Financial Data and Key Metrics Changes - Revenue for Q3 2023 was $179,600, a decrease from $357,900 in Q3 2022, with both periods reflecting non-cash revenue [32] - Research and development expenses decreased by $0.9 million from $7.9 million in Q3 2022 to $6.9 million in Q3 2023, primarily due to reduced expenses related to the PALISADE Phase III program [33] - Net loss attributable to common stockholders for Q3 2023 was approximately $9.8 million, compared to a net loss of approximately $10.7 million in Q3 2022 [34] - Cash and cash equivalents at the end of Q3 2023 were approximately $25.0 million [34] Business Line Data and Key Metrics Changes - The PALISADE Phase III program for PH94B is under review, with protocol amendments submitted to the FDA to address unexpected results from previous studies [15][16] - The PALISADE Open Label Study, which evaluates the safety and tolerability of PH94B, has shown encouraging preliminary results from nearly 400 subjects [21] Market Data and Key Metrics Changes - The company is focusing on the significant unmet need in mental healthcare, particularly for anxiety and depression disorders, which are growing areas of concern globally [7] Company Strategy and Development Direction - The company aims to shift the treatment paradigm for anxiety and depression disorders by developing differentiated treatments [7] - Plans to meet with the FDA to discuss a broader Phase III development plan for PH94B, including a potential randomized double-blind placebo-controlled study using the Liebowitz social anxiety scale (LSAS) as the primary measure [16][17] - The acquisition of Pherin Pharmaceuticals has eliminated future royalty and milestone payment obligations for PH94B and PH10, enhancing the commercial profile of these assets [28][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by the COVID-19 pandemic on study designs and patient responses, but remains confident in the potential of PH94B as a treatment for social anxiety disorders [15][16] - The company is optimistic about the upcoming data readouts and the potential for PH10 to address major depressive disorder, especially with the FDA's Fast Track designation [25][26] Other Important Information - The company has completed a small Phase IIa trial for PH94B in adjustment disorder with anxiety and anticipates announcing topline data soon [22] - The ongoing Phase I study for PH10 is expected to complete by the end of Q1 2023, which will inform future Phase IIb development plans [23][24] Q&A Session Summary Question: Upcoming FDA meeting regarding Phase III design pivot - Management discussed the potential scenarios depending on FDA feedback regarding the PALISADE-2 study and the possibility of unblinding data from interim analysis [39][40] Question: Open label study data expectations - Management indicated that the topline release will provide significant insights into the efficacy of PH94B, despite the absence of a control group [44][45] Question: Adjustment disorder study dosing and placebo rates - Management confirmed that subjects in the adjustment disorder study are taking PH94B four times a day, but historical placebo rates in this disorder are not well-documented [54][55] Question: Competitors' SAD topline data and FDA considerations - Management expressed confidence in the LSAS as a primary endpoint, citing historical success in registrational studies, while acknowledging the challenges of scaling methodologies for larger studies [61][62] Question: Timeline for Phase III studies - Management estimated that if funding is secured, Phase III studies could commence within six months, with data readouts expected by the end of Q4 2024 [67]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and equity changes, with detailed notes on business, accounting policies, and financial activities [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific dates | ASSETS (in thousands) | Dec 31, 2022 (unaudited) | Mar 31, 2022 (Note 2) | | :---------------------- | :----------------------- | :-------------------- | | Cash and cash equivalents | $25,037 | $68,135 | | Total current assets | $26,057 | $70,998 | | Total assets | $29,708 | $74,643 | | LIABILITIES (in thousands) | | | | Total current liabilities | $4,287 | $5,765 | | Total non-current liabilities | $4,746 | $4,163 | | Total liabilities | $9,034 | $9,928 | | STOCKHOLDERS' EQUITY (in thousands) | | | | Total stockholders' equity | $20,674 | $64,715 | | Total liabilities and stockholders' equity | $29,708 | $74,643 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section details the company's revenues, expenses, and net loss over specific reporting periods | (Amounts in Dollars) | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Sublicense revenue | $179,600 | $357,900 | $(402,900) | $1,070,000 | | Research and development | $6,854,000 | $7,780,000 | $35,039,800 | $23,173,600 | | General and administrative | $3,092,100 | $3,118,100 | $11,586,200 | $8,982,300 | | Total operating expenses | $9,946,100 | $10,898,100 | $46,626,000 | $32,155,900 | | Loss from operations | $(9,766,500) | $(10,540,200) | $(47,028,900) | $(31,085,900) | | Net loss and comprehensive loss | $(9,761,200) | $(10,535,100) | $(47,020,700) | $(31,074,000) | | Basic and diluted net loss per common share | $(0.05) | $(0.05) | $(0.23) | $(0.16) | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the cash inflows and outflows from operating, investing, and financing activities | (Amounts in Dollars) | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(42,242,400) | $(29,668,000) | | Net cash used in investing activities | $(212,000) | $(200,300) | | Net cash (used in) provided by financing activities | $(643,600) | $10,460,200 | | Net decrease in cash and cash equivalents | $(43,098,000) | $(19,408,100) | | Cash and cash equivalents at beginning of period | $68,135,300 | $103,108,300 | | Cash and cash equivalents at end of period | $25,037,300 | $83,700,200 | [Condensed Consolidated Statement of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Stockholders'%20Equity) This section tracks changes in the company's equity components, including common stock, additional paid-in capital, and accumulated deficit - Total stockholders' equity decreased from **$64,715,300** at March 31, 2022, to **$20,674,500** at December 31, 2022, primarily due to an accumulated deficit of **$(314,624,700)** at December 31, 2022[8](index=8&type=chunk)[21](index=21&type=chunk) - Additional paid-in capital increased from **$336,080,700** to **$339,060,200** during the nine months ended December 31, 2022, driven by stock-based compensation expense and warrant modification expense[21](index=21&type=chunk) - Common stock shares issued increased from **206,676,620** at March 31, 2022, to **207,052,010** at December 31, 2022[21](index=21&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and breakdowns of financial figures, covering business description, accounting policies, and specific financial activities [Note 1. Description of Business](index=9&type=section&id=Note%201.%20Description%20of%20Business) This note describes the company's core business, product candidates, and corporate structure - Vistagen Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing therapeutics for Central Nervous System (CNS) disorders, aiming for faster-acting treatments with fewer side effects[23](index=23&type=chunk) [Our Product Candidates](index=9&type=section&id=Our%20Product%20Candidates) This section details the company's key product candidates, their development status, and therapeutic areas - PH94B Nasal Spray: A Fast Track product candidate for Social Anxiety Disorder (SAD) and Adjustment Disorder with Anxiety (AjDA); PALISADE-1 Phase 3 study did not meet its primary efficacy endpoint, leading to a pause in PALISADE-2 and a revised Phase 3 plan focusing on multiple administrations and LSAS as the primary endpoint[24](index=24&type=chunk)[27](index=27&type=chunk)[30](index=30&type=chunk)[33](index=33&type=chunk) - PH10: An investigational pherine nasal spray for Major Depressive Disorder (MDD), granted Fast Track designation by the FDA in December 2022; A U.S. Phase 1 study in healthy volunteers commenced in January 2023[36](index=36&type=chunk)[37](index=37&type=chunk)[39](index=39&type=chunk) - AV-101: An oral prodrug for certain CNS indications involving the NMDA receptor, with Fast Track designation for adjunctive MDD treatment and neuropathic pain; An exploratory Phase 1B drug-drug interaction study is ongoing[40](index=40&type=chunk)[41](index=41&type=chunk) [Subsidiaries](index=12&type=section&id=Subsidiaries) This section lists the company's subsidiaries and their current operational status - VistaGen Therapeutics, Inc. (California) is a wholly-owned subsidiary; Two inactive subsidiaries, Artemis Neuroscience, Inc. and VistaStem Canada, Inc., were dissolved in April and June 2022, respectively[43](index=43&type=chunk) [Note 2. Basis of Presentation](index=12&type=section&id=Note%202.%20Basis%20of%20Presentation) This note explains the financial statement preparation basis, including going concern considerations and financing strategies - The company has experienced recurring losses and negative cash flows, accumulating a deficit of approximately **$314.6 million** through December 31, 2022, raising substantial doubt about its ability to continue as a going concern[46](index=46&type=chunk)[49](index=49&type=chunk) - Operations have been financed primarily through equity and debt securities (**$208.7 million**) and government grants/collaborations (**$22.7 million**)[47](index=47&type=chunk) - Cash and cash equivalents were approximately **$25.0 million** at December 31, 2022, deemed insufficient to fund planned operations for the next twelve months[49](index=49&type=chunk) - The company is evaluating cash resources and seeking additional financing through equity/debt sales, non-dilutive grants, and strategic collaborations[49](index=49&type=chunk)[50](index=50&type=chunk) - Nasdaq issued a non-compliance letter on September 6, 2022, for failing to maintain a minimum bid price of **$1.00**, with a deadline of March 6, 2023, to regain compliance[53](index=53&type=chunk) [Note 3. Summary of Significant Accounting Policies](index=13&type=section&id=Note%203.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and policies applied in preparing the financial statements - Revenue recognition for the AffaMed Agreement was adjusted due to the PALISADE-1 outcome, extending the performance obligation period to mid-calendar 2027 and resulting in a cumulative catch-up adjustment derecognizing **$892,500** and **$582,500** of previously recognized revenue for the three and six months ended September 30, 2022, respectively[67](index=67&type=chunk) Stock-Based Compensation Expense (in Dollars) | Expense Category | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :--------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | R&D expense | $296,200 | $281,800 | $1,091,900 | $836,200 | | G&A expense | $450,100 | $442,000 | $1,643,000 | $1,242,500 | | Total | $746,300 | $723,800 | $2,734,900 | $2,078,700 | - Warrants are classified as equity if indexed to the company's equity and meet specific conditions, otherwise as derivative liabilities measured at fair value[90](index=90&type=chunk) - ASU 2020-06, effective for the fiscal year beginning April 1, 2024, simplifies accounting for convertible instruments and is not expected to have a material impact[92](index=92&type=chunk)[97](index=97&type=chunk) [Note 4. Prepaid Expenses and Other Current Assets](index=20&type=section&id=Note%204.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) This note provides a breakdown of the company's prepaid expenses and other current assets | Component | December 31, 2022 | March 31, 2022 | | :------------------------------------------ | :------------------ | :--------------- | | Clinical and nonclinical materials and contract services | $159,100 | $2,139,600 | | Insurance | $456,000 | $196,500 | | Receivable from CRO for cancelled project | $- | $337,900 | | Receivable from collaboration partner | $154,100 | $- | | All other | $184,000 | $71,800 | | Total | $953,200 | $2,745,800 | - A receivable of **$337,900** from a CRO for a cancelled project at March 31, 2022, was refunded in July 2022; A new receivable of **$154,100** from a collaboration partner for project and clinical trial services was recorded at December 31, 2022[99](index=99&type=chunk) [Note 5. Property and Equipment, Net](index=20&type=section&id=Note%205.%20Property%20and%20Equipment,%20Net) This note details the company's property and equipment, net of accumulated depreciation and amortization | Component | December 31, 2022 | March 31, 2022 | | :-------------------------- | :------------------ | :--------------- | | Laboratory equipment | $1,393,300 | $1,181,300 | | Tenant improvements | $214,400 | $214,400 | | Office furniture and equipment | $72,100 | $76,200 | | Manufacturing equipment | $211,200 | $211,200 | | Total | $1,891,000 | $1,683,100 | | Accumulated depreciation and amortization | $(1,350,300) | $(1,268,800) | | Property and equipment, net | $540,700 | $414,300 | - Depreciation and amortization expense was **$30,600** for the three months ended December 31, 2022 (down from **$43,700** YoY) and **$96,200** for the nine months ended December 31, 2022 (down from **$114,900** YoY)[101](index=101&type=chunk) [Note 6. Accrued Expenses](index=21&type=section&id=Note%206.%20Accrued%20Expenses) This note provides a breakdown of the company's accrued expenses, including clinical services and compensation | Component | December 31, 2022 | March 31, 2022 | | :------------------------------------------ | :------------------ | :--------------- | | Accrued expenses for clinical and nonclinical materials, development and contract services | $776,400 | $1,070,800 | | Accrued compensation | $308,800 | $66,200 | | Accrued professional services | $- | $159,500 | | All other | $- | $32,700 | | Total | $1,085,200 | $1,329,200 | - Accrued compensation at December 31, 2022, includes a **$300,000** estimated liability related to a terminated former employee[102](index=102&type=chunk) [Note 7. Note Payable](index=21&type=section&id=Note%207.%20Note%20Payable) This note describes the company's promissory note, including its terms and outstanding balance - A **3.88%** promissory note for **$1,139,700** was executed in May 2022 for insurance policy premiums, payable in monthly installments of **$105,600** through April 2023; The outstanding balance at December 31, 2022, was **$419,100**[103](index=103&type=chunk) [Note 8. Capital Stock](index=21&type=section&id=Note%208.%20Capital%20Stock) This note details the company's capital stock activities, including share issuances, option exercises, and warrants - Under the ATM program, the company sold **1,517,798** shares for net cash proceeds of approximately **$4.3 million** during Fiscal 2022 but has not sold additional shares since October 2, 2021[104](index=104&type=chunk) - During the nine months ended December 31, 2022, stock option exercises generated **$104,400**, and ESPP purchases generated **$63,100**[107](index=107&type=chunk) - Warrants to purchase **6,878,264** shares expired unexercised during the nine months ended December 31, 2022; Warrants to purchase **1,000,000** shares were modified in December 2022 to extend exercisability for two years, resulting in a **$77,400** warrant modification expense[108](index=108&type=chunk)[109](index=109&type=chunk) Warrants Outstanding and Exercisable at December 31, 2022 | Exercise Price per Share | Expiration Date | Warrants Outstanding and Exercisable at December 31, 2022 | | :----------------------- | :-------------- | :-------------------------------------------------------- | | $0.50 | 12/9/2024 | 1,000,000 | | $0.73 | 7/25/2025 | 370,544 | | $1.82 | 3/7/2023 | 880,050 | | $7.00 | 3/3/2023 | 147,000 | | Total | | 2,397,594 | [Note 9. Related Party Transactions](index=23&type=section&id=Note%209.%20Related%20Party%20Transactions) This note discloses transactions and agreements with related parties, including board members and former executives - Consulting agreements were in place with Margaret FitzPatrick (Board member) for corporate development and public relations advisory services (**$45,000** expense for Q4 2022, **$135,000** for nine months ended Dec 31, 2022)[114](index=114&type=chunk) - Ann Cunningham (former CCO, current Board member) through i3 Strategy Partners, providing advisory services (**$120,000** fee for initial term through March 31, 2023)[115](index=115&type=chunk) - Mark Smith (former CMO) providing consulting services for product development (**$50,000** paid prior to Dec 31, 2022, with **$10,000**/month through Dec 31, 2023)[116](index=116&type=chunk) [Note 10. Commitments and Contingencies](index=23&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) This note outlines the company's lease obligations and other potential liabilities - The company leases its South San Francisco headquarters and laboratory space, with the lease extended to July 31, 2027; The operating lease liability was **$2,717,200** at December 31, 2022[118](index=118&type=chunk)[119](index=119&type=chunk) Operating Lease Liabilities (Present Value) | Fiscal Years Ending March 31, | Amount | | :---------------------------- | :----- | | 2023 (remaining three months) | $169,000 | | 2024 | $689,500 | | 2025 | $710,200 | | 2026 | $731,500 | | 2027 | $753,500 | | Thereafter | $253,600 | | Total lease expense | $3,307,300 | | Less imputed interest | $(590,100) | | Present value of operating lease liabilities | $2,717,200 | - Cash paid for operating lease liabilities was **$655,200** for the nine months ended December 31, 2022, compared to **$637,800** for the same period in 2021[121](index=121&type=chunk) [Note 11. Sublicensing and Collaborative Agreements](index=25&type=section&id=Note%2011.%20Sublicensing%20and%20Collaborative%20Agreements) This note describes key sublicensing and collaborative agreements, including terms and financial implications - The AffaMed Agreement grants an exclusive license to develop and commercialize PH94B in Greater China, South Korea, and Southeast Asia; Vistagen received a **$5.0 million** upfront payment in August 2020 and is eligible for up to **$172.0 million** in milestone payments and royalties[124](index=124&type=chunk)[127](index=127&type=chunk) - Due to the PALISADE-1 study failure and anticipated delays, the estimated performance obligation period under the AffaMed Agreement was extended to mid-calendar 2027, leading to a cumulative catch-up adjustment that derecognized **$402,900** in sublicense revenue for the nine months ended December 31, 2022[131](index=131&type=chunk) [Note 12. Subsequent Events](index=26&type=section&id=Note%2012.%20Subsequent%20Events) This note reports significant events occurring after the balance sheet date, such as acquisitions - On February 2, 2023, Vistagen completed the acquisition of Pherin Pharmaceuticals, Inc., gaining full ownership of intellectual property rights to PH94B and PH10, and acquiring three new early clinical-stage pherine product candidates: PH15 (cognition improvement), PH80 (migraine and hot flashes), and PH284 (appetite-related disorders)[133](index=133&type=chunk)[135](index=135&type=chunk) - Consideration for the Pherin Acquisition included **12,410,181** unregistered shares of common stock and approximately **$125,800** in cash[134](index=134&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and future outlook, including detailed explanations of revenue and expense changes, liquidity, and capital resources, alongside forward-looking statements and business overview [Cautionary Note Regarding Forward-Looking Statements](index=26&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section advises readers that the report contains forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements based on current expectations, subject to significant risks including financing, R&D results, regulatory approval, competition, and intellectual property[136](index=136&type=chunk) - Actual results may differ materially due to competitive and rapidly changing environments, and the company is not obligated to update these statements[138](index=138&type=chunk)[139](index=139&type=chunk) [Business Overview](index=27&type=section&id=Business%20Overview) This section provides an overview of the company's strategic focus, product pipeline, and recent development milestones - Vistagen focuses on CNS therapeutics, with lead candidates PH94B (anti-anxiety) and PH10 (antidepressant) as pherine nasal sprays, designed for rapid onset without systemic uptake[140](index=140&type=chunk) - PH94B's PALISADE-1 Phase 3 study failed its primary endpoint, leading to a re-evaluation of the Phase 3 plan for SAD, shifting focus to multiple administrations and LSAS as the primary endpoint[161](index=161&type=chunk)[163](index=163&type=chunk)[167](index=167&type=chunk) - PH10 received FDA Fast Track designation for MDD in December 2022, with a U.S. Phase 1 study initiated in January 2023 to confirm safety and facilitate Phase 2B development[171](index=171&type=chunk)[173](index=173&type=chunk) - AV-101 is an oral prodrug for CNS indications, with Fast Track designation for adjunctive MDD and neuropathic pain; An exploratory Phase 1B drug-drug interaction study is ongoing[174](index=174&type=chunk)[175](index=175&type=chunk) - Following the Pherin Acquisition, Vistagen gained full IP ownership of PH94B and PH10, and acquired three new early clinical-stage pherine candidates: PH15 (cognition), PH80 (migraine/hot flashes), and PH284 (appetite disorders)[179](index=179&type=chunk) [Financial Operations Overview and Results of Operations](index=34&type=section&id=Financial%20Operations%20Overview%20and%20Results%20of%20Operations) This section details the company's financial performance, highlighting a significant net loss, increased R&D expenses due to clinical trials, and the impact of the PALISADE-1 study outcome on revenue recognition and future development plans [Summary](index=34&type=section&id=Summary) This section summarizes the company's financial performance, accumulated deficit, and key operational developments - The company has not achieved recurring revenue and has an accumulated deficit of approximately **$314.6 million** at December 31, 2022[195](index=195&type=chunk) - Net loss for the nine months ended December 31, 2022, was approximately **$47.0 million**, compared to **$31.1 million** for the same period in 2021[195](index=195&type=chunk) - Significant resources were allocated to the PALISADE Phase 3 Program for PH94B, PH10 IND submission and Phase 1 study, and exploratory Phase 1B for AV-101[195](index=195&type=chunk)[197](index=197&type=chunk) - The PALISADE-1 study failed its primary efficacy endpoint, leading to a pause in PALISADE-2 and early termination of PALISADE OLS, impacting future PH94B development plans[198](index=198&type=chunk) - COVID-19 pandemic caused delays in supply delivery and disruptions in third-party services, potentially impacting clinical and nonclinical programs[200](index=200&type=chunk) [Results of Operations - Three Months Ended December 31, 2022 and 2021](index=36&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20December%2031,%202022%20and%202021) This section analyzes the company's financial results for the three-month periods ended December 31, 2022 and 2021 Summary of Operations (Three Months Ended December 31, in thousands) | (Amounts in thousands) | 2022 | 2021 | | :--------------------- | :------ | :------ | | Sublicense revenue | $180 | $358 | | R&D expense | $6,854 | $7,780 | | G&A expense | $3,092 | $3,118 | | Total operating expenses | $9,946 | $10,898 | | Loss from operations | $(9,766) | $(10,540) | | Net loss | $(9,761) | $(10,535) | | Net loss attributable to common stockholders | $(9,761) | $(10,743) | - Sublicense revenue decreased by **$178,300** (**49.7%**) due to a cumulative catch-up adjustment following the PALISADE-1 study outcome, extending the revenue recognition period for the AffaMed Agreement[206](index=206&type=chunk) - R&D expense decreased by approximately **$0.9 million** (**11.9%**) due to reduced costs for the PH94B PALISADE program and nonclinical activities, partially offset by increased salaries and stock-based compensation[208](index=208&type=chunk)[209](index=209&type=chunk) - G&A expense remained flat at approximately **$3.1 million**; Key changes include decreased pre-launch marketing studies, increased insurance, and expanded investor relations, offset by changes in compensation accruals[213](index=213&type=chunk)[214](index=214&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - Warrant modification expense of **$77,400** was recognized in Q4 2022 due to extending the exercisability of outstanding warrants[225](index=225&type=chunk) [Results of Operations - Nine Months Ended December 31, 2022 and 2021](index=41&type=section&id=Results%20of%20Operations%20-%20Nine%20Months%20Ended%20December%2031,%202022%20and%202021) This section analyzes the company's financial results for the nine-month periods ended December 31, 2022 and 2021 Summary of Operations (Nine Months Ended December 31, in thousands) | (Amounts in thousands) | 2022 | 2021 | | :--------------------- | :------ | :------ | | Sublicense revenue | $(403) | $1,070 | | R&D expense | $35,040 | $23,174 |\ | G&A expense | $11,586 | $8,982 | | Total operating expenses | $46,626 | $32,156 |\ | Loss from operations | $(47,029) | $(31,086) |\ | Net loss | $(47,021) | $(31,074) |\ | Net loss attributable to common stockholders | $(47,021) | $(32,019) | - Sublicense revenue was negative **$402,900** for the nine months ended December 31, 2022, compared to positive **$1,070,000** in 2021, due to a cumulative catch-up adjustment from extending the AffaMed Agreement's performance obligation period[231](index=231&type=chunk) - R&D expense increased by approximately **$11.8 million** (**50.9%**) to **$35.0 million**, primarily driven by increased costs for the PH94B PALISADE program and PH10 development activities[232](index=232&type=chunk)[237](index=237&type=chunk) - G&A expense increased by approximately **$2.6 million** (**28.9%**) to **$11.6 million**, mainly due to expensing professional services for a foregone credit facility, pre-commercialization studies, increased insurance, and higher stock-based compensation[239](index=239&type=chunk)[241](index=241&type=chunk)[243](index=243&type=chunk)[245](index=245&type=chunk) - Warrant modification expense of **$77,400** was recognized for extending warrant exercisability[253](index=253&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, funding needs, and strategies for securing additional capital - Cash and cash equivalents were approximately **$25.0 million** at December 31, 2022, which is believed to be insufficient to fund planned operations for the next twelve months, raising substantial doubt about the company's ability to continue as a going concern[260](index=260&type=chunk) - The company plans to seek additional financing through equity/debt sales, non-dilutive government grants, and strategic partnering collaborations[261](index=261&type=chunk) - Net cash used in operating activities increased to **$(42.2) million** for the nine months ended December 31, 2022, from **$(29.7) million** in 2021, primarily due to increased R&D and pre-commercialization activities[266](index=266&type=chunk) - The company received a Nasdaq non-compliance letter on September 6, 2022, for failing to maintain a minimum bid price of **$1.00**, with a deadline of March 6, 2023, to regain compliance[264](index=264&type=chunk) [Off-Balance Sheet Arrangements](index=49&type=section&id=Off-Balance%20Sheet%20Arrangements) This section discloses any off-balance sheet arrangements that could impact the company's financial position - The company has no off-balance sheet arrangements[267](index=267&type=chunk) [Recent Accounting Pronouncements](index=49&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to relevant accounting pronouncements and their potential impact on the financial statements - For information relating to recent accounting pronouncements, refer to Note 3 of the Notes to Condensed Consolidated Financial Statements[268](index=268&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 31, 2022, and there were no material changes to internal control over financial reporting during the quarter [Disclosure Controls and Procedures](index=49&type=section&id=Disclosure%20Controls%20and%20Procedures) This section details management's evaluation and conclusion regarding the effectiveness of disclosure controls and procedures - Management, with CEO and CFO participation, evaluated and concluded that disclosure controls and procedures were effective as of December 31, 2022[269](index=269&type=chunk) [Internal Control over Financial Reporting](index=49&type=section&id=Internal%20Control%20over%20Financial%20Reporting) This section reports on any changes in internal control over financial reporting during the reporting period - There were no changes in internal control over financial reporting during the quarter ended December 31, 2022, that materially affected or are reasonably likely to materially affect it[270](index=270&type=chunk) [PART II. OTHER INFORMATION](index=50&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings - The company is not currently involved in any legal proceedings[272](index=272&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks to the company's business, including clinical trial failures, dependence on product candidates, need for substantial financing, regulatory hurdles, competition, intellectual property challenges, and stock market volatility [Risk Factor Summary](index=50&type=section&id=Risk%20Factor%20Summary) This section provides a concise overview of the primary risks facing the company's operations and financial stability - Failures or delays in clinical studies (e.g., PALISADE-1) could increase costs and delay revenue generation - The company is a development-stage biopharmaceutical company with no recurring product sales revenue, making future viability difficult to assess - Heavy dependence on the success of current CNS product candidates (PH94B, PH10, AV-101) with no guarantee of regulatory approval or commercialization - Inability to retain or attract key management and scientific personnel could hinder product development - COVID-19 pandemic has impacted and may continue to impact business, including manufacturing delays, recruitment issues, and potential olfactory dysfunction affecting product efficacy - Significant competition in the pharmaceutical industry could limit market penetration - Inadequate protection of proprietary technology and patents could lead to direct competition - Recurring significant net losses and the need for substantial additional financing to execute the long-term business plan - Raising additional capital through equity financing is likely to cause substantial dilution to existing stockholders - Failure to comply with Nasdaq Capital Market listing requirements could result in delisting and negative impact on stock price and capital access [Risks Related to Product Development, Regulatory Approval and Commercialization](index=51&type=section&id=Risks%20Related%20to%20Product%20Development,%20Regulatory%20Approval%20and%20Commercialization) This section details risks associated with clinical trials, regulatory processes, manufacturing, and market acceptance of product candidates - Clinical trial failures, such as PH94B's PALISADE-1, can lead to increased costs, delays, and limit revenue generation[278](index=278&type=chunk) - Obtaining FDA approval is a complex, lengthy, expensive, and uncertain process, with many factors potentially leading to delays or denial[280](index=280&type=chunk) - The COVID-19 pandemic has caused and may continue to cause delays in development programs, supply chain disruptions, and potential olfactory dysfunction in patients, which could affect PH94B and PH10 efficacy[284](index=284&type=chunk) - Fast Track designation does not guarantee faster development or approval, and results from earlier clinical trials may not predict later-stage success[287](index=287&type=chunk)[290](index=290&type=chunk) - Reliance on third parties (CROs, CMOs) for clinical trials and manufacturing introduces risks of delays, non-compliance, and potential impact on data reliability and product supply[300](index=300&type=chunk)[306](index=306&type=chunk)[308](index=308&type=chunk) - If product candidates are regulated as controlled substances, additional regulatory requirements could delay marketing and increase costs[313](index=313&type=chunk)[314](index=314&type=chunk) - Failure to establish broad sales and marketing capabilities or achieve market acceptance could limit revenue generation[316](index=316&type=chunk)[318](index=318&type=chunk) - The pharmaceutical industry is highly competitive, with many companies having greater resources, posing a significant challenge to Vistagen's market position[328](index=328&type=chunk)[331](index=331&type=chunk) [Risks Related to Our Financial Position](index=67&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position) This section addresses financial risks, including recurring losses, need for capital, dilution, and limitations on tax benefits - The company has incurred significant net losses since inception, with an accumulated deficit of approximately **$314.6 million** at December 31, 2022, and expects substantial operating losses to continue[360](index=360&type=chunk) - Additional financing is required to fund the long-term business plan, including R&D and commercialization, as current cash and cash equivalents are insufficient for the next twelve months[365](index=365&type=chunk)[369](index=369&type=chunk) - Future equity-based financing will likely cause substantial dilution to existing stockholders, and debt financing could impose restrictive covenants[380](index=380&type=chunk)[382](index=382&type=chunk) - The ability to use net operating loss carryforwards to offset future taxable income is subject to limitations under Section 382 of the Internal Revenue Code due to potential ownership changes[383](index=383&type=chunk) [General Company-Related Risks](index=71&type=section&id=General%20Company-Related%20Risks) This section covers broader risks such as personnel retention, product liability, economic conditions, and cybersecurity threats - Success depends on retaining and attracting highly qualified management and scientific personnel; recent resignations (CCO, CMO) highlight this risk[384](index=384&type=chunk)[385](index=385&type=chunk) - Product liability lawsuits, inherent in clinical testing and commercialization, could result in substantial liabilities not fully covered by insurance, or require commercialization limits[390](index=390&type=chunk)[391](index=391&type=chunk) - Unfavorable global economic or political conditions, including those triggered by COVID-19, could adversely affect business and access to capital markets[392](index=392&type=chunk) - Cybersecurity or other system failures, especially with increased remote work, pose risks of data breaches, operational disruptions, and damage to reputation[394](index=394&type=chunk)[396](index=396&type=chunk) [Risks Related to Our Intellectual Property Rights](index=74&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property%20Rights) This section discusses risks concerning patent protection, infringement claims, licensing agreements, and changes in intellectual property law - Inability to adequately protect proprietary technology or obtain/maintain sufficient patents could allow competitors to operate more directly, materially impacting the business[400](index=400&type=chunk) - The issuance, scope, validity, and enforceability of patents are uncertain due to complex legal and factual questions, prior art, and varying international standards[405](index=405&type=chunk)[406](index=406&type=chunk) - Third parties may initiate infringement lawsuits, or challenge the validity of Vistagen's patents, leading to costly litigation, delays, or loss of intellectual property rights[419](index=419&type=chunk)[424](index=424&type=chunk) - Dependence on licensed intellectual property means that loss of license rights due to breach or termination could prevent continued development or commercialization of product candidates[441](index=441&type=chunk)[442](index=442&type=chunk) - Some licensed IP may be subject to government-funded program regulations (e.g., Bayh-Dole Act), potentially limiting exclusive rights or requiring U.S. manufacturing[448](index=448&type=chunk)[450](index=450&type=chunk) - Changes in U.S. patent law (e.g., America Invents Act, Supreme Court rulings) could diminish patent value and weaken the ability to protect products[456](index=456&type=chunk)[457](index=457&type=chunk)[458](index=458&type=chunk) [Risks Related to our Securities](index=82&type=section&id=Risks%20Related%20to%20our%20Securities) This section outlines risks affecting the company's stock, including delisting, price volatility, dilution, and compliance costs - Failure to comply with Nasdaq's minimum bid price requirement (**$1.00**) by March 6, 2023, could lead to delisting, reducing stock liquidity and hindering capital raising[466](index=466&type=chunk)[467](index=467&type=chunk) - The market price of common stock is highly volatile, influenced by clinical trial results, regulatory approvals, competition, and general market conditions[469](index=469&type=chunk)[471](index=471&type=chunk) - Future sales and issuances of common stock could cause the stock price to decline and dilute existing stockholders' ownership[469](index=469&type=chunk)[470](index=470&type=chunk) - The company does not intend to pay dividends, so investment return depends solely on stock price appreciation[474](index=474&type=chunk) - Significant costs are incurred to comply with corporate governance, federal securities law, and accounting requirements, diverting resources from core business activities[475](index=475&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=85&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds - No unregistered sales of equity securities or use of proceeds were reported[479](index=479&type=chunk) [Item 3. Defaults Upon Senior Secured Securities](index=85&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Secured%20Securities) The company reported no defaults upon senior secured securities - No defaults upon senior secured securities were reported[480](index=480&type=chunk) [Item 6. Exhibits](index=85&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including merger agreements, consulting agreements, and certifications - Exhibit 2.1: Agreement and Plan of Merger for Pherin Pharmaceuticals, Inc. acquisition (December 20, 2022) - Exhibit 10.1*: Amendment No 2. to Consulting Services Agreement with FitzPatrick & Co. LLC (effective January 1, 2023) - Exhibit 31.1* and 31.2*: Certifications of Principal Executive Officer and Principal Financial Officer - Exhibit 32*: Certification of Principal Executive and Financial Officers under Section 906 of Sarbanes-Oxley Act - Exhibits 101.INS*, 101.SCH*, 101.CAL*, 101.DEF*, 101.LAB*, 101.PRE*, 104*: Inline XBRL Taxonomy Extension and Cover Page Interactive Data File [SIGNATURES](index=86&type=section&id=SIGNATURES) This section contains the signatures of the registrant's authorized officers, Shawn K. Singh (CEO) and Jerrold D. Dotson (CFO), certifying the report - The report is signed by Shawn K. Singh, Chief Executive Officer, and Jerrold D. Dotson, Chief Financial Officer, on February 7, 2023[485](index=485&type=chunk)

VistaGen Therapeutics, Inc. (NASDAQ:VTGN) Q2 2023 Earnings Conference Call November 10, 2022 5:00 PM ET Company Participants Mark Flather - Vice President of Investor Relations Shawn Singh - Chief Executive Officer Jerry Dotson - Chief Financial Officer Conference Call Participants Andrew Tsai - Jefferies Tim Lugo - William Blair Operator Good day, and welcome to the VistaGen Second Quarter Fiscal Year 2023 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Commission File Number: 001-37761 VISTAGEN THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Washington, DC 20549 Form 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition ...

Financial Data and Key Metrics Changes - Research and development expenses increased by $9.8 million from $5.5 million to $15.3 million for the quarter ended June 30, 2022, primarily due to expenses related to the PALISADE Phase 3 program for PH94B [22] - General and administrative expenses rose to approximately $4.8 million for the quarter ended June 30, 2022, compared to approximately $2.6 million for the same quarter in the previous year, mainly due to the addition of senior management and prelaunch commercialization studies [23] - Net loss attributable to common stockholders for the quarter ended June 30, 2022, was approximately $19.8 million, compared to a net loss of approximately $8.1 million for the same quarter in 2021 [24] - As of June 30, 2022, the company had cash and cash equivalents of approximately $52 million, anticipating a considerable reduction in external spending to conserve cash for at least the next 12 months [24] Business Line Data and Key Metrics Changes - The company is focused on developing three central nervous system therapies aimed at treating anxiety and depression, with a particular emphasis on PH94B for social anxiety disorder [8][9] - The ongoing randomized double-blind placebo-controlled exploratory Phase 2a study in adjustment disorder with anxieties involves daily use of PH94B for 28 days [17] Market Data and Key Metrics Changes - The prevalence of anxiety and depression disorders has significantly increased since the beginning of the pandemic, highlighting the need for new treatment options [8] Company Strategy and Development Direction - The company aims to radically change the trajectory of mental health care and improve the lives of millions suffering from mental health challenges [29] - There is a focus on late-stage clinical development of PH94B, with plans to meet with the FDA to discuss a clearly defined development plan for further Phase 3 development [16][29] - The company is also advancing other CNS candidates, including PH10 for major depressive disorder and AV-101 in combination with probenecid [18][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledges recent setbacks but remains confident in the potential of PH94B to transform the treatment of social anxiety disorder and other anxiety disorders [9][29] - The company is assessing different study designs for submission to the FDA, emphasizing the importance of LSAS as a primary efficacy endpoint [10][16] Other Important Information - The company has conducted extensive new data analysis since its last meeting with the FDA, reinforcing confidence in PH94B's potential [12] - Preliminary data from nearly 200 subjects in the PALISADE open-label safety study suggest significant functional improvement in social anxiety disorder severity [13][14] Q&A Session Summary Question: Clarification on preliminary results from the open-label extension - Management confirmed that the improvement observed is significant, with a notable percentage of subjects showing a 20-point reduction in LSAS scores after one month of treatment [35] Question: Details on the interim PALISADE-2 analysis - Management stated that it is still too early to draw conclusions from PALISADE-1 and that they are awaiting more data from the interim analysis [40][41] Question: Performance of drug in placebo arms relative to Phase 2 - Management indicated that they are not ready to disclose specific data regarding the performance of the drug versus placebo at this time [47]

PART I. FINANCIAL INFORMATION This section provides the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive loss, statements of cash flows, and statements of changes in stockholders' equity, along with detailed notes explaining the company's business, accounting policies, and financial position for the quarter ended June 30, 2022 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20at%20June%2030%2C%202022%20and%20March%2031%2C%202022) This statement presents the company's financial position, including assets, liabilities, and equity, at specific reporting dates Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2022 (USD) | March 31, 2022 (USD) | | :-------------------------------- | :------------ | :------------- | | Cash and cash equivalents | $51,986,400 | $68,135,300 | | Total current assets | $54,993,600 | $70,998,000 | | Total assets | $58,725,600 | $74,643,400 | | Total current liabilities | $8,926,200 | $5,765,100 | | Total liabilities | $12,673,600 | $9,928,100 | | Total stockholders' equity | $46,052,000 | $64,715,300 | - Cash and cash equivalents decreased by approximately **$16.1 million** from March 31, 2022, to June 30, 2022[8](index=8&type=chunk) - Total stockholders' equity decreased by approximately **$18.7 million**, primarily due to the net loss incurred during the quarter[8](index=8&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20for%20the%20three%20months%20ended%20June%2030%2C%202022%20and%202021) This statement details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations and Comprehensive Loss Highlights | Metric | Three Months Ended June 30, 2022 (USD) | Three Months Ended June 30, 2021 (USD) | | :--------------------------------------- | :------------------------------- | :------------------------------- | | Sublicense revenue | $310,100 | $354,100 | | Research and development expense | $15,291,400 | $5,457,200 | | General and administrative expense | $4,791,800 | $2,643,100 | | Total operating expenses | $20,083,200 | $8,100,300 | | Net loss and comprehensive loss | $(19,776,300) | $(7,744,500) | | Basic and diluted net loss per common share | $(0.10) | $(0.04) | - Research and development expense significantly increased by **$9.8 million** (**179%**) from **$5.5 million** in Q2 2021 to **$15.3 million** in Q2 2022[10](index=10&type=chunk) - Net loss more than doubled, increasing from **$7.7 million** in Q2 2021 to **$(19.8 million)** in Q2 2022[10](index=10&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20June%2030%2C%202022%20and%202021) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights | Cash Flow Activity | Three Months Ended June 30, 2022 (USD) | Three Months Ended June 30, 2021 (USD) | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(15,968,300) | $(6,172,900) | | Net cash used in investing activities | $(175,100) | $(149,900) | | Net cash (used in) provided by financing activities | $(5,500) | $991,400 | | Net decrease in cash and cash equivalents | $(16,148,900) | $(5,331,400) | | Cash and cash equivalents at end of period | $51,986,400 | $97,776,900 | - Net cash used in operating activities increased significantly from **$6.2 million** in Q2 2021 to **$16.0 million** in Q2 2022, primarily due to increased R&D expenses[13](index=13&type=chunk) - Cash and cash equivalents decreased by **$16.1 million** during the quarter, ending at **$52.0 million**[13](index=13&type=chunk) [Condensed Consolidated Statement of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Stockholders'%20Equity%20for%20the%20three%20months%20ended%20June%2030%2C%202022%20and%202021) This statement outlines the changes in the components of stockholders' equity over specific reporting periods Condensed Consolidated Statement of Changes in Stockholders' Equity Highlights | Metric | March 31, 2022 (USD) | June 30, 2022 (USD) | | :-------------------------- | :------------- | :------------ | | Common Stock (Amount) | $206,700 | $206,900 | | Additional Paid-in Capital | $336,080,700 | $337,193,500 | | Accumulated Deficit | $(267,604,000) | $(287,380,300)| | Total Stockholders' Equity | $64,715,300 | $46,052,000 | - Accumulated deficit increased by approximately **$19.8 million** during the quarter, reflecting the net loss[17](index=17&type=chunk) - Additional paid-in capital increased by **$1.1 million**, primarily due to stock-based compensation expense and proceeds from stock option exercises and ESPP purchases[17](index=17&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Description of Business](index=7&type=section&id=Note%201.%20Description%20of%20Business) VistaGen Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing innovative, faster-acting therapeutics with fewer side effects for anxiety, depression, and other CNS disorders. The company's lead candidates are pherine nasal sprays PH94B and PH10, and the oral prodrug AV-101. Recent Phase 3 results for PH94B (PALISADE-1) did not meet the primary efficacy endpoint, leading to a pause in PALISADE-2 and a re-evaluation of the development strategy for PH94B - VistaGen is a clinical-stage biopharmaceutical company developing therapeutics for anxiety, depression, and other CNS disorders, aiming for faster-acting treatments with fewer side effects[19](index=19&type=chunk) - Key product candidates include PH94B (nasal spray for anxiety disorders like Social Anxiety Disorder (SAD) and Adjustment Disorder with Anxiety (AjDA)), PH10 (nasal spray for Major Depressive Disorder (MDD)), and AV-101 (oral prodrug for CNS indications involving NMDAR, in combination with probenecid)[23](index=23&type=chunk) - PALISADE-1, a Phase 3 study of PH94B for acute SAD, did not achieve its primary efficacy endpoint[21](index=21&type=chunk) Enrollment in PALISADE-2 is paused for interim data analysis, and recruitment for PALISADE OLS (long-term safety) has ended, though preliminary OLS data suggests potential for cumulative functional improvement with as-needed PH94B use[21](index=21&type=chunk)[22](index=22&type=chunk) [Note 2. Basis of Presentation](index=8&type=section&id=Note%202.%20Basis%20of%20Presentation) The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim information. The company has experienced recurring losses and negative cash flows, resulting in an accumulated deficit of $287.4 million, raising a going concern uncertainty. Operations have been financed primarily through equity and debt issuances, government grants, and strategic collaborations. Current cash and cash equivalents of $52.0 million are believed sufficient for the next 12 months, but future funding will be needed, especially after the PALISADE-1 results - The company has an accumulated deficit of approximately **$287.4 million** as of June 30, 2022, and expects continued losses and negative cash flows[26](index=26&type=chunk) - Operations have been financed through **$208.7 million** from equity/debt, **$22.7 million** from grants/collaborations, and **$38.2 million** in non-cash equity issuances for licenses/settlements[27](index=27&type=chunk) - Cash and cash equivalents were approximately **$52.0 million** at June 30, 2022, deemed sufficient for at least 12 months, but the company is re-evaluating cash resources and future funding needs following the PALISADE-1 results[29](index=29&type=chunk) - Future funding may come from equity/debt sales, warrant exercises, strategic collaborations, and government grants, with no assurance of availability or acceptable terms[31](index=31&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk) [Note 3. Summary of Significant Accounting Policies](index=9&type=section&id=Note%203.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's significant accounting policies, including the use of estimates, cash and cash equivalents, revenue recognition (primarily from the AffaMed Agreement), contract acquisition costs, research and development expense, stock-based compensation, leases, concentrations of credit risk, comprehensive loss, loss per common share, fair value measurements, and warrants issued in connection with equity financing. It also discusses recent accounting pronouncements, specifically ASU 2020-06, which is not expected to have a material impact - Revenue recognition is primarily from the AffaMed Agreement, with **$310,100** and **$354,100** recognized for the three months ended June 30, 2022 and 2021, respectively[37](index=37&type=chunk)[49](index=49&type=chunk) - Research and development expense is charged as incurred, including internal costs (salaries, stock-based compensation) and external costs (clinical/nonclinical development)[53](index=53&type=chunk) Stock-Based Compensation Expense | Expense Category | Three Months Ended June 30, 2022 (USD) | Three Months Ended June 30, 2021 (USD) | | :----------------------------- | :------------------------------- | :------------------------------- | | Research and development | $329,600 | $240,800 | | General and administrative | $627,300 | $349,600 | | Total stock-based compensation | $956,900 | $590,400 | - The company accounts for leases as operating leases, recognizing right-of-use assets and lease liabilities based on the present value of lease payments[59](index=59&type=chunk) - Potentially dilutive securities, totaling **29,004,248** at June 30, 2022, were excluded from diluted net loss per share computation due to their antidilutive effect[65](index=65&type=chunk)[66](index=66&type=chunk) [Note 4. Prepaid Expense and Other Current Assets](index=15&type=section&id=Note%204.%20Prepaid%20Expense%20and%20Other%20Current%20Assets) Prepaid expenses and other current assets increased slightly from $2.7 million at March 31, 2022, to $2.9 million at June 30, 2022, driven by a significant increase in prepaid insurance and a new receivable from a collaboration partner, partially offset by a decrease in clinical and nonclinical materials and contract services Prepaid Expense and Other Current Assets | Component | June 30, 2022 (USD) | March 31, 2022 (USD) | | :------------------------------------------ | :------------ | :------------- | | Clinical and nonclinical materials and contract services | $996,300 | $2,139,600 | | Insurance | $1,125,600 | $196,500 | | Receivable from CRO for cancelled project | $337,900 | $337,900 | | Receivable from collaboration partner | $343,900 | - | | All other | $86,600 | $71,800 | | Total | $2,890,300 | $2,745,800 | - Prepaid insurance increased significantly from **$196,500** to **$1,125,600**[78](index=78&type=chunk) - A new receivable of **$343,900** from a collaboration partner was recorded at June 30, 2022[78](index=78&type=chunk) [Note 5. Property and Equipment](index=15&type=section&id=Note%205.%20Property%20and%20Equipment) Net property and equipment increased from $414,300 at March 31, 2022, to $567,600 at June 30, 2022, primarily due to new laboratory equipment purchases and a new financing lease for office equipment. Depreciation and amortization expense for the quarter was $32,300 Property and Equipment, Net | Component | June 30, 2022 (USD) | March 31, 2022 (USD) | | :-------------------------------- | :------------ | :------------- | | Laboratory equipment | $1,356,400 | $1,181,300 | | Total Property and equipment | $1,854,100 | $1,683,100 | | Accumulated depreciation and amortization | $(1,286,500) | $(1,268,800) | | Property and equipment, net | $567,600 | $414,300 | - Depreciation and amortization expense for the three months ended June 30, 2022, was **$32,300**[79](index=79&type=chunk) - A new financing lease for office equipment was initiated in April 2022, replacing fully-depreciated equipment[79](index=79&type=chunk)[80](index=80&type=chunk) [Note 6. Accrued Expense](index=16&type=section&id=Note%206.%20Accrued%20Expense) Accrued expenses decreased from $1.3 million at March 31, 2022, to $0.7 million at June 30, 2022, mainly due to a reduction in accrued expenses for clinical and nonclinical materials, development, and contract services, partially offset by an increase in accrued compensation Accrued Expense | Component | June 30, 2022 (USD) | March 31, 2022 (USD) | | :------------------------------------------ | :------------ | :------------- | | Accrued expenses for clinical and nonclinical materials, development and contract services | $453,200 | $1,070,800 | | Accrued compensation | $240,700 | $66,200 | | Accrued professional services | $28,000 | $159,500 | | All other | $5,400 | $32,700 | | Total | $727,300 | $1,329,200 | [Note 7. Note Payable](index=16&type=section&id=Note%207.%20Note%20Payable) The company executed a new 3.88% promissory note for $1,139,700 in May 2022 to finance insurance policy premiums, payable in monthly installments through April 2023. This resulted in a current notes payable balance of $1,037,800 at June 30, 2022, up from zero at March 31, 2022 Notes Payable | Note Type | June 30, 2022 (Principal) | March 31, 2022 (Principal) | | :------------------------------------------ | :------------------------ | :------------------------- | | 3.88% Note payable to insurance premium financing company (current) | $1,037,800 | $0 | - A new **$1,139,700** promissory note was executed in May 2022 for insurance premiums, with monthly payments through April 2023[83](index=83&type=chunk) [Note 8. Capital Stock](index=16&type=section&id=Note%208.%20Capital%20Stock) The company has an At-the-Market (ATM) offering program for up to $75.0 million, under which $4.3 million net cash proceeds were received in Fiscal 2022, but no sales have occurred since October 2021. During Q2 2022, $156,100 was received from stock option exercises and ESPP purchases. As of June 30, 2022, 9,275,858 warrants were outstanding with a weighted average exercise price of $1.47 per share - The company has an ATM program for up to **$75.0 million**, with **$4.3 million** net cash proceeds received in Fiscal 2022, but no sales since October 2, 2021[84](index=84&type=chunk)[174](index=174&type=chunk) - During the quarter ended June 30, 2022, **$156,100** was received from stock option exercises and ESPP purchases[86](index=86&type=chunk)[174](index=174&type=chunk) Warrants Outstanding at June 30, 2022 | Exercise Price per Share (USD) | Expiration Date | Warrants Outstanding | | :----------------------- | :-------------- | :------------------- | | $0.50 | 12/9/2022 | 1,000,000 | | $0.73 | 7/25/2025 | 370,544 | | $0.805 | 12/31/2022 | 76,859 | | $1.50 | 12/13/2022 | 6,789,243 | | $1.70 | 10/5/2022 | 12,162 | | $1.82 | 3/7/2023 | 880,050 | | $7.00 | 3/3/2023 | 147,000 | | Total | | 9,275,858 | [Note 9. Related Party Transactions](index=17&type=section&id=Note%209.%20Related%20Party%20Transactions) The company had a consulting agreement with an independent Board member for corporate development and public relations advisory services, incurring $45,000 in expense during the quarter ended June 30, 2022, with $15,000 remaining in accounts payable - Expense of **$45,000** was recorded for consulting services from an independent Board member during Q2 2022[89](index=89&type=chunk) [Note 10. Commitments and Contingencies](index=17&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) The company's operating lease for its South San Francisco headquarters was extended to July 31, 2027. The right-of-use asset was $2,565,000 and total operating lease liability was $2,933,800 at June 30, 2022. Operating lease cost for the quarter was $197,200 Operating Lease Liabilities | Metric | As of June 30, 2022 (USD) | As of March 31, 2022 (USD) | | :-------------------------------- | :------------------ | :------------------- | | Right of use asset – operating lease | $2,565,000 | $2,662,000 | | Current operating lease obligation | $442,600 | $433,300 | | Non-current operating lease obligation | $2,491,200 | $2,605,400 | | Total operating lease liability | $2,933,800 | $3,038,700 | - Operating lease cost for the three months ended June 30, 2022, was **$197,200**[92](index=92&type=chunk) Minimum Lease Payments (South San Francisco Operating Lease) | Fiscal Years Ending March 31, | Amount (USD) | | :---------------------------- | :----- | | 2023 (remaining nine months) | $507,000 | | 2024 | $689,500 | | 2025 | $710,200 | | 2026 | $731,500 | | 2027 | $753,500 | | Thereafter | $253,600 | | Total lease expense | $3,645,300 | | Present value of operating lease liabilities | $2,933,800 | [Note 11. Sublicensing and Collaborative Agreements](index=18&type=section&id=Note%2011.%20Sublicensing%20and%20Collaborative%20Agreements) The AffaMed Agreement grants AffaMed an exclusive license to develop and commercialize PH94B in Greater China, South Korea, and Southeast Asia. VistaGen received a $5.0 million upfront payment in August 2020 and is eligible for up to $172.0 million in milestones plus royalties. Revenue is recognized on a straight-line basis over the expected service period, with $310,100 recognized in Q2 2022. The company is reassessing the impact of PALISADE-1 results on performance obligations - The AffaMed Agreement grants an exclusive license for PH94B development and commercialization in Greater China, South Korea, and Southeast Asia[95](index=95&type=chunk) - VistaGen received a **$5.0 million** upfront license payment in August 2020 and is eligible for up to **$172.0 million** in milestone payments and royalties on product sales[99](index=99&type=chunk) - Sublicense revenue of **$310,100** and **$354,100** was recognized for the three months ended June 30, 2022 and 2021, respectively, from the AffaMed Agreement[103](index=103&type=chunk) - The company is currently assessing the impact of PALISADE-1 results on the completion of its performance obligations under the AffaMed Agreement[103](index=103&type=chunk) [Note 12. Subsequent Events](index=19&type=section&id=Note%2012.%20Subsequent%20Events) Subsequent to June 30, 2022, the company granted options to purchase 257,000 shares of common stock under its 2019 Plan to new employees and a consultant - From July 1, 2022, through the report date, options to purchase **257,000** shares of common stock were granted under the 2019 Plan[105](index=105&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%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, highlighting the significant increase in net loss and R&D expenses, the impact of recent clinical trial results for PH94B, and the ongoing need for additional financing to support its clinical-stage development [Cautionary Note Regarding Forward-Looking Statements](index=20&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This note advises readers on the inherent uncertainties and risks associated with forward-looking statements in the report - The report contains forward-looking statements based on current expectations, subject to risks and uncertainties, including the ability to obtain financing, R&D results, regulatory approvals, competition, and the impact of accounting policies[107](index=107&type=chunk) - Readers are cautioned not to rely on forward-looking statements as predictions of future events due to the competitive and rapidly changing environment and unforeseen risks[108](index=108&type=chunk)[109](index=109&type=chunk) [Business Overview](index=20&type=section&id=Business%20Overview) This section describes the company's core business, product candidates, and strategic focus in biopharmaceutical development - VistaGen is a late clinical-stage biopharmaceutical company focused on developing innovative CNS therapeutics for anxiety, depression, and other disorders, aiming for rapid onset and fewer side effects[110](index=110&type=chunk) - PH94B, a pherine nasal spray, is being evaluated for multiple anxiety disorders, including SAD[112](index=112&type=chunk) Its Phase 3 PALISADE-1 study did not meet its primary efficacy endpoint, leading to a pause in PALISADE-2 enrollment and re-evaluation of the development strategy[114](index=114&type=chunk)[115](index=115&type=chunk) - PH10, another pherine nasal spray, is in preparation for a U.S. Phase 1 clinical program for MDD, with potential for Phase 2B development in 2023[134](index=134&type=chunk) - AV-101, an oral prodrug, is undergoing an exploratory Phase 1B drug-drug interaction study in combination with probenecid for CNS indications involving NMDAR[135](index=135&type=chunk) [Financial Operations Overview and Results of Operations](index=24&type=section&id=Financial%20Operations%20Overview%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial performance and key operational drivers [Summary](index=24&type=section&id=Summary) This summary highlights the company's financial performance, accumulated deficit, and ongoing R&D investments - The company has not achieved recurring revenue and has an accumulated deficit of approximately **$287.4 million** as of June 30, 2022[139](index=139&type=chunk) Net Loss Summary | Period | Net Loss (USD) | | :-------------------------------- | :------------- | | Three Months Ended June 30, 2022 | $(19.8) million | | Three Months Ended June 30, 2021 | $(7.7) million | | Fiscal Year Ended March 31, 2022 | $(47.8) million | | Fiscal Year Ended March 31, 2021 | $(17.9) million | - Significant resources are devoted to the research and development of PH94B, PH10, and AV-101, with losses expected to continue for the foreseeable future[139](index=139&type=chunk) [Summary of the Three Months Ended June 30, 2022](index=25&type=section&id=Summary%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202022) This section details key financial and operational developments for the quarter, including clinical trial outcomes and resource management - PALISADE-1, a Phase 3 study for PH94B in SAD, did not achieve its primary efficacy endpoint in July 2022[142](index=142&type=chunk) - Recruitment and enrollment in PALISADE-2 are paused pending an independent interim data analysis, and enrollment in PALISADE OLS has ended[142](index=142&type=chunk) - The company expanded its employee infrastructure across multiple functional areas, including clinical operations, regulatory affairs, and commercial operations[143](index=143&type=chunk) - Cash resources are being carefully monitored, and certain PH94B-related activities (PALISADE-2, PALISADE OLS, NDA-enabling nonclinical/manufacturing, pre-commercialization) are being deferred or cancelled to reduce expenditures[146](index=146&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) This section presents a detailed comparison of the company's financial results for the specified reporting periods [Comparison of Three Months Ended June 30, 2022 and 2021](index=26&type=section&id=Comparison%20of%20Three%20Months%20Ended%20June%2030%2C%202022%20and%202021) This section compares the company's financial performance for the three months ended June 30, 2022, against the same period in 2021 Summary of Operations (Amounts in thousands) | Metric | Three Months Ended June 30, 2022 (USD) | Three Months Ended June 30, 2021 (USD) | | :--------------------------------------- | :------------------------------- | :------------------------------- | | Sublicense revenue | $310 | $354 | | Research and development | $15,291 | $5,457 | | General and administrative | $4,792 | $2,643 | | Total operating expenses | $20,083 | $8,100 | | Loss from operations | $(19,773) | $(7,746) | | Net loss | $(19,776) | $(7,744) | | Net loss attributable to common stockholders | $(19,776) | $(8,106) | [Revenue](index=26&type=section&id=Revenue) This section discusses the sources and changes in the company's sublicense revenue - Sublicense revenue decreased from **$354,100** in Q2 2021 to **$310,100** in Q2 2022, derived solely from the AffaMed Agreement[150](index=150&type=chunk) - Approximately **$2.5 million** in revenue from the **$5.0 million** upfront payment under the AffaMed Agreement is expected to be recognized in future periods, subject to re-assessment due to PALISADE-1 results[150](index=150&type=chunk) [Research and Development Expense](index=26&type=section&id=Research%20and%20Development%20Expense) This section analyzes the changes and drivers of the company's research and development expenditures - R&D expense increased by **$9.8 million** (**179%**) to **$15.3 million** in Q2 2022, primarily due to the PALISADE Phase 3 Program for PH94B and nonclinical/outsourced manufacturing activities for PH94B and PH10[151](index=151&type=chunk) - Salaries and benefits increased by **$345,000** due to additional personnel and salary increases, partially offset by reduced accruals for compensation expense[153](index=153&type=chunk) - PH94B and PH10 clinical and nonclinical project expense saw a significant increase of **$9.3 million**, driven by the conduct of PALISADE-1, PALISADE-2, PALISADE OLS, and the Phase 2A AjDA study[156](index=156&type=chunk) - R&D expense is expected to decrease in subsequent periods due to the pausing of PALISADE-2 and ending enrollment in PALISADE OLS, but PH10 clinical development expense is anticipated to increase[151](index=151&type=chunk)[156](index=156&type=chunk) [General and Administrative Expense](index=28&type=section&id=General%20and%20Administrative%20Expense) This section examines the changes and components of the company's general and administrative costs - G&A expense increased by **$2.2 million** (**83%**) to **$4.8 million** in Q2 2022, driven by pre-commercialization market research (**$1.2 million**), increased salaries/benefits, and higher insurance expense[159](index=159&type=chunk) - Pre-commercialization expenditures are expected to substantially decrease due to the PALISADE-1 results and resulting delay in commercialization timeline[164](index=164&type=chunk) - Stock-based compensation for G&A increased, reflecting new option grants and amortization[160](index=160&type=chunk) - Insurance expense increased due to higher directors' and officers' liability coverage and new cybersecurity coverages[165](index=165&type=chunk) [Interest and Other Expense](index=30&type=section&id=Interest%20and%20Other%20Expense) This section details non-operating income and expenses, such as interest Interest Income, Net (Amounts in thousands) | Metric | Three Months Ended June 30, 2022 (USD) | Three Months Ended June 30, 2021 (USD) | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Interest income | $6 | $5 | | Interest expense on financing lease and insurance premium financing note | $(4) | $0 | | Interest income, net | $2 | $5 | - Interest income, net, decreased from **$5,100** in Q2 2021 to **$2,300** in Q2 2022[171](index=171&type=chunk) - In Q2 2021, **$361,800** was recognized for accrued dividends on Series B Preferred Stock; no such accrual in Q2 2022 as Series B Preferred was converted in November 2021[172](index=172&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company has historically funded operations through equity/debt sales, grants, and collaborations. With $52.0 million in cash at June 30, 2022, it believes it can fund operations for 12 months, but the PALISADE-1 results necessitate re-evaluation of cash resources and future funding strategies. Significant additional capital will be required for commercialization and ongoing R&D - Since inception, operations have been financed by **$208.7 million** from equity/debt, **$22.7 million** from grants/collaborations, and **$38.2 million** in non-cash equity for licenses/settlements[173](index=173&type=chunk) - Cash and cash equivalents were **$52.0 million** at June 30, 2022, believed sufficient for 12 months, but re-evaluation is ongoing due to PALISADE-1 results and deferred/cancelled activities[175](index=175&type=chunk) - Future funding will be sought through equity/debt sales, warrant exercises, strategic collaborations, and government grants, with no assurance of availability or acceptable terms[177](index=177&type=chunk)[178](index=178&type=chunk)[180](index=180&type=chunk) [Cash and Cash Equivalents](index=31&type=section&id=Cash%20and%20Cash%20Equivalents) This section focuses on the changes in the company's most liquid assets and their impact on overall financial position Changes in Cash and Cash Equivalents (Amounts in thousands) | Cash Flow Activity | Three Months Ended June 30, 2022 (USD) | Three Months Ended June 30, 2021 (USD) | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(15,968) | $(6,173) | | Net cash used in investing activities | $(175) | $(150) | | Net cash provided by (used in) financing activities | $(6) | $992 | | Net decrease in cash and cash equivalents | $(16,149) | $(5,331) | | Cash and cash equivalents at end of period | $51,986 | $97,777 | - Increased cash used in operations in Q2 2022 reflects continued PH94B clinical trials, manufacturing, nonclinical studies, and expanded internal capabilities[181](index=181&type=chunk) [Off-Balance Sheet Arrangements](index=32&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has no off-balance sheet arrangements - The company has no off-balance sheet arrangements[183](index=183&type=chunk) [Recent Accounting Pronouncements](index=32&type=section&id=Recent%20Accounting%20Pronouncements) Information regarding recent accounting pronouncements and their expected impact is provided in Note 3 to the Condensed Consolidated Financial Statements - Refer to Note 3 for information on recent accounting pronouncements[184](index=184&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of June 30, 2022. There were no material changes to internal control over financial reporting during the quarter, and previously identified material weaknesses were remediated as of March 31, 2022 [Disclosure Controls and Procedures](index=32&type=section&id=Disclosure%20Controls%20and%20Procedures) This section describes the effectiveness of controls ensuring timely and accurate financial disclosures - Management concluded that disclosure controls and procedures were effective as of June 30, 2022[185](index=185&type=chunk) [Internal Control over Financial Reporting](index=32&type=section&id=Internal%20Control%20over%20Financial%20Reporting) This section assesses the effectiveness of internal controls related to financial reporting - There was no material change in internal control over financial reporting during the quarter ended June 30, 2022[186](index=186&type=chunk) - Previously identified material weaknesses in internal control over financial reporting were remediated as of March 31, 2022[295](index=295&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings - There are no legal proceedings to report[188](index=188&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) This section outlines the significant risks and uncertainties that could adversely affect the company's business, financial condition, and results of operations [Risk Factor Summary](index=33&type=section&id=Risk%20Factor%20Summary) This summary highlights the most critical risks facing the company, including clinical trial outcomes and financial stability - Key risks include failures or delays in clinical studies, being a development-stage company with no recurring revenues, heavy dependence on PH94B, PH10, and AV-101, inability to retain key personnel, and the impact of the COVID-19 pandemic[191](index=191&type=chunk) - Other significant risks involve intense competition, challenges in protecting proprietary technology, substantial operating losses, the need for additional financing (which may cause dilution), and potential delisting from Nasdaq[191](index=191&type=chunk) [Risks Related to Product Development, Regulatory Approval and Commercialization](index=34&type=section&id=Risks%20Related%20to%20Product%20Development%2C%20Regulatory%20Approval%20and%20Commercialization) This section details risks associated with developing, obtaining approval for, and bringing products to market - Failures or delays in clinical studies, such as the PALISADE-1 Phase 3 trial for PH94B, can increase costs and delay revenue generation[194](index=194&type=chunk) - The company's business heavily depends on the successful development, manufacturing, regulatory approval, and commercialization of PH94B, PH10, and AV-101, with no guarantee of success[195](index=195&type=chunk) - The COVID-19 pandemic has caused and may continue to cause adverse impacts, including delays in development programs, supply chain disruptions, and potential interference with PH94B/PH10 efficacy due to olfactory dysfunction[198](index=198&type=chunk)[199](index=199&type=chunk) - Fast Track designations for PH94B and AV-101 do not guarantee faster development, review, or approval[201](index=201&type=chunk)[202](index=202&type=chunk) - Results from earlier clinical trials may not predict later-stage success, as demonstrated by PALISADE-1[204](index=204&type=chunk) - Reliance on third parties for clinical trials and manufacturing exposes the company to risks of delays, non-compliance, and quality control issues[216](index=216&type=chunk)[217](index=217&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk) - Failure to establish broad sales and marketing capabilities or secure collaborations could prevent revenue generation[232](index=232&type=chunk)[247](index=247&type=chunk) - Market acceptance of approved products is uncertain and depends on efficacy, safety, pricing, and competition[233](index=233&type=chunk)[234](index=234&type=chunk) - The pharmaceutical industry is highly competitive, with many larger companies developing similar products, posing a significant challenge to market penetration[243](index=243&type=chunk)[246](index=246&type=chunk) [Risks Related to Our Financial Position](index=49&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position) This section outlines financial risks, including ongoing losses, funding needs, and potential dilution - The company has incurred significant net losses since inception (**$287.4 million** accumulated deficit) and expects substantial operating losses to continue, making profitability uncertain[275](index=275&type=chunk) - Additional financing is required to execute the long-term business plan, including development and commercialization, with no guarantee of availability on acceptable terms[283](index=283&type=chunk)[288](index=288&type=chunk) - Raising additional capital through equity offerings is likely to cause substantial dilution to existing stockholders[299](index=299&type=chunk) - Current volatile economic conditions could adversely affect business and access to capital markets[291](index=291&type=chunk) - While previously identified material weaknesses in internal control over financial reporting were remediated, future weaknesses could arise, impacting financial reporting accuracy[295](index=295&type=chunk) - The ability to use net operating losses (NOLs) to offset future taxable income is subject to limitations under Section 382 of the Internal Revenue Code due to potential ownership changes[302](index=302&type=chunk) [General Company-Related Risks](index=53&type=section&id=General%20Company-Related%20Risks) This section covers broader risks such as management retention, product liability, and external economic factors - Failure to retain and attract senior management and key scientific personnel could hinder product development and commercialization[303](index=303&type=chunk)[304](index=304&type=chunk) - Product liability lawsuits could result in substantial liabilities, decreased demand, and reputational harm, potentially limiting commercialization[308](index=308&type=chunk)[309](index=309&type=chunk) - Unfavorable global economic or political conditions, natural disasters, and cybersecurity failures could adversely affect business operations and financial stability[311](index=311&type=chunk)[312](index=312&type=chunk)[313](index=313&type=chunk)[316](index=316&type=chunk) - Acquisitions or strategic alliances may not realize expected benefits due to integration difficulties or unforeseen challenges[317](index=317&type=chunk) [Risks Related to Our Intellectual Property Rights](index=56&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property%20Rights) This section addresses risks concerning the protection, validity, and enforcement of the company's intellectual property - Inability to adequately protect proprietary technology and obtain/maintain sufficient patents for product candidates could allow competitors to enter the market more directly[319](index=319&type=chunk)[322](index=322&type=chunk) - The issuance, scope, validity, and enforceability of patents are uncertain due to complex legal and factual questions, prior art, and varying international standards[325](index=325&type=chunk)[326](index=326&type=chunk) - Third parties may initiate legal proceedings alleging infringement, which could delay product development, stop commercialization, or increase costs[342](index=342&type=chunk)[344](index=344&type=chunk) - Dependence on licensed intellectual property means loss of rights due to breach or termination could prevent continued development or commercialization[362](index=362&type=chunk)[365](index=365&type=chunk) - Intellectual property from government-funded programs may be subject to federal regulations like 'march-in' rights, limiting exclusive rights and potentially restricting manufacturing to the U.S[367](index=367&type=chunk)[368](index=368&type=chunk)[370](index=370&type=chunk) - Changes in U.S. patent law, such as the America Invents Act and Supreme Court rulings, could diminish the value of patents and impair the ability to protect products[375](index=375&type=chunk)[376](index=376&type=chunk)[379](index=379&type=chunk) [Risks Related to our Securities](index=65&type=section&id=Risks%20Related%20to%20our%20Securities) This section discusses risks affecting the company's common stock, including market volatility and potential delisting - Failure to comply with Nasdaq Capital Market listing requirements (e.g., minimum bid price) could lead to delisting, reducing liquidity and negatively impacting stock price and capital access[386](index=386&type=chunk) - The market price for common stock is highly volatile, influenced by clinical trial results, regulatory approvals, competition, and general market conditions[387](index=387&type=chunk) - Future sales and issuances of common stock, including under the ATM program, could cause substantial dilution and a decline in stock price[388](index=388&type=chunk)[390](index=390&type=chunk) - The company does not intend to pay dividends, meaning returns depend solely on stock price appreciation[393](index=393&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities or use of proceeds were reported[398](index=398&type=chunk) [Item 3. Defaults Upon Senior Secured Securities](index=67&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Secured%20Securities) The company reported no defaults upon senior secured securities - No defaults upon senior secured securities were reported[399](index=399&type=chunk) [Item 6. Exhibits](index=67&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including indemnification agreements, certifications of principal officers, and XBRL interactive data files Exhibits Filed | Exhibit Number | Description | | :------------- | :---------- | | 10.1* | Indemnification Agreement, dated May 13, 2022, by and between VistaGen Therapeutics, Inc. and Reid G. Adler J.D. | | 31.1* | Certification of the Principal Executive Officer required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 31.2* | Certification of the Principal Financial Officer required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32* | Certification of the Principal Executive and Financial Officers required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 101.INS * | The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | | 101.SCH* | Inline XBRL Taxonomy Extension Schema | | 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase | | 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase | | 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase | | 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase | | 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | SIGNATURES The report is formally signed by the principal executive and financial officers - The report is signed by Shawn K. Singh, Chief Executive Officer, and Jerrold D. Dotson, Chief Financial Officer, on August 11, 2022[404](index=404&type=chunk)

Financial Data and Key Metrics Changes - Research and development expenses increased by $23.5 million from approximately $11.9 million to $35.4 million for the fiscal year ended March 31, 2022, primarily due to clinical trials and personnel hiring [25] - General and administrative expenses rose to approximately $13.5 million for the fiscal year ended March 31, 2022, compared to approximately $7.1 million for the fiscal year ended March 31, 2021, largely due to pre-launch commercialization activities [26] - Net loss attributable to common stockholders for the fiscal year ended March 31, 2022, was approximately $48.7 million, compared to a net loss of $42.3 million for fiscal 2021 [27] Business Line Data and Key Metrics Changes - The company advanced its PALISADE Phase III program for PH94B in Social Anxiety Disorder (SAD), with significant milestones achieved, including the completion of the last patient's study protocol in PALISADE-1 [10][12] - An exploratory Phase IIA clinical study of PH94B in adjustment disorder with anxiety was initiated, with topline data anticipated near the end of the year [21] Market Data and Key Metrics Changes - The prevalence of anxiety and depression disorders has increased significantly since the pandemic, highlighting the need for new treatment options [7][8] - The company is preparing to initiate PALISADE Global, a Phase III clinical trial for PH94B in markets outside the U.S., including China and Canada [19][20] Company Strategy and Development Direction - The company aims to transform the treatment of anxiety and depression through innovative solutions, focusing on the development of differentiated treatments [9][30] - The commercialization strategy includes raising awareness among healthcare providers and patients, leveraging the increased prevalence of diagnosed SAD cases [58][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the potential of their CNS pipeline and the upcoming data readouts from the PALISADE program [9][11] - The company is optimistic about the regulatory feedback from the FDA regarding PH94B's abuse liability, which may facilitate future interactions with the DEA [13][55] Other Important Information - The company has a strong intellectual property position for PH94B, with exclusivity expected to last until at least March 2033 [45] - The Phase IB trial for AV-101 in combination with probenecid is underway, following positive preclinical results [23] Q&A Session Summary Question: Timeline for topline data from PALISADE-1 - Management anticipates topline data by mid-August, following a six to eight-week data cleaning process [34] Question: Details on topline data release - The primary endpoint will be reported, along with safety data, focusing on the Subjective Units of Distress Scale [36] Question: Role of Dr. Liebowitz in studies - Dr. Liebowitz's involvement has been crucial in executing the studies, providing valuable guidance and ensuring proper study design [39][40] Question: IP situation for PH94B - Current assessment indicates exclusivity for PH94B through March 2033, with plans for pediatric development if results are positive [45] Question: Commercialization strategy for SAD - The company plans to raise awareness among healthcare providers and patients, emphasizing the unique market position due to limited competition [58][60]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K VistaGen Therapeutics, Inc. (Exact name of registrant as specified in its charter) ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Nevada 20-5093315 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) For the fiscal year ended: March 31, 2022 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commis ...

VistaGen Therapeutics, Inc. (NASDAQ:VTGN) Q3 2022 Earnings Conference Call February 10, 2022 5:00 PM ET Company Participants Mark Flather - Vice President, Investor Relations Shawn Singh - Chief Executive Officer Jerry Dotson - Chief Financial Officer Mark Smith - Chief Medical Officer Conference Call Participants Andrew Tsai - Jefferies Lachlan Hanbury-Brown - William Blair Luke Herrmann - Baird Joanne Lee - Maxim Group Operator Greetings and welcome to VistaGen Therapeutics’ Third Quarter of Fiscal Year 2 ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) VistaGen reported a net loss of $31.1 million for the nine months ended December 31, 2021, driven by increased R&D, with recurring losses and an accumulated deficit of $250.9 million raising going concern doubts Condensed Consolidated Balance Sheet Data (in USD) | Balance Sheet Items | Dec 31, 2021 (unaudited) | Mar 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $83,700,200 | $103,108,300 | | Total current assets | $86,770,300 | $104,117,500 | | Total assets | $90,536,100 | $108,281,300 | | Total current liabilities | $6,420,800 | $4,189,000 | | Total liabilities | $10,558,300 | $16,302,800 | | Total stockholders' equity | $79,977,800 | $91,978,500 | Condensed Consolidated Statements of Operations (in USD) | Operations Data (Nine Months Ended) | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Sublicense revenue | $1,070,000 | $647,600 | | Research and development expenses | $23,637,100 | $7,585,500 | | General and administrative expenses | $8,518,800 | $4,776,900 | | Loss from operations | ($31,085,900) | ($11,714,800) | | Net loss | ($31,074,000) | ($11,723,300) | | Net loss per common share (basic and diluted) | ($0.16) | ($0.19) | Condensed Consolidated Statements of Cash Flows (in USD) | Cash Flow Data (Nine Months Ended) | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($29,668,000) | ($6,791,600) | | Net cash used in investing activities | ($200,300) | ($249,900) | | Net cash provided by financing activities | $10,460,200 | $110,017,500 | | Net (decrease) increase in cash | ($19,408,100) | $102,976,000 | - The company has experienced recurring losses and negative cash flows, resulting in an accumulated deficit of approximately **$250.9 million** as of December 31, 2021[38](index=38&type=chunk)[45](index=45&type=chunk) - Management has concluded that its cash position is not sufficient to fund planned operations for the next twelve months, which raises substantial doubt about its ability to continue as a going concern without securing additional capital[197](index=197&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Increased R&D expenses, particularly for the PH94B Phase 3 program, drove a higher net loss and cash burn, necessitating additional financing despite $10.7 million raised, as current cash of $83.7 million is insufficient for the next year - The company is a late-stage clinical biopharmaceutical firm focused on CNS disorders with three clinical-stage candidates: **PH94B** (anxiety), **PH10** (depression), and **AV-101** (neurological disorders)[126](index=126&type=chunk)[127](index=127&type=chunk) - The primary focus is the **PALISADE Phase 3 Program for PH94B** for the acute treatment of social anxiety disorder (SAD), with topline results from the PALISADE-1 study anticipated in mid-2022[138](index=138&type=chunk) Comparison of Operating Expenses (Nine Months Ended Dec 31, in USD) | Expense Category | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Research and Development | $23,637,000 | $7,586,000 | +$16,051,000 | | General and Administrative | $8,519,000 | $4,777,000 | +$3,742,000 | - The increase in R&D expense was primarily driven by costs for the **PALISADE Phase 3 Program for PH94B**, including PALISADE-1 and PALISADE-2 trials, and manufacturing activities for both PH94B and PH10[170](index=170&type=chunk)[177](index=177&type=chunk) - The increase in G&A expense was mainly due to pre-commercialization studies for PH94B, increased personnel costs, and a noncash write-off of deferred offering costs from a terminated financing agreement[188](index=188&type=chunk) - During the nine months ended December 31, 2021, the company raised capital through: - Warrant exercises: ~**$6.2 million** in cash proceeds[40](index=40&type=chunk) - At-the-market (ATM) offering: ~**$4.45 million** in gross cash proceeds[41](index=41&type=chunk)[192](index=192&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of December 31, 2021, while actively remediating previously identified material weaknesses in internal control over financial reporting through staffing and software improvements - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[208](index=208&type=chunk) - The company previously identified two material weaknesses in internal control over financial reporting: (i) inadequate segregation of duties and (ii) limitations in accounting software functionality[209](index=209&type=chunk) - Remediation efforts began in April 2021, including hiring additional accounting staff and implementing new, state-of-the-art accounting software[313](index=313&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - There are no legal proceedings to report[212](index=212&type=chunk) [Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant financial, product development, operational, and intellectual property risks, including recurring losses, the need for additional financing, clinical trial uncertainties, reliance on third parties, and internal control weaknesses - **Financial Risks:** The company has a history of significant net losses (**$250.9 million** accumulated deficit), requires additional financing to continue as a going concern, and has identified material weaknesses in its internal control over financial reporting[215](index=215&type=chunk)[302](index=302&type=chunk)[313](index=313&type=chunk) - **Product Development & Regulatory Risks:** The business heavily depends on the success of its three CNS product candidates, with a high risk of failure or delay in clinical trials and no certainty of obtaining regulatory approval[215](index=215&type=chunk)[221](index=221&type=chunk) - **Operational Risks:** The COVID-19 pandemic may continue to cause delays in manufacturing and clinical trial enrollment, and the company relies completely on third-party CROs and CMOs for clinical trials and manufacturing, creating dependency risk[215](index=215&type=chunk)[241](index=241&type=chunk)[246](index=246&type=chunk) - **Intellectual Property Risks:** The company's success depends on its ability to obtain and maintain patent protection for its product candidates, which is uncertain and subject to legal challenges, and it also faces risks of infringing on third-party IP rights[333](index=333&type=chunk)[353](index=353&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=86&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[404](index=404&type=chunk) [Defaults Upon Senior Securities](index=86&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Secured%20Securities) The company reported no defaults upon senior securities - None[405](index=405&type=chunk) [Exhibits](index=86&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed include certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, as well as Inline XBRL documents[406](index=406&type=chunk)