Earnings Call Transcript - VTGN Q2 2026

Operator, Operator

Good day, everyone. Thank you for standing by. Welcome to the Vistagen Therapeutics' Fiscal Year 2026 Second Quarter 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?

Mark McPartland, Senior Vice President, Investor Relations

Thank you, operator. Good afternoon, everyone, and welcome to our conference call and webcast. Earlier this afternoon, we filed our quarterly report on Form 10-Q and issued a press release for our fiscal year 2026 second quarter, which ended on September 30, 2025, providing an overview on the progress in our PALISADE-3 program for fasedienol and social anxiety disorder across our other lead clinical neuroscience programs. We encourage you to review the press release and 10-Q, which are available in the Investors section of our website. Now before we begin, please note that we will be making forward-looking statements regarding our business during today's call based on our 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 other actual results could differ materially from those anticipated by any forward-looking statements we make today. Additional information concerning risks and factors that could affect our business and financial results are included in the fiscal year 2026 second quarter Form 10-Q for the period ending September 30, 2025, and in future filings that we'll make with the SEC from time to time, all of which are available in the Investors section of our website or, of course, on the SEC's website. Now with the formalities out of the way, we warmly welcome our stockholders, sell-side analysts, and others interested in our programs and our progress. I'm joined on our call today by Shawn Singh, our President and Chief Executive Officer; and Josh Prince, our Chief Operating Officer. Shawn will provide a brief business update, clinical update, and Josh will be available to provide additional feedback during the Q&A portion of our call. After our remarks, we will take questions from the sell-side analysts participating on the call today. I remind you, a replay of the webcast will be made available in the Events section of our Investor page on our website. With that taken care of, I'll now turn the call over to our President and CEO, Shawn Singh.

Shawn Singh, President and Chief Executive Officer

Thank you, Mark, and good afternoon, everyone. We've built a very strong momentum as we enter into what could be a potentially transformative period for Vistagen. Last week, we announced another major milestone in our PALISADE program. The last patient completed the randomized double-blind portion of our PALISADE-3 Phase III trial, evaluating our most advanced intranasal pherines product candidate, fasedienol for the acute treatment of social anxiety disorder. We are now preparing for the release of top-line results from the PALISADE-3 study by the end of this calendar year. We extend our sincere gratitude to the patients who participated in the study as well as the dedicated and experienced clinical investigators, the clinical site staff and our contract research organization. Their enthusiasm, focus on detail and the collaboration throughout the study were notable and greatly appreciated and will remain so during the ongoing open-label extension of the study. Over the past several months, I've had the privilege of meeting in person with many of the dedicated teams conducting our PALISADE-3 and PALISADE-4 studies. The energy, curiosity, and optimism that I've witnessed reaffirmed just how great the need remains for new treatment options for individuals whose daily lives are affected by social anxiety disorder and how differentiated and innovative fasedienol could be in meeting their needs. Together, our teams remain deeply focused on fasedienol's potential to become the first FDA-approved acute treatment of anxiety for the millions of adults with social anxiety disorder. Looking ahead, we remain on track to report top-line results from our PALISADE-4 Phase III trial in the first half of 2026. Both PALISADE-3 and PALISADE-4 share a similar public speaking challenge design and the same primary efficacy endpoint as our previously successful PALISADE-2 Phase III trial. In parallel, we are continuing preparations designed to advance our broader pherine pipeline, including itruvone for major depressive disorder and PH80 for menopausal hot flashes. Both depression and women's health represent areas where far too many patients still struggle without adequate options. We're deeply motivated to bring forward the innovative nonsystemic neurocircuitry-focused potential of itruvone and PH80 to help address these important and widespread needs. Turning now briefly to our financials. As of September 30, 2025, we had $77.2 million in cash, cash equivalents and marketable securities. We believe current cash covers all known aspects of our ongoing U.S. registration-directed PALISADE program for fasedienol for the acute treatment of social anxiety disorder, including potential NDA submission if our PALISADE program is successful. Before I conclude the business update, I'd like to welcome Mr. Paul Edick to our Board of Directors. Paul joins us at a pivotal time for Vistagen, bringing decades of experience in leading successful FDA approvals, commercial launches and strategic transactions. His leadership will be invaluable as we prepare for our next phase of growth. I'd also like to extend our deep gratitude to Dr. Jerry Jin, who served on our Board from 2016 until his retirement earlier in September of this year. In closing, our mission remains clear and unwavering: to redefine what is possible in neuroscience, to restore emotional well-being and improve quality of life for millions worldwide. With a diverse and innovative pipeline, experienced team, and several key milestones approaching, we believe we are entering one of the most exciting and potentially transformative periods in our company's history with deep confidence in our ability to deliver meaningful value for patients and for our stockholders. I want to thank you all for your continued interest, your support and your engagement with Vistagen. It makes a lot of difference, and we look forward to sharing our progress with you in the weeks and the months ahead.

Mark McPartland, Senior Vice President, Investor Relations

Thank you, Shawn. These are definitely exciting times at Vistagen as we continue to build momentum across our programs. Operator, we would now like to open up the call for questions from the sell-side analysts joining us today.

Operator, Operator

Your first question comes from Andrew Tsai with Jefferies.

Lin Tsai, Analyst

Look forward to the top line data readout soon. And so I think you guys have mentioned before that we should expect 6 to 8 weeks after the last visit for the top line release. Is that still the case? Or could it come earlier than that actually?

Shawn Singh, President and Chief Executive Officer

Our guidance, I think we're just going to stick with it, Andrew. Thanks for asking the question, and thanks for coming on. But our guidance is that we'll see top line results released before the end of this calendar quarter, so by the end of this calendar year.

Lin Tsai, Analyst

Okay. For the top line analysis, how should we consider discontinuation rates and any protocol violations? Can we expect the top line to closely reflect the number of patients enrolled in the study? Additionally, how should we think about the safety profile?

Shawn Singh, President and Chief Executive Officer

You're going to hear top line results similar to what we shared with PALISADE-2. We'll provide details on the primary CGI-I results, the secondary results, and also the PGI-C as a secondary measure. We'll include the usual safety information we've observed during the randomized part of the study. What we're focusing on is the top line results from the randomized double-blind portion, which is akin to the public speaking challenge. Any safety data from this study, just like with PALISADE-2, will also be presented.

Lin Tsai, Analyst

Okay. And then last question is from what you can tell, what have been the top reasons why patients screen failed in PALISADE-3? And are the top reasons different from what you saw in PALISADE-2?

Shawn Singh, President and Chief Executive Officer

We can discuss that in more detail later. However, I can tell you that the enhancements we made to the PALISADE-3 and 4 studies were aimed at ensuring a high-quality assessment of subject eligibility. Our teams were actively involved in reviewing subject eligibility. We implemented additional enhancements during the study's execution as well. Overall, we have seen what we anticipated, and we have modeled for screen failures and attrition rates from enrollment through randomization to the study's conclusion. We are comfortable with what we've typically observed, and we may have more updates on that later. A key point is that we reached the last patient class visit with the full number of participants we had planned for the studies, which was originally set at 236.

Operator, Operator

The next question comes from the line of Paul Matteis with Stifel.

Unknown Analyst, Analyst

This is Matthew, standing in for Paul. Assuming either PALISADE-3 or PALISADE-4 is successful, are there any additional requirements for registration or filing? Is there anything else you need to finalize before that? How soon can you submit your filing?

Shawn Singh, President and Chief Executive Officer

Sure, Matthew, thank you for your question. As we approach the conclusion of the Phase III development program, we plan to engage with the agency. We've mentioned before that this pivotal program involves data from a repeat dose study, open-label data from our long-term safety study, a human factors study, and standard preclinical safety-related studies, including reprotox and carc. These are all elements we expect to have completed prior to the NDA submission. We will also be having discussions with the FDA as we near submission to ensure we meet the necessary requirements. Currently, if everything proceeds as planned with our execution, we anticipate submitting the NDA around the middle of 2026, assuming PALISADE-3 yields positive results.

Operator, Operator

Your next question comes from the line of Myles Minter with William Blair. Typical preclinical safety-related studies, reprotox and carc, all those are aspects that we expect to have wrapped up upfront, of course, of an NDA package. We will also be meeting with the FDA as we get closer to make sure that we're in line with what's necessary regarding a submission package. We estimate currently, and if everything goes according to plan that we've been executing on, we could see an NDA submission if PALISADE-3 is positive sometime around the middle of '26.

Myles Minter, Analyst

Just the first one, is it your view that fasedienol would be eligible for the commissioner's priority review voucher? It seems to me like SAD is potentially a public health crisis, and it's certainly a massive unmet need with over 30 million patients out there. That's the first one. And then second is just, I think in late October, you updated clinicaltrials.gov. You terminated a site in Arkansas and Kansas. I'm just curious whether that was because you've completed enrollment and you didn't need those sites anymore or just because of your site vigilance and you're going to see these sites in person? Was it something performance related that you terminated those sites?

Shawn Singh, President and Chief Executive Officer

Thanks, Myles. Thanks for the question. Josh, why don't you go ahead and take that last question first?

Joshua Prince, Chief Operating Officer

Sure. Thank you, Myles. Throughout our studies for both PAL-3 and PAL-4, we consistently assess site performance. We encountered a few sites that struggled to enroll the right patients due to their recruitment strategies or other factors. Consequently, it became necessary to terminate those sites. Additionally, as we approach the end of the study, we adopt a wind-down strategy to ensure a controlled and efficient transition from the last patient out to the top-line results, in line with the timeline that Shawn mentioned. So, this is part of our ongoing business process as we conduct these studies.

Shawn Singh, President and Chief Executive Officer

Thanks, Josh. So Myles, on your first question related to the voucher program, the CMPV program. So we're certainly aware of it and the criteria the FDA uses to evaluate eligibility. I think right now, while we don't expect that fasedienol falls within the typical scope of the CMPV programs, we, of course, believe the magnitude of unmet need and especially for a rapid situational treatment without the worrisome side effects and safety concerns is significant. But I think if the regulatory pathways evolve or additional guidance creates a relevant framework, then of course, we'll evaluate it at the appropriate time.

Operator, Operator

Your next question comes from the line of Elemer Piros with Lucid Capital Markets.

Elemer Piros, Analyst

Shawn, this is Elemer dialing in for Elemer. What I'd like to ask you is if you have any indication on the usage patterns, this is coming from perhaps more likely from PALISADE-2 than maybe to a lesser extent from PALISADE-3 at this point for those who went out to complete the OLE up to 1 year?

Shawn Singh, President and Chief Executive Officer

Most of the usage pattern data will come from the open labels. We can discuss what was reported from the open label long-term safety study we conducted previously. The patterns established in that study provide useful guidance about future expectations in the real world. It's important to note that this is a chronic disorder that manifests acutely and episodically. Therefore, utilization largely depends on where individuals are in their journey, their job, their academic setting, and how often they need to engage socially. The long-term safety study indicated increased activity during weekdays, especially when individuals return to work or school and resume their daily routines. We observed higher usage during the work week, particularly during working hours, while weekend usage tends to decrease since people are less often in stressing situations or social settings, such as barbecues or sporting events, which can trigger feelings of judgment related to the disorder. Overall, we noted higher activity during the week and less on weekends, which we also observed in the early stages of the open-label study. This pattern helps shape our expectations regarding how we might see the drug used in everyday situations moving forward.

Elemer Piros, Analyst

Thank you, Shawn. And do you see any difference between the number of people entering the open-label phase between PALISADE-2 and PALISADE-3, and roughly what percentage is that?

Shawn Singh, President and Chief Executive Officer

I'm not going to discuss the percentages, but I can say that we have historically observed a high throughput rate in any open-label activity. As expected, one of the main reasons people are interested in participating in the study is that they believe completing it could lead to the investigational agent being part of their future treatment options. Generally, the reasons people do not continue in an open-label study are due to significant life changes, such as a job relocation or moving to a different area, which may prevent them from being close to the study site they were involved with previously.

Elemer Piros, Analyst

I just have two more questions if that's alright. What would be the minimal effect size in terms of the SUDS or the CGI that would be considered clinically meaningful?

Shawn Singh, President and Chief Executive Officer

We aim to replicate our achievements from PALISADE-2. It's important to contextualize our primary results with outcomes from other endpoints, particularly the connections between CGI-I and PGI-C. We determine clinical significance when we consider all three aspects, including not just SUDS but also the secondary measures. We are targeting to replicate what we believe is both statistically significant and clinically meaningful based on the PALISADE-2 study.

Elemer Piros, Analyst

Understand. And lastly, how do you think about commercialization at this stage? On your own, be a partner? Have you thought about this recently?

Shawn Singh, President and Chief Executive Officer

Yes, we think about it constantly. Companies in our position need to have strong reasons for any commercial launch. As a company, we always prepare for various possibilities. It's crucial for us to ensure that we have the best opportunity to create value if fasedienol is approved. There's a solid potential commercial plan, and we also see opportunities if other strategic arrangements can generate more value. We have the expertise, planning, and in some cases, execution already underway to introduce this highly innovative treatment into a space that currently lacks engaging options for patients. This allows them to customize their medication use based on how stress affects their daily lives. The market is evolving, particularly in terms of telehealth, mental health, digital psychiatry, and consumer influence on social media concerning anxiety, similar to discussions around weight and GLP-1 drugs. The market landscape has transformed significantly over the past few years. Additionally, many patients and potentially practitioners prefer online engagement over in-person visits. There are unique opportunities ahead, particularly with our anticipated target product profile and strategies to connect with practitioners and raise consumer awareness. This presents an exciting opportunity for the company with this unique asset that aligns well with the needs of both practitioners and patients.

Elemer Piros, Analyst

Yes. Exciting times. Looking forward to the read-out.

Operator, Operator

There are no further questions at this time. I would now like to turn the call back over to Mark McPartland for closing remarks. Please go ahead.

Mark McPartland, Senior Vice President, Investor Relations

Thanks, operator, and thank you again, everyone, for joining us on the call today and for your continued interest and support. With a diverse and innovative pipeline and several key major milestones on the horizon, we believe Vistagen is entering one of the most exciting and potentially transformative chapters in our company's history. If you have any additional questions, please don't hesitate to reach out to us at ir@vistagen.com or through the Contact Us section of our website. We also encourage you, of course, to register for e-mail updates to stay informed about our latest news and developments from Vistagen. We truly appreciate your time, engagement, and ongoing support, and we look forward to keeping you updated on our continued progress. This concludes the call. Have a great day.

Operator, Operator

Ladies and gentlemen, this concludes today's call. Thank you all for joining, and you may now disconnect.