A struggling biotech stock is on the move today on news of a trial extension. Indeed, Cassava Sciences (NASDAQ:SAVA) has announced that it will be extending trials of simufilam — its lead Alzheimer’s disease treatment candidate — by up to 36 months. This comes roughly two weeks after two of the company’s top executives resigned after a grand jury charged one of Cassava’s research collaborators with fraud.
SAVA stock has experienced notable growth over the past month. However, the company is still facing an uphill battle, with its troubled history continuing to cast doubts over its growth prospects.
What’s Happening With SAVA Stock?
In addition to the fraud charges being filed, another unflattering aspect of Cassava’s history is its past as a meme stock. Indeed, the company’s recent surge suggests it may be experiencing another episode of speculative, retail investor-driven trading. As of this writing, shares are up more than 1% but also up more than 50% for the past five days.
If the company can demonstrate real progress with simufilam, it might find a saving grace. But so far, there hasn’t been enough good news, with the exception of a positive late-stage trial update that briefly sent shares up last week. In a statement released today, Cassava provided further context on the trial extension:
“[Cassava] will extend by up to an additional 36 months each of the open-label extension trials in its ongoing Phase 2 and Phase 3 clinical programs. These amendments to the protocols will allow patients who have previously participated in a randomized trial of simufilam in Alzheimer’s disease, if they desire, to continue open-label treatment with simufilam.”
Executive Chairman Rick Barry noted that Cassava believes extending the trial is the best answer for its patients. “It is not a trivial commitment to expand our open-label extension studies in this manner,” he added.
Why It Matters
Even if extending the trial helps Cassava further its progress, it will likely still be hard for investors to hold onto their faith in the troubled company. Indeed, even with the past month’s growth, SAVA stock is still down more than 25% for the past six months. As InvestorPlace contributor Mohammed Saqib reports, the company has also faced intense scrutiny over “the integrity of its clinical data.” Changes in leadership aren’t likely to help Cassava completely shed this image in the eyes of many investors.
All told, Cassava hasn’t announced enough positive updates over the past month or week to justify the recent growth in SAVA stock. That suggests that shares are rising mostly on meme momentum, which may subside soon, leaving SAVA back where it started.
On the date of publication, Samuel O’Brient 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 InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
