Cassava Sciences Settles SEC Charges Over Alzheimer's Drug Claims

Cassava Sciences, a clinical-stage biopharmaceutical company, has agreed to a $40 million settlement with the U.S. Securities and Exchange Commission (SEC) over allegations that it made misleading statements about the results of a clinical trial for its experimental Alzheimer's drug, simufilam (PTI-125).

The SEC alleged that Cassava, along with its founder and former CEO Remi Barbier and former senior vice president of neuroscience Dr. Lindsay Burns, misrepresented the results of phase 2 clinical trials for simufilam.

Specifically, the SEC claims that Cassava falsely stated that the analyses of the trial data were conducted under blinded conditions, when in fact, the doctor who performed the analyses, Dr. Hoau-Yan Wang, had access to information that could have potentially unblinded him.

According to the SEC, Dr. Wang, a consultant and co-developer of simufilam, manipulated the data to make it appear that patients receiving the drug showed significant improvement in biomarkers associated with Alzheimer's disease, while those receiving a placebo showed little change. The SEC alleges that these manipulated results were then used by Cassava to raise over $260 million in new funding.

Cassava has agreed to pay the $40 million civil penalty without admitting or denying the SEC's allegations. The settlement also includes individual penalties for Barbier ($175,000), Burns ($85,000), and Wang ($50,000).

SEC Files Lawsuit Despite Settlement

Despite the settlement, the SEC has filed a lawsuit against Cassava, Barbier, and Burns in the U.S. District Court for the Western District of Texas. The lawsuit reiterates the allegations of misleading statements regarding the phase 2 clinical trial results. The SEC further claims that Cassava failed to disclose certain conflicts of interest related to Dr. Wang and his analysis of the trial data.

Cassava Maintains Focus on Ongoing Trials

In a statement, Cassava said it is "pleased to put this matter behind us" and that it "cooperated fully" with the SEC investigation. The company emphasized its commitment to completing ongoing phase 3 trials of simufilam and potentially filing for regulatory approval if the results are positive.

This settlement follows a 2021 class action lawsuit filed by shareholders against Cassava, making similar allegations of data manipulation and artificial inflation of the company's stock price.