10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

______________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2020

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                 

Commission file number: 001-35776

______________________________________

Acasti Pharma Inc.

(Exact name of registrant as specified in its charter)

 ______________________________________

Québec, Canada	98-1359336
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

3009 boul. de la Concorde East, Suite 102

Laval, Québec, Canada H7E 2B5

(Address of principal executive offices, including zip code)

450-686-4555

(Registrant’s telephone number, including area code)

______________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, no par value per share	ACST	NASDAQ Stock Market

Indicate 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 Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

1

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes ☐    No  ☒

The number of outstanding common shares of the registrant, no par value per share, as of February 9, 2021 was 179,495,705.

2

ACASTI PHARMA INC.

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended December 31, 2020

Table of Contents

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults upon Senior Securities	49
Item 4.	Mine Safety Disclosures	49
Item 5.	Other Information	49
Item 6.	Exhibits	50

3

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report contains information that may be forward-looking information within the meaning of Canadian securities laws and forward-looking statements within the meaning of U.S. federal securities laws, both of which we refer to in this quarterly report as forward-looking information. Forward-looking information can be identified by the use of terms such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue” or other similar expressions concerning matters that are not statements about the present or historical facts. Forward-looking information in this quarterly report includes, among other things, information or statements about:

· our strategy, future operations, prospects and the plans of our management with a goal to enhance shareholder value;

· the outcome of our formal review process to explore and evaluate strategic alternatives to enhance shareholder value;

· our ability to establish collaborations or obtain additional funding;

· our intellectual property position and duration of our patent rights;

· the potential adverse effects that the COVID-19 pandemic may have on our business and operations;

· our need for additional financing, and our estimates regarding our future financing and capital requirements;

· our expectation regarding our financial performance, including our costs and expenses, liquidity and capital resources; and

· our projected capital requirements to fund our anticipated expenses. 

Although the forward-looking information in this quarterly report is based upon what we believe are reasonable assumptions, you should not place undue reliance on that forward-looking information since actual results may vary materially from it. Important assumptions made by us when making forward-looking statements include, among other things, assumptions by us that:

· we are able to successfully identify and execute an opportunity or opportunities to enhance shareholder value through our strategic review process;

· we are able to obtain the additional capital and financing we require when we need it;

· we are able to attract and retain key management and skilled personnel;

· third parties provide their services to us on a timely and effective basis;

· we are able to take advantage of new business opportunities in the pharmaceutical industry;

· we are able to secure and defend our intellectual property rights, and to avoid infringing upon the intellectual property rights of third parties;

· we face no lawsuits or other proceedings or any such matters, if they arise, are satisfactorily resolved;

· there are no material adverse changes in relevant laws or regulations; and

· we are able to continue as a going concern;

4

In addition, the forward-looking information in this quarterly report is subject to a number of known and unknown risks, uncertainties and other factors, including those described in this quarterly report under the heading “Item 1A. Risk Factors”, many of which are beyond our control, that could cause our actual results and developments to differ materially from those that are disclosed in or implied by the forward-looking information, including, among others:

· we may never identify a suitable opportunity to enhance shareholder value through our strategic review process;

· if we do not successfully consummate a strategic transaction, our board of directors may decide to pursue a dissolution and liquidation of our company;

· we are substantially dependent on our remaining employees to facilitate the consummation of a strategic transaction;

· we may not realize any additional value in a strategic transaction for our intellectual property;

· our business and operations may be materially and adversely affected by the COVID-19 pandemic;

· we may be subject to foreign exchange rate fluctuations;

· we may not realize any additional value in a strategic transaction for our intellectual property;

· it is difficult and costly to protect our intellectual property rights;

· we may face infringement of third party intellectual; property and other proprietary rights; and

· general changes in economic and capital market conditions could adversely affect us

All of the forward-looking information in this quarterly report is qualified by this cautionary statement. There can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the consequences or effects on our business, financial condition or results of operations that we anticipate. As a result, you should not place undue reliance on the forward-looking information. Except as required by applicable law, we do not undertake to update or amend any forward-looking information, whether as a result of new information, future events or otherwise. All forward-looking information is made as of the date of this quarterly report.

We express all amounts in this quarterly report in U.S. dollars, except where otherwise indicated. References to “$” and “US$” are to U.S. dollars and references to “C$” or “CAD$” are to Canadian dollars.

Except as otherwise indicated, references in this quarterly report to “Acasti,” “the Corporation,” “we,” “us” and “our” refer to Acasti Pharma Inc. and its consolidated subsidiaries.

5

PART I. FINANCIAL INFORMATION

Item 1: Financial Information

Unaudited Interim Condensed Consolidated Financial Statements

Interim Condensed Consolidated Balance sheets	8
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss	9
Interim Condensed Consolidated Statements of Shareholders’ Equity	10
Interim Condensed Consolidated Statements of Cash Flows	12
Notes to the Interim condensed consolidated financial statements	13

6

Interim Consolidated Condensed Financial Statements of
(Unaudited)

Acasti pharma inc.

Three-month and nine-month periods ended December 31, 2020 and 2019

7

Acasti pharma INC.

Condensed Consolidated Interim Balance sheet

(Unaudited)

			December 31, 2020			March 31, 2020
(thousands of US dollars)	Notes		$			$
Assets
Current assets:
Cash and cash equivalents				26,546			14,240
Short-term investments		4		1,372			-
Receivables				619			546
Inventory		10		14			-
Assets held for sale		6		1,088			2,578
Deferred financing costs		8(a)		-			121
Prepaid expenses				559			977
Total current assets				30,198			18,462
Right of Use Asset				105			147
Intangible assets		5		-			4,244
Total assets				30,303			22,853
Liabilities and Equity
Current liabilities:
Trade and other payables				2,143			7,319
Lease Liability				105			76
Total current liabilities				2,248			7,395
Derivative warrant liabilities		7,8(c)		2,340			2,393
Lease Liability				-			71
Total liabilities				4,588			9,859
Equity:
Common shares				162,196			137,424
Additional paid-in capital				10,825			9,797
Accumulated other comprehensive loss				(6,934	)		(7,887	)
Accumulated deficit				(140,372	)		(126,340	)
Total shareholder’s equity (deficit)				25,715			12,994
Commitments and contingencies		13
Total liabilities and shareholders’ equity				30,303			22,853

See accompanying notes to unaudited Interim financial statements.

8

Acasti pharma INC.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

		Three-month periods ended						Nine-month periods ended
		December 31, 2020			December 31, 2019 (note 13)			December 31, 2020			December 31, 2019 (note 13)
(thousands of US dollars, except per share data)	Notes	$			$			$			$
Revenues
Revenues from product sales	10		81			-			81			-
Operating Expenses
Cost of sales of products			(36	)		-			(36	)		-
Research and development expenses, net of government assistance	9		(678	)		(3,912	)		(3,720	)		(14,056	)
General and administrative expenses			(1,105	)		(1,579	)		(4,078	)		(4,250	)
Sales and marketing expenses			(226	)		(655	)		(1,076	)		(2,101	)
Impairment of Intangible assets	5		-			-			(3,706	)		-
Impairment of Equipment	6		-			-			(1,584	)		-
Loss from operating activities			(1,964	)		(6,146	)		(14,119	)		(20,407	)
Financial Income (expenses)	11		(1,256	)		(5,977	)		87			(21,721	)
Net loss and total comprehensive loss			(3,220	)		(12,123	)		(14,032	)		(42,128	)
Basic and diluted loss per share			(0.03	)		(0.14	)		(0.15	)		(0.51	)
Weighted average number of shares outstanding			110,467,167			86,767,312			95,376,935			82,817,283

See accompanying notes to unaudited interim financial statements

9

Acasti pharma INC.

Condensed Consolidated Interim Statements of Changes in Shareholder’s Equity

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

		Common Shares
(thousands of US dollars except for share data)	Notes	Number			Dollar			Additional Paid-in Capital			Accumulated other comprehensive loss			Deficit			Total
						$			$			$			$			$
Balance, March 31, 2020			90,209,449			137,424			9,797			(7,887	)		(126,340	)		12,994
Net loss and total comprehensive loss for the period			-			-			-			-			(4,666	)		(4,666	)
Cumulative translation adjustment			-			-			-			308			-			308
Net proceeds from shares issued under the at-the-market (ATM) program	8(a)		2,278,936			1,765			-			-			-			1,765
Stock based compensation	12		-			-			635			-			-			635
Balance at June 30, 2020			92,488,385			139,189			10,432			(7,579	)		(131,006	)		11,036
Net loss and total comprehensive loss for the period			-			-			-			-			(6,146	)		(6,146	)
Cumulative translation adjustment			-			-			-			179			-			179
Net proceeds from shares issued under the at-the-market (ATM) program	8(a)		4,404,152			3,427			-			-			-			3,427
Stock based compensation			(23,394	)		(46	)		423			-			-			377
Balance at September 30, 2020			96,869,143			142,570			10,855			(7,400	)		(137,152	)		8,873
Net loss and total comprehensive loss for the period															(3,220	)		(3,220	)
Cumulative translation adjustment												466						466
Net proceeds from shares issued under the at-the-market (ATM) program	8(a)		59,204,624			19,626												19,626
Stock based compensation									(30	)								(30	)
Balance at December 31, 2020			156,073,767			162,196			10,825			(6,934	)		(140,372	)		25, 715

10

Acasti pharma INC.

Condensed Consolidated Interim Statements of Changes in Shareholder’s Equity

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

		Common Shares
(thousands of US dollars except for share data)	Notes	Number		Dollar		Additional Paid-in Capital			Accumulated other comprehensive loss			Deficit			Total
				$		$			$			$			$
Balance, March 31, 2019			78,132,734		110,857		8,150			(7,135	)		(100,827	)		11,045
Net loss and total comprehensive loss for the period			-		-		-			-			(8,846	)		(8,846	)
Cumulative translation adjustment			-		-		-			51			-			51
Shares issued as settlement	8(b)		900,000		739		-			-			-			739
Warrants exercised			20,000		34		-			-			-			34
Stock based compensation			3,000		2		250			-			-			252
Balance at June 30, 2019			79,055,734		111,632		8,400			(7,084	)		(109,673	)		3,275
Net loss and total comprehensive loss for the period			-		-		-			-			(21,158	)		(21,158	)
Cumulative translation adjustment			-		-		-			(64	)		-			(64	)
Warrants exercised			6,113,195		16,706		(188	)		-			-			16,518
Stock based compensation			19,166		20		650			-			-			670
Balance at September 30, 2019			85,188,095		128,358		8,862			(7,148	)		(130,831	)		(759	)
Net loss and total comprehensive loss for the period			-		-		-			-			(12,123	)		(12,123	)
Net proceeds from shares issued under the at-the-market (ATM) program			2,914,356		6,002		-			-			-			6,002
Cumulative translation adjustment			-		-		-			(17	)					(17	)
Warrants exercised			922,908		2,078		(113	)		-						1,965
Stock based compensation			32,460		56		586			-						642
Balance at December 31, 2019			89,057,819		136,494		9,335			(7,165	)		(142,954	)		(4,290	)

See accompanying notes to unaudited interim financial statements.

11

Acasti pharma INC.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

		Three-month periods ended						Nine-month periods ended
		December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
					(notes 13)						(notes 13)
(thousands of US dollars)	Notes	$			$			$			$
Cash flows used in operating activities:
Net loss for the period			(3,220	)		(12,123	)		(14,032	)		(42,128	)
Adjustments:
Amortization of intangible assets			-			485			781			1,449
Depreciation of equipment			-			110			142			271
Impairment of intangible assets			-			-			3,706			-
Impairment of Equipment			-			-			1,584			-
Stock-based compensation	12		(30	)		611			1,003			1,508
Change in fair value of warrant liabilities	7		1,098			5,882			(420	)		21,756
Write off-of deferred financing costs of at-the-market (ATM) program	11		-			-			264			-
Accretion of interest on convertible debenture			-			30			-			106
Unrealized foreign exchange (gain) loss			(54	)		(102	)		(208	)		(151	)
Changes in non-cash working capital items	13		(2,009	)		(2,007	)		(5,404	)		(2,870	)
Changes in other assets			1			10			25			10
Net cash used in operating activities			(4,214	)		(7,104	)		(12,559	)		(20,049	)
Cash flows from (used in) investing activities:
Acquisition of equipment			-			(254	)		(69	)		(290	)
Acquisition of investments			(1,372	)		(32	)		(1,393	)		(2,063	)
Maturity of investment			-			(61	)		21			10,890
Net cash provided by (used in) investing activities			(1,372	)		(347	)		(1,441	)		8,537
Cash flows used in financing activities:
Net proceeds from issuance of common shares under the at-the-market (ATM)	8(a)		19,745			6,002			24,955			6,002
Deferred financing costs			-			(31	)		(143	)		(67	)
Proceeds from exercise of warrants			-			1,113			-			7,733
Proceeds from exercise of stock options			-			33			-			45
Net cash provided by financing activities			19,745			7,117			24,812			13,713
Effect of exchange rate fluctuations on cash and cash equivalents			(1,843	)		260			(1,993	)		487
Translations effects on cash and cash equivalents related to reporting currency			2,678			345			3,487			208
Net increase in cash and cash equivalents			14,994			271			12,306			2,896
Cash and cash equivalents, beginning of period			11,552			19,496			14,240			16,871
Cash and cash equivalents, end of period			26,546			19,767			26,546			19,767
Cash and cash equivalents are comprised of:
Cash			7,104			6,874			7,104			6,874
Cash equivalents			19,442			12,893			19,442			12,893

See accompanying notes to unaudited interim financial statements.

12

Acasti Pharma inc.

Notes to Consolidated Interim Financial Statements

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

1. Nature of Operation:

Acasti Pharma Inc. (“Acasti” or the “Corporation”) is incorporated under the Business Corporations Act (Québec) (formerly Part 1A of the Companies Act (Québec)). The Corporation is domiciled in Canada and its registered office is located at 3009, boul.de la Concord Est, Laval, Québec, H7E 2B5.

In August 2020, the Corporation released Phase 3 clinical study results for the Corporation’s lead drug candidate, CaPre. The failure of the TRILOGY studies to meet the primary endpoint resulted in the Corporation making a decision not to proceed with a filing of a New Drug Application (NDA) with the U.S. Food and Drug Administration (FDA).

In September 2020, the Corporation commenced a formal process to explore and evaluate strategic alternatives to enhance shareholder value. Towards this end, the Corporation has engaged a financial advisor to assist in the process. There can be no assurance of a successful outcome from these efforts, or of the form or timing of any such outcome. The Corporation has greatly reduced its commercial and research and development activities including a reduction in workforce to reduce operating expenses, while it evaluates these opportunities. The Corporation’s operations are now primarily focused on evaluating strategic alternatives. The Corporation remains subject to a number of risks similar to other companies in the biotechnology industry, including compliance with government regulations, protection of proprietary technology, dependence on third parties and product liability.

2. Summary of significant accounting policies:

Adoption of U.S. GAAP:

These interim condensed consolidated financial statements of the Corporation have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP). Comparative figures, for the three and nine-month periods ended December 31, 2019, which were previously presented in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board, have been adjusted as required to be compliant with the Corporation’s accounting policies under U.S. GAAP.

Basis of presentation:

These unaudited Interim Consolidated Financial Statements have been prepared using accounting policies consistent with those used in preparing the Corporation’s March 31, 2020 Annual Consolidated Financial Statements, except as disclosed in Note 3 – Recent accounting pronouncements and policies and should be read in conjunction with such statements and Notes thereto.

The following summarizes the principal conditions or events relevant to the Corporation’s going concern assessment, which primarily considers the period of one year from the issuance date of these financial statements.

The Corporation has incurred operating losses and negative cash flows from operations since its inception. Prior to this quarter, there was substantial doubt regarding the Corporation’s ability to realize its assets and discharge its liabilities and commitments in the ordinary course of business. During this quarter, the Corporation has raised net proceeds of $19.7 million under the ATM program. The Corporation’s assets as at December 31, 2020 include cash and cash equivalents and short-term investments totaling $27.9 million. The Corporation’s current liabilities total $2.3 million at December 31, 2020 and are comprised primarily of amounts due to or accrued for creditors. Subsequent to December 31, 2020, the Corporation raised an additional $7.9 million of net proceeds.

The Corporation’s ability to continue as a going concern is dependent upon its ability to achieve a successful strategic alternative and ultimately generate cashflows to meet its obligations. Due to the failure of the Corporation’s Phase 3 clinical studies to meet its primary endpoints, and the resulting decision not to file an NDA to obtain FDA approval for CaPre, the Corporation has commenced a formal process to explore and evaluate strategic alternatives to enhance shareholder value, which is currently the focus of the Corporation’s activities. There is no assurance that a strategic transaction will be consummated as such transaction is not within the Corporation’s control. Due to the Corporation’s lack of operating activities, its current liabilities and commitments are limited. As a result of the Corporation’s current liquidity profile and lack of operating activity unrelated to the evaluating strategic alternatives, management has assessed that substantial doubt regarding its ability to continue as a going concern for one year from the issuance date of these financial statements no longer exists.

13

Acasti Pharma inc.

Notes to Consolidated Interim Financial Statements

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

2. Summary of significant accounting policies (continued):

Use of estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates are based on management’s best knowledge of current events and actions that management may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Estimates and assumptions include the measurement of derivative warrant liabilities (note 7) and stock-based compensation (note 11), impairment of intangibles and assets held for sale (notes 5 and 6) and the take-or-pay contract (note 14(a)). Estimates and assumptions are also involved in measuring the accrual of services rendered with respect to research and developments expenditures at each reporting date, as well as in determining which research and development expenses qualify for investment tax credits and in what amounts. The Corporation recognizes the tax credits once it has reasonable assurance that they will be realized. Recorded tax credits are subject to review and approval by tax authorities and, therefore, could be different from the amounts recorded.

3. Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13-Financial Instruments-Credit Losses (Topic 326), which amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost, the new guidance eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. ASU 2016-13 will affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2022. Management has not yet evaluated the impact of this ASU on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15 Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. ASU 2018-15 aligns the requirements for capitalizing implementation costs in such cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 and early adoption is permitted. Entities can choose to adopt the new guidance prospectively or retrospectively. Management has adopted the accounting standard update. However, the adoption of this update did not have any impact on the reported amounts as at December 31, 2020.

14

Acasti Pharma inc.

Notes to Consolidated Interim Financial Statements

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

4. Short-term investments

The Corporation holds various marketable securities, with maturities greater than 3 months at the time of purchase, as follows:

	December 31, 2020		March 31, 2020
		$		$
Term deposits issued in US currency earning interest at ranges between 0.30% and 0.40% and maturing on various dates from March 9, 2021 to June 22, 2021		536		-
Term deposits issued in CAD currency earning interest at ranges between 0.62% and 0.67% and maturing on various dates from April 16, 2021 to June 22, 2021		836		-
Total short-term investments		1,372		-

5. Impairment loss Intangible assets:

The Corporation tests intangible assets for impairment should circumstances change or events occur that would indicate that the fair value of an asset may be below its carrying value. During the second quarter of fiscal 2021, the Corporation released its Phase 3 clinical programs data and its failure to meet its primary endpoints, and the resulting decision to not file an NDA to obtain FDA approval for CaPre. In addition, a significant share price reduction occurred. Due to these indicators of impairment under ASC 350, the Corporation undertook an analysis to determine the fair value of its intangible asset this quarter.

In prior years, the Corporation entered into agreements with Neptune Wellness Solutions Inc. (Neptune) pursuant to which the Corporation obtained a license and exercised its option under this license agreement to pay in advance all of the future royalties payable to Neptune. This license allows the Corporation to exploit the intellectual property rights in-order to develop novel active pharmaceutical ingredients into commercial products for the prescription drugs market. In assessing the magnitude of any impairment of the license the Corporation considered all available evidence including i) significant adverse impact from business climate due to Phase 3 clinical programs failure to meet its primary endpoints, and the resulting decision to not file an NDA to obtain FDA approval for CaPre, and the resulting internal forecasts that no cash flows from the use of the license was possible, and (ii) management’s estimate that a market place participant would place minimal to no value on the license if it were to be sold on its own or in combination with other assets, recognized or not, which is a level 3 measurement in the fair value hierarchy which included unobservable inputs. Accordingly, an impairment loss of $3,706 was recognized for the nine-months ended December 31, 2020, which represents the totality of the intangible assets net book value prior to the impairment trigger and has not changed since the six-months ended September 30, 2020.

15

Acasti Pharma inc.

Notes to Consolidated Interim Financial Statements

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

6. Assets held for sale

During the period the Corporation committed to a plan and is actively marketing for sale Other assets and Equipment and has met the criteria for classification of assets held for sale:

	December 31, 2020		March 31, 2020
	$		$
Other assets		712		668
Equipment		376		1,910
		1,088		2,578

a. Other assets

Other assets represent krill oil (RKO) held by the Company that was expected to be used in the conduct of R&D activities and commercial inventory scale up related to the development and commercialization of the CaPre drug. Given that the development of CaPre will no longer be pursued, the Corporation is expected to sell this reserve. However, there is uncertainty whether the other assets will be recoverable and there is a risk of loss being recorded in the near-term.

b. Equipment

December 31, 2020	Cost		Accumulated depreciation			Impairment loss			Net book value
	$		$			$			$
Furniture and office equipment		17		(5	)		-			12
Computer equipment		136		(29	)		(54	)		53
Laboratory equipment		749		(429	)		(171	)		149
Production equipment		2,533		(1,012	)		(1,359	)		162
		3,435		(1,475	)		(1,584	)		376

Equipment is made up of Laboratory, Production, Computer and Office equipment that was utilized in the development of CaPre. Similarly, to the intangible assets, the announcement of the failed Phase 3 clinical trials resulted in an impairment trigger for the laboratory and production equipment. The impairment loss is based on management’s estimate of the fair value of the equipment less cost -to sell, which is based primarily on estimated market prices obtained from brokers specialized in selling used equipment. These projections are based on Level 3 inputs of the fair value hierarchy and reflect the Corporations best estimate of market participants’ pricing of the assets as well as the general condition of the assets.

7. Derivative warrant liabilities:

The warrants issued as part of the public offering of units composed of Common Shares and Common Share purchase warrants on May 9, 2018 and May 14, 2018 are derivative warrant liabilities given the warrant indenture contains certain contingent provisions that allow for cash settlement.

Warrants issued as part of a public offering of units composed of Common Shares and Common Share purchase warrants on December 27, 2017 are derivative warrant liabilities given the currency of the exercise price is different from the Corporation’s functional currency.

16

Acasti Pharma inc.

Notes to Consolidated Interim Financial Statements

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

7. Derivative warrant liabilities (continued):

The derivative warrant liabilities are measured at fair value at each reporting period and the reconciliation of changes in fair value for the nine-month periods is presented in the following tables:

	Warrant liabilities issued May 2018						Warrant liabilities issued December 27, 2017
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
	$			$			$			$
Balance – beginning of period		1,146			6,177			1,247			6,005
Amount transferred to Equity		-			(6,139	)		-			(4,703	)
Change in fair value		(100	)		11,459			(320	)		10,297
Translation effect		182			362			185			220
Balance – end of period		1,228			11,859			1,112			11,819
Fair value per share issuable	USD$	0.19		USD$	1.80		USD$	0.16		USD$	1.67

The fair value of the derivative warrant liabilities was estimated using the Black-Scholes option pricing model and based on the following assumptions:

	Warrant liabilities issued May 2018						Warrant liabilities issued December 27, 2017
	December 31, 2020			March 31, 2020			December 31, 2020			March 31, 2020
Exercise price	CAD$	1.31		CAD$	1.31		USD$	1.26		USD$	1.26
Share price	CAD$	0.42		CAD$	0.53		USD$	0.33		USD$	0.38
Risk-free interest		0.58	%		0.66	%		0.36	%		0.37	%
Estimated life (years)		2.35			3.11			1.99			2.74
Expected volatility		149.55	%		107.59	%		153.14	%		125.03	%

17

Acasti Pharma inc.

Notes to Consolidated Interim Financial Statements

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

8. Capital and other components of equity:

(a) “At-the-market” sales agreement:

On February 14, 2019, the Corporation entered into an “at-the-market” (ATM) sales agreement with B. Riley FBR, Inc. (“B. Riley”) pursuant to which the Common Shares may be sold from time to time for aggregate gross proceeds of up to $30 million, with sales only being made on the NASDAQ Stock Market. The Common Shares would be issued at market prices prevailing at the time of the sale and, as a result, prices may vary between purchasers and during the period of distribution. The ATM has a 3-year term and requires the Corporation to pay between 3% and 4% commission to B. Riley based on volume of sales made. On June 29, 2020, the Corporation entered into an amended and restated sales agreement (the Sales Agreement) with B. Riley, Oppenheimer & Co. Inc. and H.C. Wainwright & Co., LLC (collectively, the “Agents”) to amend the existing ATM program. Under the terms of the Sales Agreement, the Corporation may issue and sell from time to time its common shares (the Shares) having an aggregate offering price of up to US $75,000,000 through the Agents. Subject to the terms and conditions of the Sales Agreement, the Agents will use their commercially reasonable efforts to sell the Shares from time to time, based upon the Corporation’s instructions. The Corporation has no obligation to sell any of the Shares and may at any time suspend sales under the Sales Agreement. The Corporation and the Agents may terminate the Sales Agreement in accordance with its terms. Under the terms of the Sales Agreement, the Corporation has provided the Agents with customary indemnification rights and the Agents will be entitled to compensation, at a commission rate equal to 3.0% of the gross proceeds from each sale of the Shares.

During the nine-month period ended December 31, 2020, a total of 65.9 million common shares were sold for total net proceeds of approximately $24.8 million under the ATM program. Commission, legal and costs related to share sale amounted to $903. The shares were sold at the prevailing market prices, which resulted in an average price of approximately $0.39 per share. Accordingly, proportional costs of $18 related to the common shares sold, have been reclassified from deferred financings costs to equity. Total costs incurred to register the Sales Agreements were initially recorded as deferred financing costs in the Consolidated Balance Sheet. During the nine-month period ended December 31, 2020, the remaining balance of the costs incurred of $264 were written off to financing expenses.

(b) Shares issued as settlement:

On May 10, 2019, the Corporation announced the settlement regarding legal claims made by its former chief executive (“CEO”) officer with respect to the termination of his employment. Pursuant to the settlement agreement, the Corporation agreed to issue 900,000 common shares at $0.82 (CAD $1.10) per share to the former CEO. In addition, the Corporation agreed to reimburse the former CEO for legal fees of $48 (CAD $64.) Furthermore, pursuant to the settlement agreement, the Corporation received a full and final release from the former CEO on all procedures in connection with the termination of his employment. This settlement was accrued as a short-term liability as at March 31, 2019 and the expense of $786 (CAD $1,054) was included as part of General and administrative expenses. During May 2019, the shares were issued and the liability of $739 (CAD $990) reclassified as Equity.

18

Acasti Pharma inc.

Notes to Consolidated Interim Financial Statements

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

8. Capital and other components of equity (continued):

(c) Warrants:

The warrants of the Corporation are composed of the following as at December 31, 2020 and March 31, 2020:

	December 31, 2020				March 31, 2020
	Number outstanding		Amount		Number outstanding		Amount
			$				$
Liability
May 2018 public offering warrants 2018 (i)		6,593,750		1,228		6,593,750		1,146
Series December 2017 U.S. public offering warrants 2017 (ii)		7,072,962		1,112		7,072,962		1,247
		13,666,712		2,340		13,666,712		2,393
Equity
Public offering warrants
Public offering Broker warrants May 2018(iii)		222,976		89		222,976		89
Series December 2017 US Broker warrants (iv)		259,121		161		259,121		161
Public offering warrants February 2017 (v)		1,723,934		631		1,723,934		631
		2,206,031		881		2,206,031		881

(i) Warrant to acquire one Common Share at an exercise price of CAD $1.31, expiring on May 9, 2023.

(ii) Warrant to acquire one Common Share at an exercise price of $1.26, expiring on December 27, 2022.

(iii) Warrant to acquire one Common Share o at an exercise price of CAD $1.05, expiring on May 9, 2023.

(iv) Warrant to acquire one Common Share at an exercise price of $1.2625, expiring on December 19, 2022.

(v) Warrant to acquire one Common Share at an exercise price of CAD $2.15, expiring on February 21, 2022.

19

Acasti Pharma inc.

Notes to Consolidated Interim Financial Statements

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

8. Capital and other components of equity (continued):

(d) Exercise of warrants:

No warrants were exercised during the three-month and nine-month periods ending December 31, 2020. During the three-month and nine-month periods ending December 31, 2019, the following warrants were exercised with the resulting cash proceeds.

	Three-month periods ended				Nine-month periods ended
	December 31, 2019				December 31, 2019
	Number exercised		Proceeds		Number exercised		Proceeds
			$				$
May 2018 over-allotment Warrants 2018		75,000		75		3,594,350		3,586
Series December 2017 US Public offering Warrants 2017		403,808		479		2,676,611		3,382
Public offering warrants February 2017		94,100		153		180,100		292
Public offering Broker warrants May 2018		200,000		158		325,000		257
Contingent warrants private placement 2017		150,000		216		150,000		216
		922,908		1,081		6,926,061		7,733

In 2019, 235,929, broker warrants and 52,288 derivative warrants offered as part of the December 2017 U.S. public offering were exercised in a cashless manner to acquire 136,013 Common Shares of the Corporation.

9. Government assistance:

Government assistance is comprised of a government grant from the Canadian federal government and research and development investment tax credits receivable from the Quebec provincial government, which relate to qualifiable research and development expenditures under the applicable tax laws. The amounts recorded as receivables are subject to a government tax audit and the final amounts received may differ from those recorded. For the nine-month periods ended December 31, 2020 and December 31, 2019, the Corporation recorded $84 and $75, respectively, as a reduction of research and development expenses in the Statement of Loss and Comprehensive Loss.

In September 2019, the Corporation was awarded up to CAD $750,000 in non-dilutive and non-repayable funding from the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP) to apply towards eligible research and development disbursements of the Corporation’s unique commercial production platform for CaPre. During the nine-month period ended December 31, 2020 the Corporation claimed $79 in connection with this program, which has been recorded as a reduction of research and development expenses in the Consolidated Statements of Loss and Comprehensive Loss.

In October 2020, the Corporation received correspondence from the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP) that the eligible amount awarded to the Corporation for non-dilutive and non-repayable funding was reduced from up to CAD $750,000 to up to CAD $326,357.

20

Acasti Pharma inc.

Notes to Consolidated Interim Financial Statements

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

10. Revenues:

In October 2020, the Corporation entered into an agreement with the Centre Integre Universitaire et des services sociaux de L’Estrie - Centre hospitalier Universitaire de Sherbrooke to start producing and selling Viral transport medium tubes to be utilized in testing related to the Covid-19 pandemic. Revenue is recognized when the product is received by the customer.

11. Financial Income (expenses):

	Three-month periods ended						Nine-month periods ended
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
	$			$			$			$
Foreign exchange gain (loss)		(196	)		(88	)		(146	)		(51	)
Interest payable on convertible debenture		-			(23	)		-			(83	)
Accretion of interest on convertible debenture		-			(30	)		-			(106	)
Write off-of deferred financing fees related to at-the-market (ATM) program		-			-			(264	)		-
Change in fair value of warrant liabilities		(1,098	)		(5,882	)		420			(21,756	)
Interest income		38			46			77			275
Financial income (expenses)		(1,256	)		(5,977	)		87			(21,721	)

12. Stock based compensation:

At December 31, 2020 the Corporation has in place a stock option plan for directors, officers, employees and consultants of the Corporation (“Stock Option Plan”). An amendment of the Plan was approved by shareholders on September 30, 2020. The amendment provides for an increase to the existing limits for Common Shares reserved for issuance under the Stock Option Plan as well as certain changes to the minimum vesting period applicable to options granted to directors under the Stock Option Plan. The stock option plan continues to provide for the granting of options to purchase Common Shares. The exercise price of the stock options granted under this amended plan is not lower than the closing price of the Common Shares on the TSXV at the close of markets the day preceding the grant. The maximum number of Common Shares that may be issued upon exercise of options granted under the amended Stock Option Plan was increased from 11,719.910 representing 15% of the issued and outstanding Common Shares of the Company as of April 9, 2019, to 14,533,881 representing 15% of the issued and outstanding Common Shares of the Company as of August 26, 2020. The terms and conditions for acquiring and exercising options are set by the Corporation’s Board of Directors, subject among others, to the following limitations: the term of the options cannot exceed ten years and (i) all options granted to a director will be vested evenly on a monthly basis over a period of at least twelve (12) months, and (ii) all options granted to an employee will be vested evenly on a quarterly basis over a period of at least thirty-six (36) months.

The total number of shares issued to any one consultant within any twelve-month period cannot exceed 2% of the Corporation’s total issued and outstanding shares (on a non-diluted basis). The Corporation is not authorized to grant within any twelve-month period such number of options under the stock option plan that could result in a number of Common Shares issuable pursuant to options granted to (a) related persons exceeding 2% of the Corporation’s issued and outstanding Common Shares (on a non-diluted basis) on the date an option is granted, or (b) any one eligible person in a twelve-month period exceeding 2% of the Corporation’s issued and outstanding Common Shares (on a non-diluted basis) on the date an option is granted.

21

Acasti Pharma inc.

Notes to Consolidated Interim Financial Statements

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

12. Stock based compensation (continue):

The following table summarizes information about activities within the stock option plan for the nine-month periods ended:

	December 31, 2020					December 31, 2019
	Weighted average exercise price		Number of options			Weighted average exercise price		Number of options
	CAD $					CAD $
Outstanding at beginning of period		1.00		9,936,486			1.25		4,046,677
Granted		-		-			1.39		2,304,517
Exercised		-		-			1.11		(54,625	)
Forfeited		0.84		(1,787,809	)		1.04		(11,917	)
Expired		-		-			6.50		(7,500	)
Outstanding at end of period		1.03		8,148,677			1.30		6,277,152
Exercisable at end of period		1.18		5,296,811			1.39		2,917,543

No stock options were granted during the three and nine-month periods ended December 31, 2020. The fair value of options granted during the three and nine-month periods ended December 31, 2019 has been estimated according to the Black-Scholes option pricing model and based on the weighted average of the following assumptions for options granted during the nine-month periods ended:

	December 31, 2019 CAD
Exercise price	$	1.39
Share price	$	2.02
Dividend		-
Risk-free interest		1.60	%
Estimated life (years)		5.78
Expected volatility		89.70	%

At the grant date (which for some options occurs after issuance date upon shareholder approval of the options), the weighted average fair value of the options granted to employees and directors during the nine-month period ended December 31, 2019 was CAD $1.58. No options were granted to consultants.

22

Acasti Pharma inc.

Notes to Consolidated Interim Financial Statements

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

12. Stock based compensation (continued):

Compensation expense recognized under the stock option plan for the three-month periods ended December 31, 2020 and 2019 was as follows:

	Three-month periods ended					Nine-month periods ended
	December 31, 2020			December 31, 2019		December 31, 2020			December 31, 2019
	$			$		$			$
Research and development expenses		58			131		304			350
General and administrative expenses		174			386		706			959
Sales and marketing expenses		(262	)		94		(7	)		199
		(30	)		611		1,003			1,508

Stock-based compensation payment transactions and broker warrants:

The fair value of stock-based compensation transactions is measured using the Black-Scholes option pricing model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility for a duration equal to the weighted average life of the instruments, life based on the average of the vesting and contractual periods for employee awards as minimal prior exercises of options in which to establish historical exercise experience; contractual life for broker warrants), and the risk-free interest rate (based on government bonds). Service and performance conditions attached to the transactions, if any, are not taken into account in determining fair value. The expected life of the stock options is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome.

23

Acasti Pharma inc.

Notes to Consolidated Interim Financial Statements

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

13. Supplemental cash flow disclosure:

(a) Changes in non-cash operating items:

	Three-month periods ended						Nine-month periods ended
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
	$			$			$			$
Receivables		27			(237	)		(20	)		(10	)
Inventory		(14	)		-			(14	)		-
Prepaid expenses		(23	)		(1,074	)		521			(518	)
Trade and other payables		(1,999	)		(696	)		(5,891	)		(2,342	)
		(2,009	)		(2,007	)		(5,404	)		(2,870	)

(b) Non-cash transactions:

	Three-month periods ended				Nine-month periods ended
	December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2019
	$		$		$		$
Equipment included in trade and other payables		-		9		-		9
ATM transaction costs included in trade and other payables		118		-		118		-
Shares issued as settlement		-		-		-		741
Fair value of derivative warrants liability reclassified to Equity		-		868		-		10,962
Interest payable included in trade and other payables		-		31		-		31

24

Acasti Pharma inc.

Notes to Consolidated Interim Financial Statements

(Unaudited)

Three-month and nine-month periods ended December 31, 2020 and 2019

14. Commitments and contingencies:

(a) Take or pay contract:

On October 25, 2019, the Corporation signed a supply agreement with Aker Biomarine Antartic AS (“Aker”), to purchase raw krill oil product for a committed volume of commercial starting material for CaPre for a total value of $3.1 million (take or pay). The delivery of the products has been established following a calendar year basis and it must be completed in the 4th calendar quarter of 2021. As at December 31, 2020, the remaining balance of the commitment with Aker amounts to $2.8 million. There are no termination provisions within the supply agreement. Management is currently assessing whether they can recover any value from the raw krill oil product and given the uncertainty of recoverability, there is a risk that the Corporation may have a loss on this contract in the near term.

(b) Success fees

On September 23, 2020 the Corporation engaged Oppenheimer & Co., Inc,. as its financial advisor to assist in the formal process to explore and evaluate strategic alternatives to enhance shareholder value. This arrangement includes fees to be paid by the Corporation based on the success of a strategic outcome.

(c) Retention agreements

In October 2020 in connection with its strategic review process, the Corporation entered into retention incentive agreements with the Chief Executive Officer (CEO) and Chief Operating Officer (COO).

The Retention Agreements provide that the Corporation will pay the CEO an employment retention incentive of $100 provided that the CEO remains employed with the Corporation until the earlier of April 30, 2021 or the closing of a merger or like transaction with a third party.

In addition, the Retention Agreements also provide that the Corporation will pay each of the CEO and COO an amount of up to $125 in the event that certain milestones are met in relation to the monetization by the Corporation of its assets.

15. Comparative figures

Certain comparative figures in the nine and three-month period ended December 31, 2019, have been adjusted in order to conform to US GAAP. Adjustments included certain reclassifications within equity for certain warrants, the recognition of deferred tax on legacy transfers of license from Neptune that were subject to an initial recognition exemption under IFRS and different classifications within the statement of cash flows for treatment of interest expense and income.

16. Subsequent events:

In January 2021, the Corporation sold an additional 23.4 million common shares for net proceeds of approximately $7.9 million (gross proceeds of $8.1 million) under the ATM program.

25

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

This management’s discussion and analysis, or MD&A, is presented in order to provide the reader with an overview of the financial results and changes to our balance sheet as at December 31, 2020 and for the three and nine-month periods then ended. This MD&A explains the material variations in our results of operations, balance sheet and cash flows for the three and nine-month periods ended December 31, 2020 and 2019.

Market data, and certain industry data and forecasts included in this MD&A, were obtained from internal corporation surveys and market research and those conducted by third parties hired by us, publicly available information, reports of governmental agencies and industry publications, and independent third party surveys. We have relied upon industry publications as our primary sources for third-party industry data and forecasts. Industry surveys, publications and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of that information is not guaranteed. We have not independently verified any of the data from third-party sources or the underlying economic assumptions they have made. Similarly, internal surveys, industry forecasts and market research, which we believe to be reliable based upon our management’s or contracted third parties’ knowledge of our industry, have not been independently verified. Our estimates involve risks and uncertainties, including assumptions that may prove not to be accurate, and these estimates and certain industry data are subject to change based on various factors, including those discussed in our most recently filed annual report on Form 10-K.

This MD&A, approved by the Board of Directors on February 9, 2021, should be read in conjunction with our unaudited condensed interim consolidated financial statements for the three and nine-month periods ended December 31, 2020 and 2019 included in this quarterly report. Our interim financial statements were prepared in accordance with generally accepted accounting principles issued by the Financial Accounting Standards Board in the United States, or GAAP. Up to and including the third quarter ended December 31, 2019, we prepared our consolidated financial statements in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board. The comparative information in our financial statements for the three and nine-months ended December 31, 2019, has been adjusted, as necessary, to be compliant with our accounting policies under GAAP. Our financial results are now published in United States dollars. Effective March 31, 2020, the reporting currency used in the consolidated financial statements changed from Canadian dollars to U.S. dollars. This change in reporting currency has been applied in the interim financial statements retrospectively such that all amounts expressed in our consolidated financial statements and the accompanying notes thereto are in U.S. dollars.

All amounts appearing in this MD&A for the period by period discussions are in thousands of U.S. dollars, except share and per share amounts or unless otherwise indicated.

Business Overview

We are a biopharmaceutical innovator that has historically focused on the research, development and commercialization of prescription drugs using OM3 fatty acids delivered both as free fatty acids and bound-to-phospholipid esters, derived from krill oil. OM3 fatty acids have extensive clinical evidence of safety and efficacy in lowering triglycerides in patients with hypertriglyceridemia, or HTG. Our lead product candidate is CaPre, an OM3 phospholipid therapeutic. As a result of disappointing results from our two TRILOGY phase 3 trials, the Corporation has determined that the best way forward for our shareholders is to consider its strategic options, including the sale of the business or other strategic transactions. Please refer to our most recently filed annual report on Form 10-K and our last quarterly report on Form 10-Q for a historical description of our business.

Recent Developments

TRILOGY 1 & 2 Topline Results

Our two Phase 3 clinical trials, designated as TRILOGY 1 &2 randomized a total of 242 and 278 patients respectively, and were designed to evaluate the efficacy, safety and tolerability of CaPre in patients with severe hypertriglyceridemia. The top-line results were announced on January 13, 2020 and August 31, 2020 respectively, and neither TRILOGY 1 nor TRILOGY 2 met their primary endpoint for lowering triglycerides.

26

As a result, we will not file a New Drug Application (NDA) with the U.S. Food and Drug Administration (FDA) for patients with severe hypertriglyceridemia, and we do not plan to conduct additional clinical trials for CaPre. CaPre was well tolerated in TRILOGY 2, with a safety profile similar to placebo, and consistent with our previously conducted Phase 2 and 3 studies.

Engaged Oppenheimer & Co. Inc. to Assist in Strategic Review

On September 29, 2020 we announced that we had commenced a formal process to explore and evaluate strategic alternatives to enhance shareholder value. Towards this end, we have engaged Oppenheimer & Co., Inc. as our financial advisor to assist in the process. There can be no assurance of a successful outcome from these efforts, or of the form or timing of any such outcome. We expect to devote significant time and resources to identifying and evaluating strategic alternatives; however, there can be no assurance that such activities will result in any agreements or transactions that will enhance shareholder value. We do not intend to make any further disclosures regarding the strategic review process unless and until a specific course of action is approved by our Board of Directors.

Reduction in Headcount and Discontinuation of Substantially all Commercial and R&D Activities

In September 2020 we initiated a plan to reduce personnel and expenses to preserve cash and further reduce our operations consistent with the decision to discontinue substantially all commercialization and research and development activities.

Retention Agreements

In connection with our strategic review process and upon the recommendation of our Governance and Human Resources Committee, in October 2020 we entered into retention incentive agreements with Ms. Jan D’Alvise, our President and Chief Executive Officer, and Mr. Pierre Lemieux, our Chief Operating Officer and Chief Scientific Officer (the “Retention Agreements”).

The Retention Agreements provide that we will pay Ms. D’Alvise an employment retention incentive of $100,000 provided that she remains employed with the Corporation until the earlier of April 30, 2021 or the closing of a merger or like transaction with a third party. This amount is also payable by the Corporation to Ms. D’Alvise in the event of the termination of her employment without cause prior to the achievement of such milestones.

In addition, the Retention Agreements also provide that we will pay each of Ms. D’Alvise and Mr. Lemieux an amount of up to $125,000 in the event that certain milestones are met in relation to the monetization by the Company of its assets relating to CaPre. A minimum amount of $75,000 is also payable by the Corporation to each of Ms. D’Alvise and Mr. Lemieux in the event of the termination of their employment without cause prior to the achievement of such milestones.

We also announce the departure of Mr. Brian Groch, our Chief Commercial Officer, from his position with the Corporation effective December 31, 2020.

COVID-19 Update

To date, the ongoing COVID-19 pandemic has not caused significant disruptions to our business operations and research and development activities. However, in light of our intended evaluation of strategic alternatives, a continuation of the COVID-19 pandemic and any resulting volatility generally in the capital markets could adversely impact the outcome of our strategic process.

The extent to which the COVID-19 pandemic impacts our business and prospects will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 pandemic and the actions to contain the COVID-19 pandemic or treat its impact, among others. 

Basis of Presentation of the Financial Statements

Our consolidated financial statements, which include the accounts of our wholly owned subsidiary, Acasti Innovations AG, have been prepared in accordance with GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission, or the SEC, related to interim reports filed on Form 10-Q. All intercompany transactions and balances are eliminated on consolidation.

27

The following summarizes the principal conditions or events relevant to the Corporation’s going concern assessment, which primarily considers the period of one year from the issuance date of these financial statements. The Corporation has incurred operating losses and negative cash flows from operations since its inception. Previously, there was uncertainty and risk regarding the Corporation’s ability to realize its assets and discharge its liabilities and commitments in the ordinary course of business. The Corporation has raised net proceeds of $24.8 million under the ATM program during the nine months ended December 31, 2020. The Corporations assets of $30.3 million as at December 31, 2020 include cash and cash equivalents and short-term investments totaling $27.9 million. The Corporation’s current liabilities total $2.3 million at December 31, 2020 and are comprised primarily of amounts due to or accrued for creditors. Due to the Corporations current liquidity profile substantial doubt regarding its ability to continue as a going concern has ceased.

Comparative Financial Information for the Three-Month and Nine-Month Periods Ended December 31, 2020 and 2019

	Three-month periods ended						Nine-Month periods ended
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
	$			$			$			$
Net loss		(3,244	)		(12,123	)		(14,056	)		(42,128	)
Basic and diluted (loss) per share		(0.03	)		(0.14	)		(0.15	)		(0.51	)
Total assets		30,303			30,280			30,303			30,280
Working capital1		27,950			11,785			27,950			11,785
Total non-current financial liabilities		2,340			23,678			2,340			23,678
Total shareholders’ equity		25,715			(4,290	)		25,715			(4,290	)

¹ Working capital is calculated by subtracting current liabilities from current assets. Because there is no standard method endorsed by GAAP requirements, the results may not be comparable to similar measurements presented by other public companies. 

Statement of Net Loss

	Three-month periods ended						Nine-month periods ended
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
	$			$			$			$
Revenue		81			-			81			-
Cost sales of products		(36	)		-			(36	)		-
Research and development expenses		(678	)		(3,912	)		(3,720	)		(14,056	)
General and administrative expenses		(1,105	)		(1,579	)		(4,078	)		(4,250	)
Sales and marketing expenses		(226	)		(655	)		(1,076	)		(2,101	)
Impairment of Intangible assets		-			-			(3,706	)		-
Impairment of Equipment		-			-			(1,584	)		-
Financial Income (expenses)		(1,256	)		(5,977	)		87			(21,721	)
Net loss		(3,220	)		(12,123	)		(14,032	)		(42,128	)

Results of Operations for the Three-Month and Nine-Month Periods Ended December 31, 2020 and 2019

The net loss of $3,220 or $0.03 per share for the three months ended December 31, 2020 decreased by $8,903 from the net loss of $12,123 or $0.14 per share for the three months ended December 31, 2019.

The reduction in net loss resulted primarily from net financial expenses decreasing by $4,720 to a loss of $1,256 for the three months ended December 31, 2020, as compared to net financial expenses of $5,977 for the three months ended December 31, 2019. This is due mostly to a decrease from the change in fair value of the derivative warrant liability as compared to the comparative fiscal quarter in 2019 caused by a proportionately higher decrease in the quarter over quarter closing share price partly offset by a reduction in the number of warrants outstanding due to exercises during the prior year.

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In October 2020, the Corporation entered into an agreement with the Centre Integre Universitaire et des services sociaux de L’Estrie - Centre hospitalier Universitaire de Sherbrooke to start producing and selling viral transport medium tubes to be utilized in testing related to the Covid-19 pandemic.

In addition, a decrease in research and development expenses of $3,234 occurred as the TRILOGY Phase 3 clinical program for CaPre was winding down. General and administrative expenses decreased from the prior period, with the current period being impacted by lower legal and professional fees. Sales and marketing expenses also decreased as a result of the termination of CaPre commercialization activities due to the negative TRILOGY 2 Phase 3 clinical trial results.

The net loss of $14,032 or $0.15 per share for the nine months ended December 31, 2020 decreased by $28,096 from the net loss of $42,128 or $0.51 per share for the nine months ended December 31, 2019.

The decreased net loss resulted primarily from a net financial income of $87 for the nine months ended December 31, 2020 as compared to net financial expenses of $21,721 for the nine months ended December 31, 2019, due mostly to the change in fair value of the warrant derivative liability. In addition, a decrease in research and development expenses of $10,336 occurred as the TRILOGY Phase 3 clinical program for CaPre was winding down.

General and administrative expenses increased from the comparative period due to increased legal fees offset by the reversal of the estimated annual bonus accruals. Sales and marketing expenses also decreased by $1,025, as a result of the termination of any CaPre commercialization activities due to the negative TRILOGY 2 Phase 3 clinical trial results.

Furthermore, operational events related to the TRILOGY results resulted in increased loss related to the impairment of equipment and intangible assets amounting to $5,290.

Two separate derivative warrant liabilities are included in the statement of financial position as at December 31, 2020, and December 31, 2019. These derivative warrant liabilities stem from the financing transactions that took place in May 2018 and December 2017. The derivative warrant liabilities are re-measured to fair value at each reporting date using the Black-Scholes option pricing model. The valuations are mainly driven by the fluctuation in our share price resulting in an increased or decreased loss or gain related to the change in fair value of the warrant liabilities and increasing or decreasing the corresponding liability in the balance sheet.

Breakdown of Major Components of the Statement of Loss and Comprehensive Loss

Research and development expenses
	Three Months Ended						Nine Months Ended
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
	$			$			$			$
Salaries and benefits		395			448			1,115			1,283
Research contracts		141			2,120			915			9,591
Professional fees		55			593			410			998
Other		37			145			152			310
Government grants & tax credits		(8	)		(120	)		(92	)		(195	)
Sub-total		620			3,186			2,500			11,987
Stock-based compensation		58			131			304			350
Depreciation and amortization		-			595			916			1,719
Total		678			3,912			3,720			14,056

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General and administrative expenses
	Three Months Ended				Nine Months Ended
	December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2019
	$		$		$		$
Salaries and benefits		394		403		888		1,121
Professional fees		292		543		1,739		1,387
Other		245		247		737		783
Sub-total		931		1,193		3,364		3,291
Stock-based compensation		174		386		706		959
Depreciation		-		-		8		-
Total		1,105		1,579		4,078		4,250

Sales and marketing expenses
	Three Months Ended		Nine Months Ended
	December 31, 2020	December 31, 2019	December 31, 2020	December 31, 2019
	$	$	$	$
Salaries and benefits	483	365	985	817
Professional fees	-	11	75	564
Other	5	185	23	521
Sub-total	488	561	1,083	1,902
Stock-based compensation	(262)	94	(7)	199
Total	226	655	1,076	2,101

Three-Months Ended December 31, 2020 Compared to the Three-Months Ended December 31, 2019

During the three months ended September 30, 2020, we released our TRILOGY 2 Phase 3 clinical study results for CaPre. TRILOGY 2 failed to meet the primary endpoint, and consequently we will not be filing a New Drug Application (NDA) with the U.S. Food and Drug Administration. We have significantly reduced our research and development and marketing activities to reduce operating expenses, while we continue to evaluate a range of strategic alternatives. As a result, research and development expenses before depreciation, amortization and stock-based compensation expense for the three months ended December 31, 2020 totaled $620 compared to $3,186 for the three months ended December 31, 2019. The net decrease was mainly attributable to a reduction in research contracts with the reduction in R&D activities as well as a reduction in headcount within the department.

General and administrative expenses totaled $931 before depreciation and stock-based compensation expense for the three-months ended December 31, 2020 and decreased by $262 from $1,193 for the three months ended December 31, 2019. This decrease is mostly a result of a $251 decrease related to legal and professional fees.

Sales and marketing expenses were $488 before stock-based compensation expense for the three months ended December 31, 2020 compared to $561 for the three months ended December 31, 2019. The decrease was mostly due to an increase in salaries related to severances associated to the reduction in headcount in the department of $118, offset by the reduction in professional fees and other sales activities of $192 as a result of an end to planned pre-launch marketing activities for CaPre.

Stock-based compensation expense decreased to a gain of $30 for the three-month period ended December 31, 2020, as compared to a loss of $611 for the three-month period ended December 31, 2019. The decrease in expense of $641 is due to forfeited options as well as the fact that no options have been granted in the current period.

The depreciation expense decreased by $110 for the three-month period ended December 31, 2020, as compared to $110 for the three-month period ended December 31, 2019. This is due to the impact of the equipment being classified as held for resale and no additional depreciation recognized.

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Nine-Months Ended December 31, 2020 Compared to the Nine-Months Ended December 31, 2019

During the three months ended September 30, 2020, we released our TRILOGY 2 Phase 3 clinical study results for our lead product in development, CaPre. TRILOGY 2 failed to meet the primary endpoint, and consequently we will not be filing a New Drug Application (NDA) with the U.S. Food and Drug Administration. We have significantly reduced our research and development and marketing activities to reduce operating expenses, while we continue to evaluate a range of strategic opportunities. As a result, research and development expenses before depreciation, amortization and stock-based compensation expense for the nine-months ended December 31, 2020 totaled $2,500 compared to $11,987 for the nine-months ended December 31, 2019. The net decrease was mainly attributable to a reduction in R&D activities primarily for clinical research and regulatory contracts as well as a reduction in headcount within the department.

General and administrative expenses totaled $3,364 before depreciation and stock-based compensation expense for the nine-months ended December 31, 2020 and increased by $73 from $3,291 for the nine-months ended December 31, 2019. This increase was mainly attributable to a $100 increase associated with our insurance policies, as well as an increase of $206 in legal fees, which was offset by a $233 decrease in salaries related to a reversal in bonus amounts accrued.

Sales and marketing expenses were $1,083 before stock-based compensation expense for the nine-months ended December 31, 2020 compared to $1,902 for the nine-months ended December 31, 2019. The decrease was mostly due to an increase in salaries related to severances associated to the reduction in headcount in the department of $168, offset by the reduction in professional fees and other sales activities of $987 as a result of an end to planned pre-launch marketing activities for CaPre.

Stock-based compensation expense increased to $1,003 for the nine-month period ended December 31, 2020, as compared to $1,508 for the nine-month period ended December 31, 2019. The decrease in expense of $505 is due to forfeited options as well as the fact that no options have been granted in the current period.

The depreciation expense decreased by $129 for the nine-month period ended December 31, 2020, as compared to $1,449 for the nine-month period ended December 31, 2019. This is due to the impact of the decreased values of equipment and due to the impact of the equipment being classified as held for resale and no additional depreciation recognized.

Liquidity and Capital Resources

Share Capital Structure

Our authorized share capital consists of an unlimited number of Class A, Class B, Class C, Class D and Class E shares, without par value. Issued and outstanding fully paid shares, stock options, restricted shares units and warrants, were as follows for the periods ended:

	December 31, 2020 Number outstanding		March 31, 2020 Number outstanding
Class A shares, voting, participating and without par value		156,073,767		90,209,449
Stock options granted and outstanding		8,148,677		9,936,486
May 2018 public offering of warrants exercisable at CAD$1.31, until May 9, 2023		6,593,750		6,593,750
Public offering broker warrants May 2018 exercisable at CAD$1.05 until May 9, 2023		222,976		222,976
December 2017 U.S. public offering of warrants exercisable at US$1.26, until December 19, 2022		7,072,962		7,072,962
December 2017 U.S. broker warrants exercisable at US$1.2625, until December 27, 2022		259,121		259,121
February 2017 public offering of warrants exercisable at CAD$2.15, until February 21, 2022		1,723,934		1,723,934
Total fully diluted shares		180,095,187		116,018,678

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Cash Flows and Financial Condition Between the Three and Nine-Months Ended December 31, 2020 and 2019

Summary

As at December 31, 2020, cash and cash equivalents totaled $26,546, a net increase of $6,779 compared to cash and cash equivalents totaling $19,767 at December 31, 2019.

Operating activities

During the three months ended December 31, 2020 and December 31, 2019, the Corporation’s operating activities used cash of $4,214 and $7,104, respectively, and during the nine-months periods ended December 31, 2020 and December 31, 2019, the Corporation’s operating activities used cash of $12,559 and $20,049, respectively further modified by changes in working capital, excluding cash.

Investing activities

During the three-months ended December 31, 2020, the Corporation’s investing activities used cash of $1,372, compared to cash used of $347 for the three months ended December 31, 2019. The increase in cash used of $1,025 is due to the increase in investments held and invested.

During the nine-months ended December 31, 2020, the Corporation’s investing activities used cash of $1,441, compared to providing cash of $8,537 for the nine-months ended December 31, 2019. The reduction in cash provided of $9,978 is due to the decrease in marketable securities held and invested.

Financing activities

During the three-months ended December 31, 2020, the Corporation’s financing activities provided cash totaling $19,745 due to proceeds from the sale of shares under the “at-the-market”, or ATM, program, compared to cash generated of $7,117 due to proceeds from the sale of shares under the “at-the-market” and the exercise of warrants during the three months ended December 31, 2019.

During the nine-months ended December 31, 2020, the Corporation’s financing activities provided cash totaling $24,812 due to proceeds from the sale of shares under the “at-the-market”, or ATM, program, compared to cash generated of $13,713 due to proceeds from the sale of shares under the “at-the-market” and due to the proceeds from due to exercise of warrants during the nine months ended December 31, 2019.

On June 29, 2020, we filed a registration statement on Form S-3 with the SEC to register up to US $200 million of common shares, warrants and units that may be offered and sold by us from time to time. The Registration Statement was declared effective by the SEC on July 7, 2020.

ATM program 

On February 14, 2019, the Corporation entered into an “at-the-market” (ATM) sales agreement with B. Riley FBR, Inc. (“B. Riley”) pursuant to which the common shares may be sold from time to time for aggregate gross proceeds of up to $30 million, with sales only being made on the NASDAQ Stock Market. The common shares would be issued at market prices prevailing at the time of the sale and, as a result, prices may vary between purchasers and during the period of distribution. The ATM has a 3-year term and requires the Corporation to pay between 3% and 4% commission to B. Riley based on volume of sales made. On June 29, 2020, the Corporation entered into an amended and restated sales agreement (the Sales Agreement) with B. Riley, Oppenheimer & Co. Inc. and H.C. Wainwright & Co., LLC (collectively, the “Agents”) to amend the existing ATM program. Under the terms of the Sales Agreement, the Corporation may issue and sell from time to time its common shares having an aggregate offering price of up to US $75,000,000 through the Agents. Subject to the terms and conditions of the Sales Agreement, the Agents will use their commercially reasonable efforts to sell the common shares from time to time, based upon the Corporation’s instructions. The Corporation has no obligation to sell any of the common shares and may at any time suspend sales under the Sales Agreement. The Corporation and the Agents may terminate the Sales Agreement in accordance with its terms. Under the terms of the Sales Agreement, the Corporation has provided the Agents with customary indemnification rights and the Agents will be entitled to compensation, at a commission rate equal to 3.0% of the gross proceeds from each sale of the common shares.

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During the nine-month period ended December 31, 2020, a total of 65.9 million common shares were sold for total net proceeds of approximately $24.8 million under the ATM program. Commission, legal and costs related to share sale amounted to $903. The shares were sold at the prevailing market prices, which resulted in an average price of approximately $0.39 per share. Accordingly, proportional costs of $18 related to the common shares sold, have been reclassified from deferred financings costs to equity. Total costs incurred to register the Sales Agreements were initially recorded as deferred financing costs in the Consolidated Balance Sheet. During the nine-month period ended December 31, 2020, the remaining balance of the costs incurred of $264 were written off to financing expenses.

Financial Position

The following table details the significant changes to the statements of financial position as at December 31, 2020 compared to the prior fiscal year end at March 31, 2020:

Accounts	Increase (Decrease) $	Comments
Cash and cash equivalents	12,306	See cash flow statement
Receivables	(20)	Timing of reimbursement of sales taxes
Inventory	14	Inventory costs
Deferred financing costs	(264)	New costs, net of write off
Prepaid expenses	521	Expensing of insurance and other prepaid expenses
Equipment	(1,534)	Amortization & Impairment
Right of use asset	(42)	Adjustment to the net present value of lease contract for Sherbrooke
Intangible assets	(4,244)	Amortization & Impairment
Trade and other payables	(5,682)	Timing of payments net of accruals
Derivative warrant liabilities	(53)	Change in fair value of derivative warrants
Lease liability	(71)	Payment of lease liability

See the statement of changes in equity in our financial statements for details of changes to the equity accounts during the three and nine-months periods ended December 31, 2020 and 2019.

Treasury Operations

Our treasury policy is to invest cash that is not required immediately into instruments with an investment strategy based on capital preservation. Cash equivalents and marketable securities are primarily made in guaranteed investment certificates, term deposits and high-interest savings accounts, which are issued and held with Canadian chartered banks, highly rated promissory notes issued by government bodies and commercial paper. We hold cash denominated in both U.S. and CAD dollars. Funds received in U.S. dollars from equity financings are invested as per our treasury policy in U.S. dollar investments and converted to CAD dollars as needed to fulfill operational requirements and funding.

Impairment loss Intangible assets:

We test intangible assets for impairment should circumstances change or events occur that would indicate that the fair value of an asset may be below its carrying value. During the second quarter of 2021, we released our Phase 3 clinical programs data and its failure to meet its primary endpoints, and the resulting decision to not file an NDA to obtain FDA approval for CaPre. Due to these indicators of impairment under ASC 350, the Corporation undertook an analysis to determine the fair value of its intangible asset this quarter.

In prior years, we entered into agreements with Neptune pursuant to which we obtained a license and exercised our option under this license agreement to pay in advance all of the future royalties payable to Neptune. This license allows us to exploit the intellectual property rights in order to develop novel active pharmaceutical ingredients into commercial products for the prescription drugs market. In assessing the magnitude of any impairment of the license, we considered all available evidence including (i) significant adverse impact from business climate due to Phase 3 clinical program’s failure to meet its primary endpoints, and the resulting decision to not file an NDA to obtain FDA approval for CaPre, and the resulting internal forecasts that no cash flows from the use of the license was possible, and (ii) management’s estimate that a market place participant would place minimal to no value on the license if it were to be sold on its own or in combination with other assets, recognized or not, which is a level 3 measurement in the fair value hierarchy which included unobservable inputs. Accordingly, an impairment loss of $3,706 was recognized for the three and nine-months ended December 31, 2020, which represents the totality of the intangible assets net book value prior to the impairment trigger.

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Assets held for sale

During the period we committed to a plan and are actively marketing for sale Other assets and Equipment, which have met the criteria for classification of assets held for sale:

	December 31, 2020		March 31, 2020
	$		$
Other assets		712		668
Equipment		376		1,910
		1,088		2,578

Other assets

Other assets represent krill oil (RKO) held that was expected to be used in the conduct of research and activities and clinical trials related to the development CaPre drug. Given the development of CaPre will no longer be pursued, we expect to sell this reserve. However, there is uncertainty whether the other assets will be recoverable and there is a risk of loss being recorded in the near-term.

Equipment

December 31, 2020	Cost		Accumulated depreciation			Impairment loss			Net book value
	$		$						$
Furniture and office equipment		17		(5	)		-			12
Computer equipment		136		(29	)		(54	)		53
Laboratory equipment		749		(429	)		(171	)		149
Production equipment		2,533		(1,012	)		(1,359	)		162
		3,435		(1,475	)		(1,584	)		376

Equipment is made up of Laboratory, Production, Computer and Office equipment that was utilized in the development of CaPre. Similarly, to the intangible assets, the announcement of the failed Phase 3 clinical trials resulted in an impairment trigger for the laboratory and production equipment. The impairment loss is based on management’s estimate of the fair value of the equipment less cost to sell, which is based primarily on estimated market prices obtained from brokers specialized in selling used equipment. These projections are based on Level 3 inputs of the fair value hierarchy and reflect the Corporations best estimate of market participants’ pricing of the assets as well as the general condition of the assets.

Derivative Warrant Liabilities

A total of 10,188,100 warrants were issued as part of our May 2018 public offering in Canada and recognized as derivative warrant liabilities with a fair value at inception of $3,323. During the year ended March 31, 2020, a total of 3,594,350 warrants were exercised. As of December 31, 2020, the derivative warrant liability for the remaining 6,593,750 warrants totaled $1,228, which represents the fair value of these warrants as at December 31, 2020. The weighted average fair value of the warrants issued in the May 2018 public offering in Canada was determined to be CAD $0.39 per warrant at inception and approximately CAD $0.24 (US $0.19) per warrant as at December 31, 2020. 

On December 27, 2017, 9,801,861 warrants were issued as part of our U.S. public offering and recognized as derivative warrant liabilities with a fair value at inception of $4,548. The December 2017 warrants are derivative warrant liabilities for accounting purposes due to the currency of the exercise price (US$) being different from our Canadian dollar functional currency. During the year ended March 31, 2020, 2,728,899 warrants were exercised (including 52,288 warrants exercised on a cashless basis). As of December 31, 2020, the derivative warrant liability for the remaining 7,072,962 warrants totaled $1,112, which represents the fair value of these warrants as at December 31, 2020. The weighted average fair value of the 2017 warrants issued was determined to be CAD $0.60 per warrant at inception and approximately CAD $0.20 (US $0.16) per warrant as at December 31, 2020. 

34

The variance in the fair value of both existing derivative warrant liabilities as at December 31, 2020 is mostly due to the fluctuations in our share price and the dilution factor.

Contractual Obligations and Commitments 

As at December 31, 2020, our liabilities totaled $4,588 of which $2,248 was due within 1 year, and $2,340 related to derivative warrant liabilities that are expected to be settled in common shares.

A summary of the contractual obligations at December 31, 2020, is as follows:

Contractual Obligations	Total		Less than 1 year		1 to 3 years		More than 3 years
	$		$		$		$
Trade and other payables		2,143		2,143		-		-
Operating lease obligations		105		105		-		-
RKO supply agreement		2,800		2,800		-		-
Total		5,048		5,048		-		-

Lease

On March 5, 2020, we renewed the lease agreement for our research and development and quality control laboratory facility located in Sherbrooke, Québec, resulting in an obligation of $160 over 24 months of the lease term. As at December 31, 2020, the remaining balance of the commitment amounted to $105.

RKO supply agreement

On October 25, 2019, we signed a supply agreement with Aker to purchase RKO for a committed volume of commercial starting material for CaPre at a fixed price for a total value of $3.1 million (take or pay). The delivery of the RKO has been established following a calendar year basis and it is expected to be completed in the 4^th calendar quarter of 2021. As at December 31, 2020, the remaining balance of the commitment with Aker amounts to $2.8 million. There are no termination provisions within the supply agreement. Management is currently assessing whether the Corporation can recover any value from the raw krill oil product and given the uncertainty of recoverability, there is a risk that the Corporation may have a loss on this contract in the near term.

Financial advisor agreement

On September 23, 2020 we engaged Oppenheimer & Co., Inc,. as our financial advisor to assist in the formal process to explore and evaluate strategic alternatives to enhance shareholder value. This arrangement includes fees to be paid on the success of a strategic outcome.

Contingencies

We evaluate contingencies on an ongoing basis and establish loss provisions for matters in which losses are probable and the amount of the loss can be reasonably estimated.

On May 10, 2019, we announced the settlement regarding legal claims made by our former chief executive officer with respect to the termination of his employment. Pursuant to the settlement agreement, we agreed to issue 900,000 common shares valued at CAD $1.10 per share to our former CEO. In addition, we agreed to reimburse the former CEO for legal fees of $48. Pursuant to the settlement agreement, we received a full and final release from the former CEO on all procedures in connection with the termination of his employment. This settlement was accrued as a short-term liability as at March 31, 2019 and the expense of $790 was included as part of general and administrative expenses. The case is closed, and no further costs are expected. 

Off-Balance Sheet Arrangements

As of the date of this quarterly report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

35

Use of estimates and measurement of uncertainty

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates are based on management’s best knowledge of current events and actions that management may undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Estimates and assumptions include the measurement of derivative warrant liabilities, stock-based compensation, impairment of intangibles, assets held for sale and the take or pay contract. Estimates and assumptions are also involved in measuring the accrual of services rendered with respect to research and developments expenditures at each reporting date and determining which research and development expenses qualify for research and development tax credits and in what amounts. We recognize the tax credits once we have reasonable assurance that they will be realized. Recorded tax credits are subject to review and approval by tax authorities and, therefore, could be different from the amounts recorded. Estimates and assumptions are also utilized in the assessment of impairment of deferred financing costs, equipment and intangibles.

Critical Accounting Policies

Derivative warrant liabilities

The warrants forming part of the units issued in the May 2018 Canadian public offering are derivative liabilities for accounting purposes given the fact that the warrant indenture contains certain contingent provisions that allow for cash settlement. The warrants forming part of the units issued from the December 2017 U.S. public offering are derivative liabilities for accounting purposes due to the currency of the exercise price being different from our functional currency. The derivative warrant liabilities are required to be measured at fair value at each reporting date with changes in fair value recognized in earnings. We use the Black-Scholes pricing model to determine the fair value. The model requires the assumption of future stock price volatility, which is estimated based on weighted average historic volatility. Changes to the expected volatility could cause significant variations in the estimated fair value of the derivative warrant liabilities.

Stock-based compensation

We have a stock-based compensation plan, which is described in note 15 of the annual consolidated financial statements and note 12 to the interim financial statements. We account for stock options granted to employees based on the fair value method, with fair value determined using the Black-Scholes model. The Black Scholes model requires certain assumptions such as future stock price volatility and expected life of the instrument. Expected volatility is estimated based on weighted average historic volatility. The expected life of the instrument is estimated based on the average of the vesting and contractual periods for employee awards as there is minimal prior exercises of options in which to establish historical exercise experience; and contractual life is used for broker warrants. Under the fair value method, compensation cost is measured at fair value at date of grant and is expensed over the award’s vesting period with a corresponding increase in additional paid-in capital. For stock options granted to non-employees, we measure the grant-date fair value based on the equity instruments issued. Compensation cost is measured when we obtain the goods, or the counterparty renders the service.

Impairment of Long-Lived Assets

We review the recoverability of our long-lived assets whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. The carrying amount is first compared with the undiscounted cash flows. If the carrying amount is higher than the sum of undiscounted cash flows, then we determine the fair value of the underlying asset group. Any impairment loss to be recognized is measured as the difference by which the carrying amount of the asset group exceeds the estimated fair value of the asset group.

Financial Instruments

Credit risk

Credit risk is the risk of a loss if a customer or counterparty to a financial asset fails to meet its contractual obligations. We have credit risk relating to cash, cash equivalents and marketable securities, which we manage by dealing only with highly rated Canadian financial institutions. The carrying amount of financial assets, as disclosed in the statements of financial position, represents our credit exposure at the reporting date.

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Currency risk

We are exposed to the financial risk related to the fluctuation of foreign exchange rates and the degrees of volatility of those rates. Foreign currency risk is limited to the portion of our business transactions denominated in currencies other than the Canadian dollar. Fluctuations related to foreign exchange rates could cause unforeseen fluctuations in our operating results.

A portion of the expenses, mainly related to research contracts and purchase of production equipment, is incurred in U.S. dollars and in Euros, for which no financial hedging is required. There is a financial risk related to the fluctuation in the value of the U.S. dollar and the Euro in relation to the Canadian dollar. In order to minimize the financial risk related to the fluctuation in the value of the U.S. dollar in relation to the Canadian dollar, funds which were part of U.S. dollar financings continue to be invested as short-term investments in the U.S. dollar.

Furthermore, a portion of our cash and cash equivalents and marketable securities are denominated in U.S. dollars, further exposing us to fluctuations in the value of the U.S. dollar in relation to the Canadian dollar.

The following table provides an indication of our significant foreign exchange currency exposures as stated in Canadian dollars at the following dates:

	December 31, 2020					December 31, 2019
Denominated in	US $			Euro		US $			Euro
Cash and cash equivalents		20,966			-		4,772			-
Investments		536			-		20			-
Trade and other payables		(963	)		-		(6,548	)		-
		20,539			-		(1,756	)		-

The following exchange rates are those applicable to the following periods and dates:

	December 31, 2020				December 31, 2019
	Average		Reporting		Average		Reporting
CAD$ per US$		1.3393		1.2725		1.2884		1.2988
CAD$ per Euro		1.5459		1.5545		1.5013		1.4583

Based on our foreign currency exposures noted above, varying the above foreign exchange rates to reflect a 5% strengthening of the U.S. dollar and Euro would have an increase (decrease) in net loss as follows, assuming that all other variables remain constant:

	December 31, 2020		December 31, 2019
	$		$
Increase (decrease) in net loss		978		(103	)

An assumed 5% weakening of the foreign currencies would have an equal but opposite effect on the basis that all other variables remained constant.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market rates.

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Our exposure to interest rate risk as at December 31, 2020 and December 31, 2019 was as follows:

Cash and cash equivalents	Short-term fixed interest rate
Marketable securities	Short-term fixed interest rate
Unsecured convertible debentures	Short-term fixed interest rate

Our capacity to reinvest the short-term amounts with equivalent return will be impacted by variations in short-term fixed interest rates available on the market. Management believes the risk we will realize a loss as a result of the decline in the fair value of our short-term investments is limited because these investments have short-term maturities and are held to maturity.

Liquidity risk

Liquidity risk is the risk that we will not be able to meet our financial obligations as they fall due. We manage liquidity risk through the management of our capital structure and financial leverage. We also manage liquidity risk by continuously monitoring actual and projected cash flows. The Board of Directors reviews and approves our operating budgets and reviews material transactions outside the normal course of business.

Our contractual obligations related to financial instruments and other obligations and liquidity resources are presented in the liquidity and capital resources of this MD&A.

Future Accounting Changes

The following new standards, and amendments to standards and interpretations, are not yet effective for the period ended December 31, 2020, and have not been applied in preparing our consolidated financial statements.

In June 2016, the Financial Accounting Standards Board, or FASB, issued ASU 2016-13-Financial Instruments-Credit Losses (Topic 326), which amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost, the new guidance eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. ASU 2016-13 will affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2022. Management has not yet evaluated the impact of this ASU on the consolidated financial statements. 

In August 2018, the FASB issued ASU 2018-15-Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. ASU 2018-15 aligns the requirements for capitalizing implementation costs in such cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 and early adoption is permitted. Entities can choose to adopt the new guidance prospectively or retrospectively. Management has adopted the accounting standard update. However, the adoption of this update did not have any impact on the reported amounts as at December 31, 2020.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Information relating to quantitative and qualitative disclosures about market risks is detailed in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.”

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, our management, with the participation of our CEO and CFO, has performed an evaluation of the effectiveness of our disclosure controls and procedures within the meaning of Rules 13a-15 (e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based upon this evaluation, our management has concluded that, as of December 31, 2020, our existing disclosure controls and procedures were effective. It should be noted that while the CEO and CFO believe that our disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect the disclosure controls and procedures to be capable of preventing all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

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Changes in Internal Control over Financial Reporting

No changes were made to our internal controls over financial reporting that occurred during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. As of December 31, 2020, we are not a party to any legal proceedings that, in the opinion of our management, would reasonably be expected to have a material adverse effect on our business, financial condition, operating results or cash flows if determined adversely to us. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors

Any investment in our common Shares involves a high degree of risk. The following risk factors and other information included in this Quarterly Report on Form 10-Q should be carefully considered. If any of these risks actually occur, our business, financial condition, prospects, results of operations or cash flow could be materially and adversely affected and you could lose all or a part of the value of your investment. Additional risks or uncertainties not currently known to us, or that we deem immaterial, may also negatively affect our business operations.

Risks Related to Our Evaluation of Strategic Alternatives

Our business to date has been almost entirely dependent on the success of CaPre, and we have decided we will not file a New Drug Application (NDA) with the U.S. Food and Drug Administration (FDA) for patients with severe hypertriglyceridemia, and we do not plan to conduct additional clinical trials for CaPr. We will explore and evaluate strategic alternatives, which may not be successful.

To date, we have invested substantially all of our efforts and financial resources in the research and development of our lead indication for CaPre, which was our only product candidate to enter Phase 3 clinical trials.

On August 31, 2020, we announced that our second Phase 3 trial, TRILOGY 2 did not meet its primary endpoints and we would discontinue research and development activities to reduce operating expenses, including a reduction in our workforce, to preserve our cash resources while we evaluate our strategic alternatives with a goal to maximize stockholder value. We have retained Oppenheimer & Co., Inc. to advise and assist us in this strategic review, along with legal advisors. There can be no assurance that our process to identify and evaluate potential strategic alternatives will result in any definitive offer to consummate a strategic transaction, or if made that the terms thereof will be acceptable to the us. If any definitive offer to consummate a strategic transaction is received, there can be no assurance that a definitive agreement will be executed or that, if a definitive agreement is executed, the transaction will be consummated. In addition, there can be no assurance that any transaction, involving our company and/or assets, that is consummated would enhance stockholder value. There also can be no assurance that we will conduct further drug research or development activities in the future.

If we are successful in completing a strategic transaction, we may be exposed to other operational and financial risks, including increased near-term or long-term expenditures, exposure to unknown liabilities, incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions, higher-than-expected acquisition and integration costs, write-downs of assets or goodwill or impairment charges, increased amortization expenses, difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel, impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership, and inability to retain key employees of our company or any acquired businesses.

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The identification, negotiation, and completion of a strategic transaction will require significant time on the part of our management and may divert such attention away from other aspects of our business. The identification, negotiation, and completion of any such transaction may also require more time and cash resources than we anticipate.

If we do not successfully consummate a strategic transaction, our board of directors may decide to pursue a dissolution and liquidation of our company. In such an event, the amount of cash available for distribution to our shareholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.

There can be no assurance that the process to identify a strategic transaction will result in a successfully consummated transaction. If no transaction is completed, our board of directors may decide to pursue a dissolution and liquidation of the Corporation. In such an event, the amount of cash available for distribution to our shareholders will depend heavily on the timing of such decision and, ultimately, such liquidation since the amount of cash available for distribution continues to decrease as we fund our operations while we evaluate our strategic alternatives. In addition, if our board of directors were to approve and recommend, and our shareholders were to approve, a dissolution and liquidation of the Corporation, we would be required under applicable corporate law to pay our outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to our shareholders. Our commitments and contingent liabilities may include (i) obligations under our employment and related agreements with certain employees that provide for severance and other payments following a termination of employment occurring for various reasons, including a change in control of our company; (ii) potential litigation against us, and other various claims and legal actions arising in the ordinary course of business; and (iii) non-cancelable obligations. As a result of this requirement, a portion of our assets may need to be reserved pending the resolution of such obligations. In addition, we may be subject to litigation or other claims related to a dissolution and liquidation of the Corporation. If a dissolution and liquidation were pursued, our board of directors, in consultation with our advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of our common shares could lose all or a significant portion of their investment in the event of a liquidation, dissolution or winding up of the Corporation.

We are substantially dependent on our remaining employees to facilitate the consummation of a strategic transaction.

Our ability to successfully complete a strategic transaction depends in large part on our ability to retain certain of our remaining personnel. Despite our efforts to retain these employees, one or more may terminate their employment with us on short notice. The loss of the services of any of our employees could potentially harm our ability to evaluate and pursue strategic alternatives, as well as fulfill our reporting obligations as a public company. In connection with our discontinuation of commercial and research and development activities, we initiated a plan in September 2020 to reduce personnel and expenses to preserve cash and further reduce our operations.

We may not realize any additional value in a strategic transaction for our intellectual property.

The market capitalization of our company is or may be below the value of our cash, cash equivalents and marketable securities at the time of consummation of any strategic transaction. Although the TRILOGY clinical trials failed to meet their primary endpoints, we believe that data from preclinical and other clinical studies of CaPre may support potential further investigation and development activities by a potential counterparty in a strategic transaction. However, potential counterparties in a strategic transaction involving our company may place minimal or no value on our assets, given the limited data regarding their potential new application. Further, the development and any potential commercialization of CaPre by a potential counterparty to a strategic transaction will require substantial additional funding associated with the conduct of the necessary clinical testing to obtain regulatory approval. Consequently, any potential counterparty in a strategic transaction involving our company may choose not to spend additional resources and continue development of CaPre and may attribute little or no value, in such a transaction, to CaPre or our intellectual property.

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Our ability to successfully consummate a strategic transaction may be materially and adversely affected by the COVID-19 pandemic.

The COVID-19 pandemic is severely adversely affecting the U.S., Canadian and many other global economies. If the outbreak continues to spread, it may affect our operations and those of third parties upon which we rely, including limiting our ability to explore strategic alternatives to enhance shareholder value.

The extent to which the COVID-19 pandemic impacts our business and prospects will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 pandemic and the actions to contain the COVID-19 pandemic or treat its impact, among others.

Additionally, while the potential economic impact brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the global financial markets may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity and adversely affect our business and overall financial condition.

General Risks Related to the Company

We may not continue as a going concern.

We have incurred operating losses and negative cash flows from operations since our inception. To date, we have financed our operations through public offerings and private placements of securities, proceeds from exercises of warrants, rights and options, and receipt of research tax credits and research grant programs.

Prior to this quarter, there was substantial doubt regarding our ability to realize our assets and discharge our liabilities and commitments in the ordinary course of business. During this quarter, we have raised net proceeds of $19.7 million under the ATM program. Our assets as at December 31, 2020 include cash and cash equivalents and short-term investments totaling $27.9 million. Our current liabilities total $2.3 million at December 31, 2020 and are comprised primarily of amounts due to or accrued for creditors. Subsequent, to December 31, 2020, we have raised an additional $7.9 million of net proceeds under the ATM.

Our ability to continue as a going concern is dependent upon our ability to achieve a successful strategic alternative and ultimately generate cashflows to meet our obligations. Due to the failure of our Phase 3 clinical studies to meet its primary endpoints, and the resulting decision not to file an NDA to obtain FDA approval for CaPre, we have commenced a formal process to explore and evaluate strategic alternatives to enhance shareholder value, which is currently the focus of our activities. There is no assurance that a strategic transaction will be consummated as such transaction is not within our control. Due to our lack of operating activities, our current liabilities and commitments are limited. As a result of our current liquidity profile and lack of operating activity unrelated to the evaluating strategic alternatives, we have assessed that substantial doubt regarding our ability to continue as a going concern during the next 12 months statements no longer exists.

We may be subject to foreign exchange rate fluctuations.

Our reporting currency is the U.S. dollar. However, many of our expenses are denominated in foreign currencies, including Canadian dollars. As we previously completed financings in both Canadian and U.S. dollars, both currencies are maintained and used to make required payments in the applicable currency. Though we plan to implement measures designed to reduce our foreign exchange rate exposure, the U.S. dollar/Canadian dollar and U.S. dollar /European euro exchange rates have fluctuated significantly in the recent past and may continue to do so, which could have a material adverse effect on our business, financial position and results of operations.

Risks Related to Intellectual Property

We may not realize any additional value in a strategic transaction for our intellectual property.

The market capitalization of our corporation is or may be below the value of our cash, cash equivalents and marketable securities at the time of consummation of any strategic transaction. Although the CaPre clinical trial failed to meet its primary endpoints, we believe that data from preclinical and other clinical studies of CaPre may support potential further investigation and development activities. However, potential counterparties in a strategic transaction involving our corporation may place minimal or no value on our assets, given the limited data regarding their potential application. Further, the development and any potential commercialization of investigational CaPre will require substantial additional funding associated with conducting the necessary clinical testing and obtaining regulatory approval. Consequently, any potential counterparty in a strategic transaction involving our corporation may choose not to spend additional resources and continue development of CaPre and may attribute little or no value, in such a transaction, to CaPre or our other intellectual property.

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It is difficult and costly to protect our intellectual property rights.

It is possible that our patents and/or proprietary technologies in the future could be circumvented through the adoption of competitive, though non-infringing, processes or products. The patent positions of pharmaceutical companies can be highly uncertain and involve complex legal, scientific and factual questions for which important legal principles remain unresolved. Changes in either the patent laws or in interpretations of patent laws may diminish the value of our intellectual property. We cannot predict the breadth of claims that may be allowable or enforceable in our patents, or of patents licensed to us.

We face risks that:

· our rights under our U.S., Canadian or foreign patents or other licensed patents that other third parties license to us could be curtailed;

· we may not be the first inventor of inventions covered by our issued patents or pending applications or be the first to file patent applications for those inventions;

· our pending or future patent applications may not be issued with the breadth of claim coverage sought by us, or be issued at all;

· our competitors could independently develop or patent technologies that are substantially equivalent or superior to our technologies;

· our trade secrets could be learned independently by our competitors;

· the steps we take to protect our intellectual property may not be adequate; and

· effective patent, trademark, copyright and trade secret protection may be unavailable, limited or not sought by us in some foreign countries.

Further, patents have a limited lifespan. In the United States, a patent generally expires 20 years after it is filed (or 20 years after the filing date of the first non-provisional U.S. patent application to which it claims priority). While extensions may be available, the life of a patent, and the protection it affords, is limited. Without patent protection for CaPre or any other of our future product candidates, we may be open to competition from generic versions of CaPre or our other future product candidates. Further, the extensive period of time between patent filing and regulatory approval for a product candidate limits the time during which we can market that product candidate under patent protection. Patents owned by third parties could have priority over patent applications filed or in-licensed by us, or we or our licensors could become involved in interference, opposition or invalidity proceedings before U.S., Canadian or foreign patent offices. The cost of defending and enforcing our patent rights against infringement charges by other patent holders may be significant and could limit our operations.

We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful.

Competitors may infringe our patents or the patents of our licensors. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. If we or our licensors were to initiate legal proceedings against a third party to enforce a patent covering CaPre or our technology, the defendant could counterclaim that our or our licensor’s patent is invalid or unenforceable. In patent litigation, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements; for example, lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the patent office, such as the USPTO, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we or our licensors and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on CaPre or certain aspects of our platform technology. Such a loss of patent protection could have a material adverse impact on our business. Patents and other intellectual property rights also will not protect our technology if competitors design around our protected technology without legally infringing our patents or other intellectual property rights.

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In addition, in an infringement proceeding, a court may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated, held unenforceable, or interpreted narrowly and could put our patent applications at risk of not issuing. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business.

Interference proceedings provoked by third parties or brought by the USPTO may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our licensors. An unfavorable outcome could result in a loss of our current patent rights and could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms, or at all. Litigation or interference proceedings may result in a decision adverse to our interests and, even if we are successful, may result in substantial costs and distract our management and other employees. We may not be able to prevent, alone or with our licensors, misappropriation of our trade secrets or confidential information, particularly in countries where the laws may not protect those rights as fully as in the United States and Canada. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common shares.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect CaPre and any of our other future product candidates.

Numerous recent changes to the patent laws and proposed changes to the rules of the various patent offices around the world may have a significant impact on our ability to protect our technology and enforce our intellectual property rights. These changes may lead to increasing uncertainty with regard to the scope and value of our issued patents and to our ability to obtain patents in the future.

Once granted, patents may remain open to opposition, re-examination, post-grant review, inter partes review, nullification derivation and opposition proceedings in court or before patent offices or similar proceedings for a given period after allowance or grant, during which time third parties can raise objections against the initial grant. In the course of any such proceedings, which may continue for a protracted period of time, the patent owner may be compelled to limit the scope of the allowed or granted claims attacked or may lose the allowed or granted claims altogether. Depending on decisions by authorities in various jurisdictions, the laws and regulations governing patents could change in unpredictable ways that may weaken our and our licensors’ ability to obtain new patents or to enforce existing patents we and our licensors or partners may obtain in the future.

We may not be able to protect our intellectual property rights throughout the world.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of some countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

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Risks Relating to Our Common Shares

The price of our common shares may be volatile.

Market prices for pharmaceutical companies can fluctuate significantly. Factors such as the announcement to the public or in various scientific or industry forums of technological innovations; new commercial products; patents or exclusive rights obtained by us or others; disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; the commencement, enrollment or announcement of results of clinical trials we conduct, or changes in the development status of our product candidates; results or delays of pre-clinical and clinical studies by us or others; any delay in our regulatory filings for our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings; a change of regulations; additions or departures of key scientific or management personnel; overall performance of the equity markets; general political and economic conditions; publications; failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public; research reports or positive or negative recommendations or withdrawal of research coverage by securities analysts; actual or anticipated variations in quarterly operating results; announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors; public concerns over the risks of pharmaceutical products and dietary supplements; unanticipated serious safety concerns related to the use of CaPre; the ability to finance, future sales of securities by us or our shareholders; and many other factors, many of which are beyond our control, could have considerable effects on the price of our common shares. The price of our common shares has fluctuated significantly in the past and there can be no assurance that the market price of our common shares will not experience significant fluctuations in the future.

In addition, pharmaceutical companies often experience extreme price and volume fluctuations that are unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may negatively affect the market price of our common shares, regardless of our actual operating performance. In the past, securities class action litigation has often been instituted against pharmaceutical companies following periods of volatility in the market price of their securities. This type of litigation, if instituted against us, could result in substantial costs and a diversion of management’s attention and resources, which would harm our business, operating results or financial condition.

Raising additional capital may cause dilution to our existing shareholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

We may need to raise additional capital in order to execute on our business plan. We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our shareholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our shareholders. The incurrence of indebtedness by us would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates or grant licenses on terms unfavorable to us.

The market price of our common shares could decline as a result of operating results falling below the expectations of investors or fluctuations in operating results each quarter.

Our net losses and expenses may fluctuate significantly and any failure to meet financial or clinical expectations may disappoint securities analysts or investors and result in a decline in the price of our common shares. Our net losses and expenses have fluctuated in the past and are likely to do so in the future. The market price of our common shares has fluctuated significantly in the past and may continue to do so. Some of the factors that could cause the market price for our common shares to fluctuate include the following:

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· the fluctuations in valuation of our derivative warrant liabilities;

· the outcome of any litigation;

· changes in foreign currency fluctuations;

· competition;

· the timing of achievement and the receipt of milestone payments from current or future third parties;

· failure to enter into new or the expiration or termination of current agreements with third parties;

· execution of any new collaboration, licensing or similar arrangement, and the timing of payments we may make or receive under such existing or future arrangements or the termination or modification of any such existing or future arrangements;

· any intellectual property infringement lawsuit or opposition against us or our competition that could have a negative impact on the OM3 space, interference or cancellation proceeding in which we may become involved;

· additions and departures of key personnel;

· strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; 

· inability to achieve strategic outcome from review of strategic alternatives;

· changes in general market and economic conditions.

If our quarterly operating results fall below the expectations of investors or securities analysts, the market price of our common shares could decline substantially. Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the market price of our common shares to fluctuate substantially. We believe that quarterly comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance.

There can be no assurance that an active market for our common shares will be sustained.

There can be no assurance that an active market for our common shares will be sustained. Holders of common shares may be unable to sell their investments on satisfactory terms. As a result of any risk factor discussed herein, the market price of our common shares at any given point in time may not accurately reflect our long-term value. Furthermore, responding to these risk factors could result in substantial costs and divert management’s attention and resources. Substantial and potentially permanent declines in the value of our common shares may adversely affect the liquidity of the market for our common shares.

Other factors unrelated to our performance that may have an effect on the price and liquidity of our common shares include: positive or negative industry or competitor news; extent of analyst coverage; lessening in trading volume and general market interest in our common shares; the size of our public float; and any event resulting in a delisting of our common shares.

A large number of common shares may be issued and subsequently sold upon the exercise of existing warrants. The sale or availability for sale of existing warrants or other securities convertible into common shares may depress the price of our common shares.

As of December 31, 2020, there were 15.9 million common shares issuable under outstanding warrants at various exercise prices. To the extent that holders of existing warrants sell common shares issued upon the exercise of warrants, the market price of our common shares may decrease due to the additional selling pressure in the market. The risk of dilution from issuances of common shares underlying existing warrants may cause shareholders to sell their common shares, which could further contribute to any decline in our common share market price.

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Any downward pressure on the price of our common shares caused by the sale of common shares issued upon the exercise of existing warrants could encourage short sales by third parties. In a short sale, a prospective seller borrows common shares from a shareholder or broker and sells the borrowed common shares. The prospective seller anticipates that the common share price will decline, at which time the seller can purchase common shares at a lower price for delivery back to the lender. The seller profits when the common share price declines because it is purchasing common shares at a price lower than the sale price of the borrowed common shares. Such short sales of common shares could place downward pressure on the price of our common shares by increasing the number of common shares being sold, which could lead to a decline in the market price of our common shares. 

We do not currently intend to pay any cash dividends on our common shares in the foreseeable future.

We have never paid any cash dividends on our common shares and we do not anticipate paying any cash dividends on our common shares in the foreseeable future because, among other reasons, we currently intend to retain any future earnings to finance our business. The future payment of cash dividends will be dependent on factors such as cash on hand and achieving profitability, the financial requirements to fund growth, our general financial condition and other factors our board of directors may consider appropriate in the circumstances. Until we pay cash dividends, which we may never do, our shareholders will not be able to receive a return on their common shares unless they sell them. See “Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities — Dividends.”

If we fail to meet applicable listing requirements, the NASDAQ Stock Market or the TSXV may delist our common shares from trading, in which case the liquidity and market price of our common shares could decline.

Our common shares are currently listed on the NASDAQ Stock Market and the TSXV, but we cannot assure you that our securities will continue to be listed on the NASDAQ Stock Market and the TSXV in the future. In the past, we have received notices from the NASDAQ Stock Market that we have not been in compliance with its continued listing standards, and we have taken responsive actions and regained compliance.

On February 28, 2020, we received written notification from the NASDAQ Listing Qualifications Department for failing to maintain a minimum bid price of $1.00 per share for the preceding 30 consecutive business days, as required by NASDAQ Listing Rule 5550(a)(2) – bid price (the “Minimum Bid Price Rule”). The NASDAQ notification has no immediate effect on the listing of our common shares. Under NASDAQ Listing Rule 5810(c)(3)(A) – compliance period, we initially had 180 calendar days to regain compliance.

On April 17, 2020, we were informed that NASDAQ had granted temporary regulatory relief related to its minimum bid price requirement due to the COVID-19 pandemic for all NASDAQ-listed companies and therefore extended the deadline for us to regain compliance to November 9, 2020.

On November 11, 2020, we were further informed that NASDAQ had granted an additional 180 calendar days, or until May 10, 2021, for us to regain compliance. We have not regained compliance to date.

If at any time over this relief period the bid price of our common shares closes at $1.00 per share or more for a minimum of ten (10) consecutive business days, NASDAQ will provide written confirmation of compliance and the matter will be closed. If we do not regain compliance within the relief period, then our common shares will be subject to delisting, at which time we may appeal the delisting determination to a NASDAQ Hearings Panel.

If we fail to comply with listing standards and the NASDAQ Stock Market or TSXV delists our common shares, we and our shareholders could face significant material adverse consequences, including:

· a limited availability of market quotations for our common shares;

· reduced liquidity for our common shares;

· a determination that our common shares are “penny stock”, which would require brokers trading in our common shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our common shares;

· a limited amount of news about us and analyst coverage of us; and

· a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future.

46

We may pursue opportunities or transactions that adversely affect our business and financial condition.

Our management, in the ordinary course of our business, regularly explores potential strategic opportunities and transactions. These opportunities and transactions may include strategic joint venture relationships, significant debt or equity investments in us by third parties, the acquisition or disposition of material assets, the licensing, acquisition or disposition of material intellectual property, the development of new drug candidates, significant distribution arrangements, the sale of our common shares and other similar opportunities and transactions. The public announcement of any of these or similar strategic opportunities or transactions might have a significant effect on the price of our common shares. Our policy is to not publicly disclose the pursuit of a potential strategic opportunity or transaction unless we are required to do so by applicable law, including applicable securities laws relating to periodic disclosure obligations. There can be no assurance that investors who buy or sell common shares are doing so at a time when we are not pursuing a particular strategic opportunity or transaction that, when announced, would have a significant effect on the price of our common shares.

In addition, any such future corporate development may be accompanied by certain risks, including exposure to unknown liabilities of the strategic opportunities and transactions, higher than anticipated transaction costs and expenses, the difficulty and expense of integrating operations and personnel of any acquired companies, disruption of our ongoing business, diversion of management’s time and attention, and possible dilution to shareholders. We may not be able to successfully overcome these risks and other problems associated with any future acquisitions and this may adversely affect our business and financial condition.

We are a “smaller reporting company” under the SEC’s disclosure rules and have elected to comply with the reduced disclosure requirements applicable to smaller reporting companies.

We are a “smaller reporting company” under the SEC’s disclosure rules, meaning that we have either:

· a public float of less than $250 million; or

· annual revenues of less than $100 million during the most recently completed fiscal year; and

o no public float; or

o a public float of less than $700 million.

As a smaller reporting company, we are permitted to comply with scaled-back disclosure obligations in our SEC filings compared to other issuers, including with respect to disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We have elected to adopt the accommodations available to smaller reporting companies. Until we cease to be a smaller reporting company, the scaled-back disclosure in our SEC filings will result in less information about our company being available than for other public companies.

If investors consider our common shares less attractive as a result of our election to use the scaled-back disclosure permitted for smaller reporting companies, there may be a less active trading market for our common shares and our share price may be more volatile. 

As a non-accelerated filer, we are not required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act.

We are a non-accelerated filer under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and we are not required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. Therefore, our internal controls over financial reporting will not receive the level of review provided by the process relating to the auditor attestation included in annual reports of issuers that are subject to the auditor attestation requirements. In addition, we cannot predict if investors will find our common shares less attractive because we are not required to comply with the auditor attestation requirements. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and trading price for our common shares may be negatively affected.

47

U.S. investors may be unable to enforce certain judgments.

We are a company existing under the Business Corporations Act (Québec). Some of our directors and officers are residents of Canada, and substantially all of our assets are currently located outside the United States. As a result, it may be difficult to effect service within the United States upon us or upon some of our directors and officers. Execution by U.S. courts of any judgment obtained against us or any of our directors or officers in U.S. courts may be limited to assets located in the United States. It may also be difficult for holders of securities who reside in the United States to realize in the United States upon judgments of U.S. courts predicated upon civil liability of us and our directors and executive officers under the U.S. federal securities laws. There may be doubt as to the enforceability in Canada against non-U.S. entities or their controlling persons, directors and officers who are not residents of the United States, in original actions or in actions for enforcement of judgments of U.S. courts, of liabilities predicated solely upon U.S. federal or state securities laws.

There is a significant risk that we may be classified as a PFIC for U.S. federal income tax purposes.

Current or potential investors in our common shares who are U.S. Holders (as defined below) should be aware that, based on our most recent financial statements and projections and given uncertainty regarding the composition of our future income and assets, there is a significant risk that we may have been classified as a “passive foreign investment company” or “PFIC” for the 2020 taxable year and may be classified as a PFIC for our current taxable year and possibly subsequent years. If we are a PFIC for any year during a U.S. Holder’s holding period of our common shares, then such U.S. taxpayer generally will be required to treat any gain realized upon a disposition of such common shares or any so-called “excess distribution” received on such common shares, as ordinary income (with a portion subject to tax at the highest rate in effect), and to pay an interest charge on a portion of such gain or excess distribution. In certain circumstances, the sum of the tax and the interest charge may exceed the total amount of proceeds realized on the disposition, or the amount of excess distribution received, by the U.S. Holder. Subject to certain limitations, a timely and effective QEF Election (as defined below) under Section 1295 of the U.S. Internal Revenue Code of 1986, as amended, or the Code, or a Mark-to-Market Election (as defined below) under Section 1296 of the Code may be made with respect to the common shares. A U.S. Holder who makes a timely and effective QEF Election generally must report on a current basis its share of our net capital gain and ordinary earnings for any year in which we are a PFIC, whether or not we distribute any amounts to our shareholders. A U.S. Holder who makes the Mark-to-Market Election generally must include as ordinary income each year the excess of the fair market value of their common shares over the holder’s basis therein. This paragraph is qualified in its entirety by the discussion under the heading “Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities - U.S. Federal Income Tax Considerations of the Acquisition, Ownership, and Disposition of Common Shares - Passive Foreign Investment Company Rules.” Each current or potential investor who is a U.S. Holder should consult its own tax advisor regarding the U.S. federal, state and local, and non-U.S. tax consequences of the acquisition, ownership, and disposition of our common shares, the U.S. federal tax consequences of the PFIC rules, and the availability of any election that may be available to the holder to mitigate adverse U.S. federal income tax consequences of holding shares in a PFIC.

48

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

None.

49

Item 6. Exhibits

Exhibit No.	Description
3.1	Articles of Incorporation (incorporated by reference to Exhibit 4.1 from Form S-8 (File No. 333-191383) filed with the Commission on September 25, 2013)
3.2	Amended and Restated General By-Law (incorporated by reference to Exhibit 99.1 from Form 6-K (File No. 001-35776) filed with the Commission on February 21, 2017)
3.3	Advance Notice bylaw No. 2013-1 (incorporated by reference to Exhibit 4.3 from Form S-8 (File No. 333-191383) filed with the Commission on September 25, 2013)
4.1	Specimen Certificate for Common Shares of Acasti Pharma Inc. (incorporated by reference to Exhibit 2.1 from Form 20-F (File No. 001-35776) filed with the Commission on June 6, 2014)
4.2	Warrant Indenture dated December 3, 2013 between Acasti Pharma Inc. and Computershare Trust Company of Canada (incorporated by reference to Exhibit 99.1 from Form 6-K (File No. 001-35776) filed with the Commission on December 3, 2013)
4.3	Warrant Indenture dated February 21, 2017 between Acasti Pharma Inc. and Computershare Trust Company of Canada (incorporated by reference to Exhibit 2.3 from Form 20-F (File No. 001-35776) filed with the Commission on June 27, 2017)
4.4	Warrant Agency Agreement dated December 27, 2017 between Acasti Pharma Inc. and Computershare Inc. and its wholly-owned subsidiary, Computershare Trust Company N.A. (incorporated by reference to Exhibit 2.4 from Form 20-F (File No. 001-35776) filed with the Commission on June 29, 2018)
4.5	Amended and Restated Warrant Indenture dated May 10, 2018 between Acasti Pharma Inc. and Computershare Trust Company of Canada (incorporated by reference to Exhibit 2.5 from Form 20-F (File No. 001-35776) filed with the Commission on June 29, 2018)
10.1	Amended and Restated Sales Agreement, dated June 29, 2020, by and among Acasti Pharma Inc., B. Riley FBR, Inc. and Oppenheimer & Co. Inc. and H.C. Wainwright & Co., LLC (incorporated by reference to Exhibit 1.2 from Form S-3 (File No. 333-239538) filed with the Commission on June 29, 2020)
10.2	Retention agreement, dated October 27, 2020, between Acasti Pharma Inc. and Jan D’Alvise (incorporated by reference to Exhibit 10.2 from the quarterly report on Form 10-Q filed with the Commission on November 16, 2020)
10.3	Retention agreement, dated October 29, 2020 between Acasti Pharma Inc. and Pierre Lemieux (incorporated by reference to Exhibit 10.3 from the quarterly report on Form 10-Q filed with the Commission on November 16, 2020)
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

50

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Dated: February 9, 2021

ACASTI PHARMA INC.
By:	/s/ Janelle D’Alvise
	Name: Janelle D’Alvise
	Title: President and Chief Executive Officer and Director (Principal Executive Officer)
By:	/s/ Brian Ford
	Name: Brian Ford
	Title: Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

51

EX-31.1

Exhibit 31.1

CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Janelle D’Alvise, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Acasti Pharma Inc.;

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(s) 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(s) 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.

Date: February 9, 2021

/s/ Janelle D’Alvise

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Brian Ford, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Acasti Pharma Inc.;

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(s) 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(s) 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.

Date: February 9, 2021

/s/ Brian Ford

CFO, Finance

EX-32.1

Exhibit 32.1

SECTION 906 CERTIFICATION

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) in connection with the quarterly report on Form 10-Q of Acasti Pharma Inc. for the quarterly period ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer hereby certifies, to such officer’s knowledge, that:

(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 Acasti Pharma Inc.

/s/ Janelle D’Alvise
Name:	Janelle D’Alvise
Title:	Chief Executive Officer
Date:	February 9, 2021

This certification accompanies the Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed “filed” by Acasti Pharma Inc. for purposes of §18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.

EX-32.2

Exhibit 32.2

SECTION 906 CERTIFICATION

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) in connection with the quarterly report on Form 10-Q of Acasti Pharma Inc. for the quarterly period ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer hereby certifies, to such officer’s knowledge, that:

(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 Acasti Pharma Inc.

/s/ Brian Ford
Name:	Brian Ford
Title:	CFO, Finance
Date:	February 9, 2021

This certification accompanies the Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed “filed” by Acasti Pharma Inc. for purposes of §18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.

XML

Document And Entity Information - shares	9 Months Ended
	Dec. 31, 2020	Feb. 09, 2021
Document Information [Line Items]
Entity Registrant Name	Acasti Pharma Inc.
Entity Central Index Key	0001444192
Trading Symbol	acst
Current Fiscal Year End Date	--03-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		179,495,705
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Dec. 31, 2020
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Amendment Flag	false
Title of 12(b) Security	Common Shares, no par value per share

XML

Condensed Consolidated Interim Balance sheet (Current Period Unaudited) - USD ($) $ in Thousands	Dec. 31, 2020	Mar. 31, 2020
Current assets:
Cash and cash equivalents	$ 26,546	$ 14,240
Short-term investments	1,372
Receivables	619	546
Inventory	14
Assets held for sale	1,088	2,578
Deferred financing costs		121
Prepaid expenses	559	977
Total current assets	30,198	18,462
Right of Use Asset	105	147
Intangible assets		4,244
Total assets	30,303	22,853
Current liabilities:
Trade and other payables	2,143	7,319
Lease Liability	105	76
Total current liabilities	2,248	7,395
Derivative warrant liabilities	2,340	2,393
Lease Liability		71
Total liabilities	4,588	9,859
Equity:
Common shares	162,196	137,424
Additional paid-in capital	10,825	9,797
Accumulated other comprehensive loss	(6,934)	(7,887)
Accumulated deficit	(140,372)	(126,340)
Total shareholder’s equity (deficit)	25,715	12,994
Commitments and contingencies
Total liabilities and shareholders’ equity	$ 30,303	$ 22,853

XML

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Revenues from product sales	$ 81		$ 81
Cost of sales of products	(36)		(36)
Research and development expenses, net of government assistance	(678)	(3,912)	(3,720)	(14,056)
General and administrative expenses	(1,105)	(1,579)	(4,078)	(4,250)
Sales and marketing expenses	(226)	(655)	(1,076)	(2,101)
Impairment of Intangible assets			(3,706)
Impairment of Equipment			(1,584)
Loss from operating activities	(1,964)	(6,146)	(14,119)	(20,407)
Financial Income (expenses)	(1,256)	(5,977)	87	(21,721)
Net loss and total comprehensive loss	$ (3,220)	$ (12,123)	$ (14,032)	$ (42,128)
Basic and diluted loss per share (in dollars per share)	$ (0.03)	$ (0.14)	$ (0.15)	$ (0.51)
Weighted average number of shares outstanding (in shares)	110,467,167	86,767,312	95,376,935	82,817,283

XML

Condensed Consolidated Interim Statements of Changes in Shareholder's Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Mar. 31, 2019	78,132,734
Balance at Mar. 31, 2019	$ 110,857	$ 8,150	$ (7,135)	$ (100,827)	$ 11,045
Net loss and total comprehensive loss for the period				(8,846)	(8,846)
Cumulative translation adjustment			51		51
Stock based compensation	$ 2	250			252
Stock based compensation (in shares)	3,000
Balance (in shares) at Jun. 30, 2019	79,055,734
Balance at Jun. 30, 2019	$ 111,632	8,400	(7,084)	(109,673)	3,275
Shares issued as settlement (in shares)	900,000
Shares issued as settlement	$ 739				739
Warrants exercised (in shares)	20,000
Warrants exercised	$ 34				34
Balance (in shares) at Mar. 31, 2019	78,132,734
Balance at Mar. 31, 2019	$ 110,857	8,150	(7,135)	(100,827)	11,045
Net loss and total comprehensive loss for the period					(42,128)
Balance (in shares) at Dec. 31, 2019	89,057,819
Balance at Dec. 31, 2019	$ 136,494	9,335	(7,165)	(142,954)	(4,290)
Balance (in shares) at Jun. 30, 2019	79,055,734
Balance at Jun. 30, 2019	$ 111,632	8,400	(7,084)	(109,673)	3,275
Net loss and total comprehensive loss for the period				(21,158)	(21,158)
Cumulative translation adjustment			(64)		(64)
Stock based compensation	$ 20	650			670
Stock based compensation (in shares)	19,166
Balance (in shares) at Sep. 30, 2019	85,188,095
Balance at Sep. 30, 2019	$ 128,358	8,862	(7,148)	(130,831)	(759)
Warrants exercised (in shares)	6,113,195
Warrants exercised	$ 16,706	(188)			16,518
Net loss and total comprehensive loss for the period				(12,123)	(12,123)
Cumulative translation adjustment			(17)		(17)
Net proceeds from shares issued under the at-the-market (ATM) program (in shares)	2,914,356
Net proceeds from shares issued under the at-the-market (ATM) program	$ 6,002				6,002
Stock based compensation	$ 56	586			642
Stock based compensation (in shares)	32,460
Balance (in shares) at Dec. 31, 2019	89,057,819
Balance at Dec. 31, 2019	$ 136,494	9,335	(7,165)	(142,954)	(4,290)
Warrants exercised (in shares)	922,908
Warrants exercised	$ 2,078	(113)			1,965
Balance (in shares) at Mar. 31, 2020	90,209,449
Balance at Mar. 31, 2020	$ 137,424	9,797	(7,887)	(126,340)	12,994
Net loss and total comprehensive loss for the period				(4,666)	(4,666)
Cumulative translation adjustment			308		308
Net proceeds from shares issued under the at-the-market (ATM) program (in shares)	2,278,936
Net proceeds from shares issued under the at-the-market (ATM) program	$ 1,765				1,765
Stock based compensation		635			635
Balance (in shares) at Jun. 30, 2020	92,488,385
Balance at Jun. 30, 2020	$ 139,189	10,432	(7,579)	(131,006)	11,036
Balance (in shares) at Mar. 31, 2020	90,209,449
Balance at Mar. 31, 2020	$ 137,424	9,797	(7,887)	(126,340)	12,994
Net loss and total comprehensive loss for the period					(14,032)
Balance (in shares) at Dec. 31, 2020	156,073,767
Balance at Dec. 31, 2020	$ 162,196	10,825	(6,934)	(140,372)	25,715
Balance (in shares) at Jun. 30, 2020	92,488,385
Balance at Jun. 30, 2020	$ 139,189	10,432	(7,579)	(131,006)	11,036
Net loss and total comprehensive loss for the period				(6,146)	(6,146)
Cumulative translation adjustment			179		179
Net proceeds from shares issued under the at-the-market (ATM) program (in shares)	4,404,152
Net proceeds from shares issued under the at-the-market (ATM) program	$ 3,427				3,427
Stock based compensation	$ (46)	423			377
Stock based compensation (in shares)	(23,394)
Balance (in shares) at Sep. 30, 2020	96,869,143
Balance at Sep. 30, 2020	$ 142,570	10,855	(7,400)	(137,152)	8,873
Net loss and total comprehensive loss for the period				(3,220)	(3,220)
Cumulative translation adjustment			466		466
Net proceeds from shares issued under the at-the-market (ATM) program (in shares)	59,204,624
Net proceeds from shares issued under the at-the-market (ATM) program	$ 19,626				19,626
Stock based compensation		(30)			(30)
Balance (in shares) at Dec. 31, 2020	156,073,767
Balance at Dec. 31, 2020	$ 162,196	$ 10,825	$ (6,934)	$ (140,372)	$ 25,715

XML

Condensed Consolidated Interim Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Cash flows used in operating activities:
Net loss for the period	$ (3,220,000)	$ (12,123,000)	$ (14,032,000)	$ (42,128,000)
Adjustments:
Amortization of intangible assets		485,000	781,000	1,449,000
Depreciation of equipment		110,000	142,000	271,000
Impairment of intangible assets			3,706,000
Impairment of Equipment			1,584,000
Stock-based compensation	(30,000)	611,000	1,003,000	1,508,000
Change in fair value of warrant liabilities	1,098,000	5,882,000	(420,000)	21,756,000
Write off-of deferred financing costs of at-the-market (ATM) program			264,000
Accretion of interest on convertible debenture		30,000		106,000
Unrealized foreign exchange (gain) loss	(54,000)	(102,000)	(208,000)	(151,000)
Changes in non-cash working capital items	(2,009,000)	(2,007,000)	(5,404,000)	(2,870,000)
Changes in other assets	1,000	10,000	25,000	10,000
Net cash used in operating activities	(4,214,000)	(7,104,000)	(12,559,000)	(20,049,000)
Cash flows from (used in) investing activities:
Acquisition of equipment		(254,000)	(69,000)	(290,000)
Acquisition of investments	(1,372,000)	(32,000)	(1,393,000)	(2,063,000)
Maturity of investment		(61,000)	21,000	10,890,000
Net cash provided by (used in) investing activities	(1,372,000)	(347,000)	(1,441,000)	8,537,000
Cash flows used in financing activities:
Net proceeds from issuance of common shares under the at-the-market (ATM)	19,745,000	6,002,000	24,955,000	6,002,000
Deferred financing costs		(31,000)	(143,000)	(67,000)
Proceeds from exercise of warrants		1,081,000		7,733,000
Proceeds from exercise of stock options		33,000		45,000
Net cash provided by financing activities	19,745,000	7,117,000	24,812,000	13,713,000
Effect of exchange rate fluctuations on cash and cash equivalents	(1,843,000)	260,000	(1,993,000)	487,000
Translations effects on cash and cash equivalents related to reporting currency	2,678,000	345,000	3,487,000	208,000
Net increase in cash and cash equivalents	14,994,000	271,000	12,306,000	2,896,000
Cash and cash equivalents, beginning of period	11,552,000	19,496,000	14,240,000	16,871,000
Cash and cash equivalents, end of period	26,546,000	19,767,000	26,546,000	19,767,000
Cash and cash equivalents are comprised of:
Cash	7,104,000	6,874,000	7,104,000	6,874,000
Cash equivalents	$ 19,442,000	$ 12,893,000	$ 19,442,000	$ 12,893,000

XML

Note 1 - Nature of Operation

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Nature of Operations [Text Block]

1. Nature of Operation:

Acasti Pharma Inc. (“Acasti” or the “Corporation”) is incorporated under the Business Corporations Act (Québec) (formerly Part

1A

of the Companies Act (Québec)). The Corporation is domiciled in Canada and its registered office is located at

3009,

boul.de la Concord Est, Laval, Québec,

H7E

2B5.

In

August 2020,

the Corporation released Phase

3

clinical study results for the Corporation's lead drug candidate, CaPre. The failure of the TRILOGY studies to meet the primary endpoint resulted in the Corporation making a decision

not

to proceed with a filing of a New Drug Application (NDA) with the U.S. Food and Drug Administration (FDA).

In

September 2020,

the Corporation commenced a formal process to explore and evaluate strategic alternatives to enhance shareholder value. Towards this end, the Corporation has engaged a financial advisor to assist in the process. There can be

no

assurance of a successful outcome from these efforts, or of the form or timing of any such outcome. The Corporation has greatly reduced its commercial and research and development activities including a reduction in workforce to reduce operating expenses, while it evaluates these opportunities. The Corporation's operations are now primarily focused on evaluating strategic alternatives. The Corporation remains subject to a number of risks similar to other companies in the biotechnology industry, including compliance with government regulations, protection of proprietary technology, dependence on

third

parties and product liability.

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Note 2 - Summary of Significant Accounting Policies

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2. Summary of significant accounting policies:

Adoption of U.S. GAAP:

These interim condensed consolidated financial statements of the Corporation have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP). Comparative figures, for the

three

and

nine

-month periods ended

December 31, 2019,

which were previously presented in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board, have been adjusted as required to be compliant with the Corporation's accounting policies under U.S. GAAP.

Basis of presentation:

These unaudited Interim Consolidated Financial Statements have been prepared using accounting policies consistent with those used in preparing the Corporation's

March 31, 2020

Annual Consolidated Financial Statements, except as disclosed in Note

3

– Recent accounting pronouncements and policies and should be read in conjunction with such statements and Notes thereto.

The following summarizes the principal conditions or events relevant to the Corporation's going concern assessment, which primarily considers the period of

one

year from the issuance date of these financial statements.

The Corporation has incurred operating losses and negative cash flows from operations since its inception. Prior to this quarter, there was substantial doubt regarding the Corporation's ability to realize its assets and discharge its liabilities and commitments in the ordinary course of business. During this quarter, the Corporation has raised net proceeds of

$19.7

million under the ATM program. The Corporation's assets as at

December 31, 2020

include cash and cash equivalents and short-term investments totaling

$27.9

million. The Corporation's current liabilities total

$2.3

million at

December 31, 2020

and are comprised primarily of amounts due to or accrued for creditors. Subsequent to

December 31, 2020,

the Corporation raised an additional

$7.9

million of net proceeds.

The Corporation's ability to continue as a going concern is dependent upon its ability to achieve a successful strategic alternative and ultimately generate cashflows to meet its obligations. Due to the failure of the Corporation's Phase

3

clinical studies to meet its primary endpoints, and the resulting decision

not

to file an NDA to obtain FDA approval for CaPre, the Corporation has commenced a formal process to explore and evaluate strategic alternatives to enhance shareholder value, which is currently the focus of the Corporation's activities. There is

no

assurance that a strategic transaction will be consummated as such transaction is

not

within the Corporation's control. Due to the Corporation's lack of operating activities, its current liabilities and commitments are limited. As a result of the Corporation's current liquidity profile and lack of operating activity unrelated to the evaluating strategic alternatives, management has assessed that substantial doubt regarding its ability to continue as a going concern for

one

year from the issuance date of these financial statements

no

longer exists.

Use of estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Actual results

may

differ from these estimates.

Estimates are based on management's best knowledge of current events and actions that management

may

undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Estimates and assumptions include the measurement of derivative warrant liabilities (note

7

) and stock-based compensation (note

11

), impairment of intangibles and assets held for sale (notes

5

and

6

) and the take-or-pay contract (note

14

(a)). Estimates and assumptions are also involved in measuring the accrual of services rendered with respect to research and developments expenditures at each reporting date, as well as in determining which research and development expenses qualify for investment tax credits and in what amounts. The Corporation recognizes the tax credits once it has reasonable assurance that they will be realized. Recorded tax credits are subject to review and approval by tax authorities and, therefore, could be different from the amounts recorded.

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Note 3 - Recent Accounting Pronouncements

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

3. Recent Accounting Pronouncements

In

June 2016,

the FASB issued ASU

2016

-

13

-Financial Instruments-Credit Losses (Topic

326

), which amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost, the new guidance eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. ASU

2016

-

13

will affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, and any other financial assets

not

excluded from the scope that have the contractual right to receive cash. ASU

2016

-

13

is effective for annual periods, and interim periods within those annual periods, beginning after

December 15, 2022.

Management has

not

yet evaluated the impact of this ASU on the consolidated financial statements.

In

August 2018,

the FASB issued ASU

2018

-

15

Intangibles-Goodwill and Other-Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. ASU

2018

-

15

aligns the requirements for capitalizing implementation costs in such cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2019

and early adoption is permitted. Entities can choose to adopt the new guidance prospectively or retrospectively. Management has adopted the accounting standard update. However, the adoption of this update did

not

have any impact on the reported amounts as at

December 31, 2020.

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Note 4 - Investments

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

4. Short-term investments

The Corporation holds various marketable securities, with maturities greater than

3

months at the time of purchase, as follows:

	December 31, 2020		March 31, 2020
		$		$
Term deposits issued in US currency earning interest at ranges between 0.30% and 0.40% and maturing on various dates from March 9, 2021 to June 22, 2021		536		-
Term deposits issued in CAD currency earning interest at ranges between 0.62% and 0.67% and maturing on various dates from April 16, 2021 to June 22, 2021		836		-
Total short-term investments		1,372		-

XML

Note 5 - Impairment Loss Intangible Assets

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

5. Impairment loss Intangible assets:

The Corporation tests intangible assets for impairment should circumstances change or events occur that would indicate that the fair value of an asset

may

be below its carrying value. During the

second

quarter of fiscal

2021,

the Corporation released its Phase

3

clinical programs data and its failure to meet its primary endpoints, and the resulting decision to

not

file an NDA to obtain FDA approval for CaPre. In addition, a significant share price reduction occurred. Due to these indicators of impairment under ASC

350,

the Corporation undertook an analysis to determine the fair value of its intangible asset this quarter.

In prior years, the Corporation entered into agreements with Neptune Wellness Solutions Inc. (Neptune) pursuant to which the Corporation obtained a license and exercised its option under this license agreement to pay in advance all of the future royalties payable to Neptune. This license allows the Corporation to exploit the intellectual property rights in-order to develop novel active pharmaceutical ingredients into commercial products for the prescription drugs market. In assessing the magnitude of any impairment of the license the Corporation considered all available evidence including i) significant adverse impact from business climate due to Phase

3

clinical programs failure to meet its primary endpoints, and the resulting decision to

not

file an NDA to obtain FDA approval for CaPre, and the resulting internal forecasts that

no

cash flows from the use of the license was possible, and (ii) management's estimate that a market place participant would place minimal to

no

value on the license if it were to be sold on its own or in combination with other assets, recognized or

not,

which is a level

3

measurement in the fair value hierarchy which included unobservable inputs. Accordingly, an impairment loss of

$3,706

was recognized for the

nine

-months ended

December 31, 2020,

which represents the totality of the intangible assets net book value prior to the impairment trigger and has

not

changed since the

six

-months ended

September 30, 2020.

XML

Note 6 - Assets Held for Sale

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

6. Assets held for sale

During the period the Corporation committed to a plan and is actively marketing for sale Other assets and Equipment and has met the criteria for classification of assets held for sale:

	December 31, 2020		March 31, 2020
	$		$
Other assets		712		668
Equipment		376		1,910
		1,088		2,578

a. Other assets

Other assets represent krill oil (RKO) held by the Company that was expected to be used in the conduct of R&D activities and commercial inventory scale up related to the development and commercialization of the CaPre drug. Given that the development of CaPre will

no

longer be pursued, the Corporation is expected to sell this reserve. However, there is uncertainty whether the other assets will be recoverable and there is a risk of loss being recorded in the near-term.

b. Equipment

December 31, 2020	Cost		Accumulated depreciation			Impairment loss			Net book value
	$		$			$			$
Furniture and office equipment		17		(5	)		-			12
Computer equipment		136		(29	)		(54	)		53
Laboratory equipment		749		(429	)		(171	)		149
Production equipment		2,533		(1,012	)		(1,359	)		162
		3,435		(1,475	)		(1,584	)		376

Equipment is made up of Laboratory, Production, Computer and Office equipment that was utilized in the development of CaPre. Similarly, to the intangible assets, the announcement of the failed Phase

3

clinical trials resulted in an impairment trigger for the laboratory and production equipment. The impairment loss is based on management's estimate of the fair value of the equipment less cost -to sell, which is based primarily on estimated market prices obtained from brokers specialized in selling used equipment. These projections are based on Level

3

inputs of the fair value hierarchy and reflect the Corporations best estimate of market participants' pricing of the assets as well as the general condition of the assets.

XML

Note 7 - Derivative Warrant Liabilities

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

7. Derivative warrant liabilities:

The warrants issued as part of the public offering of units composed of Common Shares and Common Share purchase warrants on

May 9, 2018

and

May 14, 2018

are derivative warrant liabilities given the warrant indenture contains certain contingent provisions that allow for cash settlement.

Warrants issued as part of a public offering of units composed of Common Shares and Common Share purchase warrants on

December 27, 2017

are derivative warrant liabilities given the currency of the exercise price is different from the Corporation's functional currency.

The derivative warrant liabilities are measured at fair value at each reporting period and the reconciliation of changes in fair value for the

nine

-month periods is presented in the following tables:

	Warrant liabilities issued May 2018						Warrant liabilities issued December 27, 2017
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
	$			$			$			$
Balance – beginning of period		1,146			6,177			1,247			6,005
Amount transferred to Equity		-			(6,139	)		-			(4,703	)
Change in fair value		(100	)		11,459			(320	)		10,297
Translation effect		182			362			185			220
Balance – end of period		1,228			11,859			1,112			11,819
Fair value per share issuable	USD$	0.19		USD$	1.80		USD$	0.16		USD$	1.67

The fair value of the derivative warrant liabilities was estimated using the Black-Scholes option pricing model and based on the following assumptions:

	Warrant liabilities issued May 2018						Warrant liabilities issued December 27, 2017
	December 31, 2020			March 31, 2020			December 31, 2020			March 31, 2020
Exercise price	CAD$	1.31		CAD$	1.31		USD$	1.26		USD$	1.26
Share price	CAD$	0.42		CAD$	0.53		USD$	0.33		USD$	0.38
Risk-free interest		0.58	%		0.66	%		0.36	%		0.37	%
Estimated life (years)		2.35			3.11			1.99			2.74
Expected volatility		149.55	%		107.59	%		153.14	%		125.03	%

XML

Note 8 - Capital and Other Components of Equity

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

8. Capital and other components of equity:

(a) “At-the-market” sales agreement:

On

February 14, 2019,

the Corporation entered into an “at-the-market” (ATM) sales agreement with B. Riley FBR, Inc. (“B. Riley”) pursuant to which the Common Shares

may

be sold from time to time for aggregate gross proceeds of up to

$30

million, with sales only being made on the NASDAQ Stock Market. The Common Shares would be issued at market prices prevailing at the time of the sale and, as a result, prices

may

vary between purchasers and during the period of distribution. The ATM has a

3

-year term and requires the Corporation to pay between

3%

and

4%

commission to B. Riley based on volume of sales made. On

June 29, 2020,

the Corporation entered into an amended and restated sales agreement (the Sales Agreement) with B. Riley, Oppenheimer & Co. Inc. and H.C. Wainwright & Co., LLC (collectively, the “Agents”) to amend the existing ATM program. Under the terms of the Sales Agreement, the Corporation

may

issue and sell from time to time its common shares (the Shares) having an aggregate offering price of up to US

$75,000,000

through the Agents. Subject to the terms and conditions of the Sales Agreement, the Agents will use their commercially reasonable efforts to sell the Shares from time to time, based upon the Corporation's instructions. The Corporation has

no

obligation to sell any of the Shares and

may

at any time suspend sales under the Sales Agreement. The Corporation and the Agents

may

terminate the Sales Agreement in accordance with its terms. Under the terms of the Sales Agreement, the Corporation has provided the Agents with customary indemnification rights and the Agents will be entitled to compensation, at a commission rate equal to

3.0%

of the gross proceeds from each sale of the Shares.

During the

nine

-month period ended

December 31, 2020,

a total of

65.9

million common shares were sold for total net proceeds of approximately

$24.8

million under the ATM program. Commission, legal and costs related to share sale amounted to

$903.

The shares were sold at the prevailing market prices, which resulted in an average price of approximately

$0.39

per share. Accordingly, proportional costs of

$18

related to the common shares sold, have been reclassified from deferred financings costs to equity. Total costs incurred to register the Sales Agreements were initially recorded as deferred financing costs in the Consolidated Balance Sheet. During the

nine

-month period ended

December 31, 2020,

the remaining balance of the costs incurred of

$264

were written off to financing expenses.

(b) Shares issued as settlement:

On

May 10, 2019,

the Corporation announced the settlement regarding legal claims made by its former chief executive (“CEO”) officer with respect to the termination of his employment. Pursuant to the settlement agreement, the Corporation agreed to issue

900,000

common shares at

$0.82

(CAD

$1.10

) per share to the former CEO. In addition, the Corporation agreed to reimburse the former CEO for legal fees of

$48

(CAD

$64.

) Furthermore, pursuant to the settlement agreement, the Corporation received a full and final release from the former CEO on all procedures in connection with the termination of his employment. This settlement was accrued as a short-term liability as at

March 31, 2019

and the expense of

$786

(CAD

$1,054

) was included as part of General and administrative expenses. During

May 2019,

the shares were issued and the liability of

$739

(CAD

$990

) reclassified as Equity.

(c) Warrants:

The warrants of the Corporation are composed of the following as at

December 31, 2020

and

March 31, 2020:

	December 31, 2020				March 31, 2020
	Number outstanding		Amount		Number outstanding		Amount
			$				$
Liability
May 2018 public offering warrants 2018 (i)		6,593,750		1,228		6,593,750		1,146
Series December 2017 U.S. public offering warrants 2017 (ii)		7,072,962		1,112		7,072,962		1,247
		13,666,712		2,340		13,666,712		2,393
Equity
Public offering warrants
Public offering Broker warrants May 2018(iii)		222,976		89		222,976		89
Series December 2017 US Broker warrants (iv)		259,121		161		259,121		161
Public offering warrants February 2017 (v)		1,723,934		631		1,723,934		631
		2,206,031		881		2,206,031		881

(i) Warrant to acquire one Common Share at an exercise price of CAD $1.31, expiring on May 9, 2023.

(ii) Warrant to acquire one Common Share at an exercise price of $1.26, expiring on December 27, 2022.

(iii) Warrant to acquire one Common Share o at an exercise price of CAD $1.05, expiring on May 9, 2023.

(iv) Warrant to acquire one Common Share at an exercise price of $1.2625, expiring on December 19, 2022.

(v) Warrant to acquire one Common Share at an exercise price of CAD $2.15, expiring on February 21, 2022.

(d) Exercise of warrants:

No

warrants were exercised during the

three

-month and

nine

-month periods ending

December 31, 2020.

During the

three

-month and

nine

-month periods ending

December 31, 2019,

the following warrants were exercised with the resulting cash proceeds.

	Three-month periods ended				Nine-month periods ended
	December 31, 2019				December 31, 2019
	Number exercised		Proceeds		Number exercised		Proceeds
			$				$
May 2018 over-allotment Warrants 2018		75,000		75		3,594,350		3,586
Series December 2017 US Public offering Warrants 2017		403,808		479		2,676,611		3,382
Public offering warrants February 2017		94,100		153		180,100		292
Public offering Broker warrants May 2018		200,000		158		325,000		257
Contingent warrants private placement 2017		150,000		216		150,000		216
		922,908		1,081		6,926,061		7,733

In

2019,

235,929,

broker warrants and

52,288

derivative warrants offered as part of the

December 2017

U.S. public offering were exercised in a cashless manner to acquire

136,013

Common Shares of the Corporation.

XML

Note 9 - Government Assistance

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Government Assistance [Text Block]

9. Government assistance:

Government assistance is comprised of a government grant from the Canadian federal government and research and development investment tax credits receivable from the Quebec provincial government, which relate to qualifiable research and development expenditures under the applicable tax laws. The amounts recorded as receivables are subject to a government tax audit and the final amounts received

may

differ from those recorded. For the

nine

-month periods ended

December 31, 2020

and

December 31, 2019,

the Corporation recorded

$84

and

$75,

respectively, as a reduction of research and development expenses in the Statement of Loss and Comprehensive Loss.

In

September 2019,

the Corporation was awarded up to CAD

$750,000

in non-dilutive and non-repayable funding from the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP) to apply towards eligible research and development disbursements of the Corporation's unique commercial production platform for CaPre. During the

nine

-month period ended

December 31, 2020

the Corporation claimed

$79

in connection with this program, which has been recorded as a reduction of research and development expenses in the Consolidated Statements of Loss and Comprehensive Loss.

In

October 2020,

the Corporation received correspondence from the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP) that the eligible amount awarded to the Corporation for non-dilutive and non-repayable funding was reduced from up to CAD

$750,000

to up to CAD

$326,357.

Acasti Pharma inc.

Notes to Consolidated Interim Financial Statements

(Unaudited)

Three-month and

nine

-month periods ended

December 31, 2020

and

2019

XML

Note 10 - Revenues

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

10. Revenues:

In

October 2020,

the Corporation entered into an agreement with the Centre Integre Universitaire et des services sociaux de L'Estrie - Centre hospitalier Universitaire de Sherbrooke to start producing and selling Viral transport medium tubes to be utilized in testing related to the Covid-

19

pandemic. Revenue is recognized when the product is received by the customer.

XML

Note 11 - Financial Income (Expenses)

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Other Income and Other Expense Disclosure [Text Block]

11. Financial Income (expenses):

	Three-month periods ended						Nine-month periods ended
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
	$			$			$			$
Foreign exchange gain (loss)		(196	)		(88	)		(146	)		(51	)
Interest payable on convertible debenture		-			(23	)		-			(83	)
Accretion of interest on convertible debenture		-			(30	)		-			(106	)
Write off-of deferred financing fees related to at-the-market (ATM) program		-			-			(264	)		-
Change in fair value of warrant liabilities		(1,098	)		(5,882	)		420			(21,756	)
Interest income		38			46			77			275
Financial income (expenses)		(1,256	)		(5,977	)		87			(21,721	)

XML

Note 12 - Stock Based Compensation

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

12. Stock based compensation:

At

December 31, 2020

the Corporation has in place a stock option plan for directors, officers, employees and consultants of the Corporation (“Stock Option Plan”). An amendment of the Plan was approved by shareholders on

September 30, 2020.

The amendment provides for an increase to the existing limits for Common Shares reserved for issuance under the Stock Option Plan as well as certain changes to the minimum vesting period applicable to options granted to directors under the Stock Option Plan. The stock option plan continues to provide for the granting of options to purchase Common Shares. The exercise price of the stock options granted under this amended plan is

not

lower than the closing price of the Common Shares on the TSXV at the close of markets the day preceding the grant. The maximum number of Common Shares that

may

be issued upon exercise of options granted under the amended Stock Option Plan was increased from

11,719.910

representing

15%

of the issued and outstanding Common Shares of the Company as of

April 9, 2019,

to

14,533,881

representing

15%

of the issued and outstanding Common Shares of the Company as of

August 26, 2020.

The terms and conditions for acquiring and exercising options are set by the Corporation's Board of Directors, subject among others, to the following limitations: the term of the options cannot exceed

ten

years and (i) all options granted to a director will be vested evenly on a monthly basis over a period of at least

twelve

(

12

) months, and (ii) all options granted to an employee will be vested evenly on a quarterly basis over a period of at least

thirty-six

(

36

) months.

The total number of shares issued to any

one

consultant within any

twelve

-month period cannot exceed

2%

of the Corporation's total issued and outstanding shares (on a non-diluted basis). The Corporation is

not

authorized to grant within any

twelve

-month period such number of options under the stock option plan that could result in a number of Common Shares issuable pursuant to options granted to (a) related persons exceeding

2%

of the Corporation's issued and outstanding Common Shares (on a non-diluted basis) on the date an option is granted, or (b) any

one

eligible person in a

twelve

-month period exceeding

2%

of the Corporation's issued and outstanding Common Shares (on a non-diluted basis) on the date an option is granted.

The following table summarizes information about activities within the stock option plan for the

nine

-month periods ended:

	December 31, 2020					December 31, 2019
	Weighted average exercise price		Number of options			Weighted average exercise price		Number of options
	CAD $					CAD $
Outstanding at beginning of period		1.00		9,936,486			1.25		4,046,677
Granted		-		-			1.39		2,304,517
Exercised		-		-			1.11		(54,625	)
Forfeited		0.84		(1,787,809	)		1.04		(11,917	)
Expired		-		-			6.50		(7,500	)
Outstanding at end of period		1.03		8,148,677			1.30		6,277,152
Exercisable at end of period		1.18		5,296,811			1.39		2,917,543

No

stock options were granted during the

three

and

nine

-month periods ended

December 31, 2020.

The fair value of options granted during the

three

and

nine

-month periods ended

December 31, 2019

has been estimated according to the Black-Scholes option pricing model and based on the weighted average of the following assumptions for options granted during the

nine

-month periods ended:

	December 31, 2019 CAD
Exercise price	$	1.39
Share price	$	2.02
Dividend		-
Risk-free interest		1.60	%
Estimated life (years)		5.78
Expected volatility		89.70	%

At the grant date (which for some options occurs after issuance date upon shareholder approval of the options), the weighted average fair value of the options granted to employees and directors during the

nine

-month period ended

December 31, 2019

was CAD

$1.58.

No

options were granted to consultants.

Compensation expense recognized under the stock option plan for the

three

-month periods ended

December 31, 2020

and

2019

was as follows:

	Three-month periods ended					Nine-month periods ended
	December 31, 2020			December 31, 2019		December 31, 2020			December 31, 2019
	$			$		$			$
Research and development expenses		58			131		304			350
General and administrative expenses		174			386		706			959
Sales and marketing expenses		(262	)		94		(7	)		199
		(30	)		611		1,003			1,508

Stock-based compensation payment transactions and broker warrants:

The fair value of stock-based compensation transactions is measured using the Black-Scholes option pricing model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility for a duration equal to the weighted average life of the instruments, life based on the average of the vesting and contractual periods for employee awards as minimal prior exercises of options in which to establish historical exercise experience; contractual life for broker warrants), and the risk-free interest rate (based on government bonds). Service and performance conditions attached to the transactions, if any, are

not

taken into account in determining fair value. The expected life of the stock options is

not

necessarily indicative of exercise patterns that

may

occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which

may

also

not

necessarily be the actual outcome.

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Note 13 - Supplemental Cash Flow Disclosure

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Cash Flow, Supplemental Disclosures [Text Block]

13. Supplemental cash flow disclosure:

(a) Changes in non-cash operating items:

	Three-month periods ended						Nine-month periods ended
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
	$			$			$			$
Receivables		27			(237	)		(20	)		(10	)
Inventory		(14	)		-			(14	)		-
Prepaid expenses		(23	)		(1,074	)		521			(518	)
Trade and other payables		(1,999	)		(696	)		(5,891	)		(2,342	)
		(2,009	)		(2,007	)		(5,404	)		(2,870	)

(b) Non-cash transactions:

	Three-month periods ended				Nine-month periods ended
	December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2019
	$		$		$		$
Equipment included in trade and other payables		-		9		-		9
ATM transaction costs included in trade and other payables		118		-		118		-
Shares issued as settlement		-		-		-		741
Fair value of derivative warrants liability reclassified to Equity		-		868		-		10,962
Interest payable included in trade and other payables		-		31		-		31

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Note 14 - Commitments and Contingencies

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

14. Commitments and contingencies:

(a) Take or pay contract :

On

October 25, 2019,

the Corporation signed a supply agreement with Aker Biomarine Antartic AS (“Aker”), to purchase raw krill oil product for a committed volume of commercial starting material for CaPre for a total value of

$3.1

million (take or pay). The delivery of the products has been established following a calendar year basis and it must be completed in the

4th

calendar quarter of

2021.

As at

December 31, 2020,

the remaining balance of the commitment with Aker amounts to

$2.8

million. There are

no

termination provisions within the supply agreement. Management is currently assessing whether they can recover any value from the raw krill oil product and given the uncertainty of recoverability, there is a risk that the Corporation

may

have a loss on this contract in the near term.

(b) Success fees

On

September 23, 2020

the Corporation engaged Oppenheimer & Co., Inc,. as its financial advisor to assist in the formal process to explore and evaluate strategic alternatives to enhance shareholder value. This arrangement includes fees to be paid by the Corporation based on the success of a strategic outcome.

(c) Retention agreements

In

October 2020

in connection with its strategic review process, the Corporation entered into retention incentive agreements with the Chief Executive Officer (CEO) and Chief Operating Officer (COO).

The Retention Agreements provide that the Corporation will pay the CEO an employment retention incentive of

$100

provided that the CEO remains employed with the Corporation until the earlier of

April 30, 2021

or the closing of a merger or like transaction with a

third

party.

In addition, the Retention Agreements also provide that the Corporation will pay each of the CEO and COO an amount of up to

$125

in the event that certain milestones are met in relation to the monetization by the Corporation of its assets.

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Note 15 - Comparative Figures

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Accounting Changes and Error Corrections [Text Block]

15. Comparative figures

Certain comparative figures in the

nine

and

three

-month period ended

December 31, 2019,

have been adjusted in order to conform to US GAAP. Adjustments included certain reclassifications within equity for certain warrants, the recognition of deferred tax on legacy transfers of license from Neptune that were subject to an initial recognition exemption under IFRS and different classifications within the statement of cash flows for treatment of interest expense and income.

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Note 16 - Subsequent Events

9 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Subsequent Events [Text Block]

16. Subsequent events:

In

January 2021,

the Corporation sold an additional

23.4

million common shares for net proceeds of approximately

$7.9

million (gross proceeds of

$8.1

million) under the ATM program.

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Significant Accounting Policies (Policies)

9 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Adoption of U.S. GAAP:

These interim condensed consolidated financial statements of the Corporation have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP). Comparative figures, for the

three

and

nine

-month periods ended

December 31, 2019,

which were previously presented in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board, have been adjusted as required to be compliant with the Corporation's accounting policies under U.S. GAAP.

Basis of presentation:

These unaudited Interim Consolidated Financial Statements have been prepared using accounting policies consistent with those used in preparing the Corporation's

March 31, 2020

Annual Consolidated Financial Statements, except as disclosed in Note

3

– Recent accounting pronouncements and policies and should be read in conjunction with such statements and Notes thereto.

The following summarizes the principal conditions or events relevant to the Corporation's going concern assessment, which primarily considers the period of

one

year from the issuance date of these financial statements.

The Corporation has incurred operating losses and negative cash flows from operations since its inception. Prior to this quarter, there was substantial doubt regarding the Corporation's ability to realize its assets and discharge its liabilities and commitments in the ordinary course of business. During this quarter, the Corporation has raised net proceeds of

$19.7

million under the ATM program. The Corporation's assets as at

December 31, 2020

include cash and cash equivalents and short-term investments totaling

$27.9

million. The Corporation's current liabilities total

$2.3

million at

December 31, 2020

and are comprised primarily of amounts due to or accrued for creditors. Subsequent to

December 31, 2020,

the Corporation raised an additional

$7.9

million of net proceeds.

The Corporation's ability to continue as a going concern is dependent upon its ability to achieve a successful strategic alternative and ultimately generate cashflows to meet its obligations. Due to the failure of the Corporation's Phase

3

clinical studies to meet its primary endpoints, and the resulting decision

not

to file an NDA to obtain FDA approval for CaPre, the Corporation has commenced a formal process to explore and evaluate strategic alternatives to enhance shareholder value, which is currently the focus of the Corporation's activities. There is

no

assurance that a strategic transaction will be consummated as such transaction is

not

within the Corporation's control. Due to the Corporation's lack of operating activities, its current liabilities and commitments are limited. As a result of the Corporation's current liquidity profile and lack of operating activity unrelated to the evaluating strategic alternatives, management has assessed that substantial doubt regarding its ability to continue as a going concern for

one

year from the issuance date of these financial statements

no

longer exists.

Use of Estimates, Policy [Policy Text Block]

Use of estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Actual results

may

differ from these estimates.

Estimates are based on management's best knowledge of current events and actions that management

may

undertake in the future. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Estimates and assumptions include the measurement of derivative warrant liabilities (note

7

) and stock-based compensation (note

11

), impairment of intangibles and assets held for sale (notes

5

and

6

) and the take-or-pay contract (note

14

(a)). Estimates and assumptions are also involved in measuring the accrual of services rendered with respect to research and developments expenditures at each reporting date, as well as in determining which research and development expenses qualify for investment tax credits and in what amounts. The Corporation recognizes the tax credits once it has reasonable assurance that they will be realized. Recorded tax credits are subject to review and approval by tax authorities and, therefore, could be different from the amounts recorded.

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Note 4 - Investments (Tables)

9 Months Ended

Dec. 31, 2020

Notes Tables

Marketable Securities [Table Text Block]

	December 31, 2020		March 31, 2020
		$		$
Term deposits issued in US currency earning interest at ranges between 0.30% and 0.40% and maturing on various dates from March 9, 2021 to June 22, 2021		536		-
Term deposits issued in CAD currency earning interest at ranges between 0.62% and 0.67% and maturing on various dates from April 16, 2021 to June 22, 2021		836		-
Total short-term investments		1,372		-

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Note 6 - Assets Held for Sale (Tables)

9 Months Ended

Dec. 31, 2020

Notes Tables

Disposal Groups, Including Discontinued Operations [Table Text Block]

	December 31, 2020		March 31, 2020
	$		$
Other assets		712		668
Equipment		376		1,910
		1,088		2,578

December 31, 2020	Cost		Accumulated depreciation			Impairment loss			Net book value
	$		$			$			$
Furniture and office equipment		17		(5	)		-			12
Computer equipment		136		(29	)		(54	)		53
Laboratory equipment		749		(429	)		(171	)		149
Production equipment		2,533		(1,012	)		(1,359	)		162
		3,435		(1,475	)		(1,584	)		376

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Note 7 - Derivative Warrant Liabilities (Tables)

9 Months Ended

Dec. 31, 2020

Notes Tables

Schedule of Derivative Liabilities at Fair Value [Table Text Block]

	Warrant liabilities issued May 2018						Warrant liabilities issued December 27, 2017
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
	$			$			$			$
Balance – beginning of period		1,146			6,177			1,247			6,005
Amount transferred to Equity		-			(6,139	)		-			(4,703	)
Change in fair value		(100	)		11,459			(320	)		10,297
Translation effect		182			362			185			220
Balance – end of period		1,228			11,859			1,112			11,819
Fair value per share issuable	USD$	0.19		USD$	1.80		USD$	0.16		USD$	1.67

Fair Value Measurement Inputs and Valuation Techniques [Table Text Block]

	Warrant liabilities issued May 2018						Warrant liabilities issued December 27, 2017
	December 31, 2020			March 31, 2020			December 31, 2020			March 31, 2020
Exercise price	CAD$	1.31		CAD$	1.31		USD$	1.26		USD$	1.26
Share price	CAD$	0.42		CAD$	0.53		USD$	0.33		USD$	0.38
Risk-free interest		0.58	%		0.66	%		0.36	%		0.37	%
Estimated life (years)		2.35			3.11			1.99			2.74
Expected volatility		149.55	%		107.59	%		153.14	%		125.03	%

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Note 8 - Capital and Other Components of Equity (Tables)

9 Months Ended

Dec. 31, 2020

Notes Tables

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

	December 31, 2020				March 31, 2020
	Number outstanding		Amount		Number outstanding		Amount
			$				$
Liability
May 2018 public offering warrants 2018 (i)		6,593,750		1,228		6,593,750		1,146
Series December 2017 U.S. public offering warrants 2017 (ii)		7,072,962		1,112		7,072,962		1,247
		13,666,712		2,340		13,666,712		2,393
Equity
Public offering warrants
Public offering Broker warrants May 2018(iii)		222,976		89		222,976		89
Series December 2017 US Broker warrants (iv)		259,121		161		259,121		161
Public offering warrants February 2017 (v)		1,723,934		631		1,723,934		631
		2,206,031		881		2,206,031		881

Schedule of Stockholders' Equity Note, Warrants or Rights Exercised [Table Text Block]

	Three-month periods ended				Nine-month periods ended
	December 31, 2019				December 31, 2019
	Number exercised		Proceeds		Number exercised		Proceeds
			$				$
May 2018 over-allotment Warrants 2018		75,000		75		3,594,350		3,586
Series December 2017 US Public offering Warrants 2017		403,808		479		2,676,611		3,382
Public offering warrants February 2017		94,100		153		180,100		292
Public offering Broker warrants May 2018		200,000		158		325,000		257
Contingent warrants private placement 2017		150,000		216		150,000		216
		922,908		1,081		6,926,061		7,733

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Note 11 - Financial Income (Expenses) (Tables)

9 Months Ended

Dec. 31, 2020

Notes Tables

Schedule of Other Nonoperating Income (Expense) [Table Text Block]

	Three-month periods ended						Nine-month periods ended
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
	$			$			$			$
Foreign exchange gain (loss)		(196	)		(88	)		(146	)		(51	)
Interest payable on convertible debenture		-			(23	)		-			(83	)
Accretion of interest on convertible debenture		-			(30	)		-			(106	)
Write off-of deferred financing fees related to at-the-market (ATM) program		-			-			(264	)		-
Change in fair value of warrant liabilities		(1,098	)		(5,882	)		420			(21,756	)
Interest income		38			46			77			275
Financial income (expenses)		(1,256	)		(5,977	)		87			(21,721	)

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Note 12 - Stock Based Compensation (Tables)

9 Months Ended

Dec. 31, 2020

Notes Tables

Share-based Payment Arrangement, Option, Activity [Table Text Block]

	December 31, 2020					December 31, 2019
	Weighted average exercise price		Number of options			Weighted average exercise price		Number of options
	CAD $					CAD $
Outstanding at beginning of period		1.00		9,936,486			1.25		4,046,677
Granted		-		-			1.39		2,304,517
Exercised		-		-			1.11		(54,625	)
Forfeited		0.84		(1,787,809	)		1.04		(11,917	)
Expired		-		-			6.50		(7,500	)
Outstanding at end of period		1.03		8,148,677			1.30		6,277,152
Exercisable at end of period		1.18		5,296,811			1.39		2,917,543

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	December 31, 2019 CAD
Exercise price	$	1.39
Share price	$	2.02
Dividend		-
Risk-free interest		1.60	%
Estimated life (years)		5.78
Expected volatility		89.70	%

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]

	Three-month periods ended					Nine-month periods ended
	December 31, 2020			December 31, 2019		December 31, 2020			December 31, 2019
	$			$		$			$
Research and development expenses		58			131		304			350
General and administrative expenses		174			386		706			959
Sales and marketing expenses		(262	)		94		(7	)		199
		(30	)		611		1,003			1,508

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Note 13 - Supplemental Cash Flow Disclosure (Tables)

9 Months Ended

Dec. 31, 2020

Notes Tables

Cash Flow, Operating Capital [Table Text Block]

	Three-month periods ended						Nine-month periods ended
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
	$			$			$			$
Receivables		27			(237	)		(20	)		(10	)
Inventory		(14	)		-			(14	)		-
Prepaid expenses		(23	)		(1,074	)		521			(518	)
Trade and other payables		(1,999	)		(696	)		(5,891	)		(2,342	)
		(2,009	)		(2,007	)		(5,404	)		(2,870	)

Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]

	Three-month periods ended				Nine-month periods ended
	December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2019
	$		$		$		$
Equipment included in trade and other payables		-		9		-		9
ATM transaction costs included in trade and other payables		118		-		118		-
Shares issued as settlement		-		-		-		741
Fair value of derivative warrants liability reclassified to Equity		-		868		-		10,962
Interest payable included in trade and other payables		-		31		-		31

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Note 1 - Nature of Operation (Details Textual) - USD ($) $ in Thousands	Dec. 31, 2020	Mar. 31, 2020
Liabilities, Current, Total	$ 2,248	$ 7,395

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Note 2 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	1 Months Ended	3 Months Ended	9 Months Ended
	Jan. 31, 2021	Dec. 31, 2020	Dec. 31, 2020	Mar. 31, 2020
Cash, Cash Equivalents, and Short-term Investments, Total		$ 27,900,000	$ 27,900,000
Liabilities, Current, Total		2,248,000	2,248,000	$ 7,395,000
At-the-market Offering [Member]
Proceeds from Issuance of Common Stock, Net		$ 19,700,000	$ 24,800,000
At-the-market Offering [Member] | Subsequent Event [Member]
Proceeds from Issuance of Common Stock, Net	$ 7,900,000

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Note 4 - Investments - Marketable Securities (Details) $ in Thousands, $ in Thousands	Dec. 31, 2020 USD ($)	Dec. 31, 2020 CAD ($)	Mar. 31, 2020 USD ($)	Mar. 31, 2020 CAD ($)
Total Investments - US	$ 1,372
Total short-term investments	1,372
Deposits [Member]
Total Investments - US	536
Total short-term investments	$ 536
Canadian Deposits [Member]
Total Investments - US		$ 836
Total short-term investments		$ 836

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Note 4 - Investments - Marketable Securities (Details) (Parentheticals)	Dec. 31, 2020	Mar. 31, 2020
Deposits [Member] | Minimum [Member]
Investment, interest	0.30%	0.30%
Investment, maturity date	Mar. 09, 2021	Mar. 09, 2021
Deposits [Member] | Maximum [Member]
Investment, interest	0.40%	0.40%
Investment, maturity date	Jun. 22, 2021	Jun. 22, 2021
Canadian Deposits [Member] | Minimum [Member]
Investment, interest	0.62%	0.62%
Investment, maturity date	Apr. 16, 2021	Apr. 16, 2021
Canadian Deposits [Member] | Maximum [Member]
Investment, interest	0.67%	0.67%
Investment, maturity date	Jun. 22, 2021	Jun. 22, 2021

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Note 5 - Impairment Loss Intangible Assets (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Impairment of Intangible Assets, Finite-lived			$ 3,706

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Note 6 - Assets Held for Sale - Summary of Assets Held for Sale (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Mar. 31, 2020
Disposal Group, Including Discontinued Operation, Assets, Current, Total	$ 1,088		$ 1,088		$ 2,578
Equipment held-for-sale, impairment loss			(1,584)
Disposal Group, Held-for-sale, Not Discontinued Operations [Member]
Other assets	712		712		668
Equipment	376		376		1,910
Disposal Group, Including Discontinued Operation, Assets, Current, Total	1,088		1,088		$ 2,578
Equipment held-for-sale, cost	3,435		3,435
Equipment held-for-sale, accumulated depreciation	(1,475)		(1,475)
Equipment held-for-sale, impairment loss			(1,584)
Equipment held-for-sale, net book value	376		376
Disposal Group, Held-for-sale, Not Discontinued Operations [Member] | Furniture and Office Equipment [Member]
Equipment held-for-sale, cost	17		17
Equipment held-for-sale, accumulated depreciation	(5)		(5)
Equipment held-for-sale, impairment loss
Equipment held-for-sale, net book value	12		12
Disposal Group, Held-for-sale, Not Discontinued Operations [Member] | Computer Equipment [Member]
Equipment held-for-sale, cost	136		136
Equipment held-for-sale, accumulated depreciation	(29)		(29)
Equipment held-for-sale, impairment loss			(54)
Equipment held-for-sale, net book value	53		53
Disposal Group, Held-for-sale, Not Discontinued Operations [Member] | Laboratory Equipment [Member]
Equipment held-for-sale, cost	749		749
Equipment held-for-sale, accumulated depreciation	(429)		(429)
Equipment held-for-sale, impairment loss			(171)
Equipment held-for-sale, net book value	149		149
Disposal Group, Held-for-sale, Not Discontinued Operations [Member] | Production Equipment [Member]
Equipment held-for-sale, cost	2,533		2,533
Equipment held-for-sale, accumulated depreciation	(1,012)		(1,012)
Equipment held-for-sale, impairment loss			(1,359)
Equipment held-for-sale, net book value	$ 162		$ 162

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Note 7 - Derivative Warrant Liabilities - Changes in Fair Value (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Warrants Issued in May 2018 [Member]
Balance – beginning of period	$ 1,146	$ 6,177
Amount transferred to Equity		(6,139)
Change in fair value	(100)	11,459
Translation effect	182	362
Balance – end of period	$ 1,228	$ 11,859
Fair value per share issuable (in dollars per share)	$ 0.19	$ 1.80
Warrants Issued December 27, 2017 [Member]
Balance – beginning of period	$ 1,247	$ 6,005
Amount transferred to Equity		(4,703)
Change in fair value	(320)	10,297
Translation effect	185	220
Balance – end of period	$ 1,112	$ 11,819
Fair value per share issuable (in dollars per share)	$ 0.16	$ 1.67

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Note 7 - Derivative Warrant Liabilities - Assumptions (Details)	Sep. 30, 2020	Mar. 31, 2020
Measurement Input, Exercise Price [Member] | Warrants Issued in May 2018 [Member]
Derivative warrant liability, measurement input	1.31	1.31
Measurement Input, Exercise Price [Member] | Warrants Issued December 27, 2017 [Member]
Derivative warrant liability, measurement input	1.26	1.26
Measurement Input, Share Price [Member] | Warrants Issued in May 2018 [Member]
Derivative warrant liability, measurement input	0.42	0.53
Measurement Input, Share Price [Member] | Warrants Issued December 27, 2017 [Member]
Derivative warrant liability, measurement input	0.33	0.38
Measurement Input, Risk Free Interest Rate [Member] | Warrants Issued in May 2018 [Member]
Derivative warrant liability, measurement input	0.0058	0.0066
Measurement Input, Risk Free Interest Rate [Member] | Warrants Issued December 27, 2017 [Member]
Derivative warrant liability, measurement input	0.0036	0.0037
Measurement Input, Expected Term [Member] | Warrants Issued in May 2018 [Member]
Derivative warrant liability, measurement input	2.35	3.11
Measurement Input, Expected Term [Member] | Warrants Issued December 27, 2017 [Member]
Derivative warrant liability, measurement input	1.99	2.74
Measurement Input, Price Volatility [Member] | Warrants Issued in May 2018 [Member]
Derivative warrant liability, measurement input	1.4955	1.0759
Measurement Input, Price Volatility [Member] | Warrants Issued December 27, 2017 [Member]
Derivative warrant liability, measurement input	1.5314	1.2503

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Note 8 - Capital and Other Components of Equity (Details Textual) $ / shares in Units, $ / shares in Units, $ in Thousands					1 Months Ended		3 Months Ended			9 Months Ended		12 Months Ended
	Jun. 29, 2020 USD ($)	May 10, 2019 USD ($) shares	May 10, 2019 CAD ($) $ / shares shares	Feb. 14, 2019 USD ($)	May 31, 2019 USD ($)	May 31, 2019 CAD ($)	Dec. 31, 2020 USD ($) shares	Dec. 31, 2019 USD ($) shares	Jun. 30, 2019 USD ($)	Dec. 31, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) shares	Mar. 31, 2019 USD ($)	Mar. 31, 2019 CAD ($)	Dec. 31, 2020 $ / shares shares	Dec. 31, 2020 $ / shares shares	May 10, 2019 $ / shares
At-the-market Sales Agreement, Common Stock, Maximum Amount | $	$ 75,000,000			$ 30,000,000
At-the-market Sales Agreement, Term (Year)				3 years
At-the-market Sales Agreement, Underwriter Fees, Percentage of Sales	3.00%
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs | $										$ 18,000
Write Off of Deferred Financing Costs of At-the-Market Program | $										$ 264,000
Stock Issued During Period, Value, Settlements | $									$ 739,000
Class of Warrant or Right, Exercised During Period (in shares)								922,908			6,926,061
Warrants Issued in May 2018 [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)														1	1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in CAD per share) | $ / shares														$ 1.31
Warrants Issued December 27, 2017 [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)														1	1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in CAD per share) | $ / shares															$ 1.26
Class of Warrant or Right, Exercised During Period (in shares)								403,808			2,676,611
Class of Warrant or Right, Exercised During Period, Cashless (in shares)										52,288
Stock Issued During Period, Shares, Warrant Excercises (in shares)										136,013
Broker Warrants Issued May 2018 [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)														1	1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in CAD per share) | $ / shares														$ 1.05
Class of Warrant or Right, Exercised During Period (in shares)								200,000			325,000
Broker Warrants Issued December 2017 [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)														1	1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in CAD per share) | $ / shares															$ 1.2625
Class of Warrant or Right, Exercised During Period, Cashless (in shares)										235,929
Warrants Issued in Connection with Public Offering February 2017 [Member]
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)														1	1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in CAD per share) | $ / shares														$ 2.15
Class of Warrant or Right, Exercised During Period (in shares)								94,100			180,100
Warrants [Member]
Class of Warrant or Right, Exercised During Period (in shares)							0			0
General and Administrative Expense [Member]
Litigation Settlement, Expense												$ 786,000	$ 1,054
Former Chief Executive Officer [Member]
Stock Issued During Period, Shares, Settlements (in shares)		900,000	900,000
Shares Issued, Price Per Share (in dollars per share) | (per share)			$ 1.10													$ 0.82
Legal Fees		$ 48,000	$ 64
Stock Issued During Period, Value, Settlements					$ 739,000	$ 990
At-the-market Offering [Member]
Stock Issued During Period, Shares, New Issues (in shares)										65,900,000
Proceeds from Issuance of Common Stock, Net | $							$ 19,700,000			$ 24,800,000
Commission Costs Related to Share Sale | $										$ 903,000
Sale of Stock, Average Price Per Share (in dollars per share) | $ / shares										$ 0.39
Minimum [Member]
At-the-market Sales Agreement, Underwriter Fees, Percentage of Sales				3.00%
Maximum [Member]
At-the-market Sales Agreement, Underwriter Fees, Percentage of Sales				4.00%

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Note 8 - Capital and Other Components of Equity - Warrants (Details) - USD ($) $ in Thousands		Dec. 31, 2020	Mar. 31, 2020
Number outstanding (in shares)		2,206,031	2,206,031
Amount		$ 881	$ 881
Over-Allotment Option Warrants Issued in May 2018 [Member]
Number outstanding (in shares)	[1]	6,593,750	6,593,750
Amount	[1]	$ 1,228	$ 1,146
Warrants Issued December 27, 2017 [Member]
Number outstanding (in shares)	[2]	7,072,962	7,072,962
Amount	[2]	$ 1,112	$ 1,247
Derivative Liability Warrants [Member]
Number outstanding (in shares)		13,666,712	13,666,712
Amount		$ 2,340	$ 2,393
Broker Warrants Issued May 2018 [Member]
Number outstanding (in shares)	[3]	222,976	222,976
Amount	[3]	$ 89	$ 89
Broker Warrants Issued December 2017 [Member]
Number outstanding (in shares)	[4]	259,121	259,121
Amount	[4]	$ 161	$ 161
Warrants Issued in Connection with Public Offering February 2017 [Member]
Number outstanding (in shares)	[5]	1,723,934	1,723,934
Amount	[5]	$ 631	$ 631

[1] Warrant to acquire one Common Share at an exercise price of CAD $1.31, expiring on May 9, 2023.

[2] Warrant to acquire one Common Share at an exercise price of $1.26, expiring on December 27, 2022.

[3] Warrant to acquire one Common Share o at an exercise price of CAD $1.05, expiring on May 9, 2023.

[4] Warrant to acquire one Common Share at an exercise price of $1.2625, expiring on December 19, 2022.

[5] Warrant to acquire one Common Share at an exercise price of CAD $2.15, expiring on February 21, 2022.

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Note 8 - Capital and Other Components of Equity - Warrant Exercises (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Number exercised (in shares)		922,908		6,926,061
Proceeds		$ 1,081		$ 7,733
Over-Allotment Option Warrants Issued in May 2018 [Member]
Number exercised (in shares)		75,000		3,594,350
Proceeds		$ 75		$ 3,586
Warrants Issued December 27, 2017 [Member]
Number exercised (in shares)		403,808		2,676,611
Proceeds		$ 479		$ 3,382
Warrants Issued in Connection with Public Offering February 2017 [Member]
Number exercised (in shares)		94,100		180,100
Proceeds		$ 153		$ 292
Broker Warrants Issued May 2018 [Member]
Number exercised (in shares)		200,000		325,000
Proceeds		$ 158		$ 257
Warrants Issued in Connection with Private Placement [Member]
Number exercised (in shares)		150,000		150,000
Proceeds		$ 216		$ 216

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Note 9 - Government Assistance (Details Textual) $ in Thousands, $ in Thousands	1 Months Ended		9 Months Ended
	Oct. 31, 2020 CAD ($)	Sep. 30, 2019 CAD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Proceeds from NRC IRAP			$ 79
Maximum [Member]
Award in Non-dilutive and Non-repayable Funding From NRC IRAP	$ 326,357	$ 750,000
Research and Development Expense [Member]
Government Assistance			$ 84	$ 75

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Note 11 - Financial Income (Expenses) - Financial Expenses (Details) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Foreign exchange gain (loss)	$ (196,000)	$ (88,000)	$ (146,000)	$ (51,000)
Interest payable on convertible debenture		(23,000)		(83,000)
Accretion of interest on convertible debenture		(30,000)		(106,000)
Write off-of deferred financing fees related to at-the-market (ATM) program			(264,000)
Change in fair value of warrant liabilities	(1,098,000)	(5,882,000)	420,000	(21,756,000)
Interest income	38,000	46,000	77,000	275,000
Financial income (expenses)	$ (1,256,000)	$ (5,977,000)	$ 87,000	$ (21,721,000)

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Note 12 - Stock Based Compensation (Details Textual) - Stock Option Plan [Member] - $ / shares				3 Months Ended	9 Months Ended
	Aug. 26, 2020	Aug. 27, 2019	Apr. 09, 2019	Dec. 31, 2020	Dec. 31, 2020	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)	14,533,881		11,719.91
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Outstanding Stock Maximum	15.00%		15.00%
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)	10 years
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Outstanding Stock Maximum Per Person		2.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)				0	0	2,304,517
Consultant [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Outstanding Stock Maximum Per Person		2.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)					0
Related Party [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Outstanding Stock Maximum Per Person		2.00%
Directors and Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in CAD per share)					$ 1.58

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Note 12 - Stock Based Compensation - Activities Within the Stock Option Plan (Details) - Stock Option Plan [Member] - $ / shares	3 Months Ended	9 Months Ended
	Dec. 31, 2020	Dec. 31, 2020	Dec. 31, 2019
Outstanding, weighted average exercise price (in CAD per share)		$ 1	$ 1.25
Outstanding, number of options (in shares)		9,936,486	4,046,677
Granted, weighted average exercise price (in CAD per share)			$ 1.39
Granted, number of options (in shares)	0	0	2,304,517
Exercised, weighted average exercise price (in CAD per share)			$ 1.11
Exercised, number of options (in shares)			(54,625)
Forfeited, weighted average exercise price (in CAD per share)		$ 0.84	$ 1.04
Forfeited, number of options (in shares)		(1,787,809)	(11,917)
Expired (in CAD per share)			$ 6.50
Expired (in shares)			(7,500)
Outstanding, weighted average exercise price (in CAD per share)	$ 1.03	$ 1.03	$ 1.30
Outstanding, number of options (in shares)	8,148,677	8,148,677	6,277,152
Exercisable, weighted average exercise price (in CAD per share)	$ 1.18	$ 1.18	$ 1.39
Exercisable, number of options (in shares)	5,296,811	5,296,811	2,917,543

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Note 12 - Stock-based Compensation - Assumptions (Details) - Share-based Payment Arrangement, Option [Member]	9 Months Ended
	Dec. 31, 2019 $ / shares
Exercise price (in CAD per share)	$ 1.39
Share price (in CAD per share)	$ 2.02
Dividend
Risk-free interest	1.60%
Estimated life (years) (Year)	5 years 284 days
Expected volatility	89.70%

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Note 12 - Stock Based Compensation - Compensation Expense (Details) - Stock Option Plan [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Compensation expense	$ (30)	$ 611	$ 1,003	$ 1,508
Research and Development Expense [Member]
Compensation expense	58	131	304	350
General and Administrative Expense [Member]
Compensation expense	174	386	706	959
Selling and Marketing Expense [Member]
Compensation expense	$ (262)	$ 94	$ (7)	$ 199

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Note 13 - Supplemental Cash Flow Disclosure - Changes in Working Capital Items (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Receivables	$ 27	$ (237)	$ (20)	$ (10)
Inventory	(14)		(14)
Prepaid expenses	(23)	(1,074)	521	(518)
Trade and other payables	(1,999)	(696)	(5,891)	(2,342)
Increase (Decrease) in Working Capital	$ (2,009)	$ (2,007)	$ (5,404)	$ (2,870)

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Note 13 - Supplemental Cash Flow Disclosure - Non-cash Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Equipment included in trade and other payables		$ 9		$ 9
ATM transaction costs included in trade and other payables	118		118
Shares issued as settlement				741
Fair value of derivative warrants liability reclassified to Equity		868		10,962
Interest payable included in trade and other payables		$ 31		$ 31

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Note 14 - Commitments and Contingencies (Details Textual) - USD ($) $ in Thousands	Dec. 31, 2020	Oct. 31, 2020	Oct. 25, 2019
Chief Executive Officer [Member]
Retention Incentive Agreement, Continued Employment Until April 30, 2021 or Closing Transaction With Third Party		$ 100
Chief Executive Officer and Chief Operating Officer [Member]
Retention Incentive Agreement, Maximum Conditional Incentives		$ 125
RKO Supply Agreement [Member]
Purchase Obligation, Total			$ 3,100
Purchase Commitment, Remaining Minimum Amount Committed	$ 2,800

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Note 16 - Subsequent Events (Details Textual) - USD ($)	1 Months Ended	3 Months Ended		9 Months Ended
	Jan. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Proceeds from Issuance of Common Stock		$ 19,745,000	$ 6,002,000	$ 24,955,000	$ 6,002,000
At-the-market Offering [Member]
Stock Issued During Period, Shares, New Issues (in shares)				65,900,000
Proceeds from Issuance of Common Stock, Net		$ 19,700,000		$ 24,800,000
At-the-market Offering [Member] | Subsequent Event [Member]
Stock Issued During Period, Shares, New Issues (in shares)	23,400,000
Proceeds from Issuance of Common Stock, Net	$ 7,900,000
Proceeds from Issuance of Common Stock	$ 8,100,000