Vistagen Therapeutics is doubling down on its lead social anxiety candidate, even after the asset failed a phase 3 trial last December. The Bay Area biotech is laying off about 20% of its staff to ensure it has the cash to finish another ongoing phase 3 trial of the anti-anxiety nasal spray candidate, known as fasedienol.
The layoffs took effect on March 5 and were disclosed in a March 11 filing with the Securities and Exchange Commission.
Vistagen had 56 full-time employees as of May 31, 2025, the company reported in its most recent annual report (PDF) last June.
The headcount reduction is meant “to align disciplined capital allocation with our development priorities for our lead clinical-stage product candidates,” a Vistagen spokesperson told Fierce Biotech.
The staff cuts don’t come with any changes to the biotech’s clinical development plans or the rest of its pipeline, which consists entirely of intranasal compounds called pherines, the spokesperson added.
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Fasedienol stumbled in the phase 3 Palisade-3 study at the end of last year due to an unexpectedly high response in the placebo arm. The trial tested the ability of fasedienol to reduce anxiety symptoms when used 20 minutes prior to a public speaking test.
That disappointment ran counter to an earlier phase 3 readout, in which fasedienol’s ability to reduce public-speaking distress sent Vistagen’s stock soaring 1,272%.
Fasedienol has shown similar efficacy across its trials, William Blair analysts noted in December, with the recent phase 3 failure attributable to “an elevated placebo response” that eliminated the candidate’s treatment effect.
The ongoing phase 3 trial, Palisade-4, mimics the earlier studies in the Palisade series and is set to enroll around 236 people with social anxiety disorder. That trial should read out soon, with Vistagen expecting results in the first half of this year, according to the filing. The company’s cash runway is expected to last into 2027.
Should fasedienol ultimately succeed, it would be the first approved acute treatment for social anxiety disorder.
Vistagen’s other four candidates are all in midstage development, according to the biotech’s website, and cover major depressive disorder, mental fatigue, menopause-associated hot flashes and cancer cachexia.
Editor’s note: A previous version of this article stated that Vistagen’s stock rose significantly after a phase 2 readout. That trial was actually a phase 3 study.