Vistagen Faces Investor Lawsuit After Failed Drug Trial Crashes Stock

Vistagen Faces Investor Lawsuit After Failed Drug Trial Crashes Stock

2026-01-21 companies

South San Francisco, Tuesday, 20 January 2026.
A class action lawsuit alleges Vistagen misled investors regarding its PALISADE-3 trial, causing significant financial damage as shares plummeted over 80% following the study’s failure.

As of Tuesday, January 20, 2026, Vistagen Therapeutics, Inc. (NASDAQ: VTGN) is facing mounting legal pressure following the filing of a class action lawsuit in the U.S. District Court, Northern District of California [1]. Several nationally recognized law firms, including Bragar Eagel & Squire, P.C., Johnson Fistel, PLLP, and Bronstein, Gewirtz & Grossman, LLC, have announced actions on behalf of investors [1][3][4]. The litigation targets alleged securities violations affecting shareholders who purchased Vistagen common stock during the “Class Period,” defined as April 1, 2024, through December 16, 2025 [1][3][5]. These legal challenges arise directly from the company’s disclosures regarding its clinical trials, specifically the development of fasedienol, a drug candidate intended for the acute treatment of social anxiety disorder [5].

Market Fallout and Trial Failure

The catalyst for this wave of litigation was a precipitous decline in Vistagen’s market value occurring late last year. On December 17, 2025, the company announced that its Phase 3 PALISADE-3 trial for fasedienol failed to achieve a statistically significant improvement on its primary efficacy endpoint compared to a placebo [1][7]. The market reaction was immediate and severe. Following the announcement, Vistagen’s stock price plummeted from a closing price of $4.36 per share on December 16, 2025, to just $0.86 per share on December 17, 2025 [1]. This collapse represented a single-day decline of approximately -80.275 percent, wiping out significant shareholder value [7].

Allegations of Misleading Information

Central to the complaint is the allegation that Vistagen and certain officers made false and misleading statements or failed to disclose material adverse facts throughout the Class Period [4][5]. The lawsuit claims that the company misled investors regarding the design, execution, and potential for success of the PALISADE-3 trial, creating a false impression of the drug’s prospects based on prior data from the PALISADE-2 trial [5][8]. Specifically, the complaint alleges that defendants concealed adverse data and disseminated false information concerning the clinical results, which allegedly artificially inflated the stock price before the “true details entered the market” in December 2025 [3][5]. Investigations by firms such as Federman & Sherwood are also examining whether the company properly disclosed risks and potential setbacks related to its clinical development programs and regulatory prospects [6].

Investor Rights and Deadlines

For investors who suffered financial losses during the specified timeframe, the legal process has established a clear timeline for participation. Shareholders who purchased or acquired Vistagen securities between April 1, 2024, and December 16, 2025, have until March 16, 2026, to petition the Court to be appointed as the lead plaintiff [1][4][5]. This deadline is critical for those wishing to take an active role in the litigation, although appointment as lead plaintiff is not required to share in any potential financial recovery [8]. Various firms, including Faruqi & Faruqi, LLP and the Rosen Law Firm, are actively encouraging affected investors to contact them to discuss their legal rights and options regarding these securities claims [5][7].

Sources


Vistagen Therapeutics securities litigation