[PART I](index=5&type=section&id=PART%20I) This section details VistaGen Therapeutics' business, product pipeline, intellectual property, regulatory landscape, and corporate structure [Item 1. Business](index=5&type=section&id=Item%201.%20Business) VistaGen Therapeutics is a clinical-stage biopharmaceutical company developing CNS medicines, including PH94B for SAD, AV-101 for MDD, and PH10 for MDD, alongside stem cell technology applications [Overview](index=5&type=section&id=Overview) VistaGen Therapeutics is a clinical-stage biopharmaceutical company developing CNS medicines, including PH94B for SAD, AV-101 for MDD, and PH10 for MDD, with additional stem cell technology programs - PH94B neuroactive nasal spray is a rapid-onset, on-demand treatment candidate for SAD, with a novel mechanism activating nasal chemosensory receptors to suppress fear and anxiety[19](index=19&type=chunk) - AV-101 is an oral NMDA glutamate receptor modulator in Phase 2 for MDD, with Fast Track designation for MDD and neuropathic pain, also being explored for LID and suicidal ideation[20](index=20&type=chunk) - PH10 neuroactive nasal spray is a potential first-in-class CNS neurosteroid for MDD, showing rapid-onset antidepressant effects in Phase 2a without systemic side effects[21](index=21&type=chunk) - VistaStem Therapeutics utilizes hPSC technology for drug rescue (using CardioSafe 3D for cardiac toxicity screening) and regenerative medicine (sublicensed cardiac stem cell technology to BlueRock Therapeutics)[22](index=22&type=chunk) [Our Strategy](index=7&type=section&id=Our%20Strategy) VistaGen's strategy focuses on advancing its CNS product candidates (PH94B, AV-101, PH10) through clinical development and commercialization, exploring new indications and global markets, and leveraging hPSC technology - Advance PH94B to Phase 3 for SAD and seek regulatory approval and commercialization in the U.S[27](index=27&type=chunk) - Advance AV-101 and PH10 through Phase 2 and Phase 3 for MDD, seeking regulatory approval and commercialization in the U.S. (alone or with collaborators)[27](index=27&type=chunk) - Explore additional CNS indications for product candidates (e.g., PTSD, GAD, SI, LID, NP) and evaluate global market potential (China, EU, Japan, etc.)[27](index=27&type=chunk) - Utilize hPSC-based CardioSafe 3D for internal drug rescue programs and explore additional out-licensing transactions in regenerative medicine/cell therapy fields[27](index=27&type=chunk) [Our Product Pipeline](index=7&type=section&id=Our%20Product%20Pipeline) The company's product pipeline includes PH94B in Phase 3 for Social Anxiety Disorder, and AV-101 and PH10 in Phase 2 for Major Depressive Disorder Product Candidate Pipeline | Product Candidate | Indication | Preclinical | Phase 1 | Phase 2 | Phase 3 | | :--- | :--- | :--- | :--- | :--- | :--- | | PH94B | Social Anxiety Disorder | | | | X | | PH94B | Generalized Anxiety Disorder | X | | | | | PH94B | Post-Traumatic Stress Disorder | X | | | | | AV-101 | Major Depressive Disorder (inadequate response to ADT) | | | X | | | AV-101 | Major Depressive Disorder (ketamine therapy relapse prevention) | X | | | | | AV-101 | Neuropathic Pain | | | X | | | AV-101 | Parkinson's LID | | | X | | | AV-101 | Suicidal Ideation | | X | | | | AV-101 | Epilepsy | X | | | | | PH10 | Major Depressive Disorder (first-line therapy) | | | X | | [Our Programs](index=9&type=section&id=Our%20Programs) VistaGen develops PH94B for SAD, AV-101 for MDD, NP, LID, and SI, and PH10 for MDD, leveraging novel mechanisms to address unmet CNS needs - PH94B is preparing for initial pivotal Phase 3 study for SAD, with plans to start in H1 2020, subject to financing[33](index=33&type=chunk) - AV-101's ELEVATE Study (Phase 2 for MDD) anticipates top-line results in H2 2019; FDA granted Fast Track designation for MDD and NP[20](index=20&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - PH10 is planning for Phase 2b clinical development as a first-line treatment for MDD in H2 2020, subject to financing and FDA authorization[43](index=43&type=chunk) [PH94B Neuroactive Nasal Spray for SAD](index=9&type=section&id=PH94B%20Neuroactive%20Nasal%20Spray%20for%20SAD) PH94B is a rapid-onset neuroactive nasal spray for SAD, acquired in 2018, activating nasal chemosensory receptors without systemic exposure, with Phase 2 and pilot Phase 3 data supporting pivotal Phase 3 in H1 2020 - PH94B is a synthetic neurosteroid nasal spray with a novel, rapid-onset mechanism of action for SAD, activating nasal chemosensory receptors to suppress fear and anxiety[31](index=31&type=chunk) - Phase 2 clinical trial showed PH94B significantly reduced subjective anxiety ratings within 10-15 minutes without systemic exposure, and a pilot Phase 3 study showed greater decrease in average peak SUDS scores compared to placebo within one week[32](index=32&type=chunk) - VistaGen acquired exclusive worldwide rights to PH94B in September 2018 and plans to begin a pivotal Phase 3 study in H1 2020, aiming for the first FDA-approved on-demand SAD treatment[33](index=33&type=chunk) [AV-101 for MDD](index=9&type=section&id=AV-101%20for%20MDD) AV-101 is an oral NMDA glutamate receptor modulator in Phase 2 for MDD (ELEVATE Study, results H2 2019), with FDA Fast Track designation for MDD and Neuropathic Pain, also explored for LID, NP, and SI - AV-101 is an orally-available prodrug of 7-Cl-KYNA, a potent and selective full antagonist of the glycine site of the NMDAR, with a mechanism fundamentally different from current oral ADs[37](index=37&type=chunk) - The ELEVATE Study (Phase 2) is evaluating AV-101 as an add-on treatment for MDD, with top-line results anticipated in H2 2019[38](index=38&type=chunk) - FDA granted Fast Track designation for AV-101 as an add-on treatment for MDD and as a non-opioid treatment for Neuropathic Pain[39](index=39&type=chunk) - AV-101 is also being explored for preventing relapse of MDD and/or suicidal ideation following ketamine therapy, and has shown an excellent safety profile in clinical trials to date[38](index=38&type=chunk)[40](index=40&type=chunk) [PH10 Neuroactive Nasal Spray for MDD](index=11&type=section&id=PH10%20Neuroactive%20Nasal%20Spray%20for%20MDD) PH10 is a neuroactive nasal spray for MDD, acquired in 2018, showing rapid antidepressant effects in Phase 2a without systemic side effects, with Phase 2b development planned for H2 2020 - PH10 is a synthetic neurosteroid nasal spray with a novel, rapid-onset mechanism for MDD, activating nasal chemosensory receptors to trigger antidepressant effects[41](index=41&type=chunk) - Exploratory Phase 2a trial showed rapid-onset antidepressant effects without systemic psychological side effects or safety concerns[42](index=42&type=chunk) - VistaGen acquired exclusive worldwide rights to PH10 in October 2018 and plans to submit an IND for Phase 2b development as a first-line MDD treatment in H2 2020[43](index=43&type=chunk) [Additional Potential Clinical Development Programs](index=11&type=section&id=Additional%20Potential%20Clinical%20Development%20Programs) VistaGen explores AV-101 for SI, NP, LID, and Epilepsy, and PH94B for GAD and PTSD, leveraging preclinical data for novel mechanisms to address unmet needs - AV-101 is in a Phase 1b clinical trial (Baylor Study) for suicidal ideation in U.S. Military Veterans, funded by the VA, to test potential anti-suicidal effects[45](index=45&type=chunk) - AV-101 showed robust, dose-dependent anti-nociceptive effects in preclinical models of neuropathic pain, similar to pregabalin but with fewer side effects, leading to exploration of Phase 2a development[47](index=47&type=chunk)[48](index=48&type=chunk) - AV-101 significantly reduced LID in a preclinical MPTP monkey model of Parkinson's disease without impacting levodopa's anti-parkinsonian efficacy or causing amantadine-like side effects, supporting Phase 2a development[53](index=53&type=chunk) - PH94B demonstrated efficacy in a small placebo-controlled study in GAD patients, showing a mean reduction of **32.0% in HAM-A score**, warranting further Phase 2b investigation[57](index=57&type=chunk) - PH94B is being assessed for Phase 2a clinical development for PTSD due to its anti-anxiety effects and mechanism of decreasing sympathetic tone[59](index=59&type=chunk) - AV-101 protected against seizures and neuronal damage in preclinical epilepsy models, with plans for additional preclinical studies in 2020 to assess its development path for Phase 2a[63](index=63&type=chunk) [VistaStem Therapeutics - Stem Cell Technology-Based Programs](index=15&type=section&id=VistaStem%20Therapeutics%20-%20Stem%20Cell%20Technology-Based%20Programs) VistaStem Therapeutics, a subsidiary, applies hPSC technology for drug discovery, rescue (CardioSafe 3D), and regenerative medicine, including NCE development and sublicensed cardiac stem cell technology - VistaStem Therapeutics focuses on applying hPSC technology to discover, rescue, develop, and commercialize NCEs for CNS and other diseases, and regenerative medicine involving hPSC-derived blood, cartilage, heart, and liver cells[65](index=65&type=chunk) - CardioSafe 3D, a customized in vitro cardiac bioassay system, is used for internal drug rescue programs to identify and develop safer NCEs by predicting heart toxicity[65](index=65&type=chunk) - VistaGen sublicensed rights to certain cardiac stem cell technologies to BlueRock Therapeutics LP for heart disease treatment, and may pursue similar collaborations for other hPSC-derived cells[68](index=68&type=chunk) [Drug Rescue](index=16&type=section&id=Drug%20Rescue) Drug rescue activities focus on developing safer NCE variants, previously terminated due to heart toxicity, by leveraging CardioSafe 3D to mitigate cardiac liability and maintain efficacy - DR activities focus on producing novel, proprietary, and safer variants of NCEs terminated due to unexpected heart toxicity[67](index=67&type=chunk) - The strategy involves using CardioSafe 3D to understand cardiac toxicity and develop new NCEs with reduced cardiotoxicity while maintaining or improving efficacy[67](index=67&type=chunk) [Regenerative Medicine](index=16&type=section&id=Regenerative%20Medicine) VistaGen seeks CT and RM collaborations to leverage hPSC technology, having sublicensed cardiac stem cells to BlueRock Therapeutics, with potential for other hPSC-derived cell applications - VistaGen aims to establish CT and RM collaborations to leverage its hPSC technology and expertise in differentiating hPSCs into functional adult human cells and tissues[68](index=68&type=chunk) - Exclusive sublicense granted to BlueRock Therapeutics for cardiac stem cells for heart disease treatment, with potential for similar transactions involving blood, cartilage, and liver cells[68](index=68&type=chunk) [Intellectual Property](index=16&type=section&id=Intellectual%20Property) VistaGen protects its proprietary technology through patents, trade secrets, and know-how for its product candidates (AV-101, PH94B, PH10) and stem cell technology, relying on confidentiality and innovation - VistaGen protects its proprietary technology through patents, trade secrets, know-how, and in-licensing, covering product candidates, compositions, methods of use, and manufacturing processes[70](index=70&type=chunk)[71](index=71&type=chunk) - Employees, collaborators, consultants, and CROs are required to sign agreements for disclosure and assignment of inventions[72](index=72&type=chunk) [Patents](index=16&type=section&id=Patents) VistaGen holds and licenses granted patents and pending applications in the U.S. and internationally for its product candidates AV-101, PH94B, PH10, and its stem cell technology - AV-101 patents (U.S. and foreign) nominally expire between **2034 and 2040**, covering depression treatment, unit dose formulations, and various CNS disorders[76](index=76&type=chunk)[81](index=81&type=chunk) - PH94B patents (U.S. and foreign) nominally expire between **2025 and 2028**, related to reduction of anticipatory anxiety or social phobic response[77](index=77&type=chunk) - PH10 patents (U.S. and foreign) nominally expire in **2033**, related to treatment of depressive disorders[78](index=78&type=chunk)[82](index=82&type=chunk) - Stem cell technology patents (U.S. and foreign) related to cardiac, blood, cartilage, and liver cells nominally expire between **2021 and 2037**[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk)[83](index=83&type=chunk) [Patent Term](index=18&type=section&id=Patent%20Term) U.S. patents have a 20-year base term, extendable by adjustment or up to five years under Hatch-Waxman for drug development and FDA review delays, with similar foreign provisions - U.S. patents have a **20-year base term**, extendable by patent term adjustment or up to **five years** under Hatch-Waxman Amendments for drug development and FDA review[84](index=84&type=chunk)[85](index=85&type=chunk) - Only one patent per approved drug is eligible for extension, and the application must be submitted before patent expiration[85](index=85&type=chunk) - The FDCA provides **five-year non-patent data exclusivity** for new chemical entities and **three-year marketing exclusivity** for new clinical investigations essential to approval[86](index=86&type=chunk) [Trade Secrets](index=18&type=section&id=Trade%20Secrets) VistaGen relies on trade secrets and know-how for competitive advantage, protecting them through confidentiality and invention assignment agreements with employees, consultants, and partners - VistaGen protects trade secrets and know-how through confidentiality and invention assignment agreements with employees, consultants, scientific advisors, contractors, and partners[88](index=88&type=chunk) - Physical and technological security measures are employed to guard against misappropriation of proprietary information[88](index=88&type=chunk) [Trademarks](index=20&type=section&id=Trademarks) VistaGen owns a registered trademark in the U.S. for 'VISTAGEN' and uses trademarks for 'CardioSafe 3D' and 'LiverSafe 3D' in its business - The company owns a registered U.S. trademark for 'VISTAGEN' (renewed in 2014) and uses 'CardioSafe 3D' and 'LiverSafe 3D' trademarks[90](index=90&type=chunk) [Strategic Transactions and Relationships](index=20&type=section&id=Strategic%20Transactions%20and%20Relationships) Strategic collaborations are key to VistaGen's development, providing flexible access to external R&D, manufacturing, and regulatory capabilities, with plans for further international partnerships - Strategic collaborations are a cornerstone of VistaGen's corporate development strategy, providing flexible access to external capabilities and expertise[92](index=92&type=chunk) - The company outsources manufacturing, nonclinical and clinical development, and regulatory affairs support[92](index=92&type=chunk) - VistaGen may seek additional strategic collaborations for product development and commercialization in regions outside the U.S[92](index=92&type=chunk) [Manufacturing and Supply](index=20&type=section&id=Manufacturing%20and%20Supply) VistaGen relies solely on third-party CDMOs for cGMP manufacturing of clinical and nonclinical materials, planning long-term supply agreements and backup manufacturers to mitigate risks - VistaGen does not own or operate manufacturing facilities and sources all clinical and nonclinical material supply through third-party CDMOs[94](index=94&type=chunk) - CMOs manufacture API and drug product for AV-101, PH94B, and PH10 under cGMP on a purchase order basis[95](index=95&type=chunk) - The company plans to establish long-term commercial supply agreements and explore backup manufacturers to mitigate supply risks[95](index=95&type=chunk) - Manufacturing processes for AV-101, PH94B, and PH10 are being refined and scaled up for clinical trials, with current AV-101 supply deemed sufficient for ongoing studies[96](index=96&type=chunk)[97](index=97&type=chunk) [Sales and Marketing](index=21&type=section&id=Sales%20and%20Marketing) VistaGen plans independent U.S. commercialization for PH94B, while AV-101 and PH10 may involve collaborators, and international markets will be pursued through third-party partnerships - VistaGen plans to commercialize PH94B in the U.S. independently, if approved, by hiring a targeted sales force for psychiatrists, primary care physicians, and pediatricians[100](index=100&type=chunk) - For AV-101 and PH10, U.S. commercialization will be pursued either independently or with a collaborator, if approved[101](index=101&type=chunk) - International commercialization (China, EU, Japan, Hong Kong, South Korea) is planned through collaborations with third-party pharmaceutical companies[102](index=102&type=chunk) [Competition](index=21&type=section&id=Competition) VistaGen faces intense competition in the CNS biopharmaceutical market from companies with greater resources, developing competing therapies for SAD, MDD, NP, and LID, and in stem cell technology - The biopharmaceutical industry is highly competitive, with many companies and institutions developing therapies for CNS disorders like SAD, MDD, NP, and LID[104](index=104&type=chunk) - Competitors often possess significantly greater financial resources, R&D expertise, and established commercial operations[104](index=104&type=chunk)[107](index=107&type=chunk) - For SAD, while no FDA-approved therapies have PH94B's mechanism, other companies are developing treatments, and off-label use of antidepressants and benzodiazepines exists[105](index=105&type=chunk) - For MDD, numerous companies are developing NMDAR-targeted therapies, and AV-101 and PH10 will compete with existing oral antidepressants, ketamine-based therapies, and non-pharmaceutical treatments[106](index=106&type=chunk) - VistaStem's hPSC technology platform faces competition in stem cell, cell therapy, and regenerative medicine markets from various biopharmaceutical companies and established corporations[108](index=108&type=chunk) [Government Regulation](index=23&type=section&id=Government%20Regulation) Drug development, approval, and commercialization are extensively regulated by authorities like the FDA and EU, requiring rigorous testing, data submission, and compliance with manufacturing and marketing rules, with non-compliance leading to sanctions - Drug products are extensively regulated by authorities like the FDA in the U.S. and EMA in the EU, covering research, development, testing, manufacturing, approval, labeling, and marketing[111](index=111&type=chunk) - Failure to comply with regulations can result in sanctions such as refusal of approval, withdrawal of approval, clinical holds, recalls, fines, and criminal prosecution[112](index=112&type=chunk) - The process involves extensive nonclinical studies, IND application, IRB approval, human clinical trials (Phase 1, 2, 3), NDA submission, manufacturing facility inspections (cGMP), and FDA review[113](index=113&type=chunk) [U.S. Drug Development](index=23&type=section&id=U.S.%20Drug%20Development) U.S. drug development is regulated by the FDA, involving extensive nonclinical testing (cGLP), IND submission, and multi-phase human clinical trials (cGCP) to establish safety and efficacy, with each trial requiring IRB approval - Nonclinical development involves synthesizing active components, formulation, manufacturing process, and non-human toxicology/pharmacology studies (cGLP)[113](index=113&type=chunk) - An IND application must be effective before human clinical trials begin, and the FDA can place an IND on clinical hold due to safety concerns[114](index=114&type=chunk) - Clinical trials (Phase 1, 2, 3) must adhere to cGCPs, require informed consent, and are overseen by IRBs; foreign clinical trials can support an NDA if compliant with cGCP[115](index=115&type=chunk)[116](index=116&type=chunk)[118](index=118&type=chunk) [NDA and FDA Review Process](index=25&type=section&id=NDA%20and%20FDA%20Review%20Process) The NDA process requires submitting comprehensive data for FDA review of safety, efficacy, and cGMP compliance, with potential for pre-approval inspections, advisory committee reviews, user fees, and post-approval restrictions - An NDA submission requires nonclinical and clinical results, manufacturing information, and proposed labeling for FDA review of safety, efficacy, and cGMP compliance[120](index=120&type=chunk) - NDAs are subject to PDUFA user fees (approx. **$2.6 million** for clinical data applications) and can receive standard (**10 months**) or priority (**6 months**) review, though timelines are not guaranteed[122](index=122&type=chunk)[124](index=124&type=chunk) - FDA may issue a Complete Response Letter for deficiencies, require additional trials, or impose restrictions, REMS programs, or post-marketing studies upon approval[126](index=126&type=chunk)[127](index=127&type=chunk) [Orphan Drug Designation](index=26&type=section&id=Orphan%20Drug%20Designation) Orphan Drug designation is granted for drugs treating rare diseases, providing seven years of market exclusivity upon first approval, tax incentives, and potentially more limited data requirements - Orphan Drug designation is for drugs treating rare diseases (<**200,000 individuals** in the U.S. or non-recoverable development costs)[128](index=128&type=chunk) - First FDA approval for an orphan-designated product grants **seven years of market exclusivity** for that indication, with exceptions for clinical superiority or inability to supply[130](index=130&type=chunk) - Benefits include tax incentives for clinical research and potential for marketing approval based on more limited safety/efficacy data[130](index=130&type=chunk) [Expedited Development and Review Programs](index=28&type=section&id=Expedited%20Development%20and%20Review%20Programs) FDA programs like Fast Track and Breakthrough Therapy expedite review for serious conditions with unmet needs, allowing rolling submissions and priority review, with accelerated approval possible for surrogate endpoints - Fast Track and Breakthrough Therapy designations expedite review for drugs treating serious/life-threatening conditions with unmet needs, allowing rolling submissions and potentially priority review[132](index=132&type=chunk) - Priority review shortens FDA's action goal from **ten to six months** for drugs offering significant improvement in safety/effectiveness[134](index=134&type=chunk) - Accelerated approval is possible for serious illnesses based on surrogate endpoints, but typically requires post-marketing trials and may include distribution restrictions[135](index=135&type=chunk) [Pediatric Trials](index=30&type=section&id=Pediatric%20Trials) FDASIA requires an initial Pediatric Study Plan (PSP) for new drugs, outlining pediatric studies or justifying waivers, with an approved PIP or waiver also required in the EU before MA application - FDASIA requires an initial Pediatric Study Plan (PSP) for new drugs/indications, outlining pediatric studies or justifying waivers, subject to FDA-sponsor agreement[139](index=139&type=chunk) - In the EU, an approved Pediatric Investigation Plan (PIP) or waiver from the EMA is required before submitting a Marketing Authorization application[155](index=155&type=chunk) [Post-marketing Requirements](index=30&type=section&id=Post-marketing%20Requirements) Approved products face ongoing FDA regulation, including adverse event reporting, labeling updates, promotion rules, and cGMP compliance, with non-compliance leading to sanctions or withdrawal of approval - Approved products are subject to ongoing FDA regulation, including monitoring, adverse event reporting, and compliance with promotion/advertising rules (e.g., no off-label use)[140](index=140&type=chunk) - Manufacturers must comply with cGMP in approved facilities, subject to periodic inspections; non-compliance can lead to enforcement actions, product recalls, or withdrawal of approval[141](index=141&type=chunk) - New safety/effectiveness data may require labeling changes (warnings, contraindications) or implementation of Risk Evaluation and Mitigation Strategies (REMS)[142](index=142&type=chunk) [Other Regulatory Matters](index=31&type=section&id=Other%20Regulatory%20Matters) Drug products are regulated by various U.S. authorities beyond the FDA, including anti-fraud, anti-kickback, and false claims laws, with non-compliance leading to significant penalties and operational disruptions - Drug products are subject to regulation by various U.S. authorities beyond the FDA, including HHS, DOJ, DEA, and state/local governments[143](index=143&type=chunk) - Products may be scheduled as controlled substances under the CSA, imposing registration, security, recordkeeping, and other requirements, which could delay marketing[144](index=144&type=chunk) - Business arrangements are subject to anti-fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA, Physician Payment Sunshine Act) at federal and state levels[145](index=145&type=chunk)[146](index=146&type=chunk) - Non-compliance with these laws can result in significant civil, criminal, and administrative penalties, exclusion from healthcare programs, and operational disruption[146](index=146&type=chunk)[150](index=150&type=chunk) [European Union Drug Development](index=33&type=section&id=European%20Union%20Drug%20Development) EU drug development requires Marketing Authorization (MA), with clinical trials complying with the EU Clinical Trials Directive and cGCP standards, and an approved Pediatric Investigation Plan (PIP) required by the EMA - Medicinal products in the EU require a Marketing Authorization (MA) and are subject to extensive regulatory controls similar to the U.S[152](index=152&type=chunk)[153](index=153&type=chunk) - Clinical trials must comply with the EU Clinical Trials Directive (to be replaced by EU Clinical Trials Regulation) and cGCP, requiring approval from National Competent Authorities and Ethics Committees[153](index=153&type=chunk)[154](index=154&type=chunk) - Pediatric data or an approved Pediatric Investigation Plan (PIP) or waiver is required by the EMA prior to MA application submission[155](index=155&type=chunk) [European Union Drug Review and Approval and Post-marketing Requirements](index=33&type=section&id=European%20Union%20Drug%20Review%20and%20Approval%20and%20Post-marketing%20Requirements) MA in the EEA can be obtained via centralized, mutual recognition, decentralized, or national procedures, with post-marketing compliance required for pharmacovigilance, cGMP, and advertising, with penalties for breaches - MA in the EEA can be obtained through centralized, mutual recognition, decentralized, or national procedures; centralized is mandatory for certain products and valid across all EU Member States[156](index=156&type=chunk)[157](index=157&type=chunk) - MA evaluation has a maximum timeframe of **210 days**, with initial validity for **five years**, renewable for an unlimited period[160](index=160&type=chunk) - Post-marketing requirements include pharmacovigilance, compliance with EU cGMP standards for manufacturing, and adherence to advertising/promotion laws, with penalties for non-compliance[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) [European Union New Chemical Entity Exclusivity](index=35&type=section&id=European%20Union%20New%20Chemical%20Entity%20Exclusivity) Innovative medicinal products in the EU receive eight years of data exclusivity and two years of market exclusivity upon MA, extendable by one year for new therapeutic indications - Innovative medicinal products in the EU receive **eight years of data exclusivity** and **two years of market exclusivity** upon marketing authorization[164](index=164&type=chunk) - Data exclusivity prevents referencing innovator data for generic applications for **eight years**; generic products cannot be marketed for a further **two years**[164](index=164&type=chunk) - The **ten-year period** can be extended by **one year** (to a maximum of **11 years**) if a new therapeutic indication brings significant clinical benefit during the first eight years[164](index=164&type=chunk) [European Union Orphan Designation and Exclusivity](index=35&type=section&id=European%20Union%20Orphan%20Designation%20and%20Exclusivity) EU orphan drug designation provides ten years of market exclusivity and financial incentives for products treating rare conditions, though exclusivity can be reduced or challenged - Orphan drug designation in the EU is for products treating rare conditions (<**5 in 10,000 persons**) or those unlikely to be profitable without incentives[165](index=165&type=chunk) - Designation grants **ten years of exclusivity** in all EU Member States and financial incentives[166](index=166&type=chunk)[167](index=167&type=chunk) - Exclusivity can be reduced to **six years** if the product is sufficiently profitable or challenged if a similar product is safer, more effective, or the original cannot supply sufficient quantities[166](index=166&type=chunk) [Rest of the World Regulation](index=37&type=section&id=Rest%20of%20the%20World%20Regulation) Regulatory requirements for clinical trials, product licensing, pricing, and reimbursement vary significantly across countries outside the U.S. and EU, with non-compliance leading to fines or prosecution - Regulatory requirements for clinical trials, product licensing, pricing, and reimbursement vary widely in countries outside the U.S. and EU[169](index=169&type=chunk) - Clinical trials must adhere to cGCP and applicable local regulatory and ethical principles[169](index=169&type=chunk) - Failure to comply with foreign regulatory requirements can result in fines, suspension of approvals, product recalls, or criminal prosecution[170](index=170&type=chunk) [Coverage and Reimbursement](index=37&type=section&id=Coverage%20and%20Reimbursement) Healthcare cost containment efforts by governments and private payors impact drug pricing and reimbursement, with U.S. reforms and foreign price controls creating complex and uncertain market conditions - Healthcare cost containment efforts by governments and private payors may reduce reimbursement for new products, impacting net revenue[171](index=171&type=chunk) - Market acceptance and sales depend heavily on reimbursement policies, which are not uniform and require extensive scientific and clinical support for each payor[179](index=179&type=chunk) - Foreign countries, especially in Europe, impose strict governmental controls on drug pricing and reimbursement, often requiring cost-effectiveness comparisons[189](index=189&type=chunk) [U.S. Healthcare Reform](index=37&type=section&id=U.S.%20Healthcare%20Reform) U.S. healthcare reforms, particularly the ACA, expanded Medicaid rebates and imposed new reporting requirements, with ongoing legislative changes creating uncertainty for the pharmaceutical industry - The ACA expanded Medicaid rebates and imposed new reporting requirements on drug manufacturers for payments to physicians and teaching hospitals[174](index=174&type=chunk)[175](index=175&type=chunk) - Ongoing legislative changes and legal challenges to the ACA, such as the repeal of the individual mandate, create uncertainty and could adversely affect the industry[177](index=177&type=chunk) - Medicare payments for drugs are subject to a **2% reduction** under sequestration, which could impact future product payments[178](index=178&type=chunk) [Pharmaceutical Pricing and Reimbursement](index=39&type=section&id=Pharmaceutical%20Pricing%20and%20Reimbursement) Sales depend on third-party payor coverage and reimbursement, which are increasingly reduced, with complex price reporting for programs like Medicaid and strict governmental price controls in foreign countries - Sales of approved products depend on coverage and reimbursement from third-party payors, which are increasingly reducing reimbursements[179](index=179&type=chunk) - Participation in the Medicaid Drug Rebate Program and 340B drug pricing program requires complex monthly/quarterly price reporting (AMP, Best Price) and discounts, with potential for civil monetary penalties for errors or late submissions[181](index=181&type=chunk)[182](index=182&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) - Foreign countries, particularly in the EU, have strict governmental price controls and Health Technology Assessments (HTA) that can lead to lower prices and limited reimbursement[189](index=189&type=chunk)[190](index=190&type=chunk) [Stem Cell Technology - United States](index=41&type=section&id=Stem%20Cell%20Technology%20-%20United%20States) U.S. stem cell research, particularly hESCs, is subject to government and ethical guidelines, with political opposition existing, though iPSCs avoid these concerns, and evolving state laws may impact collaborations - U.S. government has established requirements and procedures for hESC research, and VistaGen uses hESC lines that meet these guidelines[191](index=191&type=chunk)[192](index=192&type=chunk) - Political and religious opposition to hESC technology exists, but the company also uses iPSCs, which do not involve embryonic tissues[290](index=290&type=chunk)[293](index=293&type=chunk) - Evolving state legislation on stem cell research could limit future collaborative opportunities[193](index=193&type=chunk) [Subsidiaries and Inter-Corporate Relationships](index=41&type=section&id=Subsidiaries%20and%20Inter-Corporate%20Relationships) VistaGen Therapeutics, Inc. (California), operating as VistaStem Therapeutics, is a wholly-owned subsidiary, which in turn has a wholly-owned subsidiary, Artemis Neuroscience, Inc., all managed by VistaGen's senior management - VistaGen Therapeutics, Inc. (California), dba VistaStem Therapeutics, is a wholly-owned subsidiary[195](index=195&type=chunk) - VistaStem has a wholly-owned subsidiary, Artemis Neuroscience, Inc., a Maryland corporation[195](index=195&type=chunk) - Operations of VistaStem and its subsidiary are managed by VistaGen's senior management team in South San Francisco, California[195](index=195&type=chunk) [Corporate History](index=42&type=section&id=Corporate%20History) VistaGen Therapeutics, Inc. (California) was incorporated in 1998, and in 2011, a strategic merger with Excaliber Enterprises, Ltd. (Nevada) resulted in VistaGen Therapeutics, Inc. (Nevada) as the combined entity - VistaGen Therapeutics, Inc. (Nevada) was formed through a strategic merger in May 2011, where Excaliber Enterprises, Ltd. acquired VistaStem (formerly VistaGen Therapeutics, Inc., California)[197](index=197&type=chunk) - The merger was accounted for as a reverse acquisition, with VistaStem as the accounting acquirer, and no goodwill or other intangible assets recorded[198](index=198&type=chunk) - Consolidated financial statements include VistaStem's activity from May 1998 and the combined entity's activity from May 2011, including inactive subsidiaries Artemis Neuroscience, Inc. and VistaStem Canada, Inc[199](index=199&type=chunk) [Employees](index=42&type=section&id=Employees) As of June 24, 2019, VistaGen employed nine full-time individuals, with five in R&D and four in G&A, relying on third-party collaborators for other functions and maintaining good employee relations - As of June 24, 2019, VistaGen employed **nine full-time employees**, with **five in R&D** and **four in G&A** roles[201](index=201&type=chunk) - The company utilizes a network of CROs, CDMOs, and consultants for other functional areas, complementing internal resources[201](index=201&type=chunk) - VistaGen has not experienced work stoppages and considers employee relations to be good[202](index=202&type=chunk) [Facilities](index=42&type=section&id=Facilities) VistaGen leases approximately 10,900 square feet of office and laboratory space in South San Francisco, California, with the lease expiring on July 31, 2022, deemed suitable for current needs - VistaGen leases **10,900 square feet** of office and laboratory space in South San Francisco, California[204](index=204&type=chunk) - The current lease for the facilities expires on **July 31, 2022**[204](index=204&type=chunk) [Legal Proceedings](index=42&type=section&id=Legal%20Proceedings) VistaGen Therapeutics, Inc. is not currently involved in any legal proceedings - No legal proceedings are currently reported[206](index=206&type=chunk) [Environmental Regulation](index=42&type=section&id=Environmental%20Regulation) VistaGen's business does not require compliance with any extraordinary environmental regulations - The company's business does not require compliance with any extraordinary environmental regulations[208](index=208&type=chunk) [Item 1A. Risk Factors](index=43&type=page&id=Item%201A.%20Risk%20Factors) Investing in VistaGen securities involves significant risks from uncertain drug development, lengthy regulatory approval, intense competition, recurring losses, funding needs, operational challenges, intellectual property disputes, and market volatility - Investing in VistaGen securities involves a high degree of risk, including dependence on successful drug candidate development and commercialization[210](index=210&type=chunk)[211](index=211&type=chunk) - The company faces substantial risks from the lengthy, expensive, and uncertain regulatory approval process for its product candidates[211](index=211&type=chunk)[212](index=212&type=chunk) - Significant financial risks include recurring net losses, negative cash flows, and the need for substantial additional financing to continue operations as a going concern[301](index=301&type=chunk)[305](index=305&type=chunk) - Intellectual property protection is crucial but uncertain, with risks of challenges to patent validity, infringement claims, and difficulties in enforcing rights globally[334](index=334&type=chunk)[339](index=339&type=chunk)[351](index=351&type=chunk) [Risks Related to Product Development, Regulatory Approval and Commercialization](index=43&type=section&id=Risks%20Related%20to%20Product%20Development,%20Regulatory%20Approval%20and%20Commercialization) VistaGen's success depends on regulatory approval and commercialization of drug candidates, a long, expensive, and uncertain process with risks of delays, unexpected side effects, third-party reliance, and market acceptance challenges - The company depends heavily on the success of its current drug candidates, and there is no assurance of obtaining regulatory approval or successful commercialization[211](index=211&type=chunk) - FDA approval is a complex, lengthy, expensive, and uncertain process, with potential for refusal, delay, or limitations due to various factors, including advisory committee recommendations or manufacturing non-compliance[212](index=212&type=chunk) - Results of earlier clinical trials may not be predictive of later-stage trials, and serious adverse events or undesirable side effects could delay or prevent regulatory approval[218](index=218&type=chunk)[222](index=222&type=chunk) - Reliance on third parties (CROs, CMOs) for nonclinical and clinical trials and manufacturing introduces risks of delays, non-compliance, and loss of control over critical aspects of development[229](index=229&type=chunk)[237](index=237&type=chunk) - Even if approved, product candidates may not achieve broad market acceptance due to efficacy, safety, convenience, price, competition, or reimbursement policies[246](index=246&type=chunk) [Risks Related to Our Financial Position](index=65&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position) VistaGen has incurred significant net losses and expects continued losses, raising substantial doubt about its going concern ability without additional financing, which could dilute stockholders or impose restrictive covenants, alongside identified material weaknesses in internal controls - VistaGen has incurred significant net losses since inception (approx. **$24.6 million** in FY2019, **$14.3 million** in FY2018) and expects continued losses, with an accumulated deficit of **$181.1 million** as of March 31, 2019[301](index=301&type=chunk)[454](index=454&type=chunk) - The company's continuing losses and negative cash flows raise substantial doubt about its ability to continue as a going concern, necessitating additional funding[305](index=305&type=chunk)[511](index=511&type=chunk)[535](index=535&type=chunk) - VistaGen has no current product revenues and relies on equity/debt financings, government grants, and collaborations to fund R&D and operations[303](index=303&type=chunk)[310](index=310&type=chunk)[496](index=496&type=chunk) - Future capital requirements are substantial and uncertain, and additional fundraising may cause significant dilution to stockholders or impose restrictive covenants[312](index=312&type=chunk)[313](index=313&type=chunk)[317](index=317&type=chunk) - Material weaknesses in internal control over financial reporting have been identified, primarily due to limited staff size and accounting software limitations, which could affect financial reporting reliability[315](index=315&type=chunk)[685](index=685&type=chunk) Net Loss Attributable to Common Stockholders | Fiscal Year Ended March 31, | Net Loss Attributable to Common Stockholders | | :-------------------------- | :------------------------------------------- | | 2019 | $(25,729,500) | | 2018 | $(15,575,500) | [General Company-Related Risks](index=71&type=section&id=General%20Company-Related%20Risks) VistaGen's success depends on retaining key personnel, managing growth, and mitigating product liability risks, while facing significant compliance burdens, global economic uncertainties, and cybersecurity threats - Success depends on attracting and retaining highly qualified management and scientific personnel, which is challenging in the competitive biotechnology field[321](index=321&type=chunk)[322](index=322&type=chunk) - Reliance on a small number of full-time employees and a diverse network of strategic consultants makes the company vulnerable to loss of key individuals[321](index=321&type=chunk)[323](index=323&type=chunk) - Product liability lawsuits are an inherent risk from clinical testing and commercialization, potentially leading to substantial liabilities, even with insurance[326](index=326&type=chunk)[327](index=327&type=chunk) - Compliance with U.S. public company regulations (e.g., Sarbanes-Oxley Act, SEC, Nasdaq rules) incurs significant administrative workload and expenses[328](index=328&type=chunk)[407](index=407&type=chunk) - Unfavorable global economic/political conditions, natural disasters, and cybersecurity failures could adversely affect business operations and financial condition[329](index=329&type=chunk)[330](index=330&type=chunk)[331](index=331&type=chunk) [Risks Related to Our Intellectual Property Rights](index=73&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property%20Rights) VistaGen's competitive advantage relies on obtaining and enforcing patent protection, which is complex and uncertain, with risks of patent challenges, infringement claims, costly litigation, and changes in patent law - Success depends significantly on obtaining and maintaining patent and proprietary protection for technology, defending patents, preserving trade secrets, and operating without infringing third-party rights[335](index=335&type=chunk) - The issuance, scope, validity, and enforceability of patents are uncertain due to complex legal and factual questions, potential prior art, and varying interpretations of patent laws[339](index=339&type=chunk)[340](index=340&type=chunk)[341](index=341&type=chunk) - Third parties may initiate infringement lawsuits, which are expensive, time-consuming, and could prevent commercialization or require costly licenses[351](index=351&type=chunk)[352](index=352&type=chunk)[358](index=358&type=chunk)[360](index=360&type=chunk) - Reliance on licensed intellectual property means risks of losing rights if agreements are breached or licensors fail to abide by terms[373](index=373&type=chunk)[374](index=374&type=chunk) - Some licensed IP may be subject to government 'march-in' rights or manufacturing preferences, limiting exclusive rights[379](index=379&type=chunk)[381](index=381&type=chunk)[382](index=382&type=chunk) - Changes in U.S. patent law (e.g., America Invents Act, Supreme Court rulings) could diminish patent value and protection[387](index=387&type=chunk)[388](index=388&type=chunk)[389](index=389&type=chunk)[390](index=390&type=chunk) [Risks Related to our Securities](index=83&type=section&id=Risks%20Related%20to%20our%20Securities) VistaGen's common stock faces delisting risk from Nasdaq due to minimum bid price non-compliance, high market volatility, potential dilution from future equity sales, and significant influence from a limited number of institutional stockholders - VistaGen received a Nasdaq notification for non-compliance with the minimum bid price requirement (**$1.00 per share**) and has until **December 16, 2019**, to regain compliance, with potential for delisting[396](index=396&type=chunk) - The market price for common stock is highly volatile, influenced by clinical trial results, regulatory approvals, competition, and general market conditions[400](index=400&type=chunk)[401](index=401&type=chunk) - Future sales and issuances of common stock, including conversions of preferred stock and warrant exercises, could cause substantial dilution to existing stockholders and depress the stock price[400](index=400&type=chunk)[402](index=402&type=chunk) - A limited number of institutional stockholders own a substantial portion of preferred stock convertible into common stock, potentially limiting other stockholders' influence over key transactions[403](index=403&type=chunk) - The company does not intend to pay dividends on common stock, making stock price appreciation the sole source of investment return[406](index=406&type=chunk) [Item 1B. Unresolved Staff Comments](index=87&type=page&id=Item%201B.%20Unresolved%20Staff%20Comments) As a smaller reporting company, VistaGen Therapeutics, Inc. is not required to provide disclosures regarding unresolved staff comments - The company qualifies as a smaller reporting company and is not required to disclose unresolved staff comments[410](index=410&type=chunk) [Item 2. Properties](index=87&type=page&id=Item%202.%20Properties) VistaGen's corporate headquarters and laboratories are located in South San Francisco, California, occupying approximately 10,900 square feet under a lease expiring on July 31, 2022 - Corporate headquarters and laboratories are located at 343 Allerton Avenue, South San Francisco, California[411](index=411&type=chunk) - The company leases approximately **10,900 square feet** of office and lab space[411](index=411&type=chunk) - The current lease expires on **July 31, 2022**[411](index=411&type=chunk) [Item 3. Legal Proceedings](index=87&type=page&id=Item%203.%20Legal%20Proceedings) VistaGen Therapeutics, Inc. is not currently involved in any legal proceedings - No legal proceedings are currently reported[412](index=412&type=chunk) [Item 4. Mine Safety Disclosures](index=87&type=page&id=Item%204.%20Mine%20Safety%20Disclosures) The disclosures in this section are not applicable to VistaGen Therapeutics, Inc - Mine Safety Disclosures are not applicable to the company[413](index=413&type=chunk) [PART II](index=88&type=section&id=PART%20II) This section covers VistaGen's common equity market, selected financial data, management's discussion and analysis of financial condition, and internal controls [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=88&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) VistaGen's common stock trades on Nasdaq under 'VTGN', with 42.6 million shares outstanding and 6,000 stockholders as of June 24, 2019, and no cash dividends are anticipated - Common stock has traded on The Nasdaq Capital Market under "VTGN" since **May 11, 2016**[415](index=415&type=chunk) - As of **June 24, 2019**, there were **42,622,965 shares** of common stock outstanding and approximately **6,000 stockholders** of record[418](index=418&type=chunk) - The company has never paid cash dividends on common stock and does not anticipate doing so in the foreseeable future[419](index=419&type=chunk)[406](index=406&type=chunk) - Series B Preferred Stock accrues dividends at **10% per annum**, payable in unregistered common stock upon conversion[419](index=419&type=chunk) Common Stock High and Low Sales Prices (Fiscal Years Ended March 31) | Period | High ($) | Low ($) | | :-------------------------- | :------- | :------ | | Year Ending March 31, 2019: | | | | First quarter (June 30, 2018) | 1.76 | 0.81 | | Second quarter (Sept 30, 2018) | 1.53 | 1.20 | | Third quarter (Dec 31, 2018) | 2.44 | 1.26 | | Fourth quarter (Mar 31, 2019) | 1.86 | 1.05 | | Year Ending March 31, 2018: | | | | First quarter (June 30, 2017) | 2.40 | 1.72 | | Second quarter (Sept 30, 2017) | 2.05 | 1.53 | | Third quarter (Dec 31, 2017) | 2.65 | 0.69 | | Fourth quarter (Mar 31, 2018) | 1.79 | 0.86 | [Market Information](index=88&type=section&id=Market%20Information) VistaGen's common stock has traded on The Nasdaq Capital Market under "VTGN" since May 11, 2016, with 42,622,965 shares outstanding and approximately 6,000 stockholders as of June 24, 2019 - Common stock traded on The Nasdaq Capital Market under "VTGN" since **May 11, 2016**; previously on the OTC Marketplace[415](index=415&type=chunk) - As of **June 24, 2019**, the closing price was **$0.7544 per share**[417](index=417&type=chunk) - **42,622,965 shares** of common stock were outstanding as of **June 24, 2019**, with approximately **6,000 stockholders** of record[418](index=418&type=chunk) [Dividend Policy](index=88&type=section&id=Dividend%20Policy) VistaGen has never paid cash dividends on common stock and does not anticipate doing so, intending to retain earnings for business development, though Series B Preferred Stock accrues 10% annual dividends - The company has never paid cash dividends on common stock and does not intend to in the foreseeable future, prioritizing retention of earnings for business development[419](index=419&type=chunk)[406](index=406&type=chunk) - Series B Preferred Stock accrues **10% annual dividends**, payable in unregistered common stock upon conversion[419](index=419&type=chunk) [Recent Sales of Unregistered Securities](index=88&type=section&id=Recent%20Sales%20of%20Unregistered%20Securities) VistaGen Therapeutics, Inc. has no recent sales of unregistered securities to report in this section - No recent sales of unregistered securities are reported[420](index=420&type=chunk) [Item 6. Selected Financial Data](index=88&type=page&id=Item%206.%20Selected%20Financial%20Data) As a smaller reporting company under federal securities laws, VistaGen Therapeutics, Inc. is not required to provide selected financial data in this section - The company qualifies as a smaller reporting company and is not required to provide selected financial data[421](index=421&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=89&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on VistaGen's financial condition and results, highlighting its clinical-stage status, recurring losses, critical accounting policies, and financial performance for fiscal years 2019 and 2018 - VistaGen is a clinical-stage biopharmaceutical company focused on CNS disorders, primarily MDD and SAD, with no recurring revenue[425](index=425&type=chunk)[471](index=471&type=chunk) - The company has incurred significant net losses (FY2019: **$24.6 million**; FY2018: **$14.3 million**) and expects losses to continue due to ongoing R&D[454](index=454&type=chunk) - R&D expenses increased significantly in FY2019 to **$17.1 million** (from **$7.8 million** in FY2018), primarily due to non-cash acquisition of PH94B/PH10 licenses and ELEVATE Study costs[472](index=472&type=chunk) - General and administrative expenses increased to **$7.5 million** in FY2019 (from **$6.4 million** in FY2018), mainly due to increased non-cash stock-based compensation[482](index=482&type=chunk) - The company's cash position (**$13.1 million** at March 31, 2019) and recurring losses raise substantial doubt about its ability to continue as a going concern without additional financing[497](index=497&type=chunk)[498](index=498&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=89&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This Annual Report contains forward-looking statements about VistaGen's future operations, financial position, and strategy, which involve substantial risks and uncertainties, and actual results may differ materially - The Annual Report contains forward-looking statements regarding future operations, financial position, and strategy[422](index=422&type=chunk) - These statements involve substantial risks and uncertainties, such as financing, R&D results, regulatory impact, and competition[422](index=422&type=chunk) - Actual results may differ materially from projections, and the company is not obligated to update these statements[423](index=423&type=chunk)[424](index=424&type=chunk) [Business Overview](index=89&type=section&id=Business%20Overview) VistaGen is a clinical-stage biopharmaceutical company focused on CNS disorders, primarily MDD and SAD, with a pipeline including PH94B, AV-101, and PH10, and stem cell technology through VistaStem Therapeutics - VistaGen is a clinical-stage biopharmaceutical company focused on CNS diseases, primarily MDD and SAD, affecting millions globally[425](index=425&type=chunk)[426](index=426&type=chunk)[427](index=427&type=chunk) - PH94B (neuroactive nasal spray) is in Phase 3 for SAD, offering rapid-onset effects without systemic exposure[428](index=428&type=chunk) - AV-101 (oral prodrug) is in Phase 2 for MDD (ELEVATE Study, results H2 2019) and has Fast Track designation for MDD and neuropathic pain[429](index=429&type=chunk) - PH10 (neuroactive nasal spray) is in Phase 2 for MDD, showing rapid antidepressant effects without psychological side effects[430](index=430&type=chunk) - VistaStem Therapeutics applies hPSC technology for drug rescue (CardioSafe 3D) and regenerative medicine, including a sublicense to BlueRock Therapeutics for cardiac stem cells[432](index=432&type=chunk) [Critical Accounting Policies and Estimates](index=90&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) VistaGen's financial statements rely on significant judgments and estimates for critical accounting policies, including revenue recognition, impairment, R&D, stock-based compensation, warrant liability, and income taxes, which are inherently uncertain - Critical accounting policies include revenue recognition, impairment of long-lived assets, R&D, stock-based compensation, warrant liability, and income taxes[433](index=433&type=chunk) - Significant judgments and estimates are required for these policies, such as valuing options/warrants and accruing clinical trial costs, which are inherently uncertain[433](index=433&type=chunk) - The company adopted ASC Topic 606 for revenue recognition and is evaluating ASU 2018-07 (stock compensation) and ASU 2016-02 (leases)[435](index=435&type=chunk)[575](index=575&type=chunk)[574](index=574&type=chunk) [Revenue Recognition](index=91&type=section&id=Revenue%20Recognition) VistaGen adopted ASC Topic 606 for revenue recognition, applying a five-step model to identify contracts, performance obligations, transaction price, allocation, and recognition as obligations are satisfied - Adopted ASC Topic 606 as of **April 1, 2018**, with no change to accumulated deficit, recognizing revenue when customer obtains control of goods/services[435](index=435&type=chunk)[436](index=436&type=chunk) - The five-step model involves identifying contracts and distinct performance obligations, determining transaction price (including variable consideration and milestones), allocating price based on SSP, and recognizing revenue[436](index=436&type=chunk)[437](index=437&type=chunk)[438](index=438&type=chunk)[439](index=439&type=chunk)[440](index=440&type=chunk)[441](index=441&type=chunk)[442](index=442&type=chunk)[443](index=443&type=chunk) - Milestone payments are included in transaction price when probable of achievement; sales-based royalties are recognized when related sales occur[441](index=441&type=chunk)[442](index=442&type=chunk) [Impairment of Long-Lived Assets](index=92&type=section&id=Impairment%20of%20Long-Lived%20Assets) Long-lived assets are reviewed for impairment when carrying amounts may not be recoverable, with losses recognized if undiscounted future cash flows are insufficient, though no losses have been recorded to date - Long-lived assets are reviewed for impairment when circumstances indicate carrying amount may not be recoverable[444](index=444&type=chunk) - Impairment loss is recognized if undiscounted future cash flows are less than carrying amount, writing down assets to estimated fair values[444](index=444&type=chunk) - No impairment losses on long-lived assets have been recorded to date[547](index=547&type=chunk) [Research and Development Expenses](index=92&type=section&id=Research%20and%20Development%20Expenses) R&D expenses include internal and external costs, expensed as incurred, with accruals for clinical trials based on progress, and product license costs expensed immediately if no alternative future uses exist - R&D expenses comprise internal costs (salaries, stock-based compensation) and external costs (clinical/non-clinical development, stem cell R&D, patent prosecution)[445](index=445&type=chunk)[559](index=559&type=chunk) - All R&D costs are expensed as incurred, and accruals for clinical trial costs are based on progress and contracted amounts[445](index=445&type=chunk)[446](index=446&type=chunk)[559](index=559&type=chunk)[560](index=560&type=chunk) - Costs for product/technology licenses are expensed immediately if regulatory approval or technical feasibility is not achieved and there are no alternative future uses, as seen with the **$4.25 million** PH94B and PH10 license acquisitions in FY2019[447](index=447&type=chunk)[561](index=561&type=chunk) [Stock-Based Compensation](index=92&type=section&id=Stock-Based%20Compensation) Non-cash compensation expense for stock-based awards is recognized based on grant date fair value over the vesting period, estimated using the Black-Scholes model with peer group volatility - Non-cash compensation expense for stock-based awards is recognized based on grant date fair value over the vesting period[448](index=448&type=chunk)[562](index=562&type=chunk) - The Black-Scholes option pricing model is used to estimate fair value, with key inputs being expected term (simplified method) and estimated volatility (historical data of peer companies)[450](index=450&type=chunk) - For non-employee option grants, fair value is re-measured as awards vest, and any increase is expensed[448](index=448&type=chunk)[562](index=562&type=chunk) [Warrants Issued in Connection with Equity Financing](index=94&type=section&id=Warrants%20Issued%20in%20Connection%20with%20Equity%20Financing) Warrants are generally equity components unless cash settlement or other features require liability treatment, in which case fair value changes are recognized as non-cash gain or loss - Warrants are generally accounted for as an equity component unless cash settlement or other features require liability treatment[451](index=451&type=chunk)[568](index=568&type=chunk) - For warrants requiring liability treatment, fair value is recorded as a liability at each reporting period, with changes recognized as non-cash gain or loss[451](index=451&type=chunk)[568](index=568&type=chunk) [Income Taxes](index=94&type=section&id=Income%20Taxes) VistaGen uses the asset and liability approach for income taxes, recognizing deferred tax assets and liabilities with a valuation allowance, impacted by the Tax Cuts and Jobs Act of 2017 - Income taxes are accounted for using the asset and liability approach, recognizing deferred tax assets and liabilities for temporary differences and carryforwards[452](index=452&type=chunk)[563](index=563&type=chunk) - Deferred tax assets are measured using enacted tax rates, and a valuation allowance is established to reduce them to the expected realized amount[452](index=452&type=chunk)[563](index=563&type=chunk) - The Tax Cuts and Jobs Act of 2017 reduced the U.S. federal corporate income tax rate to **21%**, impacting deferred tax calculations[629](index=629&type=chunk) [Recent Accounting Pronouncements](index=94&type=section&id=Recent%20Accounting%20Pronouncements) VistaGen refers to Note 3 of the Consolidated Financial Statements for information on recent accounting pronouncements - Information on recent accounting pronouncements is provided in Note 3 to the Consolidated Financial Statements[453](index=453&type=chunk) [Financial Operations Overview and Results of Operations](index=94&type=section&id=Financial%20Operations%20Overview%20and%20Results%20of%20Operations) VistaGen has not achieved recurring revenue and has incurred substantial net losses since inception, with operations in Fiscal Year 2019 focused on advancing product candidates and expanding intellectual property, leading to increased R&D and G&A expenses [Net Loss](index=94&type=section&id=Net%20Loss) VistaGen has incurred substantial net losses since inception, reaching an accumulated deficit of approximately $181.1 million by March 31, 2019, with net losses of $24.6 million in Fiscal 2019 and $14.3 million in Fiscal 2018 - No recurring revenue generated since inception; accumulated deficit of approximately **$181.1 million** as of **March 31, 2019**[454](index=454&type=chunk) Net Loss (Fiscal Years Ended March 31) | Fiscal Year | Net Loss (in millions) | | :---------- | :--------------------- | | 2019 | $(24.6) | | 2018 | $(14.3) | - Losses are expected to continue due to ongoing clinical development of AV-101, PH94B, and PH10[454](index=454&type=chunk) [Summary of Our Fiscal Year Ended March 31, 2019](index=94&type=section&id=Summary%20of%20Our%20Fiscal%20Year%20Ended%20March%2031,%202019) In Fiscal 2019, VistaGen advanced AV-101 development, acquired PH94B and PH10 licenses for $4.25 million, secured broad patent protection, and raised $18.7 million through equity offerings and warrant exercises - Continued AV-101 development, including the ELEVATE Study and Phase 3-enabling nonclinical studies[456](index=456&type=chunk) - Acquired exclusive worldwide licenses for PH94B and PH10 for an aggregate of **$4.25 million** in unregistered common stock[458](index=458&type=chunk)[472](index=472&type=chunk) - Secured broad patent protection for AV-101, PH94B, PH10, and stem cell technology in various countries[459](index=459&type=chunk)[460](index=460&type=chunk)[461](index=461&type=chunk)[462](index=462&type=chunk)[463](index=463&type=chunk) Financing Activities (Fiscal Year 2019) | Source | Proceeds | | :-------------------------------- | :--------- | | Summer 2018 Private Placement | $5,756,200 | | Fall 2018 Private Placement | $812,500 | | Spring 2019 Public Offering (net) | $10,400,000 | | Warrant Exercises | $605,700 | [Comparison of Fiscal Years Ended March 31, 2019 and 2018](index=96&type=section&id=Comparison%20of%20Fiscal%20Years%20Ended%20March%2031,%202019%20and%202018) VistaGen reported no revenue for both Fiscal 2019 and 2018. Operating expenses increased significantly from $14.2 million in Fiscal 2018 to $24.6 million in Fiscal 2019, driven primarily by a substantial rise in research and development expenses due to product license acquisitions and clinical trial costs Operating Results (Amounts in thousands) | Metric | Fiscal Year Ended March 31, 2019 | Fiscal Year Ended March 31, 2018 | | :-------------------------- | :------------------------------- | :------------------------------- | | Research and development | $17,098 | $7,763 | | General and administrative | $7,458 | $6,437 | | Total operating expenses | $24,556 |

VistaGen® | --- | --- | --- | --- | --- | |-------|----------------------------------------------|-------|-------|------------------| | | | | | | | | | | | | | | LOOKING BEYOND CURRENT | | | | | | | | | | | | TREATMENTS FOR | | | | | | CENTRAL NERVOUS SYSTEM (CNS) | | | | | | DISEASES AND DISORDERS WITH HIGH UNMET NEED | | | www.vistagen.com | | | :VTGN | | | Spring 2019 | vistagen.co m www.vistagen.comForward-looking www.Statements This presentation contains "forward-looking statements" within the meaning ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2018 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 001-37761 VistaGen Therapeutics, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of inc ...