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SAVA – No Time For Caution

Sep. 23, 2021 9:46 AM ETCassava Sciences, Inc. (SAVA)
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Releasing the first 12 months results from Simufilam’s Phase II lowered the risk of investing in SAVA critically. With these cognitive benefits, SAVA is all but certain to gain the green light from the FDA to market its drug for the millions suffering from Alzheimer’s Disease. I expect it to happen during Phase III, the FDA fast tracking the drug for the benefit of terminally ill patients.

One must ask, what could deny SAVA, then? Unless in the larger n-size of Phase III severe side effects appeared, nothing, and I consider this a very low probability. Phase II was to ensure safety. The drug has an excellent safety profile, better than the current drugs prescribed for AD.

Warren Buffett is not a big believer in diversification, having a history of betting 20-50% of his portfolio in a single stock multiple times across the decades. What he teaches us is to wait for that fat pitch. Wait for years or decades if you must. But when you see it, low risk, high potential, you strike and strike hard. And you hold.

SAVA presents a rare and compelling opportunity to swing for 10x-75x. I expect this will soon shrink to 5x-35x due to SAVA stock’s rise, although those are still serious multiples. I’m comfortable buying SAVA at any price beneath $250 with the current information.

The bears have a problem and they know it. They are running out of time. Soon new catalysts appear. Phase III enrolling patients, partnership news. It is possible the bears are already trapped and will have to fight to cover in a rapidly rising market.

Many investors are scared to touch SAVA, rattled by the allegations and the short attacks. But I suspect the likes of Michael Burry following this situation closely are already accumulating. More good news will shift the momentum of the crowd, but by then the share price will be materially higher, probably over $100.

Investing calls for caution. Good opportunities are scarce, especially in this overvalued market. But SAVA is one of those stocks Warren Buffet teaches us to wait for. You only need a handful of those in your entire career to make a vast fortune.

I have committed a large part of my cash reserves to SAVA shares and it is my second biggest holding.

Analyst's Disclosure: I/we have a beneficial long position in the shares of SAVA either through stock ownership, options, or other derivatives.

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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