Cassava Sciences Inc. (SAVA) has reached a settlement with the Securities and Exchange Commission (SEC) over charges of misleading statements related to a Phase 2 trial of its Alzheimer’s drug, simufilam. The settlement, totaling over $40 million, marks a significant step for the company as it seeks to move forward with its controversial drug development program.
The SEC also accused Hoau-Yan Wang, a consultant and co-developer of simufilam, of manipulating trial results. In a public statement, Cassava’s President and CEO, Rick Barry, emphasized that the settlement, though financially significant, was necessary for the company to refocus its efforts. He stated that the decision allows Cassava to concentrate on simufilam’s development without the ongoing distractions from regulatory issues.
The SEC investigation revealed that in September 2020, Cassava disclosed manipulated data from the Phase 2 trial. This data falsely suggested dramatic improvements in Alzheimer’s biomarkers, such as total tau and phosphorylated tau. The CEO, reiterating the company’s commitment to transparency, expressed that they have put the SEC’s three-year investigation behind them by settling the charge of negligently making inaccurate disclosures. He added that they do not anticipate any further action from the Department of Justice in this matter.
Following the settlement news, investment firm HC Wainwright upgraded Cassava Sciences’ stock from Neutral to Buy, with a price target of $116, representing an upside of over 290%. This bullish outlook is driven by positive expectations for the upcoming clinical trial results.
In his letter, Rick Barry highlighted the completion of the ReTHINK Phase 3 trial, which enrolled 804 patients. Cassava expects to release top-line results from this trial before the end of the year. The company is also preparing for its larger Phase 3 trial, ReFOCUS, with anticipated results in mid-2025. This trial will involve 1,125 patients and include a comprehensive analysis of cerebrospinal fluid and plasma biomarkers, further examining the efficacy of simufilam.
HC Wainwright analyst anticipates that the results from these clinical trials will demonstrate simufilam’s potential to be the first drug to sustainably alter disease progression over a six-month treatment period in patients with mild-to-moderate Alzheimer’s disease. The analyst estimates a 65% probability of success for the clinical program.
The positive news regarding the SEC settlement and the upcoming clinical trial results has had a noticeable impact on SAVA stock. At last check on Tuesday, SAVA stock was up 16.8% at $29.68.
