Cassava Sciences Shares Plunge After FDA Intervention

Cassava Sciences Inc. saw its stock price collapse by nearly 24% in a single trading session following a significant regulatory setback. The U.S. Food and Drug Administration (FDA) has placed a clinical hold on a key company study, halting its progress and sending shockwaves through the market. This development deals a major blow to the biotechnology firm, which is already navigating a sensitive period after winding down its Alzheimer's disease program.

The sell-off was triggered by the company's receipt of an official FDA notice concerning its planned Phase 2 trial. The study aimed to evaluate the drug candidate simufilam for the treatment of epilepsy associated with Tuberous Sclerosis Complex (TSC). Regulators have imposed a clinical hold, demanding additional preclinical data and specific modifications to the trial protocol before the study can proceed.

Trading on Friday, December 19, turned volatile. Shares, which had previously closed at $2.85, plummeted to an intraday low of $2.10 before settling at $2.17. This represents a one-day decline of 23.9%. Investor activity surged, with over 4.7 million shares changing hands—more than four times the average daily volume. The company's market capitalization eroded to approximately $104.8 million.

Strategic Implications of the Clinical Hold

This regulatory action strikes at the heart of Cassava Sciences' revised strategy. With its extensive Alzheimer's program terminated in early 2025, the company had pivoted to focus simufilam's development on rare neurological disorders. The TSC-related epilepsy trial was viewed as the primary catalyst for future growth.

Should investors sell immediately? Or is it worth buying Cassava Sciences?

The FDA's requirements are multifaceted. The agency is seeking further validation data on simufilam's mechanism of action. It has also flagged specific elements within the study design that must be addressed to ensure patient safety and data integrity. Consequently, the previously announced timeline is now obsolete. Company management has confirmed that the trial will not commence in the first half of 2026 as initially planned.

Cassava Sciences stated it intends to address the FDA's concerns "expeditiously," but did not provide a concrete timeline for resubmission.

A Challenging Path Forward

The technical picture for Cassava Sciences remains precarious as the new week begins. The stock has broken through several critical support levels and now trades well below its 50-day moving average of $3.28.

Moving forward, market participants will monitor several key areas:

• Regulatory Dialogue: Any formal updates regarding the company's comprehensive response to the FDA's clinical hold will be scrutinized.
• Financial Runway: According to its third-quarter report, the company holds cash and equivalents of about $106 million. This liquidity provides an operational buffer, but the absence of an active clinical trial poses a fundamental challenge to its valuation.
• Insider Sentiment: Investors will watch for any signals of confidence from company executives, such as share purchases following the steep decline.