Why the Dip in Cassava Sciences (SAVA) Stock Shouldn’t Spook You

Investors did not like the latest update from Alzheimer’s drug maker Cassava Sciences (). After showing excellent results from the first 50 patients treated with simufilam, the company’s prospective Alzheimer’s drug in an open-label mid-stage study, the results from the full 200+ patients were not as good.

Patients were given 2 100mg tablets a day over the course of one year on average, and these exhibited only a minimal change in the ADAS-Cog score. In the clinical research of Alzheimer’s, this is the cognitive scale used to measure efficacy.

Across one year, 47% of patients exhibited an improvement of 4.7 points, while 23% showed less than a 5-point drop with an average drop of 2.5 points.

However, when the company announced results from the initial 50 patients in September 2021, on the same scale, 68% displayed an improvement – or 6.8 points.

The company said that in this patient population, a minimal change or improvement over the period of a year amounts to a “highly desirable outcome.” Investors evidently disagreed with that assessment and sent shares down 24% in the following trading sessions.

That said, comparing the results to Eli Lilly’s Alzheimer treatment, Jones Trading analyst Soumit Roy finds enough to be encouraged about.

“We continue to see modestly better performance with Cassava’s simufilam vs Lilly’s donanemab in mild to moderate patient population… We could expect base case to be Cassava’s simufilam performing inline to marginally better than LLY’s donanemab, which we see as a big win, considering LLY’s donanemab could be the only approved drug in the near future (Phase 3 topline data in 2Q23) in mild to moderate patients and raising the scarcity factor for simufilam,” Roy opined.

Indeed, Roy is very much on the bullish side of the spectrum here; along with a Buy rating, the analyst gives SAVA shares a $100 price target, suggesting shares are undervalued by a whopping 264%. (To watch Roy’s track record, )

Only two other analysts have been keeping a tab on Cassava’s progress with one remaining on the sidelines and the other joining Roy in the bull camp, making the consensus view here a Moderate Buy. However, all think the shares have room for growth; the $89.33 average target implies one-year share appreciation of 203%. (See )

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