Neuroscience-focused biopharmaceutical company Cassava Sciences Inc. and two former executives have agreed to pay over $40 million to resolve U.S. Securities and Exchange Commission (SEC) allegations of misleading statements regarding a clinical trial for an Alzheimer’s disease drug, the SEC announced Thursday.
SEC Fines Cassava $40M : SEC Claims Against Cassava
The SEC’s complaint, filed in Texas federal court, alleges that Cassava Sciences misled investors about the results of a Phase 2 clinical trial for its drug simufilam (formerly PTI-125). The SEC claims Cassava falsely stated that bioanalyses were conducted under blinded conditions, which should have prevented bias. However, the SEC alleges Dr. Lindsay Burns, Cassava’s former Senior Vice President of Neuroscience, negligently provided information that allowed Dr. Hoau-Yan Wang, a co-developer and consultant, to unblind himself while running the bioanalyses.
The SEC’s Thursday announcement confirmed that Cassava, without admitting or denying the charges, agreed to pay a $40 million civil penalty. Additionally, former CEO Remi Barbier will pay $175,000, and Burns will pay $85,000. Both Barbier and Burns have also agreed to bans on serving as officers or directors, with Barbier facing a three-year ban and Burns a five-year ban. The settlements are still pending court approval.
Related Allegations Against Dr. Wang
The SEC also issued a separate order against Dr. Wang, who is a professor at the City University of New York’s Medical School. Wang is accused of manipulating clinical trial data, using the information that unblinded him to falsely indicate that the drug caused significant improvements in Alzheimer’s-related biomarkers. According to the SEC, these manipulated results were subsequently promoted by Cassava in investor presentations and press releases.
