Alzamend Neuro(ALZN) - 2022 Q3 - Quarterly Report

Clinical Development - Alzamend Neuro 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[115]. - The Phase I clinical trial for AL001 demonstrated positive topline data, with participants receiving a single dose equivalent to 150mg lithium carbonate, potentially allowing for treatment of over 40 million Americans suffering from Alzheimer's[121][122]. - Alzamend Neuro's preclinical candidate AL002 has transitioned to an extensive program of preclinical study, with positive toxicology results and a proposed combined Phase 1/2 study agreed upon by the FDA[119][120]. - The company plans to initiate the clinical trial of AL002 as soon as possible after IND approval, now expected in the second quarter of 2022[120]. - The company aims to pursue investigational new drug applications for bipolar disorder, depression, and post-traumatic stress disorder indications[124]. - Alzamend Neuro's novel approach to combat Alzheimer's involves immunotherapy, aiming to prevent, treat, and potentially cure the disease[106]. Financial Performance - Research and development expenses for the three months ended January 31, 2022, were $873,653, a 273$234,262 in the same period of 2021[137]. - General and administrative expenses for the three months ended January 31, 2022, totaled $1,682,913, reflecting a 91$881,397 in the prior year[129]. - The net loss for the three months ended January 31, 2022, was $2,572,865, representing a 130$1,118,884 for the same period in 2021[128]. - The company did not generate any revenue during the three months ended January 31, 2022, and does not anticipate generating revenue in the foreseeable future[128]. - Stock compensation expense for the three months ended January 31, 2022, was $1,024,693, an 85$553,314 in the same period of 2021[130]. - Professional fees for the three months ended January 31, 2022, amounted to $145,780, a 28$202,970 in the prior year[130]. - Total operating expenses for the nine months ended January 31, 2022, were $8,446,739, a significant increase from$3,731,912 in the same period of 2021[144]. - The company reported a net loss of $8.5 million for the nine months ended January 31, 2022, compared to a net loss of$3.8 million for the same period in 2021[159]. - Cash and cash equivalents as of January 31, 2022, were $11.8 million, with an accumulated deficit of$25.3 million[159]. - Net cash used in operating activities was $5.1 million for the nine months ended January 31, 2022, compared to$1.5 million in the same period of 2021[165]. Capital and Funding - The company raised $12.9 million from its IPO, which closed on June 17, 2021[161]. - The company expects to continue incurring losses and will need to raise additional capital until it can generate sufficient revenues[161]. - Alzamend Neuro's current operations require additional capital to fund ongoing preclinical and clinical testing, regulatory approvals, and development of manufacturing capabilities[125]. Licensing and Milestones - The company has entered into a Standard Exclusive License Agreement for AL002, which includes a 4$10 million due upon FDA approval, with various other payments totaling $1.25 million and$500,000 at different stages of clinical trials[174]. - For the AL002 License, milestone payments include $1 million due upon the first patient treated in a Phase III clinical trial and$10 million upon FDA BLA approval[175]. - Additional AL001 Licenses require milestone payments totaling $8 million due upon the first commercial sale, with other payments at various clinical trial stages[178]. Operational Considerations - The company is currently maintaining pre-COVID-19 operational levels despite potential adverse impacts from recent events like the Omicron variant[172]. - The company is closely monitoring the impact of government responses to COVID-19 on its operations[172]. - The company has no off-balance sheet arrangements that materially affect its financial condition or operations[179]. - Recent accounting standards may impact the company's financial statements, as detailed in Note 3 of the Notes to Unaudited Condensed Financial Statements[180]. - The company has not identified any market risks that are applicable due to its status as a smaller reporting company[181]. Stock and Compensation - Stock-based compensation is recognized on a straight-line basis over the requisite service period, with costs based on the grant date fair value estimated using the Black-Scholes model[108]. - The fair market value of Alzamend Neuro's common stock is determined based on the closing price on the date of grant following the IPO in June 2021[114]. - Stock compensation expense for general and administrative purposes was$2.8 million for the nine months ended January 31, 2022, up 67% from $1.7 million in 2021[148]. - Professional fees increased to$678,000 for the nine months ended January 31, 2022, a 24% rise from $547,000 in the same period of 2021[149].