Cassava Sciences (NASDAQ:SAVA) has engaged the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) amid ongoing investigations into the company and two senior employees.
Cassava's board formed an Ad Hoc Investigation Committee to oversee outside counsel conducting the investigation. The Committee also oversees the company's disclosures related to the investigation, the company said in an SEC filing.
On Friday, the DOJ announced an indictment against Dr. Hoau-Yan Wang, alleging he submitted fraudulent grant applications to the National Institutes of Health.
The indictment claims Dr. Wang made false statements about the mechanism of simufilam and manipulated research results, including fabricating Western Blot images.
Dr. Wang, a professor at the City University of New York, was a former scientific collaborator and advisor to Cassava. His research, alongside Dr. Lindsay Burns, Cassava's SVP of Neuroscience, led to the discovery of simufilam.
Dr. Wang's lab conducted the final bioanalysis for the Phase 2b study. He received a monthly stipend of $2,000 and stock options for his consulting work with Cassava, which were terminated before his indictment.
Cassava's ongoing internal investigation has revealed the potential unblinding of some Phase 2b study participants due to an email sent by a senior employee.
The Phase 2b study aimed to measure changes in cerebrospinal fluid (CSF) biomarkers and cognitive outcomes using the Cambridge Neuropsychological Test Automated Battery over 28 days.
Cassava reported significant improvements in biomarkers based on Dr. Wang's bioanalysis. However, the cognition portion of the study, analyzed for effect size rather than statistical significance, excluded certain participants.
Despite the controversy, Cassava is proceeding with two Phase 3 clinical trials of simufilam, both fully enrolled with about 1,900 patients. Data and samples from these trials will be analyzed by independent firms, with no involvement from Dr. Wang or his lab.
Price Action: SAVA shares are down 7.69% at $11.40 at last check Monday.
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