Cassava Sciences’ SAVA stock shed more than 80% of market value on Monday after the company reported that its lead pipeline drug, simufilam, failed to meet the primary endpoints in a late study for Alzheimer’s disease (AD).

SAVA releases top-line results from the ReThink-ALZ study, which evaluated simufilam in patients with mild-to-moderate AD. Treatment with the drug failed to achieve a significant reduction in cognitive or functional decline in AD patients when compared to placebo over a 52-week period, as assessed by the ADAS-COG12 and ADCS-ADL scales. The study failed to meet any pre-specified secondary and exploratory biomarker endpoints.

Based on the above study results, Cassava also decided to discontinue the phase III ReFocus-ALZ study, which evaluated simufilam in AD patients over a 76-week period. It will also be discontinuing the open-label extension study on the drug.

SAVA Stock Performance

Post the above announcement, shares of Cassava Sciences were down nearly 84% on Monday. Simufilam is the only drug in Cassava’s pipeline. After announcing the decision to end the development of the second study on simufilam, the company has no drug in active clinical development. Investors were also concerned about Cassava’s future, as the company has no marketed drugs in its portfolio and lacks a stable revenue stream.

Year to date, the stock has plunged 80.9% compared with the industry’s 4.9% decline.

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SAVA’s Plans for the Future

Despite the setback, management claimed that simufilam continued to show an overall favorable safety profile. It plans to report detailed data from the ReThink-ALZ and ReFocus-ALZ studies at a future medical meeting.

Cassava is now left with its lead investigational diagnostic product candidate, SavaDx. Management believes that this candidate has the potential to become a novel way of detecting the presence of AD from a small sample of blood.

Recent Developments in SAVA Stock

The simufilam results are one of the latest setbacks for Cassava. Earlier in September, management agreed to pay a fine of $40 million to settle charges from the U.S. Securities and Exchange Commission (SEC) over allegedly misleading statements about the results of its 2020 mid-stage study of simufilam for AD. Despite settling, SAVA did not admit to or deny the SEC’s allegations.

The SEC also brought charges against two former senior executives, including founder and ex-CEO Remi Barbier and former senior vice president of Neuroscience, Dr. Lindsay Burns. They were accused of negligence in their disclosures regarding the study of simufilam and agreed to pay fines of $175,000 and $85,000, respectively, to resolve the claims.

In a related action, the SEC charged Dr. Hoau-Yan Wang, a consultant for Cassava and associate medical professor at City University of New York’s Medical School, for allegedly manipulating the reported results of the mid-stage study on simufilam. Wang is also a co-developer of the AD drug under investigation. Without admitting or denying the violations, Dr. Wang consented to cease from future violations and pay a $50,000 penalty.

Per the SEC, Dr. Wang received information that unblinded him to certain aspects of the phase II study data of simufilam for AD. This allowed him to identify about a third of the patients and manipulate the data to make it appear that the drug had significantly improved Alzheimer’s biomarkers, such as total tau and phosphorylated tau, which are common indicators of neurodegeneration in AD patients. This manipulated data was released by SAVA on Sept. 14, 2020, which misled investors by claiming that the study was blinded even though Wang had been unblinded.

The SEC's complaint also claimed that Cassava misled investors by announcing that its therapeutic significantly improved patient cognition, particularly episodic memory in AD patients. However, management did not reveal that the full set of patient data, as opposed to the subset chosen by Dr. Burns, showed no measurable improvement in memory. Additionally, Cassava and its former CEO, Remi Barbier, failed to disclose Dr. Wang's involvement in the study, despite his personal and financial interest in simufilam’s success.

Marketed Drugs in the AD Space

Currently, there are two drugs approved by the FDA in the AD space – Leqembi and Kisunla. Both these drugs are approved to treat early symptomatic AD, which includes mild cognitive impairment or mild dementia stage of the disease.

Leqembi, which was approved last year, is marketed by Japan-based Eisai in partnership with the Biogen BIIB market. Kisunla was developed by Eli Lilly LLY and received the FDA’s approval in July.

Eli Lilly and Biogen/Eisai drugs are based on similar mechanisms, reducing the accumulation of amyloid beta (Aβ) plaque in the brain. Aβ is a protein that is said to be the primary cause of the cognitive decline associated with Alzheimer’s disease.

Cassava Sciences, Inc. Price

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SAVA’s Zacks Rank

Cassava currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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