$SAVA: The Cassava Investigation and Potential PUT Option Play

Cassava Sciences, Inc. (SAVA) is a biotech company that developing Simufilam, a drug that Cassava claims to be able to treat Alzheimer’s dementia. https://www.cassavasciences.com/

The stock skyrocketed from $80/share to $135.30/share on July 28, 2021 after Cassava reported positive results from its Phase 2b trial and that it planned to move forward with Phase 3 trials of Simufilam. Then, on August 22, 2021, a Citizens Petition was filed with the FDA against Cassava, requesting that existing drug trials be halted and that the data provided by Cassava be re-analyzed.


After that petition became public, the stock dropped to $41.79 and continued along a steady path in the $42-$47 range until November 4, 2021. It is noteworthy that, during this time, there was no instances of insider buying of the stock, one potential indicator of confidence in the stock.

On November 4, 2021, Cassava reported that it had been informed by the Journal of Neuroscience that there was no evidence of data manipulation. This cause the stock price to jump back up almost immediately to $90 on November 5, 2021.

Now, today November 17, 2021, the Wall Street Journal reported that the SEC and NIH are investigating Cassava for manipulating its data and, accordingly, its stock price. SEC Investigating Cassava Sciences, Developer of Experimental Alzheimer’s Drug - WSJ

The stock dropped down to $46 today. I think the more we find out about this investigation, the worse it will be for the stock. I purchased from $40 puts for November and $25 puts for December. It is certainly worth looking into it. I doubt the stock moves anywhere but down unless and until this investigation is completed.


Greats info, will be on my watch lists, thanks so much.

SAVA is gaining this morning on news that they have officially announced the start of their Phase 3 trial of Simulfilum:

This does not change my analysis above, BUT it may provide some good entry points for puts if you believe (as I do) that the SEC and NIH investigations are going to result in a significant drop in price.