SAVA - NASDAQ

Welcome to Cassava Sciences Reports for the Second Quarter 2024. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this webcast is being recorded. During this call and the question-and-answer session afterwards, representatives of Cassava Sciences may make what are known as forward-looking statements. A forward-looking statement is one of that is not a historical fact. Forward-looking statements are not guarantees and they involve risks, uncertainties, and assumptions. Such statements represent current expectations or beliefs concerning future events or future performance. Forward-looking statements are predictions only based upon information currently available to the Company. Actual events or results could defer materially from those made in any forward-looking statements due to a number of factors, risks and uncertainties. Please refer to Cassava Sciences' recent filings with this SEC, including Form 10-K for a description of the factors that could cause the events or results to defer materially from those made in forward-looking statements. Importantly, this conference call contains time sensitive information that is accurate only as of the date of the live webcast, the 8th of August, 2024. Except as required by law, the Company undertakes no obligation to revise or update any forward-looking statements to reflect events and circumstances after the date of this webcast. It is now my pleasure to turn today's meeting over to Rick Barry, Executive Chairman of the Board of Directors. The floor is yours.

Thank you, Judith. Good morning and thank you for joining us. With me today are three key members of the Cassava team. Dr. Jim Kupiec, our Chief Medical Officer; Eric Schoen, Cassava's Chief Financial Officer; and Chris Cook, our General Counsel and Internal Swiss Army knife. You will be meeting other talented players on the team in the future. We have a lot of material to cover this morning. So I'll get right to it. By now, you have hopefully seen the press release that we put out this morning that discusses some of our progress during the second quarter. Specifically, we highlighted the progress in our Phase III trials. The execution of these trials has been impressive. We expect our last patient/last visit in our ReTHINK trial in early Q4 and a topline read out of the data by year-end. We also expect our second Phase III trial, ReFOCUS, to read out in mid-year. We remain optimistic about the results of these trials. We think they are well powered to demonstrate a statistically significant difference between the drug and placebo arms. But investors should keep in mind that no one can correctly forecast the results of any trial. There are, of course, no guarantees. Earlier in the second quarter, Cassava raised $123 million from the warrants that we distributed to shareholders in January. The warrants allowed shareholders to invest directly in the company or to sell their warrants in the open market. The funds that we raised from the program significantly strengthened our balance sheet. As a reminder, several of us inside the company converted all or a portion of our warrants into stock, including me. I converted every warrant that was available to me. Suffice it to say that we are believers. We expect to end 2024 with a cash balance of between $117 million and a $127 million, which will allow us enough liquidity to get past our Phase III read outs. And by the way, that cash number includes the impact of our potential settlement, which I will discuss shortly. We are very grateful for the confidence that investors have demonstrated in Cassava. Just last week, we announced that we are lengthening our open-label extension trials for both our Phase II and Phase III patients. I want to take a minute to explain why we thought this was important. Prior to making this change, patients who participated in our Phase II program had the opportunity, but not the requirement to remain on our drug Simufilam for an additional two years. After being on the drug, in some cases, for four years, some of these Phase II patients were losing access to it. In our Phase III program, patients have the opportunity to go on Simufilam for 12 months after completing the trial. It is important for our patients that have continued access to our drug. Just imagine being the patient or the loved one of a patient who was on the drug and had perceived that the patient had received the benefit from the drug, but who'd exhausted the duration of the open-label extension. After asking patients to take the inherent risk of joining our clinical trials, we felt it was unfair to those patients to not continue to offer them the option to continue at least until we knew the results of our Phase III programs and the FDA had the opportunity to review our results. Honestly, the decision to expand our open-label trials was not a hard one. It was driven by our clinical team who carefully listened to the investigators at our clinical sites. Cassava needs to prepare for success, and even though it will add significant cost over the next two to three years, it is absolutely the best thing we could do for our patients. It bears repeating that 89% of the patients in our trials have elected to continue on the open-label extensions. You may have also noticed that we added further cognition and plasma biomarker monitoring every six months for patients who choose to continue on our open-label extension trial. We are doing that because the data we generate could have real value in helping us understand the potential long-term impact of Simufilam. Our Phase III program has been very well executed and on track. Dr. Kupiec will tell you more about that shortly. Now, we must plan for success. Continuing our open-label extension trials was one way for planning for success. But in the coming months, you will see others. You will notice an uptick in our R&D spending during the second half of the year. Some of that increased spending will be devoted to preparation for the commercial launch of our drug. We are currently ramping up our active pharmaceutical ingredient purchases, securing increased outsource manufacturing capacity and exploring distribution capabilities. We have to plan for Cassava's successful transition from a development stage company to a commercial enterprise. What we cannot accept is for us to fail the drug. There is an overwhelming need for Alzheimer's patients to have a drug that has the profile that Simufilam has displayed so far in its development. We cannot let patients and their loved ones down. In today's press release, we discussed the $40 million reserve we are taking for potential settlement with the Securities and Exchange Commission. This statement does not mean that we have an agreement in principle with the SEC yet. But it does mean that we now have enough information to understand what our exposure could be if we do come to a resolution with the SEC that will end their investigation of the company. I should add that we are continuing to have constructive conversations with both the SEC and the Department of Justice. There really isn't more we can say about this now, but we hope to be able to do so before law. We are not taking a charge of this magnitude lightly. $40 million is an awful lot of money for anyone, let alone a company of our size. But it is our goal to put our past behind us and focus entirely on our mission, developing a best-in-class treatment for Alzheimer's patients. Many of you have likely read the letter I wrote to the Cassava Community after becoming Executive Chair on July the 17th. In that letter, I told the story of my original connection to Alzheimer's disease, the father of a good friend named Buddy, whose life was cut short by the disease. Since I wrote that letter, I've come to understand that nearly everyone has a Buddy story. And here at Cassava, each of our people have many Buddy stories. Before July 17th, I thought Cassava had a good management team in place. But now I appreciate how great the team really is. What I see is a group of determined and dedicated people who come to work each day because they are committed to making a difference in the lives of patients and their families. And that is what motivates us. As you might imagine, I had a lot to think about before taking on this challenge. Cassava Sciences has been through an awful lot the last few years. And frankly, some of our wounds may have been self-inflicted, while some clearly have not. Most of you are probably familiar with the expression that what doesn't kill you makes you stronger. Our company has been the subject of intense scrutiny for the past three years. Today, we are a stronger company because of it. We are thinking ahead to what we could create and not dwelling on the various challenges we have faced in the past. For me, the opportunity to work alongside people who are so focused on bringing what could be a game changing therapy to patients who are in dire need of one was too great for me to ignore. For more than three decades, Dr. Kupiec has been intimately involved in drug development for companies like Pfizer, Sanofi, and Ciba-Geigy. Before joining Cassava in 2021, Jim served as Vice President, Global Clinical Leader for Parkinson's Disease and Clinical Head of the Neuroscience Research Unit at Pfizer. I should add that Dr. Kupiec is one of the key reasons why I joined the Board of Cassava in 2021. Jim also serves the Independent Review Committee, the IRC at Target ALS, also known as Lou Gehrig's disease, another neurodegenerative disorder, and he serves at pro bono. The truth is that Jim's experience in running trials like this is so deep. He's probably forgotten more about running a Phase III trial than most people will have ever learned. I've asked Dr. Kupiec to walk you through our Phase II program so you understand how well controlled and rigorous this program is. Jim?

Yes. Hey. Thanks, Rick for the introduction, and good morning, everyone. This is Jim Kupiec, Chief Medical Officer at Cassava Sciences. As Rick stated, I've been actively involved in drug development efforts at various companies for over 30 years, and I've had a particular focus on investigational drugs for the treatment of neurologic diseases since the late 1990s. I've worked on teams that have successfully developed drugs and brought them to the pharmacy shelves. However, developing new medicines for neurodegenerative disorders such as Alzheimer's disease, Parkinson's disease, or ALS has more often than not, than associated with failure. The clinical outcomes or endpoints that we assess in randomized clinical studies were associated with large variants and Phase II studies and AD studies had to be quite large to hopefully show enough of a treatment signal to then justify a very large Phase III financial investment. When I led these Phase II and Phase III programs in the past, we frequently did not know until the end of a large Phase III study that the drug had failed, and this was always sad for both patients and everyone involved in the research efforts. Drug development for neurologic diseases began to change dramatically around 2018 with the advent of ultrasensitive fluid-based biomarkers, a technologic advancement that many have characterizes the biomarker revolution for brain diseases. Biomarkers allow us to examine the machinery inside the brain cells of patients with Alzheimer's disease. Why is this important? All of us in the research community understand that drug-induced changes in the most basic cellulite functions must occur first if one expects to also see cognitive benefit later on. In January, 2021, I accepted an offer from Cassava to design and execute the Simufilam Phase III program in patients with mild to moderate Alzheimer's disease. I was very excited and I consider this a great opportunity to leverage both my many years of Alzheimer's disease trial experience and the availability of these new biomarkers to design a true state-of-the-art Phase III program that my colleagues in the research community would view as a new gold standard. Soon after my arrival, we had a successful end of Phase II meeting with the FDA in which they agreed that we had enough evidence to justify transition into Phase III. I designed two Phase III studies and had them reviewed by key colleagues and leaders in the field to ensure they were both scientifically rigorous and operationally feasible. Then the FDA approved each protocol via a regulatory procedure called the Special Protocol Assessment, or SPA. I took advantage of the biomarker revolution. A very unique design element to these studies was to require a plasma-based phosphorylated tau biomarker level to confirm abnormal neuropathology instead of a PET scan. And PET scans are expensive and they can have significant negative impact on rapid study recruitment. We were in the lead with this strategy, and other sponsors have subsequently started to do the same thing. In 2021, we selected Premier Research as a CRO to help operationalize two studies. I worked with many CROs during my career and I have to tell you that Premier has been outstanding and they have worked as hard and diligently on these studies as my own team. Countless hours were spent selecting and vetting high quality investigators to conduct these studies here in the U.S. and also in Canada, Puerto Rico, Australia, and South Korea. We selected Clario, a company with two decades of experience assessing PET and MRI scans in patients with Alzheimer's disease and they would evaluate the thousands of images we would collect in this program. We selected Signet Health, a stellar leader in the field of [Raider] training, Raider assessments to ensure each cognitive and functional assessment at the clinical sites was conducted against a gold standard. Similar high performance companies were selected to collect and analyze safety lab values, ECGs, and even patient compliance with Study Drug. Now, with everything in place, including IRB approvals, we began to screen and recruit patients in late 2021. We have about 170 committed research sites worldwide, and in less than two years, we have recruited over 1,900 patients in both studies, over 555 patients have completed their participation in the 52-week ReTHINK study, and over 420 patients have completed their participation in the 76-week ReFOCUS study for over a total of 975 completers. It's important to note that there's no overlap of clinical research sites between the two studies. The studies have a separate completely different set of investigators supporting research. As just mentioned, the ReTHINK study is 52 weeks in length and it evaluates the potential cognitive and functional benefit of Simufilam in patients with mild to moderate Alzheimer's disease. Half of the 800 plus patients were randomized to Simufilam and half were randomized placebo. Approximately 70% of the randomized patients have mild dementia, and approximately 30% of the randomized patients have moderate dementia. A substantial number of patients in the ReTHINK study have also agreed to have their plasma analyzed for key Alzheimer's disease biomarkers. These blood samples will be analyzed by completely independent CLIA certified accredited laboratory. Cassava, Premier, and our other collaborators have worked very closely to ensure the integrity of this entire study. I wanted this program to be the best I had ever created or worked on. We reviewed data from research sites, monitor any errors that occur. We work closely with the IRBs to ensure the sites are properly conducting their efforts in a way that's consistent with good clinical practice. We conduct routine audits, so we review and assess all safe reports and we document everything. We call this doing it by the book. We know that the FDA and other regulatory authorities expect this of us and they themselves conduct audits of Cassava, our CRO, our other collaborators, and many of our research sites. I need to highlight that the patients, their physician investigators, all of us at Cassava and the Premier remain completely blinded to what treatment each patient is taking. Once the last patient has passed his or her last visit in the fall, we will work quickly and thoroughly to ensure that all minor inconsistencies or questions in the database were addressed. We will confirm the accuracy of each and every piece of data. This includes, for example, all clinical data, cognitive assessment data, lab and ECG data, imaging data. Once we are satisfied, the database will be blocked, and at that point, we cannot make any changes to its content. Data lock has always been a significant and dramatic milestone for me on any of the programs that I've led. Premier Research will make this happen, at which point the Walk and blinded database, including blinded biomarker results will be shared with the Biostatisticians at the Pentara Corporation along with the treatment codes. This will allow them to break the blind and determine whether Simufilam is effective. Everyone at Cassava and Premier continue to remain blinded during this analytical period by Pentara. Pentara is the premier independent biostatistics group, I should say, working on AD studies in my opinion, and that of many others. Once Dr. Suzanne Hendrix and her team members at Pentara conclude they have properly analyzed all the data. They will call us to set up a meeting to go over all their analyses, positive or negative. We will then prepare a public disclosure and we are committed to doing this by the end of the year. Moving ahead, the second Phase III study is the ReFOCUS study, and that has recruited over 1,100 patients. This study and the ReTHINK study are very similar and that patient selection is the same. However, the ReFOCUS study is 76 weeks in length and there are three different treatments to which a patient can be randomized, two doses of Simufilam and placebo. As the study is six months longer in duration, we expect topline results to report out mid-year 2025. The ReFOCUS study is also different in that many patients have the option of participating in a number of substudies, which evaluate the impact of Simufilam on CSF fluid biomarkers, plasma biomarkers, Amyloid PET imaging, Tau PET imaging, and brain volume changes is determined by MRI. The goal of these sub studies is to demonstrate that Simufilam has the potential to modify the underlying disease process of Alzheimer's disease. Patients in both Phase III studies have the option then of rolling over into the open-label extension study. As Rick shared, some 89% of patients have elected to do just that. As Chief Medical Officer for Cassava, I'm ultimately responsible for the safety of these patients, and I spend a lot of time reviewing all types of safety lab and ECG reports along with the medical monitor at Premier. When a patient reports a new medical condition or symptom, this is called an adverse event for the purpose of regulatory filings. I'm pleased to report that no serious adverse event has yet been linked to study drug in any of our Phase II or Phase III studies. A huge amount of safety data has now been shared on two separate occasions with the Data Safety Monitoring Board, or DSMB, who have instructed us to continue the studies without change. This Board is composed of very experienced independent clinical scientists and a statistician, and they are charged with reviewing all safety data, even if they feel obligated to look at any unblinded safety data behind closed doors as per their charter and a strict set of rules that enable such an assessment. They are tasked to advise Cassava on how best to ensure the safety of our study participants and if any changes in the conduct of the study are required. This is yet an extra step we've taken to ensure patient safety. The DSMB has already met twice, and we will meet again for the third time next month. Rick, that's my update for Phase III that I wanted to share. But if I may, I'd like to share a final personal note. I was excited when I joined Cassava, but I'm even more excited and optimistic now about Simufilam and its chance of success in Phase III. Simufilam continues to be safe and well tolerated in a very large number of patients, plus the data from the 24-month open-label Phase II safety study was remarkable in that patients with mild dementia apparently had no significant decline during that two-year treatment period. If this is true and replicated in Phase III, it would represent an exceptional achievement and a significant advance in the field. So thanks for everybody on the line for your attention. I look forward to sharing our results with you at the end of the year. Rick, back to you.

Thanks so much for that, Jim. I'm now going to ask Eric Schoen, Chief Financial Officer to discuss our second quarter results and our financial projections for the remainder of 2024.

Thanks, Rick. On the cash front, we ended the June quarter with $207.3 million in cash. That balance is expected to be sufficient for operations through the conclusion of both ongoing Phase III trials and into calendar 2026 even after considering the potential $40 million loss contingency recorded in Q2 to resolve the SEC investigation that was discussed by Rick. Rick also covered the successful completion of our warrant distribution during the second quarter. During the duration of the program, a total of approximately 3.8 million warrants were exercised. As a result, the company sold 5.7 million common shares at $22 per share for gross proceeds totaling $126.3 million. After offering costs, net proceeds to the company were $123.6 million. There are currently no remaining warrants outstanding. The warrant program was a really good boost for the balance sheet. We were pleased to offer our shareholders a dividend, which gave them the choice to sell their warrants and receive cash or to exercise their warrants and increase their equity stake in the company. On the cash spend side, net cash used in operations during the six months ended June 30, 2024 was $37.4 million. This was in line with our previous guidance. Net cash used in operations for the second half of 2024 is expected to be between $80 million and $90 million, including an estimated $40 million loss contingency related to fully resolving the SEC investigation. Considering the spending level, we believe we will end the year with between $117 million to $127 million in cash. Net income was $6.2 million in Q2 compared to a net loss of $26.4 million for the same period in 2023. Net income resulted from a change in fair value of warrant liabilities, a non-cash item. This warrant gain was partially offset by the estimated SEC loss contingency settlement and cost to conduct the Phase III clinical program, as well as other studies with Simufilam. Research and development expenses for Q2 were $15.2 million. This compared to $25 million for the same period in 2023. R&D expenses decreased due primarily to the completion of patient screening and enrollment for our Phase III clinical program in the fall of 2023. Now I'll turn it back to Rick.

Thank you, Eric. Okay. Operator, could you please open the line for questions?

At this time, we will be conducting a question-and-answer session. [Operator Instructions] The first question is from Roy Soumit, Jones Research. Please go ahead.

Good morning, everyone, and thank you for providing all the details, Rick. Three questions. One is on the discontinuation dropout rate of about 20% to 22%. Could you describe us what was the key driver for that? Was it dose reduction discontinuation due to AE or any controversy related to the drug? Any details would be great. And the second is the ADAS-Cog12, I suppose, was designed more within mild, mild to moderate patients versus ADAS-Cog14. Now that we know a good chance that mild patients would show the benefit is ADAS-Cog12 still the appropriate endpoint and if FDA gave any guidance, if only one of the co-primary hits, what would be the regulatory path forward?

Okay. I think I've got it. Thanks, Soumit. Probably I'm going to ask Jim, I think to answer your questions. He's probably better prepared for it. Jim?

Yes. Let me see it. As far as the ADAS-Cog question. The first question was about the dropout rate. Dropout rate that we've seen in both of the two studies, we have about 20%, slightly more than 20% in the longer study. As is common in these studies, the most typical reason for a dropout is because of what I call study fatigue, patient fatigue, they withdraw consent. Patients are moving someplace. It's not just a patient involved in the study, but also a study partner. And they oftentimes are just vary from coming back and forth, back and forth to the research center. So if you look at, let's say, other studies that have recently been reported and approved FDA such as aducanumab or lecanemab or donanemab. Again, the most common reason for dropouts is not adverse events, but withdrawal of consent. With regards to ADAS-Cog12, that's a good question. If we were going to even earlier population like a mild cognitive impairment, we might use ADAS-Cog13 or 14. But for mild to moderate population, ADAS-Cog12 is more than adequate. The agency agrees as part of our earlier discussion a few years ago. And I think there was a third question. Can you please repeat that?

If you had any discussion with the FDA, if you hit only one of the core primary endpoints not both Cog12 and ADL?

No. We've not had such a discussion at this point. Thank you.

Thank you for taking the questions.

Thank you, Soumit.

The next question is from Vernon Bernardino, H.C. Wainwright. Please go ahead.

Hi. Good morning and thanks for taking my questions. Rick and Jim, I also want to welcome you to Cassava, look forward to your activities in helping grow the company. I have a couple questions. Rick, I know you can't go into the details as far as the SEC investigation. But I do want to press a little bit in the sense that. Could you remind us again what the SEC's investigating and what are the drivers of the $40 million amount for the estimated loss contingency that you're recording?

Well, I think, the investigation began in 2021 after the citizen's petition was filed, and there were all kinds of allegations raised in that petition. The settlement, if we reach one will – all I can say is it will end the investigation. And the commission seems to be most focused on the fact that the company raised money. Sometime in the – I can't remember now if it's the fourth quarter or the beginning of 2021. And that seems to be really what they're focused on.

Okay, terrific. Second question I have for you Jim – Dr. Kupiec. It's great that you've added a biomarkers to the Phase III studies. Regarding those biomarkers, will that be part of question one would be the topline – part of the topline announcement for ReTHINK. And are some of those biomarkers going to be, let's say, it's not necessarily targeted. But perhaps, once that would answer some of the controversy that arose from the Phase II results, the early Phase II results that led to the indictment charges against a former advisor. As you know, there's controversy about those results. I don't want to get into the indictment itself. But with these biomarkers, it seems like there'd be an opportunity for the Phase III results to answer any lingering questions as far as not necessarily duplicating those results, but perhaps confirming the directionality of those biomarkers.

Rick, you want to take that question?

I am sorry. I'm going to let you handle in on Jim.

Okay. Thanks, Rick. That's a really good set of questions. Thank you so much. So in our Phase III study, we have a number of biomarkers. In plasma in particular, we we're hoping, I cannot absolutely promise, but we are hoping that our plasma biomarker assessment in patients from ReTHINK will be available in at the end of the year. At the same time, we have cognitive data to present publicly. That is our hope and we're working to that end. The types of biomarkers we're going to be looking at in Phase III will look at some of the basic abnormalities of cell function in patients who have Alzheimer's disease. The phosphorylation of Tau, the inflammatory changes that have been seen, the degeneration of Axons, for example, in patients with Alzheimer's disease. These are the type of biomarkers that can be looked at in the plasma very accurately and with great precision. And they are the common ones that are being examined by most of the companies who are doing this type of work. There are also biomarkers that we can do in CSF, but that's part of the ReFOCUS study and we won't have those until sometime in the second half of next year in all likelihood. But yes, to your question, we're hoping to have some biomarker data available later on this year. Remember, these biomarkers we're collecting them at various time points in a 52-week ReTHINK study. The data that you raised from Phase II, much of it from CSF done in the Professor Wang's lab was in a 28-day study. And one of the things that we did a number of years ago was have a independent laboratory, Quanterix. I want to remind you of this. Quanterix did a assessment of a biomarker called p-tau181, which was in vogue then, and did show a statistically significant change. It was a small number of subjects in each of the treatment groups. So this is a double-blind study looking at placebo versus two doses of drug. And the data was in fact, significant, and I just want to remind you of that. And we're hoping to not only replicate that type of benefit, but also expand and augment it with a longer study and using perhaps more, I'll call it, more contemporary blood-based biomarkers that are now available. So hopefully that will answer your question.

No. That's fantastic. And I asked those questions because I don't know if everybody remembers. I'm sure you are very familiar with the data. A lot of the results happened very quickly within those 28 days. And that is part of the strength of Simufilam that you see the effects right away. As a follow-up to Soumit Roy's question, regarding ADAS-Cog12, I was wondering if you could go a little bit into – obviously, it'd be great to get these patients on treatment with Simufilam as early as possible. But with the statistical plan of these Phase III studies, I was wondering if you could describe a little bit if not perhaps at least characterize your statistical plan and the targeting of what kind of patients you will be announcing at least on the topline level for ReTHINK and maybe even ReFOCUS?

So the analysis – these types of studies, you have to do what's called a modified intent to treat analysis, which means you include everybody in the analysis who has taken at least one dose of drug and has had at least one follow-up visit in order to determine whether or not cognition or function has changed. For example, if somebody takes the bottle of pills and then they just disappear, they lost a follow-up, they would not be included. But otherwise, everybody else either having mild dementia or moderate dementia will be included in that analysis. That is our primary analysis. That is what the FDA expects. There will be certainly subgroup analysis that we will do. They're not the primary analysis though. In the secondary analysis, we'll look at patients who have sort of different types of dementia, mild dementia and moderate dementia, patients who have this variable or that variable. There's quite a number of subgroup analysis. I suspect that the time that we have the public disclosure later this year, we'll have most of that data, and we'll provide as much as we can. And that's my promise to you.

Thank you for your – providing that insight and taking my questions. I look forward to the data. I'll get back in the queue. Thank you.

Thanks, Vernon.

The next question is from Elemer Piros, Rodman and Renshaw. Please go ahead.

Yes. Good morning. Maybe a little bit of follow-up to Dr. Kupiec. What I'd like to understand is the statistical analysis plan of the co-primary endpoints, and whether that has been locked down and agreed with the FDA, and if you could provide just some details about how the analysis is going to be performed on the two primary endpoints?

Jim, you're very popular today.

No. I guess so. So the statistical analytical plan has been written in conjunction with statisticians at both Premier who will be analyzing the safety data and Dr. Hendrix, Dr. Mallinckrodt, Pentara Corporation, they'll be analyzing our dataset for efficacy. To your question, they will be doing a modeling approach to our patients, which is very typical. It's a very sophisticated approach as opposed to what we call simple statistics. And they'll be doing that analysis. We have written the statistical analytical plan. We are done with the statistical analytical plan internally. It is sitting at the FDA, we're waiting for the commentary on it, assuming that they approve. Then we will basically lock it down and sign off on and it'll be done. But clearly, and to the essence of your questions, it needs to be completely done so that the analysis is pre-specified before we even get close to the data lock date. So I don't know if that's what you are looking for, but hopefully that answered your question.

Yes. Maybe just one additional follow-up to that is that both of these primary endpoints would have to meet at the level of p less than 0.5. Is that correct for it to be successful?

That is correct.

And maybe just to bring in Chris, if we could. How did you arrive to this figure of a potential settlement of $40 million? Was that based on some precedents? How did that figure come about as an estimate?

I appreciate the question. But we've said everything we can about our ongoing discussions with the SEC and we have reserved $40 million. But as we indicated, we're still in discussions with the SEC, and it really wouldn't be appropriate to give any more details.

Okay. Thank you. And maybe one last question to Rick. You alluded to that there was a demand to expand the expanded access program to beyond one-year. What precipitated that? Was it more like clinicians demand or patient/family demand that you observed? If you could provide a little bit of color there?

I think the honest answer is it was a lot of things. So we heard from the sites that patients were going off and they wanted to stay on the drug. We heard that loud and clear through the clinical team. And I got to tell you, I have received quite a few emails from the patient community, generally from loved ones of patients who are on the drug or on the – that were on the trial are now on the extension trial. And they weren't begging to continue, but they very clearly wanted to continue. They understood the constraints of us being a small company and this being very costly. So it was a lot of things that led to it. But like I said, it was an easy decision. I mean, it's just the right thing to do for patients. To me, it struck me as cruel to have somebody on a drug for that long and they think that they're getting a benefit from it and we're taking them off. So it is driven by a lot of factors.

Yes. And Rick, I can imagine that you received quite a bit of an interest. I mean, this is one of the only handful of pivotal programs ongoing in Alzheimer's from potential partners. Can you describe some of the dynamics of those in the past and what would be your anticipation once data is available?

Yes. I don't think I want to go too far into it. But the – realistically, I would not expect us to see – I wouldn't expect to see a partnership before we have Phase III data. And if you think about it from the other side, if this is a big pharma company, some business development officer would have to take the risk of walking into a CEO's office and saying, hey, I want to make a bet on this company. We don't have data yet. Most of the deals you see with big pharma these days are very expensive. And they're expensive because they're risk averse and they wait until there's a Phase III result or there's an FDA approval. So I guess the best I could say is stay tuned.

Okay. Certainly will. Thank you so much for answering the questions.

Thank you.

Next question is from [indiscernible], a Private Investor. Please go ahead.

Hello. First off, that was a great update. It's nice to have Jim talking about some of the details on the trials. And I wanted to thank you personally for focusing on the patients and extending the open-labels. I think that was a great decision and made a lot of families much more calm and happy. And I'd like to congratulate the entire team. It's been quite a journey the last three years, but you guys did an incredible job getting Simufilam to the doorstep of a completed Phase III trial. I have two related questions. So some estimates say there's about 46 million patients worldwide with Alzheimer's, 6.5 million in the U.S. and 11 million in Europe. Have you guys analyzed the worldwide demand for Simufilam if there's a successful Phase III readout and FDA approval? And can you give any additional color on what steps you're taking to ensure Simufilam could be delivered to patients quickly after the FDA approval and scale worldwide?

Yes. Very timely question. So we don't have a Chief Commercial Officer here. We're a small company as you know. But we're interviewing several different firms to do the commercial plan for us. In fact, we have two or three calls I think scheduled today on that very topic. That's going to be the best way for us to do it. And then at that point, we'll decide do we need to have a Chief Commercial Officer and build a commercial team here or not. But that – we'll take a look at where is the demand, depends on the label, obviously. And as far as preparing for it, I mean, the first thing we have to do, and I made reference to it in my remarks is, we have to beef up the API or the active pharmaceutical ingredient. And we've done that. We're also looking at – we have a manufacturer right now that is making an adequate number of tablets, but for the demand that we're internally forecasting, it's not enough. So we're looking at other sources for that manufacturer.

Okay. So you mean like a new company that can scale up successfully to a worldwide scale?

Yes. Another plant within the same company that we have greater capacity. But yes, a second source and the second source might have to be a lot larger.

Okay. That's all I had.

Okay. Thank you, Matt.

Thank you.

So I think that was our last question. I just wanted to say, we really appreciate you joining us today. And I want everybody to remember, our goal is to bring the best-in-class treatment to Alzheimer's patients. That's why we're here. Thanks for listening. Have a good day.