10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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: 001-33185

MEDICINOVA, INC.

(Exact name of registrant as specified in its charter)


Delaware		33-0927979
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

4275 Executive Square, Suite 300 La Jolla, CA		92037
(Address of Principal Executive Offices)		(Zip Code)

(858) 373-1500

(Registrant’s Telephone Number, Including Area Code)

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


Common Stock, $0.001 par value	MNOV	The Nasdaq Stock Market LLC
(Title of each class)	(Trading symbol(s))	(Name of each exchange on which registered)

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, a smaller reporting company or an emerging growth company. See the definitions of “accelerated filer”, “large accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company ☐

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 9, 2023, the registrant had 49,049,246 shares of Common Stock ($0.001 par value) outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q, in particular "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," and the information incorporated by reference herein contains “forward-looking statements”. The forward-looking statements are contained principally in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this report. Forward-looking statements include all statements that are not historical facts and, in some cases, can be identified by terms such as "believe," "may," "will," "estimate," "continue," "anticipate," "design," "intend," "expect," "could," "plan," "potential," "predict," "seek," "should," "would" or the negative version of these words and similar expressions.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including those described in "Risk Factors" and elsewhere in this report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our beliefs and assumptions only as of the date of this report. Considering the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. You should read this report completely and with the understanding that our actual future results may be materially different from what we expect.

The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

•

Inability to raise additional capital if needed;

•

Inability to generate revenues from product sales to continue business operations;

•

Inability to develop and commercialize our product candidates;

•

Failure or delay in completing clinical trials or obtaining Food and Drug Administration or foreign regulatory approval for our product candidates in a timely manner;

•

Unsuccessful clinical trials stemming from clinical trial designs, failure to enroll a sufficient number of patients, undesirable side effects and other safety concerns;

•

Inability to demonstrate sufficient efficacy of product candidates;

•

Reliance on the success of our MN-166 (ibudilast) and MN-001 (tipelukast) product candidates;

•

Delays in commencement or completion of clinical trials or suspension or termination of clinical trials;

•

Loss of our licensed rights to develop and commercialize a product candidate as a result of the termination of the underlying licensing agreement;

•

Competitors may develop products rendering our product candidates obsolete and noncompetitive;

•

The widespread outbreak of an illness or any other communicable disease, such as COVID-19, which would lead key employees becoming ill for a period of time;

•

Inability to successfully attract partners and enter into collaborations on acceptable terms;

•

Dependence on third parties to conduct clinical trials and to manufacture product candidates;

•

Dependence on third parties to market and distribute products;

•

Our product candidates, if approved, may not gain market acceptance or obtain adequate coverage for third party reimbursement;

•

Disputes or other developments concerning our intellectual property rights;

•

Actual and anticipated fluctuations in our quarterly or annual operating results;

•

Price and volume fluctuations in the overall stock markets;

•

Litigation or public concern about the safety of our potential products;

•

International trade or foreign exchange restrictions, increased tariffs, foreign currency exchange;

•

High quality material for our products may become difficult to obtain or expensive;

•

Strict government regulations on our business;

•

Regulations governing the production or marketing of our product candidates;

•

Loss of, or inability to attract, key personnel; and

•

Economic, political, foreign exchange and other risks associated with international operations.

MEDICINOVA, INC.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION		5

ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)	5
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	16
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	20
ITEM 4.	CONTROLS AND PROCEDURES	20

PART II. OTHER INFORMATION		21

ITEM 1.	LEGAL PROCEEDINGS	21
ITEM 1A.	RISK FACTORS	21
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	21
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	21
ITEM 4.	MINE SAFETY DISCLOSURES	21
ITEM 5.	OTHER INFORMATION	21
ITEM 6.	EXHIBITS	22

SIGNATURES		23

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

MEDICINOVA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	March 31,			December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	55,259,368		$	18,505,493
Prepaid expenses and other current assets		775,030			499,403
Investments		—			39,982,213
Total current assets		56,034,398			58,987,109
Goodwill		9,600,240			9,600,240
In-process research and development		4,800,000			4,800,000
Property and equipment, net		41,144			45,269
Right-of-use asset		579,594			629,495
Other non-current assets		77,469			92,792
Total assets	$	71,132,845		$	74,154,905
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	585,065		$	424,646
Accrued liabilities and other current liabilities		1,988,160			2,605,308
Operating lease liability		142,197			157,505
Total current liabilities		2,715,422			3,187,459
Deferred tax liability		201,792			201,792
Other non-current liabilities		489,379			523,619
Total liabilities		3,406,593			3,912,870
Commitments and contingencies (Note 4)
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized at March 31, 2023 and December 31, 2022; 49,046,246 and 49,046,246 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively		49,046			49,046
Additional paid-in capital		477,841,714			477,438,451
Accumulated other comprehensive loss		(116,827	)		(115,285	)
Accumulated deficit		(410,047,681	)		(407,130,177	)
Total stockholders’ equity		67,726,252			70,242,035
Total liabilities and stockholders' equity	$	71,132,845		$	74,154,905

See accompanying notes.

MEDICINOVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)


	Three months ended
	March 31,
	2023			2022
Operating expenses:
Research, development and patents	$	1,476,676		$	2,111,996
General and administrative		1,486,567			1,298,016
Total operating expenses		2,963,243			3,410,012
Operating loss		(2,963,243	)		(3,410,012	)
Interest income		509,046			37,339
Other expense		(463,307	)		(13,744	)
Net loss applicable to common stockholders	$	(2,917,504	)	$	(3,386,417	)
Basic and diluted net loss per common share	$	(0.06	)	$	(0.07	)
Shares used to compute basic and diluted net loss per common share		49,046,246			49,043,246
Net loss applicable to common stockholders	$	(2,917,504	)	$	(3,386,417	)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments		(1,542	)		(7,435	)
Comprehensive loss	$	(2,919,046	)	$	(3,393,852	)

See accompanying notes.

MEDICINOVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


	Three Months Ended March 31, 2023
	Common stock				Additional paid-in		Accumulated other comprehensive			Accumulated			Total stockholders’
	Shares		Amount		capital		loss			deficit			equity
Balance at December 31, 2022		49,046,246	$	49,046	$	477,438,451	$	(115,285	)	$	(407,130,177	)	$	70,242,035
Share-based compensation	—		—			403,263	—			—				403,263
Net loss	—		—		—		—				(2,917,504	)		(2,917,504	)
Foreign currency translation adjustments	—		—		—			(1,542	)	—				(1,542	)
Balance at March 31, 2023		49,046,246	$	49,046	$	477,841,714	$	(116,827	)	$	(410,047,681	)	$	67,726,252


	Three Months Ended March 31, 2022
	Common stock				Additional paid-in		Accumulated other comprehensive			Accumulated			Total stockholders’
	Shares		Amount		capital		loss			deficit			equity
Balance at December 31, 2021		49,043,246	$	49,043	$	476,788,012	$	(98,877	)	$	(393,061,094	)	$	83,677,084
Share-based compensation	—		—			81,053	—			—				81,053
Net loss	—		—		—		—				(3,386,417	)		(3,386,417	)
Foreign currency translation adjustments	—		—		—			(7,435	)	—				(7,435	)
Balance at March 31, 2022		49,043,246	$	49,043	$	476,869,065	$	(106,312	)	$	(396,447,511	)	$	80,364,285

See accompanying notes.

MEDICINOVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three months ended
	March 31,
	2023			2022
Operating activities:
Net loss	$	(2,917,504	)	$	(3,386,417	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash stock-based compensation		403,263			81,053
Depreciation and amortization		4,105			4,429
Loss on disposal of investments		102,513			—
Change in carrying amount of right-of-use asset		49,519			45,179
Changes in assets and liabilities:
Prepaid expenses and other assets		(310,908	)		(554,172	)
Accounts payable, accrued liabilities and other liabilities		(459,248	)		111,353
Operating lease liabilities		(49,153	)		(29,825	)
Net cash used in operating activities		(3,177,413	)		(3,728,400	)
Investing activities:
Proceeds from disposal of investments		39,929,015			—
Net cash provided by investing activities		39,929,015			—
Effect of exchange rate changes on cash and cash equivalents		2,273			(7,301	)
Net change in cash and cash equivalents		36,753,875			(3,735,701	)
Cash and cash equivalents, beginning of period		18,505,493			71,430,954

SEC Form 10-Q filed by Medicinova Inc