Cassava Sciences (SAVA) inventory is up by 747% year-to-date. As such, you can be forgiven for pondering you’ve missed the boat on this one.
No want to fret, in accordance with JonesTrading’s Soumit Roy. The 5-star analyst just lately initiated protection of Cassava with a Buy score and $110 worth goal. Investors, subsequently, could possibly be pocketing good points of 90%, ought to Roy’s goal be met over the following 12 months. (To watch Roy’s monitor report, click here)
The bull case for Cassava is a straightforward one, but fraught with threat. The firm is growing simufilam, a therapy for Alzheimer’s illness (AD). Many have ventured down this path earlier than however making it throughout the end line and gaining regulatory approval has proved unattainable. There are at the moment no out there medicine that may stem the memory-obliterating illness’s progress.
Cassava hopes to vary all that, and up to now, simufilam seems promising. After releasing encouraging interim information from an open-label medical trial, which confirmed that after 6 months of therapy, simufilam improved cognitive capabilities and sufferers’ conduct, the drug is now progressing to 2 Phase three research, the primary of which ought to kick off in Q3.
The potential market is a large one, which Roy estimates could possibly be price greater than $200 billion over the following 15 years.
“Even a modest 20% probability of success and 15% penetration for simufilam indicates >$20BN in peak sales by our estimates, a large upside to current $2BN in implied valuation,” the analyst stated.
In the race to say as massive a chunk as doable from this profitable market, Biogen at the moment leads the way in which. The firm has a PDUFA date set for June seventh for aducanumab in AD.
Roy believes that regardless of an inside battle between the FDA and advisory consultants, the therapy might be permitted “with or without label restrictions.”
Is this dangerous for Cassava, then? On the opposite, such an end result may create “positive momentum.”
Either method, Roy thinks Cassava stands to profit from a “bullish AD space or solely from their own potentially positive 12- month data in mid-2021.” However, the analyst admits, the corporate might want to persuade buyers burnt by previous failures within the AD house.
“We understand investor’s weariness around investing in an Alzheimer’s disease pure play given a high Phase 3 failure rate,” the analyst stated. “We view Cassava amongst a handful to show cognitive benefits at 6 months in Phase 2 in harder to treat mild to moderate patients, and potentially has a higher probability of success to readout positive at 12-month Phase 2 data update in mid-2021.”
So, that’s Roy’s view, what does the remainder of the Street make of Cassava’s potential? Like Roy, all three different present opinions say Buy, culminating in a Strong Buy consensus score. The forecast requires 55% upside over the following 12 months, given the typical worth goal clocks in at $89.75. (See SAVA stock analysis on TipRanks)
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Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant for use for informational functions solely. It is essential to do your personal evaluation earlier than making any funding.
