People who received the Cassava treatment tended to have improved scores on a cognition test.
Dreamstime
After our feature over the weekend on the Food and Drug Administration’s big upcoming decision on whether to approve Biogen’s controversial Alzheimer’s drug, lots of readers wrote in with the same question: What about Cassava Sciences ?
Their interest is understandable, given the roller coaster ride Cassava (ticker: SAVA) shares have been on over the past week or so. The stock jumped 141.1% last Tuesday, and then another 58.6% on Wednesday, before dropping 27.9% on Thursday and 29.4% on Friday. Shares of the biotech, which now boasts a market capitalization of $1.6 billion, are up more than 550% so far this year.
Cassava shares, which closed Friday at $44.80, began the year at $6.82.
So what’s going on? Cassava said on Feb. 2 that an interim analysis of a continuing study of its experimental Alzheimer’s disease drug simufilam found that patients on the drug for six months saw their scores on a cognition test improve by 10% on average, and a measure of their dementia-related behavior improve by 29% on average.
Progress has been long in coming in Alzheimer’s disease, and any good news is welcome. But investors should understand the limits of the evidence Cassava has presented so far.
“Although we find these data provocative and encouraging, we interpret the observations with caution, as it is an open-label study that can be confounded by variables, such as expectation bias,” wrote Cantor Fitzgerald analyst Charles Duncan in a note published Feb. 2. Duncan rates the stock Overweight, with a target price of $24. “In summary, these results do not alter our fundamental views and thesis, nor do they change the risk we associate with this program.”
The limitation, as Duncan noted, is that the study was run as what’s called an open-label study, meaning there was no control group of test subjects. In addition, the study was relatively short to track the progression of Alzheimer’s disease, which is a long-term condition.
“Though the move clearly corresponds with the unmet need and market opportunity for an effective therapy for [Alzheimer’s disease], we continue to express caution on reading too much into the results of small, short-term (<1 year) studies in AD, particularly with no control arm,” wrote Citi Research analyst Neena Bitritto-Garg in a Feb. 5 note.
The data from Cassava helped moved shares of a number of smaller biotech firms with Alzheimer’s disease programs last week. Cortexyme (CRTX) is up 57.8% this year, and Anavex Life Sciences (AVXL) has gained 129.4%.
In a note to investors on Feb. 4, Jefferies health care trading desk analyst Jared Holz attributed the moves in the Alzheimer’s drug stocks to Reddit, the message board behind the GameStop (GME) surge. “Message board commentary remains a more than notable driver for single stocks and Companies with Alzheimer’s assets,” Holz wrote.
The next step for Cassasva would be a Phase 3 study of simufilam. The company said that they believed that the interim results announced this month support moving the drug into Phase 3 trials. They also said they had conducted a “successful end-of-phase 2” meeting with the FDA, but did not disclose details of the meeting. They will do so when the minutes are finalized, sometime this quarter.
“We believe this represents an incremental fundamental update that suggests progress is being made; however we await the finalized meeting minutes that should provide the P3 design and path forward for this program,” Duncan wrote of the FDA meeting.
Shares of Cassava were up another 5% in premarket trading on Monday.
Write to Josh Nathan-Kazis at [email protected]
