The Food and Drug Administration has denied a petition by short sellers to halt clinical trials of an experimental Alzheimer’s drug being developed by Cassava Sciences Inc.
The two short sellers alleged in filings with the FDA and the Securities and Exchange Commission that Cassava’s published research contained images of experiments that appear to have been manipulated using software such as Photoshop. Cassava denied the allegations, and said it was cooperating with government investigations.
The FDA said Thursday it couldn’t launch an investigation based on claims in the so-called citizen’s petition filed by the short sellers. The petition process only allows the FDA to review or overturn regulations or orders the agency has already issued, the agency said.
“This response does not represent a decision by the Agency to take or refrain from taking any action relating to the subject matter of your Petitions,” Patrizia Cavazzoni, director of the FDA’s Center for Drug Evaluation and Research, wrote in the letter.
A citizen’s petition allows members of the public to ask the FDA to take a regulatory action.
“The news is very welcome but not surprising,” said Cassava Chief Executive Remi Barbier. “We said from the outset that the allegations are false. I think the message may be that the FDA’s citizen petition privilege is not to be trifled with by stock market participants.”
Alzheimer’s is a progressive neurodegenerative disease affecting an estimated six million people in the U.S.
Shares of Austin, Texas-based Cassava closed at $135.30 in July, rallying on the prospects for its Alzheimer’s drug. The stock closed Thursday at $53.05.
The Wall Street Journal reported on the questions about Cassava’s Alzheimer’s drug, called Simufilam, and research in November. The SEC is investigating the short sellers’ allegations and the accuracy of statements that Cassava made to public investors, the Journal reported.
The short sellers, David Bredt and Geoffrey Pitt, filed the FDA citizen petition in August.
Dr. Bredt is a biotech entrepreneur and former neuroscience research chief at Johnson & Johnson and Eli Lilly & Co., while Dr. Pitt is a cardiologist and professor at Weill Cornell Medicine. They bet against Cassava’s stock before the petition became public, believing the share price would fall once their research was disclosed.
Jordan Thomas, an attorney for Messrs. Bredt and Pitt, said the petition was denied on a technicality. “Cassava Sciences has acknowledged that it is under investigation on multiple fronts and we will continue to cooperate with those federal law enforcement and regulatory authorities,” he said.
The Journal of Neuroscience, which published one of the papers on Simufilam and initially said it didn’t find evidence of data manipulation, last month published a statement of concern about the paper. The journal said it was aware of the allegations of image doctoring and is waiting on an outside investigation before taking further action.
Write to Joseph Walker at [email protected] and Dave Michaels at [email protected]
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Appeared in the February 11, 2022, print edition as ‘Short Sellers Who Sought To Derail Drug Rebuffed.’
