VistaGen Therapeutics, Inc., a biopharmaceutical company pioneering the use of embryonic stem cells as proprietary biological systems for discovery and development of novel drugs for the treatment of diabetes and central nervous system disorders, announced today the renewal of its strategic partnership with Sanwa Kagaku Kenkyusho Co. Ltd. (“Sanwa”), an international pharmaceutical company headquartered in Nagoya, Japan. Continuing the successful initial phase of the collaboration, VistaGen will apply its core embryonic stem cell technologies to discover critical biological molecules, growth factors, and drug targets related to b-islet cell growth and insulin production. Sanwa will use VistaGen’s customized, proprietary stem cell-based assays to screen its compound libraries for new drug candidates for treatment of both Type 1 and Type 2 diabetes. This strategic partnership represents the first collaborative pharmaceutical application of embryonic stem cells to discover novel therapeutics for the treatment of diabetes.

VistaGen previously received an equity investment from Sanwa, as well as technology access and license fees. Under the renewed agreement, VistaGen will receive additional funded research payments, downstream milestone payments, and royalties on product sales. The renewed agreement contemplates VistaGen and Sanwa co-developing joint discoveries coming from VistaGen’s stem cell technologies. VistaGen also will retain commercial rights for certain new drug candidates and intellectual property developed during the collaboration.

“We are pleased to extend our collaboration with Sanwa. This renewal reflects the considerable progress we have made by applying our cutting edge stem cell-based assays to rapidly identify new drug candidates and targets for diabetes,” said H. Ralph Snodgrass, Ph.D., VistaGen’s CEO. He added, .This renewal supports our business model based on strategic partnerships that provide our partners with access to our proprietary and customized ES cell-based technologies and tools for next generation drug discovery and development..

Mr. Satoshi Terao, Sanwa’s Vice President for Research and Development commented, .We are very pleased with the success of this partnership and impressed by the speed and efficiency of VistaGen’s stem-cell based discovery platform, which has enabled us to identify multiple important biological molecules and drug targets important to diabetes. We look forward to the next phase of our important partnership..

Sanwa Kagaku Kenkyusho Co. Ltd., a fully-integrated pharmaceutical company headquartered in Nagoya, Japan, is a division of Suzuken, the most profitable pharmaceutical wholesaler in Japan. Sanwa’s established therapeutic and diagnostic products serve the diabetes, cardiovascular and inflammation marketplaces. The company employs over 1,200 persons, celebrated its 50th anniversary in 2003, and had revenues in 2005 that exceeded $400 million.