Why the plunge in Cassava Sciences (SAVA) stock shouldn’t scare you


Investors didn’t like the Alzheimer’s drugmaker’s latest update Cassava Sciences (NASDAQ:SAVA). After showing excellent results from the first 50 patients treated with simufilam, the company’s future Alzheimer’s drug in an open-label mid-stage study, the results from the full 200+ patients were not so good.

Patients received an average of 2 tablets of 100 mg per day for one year and showed only minimal change in ADAS-Cog score. In the Alzheimer’s disease clinical trial, this is the cognitive scale used to measure efficacy.

Over a year, 47% of patients showed an improvement of 4.7 points, while 23% showed a decrease of less than 5 points with an average decrease of 2.5 points.

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However, when the company released the results of the first 50 patients, on the same scale, in September 2021, 68% showed an improvement – ​​or 6.8 points.

The company said that in this patient population, a minimal change or improvement over a one-year period equates to a “highly desirable outcome.”

That said, if we compare the results to Eli Lilly’s disease treatment, Jones Trading analyst Soumit Roy thinks there’s plenty to be encouraged about.

“We continue to see modestly better performance with Cassava’s simufilam versus Lilly’s donanemab in a mild to moderate patient population… We would expect Cassava’s simufilam to outperform LLY’s donanemab inline to slightly, which we see as a major win, given that LLY’s donanemab could be the only drug approved in the near future (topline data from phase 3 in 2Q23) in mild to moderate patients and increase the scarcity factor for simufilam,” Roy opined.

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Indeed, Roy is very much on the optimistic side of the spectrum here; along with a Buy rating, the analyst gives SAVA stock a $100 price target, suggesting the stock is undervalued by as much as 264%. (To view Roy’s track record, click here)

Only two other analysts have been keeping tabs on Cassava’s progress, with one staying on the sidelines and the other joining Roy in the bull camp, making the consensus here a moderate buy. However, all think the stock has room for growth; the $89.33 average target implies 203% year-over-year stock growth. (See SAVA stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the recommended analyst. The content is for informational purposes only. It is very important to do your own analysis before making an investment.


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