Vistagen Therapeutics: A Pipeline With Potential In Anxiety And Depression (NASDAQ:VTGN) – Seeking Alpha

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I haven’t written about Vistagen Therapeutics, Inc. (NASDAQ:VTGN) in five years, but following some interesting results in 2023 from a trial in social anxiety disorder (SAD), the name has come across my radar. In this article, I take a look at two members in the pipeline, PH94B (fasedienol) and PH10 (itruvone).

VTGN pipeline

VTGN is developing a pipeline of drugs that is centered around pherines. These are odorless, neuroactive steroids that act through sensory neurons found in the nose.

VTGN first got development and commercialization rights to PH94B (fasedienol), VTGN’s most advanced pherine, in September 2018 from Pherin Pharmaceuticals Inc. Then in October 2018, VTGN announced it had acquired development and commercialization rights to PH10 (itruvone), an antidepressant, from Pherin. In December 2022, VTGN announced it was acquiring Pherin Pharmaceuticals, and thus adding several more pherines to its pipeline.

Fasedienol (PH94B) in SAD

In August 2023, VTGN’s reported impressive results from a phase 3 study of PH94B, in patients with social anxiety disorder, which saw the stock rally from below $2 range to over $13.

Figure 3: Past 12 months of VTGN trading.

That phase 3 study, called PALISADE-2, was a randomized, double-blind, placebo controlled study in 141 adults with SAD. The study used a simulated public speaking challenge to provoke anxiety in the SAD patients, and recorded their anxiety at using scales such as the Subjective Units of Distress Scale (SUDS). PH94B produced a reduction in SUDS score from baseline of 13.8 points, which was significantly greater than placebo (8 points; P = 0.015 for the comparison between groups).

A number of other efficacy endpoints also achieved statistical significance over placebo, and PH94B was well tolerated with no severe or serious adverse events seen.

On April 1, 2024, VTGN announced it had initiated PALISADE-3, a phase 3 study of PH94B in SAD. PALISADE-3 is similar to PALISADE-2 as it uses a public speaking challenge to induce anxiety in SAD patients. The PALISADE-3 study plans to randomize 236 SAD patients (ages 18-65), to PH94B or placebo in a one-to-one ratio, with VTGN planning to initiate PALISADE-4, in H2’24.

While I like the odds of success for PH94B, even if the 236-patient PALISADE 3 is stopped early following an interim analysis, right now, we aren’t that close to a result.

Itruvone (PH10) in MDD

Another pherine in VTGN’s pipeline is PH10, or itruvone, from which the company has data in a trial of 30 patients with major depressive disorder (MDD). That study was a phase 2, double-blind study randomizing MDD patients to 3.2 ug per day PH10, 6.4 ug per day PH10, or placebo (all administered intranasally), for 8 weeks. Regarding the patients, the study publication, in The British Journal of Pharmaceutical and Medical Research, shows there was a bit of a difference at baseline in disease severity across the arms of the study. For example, the baseline Hamilton Depression Rating Scale (17 item, HAM-D-17) scores were 24.7 in the PH10 high dose group, 22.4 in the PH10 low dose group, and 21.0 in the placebo group. I’m not suggesting this difference is statistically significant; the point is that there is a 3.7 point difference between the high dose group and placebo at baseline.

Unfortunately, baseline imbalance isn’t uncommon in trials randomizing a small number of patients, but I find it difficult to interpret studies with baseline imbalance in disease severity. The one argument you could make is that since higher HAM-D-17 scores represent more severe depression, the high dose PH10 group actually started out with more severe disease, and then ended up with less than the placebo group at week 8. Scores fell from 24.7 to 6.9 on the HAM-D-17 in the high dose group, and from 21.0 to 10.1 in the placebo group.

VTGN’s corporate presentation presents a figure (shown above) illustrating the change from baseline in HAM-D-17 scores, but I find the figure 3 included in the 2019 publication to be worth consideration too, since it shows scores at baseline. The 2019 publication presents the data in both ways to be fair, a figure with baseline scores and a change from baseline plot.

I still think PH10 could be worth examining in future studies if VTGN has the cash. VTGN’s corporate presentation notes a phase 2b study is being planned. Indeed, a larger study would probably bring baseline severity scores closer between groups, especially since VTGN’s proposed plan only includes one dose of PH10 (3.2 ug twice daily, so 6.4 ug per day) and placebo.

Financial Overview

VTGN had cash and cash equivalents of $126.6M at the end of 2023. The company reported R&D expense of $4.5M in Q4’23 and SG&A expense of $3.8M in the same quarter. Net loss was $6.3M in Q4’23, and net cash used in operating activities was $18.6M in the nine months ended December 31, 2023.

At the current rate of burn then ($6.2M/quarter), VTGN would be out of cash in 20 quarters, or five years. Of course, cash burn should pick up with two phase 3 studies getting underway (PALISADE-3 is already underway, and PALISADE-4 in H2’24).

There were 27,025,209 shares of VTGN’s common stock outstanding as of February 12, 2024. VTGN has a market cap of $130.5M ($4.83 per share).

Conclusions and ratings

While I like VTGN’s odds of success with PH94B in its phase 3 studies, PALISADE-3 and PALISADE-4, right now, a readout isn’t that close. In a few months, I think it might already be possible to start speculating about the potential for an interim analysis and an early stoppage in one of the trials, but currently I think it is too soon. As for PH10, a phase 2B study isn’t currently underway, but I do think that could be a study worth running.

Regarding the rest of the pherine pipeline, additional non-clinical Investigational New Drug (IND) studies are required before running the planned phase 2 studies in the U.S.

VTGN only trades at cash, so I don’t rate it as a sell when it has a drug with potential in SAD, one positive phase 3 study in hand, another now underway and another planned to start in H2’24. In a couple of quarters, especially with any updates on enrollment progress, I could see myself rating VTGN a buy based on a potential run-up into PALISADE-3 results, which could come in 2025. Presently, I rate Vistagen Therapeutics, Inc. a Hold.

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