VistaGen Therapeutics, Inc. — Form 10-Q Summary
Reporting period: Three months ended June 30, 2021, the company’s fiscal first quarter of fiscal 2022. The filing was signed August 12, 2021. VistaGen is a clinical-stage biopharmaceutical company with no approved products or recurring product-sale revenue.
Key financial results
| Metric | Quarter ended June 30, 2021 | Quarter ended June 30, 2020 |
|---|---|---|
| Revenue | $354,100 | $0 |
| Research and development expense | $5.604 million | $1.731 million |
| General and administrative expense | $2.497 million | $1.391 million |
| Operating loss | $7.746 million | $3.122 million |
| Net loss | $7.745 million | $3.127 million |
| Net loss attributable to common stockholders | $8.106 million | $3.463 million |
| Basic and diluted loss per share | $0.04 | $0.07 |
| Cash used in operations | $6.173 million | $2.807 million |
| Capital expenditures | $149,900 | $0 |
Revenue was sublicense revenue recognized over time under the AffaMed PH94B agreement, not product sales. Gross margin is not meaningful for this pre-commercial company. Research and development spending increased mainly with initiation of the PH94B Phase 3 program and PH94B/PH10 development and manufacturing work; higher staffing and compensation also contributed. G&A rose with personnel, pre-commercialization studies and a noncash write-off of deferred offering costs.
Balance sheet, liquidity and capital
- Cash and cash equivalents were $97.777 million at June 30, 2021, down from $103.108 million at March 31, 2021. Total assets were $103.907 million and stockholders’ equity was $85.617 million.
- Current liabilities were $6.267 million. The filing reports no material conventional borrowing; operating lease liabilities totaled $3.631 million, and the financing lease current obligation was $2,200. Accrued Series B preferred dividends were $6.635 million.
- Management said cash was sufficient to fund planned operations for well beyond the next 12 months. The company nevertheless expects continuing losses and will need substantial additional capital to advance and potentially commercialize its candidates.
- Financing cash flow included approximately $1.110 million from warrant exercises. A May 2021 ATM agreement permits sales of up to $75 million of common stock, with a 3% agent commission; the filing does not report ATM sales during the quarter.
- Series D preferred stock was fully converted in April 2021 into approximately 9.25 million common shares. Common shares issued increased to 191.632 million at quarter-end from 180.751 million at March 31, 2021. The filing reports 192,903,896 shares issued and outstanding as of August 11, 2021.
Material changes and outlook
- PH94B: PALISADE-1, a U.S. Phase 3 study for acute treatment of social anxiety disorder, began in May 2021. It targets approximately 208 participants at 15 sites; topline results were anticipated in mid-2022. The company was preparing additional studies to support the program and a potential NDA if results are successful.
- PH10: The company planned to initiate a Phase 2B study for major depressive disorder. Its exploratory Phase 2A study had been completed, with management describing the results as positive.
- AV-101: The company planned a Phase 1B study of AV-101 with probenecid, alongside further nonclinical work.
- Management expected to continue development and nonclinical studies across the pipeline, while carefully managing costs. It also said it did not anticipate significant investment in manufacturing or other capital equipment.
- The AffaMed agreement covers PH94B development and commercialization in Greater China, South Korea and Southeast Asia. AffaMed is responsible for territory costs; VistaGen is eligible for up to $172 million in development and commercial milestones and royalties, but future payments are uncertain. The company estimated that its remaining performance obligation would be completed by the end of calendar 2023.
Risks, contingencies and unusual items
- COVID-19 had caused delays in delivery of active pharmaceutical ingredient and other supplies; further supply, CRO/CMO, trial enrollment or operational disruptions could delay programs.
- Clinical, regulatory, manufacturing and commercialization outcomes remain uncertain. The candidates require substantial further development, and earlier positive findings may not predict later-stage success.
- The company reported an accumulated deficit of approximately $227.6 million and expects recurring losses and negative operating cash flows. It warned that unavailable or unfavorable future financing could force it to reduce, delay or discontinue programs. Equity financing could dilute shareholders.
- Two material weaknesses in internal control over financial reporting—segregation of duties and accounting software functionality—were identified in the prior annual report. The company had begun remediation by adding accounting staff and implementing new software. Management concluded disclosure controls and procedures were effective at quarter-end.
- A $232,100 noncash charge resulted from writing off deferred offering costs after termination of the Lincoln Park equity-line agreement. No legal proceedings were reported.
Important facts for investors to verify
- Whether PALISADE-1 enrollment, execution and mid-2022 topline timing remain on track, and what the results show.
- Actual cash burn and runway relative to management’s estimate, including planned costs for PH94B, PH10 and AV-101 studies.
- Whether the ATM is used, the amount and price of any share sales, and the resulting dilution.
- Progress in remediating the reported internal-control material weaknesses and any subsequent changes in control effectiveness.
- Potential supply-chain or COVID-related delays, and any material changes to clinical plans, financing needs or AffaMed milestone prospects.