Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

November 13, 2023

000144419203-31Q2false20240001444192us-gaap:RetainedEarningsMember2023-03-310001444192us-gaap:RetainedEarningsMember2023-07-012023-09-300001444192srt:MaximumMemberacst:CommonClassDAndCommonClassEMember2023-04-012023-09-300001444192acst:ClassDCommonMember2023-09-300001444192acst:ClassDCommonMember2023-03-3100014441922022-09-300001444192us-gaap:CommonClassBMember2023-03-310001444192acst:EquityIncentivePlanMember2023-09-300001444192us-gaap:RetainedEarningsMember2022-07-012022-09-300001444192acst:WarrantsIssuedInMay2018Member2022-09-300001444192us-gaap:MeasurementInputExpectedTermMember2023-09-300001444192us-gaap:CommonClassBMember2023-09-300001444192acst:December2017PublicOfferingBrokerWarrantMember2022-09-300001444192acst:CommonClassDAndCommonClassEMember2023-09-300001444192us-gaap:RetainedEarningsMember2023-09-300001444192us-gaap:CommonStockMember2022-06-300001444192acst:CanadianDepositsMember2023-09-300001444192acst:September2023UsPrivateOfferingPreFundedWarrantMember2023-09-300001444192us-gaap:AdditionalPaidInCapitalMember2023-09-3000014441922022-04-012022-09-300001444192us-gaap:CommonClassAMember2023-03-310001444192acst:PreFundedWarrantsMember2023-04-012023-09-3000014441922023-05-0800014441922022-07-012022-09-300001444192us-gaap:CommonStockMember2023-03-310001444192acst:WarrantsIssuedDecember272017Member2023-09-300001444192us-gaap:GeneralAndAdministrativeExpenseMember2023-04-012023-09-300001444192us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001444192us-gaap:RetainedEarningsMember2022-04-012022-06-3000014441922022-03-1400014441922022-04-012022-06-300001444192acst:RKOSupplyAgreementMember2023-09-300001444192acst:StockOptionPlanMember2023-03-310001444192us-gaap:PrivatePlacementMember2023-09-242023-09-240001444192us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300001444192us-gaap:MeasurementInputPriceVolatilityMember2023-09-250001444192acst:PreFundedWarrantsMember2023-09-240001444192acst:WarrantsIssuedInMay2018Member2023-09-300001444192us-gaap:CommonClassCMember2023-09-300001444192us-gaap:SellingAndMarketingExpenseMember2023-07-012023-09-300001444192us-gaap:MeasurementInputRiskFreeInterestRateMember2023-09-300001444192us-gaap:PrivatePlacementMember2023-09-252023-09-250001444192acst:ClassECommonMember2023-09-300001444192acst:ResearchAndDevelopmentContractsAndContractResearchOrganizationsAgreementsMemberacst:ContractManufacturingOrganizationsMember2023-04-012023-09-300001444192acst:ClassECommonMember2023-03-310001444192us-gaap:RetainedEarningsMember2022-06-300001444192us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001444192acst:PreFundedWarrantsMember2023-09-252023-09-250001444192acst:September2023UsPrivateOfferingWarrantMember2023-09-300001444192us-gaap:FairValueInputsLevel2Member2023-09-300001444192acst:ResearchAndDevelopmentContractsAndContractResearchOrganizationsAgreementsMemberacst:ContractResearchOrganizationsMember2023-09-3000014441922020-06-292020-06-290001444192us-gaap:FairValueInputsLevel3Member2023-09-300001444192acst:WarrantsIssuedDecember272017Member2022-09-300001444192us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-3000014441922023-09-242023-09-2400014441922023-06-300001444192acst:AtTheMarketOfferingMember2020-06-292020-06-290001444192us-gaap:CommonClassCMember2023-03-310001444192us-gaap:AdditionalPaidInCapitalMember2022-09-300001444192us-gaap:CommonClassAMember2023-09-300001444192us-gaap:CommonStockMember2023-09-300001444192us-gaap:CommonStockMember2022-07-012022-09-300001444192acst:ReverseStockSplitMember2023-06-292023-06-290001444192acst:WarrantsIssuedInMay2018Member2023-06-300001444192acst:CommonWarrantAndPreFundedWarrantMember2023-09-240001444192acst:StockOptionPlanMember2023-09-300001444192us-gaap:ResearchAndDevelopmentExpenseMember2023-07-012023-09-300001444192us-gaap:GeneralAndAdministrativeExpenseMember2022-04-012022-09-300001444192us-gaap:MeasurementInputExpectedDividendRateMember2023-09-250001444192us-gaap:MeasurementInputExpectedTermMember2023-09-250001444192us-gaap:RetainedEarningsMember2023-06-300001444192us-gaap:SellingAndMarketingExpenseMember2022-04-012022-09-3000014441922023-09-3000014441922023-09-240001444192us-gaap:RetainedEarningsMember2023-04-012023-06-300001444192us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-300001444192us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001444192us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001444192us-gaap:CommonStockMember2022-09-300001444192us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300001444192us-gaap:CommonStockMember2023-09-2500014441922023-09-2500014441922022-03-142022-03-140001444192us-gaap:CommonStockMember2022-04-012022-06-300001444192acst:CommonClassDAndCommonClassEMembersrt:MinimumMember2023-04-012023-09-300001444192us-gaap:AdditionalPaidInCapitalMember2022-03-310001444192us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001444192us-gaap:CommonStockMember2023-04-012023-09-300001444192acst:StockOptionPlanMember2023-04-012023-09-300001444192us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001444192us-gaap:SellingAndMarketingExpenseMember2022-07-012022-09-300001444192us-gaap:CommonStockMember2023-09-300001444192us-gaap:RetainedEarningsMember2022-09-300001444192us-gaap:ResearchAndDevelopmentExpenseMember2023-04-012023-09-300001444192us-gaap:ResearchAndDevelopmentExpenseMember2022-04-012022-09-300001444192acst:EquityIncentivePlanMember2022-09-3000014441922022-03-3100014441922023-07-140001444192acst:StockOptionPlanMemberus-gaap:RelatedPartyMember2023-04-012023-09-300001444192us-gaap:FairValueInputsLevel1Member2023-09-300001444192acst:CanadianDepositsMember2023-03-310001444192us-gaap:AdditionalPaidInCapitalMember2022-06-300001444192us-gaap:MeasurementInputSharePriceMember2023-09-3000014441922022-06-300001444192us-gaap:CommonStockMember2023-06-300001444192us-gaap:MeasurementInputRiskFreeInterestRateMember2023-09-2500014441922023-04-012023-06-300001444192us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001444192acst:EquityIncentivePlanMember2023-04-012023-09-300001444192us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001444192us-gaap:MeasurementInputSharePriceMember2023-09-250001444192us-gaap:MeasurementInputExpectedDividendRateMember2023-09-3000014441922020-06-290001444192acst:PreFundedWarrantsMember2023-09-250001444192acst:RKOSupplyAgreementMember2019-10-2500014441922023-11-090001444192us-gaap:SellingAndMarketingExpenseMember2023-04-012023-09-300001444192us-gaap:RetainedEarningsMember2022-03-310001444192us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001444192us-gaap:AdditionalPaidInCapitalMember2023-06-3000014441922023-07-012023-09-300001444192us-gaap:CommonStockMember2022-03-310001444192acst:AtTheMarketOfferingMember2023-04-012023-09-300001444192acst:StockOptionPlanMemberacst:ConsultantMember2023-04-012023-09-300001444192us-gaap:MeasurementInputPriceVolatilityMember2023-09-300001444192us-gaap:CommonStockMember2023-07-012023-09-300001444192us-gaap:AdditionalPaidInCapitalMember2023-03-3100014441922023-04-012023-09-300001444192us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001444192acst:AtTheMarketOfferingMember2022-04-012022-09-300001444192acst:PurchaseAgreementMember2023-09-2500014441922023-07-142023-07-140001444192us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-300001444192us-gaap:CommonClassBMember2023-04-012023-09-3000014441922023-03-310001444192us-gaap:CommonClassCMember2023-04-012023-09-30iso4217:CADxbrli:sharesxbrli:purexbrli:sharesiso4217:USDxbrli:sharesacst:Voteiso4217:USD

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 September 30, 2023

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: 001-35776

______________________________________

Acasti Pharma Inc.

(Exact name of registrant as specified in its charter)

______________________________________

Québec, Canada

98-1359336

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

2572 boul. Daniel-Johnson, 2nd Floor

Laval, Québec, Canada H7T 2R3

(Address of principal executive offices, including zip code)

450-686-4555

(Registrants 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 Shares, no par value per share

ACST

Nasdaq Stock 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

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 ☒

 


 

The number of outstanding common shares of the registrant, no par value per share, as of November 9, 2023, was 9,399,404.

 


 

ACASTI PHARMA INC.

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended September 30, 2023

Table of Contents

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

4

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

38

Item 4.

Controls and Procedures

38

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

39

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

39

Item 3.

Defaults Upon Senior Securities

39

Item 4.

Mine Safety Disclosures

39

Item 5.

Other Information

39

Item 6.

Exhibits

39

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report contains information that may be forward-looking statements within the meaning of Canadian securities laws and forward-looking statements within the meaning of U.S. federal securities laws, both of which we refer to in this quarterly report as forward-looking statements. Forward- looking statements can be identified by the use of terms such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue” or other similar expressions concerning matters that are not statements about the present or historical facts.

Although the forward-looking statements in this quarterly report are based upon what we believe are reasonable assumptions, you should not place undue reliance on those forward-looking statements since actual results may vary materially from them.

 

In addition, the forward-looking statements in this quarterly report are subject to a number of known and unknown risks, uncertainties and other factors many of which are beyond our control, that could cause our actual results and developments to differ materially from those that are disclosed in or implied by the forward-looking statements, including, among others:

We are heavily dependent on the success of our lead drug candidate, GTX-104.
Clinical development is a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results. Failure can occur at any stage of clinical development.
We are subject to uncertainty relating to healthcare reform measures and reimbursement policies which, if not favorable to our drug candidates, could hinder or prevent our drug candidates’ commercial success.
If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our drug products, if approved, we may be unable to generate any revenue.
If we are unable to differentiate our drug products from branded reference drugs or existing generic therapies for similar treatments, or if the U.S. Food and Drug Administration (“FDA”) or other applicable regulatory authorities approve products that compete with any of our drug products, our ability to successfully commercialize our drug products would be adversely affected.

2


 

Our success depends in part upon our ability to protect our intellectual property for our drug candidates.
Intellectual property rights do not necessarily address all potential threats to our competitive advantage.
We do not have internal manufacturing capabilities, and if we fail to develop and maintain supply relationships with various third-party manufacturers, we may be unable to develop or commercialize our drug candidates.
The design, development, manufacture, supply, and distribution of our drug candidates are highly regulated and technically complex.
The other risks and uncertainties identified in Item 1A. Risk Factors included in our Annual Report on Form 10-K for the year ended March 31, 2023.

All of the forward-looking statements in this quarterly report are qualified by this cautionary statement. There can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the consequences or effects on our business, financial condition, or results of operations that we anticipate. As a result, you should not place undue reliance on these forward-looking statements. Except as required by applicable law, we do not undertake to update or amend any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements are made as of the date of this quarterly report.

We express all amounts in this quarterly report in U.S. dollars, except where otherwise indicated. References to “$” and “U.S.$” are to U.S. dollars and references to “C$” or “CAD$” are to Canadian dollars.

Except as otherwise indicated, references in this quarterly report to “Acasti,” “the Corporation,” “we,” “us” and “our” refer to Acasti Pharma Inc. and its consolidated subsidiaries.


 

3


 

PART I. FINANCIAL INFORMATION

Item 1: Financial Information

Unaudited Condensed Consolidated Interim Financial Statements

Condensed Consolidated Interim Balance Sheets

5

 

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

6

 

Condensed Consolidated Interim Statements of Shareholders’ Equity

7

Condensed Consolidated Interim Statements of Cash Flows

8

Notes to the Condensed Consolidated Interim Financial Statements

9

 

 

4


 

ACASTI PHARMA INC.

Condensed Consolidated Interim Balance Sheet

(Unaudited)

 

 

 

 

 

September 30,
2023

 

March 31,
2023

(Expressed in thousands of U.S. dollars except share data)

 

Notes

 

$

 

$

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

26,991

 

27,875

Short-term investments

 

5

 

15

 

15

Receivables

 

4

 

837

 

802

Prepaid expenses

 

 

 

1,044

 

598

Total current assets

 

 

 

28,887

 

29,290

 

 

 

 

 

 

 

Operating lease right of use asset

 

 

 

47

 

463

Equipment

 

 

 

10

 

104

Intangible assets

 

 

 

41,128

 

41,128

Goodwill

 

 

 

8,138

 

8,138

Total assets

 

 

 

78,210

 

79,123

 

 

 

 

 

 

 

Liabilities and Shareholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Trade and other payables

 

6

 

1,351

 

3,336

Operating lease liability

 

7

 

46

 

75

Total current liabilities

 

 

 

1,397

 

3,411

 

 

 

 

 

 

 

Derivative warrant liabilities

 

8(b)

 

3,457

 

Operating lease liability

 

 

 

 

410

Deferred tax liability

 

 

 

6,611

 

7,347

Total liabilities

 

 

 

11,465

 

11,168

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Class A common shares, no par value per share; unlimited shares authorized as of September 30, 2023 and March 31, 2023; 9,399,404 and 7,435,533 shares issued and outstanding as of September 30, 2023 and March 31, 2023

 

8(a)

 

261,038

 

258,294

Class B common shares, no par value per share; unlimited shares authorized as of September 30, 2023 and March 31, 2023; 0 shares issued and outstanding as of September 30, 2023 and March 31, 2023

 

 

 

 

Class C common shares, no par value per share; unlimited shares authorized as of September 30, 2023 and March 31, 2023; 0 shares issued and outstanding as of September 30, 2023 and March 31, 2023

 

 

 

 

Class D common shares, no par value per share; unlimited shares authorized as of September 30, 2023 and March 31, 2023; 0 shares issued and outstanding as of September 30, 2023 and March 31, 2023

 

 

 

 

Class E common shares, no par value per share; unlimited shares authorized as of September 30, 2023 and March 31, 2023; 0 shares issued and outstanding as of September 30, 2023 and March 31, 2023

 

 

 

 

Additional paid-in capital

 

 

 

17,307

 

13,965

Accumulated other comprehensive loss

 

 

 

(6,038)

 

(6,038)

Accumulated deficit

 

 

 

(205,562)

 

(198,266)

Total shareholders' equity

 

 

 

66,745

 

67,955

 

 

 

 

 

 

 

Commitments and contingencies

 

13

 

 

 

 

Total liabilities and shareholders’ equity

 

 

 

78,210

 

79,123

 

See accompanying notes to unaudited interim financial statements.

5


 

ACASTI PHARMA INC.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(Unaudited)

 

 

 

 

Three months ended

 

 

Six months ended

 

 

 

 

September 30,
2023

 

 

September 30,
2022

 

 

September 30,
2023

 

 

September 30,
2022

 

(Expressed in thousands of U.S dollars, except share and per share data)

 

Notes

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses, net of government assistance

 

 

 

 

(460

)

 

 

(3,292

)

 

 

(1,555

)

 

 

(5,882

)

General and administrative expenses

 

 

 

 

(1,589

)

 

 

(1,680

)

 

 

(3,352

)

 

 

(3,599

)

Sales and marketing

 

 

 

 

(43

)

 

 

(136

)

 

 

(154

)

 

 

(357

)

Restructuring cost

 

14

 

 

 

 

 

 

 

 

(1,485

)

 

 

 

Loss from operating activities

 

 

 

 

(2,092

)

 

 

(5,108

)

 

 

(6,546

)

 

 

(9,838

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange gain (loss)

 

 

 

 

(13

)

 

 

(12

)

 

 

(5

)

 

 

(90

)

Change in fair value of warrant liabilities

 

8(b)

 

 

(1,826

)

 

 

 

 

 

(1,826

)

 

 

10

 

Interest income and other expense

 

 

 

 

212

 

 

 

36

 

 

 

346

 

 

 

68

 

Total other income (expense), net

 

 

 

 

(1,627

)

 

 

24

 

 

 

(1,485

)

 

 

(12

)

Loss before income tax recovery

 

 

 

 

(3,719

)

 

 

(5,084

)

 

 

(8,031

)

 

 

(9,850

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax recovery

 

 

 

 

446

 

 

 

155

 

 

 

735

 

 

 

397

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss and total comprehensive loss

 

 

 

 

(3,273

)

 

 

(4,929

)

 

 

(7,296

)

 

 

(9,453

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share

 

10

 

 

(0.43

)

 

 

(0.66

)

 

 

(0.97

)

 

 

(1.28

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

 

 

7,552,677

 

 

 

7,425,166

 

 

 

7,494,425

 

 

 

7,406,689

 

See accompanying notes to unaudited interim financial statements

6


 

ACASTI PARMA INC.

Condensed Consolidated Interim Statements of Shareholders' Equity

(Unaudited)

 

 

 

Common Shares

 

 

 

 

 

 

 

 

(Expressed in thousands of U.S. dollars except share data)

 

Notes

 

Number

 

Dollar

 

Additional
paid-in
capital

 

Accumulated
other
comprehensive
loss

 

Deficit

 

Total

 

 

 

 

 

$

 

$

 

$

 

$

 

$

Balance, March 31, 2023

 

 

 

7,435,533

 

258,294

 

13,965

 

(6,038)

 

(198,266)

 

67,955

Net loss and total comprehensive loss for the period

 

 

 

 

 

 

 

(4,023)

 

(4,023)

Stock-based compensation

 

9

 

 

 

78

 

 

 

78

Balance at June 30, 2023

 

 

 

7,435,533

 

258,294

 

14,043

 

(6,038)

 

(202,289)

 

64,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares and pre-funded warrants through private placement, net of offering costs

 

8(a)

 

1,951,371

 

2,744

 

2,963

 

 

 

5,707

Issuance of common shares upon the exercise of stock options

 

 

 

12,500

 

 

21

 

 

 

21

Net loss and total comprehensive loss for the period

 

 

 

 

 

 

 

(3,273)

 

(3,273)

Stock-based compensation

 

9

 

 

 

280

 

 

 

280

Balance at September 30, 2023

 

 

 

9,399,404

 

261,038

 

17,307

 

(6,038)

 

(205,562)

 

66,745

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares

 

 

 

 

 

 

 

 

(Expressed in thousands of US dollars except for share data)

 

Notes

 

Number

 

Dollar

 

Additional
paid-in
capital

 

Accumulated
other
comprehensive
loss

 

Deficit

 

Total

 

 

 

 

 

$

 

$

 

$

 

$

 

$

Balance, March 31, 2022

 

 

 

7,381,425

 

257,990

 

12,154

 

(6,037)

 

(155,837)

 

108,270

Net loss and total comprehensive loss for the period

 

 

 

 

 

 

 

(4,524)

 

(4,524)

Cumulative translation adjustment

 

 

 

 

 

 

(2)

 

 

(2)

Stock-based compensation

 

9

 

 

 

464

 

 

 

464

Net proceeds from shares issued under the at-the-market (ATM) program

 

 

 

34,335

 

195

 

 

 

 

195

Balance at June 30, 2022

 

 

 

7,415,760

 

258,185

 

12,618

 

(6,039)

 

(160,361)

 

104,403

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss and total comprehensive loss for the period

 

 

 

 

 

 

 

(4,929)

 

(4,929)

Cumulative translation adjustment

 

 

 

 

 

 

(1)

 

 

(1)

Net proceeds from shares issued under the at-the-market (ATM) program

 

 

 

19,773

 

109

 

 

 

 

 

 

 

109

Stock-based compensation

 

9

 

 

 

582

 

 

 

582

Balance at September 30, 2022

 

 

 

7,435,533

 

258,294

 

13,200

 

(6,040)

 

(165,290)

 

100,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7


 

ACASTI PHARMA INC.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

 

 

 

 

Six months ended

 

 

 

 

 

September 30,
2023

 

 

September 30,
2022

 

(Expressed in thousands of U.S. dollars)

 

Notes

 

 

$

 

 

$

 

Cash flows used in operating activities:

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

 

 

 

(7,296

)

 

 

(9,453

)

Adjustments:

 

 

 

 

 

 

 

 

 

Depreciation of equipment

 

 

 

 

 

9

 

 

 

106

 

Gain on sale of equipment

 

 

 

 

 

(58

)

 

 

 

Stock-based compensation

 

9

 

 

 

358

 

 

 

1,046

 

Change in fair value of warrant liabilities

 

 

 

 

 

1,826

 

 

 

(10

)

Income tax recovery

 

 

 

 

 

(735

)

 

 

(397

)

Unrealized foreign exchange (gain) loss

 

 

 

 

 

 

 

 

(51

)

Write-off of equipment

 

 

 

 

 

32

 

 

 

31

 

Changes in operating assets and liabilities

 

11

 

 

 

(2,489

)

 

 

(137

)

Net cash used in operating activities

 

 

 

 

 

(8,353

)

 

 

(8,865

)

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Acquisition of equipment

 

 

 

 

 

 

 

 

(9

)

Proceeds from sale of equipment

 

 

 

 

 

110

 

 

 

 

Acquisition of short-term investments

 

 

 

 

 

 

 

 

(14

)

Maturity of short-term investment

 

 

 

 

 

 

 

 

13,185

 

Net cash from investing activities

 

 

 

 

 

110

 

 

 

13,162

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Net proceeds from issuance of common shares and warrants from private placement

 

(8a)

 

 

 

7,338

 

 

 

 

Proceeds from issuance of common shares from exercise of stock options

 

 

 

 

 

21

 

 

 

 

Net proceeds from shares issuance under the at-the-market (ATM) program

 

(8a)

 

 

 

 

 

 

304

 

Net cash from financing activities

 

 

 

 

 

7,359

 

 

 

304

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate fluctuations on cash and cash equivalents

 

 

 

 

 

 

 

 

(14

)

 

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

 

 

 

 

(884

)

 

 

4,587

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

 

 

 

 

27,875

 

 

 

30,339

 

Cash and cash equivalents, end of period

 

 

 

 

 

26,991

 

 

 

34,926

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents are comprised of:

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

10,596

 

 

 

34,926

 

Cash equivalents

 

 

 

 

 

16,395

 

 

 

 

 

See accompanying notes to unaudited interim financial statements.

8


 

 

ACASTI PHARMA INC.

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited)

(Expressed in thousands of U.S. dollars except share and per share data)

1. Nature of operation

Acasti Pharma Inc. (“Acasti” or the “Corporation”) is incorporated under the Business Corporations Act (Québec) (formerly Part 1A of the Companies Act (Québec)). The Corporation is domiciled in Canada and its registered office is located at 2572 boul. Daniel-Johnson, 2nd Floor Laval, Québec, Canada H7T 2R3.

 

The Corporation’s shares are listed on the Nasdaq Capital Market (the "Nasdaq"), and through March 27, 2023 the Corporation's shares were also listed on the TSX Venture Exchange ("TSXV"), in each case, under the symbol "ACST". On March 13, 2023 the Corporation received approval to voluntarily delist from the TSXV. Effective as at the close of trading on March 27, 2023, the Corporation's common shares are no longer listed and posted for trading on the TSXV.

 

In August 2021, the Corporation completed the acquisition via a share-for-share merger of Grace Therapeutics, Inc. (“Grace”), a privately held emerging biopharmaceutical company focused on developing innovative drug delivery technologies for the treatment of rare and orphan diseases. The post-merger Corporation is focused on building a late-stage specialty pharmaceutical company specializing in rare and orphan diseases and developing and commercializing products that improve clinical outcomes using its novel drug delivery technologies. The Corporation seeks to apply new proprietary formulations to existing pharmaceutical compounds to achieve enhanced efficacy, faster onset of action, reduced side effects, more convenient delivery and increased patient compliance; all of which could result in improved patient outcomes. The active pharmaceutical ingredients chosen by the Corporation for further development may be already approved in the target indication or could be repurposed for use in new indications.

 

The Corporation has incurred operating losses and negative cash flows from operations in each year since its inception. The Corporation expects to incur significant expenses and continued operating losses for the foreseeable future.

 

In May 2023, the Corporation implemented a strategic realignment plan to enhance shareholder value that resulted in the Corporation engaging a new management team, streamlining its research and development activities to concentrate on its lead product, GTX-104, and greatly reducing its workforce. Moving forward, the Corporation plans to build a smaller, more focused organization in the United States. Further development of GTX-102 and GTX-101 will occur at such time as additional funding is obtained or strategic partnerships are entered into.

 

On September 24, 2023, the Corporation entered into a securities purchase agreement with certain institutional and accredited investors. Gross proceeds to the Corporation from this private placement were approximately $7,500, before deducting fees and expenses. The Corporation issued and sold an aggregate of 1,951,371 common shares, no par value per share, pre-funded warrants to purchase up to an aggregate of 2,106,853 common shares, each at a purchase price of $1.8481 per common share and accompanying common warrants to purchase up to an aggregate of 2,536,391 common shares. The Corporation currently intends to use the net proceeds from the private placement for clinical trial expenses to further the Phase 3 clinical trial for GTX-104, pre-commercial planning, working capital and other general corporate purposes. The Corporation believes its cash runway, including net proceeds from this financing, will be sufficient to fund the Corporation’s operations into the second calendar quarter of 2026.

 

The Corporation will require additional capital to fund its daily operating needs beyond that time. The Corporation does not expect to generate revenue from product sales unless and until it successfully completes drug development and obtains regulatory approval, which the Corporation expects will take several years and is subject to significant uncertainty. To date, the Corporation has financed its operations primarily through public offerings and private placements of its common shares, warrants and convertible debt and the proceeds from research tax credits. Until such time that the Corporation can generate significant revenue from drug product sales, if ever, it will require additional financing, which is expected to be sourced from a combination of public or private equity or debt financing or other non-dilutive sources, which may include fees, milestone payments and royalties from collaborations with third parties. Arrangements with collaborators or others may require the Corporation to relinquish certain rights related to its technologies or drug product candidates. Adequate additional financing may not be available to the Corporation on acceptable terms, or at all. The Corporation’s inability to raise capital as and when needed could have a negative impact on its financial condition and its ability to pursue its business strategy. The Corporation plans to raise additional capital in order to maintain adequate liquidity. Negative results from studies or trials, if any, and depressed prices of the Corporation’s stock could impact the Corporation’s ability to raise additional financing. Raising additional equity capital is subject to market conditions not within the Corporation’s control. If the Corporation is unable to raise additional funds, the Corporation may not be able to realize its assets and discharge its liabilities in the normal course of business.

 

The Corporation remains subject to risks similar to other development stage companies in the biopharmaceutical industry, including compliance with government regulations, protection of proprietary technology, dependence on third-party contractors and consultants and potential product liability, among others. Please refer to the risk factors included in Part 1, Item 1A of the Corporation’s Annual Report on Form 10-K for the year ended March 31, 2023, filed with the SEC on June 23, 2023 (the “Annual Report”).

9


 

 

Reverse stock split

On June 29, 2023, the Board of Directors of the Corporation approved an amendment to the Corporation's Articles of Incorporation to implement a reverse stock split of the Corporation's Class A common shares, no par value per share, at a ratio of 1-for-6 (the “Reverse Stock Split”). On July 4, 2023, the Corporation filed Articles of Amendment to its Articles of Incorporation with the Registraire des entreprises du Québec, to implement the Reverse Stock Split. All references in these financial statements to number of common shares, warrants and options, price per share and weighted average number of shares outstanding have been adjusted to reflect the Reverse Stock Split, which became effective on July 10, 2023.

 

2. Summary of significant accounting policies:

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X under the Securities Exchange Act of 1934. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

 

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements as of and for the year ended March 31, 2023, and, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Corporation’s consolidated financial position as of September 30, 2023, the consolidated results of its operations for the three and six months ended September 30, 2023 and 2022, its statements of shareholders’ equity for the three and six months ended September 30, 2023 and 2022 and its consolidated cash flows for the six months ended September 30, 2023 and 2022.

 

These unaudited condensed consolidated financial statements should be read in conjunction with the Corporation’s audited consolidated financial statements and the accompanying notes for the year ended March 31, 2023 included in the Corporation’s Annual Report. The condensed consolidated balance sheet data as of March 31, 2023 presented for comparative purposes was derived from the Corporation’s audited consolidated financial statements but does not include all disclosures required by U.S. GAAP. The results for the three and six months ended September 30, 2023 are not necessarily indicative of the operating results to be expected for the full year or for any other subsequent interim period.

 

The Corporation’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended March 31, 2023 included in the Annual Report. There have been no changes to the Corporation's significant accounting policies since the date of the audited consolidated financial statements for the year ended March 31, 2023 included in the Annual Report.

 

Use of estimates

The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

Estimates are based on management’s best knowledge of current events and actions that management may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Estimates and assumptions include the measurement of stock-based compensation, derivative warrant liabilities, accruals for research and development contracts and contract organization agreements, and valuation of intangibles and goodwill. Estimates and assumptions are also involved in determining which research and development expenses qualify for research and development tax credits and in what amounts. The Corporation recognizes the tax credits once it has reasonable assurance that they will be realized.

 

Recent accounting pronouncements

 

The Corporation has considered recent accounting pronouncements and concluded that they are either not applicable to the Corporation's business or that the effect is not expected to be material to the consolidated financial statements as a result of future adoption.

3. Fair Value Measurements

 

Assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 are as follows:

 

10


 

 

 

Total

 

Quoted prices in active markets (Level 1)

 

Significant other observable inputs (Level 2)

 

Significant unobservable inputs (Level 3)

 

 

$

 

$

 

$

 

$

 

Assets

 

 

 

 

 

 

 

 

 

   Guaranteed investment certificates and term deposits classified as cash equivalents

 

16,395

 

16,395

 

 

 

Total assets

 

16,395

 

16,395

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

   Derivative warrant liabilities

 

3,457

 

 

 

3,457

 

Total liabilities

 

3,457

 

 

 

3,457

 

 

There were no changes in valuation techniques or transfers between Levels 1, 2 or 3 during the six months ended September 30, 2023. The Corporation’s derivative warrant liabilities are measured at fair value on a recurring basis using unobservable inputs that are classified as Level 3 inputs. Refer to Note 8(b) for the valuation techniques and assumptions used in estimating the fair value of the derivative warrant liabilities.

 

4. Receivables

 

 

September 30, 2023

 

March 31,
2023

 

 

$

 

$

Sales tax receivables

 

360

 

338

Government assistance

 

356

 

412

Interest receivable

 

94

 

52

Other receivables

 

27

 

-

Total receivables

 

837

 

802

 

Government assistance is comprised of research and development investment tax credits from the Québec provincial government, which relate to quantifiable research and development expenditures under the applicable tax laws. The amounts recorded as receivables are subject to a government tax audit and the final amounts received may differ from those recorded. For the six months ended September 30, 2022, the Corporation recorded $81 as a reduction of research and development expenses in the Statement of Loss and Comprehensive Loss.

 

5. Short-term investments

 

The Corporation holds various marketable securities, with maturities greater than 3 months at the time of purchase, as follows:

 

September 30, 2023

 

 

March 31,
2023

 

 

$

 

 

$

 

Term deposits issued in CAD currency earning interest at 3% and maturing on March 29, 2024

 

 

15

 

 

 

15

 

Total short-term investments

 

 

15

 

 

 

15

 

 

 

6. Trade and other payables

 

 

September 30, 2023

 

 

March 31, 2023

 

 

 

$

 

 

$

 

Trade payables

 

 

685

 

 

 

1,242

 

Accrued liabilities and other payables

 

 

460

 

 

 

946

 

Employee salaries and benefits payable

 

 

206

 

 

 

1,148

 

Total trade and other payables

 

 

1,351

 

 

 

3,336

 

 

7. Leases

The Corporation has historically entered into lease arrangements for its research and development and quality control laboratory facility located in Sherbrooke, Québec. As of September 30, 2023, the Corporation had one operating lease with required future minimum payments.

11


 

 

On March 14, 2022, the Corporation renewed the lease agreement effective April 1, 2022, resulting in a commitment of $556 over a 24 months base lease term and 48 months additional lease renewal term. In April 2023, the Corporation elected not to renew the additional 48 months lease renewal term with the lease expected to terminate March 31, 2024. The Corporation accounted for the change in lease term as a lease modification under ASC 842. Due to the modification in lease term, the Corporation remeasured the lease liability and right-of-use asset associated with the lease. As of the effective date of modification, the Corporation recorded an adjustment to the right-of-use asset and lease liability in the amount of $369 based on the net present value of lease payments discounted using an estimated incremental borrowing rate of 4.3%.