VistaGen Therapeutics, Inc. (VSTA) Turns a Billion Dollar Problem into a One-Of-A-Kind Opportunity

The strategy of VistaGen Therapeutics, a California based stem-cell technology company, is primed to drive rapid growth because of its unique structure. VistaGen is a developer of stem-cell based bioassay early-warning systems for determining possible toxicity of drug candidates. It provides a distinctive way of determining potential drug toxicity well before the time and expense involved in performing animal or human trials.

The history of the pharmaceutical industry is one littered with drug candidates that were developed, and sometimes even released to the public, only to discover later that there were heart or liver toxicity issues. These drugs were then often shelved, resulting in a massive loss of invested time and money for the pharmaceutical company involved. For drug companies around the world it’s a major problem. However, for VistaGen it represents a major opportunity.

VistaGen’s plan is to use their proprietary Human Clinical Trials in a Test Tube stem cell based platform, a novel bioassay system that provides toxicity testing right in the laboratory, to build a portfolio of drug rescue variants from once-promising but discontinued drug candidates. Considering the fact that development costs for a new drug can easily exceed $1 billion, VistaGen sees these shelved drugs as a veritable diamond mine which it now has the means to tap. It’s like having someone run a 20-mile marathon for you, and then letting you step in near the end to cross the finish line.

Specifically, VistaGen believes each lead drug rescue variant will have the potential to be a viable new drug candidate in which VistaGen can have significant economic participation rights, such as up-front and development milestone payments and royalties on commercial sales. Its valuable technology also sets the company up as a potential takeover target.

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