Cassava Sciences: Analysts See 300% Upside Potential Despite Controversy

Cassava Sciences Today

Cassava Sciences Inc. (NASDAQ: SAVA), currently priced at $26.50, is a biotech company focused on developing treatments for Alzheimer's disease. Among its main products is simufilam, a drug that aims not just to relieve symptoms but to address the underlying biological aspects of the disease. Despite the intriguing premise, the company has been embroiled in controversy with allegations relating to data manipulation and fraud.

Nevertheless, analysts maintain a positive outlook, designating the stock as a Buy with an average target price of $111.50, indicating a potential upside of 317% from its current trading level.

Fraud Allegations and Investigations

Concerns over data accuracy regarding simufilam's Phase 2 clinical trials surfaced in 2021, leading to formal complaints and calls for scrutiny. These allegations caught the attention of several investigative bodies. Consequently, the U.S. Securities and Exchange Commission (SEC) launched an investigation in August 2021, while the U.S. Food and Drug Administration (FDA) conducted an inspection in 2022. The inspection results criticized Dr. Hoau-Yun Wang, an advisor involved in the Phase II trials, for inadequacies in trial procedures, including improper statistical methods and lack of adequate equipment calibration, thereby casting doubt on the validity of the gathered data.

As the subsequent Phase III trial progressed in 2021 based on Phase II results, critics argued that the Phase III trial should have been halted due to concerns over data integrity.

Moreover, on June 27, 2024, the U.S. Department of Justice (DOJ) indicted Dr. Wang for charges including fabricating data on NIH grant applications. If convicted, he could face significant prison time.

Cassava Settles with the SEC

In a development that may alleviate some concerns, Cassava Sciences reached a $40 million settlement with the SEC without admitting any wrongdoing. Furthermore, interim safety studies related to simufilam indicated no significant safety issues, and the FDA has not halted the ongoing Phase III trial.

The market remains focused as the company approaches the release of crucial data from its Phase III trials: the ReTHINK-ALZ results are expected before the end of 2024, and the ReFOCUS-ALZ results will follow in mid-2025.

Recently, on October 8, 2024, H.C. Wainwright upgraded its position on SAVA from Hold to Buy, raising the price target to $116.00. Analyst Vernon Bernardino has pointed to the SEC settlement as a critical factor that mitigates long-term risks, emphasizing that the forthcoming clinical trial results are pivotal for the company’s future.

CEO's Update on Phase 3 Trials

In a letter to shareholders dated October 8, 2024, CEO Rick Barry detailed that the last patient has completed treatment for the ReTHINK Phase III trial, which included 805 participants across multiple sites in the U.S., Canada, Puerto Rico, and Australia. Premier Research International, in charge of the clinical trial, will now collect and analyze the data. The statistical analysis will be conducted by independent biostatisticians at Pentara Corp., who will notify Cassava once their analysis is complete, with results anticipated before the end of 2024.

Investment Considerations

Before considering an investment in Cassava Sciences, potential investors should be aware of expert opinions and current market conditions. While analysts continue to favor the company's stock, others may suggest exploring additional opportunities across the market that offer potentially greater returns.

Cassava, Alzheimer's, Stocks