Cassava Files Defamation Suit against Short Sellers Linked to Data Manipulation Allegations - Updated

Three months after a peer-reviewed journal cleared Cassava Sciences of data manipulation charges, the Texas-based company is fighting back.

Cassava has filed a lawsuit in federal court against individuals who were linked to a Citizen’s Petition filed with the FDA that raised concerns about data manipulation in the company’s clinical investigation of experimental Alzheimer’s treatment, simufilam. 

Cassava claims the defendants engaged in their campaign simply to profit off of a decline in the company’s shares, as they were short-sellers of the company's stock.

The lawsuit identifies more than “1,000 false and defamatory statements” made by the defendants to the FDA, or in reports and presentations posted online or on social media, Cassava announced Thursday.

The company alleges the defendants spread the “disinformation campaign” far and wide without any concerns for Cassava, its research or its clinical programs.

Cassava said the alleged disinformation campaign caused a sharp decline in the company’s stock price and also cast a pall over simuflam.

“Defendants saw an opportunity to manipulate a stock price and financially benefit from their ‘short positions’ by defaming a company developing a drug for people with Alzheimer’s disease,” Cassava wrote in its complaint.

The Allegations 

The citizen’s petition was filed in 2021 on behalf of two neuroscientists who claimed they doubted the research conducted by Cassava. As BioSpace previously reported, the complainants argued Cassava’s published research included images of experiments that appeared to have been manipulated.

The neuroscientists, who admitted to short-selling Cassava stock, sought to halt Cassava’s studies involving simufilam, which was being advanced into Phase III trials in Alzheimer’s disease.

The defendants in the lawsuit are listed as David Bredt, Geoffrey Pitt, Quintessential Capital Management, Adrian Heilbut, Jesse Brodkin, Enea Milioris and Patrick Markey.

A former neuroscientist with J&J, Bredt joined MPM Capital last year, a company that backed Protego, which is developing a similar Alzheimer’s treatment to Cassava. Bredt’s name is no longer listed on MPM’s management team page. Pitt is the director of cardiovascular research at Weill Cornell Medicine.

Cassava Sciences is represented by J. Erik Connolly, managing chair of the litigation group at Benesch Friedlander Coplan & Aronoff LLP.

“As shown by Cassava’s lawsuit, the issue of short-sellers using disinformation to drive down a company’s stock price for their own financial gain is a serious one. The actions taken by these short sellers not only impact the stock market but also the ability of companies to research and develop treatments for disease,” Connolly told BioSpace.

The allegations made about the western blot image, as well as articles supporting simufilam in other publications, have plagued Cassava for months.

Accusations of data manipulation caused the retraction of five papers in PLoS One due to “serious concerns about the integrity and reliability of the results.” And over the summer, the journal Springer pulled an article citing concerns about data manipulation allegations.

Things were looking up for the company when the FDA denied the Citizen’s Petition after the journal Neuroscience announced it could find no evidence to support claims of data manipulation. In August, the Journal of Prevention of Alzheimer's Disease also said it could find no evidence of data manipulation in an article published on its site.

Cassava’s simufilam is an oral small-molecule drug candidate designed to restore the normal shape and function of altered filamin A (FLNA) protein in the brain. When FLNA is altered, it disrupts the normal function of neurons, leading to Alzheimer’s pathology, neurodegeneration and neuroinflammation, according to the company.

In its announcement, Cassava did not specify if it intended to receive any financial damages should it win the lawsuit. The legal filing is simply another step in its “vigorous defense of itself and its stakeholders," the company noted.

Other measures taken include multiple press releases decrying and refuting the claims made by the defendants, as well as an open rebuttal of claims made in a report in the New York Times by the company's chief executive officer, Remi Barbier.

In a statement, Connolly said the alleged disinformation campaign not only hurt Cassava but also “cast a permanent cloud over research being done to try to find a treatment for a terrible disease.” He noted that additional individuals could be named as defendants in this lawsuit, or in separate claims.