William Blair upgraded VistaGen Therapeutics (NASDAQ:VTGN) to “outperform” with a fair value estimate of $9, citing a “clearly skewed risk/reward” for the shares. The stock closed at $1.94 on Dec. 31.
VistaGen is advancing its lead asset, PH94B, into a pivotal Phase 3 U.S. study in social anxiety disorder (SAD) during second quarter 2021 and a global Phase 3 study by year-end 2021.
Analyst Tim Lugo writes that intranasal pherine PH94B “could become the first FDA-approved rapid-onset treatment for SAD with a new mechanism of action and has the potential to open several new markets for the company beyond SAD.”
Clinical data generated to date from a Phase 2 trial and pilot Phase 3 trial suggest PH94B could be a safe, effective, and fast-acting therapy for anxiety disorders that does not share the safety concerns of the widely used benzodiazepine class of anxiolytics.
He assigned a 65% probability of success for PH94B in SAD and said his net present derived fair value for $9 a share “assumes a low-single-digit penetration rate in second-line and mid-single-digit penetration in third-line therapy into the large social anxiety market.”
Beyond PH94B, Mr. Lugo said VistaGen’s pipeline also includes a second intranasal pherine, PH10, which has demonstrated proof-of-concept and rapid onset in a Phase 2a study for major depressive disorder (MDD) and is ready for a Phase 2b monotherapy trial in MDD, and AV-101, which is also being explored for the treatment of MDD as a combination with probenecid.
“Ultimately, we believe the current enterprise value of around $130-million does not reflect the recent financing that provides VistaGen with the capital needed to advance development of one or more of its late-stage assets,” he added.
Following a capital raise of $100-million in late December 2020, Mr. Lugo figures VistaGen is funded for at least three years, which “we believe is more than sufficient to fund the company’s planned development of PH94B starting in 2021, including initiating two pivotal Phase 3 trials in SAD and proof-of-concept trials in multiple additional indications.”