Cassava Sciences (SAVA) Friday refuted reports that it received a “termination letter” from US officials over an investigation into its experimental Alzheimer’s drug — and SAVA stocks collapsed.
The news continues a wild journey for Cassava. Last November, the Securities and Exchange Commission opened an investigation into Cassava’s simufilam investigation. Cassava is testing the drug in patients with Alzheimer’s disease. But scientists — who also had short positions in SAVA stocks — claimed Cassava manipulated images used in testing the drug.
A widely circulated report made the rounds on Thursday recommending that the SEC close the investigation. It bore the date of Monday. The problem? Cassava says it has not received an update from the agency.
“The Company is unable to establish the legitimacy of any communications circulating in the mass media or elsewhere purportedly sent by such government agency in response to a request for public access to private data made under the Freedom of Information Act. Information Act,” Cassava said in an SEC filing. .
In response, SAVA stock fell 18% to 41.87 in the current stock market. That bounced from a nearly 36% jump on Thursday. Cassava did not respond to a request for comment.
SAVA stock: stabilizing an important protein
The data manipulation claims have weighed on SAVA stock since last year. The scientists at the center of the allegations also asked the Food and Drug Administration to suspend Cassava’s studies. But the agency refused to do so.
According to Cassava, simufilam works by stabilizing an abnormal protein in the brain.
Thursday’s news sent SAVA shares to their all-time high since February. According to MarketSmith.com, stocks have continued their recent gains well above their key moving averages. Despite the plunge on Friday, shares remained above the 50-day and 200-day lines.
SAVA stocks also have a strong Relative Strength Rating of 97, an indicator of 12-month performance. The best performing stocks have an RS rating of at least 80, according to IBD Digital.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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