Earnings Call Transcript - VTGN Q1 2025

Operator, Operator

Ladies and gentlemen, greetings and welcome to Vistagen Therapeutics Fiscal Year 2025 First Quarter Corporate Update Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark McPartland, SVP, Investor Relations at Vistagen. Please go ahead.

Mark McPartland, SVP, Investor Relations

Thank you, Ryan, and good afternoon, everyone, and welcome to Vistagen's Fiscal Year 2025 First Quarter Corporate Update Conference Call and Webcast. This afternoon, we filed our quarterly report with the Securities Exchange Commission on SEC Form 10-Q for a quarter ended June 30th, 2024, and issued a press release providing an overview of our continued progress. We encourage you to review the release and our 10-Q, which can be found in the investor section of our website. 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 required by law. 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 make today. Additional information concerning risk and factors that could affect our business and financial results is included in our fiscal year 2025 first quarter 10-Q for the period ended June 30th, 2024, and will be made in the future filings that we make with the SEC from time to time, all of which will be available in the Investor section of our website and of course on the SEC's website. With the formalities completed, we warmly welcome our stockholders, sell-side analysts, and others interested in Vistagen. I'm joined on our 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 update on the lead programs in our novel class of neurocircuitry-focused pherine drug candidates and our clinical stage pipeline. After that, at the conclusion of our prepared remarks, there will be a brief opportunity for questions from the sell-side analysts participating on the call. As a reminder, this call is being webcast and will be available for replay after completion. The replay link can also be found in the investor section of our website. I will now turn the call over to our Chief Executive Officer, Shawn Singh.

Shawn Singh, CEO

Thank you, Mark, and good afternoon everyone. Thank you for joining our call today. For those of you who are joining us for the first time, we are a neuroscience company with a diverse pipeline that includes multiple clinical stage product candidates in Phase 2 and Phase 3 development. Each of these is a novel, non-systemic, neurocircuitry-focused product candidate. Our three lead clinical development programs target large markets with treatment standards that leave millions of individuals with unmet medical needs, specifically individuals affected by profound fear and anxiety associated with social anxiety disorder, the serious and potentially life-threatening impacts of depression, and the disruptive effects of menopausal hot flashes. For decades, the standard-of-care in these very large indications has been anchored in oral medications that require systemic uptake and are associated with a bundle of worrisome side effects and safety concerns, along with prolonged onset of action and limited efficacy. Our mission is to change that with our pioneering neuroscience and our new class of clinical stage product candidates called pherine. Distinguished from all systemic oral medications approved by the FDA, our lead neuroactive pherine, Fasedienol for social anxiety, Itruvone for depression, and PH80 for menopausal hot flashes are intentionally formulated as nasal sprays to rapidly activate unique nose-to-brain neural circuits to achieve therapeutic effects without requiring systemic uptake or direct action on neurons in the brain, and to do so with favorably differentiated safety profiles that we've observed in all clinical studies of our pherine product candidates that have been completed to date. Pherine uses the nose and key neurons located in the olfactory epithelium as a portal to activate neurocircuitry in different regions of the brain that impact multiple medical conditions without having to travel through the whole body or even into the brain. These fundamental differences have enabled us to achieve historic clinical success in a Phase 3 trial for the acute treatment of Social Anxiety Disorder that we reported last year, as well as positive results in exploratory Phase 2 trials involving patients with major depressive disorder, menopausal hot flashes, premenstrual dysphoric disorder, and psychomotor impairment due to mental fatigue. Our top priority, the lead neuroscience program in which the vast majority of our team and our capital are focused on, is our US registration-directed Palisade Phase 3 program for Fasedienol. This investigational nasal spray is for the acute treatment of social anxiety disorder, and there's no FDA-approved medication for the acute treatment of SAD, which is a very large, growing, and underserved market that affects 12% of adults in the U.S. As I noted many times, our principal goal is to change that. Last year with our PALISADE-2 Phase 3 trial of Fasedienol, we reported the first-ever positive Phase 3 trial of a drug candidate for the acute treatment of SAD. Earlier this year we launched another Phase III trial, PALISADE-3, designed similarly to PALISADE-2 with the objective of replicating the success of that study. The enrollment in the PALISADE-3 study is on track, and we're also on track to initiate our PALISADE-4 Phase 3 study in the second half of this year, as we've previously guided. That study will have the same design as PALISADE-3 and the same objective of replicating the positive results from PALISADE-2. Both of these Phase III studies, as well as an exploratory Phase 2A repeat dose study, will read out next year. We believe either PALISADE-3 or PALISADE-4, if successful, and together with PALISADE-2, may establish substantial evidence of the effectiveness of fasedienol in support of a potential US new drug application submission to the FDA, which if approved could establish fasedienol as the first-ever FDA-approved acute treatment of SAD. A new treatment option with potential to be used on-demand by millions of Americans whose serious and sometimes life-threatening anxiety and fear of embarrassment, judgment, and humiliation in a wide range of social and performance situations affect their daily lives over many years, and potentially, unfortunately, sometimes lead to depression and even suicide. So again, our U.S. registration-directed PALISADE Phase III program for Fasedienol for the acute treatment of SAD is our top priority, and we are on track and well-funded to do what's necessary to put us in a position with the potential to achieve that important and very valuable goal for patients and for our stockholders. We’re also staging our other two lead pherine clinical stage programs in depression and hot flashes for further Phase II development in the US, building on positive results in exploratory Phase IIa studies in each of these large market indications, each of which has outdated standards of care and non-systemic pharmacological treatment alternatives. What we've seen in Phase II from non-systemic Itruvone for MDD and non-systemic hormone-free PH80 for menopausal hot flashes, both in terms of efficacy and safety, is driving our confidence in the potential of these product candidates to improve lives. Itruvone holds the potential to emerge as a novel and fundamentally distinct stand-alone treatment for major depressive disorder. We're preparing and strategizing for a Phase IIb development of Itruvone in the US as a product candidate that could help individuals gain relief from MDD symptoms swiftly and without many of the side effects associated with currently available systemic treatment options. Itruvone is distinguished by its favorable safety profile that's been observed in studies completed to date, which is not associated with unwanted sexual side effects or potential for abuse. Finally, our non-systemic hormone-free pherine product candidate for menopausal hot flashes, PH80, holds considerable medical and commercial promise in multiple women's health conditions, but most notably menopausal hot flashes that affect millions of women around the world. Similar to what we have accomplished to enable further Phase II development of Itruvone for MDD in the US, our ongoing nonclinical program for PH80 aims to enable our US IND to further Phase II clinical development of PH80 in the US as well for menopausal hot flashes. We are confident that millions of women affected by menopausal hot flashes would prefer a novel non-systemic hormone-free treatment option over the current therapies. With that, I'll turn the call over to Cindy, our CFO to summarize some of the financial highlights from the last quarter. Cindy?

Cindy Anderson, CFO

Thank you, Shawn. As Shawn mentioned, I will highlight a few financial results from our fiscal year 2025 first quarter. I also encourage everyone to review our report on Form 10-Q filed with the SEC earlier this afternoon for additional details and disclosures. Research and development expenses were $7.6 million for the quarter ending June 30, 2024, compared to $4.2 million for the same period last year. The increase in R&D expenses was primarily due to an increase in clinical and development expenses related to the commencement of PALISADE-3 and costs related to preparation for the initiation of PALISADE-4 Phase III trial of Fasedienol in SAD, an increase in headcount costs, and an increase in consulting and professional fees. General and administrative expenses were $4.6 million for the quarter ending June 30, 2024, compared to $3 million for the same period last year. The increase in G&A expenses was primarily due to an increase in headcount costs and professional service expenses to support the continued expansion of our administrative activities. Our net loss attributable to common shareholders was $10.7 million for the quarter ended June 30, 2024, compared to $6.9 million for the same period last year. As of June 30, 2024, we had cash, cash equivalents, and marketable securities of $108.4 million. 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, CEO

Thanks, Cindy. What drives our team day in and day out is the opportunity to improve patient lives with our pioneering neuroscience, along with the potential value for stockholders that often accompanies that type of accomplishment. With our on-track progress in our US registration-directed PALISADE Phase III program for Fasedienol aimed at the acute treatment of SAD, which is a mental health disorder growing in prevalence, it's now affecting over 30 million Americans post-pandemic, and none of them have yet an FDA-approved, flexible, patient-tailored acute treatment option. So we are confident in advancing on our goal to secure that first FDA approval. It's a very serious and very life-threatening and highly prevalent indication that requires the kind of serious attention and effort that our team is putting into driving this PALISADE Phase III program forward, building on the success we've achieved last year from the PALISADE-2 study. So on behalf of everyone at Vistagen, I just want to thank you all for your continued interest and your continued support of our mission.

Mark McPartland, SVP, Investor Relations

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

Operator, Operator

Ladies and gentlemen, we will now be conducting a question-and-answer session. Our first question is from the line of Paul Matteis with Stifel.

Unidentified Analyst, Analyst

Hi, thanks for taking our questions. This is Mark on for Paul. We were curious if you could provide any color on the types of patients that are currently enrolling for the Phase III trials for Fasedienol. That would be great. Thank you.

Shawn Singh, CEO

Sure. Mark, thanks a lot. Josh, do you want to address that? Josh is primarily on top of our execution of the PALISADE program. Can you just give a brief insight, Josh?

Josh Prince, COO

Yes. So it is very similar patients to those who were enrolled in our PALISADE-2 study. From an inclusion/exclusion criteria, LSAS scores greater than 70, for example, and no other primary health disorders, as SAD must be the primary diagnosis. In addition, some of the exclusion criteria we incorporated were the elimination of excessive smoking or vaping. But it is typically a primary SAD diagnosis with high enough severity. It is the typical demographic that is coming in.

Unidentified Analyst, Analyst

Thank you.

Shawn Singh, CEO

Thanks, Josh. It's important to ensure that we have folks that properly meet the inclusion/exclusion criteria. We're focused on chronic disorder patients. As many are aware, the typical onset of this disorder is in adolescence, and its duration is typically about 20 years. So, we want to recruit candidates who will benefit from the medication. We're very diligent about pre-screening to align with our criteria.

Unidentified Analyst, Analyst

Thanks.

Operator, Operator

Our next question comes from the line of Andrew Tsai with Jefferies. Please go ahead.

Andrew Tsai, Analyst

Hi, good afternoon. Thanks for the updates and thanks for taking my questions. For PALISADE-3, are you seeing higher screen failure rates compared to PALISADE-1 and 2? And is there anything else that you might be seeing in real-time that gives you that extra boost of confidence you are doing the right thing, enrolling the right patients and executing the study even more rigorously than last time?

Shawn Singh, CEO

Josh, do you want to give a little further insight on that?

Josh Prince, COO

Yes, absolutely. Thank you for the question. At this point, we've seen that the screening failure rates in terms of those who have a high enough score in the first public speaking challenge have been consistent with our projections, which has pleasantly surprised us. So, we are on track with the established targets.

Andrew Tsai, Analyst

And could you remind us how long it took for you to start in PALISADE-1 and 2? Is enrollment cadence for PALISADE-3 looking stronger or faster than that?

Shawn Singh, CEO

The enrollment cadence is on track with what we've guided. The pandemic impacted a lot of activity in 1 and 2, but we are pleasantly surprised by how normalized the clinical development environment is now, allowing more predictability unlike what we experienced in prior studies. So, we are comfortable with the cadence and are on track. Josh, any other insights?

Josh Prince, COO

I think that captures it. One other reminder, we have two public speaking challenges. A key aspect of this study is to screen out those who don't meet the anxiety level needed to move on to the randomization portion. That’s a critical component for study execution, and those rates are similar to what we observed in PALISADE-1 and 2.

Andrew Tsai, Analyst

Great. Last question is, what's the latest on the PALISADE-2 publication and a potential breakthrough designation filing? Thank you.

Shawn Singh, CEO

We know what we achieved in PALISADE-2 is historic. Interest in the manuscript will be submitted to a suitable journal that is in a mature stage of development. Additionally, we've already achieved Fast Track designation. There is no question about that. What we achieved in PALISADE-2 is a significant differentiator. We'll see how it goes, but I like the chances of fitting the profile for moving beyond Fast Track.

Operator, Operator

Thank you. Our next question is from the line of Tim Lugo with William Blair. Please go ahead.

Tim Lugo, Analyst

Thanks for the questions. And congratulations on the progress in the quarter. Can you remind us if you had discussions with the FDA about self-administration in PAL-1 and PAL-2 versus HCP administration in PAL-3 and PAL-4 and how you expect that to impact any dosing language in the label?

Shawn Singh, CEO

Sure. We've submitted the protocols to the agency, and they understand both of them. It is more consistent with Phase II, the HCP administration of the single dose. We believe the approach will help avoid variability site to site. We're optimistic that if we are successful in combining 3 and 4 with 2, it won't impact the treatment labeling. We want patients to be able to use the drug on-demand with a flexible approach.

Tim Lugo, Analyst

Can you provide any details on when the Phase IIb and MDD will be started? Will it be by the end of the year?

Shawn Singh, CEO

Not by year-end. We are finalizing a solid protocol synopsis and moving it to a full protocol submission to the agency before the end of the year. We're working with good KOLs around the protocol.

Operator, Operator

Thank you. Our next question is from the line of Madison Elsaadi with B. Riley Securities. Please go ahead.

Madison Elsaadi, Analyst

Hi guys. Congrats on the progress you made. And thanks for taking my question. Can you remind us that PALISADE-3 will be performed at the same clinical size as PALISADE-2? And will we see top-line data from PALISADE-3 before dosing starts in PALISADE-4?

Shawn Singh, CEO

Yes, there will be separate sites in the studies, with approximately 15 to 16 sites for each study and no overlap. The top-line data for both PALISADE-3 and PALISADE-4 is expected to be available in 2025, with PALISADE-3 projected for mid-2025 and PALISADE-4 aimed for the end of 2025. Every element of the PALISADE Phase III program will be initiated this year and wrapped up next year.

Madison Elsaadi, Analyst

Got it. That's helpful. And what are the gating steps to the MDD Phase IIb trial? It looks like you guys have reached the top of the dose efficacy curve with the current 6.4 microgram dose. Is that how you're looking at it? Or could that dose change?

Shawn Singh, CEO

No, we believe that’s where we'll land. We saw success in the Phase IIa study at two different dose levels. We're finalizing the protocol with KOLs, including members of our SAB. The 6.4 dose will likely be the basis for a stand-alone monotherapy study over a six-week period, double-blind, placebo-controlled, with HAMD-17 as the primary endpoint, similar to Phase II outcomes.

Madison Elsaadi, Analyst

Got it. Thank you.

Operator, Operator

Thank you. Ladies and gentlemen, there are no further questions. I would now hand the conference over to Mark McPartland for his closing comments. Mark?

Mark McPartland, SVP, Investor Relations

Thank you, operator, and thank you, everyone, for participating on the call today. If you have any other questions, please do not hesitate to contact us by email at ir@vistagen.com or through the Contact Us section of the website. We also encourage you to register for email updates on the website to stay connected to the latest news and events for Vistagen. Thank you all again for participating on the call. We appreciate everyone's interest and support. We look forward to keeping you updated on our ongoing progress. This concludes the call. Have a magnificent day.

Operator, Operator

Thank you. Ladies and gentlemen, the conference of Vistagen Therapeutics has now concluded. Thank you for your participation. You may now disconnect your lines.