Behind this meteoric rise is a combination of optimism for its early-stage Alzheimer’s drug and the frenzy of retail day trading that has characterized the pandemic. The company is the third biggest gainer this year behind GameStop Corp. and AMC Entertainment Holdings Inc. in the Russell 2000.

“The fundamentals of our story are in place, which is this is the first drug—to our knowledge—that can restore cognition,” Cassava’s founder and chief executive Remi Barbier said in an interview.

The latest boost came from an unlikely source—its rival Biogen Inc.—whose own Alzheimer’s treatment this week got the green light from the Food & Drug Administration. The approval drove the price of Cassava and other small biotechs higher alongside Biogen. Cassava rose as much as 8.4% on Tuesday before closing at $68.96 for a 2% gain.

Wall Street firms covering Cassava are unanimously bullish. Soumit Roy of JonesTrading, who has the highest price target at $110, estimates new medicines to tackle Alzheimer’s could generate $200 billion in sales over 15 years. Still, Roy has cautioned that Cassava, an Alzheimer’s pure-play, is “not for the faint of heart.”

A biotech plus the meme stock crowd is a combustible mix. Drugmakers that have treatments still in early trials can be highly volatile while stocks like AMC and Gamestop have had their own share of price swings.

“We’re a moonshot with one rocket ship,” Barbier acknowledged.

Unlike other top brass, Barbier isn’t playing to the newfound army of small investors. “We have a core group of institutional investors who have seen the data, done their homework and said ‘Wow—if this data replicates this is the next fill-in-the-blank, Google or Tesla.’”

Mid-Stage Trial

Cassava reached levels not seen in 20 years in February following an update from an ongoing mid-stage trial. Alzheimer’s patients getting the company’s wholly owned experimental tablet, called simufilam, showed improvement in reasoning and behavior. But the trial was with less than 100 patients and without a control arm to gauge the impact a placebo might have had on patients.

If the Austin, Texas-based company is able to show patients with mild-to-moderate Alzheimer’s are able to maintain the same level of cognition they started with at nine months, “that would be a win,” Roy said in an interview. The most bullish case would be if patients were able to show an actual improvement in scores that measure their comprehension.

Monday’s approval substantially lowers the the bar for new drugs targeting Alzheimer’s, according to Barbier. Biogen’s drug had mixed results in clinical trials and faced skepticism from some scientists. For it to remain on the market, Biogen needs to do more research.

“FDA is asking Biogen to eventually show evidence of efficacy in a real-world setting,” Barbier said.

Cassava, for its part, still remains years away from regulatory approval. The company would need to run large placebo controlled studies—the gold standard of clinical trials—which Barbier said it plans to start in the latter half of the year.

Even so, the many setbacks Biogen’s aducanumab has faced highlight the complicated road to regulatory acceptance. But for small investors looking to capitalize on that hope, Cassava at roughly $70 a share and a handful of other small biotechs look like attractive gambles.

Drugmaking juggernauts like Eli Lilly & Co. and Roche Holding AG have also been testing treatments similar to Biogen’s, but Cassava’s drug targets a different protein and it’s likely the only biotech pursuing this pathway.

Before Monday’s approval Barbier expressed hope for Biogen’s drug, “just because there’s nothing out there for patients. But, it’s not the be all end all.” In another decade there may be several new drugs on the market, he said. “It’s not a winner takes all situation,” according to Barbier.

Pain Therapeutics

Long-time biotech investors may remember Cassava by a different name, Pain Therapeutics Inc. In 2000, the company was a Bill Gates-backed initial public offering that was banking on the promise of a new generation of painkillers. The company threw in the towel on its painkiller dreams in 2019, changed its name to Cassava, and refocused on Alzheimer’s and other neurodegenerative diseases.

Despite a stock rally that makes his 5% stake—including options—worth more than $100 million, Barbier says he’s not selling. “I know the science, I know the data, I know the disease and this stuff looks promising and I’m putting my money where my mouth is.”