2023-05-10 12:04:07 ET
Summary
- Shorts have targeted the small biotech as a one-trick pony.
- Evidential data for simufilam’s biological activity outside the field of neurodegeneration promised by mid-year arrived early.
- Milan researchers found that simufilam increases the programmed cell death effects by somatostatin analog drugs on pituitary tumor cell lines.
In 2022, Cassava Sciences ( SAVA ) was intensely shorted despite high fees, becoming the fifth-highest revenue-earning stock for lenders last year. However, notwithstanding the 28% short interest, SAVA hasn't been in DataLend's top 5 in any month of 2023. A Motley Fool article in February lists the usual bear theses:
1) the Phase 2 open-label clinical trial's "new data that management spun as being positive,"
2) "Simufilam doesn't have a credible mechanism for treating anything other than Alzheimer's," and
3) Cassava "gets plenty of bad press, which it then exacerbates by responding aggressively."
Prior to May, Reason #2 would've been a legitimate concern. Next week, a simufilam preclinical study is among the select oral presentations at the 25th European Congress of Endocrinology (ECE). Investors can now be reassured that Cassava has multiple potential cancer indications to develop simufilam for, once the company has funds or a partner. On March 31, cash was $187.5 million with a burn of $24 million and no debt, but not really sufficient to fund more trials. They do have some time; with respect to simufilam in treating certain cancers and Alzheimer's disease/other neurodegenerative diseases, patents run through 2034 and 2039, respectively.
Reason #1 and Reason #3 were tackled in our previous coverage at Seeking Alpha. They're not really sufficient reasons to sell unless the buyer is particularly risk-averse; if so, they probably wouldn't be looking to invest in biotechs in the first place. For #1, the choice to believe the "spin" comes down to siding with opinions of non-science critics such as the self-styled Night King of biotech that simufilam has "placebo-like efficacy" but has no qualifications to evaluate the typical AD placebo response, or with a CEO of a biostatistical company specializing in neurodegeneration who says, "The improvement in ADAS-Cog over 1 year in mild patients taking simufilam is well outside the expected range of historic placebo decline rates from numerous other studies."
For #3, Cassava has the burden to prove the defamatory claims damaged their reputation, but instead of jumping at the chance to methodically present their case in court armed with extensive evidence and concerns validated by the scientific community, defendants are trying to have the lawsuit dismissed . Perhaps for good reason. As reported in my first coverage of SAVA, David Bredt and Geoffrey Pitt were two scientists who had short positions in SAVA who initiated a citizen's petition ("CP") to the FDA to halt the simufilam trials. In the third CP supplement with the main heading titled "Cassava Scientists Repeatedly Claim to Have Conducted Seemingly Undoable Experiments," they claimed that "international leaders in the nAChR field agree that there are no antibodies suitable for Western blotting of alpha7 nAChR…. Therefore, the alpha7 nAChR data that form a mechanistic foundation for simufilam seem scientifically undoable." However, Western blots using antibodies highly-specific to alpha7 nAChR had been published in 2011 by other Americans, prior to Dr. Hoau-Yan Wang's 2012 Neuroscience paper.
Similarly, the fourth and final CP supplement headlined "PTI-125 Binding to FLNA in Cassava's Foundational 2017 Paper Seems Impossible," mainly because, "No other direct binding studies between PTI-125 and filamin A have been reported." This lack is simply the result of PTI-125 (old name of simufilam) not being authorized for manufacture, sale or use in the U.S. unless allowed by the company. In 2020, Lindsay Burns, Sr. VP, Neurosciences, partnered with a group from Yale University. Now, a team-up in Europe demonstrated simufilam's mechanism of action (MOA, Figure 1) on filamin A ("FLNA") in cancer.
Figure 1. Simufilam Targets an Altered Form of Filamin A Protein
Cassava Sciences
The ECE abstract focused on growth hormone-secreting pituitary tumors (GH-PitNET). Of the 700,000 Americans with a brain tumor , 9-13% are pituitary adenomas , making GH-PitNET a rare disease with a total addressable market between 6,000 to 14,000. Pharmacological therapies for GH-PitNET target somatostatin receptor type 2 (SST2). However, around half of the patients are less or unresponsive to octreotide, an SST2 agonist. FLNA is required for SST2 signaling and expression. FLNA phosphorylation of the serine residue at position 2152 wipes out anti-tumor effects. Simufilam reduces this alteration and increased apoptosis but was even better in combination with octreotide.
FLNA alteration at Ser2152 has been recognized as important for other cancer types over two decades ago. Phosphorylation allows complexing with transcription factor MRTF-A and the resulting transcriptional activity promotes hepatocellular carcinoma ("HCC") proliferation, metastasis and tumor resistance. Blocking the alteration brings about oncogene-induced senescence, permanently arresting HCC tumor growth. FLNA phosphorylated at S2152 is also highly overexpressed in metastatic prostate cancer . In these studies, inhibiting other partner proteins were suggested to prevent FLNA alteration, but nothing targets those proteins. It would be much simpler to employ simufilam.
In conclusion, simufilam's pipeline now goes beyond neurodegeneration. Although it may take years to unlock its potential to be developed for multiple tumor indications, patent protection provides a long runway for the drug's development. The above findings may not lay to rest all short-sellers' concerns about the credibility of simufilam or the research behind it. After all, the Phase 3 has to be positive, and Cassava has to execute the New Drug Application. But longs no longer have to deal with attacks on a vague unsupported MOA. More importantly, the world now knows, and Longs can look forward to more collaborations in the field of cancer.
(Editor's Note: See also Seeking Alpha's latest news coverage about SAVA's stock gains amid highlighting new data.)
For further details see:
Cassava Sciences' Simufilam Mechanism Validated