Months after reports of allegations regarding Cassava Sciences’ lead drug candidate for Alzheimer’s emerged, the DOJ may now be raising its head to investigate the company.
A report from Reuters published this morning said that two sources had confirmed the US Department of Justice opened an investigation into Cassava over allegations that the biotech had manipulated search results related to simufilam, the company’s experimental Alzheimer’s drug.
The sources further told the outlet that the DOJ personnel investigating Cassava “specialize in examining whether companies or individuals have misled or defrauded investors, government agencies or consumers.” The sources did not detail the focus of the probe and if anyone specific was being looked into.
Shares of $SAVA were down approximately 30% in pre-market trading after closing Tuesday at over $21 a share.
The SEC had started investigating the company last November after Cassava revealed that certain unnamed government agencies had asked the company for documentation, going out of its way to say that the requests were not accusations of wrongdoing.
This saga got its start last August, after law firm Labaton Sucharow filed a citizen’s petition with the FDA on behalf of two doctors asking the regulatory agency to halt all the company’s clinical trials until the company’s data had been audited. The two doctors are neuroscientist and Janssen’s former chief of neuroscience discovery David Bredt, and cardiologist Geoffrey Pitt, director of Weill Cornell Medicine’s Cardiovascular Research Institute.
The two doctors told the Wall Street Journal in a separate report last year that they had shorted Cassava’s stock, betting that the share price would fall once investors recognized the problems the pair found.
According to the report, the firm started investigating Cassava after finding results “most unexpected and are probably unique” to two scientists: researcher Hoau-Yan Wang at City University of New York and Cassava’s VP of neurosciences Lindsay Burns. The scientists had published multiple papers detailing the company’s hypothesis about a connection of filamin A protein with Alzheimer’s disease — and that simufilam could address it.
However, the law firm didn’t buy it. The report noted,
This initial analysis suggests a pattern of clear errors and anomalies that are consistent with data manipulation and misrepresentation. These findings undercut the foundational science on which simufilam therapy is based.
Labaton Sucharow then pointed to three types of data it thought might be falsified: clinical biomarker data apparently analyzed by Wang’s lab; Western blot analysis that allegedly bore marks of alteration; and research involving human brain tissue using a methodology that Labaton Sucharow said “defies logic.”
“Cassava Sciences believes the claims made in this post regarding scientific integrity are false and misleading,” a statement from Cassava said at the time. “The Company stands behind its science, its scientists and its scientific collaborators, and is responding to ensure the facts are known and respected.”
The FDA rejected the petition several months later in February earlier this year. However, the federal regulatory agency denied the petition on procedural grounds, replying that the FDA is not permitted to initiate investigations based on citizen petitions
CDER director Patrizia Cavazzoni noted at the time that the FDA was concerned about the issues raised by the short seller.
“We take the issues you raise seriously. Please note that your Petitions are being denied solely on the grounds that your requests are not the appropriate subject of a citizen petition,” Cavazzoni wrote in her response to the firm. “This response does not represent a decision by the Agency to take or refrain from taking any action relating to the subject matter of your Petitions.”
Endpoints News has reached out to Cassava for confirmation and comment — and we will update once we hear back.
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