Cassava Sciences refuted reports Friday that it received a "termination letter" from U.S. officials surrounding an investigation into its experimental Alzheimer's drug — and SAVA stock tumbled.
The news continues a wild journey for Cassava. Last November, the Securities and Exchange Commission opened an investigation into Cassava's simufilam research. Cassava is testing the drug in patients with Alzheimer's disease. But scientists — who also held short positions in SAVA stock — claimed Cassava manipulated images used in testing the drug.
On Thursday, a report widely circulated suggesting the SEC recommended closing the investigation. It carried Monday's date. The problem? Cassava says it hasn't received any update from the agency.
"The company is unable to establish the legitimacy of communications circulating on mass media, or elsewhere, purportedly sent from one such government agency following a request for public access to private records made under the Freedom of Information Act," Cassava said in an SEC filing.
In response, SAVA stock toppled 18% to 41.87 on today's stock market. That reversed from a jump of nearly 36% on Thursday. Cassava didn't respond to a request for comment.
SAVA Stock: Stabilizing A Key Protein
The data manipulation claims have weighed on SAVA stock since last year. The scientists at the center of the allegations also asked the Food and Drug Administration to suspend Cassava's studies. But the agency declined to do so.
According to Cassava, simufilam works by stabilizing an abnormal protein in the brain.
Thursday's news sent SAVA stock to its highest point since February. Shares continued a recent surge well above their key moving averages, according to MarketSmith.com. Despite the dive Friday, shares stayed above its 50-day 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.
