Biotech Stock Tries to Recover as Alzheimer's Drug Draws Questions

Cassava has rebutted the allegations

Digital Content Manager
Aug 26, 2021 at 9:29 AM
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Cassava Sciences Inc (NASDAQ:SAVA) is up 4.1% at $84.16 this morning, in an attempt to bounce back from yesterday's news that its Alzheimer's drug was facing scrutiny. The stock plummeted 31.4% -- marking its biggest one-day drop in nearly a month -- after it came to light that a citizen petition was filed on Aug. 18 with the U.S. Food and Drug Administration (FDA) asking that the agency pull Cassava's two ongoing trials for its leading drug candidate simufilam, as it undergoes an audit to address claims of data manipulation. 

SAVA has countered these claims, which might be helping the security rise slightly from yesterday's one-month lows, calling the allegations "false and misleading." While it's still a ways away from closing yesterday's bear gap, the stock is looking to retake its 80-day moving average, which it closed below for the first time since late May during yesterday's session. For the year, SAVA is still up an impressive 1,085.6%. 

Short interest has been in decline, dropping 9.5% in the last two reporting periods, but the stock could still benefit from a short squeeze. The 4 million shares sold short make up 10.7% of the stock's available float. 

An unwinding of pessimism in the options pits could push SAVA back up the charts, too. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SAVA  sports a 10-day put/call volume ratio of 1.04, which stands higher than 93% of readings from the past year. This means long puts are being picked up at a much quicker-than-usual clip. 

 

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