Milestone Pharma's $52.5M Warrant Offering: Betting on FDA Approval and PSVT's Untapped Market

Milestone Pharmaceuticals (NASDAQ: MSTX) stands at a critical juncture: its FDA-reviewed New Drug Application (NDA) for CARDAMYST™ (etripamil), a novel nasal spray for paroxysmal supraventricular tachycardia (PSVT), faces a pivotal decision on December 13, 2025. With a $52.5M public offering and a contingent $75M royalty deal hinging on approval, investors must weigh the risks and rewards of backing this biotech's push to transform an underserved cardiovascular market. Let's dissect how Milestone is allocating capital, mitigating dilution, and positioning itself for a potential inflection point in late 2025.

The FDA Approval Crucible: Milestone's Make-or-Break Moment

The FDA's acceptance of Milestone's revised NDA in June .2025 marks a hard-fought rebound after a 2023 Complete Response Letter (CRL) flagged nitrosamine contamination concerns. By outsourcing manufacturing testing to FDA-approved vendors and conducting in-vitro studies, the company has addressed regulatory hurdles, with the FDA now focused on clinical data—which it has not contested.

The stakes are high: if approved, CARDAMYST could dominate a $2 billion PSVT market, where current treatments (e.g., IV medications or hospital visits) lack an on-demand, self-administered option. The $75M royalty purchase agreement with RTW Investments, extended to December 31, 2025, underscores the urgency of securing FDA approval by year-end. This funding would fuel commercialization, including marketing, distribution, and post-launch data collection.

But failure to gain approval would strand Milestone with a $52.5M dilution hit and no RTW funds, forcing reliance on further equity raises. The FDA's December decision is a binary event, making this a high-risk, high-reward bet.

The Warrant Structure: A Dilution Mitigation Masterstroke

The $52.5M offering's innovative warrant structure aims to temper immediate dilution while aligning investor incentives with Milestone's success:

• Primary Offering: 31.5M shares paired with Series A Warrants (exercise price: $1.50, expiring July 2026) and Series B Warrants ($3.00, expiring July 2028).
• Pre-Funded Warrants: 3.5M pre-funded warrants (effectively shares with a $0.001 exercise price) for select investors.

The immediate dilution is capped at ~47.5% of the current 66.28M share count. However, full warrant exercise could push shares to 131.78M—a 98.9% increase—should the stock soar past $3.00.

This structure buys time: investors are incentivized to hold shares if the stock climbs post-FDA approval, while Milestone gains upfront capital for its commercial pivot. The $1.50 Series A warrants act as a “floor” for the stock, as exercising them becomes profitable if the price exceeds this threshold—a likely scenario if the FDA greenlights CARDAMYST.

The PSVT Market: A $2B+ Opportunity Waiting for Disruption

PSVT affects ~2.5 million Americans, yet existing treatments are inconvenient: patients often require hospital visits or IV medications, delaying care during episodes. CARDAMYST's nasal spray formulation offers a first-of-its-kind solution for self-administration, potentially reducing ER visits and improving patient outcomes.

Analysts estimate the global PSVT market could exceed $2 billion by 2030, driven by rising awareness and aging populations. Milestone's first-mover advantage—if approved—positions it to capture a significant share, especially as competitors like Medtronic's implantable devices target only severe cases.

Financial Health and the Inflection Point

As of March 2024, Milestone had $70.6M in cash, projecting runway through 2026. The $52.5M offering boosts this to ~$123M, while the RTW deal adds $75M if approved. This dual funding stream would fund:
- Commercial launch costs (marketing, sales teams, distribution).
- Post-approval studies to reinforce CARDAMYST's safety profile.
- General corporate expenses, reducing reliance on dilutive equity.

The inflection point is clear: post-approval, Milestone transitions from a pre-commercial biotech to a revenue-generating entity. Even a delayed approval (e.g., a six-month extension) could collapse the stock, but success could trigger a 200%-300% upside, given the product's unmet-market appeal.

Investment Thesis: Buy the Dip Ahead of the FDA Catalyst

Bull Case: FDA approval by December 2025 unlocks the RTW financing, enabling a strong launch. CARDAMYST's $3.00/warrant exercise price becomes attainable, rewarding investors who bought at the $1.50 offering price.

Bear Case: A rejection or delayed approval triggers a selloff, with warrants expiring worthless and no RTW funds to offset losses.

Recommendation: For aggressive investors with a 12–18 month horizon, buying MSTX now at ~$1.50 offers asymmetric upside. The stock's current valuation (~$100M market cap) is far below its post-approval potential, assuming FDA approval. However, risk-averse investors should wait for the December decision or look for dips below $1.20.

Final Verdict: A High-Reward, High-Risk Play

Milestone's warrants and FDA timeline create a clear binary outcome. With the NDA's clinical data intact and regulatory hurdles cleared, the odds favor approval—if the FDA prioritizes patient access over nitrosamine technicalities. For those willing to bet on this biotech's PSVT breakthrough, the December 13 decision is the ultimate catalyst. Positioning ahead of it could pay off handsomely—if the FDA sees the light.

As with all biotech plays, caveat emptor: the FDA's final say could make or break this story.