CASSAVA SCIENCES INC

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The validity of aspects of ** the Company**’s Phase 2b Study has been called into question.

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The Company’s Phase 2b Study was designed as a 28-day, approximately 60-patient, randomized, double-blind, placebo-controlled, multiple dose study. A primary objective of the Phase 2b Study was to measure changes in levels of cerebral spinal fluid (“CSF”) biomarkers in study participants from baseline value to Day 28. CSF biomarker assays and related bioanalysis for the Phase 2b Study (the “CUNY Bioanalysis”) were conducted by the laboratory at CUNY of Dr. Hoau-Yan Wang, formerly a paid scientific collaborator, consultant and advisor to Cassava. Based on the CUNY Bioanalysis, Cassava reported statistically significant improvements in CSF biomarkers in treatment groups as compared to the placebo group for the Phase 2b Study.

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On June 28, 2024, the DOJ announced that a federal grand jury in the U.S. District Court for the District of Maryland returned an indictment of Dr. Wang alleging that he caused Cassava to submit grant applications to NIH that contained false and fraudulent representations about his research. Among other things, the indictment alleges that Dr. Wang made materially false, fraudulent, and misleading statements to NIH regarding the mechanism by which simufilam was designed to treat Alzheimer’s disease and the improvement of certain Alzheimer’s disease indicators in patients treated with simufilam, and that Dr. Wang manipulated or otherwise fabricated research results, including Western Blot images that he prepared.

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As part of the Internal Investigation being conducted by the Ad Hoc Investigation Committee of the Company’s Board of Directors, the Committee has evaluated information contained in the DOJ indictment of Dr. Wang as well as information from the Company’s discussions with the SEC. To date, the Internal Investigation has determined that certain statistical information contained in an attachment to an email sent by a former senior employee of Cassava to Dr. Wang before the CUNY Bioanalysis of CSF biomarkers was conducted could have been used to unblind him as to some number of Phase 2b Study participants. Unblinded information, if accessed in connection with bioanalysis, could be improperly utilized to manipulate underlying samples or data to skew reported results.

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The Internal Investigation has not, to date, determined, and may never be able to determine with any reasonable degree of certainty, whether Dr. Wang unblinded himself as to some number of Phase 2b Study participants. Nevertheless, the fact that Dr. Wang possessed information that could have been used to so unblind himself, together with the allegations in the DOJ indictment, undermine the blinded study design and create substantial uncertainty about the validity of the CUNY Bioanalysis of CSF biomarkers.

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In addition, another objective of the Phase 2b Study was to measure changes in cognitive outcome measures using the Cambridge Neuropsychological Test Automated Battery, or CANTAB, over the 28-day study period. In connection with our settlement with the SEC, the SEC’s complaint alleged, among other things, that disclosures relating to the Phase 2b Study’s cognition results (the “Cognition Disclosures”), which reported results from apost hoc sensitivity analysis, were inadequate and misleading.

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Accordingly, in light of the foregoing uncertainties and allegations, you should not rely on the CUNY Bioanalysis of CSF biomarkers reported by the Company in connection with the Phase 2b Study or the Cognition Disclosures from the Phase 2b Study. There can be no assurance that such uncertainties and allegations will not adversely impact the FDA’s review of an NDA with respect to simufilam following completion of our Phase 3 clinical studies or cause the FDA to request additional information regarding simufilam.

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We are subject to lawsuits and governmental investigations and inquiries.

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We are defending ourselves in a number of lawsuits, including securities class action and shareholder derivative actions, and the Company, as well as two former senior employees of the Company, have been and may continue to be subject to governmental investigations and inquiries. Defending litigation and responding to governmental investigations is expensive and time consuming and may divert the time and attention of our management away from the conduct of our primary business. Moreover, the allegations underlying such litigation and governmental investigations have damaged our business reputation, which may make it difficult to, among other things: raise capital or engage in a strategic transaction on acceptable terms or at all; hire and retain third-party consultants and collaborators; recruit and retain patients for our studies; and attract and retain qualified executive officers, other employees and directors. The foregoing matters may exacerbate other risks discussed in our Annual Report on Form 10-K under the Caption “Item 1A. Risk Factors” and have a negative impact on the perception of our company by investors, patients, investigators, collaborators, and others.

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As a result of current or future lawsuits, we may have to pay significant damages or amounts in settlement above insurance coverage, including amounts in respect of indemnification obligations of the Company to former officers and senior employees. An unfavorable outcome or prolonged litigation could materially and adversely impact our business, operating results, and financial condition, including our cash runway. In addition, current or future government investigations and inquiries could subject us to various sanctions, including significant penalties, our being prevented from receiving government grants, and other punitive measures.

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While we cannot estimate our potential exposure to future litigation, regulatory claims, investigations or proceedings at this time, we have already incurred significant expense related to litigation, government investigations and the Internal Investigation and expect to continue to incur significant expense.