Cassava Sciences experienced a significant drop in share price, hitting its lowest level since January 2021, with shares falling 35% to $12.40 last Friday. This decline followed the news that a key scientific advisor to the company for nearly two decades, Dr. Hoau-Yan Wang, was indicted for allegedly defrauding the US National Institutes Of Health (NIH).
Cassava Sciences Recent Milestons
Cassava Sciences has been developing simufilam, a drug aimed at treating mild-to-moderate Alzheimer’s disease. The drug is currently in two fully enrolled Phase 3 clinical trials, each involving over 800 patients.
According to Cassava’s Q1 2024 earnings press release, the first study, RETHINK-ALZ, evaluates simufilam’s safety and efficacy over 52 weeks, while the second study, REFOCUS-ALZ, extends this evaluation over 76 weeks.
These trials are conducted across various locations, including the United States, Canada, Puerto Rico, Australia, and South Korea, with Premier Research International supporting the clinical program.
Dr. Wang’s Significant Contributions
Dr. Wang, a long-time paid advisor, played a key role in developing the thesis that simufilam’s ability to restore the natural shape and function of the protein filamin A (FLNA) could positively affect Alzheimer’s patients.
Cassava’s research posits that the altered form of FLNA causes neuronal dysfunction, degeneration, and neuroinflammation. Simufilam is believed to disrupt amyloid binding to the α7 nicotinic acetylcholine receptor, which is central to its mechanism of action in Alzheimer’s disease.
However, many of the studies supporting this thesis, co-authored by Wang and Cassava’s Senior Vice President of Neuroscience, Lindsay Burns, have been retracted by scientific journals.
Accusations of data falsification have emerged, particularly following a Phase 2 study of simufilam that initially appeared to fail until re-evaluated by Dr. Wang’s lab, where it was subsequently declared successful.
Ripple Effects of Controversies
These controversies have led to doubts about the legitimacy of the Investigational New Drug (IND) approval Cassava received from the FDA in 2017 and the Phase 2 study results that propelled the drug into Phase 3 trials. However, these accusations primarily come from short sellers who have a vested interest in seeing Cassava’s share price fall. Cassava’s management has referred to this as a “short-and-distort” campaign.
Back in August 2021, Cassava’s shares traded over $120 following promising open-label Phase 2 study results. Now, the shares are down about 90% from those highs. Despite this, the Phase 3 trials are ongoing, with over 435 patients having completed the RETHINK study and over 300 having completed the REFOCUS study.
The Data Safety and Monitoring Board (DSMB) has reviewed the studies twice, recommending they continue as planned without modifications. Top-line data from the 52-week study is expected around year-end 2024, with results from the 76-week study anticipated by mid-2025.
Recent Developments and Their Impact on Cassava
The recent indictment of Dr. Wang presents a significant challenge for Cassava. The company issued a statement acknowledging the indictment, noting that Dr. Wang had been charged with defrauding the NIH for approximately $16 million in grants. Cassava emphasized that Dr. Wang had no involvement in the Phase 3 clinical trials of simufilam.
This situation raises several concerns. Previous investigations by the City University of New York and the FDA criticized Dr. Wang’s methods but did not result in formal actions against him or Cassava. Now, the Department of Justice has charged Dr. Wang with major fraud, wire fraud, and false statements, which could lead to imprisonment if he is convicted.
While Cassava states that Dr. Wang is no longer associated with the company, his past involvement in developing simufilam cannot be overlooked. The question arises: if the early data supporting simufilam’s progression to Phase 3 is proven to be falsified, should the drug be allowed to proceed to market even if the Phase 3 results are positive?
Looking Ahead: Potential Outcomes for Cassava
If Dr. Wang is found guilty, it does not necessarily mean Cassava will be implicated in wrongdoing. However, many of the studies and NIH grants in question are related to simufilam.
The FDA’s initial approval of the Phase 3 trials implies some level of confidence in the drug’s potential. The upcoming readouts from these trials will be crucial. If the trials show positive results, particularly in early-stage Alzheimer’s patients, it could validate simufilam’s efficacy.
However, if the results are negative or inconclusive, it could spell disaster for Cassava, especially given the financial strain the company is under with a significant operating loss and limited cash reserves.
Concluding Thoughts
Cassava’s situation is precarious. The indictment of Dr. Wang casts a shadow over the company and its ongoing trials. While the shorts have had considerable success in driving down Cassava’s stock price, the outcome of the Phase 3 trials remains a critical unknown.
The company’s management is under immense pressure, and the next few months will be pivotal. If the Phase 3 data is positive, it could vindicate the company’s efforts and provide a much-needed boost. However, if the data disappoints, it could lead to severe financial and reputational consequences for Cassava.
DISCLAIMER
You should read and understand this disclaimer in its entirety before joining or viewing the website or email/blog list of SmallCapStocks.com (the “Publisher”). The information (collectively the “Advertisement”) disseminated by email, text or other method by the Publisher including this publication is a paid commercial advertisement and should not be relied upon for making an investment decision or any other purpose. The Publisher is engaged in the business of marketing and advertising the securities of publicly traded companies in exchange for compensation. The track record, gains, upside, and/or losses mentioned in the Advertisement, if any, should not be considered as true or accurate or be the basis for an investment. The Publisher does not verify the accuracy or completeness of any information included in the Advertisement. While the Publisher does not charge for the SMS service, standard carrier message and data rates may apply. To unsubscribe from receiving promotional text messages to your phone sent via an autodialer, using your phone reply to the sender’s phone number with the word STOP or HELP for help.
The Advertisement is not a solicitation or recommendation to buy securities of the advertised company. An offer to buy or sell securities can be made only by a disclosure document that complies with applicable securities laws and only in the states or other jurisdictions in which the security is eligible for sale. The Advertisement is not a disclosure document. The Advertisement is only a favorable snapshot of unverified information about the advertised company. An investor considering purchasing the securities, should always do so only with the assistance of his legal, tax and investment advisors. Investors should review with his or her investment advisor, tax advisor or attorney, if and to the extent available, any information concerning a potential investment at the web sites of the U.S. Securities and Exchange Commission (the "SEC") at www.sec.gov; the Financial Industry Regulatory Authority (the "FINRA") at www.FINRA.org, and relevant State Securities Administrator website and the OTC Markets website at www.otcmarkets.com. The Publisher cautions investors to read the SEC advisory to investors concerning Internet Stock Fraud at www.sec.gov/consumer/cyberfr.htm, as well as related information published by the FINRA on how to invest carefully. Investors are responsible for verifying all information in the Advertisement. As an advertiser, we do not verify any information we publish. The Advertisement should not be considered true or complete.
The Publisher does not offer investment advice or analysis, and the Publisher further urges you to consult your own independent tax, business, financial and investment advisors concerning any investment you make in securities particularly those quoted on the OTC Markets. Investing in securities is highly speculative and carries an extremely high degree of risk. You could lose your entire investment if you invest in any company mentioned in the Advertisement. You acknowledge that we are not an investment advisory service, a broker-dealer or an investment adviser and we are not qualified to act as such. You acknowledge that you will consult with your own independent, tax, financial and/or legal advisers regarding any decisions as to any company mentioned here. We have not determined if the Advertisement is accurate, correct or truthful. The Advertisement is compiled from publicly available information, which include, but are not limited to, no cost online research, magazines, newspapers, reports filed with the SEC or information furnished by way of press releases. Because all information relied upon by us in preparing an advertisement about an issuer comes from a public source, it is not reliable, and you should not assume it is accurate or complete.
By your subscription to our profiles, the viewing of this profile and/or use of our website, you have agreed and acknowledged the terms of our full disclaimer and privacy policy which can be viewed at the following link: www.SmallCapStocks.com/Disclaimer and www.SmallCapStocks.com/Privacy-Policy
By accepting the Advertisement, you agree and acknowledge that any hyperlinks to the website of (1) a client company, (2) the party issuing or preparing the information for the company, or (3) other information contained in the Advertisement is provided only for your reference and convenience. The advertiser is not responsible for the accuracy or reliability of these external sites, nor is it responsible for the content, opinions, products or other materials on external sites or information sources. If you use, act upon or make decisions in reliance on information contained in any disseminated report/release or any hyperlink, you do so at your own risk and agree to hold us, our officers, directors, shareholders, affiliates and agents harmless. You acknowledge that you are not relying on the Publisher, and we are not liable for, any actions taken by you based on any information contained in any disseminated email or hyperlink.
Dean is a freelance content writer who contributes to various Digital Media Companies and independent websites all over the world. He has over 20 years of financial industry experience, so it’s safe to say he’s well informed.
