6/29/2021

speaker
Operator

Greetings. Welcome to VisaGin Therapeutics Fiscal Year 2021 Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Mark Flather, Vice President of Investor Relations. Thank you. You may begin.

speaker
Mark Flather

Thank you, Sherry. Hello, and welcome to the Vistagen Therapeutics 2021 Fiscal Year End Financial Results and Corporate Update Conference Call. I am Mark Flather, Vice President of Investor Relations at Vistagen. Thank you for joining us today for this business update, and welcome to our shareholders, analysts, and anyone taking an interest in Vistagen. Joining me today is Sean Singh, our Chief Executive Officer, Cherry Dodson, our Chief Financial Officer, and Dr. Mark Smith, our Chief Medical Officer. The format for this call will consist of prepared remarks from the management, followed by an opportunity for questions. This call is being webcast and will be available for replay. The link can be found in the Investor's IR Calendar section of our website, vistagen.com. On today's call, we will make forward-looking statements regarding our business based on our current expectations and current information. forward-looking statements speak only as of today and accept 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 that we make today. Additional information concerning risks and factors that could affect our business and financial results is included in our most recent annual report on Form 10-K filed earlier today with the Securities and Exchange Commission, or SEC, and in future filings that we make with the SEC from time to time, all of which are or will be available on the SEC's website. Now, with the formalities out of the way, I'd like to turn the call over to our Chief Executive Officer, Sean Samuels.

speaker
Sherry

Sean Samuels Great. Thank you, Mark, and good afternoon, everyone. On behalf of our entire team here at Visigyn, I just want to thank you for joining our call today. And as I've said to many of you before, independently, we are all changemakers. Not only our team here at Visigyn, but also all of you who support our efforts. And together, we are 100% committed to changing the lives of people all over the world by improving mental health. by developing medicines that have the potential to go well beyond the currently undesirable or inadequate standard of care for anxiety and depression disorders. Disorders that are disrupting the lives of millions of people all around the world. Not only patients who face these challenges with inadequate treatment alternatives, but their caregivers, their families, their friends, and their colleagues. people they come across all day in their daily lives. And even before the pandemic, we know that the prevalence of anxiety and depression disorders was alarming. And in today's world, it's certainly no secret that the pandemic has exacerbated what was already a challenging situation. And the lingering effects of the pandemic on mental health are likely to be very long-term. So now more than ever, perhaps those suffering from anxiety and depression disorders need new and safe and tolerable alternatives to current medicines. As we forge forward through this pandemic and as we forge forward as changemakers, more so than at any other time in our company's history, we're confident and we're excited about the potential of our CNS pipeline to do just that. to make meaningful changes in the lives of those impacted by mental illness. And despite the challenges of the COVID-19 pandemic, as we've reported, our fiscal 21 was very positive, transformative on many levels. Early in the year, our regulatory and clinical teams successfully forged a very important consensus with the FDA regarding the key design elements of our Palisade 1 um study the first of our two u.s multi-center randomized double-blind placebo-controlled clinical studies of ph94b which is our rapid onset nasal spray for the acute treatment of anxiety in adults with social anxiety disorder as well as all the other studies in our palisade phase 3 program that we believe are necessary to enable a U.S. new drug application or an NDA for PH94B should our Palisade Phase III program be successful. We also started the fiscal year by entering a strategic collaboration for clinical development and commercialization of PH94B in Greater China, South Korea, and Southeast Asia, all very large markets. Under that collaboration, we received a non-dilutive upfront payment of $5 million. and we've got the potential under that collaboration for another $172 million in additional development and commercial milestone payments on top of tiered royalties on sales of PH94B in those countries if a three development efforts there are successful. As we've noted, we retain exclusive rights to develop and commercialize PH94B and all of our other assets in our CNS pipeline in all other markets worldwide. Should our Palisade Phase III program be successful, we will commercialize PH94B on our own in the U.S. and enter into additional commercial collaborations in ex-U.S. markets. In December of last year, we significantly strengthened our balance sheet, as well as our institutional shareholder base, by successfully completing a $100 million capital raise that was led by teams at Jeffries and William Blair and involved numerous leading long-biased healthcare investors. That capital raise created a very important value inflection point for the company. It removed the need to go back to the market near term and provides us with capital to advance execution on all of our clinical development programs on multiple parallel tracks, across our entire CNS pipeline. We believe our current cash position is sufficient to advance our CNS pipeline through a very exciting stream of potential clinical development milestones in the coming months, in the coming years, with the initiation of Palisade 1 in SAD last month as the first of what we expect to be an exciting series of value-adding catalysts for the company. Before the end of calendar 21, we also expect to advance the Palisade Phase 3 program by initiating Palisade 2 as a replicate of Palisade 1, and as well as complementary clinical and certain non-clinical studies in the Palisade Phase 3 program necessary to support the NDA submission should the program be successful. And in addition, throughout the remainder of calendar 21 and during the first half of calendar 22, we expect to initiate multiple phase 2A studies involving PH94B, a phase 2B study of PH10 in major depressive disorder, and a phase 1B study of AB101 in combination with probemesis. I'll highlight some of these studies shortly during the product updates. As we all know, to advance groundbreaking treatments, you need great people. And we have continued to enhance our internal team by adding key personnel with extensive experience in CNS drug development, clinical operations, commercial operations, CMC, and regulatory affairs. Our experienced team will be driving our programs through very important late-stage clinical and regulatory milestones, as well as be responsible and appropriately time pre-commercial and commercial launch activities. Notably, the recent addition of Ann Cunningham as our chief commercial officer has been tremendously helpful in support of our pre-commercial planning for PH94B in the multiple SAD market segments that we're targeting in the U.S. and globally. We also added pharmaceutical industry veteran Dr. Joanne Curley to our board of directors. Dr. Curley brings extensive experience in product development, operations, and commercialization to the board. So overall, I have tremendous confidence in our team's ability to deliver remarkable outcomes across all the key functional areas and across our entire pipeline. So now I'll give you a brief update on each of the three drug candidates in our current CNS pipeline. I'll briefly describe each product MOA or the way we believe it works. and its potential indications, and I'll detail then the expected next steps in each of our development programs for these candidates. So first, PH94B. It gets a little technical, but hopefully I'll give you some understanding as to why we're so excited and confident about its game-changing potential. PH94B is a synthetic investigational neurosteroid that was developed from proprietary compounds called pharynx. With its novel MOA, PH94B is an odorless nasal spray that's designed to be administered at microgram level doses, not milligrams, microgram level doses, to achieve its rapid onset anti-anxiety or anxiolytic effects within about 10 to 15 minutes. PH94B's MOA is fundamentally differentiated from the MOA of all FDA-approved anti-anxiety drugs, including the three antidepressants, that are approved by the FDA for the treatment of SAD, or social anxiety disorder, and all the benzodiazepines and beta blockers that are prescribed on an off-label basis to treat SAD. H94B engages peripheral chemosensory receptors in the nasal passages. These trigger a subset of neurons in the main olfactory bulb, or OB, at the base of the brain. The OB neurons then stimulate inhibitory GABAergic neurons in the limbic amygdala. decreasing the activity of the sympathetic nervous system and facilitating fear extinction activity of the limbic hypothalamic system, which is the main fear and anxiety center of the brain, as well as in other parts of the brain. And importantly, unlike oral drugs, PH94B does not require systemic uptake and distribution to produce its rapid onset anti-anxiety effects. What you've got with PH94B very unique MOA using the nose as a portal to achieve neuropsychiatric benefits in a very rapid onset way and with an exceptional side effect and safety profile that is nothing like what we see with today's approved antidepressants or benzodiazepines or beta blockers. And as a result of our confidence in the work that we've done so far with PH94B, Our ongoing Palisades Phase III program for PH94B is designed to further demonstrate its potential as a fast-acting, non-sedating, non-addictive, acute treatment of anxiety in adults with SAD, and later in pediatric populations with SAD. SAD is a very prevalent indication. Over 23 million Americans are affected by it. Its mean duration of the illness is about 20 years, and the mean age of onset is only age 16. We believe 94B also has the potential to be developed as a novel treatment for adjustment disorder with anxiety, postpartum anxiety, especially given the fact that it's non-systemic, post-traumatic stress disorder, procedural anxiety, panic, and several other anxiety disorders. And importantly to note, PH94B has been granted fast track designation status by the FDA for treatment of SAD. As I noted earlier, after our positive meeting with the FDA last summer, we reached a consensus with the agency on the key aspects of the design of what has now become Palisade 1, initial phase 3 clinical trial in our Palisade phase 3 program for the development of PH94B as an acute treatment of anxiety in adults with SAD. And as a result of that meeting, Palisade 1 and Palisade 2 will substantially mirror the public speaking challenge of the statistically significant P.002 Phase 2 study of PH94B and SAD. And that meeting provided us, and that decision, and that consensus really provided us with substantial overall time, cost, and execution efficiencies for the Palisade Phase 3 program, which are now underway. So for a little more information on that Palisade Phase III program, Palisade I, as I noted, is a U.S. multicenter randomized double-blind, placebo-controlled Phase III clinical study designed to evaluate the efficacy, safety, and tolerability of the administration of 3.2 micrograms of PH94B for the acute treatment of anxiety in adults with SAD during an induced public speaking challenge. We initiated that study in May, and we currently anticipate the top-line data to read out in the middle of 22. Palisade 2, another U.S. Phase III study of PH94B and SAD, will replicate Palisade 1 with the same overall design and objectives. We expect to initiate Palisade 2 in the second half of calendar 21 and to receive top-line data readout from this study in the second half of calendar 22. In addition to Palisade 2, during the second half of 2021, we will initiate an open-label long-term safety study of PH94B. Currently, we anticipate initiating a global study of PH94B, Palisade Global, later this year to facilitate registration of PH94B in ex-US markets. We'll provide more information on Palisade Global once we're closer to that study launch. In late 21 or early 22, we also anticipate initiating the dose response and minimal time redosing studies requested by the FDA. All of this in line with our plan to drive towards a potential US NDA for PH94B in the first half of calendar 23. Again, in addition to social anxiety disorder, we're exploring PH94B's potential and are preparing for several exploratory phase 2a clinical studies of this asset in other anxiety indications. We believe that it may also be developed as a novel treatment for adjustment disorder with anxiety, postpartum anxiety, PTSD, procedural anxiety, panic, and others, as I've noted. And we expect to begin two of these studies, adjustment disorder with anxiety and procedural anxiety, an fMRI study of PH94B's effects, in the second half of this calendar year. And two more, postpartum anxiety and PTSD, are anticipated in mid-22. Provide more information on these studies once we're closer to study launch. Now moving on to our second CNS product candidate, PH10. PH10 is a synthetic investigational neurosteroid, which also was developed from proprietary compounds called pharynx. It's got a novel and rapid-onset MOA, and it's fundamentally differentiated from the MOA of all current treatments for depression disorders. It's also an odorless nasal spray, and it's designed to be administered at microgram-level doses to produce a rapid-onset effect, and one that we have seen in Phase IIa that's been sustained over eight weeks. GATES-10 activates nasal chemosensory cells in the nasal passage. These are connected, again, to neural circuits in the brain that produce antidepressant effects. Specifically, PH10 engages peripheral chemosensory receptors in the nasal passages that trigger a subset of neurons in the main OB that then stimulate neurons in the limbic amygdala. This, in turn, increases activity of the limbic hypothalamic sympathetic nervous system and increases the release of catecholamines, importantly, And unlike any of the approved oral antidepressants, PH10 also does not require systemic uptake and distribution to produce rapid-onset antidepressant effects. In all the clinical studies to date, PH10 has not caused any psychological side effects, such as dissociation or hallucinations, or any safety concerns that may be associated with other rapid-onset ketamine-based therapies, including IV ketamine or intranasal ketamine. So our successful exploratory phase 2A clinical development of PH10 for major depressive disorder has been completed, and we are now preparing for a U.S. multicenter randomized placebo-controlled phase 2B clinical study to evaluate the efficacy, safety, and tolerability of PH10 as a standalone treatment for major depressive disorder. We expect to initiate that study in mid-22. PH10 also has potential as a novel rapid-onset treatment for TRD, postpartum depression, and suicidal ideation. I'm very excited about PH10 and its novel MOA, its rapid-onset potential, its sustained antidepressant effects, and the very positive safety profile so far exhibited and demonstrated in Phase IIa development to date. The MDD space is as many of you know, is in need of continued innovation. There's never one-size-fits-all, and we believe that PH10's differentiated profile has very exciting potential in multiple large and growing depression markets worldwide, and importantly, as a standalone therapy. Finally, our third CNS product candidate is AV101. AV101 is an oral prodrug of 7-chlorokinuronic acid, and it targets the NMDA receptor, which is an ionic ionotrophic glutamate receptor in the brain. Abnormal NMDA receptor function is associated with numerous CNS diseases and disorders. AV101 is a potent and selective full antagonist of the glycine collagenous site of the NMDA receptor that inhibits its function. Unlike ketamine and other NMDA receptor antagonists, AV101's active metabolite is not an ion channel blocker. At doses administered in all clinical studies to date, AV101 has been observed to be well-tolerated and has not exhibited any sedation or dissociative or hallucinogenic psychological side effects or any other safety concerns. In light of these findings and data from some recent preclinical studies, we believe AV101, in combination with FDA-approved probenicid, has very exciting potential to become a new oral treatment alternative for depression and several neurological indications. We expect to initiate a phase 1B study to evaluate AV101 in combination with probenicidin in the second half of this year. FDA has granted fast-track designation for AV101 as a potential adjunctive treatment for MDD and as a potential non-opioid treatment for neuropathic pain. We believe it also has potential for development as a treatment for epilepsy, levodopa-induced dyskinesia associated with Parkinson's therapy, and suicidal ideation. With our innovative CNS pipeline, very strong balance sheet, and a world-class team, I'm confident that Visagen is now in its strongest position ever to drive shareholder value going forward. I'd like to now turn it over to our CFO, Jerry Dodson, to provide you with a summary of some of the highlights from our fiscal 21 financial results. Jerry?

speaker
Mark

Thank you, Sean. As Sean mentioned, I want to highlight a few items from our fiscal year in 2021 financial results. I would also encourage everyone to review the annual report on form 10 K, which we filed with the Securities and Exchange Commission a little earlier this afternoon for additional details and disclosures. We recognized $1.1 million in sublicense revenue pursuant to our PH94B development and commercialization agreement with Ever Insight Therapeutics, now referred to as AFAMED Therapeutics, during our fiscal year ended March 31st, 2021, compared to no revenue in the year ended March 31st, 2020. Our research and development expenses decreased from $13.4 million to $12.5 million for the years ended March 31, 2020, and 2021, respectively. This decrease is primarily due to the completion of our Phase II study of AV101 in major depressive disorder in fiscal 2020, noticeably offset by increased development expenses for our PH94B and PH10 programs during fiscal 2021. General and administrative expense also decreased to approximately $6.5 million from approximately $7.4 million for the years ended March 31st, 2021 and 2020, respectively. The decrease in fiscal 2021 was primarily due to the absence of non-cash warrant modification expense of approximately $0.8 million incurred in the previous fiscal year. Our net loss for the fiscal year ended March 31st, 2021 was approximately $17.9 million versus a net loss of 20.8 million for the fiscal year ended March 31st, 2020. At March 31st, 2021, The company had cash and cash equivalents of approximately $103.1 million. I would also note that during the period from April 1st through the present, we've received additional cash proceeds of approximately $1.1 million from the exercise of outstanding warrants. As I stated earlier, Please refer to our annual report on Form 10-K for additional detail and disclosure. I'll turn the call back to Sean now.

speaker
Sherry

Thanks, Jerry. We've come a very long way through the years, most significantly during this past fiscal year, in spite of far-reaching and diverse impacts of the COVID-19 pandemic. Fiscal 21 and the early months of Fiscal 22 have generated and accelerated a tremendous amount of progress at Vistagen, ideas that have now moved from opportunities to execution. And I have the privilege of speaking on behalf of everyone on our laser-focused and hardworking teams here at Vistagen. It's a privilege I'm grateful for every day, and I can assure you that we are all committed. We're all confident, and we're all very excited about the company's future. And importantly, we are grateful for your continuing interest and your support of our efforts to improve the lives of those battling mental health challenges all over the planet. We wish all of you the best of health, especially mental health, to you and to all of those who are important to you. Thank you for joining us today.

speaker
Jerry

Thanks, Sean.

speaker
Mark Flather

This concludes our prepared remarks. Sherry, we would like to now open the call up to questions, please.

speaker
Operator

Great. Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Tim Lugo with William Blair. Please proceed.

speaker
Tim Lugo

Thanks for the question, and congratulations to the whole team on all the progress. And I apologize if you're repeating yourself. I know you touched a bit upon this on the prepared commentary, but it sounds like you're going to start the Adjustment Disorder and Procedural Anxiety Exploratory Studies by year end. Is that correct? Correct. And then should we expect a readout in 2022 as well?

speaker
Sherry

Yes, on both of those, Tim. Thanks for the question, and certainly thanks for your long-term focus on what we're doing here. But, yes, the answer is we expect to initiate the adjustment disorder study before the end of the year, and the same thing with the fMRI study that will study the effects of PH94B, again, by the end of the year. And readouts for both of those will be in 22. Okay.

speaker
Tim Lugo

And then the PTSD and the postpartum, those will start in 2022. And, you know, are those expected kind of readouts in 2023 then?

speaker
Sherry

Right. Somewhere around a year for each of those.

speaker
Tim Lugo

Okay. Great. Thanks for cleaning that up. And for policy.

speaker
Sherry

Oh, yeah. Sorry. Well, no, I just wanted to note, obviously, we've talked about this before and noted it, but the goal is to really have, we think that 94B has got potential in a broad base of populations. And so we want to certainly before, well before we would launch for Peace 94B and SAD, but we want to build out as much potential for the the drug in multiple different anxiety-related disorders. So these exploratory Phase IIa studies, they're relatively small, 25 to 50 subjects, and we're a million and a half to $2 million apiece. Just to give us some ideally in controlled settings and some peer-reviewed publications associated with the potential that we can then build on for Phase IIb development while we're moving forward with 94b and SAD2.

speaker
Tim Lugo

Okay, that makes sense. And for Palisade 2, I assume you're waiting for Palisade 1 enrollment to be complete before kicking that off. Is that true? And then also maybe briefly, can you talk about the patient population and how many of those patients are expected to have already tried beta blockers and benzos in the past for their anxiety disorder and kind of how You know, I guess how much of a treatment failure type of population is this?

speaker
Sherry

Yeah, I'll let Mark handle the second half. But the first half of that is that, no, it's not the case that these are proceeding serially. There's a staggered start, but the Palisade 2 will start well before we get a readout of Palisade 1. So that will start sometime again by the end of 2021, and Palisade 1 reads out in the middle of 2022.

speaker
Tim Lugo

Okay.

speaker
Sherry

Mark Smith, you want to talk a little bit about the inclusion criteria on the background meds?

speaker
Brian

Sure. So this is a monotherapy study, number one. And we are actually excluding people who failed two FDA-approved medicines for SAD. So we don't want treatment-resistant folks to enter this trial. Okay. Now, how many have taken drugs off-label, like propranolol or benzodiazepines? We're gathering that information as we go along in the trial. I suspect a number of people will have tried it occasionally, but I think our understanding is that while benzos may certainly work, the problems are such that the they're not really preferred for this patient population. So many of them will not be taking benzos chronically. And we think, obviously, 94B is a much better alternative. But we'll be gathering that information throughout the trial.

speaker
Mark Flather

Sounds good. Thank you for all the clarity. Thanks, Tim.

speaker
Operator

Our next question is from Brian Shorkley with Robert W. Baird. Please proceed.

speaker
Brian Shorkley

Hey, good afternoon, everyone. Thanks for taking my questions. Can you just walk us through the long-term safety study that's being done with PH94B? I think last time we talked, you had said you were redoing six-month animal toxin, and that was sort of the gating factor to initiating that. Is that still ongoing? Anything to speak of there? or when you'll be able to enroll patients in that study. And then I think you had mentioned that even patients who screen out of Palisade will be able to enroll in the safety study. Can you just kind of talk through how patients will be given PH94 being followed?

speaker
Sherry

Yeah. Thanks, Brian. Great to talk to you. As I noted, we're launching the long-term safety study before the end of 21 sometime in the fall. And that's an open-label 12-month treatment period that will follow use of PH94B at 3.2 micrograms per dose, around four doses a day. And some people will be diverted from the Palisade 1 and Palisade 2 studies on an open-label basis, even completers, as well as people who screen out. So we want to give people the opportunity, even if they're randomized to placebo and

speaker
Brian

in the palisade studies there'll be an opportunity to be in the open label safety study mark smith you have anything to add yeah that's right um you know we expect uh the criteria to get in the long-term safety are a little bit looser also in that we will in that study allow background uh medications like you know ssris so um we want to establish that it's safe to add on 94b to ssris and this study will help us do that, even though we're developing it as a monotherapy in our phase three placebo-controlled studies.

speaker
Brian Shorkley

Got it. And is there any patient year target for that study in terms of FDA feedback, just in terms of what sort of the threshold they want to see in terms of exposure is for filing?

speaker
Sherry

Typical ICH guidelines, Brian, 100 for 12 months and 300 for six months.

speaker
Brian Shorkley

Okay. And then on the adjustment disorder with anxiety study, I see that's posted in trials now. I was just wondering, what is a reasonable benchmark on the Hamilton anxiety scale to sort of compare to here? And, you know, I don't know how we should kind of think about that scale versus the SUDS or the CGI from the SAD studies. They're sort of a target you're hoping to achieve here. Sure. Mark?

speaker
Brian

Yeah, let me address that. So, you know, for lack of a better scale, we're using the Hamilton anxiety scale. There haven't been too many studies in adjustment disorders. So we're kind of paving new territory here. But, you know, we expect these patients to, you know, probably average, you know, in the mid-20s or so, maybe some in the high 20s on the Hamilton anxiety scale. And, you know, we certainly want to see a change from placebo to you know, that's at least, you know, four or five points different would be fantastic. And, you know, I think it would be a successful outcome for this study. So these people aren't quite as affected as generalized anxiety disorder. So their scores aren't quite as high as the Hamilton anxiety, but we still hope to see a change from placebo.

speaker
Brian Shorkley

Okay, great. Thanks. I'll hop back into the Q&A.

speaker
Operator

Our next question is from Andrew Tsai with Jefferies. Please proceed.

speaker
Andrew Tsai

Okay, very good. Good evening and thanks for taking my questions. Big congrats, especially on getting the Phase 3 program underway. So as investors think about potential risks to study, I mean, a higher than expected placebo response naturally comes to mind. So can you talk about what you know about placebo responses for patients social anxiety in particular, and I guess what steps are you taking to mitigate a high placebo response?

speaker
Jerry

Sure.

speaker
Sherry

Mark, do you want to address that?

speaker
Brian

Yeah, sure. So, first of all, as you may know, traditionally, historically, in the social anxiety disorder studies, the placebo rate is lower for that patient population compared to generalizing anxiety disorder or major depressive disorder for that as well. And, you know, those, you know, recently, gosh, you know, placebo rates have been 45, 50%. It's hard to distinguish drug from placebo. Historically, social anxiety disorder has a placebo rate more like 30, 35%. And that reflects the fact that this is really a chronic kind of stable disease. you know, lifelong disorder. And so it's been very, it hasn't been that hard to separate drug from placebo in the historical SSRI studies. So I think that bodes well for our studies. Now, it should be a note, we're looking at public speaking here and the stress level that they experienced during their public speaking challenge. But, you know, in the phase two as well, the placebo rates were well within reason.

speaker
Sherry

Great. And, Andrew, we built in some important gates just in the first couple of steps of the study design to make sure that you've got sufficiently big patients coming into the study.

speaker
Brian

Yeah, that's right. It's important that, you know, to get patients with a high level of social anxiety disorder symptoms based on their Leibowitz scale and the fact that we're requiring them to get pretty stressed out, which they do by the public speaking challenge. So that level of severity I think also helps us differentiate from placebo.

speaker
Andrew Tsai

Great. And my second question is, You know, my understanding is FDA has not required you to do an abuse liability study. And this builds off of Brian's long-term safety question. And I acknowledge you've generated some preclinical data differentiating case 94B versus benzos. But I guess my question is, do you still plan to do one and, you know, down the road, let's say it was all positive, all these preclinical data that you're generating are all positive. I guess what kind of scheduling... do you think PH94B would obtain? It would be a scheduled drug, or do you believe it's a non-scheduled drug? Thanks.

speaker
Sherry

Well, you have to look. Thanks for the question, Andrew. It's a good question, because safety is a very key aspect of this product profile that differentiates it from anything else we've ever seen. And if we took a look at the collective body of work to date, including some very important studies, as you saw, we've noted that it PH94B does not potentiate GABA. We know it doesn't bind to the typical addiction-associated receptors, opioid or dopamine or nicotine, which is all very important. We'll be doing some additional carbon radiolabeled studies, C14 studies, to see whether it even is required to distribute into the brain to achieve its neuropsych benefits. And we'll do some fMRI cell imaging studies. Picking together what we know now from what's been done non-clinically, as well as all the behavioral signals from the clinical studies, we don't see any basis for DEA to make a recommendation to FDA a couple months before a future PDUFA date that it should be scheduled. We'll continue to do additional work. Obviously, we'll continue to see what occurs in the context, if anything, in the context of the Phase III, the Palisade Phase III program, the long-term safety study in particular. But right now, just the uniqueness of this MOA is really the hallmark of the drug. And the fact that we can achieve phenomenal benefits within a short period of time without possibly even having to act directly on CNS neurons is a tremendous breakthrough. And that's the hallmark of the fairing technology. Using the nose as a portal to the brain to achieve these neuropsychiatric benefits, of course, makes you think about it, whether it should be scheduled. But I guess we had to give you an opinion today based on the work that's been done today in the clinic and in the lab. We don't see any basis for it to be scheduled. So we'll just continue to track it closely. As you noted, FDA hasn't requested the abuse liability study. But it's something that we'll continue to consider if we think we need to do it.

speaker
Andrew Tsai

Great. May I ask a final question?

speaker
Jerry

Sure.

speaker
Andrew Tsai

Thanks. So, I mean, just tying it all together, I mean, as you think about, I guess, the market opportunity for PH94B for social anxiety alone, I mean, can you talk about why you think this could ultimately become a primary care drug as opposed to a specialty tier? And I guess, what are you doing in the meantime to educate the market? Thanks.

speaker
Sherry

Yeah, well, there are a lot of – it's one of the great benefits of having an industry veteran like Ann Cunningham on our team leading this effort in the pre-commercial activity. There are multiple journeys that we're benchmarking now and a lot of work that the team's doing because there are a lot of different patient journeys here. There are a lot of patients that in this – very under-recognized and under-diagnosed and under-treated and under-detailed market for many years now, really since about the time that Paxil came out for SAD. It's a new time and it's a new day and it requires us to make very careful research endeavors into all these various market segments. it's large no matter how you slice and dice it. This shouldn't be a product that's priced at a level that requires prior authorization. We think this is something that is going to be very, be a high level of awareness at the consumer level. We will continue to educate about the neurobiology of fear. Medical education is going to be very important. We'll be doing quite a bit of work to educate the market about the MOA, how the drug works, how it's differentiated from benzos and beta blockers and antidepressants. So, again, we're in the early innings of doing a lot of that work, but what we can see already is that this is a market that's only got about a 20% treatment rate today for SAD, and it's going to We think it'll respond very nicely to the kind of attention and care and feeding that we will apply as we go forward here.

speaker
Jerry

Does that get to your question? Andrew, did I lose you?

speaker
Operator

We did. Our next question is from Jason McCarthy with the Maxim Group. Please, proceed.

speaker
Jason McCarthy

Thanks for taking my questions. A lot of questions around the trials have been answered. Maybe more of a broad topic, perhaps. Can you talk a little bit about what your feedback or sense of the market has been in terms of its focus on PH94B versus PH10? They're both in that ferret class of drugs, but it seems like much of the focus is on PH94B, maybe not a lot of values being priced in for PH10 and what maybe the company may be doing to really promote more of the work around PH10 going forward?

speaker
Sherry

Well, Jason, hey, thanks for the question. It's great to speak with you. Awareness around PH10 absolutely will grow in the coming months. We are very excited about its potential to fit. There really is so much to be excited about. There's potential for rapid onset. There's potential for an opportunity of sustained benefits. There's potential for it to not have condomimetic side effects and safety concerns like other rapid-onset therapies. There's potential for it to not have to have an adjunctive SSRI or an atypical. So we see a lot of flexibility given what we've seen so far in terms of its safety profile and its tolerability profile in the clinic. So the key for us is to get the Phase IIb program up and running, and there are some tox studies that we need to complete in order to get that in motion, and that's all underway. But it's no less important and certainly no less valuable than PH94b. I think as we've introduced the ferrines and we've introduced the unique MOA associated with both of these drug candidates, Just status of development, most of the emphasis so far has been on PH94B and really only on SAD and really only on a narrow indication, which is one of what we think will be many in terms of social anxiety disorder. And even there, only in adult populations. So we think the drug safety profile gives us tremendous opportunity in pediatric populations as well. And maybe, as you know, the comorbidity of anxiety and depression, that rate is quite high. So I think as you see in the months coming ahead as we continue to track towards actually initiating the Phase IIb study, we'll see the interest in awareness around PH10 as it fits in with some of the other new generation antidepressants in development by our peers. We find a very nice slot for PH10 to fit into that future. treatment paradigm for a lot of depression disorders, not just MDD.

speaker
Jason McCarthy

Great. Sounds good. Lots of stuff coming up for Vistagen. Looking forward to it, Sean.

speaker
Sherry

Great. Thanks, Jason.

speaker
Operator

And our next question is from Brian Snorney with Robert W. Barrett. Please proceed.

speaker
Brian Shorkley

Hey, thank you for taking the follow-up. Since you're talking about pH 10, I did want to get a question on that as well. One of the challenges that we've seen sort of repeat in MDD is sort of progress through development and kind of loss of placebo effect, most notably in the recent waterfall readout of seranolin. I guess, how do you guys think about the challenges of trial design in MDD as you prepare to move into Phase 2b, and how do you kind of ensure that that what you get out of Phase 2B studies is a signal that can get repeated in Phase 3.

speaker
Jerry

Mark, why don't you go ahead and address that?

speaker
Brian

Sure. Well, it is challenging, obviously. But I think one way, I guess, is to stick to your guns. You know, we have a number of go-to sites that we commonly use for our Phase 2 studies. These are, you know, very good performing sites. And, you know, we have pretty strict criteria for who gets into that study, things we've talked about already. You want patients that are, you know, really ill and have a high degree of depression. And I think it's easier to find a signal with there. So I think it begins with the sites you select and the patients you select for the study. Now, we have used and other people used, you know, designs that – do help mitigate the placebo response, like the sequential parallel comparison design. And we'll certainly consider things like that. But I think for our purposes, PH10, we are going to be looking for a rapid onset. And I think in today's market, you know, you need to demonstrate a rapid effect. And so we'll be focusing on that as part of that study. But These are all challenges that everyone faces. I think we have at Vestigen acquired a number of people with a lot of experience in this field. And so I think we can face these challenges.

speaker
Jerry

Great. Thanks.

speaker
Sherry

John, a lot of it goes as well into just into the screening and the work that's done even in the early stages. levels of outreach for subjects, and the type of sites are certainly important, but also the way that those subjects come to the site and the quality of those screens and leads, and ultimately that results in better enrollment.

speaker
Jerry

Great. Thanks, Roland. That's helpful.

speaker
Mark Flather

Excellent. It looks like that's the end of the questions at this time, so I'll turn the call back over to Sean to provide the closing statements.

speaker
Sherry

Well, again, thank you, everyone. I can't emphasize enough how important it is to have the support of all of our stakeholders, shareholders, and everybody in the capital market. Well, it's important to the people who do the work on a day-to-day basis, but it's certainly important to all of the groups that we work with. There are a lot of patient advocacy groups out there that are clamoring for for new medications to really help people get unstuck. And we know that COVID is making things worse, and that's likely to not change for quite a long time. But we're proud to be in the fight, and we're going to continue to stay committed. And with your support, we'll continue to advance on all the objectives that we've laid out during this call and through collateral meetings. So again, thank you for your support, and best of health to everyone.

speaker
Operator

Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

-

-