Alzamend Neuro Inc

Previous wording

On May 5, 2022, we initiated a multiple-dose, steady-state, double-blind, ascending dose safety, tolerability, pharmacokinetic clinical trial of AL001 in patients with mild to moderate Alzheimer’s and healthy subjects. We completed the Phase IIA clinical trial in March 2023 and announced positive topline data in June 2023.

Current wording

On May 5, 2022, we initiated a multiple-dose, steady-state, double-blind, ascending dose safety, tolerability, pharmacokinetic clinical trial of AL001 in patients with mild to moderate Alzheimer’s and healthy subjects. We completed the Phase IIA clinical trial in March 2023 and announced positive topline data in June 2023, followed by the full data set in October 2024.

Previous wording

Lithium is a commonly prescribed drug for manic episodes in BD type 1 as well as maintenance therapy of BD in patients with a history of manic episodes. Lithium is also prescribed off-label for MDD, BD and treatment of PTSD, among other disorders. Lithium was the first mood stabilizer approved by the U.S. Food and Drug Administration (“FDA”) and is still a first-line treatment option (considered the “gold standard”) but is underutilized perhaps because of the need for TDM. Lithium was the first drug that required TDM by regulatory authorities in product labelling because the effective and safe range of therapeutic drug blood concentrations is narrow and well defined for treatment of BD when using lithium salts. Excursions above this range can be toxic, and below can impair effectiveness.

Current wording

Lithium is a commonly prescribed drug for manic episodes in BD type 1 as well as maintenance therapy of BD in patients with a history of manic episodes. Lithium is also prescribed off-label for MDD, BD and treatment of PTSD, among other disorders. Lithium was the first mood stabilizer approved by the U.S. Food and Drug Administration (“FDA”) and is still a first-line treatment option (considered the “gold standard”) but is underutilized perhaps because of the need for TDM. Lithium was the first drug that required TDM by regulatory authorities in product labelling because the effective and safe range of therapeutic drug blood concentrations is narrow and well defined for treatment of BD when using lithium salts. Excursions above this range can be toxic, and below can impair effectiveness. Existing lithium drugs suffer from chronic toxicity, poor physicochemical properties, and poor brain bioavailability. Alzamend’s novel AL001 formulation, a lithium-salicylate/L-proline engineered ionic cocrystal, is designed to overcome the toxicities associated with conventional lithium salts, promising a next-generation lithium treatment with an enhanced safety profile and advantageous distribution to brain and brain structures.

Previous wording

We intend to initiate clinical trials in 2025 at this MTD to determine relative increased lithium levels in the brain compared to a marketed lithium salt for Alzheimer’s, BD, MDD and PTSD, based on published mouse studies that predict that lithium can be given at lower doses for equivalent therapeutic benefit when treating with AL001. For example, the goal is to replace a 300 mg TID lithium carbonate dose for treatment of BD with a 240 mg TID AL001 lithium equivalent, which represents a daily decrease of 20% of lithium given to a patient. In August 2024, we announced that we had partnered with Massachusetts General Hospital to serve as the CRO for these clinical trials.

Current wording

Based on the results from our Phase IIA MAD study, we plan to initiate five clinical trials to determine relative increased lithium levels in the brain compared to a marketed lithium salt for healthy subject and patients diagnosed with mild to moderate Alzheimer’s, BD, MDD and PTSD, based on published mouse studies that predict that lithium can be given at lower doses for equivalent therapeutic benefit when treating with AL001. For example, the goal is to replace the amount of lithium needed for maintenance treatment of BD with a clinically relevant, lower AL001 lithium carbonate equivalent lithium dose. Such lithium dose mitigation could redefine the landscape of neuropsychiatric, neurodegenerative, and neurological treatment practices. In August 2024, we announced that we had partnered with Massachusetts General Hospital to serve as the CRO for these clinical trials.

Previous wording

Research and development expenses for the three months ended July 31, 2024 and 2023 were $207,000 and $2.4 million, respectively. As reflected in the table below, research and development expenses primarily consisted of professional fees and clinical trial fees:

Current wording

Research and development expenses for the three months ended October 31, 2024 and 2023 were $311,000 and $2.1 million, respectively. As reflected in the table below, research and development expenses primarily consisted of professional fees and clinical trial fees:

Previous wording

During the three months ended July 31, 2024 and 2023, we incurred professional fees of $184,000 and $1.1 million, respectively, which were primarily comprised of professional fees attributed to various types of scientific services, including FDA consulting services. The decrease relates to lower professional fees incurred related to minimal clinical trial activities.

Current wording

During the three months ended October 31, 2024 and 2023, we incurred professional fees of $181,000 and $1.0 million, respectively, which were primarily comprised of professional fees attributed to various types of scientific services, including FDA consulting services. The decrease relates to lower professional fees incurred related to minimal clinical trial activities.

Previous wording

During the three months ended July 31, 2024 and 2023, we incurred clinical trial fees of nil and $1.2 million, respectively. We had no clinical trial activity for the three months ended July 31, 2024. Clinical trial fees for the three months ended July 31, 2023 were for our Phase IIA clinical trial for AL001 and our Phase I/IIA clinical trial for ALZN002.

Current wording

During the three months ended October 31, 2024 and 2023, we incurred clinical trial fees of $124,000 and $795,000, respectively. Clinical trial fees for the three months ended October 31, 2024 were for our initial set-up for our Phase IIA brain imaging study with Massachusetts General. Clinical trial fees for the three months ended October 31, 2023 were for our Phase IIA clinical trial for AL001 and our Phase I/IIA clinical trial for ALZN002.

Previous wording

During the three months ended July 31, 2024 and 2023, we incurred other fees of $22,000 and $51,000, respectively, which were primarily comprised of scientific materials required for our clinical trials.

Current wording

During the three months ended October 31, 2024 and 2023, we incurred other fees of $6,000 and $14,000, respectively, which were primarily comprised of scientific materials required for our clinical trials.

Previous wording

General and administrative expenses for the three months ended July 31, 2024 and 2023 were $756,000 and $1.2 million, respectively. As reflected in the table below, general and administrative expenses primarily consisted of the following expense categories: salaries and benefits; professional fees; insurance; stock-based compensation expense; marketing fees; as well as board of director fees. For the three months ended July 31, 2024 and 2023, the remaining general and administrative expenses of $62,000 and $83,000, respectively, primarily consisted of payments for filing fees, transfer agent fees, travel and entertainment and other office expenses, none of which was significant individually.

Current wording

General and administrative expenses for the three months ended October 31, 2024 and 2023 were $1.0 million and $0.9 million, respectively. As reflected in the table below, general and administrative expenses primarily consisted of the following expense categories: salaries and benefits; professional fees; insurance; stock-based compensation expense; marketing fees; as well as board of director fees. For the three months ended October 31, 2024 and 2023, the remaining general and administrative expenses of $83,000 and $93,000, respectively, primarily consisted of payments for filing fees, transfer agent fees, travel and entertainment and other office expenses, none of which was significant individually.

Previous wording

During the three months ended July 31, 2024 and 2023, we incurred $228,000 and $153,000, respectively, in employee-related expenses. The decrease in salaries and benefits was due to a reversal of bonus accrual. As of July 31, 2024, we had four full-time and three part-time employees.

Current wording

During the three months ended October 31, 2024 and 2023, we incurred $326,000 and $226,000, respectively, in employee-related expenses. The increase in salaries and benefits was due to a bonus paid to our chief executive officer. As of October 31, 2024, we had four full-time and three part-time employees.

Previous wording

During the three months ended July 31, 2024 and 2023, we incurred insurance expense of $78,000 and $118,000, respectively, which was primarily directors’ and officers’ insurance.

Current wording

During the three months ended October 31, 2024 and 2023, we incurred insurance expense of $60,000 and $89,000, respectively, which was primarily directors’ and officers’ insurance.

Previous wording

During the three months ended July 31, 2024 and 2023, we incurred general and administrative stock-based compensation expense of $81,000 and $369,000, respectively, related to stock option grants and restricted stock grants to executives, employees and consultants. The decrease in stock-based compensation expense for the three months ended July 31, 2024 was a result of fewer stock options vesting during the period compared to the prior year period.

Current wording

During the three months ended October 31, 2024 and 2023, we incurred general and administrative stock-based compensation expense of $81,000 and $176,000, respectively, related to stock option grants and restricted stock grants to executives, employees and consultants. The decrease in stock-based compensation expense for the three months ended October 31, 2024, was a result of fewer stock options vesting during the period compared to the prior year period.

Previous wording

During the three months ended July 31, 2024 and 2023, we incurred professional fees of $222,000 and $151,000, respectively. During the three months ended July 31, 2024, we incurred $85,000 in investor relations fees, $74,000 in legal fees, $56,000 in audit fees, and $7,000 in tax preparation fees. During the three months ended July 31, 2023, we incurred $78,000 in audit fees, $29,000 in investor relations fees, $16,000 in tax preparation fees, $13,000 in related party consulting, $6,000 in Sarbanes-Oxley compliance fees and $9,000 in other professional fees. The increase in professional fees was due mainly to investor relations related to our reverse split and legal fees, partially offset by lower related party consulting, audit fees and tax preparation fees.

Current wording

During the six months ended October 31, 2024 and 2023, we incurred professional fees of $371,000 and $435,000, respectively. During the six months ended October 31, 2024, we incurred $151,000 in audit fees, $109,000 in legal fees, $86,000 in investor relations fees, $22,000 in tax preparation fees, and $2,000 in consulting fees. During the six months ended October 31, 2023, we incurred $170,000 in audit fees, $118,000 in investor relations fees, $69,000 in legal fees, $29,000 in tax preparation fees, $24,000 in related party consulting, and $17,000 in Sarbanes-Oxley compliance fees. The decrease in professional fees was due mainly to lower audit, investor relations, related party consulting and Sarbanes-Oxley compliance fees partially offset by higher legal fees.

Previous wording

Our inability to continue as a going concern could have a negative impact on our company, including our ability to obtain needed financing. We intend to finance our future development activities and our working capital needs largely through the sale of equity securities with some additional funding from other sources, including debt financing, until such time as funds provided by operations are sufficient to fund working capital requirements. Our condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should we be unable to continue as a going concern. As of July 31, 2024, we had cash of $1.2 million, a working capital deficiency of $1.5 million, an accumulated deficit of $55.0 million and stockholders’ deficit of $1.2 million. We have incurred recurring losses and reported losses for the three ended July 31, 2024 totaling $974,000. In the past, we have financed our operations principally through sales of equity securities and debt instruments.

Current wording

Our inability to continue as a going concern could have a negative impact on our company, including our ability to obtain needed financing. We intend to finance our future development activities and our working capital needs largely through the sale of equity securities with some additional funding from other sources, including debt financing, until such time as funds provided by operations are sufficient to fund working capital requirements. Our condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should we be unable to continue as a going concern. As of October 31, 2024, we had cash of $4.1 million, working capital of $3.5 million, an accumulated deficit of $56.4 million and stockholders’ equity of $3.8 million. For the three and six months ended October 31, 2024, we had net losses of $1.4 million and $2.4 million, respectively. For the six months ended October 31, 2024, cash used in operating activities was $4.5 million. Historically, we have financed our operations principally through issuances of equity and debt instruments.

Previous wording

On May 10, 2024, we sold 100 shares of Series A Convertible Preferred Stock and warrants to purchase 80,000 shares of common stock with an exercise price of $12.50, for a total purchase price of $1.0 million. The purchase price was paid by the surrender and cancellation of a term note issued by us to Orchid of $311,356, consisting of $310,000 of principal and $1,356 of accrued and unpaid interest, $100,000 discount and net cash of $588,644. On June 25, 2024, we sold 150 shares of Series A Convertible Preferred Stock and warrants to purchase 120,000 shares of common stock with an exercise price of $12.50, for a total purchase price of $1.5 million. The purchase price was paid in cash. On August 19, 2024, we sold 200 shares of Series A Convertible Preferred Stock and warrant to purchase 160,000 shares of common stock with an exercise price of $12.50, for a total purchase price of $2.0 million. The purchase price was paid in cash. On August 21, 2024, we sold 250 shares of Series A Convertible Preferred Stock and warrant to purchase 200,000 shares of common stock with an exercise price of $12.50, for a total purchase price of $2.5 million less $100,000 discount. The purchase price was paid in cash.

Current wording

On May 10, 2024, we sold 100 shares of Series A Convertible Preferred Stock and warrants to purchase 80,000 shares of common stock with an exercise price of $12.50, for a total purchase price of $1.0 million. The purchase price was paid by the surrender and cancellation of a term note issued by us to Orchid of $311,356, consisting of $310,000 of principal and $1,356 of accrued and unpaid interest, $100,000 discount and net cash of $588,644. On June 25, 2024, we sold 150 shares of Series A Convertible Preferred Stock and warrants to purchase 120,000 shares of common stock with an exercise price of $12.50, for a total purchase price of $1.5 million. The purchase price was paid in cash. On August 19, 2024, we sold 200 shares of Series A Convertible Preferred Stock and warrant to purchase 160,000 shares of common stock with an exercise price of $12.50, for a total purchase price of $2.0 million. The purchase price was paid in cash. On August 21, 2024, we sold 250 shares of Series A Convertible Preferred Stock and warrant to purchase 200,000 shares of common stock with an exercise price of $12.50, for a total purchase price of $2.5 million less $100,000 discount. The purchase price was paid in cash. On September 11, 2024, we sold 100 shares of Series A Convertible Preferred Stock and warrant to purchase 80,000 shares of common stock with an exercise price of $12.50, for a total purchase price of $1.0 million. The purchase price was paid in cash.

Previous wording

Pursuant to the Orchid SPA, Orchid has agreed to purchase the remaining 1,800 Preferred Shares based on our achievement of the milestones set forth below (the “Milestones”):

Current wording

Pursuant to the Orchid SPA, Orchid has agreed to purchase the remaining 1,700 Preferred Shares based on our achievement of the milestones set forth below (the “Milestones”):

Previous wording

Notwithstanding the foregoing Milestones, Orchid has the ability to invest any amount in its sole discretion in advance of the dates that the foregoing Milestones shall have been met. In the event that the average closing price of the common stock during the three trading days preceding the date of a tranche closing shall not be equal to or greater than $2.50 a share (the “Floor Price”), then the applicable closing shall be delayed until such time as the price meets the required threshold. We agreed to pay Ault Lending an origination fee of five percent (5%) of the total gross proceeds we receive from Orchid upon each purchase of Series A Convertible Preferred Stock. We also agreed to pay Orchid a fee of $100,000 upon the first closing, which occurred on May 10, 2024, the Fourth Tranche and the third, eighth and thirteenth closings constituting parts of the Final Tranche.

Current wording

Notwithstanding the foregoing Milestones, Orchid has the ability to invest any amount in its sole discretion in advance of the dates that the foregoing Milestones shall have been met. In the event that the average closing price of the common stock during the three trading days preceding the date of a tranche closing shall not be equal to or greater than $2.50 a share (the “Floor Price”), then the applicable closing shall be delayed until such time as the price meets the required threshold. We agreed to pay Ault Lending an origination fee of five percent (5%) of the total gross proceeds we receive from Orchid upon each purchase of Series A Convertible Preferred Stock. We also agreed to pay Orchid a fee of $100,000 upon the first closing, which occurred on May 10, 2024, $100,000 upon the third closing, which occurred on August 21, 2024, and the fourth, eighth and thirteenth closings constituting parts of the Final Tranche.

Previous wording

The following table summarizes our cash flows for the three months ended July 31, 2024 and 2023:

Current wording

The following table summarizes our cash flows for the six months ended October 31, 2024 and 2023:

Previous wording

During the three months ended July 31, 2024, net cash used in operating activities was $1.1 million. This consisted primarily of a net loss of $974,000 and a decrease in our net operating assets and liabilities of $185,000, partially offset by non-cash charges of $103,000. The non-cash charges primarily consisted of stock-based compensation expense. The decrease in our net operating assets and liabilities was due to a decrease in accounts payable and accrued liabilities and an increase in prepaid expenses and other current assets.

Current wording

During the six months ended October 31, 2024, net cash used in operating activities was $4.5 million. This consisted primarily of a net loss of $2.4 million and a decrease in our net operating assets and liabilities of $2.3 million, partially offset by non-cash charges of $197,000. The non-cash charges primarily consisted of stock-based compensation expense. The decrease in our net operating assets and liabilities was due to a decrease in accounts payable and accrued liabilities and an increase in prepaid expenses and other current assets.

Previous wording

During the three months ended July 31, 2024, net cash used in investing activities was $90,000 from the purchase of equipment. We purchased equipment, which measures lithium levels in the brain, to be used in the AL001 clinical trial.

Current wording

During the six months ended October 31, 2024, net cash used in investing activities was $90,000 from the purchase of equipment. We purchased equipment, which measures lithium levels in the brain, to be used in the AL001 clinical trial.

Previous wording

During the three months ended July 31, 2024, net cash provided by financing activities was $2.0 million from the sale of Series A Convertible Preferred Stock.

Current wording

During the six months ended October 31, 2024, net cash provided by financing activities was $8.3 million. This consisted of $7.1 million from the sale of Series A Convertible Preferred Stock and $1.2 million from the sale of common stock from our ATM Offering.