Last week, vTv Therapeutics Inc (NASDAQ:VTVT) announced that azeliragon, the company’s RAGE inhibitor in development for Alzheimer’s disease (AD) failed in Part A of the STEADFAST Phase 3 trial. As the product failed to separate from placebo, VTVT plans to stop current clinical studies on azeliragon, while it continues to analyze subset data from Parts A and B.
In reaction, five healthcare analysts have downgraded the drug maker’s stock from Buy to Hold. However, the average price target stands at $2.00, which reflects a 70% upside to yesterday’s closing price.
Let’s survey two analyst opinions:
- Roth Capital’s Robert LeBoyer wrote: “Based on the primary co-endpoint results, we are lowering our rating to Neutral from Buy. Although the company has two other products for diabetes in early clinical development, our investment thesis was based on azeliragon in Alzheimer’s disease. We have reduced our estimated net losses for the remaining quarters to reflect the discontinuation of clinical trials and related expenses, and will make further revisions as necessary. We expect the stock to trade at a range of 1.0x to 1.5x cash. The company had reported cash of $11.8 million at December 31 and with our estimated loss for the first quarter of 2018, we estimate about $9.5 million to $10.0 million on hand at March 31, 2018. With with 9.7 million shares outstanding, we value the stock at $1.00 per share.”
- Canaccord’s Sumant Kulkarni stated: “Given the high rate of failure of candidates in development for AD and because no drug has been shown to slow progression of the disease as yet, this outcome is not a surprise to us. Essentially, we viewed this single-digit stock, which is also somewhat illiquid and has concentrated ownership, almost as a call option given the potential reward in the off chance that azeliragon were to work; see our mini-dive here for background on the product. VTVT has previously stated that it has cash to last through the receipt of Part A of the results, which have now arrived […] While our model did not include any value for products other than azeliragon, we note VTVT has some other products in its pipeline. For example, VTVT recently reported positive Phase 1b results for TTP399, a product for Type 1 diabetes.”