Unique-Cassava Sciences Faces US Legal Investigation Linked to Alzheimer’s Drug, Sources Say

By Marisa Taylor and Mike Spector

WASHINGTON (Reuters) – The U.S. Justice Division has opened a prison investigation into Cassava Sciences Inc involving whether or not the biotech firm rigged analysis outcomes for its experimental Alzheimer’s drug, two folks acquainted with the investigation stated.

The Justice Division workers conducting the Cassava investigation, based mostly in Austin, Texas, concentrate on inspecting whether or not firms or people have misled or defrauded traders, authorities businesses or shoppers, based on the sources, who spoke on situation of anonymity. The sources didn’t present particulars concerning the focus of the investigation and whether or not the division was investigating particular folks.

As with every Justice Division investigation, this one might result in prison costs or be closed with out costs being filed.

In an emailed assertion, Kate Watson Moss, an legal professional representing Cassava, neither confirmed nor denied the existence of the Justice Division’s prison investigation.

“To be clear: Cassava Sciences vehemently denies any and all allegations of wrongdoing,” Watson Moss stated, including that the corporate “has by no means been charged with a criminal offense, and for good motive: Cassava Sciences has by no means engaged in prison conduct.”

Watson Moss added that Cassava Sciences has obtained confidential requests for data from authorities businesses, however declined to establish these businesses. Watson Moss stated that “Cassava Sciences has supplied data in response to those requests in full satisfaction of its authorized obligations.” Watson Moss added that no authorities company has accused the corporate of wrongdoing.

A Justice Division spokesman declined to remark.

The corporate was already dealing with scrutiny from the US Securities and Change Fee and from traders after two medical doctors outdoors Cassava final yr made accusations of information manipulation and misrepresentations associated to analysis underpinning the drug. firm’s Alzheimer’s drug, known as simufilam.

Cassava, a small firm with about two dozen workers, in a press release final yr known as the allegations of information manipulation and misrepresentation “false and deceptive.”

On its web site, Cassava describes simufilam as a “fully new strategy to treating Alzheimer’s, the most typical type of dementia and a progressive mind dysfunction that impacts practically 6 million People. The oral drug restores regular type and performance to a key protein within the mind, the corporate stated.

A PETITION TO THE FDA

The prison investigation started, sources say, someday after a lawyer on behalf of two medical doctors filed a petition in August 2021 with the US Meals and Drug Administration asking the company to cease the trials. simufilam scientific The medical doctors are David Bredt, a neuroscientist previously with Janssen of Johnson & Johnson, and Geoffrey Pitt, a heart specialist who serves as director of the Cardiovascular Analysis Institute at Weill Cornell Drugs in New York.

The petition filed by Jordan Thomas, a New York-based legal professional representing each medical doctors, says that research revealed by Cassava on scientific trials with simufilam in numerous journals contained misrepresented knowledge and pictures of experiments that appeared to have been doctored. a photograph modifying software program. The FDA denied the request and allowed the trials to proceed. Bredt and Pitt revealed final November in an article revealed by The Wall Road Journal that they shorted shares of Cassava, betting the value would drop as soon as traders realized of the alleged manipulation. They later advised The New Yorker journal that they not brief Cassava, a declare Reuters couldn’t independently confirm.

The brief sale represents “an enormous battle of curiosity,” Watson Moss stated in his assertion to Reuters.

“Cassava Sciences is fascinated by serving to folks with Alzheimer’s illness, which isn’t a straightforward payday,” added Watson Moss.

DOWNLOAD OF STOCKS

Cassava shares fell precipitously following Thomas’ FDA petition, presenting a chance for Bredt and Pitt to revenue from their guess in opposition to the corporate.

Thomas declined to touch upon the matter.

The FDA stated in February {that a} so-called citizen petition filed by the 2 medical doctors urging them to launch an investigation of simufilam was not an applicable avenue for such a request. In the meantime, requests for FDA to provoke enforcement motion are “expressly excluded from the scope of FDA’s citizen submission procedures,” the company stated, including that it workouts its personal discretion in such issues.

An FDA spokesman declined to remark.

Cassava shares rose on Nasdaq from round $7 in January 2021 to greater than $135 in July 2021 on traders’ hopes that the corporate was on the verge of a breakthrough in treating Alzheimer’s. The inventory plummeted weeks later after information of the petition questioning the outcomes of the Cassava investigation.

Shares of the corporate closed at $21.72 on Tuesday.

Cassava has obtained greater than $20 million from the US Nationwide Institutes of Well being to assist the event of simufilam.

The NIH advised Reuters that it doesn’t evaluation potential instances of analysis misconduct associated to grants, however that officers “take analysis misconduct very severely. Analysis misconduct can distort analysis choices.” NIH funding, the general integrity of the analysis we assist, and public confidence in science and outcomes.”

Cassava additionally faces investigation by the SEC, the sources stated. The Wall Road Journal final November first reported on the SEC investigation, saying the company was inspecting the claims made within the FDA petition. Reuters was unable to find out what particular claims, if any, drew the company’s scrutiny.

An SEC spokesman stated the company “doesn’t touch upon the existence or nonexistence of a doable investigation.”

(Reporting by Marisa Taylor in Washington and Mike Spector in New York; Modifying by Will Dunham and Michele Gershberg)

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