Cassava: Breaking Down B. Riley’s New Bullish Call

Alzheimer’s Disease (AD) has baffled the global medical community for years. So much so, that there still aren’t any available drugs to combat its advance.

Cassava Sciences (SAVA) has taken upon itself the mission to bring a viable treatment to market and B. Riley analyst Mayank Mamtani thinks the company’s “differentiated” approach could mark it out from the pack.

So far, most AD treatments have focused on the targeting of amyloid-beta and tau protein which have not shown to be effective in improving cognitive behavior in the long-term. Cassava‘s candidate simufilam targets altered filamin A (FLNA). While Mamtani notes that targeting FLNA in AD remains “an uncharted area,” the Phase 2 results and the “growing body of evidence for simufilam’s mechanism of action,” are encouraging.

The drug is currently in a Phase 2 open-label extension study and interim data has showed that following 6 months of treatment, simufilam improved cognitive functions and patients’ behaviour.

In July, the company will announce results of a nine-month interim analysis at the 2021 Alzheimer’s Association International Conference (AAIC). Following that, in September, there should be data available for the patients that have completed 12 months of treatment.

“Prior large-scale AD trials, particularly of Aβ antibodies, suggest the steepest rate of cognition decline in a six- to 12-month period,” Mamtani noted, “Hence, we expect these near-term readouts to be particularly informative on the likelihood of technical success.” Two simufilam Phase 3 studies are also slated to begin in 2H21.

As there are no “effective” therapies for Alzheimer’s, the 5-star analyst believes simufilam has a chance to “capture an untapped market in the U.S. and EU.” There are roughly 5.8 million mild to moderate Alzheimer’s disease patients in the U.S. and approximately another 5.1 million in the EU, according to GlobalData estimates. Only 30% of the total have received a “definitive diagnosis.” Mamtani assumes simufilam could enter this market in 2026.

All in all, the analyst offers a glowing assessment of SAVA’s potential.

“We are encouraged by the strength of simufilam’s preclinical and clinical data set, which appears supportive of disease-modifying effect, notably observed within a 6-month treatment duration. We believe this provides incremental validation to the National Institute of Health’s scientific and financial support to advance FLNA research, totaling ~$7M, as well as management’s core strategy shift in 2019 to singularly focus on AD development. We expect this focus to generate additional shareholder value as simufilam progresses through late-stage development,” Mamtani wrote.

Accordingly, Mamtani initiated coverage of SAVA with a Buy rating and $78 price target. Investors are looking at gains of ~84%, should Mamtani’s thesis pan out over the next 12 months. (To watch Mamtani’s track record, click here)

The rest of the Street supports Mamtani’s thesis. In fact, the average price target is even more upbeat; at $87.40, the figure is expected to yield 12-month returns of 109%. The stock boasts a Strong Buy consensus rating, based on a unanimous 5 Buys. (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.