I have written about Cassava Sciences several times on this blog over the years, most recently here. The short summary is that they are a small biotech with a new mechanism of action for Alzheimer's and other neurodegenerative disorders, one that came out of work at a lab at CUNY some years ago. So far that doesn't sound so bad, does it? We need new ideas in that field, and academia is where a great many of those ideas come from. But if you just turn one more page, everything goes to hell.
The original papers from the academic group have been flagged for what appears to be faked data, and audits of their work showed huge problems. The early trials of a small-molecule drug (simufilam) based on the work were compromised by all this, since some of the data were worked up by the CUNY lab (a fact that was not widely known at the time). The professor running that lab has since been indicted on charges of defrauding the NIH, and the SEC fined the company for stock manipulation around the data for the (supposedly at the time successful) Phase II trials, and two of its principal executives left under a huge cloud of suspicion. (One of them, it turns out, had stripped out a lot of the less-impressive Phase II data before the general public got a chance to see any results). You really couldn't ask for an uglier situation.
But while all that was going on, a Phase III trial was underway, and it was accompanied by cries from many observers that it should be halted in light of the vast number of problems in the data that had taken things to that point. It wasn't, though. And it just read out. To no competent observer's surprise, the results were completely negative. No effect whatsoever. The company has noted that the drug was safe, but damn it, so is lemonade and we're not trying to cure Alzheimer's patients with that while burning hundreds of millions of dollars of investor money. The entire simufilam story has been a complete waste of time, money, effort, and the hopes of desperate patients, and what's worse is that along the way there were so many big, bright, flashing warning signs that that's exactly what was going on.
If you look at the comments sections to my earlier posts on the subject, though, you will see some strongly worded opinions from the company's fans. I got even more of those in my email each time, including someone from inside the company. I was a shill, I was ignorant, I was in the pay of short-sellers, I was not telling the whole story, I needed to actually understand the subject matter, and so on. These folks are the ones holding the bag today, and I don't know who they will complain to now. If you want to read someone who was right early on about Cassava and who never stopped being right all the way, that would be Adam Feuerstein at Stat. He has written about them for years and has taken a lot more abuse for it than I ever have.
And although the US stock markets have been a tremendous financial engine that has provided funding to a long list of great ideas and made untold millions of people (big investors and small ones) more secure and wealthy along the way, it. . .well, it's also full of idiots. Why wouldn't it be? Here's someone from two weeks ago saying that "Most signs point to SAVA experiencing little risk of significant volatility. Unless something changes between now and the next earnings date (expected in February 2025), it’s quite possible SAVA stock will face neutral or moderately bullish price movements" and recommending a "high potential" options trade around the stock. This article turns out to be a pretty accurate summary of the company's many problems, but the headline is all about how "analysts" see a 300% upside to the stock. Exciting! And here's another one that says that there's been "too much selling pressure" and ". . .given the fact that it is now in oversold territory and Wall Street analysts are majorly in agreement about the company's ability to report better earnings than they predicted earlier, the stock could be due for a turnaround". Sure thing, dude. The Hindenberg has better chances of a big comeback, but you do you. You'll note that many such glass-brained takes are due to treating stocks as wiggly lines on a screen instead of looking at what the companies involved are actually doing, but that's a very old mistake indeed.
Meanwhile, there are Alzheimer's patients, and their families and friends. Who are still hoping for a drug that will actually help. There's the ones I feel the worst for in all of this, and the problem is, there are plenty of people ready to take advantage of them again.
