Companies seeking approval for drugs treating Alzheimer’s disease have tended to be among the stocks biotech investors watched but didn’t hold much hope for. That’s because prior to the Food and Drug Administration (FDA) approval of aducanumab, such treatments were seen as longshots, to say the least. However, investors in Cassava Sciences (NASDAQ:SAVA) and SAVA stock have certainly been following these developments closely.
That’s because Cassava is another player in the race to develop better, more effective Alzheimer’s treatments.
Given the scale of this disease, as well as the recent approval handed down from the FDA, there’s a lot of room for hope today among biotech investors in companies such as Cassava. Indeed, the recent run this stock has been on indicates sentiment remains broadly bullish for SAVA stock.
However, today, SAVA stock has seen some rather incredible volatility. This morning, SAVA stock shot up approximately 15% higher from yesterday’s close. However, currently, this stock is trading down approximately 6% on very heavy volume.
Let’s dive into what’s been the key cause of this volatility in Cassava Sciences today.
SAVA Stock Jumps, Sells Off on Top-Line Results
Today, Cassava Sciences shared interim data on an ongoing study of the company’s Simufilam drug for those with mild to moderate Alzheimer’s disease. The results were broadly positive, leading investors to bid up shares in a hurry.
The company reported that cognition scores improved substantially among the first 50 subjects. Additionally, the drug was well-tolerated among patients enrolled in the study, and no serious adverse effects were reported.
Indeed, that’s all incredibly positive.
However, it appears investors have been quick to take these data with a big grain of salt. Today’s afternoon selloff appears to be the result of growing skepticism among the results Cassava, and other Alzheimer’s-focused biotech stocks, produce. That’s because of some high-profile opposition to the initial data that got aducanumab approved in the first place.
Indeed, SAVA stock is likely to remain a highly volatile stock for investors from here. Those looking to invest in Cassava Sciences, or any biotech for that matter, ought to be aware of the downside risk that comes along with the potential upside investors seek.
On the date of publication, Chris MacDonald 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.