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Cassava Sciences Shares Decline Following SEC Charges Over Misleading Alzheimer’s Drug Trial Claims, According to Reuters
Cassava Sciences Faces SEC Charges Over Misleading Alzheimer’s Trial Claims
Shares of Cassava Sciences experienced a 10% decline in after-hours trading on Thursday following charges from the U.S. Securities and Exchange Commission (SEC) against the biopharmaceutical company and two former executives for making misleading statements regarding Alzheimer’s clinical trial results.
The SEC’s allegations pertain to claims made in September 2020 about a phase two clinical trial for Cassava’s proposed treatment for Alzheimer’s disease. According to the SEC, these statements misrepresented the trial results and did not disclose critical information.
In extended trading, Cassava’s stock dropped to $28.37, down from a closing price of $31.87 during regular market hours.
To resolve the civil charges, Cassava will pay $40 million. Remi Barbier, the founder and former CEO, will pay a $175,000 penalty, while Lindsay Burns, the former senior vice president of neuroscience, will pay $85,000.
Additionally, Hoau-Yan Wang, a professor at the City University of New York Medical School and a consultant involved in the drug’s development, is also charged by the SEC for purportedly manipulating trial results. The SEC noted that Cassava misled investors by asserting that its Alzheimer’s drug "significantly improved patient cognition," while failing to reveal that a comprehensive analysis of patient data showed "no measurable cognitive improvement in episodic memory."
The SEC also stated that the company did not disclose Wang’s involvement in the clinical trial or his personal, financial, and professional interests tied to the drug’s success; Wang has agreed to pay a $50,000 penalty.
In a response to the situation, Cassava indicated that it fully cooperated with the SEC’s investigation and has put in place remedial measures. The company also expressed that it does not expect any criminal charges from the Department of Justice at this time.
