Vistagen Therapeutics, Inc.

Good day, everyone, and welcome to today's Vistagen Fiscal Year 2024 Second Quarter Corporate Update Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. You may register to ask a question at any time by pressing the star and 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star 2. Please note this call is being recorded. I'll be standing by if you should need any assistance. It's now my pleasure to turn the conference over to Mark McPartland. Please go ahead, sir.

Thank you, Travis. Good afternoon, everyone, and welcome to Vistagen's fiscal year 2024 second quarter corporate update conference call and webcast. This afternoon, we filed our quarterly report and issued a press release providing an overview of our progress last quarter. We encourage you to review the release, which can be found on the investor section of the Visagen website. During today's call, we will make forward-looking statements regarding our business based on our current expectations and information. The forward-looking statements speak only as of today and 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 forelooking statement we make today. Additional information concerning risk factors that could affect our business and financial results is included in our fiscal year 2024 second quarter form 10-Q for the period ending September 30th, 2023, and in future filings that we will make with the SEC from time to time, all of which are or will be available on our website and the SEC's website. With that taken care of, I'd like to thank and welcome all of our stockholders, analysts, and everyone taking an interest in Vistagen. I'm joined on the call today by Shawn Singh, our Chief Executive Officer, Cindy Anderson, our Chief Financial Officer, and Josh Prince, our Chief Operating Officer. Shawn will provide an overview on the recent results and our progress across our key pipeline programs. A brief opportunity for questions from our sell-side analysts will follow the prepared remarks. This call is being webcast and will be available for replay after completion. The replay link can be found in the investor events section of our website. I would now like to turn the call over to our Chief Executive Officer, Sean Singh.

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

Thank you, Sean. It's great to be part of this team. As Sean mentioned, I'd like to highlight a few financial results from our fiscal year 2024 second quarter. I also encourage everyone to review our quarterly report on Form 10-Q filed with the SEC earlier this afternoon for additional details and disclosures. Research and development expenses decreased by approximately $9 million from $12 million to $3.9 million for the quarter ended September 30, 2022 and 2023, respectively. The decrease in R&D expenses primarily due to the completing the initial studies of our Palisades Phase III program in SAD, as well as reduced non-clinical development, regulatory, and outsourced manufacturing activities for Fasunidol and Nitrobone. General and administrative expenses decreased by approximately $.5 million from $3.7 million for the quarter ended September 30th, 2022, to $3.2 million for the quarter ended September 30th, 2023. primarily due to decreased compensation, consulting fees, and professional services. Our net loss attributed to common stockholders for the quarter ended September 30, 2023, was approximately $6.6 million versus a net loss of approximately $17.5 million for the quarter ended September 30, 2022. At September 30, 2023, DISAGEN had cash and cash equivalents of approximately $37.6 million. Since September 30th, we received approximately $93.5 million in net proceeds from an underwritten equity financing and $1.5 million from Fuji Pharma under our exclusive negotiation agreement. If our Palisade Phase 3 program is successful, we believe that our current cash provision will be sufficient to fund our operations through potential submission of a U.S. new drug application for Fasinidol for the acute treatment of anxiety in adults with SAB. 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 Sean.

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

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

Yes, sir. At this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star 1 to ask a question. We will pause for a moment to allow questions to queue.

Our first question comes from Andrew Sy, Jefferies.

Hey, good afternoon. I appreciate you taking the questions and congrats on the progress. Great to see you making strides here. So obviously the next step for PHA 94B is to start, you know, the Palisade III in first half 2024. So what needs to be done for you to start it earlier in Q1? rather than Q2, what exactly are the bottlenecks here? Thanks.

Thanks, Andrew. Appreciate the question. Agree. Thanks to INN. It is easier to say PH94B than Fasadinol. We hope the world will get used to that soon enough. The answer is we are targeting Q1. And so we are, everything we're doing right now is in preparation to launch Palisade III in the first quarter of 2024. So all the pregame work, a lot of that's already been underway for several months now. And, of course, we bring a lot of knowledge from the prior studies to bear into that effort. So that's our target, and we'd expect to be able to have Palisade 4 follow hopefully early in the second quarter, early in the second half of 24. Okay, very good.

Can you summarize for us just one more time all the things you're going to do differently in Palisades 3 and 4 to ensure study execution? What removals slash deletions or additions are you making to these studies relative to the prior two studies?

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

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

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

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

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

Great. Thank you very much. All right. Thanks, Andrew.

Our next question comes from Tim Lugum with William Blair.

Thanks for taking the question. Can you update us on the lack of abuse potential for Saz-Dynol? I think I got that right. I know you have some preclinical data around that, but I'm wondering if there's anything incremental coming out of CalSU and just, you know, maybe your interactions with the agency as well.

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

That's great to hear. Thank you.

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

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

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