Anxiety-Focused Stock Vistagen Therapeutics Is An Undervalued Late-Stage Neurology Player: Analyst

Analysts at Stifel recently initiated coverage on Vistagen Therapeutics Inc VTGN, emphasizing the potential of its lead asset, fasedienol, in clinical development for social anxiety disorder (SAD). Fasedienol, acquired by VTGN in 2022, is undergoing PALISADE-3/4 studies, set to conclude in 2025.

According to the analysts, SAD represents a substantial market opportunity. 

Despite VTGN's current valuation, a discount compared to several CNS peers, the risk/reward ratio leans toward the upside given the ongoing fasedienol studies.

Stifel initiated coverage with a Buy rating and a price target of $12. The analysts acknowledged certain nuanced considerations beyond the clinical risk associated with VTGN. 

Despite these considerations, they believe the valuation, approximately $60 million in market cap or roughly $135 million with all warrants exercised, is undervalued for a phase 3 CNS asset.

Regarding the fasedienol data, analysts note a mixed but generally favorable outcome, with a positive phase 2 and one positive/one negative phase 3 across PALISADE-1/2. Stifel highlights VTGN's two upcoming SAD studies with similar designs, indicating that success in either trial could potentially support a marketing application.

The broader landscape of anxiety disorders in the US is significant. While affordable generics exist, insights from Key Opinion Leaders (KOLs) suggest that a novel mechanism with a rapid onset of action would likely attract substantial usage.

Price Action: VTGN shares are up 16.90% at $3.19 on the last check Tuesday.