Cassava Sciences CEO says ‘enormous profit motive’ behind N.Y. law firm’s fraud allegations

3 weeks ago 17
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Cassava Sciences Inc.’s Chief Executive Remi Barbier said connected Friday that caller allegations of fraud were “false and misleading” and were a effect of capitalist interests to thrust down the terms of the biotechnology company’s stock.

Cassava’s banal SAVA, -11.87% had plunged 50.5% implicit the past 3 days of past week, aft New York-based instrumentality steadfast Labaton Sucharow filed a Citizen Petition connected behalf of clients, requesting the Food and Drug Administration halt objective studies of Cassava’s simufilam, fixed “multiple reasons to question the prime and integrity” of the company’s research.

“When I archetypal work the allegation, I felt dazed and confused,” Cassava’s Barbier said Friday.

Although Cassava has disputed Labaton Sucharow’s allegations, the banal has failed to recover. It rallied arsenic overmuch arsenic 8.1% aboriginal Friday, but reversed people to beryllium down 5.5% successful midday trading. It has present shed 12% this week.

The selloff since the allegations were made has wiped distant astir $2.7 cardinal from Cassava’s marketplace capitalization.

Don’t miss: Cassava Sciences punches back, aft Quanterix took a plaything by saying it didn’t construe oregon hole the disputed proceedings data.

It’s nary wonderment that CEO Barbier released different nationalist connection connected Friday.

“Let maine beryllium precise clear: I deliberation these allegations are false,” Barbier said successful a statement. “The allegations assertion that our subject is improbable, unexpected and unsocial to Cassava Sciences, and truthful it’s each an elaborate fraud. By these criteria, each cause innovations are fraudulent.”

In an audio record posted to Cassava’s website, Barbier pointed retired that Labaton Sucharow disclosed soon aft posting the Citizen Petition that not lone did the clients it represented person expertise successful neuroscience, cause discovery, biochemistry and finance, but “they besides clasp abbreviated positions successful Cassava stock.”

A abbreviated presumption is simply a stake that a banal volition autumn successful price. Read much astir abbreviated selling.

“These allegations are not lone false, I besides deliberation they are misleading,” Barbier said. “There’s an tremendous nett motive astatine work,” helium said.

Labaton Sucharow did not respond to a MarketWatch petition for comment.

FactSet, MarketWatch

Despite the caller selloff, the banal was inactive up 653.5% year-to-date, compared with the 15.8% summation successful the iShares Biotechnology exchange-traded money IBB, -0.50% and the S&P 500 index’s SPX, +0.02% 20.7% rise.

After soaring 190.6% successful January, the banal rocketed 141.2% connected Feb. 2 aft Cassava announced upbeat results of an interim investigation of simufilam.

Short interest, which was astatine a near-record 5.98 cardinal shares astatine the extremity of January, dropped by 56% to 2.62 cardinal shares arsenic of mid-February, according to FactSet data, meaning astir of the bearish bets against the banal were closed retired aft the banal spike higher. As the rally continued — it was up 1,627.7% twelvemonth to day conscionable anterior to past week’s selloff — abbreviated involvement besides accrued steadily to 5.40 cardinal shares.

Short involvement arsenic a percent of nationalist float, oregon shares disposable for trading by the nationalist was 13.9% arsenic of Aug. 31, according to fiscal information and analytics institution S3 Partners, based connected latest speech data. In comparison, abbreviated involvement arsenic a percent of interval for meme banal GameStop Corp. GME, -4.86% was 11.5% and for AMC Entertainment Holdings Inc. AMC, -1.87% was 17.4%.

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