$0.15
$1.50
bear $0.15
base $0.60
bull $1.50
margin of safety $0.30
market price* $0.71
Business condition attached to the margin of safety
Two consecutive quarters of rising CARDAMYST net product revenue with quarterly cash burn falling, showing the launch can approach self-funding before the 2029 notes come due.
Milestone Pharmaceuticals is a single-product cardiovascular company. Its drug CARDAMYST (etripamil nasal spray) for episodes of paroxysmal supraventricular tachycardia (PSVT) was approved by the FDA in December 2025, and the company is building a national sales force aimed at roughly 8,000 cardiologists and 1,500 electrophysiologists. As of the latest annual filing it has never had product revenue and has lost cash every year: operating cash flow was about -$49M in 2025 and -$29M in 2024, and after stock compensation our owner earnings were about -$0.71 per share in 2025 and -$0.62 in 2024 (worse in 2025 as launch spending began). There is therefore no positive earnings level to anchor on, and we do not credit launch sales as growth, because a new product with no sales history is not growth we can call secure. Because the earnings method gives nothing to value, we departed from it and valued what the company demonstrably holds: cash and investments of $106.0M at year-end 2025, plus $75.0M received in January 2026 from RTW for a 7% royalty on US CARDAMYST sales (falling to 4% and 1% on sales above $500M and $800M, and rising to 9.5% if sales thresholds are missed), plus about $20M raised from share sales and warrant exercises in early 2026, less the $50M 6% senior secured convertible notes due March 2029 (interest payable in kind for three years, roughly $60M at maturity). Spread over roughly 140 million shares and pre-funded warrants, and after allowing for continued launch spending and dilution, that leaves about $1 per share of gross net cash that is being consumed by an annual burn of $50-65M. We had no second-quarter 2026 quarterly filing available, so 2026 burn is estimated. Bear case ($0.15): sales are weak, the company cuts costs after about 18 months, and what remains after repaying the secured notes is small. The heavy reliance on repeated share sales (about 43 million new shares in 2025) is the named pressure.
Base case ($0.60): launch spending roughly consumes the cash raised, with launch value about equal to its cost, so equity is worth most of the remaining net cash after burn and dilution.
Bull case ($1.50): launch executes on the sales force, supply already on hand and 2036 and 2042 patent families (the core compound patents expire in 2028, with possible extension) to reach a few hundred million dollars in US sales, with the licence to Ji Xing for Greater China (up to $107.5M of further milestones, not counted) as upside. Left out as unsecured: any peak-sales forecast, the atrial fibrillation indication still in trials, ex-US partnering and any market share gains. What would make this wrong: a faster launch than anticipated would lift value well above these figures; a slower one, or a need for more equity at low prices, would lower it toward the bear case. The estimate is highly uncertain, so we require a large margin of safety and a business trigger: evidence that launch revenue is growing and burn is falling.