Pasithea Therapeutics Corp. (KTTA) stock intrinsic value fair value estimate & owner earnings analysis

WHAT THE BUSINESS IS. Pasithea Therapeutics is a clinical-stage drug developer with one program, PAS-004. PAS-004 is a MEK inhibitor, a pill designed to block a growth signal that drives certain tumors. It came from the 2022 purchase of AlloMek. The company is running two early trials. The first is a Phase 1/1b trial in adults with neurofibromatosis type 1 whose nerve-sheath tumors (plexiform neurofibromas) cannot be removed by surgery. It opened in May 2025, dosed its first patient in July 2025, and runs at five sites in the United States, Australia and South Korea. The second is a first-in-human Phase 1 study in advanced cancers, where the company reports early efficacy signals in patients with BRAF-mutated tumors. The company expects both trials to finish in 2028. It has no product revenue. Until 2022-2023 it ran ketamine clinics, which it has exited. In 2025 it wrote off $4.2 million of intangible assets and goodwill tied to earlier acquisitions. HOW WE MEASURED IT. Owner earnings are operating cash flow with the effects of working-capital swings and stock-based pay removed, minus maintenance capital spending. On that basis the business has lost cash every year. The losses were $15.0 million in 2023, $13.2 million in 2024 and $15.2 million in 2025, counting only the current drug-development business and leaving out the closed clinics. In the first half of 2026 the business used $9.5 million, about $19 million a year, and quarterly research spending is rising ($2.9 million in Q1 2026, $3.7 million in Q2). The $4.2 million write-off is a non-cash charge and does not affect these cash figures. We tested the cash-flow statements against net income adjusted for non-cash items, and every year matches exactly. The cash burn rose 15% in 2025. For the next year we assume it rises about 25%, to roughly $19 million, which follows the actual first-half 2026 pace rather than a forecast. WHAT IT OWES AND OWNS. The company has no borrowings. On June 30, 2026 it held $45.7 million of cash against $1.9 million of total liabilities, all of them ordinary operating items. The share count needs care. In December 2025 the company raised $54.9 million at $0.75 per share. Most of that sale was pre-funded warrants, which convert into shares for $0.001 each. About 33.4 million shares were outstanding in August 2026, and roughly 55.6 million more are held as pre-funded warrants. They are shares in all but name, so we value the company on about 89.0 million shares. On that count the cash is worth about $0.51 per share before any further spending. The company also owes the former AlloMek owners up to $5.0 million in development milestones, plus 3% to 5% of any future PAS-004 sales. If the company changes hands and also stops developing PAS-004 or winds down, the former owners can buy the drug back, which limits what an acquirer would pay for the company as a shell. THE CENTRAL JUDGEMENT. A Phase 1 drug has not shown it can earn money, and no partner or licensing deal is in place. So we credit PAS-004 with no value in any case, including the early cancer signals. The value of the shares is then the cash left for today's shareholders once the planned trial spending has been paid. Money raised later from new investors pays its own way and does not add value for current holders. BEAR CASE ($0.00). Spending rises as the neurofibromatosis trial moves into later parts and pediatric patients, and the milestones come due. The cash runs out around late 2027, before either trial finishes. The company then has to raise money again at low prices, or it stops. The business is worth less than nothing on its own because it only spends cash. Debt is zero and cash is $45.7 million, all of which is used up. Shareholders are left with essentially nothing. BASE CASE ($0.04). Spending stays near the first-half 2026 pace of about $19 million a year, plus about $3.5 million for the ramp-up and milestones already visible. It continues until both trials finish in mid-2028. About $4 million would be left, worth roughly $3.7 million today discounted at 6%. That is about $0.04 per share. Debt is zero. This is the company's own plan played out at its actual spending rate. BULL CASE ($0.18). Spending holds at the current pace but stops at the end of 2027, the decision point after the interim trial data the company says it will report. At that point the program is either handed to a partner who pays for it or paused. About $17 million would remain, worth roughly $15.7 million today, or $0.18 per share. The company has changed course before. After it exited the ketamine clinics in 2023, it spent $3.7 million buying back its own shares rather than burning the cash. Debt is zero. OTHER RISKS AND FILING DETAILS. The auditor's report on the 2024 financial statements raised substantial doubt about whether the company could continue, because cash was down to $6.9 million. After the December 2025 raise, management concluded that cash covers at least 12 months, and the 2025 statements carry no such warning. In February 2026 Nasdaq notified the company that its share price had closed below the $1.00 minimum. The company has since reported a compliance extension and has proposed a reverse stock split. Because the valuation assumes the cash is spent, the share count matters less than the cash left over. WHAT WOULD MAKE THIS WRONG. The value would be higher if a partner signed a licensing or funding deal for PAS-004, bringing in outside money for development, or if the company stopped spending and returned its cash to shareholders. Neither has happened. Any value for PAS-004 beyond the cash depends on clinical results that are not yet known, and we have not included it.