Pasithea Therapeutics (KTTA) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Pasithea Therapeutics Corp.'s unaudited condensed consolidated financial statements, covering balance sheets, operations, equity, cash flows, and accounting notes Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (Unaudited) ($) | December 31, 2024 ($) | |:---|:---|:---| | Cash and cash equivalents | $7,217,052 | $6,922,729 | | Total current assets | $8,636,599 | $7,368,315 | | Total assets | $17,009,142 | $16,064,719 | | Total current liabilities | $1,736,956 | $1,119,871 | | Total liabilities | $1,830,697 | $1,282,043 | | Total stockholders' equity | $15,178,445 | $14,782,676 | - Cash and cash equivalents increased by approximately $294,323 from December 31, 2024, to June 30, 2025[11] - Total assets increased by approximately $944,423, while total liabilities increased by approximately $548,654 during the six months ended June 30, 2025[11] Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Operations and Comprehensive Loss Highlights | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | |:---|:---|:---|:---|:---|\n| General and administrative | $1,662,223 | $1,587,060 | $3,612,551 | $3,878,706 | | Research and development | $2,148,676 | $2,357,974 | $3,878,527 | $4,107,102 | | Loss from operations | $(3,810,899) | $(3,945,034) | $(7,491,078) | $(7,985,808) | | Net loss | $(3,716,157) | $(3,866,249) | $(7,279,395) | $(7,727,089) | | Basic and diluted loss per share | $(0.66) | $(3.71) | $(1.85) | $(7.41) | | Comprehensive loss | $(3,710,526) | $(3,869,161) | $(7,273,764) | $(7,730,621) | - Net loss decreased by $150,092 (3.9%) for the three months ended June 30, 2025, compared to the same period in 2024[12] - Basic and diluted loss per share significantly decreased from $(3.71) to $(0.66) for the three months ended June 30, 2025, primarily due to an increase in weighted-average common shares outstanding[12] Condensed Consolidated Statements of Changes in Stockholders' Equity Key Changes in Stockholders' Equity (Six Months Ended June 30, 2025) | Item | Amount ($) | |:---|:---|\n| Balance at January 1, 2025 | $14,782,676 | | Stock-based compensation (stock options) | $96,985 | | Stock-based compensation (warrants) | $1,573 | | Issuance of common stock under ATM agreement, net | $1,652,745 | | Issuance of common stock from pre-funded warrants exercise, net | $871 | | Realized foreign currency translation loss | $7,171 | | Net loss | $(3,563,238) | | Issuance of common stock under ATM agreement, net (Q2) | $358,037 | | Issuance of common stock in May 2025 public offering, net | $4,214,506 | | Issuance of common stock from warrants exercise, net | $1,280,000 | | Foreign currency translation | $5,631 | | Net loss (Q2) | $(3,716,157) | | Balance at June 30, 2025 | $15,178,445 | - Total stockholders' equity increased by from $14,782,676 at January 1, 2025, to $15,178,445 at June 30, 2025, primarily driven by significant capital raises through common stock issuances[13] - The company issued 7,443,577 shares of common stock as of June 30, 2025, a substantial increase from 1,394,263 shares at December 31, 2024, due to ATM sales, pre-funded warrant exercises, and a public offering[13] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows Highlights | Cash Flow Activity | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | |:---|:---|:---|\n| Net cash used in operating activities | $(6,924,643) | $(8,359,951) | | Net cash provided by financing activities | $7,213,335 | $- | | Effect of foreign currency translation on cash | $5,631 | $(3,532) | | Net change in cash | $294,323 | $(8,363,483) | | Cash - End of period | $7,217,052 | $7,967,569 | - Net cash used in operating activities decreased by approximately $1.4 million for the six months ended June 30, 2025, compared to the same period in 2024[15] - The company generated $7,213,335 in cash from financing activities in the first six months of 2025, a significant increase from zero in the prior year, primarily from common stock sales and warrant exercises[15] Notes to Unaudited Condensed Consolidated Financial Statements NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS - Pasithea Therapeutics Corp. is a clinical-stage biotechnology company focused on treatments for CNS disorders, RASopathies, MAPK pathway-driven tumors, and other diseases[17] - The primary focus is on PAS-004, a MEK inhibitor, with a Phase 1 dose escalation trial ongoing in the US and Eastern Europe, expected to complete in 2026[18] - A Phase 1/1b trial for PAS-004 in adult NF1-PN patients was initiated in May 2025 in Australia, with plans for trials in South Korea and the US[19] - The company has discovery-stage programs for ALS (PAS-003) and schizophrenia (PAS-001)[21] - As of June 30, 2025, the company had $7.2 million in cash and cash equivalents and $6.9 million in working capital, but management believes additional funding is required to meet needs for the next twelve months, raising substantial doubt about its ability to continue as a going concern[25][26] NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - The company prepares its financial statements in accordance with U.S. GAAP and is an 'emerging growth company,' electing to use the extended transition period for new accounting standards[23][24] - Research and development costs are expensed as incurred, with grant income of approximately $43,000 recorded as a contra expense for the six months ended June 30, 2025[31][32] - Warrant liabilities (IPO Warrants) are classified as derivative liabilities and re-measured at fair value each balance sheet date, with changes recognized in the statements of operations[38] Fair Value Measurements of Financial Instruments | Item | June 30, 2025 Fair Value ($) | December 31, 2024 Fair Value ($) | Level 1 (June 30, 2025) ($) | Level 3 (June 30, 2025) ($) | |:---|:---|:---|:---|:---|\n| Cash equivalents | $6,207,926 | $6,093,044 | $6,207,926 | $- | | Public warrant liabilities | $88,000 | $152,240 | $88,000 | $- | | Representative warrant liabilities | $5,741 | $9,932 | $- | $5,741 | - The company adopted ASU 2023-07, Segment Reporting, as of January 1, 2024, resulting in additional disclosures of significant segment expenses[65] NOTE 3 – PROPERTY AND EQUIPMENT, NET Property and Equipment, Net | Category | June 30, 2025 ($) | December 31, 2024 ($) | |:---|:---|:---|\n| Property and equipment, gross | $161,503 | $164,696 | | Less: accumulated depreciation | $(47,939) | $(42,353) | | Property and equipment, net | $113,564 | $122,343 | - Net property and equipment decreased by approximately $8,779 from December 31, 2024, to June 30, 2025[66] - Depreciation expense was approximately $8,000 for the six months ended June 30, 2025, compared to $9,000 for the same period in 2024[66] NOTE 4 – LEASES - The company's laboratory lease in South San Francisco expired in June 2024[67] - As of June 30, 2025, the company had no recognized ROU assets and lease liabilities, down from approximately $332,000 at inception of the operating lease[68][69] Operating Lease Expense | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | |:---|:---|:---|:---|:---|\n| Operating lease expense | $- | $79,587 | $- | $122,103 | NOTE 5 – INTANGIBLE ASSETS Intangible Assets, Net | Category | June 30, 2025 Net ($) | December 31, 2024 Net ($) | |:---|:---|:---|\n| In-process research and development | $2,900,000 | $2,900,000 | | Patents and intellectual property | $4,096,068 | $4,411,150 | | Intangible assets, net | $6,996,068 | $7,311,150 | - Net intangible assets decreased by approximately $315,082 from December 31, 2024, to June 30, 2025, primarily due to amortization of patents and intellectual property[71] Future Expected Amortization Expense of Intangible Assets | Year | Amount ($) | |:---|:---|\n| 2025 (remaining) | $315,082 | | 2026 | $630,164 | | 2027 | $630,164 | | 2028 | $630,164 | | 2029 | $630,164 | | Thereafter | $1,260,330 | | Total | $4,096,068 | NOTE 6 – STOCKHOLDERS' EQUITY - The company had 7,443,577 shares of Common Stock outstanding at June 30, 2025, a significant increase from 1,394,263 shares at December 31, 2024[73] - On January 1, 2025, shares available under the 2023 Stock Incentive Plan automatically increased by 41,828 shares, totaling 264,221 available shares as of June 30, 2025[78] - During the six months ended June 30, 2025, all 871,000 September 2024 Pre-Funded Warrants were exercised, resulting in the issuance of 871,000 shares of Common Stock[86] - The company sold 692,600 shares of Common Stock under the ATM Agreement for net proceeds of $2,010,782 during the six months ended June 30, 2025[89] - The May 2025 Public Offering closed on May 7, 2025, generating approximately $4.2 million in net proceeds (excluding warrant exercises) and involved the sale of 3,571,428 shares of Common Stock (or pre-funded warrants) and accompanying Series C and D Common Warrants[90][93] - Simultaneously with the May 2025 Public Offering, investors exercised Series D Common Warrants for 914,286 shares, generating an additional $1.3 million in gross proceeds[91] NOTE 7 – STOCK OPTIONS - For the six months ended June 30, 2025, 27,379 stock options vested, and 30,716 stock options were forfeited[100] Stock-Based Compensation Expense Related to Stock Options | Period | 2025 ($) | 2024 ($) | |:---|:---|:---|\n| Three Months Ended June 30 | $58,000 | $135,000 | | Six Months Ended June 30 | $155,000 | $432,000 | - As of June 30, 2025, 151,318 stock options were outstanding with a weighted-average exercise price of $23.58 and a remaining unamortized compensation expense of approximately $139,000[103] NOTE 8 – WARRANTS - As of June 30, 2025, the fair value of Public Warrants was approximately $0.40 per warrant, and Representative Warrants was approximately $0.416 per warrant[104] Outstanding Warrants as of June 30, 2025 | Exercise Price ($) | Number of Warrants | Weighted-Average Remaining Contractual Term (years) | |:---|:---|:---|\n| $1.40 | 6,228,570 | 3.36 | | $1.75 | 250,000 | 4.85 | | $3.85 | 2,439,026 | 2.51 | | $5.13 | 85,366 | 4.26 | | $8.13 | 1,500 | 8.67 | | $20.00 | 433,999 | 1.40 | | $37.60 | 100,001 | 2.13 | | $120.00 | 13,800 | 1.21 | | $125.00 | 220,000 | 1.21 | | Total | 9,772,262 | 3.04 | - During the three and six months ended June 30, 2025, the company issued warrants to purchase 7,392,856 shares of Common Stock in connection with the May 2025 Public Offering[105] - Series D Common Warrants to purchase 914,286 shares were exercised for approximately $1.28 million in gross proceeds during the three and six months ended June 30, 2025[106] NOTE 9 – COMMITMENTS AND CONTINGENCIES - The company is not currently a party to any legal proceedings that would have a material adverse effect on its business, results of operations, financial condition, or cash flows[109][110] NOTE 10 – RELATED PARTY TRANSACTIONS - Prof. Lawrence Steinman receives $25,000 per quarter for consulting and advisory services related to clinical and commercial development of product candidates[111] NOTE 11 – INCOME TAXES - The company is evaluating the potential impacts of the newly enacted One Big Beautiful Bill Act on U.S. federal tax law but has not yet recorded any material adjustments[112][113] - As of June 30, 2025, and December 31, 2024, a full valuation allowance was established against deferred tax assets related to net operating losses, resulting in a zero balance[39] NOTE 12 – SEGMENT INFORMATION - The company operates and manages its business as a single operating and reportable segment focused on the research and development of innovative treatments for CNS disorders, RASopathies, MAPK pathway-driven tumors, and other diseases[114] Significant Segment Expenses | Expense Category | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | |:---|:---|:---|:---|:---|\n| General and administrative | $1,460,723 | $1,300,277 | $3,157,148 | $3,197,996 | | Pre-clinical research | $103,343 | $796,595 | $165,336 | $1,226,979 | | CMC | $99,413 | $420,951 | $324,010 | $798,771 | | Clinical development | $1,928,275 | $1,068,655 | $3,363,079 | $1,894,772 | | Depreciation and amortization | $161,746 | $162,257 | $323,454 | $324,514 | | Share based compensation expense | $57,645 | $160,952 | $156,203 | $507,429 | NOTE 13 – SUBSEQUENT EVENTS - The company has evaluated events subsequent to June 30, 2025, and found no material reportable subsequent events[117] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis of financial condition and operations, including company summary, recent developments, expense analysis, and liquidity outlook Company Summary - Pasithea is a clinical-stage biotechnology company focused on CNS disorders, RASopathies, MAPK pathway-driven tumors, and other diseases, with PAS-004 as its lead product candidate[123][124] - The company expects to incur significant operating losses and expenses for the foreseeable future as it advances product candidates through development and clinical trials, requiring continued financing through equity, debt, or collaborations[128][129] Recent Developments - Clinical updates for PAS-004 include completion of enrollment and initial dosing for cohort 6 in the FIH Phase 1 Dose Escalation Study (April 2025) and initiation of a Phase 1/1b clinical trial in adult NF1-PN patients (May 2025)[130] - The May 2025 Public Offering closed on May 7, 2025, generating total gross proceeds of approximately $6.3 million, including warrant exercises[131] - The company received a Nasdaq deficiency notice on June 23, 2025, for not meeting the $1.00 minimum bid price requirement and is considering options, including a reverse stock split, to regain compliance[132][133] - Inflation has led to higher costs across the business, including employee compensation and outside services, and is expected to continue impacting the company throughout 2025[134] Results of Operations Operating Results Comparison (Three Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | Change ($) | % Change | |:---|:---|:---|:---|:---|\n| General and administrative | $1,662,223 | $1,587,060 | $75,163 | 4.7% | | Research and development | $2,148,676 | $2,357,974 | $(209,298) | (8.9%) | | Loss from operations | $(3,810,899) | $(3,945,034) | $134,135 | (3.4%) | | Net loss | $(3,716,157) | $(3,866,249) | $150,092 | (3.9%) | Operating Results Comparison (Six Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | Change ($) | % Change | |:---|:---|:---|:---|:---|\n| General and administrative | $3,612,551 | $3,878,706 | $(266,155) | (6.9%) | | Research and development | $3,878,527 | $4,107,102 | $(228,575) | (5.6%) | | Loss from operations | $(7,491,078) | $(7,985,808) | $494,730 | (6.2%) | | Net loss | $(7,279,395) | $(7,727,089) | $447,694 | (5.8%) | General and administrative - G&A expenses increased by approximately $75,000 (5%) for the three months ended June 30, 2025, driven by increases in accounting, business development, personnel, and other income, partially offset by decreases in office, stock-based, and public company expenses[137] - G&A expenses decreased by approximately $266,000 (7%) for the six months ended June 30, 2025, primarily due to reduced legal, stock-based, public company, and office expenses, partially offset by increases in accounting, business development, personnel, and other income[138] - The company expects a slight decrease in G&A expenses for fiscal year 2025 compared to 2024, mainly due to reduced legal and public company expenses[139] Research and Development - R&D expenses decreased by approximately $209,000 (9%) for the three months ended June 30, 2025, primarily due to de-prioritization of discovery programs, reduced consulting, stock compensation, and manufacturing expenses, partially offset by a significant increase in clinical trials expense for PAS-004[141] - R&D expenses decreased by approximately $229,000 (6%) for the six months ended June 30, 2025, driven by similar factors as the three-month period, with a substantial increase in clinical trials expense for PAS-004 being the main offset[142] - R&D expenses are expected to increase throughout fiscal year 2025 due to increased clinical research for PAS-004 and manufacturing costs for clinical trials, partially offset by decreases in pre-clinical research and workforce reduction[143] Other income, net - Other income, net, increased by approximately $16,000 (20%) for the three months ended June 30, 2025, mainly due to foreign currency transaction gains, fair value changes in warrant liabilities, and other income, partially offset by decreased interest and dividends[144] - Other income, net, decreased by approximately $47,000 (18%) for the six months ended June 30, 2025, primarily due to decreased interest and dividends and a realized foreign currency translation loss, partially offset by increased fair value of warrant liabilities, foreign currency gains, and other income[145] Liquidity and Capital Resources Working Capital Working Capital | Metric | June 30, 2025 ($) | December 31, 2024 ($) | |:---|:---|:---|\n| Current assets | $8,636,599 | $7,368,315 | | Current liabilities | $1,736,956 | $1,119,871 | | Working capital | $6,899,643 | $6,248,444 | - Working capital increased by approximately $0.6 million between December 31, 2024, and June 30, 2025, primarily due to cash received from the May 2025 Public Offering[146] Liquidity and Financial Condition Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 ($) | 2024 ($) | |:---|:---|:---|\n| Net cash used in operating activities | $(6,924,643) | $(8,359,951) | | Net cash provided by financing activities | $7,213,335 | $- | | Net change in cash | $294,323 | $(8,363,483) | | Cash - End of period | $7,217,052 | $7,967,569 | - Cash and cash equivalents increased by approximately $0.3 million for the six months ended June 30, 2025, a significant improvement from an $8.4 million decrease in the prior year, driven by financing activities[147] - Financing activities provided $7.2 million in cash, primarily from ATM sales ($2.0 million), the May 2025 Public Offering ($4.2 million), and warrant exercises ($1.3 million)[147] Liquidity & Capital Resources Outlook - Management believes the company will not have sufficient working capital to meet its needs for the next twelve months without raising additional capital, indicating a going concern uncertainty[148] - The company's public float is below $75.0 million, restricting it from raising more than one-third of its public float through primary public offerings using shelf registration statements in any twelve-month period (baby shelf rules)[149] - Future funding requirements are highly dependent on the scope, timing, and results of R&D, clinical trials, manufacturing costs, potential collaborations, intellectual property costs, and commercialization activities[151][152] Contractual Obligations - Contractual obligations are summarized in Note 9 – Commitments and Contingencies[153] Off-Balance Sheet Arrangements - The company did not have any no off-balance sheet arrangements during the periods presented[154] Critical Accounting Estimates - There were no material changes to the company's critical accounting estimates (stock-based compensation and fair value measurements) during the three months ended June 30, 2025, from those described in its Form 10-K[155] Recent Accounting Pronouncements - A description of recent accounting pronouncements applicable to the financial statements is provided in Note 2 – Summary of Significant Accounting Policies[156] ITEM 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Pasithea Therapeutics Corp. is exempt from market risk disclosures - The company is exempt from providing market risk disclosures as a smaller reporting company[158] ITEM 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control - The CEO and CFO evaluated and concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[159] - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the three months ended June 30, 2025[161] PART II. OTHER INFORMATION ITEM 1. Legal Proceedings The company is not involved in legal proceedings with a material adverse effect on its business or financial condition - The company is not a party to any legal proceedings that are believed to have a material adverse effect on its business, results of operations, financial condition, or cash flows[164] ITEM 1A. Risk Factors Updated risk factors highlight Nasdaq minimum bid price non-compliance and potential delisting, affecting stock price and capital raising - The company received a Nasdaq notice on June 23, 2025, for non-compliance with the $1.00 minimum bid price requirement, with a compliance period until December 22, 2025[166] - Failure to regain compliance could lead to delisting, negatively affecting stock liquidity, financing ability, and investor confidence; a reverse stock split is being considered as an option[167] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported during the period - None to report[168] ITEM 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None to report[169] ITEM 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[170] ITEM 5. Other Information No other material information was reported, including no changes in Rule 10b5-1 trading arrangements - No director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025[172] ITEM 6. Exhibits Exhibits filed as part of the Form 10-Q include warrants, securities purchase agreements, and certifications - Exhibits include forms of May 2025 Pre-Funded Warrant, Series C/D Common Warrant, May 2025 Placement Agent Warrant, May 2025 Securities Purchase Agreement, and certifications by the CEO and CFO[173] SIGNATURES - The report is signed by Tiago Reis Marques, Chief Executive Officer, and Daniel Schneiderman, Chief Financial Officer, on August 14, 2025[178]