Cassava Sciences Inc, a company developing Alzheimer’s treatments, has agreed to pay a hefty $40 million to settle charges brought by the Securities and Exchange Commission (SEC). The SEC alleges that Cassava, its founder Remi Barbier, and former Senior VP of Neuroscience Lindsay Burns misled investors about the results of a Phase 2 trial for their controversial Alzheimer’s drug, simufilam.
The SEC’s investigation found that in 2020, Cassava released manipulated data from the trial, falsely suggesting significant improvements in Alzheimer’s biomarkers. This manipulation, according to the SEC, was orchestrated by Dr. Hoau-Yan Wang, a consultant and co-developer of the drug, who used his knowledge of unblinded trial data to select a subset of patients, creating a misleading impression of the drug’s effectiveness. This manipulated data was then used in a press release and investor presentations.
The SEC also claims that Cassava and its executives went further by exaggerating the drug’s ability to improve cognitive function in Alzheimer’s patients. They allegedly cherry-picked patient data, failing to disclose that the full dataset showed no measurable cognitive benefits. Additionally, the SEC alleges that investors were not made aware of Dr. Wang’s role in the trial and his vested interest in its success.
As part of the settlement, Cassava, Barbier, and Burns have agreed to pay penalties of $40 million, $175,000, and $85,000, respectively. Barbier and Burns will also be banned from serving as officers or directors for three and five years, respectively. Dr. Wang, while not admitting or denying the charges, agreed to cease future violations and pay a $50,000 fine.
Despite the settlement, Cassava maintains that it is in the final stages of testing simufilam, emphasizing its significant financial and emotional stakes in the drug’s success. The company recently reported that its Data and Safety Monitoring Board (DSMB) reviewed patient safety data from its Phase 3 trials, recommending that both trials continue without any changes.
This news has led to a decline in SAVA stock, which was down 10.90% at $28.40 during the premarket session on Friday. The SEC’s action raises serious concerns about the integrity of Cassava’s clinical trials and the potential for misleading investors. It remains to be seen how this settlement will affect the future of simufilam and Cassava Sciences.
