Litigation Releases (Cassava Sciences, Inc., Remi Barbier, and Lindsay Burns)

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26132 / September 26, 2024

Securities and Exchange Commission v. Cassava Sciences, Inc., Remi Barbier, and Lindsay Burns

, No. 1:24-cv-01150 (W.D. Tex. filed Sept. 26, 2024)

SEC Charges Cassava Sciences, Two Former Executives for Misleading Claims About Alzheimer's Clinical Trial

The Securities and Exchange Commission today filed charges against Cassava Sciences, Inc., its founder and former CEO, Remi Barbier, and its former Senior Vice President of Neuroscience, Dr. Lindsay Burns, related to misleading statements made in September 2020 about the results of a Phase 2 clinical trial for the company's purported therapeutic for the treatment of Alzheimer's disease.

The SEC's complaint alleges that Cassava and Burns misled investors with claims that its Phase 2 trial was conducted in blinded conditions, even though the scientist testing the samples - who was also the co-inventor of the therapeutic - had been unblinded. The complaint further alleges that Cassava misled investors in announcing that the company's therapeutic significantly improved patient cognition. Among other things, Cassava claimed that the Phase 2 results showed significant improvement in episodic memory of the Alzheimer's patients involved in the clinical trial. But in reporting the results, Cassava failed to disclose that the full set of patient data - as opposed to the subset of data hand-selected by Burns - showed no measurable cognitive improvement in the patients' episodic memory. Cassava and Barbier also failed to disclose the therapeutic's co-inventor's role in the clinical trial, despite his personal, financial, and professional interest in the therapeutic's success.

The SEC's complaint, filed in the U.S. District Court for the Western District of Texas, charges Cassava with violating Section 17(a)(2) and (3) of the Securities Act of 1933 and Section 13(a) of the Securities Exchange Act of 1934, and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. The complaint also charges Barbier and Burns with violating Section 17(a)(2) and (3) of the Securities Act of 1933. Without admitting or denying the allegations, Cassava, Barbier, and Dr. Burns agreed to consent to the entry of final judgments, subject to court approval, enjoining them from committing or engaging in future violations. They have also agreed to pay civil penalties of $40 million, $175,000, and $85,000 respectively. Barbier and Burns agreed to be subject to officer-and-director bars of three and five years, respectively.

The SEC's investigation was conducted by Matthew Spitzer, Ernesto Amparo, and Zachary Avallone and was assisted by Eugene Canjels from the Commission's Division of Economic Risk and Analysis. The investigation was supervised by Sarah Hall, Melissa Armstrong, and Mr. Cave.