Company Overview - Alzamend Neuro Inc. has partnered with Massachusetts General Hospital to conduct a Phase 2 study of AL001 for treating post-traumatic stress disorder (PTSD) [1][2] - The company aims to assess the comparative increase in lithium levels in the brain compared to commonly marketed lithium salts among PTSD patients [2] Clinical Trial Details - The objective of the trial is to predict the minimum dose necessary for AL001 to achieve effectiveness and safety comparable to established lithium salts [2] - The study is expected to help meet regulatory safety standards through the Section 505(b)(2) pathway for FDA approval [2] Market Performance - Following the announcement of the partnership and clinical trial, Alzamend Neuro's stock (ALZN) increased by 267.7%, reaching $7.50 [2]

Financial Condition and Funding - As of April 30, 2024, the company had $376,000 in cash and cash equivalents, with expectations of needing substantial additional funding for ongoing clinical trials [144]. - The company has a going concern opinion from its independent registered public accounting firm, indicating substantial doubt about its ability to continue operations without additional capital [147]. - The company does not expect to generate revenue for several years, if at all, and may not achieve profitability for many years after generating material revenue [149]. - The company has identified material weaknesses in its internal control over financial reporting, which could affect the accuracy and timeliness of financial reporting [273]. - The company does not intend to pay dividends in the foreseeable future, relying instead on stock appreciation for returns on investment [272]. Clinical Trials and Product Development - The company has initiated clinical trials for AL001 and ALZN002 but has not yet completed pivotal trials or obtained marketing approvals, indicating a lack of near-term revenue [148]. - Clinical trials for AL001 and ALZN002 are expected to be expensive, time-consuming, and may face delays or termination due to various factors [187]. - The company plans to submit AL001 and ALZN002 for regulatory approval in the future, but neither has been submitted yet [162]. - Successful development, FDA approval, and commercialization of AL001 or ALZN002 are critical for the company's near-term prospects and revenue generation [162]. - The anticipated development of a Risk Evaluation and Mitigation Strategy (REMS) for AL001 or ALZN002 could cause delays in the approval process and impact market potential [205]. Regulatory and Compliance Risks - The company is required to pay a 4% royalty on net sales for ALZN002 and a 4.5% royalty for AL001, along with various milestone payments totaling up to $10 million for AL001 upon FDA approval [152]. - The reimbursement approval process is time-consuming and may significantly affect the commercial viability of AL001 and ALZN002 [175]. - Regulatory approval processes vary by country and can involve additional studies, which may delay commercialization [183]. - Failure to obtain necessary regulatory approvals could materially and adversely affect the company's business and financial condition [181]. - The company may face significant penalties if it fails to comply with ongoing FDA and regulatory body obligations after receiving approval for its products [195]. Market and Competitive Landscape - Market acceptance of AL001 and ALZN002 is uncertain and depends on factors such as safety, efficacy, physician willingness, and reimbursement from third-party payers [166]. - The company faces substantial competition from major pharmaceutical and biotechnology companies, which may have greater resources and expertise in research, development, and marketing [215]. - If competitors develop safer or more effective products, the company's commercial opportunity could be significantly reduced or eliminated [216]. - The high rate of failure for drug candidates in clinical trials could materially and adversely affect the company's business and financial condition [185]. Intellectual Property and Legal Risks - The company may need to litigate to enforce its intellectual property rights, which could be costly and distract management from core business operations [222]. - The company relies on a combination of patents and trade secret protection to safeguard its intellectual property, but there is a risk of inadequate protection [230]. - The company may face third-party claims alleging patent infringement, which could result in substantial expenses and hinder the development of its products [228]. - The company is at risk of losing its competitive edge if it cannot adequately protect its proprietary information and trade secrets [224]. Stock and Market Performance - The company was notified by Nasdaq that the minimum Market Value of Listed Securities (MVLS) for its common stock was below the $35 million requirement for continued listing [251]. - The company has until March 25, 2024, to regain compliance with the MVLS Rule [251]. - On March 26, 2024, Nasdaq determined that the company had not regained compliance, leading to a scheduled delisting on April 4, 2024 [252]. - The market price of the company's common stock has fluctuated between $6.76 and $115.95 per share during the year ended April 30, 2024 [257]. - Delisting from Nasdaq could impair the liquidity of the company's common stock and harm its ability to raise capital [255]. Operational and Management Challenges - The company has limited operating history since its incorporation in February 2016, making future operating results uncertain [150]. - The company relies heavily on senior management, particularly key individuals such as the CEO and CFO, and their loss could delay the development and commercialization of its product candidates AL001 and ALZN002 [214]. - The company anticipates difficulties in hiring qualified personnel due to intense competition in the biopharmaceutical field [280]. - Increased costs associated with operating as a public company will require management to devote substantial time to compliance initiatives and corporate governance practices [298]. Internal Control and Compliance Measures - The company is implementing measures to improve internal control over financial reporting, including formalizing documentation and strengthening supervisory reviews [275]. - There is a risk that the measures taken may not be sufficient to remediate identified material weaknesses, potentially leading to misstatements in financial statements [276]. - The company is subject to the Sarbanes-Oxley Act, requiring effective internal controls over financial reporting, which may incur significant costs and management efforts [291].

Product Development - Alzamend Neuro aims to develop therapeutics for Alzheimer's, bipolar disorder, major depressive disorder, and post-traumatic stress disorder, with two main product candidates: AL001 and ALZN002[101]. - AL001 has shown positive preclinical results, preventing cognitive deficits and improving memory compared to lithium carbonate, with a maximum tolerated dose identified at 240 mg three times daily[112][113]. - The company plans to initiate two safety and efficacy clinical trials for AL001 in Alzheimer's patients, with Investigational New Drug applications submitted for bipolar disorder, major depressive disorder, and post-traumatic stress disorder[115]. - ALZN002 is an active immunotherapy vaccine designed to treat mild to moderate dementia of the Alzheimer's type, with a Phase I/IIA clinical trial initiated in April 2023[118][119]. - Alzamend's strategy includes advancing clinical development and exploring additional indications for its product candidates[111]. Financial Performance - Total operating expenses for the three months ended January 31, 2024, were $2.66 million, a decrease of 51% from $5.42 million in the same period of 2023[125]. - Research and development expenses decreased by 34% to $1.91 million for the three months ended January 31, 2024, compared to $2.89 million in 2023[125]. - The net loss for the three months ended January 31, 2024, was $2.66 million, a reduction of 51% from a net loss of $5.43 million in the same period of 2023[125]. - No revenue was generated during the three months ended January 31, 2024, and the company does not anticipate generating revenue in the foreseeable future[126]. - General and administrative expenses for the three months ended January 31, 2024, were $751,000, down 70% from $2.53 million in 2023[133]. - Clinical trial fees for the three months ended January 31, 2024, were $1.25 million, a decrease of 39% from $2.05 million in 2023[130]. - For the nine months ended January 31, 2024, total operating expenses were $9.09 million, a decrease of 21% from $11.57 million in the same period of 2023[141]. - Research and development expenses for the nine months ended January 31, 2024, were $6.27 million, an increase of 8% from $5.80 million in 2023[143]. - The company incurred a net loss of $9.1 million for the nine months ended January 31, 2024, compared to a net loss of $6.7 million for the same period in 2023[156]. - The company reported general and administrative expenses of $2.8 million for the nine months ended January 31, 2024, a decrease of 51% from $5.8 million in the prior year[150]. - Clinical trial fees increased to $3.3 million for the nine months ended January 31, 2024, up from $2.6 million in the same period in 2023, with $1.9 million allocated to the Phase IIA clinical trial for AL001[147]. - Stock-based compensation expense decreased to $660,000 for the nine months ended January 31, 2024, down 79% from $3.1 million in the prior year[152]. Compliance and Regulatory Issues - Alzamend received a deficiency letter from Nasdaq on September 26, 2023, indicating that the market value of its listed securities fell below the $35 million requirement for continued listing[121]. - The company has until March 25, 2024, to regain compliance with the Nasdaq listing rule by maintaining a market value of $35 million or more for at least 10 consecutive business days[121]. - Nasdaq issued a Deficiency Letter due to the Common Stock bid price closing below $1.00 for 30 consecutive business days, with a compliance deadline of July 30, 2024[122]. Funding and Capital Structure - As of January 31, 2024, the company had cash of $283,000 and a working capital deficiency of $3.2 million[157]. - The company sold 816,426 shares of Common Stock for gross proceeds of $1.0 million during the nine months ended January 31, 2024, as part of an At-the-Market Offering[161]. - The company entered into an agreement to sell up to $6 million of Series B Convertible Preferred Stock, with the first closing resulting in $1.22 million raised[162]. - Net cash used in operating activities was $6.8 million for the nine months ended January 31, 2024, primarily due to the net loss[168]. - The company plans to finance future development activities largely through the sale of equity securities and additional debt financing[157]. - The company has not been able to initiate Phase II clinical trials for AL001 due to insufficient financing[159]. Licensing and Royalties - AL001 License Agreements require combined royalty payments of 4.5% on net sales, with minimum royalties starting at $40,000 in the first year[171]. - ALZN002 License Agreement mandates 4% royalty on net sales, with minimum royalties beginning at $20,000 in the first year[174]. - November AL001 License Agreements stipulate 3% royalty on net sales, with minimum royalties starting at $40,000 in the first year[176]. - Total milestone payments for AL001 technologies include $1,250,000 due in March 2025 upon first patient treated in a Phase III clinical trial[178]. - ALZN002 License includes milestone payments of $1,000,000 upon first patient treated in a Phase III clinical trial[180]. - Additional AL001 licenses require a payment of $2,000,000 due in March 2026 upon first patient treated in a Phase III clinical trial[181]. - The company has paid an initial license fee of $200,000 for both AL001 and ALZN002 licenses[173][174]. - The Licensor received 148,528 shares for AL001 and 240,120 shares for ALZN002 as part of the licensing agreements[173][174]. - The AL001 and ALZN002 licenses have indefinite terms until certain conditions are met, including the expiration of patent rights[177]. - The company has entered multiple amendments to the ALZN002 License Agreement, modifying payment timing[173].

Product Development - Alzamend Neuro aims to develop therapeutics for Alzheimer's, bipolar disorder, major depressive disorder, and post-traumatic stress disorder, with two main product candidates: AL001 and ALZN002[96]. - AL001 has shown positive preclinical results, preventing cognitive deficits and improving memory compared to lithium carbonate, with a maximum tolerated dose identified at 240 mg three times daily[105][106]. - The company plans to initiate two safety and efficacy clinical trials for AL001 in patients with mild to moderate Alzheimer's, with Investigational New Drug applications submitted for bipolar disorder, major depressive disorder, and PTSD[109]. - ALZN002 is an active immunotherapy vaccine designed to treat mild to moderate Alzheimer's, with a Phase I/IIA clinical trial initiated in April 2023 to assess safety and efficacy[112]. - The company has a focus on advancing clinical development and expanding its pharmaceutical pipeline to include additional indications for AL001[104]. - Alzamend Neuro's strategy includes optimizing the value of its product candidates in major markets and pursuing translational and functional endpoints for efficient development[104]. Financial Performance - Research and development expenses for the three months ended October 31, 2023, were $2.0 million, a 30% increase from $1.5 million in the same period of 2022[119]. - General and administrative expenses decreased by 42% to $905,000 for the three months ended October 31, 2023, compared to $1.6 million in the prior year[126]. - The net loss for the three months ended October 31, 2023, was $2.9 million, a 7% improvement from a net loss of $3.1 million in the same period of 2022[117]. - The company did not generate any revenue during the three months ended October 31, 2023, and does not anticipate generating revenue in the foreseeable future[118]. - Clinical trial fees increased by 44% to $795,000 for the three months ended October 31, 2023, compared to $552,000 in the same period of 2022[123]. - Total operating expenses for the three months ended October 31, 2023, were $2.9 million, a 7% decrease from $3.1 million in the prior year[117]. - The basic and diluted net loss per common share improved to $(0.44) for the three months ended October 31, 2023, from $(0.48) in the same period of 2022[117]. - Research and development expenses for the six months ended October 31, 2023, were $4.4 million, a 50% increase from $2.9 million in the same period of 2022[136]. - The total net loss for the six months ended October 31, 2023, was $6.4 million, a 5% increase from $6.1 million in the same period of 2022[133]. - The company incurred professional fees of $2.1 million for the six months ended October 31, 2023, consistent with the previous year[138]. - Clinical trial fees for the six months ended October 31, 2023, increased to $2.0 million from $575,000 in the same period of 2022, with $1.4 million allocated to the Phase IIA clinical trial for AL001 and $650,000 for ALZN002[139]. - General and administrative expenses decreased by 36% to $2.1 million for the six months ended October 31, 2023, compared to $3.2 million in 2022[144]. - Stock-based compensation expense for general and administrative purposes dropped by 66% to $545,000 in the six months ended October 31, 2023, from $1.6 million in the prior year[146]. - Net cash used in operating activities was $4.8 million for the six months ended October 31, 2023, compared to $4.9 million in the same period of 2022[158]. - The company reported a net loss of $6.4 million for the six months ended October 31, 2023, compared to a loss of $2.9 million for the three months ended October 31, 2023[151]. - As of October 31, 2023, the company had cash of $200,000 and an accumulated deficit of $50.5 million[151]. Capital and Compliance - Alzamend Neuro requires additional capital to fund ongoing clinical trials and operations, as progress depends on various factors including regulatory approvals and competitive landscape[113]. - As of September 26, 2023, Alzamend Neuro received a notice from Nasdaq regarding non-compliance with the minimum Market Value of Listed Securities requirement, needing to regain compliance by March 25, 2024[114]. - The company sold 6,149 shares of Common Stock for gross proceeds of $19,000 during the six months ended October 31, 2023, and an additional 651,046 shares for $849,000 from November 1, 2023, to December 14, 2023[154]. - The company incurred $147,000 in cash used for investing activities, primarily for the purchase of machinery and equipment for clinical trials[159]. - The company has entered into an At-the-Market Issuance Sales Agreement to sell shares of Common Stock with an aggregate offering price of up to approximately $9.8 million[153]. Licensing and Royalties - The AL001 License Agreements require combined royalty payments of 4.5% on net sales of products developed from the licensed technology, with minimum royalties starting at $40,000 on the first anniversary of the first commercial sale[162]. - The ALZN002 License Agreement requires royalty payments of 4% on net sales of products developed from the licensed technology[164]. - An initial license fee of $200,000 was paid for ALZN002, along with 240,120 shares of common stock as an additional licensing fee[164]. - Minimum royalties for ALZN002 are set at $20,000 on the first anniversary, $40,000 on the second anniversary, and $50,000 on the third anniversary of the first commercial sale[164]. - The November AL001 License Agreements require royalty payments of 3% on net sales of products developed from the licensed technology[166]. - An initial license fee of $20,000 was paid for the additional indications under the November AL001 License Agreements[166]. - Minimum royalties for the November AL001 License Agreements are $40,000 on the first anniversary, $80,000 on the second anniversary, and $100,000 on the third anniversary of the first commercial sale[166]. - Milestone payments for AL001 include $1,250,000 due in March 2025 upon the first patient treated in a Phase III clinical trial[168]. - A total of $10,000,000 is due upon FDA NDA approval for the AL001 technology[168]. - For ALZN002, a payment of $10,000,000 is due upon the first commercial sale[169]. - Additional AL001 licenses include a payment of $16,000,000 due on August 1, 2029, upon the first commercial sale[170].

Product Development - The company aims to develop therapeutics for Alzheimer's, bipolar disorder, major depressive disorder, and post-traumatic stress disorder, with two main product candidates: AL001 and ALZN002[84]. - AL001 has shown positive preclinical results, preventing cognitive deficits and improving memory compared to traditional lithium carbonate treatments, with a maximum tolerated dose of 240 mg three times daily established[95][94]. - The company plans to file Investigational New Drug applications for AL001 targeting bipolar disorder, major depressive disorder, and post-traumatic stress disorder by the end of 2023[98]. - ALZN002 is an active immunotherapy vaccine designed to treat mild to moderate Alzheimer's dementia, with a Phase I/IIA clinical trial initiated in April 2023[101]. - The company has received FDA approval to proceed with clinical trials for both AL001 and ALZN002, indicating progress in its development pipeline[100][99]. Financial Performance - The company did not generate any revenue during the three months ended July 31, 2023, and does not anticipate generating revenue in the foreseeable future[106]. - Net loss for Q3 2023 was $3.53 million, a 16% increase from a net loss of $3.04 million in Q3 2022[120]. - Cash used in operating activities for Q3 2023 was $3.30 million, compared to $2.54 million in Q3 2022[127]. - The company had cash of $1.7 million and an accumulated deficit of $47.6 million as of July 31, 2023[121]. Research and Development - The company’s research and development expenses are recognized as incurred, reflecting its commitment to advancing its therapeutic candidates[85]. - Research and development expenses increased by 72% to $2.37 million in Q3 2023 from $1.38 million in Q3 2022[108]. - Clinical trial fees surged to $1.25 million in Q3 2023 from $24,000 in Q3 2022, reflecting a 5,198% increase[110]. Operational Expenses - General and administrative expenses decreased by 30% to $1.16 million in Q3 2023 from $1.66 million in Q3 2022[114]. - Stock-based compensation expense decreased by 57% to $369,000 in Q3 2023 from $867,000 in Q3 2022[116]. Capital Requirements - The company requires additional capital to fund ongoing clinical trials and operations, as working capital needs depend on various factors including regulatory approvals and competitive landscape[102]. - The company plans to finance future development activities primarily through the sale of equity securities[121]. - The company entered into a Sales Agreement to sell up to approximately $9.8 million in shares of common stock through an ATM Offering[123]. Licensing Agreements - The AL001 License Agreements require combined royalty payments of 4.5% on net sales of products developed from the licensed technology[130]. - An initial license fee of $200,000 has been paid for AL001, and the Licensor received 2,227,923 shares of common stock as an additional licensing fee[130]. - Minimum royalties for AL001 are set at $40,000 on the first anniversary, $80,000 on the second anniversary, and $100,000 on the third anniversary of the first commercial sale[130]. - The ALZN002 License Agreement mandates royalty payments of 4% on net sales, with an initial license fee of $200,000 already paid[132]. - Minimum royalties for ALZN002 are $20,000 on the first anniversary, $40,000 on the second anniversary, and $50,000 on the third anniversary of the first commercial sale[132]. - The November AL001 License Agreements require royalty payments of 3% on net sales, with an initial license fee of $20,000 paid for the additional indications[134]. - Minimum royalties for the November AL001 License Agreements are $40,000 on the first anniversary, $80,000 on the second anniversary, and $100,000 on the third anniversary of the first commercial sale[134]. - Milestone payments for the AL001 technologies include $10,000,000 upon FDA NDA approval, due 8 years from the effective date of the agreement[136]. - For ALZN002, a milestone payment of $1,000,000 is due upon the first patient treated in a Phase III clinical trial, 12 months from the completion of the first Phase II clinical trial[137]. - Additional AL001 Licenses include a payment of $16,000,000 due on August 1, 2029, upon the first commercial sale[138].

Financial Position and Capital Requirements - As of April 30, 2023, the company had $5.1 million in cash and cash equivalents, which is expected to fund operations for approximately six months without additional funding [142]. - The company anticipates substantial increases in expenses over the next few years due to the capital-intensive nature of biotechnology product development, including costs for clinical trials and commercialization [141]. - The company has expressed substantial doubt about its ability to continue as a going concern due to insufficient capital to fund operations, as indicated by the auditors' going concern opinion [145]. - The company must raise substantial additional capital to complete the development and commercialization of its product candidates, which may involve significant dilution for existing shareholders [144]. - The company does not expect to generate revenue for several years, and profitability is not anticipated until several years after generating material revenue [147]. Product Development and Regulatory Approval - The company has initiated clinical trials for two product candidates, AL001 and ALZN002, but has not yet completed pivotal trials or obtained marketing approvals, indicating a lack of near-term revenue [146]. - The company plans to submit AL001 and ALZN002 for regulatory approval, which is essential for initiating commercial distribution [159]. - Successful development, FDA approval, and commercialization of AL001 or ALZN002 are critical for the company's near-term prospects and revenue generation [159]. - The company faces significant risks related to the regulatory approval process, which requires substantial resources and may lead to abandonment of product candidates if safety and efficacy are not demonstrated [178]. - The FDA has only approved two new drugs for Alzheimer's since 2003, highlighting a high failure rate for drug candidates in clinical trials [183]. - Clinical trials for AL001 and ALZN002 are expected to be expensive and time-consuming, potentially taking several years to complete [184]. - The company plans to seek breakthrough therapy designation for both AL001 and ALZN002, which may not guarantee faster development or FDA approval [187]. - Regulatory approvals may come with conditions that require costly post-marketing surveillance and compliance with extensive requirements [191]. - The reimbursement approval process is time-consuming and may significantly impact the commercial viability of AL001 and ALZN002 [172]. Competition and Market Risks - The company faces substantial competition from major pharmaceutical and biotechnology companies, which may have greater resources and expertise in drug development and commercialization [210]. - If competitors develop safer or more effective products, the company's market opportunity could be significantly reduced or eliminated [212]. - Market acceptance of AL001 and ALZN002 is uncertain and depends on factors such as safety, efficacy, pricing, and reimbursement from third-party payers [162]. - Cost containment trends in the healthcare industry could lead to lower product revenue and profitability due to pricing pressures from third-party payers [173]. Intellectual Property and Legal Risks - The company may need to litigate to protect its intellectual property rights, which could be costly and distract management from core business operations [217]. - The company relies on a combination of patents and trade secrets to protect its intellectual property, but there is a risk of inadequate protection leading to competitive disadvantages [226]. - Obtaining and enforcing patents in the biopharmaceutical industry is costly, time-consuming, and uncertain, with recent patent law changes potentially diminishing patent value [231]. - The company may encounter significant problems in protecting and defending intellectual property rights in foreign jurisdictions, particularly in developing countries [235]. - The company is subject to various healthcare fraud and abuse laws, including the Anti-Kickback Statute, which could materially affect its operations upon successful commercialization of its products in the U.S. [202]. Management and Operational Challenges - The company relies heavily on senior management, and the loss of key personnel could delay the development and commercialization of its product candidates, AL001 and ALZN002 [208]. - The company has identified material weaknesses in its internal control over financial reporting, which could lead to misstatements in financial statements if not remediated effectively [266]. - The company is in the process of enhancing its internal control over financial reporting, which is expected to be time-consuming and costly [272]. - The company may face challenges in hiring qualified personnel due to intense competition in the biopharmaceutical field [273]. - The company's information technology systems are vulnerable to disruptions, which could adversely affect business operations and financial condition [274]. Stock and Market Performance - The company's common stock is listed on the Nasdaq Capital Market, with trading prices fluctuating between $0.425 and $1.19 per share during the year ended April 30, 2023 [251]. - Beneficial ownership of the shares of common stock by directors and executive officers represents approximately 49.5% of the outstanding shares, allowing them to influence management and significant corporate transactions [242]. - The market price of the company's common stock may decline due to substantial sales by directors, executive officers, or significant stockholders [254]. - The volatility of the stock market and the pharmaceutical industry may significantly affect the market price of the company's common stock, regardless of its operating performance [253]. Financial Obligations and Future Payments - A payment of $2,000,000 is due 36 months from the completion of the first Phase II clinical trial, with an additional $16,000,000 due upon the first patient treated in a Phase III clinical trial [369]. - The company is required to pay royalty payments of 4% on net sales for ALZN002 and 4.5% for AL001, along with various milestone payments totaling up to $10 million upon FDA approval for AL001 [151].

Drug Development and Clinical Trials - Alzamend Neuro aims to develop treatments for Alzheimer's, bipolar disorder, major depressive disorder, and post-traumatic stress disorder through patented intellectual property and immunotherapy approaches[93]. - The company submitted an Investigational New Drug (IND) application for AL001 to the FDA on June 30, 2021, and received a "Study May Proceed" letter for a Phase I study on July 28, 2021[103]. - Phase I clinical trial data for AL001 indicated that a 150 mg dosage is bioequivalent to the marketed 300 mg lithium carbonate product, suggesting potential for better outcomes with reduced dosing[105]. - Alzamend Neuro plans to initiate Phase II clinical trials for AL001 for Alzheimer's treatment and anticipates filing INDs for bipolar disorder, major depressive disorder, and PTSD upon completion of the current Phase IIA study[111]. - The company has an additional preclinical candidate, ALZN002, which has transitioned to an extensive preclinical study program, with a focus on developing a cell-based therapeutic vaccine for Alzheimer's[112]. - An IND application for ALZN002 was submitted to the FDA on September 29, 2022, to conduct a Phase I/IIA clinical trial assessing safety and efficacy in subjects with mild to moderate Alzheimer's[114]. - The Phase IIA study for AL001 will evaluate safety and tolerability under multiple-dose conditions, targeting a maximum tolerated dose for further studies[109]. - The company expects to dose the first patient in a Phase I/IIA clinical trial for ALZN002 in the first quarter of 2023, following FDA approval[115]. Financial Performance - The company reported a net loss of $5,425,574 for the three months ended January 31, 2023, compared to a net loss of $2,572,865 for the same period in 2022, representing an increase of 111%[118]. - Research and development expenses increased by 231% to $2,888,847 for the three months ended January 31, 2023, up from $873,653 in the same period of 2022[118]. - General and administrative expenses rose by 51% to $2,534,665 for the three months ended January 31, 2023, compared to $1,682,913 for the same period in 2022[118]. - The company did not generate any revenue during the three months ended January 31, 2023, and does not anticipate generating revenue in the foreseeable future[119]. - Total operating expenses for the three months ended January 31, 2023, were $5,423,512, an increase of 112% from $2,556,566 in the same period of 2022[118]. - Clinical trial fees surged by 623% to $2,050,000 for the three months ended January 31, 2023, compared to $283,497 in the same period of 2022[127]. - The company incurred professional fees of $861,000 for the three months ended January 31, 2023, an increase of 80% from $480,000 in the same period of 2022[128]. - The company reported a net loss of $11.6 million for the nine months ended January 31, 2023, compared to a net loss of $8.5 million for the same period in 2022[149]. - Cash used in operating activities was $6.7 million for the nine months ended January 31, 2023, compared to $5.1 million in the same period of 2022[156]. - As of January 31, 2023, the company had cash of $7.4 million and an accumulated deficit of $40.8 million[149]. Expenses and Costs - Stock-based compensation expense for the nine months ended January 31, 2023, was $3.1 million, an increase of 12% from $2.8 million in the same period of 2022[138]. - Total general and administrative expenses increased by 18% to $5.8 million for the nine months ended January 31, 2023, compared to $4.9 million in the prior year[144]. - Research and development expenses rose by 64% to $5.8 million for the nine months ended January 31, 2023, up from $3.5 million in the same period of 2022[144]. - Clinical trial fees increased significantly by 161% to $2.6 million for the nine months ended January 31, 2023, compared to $1.0 million in the prior year[146]. - Marketing fees surged to $495,000 for the nine months ended January 31, 2023, from just $7,000 in the same period of 2022, marking a 6,823% increase[141]. - Professional fees increased by 59% to $3.0 million for the nine months ended January 31, 2023, compared to $1.9 million in the prior year[145]. Capital and Funding - The company raised $4 million by selling 2,666,667 shares of common stock at $1.50 per share to Ault Lending, LLC, following the achievement of a milestone in the Phase I clinical trial for AL001[108]. - The company expects to continue incurring losses and will need to raise additional capital to fund its operations and development activities[153]. Milestones and Obligations - The company has successfully completed several milestones including the pre-IND meeting and IND application filing for AL001 and ALZN002, with milestone payments totaling $10,000,000 upon FDA approval[163]. - Initial license fees of $20,000 have been paid for two additional AL001 licenses, which require a 3% royalty on net sales of products developed from the licensed technology[166]. - The company is obligated to make milestone payments for the additional AL001 licenses, including $1,000,000 upon first patient treated in a Phase III clinical trial and $8,000,000 upon first commercial sale[167]. - The company completed the first clinical trial for ALZN002, with milestone payments of $500,000 due upon completion[164]. - The company has a total of $1,250,000 due 12 months from the completion of the first Phase II clinical trial for ALZN002[163]. - The company has completed the first Phase I clinical trial for ALZN002, with milestone payments of $175,000 due upon completion[164]. - The company has a total of $10,000,000 in milestone payments due upon FDA BLA approval for ALZN002[164]. Regulatory and Accounting Considerations - The company is a smaller reporting company, and certain market risk disclosures are not applicable[169]. - Recent accounting standards may impact the company's financial statements, as noted in the financial statements[168].

Drug Development and Clinical Trials - Alzamend Neuro aims to develop treatments for Alzheimer's, bipolar disorder, major depressive disorder, and post-traumatic stress disorder through patented intellectual property and immunotherapy approaches[93]. - The company submitted an Investigational New Drug (IND) application for AL001 to the FDA on June 30, 2021, and received a "Study May Proceed" letter for a Phase I study on July 28, 2021[101]. - Phase I clinical trial data for AL001 indicated that a 150 mg dosage is bioavailable compared to the marketed 300 mg lithium carbonate product, with safety profiles being benign[103]. - AL001 has the potential to provide benefits from lithium at up to 50% of the currently approved lithium carbonate dosage, potentially treating over 40 million Americans suffering from Alzheimer's and other neurodegenerative diseases[104]. - The company plans to file INDs for bipolar disorder, major depressive disorder, and PTSD upon completion of the current Phase IIA study for AL001[110]. - Alzamend Neuro has an additional preclinical candidate, ALZN002, which aims to restore the immunological system's ability to combat Alzheimer's and has shown positive anti-inflammatory responses[112]. - An IND application for ALZN002 was submitted to the FDA on September 29, 2022, to conduct a Phase I/IIA clinical trial assessing safety, tolerability, and efficacy in subjects with mild to moderate Alzheimer's[113]. - The Phase IIA study for AL001 will evaluate safety and tolerability under multiple-dose conditions, targeting a maximum tolerated dose for further studies[107]. - The company received a "study may proceed" letter from the FDA for a phase I/IIA clinical trial of ALZN002, expecting to dose the first patient in Q1 2023[114]. Financial Performance - Total operating expenses for the three months ended October 31, 2022, were $3.1 million, a decrease of 13% from $3.6 million in the same period of 2021[117]. - Research and development expenses for the three months ended October 31, 2022, were $1.5 million, down 12% from $1.8 million in the same period of 2021[124]. - General and administrative expenses for the three months ended October 31, 2022, were $1.6 million, a decrease of 14% from $1.8 million in the same period of 2021[119]. - The net loss for the three months ended October 31, 2022, was $3.1 million, a 14% improvement from a net loss of $3.6 million in the same period of 2021[117]. - The company did not generate any revenue during the three months ended October 31, 2022, and does not anticipate generating revenue for the foreseeable future[118]. - Basic and diluted net loss per common share for the three months ended October 31, 2022, was $(0.03), an improvement from $(0.04) in the same period of 2021[117]. - Total operating expenses for the six months ended October 31, 2022, were $6.1 million, an increase of 4% from $5.9 million in the same period of 2021[131]. - The company reported a net loss of $6.2 million for the six months ended October 31, 2022, compared to a net loss of $5.9 million in the same period of 2021[146]. - Cash as of October 31, 2022, was $9.2 million, with an accumulated deficit of $35.3 million[146]. - Net cash used in operating activities was $4.9 million for the six months ended October 31, 2022, compared to $3.3 million in 2021[151]. Expenses and Financing - The company incurred professional fees of $1.5 million for the three months ended October 31, 2022, primarily related to clinical trial monitoring and IND preparation[126]. - The company expects to require additional financing to fund future operations due to various factors including clinical testing progress and regulatory approvals[115]. - Stock-based compensation expense for the six months ended October 31, 2022, was $1.6 million, a decrease of 10% from $1.8 million in the same period of 2021[136]. - Salaries and benefits increased by 29% to $443,000 for the six months ended October 31, 2022, compared to $343,000 in 2021[137]. - Professional fees decreased by 29% to $377,000 for the six months ended October 31, 2022, down from $532,000 in 2021[138]. - Research and development expenses rose by 9% to $2.9 million for the six months ended October 31, 2022, compared to $2.7 million in 2021[140]. - The company expects to continue incurring losses and will need to raise additional capital to fund operations and development activities[149]. Milestones and Payments - The company has successfully completed the pre-IND meeting, IND application filing, and the Phase I clinical trial milestones for AL001 and ALZN002[158]. - The company is required to pay milestone payments totaling $1,000,000 upon the first patient treated in a Phase III clinical trial, which is due 36 months from the completion of the first Phase II clinical trial[161]. - The company has paid initial license fees of $20,000 for two additional royalty-bearing exclusive worldwide licenses for AL001, which includes a 3% royalty on net sales of products developed from the licensed technology[160]. - A milestone payment of $8,000,000 is due for the first commercial sale, which is 8 years from the effective date of the agreement[161]. - The company has a payment structure that includes $500,000 due 24 months from the completion of the first Phase I clinical trial[161]. - The company has a payment of $175,000 due 12 months from the first patient dosed in Phase I[161]. - The company has a payment of $50,000 due upon IND application filing, which has been completed[161]. - The company has a payment of $150,000 due 12 months from IND filing date upon the first dosing of a patient in a clinical trial[161]. - The company has a payment of $400,000 due 12 months from the first patient dosing upon completion of the first clinical trial[161]. Regulatory and Reporting - The company is classified as a smaller reporting company, which impacts the applicability of certain market risk disclosures[164].

Clinical Development and Regulatory Approval - Company is in early clinical-stage development with no near-term revenue and may never achieve profitability [138] - Two product candidates, AL001 and AL002, require extensive clinical evaluation and regulatory approval before generating revenue [139] - Company plans to submit AL001 and AL002 for regulatory approval, which is critical for future revenue generation [153] - The success of product candidates depends on timely completion of clinical trials and regulatory compliance [154] - The regulatory approval process for AL001 and AL002 is uncertain and requires significant resources, with no guarantee of success [167] - Clinical trials for AL001 and AL002 are expected to be expensive and time-consuming, potentially taking several years to complete [176] - The company plans to seek breakthrough therapy designation for both AL001 and AL002, which may provide additional guidance from the FDA [179] - If breakthrough therapy designation is not received, it could increase the FDA's review time and adversely impact the development timeline [178] - Regulatory approvals for AL001 and AL002 may come with conditions that could limit marketing and require costly surveillance [183] - The anticipated development of a Risk Evaluation and Mitigation Strategy (REMS) for AL001 or AL002 could delay the approval process and impact commercialization [193] - Regulatory authorities may impose additional requirements or halt clinical trials due to safety concerns, affecting market acceptance [162] Financial Risks and Profitability - Company has a limited operating history since incorporation in February 2016, making future profitability uncertain [140] - Future financing may not be available on favorable terms, potentially diluting stockholders and imposing financial restrictions [141][142] - AL001 and AL002 may not achieve market acceptance, significantly limiting revenue generation potential [155] - Obtaining reimbursement from third-party payers is essential for commercial viability, and the process is time-consuming and expensive [164] - There is a high rate of failure for drug candidates in clinical trials, which could impair the company's business plan and reputation [173] - The company may face significant setbacks in clinical trials, impacting revenue generation and financing [173] - The company expects to face substantial competition, which may impact pricing and market acceptance of AL001 and AL002 [158] - The company may face substantial costs and management distractions from potential securities class action litigation due to stock price volatility [295] Competition and Market Dynamics - The company faces substantial competition from major pharmaceutical and biotechnology companies, which may have greater resources and expertise in research and development [205] - If competitors develop safer or more effective products, the company's commercial opportunity could be significantly reduced or eliminated [206] Intellectual Property and Legal Risks - The company expects to rely on a combination of patents and trade secret protection to safeguard its intellectual property related to AL001 and AL002 [222] - The strength of the company's patents may be uncertain, and challenges to their validity could threaten the commercialization of its product candidates [224] - The company may face third-party claims alleging patent infringement, which could result in substantial expenses and hinder product development [219] - The company may need to litigate to enforce its intellectual property rights, which could be costly and distract management from core business operations [212] - Obtaining and enforcing patents in the biopharmaceutical industry is costly and uncertain, with recent patent law changes potentially diminishing patent value [228] - The company may encounter significant problems in protecting intellectual property rights in foreign jurisdictions, particularly in developing countries [231] - Filing and defending patents globally is prohibitively expensive, which may allow competitors to use technologies in jurisdictions without patent protection [230] - Noncompliance with patent agency requirements could result in abandonment or lapse of patents, adversely affecting market entry [229] Management and Operational Risks - The company is highly dependent on senior management, particularly key individuals such as the CEO and CFO, and their loss could materially affect the development of product candidates AL001 and AL002 [201] - The company is subject to various claims and legal actions that could harm its business and financial condition [274] - The company anticipates significant additional professional fees and internal costs to build its accounting and financial infrastructure [283] - The company expects to incur increased costs due to compliance with the Sarbanes-Oxley Act and other regulations as a public company [290] - The company has identified material weaknesses in its internal control over financial reporting, which could lead to misstatements in financial reports [263] - The company is implementing measures to improve internal controls, including adding accounting personnel and strengthening supervisory reviews [264] - The company may experience difficulties in hiring qualified personnel due to intense competition in the biopharmaceutical field [272] - The company's information technology systems are vulnerable to disruptions, which could adversely affect business operations [273] Stock and Corporate Governance - The company is currently not in compliance with Nasdaq listing requirements, specifically the minimum bid price requirement, and must regain compliance by December 19, 2022 [247] - Beneficial ownership of the shares by directors and executive officers represents approximately 48.2% of the outstanding shares, allowing them to influence management and corporate transactions [240] - The company operates under the limitations of director liability and indemnification provisions, which may discourage stockholder lawsuits against directors [291] - The company is classified as an "emerging growth company," allowing it to rely on exemptions from certain disclosure requirements [288] - The company is governed by Section 203 of the Delaware General Corporation Law, which may delay or prevent a change in control [280] - The concentration of stock ownership among a few shareholders may limit the influence of other stockholders on corporate matters [257] Compliance and Regulatory Risks - The company must comply with health care "fraud and abuse" laws, which could materially affect its operations if violated [196] - Any adverse medical events related to AL001 or AL002 must be reported to the FDA, and failure to do so could result in sanctions [185] - The company must comply with various anti-corruption laws, including the U.S. Foreign Corrupt Practices Act, which poses compliance risks [276] - The company may face significant penalties if it fails to comply with ongoing FDA and regulatory obligations post-approval [182] - Legislative or regulatory reforms could increase the difficulty and cost of obtaining regulatory clearance for future product candidates [187] - The company is subject to potential penalties if it fails to comply with state fraud and abuse laws, which could adversely affect its financial condition [200]