Cassava Sciences (NASDAQ:SAVA) stock is falling Monday after the company shared an update on its Phase 3 trial for a treatment for Alzheimer's disease that has been widely followed by the market.
Martin Shkreli, a well-know figure in the pharmaceutical space, predicted the stock’s crash Sunday night.
What Happened: Cassava Sciences reported that its Phase 3 topline results for the ReThink-ALZ study on Simufilam did not meet primary endpoints, sending shares significantly lower to start the trading week.
The company said it intends to present the data at an upcoming meeting, and Simufilam showed a favorable safety profile.
"Simufilam did not show a significant reduction in cognitive or functional decline versus placebo in patients with mild-to-moderate Alzheimer's disease," the company said.
Cassava Sciences CEO Rick Barry called the results "disappointing for patients and their families."
Benzinga reached out to Cassava for comment.
Shkreli, a former hedge fund manager, predicted Monday's sharp shared decline.
"If you have $ on robinhood or interactive, short SAVA now," Shkreli tweeted at 10:22 p.m. ET Sunday night.
The tweet signaled a belief that Cassava Sciences stock was set to fall. Robinhood and Interactive Brokers are among the brokers who offer 24-hour trading on select stocks, which is why they were named by Shkreli.
Shkreli was asked by several people on X if his tweet was financial advice, to which he replied yes. Shkreli also told people that waiting until Monday's opening bell at 9:30 a.m. ET would be too late to short the stock.
Cassava Sciences shares were halted at 7:25 a.m. ET with the company's update coming at 7:30 a.m. ET and shares resuming for trading at 7:55 a.m. ET.
Shares quickly fell Monday morning by over 80% after the company's update.
The post by Shkreli shouldn't come as a huge surprise since a Nov. 21 thread about a 38-page paper on Cassava by the former hedge fund manager is his pinned tweet.
"I don't *think* it doesn't work. It is impossible for it to work," the thread says.
Shkreli said Alzheimer's Disease is a very tough market to target to begin with as 98% of the last Phase 3 trials for the disease have failed. Cassava's Phase 3 treating symptomatic patients could doom it, Shkreli predicted in the thread.
"Cassava bulls are looking for a ‘lotto ticket' return, but their chances are worse than the lotto."
Shkreli was extremely confident in his prediction, with a post listing the things that he would do if the Phase 3 trial met its primary endpoint.
- Delete my X account
- Shave my head on YouTube and delete that account as well
- Begin estrogen therapy and legally change my name to Martina
- Move to Haiti, bringing my best friend/cat Nibbles
- Retire from business completely
Shkreli took aim at WallSteetBets, a subreddit on Reddit Monday with a tweet saying that "garbage like $SAVA" comes from the subreddit.
Read Also: Looking At Cassava Sciences’s Recent Unusual Options Activity
Why It's Important: Shkreli said Cassava not meeting the primary endpoint would make the stock "an easy short" and shares could trade near their cash value levels of $2 to $3 per share.
The prediction from Shkreli comes after the former hedge fund manager's wild past in the pharmaceutical sector. Known as "pharma bro" to many, Shkreli previously was CEO of Retrophin and Turing Pharmaceuticals. Shkreli famously raised the price of antiparasitic drug Daraprim from $13.50 to $750 for insurance providers after Turing acquired the drug.
Shkreli was convicted of securities fraud in 2017 and currently has a lifetime ban from the pharmaceutical sector.
Before his recent Cassava Sciences focus, the former hedge funder has been making recent headlines in the cryptocurrency sector.
Benzinga reached out to Shkreli for comment and did not hear back by the time of publication.
Citron Research, known for their short reports, praised Shkreli's prediction on Cassava Sciences in a tweet.
"$SAVA illustrates the difficulty in shorting stocks. Has been a clear fraud for years but almost became an impossible short because of the ‘new market forces'. Nice to see some good homework by @martinshkreli added with a dose of reality to achieve real price discovery," Citron Research tweeted.
SAVA Price Action: Cassava Sciences stock is down 84.6% to $4.06 on Monday versus a previous 52-week trading range of $8.79 to $42.20, hitting new 52-week lows.
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Photo: Wikimedia
