Fresh Crop of Concerns Surrounding Alzheimer's Drug Sinks SAVA

The stock opened at a fresh annual low

Digital Content Manager
Apr 19, 2022 at 10:19 AM
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The shares of Cassava Sciences Inc (NASDAQ:SAVA) are taking a drubbing this morning, last seen down 23.6% at $19.35, and set for their lowest open since January 2021. Weighing on the stock is a recent article published by the New York Times, which described several new concerns surrounding the company's experimental Alzheimer's drug, simufilam. One of the major allegations highlighted in the article includes a report that one of Cassava's advisers, Dr H.Y. Wang, had five papers he authored retracted from the scientific journal PLoS ONE. 

SAVA's simufilam drug has been the subject of debate since last summer, with several updates during this time period yanking the equity up and down the charts. The security is a ways away from its Aug. 29 record high of $146.16, pressured lower in recent months by several overhead trendlines, including the 60-day moving average. SAVA has shed over 42% this year, and 72% in the last nine months. 

The security looks overdue for a round of analyst downgrades. Of the four in coverage, three call it a "strong buy," plus, the stock's 12-month consensus price target of $98.80 is a hefty 414.6% premium to current levels. 

Short-term options traders have also been more call-biased than usual, and an unwinding here could put additional pressure on the stock. This is per Cassava Sciences stock's Schaeffer's put/call open interest ratio (SOIR) of 0.65, which sits higher than just 28% of readings from the past year. 

Speaking of options, SAVA's are cheaper than usual at the moment, due to its Schaeffer's Volatility Index (SVI) of 130%, which sits in the 23rd percentile of its 12-month range. In other words, options players are pricing in relatively low volatility expectations at the moment. 

 

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