Last week, biotech Cassava Sciences (SAVA -1.95%) published topline interim-analysis data for simufilam, a potential treatment for Alzheimer's disease. This is the company's sole late-stage candidate. The stock surged over 20% in pre-market trading on the news Wednesday, only to lose all of its gains and then some. The stock closed Wednesday down 1% to $52.31 and traded up over 23% on Friday to $64.40.
The company was recently hit by allegations from short-sellers, so it needed an opportunity like this to defend itself. Unfortunately, these developments do not paint a clear path to victory, but instead, they raise more perplexing questions about its science. Let's find out why.
Digging into the study results
In the study, the first 50 Alzheimer's patients with mild to moderate disease who received simufilam for a period of 12 months saw their cognition improve by an average of 3.2 points on the Alzheimer's Disease Assessment Cognitive Subscale (ADAS-COG) from baseline. ADAS-COG measures patients' cognitive abilities on a scale from 0 to 70. While not explicitly stated, patients with mild to moderate Alzheimer's disease usually score between 16 to 26 on the ADAS-COG scale at baseline. The company said the results were statistically significant and verified by two independent statisticians.
But for investors looking deeper, there's more to the story. The first flaw of the study is that all participants received the experimental drug since it is an open-label study. Therefore, there is no true placebo cohort for comparison.
Second, if you pay close attention to the trial protocol, patients are included in the study even if they take Alzheimer's medications approved by the Food and Drug Administration (FDA), such as donepezil. That ties into the first point: Without a placebo cohort, it's impossible to nail down the cause of the reported efficacy.
Lastly, the company is only reporting data from 50 out of 200 patients enrolled in the study. Like watching vote counts during elections, the results can change dramatically as more data comes rolling in.
Does Biogen's FDA win hold clues for Cassava?
Let's look at recent news in the Alzheimer's space to compare Cassava's situation to Biogen's (BIIB -1.36%)
In June, the FDA approved Aduhelm and since then, there's been much controversy and fallout from the decision. Biogen's Alzheimer's drug Aduhelm also demonstrated therapeutic signals in open-label studies but failed to achieve cognition endpoints in phase 3.
According to multiple media reports, the FDA was pressured to approve the drug by special-interest lobbying. There are also questions around the drug's efficacy, as it met surrogate endpoints like reduction of beta-amyloid plaques, which are abnormal proteins that accumulate in the brain and disrupt neuron communications. Beta-amyloid plaques are theorized to cause neurodegenerative activity in Alzheimer's disease, but the scientific community does not agree on whether this is the root cause of the disease.
That's not really a probable pathway to approval for Cassava as simufilam actually raised patients' beta-amyloid levels in phase 2. Even though simufilam saw a rise in these levels, it's important to note that it wasn't created to target amyloids directly. Other drugs may not get the same lenience due to the controversial approval process with Aduhelm. For now, I'd steer well clear of this biotech as the science is still not quite rock-solid and proven. Simufilam would need concrete cognition data to make it to approval, but we don't even know if the drug helps cognition as its recent results came from an open-label study.
Keep in mind that Cassava has no revenue, a market cap of over $2.4 billion, and only about $278 million cash on hand. So there's little for investors to fall back on if simufilam stumbles in phase 3. The current valuation simply doesn't justify speculating on an experiential drug that could have a rocky road to regulatory approval.