Cassava Sciences Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 7, 2024

There are 6 speakers on the call.

Operator

Ladies and gentlemen, welcome to Casava Science Report for the Q3 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. During this call and the question and answer session afterwards, representatives of CasaFaciens may make what are known as forward looking statements.

Operator

A forward looking statement is one that is not 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 upon information currently available to the company. Actual events or results could differ materially from those made in any forward looking statement due to a number of factors, risks and uncertainties.

Operator

Please refer to Picasso Science's recent filings with the SEC, including Forms 10 ks and 10 Q 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, November 7, 2024. 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. It's now my pleasure to turn today's meeting over to Rick Berry, President and Chief Executive Officer. The floor is yours.

Speaker 1

Well, thank you, Mao, 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 as well as Eric Schone, who I think of as the Chancellor of the Exchequer, also known as our Chief Financial Officer. Doctor. Jim Kupec, our Chief Medical Officer and the star of the August investor call will not be able to join us today.

Speaker 1

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. 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. We expect to announce the top line results of the trial before the end of this year.

Speaker 1

This is an exciting time for us. We remain optimistic that we will see promising data that could ultimately lead to a best in class treatment for Alzheimer's. But we will all see whether our optimism is warranted or misplaced before too long. 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 1

As a reminder, we expect to report our biomarker data from a subset of patients from the RE THINK study at the same time as our cognition data. This will involve approximately 100 patients and provide plasma biomarker results for PTOWS-two seventeen, neurofilament light chain otherwise known as NfL, glial fibrillary acidic protein known as GFAP and total tau. I want you to be 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.

Speaker 1

Also, we will report our data to you whether it is good, bad or ambiguous. Last week, a team of us from cassava 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 clinical team, which is headed by Doctor. Kupec. 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.

Speaker 1

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 3 program as well as the people who ran the operation of their sites. Many of the investigators are considered the best in their business. These are the same investigators who were also involved, for example, in the successful trials for Eli Lilly's denanimab and Eisai's lencanumab.

Speaker 1

The many doctors I met decided to participate in our trials because they made their own assessment of semaphilum and they believe 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 believe the drug

Operator

needed to be studied.

Speaker 1

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 Simafilm 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 CTAD last week, but there are a few that I want to focus on. You may recall that in our last call, Jim Kupik 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.

Speaker 1

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.

Speaker 1

That is the probability that a person has the disease given a positive test result of over 90%. I think you'll agree that sure beats a postmortem 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. You may recall last quarter that I mentioned the cassava's planning for success.

Speaker 1

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.

Speaker 1

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. Cholinesterase 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 Eisai.

Speaker 1

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

Speaker 1

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

Speaker 1

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? We know there is approximately 7,000,000 patients currently diagnosed with Alzheimer's disease in the United States. But we also know that the disease is under diagnosed. We know that half the diagnosed Alzheimer's patients are considered to be mild.

Speaker 1

Our research tells us that 1,200,000 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. I want you to reimagine Alzheimer's disease treatment possibilities should Simofilam's approval become a reality. Simofilam is potentially a first of a kind disease modifying specialty like treatment that could be prescribed by a PCP.

Speaker 1

This is the scenario for which we are planning if our Phase III trials are successful. Even if Simophilum is successful, it may still take more time than we would prefer before physicians become comfortable using biomarkers like p Tau217 to diagnose their patients. We understand that it will take brilliant execution on our part even if cimaphilum 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 us, it is that this team doesn't shy away from challenging situations.

Speaker 1

We lean in and we work our way through them. 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. Well, thank you for indulging the vision that motivates all of us at GASAVA. I'd now like to turn the call over to Eric Shone, who will provide you with the financial update. Eric?

Speaker 2

Thanks, Rick. Let's start with our cash and cash equivalents. We ended the September quarter with $149,000,000 in cash. That balance is expected to be sufficient for operations through the conclusion of both ongoing Phase 3 trials and into calendar 2026. Separate from the $149,000,000 of cash is $40,000,000 of restricted cash.

Speaker 2

That is a new and temporary line on our balance sheet. 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. That settlement is still subject to approval by the U. S. District Court after which the escrow account will be released to the SEC.

Speaker 2

We don't anticipate any issues with court approval. On the spending side of the equation, net cash used in operations during the 9 months ended September 30 was $55,700,000 or roughly $18,500,000 each quarter. Net cash use in operations for the second half of twenty twenty four is expected to be between 80 $1,000,000 $90,000,000 This is consistent with our previous guidance. That estimate includes the $40,000,000 settlement I just referenced. Considering the spending level, we believe we will end the year with between 117 $1,000,000 to $127,000,000 in cash.

Speaker 2

That is the same amount as guided to in our last quarterly call. No change. Now onto our profit and loss for the quarter. Our net loss was $27,900,000 or $0.58 per share in Q3 compared to a net loss of $25,700,000 or $0.61 per share for the same period in 2023. Research and development expenses for Q3 were $17,700,000 This compared to $23,600,000 for the same period last year.

Speaker 2

R and D expenses are decreasing as more and more patients complete the Phase 3 studies and rollover into the lower cost open label study. General and administrative expense for Q3 were $12,900,000 compared to $4,300,000 for the same quarter last year. The significant increase was due primarily to higher legal related expenses, which were partially offset by insurance recoveries, increased compensation costs, including severance costs as well as an increase in stock based compensation expense due to new awards granted in late 2023 2024. Now I'll turn it back to Rick.

Speaker 1

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

Operator

Thank you. At this time, we will conducting a question and answer session. Our first question comes from Vernon Bernardino from H. C. Wainwright.

Operator

Please go ahead.

Speaker 3

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 has been developed and I was just wondering if I could get an update on its status. And that is the status of SalvoDx.

Speaker 3

One thing that would be important for Smith Lam's success would be the biomarker diagnostic results as you mentioned. Obviously, p tau was something that can be used for a biomarker. But I was wondering if you could give us an update on SalvaDx?

Speaker 1

Sure. Thanks Vernon. In a world where the diagnostic tools are becoming so good, particularly as p Tau217, we wonder where SabaDX is going to fit into that. And that doesn't mean we're not going to pursue it, we will. But we're a small company with limited resources and there are other ways that we could spend our money such as looking at additional indications for Simutilum.

Speaker 1

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 3

Terrific. And as a follow-up, I was just 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 1

So on the biomarkers, we'll be measuring p Tau-two seventeen, NfL, GSAP, total tau, and

Speaker 3

I think that's

Speaker 1

it. So just and this is remembering, we talked about this in the second trial, we have a lot more. There's more patients, there's some CSF analysis and there's also imaging analysis.

Speaker 3

And can you remind us the time points at which these in the Phase 3 are being measured?

Speaker 1

From baseline till last visit.

Speaker 3

Baseline and last visit only?

Speaker 1

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

Speaker 3

Great. Thanks for taking my question. Looking forward to the results as I mentioned.

Speaker 1

Okay. We are too. Thanks.

Operator

Thank you. Next question comes from Elmer Piros from Rotman. Please go ahead.

Speaker 4

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, 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?

Speaker 4

And obviously, there is a different statistical treatment of either of those or both of those scenarios. If you could elaborate, please?

Speaker 1

Sure. Thanks, Elemer, and thanks for the question. There's been this, I don't know, misunderstanding about the SAP. And just to make it clear, 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 1

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 Pentara 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. As far as the endpoints of the trial, we have 2 primary endpoints, as you know, it's ADAS COG-twelve and it's activities of daily living.

Speaker 1

And our SPA with FDA says we have to hit on both in order to call the trial successful. And there'll be there are secondary endpoints, etcetera, but they matter a lot less than hitting the primaries.

Speaker 4

And the BRICD integrated endpoint of IARDS, is that out of the picture or is that relegated to as a secondary endpoint?

Speaker 1

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

Speaker 4

Okay. Now is there a preset analysis of mild AD patients only? And if you have to go to that sort of analysis, how does the statistics work there?

Speaker 1

There is. We are expecting to have an analysis of mild patients as well as moderate and then the combined. So

Speaker 2

I think as

Speaker 1

you know, 70% of the roughly 70% of the patients were mild in this trial, the rest are moderates.

Speaker 4

Okay. And just one clarification of the Fosso TOW measurement. I think the enrollment criteria was using Fosso TOW-one hundred and eighty one. And you mentioned that you'll provide analysis of Hosotal-two seventeen as how it may change due to treatment. If you could help us understand that I'm correct in assuming that and what's the significance of one versus the other as the field evolved into looking at Hosodao-two seventeen as more prominent biomarker?

Speaker 1

Yes, you got it, Elemer. It's when we started the trial, I think the scientific community with respect to Alzheimer's lean towards the p Tau-one hundred and eighty one as a better biomarker. But here we are 3 plus years later. And I can tell you being at the conference last week, yes, 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 1

So I don't know. I think we're measuring 181 at the end of the trial as well. So but it's not I don't think it's going to be that important of a biomarker.

Speaker 4

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 clean and set up for the analysis plan at this stage?

Speaker 1

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

Speaker 4

So it's still by year end?

Speaker 1

By year end, definitely.

Speaker 4

Okay. Looking forward to it. Thank you very much, Rick.

Speaker 1

Thank you. Thanks for the questions.

Operator

Thanks. Our next question comes from Matthew Mokhtar. Please go ahead.

Speaker 5

Thanks for bringing me on the call. So the vision that you're laying out around the primary care physician is very exciting. I think like all investors and humans are excited about that vision. What I wanted to talk about is, 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 COG12. 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.

Speaker 5

I have 2 questions kind of related to that. First is, how are you thinking the company would navigate a subset of patients performing great with the FDA and taking the drug to market, if it's the mild 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.

Speaker 5

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 U. S. And around the world?

Speaker 1

Very good questions, Matt. So with respect to the potential results, and we're all speculating, but 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. We would have an interesting choice to make with respect to our refocus trial because we would have the capability to go back to we'd have the capability to revise our statistical analysis plan and resubmit to FDA to make the second trial, put more of the alpha on the miles. That would be a really big decision to do it.

Speaker 1

So with respect to subgroups, I've spoken to a few investors about this. What we won't do is we're not going to pick out some niche group that seem to perform really well based on the drug and then try to convince investors that we're going to take that one over the goal line. That's just not a winning argument. But if you do have 70% of your trial with statistical significance and showing great results in mild, but it's the moderates that have killed your primary endpoint. That's a different story and we'd have to go and talk to the agency about that.

Speaker 1

So I wouldn't think that that situation is hopeless, but it's all going to depend on the data and what how the agency responds to it. The second question about when will it be available is really good one. We're kind of thinking 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

Speaker 5

is recovering from us. Let's do it.

Speaker 1

But there's a lot that depends on that. And but I think that's a realistic target to get to market. 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 5

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 impact from semifilum and how you might prioritize which indications you would pursue after you get past this Phase 3 for Alzheimer's? Well,

Speaker 1

I don't want to go into too much detail. I mean, there's a lot of theoreticals where we have some scientific work that was done in the past, but we got to think about how we're going to allocate the resources and the probability of success. There is one indication that 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 and built an animal model

Operator

based

Speaker 1

upon tuberous sclerosis, the childhood epilepsy part of it. And she's absolutely convinced that the drug would work in that indication. That would be an indication that would not require enormous trials, huge resources. You get an answer pretty quickly. We've 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.

Speaker 1

We have some things that we got to work out, but we're working on them.

Speaker 5

I know the resources are strapped, but is this something that you guys are able to do some initial groundwork on now or in the recent past on these different indications? Just kind of get the process started.

Speaker 1

Well, we can with the one I was just talking about. The other is no. It's more theoretical.

Speaker 5

Okay. Thank you very much.

Speaker 1

Okay. Thank you, Matt.

Operator

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

Speaker 1

Thanks. Well, we really appreciate you joining the call today. We do, to repeat, expect to announce our top line Phase 3 results before the end of 2024 and we really look forward to sharing them when they're available. Thanks so much for listening.

Operator

This does now conclude today's conference. You may now disconnect your lines at this time. Thank you for participation. Goodbye.

Powered by Quartr
Earnings Conference Call
Cassava Sciences Q3 2024
00:00 / 00:00