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Cassava: Alzheimer Treatment’s Progress Merits a New Price Target

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The development of Cassava Sciences’ (SAVA) Alzheimer treatment appears to be rolling along smoothly.

On Monday, the biotech said its End-of Phase 2 (EOP2) mid-January meeting with the FDA had gone well. The company met up with the regulatory body to discuss the path forward for simufilam, Cassava’s Alzheimer’s disease (AD) drug candidate, which is now ready for a Phase 3 trial.

After speaking with management, H.C. Wainwright analyst Vernon Bernardino points out that "the highlight of the meeting was Cassava Sciences reaching agreement with the FDA on key elements for conducting two double-blind, randomized, placebo-controlled pivotal Phase 3 studies that would confirm the disease-modifying effects and symptomatic improvement observed in results from recently completed Phase 2 studies with simufilam.”

For each Phase 3 study, the FDA has consented to perform a Special Protocol Assessment (SPA), an important factor, says the 5-star analyst, which can enhance the “potential of the pivotal studies to meet the FDA’s standards of approvability.”

Interim data from an open-label study has showed that simufilam can improve cognitive functions and patients’ behavior.

What the data also showed was the treatment’s potential to have a durable effect. With AD being a progressive disease, there’s currently no drug which has improved cognition for more than six to nine months. Bernardino thinks this aspect is “underappreciated.”

Bernadino believes that if the pivotal studies confirm simufilam’s long-lasting effects on cognition, its availability could “further increase the percentage of early onset AD patients receiving treatment.”

After 50 subjects complete a full year of therapy, the analyst expects a second interim analysis of the ongoing open-label trial, which could be another positive catalyst circa mid-2021.

Based on all of the above, Bernardino boosted his price target on SAVA from $66 to $97. Investors are looking at ~100% gains, should Bernardino’s forecast goes as planned over the next 12 months. The analyst’s rating stays a Buy. (To watch Bernardino’s track record, click here)

Two other analysts have recently thrown the hat in with a Cassava review and both agree the stock is a Buy, too. The Strong Buy consensus rating is backed by a $67 average price target, which suggests upside of ~38% in the year ahead. (See SAVA stock analysis on TipRanks)

To find good ideas for healthcare stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.