What Do VistaGen’s Newly Added Risk Factors Mean for Investors

VistaGen Therapeutics (VTGN) is a biopharmaceutical company developing medicines targeting several nervous system disorders. On June 29, the company released its Fiscal 2021 financial results for the period ended March 31 and provided several corporate updates.

Fiscal 2021 Financial Results

VistaGen reported revenue of $1.1 million and a net loss of $17.9 million. The loss narrowed from $20.8 million in the previous year. The company finished the fiscal year with more than $103 million in cash.

VistaGen said it reached an agreement with the FDA over Phase 3 clinical trials of its PH94B drug candidate targeting adults with social anxiety disorder. The company entered into a PH94B development and commercialization agreement with AffaMed Therapeutics.

As part of that arrangement, VistaGen received a $5 million upfront payment and is eligible for additional milestone payments of as much as $172 million. Additionally, the company is eligible to receive a share of PH94B sales generated in South Korea, Greater China, and Southeast Asia. (See VistaGen stock charts on TipRanks).

Moreover, VistaGen said it raised $127.5 million from various long-term healthcare-focused institutional investors, including Acuta Capital, Venrock Healthcare Capital Partners, and OrbiMed.

“Our fiscal year 2021 was transformative, involving several drug development, financial and regulatory milestones that fortified the foundation for our very strong start this fiscal year,” VistaGen management said in a press release.

VistaGen’s Risk Factors

According to the new Tipranks Risk Factors tool, VistaGen’s primary risk category is Tech and Innovation, representing 33% of the 60 risks identified. Finance and Corporate and Legal and Regulatory are the next two major risk factors at 23% and 18%, respectively. VistaGen’s total number of risks identified dropped from 71 in the previous report.

Since its Fiscal 2021 report, VistaGen has removed 15 risks factors and added two new risk factors. One of the newly added risks falls under the Finance and Corporate category and the other under the Macro and Political category.

Under the new Finance and Corporate risk factor, VistaGen cautions that its share price and business may be adversely impacted if it has to raise additional capital through securities offerings at better terms than those of existing investors. In the new Macro and Political risk factor, VistaGen states that the COVID-19 pandemic may continue to negatively affect its business.

The Tech and Innovation risk factor’s sector average is 24%, compared to VistaGen’s 33%. The company’s shares are up more than 500% over the past year.

Analyst’s Take

Jefferies analyst Andrew Tsai recently reiterated a Buy rating on VistaGen stock and raised the price target to $7 from $6. Tsai’s new price target suggests 122.22% upside potential.

Consensus among analysts is a Strong Buy based on 4 Buys, with an average VistaGen price target of $7 per share.

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