CASSAVA SCIENCES, INC. This discussion and analysis should be read in conjunction with
This Quarterly Report on Form 10-Q contains certain statements that are considered forward-looking statements within the meaning of the Private Securities Reform Act of 1995. We intend that such statements be protected by the safe harbor created thereby. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "should," "will" and "would" or the negatives of these terms or other comparable terminology.
The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Forward-looking statements involve risks and uncertainties and our actual results and the timing of events may differ significantly from the results discussed in the forward-looking statements. Examples of such forward-looking statements include, but are not limited to statements about:
?our intention to initiate a second Phase 3 clinical study with simufilam in Alzheimer's disease by the end of 2021, the number of participants we expect to enroll in our Phase 3 studies, the geographic areas for study enrollment, and the expected treatment benefits of simufilam for people with Alzheimer's disease;
?our reliance on third-party contractors to make drug supply on a large-scale for our Phase 3 clinical program, or their ability to do so on-time or on-budget;
?limitations around the interpretation of cognitive results from a long-term open-label study design, as compared to efficacy results from a fully completed, randomized controlled study design;
?the expected rate of cognitive decline over time in untreated Alzheimer's patients;
?the ability of clinical scales to assess cognition or health in our trials of Alzheimer's disease;
?announcements or plans regarding any future analyses of our open-label study of simufilam and our estimated timeline for doing so;
?any significant changes we have made, or anticipate making, to the design of an on-going open-label study of simufilam;
?announcements regarding an End-of-Phase 2 meeting with the
?our ability to initiate, conduct or analyze additional clinical and non-clinical studies with our product candidates targeted at Alzheimer's disease and other neurodegenerative diseases;
?the interpretation of results from our Phase 2 clinical studies;
?our plans to further develop SavaDx, our investigational blood-based diagnostic, and our estimated timeline for doing so;
?the safety, efficacy, or potential therapeutic benefits of our product candidates;
?the utility of protection, or the sufficiency, of our intellectual property;
?our potential competitors or competitive products;
?expected future sources of revenue and capital and increasing cash needs;
?our use of Clinical Research Organizations (CROs) to conduct clinical studies of our product candidates;
?expectations regarding trade secrets, technological innovations, licensing agreements and outsourcing of certain business functions;
?our expenses increasing or fluctuations in our financial or operating results;
?our operating losses and anticipated operating and capital expenditures;
?expectations regarding the issuance of shares of common stock to employees pursuant to equity compensation awards, net of employment taxes;
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?the development and maintenance of our internal information systems and infrastructure;
?our need to hire additional personnel and our ability to attract and retain such personnel;
?existing regulations and regulatory developments in
?our need to expand the size and scope of our physical facilities;
?the sufficiency of our current resources to continue to fund our operations;
?the accuracy of our estimates regarding expenses, capital requirements, and needs for additional financing;
?assumptions and estimates used for our disclosures regarding stock-based compensation; and
?the long-term impact of COVID-19, a novel coronavirus first detected in 2019, on our operations and financial condition.
Such forward-looking statements and our business involve risks and uncertainties, including, but not limited to the following:
?We are in the early stages of clinical drug development and have a limited operating history in our business targeting Alzheimer's disease and no products approved for commercial sale.
?Research and development of biopharmaceutical products is a highly uncertain undertaking and involves a substantial degree of risk and our business is heavily dependent on the successful development of our product candidates.
?We are concentrating a substantial portion of our research and development efforts on the diagnosis and treatment of Alzheimer's disease, an area of research that has recorded many clinical failures.
?We may encounter substantial delays in our clinical trials or may not be able to conduct or complete our clinical trials on the timelines we expect, if at all.
?Our clinical trials may fail to demonstrate evidence of the safety and efficacy of our product candidates, which would prevent, delay, or limit the scope of regulatory approval and the commercialization of our product candidates.
?We may need to obtain substantial additional financing to complete the development and any commercialization of our product candidates.
?We are a small company with no sales force and may not be successful in our efforts to commercialize any product candidates which are approved.
?Our CROs and contract manufacturers may fail to perform as anticipated.
?We may be unable to protect our intellectual property rights or trade secrets.
?We may be subject to third-party claims of intellectual property infringement.
?We may not succeed in our maintenance or pursuit of licensing rights or third-party intellectual property necessary for the development of our product candidates.
?Enacted or future legislation or regulatory actions may adversely affect our product pricing, or limit the reimbursement we may receive for our products.
?A significant breakdown, security breach or interruption affecting our internal computer systems, or those used by our third-party research collaborators, may compromise the confidentiality of our financial or proprietary information, result in material disruptions of our products and operations and adversely affect our reputation.
?We may be unsuccessful at hiring and retaining qualified personnel.
?Adverse circumstances caused by disease epidemics or pandemics, such as Coronavirus Disease 2019, or COVID-19, a novel coronavirus first detected in 2019;
Please also refer to the section of this Quarterly Report on Form 10-Q entitled
"Risk Factors" identified in Part II, Item 1A and the "Risk Factors" in our
Annual Report on Form 10-K for the fiscal year ended
We caution you not to place undue reliance on forward-looking statements because our future results may differ materially from those expressed or implied by them. We do not intend to update any forward-looking statement, whether written or oral, relating to the matters discussed in this Quarterly Report on Form 10-Q, except as required by law.
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Our research programs in neurodegeneration benefit from longstanding scientific
and financial support from the
Overview
Over the past 10 years, we have combined state-of-the-art technology with new insights in neurobiology to develop novel solutions for Alzheimer's disease and other neurodegenerative diseases. Our strategy is to leverage our unique scientific/clinical platform to develop a first-in-class program for treating neurodegenerative diseases, such as Alzheimer's.
We currently have two clinical-stage biopharmaceutical assets under development:
?our lead therapeutic product candidate, called simufilam, is a novel treatment for Alzheimer's disease; and
?our lead investigational diagnostic product candidate, called SavaDx, is a novel way to detect the presence of Alzheimer's disease from a small sample of blood, possibly years before the overt appearance of clinical symptoms.
Our scientific approach for the treatment of Alzheimer's disease seeks to simultaneously improve both neurodegeneration and neuroinflammation. We believe our ability to improve multiple vital functions in the brain represents a new, different and crucial approach to address Alzheimer's disease.
Our lead therapeutic product candidate, simufilam, is a proprietary small molecule (oral) drug. Simufilam targets an altered form of a protein called filamin A (FLNA) in the Alzheimer's brain. Published studies have demonstrated that the altered form of FLNA causes neuronal dysfunction, neuronal degeneration and neuroinflammation.
We believe simufilam improves brain health by reverting altered FLNA back to its native, healthy conformation, thus countering the downstream toxic effects of altered FLNA. We have generated and published experimental and clinical evidence of improved brain health with simufilam. Importantly, simufilam is not dependent on clearing amyloid from the brain. Since simufilam has a unique mechanism of action, we believe its potential therapeutic effects may be additive or synergistic with that of other therapeutic candidates aiming to treat neurodegeneration.
Simufilam has demonstrated a multitude of beneficial effects in animal models of disease, including normalizing neurotransmission, decreasing neuroinflammation, suppressing neurodegeneration, and restoring memory and cognition.
Simufilam and SavaDx were both discovered and designed in-house and were
characterized by our academic collaborators during research activities that were
conducted from approximately 2008 to date. We own exclusive, worldwide rights to
these drug assets and related technologies, without royalty obligations to any
third party. Our patent protection with respect to simufilam and use of
simufilam for Alzheimer's disease and other neurodegenerative disease currently
runs through 2033 and includes six issued patents and related patent filings and
applications. In addition, we have patent protection with respect to simufilam
for use in treating certain cancers that runs through 2034. We currently have no
patents or patent applications with respect to SavaDx, which we believe is
protected in
Alzheimer's disease is a progressive neurodegenerative disorder that affects
cognition, function and behavior. As of 2020, there were approximately
50 million people worldwide living with dementia and the annual global cost of
dementia is now above
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Phase 2a Study
In 2019, we completed a small, first-in-patient, clinical-proof-of-concept,
open-label Phase 2a study of simufilam in the
Phase 2b Study
In
Clinical Strategy Around Open-label Study
Much of the value of our open-label study is to gain data to support simufilam's long-term safety profile in patients. Interim data from an open-label study has limitations compared to efficacy data from a fully completed, large, randomized controlled clinical trial, or from a fully completed open-label study.
We believe there is logic to conducting an open-label study prior to conducting a large, expensive Phase 3 clinical testing program. First, this is a standard clinical method of demonstrating drug safety. Second, we believe that if an experimental drug for Alzheimer's shows no treatment benefits in a well-designed, long-term open-label study, then there is no chance that drug will succeed in Phase 3 clinical testing. Of course, the opposite is not true: encouraging treatment effects in an open-label study is not proof of drug safety or efficacy, nor can encouraging treatment effects predict clinical success in a Phase 3 program.
In short, we believe a well-designed, long-term, open-label study is an exercise in prudent risk-management. Clinical results may serve as a tool to help inform and manage the inherent risks and uncertainties of drug development prior to undertaking a large, expensive Phase 3 clinical testing program.
Open-label Study Strategy
In
In
In
In
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treatment. Patients' cognition and behavior scores both improved following nine months of simufilam treatment, with no safety issues. Nine months of simufilam treatment improved cognition scores by 3.0 points on ADAS-Cog11, an 18% mean improvement from baseline to month 9 (p<0.001).
In
Baseline values for cognition for each 50-patient cohort may not be exactly the
same at months 6, 9 and 12 because study participants may drop out of the
open-label study in-between interim analyses. At
Figure 1. Cognition Results
[[Image Removed: Picture 2]]
Insert A ADAS-Cog11 scores improved 3 points at 9 months in the first 50
subjects. Mean ADAS-Cog Change from Baseline -4 -3 -2 -1 0 +1 +2 +3 -1.6 -3.0
DECLINE IMPROVE P < 0.001 by paired t test: Baseline vs. 9 Months 6 months 9
months 12 months CASSAVA sciences
?
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Alzheimer's is a progressive disease. Cognition will always decline over time. Historical controls indicate that in patients with mild-to-moderate Alzheimer's disease, cognition scores decline an average of 5.5 points on ADAS-Cog over 12 months amongst study subjects who were administered placebo in randomized, controlled trials, as reported by the science literature1, and, more recently, by Biogen, Inc. In 2020, Biogen reported a 5.2-point decline over 18 months on ADAS-Cog amongst study subjects with early Alzheimer's disease who were administered placebo in two Phase 3 randomized, controlled trials studies with their drug, aducanumab2.
Despite an expectation of cognitive decline, simufilam improved ADAS-Cog scores in 68% of patients at 12 months. An additional 20% of patients declined less than an expected 5 points decline at 12 months. These study subjects declined an average of 2.5 points (S.D. ± 1.3). Cognition outcomes suggest simufilam's treatment effects were broad-based. Figure 2 (data at 9 months).
Figure 2. Individual Patient Changes in ADAS-Cog (N=50) at 9 months
[[Image Removed: Picture 5]]
Insert B 66% of Patients Improved at 9 Months (N=33) 22% of Patients Declined Less Than Expected (N=11) Change in ADAS-Cog11 Baseline to 9 Months -15 -10 -5 0 5 10 DECLINE IMPROVE 4+ point decline over 9 months is expected in M2M AD CASSAVA sciences
Alzheimer's is often accompanied by behaviors disorders, such as anxiety, agitation or delusions. These may become more frequent as disease progresses. Simufilam reduced dementia-related behavior at 12 months on the Neuropsychiatric Inventory (NPI), a clinical tool widely used to measure changes in dementia-related behavior.
?At baseline, 34% of study subjects had no neuropsychiatric symptoms.
?At month 6, 38% of study subjects had no neuropsychiatric symptoms.
?At month 9, over 50% of study subjects had no neuropsychiatric symptoms.
?At month 12, over 50% of study subjects had no neuropsychiatric symptoms.
The safety profile of simufilam in the interim analysis is consistent with prior human studies. There were no drug-related serious adverse events. Adverse events were mild and transient.
In
_____________________________
1 Disease Progression Meta-analysis Model in Alzheimer's disease (Ito, et al.,
2 EMERGE and ENGAGE Topline Results (2020), available on-line. ?
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A key objective of this bioanalysis was to measure changes in levels of biomarkers in patients before and after 6 months of treatment with open label simufilam. Biomarker data were analyzed from cerebrospinal fluid (CSF) collected from 25 patients with mild-to-moderate Alzheimer's disease who are enrolled in the open-label study and who agreed to undergo a lumbar puncture at baseline and again after 6 months of treatment. All bioanalyses were conducted blind by an outside lab.
Simufilam robustly improved all measured CSF biomarkers in this cohort of 25 patients with mild-to-moderate Alzheimer's disease.
Cerebrospinal fluid (CSF) biomarkers of disease pathology, t-tau and p-tau181, decreased 38% and 18%, respectively (both p<0.00001). CSF biomarkers of neurodegeneration, neurogranin and Nfl, decreased 72% and 55%, respectively (both p<0.00001). CSF biomarkers of neuroinflammation, sTREM2 and YKL-40, decreased 65% and 44% (both p<0.00001). All p-values are baseline vs. 6-month levels by paired t-test. Figure 3.
Core markers of Alzheimer's pathology are total tau (T-tau), phosphorylated tau (P-tau181), and amyloid beta42 (A?42). In Alzheimer's, tau levels are elevated and A?42 is low.
?T-tau decreased 38% (p<0.00001)
?P-tau181 decreased 18% (p<0.00001)
?CSF A?42 increased 84% (p<0.00001) ?
Elevated CSF levels of two proteins, neurogranin (Ng) and neurofilament
?Ng decreased 72% (p<0.00001)
?NfL decreased 55% (p<0.00001) ?
Elevated levels of marker YKL-40 indicate neuroinflammation.
?YKL-40 decreased 44% (p<0.00001) ?
sTREM2 is a biomarker of microglia-induced neuroinflammation that has commanded substantial recent attention from researchers for its role in Alzheimer's and frontotemporal dementia.
?sTREM2 decreased 65% (p<0.00001)
HMGB1 protein, is a damage-related protein sometimes called a 'danger molecule' because it triggers additional neuroinflammation and loss of neurons.
?HMGB1 decreased 53% (p<0.00001)
Figure 3. Significant Decreases in CSF Biomarkers at Month 6
[[Image Removed: Picture 7]]
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Insert D % Change from Baseline -80% -70% -60% -50% -40% -30% -20% -10% 0%
P-tau181 Total tau sTREM2 YKL40 Neurogranin NfL HMGB1 -18% -38% -65% -44% -72%
-55% -53% P < 0.0001 for all by paired t test CASSAVA sciences
Cognition Maintenance Study
In
Figure 4. Cognition Maintenance Study Design
[[Image Removed: Picture 6]]
End-of-Phase 2 (EOP2) Meeting with FDA
In
In
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1 ADAS-Cog = The Alzheimer's Disease Assessment Scale - Cognitive Subscale, a measure of cognition
2 ADCS-ADL = Alzheimer's Disease Cooperative Study - Activities of Daily Living, a measure of health function
3 iADRS = integrated Alzheimer's Disease Rating Scale, a composite measure of cognition and health function
?
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Special Protocol Assessments
On
An SPA agreement indicates concurrence by the FDA with the adequacy and acceptability of specific critical elements of overall protocol design (e.g., entry criteria, dose selection, endpoints, etc.). These elements are critical to ensure that our planned Phase 3 studies of simufilam in Alzheimer's disease can be considered adequate and well-controlled studies in support of a future regulatory submission and marketing application.
The first clinical study protocol under the SPA is titled "A Phase 3,
Randomized, Double-Blind, Placebo-Controlled,
The second clinical study protocol under the SPA is titled "A Phase 3,
Randomized, Double-Blind, Placebo-Controlled,
Phase 3 Drug Supply
In
Phase 3 Clinical Program
The Phase 3 program consists of two large, double-blind, randomized,
placebo-controlled studies in patients with mild-to-moderate Alzheimer's disease
dementia. Figure 5. In
Figure 5. Phase 3 Program Overview
[[Image Removed: Picture 8]]
On
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The first Phase 3 study, called RETHINK-ALZ, is designed to evaluate the safety
and efficacy of oral simufilam 100 mg in enhancing cognition and slowing
cognitive and functional decline over 52 weeks. Secondary objectives include the
assessment of simufilam's effect on neuropsychiatric symptoms and caregiver
burden. We plan to enroll in a randomized, double-blind, placebo-controlled
study approximately 750 patients with mild-to-moderate Alzheimer's disease in
the
The second Phase 3 study, called REFOCUS-ALZ, which is expected to begin by the
end of the fourth quarter in 2021, is designed to evaluate the safety and
efficacy of oral simufilam 100 mg and 50 mg over 78 weeks. We plan to enroll in
a randomized, double-blind, placebo-controlled study approximately 1,000
patients with mild-to-moderate Alzheimer's disease in the
SavaDx
Our diagnostic effort, called SavaDx, is a clinical-stage program focused on
detecting the presence of Alzheimer's disease from a small sample of blood,
possibly years before the overt appearance of clinical symptoms. We are
developing SavaDx as a fast, accurate and quantitative blood-based
investigational biomarker/diagnostic to detect and monitor Alzheimer's
disease. The goal is to make the detection of Alzheimer's disease as simple as
getting a blood test. There is no patent protection for SavaDx in the
In blinded studies, SavaDx detected >10-fold differences between patients with Alzheimer's and age-matched normal controls or young cognitively intact subjects (N=232).
In
Simufilam 100 mg and 50 mg reduced plasma levels of altered filamin A by 48% (p=0.003) and 44% (p=0.02) respectively, versus placebo. Additionally, simufilam 100 mg and 50 mg reduced plasma levels of p-tau181 by 17% (p=0.01) and 15% (p=0.02) respectively, versus placebo. Plasma p-tau181 is a biomarker that is known to be elevated in Alzheimer's disease.
For business, personnel, scientific and regulatory reasons, we continue to prioritize the development of simufilam, our novel drug candidate, over SavaDx, our novel diagnostic candidate. The regulatory pathway for SavaDx is currently unknown but may eventually include analytical validation studies and clinical studies that support evidence of sensitivity, specificity, precision, accuracy and other variables in various healthy and diseased patient populations. We have not conducted such studies and do not expect to conduct such studies in 2021.
Publication Corrections
An erratum or corrigendum is a correction of a published text, generally a production or author's error, that was not caught in proofing. We note the following corrections in our published works.
In
In 2017, we published in Neurobiology of Aging an article titled "PTI-125 binds
and reverses an altered conformation of filamin A to reduce Alzheimer's disease
pathogenesis" (Vol 55,
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In 2012, we published in the
No Evidence of Data Manipulation in Technical Paper
In
"
Impact of COVID-19 on our Business
During the COVID-19 pandemic, our top priorities are to protect the health, well-being, and safety of our employees and partners, while still focusing on the key drivers of our business. Despite COVID-19, we believe we remain on-track to achieve our major strategic objectives for 2021 with simufilam. We have not experienced major disruptions across our drug manufacturing operations or supply of materials. Our broad spectrum of technical consultants, scientific advisors and service providers continue to provide timely services. We have adapted flexible business practices, such as remote work arrangements and temporary travel restrictions, to insure we continue to operate safety and cautiously while also meeting our public health responsibilities. We recognize the pandemic has created a dynamic and uncertain situation in the national economy. We continue to closely monitor the latest information to make timely, informed business decisions and public disclosures regarding the potential impact of pandemic on our operations. However, the scope of pandemic is unprecedented and its long-term impact on our operations cannot be reasonably estimated at this time.
Financial Overview
We have yet to generate any revenues from product sales. We have an accumulated
deficit of
We expect to continue to use significant cash resources in our operations for the next several years. Our cash requirements for operating activities and capital expenditures may increase substantially in the future as we:
?conduct our first Phase 3 study with simufilam
?initiate and conduct our second Phase 3 study with simufilm
?continue a large-scale drug manufacturing campaign for simufilam;
?conduct other preclinical and clinical studies for our product candidates;
?plan to seek regulatory approvals for our product candidates;
?develop, formulate, manufacture and commercialize our product candidates;
?implement additional internal systems and develop new infrastructure;
?acquire or in-license additional products or technologies, or expand the use of our technology;
?maintain, defend and expand the scope of our intellectual property;
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?hire additional personnel; and
?expand our office facilities to accommodate growth in personnel and R&D activities.
Product revenue will depend on our ability to receive regulatory approvals for, and successfully market, our product candidates. If our development efforts result in regulatory approval and successful commercialization of our product candidates, we will generate revenue from direct sales of our drugs and/or, if we license our drugs to future collaborators, from the receipt of license fees and royalties from sales of licensed products. We conduct our research and development programs through a combination of internal and collaborative programs. We rely on arrangements with universities, our collaborators, contract research organizations and clinical research sites for a significant portion of our product development efforts.
We focus substantially all of our research and development efforts in the area
of neurology. The following table summarizes expenses which have been reduced
for reimbursements received for
Three months ended Nine months ended
September 30, September 30,
2021 2020 2021 2020
Research and development expenses - gross
1,988 975 3,451 3,415
Research and development expenses - net
Research and development expenses include compensation, contractor fees and
supplies as well as allocated common costs. Contractor fees and supplies
generally include expenses for preclinical studies and clinical trials and costs
for formulation and manufacturing activities. Other common costs include the
allocation of common costs such as facilities. During the three months ended
Our technology has been applied across certain of our product candidates. Data, know-how, personnel, clinical results, research results and other matters related to the research and development of any one of our product candidates also relate to, and further the development of, our other product candidates. As a result, costs allocated to a specific drug candidate may not necessarily reflect the actual costs surrounding research and development of that product candidate due to cross application of the foregoing.
Estimating the dates of completion of clinical development, and the costs to complete development, of our product candidates would be highly speculative, subjective and potentially misleading. Pharmaceutical product candidates take a significant amount of time to research, develop and commercialize. The clinical trial portion of the development of a new drug alone usually spans several years. We expect to reassess our future research and development plans based on our review of data we receive from our current research and development activities. The cost and pace of our future research and development activities are linked and subject to change.
Critical Accounting Policies
The preparation of our condensed financial statements in accordance with
accounting principles generally accepted in
?Research Contracts and Accruals. We have entered into various research and development contracts with research institutions and other third-party vendors. Except for refundable deposits, related payments are
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recorded as research and development expenses as incurred. We record accruals for estimated ongoing research costs. When evaluating the adequacy of the accrued liabilities, we analyze progress of the studies including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ from our estimates. Our historical accrual estimates have not been materially different from actual costs.
?2020 Cash Incentive Bonus Plan. In 2020, we established the 2020 Cash Incentive Bonus Plan (the "Plan") to incentivize Plan participants. Awards under the Plan are accounted for as liability awards under ASC 718, "Stock-based Compensation". The fair value of each potential Plan award will be determined once a grant date occurs and will be remeasured each reporting period. Compensation expense associated with the Plan will be recognized over the expected achievement period for each Plan award, when a Performance Condition is considered probable of being met.
The Plan was established to promote the long-term success of the Company by
creating an "at-risk" cash bonus program that rewards Plan participants with
additional cash compensation in lockstep with significant increases in our
market capitalization. The Plan is considered "at-risk" because Plan
participants will not receive a cash bonus unless our market capitalization
increases significantly and (1) we complete a merger or acquisition transaction
that constitutes a sale of ownership of the Company or its assets (a Merger
Transaction) or (2) the Compensation Committee of the Board (the Compensation
Committee) determines the Company has sufficient cash on hand, as defined in the
Plan, to render payment (each, a "Performance Condition"), neither of which may
ever occur. Because of the inherent discretion and uncertainty
regarding these requirements, we have concluded that a Plan grant date has not
occurred as of
?Stock-based Compensation. We recognize non-cash expense for the fair value of all stock options and other share-based awards. We use the Black-Scholes option valuation model to calculate the fair value of stock options, using the single-option award approach and straight-line attribution method. For all options granted, we recognize the resulting fair value as expense on a straight-line basis over the vesting period of each respective stock option, generally four years.
We have granted share-based awards that vest upon achievement of certain performance criteria, or Performance Awards. We multiply the number of Performance Awards by the fair value of our common stock on the date of grant to calculate the fair value of each award. We estimate an implicit service period for achieving performance criteria for each award. We recognize the resulting fair value as expense over the implicit service period when we conclude that achieving the performance criteria is probable. We periodically review and update as appropriate our 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.
?Income Taxes. We account for income taxes under the asset and liability method.
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax balances are adjusted to reflect tax rates based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse. We have accumulated significant deferred tax assets that reflect the tax effects of net operating loss and tax credit carryovers and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of certain deferred tax assets is dependent upon future earnings. We are uncertain about the timing and amount of any future earnings. Accordingly, we offset these deferred tax assets with a valuation allowance.
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We account for uncertain tax positions in accordance with ASC 740, "Income Taxes", which clarifies the accounting for uncertainty in tax positions. These provisions require recognition of the impact of a tax position in our condensed financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Any interest and penalties related to uncertain tax positions will be reflected as a component of income tax expense.
Results of Operations - Three and Nine Months Ended
Research and Development Expense
Research and development expenses consist primarily of costs of drug development work associated with our product candidates, including:
?Pre-clinical testing,
?clinical trials,
?clinical supplies and related formulation and design costs, and
?compensation and other personnel-related expenses.
Research and development expenses were
Research and development expenses were
We expect research and development expense to increase significantly in future periods as compared to 2020 as we continue to hire new personnel, manufacture drug supply, continue our development efforts and conduct a Phase 3 clinical program with simufilam.
General and Administrative Expense
General and administrative expenses consist of personnel costs, allocated
expenses and other expenses for outside professional services, including legal,
human resources, audit and accounting services. Personnel costs consist of
salaries, bonus, benefits and stock-based compensation. Allocated expenses
consist primarily of leased facility costs. Depreciation and amortization for
buildings owned is included in general and administrative expense. We incur
expenses associated with operating as a public company, including additional
legal fees, expenses related to compliance with the rules and regulations of the
General and administrative expenses were
General and administrative expenses were
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We expect our general and administrative expenses to increase significantly in future periods due primarily to anticipated higher legal and professional fees related to ongoing securities class action lawsuits and governmental investigations.
Gain on Sale of Property and Equipment
There were no sales of property and equipment during the three and nine months
ended
There were no sales of property and equipment during the three months ended
We do not currently expect any future gains on sales of property and equipment.
Interest Income
Interest income was
We expect interest income to decrease in the remainder 2021 compared to 2020 due to decreases in interest rates.
Other income, net
We record the net income from building operations and leases as other income,
net, as leasing is not core to the Company's operations. Other income, net, was
Liquidity and Capital Resources
Since inception, we have financed our operations primarily through public and
private stock offerings, payments received under collaboration agreements and
interest earned on our cash and cash equivalents balances. We intend to continue
to use our capital resources to fund research and development activities,
capital expenditures, working capital requirements and other general corporate
purposes. As of
2021 Registered Direct Offering
On
Common Stock Warrants
In
We did not receive any proceeds from exercise of common stock warrants during
the three months ended
During the nine months ended
There were no common stock warrants outstanding as of
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At-the-Market Common Stock Offering
In
There were no common stock sales under the ATM during the three and nine months
ended
NIH Research
Our programs have been supported by
In
2020 Cash Incentive Bonus Plan Obligations
In
The Company's market capitalization, including all outstanding stock options,
was
The Company's potential financial obligation to plan participants at
No actual cash payments have been made to participants under the Plan as of
Use of Cash
Net cash used in operating activities was
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Net cash used in operating activities was
Net cash used in investing activities during the nine months ended
Net cash provided by investing activities during the nine months ended
Net cash provided by financing activities during the nine months ended
Net cash provided by financing activities during the nine months
ended
Leases
We lease approximately 6,000 square feet of office space pursuant to a
non-cancelable operating lease in
On
Other Commitments
We had non-cancellable commitments for the manufacture of simufilam totaling
approximately
We have an accumulated deficit of
?
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