A bad month just got much worse for Cassava Sciences (NASDAQ:SAVA). SAVA stock is plunging today on news that President and CEO Remi Barbier is stepping down, effective immediately. As the company’s board continues to search for a permanent new CEO, Rick Barry will fill the position on an interim basis.
News of this development has sent SAVA stock into a tailspin, pushing it down more than 30% in just a few hours of trading. Things weren’t looking good for the struggling pharmaceutical producer before, but now they’re even more uncertain as the stock dips below the $10 mark.
Does this mean investors should ditch SAVA stock and focus on more stable investments? Let’s take a closer look.
What’s Happening With SAVA Stock?
It’s no secret that Cassava Sciences has been on a downward spiral for months. The former meme stock is down over 55% for the past one year, a trajectory that is likely to continue. Even after beating analyst estimates for first-quarter earnings, the company has struggled to garner any serious momentum. On top of that, SAVA has faced a variety of negative catalysts, such as a former key advisor being indicted on fraud charges.
Now, the company is facing an uncertain future as it embarks on a search for a permanent leader. In the meantime, new interim CEO Rick Barry has been a director at Cassava since 2021. He has also held leadership positions at Sarepta Therapeutics (NASDAQ:SRPT), an industry peer to Cassava that has enjoyed a year of steady growth so far.
In a statement, Barry noted that Cassava is focused on its treatment for Alzheimer’s disease. However, the CEO change isn’t the only shakeup at the company. Senior Vice President of Neuroscience Lindsay Burns is also resigning from her role, although she will serve as a consultant to the company’s research team for the near future.
The appointment of a new CEO often sends a stock down in the short term. Stable companies can easily bounce back. But given Cassava’s poor performance lately, investors have reason to be concerned about SAVA stock. The company hasn’t reported much good news lately. As InvestorPlace contributor Andy Kim reports:
“In the first quarter of 2024, Cassava Science was able to turn things around and reach $25 million in net income as opposed to a $24.3 million net loss. However, Cassava Sciences is still facing larger challenges that could cause significant damage in the future. The Texas-based biotech firm has yet to resolve the ongoing accusations of data manipulation in the Simufilam trial.”
Why It Matters
It’s easy for a new leader to claim that a company is focused on a promising new product that could help spur growth in the long term. But until Cassava reports real progress, it will be hard for investors to be optimistic about its chances of recovering. As Kim correctly highlights, the data manipulation accusations will likely continue to cast doubt over Cassava’s work until it can show real headway. So far, there hasn’t been much to report.
When the company’s board appoints a permanent CEO, it may help SAVA stock stabilize. But that could take some time. And while investors wait, shares are likely to keep trending downward.
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.
