Cassava Sciences Charged by SEC

Date: WASHINGTON (Reuters)
Shares of Cassava Sciences (NASDAQ:SAVA) fell 10% in post-market trading on Thursday after the U.S. Securities and Exchange Commission (SEC) charged the biopharmaceutical company and two former executives for misleading claims about the results of Alzheimer’s clinical trials.

Misleading Claims

The misleading statements were made in September 2020 regarding the results of a phase two clinical trial for Cassava’s purported drug treatment for Alzheimer’s, according to the SEC.

Cassava’s shares dropped to $28.37 in extended-hours trading, down from $31.87 at the close of regular trading hours on Thursday.

Settlement Details

The SEC has stated that Cassava will pay $40 million to settle the civil charges. Additionally,
– Remi Barbier, the company’s founder and former CEO, will pay $175,000
– Lindsay Burns, former senior vice president of neuroscience, will pay $85,000

Hoau-Yan Wang, a City University of New York Medical School professor and consultant for Cassava who helped develop the Alzheimer’s drug, has also been charged by the SEC for manipulating trial results.

Specific Misconduct

The SEC outlined that Cassava misled investors by claiming its Alzheimer’s drug “significantly improved patient cognition” while failing to disclose that comprehensive patient data showed “no measurable cognitive improvement in the patients’ episodic memory.”

The company also did not reveal Wang’s involvement in the clinical trial and his personal, financial, and professional interests in the drug’s success. Wang has agreed to pay a $50,000 penalty.

Company Statement

In response to the SEC’s charges, Cassava stated that it cooperated fully with the investigation and has implemented remedial measures. The company added that it does not currently anticipate criminal charges from the Department of Justice.