Cassava Sciences (NASDAQ:SAVA) stock continues to make sense for risk-tolerant investors seeking Alzheimer’s disease treatment stocks.
The risk is inherent for several reasons. Alzheimer’s disease continues to be a very difficult disease to treat. According to the Mayo Clinic, there are four FDA approved therapeutics for the disease. All four can slow the progression of the disease, but none can halt or reverse it.
Cassava Sciences is a company at the forefront of new treatments that promise new hope for combatting Alzheimer’s disease. It has made progress in improving treatment which has made SAVA stock one to watch.
Let’s begin by understanding its volatility, potential, and recent news which has investors excited.
On the one hand, there is currently a lot of upside in Cassava Sciences stock. Shares trade just shy of $60. The good news is that the four analysts with coverage of the equity all believe it to be a buy. They have given it an average target price near $150.
While that sounds very tempting, investors must be aware of the stock’s inherent volatility. It went from $8 to $80 in the first two months of 2021. Then it halved to $40, staying there for months.
Between May and July it went from $40 to $135, then dropped off a cliff twice more after that.
If you were following along or if you were invested, it was exhausting and exhilarating. And that’s why I led into this article by stating that Cassava Sciences remains an interesting bet for risk tolerant investors.
The latest news that could spike demand again relates to Sept. 22 news about Simufilam, its Alzheimer’s disease drug.
A Closer Look at SAVA Stock
On Sept. 22 Cassava Sciences released data related to a 12-month study of Simufilam for treating Alzheimer’s disease.
Overall, the results were good. Over the course of the 12-month study cognition scores improved by 3.2 points on an ADAS-Cog test and over 50% of participants showed no behavioral disorders.
To put those results in perspective, placebo participants declined by 5.5 points on the ADAS-Cog test over the 12-month period.
While that news is very promising, it too requires perspective in order to be judged. Simufilam still faces a rigorous FDA trial process even though this most recent news is positive.
Now Simufilam will continue its process toward FDA approval. If it is ultimately approved, it will join those four approved treatments listed above.
That phase 3 clinical trial is now scheduled to begin sometime in Q4 of this year. That trial will be done under an FDA Special Protocol Assessment (SPA). In such a program joint protocol design reduces uncertainty and speeds up late-stage drug development. That favors Cassava’s chances of FDA approval, as do other factors.
The Bottom Line on Cassava Sciences
It is obvious that Cassava Sciences has many significant hurdles it still must overcome. For more conservative investors that risk may simply be too high.
I cannot say with any certainty what Simufilam’s chances are as it enters Phase 3 trials, but I would say that there are a few precedents which make it quite attractive.
First of all, it is clearly working with the FDA rather than against it. It will continue to progress toward approval under that aforementioned SPA.
Further, 58% of Phase 3 trials were reported to have been successful as recently as 2016 according to the National Institutes of Health. Ostensibly that implies the company’s chances of success are better than its chances of failure.
That all bodes well for SAVA stock. So if you’re looking to play pharmaceutical development stocks, SAVA looks like a strong choice.
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.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.”