The Not-So-Perfect Drug?
One pill makes you larger, and one pill makes you small.
And the ones that Cassava Sciences (Nasdaq: SAVA) gives you might not do anything at all…
Or so a “statement of concern” from Jordan Thomas says. Thomas is a partner and chair of Labaton Sucharow, a whistleblower legal practice that specializes in antitrust, securities, corporate governance, shareholder rights, consumer cybersecurity and data privacy litigation.
That’s a whole lotta words just to say “Wall Street ambulance chaser,” but might Labaton be on to something with Cassava Sciences?
The drug in question is Cassava’s Alzheimer’s treatment simufilam. The drug already passed phase 2 trials, and the FDA this week approved Cassava’s plans for a phase 3 trial, setting up a pathway to final approval.
But Thomas’ “statement of concern” casts doubt on the data the FDA used to decide on simufilam’s phase 3 trials. Here are a couple excerpts from Thomas’ report:
This report raises concerns about the quality and integrity of the laboratory-based studies surrounding this drug candidate … [and notes] a long-standing pattern of seemingly intentional data manipulation and misrepresentation in scientific papers and corporate disclosures.
The volume of problematic material uncovered in publicly available sources indicates a thorough audit would likely unveil significant additional scientific misconduct and data manipulation.
According to Thomas, there are at least nine major areas of concern in simufilam’s trial data.
But Cassava isn’t taking this lying down. Today, the company issued a statement calling Thomas’ claims a work of “fiction.” No need to ask Alice about that statement — I have the juicy bits right here:
Ahh, science. That’s the rub here. Not only did Cassava rebut each of Thomas’ nine points with “fact” and “fiction” declarations … the company’s data was also peer reviewed in several scientific journals and, of course, by the FDA.
In other words, Cassava’s Alzheimer’s test data for simufilam has already been rigorously tested and reviewed.
Given this information, today’s 30% plunge in SAVA on Thomas’ allegations appears to be a real buying opportunity for the stock. I mean, the data manipulation points Thomas brings up would’ve already been exposed in simufilam’s phase 2 testing, the FDA review or the scientific journal peer reviews.
Unfortunately, there are two key points driving today’s SAVA stock sell-off … and at least one of them is Cassava’s fault.
Last year, the company reported that a mid-stage study of simufilam failed to show results. But the data was reanalyzed by a different lab, showing improvements that Cassava missed. Then, in February, Cassava said that it replicated the improvements in another trial with less than 100 patients and no control arm to compare against a placebo.
That’s all on Cassava … and it’s likely why the stock cratered amid today’s allegations.
The second point is that Biogen (Nasdaq: BIIB) already pulled a fast one this year with its Alzheimer’s drug aducanumab — seriously, what’s with these drug names?
According to the FDA, aducanumab was “reasonably likely to result in a clinical benefit.” I’m pretty sure we can all agree that “reasonably likely” is not a very scientific statement — and certainly not one that should accompany an FDA-approved drug.
So, SAVA stock plunged on clear fears … but the data on its Alzheimer’s drug still appears to be solid. Situation normal, all fudged up for the biotech sector.
If you feel like taking a bit of a risk here, Great Ones, SAVA’s sell-off makes it a prime target for potentially big gains … if you can ride out the storm.
How about … nah. What else is happening in biotech?
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Going: Red Ain’t Your Color
I can see you over there staring at your portfolio, watching that stock roll over all alone tonight. And chances are you’re sitting here in this bar ‘cause Urban Outfitters (Nasdaq: URBN) didn’t treat you right.
Keith Urban? In my Great Stuff? It’s more likely than you’d think…
So, Urban Outfitters just reported record second-quarter revenue and blowout quarterly earnings. Well, it’s probably not my place, but I’m gonna say it anyway … URBN is sinking because of COVID-19 fears.
The company warned that third-quarter sales would be in the low single digits, that freight and commodity prices were rising … and that it’s dealing with supply chain issues.
Surely, Urban isn’t the first retailer to note these clearly pandemic-related issues … but y’all know Wall Street: It can’t handle the truth.
So, what should’ve been a minor setback of like 2% or 3% on cautious guidance turned into a nearly 10% rout for URBN stock. That said, if you’re an URBN bull or owned shares at all this past year, you’re likely used to the volatility at this point.
Since February, URBN has ricocheted between price support at $34 and resistance near $40. This kind of predictable volatility is an options trader’s dream. Just wait ‘till the shares hit near $40 and buy puts. Then when URBN nears $34 … buy calls. Rinse, repeat.
Of course, this only works if options prices aren’t too high — i.e., you need a move above $40 or below $34 to realize any real profit. Option prices are funny like that.
Right now, however, URBN is right smack in the middle of this range at $37 and some change … so, no dice on the options trade. But if you wait around a while, the shares look like they’re headed for a retest of $34. Keep your eyes peeled…
Going: Sportin’ A Goodie
…And keep your eyes on the ball while you’re at it. Dick’s Sporting Goods (NYSE: DKS) just knocked a homer in its latest earnings report and shattered Wall Street’s expectations like a windshield in the stadium parking lot.
Can you tell why I don’t use sports metaphors often?
Go team! Do the … thing!
I’m also a die-hard Bengals fan … and we don’t really know how to use positive sports metaphors.
Wall Street’s estimates weren’t even close this quarter. Dick’s revenue rose 21% year over year and reached $3.27 billion, beating out analysts’ targets for $2.84 billion. Earnings hit $5.08 per share and handily topped expectations for $2.88 per share.
But you’ll find none of that Urban Outfitters style of pessimism here — no siree! Dick’s raised both its previous revenue and earnings guidance for the rest of 2021 high above analysts’ expectations. But methinks Wall Street still low-balled Dick’s with its estimates this time around.
Apparently, a few analysts were still scratching their heads wondering how Dick’s could pull ahead amid a pandemic, but it’s a simple win-win scenario. Once lockdowns eased up, people bought outdoorsy junk and team sports gear, once it was safer to … you know, play full contact?
Now, with the delta variant stirring up those lockdown fears in most retailers, Dick’s isn’t that worried. If we stay inside longer, back to the garage-based gym we go. Dick’s could sell more home-exercise gear like free weights, punching bags and whatnot.
If COVID cases start to subside, then that’s even better news for Dick’s. The last time lockdowns lifted, Dick’s saw an insane sales rush from the return of kids’ sports.
Plus, there’s the clothing and sport accessories aspect. I know not many people go to the sporting goods store for the bulk of their clothes shopping (see Urban Outfitters, above). But if it’s been a year or so since you’ve been out doing summertime stuff outdoors, suddenly that fishing shirt ain’t fitting so well, huh?
Fishing shirt? ‘Round here, we just call that a shirt…
You get the idea. Dick’s will edge out its sports retail peers no matter the pandemic clime … just like it has for its past few quarterly reports.
In a sense, Dick’s quelled investors’ uncertainty about the reopening hokey-pokey, which is tough for a retailer to do right now (see again: Urban Outfitters, above). And for that, DKS shares rallied a valiant 16% today.
Gone: Warby Parkour
After years of flirtatious teasing, boutique eyewear maker Warby Parker is ready to commit and take its business public via a direct listing, trading under the ticker symbol WRBY.
If you haven’t heard of Warby Parker before, you’re probably over the age of 40 and/or have wickedly good eyesight. The company was founded by a group of college kids back in 2010 and was an early adopter of the direct-to-consumer model.
Warby Parker keeps the cost of its glasses low, low, low, low by circumventing third-party retailers, designing in-house and selling its specs online. As you can imagine, this helped Warby appeal to broke, four-eyed, antisocial Millennials everywhere.
But then Warby Parker became one of those cool kids, caved to peer pressure and opened select brick-and-mortar locations across the country. Right in time for a pandemic. The results have been rather … lackluster.
For one, Warby Parker suffered losses in 2020 due to those months-long lockdowns. In the first half of “the year that shall not be named,” the company reported a net loss of $10 million on revenue of $177 million. Not great … but also not surprising when you consider the whole world was going to hell in a handbasket at the time.
The thing is, Warby Parker is still burning cash a year later, reporting a net loss of $7.3 million in the first half of 2021. And aside from taking the company public, Warby’s big wigs haven’t presented a plan to increase its long-term profitability:
So … you’re saying that in order to make more money … you need to sell more things? And make it cheaper to sell those things? I’m so glad those Econ 101 classes paid off.
Sorry, Warby Parker, but I’m not biting. Maybe instead of hemorrhaging money on brick-and-mortar locations, you should focus on growing the interweb presence that made you “cool” and “trendy” in the first place.
Oh, you better believe it’s that time of the week again! Time for you to ramble on and share your song … in poll form, at least. We’re only one day away from this week’s edition of Reader Feedback, so remember to write in if anything you read today gets the mental motor runnin’.
Last week, we asked about the pandemic-propelled housing boom that’s totally not a bubble … nope, nothing to see here…
This is the first time in a while that Great Ones were this much in agreement: A whole 62.3% of you said that it’d be crazy to buy a house (any house, pick a house) at current prices.
About 13.3% of you bought a home way back in the day … like last year … while another 11.1% of you are still looking and probably getting worried. RIP. Good luck out there.
Oh, and I appreciate the last 13.3% of you who have absolutely no memory of this housing boom … frankly, I’d rather not watch what’s next either.
Now, a poll is all nice and dandy … but one little morsel of meaty market matters really got you Great Ones writing in.
Our inbox was ablaze with names for the new (and nightmarish) AI-powered robot from Tesla (Nasdaq: TSLA). We wanted to know if you had a better name in mind to call our new robot overlords rather than Musk’s oh-so-creative “Tesla Bot.”
As it turns out, literally any other name would’ve been better. We’ve collected your suggestions over the past week, and today, you get to vote for the best of the best — the cream of the robot-circuitry crop!
And if you have other ideas for the Tesla bot, well, you know where those can go.
Straight to the trash? Straight up my … area?
No, straight to our inbox here … and then on to my fridge door, so I can be reminded of all the brilliance you send in. Gosh. Y’all think I’m so heartless sometimes…
So, go on and answer our poll, won’t ya? Tell us below:
Thanks for chiming in with your thoughts! And now, you take over the ranting reins in the inbox. We’ll catch up with the results for today’s poll this time next week.
In the meantime, here’s where you can find our other junk — erm, I mean where you can check out some more Greatness:
- Get Stuff: Subscribe to Great Stuff right here!
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- Our Inbox: GreatStuffToday@BanyanHill.com.
Until next time, stay Great!
Joseph Hargett
Editor, Great Stuff
