VistaGen Therapeutics Inc.

11/13/2025 | Press release | Distributed by Public on 11/13/2025 15:36

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q (Quarterly Report or Report) may constitute "forward-looking statements" for purposes of the federal securities laws, including the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), that involve substantial risks and uncertainties. Our forward-looking statements include, but are not limited to, statements regarding our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are also forward-looking statements. The words "anticipate," "believe," "can," "contemplate," continue," "could," "estimate," "expect," "future," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "strategy," "target," "will," "would," or the negative of these terms or similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Report may include, for example, statements about:
•the period over which we anticipate our available financial resources will enable us to fund our operating expense;
•our ability to obtain additional funding for our operations, including funding necessary to complete further development, approval and, if approved, commercialization of our product candidates;
•the format, objectives, strategy, likelihood of success, and cost of our preclinical studies and clinical trials and other product development activities, including the design of our preclinical studies and clinical trials;
•the timing of initiation of our preclinical studies and clinical trials;
•our ability to recruit, enroll and randomize suitable patients in our clinical trials;
•the timing of completion of our preclinical studies and clinical trials and related preparatory work;
•our ability to collect and interpret preclinical and clinical data;
•the timing and outcome of regulatory interactions, including whether preclinical studies and clinical trials meet the criteria to enable early-stage or late-stage clinical development or support registration of our product candidates;
•the potential attributes and benefits of our product candidates;
•our ability to obtain and, if obtained, maintain regulatory approval for our product candidates, and any related restrictions, limitations or warnings on the label of an approved product candidate;
•the potential for our business development efforts to optimize the potential value of our neuroscience pipeline;
•our ability to compete with other companies currently marketing or engaged in the development of treatments for the indications that we pursue or are pursuing for our product candidates;
•our ability to obtain and maintain intellectual property protection for our product candidates and the duration of such protection;
•our ability to contract with and rely on the performance of third-parties to assist in conducting our preclinical studies and clinical trials and manufacturing our product candidates;
•the size and growth potential of the markets for our product candidates, and our ability to serve those markets, either on our own or in partnership with others;
•the rate and degree of market acceptance of our product candidates, if approved;
•the pricing and reimbursement of our product candidates, if approved;
•regulatory changes, including regulatory personnel, and developments in the U.S. and foreign countries;
•the impact of laws, regulations, accounting standards, regulatory requirements, judicial decisions and guidance issued by authoritative bodies;
•our ability to attract and retain key scientific, medical, commercial and management personnel;
•our estimates regarding expenses, future revenue, and needs for additional financing;
•our future financial performance;
•our ability to recognize the anticipated benefits of our License and Collaboration Agreement with AffaMed Therapeutics, Inc. (including our ability to receive future payments thereunder) and any other future financing or business development transactions;
•the effect of adverse market or macroeconomic conditions, including, among others, tariffs, inflation, interest rates and economic uncertainty, market volatility resulting from global political or economic developments, government shutdowns and reductions in force (RIFs) at government regulatory agencies and reductions in force (RIFs) at government regulatory agencies, war, international hostilities and terrorism, any future public health epidemics or outbreaks of infectious disease and other factors on any of the foregoing or other aspects of our business operations, including but not limited to our preclinical studies, clinical trials and other product development activities, healthcare systems and the global economy as a whole; and
•other risks and uncertainties, including those listed under Part I, Item 1A of this Quarterly Report titled "Risk Factors."
The forward-looking statements contained in this Quarterly Report are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions or important factors that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," set forth in this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. There may be additional risks that we consider immaterial, or which are unknown. It is not possible to predict or identify all such risks. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
You should read this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
This Quarterly Report contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed as exhibits to this Quarterly Report. Unless the context otherwise requires, reference in this Quarterly Report to the terms "Vistagen," "the Company," "we," "us," "our," and similar designations refer to Vistagen Therapeutics, Inc., a Nevada corporation, and where appropriate, our consolidated subsidiaries.
This Quarterly Report may contain references to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred to in this Quarterly Report may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies' trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
We may from time to time provide estimates, projections and other information concerning our industry, the general business environment, and the markets for certain diseases or disorders, including estimates regarding the potential size of those markets and the estimated incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, market research, projections, or similar methodologies is inherently subject to uncertainties, and actual circumstances, events or numbers, including actual disease prevalence rates and market size, may differ materially from the information reflected in this Quarterly Report. Unless otherwise expressly stated, we obtained the industry, market and competitive position data from our internal estimates and research, or from independent market research, industry and general publications and surveys, governmental agencies and publicly available information in addition to
research, surveys and studies conducted by third parties that have not been independently verified which may, in the future, prove not to have been accurate.
Business Overview
We are a late clinical-stage biopharmaceutical company leveraging a deep understanding of nose-to-brain neurocircuitry to develop and commercialize a new class of intranasal product candidates called pherines. Our broad and diverse neuroscience pipeline currently consists of five clinical-stage pherine product candidates, each with a novel mechanism of action (MOA) and positive clinical data in their targeted indication(s). Pherines rapidly, specifically and selectively bind to peripheral receptors in human nasal chemosensory neurons, and are designed to rapidly activate nose-to-brain neurocircuits believed to regulate brain areas without requiring systemic absorption or uptake into the brain to achieve desired therapeutic benefits.
Our most advanced intranasal pherine product candidate is fasedienol, which is being investigated in our U.S. registration-directed PALISADE Program for the acute treatment of social anxiety disorder (SAD). In August 2023, we received and reported positive topline results from our PALISADE-2 Phase 3 trial of fasedienol for the acute treatment of SAD. The ongoing clinical trials in our PALISADE Program include our PALISADE-3 and PALISADE-4 Phase 3 trials, which are designed similarly to PALISADE-2, and a small exploratory, randomized, double blind, placebo controlled, three-arm Phase 2B clinical trial designed to assess efficacy, safety and tolerability of a repeat dose of fasedienol in adults with SAD in a public speaking challenge in a clinical setting (the Repeat Dose Study). The Repeat Dose Study was designed based on FDA feedback to evaluate the effect of repeat dosing of fasedienol, potential dosing interval for repeat dose, as well as potential dose response and duration of effect. Topline data for PALISADE-3 are expected in the fourth calendar quarter of 2025 and topline results for PALISADE-4 and the Repeat Dose Study are expected in the first half of calendar 2026.
We have also reported positive results from an exploratory Phase 2A clinical trial for each of our next most advanced pherine product candidates, itruvone for treatment of major depressive disorder, and PH80 for both vasomotor symptoms (hot flashes) due to menopause and premenstrual dysphoric disorder, as well as a pilot Phase 2A study of PH15 for improvement of psychomotor impairment due to mental fatigue and an exploratory Phase 2A study of PH284 for treatment of cancer cachexia.
We are passionate about developing transformative treatment options with potential to meet clear and growing unmet needs and bring meaningful relief to patients underserved by current standards of care and are working to deliver long term value to our stockholders.
Our Neuroscience Product Candidates
Fasedienol
Overview of Social Anxiety Disorder
SAD is a highly prevalent, serious, and life-threatening psychiatric mental health disorder affecting over 30 million adults in the U.S. With onset typically early in life, usually during adolescence, SAD persists for many years thereafter, with a reported mean duration of about 20 years. Individuals with SAD experience extreme anxiety, distress, fear, and impairment due to their fear of being watched, embarrassed, judged, humiliated, negatively evaluated, and scrutinized. The profound acute anxiety associated with SAD often results in avoidance of everyday interactions and opportunities in academic, social and vocational settings, which can lead to impaired personal relationships, unsatisfactory work performance, and substance abuse, significantly impacting various aspects of daily life. Individuals with SAD face an increased risk of serious and life-threatening co-morbid depression, substance abuse, suicidal ideation and suicide.
Fasedienol for the Acute Treatment of Social Anxiety Disorder
Fasedienol, our lead clinical-stage product candidate, is a synthetic neurocircuitry-focus intranasal pherine in an ongoing U.S. registration-directed Phase 3 clinical development program for the acute treatment of anxiety in adults with SAD. Fasedienol's MOA is fundamentally differentiated from all FDA-approved anti-anxiety medications. When administered intranasally in microgram-level doses, neurocircuitry-focused fasedienol modulates the nasal-limbic amygdala fear and anxiety neurocircuits involved in the pathophysiology of SAD. Fasedienol is pharmacologically active without requiring apparent systemic absorption or direct binding on neurons in the brain to achieve its rapid-onset anxiolytic effects. Fasedienol does not exert effects on certain cellular receptors that are associated with known drug abuse liability potential (for example, dopamine and opiate receptors) when activated by certain other pharmaceutical compounds for neuropsychiatric and neurological disorders. Unlike benzodiazepines, fasedienol does not potentiate GABA-A. Because of its innovative non-systemic neurocircuitry-focused MOA, we believe fasedienol has the potential to achieve rapid-onset anxiolytic effects for individuals with SAD on an acute, as-needed basis, with a significantly reduced risk of unwanted side
effects and safety concerns, such as potential drug-drug interactions, abuse, misuse, and addiction, associated with certain current oral and other systemically absorbed neuropsychiatric pharmaceuticals that act directly on neurons in the brain and are sometimes prescribed off-label for the acute treatment of SAD.
Fasedienol's U.S. Registration-directed PALISADE Program
Fasedienol is under development, and has received fast track designation, for the acute treatment of SAD, and is designed to reduce the wave of anxiety usually experienced by SAD patients before engaging in (and during) a feared and anxiety-provoking social or performance situation. While there are approved treatments for SAD, none is approved for the acute treatment of SAD on an as-needed basis in connection with an anxiety-producing social or performance-based event. We have designed fasedienol with the goal of creating a product candidate with a rapid-onset non-systemic proposed MOA and pharmacological effect, a key and substantial difference between fasedienol and all other available therapies approved by the FDA for the treatment of SAD.
Our PALISADE Program includes the PALISADE-1, PALISADE-2, PALISADE-3, and PALISADE-4 Phase 3 studies. These clinical trials are randomized, double-blind, placebo-controlled, U.S. multi-center clinical trials designed to evaluate the efficacy, safety, and tolerability of a single dose of fasedienol to relieve anxiety symptoms in adult patients with SAD during a five-minute, simulated, anxiety-provoking public speaking challenge conducted in a clinical setting, as measured using the patient-rated Subjective Units of Distress Scale (SUDS) as the primary efficacy endpoint. Our PALISADE-1 clinical trial, completed in 2022, was conducted during the COVID-19 pandemic and did not meet its primary endpoint. After receipt of PALISADE-1 data, we terminated the PALISADE-2 study early prior to completion (after enrolling 141 patients out of a planned 208). However, after terminating the study early, we analyzed the data from the 141 enrolled subjects and announced in 2023 that the study successfully met its primary efficacy endpoint. Based on the positive data from PALISADE-2, we initiated the PALISADE-3 and PALISADE-4 Phase 3 studies using the same randomized portion of the trial designs and endpoints to PALISADE-2, and each with an open-label extension. Topline data from the randomized portion of PALISADE-3 are expected in the fourth calendar quarter of 2025 and topline results from the randomized portion of PALISADE-4 are expected in the first half of calendar 2026.
We have aligned with the FDA that a clinic-based public speaking challenge and the SUDS are the appropriate study design and primary efficacy endpoint, respectively, to measure anxiety immediately related to the specific stressor, and is an appropriate and efficient path for our U.S. registration-directed PALISADE Program, which is focused on fasedienol's potential to become the first FDA-approved acute treatment of anxiety for adults with SAD. Based on FDA feedback, in addition to the Repeat Dose Study, we plan to generate evidence to support the clinical meaningfulness of the duration and magnitude of effect of fasedienol, which we intend to include in a potential NDA submission together with data from our pivotal program, Repeat Dose Study, open-label long-term safety study, a human factors study, and other clinical and preclinical studies.
We believe either PALISADE-3 or PALISADE-4, if successful, together with the positive results from PALISADE-2, may establish substantial evidence of the effectiveness of fasedienol in support of a potential NDA submission to the U.S. FDA for the acute treatment of SAD. As we move closer toward completion of Phase 3 development, we plan to seek further feedback from the FDA regarding the proposed submission package for a potential NDA.
We believe fasedienol has the potential to be the first FDA-approved acute treatment of SAD and may provide significant advantages relative to the suboptimal standard of care for the highly prevalent disorder.
Itruvone
Overview of Major Depressive Disorder
Depression is a serious medical condition and a global public health concern that can arise at any time during a person's life. According to the World Health Organization (WHO), depression effects over 300 million people worldwide. The U.S. National Institute of Mental Health (NIMH) reports that approximately 21 million adults in the U.S., or approximately 8.4% of all adults in the U.S., experienced at least one major depressive episode in 2020. While many individuals will experience a depressive episode at some point during their lifetime, major depressive disorder (MDD) is different. MDD is the chronic, pervasive feeling of utter unhappiness and suffering, which impairs daily functioning. Symptoms of MDD can include a lack of pleasure in activities, changes in appetite resulting in weight fluctuations, insomnia or excessive sleeping, psychomotor agitation, loss of energy or increased fatigue, feelings of worthlessness or inappropriate guilt, difficulty thinking, concentrating or making decisions, and thoughts of death or suicide and attempts at suicide. MDD is the psychiatric diagnosis most commonly associated with suicide.
For many people, depression cannot be controlled for any length of time without treatment. However, approximately two out of every three people with depression do not experience adequate therapeutic benefits from their initial treatment with a standard antidepressant. Even after multiple treatment attempts, about one-third of individuals with depression are unable to find a sufficiently effective therapy. Inadequate response to current treatments is among the key reasons MDD is one of the leading public health concerns in the U.S., creating a significant unmet medical need for new agents with fundamentally differentiated MOAs and differentiated safety.
Itruvone for the Treatment of Major Depressive Disorder
Itruvone is our investigational pherine product candidate under development as a stand-alone treatment of MDD, an indication for which the FDA has granted fast track designation. Unlike other antidepressants which rely on single or double-receptor occupancy in the brain, itruvone's proposed MOA involves modulation of the nasal-limbic amygdala anhedonia and depressed mood neurocircuits. The scope of itruvone's neural circuit activation, and potential impact on the brain, appears, in studies completed to date, to be wider, faster and safer than can be achieved with current therapies targeting binding to any specific brain receptor. We believe non-systemic itruvone has the potential to treat MDD without causing the side effects and safety concerns that may be associated with currently approved systemic antidepressant therapies, including, among others, drug-drug interactions, psychological side effects, sexual side effects, sedation, weight gain and suicidal ideation.
In a randomized, double-blind, placebo-controlled parallel design exploratory Phase 2A clinical trial of itruvone as a stand-alone treatment for MDD, itruvone reduced depressive symptoms in as early as one week based on the 17-item Hamilton Depression Scale (HAM-D-17) scores compared to placebo. Itruvone was well-tolerated and did not cause psychological side effects (such as dissociation), sexual side effects, weight gain, or other safety concerns that may be associated with other approved pharmacological therapies for MDD. Positive data from our June 2023 Phase 1 trial of itruvone demonstrated that there were no reported treatment-related serious adverse events (SAEs) or discontinuations due to adverse events in the trial. As a result, building on the positive results from Phase 2A clinical development of itruvone in MDD, we are currently planning for potential U.S. Phase 2B clinical development of itruvone as a stand-alone treatment for MDD.
PH80
Overview of Vasomotor Symptoms (Hot Flashes) due to Menopause
Vasomotor symptoms (VMS), comprised of hot flashes and night sweats, are the most common symptoms of the menopausal transition, affecting 60% - 80% of menopausal women in the U.S., according to SWAN (Study of Women Across the Nation) and other published studies. VMS can be described as a sudden, intense feeling of warmth spreading through the upper body and face, flushed appearance with red, blotchy skin, rapid heartbeat, and perspiration on the upper body. Each episode typically lasts between one and five minutes and may be accompanied by sweating, chills, and anxiety. Although there is individual variability in the frequency and severity of symptoms, VMS negatively impacts physical, emotional, social, and occupational well-being, and can significantly diminish the overall quality of life and work productivity for those who experience symptoms. While there are FDA-approved therapies for the treatment of moderate to severe VMS due to menopause, many women are unable to use currently therapies due to contraindications and safety concerns, such as cardiovascular disorders, dementia, breast cancer, and liver toxicity.
PH80 for the Treatment of Vasomotor Symptoms (Hot Flashes) due to Menopause
PH80 is our investigational pherine product candidate under development as a novel, non-hormonal, non-systemic, as-needed treatment of moderate to severe VMS (hot flashes) due to menopause, and potentially additional women's health-focused indications. PH80's MOA is fundamentally differentiated from all currently approved treatments for VMS (hot flashes) due to menopause. Administration of low microgram doses of PH80 appears to rapidly activate peripheral nasal chemosensory neurons that modulate the nasal-limbic amygdala-hypothalamic depressed mood and thermoregulatory neurocircuits. Notably, in vitro studies show that PH80 does not engage steroid receptors; an in vivo study in mice showed no estrogenic and/or androgenic activity and no changes in weight of the uterus or seminal vesicles after intranasal administration. Additionally, an in vitro study has demonstrated that PH80 does not exert effects on receptor targets with known abuse potential, and a clinical study in human volunteers showed no detectable PH80 in blood plasma, indicating the non-systemic nature of PH80's therapeutic benefit.
In a randomized, double-blind, placebo-controlled exploratory Phase 2A clinical study of PH80 that was designed to explore the efficacy, safety, and tolerability of intranasal administration of PH80 for the management of menopausal hot flashes in women, PH80 induced a significant reduction in the daily number of hot flashes compared to placebo at the end of the first week of treatment, and the improvement was maintained through each treatment week until the end of the four
consecutive week treatment period. PH80 was well-tolerated with no SAEs, and the adverse event profiles were comparable between PH80 and placebo. No subject discontinued participation in the study as a result of adverse events.
We are currently preparing for our planned submission of our U.S. IND to facilitate further Phase 2 clinical development of PH80 in the U.S. as a treatment of moderate to severe VMS (hot flashes) due to menopause and potentially additional women's health indications.
Overview of Premenstrual Dysphoric Disorder
According to the U.S. National Institutes of Health (NIH), 5% to 8% of menarcheal (menstruating women) individuals have moderate-to-severe symptoms that can cause significant distress and functional impairment, suggestive of premenstrual dysphoric disorder (PMDD), a severe, sometimes disabling extension of premenstrual syndrome (PMS). Like PMS, PMDD can cause bloating, breast tenderness, fatigue, and changes in sleep and eating habits, but distinctively, it can also cause extreme mood shifts that can disrupt daily life and damage relationships. The cause of PMDD is not clearly understood, but it is thought that neurotransmitter systems may trigger PMDD. Treatment of PMDD is aimed at preventing or minimizing symptomology.
PH80 for Premenstrual Dysphoric Disorder
In an exploratory, randomized, double-blind, placebo-controlled Phase 2A clinical study of PH80 for management of the symptoms of PMDD in subjects with a regular menstrual cycle and at least a one-year history of PMDD, PH80 demonstrated a statistically significant improvement versus placebo in management of the symptoms of PMDD, including negative mood and physical and behavioral symptoms, using the subject-rated Penn Daily Symptom Report (DSR). PH80 was well-tolerated with no SAEs.
PH15
Overview of Cognitive and Psychomotor Impairment due to Mental Fatigue
Numerous conditions and disorders, such as shift work disorder, sleep apnea, and narcolepsy, can lead to debilitating sleep deprivation and mental fatigue. The prevalence of these conditions and disorders is high. For example, moderate to severe sleep apnea affects approximately 20% of adult men and 10% of postmenopausal women. Individuals affected by mental fatigue require improved treatment options with a differentiated safety profile, one without the potential for abuse liability or negative and treatment-limiting side effects and safety concerns that may lead to self-treatment and subsequent substance use disorders.
PH15 for Improvement of Psychomotor Impairment due to Mental Fatigue
PH15 is our investigational pherine product candidate under development as a treatment to improve psychomotor impairment caused by mental fatigue. PH15 is thought to target nasal receptors that modulate the nasal-entorhinal cortex area/hippocampus cognition neurocircuits, that are known to be associated with psychomotor activity and cognition, without requiring systemic absorption or direct action on neurons in the brain. PH15 has demonstrated excellent safety data in all clinical trials completed to date and we believe PH15's MOA is differentiated from the MOA of all currently approved treatments to improve psychomotor impairment caused by mental fatigue.
In a randomized, double-blind, placebo-controlled, crossover Phase 2A pilot study (n=10) designed to explore the efficacy, safety, and tolerability of intranasal administration of PH15 on psychomotor performance as measured by reaction time in sleep-deprived participants, PH15 demonstrated a statistically significant improvement in reaction time compared to placebo and caffeine in the sleep-deprived study participants. PH15 was well-tolerated in this study, with no SAEs reported. The adverse event profiles of PH15 and placebo were comparable.
We are currently evaluating the potential Phase 2 development path forward for PH15 and the manufacturing, nonclinical and Phase 1 clinical programs required to support submission of a U.S. IND to facilitate further potential Phase 2 development of PH15 in the U.S.
PH284
Overview of Cancer Cachexia
Cachexia, also known as wasting syndrome, is a complex metabolic syndrome that causes a gradual loss of muscle and body weight. Cachexia is associated with chronic diseases like cancer, AIDS, heart failure, chronic obstructive pulmonary disease, anorexia nervosa, multiple sclerosis, tuberculosis, and anemia. According to the National Cancer Institute (NCI),
cachexia is estimated to occur in up to 80% of people with advanced cancer, depending on the type of cancer and how well they respond to cancer treatment. Cachexia is thought to directly cause up to 30% of cancer deaths, often because of heart or respiratory failure related to muscle loss. Maintaining nutritional support and alleviating cachexia has the potential to improve the underlying condition of cancer. Currently, there are no effective medical interventions or approved drugs proven to alleviate cachexia.
PH284 for Cancer Cachexia
PH284 is our investigational pherine product candidate with a novel, rapid-onset, neurocircuitry-focused proposed MOA that, we believe, is differentiated from all current treatments for the loss of appetite associated with chronic disorders, such as cancer or heart disease. PH284 is thought to act by modulating the nasal-limbic amygdala-hypothalamic depressed mood and appetite control neurocircuits.
In a double-blind, placebo-controlled exploratory Phase 2A study designed to evaluate the efficacy, safety, and tolerability of intranasal administration of PH284 in female patients diagnosed with cachexia (induced by chronic loss of appetite) due to terminal cancer, PH284 induced a cumulative effect on mean Subjective Feeling of Hunger (SFH) scores, as compared to placebo. No unusual changes in body weight were observed in either the PH284 or placebo groups, though on average, there was a small gain in body weight for PH284 versus a small loss in placebo. PH284 demonstrated no serious adverse events, and adverse events reported for the PH284 group were similar to those reported in the placebo-treated group. All the adverse events reported were attributed to the underlying medical condition (cancer) and were not deemed to be related to the administration of PH284 or placebo.
We are currently evaluating the potential path forward for PH284, including an assessment of the manufacturing, nonclinical and Phase 1 clinical programs required to support a U.S. IND application for potential further Phase 2 clinical development of PH284 for the treatment of cancer cachexia or other appetite-related disorders.
AV-101
AV-101 for NMDAR-related Neurological Disorders
AV-101 (4-Cl-KYN) is our novel, oral prodrug candidate that targets the NMDAR (N-methyl-D-aspartate receptor), an ionotropic glutamate receptor in the brain. Abnormal NMDAR function is associated with numerous neurological diseases and disorders. 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. In clinical and nonclinical testing completed to date, AV-101 has demonstrated good oral bioavailability and an excellent pharmacokinetic (PK) profile. No binding of AV-101 or 7-Cl-KYNA to off-site targets was identified by an extensive receptor screening study. Moreover, in all clinical trials completed to date, AV-101 has been safe and very well-tolerated with no psychological side effects or safety concerns and no treatment-related SAEs that are often observed with classic channel-blocking NMDAR antagonists such as ketamine and amantadine. Nonclinical results also indicate that chronic administration of 4-Cl-KYN induces hippocampal neurogenesis and increases endogenous levels of KYNA, which also is a functional NMDAR glycine site antagonist.
Based on observations and findings from preclinical studies, we believe AV-101 has the potential to become an oral treatment alternative for multiple neuroscience disorders, including levodopa-induced dyskinesia (LID) and neuropathic pain (NP) potentially among others. We are currently assessing whether there is a path forward for potential collaborative manufacturing, clinical development and commercialization of AV-101 for one or more neurological disorders involving the NMDAR.
The FDA has granted Fast Track designation for the investigation of AV-101 for the treatment of NP and for the adjunctive treatment of MDD.
Subsidiaries
Our wholly-owned subsidiaries consist of Pherin Pharmaceuticals, Inc, a Delaware corporation (Pherin), and Vistastem, Inc., a California corporation founded in 1998 (Vistastem).
Financial Operations Overview and Results of Operations
Financial Overview
Since inception, we have devoted substantial resources to advancing initiatives related to research, development, and contract manufacturing of our neuroscience pipeline, 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 trials focused on development and potential commercialization of our product candidates, with substantial emphasis on our lead pherine product candidates, fasedienol, itruvone, and PH80, for the acute treatment of SAD, and treatment of MDD and VMS due to menopause, respectively, over the last several years. At the end of our fiscal year ended March 31, 2024, we launched our PALISADE-3 Phase 3 clinical trial as part of our U.S. registration-directed PALISADE Program evaluating fasedienol for the acute treatment of anxiety in adults with SAD, and in September 2024, we initiated our PALISADE-4 Phase 3 clinical trial for the same indication, and incurred costs to plan and prepare for the initiation the Repeat Dose Study, which we initiated in January 2025. Both the PALISADE-4 Phase 3 trial and the Repeat Dose Study are also parts of our PALISADE Program for fasedienol in SAD. In addition, we are continuing to conduct various nonclinical studies and contract manufacturing activities involving other clinical-stage pherine product candidates in our neuroscience pipeline. We also have ongoing initiatives for creating, protecting and patenting intellectual property (IP) related to our neuroscience product candidates and nasal spray delivery device technologies.
At September 30, 2025, we had an accumulated deficit of approximately $442.1 million. Our net loss for the year ended March 31, 2025 (Fiscal 2025) and the year ended March 31, 2024 (Fiscal 2024) was approximately $51.4 million and $29.4 million, respectively, and we incurred a net loss of approximately $19.4 million and $34.5 million for the three and six months ended September 30, 2025, respectively. We expect losses to continue for the foreseeable future as we engage in further research, clinical and nonclinical development, contract manufacturing, pre-commercialization, and regulatory activities related to fasedienol, itruvone, PH80 and our other pherine product candidates. We have not yet achieved revenue-generating status from any of our product candidates or technologies in amounts sufficient to sustain our operations and enable our strategic business plans.
Components of Results of Operations
Sublicense and Other Revenue
Sublicense and other revenue consist of revenue recognized under our License and Collaboration Agreement with AffaMed Therapeutics, Inc. (the Affamed Agreement) and our Exclusive Negotiation Agreement (the Negotiation Agreement) with Fuji Pharma Co., Ltd. Revenue is recognized as identified performance obligations are satisfied.
Operating Expense
Research and Development Expense
To date, our research and development expense has consisted primarily of external and internal costs related to the development of our product candidates and development programs. Our research and development expense primarily includes:
•External costs, including:
◦expenses incurred in connection with planning, preparing for and conducting clinical trials, including investigator grants and site payments, and pass-through expenses and expenses incurred under agreements with our contract research organizations (CROs), central laboratories and other vendors and service providers engaged to conduct our trials;
◦expenses incurred in connection with the discovery and preclinical development of our product candidates, including under agreements with third parties, such as consultants and CROs;
◦costs associated with consultants for chemistry, manufacturing, and control (CMC) development, and other manufacturing-related services;
◦the cost of manufacturing compounds for use in our nonclinical studies and clinical trials, including under agreements with third parties, such as consultants and third-party contract manufacturers; and
◦costs related to compliance with development regulatory requirements.
•Internal costs, including:
◦employee-related expenses, including salaries, related benefits, travel and share-based compensation expenses for employees engaged in research and development functions;
◦the costs of laboratory supplies and acquiring and developing preclinical study materials; and
◦facilities, depreciation and other expenses, which include allocated expenses for rent and maintenance of facilities, and supplies.
We expense research and development costs in the periods in which they are incurred. External expenses are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers or our estimate of the level of service that has been performed at each reporting date.
Research and development activities are central to our business model. There are numerous factors associated with the successful development of any of our product candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. In addition, future regulatory factors beyond our control may impact our clinical development programs and regulatory pathways. Product candidates in later stages of development generally have higher development costs than those in earlier stages of development.
Our future research and development expenses may vary significantly based on a wide variety of factors, such as:
•the number and scope, rate of progress, expense and results of our preclinical development activities and clinical trials;
•the number of trials required for regulatory approval;
•the number of sites included in each of our clinical trials;
•the length of time required to enroll eligible patients;
•the number of patients that participate in the trials;
•the ability to identify appropriate patients eligible for our clinical trials;
•the number of doses that patients receive during such clinical trials;
•the drop-out or discontinuation rates of patients;
•potential additional safety monitoring requested by regulatory agencies;
•the duration of patient participation in the trials and follow-up;
•the phase of development of the product candidate;
•the efficacy and safety profile of the product candidate;
•the timing, receipt, and terms of any approvals from applicable regulatory authorities including the FDA and non-U.S. regulators;
•maintaining a continued acceptable safety profile of our product candidates following approval, if any;
•the cost and timing of manufacturing our product candidates and our reliance on third-party CDMOs;
•significant and changing government regulation and regulatory guidance;
•the impact of any business interruptions to our operations or to those of the third parties with whom we work, including consolidation of third-party CROs, CDMOs or preclinical and clinical research sites involved in our product development programs;
•adverse effects on the financial markets, the global economy, the supply chain and our expenses due to pandemics or other epidemic diseases, geopolitical instability, government shutdowns and RIFs, inflation, rising interest rates, government tariffs and other factors; and
•the extent to which we establish additional strategic collaborations or other arrangements.
A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. The process of conducting the necessary preclinical and clinical research and development to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates or any future candidates may be affected by a variety of factors. We may never succeed in achieving regulatory approval for any of our product candidates or any future candidates.
General and Administrative Expense
General and administrative expenses consist of salaries, bonuses, related benefits and stock-based compensation expense for personnel in executive, legal, finance and administrative functions; professional fees for legal, consulting, accounting and audit services; and travel expenses, technology costs and other allocated expenses. We expense general and administrative expenses in the periods in which they are incurred.
Results of Operations for the Three and Six Months Ended September 30, 2025
The following table summarizes the results of our operations for the three and six months ended September 30, 2025 and 2024 (in thousands):
Three Months Ended
September 30, 		Six Months Ended
September 30,
2025 2024 2025 2024
Revenues:
Sublicense and other revenue $ 258 $ 183 $ 502 $ 267
Total revenues 258 183 502 267
Operating expenses:
Research and development 15,915 10,215 27,693 17,863
General and administrative 4,396 4,195 8,667 8,762
Total operating expenses 20,311 14,410 36,360 26,625
Loss from operations (20,053) (14,227) (35,858) (26,358)
Other income, net:
Interest income, net 630 1,273 1,342 2,671
Other income 6 - 4 -
Loss before income taxes (19,417) (12,954) (34,512) (23,687)
Income taxes - (7) - (7)
Net loss $ (19,417) $ (12,961) $ (34,512) $ (23,694)
Revenue
We recognized $0.3 million and $0.5 million in sublicense and other revenue for the three and six months ended September 30, 2025, as compared to $0.2 million and $0.3 million for the three and six months ended September 30, 2024, respectively. The increase in sublicense and other revenue of is due to timing of revenue recognized under the AffaMed Agreement.
Absent the achievement of milestones under the AffaMed Agreement, or the execution of similar agreements in the future, if any, we expect sublicense and other revenue to stay consistent in future periods as we continue to recognize revenue under the AffaMed Agreement.
Research and Development Expense
The following table summarizes our research and development expense for the three and six months ended September 30, 2025 and 2024 (in thousands):
Three Months Ended
September 30, 		Six Months Ended
September 30,
2025 2024 2025 2024
Clinical and nonclinical studies and development expense by program
Fasedienol $ 11,342 $ 5,850 $ 19,313 $ 9,626
All other 749 569 985 867
Total clinical and nonclinical studies and development expense 12,091 6,419 20,298 10,493
Salaries and benefits 2,604 2,487 5,089 4,635
Stock-based compensation 475 432 861 1,106
Consulting and professional services 350 456 640 923
Occupancy and all other costs 395 421 805 706
Total research and development expense $ 15,915 $ 10,215 $ 27,693 $ 17,863
Research and development expense was $15.9 million and $27.7 million for the three and six months ended September 30, 2025, as compared to $10.2 million and $17.9 million for the three and six months ended September 30, 2024, respectively.
The increase of $5.7 million in research and development expense for the three months ended September 30, 2025 as compared to the same period in Fiscal 2025 was primarily due to an increase in expense of $5.5 million related to our U.S. registration-directed PALISADE Program for fasedienol for the acute treatment of SAD, and an increase of $0.1 million in connection with the increased headcount.
The increase of $9.8 million in research and development expense for the six months ended September 30, 2025 as compared to the same period in Fiscal 2025 was primarily due to an increase in clinical development expense of $9.7 million, related to our U.S. registration-directed PALISADE Program for fasedienol for the acute treatment of SAD and an increase of $0.2 million in connection with increased headcount, partially offset by a decrease in consulting and professional services of $0.3 million.
We expect that our research and development expense will increase over the next fiscal year as we continue to advance our pherine product candidates through nonclinical studies, clinical trials, and expand third-party contract manufacturing and regulatory activities required to advance further research and development of our current pherine product candidates and potentially, additional pherine product candidates, maintain, expand, protect and enforce our intellectual property portfolio, and hire additional headcount. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the nonclinical and clinical development of any pherine product candidates we may develop. A change in the outcome of any number of variables with respect to product candidates we may develop could significantly change the costs and timing associated with the development of that product candidate.
General and Administrative Expense
General and administrative expense was $4.4 million and $8.7 million for the three and six months ended September 30, 2025, as compared to $4.2 million and $8.8 million for the three and six months ended September 30, 2024, respectively.
We expect that our general and administrative expense may increase substantially over the next fiscal year as we hire additional personnel to support the continued growth of our research and development, contract manufacturing and pre-commercialization operations and incur additional expenses associated with being a public company.
Other Income
Interest income, net, decreased for the three and six months ended September 30, 2025 as compared to the same period in Fiscal 2025 primarily due to a decrease in amounts invested in interest bearing securities.
Liquidity and Capital Resources
Sources of Liquidity
Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. To date, as of September 30, 2025, we have financed our operations and technology acquisitions primarily through the issuance and sale of our equity securities for cash proceeds of approximately $370.2 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 payments, and other revenues. Additionally, we have issued equity securities with an approximate value at issuance of $41.3 million for non-cash acquisitions of product licenses, consideration for our acquisition of Pherin Pharmaceuticals, Inc. in February 2023 (the Pherin Acquisition), and in settlements of certain liabilities, including liabilities for professional services rendered to us or as compensation for such services.
In addition, we received net proceeds of approximately $93.5 million from an underwritten public offering of our securities in October 2023 (October 2023 Public Offering), and $1.5 million in connection with the execution of the Negotiation Agreement with Fuji Pharma Co., Ltd. in September 2023.
In May 2021, we entered into an Open Market Sale Agreement (the Sales Agreement) with Jefferies LLC (Jefferies) as sales agent, with respect to an at-the-market offering program, under which we were permitted, at our option, to offer and sell, from time to time, shares of our common stock having an aggregate offering price of up to $75.0 million. In February 2024, the aggregate offering price available under the Sales Agreement was increased to up to $100 million, and in June 2025, the aggregate offering price available under the Sales Agreement was increased to up to $175 million. During the three and six months ended September 30, 2025, we sold an aggregate of 9,608,772 and 9,798,839 shares under the Sales Agreement, for net proceeds of $27.9 million and $28.3 million, respectively. We did not sell any shares under the Sales Agreement, during the three or six months ended September 30, 2024.
As of September 30, 2025 we had cash, cash equivalents, and marketable securities of approximately $77.2 million. As of November 13, 2025, the issuance date of the condensed consolidated financial statements in this Quarterly Report as of and for the three and six months ended September 30, 2025, there is uncertainty about whether our combined cash, cash equivalents, and marketable securities will be sufficient to fund operations beyond twelve months from the issuance date of these condensed consolidated financial statements and therefore we concluded that substantial doubt existed about our ability to continue as a going concern.
When necessary and/or advantageous, we will seek additional capital to fund our planned operations through (i) sales of our equity and/or debt securities in one or more public offerings and/or private placements, including, but not limited to sales of our securities under the Sales Agreement, (ii) non-dilutive government grants and research awards and/or (iii) non-dilutive strategic partnering collaborations to advance development and commercialization of one or more of our product candidates. However, no assurance can be provided that any such sales of our securities, awards, agreements or collaborations will occur in the future. While we may make additional sales of our equity securities, we do not have an obligation to do so.
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. In the future, to further advance the clinical development of our product candidates, as well as support our operating activities, we plan to seek additional financing, including both equity-based and/or debt-based capital and potentially from non-dilutive sources other than debt-based capital, and continue to carefully manage our operating costs, including, but not limited to, our clinical, nonclinical, and pre-commercialization programs.
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 any current or future development and commercialization collaborations will generate revenue from future potential milestone payments or otherwise.
Cash Flows
The following table summarizes changes in cash and cash equivalents for the periods stated (in thousands):
Six Months Ended September 30,
2025 2024
Net cash used in operating activities $ (32,605) $ (21,755)
Net cash used in investing activities (882) (13,253)
Net cash provided by financing activities
29,142 88
Net increase (decrease) in cash and cash equivalents
(4,345) (34,920)
Cash and cash equivalents at beginning of period 67,131 119,166
Cash and cash equivalents at end of period $ 62,786 $ 84,246
Operating Activities
Net cash used in operating activities for the six months ended September 30, 2025 was $32.6 million, consisting primarily of our net loss of $34.5 million, adjusted for $2.1 million of non-cash charges primarily related to stock-based compensation expense and amortization of our operating lease right-of-use asset, and $0.2 million in net changes in operating assets and liabilities.
Net cash used in operating activities for the six months ended September 30, 2024 was $21.8 million, consisting primarily of our net loss of $23.7 million, adjusted for $2.4 million of non-cash charges primarily related to stock-based compensation expense and amortization of our operating lease right-of-use asset, and $0.5 million in net changes in operating assets and liabilities.
Investing Activities
Net cash used in investing activities for the six months ended September 30, 2025 was $0.9 million, consisting of purchases of marketable securities and property and equipment, partially offset by the sale and maturity of marketable securities.
Net cash used in investing activities for the six months ended September 30, 2024 was $13.3 million, consisting of purchases of marketable securities and property and equipment, partially offset by the sale and maturity of marketable securities.
Financing Activities
Net cash provided by financing activities during the six months ended September 30, 2025 was $29.1 million, consisting primarily of net proceeds from the sale of common stock in at-the-market transactions under the Sales Agreement of $28.3 million, and proceeds from the issued note payable related to the insurance premium financing arrangement of $1.0 million.
Net cash provided by financing activities during the six months ended September 30, 2024 was immaterial.
Contractual Obligations
There have been no other material changes in our contractual obligations and commitments during the three and six months ended September 30, 2025, from those described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations-Contractual Obligations and Commitments" in our Annual Report on Form 10-K for the year ended March 31, 2025, filed with the SEC on June 17, 2025 (the Annual Report).
Critical Accounting Estimates
There have been no material changes to our critical accounting estimates during the three and six months ended September 30, 2025, as compared to the critical accounting policies and estimates disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report.
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