Vistagen Therapeutics, Inc. (VTGN) Earnings Call Transcript & Summary

Good day, everyone. Thank you for standing by. Welcome to the Vistagen Therapeutics Corporate Update Conference Call and Webcast. Please note that today's conference is being recorded. At this time, I'd like to turn the conference over to your host, Mark McPartland, Senior Vice President, Investor Relations at Vistagen. Mark, please go ahead.

Thank you, Michelle, and good morning, everyone. Welcome, and thank you for joining us. In a press release issued earlier this morning, Vistagen announced top line results and post-hoc analyses of data from our PALISADE-4 Phase III public speaking challenge trial, evaluating fasedienol for acute treatment of social anxiety disorder as well as our planned next steps in fasedienol program. The announcement is available in the Investors section of our website. During today's call, we will briefly review the PALISADE-4 top line and post-hoc data, provide perspective on the findings within the broader fasedienol clinical development program and outline the company's planned regulatory and development plans. During today's call, we will make forward-looking statements regarding our business development programs, regulatory strategy, financial outlook and other matters based on our current expectations. These forward-looking statements speak only as of today and involve risks and uncertainties that could cause actual results to differ materially from those anticipated. Additional information regarding these risks and uncertainties is included in our most recent filings with the SEC, including our annual report on Form 10-K and 10-Q, today's current report on Form 8-K. Except as required by law, we undertake no duty to update any forward-looking statements. With the formalities out of the way, we welcome our stockholders, investment community and others joining us today. I'm joined on the call with Shawn Singh, our President and Chief Executive Officer; Dr. Angel Angelov, our Chief Medical Officer; and Josh Prince, our Chief Operating Officer. Shawn will provide some opening remarks, and then Dr. Angelov will provide an overview of the primary and post-hoc analyses from our PALISADE-4 top line results and his perspectives on their significance, along with the full post-hoc data from our PALISADE program. Followed by a brief operational commentary and closing remarks by Shawn. After that, we'll open up the call for questions from the sell-side analysts. And with that, I would like to turn the call over to Shawn.

Thank you, Mark, and good morning, everyone. As disclosed in today's press release, PALISADE-4 did not achieve its primary or secondary endpoints in the overall trial population. Those results certainly were disappointing. However, our multiple post-hoc analyses of the data in patients with very severe social anxiety disorder amounting to slightly over half of the patients randomized in the trial demonstrates significant findings we believe are important from a clinical and regulatory perspectives. Today's call and the slide deck covered by our Form 8-K just filed this morning are intended to share those findings with you. Although these findings do not change the primary outcome of PALISADE-4, they provide us important scientific insight into the broader fasedienol development program, and they have helped us inform our plans to meet with the FDA to discuss a transition from our previous registrational pathway for fasedienol in social anxiety disorder involving an acute symptom treatment to a potential registrational pathway focused on the overall treatment of social anxiety disorder over time. Today's call has 2 key objectives: first, to review the PALISADE-4 results; second, to share the additional analyses we conducted and explain how those findings fit within the large body of data and totality of evidence generated across our development of fasedienol in social anxiety disorder over the years. We will discuss how that data and evidence support our plan to meet with the FDA with the goal of mapping a clear registrational pathway forward for fasedienol to help improve the lives of patients with this highly prevalent disorder who have not seen a new FDA-approved treatment alternative in over 20 years. With that, it's my pleasure to turn the call over to our Chief Medical Officer, Dr. Angel Angelov, to walk you through primary and post-hoc data from PALISADE-4 and pooled post-hoc data from across the PALISADE program in patients with very severe social anxiety disorder. Angel?

Thank you, Shawn. Before reviewing PALISADE-4 specifically, I would like to briefly place today's results in the context of the broader PALISADE development program. The PALISADE program was designed to evaluate fasedienol as an on-demand acute treatment for social anxiety disorder using a standardized 5-minute public speaking challenge, a minute-by-minute assessment using the subjective units of distress scale, or SUDS, with a onetime drug administration model. Across the PALISADE program, we've accumulated a substantial efficacy and safety database, including more than 1,500 exposed participants. Today's discussion focuses primarily on our PALISADE-4 trial, but our interpretations and current plans are informed by the complete body of evidence generated across the entire fasedienol development program, including the PALISADE program, Phase II studies, large open-label studies on an outpatient basis and Phase I electrophysiological studies. As Shawn mentioned, the primary analysis of PALISADE-4 did not achieve statistical significance on the primary or secondary endpoints in the overall trial population. These are the results we reported this morning, and I'd like to begin by reviewing those data. In the overall study population of 238 patients, the least-squares mean change from baseline on the SUDS was minus 9.5 points for patients receiving fasedienol compared with minus 11.4 points for patients receiving placebo, resulting in a treatment difference of 1.9 points, which was not statistically significant. Similarly, we did not observe statistically significant treatment difference between fasedienol and placebo on the secondary endpoints evaluated in the study, although there is a noticeable difference in the patient perspective on efficacy in the PGI-C data. Importantly, safety and tolerability data for fasedienol remained favorable, consistent with observations throughout the entire clinical development program. No new safety signals were identified, and the overall safety findings were consistent with previous placebo-controlled studies. While the results in the primary analysis were not what we had hoped for, completing the primary analysis represented the first step in understanding the study. As is customary following any large Phase III trial, we conducted a comprehensive scientific review of the complete data set to better understand the findings and evaluate whether additional observations might help inform future development decisions. I'd now like to provide important context for the additional analysis that follow. During the data review, we examined several factors, including the overall distribution of treatment responses, placebo variability, site operations, baseline disease characteristics and the consistency of treatment effects observed across the data set. That review identified several observations that we believe warranted additional evaluation. The first of those observations is placebo response variability. We believe that is very important for understanding the overall study results. While the treatment effect observed among patients receiving fasedienol was generally comparable with prior studies, placebo responses exhibited greater variability, contributing to a broader distribution of outcomes. We also observed notable differences between the mean and median placebo responses, indicating there's a relatively small number of extreme values for placebo that influence the overall distribution of placebo outcomes. That led us to a deeper exploration of placebo behavior related to severity subpopulations in the trial and in the context of the public speaking challenge, which is designed to detect an acute anxiolytic effect. As noted, when we compare PALISADE-4 with prior studies in the PALISADE program, the level of improvement observed among patients receiving fasedienol remained relatively consistent. In contrast, greater variability appeared to be concentrated within placebo responses rather than the active treatment responses. In our subpopulation analysis, we focused on patients with very severe social anxiety disorder defined as having a baseline score on the Liebowitz Social Anxiety Scale, or LSAS, of 95 or greater at visit 1 screening. We wondered whether subjects having more severe anxiety would be less likely to show a large improvement on placebo. This very severe LSAS subgroup included 123 patients, just over half of the overall study population. The LSAS is one of the most used clinician-rated measures of social anxiety disorder severity in clinical research and has served as the primary efficacy endpoint in the registrational trial supporting all currently approved pharmacologic therapies for the treatment of social anxiety disorder. In this post-hoc analysis of very severe social anxiety disorder patients, fasedienol demonstrated a nominally statistically significant improvement compared with placebo on the trial's primary efficacy measure. The least-square mean change from baseline in the SUDS score. Patients receiving fasedienol achieved LS mean change from baseline of minus 12.8 points compared with only minus 3.7 points for placebo, representing a treatment difference of negative 9.1 points with a nominal p-value of 0.036. PGI-C percent responders, a patient-reported secondary endpoint also showed nominal statistical significance in this very high severity subpopulation. The largest driver of efficacy for the post-hoc subpopulation was the filter for disease severity. The additional filters who saw ceiling effects and [indiscernible] improvement of placebo at Visit 2 when worsening anxiety is expected by the anxiety-provoking public speaking challenge contributed less but widened the separation of fasedienol from placebo. We applied the same filter approach to a post-hoc pooled analysis, first for PALISADE 3 and 4, then for PALISADE 1, 3 and 4 and finally, for all 4 Phase III trials in the PALISADE program. The totality of data to date from the fasedienol development program, including the post-hoc pool data in the very severe patient subpopulation, supports the hypothesis that fasedienol's acute anxiolytic signal may be the most detectable when the study population has sufficient baseline trait anxiety like that in the very severe social anxiety subpopulation. And the endpoint is not overwhelmed by noise from the public speaking challenge. These findings should be interpreted in the context of the overall data set for the development program. When viewed together with the favorable safety and tolerability data observed throughout the PALISADE program, our positive PALISADE-2 Phase III trial and other clinical evidence generated across the development program, we believe these data provide important scientific and clinical basis for discussions with the FDA regarding the potential future registrational pathway for fasedienol. Before I turn the call back to Shawn to discuss our planned FDA engagement, I'd like to briefly comment on another important component of the overall development program, our accumulated safety knowledge. In addition to the efficacy data we've discussed, fasedienol development program has now accumulated a substantial safety database with more than 1,500 participants exposed to fasedienol, including more than 300 with at least 6 months of exposure and more than 100 with at least 12 months of exposure in outpatient settings. No new safety signals have been identified in PALISADE-4, and the favorable safety and tolerability data have remained consistent throughout the clinical development program. We believe this safety database, together with the efficacy observations discussed today and the broader body of evidence generated across the PALISADE program provide important context for our planned discussions with the FDA regarding future development of fasedienol. With that, I'll turn the call back to Shawn.

Thank you, Angel. Evaluating the totality of evidence across the fasedienol development program with a goal of establishing a clear registrational pathway forward for this asset. Based on the totality of data to date, our immediate priority is to engage with the FDA to discuss a plan to transition away from the acute treatment of social anxiety disorder measured by the SUDS to the treatment of social anxiety disorder measured by the LSAS, consistent with regulatory precedent supporting the 3 FDA-approved antidepressants for treatment of social anxiety disorder. We plan to seek agreement to pursue a single trial registrational pathway with confirmatory evidence under the FDA's draft guidance to industry published just a little over a week ago. That trial would be designed to evaluate fasedienol's potential to treat social anxiety disorder over time in a Phase III outpatient trial with the LSAS as the primary endpoint. Confirmatory evidence would include positive data from our PALISADE-2 Phase III trial, the data that we've shared with you today, our placebo-controlled Phase II clinical trials, LSAS related open-label data and the aggregate safety data Angel just discussed with you. We also continue to expect top line results from the randomized portion of our Phase II repeat dose study later this quarter -- next quarter. As we previously shared, the design of that study was informed by FDA feedback to evaluate repeat dosing, dosing interval, dose response and duration of effect. At the same time, we will remain financially disciplined based on our current operating plans and previously announced cost management initiatives we continue to expect our cash resources to support our operations into 2027. Beyond fasedienol, we remain confident about and committed to advancing our broader Pherine pipeline, including preparations for the continued clinical development of our nonsystemic pherine, itruvone for major depressive disorder and refisolone for menopausal hot flashes. We believe the totality of evidence from our fasedienol development program, including the post-hoc analysis and insights we've discussed with you today, support confidence in fasedienol's therapeutic potential to improve the lives of over 30 million individuals in the U.S. living day after day, most for many years, with the impact of social anxiety disorder has on their daily lives. We are grateful for all involved with PALISADE-4. Your participation made a difference, a very big difference, and we look forward to engaging with the FDA and updating investors as we move forward. With that, I'll turn the call back to Mark to begin a brief Q&A period.

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

Thank you. [Operator Instructions] And the first question will come from Paul Matteis with Stifel. Your line is now open.

On the switch to the LSAS, can you talk about some of the historical data with fasedienol and LSAS? I thought I remember that in some of the earlier studies, this was a more challenging endpoint or a less sensitive endpoint, which might be why you went with the SUDS. My second question is just in this severe population subgroup, it looks like there might be a site excluded or certain patients excluded from that analysis. So maybe just talk about the rationale there. And then third, I guess, given the lack of difference overall in the study, if the fact that there seems to be the signal in severe, does that mean that the mild -- in the milder population or the moderate to mild population placebo did better? And if so, how would you reconcile that?

Great. Thanks a lot, Paul. Appreciate the question. So your first question refers to, I think, the placebo-controlled Phase II crossover study. So I'll let Dr. Angelov address that.

Yes. So we did study in the Phase II program where beyond the SUDS that was used in that study, we also had LSAS assessment that came at the weekly intervals that the study was ongoing. It was a 2-week study where patients received fasedienol or placebo. And after 2 weeks, they switched to the opposite group's drug. So 2 weeks of fasedienol after that 2 weeks of placebo and then in the other arm, the opposite way. What we saw in that study was that the LSAS improved at a level that was statistically significant for a relatively small study that showed that LSAS did improve over time and really generated a lot of interest in the possibility of LSAS as a primary endpoint in future studies.

Paul, you might remember that was Dr. Liebowitz in that study. He's the innovator, of course, of the Liebowitz Social Anxiety Scale or the LSAS. And so that -- what we liked in that study was the folks that got the drug first before they crossed over to placebo. We actually saw a carryover effect, which is consistent with how we think this drug's MOA operates, which is that you build confidence over time and your symptoms knock down in acute settings. And then as you continue to engage and not avoid your stressors, you see that confidence cognitively build over time.

Yes. To the second question, in the exclusions that we had, we had one site excluded. However, it was because of unreliable data, and it was all flagged before database lock. When we excluded that site, there was no change from placebo on the data that we're reviewing. We excluded the site unreliable data and not as part of the severe subpopulation review. The subpopulation review dramatically diverged when we have the LSAS 95 and above cutoff. The additional the additional filters of ceiling subscores, just to give you a sense, when you're at 90 to 100, you're at the max of that scale. And then you go through a public speaking challenge that is supposed to induce additional anxiety. There's no way that, that scale can continue going up. So we excluded patients with that type of ceiling effect, and there was only 5 of them that had that. And then the additional filter brought in just one more person because of the way that huge placebo response observed in the visit 2, which was all placebo run-in. So overall, the biggest effect comes from the LSAS 95 and above cutoff and then the other filters just nominally contributed but didn't create the separation that the severity subpopulation did. And to your last point, one of the things that is important to understand is that it's just -- it's not that the drug may not work in milder cases. It is easier to see the signal when you have this higher level of anxiety based on. So that is why it's much more prominent and less variability was seen with the placebo response with the severe subpopulation.

And our next question is going to come from Myles Minter with William Blair. Your line is open.

Just back on like the excluded data in that post-hoc analysis as well. I think you exclude a handful of patients that coming into the public speaking challenge, I think they were scoring subscores of greater than 90 and maybe that the public speaking challenge because you're so anxious to start with didn't get that rise and fall that we'd expect in the anticipation performance sort of stage of that. Maybe you can talk about the effect on that. And then if I break down PAL 1, 2, 3, 4 individually and don't pool them, do you have on a post-hoc basis a static effect in PAL 2 for this severe population given that is your positive trial from the overall population?

The first question related to the ceiling effect, I think, Myles. Is that accurate? The scale -- the subscale 0 to 100 and those that, there's a handful that were 90 to 100. And when you are starting at that spot at your baseline, there isn't really any potential for the instrument to measure a benefit because there's not much room between 90 and where you are between 90 and 100. So that ceiling effect did impact and we excluded -- what was it?

5 patients.

5 subjects in that regard.

Yes. And from the -- just to really go through those 3 numbers, 15 were excluded from Site 1. However, only 12 of those had actually LSAS 95 and above. then 5 were excluded for the ceiling SUDS scores that Shawn just talked about. And there was one additional patient that was excluded for this pronounced really placebo response where they paradoxically improved while they're getting provoked with the public speaking challenge. So this is really the total numbers of PALISADE-4 in terms of exclusions. And the overall number that you see is primarily driven by 98 subjects that came from the cutoff of the LSAS 95 and above.

Then the next question goes to the severity in PAL-2 alone on a stand-alone basis.

Correct.

Yes, we looked at that, and we did not see the same type of separation that we see in PAL-4, really the combined data of 3 and 4 and really the total full data. Why do we think that is? We didn't have the variability of placebo responses that we see in PAL-4. That was really the biggest driver for the results that we saw in the overall population. In PALISADE-2, there was no such variability in the placebo responses. Hence, there was really no specific subpopulation that carried the overall results.

Angelov, I would add to that, too, PALISADE-2 had a smaller sample size. So when you start cutting, you're getting to much smaller ends. And that's one of the advantages, obviously, of pooled is you have bigger ends to show that separation.

Yes, correct. Because directionally, as you can imagine, when you have a positive trial, actually all the subpopulation, the severe and the less severe, they all were directionally pointing in the same way, fasedienol was better than placebo. But when you have the lower ends, getting to statistical significance makes it much, much harder.

And the next question is going to come from Andrew Tsai with Jefferies.

The first one in terms of the history of the development program, I feel like there was a period of time, maybe right after PALISADE-1, but actually before PALISADE-2, where you did consider pivoting to LSAS and you had FDA discussions back then. So can you remind us the degree of alignment or agreement you got with the FDA to look at LSAS just as a reminder? And then I have more follow-ups.

Yes. Thanks, Andrew. Good to hear from you. The meeting that we had with the FDA in the spring of 2023 was focused primarily on whether or not the LSAS remained a valid and reliable endpoint for a registrational pathway similar to the antidepressants, 3 antidepressants that were approved at that point about 20 years ago. And so because the agency has not approved anything since over 20 years from now, 23 now at this point, I think Effexor was the last one. We needed to -- in case we wanted to move to that direction, we need to understand whether the agency was still aligned on that endpoint being valid and reliable. And we've got a definitive yes on that one.

Makes sense. And now that you're pursuing an LSAS in the next Phase III, would this be a daily kind of fixed dosing paradigm? Or is it still treat as needed? And is it fair that the study duration might be a little bit longer, more consistent with the prior previous drugs, the antidepressants, maybe it's like an 8-week paradigm. I don't know. But maybe talk about that different.

Yes, that's certainly something we'll be addressing with the agency. The MOA and building the program around the MOA has always been central to our thinking. And the way this drug works is with rapid onset effect that we see. So we discussed that with the FDA and certainly, an over time perspective with the LSAS being more of a movie as opposed to a quick snapshot, we would expect the study it doesn't necessarily have to be exactly the same as the 12-week structure that the approved drugs have. That's something we'll discuss with the agency. Those obviously have a different MOA takes a lot longer, as you know, for those types of drugs to kick in. But we'll have that discussion with the FDA, and we'd expect it to be more along the lines of the crossover study, but it's something certainly will be discussed with them as an immediate priority.

Shawn, I would just also add to that, that back then and obviously still holds true now, from the crossover study that Angelov mentioned, we had -- in 2 weeks, we had about the same magnitude of effect that the approved SSRIs had in 12 weeks. And so to your point, we've looked at what's the potential study duration, potentially less than 12 weeks, but obviously longer than what we did recently. And then I think the other piece is just the continued open-label data that we've driven, granted it's not placebo-controlled, but it's the other thing that gives us some confidence in hopefully the future study where you see LSAS decline over time.

Okay. And very last question. I think there was this separate redosing study that could read out soon, too, also in Q3. Would you still plan to share those results regardless of the outcome? Or is that kind of in the back burner for now?

Absolutely. Yes, absolutely. That is on track with prior guidance. So absolutely, we would. And it would also be part of the overall totality of data and discussion with the FDA as we map out under the single trial guidance, which really is extremely helpful to have this draft guidance and its recency is also very important to us about a single trial pathway. So those are the things that we want to get in front of the FDA as soon as we can and discuss what we and they believe is an appropriate path forward given the body of work that's been generated up to this point, which is absolutely robust. So looking forward to it.

Thank you and I am showing no further questions in the queue at this time.

Thank you, operator, and thank you, everyone, who joined us on the call today for your thoughtful questions. If anyone on today's call has additional questions, please feel free to contact us at [email protected] or through the Contacts section of our website. Thank you again for your time and participation and your continued interest and support in Vistagen. This concludes today's conference call. Have a great day.

Thank you, and you may now disconnect.