As if to show the purpose that what goes up, should come down, shares of Cassava Sciences (SAVA) took an actual beating final week. Considered one of 2021’s star performers, SAVA inventory had been on an absolute tear this yr, as buyers took a shine to the Alzheimer’s illness (AD) targeted firm following the discharge of promising information for its potential AD therapy simufilam.
Nevertheless, in two consecutive classes, shares shed a mixed 56% after the corporate introduced outcomes from an interim evaluation for the drug following 9 months of therapy in an open-label research.
So, what did the information present? Nicely, for one, based on the corporate, even after 9 months, simufilam improved sufferers’ cognitive conduct, by 3 factors on the ADAS-Cog11 scale, virtually double the 1.6 factors registered following 6 months of therapy and one thing that no Alzheimer’s therapy had achieved earlier than. Total, at 9 months, simufilam improved ADAS-Cog scores in 66% of sufferers, whileat 9 months, 22% of sufferers additionally confirmed much less of a decline than what had been recorded in beforehand revealed science literature.
“This, in our view,” stated B. Riley’s Mayank Mamtani, “Represents a house run state of affairs, exceeding investor expectations, and making a powerful case for best-in-indication scientific efficacy for simufilam in mild-to-moderate Alzheimer’s sufferers primarily based on the 2 key highlights of the dataset.”
Which begs the query, why did the shares drop so violently?
Nicely, for one, Annovis Bio launched information for its Alzheimer’s candidate the identical day Cassava introduced its outcomes. The outcomes didn’t go down properly with buyers and induced a domino impact amongst some AD-focused names.
Moreover, some impartial researchers have raised “doubts in regards to the purported advantages” of simufilam and have even known as the research’s outcomes “overblown, inappropriate, and uninterpretable.”
Mamtani, nonetheless, senses alternative and says B. Riley “can be extra consumers of the shares on weak spot, which we view to be largely attributed to investor confusion across the course of of information launch…”
The market should have learn Mamtani’s ideas as shares bounced again aggressively in Monday’s buying and selling. Nevertheless, Mamtani thinks the inventory may nonetheless be price way over its present valuation.
The analyst raised his value goal on SAVA to $145 (from $111), whereas reiterating a Purchase score. Traders could possibly be pocketing features of ~70%, ought to Mamtani’s thesis play out as anticipated. (To look at Mamtani’s observe file, click here)
It’s largely Buys, too, from Mamtani’s colleagues. SAVA inventory retains its Robust Purchase consensus score primarily based on 4 constructive opinions and 1 Maintain. In the meantime, the $139.75 common value goal represents 12-month upside potential of ~66%. (See SAVA stock analysis on TipRanks)
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Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant for use for informational functions solely. It is rather necessary to do your personal evaluation earlier than making any funding.