Cassava Sciences (SAVA) - Get Cassava Sciences, Inc. Report plummeted Wednesday after disclosing that "certain government agencies", which reportedly included the Securities and Exchange Commission, were investing claims the biotech manipulated research results of its experimental Alzheimer’s drug, simufilam.
Shares of the Austin, Texas company were. down nearly 20% to $49.53 at last check.
Cassava said in a securities filing that "certain government agencies have asked us to provide them with corporate information and documents" and the Wall Street Journal, citing people familiar with the matter, that the agency was the SEC.
"We have been cooperating and will continue to cooperate with government authorities," Cassava said it is filing. "No government agency has informed us that any wrongdoing has occurred by any party."
The National Institutes of Health, which awarded $20 million in grants to Cassava and its academic collaborators since 2015 for drug development, is also examining the claims, according to the company’s chief executive officer.
Cassava Sciences became embroiled in controversy in August when Jordan Thomas, a partner and chair of the whistleblower representation practice at Labaton Sucharow, filed a citizen's petition with the U.S. Food and Drug Administration seeking to halt to trials of simufilam.
On Wednesday, Thomas wrote a letter to acting U.S. Food and Drug Administration Janet Woodcock saying "my clients’ worst fears about Cassava Sciences appear to have been true."
Thomas identified his clients as David Bredt, former neuroscience research chief at Johnson & Johnson (JNJ) - Get Johnson & Johnson Report and Eli Lilly & Co. (LLY) - Get Eli Lilly and Company Report, and Geoffrey Pitt, a cardiologist and professor at Weill Cornell Medicine
"Due to their serious concerns about simufilam and related research by Cassava," Thomas said, "and at great personal and professional risk, my whistleblower clients, along with other prominent doctors and scientists, have voluntarily gone on the record."
Bredt and Pitt wrote that Cassava’s research include images of experiments that appear to have been manipulated using software such as Photoshop.
Thomas said that "increasingly evidence suggests that Cassava has doctored its research and clinical trial results, duped peer-reviewed journals, used the tainted science to trick the NIH and FDA into approving grants and clinical trials."
In addition, the company "misled investors by touting their grants and clinical trials without disclosing their troubling research practices, and withheld material information about the true nature of its drug from vulnerable Alzheimer’s Disease patients."
The FDA has a duty, Thomas said, "to immediately halt the simufilam clinical trials, conduct a rigorous audit of all the company’s research and clinical trial results, and report the agency’s findings to interested law enforcement and regulatory authorities."
Cassava did not immediately respond to a request for comment, but Chief Executive Remi Barbier has said that short sellers have abused the FDA’s petition process.