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Grace Therapeutics, Inc (NASDAQ:GRCE) reported first quarter fiscal year 2026 results highlighting the recent submission of its new drug application (NDA) for GTx-104. GTx-104 is an infused formulation of nimodipine developed to treat patients with aneurysmal subarachnoid hemorrhage (aSAH). The company announced that it had submitted its new drug application (NDA) to the FDA on June 25th. This is a meaningful milestone for the company and may trigger the release of additional capital if the NDA is accepted. We expect the FDA to announce its acceptance in the August 2025 timeframe. As a reminder, in February the company announced results for the Phase III STRIVE-ON trial. It found excellent relative dose intensity, better outcomes, fewer intensive care unit readmissions and fewer ventilator days for patients on GTx-104 compared with oral nimodipine.
Fiscal Year 1Q:26 Financial and Operational Results
Grace reported 1Q:26 results in a press release and a Form 10-Q filing with the SEC on August 12th. For the three-month period ending June 30th, 2025, operating expenses of $3.1 million were recognized. Net loss for 1Q:26 totaled ($3.4) million or ($0.21) per share. Comparing the fiscal first quarter 2026 to the same prior year period:
- General & Administrative expenses were $2.1 million, down 5% from $2.3 million. The change was attributable to lower professional fees;
- Research and development expenses fell by 65% to $1.0 million from $2.7 million as the clinical development program for GTx-104 concluded;
- Net interest and other income were ($0.3) million compared to $1.6 million with the difference primarily related to a change in fair value of derivative warrant liabilities related to an increase in Grace’s stock price. Interest income fell due to a lower interest yield;
- Net loss was ($3.4) million vs. ($2.6) million or ($0.21) per share vs ($0.24).
As of June 30th, 2025, cash and equivalents carried on the balance sheet totaled $20.0 million. This amount compares to the $22.1 million cash balance held at the end of fiscal year 2025. Net cash used in financing for 1Q:26 was $327,000 million related to stock issuance costs.
New Drug Application (NDA) Submission
As expected, Grace Therapeutics submitted its new drug application (NDA) to the FDA before the end of the calendar second quarter. Following the pre-NDA meeting held with the FDA earlier in the year, management felt closely aligned with the agency in terms of NDA acceptance requirements. It spent the next several months preparing the related documents and on June 24th announced that it had submitted its application.
Grace is in a strong financial position with $20 million in cash as of June 30th, 2025 and offers a product that meets a profound unmet need. During previous equity capital raises, Grace was able to structure these deals so that the attached warrants could be called upon after achieving certain milestones. The company will be able to demand exercise of warrants that can potentially generate about $7.6 million following NDA acceptance and about $15 million following approval of GTx-104 assuming the warrants are in the money. Following normal regulatory timelines, the first milestone could be reached in August if the FDA accepts the application.
With the funds on the balance sheet and additional capital raised from the warrant exercises, Grace will be able to begin commercialization activities. Its plan is to focus on the top 250 to 300 hospitals that address aneurysmal subarachnoid hemorrhage (aSAH), which is achievable with a sales force of 15 to 20. We expect to hear more about the strategy in the coming months and following the conclusion of marketing studies the company is conducting.
Grace Therapeutics Investment Thesis
In support of the reiteration of the thesis for the company, we recorded a short clip highlighting reasons to own Grace Therapeutics.
Investment Thesis
Grace’s GTx-104 investment thesis is straightforward. There are about 40,000 aSAH cases per year in the United States that in many cases are inadequately served. Oral nimodipine is standard of care. The underlying drug has demonstrated its efficacy in increasing blood flow to the brain, reducing brain damage and improving neurological outcomes. However, nimodipine is only available in oral form which presents several shortcomings. The primary weakness is that the oral formulation is difficult to administer to patients that are unconscious or have a hard time swallowing, which is a common feature of aSAH patients. Oral nimodipine should be administered every four hours due to its short half-life and it should not be taken with food as this further reduces its already low bioavailability. Oral nimodipine has low and inconsistent bioavailability due to first-pass metabolism and poor solubility, resulting in reduced systemic exposure. Higher blood plasma levels can cause hypotension which is associated with neurological impairment, organ damage, reduced kidney function and other risks. Europe offers an IV formulation of nimodipine branded Nimotop; however, the product solubilizes the drug with high levels of ethanol and propylene glycol. These excipients have numerous negative effects and prevented FDA approval of Nimotop. Grace’s IV formulation uses excipients generally recognized as safe (GRAS), and provides a product which is able to improve upon the ethanol-based European version and the oral formulation’s primary weaknesses.
Results from Grace’s Phase III safety trial found excellent relative dose intensity, better outcomes, fewer intensive care unit readmissions and fewer ventilator days for GTx-104 compared with oral nimodipine. The trial met its primary endpoint of the number of patients with at least one episode of clinically significant hypotension reasonably considered to be caused by the drug. Patients receiving GTx-104 experienced a 19% reduction in at least one incidence of clinically significant hypotension compared to oral nimodipine (28% versus 35%). Secondary endpoints include safety, clinical and pharmacoeconomic outcomes. Additional detail on the trial can be found in Grace’s press release and in our report.
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