Cassava Sciences (SAVA) In Search of Asymmetric Opportunities - July 19, 2021
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Cassava Sciences (SAVA) In Search of Asymmetric Opportunities July 19, 2021
Disclaimer
This presentation has been prepared for informational purposes only and does not constitute
an offer to sell or a solicitation to purchase any security. The contents of this presentation are
not intended to provide investment advice and under no circumstances does this presentation
represent a recommendation to buy or sell a security. This information contained herein
reflects the opinions of the presenter as of the date hereof.
The analysis may include certain forward looking statements, estimates and projections. No
representation, expressed or implied, is made as to the accuracy or completeness of such
statements, estimates or projections. Actual results may vary materially from such statements,
estimates or projections.
This presentation is intended to be read with reference to any and all footnotes and appendices.
All investments, including investments discussed herein, contains risk of loss, including possible
loss of your entire investment.
2
Career Defining Opportunity
We have been professional investors for
decades and this is the greatest investment
opportunity we have ever seen
Source:
Note: 3
The Opportunity
Why is the opportunity unique?
• ~$3 billion enterprise value addressing a >$100 billion TAM in Alzheimer’s
• Alzheimer’s is our biggest unmet medical need with over 30 million people worldwide
diagnosed
• Renewed focus on Alzheimer’s following Biogen’s controversial drug approval in June 2021
• Cassava’s Simufilam has unprecedented and consistent data with a flawless safety profile, and
a unique mechanism of action
• Clear path to value realization with ~9 data sets to be released between now and early 2022
• Cassava will be the first company ever to present improvement of cognition at 9-months
when they present at AAIC on July 29th. Cassava will follow that with historic 12-month
results in September
• Two phase 3 studies beginning in the second half of 2021
• The most bullish (yet credible) CEO we’ve ever encountered
• >5X potential return
Source: World Health Organization, Annovis Bio, Cassava Sciences
Note: Enterprise value as of 7/19/21 4
Cassava Sciences YTD
Population
in millions SAVA YTD Stock Performance
$116.00
2/2/21 - 2/4/21
Stock up >400% from pre- 6/21/21
announcement price. Intra- Announcement of 6-
$96.00 day all-time high of 4/21/21 month biomarkers
$117.54 reached on 2/4/21 Announces that 9- and SavaDx being
month interim results presented at AAIC
$76.00 will be presented at
AAIC
$56.00 2/2/21
Announces
interim 6-month
results from
$36.00 open-label study 5/10/21
Announces initiation
of CMS study earlier
than expected
$16.00
-$4.00
Source: Cap IQ, Cassava Sciences
Note: Pricing through 7/19/21 5
Cassava Sciences Short-Term Milestones
September 2021 November 2021
Commence phase Begin phase 3b
6/7/21
3a study of 600 study of 1,000
Biogen receives Other potential 2021 catalysts
patients for 12 patients for 18
FDA approval of
months examining months examining
aducanumab
symptomatic disease-modifying • Release of 12-month
improvement dffects biomarker data for open-label
study
• Publication of data in a
respected peer-reviewed
journal (Ex: Nature Medicine
or New England Journal of
Medicine)
• Initiation of coverage by
additional sell-side research
7/26/21 - 7/29/21 • November 9-12, 2021: CTAD
5/10/21
Present 9-month September 2021 conference and potential
Initiation of Cognition
Maintenance Study for
cognition and safety Announce 12-month presentation from Cassava
Results, 6-Month cognition and safety Sciences
patients who have
biomarker results, and data from open-label
completed one year of
clinical results of SavaDx study
treatment
at AAIC
Source: Cassava Sciences
Note: 6
The Growing Alzheimer’s Problem
7
AD is our Largest Unmet Medical Need
“You know, if we don’t do something about Alzheimer’s in America, every single, solitary hospital bed that
exists in America — as the nurses can tell you — every single one will be occupied in the next 15 years with
an Alzheimer’s patient — every one.”
- President Joe Biden on May 27, 2021
Alzheimer’s by the numbers:
50 Million+ 60-70%
Worldwide Dementia patients Of Dementia cases are Alzheimer’s
152 Million 6th
Projected Alzheimer’s cases by 2050 Leading cause of death for all adults
Source: World Health Organization, Alzheimer’s Disease International, CDC, Washington Post
Note: 8
Alzheimer’s is a Global Problem
Population
in millions
Global Growth in Alzheimer’s Projections
50
45
40 Million
40
35
30
25
20 18 Million
15 13 Million
10 Million
10 8 Million
6 Million
5
0
US Europe China
Current Diagnosed (Estimate) 2050 Projection
Source: Alzheimer’s Association, Alzheimer-Europe.org, Chinese Geriatrics Society
Note: 9
The World is Rapidly Aging
Population
in millions Worldwide Growth in Elderly Population
2,500
2 Billion
2,000
1,500
1,000 900 Million
500 434 Million
125 Million
0
Number of People Worldwide Ages 60+ Number of People Worldwide Ages 80+
2015 2050 (Estimate)
(Population in Millions)
2015 World 2050 World % of 2015 % of 2050
% Growth
Population Population Population Population
Number of People Worldwide Ages 60+ 900 2,000 122% 12% 22%
Number of People Worldwide Ages 80+ 125 434 247% 2% 5%
World Population 7,339 9,091 24% - -
Source: World Health Organization
Note: 10The Problem is Getting Worse Source: Annovis Bio Note: 11
The Problem is Getting Worse (Cont..) Source: Annovis Bio Note: 12
Devastating Financial Burden
13$1 Trillion Problem
$355 Billion $1.1 Trillion 15.3 Billion
2021 projected annual Alzheimer’s and Hours provided by caregivers in 2020
other dementias cost in the US and the valued at nearly ~$257 billion
2050 projected cost
$373 Thousand 23x Higher
Estimated lifetime cost of care for Annual Medicaid payment for those 65 and
someone with dementia older with Alzheimer’s v. those without
Source: Alzheimer’s Association, Alzheimer’s Association 2021 report
Note: 14Current Treatment Options
15Acetylcholinesterase Inhibitors
Massively flawed class of drugs that has been the only option for the last 20 years
• Only works temporarily (~6 months on average). With use, the brains receptors are
desensitized, and the drug’s efficacy is lost
• Acetylcholinesterase Inhibitors generated >$5 billion in sales in 2019
• Marred by side effects, which result in patients discontinuing treatment due to diminished
quality of life / limited efficacy
Acetylcholinesterase Inhibitors stats:
8 out of 10 4.5 out of 10
AD patients start out on an Remain on therapy at 12 months due to
Acetylcholinesterase Inhibitor side-effects
12 million 30%
Prescriptions dispensed per year Discontinue by the 4th month of use
Source: Alpha Cognition presentation (Symphony Health data), JAMA, NIH
Note: 16Amyloid Plaque Treatments
Billions of dollars and decades of time spent pursuing the amyloid thesis
• An academically strong thesis, years of failed trials have shown that this is likely the
wrong strategy for addressing Alzheimer’s
• Amyloid plaque is associated with Alzheimer’s disease, but it appears that clearing plaque
on its own is insufficient for improving symptoms
• Big pharma has mostly focused on the amyloid plaque approach with Biogen’s recently
approved Aduhelm and Eli Lilly’s donanemab (received BTD on 6/24/21) both being
drugs that target clearing amyloid plaque (albeit slightly different targets)
• Amyloid plaque treatments have lacked clinical results, are inefficient to administer
intravenously, require multiple MRI’s, carry a hefty price tag and consistently have
troubling side effects such as brain swelling and microhemorrhages
Source: Washington Post, NIH, FDA, Eli Lilly, New York Times, Harvard Health
Note: 17Aduhelm – Troubling FDA Decision
Aduhelm was approved despite opposition from the FDA advisory committee
• Patient groups have been desperate for any treatment leaving the FDA with the thought
that something/anything was better than nothing
• 3 out of the 11 experts on the FDA CNS committee resigned over the approval of
Aduhelm
• In two phase 3 studies, one study outright failed (Engage) while the other study (Emerge)
still failed to improve cognition but did improve relative to the placebo in the high-dose
treatment
• Aduhelm did show an improvement in αβ-42, p-tau and t-tau biomarkers
• The clearing of amyloid plaque is what led the FDA to grant Biogen accelerated approval
• 34% of patients had brain-swelling, ~19% had microhemorrhages, and ~92% of patients
had some form of adverse event
“There is no good evidence that reducing amyloid leads to meaningful changes in the clinical course of the
disease”
- Dr. Aaron Kesslheim (Professor of Medicine at Harvard Medical School in a WSJ article published on 6/8/21)
Source: Biogen, Wall Street Journal, Reuters, FDA
Note: 18Simufilam
19A Unique Mechanism of Action
10+ years of in-house research leading to Simufilam
• Simufilam is a proprietary, small molecule drug taken orally to treat Alzheimer’s
• The mechanism of action reduces both neurodegeneration and neuroinflammation
• Flawless safety profile
• Simufilam aims to restore the normal shape and function of a scaffolding protein in the
brain called Filamin A (FLNA). Altered Filamin A is critical in the formation of amyloid
plaque. The hypothesis is that Simufilam bonds to altered FLNA, restores its proper
shape and thus stops the production of amyloid plaque in the brain
• Simufilam is a disease-modifying drug not one that is solely focused on alleviating
symptoms
• Our research suggests that the small-molecule approach targeting misfolded proteins has
a long-term effect
Source: Cassava Sciences, Joe Springer
Note: See appendix for mechanism of action 20Simufilam Clinical Results
A history of safety, cognition improvements and improvements in biomarkers
• Phase 2b results were released in September of 2020
• 28-day double-blind, randomized, placebo-controlled, multi-center study
• Safe and well-tolerated
• 98% response rate in biomarkers for Tau/p-Tau, neuroinflammation,
neurodegeneration (25% decrease in tau/Aβ42 ratio)
• Improvements seen in cognition with the CANTAB test (improvements over the
placebo group in both episodic memory and spatial working memory)
• 2b results replicated prior clinical results
• 6-month interim analysis of the 12-month open-label study
• Reported on the first 50 patients who’ve completed 6 months of treatment
• Cognition scores improved by 1.6 points on ADAS-Cog 11 (10% mean
improvement from baseline)
• Dementia-related behavior improved by 1.3 points on NPI (Neuropsychiatric
Inventory)
Source: Cassava Sciences, Cambridge Cognition, NCBI, Alz.Org
Note: 21Biomarkers in Phase 2B Results
Lower numbers are more desirable for all markers except Aβ42
Source: Cassava Sciences
Note: See appendix for additional biomarker analysis 22Simufilam v. Aduhelm v. Donanemab
Drug Overview Comparison
Cassava Sciences Biogen Eli Lilly
Drug Simufilam Aduhelm Donanemab
Administered Orally (twice daily) Intravenous Infusion (monthly) Intravenous Infusion (monthly)
Targets altered Filamin A to
restore shape/function to reduce Clears amyloid plaques
Mechanism of Action Clears amyloid-β plaque
neuroinflammation and (specifically N3pG)
neurodegeneration
Over 30% of patients had brain- Over 25% of patients had brain-
Clean safety profile. No patient swelling, ~19% had swelling, ~8% had
Safety Concerns
drug discontinuation microhemorrhages and ~5% had microhemmorhages and ~30% had
to discontinue treatment to discontinue treatment
Cognition Improvement (At 26
10% (1.6 point improvement) -3% (0.7 point decline) 1% (0.3 point improvement)
Weeks) in ADAS-Cogⴕ
Improvement in clearing amyloid
Improvement across all validated Improvement in αβ-42, p-tau, t- plaques. Didn't produce a
Biomarkers
Alzheimer's Disease biomarkers tau compared to baseline significant effect lowering tau
load
$56K per annum (along with
Cost (Estimated) ~$28K per annum* $50K per annum**
multiple MRI's)
* Blended average between B Riley Securities estimated midpoint pricing of $18K (6/22/21 report), Jones Trading estimated pricing
of $40K (6/28/21 report), and Maxim Group estimated pricing of $25K (7/7/21 report)
** Per Truist (7/2/21 report)
ⴕ Cassava Sciences utilized the ADAS-Cog 11 test while Biogen and Eli Lilly utilized ADAS-Cog 13. ADAS-Cog 13 is the same test as
ADAS-Cog 11 with the addition of two additional tasks
Source: Cassava Sciences, FDA Results, Biogen Investor Presentation, New York Times, Eli Lilly Investor Presentation, Analyst Estimates
Note: 23Upcoming Studies
Cassava Sciences has already initiated its Cognition Maintenance Study
(CMS), and their two phase 3 studies will begin in 2H 2021
Ongoing Cognition Maintenance Study (CMS):
Comparing cognition in Alzheimer’s patients who continue v. discontinue
1 Simufilam following 1-year of treatment. The study is double-blind,
randomized, placebo-controlled
Symptomatic improvement phase 3 trial:
This 600 patient, 12-month study has the goal of demonstrating improved
2 cognition (above baseline) and health function in subjects treated with
Simufilam compared to placebo
Disease-modifying effects phase 3 trial:
This 1,000 patient 18-month study has the goal of demonstrating a slower
3 rate of decline in cognition and health-function in subjects treated with
Simufilam compared to placebo
Source: Cassava Sciences
Note: All trials utilize the ADAS-Cog test for the primary cognition endpoint. The two phase 3 trials use the ADCS-ADL scale as the health function endpoint 24FDA
25A Change in the FDA’s Stance
There are 4 distinct approaches for making drugs available as rapidly and
safely as possible:
1 Fast Track Designation:
Breakthrough Therapy Designation:
2 Eli Lilly received Breakthrough Therapy Designation on June 24th, 2021
Accelerated Approval:
3 Biogen received Accelerated Approval for Aduhelm on June 7th, 2021
4 Priority Review:
The FDA now views Alzheimer’s as a fatal disease. By approving Biogen’s drug and
granting Eli Lilly BTD, the FDA has effectively lowered the bar for new drug approval
Source: Eli Lilly, Biogen, FDA
Note: 26Possible Breakthrough Therapy Designation
“the short version is yes, yes, and yes. We're very, very conscious, more than anyone
we've been focusing on Alzheimer's 24/7 for about twelve years now”
- Remi Barbier when asked about possible BTD in a Being Patient Interview on 3/1/21
Source: Being Patient
Note: 27Alzheimer’s Association International Conference
(AAIC) Preview
July 26th – 30th, 2021
28AAIC – What’s Being Announced?
1 9-Month open-label results 2 6-Month biomarkers 3 Phase 2 SavaDx results
• Reporting of interim safety & • Reporting biomarkers on 25 • Investigational diagnostic
cognition data for the first 50 patients who have completed 6 candidate to detect Alzheimer’s
patients to complete 9 months months of open-label drug disease with a simple blood test.
of open-label drug treatment treatment SavaDx aims to detect the
• Cassava Sciences has been • Presenting 11 different disease years before the onset of
invited to present this data as an biomarkers that fall into 3 symptoms
oral presentation categories (Alzheimer’s disease, • Randomized, placebo-controlled
• Cassava Sciences gained neurodegeneration, study that was completed in
notoriety in February 2021 when neuroinflammation) 2020 with 64 patients
they reported a 1.6 ADAS-Cog • AD is a “disease of biomarkers” • The SavaDx program is funded
11 improvement at 6 months and are widely considered by research grants from the
(10% improvement). Nobody objective measures in assessing National Institutes of Health
has ever shown cognition progress of Alzheimer’s (NIH)
improvement at 9 months
• Clean and consistent safety
profile of Simufilam
Source: Cassava Sciences
Note: 29Cognition Expectations (Internal Estimates)
Estimated 5+ point
improvement over
placebo at 52 weeks
1.6 point Estimated 1.5-2.5 Estimated 0.8-2.5
improvement point improvement point improvement at
a 6 months at 9 months 12 months
Dashed yellow line indicates our internal estimates for 9 and 12 month results
We expect Cassava Sciences to be the first to show improvement in cognition at 9 months,
and we also expect cognition to stabilize or even improve from the 6-month results
Source: Cassava Sciences investor presentation
Note: Analyst expectations in the appendix 306-Month Biomarkers | SavaDx
6-Month biomarkers SavaDx
• Expect the 6-month biomarker data to show • The Phase 2b study was completed in 2020. We
positive results across the continuum of believe that Cassava would have already released
biomarkers results if the study outcome was negative
• Expect biomarkers to be similar to or an • Expecting more information about the use case
improvement upon phase 2b biomarker results. (broad Alzheimer’s testing v. Simufilam
companion diagnostic)
• No bias potential with biomarkers
• The market doesn’t appear to be pricing in any
upside for SavaDx. We view this as a free option
We believe the addition of these two data sets will serve as incremental positives to
the 9-month cognition & safety data
Source: NIH Publication, Cassava Sciences
Note: 31Reason for Optimism
Consistent & convincing science
• Simufilam has been consistent in showing improvements in cognition, behavior, relevant biomarkers and
has shown to be safe at every stage of clinical testing
• There’s scientific basis for small molecule drugs addressing misfolded proteins having a lasting effect
Bullish management
• Why would management willingly present on the biggest stage in the world for Alzheimer’s if they had
lousy data?
• Remi Barbier (Founder/CEO) is struggling to contain his excitement at every public appearance
• Management and insiders own > 5% & have not sold despite the 1,000%+ increase in stock price YTD
It's the consistency of data from basic research to the animal data, to the CSF biomarkers, to the early
cognition, to the open label study. There's a consistent theme that, in my opinion, the world of Alzheimer's
disease R&D has never seen before.
- Remi Barbier (CEO/Founder of Cassava Sciences in a Being Patient interview on 2/26/21)
“I know the science, I know the data, I know the disease, and this stuff looks promising and I'm putting my
money where my mouth is”
- Remi Barbier (Fortune interview published on 6/8/21)
Source: Joe Springer, Being Patient, Fortune
Note: 32“I Won’t Spill the Beans”
Why would Cassava Sciences CEO, Remi Barbier, make these sort of comments if he
wasn’t certain of 9-month results?
Source: Millionaires Investment Secrets, B Riley Securities
Note: Remi Barbier spoke at the B Riley Securities neuroscience conference on 4/28/21 33Valuation
34Valuation Overview
Goal: Provide a holistic valuation range based on a multitude of methods
Discounted cash flow analysis (DCF):
1 Estimated target price ≈ $700/share
Multiple of peak sales:
2 Estimated target price ≈ $1,325 - $1,660/share
Analysis of Biogen and Eli Lilly market cap moves:
3 Estimated target price ≈ $555/share
Multiple of Acetylcholinesterase Inhibitors sales:
4 Estimated target price ≈ $517/share
Source:
Note: 35Discounted Cash Flow (DCF)
Key assumptions Key outputs
• Projection period: 2021 – 2033 • Price/share: ~$699
• Discount rate (WACC): 15.0% • Enterprise value: ~$29.4 billion
• Terminal growth rate: 1.6% • Market cap: ~$29.6 billion
• Year of FDA approval: 2024 (midyear) • % of value from projection: ~59.0%
• Gross margin: 85% (analyst consensus) • % of value from terminal value: ~41.0%
Price/share sensitivity analysis
Discount Rate
10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0%
Terrminal Growth Rate
(0.8%) $1,205 $1,050 $922 $816 $727 $650 $585 $528 $479 $436 $398
(0.4%) $1,230 $1,069 $937 $828 $735 $657 $590 $533 $483 $439 $400
0.0% $1,258 $1,090 $953 $840 $745 $665 $596 $538 $486 $442 $403
0.4% $1,288 $1,112 $970 $853 $755 $673 $603 $543 $491 $445 $406
0.8% $1,320 $1,136 $988 $866 $766 $681 $609 $548 $495 $449 $408
1.2% $1,356 $1,162 $1,007 $881 $777 $690 $616 $553 $499 $452 $411
1.6% $1,394 $1,190 $1,028 $896 $789 $699 $623 $559 $504 $456 $414
2.0% $1,437 $1,220 $1,050 $913 $802 $709 $631 $565 $509 $460 $418
2.4% $1,484 $1,254 $1,074 $931 $815 $719 $639 $572 $514 $464 $421
2.8% $1,537 $1,290 $1,101 $951 $830 $731 $648 $578 $519 $468 $424
3.2% $1,595 $1,331 $1,129 $972 $846 $743 $657 $586 $525 $473 $428
Source: Internal estimates
Note: DCF included in the appendix 36Peak Sales (Internal Estimates)
Sizing the AD market Peak sales calculation
~50 million current dementia patients worldwide ~51.2 million patients for Simufilam TAM
~65% of dementia patients have Alzheimer’s disease 1.4% estimated peak global penetration rate for Simufilam
~32.5 million current AD patients worldwide ~720 thousand peak patients on Simufilam
$12K annual $24K annual $36K annual
~4% annual growth rate in Alzheimer’s patients
cost cost cost
$8.6 billion $17.2 billion $25.8 billion
~51.2 million estimated Alzheimer’s patients by 2033
peak sales peak sales peak sales
Source: World Health Organization, Alzheimer’s Disease International, Internal estimates
Note: Most estimated penetration rates are for EU/US only while our analysis assumes a global rate 37Peak Sales (Aggregated)
$ in billions
Simufilam peak sales estimates
$28.0
$24.0 $22.9
$20.0
$18.0
$16.0
$13.7
$12.0
$9.6 $10.0
$7.9
$8.0
$4.0 $3.0
$0.0
SAVA current enterprise value Maxim Group Jones Trading B Riley Securities
Cantor Fitzgerald Joe Springer Average peak sales estimate
Analysts expect Simufilam will generate ~$13.7 billion in peak sales
Source: Maxim Group, Jones Trading, B Riley Securities, Cantor Fitzgerald, Joe Springer
Note: Enterprise value as of 7/19/21 38Multiple of Peak Sales
When analyzing 10 of the largest M&A deals for pre-revenue biotech, we found that
on average big pharma pays ~4.1x estimated peak sales
Internal peak sales
estimate
$17.2 billion
Peak sales multiple Enterprise value range Midpoint share price range
4.1x ~$56 - $70 billion ~$1,325 - $1,660/share
Average sell-side peak
sales estimate
$13.7 billion
Valuation ranges from ~$420/share at the low end to ~$3,245 at the high end1
Source: World Health Organization, Alzheimer’s Disease International, Internal estimates
Note: Estimated ~$282 million in net cash and ~42.4 million fully diluted shares to get to target price. Breakdown in appendix 39
1 Low-end assumes lowest peak sales and peak sales multiple. Vice versa for high-end. See appendix for detailsBiogen and Eli Lilly Market Cap Moves
Biogen material AD events Eli Lilly material AD events
$430 $240.00
1/11/21
Topline results from phase 2
$410 11/4/20 $230.00 trial of donanemab released.
The FDA implies favorable ruling 6/7/21 - 6/10/21 Market cap increases by $17.7 6/7/21-6/10/21
$390 and analysts upgrade the stock. FDA approved billion FDA approved
$220.00
Market cap increases by $16.7 aducanumab. Market cap aducanumab (Biogen).
$370 billion increases by $19.3 billion Market cap increases
$210.00 by $28.6 billion
$350
$200.00
$330 11/9/20
FDA advisory committee votes
against approval for aducanumab. $190.00
$310
Market cap decreases by $18.4 billion
(peak to trough from 11/4/20) $180.00
$290
6/24/21
$170.00 3/15/21 FDA gives donanemab
$270 Full results for phase 2 trial of Breakthrough Therapy
donanemab released with mixed results. Designation (BTD). Market
$250 $160.00 Market cap decreases by $17.2 billion cap increases by $14.4
billion
$230 $150.00
BIIB Share Price LLY Share Price
On average, the market cap moved ~$19 billion on Alzheimer’s news. A $19 billion
move from today’s price would value Cassava Sciences at ~$555/share
Source: Cap IQ
Note: Pricing as of 7/19/21 40Acetylcholinesterase Inhibitors Multiple
Why: Acetylcholinesterase Inhibitors, such as Aricept, are the only
current treatment option for Alzheimer’s patients. However, they only
provide symptomatic improvement for ~6 months
2019 Acetylcholinesterase
Peak sales multiple Implied enterprise value Implied share price
Inhibitors sales1
~$5 billion 4.1x ~$20.4 billion ~$517/share
This may be a floor valuation for Cassava Sciences. Simufilam has already shown
comparable cognition improvements at 6 months with no side effects. Maxim Group
highlighted how Simufilam could replace Acetylcholinesterase Inhibitors as the
standard of care
Source: Internal estimates, Symphony Health, Maxim Group
Note: Estimated ~$282 million in net cash and ~40.0 million current shares outstanding to get to implied share price. See Appendix for details 41
1 Per Symphony HealthThree Multi-Billion Dollar “Call Options”
Other Central Nervous Systems (CNS) applications
1 Possible use in diseases such as Parkinson’s, ALS, Rett’s syndrome,
Huntington’s disease and even oncology
Prophylactic use
2 Potential for Simufilam to be taken preventatively to eliminate or severely
delay the onset of symptoms associated with Alzheimer’s
SavaDx
3 A blood-based diagnostic test that could massively increase the total
addressable market (TAM) for Simufilam with earlier Alzheimer’s diagnosis
Source:
Note: 42Other CNS Applications
Multiple billion-dollar opportunities besides Alzheimer’s
• CNS = central nervous system
• There is evidence that restoring misfolded proteins could apply to other CNS diseases
• We estimate there are 15-20 million current dementia cases that aren’t Alzheimer’s
• Vascular dementia & Lewy Body dementia combined will likely be a $25 billion+ market
• Parkinson’s is expected to be an ~$11.5 billion market by 2029
• Other potential use cases such as Rett’s syndrome, Huntington’s disease, ALS and more
• Protein misfolding also appears to be a cause of cancer leading to possible exploration
into oncology
• Cassava Sciences is focusing on Alzheimer’s first before treating other diseases
Source: Nature, NCBI, Alzheimer’s Association, Polaris Market Research, PubMed.gov, Global Data, NCBI
Note: 43Prophylactic Use
The ultimate upside case where all previous valuations are irrelevant
• Amyloid plaques begin forming up to 20 years before AD symptoms appear
• Prevention is the key to solving Alzheimer’s
• Simufilam might be used preventatively due to the following:
• Excellent safety profile
• Oral tablet
• Upstream of amyloid plaque
• SavaDx allowing for early diagnosis
• Estimated 250-million person TAM by 2050 that would be a $100 billion+ annual
opportunity even with a 96%-98% discount in pricing
2 Billion 50% 25% ~250 Million
Estimated Number of Assumption of Those % of Americans Aged 45+ Estimated Market Size for
People Worldwide Ages Worldwide With Access to Using a Statin (Model for Preventative Alzheimer’s
60+ by 2050 (per WHO) Healthcare in 2050 Whole World) Disease Drug
Source: World Health Organization, Harvard Health, United Nations
Note: 44SavaDx
A possible companion to Simufilam or a significant value driver in its own right
• SavaDx detected >10-fold differences between patients with and without Alzheimer’s in
blinded studies
• Could massively increase the TAM for Simufilam by allowing for earlier diagnosis and a
longer resulting treatment period
• Current Alzheimer’s diagnosis tools leave much to be desired through their cost,
inaccuracy or invasive nature
• Cassava will be presenting phase 2b results at AAIC
• SavaDx alone could be worth billions if widely used as an Alzheimer’s diagnosis tool
Source: Cassava Sciences, Company press releases
Note: 45Conclusion
46Conclusion
Why are we so confident in the 9 and 12-month results?
• Simufilam is the first in a new class of drug candidates that target altered Filamin A, a
proteopathy in Alzheimer’s disease
• Small molecules targeting misfolded proteins have been shown to have a lasting persistent
impact
• Scientific belief that Simufilam’s mechanism of action could be enduring for years
• Consistently stellar safety profile
• Simufilam targets both neuroinflammation and neurodegeneration
• 6-month and 12-month biomarker data will confirm what the cognition and behavioral
results have shown
• Bullish (yet credible) CEO who has clearly telegraphed consistent and positive upcoming
data
Source:
Note: 47Conclusion (Cont..)
Next steps
• Positive 9-month cognition & safety data coupled with 6-month biomarkers and the
upcoming 12-month data will validate Simufilam as a disease-modifying drug
• Two phase 3 trials will begin this year and the company has sufficient cash to pay for both
studies
• Results from the cognition maintenance study (CMS) should come in early 2022
• Material share price appreciation due to groundbreaking data results along with eventual
Breakthrough Therapy Designation (BTD)
Source:
Note: 48Appendix
49Simufilam Mechanism of Action Source: Cassava Sciences Note: 50
Phase 2b Patient Responder Analysis Source: Cassava Sciences Note: 51
Phase 2b Total tau/Aβ42 Decreased Source: Cassava Sciences Note: 52
Phase 2b - P-tau/Aβ42 Decreased Source: Cassava Sciences Note: 53
Cognition Maintenance Study Design Source: Cassava Sciences Note: 54
Phase 3 Study Overview Source: Cassava Sciences Note: 55
Cognition Expectations (B Riley)
B Riley Securities 9-Month Readout Scenarios
2.0 60.00%
1.5 1.0 - 2.0
40.00%
1.0
20.00%
0.5 0.0 -1.0
0.0 0.00%
-0.5 (1.0) - 0.0
-20.00%
-1.0
-40.00%
-1.5
-2.0 -60.00%
6-Month Results Comparable Levels of Cognition Maintain Cognition Above Baseline Cognition Falls Below Baseline (15%
Improvement (20% Probability) (65% Probability) Probability)
ADAS-Cog 11 improvement from baseline Implied Stock Reaction (% Change)
ADAS-Cog 11
Implied Stock Reaction
Scenario Improvement Range Probability
(% Change)
(From Baseline)
6-Month Results 1.6 - -
Comparable Levels of Cognition Improvement 1.0 - 2.0 20% 50-60%
Maintain Cognition Above Baseline 0.0 - 1.0 65% 15-25%
Cognition Falls Below Baseline (1.0) - 0.0 15% (40)-(50)%
Source: B Riley Securities
Note: 6-month results have already been reported by Cassava in February 2021 thus no probability or reaction given 56Cognition Expectations (Jones Trading)
Jones Trading 9-Month Readout Scenarios
2.0 80.00%
1.6+
1.5 60.00%
0.8 - 1.6
1.0 40.00%
0.5 20.00%
0.0 0.0 0.00%
-0.5 -20.00%
-1.0 (1.0) - (0.8) -40.00%
-1.5 -60.00%
-2.0 -80.00%
6-Month Results Improved from 6-Month Improved from baseline In-line with baseline (20% Decline from baseline (5%
Readout (15% Probability) (60% Probability) Probability) Probability)
ADAS-Cog 11 improvement from baseline Implied Stock Reaction (% Change)
ADAS-Cog 11
Implied Stock Reaction
Scenario Improvement Range Probability
(% Change)
(From Baseline)
6-Month Results 1.6 - -
Improved from 6-Month Readout 1.6+ 15% 40%
Improved from Baseline 0.8 - 1.6 60% 20%
In-line with Baseline 0.0 20% -15%
Decline from Baseline (1.0) - (0.8) 5% -70%
Source: Jones Trading
Note: 6-month results have already been reported by Cassava in February 2021 thus no probability or reaction given 57DCF Output
($ in Millions)
2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E
Revenue $0 $0 $0 $1,223 $5,083 $9,238 $10,965 $12,243 $13,455 $14,435 $15,471 $16,400 $17,205
Revenue Growth 315% 82% 19% 12% 10% 7% 7% 6% 5%
Cost of Goods Sold 0 0 0 184 762 1,386 1,645 1,836 2,018 2,165 2,321 2,460 2,581
Gross Profit $0 $0 $0 $1,040 $4,320 $7,852 $9,321 $10,407 $11,437 $12,270 $13,150 $13,940 $14,624
Gross Margin 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0% 85.0%
R&D Expense ($29) ($103) ($84) ($79) ($81) ($83) ($84) ($86) ($88) ($89) ($91) ($93) ($95)
SG&A Expense (10) (15) (23) (489) (915) (1,386) (1,645) (1,836) (2,018) (2,165) (2,321) (2,460) (2,581)
Operating Income ($39) ($118) ($107) $471 $3,324 $6,384 $7,592 $8,484 $9,331 $10,015 $10,739 $11,387 $11,949
Taxes @ 20% (94) (665) (1,277) (1,518) (1,697) (1,866) (2,003) (2,148) (2,277) (2,390)
After-Tax Operating Income ($39) ($118) ($107) $377 $2,660 $5,107 $6,073 $6,787 $7,465 $8,012 $8,591 $9,109 $9,559
(+) D&A 15 31 79 87 97 102 114 124 134 142
(-) CapEx (61) (127) (92) (110) (122) (135) (144) (155) (164) (172)
(+/-) Change in NWC (73) (254) (370) (329) (306) (336) (361) (387) (410) (430)
Unlevered FCF ($39) ($118) ($107) $258 $2,309 $4,724 $5,722 $6,456 $7,096 $7,621 $8,174 $8,669 $9,099
Time Factor 0.5 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 9.5 10.5 11.5 12.5
Present Value ($37) ($96) ($75) $158 $1,231 $2,190 $2,307 $2,263 $2,163 $2,020 $1,884 $1,738 $1,586
Terminal Value $12,024
Enterprise Value $29,357
Add: Net Cash 282
Market Cap $29,639
Divide By: Diluted Shares 42
Price/Share $699.0
Assumptions
Discount Rate 15.0%
Terminal Growth Rate 1.6%
Source: Internal estimates
Note: 58Internal Peak Sales
Market Sizing
Item Value
Current Dementia Patients Worldwide 50.0 million
% of Dementia Patients with Alzheimer's Disease 65%
Current AD Patients Worldwide 32.5 million
Expected Annual Growth Rate in Patients 4%
Estimated Peak Sales Year 2033
Estimated AD Patients by Peak Year 51.2 million
Peak Sales Calculation
Item Low End Midpoint High End
Global AD Patients 51.2 million 51.2 million 51.2 million
Peak Global Penetration of Simufilam 1.4% 1.4% 1.4%
Peak Patients on Simufilam 0.72 million 0.72 million 0.72 million
Monthly Cost $1,000 $2,000 $3,000
Simifulam Cost Per Year $12,000 $24,000 $36,000
Peak Simifulam Sales $8.6 billion $17.2 billion $25.8 billion
Source: World Health Organization, Alzheimer’s Disease International, Internal estimates
Note: 59Peak Sales Valuation
Analyst Peak Sales Estimate Valuation Internal Peak Sales Estimate Valuation
Item Value Item Value
Peak Sales $13.7 billion Peak Sales $17.2 billion
(X) M&A Peak Sales Multiple 4.1x (X) M&A Peak Sales Multiple 4.1x
Implied Cassava Sciences EV $55.8 billion Implied Cassava Sciences EV $70.2 billion
(+) Net Cash $281.9 million (+) Net Cash $281.9 million
Implied Cassava Sciences Market Cap $56.1 billion Implied Cassava Sciences Market Cap $70.5 billion
(/) Fully Diluted Shares 42.4 million (/) Fully Diluted Shares 42.4 million
Implied Cassava Sciences Stock Price $1,324 Implied Cassava Sciences Stock Price $1,662
Low End Peak Sales Estimate Valuation High End Peak Sales Estimate Valuation
Item Value Item Value
Peak Sales $7.9 billion Peak Sales $22.9 billion
(X) M&A Peak Sales Multiple 2.2x (X) M&A Peak Sales Multiple 6.0x
Implied Cassava Sciences EV $17.5 billion Implied Cassava Sciences EV $137.3 billion
(+) Net Cash $281.9 million (+) Net Cash $281.9 million
Implied Cassava Sciences Market Cap $17.8 billion Implied Cassava Sciences Market Cap $137.6 billion
(/) Fully Diluted Shares 42.4 million (/) Fully Diluted Shares 42.4 million
Implied Cassava Sciences Stock Price $419 Implied Cassava Sciences Stock Price $3,246
Source: Company filings, Company press releases, Internal estimates
Note: 60M&A Peak Sales Multiples
M&A in Biotech Peak Sales Multiple Analysis
Reported Deal Peak Sales
Announcement Date Target Acquirer Main Market Multiple Adjustment to Peak Sales (If relevant)
Value ($) Estimate
Triple-Negative Breast
13-Sep-2020 Immunomedics, Inc. Gilead Sciences, Inc. $21,000.0 4,700 4.5x -
Cancer
Bristol Myers Squibb
05-Oct-2020 MyoKardia, Inc. $13,100.0 Cardiovasular diseases 3,000 4.4x -
Co.
28-Aug-2017 Kite Pharma, Inc. Gilead Sciences, Inc. $11,900.0 T-Cell Therapy 2,000 6.0x -
Cholesterol Lowering
24-Nov-2019 The Medicines Co. Novartis AG $9,700.0 3,400 2.9x 15% sales haircut to account for royalty payments
Therapy
Juno Therapeutics, 10% sales haircut to account for pre-existing
22-Jan-2018 Celgene Corp. $9,000.0 T-Cell Therapy 2,700 3.3x
Inc. Celgene Royalty
Gene replacement
Novartis therapy for spinal
09-Apr-2018 AveXis, Inc. $8,700.0 2,000 4.4x -
International AG muscular atrophy
(SMA)
TRK Inhibitor / RET
$375 million peak sales for Vitrakvi ($750 million
07-Jan-2019 Loxo Oncology, Inc. Eli Lilly & Co. $8,000.0 Inhibitor / BTK 1,375 5.8x
peak but 50% share with Bayer)
Inhibitor
Momenta Immune-mediated $500 million reduction for partnership with CSL for
19-Aug-2020 Johnson & Johnson $6,500.0 3,000 2.2x
Pharmaceuticals, Inc. disorders M230 (Likely conservative)
ARIAD Takeda Hematologic and solid
09-Jan-2017 $5,200.0 2,000 2.6x -
Pharmaceuticals, Inc. Pharmaceutical Co., tumor oncology
Myelodysplastic
02-Mar-2020 Forty Seven, Inc. Gilead Sciences, Inc. $4,900.0 Syndrome, Acute 1,000 4.9x -
Myeloid Leukemia
Average Multiple Paid 4.1x
Source: Company filings, company press releases, industry articles
Note: 61Acetylcholinesterase Inhibitors Multiple
Acetylcholinesterase Inhibitors Valuation Rule of Thumb
($ in millions)
Item Value
2019 Acetylcholinesterase Inhibitor Sales $5,000
(X) Peak Sales Multiple from M&A 4.1x
Implied Cassava Sciences Enterprise Value $20,403
(+) Net Cash $282
Implied Cassava Sciences Market Cap $20,685
(/) Current Shares Outstanding 40
Implied Cassava Sciences Stock Price $517
Source: Internal estimates, Symphony Health
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