Company UpdateFebruary 8, 2018

Biotechnology & Pharmaceuticals

VistaGen Therapeutics (VTGN - $1.19 - Buy) COMPANY NOTEPrice Target ChangeEstimate Change

Gbola Amusa, MD, CFA, Head of HC Research, +1-646-465-9024gamusa@chardan.com

Sales and trading 7 a.m. to 7 p.m. ET, (646) 465-9090Sales and trading 7 p.m. to 7 a.m. ET, (646) 465-9063

Stock Data 02/07/18Price $1.1952 Week Range ($0.69 - $3.15)Price Target $22.00Prev Price Target $30.00Market Cap (mil) 56.08Shares out (mil) 47.133-Mo Avg Vol 1,906,075Cash per share $0.33Total Debt (mil) $0.10Debt/Equity 2%

One year price history VTGN

VTGN (Buy, PT$22): 18x upside to our PT, even fullydiluted; PII data ahead

In the past year, VistaGen (VTGN) has made important progresson the development of AV-101, a novel, fast-acting NMDA receptormodulator in phase II trials for major depressive disorder (MDD). AfterVistaGen received Fast Track Designation for AV-101 in December 2017,the company announced on 29 January 2018 that the long-awaited phaseII trial of AV-101 as an adjunctive therapy in MDD (NCT03078322) isset to begin in 1Q18. Additionally, data from the NIMH-sponsored phaseII monotherapy trial (NCT02484456) of AV-101 in treatment-resistantdepression are due in 2H18. This trial should provide extensive biomarkerand mechanistic data on the biology of AV-101 in MDD patients. Weunderstand the granting of FDA Fast Track Designation has alreadyincreased VistaGen's interactions with the FDA and offers the potentialfor expedited approval. VistaGen's standing on manufacturing and IP forAV-101 have also improved, as multiple US and EU patents were grantedin late 2017. On VistaGen's clinical trial momentum and upcomingdata that could provide investors Naurex-type returns, we reiterateour long-standing thesis on VistaGen as a vastly undervalued playerin the novel, fast-acting antidepressant space.

We offer our reasons for seeing upside in VTGN on AV-101 (Chardan:$2.01 billion in 2030E 40% risk-adjusted forecasts, per Figure 5):

• AV-101, due to its novel mechanism, is fast-acting, when traditionaltherapies take 4-8 weeks to work and do not work in most patients.

• AV-101 has the potential for ketamine-like efficacy, but without thenegative psychotomimetic side effects or risk of abuse.

• AV-101 has shown good safety so far, without the effects of ketamine,and most likely will not require a boxed warning.

• AV-101 is orally-administered, which is more appealing for widespreaduse than IV-administered rapastinel from Allergan (unrated).

• AV-101 has the support of KOLs in the MDD space (e.g. Dr. Zarate),associated with funding and leading the phase I and phase II trials.

• Naurex, which originally developed rapastinel, was acquired for $560million upfront (and perhaps $2 billion total NPV) after phase IIb trials,implying corporate activity could soon force a VTGN repricing.

• VistaGen is highly undervalued compared to its relevant comps. Wenote Sage Therapeutics (Buy) is also developing a novel, fast-acting,once-daily oral product, but has a market cap over $7 billion.

Upcoming VTGN catalysts:

• 1Q18. AV-101: Initiate phase II adjunctive treatment trial in MDD• 2H18. AV-101: Initial results of phase II NIMH-sponsored trial in MDD• 1H19. AV-101: Initial phase II results in adjunctive treatment in MDD

Please refer to important disclosure information and Regulation Analyst Certification found on pages 27 - 29 of this report.

• 1H19. AV-101: Initiate phase II trials in neuropathic pain and Parkinson's disease levodopa-induced dyskinesia

Relevant VTGN research:

• 7 December 2017: "SAGE (Buy): PT to $225 (+61%); still 'too good to be untrue'"• 8 November 2016: "Buy (PT$30): Phase IIa results in 1H17 to expose a blockbuster opportunity?"• 9 February 2016: "Rapastinel Breakthrough Status bodes well for VSTA's AV-101"• 23 December 2015: "Positive: The media focuses on 'next-gen approach to ketamine'"• 27 July 2015: "Important positive: Allergan to acquire Naurex, VSTA's closest comp"

Valuation:Our VistaGen (VTGN) price target of $22 is based on a probability-adjusted modeling of key franchises. We use a DCFwith a WACC of 15.0% and perpetuity growth of 1.0% (4.6x implied terminal EBITDA multiple) to derive our price target.For our share count, we assume full conversion/dilution of all securities (Series A Preferred, Series B Preferred, SeriesC Preferred, stock options, and stock warrants). Our fully-diluted share count of 47.128 million shares would stand at26.741 million shares were we to use the treasury method of dilution. Movement to full dilution is the greatest contributorto our reduction of our price target from $30 to $22, after VistaGen's recent common stock/warrants offering.

Risks to achievement of target price:Clinical risks: Despite the promise of AV-101, we note that, as is typical for a phase II drug, the benefits of AV-101in major depressive disorder (MDD) are mostly theoretical, without more robust human proof-of-concept data expectedfrom ongoing phase II trials. Though the typical probability of a phase II product is roughly 40%, AV-101 is being testedin MDD, which due to many drug failures in the past may make our probability of launching too optimistic.

Regulatory: Despite the clinical progress for AV-101 so far in MDD, there is no certainty the product will be approvedor reimbursed in the US, even if AV-101 achieve's future targets on endpoints. If the regulatory pathway proves morecomplex and/or time consuming than we anticipate, there could be a materially-negative impact to our risk-adjustedprojections and price target.

Commercialization: The potential of AV-101 may not be as large as we project, possibly due to competition. In particular,we note competition for example in major depressive disorder from Sage Therapeutics (Buy) that provides risk to theterminal valuation of VistaGen. The price of VistaGen’s products might prove too high for the market to bear, especiallyin a setting like depression, where the use of generic medicines is widespread. In addition, VistaGen if successful wouldhave to build a sales, marketing and medical affairs infrastructure in the US and possibly other global regions.

Intellectual property: It is not clear if AV-101 will have patent life beyond mandatory 5- and 10-year exclusivity positionsin the US or the patent protections that have been granted in recent years.

Financing risk: The company may need to raise additional capital, perhaps via equity financings, before reachingprofitability, potentially resulting in share dilution for shareholders.

Stock price volatility: Share price volatility is common for developmental companies in the biotechnology sector.

Company description:VistaGen is a clinical-stage biopharmaceutical company based in South San Francisco that is committed to developingnovel medicines for depression and disorders involving the central nervous system. VistaGen's lead product candidate,AV-101, is being investigated as a potentially safe, orally-available NMDA receptor modulating drug with rapid-onsetantidepressant effects. The US NIMH, under preeminent thought leader Dr. Carlos Zarate, is sponsoring a phase II efficacyand safety study, which started in November 2015, of AV-101 in major depressive disorder (MDD). The NIH previouslyawarded VistaGen $9 million for AV-101 pre-clinical and phase I trials, and is fully funding the phase II monotherapyprogram for AV-101.

Page 2 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

Contents AV-101: The summary profile of a potentially workhorse product for depression ..................................................................... 4

AV-101 may have a best-in-class profile for positive ketamine-like effects in depression ...................................................... 5

AV-101 may have a best-in-class profile for avoiding negative ketamine-like effects ............................................................. 6

Past events: The Naurex acquisition and BTDs in MDD are positives for VistaGen ..................................................................... 8

Catalysts: Phase II NIMH-sponsored AV-101 trial should have results by 2H18 .......................................................................... 9

The Chardan MDD Model: VistaGen and Allergan could produce blockbuster assets .............................................................. 11

We model $2.01 billion in 2030E risk-adjusted sales for AV-101 in MDD .............................................................................. 11

Background: Depression is a common, but serious, illness ........................................................................................................ 12

Depression affects 6.7% of the population, with younger adults more likely to be affected ................................................ 12

An unmet medical need exists with current drug therapies in major depressive disorder ................................................... 14

Ketamine and other NMDAR modulators address the unmet medical need ............................................................................ 15

Ketamine is a breakthrough depression therapy, but comes with important risks ............................................................... 15

VistaGen and Allergan are emerging with ketamine-like products (NDMAR modulators) .................................................... 16

VistaGen: AV-101 (L-4-chlorokynurenine or 4-Cl-KYN) (phase II) .............................................................................................. 18

AV-101 is VistaGen’s phase II oral product for major depression .......................................................................................... 18

Dr. Zarate’s association with VTGN to us is akin to Dr. Rosenberg’s association with Kite ................................................... 21

Allergan: Rapastinel (phase III) ................................................................................................................................................... 21

Allergan’s rapastinel has produced positive animal and human data through phase II trials ............................................... 21

Movement of rapastinel through phase II trials was associated with $161 mm of financing ............................................... 24

Financials .................................................................................................................................................................................... 25

Income statement .................................................................................................................................................................. 25

Discounted cash flow (DCF) analysis ...................................................................................................................................... 26

Page 3 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

AV-101: The summary profile of a potentially workhorse product for depression

Source: Corporate reports, academic literature, management interview, Chardan. See the next page for references above.

Figure 1: AV-101, though earlier in development, may have a competitive profile versus rapastinel, and may dominate ketamine

Performance on positive

clinical attributes

VistaGen

AV-101

Allergan (Naurex)

Rapastinel (GLYX-13)

Generic

Ketamine

Positive effects on mood ■ ■ ■References 1, 7, 8 2, 3, 4 5, 6

Direct NMDA-R modulator ■ ■ ■References 9, 10 3 5, 6

Non-channel blocker ■ ■ □References 9, 10 3 NA

More potent GlyB site modulator ■ □ □References 10 10 5, 6, 10

Robust oral bioavailability (not IV) ■ □ □References 1 2 5, 6

Performance on negative

ketamine clinical attributes

VistaGen

AV-101

Allergan (Naurex)

Rapastinel (GLYX-13)

Generic

Ketamine

Lack of evidence for abusive

potential■ ■ □

References 1, 7, 8 2, 4 5, 6

Lack of hallucinogenic properties ■ ■ □References 1, 7, 8 2, 4 5, 6

Lack of schizophrenia-like effects ■ ■ □References 1, 7, 8 2, 4 5, 6

Lack of other negative psychotropic

effects■ ■ □

References 1, 7, 8 2, 4 5, 6

Lack of narrow therapeutic range ■ □ □References 1 (not anticipated) 2, 3 5, 6

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VistaGen TherapeuticsCompany Note

February 8, 2018

We reviewed the academic literature and discussed AV-101’s profile with management.1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 Our take

after the review is summarized in Figure 1.

AV-101 may have a best-in-class profile for positive ketamine-like effects in depression Positive effects on mood (references 1-6, 7, 8). The results from preclinical studies on AV-101 in major depressive disorder

(MDD) have been presented at clinical conferences—American College of Neuropsychopharmacology Annual Meeting

(2014) and the Society for Neuroscience Annual Meeting (2014)—and published in the Journal of Pharmacology and

Experimental Therapeutics. In the studies cited, AV-101 showed significant positive effects on mood (antidepressant

effects), which were comparable to ketamine, in four animal models of depression. Additionally, in the phase Ib trial,

multiple healthy subjects on AV-101 (and none on placebo) reported positive feelings of well-being, without ketamine’s side

effects.

Direct NMDAR modulator (references 3, 5, 6, 9, and 10). AV-101 is designed to be mechanistically, but not structurally,

similar to ketamine as an NMDA receptor (NMDAR) agonist, while being much safer due to the selective glycine site

binding. On the NMDAR mechanism, AV-101 modulates (reduces the activity of) the channel but does not block it, meaning

AV-101 can avoid the sedating, hallucinogenic, and addictive side effects caused by ketamine. Additionally, AV-101

upregulates the activity of another major glutamate receptor, AMPA, which is required for the beneficial effects of

ketamine, further reinforcing the ketamine-like activity without the side effects.13, 14

More potent GlyB site modulator and non-channel blocker (references 9, 10). Per reference 10, scientists who invented

rapastinel demonstrated the active metabolite of AV-101 (7-chloro-kynurenic acid; 7-Cl-KYNA), when working via GlyB,

1 Snodgrass HR. Safety, Tolerability and Pharmacokinetics of Multiple Doses of AV-101 in Healthy Volunteers. 2015; Available from:

https://www.vistagen.com/news-media/press-releases/detail/12/vistagen-therapeutics-successfully-completes-final-phase-1. 2 Preskorn S, et al. Randomized Proof of Concept Trial of GLYX-13, an N-Methyl-D-Aspartate Receptor Glycine Site Partial Agonist, in

Major Depressive Disorder Nonresponsive to a Previous Antidepressant Agent. J Psychiatr Pract. 2015; 21(2):140-9. 3 Moskal JR, et al. GLYX-13, an NMDA receptor glycine site functional partial agonist enhances cognition and produces antidepressant

effects without the psychotomimetic side effects of NMDA receptor antagonists. Expert Opin Invest Drugs. 2014; 23(2):243-54. 4 Yu W, et al. A Single Intravenous Dose of the NMDA Receptor Functional Partial Agonist NRX-1074 Dose Dependently Improved HDRS-

17 Score Within 24 Hours in Subjects with Major Depressive Disorder (MDD), in Society of Biol. Psychiatry, Annual Meeting. 2015. 5 Murrough JW. Ketamine as a novel antidepressant: from synapse to behavior. Clin Pharmacol Ther. 2012; 91(2):303-9.

6 Iadarola ND, et al. Ketamine and other N-methyl-D-aspartate receptor antagonists in the treatment of depression: a perspective

review. Ther Adv Chronic Dis. 2015; 6(3):97-114. 7 Zanos P, et al. 4-Cl-Kynurenine, a Prodrug of a Selective Glycine B NMDA Receptor Antagonist, Induces Rapid and Sustained

Antidepressant Effects without Ketamine-related Side Effects, in Annual Meeting American College of Neuropsychopharmacology. 2014. 8 Zanos P, et al. 4-Cl-kynurenine, a prodrug of a selective glycine B NMDA receptor antagonist, induces rapid and sustained

antidepressant effects without ketamine-related side effects, in Society of Neuroscience Annual Meeting. 2014. 9 Hokari M, et al. Facilitated brain uptake of 4-chlorokynurenine and conversion to 7-chlorokynurenic acid. Neuroreport. 1996; 8(1):15-8.

10 Kemp JA, et al. 7-Chlorokynurenic acid is a selective antagonist at the glycine modulatory site of the N-methyl-D-aspartate receptor

complex. Proc Natl Acad Sci U S A. 1988; 85(17):6547-50. 11

Moskal JR, et al. GLYX-13: a monoclonal antibody-derived peptide that acts as an N-methyl-D-aspartate receptor modulator. Neuropharmacology. 2005; 49(7):1077-87. 12

Wieber J, et al. Pharmacokinetics of ketamine in man. Anaesthesist. 1975; 24(6):260-3. 13

Aleksandrova LR, et al. Antidepressant effects of ketamine and the roles of AMPA glutamate receptors and other mechanisms beyond NMDA receptor antagonism. J Psychiatry Neurosci. 2017. 42(4):222-229. 14

VistaGen January 2018 corporate presentation. https://d1io3yog0oux5.cloudfront.net/_12a86911ff75fc6ca5e682aa6f8926a4/vistagen/db/241/613/pdf/VistaGen+Corporate+Presentation+January+2018.pdf

Page 5 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

inhibited the binding and function more than 3x the molar amount of rapastinel. As ketamine is a channel blocker and does

not bind the GlyB site, the theoretical advantages of operating this way are missing for ketamine.

Robust oral bioavailability, with a serum half-life of 2-3 hours (eliminating the need for IV) (references 1, 2, 5, 6). Per

reference 1, the oral bioavailability of AV-101 has been demonstrated in both preclinical (39-94%) and clinical studies

(>45%), thereby supporting use of an oral formulation in ongoing phase II studies. The oral bioavailability for AV-101 has

been confirmed, with the serum half-life of AV-101, and its active metabolite (7-chloro-kynurenic acid), being 2-3 hours.

This compares favorably to the serum half-life of rapastinel of less than 10 minutes and of ketamine of less than 15

minutes. Because both rapastinel and ketamine have low oral bioavailability, the majority of clinical studies for the

compounds have delivered both via intravenous (IV) formulations. Investigators are looking at delivering ketamine by

intramuscular injection, nasal spray, and sublingual absorption, but the expectation is that efficacy will be limited.

AV-101 may have a best-in-class profile for avoiding negative ketamine-like effects Lack of evidence for abusive potential (references 1, 7, and 8). The safety shown by AV-101 in phase I clinical trials, in

addition to the well-established preclinical models for drug abuse, all suggest that AV-101 will be a drug with a low

potential for abuse. We note the importance of this given ketamine’s role as a “party” drug and other forms of abuse.

Lack of hallucinogenic, schizophrenia-like, and other negative properties (references 1, 2, 4-8). Unlike the considerable

body of evidence relating to the negative side-effects of ketamine (which also includes confusion, dissociations, dizziness,

and increased blood pressure and heart rate), we could not find evidence of similar negative side effects in preclinical or

clinical studies for AV-101 or rapastinel.

Lack of narrow therapeutic range (references 1, 2, 3, 5, and 6). Based on preclinical data, it is anticipated that AV-101 will

have a wide therapeutic range. The preclinical data supported human dosing up to 1800 mg/day. Doses as high as 1,440

mg/day for 14 days had a safety profile consistent with placebo, thereby supporting a wide dosing range. For example:

Though AV-101 phase I studies were designed to measure safety and pharmacokinetics, potential antidepressant

effects of AV-101 were seen, as approximately 20% of the normal healthy subjects receiving the highest dose (1,440

mg) reported positive feelings of well-being. Lower frequencies of expressions of positive mood effects were observed

at doses as low as 360 mg. Importantly, none of the 31 subjects receiving placebo expressed effects on mood.

By comparison, studies with rapastinel indicate positive effects on mood between 1 and 30 mg intravenously, with the

majority of data suggesting that a statistically significant effect is observed at 5 or 10 mg of dosing.

Lastly, ketamine has a narrow therapeutic range since it must be delivered at a sub-anesthetic dose that is efficacious

but still low enough to minimize the negative side-effects in Figure 1. Often 0.5 mg/kg IV is used.

Page 6 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

VistaGen’s closest comp, Naurex, was acquired for $560 mm upfront (c$2 bn NPV)

Allergan (unrated) acquired Naurex in an all-cash transaction for $560 mm, with the potential for milestone payments.

The acquisition took place on 26 July 2015. Allergan acquired rapastinel (GLYX-13), a once-weekly IV molecule for

depression. Rapastinel works similarly to AV-101 by modulating the NMDAR at the GlyB site. Allergan acquired Naurex after

1 phase IIb study of rapastinel in treatment-resistant MDD.

Rapastinel and AV-101 have the potential to work within hours or days. Recall from our VistaGen initiation note (“Initiate

Buy (PT$50) on AV-101’s uplifting profile”), we highlight the potential for NMDA receptor modulators to work within hours

or days. AV-101 and Allergan’s drug rapastinel work on the same receptor as ketamine to relieve depression, but because

they are only NMDA receptor modulators (rather than complete blockers, like ketamine), AV-101 and rapastinel lack

ketamine’s psychotomimetic side effects. Rapastinel produced breakthrough results in depression within 24 hours in phase

II trials. In phase I trials, AV-101 produced feelings of well-being in healthy subjects, without any of ketamine’s side effects.

We anticipate further efficacy data from the NIH-sponsored phase II monotherapy study from 20-25 patients in 2H18.

Allergan has the edge on visibility and launch timing, but VistaGen has the edge on oral convenience. Rapastinel is ahead

of AV-101 in clinical trials and will most likely, if successful, be marketed prior to AV-101. However, we note that AV-101 has

many advantages over rapastinel, one being that AV-101 is an oral drug whereas rapastinel is an IV. We have seen no

evidence that Allergan has successfully converted rapastinel or a follow-on product into an oral compound. We also note

that there are 9 different variants of the NMDAR; AV-101 can regulate all of them while NR2B-selective compounds can

only modulate 4 out of the 9 variants.

Page 7 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

Past events: The Naurex acquisition and BTDs in MDD are positives for VistaGen

We believe that Allergan acquiring Naurex for $560 mm cash upfront plus an undisclosed amount of future milestone

payments is a key positive for VistaGen, a relevant comp. We believe the net present value of the Naurex acquisition was

roughly $2 billion. Rapastinel, per a 29 January 2016 release, has also obtained FDA Breakthrough Therapy Designation

(BTD). More recently, SAGE-217 achieved a BTD, per a 7 February 2018 release from Sage Therapeutics (Buy). We see the

rapastinel and SAGE-217 BTDs as a positive signal from the FDA regarding the need for novel treatments for MDD.

Source: Corporate reports, Chardan.

Figure 2: VistaGen has made strides in the past 3 years, obtaining Fast Track Designation for AV-101 and approval to begin the PII adjunctive trial

Date Event Chardan Comment

23-Jan-13 AV-101: Completed final phase I safety study in MDD Results indicated that AV-101 was safe and well tolerated

17-Feb-15 AV-101: Signed agreement for CRADA with the NIMH for the phase II study in MDD Dr. Carols Zarate of the NIMH has chosen to fund the phase II study in MDD

1-Jul-15 AV-101: Received FDA and NIH clearance to initiate phase II study in MDD The phase II trial was initiated in 3Q15

26-Jul-15 AV-101 competition: Allergan acquired Naurex for $560 mm upfront We see this as a key positive for VTGN, as Naurex was VTGN's closest comp

1-Oct-15 AV-101: Preclinical data published in the J. of Pharmacology and Experimental Therapeutics Data from 4 animal models showed rapid, dose-dependent and persistent ketamine-like effects

3-Nov-15 AV-101: First patient is dosed in NIH-sponsored phase IIa monotherapy study in MDD We believe completion of phase II trials could take VistaGen to roughly $2bn in market cap

4-Nov-15 AV-101 competition: Allergan presented rapastinel and NRX-1074 data at Soc. for Neurosci. Results showed a rapid onset of antidepressant efficacy 1 day after a single dose

19-Jan-16 AV-101 competition: Preclinical rapastinel data in mouse model published Results in Behavioural Brain Research showed rapastinel demonstrated pro-cognitive benefits

29-Jan-16 AV-101 competition: Rapastinel received FDA Breakthrough Therapy Designation Supports our belief that ketamine-like antidepressants are potentially disruptive for MDD

11-May-16 VistaGen began trading on NASDAQ as "VTGN" and announced $10 million public offering We believe the offering is sufficient to begin running the company-sponsored phase II trial

14-Dec-16 VistaGen granted exclusive sublicense of cardiac stem cell tech to BlueRock Therapeutics We do not model the Stem Cell Platform at this time

29-Mar-17 VistaGen receives European Patent Office Notice of Intention to Grant EU Patent for AV-101 Patent claims covering multiple dosage forms of AV-101 through January 2034

27-Apr-17 VistaGen publishes nonclinical studies of AV-101 in neuropathic pain in J. of Pain online AV-101 had anti-nociceptive effects without burdensome side effects; in October 2017 print issue

22-Jun-17 VistaGen publishes PI studies of AV-101 in Scand. Journal of Pain online; in print Oct. 2017 Results could support phase II studies including as non-opioid treatment for neuropathic pain

8-Aug-17 VistaGen receives Notice of Allowance from USPTO for Patent for Bone Marrow Stem Cells We do not model the Stem Cell Platform at this time

28-Sep-17 VistaGen receives Notice of Allowance from USPTO for Methods of Production for AV-101 Patent relates to certain Methods of Production for AV-101

26-Oct-17 VistaGen receives FDA authorization for PII study of AV-101 as adjunctive treatment in MDD The company expects to initiate the trial in 1Q18

6-Nov-17 VistaGen receives EU patent for AV-101 in depression Patent relates to treatment of depression, PD LID and use of multiple dosage forms

6-Dec-17 VistaGen receives US Patent in regards to Methods of Production for AV-101 Patent relates to Methods of Production

8-Dec-17 VistaGen receives US Patent in regards to Methods for Bone Marrow Stem Cells We do not model the Stem Cell Platform at this time

3-Jan-18 VistaGen receives FDA Fast Track Designation (FTD) for AV-101 in MDD FTD allows for more frequent communication with the FDA and may provide for priority review

CRADA = Cooperative Research and Development Agreement; MDD = major depressive disorder; NIMH = National Institute of Mental Health; PD LID = Parkinson’s disease levodopa-induced dyskinesia; USPTO = US

Patent and Trademark Office

Page 8 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

Catalysts: The 2 phase II AV-101 trials should report results by 1H19

We believe the upcoming movement of AV-101 through phase II trials will lead to market appreciation of VistaGen, as

movement of rapastinel through phase II trials improved Naurex (acquired by Allergan) valuation.

Source: Corporate reports, Chardan.

Figure 3: By 1H19, we could see 2 major data releases for VistaGen, potentially de-risking VTGN and generating exceptional investment returns

Date Event Chardan Comment

1Q18 AV-101: Start of RDBPC phase II adjunctive-treatment trial in ~180 patients in MDD A sequential parallel comparison design (SPCD) study to mitigate placebo effects

Mid-18 AV-101: Complete ~20-pt phase II NIMH-sponsored study as monotx in MDD Study will provide many important biomarkers that can inform future AV-101 use and development

Nov-18 AV-101 competition: PCD rapastinel phase III RAP-MD-01 trial as adjunctive therapy in MDD We believe (+) results would benefit VTGN; RDBPC trial; 700 pts; 450 mg rapastinel IV weekly, 3 wks

Dec-18 AV-101 competition: PCD rapastinel phase III RAP-MD-02 trial as adjunctive therapy in MDD RDBPC trial; 1050 patients; 225 or 450 mg rapastinel IV weekly for 3 weeks

Dec-18 AV-101 competition: PCD rapastinel phase III RAP-MD-03 trial as adjunctive therapy in MDD RDBPC; 700 patients; 450 mg rapastinel IV weekly for 3 weeks

2H18 AV-101: Topline results for ~20-pt phase II NIMH-sponsored study as monotx in MDD RDBPC trial with crossover; single daily dose over 14 days; KOL Dr. Carlos Zarate (NIMH), is the PI

2H18 AV-101: Completion of phase II adjunctive treatment trial in ~180 patients in MDD Once daily oral admin., 14 day study; comps suggest (+) results could take VTGN to ~$2bn valuation

Jan-19 AV-101: PCD of phase II adjunctive therapy trial in MDD 1° outcome is improvement in Montgomery-Asberg Depression Rating Scale 6-item score

1H19 AV-101: Initiate 40 patient cross-over PC phase II trial in neuropathic pain Preclinical data published in Oct. 2017 issue of Journal of Pain (Yaksh et al.; online 18 Apr 2017)

1H19 AV-101: Initiate 30 pt. cross-over PC phase II trial in PD levodopa-induced dyskinesia Only approved treatment is amantadine, a weak agonist of NMDA receptor; AV-101 could be superior

1H19 AV-101: Topline results of phase II adjunctive treatment trial in MDD We believe AV-101 will show efficacy in patients with inadequate response to standard of care

1H19 AV-101 competition: Topline data for rapastinel phase III adjunctive therapy trials Results of these 3 short-term trials could have positive read-across to VTGN's program

Sep-19 AV-101 competition: PCD rapastinel phase III trial to prevent relapse in MDD patients RDBPC trial; 600 patients; testing 450 mg rapastinel IV weekly or every 2 weeks over 1 to 2 years

Dec-19 AV-101: PCD of phase II NIMH-sponsored study as monotx in MDD Finishing phase IIa trials led to a $38 million Series B financing for Naurex (acquired by AGN)

Jan-20 AV-101 competition: PCD rapastinel phase II study in patients with MDD at risk for suicide Will be tested in hospitalized patients; will test speed and safety of rapastinel in this indication

Feb-20 AV-101 competition: PCD rapastinel phase III long term safety trial OL trial; 500 patients; testing 450 mg rapastinel IV weekly or every 2 weeks for 1 year

2020 AV-101 competition: Expected completion of rapastinel phase III maintenance trial Patients from 3 short term trials could roll over into maintenance study; FDA requested data for NDA

2020 AV-101: Results of phase III trial in MDD An SPA could cover a single phase III trial protocol to support an NDA

2020 AV-101: Submissions of NDA for marketing in MDD Assumes an SPA from the FDA covering a single phase III trial

2021 AV-101: Approval and launch in the US and Europe for MDD AV-101 could become the first oral NMDAR modulator for MDD

MDD = major depressive disorder; monotx = monotherapy; NDA = New Drug Application; NIMH = National Institute of Mental Health; NMDA = N-methyl-D-aspartate; RDBPC = randomized, double-blind, placebo

controlled; SPA = special protocol assessment

Page 9 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

Source: Corporate reports, Chardan. Note: The above assumes AV-101 may be able to move into phase II trials for non-MDD indications without a formal phase I study.

Figure 4: Generation of phase II AV-101 results in MDD for VistaGen should lead to better market appreciation of VistaGen’s fundamentals

Product Candidate Near-term milestones WW Rights

AV-101 (4-Cl-KYN)

Selective NMDA receptor

antagonist (glycine-binding co-

agonist site)

Parkinson's disease LID

· 1H19: Initiate phase II trial VTGN

Stage of Development

Preclin Phase 1 Phase 2 Phase 3 Filing Market

VTGN

AV-101 (4-Cl-KYN)

Selective NMDA receptor

antagonist (glycine-binding co-

agonist site)

Epilepsy

AV-101 (4-Cl-KYN)

Selective NMDA receptor

antagonist (glycine-binding co-

agonist site)

Huntington's disease

VTGN

AV-101 (4-Cl-KYN)

Selective NMDA receptor

antagonist (glycine-binding co-

agonist site)

Major depressive disorder

· 1Q18: Start PII adj-treat. trial

· 2H18: PII NIMH trial results

· 1H19: PII adjunctive treatment trial

results

VTGN

AV-101 (4-Cl-KYN)

Selective NMDA receptor

antagonist (glycine-binding co-

agonist site)

Neuropathic pain

· 1H19: Initiate phase II trial VTGN

Page 10 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

The Chardan MDD Model: VistaGen and Allergan could produce blockbuster assets

We model $2.01 billion in 2030E risk-adjusted sales for AV-101 in MDD

Source: Corporate reports, NIMH, World Bank, academic literature, Chardan.

Figure 5: Novel fast-acting depression drugs—15.4% 1st

-line/10.1% TRD replacement would support blockbuster ramifications for AV-101

We stratified our depression model based on differential use for novel fast-acting products as first-line therapies, due to the

very rapid onset of action, which fulfills the unmet medical need of current treatments taking 4-8 weeks to take effect. We

another place where unmet medical needs are greatest is in treatment-resistant depression (TRD) patients, who need novel

mechanisms of action. Therefore, we make the following assumptions (see Figure 7):

Novel fast-acting therapies penetrate 15.4% of the first line market in 2030E and 10.1% of the treatment-resistant

depression market, with 2nd- to 4th-line markets only 3.4% penetrated by novel products.

We assume Allergan (rapastinel) takes 19.9% of the market in 2030E. We note however, that if the oral product (NRX-

1074/apimostinel) is in fact significantly behind AV-101, which we believe it is (as Allergan has provided no updates on

the program since the 2015 acquisition and apparently no clinical trials are ongoing), then the long-term market share

dynamics are likely to favor VistaGen over Allergan. We also assume 20.9% of the market in 2030E goes to SAGE-217,

an oral GABA modulator from Sage Therapeutics (Buy), after positive phase II results in December 2017.

We assume AV-101 takes 16.5% of the market of novel, fast-acting products in 2030E and is priced at $13 per day, or

$4,745 per year, making switching from generics more likely.

$ in millions 2014A 2015A 2016A 2017A 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

TOTAL SALES, BY GEOGRAPHY (NON-RISK-ADJUSTED)

United States 19.2 147.6 390.7 905.8 1,757.4 2,384.7 2,648.3 2,827.1 3,005.4

Europe 8.4 65.0 171.9 398.6 773.3 1,049.3 1,165.3 1,243.9 1,322.4

International 0.0 4.8 36.9 97.7 226.5 439.3 596.2 662.1 706.8

Global sales of AV-101 ($ million) (non-risk-adjusted) 27.6 217.4 599.5 1,402.0 2,757.1 3,873.3 4,409.8 4,733.1 5,034.6

Probability of launching 40% 40% 40% 40% 40% 40% 40% 40% 40%

Global sales of AV-101 ($ million) (40% risk-adjusted) 11.0 87.0 239.8 560.8 1,102.8 1,549.3 1,763.9 1,893.2 2,013.8

YoY growth 688.0% 175.8% 133.9% 96.6% 40.5% 13.9% 7.3% 6.4%

UNITED STATES

Individuals 12-up (000s) 269,293 271,709 274,177 276,559 278,834 281,122 283,455 285,499 287,658 289,842 291,950 293,962 295,940 297,839 299,663 301,469 303,281

% on depression medications 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8% 10.8%

Number of 12-up on depression meds (000s) 29,084 29,345 29,611 29,868 30,114 30,361 30,613 30,834 31,067 31,303 31,531 31,748 31,962 32,167 32,364 32,559 32,754

% in remission on 1st-line therapy 36.8% 36.8% 36.8% 36.8% 36.8% 36.8% 36.8% 36.8% 36.8% 36.8% 36.8% 36.8% 36.8% 36.8% 36.8% 36.8% 36.8%

% in remission on 2nd-line therapy 19.3% 19.3% 19.3% 19.3% 19.3% 19.3% 19.3% 19.3% 19.3% 19.3% 19.3% 19.3% 19.3% 19.3% 19.3% 19.3% 19.3%

% in remission on 3rd-line therapy 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0%

% in remission on 4th-line therapy 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9%

% with treatment-resistant depression 32.9% 32.9% 32.9% 32.9% 32.9% 32.9% 32.9% 32.9% 32.9% 32.9% 32.9% 32.9% 32.9% 32.9% 32.9% 32.9% 32.9%

Number in remission on 1st-line therapy (000s) 10,703 10,799 10,897 10,992 11,082 11,173 11,266 11,347 11,433 11,519 11,603 11,683 11,762 11,837 11,910 11,982 12,054

% replacement for novel, fast-acting products 0.3% 1.7% 4.3% 6.9% 10.2% 13.4% 14.2% 14.7% 15.0% 15.1% 15.3% 15.4%

Number in remission on 2nd-line therapy (000s) 5,625 5,675 5,727 5,776 5,824 5,872 5,920 5,963 6,008 6,054 6,098 6,140 6,181 6,221 6,259 6,297 6,334

% replacement for novel, fast-acting products 0.1% 0.4% 0.9% 1.5% 2.2% 2.9% 3.1% 3.2% 3.3% 3.3% 3.3% 3.4%

Number in remission on 3rd-line therapy (000s) 1,748 1,763 1,779 1,795 1,810 1,824 1,840 1,853 1,867 1,881 1,895 1,908 1,921 1,933 1,945 1,956 1,968

% replacement for novel, fast-acting products 0.1% 0.4% 0.9% 1.5% 2.2% 2.9% 3.1% 3.2% 3.3% 3.3% 3.3% 3.4%

Number in remission on 4th-line therapy (000s) 1,431 1,444 1,457 1,470 1,482 1,494 1,506 1,517 1,529 1,540 1,552 1,562 1,573 1,583 1,593 1,602 1,612

% replacement for novel, fast-acting products 0.1% 0.4% 0.9% 1.5% 2.2% 2.9% 3.1% 3.2% 3.3% 3.3% 3.3% 3.4%

Number with treatment-resistant depression (000s) 9,578 9,663 9,751 9,836 9,917 9,998 10,081 10,154 10,231 10,308 10,383 10,455 10,525 10,593 10,658 10,722 10,786

% replacement for novel, fast-acting products 0.2% 1.1% 2.8% 4.5% 6.6% 8.8% 9.3% 9.6% 9.8% 10.0% 10.1%

Patients on novel, fast-acting products (000s) 246 690 1,223 1,849 2,525 2,869 3,005 3,100 3,162 3,224 3,276

On rapastinel/NRX-1074 (Allergan) (000s) 246 687 1,168 1,666 2,040 1,810 1,347 984 817 731 652

On SAGE-217 (SAGE) (000s) 3 26 73 200 413 558 614 646 666 683

On AV-101 (VTGN) (000s) 4 31 79 180 342 455 496 519 541

On other (000s) 26 79 205 466 758 1,047 1,203 1,309 1,401

Novel, fast-acting products 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Share for rapastinel/NRX-1074 (Allergan) 100.0% 99.6% 95.4% 90.1% 80.8% 63.1% 44.8% 31.7% 25.8% 22.7% 19.9%

Share for SAGE-217 (SAGE) 0.4% 2.1% 4.0% 7.9% 14.4% 18.6% 19.8% 20.4% 20.6% 20.9%

Share for AV-101 (VTGN) 0.3% 1.7% 3.1% 6.3% 11.4% 14.7% 15.7% 16.1% 16.5%

Share for other 2.1% 4.3% 8.1% 16.2% 25.2% 33.8% 38.0% 40.6% 42.8%

Price of rapastinel/NRX-1074 (Allergan) $6,500 $6,630 $6,763 $6,898 $7,036 $7,177 $7,320 $7,466 $7,616 $7,768 $7,923

Price of SAGE-217 (SAGE) $7,275 $7,421 $7,569 $7,720 $7,875 $8,032 $8,193 $8,357 $8,524 $8,694

Price of AV-101 (VTGN) $4,745 $4,840 $4,937 $5,035 $5,136 $5,239 $5,344 $5,451 $5,560

Price of other (weighted) $5,000 $5,100 $5,202 $5,306 $5,412 $5,520 $5,631 $5,743 $5,858

US sales of AV-101 ($ million) 19.2 147.6 390.7 905.8 1,757.4 2,384.7 2,648.3 2,827.1 3,005.4

YoY growth 670.7% 164.6% 131.8% 94.0% 35.7% 11.1% 6.8% 6.3%

Page 11 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

Background: Depression is a common, but serious, illness

Depression affects 6.7% of the population, with younger adults more likely to be affected Depression affects a variety of people in a variety of ways. Major depression (major depressive disorder, MDD), or clinical

depression, is a mood disorder causing persistent feelings of sadness, which can lead to a variety of emotional and physical

problems. The Diagnostic and Statistical Manual of Mental Disorders (DSM-5) provides a list of symptoms of clinical

depression that include recurrent fatigue, feelings of worthlessness or guilt, indecisiveness, sleep disturbances, inability to

feel pleasure, restlessness or feeling slowed down, thoughts of self-harm, and weight changes.15 Clinical depression is

different than the passing sadness that everyone experiences in their lives. The sadness that someone who is not afflicted

by depression feels is typically short-lived and is gone after a few days, while someone with MDD has persistent symptoms.

Men, women, and children are all affected by depression. MDD affects 350 million people worldwide,16 with

approximately 15 million adult Americans, or almost 7%, affected (see Figure 8).17 According to multiple academic journals,

women are 50% more likely than men to develop depression. The far reaching nature of depression is such that the World

Health Organization (WHO) predicts that by 2030, depression will be the leading cause of disease burden worldwide.18

Depression can be difficult to diagnose because it often goes unreported, for example, due to social stigma or lack of

awareness. Doctors frequently overlook depression in the elderly since it can be challenging to distinguish normal grief

(over the loss of a loved one, for example) from major depression. In addition, older adults have more medical conditions

and take more medications, which can influence depression.

Despite the difficulties in diagnosis, 1 in 10 Americans over 12 years of age take antidepressants. U.S. Centers for Disease

Control and Prevention data show, per Figure 7, over 10% of adults take antidepressants, with older Americans more likely

to take antidepressants, despite the lower prevalence in older individuals.

15

http://www.dsm5.org/Pages/Default.aspx 16

http://www.who.int/mental_health/management/depression/who_paper_depression_wfmh_2012.pdf 17

https://www.nimh.nih.gov/health/statistics/prevalence/major-depression-among-adults.shtml 18

Lépine JP and M Briley. The increasing burden of depression. Neuropsychiatr Dis Treat. 2011; 7(Suppl 1):3-7.

Page 12 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

Source: NIMH Statistics19, Chardan. *NH/OPI = Native Hawaiian/ Other Pacific Islander **AI/AN = American Indian/Alaska Native

Figure 6: Depression affects 6.7% of US adults, with females, and younger adults disproportionately affected

Source: U.S. Centers for Disease Control and Prevention20, Chardan.

Figure 7: Percentage of people aged >12 who take antidepressants in the US (2005-2008)

19

http://www.nimh.nih.gov/health/statistics/prevalence/major-depression-among-adults.shtml 20

http://www.cdc.gov/nchs/data/databriefs/db76.pdf

Page 13 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

An unmet medical need exists with current drug therapies in major depressive disorder Treatment-resistant depression (TRD) is a serious issue due to the levels of dysfunction that major depression causes.

Relatively few novel anti-depression medicines have been approved in the last 15 years (see Figure 8), and the ones that

have been approved all target old mechanisms. Because of this, there are a series of unmet medical needs in the market. In

particular, there is hope for finding new medications that act quickly for the approximately 33% of people with treatment-

resistant depression that do not respond to existing antidepressants,21 in addition to the vast number of people that are

affected by the side effects of antidepressants. It is a large gap in the depression market.

Source: NIMH Statistics, Chardan.

Figure 8: None of the treatments approved by the FDA for depression since 2001 function in a novel way and all have black box warnings

There is no therapy currently on the market that can provide fast relief for depression symptoms. The fastest treatments

on the market are antidepressant medications, which take 4-8 weeks to take effect. For someone who is already in a

vulnerable or compromised state, having to wait that long for relief can be extremely hazardous.

30% to 45% of depressed patients do not respond to current medications. A Patient Preference and Adherence article on

depression points out that only 60-70% of patients respond positively to antidepressant therapy, meaning 30%-40% do not

respond even after multiple treatments are tried. Naurex (prior to Allergan acquisition) cites that current therapies do not

adequately treat 45% of patients.22 Of those for whom current therapies do not work, 10-30% showed treatment-resistant

symptoms. More than one medication is often prescribed if the first one does not succeed, but doing so increases side

21

Rush, A. J., et al. Acute and longer-term outcomes in depressed outpatients requiring one or several treatment steps: a STAR*D report." Am J Psychiatry. 2006; 163:1905-1917. 22

https://www.prnewswire.com/news-releases/naurexs-glyx-13-demonstrates-robust-sustained-antidepressant-effects-and-excellent-tolerability-in-phase-2b-study-300007528.html

Drug Mechanism Year Approved NME Box Warning?

Trintellix (vortioxetine) SSRI 2013 No Yes

Fetzima (levomilnacipran) SNRI 2013 No Yes

Viibryd (vilazodone hydrochloride) SNRI 2011 No Yes

Oleptro (trazodone hydrochloride) SSRI 2010 No Yes

Aplenzin (bupropion hydrobromide) SNRI 2008 No Yes

Cymbalta (duloxetine) SNRI 2004 No Yes

Lexapro (escitalopram oxalate) SSRI 2002 No Yes

Paxil CR (paroxetine hydrochloride) SSRI 2002 No Yes

Zoloft (sertraline HCl) SSRI 2002 No Yes

Prozac Weekly (fluoxetine HCl) SSRU 2001 No Yes

Remeron SolTab (mirtazapine) Tetracyclic 2001 No Yes

Pristiq (desvenlafaxine) SNRI 2008 No Yes

Pexeva (paroxetine mesylate) SSRI 2003 No Yes

Page 14 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

effects.23 The side effects of antidepressants are a large drawback for people thinking about starting new medications or

adding another. In addition, Carlos A. Zarate, Jr., MD, Chief of the Experimental Therapeutics and Pathophysiology Branch

and Section on Neurobiology and Treatment of Mood and Anxiety Disorders at the National Institute of Mental Health

(NIMH) notes, “For some patients, there appears to be a ceiling effect in our ability to treat them despite augmentation,

switching, and combined strategies”.24 Dr. Zarate is conducting VistaGen’s phase II NIMH study of AV-101 (4-Cl-kynurenine)

in depression.

Antidepressant medication can cause suicidal thoughts or behavior, particularly among children and young adults.

VistaGen believes that AV-101 will not require a Boxed Warning. A Boxed Warning or “Black Box Warning” is the strictest

warning required by the FDA to appear on prescription drug labels and is designed to call attention to serious or life-

threatening risks. We note there a number of marketed drugs with Boxed Warnings used to treat depression that come

with serious side effects, such as SSRIs and SNRIs (Figure 10). The labels associated with these drugs discuss the increased

risk of suicidal thinking and behavior in children, adolescents, and young adults in short-term studies of MDD and other

psychiatric disorders. We note that it has yet to be determined whether AV-101 will receive a Black Box Warning, but

emphasize that it would be positively differentiated from other therapies if it did not require this label.

Existing therapies (SSRIs and SNRIs) take 4-8 weeks to work and have a variety of side effects. The most common

antidepressant medications are selective serotonin reuptake inhibitors (SSRI) and serotonin and norepinephrine reuptake

inhibitors (SNRI). It has been shown that serotonin and norepinephrine are involved in regulating mood, but it is still

unknown precisely how SSRIs and SNRIs work. Regardless, they are limited by side effects such as sexual problems, sleep

disturbances, headaches, and weight gain; and, they take 4-8 weeks for the patient to feel the full effects.

Tricyclic antidepressants can take 6-8 weeks to take effect. Tricyclic antidepressants are a class older than SSRIs/SNRIs.

They are not as commonly used because of the side effects, which include dizziness, drowsiness, dry mouth, sexual

problems, and weight gain. They also affect the heart in serious ways in people with preexisting heart conditions. Tricyclic

antidepressants additionally take 6-8 weeks to take effect.

Monoamine oxidase inhibitors (MAOIs) take 4-6 weeks to take effect. MAOIs are the oldest antidepressant class. They are

most often used in people that experience atypical depression symptoms, like increased appetite and panic. There is a big

drawback to taking MAOIs since certain foods and beverages, like cheese and red wine, cannot be consumed while taking

them. In addition, other medications must be avoided if taking MAOIs, such as some birth control pills, pain relievers, cold

and allergy medications, and herbal supplements. MAOIs take 4-6 weeks to take effect.

Ketamine and other NMDAR modulators address the unmet medical need

Ketamine is a breakthrough depression therapy, but comes with important risks Ketamine, which has effects on NMDA receptors, has potential in depression. Ketamine has existed for a long time in the

medical world, but, until recently, it has only been used as an FDA-approved intravenous anesthetic. Ketamine works on the

NMDA receptors in the brain as a glutamate receptor antagonist. The medical benefits of ketamine are becoming more

evident. Unlike depression drugs that take 4-8 weeks to work, ketamine has a rapid and predictable onset, which is a

23

Al-Harbi KS. Treatment-resistant depression: therapeutic trends, challenges, and future directions. Patient Prefer Adherence. 2012; 6:369-388 24

http://www.psychiatryadvisor.com/apa-2015-coverage/ketamine-treatment-resistant-depression/article/415158/

Page 15 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

drastic improvement on existing depression therapies.25 Effects can last 24 hours after one dose, per a study on rats done

by the NIH. Ketamine has been shown, via actions on glutamate receptors, to promote long-lasting signal transmission in

neurons, known as synaptic plasticity, which is associated with learning and memory.26 Although a ketamine infusion

induces transient cognitive deficits and euphoria, there is a lessening of core symptoms of depression that seem

disconnected from the ketamine “high”. The feelings of wellbeing last for almost three days while the “high” disappears

after a matter of hours.27 Scientists are now trying to isolate different factors around the NMDA receptor on which

ketamine acts to achieve the antidepressant effects of ketamine without the psychotomimetic side effects.

Ketamine rapidly reduces depression scores in people with major depression. The Hamilton Depression Rating Scale

(HDRS or HAMD) was used in a study performed on the effects of a single dose of intravenous ketamine in patients with

depression. The subjects showed significant improvement of depressive symptoms within 72 hours. This improvement was

measured in part by the subjects’ depression scale scores, which decreased by 14+/- SD 10 points.28 In addition, a 2006

study by Dr. Carlos Zarate of the NIH, and others, demonstrated the rapid and potent antidepressant effects of ketamine,

when the drug is infused two or three times per week.29 In the study, subjects that received ketamine showed significant

improvement of depression symptoms compared with the subjects that received a placebo. Antidepressant effects were

felt within 110 minutes of injection and remained notable throughout the week. Of the subjects treated, 71% met response

criteria and 29% met remission criteria the day after the infusion. 35% percent of subjects maintained response for at least

1 week. Adverse effects associated with ketamine, such as euphoria, dizziness, and de-realization, did emerge, however the

“high” did not persist beyond 80-110 minutes, meaning it did not cause the lasting feelings of wellbeing and relief of

depression symptoms that patients experienced. The results of the study support the theory that directly targeting the

NMDA receptor may bring about the rapid and relatively sustained antidepressant affects that the depression community

needs. Dr. Carlos Zarate, who led the study, with his NIH colleagues, is funding VistaGen in clinical phase II testing of

VistaGen’s ketamine-like antidepressant, AV-101, which results are expected in 2H18.

Due to the side effects of ketamine, it is abused as street drug and is a Schedule III Controlled Substance. Ketamine blocks

the NMDA receptor completely, which leads to drastic side effects like psychosis and dissociation. Although utilizing the

NMDA receptor in the brain may be a key to rapid and enduring relief of depression symptoms, ketamine in its existing

state causes extreme side effects, like hallucinations and dissociation. Ketamine is abused generally via snorting or oral

consumption. Similar to PCP, when taken in high doses, ketamine causes dream-like states, out-of-body experiences,

hallucinations, dissociation, delirium, psychosis-like states, and potentially amnesia. It is used as a club and party drug

(“Special K”) for those reasons, and has been designated a Schedule III Controlled Substance. Such side effects and potential

for abuse are however unacceptable for any common-use depression drug.

VistaGen and Allergan are emerging with ketamine-like products (NDMAR modulators) VistaGen is developing AV-101 (phase II), and Allergan is developing rapastinel (phase III). VistaGen is based in San

Francisco, California. AV-101 is an NMDA receptor glycine-binding site antagonist. Rapastinel works on the NMDA receptor

25

Haas DA and DG Harper. Ketamine: a review of its pharmacologic properties and use in ambulatory anesthesia. Anesth Prog. 1992; 39(3):61-68. 26

http://www.nimh.nih.gov/news/science-news/2013/ketamine-cousin-rapidly-lifts-depression-without-side-effects.shtml 27

Berman RM, et al. Antidepressant effects of ketamine in depressed patients. Biol Psychiatry. 2000; 47(4):351-4. 28

Berman RM, et al. Antidepressant effects of ketamine in depressed patients. Biol Psychiatry. 2000; 47(4):351-4. 29

Zarate Jr. CA, et al. A randomized trial of an N-methyl-D-aspartate antagonist in treatment-resistant major depression. Arch Gen Psychiatry. 2006; 63(8):856-64.

Page 16 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

as a partial agonist (see Figure 9). Indeed, rapastinel has been cited as showing 20% of the activity of glycine full agonist D-

serine.30 Unlike ketamine, rapastinel and AV-101 do not completely block the NMDA receptor channel, so they do not

produce psychotomimetic side effects, but still achieve the antidepressant effects.

Source: VistaGen corporate presentation, Chardan.

Figure 9: VistaGen’s AV-101 (antagonist) and Naurex’s rapastinel (partial agonist) work at the same place, but in different ways

VistaGen’s AV-101 and Allergan’s product (rapastinel) interact with NMDA receptor in different ways (see Figure 9). AV-

101 is a small molecule modulator of the NMDA receptor and is a glycine-binding site antagonist. Rapastinel is a peptide

modulator of the NMDA receptor and is a glycine-binding site partial agonist. In addition, VistaGen’s drug is orally active,

whereas Allergan’s rapastinel is administered intravenously,

We found other drugs in clinical development which have limitations. Esketamine, an inhaled intranasal version of

ketamine produced by Johnson & Johnson (unrated), is currently in phase III trials (NCT02932943, NCT02943564,

NCT02943577, NCT02951988, NCT03002077) for TRD, with an NDA filing expected in 2018. Esketamine is administered via

nasal spray at 1/12th the dose used for anesthesia and will only be used in clinics, not given to individual patients, in part

due to the potential for abuse. Although there is considerable anticipation in advance of phase III results, phase II results

(from NCT01998958) published in JAMA Psychiatry indicate increased dissociative symptoms in esketamine-treated

30

Moskal JR, et al., GLYX-13, an NMDA receptor glycine site functional partial agonist enhances cognition and produces antidepressant effects without the psychotomimetic side effects of NMDA receptor antagonists. Expert Opin Investig Drugs. 2014; 23(2):243-254.

Page 17 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

patients compared to controls, suggesting this drug does not eliminate many of the negative effects of ketamine.31 20% of

all patients treated with esketamine experienced dissociative reactions or symptoms while 13% of patients had dissociative

disorder. While these adverse events resolved within one day of treatment, we see this as evidence for potential abuse of

esketamine if it comes to market. Cerecor (unrated) asset CERC-301, a partial glutamatergic NMDA agonist, was tested as

an adjunctive therapy in multiple phase II trials; however, the product did not meet its primary endpoint of change in the

Hamilton Depression Rating Scale in patients with treatment-refractory MDD when added to current antidepressant

regimens.32 A phase II trial at a low dose in combination with antidepressants in patients with MDD and suicidal ideation

also missed the primary endpoint.33 Cerecor is continuing to develop CERC-301 as an adjunctive therapy, despite these

failures, although no new results have been announced and no trials are currently ongoing. D-cycloserine, a partial glycine

site agonist like rapastinel, has also been investigated in MDD but in order to reach a dose sufficient for an antidepressant

effect, there is a high risk of psychotomimetic and other unsafe side effects.34 For these reasons, we believe VistaGen and

Allergan are the leaders in the ketamine-like depression space and are most likely to succeed with their pipeline products.

VistaGen: AV-101 (L-4-chlorokynurenine or 4-Cl-KYN) (phase II)

AV-101 is VistaGen’s phase II oral product for major depression AV-101 advances on ketamine’s benefits, without the side effects and need for IV administration. AV-101 is a novel, oral,

small-molecule prodrug candidate, currently in an NIH-sponsored phase II trial for major depressive disorder. VistaGen also

cites the potential for AV-101 utility in epilepsy, Huntington’s disease, neuropathic pain as a non-opioid treatment, and

levodopa induced dyskinesia associated with Parkinson’s disease, which is based on results seen for the compound in a

series of animal studies. We model AV-101 use however only in MDD. AV-101 is designed to be mechanistically, but not

structurally, similar to ketamine as an NMDAR antagonist with rapid effect through AMPA-dependent glutamate release,35

but potentially much safer due to the selective glycine site binding. On the NMDAR mechanism, AV-101 modulates

(reduces the activity of) the channel but does not block it, meaning it can avoid the sedating, hallucinogenic, and addictive

side effects caused by ketamine. Indeed, VistaGen has shown results of two NIH-funded phase I clinical studies which

demonstrate AV-101 is safe and well-tolerated.

Phase Ia and Ib studies showed AV-101 to be safe and well-tolerated and led to feelings of well-being in healthy subjects.

NIH-funded phase Ia and Ib trials were single-site, randomized, double-blind, placebo-controlled studies. The 36-patient

phase Ia study at Progressive Medical Research in Daytona, FL looked at six single-dose levels (30, 120, 360, 720, 1,080, and

1,440 mg), with 18 patients treated with AV-101 and 18 on placebo (6 patients per dose cohort). At higher doses, per the

VistaGen corporate presentation, AV-101 produced positive feelings of well-being like the antidepressant effects reported

with ketamine, but without any of the ketamine’s side effects (see Figure 10). The 48-patient phase Ib study at the

31

Daly EJ et al. Efficacy and Safety of Intranasal Esketamine Adjunctive to Oral Antidepressant Therapy in Treatment-Resistant Depression A Randomized Clinical Trial JAMA Psychiatry, 2017. doi:10.1001/jamapsychiatry.2017.3739. 32

https://ir.cerecor.com/press-releases/detail/30/cerecor-reports-top-line-data-from-cerc-301-phase-2-study 33

https://d1io3yog0oux5.cloudfront.net/_94160011ab647fefc0dc6be8fac39459/cerecor/db/322/603/file/Poster+-+Study+Clin301-201_FINAL.pdf 34

Heresco-Levy U, et al. A randomized add-on trial of high-dose D-cycloserine for treatment-resistant depression. Int J Neuropsychopharmacol. 2013; 16(3):501-506. 35

Chowdhury GMI, et al. Transiently increased glutamate cycling in rat PFC is associated with rapid onset of antidepressant-like effects. Mol Psychiatry. 2017; 22(1): 120-126.

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VistaGen TherapeuticsCompany Note

February 8, 2018

University of California San Diego looked at a daily oral dose for 14 days, with sequential dose-escalation. Given the phase

Ia results, three dose levels (360, 1,080, and 1,440 mg) were tested, with 36 subjects treated with AV-101 and 12 on

placebo (16 patients per dose cohort). As in phase Ia, the phase Ib results showed that multiple subjects on AV-101 (and

none on placebo) reported positive feelings of well-being, without any of ketamine’s side effects (see Figure 10).

Source: VistaGen corporate presentation, Chardan.

Figure 10: AV-101 produced feelings of well-being, even in healthy subjects, and had no safety issues

Phase II NIH-sponsored trials for AV-101 will read-out in 2H18. The principal investigator is Dr. Carlos Zarate, Chief of

Experimental Therapeutics and Pathophysiology at the National Institute of Mental Health. The trial (NCT02484456) is a

single-site, double-blind, placebo-controlled crossover study in 20-25 adult subjects with treatment-resistant major

depressive disorder. A single oral dose of 1,080 mg or 1,440 mg is administered once a day for 14 days without any

background treatments. The primary objective is to evaluate safety and efficacy of AV-101 using the standard HDRS total

score. Secondary outcomes will include proportion of subjects achieving remission (HDRS ≤7) and response (≥50%

reduction from baseline in HDRS total score); change from baseline in Hamilton Anxiety Rating Scale (HAM-A),

Montgomery-Asberg Depression Rating Scale (MADRS), and the Columbia Suicide Severity Rating Scale (C-SSRS) total

scores.

The NIH collaboration should ensure deep scientific insights into AV-101’s profile, which regulators should appreciate.

The phase II monotherapy study, because of access to NIH resources, will include a high amount of study into AV-101’s

mechanism and profile. NIH facilities and resources involved will include the Experimental Therapeutics and

Pathophysiology Branch, the Functional MRI Core (fMRI), the Magnetic Resonance Spectroscopy Core (MRS), the

Phase 1a Placebo AV-101

Non-serious events 32% (6/18) 11% (2/18)

Feelings of well being 0% 11% (2/18)

Phase 1b

Non-serious events 83% (10/12) 67% (24/36

Feelings of well being 0% 8% (3/36)

Phase 1a & 1b, two

highest doses

Feelings of well being 0% 15% (4/27)

*Forty-nine of the 57 total adverse events (AEs) were considered mild and 8

moderate. Headache was the most commonly reported AE. All of the AEs

reported during the clinical study were completely resolved.

Page 19 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

Neurophysiology Imaging Facility, the Microarray Core, and the Scientific and Statistical Computing Core. In addition, clinical

bioanalytical chemistry, metabolomics, and immunoassay support will be provided. Per VistaGen, the collaboration should

lead to important assessments on pharmacokinetics, drug metabolism, and metabolomics analyses, as well as surrogate

biomarkers of drug effect, such as glutamate imaging using 7T-MRS, plasma/serum brain-derived neurotrophic factor

(BDNF) levels, glycine/serine mRNA levels, levels of oxidative stress, and cerebrospinal fluid measurements of pro-

inflammatory cytokines.

A company-sponsored phase II adjunctive therapy trial will also be initiated in 1Q18. This second trial (NCT03078322) is

expected to enroll ~180 patients in a double-blind, placebo-controlled trial of AV-101 on a background of open-label use of

a commercially-available antidepressant. The targeted patient population is those who have an inadequate response to 1-3

approved antidepressants during an ongoing depressive episode, with a baseline HAMD-17 score of >20. Efficacy of AV-101

will be assessed using the Montgomery-Asberg Depression Rating Scale 6-item version (MADRS-6) after 14 days of

treatment. The study will also assess the time course of improvement and safety/tolerability of the drug, as measured by

adverse events and lab tests. The study is designed as a sequential parallel comparison design (SPCD) trial, which should

reduce the high placebo response rate seen in many MDD trials (Figure 11).36,37 We see the use in “patients with an

inadequate response to standard antidepressants” as a long term benefit from a regulatory standpoint. TRD, the patient

population being targeted in the phase III esketamine trials, requires patients to fail 2 independent antidepressants. The

inadequate response definition, however, does not require patients to fail treatment prior to beginning AV-101, it only

requires patients to continue to experience symptoms despite ongoing therapy. This less stringent definition could allow

AV-101 to be used by a significantly larger patient population than TRD, if approved.

Source: Mullard, A. Nat Rev Drug Discov. 2016. 15:807-808, Chardan.

Figure 11: VistaGen’s phase II adjunctive therapy trial will use an SPCD to reduce the impact of the placebo effect

36

http://mgh-ctni.org/innovations/spcd/ 37

Mullard A. Paring down the placebo response. Nat Rev Drug Discov. 2016. 15:807-808.

Page 20 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

Dr. Zarate’s association with VTGN to us is akin to Dr. Rosenberg’s association with Kite The association of Dr. Zarate with AV-101 will likely be taken as a positive in the future. As mentioned above, Dr. Carlos A.

Zarate of the NIMH is conducting the NIH-sponsored phase II study of AV-101 in MDD and, along with his NIMH colleagues,

has chosen to fund VistaGen in the phase II testing of AV-101. Based on Dr. Zarate’s credentials, his association with AV-

101 and VistaGen will likely be taken as a quality signal, in the same way that adoptive cell transfer guru, Dr. Steven

Rosenberg, was taken as a quality signal for Kite Pharma, a Gilead company (unrated), on Dr. Rosenberg’s groundbreaking

work in engineered T cells with tumor-specific T cell receptors (TCRs) and chimeric antigen receptors (CARs).

Dr. Zarate is a key opinion leader in the depression space. Per Dr. Zarate’s bio, he “holds the position of Chief, Section on

the Neurobiology and Treatment of Mood Disorders and Chief of Experimental Therapeutics and Pathophysiology Branch

(ETPB) at the National Institute of Mental Health, and Clinical Professor of Psychiatry and Behavioral Sciences, at The

George Washington University. He has been contributing to studying and treating psychiatric diseases for more than twenty

years, holding positions at Harvard and University of Massachusetts Medical Schools. He has authored more than 240

publications in the field, including more than 60 involving the uses of ketamine for treating depression many of which are

highly sited in the field.”

Dr. Zarate has published some of the most important work on ketamine and NMDA receptor modulators. As described

above, Dr. Zarate was the principal investigator for the 2006 NIH study, and led other NIH studies, which demonstrated the

rapid and potent antidepressant effects of ketamine.38 The results of the study for many gave great strength to the theory

that modulating the NMDA receptor can bring about the rapid and sustained antidepressant effects.

AV-101 was granted Fast Track Designation from the FDA in January 2018. Fast track designation is “designed by the FDA

to facilitate the development, and expedite the review, of drugs to treat serious conditions and fill an unmet medical

need.” This newly-acquired status will allow VistaGen to have more frequent interactions with the FDA during the

remaining phases of development, including design of the pivotal trial(s), and possibly priority review to expedite the

approve process. We see this as a new positive for AV-101.

Allergan: Rapastinel (phase III)

Allergan’s rapastinel has produced positive animal and human data through phase II trials Rapastinel has produced data in 500 subjects to date. Rapastinel is a novel, first-in-class glycine-site functional partial

agonist (GFPA) selective modulator of the NMDA receptor which has shown rapid anti-depressant activity without

ketamine’s psychotomimetic side effects. These results have been confirmed in over 500 human subjects to date.

Animal studies supported human development.39 In animal studies, rapastinel has been shown to facilitate learning and

memory in both young adult and learning-impaired aged rats and to produce antidepressant-like effects in several animal

models. Rapastinel, further, showed no psychotomimetic side effects in rats, no addictive side effects characteristic of

NMDAR antagonists, and no sensory-motor gating deficits associated with positive symptoms of schizophrenia. Rapastinel

was well tolerated.

38

Zarate Jr. CA, et al. A randomized trial of an N-methyl-D-aspartate antagonist in treatment-resistant major depression. Arch Gen Psychiatry. 2006; 63(8):856-64. 39

Moskal JR, et al., GLYX-13, an NMDA receptor glycine site functional partial agonist enhances cognition and produces antidepressant effects without the psychotomimetic side effects of NMDA receptor antagonists. Expert Opin Investig Drugs. 2014; 23(2):243-254.

Page 21 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

A phase I study showed rapastinel was well tolerated. A phase I safety and pharmacokinetics study in normal human

volunteers showed rapastinel to have supralinear AUC increases over a dose range of 0.5 – 25 mg/kg with a short half-life of

10 minutes or less. Rapastinel was well tolerated, with adverse events stated as similar to placebo.

A phase IIa study showed rapastinel significantly reduced depression (within 24 hours) with no safety concerns.40 Naurex

then produced a 116-patient randomized, double-blind, multiple-dose level (1, 5, 10, or 30 mg/kg), placebo-controlled,

single IV dose parallel safety and efficacy study in patients with MDD. Subjects were recruited from April 2011 to July 2012.

33 received placebo, and 25, 20, 17, and 21 received rapastinel at doses of 1, 5, 10, and 30 mg/kg, respectively. Dose levels

of 5 and 10 mg/kg reduced HDRS-17 statistically significantly compared to placebo at day 7, but not day 14, as the study

was a single-dose study (see Figure 12). It was concluded that the dose of 10 mg/kg would be the peak of the dose

response. The anti-depressant effect was not existent for the 30 mg/kg dose, similar to a dose response observed in

animals. In the study, no treatment-related serious adverse events occurred, and no differences were noted between

treatment groups for adverse events, ECG, oxygen saturation, laboratory or hematological data, or vital signs. However,

approximately 10% of subjects who received rapastinel reported dizziness, versus none on placebo. The dizziness lasted

from 5 min to several hours and was also reported by 10% of subjects in the phase I study. Importantly, unlike other

NMDAR modulators previously studied in humans, rapastinel did not increase the BPRS+ score at any point, showing the

product has low potential for psychotomimetic effects (see Figure 12).

Source: Moskal JR, et al. Expert Opin Investig Drug, 2014; 23(2):243-254, Chardan.

Figure 12: Phase IIa—A single rapastinel dose reduced depression scores (HDRS-17) within 24 hours, without psychotomimetic side effects (BPRS+)

The strong placebo effect in the phase IIa study might be explained by the IV route of administration, as injection is

associated with larger placebo effects in depression clinical trials compared to oral administration, and prolonged infusion

40

Moskal JR, et al., GLYX-13, an NMDA receptor glycine site functional partial agonist enhances cognition and produces antidepressant effects without the psychotomimetic side effects of NMDA receptor antagonists. Expert Opin Investig Drugs. 2014; 23(2):243-254.

Page 22 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

time allows a “therapeutic relationship” to develop. Experts also cited a strong expectation of response given wide media

attention of the efficacy of ketamine and the large number of evaluations given in the 24-hr inpatient period.

A phase IIb study evaluated the safety and efficacy of repeated dosing of rapastinel.41, 42 Naurex ran a six-week double-

blind, placebo-controlled adaptive-dose study with 386 subjects (67% female, 33% male; median age of 50 years) receiving

an IV bolus of rapastinel, followed by weekly injections until a response was established, as a measured by a reduction in

HDRS-17 to a score less than or equal to 50% of the pre-dose baseline. Of those with a response, subjects were then dosed

with weekly doses of placebo to force a relapse in depressive symptoms. Upon relapse, subjects were dosed with

rapastinel to evaluate whether efficacy could be re-established.

The phase IIb study showed rapastinel was statistically more effective than the placebo in reducing depression. Naurex

reported the results of the phase IIb trial in a 10 December 2014 press release. The trial was conducted across 25 U.S. sites

and enrolled more than 400 patients with MDD who had an inadequate response to antidepressant therapies. The results

showed that there was an average 2.8-point decrease in HDRS-17 scores (i.e. improvement of depressive symptoms) in the

week after receiving rapastinel. HDRS scores also decreased incrementally with each additional dose of rapastinel. A

significant reduction of depression symptoms was seen in as few as 2 hours. The 2.8 point decrease for rapastinel patients

was notable, compared to an average 3.1 point increase in HDRS-17 scores (worsening of depressive symptoms) in the

week after receiving placebo (p = 0.03). Thus, while the phase IIa study confirmed a significant reduction in depressive

symptoms in as a little as two hours following a single injection of rapastinel, which persists for 7 days, the phase IIb study

demonstrates that the effect was durable and builds with repeated doses, and produces an effect, per Naurex’s press

release, that was nearly double the effect seen with most other antidepressant drugs after 4 to 6 weeks of repeated dosing.

The phase IIb study showed no drug-related serious adverse events were experienced. Naurex deemed rapastinel was

well-tolerated throughout the study, with no serious drug-related adverse events and no subjects discontinuing treatment

due to drug-related adverse events. Naurex management in the 10 December 2014 press release, however, did not

comment on whether the rates of dizziness seen in the phase IIa trial were also present in the phase IIb trial; though, we

note the lack of treatment-related discontinuations as a positive.

Breakthrough Therapy designation was granted in January 2016, based on preclinical and preliminary clinical evidence.

Breakthrough Therapy designation is “intended to expedite the development and review of a potential new medicine if it is

intended to treat a serious or life-threatening disease and preliminary clinical evidence indicates that the drug may

demonstrate substantial improvement over existing therapies.” We believe Breakthrough Therapy designation supports the

notion that rapastinel is an effective drug in a setting with a largely unmet medical need.

41

https://www.prnewswire.com/news-releases/naurexs-glyx-13-demonstrates-robust-sustained-antidepressant-effects-and-excellent-tolerability-in-phase-2b-study-300007528.html 42

Abstract T68. http://www.nature.com/npp/journal/v39/n1s/full/npp2014281a.html

Page 23 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

Movement of rapastinel through phase II trials was associated with $161 mm of financing

Movement of rapastinel through phase II trials led to increased investor confidence and $161 mm of new money. From

Naurex’s press releases, we note the following financings for Naurex as rapastinel progressed through phase II trials:

11 May 201143: $18 million Series A financing prior to initiation of the phase IIa rapastinel (GLYX-13) trial

17 December 201244: $38 million Series B financing after positive phase IIa rapastinel (GLYX-13) results

6 May 201445: $25 million additional investments from shareholders after positive top-line phase IIb rapastinel (GLYX-

13) results

3 December 201446: $80 million Series C financing prior to initiation of phase III rapastinel (GLYX-13) trials

We believe VistaGen is undervalued given other CNS company market-caps

We believe VistaGen is undervalued as a phase II company in the CNS space. We believe a credible phase II company in

the MDD space should be worth much more than $55.6 mm fully-diluted market cap for VTGN and underscores the

opportunity for significant upside. Selected companies in this space include Intra-Cellular Therapies (unrated) a phase III

company with a market-cap of $895 million; Sage Therapeutics a phase III company with a market-cap of $7.2 billion,

Acadia Pharmaceuticals (unrated) with a commercial product with a market-cap of $3.8 billion; and Alkermes (unrated)

with a newly approved product with a market-cap of $8.6 billion. (All market-caps are as of 7 February 2018.) Although

these companies are in later-stage development, given the market size of depression we believe VistaGen is undervalued.

43

https://www.prnewswire.com/news-releases/naurex-completes-18-million-series-a-financing-121623948.html 44

https://www.prnewswire.com/news-releases/naurex-completes-38-million-series-b-financing-183768991.html 45

https://www.prnewswire.com/news-releases/naurex-reports-positive-top-line-phase-2b-results-for-novel-antidepressant-glyx-13-and-advances-nrx-1074-into-phase-2-depression-study-258089291.html 46

https://www.prnewswire.com/news-releases/naurex-raises-80-million-in-series-c-financing-to-advance-novel-nmda-receptor-modulators-in-depression-and-other-cns-disorders-300003889.html

Page 24 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

Financials

Income statement

Source: Corporate reports, Chardan Capital Markets

Figure 13: VistaGen Therapeutics—Income statement

$ in million, except EPS 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Revenues and royalties 2.1 1.3 0.2 0.0 0.0 0.0 1.3 0.0 0.0 0.0 0.0 11.0 87.0 239.8 560.8 1,102.8 1,549.3 1,763.9 1,893.2 2,013.8

Cost of sales 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -3.9 -23.9 -53.2 -112.7 -220.6 -308.3 -349.3 -373.0 -394.7

Gross profit 2.1 1.3 0.2 0.0 0.0 0.0 1.3 0.0 0.0 0.0 0.0 7.1 63.0 186.6 448.1 882.3 1,241.0 1,414.7 1,520.3 1,619.1

Research and development -3.7 -5.4 -3.4 -2.5 -2.4 -3.9 -5.2 -12.8 -30.5 -37.9 -47.1 -58.6 -72.8 -90.5 -111.7 -207.7 -275.0 -294.0 -295.0 -292.0

Sales, general and administrative -5.0 0.0 -3.6 -2.5 -4.3 -13.9 -6.3 -12.7 -25.3 -30.6 -37.0 -44.7 -54.0 -65.3 -171.3 -328.6 -450.1 -499.2 -521.6 -539.7

Other operating expenses 0.0 -5.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Operating income/loss -6.6 -9.0 -6.8 -5.0 -6.8 -17.9 -10.2 -25.4 -55.8 -68.5 -84.1 -96.2 -63.8 30.8 165.1 345.9 515.9 621.5 703.7 787.4

Interest income (expenses) -3.1 -1.9 -0.9 -1.5 -4.5 -0.8 0.0 0.0 0.3 0.8 1.3 1.6 2.1 2.5 3.2 5.1 9.0 14.9 22.2 31.6

Other income (expense) 0.2 -1.3 -5.2 3.6 -2.6 -28.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net income before income taxes -9.5 -12.2 -12.9 -3.0 -13.9 -47.2 -10.2 -25.5 -55.5 -67.7 -82.8 -94.5 -61.7 33.3 168.3 351.0 524.9 636.4 725.8 819.0

Provision for income taxes 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -1.7 -42.1 -87.7 -131.2 -159.1 -181.5 -204.7

Net income (loss) -9.5 -12.2 -12.9 -3.0 -13.9 -47.2 -10.3 -25.5 -55.5 -67.7 -82.8 -94.5 -61.7 31.6 126.2 263.2 393.7 477.3 544.4 614.2

Accrued or deemed dividend on preferred stock 0.0 0.0 -10.2 0.0 0.0 -4.2 -1.4 -1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net income (loss) to common stockholders -9.5 -12.2 -23.1 -3.0 -13.9 -51.4 -11.6 -26.5 -55.5 -67.7 -82.8 -94.5 -61.7 31.6 126.2 263.2 393.7 477.3 544.4 614.2

Shares, basic (million) 5.241 14.737 18.108 21.973 1.319 1.768 7.532 12.726 29.349 33.349 36.826 39.848 42.474 42.474 42.474 42.474 42.474 42.474 42.474 42.474

Shares, diluted (million) 5.241 14.737 18.108 21.973 1.319 1.768 7.532 12.726 29.349 33.349 36.826 39.848 42.474 42.474 42.474 42.474 42.474 42.474 42.474 42.474

Net income per share - basic -1.81 -0.83 -1.27 -0.14 -10.53 -29.08 -1.54 -2.08 -1.89 -2.03 -2.25 -2.37 -1.45 0.74 2.97 6.20 9.27 11.24 12.82 14.46

YoY EPS growth NM -54.2% 53.8% -89.4% 7695.0% 176.2% -94.7% 34.8% -9.1% 7.4% 10.8% 5.5% -38.8% -151.2% 299.4% 108.6% 49.5% 21.3% 14.1% 12.8%

Net income per share - diluted -1.81 -0.83 -1.27 -0.14 -10.53 -29.08 -1.54 -2.08 -1.89 -2.03 -2.25 -2.37 -1.45 0.74 2.97 6.20 9.27 11.24 12.82 14.46

YoY EPS growth NM -54.2% 53.8% -89.4% 7695.0% 176.2% -94.7% 34.8% -9.1% 7.4% 10.8% 5.5% -38.8% -151.2% 299.4% 108.6% 49.5% 21.3% 14.1% 12.8%

Distribution of cash to shareholders

Dividends paid 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Share repurchases 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Common size income statement 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

Revenues and royalties 100.0% 100.0% 100.0% NM NM NM 100.0% NM NM NM NM 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Cost of sales 0.0% 0.0% 0.0% NM NM NM 0.0% NM NM NM NM -35.6% -27.5% -22.2% -20.1% -20.0% -19.9% -19.8% -19.7% -19.6%

Gross profit 100.0% 100.0% 100.0% NM NM NM 100.0% NM NM NM NM 64.4% 72.5% 77.8% 79.9% 80.0% 80.1% 80.2% 80.3% 80.4%

Research and development -177.6% -401.5% -1715.5% NM NM NM -416.3% NM NM NM NM -530.8% -83.7% -37.7% -19.9% -18.8% -17.8% -16.7% -15.6% -14.5%

Sales, general and administrative -239.4% 0.0% -1781.0% NM NM NM -503.6% NM NM NM NM -405.0% -62.1% -27.2% -30.6% -29.8% -29.1% -28.3% -27.6% -26.8%

Other operating expenses 0.0% -372.3% 0.0% NM NM NM 0.0% NM NM NM NM 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Operating income/loss -317.0% -673.8% -3396.5% NM NM NM -819.9% NM NM NM NM -871.4% -73.4% 12.8% 29.4% 31.4% 33.3% 35.2% 37.2% 39.1%

Interest income (expenses) -150.6% -141.1% -460.5% NM NM NM 0.0% NM NM NM NM 14.7% 2.4% 1.0% 0.6% 0.5% 0.6% 0.8% 1.2% 1.6%

Other income (expense) 9.8% -94.7% -2584.5% NM NM NM 0.0% NM NM NM NM 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Net income before income taxes -457.8% -909.5% -6441.5% NM NM NM -819.9% NM NM NM NM -856.7% -71.0% 13.9% 30.0% 31.8% 33.9% 36.1% 38.3% 40.7%

Provision for income taxes 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% -5.0% -25.0% -25.0% -25.0% -25.0% -25.0% -25.0%

Net income (loss) -457.9% -909.7% -6443.5% NM NM NM -820.1% NM NM NM NM -856.7% -71.0% 13.2% 22.5% 23.9% 25.4% 27.1% 28.8% 30.5%

Accrued or deemed dividend on preferred stock 0.0% 0.0% -5096.6% NM NM NM -109.4% NM NM NM NM 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Net income (loss) to common stockholders -457.9% -909.7% -11540% NM NM NM -929.6% NM NM NM NM -856.7% -71.0% 13.2% 22.5% 23.9% 25.4% 27.1% 28.8% 30.5%

Page 25 of 29Chardan Capital Markets, LLC

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February 8, 2018

Discounted cash flow (DCF) analysis

Source: Corporate reports, Chardan Capital Markets

Figure 14: VistaGen Therapeutics—Discounted cash flow (DCF) analysis

$ in millions, except per share data 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E

EBIT -6.6 -9.0 -6.8 -5.0 -6.8 -17.9 -10.2 -25.4 -55.8 -68.5 -84.1 -96.2 -63.8 30.8 165.1 345.9 515.9 621.5 703.7 787.4

Taxes 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -1.7 -42.1 -87.7 -131.2 -159.1 -181.5 -204.7

Unlevered net income -6.6 -9.0 -6.8 -5.0 -6.8 -17.9 -10.3 -25.4 -55.8 -68.5 -84.1 -96.2 -63.8 29.1 123.0 258.2 384.7 462.4 522.2 582.7

(+) depreciation and amortization 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.3 0.5 0.7 0.9 1.1 8.5 23.5 55.0 108.1 151.8 172.9 185.5 197.4

(-) capital expenditures -0.1 0.0 -0.1 0.0 0.0 0.0 -0.2 -0.4 -0.9 -1.4 -1.9 -2.4 -11.5 -24.0 -56.1 -110.3 -154.9 -176.4 -189.3 -201.4

(-) increase in working capital 3.2 -0.9 -0.6 1.4 0.4 -2.1 -0.5 -0.5 0.1 0.1 0.5 -5.3 -30.7 -32.2 -103.3 -125.5 -62.9 -27.6 -27.0 -0.7

(+) deferred taxes 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

(+) other non-cash items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Unlevered free cash flow -3.4 -10.0 -7.5 -3.6 -6.3 -19.9 -10.9 -26.1 -56.1 -69.1 -84.6 -102.8 -97.5 -3.6 18.6 130.5 318.7 431.2 491.4 577.9

Adjustment to first year cash flow 23.9

Adjusted unlevered free cash flow -2.2 -56.1 -69.1 -84.6 -102.8 -97.5 -3.6 18.6 130.5 318.7 431.2 491.4 577.9

Discount rate 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0%

Time period of discount, years 0.08 1.08 2.08 3.08 4.08 5.08 6.08 7.08 8.08 9.08 10.08 11.08 12.08

Time period of discount, years (mid-year convention) 0.04 0.58 1.58 2.58 3.58 4.58 5.58 6.58 7.58 8.58 9.58 10.58 11.58

Discount factor for free cash flow 0.99 0.92 0.80 0.70 0.61 0.53 0.46 0.40 0.35 0.30 0.26 0.23 0.20

Present value of unlevered free cash flow -2.2 -51.7 -55.4 -59.0 -62.3 -51.4 -1.6 7.4 45.2 96.0 113.0 112.0 114.5

Sum of PV of forecasted unlevered free cash flow 204.5

Terminal value: 1.0% perpetuity growth rate 4,198.4

Present value of terminal value 831.8

Implied terminal EBITDA multiple 4.6 x

Enterprise value 1,036.3

Equity value 1,051.5

Equity value per diluted share $22.31

Assumptions WACC calculations Balance sheet DCF value allocated to products and cash

Date 7-Feb-18 Risk-free rate 2.1% Total debt 0.1

Fiscal year ending (1-12) 6 Adjusted beta 1.9 Cash and equivalents 15.4 AV-101 $21.99 98.5%

Fiscal year ending (month) June Rm-Rf 7.0% Net debt -15.3 Cash per share 0.32 1.5%

Projections discounted to (1-12) 5 Re 15.1% Debt, as a % of equity 1.7% Equity value per share $22.31 100.0%

Projections discounted to (month) May Rd 0.0% Cash per share $0.33

Diluted shares outstanding 47.128 WACC, calculated 15.0% Closing price, 7-Feb-18 $1.18

Perpetuity growth rate 1.0% WACC, chosen 15.0% Fully diluted market cap, 7-Feb-18 $55.6 mm

Shares (VTGN 524B4, 12 December 2017) Dilution

3,279,871 shares, on exercise of stock options 3.280 shares $3.23 WAEP 0.000

7,107,157 shares, on exercise of prior warrants 7.107 shares $4.70 WAEP 0.000

10,000,000 shares, on exercise of Dec-17 warrants 10.000 shares $1.50 WAEP 0.000

750,000 shares, on conversion of Series A Preferred 0.750 shares 1 CR 0.750

1,823,700 shares, on conversion of Series B Preferred 1.824 shares 1 CR 1.824

2,318,012 shares, on conversion of Series C Preferred 2.318 shares 1 CR 2.318

Possible dilution (million shares) 25.279 4.892

Diluted shares (treasury method) 26.741

Fully diluted shares 47.128

Page 26 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

Required Research Disclosures

Distribution of Ratings/IB Services

Chardan Capital MarketsIB Serv./Past 12 Mos.

Rating Count Percent Count Percent

BUY [BUY] 67 68.37 26 38.81HOLD [NEUTRAL] 22 22.45 1 4.55SELL [SELL] 0 0.00 0 0.00NOT RATED [NR] 9 9.18 1 11.11

Regulation Analyst Certification ("Reg AC") — ANALYST(s) CERTIFICATION: The analyst(s) responsible for covering the securities in this report certify that the viewsexpressed in this research report accurately reflect their personal views about “Company” and its securities. The analyst(s)responsible for covering the securities in this report certify that no part of their compensation was, is, or will be directly orindirectly related to the specific recommendation or view contained in this research report.

DISCLOSURES

Within the last twelve months, Chardan Capital Markets has received compensation for investment banking services fromVistaGen Therapeutics. This research contains forward looking statements made pursuant to the safe harbor provisionof Private Securities Litigation Act of 1995.

Chardan Capital Markets makes a market in shares of VistaGen Therapeutics and as such, buys and sells from customerson a principal basis.

RATINGS

Page 27 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

Buy: Expected to materially outperform sector average over 12 months and indicates total return of at least 10% overthe next 12 months.

Neutral: Returns expected to be in line with sector average over 12 months and indicates total return between negative10% and 10% over the next 12 months.

Sell: Returns expected to be materially below sector average over 12 months and indicates total price decline of at least10% over the next 12 months.

VistaGen Therapeutics (VTGN - $1.19 - Buy)Price Target $22.00

VALUATION:

Our VistaGen (VTGN) price target of $22 is based on a probability-adjusted modeling of key franchises. We use a DCFwith a WACC of 15.0% and perpetuity growth of 1.0% (4.6x implied terminal EBITDA multiple) to derive our price target.For our share count, we assume full conversion/dilution of all securities (Series A Preferred, Series B Preferred, SeriesC Preferred, stock options, and stock warrants). Our fully-diluted share count of 47.128 million shares would stand at26.741 million shares were we to use the treasury method of dilution. Movement to full dilution is the greatest contributorto our reduction of our price target from $30 to $22, after VistaGen's recent common stock/warrants offering.

RISKS TO ACHIEVEMENT OF TARGET PRICE:

Clinical risks: Despite the promise of AV-101, we note that, as is typical for a phase II drug, the benefits of AV-101in major depressive disorder (MDD) are mostly theoretical, without more robust human proof-of-concept data expectedfrom ongoing phase II trials. Though the typical probability of a phase II product is roughly 40%, AV-101 is being testedin MDD, which due to many drug failures in the past may make our probability of launching too optimistic.

Regulatory: Despite the clinical progress for AV-101 so far in MDD, there is no certainty the product will be approvedor reimbursed in the US, even if AV-101 achieve's future targets on endpoints. If the regulatory pathway proves morecomplex and/or time consuming than we anticipate, there could be a materially-negative impact to our risk-adjustedprojections and price target.

Commercialization: The potential of AV-101 may not be as large as we project, possibly due to competition. In particular,we note competition for example in major depressive disorder from Sage Therapeutics (Buy) that provides risk to theterminal valuation of VistaGen. The price of VistaGen’s products might prove too high for the market to bear, especiallyin a setting like depression, where the use of generic medicines is widespread. In addition, VistaGen if successful wouldhave to build a sales, marketing and medical affairs infrastructure in the US and possibly other global regions.

Intellectual property: It is not clear if AV-101 will have patent life beyond mandatory 5- and 10-year exclusivity positionsin the US or the patent protections that have been granted in recent years.

Financing risk: The company may need to raise additional capital, perhaps via equity financings, before reachingprofitability, potentially resulting in share dilution for shareholders.

Stock price volatility: Share price volatility is common for developmental companies in the biotechnology sector.

FORWARD-LOOKING STATEMENTS: This Report contains forward-looking statements, which involve risks anduncertainties. Actual results may differ significantly from such forward-looking statements. Factors that might cause sucha difference include, but are not limited to, those discussed in the “Risk Factors” section in the SEC filings available inelectronic format through SEC Edgar filings at www.SEC.gov on the Internet.

COMPENSATION OR SECURITIES OWNERSHIP: The analyst(s) responsible for covering the securities in this reportreceives compensation based upon, among other factors, the overall profitability of Chardan Capital Markets includingprofits derived from investment banking revenue and securities trading and market making revenue. The analyst(s) thatprepared the research report did not receive any compensation from the Company or any other companies mentionedin this report in connection with the preparation of this report. The analysts responsible for covering the securities in thisreport currently do not own common stock in the Company, but in the future may from time to time engage in transactionswith respect to the Company or other companies mentioned in the report.

For compendium reports (a research report covering six or more subject companies) please see the latest publishedresearch to view company specific disclosures.

Page 28 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018

GENERAL: This report is provided for informational purposes only. It is not to be construed as an offer to buy or sella solicitation of an offer to buy or sell any financial instruments or to particular trading strategy in any jurisdiction. Theinformation and opinions in this report were prepared by registered employees of Chardan Capital Market. The informationherein is believed by Chardan Capital Market to be reliable and has been obtained from public sources believed to bereliable, but Chardan Capital Market makes no representation as to the accuracy or completeness of such information.Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of thisreport. They do not necessarily reflect the opinions of Chardan Capital Market and are subject to change without notice.In addition, opinions, estimates and projections in this report may differ from or be contrary to those expressed by otherbusiness areas or group of Chardan Capital Market and its affiliates. Chardan Capital Market has no obligation to update,modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or anyopinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

Chardan Capital Market does not provide individually tailored investment advice in research reports. This report hasbeen prepared without regard to the particular investments and circumstances of the recipient. The securities discussedin this report may not suitable for all investors and investors must make their own investment decisions using theirown independent advisors as they believe necessary and based upon their specific financial situations and investmentobjectives. Estimates of future performance are based on assumptions that may not be realized. Furthermore, pastperformance is not necessarily indicative of future performance.

Chardan Capital Market salespeople, traders and other professionals may provide oral or written market commentary ortrading strategies to our clients that reflect opinions that are contrary to the opinions expressed in this research. ChardanCapital Markets may seek to offer investment banking services to all companies under research coverage.

Electronic research is simultaneously available to all clients. This report is provided to Chardan Capital Market clientsand may not be redistributed, retransmitted or disclosed, in whole or in part, or in any form or manner, without the expresswritten consent of Chardan Capital Market. Receipt and review of this research report constituted your agreement notto redistribute, retransmit, or disclose to others the contents, opinions, conclusion or information contained in this report(including any investment recommendations, estimates or target prices) without first obtaining express permission fromChardan Capital Market.

This report is not intended for distribution to, or use by any person or entity in any jurisdiction or country where suchdistribution or use would be contrary to local law or regulation.

For investors in the UK: In making this report available, Chardan Capital Market makes no recommendation to buy, sell orotherwise deal in any securities or investments whatsoever and you should neither rely or act upon, directly or indirectly,any of the information contained in this report in respect of any such investment activity. This report is being directedat or distributed to , (a) persons who fall within the definition of Investment Professionals (set out in Article 19(5) of theFinancial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”)); (b)persons falling within thedefinition of high net worth companies, unincorporated associations, etc. (set out in Article 49(2) of the Order); (c) otherpersons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevantpersons”). This report must not be acted on or relied on by persons who are not relevant persons.

Page 29 of 29Chardan Capital Markets, LLC

VistaGen TherapeuticsCompany Note

February 8, 2018