Vistagen Therapeutics Inc. (VTGN) May Hold the Key to Treatment Resistant Depression

The Phase I trial results for AV-101 were cautiously encouraging. A Phase Ia trial saw a dose escalation setup on 36 patients, 18 in the active arm and 18 on placebo, to see if AV-101 caused any ketamine-like side effects. There were none reported. On top of that, 2 out of 3 patients in the highest dose cohort voluntarily reported feelings of well-being, an initial if scant indication of efficacy on humans without the negative effects of ketamine. No patients in the placebo arm reported similar feelings.

A Phase 1b trial found similar results, with 1 out of 12 patients in the highest cohort reporting feelings of well-being, but none in the placebo arm. While that may seem low, the trials were on healthy volunteers, so it is unclear if modulating the NMDA receptor in people without TRD is supposed to do much. The real test will be on patients with TRD in the Phase IIa.

The ongoing Phase IIa trial is enrolling up to 28 patients, with a primary efficacy endpoint using the Hamilton Depression Rating Scale, considered the gold standard for rating depression in clinical trials. These will be patients with TRD being treated for 14 days. Any significant efficacy reported here should bring in some speculative investment as people will begin comparing Vistagen to Naurex and Allergan plc (NYSE:AGN) more actively.

It is the planned Phase IIb trial, however, that is the most interesting because of its setup. Scheduled to begin by the end of this year, it is targeting a 280-patient enrollment for AV-101 as an augmentation therapy with a Sequential Parallel Comparison Design (SPCD). The SPCD is especially appropriate for psychological trials focusing on mood endpoints because the placebo effect is particularly high here.

An SPCD protocol enables the filtering out of placebo responders after an initial stage in order to compare the active arm with confirmed placebo non-responders. This enables investigators to get a clearer picture of whether the drug actually works or not. It will also help assuage FDA concerns from the placebo effect direction. The trial isn’t expected to complete until 2018, so for now it is the Phase IIa that will determine the value of the company in the short term.

The risks here should not be understated however. Though Vistagen has other assets, it is heavily reliant on AV-101. Its balance sheet needs padding, and funding will be reliant on good results. Lack of efficacy in this trial could irreversibly damage the company and put its future into question.

That said, there is one more major advantage that Vistagen’s AV-101 has over Allergan and Rapastinel, and that is that Rapastinel can only be administered intravenously. AV-101 is a pill that can be taken orally, and that is made possible because it is a prodrug. Prodrugs are designed to be inert until they reach their destination, in this case the NMDA receptor in the brain. A pill has obvious advantages over IV including ease of prescription and administration, and less associated taboo.

If Rapastinel makes it to market, it will likely get there before AV-101. But even so, the oral advantage that AV-101 has evens out the playing field, assuming it is apples to apples with Rapastinel as both do have the same mechanism of action.

As for the future, Vistagen Therapeutics Inc. (NASDAQ:VTGN) has expressed its intent to explore partnership opportunities with Big Pharma and will likely use any successful Phase IIa trial reported next year to attract one. Whether Vistagen is looking for only partnership or acquisition outright is not yet clear. What is clear though, is that a drug with the same mechanism of action as AV-101 was already acquired for over half a billion by Allergan at Phase IIb. So how much would Vistagen be worth if it reports successful results for its Phase IIa in the first half of 2017? Hard to pinpoint exactly, but it will probably be much more than $32 million.

Note: This article is written by David Rich and originally published at Market Exclusive.