Vistagen Therapeutics, Inc. (VTGN) Securities Class Action Lawsuit Update

A federal securities class action alleging violations of the Securities Exchange Act of 1934, including Sections 10(b) and 20(a) and SEC Rule 10b-5 has been filed against Vistagen Therapeutics, Inc. (NASDAQ: VTGN) covering April 1, 2024 through December 16, 2025. Investors allege the company and its leaders promoted fasedienol’s Phase 3 prospects for social anxiety disorder by leaning on prior PALISADE-2 results and “notable enhancements” to the PALISADE-3 trial. The complaint says those upbeat claims concealed material risks and adverse facts about the design and execution of a public speaking challenge-based , placebo-controlled study. On December 17, 2025, Vistagen announced PALISADE-3 failed to meet its primary endpoint and showed no treatment difference on secondary endpoints, contradicting those representations. The stock fell more than 80% in one day, allegedly harming investors who bought at artificially inflated prices.

Vistagen Therapeutics, Inc. (VTGN) Securities Lawsuit Case Details

• Case Name: Eller v. Vistagen Therapeutics, Inc. et al.
• Case No.: 3:26-cv-00427
• Jurisdiction: U.S. District Court, Northern District of California
• Filed on: January 15, 2026

Vistagen Therapeutics, Inc. (VTGN) Company Profile

Vistagen is a clinical-stage biopharmaceutical company and NASDAQ-listed biotechnology issuer focused on developing and commercializing therapies for neuropsychiatric and neurological disorders. Its pipeline includes fasedienol, an investigational neuroactive pherine nasal spray (intranasal delivery) for adults with social anxiety disorder as an acute treatment.

Vistagen Therapeutics, Inc. (VTGN) Securities Lawsuit Class Period

April 1, 2024-December 16, 2025, inclusive.

All investors who purchased or otherwise acquired Vistagen common stock (NASDAQ: VTGN) during the Class Period and traded on the NASDAQ.

Allegations in the Vistagen Therapeutics, Inc. (VTGN) Securities Class Action Lawsuit

According to the complaint, Vistagen Therapeutics, Inc., CEO Shawn K. Singh, and COO Joshua Prince are sued for statements they made about fasedienol’s Phase 3 program during the Class Period. The case centers on what they allegedly told investors about PALISADE-3’s design, execution, and likelihood of success, portrayed as building on earlier PALISADE-2 outcomes and positioned as a confirmatory Phase 3 study (alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act and SEC Rule 10b-5).

The narrative begins on April 1, 2024, when Singh said in a press release that initiating PALISADE-3 marked “another major milestone” in plans to develop and commercialize fasedienol for social anxiety disorder and that PALISADE-4 would follow later in the year. On June 11, 2024, during an earnings call, Singh told investors the company had built “notable enhancements” into PALISADE-3 and -4, with operational changes to optimize enrollment, enhance surveillance, control variability, and drive rigorous protocol adherence. That same day, he said success in either PALISADE-3 or -4, together with PALISADE-2 and additional safety data, could support a potential U.S. new drug application in the first half of 2026.

On August 13, 2024, Singh added that PALISADE-3 was designed similarly to PALISADE-2 with the objective of replicating that study’s success on the primary endpoint measured by SUDS scores. By February 13, 2025, asked about risks on another earnings call, he said the situation did not “keep [him] up at night” given enhancements and rigorous protocol adherence despite the risk of clinical trial failure.

Meanwhile, investors allege the company created a false impression that PALISADE-3’s adjustments and oversight made Phase 3 success likely and positioned the study as confirmatory. The complaint states defendants knew or recklessly disregarded that public speaking challenge-based endpoints commonly show elevated placebo responses, site variability, and measurement noise-risks reflected in Vistagen’s own Phase 2 experience and published research-yet continued to tout modifications and present PALISADE-3 as likely to succeed, while shares traded at artificially inflated prices during the Class Period.

The Truth Emerges

The truth surfaced on December 17, 2025, when Vistagen issued a press release as a corrective disclosure announcing PALISADE-3 failed to achieve its primary endpoint, as measured by change from baseline on the Subjective Units of Distress Scale (SUDS). The company also reported no statistically significant treatment difference between fasedienol and placebo on secondary endpoints. Singh stated, “We are disappointed by the unexpected results of this public speaking challenge trial, which are inconsistent with positive outcomes observed in Phase 2 and our PALISADE-2 Phase 3 study.” These revelations stood in direct contrast to earlier assurances about “notable enhancements,” operational changes, and a strong likelihood of Phase 3 success. The single announcement crystallized what investors allege had been concealed: that the design and inherent risks of the public speaking challenge undercut the upbeat narrative driving expectations for PALISADE-3.

Market Reaction

The market reacted immediately. On December 17, 2025, Vistagen’s stock fell, dropping from a prior close of $4.36 per share on December 16 to $0.86 per share at the close on the day of the disclosure (an approximately 80.27% decline). According to the complaint, investors and analysts responded to the failure of PALISADE-3’s primary and secondary endpoints following the corrective disclosure, reflecting a sharp reassessment of the company’s prospects for fasedienol.

Next Steps

• The Court will issue its order for lead plaintiff and counsel in the weeks after submissions are due.
• The Court will then consider motion for class certification.
• The Court will later consider a Motion to Dismiss.

Disclaimer: This shareholder alert is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for personalized guidance. No specific outcomes are guaranteed.