Pair Trade Closed: Chardan No Longer Advocates Owning vTv Therapeutics Over Axovant

vTv Therapeutics Inc VTVT shares have outperformed Axovant Sciences Ltd AXON shares by 63 percent since Chardan recommended owning the former over the latter in January 2016.

The Analyst

Chardan analyst Gbola Amusa has a Neutral rating on Axovant and a $2 price target.

The Thesis

Chardan's premise behind its earlier recommendation of owning vTv Therapeutics over Axovant was based on the former having a Phase 3 asset – azeliragon - in Alzheimer's disease, Amusa said in a Thursday note. The analyst said azeliragon data was superior over Axovant's RVT-101 data.

Notwithstanding several parallels between azeliragon and RVT-101 programs, the analyst said a striking difference existed in the valuations of both companies at the time of his 2016 call. Compared to Axovant's $1.7 billion market-cap in Jan. 2016, vTv Therapeutics had a paltry valuation of C$200 million, the analyst noted.

With Chardan's bearish thesis on Axovant having played out following the failed pivotal late-stage MINDSET trial that evaluated the company's intepirdine in mild-to-moderate Alzhiemer's disease, the firm said valuations of Axovant ($168 million) and vTv Therapeutics ($156 million) have now converged.

Thus, the call to close out to pair trade.

Price Action

Over the past year, Axovant has lost about 90 percent compared to a more modest 20 percent drop by vTv Therapeutics.

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