Drug Development and Pipeline - Acasti completed the acquisition of Grace on August 27, 2021, positioning itself as a late-stage specialty pharmaceutical company focused on rare and orphan diseases[90]. - The company has three advanced drug candidates: GTX-104 for Subarachnoid Hemorrhage (SAH), GTX-102 for Ataxia Telangiectasia (A-T), and GTX-101 for Postherpetic Neuralgia (PHN), all of which have received Orphan Drug Designation (ODD)[95][98]. - Acasti's drug development strategy leverages the 505(b)(2) regulatory pathway, potentially shortening the time to market for reformulated drugs[92]. - The company anticipates starting Phase 3 safety studies for GTX-104 in the first half of 2023, following successful PK bridging study results[98]. - GTX-102's PK bridging study results are expected in the second half of 2022, with Phase 3 initiation planned for the second half of 2023[98]. - GTX-101's single-dose study results are expected in the second half of 2022, with a Multiple Ascending Dose study to follow in 2023[98]. - Acasti's therapeutic pipeline includes three unique clinical stage assets supported by over 40 granted and pending patents worldwide[93]. - GTX-102, a concentrated oral-mucosal spray of betamethasone, aims to improve neurological symptoms of Ataxia Telangiectasia (A-T), a rare genetic disorder affecting approximately 4,300 patients annually in the U.S.[115][117]. - GTX-101, a non-narcotic topical bupivacaine spray, targets postherpetic neuralgia (PHN) with a total addressable market of $2.5 billion, including $200 million for PHN pain[132][135]. Financial Performance - The net loss for the three months ended June 30, 2022, was $4.524 million, an increase of $1.406 million from the net loss of $3.118 million for the same period in 2021[152]. - Research and development expenses for the three months ended June 30, 2022, totaled $2.590 million, a significant increase of $2.121 million compared to $469,000 for the same period in 2021[150]. - Total assets as of June 30, 2022, amounted to $124.931 million, an increase of $64.478 million from $60.453 million as of June 30, 2021[150]. - The company reported total shareholders' equity of $104.403 million as of June 30, 2022, up by $50.946 million from $53.457 million in the previous year[150]. - General and administrative expenses for the three months ended June 30, 2022, totaled $1.919 million, a decrease of $757,000 from $2.676 million for the same period in 2021[161]. - Cash and cash equivalents totaled $38,377 as of June 30, 2022, a net decrease of $2,598 compared to $40,975 at June 30, 2021[168]. - Operating activities used cash of $5,426 for the three months ended June 30, 2022, compared to $3,401 for the same period in 2021[169]. - Total fully diluted shares increased to 50,462,426 as of June 30, 2022, from 49,018,292 as of March 31, 2022[167]. Market Potential - The total addressable market for SAH is estimated at over $300 million in the U.S., with approximately 53,596 individuals experiencing aSAH annually[110]. - The potential total addressable market for A-T treatments is estimated at $150 million based on the number of treatable patients in the U.S.[117]. - Approximately 40% of patients using lidocaine patches experience insufficient pain relief, highlighting the need for alternatives like GTX-101[132]. Clinical Study Results - In a clinical trial, oral liquid betamethasone reduced ataxia symptoms by a median of 13 points (28% decrease) in the intent-to-treat population, with significant results compared to placebo (P = 0.01)[119]. - GTX-102 achieves similar blood levels at only 1/70th the volume of an oral solution of betamethasone, which is crucial for patients with swallowing difficulties[121]. - GTX-101 has shown to be well absorbed through the skin with no evidence of skin irritation in Phase 1 studies, indicating its safety and tolerability[138]. - The company believes that non-opioid products like GTX-101 will be attractive options for PHN pain relief due to faster onset and sustained relief[140]. Regulatory and Compliance - Acasti plans to submit the final PK bridging study report to the FDA in Q3 2022 and expects to initiate the Phase 3 Safety Study in the first half of 2023, which will take approximately 18 months to complete[114]. - The company received a notification from Nasdaq on July 27, 2022, for failing to maintain a minimum bid price of $1.00 per share for 30 consecutive business days, with a compliance deadline of January 23, 2023[146]. - The company has no changes in internal controls over financial reporting that materially affected them during the quarter ended June 30, 2022[215]. - There have been no material changes from the risk factors disclosed in the most recently filed annual report on Form 10-K[218]. Commitments and Obligations - The company has a remaining commitment of $2.8 million under the RKO supply agreement, which is currently disputed with Aker Biomarine Antarctic[190]. - The total contractual obligations as of June 30, 2022, amounted to $6,760, with $3,062 due within one year[188]. - The company has a fixed value commitment of $3.1 million for the RKO supply agreement with Aker to purchase raw krill oil product for CaPre[202].

Financial Data and Key Metrics Changes - Research and development expenses for the year ended March 31, 2022, totaled $5.6 million, an increase from $4.2 million for the year ended March 31, 2021 [26] - General and administrative expenses for the year ended March 31, 2022, were $9.3 million, compared to $5.5 million for the year ended March 31, 2021 [27] - Net loss for the year ended March 31, 2022, was $9.8 million or $0.27 per share, compared to a net loss of $19.7 million or $1.33 per share for the year ended March 31, 2021 [28] Business Line Data and Key Metrics Changes - The company has three drug candidates in clinical development: GTX104, GTX102, and GTX101, all acquired through the Grace Therapeutics merger [8][18] - GTX104 is a novel formulation of nimodipine for IV infusion targeting patients with Subarachnoid Hemorrhage (SAH), with a total available market in the U.S. estimated at over $300 million [11][16] - GTX102 is a concentrated oral mucosal spray of betamethasone aimed at treating Ataxia-telangiectasia, with a market opportunity estimated at $150 million in the U.S. [19] - GTX101 is a non-narcotic topical bioadhesive bupivacaine spray for Postherpetic Neuralgia, addressing significant unmet needs in pain management [21] Market Data and Key Metrics Changes - SAH affects approximately 50,000 patients annually in the U.S., with a high mortality rate before reaching the hospital [10] - The current standard of care for SAH is an orally administered nimodipine, which has limitations in administration and absorption [12][16] Company Strategy and Development Direction - The company aims to reformulate and repurpose marketed medicines for rare and orphan diseases, utilizing the 505b2 regulatory pathway for faster drug approval [8][9] - The focus is on advancing clinical programs for GTX104, GTX102, and GTX101, with plans to initiate Phase 3 studies for GTX104 and GTX102 and Phase 2 for GTX101 [43][44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about fiscal year 2023 being transformative, with several important milestones expected [43] - The company anticipates submitting an NDA for GTX104 in early 2024, following the completion of a safety study [32][44] Other Important Information - The company had approximately $44 million in cash, cash equivalents, and short-term investments as of March 31, 2022, down from $60.7 million the previous year [25] - Monthly cash burn is expected to increase from $800,000 to $2 million as clinical trials ramp up [40] Q&A Session Summary Question: What is the design and number of patients for the safety study of GTX104? - The safety study is designed for 100 to 125 patients, comparing GTX104 with the oral nimodipine capsule, expected to complete in 12 to 18 months [32] Question: When are the patents expected to issue following the notice of allowances? - The company expects the patents to issue very soon [34][35] Question: Has the PK bridging study protocol for GTX102 been developed or approved? - The study protocol for GTX102 has been completed and is set to start within the next month [38] Question: What is the expected monthly cash burn as trials begin? - Monthly cash burn is expected to increase to upwards of $2 million as clinical trials commence [40]

Financial Performance - The net loss for the year ended March 31, 2022, was $9,819, a decrease of $9,859 from the net loss of $19,678 for the year ended March 31, 2021, resulting in a loss per share of $0.27 compared to $1.33 [273]. - The company did not generate any revenue for the year ended March 31, 2022, compared to $196 for the year ended March 31, 2021 [272]. - Operating activities used cash of $17,234 for the year ended March 31, 2022, compared to $14,319 for the year ended March 31, 2021 [290]. - The company did not engage in any financing activities during the year ended March 31, 2022, compared to cash generated of $59,490 from share sales in the previous year [292]. Assets and Equity - Total assets increased to $128,620 as of March 31, 2022, from $62,458 as of March 31, 2021, reflecting an increase of $66,162 [270]. - Total shareholders' equity increased to $108,270 as of March 31, 2022, from $55,660 as of March 31, 2021, an increase of $52,610 [270]. - Cash and cash equivalents and short-term investments totaled $43.7 million as of March 31, 2022 [269]. - Working capital decreased to $42,271 as of March 31, 2022, from $60,793 as of March 31, 2021, a decrease of $18,522 [270]. Expenses - Research and development expenses for the year ended March 31, 2022, totaled $5,559, an increase of $1,386 from $4,173 for the year ended March 31, 2021 [277]. - General and administrative expenses totaled $9,263 for the year ended March 31, 2022, an increase of $3,742 from $5,521 for the year ended March 31, 2021 [282]. - Total third-party research and development expenses before salaries and benefits for the year ended March 31, 2022, amounted to $3,095, compared to $1,445 for the year ended March 31, 2021, resulting in an increase of $1,650 [278]. - Sales and marketing expenses decreased to $518 for the year ended March 31, 2022, from $1,142 for the year ended March 31, 2021, reflecting a decrease of $624 [285]. - Acquisition-related expenses totaled $3.2 million for the year ended March 31, 2022, included in general and administrative expenses [307]. Cash Flow and Liquidity - Cash and cash equivalents totaled $30,339 as of March 31, 2022, a net decrease of $20,603 from $50,942 at March 31, 2021 [289]. - The company manages liquidity risk by monitoring actual and projected cash flows and through the management of its capital structure and financial leverage [338]. - The company continuously monitors its operating budgets and reviews material transactions outside the normal course of business to manage liquidity risk [338]. Acquisitions and Goodwill - The acquisition of Grace Therapeutics was completed on August 27, 2021, resulting in the issuance of 18,241,233 common shares valued at $60,824 [300][301]. - Intangible assets related to the acquisition of Grace amounted to $69,810, primarily for in-process research and development [303]. - Goodwill of $12,964 was recognized as the excess of the consideration transferred over the net assets acquired [304]. Derivative Liabilities and Commitments - The fair value of derivative warrant liabilities for the remaining 824,218 warrants was $10 as of March 31, 2022, down from an initial value of $3,323 at inception [315]. - As of March 31, 2022, total contractual liabilities amounted to $3,461, with $3,260 due within one year [317]. - The company has a remaining commitment of $2.8 million under the RKO supply agreement for raw krill oil, with no planned use for the product [321]. Currency and Interest Rate Risks - A 5% strengthening of the U.S. dollar would result in an increase in net loss by CAD$3,129, compared to CAD$4,048 for March 31, 2021 [337]. - Interest rate risk exposure as of March 31, 2022, includes cash and cash equivalents and short-term fixed interest rate investments [337]. - The company’s capacity to reinvest short-term amounts will be impacted by variations in short-term fixed interest rates available on the market [337]. Other Financial Information - The company has assessed recent accounting pronouncements and concluded that they are not expected to have a material effect on consolidated financial statements [338]. - There were no off-balance sheet arrangements that could materially affect the company's financial condition as of the report date [322]. - The average CAD$ per US$ was 1.2536 for March 2022 reporting, compared to 1.3212 for March 2021 [336]. - The average CAD$ per Euro was 1.4569 for March 2022 reporting, compared to 1.5409 for March 2021 [336].

Financial Data and Key Metrics Changes - R&D expenses for Q2 2021 totaled $0.55 million, down from $0.81 million in Q2 2020, primarily due to reduced professional fees related to completed trials [24] - General administrative expenses increased to $2.9 million in Q2 2021 from $1.1 million in Q2 2020, attributed to higher legal and professional fees related to the Grace Therapeutics transaction [25] - Net income for Q2 2021 was $1 million, or approximately $0.03 per share, compared to a net loss of $6.1 million, or $0.52 per share, in Q2 2020 [26] - Cash equivalents and short-term investments reached $50.8 million as of September 30, 2021, compared to $11.6 million a year earlier, indicating a significant improvement in liquidity [26][27] Business Line Data and Key Metrics Changes - The merger with Grace Therapeutics has expanded the company's portfolio to include new drug delivery technologies and clinical assets, focusing on rare and orphan diseases [11][12] - GTX 104, a novel IV formulation of Nimodipine, is currently undergoing a pivotal pharmacokinetic bridging study, with results expected in the first half of 2022 [15][34] - GTX 101 and GTX 102 have received composition of matter patents, enhancing the company's intellectual property portfolio and potential market opportunities [18][22] Market Data and Key Metrics Changes - The addressable market for GTX 104 is estimated at over $300 million in the U.S. for patients experiencing subarachnoid hemorrhage [16] - GTX 101 targets an estimated market of $400 million for postherpetic neuralgia, while GTX 102 addresses a market of about $150 million for ataxia-telangiectasia [19][21] Company Strategy and Development Direction - The company aims to focus on concentrated markets with targeted commercial teams for GTX 104 and GTX 102, while considering partnerships for broader market reach for GTX 101 [36][38] - The strategy includes leveraging the Orphan Drug Designation for GTX 104 to secure market exclusivity and expedite the regulatory process [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the ongoing clinical studies and the potential for significant value creation through successful execution of the clinical pipeline [48][50] - The company is committed to improving communication with investors to enhance understanding of its new business model and assets following the merger [48] Other Important Information - The company has sufficient cash to fund operations for at least two years, allowing for the advancement of multiple clinical programs [27][28] - The company plans to conduct additional studies and publish data to demonstrate the benefits of its drug formulations, particularly in terms of safety and economic outcomes [56][57] Q&A Session Summary Question: Importance of the PK study and timing of Phase III for GTX 104 - Management confirmed that the PK study is crucial for comparing blood levels of GTX 104 to oral Nimodipine, with results expected in the first half of 2022 and Phase III study anticipated in the second half of 2022 [34] Question: Commercial strategy following approval - The company plans to target major Neuro ICU centers with a small, focused sales team for GTX 104, while considering partnerships for GTX 101 due to its larger market [36][38] Question: Plans for deploying cash - Management indicated that current cash is adequate to support the completion of GTX-104 development and advance GTX-102 and GTX-101 [42] Question: Update on CaPre - Management is evaluating strategic options for CaPre and will provide updates as the process progresses [44] Question: Addressing shareholder concerns post-reverse stock split - Management acknowledged the frustration regarding the reverse stock split and emphasized the importance of execution and communication to improve company value [47][50] Question: Commercial potential across geographies for GTX 104 and 102 - The company believes it can effectively cover the concentrated market for GTX 104 in the U.S. and plans to partner for international opportunities, while GTX 102 will also target a small number of specialized centers [53]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated interim financial statements for the three and nine months ended December 31, 2021, reflecting the Grace Therapeutics acquisition and a 1-for-8 reverse stock split Condensed Consolidated Interim Balance Sheet Highlights (in thousands of U.S. dollars) | Account | December 31, 2021 | March 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $33,013 | $50,942 | | Intangible assets | $65,208 | $0 | | **Total assets** | **$114,227** | **$62,458** | | Total current liabilities | $2,897 | $1,579 | | Total liabilities | $3,165 | $6,798 | | **Total shareholder's equity** | **$111,062** | **$55,660** | Condensed Consolidated Interim Statements of Loss (in thousands of U.S. dollars, except per share data) | Metric | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | Nine Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | Research and development expenses | $(2,179) | $(678) | $(3,233) | $(3,720) | | General and administrative expenses | $(1,808) | $(1,105) | $(7,441) | $(4,078) | | **Net loss** | **$(3,778)** | **$(3,220)** | **$(5,915)** | **$(14,032)** | | **Basic and diluted loss per share** | **$(0.09)** | **$(0.26)** | **$(0.23)** | **$(1.18)** | Condensed Consolidated Interim Statements of Cash Flows Highlights (Nine Months Ended, in thousands of U.S. dollars) | Cash Flow Activity | December 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,089) | $(12,559) | | Net cash from (used in) investing activities | $(3,533) | $(1,441) | | Net cash from financing activities | $0 | $24,812 | | **Net (decrease) increase in cash** | **$(17,929)** | **$12,306** | - On August 27, 2021, the company acquired Grace Therapeutics, issuing common shares valued at approximately **$60.8 million**, which was accounted for as a business combination, resulting in the recognition of **$65.2 million** in intangible assets related to in-process research and development (IPR&D)[63](index=63&type=chunk)[65](index=65&type=chunk)[68](index=68&type=chunk) - A **1-for-8 reverse stock split** of the company's common stock was made effective on August 31, 2021, with all share and per-share data in the financial statements retroactively adjusted to reflect this split[53](index=53&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, detailing the strategic shift post-Grace Therapeutics acquisition, progress of lead drug candidates, and analysis of financial results, liquidity, and capital resources [Business Overview and Clinical Programs](index=21&type=section&id=Business%20Overview%20and%20Clinical%20Programs) Following the Grace Therapeutics acquisition, Acasti is now a late-stage specialty pharmaceutical company focused on rare and orphan diseases, advancing three clinical-stage assets: GTX-104, GTX-102, and GTX-101, utilizing the 505(b)(2) regulatory pathway - The company's strategy is to apply new proprietary formulations to existing pharmaceutical compounds to achieve enhanced efficacy, faster onset, and reduced side effects, targeting a potentially shorter path to regulatory approval via the **Section 505(b)(2) pathway**[114](index=114&type=chunk)[115](index=115&type=chunk) Key Clinical Programs Overview | Drug Candidate | Indication | Description | Market Opportunity (U.S. $ millions) | Near-Term Milestone | | :--- | :--- | :--- | :--- | :--- | | **GTX-104** | Subarachnoid Hemorrhage (SAH) | IV formulation of nimodipine | ~$300 | Complete pivotal PK study in H1 2022; start Phase 3 safety study in H2 2022 | | **GTX-102** | Ataxia Telangiectasia (A-T) | Oral-mucosal betamethasone spray | ~$150 | Conduct PK bridging study and confirmatory Phase 3 trial | | **GTX-101** | Postherpetic Neuralgia (PHN) | Topical bupivacaine spray | ~$400 (PHN) | Conduct dose-ranging Phase 1 clinical trials | - For **GTX-104**, a pivotal PK bridging study initiated in September 2021 showed interim results from the first 20 subjects met primary endpoints, demonstrating **comparable bioavailability** to oral nimodipine with **much lower variability**[138](index=138&type=chunk)[139](index=139&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) The company's net loss increased for the three-month period but decreased for the nine-month period ended December 31, 2021, driven by higher R&D and G&A expenses, offset by reduced impairment charges and a positive change in derivative warrant liabilities Net Loss Comparison (in thousands of U.S. dollars) | Period | Net Loss (2021) | Net Loss (2020) | Change | | :--- | :--- | :--- | :--- | | **Three Months Ended Dec 31** | $(3,778) | $(3,220) | $558 Increase | | **Nine Months Ended Dec 31** | $(5,915) | $(14,032) | $8,117 Decrease | - R&D expenses for Q3 2021 **increased by $1.5 million** year-over-year, mainly due to advancing the GTX-104, GTX-102, and GTX-101 programs acquired in the Grace merger[189](index=189&type=chunk)[196](index=196&type=chunk) - General & Administrative expenses for the nine months ended Dec 31, 2021, **increased by $3.4 million** year-over-year, primarily due to legal, accounting, and professional fees related to the Grace merger and the renewal of the at-the-market (ATM) program[192](index=192&type=chunk)[201](index=201&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2021, the company held **$33.0 million** in cash, with primary cash usage in operating activities, and no funds raised via the ATM program, while the Grace acquisition significantly altered its financial position - The company held **$33.0 million** in cash and cash equivalents as of December 31, 2021[206](index=206&type=chunk) - On November 10, 2021, the company renewed its at-the-market (ATM) program, allowing for the sale of common shares up to an aggregate offering price of **$75 million**, though no shares were sold under the ATM program during the nine months ended December 31, 2021[212](index=212&type=chunk)[213](index=213&type=chunk) Contractual Obligations at December 31, 2021 (in thousands of U.S. dollars) | Obligation | Total | Less than 1 year | | :--- | :--- | :--- | | Trade and other payables | $2,843 | $2,843 | | Operating lease obligations | $22 | $22 | | RKO supply agreement | $2,800 | $2,800 | | **Total** | **$5,665** | **$5,665** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, including credit, currency, interest rate, and liquidity risks, and outlines management strategies for each - The company is exposed to **foreign currency risk** as a portion of its expenses are in U.S. dollars and Euros, while its functional currency is the Canadian dollar, mitigated by holding cash in both U.S. and Canadian dollars[249](index=249&type=chunk) - As of December 31, 2021, a hypothetical **5% strengthening** of the U.S. dollar and Euro would result in an **increase to the net loss of approximately $3.2 million**, assuming all other variables remain constant[253](index=253&type=chunk)[254](index=254&type=chunk) - **Liquidity risk** is managed by monitoring cash flows and through the Board of Directors' review of operating budgets and material transactions[255](index=255&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2021, with no material changes to internal controls over financial reporting during the quarter - Based on an evaluation as of the end of the period, the CEO and CFO concluded that the company's disclosure controls and procedures were **effective**[259](index=259&type=chunk) - **No material changes** were made to the company's internal controls over financial reporting during the quarter ended December 31, 2021[260](index=260&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in legal proceedings related to the Grace Therapeutics merger, facing consolidated stockholder lawsuits alleging material omissions, which it believes are without merit and intends to vigorously defend - **Four stockholder lawsuits** were filed in connection with the Grace merger, alleging violations of Section 14(a) of the Exchange Act due to purported material omissions in public disclosures[262](index=262&type=chunk) - **Two of the four complaints have been voluntarily dismissed** without prejudice, while the **remaining two have been consolidated**, and the plaintiff has been ordered to file an amended complaint[263](index=263&type=chunk) - Acasti believes the allegations in the complaints are **frivolous and without merit** and plans to **vigorously defend** against them[263](index=263&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks associated with investing in the company's common shares, updated post-Grace merger, covering general operations, business, development, commercialization, intellectual property, third-party reliance, and common stock volatility [Risks Related to Business and Commercialization](index=42&type=section&id=Risks%20Related%20to%20Business%20and%20Commercialization) The company's success is highly dependent on its lead drug candidates, GTX-104, GTX-102, and GTX-101, facing lengthy, expensive, and uncertain development, regulatory approval, market acceptance, and intense competition - The company's business and future success are **substantially dependent** on the ability to successfully develop, obtain regulatory approval for, and commercialize its lead product candidates, **GTX-104, GTX-102, and GTX-101**[302](index=302&type=chunk) - The company intends to use the **505(b)(2) regulatory pathway**, but there is a risk the FDA may not agree with this approach, which would **significantly increase the time and cost** to get products approved[303](index=303&type=chunk)[305](index=305&type=chunk) - The company faces **significant competition** from other biotechnology and pharmaceutical companies that have **substantially greater financial and technical resources**[292](index=292&type=chunk)[293](index=293&type=chunk) [Risks Related to Intellectual Property and Third-Party Reliance](index=52&type=section&id=Risks%20Related%20to%20Intellectual%20Property%20and%20Third-Party%20Reliance) Acasti's success depends on protecting its intellectual property and avoiding infringement, particularly with the 505(b)(2) pathway, and it relies heavily on third-party CMOs and CROs for manufacturing and clinical trials, exposing it to performance and disruption risks - The company's drug development strategy relies heavily on the **505(b)(2) pathway**, which requires certifying non-infringement of third-party patents, often resulting in **costly litigation**[341](index=341&type=chunk) - Acasti **does not have internal manufacturing capabilities** and **relies on third-party manufacturers (CMOs)**, which exposes it to **risks of manufacturing failures, regulatory compliance issues, and supply disruptions** that could delay clinical development and commercialization[355](index=355&type=chunk)[356](index=356&type=chunk) - The company also **relies on third-party CROs** to conduct preclinical studies and clinical trials, and if these parties fail to perform their duties successfully or meet deadlines, it could **substantially harm the business**[357](index=357&type=chunk) [Risks Relating to Common Shares](index=57&type=section&id=Risks%20Relating%20to%20Common%20Shares) Investment in the company's common shares involves significant risks, including potential PFIC status, price volatility, future dilution from capital raises, and delisting risks from NASDAQ or TSXV, with no expected dividends - The company may be treated as a **passive foreign investment corporation (PFIC)**, which could have **adverse tax consequences** for U.S. shareholders[371](index=371&type=chunk)[372](index=372&type=chunk) - The price of the company's common shares may be **volatile** due to factors such as clinical trial results, regulatory developments, and market conditions, and the company **does not expect to pay cash dividends** in the foreseeable future[378](index=378&type=chunk)[379](index=379&type=chunk) - Failure to meet applicable listing requirements could result in the **delisting** of common shares from the NASDAQ Stock Market or the TSX Venture Exchange, which would **negatively impact liquidity and market price**[383](index=383&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales of equity securities or use of proceeds for the period - **None**[393](index=393&type=chunk) [Item 3. Defaults upon Senior Securities](index=60&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) This section reports no defaults upon senior securities for the period - **None**[393](index=393&type=chunk) [Item 4. Mine Safety Disclosures](index=60&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - **Not applicable**[393](index=393&type=chunk) [Item 5. Other Information](index=60&type=section&id=Item%205.%20Other%20Information) This section reports no other information for the period - **None**[393](index=393&type=chunk) [Item 6. Exhibits](index=61&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the quarterly report, including corporate governance documents, warrant agreements, and required CEO/CFO certifications - The report includes a list of filed exhibits, such as **corporate formation documents, warrant indentures, and required CEO/CFO certifications** under Rules 13a-14(a) and Section 906 of the Sarbanes-Oxley Act[395](index=395&type=chunk)

Company Overview - Acasti Pharma is a specialty pharma company focused on rare and orphan diseases[3, 55] - The company has novel drug formulation and delivery technologies to improve clinical outcomes[3, 55] - Acasti's lead assets have been granted Orphan Drug Designation (ODD) in the US and EU, offering potential market exclusivity[3, 55] - Acasti has over 40 granted and pending patents worldwide, providing exclusivity beyond 2036[3, 55] Financial Status - Acasti had approximately $50 million in cash as of September 30, 2021, providing an operating runway of two years[3, 55] - As of December 31, 2021, Acasti Pharma Inc had 44,288,183 common shares[52] - As of December 31, 2021, Acasti Pharma Inc market cap was USD $55.8M[52] Drug Candidates & Market Potential - The estimated addressable market in the US alone for GTX-104, GTX-102, and GTX-101 is $2 billion[3, 55] - GTX-104 targets Subarachnoid Hemorrhage (SAH), with an addressable market of over $300 million in the US[3, 8] - GTX-102 targets Ataxia-Telangiectasia (A-T), affecting an estimated 4,300 patients in the US, with a potential addressable market of $150 million[30] - GTX-101 targets Postherpetic Neuralgia (PHN), with an estimated addressable market of ~$400 million in the US[45]

Financial Performance - The net loss for the three months ended December 31, 2020, was $3,220, or $0.03 per share, a decrease from a net loss of $12,123, or $0.14 per share, for the same period in 2019[112]. - For the nine months ended December 31, 2020, the net loss was $14,032, or $0.15 per share, down from $42,128, or $0.51 per share, for the same period in 2019[113]. - The company reported a net financial income of $87 for the nine months ended December 31, 2020, compared to net financial expenses of $21,721 for the same period in 2019[114]. - The total shareholders' equity increased to $25.7 million as of December 31, 2020, compared to a deficit of $4.29 million in the same period of 2019[110]. Assets and Liabilities - Total assets as of December 31, 2020, were $30.3 million, with cash and cash equivalents totaling $27.9 million[109]. - As of December 31, 2020, total liabilities amounted to $4,588, with $2,248 due within one year[151]. - The derivative warrant liability for the remaining 6,593,750 warrants totaled $1,228, reflecting a fair value decrease from $3,323 at inception[147]. - Other assets held for sale, including krill oil, are valued at $712, with equipment valued at $376, totaling $1,088[144]. Cash Flow and Financing - The company raised net proceeds of $24.8 million under the ATM program during the nine months ended December 31, 2020[109]. - Total cash and cash equivalents as of December 31, 2020, amounted to $26,546, reflecting a net increase of 34.3% compared to $19,767 at December 31, 2019[130]. - Financing activities provided cash totaling $19,745 during the three months ended December 31, 2020, compared to $7,117 in the same period of 2019, representing an increase of 177.5%[133]. Expenses - Research and development expenses decreased by $3,720 for the nine months ended December 31, 2020, compared to $14,056 for the same period in 2019[111]. - Research and development expenses for the three months ended December 31, 2020, totaled $620, a significant decrease of 80.5% from $3,186 for the same period in 2019[120]. - General and administrative expenses decreased to $931 for the three months ended December 31, 2020, down 22% from $1,193 in the same period of 2019[121]. - Sales and marketing expenses were $488 for the three months ended December 31, 2020, a decrease of 13% from $561 for the same period in 2019[121]. Strategic Decisions - The company engaged Oppenheimer & Co. Inc. to assist in exploring strategic alternatives to enhance shareholder value[102]. - The company initiated a plan to reduce personnel and expenses in September 2020, discontinuing substantially all commercialization and R&D activities[103]. - The company will not file a New Drug Application (NDA) for its lead product candidate, CaPre, due to disappointing results from the TRILOGY Phase 3 trials[102]. Impairments and Risks - An impairment loss of $3,706 was recognized for intangible assets, representing the totality of the intangible assets' net book value prior to the impairment trigger[142]. - Equipment impairment losses totaled $1,584, primarily due to the failed Phase 3 clinical trials[146]. - The company recognized a risk of loss on the krill oil product due to uncertainty regarding recoverability[145]. Currency and Interest Rate Risks - The company has exposure to interest rate risk, with short-term fixed interest rate investments that may be affected by market rate fluctuations[171]. - Liquidity risk is managed through continuous monitoring of actual and projected cash flows, with the Board of Directors reviewing operating budgets[175]. - The company incurred expenses in U.S. dollars and Euros, with no financial hedging required, exposing it to foreign currency risk[166]. - The average exchange rate for CAD per Euro was 1.5459 for 2020, compared to 1.5013 for 2019, reflecting a depreciation of the Canadian dollar against the Euro[169]. Future Accounting Changes - Future accounting changes include ASU 2016-13, effective after December 15, 2022, which will impact the reporting of credit losses[177]. - Management has adopted ASU 2018-15 regarding internal-use software, but it did not impact reported amounts as of December 31, 2020[178].