Q2 2023 VistaGen Therapeutics Inc Earnings Call

Good day and welcome to the Vista Gen second quarter fiscal year 2023 results Conference call. Today's conference is being recorded at this time I would like to turn the conference over to Mark leather Vice President of Investor Relations. Please go ahead Sir.

Thank you Johnny Hello, and welcome to <unk> Conference call covering our second quarter of fiscal year 2023 financial results and business update I'm, Mark flatter Vice President of Investor Relations Mr. Jim. Thank.

Thank you for joining us today and welcome to our stockholders analysts and anyone has taken an interest in decision. Joining me today are Sean <unk>, Our Chief Executive Officer, and Jerry Dodson, Our Chief Financial Officer.

Format for this call will consist of prepared remarks from management, followed by a brief opportunity from questions from sell side analysts. This call is being webcast and will be available for replay link to access the replay can be found in the investors IR calendar section of our website Vista Gen Dot com on today's call. We will make forward looking statements regarding our business based on current.

Patients and current information the forward looking statements speak only as of today and except as required by law, we do not assume any duty to update in the future any forward looking statements 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.

We may make today additional information concerning risks and factors that could affect our business and financial results is included in our most recent quarterly report on Form 10-Q 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.

<unk> on our website and the SEC's website now I'd like to turn the call over to our Chief Executive Officer, Sean Zhang.

Thank you Mark and good afternoon, everyone. Thank you for joining the call.

As I've said many times Vista Gen remains laser focused on addressing the significant and growing unmet mental health needs and communities across the globe.

As I discussed last quarter with the U S surgeon general and other leaders throughout the ecosystem focused on mental health and the epidemic.

World needs a marked change in the stigma surrounding mental illness available treatment options and the overall trajectory of mental health care.

Individuals across a diverse range of communities need faster acting treatment options that are not associated with unwanted side effects or risks of misuse overuse or addiction. It's.

Crystal clear to our team at Vista and that patients are counting on us.

Families are counting on us and communities are counting on us.

So we're steadfast in our mission and we're confident in our strategy and the potential of our pipeline to shift the treatment paradigm for anxiety and depression disorders.

Improve the trajectory of mental health care, one mind at a time.

So let's get into some of the detail about progress across our pipeline starting with our palisade phase III program for ph 94 B.

And social anxiety disorder or <unk>.

Our palisade, one and policy two double blind placebo controlled phase III studies, and our palisade open label study.

While the outcome of palisade, one was a setback that will extend our timeline for bringing page 94 being a market. It was by no means the end of the line for Pete's 94 B.

Quite to the contrary.

Setbacks, especially neuro psychiatry, Ken certainly setup comebacks and Thats, where we believe we are at today with th 94 B <unk>.

We've been gathering and analyzing the data from this study and have identified a few areas, especially related to the impacts of the pandemic.

And that May have contributed to the results that were so different from what we've observed in previous clinical studies of ph 90 for me.

Including the recently.

SaaS Palisade open label Safety study, which we'll talk about later on the call.

We're making every effort possible to minimize these potential issues as we advance further in the development of 94, B and C D and other anxiety disorders, including recruitment and screening efficiencies and rigorous protocol adherence.

The second component of our palisade phase III program in SCD is our palisade to study.

As previously noted this study was paused during the last quarter to allow for an interim analysis to be performed by independent biostatistician and to determine whether it would be prudent to continue with this study as originally planned or to close it and.

And as we announced in September after they conducted an unblinded interim analysis of the 140 subjects, who had completed the study at the time the independent Biostatistician recommended that we continue policy to as planned to our target enrollment of 208 subjects.

So that's what we'll do and we'll do that armed with the recommendation and the insights that informed that inform our preparations for the restart of palisade too.

And we're on track to restart that study in the near term and deliver top line results in 2023.

The third important component of our palisade Phase III program is the palisade open label study, which we initiated in October of 2021 to evaluate the safety and Tolerability of page 94, being adult subjects with SPD.

Taken as needed prior to acute anxiety, provoking social and performance situations in their daily life.

Up to four times per day and over a period of up to 12 months.

In addition to assessing safety and Tolerability. We also included several exploratory efficacy objectives, including assessment of ph 94, BS potential to achieve overall symptom reduction and improvement in the severity of SAP D. As measured by the <unk> social anxiety scale, that's the efficacy endpoint required by the <unk>.

For all of the prior approvals.

In August and to conserve cash and also to assess these key safety Tolerability and <unk> data, we closed recruitment and enrollment in that palisade open label study.

And as we reported today are preliminary analysis now of nearly 400 subjects in that final dataset for the palisade open label study.

We see that there was robust functional improvement in anxiety provoking social and performance situations in the daily life of the subjects as measured by the <unk> SaaS or the LIBOR social anxiety scale. So as to efficacy. We now have two important datasets supporting page 94, <unk> ability to improve <unk>.

<unk> scores the palisade open label study over a period of one month and beyond and the published double blind placebo controlled phase II real World crossover study after two weeks of use.

These two studies combined demonstrate the potential for ph 94, b to achieve robust overall reduction in the symptoms of <unk> and improvement in the severity of SCD overtime as measured by the <unk> SaaS.

We believe the all SaaS measurements over time may be very well suited for a phase III trial to demonstrate the efficacy and the true impact of Peach 94, B on patients' lives given that it measures overall improvement in disease disease severity.

Capturing the reduction in fear and anxiety as well as the avoidance of social and performance situations. These studies further reinforce our belief in the potential of <unk> 94, B when it's used acutely as needed in daily life.

To provide onset rapid onset clinically meaningful and sustained response in SCD patients all with a very favorable safety and Tolerability profile.

So we're planning to meet with the FDA during the first quarter of 'twenty, three and our objective for that meeting will be to reach a consensus with the FDA around a clearly defined next step plan for further development of ph 94 B NSA.

Moving to our second target indication for page 94, B adjustment disorder with anxiety, we're progressing in our phase Iia clinical trial in that indication and as noted earlier today, we've completed enrollment in this study which is ongoing.

An exploratory double blind placebo controlled phase Iia clinical trial that is designed to evaluate again, the efficacy safety and Tolerability of <unk> 94, <unk> as a potential treatment of adults with adjustment disorder with anxiety.

Study protocol in this phase Iia study involves multiple administration assessments of <unk> 94 B.

Which in the study it's administered four times a day for 28 days. So we anticipate announcing topline results from this study during the first quarter of calendar 'twenty three.

We've also made very notable progress with our second Ferring asset ph Ted.

And you might recall that in a small published exploratory randomized double blind placebo controlled phase Iia study of ph 10 in major depressive disorder.

<unk> was conducted in Mexico at the six four microgram dose that was administered intra nasally twice a day for eight weeks ph tend significantly reduce depressive symptoms as early as one week based on the 17 item Hamilton depression scale scores compared to placebo.

Two two.

<unk> was also as 94 B is very well tolerated did not cause any psychological side effects needs association or hallucinations or other safety concerns that you might.

Find associated with other rapid onset.

Therapy, such as ketamine.

So we recently submitted last quarter, our U S investigational new drug application to the FDA to enable us to initiate a small and very brief phase one clinical study of <unk> in the U S in healthy volunteers.

So should the FDA permitted us to proceed we plan to initiate that study before the end of this calendar year.

And this study is intended to facilitate moving back into phase II development Phase II development at this time, a ph 10 in the U S and either on our own or with a collaborator and our target is for the ph tend to become a potential fast acting stand alone treatment for Mds.

So similar to the robust anxiety market. We know there is a significant unmet need in the major depressive disorder.

Universe, where current treatments are just either undesirable or inadequate or both and with a differentiated mechanism of action that we have designed into ph 10 designed to be fast acting non systemic non sedating th soon as potential to radically shift the treatment paradigm for MTV, having this.

Asset in the clinic in the U S. It's a very important milestone on our path to bringing ph tend to the many individuals who are suffering and battling with depression disorders.

Finally, as <unk> hundred one in combination with FDA approved oral probenecid, our exploratory phase <unk> drug drug interaction study of that combination is ongoing we anticipate completing the study during.

The second calendar quarter of 2023 after that we'll assess all of the 101 data that we have generated to date preclinical and clinical and consider.

Exploratory phase III development of <unk> 101 combination with probenecid, either on our own Oregon with a collaborator as potential oral treatment for CNS disorders that involve the NMDA receptor.

So as we stand at the threshold of having now all three of our CNS drug candidates in active clinical trials.

We believe we're in a position of notable strength.

<unk> team with strong and novel pipeline, that's aimed at large and growing markets.

With tremendous need and a strong mission that drives us to deliver better solutions, all intended to improvement of health care and improve lives.

Very exciting time for our company market conditions, notwithstanding and we believe that we are very well positioned for 2023 and beyond.

Now our CFO , Jay Dobson will summarize some of the highlights of our financial results for the second quarter.

Gary.

Thank you Sean.

As Sean mentioned I'm, just going to highlight a few of the financial results from the second quarter of our fiscal year 2023.

I would also encourage everyone to review our quarterly report on Form 10-Q, which we filed with the SEC earlier. This afternoon for additional details and disclosures.

As Sean noted previously.

Timeline to expected FDA and.

Got the FDA approval and commercialization of ph 94, B NSA has been extended and as a result.

Mounting standards require that we update our estimates for revenue recognition that are tied to those milestones.

We recorded an adjustment to revenue in the quarter ended September 32000 22022.

Necessary based on the revised forecast of our future development timetable for ph 94 B.

Again, I would ask that you refer to the Form 10-Q filed earlier today for much more detailed information on that subject.

Our research and development expense increased by $2 $9 million from $10 million to $12 9 million for the quarter ended September 32021, and 2022, respectively.

This increase is primarily due to the expense related to conducting our palisade phase III program for ph 94, B and Shawn has already described that program includes palisade, one palisade too and the palisade open label study.

We also conducted the ph 94, B phase Iia study and adjustment disorder with anxiety and other non clinical development regulatory and outsourced manufacturing activities related to both <unk> hundred 94, B and ph Tim.

Our general and administrative expenses increased to approximately $3 7 million for the quarter ended September 30.

2022, compared to approximately $3 2 million for the quarter ended September 32021 the.

The primary components of that increase include expanded investor and public relations and corporate awareness initiatives and the expense of some other professional services that we incurred during the period.

Our net loss attributable to common stockholders for the quarter ended September 32022 was approximately $17 5 million.

<unk> net loss of approximately $13 2 million for the quarter ended September 32021.

At September 32022, the company had cash and cash equivalents of approximately $35 3 million.

As a result of the expected reduction in research and development costs, resulting from the conclusion of pulling.

Clinical trials as Ron discussed earlier, along with the deferral of some pre commercialization activities, we expect to see lower burn rates over the next few quarters.

In light of our cash conservation efforts and while we maintain optimistic assumptions for future data Readouts. We believe our current cash should extend through a series of potential key milestones and data readouts.

2023.

Again, I would recommend that you refer to our quarterly report on Form 10-Q filed earlier today for additional details and disclosures.

So Ron I will turn the call back to you now.

Great. Thanks, Jerry So our core mission remains the same to improve mental health and the well being of people worldwide.

And as we continue to advance the next phases of our corporate development were confident in our strategy and we're confident in the potential potential of our pipeline to deliver relief to patients suffering from anxiety from depression and from other CNS related disorders and that in doing so we can also deliver extraordinary value for our stockholders.

So on behalf of all the team at Vista Gen. I want to thank you for the privilege and for the opportunity to make a difference.

One mind at a time.

Thank you Sean This concludes our prepared remarks, operator, we would like now to open up the question to open up the call to questions from analysts.

Thank you.

Like to ask a question please signal by pressing star one on your telephone keypad.

Speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment and that is star one for questions.

And we will hear first from Andrew Tsai of Jefferies.

Oh thanks.

Sorry, I hopped on from another call and apologies.

If you've answered this already.

I guess this interim analysis that they happen to look at.

Do they look at the phase III and did they look at the actual efficacy on sides.

Or is it just the inputs to the powering assumptions. That's my first question.

Hey, Andrew Great to talk to you they looked at all of the unblinded data available for the 140 subjects that are completed Perl to up to the point where are we positive.

So that would include SaaS okay.

Mhm.

The objective of that.

Yeah go ahead.

I'm sorry to cut you off but you go ahead.

Well I was just going to say as we've talked about the objective of that analysis first and foremost was to assess whether it was futile for us to continue the study or whether it was prudent to continue the study and so that is clearly what we got feedback was obviously it wasn't feudal so there had been a trend what degree of trend.

We don't know we don't have access to the data.

We didn't then we don't know so its an independent third party global Biostatistician team that looked at it.

So as a result of that recommendation it makes sense obviously to continue.

Okay.

So then the natural question would be how can the second phase III b seemingly be looking pretty different.

What happened in <unk>.

How do we reconcile that.

Well, there's a lot of things that are different, especially the macro universe associated with the pandemic I mean, a lot of the issues associated with what we've looked at.

And then the potential corrective actions associated with it do tie in to some degree to the pandemic.

And where we are today versus where we are during a lot of that Perl. One trial has significantly different in the population absenteeism different site turn it over is different.

The ability to get insights and train and enforce rigorous protocol adherence.

Those kinds of things also to really counter against some of the potential unforeseen biological challenges that emerged through data external data not our data during the course of the two studies, especially as it relates to the.

Nasal epithelium cells that are associated with the chemosensory receptors, where we dropped 94 beat directly onto so there are things that can be done to ensure that people have active and fully regenerate if they ever had COVID-19.

Or to ensure that they have the ability to smell. So theres clinical factory tests, there's other things that we can assess upfront now that.

We really weren't as much in play as before.

But the other thing is to Theres different sites. This is a distinct same protocol, but it is a different set of sites involved in the study and certainly conducted at a different time. So we're doing everything we can do in terms of corrected actions that can be implemented in the palisade II phase III trial before it'll restarted and we're being very careful in.

<unk> and systematic in the way that we assess any of the potential root causes of power one and apply the lessons learned from that effort into the restart of palisade too. So I really like where we stand I think we've done incredibly good work we've got some good good measures in place.

And looking forward to restarting the study.

Perfect and.

So is it fair to assume.

At this juncture are you guys leaning to the failure I apologize one being more of a <unk> execution operational seeing and you've kind of single that out to maybe the route of administration and many different types of pain.

Patients I guess internal during Covid I guess.

My question is.

Are you there.

How can we know for sure administrations can be done properly.

Going forward.

These changes, you're making pallets and can you perhaps.

Whether the F&B on board with that in terms of like insuring.

Ensuring patients are properly confidently administrating, yes. Thanks.

Yes.

So what you are alluding to is if people were to.

Inhale the drug put it too far up their nose and not spread directly at the mid septum that the drug would go into the respiratory system and not have the intended effect. The other potential situations that they don't have the cells. As a result of having had COVID-19 and not have those cells regenerate by the time they get into the study.

And whether or not they have any sense of smell. So there are things that can be done certainly things that no way with the FDA, we believe object too.

But importantly.

It's the case that every company as you well know has the risk of.

Of ensuring that training and the protocols are rigorously adhere to in that site visits are all done.

<unk> and regularly.

And without a lot of the barriers that were associated with the pandemic early on especially.

It's a lot easier to do that these days, while theres still COVID-19 protective <unk> in place at sites. There definitely has been a lot smoother rhythm in the ability to to train subjects to train Raiders to train investigators overall and when Youre working with.

Our novel MLA, It's a novel indication in many cases, because you haven't seen anything approved in a couple of decades. It does take that extra effort and we want to make sure that we've redoubled all efforts that coordinate with our CRO with the sites and the re education and retraining process. After the pause has been very and will be.

Very well focused on every best practice.

Can conceive to make that a smooth restart and completion of the study.

Thanks.

One very last question is going back to the interim yeah, I'm, just trying to determine how much weight.

We can give to this interim finding it could it be possibly kind of quote unquote, a false read and pardon my choice of words.

It.

Is it pretty compelling of the findings such that you would start another phase III potentially yes, yes. Thanks.

Look the key of that of that analysis was to determine whats the disciplined way forward. It would've been reckless to simply say on the result of palisade one okay, let's just keep going no matter. What it also wouldn't have been disciplined to simply stop the study, especially in the event that there was a trend and.

We prematurely remove the opportunity for that to be one of the anchors of an NDA. So we did the interim analysis with third parties that had full access to the data and relying on their professional expertise and the way that we submitted.

And the FDA agreed upon that analysis to be done and of course, we have to remain blinded to all of it because of.

Our bias related issues that operational bias issues that FDA was always worried about.

They came up with.

Exactly what we've reported and that certainly is sufficient enough to warrant.

Relatively modest additional spend to complete the study and we are on track to get that done.

When you don't have a study that is futile and you have a study that must have at least have a trend towards success. It makes sense to keep going in that study. So that was the basis that we.

Considered and that was the reason that we've decided to move forward with that now does that mean that.

Every future study of ph 90 for BNS.

Is to be the exact same design with a single assessment.

Very provocative in clinic public speaking challenge no it doesn't.

<unk>.

We will consider it so what we want with the FDA. While we are meeting with them is to generate optionality at palisade two is positive.

Puts us on one track if it's a trend with with a potentially significant effect size. That's another track if it's not successful thats yet another track so with multiple different options forward.

And one of the things is so encouraging about what we've seen in the open label study and the crossover study is that with the SaaS, which is the endpoint. The FDA is constantly used for approval of the prior drugs.

We're seeing some substantial improvements in the way that we think the drug will be used in the real world by clinicians by patients and Thats an important part of this so it could be that we marry up a different phase III design against what could be the outcome of palisade too or.

Or any combination of those outcomes that I discussed so we'll see we're very much looking forward to meeting with the FDA. While we are very happy to see also is the things that we've said before about abuse liability. When we had that press release that said comment at this time well we've got several hundred more subjects now under assessment.

That gives us further confidence about that as well. So it's got a it's got a very favorable safety profile and now we're seeing the ability for it to make a difference in people and what really matters in sandy.

You want people to gain confidence to engage in the things that previously stressed them out.

<unk> that were anxiety, provoking and fear and provoking situations, because that's that renewed confidence to engage in those situations with less dread and less anxiety, that's what the SaaS shows and that's what we want to achieve for the world with this drug so.

It's an exciting time and I think while we are certainly not happy with the outcome of <unk>, one definitely brought some teaching to the table.

And combining that with the rest of what we know about 94 beats a tremendously exciting moment.

Okay, Okay, alright fingers crossed and how things turn back around to the positive of course, thanks Andrew.

And we'll go next to Tim Lugo with William Blair.

Okay.

Thanks for the question and just following up on that.

The meeting with the agency how long do you think.

Before you guys had been scheduled.

And then.

Obviously, it's starting to go great.

Right.

That's a great outcome when can we expect top line.

Once that's restarted.

And then also with the off obviously, it's not as immediate different measurement.

Are you are you going to talk to the FDA about the next study potentially being more of a real world setting not a laboratory study.

Yeah, great questions, Tim Great to talk to you. Thank you for that so in terms of getting in front of the FDA. There's a 75 day track to get in front of them. So sometime in the middle of the second quarter is where we're earmarking at the moment to get in front of them now FDA.

It doesn't have to give you that they can always push it back a little bit, but that's roughly where we're expecting to land with the request in the background package. We will submit taking your third question certainly will include the totality of Av.

Of data that we've been seeing recently around SaaS as the endpoint FDA is very familiar with that as you know that's the three antidepressants approve that's the endpoint that supported the approval so it's a little different and such because.

There had not been anything yet approved on the basis of subs, but what we see with this drug again is designed to be used acutely, but when its used multiple times and we get multiple assessments.

See the kind of improvement in social functioning that really is exciting and it's what the world needs. It's what patients need in this particular indication. So it will be certainly part of the discussion.

And the outcome.

The decision tree that I laid out relating to palisade will also be a factor, but we want to get in front of them sooner than later and we may even start a phase III before.

Before the results of policy to her out so we can give further guidance on <unk> two when we restart but.

Ideally it could be a little bit after the holidays.

Always a great idea to start neuroscience studies in the holiday season, but we may do it.

Little bit before the holidays Christmas holidays, it's not right around the beginning of the year and then after that we will give you some guidance as to further guidance in the first part of the year.

Around topline result, okay, that's great.

Thanks for that and then could you just to take an alpha spend given the palisade too Joe is that okay.

I have to take a stand on that.

No.

Fair enough. Thank you so much.

We'll move next to Brian <unk> with Baird.

Hey, this is Luke on for Brian Thanks for taking the questions.

First SaaS I guess is there potential that data from both the LIBOR at scale and subs could eventually support a filing and in the open label study, where there any other average at the endpoints you measure that you might consider presenting in the first quarter.

Yeah, Hey look thanks for the question. So the answer is yes, I mean, one thing to remember is.

When J&J had the approval of S. Ketamine after a handful of failures in phase III and ultimately the NDA was supported by two different types.

Phase III studies.

One was a conventional parallel design and one was a randomized withdrawal study. So there is precedent in FDA for different types of studies.

With different primary endpoints to support an approval and again here.

Firstly, given the safety profile, we've seen so far it just opens up potential for dialogues for really some non traditional.

Maybe non traditional but maybe becoming more commonplace approaches by the division of psychiatric products to embrace.

Different.

<unk>, enabling phase.

Phase III program. So again, the subs is great because it allows the acute assessment.

But the <unk> SaaS is also great because it shows how it affects people in their daily lives over multiple administrations. So.

One of the reasons that we did the palisade studies as we palisade one as we did in <unk> is.

We were at a point in the World in June of 2020, when we got that consensus from FDA.

Ed.

Not in the Fda's preference.

Preference, nor nor ours to put people out into the world in the world with shelter in place to expose them to stressors in uncontrolled environment. So.

Having the <unk> study at.

Three sites in phase II.

Nearly statistically significant.

Outcome with the laboratory based study.

It was easy to go that direction at that time in the world.

Now with the heavily vaccinated world I mean, what we've seen in the open label.

Not an issue with Covid at all over multiple months, where people are exposed in dealing with this dressers over there of their daily life. So I think it's.

It's a nice combination to show again drug works acutely, but the more use it the better you get because you are more confident than you engaging the kinds of.

Situations that are really the sum total of your opportunity cost in your life. So.

We will definitely be discussing that with the agency.

Great and if I could that I guess, one did I hit both.

Oh, sorry, I forgot the other question.

What was the Hello.

The other one was.

Any other efficacy endpoints from the.

Yes.

Yes, that's a great point, sorry, they get too carried away about the potential of the drug.

The answer is yes, we will have in the first quarter.

There'll be some additional assessments, especially on like CGI and Pgi C. Those are.

Really what we've seen is that theyre consistent with the kinds of responses that we've seen at one month two months three months I mean, just terrific reductions in the <unk> SaaS as to severity and as to fear anxiety and avoidance.

Frequency so those will be included too.

As we put out the the other SaaS components.

Great and then just to add one more on adjustment disorder can you talk about the decision to use the Hamilton scale as the primary endpoint.

Provide some color on the degree of impact Youre looking for.

It's a different thats an exploratory study so we have to keep that part in mind, it's a small study and the hammer is a more appropriate.

Endpoint for that type of disorder.

A lot more like.

More like say, although not exactly but more like that because it's more of an all day everyday feeling rather than an episodic situation like you see typically with FCB. So the MAA was the conventional scale that was used for.

Antidepressants approved for <unk>.

So seeded with.

With Benzos that are used for that indication. So we thought it was the most appropriate and so.

The FDA is a common endpoint for this type of indication, although there havent been a lot of studies and adjustment disorder.

So.

Something along the lines of what those drugs had to see in terms of a difference between your placebo group in your treatment group.

Couple of points a few points wasn't much that you needed in order to get there.

To get those drugs approved in.

And similar indications again, not adjustment disorder, but we took teaching from.

Literature in and several other.

Indications, where handmade was involved to land on using that as the primary endpoint.

Great. Thanks, I'll hop back in queue.

Yes.

Thanks Luke.

And with no other questions in queue I would now like to turn the call back to Mark leather.

Excellent. Thanks, Jenny if you have any additional questions. Please do not hesitate to get in touch with us by E mailing IR at <unk> dot com or contacting the individuals listed in our press release issued today. We also encourage you to sign up for our website to stay connected with the latest news from Vista, Jim. Thank you for tuning in and we appreciate every.

His attention and support we look forward to keeping you current on our continuing progress. This concludes our call have a great day you may all disconnect now.

And again that concludes today's call. We thank you for your participation and again you may now disconnect.

Okay.

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