Investing.com -- Shares of Cassava Sciences, Inc (NASDAQ:SAVA) dropped 11.5% in pre-open trade on Friday following the company's statement that it has reached a $40 million settlement with the U.S. Securities and Exchange Commission (SEC) over negligence-based disclosure charges.
The charges stem from an SEC investigation into statements made by the company regarding the results of its 2020 Phase 2b clinical trial of simufilam, an experimental treatment for Alzheimer’s disease.
Cassava Sciences, Inc. settled the charges with the SEC, agreeing to pay a $40 million penalty, without admitting or denying the SEC’s allegations.
Cassava stated that it fully cooperated with the SEC and has since implemented remedial measures. The $40 million penalty will impact the company's financials for the second half of 2024.
Cassava also addressed a separate investigation by the U.S. Department of Justice (DOJ), stating that it does not expect criminal charges or a resolution to be brought by the DOJ’s Criminal Division.
In July, the company announced several changes to its leadership and corporate governance, including the appointment of Richard Barry as executive chairman of the Board and his transition to chief executive on September 6.
“We can now focus all of our attention on completion of the ongoing Phase 3 trials of simufilam,” Barry said in a statement.
Cassava reiterated its financial outlook, projecting cash reserves of $117 to $127 million at the end of 2024, though its cash use for the latter half of the year is expected to be between $80 and $90 million, including the SEC fine.