Noting that patients often must wait months to see if existing therapies will provide relief, VistaGen Therapeutics Inc.'s (VTGN:NASDAQ) AV-101 "is part of an emerging class of antidepressant drugs targeting the NMDA receptor for adjunctive treatment of MDD [major depressive disorder] and has the potential for rapid relief of depressive symptoms within days (vs. months)," the Maxim initiation report states.
The March 28 report goes on to note that, "The opportunity in MDD adjunctive therapy (and any depression market segment) is large and, as such, attracts pharma."
Data from a Phase 2 trial for AV-101 as a monotherapy for MDD is due in Q4/17, according to Maxim. The company is also designing a Phase 2 "adjunctive therapy study that is expected to initiate in 2H17," the report stated. Because that study uses "Sequential Parallel Comparison Design," which is part of the Alkermes Plc (ALKS:NASDAQ) "playbook" and has been shown to both minimize placebo effect and increase "trial powering," VistaGen can "conduct a smaller, more rapid, and cost-effective study to achieve proof of concept (POC) data by late 2018."
In the report, Maxim maintains that AV-101 "has the potential to be faster-acting and safer than standard FDA-approved antidepressants." The drug is "similar to ketamine, and acts in the brain through the same glutamatergic AMPA-dependent pathway, rapidly inducing antidepressant effects via a final common pathway."
In addition, "AV-101 has been shown to be safe and well-tolerated in two NIH-funded Phase I safety studies with no ketamine-like side effects," Maxim stated, adding the therapy could also prove efficacious in other central nervous system indications, including "chronic neuropathic pain and epilepsy, as well as neurodegenerative diseases, such as Parkinson's disease and Huntington's disease."
While AV-101 shows promise as a monotherapy, Maxim is bullish on its use as an adjunct therapy while patients wait for other treatments to take effect. "A majority of patients will experience months to years of trial and error to find an effective combination of therapies that alleviate depressive disorders," the report states. "New adjunctive therapies that are in development have a rapid onset of action (days to weeks) can bridge the therapeutic gap especially for patients in crisis. We see this segment alone as a multi-billion dollar opportunity."
While there is some risk because the company is expected to need to raise capital, Maxim states, "With a current valuation of less than $20M we see nominal downside risk to our 12-month target and look instead at the potential for upside if a partner were to step into the opportunity ahead of data while the valuation is depressed."
Maxim has initiated coverage on VistaGen with a Buy rating and a $4 price target. VistaGen is currently trading at around $1.97.
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1) Tracy Salcedo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own shares of the following companies mentioned in this article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures from Maxim Group, VistaGen Therapeutics Inc., Equity Research Initiation, March 28, 2017
I, Lauren Chung, Ph.D., attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.
I, Jason McCarthy, Ph.D., attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.
I, Jason Kolbert, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.
The research analyst(s) primarily responsible for the preparation of this research report have received compensation based upon various factors, including the firm’s total revenues, a portion of which is generated by investment banking activities.
Maxim Group makes a market in VistaGen Therapeutics, Inc.
Maxim Group expects to receive or intends to seek compensation for investment banking services from VistaGen Therapeutics, Inc. in the next 3 months.