Earnings season is in full swing and next week will be especially interesting for avid Street watchers when some of the world’s biggest companies announce their quarterly performances. But there is also another altogether different event which should be on investors’ radar.
Between July 26-29, Denver will host the 2021 Alzheimer’s Association International Conference (AAIC), where all eyes will be on Cassava Sciences (SAVA). The Alzheimer’s disease (AD) focused biotech has garnered plenty of attention already this year, due to the promise of its AD candidate simufilam. Interim data from an open label study released earlier in the year, showed that following 6 months of treatment, simufilam improved patients’ cognitive functions and behavior – specifically, the treatment displayed 1.6 points of cognitive improvement from baseline, as measured by the ADAS-Cog (Alzheimer’s Disease Assessment Scale-Cognitive Subscale).
At the conference, Cassava will present data from the open label study of 50 mild to moderate AD patients following 9 months of treatment. So far, AD treatments have failed to show a positive impact after such a long period, but H.C. Wainwright’s Vernon Bernardino expects simufilam “to show clear evidence of efficacy.”
“As AD is still ultimately a progressive disease, and the effects of all AD drugs, including donepezil, have so far been temporary, we acknowledge that AD patients on simufilam may not be able to maintain a 1.6-point improvement in ADAS-Cog over nine months,” the 5-star analyst said. “However, we note that the 1.6-point improvement from baseline in ADAS-Cog observed with simufilam at six months was beyond what may be expected of any model of a placebo effect, and thus, the cognitive improvement is likely due to simufilam’s novel mechanism of action.”
Furthermore, Bernardino believes the dual mechanism of action was also behind the “significant” improvement of a whole panel of validated biomarkers of AD and materially lowered measurements of neuroinflammation. Since simufilam is so far the only investigational drug to show “positive direction in all of these outcomes,” Bernardino believes the treatment has the potential to “change the trajectory of cognitive decline in AD patients.”
To this end, Bernardino reiterated a Buy rating for SAVA shares and raised the price target from $97 to $124. However, following July’s 48% gains, the new figure suggests shares will remain range bound for the foreseeable future. (To watch Bernardino’s track record, click here)
Overall, SAVA has decent support amongst Bernardino’s colleagues, but its current valuation presents a conundrum. SAVA’s Strong Buy consensus rating is based on 4 Buys and 1 Hold. However, the $127 average price target suggests shares will stay flat. (See SAVA stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
