vtgn-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)


			þ			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


			o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________.

Commission File Number: 001-37761

VISTAGEN THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)


Nevada			20-5093315
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

343 Allerton Avenue

South San Francisco, CA 94080

(Address of principal executive offices including zip code)

(650) 577-3600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	VTGN	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	o
Non-Accelerated filer	x	Smaller reporting company	x
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of November 6, 2024, 27,843,466 shares of the registrant’s common stock, $0.001 par value, were outstanding.

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TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements			1
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Operations and Comprehensive Loss			2
Condensed Consolidated Statement of Changes in Stockholders’ Equity			3
Condensed Consolidated Statements of Cash Flows			4
Notes to the Condensed Consolidated Financial Statements			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			13
Item 3. Quantitative and Qualitative Disclosures About Market Risk			24
Item 4. Controls and Procedures			24

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			25
Item 1A. Risk Factors			25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			76
Item 3. Defaults Upon Senior Securities			77
Item 4. Mine Safety Disclosures			77
Item 5. Other Information			77
Item 6. Exhibits			77

SIGNATURES			78

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PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

VISTAGEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and par value amounts)


	September 30, 2024		March 31, 2024
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	84,246	$	119,166
Marketable securities	13,332		-
Prepaid expenses and other current assets	2,370		1,506
Total current assets	99,948		120,672
Property and equipment, net	467		435
Right-of-use asset - operating lease	1,583		1,820
Other assets	498		726
Total assets	$	102,496	$	123,653
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	715	$	1,547
Accrued expenses	3,815		2,235
Deferred revenue - current portion	2,468		791
Operating lease obligation - current portion	525		550
Total current liabilities	7,523		5,123
Deferred revenue - non-current portion	730		2,674
Operating lease obligation - non-current portion	1,269		1,570
Total liabilities	9,522		9,367
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized at September 30, 2024 and March 31, 2024; no shares outstanding at September 30, 2024 and March 31, 2024	-		-
Common stock, $0.001 par value; 325,000,000 shares authorized at September 30, 2024 and March 31, 2024; 27,059,629 and 27,029,731 shares issued at September 30, 2024 and March 31, 2024, respectively	27		27
Additional paid-in capital	476,801		474,441
Treasury stock, at cost, 4,522 shares of common stock held at September 30, 2024 and March 31, 2024	(3,968)		(3,968)
Accumulated other comprehensive income	22		-
Accumulated deficit	(379,908)		(356,214)
Total stockholders’ equity	92,974		114,286
Total liabilities and stockholders’ equity	$	102,496	$	123,653

See accompanying notes to unaudited condensed consolidated financial statements.

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VISTAGEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(in thousands, except share and per share data)


	Three Months Ended September 30,				Six Months Ended September 30,
	2024		2023		2024		2023
Revenues:
Sublicense and other revenue	$	183	$	278	$	267	$	455
Total revenues	183		278		267		455
Operating expenses:
Research and development	10,215		3,851		17,863		8,048
General and administrative	4,195		3,207		8,762		6,185
Total operating expenses	14,410		7,058		26,625		14,233
Loss from operations	(14,227)		(6,780)		(26,358)		(13,778)
Other income, net:
Interest income, net	1,273		192		2,671		290
Loss before income taxes	(12,954)		(6,588)		(23,687)		(13,488)
Income taxes	(7)		—		(7)		(3)
Net loss	$	(12,961)	$	(6,588)	$	(23,694)	$	(13,491)
Unrealized gain on marketable securities	20		—		22		—
Comprehensive loss	$	(12,941)	$	(6,588)	$	(23,672)	$	(13,491)
Basic and diluted net loss per common share	$	(0.42)	$	(0.66)	$	(0.77)	$	(1.55)
Weighted average common shares outstanding, basic and diluted	30,632,347		10,042,530		30,617,970		8,717,050

See accompanying notes to unaudited condensed consolidated financial statements.

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VISTAGEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands, except share amounts)


	Common Stock			Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at March 31, 2023	7,315,583	$	7	$	342,893	$	(3,968)	$	-	$	(326,852)	$	12,080
Stock-based compensation expense	-	-		569		-		-		-		569
Sale of common stock pursuant to 2019 Employee Stock Purchase Plan	2,672	-		4		-		-		-		4
Issuance of common stock under Open Market Sale Agreement, net of issuance costs	561,418	1		1,098		-		-		-		1,099
Net loss	-	-		-		-		-		(6,903)		(6,903)
Balance at June 30, 2023	7,879,673	$	8	$	344,564	$	(3,968)	$	-	$	(333,755)	$	6,849
Stock-based compensation expense	-	-		584		-		-		-		584
Issuance of common stock under Open Market Sale Agreement, net of issuance costs	4,137,077	4		34,796		-		-		-		34,800
Net loss	-	-		-		-		-		(6,588)		(6,588)
Balance at September 30, 2023	12,016,750	$	12	$	379,944	$	(3,968)	$	-	$	(340,343)	$	35,645


	Common Stock			Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at March 31, 2024	27,029,731	$	27	$	474,441	$	(3,968)	$	-	$	(356,214)	$	114,286
Stock-based compensation expense	-	-		1,160		-		-		-		1,160
Sale of common stock pursuant to 2019 Employee Stock Purchase Plan	29,898	-		88		-		-		-		88
Unrealized gain on marketable securities available-for-sale, net	-	-		-		-		2		-		2
Net loss	-	-		-		-		-		(10,733)		(10,733)
Balance at June 30, 2024	27,059,629	$	27	$	475,689	$	(3,968)	$	2	$	(366,947)	$	104,803
Stock-based compensation expense	-	-		1,112		-		-		-		1,112
Unrealized gain on marketable securities available-for-sale, net	-	-		-		-		20		-		20
Net loss	-	-		-		-		-		(12,961)		(12,961)
Balance at September 30, 2024	27,059,629	$	27	$	476,801	$	(3,968)	$	22	$	(379,908)	$	92,974

See accompanying notes to unaudited condensed consolidated financial statements.

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VISTAGEN THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Six Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(23,694)	$	(13,491)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	71		63
Stock-based compensation	2,272		1,153
Amortization of operating lease right-of-use asset	237		215
Accretion on marketable securities	(159)		-
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(864)		289
Other assets	190		-
Operating lease liability	(326)		(234)
Deferred sublicense and other revenue, net of deferred contract acquisition costs	(230)		(413)
Accounts payable and accrued expenses	748		(1,663)
Net cash used in operating activities	(21,755)		(14,081)

Cash flows from investing activities:
Purchases of laboratory and other equipment	(103)		-
Sales and maturities of marketable securities	5,498		-
Purchases of marketable securities	(18,648)		-
Net cash used in investing activities	(13,253)		-

Cash flows from financing activities:
Net proceeds from sale of common stock under Open Market Sale Agreement, net of deferred offering costs	-		36,033
Net proceeds from sale of common stock under 2019 Employee Stock Purchase Plan	88		4
Repayment of note payable	-		(986)
Net cash provided by financing activities	88		35,051
Net increase (decrease) in cash and cash equivalents	(34,920)		20,970
Cash and cash equivalents at beginning of period	119,166		16,638
Cash and cash equivalents at end of period	$	84,246	$	37,608
Supplemental disclosure of noncash activities:
Non-cash investing and financing activities:
Insurance premiums settled by issuing note payable	$	-	$	880

See accompanying notes to unaudited condensed consolidated financial statements.

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VISTAGEN THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Description of Business

Vistagen Therapeutics, Inc., a Nevada corporation (Vistagen, the Company, we, our, or us), is a late clinical-stage biopharmaceutical company leveraging a deep understanding of nose-to-brain neurocircuitry to develop and commercialize a broad and diverse pipeline of product candidates from a new class of intranasal therapies called pherines. Each pherine product candidate in Vistagen's neuroscience pipeline is designed to rapidly activate peripheral chemosensory neurons in the nasal cavity, impacting neural circuits in the olfactory system and brain to achieve desired therapeutic benefits and differentiated safety, without requiring systemic absorption or binding to neurons in the brain. Vistagen’s neuroscience pipeline also includes an oral prodrug with potential to impact certain neurological conditions involving the NMDA receptor. Vistagen is passionate about developing transformative treatment options to improve the lives of individuals underserved by the current standard of care for multiple highly prevalent disorders, including social anxiety disorder, major depressive disorder, and vasomotor symptoms (hot flashes) associated with menopause.

2. Basis of Presentation, Principles of Consolidation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) applicable to interim financial information and pursuant to the instructions of the Securities and Exchange Commission (SEC) on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Further, the results of our operations for any interim periods are not necessarily indicative of the results that may be expected for any other interim period or the full fiscal year. In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation have been included. The condensed consolidated balance sheet at March 31, 2024, has been derived from our audited consolidated financial statements but does not include all disclosures required by U.S. GAAP. Because all of the disclosures required by U.S. GAAP for complete financial statements are not included herein, these unaudited condensed consolidated financial statements and the accompanying notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended March 31, 2024 (Annual Report).

The accompanying unaudited condensed consolidated financial statements include the accounts of Vistagen and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, those relating to stock-based compensation, revenue recognition, research and development expenses, determination of right-of-use assets under lease transactions and related lease obligations, and the assumptions used to value warrants. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may materially differ from these estimates and assumptions.

Liquidity

We have incurred significant losses and negative cash flows from operations since inception. As of September 30, 2024, we had an accumulated deficit of $379.9 million. We expect that operating losses and negative cash flows will continue for the foreseeable future as we continue research, development and contract manufacturing of our neuroscience pipeline. We currently expect that our cash, cash equivalents and marketable securities of $97.6 million as of September 30, 2024 will be sufficient to fund operating expenses and capital requirements for more than 12 months from the date these unaudited condensed consolidated financial statements are issued.

Fair Value Measurements

The Company measures cash equivalents and available-for-sale debt securities at fair value. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Therefore, fair value is a market-based measurement that is determined based on assumptions

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that market participants would use in pricing an asset or liability. Fair value is affected by a number of factors, including the type of asset or liability, the characteristics specific to the asset or liability and the state of the marketplace including the existence and transparency of transactions between market participants. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2—Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3—Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).

Money market funds are highly liquid investments and are classified as Level 1. The pricing information for these assets is readily available and can be independently validated as of the measurement date. Available-for sale debt securities are valued using observable inputs from similar assets, or from observable data in markets that are not active. These assets are classified as Level 2.

Marketable Securities

Marketable securities consist of U.S. treasury securities. These securities are classified as available-for sale, as the sale of such securities may be required prior to their maturity. Available-for-sale securities are recorded at fair value, with the related unrealized gains and losses included in accumulated other comprehensive income or loss and included as a separate component of stockholders' equity. Our marketable debt securities are classified as cash equivalents if the original maturity, from the date of purchase, is 90 days or less, and as marketable securities if the original maturity, from the date of purchase, is in excess of 90 days. Our cash equivalents are generally composed of U.S. treasury securities and money market funds. The amortized cost of available-for-sale securities reflects amortization of premiums and accretion of discounts to maturity. Premiums and discounts on debt securities are amortized into interest and other income, net. The Company classifies investments in marketable debt securities as current assets, regardless of the stated maturity date, which may be beyond one year from the current balance sheet date. Short-term classification reflects management's view that the entire portfolio is available, and the Company may use the proceeds from sale of these investments to fund current operations, as necessary.

Recently Issued Accounting Pronouncements

There were no significant updates not already disclosed in the Company’s audited consolidated financial statements for the years ended March 31, 2024, and 2023, to the recently issued accounting standards for the six months ended September 30, 2024.

Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for public entities with annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its condensed financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment among other disclosure requirements. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of this guidance on its condensed financial statements.

3. Fair Value Measurements

The following tables show the Company’s cash, cash equivalents and marketable securities at fair value as of September 30, 2024 and March 31, 2024 (in thousands):

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	September 30, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents:
Cash and money market funds	$	83,748	$	—	$	—	$	83,748
U.S. treasury securities	—		498		—		498
Marketable securities
U.S. treasury securities	—

SEC Form 10-Q filed by Vistagen Therapeutics Inc.