A big reason why Cassava Sciences (SAVA) stock is soaring

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Deleted: Despite a significant drop in the S&P 500, stocks are Cassava Sciences (NASDAQ:SAVA) closed higher by 35%. This is because the Securities and Exchange Commission (SEC) has closed his case on cassava after the start of an investigation last November. The investigation began after two doctors accused Cassava of manipulating research using tools such as Photoshop. Doctors have filed a public petition with the Food and Health Administration (FDA), asking it to halt clinical trials of Cassava for Simufilam, an experimental Alzheimer’s disease (or AD) drug. It is interesting that the doctors revealed a short position with Sava as well.

CEO Remi Barbier vehemently denied the claims, stating:

No evidence, no credible evidence, no evidence that I’ve ever been involved, nor has anyone I know ever been involved in the funny business.

However, Cassava’s legal troubles did not end there.

SAVA stock in green after SEC update

After the petition, several reputable sources expressed their opinion. Yale professor Marina Picciotto concluded that Cassava’s research showed no signs of manipulation. However, she expressed that there were duplicate photos that did not affect the conclusion of the study. Meanwhile, image manipulation consultant Elizabeth Bik said she found instances of manipulation in the research report. Bik added, “The medicine could work great,” despite the allegations.

FDA at the end rejected the petition, which states that enforcement actions are “expressly excluded from the scope of FDA’s citizen petition procedures.” As a result, the FDA allowed trials of Simufilam to continue.

Then, in July, the Department of Justice (DOJ) announced that opened an investigation into cassava, citing manipulation of research. The investigation also sought to determine whether the company misled its investors and consumers. On the same day, Cassava released a statement denying the allegations. The statement emphasized that it has not received any charges since the SEC began its investigation. In addition, he sought to comfort investors by explaining that no officer or director had sold shares in more than a decade. Meanwhile, SAVA short traders are expected to make more than $100 million in profits as a result of the SEC investigation.

They currently exist two phase 3 clinical trials are ongoing for Simufilam called RethinkALZ and RefocusALZ. Final results from both trials are expected to be published in mid-2024. While 99% of AD therapies have failed, the end of the SEC investigation offers a beacon of hope for AD patients and SAVA investors.

As of the date of publication, Eddie Pan did not hold (directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the writer and are the subject of InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider trading. He writes for InvestorPlace’s Today’s Market team, which focuses on the latest news involving popular stocks.

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