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What changed in Vistagen Therapeutics, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Vistagen Therapeutics, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+465 added−443 removedSource: 10-K (2023-06-28) vs 10-K (2022-06-23)

Top changes in Vistagen Therapeutics, Inc.'s 2023 10-K

465 paragraphs added · 443 removed · 321 edited across 3 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

209 edited+24 added−46 removed285 unchanged
Biggest changeThese risks include, among others: ● the successful completion of our PALISADE-1, PALISADE-2 and/or other clinical or nonclinical studies in the PALISADE Phase 3 program for PH94B in SAD may not be sufficient to cause the FDA to approve of any NDA that we may submit or cause any other agency to provide regulatory approval of PH94B and, even if approved, does not ensure acceptance of PH94B by clinicians leading to a revenue stream to support our operations; if we are unable to retain or attract key management and scientific personnel, we may be unable to successfully produce, develop and commercialize our product candidates; ● we are a development stage biopharmaceutical company with no recurring revenues from product sales or approved products, and limited experience developing or commercializing new drug candidates, which makes it difficult to assess our future viability; 33 ● we depend heavily on the success of our current CNS product candidates, PH94B, PH10 and AV-101, and we cannot be certain that we will be able to obtain regulatory approval for, or successfully commercialize, any of our current or future product candidates; ● failures or delays in the commencement or completion of our planned clinical trials, including, among others, clinical studies in our PALISADE Phase 3 program for PH94B in SAD, could delay, prevent or limit our ability to generate revenue and continue our business; ● the COVID-19 pandemic has had, and may continue to have, an impact on our business, including delays and potential delays in manufacturing and testing of certain drug substance and drug products and potential delays in recruitment and enrollment in the PALISADE Phase 3 Program and other planned clinical and nonclinical studies of our product candidates; ● we face significant competition, and if we are unable to compete effectively, we may not be able to achieve or maintain significant market penetration or improve our results of operations; ● if we are unable to adequately protect our proprietary technology, or obtain and maintain issued patents that are sufficient to protect our product candidates, others could compete against us more directly, which would have a material adverse impact on our business, results of operations, financial condition and prospects; ● we have incurred significant net losses since inception and we will continue to incur substantial operating losses for the foreseeable future; ● we require substantial additional financing to execute our long-term business plan, including further development and commercialization of PH94B and our other CNS product candidates, and to continue to operate as a going concern; ● raising additional capital in equity-based financing transactions is likely to cause substantial dilution to our existing stockholders, may restrict our operations or require us to relinquish rights, and may require us to seek stockholder approval to authorize additional shares of our common stock; and ● other risks and uncertainties, including those described under Risk Factors below.
Biggest changeThese risks include, among others: ● we require substantial additional financing to execute our long-term business plan either on our own or with collaborators, including further development of our product candidates; ● We have incurred significant net losses since inception and we will continue to incur substantial operating losses for the foreseeable future; ● we are a development stage biopharmaceutical company with no revenues from product sales or approved products, and limited experience developing new drug candidates, which makes it difficult to assess our future viability; ● failures of our current and/or future clinical studies of our product candidates, or delays in the commencement of completion of our clinical trials, could result in increased costs to us and could delay, prevent or limit our ability to generate revenue and continue our business; ● we depend heavily on the success of our product candidates and we cannot be certain that we will be able to obtain regulatory approval for, or successfully commercialize, any of our current or future product candidates; ● if we are unable to retain or attract key management and scientific personnel, we may be unable to successfully produce and develop our product candidates; ● the successful completion of clinical or nonclinical studies in any of our development programs may not be sufficient to cause the FDA to approve of any NDA that we may submit or cause any other agency to provide regulatory approval of any of our product candidates and, even if approved, does not ensure acceptance of such product candidates by clinicians leading to a revenue stream to support our operations; ● we face significant competition, and if we are unable to compete effectively, we may not be able to achieve or maintain significant market penetration or improve our results of operations; ● if we are unable to adequately protect our proprietary technology, or obtain and maintain issued patents that are sufficient to protect our product candidates, others could compete against us more directly, which would have a material adverse impact on our business, results of operations, financial condition and prospects; ● raising additional capital in equity-based financing transactions is likely to cause substantial dilution to our existing stockholders, may restrict our operations or require us to relinquish rights, and may require us to seek stockholder approval to authorize additional shares of our common stock; ● if we fail to comply with the continued listing requirements of the Nasdaq Capital Market, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted; and ● other risks and uncertainties, including those described under Risk Factors below.
In addition, the terms of any such securities may include liquidation or other preferences that materially adversely affect rights of our stockholders. Debt financing, if available, would increase our fixed payment obligations and would involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
In addition, the terms of any such securities may include liquidation or other preferences that materially adversely affect the rights of our stockholders. Debt financing, if available, would increase our fixed payment obligations and would involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
Our ability to obtain valid and enforceable patents depends, among other factors, on whether the differences between our technology and the prior art allow our inventions to be patentable over relevant prior art. Such prior art includes, for example, scientific publications, investment blogs, granted patents and published patent applications.
Our ability to obtain valid and enforceable patents depends, among other factors, on whether the differences between our technology and the prior art allow our inventions to be patentable over the relevant prior art. Such prior art includes, for example, scientific publications, investment blogs, granted patents, and published patent applications.
For example, we published a web post on the NIH clinical trials website prior to the filing of our initial AV-101 patent application, which describes unit doses for a then future study, but does not mention treatment of depression and does not provide any preclinical or clinical study data relating to depression or any other medical condition, disease or disorder.
For example, we published a web post on the NIH clinical trials website prior to the filing of our initial AV-101 patent application, which describes unit doses for a then future study but does not mention the treatment of depression and does not provide any preclinical or clinical study data relating to depression or any other medical condition, disease or disorder.
The USPTO and various other foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
The USPTO and various other foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment, and other provisions during the patent process. There are situations in which noncompliance can result in the abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States or European Union. The outcome of intellectual property litigation is subject to uncertainties that cannot be adequately quantified in advance.
We may not be able to prevent, alone or with our licensors, the misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States or the European Union. The outcome of intellectual property litigation is subject to uncertainties that cannot be adequately quantified in advance.
Our business could be harmed if the prevailing party does not offer us or our licensors or collaborators a license on commercially reasonable terms or at all. Even if we or our licensors or collaborators obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us or our licensors or collaborators.
Our business could be harmed if the prevailing party does not offer us or our licensors or collaborators a license on commercially reasonable terms or at all. Even if we or our licensors or collaborators obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us or our licensors or collaborators.
As we have done previously, we may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates, and we cannot provide any assurances that third-party patents do not exist that might be enforced against our current product candidates or future products in the absence of such a license.
As we have done previously, we may need to obtain licenses from third parties to advance our research or allow the commercialization of our product candidates, and we cannot provide any assurances that third-party patents do not exist that might be enforced against our current product candidates or future products in the absence of such a license.
Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. If we fail in defending such claims, in addition to paying monetary claims, we may lose valuable intellectual property rights or personnel.
Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. If we fail to defend such claims, in addition to paying monetary claims, we may lose valuable intellectual property rights or personnel.
The FDA may refuse to permit the filing of our NDA, delay, limit or deny approval of a NDA for many reasons, including, among others: ● if we submit an NDA and it is reviewed by a FDA advisory committee, the FDA may have difficulties scheduling an advisory committee meeting in a timely manner or the advisory committee may recommend against approval of our application or may recommend that the FDA require, as a condition of approval, additional nonclinical or clinical studies, limitations on approved labeling or distribution and use restrictions; 35 ● a FDA advisory committee may recommend, or the FDA may require, a Risk Evaluation and Mitigation Strategies ( REMS ) safety program as a condition of approval or post-approval; ● a FDA advisory committee or the FDA or applicable regulatory agency may determine that there is insufficient evidence of overall effectiveness or safety in a NDA and require additional clinical studies; ● the FDA or the applicable foreign regulatory agency may determine that the manufacturing processes or facilities of third-party contract manufacturers with which we contract do not conform to applicable requirements, including current Good Manufacturing Practices ( cGMPs ); or ● the FDA or applicable foreign regulatory agency may change its approval policies or adopt new regulations.
The FDA may refuse to permit the filing of our NDA, delay, limit or deny approval of a NDA for many reasons, including, among others: ● if we submit an NDA and it is reviewed by a FDA advisory committee, the FDA may have difficulties scheduling an advisory committee meeting in a timely manner or the advisory committee may recommend against approval of our application or may recommend that the FDA require, as a condition of approval, additional nonclinical or clinical studies, limitations on approved labeling or distribution and use restrictions; ● a FDA advisory committee may recommend, or the FDA may require, a Risk Evaluation and Mitigation Strategies ( REMS ) safety program as a condition of approval or post-approval; ● a FDA advisory committee or the FDA or applicable regulatory agency may determine that there is insufficient evidence of overall effectiveness or safety in a NDA and require additional clinical studies; ● the FDA or the applicable foreign regulatory agency may determine that the manufacturing processes or facilities of third-party contract manufacturers with which we contract do not conform to applicable requirements, including current Good Manufacturing Practices ( cGMPs ); or ● the FDA or applicable foreign regulatory agency may change its approval policies or adopt new regulations.
The following examples are illustrative: ● others may be able to develop and/or practice technology that is similar to our technology or aspects of our technology but that is not covered by the claims of patents, should such patents issue from our patent applications; 63 ● we might not have been the first to make the inventions covered by a pending patent application that we own; ● we might not have been the first to file patent applications covering an invention; ● others may independently develop similar or alternative technologies without infringing our intellectual property rights; ● pending patent applications that we own or license may not lead to issued patents; ● patents, if issued, that we own or license may not provide us with any competitive advantages, or may be held invalid or unenforceable or be narrowed, as a result of legal challenges by our competitors; ● third parties may compete with us in jurisdictions where we do not pursue and obtain patent protection; ● we may not be able to obtain and/or maintain necessary or useful licenses on reasonable terms or at all; and ● the patents of others may have an adverse effect on our business.
The following examples are illustrative: ● others may be able to develop and/or practice technology that is similar to our technology or aspects of our technology but that is not covered by the claims of patents, should such patents issue from our patent applications; ● we might not have been the first to make the inventions covered by a pending patent application that we own; ● we might not have been the first to file patent applications covering an invention; ● others may independently develop similar or alternative technologies without infringing our intellectual property rights; ● pending patent applications that we own or license may not lead to issued patents; ● patents, if issued, that we own or license may not provide us with any competitive advantages, or may be held invalid or unenforceable or be narrowed, as a result of legal challenges by our competitors; ● third parties may compete with us in jurisdictions where we do not pursue and obtain patent protection; ● we may not be able to obtain and/or maintain necessary or useful licenses on reasonable terms or at all; and ● the patents of others may have an adverse effect on our business.
Market acceptance of our product candidates, if approved, will depend on a number of factors, including, among others: ● the efficacy and safety of our product candidates as demonstrated in clinical trials, and, if required by any applicable regulatory authority in connection with the approval for the applicable indications, to provide patients with incremental health benefits, as compared with other available therapies; 42 ● limitations or warnings contained in the labeling approved for our product candidates by the FDA or other applicable regulatory authorities; ● the clinical indications for which our product candidates are approved; ● availability of alternative treatments already approved or expected to be commercially launched in the near future; ● the potential and perceived advantages of our product candidates over current treatment options or alternative treatments, including future alternative treatments; ● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; ● the strength of marketing and distribution support and timing of market introduction of competitive products; ● publicity concerning our products or competing products and treatments; ● pricing and cost effectiveness; ● the effectiveness of our sales and marketing strategies; ● our ability to increase awareness of our product candidates through marketing efforts; ● our ability to obtain sufficient third-party coverage or reimbursement; or ● the willingness of patients to pay out-of-pocket in the absence of third-party coverage.
Market acceptance of our product candidates, if approved, will depend on a number of factors, including, among others: ● the efficacy and safety of our product candidates as demonstrated in clinical trials, and, if required by any applicable regulatory authority in connection with the approval for the applicable indications, to provide patients with incremental health benefits, as compared with other available therapies; ● limitations or warnings contained in the labeling approved for our product candidates by the FDA or other applicable regulatory authorities; ● the clinical indications for which our product candidates are approved; ● availability of alternative treatments already approved or expected to be commercially launched in the near future; ● the potential and perceived advantages of our product candidates over current treatment options or alternative treatments, including future alternative treatments; ● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; ● the strength of marketing and distribution support and timing of market introduction of competitive products; ● publicity concerning our products or competing products and treatments; 51 ● pricing and cost effectiveness; ● the effectiveness of our sales and marketing strategies; ● our ability to increase awareness of our product candidates through marketing efforts; ● our ability to obtain sufficient third-party coverage or reimbursement; or ● the willingness of patients to pay out-of-pocket in the absence of third-party coverage.
We could also be required to seek funds through arrangements with collaborative partners in certain territories, including the U.S., or at an earlier stage than otherwise would be desirable or aligned with our business plan, and we may be required to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.
We may also seek funds through arrangements with collaborative partners in certain territories, including the U.S., or at an earlier stage than otherwise would be desirable or aligned with our business plan, and we may be required to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.
Further, our trade secrets could otherwise become known or be independently discovered by our competitors. Third parties may initiate legal proceedings against us alleging that we infringe their intellectual property rights, which may prevent or delay our product development efforts and stop us from commercializing candidate products or increase the costs of commercializing them, if approved.
Further, our trade secrets could otherwise become known or be independently discovered by our competitors. 67 Third parties may initiate legal proceedings against us, alleging that we infringe their intellectual property rights, which may prevent or delay our product development efforts and stop us from commercializing candidate products or increase the costs of commercializing them if approved.
To that end, we must be able to manage our research, development and regulatory efforts effectively, and hire, train and integrate additional management, administrative, research and development, regulatory, commercial and other personnel. The hiring, training and integration of new employees may be more difficult, costly and/or time-consuming for us because we have fewer resources than a larger organization.
To that end, we must be able to manage our research, development and regulatory efforts effectively, and hire, train and integrate additional management, administrative, research and development, regulatory and other personnel. The hiring, training and integration of new employees may be more difficult, costly and/or time-consuming for us because we have fewer resources than a larger organization.
We are a development-stage biopharmaceutical company with no recurring revenues from product sales or approved products, and limited experience developing new therapeutic product candidates, including conducting clinical trials and other areas required for the successful development and commercialization of therapeutic products, which makes it difficult to assess our future viability. We are a development-stage biopharmaceutical company.
We are a development-stage biopharmaceutical company with no recurring revenues from product sales or approved products, and limited experience developing new therapeutic product candidates, including conducting clinical trials and other areas required for the successful development of therapeutic products, which makes it difficult to assess our future viability. We are a development-stage biopharmaceutical company.
We also could incur significant costs associated with civil or criminal fines and penalties. Although we maintain workers' compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities.
We also could incur significant costs associated with civil or criminal fines and penalties. 58 Although we maintain workers' compensation insurance to cover us for costs and expenses, we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities.
Additionally, having substantially shifted to remote working arrangements, we also face a heightened risk of cybersecurity attacks or data security incidents and are more dependent on internet and telecommunications access and capabilities. COVID-19 has also created significant disruption and volatility in national, regional and local economies and markets.
Additionally, having substantially shifted to remote working arrangements, we also face a heightened risk of cybersecurity attacks or data security incidents and are more dependent on internet and telecommunications access and capabilities. COVID-19 also created significant disruption and volatility in national, regional and local economies and markets.
With respect to PH10 and AV-101 in combination with probenecid for treatment of depression disorders, including MDD, and AV-101 in combination with probenecid for treatment of certain neurological disorders, including levodopa-induced dyskinesia associated with therapy for Parkinson’s disease, neuropathic pain, and epilepsy, we believe a range of pharmaceutical and biotechnology companies have programs to develop new drug candidates and/or medical device technologies for such indications, including, but not limited to, Abbott Laboratories, Acadia, Allergan, Alkermes, Aptynix, AstraZeneca, Axsome, Eli Lilly, GlaxoSmithKline, IntraCellular, Janssen, Lundbeck, Merck, Neurocrine, Novartis, Ono, Otsuka, Pfizer, Relmada, Roche, Sage, Sumitomo Dainippon, Takeda and Xenon, as well as any affiliates of the foregoing companies.
With respect to itruvone and AV-101 in combination with probenecid for treatment of depression disorders, including MDD, and AV-101 in combination with probenecid for treatment of certain neurological disorders, including levodopa-induced dyskinesia associated with therapy for Parkinson’s disease, neuropathic pain, and epilepsy, we believe a range of pharmaceutical and biotechnology companies have programs to develop new drug candidates and/or medical device technologies for such indications, including, but not limited to, Abbott Laboratories, Acadia, Allergan, Alkermes, Aptynix, AstraZeneca, Axsome, Eli Lilly, GlaxoSmithKline, IntraCellular, Janssen, Lundbeck, Merck, Neurocrine, Novartis, Ono, Otsuka, Pfizer, Relmada, Roche, Sage, Sumitomo Dainippon, Takeda and Xenon, as well as any affiliates of the foregoing companies.
If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock. Patent and other types of intellectual property litigation can involve complex factual and legal questions, and their outcomes are uncertain.
If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock. Patent litigation and other types of intellectual property litigation can involve complex factual and legal questions, and litigation outcomes are uncertain.
Although we are not aware of any claims currently pending or threatened against us, we may be subject to claims that we or our employees, advisors or consultants have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third party.
Although we are not aware of any claims currently pending or threatened against us, we may be subject to claims that we or our employees, advisors, or consultants have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or another third party.
We do not control these analysts. The price of our common stock could decline if one or more equity research analysts downgrade our common stock or if such analysts issue other unfavorable commentary or cease publishing reports about us or our business. There may be additional issuances of shares of preferred stock in the future.
We do not control these analysts. The price of our common stock could decline if one or more equity research analysts downgrade our common stock or if such analysts issue other unfavorable commentary or cease publishing reports about us or our business. 76 There may be additional issuances of shares of preferred stock in the future.
We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful. We are subject to healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.
We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful. 55 We are subject to healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.
Such a loss of patent protection would have a material adverse impact on our business. Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Such a loss of patent protection would have a material adverse impact on our business. 65 Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which our stockholders purchased them. 65 We incur significant costs to ensure compliance with corporate governance, federal securities law and accounting requirements.
There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which our stockholders purchased them. We incur significant costs to ensure compliance with corporate governance, federal securities law and accounting requirements.
In addition, orphan drug exclusive marketing rights in the U.S. may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition or if another drug with the same active moiety is determined to be safer, more effective, or represents a major contribution to patient care. 47 Our future growth may depend, in part, on our ability to penetrate foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties.
In addition, orphan drug exclusive marketing rights in the U.S. may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition or if another drug with the same active moiety is determined to be safer, more effective, or represents a major contribution to patient care. 57 Our future growth may depend, in part, on our ability to penetrate foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties.
We have and will continue to use significant capital for the development and commercialization of our product candidates, and, as such, we expect to seek additional capital from future issuance(s) of our securities, which may consist of issuances of equity and/or debt securities, to fund our planned operations.
We have and will continue to use significant capital for the development of our product candidates, and, as such, we expect to seek additional capital from future issuance(s) of our securities, which may consist of issuances of equity and/or debt securities, to fund our planned operations.
The foregoing types of proceedings can be expensive and time-consuming and many of our own or our licensors’ or collaborators’ adversaries in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these legal actions than we or our licensors or collaborators can.
The foregoing types of proceedings can be expensive and time-consuming and many of our own or our licensors’ or collaborators’ adversaries in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these kinds of legal actions than we or our licensors or collaborators can dedicate.
The ongoing COVID-19 pandemic, or another highly transmissible and pathogenic infectious disease, could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in a further economic downturn or a global recession.
The COVID-19 pandemic, or another highly transmissible and pathogenic infectious disease, could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in a further economic downturn or a global recession.
We cannot assure that our business, product candidates and methods do not or will not infringe the patents or other intellectual property rights of third parties. Third parties may initiate legal proceedings against us or our licensors or collaborators alleging that we or our licensors or collaborators infringe their intellectual property rights.
We cannot assure that our business, product candidates, and proprietary methods do not or will not infringe the patents or other intellectual property rights of third parties. Third parties may initiate legal proceedings against us or our licensors or collaborators, alleging that we or our licensors or collaborators infringe their intellectual property rights.
If we are unable to establish broad sales and marketing capabilities on our own or enter into agreements with third parties to market and sell our CNS product candidates, we may not be able to generate any revenue.
If we are unable to establish broad sales and marketing capabilities on our own or enter into agreements with third parties to market and sell our CNS product candidates, we may not be able to generate any revenue from product sales.
As a result, we can expect to relinquish some or all of the control over the future success of a product candidate that we license to a third party in the territories included in the licenses. We face significant competition in seeking appropriate collaborators.
As a result, we can expect to relinquish some or all of the control over the future success of a product candidate that we license to a third party in the territories included in the licenses. 54 We face significant competition in seeking appropriate collaborators.
In addition, intellectual property litigation or claims could force us to do one or more of the following: ● cease developing, selling or otherwise commercializing our product candidates; ● pay substantial damages for past use of the asserted intellectual property; 59 ● obtain a license from the holder of the asserted intellectual property, which license may not be available on reasonable terms, if at all; and ● in the case of trademark claims, redesign, or rename, some or all of our product candidates to avoid infringing the intellectual property rights of third parties, which may not be possible and, even if possible, could be costly and time-consuming.
In addition, intellectual property litigation or claims could force us to do one or more of the following: ● cease developing, selling or otherwise commercializing our product candidates; ● pay substantial damages for past use of the asserted intellectual property; ● obtain a license from the holder of the asserted intellectual property, which license may not be available on commercially reasonable terms, if at all; and ● in the case of trademark claims, redesign, or rename, some or all of our product candidates to avoid infringing the intellectual property rights of third parties, which may not be possible and, even if possible, could be costly and time-consuming.
We also rely upon unpatented trade secrets, unpatented know-how and continuing technological innovation to develop and maintain our competitive position, which we seek to protect, in part, by confidentiality agreements with our employees and our collaborators and consultants.
We also may rely upon unpatented trade secrets, unpatented know-how, and continuing technological innovation to develop and maintain our competitive position, which we seek to protect, in part, by confidentiality agreements with our employees and our collaborators and consultants.
With respect to PH94B, in addition to potential competition from certain current FDA-approved antidepressants and off-label use of benzodiazepines and beta blockers, we believe additional drug candidates in development for SAD may include, but potentially not be limited to, an oral fatty acid amide hydrolase inhibitor in development by Janssen, and two oral drug candidates in Phase 2 development that act on the alpha-7 nicotinic acetylcholine receptor, one in development by Bionomics and the other in development by Vanda.
With respect to fasedienol, in addition to potential competition from certain current FDA-approved antidepressants and off-label use of benzodiazepines and beta blockers, we believe additional drug candidates in development for SAD may include, but potentially not be limited to, an oral fatty acid amide hydrolase inhibitor in development by Janssen, and two oral drug candidates in Phase 2 development that act on the alpha-7 nicotinic acetylcholine receptor, one in development by Bionomics and the other in development by Vanda.
Future growth will impose significant added responsibilities on members of management. Our future financial performance and our ability to develop and commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively.
Future growth will impose significant added responsibilities on members of management. Our future financial performance and our ability to develop our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively.
For PH10, at present, we believe we will need to complete at least one additional Phase 2B clinical study, two adequate and well-controlled Phase 3 clinical trials, as well as standard nonclinical and long-term clinical safety studies, as well as other smaller clinical studies prior to the potential submission of a NDA for regulatory approval of PH10 as a stand-alone rapid-onset treatment for MDD, or any other depression disorder.
For itruvone, at present, we believe we will need to complete at least one additional Phase 2B clinical study, two adequate and well-controlled Phase 3 clinical trials, as well as standard nonclinical and long-term clinical safety studies, as well as other smaller clinical studies prior to the potential submission of a NDA for regulatory approval of itruvone as a stand-alone rapid-onset treatment for MDD, or any other depression disorder.
General Company-Related Risks If we fail to retain and attract senior management and key scientific personnel, we may be unable to successfully produce, develop and commercialize our product candidates.
General Company-Related Risks If we fail to retain and attract senior management and key scientific personnel, we may be unable to successfully produce and develop our product candidates.
Compliance with such regulations may limit our exclusive rights, subject us to expenditure of resources with respect to reporting requirements and limit our ability to contract with non-U.S. manufacturers.
Compliance with such regulations may limit our exclusive rights, subject us to an expenditure of resources with respect to reporting requirements and limit our ability to contract with non-U.S. manufacturers.
We believe that any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidates and would substantially increase the costs of commercializing our product candidates and significantly impact our ability to successfully commercialize our product candidates and generate revenues. 43 Even if we receive marketing approval for our CNS product candidates, we may still face future development and regulatory difficulties.
We believe that any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidates and would substantially increase the costs of commercializing our product candidates and significantly impact our ability to successfully commercialize our product candidates and generate revenues. 52 Even if we receive marketing approval for our CNS product candidates, we may still face future development and regulatory difficulties.
We also could become subject to investigations by The Nasdaq Stock Market, the Securities and Exchange Commission or other regulatory authorities, which could require additional financial and management resources. 52 Raising additional capital is likely to cause substantial dilution to our existing stockholders, may restrict our operations or require us to relinquish rights, and may require us to seek stockholder approval to authorize additional shares of our common stock.
We also could become subject to investigations by The Nasdaq Stock Market, the Securities and Exchange Commission or other regulatory authorities, which could require additional financial and management resources. 60 Raising additional capital is likely to cause substantial dilution to our existing stockholders, may restrict our operations or require us to relinquish rights, and may require us to seek stockholder approval to authorize additional shares of our common stock.
A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business. 60 Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business. 70 Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We will continue to invest resources to comply with evolving laws, regulations and standards, however this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.
This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We will continue to invest resources to comply with evolving laws, regulations and standards, however this investment may result in increased general and administrative expense and a diversion of management’s time and attention from revenue-generating activities to compliance activities.
However, it was submitted in two continuation depression-related AV-101 patent applications that have similar claims and the USPTO did not make further rejection based on that post. Another source of uncertainty pertains to patent properties that were in-licensed by us for which prior art submissions were under the control of the licensor.
However, it was submitted in two continuation depression-related AV-101 patent applications that have similar claims, and the USPTO did not make further rejections based on that post. Another source of uncertainty pertains to patent properties that were in-licensed by us for which prior art submissions were under the control of the licensor.
Restrictions under applicable federal and state healthcare laws and regulations include the following: ● The federal anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid. ● The federal False Claims Act imposes criminal and civil penalties, including those from civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government. ● The federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information. ● The federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services. ● The federal transparency requirements, sometimes referred to as the “Sunshine Act,” under the Patient Protection and Affordable Care Act, require manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to report to the Department of Health and Human Services information related to physician payments and other transfers of value and physician ownership and investment interests. 46 ● Analogous state laws and regulations, such as state anti-kickback and false claims laws and transparency laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payers, including private insurers, and some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance. ● Guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures and drug pricing. ● Foreign Corrupt Practices Act and its application to marketing and selling practices as well as to clinical trials.
Restrictions under applicable federal and state healthcare laws and regulations include the following: ● The federal anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid. ● The federal False Claims Act imposes criminal and civil penalties, including those from civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government. ● The federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information. ● The federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services. ● The federal transparency requirements, sometimes referred to as the “Sunshine Act,” under the Patient Protection and Affordable Care Act, require manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to report to the Department of Health and Human Services information related to physician payments and other transfers of value and physician ownership and investment interests. ● Analogous state laws and regulations, such as state anti-kickback and false claims laws and transparency laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payers, including private insurers, and some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance. ● Guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures and drug pricing. ● Foreign Corrupt Practices Act and its application to marketing and selling practices as well as to clinical trials. 56 Ensuring that our future business arrangements with third parties comply with applicable healthcare laws and regulations could be costly.
Additionally, if any of our product candidates receives marketing approval and we or others later identify undesirable or unacceptable side effects or safety concerns caused by these product candidates, a number of potentially significant negative consequences could result, including: ● regulatory authorities may withdraw, suspend, or limit approvals of such product and require us to take them off the market; ● regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; ● regulatory authorities may require a medication guide outlining the risks of such side effects for distribution to patients, or that we implement a Risk Evaluation and Mitigation Strategy ( REMS) drug safety program or REMS-like plan to ensure that the benefits of the product outweigh its risks; ● we may be required to change the way a product is distributed or administered, conduct additional clinical trials or change the labeling of a product; 37 ● we may be required to conduct additional post-marketing studies or surveillance; ● we may be subject to limitations on how we may promote the product; ● sales of the product may decrease significantly; ● we may be subject to regulatory investigations, government enforcement actions, litigation or product liability claims; and ● our products may become less competitive or our reputation may suffer.
Additionally, if any of our product candidates receives marketing approval and we or others later identify undesirable or unacceptable side effects or safety concerns caused by these product candidates, a number of potentially significant negative consequences could result, including: ● regulatory authorities may withdraw, suspend, or limit approvals of such product and require us to take them off the market; ● regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; ● regulatory authorities may require a medication guide outlining the risks of such side effects for distribution to patients, or that we implement a REMS drug safety program or REMS-like plan to ensure that the benefits of the product outweigh its risks; ● we may be required to change the way a product is distributed or administered, conduct additional clinical trials or change the labeling of a product; ● we may be required to conduct additional post-marketing studies or surveillance; ● we may be subject to limitations on how we may promote the product; ● sales of the product may decrease significantly; ● we may be subject to regulatory investigations, government enforcement actions, litigation or product liability claims; and ● our products may become less competitive or our reputation may suffer.
However, these designations may not actually lead to faster development or regulatory review or approval processes for PH94B or AV-101. Further, there is no guarantee the FDA will grant Fast Track designation for PH94B or AV-101 as a treatment option for other CNS indications or for any of our other product candidates in the future.
However, these designations may not actually lead to faster development or regulatory review or approval processes for fasedienol or AV-101. Further, there is no guarantee the FDA will grant Fast Track designation for fasedienol or AV-101 as a treatment option for other CNS indications or for any of our other product candidates in the future.
A severe or prolonged economic downturn, such as the recent economic downturn triggered by the ongoing COVID-19 pandemic, could result in a variety of risks to our business, including, weakened demand for our product candidates and our ability to raise additional capital when needed on acceptable terms, if at all.
A severe or prolonged economic downturn, such as the economic downturn triggered by the COVID-19 pandemic, could result in a variety of risks to our business, including, weakened demand for our product candidates and our ability to raise additional capital when needed on acceptable terms, if at all.
Any of these factors, many of which are beyond our control, could jeopardize our ability to obtain regulatory approval for and successfully commercialize any current or future drug product candidate we may develop. Any such setback in our pursuit of regulatory approval for any product candidate would have a material adverse effect on our business and prospects.
Any of these factors, many of which are beyond our control, could jeopardize our ability to obtain regulatory approval for any current or future drug product candidate we may develop. Any such setback in our pursuit of regulatory approval for any product candidate would have a material adverse effect on our business and prospects.
However, these FDA Fast Track designations may not lead to a faster development or regulatory review or approval process for PH94B or AV-101 and the FDA may withdraw Fast Track designation of PH94B or AV-101 if it believes that the respective designation is no longer supported by data from our clinical development programs.
However, these FDA Fast Track designations may not lead to a faster development or regulatory review or approval process for fasedienol or AV-101 and the FDA may withdraw Fast Track designation of fasedienol or AV-101 if it believes that the respective designation is no longer supported by data from our clinical development programs.
However, new antidepressant products with other mechanisms of pharmacological action or products approved for other indications, including the FDA-approved anesthetic ketamine hydrochloride administered intravenously, are being or may be used for treatment of MDD, as well as other CNS indications for which PH10 or AV-101 in combination with probenecid may have therapeutic potential.
However, new antidepressant products with other mechanisms of pharmacological action or products approved for other indications, including the FDA-approved anesthetic ketamine hydrochloride administered intravenously, are being or may be used for treatment of MDD, as well as other CNS indications for which itruvone or AV-101 in combination with probenecid may have therapeutic potential.
Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital. We expect our research and development expenses to significantly increase in connection with planned nonclinical and clinical studies, and out-sourced manufacturing, of our product candidates.
Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital. We expect our research and development expense to significantly increase in connection with planned nonclinical and clinical studies, and out-sourced manufacturing, of our product candidates.
Overall, the degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: ● any issued patents related to PH94B, PH10, AV-101 or any pending patent applications, if issued and challenged by others, will include or maintain claims having a scope sufficient to protect PH94B, PH10, AV-101 or any other products or product candidates against generic or other competition, particularly considering that any patent rights to these compounds per se have expired; ● any of our pending patent applications will issue as patents at all; ● we will be able to successfully commercialize our product candidates, if approved, before our relevant patents expire; ● we were the first to make the inventions covered by each of our patents and pending patent applications; ● we were the first to file patent applications for these inventions; ● others will not develop similar or alternative technologies that do not infringe our patents; ● others will not use pre-existing technology to effectively compete against us; ● any of our patents, if issued, will ultimately be found to be valid and enforceable, including on the basis of prior art relating to our patent applications and patents; ● any patents currently held or issued to us in the future will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; ● we will develop additional proprietary technologies or product candidates that are separately patentable; or ● our commercial activities or products will not infringe upon the patents or proprietary rights of others.
Overall, the degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: ● any granted patents related to our product candidates or any pending patent applications, if granted and challenged by others, will include or maintain claims having a scope sufficient to these product candidates or any other products or product candidates against generic or other competition, particularly considering that any patent rights to these compounds per se have expired; ● any of our pending patent applications will issue as patents at all; ● we will be able to successfully commercialize our product candidates, if approved, before our relevant patents expire; ● we were the first to make the inventions covered by each of our patents and pending patent applications; ● we were the first to file patent applications for these inventions; ● others will not develop similar or alternative technologies that do not infringe our patents; ● others will not use pre-existing technology to effectively compete against us; ● any of our patents, if issued, will ultimately be found to be valid and enforceable, including on the basis of prior art relating to our patent applications and patents; ● any patents currently held or issued to us in the future will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; ● we will develop additional proprietary technologies or product candidates that are separately patentable; or ● our commercial activities or products will not infringe upon the patents or proprietary rights of others.
The market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including, among others: ● volatility resulting from uncertainty and general economic conditions caused by the ongoing COVID-19 pandemic; ● plans for, progress of or results from nonclinical and clinical development activities related to our product candidates; ● the failure of the FDA or other regulatory authority to approve our product candidates; ● announcements of new products, technologies, commercial relationships, acquisitions or other events by us or our competitors; ● the success or failure of other CNS therapies; ● regulatory or legal developments in the U.S. and other countries; ● announcements regarding our intellectual property portfolio; ● failure of our product candidates, if approved, to achieve commercial success; ● fluctuations in stock market prices and trading volumes of similar companies; ● general market conditions and overall fluctuations in U.S. equity markets; ● variations in our quarterly operating results; ● changes in our financial guidance or securities analysts’ estimates of our financial performance; ● changes in accounting principles; ● our ability to raise additional capital and the terms on which we can raise it; 64 ● sales or purchases of large blocks of our common stock, including sales or purchases by our executive officers, directors and significant stockholders; ● establishment of short positions by holders or non-holders of our stock or warrants; ● additions or departures of key personnel; ● discussion of us or our stock price by the press and by online investor communities; and ● other risks and uncertainties described in these risk factors.
The market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including, among others: ● volatility resulting from uncertainty and general economic conditions; ● plans for, progress of or results from nonclinical and clinical development activities related to our product candidates; ● the failure of the FDA or other regulatory authority to approve our product candidates; ● announcements of new products, technologies, commercial relationships, acquisitions or other events by us or our competitors; ● the success or failure of other CNS therapies; ● regulatory or legal developments in the U.S. and other countries; ● announcements regarding our intellectual property portfolio; 75 ● failure of our product candidates, if approved, to achieve commercial success; ● fluctuations in stock market prices and trading volumes of similar companies; ● general market conditions and overall fluctuations in U.S. equity markets; ● variations in our quarterly operating results; ● changes in our financial guidance or securities analysts’ estimates of our financial performance; ● changes in accounting principles; ● our ability to raise additional capital and the terms on which we can raise it; ● sales or purchases of large blocks of our common stock, including sales or purchases by our executive officers, directors and significant stockholders; ● establishment of short positions by holders or non-holders of our stock or warrants; ● additions or departures of key personnel; ● discussion of us or our stock price by the press and by online investor communities; and ● other risks and uncertainties described in these risk factors.
Even if a patent issues and is held to be valid and enforceable, competitors may be able to design around our patents, for example, by using pre-existing or newly developed technology. Other parties may develop and obtain patent protection for more effective technologies, designs or methods.
Even if a patent is granted and is held to be valid and enforceable, competitors may be able to design around our patents, for example, by using pre-existing or newly developed technology. Other parties may develop and obtain patent protection for more effective technologies, designs, or methods.
Some intellectual property which we have licensed may have been discovered through government-funded programs and thus may be subject to federal regulations such as “ march-in ” rights, certain reporting requirements, and a preference for U.S. industry.
Some intellectual property that we have licensed may have been discovered through government-funded programs and thus may be subject to federal regulations such as “ march-in ” rights, certain reporting requirements, and a preference for U.S. industry.
Also, management is currently unaware of any FDA-approved oral treatment for MDD having the same mechanism of pharmacological action and safety profile as our intranasally-administered PH10 or our orally-administered AV-101 in combination with probenecid.
Also, management is currently unaware of any FDA-approved oral treatment for MDD having the same mechanism of pharmacological action and safety profile as our intranasally-administered itruvone or our orally administered AV-101 in combination with probenecid.
We strive to protect and enhance the proprietary technologies that we believe are important to our business, including seeking patents intended to cover our product candidates, their compositions and formulations, their methods of use and methods of manufacturing and any other inventions we consider important to the development of our business.
We strive to protect and enhance the proprietary technologies that we believe are important to our business, including seeking patents intended to cover our product candidates, their compositions and formulations, their methods of use and methods of manufacturing, delivery devices, and any other inventions we consider important to the development of our business.
Furthermore, though an issued patent is presumed valid and enforceable, its issuance is not conclusive as to its validity or its enforceability and it may not provide us with adequate proprietary protection or competitive advantages against competitors with similar products.
Furthermore, though an issued patent is presumed valid and enforceable, its issuance is not conclusive as to its validity or its enforceability, and the patent may not provide us with adequate proprietary protection or competitive advantages against competitors with similar products.
Ensuring that we have adequate internal control over financial reporting in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently.
Ensuring that we have adequate internal control over financial reporting so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently.
We rely on these licensors to have satisfied the relevant disclosure obligations. In the event any previously published prior art is deemed to be invalidating prior art, it may cause certain of our issued patents to be invalid and/or unenforceable, which would cause us to lose at least part, and perhaps all, of the patent protection on relevant product candidates.
We rely on these licensors to satisfy the relevant disclosure obligations. In the event any previously published prior art is deemed to be invalidating prior art, it may cause certain of our issued patents to be invalid and/or unenforceable, which would cause us to lose at least part, and perhaps all, of the patent protection on relevant product candidates.
Our future profitability may depend, in part, on our ability to commercialize our product candidates in foreign markets for which we may rely on collaboration with third parties such as our collaboration with AffaMed to develop and commercialize PH94B in key Asian markets.
Our future profitability may depend, in part, on our ability to commercialize our product candidates in foreign markets for which we may rely on collaboration with third parties such as our collaboration with AffaMed to develop and commercialize fasedienol in key Asian markets.
Thus, for each of the patent families that we believe provide coverage for our lead product candidates or technologies, we will need to decide whether and where to pursue protection outside the U.S.
Thus, for each of the patent families that we believe provide coverage for our lead product candidates or technologies, we will need to decide where and when to pursue protection outside the U.S.
With the continuing COVID-19-driven shift to remote working, and the use of virtual board and executive management meetings, cybersecurity risks are exponentially greater, including increased risk of phishing and other cybersecurity attacks as well as increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information about us or our customers, employees, or business partners.
With the continuing shift to remote working, and the use of virtual board and executive management meetings, cybersecurity risks are exponentially greater, including increased risk of phishing and other cybersecurity attacks as well as increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information about us or our customers, employees, or business partners.
We have been granted Fast Track designation from the FDA for development of PH94B for the treatment of social anxiety disorder (SAD) and AV-101 for the adjunctive treatment of major depressive disorder (MDD) and for the treatment of neuropathic pain (NP).
We have been granted Fast Track designation from the FDA for development of fasedienol for the treatment of social anxiety disorder (SAD) and AV-101 for the adjunctive treatment of major depressive disorder (MDD) and for the treatment of neuropathic pain (NP).
It is probable that the number of companies seeking to develop product candidates similar to and competitive with our product candidates will increase in the future. Currently, management is unaware of any FDA-approved rapid-onset, acute treatment of anxiety in adults with SAD having the same mechanism of pharmacological action and safety profile as PH94B.
It is probable that the number of companies seeking to develop product candidates similar to and competitive with our product candidates will increase in the future. Currently, management is unaware of any FDA-approved rapid-onset, treatment of anxiety in adults with SAD having the same mechanism of pharmacological action and safety profile as fasedienol.
We currently have no approved products and no recurring revenues from product sales, and we have not yet fully demonstrated an ability to overcome many of the fundamental risks and uncertainties frequently encountered by development stage companies in new and rapidly evolving fields of technology, particularly biotechnology.
We currently have no approved products and no revenue from product sales, and we have not yet fully demonstrated an ability to overcome many of the fundamental risks and uncertainties frequently encountered by development stage companies in new and rapidly evolving fields of technology, particularly biotechnology.
In addition, certain of our product candidates, including PH94B and PH10, will be subject to regulation as combination products, which means that they are composed of both a drug product and device product. Although we do not contemplate doing so, if marketed individually, each component would be subject to different regulatory pathways and reviewed by different centers within the FDA.
In addition, certain of our product candidates, including fasedienol and itruvone, will be subject to regulation as combination products, which means that they are composed of both a drug product and device product. Although we do not contemplate doing so, if marketed individually, each component would be subject to different regulatory pathways and reviewed by different centers within the FDA.
When necessary, if we are unable to obtain additional funding on a timely basis and on acceptable terms, we may be required to significantly curtail, delay or discontinue one or more of our research or product development programs or the commercialization of any product candidate or be unable to continue or expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.
When necessary, if we are unable to obtain additional funding on a timely basis and on acceptable terms, we may be required to significantly curtail, delay or discontinue one or more of our research or product development programs or be unable to continue or expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.
Moreover, the relevant standards for granting and reviewing patents varies among countries in which we pursue patents. 56 In addition, some patent-related uncertainty exists because of the challenge in finding and addressing all of the relevant and material prior art in the biotechnology and pharmaceutical fields.
Moreover, the relevant standards for granting and reviewing patents vary among the countries in which we pursue patents. In addition, some patent-related uncertainty exists because of the challenge of finding and addressing all of the relevant and material prior art in the biotechnology and pharmaceutical fields.
For example, if we receive FDA marketing approval for PH94B as an acute treatment of anxiety in adults with SAD, physicians may prescribe PH94B to their patients in a manner that is inconsistent with the FDA-approved label. However, if we are found to have promoted such off-label uses, we may become subject to significant liability.
For example, if we receive FDA marketing approval for fasedienol as an needed treatment of anxiety in adults with SAD, physicians may prescribe fasedienol to their patients in a manner that is inconsistent with the FDA-approved label. However, if we are found to have promoted such off-label uses, we may become subject to significant liability.
Other more recent court decisions and related USPTO examination guidelines must be taken into account, particularly as they relate to changes in what types of inventions are eligible for patent protection. Foreign patent and intellectual property laws also are evolving and are not predictable as to their impact on the Company and other biopharmaceutical companies.
Other more recent court decisions and related USPTO examination guidelines must be considered, particularly as they relate to changes in what types of inventions are eligible for patent protection. Foreign patent and intellectual property laws are also evolving and are not predictable as to their impact on the Company and other biopharmaceutical companies.
Our future capital requirements may depend on many factors, including: ● the number and characteristics of the product candidates we pursue; ● the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical and clinical studies; ● the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates; ● the cost of commercialization activities if any of our product candidates are approved for sale, including marketing, sales and distribution costs; ● the cost of manufacturing and formulating our product candidates and any products we successfully commercialize; ● our ability to establish and maintain strategic partnerships, licensing or other collaborative arrangements and the financial terms of such agreements; ● market acceptance of our product candidates; ● the effect of competing technological and market developments; ● our ability to obtain government funding for our research and development programs; ● the costs involved in obtaining, maintaining and enforcing patents to preserve our intellectual property; ● the costs involved in defending against such claims that we infringe third-party patents or violate other intellectual property rights and the outcome of such litigation; ● the timing, receipt and amount of potential future licensee fees, milestone payments, and sales of, or royalties on, our future products, if any; and ● the extent to which we may acquire or invest in additional businesses, product candidates and technologies. 51 Any additional fundraising efforts will divert certain members of our management team from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.
Our future capital requirements may depend on many factors, including: ● the number and characteristics of the product candidates we pursue; ● the scope, progress, results and costs of researching, developing and commercializing our product candidates, and conducting preclinical and clinical studies ● the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates; ● the cost of manufacturing and formulating our product candidates; ● our ability to establish and maintain strategic partnerships, licensing or other collaborative arrangements and the financial terms of such agreements; ● market acceptance of our product candidates; ● the effect of competing technological and market developments; ● our ability to obtain government funding for our research and development programs; ● the costs involved in obtaining, maintaining and enforcing patents to preserve our intellectual property; ● the costs involved in defending against such claims that we infringe third-party patents or violate other intellectual property rights and the outcome of such litigation; ● the timing, receipt and amount of potential future licensee fees, milestone payments, and sales of, or royalties on, our future products, if any; and ● the extent to which we may acquire or invest in additional businesses, product candidates and technologies. 40 Any additional fundraising efforts will divert certain members of our management team from their day-to-day activities, which may adversely affect our ability to develop our product candidates.
We also rely on know-how, continuing technological innovation and in-licensing opportunities to develop, strengthen and maintain the proprietary position of our product candidates. We own and have licensed patents and patent applications related to product candidates PH94B, PH10, AV-101 and also to certain stem cell technology.
We also rely on know-how, continuing technological innovation and in-licensing opportunities to develop, strengthen and maintain the proprietary position of our product candidates. We own patents and patent applications related to product candidates fasedienol (PH94B), itruvone (PH10), PH80, PH15 and AV-101 and have licensed patents and patent applications related to certain stem cell technology.
Our success depends in part on our continued ability to attract, retain and motivate highly qualified management and technical personnel across multiple key functions, including, but not limited to clinical operations, commercial operations, finance, human resources, information technology, manufacturing and quality assurance, regulatory affairs and medical affairs.
Our success depends in part on our continued ability to attract, retain and motivate highly qualified management and technical personnel across multiple key functions, including, but not limited to clinical operations, finance, legal, human resources, information technology, CMC and quality assurance, regulatory affairs and medical affairs.
In certain cases, including the Baylor Study and other investigator-sponsored clinical studies, we cannot control the amount and timing of resources these third-parties devote to clinical trials involving our product candidates.
In certain cases, including investigator-sponsored clinical studies, we cannot control the amount and timing of resources these third parties devote to clinical trials involving our product candidates.
For PH94B, PH10 and certain stem cell technologies, we are a party to a number of license agreements under which we are granted rights to intellectual properties that are or could become important to our business.
For certain stem cell technologies, we are a party to a number of license agreements under which we are granted rights to intellectual properties that are or could become important to our business.
We will require substantial additional financing to fund future operations, including research and development activities for our CNS product candidates and our anticipated pre-launch and other commercialization activities, assuming our clinical development programs are successful and we receive necessary regulatory approvals from the FDA. We may not be able to obtain financing on favorable terms, if at all.
We will require substantial additional financing to fund future operations, including research and development activities for our CNS product candidates, assuming our clinical development programs are successful and we receive necessary regulatory approvals from the FDA. We may not be able to obtain financing on favorable terms, if at all.
Any such limitation, whether as the result of future offerings, prior private placements, sales of our common stock by our existing stockholders or additional sales of our common stock by us in the future, could have a material adverse effect on our results of operations in future years.
Any such limitation, whether as the result of prior or future offerings of our debt and/or equity securities, private placements, sales of our common stock by our existing stockholders or additional sales of our common stock by us could have a material adverse effect on our results of operations in future years.
Through March 31, 2022, we have generated approximately $22.7 million in revenues, consisting of receipts of non-dilutive cash payments from collaborators, sublicense revenue, including the $5.0 million cash payment received under the AffaMed Agreement during the quarter ended September 30, 2020, a substantial portion of which remains recorded as deferred revenue at March 31, 2022, and research and development grant awards from the NIH.
Through March 31, 2023, we have generated approximately $22.7 million in revenues, consisting of receipts of non-dilutive cash payments from collaborators, sublicense revenue, including the $5.0 million cash payment received under the AffaMed Agreement during the quarter ended September 30, 2020, the majority of which remains recorded as deferred revenue at March 31, 2023, and research and development grant awards from the NIH.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAt March 31, 2022 and June 22, 2022, no shares of our preferred stock were outstanding. Dividend Policy We have never paid or declared any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
Biggest changeDividend Policy We have never paid or declared any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. Recent Sales of Unregistered Securities None. I tem 6.
Selected Financial Data The disclosures in this section are not required because we qualify as a smaller reporting company under federal securities laws. 67
Selected Financial Data The disclosures in this section are not required because we qualify as a smaller reporting company under federal securities laws. 79
At June 22, 2022, we had 206,640,955 shares of common stock outstanding held by approximately 20,000 stockholders.
At June 27, 2023, we had 7,872,479 shares of common stock outstanding held by approximately 13,000 stockholders. At June 27, 2023, no shares of our preferred stock were outstanding.
Removed
High Low Year Ended March 31, 2022 First quarter ended June 30, 2021 $ 3.17 $ 1.91 Second quarter ended September 30, 2021 $ 3.55 $ 2.56 Third quarter ended December 31, 2021 $ 2.78 $ 1.60 Fourth quarter ended March 31, 2022 $ 2.11 $ 1.06 Year Ended March 31, 2021 First quarter ended June 30, 2020 $ 0.68 $ 0.35 Second quarter ended September 30, 2020 $ 1.06 $ 0.46 Third quarter ended December 31, 2020 $ 1.96 $ 0.6088 Fourth quarter ended March 31, 2021 $ 3.18 $ 1.83 On June 22, 2022 the closing price of our common stock on the Nasdaq Capital Market was $1.02 per share.
Added
High Low Year Ended March 31, 2023 First quarter ended June 30, 2022 $ 53.70 $ 25.80 Second quarter ended September 30, 2022 $ 32.10 $ 4.16 Third quarter ended December 31, 2022 $ 5.10 $ 2.30 Fourth quarter ended March 31, 2023 $ 10.30 $ 3.09 Year Ended March 31, 2022 First quarter ended June 30, 2021 $ 95.10 $ 57.30 Second quarter ended September 30, 2021 $ 106.50 $ 76.80 Third quarter ended December 31, 2021 $ 83.40 $ 48.00 Fourth quarter ended March 31, 2022 $ 63.30 $ 31.80 We completed a stockholder approved 1-for-30 reverse split of our issued and outstanding common stock effective on June 6, 2023 (the Reverse Stock Split ).
Removed
During our fiscal year ended March 31, 2022, the custodial holder of 500,000 shares of our Series A Preferred Stock ( Series A Preferred ) converted such shares into 750,000 shares of our common stock; the custodial holder of 1,131,669 outstanding shares of our Series B 10% Convertible Preferred Stock ( Series B Preferred ), converted such shares into 1,131,669 shares of our common stock and was issued 3,295,778 shares of our common stock in payment of dividends accrued from May 2015 through November 2021 upon conversion of the Series B Preferred; and the custodial holder of 2,318,012 shares of our Series C Convertible Preferred Stock ( Series C Preferred ) converted such shares into 2,318,012 shares of our common stock.
Added
The per share high and low prices in the table above and other references to shares and per share prices elsewhere in this Report have been adjusted retrospectively to reflect the Reverse Stock Split. On June 27, 2023 the closing price of our common stock on the Nasdaq Capital Market was $1.69 per share.
Removed
Our Series B Preferred accrued dividends at a rate of 10% per annum, which dividends were payable solely in unregistered shares of our common stock at the time the Series B Preferred was converted into common stock.
Removed
As noted above, our Series B Preferred was converted into common stock and we issued common stock in payment of accrued dividends during the fiscal year ended March 31, 2022 and there is currently no Series B Preferred outstanding. Recent Sales of Unregistered Securities None. I tem 6.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

109 edited+118 added−72 removed60 unchanged
Biggest changeThe Financial Statements do not include any adjustments that might result from the negative outcome of this uncertainty Cash and Cash Equivalents The following table summarizes changes in cash and cash equivalents for the fiscal years stated (in thousands): Fiscal Year Ended March 31, 2022 2021 Net cash used in operating activities $ (45,257 ) $ (12,074 ) Net cash used in investing activities (200 ) (275 ) Net cash provided by financing activities 10,484 114,102 Net increase (decrease) in cash and cash equivalents (34,973 ) 101,753 Cash and cash equivalents at beginning of period 103,108 1,355 Cash and cash equivalents at end of period $ 68,135 $ 103,108 80 As described previously, the combination of the net proceeds we received during Fiscal 2021 from the December 2020 Public Offering and the August 2020 Public Offering followed subsequently by the proceeds from warrant exercises in both Fiscal 2021 and Fiscal 2022 and sales of our common stock under the ATM during Fiscal 2022 have provided sufficient funds for us to significantly advance an important stream of initiatives across our CNS pipeline, including, among others, our PALISADE Phase 3 Program for PH94B in SAD, our exploratory clinical program for PH94B in multiple anxiety-related indications beyond SAD, our Phase 2B development program for PH10 in MDD, and our exploratory Phase 1B clinical program for AV-101 in combination with probenecid.
Biggest changeIn addition, although the Listing Qualifications Staff of The Nasdaq Stock Market, LLC ( Nasdaq ) advised us on June 22, 2023 that we regained compliance with the minimum bid price requirement of the Nasdaq Capital Market, there can be no assurance that our common stock will maintain a closing bid price sufficient to remain in compliance with the minimum bid price requirement or that we will maintain compliance with other continued listing standards for the Nasdaq Capital Market. 100 Cash and Cash Equivalents The following table summarizes changes in cash and cash equivalents for the fiscal years stated (in thousands): Fiscal Years Ended March 31, 2023 2022 Net cash used in operating activities $ (49,715 ) $ (45,257 ) Net cash used in investing activities (740 ) (200 ) Net cash provided by (used in) financing activities (1,042 ) 10,484 Net decrease in cash and cash equivalents (51,497 ) (34,973 ) Cash and cash equivalents at beginning of period 68,135 103,108 Cash and cash equivalents at end of period $ 16,638 $ 68,135 As discussed above, the combination of the net proceeds we received from public offerings in Fiscal 2021, from transactions under our ATM in Fiscal 2022 and from warrant exercises in both Fiscal 2021 and Fiscal 2022, have been the primary sources of our available cash during both Fiscal 2022 and Fiscal 2023.
In May 2021, we entered into an Open Market Sale Agreement SM (the Sales Agreement ) with Jefferies LLC as sales agent ( Jefferies ), with respect to an at-the-market offering program (the ATM ) under which we may, at our option, offer and sell, from time to time, shares of our common stock having an aggregate offering price of up to $75.0 million through Jefferies as our sales agent.
In May 2021, we entered into an Open Market Sale Agreement SM (the Sales Agreement ) with Jefferies LLC ( Jefferies ) as sales agent, with respect to an at-the-market offering program (the ATM ) under which we may, at our option, offer and sell, from time to time, shares of our common stock having an aggregate offering price of up to $75.0 million through Jefferies as our sales agent.
The underlying lease reflects commercial property rents prevalent in the South San Francisco real estate market at the time of our November 2016 lease amendment extending the lease of our headquarters facilities in South San Francisco by five years from July 31, 2017 to July 31, 2022.
The underlying lease reflects commercial property rents prevalent in the South San Francisco real estate market at the time of our November 2016 lease amendment extending the lease of our headquarters facilities in South San Francisco by five years from July 31, 2017 to July 31, 2022.
Valuation allowances are established, when necessary, to reduce the deferred tax assets to an amount expected to be realized. Recent Accounting Pronouncements See Note 3 to the Consolidated Financial Statements included in Item 8 in this Report ( Financial Statements ) for information on recent accounting pronouncements.
Valuation allowances are established, when necessary, to reduce the deferred tax assets to an amount expected to be realized. 90 Recent Accounting Pronouncements See Note 3 to the Consolidated Financial Statements included in Item 8 in this Report ( Financial Statements ) for information on recent accounting pronouncements.
Food and Drug Administration (FDA) and other domestic and foreign regulatory agencies, the impact of competitive products, product development, commercialization and technological difficulties, the effect of our accounting policies, and other risks as detailed in the section entitled “ Risk Factors ” in this Report.
Food and Drug Administration (FDA) and other domestic and foreign regulatory agencies, the impact of competitive products, product development and technological difficulties, the effect of our accounting policies, and other risks as detailed in the section entitled “ Risk Factors ” in this Report.
In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, we write down the assets to their estimated fair values and recognize the loss in the Consolidated Statements of Operations and Comprehensive Loss.
In the event such cash flows are not expected to be sufficient to recover the carrying amount of the assets, we write down the assets to their estimated fair values and recognize the loss in the Consolidated Statements of Operations and Comprehensive Loss.
We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied at a point in time or over time, and if over time, based on the use of an output or input method. 70 Right-of-use assets and lease obligations We account for our leases following the guidance of Accounting Standards Update No. 2016-02, “ Leases (Topic 842) ” ( ASU 2016-02 ).
We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied at a point in time or over time, and if over time, based on the use of an output or input method. 88 Right-of-use Assets and Lease Obligations We account for our leases following the guidance of Accounting Standards Update No. 2016-02, “ Leases (Topic 842) ” ( ASU 2016-02 ).
Operations at our headquarters in South San Francisco were significantly curtailed during Fiscal 2021 and the first half of Fiscal 2022, and, to some extent, periodically thereafter, while state and local restrictions required remote working conditions. Most of our recent employee additions are geographically located away from our headquarters facility in South San Francisco and routinely work remotely.
Operations at our headquarters in South San Francisco were significantly curtailed during the first half of Fiscal 2022, and, to some extent, periodically thereafter, while state and local restrictions required remote working conditions. Most of our employee additions during Fiscal 2022 and thereafter are geographically located away from our headquarters facility in South San Francisco and routinely work remotely.
Except for grants to new employees, expense attributable to recent option grants is generally being amortized over two-year to three-year vesting periods, with essentially all of the grants made since May 2019, including those made in Fiscal 2022 and Fiscal 2021, being 25% vested and expensed upon grant, in accordance with the terms of the respective grants.
Except for grants to new employees, expense attributable to recent option grants is generally being amortized over two-year to three-year vesting periods, with essentially all of the grants made since May 2019, including those made in Fiscal 2023 and Fiscal 2022, being 25% vested and expensed upon grant, in accordance with the terms of the respective grants.
Legal, accounting and other professional fees for Fiscal 2022 and Fiscal 2021 includes expense related to routine corporate legal and compliance fees as well as legal counsel and other costs related to patent prosecution and protection pursuant to our stem cell technology license agreements, our AV-101 patents, or patents that we have elected to pursue for commercial purposes, as well as recurring annual license fees.
Legal, accounting and other professional fees for Fiscal 2023 and Fiscal 2022 includes expense related to routine corporate legal and compliance fees as well as legal counsel and other costs related to patent prosecution and protection pursuant to our stem cell technology license agreements, our AV-101 patents, or patents that we have elected to pursue for commercial purposes, as well as recurring annual license fees.
Rent expense for both Fiscal 2022 and Fiscal 2021 reflects our implementation of ASC 842 and the requirement to recognize, as an operating lease related to our South San Francisco office and laboratory facility, a right-of-use asset and a lease liability, both of which must be amortized over the expected lease term.
Rent expense for both Fiscal 2023 and Fiscal 2022 reflects our implementation of ASC 842 and the requirement to recognize, as an operating lease related to our South San Francisco office and laboratory facility, a right-of-use asset and a lease liability, both of which must be amortized over the expected lease term.
In November 2021, the custodial holder of 1,131,669 outstanding shares of our Series B Preferred exercised its rights for conversion into common stock under the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series B 10% Convertible Preferred Stock (Series B Certificate of Designation) and we issued 1,131,669 shares of our common stock upon conversion.
In November 2021, the custodial holder of 1,131,669 outstanding shares of our Series B Preferred exercised its rights for conversion into common stock under the terms of the Certificate of Designation of the Relative Rights and Preferences of the Series B 10% Convertible Preferred Stock (Series B Certificate of Designation) and we issued 37,722 shares of our common stock upon conversion.
At March 31, 2022 and 2021, we had both investor warrants and share-based compensation warrants outstanding that were classified as equity. Income Taxes We account for income taxes using the asset and liability approach promulgated by ASC 740, Income Taxes , for financial reporting purposes.
At March 31, 2023 and 2022, we had both investor warrants and share-based compensation warrants outstanding that were classified as equity. Income Taxes We account for income taxes using the asset and liability approach promulgated by ASC 740, Income Taxes , for financial reporting purposes.
Subject to certain restrictions, our Registration Statement on Form S-3 (the S-3 Shelf Registration Statement ) remains available for future sales of our equity securities in one or more public offerings, including under the ATM with Jefferies, from time to time.
Subject to certain restrictions, our Registration Statement on Form S-3 (the S-3 Shelf Registration Statement ) remains available for future sales of our equity securities in one or more public offerings, including under the ATM, from time to time.
The preparation of financial statements in conformity with United States generally accepted accounting principles ( GAAP ) requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes to the consolidated financial statements.
The preparation of financial statements in conformity with United States generally accepted accounting principles ( U.S. GAAP ) requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes to the consolidated financial statements.
As disclosed in Note 14, Commitments and Contingencies, in the Financial Statements, in October 2021, we entered into an amendment to this lease, pursuant to which the term of the lease was extended from August 1, 2022 to July 31, 2027 and the base rent under the lease for the five-year extension period was specified.
As disclosed in Note 14, Commitments and Contingencies, in the Financial Statements in Item 8 of this Report, in October 2021, we entered into an amendment to this lease, pursuant to which the term of the lease was extended from August 1, 2022 to July 31, 2027 and the base rent under the lease for the five-year extension period was specified.
As disclosed in Note 14, Commitments and Contingencies, in the Financial Statements, in October 2021, we entered into an amendment to this lease, pursuant to which the term of the lease was extended from August 1, 2022 to July 31, 2027 and the base rent under the lease for the five-year extension period was specified.
As disclosed in Note 14, Commitments and Contingencies, in the Financial Statements included in Item 8 of this Report, in October 2021, we entered into an amendment to this lease, pursuant to which the term of the lease was extended from August 1, 2022 to July 31, 2027 and the base rent under the lease for the five-year extension period was specified.
PH10 Nasal Spray PH10 is an odorless, tasteless synthetic investigational pherine nasal spray with a novel, rapid-onset potential MOA that is fundamentally differentiated from the MOA of all currently approved treatments for depression disorders.
Itruvone Nasal Spray Itruvone (PH10) is an odorless, tasteless synthetic investigational pherine from the pregnane family with a novel, rapid-onset potential MOA that is fundamentally differentiated from the MOA of all currently approved treatments for depression disorders.
Notwithstanding the foregoing, there can be no assurance that our current strategic collaboration under the AffaMed Agreement will generate revenue from future potential milestone payments, or that future financings or other strategic collaborations will be available to us in sufficient amounts, in a timely manner, or on terms acceptable to us, if at all.
Notwithstanding the foregoing, there can be no assurance that future financings will be available to us in sufficient amounts, in a timely manner, or on terms acceptable to us, if at all, or that our current development and commercialization collaboration under the AffaMed Agreement or other potential strategic partnering collaborations will generate revenue from future potential milestone payments or otherwise.
Since acquiring our exclusive worldwide licenses to our intranasal investigational product candidates, PH94B and PH10, in 2018, we have devoted substantial resources to advancing initiatives related to research, development, and contract manufacturing of such product candidates, including initiatives related to manufacturing processes, analytical methods and production programs for drug substance and finished drug product, as well as for preclinical and clinical studies focused on potential commercialization of these product candidate for neuropsychiatry indications.
Since acquiring our exclusive worldwide licenses in 2018, we have devoted substantial resources to advance initiatives related to research, development, and contract manufacturing of our intranasal investigational product candidates, fasedienol (PH94B) and itruvone (PH10), including initiatives related to manufacturing processes, analytical methods and production programs for drug substance and finished drug product, as well as for preclinical studies and clinical studies focused on potential commercialization of these product candidates for neuropsychiatry indications.
Grants to new employees generally vest 25% on the first anniversary of the grant date and ratably monthly over the next three years. Board fees and other consulting services represents, in both Fiscal 2021 and Fiscal 2022, fees paid as consideration for Board and Board Committee services to the independent members of our Board of Directors.
Grants to new employees generally vest 25% on the first anniversary of the grant date and ratably monthly over the next three years. 96 Board fees and other consulting services represents, in both periods, fees paid as consideration for Board and Board Committee services to the independent members of our Board of Directors.
From initial issuance in May 2015 through the time of conversion in November 2021, the Series B Preferred had accrued 10% dividends aggregating $7,217,800 and, in accordance with the terms of the Series B Certificate of Designation, we issued 3,295,778 shares of our unregistered common stock in payment of the accrued dividends.
From initial issuance in May 2015 through the time of conversion in November 2021, the Series B Preferred had accrued 10% dividends aggregating $7,217,800 and, in accordance with the terms of the Series B Certificate of Designation, we issued 109,860 shares of our unregistered common stock in payment of the accrued dividends.
These 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, warrant modifications, and useful lives for property and equipment and related depreciation calculations.
These 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, warrant modifications, and useful lives for property and equipment and related depreciation calculations. Our actual results could differ from these estimates.
As a result of periodic shelter-in-place restrictions and travel and workplace precautions and restrictions associated with the COVID-19 pandemic continuing throughout both Fiscal 2021 and Fiscal 2022, management presentations and historically in-person meetings held in multiple U.S. markets and certain international markets with existing and potential individual and institutional investors, investment professionals and advisors, media, and securities analysts, as well as various investor relations, market awareness and corporate development and partnering initiatives, have generally occurred remotely without requiring in-person business travel by our executives.
As a result of periodic shelter-in-place restrictions and travel and workplace precautions and restrictions associated with the COVID-19 pandemic during calendar 2020 and 2021, management presentations and historically in-person meetings held in multiple U.S. markets and certain international markets with existing and potential individual and institutional investors, investment professionals and advisors, media, and securities analysts, as well as various investor relations, market awareness and corporate development and partnering initiatives, generally occurred remotely without requiring in-person business travel by our executives.
For example, our current focus on AV-101 is in combination with probenecid which may provide opportunities to explore the therapeutic potential of the combination for certain CNS indications involving the NMDAR.
With respect to AV-101, our current focus is evaluating AV-101 in combination with probenecid, which may provide opportunities to explore the therapeutic potential of the combination for certain CNS indications involving the NMDAR.
Our business is subject to significant risks including, but not limited to, our ability to obtain substantial additional financing, the results of our research and development efforts, the results of nonclinical and clinical testing, the effects of the ongoing COVID-19 pandemic, the effect of regulation by the U.S.
Our business is subject to significant risks including, but not limited to, our ability to obtain substantial additional financing, the results of our research and development efforts, the results of nonclinical and clinical testing, the effect of regulation by the U.S.
From time to time during the COVID-19 pandemic, however, the efficiency and productivity of certain preclinical and clinical development programs and our third-party collaborators, including , among others, contract research and development organizations ( CROs ), contract manufacturing organizations ( CMOs ) and other third-party service providers have been, and may be in the future, impacted by prevailing surges in the spread of variants of COVID-19, such as spreads induced by the Delta and Omicron variants and their sub-variants during Fiscal 2021 and Fiscal 2022, shelter-in-place orders, social distancing measures, travel bans and restrictions, and certain business and government closures or reductions in service.
From time to time during the COVID-19 pandemic, however, the efficiency and productivity of certain preclinical and clinical development programs and our third-party collaborators, including, among others, CROs, CMOs and other third-party service providers have been impacted by surges in the spread of variants of COVID-19, such as spreads induced by the Delta and Omicron variants and their sub-variants during Fiscal 2022 and thereafter, shelter-in-place orders, social distancing measures, travel bans and restrictions, and certain business and government closures or reductions in service.
Importantly, unlike all currently approved oral antidepressants ( ADs ) and rapid-onset ketamine-based therapy ( KBT ), including both intravenous ketamine and intranasal ketamine (esketamine), we believe PH10 does not require systemic uptake and distribution to produce rapid-onset of antidepressant effects.
Importantly, unlike all currently approved oral antidepressants ( ADs ) and rapid-onset ketamine-based therapy, including both intravenous ketamine and intranasal ketamine (esketamine), we believe itruvone does not require systemic uptake and distribution of the compound to the brain to produce rapid-onset of antidepressant effects.
Investor and public relations expense in both Fiscal 2022 and Fiscal 2021 includes the fees of our various external service providers for a broad spectrum of investor relations, public relations and social media services, and well as market awareness and strategic advisory and support functions and initiatives.
Investor and public relations expense in both Fiscal 2023 and Fiscal 2022 includes the fees of our various external service providers for a broad spectrum of investor relations, public relations and social media services, and, particularly in Fiscal 2023, additional market awareness and strategic advisory and support functions and initiatives.
Throughout Fiscal 2022 and Fiscal 2021, VistaStem had two inactive, wholly owned subsidiaries, Artemis Neuroscience, a Maryland corporation, and VistaStem Canada, Inc., an Ontario corporation. VistaStem Canada was dissolved in April 2022 and Artemis Neuroscience was dissolved in June 2022.
Throughout Fiscal 2022 and for a portion of Fiscal 2023, Vistastem had two inactive, wholly owned subsidiaries, Artemis Neuroscience, a Maryland corporation, and VistaStem Canada, Inc., an Ontario corporation. VistaStem Canada was dissolved in April 2022 and Artemis Neuroscience was dissolved in June 2022.
Due to its later stage of development, costs for PH94B initiatives have significantly exceeded those for PH10 during both Fiscal 2022 and Fiscal 2021. In both years, AV-101 project expense includes costs for certain preclinical studies related to the use of AV-101 with adjunctive probenecid and certain AV-101 manufacturing stability studies.
Due to its later stage of development, costs for fasedienol initiatives have significantly exceeded those for itruvone during both Fiscal 2023 and Fiscal 2022. In both Fiscal 2023 and Fiscal 2022, AV-101 project expense includes costs for certain preclinical and nonclinical studies related to the use of AV-101 with adjunctive probenecid and certain AV-101 manufacturing stability studies.
Accounting expense includes costs related to the annual audit of our prior year financial statements and the three quarterly reviews of our current year financial statements.
Accounting expenses include costs related to the annual audit of our prior year financial statements and the three quarterly reviews of our current year financial statements.
AV-101 is an oral prodrug of 7-chloro-kynurenic acid (7-Cl-KYNA), which is a potent and selective full antagonist of the glycine co-agonist site of the NMDAR that inhibits the function of the NMDAR. Unlike ketamine and many other NMDAR antagonists, 7-Cl-KYNA is not an ion channel blocker.
The active metabolite of AV-101, 7-chloro-kynurenic acid (7-Cl-KYNA), is a potent and selective full antagonist of the glycine binding site of the NMDAR that inhibits the function of the NMDAR. Unlike ketamine and many other NMDAR antagonists, 7-Cl-KYNA is not an ion channel blocker.
Upon termination of the LPC Agreement, we expensed the remaining $232,100 of deferred offering costs related to the agreement as a noncash charge to G&A expense. Interest and Other Income, Net Interest income, net totaled $19,900 in Fiscal 2022 compared to $1,600 in for Fiscal 2021.
Upon termination of the agreement, we expensed the remaining $232,100 of deferred offering costs related to the agreement as a noncash charge to G&A expense in Fiscal 2022. Interest and Other Income, Net Interest income, net totaled $26,200 in Fiscal 2023 compared to $19,900 in Fiscal 2022.
Throughout Fiscal 2021 and Fiscal 2022 and through the date of this Report, strains of SARS-CoV-2, commonly referred to as COVID-19 and multiple variants of the virus, have spread globally and the outbreak has been declared a pandemic by the World Health Organization and a public health emergency in the U.S. by the U.S. Secretary of Health and Human Services.
Throughout Fiscal 2022 and during Fiscal 2023, strains of SARS-CoV-2, commonly referred to as COVID-19 and multiple variants of the virus, have spread globally and the outbreak was declared a pandemic by the World Health Organization and a public health emergency in the U.S. by the U.S. Secretary of Health and Human Services.
External research and development expenses consist primarily of costs associated with clinical and nonclinical development of PH94B, PH10, and AV-101. All such costs are charged to expense as incurred. We also record accruals for estimated ongoing clinical trial costs. Clinical trial costs represent costs incurred by contract research organizations ( CRO s) and clinical trial sites.
External research and development expenses consist primarily of costs associated with clinical and nonclinical development of fasedienol, itruvone, and AV-101. All such costs are charged to expense as incurred. We also record accruals for estimated ongoing clinical trial costs. Clinical trial costs represent costs incurred by CROs and clinical trial sites.
The recognition of the BCF on the Series D Preferred had no aggregate impact on our stockholders’ equity or on our cash position. 78 Liquidity and Capital Resources Since our inception in May 1998 through March 31, 2022, we have financed our operations and technology acquisitions primarily through the issuance and sale of our equity and debt securities for cash proceeds of approximately $208.6 million, as well as from an aggregate of approximately $22.7 million of government research grant awards (excluding the fair market value of government sponsored and funded clinical trials), strategic collaboration payments, intellectual property licensing and other revenues.
Liquidity and Capital Resources Since our inception in May 1998 through March 31, 2023 we have financed our operations and technology acquisitions primarily through the issuance and sale of our equity and debt securities for cash proceeds of approximately $208.7 million, as well as from an aggregate of approximately $22.7 million of government research grant awards (excluding the fair market value of government sponsored and funded clinical trials), strategic collaboration payments, intellectual property licensing and other revenues.
Recent Developments During Fiscal 2022, holders of outstanding warrants to purchase an aggregate of 7,298,791 shares of our common stock exercised such warrants, and we received cash proceeds of approximately $6.2 million.
During Fiscal 2022, holders of outstanding warrants to purchase an aggregate of 243,293 shares of our common stock exercised such warrants, and we received cash proceeds of approximately $6.2 million.
Our future working capital requirements will depend on many factors, including, without limitation, potential impacts related to the on-going COVID-19 pandemic, the scope and nature of opportunities related to our success and the success of certain other companies in nonclinical and clinical trials, including our development and commercialization of our current product candidates, the availability of, and our ability to enter into collaborations on terms acceptable to us.
Our future working capital requirements will depend on many factors, including, without limitation, potential impacts related to adjustments in the size of our staff, the scope and nature of opportunities related to our success or failure and the success or failure of certain other companies in nonclinical and clinical trials, including the development and commercialization of our current product candidates, and the availability of, and our ability to enter into financing transactions and research, development and commercialization collaborations on terms acceptable to us.
Business Overview We are a late clinical-stage, central nervous system ( CNS )-focused biopharmaceutical company striving to transform the treatment landscape for individuals living with anxiety, depression and other CNS disorders. We are advancing development of therapeutics with the potential to be faster-acting, and with fewer side effects and safety concerns, than those that are currently available.
Business Overview We are a late clinical-stage biopharmaceutical company aiming to transform the treatment landscape for individuals living with anxiety, depression and other CNS disorders. We are advancing therapeutics with the potential to be faster-acting, and with fewer side effects and safety concerns, than those currently available for treating anxiety, depression and multiple CNS disorders.
Such costs were composed of the cash payment of $220,000 for sublicense fees which we were obligated to make pursuant to our PH94B license from Pherin, and the $125,000 cash payment and $125,000 fair value of common stock issued for consulting services, in each case exclusively related to our acquisition of the AffaMed Agreement.
Beginning in the quarter ended September 30, 2020, we began to amortize the deferred contract acquisition costs related to our acquisition of the AffaMed Agreement, composed of the cash payment of $220,000 for sublicense fees which we were obligated to make pursuant to our PH94B license from Pherin, and the $125,000 cash payment and $125,000 fair value of common stock issued for consulting services, in each case exclusively related to our acquisition of the AffaMed Agreement.
As described more completely in Note 8, Capital Stock , in the Financial Statements ( Note 8 ), in May 2021, we entered into an Open Market Sale Agreement SM (the Sales Agreement ) with respect to an at-the-market offering program (the ATM ) under which we may offer and sell, from time to time, shares of our common stock having an aggregate offering price of up to $75.0 million through our sales agent.
Additionally, in May 2021, we entered into an Open Market Sale Agreement SM (the Sales Agreement ) with Jefferies LLC ( Jefferies ) as sales agent, with respect to an at-the-market offering program (the ATM ) under which we may, at our option, offer and sell, from time to time, shares of our common stock having an aggregate offering price of up to $75.0 million through Jefferies as our sales agent.
From time to time since the beginning of the COVID-19 pandemic, we have experienced delays in the delivery of supplies of active pharmaceutical product ( API ) or other key materials required to continue development of PH94B and PH10, as well as temporary disruptions in the availability of third-party personnel and others involved in the conduct of our preclinical and clinical programs.
Moreover, during the COVID-19 pandemic, we experienced delays in the delivery of supplies of active pharmaceutical product ( API ) or other key materials required to continue development of fasedienol and itruvone, as well as temporary disruptions in the availability of third-party personnel and others involved in the conduct of our preclinical and clinical programs.
In both Fiscal 2022 and Fiscal 2021, this expense includes legal counsel and other costs we have incurred to advance various patent applications in the U.S. and numerous foreign countries, primarily with respect to AV-101 and our stem cell technology platform, and, to a lesser extent, with respect to our PH94B and PH10 intellectual property portfolios.
In both Fiscal 2023 and Fiscal 2022, this expense includes legal counsel and other costs we have incurred to advance various patent applications in the U.S. and numerous foreign countries, primarily with respect to AV-101 and our stem cell technology platform, but also nominally with respect to our fasedienol and itruvone intellectual property portfolios.
General and Administrative Expense General and administrative ( G&A ) expense increased by approximately $6.4 million to approximately $13.5 million in Fiscal 2022 compared to approximately $7.1 million in Fiscal 2021.
General and Administrative Expense General and administrative ( G&A ) expense increased by approximately $1.2 million to approximately $14.7 million in Fiscal 2023 compared to approximately $13.5 million in Fiscal 2022.
Fiscal 2022 stock-based compensation expense reflects the amortization of option grants made to our internal R&D team as well as certain clinical and scientific consultants since May 2019, in addition to grants to new senior management and other employees as indicated above.
Stock-based compensation expense for Fiscal 2023 reflects the amortization of option grants made to our R&D staff and certain clinical and scientific consultants since May 2019, in addition to grants to new employees as indicated above.
The following table indicates the primary components of interest income and expense for each of the periods (amounts in thousands): Fiscal Year Ended March 31, 2022 2021 Interest income $ 20 $ 15 Interest expense on financing lease, insurance premium financing notes and Payroll Protection Program note (2021) - (13 ) Interest income, net $ 20 $ 2 In both Fiscal 2022 and Fiscal 2021, interest income relates to cash deposits in interest-bearing cash equivalent accounts.
The following table indicates the primary components of interest income and expense for each of the periods (amounts in thousands): Fiscal Years Ended March 31, 2023 2022 Interest income $ 49 $ 20 Interest expense on financing lease and insurance premium financing note (23 ) - Interest income, net $ 26 $ 20 In both Fiscal 2023 and Fiscal 2022, interest income relates to cash deposits in interest-bearing cash equivalent accounts.
All outstanding options granted to G&A employees, Board members and consultants prior to May 2019 are fully vested and amortized at March 31, 2022.
All outstanding options granted to G&A employees, Board members and consultants prior to May 2019 were fully vested and amortized at the end of Fiscal 2022.
Costs incurred in obtaining product or technology licenses are charged immediately to research and development expense if the product or technology licensed has not achieved regulatory approval or reached technical feasibility and has no alternative future uses.
Revisions are charged to research and development expense in the period in which the facts that give rise to the revision become known. 89 Costs incurred in obtaining product or technology licenses are charged immediately to research and development expense if, at acquisition, the product or technology licensed has not achieved regulatory approval or reached technical feasibility and has no alternative future uses.
The increase in insurance expense in Fiscal 2022 is primarily attributable to the market-rate increase in the premium for our directors’ and officers’ liability insurance upon renewal of our policy in May 2021, and additional coverages, including cybersecurity, added to our program during Fiscal 2022.
The increase in Fiscal 2023 insurance expense is primarily attributable to the increased coverage obtained under our directors’ and officers’ liability insurance upon renewal of our policy in May 2022 and additional coverages, including cybersecurity and employment practices liability, added to our insurance program during Fiscal 2022.
Cash used in investing activities in both Fiscal 2021 and Fiscal 2022 reflects the cost of laboratory analytical equipment and select manufacturing equipment acquired for use by our CMO in connection with the development and production of PH94B drug product and, in Fiscal 2022, laboratory equipment to be used in our internal development initiatives.
Cash used in investing activities during Fiscal 2022 primarily reflects the cost of laboratory analytical equipment acquired for use by our CMO in connection with the development and production of fasedienol drug product.
Specifically, in a manner similar to PH94B, PH10’s proposed MOA involves binding to peripheral chemosensory neurons in the nasal passages to regulate the olfactory-amygdala neural circuits believed to increase activity of the limbic-hypothalamic sympathetic nervous system and increase the release of catecholamines.
Specifically, in a manner similar to fasedienol, itruvone’s proposed MOA involves the regulation of the olfactory-amygdala neural circuits believed to increase activity of the limbic-hypothalamic sympathetic nervous system and increase the release of catecholamines.
We recognize revenue following the guidance of Accounting Standards Update ( ASU ) No. 2014-09, Revenue from Contracts with Customers (Topic 606) and its related amendments, collectively referred to as ASC ( Accounting Standards Codification ) Topic 606.
In prior years, we occasionally generated revenue from collaborative research and development arrangements, licensing and technology access fees and government grants. We recognize revenue following the guidance of Accounting Standards Update ( ASU ) No. 2014-09, Revenue from Contracts with Customers (Topic 606) and its related amendments, collectively referred to as ASC ( Accounting Standards Codification ) Topic 606.
While we may make additional sales of our equity securities under the S-3 Shelf Registration Statement and/or under the Sales Agreement, we do not have an obligation to do so.
Subject to certain restrictions, our S-3 Shelf Registration Statement remains available for future sales of our equity securities in one or more public offerings from time to time. While we may make additional sales of our equity securities under the S-3 Shelf Registration Statement and/or under the Sales Agreement, we do not have an obligation to do so.
In addition to the potential issuance of debt securities or sale of our equity securities, we may also seek to enter research, development and/or commercialization collaborations similar to the AffaMed Agreement to provide non-dilutive funding for our operations, while also reducing a portion of our future cash outlays and working capital requirements.
For example, we may seek to enter research, development and/or commercialization collaborations similar to the AffaMed Agreement, which applies only to development and commercialization of PH94B in Greater China, South Korea and Southeast Asian territories, to provide non-dilutive funding for our operations, while also reducing a portion of our future cash outlays and working capital requirements.
We assess whether each promised good or service is distinct for the purpose of identifying the performance obligations in the contract. This assessment involves subjective determinations and requires judgments about the individual promised goods or services and whether such are separable from the other aspects of the contractual relationship.
This assessment involves subjective determinations and requires judgments about the individual promised goods or services and whether such are separable from the other aspects of the contractual relationship.
During September and early October 2021, we sold an aggregate of 1,517,798 shares of our common stock and received gross cash proceeds of approximately $4.45 million under the ATM. We have not sold any shares under the ATM from October 2, 2021 through the date of this Report.
During September and early October 2021, we sold an aggregate of 50,593 shares of our common stock and received gross cash proceeds of approximately $4.45 million under the ATM. We did not sell any shares of our common stock under the ATM during Fiscal 2023.
Designed for intranasal administration in low microgram doses, the novel MOA of PH94B is fundamentally differentiated from all current anti-anxiety medications, including all antidepressants approved by the FDA for treatment of SAD, as well as all benzodiazepines and beta blockers prescribed for treatment of SAD on an off-label basis.
The proposed MOA of fasedienol is fundamentally differentiated from all currently approved anti-anxiety medications, including the three antidepressants approved by the FDA for the treatment of SAD, as well as all benzodiazepines and beta blockers, which, although not FDA-approved for the treatment of SAD, are prescribed for treatment of SAD on an off-label basis.
Additionally, we have issued equity securities with an approximate value at issuance of $38.2 million in noncash acquisitions of product licenses and in settlements of certain liabilities, including liabilities for professional services rendered to us or as compensation for such services.
Additionally, we have issued equity securities with an approximate value at issuance of $41.3 million in noncash acquisitions of product licenses, the Pherin Acquisition, and in settlements of certain liabilities, including liabilities for professional services rendered to us or as compensation for such services. We did not complete any capital-raising or other significant financing activities during Fiscal 2023.
We only apply the five-step model to contracts when it is probable that we will collect the consideration to which we are entitled in exchange for the goods or services we transfer to a customer.
We only apply the five-step model to contracts when it is probable that we will collect the consideration to which we are entitled in exchange for the goods or services we transfer to a customer. 87 Once a contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performance obligations.
We recognized approximately $945,000 and $1,386,000 during Fiscal 2022 and Fiscal 2021, respectively, attributable to the 10% cumulative dividend accrued on outstanding shares of our Series B 10% Convertible Preferred Stock ( Series B Preferred ) as an additional deduction in arriving at net loss attributable to common stockholders in the Financial Statements.
We did not finance insurance premiums for policies that renewed in May 2021 or February 2022. 98 We recognized approximately $945,000 during Fiscal 2022 attributable to the 10% cumulative dividend accrued on outstanding shares of our Series B 10% Convertible Preferred Stock ( Series B Preferred ) prior to its conversion in November 2021 as an additional deduction in arriving at net loss attributable to common stockholders.
Fiscal 2022 expense also includes the cost of certain outsourced financial and accounting services and implementation of new accounting software, and an expanded service level from our information technology service provider, all of which commenced at the beginning of Fiscal 2022, as well as certain recruiting fees incurred in connection with searches for certain specialized positions that commenced late in Fiscal 2022.
Both years reflect expense related to an expanded service level from our information technology service provider and a contracted head of Information Technology, all of which commenced at the beginning of Fiscal 2022. Both years also reflect certain recruiting fees incurred in connection with searches for certain specialized positions.
Further, bonus payments for achievement of certain core corporate objectives during calendar year 2021, paid in February 2022, exceeded amounts paid in December 2020 to a smaller number of employees for achievement of calendar 2020 objectives. 76 Fiscal 2022 stock-based compensation expense reflects the amortization of option grants made to our internal management and administrative staff, independent members of our Board and certain consultants since May 2019, in addition to grants to new senior management and other new employees as indicated above.
Fiscal 2023 stock-based compensation expense reflects the amortization of option grants made to our internal management and administrative staff, independent members of our Board and certain consultants since May 2019, in addition to grants to new senior management and other new employees as indicated above.
During Fiscal 2022, we incurred expenses for various phase-appropriate and customary pre-commercialization studies, analyses, projections, strategic modeling and awareness services, primarily attributable to PH94B as a potential acute treatment of anxiety in adults with SAD. We plan to continue such studies and initiatives in parallel with our clinical and regulatory initiatives.
Throughout Fiscal 2022 and through the second quarter of Fiscal 2023, we incurred expenses for a number of customary pre-commercialization studies, analyses, projections, strategic modeling and awareness services, primarily attributable to Fasedienol as a potential acute treatment of anxiety in adults with SAD.
Fiscal Year Ended March 31, 2022 2021 Sublicense revenue $ 1,109 $ 1,090 Operating expenses: Research and development 35,408 11,926 General and administrative 13,480 7,098 Total operating expenses 48,888 19,024 Loss from operations (47,779 ) (17,934 ) Interest income, net 20 2 Other income - 1 Loss before income taxes (47,759 ) (17,931 ) Income taxes (3 ) (3 ) Net loss (47,762 ) (17,934 ) Accrued dividend on Series B Preferred Stock (945 ) (1,386 ) Beneficial conversion feature on Series D Preferred Stock - (23,000 ) Net loss attributable to common stockholders $ (48,707 ) $ (42,320 ) Revenue We recognized sublicense revenue pursuant to the AffaMed Agreement in the amount of $1,108,900 in Fiscal 2022 compared to $1,089,500 in Fiscal 2021.
Fiscal Year Ended March 31, 2023 2022 Sublicense revenue $ (227 ) $ 1,109 Operating expenses: Research and development 44,377 35,408 General and administrative 14,664 13,480 Total operating expenses 59,041 48,888 Loss from operations (59,268 ) (47,779 ) Interest income, net 26 20 Loss before income taxes (59,242 ) (47,759 ) Income taxes (6 ) (3 ) Net loss (59,248 ) (47,762 ) Accrued dividend on Series B Preferred Stock - (945 ) Net loss attributable to common stockholders $ (59,248 ) $ (48,707 ) Revenue We derecognized $227,300 in sublicense revenue pursuant to the AffaMed Agreement during Fiscal 2023 compared to recognizing revenue of $1,108,900 during Fiscal 2022.
In addition to the initiation of PALISADE-1 and PALISADE-2, during Fiscal 2022, we initiated the PALISADE Long-term Safety study and advanced our planned exploratory Phase 2A clinical program for PH94B with the initiation of our Phase 2A clinical study in adults experiencing AjDA.
We initiated our PALISADE Phase 3 Program for fasedienol in SAD with PALISADE-1 in May 2021 and PALISADE-2 in August 2021. During Fiscal 2022, we also initiated the PALISADE OLS and advanced our Phase 2A clinical study of fasedienol in adults experiencing AjDA.
We record stock-based compensation expense over the period during which the employee or other grantee is required to perform services in exchange for the award, which generally represents the scheduled vesting period. We have not granted restricted stock awards to employees or consultants nor do we have any awards with market or performance conditions.
Stock-Based Compensation We recognize compensation cost for all stock-based awards to employees and non-employee consultants based on the grant date fair value of the award. We record stock-based compensation expense over the period during which the employee or other grantee is required to perform services in exchange for the award, which generally represents the scheduled vesting period.
PH10, which is administered at microgram-level doses, engages and activates chemosensory cells in the nasal passages, connected to neural circuits in the brain that produce antidepressant effects.
Itruvone, which is administered as a nasal spray at microgram-level doses, is designed to engage and activate chemosensory neurons in the nasal cavity, which are connected to neural circuits in the brain that produce antidepressant effects.
The following table indicates the primary components of G&A expense for each of the periods (amounts in thousands): Fiscal Year Ended March 31, 2022 2021 Salaries and benefits $ 4,082 $ 2,052 Stock-based compensation 2,023 1,559 Board fees and other consulting services 453 428 Legal, accounting and other professional fees 1,791 1,115 Investor and public relations 707 695 Pre-launch marketing studies and analyses 2,796 - Insurance 578 449 Travel expenses 42 4 Rent and utilities 377 354 Sublicense contract amortized acquisition expense 105 102 Write off of deferred offering costs 232 - All other expenses 294 340 $ 13,480 $ 7,098 The increase in salaries and benefits expense in Fiscal 2022 primarily results from the addition of our Chief Commercial Officer in May 2021, our Vice President, Investor Relations in March 2021, our Vice President, Strategic Insights and Analytics in November 2021, our Vice President, Human Resources in January 2022 and three other administrative employees during the period.
The following table indicates the primary components of G&A expense for each of the periods (amounts in thousands): Fiscal Years Ended March 31, 2023 2022 Salaries and benefits $ 4,313 $ 4,082 Stock-based compensation 1,972 2,023 Board fees and other consulting services 678 453 Legal, accounting and other professional fees 2,424 1,791 Investor and public relations 1,160 707 Pre-launch marketing studies and analyses 1,904 2,796 Insurance 1,379 578 Travel expenses 107 42 Rent and utilities 419 377 Sublicense contract amortized acquisition expense (21 ) 105 Warrant modification expense 77 - Write off of deferred offering costs - 232 All other expenses 252 294 $ 14,664 $ 13,480 The increase in salaries and benefits expense for Fiscal 2023 primarily reflects the addition of four additional management and staff positions including our Vice President, Human Resources in January 2022, our Chief Legal Officer in May 2022, our Vice President, Associate General Counsel in August 2022 and an additional administrative employee, as well as the impact of salary increases effective in January 2022 granted to our G&A management and staff.
From an operational perspective, throughout Fiscal 2022 and through the date of this Report, we have continued to advance our nonclinical and clinical development, manufacturing, and regulatory activities necessary for (i) Phase 3 clinical development of PH94B as a potential acute treatment of anxiety in adults with SAD, (ii) advancing our planned exploratory Phase 2A clinical program for PH94B with the initiation of our Phase 2A clinical study in adults experiencing AjDA, while also exploring potential opportunities for Phase 2A clinical development of PH94B in anxiety disorders beyond SAD, (iii) Phase 2B development of PH10 as a potential stand-alone treatment of MDD and (iv) exploratory Phase 1B development of AV-101 in combination with probenecid to explore potential opportunities to develop the combination for treatment of multiple CNS indications.
Summary of the Fiscal Year Ended March 31, 2023 Throughout Fiscal 2022 and Fiscal 2023, we have continued to advance our nonclinical and clinical development, manufacturing, and regulatory activities necessary for (i) Phase 3 clinical development of fasedienol as a potential treatment of anxiety in adults with SAD, (ii) advancing our Phase 2A clinical study of fasedienol in adults experiencing AjDA, (iii) submitting our itruvone IND and initiating a small Phase 1 study of itruvone in the U.S. to facilitate potential Phase 2B development as a stand-alone treatment of MDD and (iv) exploratory Phase 1B development of AV-101 in combination with probenecid to assess potential opportunities to develop the combination for treatment of certain CNS indications.
Consulting and other professional services in both periods reflects fees incurred, generally on an as-needed basis, for project-based scientific, CMC, nonclinical and clinical development and regulatory advisory and analytical services rendered to us by third parties, primarily in support of our PH94B and PH10 development initiatives.
The extension of option exercisability by approximately six months for a terminated employee accounted for approximately $109,000 of additional expense during Fiscal 2023. 2019 ESPP expense in Fiscal 2023 decreased by approximately $10,000 compared to Fiscal 2022 expense. 94 Consulting and other professional services in both periods reflects fees incurred, generally on an as-needed basis, for project-based scientific, CMC, nonclinical and clinical development and regulatory advisory and analytical services rendered to us by third parties, primarily in support of our fasedienol and itruvone development initiatives.
Rent expense for both Fiscal 2022 and Fiscal 2021 reflects our implementation of ASC 842 and the requirement to recognize, as an operating lease related to our South San Francisco office and laboratory facility, a right-of-use asset and a lease liability, both of which must be amortized over the expected lease term.
During Fiscal 2023, we incurred modest travel expense for attendance at seminars, and for vendor audits, clinical trial site visits and certain investor-focused events, as conditions have permitted, with in-person travel still reasonably limited. 97 Rent expense for both Fiscal 2023 and Fiscal 2022 reflects our implementation of ASC 842 and the requirement to recognize, as an operating lease related to our South San Francisco office and laboratory facility, a right-of-use asset and a lease liability, both of which must be amortized over the expected lease term.
All outstanding options granted to R&D employees and consultants prior to May 2019 are fully vested and amortized at March 31, 2022.
All outstanding options granted to R&D employees and consultants prior to May 2019 became fully vested and amortized during or prior to the end of Fiscal 2022 and the May 2019 grants became fully vested during Fiscal 2023.
We allocate total rent expense for our South San Francisco facility between R&D expense and G&A expense based generally on square footage dedicated to each function.
We allocate total rent expense for our South San Francisco facility between R&D expense and G&A expense based generally on square footage dedicated to each function. In both years, rent expense includes charges for such items as common area maintenance fees, taxes and insurance which are generally assessed to us by our landlord.
In September 2021 and on October 1, 2021, we sold an aggregate of 1,517,798 shares of our common stock and received gross cash proceeds of approximately $4.45 million under the ATM. We have not sold any additional shares of our common stock under the ATM from October 2, 2021 through the date of this Report.
From June 12, 2023 through the date of this Report we sold an aggregate of 561,418 shares of our common stock and received approximately $1.15 million in gross proceeds under the ATM.
Noncash research and development expenses, primarily stock-based compensation and equipment depreciation in both periods, accounted for approximately $1.5 million and $0.8 million in Fiscal 2022 and Fiscal 2021, respectively.
In addition to the noncash fair value of the common stock issued in the Pherin Acquisition in Fiscal 2023, other noncash research and development expenses, primarily stock-based compensation and depreciation in both periods, accounted for approximately $1.5 million in both Fiscal 2023 and Fiscal 2022.
In both periods, manufacturing, formulation, validation and analysis of sufficient quantities of drug substance and drug product for both clinical trials and other developmental requirements have been and continue to be significant initiatives for advancing both PH94B and PH10.
Throughout both Fiscal 2023 and 2022, manufacturing, formulation, process validation and analysis of sufficient quantities of drug substance and drug product for clinical trials and other developmental requirements were significant initiatives for advancing both fasedienol and itruvone.
Grants awarded after March 31, 2021, including those granted to new employees, account for approximately $604,000 of Fiscal 2022 expense, offset by the expense reduction compared to Fiscal 2021 of approximately $237,000 for grants made in Fiscal 2021 and prior years that became fully vested during Fiscal 2022.
Grants awarded after March 31, 2022, including those granted to new employees indicated above, account for approximately $78,000 of Fiscal 2023 expense, offset by an expense reduction of approximately $791,000 attributable to certain options granted between May 2019 and June 2020 that became fully vested and amortized in Fiscal 2023.
The following table indicates the primary components of R&D expense for each of the periods (amounts in thousands): Fiscal Years Ended March 31, 2022 2021 Salaries and benefits $ 6,040 $ 1,986 Stock-based compensation 1,457 747 Consulting and other professional services 834 328 Clinical and nonclinical studies and development expenses: PH94B and PH10 25,238 7,620 AV-101 999 611 All other 75 24 26,312 8,255 Rent 483 545 Depreciation 97 64 All other 185 1 Total Research and Development Expense $ 35,408 $ 11,926 The increase in salaries and benefits expense for Fiscal 2022 primarily reflects the impact of the addition of senior management personnel across multiple functional R&D areas, including chemistry, manufacturing and controls ( CMC ), clinical operations, clinical research, pharmacovigilance, biostatistics and clinical analytics, development operations, regulatory affairs and translational medicine, as well as other R&D personnel during the period from December 2020 through March 2022.
The following table indicates the primary components of R&D expense for each of the periods (amounts in thousands): Fiscal Years Ended March 31, 2023 2022 Salaries and benefits $ 6,255 $ 6,040 Stock-based compensation 1,365 1,457 Consulting and other professional services 817 834 Clinical and nonclinical studies and development expenses: Fasedienol and Itruvone 30,326 25,184 AV-101 1,163 999 All other 72 129 31,561 26,312 Cost of Pherin Acquisition as an asset purchase 3,559 - Rent 556 483 Depreciation 102 97 All other 162 185 Total Research and Development Expense $ 44,377 $ 35,408 The increase in salaries and benefits expense in Fiscal 2023 primarily reflects the addition of seven new management and staff positions across multiple functional disciplines, including biostatistics and clinical analytics, clinical operations, chemistry, manufacturing and controls, and regulatory affairs since the end of Fiscal 2022, as well as the impact of salary increases effective in January 2022 granted to our R&D management and staff.
We assess whether these options provide a material right to the customer and if so, they are considered performance obligations. The exercise of a material right may be accounted for as a contract modification or as a continuation of the contract for accounting purposes.
The exercise of a material right may be accounted for as a contract modification or as a continuation of the contract for accounting purposes. We assess whether each promised good or service is distinct for the purpose of identifying the performance obligations in the contract.

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