Pasithea Therapeutics Corp. (NASDAQ:KTTA) is a clinical-stage biotechnology company at the forefront of developing innovative treatments for central nervous system (CNS) disorders and other diseases, including RASopathies. The company’s primary focus is on advancing its lead therapeutic candidate, PAS-004, a next-generation macrocyclic mitogen-activated protein kinase (MEK) inhibitor, which holds the potential to address the limitations and liabilities associated with existing drugs targeting a similar mechanism of action.
Company History and Business Overview Pasithea Therapeutics was incorporated in the State of Delaware on May 12, 2020 and completed its Initial Public Offering (IPO) on September 17, 2021. The company’s primary operations, the Therapeutics segment, are dedicated to developing its lead product candidate, PAS-004, for the treatment of a range of RASopathies, including neurofibromatosis type 1 (NF1)-associated neurofibromas, as well as various oncology indications.
In December 2023, Pasithea received clearance from the U.S. Food and Drug Administration (FDA) for its Investigational New Drug (IND) application for PAS-004 and a study may proceed letter, allowing the company to initiate a 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 this Phase 1 clinical trial at four sites in the United States and plans to open an additional three sites in Eastern Europe in the fourth quarter of 2024.
During 2023, Pasithea made the decision to cease further development of its PAS-2 program for multiple sclerosis. This decision was based on several factors, including the significant capital, resources, and time required for development, as well as the current and projected availability of effective treatment options for MS patients. Additionally, the company discontinued providing business support services to anti-depression clinics in the U.K. and United States, which were previously conducted through partnerships with healthcare providers.
Throughout its history, Pasithea’s primary sources of funding have been proceeds from various public and private offerings of its capital stock. The company remains dependent on securing additional working capital through the sale of equity and/or debt securities to continue executing its development plans and maintain operations.
Financials
Financial Snapshot and Liquidity As of September 30, 2024, Pasithea Therapeutics had approximately $9.40 million in cash and cash equivalents, with working capital of approximately $9.10 million. The company has incurred significant operating losses and negative cash flows from operations since inception, with an accumulated deficit of approximately $46.40 million as of September 30, 2024.
For the nine months ended September 30, 2024, Pasithea reported a net loss from continuing operations of $10.73 million, compared to a net loss from continuing operations of $10.48 million for the same period in 2023. The company’s research and development expenses increased by approximately $939,000, or 20%, for the nine months ended September 30, 2024, compared to the same period in 2023, primarily driven by the initiation of the Phase 1 clinical trial for PAS-004. General and administrative expenses decreased by approximately $779,000, or 13%, for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to decreases in legal, accounting, and other administrative costs.
Pasithea’s major sources of cash have historically been proceeds from various public and private offerings of its capital stock. In September 2024, the company announced the closing of a $4.50 million private placement, providing additional capital to support its ongoing development efforts.
Based on the company’s current cash position and planned expenditures, Pasithea’s management believes that the company will not have sufficient working capital to meet its needs through the next twelve months without obtaining additional funding. The company is dependent on securing further capital through the sale of equity or debt securities to continue executing its development plans and maintain operations.
For the most recent quarter (Q3 2024), Pasithea reported no revenue, a net loss of $2,999,834,000, operating cash flow (OCF) of -$11,472,042,049, and free cash flow (FCF) of -$11,472,042,049. The company’s liquidity position includes a debt-to-equity ratio of 0, cash of $9.36 million, a current ratio of 14.81, and a quick ratio of 14.81. Pasithea operates solely in the United States as a small cap company.
Business Segments
Therapeutics Segment The Therapeutics segment is Pasithea’s core focus, where the company is developing innovative treatments for central nervous system (CNS) disorders and other diseases, including RASopathies. The company’s lead therapeutic candidate is PAS-004, a next-generation macrocyclic mitogen-activated protein kinase (MEK) inhibitor that may address the limitations and liabilities associated with existing drugs targeting a similar mechanism of action.
For the nine months ended September 30, 2024, the Therapeutics segment’s research and development expenses were $5.69 million, an increase of 19.8% compared to the same period in 2023. This increase was primarily driven by costs related to the initiation of the PAS-004 Phase 1 trial, as well as increased general research and development, consulting, and manufacturing expenses.
In addition to PAS-004, Pasithea has two earlier-stage discovery programs, PAS-3 for amyotrophic lateral sclerosis (ALS) and PAS-1 for schizophrenia, which the company believes address limitations in the treatment paradigm for those indications.
Clinics Segment (Discontinued) During 2023, Pasithea discontinued its Clinics segment, which previously provided business support services to anti-depression clinics in the U.K. and the United States through partnerships with healthcare providers. The company sold and disposed of the assets associated with the Clinics operations in Los Angeles, CA, and discontinued the at-home services in New York, NY and the U.K.
As of September 30, 2024, there was no carrying value associated with the discontinued Clinics segment, and the results of its operations have been reflected as discontinued operations in Pasithea’s financial statements.
Regulatory and Clinical Milestones In December 2023, Pasithea received clearance from the FDA for its IND application for PAS-004 and a study may proceed letter, allowing the company to initiate a Phase 1 clinical trial in patients with MAPK pathway-driven advanced tumors. The company is currently conducting this trial at four sites in the United States and plans to open an additional three sites in Eastern Europe in the fourth quarter of 2024.
On September 9, 2024, Pasithea announced the successful completion of long-term chronic toxicity studies for its lead candidate, PAS-004. Additionally, on September 26, 2024, the company reported positive safety, tolerability, pharmacokinetic (PK), and preliminary efficacy data from the first two cohorts of patients in the ongoing Phase 1 trial of PAS-004.
Pasithea’s clinical development plan for PAS-004 includes initiating a Phase 1/2a trial in adult patients with NF1-associated plexiform and/or cutaneous neurofibromas, followed by a pediatric patient population, with the ultimate goal of seeking FDA marketing approval in these patient populations.
In September 2024, the company also announced the appointment of Dr. Rebecca Brown, Director of the Neurofibromatosis Clinic at The Mount Sinai Hospital, to its Scientific Advisory Board, further strengthening its expertise in the development of therapies for NF1 and other CNS disorders.
Risks and Challenges As a clinical-stage biotechnology company, Pasithea Therapeutics faces several risks and challenges that are common to the industry, including:
1. Uncertainty in the successful development and regulatory approval of its product candidates The development of pharmaceutical products is a highly complex and risky process, with no guarantee of success. Pasithea’s ability to obtain regulatory approval for its product candidates is subject to numerous factors, including the results of clinical trials, the quality of its manufacturing processes, and the company’s compliance with applicable regulations.
2. Dependence on the success of its lead candidate, PAS-004 Pasithea’s future success is heavily dependent on the successful development and commercialization of PAS-004. Failure to achieve positive results in clinical trials or obtain regulatory approval for PAS-004 could significantly impact the company’s financial condition and prospects.
3. Reliance on third-party vendors and contract research organizations Pasithea relies on a network of third-party vendors, including contract research organizations (CROs) and contract manufacturing organizations (CMOs), to support its research and development activities. Disruptions or delays in the services provided by these third parties could adversely affect the company’s operations and financial condition.
4. Need for additional capital As a clinical-stage company, Pasithea will require significant additional funding to continue its operations and advance its product candidates through clinical development and potential commercialization. Failure to secure adequate financing could jeopardize the company’s ability to continue as a going concern.
5. Competition from larger, more established pharmaceutical companies Pasithea operates in a highly competitive industry, with several larger, more established pharmaceutical companies that have significantly greater financial, manufacturing, and commercial resources. These competitors may be able to develop and commercialize products more quickly and effectively than Pasithea.
Outlook and Conclusion Pasithea Therapeutics is a promising clinical-stage biotechnology company focused on developing innovative treatments for central nervous system disorders and rare diseases. The company’s lead candidate, PAS-004, a next-generation macrocyclic MEK inhibitor, holds significant potential to address the limitations and liabilities associated with existing drugs targeting a similar mechanism of action.
With the recent clearance of its IND application and the initiation of a Phase 1 clinical trial for PAS-004, Pasithea has made significant strides in advancing its lead program. The company’s plans to initiate a Phase 1/2a trial in NF1-associated neurofibromas, followed by a pediatric patient population, further demonstrate its commitment to developing transformative therapies for underserved patient populations.
However, as a clinical-stage company, Pasithea faces a range of risks and challenges, including the inherent uncertainty in drug development, reliance on third-party vendors, and the need for substantial additional capital to continue its operations and advancement of its pipeline. Overcoming these obstacles will be crucial for the company to realize the full potential of its innovative approaches and deliver on its promise of addressing the unmet needs of patients suffering from CNS disorders and rare diseases.
Overall, Pasithea Therapeutics represents a compelling investment opportunity for those interested in the biotechnology sector and the development of groundbreaking treatments for complex medical conditions. As the company continues to execute on its clinical and regulatory milestones, it will be important to closely monitor its progress and ability to navigate the challenges that lie ahead.
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