Austin, Texas-based Cassava Sciences Inc. (SAVA:NASDAQ) announced it had completed enrollment in its two pivotal Phase 3 trials evaluating lead drug candidate simufilam for Alzheimer's disease (AD), surpassing initial enrollment targets, noted H.C. Wainwright analyst Vernon Bernardino in a November 8 research report.
Robust Enrollment Exceeds Expectations
The Phase 3 studies, named RETHINK-ALZ and REFOCUS-ALZ, were originally designed to enroll 750 and 1,000 AD patients, respectively over one year. However, Cassava completed enrollment of 804 patients in RETHINK-ALZ in just ten months. Meanwhile, REFOCUS-ALZ enrolled a total of 1,125 patients.
According to Bernardino, the robust enrollment numbers "show patient enrollment is exceeding our expectations, and supports our view that there is high interest in simufilam."
Novel Mechanism and Safety Profile Drive Interest
The analyst believes the Alzheimer's community has a significant interest in simufilam given its novel mechanism of action to restore altered filamin A (FLNA) protein to normal, strong safety profile demonstrated so far, and potential to change disease progression shown in Phase 2 trials.
Late-Stage Data Catalysts
Approaching Bernardino expects topline data readouts from the RETHINK-ALZ and REFOCUS-ALZ trials by the end of 2024 and mid-2025, respectively.
He sees Cassava signing a "lucrative" simufilam licensing deal in 2024 based on positive Phase 3 results, with upfront and milestone payments totaling US$1.5 billion.
Interim Safety Data Positive
The analyst also highlighted recent interim MRI data from 180 patients in REFOCUS-ALZ supporting simufilam's safety profile.
The Week 40 brain scans showed no signs of amyloid-related imaging abnormalities (ARIA), which are common side effects of other experimental Alzheimer's drugs like lecanemab.
Bernardino believes this early safety data will help drive simufilam adoption upon approval, with potential for over US$1.8 billion in revenue in the first year. He maintains a Buy rating on Cassava Sciences with a US$124 price target.
Financial Results Beat Expectations
Cassava reported a Q3 net loss of US$25.7 million, beating the analyst's US$37.5 million loss estimate, driven by lower R&D spending.
The company had US$142.4 million in cash at quarter end, providing operational funding through early 2026 based on management projections.
Upside Driven by Clinical Progress
The US$124 price target was based on a probability-adjusted discounted cash flow model, applying a 13% weighted average cost of capital and 65% odds of success.
Key risks include negative clinical trial data, regulatory delays, competition, intellectual property issues, and the need for additional financing.
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Disclosures For H.C. Wainwright & Co., Cassava Sciences Inc., November 8, 2023
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H.C. WAINWRIGHT & CO, LLC RATING SYSTEM: H.C. Wainwright employs a three tier rating system for evaluating both the potential return and risk associated with owning common equity shares of rated firms. The expected return of any given equity is measured on a RELATIVE basis of other companies in the same sector. The price objective is calculated to estimate the potential movements in price that a given equity could reach provided certain targets are met over a defined time horizon. Price objectives are subject to external factors including industry events and market volatility.
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I, Vernon Bernardino , certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies. None of the research analysts or the research analyst’s household has a financial interest in the securities of Cassava Sciences, Inc. (including, without limitation, any option, right, warrant, future, long or short position).
As of October 31, 2023 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Cassava Sciences, Inc.
Neither the research analyst nor the Firm knows or has reason to know of any other material conflict of interest at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The firm or its affiliates received compensation from Cassava Sciences, Inc. for non-investment banking services in the previous 12 months.
The Firm or its affiliates did receive compensation from Cassava Sciences, Inc. for investment banking services within twelve months before, and will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
H.C. Wainwright & Co., LLC managed or co-managed a public offering of securities for Cassava Sciences, Inc. during the past 12 months.
The Firm does not make a market in Cassava Sciences, Inc. as of the date of this research report.
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