VivoSim Labs, INC.

VivoSim Labs, Inc. is a pharmaceutical and biotechnology services company focused on providing testing of drugs and drug candidates in three-dimensional human tissue models of liver and intestine. The company offers partners liver and intestinal toxicology insights using its new approach methodologies models and anticipates accelerated adoption of human tissue models following the U.S. Food and Drug Administration announcement on April 10, 2025 to refine animal testing requirements in favor of these non-animal NAM methods. The company also expects to offer bespoke services in investigational toxicology, mechanism of drug action elucidation, and other applications of these complex human tissue models. Prior to March 2025, the company was a clinical stage biotechnology company focused on developing FXR314 in inflammatory bowel disease, including ulcerative colitis.

The company faces intense competition in the biotechnology and pharmaceutical industry from major drug companies, specialized biotechnology firms, academic institutions, government agencies, and private and public research institutions, many of which have significantly greater financial and technical resources. Principal competitive factors include quality, scientific and technical support, intellectual property portfolio, and the availability of substantial capital resources. The company owns or exclusively licenses more than 160 ¹ patents and pending applications worldwide covering specific tissue designs, uses, and methods of manufacture. The company's liver toxicology platform demonstrated a sensitivity of 87.5% ² and a specificity of 100% ³ for a set of challenging liver toxicity cases, which management believes is a world's best.

The company generates revenue through providing liver toxicology predictive screening and research services to pharmaceutical and biotech companies at all stages of drug development, as well as through potential milestone payments from the sale of its FXR program. Revenue streams include royalty revenue from license agreements and product revenue, though the company ended its Mosaic Cell Sciences commercial operations during the third quarter of fiscal 2025. The company also recognizes other income from asset sales, including the FXR Asset Sale to Eli Lilly and Company. The company's services offer the potential benefit of reducing the significant risk and cost of bringing therapeutics to market through the regulatory process, as it is estimated that less than 10% ⁴ of drug candidates entering clinical trials are approved.

The company's platform technology encompasses expertise in 3D organoids such as spheroids, with significant advances in proprietary cell culture techniques including ratios, components, and conditions protected as trade secrets. The company is developing novel human normal and disease models using high throughput systems, bioprinted and flow/stretch capable 3D systems. The company's intellectual property portfolio includes 39 ⁵ issued U.S. patents and more than 50 ⁶ issued international patents in foreign jurisdictions including Australia, Canada, China, Denmark, France, Great Britain, Germany, Ireland, Japan, Sweden, the Netherlands and Switzerland. The company solely or jointly owns or holds exclusive licenses to 4 ⁷ pending U.S. patent applications and 2 ⁸ pending international applications in foreign jurisdictions including Canada and the European Patent Office. The company's NAMkind Human Liver Tissue is protected by U.S. Patent Nos. 9,222,932, 9,442,105, 10,400,219 and 11,127,774; Australia Patent Nos. 2014236780 and 2017200691; Canada Patent No. 2,903,844; and European Patent No. 2970896. The company's Human Kidney Tissue is protected by U.S. Patent Nos. 9,481,868, 10,094,821, 10,962,526 and 11,867,689; Australian Patent No. 2015328173; Canadian Patent No. 2,962,778; Chinese Patent No. ZL201580066469.8; European Patent No. 3204488; and Japan Patent No. 7021177.

The company's FXR program was sold to Eli Lilly and Company on March 25, 2025 for an upfront cash payment of $10.0 million ⁹, of which $9.0 million ¹⁰ was paid at closing and $1.0 million ¹¹ was deposited into escrow for 15 months to satisfy claims for indemnification, with potential milestone payments of up to $50.0 million ¹² in the aggregate contingent upon the achievement of certain development, regulatory and commercial milestones. In July 2026, the company received a milestone payment of $5.0 million ¹³ upon the achievement of a certain development milestone related to FXR314. Effective April 24, 2025, the company changed its corporate name to VivoSim Labs, Inc. On March 31, 2026, the company priced a best efforts public offering consisting of 286,557 ¹⁴ shares of common stock and 429,836 ¹⁵ accompanying common warrants to purchase up to 429,836 shares of common stock at a combined public offering price of $1.14 ¹⁶ per share and accompanying one and a half common warrants, and 2,345,022 ¹⁷ pre-funded warrants to purchase 2,345,022 shares of common stock and 3,517,533 ¹⁸ accompanying common warrants to purchase up to 3,517,533 shares of common stock at a combined public offering price of $1.139 ¹⁹ per pre-funded warrant. Each common warrant has an exercise price of $1.71 ²⁰ per share of common stock. The fair value of the common stock warrant liability was $5.7 million ²¹ as of March 31, 2026. As of March 31, 2026, the company had issued and sold pursuant to a Sales Agreement an aggregate of 1,530,001 ²² shares of common stock for gross proceeds of approximately $52.0 million ²³.

The company has generated operating losses each year since it began operations, including $11.5 million ²⁴ and $12.6 million ²⁵ for the years ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the company had an accumulated deficit of $356.0 million ²⁶. As of March 31, 2026, the company had total current assets of approximately $6.6 million ²⁷ and current liabilities of approximately $2.8 million ²⁸, resulting in working capital of $3.8 million ²⁹. As of March 31, 2026, the company's stockholders' equity was negative $1.1 million ³⁰. The company's closing stock price during the fiscal year ended March 31, 2026 ranged from $1.38 ³¹ to $4.78 ³² per share. As of July 10, 2026, the company had 3,494,071 ³³ outstanding shares of common stock and approximately 75 ³⁴ holders of record.

Management has performed an analysis and concluded that substantial doubt exists about the company's ability to continue as a going concern. The company's independent registered public accounting firm has included in its opinion for the year ended March 31, 2026 an explanatory paragraph expressing substantial doubt in the company's ability to continue as a going concern. The company expects to incur substantial additional operating losses over the next several years as its services and research and development activities proceed. The company currently does not have any committed external source of funds and does not expect to generate any meaningful revenue in the foreseeable future.

The company anticipates accelerated adoption of human tissue models following the FDA announcement on April 10, 2025 to refine animal testing requirements in favor of non-animal NAM methods. The company is now offering liver toxicology predictive screening and research services as well as working on predicting and studying the intestinal side effect profiles of drugs that are therapeutic candidates of pharmaceutical and biotech companies at all stages of drug development. The company also expects to offer bespoke services in the areas of investigational toxicology, mechanism of drug action elucidation, and other applications of these complex human tissue models. A portion of the company's internal research continues to focus on early stage internal drug discovery programs, validating targets, and testing potentially licensable or transactable external drug compounds to identify drug candidates for partnering and/or internal clinical development.

The company's services offer the potential benefit of reducing the significant risk and cost of bringing therapeutics to market through the regulatory process. The company presented findings at the May 2025 Digestive Disease Week scientific conference showing that its liver toxicology platform had a best-in-class predictive power with sensitivity of 87.5% ³⁵ and specificity of 100% ³⁶. The company believes these attributes can enable critical complex, multicellular disease models that can be used to study and develop clinically effective drugs across multiple therapeutic areas. The company has also used these human disease models to identify new molecular targets responsible for driving IBD and to explore the mechanism of action of known drugs including JAK inhibitors and related molecules.

The company expects to incur substantial additional operating losses over the next several years as its services and research and development activities proceed. The amount of future losses and when, if ever, the company will achieve profitability are uncertain. The company's ability to generate revenue and achieve profitability will depend on, among other things, entering into partnering arrangements with pharmaceutical companies, successfully developing human tissues and disease models, successfully outsourcing certain portions of development efforts, entering into partnering or licensing arrangements, obtaining regulatory approval, and raising sufficient funds.

As of June 1, 2026, the company had 15 ³⁷ employees, of which 9 ³⁸ are full-time. The company has also retained some of its former employees as consultants, in addition to a number of expert consultants in specific scientific and operational areas. The company's human capital resources objectives include identifying, recruiting, retaining, incentivizing and integrating existing and additional employees. The principal purposes of the company's equity incentive plans are to attract, retain and motivate select employees, consultants, and directors through the granting of equity-based compensation awards.

The company has the ability to sell up to $3.1 million ³⁹ of additional shares of its common stock to the public through an at the market offering pursuant to a Sales Agreement entered into with JonesTrading Institutional Services LLC on March 16, 2018. As of March 31, 2026, the company had issued and sold pursuant to the Sales Agreement an aggregate of 1,530,001 ⁴⁰ shares of common stock for gross proceeds of approximately $52.0 million ⁴¹. The company currently has an effective shelf registration statement on Form S-3 filed with the SEC. In the event that the aggregate market value of the company's common stock held by non-affiliates is less than $75.0 million, the amount the company can raise through primary public offerings of securities in any twelve-month period using shelf registration statements is limited to an aggregate of one-third of its public float.

The company faces significant headwinds including that using its platform technology to develop healthy human tissues and disease models to support both external and internal drug discovery and development is new and unproven. The company has not identified or developed any drug candidates utilizing its business model. The company may experience unforeseen technical complications, unrecognized defects and limitations in its technology or its ability to develop disease models or identify viable drug candidates. The company will require access to a constant, steady, reliable supply of human cells to support its services and research and development activities, and there can be no guarantee that the company will be able to access the quantity and quality of raw materials needed at a cost-effective price.

The company's ability to continue as a going concern is dependent upon its ability to obtain additional equity or debt financing, obtain government grants, reduce expenditures, and generate significant revenue. The company may require substantial additional funding, and raising additional capital would cause dilution to existing stockholders and may restrict operations or require the company to relinquish rights to its technologies or to a product candidate. The company's public float was less than $75.0 million as of the date of filing, limiting the amount the company can raise through primary public offerings of securities using shelf registration statements to an aggregate of one-third of its public float. Additional funds may not be available when needed on terms that are acceptable to the company, or at all.

Management has performed an analysis and concluded that substantial doubt exists about the company's ability to continue as a going concern, and the independent registered public accounting firm has included an explanatory paragraph expressing substantial doubt in the company's ability to continue as a going concern for the year ended March 31, 2026. The company has generated operating losses each year since it began operations, including $11.5 million ⁴² and $12.6 million ⁴³ for the years ended March 31, 2026 and 2025, respectively, and as of March 31, 2026 had an accumulated deficit of $356.0 million ⁴⁴. The company's stockholders' equity was negative $1.1 million ⁴⁵ as of March 31, 2026, and the company is not in compliance with Nasdaq Listing Rule 5550(b)(1) requiring a minimum of $2,500,000 in stockholders' equity, which could result in delisting from the Nasdaq Capital Market. The company's common stock is currently trading below $1 per share, and if it continues to trade below the minimum bid price for 30 consecutive business days, the company expects to receive a deficiency notice from Nasdaq. The company may require substantial additional funding, and as of the date of filing, the company's public float was less than $75.0 million, limiting the amount the company can raise through primary public offerings of securities using shelf registration statements to an aggregate of one-third of its public float. The company's business model of using 3D human tissue models for drug testing is new and unproven, and the company has not identified or developed any drug candidates utilizing this business model.

Management's message emphasizes the company's transformation from a clinical stage biotechnology company to a pharmaceutical and biotechnology services company focused on providing testing of drugs and drug candidates in 3D human tissue models of liver and intestine. Key themes include the anticipated accelerated adoption of human tissue models following the FDA's April 10, 2025 announcement to refine animal testing requirements, the company's best-in-class predictive power demonstrated at the May 2025 Digestive Disease Week scientific conference with sensitivity of 87.5% ⁴⁶ and specificity of 100% ⁴⁷, and the strategic shift to leverage the company's longstanding assets including intestinal and liver tox models, expertise, and IP portfolio for 3D bioprinting. Management has emphasized that substantial doubt exists about the company's ability to continue as a going concern, with the company expecting to incur substantial additional operating losses over the next several years. The company's strategic priorities include building a services platform supported by adoption by pharmaceutical and biotech companies, successfully developing human tissues and disease models for drug discovery and development, and raising sufficient funds to finance activities and the long-term business plan.