Cassava Sciences ( SAVA ) on Friday refuted reports that it received a “termination letter” from U.S. officials surrounding an investigation into its experimental Alzheimer’s drug, sending SAVA shares tumbling.
The news continues a wild journey through Yuca. Last November, the Securities and Exchange Commission opened an investigation into Cassava’s simufilam research. Cassava is testing the drug in Alzheimer’s disease patients. But the scientists, who also had short positions in SAVA shares, claimed Yuca manipulated images used to test the drug.
On Thursday, a report suggesting the SEC was recommending closing the investigation was widely circulated. It was dated Monday. The problem? Cassava says he has not received an update from the agency.
“The Company cannot establish the legitimacy of communications circulating in the mass media or elsewhere, purportedly sent by one of these government agencies following a request for public access to private records made in under the Freedom of Information Act,” Cassava said in an SEC filing. .
In response, SAVA shares fell 21.3% near 40.20 in afternoon trading on the stock market today. That reversed a jump of nearly 36% on Thursday. Cassava did not respond to a request for comment.
Stock SAVA: Stabilization of a key protein
Claims of data manipulation have weighed on SAVA’s stock since last year. The scientists at the center of the allegations also asked the Food and Drug Administration to suspend studies of Cassava. But the agency refused to do so.
According to Yuca, simufilam works by stabilizing an abnormal protein in the brain.
Thursday’s news sent SAVA shares to their highest point since February. According to MarketSmith.com, the stock continued a recent rally well above its key moving averages. Despite Friday’s dive, shares held above their 50- and 200-day lines.
SAVA stock also has a strong relative strength rating of 97, an indicator of 12-month performance. The best-performing stocks have RS Ratings of at least 80, according to IBD Digital.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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