Cassava Sciences Shares Fall in Pre-Market Trading Following $40 Million SEC Settlement

Shares of Cassava Sciences, Inc. experienced an 11.5% decline in pre-market trading on Friday following the company’s announcement of a $40 million settlement with the U.S. Securities and Exchange Commission (SEC) concerning negligence-based disclosure charges.

These charges originated from an SEC investigation into the company’s statements regarding the outcomes of its 2020 Phase 2b clinical trial for simufilam, an experimental treatment aimed at Alzheimer’s disease.

Cassava has settled with the SEC, agreeing to pay the $40 million penalty without admitting or denying the allegations. The company emphasized that it fully cooperated with the SEC and has implemented remedial measures in response to the charges. The financial impact of the penalty is expected to be felt during the second half of 2024.

Additionally, Cassava addressed a separate inquiry from the U.S. Department of Justice (DOJ), indicating its belief that no criminal charges would result from the DOJ’s Criminal Division review.

In July, Cassava announced significant changes to its leadership and corporate governance, including the appointment of Richard Barry as executive chairman of the Board, who is set to transition to chief executive on September 6.

Barry expressed the company’s intention to concentrate on completing the ongoing Phase 3 trials of simufilam. Cassava also reiterated its financial outlook, estimating cash reserves of $117 to $127 million by the end of 2024, while anticipating cash expenditures in the latter half of the year to be between $80 and $90 million, which includes the SEC settlement.