Why the plunge in Cassava Sciences (SAVA) stock shouldn’t scare you


Investors didn’t like the latest update from the Alzheimer’s drug maker Cassava Sciences (NASDAQ: SAVA). After showing excellent results from the first 50 patients treated with simufilam, the company’s prospective Alzheimer’s drug, in an open-label mid-stage study, results from the full 200+ patients were not so good.

Patients were given an average of 2,100mg tablets per day over the course of one year, and this showed only a minimal change in the ADAS-Cog score. In the clinical research of Alzheimer’s, it is the cognitive scale that is used to measure effectiveness.

Over one year, 47% of patients showed an improvement of 4.7 points, while 23% showed less than a 5-point drop with an average drop of 2.5 points.

However, when the company released results from the initial 50 patients on the same scale in September 2021, 68% showed an improvement – ​​or 6.8 points.

The company said that in this patient population, a minimal change or improvement over the period of a year equates to a “highly desirable outcome.” Investors apparently disagreed with that assessment, sending shares down 24% in the following trading sessions.

That said, comparing the results to Eli Lilly’s Alzheimer’s treatment, Jones Trading analyst Soumit Roy finds plenty to be encouraged about.

“We continue to see modestly better performance with Cassava’s simufilam vs Lilly’s donanemab in the mild to moderate patient population… We can expect the base case to be Cassava’s simufilam performing inline to marginally better than LLY’s donanemab, which we as a considered a big win, considering LLY’s donanemab could be the only approved drug in the near future (Phase 3 top-line data in 2Q23) in mild to moderate patients and raise the scarcity factor for simufilam,” opines Roy.

Indeed, Roy is very much on the bullish side of the spectrum here; along with a Buy rating, the analyst gives SAVA stock a $100 price target, suggesting shares are undervalued by a whopping 264%. (To look at Roy’s record, click here)

Only two other analysts have been tracking Cassava’s progress with one staying on the sidelines and the other joining Roy in the bull camp, making the consensus view here a moderate buy. However, everyone thinks the shares have room for growth; the average target of $89.33 implies one year stock growth of 203%. (See SAVA stock forecast)

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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.

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