Alzheimer’s disease (AD) is a notoriously difficult condition to treat. In fact, there are currently no available drugs that can halt the advancement of the memory-destroying disease. Finding a treatment is one of the medical world’s holy grails and is the modus operandi of Cassava Sciences (SAVA).
The company is developing AD treatment simufilam and while the drug is still going through the testing phases, the results so far have been promising.
Although getting a treatment to market is obviously the end goal, Cassava could notch a first on the path to this objective, when it will present data following 9 months of treatment from the open-label trial with simufilam at the Alzheimer’s Association International Conference (AAIC) in July. The drug could be the first to display cognitive benefits at 9 months.
“To our knowledge,” said JonesTrading analyst Soumit Roy, “Cassava is to the only company to show cognitive benefits at 6 months in Phase 2 in harder to treat mild to moderate AD patients, and potentially has a higher probability of success to readout positive at the now expected 9-month Phase 2 data update in July 26-29th AAIC.”
The Phase 2 data showed that after 6 months of treatment, simufilam improved cognitive functions and patients’ behaviour. Roy was looking forward to the 12-month readout, which is slated for late 3Q20, which the 5-star analyst expects will be positive. The unexpected 9-month readout, Roy says, is a “positive indication.”
Both readouts are potential catalysts and so are the initiations of two simufilam Phase 3 trials in 2H21. But there is another possible indirect catalyst.
Biogen (BIIB) has a PDUFA date set for June 7 for its AD treatment aducanumab, for which Roy thinks the “AD space is poised to hear approval.” The “positive momentum” could possibly push Eli Lilly (LLY) to attempt to gain “conditional approval based on Phase 2 data” for its AD candidate. With these potential tailwinds, Roy believes Cassava “would benefit from the bullish AD space.”
Despite SAVA stock being up by 412% year-to-date, the shares have taken a proper beating since the early February highs and have retreated by 65%. Roy expects the stock to claim back those gains and some over the next 12 months. The analyst’s $110 price target suggests upside of 205%. Needless to say, Roy’s rating is a Buy. (To view Roy’s track record, click here)
All 3 other analysts who recently reviewed Cassava’s prospects also anticipate triple-digit returns; the Street’s $89.75 average price implies returns of 157% in the year head. The stock’s Strong Buy consensus rating is based on Buys only – 4, in total. (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.
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