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vtgn10q_dec312020
 

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, DC 20549
 
Form 10-Q
(Mark One)
 
 
 
☑
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended December 31, 2020
or
 
 
 
☐
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                      to                      .
 
Commission File Number: 001-37761
 
VistaGen Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
 
 
Nevada
 
20-5093315
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
343 Allerton Avenue
South San Francisco, CA 94080
(Address of principal executive offices including zip code)
 
(650) 577-3600
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.001 per share
VTGN
Nasdaq Capital Market
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 
Large accelerated filer
 [  ]
Accelerated filer
[  ]
Non-Accelerated filer
 [  ]
Smaller reporting company
[X]
 
 
Emerging growth company
[  ]
     
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
 
As of February 11, 2021, 141,694,413 shares of the registrant’s common stock, $0.001 par value, were issued and outstanding.
 


 
 
 
VistaGen Therapeutics, Inc.
Quarterly Report on Form 10-Q
for the Quarter Ended December 31, 2020
 
 
TABLE OF CONTENTS
 
 
Page
 
 
 
 
1
2
3
4
6
24
44
 
44
 
 
 
45
45
83
83
84
 
 
85
 
 
 
 
 
PART I. FINANCIAL INFORMATION
 
Item 1. Condensed Consolidated Financial Statements (Unaudited)
 
VISTAGEN THERAPEUTICS, INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Dollars, except share amounts)
 
 
 
December 31,
 
 
 March 31,
 
 
 
2020
 
 
2020
 
 
 
 (Unaudited)
 
 
(Note 2)
 
 
 
 
 
 
 
 
 ASSETS
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 $104,331,100 
 $1,355,100 
 Prepaid expenses and other current assets
  547,500 
  225,100 
Deferred contract acquisition costs - current portion
  116,900 
  - 
Total current assets
  104,995,500 
  1,580,200 
Property and equipment, net
  382,200 
  209,600 
Right of use asset - operating lease
  3,312,100 
  3,579,600 
Deferred offering costs
  241,300 
  355,100 
Deferred contract acquisitions cost - non-current portion
  292,200 
  - 
Security deposits and other assets
  47,800 
  47,800 
Total assets
 $109,271,100 
 $5,772,300 
 
    
    
 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
    
    
 Current liabilities:
    
    
 Accounts payable
 $776,400 
 $1,836,600 
 Accrued expenses
  507,200 
  561,500 
 Current notes payable
  98,400 
  56,500 
 Deferred revenue - current portion
  1,244,000 
  - 
 Operating lease obligation - current portion
  351,500 
  313,400 
 Financing lease obligation - current portion
  3,600 
  3,300 
 Total current liabilities
  2,981,100 
  2,771,300 
 
    
    
 Non-current liabilities:
    
    
 Accrued dividends on Series B Preferred Stock
  5,923,700 
  5,011,800 
 Deferred revenue - non-current portion
  3,108,400 
  - 
 Operating lease obligation - non-current portion
  3,446,900 
  3,715,600 
 Financing lease obligation - non-current portion
  300 
  3,000 
 Total non-current liabilities
  12,479,300 
  8,730,400 
 Total liabilities
  15,460,400 
  11,501,700 
 
    
    
 Commitments and contingencies (Note 10)
    
    
 
    
    
 Stockholders’ equity (deficit):
    
    
Preferred stock, $0.001 par value; 10,000,000 shares authorized at December 31, 2020 and March 31, 2020:
Series A Preferred, 500,000 shares authorized, issued and outstanding at December 31, 2020 and March 31, 2020
  500 
  500 
Series B Preferred; 4,000,000 shares authorized at December 31, 2020 and March 31, 2020; 1,131,669 shares
and 1,160,240 shares issued and outstanding at December 31, 2020 and March 31, 2020, respectively
  1,100 
  1,100 
Series C Preferred; 3,000,000 shares authorized at December 31, 2020 and March 31, 2020; 2,318,012 shares
issued and outstanding at September 30, 2020 and March 31, 2020
  2,300 
  2,300 
Series D Preferred; 2,000,000 shares and no shares authorized, issued and outstanding at December 31, 2020
and March 31, 2020, respectively
  2,000 
  - 
Common stock, $0.001 par value; 175,000,000 shares authorized at December 31, 2020 and March 31, 2020;
138,800,137 and 49,348,707 shares issued and outstanding at December 31, 2020 and March 31, 2020, respectively
  138,800  
  49,300  
Additional paid-in capital
  311,264,800 
  200,092,800 
Treasury stock, at cost, 135,665 shares of common stock held at December 31, 2020 and March 31, 2020
  (3,968,100)
  (3,968,100)
Accumulated deficit
  (213,630,700)
  (201,907,400)
Total stockholders’ equity (deficit)
  93,810,700 
  (5,729,400)
Total liabilities and stockholders’ equity (deficit)
 $109,271,100 
 $5,772,300 
 
 
See accompanying notes to Condensed Consolidated Financial Statements.
 
 
 
 
VISTAGEN THERAPEUTICS, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(Amounts in dollars, except share amounts)
 
 
 
 Three Months Ended December 31,
 
 
 Nine Months Ended December 31,
 
 
 
 2020
 
 
2019
 
 
 2020
 
 
2019
 
 Sublicense revenue
 $313,600 
 $- 
 $647,600 
 $- 
  Total revenues
  313,600 
  - 
  647,600 
  - 
Operating expenses:
    
    
    
    
 Research and development
  3,496,100 
  3,014,500 
  7,585,500 
  11,533,600 
 General and administrative
  2,116,800 
  2,948,300 
  4,776,900 
  6,004,500 
  Total operating expenses
  5,612,900 
  5,962,800 
  12,362,400 
  17,538,100 
Loss from operations
  (5,299,300)
  (5,962,800)
  (11,714,800)
  (17,538,100)
Other income (expenses), net:
    
    
    
    
 Interest income (expense), net
  600 
  1,500 
  (6,500)
  33,400 
 Other income
  - 
  - 
  600 
  - 
Loss before income taxes
  (5,298,700)
  (5,961,300)
  (11,720,700)
  (17,504,700)
Income taxes
  - 
  (200)
  (2,600)
  (2,600)
Net loss and comprehensive loss
 $(5,298,700)
 $(5,961,500)
 $(11,723,300)
 $(17,507,300)
 
    
    
    
    
   Accrued dividends on Series B Preferred stock
  (353,600)
  (321,800)
  (1,036,600)
  (938,100)
 
    
    
    
    
Net loss attributable to common stockholders
 $(5,652,300)
 $(6,283,300)
 $(12,759,900)
 $(18,445,400)
 
    
    
    
    
Basic and diluted net loss attributable to common
    
    
    
    
     stockholders per common share
 $(0.07)
 $(0.15)
 $(0.19)
 $(0.43)
 
    
    
    
    
Weighted average shares used in computing
    
    
    
    
 basic and diluted net loss attributable to common
    
    
    
    
 stockholders per common share
  81,086,105 
  43,158,889 
  66,551,962 
  42,802,256 
 
 
See accompanying notes to Condensed Consolidated Financial Statements.
 
 
 
VISTAGEN THERAPEUTICS, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in Dollars)
 
 
 Nine Months Ended December 31,
 
 
 
2020
 
 
2019
 
 Cash flows from operating activities:
 
 
 
 
 
 
  Net loss
 $(11,723,300)
 $(17,507,300)
 
 Adjustments to reconcile net loss to net cash used in operating activities:
 
    
   Depreciation and amortization
  77,300 
  77,600 
   Stock-based compensation
  1,815,900 
  3,088,700 
   Expense related to modification of warrants
  - 
  826,900 
   Amortization of fair value of common stock issued for services
  - 
  92,100 
   Amortization of fair value of warrants issued for services
  - 
  13,800 
   Changes in operating assets and liabilities:
    
    
    Receivable from supplier
  - 
  300,000 
    Prepaid expenses and other current assets
  (200)
  56,200 
    Right of use asset - operating lease
  267,500 
  249,400 
    Operating lease liability
  (230,700)
  (196,300)
       Deferred sublicense revenue, net of deferred contract acquisition costs
  4,068,300 
  - 
    Accounts payable and accrued expenses
  (1,066,400)
  (178,900)
     Net cash used in operating activities
  (6,791,600)
  (13,177,800)
 
    
    
 Cash flows from property and investing activities:
    
    
  Purchases of manufacturing and other equipment
  (249,900)
  - 
     Net cash used in investing activities
  (249,900)
  - 
 
    
    
 Cash flows from financing activities:
    
    
  Net proceeds from issuance of common stock and Series D Preferred stock
  93,675,100 
  - 
  Net proceeds from issuance of common stock and warrants, including Units
  12,974,900 
  650,000 
  Net proceeds from exercise of warrants
  808,500 
  410,000 
  Proceeds from sale of warrants
  - 
  300,000 
  Net proceeds from sale of common stock under equity line
  2,841,600 
  - 
  Proceeds from issuance of note under Payroll Protection Plan
  224,400 
  - 
  Repayment of capital lease obligations
  (2,400)
  (2,200)
  Repayment of notes payable, including Payroll Protection Plan note
  (504,600)
  (217,000)
     Net cash provided by financing activities
  110,017,500 
  1,140,800 
 Net increase (decrease) in cash and cash equivalents
  102,976,000 
  (12,037,000)
 Cash and cash equivalents at beginning of period
  1,355,100 
  13,100,300 
 Cash and cash equivalents at end of period
 $104,331,100 
 $1,063,300 
 
    
    
 
    
    
 Supplemental disclosure of noncash activities:
    
    
    Insurance premiums settled by issuing note payable
 $322,200 
 $230,200 
    Accrued dividends on Series B Preferred
 $1,036,600 
 $939,100 
 
 Accrued dividends on Series B Preferred settled upon conversion by issuance
 
    
        of common stock
 $124,600 
 $- 
 
 
See accompanying notes to Condensed Consolidated Financial Statements.
 
 
 
 
-3-
 
VISTAGEN THERAPEUTICS, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2019 AND 2020
(Unaudited)
(Amounts in Dollars, except share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional
 
 
Total Stockholders'
'
 
Series A Preferred Stock
 
 
Series B Preferred Stock
 
 
Series C Preferred Stock
 
 
Series D Preferred Stock
 
 
 Common Stock
 
   Paid-in 
  Treasury 
  Accumulated 
  Equity 
 
 
 Shares
 
 
 Amount
 
 
 Shares
 
 
 Amount
 
 
 Shares
 
 
 Amount
 
 
 Shares
 
 
 Amount
 
 
 Shares
 
 
 Amount
 
 
 Capital
 
 
Stock
 
 
Deficit
 
 
(Deficit)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at March 31, 2019
  500,000 
 $500 
  1,160,240 
 $1,200 
  2,318,012 
 $2,300 
  - 
 $- 
  42,758,630 
 $42,800 
 $192,129,900 
 $(3,968,100)
 $(181,133,400)
 $7,075,200 
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Accrued dividends on Series B Preferred stock
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (302,500)
  - 
  - 
  (302,500)
Stock-based compensation expense
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  1,063,000 
  - 
  - 
  1,063,000 
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Net loss for the quarter ended June 30, 2019
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (6,209,900)
  (6,209,900)
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Balances at June 30, 2019
  500,000 
 $500 
  1,160,240 
 $1,200 
  2,318,012 
 $2,300 
  - 
 $- 
  42,758,630 
 $42,800 
 $192,890,400 
 $(3,968,100)
 $(187,343,300)
 $1,625,800 
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Accrued dividends on Series B Preferred stock
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (313,800)
  - 
  - 
  (313,800)
Stock-based compensation expense
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  393,500 
  - 
  - 
  393,500 
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Net loss for the quarter ended September 30, 2019
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (5,335,900)
  (5,335,900)
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Balances at September 30, 2019
  500,000 
 $500 
  1,160,240 
 $1,200 
  2,318,012 
 $2,300 
  - 
 $- 
  42,758,630 
 $42,800 
 $192,970,100 
 $(3,968,100)
 $(192,679,200)
 $(3,630,400)
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Proceeds from sale of units of common stock and warrants for cash in private placement
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  650,000 
  600 
  649,400 
  - 
  - 
  650,000 
Proceeds from sale of warrants in private placement
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  300,000 
  - 
  - 
  300,000 
Proceeds from exercise of warrants
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  820,000 
  800 
  409,200 
  - 
  - 
  410,000 
Accrued dividends on Series B Preferred stock
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (321,800)
  - 
  - 
  (321,800)
Stock-based compensation expense
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  1,632,200 
  - 
  - 
  1,632,200 
Increase in fair value attributed to warrant modifications and additional warrants issued
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  826,900 
  - 
  - 
  826,900 
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Net loss for the quarter ended December 31, 2019
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (5,961,500)
  (5,961,500)
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Balances at December 31, 2019
  500,000 
 $500 
  1,160,240 
 $1,200 
  2,318,012 
 $2,300 
  - 
 $- 
  44,228,630 
 $44,200 
 $196,466,000 
 $(3,968,100)
 $(198,640,700)
 $(6,094,600)
 
(Continued on next page)
 
 
 
 
-4-
 
VISTAGEN THERAPEUTICS, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2019 AND 2020
(Unaudited)
(Amounts in Dollars, except share amounts)

 
 
Series A Preferred Stock
 
 
Series B Preferred Stock
 
 
Series C Preferred Stock
 
 
Series D Preferred Stock
 
 
 Common Stock
 
 
  Additional Paid-in
 
 
Treasury
 
 
Accumulated
 
  Total Stockholders' Equity 
 
 
 Shares
 
 
 Amount
 
 
 Shares
 
 
 Amount
 
 
 Shares
 
 
 Amount
 
 
 Shares
 
 
 Amount
 
 
 Shares
 
 
 Amount
 
 
 Capital
 
 
Stock
 
 
Deficit
 
 
(Deficit)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at March 31, 2020
  500,000 
 $500 
  1,160,240 
 $1,200 
  2,318,012 
 $2,300 
  - 
 $- 
  49,348,707 
 $49,300 
 $200,092,800 
 $(3,968,100)
 $(201,907,400)
 $(5,729,400)
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Proceeds from sale of units of common stock and warrants for cash in private placement
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  125,000 
  200 
  49,800 
  - 
  - 
  50,000 
Net proceeds from sale of common stock under equity line
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  6,201,995 
  6,200 
  2,741,300 
  - 
  - 
  2,747,500 
Issuance of common stock at fair value for professional services
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  233,645 
  200 
  124,800 
  - 
  - 
  125,000 
Sale of common stock pursuant to 2019 Employee Stock Purchase Plan
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  28,125 
  - 
  12,600 
  - 
  - 
  12,600 
Expenses related to S-3 registration statement for warrant shares
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (29,400)
  - 
  - 
  (29,400)
Accrued dividends on Series B Preferred stock
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (335,800)
  - 
  - 
  (335,800)
Stock-based compensation expense
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  674,600 
  - 
  - 
  674,600 
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Net loss for the quarter ended June 30, 2020
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (3,126,800)
  (3,126,800)
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Balances at June 30, 2020
  500,000 
 $500 
  1,160,240 
 $1,200 
  2,318,012 
 $2,300 
  - 
 $- 
  55,937,472 
 $55,900 
 $203,330,700 
 $(3,968,100)
 $(205,034,200)
 $(5,611,700)
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Net proceeds from sale of common stock in public offering
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  17,868,250 
  17,900 
  12,887,200 
  - 
  - 
  12,905,100 
Net proceeds from exercise of warrants
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  228,000 
  200 
  113,800 
  - 
  - 
  114,000 
Net proceeds from sale of common stock under equity line
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  100,000 
  100 
  49,200 
  - 
  - 
  49,300 
Accrued dividends on Series B Preferred stock
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (347,200)
  - 
  - 
  (347,200)
Stock-based compensation expense
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  410,900 
  - 
  - 
  410,900 
 
    
    
    
    
    
    
    
    
    
    
    
    
    
  - 
Net loss for the quarter ended September 30, 2020
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (3,297,800)
  (3,297,800)
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Balances at September 30, 2020
  500,000 
 $500 
  1,160,240 
 $1,200 
  2,318,012 
 $2,300 
  - 
 $- 
  74,133,722 
 $74,100 
 $216,444,600 
 $(3,968,100)
 $(208,332,000)
 $4,222,600 
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Net proceeds from sale of common stock and Series D Preferred stock in public offering
  - 
  - 
  - 
  - 
  - 
  - 
  2,000,000 
  2,000 
  63,000,000 
  63,000 
  93,582,900 
  - 
  - 
  93,647,900 
Net proceeds from exercise of warrants
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  1,447,782 
  1,400 
  722,500 
  - 
  - 
  723,900 
Accrued dividends on Series B Preferred stock
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (353,600)
  - 
  - 
  (353,600)
Stock-based compensation expense
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  730,400 
  - 
  - 
  730,400 
Conversion of Series B Preferred stock to common and payment of accrued dividends in common stock
  - 
  - 
  (28,571)
  (100)
  - 
  - 
  - 
  - 
  188,633 
  200 
  124,500 
  - 
  - 
  124,600 
Sale of common stock pursuant to 2019 Employee Stock Purchase Plan
  -  
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  30,000 
  100 
  13,500 
  - 
  - 
  13,600 
Net loss for the quarter ended December 31, 2020
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (5,298,700)
  (5,298,700)
 
    
    
    
    
    
    
    
    
    
    
    
    
    
    
Balances at December 31, 2020
  500,000 
 $500 
  1,131,669 
 $1,100 
  2,318,012 
 $2,300 
  2,000,000 
 $2,000 
  138,800,137 
 $138,800 
 $311,264,800 
 $(3,968,100)
 $(213,630,700)
 $93,810,700 
 
 
See accompanying notes to Condensed Consolidated Financial Statements.
 
 
 
VISTAGEN THERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
Note 1.  Description of Business
 
VistaGen Therapeutics, Inc., a Nevada corporation (which may be referred to as VistaGen, the Company, we, our, or us), is a clinical-stage biopharmaceutical company committed to developing and commercializing differentiated new generation medications that go beyond the current standard of care for anxiety, depression and other central nervous system (CNS) disorders. Our pipeline includes three CNS product candidates, PH94B, PH10 and AV-101, each with a differentiated potential mechanism of action, favorable safety results observed in all clinical studies to date, and therapeutic potential in multiple CNS indications. We are currently preparing PH94B for a pivotal Phase 3 clinical study as a potential acute treatment of anxiety in adults with social anxiety disorder (SAD). We are also planning for several small exploratory Phase 2A studies in adult patients experiencing adjustment disorder, pre-procedural anxiety, postpartum anxiety and post-traumatic stress disorder. PH10 has completed a successful exploratory Phase 2A study for the treatment of major depressive disorder (MDD). We are currently preparing for planned Phase 2B clinical development of PH10 as a potential stand-alone treatment for MDD. In several clinical studies, AV-101 was shown to be orally bioavailable and was well-tolerated. Based on successful these clinical studies and several preclinical studies, we are currently planning to pursue Phase 1B, and, if successful, subsequent Phase 2A, clinical development of AV-101 in combination with probenecid for treatment of CNS indications involving the N-methyl-D-aspartate receptor (NMDAR). Additionally, our wholly owned subsidiary, VistaGen Therapeutics, Inc., d/b/a VistaStem, a California corporation (VistaStem), has pluripotent stem cell technology focused on assessing and developing small molecule new chemical entities (NCEs) for our CNS pipeline, or for out-licensing, by utilizing CardioSafe 3D, VistaStem’s customized human heart cell-based cardiac bioassay system. Our goal is to become a biopharmaceutical company that develops and commercializes innovative CNS therapies for multiple large and growing neuropsychiatry and neurology markets worldwide where current treatments are inadequate to meet the needs of millions of patients.
 
Our Product Candidates
 
We believe that PH94B has the potential to be a first-in-class neuroactive steroid nasal spray for use in a wide range of indications involving anxiety or phobia. Designed to be self-administered in microgram level doses, PH94B does not require systemic uptake and distribution to produce rapid-onset anti-anxiety effects and has demonstrated a favorable safety profile in all clinical studies to date. We are initially developing PH94B as a potential fast-acting, non-sedating acute treatment of anxiety in adults with SAD. We believe PH94B also has potential to be developed as a novel treatment for a broad range of anxiety disorders, including adjustment disorder, postpartum anxiety, post-traumatic stress disorder, pre-procedural anxiety, panic and others. The U.S. Food and Drug Administration (FDA) has granted Fast Track designation for development of PH94B for the acute treatment of SAD.
 
PH10 is an innovative investigational neuroactive steroid nasal spray designed to have rapid-onset and therapeutic potential in several neuropsychiatric indications involving depression. Self-administered in microgram level doses, PH10 does not require systemic uptake and distribution to produce rapid-onset antidepressant effects. Following completion of a successful exploratory Phase 2A clinical study, we are preparing for a planned Phase 2B clinical study of PH10 as a stand-alone treatment of MDD. With its rapid-onset pharmacology, lack of systemic exposure at clinical doses administered to-date and favorable safety results observed in all clinical studies to date, we believe PH10 has potential to be a new stand-alone treatment for several additional depression disorders.
 
AV-101 (4-Cl-KYN) is a potentially novel, investigational prodrug designed to be orally administered and to target the NMDAR, an ionotropic glutamate receptor in the brain. Abnormal NMDAR function is associated with numerous CNS diseases and disorders. AV-101’s active metabolite, 7-chloro-kynurenic acid (7-Cl-KYNA), has been observed to be a potent and selective full antagonist of the glycine co-agonist site of the NMDAR that inhibits the function of the NMDAR, but does not block NMDAR function like ketamine and other NMDAR antagonists. At doses administered to-date, AV-101 has been observed in clinical trials to be orally bioavailable, well-tolerated and not cause dissociative or hallucinogenic psychological side effects or safety concerns similar to those that may be caused by other NMDAR antagonists. In light of these and findings from a wide range of preclinical studies, we believe that AV-101, in combination with FDA-approved probenecid, has potential to become a new oral treatment alternative for multiple large CNS markets. We are currently preparing to evaluate AV-101’s therapeutic potential in combination with probenecid in a Phase 1B clinical study. The FDA has granted Fast Track designation for development of AV-101 as both a potential adjunctive treatment for MDD and as a non-opioid treatment for neuropathic pain (NP).
 
VistaStem is applying pluripotent stem cell (hPSC) technology and CardioSafe 3D, our customized cardiac bioassay system, to discover and develop novel, investigational small molecule NCEs for our CNS pipeline or for out-licensing.
 
 
 
-6-
 
Subsidiaries
 
As noted above, VistaStem Therapeutics, a California corporation, is our wholly-owned subsidiary. Our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q (Report) also include the accounts of VistaStem and VistaStem’s two wholly-owned inactive subsidiaries, Artemis Neuroscience, Inc., a Maryland corporation, and VistaStem Canada, Inc., a corporation organized under the laws of Ontario, Canada.
 
Note 2.  Basis of Presentation
 
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not contain all of the information and footnotes required for complete consolidated financial statements. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly our interim financial information. The accompanying Condensed Consolidated Balance Sheet at March 31, 2020 has been derived from our audited consolidated financial statements at that date but does not include all disclosures required by U.S. GAAP.  The operating results for the three and nine months ended December 31, 2020 are not necessarily indicative of the operating results to be expected for our fiscal year ending March 31, 2021, or for any other future interim or other period.
 
The accompanying unaudited Condensed Consolidated Financial Statements and notes to the Condensed Consolidated Financial Statements contained in this Report should be read in conjunction with our audited Consolidated Financial Statements for our fiscal year ended March 31, 2020 contained in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (SEC) on June 29, 2020.
 
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared assuming we will continue as a going concern. As a clinical-stage biopharmaceutical company having not yet developed commercial products or achieved sustainable revenues, we have experienced recurring losses and negative cash flows from operations resulting in a deficit of approximately $213.6 million accumulated from inception (May 1998) through December 31, 2020. We expect losses and negative cash flows from operations to continue for the foreseeable future as we engage in further development of PH94B, PH10 and AV-101, execute our drug rescue programs and pursue potential drug development and regenerative medicine opportunities.
 
Since our inception in May 1998 through December 31, 2020, 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 $193.6 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 and intellectual property licensing, and other revenues. 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.
 
Recent Developments
 
As described more completely in Note 8, Capital Stock, in December 2020, we entered into an underwriting agreement (the December 2020 Underwriting Agreement) pursuant to which we sold, in an underwritten public offering (the December 2020 Public Offering), 63,000,000 shares of our common stock, par value $0.001 per share (Common Stock) at a public offering price of $0.92 per share and 2,000,000 shares of a newly issued series of convertible preferred stock (Series D Preferred) and, together with the Common Stock, the Securities) at a public offering price of $21.16 per share, resulting in gross proceeds to us of $100 million. Net proceeds to us from the securities sold in the December 2020 Public Offering, after deducting underwriting discounts and commissions and offering expenses payable by us, were approximately $93.6 million.
 
As also described more completely in Note 8, Capital Stock, in August 2020, we entered into an underwriting agreement (the August 2020 Underwriting Agreement) pursuant to which we sold, in an underwritten public offering (the August 2020 Public Offering), an aggregate of 15,625,000 shares of our common stock at a public offering price of $0.80 per share, resulting in gross proceeds to us of $12,500,000. Under the terms of the August 2020 Underwriting Agreement, we granted to the underwriter an over-allotment option (the Over-Allotment Option) to purchase up to an additional 2,343,750 shares of common stock at a public offering price of $0.80 per share. The underwriter exercised the Over-Allotment Option with respect to 2,243,250 shares (the Exercised Option Shares), resulting in additional gross proceeds to us of $1,794,600. Aggregate net proceeds to us from the August 2020 Public Offering, after deducting underwriting discounts and commissions and offering expenses payable by us, were approximately $12.9 million.
 
 
 
 
-7-
 
As more completely described in Note 11, Sublicensing and Collaboration Agreements, in June 2020, we entered into a strategic licensing and collaboration agreement for the clinical development and commercialization of PH94B for acute treatment of anxiety in adults with SAD and other potential anxiety-related disorders (the EverInsight Agreement), with EverInsight Therapeutics Inc., (EverInsight), a biopharmaceutical company focused on developing and commercializing transformative pharmaceutical products for patients in Greater China and other parts of Asia, and funded by CBC Group, a global healthcare-focused venture capital firm. Subsequent to entering into the EverInsight Agreement, in October 2020, EverInsight merged with AffaMed Therapeutics, also funded by CBC Group, which as a combined, complementary entity is focusing on developing and commercializing therapeutics to address ophthalmologic and CNS disorders in Greater China and beyond. Accordingly, we are now referring to EverInsight and the EverInsight Agreement as AffaMed and the AffaMed Agreement, respectively. Under the terms of the AffaMed Agreement, AffaMed agreed to make a non-dilutive upfront license payment of $5.0 million to us, which we received in August 2020. Upon successful development and commercialization of PH94B in AffaMed’s territory, we are eligible to receive up to $172 million in additional development and commercial milestone payments, plus royalties on commercial sales in the licensed territory. The $5.0 million upfront license payment resulted in net cash proceeds to us of approximately $4.655 million after the sublicense payment we agreed to make to Pherin Pharmaceuticals, Inc. (Pherin) pursuant to our PH94B license from Pherin, and payment for consulting services related to the AffaMed Agreement.
 
Additionally, as described in Note 8, Capital Stock, on March 24, 2020, we entered into a purchase agreement and a registration rights agreement with Lincoln Park Capital Fund (Lincoln Park) pursuant to which Lincoln Park committed to purchase up to $10,250,000 of our common stock at market-based prices over a period of 24 months (the LPC Agreement). To satisfy our obligations under the registration rights agreement, we filed a Registration Statement on Form S-1 (the LPC Registration Statement) with the Securities and Exchange Commission (the SEC) on March 31, 2020, which the SEC declared effective on April 14, 2020 (Registration No. 333-237514). Subsequent to the effectiveness of the LPC Registration Statement and through July 2020, we sold 6,301,995 registered shares of our common stock to Lincoln Park and received gross cash proceeds of $2,891,200. We have not sold any shares of our common stock pursuant to the Lincoln Park Agreement since July 2020.
 
As also described in Note 8, Capital Stock, during December 2020, certain holders of outstanding warrants exercised such warrants to purchase an aggregate of 1,447,782 shares of our common stock and we received cash proceeds of $723,900 from such exercises. As disclosed in Note 12, Subsequent Events, since December 31, 2020, holders of outstanding warrants have exercised warrants to purchase an additional 2,941,027 shares of our common stock and we have received cash proceeds of approximately $2.86 million.
 
Liquidity and Capital Resources
 
As a clinical-stage biopharmaceutical company, we have historically financed our operations and technology acquisitions primarily through the issuance and sale of our equity and debt securities. During the nine months ended December 31, 2020, we generated approximately $114.8 million in net cash proceeds from the transactions described above. As of December 31, 2020, we had cash and cash equivalents of approximately $104.3 million, which we believe is sufficient to fund our planned operations for well beyond the twelve months following the issuance of these financial statements, removing earlier doubt regarding our ability to continue as a going concern. Nevertheless, we have not yet developed products that generate recurring revenue and, assuming successful completion of our planned clinical and nonclinical programs, we will need to invest substantial additional capital resources to commercialize any of them.
 
During the next twelve months, we plan to (i) prepare for and launch two pivotal Phase 3 clinical trials of PH94B for acute treatment of anxiety in adult patients with SAD, one in North America and another globally, (ii) prepare for and launch a small exploratory Phase 2A study of PH94B for acute treatment of adult patients with adjustment disorder, (iii) prepare for and potentially launch small exploratory Phase 2A clinical studies of PH94B in postpartum anxiety, post-traumatic stress disorder and/or pre-procedural (i.e. pre-MRI) anxiety, (iv) assess and potentially launch a Phase 1B study of AV-101 in combination with probenecid to enable exploratory Phase 2A development of the combination for treatment of CNS disorders, and (v) conduct several nonclinical studies involving PH94B, PH10 and AV-101.
 
Although we believe our current cash position is sufficient to fund our planned operations for the next twelve months, when necessary and advantageous, we may raise additional capital through the sale of our equity securities in one or more (i) public offerings (ii) private placements to accredited investors, and/or (iii) in strategic licensing and development collaborations involving one or more of our drug candidates in markets outside the United States, similar to the AffaMedAgreement. Subject to certain restrictions, our Registration Statement on Form S-3 (Registration No. 333-234025) (the S-3 Registration Statement), which became effective on October 7, 2019 and was used to register the securities sold in the December 2020 Public Offering and the shares of common stock and the Exercised Option Shares sold in the August 2020 Public Offering, 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 Registration Statement, we do not have an obligation to do so. Further, at December 31, 2020 and through the date of this Report, there are approximately 2.04 million registered shares of our common stock remaining available for sale under the LPC Agreement. We have no obligation to sell any additional shares to Lincoln Park under the LPC Agreement.
 
In addition to the potential sale of our equity securities, we may also seek to enter research, development and/or commercialization collaborations similar to the AffaMed Agreement and the Bayer Agreement (defined in Note 11, below) to provide funding, including non-dilutive funding, for development of one or more of our CNS product candidate programs. We may also seek additional government grant awards or agreements similar to our prior agreement with the U.S. National Institutes of Health (NIH), Baylor University and the U.S. Department of Veterans Affairs in connection with certain government-sponsored studies of AV-101. Such strategic collaborations may provide non-dilutive resources to advance our strategic initiatives while reducing a portion of our future cash outlays and working capital requirements. We may also pursue intellectual property arrangements similar to the AffaMed Agreement and the Bayer Agreement with other parties. Although we may seek additional collaborations that could generate revenue and/or provide non-dilutive funding for development of our product candidates, as well as new government grant awards and/or agreements, no assurance can be provided that any such collaborations, awards or agreements will occur in the future.  
 
 
 
-8-
 

Our future working capital requirements will depend on many factors, including, without limitation, potential impacts related to the current 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 and various applications of our stem cell technology platform, the availability of, and our ability to obtain, government grant awards and agreements, and our ability to enter into collaborations on terms acceptable to us. To further advance the clinical development of PH94B, PH10, and AV-101 and, to a lesser extent, our stem cell technology platform, as well as support our operating activities, we plan to continue to carefully manage our routine operating costs, including our employee headcount and related expenses, as well as costs relating to regulatory consulting, contract manufacturing, research and development, investor and public relations, business development, legal, intellectual property acquisition and protection, public company compliance and other professional services and operating costs. 
 
Notwithstanding the foregoing, there can be no assurance that our current strategic collaborations under the AffaMed Agreement and/or the Bayer Agreement (defined in Note 11, below) will generate revenue from future potential milestone payments, or that future financings or government 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. If we are unable to obtain additional financing on a timely basis when needed, our business, financial condition, and results of operations may be harmed, the price of our stock may decline, we may be required to reduce, defer, or discontinue certain of our research and development activities and we may not be able to continue as a going concern.  
 
Note 3.  Summary of Significant Accounting Policies
 
Use of Estimates
 
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.  Significant estimates include those relating to revenue recognition, share-based compensation, right-of-use assets and lease liabilities and assumptions that have been used historically to value warrants and warrant modifications.
 
Revenue Recognition
 
We generate revenue from collaborative research and development arrangements, licensing and technology transfer agreements, including strategic licenses or sublicenses, and government grants. We expect that our primary source of revenue beginning in the quarter ended September 30, 2020 will be from the AffaMed Agreement involving clinical development and commercialization of PH94B for acute treatment of anxiety in adults with SAD, and potentially other anxiety-related disorders, in Greater China, South Korea, and Southeast Asia. The terms of the AffaMed Agreement include a $5.0 million non-refundable upfront license fee which we received in August 2020, potential payments based upon achievement of certain development and commercial milestones, and royalties on product sales. We also have the Bayer Agreement, pursuant to which we recorded sublicense revenue in the third quarter of our fiscal year ended March 31, 2017, also described in Note 11, Sublicensing and Collaborative Agreements, as a potential revenue generating arrangement.
 
Under Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (Topic 606), we recognize revenue when our customers obtain control of promised goods or services, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of Topic 606, we perform the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation. 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.
 
Performance Obligations
 
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 components are separable from the other aspects of the contractual relationship. In assessing whether a promised good or service is distinct in the evaluation of a collaboration arrangement subject to Topic 606, we consider factors such as the research, manufacturing and commercialization capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace.
 
 
 
 
-9-
 
Collaboration arrangements can have several promised goods or services including a license for our intellectual property, product supply and development and regulatory services. When the customer could not obtain the intended benefit of the contract from a promised good or service without one or more other promises in the contract, the promise is determined to be not distinct in the context of the contract and is combined with other promises until the combined promises are distinct to identify performance obligations. We have determined that the AffaMed Agreement includes a single combined performance obligation that includes both the license to intellectual property and development and regulatory services.
 
Arrangements can include promises for optional additional items, which are considered marketing offers and are accounted for as separate contracts when the customer elects such options. Arrangements that include a promise for future supply of product for either clinical development or commercial supply and optional research and development services at the customer’s or the Company’s discretion are generally considered as options. We assess whether these options provide a material right to the customer and if so, such material rights are accounted for as separate performance obligations. When the customer exercises an option, any additional payments related to the option are recorded in revenue when the customer obtains control of the goods or services.
 
Transaction Price
 
Arrangements may have both fixed and variable consideration. For collaboration agreements, the non-refundable upfront fees and product supply selling prices are considered fixed, while milestone payments are considered variable consideration when determining the transaction price. At the inception of each arrangement, we evaluate whether the development milestones are considered probable of being achieved and estimate an amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the value of the associated milestone is included in the transaction price. Milestone payments that are not within our control or the licensee’s control, such as approvals from regulators, are generally not considered probable of being achieved until such approvals are received.
 
For sales-based royalties, including commercial milestone payments based on the level of sales, for which the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of when (a) the related sales occur, or (b) the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
 
In determining the transaction price, we adjust consideration for the effects of the time value of money if the timing of payments provides us with a significant benefit of financing. We do not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the licensee and the transfer of the promised goods or services to the licensee will be one year or less.
 
Allocation of Consideration
 
As part of the accounting for collaboration arrangements, we must develop assumptions that require judgment to determine the stand-alone selling price of each performance obligation identified in the contract. The transaction price is allocated to the identified performance obligations in proportion to their standalone selling prices (SSP) on a relative SSP basis. SSP is determined at contract inception and is not updated to reflect changes between contract inception and satisfaction of the performance obligations. In developing the SSP for a performance obligation, we consider applicable market conditions and relevant Company-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated costs. We validate the SSP for performance obligations by evaluating whether changes in the key assumptions used to determine the SSP will have a significant effect on the allocation of arrangement consideration between multiple performance obligations. Since the AffaMed Agreement includes a single combined performance obligation that is not distinct, there is no allocation of consideration.
 
Timing of Recognition
 
Significant management judgment is require