Despite positive news regarding data Cassava Sciences (NASDAQ:SAVA) has again slipped. It is clear that volatility will continue to follow the biopharmaceutical company. It is also clear that the company and SAVA stock will remain highly interesting to the market.
Let’s start with the most recent news and work backwards. That should show potential investors that there is high risk in investing in Cassava Sciences as it attempts to bring novel Alzheimer’s treatments to market.
More Positive News for SAVA Stock?
Cassava Sciences is proving to be a very difficult stock to pin down. The market has been keenly watching for the company’s July 29 announcements regarding its Alzheimer’s drug, simufilam.
So, when the company released positive cognition and biomarker data, most would have expected that it should signal upward pressure on share prices.
However, prices did precisely the opposite, dropping 20% in the first few hours after the news was released. There is little to explain why such movement should occur. Message boards seemed to be searching for any news that could explain the phenomenon as well. They were also stumped.
We can posit a few hypotheses about the stock price’s strange behavior, but it’s best to simply unpack the data first. So, let’s understand what simufilam trials have indicated as it relates to biomarkers. The least technical explanation is to state that simufilam improved all biomarkers within Alzheimer’s patients in the latest results of a six-month open label treatment.
Six measured data points each decreased between 18% and 72% in during the trial on patients with mild-to-moderate Alzheimer’s disease. This suggests, but doesn’t prove definitively, that simufilam could help treat the disease in the long term.
More Strong Data
In addition to biomarker data, Cassava Sciences also released cognition data on July 29. Again, here the data seemed to be positive. The data showed that cognition scores improved 18% from baseline to nine months in the same set of mild-to-moderate Alzheimer’s patients.
In fact, the data may signify a scientific first:
Cassava Sciences believes today’s data is the first report of significant cognitive improvements at 9 months that also track with robust improvements in biomarkers in patients with Alzheimer’s.
The company seemed to imply that this data contradicted former literature on the irreversibility of the disease, stating: “Alzheimer’s is a progressive disease. Cognition will always decline over time. In patients with mild-to-moderate Alzheimer’s disease, cognition scores decline over 4 points on ADAS-Cog over 9 months with over 90% certainty, as reported by the science literature.”
Simufilam improved ADAS-Cog scores in 66% of patients at nine months. An additional 22% of patients declined less than reported in the science literature at nine months. Cognition outcomes suggest simufilam’s treatment effects were broad-based.’
The seemingly positive news leaves many questions as to why SAVA stock gave up 20% of its value immediately following the news.
Open Label?
One possible explanation for the trepidation is the nature of the studies’ design. Both of the data sets were gathered from what is referred to as an open-label trial. In open-label trials information regarding the treatment is not withheld from researchers and participants. So, both participants and researchers knew exactly what drug was being administered and what it sought to achieve.
This is antithetical to double-blind trials which lead to reduced bias. That could be one explanation, but it seems unlikely as that knowledge was already given.
Too Hot, Too Early?
Another possible explanation is that SAVA stock investors somehow became suddenly worried about the longer term. After all, this was an interim study and simufilam still faces a long and arduous role to commercialization.
That too, however, seems an unlikely explanation. SAVA stock rose from $115 to $145 in the hours leading up to the data press release. The data seemed to substantiate the hype.
In any case, volatility looks to be a significant risk for SAVA stock at this point. But that may be no issue at all for certain investors given what simufilam purports to do in the future.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
