Cassava’s Alzheimer’s Drug Is Potentially Better Than Biogen’s, Says Analyst

Monday was a landmark day in the fight against Alzheimer’s disease. In an outcome which took Wall Street by surprise, the FDA approved Biogen’s controversial Alzheimer’s drug Aduhelm (aducanumab). The decision amounts to a win not only to Biogen but potentially to the U.S.’s 6 million plus sufferers of the memory wiping disease.

JonesTrading analyst Soumit Roy thinks the approval will also provide “positive momentum” for other companies working on treatments for Alzheimer’s, namely Cassava Sciences (SAVA).

However, apart from the fact Biogen is required to carry out a post-approval clinical trial to confirm the drug’s clinical benefit, the analyst highlights several reasons why the treatment could have a “slower adoption ramp.” These include the “need for early diagnosis/detection to be eligible on aducanumab, lack of healthcare infrastructure for screening in the U.S. to detect early stage Alzheimer and possibly continued need for PET scan.”

On the other hand, Roy thinks Cassava’s Alzheimer’s drug candidate, simufilam, could potentially “have better market penetration,” as it has been the only drug to exhibit cognitive benefits at 6 months.

What’s more, in July (26-29), at AAIC (Alzheimer’s Association International Conference), Cassava is set to present a 9-month readout from simufilam’s ongoing Phase 2 open label study in Alzheimer’s disease.

As Cassava’s therapy could also be the first to display cognitive benefits at nine months, Roy says investors’ expectations are “high.”  

“It is critical to note,” the 5-star analyst added, “That the Alzheimer patient population in Cassava’s trial is mild to moderate – more advanced than Biogen’s early stage patients, and is on par with Eli Lilly’s trial patient population.”

Therefore, as both Biogen and Lilly’s drugs began to exhibit a decline from 36 weeks and onwards – although at a slower rate compared to the placebo – maintenance of cognition score (ADAS-Cog11) with respect to the baseline levels “would be a win.” Moreover, continued cognition performance with simufilam above baseline levels would be a “big win.”

The stock has built up momentum again recently, and Roy thinks there could be some “sell the news” profit taking should Cassava deliver the goods. However, the analyst states, “We will be Buyers of SAVA,” should that scenario play out.

Roy’s Buy recommendation is backed by a $110 price target, implying upside of ~66% from current levels. (To watch Roy’s track record, click here)

Evidently, Roy’s colleagues also think Cassava is well-positioned to deliver. The stock has a Strong Buy consensus rating, based on a unanimous 5 Buys. The forecast is for one-year gains of ~32%, given the average price target currently stands at $87.40. (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.