Cassava Sciences Inc. has announced a significant agreement to resolve a previously filed consolidated securities class action lawsuit, committing to a payment of $31.25 million. This settlement aims to fully address all claims brought by investors who engaged in trading Cassava's common stock or options within the period spanning September 2020 to October 2023. The company emphasizes that this resolution does not constitute an admission of any wrongdoing on its part and has already allocated the entire settlement sum as a loss contingency in the second quarter of 2025, marking a crucial step towards putting this legal challenge behind them.
The lawsuit, initiated in 2021 in the U.S. District Court for the Western District of Texas, centered around allegations from investors. The agreed-upon settlement will cover these claims, pending judicial approval. The court will also determine whether other related securities cases filed later will be incorporated into this settlement. This move is seen as a strategic decision by Cassava Sciences to mitigate ongoing legal expenditures and redirect its focus and resources towards its core scientific endeavors.
Rick Barry, the President and CEO of Cassava Sciences, expressed satisfaction with the agreement, highlighting its importance in moving past a significant and long-standing legal matter. He noted that resolving this litigation allows the company to concentrate its efforts on the continued advancement of simufilam, particularly as a potential therapeutic option for TSC-related epilepsy. This focus is critical, especially after the company's decision earlier in the year to cease the development of simufilam for Alzheimer's disease.
Further underscoring confidence in the company's direction, a Form 4 filing in September revealed that CEO Rick Barry acquired 237,941 shares of Cassava stock at an average price of $2.25 each. This insider purchase by the chief executive conveyed a strong signal of belief in the company's future prospects, particularly following the earlier setback with the Alzheimer's drug development. At the close of the trading day preceding the announcement, Cassava Sciences shares experienced a slight decline, trading at $2.35, a 1.26% decrease in premarket activity.
The resolution of this class action lawsuit represents a pivotal moment for Cassava Sciences, allowing the biotechnology firm to reallocate its attention and financial capital. By settling this legal dispute, the company can now fully dedicate itself to its research and development pipeline, particularly the ongoing clinical trials for simufilam in treating TSC-related epilepsy. This strategic shift is expected to enhance investor confidence and provide a clearer path forward for the company's innovative therapeutic solutions.