Cassava's Stock Drops After It Agrees to Pay $40M to Settle SEC Alzheimer's Claims

Key Takeaways

• Cassava Sciences and two former executives agreed to pay more than $40 million in a settlement with the SEC.
• The SEC said that Cassava made misleading statements about a clinical trial of its Alzheimer’s disease drug. Cassava in the settlement neither confirmed nor denied the charges.
• Study data was manipulated so that the drug appeared to have dramatic success in improving biomarkers associated with Alzheimer’s, the SEC said.

Cassava Sciences (SAVA) shares dropped more than 11% after the company agreed to a $40 million settlement with the Securities and Exchange Commission (SEC) over charges that it manipulated clinical trial data related to its Alzheimer’s disease drug.

The company, along with two former executives, made “misleading statements” in September 2020 about the results of a Phase 2 trial of Cassava’s drug simufilam, the SEC said Thursday.

The medical professor who co-developed the drug manipulated the results so that it appeared the drug had shown dramatic success treading Alzheimer's, the SEC said. The settlement was made without Cassava confirming or denying the SEC's findings.

The SEC found that Cassava misled investors by claiming the trial was conducted in blind conditions and by not revealing their co-developer’s role. The company also falsely claimed that simufilam improved patients’ cognition by only disclosing a portion of the data, the SEC said. 

In addition to the $40 million settlement from Cassava, then-CEO Remi Barbier agreed to pay $175,000. (A former senior vice president was also named in the settlement.) Richard Barry took the reins as CEO of Cassava earlier this month after being named the company’s executive chairman in July. 

Despite Friday's slide, shares of Cassava are still up some 25% this year.

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