Psyence(PBM) - 2025 Q4 - Annual Report

FORM 20-F Filing Information This section provides details on the company's Form 20-F filing, including its type, registrant information, and current issuer status Filing Type and Registrant Details This document is an Annual Report on Form 20-F for the fiscal year ended March 31, 2025, filed by Psyence Biomedical Ltd., an Ontario, Canada-organized company. Its securities, Common shares (PBM) and Warrants (PBMWW), are registered on The Nasdaq Stock Market LLC - The filing is an Annual Report on Form 20-F for the fiscal year ended March 31, 2025[2] - Registrant is Psyence Biomedical Ltd., organized under the laws of Ontario, Canada[2] Registered Securities | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common shares, without par value | PBM | The Nasdaq Stock Market LLC | | Warrants, each exercisable to purchase one Common Share at an exercise price of $6,874.13 per share | PBMWW | The Nasdaq Stock Market LLC | Issuer Status and Outstanding Shares As of March 31, 2025, Psyence Biomedical Ltd. had 568,021 common shares outstanding. The company is classified as a non-accelerated filer and an emerging growth company, and it prepares its financial statements in accordance with International Financial Reporting Standards (IFRS) - The number of outstanding common shares as of March 31, 2025, was 568,021[4] Filer Status | Filer Status | Checkmark | | :---------------------- | :-------- | | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Emerging growth company | ☒ | - The registrant uses International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board to prepare its financial statements[6] Cautionary Note Regarding Forward-Looking Statements This section warns readers about forward-looking statements, their inherent risks, and the factors that could cause actual results to differ materially Nature of Forward-Looking Statements This section highlights that the report contains forward-looking statements regarding the company's plans, objectives, and financial performance, which are based on management's beliefs and assumptions. These statements involve known and unknown risks and uncertainties that could cause actual results to differ materially from expectations - Forward-looking statements relate to plans, objectives, and expectations for business, operations, and financial performance, identifiable by terms like 'may,' 'should,' 'expect,' 'intend,' 'plan,' 'anticipate,' 'believe,' 'estimate,' 'predict,' 'potential,' 'continue'[11] - Such statements are based on management's beliefs and assumptions, but involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[11] - Readers are cautioned not to rely on these statements and to review risk factors discussed in the report and future SEC filings[12] Specific Risks for Forward-Looking Statements Key risks affecting forward-looking statements include the ability to maintain Nasdaq listing, stock price volatility, success in retaining key personnel, and factors related to product development such as clinical trial results, regulatory approvals, intellectual property, supply chain, and commercialization - Ability to maintain Nasdaq listing for Common Shares or Warrants[14] - Volatility in the price of Psyence Biomedical's securities due to competitive and regulated industries, performance variations, regulatory changes, and capital structure changes[14] - Success in retaining or recruiting officers, key employees, or directors[14] - Factors relating to business, operations, and financial performance, including achieving successful clinical results, obtaining regulatory approval for product candidates, securing intellectual property rights, commercializing products, dependence on third-party licenses and material supply, and responding to economic conditions[14] PART I This section covers foundational information including director identities, offer statistics, key company data, and a comprehensive analysis of risk factors ITEM 1. Identity of Directors, Senior Management and Advisers This item states that the information regarding the identity of directors, senior management, and advisers is not applicable in this section, implying it is covered elsewhere in the report - Information for this item is not applicable in this section[16] ITEM 2. Offer Statistics and Expected Timetable This item indicates that information regarding offer statistics and expected timetable is not applicable in this report - Information for this item is not applicable[17] ITEM 3. Key Information This section provides key information about the company, including its capitalization, indebtedness, reasons for any offer, use of proceeds, and a comprehensive list of risk factors associated with investing in its securities, its operations, the psychedelic therapy market, intellectual property, and ownership of its securities A. [Reserved.] This section is reserved and contains no information - This section is reserved and contains no information[18] B. Capitalization and Indebtedness This section states that information regarding capitalization and indebtedness is not applicable - Information for this item is not applicable[18] C. Reasons for the Offer and Use of Proceeds This section states that information regarding reasons for the offer and use of proceeds is not applicable - Information for this item is not applicable[19] D. Risk Factors Investing in Psyence Biomedical's securities involves a high degree of risk, stemming from its status as a clinical-stage biotechnology company with a limited operating history, dependence on substantial future funding, intense competition, reliance on third parties for clinical trials and intellectual property, and the evolving regulatory landscape of the psychedelic therapy market. Additionally, risks related to the ownership of its securities include potential stock price volatility, delisting from Nasdaq, and the company's status as an emerging growth company and foreign private issuer - Investing in Psyence Biomedical's securities involves a high degree of risk, requiring careful consideration of various factors that could materially adversely affect the business, financial condition, results of operations, and future growth[20] Risks Related to the Company's Financial Condition and Operating History Psyence Biomedical is a clinical-stage biotechnology company with a limited operating history, incurring significant losses since inception and expecting to continue doing so. It has not generated revenue and relies on equity and convertible debt financing. The company requires substantial additional funding for product development and clinical trials, with existing cash projected to last beyond 12 months, but future needs are uncertain and dependent on various factors including regulatory outcomes and market conditions - Psyence is a clinical-stage biotechnology company with a limited operating history, incurring significant losses since inception and expecting to continue incurring losses for the foreseeable future[21][22][25] Net Profit/(Loss) by Fiscal Year (USD) | Fiscal Year Ended March 31 | Net Profit/(Loss) (USD) | | :------------------------- | :---------------------- | | 2025 | $1 million | | 2024 | ($50.96 million) | - The company has not generated any revenue to date and has financed operations solely through equity and convertible debt financings[22][28] - Substantial additional funding is required to achieve business goals, including conducting clinical trials (Phase IIb and future Phase III), seeking regulatory approvals, and commercializing product candidates[30][31] - Existing cash is expected to fund operations beyond 12 months, but additional funds may be needed sooner due to unforeseen factors or strategic considerations, with no guarantee of availability on acceptable terms[32][33] Risks Related to Personnel and Competition The company's success is highly dependent on its key management and scientific personnel, and its ability to attract and retain qualified employees in a competitive pharmaceutical field. The psychedelic therapy and biotechnology industries are rapidly changing and intensely competitive, with larger, more resourced competitors potentially developing superior products or technologies, which could negatively impact Psyence's market position and operating results - Future growth and success depend on the ability to recruit, retain, manage, and motivate employees, particularly key management and scientific personnel like Dr. Neil Maresky (CEO), Jody Aufrichtig (Executive Chairman), Warwick Corden-Lloyd (CFO), Dr. Clive Ward-Able (Medical Director), and Taryn Vos (General Counsel)[36] - The psychedelic therapy and biotechnology industries are intensely competitive, with numerous competitors including major multinational pharmaceutical companies, established biotechnology firms, and research institutions, many of which have greater financial and other resources[38] - Competitors may introduce new psychedelic analogs or technological advances that are safer, more effective, better marketed, or less costly, potentially rendering Psyence's product candidates obsolete or non-competitive[39][40] Risks Related to Clinical Trials and Product Development Psyence faces significant risks in clinical trials, including a high failure rate for product candidates, potential non-acceptance of ex-U.S. trial data by the FDA, and unpredictable outcomes. Delays or negative results in trials, or issues with third-party suppliers and manufacturers, could severely impact development timelines, regulatory approval, and commercial viability. The company relies heavily on third parties like Southern Star Research for conducting trials and Filament Health Corp for product supply, making it vulnerable to their performance and compliance - There is a high rate of failure for product candidates in clinical trials; positive preclinical or early-phase results are not predictive of future success[42][45][46] - Clinical studies conducted outside the U.S. may not be accepted by the FDA, potentially requiring additional costly and time-consuming trials[41] - Supply chain interruptions, particularly dependence on Filament Health Corp for PEX010, could delay product development. Failure of CMOs to comply with GMP standards could lead to defective products and liability[48][49] - Product candidates may be ineffective or unsafe, leading to delays or termination of development[43] - Regulatory approvals are uncertain and time-consuming, with no guarantee of being granted[44] - Negative results from external studies or adverse safety events could materially harm the business[47] Risks Related to Data Security and Regulatory Compliance Psyence handles sensitive data, making it vulnerable to security breaches that could lead to legal claims, penalties, and reputational damage. The company operates in a highly regulated industry, and non-compliance with healthcare laws, especially those pertaining to controlled substances like psilocybin, could result in substantial enforcement actions, fines, product withdrawals, and criminal prosecutions. Evolving regulations and interpretations pose ongoing compliance challenges and costs - The company collects and stores sensitive data, including intellectual property and clinical trial data, making its networks vulnerable to cyberattacks, employee error, or other disruptions, which could lead to legal claims, penalties, and reputational damage[51] - Compliance with numerous federal, state, and local laws and regulations governing the manufacture, labeling, and distribution of psychedelic products is costly and complex. Non-compliance could result in civil/criminal penalties, product recalls, and adverse effects on business operations and financial results[52][53][59] Risks Related to Acquisitions and Funding Psyence may pursue acquisitions or strategic alliances, but there's no guarantee of realizing expected benefits due to integration challenges, increased costs, or dilution of shareholder equity. The company requires substantial additional financing for product development and commercialization, and its ability to secure this funding on acceptable terms is uncertain, potentially forcing delays or termination of development efforts - Future acquisitions or strategic alliances may incur non-recurring charges, increase expenditures, dilute shareholders, or disrupt management, with no assurance of achieving expected synergies[54] - The company will require substantial additional financing to develop product candidates and implement operating plans, particularly for commercial production and registrational trials[55] Cash and Cash Equivalents (USD) | Metric | March 31, 2025 (USD) | | :---------------------- | :------------------- | | Cash and cash equivalents | $6,171,130 | - Inability to raise additional capital on acceptable terms could lead to significant delays, scaling back, or discontinuation of product development and commercialization efforts, harming business and stock price[57][58] Risks Related to Third-Party Reliance and Government Incentives Psyence relies heavily on third parties like Southern Star Research for clinical trials and licensed intellectual property, particularly from Filament for PEX010. Loss of these rights or failure of third parties to perform could severely impact development. The company also depends on Australian R&D tax incentives, and their reduction or discontinuation could harm operating results. Conflicts of interest may arise from key personnel allocating time to other businesses - Psyence relies on third parties (e.g., Southern Star Research) to conduct clinical trials, and their failure to perform contractual duties or meet deadlines could delay or prevent regulatory approval and commercialization[60][61][62] - The company is dependent on licensed intellectual property, specifically the Research IP Agreement with Filament for PEX010, which expires in April 2027. Loss of these rights or inability to secure alternative agreements for Phase III studies would materially impact the business[64][65][66] - The company has received R&D cash rebates from the Australian Government (AUD $1,336,622 for FY2023). Failure to qualify for future incentives could harm operating results[80][81][82] - Certain directors and officers allocate time to other businesses, potentially causing conflicts of interest[79] Risks Related to Regulatory Matters Psyence's product development and commercialization are subject to extensive and evolving healthcare regulations. Failure to comply with these laws, particularly those governing controlled substances like psilocybin, could lead to substantial enforcement actions, including civil and criminal penalties, product withdrawals, and operational restructuring. Clinical trials are expensive, time-consuming, and uncertain, with potential for delays, negative results, or differing interpretations by regulatory agencies. Serious adverse events or safety risks could halt development or limit market acceptance. The company may seek expedited regulatory pathways (Fast Track, Breakthrough Therapy, Accelerated Approval), but these do not guarantee faster development or approval - Failure to comply with healthcare regulations (federal, state, foreign) could lead to substantial enforcement actions, including civil/criminal penalties, product withdrawals, and adverse effects on business[83][91] - Clinical trials are expensive, time-consuming, and uncertain, susceptible to delays or termination due to various factors including regulatory consensus, patient enrollment, side effects, manufacturing issues, and changes in regulatory policies[87][88][92] - Serious adverse events or safety risks could require abandoning development, delaying/limiting approval, or causing product recalls, significantly harming business prospects[93][94] - The company may seek Fast Track, Breakthrough Therapy, or Accelerated Approval designations, but these do not guarantee faster development, regulatory review, or approval, nor do they assure FDA approval[101][104][105] Risks Relating to the Psychedelic Therapy Market and Biotechnology Industry The psychedelic therapy industry is nascent and may not grow as anticipated, requiring significant investment in brand awareness and compliance. Negative public opinion, influenced by scientific research, media, or litigation, could adversely impact demand for Psyence's products. Research into medical psychedelics is still in early stages, and future findings could contradict current beliefs, affecting market viability. The industry's newness also makes market quantification difficult, leading to reliance on estimates - The psychedelic therapy industry is relatively new and may not continue to exist or grow as anticipated, requiring significant investment in brand awareness and compliance[106] - Negative public opinion and perception, influenced by scientific research, regulatory investigations, litigation, or media, could adversely impact Psyence's ability to operate and its growth strategy, especially given psilocybin's status as a controlled substance[107][108] - Research into medical psychedelics is in early stages, and future clinical trials may yield negative conclusions regarding benefits, safety, or social acceptance, materially affecting demand for Psyence's product candidates[109] - The nascent stage of the psychedelic therapy industry makes market quantification difficult, requiring investors to rely on their own estimates of market data accuracy[110] Risks Related to Intellectual Property Psyence relies on a combination of patent, copyright, trademark, and trade secret laws to protect its intellectual property, but faces challenges due to the unpatentable nature of naturally occurring psilocybin and the high cost of patent protection. The company is dependent on licensed IP from third parties, and any loss or challenge to these rights could harm its competitive position. Infringement claims by third parties are a significant risk, potentially leading to damages, product re-engineering, or market exclusion. Protecting trade secrets is also difficult, and their disclosure could diminish product value - Psyence relies on patent, copyright, trademark, and trade secret laws to protect IP, but naturally occurring substances like psilocybin cannot be patented, requiring reliance on patents for formulations, methods of use, and processes[111][112][115] - Dependence on Filament's intellectual property for PEX010 means any failure by Filament to maintain or defend its IP would directly affect Psyence's clinical trial initiatives[113] - Claims of intellectual property infringement by third parties could adversely affect operating profits, leading to damages, manufacturing suspension, or market exclusion[117][118][119] - Protecting trade secrets is difficult, and unauthorized disclosure could significantly diminish the value of Psyence's products and harm its competitive position[121][122] Risks Related to Ownership of Our Securities Future sales of securities by existing holders could depress the stock price. The company faces continued listing challenges on Nasdaq, including minimum bid price and market value requirements, with potential delisting leading to reduced liquidity and market price. The market price and trading volume of Common Shares may be volatile due to various factors. The exercise of warrants could dilute existing shareholders. As an 'emerging growth company' and 'foreign private issuer,' Psyence benefits from reduced SEC reporting requirements, which might make its shares less attractive to some investors. The company reports under IFRS, which differs from U.S. GAAP, potentially hindering comparability. Classification as a Passive Foreign Investment Company (PFIC) could have adverse U.S. federal income tax consequences for U.S. taxpayers. Furthermore, Canadian incorporation and operations may limit U.S. investors' ability to protect their interests through U.S. courts. The company does not expect to pay dividends in the foreseeable future - Future sales of securities by existing holders, or the perception of such sales, could adversely impact the market price of Common Shares[123] - The company has faced and continues to address Nasdaq continued listing requirements (e.g., minimum bid price, market value of listed securities), with potential delisting posing significant adverse consequences like reduced liquidity and 'penny stock' classification[124][126][127][128] - The market price and trading volume of Common Shares may be volatile due to factors including differences in estimates, business developments, litigation, future sales of securities, and general economic conditions[130][131][133] - The exercise of 281,950 outstanding warrants could increase the number of shares eligible for future resale, resulting in dilution to current shareholders[132] - As an 'emerging growth company' and 'foreign private issuer,' Psyence benefits from reduced SEC reporting requirements and exemptions from certain Nasdaq corporate governance rules, which may make its Common Shares less attractive to some investors[140][141][142][143][145] - The company reports financial results under IFRS, which differs from U.S. GAAP, potentially making financial statements less comparable for U.S. investors[146] - Classification as a Passive Foreign Investment Company (PFIC) could lead to adverse U.S. federal income tax consequences for U.S. taxpayers[147][148][149][150] - Due to Canadian incorporation and a majority of operations/officers residing outside the U.S., U.S. investors may face difficulties in protecting their interests or enforcing judgments through U.S. courts[151] - The company does not expect to pay dividends in the foreseeable future, as it plans to retain earnings to fund business development and growth[154][155] ITEM 4. Information on the Company This section provides a comprehensive overview of Psyence Biomedical Ltd., detailing its corporate history, business operations, product candidates, clinical trial progress, intellectual property strategy, competitive landscape, and regulatory framework. It highlights the company's focus on developing natural psilocybin products for palliative care, particularly for Adjustment Disorder in cancer patients, and its strategic partnerships for API supply and R&D A. Corporate History and Development Psyence Biomedical Ltd. was incorporated on June 29, 2023, and consummated a business combination on January 25, 2024, with Newcourt Acquisition Corp (NCAC), leading to its listing on Nasdaq under symbols PBM and PBMWW. This transaction involved PGI contributing its therapeutics division to Psyence Biomedical, separating it from Psyence Group's other divisions (Function and Production). The company also secured a convertible debt PIPE financing of $3.125 million principal amount - Psyence Biomedical Ltd. was incorporated on June 29, 2023[161] - The company consummated a business combination on January 25, 2024, with Newcourt Acquisition Corp (NCAC), resulting in its listing on Nasdaq[156][160] - The business combination involved Psyence Group Inc. (PGI) contributing its Psyence Therapeutics division to Psyence Biomedical, while retaining Psyence Production and Psyence Function[163][164] - A convertible debt PIPE financing of $3,125,000 aggregate principal amount (for gross proceeds of $2,500,000) was closed with investors[157] B. Business Overview Psyence Biomedical is a life science biotechnology company focused on developing natural psilocybin products for psychological trauma and mental health consequences in palliative care, with a lead product candidate, PEX010, for Adjustment Disorder (AjD) due to incurable cancer. The company is conducting a Phase IIb clinical trial in Australia, leveraging strategic licensing agreements for PEX010 and other APIs, and aims to expand indications. Its business model considers various approaches for product delivery, from supply to clinic ownership, targeting oncology sites. The company operates within a complex and evolving regulatory landscape across North America, EU, UK, and Australia, with psilocybin being a strictly controlled substance - Psyence Biomedical is a life science biotechnology company developing natural psilocybin products for psychological trauma and mental health in palliative care[167][168] - The lead product candidate is PEX010, a 25mg naturally sourced psilocybin capsule, licensed from Filament Health Corp, for use in a Phase IIb study for Adjustment Disorder (AjD) due to incurable cancer[169][183] - A Phase IIb double-blind, randomized clinical trial for PEX010 in AjD due to incurable cancer is being conducted in Australia by Southern Star Research, with enrollment estimated to commence in the second half of 2025[170][180] - The company has secured exclusive IP licensing agreements with Psyence Labs Ltd. for pharmaceutical-grade, nature-derived psilocybin for Substance Use Disorder (SUD), including Alcohol Use Disorder (AUD), and a right of first refusal for ibogaine[189][190][191] - Psyence's IP strategy focuses on patenting formulations, methods of use, compositions of matter, and formulation processes, as naturally occurring psilocybin cannot be patented[195][196] - The palliative care market is large, with an expected CAGR of 9.4% through 2030, and the initial indication within the cancer segment represents about 37% of the total market[275][281][285] - The regulatory landscape for psilocybin is highly restrictive but evolving, with recent down-scheduling in Australia for treatment-resistant depression and momentum in the U.S. for therapeutic psychedelics[300][304][307] C. Organizational Structure This section refers to the corporate history and development section for details on the company's organizational structure - The organizational structure information is incorporated by reference from Item 4.A. Corporate History and Development[308] D. Property, Plants and Equipment Psyence's headquarters are located in Toronto, Ontario, Canada, with an additional operational office in Cape Town, South Africa - Psyence's headquarters are at 121 Richmond Street West, Penthouse Suite 1300, Toronto, Ontario, M5H 2K1, Canada[309] - The company also maintains an operational office in South Africa at Unit A210 The Old Biscuit Mill, 373-375 Albert Road, Woodstock, Cape Town, 7925[309] ITEM 4A. Unresolved Staff Comments This section states that there are no unresolved staff comments - There are no unresolved staff comments[310] ITEM 5. Operating and Financial Review and Prospects This section provides management's discussion and analysis of Psyence Biomedical's financial condition and results of operations, highlighting significant increases in sales and marketing, general and administrative, and professional fees due to its NASDAQ listing. Research and development expenses decreased year-over-year but are expected to rise. The company reported a net profit for FY2025 driven by fair value gains on convertible notes and promissory notes, significantly improving its liquidity and working capital position. It also details critical accounting estimates, financial risk management, and its status under the JOBS Act - The company is a life science biotechnology company focused on developing botanical psilocybin-based psychedelic medicines for mental health disorders in palliative care, currently conducting clinical trials for adjustment disorder in cancer patients[314] Operating Results For the fiscal year ended March 31, 2025, Psyence Biomedical experienced a significant increase in sales and marketing, general and administrative, and professional and consulting fees, primarily driven by its NASDAQ listing and expanded corporate operations. Research and development expenses decreased due to timing of milestone activities and a CRO transition but are expected to increase. The company reported a net profit of $1,011,790 for FY2025, a substantial improvement from a $51,159,048 loss in FY2024, largely due to fair value gains on convertible notes and promissory notes Key Operating Expenses (USD) | Expense Category | FY2025 | FY2024 | FY2023 | | :--------------------------- | :------------ | :------------ | :------------ | | Sales and marketing | $483,530 | $80,603 | $7,029 | | Research and development | $342,168 | $954,593 | $1,608,895 | | General and administrative | $1,209,847 | $557,904 | $366,435 | | Professional and consulting fees | $1,623,209 | $1,158,484 | $1,252,510 | - Sales and marketing costs increased significantly in FY2025 due to investor awareness and brand positioning efforts following the NASDAQ listing[315][316] - R&D expenses decreased in FY2025 due to timing of milestone activities and a CRO transition, but are anticipated to increase in future periods[317][318] - General and administrative expenses rose significantly in FY2025 due to scaling corporate operations and meeting U.S. public company obligations[321][322] - Professional and consulting fees increased in FY2025, primarily due to higher legal costs associated with regulatory compliance and corporate governance post-NASDAQ listing[324][325] Net Income/(Loss) and Fair Value Movements (USD) | Item | FY2025 | FY2024 | | :------------------------------------ | :------------ | :------------- | | Net Income/(Loss) | $1,011,790 | ($51,159,048) | | Fair value gain/(loss) on convertible note | $3,357,628 | ($5,157,397) | | Fair value gain/(loss) on promissory notes | $705,565 | ($108,288) | | R&D Rebate | $0 | $879,344 | | Investment in Psyence Labs (Fair Value Gain) | $22,967 | $0 | - The company invested in Psyence Labs, valued at $745,000, and recognized a fair value gain of $22,967 in FY2025[329] Liquidity and Capital Resources Psyence Biomedical's liquidity significantly improved as of March 31, 2025, with a cash balance of $6,171,130 and positive working capital of $5,965,908, a substantial turnaround from the prior year's negative working capital. The company's operations have historically been financed through shareholder investments, R&D rebates, and a loan facility. Future funding for ongoing R&D and clinical trials remains dependent on market conditions and access to capital Liquidity and Working Capital (USD) | Metric | March 31, 2025 | March 31, 2024 | | :----------------- | :------------- | :------------- | | Cash balance | $6,171,130 | $762,799 | | Working capital | $5,965,908 | ($10,978,027) | - The company has historically financed operations through shareholder investments, a loan facility against R&D rebates, and the rebates themselves[335] - Primary capital needs include funding research and development, clinical trials, staffing, and professional fees[339] - Ongoing financing is required to support R&D activities, and access to future capital is uncertain[338] Research and Development (Accounting Policy) Expenditures on research activities are expensed as incurred. Development expenditures are capitalized only if they meet specific criteria for reliability, technical and commercial feasibility, probable future economic benefits, and sufficient resources for completion and use/sale. Costs for establishing and maintaining patents are expensed - Research expenditures are recognized as expenses when incurred[340] - Development expenditures are capitalized only if reliably measurable, technically/commercially feasible, probable of future economic benefits, and the company intends and has resources to complete and use/sell the asset[341] - Costs for establishing and maintaining patents are expensed as incurred[341] Critical Accounting Estimates The preparation of financial statements requires management to make significant estimates and judgments, particularly in determining the fair value of convertible debt instruments due to their complex conversion features. These valuations incorporate observable and unobservable inputs, and changes in assumptions can materially impact reported profit or loss - Management exercises significant judgment in determining the fair value of convertible promissory notes, classified as financial liabilities at fair value through profit or loss (FVTPL), due to variable conversion features[343] - Fair value assessment uses valuation techniques incorporating observable and unobservable inputs, such as share price volatility, risk-free interest rates, and conversion terms, with changes in these assumptions materially impacting profit or loss[343] Quantitative and Qualitative Disclosures About Financial Instruments and Financial Risk Management Psyence Biomedical is exposed to credit, liquidity, foreign exchange, and interest rate risks. Credit risk is mitigated by depositing cash with reputable financial institutions. Liquidity risk is managed through ongoing review of commitments and cash balances, though access to future financing is uncertain. Foreign exchange risk, primarily from international operations, is managed by holding funds in USD, with a 10% adverse change impacting net loss by $8,861 as of March 31, 2025. The company has no significant interest rate risk. Capital management aims to safeguard going concern status and optimize capital structure - The company is exposed to credit risk (managed by depositing cash with reputable banks), liquidity risk (managed by reviewing commitments and cash, but future financing is uncertain), foreign exchange risk (managed by holding funds in USD), and interest rate risk (insignificant due to no significant interest-bearing assets/liabilities)[344][345][346][347][348][349][351][352] - A 10% adverse change in exchange rates would result in a $8,861 loss as of March 31, 2025[350] - Capital management objectives are to safeguard going concern, meet capital expenditures, and maintain a flexible capital structure, with shareholders' equity considered as capital[353][354] Off-Balance Sheet Arrangements As of March 31, 2025, Psyence Biomedical has no off-balance sheet arrangements, including variable interest entities, off-balance sheet financing, debt guarantees, or non-financial asset purchases - The company has no obligations, assets, or liabilities considered off-balance sheet arrangements as of March 31, 2025[355] Contractual Obligations Psyence Biomedical does not have any long-term debt, capital lease obligations, operating lease obligations, or long-term liabilities - The company has no long-term debt, capital lease obligations, operating lease obligations, or long-term liabilities[356] JOBS Act As an 'emerging growth company' under the JOBS Act, Psyence Biomedical is allowed to delay adoption of new accounting pronouncements and may rely on reduced reporting requirements, such as exemptions from auditor attestation on internal controls and certain executive compensation disclosures. These exemptions apply for up to five years or until the company no longer qualifies as an EGC - As an 'emerging growth company' (EGC) under the JOBS Act, Psyence Biomedical can delay adopting new or revised accounting pronouncements based on private company effective dates[357] - Exemption from auditor's attestation report on internal control over financial reporting (Section 404(b) of Sarbanes-Oxley Act)[358] - Reduced disclosure obligations regarding executive compensation[358] - Exemptions from non-binding advisory vote on executive compensation and shareholder approval of golden parachute payments[358] - These exemptions apply for five years or until the company ceases to be an EGC[358] ITEM 6. Directors, Senior Management and Employees This section details the company's directors and senior management, their compensation, and corporate governance practices. It outlines the executive officers' roles and compensation structure, including base salaries, bonuses, and RSU awards. The Board of Directors, consisting of five members with a majority of independent directors, operates through audit, compensation, and nominating/corporate governance committees. As a foreign private issuer, the company utilizes certain home-country corporate governance exemptions from Nasdaq requirements. It also covers employee numbers and share ownership information A. Directors and Senior Management The company's executive officers include Dr. Neil Maresky (CEO), Warwick Corden-Lloyd (CFO), and Jody Aufrichtig (Strategic Business Development Officer and Chairman). The Board of Directors comprises these executives along with independent directors Marc Balkin, Christopher Bull, and Dr. Seth Feuerstein, all bringing extensive experience in biopharmaceuticals, finance, and technology Directors and Executive Officers | Name | Age | Position(s) | | :------------------ | :-- | :--------------------------------------------- | | Jody Aufrichtig | 51 | Chairman of the Board and Strategic Business Development Officer | | Dr. Neil Maresky | 61 | Chief Executive Officer and Director | | Warwick Corden-Lloyd | 45 | Chief Financial Officer | | Marc Balkin | 50 | Director | | Christopher (Chris) Bull | 56 | Director | | Dr. Seth Feuerstein | 52 | Director | - Dr. Neil Maresky (CEO) has over 25 years of biopharmaceutical expertise, including leadership roles at AstraZeneca, Bayer, and Wyeth[361] - Warwick Corden-Lloyd (CFO) is a Chartered Accountant with 19+ years in public accounting, consulting, and listed financial services, including Canopy Growth Africa and Capitec Bank[362] - Jody Aufrichtig (Executive Chairman) is an experienced entrepreneur and chartered accountant, founder of MindHealth Biomed Corp and former Managing Director of Canopy Growth Africa[363] - Independent directors Marc Balkin, Christopher Bull, and Dr. Seth Feuerstein bring expertise in finance, M&A, intellectual property, chemical engineering, psychiatry, and digital health[364][365][366] B. Compensation Executive officers' compensation for FY2025 includes base salaries and annual cash bonuses based on performance metrics. Dr. Neil Maresky received $390,000, Jody Aufrichtig $216,667, and Warwick Corden-Lloyd $195,000. Compensation also includes RSU awards subject to lock-up periods and clawback policies. Non-executive directors receive a fixed monthly fee and long-term equity awards in the form of RSUs. The Compensation Committee determines these arrangements Summary Compensation Table (USD) | Name and principal position | Year | Salary (US$) | Bonus (US$) | Total (US$) | | :-------------------------- | :--- | :----------- | :---------- | :---------- | | Neil Maresky (CEO) | 2025 | 360,000 | 30,000 | 390,000 | | | 2024 | 231,228 | — | 356,686 | | Jody Aufrichtig (Executive Chairman) | 2025 | 200,000 | 16,667 | 216,667 | | | 2024 | 110,302 | — | 184,999 | | Warwick Corden-Lloyd (CFO) | 2025 | 180,000 | 15,000 | 195,000 | | | 2024 | 98,346 | — | 123,329 | - Executive officers' compensation includes market-related base annual salaries/fees, annual cash bonuses (50-100% of base for CEO/Executive Chairman, 30-80% for CFO) based on performance metrics, and RSU awards subject to lock-up and clawback[368][376][381][385] - Non-executive directors receive a fixed monthly fee (e.g., Mr. Balkin and Dr. Feuerstein: $2,500/month; Mr. Bull: £6,250/month) and long-term equity awards in the form of RSUs[390] - The company has entered into indemnification agreements with each officer and director[393] C. Board Practices Psyence Biomedical's corporate governance includes a Board of Directors with a majority of independent directors and independent audit, compensation, and nominating/corporate governance committees. The Audit Committee, chaired by Marc Balkin (an 'audit committee financial expert'), oversees financial reporting and internal controls. As a foreign private issuer, the company leverages exemptions from certain Nasdaq corporate governance standards, such as quorum requirements for shareholder meetings. Directors and officers are indemnified under Ontario law and company agreements - Board of Directors has a majority of independent directors (Marc Balkin, Chris Bull, Dr. Seth Feuerstein)[431] - Independent audit, compensation, and nominating and corporate governance committees are established with written charters[432] - Marc Balkin is an 'audit committee financial expert' and chairs the Audit Committee, which oversees financial statements, internal controls, and related-party transactions[433][435][436][439] - As a foreign private issuer, the company is exempt from certain Nasdaq corporate governance standards, including requirements for a majority independent board and fully independent committees, and has a lower quorum requirement for shareholder meetings (25% vs. Nasdaq's 33 1/3%)[441][442][443] - Directors and officers are indemnified against certain liabilities and expenses, in accordance with the Business Corporations Act (Ontario) and company agreements[444][445] D. Employees As of March 31, 2025, Psyence Biomedical had 12 employees and consultants, with 11 providing services through consulting agreements, located across Canada, Australia, the US, South Africa, and the United Kingdom - As of March 31, 2025, the company had 12 employees and consultants, with 11 providing services via consulting agreements[446] - These personnel are located in Canada, Australia, the US, South Africa, and the United Kingdom[446] E. Share Ownership Information regarding the ownership of Common Shares by directors and executive officers is incorporated by reference from Item 7.A. of this report - Share ownership information for directors and executive officers is incorporated by reference from Item 7.A[447] F. Disclosure of a Registrant's Action to Recover Erroneously Awarded Compensation This section states that the disclosure regarding action to recover erroneously awarded compensation is not applicable - This section is not applicable[448] ITEM 7. Major Shareholders and Related Party Transactions This section provides details on major shareholders, including beneficial ownership by 5% holders, executive officers, and directors, and outlines related party transactions. It describes the issuance and subsequent extinguishment of convertible promissory notes to Psyence Group Inc. (PGI) and NCAC Sponsor through debt-for-equity exchanges, resulting in fair value gains. The company has a related party transaction policy to manage potential conflicts of interest A. Major Shareholders As of June 19, 2025, there were 713,232 Common Shares issued and outstanding. The table indicates no 5% holders, directors, or executive officers individually or as a group beneficially owned more than 5% of the outstanding Common Shares. The company is not directly or indirectly controlled by any other corporation, foreign government, or natural/legal person - As of June 19, 2025, there were 713,232 Common Shares issued and outstanding[449] - No 5% holders, directors, or executive officers are listed as beneficially owning more than 5% of the outstanding Common Shares[450] - The company is not directly or indirectly owned or controlled by any other corporation, foreign government, or natural/legal person[450] - Rule 144 allows existing shareholders to sell restricted Common Shares after a six-month beneficial ownership period, with additional restrictions for affiliates[452][453] B. Related Party Transactions On January 25, 2024, Psyence issued unsecured convertible promissory notes to Psyence Group Inc. (PGI Note for $1,610,657) and NCAC Sponsor (NCAC Note for $1,615,501). Both notes were subsequently extinguished through debt-for-equity exchange agreements in September and October 2024, including make-whole payments in December 2024. These conversions resulted in fair value gains of $327,668 for the PGI Note and $377,897 for the NCAC Note, recorded in the consolidated statements of income/(loss). The company has a related party transaction policy requiring audit committee review and approval for transactions exceeding $120,000 - On January 25, 2024, the company issued unsecured convertible promissory notes to PGI ($1,610,657 principal) and NCAC Sponsor ($1,615,501 principal), both bearing no interest and convertible into shares[455][456] - Both notes were designated at FVTPL due to embedded variable conversion features[457] - The PGI Note was extinguished through the issuance of 3,473 common shares (for $1,307,960) and 1,414 common shares (for remaining balance) in September and October 2024, plus 42,378 common shares for a make-whole payment in December 2024, resulting in a fair value gain of $327,668[460][461][462] - The NCAC Note was extinguished through the issuance of 5,405 common shares in September 2024, plus 46,870 common shares for a make-whole payment in December 2024, resulting in a fair value gain of $377,897[463][464][465] - The fair value of both notes was $nil as of March 31, 2025, with a total fair value gain of $705,565 recognized in the statement of comprehensive income for the year[466] - The Board has adopted a written related party transaction policy requiring audit committee review and approval for transactions exceeding $120,000[467][468][469] C. Interests of Experts and Counsel This section states that information regarding the interests of experts and counsel is not applicable - This section is not applicable[470] ITEM 8. Financial Information This section refers to the consolidated financial statements starting on page F-1 for detailed financial information. It also states that Psyence has not paid cash dividends and does not intend to in the foreseeable future, and reports no