VistaGen Therapeutics, Inc. — Form 10-Q Summary
Reporting period: Three and six months ended September 30, 2018; balance-sheet comparisons are to March 31, 2018. VistaGen is a clinical-stage biopharmaceutical company with no approved products and no recurring product revenue.
Financial performance and position
| Metric | Three months ended Sept. 30 | Six months ended Sept. 30 |
|---|---|---|
| Revenue | $0 in 2018 and 2017 | $0 in 2018 and 2017 |
| Research and development expense | $5.26 million vs. $2.43 million | $8.00 million vs. $3.52 million |
| General and administrative expense | $2.17 million vs. $2.57 million | $3.64 million vs. $3.73 million |
| Net loss | $7.44 million vs. $5.00 million | $11.65 million vs. $7.26 million |
| Net loss attributable to common stockholders | $7.72 million vs. $5.25 million | $12.21 million vs. $7.77 million |
| Basic and diluted loss per share | $0.30 vs. $0.53 | $0.50 vs. $0.82 |
- Six-month operating cash use was $7.06 million, compared with $4.01 million in 2017. Investing cash use was $0.17 million; financing provided $4.69 million. Cash declined $2.55 million to $7.83 million.
- At September 30, cash was $7.83 million, current assets were $8.48 million, current liabilities were $1.31 million, and total liabilities were $4.90 million. Working capital was approximately $7.17 million. Current notes payable were $115,600; capital lease obligations totaled $10,700. Accrued Series B preferred dividends were $3.17 million.
- Accumulated deficit was $168.2 million. Gross margin is not meaningful because the company reported no revenue.
Material changes versus the prior comparable period
- Quarterly net loss rose to $7.44 million from $5.00 million; six-month net loss rose to $11.65 million from $7.26 million. Higher research and development spending was the main driver, including ELEVATE trial and AV-101 manufacturing costs and a $2.25 million noncash charge for the PH94B license and PH10 option.
- Six-month research and development expense more than doubled, to $8.00 million from $3.52 million. General and administrative expense decreased modestly for the six-month period, while noncash stock-based compensation increased.
- Six-month operating cash use increased to $7.06 million from $4.01 million, largely reflecting ELEVATE and related development activity.
- Common shares outstanding increased from 23.07 million at March 31 to 28.68 million at September 30. The company also had 20.71 million warrants outstanding at quarter-end, creating potential dilution.
Outlook, risks and unusual items
- Clinical programs: Management expected top-line results from the Phase 2 ELEVATE study of AV-101 in major depressive disorder in mid-2019. AV-101 also had NIMH- and Baylor/VA-associated studies underway. The FDA granted AV-101 Fast Track designation for adjunctive MDD and neuropathic pain. Management planned further AV-101 studies and preparation for pivotal Phase 3 development of PH94B; PH10 development was also planned.
- Licenses and financing after quarter-end: In September, the company issued stock valued at $2.25 million for PH94B rights and an option for PH10. In October, it exercised the PH10 option, issuing stock valued at $2.00 million. Through October 26, it reported approximately $2.4 million of additional cash proceeds from private placements and warrant exercises.
- Going concern and liquidity: Management stated that, without additional financing, available resources were likely insufficient to fund planned operations for the 12 months following issuance of the financial statements, raising substantial doubt about continuing as a going concern. The company expects continuing losses and negative operating cash flows and may need to reduce or defer development if financing is unavailable. Future funding may dilute stockholders; no assurance was given that financing or collaborations would be available on acceptable terms.
- Development and operating risks: Product candidates require substantial further clinical work and regulatory approval; early results may not predict later outcomes. The company depends on third-party research, clinical and manufacturing organizations, and identified risks involving trial delays, safety, supply, regulatory requirements, competition, intellectual property and commercialization. It had no products for sale and no recurring revenue arrangements.
- Controls and legal matters: Management concluded disclosure controls were effective, but two previously identified material weaknesses in financial reporting controls—segregation of duties and accounting software functionality—remained unresolved. The filing reported no legal proceedings and no defaults upon senior securities.
Important facts for investors to verify
- Cash runway and subsequent financing proceeds relative to planned trial and operating costs; the filing does not provide a clear quantified cash runway.
- Enrollment, timing and results of ELEVATE and other AV-101 studies, and the development timelines and funding needs for PH94B and PH10.
- Terms and potential dilution from private placements, outstanding warrants, preferred stock and equity-based compensation.
- Whether the company remediates its internal-control material weaknesses and maintains reliable financial reporting.
- Whether clinical, regulatory, manufacturing, intellectual-property or financing developments materially alter the company’s plans or ability to continue operations.