VistaGen Therapeutics said it has signed a strategic financing agreement with the European subsidiary of Bergamo Acquisition, an investment holding company that will provide it with $36 million to accelerate the use of its stem cell-based technology to find variants of drugs abandoned in development because of safety concerns.

VistaGen uses its human pluripotent stem cell technology for so-called “drug rescue.” It in-licenses drugs that have been abandoned in clinical development because of safety concerns and seeks to develop drug variants that provide efficacy without the heart or liver safety problems that often are responsible for sidelining development. The company’s technology is used to determine whether the drugs are safe for the heart and liver. Once the company has developed a new variant, it seeks to out-license it.

The company says unexpected heart or liver toxicity can wash away hundreds of millions of dollars in investment and years of development work to advance a drug to late-stage development. When confronted with that problem, pharmaceutical companies often discontinue the development program for the once-promising drug candidate and shelve the compound, even though it has generated positive data indicating its potential therapeutic and commercial benefits.

Under the terms of the agreement, Bergamo’s European subsidiary will invest $36 million in VistaGen in consideration for 72 million shares of restricted VistaGen common stock at a price of 50 cents per share. VistaGen shares were up more than 15 percent to 87 cents in mid-day trading following the announcement.

The transaction is scheduled to close on or before April 30, 2013. Once closed, the shares issued in connection with the financing will represent a majority of the issued and outstanding shares of VistaGen’s common stock, the company says.