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Why Cassava Sciences Stock Is Bolting Higher Today

By George Budwell – Sep 22, 2020 at 10:04AM

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An insider buy is sending this small-cap biotech's shares higher today.

What happened

Shares of the clinical-stage biotech Cassava Sciences (SAVA 2.64%) rose by as much as 15% in pre-market trading Tuesday morning. The small-cap company's shares are perking up today in response to a fairly sizable insider buy by board member Sanford Robertson.

Last Friday, Robertson reportedly purchased 36,281 shares at an average price of $8.92 per share, according to a Form 4 filed with the Securities and Exchange Commission. Per the filing, this particular board member now owns a whopping 912,623 shares after this latest acquisition. 

A medical report labeled Alzheimer's disease.

Image source: Getty Images.

So what

Cassava's shares have already jumped by a staggering 250% over just the past two weeks, thanks to the strong mid-stage trial results for its experimental Alzheimer's disease (AD) medication known as sumifilam. The big deal is that there are no AD drugs on the market that are truly disease-modifying.

So the first drug to halt the course of the disease, slow it down, or perhaps reverse it, would have a real shot at becoming the best-selling pharma product of all time. While sumifilam is a long shot to fill this unmet medical need, this recent insider buy implies that at least one board member has a fair amount of confidence in the drug's future.  

Now what

What's the next logical step? Cassava doesn't have the financial resources necessary to advance sumifilam into a costly phase 3 trial. So the company will more than likely partner with a larger pharma, or perhaps attempt to sell itself outright. This red-hot biotech's recent run, in turn, may be far from over. Stay tuned. 

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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