The troubled biopharma company Cassava Sciences agreed last week to pay $40 million to settle U.S. Securities and Exchange Commission (SEC) charges that it had misled investors about early clinical results for its experimental Alzheimer’s disease drug, simufilam. The compound is now in pivotal phase 3 trials, but SEC’s announcement may fuel calls to halt those studies.
SEC also announced that two former Cassava executives—recently departed CEO Remi Barbier and Senior Vice President for Neuroscience Lindsay Burns—played a key role in misleading investors. The husband and wife separately agreed to pay $175,000 and $85,000, respectively, and will “be subject to officer-and-director bars of 3 and 5 years, respectively,” according to SEC. Neuroscientist Hoau-Yan Wang, a City University of New York (CUNY) professor and until recently a longtime Cassava adviser, agreed to pay $50,000 to settle charges in a related administrative proceeding, SEC said.
If approved by the U.S. District Court for the Western District of Texas, the settlements would end one of the long-standing investigations that has besieged Cassava. Barbier, Burns, and Wang did not admit or deny guilt, according to SEC’s statement, and none could be reached for comment. “Cassava is pleased to put this matter behind us,” CEO Richard Barry said in a written statement. “We can now focus all of our attention on completion of the ongoing phase 3 trials of simufilam.”
SEC’s moves follow Wang’s recent indictment by the U.S. Department of Justice for alleged research fraud in laboratory work associated with simufilam, which Wang and Burns invented. The Food and Drug Administration (FDA) had identified a raft of serious deficiencies in Wang’s lab procedures, strongly suggesting some tests he ran on simufilam clinical trial samples were invalid. CUNY itself found Wang had committed “egregious” scientific misconduct associated with his work for Cassava and other studies.
The SEC complaint said Cassava and Barbier knew Wang’s lab was not qualified to conduct the biomarker testing that suggested simufilam was effective for Alzheimer’s, among other problems. The agency also charged that Wang had been “unblinded” for patient fluid samples that he tested. That means he would have known which samples came from those given the drug rather than a placebo, potentially biasing his data. The complaint cited Burns as well, saying she “negligently failed to fully disclose” that she had removed data from 40% of the volunteers in a phase 2 simufilam clinical trial after learning which ones received simufilam or the placebo.
Cassava allegedly withheld its knowledge of all those matters, and its share price rose after Barbier and Burns announced the phase 2 results were favorable. The company raised more than $260 million from investors after that announcement, according to SEC. In fact, the complete data showed the drug failed to improve “episodic” memory in Alzheimer’s patients, SEC said.
“There is strong evidence of corruption of the basic science and pharmacology data on which the phase 2 trials were based,” says Matthew Schrag, a Vanderbilt University neuroscientist who discovered many apparently manipulated images in Wang and Cassava’s preclinical studies. Schrag, who worked independently of his university, adds: “Now, there is strong evidence of corruption of the phase 2 trial data on which the phase 3 trials are based. Experimenting on many hundreds of people with memory problems in this context is highly unethical. These trials should be stopped.”
A Cassava spokesperson said via email that a 2-year hybrid clinical trial—combining an open-label design in which all Alzheimer's patients knew they were getting simufilam, with a 6-month placebo-controlled interlude—showed favorable cognitive results. “There are inherent weaknesses in open-label studies,” the spokesperson said. “But there are good reasons to believe our [first phase 3] trial could be successful.”
