Allegations of fraud against Cassava Sciences (NASDAQ:SAVA) are unlikely to stop its Alzheimer’s drug candidate from quickly advancing to a Phase 3 clinical trial. As a result, I remain very bullish on SAVA stock.
One of the most important reasons is an issue that hasn’t been explored very much yet. Specifically, none of the allegations against Cassava relates directly to the most recent safety and cognition data on its Alzheimer candidate, simufilam.
That safety and cognition data, released on July 29, was incredibly positive, as simufilam did not cause any major adverse side effect, and apparently became the first drug to improve Alzheimer’s patients’ cognition levels after nine months.
Vigorously Debating the Trees and Ignoring the Forest
The Citizen’s Petition to the FDA that started this controversy was submitted by attorney Jordan Thomas and published on Aug. 22. Basically, it focuses on using technical analysis to question the integrity of studies carried out in the lab of an associate (but not an employee) of Cassava, Dr. Hoau-Yan Wang, who is a professor at City University of New York. Wang serves on the company’s scientific advisory board.
Dr. Lindsay Burns, Cassava’s vice president for neuroscience, co-authored several papers that were based on the data whose integrity is questioned by the petition.
Thomas also claims that Cassava has been using brains that were too old to test its drug and that only Wang’s lab has reported a connection between the protein that simufilam affects and Alzheimer’s.
Assessing the merit of the technical accusations is way beyond my expertise. But gauging the likely impact of those accusations on SAVA stock is well within my purview.
And, as I indicated earlier, I think, while so many have focused on debating the merits of Thomas’ accusations, nearly everyone is ignoring a crucial point: There appears to have been no credible accusations against the safety and cognition data that Cassava unveiled on July 29.
What’s more, Thomas’ accusations primarily relate to the measurement of biomarkers used to determine the presence of proteins associated with Alzheimer’s in patients’ brains. Yet, for Phase 2B data reported by the company, an independent company, Quanterix (NASDAQ:QTRX), assessed the biomarkers, according to Cassava. Quanterix has not denied that assertion. And no one, as far as I’ve seen, has contested the accuracy of the cognition and safety data released on July 29.
Moreover, no independent expert that I’ve seen has corroborated Thomas’ points about using brains that are too old, and, as I noted, Quanterix has confirmed Cassava’s biomarker data. As a result, the only arguments Thomas makes that seem valid are his attacks on the integrity of Wang’s experiments.
So, while many people are debating the trees (the charges regarding the integrity of Cassava’s old papers), nobody appears to have realized that the forest (the company’s great, undisputed safety and cognition data) is hundreds of time more important.
The Impact on the Alzheimer’s Treatment
I would not rule out the possibility that most of Thomas’ charges about Wang’s lab are true. After all, multiple experts who claim to be free from any conflicts of interest say that the allegations have merit.
Thomas asks the FDA to “halt” upcoming Phase 3 trial of simufilam and conduct audits of multiple aspects of Cassava’s prior work. That would delay the drug’s availability for years, potentially costing millions of Alzheimer’s sufferers a year or two of much better quality of life.
I’m not surprised that Thomas is making these arguments. Someone is obviously paying him to try to derail Cassava’s drug, and lawyers are trained to find the best available arguments that support their missions.
Also, our legal system embraces the idea of ignoring crucial evidence because the person or people who provided that evidence did something improper. For example, evidence in a criminal investigation that’s obtained illegally is sometimes ruled inadmissible in courts, at times ruining prosecutors’ entire cases and allowing obviously guilty people to go free. And if a trial witness is found to have lied about one issue or done something wrong in the past, opposing lawyers argue that everything he or she says is worthless.
But should we use the same principle when it comes to drugs that could save or greatly improve the lives of literally millions of people? Taken to its logical extreme, that concept is totally ridiculous and very dangerous.
For example, what if we somehow found out now that data from the early studies of a drug that’s greatly prolonging the lives of AIDS patients was falsified? Should we recall the drug until all of the studies on it can be audited, potentially condemning tens of thousands of people to much earlier deaths and much greater suffering? Or should we rely on all the subsequent evidence we obtained that the drug is safe and effective and keep prescribing the drug? I think the answer is pretty obvious.
Likewise, the idea of potentially causing hundreds of thousands of Alzheimer’s patients to suffer needlessly because a professor may have faked some data in early tests should be viewed as an idea that violates common sense.
Other Important Points
As many others have pointed out, the FDA quite correctly appears to be moving ahead with the Phase 3 trial of Cassava’s simufilam, despite Thomas’ petition. The agency did, after all, issue the protocols for the Phase 3 trial several days after receiving Thomas’ petition.
Also importantly (and I haven’t seen anyone else point this out), just because Burns authored or co-authored papers about the data generated by Wang’s lab does not mean that she was closely involved with or even knew about any improper activities that may have gone on there. I highly doubt whether she spent much time at the lab carrying out experiments.
Also worth noting is that Dr. Nadav Friedmann, Cassava’s chief medical officer, and Dr, James Kupiec, its chief clinical development officer, both appear to be Burns’ supervisors. Both spent many years working in responsible positions for large, well-known pharmaceutical companies. Friedmann was CEO of Daiichi Pharmaceutical Corporation (OTC:DSNKY) and Kupiec was a vice president for Pfizer (NYSE:PFE).
The Bottom Line on SAVA Stock
Fraud that may or may not have been committed at Wang’s lab will not be allowed to invalidate the unchallenged safety and cognition results of Cassava’s recent study or delay its upcoming Phase 3 trial. Therefore, long-term investors should buy SAVA stock on its current weakness.
On the date of publication, Larry Ramer held a long position in SAVA stock.