Alzamend Neuro(ALZN) - 2024 Q1 - Quarterly Report

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$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$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$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$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].