Why Is Cassava Sciences (SAVA) Stock Heating Up Today?

  • Cassava Sciences (SAVA) rose 5% overnight after Biogen (BIIB) released an Alzheimer’s drug study.
  • The Cassava drug, called Simufilam, has a different target than Biogen’s drug.
  • Biogen’s drug doesn’t cure Alzheimer’s, and pricing on it will be an issue.
SAVA stock - Why Is Cassava Sciences (SAVA) Stock Heating Up Today?

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Casava Sciences (NASDAQ:SAVA) stock rose 5% overnight in sympathy with Biogen’s (NASDAQ:BIIB) successful clinical trial of an Alzheimer’s drug called lecanemab.

Lecanemab, developed with Eisai (OTCMKTS:ESALY) of Japan, showed a decline in symptoms among 1,795 patients with early Alzheimer’s, a brain disease impacting nearly one-third of Americans ages 85 and older. The news sent Biogen stock up as much as 51% in overnight trading, increasing its market capitalization by about $14 billion.

Eisai and Biogen also worked together on Aduhelm, an Alzheimer’s drug criticized last year for its high price and lack of efficacy. Cassava is working on its own Alzheimer’s drug called Simufilam.

What’s Going on With SAVA Stock?

Alzheimer’s has become a huge target for drugmakers. The disease’s destructive nature and its prevalence in a rapidly-aging population guarantee a ready market.

But there is controversy on how to target it. Aduhelm targeted the amyloid plaques that are a marker for the disease. Eisai also developed Aricept, which has been a standard treatment since the 1990s.

Eisai CEO Haruo Naito said the new study, called Clarity, helps “prove the amyloid hypothesis.” But cognitive decline was only reduced by 27% among patients in the study. Lecanemab is not a cure for Alzheimer’s.

Eli Lilly (NYSE:LLY) is working on a similar drug called donanemab using the same review process as the Eisai-Biogen drug. The accelerated review process was also used with Aduhelm, which Biogen tried to price at $56,000 per year.

Simufilam is undergoing Phase 3 studies, which began late last year. Unlike lecanemab, the Cassava drug is designed to stabilize a brain protein called filamin-A.

The overnight gain in Cassava shares put its market cap near $2 billion, although it has no revenue. Biogen’s $40 billion market cap is based on $10.6 billion in revenue.

What Happens Now?

Cassava and Biogen are aiming at different treatments for Alzheimer’s. The fact Biogen has a successful study means nothing regarding the Cassava drug.

Pricing will also be an issue for any approved Alzheimer’s treatment. The Aduhelm controversy shows there’s a limit to what insurers and policymakers can pay for a treatment that doesn’t effect a cure.

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.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack.


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