VivoSim Labs, INC.

Previous wording

We are a pharmaceutical and biotechnology services company that is focused on providing testing of drugs and drug candidates in three-dimensional (“3D”) human tissue models of liver and intestine. We offer partners liver and intestinal toxicology insights using our new approach methodologies ("NAM") models. We anticipate accelerated adoption of human tissue models following the U.S. Food and Drug Administration (“FDA") announcement on April 10, 2025 to refine animal testing requirements in favor of these non-animal NAM methods. We will also offer bespoke services in the areas of investigational toxicology, mechanism of drug action elucidation, and other applications of these complex human tissue models.

Current wording

We are a pharmaceutical and biotechnology services company that is focused on providing testing of drugs and drug candidates in three-dimensional (“3D”) human tissue models of liver and intestine. We offer partners liver and intestinal toxicology insights using our new approach methodologies ("NAM") models. We anticipate accelerated adoption of human tissue models following the U.S. Food and Drug Administration (“FDA") announcement on April 10, 2025 to refine animal testing requirements in favor of these non-animal NAM methods. We also expect to offer bespoke services in the areas of investigational toxicology, mechanism of drug action elucidation, and other applications of these complex human tissue models.

Previous wording

We also advance product candidates to treat inflammatory bowel disease ("IBD") discovered and developed using our complex human tissue intestinal models. Prior to March 2025, we were a clinical stage biotechnology company that was focused on developing FXR314 in IBD, including ulcerative colitis ("UC"), based on demonstration of clinical promise in 3D human tissues as well as strong preclinical data. Our clinical focus was in advancing FXR314 in IBD, including UC and Crohn’s disease ("CD"). We planned to start a Phase 2a clinical trial in UC in the calendar year 2025 and were also exploring the potential for combination therapies using FXR314 and approved mechanisms in preclinical animal studies and our IBD disease models. We have also advanced a second program since 2023, a novel drug that will be a new chemical entity (“NCE”) to an undisclosed target discovered in our intestinal models to have activity for UC and CD. This drug program (the “Preclinical IBD Program”) has now left the in-silico phase in recent quarters, and has moved to medicinal chemistry stage, the real-world synthesis of novel candidate compounds.

Current wording

Prior to March 2025, we were a clinical stage biotechnology company that was focused on developing FXR314 in inflammatory bowel disease ("IBD"), including ulcerative colitis ("UC"), based on demonstration of clinical promise in 3D human tissues as well as strong preclinical data. Our clinical focus was in advancing FXR314 in IBD, including UC and Crohn’s disease ("CD"). We planned to start a Phase 2a clinical trial in UC in the calendar year 2025 and were also exploring the potential for combination therapies using FXR314 and approved mechanisms in preclinical animal studies and our IBD disease models.

Previous wording

In March 2025, we sold our FXR program for $10.0 million, with $9.0 million paid at closing and $1.0 million held in escrow for a period of 15 months, with future milestones of up to $50.0 million in the aggregate to be paid if the lead asset, FXR314, hits key development, regulatory and commercial milestones.

Current wording

In March 2025, we sold our FXR program for $10.0 million, with $9.0 million paid at closing and $1.0 million held in escrow for a period of 15 months, with future milestones of up to $50.0 million in the aggregate to be paid if the lead asset, FXR314, hits key development, regulatory and commercial milestones. In July 2026, we received a milestone payment in the amount of $5.0 million upon the achievement of a certain development milestone related to FXR314. Additionally, in July 2026, the $1.0 million held in escrow was released to us.

Previous wording

We are now offering liver toxicology predictive screening and research services as well as working on predicting and studying the intestinal side effect profiles of drugs that are therapeutic candidates of pharmaceutical and biotech companies at all stages of drug development. We plan to not only market this directly to pharmaceutical and biotech companies, but also partner with specific contract research organizations to complement our offering and to quickly grow our portfolio of clients. Our services offer the potential benefit of reducing the significant risk and cost of bringing therapeutics to market through the regulatory process. It is estimated that less than 10% of drug candidates entering clinical trials are approved, with a portion of the failures due to unexpected liver toxicity or intestinal intolerability. In addition, even approved drugs are occasionally withdrawn after liver toxicity is determined to be caused by the drug in a phenomenon called drug induced liver injury. We presented findings at the May 2025 Digestive Disease Week scientific conference showing that our liver toxicology platform had a best-in-class predictive power. Our liver predictive power was shown to be 87.5% for a set of challenging liver toxicity cases – inclusive of classic cases of “liver tox misses” drugs with unforeseen liver toxicity found in clinical trials or drugs that were withdrawn from the market after liver toxicity issues emerged later. The platform identified correctly that 87.5% of the known liver-toxic drugs could be seen as liver toxic using NAMkind™ liver. This is known as the sensitivity of the platform, which at 87.5% is a world’s best. Importantly, the specificity was 100%, meaning that none of the compounds tested that are not liver toxic were incorrectly identified as having liver toxicity issues by the platform.

Current wording

We are now offering liver toxicology predictive screening and research services as well as working on predicting and studying the intestinal side effect profiles of drugs that are therapeutic candidates of pharmaceutical and biotech companies at all stages of drug development. Our services offer the potential benefit of reducing the significant risk and cost of bringing therapeutics to market through the regulatory process. It is estimated that less than 10% of drug candidates entering clinical trials are approved, with a portion of the failures due to unexpected liver toxicity or intestinal intolerability. In addition, even approved drugs are occasionally withdrawn after liver toxicity is determined to be caused by the drug in a phenomenon called drug induced liver injury. We presented findings at the May 2025 Digestive Disease Week scientific conference showing that our liver toxicology platform had a best-in-class predictive power. Our liver predictive power was shown to be 87.5% for a set of challenging liver toxicity cases – inclusive of classic cases of “liver tox misses” drugs with unforeseen liver toxicity found in clinical trials or drugs that were withdrawn from the market after liver toxicity issues emerged later. The platform identified correctly that 87.5% of the known liver-toxic drugs could be seen as liver toxic using NAMkind™ liver. This is known as the sensitivity of the platform, which at 87.5% is a world’s best. Importantly, the specificity was 100%, meaning that none of the compounds tested that are not liver toxic were incorrectly identified as having liver toxicity issues by the platform.

Previous wording

We have also used these human disease models to identify new molecular targets responsible for driving IBD and to explore the mechanism of action of known drugs including JAK inhibitors and related molecules. A portion of our internal research continues to focus on early stage internal drug discovery programs, validating targets, and testing potentially licensable or transactable external drug compounds to identify drug candidates for partnering and/or internal clinical development. This includes the Preclinical IND Program, which has reached a more mature stage than other efforts in this area.

Current wording

We have also used these human disease models to identify new molecular targets responsible for driving IBD and to explore the mechanism of action of known drugs including JAK inhibitors and related molecules. A portion of our internal research continues to focus on early stage internal drug discovery programs, validating targets, and testing potentially licensable or transactable external drug compounds to identify drug candidates for partnering and/or internal clinical development.

Previous wording

For the three months ended December 31, 2025 and 2024, total revenue was less than $0.1 million. Royalty revenue is related to sales-based royalties from licensing intellectual property. We expect royalty revenue to remain consistent going forward. Product revenue was zero and less than $0.1 million for the three months ended December 31, 2025 and 2024, respectively. Product revenue is related to the Company's former Mosaic division which ended operations during the third quarter of fiscal 2025. Going forward, we expect to generate service revenues related to our service model.

Current wording

For the three months ended June 30, 2026 and 2025, total revenue was less than $0.1 million. Royalty revenue is related to sales-based royalties from licensing intellectual property. We expect royalty revenue to remain consistent with the current quarter going forward.

Previous wording

For the three months ended December 31, 2025, total research and development expenses were $1.1 million, a decrease of approximately $0.6 million, or 36%, from the prior year period. Our average full-time research and development staff decreased from an average of thirteen full-time employees for the three months ended December 31, 2024, to an average of ten full-time employees for the three months ended December 31, 2025. Our operations for the three months ended December 31, 2025 as compared to the three months ended December 31, 2024 resulted in a $0.1 million decrease in personnel related expenses, which included salary and share-based compensation expense, due to the decrease in headcount. There was also a $0.5 million decrease in material related expenses mainly due to the write-down of inventory in the prior fiscal year. Going forward, we expect research and development expenses to increase as we execute our service model.

Current wording

For the three months ended June 30, 2026, total research and development expenses were $1.1 million, an increase of approximately $0.1 million, or 13%, from the prior year period. Our average full-time research and development staff increased from an average of ten full-time employees for the three months ended June 30, 2025, to an average of eleven full-time employees for the three months ended June 30, 2026. Our operations for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 resulted in a $0.1 million increase in personnel related expenses, which includes stock-based compensation, due to the increase in headcount. Going forward, we expect personnel related expenses to increase due to an increase in headcount. We also expect other research and development expenses to remain consistent with the current quarter, followed by a relative shift from research and development expenses to cost of services provided as our service revenue commences in the upcoming quarters.

Previous wording

For the three months ended December 31, 2025, total selling, general and administrative expenses were approximately $1.6 million, a decrease of approximately $0.1 million, or 4%, from the prior year period. Our average full-time selling, general and administrative staff remained at an average of four full-time employees for each of the three months ended December 31, 2025 and 2024. Our operations for the three months ended December 31, 2025 as compared to the three months ended December 31, 2024 resulted in a $0.2 million decrease in corporate related expenses, mostly due to decreases in legal costs and investor relations costs, which was offset by $0.1 increase in consulting expenses.

Current wording

For the three months ended June 30, 2026, total selling, general and administrative expenses were approximately $1.7 million, a decrease of approximately $0.3 million, or 16%, from the prior year period. Our average full-time selling, general and administrative staff increased from an average of three full-time employees for the three months ended June 30, 2025, to an average of four full-time employees for the three months ended June 30, 2026. Our operations for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 resulted in a $0.1 million increase in personnel related expenses, which includes stock-based compensation, due to the increase in headcount. The increase in personnel costs were offset by a $0.4 million decrease in corporate related expenses mostly due to the Company selling its FXR program during the year ended March 31, 2025, which resulted in significant general and IP related costs during the closing of the sale and tech transfer in the three months ended June 30, 2025. Going forward, we expect selling, general and administrative expenses to remain consistent with the current quarter.

Previous wording

Going forward, we intend to offer partners liver and intestinal toxicology insights using NAM models. We plan to work with pharmaceutical and biotech companies at all stages of drug development to reduce the significant risk and cost of bringing therapeutics to market through the regulatory process. We will also offer bespoke services in the areas of investigational toxicology, mechanism of drug action elucidation, and other applications of these complex human tissue models.

Current wording

Going forward, we intend to offer partners liver and intestinal toxicology insights using NAM models. We plan to work with pharmaceutical and biotech companies at all stages of drug development to reduce the significant risk and cost of bringing therapeutics to market through the regulatory process. We also will offer bespoke services in the areas of investigational toxicology, mechanism of drug action elucidation, and other applications of these complex human tissue models.

Previous wording

The accompanying Condensed Consolidated Financial Statements have been prepared on the basis that we are a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of December 31, 2025, we had cash and cash equivalents of approximately $4.3 million, restricted cash of approximately $0.1 million and an accumulated deficit of $350.2 million. The restricted cash was pledged as collateral for a letter of credit that the Company is required to maintain as a security deposit under the terms of the lease agreement for its facilities. We had negative cash flow from operations of approximately $8.6 million during the nine months ended December 31, 2025. At March 31, 2025, we had cash and cash equivalents of approximately $11.3 million, restricted cash of approximately $0.1 million and an accumulated deficit of approximately $342.2 million.

Current wording

The accompanying Condensed Consolidated Financial Statements have been prepared on the basis that we are a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of June 30, 2026, we had cash and cash equivalents of approximately $1.7 million, restricted cash of approximately $0.1 million and an accumulated deficit of $357.3 million. The restricted cash was pledged as collateral for a letter of credit that the Company is required to maintain as a security deposit under the terms of the lease agreement for its facilities. We had negative cash flow from operations of approximately $3.2 million during the three months ended June 30, 2026. At March 31, 2026, we had cash and cash equivalents of approximately $5.0 million, restricted cash of approximately $0.1 million and an accumulated deficit of approximately $356.0 million.

Previous wording

At December 31, 2025, we had total current assets of approximately $6.0 million and current liabilities of approximately $2.5 million, resulting in working capital of $3.5 million. At March 31, 2025, we had total current assets of approximately $12.1 million and current liabilities of approximately $3.7 million, resulting in working capital of $8.4 million.

Current wording

At June 30, 2026, we had total current assets of approximately $3.2 million and current liabilities of approximately $1.9 million, resulting in working capital of $1.3 million. At March 31, 2026, we had total current assets of approximately $6.6 million and current liabilities of approximately $2.8 million, resulting in working capital of $3.8 million.

Previous wording

The following table summarizes the primary sources and uses of cash for the nine months ended December 31, 2025 and 2024 (in thousands):

Current wording

The following table summarizes the primary sources and uses of cash for the three months ended June 30, 2026 and 2025 (in thousands):

Previous wording

Net cash used in operating activities for the nine months ended December 31, 2025, was approximately $8.6 million as compared to $7.4 million used in operating activities for the nine months ended December 31, 2024. This $1.2 million increase in operating cash usage can be attributed primarily to the timing of payables and R&D projects.

Current wording

Net cash used in operating activities for the three months ended June 30, 2026, was approximately $3.2 million as compared to $3.9 million used in operating activities for the three months ended June 30, 2025. This $0.7 million decrease in operating cash usage can be attributed primarily to the timing of payables and accrued expenses.

Previous wording

Net cash provided by financing activities was $1.6 million and $5.7 million for the nine months ended December 31, 2025 and 2024, respectively. Financing activities consisted of the sale of common stock through at-the-market (“ATM”) share offerings for proceeds of approximately $1.8 million as well as the repayment of the insurance premium financing liability of $0.2 million for the nine months ended December 31, 2025. Financing activities consisted of the sale of common stock through at-the-market ("ATM") share offerings and a public offering of common stock and accompanying common warrants and pre-funded warrants for the nine months ended December 31, 2024.

Current wording

Net cash used in financing activities for the three months ended June 30, 2026, was $0.1 million and consisted of the repayment of the insurance premium financing liability. Net cash provided by financing activities was $1.7 million for the three months ended June 30, 2025, and consisted of the sale of common stock through at-the-market (“ATM”) share offerings for proceeds of approximately $1.8 million as well as the repayment of the insurance premium financing liability of $0.1 million.

Previous wording

Through December 31, 2025, we have financed our operations primarily through the sale of common stock through public offerings, including our ATM program, from revenue derived from the licensing of intellectual property, products and research-based services, grants, and collaborative research agreements, the sale of our FXR program, and from the sale of convertible notes.

Current wording

Through June 30, 2026, we have financed our operations primarily through the sale of common stock through public offerings, including our ATM program, from revenue derived from the licensing of intellectual property, products and research-based services, grants, and collaborative research agreements, the sale of our FXR program and related developmental milestone payments, and from the sale of convertible notes.

Previous wording

Our ongoing cash requirements include research and development expenses, compensation for personnel, consulting fees, legal and accounting support, insurance premiums, facilities, maintenance of our intellectual property portfolio, license and collaboration agreements, listing on the Nasdaq Capital Market, and other miscellaneous fees to support our operations. We expect our total operating expense for the fiscal year ending March 31, 2026 to be between $10 million and $12 million. Based on our current operating plan and available cash resources, we will need substantial additional funding to support future operating activities. We have concluded that the prevailing conditions and ongoing liquidity risks faced by us raise substantial doubt about our ability to continue as a going concern for at least one year following the date these financial statements are issued. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

Current wording

Our ongoing cash requirements include research and development expenses, compensation for personnel, consulting fees, legal and accounting support, insurance premiums, facilities, maintenance of our intellectual property portfolio, license and collaboration agreements, listing on the Nasdaq Capital Market, and other miscellaneous fees to support our operations. We expect our total operating expense for the fiscal year ending March 31, 2027 to be $10.7 million. Based on our current operating plan and available cash resources, we will need substantial additional funding to support future operating activities. We have concluded that the prevailing conditions and ongoing liquidity risks faced by us raise substantial doubt about our ability to continue as a going concern for at least one year following the date these financial statements are issued. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

Previous wording

During the nine months ended December 31, 2025, we issued 701,729 shares of common stock for net proceeds of approximately $1.8 million, all of which were sold pursuant to the 2024 Shelf. As of December 31, 2025, we have sold an aggregate of 1,198,134 shares of common stock in ATM offerings under the 2024 ATM Prospectus, with gross proceeds of approximately $6.9 million and net proceeds of approximately $6.7 million. As of December 31, 2025, there was approximately $140.1 million available for future offerings under the 2024 Shelf, and approximately $3.1 million available for future offerings through our ATM program under the 2024 ATM Prospectus, as amended on April 11, 2025.

Current wording

During the three months ended June 30, 2026, we did not issue any shares of common stock pursuant to the 2024 Shelf. As of June 30, 2026, we have sold an aggregate of 1,198,134 shares of common stock in ATM offerings under the 2024 ATM Prospectus, with gross proceeds of approximately $6.9 million and net proceeds of approximately $6.7 million. As of June 30, 2026, there was approximately $140.1 million available for future offerings under the 2024 Shelf, and approximately $3.1 million available for future offerings through our ATM program under the 2024 ATM Prospectus, as amended on April 11, 2025.