VistaGen Therapeutics(VTGN) - 2023 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Condensed Consolidated Financial Statements (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 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 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 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 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][21] - 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] - Common stock shares issued increased from 206,676,620 at March 31, 2022, to 207,052,010 at December 31, 2022[21] Notes to the Condensed Consolidated Financial Statements This section provides detailed explanations and breakdowns of financial figures, covering business description, accounting policies, and specific financial activities Note 1. Description of Business 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] Our Product Candidates 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][27][30][33] - 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][37][39] - 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][41] 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] Note 2. Basis of Presentation 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][49] - Operations have been financed primarily through equity and debt securities ($208.7 million) and government grants/collaborations ($22.7 million)[47] - 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] - The company is evaluating cash resources and seeking additional financing through equity/debt sales, non-dilutive grants, and strategic collaborations[49][50] - 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] Note 3. Summary of Significant Accounting Policies 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] 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] - 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][97] Note 4. Prepaid Expenses and Other Current Assets 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] Note 5. Property and Equipment, Net 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] Note 6. Accrued Expenses 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] Note 7. Note Payable 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] Note 8. Capital Stock 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] - During the nine months ended December 31, 2022, stock option exercises generated $104,400, and ESPP purchases generated $63,100[107] - 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][109] 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 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] - 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] - 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] Note 10. Commitments and Contingencies 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][119] 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] Note 11. Sublicensing and Collaborative Agreements 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][127] - 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] Note 12. Subsequent Events 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][135] - Consideration for the Pherin Acquisition included 12,410,181 unregistered shares of common stock and approximately $125,800 in cash[134] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - Actual results may differ materially due to competitive and rapidly changing environments, and the company is not obligated to update these statements[138][139] Business Overview 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] - 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][163][167] - 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][173] - 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][175] - 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] Financial Operations Overview and Results of Operations 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 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] - 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] - 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][197] - 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] - COVID-19 pandemic caused delays in supply delivery and disruptions in third-party services, potentially impacting clinical and nonclinical programs[200] Results of Operations - Three Months Ended December 31, 2022 and 2021 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] - 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][209] - 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][214][219][220] - Warrant modification expense of $77,400 was recognized in Q4 2022 due to extending the exercisability of outstanding warrants[225] Results of Operations - Nine Months Ended December 31, 2022 and 2021 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] - 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][237] - 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][241][243][245] - Warrant modification expense of $77,400 was recognized for extending warrant exercisability[253] Liquidity and Capital Resources 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] - The company plans to seek additional financing through equity/debt sales, non-dilutive government grants, and strategic partnering collaborations[261] - 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] - 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] Off-Balance Sheet Arrangements 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] Recent Accounting Pronouncements 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] Item 4. Controls and Procedures 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 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] Internal Control over Financial Reporting 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] PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings The company reported no legal proceedings - The company is not currently involved in any legal proceedings[272] Item 1A. Risk Factors 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 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 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] - Obtaining FDA approval is a complex, lengthy, expensive, and uncertain process, with many factors potentially leading to delays or denial[280] - 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] - Fast Track designation does not guarantee faster development or approval, and results from earlier clinical trials may not predict later-stage success[287][290] - 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][306][308] - If product candidates are regulated as controlled substances, additional regulatory requirements could delay marketing and increase costs[313][314] - Failure to establish broad sales and marketing capabilities or achieve market acceptance could limit revenue generation[316][318] - The pharmaceutical industry is highly competitive, with many companies having greater resources, posing a significant challenge to Vistagen's market position[328][331] Risks Related to Our Financial Position 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] - 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][369] - Future equity-based financing will likely cause substantial dilution to existing stockholders, and debt financing could impose restrictive covenants[380][382] - 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] General Company-Related Risks 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][385] - Product liability lawsuits, inherent in clinical testing and commercialization, could result in substantial liabilities not fully covered by insurance, or require commercialization limits[390][391] - Unfavorable global economic or political conditions, including those triggered by COVID-19, could adversely affect business and access to capital markets[392] - Cybersecurity or other system failures, especially with increased remote work, pose risks of data breaches, operational disruptions, and damage to reputation[394][396] Risks Related to Our Intellectual Property Rights 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] - The issuance, scope, validity, and enforceability of patents are uncertain due to complex legal and factual questions, prior art, and varying international standards[405][406] - 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][424] - 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][442] - 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][450] - 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][457][458] Risks Related to our Securities 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][467] - The market price of common stock is highly volatile, influenced by clinical trial results, regulatory approvals, competition, and general market conditions[469][471] - Future sales and issuances of common stock could cause the stock price to decline and dilute existing stockholders' ownership[469][470] - The company does not intend to pay dividends, so investment return depends solely on stock price appreciation[474] - Significant costs are incurred to comply with corporate governance, federal securities law, and accounting requirements, diverting resources from core business activities[475] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 3. Defaults Upon Senior Secured Securities The company reported no defaults upon senior secured securities - No defaults upon senior secured securities were reported[480] Item 6. Exhibits 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 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]