as of March 31, 2025, MIRA is currently in violation of this rule and was notified of this fact by Nasdaq on April 8, 2025. Having to raise cash via the company’s $7 million at-the-market (ATM) offering facility with Rodman & Renshaw would be costly and likely to further depress MIRA’s stock price. Nasdaq granted an extension for MIRA to regain compliance with Rule 5550(b)(1) by October 6, 2025.
In clinical news, MIRA announced the enrollment of the first subjects in its Phase 1 clinical trial of Ketamir-2, being conducted in Israel, as well as the completion of in vitro release testing for its topical formulation of Ketamir-2, under investigation for localized application in pain-related conditions, in April 2025. In May 2025, MIRA announced the absence of brain toxicity in a neurotoxicity study of Ketamir-2, which had been required by the FDA prior to initiating human clinical trials in the U.S. The results of the study will be submitted to the FDA as part of MIRA’s ongoing regulatory and clinical development strategy.
In our view, the scientific rationale underlying MIRA’s developmental assets, Ketamir-2 and MIRA-55, is backed by compelling preclinical data. In its 2024 Form 10K, MIRA confirmed its plan to sell or license both assets after the completion of Phase 2 development. However, even if Ketamir-2 were to move directly from Phase 1 to Phase 2 clinical trials at the end of 2025, we believe that a sale of the asset or a licensing transaction of a scope that would allow MIRA to finance the development of follow-on assets cannot reasonably be completed before 2027.
Even with $5 million of development capital from the potential acquisition of SKNY Pharmaceuticals, MIRA would still need to raise additional capital in 2026 in what has been and we expect will continue to be a very challenging market for micro and nano cap companies.
With MIRA’s share price under pressure, we caution investors that in addition to the potential dilution associated with the proposed SKNY acquisition, there will likely be the pain of a potential reverse stock split to maintain compliance with Nasdaq’s minimum bid price requirement of $1 per share before the market rewards any clinical successes.
We maintain our HOLD rating on the stock for the time being, until more information on the proposed SKNY acquisition becomes available to permit a more in-depth assessment of MIRA’s prospects.