If volatility is not your bag, then definitely stay away from Cassava Sciences (SAVA) stock. This biotech has been one of 2021’s most volatile, not to mention, controversial names.
Ultimately, however, for those willing to shoulder the risk, a bet on Cassava at the start of the year has paid off – the stock is up by a huge 900% since 2021 began. That said, if you came on board toward the end of July, you’re probably sitting on some heavy losses, as the market has taken back a huge chunk of the prior improbable gains.
For those not following the Cassava roller coaster ride, the stock’s rise has been built on the potential of its Alzheimer’s disease (AD) treatment simufilam. AD is a notoriously hard nut to crack and simufilam’s results from an ongoing open-label trial so far have shown much promise. Following 6 months, 9 months, and most recently a 12-month analysis, patients’ cognitive behavior improved – a feat yet to be achieved by any other AD treatment. The safety data has also been positive, and acting as a further catalyst, 2 Phase 3 trials should kick off in Q4.
However, investors are now taking those results with a grain of salt, after the company’s methods of data gathering and analysis have been put under the microscope, following a citizen petition filed with the FDA claiming the results were bogus.
What’s a simple investor to do then?
While Maxim’s Jason McCarthy admits the citizen’s petition overhang is “impacting valuation,” and is an “additional risk” that investors should be mindful of, the analyst believes its outcome is not worth speculating on as it is “up to the regulators.”
“Our views and outlook for the company are predicated on the factors around the drug, the programs and the path forward to P3,” the analyst went on to say.
And here, McCarthy notes the complex nature of AD, and the fact the data “generating all the attention” is based on only 50 patients and an open-label trial.
“However,” McCarthy added, “The improvement in cognition at 6-months appears to be on track with what could be expected from standard of care acetylcholinesterase inhibitors. Considering the effects of these drugs tend to wear off at 6 months and placebo effects, if any, out this far should be less of a risk, the simufilam data at 9 and 12 months is compelling, even with a small N-value, in our view.”
Accordingly, McCarthy rates SAVA stock a Buy and has a $190 price target for the shares, implying upside of a hefty 180% from current levels. (To watch McCarthy’s track record, click here)
Other analysts are also optimistic; while the $147.4 average price target is not quite as high as McCarthy’s, the figure still represents possible one-year returns of 117%. Rating wise, the outlook is also positive; the stock boasts a Strong Buy consensus rating, based on 4 Buys vs. 1 Hold. (See SAVA stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.