The Good News Is Piling Up for Cassava Stock

After Cassava Sciences (NASDAQ:SAVA) reported additional, impressive data on its Alzheimer’s drug candidate and recruitment for one of its Phase 3 trials began, I remain very bullish on SAVA stock.

drug stocks alzheimer's disease with MRI
Source: Atthapon Raksthaput /

The new data suggests that the drug candidate, simufilam, will indeed significantly help Alzheimer’s patients. And the fact that recruitment is beginning for a Phase 3 trial of simufilam strongly indicates that the FDA is not at all worried about the recent accusations made against Cassava.

Actually, this development shows that the agency is likely to reject the citizen’s petition that a lawyer, who reportedly represents short sellers of SAVA stock, lodged against Cassava in August. The petition alleged that Cassava had manipulated data on simufilam, placing the safety of the drug in doubt.

It also sought to have the FDA halt upcoming Phase 3 trials of the drug while the allegations were investigated.

More Impressive Data

On Sept. 22, Cassava reported that the cognitive scores of 50 Alzheimer’s patients who took simufilam for a year “improved {by} an average of 3.2 points.” Of course, the scores of Alzheimer’s patients on cognitive tests almost always decline over significant amounts of time.

More specifically, Cassava reported that “an independent, published meta-analysis of patients with mild-to-moderate Alzheimer’s disease reports an average decline of 5.5 points over 12 months amongst study subjects who were administered placebo in randomized, controlled trials.”

So, the fact that the cognitive scores of Alzheimer’s patients taking simufilam improved, on average, over a year is quite momentous.

What’s more, Cassava reported that the drug was tolerated well and didn’t trigger any serious incidents during the year-long trial.

The drug maker also noted that the data generated by the trial was maintained by another company that transmitted the information to two independent biostatisticians. The latter pair then analyzed the data, Cassava stated.

As with the impressive cognitive data from a simufilam trial that Cassava released last summer, no one, to my knowledge, has questioned the accuracy of the cognitive data that Cassava unveiled on Sept. 22.

Recruitment for a Phase 3 Trial Is Underway

According to the ClinicalTrials website, which is maintained by the U.S. National Library of Medicine, Cassava is recruiting participants for a Phase 3 trial simufilam.

If the FDA agreed with the allegations made by the citizen’s petition and was planning to follow its recommendation to halt the Phase 3 trials of simulfilam, recruitment for the Phase 3 trial would obviously not have kicked off so soon after the petition was filed.

As a result, as I stated earlier, the agency looks poised to reject the petition completely.

A Bullish Note on SAVA Stock

Maxim analyst Jason McCarthy recently called the data generated after nine and 12 months of treatment with simulfilam “compelling,” TipRanks reported on Sept. 27. The analyst has a “buy” rating and a very bullish $190 price target on the shares.

And although McCarthy called the citizen’s petition an “additional risk,” he does not appear to be too worried about the overhang, given his rating and price target on SAVA stock.

And other analysts also don’t seem to be too concerned about it, as their average price target on the name is $147.40, TipRanks reported.

The Bottom Line

The cognitive data on Cassava’s simulfilam indicates that the drug is an extremely helpful, safe treatment for Alzheimer’s disease, which kills tens of thousands of people in the U.S. annually and is extremely debilitating, tragic, and costly. Further, there is no drug that effectively treats the underlying causes of the disease.

Meanwhile, the FDA appears set to ignore the citizen’s petition filed against the drug. Given these points, along with the fact that SAVA stock is trading at a rather low market capitalization of $2.5 billion, I recommend that growth investors buy its shares.

On the date of publication, Larry Ramer held a long position in SAVA stock. 



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