6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of August 2018

Commission File Number 001-38177

Clementia Pharmaceuticals Inc.

(Translation of registrant’s name into English)

4150 St Catherine Street West, Suite 550

Montreal, Quebec, Canada, H3Z 2Y5

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: 

Form 20-F ☒   Form 40-F ☐ 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

EXHIBITS INCLUDED AS PART OF THIS REPORT

Exhibit
99.1	Management’s Discussion and Analysis of Financial Condition and Results of Operations
99.2	Interim Condensed Consolidated Financial Statements

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Clementia Pharmaceuticals Inc.
Date: August 9, 2018		By:	/s/ Michael Singer
		Name:	Michael Singer
		Title:	Chief Financial Officer

EX-99.1

Exhibit 99.1

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis (MD&A) of our financial condition and results of operations was prepared by Management with information available as at August 8, 2018. This MD&A should be read in conjunction with our unaudited interim condensed consolidated financial statements for the three and six-month periods ended June 30, 2018 and notes thereto, as well as our audited consolidated financial statements for the year ended December 31, 2017 and notes thereto, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and the annual report on form 20-F of the Company for the year ended December 31, 2017. These documents and additional information regarding Clementia are available on our website at www.clementiapharma.com, or at www.sec.gov or at www.sedar.com.

Except as otherwise indicated, “Clementia”, the “Company”, “we”, “us” and “our” refer to Clementia Pharmaceuticals Inc. and its wholly-owned subsidiary, Clementia Pharmaceuticals USA Inc.

All amounts are presented in United States dollars unless otherwise indicated.

In August 2017, the Company completed its initial public offering (IPO) and issued 9,191,000 common shares at $15 per share, including the underwriters’ over-allotment option, for total gross proceeds of $137.9 million. The Company’s common shares are listed and traded on the Nasdaq Global Select Market under the symbol CMTA.

This MD&A contains forward-looking statements that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations, intentions, and projections. Our actual results could differ materially from those discussed in these forward-looking statements. Refer to “Risks Factors” as well as “Forward-looking statements” below.

Overview

We are a clinical stage biopharmaceutical company innovating new treatments for people with ultra-rare bone disorders and other diseases. Our lead product candidate, palovarotene, is an oral small molecule RARγ agonist that has shown potent activity in preventing abnormal bone formation as well as fibrosis in a variety of tissues. We are developing palovarotene for the treatment of Fibrodysplasia Ossificans Progressiva (FOP), Multiple Osteochondromas (MO) and other diseases.

Our most advanced indication for palovarotene is for the treatment of FOP. Palovarotene has received Orphan Drug status for FOP from the U.S. Food and Drug Administration (FDA), and orphan drug status for the treatment of FOP in the European Union (EU). In addition, palovarotene has been granted Fast Track and Breakthrough Therapy designations for FOP from the FDA. In the fourth quarter of 2017, we initiated enrollment in our Phase 3 registration trial, the MOVE Trial, evaluating palovarotene in adults and children with FOP. Patients in the MOVE Trial will be treated chronically with palovarotene, with increased doses during flare-ups. Enrollment is on track and based on the current enrollment rate, we expect to report data from this trial in 2020, with two interim analyses in 2019.

Palovarotene is also being developed for the treatment of MO. Palovarotene was granted Orphan Drug Designation as a treatment for MO by the FDA in November 2017 and the EMA in May 2018. Following the completion of our pre-clinical proof-of-concept studies showing that palovarotene inhibits the number of osteochondromas expressed in animal models of MO and based on our knowledge of the safety and tolerability profile of palovarotene and our pre-clinical animal model data, we recently enrolled the first patient in a placebo-controlled Phase 2 study of palovarotene in MO, called MO-Ped. The MO-Ped Trial will enroll up to 240 patients at approximately 25-30 clinical sites worldwide in both male and female pediatric patients from 2 to 14 years of age to assess palovarotene’s effect on the rate of new osteochondroma formation, other secondary and exploratory endpoints, as well as product safety. We expect to report data from this trial in 2021 with a potential interim analysis in the first half of 2020.

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We also believe that RARγ agonists have great potential as inhibitors of BMP signaling in other indications. Palovarotene has been shown to exert multiple effects in various tissues including in ocular tissues, where RARγ agonists generally demonstrate anti-fibrotic properties. As a result, we have conducted pre-clinical proof-of-concept studies in dry eye disease demonstrating that an eye drop formulation of palovarotene can potently increase tear production and decrease corneal damage. Following the completion of these studies, we initiated IND-enabling toxicity studies of an ophthalmologic formulation in order to begin a Phase 1 clinical trial in dry eye disease in 2018. We are also focused on developing our RARγ agonist platform beyond palovarotene for larger, related disease markets. As part of this development process, we are currently in the process of characterizing second generation RARγ agonists that we have licensed from Galderma. On the basis of our scientific know-how and other clinical and commercial insights, a number of indications have been prioritized for animal proof-of-concept studies which commenced in 2017 and are continuing in 2018. Should these studies be successful, we plan to initiate the pre-IND activities necessary to initiate clinical trials in these new indications.

Since our inception in November 2010, we have devoted substantially all of our resources to organizing and staffing our Company, business planning, raising capital, developing our product candidates, preparing and conducting clinical studies of our product candidates, providing general and administrative support for these operations and protecting our intellectual property. We have funded our operations primarily through issuances of common shares from our IPO, issuances of redeemable convertible preferred shares as well as the issuance of convertible notes. From our inception through June 30, 2018, we have received gross proceeds of $240.7 million from such transactions, of which $137.9 million was in the form of gross proceeds from our IPO, $102.2 million was in the form of gross proceeds from the sale of preferred shares, $0.5 million was in the form of gross proceeds from the sale of convertible notes and $0.1 million was in the form of gross proceeds from the sale of other common shares. As at June 30, 2018 we had cash and investments of $117.9 million. The Company expects that its existing cash, short-term and long-term investments at June 30, 2018 will enable it to fund planned operating expenses for more than the next twelve months from June 30, 2018.

We are a development-stage company and have not generated any revenue. We have incurred net losses since our inception, substantially all of which resulted from non-cash finance charges incurred in connection with the accounting of our preferred shares and embedded derivatives, as well as research and development activities and general and administrative costs associated with our operations. As at June 30, 2018, we had an accumulated deficit of $115.6 million. In August 2017, all of the outstanding Class A, B and C redeemable convertible preferred shares were converted on a one-for-one basis into common shares of the Company. In connection therewith, the Company eliminated the $173.3 million contributed surplus created by the conversion of the preferred shares into common shares, an amount equal to the excess of the carrying value of the preferred share liabilities and embedded derivatives liabilities immediately prior to the conversion over the amount that was accounted for as share capital, being the stated capital of the preferred shares, and reduced its deficit in the third quarter of 2017 by a corresponding amount of $173.3 million.

2

We expect to incur significant expenses and increasing operating losses for the foreseeable future. We expect our expenses will increase substantially in connection with our ongoing activities, particularly as we advance clinical development of palovarotene by conducting clinical trials; continue research and development efforts to support clinical development of additional RARγ agonist candidates; continue to engage contract manufacturing organizations (CMOs) to manufacture our clinical study materials and to develop large-scale manufacturing capabilities; seek regulatory approval for our product candidates; add personnel to support our product development and future commercialization; add operational, financial and management information systems; maintain, leverage and expand our intellectual property portfolio; and continue to operate as a public company.

We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for palovarotene or any other product candidate, which we expect will take a number of years and is subject to significant uncertainty. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution. As a result, we will need additional financing to support our continuing operations. Until such time that we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity, debt financings or other sources, which may include collaborations with third parties. Arrangements with collaborators or others may require us to relinquish certain rights related to our technologies or product candidates. Adequate additional financing may not be available to us on acceptable terms, or at all. Our inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. The Company will need to generate significant revenue to achieve profitability and it may never do so.

Financial Operations Overview

Revenue

We have not generated any revenues from product sales since our inception and do not expect to generate any revenues from the sale of products in the near future. If our development efforts result in clinical success and regulatory approval or collaboration agreements with third parties for our product candidates, we may generate revenue from those product candidates.

Research and development expenses

Research and development (R&D) expenses consist primarily of costs associated with our product research and development efforts, and predominantly include:

· personnel costs, including salaries, benefits, bonuses, stock-based compensation expenses and related travel for employees engaged in scientific research and development functions;

· expenses incurred under agreements with contract research organizations, or CROs and investigative sites that conduct our clinical and non-clinical studies;

· expenses associated with manufacturing clinical study materials and developing external manufacturing capabilities;

· costs of outside consultants, including their fees and related travel expenses;

· other expenses related to non-clinical studies and expenses related to regulatory activities; and

· milestone payments made under our third-party licensing agreements.

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Research and development costs are generally expensed as incurred unless they meet specific criteria for recognition as internally-generated intangible assets as per IFRS. We have not recognized any internally-generated intangible asset to date.

Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and our clinical sites.

We have been focused on developing palovarotene, our product candidate for the treatment of patients with FOP and MO. Our research and development expenses consist principally of external costs, such as start-up fees paid to investigators, consultants, central laboratories and CROs in connection with our clinical and non-clinical studies, and costs related to acquiring and manufacturing clinical study materials. We do not allocate personnel-related costs, depreciation or other indirect costs to specific programs, as they are deployed across various projects under development and, as such, are separately classified as personnel and other expenses.

The following table summarizes our research and development expenses by program before tax credits:

	Six-month periods ended June 30,				Years ended December 31,
	2018		2017*		2017		2016		2015
	(in thousands)
Palovarotene for FOP R&D expenses	$	9,319	$	4,947	$	13,579	$	11,422	$	10,347
Palovarotene for MO R&D expenses		1,876		220		2,847		369		-
Palovarotene for ocular R&D expenses		704		177		1,609		229		75
Manufacturing of palovarotene		2,388		1,576		3,070		1,592		971
Other R&D expenses		334		277		532		149		501
Total direct R&D expenses		14,621		7,197		21,637		13,761		11,894
Personnel-related costs		2,990		1,923		4,476		2,353		1,971
Facility and other expenses		822		620		1,293		738		531
Total personnel, facility and other expenses		3,812		2,543		5,769		3,091		2,502
Total research and development expenses	$	18,433	$	9,740	$	27,406	$	16,852	$	14,396

*Certain amounts have been reclassified for presentation purposes (addition of “Manufacturing of palovarotene” caption which was formerly included as part of “Palovarotene for FOP R&D expenses”).

Research and development activities are central to our business. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. From inception through June 30, 2018, we incurred approximately $86.9 million in research and development expenses. We expect that our research and development expenses will continue to increase in the foreseeable future as we advance our product candidates into later stages of clinical development.

4

We cannot determine with certainty the duration and completion costs for our ongoing or future clinical studies of our product candidates or if, when, or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates. The duration, costs, and timing of clinical studies and the development of our product candidates will depend on a variety of factors, including:

· the scope, rate of progress, and expense of our ongoing clinical studies as well as any additional clinical studies and other research and development activities;

· future clinical study results;

· uncertainties in clinical study enrollment rate or design;

· significant and changing government regulation; and

· the timing and receipt of any regulatory approvals.

A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA, or another regulatory authority were to require us to conduct clinical studies beyond those that we currently anticipate will be required for the completion of clinical development of a product candidate or if we experience significant delays in enrollment in any of our clinical studies, significant additional time and financial resources could be required for the completion of clinical development.

General and administrative expenses

General and administrative expenses consist primarily of personnel costs, including salaries, related benefits, bonuses, stock-based compensation and travel expenses for our executive, finance, business and corporate development and other administrative functions. General and administrative expenses also include facilities and other expenses, including rent, depreciation, maintenance of facilities, information technology infrastructure and security, insurance and supplies; and professional fees for accounting, tax and legal services, including legal expenses to pursue patent protection for our intellectual property.

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support the anticipated growth in our research and development activities and the potential commercialization of our product candidates. We also anticipate increased expenses related to audit, legal, regulatory, and tax-related services associated with maintaining compliance with our public listing on The Nasdaq Global Select Market and SEC requirements, director and officer insurance premiums, and investor relations costs. Additionally, if and when we believe a regulatory approval of palovarotene or any other product candidate appears likely, we anticipate an increase in personnel and related expenses as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of palovarotene or any other product candidate.

Interest income and financial expenses

Interest income consists of interest earned on our cash and investments. Our interest income increased as of the second half of 2017 due largely to higher invested cash balances resulting from the net proceeds of our August 2017 IPO, as well as an increase in current interest rates realized on cash and investments.

Financial expenses consist mainly of losses on the re-measurement of embedded derivatives at fair value at each reporting date, accretion expense, bank charges and other interest, as well as foreign exchange gains and losses. Accretion expense consists of accreted interest expense related to our Class A, Class B and Class C redeemable convertible preferred shares to bring the debt components of our preferred shares back to their face value over time. Our IPO, which was completed in August 2017, resulted in the conversion of all classes of our preferred shares on a one-for-one basis into common shares and as such, gains or losses on the re-measurement of embedded derivatives at fair value and accretion expense ceased during the third quarter of 2017. Foreign exchange gains and losses consist of the realized and unrealized net gains and losses from holding cash in foreign currency and foreign currency-denominated other current assets and accounts payable.

5

Results of Operations

Comparison of the three-months ended June 30, 2018 and 2017

The following table summarizes our results of operations for the three-months ended June 30, 2018 and 2017:

Three-month periods ended June 30,	2018			2017			Increase (decrease)
	(in thousands)
Expenses:
Research and development expenses		7,437			6,332			1,105
Investment tax credits		(204	)		(70	)		(134	)
		7,233			6,262			971
General and administrative expenses		3,900			2,393			1,507
Interest income		(539	)		(107	)		(432	)
Financial expenses		28			14,678			(14,650	)
Income tax expense		146			98			48
Net loss and comprehensive loss		10,768			23,324			(12,556	)

Research and development expenses

Research and development expenses were $7.4 million for the three-month period ended June 30, 2018, compared to $6.3 million for the three-month period ended June 30, 2017. The $1.1 million increase was primarily due to:

• $1.1 million increase in clinical studies and CRO related activities as a result of patient enrollment in the MOVE study and MO-Ped study;

• $0.8 million decrease in manufacturing activities due to timing of manufacturing runs and formulation work to meet clinical supply requirements;

• $0.8 million increase in personnel related expenses in support of increased development activities.

Tax credits

Tax credits were $0.2 million for the three-month period ended June 30, 2018, compared to $0.1 million for the three-month period ended June 30, 2017. The increase in tax credits is the result of increased research and developments activities undertaken by the Company.

General and administrative expenses

General and administrative expenses were $3.9 million for the three-month period ended June 30, 2018, compared to $2.4 million for the three-month period ended June 30, 2017. The increase of $1.5 million in expenses was primarily due to a $0.6 million increase in personnel related costs to support the continued growth of the Company, a $0.2 million increase in public company related costs and a $0.7 million increase in pre-commercial marketing activities.

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Interest income

Interest income was $0.5 million for the three-month period ended June 30, 2018, compared to $0.1 million for the three-month period ended June 30, 2017. The increase in interest income relates to higher invested balances as a result of our IPO proceeds.

Financial expenses

Financial expenses were close to nil for the three-month period ended June 30, 2018, compared to $14.7 million for the three-month period ended June 30, 2017. The decrease in financial expenses was primarily due to the re-measurement at fair value of the embedded derivative in our preferred shares in the first quarter of 2017. With the completion of our IPO in August 2017, all classes of our preferred shares were converted on a one-for-one basis into common shares and as such, gains or losses on the re-measurement of embedded derivatives at fair value and accretion expense were eliminated going forward.

Comparison of the six-months ended June 30, 2018 and 2017

The following table summarizes our results of operations for the six-month periods ended June 30, 2018 and 2017:

Six-month periods ended June 30,	2018			2017			Increase (decrease)
	(in thousands)
Expenses:
Research and development expenses		18,433			9,740			8,693
Investment tax credits		(355	)		(120	)		(235	)
		18,078			9,620			8,458
General and administrative expenses		6,757			4,062			2,695
Interest income		(1,091	)		(188	)		(903	)
Financial expenses		68			51,025			(50,957	)
Income tax expense		187			142			45
Net loss and comprehensive loss		23,999			64,661			(40,662	)

Research and development expenses

Research and development expenses were $18.4 million for the six-month period ended June 30, 2018, compared to $9.7 million for the six-month period ended June 30, 2017. The $8.7 million increase was primarily due to:

• $6.1 million increase in clinical studies and CRO related activities as a result of patient enrollment in the MOVE and MO-Ped studies;

• $0.8 million increase in manufacturing activities to meet clinical supply requirements of the MOVE and MO-Ped trials;

• $0.5 million increase in non-clinical research activities for ocular studies and other potential indications;

• $1.3 million increase in personnel related expenses in support of increased development activities.

7

Tax credits

Tax credits were $0.4 million for the six-month period ended June 30, 2018, compared to $0.1 million for the six-month period ended June 30, 2017. The increase in tax credits is the result of increased research and developments activities undertaken by the Company.

General and administrative expenses

General and administrative expenses were $6.8 million for the six-month period ended June 30, 2018, compared to $4.1 million for the six-month period ended June 30, 2017. The increase of $2.7 million in expenses was primarily due to a $1.2 million increase in personnel related costs to support the continued growth of the Company, of which $0.9 million is in the form of share-based compensation expense, a $0.4 million increase in public company related costs and a $1.2 million increase in pre-commercial marketing activities.

Interest income

Interest income was $1.1 million for the six-month period ended June 30, 2018, compared to $0.2 million for the six-month period ended June 30, 2017. The increase in interest income relates to higher invested balances as a result of our IPO proceeds.

Financial expenses

Financial expenses were close to nil for the six-month period ended June 30, 2018, compared to $51.0 million for the six-month period ended June 30, 2017. The decrease in financial expenses was primarily due to the re-measurement at fair value of the embedded derivative in our preferred shares in the first quarter of 2017. With the completion of our IPO in August 2017, all classes of our preferred shares were converted on a one-for-one basis into common shares and as such, gains or losses on the re-measurement of embedded derivatives at fair value and accretion expense were eliminated going forward.

Liquidity and Capital Resources

Sources of liquidity

We have funded our operations principally from the issuance of common shares, preferred shares and convertible notes to purchase common shares, and IPO proceeds. In addition, we have recorded tax credits of $2.2 million since inception. As of June 30, 2018, we had cash and investments of $117.9 million. Cash in excess of immediate working capital requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. Currently, our investments are held in term deposits with a Canadian chartered bank.

The Company is not subject to any externally imposed restrictions, covenants or capital requirements and has no arranged sources of financing.

8

Cash flows

Comparison of the three-month periods ended June 30, 2018 and 2017

The following table sets forth the primary sources and uses of cash for each of the periods set forth below:

Three-month periods ended June 30,	2018			2017			Increase (decrease)
	(in thousands)
Net cash provided by (used in)
Operating activities		(13,752	)		(6,201	)		(7,551	)
Investing activities		98			(5,969	)		6,067
Financing activities		-			6			(6	)
Net decrease in cash		(13,654	)		(12,164	)		(1,490	)

Operating activities

The use of cash in all periods resulted primarily from our net losses, adjusted for non-cash charges and changes in working capital. The increase in cash used in operating activities for the three-month period ended June 30, 2018, compared to the three-month period ended June 30, 2017, is due to an increase in research and development activities for new and on-going clinical trial activities primarily in FOP and MO as well as an increase in general and administrative expenses.

During the three-month period ended June 30, 2018, operating activities used $13.8 million in cash, primarily resulting from our research and development and general and administrative expenses, as well as cash used for changes in working capital. The significant item accounting for the change in working capital includes an increase in prepaid expense.

During the three-month period ended June 30, 2017, operating activities used $6.2 million in cash, primarily resulting from research and development and general and administrative expense, partially offset by cash provided by changes in working capital. The significant item accounting for the change in working capital included an increase in accounts payable and accrued liabilities.

Investing activities

Net cash used in investing activities primarily consists of the acquisition and maturity of investments, in-licensing of intellectual property and purchases of fixed assets.

During the three-month period ended June 30, 2018, investing activities provided $0.1 million primarily from interest revenues received during the period. During the three-month period ended June 30, 2017, investing activities used $6.0 million in cash primarily due to the acquisition of investments and in-licensing of intellectual property.

Financing activities

During the three months ended June 30, 2018, there were no financing activities. During the three months ended June 30, 2017, net cash provided by financing activities was almost nil as a result of exercises of stock options during the period.

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Comparison of the six-month periods ended June 30, 2018 and 2017

The following table sets forth the primary sources and uses of cash for each of the periods set forth below:

Six-month periods ended June 30,	2018			2017			Increase (decrease)
	(in thousands)
Net cash provided by (used in)
Operating activities		(23,494	)		(12,139	)		(11,355	)
Investing activities		263			4,355			(4,092	)
Financing activities		-			9,902			(9,902	)
Net increase (decrease) in cash		(23,231	)		2,118			(25,349	)

Operating activities

The use of cash in all periods resulted primarily from our net losses, adjusted for non-cash charges and changes in working capital. The increase in cash used in operating activities for the six-month period ended June 30, 2018, compared to the six-month period ended June 30, 2017, is due to an increase in research and development activities for new and on-going clinical trial activities primarily in FOP and MO as well as an increase in general and administrative expenses.

During the six-month period ended June 30, 2018, operating activities used $23.5 million in cash, primarily resulting from our research and development and general and administrative expenses, as well as cash used for changes in working capital. The significant items accounting for the change in working capital include an increase in prepaid expenses, partially offset by an increase in accounts payable and accrued liabilities.

During the six-month period ended June 30, 2017, operating activities used $12.1 million in cash, primarily resulting from research and development and general and administrative expenses, partially offset by cash provided by changes in working capital. The significant item accounting for the change in working capital included an increase in accounts payable and accrued liabilities.

Investing activities

Net cash used in investing activities primarily consists of the acquisition and maturity of investments, in-licensing of intellectual property and purchases of fixed assets.

During the six-month period ended June 30, 2018, investing activities provided $0.3 million primarily from interest revenues received during the period. During the six-month period ended June 30, 2017, investing activities provided $4.4 million in cash primarily from the maturity of investments, partially offset by in-licensing of intellectual property.

Financing activities

During the six-months ended June 30, 2018, there were no financing activities.

During the six-months ended June 30, 2017, net cash provided by financing activities was $9.9 million resulting from net proceeds received from the issuance of 841,410 shares of our Class C redeemable convertible preferred shares.

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Funding Requirements and Planned Operations

To date, we have not generated any revenue from product sales and we do not know when, or if, we will generate any revenue from product sales in the future. We do not expect to generate significant revenue from product sales unless and until we obtain regulatory approval to commercialize our current product candidate or future product candidates. We anticipate that we will continue to generate losses for the foreseeable future, and we expect these losses to increase as we continue the development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products. We are subject to all of the risks incident in the development of new therapeutic products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We expect to incur additional costs associated with operating as a public company.

We believe that our existing cash and investments as of June 30, 2018 will be sufficient to fund our anticipated operating expenses for more than the next twelve months from June 30, 2018. However, we will eventually require additional capital for the commercial development and potential working capital purposes for our existing product candidates and we may also need to raise additional funds to pursue other development activities related to additional product candidates.

Until we can generate a sufficient amount of revenue from our products, if ever, we expect to finance future cash needs through public or private equity, debt offerings or others. Additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates. If we raise additional funds through the issuance of additional debt or equity securities, it could result in dilution to our existing stockholders, increased fixed payment obligations and these securities may have rights senior to those of our common shares. If we incur indebtedness, we could become subject to covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Any of these events could significantly harm our business, financial condition and prospects.

Quarterly Financial Data

We have a history of operating losses and have not been profitable since our inception in 2010. We expect to continue to incur losses for at least the next several years as we pursue clinical trials and research and development efforts. See “Risks Factors” below.

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Selected financial information for the eight quarters ending June 30, 2018 are as follows:

	Revenue		Research and development expenses before tax credits		Financial expenses (income)			Net loss and comprehensive loss			Basic and diluted loss per share
	(in thousands, except per share data)
Q2-2018	$	-	$	7,437	$	28		($	10,768	)	($	0.34	)
Q1-2018	$	-	$	10,996	$	40		($	13,231	)	($	0.42	)
Q4-2017	$	-	$	10,592	($	3	)	($	11,789	)	($	0.37	)
Q3-2017	$	-	$	7,074	$	29,416		($	39,006	)	($	1.83	)
Q2-2017	$	-	$	6,333	$	14,678		($	23,324	)	($	9.54	)
Q1-2017	$	-	$	3,407	$	36,347		($	41,337	)	($	17.48	)
Q4-2016	$	-	$	5,308	$	42,317		($	48,374	)	($	20.57	)
Q3-2016	$	-	$	4,490	($	3,477	)	($	1,627	)	($	0.69	)

It is important to note that historical patterns of expenditures cannot be taken as an indication of future expenditures. The amount and timing of expenditures and availability of capital resources vary substantially from period to period, depending on the level of research and development activities being undertaken at any one time and the availability of funding from investors and prospective commercial partners.

Financing expenses primarily reflect the revaluation of the preferred shares embedded derivative liabilities at fair value and underlying assumptions as well as accretion expenses on the preferred shares liabilities. With the completion of our IPO in August 2017, all classes of our preferred shares have been converted on a one-for-one basis into common shares and as such, gains or losses on the re-measurement of embedded derivatives at fair value and accretion expense were eliminated.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations at June 30, 2018.

	Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years		Total
	(in thousands)
Operating lease obligations		536		193		-		-		729
Other		175		150		-		-		325
		711		343		-		-		1,054

On July 2, 2015, we entered into a non-cancelable operating lease that expires on June 30, 2020 for office space at 4150 Sainte-Catherine Street West, Suite 550 in Montreal, Quebec, Canada. On June 6, 2017, we entered into a second non-cancelable operating lease that expires on June 30, 2020 for additional office space at 4150 Sainte-Catherine Street West, suite 450 in Montreal, Quebec. We also lease office space at 275 Grove Street, Suite 2-400 in Newton, Massachusetts under a non-cancelable operating lease that expires on April 30, 2019.

We expect to fund existing commitments with our cash and working capital.

12

We also have obligations to make future payments to third parties that become due and payable on the achievement of certain development, regulatory and commercial milestones. We have not included these commitments on our statement of financial position or in the table above because the achievement and timing of these milestones is not fixed or determinable. These commitments include:

• In accordance with an exclusive licensing agreement with Hoffman-La Roche, we are committed to pay Roche (i) a total of $1 million in milestone payments upon the achievement of certain clinical milestones, (ii) up to a total of $11 million in milestone payments upon the achievement of certain regulatory milestones in connection with the three clinical trial programs currently underway with an additional $1 million in milestone payments upon the achievement of certain regulatory milestones in connection with each subsequent indication, if any, and (iii) up to a total of $37.5 million in milestone payments upon the achievement of certain sales milestones. We achieved the clinical milestone in December 2017 and paid Roche $1 million in January 2018. Future royalty payments in the low teens based on net sales are also stipulated in the licensing agreement. The likelihood and timing of these payments is not known at this time.

• In accordance with an exclusive licensing agreement with Thomas Jefferson University, we are committed to make a total of $0.1 million in milestone payments upon the achievement of certain clinical milestones and a total of $0.25 million in milestone payments upon the achievement of certain regulatory milestones, in each case in connection with the first licensed product or licensed process that meets the relevant milestones. We achieved the clinical milestone and paid TJU $0.1 million in December 2017. Future low single digit royalty payments based on net sales are also stipulated in the licensing agreement. Annual license maintenance royalty payments are also required as per the terms of the licensing agreement. Such maintenance royalty payments are non-refundable but can be applied to royalties owing on sales per calendar year. The likelihood and timing of these payments is not known at this time.

• In accordance with an exclusive licensing agreement with Yamaguchi University, we are committed to make a total of $0.08 million in milestone payments upon the achievement of certain clinical milestones and a total of $0.15 million in milestone payments upon the achievement of certain regulatory milestones, in each case in connection with the first licensed product that meets the relevant milestones. Future low single digit royalty payments based on net sales are also stipulated in the licensing agreement. We also have a royalty buy-out option pursuant to which we can terminate our obligation to pay royalties to Yamaguchi University under the license agreement at any time and at our sole discretion upon payment of a certain amount to Yamaguchi University. The likelihood and timing of these payments is not known at this time.

• In March 2017, we entered into an exclusive licensing agreement with Galderma to obtain access to RARγ agonists and were granted exclusive rights to use these RARγ agonists in non-dermatological indications. In accordance with this agreement with Galderma, we are committed to pay Galderma a total of $2 million in milestone payments upon the achievement of certain clinical milestones and up to a total of $25.5 million in milestone payments upon the achievement of certain regulatory milestones, in each case in connection with the first product that meets the relevant milestones. Future single digit royalty payments based on net sales are also stipulated in the licensing agreement. The likelihood and timing of these payments is unknown at this time.

13

We enter into contracts in the normal course of business with CROs for pre-clinical research and clinical studies, research supplies and other services and products for operating purposes. These contracts generally provide for termination on notice, and therefore are cancelable contracts and not included in the table of contractual obligations and commitments.

Quantitative and Qualitative Disclosures about Market Risks

We are exposed to certain financial risks, including liquidity risk, credit risk, interest rate risk and foreign exchange risks.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure and financial leverage by monitoring its forecasted cash requirements and expected cash drawdowns. The balance of the Company’s accounts payable and accrued liabilities is due within one year.

Credit risk arises from cash, short and long-term investment, interest and other receivables. The Company holds its cash and short and long-term investments at Canadian and US chartered banks. The credit risk of cash, short and long-term investments and interest receivable from short and long-term investments is limited because the counter-parties are chartered banks with high credit ratings assigned by international credit rating agencies.

We are exposed to interest rate risk on our short and long-term investments. The objective of holding term deposits is to invest the Company’s excess cash resources in investment vehicles that provide a better rate of return compared to our interest bearing operating bank accounts with limited risk to the principal amount invested. We intend to match the maturities of our term deposits with the cash requirements of our operating activities. We do not have in place any tools to manage our interest rate risk. We do not believe that the results of operations or cash flows would be affected to any significant degree by a sudden change in market interest rates relative to interest rates on our investments, owing to the relative short-term nature of the investments.

We are exposed to the financial risk related to fluctuations of foreign exchange rates. We incur a portion of our expenditures in Canadian dollars and in Euros. A change in the currency exchange rates between the U.S. dollar relative to the Canadian dollar or the Euro could have a significant effect on our results of operations, financial position or cash flows. We are exposed to currency risk through our cash, sales tax and other receivables and accounts payable and accrued liabilities denominated in Canadian dollars and Euros. We do not have in place any tools to manage our foreign exchange risk, other than keeping expected foreign currency cash requirements in the foreign currency to form a natural hedge. Based on our net exposures as at June 30, 2018, and assuming all other variables remain constant, a 10% depreciation or appreciation of the U.S. dollar against the Canadian dollar and the Euro would result in an increase/decrease of less than $0.1 million on the Company’s results of operations.

Critical accounting judgments and key sources of estimation uncertainty

The management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with IFRS as issued by the IASB. The preparation of these financial statements in conformity with IFRS requires us to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of revenues, expenses, assets and liabilities. Actual results could differ from those estimates.

On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on the most probable set of economic conditions and planned course of action, historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of the asset or liability affected in future periods. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which these estimates are revised and in any future periods affected.

14

Balances and transaction that are subject to a high degree of estimation are the estimation of accrued expenses and the valuation of the embedded derivatives of the preferred shares for periods prior to our IPO. The critical accounting judgements and key sources of estimate uncertainty are consistent with those in the audited consolidated financial statements and notes thereto of the Company for the year ended December 31, 2017.

Adoption of New Accounting Standards and Future Accounting Standards

On January 1, 2018, the Company adopted Financial Instruments (IFRS 9), which replaces the requirements of International Accounting Standard (IAS) 39, Financial Instruments, Recognition and Measurement for classification and measurement of financial assets and liabilities. IFRS 9 introduces a single classification and measurement approach for financial instruments, which is driven by cash flow characteristics and the business model in which an asset is held. This single, principle-based approach replaces existing rule-based requirements and results in a single impairment model being applied to all financial instruments. IFRS 9 also modifies the hedge accounting model to incorporate the risk management practices of an entity. Additional disclosures are also required under the new standard. The Company’s principal financial assets are cash and investments which do not have material expected credit losses due to the counterparty Canadian and U.S. chartered banks that have high credit ratings and low default rates.

The IASB has issued new standards that are not yet effective for the year ended December 31, 2018, and although early adoption is permitted, they have not been applied in preparing our consolidated financial statements. We are currently evaluating the effect, if any, the following new standard will have on our financial results.

(i) Leases (IFRS 16), effective for annual periods beginning on or after January 1, 2019, provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessees and lessors. It supersedes IAS 17, Leases and its associated interpretive guidance. Significant changes were made to lessee accounting with the distinction between operating and finance leases removed and assets and liabilities recognized in respect of all leases (subject to limited exceptions for short-term leases and leases of low value assets). Earlier application of IFRS 16 is permitted for companies that have also adopted IFRS 15, Revenues from Contracts with Customers.

15

Internal Controls and Procedures

During the three-months ended June 30, 2018, there were no changes made to the Company’s internal controls over financial reporting (ICFR) that have materially affected or are reasonably likely to materially affect our ICFR.

The design of any system of internal controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

It should be noted a control system, no matter how well designed and operated, cannot provide absolute assurance that that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Risk Factors

You should carefully consider the risk factors included in our annual report on Form 20-F filed with the United States Securities and Exchange Commission (SEC) and SEDAR, in addition to information contained in this MD&A and our interim condensed consolidated financial statements and related notes and other filings we make with the SEC and SEDAR. Any of the risk factors described could adversely affect our business, operating results and financial condition. There have been no significant changes in our risk factors as of the date of this MD&A as compared to the risk factors described in our annual report on Form 20-F. Additional risks that we currently do not know about or that we currently believe to be immaterial may also materially adversely affect the Company’s business, financial condition and operating results.

Forward-looking statements

This MD&A and other written reports and releases and oral statements made from time to time by the Company contain forward-looking statements. All statements that are not clearly historical in nature are forward-looking, and the words “anticipate”, “believe”, “expect”, “estimate”, “may”, “will”, “could”, “leading”, “intend”, “contemplate”, “shall”, “plan” and similar expressions are generally intended to identify forward-looking statements. All statements that address expectations, possibilities or projections about the future, including without limitation, statements about our strategies for development, sources or adequacy of capital, expenditures and financial results are forward-looking statements.

16

All forward-looking statements reflect our beliefs and assumptions based on information available at the time assumptions are made. These forward-looking statements are not based on historical facts, but rather on Management’s expectations regarding future activities, results of operations, performance, future clinical and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, known and unknown, that contribute to the possibility that the predictions, forecasts, projections or other forward-looking statements will not occur. Factors which could cause future outcomes to differ materially from those set forth in the forward-looking statements include, but are not limited to, our ability to generate revenue and become profitable; the ability to obtain, on satisfactory terms or at all, the financing required to support operations, development, clinical trials and commercialization of products; the risks related to our heavy reliance on palovarotene, our only current product candidate; the risks of delays and inability to complete clinical trials due to difficulties in enrolling patients; the risks associated with the development of palovarotene and any future product candidate, including the demonstration of efficacy and safety; the risks related to clinical trials including the risk of negative results, potential delays, cost overruns and potential adverse events or unanticipated side effects; the risk of reliance on third-parties for the planning, conduct and monitoring of clinical trials and for the manufacture of clinical drug supplies and drug product; potential changes in regulatory requirements, and delays or negative outcomes from the regulatory approval process; our ability to successfully compete in our targeted markets, including the risk that competing therapies could emerge; the risks related to healthcare reimbursement policies and potential healthcare reform; our heavy dependence on licensed intellectual property, including our ability to source and maintain licenses from third-party owners; our ability to adequately protect proprietary information, trade secrets, and technology from competitors; the risk of patent or other intellectual property related litigation; risks related to changes in patent laws and interpretations; risks relating to our ability to manage the expansion of the size and scope of our Company, including risks associated with international operations; the potential for product liability claims; and our ability to attract, retain and motivate key personnel. The above are further and more fully described under our annual report on Form 20-F and other filings we make with the SEC and SEDAR.

Although the forward-looking statements are based upon what Management believes to be reasonable assumptions, such statements include various risks and uncertainties and we cannot assure readers that actual results will be consistent with these forward-looking statements.

Any forward-looking statements represent our estimates only as of the date of this MD&A and should not be relied upon as representing our estimates as of any subsequent date. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

17

EX-99.2

Exhibit 99.2

Clementia Pharmaceuticals Inc.

Interim Condensed Consolidated
Financial Statements

Three and six-month periods ended June 30, 2018 and 2017

(unaudited)

 

Clementia Pharmaceuticals Inc.

Interim Condensed Consolidated Statements of Financial Position (unaudited)

As at (in US dollars)	Note	June 30, 2018			December 31, 2017
Assets
Current assets
Cash		$	12,937,235		$	36,230,343
Short-term investments	4		55,000,000			30,000,000
Interest receivable			1,402,584			575,499
Sales tax and other receivables			71,105			94,497
Income tax and tax credits receivable			1,205,372			977,901
Prepaid expenses			5,907,485			3,798,882
Total current assets			76,523,781			71,677,122
Non-current assets
Long-term investments	4		50,000,000			75,000,000
Property and equipment			23,720			33,084
Intangible assets			1,619,251			1,715,192
Total non-current assets			51,642,971			76,748,276
Total assets		$	128,166,752		$	148,425,398
Liabilities
Current liabilities
Accounts payable and accrued liabilities		$	8,455,136		$	6,718,666
Total liabilities			8,455,136			6,718,666
Equity
Common shares			230,659,692			230,659,692
Contributed surplus			4,663,076			2,659,348
Deficit			(115,611,152	)		(91,612,308	)
Total equity			119,711,616			141,706,732
Subsequent events	11
Total equity and liabilities		$	128,166,752		$	148,425,398

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

2

Clementia Pharmaceuticals Inc.

Interim Condensed Consolidated Statements of Changes in Equity (unaudited)

	Common shares				Contributed surplus		Deficit			Equity
(in US dollars)	Shares		$		$		$			$
December 31, 2017		31,717,584		230,659,692		2,659,348		(91,612,308	)		141,706,732
Shared-based compensation (note 6)		-		-		2,003,728		-			2,003,728
Net loss and comprehensive loss		-		-		-		(23,998,844	)		(23,998,844	)
June 30, 2018		31,717,584		230,659,692		4,663,076		(115,611,152	)		119,711,616

	Common shares				Contributed surplus			Deficit			Equity
(in US dollars)	Shares		$		$			$			$
December 31, 2016		2,351,347		272,391		498,471			(149,442,970	)		(148,672,108	)
Exercise of stock options		99,013		51,626		(20,038	)		-			31,588
Shared-based compensation (note 6)		-		-		682,276			-			682,276
Net loss and comprehensive loss		-		-		-			(64,660,772	)		(64,660,772	)
June 30, 2017		2,450,360		324,017		1,160,709			(214,103,742	)		(212,619,016	)

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

3

Clementia Pharmaceuticals Inc.

Interim Condensed Consolidated Statements of Net Loss and Comprehensive Loss
(unaudited)

			Three-month periods ended June 30,						Six-month periods ended June 30,
(in US dollars)	Note		2018			2017			2018			2017
Expenses
Research and development expenses			$	7,437,155		$	6,332,519		$	18,432,718		$	9,740,030
Investment tax credits				(203,917	)		(70,414	)		(354,955	)		(120,040	)
				7,233,238			6,262,105			18,077,763			9,619,990
General and administrative expenses				3,899,531			2,393,514			6,756,769			4,061,806
Interest income				(538,872	)		(106,837	)		(1,090,630	)		(187,834	)
Financial expenses		8		27,499			14,677,698			67,765			51,024,782
Net loss before income taxes				10,621,396			23,226,480			23,811,667			64,518,744
Income tax expense				146,211			97,665			187,177			142,028
Net loss and comprehensive loss			($	10,767,607	)	($	23,324,145	)	($	23,998,844	)	($	64,660,772	)
Basic and diluted loss per share			($	0.34	)	($	9.54	)	($	0.76	)	($	26.88	)
Weighted average number of outstanding basic and diluted shares				31,717,584			2,445,729			31,717,584			2,405,187

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

4

Clementia Pharmaceuticals Inc.

Interim Condensed Consolidated Statements of Cash Flows (unaudited)

		Three-month periods ended June 30,						Six-month periods ended June 30,
(in US dollars)	Note		2018			2017			2018			2017
Operating activities
Net loss		($	10,767,607	)	($	23,324,145	)	($	23,998,844	)	($	64,660,772	)
Adjusting items
Interest income recognized in net loss			(538,872	)		(106,837	)		(1,090,630	)		(187,834	)
Depreciation of property and equipment			4,682			6,314			9,364			13,792
Amortization of intangible assets			48,236			48,227			95,941			82,045
Transaction costs recognized in net loss	5		-			-			-			35,175
Embedded derivative loss recognized in net loss	5		-			13,578,536			-			48,895,585
Accretion of preferred shares	5		-			1,097,699			-			2,085,737
Share-based compensation	6		1,271,935			598,535			2,003,728			682,276
Net foreign exchange gain			37,429			(8,353	)		54,613			(15,393	)
Income tax expense recognized in net loss			146,211			97,665			187,177			142,028
Income taxes paid			(54,447	)		(42,500	)		(59,693	)		(88,089	)
Tax credit			(126,337	)		-			(160,997	)		-
Net changes in working capital
Sales tax and other receivables			40,984			(64,316	)		19,922			(25,024	)
Investment tax credits receivable			(77,580	)		(70,414	)		(193,958	)		(120,040	)
Deferred financing costs			-			(182,240	)		-			(275,784	)
Prepaid expenses			(3,541,020	)		(75,603	)		(2,108,603	)		(80,064	)
Accounts payable and accrued liabilities			(195,284	)		2,246,567			1,747,832			1,377,851
Net operating cash flows			(13,751,670	)		(6,200,865	)		(23,494,148	)		(12,138,511	)
Investing activities
Interest income received			97,826			36,329			263,545			367,372
Acquisition of short and long-term investments			-			(5,000,000	)		(5,000,000	)		(25,000,000	)
Maturity of short-term investments			-			-			5,000,000			30,000,000
Acquisition of property and equipment			-			(5,302	)		-			(12,828	)
Acquisition of intellectual property			-			(1,000,000	)		-			(1,000,000	)
Net investing cash flows			97,826			(5,968,973	)		263,545			4,354,544
Financing activities
Issuance of common shares			-			5,859			-			31,588
Issuance of preferred shares	5		-			-			-			10,000,080
Issue costs of preferred shares	5		-			-			-			(129,520	)
Net financing cash flows			-			5,859			-			9,902,148
Net (decrease) increase in cash			(13,653,844	)		(12,163,979	)		(23,230,603	)		2,118,181
Cash at beginning of period			26,638,487			23,722,034			36,230,343			9,434,495
Effect of exchange rate fluctuations on cash held			(47,408	)		26,166			(62,505	)		31,545
Cash at end of period		$	12,937,235		$	11,584,221		$	12,937,235		$	11,584,221

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

5

Clementia Pharmaceuticals Inc.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Three and six-month periods ended June 30, 2018 and 2017 (in US dollars)

1. General information

Clementia Pharmaceuticals Inc. (the Company or Clementia) is a clinical stage biopharmaceutical company innovating new treatments for people with ultra-rare bone disorders and other diseases. The Company’s lead product candidate, palovarotene, is an oral small molecule that has shown potent activity in preventing abnormal new bone formation as well as fibrosis in a variety of tissues. The Company is developing palovarotene for the treatment of Fibrodysplasia Ossificans Progressiva (FOP), Multiple Osteochondromas (MO) and other diseases.

In August 2017, the Company completed its initial public offering (IPO) and issued 9,191,000 common shares at $15 per share, including the underwriters’ over-allotment option, for total gross proceeds of $137,865,000. The Company’s common shares are listed and traded on the Nasdaq Global Select Market under the symbol CMTA.

Clementia is a development stage company and has not generated any product revenues to date. The Company has incurred net losses in each year since its inception. Net losses were $23,998,844 for the six-month period ended June 30, 2018, resulting primarily from research and development activities and general and administrative costs associated with operations, and $115,455,193 for the year ended December 31, 2017, resulting primarily from non-cash finance charges incurred in connection with the accounting of our preferred shares and embedded derivatives, as well as costs incurred in connection with research and development activities and general and administrative costs associated with operations. As of June 30, 2018, the Company had an accumulated deficit of $115,611,152. In August 2017, all outstanding Class A, B and C redeemable preferred shares were converted on a one-for-one basis into common shares of the Company. In connection therewith, the Company eliminated $173,285,855 in contributed surplus created by the conversion of the preferred shares into common shares, an amount equal to the excess of the carrying value of the preferred share liabilities and embedded derivatives liabilities immediately prior to the conversion over the amount that was accounted for as share capital, being the stated capital of the preferred shares, and reduced its deficit in the third quarter of 2017 by a corresponding amount of $173,285,855. Operating activities used $23,494,148 in cash for the six-month ended June 30, 2018 and $35,566,460 in cash for the year ended December 31, 2017. The Company expects that its existing cash, short-term and long-term investments as of June 30, 2018 will enable it to fund its planned operating expenses for more than the next twelve months from June 30, 2018.

We expect to incur significant expenses and continued operating losses for the foreseeable future. We expect our expenses will increase substantially in connection with our ongoing activities, particularly as we advance clinical development of palovarotene by conducting clinical trials; continue research and development efforts to support clinical development of additional RARγ agonist candidates; continue to engage contract manufacturing organizations (CMOs) to manufacture our clinical study materials and to develop large-scale manufacturing capabilities; seek regulatory approval for our product candidates; add personnel to support our product development and future commercialization; add operational, financial and management information systems; maintain, leverage and expand our intellectual property portfolio; and continue to operate as a public company.

6

Clementia Pharmaceuticals Inc.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Three and six-month periods ended June 30, 2018 and 2017 (in US dollars)

We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for palovarotene or any other product candidate, which we expect will take a number of years and is subject to significant uncertainty. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution. As a result, we will need additional financing to support our continuing operations.

Until such time that we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity, debt financings or others, which may include collaborations with third parties. Arrangements with collaborators or others may require us to relinquish certain rights related to our technologies or product candidates. Adequate additional financing may not be available to us on acceptable terms, or at all. Our inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. The Company will need to generate significant revenue to achieve profitability and it may never do so.

Clementia is incorporated under the laws of Canada. The address of the Company’s registered head office is 4150 Sainte-Catherine Street West, Suite 550, Montréal, Québec, Canada, H3Z 2Y5.

2. Significant accounting policies

a. Statement of compliance and basis of preparation

These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB), and were approved for issuance by the board of directors and authorized for issue on August 8, 2018. In July 2017, the Company amended its articles of incorporation to effect a 11.99-for-1 stock-split of all of the Company’s common shares. The stock-split became effective July 19, 2017 and, as a result, all issued and outstanding common shares, preferred shares, stock options and per share amounts contained in these interim condensed consolidated financial statements have been retrospectively adjusted to reflect this stock-split for the prior year figures.

The interim condensed consolidated financial statements were prepared using the same accounting policies as set forth in notes 2 and 3 in the audited consolidated financial statements of the Company for the year ended December 31, 2017. These interim condensed consolidated financial statements do not include all the notes required in annual financial statements. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company for the year ended December 31, 2017.

The preparation of the Company’s interim condensed consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of revenues, expenditures, assets and liabilities. Actual results could differ from those estimates.

7

Clementia Pharmaceuticals Inc.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Three and six-month periods ended June 30, 2018 and 2017 (in US dollars)

On an ongoing basis, estimates and judgements are evaluated. The Company bases its estimates on the most probable set of economic conditions and planned course of action, historical experience, known trends and events, and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of the asset or liability affected in future periods. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which these estimates are revised and in any future periods affected.

Balances and transactions that are subject to a high degree of estimation are the estimation of accrued expenses and the valuation of the embedded derivatives of the preferred shares. The critical accounting judgements and key sources of estimate uncertainty are consistent with those in the audited consolidated financial statements and notes thereto of the Company for the year ended December 31, 2017.

3. Adoption of new accounting standards and future changes in accounting policies

On January 1, 2018, the Company adopted Financial Instruments (IFRS 9), which replaces the requirements in IAS 39, Financial Instruments, Recognition and Measurement for classification and measurement of financial assets and liabilities. IFRS 9 introduces a single classification and measurement approach for financial instruments, which is driven by cash flow characteristics and the business model in which an asset is held. This single, principle-based approach replaces existing rule-based requirements and results in a single impairment model being applied to all financial instruments. IFRS 9 also modifies the hedge accounting model to incorporate the risk management practices of an entity. Additional disclosures are also required under the new standards. The expected credit loss related to the Company’s financial assets is not considered material because the Company’s principal financial assets are cash and investments (note 4) which do not have material expected credit losses due to the counterparty Canadian and U.S. chartered banks that have high credit ratings and low default rates.

The IASB has also issued new standards that are not effective for the year ended December 31, 2018, and although early adoption is permitted, they have not been applied in preparing these interim condensed consolidated financial statements. The Company is currently evaluating the effect, if any, the following new standard will have on its financial results.

i) Leases (IFRS 16), effective for annual periods beginning on or after January 1, 2019, provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessees and lessors. It supersedes IAS 17 Leases and its associated interpretive guidance. Significant changes were made to lessee accounting with the distinction between operating and finance leases removed and assets and liabilities recognized in respect of all leases (subject to limited exceptions for short-term leases and leases of low value assets).  Earlier application of IFRS 16 is permitted for companies that have also adopted IFRS 15, Revenue from Contracts with Customers. 

8

Clementia Pharmaceuticals Inc.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Three and six-month periods ended June 30, 2018 and 2017 (in US dollars)

4. Investments

Term deposits, bearing interest at rates varying between 1.55% and 1.88% and maturing on various dates up to October 1, 2019, were classified as follows.

	June 30, 2018		December 31, 2017
Short-term investments	$	55,000,000	$	30,000,000
Long-term investments	$	50,000,000	$	75,000,000
	$	105,000,000	$	105,000,000

The objective for holding term deposits is to invest the Company’s excess cash resources in investment vehicles that provide a better rate of return compared to the Company’s interest bearing operating bank accounts with limited risk to the principal amount invested. The Company intends to match the maturities of its term deposits with the cash requirements of the Company’s operating activities.

5. Preferred shares

On March 16, 2017, the Company completed a $10,000,080 Class C financing with a new investor. Under the agreed terms, the Company issued 841,410 Class C redeemable convertible preferred shares at $11.88 per share for a total consideration of $10,000,080, less $129,520 in share issuance costs. Class A, B and C redeemable and convertible preferred shares had substantially the same terms.

In August 2017, immediately prior to its qualifying IPO, all of the outstanding Class A, B and C redeemable convertible preferred shares were converted on a one-for-one basis into 20,076,224 common shares of the Company. In connection therewith, in the third quarter of 2017 the Company i) included the original stated capital of the preferred shares in share capital, ii) included the excess of the total carrying value of the preferred shares and the embedded derivative liabilities over the original stated capital of the preferred shares in contributed surplus and iii) eliminated the contributed surplus created by the conversion of the preferred shares into common shares and recorded a corresponding reduction in deficit (as resolved by the Company’s board of directors).

9

Clementia Pharmaceuticals Inc.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Three and six-month periods ended June 30, 2018 and 2017 (in US dollars)

As at June 30, 2018 and December 31, 2017, there were no Class A, B or C redeemable convertible preferred shares issued and outstanding.

There were no changes in preferred shares and embedded derivatives for the six-month period ended June 30, 2018. Changes in preferred shares and embedded derivatives for the six-month period ended June 30, 2017 were as follows:

	Preferred shares							Embedded derivatives
	Class A		Class B		Class C			Class A		Class B			Class C
Balance, December 31, 2016	$	24,993,486	$	42,887,466	$	-		$	83,355,470	$	34,469,141		$	-
Issuance of preferred shares		-		-		7,284,269			-		-			2,715,811
Transaction costs		-		-		(94,345	)		-		-			-
Accretion during the period		307,595		662,239		18,204			-		-			-
Loss (gain) on re-measurement at fair value		-		-		-			44,814,889		(9,497,840	)		-
Balance, March 31, 2017		25,301,081		43,549,705		7,208,128			128,170,359		24,971,301			2,715,811
Accretion during the period		311,491		672,465		113,743			-		-			-
Loss (gain) on re-measurement at fair value		-		-		-			19,102,528		(4,498,721	)		(1,025,271	)
Balance, June 30, 2017	$	25,612,572	$	44,222,170	$	7,321,871		$	147,272,887	$	20,472,580		$	1,690,540

The fair values of the embedded derivative conversion options prior to March 16, 2017 were estimated using a Monte Carlo simulation model.

The fair values of the embedded derivative conversion options at March 31, 2017, and at inception for the Class C preferred shares, were estimated using a hybrid of the probability-weighted expected return method (PWERM), weighted at 75%, and a Monte Carlo simulation model, weighted at 25%. The Company integrated a PWERM model into its valuation methodology during the first quarter of 2017 as it had undertaken tangible steps towards a qualifying IPO and it believed this model to be a more accurate estimation method of the conversion option.

The fair value of the embedded derivative conversion options at June 30, 2017 were estimated using a hybrid of the PWERM method, weighted at 95%, and a liquidation scenario, weighted at 5%. The shift in weight towards the PWERM model considered the Company’s progress towards a qualifying IPO.

Under the PWERM methodology, the fair value was estimated based upon the future implied equity values using a range of low, medium and high exit multiples. Exit multiples were derived from comparable public company transactions that compared the invested capital (being the aggregate of debt and shares) to the pre-IPO equity values. The estimated implied equity value was discounted back from the estimated time to exit to the valuation date.

10

Clementia Pharmaceuticals Inc.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Three and six-month periods ended June 30, 2018 and 2017 (in US dollars)

The fair value of the embedded derivative conversion options were estimated at inception and on a recurring basis using the Monte Carlo simulation model or PWERM methodology with the following key assumptions, including a nil dividend yield:

	June 30, 2017						2017 (inception)
	Class A		Class B		Class C		Class C
Fair value of embedded derivative per share	$	10.98	$	3.51	$	2.01	$	3.23
PWERM assumptions:
Range of exit multiples		3.2-3.7		3.2-3.7		3.2-3.7		3.4-4.1
Time to exit (in years)		0.08		0.08		0.08		0.50
Monte Carlo assumptions:
Starting equity value (in millions of $)		-		-		-	$	298.1
Volatility		-		-		-		74	%
Weighted average time to exit (in years)		-		-		-		0.75

These derivative liabilities were classified as a Level 3 in the fair value hierarchy. A reasonably possible movement in the estimated starting equity value, expected volatility or expected time to exit could significantly impact the fair value of the embedded derivative.

6. Share-based payments

Stock options

Under the Company’s Employee Stock Option Plan (ESOP), the Company could grant to its directors, management and employees non-transferrable stock options for the purchase of common shares. Up until completion of the IPO, the maximum number of common shares that were available for issuance under the ESOP was limited to 3,786,886, of which 2,913,582 remain outstanding as at June 30, 2018 (2,997,836 as at December 31, 2017).

Upon completion of its IPO in August 2017, the Company adopted the 2017 Omnibus Plan (Omnibus) under which all future equity-based awards are now granted. The maximum number of common shares available for issuance under the Omnibus is limited to 3,659,308 as at June 30, 2018 (2,390,605 as at December 31, 2017). This number will automatically increase by an annual amount to be added on the first day of each year, beginning January 1, 2018 and continuing until, and including, the year ending December 31, 2027, equal to the lower of 4% of the number of common shares outstanding as of December 31 of the prior calendar year and an amount determined by the Company’s board of directors. The annual amount added on January 1, 2018 was established at 4% of the common shares outstanding at December 31, 2017, or 1,268,703.

11

Clementia Pharmaceuticals Inc.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Three and six-month periods ended June 30, 2018 and 2017 (in US dollars)

The Omnibus provides for awards of stock options, stock appreciation rights, unrestricted stock, stock units (including restricted stock units), performance awards, deferred share units, elective deferred share units and other awards convertible into or otherwise based on the Company’s common shares. As at June 30, 2018, 1,420,370 stock options were granted and remain outstanding under the Omnibus (27,990 as at December 31, 2017).

Changes in the number of stock options outstanding are as follows:

	Three-months ended June 30,										Six-months ended June 30,
				2018					2017					2018					2017
	Options			Weighted average exercise price		Options			Weighted average exercise price		Options			Weighted average exercise price		Options			Weighted average exercise price
Balance at beginning of period		3,826,952		$	5.07		2,549,098		$	1.07		3,025,826		$	2.61		2,453,586		$	0.44
Issued during the period		508,500		$	16.26		468,809		$	10.04		1,406,480		$	14.76		643,263		$	9.95
Exercised during the period		-			-		(20,071	)	$	0.29		-			-		(99,013	)	$	0.32
Forfeited during the period		(1,500	)	$	17.00		-			-		(98,354	)	$	10.43		-			-
Balance at end of period		4,333,952		$	6.38		2,997,836		$	2.48		4,333,952		$	6.38		2,997,836		$	2.48

The following table summarizes the information related to outstanding stock options as at June 30, 2018.

			Outstanding stock options				Exercisable stock options
Range of exercise prices			Number of stock options outstanding	Weighted average remaining contractual life (years)	Weighted average exercise price		Number of exercisable stock options	Weighted average exercise price
$0.29	-	$0.69	2,300,594	5.8	$	0.34	1,887,813	$	0.33
	$4.81		53,979	7.5	$	4.81	36,653	$	4.81
$9.70	-	$10.04	559,009	8.8	$	9.97	201,828	$	9.95
$11.92	-	$13.80	850,380	6.7	$	13.78	2,664	$	13.80
$15.95	-	$16.50	462,990	6.8	$	15.99	-		-
$17.00	-	$18.98	107,000	6.8	$	17.77	-		-
			4,333,952	6.5	$	6.38	2,128,958	$	1.34

12

Clementia Pharmaceuticals Inc.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Three and six-month periods ended June 30, 2018 and 2017 (in US dollars)

During the three-month period ended June 30, 2018, the Company recorded a stock-based compensation expense of $1,208,214 ($598,535 during the three-month period ended June 30, 2017), of which $759,734 ($415,537 in 2017) was recorded in general and administrative expenses and $448,480 ($182,998 in 2017) in research and development expenses in relation to stock options.

During the six-month period ended June 30, 2018, the Company recorded a stock-based compensation expense of $1,883,340 ($682,276 during the six-month period ended June 30, 2017) of which $1,298,351 ($440,792 in 2017) was recorded in general and administrative expenses and $584,989 ($241,484 in 2017) in research and development expenses in relation to stock options.

As at June 30, 2018, the Company had approximately $6.9 million of total unrecognized stock-based compensation expense, net of related forfeiture estimates, which is expected to be recognized over a weighted-average remaining vesting period of approximately 1.4 years.

As at June 30, 2018, there were 440,000 performance-based stock options outstanding for which no stock-based compensation expense was recorded. The Company had approximately $4.0 million of unrecognized stock-based compensation expense related to these.

The fair value of the stock options granted in the six-month periods was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

Six-month periods ended June 30,
	2018			2017
Grant (number of stock options)		1,406,480			643,263
Weighted average fair value of stock options	$	8.69		$	6.67
Weighted average exercise price	$	14.76		$	9.95
Weighted average assumptions:
Share price	$	14.76		$	9.95
Risk-free interest rate		2.62	%		1.96	%
Expected dividend yield		Nil			Nil
Volatility factor		74.29	%		77.11	%
Expected life (in years)		4.4			5.9

The Company estimates the fair value of its share-based awards to employees and directors using the Black-Scholes option pricing model that was developed to estimate the fair value of freely tradable, fully transferrable stock options without vesting restrictions. The terms of the share-based awards that have been awarded by the Company differ significantly from actual options that the Black-Scholes model was designed to evaluate.

13

Clementia Pharmaceuticals Inc.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Three and six-month periods ended June 30, 2018 and 2017 (in US dollars)

The Black-Scholes model requires the input of highly subjective assumptions, which affect the calculated values. These include (a) the expected volatility of the Company’s stock, (b) the expected life of the award, (c) the risk-free interest rate and (d) expected dividends. The assumptions used represent the Company’s best estimates at the time of grant.

The expected volatility reflects the assumption that the volatility used in estimating the fair value of share-based compensation is indicative of future trends, which may not necessarily be the actual outcome. Due to the lack of a public market for the trading of the Company’s common shares and a lack of company specific historical and implied volatility data, prior to 2018, the Company based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded (peer data). For these analyses, companies selected had comparable characteristics to the Company, including risk profiles, orphan drugs within their portfolios and position within the industry. Beginning in fiscal 2018, the Company has started to weigh its limited share price volatility with peer data in order to estimate the volatility assumption used for new awards. The weighting of the use of the Company’s own volatility will increase as more time elapses and data becomes available. This process will continue to be applied until a sufficient amount of historical data regarding the volatility of the Company’s own share price volatility becomes available, at which point the Company will rely solely on its own historical volatility.

The expected life of the options reflects the assumption that the expected life of the options used in estimating the fair value of share-based compensation is indicative of future exercise patterns that may occur which may not necessarily be the actual outcome. Due to its limited operating history, the Company has estimated the expected life of its stock options using the “simplified method”, whereby the expected life equals the average vesting terms and the contractual term of the option.

The risk-fee interest rates for periods within the expected life of the option are based on the U.S. Department of Treasury daily treasury yield curve rates in effect at grant date for time periods approximately equal to the expected life of the option.

The expected dividend yield has been estimated at nil as the Company has never paid cash dividends and does not expect to do so in the foreseeable future.

Deferred share units (DSUs)

Under the Company’s Omnibus, directors may elect to take all, none or a portion of their director compensation as DSUs. DSUs have no voting rights, but accrue dividends, if any, as additional DSUs at the same rate as dividends are paid on the Company’s shares. There are no vesting requirements relating to DSUs. DSUs are settled when a director leaves the Company’s board of directors, in either cash or the Company’s common shares issued from treasury or purchased on the open market, at the Company’s option. DSUs issued were treated as equity-settled DSUs whereby the fair value of services received is credited against contributed surplus, with the corresponding share-based compensation being recorded under general and administrative expenses. DSUs are not remeasured subsequent to grant date.

On March 31, 2018, the Company granted 3,738 DSUs to directors in lieu of payment of their board fees at a grant date fair value of $15.15, based on the closing price of the Company’s shares, and recognized an expense of $56,667 in general and administrative expenses for the three-months ended March 31, 2018.

14

Clementia Pharmaceuticals Inc.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Three and six-month periods ended June 30, 2018 and 2017 (in US dollars)

On June 30, 2018, the Company granted 4,842 DSUs at a grant date fair value of $13.16 and recognized an expense of $63,721 in general and administrative expenses for the three-months ended June 30, 2018.

7. Additional information on the interim condensed consolidated statements of net loss and comprehensive loss

	Three-months ended June 30,				Six-months ended June 30,
	2018		2017		2018		2017
Included in research and development expenses:
Employee benefits expense	$	1,604,319	$	1,141,917	$	2,990,481	$	1,925,788
Depreciation of property and equipment	$	2,911	$	4,193	$	5,843	$	8,866
Expenses related to minimum operating lease payments	$	115,696	$	106,728	$	237,262	$	208,351
Included in general and administrative expenses:
Employee benefits expense	$	1,477,028	$	969,934	$	2,750,056	$	1,486,740
Depreciation of property and equipment	$	1,771	$	2,121	$	3,521	$	4,926
Amortization of intangible assets	$	48,236	$	48,227	$	95,941	$	82,045
Expenses related to minimum operating lease payments	$	38,235	$	26,899	$	68,162	$	56,787

8. Financial expenses

	Three-months ended June 30,					Six-months ended June 30,
	2018		2017			2018		2017
Transaction costs – embedded derivatives	$	-	$	-		$	-	$	35,175
Accretion – preferred shares		-		1,097,699			-		2,085,737
Loss on re-measurement at fair value – embedded derivatives		-		13,578,536			-		48,895,585
Bank charges and other interest		4,567		5,658			8,843		7,834
Foreign exchange losses (gains)		22,932		(4,195	)		58,922		451
Total financial expenses	$	27,499	$	14,677,698		$	67,765	$	51,024,782

9. Financial instruments

The Company has determined that the carrying amount of its short-term financial assets and liabilities, including cash, short-term investments and accounts payable and accrued liabilities approximate their fair values due to the relatively short periods to maturity of these financial assets and liabilities.

15

Clementia Pharmaceuticals Inc.

Notes to the Interim Condensed Consolidated Financial Statements (unaudited)

Three and six-month periods ended June 30, 2018 and 2017 (in US dollars)

10. Operating segments

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions, being the biopharmaceutical segment. The Company’s singular focus is on advancing treatments for people living with rare diseases, including FOP and MO, as well as other diseases.

All of the Company’s intangible assets are held in Canada. As at June 30, 2018, the Company’s property and equipment are held as follows: 79% held in Canada and 21% in the United States.

11. Subsequent events

Subsequent to June 30, 2018, the Company granted 283,980 stock options under the 2017 Omnibus Plan at a weighted average exercise price of $11.49.

16

XML

Document And Entity Information	6 Months Ended
	Jun. 30, 2018
Document Information [Line Items]
Entity Registrant Name	Clementia Pharmaceuticals Inc.
Entity Central Index Key	0001647320
Trading Symbol	cmta
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Type	6-K
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Interim Condensed Consolidated Statements of Financial Position (Current Period Unaudited) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Current assets
Cash	$ 12,937,235	$ 36,230,343
Short-term investments	55,000,000	30,000,000
Interest receivable	1,402,584	575,499
Sales tax and other receivables	71,105	94,497
Income tax and tax credits receivable	1,205,372	977,901
Prepaid expenses	5,907,485	3,798,882
Total current assets	76,523,781	71,677,122
Non-current assets
Long-term investments	50,000,000	75,000,000
Property and equipment	23,720	33,084
Intangible assets	1,619,251	1,715,192
Total non-current assets	51,642,971	76,748,276
Total assets	128,166,752	148,425,398
Current liabilities
Accounts payable and accrued liabilities	8,455,136	6,718,666
Total liabilities	8,455,136	6,718,666
Common shares	230,659,692	230,659,692
Contributed surplus	4,663,076	2,659,348
Deficit	(115,611,152)	(91,612,308)
Total equity	119,711,616	141,706,732
Total equity and liabilities	$ 128,166,752	$ 148,425,398

XML

Interim Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($)	Issued capital [member]	Share premium [member]	Retained earnings [member]	Total
Balance (in shares) at Dec. 31, 2016	2,351,347
Balance at Dec. 31, 2016	$ 272,391	$ 498,471	$ (149,442,970)	$ (148,672,108)
Statement Line Items [Line Items]
Shared-based compensation (note 6)		682,276		682,276
Net loss and comprehensive loss			(64,660,772)	(64,660,772)
Exercise of stock options (in shares)	99,013
Exercise of stock options	$ 51,626	(20,038)		31,588
Balance (in shares) at Jun. 30, 2017	2,450,360
Balance at Jun. 30, 2017	$ 324,017	1,160,709	(214,103,742)	(212,619,016)
Balance (in shares) at Dec. 31, 2016	2,351,347
Balance at Dec. 31, 2016	$ 272,391	498,471	(149,442,970)	(148,672,108)
Statement Line Items [Line Items]
Net loss and comprehensive loss				(115,455,193)
Balance (in shares) at Dec. 31, 2017	31,717,584
Balance at Dec. 31, 2017	$ 230,659,692	2,659,348	(91,612,308)	141,706,732
Statement Line Items [Line Items]
Shared-based compensation (note 6)		2,003,728		2,003,728
Net loss and comprehensive loss			(23,998,844)	(23,998,844)
Balance (in shares) at Jun. 30, 2018	31,717,584
Balance at Jun. 30, 2018	$ 230,659,692	$ 4,663,076	$ (115,611,152)	$ 119,711,616

XML

Interim Condensed Consolidated Statements of Net Loss and Comprehensive Loss (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Expenses
Research and development expenses	$ 7,437,155	$ 6,332,519	$ 18,432,718	$ 9,740,030
Investment tax credits	(203,917)	(70,414)	(354,955)	(120,040)
Research and development expense, net	7,233,238	6,262,105	18,077,763	9,619,990
General and administrative expenses	3,899,531	2,393,514	6,756,769	4,061,806
Interest income	(538,872)	(106,837)	(1,090,630)	(187,834)
Financial expenses	27,499	14,677,698	67,765	51,024,782
Net loss before income taxes	10,621,396	23,226,480	23,811,667	64,518,744
Income tax expense	146,211	97,665	187,177	142,028
Net loss and comprehensive loss	$ (10,767,607)	$ (23,324,145)	$ (23,998,844)	$ (64,660,772)
Basic and diluted loss per share (in dollars per share)	$ (0.34)	$ (9.54)	$ (0.76)	$ (26.88)
Weighted average number of outstanding basic and diluted shares (in shares)	31,717,584	2,445,729	31,717,584	2,405,187

XML

Interim Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Operating activities
Net loss	$ (10,767,607)	$ (23,324,145)	$ (23,998,844)	$ (64,660,772)
Adjusting items
Interest income recognized in net loss	(538,872)	(106,837)	(1,090,630)	(187,834)
Depreciation of property and equipment	4,682	6,314	9,364	13,792
Amortization of intangible assets	48,236	48,227	95,941	82,045
Transaction costs recognized in net loss				35,175
Embedded derivative loss recognized in net loss		13,578,536		48,895,585
Accretion of preferred shares		1,097,699		2,085,737
Share-based compensation	1,271,935	598,535	2,003,728	682,276
Net foreign exchange gain	37,429	(8,353)	54,613	(15,393)
Income tax expense recognized in net loss	146,211	97,665	187,177	142,028
Income taxes paid	(54,447)	(42,500)	(59,693)	(88,089)
Tax credit	(126,337)		(160,997)
Net changes in working capital
Sales tax and other receivables	40,984	(64,316)	19,922	(25,024)
Investment tax credits receivable	(77,580)	(70,414)	(193,958)	(120,040)
Deferred financing costs		(182,240)		(275,784)
Prepaid expenses	(3,541,020)	(75,603)	(2,108,603)	(80,064)
Accounts payable and accrued liabilities	(195,284)	2,246,567	1,747,832	1,377,851
Net operating cash flows	(13,751,670)	(6,200,865)	(23,494,148)	(12,138,511)
Investing activities
Interest income received	97,826	36,329	263,545	367,372
Acquisition of short and long-term investments		(5,000,000)	(5,000,000)	(25,000,000)
Maturity of short-term investments			5,000,000	30,000,000
Acquisition of property and equipment		(5,302)		(12,828)
Acquisition of intellectual property		(1,000,000)		(1,000,000)
Net investing cash flows	97,826	(5,968,973)	263,545	4,354,544
Financing activities
Issuance of common shares		5,859		31,588
Net financing cash flows		5,859		9,902,148
Net (decrease) increase in cash	(13,653,844)	(12,163,979)	(23,230,603)	2,118,181
Cash at beginning of period	26,638,487	23,722,034	36,230,343	9,434,495
Effect of exchange rate fluctuations on cash held	(47,408)	26,166	(62,505)	31,545
Cash at end of period	$ 12,937,235	$ 11,584,221	$ 12,937,235	11,584,221
Series C preferred shares [member]
Financing activities
Issuance of preferred shares				10,000,080
Issue costs of preferred shares				$ (129,520)

XML

Note 1 - General Information

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of general information about financial statements [text block]

1. General information

Clementia Pharmaceuticals Inc. (the Company or Clementia) is a clinical stage biopharmaceutical company innovating new treatments for people with ultra-rare bone disorders and other diseases. The Company’s lead product candidate, palovarotene, is an oral small molecule that has shown potent activity in preventing abnormal new bone formation as well as fibrosis in a variety of tissues. The Company is developing palovarotene for the treatment of Fibrodysplasia Ossificans Progressiva (FOP), Multiple Osteochondromas (MO) and other diseases.

In

August 2017,

the Company completed its initial public offering (IPO) and issued

9,191,000

common shares at

$15

per share, including the underwriters’ over-allotment option, for total gross proceeds of

$137,865,000.

The Company’s common shares are listed and traded on the Nasdaq Global Select Market under the symbol CMTA.

Clementia is a development stage company and has

not

generated any product revenues to date. The Company has incurred net losses in each year since its inception. Net losses were

$23,998,844

for the

six

-month period ended

June 30, 2018,

resulting primarily from research and development activities and general and administrative costs associated with operations, and

$115,455,193

for the year ended

December 31, 2017,

resulting primarily from non-cash finance charges incurred in connection with the accounting of our preferred shares and embedded derivatives, as well as costs incurred in connection with research and development activities and general and administrative costs associated with operations. As of

June 30, 2018,

the Company had an accumulated deficit of

$115,611,152.

In

August 2017,

all outstanding Class A, B and C redeemable preferred shares were converted on a

one

-for-

one

basis into common shares of the Company. In connection therewith, the Company eliminated

$173,285,855

in contributed surplus created by the conversion of the preferred shares into common shares, an amount equal to the excess of the carrying value of the preferred share liabilities and embedded derivatives liabilities immediately prior to the conversion over the amount that was accounted for as share capital, being the stated capital of the preferred shares, and reduced its deficit in the

third

quarter of

2017

by a corresponding amount of

$173,285,855.

Operating activities used

$23,494,148

in cash for the

six

-month ended

June 30, 2018

and

$35,566,460

in cash for the year ended

December 31, 2017.

The Company expects that its existing cash, short-term and long-term investments as of

June 30, 2018

will enable it to fund its planned operating expenses for more than the next

twelve

months from

June 30, 2018.

We expect to incur significant expenses and continued operating losses for the foreseeable future. We expect our expenses will increase substantially in connection with our ongoing activities, particularly as we advance clinical development of palovarotene by conducting clinical trials; continue research and development efforts to support clinical development of additional RARγ agonist candidates; continue to engage contract manufacturing organizations (CMOs) to manufacture our clinical study materials and to develop large-scale manufacturing capabilities; seek regulatory approval for our product candidates; add personnel to support our product development and future commercialization; add operational, financial and management information systems; maintain, leverage and expand our intellectual property portfolio; and continue to operate as a public company.

We do

not

expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for palovarotene or any other product candidate, which we expect will take a number of years and is subject to significant uncertainty. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing, and distribution. As a result, we will need additional financing to support our continuing operations.

Until such time that we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity, debt financings or others, which

may

include collaborations with

third

parties. Arrangements with collaborators or others

may

require us to relinquish certain rights related to our technologies or product candidates. Adequate additional financing

may

not

be available to us on acceptable terms, or at all. Our inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. The Company will need to generate significant revenue to achieve profitability and it

may

never do so.

Clementia is incorporated under the laws of Canada. The address of the Company’s registered head office is

4150

Sainte-Catherine Street West, Suite

550,

Montréal, Québec, Canada,

H3Z

2Y5.

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Note 2 - Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of significant accounting policies [text block]

2. Significant accounting policies

a. Statement of compliance and basis of preparation

These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard (IAS)

34,

Interim Financial

Reporting, as issued by the International Accounting Standards Board (IASB), and were approved for issuance by the board of directors and authorized for issue on

August 8, 2018.

In

July 2017,

the Company amended its articles of incorporation to effect a

11.99

-for-

1

stock-split of all of the Company’s common shares. The stock-split became effective

July 19, 2017

and, as a result, all issued and outstanding common shares, preferred shares, stock options and per share amounts contained in these interim condensed consolidated financial statements have been retrospectively adjusted to reflect this stock-split for the prior year figures.

The interim condensed consolidated financial statements were prepared using the same accounting policies as set forth in notes

2

and

3

in the audited consolidated financial statements of the Company for the year ended

December 31, 2017.

These interim condensed consolidated financial statements do

not

include all the notes required in annual financial statements. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company for the year ended

December 31, 2017.

The preparation of the Company’s interim condensed consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of revenues, expenditures, assets and liabilities. Actual results could differ from those estimates.

On an ongoing basis, estimates and judgements are evaluated. The Company bases its estimates on the most probable set of economic conditions and planned course of action, historical experience, known trends and events, and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying values of assets and liabilities that are

not

readily apparent from other sources. Actual results

may

differ from these estimates under different assumptions or conditions. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of the asset or liability affected in future periods. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which these estimates are revised and in any future periods affected.

Balances and transactions that are subject to a high degree of estimation are the estimation of accrued expenses and the valuation of the embedded derivatives of the preferred shares. The critical accounting judgements and key sources of estimate uncertainty are consistent with those in the audited consolidated financial statements and notes thereto of the Company for the year ended

December 31, 2017.

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Note 3 - Adoption of New Accounting Standards and Future Changes in Accounting Policies

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of expected impact of initial application of new standards or interpretations [text block]

3. Adoption of new accounting standards and future changes in accounting policies

On

January 1, 2018,

the Company adopted

Financial Instruments

(IFRS

9

), which replaces the requirements in IAS

39,

Financial Instruments, Recognition and Measurement

for classification and measurement of financial assets and liabilities. IFRS

9

introduces a single classification and measurement approach for financial instruments, which is driven by cash flow characteristics and the business model in which an asset is held. This single, principle-based approach replaces existing rule-based requirements and results in a single impairment model being applied to all financial instruments. IFRS

9

also modifies the hedge accounting model to incorporate the risk management practices of an entity. Additional disclosures are also required under the new standards. The expected credit loss related to the Company’s financial assets is

not

considered material because the Company’s principal financial assets are cash and investments (note

4

) which do

not

have material expected credit losses due to the counterparty Canadian and U.S. chartered banks that have high credit ratings and low default rates.

The IASB has also issued new standards that are

not

effective for the year ended

December 31, 2018,

and although early adoption is permitted, they have

not

been applied in preparing these interim condensed consolidated financial statements. The Company is currently evaluating the effect, if any, the following new standard will have on its financial results.

i) Leases (IFRS 16 ), effective for annual periods beginning on or after January 1, 2019, provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessees and lessors. It supersedes IAS 17 Leases and its associated interpretive guidance. Significant changes were made to lessee accounting with the distinction between operating and finance leases removed and assets and liabilities recognized in respect of all leases (subject to limited exceptions for short-term leases and leases of low value assets).  Earlier application of IFRS 16 is permitted for companies that have also adopted IFRS 15, Revenue from Contracts with Customers . 

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Note 4 - Investments

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of investments other than investments accounted for using equity method [text block]

4. Investments

Term deposits, bearing interest at rates varying between

1.55%

and

1.88%

and maturing on various dates up to

October 1, 2019,

were classified as follows.

	June 30, 2018		December 31, 2017
Short-term investments	$	55,000,000	$	30,000,000
Long-term investments	$	50,000,000	$	75,000,000
	$	105,000,000	$	105,000,000

The objective for holding term deposits is to invest the Company’s excess cash resources in investment vehicles that provide a better rate of return compared to the Company’s interest bearing operating bank accounts with limited risk to the principal amount invested. The Company intends to match the maturities of its term deposits with the cash requirements of the Company’s operating activities.

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Note 5 - Preferred Shares

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of preferred shares [text block]

5. Preferred shares

On

March 16, 2017,

the Company completed a

$10,000,080

Class C financing with a new investor. Under the agreed terms, the Company issued

841,410

Class C redeemable convertible preferred shares at

$11.88

per share for a total consideration of

$10,000,080,

less

$129,520

in share issuance costs. Class A, B and C redeemable and convertible preferred shares had substantially the same terms.

In

August 2017,

immediately prior to its qualifying IPO, all of the outstanding Class A, B and C redeemable convertible preferred shares were converted on a

one

-for-

one

basis into

20,076,224

common shares of the Company. In connection therewith, in the

third

quarter of

2017

the Company i) included the original stated capital of the preferred shares in share capital, ii) included the excess of the total carrying value of the preferred shares and the embedded derivative liabilities over the original stated capital of the preferred shares in contributed surplus and iii) eliminated the contributed surplus created by the conversion of the preferred shares into common shares and recorded a corresponding reduction in deficit (as resolved by the Company’s board of directors).

As at

June 30, 2018

and

December 31, 2017,

there were

no

Class A, B or C redeemable convertible preferred shares issued and outstanding.

There were

no

changes in preferred shares and embedded derivatives for the

six

-month period ended

June 30, 2018.

Changes in preferred shares and embedded derivatives for the

six

-month period ended

June 30, 2017

were as follows:

	Preferred shares							Embedded derivatives
	Class A		Class B		Class C			Class A		Class B			Class C
Balance, December 31, 2016	$	24,993,486	$	42,887,466	$	-		$	83,355,470	$	34,469,141		$	-
Issuance of preferred shares		-		-		7,284,269			-		-			2,715,811
Transaction costs		-		-		(94,345	)		-		-			-
Accretion during the period		307,595		662,239		18,204			-		-			-
Loss (gain) on re-measurement at fair value		-		-		-			44,814,889		(9,497,840	)		-
Balance, March 31, 2017		25,301,081		43,549,705		7,208,128			128,170,359		24,971,301			2,715,811
Accretion during the period		311,491		672,465		113,743			-		-			-
Loss (gain) on re-measurement at fair value		-		-		-			19,102,528		(4,498,721	)		(1,025,271	)
Balance, June 30, 2017	$	25,612,572	$	44,222,170	$	7,321,871		$	147,272,887	$	20,472,580		$	1,690,540

The fair values of the embedded derivative conversion options prior to

March 16, 2017

were estimated using a Monte Carlo simulation model.

The fair values of the embedded derivative conversion options at

March 31, 2017,

and at inception for the Class C preferred shares, were estimated using a hybrid of the probability-weighted expected return method (PWERM), weighted at

75%,

and a Monte Carlo simulation model, weighted at

25%.

The Company integrated a PWERM model into its valuation methodology during the

first

quarter of

2017

as it had undertaken tangible steps towards a qualifying IPO and it believed this model to be a more accurate estimation method of the conversion option.

The fair value of the embedded derivative conversion options at

June 30, 2017

were estimated using a hybrid of the PWERM method, weighted at

95%,

and a liquidation scenario, weighted at

5%.

The shift in weight towards the PWERM model considered the Company’s progress towards a qualifying IPO.

Under the PWERM methodology, the fair value was estimated based upon the future implied equity values using a range of low, medium and high exit multiples. Exit multiples were derived from comparable public company transactions that compared the invested capital (being the aggregate of debt and shares) to the pre-IPO equity values. The estimated implied equity value was discounted back from the estimated time to exit to the valuation date.

The fair value of the embedded derivative conversion options were estimated at inception and on a recurring basis using the Monte Carlo simulation model or PWERM methodology with the following key assumptions, including a

nil

dividend yield:

	June 30, 2017						2017 (inception)
	Class A		Class B		Class C		Class C
Fair value of embedded derivative per share	$	10.98	$	3.51	$	2.01	$	3.23
PWERM assumptions:
Range of exit multiples		3.2-3.7		3.2-3.7		3.2-3.7		3.4-4.1
Time to exit (in years)		0.08		0.08		0.08		0.50
Monte Carlo assumptions:
Starting equity value (in millions of $)		-		-		-	$	298.1
Volatility		-		-		-		74	%
Weighted average time to exit (in years)		-		-		-		0.75

These derivative liabilities were classified as a Level

3

in the fair value hierarchy. A reasonably possible movement in the estimated starting equity value, expected volatility or expected time to exit could significantly impact the fair value of the embedded derivative.

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Note 6 - Share-based Payments

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of share-based payment arrangements [text block]

6. Share-based payments

Stock options

Under the Company’s Employee Stock Option Plan (ESOP), the Company could grant to its directors, management and employees non-transferrable stock options for the purchase of common shares. Up until completion of the IPO, the maximum number of common shares that were available for issuance under the ESOP was limited to

3,786,886,

of which

2,913,582

remain outstanding as at

June 30, 2018 (

2,997,836

as at

December 31, 2017).

Upon completion of its IPO in

August 2017,

the Company adopted the

2017

Omnibus Plan (Omnibus) under which all future equity-based awards are now granted. The maximum number of common shares available for issuance under the Omnibus is limited to

3,659,308

as at

June 30, 2018 (

2,390,605

as at

December 31, 2017).

This number will automatically increase by an annual amount to be added on the

first

day of each year, beginning

January 1, 2018

and continuing until, and including, the year ending

December 31, 2027,

equal to the lower of

4%

of the number of common shares outstanding as of

December 31

of the prior calendar year and an amount determined by the Company’s board of directors. The annual amount added on

January 1, 2018

was established at

4%

of the common shares outstanding at

December 31, 2017,

or

1,268,703.

The Omnibus provides for awards of stock options, stock appreciation rights, unrestricted stock, stock units (including restricted stock units), performance awards, deferred share units, elective deferred share units and other awards convertible into or otherwise based on the Company’s common shares. As at

June 30, 2018,

1,420,370

stock options were granted and remain outstanding under the Omnibus (

27,990

as at

December 31, 2017).

Changes in the number of stock options outstanding are as follows:

	Three-months ended June 30,										Six-months ended June 30,
				2018					2017					2018					2017
	Options			Weighted average exercise price		Options			Weighted average exercise price		Options			Weighted average exercise price		Options			Weighted average exercise price
Balance at beginning of period		3,826,952		$	5.07		2,549,098		$	1.07		3,025,826		$	2.61		2,453,586		$	0.44
Issued during the period		508,500		$	16.26		468,809		$	10.04		1,406,480		$	14.76		643,263		$	9.95
Exercised during the period		-			-		(20,071	)	$	0.29		-			-		(99,013	)	$	0.32
Forfeited during the period		(1,500	)	$	17.00		-			-		(98,354	)	$	10.43		-			-
Balance at end of period		4,333,952		$	6.38		2,997,836		$	2.48		4,333,952		$	6.38		2,997,836		$	2.48

The following table summarizes the information related to outstanding stock options as at

June 30, 2018.

			Outstanding stock options				Exercisable stock options
Range of exercise prices			Number of stock options outstanding	Weighted average remaining contractual life (years)	Weighted average exercise price		Number of exercisable stock options	Weighted average exercise price
$0.29	-	$0.69	2,300,594	5.8	$	0.34	1,887,813	$	0.33
	$4.81		53,979	7.5	$	4.81	36,653	$	4.81
$9.70	-	$10.04	559,009	8.8	$	9.97	201,828	$	9.95
$11.92	-	$13.80	850,380	6.7	$	13.78	2,664	$	13.80
$15.95	-	$16.50	462,990	6.8	$	15.99	-		-
$17.00	-	$18.98	107,000	6.8	$	17.77	-		-
			4,333,952	6.5	$	6.38	2,128,958	$	1.34

During the

three

-month period ended

June 30, 2018,

the Company recorded a stock-based compensation expense of

$1,208,214

(

$598,535

during the

three

-month period ended

June 30, 2017),

of which

$759,734

(

$415,537

in

2017

) was recorded in general and administrative expenses and

$448,480

(

$182,998

in

2017

) in research and development expenses in relation to stock options.

During the

six

-month period ended

June 30, 2018,

the Company recorded a stock-based compensation expense of

$1,883,340

(

$682,276

during the

six

-month period ended

June 30, 2017)

of which

$1,298,351

(

$440,792

in

2017

) was recorded in general and administrative expenses and

$584,989

(

$241,484

in

2017

) in research and development expenses in relation to stock options.

As at

June 30, 2018,

the Company had approximately

$6.9

million of total unrecognized stock-based compensation expense, net of related forfeiture estimates, which is expected to be recognized over a weighted-average remaining vesting period of approximately

1.4

years.

As at

June 30, 2018,

there were

440,000

performance-based stock options outstanding for which

no

stock-based compensation expense was recorded. The Company had approximately

$4.0

million of unrecognized stock-based compensation expense related to these.

The fair value of the stock options granted in the

six

-month periods was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

Six-month periods ended June 30,
	2018			2017
Grant (number of stock options)		1,406,480			643,263
Weighted average fair value of stock options	$	8.69		$	6.67
Weighted average exercise price	$	14.76		$	9.95
Weighted average assumptions:
Share price	$	14.76		$	9.95
Risk-free interest rate		2.62	%		1.96	%
Expected dividend yield		Nil			Nil
Volatility factor		74.29	%		77.11	%
Expected life (in years)		4.4			5.9

The Company estimates the fair value of its share-based awards to employees and directors using the Black-Scholes option pricing model that was developed to estimate the fair value of freely tradable, fully transferrable stock options without vesting restrictions. The terms of the share-based awards that have been awarded by the Company differ significantly from actual options that the Black-Scholes model was designed to evaluate.

The Black-Scholes model requires the input of highly subjective assumptions, which affect the calculated values. These include (a) the expected volatility of the Company’s stock, (b) the expected life of the award, (c) the risk-free interest rate and (d) expected dividends. The assumptions used represent the Company’s best estimates at the time of grant.

The expected volatility reflects the assumption that the volatility used in estimating the fair value of share-based compensation is indicative of future trends, which

may

not

necessarily be the actual outcome. Due to the lack of a public market for the trading of the Company’s common shares and a lack of company specific historical and implied volatility data, prior to

2018,

the Company based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded (peer data). For these analyses, companies selected had comparable characteristics to the Company, including risk profiles, orphan drugs within their portfolios and position within the industry. Beginning in fiscal

2018,

the Company has started to weigh its limited share price volatility with peer data in order to estimate the volatility assumption used for new awards. The weighting of the use of the Company’s own volatility will increase as more time elapses and data becomes available. This process will continue to be applied until a sufficient amount of historical data regarding the volatility of the Company’s own share price volatility becomes available, at which point the Company will rely solely on its own historical volatility.

The expected life of the options reflects the assumption that the expected life of the options used in estimating the fair value of share-based compensation is indicative of future exercise patterns that

may

occur which

may

not

necessarily be the actual outcome. Due to its limited operating history, the Company has estimated the expected life of its stock options using the “simplified method”, whereby the expected life equals the average vesting terms and the contractual term of the option.

The risk-fee interest rates for periods within the expected life of the option are based on the U.S. Department of Treasury daily treasury yield curve rates in effect at grant date for time periods approximately equal to the expected life of the option.

The expected dividend yield has been estimated at

nil

as the Company has never paid cash dividends and does

not

expect to do so in the foreseeable future.

Deferred share units (DSUs)

Under the Company’s Omnibus, directors

may

elect to take all,

none

or a portion of their director compensation as DSUs. DSUs have

no

voting rights, but accrue dividends, if any, as additional DSUs at the same rate as dividends are paid on the Company’s shares. There are

no

vesting requirements relating to DSUs. DSUs are settled when a director leaves the Company’s board of directors, in either cash or the Company’s common shares issued from treasury or purchased on the open market, at the Company’s option. DSUs issued were treated as equity-settled DSUs whereby the fair value of services received is credited against contributed surplus, with the corresponding share-based compensation being recorded under general and administrative expenses. DSUs are

not

remeasured subsequent to grant date.

On

March 31, 2018,

the Company granted

3,738

DSUs to directors in lieu of payment of their board fees at a grant date fair value of

$15.15,

based on the closing price of the Company’s shares, and recognized an expense of

$56,667

in general and administrative expenses for the

three

-months ended

March 31, 2018.

On

June 30, 2018,

the Company granted

4,842

DSUs at a grant date fair value of

$13.16

and recognized an expense of

$63,721

in general and administrative expenses for the

three

-months ended

June 30, 2018.

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Note 7 - Additional Information on the Interim Condensed Consolidated Statements of Net Loss and Comprehensive Loss

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of additional information on the consolidated statements of net loss and comprehensive loss [text block]

7. Additional information on the interim condensed consolidated statements of net loss and comprehensive loss

	Three-months ended June 30,				Six-months ended June 30,
	2018		2017		2018		2017
Included in research and development expenses:
Employee benefits expense	$	1,604,319	$	1,141,917	$	2,990,481	$	1,925,788
Depreciation of property and equipment	$	2,911	$	4,193	$	5,843	$	8,866
Expenses related to minimum operating lease payments	$	115,696	$	106,728	$	237,262	$	208,351
Included in general and administrative expenses:
Employee benefits expense	$	1,477,028	$	969,934	$	2,750,056	$	1,486,740
Depreciation of property and equipment	$	1,771	$	2,121	$	3,521	$	4,926
Amortization of intangible assets	$	48,236	$	48,227	$	95,941	$	82,045
Expenses related to minimum operating lease payments	$	38,235	$	26,899	$	68,162	$	56,787

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Note 8 - Financial Expenses

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of finance income (cost) [text block]

8. Financial expenses

	Three-months ended June 30,					Six-months ended June 30,
	2018		2017			2018		2017
Transaction costs – embedded derivatives	$	-	$	-		$	-	$	35,175
Accretion – preferred shares		-		1,097,699			-		2,085,737
Loss on re-measurement at fair value – embedded derivatives		-		13,578,536			-		48,895,585
Bank charges and other interest		4,567		5,658			8,843		7,834
Foreign exchange losses (gains)		22,932		(4,195	)		58,922		451
Total financial expenses	$	27,499	$	14,677,698		$	67,765	$	51,024,782

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Note 9 - Financial Instruments

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of financial instruments [text block]

9. Financial instruments

The Company has determined that the carrying amount of its short-term financial assets and liabilities, including cash, short-term investments and accounts payable and accrued liabilities approximate their fair values due to the relatively short periods to maturity of these financial assets and liabilities.

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Note 10 - Operating Segments

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of operating segments [text block]

10. Operating segments

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions, being the biopharmaceutical segment. The Company’s singular focus is on advancing treatments for people living with rare diseases, including FOP and MO, as well as other diseases.

All of the Company’s intangible assets are held in Canada. As at

June 30, 2018,

the Company’s property and equipment are held as follows:

79%

held in Canada and

21%

in the United States.

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Note 11 - Subsequent Events

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of events after reporting period [text block]

11. Subsequent events

Subsequent to

June 30, 2018,

the Company granted

283,980

stock options under the

2017

Omnibus Plan at a weighted average exercise price of

$11.49.

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Discloure of Significant Accounting Policies

Description of accounting policy for statement of compliance and basis of preparation [text block]

a. Statement of compliance and basis of preparation

These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard (IAS)

34,

Interim Financial

Reporting, as issued by the International Accounting Standards Board (IASB), and were approved for issuance by the board of directors and authorized for issue on

August 8, 2018.

In

July 2017,

the Company amended its articles of incorporation to effect a

11.99

-for-

1

stock-split of all of the Company’s common shares. The stock-split became effective

July 19, 2017

and, as a result, all issued and outstanding common shares, preferred shares, stock options and per share amounts contained in these interim condensed consolidated financial statements have been retrospectively adjusted to reflect this stock-split for the prior year figures.

The interim condensed consolidated financial statements were prepared using the same accounting policies as set forth in notes

2

and

3

in the audited consolidated financial statements of the Company for the year ended

December 31, 2017.

These interim condensed consolidated financial statements do

not

include all the notes required in annual financial statements. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company for the year ended

December 31, 2017.

The preparation of the Company’s interim condensed consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of revenues, expenditures, assets and liabilities. Actual results could differ from those estimates.

On an ongoing basis, estimates and judgements are evaluated. The Company bases its estimates on the most probable set of economic conditions and planned course of action, historical experience, known trends and events, and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying values of assets and liabilities that are

not

readily apparent from other sources. Actual results

may

differ from these estimates under different assumptions or conditions. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of the asset or liability affected in future periods. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which these estimates are revised and in any future periods affected.

Balances and transactions that are subject to a high degree of estimation are the estimation of accrued expenses and the valuation of the embedded derivatives of the preferred shares. The critical accounting judgements and key sources of estimate uncertainty are consistent with those in the audited consolidated financial statements and notes thereto of the Company for the year ended

December 31, 2017.

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Note 4 - Investments (Tables)

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of term deposits [text block]

	June 30, 2018		December 31, 2017
Short-term investments	$	55,000,000	$	30,000,000
Long-term investments	$	50,000,000	$	75,000,000
	$	105,000,000	$	105,000,000

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Note 5 - Preferred Shares (Tables)

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of changes in Preferred Shares and Embedded Derivatives [text block]

	Preferred shares							Embedded derivatives
	Class A		Class B		Class C			Class A		Class B			Class C
Balance, December 31, 2016	$	24,993,486	$	42,887,466	$	-		$	83,355,470	$	34,469,141		$	-
Issuance of preferred shares		-		-		7,284,269			-		-			2,715,811
Transaction costs		-		-		(94,345	)		-		-			-
Accretion during the period		307,595		662,239		18,204			-		-			-
Loss (gain) on re-measurement at fair value		-		-		-			44,814,889		(9,497,840	)		-
Balance, March 31, 2017		25,301,081		43,549,705		7,208,128			128,170,359		24,971,301			2,715,811
Accretion during the period		311,491		672,465		113,743			-		-			-
Loss (gain) on re-measurement at fair value		-		-		-			19,102,528		(4,498,721	)		(1,025,271	)
Balance, June 30, 2017	$	25,612,572	$	44,222,170	$	7,321,871		$	147,272,887	$	20,472,580		$	1,690,540

Disclosure of assumptions used to determine the fair value of embedded derivative [text block]

	June 30, 2017						2017 (inception)
	Class A		Class B		Class C		Class C
Fair value of embedded derivative per share	$	10.98	$	3.51	$	2.01	$	3.23
PWERM assumptions:
Range of exit multiples		3.2-3.7		3.2-3.7		3.2-3.7		3.4-4.1
Time to exit (in years)		0.08		0.08		0.08		0.50
Monte Carlo assumptions:
Starting equity value (in millions of $)		-		-		-	$	298.1
Volatility		-		-		-		74	%
Weighted average time to exit (in years)		-		-		-		0.75

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Note 6 - Share-based Payments (Tables)

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of number and weighted average exercise prices of share options [text block]

	Three-months ended June 30,										Six-months ended June 30,
				2018					2017					2018					2017
	Options			Weighted average exercise price		Options			Weighted average exercise price		Options			Weighted average exercise price		Options			Weighted average exercise price
Balance at beginning of period		3,826,952		$	5.07		2,549,098		$	1.07		3,025,826		$	2.61		2,453,586		$	0.44
Issued during the period		508,500		$	16.26		468,809		$	10.04		1,406,480		$	14.76		643,263		$	9.95
Exercised during the period		-			-		(20,071	)	$	0.29		-			-		(99,013	)	$	0.32
Forfeited during the period		(1,500	)	$	17.00		-			-		(98,354	)	$	10.43		-			-
Balance at end of period		4,333,952		$	6.38		2,997,836		$	2.48		4,333,952		$	6.38		2,997,836		$	2.48

Disclosure of range of exercise prices of outstanding share options [text block]

			Outstanding stock options				Exercisable stock options
Range of exercise prices			Number of stock options outstanding	Weighted average remaining contractual life (years)	Weighted average exercise price		Number of exercisable stock options	Weighted average exercise price
$0.29	-	$0.69	2,300,594	5.8	$	0.34	1,887,813	$	0.33
	$4.81		53,979	7.5	$	4.81	36,653	$	4.81
$9.70	-	$10.04	559,009	8.8	$	9.97	201,828	$	9.95
$11.92	-	$13.80	850,380	6.7	$	13.78	2,664	$	13.80
$15.95	-	$16.50	462,990	6.8	$	15.99	-		-
$17.00	-	$18.98	107,000	6.8	$	17.77	-		-
			4,333,952	6.5	$	6.38	2,128,958	$	1.34

Disclosure of indirect measurement of fair value of goods or services received, share options granted during period [text block]

Six-month periods ended June 30,
	2018			2017
Grant (number of stock options)		1,406,480			643,263
Weighted average fair value of stock options	$	8.69		$	6.67
Weighted average exercise price	$	14.76		$	9.95
Weighted average assumptions:
Share price	$	14.76		$	9.95
Risk-free interest rate		2.62	%		1.96	%
Expected dividend yield		Nil			Nil
Volatility factor		74.29	%		77.11	%
Expected life (in years)		4.4			5.9

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Note 7 - Additional Information on the Interim Condensed Consolidated Statements of Net Loss and Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of supplemental information of comprehensive income (loss) [text block]

	Three-months ended June 30,				Six-months ended June 30,
	2018		2017		2018		2017
Included in research and development expenses:
Employee benefits expense	$	1,604,319	$	1,141,917	$	2,990,481	$	1,925,788
Depreciation of property and equipment	$	2,911	$	4,193	$	5,843	$	8,866
Expenses related to minimum operating lease payments	$	115,696	$	106,728	$	237,262	$	208,351
Included in general and administrative expenses:
Employee benefits expense	$	1,477,028	$	969,934	$	2,750,056	$	1,486,740
Depreciation of property and equipment	$	1,771	$	2,121	$	3,521	$	4,926
Amortization of intangible assets	$	48,236	$	48,227	$	95,941	$	82,045
Expenses related to minimum operating lease payments	$	38,235	$	26,899	$	68,162	$	56,787

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Note 8 - Financial Expenses (Tables)

6 Months Ended

Jun. 30, 2018

Statement Line Items [Line Items]

Disclosure of total financial expenses [text block]

	Three-months ended June 30,					Six-months ended June 30,
	2018		2017			2018		2017
Transaction costs – embedded derivatives	$	-	$	-		$	-	$	35,175
Accretion – preferred shares		-		1,097,699			-		2,085,737
Loss on re-measurement at fair value – embedded derivatives		-		13,578,536			-		48,895,585
Bank charges and other interest		4,567		5,658			8,843		7,834
Foreign exchange losses (gains)		22,932		(4,195	)		58,922		451
Total financial expenses	$	27,499	$	14,677,698		$	67,765	$	51,024,782

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Note 1 - General Information (Details Textual)	1 Months Ended	3 Months Ended			6 Months Ended		12 Months Ended
	Aug. 31, 2017 USD ($) $ / shares shares	Jun. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Statement Line Items [Line Items]
Issuance of common stock | shares	9,191,000
Shares issued, price per share | $ / shares	$ 15
Proceeds from initial public offering	$ 137,865,000
Total comprehensive income		$ (10,767,607)		$ (23,324,145)	$ (23,998,844)	$ (64,660,772)	$ (115,455,193)
Retained earnings		(115,611,152)			(115,611,152)		(91,612,308)
Convertible instrument, conversion ratio	1
Increase (decrease) through excess of carrying value of preferred shares and embedded derivatives liabilities over the stated capital of the preferred shares			$ 173,285,855
Net cash flows from (used in) operating activities		$ (13,751,670)		$ (6,200,865)	(23,494,148)	(12,138,511)	$ (35,566,460)
Share premium [member]
Statement Line Items [Line Items]
Total comprehensive income
Reduction of Deficit	$ (173,285,855)

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Note 2 - Significant Accounting Policies (Details Textual)	1 Months Ended
	Jul. 31, 2017
Statement Line Items [Line Items]
Stock split, conversion ratio	11.99

XML

Note 4 - Investments (Details Textual)	6 Months Ended
	Jun. 30, 2018
Bottom of range [member]
Statement Line Items [Line Items]
Term deposits, interest rate	1.55%
Top of range [member]
Statement Line Items [Line Items]
Term deposits, interest rate	1.88%

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Note 4 - Investments - Term Deposits (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Statement Line Items [Line Items]
Short-term investments	$ 55,000,000	$ 30,000,000
Long-term investments	50,000,000	75,000,000
Total deposit assets	$ 105,000,000	$ 105,000,000

XML

Note 5 - Preferred Shares (Details Textual)		1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 16, 2017 USD ($) $ / shares shares	Aug. 31, 2017 $ / shares shares	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2017 USD ($)	Jun. 30, 2018 shares	Dec. 31, 2017 shares
Statement Line Items [Line Items]
Shares issued, price per share | $ / shares		$ 15
Preferred shares, conversion ratio		1
Conversion of convertible preferred shares		20,076,224
Embedded derivative, fair value assumption, probability-weighted expected return method, weighted percentage			95.00%	75.00%
Embedded derivative, fair value assumption, Monte Carlo simulation model, weighted percentage			5.00%	25.00%
Preferred shares, dividend rate
Series C preferred shares [member]
Statement Line Items [Line Items]
Proceeds from issue of preference shares | $	$ 10,000,080				$ 10,000,080
Number of preferred shares issued during period	841,410
Shares issued, price per share | $ / shares	$ 11.88
Payments for share issue costs | $	$ 129,520				$ 129,520
Number of shares outstanding at end of period						0	0
Total number of shares issued						0	0
Series A preferred shares [member]
Statement Line Items [Line Items]
Number of shares outstanding at end of period						0	0
Total number of shares issued						0	0
Series B preferred shares [member]
Statement Line Items [Line Items]
Number of shares outstanding at end of period						0	0
Total number of shares issued						0	0

XML

Note 5 - Preferred Shares - Changes in Preferred Shares and Embedded Derivatives (Details) - USD ($)	3 Months Ended
	Jun. 30, 2017	Mar. 31, 2017
Embedded derivatives derived from series A preferred shares [member]
Statement Line Items [Line Items]
Balance	$ 128,170,359	$ 83,355,470
Issuance of preferred shares
Transaction costs
Loss (gain) on re-measurement at fair value	19,102,528	44,814,889
Balance	147,272,887	128,170,359
Embedded derivatives derived from series B preferred shares [member]
Statement Line Items [Line Items]
Balance	24,971,301	34,469,141
Issuance of preferred shares
Transaction costs
Loss (gain) on re-measurement at fair value	(4,498,721)	(9,497,840)
Balance	20,472,580	24,971,301
Embedded derivatives derived from series C preferred shares [member]
Statement Line Items [Line Items]
Balance	2,715,811
Issuance of preferred shares		2,715,811
Transaction costs
Loss (gain) on re-measurement at fair value	(1,025,271)
Balance	1,690,540	2,715,811
Series A preferred shares [member]
Statement Line Items [Line Items]
Balance	25,301,081	24,993,486
Issuance of preferred shares
Transaction costs
Accretion during the period	311,491	307,595
Loss (gain) on re-measurement at fair value
Balance	25,612,572	25,301,081
Series B preferred shares [member]
Statement Line Items [Line Items]
Balance	43,549,705	42,887,466
Issuance of preferred shares
Transaction costs
Accretion during the period	672,465	662,239
Loss (gain) on re-measurement at fair value
Balance	44,222,170	43,549,705
Series C preferred shares [member]
Statement Line Items [Line Items]
Balance	7,208,128
Issuance of preferred shares		7,284,269
Transaction costs		(94,345)
Accretion during the period	113,743	18,204
Loss (gain) on re-measurement at fair value
Balance	$ 7,321,871	$ 7,208,128

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Note 5 - Preferred Shares - Key Assumptions (Details) $ / shares in Units, $ in Millions		6 Months Ended
	Mar. 16, 2017 USD ($) $ / shares	Jun. 30, 2017 USD ($) $ / shares
Series A preferred shares [member]
Statement Line Items [Line Items]
Fair value of embedded derivative per share (in dollars per share) | $ / shares		$ 10.98
Series A preferred shares [member] | PWERM assumptions [member]
Statement Line Items [Line Items]
Time to exit (in years) (Year)		29 days
Series A preferred shares [member] | PWERM assumptions [member] | Bottom of range [member]
Statement Line Items [Line Items]
Range of exit multiples		3.2
Series A preferred shares [member] | PWERM assumptions [member] | Top of range [member]
Statement Line Items [Line Items]
Range of exit multiples		3.7
Series A preferred shares [member] | Monte Carlo assumptions [member]
Statement Line Items [Line Items]
Starting equity value (in millions of $) | $
Volatility
Series A preferred shares [member] | Monte Carlo assumptions [member] | Weighted average [member]
Statement Line Items [Line Items]
Time to exit (in years) (Year)
Series B preferred shares [member]
Statement Line Items [Line Items]
Fair value of embedded derivative per share (in dollars per share) | $ / shares		$ 3.51
Series B preferred shares [member] | PWERM assumptions [member]
Statement Line Items [Line Items]
Time to exit (in years) (Year)		29 days
Series B preferred shares [member] | PWERM assumptions [member] | Bottom of range [member]
Statement Line Items [Line Items]
Range of exit multiples		3.2
Series B preferred shares [member] | PWERM assumptions [member] | Top of range [member]
Statement Line Items [Line Items]
Range of exit multiples		3.7
Series B preferred shares [member] | Monte Carlo assumptions [member]
Statement Line Items [Line Items]
Starting equity value (in millions of $) | $
Volatility
Series B preferred shares [member] | Monte Carlo assumptions [member] | Weighted average [member]
Statement Line Items [Line Items]
Time to exit (in years) (Year)
Series C preferred shares [member]
Statement Line Items [Line Items]
Fair value of embedded derivative per share (in dollars per share) | $ / shares	$ 3.23	$ 2.01
Series C preferred shares [member] | PWERM assumptions [member]
Statement Line Items [Line Items]
Time to exit (in years) (Year)	182 days	29 days
Series C preferred shares [member] | PWERM assumptions [member] | Bottom of range [member]
Statement Line Items [Line Items]
Range of exit multiples	3.4	3.2
Series C preferred shares [member] | PWERM assumptions [member] | Top of range [member]
Statement Line Items [Line Items]
Range of exit multiples	4.1	3.7
Series C preferred shares [member] | Monte Carlo assumptions [member]
Statement Line Items [Line Items]
Starting equity value (in millions of $) | $	$ 298.1
Volatility	74.00%
Series C preferred shares [member] | Monte Carlo assumptions [member] | Weighted average [member]
Statement Line Items [Line Items]
Time to exit (in years) (Year)	273 days

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Note 6 - Share-based Payments (Details Textual)				3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018 USD ($) shares	Mar. 31, 2018 USD ($)	Jan. 01, 2018 shares	Jun. 30, 2018 USD ($) shares	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) shares	Jun. 30, 2017 USD ($)	Dec. 31, 2017 shares	Mar. 31, 2017	Dec. 31, 2016
Statement Line Items [Line Items]
Number of share options outstanding in share-based payment arrangement at end of period	4,333,952	3,826,952		4,333,952	2,997,836	4,333,952	2,997,836	3,025,826	2,549,098	2,453,586
Expense from share-based payment transactions with employees				$ 1,208,214	$ 598,535	$ 1,883,340	$ 682,276
Expense from share-based payment transactions with employees, allocated to general and administrative expenses				759,734	415,537	1,298,351	440,792
Expense from share-based payment transactions with employees, allocated to research and development expenses				448,480	$ 182,998	584,989	$ 241,484
Unrecognized share-based compensation expense, net of related forfeiture estimates	$ 6,900,000			$ 6,900,000		$ 6,900,000
Unrecognized share-based compensation expense, period for recognition						1 year 146 days
Employee stock option plan [member[
Statement Line Items [Line Items]
Number of share options available for issuance | shares	3,786,886			3,786,886		3,786,886
Number of share options outstanding in share-based payment arrangement at end of period	2,913,582			2,913,582		2,913,582		2,997,836
2017 Omnibus Plan [member]
Statement Line Items [Line Items]
Number of share options outstanding in share-based payment arrangement at end of period	1,420,370			1,420,370		1,420,370		27,990
Number of share options available for issuance, increase, lower limit, percentage of common shares outstanding						4.00%		4.00%
Number of share options available for issuance, increase, lower limit, shares | shares			1,268,703
2017 Omnibus Plan [member] | Top of range [member]
Statement Line Items [Line Items]
Number of share options available for issuance | shares	3,659,308			3,659,308		3,659,308		2,390,605
Performance-based stock options granted [member]
Statement Line Items [Line Items]
Number of share options outstanding in share-based payment arrangement at end of period	440,000			440,000		440,000
Unrecognized share-based compensation expense	$ 4,000,000			$ 4,000,000		$ 4,000,000
Deferred share units (DSUs) [member]
Statement Line Items [Line Items]
Expense from share-based payment transactions with employees, allocated to general and administrative expenses	$ 63,721	$ 56,667
Number of other equity instruments granted in share-based payment arrangement	4,842	3,738
Weighted average exercise price of other equity instruments granted in share-based payment arrangement	$ 13.16	$ 15.15

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Note 6 - Share-based Payments - Number of Stock Options Outstanding (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)
Statement Line Items [Line Items]
Balance at beginning of period, options	3,826,952	2,549,098	3,025,826	2,453,586
Balance at beginning of period, weighted average exercise price	$ 5.07	$ 1.07	$ 2.61	$ 0.44
Grant (number of stock options)	508,500	468,809	1,406,480	643,263
Issued during the period, weighted average exercise price	$ 16.26	$ 10.04	$ 14.76	$ 9.95
Exercised during the period, options		(20,071)		(99,013)
Exercised during the period, weighted average exercise price		$ 0.29		$ 0.32
Forfeited during the period, options	(1,500)		(98,354)
Forfeited during the period, weighted average exercise price	$ 17		$ 10.43
Balance at end of period, options	4,333,952	2,997,836	4,333,952	2,997,836
Balance at end of period, weighted average exercise price	$ 6.38	$ 2.48	$ 6.38	$ 2.48

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Note 6 - Share-based Payments - Summary of Outstanding Stock Options (Details)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Statement Line Items [Line Items]
Number of stock options outstanding	4,333,952	3,826,952	3,025,826	2,997,836	2,549,098	2,453,586
Weighted average remaining contractual life	6.5
Weighted average remaining exercise price	$ 6.38	$ 5.07	$ 2.61	$ 2.48	$ 1.07	$ 0.44
Number of exercisable stock options	2,128,958
Weighted average exercise price	$ 1.34
Range 1 [member]
Statement Line Items [Line Items]
Number of stock options outstanding	2,300,594
Weighted average remaining contractual life	5.8
Weighted average remaining exercise price	$ 0.34
Number of exercisable stock options	1,887,813
Weighted average exercise price	$ 0.33
Range 1 [member] | Bottom of range [member]
Statement Line Items [Line Items]
Exercise price	0.29
Range 1 [member] | Top of range [member]
Statement Line Items [Line Items]
Exercise price	0.69
Range 2 [member]
Statement Line Items [Line Items]
Exercise price	$ 4.81
Number of stock options outstanding	53,979
Weighted average remaining contractual life	7.5
Weighted average remaining exercise price	$ 4.81
Number of exercisable stock options	36,653
Weighted average exercise price	$ 4.81
Range 3 [member]
Statement Line Items [Line Items]
Exercise price	$ 201,828
Number of stock options outstanding	559,009
Weighted average remaining contractual life	8.8
Weighted average remaining exercise price	$ 9.97
Weighted average exercise price	9.95
Range 3 [member] | Bottom of range [member]
Statement Line Items [Line Items]
Exercise price	9.7
Range 3 [member] | Top of range [member]
Statement Line Items [Line Items]
Exercise price	$ 10.04
Range 4 [member]
Statement Line Items [Line Items]
Number of stock options outstanding	850,380
Weighted average remaining contractual life	6.7
Weighted average remaining exercise price	$ 13.78
Number of exercisable stock options	2,664
Weighted average exercise price	$ 13.80
Range 4 [member] | Bottom of range [member]
Statement Line Items [Line Items]
Exercise price	11.92
Range 4 [member] | Top of range [member]
Statement Line Items [Line Items]
Exercise price	$ 13.8
Range 5 [member]
Statement Line Items [Line Items]
Number of stock options outstanding	462,990
Weighted average remaining contractual life	6.8
Weighted average remaining exercise price	$ 15.99
Number of exercisable stock options
Weighted average exercise price
Range 5 [member] | Bottom of range [member]
Statement Line Items [Line Items]
Exercise price	15.95
Range 5 [member] | Top of range [member]
Statement Line Items [Line Items]
Exercise price	$ 16.5
Range 6 [member]
Statement Line Items [Line Items]
Number of stock options outstanding	107,000
Weighted average remaining contractual life	6.8
Weighted average remaining exercise price	$ 17.77
Number of exercisable stock options
Weighted average exercise price
Range 6 [member] | Bottom of range [member]
Statement Line Items [Line Items]
Exercise price	17
Range 6 [member] | Top of range [member]
Statement Line Items [Line Items]
Exercise price	$ 18.98

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Note 6 - Share-based Payments - Fair Value Assumptions (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2018 $ / shares	Jun. 30, 2017 $ / shares	Jun. 30, 2018 USD ($) $ / shares	Jun. 30, 2017 USD ($) $ / shares
Statement Line Items [Line Items]
Grant (number of stock options)	508,500	468,809	1,406,480	643,263
Weighted average fair value of stock options (in dollars per share) | $ / shares	$ 8.69	$ 6.67	$ 8.69	$ 6.67
Weighted average exercise price			$ 14.76	$ 9.95
Share price			$ 14.76	$ 9.95
Risk-free interest rate			2.62%	1.96%
Expected dividend yield
Volatility factor			74.29%	77.11%
Expected life (in years)			4.4	5.9

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Note 7 - Additional Information on the Consolidated Statements of Net Loss and Comprehensive Loss - Net Loss and Comprehensive Loss (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement Line Items [Line Items]
Employee benefits expense, included in research and development expenses	$ 1,604,319	$ 1,141,917	$ 2,990,481	$ 1,925,788
Depreciation of property and equipment, included in research and development expenses	2,911	4,193	5,843	8,866
Expenses related to minimum operating lease payments, included in research and development expenses	115,696	106,728	237,262	208,351
Employee benefits expense, included in general and administrative expenses	1,477,028	969,934	2,750,056	1,486,740
Depreciation of property and equipment, included in general and administrative expenses	1,771	2,121	3,521	4,926
Amortization of intangible assets, included in general and administrative expenses	48,236	48,227	95,941	82,045
Expenses related to minimum operating lease payments, included in general and administrative expenses	$ 38,235	$ 26,899	$ 68,162	$ 56,787

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Note 8 - Financial Expenses - Financial Expenses (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement Line Items [Line Items]
Transaction costs – embedded derivatives				$ 35,175
Accretion of preferred shares		1,097,699		2,085,737
Loss on re-measurement at fair value – embedded derivatives		13,578,536		48,895,585
Bank charges and other interest	4,567	5,658	8,843	7,834
Foreign exchange losses (gains)	22,932	(4,195)	58,922	451
Total financial expenses	$ 27,499	$ 14,677,698	$ 67,765	$ 51,024,782

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Note 10 - Operating Segments (Details Textual)	Jun. 30, 2018
Statement Line Items [Line Items]
Percentage of property and equipment located at Canada	79.00%
Percentage of property and equipment located at United States	21.00%

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Note 11 - Subsequent Events (Details Textual)	1 Months Ended	3 Months Ended		6 Months Ended
	Jul. 31, 2018 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)
Statement Line Items [Line Items]
Number of share options granted in share-based payment arrangement		508,500	468,809	1,406,480	643,263
Weighted average exercise price of share options granted in share-based payment arrangement		$ 16.26	$ 10.04	$ 14.76	$ 9.95
Options granted [member] | 2017 Omnibus Plan [member]
Statement Line Items [Line Items]
Number of share options granted in share-based payment arrangement	283,980
Weighted average exercise price of share options granted in share-based payment arrangement	$ 11.49