MW Cassava Sciences' stock craters after Alzheimer's disease trial fails to meet its goals

By Ciara Linnane

News is the latest setback for the clinical-stage biotech, which was the subject of SEC and Justice Department investigations earlier this year

Cassava Sciences Inc.'s stock tumbled 85% Monday to put it on track for its biggest-ever one-day decline, after the clinical-stage biotech company said a trial of a treatment for mild to moderate Alzheimer's disease failed to meet its main goals.

The news is just the latest setback for the company, which was investigated by the Securities and Exchange Commission and the Justice Department earlier this year over claims it made about the treatment in the past.

Austin, Texas-based Cassava (SAVA), which specializes in treatments for neurodegenerative diseases, said in a regulatory filing that it would still present the data from the failed Phase 3 trial at a coming medical meeting. The company also held a conference call with analysts Monday morning but did not take any questions.

The trial sought to evaluate the company's novel treatment, called simufilam, as a treatment for cognitive or functional decline compared with placebo, but the treatment failed to deliver at week 52, based on the DAS-COG12 and ADCS-ADL scales, two key measurements of the degree to which a patient can perform a variety of tasks.

Simufilam continued to show an overall favorable safety profile, however.

"We took careful measures to enroll patients with mild-to-moderate [Alzheimer's disease]," Chief Executive Rick Barry said in prepared remarks. "Despite that, the loss of cognition in the placebo group was less pronounced than was previously reported in other placebo-controlled studies in [Alzheimer's disease]. We are working to understand this better."

The company has decided to discontinue a second Phase 3 trial because of Monday's results, he said, but will report detailed analyses of both studies at a future date.

On a call with analysts, Chief Medical Officer Jim Kupiec said the simufilam cohort of the trial showed a 0.39 point reduction in their overall mean score based on the ADAS-Cog 12 scale.

"Although this change is moving in the direction of improvement, it did not reach statistical significance with a p value of 0.43," he said, according to a FactSet transcript.

For the assessment of functional ability using the ADCS-ADL scale, patients taking simufilam achieved a 0.51-point increase in their overall mean score. That also showed a move in the direction of improvement but fell short of statistical significance, he said.

Barry told analysts the company is hoping the information it has gathered can ultimately be used to help Alzheimer's patients.

"Cassava will continue to review all of the data and evaluate next steps," he said.

For now, the company has no approved products. Chief Financial Officer Eric Schoen said it remains well capitalized, with $149 million in cash and equivalents at the end of the third quarter.

But the news is only the latest setback for Cassava, coming after the SEC and Justice Department investigations. In September, the company's founder and former CEO, Remi Barbier, and its former senior vice president of neuroscience, Lindsay Burns, agreed to pay more than $40 million to settle charges over "misleading claims" about the Alzheimer's trial.

Relatedly, the SEC charged Hoau-Yan Wang, a Cassava consultant and an associate professor at the City University of New York's Medical School, with manipulating the reported clinical trial results. Wang was the treatment's co-developer.

Wang was indicted in June under allegations that he caused Cassava to submit grant applications to the U.S. National Institutes of Health "that contained false and fraudulent representations about his research," according to a filing.

The SEC alleges that Wang identified about a third of the patients enrolled in the trial, "unblinding" it, and then manipulated the data "to create the appearance that the drug had caused dramatic improvements in biomarkers associated with Alzheimer's disease."

The SEC also alleges that Wang knew Cassava would publicize the manipulated data when it announced the results of the trial four years ago. The full set of patient data "showed no measurable cognitive improvement in the patients' episodic memory," the SEC said.

The company said Wang had nothing to do with the Phase 3 trial, which enrolled 804 people at more than 75 clinical sites in the U.S., Canada and Australia. Subjects were randomized and received either 100 milligrams of simufilam or placebo.

Secondary endpoints included measures of neuropsychiatric symptoms and caregiver burden.

The stock has gained 17.6% in the year to date, while the S&P 500 has gained 25%.

-Ciara Linnane

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

November 25, 2024 10:43 ET (15:43 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.