Wedbush Upbeat On Vitae Pharmaceuticals Despite Diabetes Results

Vitae Pharmaceuticals Inc VTAE fell about 15 percent Monday after the company posted disappointing interim results from study of its type 2 diabetes drug for overweight patients.

Wedbush's Liana Moussatos said the treatment will probably get shelved and she removed it from her forward estimates for the company.

Moussatos also shaved her target on Vitae nearly 5 percent to $20, but maintained an Outperform rating, citing its pipeline treatments for Alzheimer's disease, eczema and psoriasis.

Separately Monday, Vitae said it began a Phase I study of its psoriasis treatment VTP-43742, that Moussatos believes could see "blockbuster sales" of $1.1 billion annually.

Vitae also said it will launch an additional Phase I trial of the prospective psoriasis drug in the third quarter, with interim results expected by year-end.

The psoriasis drug is also under development for multiple sclerosis and rheumatoid arthritis.

Vitae said Monday that efficacy results of its ongoing Phase II trial of the type2 diabetes drug failed to meet criteria set by its developer Boehringer Ingelheim Corp.

Vitae said the German development partner will decide on its "appropriate next step" following completion of a separate study next year concerning the diabetes drug.

The company traded recently at $13.18, down $2.01 (13 percent). Including Monday's sell-off, shares are still up 17 percent in the past three months.

Type 2 diabetes may affect one in three American adults by 2050. About 85 percent of patients from the disease are overweight.