On Tuesday, plaintiff Patricia Matranga filed a suit against the board of directors and upper management of Cassava Sciences, Inc in the Western District of Texas. The plaintiff is claiming that the board and its upper management had violated its fiduciary duties.
Cassava is a biotechnology corporation that develops drugs for neurodegenerative diseases and is based in Austin, Texas, according to the complaint.
The complaint states that “the individual defendants caused the company to submit manipulated data to the U.S Food and Drug Administration and made, or caused the company to make, materially false and misleading statements to the investing public.”
The plaintiff claims that some of the misleading statements were based on the data that the company had released concerning their drug simufilam’s effectiveness as a therapeutic product to combat Alzheimer’s disease.
According to the court documents, the defendant had manipulated the data to show that the drug was much more effective than it actually was. The plaintiff alleges that the truth had only come out once there was a citizen petition that suggested there was “a series of anomalies that are suggestive of systemic data manipulation and misrepresentation.”
The defendant originally defended itself from these claims by stating that they had used data provided to them by an independent company named Quanterix. Yet in the following days Quanterix released a statement that “Quanterix or its employees did not interpret the test results or prepare the data charts presented by Cassava at the Alzheimer’s Association International Conference in July 2021.”
The plaintiff suggests that the price per share for Cassava had fallen the following days after the citizen petition from $117.83 to $58.34 which had tarnished the reputation of the company and deceived the shareholders.
The defendant is facing four counts, violation of Section 14(a) of the Exchange Act, violation of Section 20(a) of the Exchange Act, breach of fiduciary duty, and unjust enrichment.
The plaintiff is being represented by Levi & Korsinsky, LLP.