Shares of Cassava sciences (NASDAQ: SAVA) were down 5.3% at 11:05 a.m. ET on Monday, after falling as much as 19% earlier in the morning. The drop followed Friday’s federal indictment of Hoau-Yan Wang, a former adviser to Cassava.
Wang was accused of fraud in connection with grant applications to the U.S. National Institutes of Health (NIH) for work on Cassava’s experimental drug simufilam. These grants resulted in approximately $16 million being awarded from the NIH to Wang and Cassava between 2017 and 2021.
What does this mean for Cassava Sciences?
Cassava has disclosed that some government agencies have requested information and documents. The company has cooperated with this investigation. Cassava has not been accused of any wrongdoing at this time, although the biotech acknowledged in its more recent 10-K filing: “We cannot predict the outcome or impact of these ongoing matters, including whether any government agency will bring an enforcement action against us or others.”
In a public statement about the charges against Wang, Cassava did not reveal whether there had been any further contact with government authorities. However, the company emphasized in this statement that Wang and the medical school where he previously worked “had no involvement in the company’s Phase 3 clinical trials of simufilam.”
Are Cassava Sciences Stock a Bad News Buy?
I think investors are better off when it comes to Cassava Sciences. Even without the uncertainty associated with the recent indictment against Wang, there are plenty of other biotech stocks that offer better risk-reward ratios.
Should You Invest $1,000 In Cassava Sciences Now?
Consider the following before purchasing shares in Cassava Sciences:
The Motley Fool Stock Advisor team of analysts has just identified what they think is the 10 best stocks for investors to buy now… and Cassava Sciences wasn’t one of them. The ten stocks that made the cut could deliver monster returns in the years to come.
Think about when Nvidia made this list on April 15, 2005… if you had invested $1,000 at the time of our recommendation, you would have $757,001!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the performance of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns from June 24, 2024
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Cassava Sciences Stock Is Sinking Today was originally published by The Motley Fool
