SEC Filing | Cassava Sciences, Inc.

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sava-20230630x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

Form 10-Q

_____________________


	(Mark One)
	þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2023

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ___________ to ___________

Commission File Number: 000-29959

_______________

Cassava Sciences, Inc.

(Exact name of registrant as specified in its charter)


	Delaware	91-1911336
	(State or other jurisdiction of	(I.R.S. Employer
	incorporation or organization)	Identification Number)

6801 N. Capital of Texas Highway, Building 1; Suite 300, Austin, TX 78731

(512) 501-2444

(Address, including zip code, of registrant’s principal executive offices and

telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

SAVA

Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


	Large Accelerated Filer þ	Accelerated Filer ¨
	Non-accelerated Filer ¨	Smaller Reporting Company ¨
		Emerging Growth Company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



	Common Stock, $0.001 par value	41,969,994
		Shares Outstanding as of August 1, 2023

CASSAVA SCIENCES, INC.

TABLE OF CONTENTS


		Page No.
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets – June 30, 2023 and December 31, 2022	3

	Condensed Consolidated Statements of Operations – Three and Six Months Ended June 30, 2023 and 2022	4

	Condensed Consolidated Statements of Changes in Stockholders’ Equity - Three and Six Months Ended June 30, 2023 and 2022	5

	Condensed Consolidated Statements of Cash Flows – Six Months Ended June 30, 2023 and 2022	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	36

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	36

Item 1A	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 3.	Defaults Upon Senior Securities	37

Item 4.	Mine Safety Disclosures	38

Item 5.	Other Information	38

Item 6.	Exhibits	39

Signatures		40

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements



CASSAVA SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, In thousands, except share and par value data)

	June 30, ‎2023		December 31, ‎2022

ASSETS
Current assets:
Cash and cash equivalents	$	168,438	$	201,015
Prepaid expenses and other current assets		6,095		10,211
Total current assets		174,533		211,226
Operating lease right-of-use assets		—		122
Property and equipment, net		22,328		22,864
Intangible assets, net		387		622
Total assets	$	197,248	$	234,834

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	10,338	$	4,017
Accrued development expense		7,044		2,280
Accrued compensation and benefits		220		170
Operating lease liabilities, current		—		104
Other current liabilities		293		492
Total current liabilities		17,895		7,063
Operating lease liabilities, non-current		—		35
Other non-current liabilities		—		197
Total liabilities		17,895		7,295
Commitments and contingencies (Notes 10, 11 and 12)
Stockholders' equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding		—		—
Common stock, $0.001 par value; 120,000,000 shares authorized; 41,919,527 and 41,735,557 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		42		42
Additional paid-in capital		513,510		511,049
Accumulated deficit		(334,199)		(283,552)
Total stockholders' equity		179,353		227,539
Total liabilities and stockholders' equity	$	197,248	$	234,834

See accompanying notes to condensed consolidated financial statements.

‎

Enstivity



CASSAVA SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)

	Three months ended				Six months ended
	June 30,				June 30,
	2023		2022		2023		2022
Operating expenses:
Research and development, net of grant reimbursement	$	24,969	$	16,948	$	47,089	$	31,854
General and administrative		3,808		2,969		8,200		5,884
Total operating expenses		28,777		19,917		55,289		37,738
Operating loss		(28,777)		(19,917)		(55,289)		(37,738)
Interest income		2,198		314		4,249		345
Other income, net		203		275		393		538
Net loss	$	(26,376)	$	(19,328)	$	(50,647)	$	(36,855)
Net loss per share, basic and diluted	$	(0.63)	$	(0.48)	$	(1.21)	$	(0.92)
Shares used in computing net loss per share, basic and diluted		41,793		40,015		41,766		39,989

See accompanying notes to condensed consolidated financial statements.

‎



CASSAVA SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited, in thousands, except share data)



								Total
	Common stock			Additional		Accumulated		stockholders'
	Shares	Par value		paid-in capital		deficit		equity
Balance at December 31, 2021	40,016,792	$	40	$	461,181	$	(207,306)	$	253,915
Stock-based compensation for:
Stock options for employees	—		—		471		—		471
Stock options for non-employees	—		—		24		—		24
Issuance of common stock pursuant to exercise of stock options	14,488		—		211		—		211
Net loss	—		—		—		(17,527)		(17,527)
Balance at March 31, 2022	40,031,280	$	40	$	461,887	$	(224,833)	$	237,094
Stock-based compensation for:
Stock options for employees	—		—		462		—		462
Stock options for non-employees	—		—		23		—		23
Issuance of common stock pursuant to exercise of stock options	66,637		—		119		—		119
Net loss	—		—		—		(19,328)		(19,328)
Balance at June 30, 2022	40,097,917	$	40	$	462,491	$	(244,161)	$	218,370


Balance at December 31, 2022	41,735,557	$	42	$	511,049	$	(283,552)	$	227,539
Stock-based compensation for:
Stock options for employees	—		—		650		—		650
Stock options for non-employees	—		—		23		—		23
Issuance of common stock pursuant to exercise of stock options	13,878		—		64		—		64
Net loss	—		—		—		(24,271)		(24,271)
Balance at March 31, 2023	41,749,435	$	42	$	511,786	$	(307,823)	$	204,005
Stock-based compensation for:
Stock options for employees	—		—		812		—		812
Stock options for non-employees	—		—		23		—		23
Issuance of common stock pursuant to exercise of stock options	170,092		—		889		—		889
Net loss	—		—		—		(26,376)		(26,376)
Balance at June 30, 2023	41,919,527	$	42	$	513,510	$	(334,199)	$	179,353

See accompanying notes to condensed consolidated financial statements.
‎



CASSAVA SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)


	Six months ended June 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(50,647)	$	(36,855)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		1,508		980
Depreciation		544		352
Amortization of intangible assets		238		260
Changes in operating assets and liabilities:
Prepaid and other current assets		4,116		4,431
Operating lease right-of-use assets and liabilities		(17)		(4)
Accounts payable and accrued expenses		6,661		(2,368)
Accrued development expense		4,764		515
Accrued compensation and benefits		50		(1,701)
Other liabilities		(396)		(254)
Net cash used in operating activities		(33,179)		(34,644)
Cash flows from investing activities:
Purchase of property and equipment		(351)		(1,891)
Net cash used in investing activities		(351)		(1,891)
Cash flows from financing activities:
Proceeds from issuance of common stock upon exercise of stock options		953		330
Net cash provided by financing activities		953		330
Net decrease in cash and cash equivalents		(32,577)		(36,205)
Cash and cash equivalents at beginning of period		201,015		233,437
Cash and cash equivalents at end of period	$	168,438	$	197,232

See accompanying notes to condensed consolidated financial statements.

‎

Cassava Sciences, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. General and Liquidity

Cassava Sciences, Inc. and its wholly-owned subsidiary (collectively referred to as the “Company”) discover and develop proprietary pharmaceutical product candidates that may offer significant improvements to patients and healthcare professionals. The Company generally focuses its discovery and product development efforts on disorders of the nervous system.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. All intercompany transactions and balances have been eliminated in consolidation. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for any other interim period or for the year 2023. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Liquidity

The Company has incurred significant net losses and negative cash flows since inception, and as a result has an accumulated deficit of $334.2 million at June 30, 2023. The Company expects its cash requirements to be significant in the future. The amount and timing of the Company’s future cash requirements will depend on regulatory and market acceptance of its product candidates and the resources it devotes to researching and developing, formulating, manufacturing, commercializing and supporting its products. The Company may seek additional funding through public or private financing in the future, if such funding is available and on terms acceptable to the Company. There are no assurances that additional financing will be available on favorable terms, or at all. However, management believes that the current working capital position will be sufficient to meet the Company’s working capital needs for at least the next 12 months.

Note 2. Significant Accounting Policies

Use of Estimates

The Company makes estimates and assumptions in preparing its condensed consolidated financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amount of revenue earned and expenses incurred during the reporting period. The Company evaluates its estimates on an ongoing basis, including those estimates related to manufacturing agreements and research collaborations. Actual results could differ from these estimates and assumptions.

Cash and Cash Equivalents and Concentration of Credit Risk

The Company invests in cash and cash equivalents. The Company considers highly liquid financial instruments with original maturities of three months or less to be cash equivalents. Highly liquid investments that are considered cash equivalents include money market accounts and funds, certificates of deposit, and U.S. Treasury securities. The Company maintains its cash and cash equivalents at one financial institution.

Fair Value Measurements

The Company recognizes financial instruments in accordance with the authoritative guidance on fair value measurements and disclosures for financial assets and liabilities. This guidance defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. The guidance also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

Level 1 includes quoted prices in active markets.

Level 2 includes significant observable inputs, such as quoted prices for identical or similar securities, or other inputs that are observable and can be corroborated by observable market data for similar securities. The Company uses market pricing and other observable market inputs obtained from third-party providers. It uses the bid price to establish fair value where a bid price is available. The Company does not have any financial instruments where the fair value is based on Level 2 inputs.

Level 3 includes unobservable inputs that are supported by little or no market activity. The Company does not have any financial instruments where the fair value is based on Level 3 inputs.

If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation. The fair value of cash and cash equivalents was based on Level 1 inputs at June 30, 2023 and December 31, 2022.

Business Segments

The Company reports segment information based on how it internally evaluates the operating performance of its business units, or segments. The Company’s operations are confined to one business segment: the development of novel drugs and diagnostics.

Proceeds from Grants

During the three and six months ended June 30, 2023, there were no reimbursements received pursuant to National Institutes of Health (“NIH”) research grants. During the three and six months ended June 30, 2022, the Company received reimbursements totaling $0.4 million and $0.5 million, respectively, pursuant to NIH research grants. The Company records the proceeds from these grants as reductions to its research and development expenses.

Stock-based Compensation

The Company recognizes non-cash expense for the fair value of all stock options and other share-based awards. The Company uses the Black-Scholes option valuation model (“Black-Scholes”) to calculate the fair value of stock options, using the single-option award approach and straight-line attribution method. This model requires the input of subjective assumptions including expected stock price volatility, expected life and estimated forfeitures of each award. These assumptions consist of estimates of future market conditions, which are inherently uncertain, and therefore, are subject to management's judgment. For all options granted, it recognizes the resulting fair value as expense on a straight-line basis over the vesting period of each respective stock option, generally four years.

The Company has granted share-based awards that vest upon achievement of certain performance criteria (“Performance Awards”). The Company multiplies the number of Performance Awards by the fair value of its common stock on the date of grant to calculate the fair value of each award. It estimates an implicit service period for achieving performance criteria for each award. The Company recognizes the resulting fair value as expense over the implicit service period when it concludes that achieving the performance criteria is probable. It periodically reviews and updates as appropriate its estimates of implicit service periods and conclusions on achieving the performance criteria. Performance Awards vest and common stock is issued upon achievement of the performance criteria.

Net Loss per Share

The Company computes basic net loss per share on the basis of the weighted-average number of common shares outstanding for the reporting period. Diluted net loss per share is computed on the basis of the weighted-average number of common shares outstanding plus potential dilutive common shares outstanding using the treasury-stock method. Potential dilutive common shares consist of outstanding common stock options. There is no difference between the Company’s net loss and comprehensive loss. The numerators and denominators in the calculation of basic and diluted net loss per share were as follows (in thousands, except net loss per share data):