Cassava Sciences Stock: Massive Potential Marred By Controversy

Summary

Cassava Sciences, Inc. is a pre-revenue biotechnology company. The company specializes in neurodegenerative diseases, such as Alzheimer’s disease.

In the US, there are 6.2M Americans aged 65 and older with Alzheimer’s dementia. The Alzheimer’s patients will double to nearly 13M by 2050.

In September 2021, SAVA reported a 40% mean improvement in Alzheimer’s patients’ cognition for most enrolled patients.

SAVA is currently trading at an EV/FY25 revenue of 2.26x. If successful, the potential for re-rating could be tremendous.

We discuss whether investors should add the stock now.

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Nur Ceren Demir/iStock via Getty Images Investment Thesis

Cassava Sciences Inc (NASDAQ: SAVA ) is a pre-revenue biotechnology company. The company specializes in neurodegenerative diseases, such as Alzheimer’s disease. Alzheimer’s is categorized as a progressive disease whose patient’s cognition will continually worsen over time.

In 2021, the World Health Organisation (WHO) estimates 55M Alzheimer’s patients globally. This number is projected to rise to 78M by 2030 and 139M by 2050. The Alzheimer’s Association estimates 6.2M Americans aged 65 and older with Alzheimer’s dementia in the US. It is projected that Alzheimer’s patients will double to nearly 13M in the US by 2050.

In 2021, the Alzheimer’s Association estimated that neurodegenerative diseases such as Alzheimer’s and other dementias cost $355B. It includes $239B in Medicare and Medicaid payments combined. By 2050, Alzheimer’s is projected to cost more than $1.1T. Thus, it is imperative for the development of an effective Alzheimer’s treatment to slow down the devastating health and economic impact of neurodegenerative disease. SAVA is currently developing Simufilam and SavaDx to treat and detect Alzheimer’s disease, respectively. SAVA Stock YTD Performance

SAVA stock YTD performance (as of 29 October 21).

SAVA stock investors have had a “crazy ride” all year. At one point, its YTD return even reached close to 2,000%. Despite that, investors who added Cassava stock at the start of 2021 are still up by 532.4% YTD. It has still been a phenomenal year for these investors. Given the tumultuous ride that the stock has been through, it’s challenging to say where we think it will end by 2021. Therefore, we encourage investors to continue monitoring its price action closely. Top-Line Results for Alzheimer’s Treatment Candidate

On 2nd February 2021, SAVA reported that its candidate treatment, Simufilam, improved patients’ conditions in the early stages of Alzheimer’s disease . This result is from an ongoing open-label clinical study for patients with mild-to-moderate Alzheimer’s disease. Its announcement led to a spike in SAVA stock price.

The interim clinical analysis shows a 1.6 points improvement in the ADAS-Cog11 system in Alzheimer’s patient’s cognition. It is equivalent to a 10% mean improvement. There is also a 29% improvement in dementia-related behavior such as anxiety, delusions, and agitation. The result is after six months of Simufilam treatment, with mild and transient adverse side effects. “We could not be more pleased with these interim results,” said Remi Barbier, President & CEO of Cassava . “An improvement in cognition and behavior tells us this drug candidate has potential to provide lasting treatment effects for people living with Alzheimer’s disease . It’s an exciting development.” In September 2021, SAVA reported a continued improvement in most of the enrolled patients. The results show a mean improvement of 3.2 points on ADAS-COG11. This is for those who completed 12 months of Simufilam treatment. For 68% of Alzheimer’s patients, an average of 6.8 points of improvement is reported. This is equivalent to a total of 40% mean improvement in Alzheimer’s patient’s cognition.

On the other hand, 20% of the patients reported a slower decline of fewer than 5 points on ADAS-Cog at 12 months. According to the US FDA, Alzheimer’s disease usually declines by 6 – 12 ADAS-cog points annually. As such, Simufilam may serve as a breakthrough candidate to slow down and also treat Alzheimer’s disease in the future.

SAVA has several concurrent clinical trials in progress with multiple patient groups. These are projected to end in 2023 and 2024. There was a valid concern if these concurrent phase 3 clinical trials will yield the same positive top-line data. This is because the previous successful trial only involved 50 Alzheimer’s patients without a placebo group. The current ongoing trials will involve placebo groups and approximately more than 2K Alzheimer’s patients . As such, the bigger sample group may possibly skew the clinical results unfavorably.

Nonetheless, in August 2021, SAVA […]

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