Cassava Sciences Shares Plunge 10% After SEC Charges Company for Misleading Claims - What Does This Mean for Investors?
In a shocking turn of events, Cassava Sciences (NASDAQ:) saw its shares tumble by 10% in after-hours trading following charges by the U.S. Securities and Exchange Commission (SEC). The biopharmaceutical company, along with two former executives, were accused of making false claims about the results of Alzheimer's clinical trials back in September 2020.
The SEC alleged that Cassava misled investors by stating that its Alzheimer's drug had "significantly improved patient cognition" without disclosing the full set of patient data, which actually showed "no measurable cognitive improvement in the patients' episodic memory." Additionally, the company failed to disclose the involvement of Hoau-Yan Wang, a consultant who helped develop the drug and had personal interests in its success.
As a result, Cassava will pay $40 million to settle the charges, while the former CEO and senior vice president will pay $175,000 and $85,000, respectively. Wang, the CUNY Medical School professor, will pay a $50,000 penalty for manipulating trial results.
Despite these developments, Cassava stated that it has cooperated with the SEC's investigation and has taken steps to address the issues. The company also mentioned that it does not expect criminal charges from the Department of Justice at this time.
In conclusion, this news serves as a cautionary tale for investors about the importance of transparency and due diligence in the biopharmaceutical industry. It highlights the risks associated with investing in companies that make bold claims without proper evidence to back them up. Investors should always conduct thorough research and consider all factors before making investment decisions to protect their finances and mitigate potential losses.