Prepared remarks
Good day, everyone. Thank you for standing by. Welcome to the Vistagen Therapeutics Fiscal Year 2026 Third Quarter Corporate Update Conference Call and Webcast. Please note that today's call is being recorded. At this time, I'd like to turn the call over to your host, Mark McPartland, Senior Vice President, Investor Relations at Vistagen. Mark?
Thank you, Lisa, and good afternoon, everyone, and welcome to our conference call and webcast. Earlier this afternoon, we filed our quarterly report on Form 10-Q and issued a press release for our fiscal year 2026 third quarter, which ended December 31, 2025, and provided an update of our progress across our clinical stage neuroscience program. We encourage you to review the PR and 10-Q which are both available in the Investors section of our website. Before we begin, please note that we'll be making forward-looking statements regarding our business during today's call based on current expectations and information. These forward-looking statements speak only as of today. Except as law requires, we do not assume any duty to update any forward-looking statements made today or in the future. Of course, forward-looking statements involve risks and uncertainties, and our actual results could differ materially from those anticipated by any forward-looking statements we make today. Additional information concerning risks and factors that could affect our business and our financial results are included in our fiscal year 2026 third quarter Form 10-Q and for the period ending December 31, 2025, and in future filings that we make with the SEC from time to time. Again, all of which are available in the Investors section of our website or, of course, on the SEC's website. With the formalities completed, we warmly welcome our stockholders, sell-side analysts and others interested in our programs in progress. I'm joined on our call today by Shawn Singh, our President and Chief Executive Officer; Josh Prince, our Chief Operating Officer; and Nick Tressler, our Chief Financial Officer. Shawn will provide a brief business and clinical update, and Josh and Nick will be available to provide additional feedback during the Q&A portion of our call. After our remarks, we'll take questions from the sell-side analysts participating on the call. A replay of the webcast will be available in the Events section of the Investor page of our website. With that taken care of, I'd now like to turn the call over to our President and CEO, Shawn Singh.
Thank you, Mark, and good afternoon, everyone. It's been an important quarter for our team with the completion of the randomized portion of our PALISADE-3 Phase III trial in social anxiety disorder, as guided, and focused efforts to learn from the study's results and drive high-quality and efficient execution of our ongoing PALISADE-4 Phase III trial. We have reviewed available data from PALISADE-3 and implemented moderate refinements, including retraining, site rationalization and operational enhancements to PALISADE-4. We've also been working with third-party collaborators on the implementation of innovative approaches to analyze the available data sets, not only from PALISADE-3, but also from the fasedienol studies across the PALISADE program, including both the randomized and the open-label trials. Our objective is to better understand the drivers of both fasedienol and placebo response using the substantial data collected from these studies to potentially inform optimized statistical models that consistently incorporate covariates and explanatory variables across all PALISADE studies, which could anchor future weight of evidence discussions with the FDA. The analyses are ongoing with our collaborators and involve the use of their proprietary artificial intelligence and machine learning technologies to identify nonspecific responses and understand and predict susceptibility to placebo response and likelihood of response to active drug in the context of the public speaking challenge study design. Overall, the full complement of ongoing work is focused on delivering practical operational understanding, predictors of response and enhanced statistical models with the potential to impact both PALISADE-4 and our regulatory strategy based on the totality of data from the PALISADE program. The open-label extension portion of PALISADE-3 and PALISADE-4 remains ongoing and is designed to evaluate the safety and tolerability of repeated as-needed intranasal administration of fasedienol in adults with social anxiety disorder, but in real-world daily life situations. In addition to safety assessments, the study includes exploratory longitudinal measures using validated instruments such as the clinician-administered Liebowitz Social Anxiety Scale, or LSAS, and the patient-reported Social Phobia Inventory, or SPIN. While open-label data are inherently uncontrolled and exploratory, the OLE portion of the PALISADE-3 Phase III study could provide important context on patient experience with repeated use over time in real-world anxiety-provoking situations the patients encounter. Together with our broader analytical work across the PALISADE program, insights from open-label studies should contribute to our enhanced understanding of fasedienol drug effect and usage patterns. Once again, we'd like to thank the patients who participated in our PALISADE studies as well as the clinical investigators, the site staff and our contract research organization for their ongoing dedication and professionalism as we complete PALISADE-4 and advance our broader analytical efforts. As we've previously stated, if PALISADE-4 is successful, together with PALISADE-2, the broader body of evidence generated across the PALISADE program, these data may support a potential new drug application submission to the U.S. Food and Drug Administration for the acute treatment of social anxiety disorder in adults. The significant unmet need in social anxiety disorder, where effective treatments are very limited, continues to guide our work and our long-term focus. Turning to our women's health program. We received an official USAN adoption statement, designating PH80 as refisolone. Refisolone is our hormone-free, nonsystemic intranasal product candidate with potential for the treatment of moderate to severe vasomotor symptoms, commonly referred to as hot flashes due to menopause. We believe refisolone may also have therapeutic potential across other women's health indications. We are currently preparing to submit our U.S. Investigational New Drug Application, or IND, for refisolone to the U.S. FDA, with a planned submission in the first half of 2026. This IND is intended to support further potential Phase II clinical development of refisolone in the U.S. for the treatment of moderate to severe vasomotor symptoms due to menopause. Building on a previously completed placebo-controlled exploratory Phase IIa clinical trial conducted in Mexico by Pherin Pharmaceuticals, which is now our wholly owned subsidiary, and that trial demonstrated clinical benefit in the vasomotor symptoms indication. We believe that indication in women's health represents a significant area of unmet need, and we remain committed to advancing refisolone as a nonsystemic, hormone-free product candidate with a disciplined data-driven approach as we prepare for the potential next phase of clinical development. Turning briefly to our financial position as of December 31, 2025, we had $61.8 million in cash, cash equivalents, and marketable securities. During the quarter, we implemented company-wide cash preservation measures intended to enhance our operational efficiency, extend our runway and maintain strategic flexibility across our Pherin pipeline. We believe we are well positioned to complete PALISADE-4 and to advance preparations and planning for our Pherin pipeline. In closing, our mission remains unchanged: to deliver transformative treatments and improved lives. The path forward requires discipline, rigor, and thoughtful analysis, and we believe the steps we have taken and are taking position Vistagen to make informed decisions and responsibly advance programs with the potential to deliver meaningful value to patients and to shareholders. So I want to thank you for your continued interest in the company and your support, and we look forward to updating you on our progress in the quarters ahead.
Thank you, Shawn. Operator, we would now like to open up the call for questions from the sell-side analysts joining us today.
Questions and answers
The first question today is from Andrew Tsai of Jefferies.
Thanks for the update. So maybe in the PALISADE-3 data, you had a chance to look at it descriptively, how did the individual curves look at every interval out to 5 minutes? Was there a separation at all across any of those time points with fasedienol versus placebo?
Thanks for the question, Andrew. Josh?
Andrew, at this point, what we've released publicly is the top-line results. So we're still looking into a lot of that data. We haven't released the individual curves publicly. We do know that where we find information is looking into individual respondents and subgroups of respondents. And again, that analysis continues. So that's where we do see definite differences.
Okay. And it sounds like you're looking at ways for PALISADE-4 to tweak around the SAP planning, let's just say you did, would you need to notify and then talk to the FDA to potentially get an official buy-in from them that the changes can be done? Is there a risk to modifying the SAP plan, basically?
Yes, great question. Go ahead, Shawn.
No, you can go ahead. That's fine.
Great question. The SAP, just like with PALISADE-3, has already been submitted and approved, no feedback from FDA. So that's set. So any future changes, to your point, would absolutely require a resubmission and alignment with the FDA before we locked the database and got the top-line results.
Understood. And then my last question is, should you modify the plan, would you need to backfill back to the original enrollment target of around 236 or 238? Or are there no changes to the enrollment?
Yes. The change to the SAP would not change the enrollment or the planned enrollment for the study. The key there is that it's whatever that SAP is, like I said, locked in before you get to database lock and then applied to the total population for the study.
Next question is coming from the line of Emily Chudy of Stifel.
This is Emily on behalf of Paul Matteis from Stifel. I have a quick question. Could you remind us about your current status with enrollment for PALISADE-4? Do you plan to make an announcement once that or the dosing is completed? Also, could you share what details from PALISADE-3 led you to the refinements you mentioned earlier?
Thank you, Emily. I appreciate your question. It will follow the same timeline as PALISADE-3. Once the last patient has their final visit, we will move towards the topline results. We remain on track with the guidance we have previously provided regarding PALISADE-4 TOR, the randomized part of PALISADE-4. Josh, you can take the next question.
I'm sorry, I missed the second part. Can you rephrase that?
You mentioned refinements, including retraining of some sites. Could you provide more details on what you observed from PALISADE-3 that informed that decision?
Yes. I don't think we can go into too much detail given PALISADE-4 is ongoing. But at a high level, one of the things that made PALISADE-3 different than PALISADE-2 was a higher placebo response. So as one example, making sure that our training is reinforced and up-to-date with sites in terms of potential ways to minimize that, in particular, how the protocol is followed, the script is followed to the letter, making sure that there's no chatting with the subjects as they come in, anything that could potentially lend to a comfort for a subject that can drive a higher placebo effect. Those types of things that we're able to implement quickly based on what we see from PALISADE-3. And also because we're listening to what's happening at each site through the audio recordings that we've talked about previously, it gives us the opportunity to be hyper-focused on feedback and any intervention where we see something deviating from the prescript that we've put in place.
In addition to that, there will be a focus on centralized recruitment to ensure everything is completely tight and rationalized. This will help impact in-stream execution, particularly with a strong emphasis on strategies to mitigate placebo effects and best practices, especially from highly experienced sites.
Our next question is coming from the line of Myles Minter of William Blair.
This is John on for Myles. I was wondering if you could talk a little bit more through your regulatory path forward and your confidence in it in the event that PALISADE-4 hits and you have a 50% program success? And alternatively, if PALISADE-4 misses, do you see any regulatory path forward with PALISADE-2 alone?
Thank you for the question, John. We believe that the outcomes of regulatory processes depend on more than just FDA regulations and guidance; they also depend on the overall data, the strength of the evidence, the risk-benefit analysis, and the characteristics of the target population in need. Our regulatory strategies are aligned with these assessments. We cannot speculate on approval scenarios, but we remain aware of the evolving role of AI in the agency and its incorporation into regulatory decision-making. We are closely monitoring that aspect. Additionally, the strength of evidence is critical. Once we analyze the randomized portion of PALISADE-4, we will evaluate the overall program data. Our primary regulatory strategy continues to focus on complementing PALISADE-2 with comprehensive information for the acute treatment of social anxiety disorder, providing broader context if PALISADE-4 is successful. If PALISADE-4 does not meet its goals compared to placebo, our focus will still be on the overall evidence and the weight of evidence from the entire program and all related data concerning the drug.
Helpful. And a quick follow-up. Is there anything that you're seeing in the blinded data of PALISADE-4 that gives you a little bit more confidence in that study over PALISADE-3?
No comment on the blinded data, John.
And the next question is coming from the line of Elemer Piros of Lucid.
Shawn, have you noticed any impact on enrollment since the announcement on December 17? Enrollment patterns?
Josh, you can address that.
Sure. The quick answer is no, definitely have not. Enrollment has continued as planned and projected for PALISADE-4.
Okay. And so what I'm trying to understand is how could the PALISADE-3 outcome, and potentially PALISADE-4, be different by amending the SAP? Would that mean that you would include some covariates that may influence the separation between the 2 arms? If you could just help me conceptually understand this a little bit better.
Sure. Part of our work with AI and machine learning involves exploring its potential, which is not guaranteed. You're asking about any covariates that could have a fixed effect on the ANCOVA, and those may develop from our collaborations with proprietary AI and ML. We're interested in whether there are any covariates that stand out when analyzing patient populations in previous studies, particularly PALISADE-3, that might provide some indication. Currently, we don't have a definitive answer. As mentioned earlier, if we decide to modify the SAP approved by the agency, we will need to discuss this with them. It's all part of our ongoing investigation. If there are no relevant covariates, we still have operational efficiencies and insights from the studies that are being integrated into the execution of PAL-3 or PAL-4. Josh, do you have anything to add on this?
No, I think that captures it.
So just to summarize, you're looking at PALISADE-3 and maybe even PALISADE-2 for some covariates. If you find them, then you modify the SAP, take it to the FDA before you were to analyze PALISADE-4 hypothesizing that those same covariates will be applicable to PALISADE-4. Am I understanding it correctly?
Yes. It has to be not only timely, as it should be before you lock the database, but also appropriate. There may be potential changes that might not be suitable under FDA regulations. Thus, it needs to be something impactful while also being reasonable with thorough review by the FDA.
Shawn, I would just add that we're looking across all the PALISADE studies, including PALISADE-1, 2, and 3, to see what we can learn. With the completion of the third study, we have a larger dataset to analyze, which increases our ability to explore different factors. You are absolutely correct that it mainly concerns the covariates or correction factors that would be used in your statistical model.
I understand. I have a quick question regarding the numbers. At the end of December, you reported 39.7 million shares outstanding, but the weighted average for the quarter was 42 million. Could you clarify that for me?
Nick, are you on?
Yes, I am. Yes. So it's shares are outstanding at the end of the quarter. It's how we measure our earnings per share.
Okay. So I would say there is a higher number of shares outstanding because they have reduced to 42 million?
That includes the prefunded warrants, Elemer.
Operator, I believe that's all the time we have for today. We can wrap up the call. So thank you, everyone, for joining today and for your continued interest and support in Vistagen. Again, with our diverse, innovative pipeline, we are encouraged about the future prospects of the company. If you have any additional questions, please don't hesitate to reach out to us via e-mail, ir@vistagen.com, or through the Contact Us section of our website. We also encourage you to register for e-mail updates and stay informed about the latest news and developments from Vistagen via our regular updates. We appreciate your time, engagement, and ongoing support, and we look forward to keeping you updated on our continued progress. This concludes our call today. Have a great day.
Mark, one more thing, real quick. I just want to clarify. I think I misspoke. I think I said $61.2 million at the end of 12/31/25, it was $61.8 million as reflected in our Q.
Thanks, Shawn.
This concludes today's program. Thank you all for joining. You may now disconnect.