vTv Therapeutics Inc (NASDAQ: VTVT) is having an overwhelmingly strong day in the market today, up by nearly double early on. With little news released by the company, and a recently failed clinical trial, why is this stock flying? Well, it has to do with the fact that the company plans to keep its offices in light of the building being purchased by a competitor. Today, we’ll talk about:
- What prompted the gains in VTVT today;
- what we’re seeing from the stock;
- why we wouldn’t get involved at the moment; and
- what we’ll be watching for ahead.
VTVT Is Skyrocketing!
As mentioned above, vTv Therapeutics is climbing in the market today after a recent announcement that it intends to keep its headquarters at its current location. The company, located in High Point, was thought to be leaving its headquarters and relocating after an announcement that the building it is currently in was purchased by a new owner. Unfortunately for VTVT, the new building owner is a competitor that is working on its own Alzheimer’s drug.
The idea that two companies working on competing treatments is leading to some speculation that there will be a partnership relatively soon. However, we don’t believe this to be the case considering that fact that, earlier this month, it was announced that the VTVT Phase 3 clinical study in Alzheimer’s disease failed to achieve its primary endpoint. Nonetheless, speculation mixed with the fact that there will be no need to move headquarters seems to be the driver of the movement that we’re seeing in the stock.
What We’re Seeing From The Stock
With the news that vTv Therapeutics will be staying in its current headquarters in High Point, mixed with the speculation surrounding an Alzheimer’s partnership and possible other partnerships, the stock started climbing early on. Since then, it has continued to fly as technical traders haven’t found their take-profit point. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:22), VTVT is trading at $2.28 per share after a gain of $1.09 per share (91.60%) thus far today.
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Why We’re Not So Impressed
You know what they say… what goes up, must come down. While that’s not always the case in the market, when it comes to VTVT, it is smart to consider the risks. First and foremost, the company recently had a failed Alzheimer’s trial that drove the price of the stock into the dirt. While some are falling back on the company’s work in Type 2 Diabetes, there are some issues there as well. At the end of the day, vTv Therapeutics simply doesn’t have the resources to progress into Phase 3 studies for this indication at the moment. Therefore, the best plan of action would be to find a partner to progress the development of the treatment and share the cost. Of course, that partner would share in the profits if there were any as well. Another option would be to look to the market for resources, but this would likely be a dilutive move, causing further pain for investors. With that said, while this is one that is clearly making some traders big winners today, it may not be a smart choice to invest in VTVT at the moment.
What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on VTVT. In particular, we’re interested in learning about the next steps the company plans on taking with regard to the Alzheimer’s indication. We’re also interested to see in which direction the company goes in order to progress its Diabetes related assets. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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