Cassava Sciences: A Solid “Blood in the Street” Opportunity

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The pullback in Cassava Sciences (SAVA) is overkill, we noted on August 27.

At the time, the stock had just pulled back from a high of $130 to a low of $50.85, All after a firm called into question the quality and integrity of SAVA’s Alzheimer’s test results, and asked  the US FDA to halt of the SAVA trials until there’s further investigation.

However, as fear began to get out of hand, opportunity emerged.

  • B. Riley analysts said SAVA is a buy on weakness, given the “numerous inconsistencies” in the petition. Plus, they reminded investors that SAVA had “highly favorable” engagement with the US FDA, including an agreement for pivotal Phase III studies.
  • SAVA CEO Remi Barbier said, as quoted by Bloomberg, said “I’ve never heard of a Citizen’s Petition for a pre-Phase 3 drug, especially on a drug that appears to be as safe as simufilam. We see the filing of a citizen’s petition as a technique intended to add to the pile of fear and doubt generated by their initial document.”
  • In addition, we could clearly see fear was priced in by watching RSI, MACD, and Williams’ %R.  About 80% of the time, when these three indicators align that deep in oversold territory, the stock tends to bounce.  We saw it happen in April 2021, in May 2020, and in March 2020.

Today, the stock is back to $63.41 – and running after announcing “top-line clinical data from a pre-planned interim analysis of an on-going open-label study with its drug candidate simufilam in patients with mild-to-moderate Alzheimer’s disease,” as noted in a company release.

“In a study funded by the National Institutes of Health (NIH), ADAS-Cog11 scores improved an average of 3.2 points from baseline (p<0.001) in the first 50 study subjects who completed 12 months of open-label treatment with simufilam. To emphasize impartiality, changes in ADAS-Cog scores baseline to month 12 were independently analyzed by two consulting biostatistician,” the release added.

From here, if the company can provide further positive results, SAVA could run back to $130 – with patience, and a hopeful lack of more bear attacks.

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