Adam Jackson
Synthetic cannabinoid drug developer Mira Pharmaceuticals (Nasdaq: MIRA) secured a better-than-expected $9 million initial public offering, but analysis of regulatory filings spell potential trouble for investors.
The Maryland-based drug developer plans to submit filings to the U.S. Food and Drug Administration by late Q3 2024 to kickstart clinical tests for its primary drug, which targets anxiety and cognitive decline in the elderly. This path began with its IPO filing in June, where an initial target of around $16 million was set, before it downsized its proposal to $7 million.
While the market is bullish about treatments for anxiety and depression, Mira’s position remains precarious. The firm is still in the preclinical phase with modest capital, making its treatments and IPO inherently risky.
Overall, the ongoing market tug-of-war between the excitement around synthetic cannabinoids and potential uncertainties and risks tied to such investments have started to eat away at some of its allure.
The drug in question, MIRA1a, is designed to selectively address the cannabinoid type 1 (CB1) and cannabinoid type 2 (CB2) receptors, which influence appetite, mood, memory, and pain.
While the company’s early preclinical and animal studies are encouraging, the definitive outcomes regarding its efficacy, safety, and commercial potential are still foggy. A key highlight for the company came in November 2022, when the Drug Enforcement Administration confirmed MIRA1a is not a controlled substance, giving it a competitive edge.
Spending Questions
Mira’s S-1 filings show financials that resemble many life science firms at the preclinical stage, especially in cannabinoid therapeutics: minimal revenues and sizable research and development costs.
At the end of the first quarter of 2023, it reported net losses of $1.3 million, which followed annual losses of $7.1 million in 2022 and $2.2 million in 2021. It most recently reported having $1,349 in cash with liabilities totaling $2.2 million.
In 2022, the company’s expenses spiked: General costs were $3 million, stock compensation stood at $700,000, and travel expenses, boosted by leasing an airplane, reached $1.7 million.
The company leased the private jet from Supera Aviation, a company with ties to Mira’s former CFO James McNulty. That lease costs about $50,000 a month and was planned to last 24 months, but Mira canceled it early in March 2023.
McNulty has been the registered owner of the aviation company since September 2018, according to Florida Sun Biz records. Mira’s founder, Jonnie R. Williams, is also a managing member.
The company said the private jet was used for “the expansion of preclinical programs, existing and potential vendor visits, and preparation for manufacturing, and ongoing Company fund raising efforts.”
The company’s newly minted CEO Erez Aminov, who joined the company in April 2023, also happens to be engaged to the founder’s daughter. Aminov’s contract posits that he dedicate a minimum of half his business hours to company activities, with a salary package set at $110,000 annually.
Michelle Yanez, the newly appointed CFO, has a full-time commitment, and her salary stands at $165,000.
Like Aminov, Chris Chapman, who helms affairs as the executive chairman, operates on a part-time basis, with yearly compensation pegged at $150,000 annually.
The company has retained Adam Kaplin as a consultant, compensating him with a monthly fee of $9,166, despite lacking a formal written agreement with him.
Additionally, the company released 2022 compensation figures for other personnel, including:
- Jude Uzonwanne, former CEO and president, had an annual package totaling $922,385. This was composed of $125,000 in salary, $50,000 in stock awards, option awards of $739,000, and other compensations of $8,385.
- McNulty, the former CFO, pocketed $366,868. His earnings breakdown includes a $266,868 salary and $100,000 from stock awards.
- Kaplin, who also serves as the chief scientific officer and president, received $789,000 in compensation at the end of 2022’s operating year. The sum includes $50,000 in stock awards and option awards valued at $739,000. Factoring in his $9,166 monthly consulting fees worth $109,992 annually, Kaplin may have earned more than $800,000.
Crossing Interests
Mira has ties with another biotech company, MyMD, that is in questionable financial health, with its auditor expressing solvency concerns.
Several Mira executives, including Kaplin and Chapman, hold significant roles in MyMD, with Aminov involved as a senior consultant. Adding complexity is the shared equity in MyMD among Mira’s leadership and MyMD’s patent rights to MIRA1a in international markets. Any IP disputes could be complicated by the intertwined loyalties.
All things considered, the absence of collaborations with large pharmaceutical entities or endorsements from recognized life science venture capital or strategic pharmaceutical players suggests a challenging road ahead for Mira.
On its Nasdaq debut, Mira’s shares started at $7 and touched $7.98, eventually closing at $7.42. That was based on the company’s pricing of its 1.28 million shares at $7 each, raising around $9 million. Kingswood Capital, which managed the IPO, has an option to buy an additional 191,000 shares at the IPO price.
