Shares of Cassava Sciences (SAVA.O) experienced a 10% decline in post-market trading after the US Securities and Exchange Commission (SEC) filed charges against the biopharmaceutical company and two former executives for allegedly making misleading claims about the results of its Alzheimer’s clinical trials.
The SEC’s allegations on Thursday stem from statements made in September 2020 regarding a phase two clinical trial for Cassava’s proposed Alzheimer’s treatment. Following the announcement, Cassava’s stock price fell to $28.37 in after-hours trading, down from $31.87 at the close of regular trading.
As part of the settlement, Cassava has agreed to pay $40 million, while founder and former CEO Remi Barbier will pay $175,000, and former senior vice president of neuroscience Lindsay Burns will pay $85,000. Additionally, Hoau-Yan Wang, a consultant for Cassava and a professor at the City University of New York Medical School, has also been charged by the SEC for allegedly manipulating the trial results and will pay a $50,000 penalty.
The SEC’s complaint indicates that Cassava misled investors by asserting that its Alzheimer’s drug “significantly improved patient cognition,” while failing to disclose that comprehensive patient data indicated “no measurable cognitive improvement.” Furthermore, the company did not reveal Wang’s role in the clinical trial or his vested interests in the drug’s success.
Cassava stated that it fully cooperated with the SEC’s investigation and has implemented remedial measures. The company does not currently anticipate any criminal charges from the Department of Justice.
The SEC emphasized the importance of maintaining public confidence in capital markets and committed to addressing fraudulent activities that undermine investor trust. The charges against Cassava and its executives highlight the SEC’s ongoing efforts to uphold integrity within the pharmaceutical industry.
The settlement is subject to court approval, and while the allegations have affected Cassava’s stock value, the company’s future operations and developments remain uncertain in light of these events.
With input from Market Watch, Reuters, The Securities and Exchange Commission.
