Cassava Short Sellers Harvest $100 Million in August Stock Rout

(Bloomberg) — The retail favorite Cassava Sciences Inc. has been sold amid concerns over research data on its Alzheimer’s drug, which has seen shortsellers earn more than $100 million in the past month, according to data from S3 Partners.

The recent moves place the stock at the center of the latest standoff between retailers and short sellers, who are often hedge funds or institutional companies that bank on declines in a stock. According to S3, bearish bets have been placed against about 13% of the biotech’s float or about $293 million.

Cassava’s stock took a beating last week after a lawyer, backed by a shortseller, filed a petition to halt trials of the company’s main asset, an experimental treatment for Alzheimer’s disease over concerns about the disease. integrity of the data. Sales accelerated on Friday when Quanterix Corp., the lab that Cassava cited for generating the data, distanced itself from the results, saying it had not interpreted them or prepared information presented at a recent industry conference. An analyst at Cantor Fitzgerald said Friday it was impossible to conduct his due diligence and suspended his hold rating on the stock.

“Acknowledged short sellers are making the rounds with accusations of scientific impropriety,” Cassava CEO Remi Barbier said in an emailed statement. “They will make a huge financial gain from a decline in the Cassava Sciences stock.”

Cassava has previously said that Quanterix’s only job in the process was to conduct sampling and that it saw the petition “as a technique intended to add to the pile of fear and doubt that sprang from their original document.”

Even after losing about 55% in the past four trading days, the stock is still this year’s second best performer in the Russell 2000. Retailers jumped into the stock early in the year after early data in a small study – the results of which are now in doubt – were considered positive for treatment. The regulatory approval of Biogen Inc.’s controversial Aduhelm. renewed optimism about the chances that smaller biotech companies would also be successful in treating Alzheimer’s disease and helped the stock soar to nearly 20-fold annual profits in July.

After initially gaining Cassava stocks during the recent downturn, there are signs that day traders are losing interest again.

“Retail investors aggressively bought into the dip last Wednesday during the first leg of the sell-off. Then they became net sellers on Thursday as the stock continued to fall,” said Giacomo Pierantoni, an analyst at Vanda Research, a company that tracks retail sales.

Even with the recent sell-off, shorts that have been betting against Cassava’s stock for some time have yet to make up for all their losses. According to S3’s Ihor Dusaniwsky, shortsellers are still down about $240 million this year.

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