Hi everyone, thanks for joining us at the H.C. Wainwright 27th Annual Global Investment Conference. My name is Emily Bodnar, and I'm an Equity Research Analyst at H.C. Wainwright. I'm pleased to introduce our next presenter, Rick Barry, who's the Chief Executive Officer of Cassava Sciences.
Thank you, Emily. First, let me thank the folks at H.C. Wainwright for inviting us and asking us to present at the conference. I suppose I would be ungrateful if I also didn't thank the rock star, Sting, because tonight is the HCW Gala, and Sting asked me to be the warm-up band by being the last person to present today. It's about as close as I'm ever going to become to being a rock star. Today I will be making forward-looking statements. Please read them carefully. This morning we updated our website with a new corporate investor deck. That deck is on our website. It will give you a lot more information than I'm going to be able to give you over the next 20 minutes. I'm going to pause on a few slides to highlight the things that I think are important.
First, I want to give you an understanding of why I'm here. I joined the board of Cassava Sciences in 2021. I've served on three public biotech boards since I left the money management business in 2010. I've always been interested in companies when they're doing something revolutionary or very different. I got involved in Sarepta, for example, when its first exon- skipping drug was in phase I. I joined the board of MiMedx after the company got itself into trouble with the U.S. government and nearly wiped out all shareholder value, even though the company's revolutionary amniotic stem cell wound- healing products were, and I think still are, the best in the industry. What interested me about Cassava was they were developing a potential treatment for Alzheimer's disease, but they were going about it in a very different way.
Most of us have seen many, many, many failures in Alzheimer's over the last 30 years. Instead of attacking amyloid plaque like most drugs had done, Cassava's drug essentially tried to correct some of what they believed were the root causes of the disease. Companies that are doing something different are almost always controversial. As an investor, controversy can present an opportunity if you think you can develop enough conviction based upon good research about what the company is intending to do. That's what I've always done. Unfortunately, Cassava attracted more controversy than I ever would have imagined, and by the summer of 2024, the company was under investigation by two government agencies. Those investigations led to the resignation of the company's CEO and Senior Vice President of Neuroscience.
As you probably know, the company announced a settlement with the Securities and Exchange Commission last fall, which put that sad chapter behind us. I became Executive Chair of the company on July 17th, 2024. The company, as you may remember, had two fully enrolled phase III Alzheimer's disease trials, the first of which was only months away from a readout. I strongly believed the drug had a good chance of success in Alzheimer's, and as I've seen the suffering of patients and their families from this wicked disease, I wanted to make sure that patients would have an opportunity to get this drug if the trials were successful. A funny thing happened early in the morning of July 17th.
Just as the press release announcing the management change hit the wires, I was in Austin and was preparing to go to the company's offices to meet the workforce for the first time and explain as best as I could what had happened and what the plan would be. I got a phone call from an old friend of mine who had just seen the news. He was insistent that I needed to get in touch with a mutual friend of ours. He was a brilliant guy who happens to serve as the head of translational science at the Tuberous Sclerosis Alliance. I kind of got my hands full at the moment, was what I was thinking, but he was very insistent that I get in touch with this friend. There was a history between Cassava and tuberous sclerosis, and he implored me to understand it.
I was intrigued by what he told me, so I got in touch with our friend. I knew there had been some interesting research at Yale University on our drug, simufilam, but I didn't know much about it at the time. It turns out that a professor at Yale, Dr. Angélique Bordey, who was Vice Chair of the Yale Medical School, had performed some experiments using our drug in a mouse model to see if it would have an effect on a specific type of epilepsy related to TSC and focal cortical dysplasia type 2. The results were very compelling, and they were published in Science Translational Medicine in 2020. Yale had filed patents around Dr. Bordey's findings, and they approached the company, asking the company to license the patents. The management at the time had no interest. What I learned was that Dr.
Bordey was very passionate about her findings and strongly believed that our drug could help patients with this disease. My friend at TSC Alliance was equally enthusiastic about her work and her findings and urged me to find a way to run a trial for TSC patients. He said he would put the full resources of the TSC Alliance behind our program. That started several months of serious work. We looked hard at how we could come to terms with Yale in order to have freedom to operate. We obviously worked to understand the market opportunity. We looked at a few drugs that had been successful, or the few drugs that had been successful, and the many failures in this indication. The TSC Alliance arranged for us to meet with many of the leading clinicians in the U.S. who wanted to learn about simufilam.
They also read Dr. Bordey's work. We decided that TSC would be our next program, but we waited for what we thought was going to be a positive AD result before we launched another program. As we now know, our phase III results failed, and we had a tremendous amount of work to do to understand why. We needed to understand what happened, so we spent months just interrogating the data. Drugs fail for lots of reasons in trials, and we wanted to make sure that we could see activity in simufilam before we endeavored to tackle another difficult disease. One thing you should know is that our safety profile was remarkable in the Alzheimer's trial. We had no drug-related adverse events in the trial, and there were more than 1,150 on our drug in the phase III trials.
We feel we have an understanding now of what happened, and we're hopeful that you're going to be reading about it when our manuscript gets published. Despite the respect that we have for Dr. Bordey, we wanted to see if we could see a successful result in another mouse model. We ran a study in the TSC Alliance mouse model, which is much more challenging than the model Dr. Bordey used in her study. In this model, the mice are very sick. Lots of mice generally die too quickly before you see a result. We saw a very similar signal in the TSC model that Dr. Bordey saw in her FCD2 model. If I've learned nothing else in my time as an investor, a director, or a business operator, I've learned that success will largely be determined by the company you keep.
This is a good team, and it's a solid board. As you can see, Dr. Angélique Bordey, she joined us a few months ago. She's our Senior Vice President of Neuroscience. She's regarded as one of the leading experts in the world on TSC, and we're extremely fortunate to have her. We recently announced the addition of Dr. Joe Houlihan. Dr. Houlihan is a neurologist and hepatologist who worked with J&J for many years in medical affairs. More recently, he was the Chief Medical Officer for Marinus, who ran a large phase III trial in TSC-related epilepsy. He is very committed to developing better solutions for TSC patients. I should also mention Dr. Claude Nicaise. He serves as our Board Chair. Claude and I have served on this reputable board for more than 10 years together. Dr. Nicaise's experience in drug development is incredibly impressive.
He's got more than 14 drug approvals to his credit. There are two ways we could go with this drug. We could look at TSC-related epilepsy, which is what we plan to do, and/or we could look at focal cortical dysplasia 2. Our initial proof-of-concept trial, which I'll get into in a moment, we're going to look at TSC-related epilepsy. The reason is FCD2 is harder to diagnose. Generally, it's hard to know if the patient has it until they've had surgery. Now I'm going to talk about what is tuberous sclerosis. The hallmark of TSC is when patients, they grow these cortical tubers in the brain.
The tubers tend to affect different parts of the body, but the thing that tends to affect more than anything else, what's most common about the disease, is that 80%- 90% of the patients experience epilepsy, and it's a form that's basically related to TSC. This is the slide you would expect to see in an investor presentation. You need to see the size of the market and how well it's served. You can see here that TSC is, for a rare disease, a pretty large patient population. There's 50,000 patients estimated in the United States. About 80%- 90% of those patients have epilepsy-related seizures, and sadly, more than 60% of those patients, even though they're on medication, don't get full relief from those medications.
You should know that there are two approved drugs for this indication: Afinitor, which was originally marketed by Novartis, and EPIDIOLEX, which is currently marketed by Jazz . They're good drugs. With more than 60% of the patients getting inadequate control of their seizures, the patients need new solutions. There's a clear commercial opportunity here. That's not the only reason that you do something like this. By now, you get the real reason, and that is, why do you tackle a disease like this? The reason is that there is a dire need for it. Can you imagine having your child having such powerful seizures that you fear that your child could die from them one night while you're soundly asleep? That's the problem I have learned from parents that I've talked to that have children with this disease.
I've met parents who've had to sleep with their kids for the first 16 years of their lives. Can you imagine how frightening that would be? That's why we need to be successful. Patients are waiting for something better. I'm going to talk about some of the preclinical, you could see some of the preclinical findings here. I think the important thing about this slide is that we are preparing to begin a proof of concept study in the first half of 2026. We've worked very closely with the TSC Alliance to start this. We were at the TSC International Research Conference. I think I've met with the top 10 or 15 clinicians in the United States who treat these patients. They're very excited about participating in our trial. The reason seems to be that this is a different mechanism of action than what these patients are used to.
Ordinarily, anti-seizure medications treat the symptoms, so they can reduce the number of seizures, but very rarely do they go away. If our drug is successful, this could treat the root cause of the disease. You know, will it? It has in mice. Is it going to do it in humans? We'll find out. That's why you run a trial. They're excited about that potential. I think they're even more excited about the fact that our safety profile, at least as seen in Alzheimer's, was remarkably good. The drugs that are out there now, again, they're good drugs, but these drugs are difficult for patients to tolerate. Some patients can't tolerate mTOR inhibitors, even though the drugs work very well. There's a market opportunity here if we get this right.
These are the two mouse models that we ran that have been successful for us: the Yale mouse model and TSC mouse model. Okay, now some of the data. This is from Dr. Bordey's work. You could see on the right-hand side of the screen that there was a very substantial reduction in seizure activity. This was at the FCD2 model. This, you see, 60% reduction in seizure frequency. In fact, when you look closely at it, about 30% of the mice were seizure-free by the end of the study. It was like this. This is a heat map that shows you, you know, how often seizures were occurring. I think the thing that's really important about this is that what we see here is that the longer the mice are on the drug, the better they do. The better the outcome seems to be.
We see that also at, well, the data for our TSC mouse model study will be published very soon. We'll be announcing that when it does get published. You'll see a very similar thing. The longer they're on the drug, the better they seem to do. Does that make the disease modifying, or does that make the drug disease modifying? We'll find out when we go into humans. It's an interesting outcome. This is data from the TSC mouse model, which we just announced a month or so ago. I think what's interesting about this slide is that what you see here is a dose response. You see virtually no effect in the vehicle or placebo. You see very little, virtually no, except at 5 mg. At 10 mg and 20 mg, and particularly at 20 mg, you see a very different story.
As I said, we had, counting in the full clinical program for Alzheimer's, we had over 1,200 patients dosed, no drug-related serious adverse events, very good safety profile. In fact, some people may argue the safety profile was too good. Okay, we have, we own the drug outright. We licensed this indication from Yale . We will pay royalties if we're successful, and milestones if we're successful. We have intellectual property that ranges from 2029 out to 2040. There's still quite a bit of runway on this. The patent protection also includes different forms of simufilam. It's actually pretty broad. In June, we attended the TSC International Research Meeting and met with presentations and met with many of the clinicians. Dr. Bordey presented her work from Yale . In August, we announced the findings from the TSC mouse model. Currently, we are working to prepare our IND.
We are expecting approval of the IND by the end of the year. In the first half of 2026, we intend to enter the clinic with a phase II-A proof-of-concept study . Our balance sheet is pretty strong. Currently, at the end of June, we had $112 million worth of cash, and we had no debt. Our estimated cash at the end of 2025 is expected to be between $61 million and $65 million. That does not mean that we're burning $40 million in the second half of the year. It means that we have, if you look at our financial statement, we took a $31.25 million reserve for a loss contingency related to the potential settlement of a securities litigation, which has been an overhang in the company. The operational burn in the second half of the year is $16 million- $20 million.
We expect to have cash all the way through the second quarter of 2027. We have a very comfortable amount of runway for the proof- of- concept study. We're looking for a signal. We'll see what we have. Thank you very much. If there's any questions, I'm happy to take them.
Great. Thank you very much, Rick. Thanks everyone for listening in. Anyone has any questions?
Just a quick question on the heat maps. The first two heat maps for seizure reduction. Actually, the one before, though. Yeah, this one here. It looks like the simufilam- treated group, it looks like there's a higher rate of seizure in the baseline period, and then that's reduced, but there's a low. Are both these heat maps on the same scale?
As far as I know, they are.
Got it.
As far as I know.
The seizures start after giving the mice vehicle on the top, and then they go away. They start in the baseline, and then they go away on drug.
What I don't know about this study, and I can ask Dr. Bordey, is on what day did they start counting? On the second study, I know they start counting, I think, on day 20.
Got it. Okay. Thank you.
Sure.