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What's in the Cards for Cassava (SAVA) This Earnings Season?

Zacks Equity Research
·4 min read

We expect investors to focus on clinical-stage biotechnology company Cassava Sciences, Inc.’s SAVA updates related to its lead candidate, sumifilam, a proprietary oral drug being developed for the treatment of Alzheimer’s disease (AD) at its third-quarter 2020 earnings conference.

In the last reported quarter, Cassava Sciences delivered an earnings surprise of 16.67%.

Shares of the company have skyrocketed 79.2% in the year so far against the industry’s decline of 6.6%.

Let’s see, how things are shaping up for this announcement.

Factors at Play

In absence of a marketed product in the company’s portfolio, investors’ focus will be on the updates related to Cassava Sciences’ pipeline development.

During the second quarter of 2020, the company completed a randomized, placebo-controlled, double-blind, phase IIb study of its lead drug candidate, sumifilam, in patients with mild-to-moderate AD (N=64). This study was substantially funded by a research grant award from the National Institutes of Health (NIH). The drug was safe and well-tolerated. Sumifilam is the first of a new class of drug compounds that bind to a protein called Filamin A.

Last month, the company announced encouraging final results from the study that suggest sumifilam may be slowing disease progression in Alzheimer’s patients. Sumifilam significantly improved an entire panel of validated biomarkers of disease in patients with AD. Additionally, AD patients treated with sumifilam showed directional improvements in tests of remembering new information compared to patients on placebo. Improvements in cognition correlated most strongly with decreases in P-tau181, a biomarker that, when elevated, leads to tangles in the brain. Sumifilam decreased brain levels of Ptau-181 by 8-11% versus placebo.

Patients treated with 50 mg or 100 mg of sumifilam twice-daily for 28 days showed statistically significant improvements in biomarkers of disease pathology, neurodegeneration and neuroinflammation, versus patients who took placebo. In addition, Alzheimer’s patients treated with sumifilam showed directional improvements in validated tests of episodic memory and spatial working memory, versus patients on placebo. The study achieved a 98% response rate, defined as the proportion of study participants taking sumifilam who showed improvements in biomarkers.

Meanwhile, Cassava Sciences is conducting an ongoing, long-term, open-label, multi-center, extension study of sumifilam 100 mg twice-daily for 12 months. The study targets to enroll approximately 100 patients with mild-to-moderate Alzheimer’s disease, including patients from prior studies of sumifilam. The open-label study is currently more than 50% enrolled.

Cassava Sciences is also developing an investigational diagnostic, called SavaDx, to detect Alzheimer’s disease with a simple blood test.

We expect management to provide updates on the same during the upcoming earnings call.

At the end of June, cash and cash equivalents were $25.3 million. Investors will be keen to know the cash runaway plans of the company as well.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Cassava Sciences this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. But this is not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Cassava Sciences has an Earnings ESP of 0.00%, as both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged at a loss of 7 cents per share.

Zacks Rank: The company currently carries a Zacks Rank #2.

Stocks That Warrant a Look

Here are a few healthcare stocks worth considering, as our model shows that these have the right mix of elements to beat estimates this time around.

Regenxbio, Inc. RGNX has an Earnings ESP of +4.76% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Vertex Pharmaceuticals VRTX has an Earnings ESP of +3.83% and a Zacks Rank #3.

Alnylam Pharmaceuticals, Inc. ALNY has an Earnings ESP of +4.23% and a Zacks Rank #3.

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