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Cassava Sciences (NASDAQ:SAVA): Cracking Alzheimer’s or Succumbing to Short Sellers?
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Cassava Sciences (NASDAQ:SAVA): Cracking Alzheimer’s or Succumbing to Short Sellers?

Story Highlights

With hopes riding high on the outcome of Phase 3 trials, Cassava Sciences emerges as a potential game-changer in Alzheimer’s treatment, but extreme volatility and uncertainty make it a dicey choice for investors, at least until more concrete results are revealed.

According to the Alzheimer’s Association, approximately 1 in 9 individuals aged 65 and older in the United States (7 million Americans) are diagnosed with Alzheimer’s, a brain disorder that slowly destroys memory and thinking skills. Worldwide, it’s estimated to affect over 55 million people. These numbers are expected to increase significantly in the years ahead. There is currently no known cure for the condition, and that’s what Cassava Sciences (NASDAQ:SAVA) has been looking to change. However, the stock has swung wildly, as news about the company’s progress has inspired speculators and short sellers alike.

With results from Phase-3 clinical trials expected on the company’s lead drug candidate due at the end of 2024/mid-2025, the stock could go to zero or spike in price overnight based on the findings. For short-term speculators, the casino is open. However, long-term investors may want to sidestep the circus and wait for results before revisiting.

SAVA stock has fallen by 48.1% in the past three years.

Cassava Sciences Alzheimer’s Treatment Candidate

Cassava Sciences is a neuroscience-focused company developing solutions for debilitating neurodegenerative conditions, specifically Alzheimer’s disease. Its primary focus is on two key developments: Simufilam and SavaDx.

Simufilam, the leading drug candidate, differs from typical approaches, as it doesn’t aim to clear amyloid out of the brain but offers a novel path for treatment. It is an orally administered, novel small molecule targeting the altered filamin A protein, which is prevalent in Alzheimer’s. Clinical results indicate some efficacy in treating early-stage mild forms of the disease. It’s undergoing clinical evaluation in two pivotal Phase 3 trials, with top-line results expected toward the end of 2024 or mid-2025.

SavaDx is an investigational diagnostic tool for detecting Alzheimer’s through a blood test that is currently in its early stages of development.

Allegations of Misconduct Against Cassava

Allegations of research misconduct were levied against the company in August 2021. An internal investigation carried out in response to these claims revealed that they originated with individuals known to be short sellers of the company’s stock. The investigation concluded that neither the company nor its employees were involved in or aware of any research misconduct. However, the company continues to be haunted by this issue, as a little less than a third of all outstanding shares are still held in short interest.

The company recently added three new members to its Board of Directors to shore up its credibility. The firm added Dr. Nicaise, with a strong track record in clinical and regulatory leadership roles; Mr. Gravier, a past Managing Director in the healthcare group of Perella Weinberg Partners; and Mr. Anderson, a former Executive Assistant Director of the Criminal, Cyber, Response, and Services group at the FBI, who brings deep operational experience in cybersecurity and economic espionage.

Is SAVA Stock a Buy, According to Analysts?

SAVA is thinly followed by Wall Street, though the analysts who cover it are bullish on the stock. Cassava Sciences is rated a Moderate Buy based on their recommendations and 12-month price targets over the past three months. The average price target for SAVA stock is $99.50, with a forecast range of $124.00 on the high end and $75.00 on the low end. This represents 388.9% upside potential from current levels.

The stock is highly volatile and subject to wild swings over short periods. It currently trades in the middle of its 52-week price range of $12.32-$32.10 and demonstrates negative price momentum, trading below the 20-day (21.91) and 50-day (22.08) moving averages.

SAVA in Summary

It has been a wild ride for Cassava Sciences. Anticipation is building for the conclusion of Phase 3 clinical trials, which many see as the ultimate proving ground for finally debunking or confirming the firms’ treatment claims. If successful, the drug could bring relief to millions of families struggling to care for loved ones with early-stage Alzheimer’s. It is a highly speculative play at this point, but could quickly evolve into a compelling investment opportunity.

Disclosure

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