Cassava Sciences’ stock (SAVA) experienced a catastrophic drop on Monday, losing over three-quarters of its value. This collapse followed the failure of the company’s Alzheimer’s treatment, simufilam, in a critical Phase 3 trial.
The trial evaluated simufilam’s efficacy in patients with mild-to-moderate Alzheimer’s disease. After a year of treatment, the drug failed to demonstrate a significant reduction in cognitive or functional decline compared to the placebo group.
Disappointing Results from Phase 3 Trial
“We took careful measures to enroll patients with mild-to-moderate AD,” Chief Executive Rick Barry said in a statement. “Despite that, the loss of cognition in the placebo group was less pronounced than was previously reported in other placebo-controlled studies in AD. We are working to understand this better.”
The findings are a major setback for the company, which had positioned simufilam as a potentially groundbreaking oral treatment for Alzheimer’s disease. The trial results showed no measurable advantage for simufilam over placebo in either cognitive abilities or the performance of daily living tasks.
Stock Plummets to Historic Lows
In reaction to the trial results, SAVA stock nosedived over 84%, closing at $4.13. This marks the stock’s lowest valuation in four years.
Phase 3 Program Terminated
Cassava announced it would shut down its second Phase 3 study, ReFocus-ALZ, as well as an ongoing open-label extension study in which all patients knowingly receive simufilam. These decisions come after the drug failed to meet its goals in the first Phase 3 trial.
The setback delivers a serious blow to Cassava’s drug development program, which has been polarizing among Wall Street analysts and investors.
A Tumultuous History for SAVA Stock
Cassava Sciences’ stock saw a meteoric rise in 2021 when the company claimed that simufilam improved cognitive function in patients with mild-to-moderate Alzheimer’s disease—an unprecedented claim. At the time, other Alzheimer’s drugs, such as those developed by Biogen (BIIB) and Eli Lilly (LLY), had only been able to slow cognitive decline, not reverse or improve it.
However, critics quickly pointed out that these findings were based on open-label studies, which lack a placebo group for comparison. This led to skepticism about the validity of the results.
Allegations of Misconduct and SEC Investigation
In the same year, a group of short sellers accused Cassava of manipulating its test results. The allegations included claims that the company falsified images in an analysis, used flawed methods to collect brain tissue samples, and manipulated biomarker data.
Cassava has consistently denied these accusations, but the controversy triggered a Securities and Exchange Commission (SEC) investigation, casting a shadow over the company’s credibility.
Leadership Shake-Up
In July 2024, the company faced additional turmoil when its former CEO, Remi Barbier, abruptly resigned. Barbier remained with the company in a nonexecutive capacity for two months before his full departure. Lindsay Burns, Cassava’s senior vice president of neuroscience and Barbier’s wife, also stepped down immediately.
The leadership changes caused further turbulence for the stock, which tumbled more than 29% on July 17. By that point, SAVA shares had already dropped below $10.
What’s Next for Cassava Sciences?
The failure of simufilam represents a significant hurdle for Cassava Sciences, which must now reassess its approach to drug development. The company’s bold claims about simufilam had fueled both investor excitement and intense scrutiny, leaving it in a precarious position after the drug’s failure.
For the Alzheimer’s community, the results are another reminder of the immense challenges in developing effective treatments for this complex disease. While companies like Biogen and Eli Lilly have made incremental progress, the search for a cure or truly transformative therapy continues to face setbacks.
For Cassava, rebuilding investor trust and determining a new path forward will be crucial. As the company grapples with the fallout, the future of its Alzheimer’s research program remains uncertain.
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