Cassava Sciences (NASDAQ:SAVA) rose 20% in overnight trading after board member Sanford Robertson bought 100,000 shares. Chief financial officer Eric Schoen also bought shares. Before the purchases, SAVA stock had lost half its value in 2022. The shares are now up to about $26 per share with a market capitalization of $1 billion.
In addition to raising the price of shares directly, since the company only has 40 million shares outstanding, the purchases kindled hope that Cassava might be bought for a premium price. The company is working on a blood test to detect Alzheimer’s Disease and a treatment called Simufilam, which is now in Phase 3 clinical trials.
What’s Going on With Cassava Sciences?
Still, there are reasons for cautious optimism. Cassava still had nearly $200 million in cash at the end of June, even after its net loss. Success in its Phase 3 trials could generate excitement and a possible buyout even before a treatment is approved. Hope raised in early trials sent the shares to more than $120 each last year.
The company is still led by founder Remi Barbier, but has not brought a drug to market in its 25-year history. Under its previous name, Pain Therapeutics, the company was mainly seeking to design opioids, which have fallen out of favor. The company and its drugs have long been controversial.
The Bottom Line on SAVA Stock
Cassava stock is a speculation — a penny stock with a market cap under $1 billion moves quickly on any news. A buyout would bring a quick profit. Good Phase 3 data would help. So would a successful conclusion to the federal investigation. That gives Cassava three strikes at success but, if it can’t get a hit, it’s out.
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.