Sentiment can quickly turn on Wall Street. For proof, look no further than Cassava Sciences’ recent run (SAVA) stock. The Alzheimer’s-focused biotech was one of the star performers of 2021, posting huge market share gains based on the promising data so far for its AD contender simufilam.
But in three consecutive sessions last week, stocks lost 61% of their value. The downturn began after it became known that a citizen petition had been filed with the FDA calling for the drug’s clinical trials to be halted, stressing that the positive data was based on the findings of a single outside academic lab, while also claiming that some results showed signs that the data was being manipulated. The slide continued after Quanterix – the aforementioned third-party lab – distanced itself from the company, clarifying that it “was not interpreting the test results or preparing the data cards presented by Cassava at the Alzheimer’s Association International Conference (AAIC) in July 2021 or otherwise.” .”
Cassava also released a press statement addressing most – but not all – of the concerns raised in the report. Important, JonesTrading analyst says Submitted Roy, the fact that some of the scientific papers were “questioned” is the fact that some of the scientific papers were published in reputable journals with a “rigorous peer review process”.
In addition, just days after the citizen’s petition was filed, the FDA signed the Special Protocol Assessment (SPA) for both pivotal Phase 3 trials of simufilam.
So, presented with all the information, what should an investor do? Well, for one, Roy thinks a “stock turn” is in the cards, saying investors are getting a “nice entry point” ahead of the expected 4Q21 12-month data readout. After the 9-month positive readout – which showed a 7 point ADAS-Cog improvement over historical placebo data – Roy expects the data to “maintain a high degree of clinical benefit.”
In fact, the 5-star analyst says he has “given no credit whatsoever for the biomarker data presented so far”, and in order to arrive at a “meaningful conclusion”, he will look at the difference in the biomarker levels between 6 and 9 months.
“All biomarkers have failed to conclusively predict clinical benefits in neurodegenerative diseases and, in general, the mechanisms of action of several well-applied drugs are often not well established,” Roy summed up.
Accordingly, Roy maintains a buy recommendation for SAVA stocks, supported by a price target of $215. After the big sell-off, this target sets the upside potential at a whopping 311%. (To view Roy’s track record, click here)
Most of Roy’s colleagues are also not discouraged by the allegations. Based on 4 Buys vs. 1 Hold, the stock has a Strong Buy consensus rating. In addition, the average price target of $154.80 offers a potential one-year price gain of as much as 195%. (See SAVA stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are those of the featured analyst only. The content is for informational purposes only. It is very important to do your own analysis before making any investment.