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Joe Cotton: Stock pick of the week is Cassava Sciences, a very speculative biotech company

Market Assessment – As of Monday, November 1, 2021 at 4:15 PM

Last week the DOW held its gains and this week it started the week off well. On Monday, it closed up 94.28 points, and it appears that it will continue to move up this week.

Facebook (FB) 329.98 got down to 310 Intra-day on Thursday and closed Friday at 323.57. In our Market Letter today, we said we liked it at that discounted price, and it moved up well today…up 6.41 points.

Joe Cotton

Our “Stock of The Week” is Cassava Sciences, Inc. (SAVA) 46.11.

It is a VERY SPECULATIVE clinical stage biotech company. I originally chose it as my 2021 contest entrant for the Wall Street’s Best Investments national stock contest and bought it at $8.42 on 12/17/20.

I chose the stock because they had a therapeutic product candidate, PT1-125 (Simufilam) that had completed a Phase 2b clinical trial for Alzheimer’s, with very significant results in that it actually appeared to improve the symptoms of the disease, not just slow or halt the progress of the disease.

As you can see from the chart, the stock rocketed up to $140 in July of 2021 – a gain of 1562%. In August of 2021, the New York based law firm of Labaton Sucharow filed a citizen’s petition with the FDA to halt their clinical trials, claiming the data for the 2nd phase trial was flawed, and alleging fraud by Cassava. It turned out that the attorney was representing clients that were shorting the stock (ie. whom were betting it would decline). And decline it did — it lost more than half its value in 4 days– from $117.83 to $53.26 from Tuesday, August 24 to Monday, August 30th.

We believe it was a phony petition, and that the data for the 2nd phase clinical was valid. Apparently the FDA held the same opinion, because they allowed the company to begin their 3rd Phase trial this month.

If the data from the 3rd Phase trial is similar to the results of the 2nd Phase trial, then the company should have a billion dollar blockbuster drug, and we believe the stock could eventually reach $300 a share. Meanwhile there are innumerable class action lawsuits that have been filed by attorneys alleging deception by the company.

We like the stock and think it finally bottomed on Friday at 43.13. We bought the SAVA Nov 5 2021 43.0 Calls Monday at prices ranging from 2.43 to 2.55. The calls closed Monday at $4.10. We believe the stock is headed back up, and we expect it to double within the next few months.

Joe Cotton has won 3 National Stock Picking Contests with yearly percentage gains in excess of 96%. His 2020 Wall Street’s Best stock contest winner was Inovio Pharmaceuticals (Symbol INO) with a 742% 1-Year return.

This article is not investment advice, nor is it in any way to be construed as investment advice. For Investment Advice consult a Registered Investment Advisor or a Certified Financial Planner. Joe Cotton’s website is www.cottonstocks.net. NKY’s Joseph W Cotton is publisher of the market newsletter, Cotton’s Technically Speaking. He is a graduate of Xavier University, a former bank manager and credit analyst, and a former Fidelity Investments registered investment representative. Contact him at cottonstocks@hotmail.com

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