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Vistagen Therapeutics (NASDAQ:VTGN) has made great progress in being able to advance its pipeline. That’s because it was able to achieve positive results from its phase 3 PALISADE-2 study, which used its lead drug fasedienol for the treatment of patients with social anxiety disorder [SAD]. Not only was the primary endpoint of Subjective Units of Distress Scale [SUDS] score met, but this late-stage study also met on the secondary endpoint of Clinical Global Impressions Improvement [CGI-I] scale. The thing is that this data was a big deal, which is surprising that the stock price is not trading much higher than where it currently is. The stock is trading at around $5.23 per share with a market cap of only $140.25 million. I believe that it should be valued higher after the positive data it released for three reasons. The first reason is because this could possibly be a new class of medicine for these patients in over 20 years.
This would mean the ability for it to provide a novel treatment approach for these patients with SAD. The second reason would be based off of the possible market, which is that there are roughly 25 million people in the United States living with this disorder. The final reason is that the positive data achieved from the phase 3 PALISDE-2 study leads to two other catalysts to be expected next year, which would be the initiation of two phase 3 studies for this PALISADE program. It is also advancing another program in the pipeline, which is itruvone for the treatment of major depressive disorder [MDD] therapy. It achieved positive safety data from a phase 1 study and it expects to initiate a phase 2b study in the 2nd half of 2024. Why this program holds promise is because it could provide MDD patients a non-systemic monotherapy form of treatment, which is very different from all FDA approved antidepressants.
Fasedienol Could Provide New Treatment Option For Acute Social Anxiety Disorder
As I stated above, VistaGen Therapeutics achieved positive results from the phase 3 PALISADE-2 study, which used a nasal spray known as fasedienol for the treatment of patients with Social Anxiety Disorder. Social Anxiety Disorder [SAD] is a type of disorder whereby constant social interactions cause constant irrational anxiety. It is estimated that there are roughly 25 million people in the United States with this disorder. It was stated that a total of 141 patients in this study were given treatment with fasedienol or placebo. Matter of fact, the participants in this study were split into the following groups:
- 70 patients who took Fasedienol
- 71 patients who took placebo
One important thing to note is that for SAD patients to enter this study had to have a Liebowitz Social Anxiety Scale [LSAS] score of 70 points or higher. The primary endpoint explored was the difference in mean SUDS score during a public speaking challenge event. This primary endpoint was met with statistical significance, which was a difference in SUDS score, with a p-value of p=0.015. That is, the patients given drug achieved an LS mean -13.8, compared to those given placebo who achieved a LS mean of -8.0. This late-stage trial was also able to meet on the secondary endpoint of CGI-I scale score, with a statistically significant p-value of p=0.033 [37.7% of patients given drug were responders, compared to only 21.4% of those on placebo]. The potential with VistaGen just isn’t the ability to be successful in advancing a drug through the pipeline. fasedienol has a novel mechanism of action, which is different from all other types of currently approved anti-anxiety medications. How can that be? Well, that’s because it’s all about the way this nasal spray drug works. When delivered to patients intranasally fasedienol ultimately targets the limbic amygdala of the brain, which is involved with anxiety of mood disorders. This part of the brain is almond size in shape and it is important for detecting danger. The best part of all about fasedienol being different from SSRIs, SNRIs and benzodiazepines prescribed off-label, is that it doesn’t require systemic absorption.
Having said all of that, there are three catalysts expected with respect to the advancement of fasedienol for the treatment of patients with Social Anxiety Disorder [SAD]. The first catalyst would be the initiation of the phase 3 PALISADE-3 study, which is using this nasal spray drug to treat these patients, expected in the 1st half of 2024. A second late-stage study for this program, known as PALISADE-4, is expected to start in the 2nd half of 2024. Both of these phase 3 studies are going to be identical and incorporate the same design as the previously reported phase 3 PALISADE-2 study. How will these new phase 3 studies be identical? Well, for starters both are going to incorporate acute administration of fasedienol for the treatment of patients with SAD through an anxiety-provoking public speaking challenge. Secondly, the primary endpoint is going to be the same, which is a patient-reported SUDS score. Believe it or not, but this program has the ability to get even better than this. How so? There is a chance whereby VistaGen might be able to get away with repeat administration of fasedienol. That is, it is going to initiate a phase 2b study that is going to incorporate repeat dosing with 60 patients. Such a trial is expected to begin in the 2nd half of 2024 if all goes according to plan. The purpose of this study is to see if another repeat dose of fasedienol will be able to further relieve symptoms of anxiety for these SAD patients. In essence, this could further enhance efficacy of the drug if it is both tolerable and successful.
Itruvone Nasal Spray Provides Another Shot On Goal For Large Target Market
The next program in the pipeline to go over involves the use of itruvone, which is a nasal spray being developed for the treatment of patients with major depressive disorder [MDD]. The thing is that what might separate this type of drug compared to the other FDA approved medications, would again be its novel mechanism of action [MOA]. That’s because if this drug ultimately gets past all clinical testing, plus is ultimately approved, it could be used as a new novel treatment as a monotherapy for the treatment of this patient population. Especially, since it would have the competitive advantage of it not being reliant on systemic absorption. The depression market is a big opportunity for sure. It is said that the global depression treatment market is expected to reach $16.06 billion by 2027. If a drug like itruvone can be given non-systemically achieving similar or superior efficacy, on top of an improved safety profile, then it could have a good chance at competing well in this market. A possible milestone might be the initiation of a mid-stage study. That’s because VistaGen intends to initiate a phase 2b study alone or with a potential strategic partner to advance the use of itruvone for the treatment of patients with MDD. The plan is to initiate such a phase 2b study in the 2nd half of 2024.
Financials
According to the 10-Q SEC Filing, VistaGen Therapeutics had cash and cash equivalents of approximately $37.6 million as of September 30th 2023. However, this definitely would not be enough cash to fund its operations for an extended period of time. Thus, it chose to raise $100 million in an underwritten public offering before expenses. Even though this provided immediate dilution of the biotech, I believe that this cash raise was good news. Why is that? That’s because it now states that it has enough cash on hand to fund its operations into the 1st half of 2026. Speaking of which, this is the time whereby it expects that it might be the time where it could possibly be in a position to file a New Drug Application [NDA] of fasedienol for the treatment of patients with SAD at that time.
There also seems to be great interest for products for its pipeline. Fuji Pharma secured a time-limited deal [18 months] whereby it could obtain a license to develop and commercialize Vistagen’s PH80 as a nasal spray for the acute treatment of moderate-to-severe vasomotor symptoms [hot flashes] due to menopause and possibly other indications for the Japanese market. Vistagen received a non-refundable payment of $1.5 million for this deal. It is possible that such a deal could eventually be expanded upon and this could be another way to generate additional cash at a later time.
Risks To Business
There are several risks that investors should be aware of before investing in VistaGen Therapeutics. The first risk to consider would be with respect to the advancement of fasedienol for the treatment of patients with Social Anxiety Disorder [SAD]. The use of this drug is being explored in the ongoing phase 3 PALISADE program, whereby two new phase 3 regulatory studies are expected to begin. Despite the biotech being able to meet both the primary endpoint and secondary endpoint of the phase 3 PALISADE-2 study in patients with SAD, there is no guarantee that one or both of these studies will end up achieving the same outcome.
A second risk to consider would be the clinical strategy to incorporate a small phase 2b study, which is going to allow for repeat dosing of fasedienol for the treatment of patients with SAD. There is no assurance that a repeat dose of this nasal spray drug will allow the patient to experience a further reduction of their anxiety symptoms.
A third risk to consider would be with respect to the phase 2b MDD study, which is expected to start in the 2nd half of 2024, using the other drug itruvone. This trial being initiated is highly going to depend upon whether or not it will be able to obtain funding. As I noted above, the goal is for this mid-stage study to be advanced by VistaGen alone or with a strategic partner. There is no guarantee that it will find sufficient funding and/or a partner willing to pay for advancement of itruvone for this indication.
The fourth and final risk to consider would be with respect to the Fuji Pharma deal established. Even though this Japanese pharmaceutical company has interest to advance PH80 for menopause now, there is no assurance that it will continue to want to do so in the future. This means that VistaGen could possibly lose out on the deal being expanded upon.
Conclusion
VistaGen has made great progress in being able to advance its pipeline, especially since it achieved positive results from its phase 3 PALISADE-2 study, using fasedienol for the treatment of patients with Social Anxiety Disorder [SAD]. The ability for it to meet both the primary and secondary endpoints of this study is a big deal as it relates to many people who have this disorder. With such a large market for the biotech to go after, the ability for it to possibly eventually receive FDA approval would be huge. The positive data from PALISADE-2 establishes proof of concept that fasedienol is very helpful for these patients with SAD for starters.
It also now allows for the initiation of two additional phase 3 studies to use a multi-dose strategy for this drug to treat this patient population. Both of the phase 3 studies to be initiated as part of this PALISADE program, which might ultimately be helpful for possible regulatory approval, are PALISADE-3 and PALISADE-4. With both of these studies being initiated next year, it moves VistaGen one step closer to providing a new treatment option for these patients with SAD. That is, fasedienol is being developed as a novel drug for these patients.
