Stifel Sees Challenging Road Ahead For vTv Therapeutics After Failed Alzheimer's Trial

vTv Therapeutics Inc VTVT announced Monday after the close that results from Part A of its late-stage study of an investigational medication to treat Alzheimer's disease did not meet either co-primary endpoint.

Patients taking its pipeline candidate azeliragon, when compared with a placebo, did not improve in cognitive or functional outcomes as measured by the Alzheimer's Disease Assessment Scale-cognitive subscale and the Clinical Dementia Rating Scale Sum of Boxes, according to Stifel. The withdrawal rate was comparable for both the treatment and control arms.

Reacting to the outcome, vTv shares were plunging nearly 70 percent after the open Tuesday.

The Analyst

Stifel analyst Alex Schwartz downgraded vTv Therapeutics from Buy to Hold and lowered the price target from $12 to $1.

The Thesis

Following the negative trial results, vTv Therapeutics decided to discontinue the STEADFAST Part B trial, which was due to produce final data in early 2019, Schwartz said in a Monday evening note.

If the Part A group responded to data, the company intends to factor this signal into its prespecified analysis and examine Part B data, the analyst said. This data is likely in the second quarter, the analyst said, citing the company.

Stifel adjusted its forecast for the probability of success for azeliragon from 50 percent to zero. Yet Schwartz said he sees value in the company's two underlying diabetes assets, each of which possesses positive Phase 2 data.

"However, given vTv's cash on hand, extended search to find partners for the programs and length/costs to conduct Phase III trials, we see a challenging road ahead for the company."

Stifel pushed out its projection for the launch of vTv's diabetes assets to 2024.

Schwartz identified the following as catalysts for the company: 

• Azeliragon Phase III Part B data: Q2 2018
• TPP399 T1D Phase II data: year-end 2018
• TPP273 T2D Phase II data: 2019

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