Cassava Sciences (NASDAQ: SAVA) stock price has crawled back this week after the company moved on with its Alzheimer’s drug trial. The shares, which have been in a freefall for months, jumped to a high of $19.50, a few points above this month’s low of $16.45. In all, the shares have plunged by more than 87% from their all-time high.
Phase 3 trial continuesCassava Sciences is a biopharmaceutical company that is doing research on Alzheimer’s disease, a common illness that affects more than 5 million patients in the US alone. Its primary candidate is a drug known as Simufilam, which attaches to the altered filamin (FLNA) protein in the brain, helping it regain its usual activity and shape.
By so doing Cassava Sciences aims to improve the life of millions of patients with the disease.In a statement this week, the company said that it had completed phase 3 of the clinical trial, which had 804 patients. It also received a safety clearance in September.
In the next stage, the company will carry out the second phase 3 trial on 1,100 patients. It hopes to complete the second phase of enrolment in the current quarter. Therefore, traders will be watching this process closely.
Cassava Sciences is one of the many companies researching and working on Alzheimer’s drug. Biogen, the giant pharma company, received a standard approval for its Leqembi drug a while ago but the financial performance has been quite mild because of its effectiveness and cost. Eli Lilly is also working on donanemab.
Interestingly, Cassava Sciences insiders seem comfortable with the stock even after it crashed by over 87%. A closer look shows that no insider has sold shares for a while. Instead, insiders have bought shares worth over $896k in the past 12 months. This could be a sign that they believe that the company will gain clearance after the current trials phase ends.
Still, Cassava Sciences faces numerous challenges, including the complexity of treating Alzheimer’s and the company’s falling cash reserves.
Cassava Sciences stock price
The story of SAVA stock price has been described as a rise from rags to riches and back to rags again. Its stock jumped from less than $1 in 2019 to $145 in 2021. It has now erased more than 87% of its value.
The shares have crashed below the 50-day and 100-day exponential moving averages. A closer look shows that the stock has formed what looks like a falling wedge pattern, which is a bullish sign. In price action analysis, this pattern is one of the most accurate bullish signs.
The wedge pattern is nearing the confluence zone. Therefore, there is a likelihood that the Cassava Sciences stock price will retreat to the lower side of the wedge pattern at $14.50. In the long term, the stock could bounce back to $27. Nonetheless, I believe that the SAVA shares are highly risky for now.
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