Cassava Sciences Agrees to $40 Million Settlement with SEC Over Manipulated Alzheimer’s Trial Data

Settlement Amount:
Cassava Sciences and its former executives agreed to pay more than $40 million to settle SEC charges related to misleading statements about the results of a Phase 2 clinical trial for their Alzheimer's disease drug, simufilam.

Manipulation of Trial Data:
The SEC alleged that a consultant and co-developer of the drug, Dr. Hoau-Yan Wang, manipulated trial data to create the appearance of significant improvements in Alzheimer's biomarkers, such as total tau and phosphorylated tau.

Misleading Claims:
Cassava and its executives were accused of misleading investors by claiming the trial was conducted in blinded conditions and by not disclosing Wang's role in the trial. They also falsely claimed that simufilam improved patients' cognition by only disclosing a portion of the data.

Penalties:
Cassava agreed to pay $40 million, while former CEO Remi Barbier and former Senior Vice President of Neuroscience Dr. Lindsay Burns agreed to pay $175,000 and $85,000, respectively. Barbier and Burns also agreed to officer-and-director bars of three and five years, respectively.

Impact on Stock:
Following the settlement, Cassava Sciences (SAVA) shares dropped more than 11% but are still up about 25% this year.