What happened
Shares of Cassava Sciences (SAVA +5.31%) were tanking Friday, down by almost 30% early in the session and still off by 11.6% as of 12:35 p.m. ET. The steep decline came after the company issued a public statement regarding an internal report prepared by the City University of New York (CUNY) that was leaked to the press.
On Thursday, the respected journal Science revealed that an anonymous source had given it a copy of CUNY's report. This report focused on the university's investigation into alleged data manipulation in research conducted by Cassava and a scientist at CUNY. Cassava's public response on Friday stated that the CUNY report did not make any findings of data manipulation.
The company also noted that short-selling activity in its stock soared by 40% before the CUNY report was leaked. Cassava pointed out in its public statement that a lawyer for some short-sellers was quoted in the Science article. However, the company acknowledged that the article "does not indicate what role, if any, short-sellers had in the leak."
NASDAQ: SAVA
Key Data Points
So what
The allegations about data manipulation related to the experimental Alzheimer's disease drug simufilam have been hanging over Cassava's head like a dark cloud for more than two years. As a result of this controversy, Cassava stock has plunged nearly 90% from the peak it touched in mid-2021. The article published in Science on Thursday stirred things up once again.
However, Cassava CEO Remi Barbier stated, "We remain confident in the underlying science for simufilam, our lead drug candidate." The company stressed in its public statement that it doesn't rely only on research conducted by CUNY, and that the research supporting simufilam also stems from "the work of scientists at academic institutions that have no connection to CUNY."
Now what
Cassava continues to evaluate simufilam in phase 3 clinical studies as a potential treatment for Alzheimer's disease. One of these studies completed patient enrollment earlier this month. Another is expected to complete enrollment before the end of 2023.
Ultimately, Cassava's fortunes hinge on the results of these studies. In the meantime, the stock is likely to remain highly volatile.
