An effective drug for Alzheimer’s would be huge. After a positive Phase 2 study, an analyst upgrades and Cassava Sciences insiders buy.

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Back in December of 2019, three Cassava Sciences insiders bought $3.2M of their own stock at $2.25. Two weeks later the stock closed at $9.65. So its understandable that investors might aggressively bid up Cassava Sciences (SAVA) stock after two insiders disclosed on Thursday the purchase of $1.58M of SAVA at $6.98. SAVA closed at $10.07 on the day, up 42%. And that’s on top of a 210% gain in the four sessions prior to the recent SAVA Form 4 filings.

What’s the reason behind the Cassava Sciences excitement? The company has developed a drug that appears to be effective against Alzheimer’s — a disease with essentially no significant treatments. On Monday, the biotech company published final results from a phase 2 trial of sumifilam, a drug designed to slow the advance of Alzheimer’s in patients with mild to moderate disease. Data from the trial demonstrated statistically significant improvements in biomarkers of disease and cognition.

Cassava Sciences daily chart since Nov. 2019. Source: Interactive Brokers

Analyst Jason McCarthy of Maxim raised SAVA to a buy with a target of $14 after promising phase 2 results for sumifilam, a drug to treat Alzheimer’s.

Jason McCarthy of Maxim reacted to the data from the phase 2 trial by raising his rating to buy from hold and establishing a $14 price target. The analyst noted that next steps include an end-of-phase 2 meeting with the FDA and developing plans for a Phase 3 program. McCarthy is currently assuming a 2025 approval and launch and uses a 70% risk adjustment given the stage of development of sumifilam.

Leading the Sept. 18 buying by Cassava Sciences insiders was Sanford Robertson, a SAVA director since 1998. Robertson’s first purchase of SAVA as an insider was on March 6, 2009 at the peak of the financial crisis, when he bought 2,500 shares at $0.10. On Wednesday, Robertson bought $1.49M of stock at $7.03. Joining him in the buying was CFO Eric Schoen, who bought 12,000 shares at $7.03. Robertson’s previous purchase of SAVA stock was on Dec. 20 when he bought $932K of stock at $2.20. A cluster of buying late last year presaged a surge in SAVA shares.

Cassava Sciences insiders purchases since Dec. 2019.

InsiderTitleTransactionTrade Date Shares Avg. Price Total Change%
Schoen EricChief Financial OfficerOpen Mkt Buy17-Sep-2020      10,0007.03 $        70,30024.63%
Robertson SanfordDirectorOpen Mkt Buy17-Sep-2020    213,7196.98 $   1,491,76032.25%
Schoen EricChief Financial OfficerOpen Mkt Buy17-Sep-2020        2,0007.04 $        14,0803.95%
Barbier RemiPresident and CEO, DirectorOpen Mkt Buy31-Dec-2019    100,0005.53 $      553,00010.32%
Barbier RemiPresident and CEO, DirectorOpen Mkt Buy26-Dec-2019      10,0004.15 $        41,5001.04%
Robertson SanfordDirectorOpen Mkt Buy20-Dec-2019    423,7882.2 $      932,334177.44%
Robertson SanfordDirectorOpen Mkt Buy19-Dec-2019      76,2121.86 $      141,75446.86%
Schoen EricChief Financial OfficerOpen Mkt Buy19-Dec-2019        5,3001.88 $          9,96453.00%
Barbier RemiPresident and CEO, DirectorOpen Mkt Buy18-Dec-2019        2,5991.65 $          4,288           –
Source: WhaleWisdom.com

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