Cassava Sciences Is Worth Considering After Hitting Its Latest Trough

SAVA stock - Cassava Sciences Is Worth Considering After Hitting Its Latest Trough

Source: Postmodern Studio /

Cassava Sciences (NASDAQ: SAVA) is a clinical-stage biotechnology firm focused on developing drugs for Alzheimer’s disease. The company’s Simufilam drug is in Phase 3 of clinicals trials. At this stage, SAVA stock needs clinical trials on 750 Alzheimer patients in Phase 1 and 1,000 in Phase 2.

However, between October 2020 and March 2021, only 60 patients have enrolled in the program with another 170 patients still being screened. Management aims to expedite the number of enrollments for clinical trials by opening sites across the globe.

Approximately 105 clinical sites have been opened with a target of 175 by the end of 2022. This initiative should help Cassava Sciences bring in more patients and expedite the whole process.

The drug is also under special protocol review by the U.S. Food and Drug Administration (FDA). This means if the FDA gives a go-ahead after it meets the scientific and regulatory requirements, the company can market its product. If it gets an FDA approval, SAVA stock will surge.

Amidst all this, recent accusations by short-sellers regarding data manipulation in Cassava’s clinical trials for Simufilam has tainted the company’s image. SAVA stock has plummeted to all-time lows.

Although these claims are unfounded according to Neuroscience journal and the FDA, investors’ perceptions have not changed much. As of the middle of March, approximately 29% of SAVA shares were still held short. Also, the stock has continued its downward momentum.

On a positive note, the company maintains a pristine balance sheet with no debts. It holds $233.4 million in cash and cash equivalents, which should aid in carrying out research and development (R&D) activities.

Although the company’s FDA approval for Simufilam is pending, there’s a strong probability this will occur. Given the stock is trading near its lows, it appears to be a good investment opportunity for risk-aggressive investors.

Based on the consensus of five analysts, the stock has a 12-month average price target of $110, reflecting an upside potential of almost 322% from the current price. I would consider SAVA stock a good contrarian bet.

 On the date of publication, Sakshi Agarwalla 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 Publishing Guidelines. 

Sakshi Agarwalla has more than eight years of experience writing equity research reports and preparing financial models for companies across various industries, as well as writing newsletters and financial articles. Recently, she assisted her Fund manager in executing trades, preparing weekly, monthly NAVs and writing newsletters. She has a postgraduate degree in finance and has completed CFA.

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