Cassava Sciences (NASDAQ:SAVA) stock rose nearly 30% on Sept. 20 as speculators bet on the company’s efforts against Alzheimer’s Disease. The gain brought SAVA stock within 11% of where it started 2022. It was falling in pre-market trade today.
Cassava is testing Simufilam, an Alzheimer’s treatment. Before turning to Alzheimer’s, the company was called Pain Therapeutics and was designing opioids.
What Speculators See in SAVA Stock
Cassava is one of the most controversial companies in biotech. The controversy was detailed in a January New Yorker piece about whistleblowers and Cassava CEO Remi Barbier.
Cassava’s Alzheimer’s treatment targets a protein called filamin A. Mutations in filamin A, also known as FLNA, have been linked to several diseases.
A treatment for Alzheimer’s would be a big win for modern biotech. Past efforts targeting plaques caused by the disease, like Aduhelm from Biogen (NASDAQ:BIIB), have disappointed in the market. Even if Simufilam isn’t a cure, positive results in its Phase 3 study could result in a buyout. Cassava has a market capitalization of about $1.5 billion despite a lack of revenue.
Short interest has been rising lately, with 31% of Cassava shares being held short on Aug. 31. The stock has also been helped by a considerable amount of insider buying.
There are also some investors claiming on social media that the Securities and Exchange Commission (SEC) may drop a criminal probe of Cassava launched in July. The idea is that the company is “proving the shorts wrong.”
Finally, a large trader, or “whale,” has reportedly been buying bullish options on Cassava stock. The company is next due to report results on Nov. 9.
What Happens Next?
Cassava will remain a speculative stock — the kind you don’t want to trade unless you have direct access to market prices and a cast-iron stomach. Traders will be making and losing a lot of money on Cassava before its next report to shareholders.
On the date of publication, Dana Blankenhorn did not hold (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.
