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Cassava: Potential Alzheimer’s Treatment Opens Door for Lucrative Licensing Deal

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There has been a lot of buzz around Cassava Sciences (SAVA) recently; The biotech is on a quest to achieve what so many others have failed to do - bring a viable Alzheimer’s treatment to market.

According to H.C. Wainwright analyst Vernon Bernardino, the company has the potential to deliver on its promise.

Driving the bull case for Cassava is simufilam, its Alzheimer’s disease (AD) candidate for which the company recently released encouraging data from an open-label clinical trial.

Following 6 months of treatment, simufilam was found to improve cognitive functions and patients’ behavior.

“Importantly,” Bernardino says, “As simufilam works by targeting filamin A (FLNA), a scaffolding protein found in altered form in the neuronal cells of AD patients, we now look for Cassava Sciences to sign a lucrative licensing deal for ex U.S. rights to simufilam’s clinical development and commercialization in the second-half of 2021.”

The AD drug development field has been ruled by the targeting of β-amyloid and tau protein, which has led to “failed clinical programs and no approved drugs that change the course of AD progression.” Bernardino thinks simufilam’s target, altered FLNA, “represents a scarcity in AD drug development,” which will only enhance simufilam’s value.

The 5-star analyst believes the company could nab an upfront licensing deal of over $1.5 billion, with regulatory and milestone-driven payments, and “mid-double digit royalty payments from a prospective partner.”

Moreover, recent financing has boosted the company coffers by $200 million. The strengthened balance sheet “significantly de-risks completion of simufilam’s clinical development and future commercialization.” It will also mean Cassava can approach the negotiating table in a strong position, so it can keep the full rights to simufilam in the U.S. and Canada.

Bernardino expects simufilam to advance through a pivotal study and anticipates approval by 2026. The analyst also now believes it can achieve 20% peak penetration of the AD market, compared to his prior 12% penetration estimate. This figure, he says, “leaves ample room for additional innovative therapies for AD to move forward and gain regulatory approval, as well as upside to our models.”

In addition to reiterating a bullish call, Bernardino gives SAVA a $66 price price, which shows his confidence in ~29% upside for the next 12 months. (To watch Bernardino’s track record, click here)

2 other analysts are currently following Cassava’s progress, and both are also Buyers. The Strong Buy consensus rating is backed by a $56.67 average price target, implying upside of 11% over the next 12 months. (See SAVA stock analysis on TipRanks)

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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.