What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2026-06-15 compared with 2025-06-17 · 75 added, 61 removed, 195 unchanged (41% of the section changed)

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Securities Authorized for Issuance Under Equity Compensation Plans

See Item 12 of Part III of this Annual Report for information about our equity compensation plans, which information will be incorporated by reference to the information that will be contained in our proxy statement related to the 2025 Annual Meeting of Stockholders, which we intend to file with the SEC on or before July 29, 2025.

Please see Part III, Item 12 of this Annual Report.

Performance Graph

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registration-directed PALISADE Program for the acute treatment of social anxiety disorder (SAD).

In August 2023, we received and reported positive topline results from our PALISADE-2 Phase 3 trial of fasedienol for the acute treatment of SAD.

The ongoing clinical trials in our PALISADE Program include our PALISADE-3 and PALISADE-4 Phase 3 trials, which are designed similarly to PALISADE-2, and a small exploratory Phase 2 repeat dose study (the Repeat Dose Study).

Topline data for PALISADE-3 are expected in the fourth quarter of 2025 and topline results for PALISADE-4 and the Repeat Dose Study are expected in the first half of 2026.

We believe either PALISADE-3 or PALISADE-4, if successful, together with the positive results from PALISADE-2, may establish substantial evidence of the effectiveness of fasedienol in support of a potential New Drug Application (NDA) submission to the U.S.

FDA for the acute treatment of SAD.

The FDA has granted

Fast Track designation for the investigation of fasedienol for the acute treatment of SAD.

Fasedienol has the potential to be the first FDA-approved acute treatment of SAD and provide significant advantages relative to the current standard of care.

We have also reported positive results from an exploratory Phase 2A clinical trial for each of our next most advanced pherine product candidates, itruvone for treatment of major depressive disorder, and PH80 for both vasomotor symptoms (hot flashes) due to menopause and premenstrual dysphoric disorder (PMDD), as well as a pilot Phase 2A study of PH15 for improvement of psychomotor impairment due to mental fatigue and an exploratory Phase 2A study of PH284 for treatment of cancer cachexia.

We are passionate about developing transformative treatment options with potential to meet clear and growing unmet needs and bring meaningful relief to patients underserved by the current standard of care for multiple highly prevalent indications, all while delivering long term value to our shareholders.

Our PALISADE Program includes the PALISADE-1, PALISADE-2, PALISADE-3, and PALISADE-4 Phase 3 clinical trials and a small exploratory Phase 2 repeat dose study (the Repeat Dose Study).

PALISADE-2 achieved its primary efficacy endpoint, as reported in August 2023.

Neither PALISADE-1, completed in 2022, nor PALISADE-3, the randomized portion of which was completed in December 2025, achieved its primary endpoint.

On May 8, 2026, we announced that the last patient had completed the last visit in the randomized portion of PALISADE-4, and we expect to announce topline results from the randomized portion of PALISADE-4 in the second quarter of calendar 2026.

The FDA has granted Fast Track designation for the investigation of fasedienol for the acute treatment of SAD.

We believe PALISADE-4, if successful, together with the positive results from PALISADE-2 and confirmatory evidence from our overall fasedienol development program in SAD, including the Repeat Dose Study and Open Label Extension data, as well as confirmatory evidence we plan to generate based on FDA feedback to support the clinical meaningfulness of the duration and magnitude of effect of fasedienol, may establish substantial evidence of the effectiveness of fasedienol in support of a potential New Drug Application (NDA) submission to the FDA for the acute treatment of SAD.

We have also reported positive results from an exploratory Phase 2A clinical trial for each of our next most advanced pherine product candidates, itruvone for treatment of major depressive disorder, and refisolone (formerly PH80) for both vasomotor symptoms (hot flashes) due to menopause and premenstrual dysphoric disorder (PMDD), as well as a pilot Phase 2A study of PH15 for improvement of psychomotor impairment due to mental fatigue and an exploratory Phase 2A study of PH284 for treatment of cancer cachexia.

In April 2026, we announced receipt of a 'Study May Proceed' letter from the FDA under our U.S.

Investigational New Drug (IND) application for refisolone for the treatment of moderate to severe vasomotor symptoms (hot flashes) due to menopause.

In March 2026, our Board of Directors approved a reduction of approximately 20% in our workforce, intended to provide disciplined cash management while prioritizing efficient execution of the ongoing clinical studies in our PALISADE Program.

See 'Liquidity and Capital Resources' below for additional discussion.

Our wholly-owned subsidiaries consist of Pherin Pharmaceuticals, Inc, a Delaware corporation (Pherin), which we acquired in February 2023, and Vistastem, Inc., a California corporation founded in 1998 (Vistastem).

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Revenue is recognized as identified performance obligations are satisfied.

See Note 11 to our consolidated financial statements for a complete description of the AffaMed Agreement and Fuji Pharma Negotiation Agreement.

Operating Expenses

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Sublicense and Other Revenue

Sublicense and other revenue were $0.5 million and $1.1 million for the years ended March 31, 2025 and 2024, respectively.

The decrease in sublicense and other revenue of $0.6 million is due to timing of revenue recognized under the AffaMed Agreement.

Absent the achievement of milestones under the AffaMed Agreement, or the execution of similar agreements in the future, if any, we expect sublicense and other revenue to stay consistent in future periods as we continue to recognize revenue under the AffaMed Agreement.

Sublicense and other revenue was $1.3 million for the year ended March 31, 2026, compared to $0.5 million for the year ended March 31, 2025, an increase of $0.8 million.

The increase in sublicense and other revenue is due to timing of revenue recognized under the AffaMed Agreement.

As of March 31, 2026, approximately $ 0.4 million of deferred revenue under the AffaMed Agreement remained to be recognized, which we expect to recognize in fiscal 2027.

Approximately $1.3 million of deferred revenue under the Negotiation Agreement with Fuji Pharma also remained as of March 31, 2026.

The recognition of remaining deferred revenue under the Negotiation Agreement is dependent on the outcome of the Exclusive Negotiation Period, as further described in Note 11 to our consolidated financial statements included with this Annual Report.

The amount and timing of future sublicense and other revenue will also depend on the achievement of milestones under existing agreements, if any, and the execution of new licensing or sublicensing agreements, if any.

Research and Development Expenses

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Fasedienol $ 38,513 $ 21,892

Itruvone 765 931

AV-101 135 232

All other 2,203 200

Other clinical stage candidates 1,230 3,103

Total clinical and nonclinical studies and development expenses 39,743 24,995

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Total research and development expenses $ 54,974 $ 39,375

Research and development expense was $39.4 million and $20.0 million for the years ended March 31, 2025 and 2024, respectively.

The increase of $19.4 million in research and development expense for the year ended March 31, 2025, as compared to the year ended March 31, 2024, was primarily due to an increase in expense of $15.8 million related to our U.S.

registration-directed PALISADE Program for fasedienol for the acute treatment of SAD, including manufacturing, nonclinical studies and our PALISADE-3 and PALISADE-4 Phase 3 clinical trials and the Repeat Dose Study, as well as manufacturing and nonclinical studies to support our planned PH80 U.S.

Investigational New Drug Application (IND) to facilitate further Phase 2 development for the treatment of VMS, and increase of $2.8 million in connection with the increased headcount, an increase in consulting and professional fees of $0.2 million, and an increase in occupancy and other costs of $0.5 million.

We expect that our research and development expense may increase over the next fiscal year as we continue to advance our pherine product candidates through nonclinical studies, clinical trials, and expand third-party contract manufacturing and regulatory activities required to advance further research and development of our current pherine product candidates and additional pherine product candidates, maintain, expand, protect and enforce our intellectual property portfolio, and hire additional headcount.

At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any pherine product candidates we may develop.

Research and development expense was $55.0 million for the year ended March 31, 2026 compared to $39.4 million for the year ended March 31, 2025, an increase of $15.6 million or 39.6%.

The increase was primarily driven by higher clinical trial activity within our fasedienol program, partially offset by lower spend on our other clinical-stage pherine product candidates.

Clinical and nonclinical studies and development expenses by program increased by $14.7 million, from $25.0 million in fiscal 2025 to $39.7 million in fiscal 2026.

PALISADE Program expenses increased by $16.6 million, from $21.9 million in fiscal 2025 to $38.5 million in fiscal 2026.

The increase was attributable to three clinical studies within our U.S.

registration-directed PALISADE Program, including our PALISADE-3 and PALISADE-4 Phase 3 clinical trials and the Repeat Dose Study conducted concurrently during fiscal 2026.

By comparison, fiscal 2025 reflected only a partial period of activity for these studies as each was in earlier stages of enrollment and start-up.

The fiscal 2026 increase reflects higher CRO costs, investigator and site payments, and pass-through expenses associated with the expanded scale of patient enrollment, dosing, and trial conduct activities.

Other clinical-stage product candidate s under active development include refisolone and itruvone.

Expenses for these candidates decreased $1.9 million, from $3.1 million in fiscal 2025 to $1.2 million in fiscal 2026, primarily reflecting reduced clinical and nonclinical activity as we prioritized resources toward our PALISADE Program.

Salaries and benefits expense increased by $1.0 million from $9.4 million in fiscal 2025 to $10.4 million in fiscal 2026, primarily due to increased headcount supporting our clinical development activities.

Stock-based compensation decreased by $0.2 million from $1.9 million in fiscal 2025 to $1.7 million in fiscal 2026.

Consulting and professional services expenses were substantially unchanged at $1.6 million in each of fiscal 2026 and 2025.

Occupancy and all other costs were also substantially unchanged at $1.5 million in each of fiscal 2026 and 2025.

We expect that our research and development expense may fluctuate over the next fiscal year.

The fluctuation depends on when we conduct nonclinical studies and clinical trials, and expand third-party contract manufacturing and regulatory activities required to advance further research and development of our current pherine product candidates and additional pherine product candidates, and when and to what extent we maintain, expand, protect and enforce our intellectual property portfolio, and hire additional headcount.

At this time, we cannot accurately estimate or know the nature, timing and costs of these efforts that will be necessary to complete the preclinical and clinical development of any pherine product candidates we may develop.

A change in the outcome of any number of variables with respect to product candidates we may develop could significantly change the costs and timing associated with the development of that product candidate.

General and Administrative Expenses

General and administrative expense was $17.1 million and $14.1 million for the years ended March 31, 2025 and 2024, respectively.

The increase of $3.0 million in general and administrative expense for the year ended March 31, 2025, as compared to the year ended March 31, 2024, was primarily due to an increase in headcount and related costs of $1.8 million, as well as an increase in consulting and professional fees of $0.6 million.

We expect that our general and administrative expenses may increase substantially over the next fiscal year as we hire additional personnel to support the continued growth of our research and development, contract manufacturing and pre-commercialization operations and incur additional expenses associated with being a public company.

Other income was $4.6 million and $3.7 million for the years ended March 31, 2025 and 2024, respectively.

The increase of $0.9 million was primarily related to an increase in interest rate return on our cash, cash equivalents, and marketable securities due to increased investment balances.

General and administrative expense was $18.4 million for the year ended March 31, 2026, compared to $17.1 million for the year ended March 31, 2025, an increase of $1.3 million or 7.8%.

The increase was primarily attributable to higher corporate legal expense, including costs associated with the defense of pending shareholder litigation, higher salaries and wages, and higher consulting fees, partially offset by lower incentive bonus expense in fiscal 2026.

Our expectation for general and administrative expense is largely dependent on the results of the randomized portion of our PALISADE-4 clinical trial.

We expect that our general and administrative expenses may increase substantially over the next fiscal year in the event of positive results from PALISADE-4.

Under a positive scenario, we will prepare to submit a NDA to the FDA and begin commercialization efforts to support product launch or partnering of commercialization for

However, in the event of negative results from PALISADE-4, we expect to further cash conservation efforts that were implemented following the announcement of negative results from the randomized portion of our PALISADE-3 clinical trial, resulting in an anticipated decrease to general and administrative expense.

Other income, net was $2.4 million for the year ended March 31, 2026, compared to $4.6 million for the year ended March 31, 2025, a decrease of $2.1 million, or 46%.

The decrease was primarily attributable to lower average balances of cash, cash equivalents, and marketable securities during fiscal 2026 as compared to fiscal 2025, reflecting the use of cash to fund our operations.

Liquidity and Capital Resources

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Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations.

To date, as of March 31, 2025, we have financed our operations and technology acquisitions primarily through the issuance and sale of our equity securities for cash proceeds of approximately $340.4 million, as well as from an aggregate of approximately $22.7 million of government research grant awards (excluding the fair market value of government-sponsored and funded clinical trials), strategic collaboration payments, intellectual property licensing payments, and other revenues.

As of March 31, 2026, we have financed our operations and technology acquisitions primarily through the issuance and sale of our equity securities for cash proceeds of approximately $371.2 million, as well as from an aggregate of approximately $22.7 million of government research grant awards (excluding the fair market value of government-sponsored and funded clinical trials), strategic collaboration payments, intellectual property licensing payments, and other revenues.

Additionally, we have issued equity securities with an approximate value at issuance of $41.3 million for non-cash acquisitions of product licenses, the Pherin Acquisition, and in settlements of certain liabilities, including liabilities for professional services rendered to us or as compensation for such services.

In May 2021, we entered into an Open Market Sale Agreement (the Sales Agreement) with Jefferies LLC (Jefferies) as sales agent, with respect to an at-the-market offering program (the ATM) under which we were permitted, at our option, to offer and sell, from time to time, shares of our common stock having an aggregate offering price of up to $75.0 million through Jefferies as our sales agent.

In February 2024, the aggregate gross proceed available under the Sales Agreement was increased to $100 million.

During the years ended March 31, 2025 and 2024, we sold an aggregate of 1,108,587 and 4,698,495 shares, respectively, under the Sales Agreement, for net proceeds of $3.0 million and $36.2, respectively, after sales agent commissions.

The aggregate offering price available under the Sales Agreement was increased to $100.0 million in February 2024 and to $175.0 million in June 2025.

During our fiscal years ended March 31, 2026 and 2025, we sold an aggregate of 10,403,244 and 1,108,587 shares, respectively, under the Sales Agreement, for net proceeds of $30.6 million and $3.0 million, respectively, after sales agent commissions.

We pay Jefferies a commission of up to three percent (3.0%) of the aggregate gross proceeds from any sales under the Sales Agreement.

In addition, during the year ended March 31, 2024, we received net proceeds of approximately $93.5 million from the October 2023 Public Offering and $1.5 million from Fuji Pharma under the Negotiation Agreement.

As of March 31, 2026 and 2025 , we had cash, cash equivalents, and marketable securities of $45.4 million and $80.5 million , respectively.

As of June 17, 2025 , the issuance date of the consolidated financial statements in this Annual Report as of and for the year ended March 31, 2025, there is uncertainty about whether our combined cash, cash equivalents, and marketable securities will be sufficient to fund operations beyond twelve months from the issuance date of these consolidated financial statements and therefore we concluded that substantial doubt existed about our ability to continue as a going concern.

When necessary and/or advantageous, we will seek additional capital to fund our planned operations through (i) sales of our equity and/or debt securities in one or more public offerings and/or private placements, including sales of our securities under the Sales Agreement, (ii) non-dilutive government grants and research awards and/or (iii) non-dilutive strategic partnering collaborations to advance development and commercialization of our product candidates.

As of June 15, 2026 , the issuance date of the consolidated financial statements in this Annual Report, we concluded that substantial doubt exists about our ability to continue as a going concern for a period of at least twelve months from the date these consolidated financial statements are issued.

When necessary and/or advantageous, we will seek additional capital to fund our planned operations through, among other options, (i) sales of our equity and/or debt securities in one or more public offerings and/or private placements, including sales of our securities under the Sales Agreement, (ii) non-dilutive government grants and research awards and/or (iii) non-dilutive strategic partnering collaborations to advance development and commercialization of our product candidates.

However, no assurance can be provided that any such sales of our securities, awards, agreements or collaborations will occur in the future.

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Our future working capital requirements will depend on many factors, including, without limitation, potential impacts related to adjustments in the size of our staff, the scope and nature of opportunities related to our success or failure and the success or failure of certain other companies in nonclinical and clinical trials, including the development and commercialization of our current product candidates, and the availability of, and our ability to enter into financing transactions and research, development and commercialization collaborations on terms acceptable to us.

In the future, to further advance the clinical development of our product candidates, as well as support our operating activities, we plan to seek additional financing, including both equity-based and/or debt-based capital and potentially from non-dilutive sources other than debt-based capital, and continue to carefully manage our operating costs, including, but not limited to, our clinical, nonclinical, and pre-commercialization programs.

Notwithstanding the foregoing, there can be no assurance that future financings will be available to us in sufficient amounts, in a timely manner, or on terms acceptable to us, if at all, or that current or future development and commercialization collaborations will generate revenue from future potential milestone payments or otherwise.

In the future, to further advance the clinical development and commercialization of our product candidates, as well as support our operating activities, we plan to seek substantial additional financing, including both equity-based and/or debt-based capital and potentially from non-dilutive sources other than debt-based capital, and continue to carefully manage our operating costs, including, but not limited to, our clinical, nonclinical, and pre-commercialization programs.

However, there can be no assurance that future financing will be available to us in sufficient amounts, in a timely manner, or on terms acceptable to us, if at all, or that current or future development and commercialization collaborations will generate revenue from future potential milestone payments or otherwise.

See Note 2 to our consolidated financial statements contained in this Annual Report for additional information regarding our going concern assessment.

The following table summarizes changes in cash and cash equivalents for the fiscal years stated (in thousands):

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Operating Activities

Net cash used in operating activities for the year ended March 31, 2025 was $42.1 million, consisting primarily of our net loss of $51.4 million, adjusted for $4.6 million of non-cash charges primarily related to stock-based compensation expense and amortization of our operating lease right-of-use asset, and $4.8 million for net changes in operating assets and liabilities.

Net cash used in operating activities for the year ended March 31, 2026 was $66.4 million, consisting primarily of our net loss of $69.7 million, adjusted for $4.2 million of non-cash charges primarily related to stock-based compensation expense and amortization of our operating lease right-of-use asset, and a $0.9 million use of cash for net changes in operating assets and liabilities.

Net cash used in operating activities for the year ended March 31, 2025 was $42.1 million, consisting primarily of our net loss of $51.4 million, adjusted for $4.5 million of non-cash charges primarily related to stock-based compensation expense and amortization of our operating lease right-of-use asset, and $4.8 million for net changes in operating assets and liabilities.

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Net cash used in investing activities for the year ended March 31, 2026 was $0.9 million, consisting of purchases of marketable securities and property and equipment, partially offset by the sale and maturity of marketable securities.

Net cash used in investing activities for the year ended March 31, 2024 was $0.1 million, consisting of purchases of property and equipment.

Net cash used in investing activities for the year ended March 31, 2025 was $13.1 million, consisting primarily of net purchases of marketable securities and, to a lesser extent, purchases of property and equipment.

Financing Activities

Net cash provided by financing activities during the year ended March 31, 2025 was $3.2 million.

consisting primarily of net proceeds from the sale of shares of our common stock in ATM transactions under the Sales Agreement.

Net cash provided by financing activities during the year ended March 31, 2024 was $128.4 million.

This consisted primarily of net proceeds of $93.5 resulting from the October 2023 Public Offering, net proceeds of $35.9 million resulting from the sale of shares of our common stock under the Sales Agreement, partially offset by the repayment of notes payable of notes payable of 1.0 million.

Net cash provided by financing activities during the year ended March 31, 2026 was $31.0 million, consisting primarily of net proceeds from the sale of our common stock in ATM transactions under the Sales Agreement.

Net cash provided by financing activities during the year ended March 31, 2025 was $3.2 million, consisting primarily of net proceeds from the sale of our common stock in ATM transactions under the Sales Agreement and to a lesser extent, proceeds from activity in our Employee Stock Purchase Plan.

Future Funding Requirements

Based on our current operating plan, we believe that our existing cash, cash equivalents, and marketable securities will not be sufficient to fund our operations beyond the next twelve months from the date of this Annual Report.

We anticipate that we will continue to seek additional funding, though the precise timing and nature of such additional funding may prove uncertain.

We anticipate that we will continue to seek substantial additional funding, though the precise timing and nature of such additional funding may prove uncertain or unavailable to us.

Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

See "Risk Factors " above.

We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect.

We have based this estimate on assumptions that may prove to be wrong, and we could deplete our current capital resources sooner than we expect.

Additionally, the process of conducting nonclinical studies and testing product candidates in clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain.

Our future capital requirements will depend on many factors, including:

• the initiation, type, number, scope, results, costs and timing of, our ongoing and planned nonclinical studies and clinical trials of existing product candidates or clinical trials of other potential product candidates we may choose to pursue in the future, including based on feedback received from regulatory authorities;

• the initiation, type, number, scope, costs, timing and results of, the recently completed randomized portion of PALISADE-4, our ongoing and planned nonclinical studies and clinical trials of product candidates or clinical trials of other potential product candidates we may choose to pursue in the future, including based on feedback received from regulatory authorities;

• the costs and timing of manufacturing for current or future product candidates, including commercial scale manufacturing if any product candidate is approved;

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However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders could, and likely will, be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders likely will, be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.

Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock.

If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish potentially valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock.

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

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We lease our corporate office and laboratory space in South San Francisco, California.

As of March 31, 2025, total future aggregate operating lease commitments were $1.7 million, with approximately $0.7 million due during the year ending March 31, 2026, and the remaining due in periods ending March 31, 2027 through 2028.

As of March 31, 2026, total undiscounted future aggregate operating lease commitments were $1.0 million, with approximately $0.8 million due during the year ending March 31, 2027, and the remaining due in periods ending March 31, 2028.

These obligations are further described in Note 5 to our audited consolidated financial statements.

In addition, we enter into agreements in the normal course of business with certain vendors for the provision of goods and services, which includes third-party contract manufacturing services with CDMOs, development services with CROs, and research and development services from other industry consultants.

These agreements may include certain provisions for purchase obligations and termination obligations that could require payments for the cancellation of committed purchase obligations or for early termination of the agreements.

The amount of the cancellation or termination payments vary and are based on the timing of the cancellation or termination and the specific terms of the agreement.

These obligations and commitments are not separately presented.

These arrangements are generally cancelable by either party with notice, and we are not committed to any material non-cancelable purchase obligations as of March 31, 2026.

Critical Accounting Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S.

Generally Accepted Accounting

Principles (GAAP).

Generally Accepted Accounting Principles (GAAP).

The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements.

We base our estimates on historical experience, known trends and events, and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

We base our estimates on historical experience, known trends and

events, and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 2 to our Consolidated Financial Statements included elsewhere in this Annual Report, we believe the following accounting estimate to be most critical to the preparation of our financial statements.

Research and Development Expenses.

Prepaids, and Accruals

Research and development expenses consist of external and internal costs associated with our research and development activities, including its discovery and research efforts and the manufacturing, nonclinical and clinical development of our neuroscience product candidates.

While our significant accounting policies are described in more detail in Note 2 to our Consolidated Financial Statements included elsewhere in this Annual Report, we believe the following accounting estimates to be most critical to the preparation of our financial statements.

Research and Development Expenses, Prepaids, and Accruals

Research and development expenses consist of external and internal costs associated with our research and development activities, including our discovery and research efforts and the manufacturing, nonclinical and clinical development of our neuroscience product candidates.

Research and development costs are expensed in the period incurred.

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When evaluating the adequacy of the accrued liabilities, we analyze progress of the services, including the phase or completion of events, invoices received and contracted costs.

We hold discussions with applicable personnel and outside service providers as to the progress of our manufacturing, nonclinical studies, clinical trials, or contracted services are completed.

We hold discussions with applicable personnel and outside service providers regarding the status and progress of our manufacturing, nonclinical studies, clinical trials, and other contracted services.

Significant judgments and estimates may be made in assessing the phase or completion of events to determine the expense and the resulting prepaid or accrued balances at the end of any reporting period.

Actual results could differ from our estimates.

Our R&D accruals are most sensitive to assumptions about CRO progress on clinical trials, where invoices may lag actual services performed by several months.

If our estimates of vendor progress differ from actual progress, our research and development expense and accrued liabilities could be materially different from the amounts reported.

Non-refundable advance payments for goods and services, including fees for process development, are deferred and recognized as expense in the period that the related goods are consumed, or services are performed.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity