Cassava Sciences Has Value and Is Likely To Proceed to Phase 3

© Source: Shutterstock A scientist holding up her biotech experiment in a small Petri dish.

Cassava Sciences (NASDAQ:SAVA), the Alzheimer’s disease (AD) drug company, certainly has had a rough time. In fact, one author recently called SAVA stock a “volatile, battleground stock.” This is because the company has endured a number of short attacks recently. Most of these came out after their recent September release of 9-month Phase 2 results.

© Provided by InvestorPlace A scientist holding up her biotech experiment in a small Petri dish.

SAVA stock closed 2020 at $6.82 per share on Dec. 31. Since then it has skyrocketed several times above $100 per share and even peaked at $135.30 on July 28. As of Sept. 17, it was at $46.50, or still up 782% year-to-date. However, since the end of Q2 when SAVA closed at $85.44, the stock is still down 45.6%.

Nevertheless, there are reasons to be positive about the stock’s upside. For one, Cassava Sciences is highly likely to proceed to its planned Phase 3 study of Simufilam, its Alzheimer’s disease drug. The company’s latest slide deck presentation shows that it is now ready to proceed to a Phase 3 study of the drug’s efficacy against Alzheimer’s.

Upcoming Events That Should Help

Page 6 of the slide deck shows that Cassava Sciences has four upcoming events that can act as trigger points for SAVA stock. For example, the company plans on releasing the 12-month results of the first 50 patients to complete 12 months of using Simufilam.

Originally the company was going to release these Phase 2 results in September. But I suspect that the company is reviewing its presentation of those results in order to stand up to further scrutiny.

  • 7 Dividend Stocks to Buy With Yields Over 4%

In addition, the company reports that its Phase 3 clinical trials protocols have been approved by the FDA. As Cassava Sciences had over $278 million on its balance sheet as of June 30, I don’t foresee any issues in terms of launching the first several of these Phase trials. The purpose of the studies are to test its efficacy in AD patients.

The company is also planning on conducting a placebo-controlled Cognition Maintenance Study (CMS) in Alzheimer’s patients.

Every one of these study results could end up spiking or pushing lower SAVA stock. However, I believe that on balance, given good results, especially cognition results, the probabilities provide potential upside for SAVA stock.

Seeing a Binary Trade with SAVA Stock

Analysts are still positive on SAVA stock, although some have lowered their price targets. For example, recently a B. Riley analyst lowered their price target to $108 from $145 due to the stock’s “elevated risks.” The analyst kept their Buy rating on the stock. They saw little reason that the FDA would pull the company’s applications to begin Phase 3 clinical trials, as some shorts have tried to get done.

As of today, TipRanks.com indicates that the average price target of five analysts covering the stock is $147.40. This ranges from a low of $100 to a high of $215.00 per share. Moreover, Seeking Alpha indicates that the average price of its survey of three analysts covering SAVA stock is $140.67. Yahoo! Finance, which uses Refinitiv survey data, reports that four analysts have an average $159.25 price target. The average of all three surveys is $149.11. We can use this to calculate its expected return.

These high price targets vs. the shorts’ claims that the stock is worthless almost make this a binary play. If there is fraud in the results presentations, one wonders, why would the company be pressing to start Phase 3 trials? In addition, why hasn’t management taken down the huge potential payments they could have when the stock was higher? These points lead one to believe that there is still likely some upside in the stock, assuming that the remaining Phase 2 and upcoming Phase 3 results are positive.

Using Probability Analysis for SAVA Stock

One method I have used with binary situations like this in the past is to derive a probability-weighted price target. For example, let’s assume that there is a 50% chance that analysts are right and the stock will hit $149.11 sometime in the next 12 months. Let’s also assume that there is a 50% chance that the company is worthless, except for its cash per share, or about $6.95 per share ($278m/40m shares). What is the expected return (ER)?

First, if we multiply 0.50 times $149.11, the analyst weighted price component of the total value is $74.57. Now assuming the shorts are right, their weighted component value is $3.48 per share. Now adding the two weighted average components results in a probability-weighted price of $78.05 (i.e., $74.57 + 3.48).

Of course, this gives no value to the ongoing research and even to the value of SavaDx, the company’s blood-based diagnostic test. The implied ER or upside for SAVA stock is 67.85%. That is a decent expected return for most investors. Just keep in mind that this stock will be highly volatile.

On the date of publication, Mark R. Hake held a long position in SAVA but not in any other security (directly or indirectly) mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.

Internet Explorer Channel Network
News Related

OTHER NEWS

Trump's new social media platform won't let users criticize the site, according to its terms of service

© Win McNamee/Getty Images Former President Donald Trump. Win McNamee/Getty Images Trump announced plans Wednesday to launch a new social media platform. TRUTH Social was created to “give a voice ... Read more »

Voucher scheme verification emails 'are genuine'

Emails reporting identification issues with the high street voucher scheme are genuine, the Department for the Economy has confirmed. © Getty Images Data given in the initial application is automatically ... Read more »

VALORANT player pulls off ace with Sova's Shock Bolts

We’ve seen some impressive VALORANT aces before without guns. But a recent Sova player managed to pull off something special, taking out the entire enemy team using only Shock Bolts. ... Read more »

Ronaldo insists Man United 'never give up' after goal in comeback win

© Provided by Daily Mail MailOnline logo Cristiano Ronaldo scored the decisive goal in a sensational Manchester United comeback in the Champions League to send Ole Gunnar Solskjaer’s side top ... Read more »

United have to 'grab on to emotion' of Atalanta win, says Ferdinand

© Provided by Daily Mail MailOnline logo Manchester United must focus on their second-half comeback against Atalanta rather than worry about their woeful opening 45 minutes ahead of this weekend’s ... Read more »

Solskjaer: Ronaldo answered critics with winner in comeback victory

© Provided by Daily Mail MailOnline logo Cristiano Ronaldo crowned another sensational Manchester United comeback in the Champions League to send Ole Gunnar Solskjaer’s side top of Group F. Ronaldo ... Read more »

Apellis (APLS) Gets CHMP Nod for Rare Blood Disorder Drug (Revised)

Apellis Pharmaceuticals, Inc. APLS and its partner Swedish Orphan Biovitrum AB (Sobi) announced that the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (“CHMP”) has rendered a ... Read more »

Hermès Revenues Jump 31.5% in Q3 as Asia Remains Strong

© Delphine Achard/WWD Click here to read the full article. PARIS – Hermès International said revenues jumped 31.5 percent year-on-year in the third quarter, helped by a “remarkable” performance in ... Read more »

Taliban strike journalists at Kabul women's rights protest

The Taliban struck several journalists to prevent media coverage of a women’s rights protest in Kabul on Thursday.  © BULENT KILIC The Taliban struck several journalists to prevent media coverage ... Read more »

T20 World Cup memories, forgotten goals and indoor mountain biking

1) The first round of the T20 World Cup is currently in session in the United Arab Emirates and Oman. Treat yourself to the official anthem here. What’s the moment ... Read more »

Fans on social media aren't excited by Newcastle's interest in Mesut Ozil

Newcastle United are set for relegation as things stand as they sit 19th in the Premier League table, but the Magpies are now the richest club in Europe after their ... Read more »

Stat Nerd Thursday: Unvervalued players and teams heading into week 7

Subscribe to the Yahoo Fantasy Football Forecast Apple Podcasts • Spotify • Stitcher • Google Podcasts Matt Harmon and Dalton Del Don get together to go over some of their ... Read more »

Ronaldo's shirt grabbed by a pitch invader after United beat Atalanta

© Provided by Daily Mail MailOnline logo Manchester United stewards were forced to wrestle a pitch invader to the ground after a supporter raced on and tugged on Cristiano Ronaldo‘s ... Read more »

Timberwolves' Anthony Edwards told Rockets' coach to 'call a damn timeout' after hitting back-to-back 3s

© Provided by CBS Sports Anthony Edwards has only just begun his second season in the NBA, but the former No. 1 overall pick has already established himself as one ... Read more »

People share snaps of hilarious frustrating mishaps

© Provided by Daily Mail MailOnline logo Sometimes it seems like nothing in life is going your way, but these very unlucky people are sure to make you feel much ... Read more »

Evan Engram tuning out boos and trade talk, focused on Giants

© Provided by NBC Sports New York Giants tight end Evan Engram heard boos from the home fans during the team’s loss to the Atlanta Falcons in late September. He ... Read more »

As India Enters 100-Crore Covid Vaccine Club, Survey Finds 61% Ready to Take Third Shot if Available

© Provided by News18 As India Enters 100-Crore Covid Vaccine Club, Survey Finds 61% Ready to Take Third Shot if Available As India achieved the historic milestone of completing 1 ... Read more »

Blues/Golden Knights Recap

First Period Highlights: © Photo by Ethan Miller/Getty Images William Karlsson got the Golden Knights on the board first in this one. The Knights came in on Jordan Binnington on ... Read more »

Covid Plan B measures ‘set to be rolled out in 20 UK hotspots within days'

SOME parts of England are set have Plan B rules introduced as coronavirus infections continue to rise, it has been claimed. It comes as Health Secretary Sajid Javid last night ... Read more »

NFL and former players reach deal to end race as factor to decide payouts in concussion settlement programme

It follows public outrage over the use of "race-norming" - a practice which assumes black players start with lower cognitive function than white players, which critics said made it difficult for black retired players to qualify for payouts. Read more »

Australia sets $1 million reward for missing four-year-old

Australian authorities on Thursday offered Aus$1 million (US$750,000) for information leading to the discovery of a missing four-year-old girl feared abducted from a remote campsite last weekend. © Provided by ... Read more »

With Virginia governor's race looming, Biden takes to CNN town hall to pitch his agenda to voters

WASHINGTON – President Joe Biden will take center stage in Baltimore Thursday as he looks to sharpen his pitch on his multi-trillion-dollar infrastructure and social spending plans, the centerpiece of his domestic agenda that Democrats ... Read more »

Dodgers' Bats Leave Little Hope for Another Awakening

Los Angeles again trails Atlanta 3–1 in the NLCS. This time, its offense doesn’t look up to the task for a comeback. View the original article to see embedded media. ... Read more »

U.S. Backs Vaccine Mixes; India Hits Billion Doses: Virus Update

(Bloomberg) — U.S. regulators approved the mixing of vaccines as they cleared boosters for the shots made by Moderna Inc. and Johnson & Johnson. Most Read from Bloomberg Google’s Biggest ... Read more »

El Salvador Congress upholds total abortion ban

El Salvador’s Congress voted on Wednesday to uphold the country’s complete abortion ban, ruling against terminations even in exceptional circumstances. © MARVIN RECINOS People march demanding the decriminalization of abortion ... Read more »

Virals: Liverpool target Youri Tielemans 'rejects latest contract offer'

© Michael Regan/Getty Images Sport Leicester City v Wolverhampton Wanderers – Premier League Liverpool were widely expected to sign a midfielder during the summer transfer window in order to suitably ... Read more »

Hina Khan's Latest Post is All About The Importance of Mental Health Over Physical Fitness | Read on

© KS Swati | India.com Lifestyle Staff Hina Khan’s Latest Post is All About The Importance of Mental Health Over Physical Fitness. Picture Credits: Instagram (@realhinakhan) Mental health has gained ... Read more »

Israeli minister sees opportunity at UN climate conference

JERUSALEM (AP) — Israel’s new environmental protection minister has set some ambitious goals: She believes she can use her office to play an important role in the global battle against ... Read more »

How To Close Down Your Vegetable Garden for the Winter

We winterize our kitchens and cars, so why not winterize our garden as well? © PaulMaguire/Getty Images The truth is, most of us do it without really thinking about it. ... Read more »

How long is Nick Chubb out? Injury timeline, return date, latest updates for Browns RB

No running backs, big problems for the Browns. Nick Chubb was absent in the Browns’ Week 6 matchup with the Cardinals, after it was revealed the prior Friday that he ... Read more »

'Oh Joe!' Biden surprises Kamala Harris with birthday flowers

© Provided by Daily Mail MailOnline logo Vice President Kamala Harris accepted flowers from the president and was serenaded by a roomful of staffers as she celebrated her 57th birthday ... Read more »

8 Items to Put in Your Fibromyalgia Winter Care Kit

I have been diagnosed with fibromyalgia for about a year and a half now, but I have been living with it for many years before I received an official diagnosis. ... Read more »

Belgium braces for another surge in COVID-19 cases

1 / 2Virus Outbreak BelgiumFILE – In this Friday, Nov. 6, 2020 file photo, Medical personnel work in the intensive care ward for COVID-19 patients at the MontLegia CHC hospital ... Read more »

Report: Eagles had “recent discussions” with Texans about Deshaun Watson trade

NFL trade rumors are heating up with the November 2 deadline fast approaching. The latest buzz indicates that Deshaun Watson might be headed to the Miami Dolphins. Longtime NFL reporter ... Read more »

What time is the NFL game tonight? TV schedule, channel for Browns vs. Broncos in Week 7

“Thursday Night Football” has started at the same time for the entire 2021 NFL season. That won’t change in Week 7. The Browns and Broncos have the honors of starting ... Read more »

How long is Kareem Hunt out? Injury timeline, return date, latest updates for Browns RB

The Browns will be hunting for running back production on Thursday night. Kareem Hunt, half of Cleveland’s 1-2 punch in the backfield, is out for quite a bit after suffering ... Read more »

Flights cancelled, schools closed as China fights virus outbreak

Authorities in China cancelled hundreds of flights, closed schools and ramped up mass testing on Thursday to try and stamp out a new Covid-19 outbreak linked to a group of ... Read more »

Nearly 200 perish in India, Nepal rains

Nearly 200 people have died in floods and landslides in India and Nepal, officials said Thursday, with whole families buried in their homes and two young girls swept away as ... Read more »

Breast cancer: Four misconceptions about mammograms debunked

© Provided by The South African October is Breast Cancer Awareness Month and going for your annual breast cancer screening is vital. WHAT ARE MAMMOGRAMS AND BREAST SONARS? There are ... Read more »

Virals: Matt Jones posts hilarious GIF in response to transfer claim

Popular Everton podcaster Matt Jones has taken to social media to light-heartedly ridicule reports that Dominic Calvert-Lewin could be leaving the club. © Mike Hewitt/Getty Images Sport Brighton & Hove ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic