Cassava Sciences Plunges 24.7% on FDA Clinical Hold for Simufilam Trial in TSC-Related Epilepsy – What’s Next for Biotech’s High-Risk Play?

Summary
• Cassava Sciences (SAVA) tumbles 24.68% intraday, hitting a low of $2.095 amid a full clinical hold by the FDA on its simufilam trial for TSC-related epilepsy.
• The stock opens at $2.48, trades between $2.095 and $2.61, and closes at $2.1466, erasing 24.68% of its value in a single session.
• The FDA’s December 15 letter demands additional pre-clinical data and protocol revisions, delaying the trial’s initiation beyond Q1 2026.
• With a 10.07% turnover rate and a dynamic PE of -0.99, SAVA’s collapse reflects regulatory skepticism and investor panic over its Alzheimer’s drug pivot.

Cassava Sciences’ 24.7% intraday freefall underscores the fragility of biotech stocks reliant on single-drug pipelines. The FDA’s clinical hold on simufilam’s TSC-related epilepsy trial has triggered a liquidity crisis, with the stock trading below its 200-day moving average of $2.45. Investors now face a critical juncture: Will the company’s pivot to rare disease therapies salvage its value, or does this mark the end of a speculative chapter?

FDA’s Clinical Hold Sparks Investor Exodus
Cassava Sciences’ 24.7% collapse stems directly from the FDA’s December 15 letter placing its simufilam trial for TSC-related epilepsy on full clinical hold. The agency demanded additional pre-clinical data and protocol revisions, forcing the company to abandon its Q1 2026 trial initiation timeline. This regulatory setback compounds prior failures, including the discontinuation of simufilam’s Alzheimer’s program in March 2025 after a Phase 3 trial showed no efficacy. With simufilam’s TSC application now under scrutiny, investors are fleeing a stock that had already traded at a 72% discount to its 52-week high of $4.98. The FDA’s intervention has exposed SAVA’s overreliance on a single molecule, triggering a liquidity spiral as short-term options traders and institutional holders unwind positions.

Biotech Sector Mixed as AMGN Rises 1.09%
While Cassava Sciences’ 24.7% drop is an outlier, the broader biotech sector remains polarized. Amgen (AMGN), the sector’s leader, rose 1.09% on strong earnings, highlighting the contrast between established players and high-risk biotechs. SAVA’s collapse reflects the sector’s inherent volatility, where regulatory outcomes for single-drug candidates can trigger disproportionate market reactions. However, peers like Novo Nordisk (NVAX) and Vertex Pharmaceuticals (VRTX) remain resilient, underscoring the importance of diversified pipelines and robust clinical data in mitigating regulatory risks.

Bearish Playbook: Options and ETFs to Navigate SAVA’s Freefall
• 200-day MA: $2.45 (below current price)
• RSI: 37.95 (oversold)
• MACD: -0.067 (bearish divergence)
• Bollinger Bands: $2.63–$3.45 (price near lower band)

Cassava Sciences’ technicals confirm a short-term bearish trend, with RSI in oversold territory and MACD signaling momentum decay. Key support levels at $2.63 and $2.32 (based on accumulated volume) suggest further downside if the stock breaks below $2.10. The 200-day MA at $2.45 acts as a critical psychological barrier; a sustained close below this level could trigger a 20% extension to $1.95. Given the stock’s 6.43% daily volatility and 10.07% turnover rate, aggressive short-term options strategies are warranted.

Top Options Contracts:
• SAVA20260116P2 (Put, $2 strike, Jan 16 2026):
- IV: 80.91% (high volatility)
- Leverage: 17.92% (moderate)
- Delta: -0.328 (moderate sensitivity)
- Theta: -0.001882 (moderate time decay)
- Gamma: 0.7368 (high sensitivity to price swings)
- Turnover: 349 (liquid)
- Payoff (5% downside): $0.05 per share (2.5% return on premium).
This put option offers asymmetric upside in a bearish scenario, with high gamma amplifying gains if SAVA breaks below $2.10.

• SAVA20260116C2 (Call, $2 strike, Jan 16 2026):
- IV: 114.03% (extreme volatility)
- Leverage: 6.14% (high)
- Delta: 0.654 (high sensitivity)
- Theta: -0.005895 (rapid time decay)
- Gamma: 0.5338 (moderate sensitivity)
- Turnover: 3,433 (highly liquid)
- Payoff (5% downside): $0.00 (no intrinsic value).
While the call option is a long-shot in a bearish environment, its high IV and liquidity make it a speculative play for a rebound above $2.30.

Actionable Insight: Aggressive bears should prioritize SAVA20260116P2 for a 5% downside scenario. If the stock breaks below $2.10, this put could deliver 2.5% returns. For a bullish bounce, SAVA20260116C2 offers high leverage but requires a 15% rebound to breakeven.

Backtest Cassava Sciences Stock Performance
The backtest of SAVA's performance after a -25% intraday plunge from 2022 to now shows mixed results. While the stock experienced a maximum return of 6.75% over 30 days, the win rates for 3-day, 10-day, and 30-day periods are relatively low, indicating that most short-term movements were negative or negligible.

SAVA’s Freefall: A Harbinger of Regulatory Risk in Biotech
Cassava Sciences’ 24.7% collapse is a stark reminder of the regulatory volatility haunting biotech stocks. With the FDA’s clinical hold exposing the fragility of its simufilam pipeline, SAVA now faces a critical inflection point. Investors must monitor three signals: (1) the stock’s ability to hold above $2.10, (2) the FDA’s response to revised trial protocols, and (3) Amgen’s (AMGN) 1.09% rally as a sector barometer. For now, the bearish playbook dominates—short-term puts like SAVA20260116P2 offer asymmetric upside if the stock extends its decline. Watch for a breakdown below $2.10 or a regulatory update to trigger the next move.