Stem Cell Tech Firm VistaGen
Goes Public via Reverse Merger
"The latest fi rm to opt for a reverse merger rather
than the more traditional initial public offering, VistaGen
Therapeutics Inc. inked a deal to merge with Excaliber
Enterprises Ltd., a public shell listed on the Over-the-Counter
Bulletin Board.
VistaGen’s transaction came less than a month after
regenerative medicine fi rm IntelliCell Biosciences Inc., of
New York, said it was reaching OTC BB investors through
its merger with Media Exchange Group, and followed a
few months after cell therapy company Cambridge, Mass.-
based Pathfi nder LLC went public via a reverse merger with
SyntheMed Inc. (See BioWorld Today, Dec. 27, 2010.)
Reverse mergers, though criticized for offering limited
liquidity to shareholders, have become viable routes to"
continuing : "public markets for small fi rms, especially those that still are
early stage, like IntelliCell or Pathfi nder, though VistaGen
doesn’t quite fi t that description.
“It’s not so much that we’re early stage; we’re 12 years
old,” said CEO Shawn K. Singh, adding that VistaGen looked
at various strategic alternatives. Given the “size of our
company and the business model we’re running,” a reverse
merger deal fi t the bill. “Our goals were to access the capital
markets and to raise awareness of the company.”
VistaGen will list initially on the OTC BB under a new
ticker symbol to be designated once the newly combined
company’s name is offi cially changed. But the plan is to
jump to a larger exchange such as the NYSE Amex or
Nasdaq, “sooner than later,” Singh said. That would expand
VistaGen’s visibility and help it grow an investor base.
Not that the OTC BB isn’t helpful. “It’s a good starting
spot,” he told BioWorld Today. “Investors are used to seeing
biotechs on the OTC BB, and plenty of companies have
started out there.”
He pointed to diagnostic fi rm Neoprobe Corp., of
Dublin, Ohio, which successfully made the leap from the
OTC BB to the NYSE Amex earlier this year.
Helix BioPharma Corp. is another example. That fi rm,
based in Aurora, Ontario, initially went public on the Toronto
Stock Exchange. In 2009, the company made its move to
the U.S. markets, with a listing on the OTC BB, which helped
raise its profi le, allowing for the move to the NYSE Amex in
September. (See BioWorld Insight, March 21 , 2011 .)
For VistaGen, going public coincides with a new stage
in the company’s development progress.
“Right now, we’re at a jumping off point,” Singh said. The
company has cash and also eliminated its debt, thanks to a
$3.87 million fi nancing of 1 . 1 million units priced at $3.50
each – including a $1 .5 million investment by Platinum Long
Term Growth Fund – concluded just prior to the Excaliber
merger. And it’s ready to put the stem cell technology it’s
been perfecting to work.
VistaGen’s platform, known as Human Clinical
Trials in a Test Tube, actually combines several stem cell
technologies, including those developed by company
founder Gordon Keller, who serves as the chief scientifi c
offi cer and works out of a lab at the University Health
Network’s McEwen Centre for Regenerative Medicine in
Toronto. Singh described it as a “versatile” platform that
is based on the core differentiation technology; in other
words, “what do stem cells become and how do they get
there.”
In one application, VistaGen is using human cells from
pluripotent stem cells to create biological assays for drug
screening. The aim is to “rescue” drug candidates that have
proven effi cacy but were shelved due to toxicity issues,
largely because existing assays fail to provide adequate
toxicity data, Singh said.
The fi rm is tackling cardiac toxicity fi rst, since it’s been
a particularly troubling area. Its CardioSafe 3D system is
designed to predict the in vivo cardiac effects of smallmolecule
candidates before they are tested in humans.
Unlike the earlier assays, CardioSafe provides “clearly
predictive data,” Singh added. “So we don’t need to have
another Vioxx; we don’t need to have another Avandia.”
Vioxx (rofecoxib), a COX-2 inhibitor developed by
Merck & Co. Inc., was voluntarily pulled from the market by
the Whitehouse Station, N.J.-based pharma in 2004, while
diabetes drug Avandia (rosiglitazone) from GlaxoSmithKline
plc has been under fi re for its cardiovascular side effects.
VistaGen is in the process of looking for drugs for its
rescue efforts, seeking candidates that have established
effi cacy and millions of investment dollars behind them.
“Sometimes is just takes some re-engineering through
modern medicinal chemistry to put those drugs back on
track,” Singh said.
Beyond its drug rescue work, the company also plans
to advance its preclinical cell therapy program based on its
stem cell technology. Pilot programs are expected to focus
on heart, liver and cartilage repair.
It also has a clinical-stage candidate, AV-101 , an oral
prodrug designed to convert in the brain into active
metabolite 7-chlorokynurenic acid, an agonist of N-methyl-
D-aspartate receptors. Data from a Phase I safety study are
expected in the “near term,” Singh said.
AV-101 is in development for neuropathic pain, epilepsy
and neurodegenerative disorders such as Parkinson’s
disease and Huntington’s disease. Development of AV-101 is
being funded primarily by grant money from the National
Institutes of Health."
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