VistaGen Therapeutics Inc

NASDAQ:VTGN

Earnings Call Transcript 2024-Q2

[Operator]

Good day, everyone, and welcome to today's Vistagen Fiscal Year 2024 Second Quarter Corporate Update Conference Call. [Operator Instruction]. Please note this call is being recorded. It is now my pleasure to turn the conference over to Mark McPartland. Please go ahead, sir.

[Mark McPartland, executive]

Thank you, Travis. Good afternoon, everyone, and welcome to Vistagen's Fiscal Year 2024 Second Quarter Corporate Update Conference Call and Webcast. This afternoon, we filed our quarterly report and issued a press release providing an overview of our progress last quarter. We encourage you to review the release, which can be found on the Investors section of the Vistagen website. During today's call, we will make forward-looking statements regarding our business based on our current expectations and information. The forward-looking statements speak only as of today, and except as required by law, we do not assume any duty to update in the future any forward-looking statement made today. Of course, forward-looking statements involve risks and uncertainties, and our actual results could differ materially from those anticipated by any forward-looking statements we make today. Additional information concerning risk factors that could affect our business and financial results is included in our fiscal year 2024 second quarter Form 10-Q for the period ending September 30, 2023, and in future filings that we will make with SEC from time to time, all of which are or will be available on our website and the SEC's website. With that taken care of, I'd like to thank and welcome all of our stockholders, analysts and everyone taking an interest in Vistagen. I'm joined on the call today by Shawn Singh, our Chief Executive Officer; Cindy Anderson, our Chief Financial Officer; and Josh Prince, our Chief Operating Officer. Shawn will provide an overview on the recent results and our progress across our key pipeline programs. A brief opportunity for questions from our sell-side analysts will follow the prepared remarks. This call is being webcast and will be available for replay after completion. The replay link can be found in the Investor and section of our website.I would now like to turn the call over to our Chief Executive Officer, Shawn Singh.

[Shawn Singh, executive]

Thank you, Mark, and good afternoon, everyone, and thank you for joining our call. We achieved several milestones since our last call to establish a well-defined and fully funded Phase 3 development program for our lead Ferring asset, fasedienol, with the potential to enable us to advance to a potential NDA submission for the acute treatment of social anxiety disorder. In the midst of the ongoing mental illness crisis, we are poised to transform the treatment paradigm for this widespread anxiety disorder that affects the lives of about 10% of our population. Social anxiety disorder, or SAD, is a disruptive, serious and potentially life-threatening anxiety disorder with high opportunity costs in daily life and no FDA-approved patient tailored as needed, acute treatment option to help individuals rapidly and safely address their anxiety when the stresses are upon them during what for many is their decades-long journey with SAD. The hope of a revolutionary approach to treatment extends beyond fasedienol SAD to our full Ferin-based portfolio, and we remain fully focused on their development to create faster acting, safer alternatives to address significant unmet needs in large CNS-related markets or current treatment options fall short for patients. Since our last conference call in August, we've continued to build on the momentum created by our successful PALISADE 2 Phase 3 study of fasedienol for the treatment of anxiety in adults with social anxiety disorder. During the past few months, we've strengthened our balance sheet considerably, securing $137.7 million in gross proceeds from equity financings and an exclusive negotiation agreement with Fuji Pharma regarding a potential license to develop and commercialize our PH8 in Japan. We expect this cash infusion will extend our corporate runway through several important clinical and corporate milestones as we advance our pipeline, including our primary focus on a potential U.S. New Drug Application, or NDA, for fasedienol and SAD. Given that fasedienol's rapid onset mechanism of action is differentiated from all FDA-approved anxiety drugs, our primary target initial indication for fasedienol remains the acute treatment of anxiety in adults with SAD. And as noted, there is no FDA-approved drug therapy for the acute treatment of SAD. For that acute indication, we've previously aligned with the FDA that a simulated public speaking challenge in a clinical setting is an appropriate study design and that the subjective units of distressed scale are subs is an appropriate primary efficacy endpoint to assess the efficacy of fasedienol because it provides a measure of anxiety on a minute-by-minute basis immediately related to the specific stressor.We believe utilizing a simulated anxiety-provoking public speaking challenge study design provides the most appropriate and efficient path for fasedienol to potentially become the first FDA-approved acute treatment of anxiety for adults with SCD. So to complement the positive top line results from PALISADE 2. We are currently preparing to launch 2 similar Phase 3 clinical trials in 2024, PALISADE 3 in the first half of 2024 and PALISADE 4 in the second half of 2024. Like the successful PALISADE 2 study, both PALISADE 3 and PALISADE 4 will be multicenter, randomized, double-blind, placebo-controlled Phase 3 clinical trials designed to evaluate the efficacy, safety and tolerability of the acute administration of faced in or to relieve anxiety symptoms in adult patients with SAD after a single dose of fasedienol during a simulated anxiety provoking public speaking challenge conducted in the clinical setting. And as measured using the patient-reported suds is the primary efficacy endpoint. PALISADE 3 and 4 will also have an open-label extension for up to 12 months to provide additional long-term safety data. If successful, we believe either PALISADE 3 or PALISADE 4, together with PALISADE 2, they establish substantial evidence of the effectiveness of fasedienol in support of a potential fasedienol NDA submission for the acute treatment of anxiety in adults with SAD in the first half of 2026. We also plan to initiate a small faced in all Phase 2B repeat dose study in the second half of 2024. The fasedienol repeat dose study will be a multicenter, randomized, double-blind, placebo-controlled clinical trial, a small one, about 60 subjects to evaluate the efficacy, safety and tolerability of a repeat dose of fasedienol that's administered 10 minutes after an initial dose to further relieve symptoms of acute anxiety in adults with SAD during the anxiety provoking public speaking challenge. That repeat dose study will consist of 3 different dosing arms with an open-label extension for up to 12 months. 12 months open-label extensions planned for the PALISADE 3, 4 and repeat dose studies are all intended to expand our faced safety database. For ICH guidelines, we're targeting 300 patients treated with fasedienoll for at least 6 months and 100 for 12 months. To date, over 750 subjects have been exposed to fasedienol, including over 30,000 doses administered in our PALISADE open-label safety study. And we continue to be very encouraged with facedienol all safety profile in all clinical studies to date. The positive PALISADE 2 data also bolster our growing confidence and the evidence supporting the potential of our entire faring pipeline. We've had some recent advancements in a couple of other programs. So let's take a brief look at those. In June, we completed a successful randomized double-blind placebo-controlled Phase 1 study intended to investigate the safety and tolerability of itruvon in healthy adult subjects. That trial was conducted to stage potential Phase2B clinical development of itruvone in the U.S., and it confirmed the favorable safety profile of itruvone established in 3 previous clinical trials conducted in Mexico, including a positive randomized double-blind, placebo-controlled Phase 2A study of itruvone in major depressive disorder, or MDD. As we advance and remain focused primarily on our PALISADE Phase 3 program for facidinole and SAD, we also plan to explore various ways to unlock the significant potential value of itruvone as a differentiated non-systemic monotherapy for MDD through potential strategic partnering arrangements in the U.S. as well as in major markets outside the U.S. We're also optimistic about our hormone-free non-systemic PH80 nasal spray, which has now been studied in multiple significant women's health indications. Within the last 2 quarters, we've announced positive results from 2 PH80 studies in women's health indications, the first of which was the exploratory Phase 2 a study of PH80 in women diagnosed with vasomotor symptoms or hot flashes that are due to menopause. And the Phase 2A study, PH80 induced a significant reduction in the daily number of hot flashes compared to placebo at the end of the first week of treatment and the improvement was maintained through each treatment week until the end of the treatment period. PH80 treatment also significantly reduced the severity of the disruption and function sweating related to hot flashes during the treatment period compared to placebo. Was well tolerated with no serious adverse events and the adverse event profiles were comparable between PH80 and placebo. One of the favorable aspects of running additional trials in this particular indication is that there will be objective measures for these studies that to say that it's easier to measure how many hot flashes are experienced and the frequency of those symptoms versus more subjective endpoints that we often see in other studies in different indications. The other positive PH80 data we announced recently were from an exploratory Phase 2A study of Page for the acute management of premenstrual dysphoric disorder or PMDD. In this study, PH80 demonstrated statistically and clinically significant improvement versus placebo and symptoms of PMDD using the subject rated Pen Daily symptom report as early as day 4, continuing to day 6. There are limited effective treatment options that help with both physical and mood symptoms of PMDD and we believe these results are quite promising. Given the depth of our entire CNS pipeline and the now robust body of successful safety and efficacy studies to date. We are also pursuing multiple potential nondilutive strategic development and commercialization partnerships, both global and regional to unlock the full value of our product candidate portfolio efficiently. We believe global and regional partnerships would amplify our internal expertise and development activities, potentially accelerate key development timelines and enhance our overall efforts to deliver differentiated new treatment options where the current standard of care falls short. As an example of this, we recently announced the receipt of $1.5 million from our exclusive negotiation agreement with Fuji Pharma regarding a potential license to develop and commercialize PH80 in hot flashes due to menopause and other indications in Japan. This is simply a right to discuss the potential for that license with us in a time-limited period. It's not a license that's simply a nonrefundable payment to talk to us.I will now turn the call over to our new CFO, Cindy Anderson, to summarize some of the highlights from our financial results for our fiscal year 2024 second quarter. Cindy has been a great recent addition to our team following the retirement of our former CFO, Jerry Dodson, after his over 10 years of distinguished service to the company. Cindy?

[Cynthia Anderson, executive]

Thank you, Shawn. It's great to part this team. As Shawn mentioned, I would like to highlight a few financial results from our fiscal year 2024 second quarter. I also encourage everyone to review our quarterly report on Form 10-Q filed with the SEC earlier this afternoon for additional details and disclosures. Research and development expenses decreased by approximately $9 million from $12 million to $3.9 million for the quarter ended September 30, 2022 and 2023, respectively. The decrease in R&D expense is primarily due to the completing the initial studies of our PALISADE Phase 3 program in SAD as well as reduced nonclinical development, regulatory and outsourced manufacturing activities for fasedienol and itruvone.General and administrative expenses decreased by approximately $0.5 million from $3.7 million for the quarter ended September 30, 2022, to $3.2 million for the quarter ended September 30, 2023, primarily due to decreased compensation, consulting fees and professional services. Our net loss attributable to common stockholders for the quarter ended September 30, 2023, was approximately $6.6 million versus a net loss of approximately $17.5 million for the quarter ended September 30, 2022. At September 30, 2023, Vistagen had cash and cash equivalents of approximately $37.6 million.Since September 30, we received approximately $93.5 million in net proceeds from an underwritten equity financing and $1.5 million from Fuji Pharma under our exclusive negotiation agreement. If our PALISADE Phase 3 program is successful, we believe that our current cash position will be sufficient to fund our operations through a potential submission of a U.S. new drug application for fasedienol for the acute treatment of anxiety in adults with SAD. As a reminder, please refer to our quarterly report on Form 10-Q filed today with the SEC for additional details and disclosures. I will now turn the call back over to Shawn.

[Shawn Singh, executive]

Thank you, Cindy. So to wrap up, our dedication to enhancing global mental health and the overall well-being of individuals who are affected by a wide range of CNS disorders is unwavering. And as we are progressing through the next phases of our corporate development strategy, we're doing that with confidence in the potential of our PALISADE Phase 3 program for fasedienol and social anxiety disorder as well as the clinical stage assets that are up and down our entire pipeline. We've got a capable team. We've got a robust pipeline, and we've got a steadfast commitment to pioneer a differentiated solutions. Totally different approaches to the current standard of care for multiple sizable CNS markets that have substantial unmet needs. So on behalf of our entire Vistagen team, once again, we're grateful for the privilege and for the opportunity to create meaningful impacts for patients, not only in the U.S., but all around the world who are impacted in their daily lives by these disruptive and often disabling serious CNS conditions.

[Mark McPartland, executive]

Thank you, Shawn. Operator, we'd like to open up the call for questions from the sell-side analysts participating on the call today.

[Operator]

[Operator Instructions]. Our first question comes from Andrew Tsai, Jefferies.

[Lin Tsai, analyst]

And can you summarize for us just one more time, all the things you're going to do differently in PALISADE-3 and 4 to ensure study execution. What removal/deletions or additions are you making to these studies relative to the prior 2 studies?

[Shawn Singh, executive]

As you obviously know, the macro world is fundamentally different as we move into the first part of '24 as it is right now relative to '22 or '21, certainly '21. And what's nice to see is the return to normal of a lot of the typical conventions that are associated with efficient execution, preparation and execution of clinical studies. As it relates to our particular protocol and the studies that we'll be initiating going forward with this public speaking challenge and the study design that's associated with SUDS here are certain things that may or may not have been in effect, but we know that it's possible for COVID to disrupt the factory system a bit. So there will be no subjects enrolled that have had a nasal swab within a month for RSV, for COVID, for flu. They'll have to pass a smell test, click factory test in order to be eligible, there be no high-frequency vapors or smokers or drinkers of Red Bull and things of that nature. There's a high level of scrutiny that's associated with the front end of assessing patient eligibility.Josh Prince is on, Josh, is our COO and overseas our team. Josh, do you want to highlight a few other things.

[Joshua Prince, executive]

I think you captured a couple there, Shawn. And it's important to think of the -- essentially, we're doing everything we can to ensure that we have the patients for this one dose public speaking challenge, make sure we have patients in there that can get the benefit from product. And so it's those things that Shawn mentioned, it's also the oversight in terms of sites, in terms of changing the way that we monitor and work with our CRO over the sites to make sure that we're on top of things that we have data reviews, eligibility reviews, those types of things. Those are the keys to make sure that we have a successful study. It's really all about the execution of that public-speaking challenge with the right patients in there. So that's where we'll go forward.

[Shawn Singh, executive]

Some of the other things, Andrew, that are possible. Obviously, the surveillance is -- it's fundamentally changed since even PALISADE 2. So part of our operating model is to make sure we have our own people on sites in addition to the resources that are brought to bear by CROs and the sites themselves. Of course, no mask will be involved in PALISADE 3 or PALISADE 4, which is a big difference from the prior studies. So just trying to get back to a situation where the macro environment allows us to apply a lot of the tradecraft that's been historically successful when we're trying to not only plan for, let's say, with an in-person investigators meeting, the likes of which weren't possible with some of the earlier studies. That starts things off. And then the ability to interact more frequently with sites in person, all that's important when you're trying to generate rigorous adherence to the study protocol. I think also what we'll see is a better predictability about staff site staff in general, the depth of the staffs, the more consistent execution, ability to execute between studies, study visits, I should say, or predictably plan them. So a lot of things that are essential to be able to execute a protocol, such as we've got in place for the successful PAL 2 study. And as we bring that into PAL 3and 4, even more confidence in the overall environment than was the case in '22.

[Lin Tsai, analyst]

And maybe last one. Can you give us a flavor of what additional data will be presented at your medical conferences tomorrow for fasedienol? And I think there's another asset that's where there's data being presented. So what would be the key takeaways that we should take home for these presentations.

[Shawn Singh, executive]

Well, the key effort right now is to obviously raise awareness of what the clinical audience hadn't seen in many, many years in this indication. So to be able -- what you'll see mostly from those presentations are the top line results from PALISADE 2 as well as some data from our open-label study, which is remarkable given the number of doses and the number of subjects exposed to the drug in an anxiety disorder, you just don't see it. And then some data from our PH80 study. So key to what we are doing now, obviously, is to raise awareness of what's been achieved as well as to raise awareness of what's ahead, not only in the markets, but also within the clinical communities that we know ultimately will be key pieces of the puzzle downstream.

[Operator]

Our next question comes from Tim Lugo with William Blair.

[Tim Lugo, analyst]

Can you update us on the lack of abuse potential for fasedienol? I think I got that right. I know you have some preclinical data around that, but I'm wondering if there's anything incremental coming out [indiscernible] just maybe your interactions with the agency as well.

[Shawn Singh, executive]

Obviously, the data that we teed up to the agency back in '22 was focused on whether or not there were signals and had been any signals at that time of abuse liability potential, given that this is a nasal spray and a lot of folks were wondering, well, what happens when you put something in the nose, as it become addictive. And the uniqueness of this mechanism of action that we have with fascidinol on the rest of the Ferens is important to note because what we're dealing with, and we've done multiple studies not only on the clinical side, but some important preclinical ones associated with the reality that there's no potentiation of GABA for example, as you see with benzodiazepines. -- radiolabeling the drug showed no systemic exposure. So the drugs, these fairings don't have to get into the brain and act directly on CNS neurons in the brain, including the abuse liability receptors that are typically out there. So we put a whole body of work to the agency at the time and asked the question, what came back from as we reported, was they didn't see any reason for us to have to do a human abuse liability study at that time. Since then, what's been delivered is all of the data from the open-label study, which had 481 subjects, and the adverse event profile in that study was remarkable, especially again for a drug in neuropsychiatry, where the most common adverse effect -- our adverse event was headache, and that was reported and really only 17% overall, but 8.7% were drug related. And beyond COVID-19, which was 0% drug related, there was no other treatment-emergent adverse effect in more than 5% of the participants. And then the PALISADE 2 study similar in PALISADE 1, similar safety profile, although even less prevalent in terms of the treatment emergent adverse effects or events. These data overall, nonclinical and clinical really continue to reinforce our belief in why we don't see the safety concerns you typically see associated with benzodiazepines or antidepressants. These are not systemically absorbed drugs. You cannot detect them in the plasma. And so you're basically using the nose as a portal to achieve the effects from different regions of the brain that are associated with these different indications. Not having to go in the mouth and be metabolized by the liver, bump into other drugs through the bloodstream, older blood-brain barrier into the brain, all those are major factors that really distinguish this class from everything that's historically been approved or is even in development for these neuropsychiatric indications. So it's not a concern we've had in the past. It's not a concern the FDA had when we showed them the data, and it's certainly not a concern that we have now after tens of thousands of more doses and hundreds of more subjects since we first got that read from the FDA.

[Operator]

We have no further questions in the queue at this time. I'd now like to turn the call back over to today's speakers for any additional or closing remarks.

[Mark McPartland, executive]

If there are any additional questions that you might have, please don't hesitate to contact us here [e-mail] or contacting those listed on our press release issued earlier today, as we noted, or on the contact section of our website. We also encourage you to register for e-mail updates on our website to stay connected with the latest news from Vistagen. Again, thank you for participating on the call today. We appreciate everyone's attention and continued support. We look forward to keeping you current on our continued progress. This concludes the call. Have a tremendous day.

[Operator]

This does conclude today's program. Thank you for your participation. You may disconnect at any time.