(Bloomberg) — Cassava Sciences Inc. shares dropped following a report that the Securities and Exchange Commission has begun an investigation of the pharmaceutical company.
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Securities regulators are examining claims that the company manipulated research results of its experimental Alzheimer’s disease treatment, the Wall Street Journal reported citing unnamed people familiar with the matter. The National Institutes of Health, which provided grants to the company and its academic collaborators, is also looking into the claims, the Journal reported.
Shares of Cassava, which have soared this year on hopes that the Alzheimer’s drug could soon reach the market, declined 18.9% at 9:30 a.m. Wednesday in New York.
Earlier this week, the company had disclosed in a regulatory filing that the U.S. government was investigating the company, and said it has been cooperating and would continue to cooperate with the authorities. Cassava said no agency had informed the company that any wrongdoing had occurred by any party.
In August, a former SEC enforcement lawyer filed a petition with the Food and Drug Administration to halt studies of the company’s therapy, questioning the quality and integrity of its trial results. Cassava issued a statement at the time rejecting the claims.
The reported SEC investigation is likely to add to recent controversy around drugs for Alzheimer’s disease. In June, the FDA granted a fast approval for Biogen Inc.’s treatment for the memory-destroying condition, despite objections from its own scientific advisers. Since then, few patients have been using the treatment.
(Updates with regular-hours stock trading and additional context on previous regulatory filing starting in third paragraph)
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