Last month, Cassava Sciences Inc. (NASDAQ:SAVA) agreed to pay over $40 million to resolve SEC charges over misleading statements related to a Phase 2 trial of the company's controversial Alzheimer's drug, simufilam.
The SEC also charged Hoau-Yan Wang, a consultant and co-developer of the drug, with manipulating trial results.
In an open letter, Cassava President and CEO Rick Barry emphasized that the settlement, though financially significant, was necessary for the company to refocus its efforts.
The firm expressed that this decision allows it to concentrate on simufilam's development without ongoing distractions from regulatory issues.
The SEC's investigation found that in September 2020, Cassava disclosed manipulated data from the trial, which falsely suggested dramatic improvements in Alzheimer's biomarkers like total tau and phosphorylated tau.
The CEO added, "In sum, we have been able to put the SEC's three-year investigation of Cassava behind us by agreeing to settle a charge of negligently making inaccurate disclosures related to our 2020 Phase 2b clinical study and paying a $40 million monetary penalty. In addition, we do not anticipate that the Department of Justice will charge the company or seek a resolution from us."
With the update, HC Wainwright has upgraded Cassava Sciences' stock from Neutral to Buy, with a price target of $116, an upside of over 290%.
In the letter, Rick highlighted completing the ReTHINK Phase 3 trial, which enrolled 804 patients. Cassava expects to release top-line results before the end of the year.
Cassava is also preparing for its larger Phase 3 trial, ReFOCUS, to announce results in mid-2025.
The trial will involve 1,125 patients and further examine cerebrospinal fluid and plasma biomarkers, ensuring a comprehensive analysis of simufilam's efficacy.
HC Wainwright analyst anticipates that the results from these clinical trials will show simufilam's potential to be the first drug to sustainably alter disease progression over a six-month treatment period in patients with mild-to-moderate Alzheimer's disease. The analyst factors a 65% clinical program probability of success.
Price Action: SAVA stock is up 16.8% at $29.68 at last check Tuesday.
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