Q3 2024 Cassava Sciences Inc Earnings Call

November 7, 2024

I'm reassured about a couple of things.

Given the scrutiny this company has been under, you can expect that we will measure twice and cut once before we report our results.

We will be especially careful to be sure that what we report is accurate to the best of our ability. Also, we will report our data to you whether it is good, bad, or ambiguous.

Last week, a team of us from CASAVA attended the Clinical Trials for Alzheimer's Disease or CTAD conference in Madrid.

First, I have to tell you how impressed I am by our climate team, which is headed by Dr. Kupiec.

If you aren't aware, Jim is a highly respected member of the Alzheimer's research community, having led Pfizer's neuroscience group for many years, and he has surrounded himself with a team of professionals who are cut from the same dedicated cloth.

Jim and his team have assembled a virtual all-star team of private investigators for our Phase 3 program.

I had the privilege to meet many of the principal investigators from our Phase III program as well as the people who ran the operation of their sites.

Many of the investigators are considered the best in their business.

The many doctors I met decided to participate in our trials because they made their own assessment of Cimefilum and they believed that, based on its hypothesized mechanism of action, the drug had a reasonable chance of working.

If the trials are successful, they know it would make a difference in the lives of their patients.

These doctors live for innovation in Alzheimer's drug discovery, and they want to be involved with something that could make a real difference. They know better than anyone that there is no sure thing in Alzheimer's.

But they believed the drug needed to be studied.

Additionally, I believe they chose to be involved because of the trust they have in Jim and his remarkable team.

I am really proud to be associated with this team, and I'm truly grateful to these courageous doctors who have given Simophilum the opportunity to demonstrate its potential by participating in our trials when it would have been so much easier to have just said no.

We witnessed a lot of very interesting presentations at CTAC last week, but there are a few that I want to focus on.

You may recall that in our last call, Jim Kupiec spoke of what he calls the biomarker revolution in Alzheimer's disease.

There's been an explosion of innovation in plasma and cerebral spinal fluid biomarkers over the last several years.

We now find ourselves at a point where commercially available plasma biomarker tests are demonstrating an extremely high correlation with amyloid beta positivity in the brain as measured by CSF or PET scans.

Neuroscientists believe that the presence of amyloid beta is one of the key hallmarks of Alzheimer's.

Research indicates that a patient with amyloid beta and clinical symptoms has Alzheimer's or, if asymptomatic, is clearly at a high risk of developing the disease.

One CTAD presentation reported data from biomarker assays developed by companies such as Eli Lilly, Fuji Rebio, and C2n Diagnostics.

All three showed positive predictive values. That is, the probability of a person that a person has the disease, given a positive test result, of over 90%.

I think you'll agree that sure beats a post-mortem analysis.

Why am I bringing this up?

because these types of tools have the power to change the way medicine is practiced, specifically with respect to the Alzheimer's patient journey.

Speaker Change: You may recall last quarter that I mentioned Cassava's planning for success. I specifically told you we were significantly expanding our manufacturing capabilities, including ramping up our active pharmaceutical ingredient production.

Those activities are being informed by a commercial plan that we've been developing with the help of an experienced industry consultant. I'd like to share with you some of the things that we're thinking about and just beginning to map out.

Before I do that, however, you need to understand that I'm not about to give you forecasts. We do not know how the trials will read out, and I'm not trying to hint that we know we're going to be successful. We do not.

I'm just describing our vision of the potential opportunity, how we could focus on commercial efforts on that opportunity, and what the market could look like.

We all know that up until recently, physicians have had very few tools to diagnose and treat people with Alzheimer's.

Colon esterase inhibitors are still widely prescribed, even though they are not disease-modifying.

Some doctors are prescribing the recently approved monoclonal antibody-based drugs from Lilly and Esai. Although these new drugs have demonstrated disease-modifying capabilities, they have their own well-known limitations.

The primary care physician is typically the first to diagnose or suspect Alzheimer's.

In fact, research tells us that 85% of patients get their initial diagnosis from the PCP, but quite often diagnosis is delayed until a patient is in the moderate and advanced stages of the disease, due to many factors, including diagnostic uncertainty.

Some PCPs don't feel adequately trained to determine a definitive diagnosis.

Doctors also struggle with time constraints, stigma, and fear of causing the patient emotional distress, especially when treatment options are so limited.

We envision a world where that PCP does have a treatment option that is superior to cholinesterase inhibitors and doesn't come with the challenges posed by the new monoclonal antibody-based drugs.

If that option is twice a day, more oral medication with an excellent safety profile, the PCP would be in a much better position to treat his or her patient.

Now, couple that treatment with a readily available, cost-effective, and accurate plasma biomarker diagnostic assay, and PCPs can actually diagnose and treat their patients.

I'll see you later.

Reimagine the number of moments we can preserve if we can accelerate the point at which treatment is initiated by preparing PCPs for this revolutionary opportunity.

Speaker Change: If we can realize our vision, the doctor could have high confidence in making a diagnosis and then prescribe a drug that is convenient, safe, and effective.

What does the market look like?

But we also know that the disease is underdiagnosed.

Speaker Change: We know that half the diagnosed Alzheimer's patients are considered to be mild.

Our research tells us that 1.2 million Alzheimer's patients are diagnosed in the U.S. each year, but only about 55% of Alzheimer's patients are treated with a prescription drug approved for the disease.

Speaker Change: I want you to reimagine Alzheimer's disease treatment possibilities should Simifilm's approval become a reality.

Speaker Change: Simofilam is potentially a first-of-a-kind, disease-modifying, specialty-like treatment that could be prescribed by a PCP. This is the scenario for which we are planning if our Phase III trials are successful.

even if Simithone is successful.

It may still take more time than we would prefer before physicians become comfortable using biomarkers like P-Tau 217 to diagnose their patients.

We understand that it will take brilliant execution on our part, even if Simifilm shows the kind of results we would all like to see.

We are up for the challenge.

and if the past few months have proven anything about it.

is that this team doesn't shy away from challenging situations.

We lean in and we work our way through them.

Speaker Change: Our North Star is to be on the front lines of transforming the way this disease is diagnosed and treated so that the patients can experience the moments they deserve with their loved ones.

Speaker Change: Well, thank you for indulging the vision that motivates all of us at Cassava.

I'd now like to turn the call over to Eric Schoen, who will provide you with a financial update.

Eric Schoen: Thanks Rick. Let's start with our cash and cash equivalents. We ended the September quarter with a hundred and forty nine million in cash.

Eric Schoen: That balance is expected to be sufficient for operations through the conclusion of both ongoing phase 3 trials and into calendar 2026.

Eric Schoen: Separate from the 149 million of cash is 40 million of restricted cash. That is a new and temporary line on our balance sheet.

Eric Schoen: That bucket is being held in an escrow account for the sole purpose of satisfying the monetary penalty as part of our settlement with the Securities and Exchange Commission that we announced in September.

Eric Schoen: That settlement is still subject to approval by the U.S. District Court, after which the escrow account will be released to the SEC. We don't anticipate any issues with court approval.

On the spending side of the equation, net cash used in operations during the nine months ended September 30th was $55.7 million, or roughly $18.5 million each quarter.

Eric Schoen: Net cash use in operations for the second half of 2024 is expected to be between $80 million and $90 million.

This is consistent with our previous guidance.

That estimate includes the $40 million settlement I just referenced.

Eric Schoen: Considering this spending level, we believe we will end the year with between $117 to $127 million in cash. That is the same amount as guided to in our last quarterly call. No change.

Now on to our profit and loss for the quarter.

Eric Schoen: Our net loss was $27.9 million, or $0.58 per share, in Q3, compared to a net loss of $25.7 million, or $0.61 per share, for the same period in 2023.

Research and development expenses for Q3 were $17.7 million.

Eric Schoen: This compared to $23.6 million for the same period last year.

Eric Schoen: R&D expenses are naturally decreasing as more and more patients complete the Phase 3 studies and roll over into the lower-cost open-label study.

Eric Schoen: General and administrative expense for Q3 were $12.9 million compared to $4.3 million for the same quarter last year.

Eric Schoen: The significant increase was due primarily to higher legal-related expenses, which were partially offset by insurance recoveries.

Eric Schoen: Increased compensation costs, including severance costs, as well as an increase in stock-based compensation expense due to new awards granted in late 2023 and 2024.

Now I'll turn it back to Rick.

Thank you, Eric.

Okay. Operator, could you please open the line for questions?

and Richard Barry. Thank you.

Speaker Change: Thank you. At this time, we will be conducting a question and answer session. For those of you on your telephone lines, to ask a question, you may press star, then 1 on your touchtone telephone.

Speaker Change: If you are using a speakerphone, please flick up your headset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster.

Thank you. Bye.

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Our first question comes from Vernon Bernardino from HC Wainwright.

Please go ahead.

Speaker Change: Hi, good morning and thanks for taking my question. Congratulations on the progress. Looking forward to those top-line results.

The only question I really had is something that

Speaker Change: has been developing. I was just wondering if I could get an update on status. And that is the status of Salva DX. One thing that would be important for SmithLamb's success would be the biomarker.

Eric Schoen: Diagnostic results, as you mentioned, obviously p-tau is something that can be used for a biomarker, but I was wondering if you could give us an update on salva-dx.

Sure. Thanks, Vernon.

Vernon: Hi Rick. You know in a world where the diagnostic tools are becoming so good particularly as P-Tau 217

We wonder where SavaDX is going to fit into that.

Vernon: That doesn't mean we're not going to pursue it. We will. But, you know, we're a small company with limited resources.

Vernon: and there are other ways that we could spend our money, such as looking at additional indications for Simothelin.

Vernon: And so there's a lot to think about once we have results. How do we want to allocate our capital? Do we want to put it into a diagnostic that may be an improvement over some of the diagnostics that are out there? Or do we want to pursue other indications?

That's the best answer I can give you.

Speaker Change: Perfect and as a follow-up I was wondering again what kind of detail will you be providing in the top-line results before year-end as far as biomarkers are concerned?

Speaker Change: So in the biomarkers we will be measuring p-tau 217, NFL, GSAPP,

Total Tau

and I think that's it.

Vernon: So just and this is remembering we talked about this in the second trial we have a lot more

Vernon: There's more patients, there's some CFF analysis, and there's also imaging analysis.

Speaker Change: and can you remind us the time points at which these in the phase 3 are being measured

from Baseline to last visit.

Thank you.

baseline and last visit only.

Speaker Change: I believe so. I mean I could get back to you. There might have been an interim analysis, not analysis, there might have been an interim draw, but I have it in my head that it was the baseline and finish.

Speaker Change: Great. Thanks for taking my question. Looking forward to the results as I mentioned. Okay. We are too. Thanks.

Thank you. Next question comes from Elmar Piros from Rotman.

Please go ahead.

Elmar Piros: Yes, good morning. What I'd like to verify, Rick, is that the Statistical Analysis Plan has been locked down with the FDA, and maybe a part of that question is,

Vernon: you're talking about the ADOS-COG and the ADL as co-primary endpoints. Would both of those or either of those would have to hit for success? And obviously there is a different...

Vernon: statistical treatment of either of those or both of those scenarios. If you could elaborate, please.

Sure. Thanks, Elmer, and thanks for the questions.

Speaker Change: You know, there's been this, I don't know, misunderstanding about the SAP and just to make it clear

Vernon: So we submitted a statistical analysis plan to the FDA, and you submit this to get their comments.

and they gave us some comments which are relatively minor.

Vernon: Now, we would be not very clever if we didn't take their comments into account and incorporate them in our plan. But we took their comments, we went back to Pentara.

and put their comments in, had Pentaro make some changes.

Vernon: and then the important thing is that you have to sign the SAP before you lock your database and we've done that.

Vernon: As far as the endpoints of the trial, we have two primary endpoints, as you know. It's AIDS COG 12, and it's activities of daily living.

and our

Vernon: Our SPA with FDA says we have to hit on both in order to call the trial successful.

Vernon: and they'll be, you know, there are secondary endpoints, etc., but, you know.

they matter a lot less than hitting the primaries.

Speaker Change: and Rick, the integrated endpoint of IARDS, is that out of the picture or is that relegated to as a secondary endpoint?

Yeah, good question. It's a secondary endpoint.

Speaker Change: Okay. Now, is there a pre-set analysis of mild A.D. patients only? And if you have to go to that sort of analysis, how does the statistics work there?

Speaker Change: There is. We are expecting to have an analysis of mild patients as well as moderate and then, you know, the combined.

Speaker Change: So, I think as you know, roughly 70% of the patients were mild in this trial, the rest were moderates.

Speaker Change: Phosphatau 181, and you mentioned that you'll provide analysis of Phosphatau 217.

as how it may change due to treatment.

Speaker Change: us understand whether I'm correct in assuming that and what's the significance of one versus the other. Has the field evolved into looking at HOSOTAU-217 as more prominent biomarker?

Elmar Piros: Yeah, you got it Elmer. It's when we started the trial, I think the scientific community with respect to Alzheimer's leaned towards the PTAL 181 as a better biomarker, but here we are three plus years later and I can tell you being at the conference last week

Speaker Change: Yeah, people still talk a bit about 181, it's a pretty good tool, but 217 is what everybody in Alzheimer's is focused on right now. So I don't know, I think we're measuring 181 at the end of the trial as well, so, but it's not...

Speaker Change: I don't think it's going to be that important of a biomarker.

Speaker Change: clean and set up for the analysis plan at this stage.

Speaker Change: I can't blame you for asking the question. It's a great one. We don't want to go there.

So it's still by year end.

By ear, definitely.

Speaker Change: Okay, looking forward to it. Thank you very much, Rick. Thank you, and thanks for the questions.

Thanks. Our next question comes from Matthew Machtrup.

Please go ahead.

Thanks for bringing me on the call.

Speaker Change: What I wanted to talk about is, you know, as I've studied the phase 2 and placebo results of hundreds of AD studies, I believe that hopefully we'll repeat that in phase 3.

and show significant improvement for ADAS Cog 12.

Speaker Change: But I'm also considering a scenario of phase 3 results showing that mild significantly improved but an underperformance of moderate and potentially resulting in the population missing statistical significance. I have two questions kind of related to that.

Speaker Change: How are you thinking the company would navigate a subset of patients performing great with the FDA and taking the drug to market?

Speaker Change: if it's the milds only that are significant. And then the second question I have is, many families are reaching out to me asking when they'll get access to the drug in the US and around the world.

Speaker Change: And if the drug does perform, what's your upper level thought on when you think the drug could hit the market in the U.S. and around the world?

Very good question, Pat.

Speaker Change: So, with respect to the potential results, and, you know, we're all speculating.

Speaker Change: Well, I guess the overarching thing is we don't want to rely on subgroup analysis. However, if we showed statistical significance in mild patients and for some reason we miss our primary endpoints because of the moderates,

Speaker Change: we would have an interesting choice to make with respect to our refocus trial.

because we would have the capability to go back to...

Speaker Change: We'd have the capability to revise our statistical analysis plan and resubmit the FDA to make the second trial, you know, put more of the alpha on the miles. That would be a really big decision to do it.

So, you know, with respect to subgroups...

and I've spoken to a few investors about this.

Speaker Change: What we won't do is we're not going to pick out, you know, some niche group that seem to perform really well based on the drug and then, you know, try to convince investors that we're going to take that one over the goal line.

Speaker Change: That's just not a winning argument, but if you, you know, if you do have 70% of your trial with statistical significance and showing, you know, great results and mild, but it's the moderates that have, you know, killed your primary endpoint.

Speaker Change: that's a different story and we'd have to go and talk to the agency about that so I I wouldn't think that that situation is hopeless but it's all going to depend on the data and what how the how the agency responds to it

Speaker Change: The second question about when will it be available for a good one.

You know, we're kind of thinking...

Speaker Change: In all likelihood, it would be late summer, early fall would be an optimistic. I'm sorry, late summer, early fall of 2026, not next year. Eric, just the heart attack that he was just about to have. Let's do it.

Speaker Change: but you know it's there's a lot that depends on that and but I think that's a realistic target to get to market.

Speaker Change: you could make some really aggressive assumptions that I don't think I would necessarily make to get maybe a few months off that but that's that's probably the right ballpark.

Speaker Change: I'd like another question if you don't mind. Can you elaborate a little bit on what other indications you guys think there is the most potential of potential impact from semiphilum and and how you might prioritize which indications you would pursue?

Speaker Change: after, you know, after you get past this is phase three for Alzheimer's.

Speaker Change: Well, I don't want to go into too much detail. I mean, there's a lot of theoreticals.

Speaker Change: There is one indication that, you know, I think most people who know the company pretty well are aware of, and that is there was a study done by a professor at Yale which was really a pretty fascinating study where she took our drug

Speaker Change: and built an animal model based upon tuberous sclerosis, the childhood epilepsy part of it.

Speaker Change: You get an answer pretty quickly. I don't want to say that we're doing that, but that would be kind of a logical place for us to go next. We have some things that we've got to work out, but we're working on them.

Speaker Change: I know the resources are strapped but is this something that you guys are able to do some initial groundwork on?

Speaker Change: now or in the recent past like on these different indications?

to just kind of get the process started.

Speaker Change: Well, we can with the one I was just talking about.

The others, no. It's more theoretical.

Okay, thank you very much.

Okay. Thank you, Matt.

Speaker Change: Thank you. This was the last question. I will now turn back to Rick Barry for closing remarks. Please go ahead.

Thanks. Well, we really appreciate you joining the call today.

Speaker Change: We do, to repeat, expect to announce our top-line Phase III results before the end of 2024.

Speaker Change: And we really look forward to sharing them when they're available. Thanks so much for listening.

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Speaker Change: Ladies and gentlemen, welcome to Kassava Science Report for the third quarter 2024.

At this time, all participants are in a listen-only mode.

A question and answer session will follow the formal presentation.

As a reminder, this audio webcast is being recorded.

Speaker Change: During this call and the question and answer session afterwards, representatives of Kasseler Science may make what are known as forward-looking statements. A forward-looking statement is one that is not a historical fact.

Speaker Change: Forward-looking statements are not guarantees and they involve risks, uncertainties and assumptions.

Speaker Change: Such statements represent current expectations or beliefs concerning future events or future performance.

Speaker Change: Forward-looking statements are predictions only based upon information currently available to the company.

Speaker Change: Actual events or results could differ materially from those made in any forward-looking statement due to a number of factors, risks and uncertainties.

Speaker Change: Please refer to Karthofer Science's recent fillings with the SEC including Forms 10k and 10q for description of the factors that could cause the events or results to differ much earlier from those made in forward-looking statements.

Speaker Change: Importantly, this conference call contains time-sensitive information that is accurate only as of the date of the live webcast, November 7, 2024.

Speaker Change: Except as required by law, the company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this webcast.

Speaker Change: It's now my pleasure to turn today's meeting over to Rick Barry, President and Chief Executive Officer. The floor is yours.

Rick Barry: Well, thank you, Melo, for the introduction. Good morning, everyone, and thank you for joining us.

With me today is Chris Cook, our Swiss Army knife.

and also our general counsel.

Speaker Change: Schoen, as well as Eric Schoen, who I think of as the Chancellor of the Exchequer.

also known as our Chief Financial Officer.

Speaker Change: Dr. Jim Kupiec, our Chief Medical Officer and the star of the August Investor Call, will not be able to join us today.

Speaker Change: As you know, we announced the last patient last visit of our first phase 3 trial, RETHINK-ALZ, several weeks ago.

Database cleanup is ongoing.

Speaker Change: This is a routine process that takes place at the end of every clinical trial. The purpose is to ensure the accuracy of all information in the database before it is locked and the statistical analysis begins.

Speaker Change: We expect to announce the top-line results of the trial before the end of this year.

This is an exciting time for us.

Speaker Change: We remain optimistic that we will see promising data that could ultimately lead to a best-in-class treatment for Alzheimer's.

Speaker Change: There really isn't much more we can say about the trial until our data are unblinded and revealed to us by our biostatisticians at Pentara Corporation.

We look forward to sharing our data with you.

Speaker Change: As a reminder, we expect to report our biomarker data from a subset of patients from the RETHINK study at the same time as our cognition data.

Speaker Change: This will involve approximately 100 patients and provide plasma biomarker results for p-tau 217, neurofilament light chain, otherwise known as NFL, glial fibrillary acidic protein, known as GFAP, and total tau.

Speaker Change: I want you to be reassured about a couple of things.

Speaker Change: Given the scrutiny this company has been under, you can expect that we will measure twice and cut once before we report our results.

Speaker Change: We will be especially careful to be sure that what we report is accurate to the best of our ability.

Speaker Change: Also, we will report our data to you, whether it is good, bad, or ambiguous.

Speaker Change: Last week, a team of us from CASAVA attended the Clinical Trials for Alzheimer's Disease, or CTAD, conference in Madrid.

Speaker Change: First, I have to tell you how impressed I am by our clinical team, which is headed by Dr. Kupiec.

Speaker Change: If you aren't aware, Jim is a highly respected member of the Alzheimer's research community, having led Pfizer's neuroscience group for many years, and he has surrounded himself with a team of professionals who are cut from the same dedicated cloth.

Jim and his team have assembled a virtual all-star team.

of private investigators for our phase three program.

Speaker Change: I had the privilege to meet many of the principal investigators from our Phase III program as well as the people who ran the operation of their sites.

Speaker Change: Many of the investigators are considered the best in their business.

Speaker Change: These are the same investigators who were also involved, for example, in the successful trials for Eli Lilly's Bananamab and Esai's Lincanamab.

Speaker Change: The many doctors I met decided to participate in our trials because they made their own assessment of Simophilum and they believed that, based on its hypothesized mechanism of action, the drug had a reasonable chance of working.

If the trials are successful,

Speaker Change: They know it would make a difference in the lives of their patients.

Speaker Change: These doctors live for innovation in Alzheimer's drug discovery, and they want to be involved with something that could make a real difference.

Speaker Change: They know better than anyone that there is no sure thing in Alzheimer's.

but they believed the drug needed to be studied.

Speaker Change: Additionally, I believe they chose to be involved because of the trust they have in Jim and his remarkable team.

I am really proud to be associated with this team.

Speaker Change: and I'm truly grateful to these courageous doctors who have given Simophilum the opportunity to demonstrate its potential by participating in our trials when it would have been so much easier to have just said no.

Speaker Change: We witnessed a lot of very interesting presentations at CTAD last week.

Speaker Change: Schoen, Richard Barry Schoen, James Kupiec, Richard Barry Schoen, James Kupiec, Richard

Speaker Change: You may recall that in our last call, Jim Kupiec spoke of what he calls the biomarker revolution in Alzheimer's disease.

Speaker Change: There's been an explosion of innovation in plasma and cerebral spinal fluid biomarkers over the last several years.

Speaker Change: We now find ourselves at a point where commercially available plasma biomarker tests are demonstrating an extremely high correlation with amyloid beta positivity in the brain, as measured by CSF or PET scans.

Speaker Change: Neuroscientists believe that the presence of amyloid beta is one of the key hallmarks of Alzheimer's.

Speaker Change: Research indicates that a patient with amyloid beta and clinical symptoms has Alzheimer's or, if asymptomatic, is clearly at a high risk of developing the disease.

Speaker Change: One CTAD presentation reported data from biomarker assays developed by companies such as Eli Lilly, Fuji Rebio, and C2n Diagnostics.

All three showed positive predictive values.

That is, the probability of a person that...

Speaker Change: that a person has the disease given a positive test result.

of over 90 percent.

I think you'll agree that sure beats a post-mortem analysis.

Why am I bringing this up?

because these types of tools have the

specifically, with respect to the Alzheimer's patient journey.

Speaker Change: Those activities are being informed by a commercial plan that we've been developing with the help of an experienced industry consultant. I'd like to share with you some of the things that we're thinking about and just beginning to map out.

Speaker Change: Before I do that, however, you need to understand that I'm not about to give you forecasts.

Speaker Change: We do not know how the trials will read out, and I'm not trying to hint that we know we're going to be successful. We do not.

Speaker Change: I'm just describing our vision of the potential opportunity, how we could focus on commercial efforts on that opportunity, and what the market could look like.

Speaker Change: We all know that up until recently, physicians have had very few tools to diagnose and treat people with Alzheimer's.

Speaker Change: Colon esterase inhibitors are still widely prescribed even though they are not disease modifying.

Speaker Change: Some doctors are prescribing the recently approved monoclonal antibody based drugs from Lilly and Esai.

Speaker Change: Although these new drugs have demonstrated disease-modifying capabilities, they have their own well-known limitations.

Speaker Change: The primary care physician is typically the first to diagnose or suspect Alzheimer's.

Speaker Change: To date, these doctors have had few options at hand to help their patients.

Speaker Change: In fact, research tells us that 85% of patients get their initial diagnosis from the PCP, but quite often diagnosis is delayed until a patient is in the moderate and advanced stages of the disease.

due to many factors, including diagnostic uncertainty.

Speaker Change: Some PCPs don't feel adequately trained to determine a definitive diagnosis.

Speaker Change: Doctors also struggle with time patient emotional distress, especially when treatment options are so limited.

Speaker Change: and doesn't come with the challenges posed by the new monoclonal antibody-based drugs.

Speaker Change: If that option is twice a day, more oral medication with an excellent safety profile,

Speaker Change: the PCP would be in a much better position to treat his or her patient.

Speaker Change: Now, couple that treatment with a readily available, cost-effective, and accurate plasma biomarker diagnostic assay, and PCPs can actually diagnose and treat their patients.

Speaker Change: Reimagine the number of moments we can preserve if we can accelerate the point at which treatment is initiated by preparing PCPs for this revolutionary opportunity.

Speaker Change: If we can realize our vision, the doctor could have high confidence in making a diagnosis and then prescribe a drug that is convenient, safe, and effective.

What does the market look like?

But we also know that the disease is underdiagnosed.

Speaker Change: We know that half the diagnosed Alzheimer's patients are considered to be mild.

Speaker Change: Our research tells us that 1.2 million Alzheimer's patients are diagnosed in the U.S. each year, but only about 55% of Alzheimer's patients are treated with a prescription drug approved for the disease.

Speaker Change: I want you to reimagine Alzheimer's disease treatment possibilities should Simifilm's approval become a reality.

Speaker Change: Simofilam is potentially a first-of-a-kind, disease-modifying, specialty-like treatment that could be prescribed by a PCP.

Speaker Change: This is the scenario for which we are planning if our Phase 3 trials are successful.

even if Simithone is successful.

Speaker Change: It may still take more time than we would prefer before physicians become comfortable using biomarkers like P-Tau 217 to diagnose their patients.

Speaker Change: We understand that it will take brilliant execution on our part, even if Simophilum shows the kind of results we would all like to see.

We are up for the challenge.

Speaker Change: and if the past few months have proven anything about it.

is that this team doesn't shy away from challenging situations.

We lean in and we work our way through them.

Speaker Change: Well, thank you for indulging the vision that motivates all of us at Cassava.

Thanks, Rick.

Speaker Change: Let's start with our cash and cash equivalents. We ended the September quarter with $149 million in cash.

Speaker Change: That balance is expected to be sufficient for operations through the conclusion of both ongoing Phase III trials and into calendar 2026.

Speaker Change: Separate from the 149 million of cash is 40 million of restricted cash. That is a new and temporary line on our balance sheet.

Speaker Change: That bucket is being held in an escrow account for the sole purpose of satisfying the monetary penalty as part of our settlement with the Securities and Exchange Commission that we announced in September.

Speaker Change: That settlement is still subject to approval by the U.S. District Court, after which the escrow account will be released to the SEC.

We don't anticipate any issues with court approval.

Speaker Change: On the spending side of the equation, net cash used in operations during the nine months ended September 30th was $55.7 million, or roughly $18.5 million each quarter.

Speaker Change: Net cash use in operations for the second half of 2024 is expected to be between $80 million and $90 million.

This is consistent with our previous guidance.

That estimate includes the $40 million settlement I just referenced.

Speaker Change: Considering this spending level we will believe we will end the year with between a hundred and seventeen to a hundred and twenty seven million in cash. That is the same amount as guided to in our last quarterly call. No change.

Now on to our profit and loss for the quarter.

Speaker Change: Our net loss was $27.9 million, or $0.58 per share, in Q3, compared to a net loss of $25.7 million, or $0.61 per share, for the same period in 2023.

Research and development expenses for Q3 were $17.7 million.

Speaker Change: This compared to $23.6 million for the same period last year.

Speaker Change: R&D expenses are naturally decreasing as more and more patients complete the Phase 3 studies and roll over into the lower-cost open-label study.

Speaker Change: General and administrative expense for Q3 were $12.9 million compared to $4.3 million for the same quarter last year.

Speaker Change: The significant increase was due primarily to higher legal-related expenses, which were partially offset by insurance recoveries.

Speaker Change: Increased compensation costs, including severance costs, as well as an increase in stock-based compensation expense due to new awards granted in late 2023 and 2024.

Now I'll turn it back to Rick.

Thank you, Eric.

Okay. Operator, could you please open the line for questions?

and Richard Barry. Thank you.

Speaker Change: If you are using a speakerphone, please pick up your headset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster.

Our first question comes from Vernon Bernardino from HC Wainwright.

Please go ahead.

Speaker Change: Good morning and thanks for taking my question. Congratulations on the progress. Looking forward to those top-line results.

The only question I really had is something that

Speaker Change: has been developing, and I was just wondering if I could get an update on status. And that is the status of Salva DX. One thing that would be important for SmithLamb's success would be the biomarker.

Speaker Change: diagnostic results, as you mentioned. Obviously, P-tau is something that can be used for a biomarker, but I was wondering if you could give us an update on SAVA-Dx.

Sure, thanks Vernon.

Speaker Change: Hi Rick. You know, in a world where the diagnostic tools are becoming so good, particularly as PTAL 217,

We wonder where SavaDX is going to fit into that.

Speaker Change: That doesn't mean we're not going to pursue it, we will, but you know we're a small company with limited resources.

Speaker Change: and there are other ways that we could spend our money, such as looking at additional indications for Simothelium.

Speaker Change: And so there's a lot to think about once we have results. How do we want to allocate our capital? Do we want to put it into a diagnostic that may be an improvement over some of the diagnostics that are out there? Or do we want to pursue other indications?

That's the best answer I can give you.

Speaker Change: Perfect and as a follow-up I was wondering again what kind of detail will you be providing in the top-line results before year-end as far as biomarkers are concerned?

Speaker Change: So in the biomarkers we will be measuring PTAU 217, NSL, GSAP,

Total Tau

and I think that's it.

Speaker Change: So just and this is remembering talked about this in the second trial we have a lot more

Speaker Change: There's more patients, there's some CFF analysis, and there's also imaging analysis.

Speaker Change: and can you remind us the time points at which these in the phase 3 are being measured

from Baseline to last visit.

baseline and last visit only.

Speaker Change: I believe so I mean I could get back to you there might have been an interim analysis, not analysis, there might have been an interim draw but I have it in my head that it was the baseline and finish.

Speaker Change: Great. Thanks for taking my question. Looking forward to the results as I mentioned. Okay. We are too. Thanks.

Thank you. Next question comes from Elmar Piros from Rotman.

Please go ahead.

Elmar Piros: Yes, good morning. What I'd like to verify, Rick, is that a statistical analysis plan has been locked down with the FDA, and maybe a part of that question is,

Elmar Piros: you're talking about the ADAS-CoG and the ADL as co-primary endpoints. Would both of those or either of those would have to hit for success?

and obviously there is a difference.

Speaker Change: statistical treatment of either of those or both of those scenarios.

Make sure you go to your library, please.

Sure. Thanks, Elmer, and thanks for the questions.

Speaker Change: you know there's been this I don't know misunderstanding about the SAP and just to make it clear

Speaker Change: So we submitted a statistical analysis plan to the FDA, and you submit this to get their comments.

and they gave us some comments which are relatively minor.

Speaker Change: Now, we would be not very clever if we didn't take their comments into account and incorporate them in our plan. But we took their comments, we went back to Pentara.

Speaker Change: put their comments in, had Pentera make some changes, and then the important thing is that you have to sign the SAP before you lock your database. And we've done that.

Speaker Change: As far as the endpoints of the trial, we have two primary endpoints, as you know. It's ADIS-Cog 12 and it's activities of daily living.

Speaker Change: Our SPA with FDA says we have to hit on both in order to call the trial successful.

Speaker Change: and they'll be, you know, there are secondary endpoints, et cetera, but, you know.

they matter a lot less than hitting the primaries.

Speaker Change: And Rick, the integrated endpoint of IARDS, is that out of the picture or is that relegated to as a secondary endpoint?

Yeah, good question. It's a secondary endpoint.

Speaker Change: Okay. Now, is there a pre-set analysis of mild A.D. patients only? And if you have to go to that sort of analysis, how does the statistics work there?

Speaker Change: There is. We are expecting to have an analysis of mild patients as well as moderate and then, you know, the combined.

Speaker Change: So, I think as you know, roughly 70% of the patients were mild in this trial, the rest were moderates.

Speaker Change: Okay, and just one clarification of the phospho-tau measurement, I think the enrollment criteria was using phospho-tau 181 and You mentioned that you'll provide analysis of phospho-tau 217

Speaker Change: as how it may change due to treatment. If you could help us understand whether I'm correct in assuming that and what's the significance of one versus the other. Has the field evolved into looking at HOSOTAU-217?

and there's more.

more prominent biomarker.

Speaker Change: Yeah, you got it Elmer. It's when we started the trial, I think the scientific community with respect to Alzheimer's leaned towards the p-tau 181 as a better biomarker, but here we are three plus years later and I can tell you being at the conference last week

Speaker Change: Yeah, people still talk a bit about 181, it's a pretty good tool, but 217 is what everybody in Alzheimer's is focused on right now.

Speaker Change: So, I don't know, I think we're measuring 181 at the end of the trial as well.

Speaker Change: So, but it's not, you know, I don't think it's going to be that important of a biomarker.

Speaker Change: And maybe one last question. As you look through or work through the data cleanup, roughly what proportion of the total data you have been able to

Speaker Change: clean and set up for the analysis plan at this stage.

Speaker Change: I can't blame you for asking the question. It's a great one. We don't want to go there.

So it's still by year-end.

By ear, definitely.

Rick Barry: Okay, looking forward to it. Thank you very much, Rick. Thank you, and thanks for the questions.

Thanks. Our next question comes from Matthew Machtrup.

Please go ahead.

Thanks for bringing me on the call.

Speaker Change: So, the vision that you're laying out around the primary care physician is very exciting. I think all investors and humans are excited about that vision.

Vernon: What I wanted to talk about is, you know, as I've studied the phase 2 and placebo results of hundreds of AD studies, I believe that hopefully we'll repeat that in phase 3.

Vernon: and show significant improvement for 8-SCOG-12. But I'm also considering a scenario of phase 3 results showing that mild significantly improved, but an underperformance of moderate and potentially resulting in the population missing statistical significance. I have two questions kind of related to that. First is...

Vernon: How are you thinking the company would navigate a subset of patients performing great with the FDA and taking the drug to market?

Vernon: if it's the milds only that are significant. And then the second question I have is, many families are reaching out to me asking when they'll get access to the drug in the U.S. and around the world.

Vernon: and if the drug does perform what are your what's your upper-level thoughts on when you think the drug could hit the market in the US and around the world?

Very good question, Pat.

Speaker Change: So with respect to the potential results, and you know we're all speculating, but

Vernon: we would have an interesting choice to make with respect to our refocus trial.

because we would have the capability to go back to

Vernon: We'd have the capability to revise our statistical analysis plan and resubmit to FDA to make the second trial, you know, put more of the alpha on the miles. That would be a really big decision to do it.

Vernon: So, you know, with respect to subgroups, you know, I've spoken to a few investors about this. What we won't do is we're not going to pick out, you know, some niche group that seemed to perform really well based on the drug and then, you know, try to convince investors that we're going to take that one over the goal line.

That's just not a winning argument.

Vernon: But if you, you know, if you do have 70% of your trial with statistical significance and showing, you know, great results and milds, but it's the moderates that have, you know, killed your primary endpoint.

Vernon: that's a different story and we'd have to go and talk to the agency about that so I I wouldn't think that that situation is hopeless but it's all going to depend on the data and what how the how the agency responds to it

Vernon: The second question about when will it be available is a really good one.

you know we're kind of thinking

Thank you.

Vernon: But, you know, there's a lot that depends on that, but I think that's a realistic target to get to market.

Vernon: You could make some really aggressive assumptions that I don't think I would necessarily make to get maybe a few months off that, but that's probably the right ballpark.

Speaker Change: I'd like another question, if you don't mind. Can you elaborate a little bit on what other indications you guys think...

Speaker Change: there is the most potential impact from semiphilum and how you might prioritize which indications you would pursue.

Speaker Change: Well, I don't want to go into too much detail. I mean, there's a lot of theoreticals.

Speaker Change: There is one indication that, you know, I think most people who know the company pretty well are aware of, and that is there was a study done by a professor at Yale, which was really a pretty fascinating study where she took our drug

Vernon: and built an animal model based upon tuberous sclerosis, the childhood epilepsy part of it.

Vernon: and she's absolutely convinced that the drug would work in that indication.

Speaker Change: I know the resources are strapped, but is this something that you guys are able to do some initial groundwork on?

Vernon: now or in the recent past, like on these different indications.

to just kind of get the process started.

Speaker Change: Well, we can with the one I was just talking about.

The others, no. It's more theoretical.

Okay, thank you very much.

Okay. Thank you, Matt.

Speaker Change: Thank you. This was the last question. I will now turn back to Rick Barry for closing remarks. Please go ahead.

Thanks. Well, we really appreciate you joining the call today.

Speaker Change: We do, to repeat, expect to announce our top-line Phase III results before the end of 2024.

Speaker Change: And we really look forward to sharing them when they're available. Thanks so much for listening.

Q3 2024 Cassava Sciences Inc Earnings Call

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