Cassava Sciences Inc. (SAVA) announced Tuesday that it's closing the book on a messy chapter of litigation. The biotechnology company has reached a definitive settlement agreement for a consolidated securities class action that was originally filed back in 2021 in the U.S. District Court for the Western District of Texas.
The deal? Cassava will pay $31.25 million to fully resolve all claims tied to the lawsuit. The class includes investors who purchased Cassava common stock or call options, or sold put options, between September 14, 2020, and October 12, 2023, with certain exclusions applying. The court still needs to determine whether some later-filed securities cases will get folded into this settlement.
Here's the important part for anyone tracking the company's financials: Cassava already saw this coming. The biotech fully reserved the $31.25 million settlement amount as a loss contingency during the second quarter of 2025. And as is standard in these types of agreements, there's no admission of wrongdoing from Cassava's side.
Rick Barry, President and CEO of Cassava, struck an optimistic tone about moving forward. "We are pleased to announce that we have reached an agreement to resolve our most significant, legacy litigation," he said. "With this agreement, we can dedicate our attention and resources to the continued development of simufilam as a potential treatment for TSC-related epilepsy."
That epilepsy focus represents something of a pivot for Cassava. Earlier this year, the company made the difficult decision to discontinue development of simufilam for Alzheimer's disease after the drug flopped in Phase 3 trials. Now they're betting on a different indication for the same molecule.
Interestingly, CEO Barry has been putting his money where his mouth is. Back in September, a Form 4 filing revealed that he scooped up 237,941 shares at an average price of $2.25 each. That insider purchase came across as a confidence signal following the Alzheimer's program shutdown, suggesting management still sees potential in the company's repositioned strategy.
Cassava Sciences shares were trading down 1.26% at $2.35 during premarket hours on Monday.
