Meme Stock Cassava Peels Off $2.6 Billion After Data Challenges

(Bloomberg) — Cassava Sciences Inc. continued to decline Monday after an analyst suspended its review, saying the company’s flagship product, an experimental drug for Alzheimer’s disease, presented a “zealous challenge.”

Before pulling the plug on his rating, Cantor Fitzgerald’s Charles Duncan was the only analyst with a neutral rating for the stock. Four more analysts still recommend buying the stock, even after a rally fueled by the retail trader saw the stock rise more than seven times this year.

The Austin, Texas-based company did not respond to requests for comment.

The biotech company has lost more than 50% or $2.6 billion in a four-day plunge after a former Securities and Exchange Commission attorney representing an unnamed shortseller petitioned the Food and Drug Administration to suspend its trials. Discontinue Cassava’s drug, simufilam. The petition questioned the quality and integrity of research results for the drug intended to treat the brain-devouring disease.

“It will not be possible to properly investigate these allegations without non-public company records and raw data that we do not have access to,” Duncan wrote in his note to customers. “The data presented so far are provocative, but not yet conclusive, and therefore need to be replicated in a larger, longer study.”

Cassava fell as much as 13% on Monday. The company is expected to start a late-stage study later this year.

(Updates everywhere stocks.)

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