The stock was due to open Aug. 26 at almost $30 per share, a market capitalization of almost $1.2 billion. The company is working on the detection and treatment of Alzheimer’s disease. Its lead drug candidate is called Simufilam. The company is also working on an Alzheimer’s detection test called SavaDX.
SAVA Stock: What’s Up at Cassava?
Cassava stock is down 34% in 2022. It began the year at nearly $49 per share. But it is up 42% since Aug. 17, when two other insiders bought shares on hopes the company could be bought.
Simufilam has been undergoing a Phase 3 trial since last August to determine whether it works against Alzheimer’s, a dementia that afflicts 10% of those over 65 and one-third of those over 85. Unlike Aduhelm, the controversial Alzheimer’s drug from Biogen (NASDAQ:BIIB), Simufilam doesn’t attack brain plaques directly. Instead, it restores the shape of a scaffolding protein called filamin A (FLMA).
But Cassava’s approach is also controversial. The underlying science claiming plaques caused the disease, conducted at the University of Minnesota in 2006, has been questioned. A whistleblower recently claimed images in the seminal paper at UMN were tampered with.
The New Yorker has also written a story with specific charges against Simufilam and Cassava. Cassava was previously called Pain Therapeutics but failed to bring its pain medicine, called Remoxy, to market.
What Happens Now?
If Cassava is bought, the controversy over Simufilam won’t matter for investors. They will be someone else’s problem. Barry’s is the third recent insider purchase, leading to speculation that there may be fire inside the smoke.
Whether there is or not remains speculation. But if Simufilam does work, the drug would be a blockbuster, and millions of families would get relief.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.