Earnings Call Transcript - VTGN Q4 2025

Mark Adrian McPartland, Senior Vice President, Investor Relations

Good day, everyone, and thank you for standing by. Welcome to the Vistagen Therapeutics Fiscal Year-End 2025 Corporate Update Conference Call and Webcast. Please note that today's call is being recorded. At this time, I'd like to turn the call over to your host, Mark McPartland, Senior Vice President, Investor Relations at Vistagen. Mark, please go ahead. Thank you, Victor. Good afternoon, everyone, and welcome to Vistagen's Fiscal Year-end 2025 Corporate Update Conference Call and Webcast. Earlier this afternoon, we issued a press release for our fiscal year-end 2025, which ended on March 31, 2025, providing an overview of our progress across our lead clinical stage neuroscience programs. We encourage you to review the release and the 10-K, which can be found on our website's Investors section. Before we begin, please note that we will make forward-looking statements regarding our business during today's call based on current expectations and information. These forward-looking statements speak only as of today, except as law requires. We do not assume any duty to update any forward-looking statements made today or in the future. 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 may make today. Additional information concerning risks and factors that could affect our business and financial results are included in our fiscal year-end 2025 Form 10-K for the period ending March 31, 2025, and in future filings we'll make with the SEC from time to time, all of which are available in the Investors section of our website and on the SEC's website. Now with the formalities out of the way, we warmly welcome our stockholders, sell-side analysts, and interested parties in our program and progress. I'm joined on our call today by Shawn Singh, our President and Chief Executive Officer; and Cindy Anderson, our Chief Financial Officer. Shawn will discuss recent highlights in our lead neuroscience program, and Cindy will discuss our fiscal year-end 2025 financial results. After our prepared remarks, there will be a brief opportunity for questions from the sell-side analysts on the call. As a reminder, this call is being webcast and will be available for replay upon completion. A replay link can also be found on our website's Investor Events section. I will now turn the call over to our President and Chief Executive Officer, Shawn Singh. Shawn, the floor is yours.

Shawn K. Singh, President and Chief Executive Officer

Thank you, Mark, and good afternoon, everyone. Thank you for joining us. As some of you know, our team here at Vistagen is at the leading edge of neuroscience that involves the therapeutic potential of nose-to-brain neurocircuitry to develop a new class of nonsystemic intranasal product candidates called pherines. We now have five clinical-stage pherine product candidates, each with a mechanism of action that is differentiated from all approved drugs and positive results in a controlled trial. Together, they cover a broad and diverse range of large market conditions and disorders where underserved patients have needed new and better treatment options for many years. Fiscal 2025 was another significant year of progress across our neuroscience pipeline with multiple pherine product candidates in Phase II or Phase III development. We are advancing our mission to deliver transformative treatment options for patients and build value for our stockholders. Our lead pherine product candidate, fasedienol, is in Phase III development for the acute treatment of social anxiety disorder, or SAD. There is no FDA-approved acute treatment for SAD, a condition that now is estimated to affect over 31 million U.S. adults who struggle with intense stress and debilitating anxiety and fear of embarrassment, humiliation, and judgment in everyday social and performance situations. Our goal for fasedienol is for it to become the first FDA-approved acute treatment of SAD and help improve the lives of millions of Americans affected by this serious and potentially life-threatening disorder that often begins in adolescence and continues for decades. The ongoing Phase III trials in our U.S. registration-directed PALISADE program for fasedienol for the acute treatment of SAD - PALISADE-3 and PALISADE-4, are designed to complement our success in our PALISADE-2 Phase III trial that we reported during the second half of 2023. Our PALISADE-3 trial is on track for a top-line data readout in the fourth quarter of this year, and we anticipate top-line results from PALISADE-4 in the first half of 2026. The enthusiasm of patients and physicians participating in the PALISADE Program continues to be very strong, and we remain committed to rigorous operational execution. If successful, we believe either PALISADE-3 or PALISADE-4, in combination with the positive results from PALISADE-2, could provide the substantial evidence of effectiveness needed to support a new drug application for fasedienol and its potential to be the first FDA-approved acute treatment for SAD. We are also advancing itruvone, our pherine product candidate for the stand-alone treatment of major depressive disorder, or MDD. Following the promising results from a controlled exploratory Phase IIa study, we are encouraged by its differentiated, nonsystemic mechanism of action and potential to treat MDD without the weight gain, sexual side effects, or systemic safety concerns commonly seen with traditional antidepressants. Our pherine product candidate focused on women's health indications, PH80, also continues to generate interest as we advance its development as a potential hormone-free treatment for menopausal hot flashes. PH80 also demonstrated positive signals in the controlled exploratory Phase IIa study in premenstrual dysphoric disorder, or PMDD, further validating its broad utility in women's health. We are also encouraged by PH80's potential to treat the disruptive and painful effects of dysmenorrhea. We've made substantial progress preparing our U.S. IND for PH80 to support additional Phase II clinical development in women's health, and we anticipate submitting the IND in the second half of this year. Beyond these three lead programs, our diversified pherine pipeline has potential for future development to improve cognitive and psychomotor impairment due to mental fatigue, as well as appetite-enhancing effects in patients with cancer cachexia, often overlooked conditions with limited treatment options. So across all five of our clinical-stage pherine product candidates, potential therapeutic benefits have been observed with favorable safety, a testament to the power and the promise of nose-to-brain neurocircuitry. On the U.S. regulatory front, which is on most of our minds these days, we are encouraged by the evolving regulatory landscape. Last week, I was privileged to participate in the FDA's CEO Listening Tour, which was hosted at the Stanford Medical School. This CEO-only forum was led by FDA Commissioner, Dr. Marty Makary, and CBER Director, Dr. Vinay Prasad, along with their supportive staff members. The forum was impressive and very productive, allowing for essential direct interfaces between the new FDA leadership and my fellow industry CEOs to drive FDA initiatives aimed at improving the ease and frequency of communication with the agency and providing clear and early guidance to support optimal capital allocation, enhance market confidence and predictability, while also modernizing the agency's regulatory framework and leveraging AI to bring innovative, safe, and effective medications to underserved patient populations, both large and small. I applaud Commissioner Makary for holding this unique forum in several cities across the country, where industry expertise and perspectives can and will be openly shared with FDA leadership. It's a meaningful step toward fostering a far more collaborative, transparent, and innovation-friendly regulatory environment where, very importantly to us, new mechanisms of action and emerging technologies require reevaluation of legacy registrational pathways. At Vistagen, we welcome the conversations with the FDA, as always, about policies that speed up innovation and make drug development more efficient and affordable, and most importantly, improve patient outcomes. Overall, we are energized by the potential of all five of our clinical-stage pherine product candidates. With our primary focus on delivering top-line data from PALISADE-3 in the fourth quarter of this year, doing so has the near-term potential to transform lives and produce remarkable shareholder value.

Cynthia Lynn Anderson, Chief Financial Officer

Thanks, Shawn. As Shawn mentioned, I will highlight a few financial results from our fiscal year ended March 31, 2025. Research and development expenses were $39.4 million for the fiscal year ended March 31, 2025, compared to $20 million for the same period last year. The increase in R&D expenses was primarily due to increases in research, clinical and nonclinical development, contract manufacturing expenses, and headcount related to our U.S. registrational PALISADE program for fasedienol in SAD, and our U.S. IND enabling program for PH80 in women's health. General and administrative expenses were $17.1 million for the fiscal year ended March 31, 2025, compared to $14.1 million for the same period last year. The increase in G&A expenses was primarily due to increased headcount, consulting, and professional fees. Our net loss attributable to common shareholders was $51.4 million for the fiscal year ended March 31, 2025, compared to $29.4 million for the same period last year. As of March 31, 2025, we had $80.5 million in cash, cash equivalents, and moderate securities. I will now hand the call back over to Shawn.

Shawn K. Singh, President and Chief Executive Officer

Thank you, Cindy. Once again, everyone, at Vistagen, our mission is to transform lives with pioneering neuroscience and an innovative pipeline of intranasal product candidates, nonsystemic intranasal product candidates that harness the power of nose-to-brain neurocircuitry, unlike any pharmaceutical product ever before them. With five promising clinical-stage pherine product candidates and a U.S. registration-directed Phase III program advancing, we are not just developing innovative potential treatments, but also working to restore hope, dignity, and the quality of life for millions of people facing underserved conditions every day. We thank you for your continued support and your belief in our mission. On behalf of the entire Vistagen team, we are honored to be on this journey with you, and we look forward to keeping you closely updated on our continuing progress.

Mark Adrian McPartland, Senior Vice President, Investor Relations

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

Julian Pino, Analyst

This is Julian on for Paul. You alluded to changes with FDA leadership and there's been reports of turnover of staff and medical review teams. I guess in your interactions with the agency, have you noticed any changes or anything that's worth highlighting to sell-side and investors? And then just with respect to PALISADE-4 quickly, you talked about patient demand being quite strong. What led to the modest slip back of timing for P4? Was it something operational? Or any color that you could provide on that would be super helpful.

Shawn K. Singh, President and Chief Executive Officer

Great. You bet, Julian. So to the first question, it was a very common line of inquiry by a handful of us at that CEO listening forum. It was quite interesting because it contrasted with the tone and tenor that we had heard a week before in the open forum of the Jefferies conference, and it was very encouraging, especially on this particular point. Not only did Dr. Makary say this, but Dr. Prasad from the CBER also stated it, which is that no FDA reviewer or inspector was involved with the reduction in force, and that they are hiring additional reviewers and inspectors with domain expertise in the areas that they review. So we hope that will be the case. In our case, we haven't seen any changes in our review team, which is helpful. One of the things I mentioned to them is it would be nice and helpful for the industry if, at this point, given the kind of questions you just asked, that each company, each sponsor with an open IND or a program underway gets reconfirmed that the teams they have is the team that they have had, especially as it relates to prior commitments and agreements. So we'll see if they act on that. Overall, I think we heard it not only at the Jefferies conference but again, at our Listening forum, which is that in terms of the muscle, the reviewers and the inspectors, there hadn't been any change. Most of the change was associated with centralizing resources, where there was tremendous overlap in fiefdoms and a sort of tribalism component where every aspect within the FDA had its own little universe, whereas none of us in the audience would really build the FDA or build a company like the FDA has been built today. So I think they appreciate that and recognize it, and I think we can expect some changes. So that's encouraging on that side. So back to the PALISADE-4, I think overall, we've talked about to you and Paul in the past and others, the enhancements that we brought to the table related to PALISADE-3 and PALISADE-4 from lessons learned and improvements that could be implemented to limit variability, to enhance subject selection, and to improve study execution efficiency. Those enhancements, in addition to the mask, obviously coming off and eliminating some of the COVID-related disorders, we really have been focused on very stringent subject eligibility requirements. Some of the original projections that we had were based on observations from PALISADE-2 and the recruitment rates in those studies, which steadily increased through the end of the study, especially when the world got a little more normal towards the end of PALISADE-2. The impact of those positive enhancements that we made to PALISADE-3 and 4 wasn't fully understood at the beginning, but it's now very apparent that screening visits have continued to increase. Additionally, the more stringent subject eligibility requirements and secondary subject eligibility review that we integrated with developing our own internal team in conjunction with increased training and remediation, have benefited us in limiting variability. So, bottom line, we've been very selective in the way that the study can be executed; the stringent inclusion/exclusion criteria, all in an effort to replicate the success from PALISADE-2. So I think we've got a pretty good rhythm now, and we've been able to eliminate subjects who we think may be less likely to demonstrate a benefit through that more rigorous eligibility criteria that we've applied, along with the secondary review of subject eligibility and site conduct, which is ongoing and very specific. So overall, all that together has caused a little bit of an adjustment in timing, but we think that benefits the overall potential outcome of the study.

Andrew Tsai, Analyst

I appreciate the updates. So looking ahead, heading into the PALISADE-3 data readout, can we expect you to announce enrollment completion in that study? And if so, from there, how many weeks can we expect you to take before reporting the top-line data?

Shawn K. Singh, President and Chief Executive Officer

Thank you for your question, Andrew. We will provide an update once we finish enrollment. Keep in mind that it's a four-visit study. We will announce the completion of the last patients' safety follow-up. After that, the timeline to reach the database lock can vary depending on the number of queries, but typically we expect to have top-line data within about six weeks, with a maximum timeframe of eight weeks.

Andrew Tsai, Analyst

Understood. And then earlier, speaking of variability back in the successful PALISADE-2 study, I think the placebo arm showed a SUDS reduction of 8 points on an absolute basis. Would you expect that to be the same case for PALISADE-3 and 4? Or with these more enhanced controls could the placebo be lower?

Shawn K. Singh, President and Chief Executive Officer

Well, what we've certainly done, Andrew, is intended to design PALISADE-3 and 4 in a manner to replicate the success we saw in PALISADE-2. Where that actually lands, we'll have to see how the cards fall, but everything we've done has been intended to limit variability. The idea, obviously, is to increase visibility into all aspects of the study and its execution to ensure the highest possible potential to reduce variability. So we'll see how it all turns out.

Andrew Tsai, Analyst

Great. And then my last question is in terms of psych conduct and as well as your overall surveillance, are you making sure these PIs are disqualifying patients appropriately when these patients are taking their SUDS tests? And are you looking at these SUDS ratings somehow for each patient to make sure all time points make sense with the scoring?

Shawn K. Singh, President and Chief Executive Officer

Well, the last question, again, whether it makes sense, they are what they are in terms of the scoring. But what I can tell you firsthand is that the whole purpose of what we did differently with PALISADE-3 and 4 was to develop an internal team that we call our secondary eligibility review team. This internal Vistagen team consists of very experienced psychometricians who review eligibility of each subject, and they listen to screening assessments as well as each public speaking challenge to ensure proper execution. We believe these kinds of enhancements take a little bit more time, especially with a hyper-focus on training upfront, across all endpoints, not just the SUDS but the CGI-I and the PGIC to ensure confidence that the study is being run correctly and that we've done everything we can through all the experience we've gained from the execution of two prior studies to enhance the potential for success.

Myles Robert Minter, Analyst

I've got one on the CEO forum and maybe conversations that you had with Marty Makary. It seems pretty clear to me that the FDA is driven to expedite approvals of products that are addressing a health crisis in the U.S., with innovative cures for the American people, addressing unmet public health needs, given the voucher program announced today. It seems like your work in social anxiety would align with those priorities. But when we read the MAHA report that's coming from HHS, it paints a slightly different picture in its preliminary stance there, potentially wanting to restrict the use of mood stabilizer drugs. I know you're offering a different mechanism of action here. But did you get any alignment from Marty or higher-ups at the FDA that they're aligned with social anxiety disorder and fasedienol as addressing these pillars that the FDA has mandated? Or is there an alignment here on that unmet need, or is it more aligned with the HHS opinion in that MAHA report? I'd love your thoughts on that dynamic. And then secondly, it's a question on PAL-3 and 4. It seems clear to me that patient demand in the trial is not the issue. Things are going well, but maybe it's the screening and the inclusion/exclusion criteria. I'm wondering whether that is related to the Liebowitz Social Anxiety Scale or the independent raters that you have on board now that could be screening out more patients?

Shawn K. Singh, President and Chief Executive Officer

Well, thanks, Myles. It's a lot to unpack, and we could talk forever on that. But to address your first question, I'd say, look, we have over 30 million people in this country affected by social anxiety. We have a mechanism of action unlike anything that's ever been put out in the anxiety treatment arena. It's not a drug candidate known for causing addiction potential, sexual side effects, weight gain, or requiring a REMS, which are common issues with existing treatments. However, the forum had ground rules stating we shouldn't discuss specific programs in detail. We do believe we have obtained fast track designation from the FDA, which indicates their viewpoint on its regulatory potential concerning serious and life-threatening conditions. The prevalence of social anxiety continues to increase, yet there are no new options without significant baggage. We certainly know about the benzodiazepine epidemic. Delivering innovative mechanisms of action is likely at the forefront of concern for everyone in that room, including FDA leadership, alongside the support teams that I spoke with during the introductory hour of that event. So we feel confident in our place regarding assisting individuals in reclaiming their rhythm of life aspirations. While I cannot give you a direct answer from discussions in that context, we feel optimistic based on past communications. In addressing PALISADE-3 and 4, the issue isn't with recruitment; rather, there has been significant interest in our recruitment vehicles. The slowdown primarily has occurred during Visit 1, the initial screening. The throughput rates from the screening visit through the end of the study have been very consistent with what we've seen in previous studies. Likewise, we are observing a good throughput rate from Visit 4 into the open-label phase. All of this aligns well with our approach. |

Myles Robert Minter, Analyst

Operator, I believe that's all the time we have for questions today. If those who participated on the call have additional questions, please don't hesitate to contact us by emailing ir@vistagen.com or via the contact section of our website. We also encourage you to register for email updates on our website to stay connected with our latest news. Thank you for participating on the call today. We appreciate everyone's interest and support. We look forward to keeping you updated on our ongoing progress. This concludes our call. Have a tremendous day.

Operator, Operator

Thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone, have a great day.