VistaGen Therapeutics(VTGN) - 2020 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) Presents unaudited financial statements, including balance sheets, operations, cash flows, and notes, highlighting going concern uncertainty Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (as of September 30, 2019 vs. March 31, 2019) | Metric | September 30, 2019 (Unaudited) (USD) | March 31, 2019 (USD) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $4,072,400 | $13,100,300 | | Total current assets | $4,676,900 | $13,651,200 | | Total assets | $8,735,500 | $14,011,700 | | Liabilities & Equity | | | | Total current liabilities | $4,117,300 | $2,800,900 | | Total liabilities | $12,365,900 | $6,936,500 | | Total stockholders' (deficit) equity | $(3,630,400) | $7,075,200 | Condensed Consolidated Statements of Operations and Comprehensive Loss Operating Results Summary | Metric | Three Months Ended Sep 30, 2019 (USD) | Three Months Ended Sep 30, 2018 (USD) | Six Months Ended Sep 30, 2019 (USD) | Six Months Ended Sep 30, 2018 (USD) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $4,205,200 | $5,261,100 | $8,519,100 | $8,004,800 | | General and administrative | $1,146,100 | $2,171,000 | $3,056,200 | $3,637,300 | | Loss from operations | $(5,351,300) | $(7,432,100) | $(11,575,300) | $(11,642,100) | | Net loss | $(5,335,900) | $(7,435,000) | $(11,545,800) | $(11,649,500) | | Net loss attributable to common stockholders | $(5,649,700) | $(7,718,600) | $(12,162,100) | $(12,206,600) | | Basic and diluted net loss per common share | $(0.13) | $(0.30) | $(0.29) | $(0.50) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary (Six Months Ended September 30) | Metric | 2019 (USD) | 2018 (USD) | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,898,200) | $(7,063,100) | | Net cash used in investing activities | $0 | $(169,800) | | Net cash (used in) provided by financing activities | $(129,700) | $4,686,200 | | Net decrease in cash and cash equivalents | $(9,027,900) | $(2,546,700) | | Cash and cash equivalents at end of period | $4,072,400 | $7,831,600 | Notes to Condensed Consolidated Financial Statements Detailed notes support financial statements, covering CNS product pipeline, going concern uncertainty, accounting policies, and subsequent private placement - The company is a clinical-stage biopharmaceutical firm focused on CNS diseases, with a portfolio including AV-101 for Major Depressive Disorder (MDD), PH10 for MDD, and PH94B for Social Anxiety Disorder (SAD)[22][23][25] - The company's financial statements have been prepared on a going concern basis, but recurring losses, negative cash flows, and a cash balance of approximately $4.1 million at September 30, 2019, raise substantial doubt about its ability to fund operations for the next twelve months without additional financing[32][34] - On April 1, 2019, the company adopted the new lease accounting standard (ASC 842), resulting in the recognition of approximately $4.3 million in total lease liabilities and approximately $3.9 million in right-of-use assets on the balance sheet[57] - Subsequent to the quarter's end, between October 30 and November 6, 2019, the company completed a private placement, selling 600,000 units for $1.00 each, raising aggregate cash proceeds of $600,000[79] Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial performance, detailing operating expense changes driven by clinical trials and reiterating liquidity challenges and going concern doubts Results of Operations Net loss decreased for three months due to a 2018 non-cash expense, while six-month net loss was stable, with R&D and G&A changes detailed Comparison of Operating Expenses (Three Months Ended Sep 30) | Expense Category | 2019 (USD) | 2018 (USD) | Change (USD) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Research & Development | $4.2M | $5.3M | $(1.1M) | Decrease primarily due to a $2.25M non-cash expense in 2018 for PH94B/PH10 license acquisition, partially offset by increased 2019 costs for the ELEVATE Study. | | General & Administrative | $1.1M | $2.2M | $(1.1M) | Decrease due to lower stock-based compensation and absence of bonus payments made in 2018. | Comparison of Operating Expenses (Six Months Ended Sep 30) | Expense Category | 2019 (USD) | 2018 (USD) | Change (USD) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Research & Development | $8.5M | $8.0M | $0.5M | Increase driven by higher costs for the ELEVATE Study and PH94B/PH10 development, offsetting the non-recurring $2.25M license acquisition cost from 2018. | | General & Administrative | $3.1M | $3.6M | $(0.5M) | Decrease due to lower stock-based compensation and non-recurring 2018 bonus payments. | Liquidity and Capital Resources Cash of $4.1 million is insufficient for future operations, raising substantial doubt about going concern, necessitating additional capital - Cash and cash equivalents decreased to $4.1 million at September 30, 2019, from $13.1 million at March 31, 2019[146][150] - The company explicitly states that its current cash position is not sufficient to fund planned operations for the next twelve months, which raises substantial doubt about its ability to continue as a going concern[146][149] - Future capital requirements depend on many factors, including the costs of pivotal Phase 3 trials for PH94B and AV-101, and Phase 2b trials for PH10[148][250] Controls and Procedures Management concluded disclosure controls were effective but identified two material weaknesses in internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of the end of the period[155] - The company identified two ongoing material weaknesses in internal control over financial reporting: lack of segregation of duties and inadequate accounting software functionality[156] PART II. OTHER INFORMATION Legal Proceedings The company reports no legal proceedings during the period - The company had no legal proceedings to report[158] Risk Factors Extensive risks include dependence on clinical-stage candidates, regulatory uncertainty, third-party reliance, significant losses, and need for additional financing Risks Related to Product Development, Regulatory Approval and Commercialization Success hinges on clinical-stage candidates, facing uncertain regulatory approval, reliance on third-party manufacturing and trials, and market acceptance challenges - The business depends heavily on the successful development, regulatory approval, and commercialization of its three clinical-stage candidates: AV-101, PH94B, and PH10[160] - The company relies completely on third-party Contract Manufacturing Organizations (CMOs) for the manufacturing of its product candidates and has no internal manufacturing capabilities[182] - The company relies on third parties such as Contract Research Organizations (CROs) to conduct its clinical trials, leading to less direct control over timing and execution[177][178] Risks Related to Our Financial Position History of significant net losses, need for substantial additional financing, going concern doubts, and material weaknesses in internal controls are key risks - The company has incurred significant net losses since inception, with an accumulated deficit of approximately $192.7 million as of September 30, 2019, and may never achieve profitability[244] - The company requires additional financing to continue as a going concern, as its auditors have indicated that continuing losses and negative cash flows raise substantial doubt about this ability[248] - Material weaknesses in internal control over financial reporting have been identified related to segregation of duties and accounting software, which could harm the business and stock price if not addressed[256] Risks Related to Our Intellectual Property Rights Success depends on obtaining and maintaining patent protection, with risks of invalidation or loss of licensed IP rights for key product candidates - The company's success depends on its ability to obtain and maintain patent and other proprietary protection for its technology and product candidates[276][277] - The company is dependent on licensed intellectual property for PH10, PH94B, and certain stem cell technologies. Breaching these license agreements could result in the loss of rights to develop and commercialize these candidates[317][318] Unregistered Sales of Equity Securities and Use of Proceeds A post-quarter private placement raised $600,000 by selling 600,000 units of common stock and warrants for general corporate purposes Fall 2019 Private Placement Details | Metric | Detail | | :--- | :--- | | Date | October 30 - November 6, 2019 | | Securities Sold | 600,000 units (1 common share + 0.5 warrant per unit) | | Price Per Unit | $1.00 | | Warrants Issued | 300,000 | | Warrant Exercise Price | $2.00 per share | | Gross Proceeds | $600,000 | | Use of Proceeds | General corporate purposes | Defaults Upon Senior Securities The company reports no defaults upon senior securities during the period - The company had no defaults upon senior securities to report[354] Exhibits Exhibits filed with Form 10-Q include private placement agreements and officer certifications - Exhibits filed include forms for the Fall 2019 Private Placement, officer certifications (302 and 906), and XBRL instance documents[355]