Cassava Sciences, Inc.

Welcome to Cassava Sciences Report for the second quarter 2024. At this time, all participants are in a listen-only mode. A question and answer session will follow the form of presentation. As a reminder, this webcast is being recorded. During this call and the question and answer session afterwards, representatives of Cassava Sciences may make what are known as forward-looking statements. forward-looking statement is one of that is not a historical fact forward-looking statements are not guarantees and they involve risks uncertainties and assumptions such statements represent current expectations or beliefs concerning future events or future performance forward-looking statements are predictions only based on upon information currently available to the company Actual events or results could differ materially from those made in any forward-looking statements due to a number of factors, risks, and uncertainties. Please refer to Cassava Sciences' recent filings with the SEC, including Form 10-K, for a description of the factors that could cause the events or results to differ materially from those made in forward-looking statements. Importantly, this conference call contains time-sensitive information that is accurate only as of the date of the live webcast, the 8th of August, 2024. Except as required by law, the company undertakes no obligation to revise or update any forward-looking statements to reflect events and circumstances after the date of this webcast. It is now my pleasure to turn today's meeting over to Rick Barry, Executive Chairman of the Board of Directors. The floor is yours.

Thank you, Judith. Good morning, and thank you for joining us. With me today are three key members of the CASAVA team, Dr. Jim Kupec, our Chief Medical Officer, Eric Schoen, CASAVA's Chief Financial Officer, and Chris Cook, our General Counsel and Internal Swiss Army Knight. You'll be meeting other talented players on the team in the future. We have a lot of material to cover this morning, so I'll get right to it. By now you have hopefully seen the press release that we put out this morning that discusses some of our progress during the second quarter. Specifically, we highlighted the progress in our phase three trials. The execution of these trials has been impressive. We expect our last patient last visit in our rethink trial in early Q4. and a top line readout of the data by year end. We also expect our second phase three trial refocus to read out in mid year. We remain optimistic about the results of these trials. We think they're well powered to demonstrate a statistically significant difference between the drug and placebo arms. But investors should keep in mind that no one can correctly forecast the results of any trial. There are, of course, no guarantees. Earlier in the second quarter, Cassava raised $123 million from the warrants that we distributed to shareholders in January. The warrants allowed shareholders to invest directly in the company or to sell their warrants in the open market. The funds that we raised from the program significantly strengthened our balance sheet. As a reminder, several of us inside the company converted all or a portion of our warrants into stock, including me. I converted every warrant that was available to me. Suffice it to say that we are believers. We expect to end 2024 with a cash balance of between $117 and $127 million, which will allow us enough liquidity to get past our Phase III readouts. And by the way, that cash number includes the impact of our potential settlement, which I will discuss shortly. We are very grateful for the confidence that investors have demonstrated in Cassava. Just last week, we announced that we are lengthening our open-label extension trials for both our Phase II and Phase III patients. I want to take a minute to explain why we thought this was important. Prior to making this change, patients who participated in our Phase II program had the opportunity, but not the requirement, to remain on our drug, Simifolam, for an additional two years. After being on the drug, in some cases for four years, some of these Phase II patients were losing access to it. In our Phase III program, patients had the opportunity to go on simetholem for 12 months after completing the trial. It is important for our patients to have continued access to our drug. Just imagine being the patient or the loved one of a patient who was on the drug and had perceived that the patient had received a benefit from the drug, but who'd exhausted the duration of the open-label extension. After asking patients to take the inherent risk of joining our clinical trials, we felt it was unfair to those patients to not continue to offer them the option to continue, at least until we knew the results of our Phase III programs and the FDA had the opportunity to review our results. Honestly, the decision to expand our open-label trials was not a hard one. It was driven by our clinical team, who carefully listened to the investigators at our clinical sites. Cassava needs to prepare for success, and even though it will add significant cost over the next two to three years, it is absolutely the best thing we could do for our patients. It bears repeating that 89% of the patients in our trials have elected to continue on the open-label extensions. You may have also noticed that we added further cognition and plasma biomarker monitoring every six months for patients who choose to continue on our open-label extension trial. We're doing that because the data we generate could have real value in helping us understand the potential long-term impact of semaphil. Our phase three program has been very well executed and on track. Dr. Kupec will tell you more about that shortly. Now we must plan for success. Continuing our open label extension trials was one way for planning for success. But in the coming months, you will see others. You will notice an uptick in our R&D spending during the second half of the year. Some of that increased spending will be devoted to preparation for the commercial launch of our drug. We are currently ramping up our active pharmaceutical ingredient purchases, securing increased outsourced manufacturing capacity, and exploring distribution capabilities. We have to plan for Cassava's successful transition from a development stage company to a commercial enterprise. What we cannot accept is for us to fail the drug. There is an overwhelming need for Alzheimer's patients to have a drug that has the profile that Simifilm has displayed so far in its development. We cannot let patients and their loved ones down. In today's press release, we discussed the $40 million reserve we are taking for potential settlement with the Securities and Exchange Commission. This statement does not mean that we have an agreement in principle with the SEC yet, but it does mean that we now have enough information to understand what our exposure could be if we do come to a resolution with the SEC that will end their investigation of the company. I should add that we are continuing to have constructive conversations with both the SEC and the Department of Justice. There really isn't more we can say about this now, but we hope to be able to do so before long. We are not taking a charge of this magnitude lightly. $40 million is an awful lot of money for anyone, let alone a company of our size. But it is our goal to put our past behind us and focus entirely on our mission, developing a best-in-class treatment for Alzheimer's patients. Many of you have likely read the letter I wrote to the Cassava community after becoming executive chair on July the 17th. In that letter, I told the story of my original connection to Alzheimer's disease, the father of a good friend named Buddy, whose life was cut short by the disease. Since I wrote that letter, I've come to understand that nearly everyone has a Buddy story. And here at Cassava, each of our people have many Buddy stories. Before July 17th, I thought Cassava had a good management team in place. but now I appreciate how great the team really is. What I see is a group of determined and dedicated people who come to work each day because they are committed to making a difference in the lives of patients and their families, and that is what motivates us. As you might imagine, I had a lot to think about before taking on this challenge. Cassava Sciences has been through an awful lot the last few years, and frankly, some of our wounds may have been self-inflicted, while some clearly have not. Most of you are probably familiar with the expression that what doesn't kill you makes you stronger. Our company has been the subject of intense scrutiny for the past three years. Today, we are a stronger company because of it. We are thinking ahead to what we could create and not dwelling on the various challenges we have faced in the past. For me, the opportunity to work alongside people who are so focused on bringing what could be a game-changing therapy to patients who are in dire need of one was too great for me to ignore. For more than three decades, Dr. Kupec has been intimately involved in drug development for companies like Pfizer, Sanofi, and Cibagaygi. Before joining Cassava in 2021, Jim served as vice president Global Clinical Leader for Parkinson's Disease and Clinical Head of the Neuroscience Research Unit at Pfizer. I should add that Dr. Kupik is one of the key reasons why I joined the Board of GASADA in 2021. Tim also serves the Independent Review Committee, the IRC, at Target ALS, also known as Lou Gehrig's disease, another neurodegenerative disorder, and he serves it pro bono. The truth is that Jim's experience in running trials like this is so deep, he's probably forgotten more about running a Phase III trial than most people will have ever learned. I've asked Dr. Kupec to walk you through our Phase III program so you understand how well controlled and rigorous this program is. Jim?

Yeah, hey, thanks, Rick, for the introduction, and good morning, everyone. This is Jim Kupik, Chief Medical Officer, Cassava Sciences. As Rick stated, I've been actively involved in drug development efforts at various companies for over 30 years, and I've had a particular focus on investigational drugs for the treatment of neurologic diseases since the late 1990s. I've worked on teams that have successfully developed drugs and brought them to the pharmacy shelves. However, Developing new medicines for neurodegenerative disorders, such as Alzheimer's disease, Parkinson's disease, or ALS, has more often than not been associated with failure. The clinical outcomes or endpoints that we assess in randomized clinical studies are associated with large variants, and Phase II studies and AD studies had to be quite large to hopefully show enough of a treatment signal to then justify a very large Phase III financial investment. When I led these phase two and phase three programs in the past, we frequently did not know until the end of a large phase three study that the drug had failed. And this was always sad for both patients and everyone involved in the research efforts. Drug development for neurologic diseases began to change dramatically around 2018 with the advent of ultra-sensitive fluid-based biomarkers a technologic advancement that many have characterized as the biomarker revolution for brain diseases. Biomarkers allow us to examine the machinery inside the brain cells of patients with Alzheimer's disease. Why is this important? All of us in the research community understand that drug-induced changes in the most basic cellular functions must occur first if one expects to also see cognitive benefit later on. In January 2021, I accepted an offer from Casaba to design and execute the Simifilm Phase 3 program in patients with mild to moderate Alzheimer's disease. I was very excited, and I considered this a great opportunity to leverage both my many years of Alzheimer's disease trial experience and the availability of these new biomarkers to design a true, state-of-the-art Phase 3 program that my colleagues in the research community would view as a new gold standard. Soon after my arrival, we had a successful into phase two meeting with the FDA, in which they agreed that we had enough evidence to justify transition to phase three. I designed two phase three studies and had them reviewed by key colleagues and leaders in the field to ensure they were both scientifically rigorous and operationally feasible. Then the FDA approved each protocol via a regulatory procedure called Special Protocol Assessment, or SPA. I took advantage of the biomarker revolution. A very unique design element to these studies was to require a plasma-based phosphorylated tau biomarker level to confirm abnormal neuropathology instead of a PET scan. And PET scans are expensive, and they can have a significant negative impact on rapid study recruitment. We were in the lead with this strategy, and other sponsors have subsequently started to do the same thing. In 2021, we selected Premier Research as the CRO to help operationalize two studies. I've worked with many CROs during my career, and I have to tell you that Premier has been outstanding, and they have worked as hard and diligently on these studies as my own team. Countless hours were spent selecting and vetting high-quality investigators to conduct these studies here in the U.S. and also in Canada, Puerto Rico, Australia, and South Korea. We selected Clario, a company with two decades of experience assessing PET and MRI scans in patients with Alzheimer's disease, and they would evaluate the thousands of images we would collect in this program. We selected Signet Health, a stellar leader in the field of radar training, radar assessments, to ensure each cognitive and functional assessment at the clinical sites was conducted against a gold standard. Similar high-performance companies were selected to collect and analyze safety lab values, ECGs, and even patient compliance with study drug. Now, with everything in place, including IRB approvals, we began to screen and recruit patients in late 2021. We have about 170 committed research sites worldwide, and in less than two years, we have recruited over 1,900 patients in both studies. Over 555 patients have completed their participation in the 52-week Rethink study, and over 420 patients have completed their participation in the 76-week Refocus study, for over a total of 975 completers. It's important to note that there is no overlap of clinical research sites between the two studies. The studies have a separate, completely different set of investigators supporting the research. As just mentioned, the RETHINK study is 52 weeks in length, and it evaluates the potential cognitive and functional benefit of semaphilam in patients with mild to moderate Alzheimer's disease. Half of the 800-plus patients were randomized to semaphilam, and half were randomized to placebo. Approximately 70% of the randomized patients have mild dementia, and approximately 30% of the randomized patients have moderate dementia. A substantial number of patients in the RETHINK study have also agreed to have their plasma analyzed for key Alzheimer's disease biomarkers. These blood samples will be analyzed by a completely independent, CLIA-certified, accredited laboratory. Cassava, Premier, and our other collaborators have worked very closely to ensure the integrity of this entire study. I wanted this program to be the best I had ever created or worked on. We reviewed data from research sites, monitored any errors that occur. We worked closely with the IRBs to ensure the sites properly conducting their efforts in a way that's consistent with good clinical practice. We conduct routine audits. We review and assess all safety reports, and we document everything. We call this doing it by the book. We know that the FDA and other regulatory authorities expect this of us, and they themselves conduct audits of CASAVA, our CRO, our other collaborators, and many of our research sites. I need to highlight that the patients Their physician investigators, all of us at Cassava, and the premier remain completely blinded to what treatment each patient is taking. Once the last patient has passed his or her last visit in the fall, we will work quickly and thoroughly to ensure that all minor inconsistencies or questions in the database are addressed. We will confirm the accuracy of each and every piece of data. This includes, for example, all clinical data. cognitive assessment data, lab and ECG data, imaging data. Once we are satisfied, the database will be locked, and at that point we cannot make any changes to its content. Data lock has always been a significant and dramatic milestone for me on any of the programs that I've led. Premier research will make this happen, at which point the locked and blinded database, including blinded biomarker results, will be shared with the biostatisticians at the Pintera Corporation along with the treatment codes. This will allow them to break the blind and determine whether semaphore is effective. Everyone at Cassava and Premier continued to remain blinded during this analytical period by Pintera. Pintera is the premier independent biostatistician group, biostatistics group I should say, working on AD studies in my opinion and that of many others. Once Dr. Suzanne Hendricks and her team members at Pentara conclude they have properly analyzed all the data, they will call us to set up a meeting to go over all their analyses, positive or negative. We will then prepare a public disclosure, and we are committed to doing this by the end of the year. Moving ahead, the second phase three study is the refocus study, and that has recruited over 1,100 patients. This study and the rethink study are very similar in that patient selection is the same. However, the refocused study is 76 weeks in length, and there are three different treatments to which a patient can be randomized, two doses of semaphilum and placebo. As the study is six months longer in duration, we expect top-line results to report out mid-year 2025. The refocused study is also different in that many patients have the option of participating in a number of sub-studies. which evaluate the impact of semifilm on CSS fluid biomarkers, plasma biomarkers, amyloid PET imaging, tau PET imaging, and brain volume changes as determined by MRI. The goal of these sub-studies is to demonstrate that semifilm has the potential to modify the underlying disease process of Alzheimer's disease. Patients in both Phase III studies have the option, then, of rolling over into the open-label extension study As Rick shared, some 89% of patients have elected to do just that. As Chief Medical Officer for Cassava, I'm ultimately responsible for the safety of these patients, and I spend a lot of time reviewing all types of safety, lab, and ECG reports, along with the medical monitor at Premier. When a patient reports a new medical condition or symptom, this is called an adverse event for the purpose of regulatory filings. I'm pleased to report that no serious adverse event has yet been linked to study drug in any of our Phase II or Phase III studies. A huge amount of safety data has now been shared on two separate occasions with the Data Safety Monitoring Board, or DSMB, who have instructed us to continue the studies without change. This board is composed of very experienced, independent clinical scientists and a statistician, and they are charged with reviewing all safety data even if they feel obligated to look at any unblinded safety data behind closed doors as per their charter and a strict set of rules that enable such an assessment. They are tasked to advise CASAVA on how best to ensure the safety of our study participants and if any changes in the conduct of the study are required. This is yet an extra step we've taken to ensure patient safety. The DSMB has already met twice, and we will meet again for the third time next month. Rick, that's my update for Phase 3 that I wanted to share, but if I may, I'd like to share a final personal note. I was excited when I joined Casaba, but I'm even more excited and optimistic now about semaphilum and its chance of success in Phase 3. Semaphilum continues to be safe and well-tolerated in a very large number of patients. plus the data from the 24-month open-label Phase II safety study, was remarkable in that patients with mild dementia apparently had no significant decline during that two-year treatment period. If this is true and replicated in Phase III, it would represent an exceptional achievement and a significant advance in the field. So thanks for everybody on the line for your attention. I look forward to sharing our results with you at the end of the year. Rick, back to you.