With few updates from the company in recent weeks, it’s no shock that shares in Cassava Sciences (NASDAQ:SAVA) haven’t made many big moves lately. Sure, SAVA stock did experience a brief slide late month, falling to just above $35 per share.
This was quickly followed up with a quick move back to between $40 and $50 per share, where it sits today. Much of this is the result of the recent market volatility. In the coming weeks, you should expect shares to trade sideways, only making big moves if/when the markets again get rocky.
However, while its price action may be more “boring” now than it was during its wild moves last year, that may not be the case a few months down the road.
By then, we’ll know more about whether Simufilam is en-route to getting U.S. Food and Drug Administration (FDA) approval. Or, if its one of the vast majority of drug candidates that fails to make it to the commercialization stage.
The situation here is pretty cut-and-dry. Shares could skyrocket if Simufilam gets approved. If it doesn’t? With almost all of this company’s valuation built around the assumption this drug will get approved, you can expect it to take an immediate plunge if this catalyst evaporates. Yet depending on your risk appetite, this may be an opportunity to consider.
SAVA Stock at a Glance
In case you are just stumbling on Cassava Sciences now, here’s a brief overview of the situation. Like I mentioned above, the company is in the process of getting its Alzheimer’s treatment, Simufilam, through the approval pipeline. Right now, it’s at the Phase 3 stage of clinical trials.
SAVA stock took off in early 2021 as excitement grew among investors for this potential blockbuster drug. However, last August, it lost its momentum. This was due to allegations that it manipulated trial data. Shares tumbled in the aftermath. Even as the company’s CEO Remi Barbier, fought back, countering that the allegations were the result of a “short and distort” campaign.
Several medical journals, most recently Neuroscience, have found no evidence proving the claims to be true. Yet they continue to dog the company. Back in November, further data manipulation rumors emerged. Last month, The New Yorker did a deep dive into the attorney representing the whistleblower who made the initial data manipulation claim.
Granted, this increased attention hasn’t had that much further impact on the stock’s performance. Still, it’s likely why shares continue to struggle moving back well above $50 per share. But while that’s frustrating in the short term, it does make it easy to enter a position in this risky stock, without having to chase it.
It’s All or Nothing With Cassava Sciences
When it comes to stocks, binary plays are not the most ideal situations. It’s always better to have an opportunity where there are multiple catalysts. In that type of situation, only one catalyst needs to play out in order to send the stock higher.
Unfortunately, with SAVA stock, it’s all or nothing. There’s no other way to put it. Either Simufilam works, and gets the go-ahead from the FDA, sending the stock soaring. If this Alzheimer’s treatment doesn’t work? It’s not out of the question for shares to drop back to single-digit prices.
The market values Cassava Sciences today at $1.77 billion. That’s entirely based on the possibility that Simufilam is one day a blockbuster drug. If this possibility completely flies out the window? Shares won’t go to zero, as there may be some value in the other candidates in its pipeline. Plus, the $241.52 million in cash in its coffers (worth $6.04 per share). Yet a move down to a price not too far above the value of this cash position isn’t out of the question.
In other words, it could drop more than 80% if Simufilam flops. Conversely, if it continues to make its way through the pipeline? The sky may just well be the limit, within reason.
Some projections from last year said the stock could be worth hundreds, if not close to $1,000 per share, if Simufilam makes it to the approval stage. That may be overstating it. However, a move back to its all-time high ($146.16 per share), or perhaps a little bit higher? This may be within reach.
Bottom Line on SAVA Stock
Earning a “B” rating in my Portfolio Grader, expect Cassava Science to keep trading sideways. At least, until its moment of truth arrives. There is big downside if the Phase 3 data comes in, and it’s clear that it’s “game over” for Simufilam. There is massive upside if Phase 3 results are promising, and it continues to make its way to FDA approval.
I would recommend taking a deep dive into the company and its flagship candidate before buying. But if you’re looking for “moonshot” opportunities, SAVA stock is one worth looking into.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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