Pasithea Therapeutics Corp 10-Q for FY2024 Q2
Pasithea Therapeutics Corp. (KTTA)
About this 10-Q
Pasithea Therapeutics Corp filed this 10-Q on August 13, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).
Headline figures
Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $3.87M
- compared with a net loss of $3.76M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM
For
the Quarterly Period Ended
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For the transition period from _______to ________.
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by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.
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| ☒ | Smaller Reporting Company | ||
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As of August
13, 2024, there were
PASITHEA THERAPEUTICS CORP.
FORM 10-Q
For the Quarter ended June 30, 2024
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PASITHEA THERAPEUTICS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Amount due from sale of assets | ||||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Right of use asset- operating lease | ||||||||
| Intangibles, net | ||||||||
| Goodwill | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Lease liability- short term portion | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Warrant liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, par value $ | ||||||||
| Common stock, par value $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
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PASITHEA THERAPEUTICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | $ | $ | $ | $ | ||||||||||||
| Research and development | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Change in fair value of warrant liabilities | ( | ) | ( | ) | ||||||||||||
| Interest and dividends, net | ||||||||||||||||
| Other income (expense), net | ||||||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss from discontinued operations, net of tax | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| $ | $ | ( | ) | $ | $ | ( | ) | |||||||||
| Comprehensive loss: | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Foreign currency translation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
See accompanying notes to the unaudited condensed consolidated financial statements.
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PASITHEA THERAPEUTICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Loss | Deficit | Equity | |||||||||||||||||||
| Balance at January 1, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Stock-based compensation: | ||||||||||||||||||||||||
| -restricted stock units | ||||||||||||||||||||||||
| -stock options | - | |||||||||||||||||||||||
| -warrants | - | |||||||||||||||||||||||
| Foreign currency translation | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Stock-based compensation: | ||||||||||||||||||||||||
| -restricted stock units | ||||||||||||||||||||||||
| -stock options | - | |||||||||||||||||||||||
| -warrants | - | |||||||||||||||||||||||
| Foreign currency translation | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Balance at January 1, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Stock-based compensation: | ||||||||||||||||||||||||
| -restricted stock units | ||||||||||||||||||||||||
| -stock options | - | |||||||||||||||||||||||
| Foreign currency translation | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Stock-based compensation: | ||||||||||||||||||||||||
| -restricted stock units | ||||||||||||||||||||||||
| -stock options | - | |||||||||||||||||||||||
| Foreign currency translation | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
3
PASITHEA THERAPEUTICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss from continuing operations | $( | ) | $( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization expense | ||||||||
| Stock-based compensation | ||||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Non-cash lease expense | ||||||||
| Gain on sale of assets | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Other assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Lease liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Net cash proceeds from sale of assets | ||||||||
| Net cash used in investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Note payable proceeds | ||||||||
| Principal payments on note payable | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect of foreign currency translation on cash | ( | ) | ( | ) | ||||
| Net cash used in operating activities of discontinued operations | ( | ) | ||||||
| Net cash provided by investing activities of discontinued operations | ||||||||
| NET CHANGE IN CASH | $ | ( | ) | $ | ( | ) | ||
| Cash - Beginning of period | ||||||||
| Cash - End of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Amount due from sale of assets | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
4
PASITHEA THERAPEUTICS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023
NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS
Pasithea Therapeutics Corp. (“Pasithea” or the “Company”) was incorporated in the State of Delaware on May 12, 2020 and completed an Initial Public Offering (the “Initial Public Offering”) on September 17, 2021. The Company is a biotechnology company focused on the discovery, research and development of innovative treatments for central nervous system (CNS) disorders and other diseases, including RASopathies. The Company is leveraging its expertise in the fields of neuroscience, translational medicine, and drug development to bring life-changing therapies to patients.
The Company’s primary operations (the “Therapeutics” segment) are focused on developing the Company’s lead product candidate, PAS-004, a next-generation macrocyclic mitogen-activated protein kinase, or MEK inhibitor that the Company believes may address the limitations and liabilities associated with existing drugs targeting a similar mechanism of action. In December 2023, the U.S. Food and Drug Administration (the “FDA”) cleared our Investigational New Drug application (the “IND”) for PAS-004 and the Company received a study may proceed letter from the FDA for the Company’s Phase 1 multicenter, open-label, dose escalation trial of PAS-004 in patients with MAPK pathway-driven advanced tumors with a documented RAS, NF1 or RAF mutation or patients who have failed BRAF/MEK inhibition. The Company is currently conducting the Phase 1 clinical trial at clinical sites in the United States and plans to open additional sites in Eastern Europe in the third quarter of 2024. The Company’s clinical development plan for PAS-004 is to begin a Phase 1 clinical trial in adult and pediatric neurofibromatosis type 1 (NF1)-associated plexiform and/or cutaneous neurofibroma and ultimately seek FDA marketing approval in these patient populations.
Additionally, the Company has two programs that are in the discovery stage, which the Company believes address limitations in the treatment paradigm of the indications the Company plans to address with these programs, which are currently amyotrophic lateral sclerosis (“ALS”) for PAS-003 and schizophrenia for PAS-001.
During the year ended December 31, 2023, the Company discontinued providing business support services to anti-depression clinics (the “Clinics” segment) in the U.K. and in the United States, previously conducted through partnerships with healthcare providers. During the year ended December 31, 2023, the at home services in New York, NY as well as in the U.K were discontinued and the Company sold and disposed of the assets associated with the Clinics operations in Los Angeles, CA. The lease associated with the related property in Los Angeles was assumed by the buyer in the transaction.
Throughout this report, the terms “our,” “we,” “us,” and the “Company” refer to Pasithea Therapeutics Corp. and its subsidiaries, Pasithea Therapeutics Limited (U.K.), Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, Pasithea Clinics Inc., Alpha-5 Integrin, LLC (“Alpha-5”), and AlloMek Therapeutics, LLC (“AlloMek”). Pasithea Therapeutics Limited (U.K.), legally dissolved as of January 2, 2024 was a private limited Company, registered in the United Kingdom (U.K.). Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda is a private limited Company registered in Portugal. Pasithea Clinics Inc. is incorporated in Delaware. Alpha-5 and AlloMek are both Delaware limited liability companies. The operations of Pasithea Therapeutics Limited (U.K.), Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, and Pasithea Clinics Inc. have been discontinued.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
5
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period.
Liquidity and Capital Resources
As of June 30, 2024, the Company had approximately
$
Going Concern Uncertainty
The accompanying unaudited condensed consolidated
financial statements have been prepared as if the Company will continue as a going concern. The Company has incurred significant operating
losses and negative cash flows from operations since inception. On June 30, 2024, the Company had cash and cash equivalents of approximately
$8.0 million and an accumulated deficit of approximately $
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The Company evaluates the need to consolidate affiliates based on standards set forth in Accounting Standards Codification (“ASC”) 810, “Consolidation,” (“ASC 810”). The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Alpha-5, AlloMek, Pasithea Therapeutics Limited (U.K.) (was legally dissolved as of January 2, 2024) and Pasithea Clinics Inc. All significant intercompany transactions and balances have been eliminated in consolidation.
These condensed consolidated financial statements are presented in U.S. Dollars.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Management regularly makes estimates related to the fair value of warrant liabilities; the recoverability of long-lived assets; the fair values and useful lives of intangible assets acquired in business combinations; the potential impairment of goodwill; and income taxes. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable, the results of which form the basis for the amounts recorded in the consolidated financial statements. As appropriate, the Company obtains reports from third-party valuation experts to inform and support estimates related to fair value measurements.
6
Research and Development
Research and development costs are charged to operations when incurred and are included in operating expense, except for goodwill related to intellectual property and patents. Our research and development costs consist principally of compensation of employees and consultants that perform the Company’s research and development activities, payments to third parties for preclinical, clinical and regulatory activities, costs to acquire drug supply and drug product from contract development and manufacturing organizations and third-party contractors relating to chemistry, manufacturing and controls (“CMC”) efforts, , and research and development costs related to our discovery programs. Depending upon the timing of payments to the service providers, the Company recognizes prepaid expenses or accrued expenses related to these costs. These accrued or prepaid expenses are based on management’s estimates of the work performed under service agreements, milestones achieved and experience with similar contracts. The Company monitors each of these factors and adjusts estimates accordingly.
General and Administrative
Our general and administrative expenses primarily consist of personnel and related costs, including stock-based compensation, legal fees relating to both intellectual property and corporate matters, accounting and audit related costs, insurance, corporate communications and public company expenses, information technology, office and facility rents and related expenses, including depreciation, amortization and maintenance, and fees for consulting, business development and other professional services.
Grants
In connection with the acquisition of Alpha-5, the Company legally assumed rights under a grant agreement with FightMND, which was entered into by Alpha-5 on September 23, 2021. FightMND supports pre-clinical research, development and assessment of therapeutics for motor neuron disease, including ALS. Under the grant agreement, the Company is entitled to reimbursements for costs incurred for research related to its monoclonal antibody targeting a5b1 integrin as a potential treatment for ALS. There was no grant income recognized for the six months ended June 30, 2024 and 2023.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity
of three months or less when purchased to be cash equivalents, classified as trading securities. The Company had cash equivalents of $
Property and Equipment and Depreciation
Property and equipment is recorded at cost, net of depreciation. Depreciation is computed using straight-line and accelerated methods over the estimated useful lives of the related assets which range from three to ten years. Expenditures that enhance the useful lives of the assets are capitalized and depreciated. Maintenance and repairs are expensed as incurred. When properties are retired or otherwise disposed of, related costs and related accumulated depreciation are removed from the accounts. Leasehold improvements are amortized over the shorter of the estimated useful life of those leasehold improvements and the remaining lease term.
Warrant Liability
The Company accounts for the publicly traded warrants issued in its Initial Public Offering (the “Public Warrants”) and the warrants issued as compensation to the underwriters in its Initial Public Offering (the “Representative Warrants” and together with the Public Warrants, the “IPO Warrants”) in accordance with the guidance contained in ASC 815, “Derivatives and Hedging,” under which the IPO Warrants do not meet the criteria for equity treatment and must be recorded as derivative liabilities. Accordingly, the Company classifies the IPO Warrants as liabilities at their fair value and adjusts the IPO Warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until the IPO Warrants are exercised or expire, and any change in fair value is recognized in the Company’s condensed consolidated statement of operations and comprehensive loss. The fair value of the IPO Warrants was initially measured using a Black Scholes pricing model. Currently, the fair value of the Public Warrants is measured using quoted market prices, and the fair value of the Representative Warrants is based on an estimate of the relative fair value to the Public Warrants, accounting for a small difference in the exercise price.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $
Fair Value of Financial Instruments
With the exception of liabilities related to the IPO Warrants, described in the table below, the fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
7
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
| Fair value measurements at reporting date using: | ||||||||||||||||
| Fair value | Quoted prices in active markets for identical liabilities (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||
| Assets: | ||||||||||||||||
| Cash equivalents, June 30, 2024 | $ | $ | $ | $ | ||||||||||||
| Assets: | ||||||||||||||||
| Cash equivalents, December 31, 2023 | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Public warrant liabilities, June 30, 2024 | $ | $ | $ | $ | ||||||||||||
| Representative warrant liabilities, June 30, 2024 | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Public warrant liabilities, December 31, 2023 | $ | $ | $ | $ | ||||||||||||
| Representative warrant liabilities, December 31, 2023 | $ | $ | $ | $ | ||||||||||||
| Three months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Representative warrant liabilities, April 1 | $ | $ | ||||||
| Issuances | ||||||||
| Exercises | ||||||||
| Change in fair value | ( | ) | ||||||
| Representative warrant liabilities, June 30 | $ | $ | ||||||
| Six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Representative warrant liabilities, January 1 | $ | $ | ||||||
| Issuances | ||||||||
| Exercises | ||||||||
| Change in fair value | ( | ) | ||||||
| Representative warrant liabilities, June 30 | $ | $ | ||||||
8
The change in fair value of the Representative Warrants liabilities is recorded in change in fair value of warrant liabilities on the condensed consolidated statement of operations and comprehensive loss.
The fair value of the cash equivalents is based on the fair value of marketable securities invested in U.S. government money market funds.
The fair value of the liability associated with the Public Warrants as of June 30, 2024 was based on the quoted closing price on The Nasdaq Capital Market and is classified as Level 1. The fair value of the liability associated with the Representative Warrants as of June 30, 2024 was based on an estimate of the relative fair value to the Public Warrants, accounting for a small difference in the exercise price, and is classified as Level 3.
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Net Loss Per Share
Net loss per share is computed by dividing net
loss by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share is computed similarly
to the basic earnings per share, except the weighted average number of common shares outstanding are increased to include additional shares
from the assumed exercise of share options, if dilutive.
| Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Stock options | ||||||||
| Warrants | ||||||||
| Restricted stock units | ||||||||
Foreign Currency Translations
The Company’s functional and reporting currency is the U.S. dollar. All transactions initiated in other currencies are translated into U.S. dollars using the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the U.S. dollar at the rate of exchange in effect at the balance sheet date. Unrealized exchange gains and losses arising from such transactions are deferred until realization and are included as a separate component of stockholders’ equity (deficit) as a component of comprehensive income or loss. Upon realization, the amount deferred is recognized in income in the period when it is realized.
Translation of Foreign Operations
The financial results and position of foreign operations whose functional currency is different from the Company’s presentation currency are translated as follows:
| ● | assets and liabilities are translated at period-end exchange rates prevailing at that reporting date; |
| ● | equity is translated at historical exchange rates; and |
| ● | income and expenses are translated at average exchange rates for the period. |
Exchange differences arising from translation of foreign operations are transferred directly to the Company’s accumulated other comprehensive loss in the condensed consolidated financial statements. Transaction gains and losses arising from exchange rate fluctuation on transactions denominated in a currency other than the functional currency are included in the condensed consolidated statements of operations and comprehensive loss.
9
| As of June 30, 2024 | As of December 31, 2023 | |||||||
| Closing rate, British Pound (GBP) to $USD at period end | ||||||||
| Average rate, GBP to $USD for the period ended | ||||||||
| Closing rate, Euro (EUR) to $USD at period end | ||||||||
| Average rate, EUR to $USD for the period ended | ||||||||
Comprehensive Income (Loss)
ASC 220, “Comprehensive Income,” establishes standards for reporting and display of comprehensive income (loss) and its components in a full set of general-purpose financial statements. As of June 30, 2024 and December 31, 2023, the Company had no material items of other comprehensive income (loss) except for the foreign currency translation adjustment.
Impairment of Long-Lived Assets and Goodwill
Long-lived and amortizable intangible assets are assessed annually for impairment or sooner should impairment indicators exist. Significant events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. Such circumstances may include a significant decrease in the market price of an asset, a significant adverse change in the manner in which the asset is being used or in its physical condition or a history of operating or cash flow losses associated with the use of an asset. An impairment loss is recognized when the carrying amount of an asset exceeds the anticipated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss is the excess of the asset’s carrying value over its fair value. There were no charges related to impairments of long-lived assets for all periods presented.
Goodwill is assessed for impairment annually during the fourth quarter, or more frequently if impairment indicators exist. Impairment exists when the carrying amount of goodwill exceeds its implied fair value. The Company may elect to assess goodwill for impairment using a qualitative or a quantitative approach, to determine whether it is more likely than not that the fair value of goodwill is greater than its carrying value. There were no charges related to goodwill impairment for all periods presented.
Leases
The Company’s has leases related to office space. The Company determines whether a contract is or contains a lease at the time of the contract’s inception based on the presence of identified assets and the Company’s right to obtain substantially all the economic benefit from or to direct the use of such assets. When the Company determines a lease exists, it records a right-of-use (“ROU”) asset and corresponding lease liability on its balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term. Lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are recognized at the lease commencement date at the present value of the remaining future lease payments the Company is obligated for under the terms of the lease. Lease liabilities are recognized concurrent with the recognition of the ROU asset and represent the present value of lease payments to be made under the lease. These ROU assets and liabilities are adjusted for any prepayments, lease incentives received, and initial direct costs incurred. As the discount rate implicit in the lease is not readily determinable in most of the Company’s leases, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. If the Company’s lease terms include an option to extend the lease for a set period, the Company evaluates the renewal option and should it be reasonably certain that the Company will exercise that option, adjusts the ROU asset and liability accordingly.
10
Stock-Based Compensation
The Company accounts for its stock-based compensation awards to employees and members of its Board of Directors (the “Board”) in accordance with ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments to employees and Board members, including grants of employee stock options, to be recognized in the statements of operations by measuring the fair value of the award on the date of grant and recognizing this fair value as stock-based compensation using a straight-line method over the requisite service period, generally the vesting period.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.
NOTE 3 – PROPERTY AND EQUIPMENT, NET
| As of June 30, 2024 | As of December 31, 2023 | |||||||
| Leasehold improvements | $ | $ | ||||||
| Laboratory equipment | ||||||||
| Office equipment | ||||||||
| Property and equipment, gross | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
NOTE 4 – LEASES
Laboratory Lease – South San Francisco, California
In August 2022, the Company, as a lessee, entered
into an amended sublease agreement to sublease laboratory and office space in South San Francisco, California. The lease commenced on
August 15, 2022. The term of this sublease is for a period of thirty-nine and one-fourth (
This lease was accounted for as an operating lease
under ASC 842, Leases, which resulted in the recognition of a right of use asset (“ROU asset”) and liability of approximately
$
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| As of June 30, 2024 | As of December 31, 2023 | |||||||
| Non-current leases - right of use assets | $ | $ | ||||||
| Current liabilities - operating lease liabilities | $ | $ | ||||||
| Non-current liabilities - operating lease liabilities | $ | $ | ||||||
| Operating lease expense | $ | $ | ||||||
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | $ | ||||||
NOTE 5 – INTANGIBLE ASSETS
| June 30, 2024 | December 31, 2023 | |||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||||||||
| In-process research and development | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Patents and intellectual property | ( | ) | ( | ) | ||||||||||||||||||||
| Intangible assets, net | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
| 2024 (remaining) | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Remaining future amortization expense | $ |
There were no changes to goodwill for the six months ended June 30, 2024.
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NOTE 6 – STOCKHOLDERS’ EQUITY
The
Company is authorized to issue an aggregate of
Common Stock
The Company had
Each
holder of Common Stock is entitled to
In addition, the holders of our Common Stock will be entitled to receive ratably such dividends, if any, as may be declared by the Board out of legally available funds; however, the current policy of our Board is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of our Common Stock will be entitled to share ratably in all assets that are legally available for distribution.
Holders of our Common Stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to the Common Stock. The rights, preferences and privileges of the holders of Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future.
Effective
January 2, 2024, the Company amended its Second Amended and Restated Certificate of Incorporation to effect a one-for-twenty (
2023 Stock Incentive Plan
The
Board and stockholders have adopted and approved the Company’s 2023 Stock Incentive Plan (the “2023 Plan”) which took
effect on December 19, 2023. The 2023 Plan allows for the issuance of securities, including stock options, restricted stock, and restricted
stock units (“RSUs”) to employees, Board members and consultants. The initial number of shares of Common Stock available
for issuance under the 2023 Plan was
On
January 1, 2024, the number of shares of Common Stock available for issuance under the 2023 Plan automatically increased by
Common Stock Issuances for the Three and Six Months Ended June 30, 2024
During the three and six months ended June 30, 2024, the Company issued
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As
of June 30, 2024, the remaining unamortized RSU stock-based compensation expense was approximately $
Common Stock Issuances for the Three and Six Months Ended June 30, 2023
During the three and six months ended June 30, 2023, the Company issued
As
of June 30, 2023, remaining unamortized RSU stock-based compensation expense was approximately $
The Company did not grant any RSUs or restricted stock during the three and six months ended June 30, 2023.
NOTE 7 – STOCK OPTIONS
Stock Options Issued, Vested and Cancelled
During the three months ended June
30, 2024, the Company did not issue any stock options. During the three months ended June 30, 2024, stock options to purchase an
aggregate of
During
the six months ended June 30, 2024, the Company issued stock options under the 2023 Plan to employees, to purchase an aggregate of
During
the six months ended June 30, 2024, stock options to purchase an aggregate of
Stock-Based Compensation
For
the three months ended June 30, 2024 and 2023, total stock-based compensation expense related to the Company’s stock options was
approximately $
For
the six months ended June 30, 2024 and 2023, total stock-based compensation expense related to the Company’s stock options was
approximately $
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| Number of Options | Weighted average exercise price per share | Weighted average remaining contractual term (years) | Aggregate intrinsic value (in thousands) | |||||||||||||
| Outstanding, January 1, 2024 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Expired/Cancelled | ( | ) | ||||||||||||||
| Exercised | ||||||||||||||||
| Outstanding, June 30, 2024 | $ | |||||||||||||||
| Exercisable, June 30, 2024 | $ | $ | ||||||||||||||
As
of June 30, 2024, the remaining unamortized stock-based compensation expense related to
the stock options was approximately $
NOTE 8 – WARRANTS
As
of June 30, 2024, the fair value of the Public Warrants was approximately $
| Exercise Price | Number of Warrants | Weighted-average remaining contractual term (years) | Weighted-average exercise price | |||||||||||
| $ | 8.13 | |||||||||||||
| $ | 37.60 | |||||||||||||
| $ | 70.00 | |||||||||||||
| $ | 120.00 | |||||||||||||
| $ | 125.00 | |||||||||||||
| $ | ||||||||||||||
During the three months ended June 30, 2024, the Company did not issue any warrants.
During the six months ended June 30, 2024, the Company issued warrants
to purchase an aggregate of
For the three months ended June
30, 2024 and 2023, total stock-based compensation expense related to the Company’s warrants was approximately $
For the six months ended June
30, 2024 and 2023, total stock-based compensation expense related to the Company’s warrants was approximately $
No warrants were expired/cancelled or exercised during the six months ended June 30, 2024.
15
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Legal and Regulatory Environment
The healthcare industry is subject to numerous laws and regulations of federal, state and local governments. These laws and regulations include, but are not limited to, matters such as licensure, accreditation, government healthcare program participation requirement, reimbursement for patient services and Medicare and Medicaid fraud and abuse. Government activity has increased with respect to investigations and allegations concerning possible violations of fraud and abuse statutes and regulations by healthcare providers.
Violations of these laws and regulations could result in expulsion from government healthcare programs, together with the imposition of significant fines and penalties, as well as significant repayments for patient services previously billed. Management believes that the Company is in compliance with fraud and abuse regulations, as well as other applicable government laws and regulations. While no material regulatory inquiries have been made, compliance with such laws and regulations can be subject to future government review and interpretation, as well as regulatory actions unknown or unasserted at this time.
NOTE 10 – DISCONTINUED OPERATIONS
During the year ended December 31, 2023, the Company sold and disposed of our assets associated with the Clinics operations in Los Angeles, CA and disposed of our services in the U.K. The lease associated with the related property in Los Angeles was assumed by the buyer in the transaction.
As
of June 30, 2024 and December 31, 2023, the carrying amounts of the classes of assets and liabilities related to the discontinued operations
of the Clinics operations were $
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of services | ||||||||||||||||
| Gross margin | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Loss from discontinued operations | ( | ) | ( | ) | ||||||||||||
| Gain on sale of assets | ||||||||||||||||
| Loss from discontinued operations, before income tax | ( | ) | ( | ) | ||||||||||||
| Income tax expense | ||||||||||||||||
| Net loss from discontinued operations, net of tax | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| $ | $ | ( | ) | $ | $ | ( | ) | |||||||||
In accordance with U.S. GAAP, only expenses specifically identifiable and related to a business to be disposed may be allocated to discontinued operations. As such, the general and administrative expenses recorded in discontinued operations include corporate costs incurred directly in support of the Clinics business.
16
NOTE 11 – RELATED PARTY TRANSACTIONS
PsychoGenics, Inc.
In April 2023 we entered into a contract with PsychoGenics, Inc.
(“PsychoGenics”) for the conduct of one of our preclinical studies. PsychoGenics is a contract manufacturing organization
with extensive preclinical experience in CNS and orphan disorders. Pursuant to the contract, we made aggregate payments to PsychoGenics
totalling approximately $
Dr. Emer
Leahy, a member of our Board, is the current Chief Executive Officer and a less than
Consulting Agreement With Prof. Lawrence Steinman
The
Steinman Consulting Agreement memorializes the compensation arrangements pursuant to which Prof. Steinman has been compensated for his
services to our Company, as previously disclosed in our public filings. Pursuant to the Steinman Consulting Agreement, Prof. Steinman
provides a variety of consulting and advisory services relating principally to the clinical and commercial development of our product
candidates, including our research and development strategy through all phases of discovery and preclinical development, identifying
potential partners for our pre-clinical assets, and business development efforts related to our pre-clinical assets, among other things.
Pursuant to the Steinman Consulting Agreement, Prof. Steinman receives $
NOTE 12 – SUBSEQUENT EVENTS
The Company has evaluated events and transactions subsequent to June 30, 2024 through the date these condensed consolidated financial statements were included on Form 10-Q and filed with the SEC. There are no subsequent events identified that would require disclosure.
17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of financial condition and operating results together with our financial statements and the related notes and other financial information included elsewhere in this quarterly report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed on March 29, 2024. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth in the section of this report captioned “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q as well as the risk factors set forth in the section titled “Risk Factors” included in our Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements. For convenience of presentation some of the numbers have been rounded in the text below.
Throughout this report, the terms “our,” “we,” “us,” and the “Company” refer to Pasithea Therapeutics Corp. and its subsidiaries, Pasithea Therapeutics Limited (U.K.), Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, Pasithea Clinics Inc., Alpha-5 Integrin, LLC (“Alpha-5”), and AlloMek Therapeutics, LLC (“AlloMek”). Pasithea Therapeutics Limited (U.K.), legally dissolved as of January 2, 2024 was a private limited Company, registered in the United Kingdom (U.K.). Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, is a private limited Company registered in Portugal. Pasithea Clinics Inc. is incorporated in Delaware. Alpha-5 and AlloMek, are both Delaware limited liability companies. The operations of Pasithea Therapeutics Limited (U.K.), Pasithea Therapeutics Portugal, Sociedade Unipessoal Lda, and Pasithea Clinics Inc. have been discontinued.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are generally identified by the use of such words as “may,” “could,” “should,” “would,” “believe,” “anticipate,” “forecast,” “estimate,” “expect,” “intend,” “plan,” “continue,” “outlook,” “will,” “potential” and similar statements of a future or forward-looking nature. These forward-looking statements speak only as of the date of filing this Quarterly Report with the SEC, and include, without limitation, statements about the following:
| ● | our lack of operating history; |
| ● | the expectation that we will incur significant operating losses for the foreseeable future and will need significant additional capital; |
| ● | the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements; |
| ● | our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; |
| ● | our plans to develop and commercialize our product candidates involves a lengthy and expensive process, with an uncertain outcome; |
| ● | the initiation, enrollment, timing, progress, results, and cost of our research and development programs and our current and future preclinical studies and clinical trials, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available; |
| ● | the timing of interim data and final results from our clinical trials for PAS-004; |
| ● | the potential safety and efficacy of our product candidates and the therapeutic implications of clinical and preclinical data; |
| ● | the timing and focus of our future preclinical studies and clinical trials, and the reporting of data from those studies and trials; |
| ● | the size of the market opportunity for our future product candidates, including our estimates of the number of patients who suffer from the diseases we are targeting; |
18
| ● | the success of competing therapies that are or may become available; |
| ● | the beneficial characteristics, safety, efficacy and therapeutic effects of our future product candidates; |
| ● | our ability to obtain and maintain regulatory approval of our future product candidates; |
| ● | our plans relating to the further development of our future product candidates, including additional disease states or indications we may pursue; |
| ● | existing regulations and regulatory developments in the United States and other jurisdictions; |
| ● | our dependence on third parties; |
| ● | the need to hire additional personnel and our ability to attract and retain such personnel; |
| ● | our plans and ability to obtain or protect intellectual property rights, including extensions of patent terms where available and our ability to avoid infringing the intellectual property rights of others; |
| ● | our financial performance and sustaining an active trading market for our Common Stock and Public Warrants; |
| ● | our ability to restructure our operations to comply with any potential future changes in government regulation; |
| ● | disruptions to the development of our product candidates due to public health crises, such as epidemics and pandemics, including the COVID-19 global pandemic; |
| ● | the impact of global economic and market conditions and political developments on our business, including, among others, rising inflation and capital market disruptions, economic sanctions, bank failures, regional conflicts around the world, and economic slowdowns or recessions that may result from such developments which could harm our research and development efforts as well as the value of our Common Stock and our ability to access capital markets; |
| ● | business interruptions resulting from geopolitical actions and global events, including political instability, natural disasters and events of terrorism and wars such as the war between Ukraine and Russia, and the corresponding tensions created from such conflict between Russia, the United States and countries in Europe as well as other countries such as China, and the conflict between Hamas and Israel; and |
| ● | our reliance on foreign contract research organizations (CROs) and contract manufacturing organizations (CMOs), including WuXi AppTec, that may be subject to U.S. legislation, including the proposed BIOSECURE bill, trade restrictions and other foreign regulatory requirements which could increase the cost or reduce the supply of material available to us, delay the procurement or supply of such material or have an adverse effect on our ability to secure significant commitments from governments to purchase our potential therapies |
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. You should refer to the “Risk Factors” section of this Quarterly Report for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. We operate in an evolving environment and new risk factors and uncertainties may emerge from time to time. It is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. You should review the factors and risks and other information we describe in the reports we will file from time to time with the SEC.
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Company Summary
We are a clinical-stage biotechnology company primarily focused on the discovery, research and development of innovative treatments for CNS disorders and other diseases, including RASopathies.
Our primary operations, the Therapeutics segment, are focused on developing our lead therapeutic candidate, PAS-004, a next-generation macrocyclic mitogen-activated protein kinase, or MEK inhibitor that we believe may address the limitations and liabilities associated with existing drugs with a similar mechanism of action. PAS-004 is a small molecule allosteric inhibitor of MEK 1 and MEK 2 for potential use in the treatment of a range of RASopathies, including neurofibromatosis type 1 (“NF1”)- associated neurofibromas and a number of oncology indications, among others that we acquired from AlloMek Therapeutics, LLC in October 2022. In December 2023, the FDA cleared our IND for PAS-004 and the Company received a study may proceed letter from the FDA for the Company’s Phase 1 multicenter, open-label, dose escalation trial of PAS-004 in patients with MAPK pathway-driven advanced tumors with a documented RAS, NF1 or RAF mutation or patients who have failed BRAF/MEK inhibition. The Company is currently conducting the Phase 1 clinical trial at four clinical sites in the United States and plans to open an additional three sites in Eastern Europe in the third quarter of 2024. The Company’s clinical development plan for PAS-004 is to begin a Phase 1 clinical trial in adult and pediatric NF1-associated plexiform and/or cutaneous neurofibroma and ultimately seek FDA marketing approval in these patient populations.
Additionally, the Company has two programs that are in the discovery stage, which the Company believes address limitations in the treatment paradigm of the indications the Company plans to address with these programs, which are currently ALS for PAS-003 and schizophrenia for PAS-001. During the year ended December 31, 2023, we determined to cease further development of our PAS-002 program for multiple sclerosis due to several factors including the significant capital, resources and time required to develop the program, and the current and projected availability of effective treatment options for MS patients, among others.
Our ability to generate product revenue will depend on the successful development, regulatory approval and eventual commercialization of one or more of our product candidates. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings, or other capital sources, including potential collaborations with other companies or other strategic transactions. Adequate funding may not be available to us on acceptable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our product candidates.
We expect to continue to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through all stages of development and clinical trials and, ultimately, seek regulatory approval. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. We expect our expenses and capital requirements will increase significantly in connection with our ongoing activities as we:
| ● | continue our ongoing and planned research and development of our product candidates; |
| ● | initiate nonclinical studies and clinical trials for any additional product candidates that we may pursue; |
| ● | scale up external manufacturing capacity with the aim of securing sufficient quantities to meet our capacity requirements for clinical trials and potential commercialization; |
| ● | establish a sales, marketing and distribution infrastructure to commercialize any approved product candidates and related additional commercial manufacturing costs; |
| ● | develop, maintain, expand, protect and enforce our intellectual property portfolio; |
| ● | acquire or in-license product candidates and technologies; and |
| ● | add clinical, operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts. |
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Recent Developments
Reverse Stock Split
On December 28, 2023, we filed a Certificate of Amendment to our Second Amended and Restated Certificate of Incorporation reflecting a one-for-20 reverse stock split (the “Reverse Stock Split”) of our issued and outstanding shares of Common Stock which became effective at 12:01 a.m. Eastern Time on January 2, 2024. As a result of the Reverse Stock Split, every 20 shares of Common Stock issued and outstanding were converted into one share of Common Stock, with a corresponding reduction in the number of authorized shares of Common Stock from 495,000,000 to 100,000,000. The Reverse Stock Split affected all stockholders uniformly and did not alter any stockholder’s percentage interest in the Company’s equity, except to the extent that the Reverse Stock Split resulted in some stockholders owning a fractional share. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who were otherwise entitled to receive a fractional share instead received a cash payment (without interest) equal to such fraction multiplied by the average of the closing sales prices of Common Stock on The Nasdaq Capital Market for the five consecutive trading days immediately preceding the effective date of the Reverse Stock Split (with such average closing sales prices adjusted to give effect to the Reverse Stock Split). All outstanding securities entitling their holders to purchase shares of Common Stock or acquire shares of Common Stock, including stock options, convertible debt and warrants, were adjusted as a result of the Reverse Stock Split, as required by the terms of those securities.
The accompanying condensed consolidated financial statements reflect the Reverse Stock Split. All share and per share information data herein that relates to our Common Stock prior to the effective date has been retroactively restated to reflect the Reverse Stock Split.
Impact of Inflation
We have recently experienced higher costs across our business as a result of inflation, including higher costs related to employee compensation and outside services. We expect inflation to continue to have a negative impact throughout 2024, and it is uncertain whether we will be able to offset the impact of inflationary pressures in the near term.
Results of Operations
Comparison of the Three and Six Months Ended June 30, 2024 and 2023
Our financial results for the three and six months ended June 30, 2024 and 2023 are summarized as follows:
For the Three Months Ended June 30, | ||||||||||||||||
| 2024 | 2023 | Change | % Change | |||||||||||||
| General and administrative | $ | 1,587,060 | $ | 1,800,536 | $ | (213,476 | ) | (11.9 | ) | |||||||
| Research and development | 2,357,974 | 2,028,165 | 329,809 | 16.3 | ||||||||||||
| Loss from operations | (3,945,034 | ) | (3,828,701 | ) | (116,333 | ) | 3.0 | |||||||||
| Other income (expense), net | 78,785 | 230,617 | (151,832 | ) | (65.8 | ) | ||||||||||
| Net loss from continuing operations | (3,866,249 | ) | (3,598,084 | ) | (268,165 | ) | 7.5 | |||||||||
| Net loss from discontinued operations, net of tax | - | (165,146 | ) | 165,146 | (100.0 | ) | ||||||||||
| Net loss | $ | (3,866,249 | ) | $ | (3,763,230 | ) | $ | (103,019 | ) | 2.7 | ||||||
For the Six Months Ended June 30, | ||||||||||||||||
| 2024 | 2023 | Change | % Change | |||||||||||||
| General and administrative | $ | 3,878,706 | $ | 3,916,802 | $ | (38,096 | ) | (1.0 | ) | |||||||
| Research and development | 4,107,102 | 3,124,451 | 982,651 | 31.5 | ||||||||||||
| Loss from operations | (7,985,808 | ) | (7,041,253 | ) | (944,555 | ) | 13.4 | |||||||||
| Other income (expense), net | 258,719 | 177,359 | 81,360 | 45.9 | ||||||||||||
| Net loss from continuing operations | (7,727,089 | ) | (6,863,894 | ) | (863,195 | ) | 12.6 | |||||||||
| Net loss from discontinued operations, net of tax | - | (437,015 | ) | 437,015 | (100.0 | ) | ||||||||||
| Net loss | $ | (7,727,089 | ) | $ | (7,300,909 | ) | $ | (426,180 | ) | 5.8 | ||||||
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General and administrative
General and administrative expenses consist primarily of personnel expenses, including salaries, benefits, and stock-based compensation expense, for employees and consultants in executive, finance and accounting, legal, operations support, information technology and human resource functions. General and administrative expenses also include corporate facility costs not otherwise included in research and development expense, including rent, utilities, depreciation, amortization, and maintenance, as well as legal fees related to intellectual property and corporate matters, fees for accounting and consulting services and other expenses, including insurance, public company and corporate communications, information technology, and board fees.
General and administrative expenses decreased by approximately $213,000, or 12%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was primarily driven by decreases in (i) accounting and business development of approximately $27,000 (ii) non-cash amortization and depreciation and stock-based compensation of approximately $184,000, (iii) personnel related expenses of approximately $67,000, (iv) legal expenses of approximately $48,000, (v) public company and corporate communications expenses of approximately $25,000 and (vi) other expenses of approximately $104,000, offset by increases in (i) office expenses of approximately $204,000 and (ii) consulting costs of approximately $38,000.
General and administrative expenses decreased by approximately $38,000, or 1%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was primarily driven by decreases in (i) personnel costs of approximately $324,000, (ii) accounting and business development of approximately $95,000 and (iii) other expenses of approximately $104,000, offset by increases in (i) legal expenses of approximately $171,000, (ii) office expenses, including franchise taxes and insurance of approximately $145,000, (iii) public company and corporate communications expenses of approximately $80,000, (iv) non-cash amortization and depreciation and stock-based compensation of approximately $52,000 and (v) consulting costs of approximately $37,000.
We expect general and administrative expenses to continue at lower levels in fiscal year 2024 as compared to fiscal year 2023 due to the non-recurring expenses that were incurred in 2023 related to the unsolicited, non-binding proposal to acquire all outstanding shares of the Company from a third party and the tender offer we completed in September 2023.
Research and Development
Research and development expenses relate to activities primarily focused on the development of PAS-004 for the three and six months ended June 30, 2024, and PAS-004, PAS-003, and PAS-001 for the three and six months ended June 30, 2023.
Research and development expenses increased by approximately $307,000, or 15%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase was primarily driven by increases in (i) clinical trial costs of approximately $844,000 related to the initiation of the Phase 1 clinical trial of PAS-004, (ii) personnel expenses, including salaries, benefits and severance payments of approximately $279,000 related to the closure of our research laboratory and reduction in related workforce, and (iii) general expenses of approximately $74,000, offset by decreases in (i) manufacturing and CMC expenses of approximately $323,000, (ii) preclinical research and development expenses related to our discovery programs of approximately $ 460,000, (iii) consulting costs of approximately $53,000 and (iv) non-cash stock-based compensation of approximately $54,000.
Research and development expenses increased by approximately $982,000, or 31%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was primarily driven by increases in (i) clinical trial costs of approximately $1,527,000 related to the initiation of the Phase 1 clinical trial of PAS-004, (ii) personnel expenses, including salaries, benefits and severance payments of approximately $257,000 related to the closure of our research laboratory and reduction in related workforce, (iii) consulting costs of approximately $102,000, iv) general expenses of approximately $65,000 and (v) non-cash stock-based compensation of approximately $61,000, offset by decreases in (i) preclinical research and development expenses related to our discovery programs of approximately $893,000 and (ii) manufacturing and CMC expenses of approximately $137,000.
We expect research and development expenses to increase in fiscal year 2024 as compared to fiscal year 2023 primarily due to the clinical development of PAS-004 as well as PAS-004 CMC activities, offset by decreases in preclinical research and development related to the closure of our research laboratory.
22
Other income (expense), net
For the three months ended June 30, 2024, other income (expense), net decreased by approximately $152,000, or 66%, compared to the three months ended June 30, 2023. The decrease in other income (expense), net is due primarily to a decrease in the fair value of the Public Warrants and the Representative Warrants (as such terms are defined in “Note 2 – Summary of Significant Accounting Policies” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q) that occurred during the three months ended June 30, 2024, compared to a larger increase in the fair value of the Public Warrants and the Representative Warrants that occurred during the three months ended June 30, 2023.
For the six months ended June 30, 2024, other income (expense), net increased by approximately $81,000, or 46%, compared to the six months ended June 30, 2023. The increase in other income (expense), net is due primarily to dividend income of $268,000 during the six months ended June 30, 2024 compared to approximately $111,000 of dividend income during the six months ended June 30, 2023. This increase was partially offset related to the decrease in the fair value of warrant liabilities. See “Note 2 – Summary of Significant Accounting Policies” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for more information on the accounting treatment of the Public Warrants and the Representative Warrants.
Discontinued Operations
During the year ended December 31, 2023, we discontinued our support services to anti-depression clinics in the U.K. and related at-home services in New York, NY. We also discontinued our clinical operations in Los Angeles, CA and disposed of the related property. Accordingly, we discontinued the operations of our Clinics segment provided by our subsidiaries, and currently have one reportable segment, the Therapeutics segment, related to the research and development of our therapeutic product candidates. As of June 30, 2023, all activity related to our discontinued subsidiaries is included in Net loss from discontinued operations, net of tax in the condensed consolidated statements of operations and comprehensive loss.
Working Capital
| As of June 30, 2024 | As of December 31, 2023 | |||||||
| Current assets | $ | 8,642,465 | $ | 16,692,154 | ||||
| Current liabilities | 1,394,852 | 2,634,040 | ||||||
| Working capital | $ | 7,247,613 | $ | 14,058,114 | ||||
Working capital decreased by approximately $6.8 million between December 31, 2023 and June 30, 2024 due primarily to cash used to fund operations for the six months ended June 30, 2024.
Liquidity and Financial Condition
| Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Net loss from continuing operations | $ | (7,727,089 | ) | $ | (6,863,894 | ) | ||
| Net cash used in operating activities | $ | (8,359,951 | ) | $ | (6,281,944 | ) | ||
| Net cash used in investing activities | - | (29,496 | ) | |||||
| Net cash provided by financing activities | - | 133,335 | ||||||
| Effect of foreign currency translation | (3,532 | ) | (2,800 | ) | ||||
| Net cash used in discontinued operations | - | (259,326 | ) | |||||
| Decrease in cash and cash equivalents | $ | (8,363,483 | ) | $ | (6,440,231 | ) | ||
Cash and cash equivalents decreased by approximately $8.4 million for the six months ended June 30, 2024, compared to a decrease of approximately $6.4 million for the six months ended June 30, 2023, which was primarily attributable to cash used to fund operations and an increase in prepaid expenses.
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Liquidity & Capital Resources Outlook
As of June 30, 2024, we had approximately $8.0 million in operating bank accounts and money market funds, with working capital of approximately $7.2 million. We have incurred significant operating losses and negative cash flows from operations. On June 30, 2024, we had an accumulated deficit of approximately $43.0 million. We have incurred recurring losses, have experienced recurring negative operating cash flows, and require significant cash resources to execute our business plans. Historically, our major sources of cash have been comprised of proceeds from various public and private offerings of our capital stock. We are dependent on obtaining additional working capital funding from the sale of equity and/or debt securities in order to continue to execute our development plans and continue operations. Subsequent to the consummation of the Initial Public Offering, our liquidity was and continues to be satisfied through the net proceeds from the Initial Public Offering, the private placement we consummated in November 2021 and the receipt of cash upon the prior exercise of our outstanding warrants. Based on the foregoing, management believes that we will not have sufficient working capital to meet our needs through twelve months from the issuance date of the condensed consolidated financial statements, without raising additional capital.
Liquidity & Capital Resources Outlook
Our primary use of cash is to fund operating expenses, primarily general and administrative and research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:
| ● | the scope, timing, progress and results of discovery, preclinical development, laboratory testing and clinical trials for our product candidates; |
| ● | the costs of manufacturing our product candidates for clinical trials and in preparation for marketing approval and commercialization; |
| ● | the extent to which we enter into collaborations or other arrangements with third parties in order to further develop our product candidates; |
| ● | the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; |
| ● | the costs and fees associated with the discovery, acquisition or in-license of additional product candidates or technologies; |
| ● | expenses needed to attract and retain skilled personnel; |
| ● | the costs required to scale up our clinical, regulatory and manufacturing capabilities; |
| ● | the costs of future commercialization activities, if any, including establishing sales, marketing, manufacturing and distribution capabilities, for any of our product candidates for which we receive marketing approval; and |
| ● | revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval. |
We will need significant additional funds to meet operational needs and capital requirements for clinical trials, other research and development expenditures, and business development activities. We currently have no credit facility or committed sources of capital. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical studies.
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Contractual Obligations
See Note 9 – Commitments and Contingencies in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for a summary of our contractual obligations.
Off-Balance Sheet Arrangements
During the periods presented, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Exchange Act.
Critical Accounting Estimates
Our critical accounting estimates, which include (1) revenue recognition, (2) stock-based compensation and (3) fair value measurements, are more fully described in the Notes to our Consolidated Financial Statements included in our Form 10-K for the fiscal year ended December 31, 2023, as filed on March 29, 2024. During the six months ended June 30, 2024, there were no material changes to our critical accounting policies and estimates from those described in our Form 10-K.
Recent Accounting Pronouncements
See Note 2 – Summary of Significant Accounting Policies in the Notes to our Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q for a description of recent accounting pronouncements applicable to our financial statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable. As a smaller reporting company, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, and have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures, as defined in the Securities Exchange Act of 1934, as amended (the Exchange Act), Rule 13a-15(e), are not effective at a reasonable assurance level due to the material weakness described below.
25
Notwithstanding the material weakness, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that the condensed consolidated financial statements included in this Quarterly Report present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in accordance with U.S. Generally Accepted Accounting Principles.
Remediation of Previously Identified Material Weakness
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
As previously disclosed in our Form 10-K for the year ended December 31, 2023, as filed on March 29, 2024, management in connection with our independent auditors identified a material weakness in our controls related to the review of the annual income tax provision prepared by a third-party firm during the audit process related to our fiscal year ended December 31, 2023. Specifically, we did not maintain effective controls to sufficiently review the completeness and accuracy of the annual tax provision in Note 10 to our financial statements (the “Tax Provision Disclosure”) included in our Form 10-K for the year ended December 31, 2023.
In response to the material weakness, management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, initiated a reassessment of our processes and controls related to the Tax Provision Disclosure and developed an action plan to remediate this matter, which included creating processes to ensure a thorough review of all materials and schedules prepared by third parties with respect to the Tax Provision Disclosure and engaging a tax professional to prepare and review any Tax Provision Disclosures. Management believes the involvement of the tax professional provides sufficient remediation, and the related controls will be subject to testing as applicable during the year.
Evaluation of Changes in Internal Control over Financial Reporting
Other than the remediation of the material weakness described above, there have been no changes in the Company’s internal control over financial reporting during the three months ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, we believe would individually or in the aggregate have a material adverse effect on our business, results of operations, financial condition or cash flows.
Item 1A. Risk Factors
There have been no material changes to the risk factors set forth in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed on March 29, 2024. Our business involves significant risks. You should carefully consider the risks and uncertainties described in our Form 10-K, together with all of the other information in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Form 10-K. The risks and uncertainties described in our Form 10-K are not the only ones we face. Additional risk and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. The realization of any of these risks and uncertainties could have a material adverse effect on our reputation, business, financial condition, results of operations, growth and future prospects as well as our ability to accomplish our strategic objectives. In that event, the market price of our common stock and Public Warrants could decline, and you could lose part or all of your investment.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Insider Trading Arrangements and Policies
During
the quarter ended June 30, 2024, none of the Company’s directors or officers
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Item 6. Exhibits
| Exhibit No. | Description | |
| 31.1* | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1** | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2** | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS* | Inline XBRL Instance Document. | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
| * | Filed herewith. |
| ** | Furnished, not filed. |
28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| PASITHEA THERAPEUTICS CORP. | ||
| By: | /s/ Tiago Reis Marques | |
| Tiago Reis Marques | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: August 13, 2024 | ||
| By: | /s/ Daniel Schneiderman | |
| Daniel Schneiderman | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) |
||
| Date: August 13, 2024 | ||
29
Exhibit 31.1
PASITHEA THERAPEUTICS CORP.
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Tiago Reis Marques, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2024 of Pasithea Therapeutics Corp. (the “Registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
| 4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the Registrant and have: |
| (a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
| 5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
| (b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| By: | /s/ Tiago Reis Marques | |
| Tiago Reis Marques | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
Date: August 13, 2024
Exhibit 31.2
PASITHEA THERAPEUTICS CORP.
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Daniel Schneiderman, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the period ended June 30, 2024 of Pasithea Therapeutics Corp. (the “Registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; |
| 4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the Registrant and have: |
| (a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
| 5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and |
| (b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
| By: | /s/ Daniel Schneiderman | |
| Daniel Schneiderman | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and | ||
| Principal Accounting Officer) |
Date: August 13, 2024
Exhibit 32.1
PASITHEA THERAPEUTICS CORP.
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report on Form 10-Q for the period ended June 30, 2024 of Pasithea Therapeutics Corp. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| By: | /s/ Tiago Reis Marques | |
| Tiago Reis Marques | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
Date: August 13, 2024
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.
Exhibit 32.2
PASITHEA THERAPEUTICS CORP.
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report on Form 10-Q for the period ended June 30, 2024 of Pasithea Therapeutics Corp. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| By: | /s/ Daniel Schneiderman | |
| Daniel Schneiderman | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and | ||
| Principal Accounting Officer) |
Date: August 13, 2024
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.