Cassava Sciences (NASDAQ:SAVA) Inc., a pharmaceutical company specializing in preparations, announced today that it has settled a derivative lawsuit filed on behalf of the company. The case, originally opened on August 19, 2022, in the Delaware Court of Chancery, involved claims against certain officers and board members concerning the company's 2020 Cash Incentive Bonus Plan.
The Austin, Texas-based company, previously known as Pain Therapeutics Inc., disclosed in a recent 8-K filing that on May 28, 2024, all parties involved agreed to a Stipulation and Agreement of Settlement, Compromise, and Release to resolve the action. This agreement is pending final approval from the Delaware Court of Chancery.
The settlement terms, if approved, will result in the dismissal with prejudice of the lawsuit, which means it cannot be filed again. On June 26, 2024, the court issued a Scheduling Order and approved the Notice of Pendency of Settlement of Class and Derivative Action. A final settlement hearing is scheduled for September 9, 2024.
The Notice informs shareholders of the proposed settlement terms and conditions and provides information about the upcoming final hearing. Cassava Sciences, with its common stock and warrants listed on the Nasdaq Capital Market under the symbols SAVA and SAVAW respectively, has seen its warrants delisted following a redemption on May 7, 2024.
The filing is based on a press release statement.
In other recent news, Cassava Sciences reported a profitable first quarter, with a net income of $25 million, a significant turnaround from the previous year's net loss of $24.3 million. This positive financial outcome was attributed to changes in the fair value of warrant liabilities, despite increased costs linked to ongoing clinical trials for the Alzheimer's disease drug candidate, simufilam.
Furthermore, Cassava Sciences received a revised price target from H.C. Wainwright, raising the target to $131.00, up from the previous $124.00, following the company's first-quarter financial and operational results.
However, the company has been facing legal challenges, including the indictment of a former consultant, Dr. Hoau-Yan Wang, by a federal grand jury, as well as ongoing investigations by the Department of Justice and the Securities and Exchange Commission. This has led Jones Trading to downgrade the company's stock from Buy to Hold due to the uncertainties surrounding these legal issues.
In addition, Cassava Sciences is conducting two key studies, RETHINK-ALZ and REFOCUS-ALZ, with top-line results expected by the end of 2024 and mid-2025 respectively. These trials are critical milestones for the company as they progress in the development of simufilam.
These are recent developments that investors should be aware of as they navigate the current landscape of the company.
InvestingPro Insights
As Cassava Sciences Inc. navigates through its legal challenges and continues its clinical trials, investors are closely monitoring the company's financial health and stock performance. According to InvestingPro data, Cassava Sciences is currently operating with a market capitalization of $488.88 million. This reflects the market's valuation of the company despite recent legal and operational hurdles.
InvestingPro Tips highlight that while Cassava Sciences holds more cash than debt on its balance sheet, which could provide some financial stability, the company is quickly burning through cash. This is a crucial point for investors to consider, especially since the company is not anticipated to be profitable this year. Moreover, the stock's performance has been tumultuous, with a one-month price total return of -50.95% and a six-month price total return of -63.08%, indicating significant recent declines.
With a Price / Book ratio of 6.22 as of the last twelve months ending Q1 2024, the stock is trading at a high multiple, which may be a concern for value-oriented investors. Additionally, the company's lack of dividends could be a factor for those seeking income from their investments. For a more comprehensive analysis of Cassava Sciences, including additional InvestingPro Tips, investors can visit https://www.investing.com/pro/SAVA. There are 13 more InvestingPro Tips available, which could provide further insights into the company's performance and outlook.
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