Since biotechnology company Cassava Sciences (NASDAQ:SAVA) is working hard to fight Alzheimer’s disease, it might be surprising to know that the company has some harsh critics. There’s a lot of drama going on with Cassava, and SAVA stock traders need to be aware of the latest developments.
Just to give you a primer, Cassava Sciences is developing an Alzheimer’s disease drug called simufilam. This drug is is Phase 3 ready in 2021, according to the company.
More specifically, after an End-of-Phase 2 meeting with Food and Drug Administration, Cassava received two FDA Special Protocol Assessments for future Phase 3 studies with simufilam. So, until the recent drama started, things seemed to be running smoothly for Cassava Sciences.
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But, that’s how it goes in the markets sometimes. Today, we’ll try to sift through the rumor mill and extract the facts — and along the way, observe a swift and potent response from Cassava’s CEO.
SAVA Stock at a Glance
Generally speaking, biotechnology stocks are prone to bouts of volatility. When Reddit traders get involved, the volatility can be greatly amplified.
SAVA stock is a perfect example of this. The share price started out near $7 in early January, but it seems that the short-squeeze crowd pushed it up to the $80 level in early February.
After that rally fizzled, the share price retreated to $34 in April. Yet, the buyers were apparently just taking a breather as another run-up was about to commence.
It was quite a memorable summer as SAVA stock rocketed to a 52-week high of $146.16 on July 28. Unfortunately, like the previous rally, this one wasn’t destined to last very long.
Without a doubt, some scathing allegations against Cassava Sciences contributed to the share price’s decline below $50 in September.
So, let’s delve into the back-and-forth between this fascinating biotech firm and its fierce detractors.
A Whistle Is Blown
Surely, it’s not a coincidence that SAVA stock tumbled immediately after a would-be whistle-blower asked federal regulators to halt the clinical trials of simufilam.
Gallery: 7 Discord Stocks Investors Are Pumping Higher (InvestorPlace)
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To clarify the point of this write-up, this is neither a position of buying or selling the Discord stocks mentioned above but rather providing information on what’s currently popular. Still, as Yeung wisely remarked, “what I write today will become stale within 10 minutes of publication.” Some of these speculative ideas may have a longer lifespan but again, due diligence is your friend. ContextLogic (NASDAQ:WISH) China Pharma Holdings (NYSEAMERICAN:CPHI) Gold Resource (NYSEAMERICAN:GORO) NeoPhotonics (NYSE:NPTN) LivexLive Media (NASDAQ:LIVX) LM Funding America (NASDAQ:LMFA) Flora Growth (NASDAQ:FLGC)
Discord Stocks Looking for a Boost: ContextLogic (WISH)
Perusing the blogosphere, one of our competitor sites asked, why is everyone talking about ContextLogic? Well, it’s probably the same reason why people love buying junk cryptocurrencies or why dogs chase cars they have no intention of driving. Sometimes, we want what we want, whether it follows a particular logic or not. That said, ContextLogic does offer some fundamental justification. Billed as a “one of the largest and fastest growing global ecommerce platforms” according to its website, ContextLogic matches “value-conscious consumers” with over “half a million merchants around the world.” On the surface, the narrative sounds compelling because of the integration of online sales in everyday purchases. Factor in the disruption and lockdowns associated with the novel coronavirus pandemic and you can see why WISH has been one of the most popular Discord stocks. Even now, with shares taking a beating, they attract the buy-the-dip folks. Unfortunately, the company’s latest financial disclosure revealed that marketplace revenue “plunged 29% from a year earlier as users shopped elsewhere.” That’s a particularly tough blow as ContextLogic essentially received free marketing during the lockdowns. Apparently, that wasn’t enough although if you’re a cup-half-empty type, WISH stock is discounted 30% over the trailing month.
China Pharma Holdings (CPHI)
Before I get into this next company on our list of Discord stocks, let me start with a firm disclosure: I am not going to touch China Pharma Holdings with a ten-foot pole. That’s not to say that I’m bearish on CPHI or anything of that nature. I just don’t have the nerves of steel required to put my money at risk. Nevertheless, China Pharma popped up again among Discord stocks and it likely has to do with the ongoing Covid-19 pandemic. As InvestorPlace editor Sarah Smith pointed out in October 2020, the company has an “expansive pharmaceutical and biotech business within China.” Critically, it also has a subsidiary which focuses on manufacturing face masks. Of course, with the delta variant spreading throughout the globe, face masks might continue to carry relevance. And as if we needed more ominous news, Reuters reported that the lambda variant “shows vaccine resistance in lab.” If so, personal protective equipment may once again be part of everyday life.
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Still, this is a very narrow play on Covid, which may be why shares have cratered over the last several days.
Discord Stocks Looking for a Boost: Gold Resource (GORO)
Whenever you’re dealing with online investment forums, you’ll find plenty of advocates of precious metals. For full disclosure, I think it’s wise for investors to have a small portion (I’d say no more than 5% to start) of their asset base in physical precious metals. That way, should a nuclear apocalypse erupt and electromagnetic pulse attacks render the internet useless, you can still shop at your local grocery store with silver rounds (which may be worth $500,000 per ounce following hyperinflation of the dollar). And if none of these terrible things happen, you can rely on the metals’ intrinsic value. Therefore, it wasn’t too surprising that Gold Resource made the rounds of popular Discord stocks. However, this may be a case where outside observers test how much pain dip-buyers can endure. From the close of Aug. 17, the trailing month has witnessed a 40% decline in the GORO stock price. Could it be a once-in-a-lifetime opportunity based on inflation concerns? Maybe. But right now, a multi-decade low money velocity suggests that we’re actually encountering deflationary pressures. While precious metals may eventually rise due to the fear trade, it’s safe to say that GORO is best left for extreme speculators.
Shares of NeoPhotonics, a communications technology firm, have sparked interest among Discord users due to their heavily discounted price and their potential for another move higher. Over the trailing six months, NPTN has shed 29%, which is a staggering loss to be sure. However, a return to this year’s closing high of $13.78 would net a very handsome profit. Fundamentally, the narrative isn’t without justification. From its website, NeoPhotonics designs and manufactures “advanced hybrid photonic integrated optoelectronic devices for ultra-fast communications networks.” Such technologies serve cloud computing operations and hyper-scale data center internet content providers and telecom networks. For context, Gartner predicts that global end-user spending on public cloud services will reach $332.3 billion by the end of this year, up from $270 billion in 2020. Further, Gartner notes that innovations such as containerization, virtualization and edge computing have gained tremendous relevance in light of the pandemic.
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I think where investors are getting skeptical with NPTN is that the company has generated disappointing revenue figures relative to their year-ago comparisons. If anything, interest in digitalization should have increased favorably for NeoPhotonics. Still, it may be an interesting wager among Discord stocks once the volatility dies down.
Discord Stocks Looking for a Boost: LivexLive Media (LIVX)
One of the contextually intriguing Discord stocks, LivexLive Media markets itself as “the world’s first all-in-one music & entertainment destination that combines premium livestreams of concerts and festivals, expertly-curated streaming radio stations, podcasts, and original artist video and audio content.” Following the March doldrums of last year, many contrarians saw a huge opportunity with LIVX stock. As the underlying company stated on its website, the platform “gives fans a front row seat to their favorite artists’ shows.” Since inception, LivexLive has streamed live performances from more than 1,800 artists across all genres. Sure enough, LIVX stock has ebbed and flowed with coronavirus infections, which makes this somewhat of a cynical play. If you anticipate further disruptions from the Covid-19 pandemic, whether that be the delta variant or the lambda variant, there’s at least modest justification for believing shares will move higher. On the other hand, Americans in particular have proven nothing will get in the way of fulfilling their entertainment needs. Therefore, LIVX’s live-streaming angle could face some pressure as pent-up demand favors in-person concert attendance.
LM Funding America (LMFA)
If you’ve ever wanted to be a goodfella but were afraid of, you know, the legal consequences, you can partially live out your mobster fantasies with LM Funding America. Typical American euphemism, LM Funding specializes in debt collection services. According to its corporate profile, the company “provides funding to nonprofit community associations (Associations) primarily located in the state of Florida, as well as in the states of Washington, Colorado and Illinois. The company offers funding to Associations by purchasing a certain portion of the associations’ rights to delinquent accounts that are selected by the Associations arising from unpaid Association assessments.” Apparently, LM Funding has happy clients as well, with one testimonial declaring that the firm “deals with delinquencies and the attorneys so I don’t have to.” Likely, more positive reviews are on the way as LM enjoys two catalysts.
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First, as the Washington Post detailed, your neighbors’ delinquencies can ruin your own efforts to sell your condo. Thus, everyone has a shared incentive to resolve these matters. Second, the economic pressures associated with the pandemic may see a rise in financial shortfalls for associations, thereby making LMFA one of the most relevant Discord stocks.
Discord Stocks Looking for a Boost: Flora Growth (FLGC)
Botanical investments attract younger investors. I’m not sure why, it’s just the way that it is. But irrespective of the underlying personal reasons for bullishness, the political backdrop has certainly improved for the “agricultural” industry. According to a Pew Research Center report, two-thirds of Americans support marijuana legalization, which is basically a flipping of the narrative from two decades ago. Therefore, it’s no surprise that Flora Growth garnered much attention in the arena of Discord stocks. Specializing in high-quality organic oils, infused food and beverages and pharmaceutical-grade derivatives of a plant whose identity can be revealed by subtracting 100 from the number 520. Forgive me but I’m trying to keep this article on the algorithm’s safe list. While an intriguing opportunity, the main challenge facing FLGC stock is that horticulture if you will is a tough business. True, the company has an international distribution footprint, which broadens Flora’s appeal. At the same time, FLGC is a narrative-driven investment as the company is a pre-revenue firm. There might be an outside chance that shares bounce higher as traders milk the speculative opportunity for one last go. However, only participate with money you can comfortably afford to lose, if you’re going to participate at all. On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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This was brought on by Jordan Thomas, a partner and chair of the whistle-blower representation practice at Labaton Sucharow.
Thomas also happens to be a former Securities and Exchange Commission enforcement lawyer.
Reportedly, Thomas’ firm posted a “statement of concern” on a U.S. government website.
In it, the law firm raised “concerns about the quality and integrity of the laboratory-based studies surrounding this drug candidate.”
The firm took issue with how simufilam was tested, claiming “a long-standing pattern of seemingly intentional data manipulation and misrepresentation in scientific papers and corporate disclosures.” Furthermore, the statement alleged that there was a “volume of problematic material uncovered in publicly available sources.”
It even suggested the possibility of “scientific misconduct and data manipulation.”
Short and Distort
A potential rebound of SAVA stock will, to a certain extent, depend on Cassava Science’s ability to respond effectively to these allegations.
The investors should be glad to know that the company’s CEO is standing up and fighting back.
Chairman of the Board, President and CEO Remi Barbier swiftly issued a public statement about the matter.
Barbier called the allegations “false,” but that was just the beginning. The CEO asserted, “Two days after issuing their report, the law firm disclosed that they represent clients who have a short position in Cassava stock.”
In other words, Barbier is pointing out the firm’s alleged vested interest in publishing critical statements about Cassava Sciences.
He called this tactic “short and distort,” and declared that “There is an enormous profit motive at work. As previously noted, after the allegations were made public, which is to say after the damage was done, the law firm issued a press release admitting its anonymous clients ‘hold short positions in Cassava stock.’”
If what Barbier is saying is true, this would cast a dark shadow on the law firm’s motives. It would also call the veracity of the firm’s allegations into question.
As you can see, things are getting interesting with Cassava Sciences. The investors will need to stay tuned to monitor how the drama unfolds.
It’s possible that the worst-case scenario — halting the advancement of simufilam permanently — has already been priced into SAVA stock.
And if that’s the case, then any good news could send the share price higher.
In the meantime, keep your stock positions small, and always check for financial motives whenever you see whistle-blowers blowing whistles.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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