Cassava Sciences(SAVA) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements 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] - 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] - 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][92][107] - In January 2024, the company distributed warrants which, through their redemption in May 2024, generated total gross proceeds of approximately $126.3 million[114] - In January 2025, the company implemented a workforce reduction of 10 employees (33%), incurring approximately $0.4 million in one-time severance costs[120][121] Management's Discussion and Analysis of Financial Condition and Results of Operations 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][151][154] - 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][135][145] - 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][165] 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] - 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] - 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][193] Liquidity and Capital Resources - As of March 31, 2025, the company had cash and cash equivalents of $117.3 million[196] - The company believes its current cash and cash equivalents will be sufficient to fund operations for at least the next 12 months[209] - 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][205] - The 2024 warrant distribution generated total net proceeds of approximately $123.6 million after expenses and commissions[114][201] Quantitative and Qualitative Disclosures About Market Risk 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] Controls and Procedures 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] - 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] PART II. OTHER INFORMATION Legal Proceedings 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] Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[217] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[218] Mine Safety Disclosures This item is not applicable to the company - Not applicable[219] Other Information 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] Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications by the CEO and CFO