FY 2024 earnings in line with our projections; binding letter of intent signed to acquire SKNY Pharmaceuticals in all-stock transaction; press release light on detail.
MIRA Pharmaceuticals reported financial results for the year ended December 31, 2024. Revenue was $0, on par with our estimate. FY 2024 GAAP EPS of $(0.51) was slightly better than our $(0.52) estimate, mainly due to lower than expected R&D costs during Q4 2024. Common shares outstanding increased from 14.78 million at the end of FY 2023 to 16.56 million onDecember 31, 2024, representing 12.04% dilution.
In our view, for a company of MIRA’s size with two part-time employees–MIRA’s CEO and CFO divide their time between MIRA and Telomir Pharmaceuticals–and one key consultant, FY2024 G&A expenses of over $1 million per quarter are high. Included in the G&A expense category are employee-related expenses, including salaries, benefits, and travel, other administrative functions, as well as fees paid for legal, accounting, and tax services, consulting fees, and facilities costs not included in R&D expense.
MIRA’s cash position declined from $4.60 million at the end of FY 2023 to $2.83 million on December 31, 2024, causing the company’s current ratio to drop from 8.7x to 4.0x. Management stated that existing cash resources are expected to support operations into Q3 2025. In light of MIRA’s FY 2024 net loss of$7.85 million, net cash used in operations of $5.56 million, and advancement of lead asset Ketamir-2 into Phase 1 clinical development during Q1 2025, there is an urgent need to raise additional funds in the near future.
On March 24, 2025, MIRA announced that it had signed a binding letter of intent to acquire SKNY Pharmaceuticals, Inc., a privately-held Delaware corporation, in an all-stock transaction. The announcement said that 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 to MIRA’s development pipeline.
A $5 million cash infusion would provide MIRA with runway into 2026. However, according to MIRA’s 2024 Form 10K, filed with the SEC on April 28, 2025, the completion of the transaction is contingent upon an independent valuator determining that SKNY’s valuation is at least equal to or greater than that of MIRA. Consequently, the contemplated transaction would result in 100% or greater dilution of MIRA’s existing shareholders via the issuance of shares from the company’s treasury. Closing of the transaction is not assured at present, as the parties must complete a 90-day mutual due diligence period, negotiate deal terms, and obtain the necessary regulatory and board approvals.
Markets responded negatively to the announcement, with the stock losing 30% in value, dropping from a closing price of $1.28 on March 21 (the last trading day before the announcement) to $0.90 on April 3.
We note the numerous uncertainties associated with the proposed transaction given the black boxnature 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.
MIRA management declined to answer questions raised by its press release announcing the proposed SKNY transaction, referring us to a Form S-4 the company will be filing at an unspecified future date. Our questions sought additional detail on the molecular structure of the SKNY asset, intellectual property protecting it, preclinical data and/or IND-enabling studies that would allow for verification of the asset, and clarification on interrelationships between members of MIRA’s board, executive leadership or major shareholders with the principals or owners of SKNY, among others. While some of these questions were answered in MIRA’s 2024 Form 10K–SKNY, the proposed acquisition target, and MIRA’s largest shareholder, are related parties–other questions remained unaddressed.
SKNY licenses its weight loss and smoking cessation asset from Miralogx, an intellectual property development company owned by the Bay Shore Trust. The Bay Shore Trust is MIRA’s largest shareholder. Miralogx also licenses development and commercialization rights to Ketamir-2 to MIRA. MIRA and Miralogx have the same founder, who is also MIRA’s largest shareholder, and thus Miralogx is considered a related party to both MIRA and SKNY. MIRA’s founding stockholders include the Bay Shore Trust and Miralogx, which collectively own more than 27% of MIRA’s outstanding common stock, as well as outstanding warrants to purchase up to 700,000 shares of MIRA’s common stock at an exercise price of$2.00, expiring on November 15, 2028.
In clinical news, MIRA submitted an Investigational New Drug (IND) application for Ketamir-2 for neuropathic pain indications to the FDA in December 2024. In its response, the agency required the completion of a neurotoxicity study before proceeding with human dosing. This study is currently ongoing and management expects it to be completed by May 2025.
In further developments, Mira received approval from the Israeli Ministry of Health and Institutional Review Board to initiate a Phase I clinical trial, which is now being conducted at the Clinical Pharmacology Unit, Hadassah Medical Center in Jerusalem, Israel. On April 1, 2025, MIRA announced the enrollment of the first volunteer study subjects, along with expected completion of the study by Q4 2025.
In our view, the scientific rationale underlying MIRA’s developmental assets, Ketamir-2 and MIRA-55, isbacked 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.
Further, even if MIRA manages to secure $5 million of development capital in a potential acquisition of SKNY Pharmaceuticals in Q3 2025, the company 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 listing requirements 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.