[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%2E%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=4&type=section&id=Item%201%2E%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including the Balance Sheets, Statements of Operations, Statements of Stockholders' Equity, and Statements of Cash Flows, along with detailed notes explaining the company's financial position, performance, and accounting policies for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%E2%80%93%20June%2030%2C%202025%20and%20December%2031%2C%202024) This section presents the company's financial position, including assets, liabilities, and stockholders' equity, as of June 30, 2025, and December 31, 2024 | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :------------------ | | Cash and cash equivalents | $112,381 | $128,574 | | Total current assets | $114,821 | $136,532 | | Total assets | $135,384 | $157,533 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :------------------ | | Accounts payable and accrued expenses | $42,822 | $7,654 | | Total current liabilities | $47,332 | $11,750 | | Total liabilities | $47,411 | $11,829 | | Total stockholders' equity | $87,973 | $145,704 | | Total liabilities and stockholders' equity | $135,384 | $157,533 | - Cash and cash equivalents decreased by **$16.2 million** from December 31, 2024, to June 30, 2025[9](index=9&type=chunk) - Total current liabilities significantly increased from **$11.75 million** at December 31, 2024, to **$47.33 million** at June 30, 2025, primarily due to a rise in accounts payable and accrued expenses[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section details the company's revenues, expenses, and net income or loss for the three and six months ended June 30, 2025, and 2024 | Operating Expenses (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $5,116 | $15,198 | $18,782 | $31,431 | | General and administrative | $40,276 | $46,204 | $51,196 | $49,905 | | Total operating expenses | $45,392 | $61,402 | $69,978 | $81,336 | | Operating loss | $(45,392) | $(61,402) | $(69,978) | $(81,336) | | Net income (loss) | $(44,224) | $6,155 | $(67,627) | $31,198 | | Net income (loss) per share, basic | $(0.92) | $0.13 | $(1.40) | $0.70 | - The company reported a net loss of **$44.2 million** for the three months ended June 30, 2025, compared to a net income of **$6.2 million** for the same period in 2024[12](index=12&type=chunk) - Research and development expenses decreased by **66%** for the three months ended June 30, 2025, primarily due to the phase-out of the Alzheimer's disease development program[12](index=12&type=chunk)[186](index=186&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20-%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section outlines changes in the company's stockholders' equity, including net income/loss and stock-based compensation, for the three and six months ended June 30, 2025, and 2024 | Stockholders' Equity (in thousands) | Balance at December 31, 2024 | Stock-based compensation (Q1 2025) | Net loss (Q1 2025) | Balance at March 31, 2025 | Stock-based compensation (Q2 2025) | Net loss (Q2 2025) | Balance at June 30, 2025 | | :---------------------------------- | :--------------------------- | :--------------------------------- | :----------------- | :------------------------ | :--------------------------------- | :----------------- | :----------------------- | | Additional paid-in capital | $550,767 | $5,189 + $36 + $90 | — | $556,082 | $4,545 + $36 | — | $560,663 | | Accumulated deficit | $(405,111) | — | $(23,403) | $(428,514) | — | $(44,224) | $(472,738) | | Total stockholders' equity | $145,704 | $5,315 | $(23,403) | $127,616 | $4,581 | $(44,224) | $87,973 | - Total stockholders' equity decreased from **$145.7 million** at December 31, 2024, to **$88.0 million** at June 30, 2025, primarily due to net losses incurred[15](index=15&type=chunk) - Accumulated deficit increased significantly from **$405.1 million** at December 31, 2024, to **$472.7 million** at June 30, 2025[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section reports the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 | Cash Flows (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(16,283) | $(37,368) | | Net cash used in investing activities | — | $(29) | | Net cash provided by financing activities | $90 | $123,552 | | Net increase (decrease) in cash and cash equivalents | $(16,193) | $86,155 | | Cash and cash equivalents at end of period | $112,381 | $207,291 | - Net cash used in operating activities decreased from **$37.4 million** in the first six months of 2024 to **$16.3 million** in the first six months of 2025[17](index=17&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) - Cash and cash equivalents at the end of the period decreased from **$207.3 million** at June 30, 2024, to **$112.4 million** at June 30, 2025[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. General and Liquidity](index=8&type=section&id=Note%201.%20General%20and%20Liquidity) This note discusses the company's accumulated deficit, future cash requirements, and management's assessment of liquidity for the next 12 months - The Company has an accumulated deficit of **$472.7 million** at June 30, 2025, and expects significant future cash requirements[22](index=22&type=chunk) - Management believes current working capital will be sufficient for at least the next 12 months, but future financing may be sought[22](index=22&type=chunk) [Note 2. Significant Accounting Policies](index=8&type=section&id=Note%202.%20Significant%20Accounting%20Policies) This note describes the key accounting principles and methods used in preparing the financial statements, including segment reporting and fair value measurements - The Company's operations are confined to **one business segment**: the development of novel drugs and diagnostics[29](index=29&type=chunk) - Fair value of cash and cash equivalents is based on Level 1 inputs[26](index=26&type=chunk) - Common stock warrants were valued using a Monte Carlo model at distribution (**$6.71 per warrant**) and stopped trading after May 2, 2024, presumed to have no value as of May 7, 2024[27](index=27&type=chunk)[28](index=28&type=chunk) [Note 3. Prepaid Expenses and Other Current Assets](index=16&type=section&id=Note%203.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) This note provides a breakdown of the company's prepaid expenses and other current assets as of June 30, 2025, and December 31, 2024 | Prepaid Expenses and Other Current Assets (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :------------------ | | Prepaid insurance | $5 | $800 | | Contract research organization and other deposits | $1,466 | $6,173 | | Interest receivable | $835 | $947 | | Other | $134 | $38 | | Total prepaid expenses and other current assets | $2,440 | $7,958 | - Total prepaid expenses and other current assets decreased by approximately **$5.5 million** from December 31, 2024, to June 30, 2025, primarily due to a reduction in contract research organization and other deposits[59](index=59&type=chunk) [Note 4. Real Property and Other Income, Expense](index=16&type=section&id=Note%204.%20Real%20Property%20and%20Other%20Income%2C%20Expense) This note details the company's other income and expenses, primarily related to real property operations, for the three and six months ended June 30, 2025, and 2024 | Other Income (Loss), Net (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Lease revenue | $110 | $314 | $246 | $717 | | Property operating expenses | $(156) | $(215) | $(374) | $(458) | | Other income, net | $(46) | $99 | $(128) | $259 | - The company recorded a net loss from real property operations of **$46,000** for the three months ended June 30, 2025, compared to a net income of **$99,000** for the same period in 2024, due to higher vacancy rates[61](index=61&type=chunk)[199](index=199&type=chunk) [Note 5. Property and equipment](index=17&type=section&id=Note%205.%20Property%20and%20equipment) This note presents the net book value of the company's property and equipment, along with accumulated depreciation, as of June 30, 2025, and December 31, 2024 | Property and Equipment, Net (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :------------------ | | Gross property and equipment | $24,227 | $24,237 | | Accumulated depreciation | $(3,664) | $(3,236) | | Property and equipment, net | $20,563 | $21,001 | - Depreciation expense was **$0.2 million** for the three months ended June 30, 2025, and **$0.4 million** for the six months ended June 30, 2025[62](index=62&type=chunk)[63](index=63&type=chunk) [Note 6. Stockholders' Equity and Stock-Based Compensation Expense](index=17&type=section&id=Note%206.%20Stockholders%27%20Equity%20and%20Stock-Based%20Compensation%20Expense) This note provides details on stock option and performance award activity and the associated stock-based compensation expense for the periods presented | Stock Option and Performance Award Activity | Outstanding as of Dec 31, 2024 | Options granted | Options exercised | Options forfeited/canceled | Outstanding as of Jun 30, 2025 | | :---------------------------------------- | :----------------------------- | :-------------- | :---------------- | :------------------------- | :----------------------------- | | Stock Options | 4,463,028 | 1,467,000 | (225,209) | (1,359,449) | 4,345,370 | | Performance Awards | 7,142 | — | — | — | 7,142 | | Stock-based Compensation Expense (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $1,162 | $972 | $3,534 | $1,945 | | General and administrative | $3,420 | $1,632 | $6,272 | $2,994 | | Total stock-based compensation expense | $4,582 | $2,604 | $9,806 | $4,939 | - Total stock-based compensation expense increased by **76%** for the three months ended June 30, 2025, and by **98%** for the six months ended June 30, 2025, compared to the prior year periods[67](index=67&type=chunk) [Note 7. Income Taxes](index=19&type=section&id=Note%207.%20Income%20Taxes) This note explains the company's income tax position, including the absence of income tax provision due to projected net losses and valuation allowances - The Company did not provide for income taxes during the three and six months ended June 30, 2025, due to projected taxable net loss for the full year 2025, offset by a valuation allowance[72](index=72&type=chunk) [Note 8. Commitments](index=19&type=section&id=Note%208.%20Commitments) This note outlines the company's contractual obligations, including a license agreement with Yale University and commitments for active pharmaceutical ingredient manufacturing - The Company entered into an exclusive worldwide License Agreement with Yale University on February 26, 2025, for simufilam in TSC-related epilepsy[74](index=74&type=chunk) - The agreement includes a nominal upfront fee, milestone payments up to **$4.5 million**, and tiered royalties on net sales[74](index=74&type=chunk) - The Company has non-cancellable commitments of approximately **$1.2 million** for the manufacture of simufilam's active pharmaceutical ingredient[73](index=73&type=chunk) [Note 9. 2020 Cash Incentive Bonus Plan](index=19&type=section&id=Note%209.%202020%20Cash%20Incentive%20Bonus%20Plan) This note describes the terms and conditions of the company's cash incentive bonus plan, including its "at-risk" nature and current status regarding grant dates and payments - The 2020 Cash Incentive Bonus Plan (CIB Plan) is an 'at-risk' program rewarding participants for significant increases in market valuation, subject to specific conditions[76](index=76&type=chunk) - No grant date has occurred as of June 30, 2025, and no Performance Conditions are considered **probable of being met**, thus no compensation expense has been recorded and no payments made[77](index=77&type=chunk)[84](index=84&type=chunk)[88](index=88&type=chunk) - The CIB Plan was amended on March 6, 2025, specifying that the Chairman, President, and CEO would receive a bonus based on a Merger Transaction only, not Market Capitalization Conditions[87](index=87&type=chunk) [Note 10. Contingencies](index=21&type=section&id=Note%2010.%20Contingencies) This note details the company's legal and regulatory contingencies, including settlements, investigations, and loss reserves for ongoing litigation - The Company settled an SEC investigation in September 2024, paying a civil monetary penalty of **$40 million** in November 2024[91](index=91&type=chunk)[92](index=92&type=chunk) - A loss contingency of **$31.25 million** was reserved as of June 30, 2025, for a potential settlement of the Consolidated Securities Action[97](index=97&type=chunk)[109](index=109&type=chunk) - The Company reserved a **$4.0 million** loss contingency for a potential settlement with intervenor plaintiffs and other claimants in an Anti-SLAPP lawsuit[108](index=108&type=chunk) [Note 11. Warrant Dividend Distribution](index=25&type=section&id=Note%2011.%20Warrant%20Dividend%20Distribution) This note discusses the company's 2024 warrant dividend distribution, subsequent redemption, and the financial impact on warrant liabilities - On January 3, 2024, the Company distributed approximately **16.9 million warrants**, which were redeemed on May 7, 2024[110](index=110&type=chunk)[112](index=112&type=chunk) - Total net proceeds from warrant exercises in 2024 were approximately **$123.6 million**, resulting from the issuance of **5.7 million common shares**[117](index=117&type=chunk) - A gain from the change in fair value of warrant liabilities of **$108.2 million** was recognized for the six months ended June 30, 2024, with **no warrants outstanding** at June 30, 2025[120](index=120&type=chunk)[121](index=121&type=chunk)[196](index=196&type=chunk) [Note 12. Restructuring Activities](index=27&type=section&id=Note%2012.%20Restructuring%20Activities) This note describes the company's workforce reduction in January 2025 and the associated one-time severance costs incurred - On January 7, 2025, the Company announced a workforce reduction of **10 employees (33%)**[122](index=122&type=chunk) - Approximately **$0.4 million** in one-time costs, primarily severance payments, were incurred and paid in the first quarter of 2025 due to the Workforce Reduction[123](index=123&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and future outlook, highlighting the strategic shift from Alzheimer's disease to TSC-related epilepsy development [Forward-looking Statements and Notices](index=28&type=section&id=Forward-looking%20Statements%20and%20Notices) This section provides cautionary statements regarding forward-looking information and advises investors to review risk factors - The report contains forward-looking statements regarding future performance, plans, and anticipated events, which involve risks and uncertainties[125](index=125&type=chunk)[126](index=126&type=chunk) - Investors are cautioned not to place undue reliance on these statements and to review the 'Risk Factors' section in the Annual Report on Form 10-K[128](index=128&type=chunk)[129](index=129&type=chunk) [Overview](index=30&type=section&id=Overview) This section introduces Cassava Sciences as a clinical-stage biotechnology company, highlighting its strategic shift from Alzheimer's disease to TSC-related epilepsy development - Cassava Sciences is a clinical-stage biotechnology company focused on central nervous system disorders, specifically shifting its lead therapeutic drug candidate, simufilam, from Alzheimer's disease to **TSC-related epilepsy**[134](index=134&type=chunk)[136](index=136&type=chunk) - The company completed the phase-out of its Alzheimer's disease development program in the **second quarter of 2025**[134](index=134&type=chunk) - Simufilam targets the filamin A (FLNA) protein in the brain, with preclinical studies suggesting its role in seizures and neuronal abnormalities in TSC[137](index=137&type=chunk) [About Tuberous Sclerosis Complex (TSC)](index=31&type=section&id=About%20Tuberous%20Sclerosis%20Complex%20%28TSC%29) This section provides background information on Tuberous Sclerosis Complex, including its prevalence and the common occurrence of epilepsy in affected patients - TSC is a genetic disorder affecting approximately **1 in 6,000 live births**, with about **50,000 people affected** in the United States[139](index=139&type=chunk) - Epilepsy is common in **84% of TSC patients**, with approximately **60% suffering from treatment-resistant seizures**[139](index=139&type=chunk) [Preclinical Studies with Simufilam in Tuberous Sclerosis Complex](index=32&type=section&id=Preclinical%20Studies%20with%20Simufilam%20in%20Tuberous%20Sclerosis%20Complex) This section summarizes preclinical research indicating simufilam's potential to reduce TSC-related seizure activity and neuronal abnormalities - Preclinical research at Yale and in collaboration with TSCA indicates simufilam may reduce TSC-related seizure activity and limit neuronal abnormalities in mouse models[140](index=140&type=chunk)[142](index=142&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) - The Company plans to file an Investigational New Drug (IND) application to initiate a proof-of-concept clinical trial for simufilam in TSC-related epilepsy in the **first half of 2026**[146](index=146&type=chunk) [License Agreement with Yale](index=32&type=section&id=License%20Agreement%20with%20Yale) This section details the exclusive worldwide license agreement with Yale University for simufilam in TSC-related epilepsy, including financial terms - On February 26, 2025, the Company entered into an exclusive worldwide License Agreement with Yale University for simufilam in TSC-related epilepsy[147](index=147&type=chunk) - The agreement includes a nominal upfront license fee, milestone payments up to **$4.5 million**, and tiered royalties on net sales[148](index=148&type=chunk) [Clinical Trials in Alzheimer's Disease (Discontinued)](index=34&type=section&id=Clinical%20Trials%20in%20Alzheimer%27s%20Disease%20%28Discontinued%29) This section reports the discontinuation of simufilam's Phase 3 Alzheimer's disease studies due to failure to meet endpoints - Both Phase 3 studies (RETHINK-ALZ and REFOCUS-ALZ) of simufilam for Alzheimer's disease did not meet their pre-specified co-primary, secondary, and exploratory biomarker endpoints[154](index=154&type=chunk)[156](index=156&type=chunk) - The Company discontinued its Alzheimer's disease development program, with the phase-out completed in the **second quarter of 2025**[155](index=155&type=chunk)[157](index=157&type=chunk) [Leadership Changes](index=34&type=section&id=Leadership%20Changes) This section announces recent changes in the company's executive leadership, including retirements and new appointments - James W. Kupiec, M.D., retired as Chief Medical Officer effective **May 9, 2025**[158](index=158&type=chunk) - R. Christopher Cook was appointed Chief Operating and Legal Officer on **April 18, 2025**[159](index=159&type=chunk) [Risk is Fundamental to the Drug Development Process](index=34&type=section&id=Risk%20is%20Fundamental%20to%20the%20Drug%20Development%20Process) This section emphasizes the inherent risks, complexity, and costs associated with drug discovery and development - Drug discovery and development is a long, complex, costly, and **high-risk business**[160](index=160&type=chunk) - Investors are cautioned that investing in publicly traded securities of the company carries the **risk of total loss**[160](index=160&type=chunk) [Our Scientific Approach is Different](index=34&type=section&id=Our%20Scientific%20Approach%20is%20Different) This section explains the company's unique scientific strategy targeting the FLNA protein for central nervous system diseases, particularly TSC-related epilepsy - The company's scientific approach targets the scaffolding protein FLNA to treat central nervous system diseases, believing it is a promising target for **TSC-related epilepsy**[161](index=161&type=chunk)[164](index=164&type=chunk) - Simufilam, a small molecule oral treatment, aims to prevent abnormal functioning of FLNA[164](index=164&type=chunk) [Expansion of Our Science to Other Indications](index=36&type=section&id=Expansion%20of%20Our%20Science%20to%20Other%20Indications) This section outlines the company's plans for further preclinical studies in TSC-related seizures and potential expansion to other CNS disorders - The company intends to continue exploratory preclinical studies for simufilam in TSC-related seizures and submit an IND application for a proof-of-concept clinical trial[167](index=167&type=chunk) - There is potential to expand scientific insights to other central nervous system disorders[166](index=166&type=chunk) [REFOCUS-ALZ (Discontinued)](index=36&type=section&id=REFOCUS-ALZ%20%28Discontinued%29) This section provides specific details on the discontinued Phase 3 REFOCUS-ALZ study for Alzheimer's disease, including endpoint results and safety profile - The Phase 3 REFOCUS-ALZ study for Alzheimer's disease, which enrolled **1,125 patients**, did not meet its co-primary, secondary, and exploratory biomarker endpoints[156](index=156&type=chunk)[168](index=168&type=chunk) | Co-Primary Endpoint Data (LS means change from baseline) | Simufilam 100 mg BID | Simufilam 50 mg BID | Placebo BID | Delta (Simufilam vs Placebo) | P-value | | :------------------------------------------------------- | :------------------- | :------------------ | :---------- | :--------------------------- | :------ | | ADAS-COG12 (N=372-376) | 4.97 | 5.26 | 4.70 | 0.27 (100mg), 0.56 (50mg) | P=0.67 (100mg), P=0.37 (50mg) | | ADCS-ADL (N=373-376) | -6.27 | -6.43 | -5.32 | -0.95 (100mg), -1.10 (50mg) | P=0.23 (100mg), P=0.16 (50mg) | - Simufilam continued to demonstrate an overall **favorable safety profile** in the REFOCUS-ALZ study[156](index=156&type=chunk)[171](index=171&type=chunk) [SavaDx](index=39&type=section&id=SavaDx) This section announces the discontinuation of the investigational diagnostic product candidate, SavaDx, due to business, technical, and personnel reasons - The investigational diagnostic product candidate, SavaDx, focused on detecting Alzheimer's disease from blood, has been **discontinued** as of mid-2025 due to business, technical, and personnel reasons[173](index=173&type=chunk) - SavaDx development accounted for **less than 1%** of the research budget[173](index=173&type=chunk) [We Own Worldwide Rights to Our Development Program](index=39&type=section&id=We%20Own%20Worldwide%20Rights%20to%20Our%20Development%20Program) This section clarifies the company's intellectual property ownership, including patents for simufilam, and the Yale license agreement - The Company owns intellectual property, including patents for simufilam's composition of matter and methods of use in various countries, with terms expiring from **2029 to 2040**[138](index=138&type=chunk)[176](index=176&type=chunk) - No royalties are owed to third parties for these patents and applications[138](index=138&type=chunk)[176](index=176&type=chunk) - The License Agreement with Yale grants **exclusive worldwide rights** to Yale's intellectual property for simufilam in TSC-related epilepsy[177](index=177&type=chunk) [Financial Overview](index=39&type=section&id=Financial%20Overview) This section summarizes the company's financial position, including its accumulated deficit, lack of product revenue, and anticipated future cash requirements - The Company has an accumulated deficit of **$472.7 million** at June 30, 2025, and has not generated product revenue[178](index=178&type=chunk) - Significant cash resources are expected to be used in operations for preclinical and clinical studies, regulatory approvals, manufacturing, and legal proceedings[179](index=179&type=chunk)[180](index=180&type=chunk) - Research and development expenses for SavaDx represented **less than 1%** of total R&D expenses[182](index=182&type=chunk) [Results of Operations – Three and Six Months Ended June 30, 2025 and 2024](index=41&type=section&id=Results%20of%20Operations%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section provides a detailed analysis of the company's operating results for the specified periods, covering various expense categories [Research and Development Expense](index=41&type=section&id=Research%20and%20Development%20Expense) This section analyzes the changes in research and development expenses, attributing decreases primarily to the phase-out of the Alzheimer's disease program | Research and Development Expense (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Clinical trials | $1,313 | $10,877 | $9,408 | $22,169 | | Pre-clinical projects | $827 | $867 | $1,542 | $1,999 | | CMC costs | $391 | $398 | $774 | $1,193 | | Personnel related | $1,049 | $1,615 | $2,774 | $3,260 | | Stock-based compensation | $1,162 | $972 | $3,534 | $1,945 | | Other | $374 | $469 | $750 | $865 | | Total Research and development | $5,116 | $15,198 | $18,782 | $31,431 | - R&D expenses decreased by **66%** to **$5.1 million** for the three months ended June 30, 2025, and by **40%** to **$18.8 million** for the six months ended June 30, 2025, primarily due to the phase-out of the Alzheimer's disease program[186](index=186&type=chunk)[188](index=188&type=chunk) - The decrease was partially offset by a **$1.6 million increase** in stock-based compensation expense for the six months ended June 30, 2025[188](index=188&type=chunk) [General and Administrative Expense](index=42&type=section&id=General%20and%20Administrative%20Expense) This section discusses the fluctuations in general and administrative expenses, highlighting the impact of litigation contingencies and insurance recoveries - G&A expenses decreased by **13%** to **$40.3 million** for the three months ended June 30, 2025, primarily due to a lower securities litigation loss contingency (**$31.3 million** in 2025 vs. **$40.0 million** SEC-related in 2024)[191](index=191&type=chunk) - For the six months ended June 30, 2025, G&A expenses increased by **3%** to **$51.2 million**, as the 2024 SEC-related loss contingency was partially offset by **$8.8 million** in insurance recoveries, which were absent in 2025[192](index=192&type=chunk) - G&A expenses are expected to remain **high** due to professional fees, legal expenses, potential settlements, and increased stock-based compensation[193](index=193&type=chunk) [Interest Income](index=42&type=section&id=Interest%20Income) This section explains the decrease in interest income due to lower interest rates and reduced cash balances - Interest income decreased to **$1.2 million** for the three months ended June 30, 2025 (from **$2.3 million** in 2024), and to **$2.5 million** for the six months ended June 30, 2025 (from **$4.1 million** in 2024)[194](index=194&type=chunk) - The decrease is primarily due to **lower interest rates and reduced cash balances**[194](index=194&type=chunk) [Change in fair value of warrants](index=42&type=section&id=Change%20in%20fair%20value%20of%20warrants) This section details the impact of warrant redemption on the fair value of warrant liabilities, noting no outstanding warrants in 2025 - No common stock warrants were outstanding or had a change in fair value for the three and six months ended June 30, 2025[196](index=196&type=chunk) - A gain of **$65.1 million** and **$108.2 million** from the change in fair value of warrant liabilities was recorded for the three and six months ended June 30, 2024, respectively, due to their redemption[196](index=196&type=chunk)[197](index=197&type=chunk) [Other income (loss), net](index=43&type=section&id=Other%20income%20%28loss%29%2C%20net) This section explains the net loss from other income, primarily due to higher vacancy rates in the company's office complex - Other income (loss), net, was a loss of **$(46,000)** for the three months ended June 30, 2025, and a loss of **$(0.1) million** for the six months ended June 30, 2025[198](index=198&type=chunk) - This net loss is attributed to **higher vacancy rates** in the company's office complex, impacting rental income[199](index=199&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations, including cash flow and funding needs [2024 Common Stock Warrant Distribution](index=44&type=section&id=2024%20Common%20Stock%20Warrant%20Distribution) This section reviews the 2024 warrant distribution and its significant contribution to the company's net proceeds - In 2024, the Company distributed approximately **16.9 million warrants**, which were subsequently redeemed on May 7, 2024[202](index=202&type=chunk)[203](index=203&type=chunk) - The warrant exercises generated approximately **$123.6 million** in net proceeds for the Company in 2024[206](index=206&type=chunk) [2020 Cash Incentive Bonus Plan Obligations](index=44&type=section&id=2020%20Cash%20Incentive%20Bonus%20Plan%20Obligations) This section confirms that no payments have been made under the CIB Plan as of the reporting date - No cash payments have been authorized or made to participants under the CIB Plan as of June 30, 2025, or through the filing date[208](index=208&type=chunk) [Use of Cash](index=44&type=section&id=Use%20of%20Cash) This section analyzes the company's cash flow from operating and financing activities for the six months ended June 30, 2025 - Net cash used in operating activities was **$16.3 million** for the six months ended June 30, 2025, primarily due to a net loss of **$67.6 million**, partially offset by increases in accrued expenses and stock-based compensation[209](index=209&type=chunk) - Net cash provided by financing activities was **$0.1 million** for the six months ended June 30, 2025, from stock option exercises, a significant decrease from **$123.6 million** in 2024 from warrant exercises[211](index=211&type=chunk)[212](index=212&type=chunk) [Property and Leases](index=45&type=section&id=Property%20and%20Leases) This section describes the company's real estate holdings and the expected net loss from leasing activities due to vacancy rates - The Company occupies approximately **25%** of its **90,000 square foot** office complex in Austin, Texas, with the remainder leased or available for lease[213](index=213&type=chunk) - A net loss on leasing activities is expected in 2025 due to **higher vacancy rates and significantly lower rental income**[213](index=213&type=chunk) [Other Commitments](index=45&type=section&id=Other%20Commitments) This section reiterates the company's accumulated deficit and future funding requirements, while affirming current liquidity for the next 12 months - The Company has an accumulated deficit of **$472.7 million** as of June 30, 2025, and anticipates significant future cash requirements[214](index=214&type=chunk) - Current cash and cash equivalents are believed to be sufficient for at least the next **12 months**, but additional future funding may be sought[214](index=214&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Cassava Sciences is not required to provide quantitative and qualitative disclosures about market risk - The Company is **exempt** from providing market risk disclosures as a smaller reporting company[215](index=215&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of June 30, 2025, with no material changes identified - Disclosure controls and procedures were evaluated and deemed **effective** as of June 30, 2025[216](index=216&type=chunk)[217](index=217&type=chunk) - No **material changes** in internal control over financial reporting were identified during the three months ended June 30, 2025[218](index=218&type=chunk) [PART II. OTHER INFORMATION](index=45&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section contains additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 10 for detailed information regarding the company's legal proceedings, including government inquiries and litigation contingencies - Information on legal proceedings, including government inquiries and litigation, is detailed in **Note 10** to the condensed consolidated financial statements[219](index=219&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the 2024 Annual Report on Form 10-K for risk factors and provides a supplemental risk factor concerning potential FDA disruptions - A supplemental risk factor highlights that disruptions at the FDA, including workforce reductions or inadequate funding, could **negatively impact** the company's business by delaying regulatory reviews and approvals[221](index=221&type=chunk) - The U.S. Department of Health and Human Services (HHS) announced an FDA workforce reduction of approximately **3,500 employees** in March 2025[221](index=221&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities or use of proceeds occurred[223](index=223&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - No defaults upon senior securities occurred[224](index=224&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are **not applicable** to the Company[225](index=225&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) No directors or officers reported adopting or terminating Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No directors or officers reported adopting or terminating Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[226](index=226&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents, employment agreements, and key agreements - Key exhibits include Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, employment agreements for Eric J. Schoen and R. Christopher Cook, the 2020 Cash Incentive Bonus Plan, and the License Agreement with Yale University[227](index=227&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are also filed[227](index=227&type=chunk) [SIGNATURES](index=49&type=section&id=SIGNATURES) This section confirms the official signing of the report by the company's principal executive and financial officers - The report is signed by Richard J. Barry, President and Chief Executive Officer, and Eric J. Schoen, Chief Financial Officer, on **August 14, 2025**[231](index=231&type=chunk)

[Q2 2025 Financial Results and Business Update Overview](index=1&type=section&id=Q2%202025%20Financial%20Results%20and%20Business%20Update%20Overview) [Executive Summary of Q2 2025 Performance](index=1&type=section&id=Executive%20Summary%20of%20Q2%202025%20Performance) Cassava Sciences reported a **$44.2 million net loss** for Q2 2025, a significant shift from prior year net income, with **$16.3 million net cash used in operations** for H1 2025 Net Income (Loss) Comparison (in millions) | Period | Net Income (Loss) (in millions) | | :----- | :------------------------------ | | Q2 2025 | ($44.2) | | Q2 2024 | $6.2 | Net Cash Used in Operations (in millions) | Period | Net Cash Used in Operations (in millions) | | :----- | :---------------------------------------- | | H1 2025 | $16.3 | | H2 2025 (Expected) | $47 - $51 | [Corporate Highlights](index=1&type=section&id=Corporate%20Highlights) The company advances simufilam for TSC-related epilepsy with positive preclinical data, strategic neuroscience appointments, and addresses securities litigation with a recorded loss contingency [TSC-related Epilepsy Program Development](index=1&type=section&id=TSC-related%20Epilepsy%20Program%20Development) - Simufilam is being advanced as a potential first-in-class treatment for TSC-related epilepsy, with positive preclinical results showing alleviation of neuronal abnormalities and a **60% reduction in seizure frequency** in a mouse model[5](index=5&type=chunk)[6](index=6&type=chunk)[9](index=9&type=chunk) - A proof-of-concept clinical study for TSC-related epilepsy is planned for **H1 2026**, following positive preclinical data and a Yale University license agreement in **February 2025**[6](index=6&type=chunk)[8](index=8&type=chunk)[9](index=9&type=chunk) [Key Neuroscience Appointments](index=1&type=section&id=Key%20Neuroscience%20Appointments) - Dr. Joseph Hulihan has been appointed as **Chief Medical Officer (CMO)** to advise on the clinical development of simufilam for TSC-related epilepsy[7](index=7&type=chunk) - Dr. Angélique Bordey joined as **Senior Vice President (SVP), Neuroscience**, and Dr. Jack Moore as **SVP, Clinical Development**, to guide the clinical development strategy[7](index=7&type=chunk)[10](index=10&type=chunk) [Financial Position and Litigation Update](index=1&type=section&id=Financial%20Position%20and%20Litigation%20Update) Cash and Cash Equivalents (in millions) | As of | Amount (in millions) | | :---- | :------------------- | | June 30, 2025 | $112.4 | | December 31, 2024 | $128.6 | - An estimated loss contingency of **$31.25 million** was recorded in Q2 2025 related to the potential settlement of certain securities litigation[3](index=3&type=chunk)[8](index=8&type=chunk)[15](index=15&type=chunk) [Detailed Financial Results for Second Quarter 2025](index=2&type=section&id=Detailed%20Financial%20Results%20for%20Second%20Quarter%202025) [Key Financial Metrics](index=2&type=section&id=Key%20Financial%20Metrics) Cassava Sciences reported a Q2 2025 net loss of $44.2 million ($0.92 per share), a decline from Q2 2024 net income, with cash and cash equivalents at $112.4 million as of June 30, 2025 Net Income (Loss) and EPS (in millions, except per share amounts) | Metric | Q2 2025 | Q2 2024 | | :----- | :------ | :------ | | Net Income (Loss) (in millions) | ($44.2) | $6.2 | | EPS (Basic & Diluted) | ($0.92) | $0.13 | Cash and Cash Equivalents (in millions) | Date | Amount (in millions) | | :--- | :------------------- | | June 30, 2025 | $112.4 | | December 31, 2024 | $128.6 | Net Cash Used in Operations (in millions) | Period | Amount (in millions) | | :----- | :------------------- | | H1 2025 | $16.3 | | H2 2025 (Expected) | $47 - $51 | | Year-end 2025 (Estimated Cash) | $61 - $65 | - The Q2 2025 net loss included a **$31.25 million** estimated loss contingency for securities litigation and **$4.6 million** in non-cash stock-based compensation expense[15](index=15&type=chunk) - Net income in Q2 2024 was primarily driven by a non-cash gain from the change in fair value of warrant liabilities[15](index=15&type=chunk) [Operating Expenses Analysis](index=2&type=section&id=Operating%20Expenses%20Analysis) R&D expenses decreased by 66% due to Alzheimer's program completion, while G&A expenses fell 13%, influenced by varying litigation loss contingencies Research and Development (R&D) Expenses (in millions) | Period | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (YoY) | | :----- | :-------------------- | :-------------------- | :----------- | | R&D Expenses | $5.1 | $15.2 | -66% | | Stock-based Compensation | $1.2 | $1.0 | +20% | - The **66% decrease in R&D expenses** was primarily due to the phase-out and completion of the Alzheimer's disease development program in Q2 2025[15](index=15&type=chunk) General and Administrative (G&A) Expenses (in millions) | Period | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (YoY) | | :----- | :-------------------- | :-------------------- | :----------- | | G&A Expenses | $40.3 | $46.2 | -13% | | Stock-based Compensation | $3.4 | $1.6 | +112.5% | | Legal-related Costs (Q2 2025) | ~$3.6 | N/A | N/A | - The **13% decrease in G&A expenses** was mainly due to a **$40.0 million SEC-related loss contingency** recorded in 2024, compared to a **$31.25 million securities litigation estimated loss contingency** recorded in 2025[15](index=15&type=chunk) [About Tuberous Sclerosis Complex (TSC) and TSC-related Epilepsy](index=2&type=section&id=About%20Tuberous%20Sclerosis%20Complex%20(TSC)%20and%20TSC-related%20Epilepsy) - Tuberous Sclerosis Complex (TSC) is a rare genetic disorder caused by mutations in TSC1 or TSC2 genes, affecting approximately **50,000 people** in the US and involving multiple organs, including the brain, leading to severe manifestations like epileptic seizures[9](index=9&type=chunk)[12](index=12&type=chunk)[13](index=13&type=chunk) - Epilepsy is the most common medical condition in TSC patients, affecting **80-90%**, with two-thirds experiencing refractory epilepsy. Current therapies are often not fully effective and are associated with serious adverse events[13](index=13&type=chunk) [About Cassava Sciences, Inc.](index=2&type=section&id=About%20Cassava%20Sciences%2C%20Inc.) - Cassava Sciences, Inc. is a biotechnology company focused on developing novel, investigational treatments for central nervous system disorders, with a primary focus on simufilam for TSC-related epilepsy[14](index=14&type=chunk) - Simufilam is a proprietary, investigational oral small molecule believed to modulate the activity of the filamin A protein, which regulates diverse aspects of neuronal development[14](index=14&type=chunk) [Financial Tables](index=4&type=section&id=Financial%20Tables) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This table presents unaudited condensed consolidated statements of operations for Cassava Sciences for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations (unaudited, in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Operating expenses | | | | | | Research and development | $5,116 | $15,198 | $18,782 | $31,431 | | General and administrative | $40,276 | $46,204 | $51,196 | $49,905 | | Total operating expenses | $45,392 | $61,402 | $69,978 | $81,336 | | Operating loss | ($45,392) | ($61,402) | ($69,97

Core Insights - Cassava Sciences, Inc. reported a net loss of $44.2 million for Q2 2025, a significant decline from a net income of $6.2 million in the same period of 2024 [2][13] - The company is advancing its investigational treatment simufilam for Tuberous Sclerosis Complex (TSC)-related epilepsy, with a proof-of-concept study planned for H1 2026 [5][9] - Cassava has appointed experienced neuroscience professionals to guide the clinical development of simufilam, enhancing its research capabilities [6][8] Financial Performance - Net cash used in operations for the first half of 2025 was $16.3 million, with expectations of $47 to $51 million for the second half, including a $31.25 million estimated loss contingency related to securities litigation [2][13] - Cash and cash equivalents stood at $112.4 million as of June 30, 2025, down from $128.6 million at the end of 2024 [13][22] - Research and development expenses decreased by 66% to $5.1 million in Q2 2025, primarily due to the phase-out of the Alzheimer's disease program [13][20] Business Developments - The company initiated a new program focused on TSC-related epilepsy, supported by positive preclinical studies showing a 60% reduction in seizure frequency in animal models [3][5] - Cassava has established collaborations with Yale University and the TSC Alliance to further its research on simufilam [9][12] - The appointment of Dr. Joseph Hulihan as Chief Medical Officer and other neuroscience leaders is expected to strengthen the clinical development strategy for simufilam [6][8] Market Context - TSC affects approximately 50,000 people in the US, with 80% to 90% of patients experiencing seizures, highlighting a significant unmet medical need for effective treatments [11][12] - Current therapies for TSC-related epilepsy are not fully effective and are associated with serious adverse events, indicating a potential market opportunity for simufilam [11][12]

Core Viewpoint - Cassava Sciences, Inc. has appointed Dr. Joseph Hulihan as Chief Medical Officer to lead the clinical development of simufilam for Tuberous Sclerosis Complex (TSC)-related epilepsy [1][3][8] Company Overview - Cassava Sciences, Inc. is a clinical-stage biotechnology company focused on developing investigational treatments for central nervous system disorders, including TSC-related epilepsy [5] - Simufilam is a proprietary oral small molecule believed to modulate the activity of the filamin A protein, which is crucial for neuronal development [5] Appointment of Dr. Joseph Hulihan - Dr. Hulihan has over 25 years of experience in the development of therapeutics for epilepsy and neurological disorders, previously serving as CMO at Marinus Pharmaceuticals and in senior roles at Janssen Pharmaceuticals [2][4] - He is board certified in Neurology and Electroencephalography (EEG) and has been involved in over 25 late-stage neurology-focused clinical trials [2][4] Clinical Development Plans - The clinical program for simufilam as a potential treatment for TSC-related epilepsy is set to begin in the first half of 2026 [4][8] - Dr. Hulihan expressed enthusiasm for simufilam's novel mechanism of action and the upcoming proof-of-concept study [4]

Core Viewpoint - Cassava Sciences, Inc. reported positive preclinical results for simufilam in treating tuberous sclerosis complex (TSC)-related epilepsy, indicating its potential as a novel treatment option [1][2][6] Company Summary - Cassava Sciences is a clinical-stage biotechnology company focused on developing treatments for central nervous system disorders, including TSC-related epilepsy [13] - Simufilam is a proprietary oral small molecule believed to modulate the activity of the filamin A protein, which is crucial for neuronal development [13] - The company plans to initiate a proof-of-concept study for simufilam in TSC-related epilepsy in the first half of 2026 [6][9] Research Findings - The study utilized the Tsc1 conditional knockout (CKO) mouse model, which is recognized for evaluating the effectiveness of therapeutics for TSC-related epilepsy [3][4] - Simufilam demonstrated a beneficial effect on seizure activity, showing a statistically significant correlation between the dose of simufilam and the number of seizures [4] - The results align with previous findings from Yale School of Medicine, reinforcing the potential of simufilam as a first-in-class treatment for TSC-related epilepsy [2][5] Industry Context - Tuberous sclerosis complex affects approximately 50,000 individuals in the US, with epilepsy being the most common condition associated with TSC [12] - Between 80% and 90% of TSC patients experience seizures, and two-thirds have refractory epilepsy, highlighting the urgent need for new treatment options [12] - Current therapies are not fully effective and can lead to serious adverse events, emphasizing the potential market opportunity for simufilam [12]

Core Insights - Cassava Sciences, Inc. presented promising preclinical data on simufilam, showing a significant reduction in seizure activity in a mouse model, which supports its potential as a treatment for Tuberous Sclerosis Complex (TSC)-related epilepsy [1][3][4] - The company plans to initiate human clinical studies in the first half of 2026 to further evaluate simufilam's efficacy in treating TSC-related epilepsy [2][3][10] Preclinical Data - Simufilam reduced seizure frequency by 60% in a mouse model compared to vehicle-treated mice, with significant results (p<0.0001) [7][9] - The effective dose in mice was 20 mg/kg/day, and no adverse effects were observed at doses up to 50 mg/kg/day in rats and 1250 mg/kg/day in mice [7] - The treatment also led to a higher rate of seizure freedom in mice, with 11 out of 32 simufilam-treated mice achieving seizure freedom compared to 3 out of 29 vehicle-treated mice (p=0.0343) [9] Clinical Safety Data - Data from two Phase 3 studies involving 1,929 patients with mild-to-moderate Alzheimer's disease demonstrated a favorable safety profile for simufilam [11][15] - Non-serious adverse events were typically mild and not considered related to simufilam, with no serious adverse events assessed as study-drug related [15] Background on TSC - Tuberous Sclerosis Complex (TSC) affects approximately 50,000 patients in the US, leading to lifelong epilepsy and severe neurological issues [3][12] - Current treatments for TSC-related epilepsy are often ineffective, with nearly two-thirds of patients not responding to antiepileptic drugs [13][14] Future Directions - Additional preclinical studies are planned in collaboration with the TSC Alliance to explore simufilam's mechanism of action and its potential for treating TSC-related epilepsy [10]

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company reported a net loss of **$23.4 million** for Q1 2025, a significant shift from a net income of **$25.0 million** in Q1 2024, primarily due to a **$43.0 million** gain from warrant liabilities in the prior year Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $117,328 | $128,574 | | Total current assets | $120,151 | $136,532 | | Total assets | $140,932 | $157,533 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $13,237 | $11,750 | | Total liabilities | $13,316 | $11,829 | | Total stockholders' equity | $127,616 | $145,704 | | Total liabilities and stockholders' equity | $140,932 | $157,533 | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Research and development | $13,666 | $16,233 | | General and administrative | $10,920 | $3,701 | | Total operating expenses | $24,586 | $19,934 | | Operating loss | $(24,586) | $(19,934) | | Gain from change in fair value of warrant liabilities | $— | $43,041 | | Net income (loss) | $(23,403) | $25,043 | | Net loss per share, diluted | $(0.48) | $(0.43) | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(11,336) | $(19,127) | | Net cash used in investing activities | $— | $— | | Net cash provided by financing activities | $90 | $22,160 | | Net increase (decrease) in cash | $(11,246) | $3,033 | | Cash and cash equivalents at end of period | $117,328 | $124,169 | Notes to Condensed Consolidated Financial Statements - The company has a history of significant net losses, with an accumulated deficit of **$428.5 million** as of March 31, 2025. Management believes current working capital is sufficient to meet needs for at least the next 12 months[23](index=23&type=chunk) - On February 26, 2025, the company entered into an exclusive worldwide license agreement with Yale University for the development and commercialization of simufilam for Tuberous Sclerosis Complex (TSC)-related epilepsy. The agreement includes up to **$4.5 million** in milestone payments and tiered royalties[75](index=75&type=chunk) - The company is involved in multiple legal proceedings, including government investigations and securities class action lawsuits. It settled with the SEC in September 2024, paying a **$40 million** penalty. A reserve of **$3.0 million** has been accrued for potential litigation settlements[90](index=90&type=chunk)[92](index=92&type=chunk)[107](index=107&type=chunk) - In January 2024, the company distributed warrants which, through their redemption in May 2024, generated total gross proceeds of approximately **$126.3 million**[114](index=114&type=chunk) - In January 2025, the company implemented a workforce reduction of **10 employees** (**33%**), incurring approximately **$0.4 million** in one-time severance costs[120](index=120&type=chunk)[121](index=121&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic pivot from Alzheimer's disease to Tuberous Sclerosis Complex (TSC)-related epilepsy following the failure of Phase 3 trials, with R&D expenses decreasing and G&A expenses rising due to legal costs Overview and Business Update - The company has discontinued its Alzheimer's disease development program for simufilam after two **Phase 3 studies** (RETHINK-ALZ and REFOCUS-ALZ) failed to meet their co-primary endpoints. The phase-out is expected to be complete by the end of Q2 2025[132](index=132&type=chunk)[151](index=151&type=chunk)[154](index=154&type=chunk) - The company is now focusing on developing simufilam for **Tuberous Sclerosis Complex (TSC)-related epilepsy**, supported by an exclusive license agreement with Yale University[132](index=132&type=chunk)[135](index=135&type=chunk)[145](index=145&type=chunk) - The company intends to conduct exploratory **preclinical studies** in collaboration with the Tuberous Sclerosis Alliance (TSCA) to assess simufilam's potential for TSC-related seizures before considering an IND application[144](index=144&type=chunk)[165](index=165&type=chunk) Results of Operations - Research and Development (R&D) expenses **decreased by 16%** to **$13.7 million** in Q1 2025 from **$16.2 million** in Q1 2024, primarily due to the discontinuation of Alzheimer's clinical trials[185](index=185&type=chunk) - General and Administrative (G&A) expenses **increased to $10.9 million** in Q1 2025 from **$3.7 million** in Q1 2024. The increase was driven by a **$3.0 million** estimated legal loss accrual and the absence of a **$3.0 million** insurance recovery that occurred in the prior-year period[189](index=189&type=chunk) - A **gain of $43.0 million** from the change in fair value of warrants was recognized in Q1 2024, which was the primary reason for the net income in that period. No such gain occurred in Q1 2025 as there were no warrants outstanding[192](index=192&type=chunk)[193](index=193&type=chunk) Liquidity and Capital Resources - As of March 31, 2025, the company had cash and cash equivalents of **$117.3 million**[196](index=196&type=chunk) - The company believes its current cash and cash equivalents will be **sufficient to fund operations for at least the next 12 months**[209](index=209&type=chunk) - Net cash used in operating activities was **$11.3 million** for the three months ended March 31, 2025, compared to **$19.1 million** in the same period of 2024[204](index=204&type=chunk)[205](index=205&type=chunk) - The 2024 warrant distribution generated total net proceeds of approximately **$123.6 million** after expenses and commissions[114](index=114&type=chunk)[201](index=201&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Cassava Sciences, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is **not required to provide information on market risk** as it qualifies as a **smaller reporting company** under Regulation S-K[210](index=210&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2025[211](index=211&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter that materially affected, or are reasonably likely to materially affect, these controls[213](index=213&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, including government inquiries and shareholder lawsuits, with detailed information provided in Note 10 of the financial statements - The company is involved in **ongoing litigation, government inquiries, and investigations**. Detailed information is provided in Note 10 to the condensed consolidated financial statements[214](index=214&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - **No material changes** in risk factors have occurred since the filing of the 2024 Annual Report on Form 10-K[215](index=215&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - **None**[217](index=217&type=chunk) [Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - **None**[218](index=218&type=chunk) [Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[219](index=219&type=chunk) [Other Information](index=46&type=section&id=Item%205.%20Other%20Information) During the quarter, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - **No directors or officers informed the company of the adoption or termination of a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement** during the quarter[220](index=220&type=chunk) [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications by the CEO and CFO

[Business Update](index=1&type=section&id=Business%20Update) Cassava pivots to TSC-related epilepsy with simufilam, discontinues Alzheimer's program, and reduces workforce - The company aims to initiate the first clinical study for simufilam in TSC-related epilepsy in **H1 2026**[3](index=3&type=chunk) - The Alzheimer's disease program with simufilam will be completely discontinued by end of **Q2 2025** after Phase 3 study failures[6](index=6&type=chunk) [Portfolio Highlights](index=1&type=section&id=Portfolio%20Highlights) Portfolio focuses on simufilam for TSC-related epilepsy, with H1 2026 clinical trials planned, following Alzheimer's program termination - **Simufilam** is being developed for Tuberous Sclerosis Complex (TSC)-related epilepsy, with clinical trials planned to start in **H1 2026**[3](index=3&type=chunk)[6](index=6&type=chunk) - The Alzheimer's disease program is being completely discontinued by **end of Q2 2025** due to Phase 3 study failures[6](index=6&type=chunk) - A license agreement for TSC program intellectual property was established with Yale University in **February 2025**[3](index=3&type=chunk)[6](index=6&type=chunk) [Corporate Highlights](index=1&type=section&id=Corporate%20Highlights) Cassava appointed new SVPs for neuroscience and clinical development, and reduced its workforce by 33% through a cost curtailment program - Appointed **Dr. Angélique Bordey** as SVP, Neuroscience, and **Dr. Jack Moore** as SVP, Clinical Development, to advance the new TSC program[3](index=3&type=chunk)[6](index=6&type=chunk) - Implemented a cost curtailment program, reducing the workforce by **10 employees** (approximately **33%**) in Q1[6](index=6&type=chunk) - **Dr. James W. Kupiec** retired as Chief Medical Officer, effective **May 9, 2025**[6](index=6&type=chunk) [Financial Results for First Quarter 2025](index=1&type=section&id=Financial%20Results%20for%20First%20Quarter%202025) Cassava reported a Q1 2025 net loss of **$23.4 million**, contrasting with Q1 2024 net income, while maintaining **$117.3 million** cash and no debt Key Financial Metrics (in millions) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | **Net Income (Loss)** | **($23.4M)** | **$25.0M** | **-$48.4M** | | R&D Expenses | $13.7M | $16.2M | -16% | | G&A Expenses | $10.9M | $3.7M | +195% | | Cash & Cash Equivalents | $117.3M | - | - | | Net Cash Used in Operations | $11.3M | - | - | - The company ended Q1 2025 with **$117.3 million** in cash and cash equivalents and no debt[1](index=1&type=chunk)[10](index=10&type=chunk) - The increase in G&A expenses was primarily driven by a **$3.0 million** estimated loss accrual for legal-related expenses[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For Q1 2025, Cassava reported no revenue, an operating loss of **$24.6 million**, and a net loss of **$23.4 million** or **($0.48) per share**, contrasting with Q1 2024's net income Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | (In thousands, except per share amounts) | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | **Operating Expenses** | | | | Research and development | $13,666 | $16,233 | | General and administrative | $10,920 | $3,701 | | **Total operating expenses** | **$24,586** | **$19,934** | | **Operating loss** | **($24,586)** | **($19,934)** | | Gain from change in fair value of warrant liabilities | $— | $43,041 | | **Net income (loss)** | **($23,403)** | **$25,043** | | **Net income (loss) per share, basic** | **($0.48)** | **$0.58** | [Condensed Consolidated Balance Sheets](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2025, Cassava's total assets were **$140.9 million**, decreasing from **$157.5 million** at year-end 2024, with liabilities at **$13.3 million** and equity at **$127.6 million** Condensed Consolidated Balance Sheets (in thousands) | (In thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $117,328 | $128,574 | | **Total assets** | **$140,932** | **$157,533** | | **Liabilities and Stockholders' Equity** | | | | Total current liabilities | $13,237 | $11,750 | | **Total liabilities** | **$13,316** | **$11,829** | | **Total stockholders' equity** | **$127,616** | **$145,704** | | **Total liabilities and stockholders' equity** | **$140,932** | **$157,533** |

Core Insights - Cassava Sciences, Inc. is advancing the development of simufilam for TSC-related epilepsy, with plans to initiate clinical trials in the first half of 2026 following necessary pre-clinical studies and regulatory strategy development [3][6] - The company reported a net loss of $23.4 million for Q1 2025, a significant decrease from a net income of $25.0 million in the same period in 2024, primarily due to the change in fair value of warrant liabilities [6][10] - As of March 31, 2025, Cassava had cash and cash equivalents of $117.3 million, with no debt, indicating a favorable balance sheet for future developments [6][19] Business Update - Cassava has entered a license agreement with Yale University for intellectual property rights related to potential treatments for rare diseases, including TSC-related epilepsy [3][6] - The company has appointed Dr. Angélique Bordey as SVP of Neuroscience and Dr. Jack Moore as SVP of Clinical Development to enhance its team for the new TSC-related epilepsy program [3][6] - The Alzheimer's disease program, which did not meet its co-primary endpoints in Phase 3 studies, will be completely discontinued by the end of Q2 2025 [6][10] Financial Performance - Total operating expenses for Q1 2025 were $24.6 million, compared to $19.9 million in Q1 2024, reflecting increased general and administrative expenses primarily due to legal-related costs [10][17] - Research and development expenses decreased by 16% to $13.7 million in Q1 2025, down from $16.2 million in the same period in 2024, due to the discontinuation of Alzheimer's clinical trials [10][17] - General and administrative expenses rose to $10.9 million in Q1 2025, compared to $3.7 million in Q1 2024, largely due to legal expenses and the absence of insurance recoveries [10][17]

Core Insights - Cassava Sciences, Inc. has appointed Dr. Angélique Bordey as Senior Vice President of Neuroscience to lead research and development efforts, particularly focusing on simufilam for TSC-related epilepsy and other potential indications [1][2][3] Company Overview - Cassava Sciences, Inc. is a clinical-stage biotechnology company that develops investigational treatments for central nervous system disorders, including simufilam for TSC-related epilepsy [7] - Simufilam is a proprietary oral small molecule targeting the filamin A protein [7] Leadership and Expertise - Dr. Bordey brings extensive experience as Vice Chair of the Department of Neurosurgery at Yale School of Medicine and has published over 125 research papers [5][6] - Her research has contributed to a recently granted patent for simufilam's use in treating TSC-related epilepsy, which has led to a licensing agreement with Yale University [3][4] Research Focus - Dr. Bordey will guide the preclinical program to evaluate simufilam as a treatment for TSC-related epilepsy, which is known to be challenging to manage [2][4] - The collaboration with the TSC Alliance and her leadership in the TSC community may facilitate productive study collaborations [3][4]