Cassava Sciences Inc., a drugmaker with no products on the market after 20 years, is the top biotech performer in 2021 with an increase of 910%.
Behind this meteoric rise is a combination of optimism for its early-stage Alzheimer’s drug and the frenzy of retail day trading that has characterized the pandemic. The company is the third biggest gainer this year behind GameStop Corp. and AMC Entertainment Holdings Inc. in the Russell 2000.
“The fundamentals of our story are in place, which is this is the first drug—to our knowledge—that can restore cognition,” Cassava’s founder and chief executive Remi Barbier said in an interview.
The latest boost came from an unlikely source—its rival Biogen Inc.—whose own Alzheimer’s treatment this week got the green light from the Food & Drug Administration. The approval drove the price of Cassava and other small biotechs higher alongside Biogen. Cassava rose as much as 8.4% on Tuesday morning in New York to trade at $73.26 before paring to a 2.1% gain.
Wall Street firms covering Cassava are unanimously bullish. Soumit Roy of JonesTrading, who has the highest price target at $110, estimates new medicines to tackle Alzheimer’s could generate $200 billion in sales over 15 years. Still, Roy has cautioned that Cassava, an Alzheimer’s pure-play, is “not for the faint of heart.”
A biotech plus the meme stock crowd is a combustible mix. Drugmakers that have treatments still in early trials can be highly volatile while stocks like AMC and Gamestop have had their own share of price swings.
“We’re a moonshot with one rocket ship,” Barbier acknowledged.
Unlike other top brass, Barbier isn’t playing to the newfound army of small investors.
“We have a core group of institutional investors who have seen the data, done their homework and said ‘Wow—if this data replicates this is the next fill-in-the-blank, Google or Tesla.’”
Mid-Stage Trial
Cassava reached levels not seen in 20 years in February following an update from an ongoing mid-stage trial. Alzheimer’s patients getting the company’s wholly owned experimental tablet, called simufilam, showed improvement in reasoning and behavior. But the trial was with less than 100 patients and without a control arm to gauge the impact a placebo might have had on patients.
If the Austin, Texas-based company is able to show patients with mild-to-moderate Alzheimer’s are able to maintain the same level of cognition they started with at nine months, “that would be a win,” Roy said in an interview. The most bullish case would be if patients were able to show an actual improvement in scores that measure their comprehension.