November is off to a good start for biopharma company Cassava Sciences (NASDAQ:SAVA), which may be nearing a breakthrough regarding its Alzheimer’s treatment drug Simufilam. SAVA stock has been red-hot all season, demonstrating impressive gains. While this has been chiefly due to the positive results reported from Simufilam’s Phase 3 clinical trials, today brought more good news for the company as a previous dispute that might have negatively impacted the stock was settled.
What’s Happening With SAVA Stock
In all scientific research, data integrity is of the upmost importance. If it is compromised, it can mean severe setbacks for the team and company responsible. Today’s news confirms that Cassava has been able to dodge such a bullet. In August, SAVA stock plunged by more than 30% when allegations surfaced of Cassava manipulating data in its reported findings in July 2012. These included the accusation that the company had altered test images known as Western Blots, often used in protein detection.
Cassava was quick to deny all allegations. Today it was reported that they were right to do so, as The Journal of Neuroscience confirmed that no evidence of data manipulation has been found.
SAVA shares have spiked today and are up more than 24% as of this writing. Its gains for the past week — more than 81% — are even more impressive. Its August declines didn’t hurt SAVA too much, and the stock has rebounded well, rising 50% for the past month.
Why It Matters
The pharmaceutical industry is no stranger to scandals. But instances like this, when a company has done nothing wrong, help lend it credibility. While it’s worth noting that Cassava was doing fine on its own, with share prices generating highly favorable returns for investors, it never hurts to have the world be reassured that you are on the straight and narrow.
As fast as SAVA stock is rising, there may still be room to board the train before the real profits start to stack up. While InvestorPlace‘s Mark Hake acknowledges that Cassava’s road to success has been bumpy, he recently argued that SAVA stock investments have the potential to triple in value if Simufilam succeeds. So far, most indicators are that it will.
Fellow InvestorPlace contributor Larry Ramer staked a similar claim. To his way of thinking, SAVA is an undervalued stock with a product that has strong data to support it. The recent events only serve to boost his argument.
What It Means
Cassava is well on its way to becoming the company that has made the most significant contributions to Alzheimer’s treatment. The disease remains both common and difficult to treat, largely due to the lack of available options. If Cassava is successful in producing the next major Alzheimer’s breakthrough, it will establish itself as a giant of Big Pharma, gaining important market share.
Anyone looking for a bullish play on the biopharma sector should watch Cassava as it nears completion of its trials.
On the date of publication, Samuel O’Brient 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.