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Cassava Sciences: The Right Approach To Tackling Alzheimer's

May 05, 2021 11:45 AM ETCassava Sciences, Inc. (SAVA)BIIB, LLY14 Comments
Chetan Woodun profile picture
Chetan Woodun


  • Cassava Sciences is developing a treatment against Alzheimer's disease.
  • There are different approaches to finding a cure and each faces competition. But SAVA is diversified in diagnostics as well, for the dreaded condition which adversely impacts the lives of millions.
  • After an initial setback in May 2020, there seems to be no factor which could trigger a significant downside in the stock.
  • On the other hand, there should be upside by June and more later, after a Phase 3 trial is announced.
  • I first start by providing some insights as to the latest price action.

Woman spending time with her elderly mother
Photo by PIKSEL/iStock via Getty Images

Since my last article on Cassava Sciences (NASDAQ:SAVA) in January 2020, when I was bullish, the stock is up by more than 500%. At one point in early February of this year, it was up by

This article was written by

Chetan Woodun profile picture
My aim is to provide differentiated insights, whether it is for investing, trading, or informational reasons. For this purpose, I am not a classical equity researcher or fund manager, but, I come from the IT world as the founder of Keylogin Information and Technologies Co. Ltd. Thus, my research is often backed by analytics and I make frequent use of charts to support my position.I also invest, and thus, in this tumultuous market, I often look for strategies to preserve capital. As per my career history below, I have wide experience, initially as an implementer in virtualization and cloud, and I was subsequently a team leader and project lead, mostly working in telcos.I like to write around themes like automated supply chains, Generative AI, telcos Capex, the deflationary nature of software, semiconductors, etc and I am often contrarian. I have also covered biotechs.I have also been an entrepreneur in real estate ( a mediocre one), a business owner, and a farmer, and dedicate at least 5 hours per week to working on a non-profit basis. For this purpose, I help needy families by providing sponsored work and contributing peer reviews and opinions for enterprise tech.I have been investing for the last 25 years, initially in mutual or indexed funds before later opting for individual stocks. Got a lot of experience in the 2008/2009 downturn when I lost a lot due mostly to wrong advice. Since then I do my own research and have fallen in love with Seeking Alpha because of the unique perspectives it provides to someone investing hard-earned money as well as access to some of the best analysts.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This is an investment thesis and is intended for informational purposes. Investors are kindly requested to do additional research before investing.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (14)

The most important sentence i6n this article is the last sentence as it gives SAVA the most financial flexibility in either partnering for marketing or buyout potential. Once again, your best chance to profit on SAVA is from long term option SPREADS given the high premiums and the amount of time it will take for trials to advance. Downside risks speak for themselves if the trials do not do well, so you dont want a lot invested in the stock. Upside returns using option leverage AND the benefits of selling premium look VERY attractive right now. This author thinks the price of SAVA will move to $50 or so in July and then higher as Phase 3 gets announced (say $60???). Well consider the stock selling at $41 today. You can buy a January 2022 call option spread between $30 and $35 for about $2.05. So..... you could buy 1000 shares for $41,000 or you could buy a 200 contract spread for the same $41,000 where you would realize $100,000 if shares are above just $35 come next January. that is a 150% return in about 8 months that you realize if the shares just stay flat (above $35) and the price needs to drop from $41 to $32 for you to lose any money. If you agree with the author, that the shares are likely heading north to $60 by EOY, realize you can buy a $55 to $60 for about $1.10. So for the price of 1100 shares, you could buy a 400 contract spread to realize $200,000 or about 5X your money if share price is above $60 next January. Selling the high premiums of the short legs really helps and these are defined loss trades if they go against you. For what it is worth, I am already invested in both these spreads and do not own any shares. I also have May and August spreads.... good luck
@brooks1988 What do you think of options calls at 150 for august?
@The Cy are you serious about $150 strike calls? That’s like buying lottery tickets. My august spread is long the $20s and short the $22.50s. $1.62 to make $2.50 and the stock needs to drop below $21.65 for me to lose money.
@brooks1988 yes, serious, bought a lot below 1$... Happy until now but do not know what to expect for next 6-7 weeks... Do you ?
Still buying both the stock and calls, looks like a potential win this year.
@Rainman 06 wich options did you bought and explain please?
What would be the value of SAVA based only on SavaDx ?
Based on past 2 days excellent AZ virtual conference and interesting observations of changing causes of AZ analyst at B.Riley reiterated his positive view on SAVA:
"We base our Buy rating and 12-month price target of $78 per share on a discounted cash flow (DCF) analysis of revenue and cash flow
projected through 2031. Our projections of free cash flow from sales of simufilam for dementia associated with AD are adjusted and weighted
based on the clinical development of other drug candidates and cross-trial comparisons of clinical designs and clinical data. Our DCF analysis
applies a WACC-calculated 13.5% discount rate and a 2% terminal growth rate, in line with other clinical-stage biotech companies, yielding an
implied enterprise value of $3.0B. For 2031, the final projected year of our model, we forecast $2.6BM in total risk-adjusted revenue, which
assumes a 45% probability of clinical and regulatory success for simufilam. We currently do not ascribe any value in our model to SavaDx,
which we believe has the potential to be integrated into the sales of simufilam."
biogenius profile picture
July interim result can be a sp moving event. However, I don't think starting p3 will precipitate any sustained price movement because it is already a widely anticipated event.
Office Rat profile picture
"...Cassava's stock cannot move downwards by any significant amount,..."

Famous last words. I've been riding this rollercoaster since it was PTIE, and there have been many downdrafts, even after it appeared they had a slam-dunk approval for a product. This company is still a speculative purchase; I'm not going to bet the farm on it.
@Office Rat agreed. I don’t own SAVA, but I have positions in several clinical stage biotechs. Until there is an approved product on the market and generating revenue there is always something that can send the price spiraling lower. I read the author to be saying SAVA has strong price support in the low 40s, which may be true, but in biotech it only takes one setback to quickly break through that lower band resistance. That said, SAVA is a very interesting stock with a potentially huge breakthrough product, and I am definitely considering opening a small position at these levels.
Thank you so much for taking the time to post this excellent perspective. Well organized and well written for non tech readers. Greatly appreciated.
Hi, great article and DD, about the market cap... considering that 40 millions shares are in circulation : it’s a 8500$/share price? And what would be the time frame to get there?

Best regards!
@The Cy
I’ll let a few shares go for 7500.00 but today only😂
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