CASSAVA SCIENCES INC

Cassava Sciences, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note1. General and Liquidity

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

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the instructions to the Quarterly Report on Form10-Q and Article10 of Regulation S-X. All intercompany transactions and balances have been eliminated in consolidation. Accordingly, the condensed consolidated financial statements donot include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management of the Company, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for thethree andsix months ended* June 30, 2025* arenot necessarily indicative of the results that* maybe expected for any other interim period or for the year2025.* For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form10-K for the year ended* December 31, 2024*.

Liquidity

The Company has incurred significant net losses and negative cash flows since inception, and as a result has an accumulated deficit of $472.7 million at* June 30, 2025*. The Company expects its cash requirements to be significant in the future. The amount and timing of the Company’s future cash requirements will depend on regulatory and market acceptance of its product candidates and the resources it devotes to researching and developing, formulating, manufacturing, commercializing and supporting its products. The Company* mayseek additional funding through public or private financing in the future, if such funding is available and on terms acceptable to the Company. There areno* assurances that additional financing will be available on favorable terms, or at all. However, management believes that the current working capital position will be sufficient to meet the Company’s working capital needs for at least the next12 months.

Note2. Significant Accounting Policies

Use of Estimates

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

Cash and Cash Equivalents and Concentration of Credit Risk

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

Fair Value Measurements

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

If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation. The fair value of cash and cash equivalents was based on Level1 inputs at* June 30, 2025* and* December 31, 2024*.

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The fair value of common stock warrants of $6.71 per warrant was determined at distribution on* January 3, 2024using a Monte Carlo valuation model since the warrants werenot* traded on the open market on* January 3, 2024.Warrant trading on Nasdaq began on January 4, 2024.Quantitative information regarding Level3* fair value measurements for common stock warrants are as follows:

The common stock warrants stopped trading on Nasdaq after* May 2, 2024and subsequently had little orno* market activity. As of* May 7, 2024,the warrants were presumed to haveno* value since they were redeemed for a nominal payment of $0.001 per warrant.

Business Segments

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

The Company’s reportable segment reflects the manner in which its chief operating decision maker ("CODM") allocates resources and assesses performance. The Company's CODM is the President and Chief Executive Officer. The primary measure used by the Company's CODM for purposes of allocating resources is based on net loss that also is reported on the consolidated statements of operations as consolidated net loss. The measure of segment assets is reported on the condensed consolidated balance sheets as cash and cash equivalents.

The Company hasnot generated any product revenue in the current period and expects to continue to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates through stages of development and clinical trials.

As such, the CODM uses cash forecast models in deciding how to invest in the development of novel drugs and diagnostics. Such cash forecast models are reviewed to assess the entity-wide operating results and performance. Net loss is used to monitor budget versus actual results. Monitoring budgeted versus actual results, net cash used in operating activities for the period and cash on hand are used in assessing performance of the segment.

The following table summarizes expenses by category regularly reviewed by the CODM (in thousands):

(a) Other segment items include interest income, other income, net and gain from change in fair value of warrant liabilities.

The following table summarizes assets regularly reviewed by the CODM (in thousands):

For thesix months ended* June 30, 2025and2024,* the net cash used in operating activities was $16.3 million and $37.4 million, respectively.

Stock-based Compensation



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



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

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Net Income (Loss) per Share



Basic net income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted-average number of common shares outstanding and potentially dilutive securities outstanding during the period using the treasury stock method. Potentially dilutive securities are excluded from the computations of diluted earnings per share if their effect would be anti-dilutive. A net loss causes all potentially dilutive securities to be anti-dilutive. Potentially dilutive securities consist of outstanding common stock options, warrants and Performance Awards. There isno difference between the Company’s net income (loss) and comprehensive net income (loss). The numerators and denominators in the calculation of basic and diluted net loss per share were as follows (in thousands, except net loss per share data):

The Company excluded common stock options and Performance Awards outstanding for thethree andsix months ended* June 30, 2025and2024* from the calculation of net loss per share, diluted, because the effect of including outstanding options and Performance Awards would have been anti**-dilutive. Warrants were included for the calculation of net loss per share, diluted, for the period ended June 30, 2024assuming each warrant was exercisable forone andone-half shares of common stock.

Warrant Liabilities

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and in accordance with the Financial Accounting Standards Board (“FASB“) Accounting Standards Codification (“ASC“)480, “Distinguishing Liabilities from Equity” (“ASC480“), and ASC815, “Derivatives and Hedging” (“ASC815“). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC480, meet the definition of a liability pursuant to ASC480, and whether the warrants meet all of the requirements for equity classification under ASC815, including whether the warrants are indexed to the Company’s own shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that donot meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value of the date of issuance, and each condensed consolidated balance sheet date thereafter. Changes in the estimated fair value of liability classified warrants are recognized as a non-cash gain or loss on the statements of operations. Costs associated with issuing the warrants classified as derivative liabilities are charged to operations when the warrants are issued.

There wereno warrants outstanding at* June 30, 2025or December 31, 2024.*

Fair Value of Financial Instruments

Financial instruments include accounts payable, accrued expenses, accrued development expense and other liabilities. The estimated fair value of certain financial instruments* maybe determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value; therefore, the estimates arenot* necessarily indicative of the amounts that could be realized or would be paid in a current market exchange. The effect of using different market assumptions and/or estimation methodologies* may*be material to the estimated fair value amounts. The carrying amounts of accounts payable, accrued expenses, accrued development expense and other liabilities are at cost, which approximates fair value due to the short maturity of those instruments.

Research Contracts, Prepaids and Accruals

The Company has entered into various research and development contracts with research institutions and otherthird-party vendors. These agreements are generally cancelable. Related payments are recorded as research and development expenses as incurred. The Company records prepaids and accruals for estimated ongoing research costs. When evaluating the adequacy of prepaid expenses and accrued liabilities, the Company analyzes 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 prepaid and accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates. The Company’s historical prepaid and accrual estimates havenot been materially different from actual costs.

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Incentive Bonus Plan

In2020, the Company established the2020 Cash Incentive Bonus Plan (the “CIB Plan”) to incentivize CIB Plan participants. Awards under the CIB Plan are accounted for as liability awards under ASC718 “Stock-based Compensation”. The fair value of each potential CIB Plan award will be determined once a grant date occurs and will be remeasured each reporting period. Compensation expense associated with the CIB Plan will be recognized over the expected achievement period for each CIB Plan award, when a Performance Condition (as defined below) is considered probable of being met. See Note9 for further discussion of the CIB Plan.

Property and Equipment

Property and equipment are recorded at cost, net of accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets. Owned buildings and related improvements have estimated useful lives of 39 years and approximately 10 years, respectively. Tenant improvements are amortized using the straight-line method over the useful lives of the improvements or the remaining term of the corresponding leases, whichever is shorter.

Property and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying amount of an asset* may**not* be recoverable. If property and equipment are considered to be impaired, an impairment loss is recognized.

Insurance Recoveries

We record proceeds from our insurance policies when the loss event has occurred, and proceeds are estimable and probable of being recovered. Insurance recoveries and proceeds received are recorded as a reduction to general and administrative expense. There wereno insurance recoveries during thethree andsix months ended* June 30, 2025.There was approximately $5.8 million and $8.8 million of insurance recoveries recorded during thethree* andsix months ended* June 30,** 2024, respectively.*

Related Party Transactions

On* July 15, 2024,our former President and Chief Executive Officer resigned from the Company, effective as of September 13, 2024 (the “Effective Date”). Pursuant to the terms of his employment agreement, our former President and Chief Executive Officer is receiving severance compensation equal to $1.23 million paid ratably overtwelve* months following the Effective Date. The full amount of severance compensation was included in general and administrative expense in the period the resignation was tendered andno severance compensation relating to this agreement was recognized in thethree andsix months ended* June 30, 2025or2024.*

On* July 16, 2024,our former Senior Vice President (SVP), Neuroscience agreed to step down from her employment with the Company, effective immediately. Our former SVP, Neuroscience is the spouse of our former President and Chief Executive Officer. Pursuant to a separation agreement, our former SVP, Neuroscience is receiving severance compensation equal to $0.5 million paid in quarterly installments overtwelve* months. The full amount of severance compensation was included in research and development expense in the period the agreement providing for severance was executed andno severance compensation relating to this agreement was recognized in thethree andsix months ended* June 30, 2025or2024.*

Included in accrued compensation and benefits at* June 30, 2025and December 31, 2024*is approximately $0.3 and $1.2 million, respectively, of accrued severance costs for thetwo former senior officers.

On* July 16, 2024,the Company entered into aone-year consulting agreement with the Company’s former SVP, Neuroscience. Pursuant to the terms of the consulting agreement, the consultant is providing services for purposes of providing information and support for scientific research and/or obtaining governmental approval for the Company’s products. The Company agreed to pay $500 per hour for such consulting services. The Company incurred fees totaling $20,000 under the consulting agreement during thethree* andsix months ended* June 30, 2025.The Company didnot incur any fees under the consulting agreement during thethree* andsix months ended* June 30, 2024.*

On* June 20, 2025,the Company entered into aone-year consulting agreement with James W. Kupiec, M.D., the Company’s former Chief Medical Officer. Pursuant to the terms of the consulting agreement, the consultant is providing services relating to Company manuscripts and publications. The Company agreed to pay a fixed fee totaling $42,000 for such consulting services. The Company incurred fees totaling $21,000 under the consulting agreement during thethree* andsix months ended* June 30, 2025.*

Income Taxes

The Company accounts 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. The Company has 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. The Company is uncertain about the timing and amount of any future earnings. Accordingly, the Company offsets these deferred tax assets with a valuation allowance.

The Company accounts for uncertain tax positions in accordance with ASC740, “Income Taxes”, which clarifies the accounting for uncertainty in tax positions. These provisions require recognition of the impact of a tax position in the Company’s condensed consolidated financial statements only if that position is more likely thannot 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.

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Recently Issued Accounting Pronouncements

In* November 2024,the FASB issued ASU2024*-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses. This ASU includes amendments that require entities to bifurcate specified expense line items on the income statement into underlying components, including employee compensation, depreciation, and intangible asset amortization, as applicable. Qualitative descriptions of the remaining components are required. These enhanced disclosures are required for both interim and annual periods. In* January 2025,the FASB subsequently issued ASU2025*-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220-40): Clarifying the Effective Date, to provide clarification on the ASU's effective date. The new standard is effective for fiscal years beginning after* December 15, 2026on a prospective basis with the option to apply it retrospectively, and for interim periods within fiscal years beginning after December 15, 2027.*Early adoption is permitted. The adoption of this guidance will result in the Company being required to include enhanced disclosures around income statement expenses.

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740): Improvements to Income Tax Disclosures. The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as reconciling items that meet a quantitative threshold. Further, the ASU requires additional disclosures on income tax expense and taxes paid, net of refunds received, by jurisdiction. The new standard is effective for annual periods beginning after* December 15, 2024*on a prospective basis with the option to apply it retrospectively. Early adoption is permitted. The adoption of this guidance will result in the Company being required to include enhanced income tax related disclosures.

Note3. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets at* June 30, 2025* and* December 31, 2024* consisted of the following (in thousands):

Contract research organization and other deposits represent cash payments made to vendors in excess of expenses incurred.

Note4. Real Property and Other Income, Expense

The Company owns atwo-building office complex in Austin, Texas, a portion of which serves as its corporate headquarters. Maintenance, physical facilities, leasing, property management and other key responsibilities related to property ownership are outsourced to professional real-estate managers. The office complex has approximately 90,000 square feet of rentable space. At* June 30, 2025*, the Company occupied approximately 25% of the property with the remainder either leased or available for lease tothird parties. Gross rental income under existingthird-party leases at* June 30, 2025is expected to total $0.2 million in2025,* $0.4 million in2026 and $0.2 million in2027.

The Company records the net income from building operations and leases as other income, net, as leasing isnot core to the Company’s operations. Building depreciation and amortization for spacenot occupied by the Company is included in general and administrative expense. Building depreciation and amortization for space occupied by the Company is allocated between general and administrative expense and research and development expense. Components of other income, net, for the periods presented were as follows (in thousands):

The Company had accrued property taxes related to the building totaling $0.1 million and $0.3 million at* June 30, 2025and December 31, 2024,*respectively, included in other current liabilities.

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Note5. Property and equipment

The components of property and equipment, net, as of* June 30, 2025* and* December 31, 2024* were as follows (in thousands):

Depreciation expense for property and equipment was $0.2 million and $0.3 million for thethree months ended* June 30, 2025and2024*, respectively.

Depreciation expense for property and equipment was $0.4 million and $0.6 million for thesix months ended* June 30, 2025and2024,* respectively.

Note6. Stockholders’** Equity and Stock-Based Compensation Expense**

Common Stock Warrant Distribution

See Notes2 and11 regarding the distribution of common stock warrants on* January 3, 2024.*

Stock Option and Performance Award Activity in2025

During thesix months ended* June 30, 2025*, stock options and unvested Performance Awards outstanding under the Company’s stock option plans changed as follows:

The weighted average exercise price per share of options outstanding at* June 30, 2025* was $15.59. As outstanding options vest over the current remaining vesting period of 2.5 years, the Company expects to recognize stock-based compensation expense of $30.6 million. If and when outstanding Performance Awards vest, the Company will recognize stock-based compensation expense of $0.1 million over the implicit service period.

During thethree months ended* June 30, 2025,there wereno stock options exercised. During thesix* months ended* June 30, 2025,there were 225,209 stock options exercised. Of the stock options exercised,120,492 stock options were net settled in satisfaction of the exercise price, withno cash proceeds received. Cash proceeds to the Company for optionsnot* net settled totaled $90,000 during thesix months ended* June 30, 2025**.*

Stock-based Compensation Expense in2025

During thethree andsix months ended* June 30, 2025and2024*, the Company’s stock-based compensation expense was as follows (in thousands):

The Company estimates forfeitures for each award in determining stock-based compensation expense. The Company recorded $0.6 million and $0.2 million of estimated forfeitures during thethree andsix months ended* June 30, 2025,respectively. There wereno estimated forfeitures during thethree* andsix months ended* June 30, 2024.*

2018 Equity Incentive Plan

The Company’s Board of Directors (the “Board”) or a designated committee of the Board is responsible for administration of the Company’s2018 Omnibus Incentive Plan, as amended in* May 2022 (the“2018* Plan”) and determines the terms and conditions of each option granted, consistent with the terms of the2018 Plan. The Company’s employees, directors, and consultants are eligible to receive awards under the2018 Plan, including grants of stock options and Performance Awards. Share-based awards generally expire 10 years from the date of grant. The2018 Plan provides for issuance of up to 5,000,000 shares of common stock, par value $0.001 per share, subject to adjustment as provided in the2018 Plan.



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When stock options or Performance Awards are exercised net of the exercise price and taxes, the number of shares of stock issued is reduced by the number of shares equal to the amount of taxes owed by the award recipient and that number of shares are cancelled. The Company then uses its cash to pay tax authorities the amount of statutory taxes owed by and on behalf of the award recipient.

Note7. Income Taxes*** ***

The Company didnot provide for income taxes during thethree andsix months ended* June 30, 2025* because it has projected a taxable net loss for the full year2025 for which any benefit will be offset by an increase in the valuation allowance. There was alsono provision for income taxes for thethree andsix months ended* June 30, 2024*.

Note8. Commitments

The Company conducts its product research and development programs through a combination of internal and collaborative programs that include, among others, arrangements with universities, contract research organizations and clinical research sites. The Company has contractual arrangements with these organizations that are cancelable. The Company’s obligations under these contracts are largely based on services performed. The Company also had non-cancellable commitments for the manufacture of simufilam's active pharmaceutical ingredient totaling approximately $1.2 million recorded in prepaid expenses and other current assets at* June 30, 2025.*The Company is dependent on contract development and manufacturing organizations for the manufacture of all our materials for clinical studies.

On* February 26, 2025,the Company entered into a License Agreement (the “License Agreement”) with Yale University (“Yale”) pursuant to which the Company was granted exclusive worldwide rights, with rights to sublicense, to Yale’s interest in certain patent and other intellectual property rights that could be useful or necessary to the development and commercialization of simufilam for the treatment of Tuberous Sclerosis Complex (“TSC”)-related epilepsy and other potential indications. Pursuant to the License Agreement, the Company has agreed to use reasonable commercial efforts to implement a plan that it has designed for such development and commercialization. In exchange for the rights acquired pursuant to the License Agreement, the Company agreed to pay Yale (i) a nominal upfront license fee, (ii) payments upon the achievement of specified clinical, regulatory and commercial milestones, totaling up to $4.5 million and (iii) upon transfer to athird* party in connection with a regulatory priority review voucher, if issued, a low-to-mid double digit percentage of any consideration received for such transfer. The Company also agreed to pay Yale tiered royalties, ranging from a low- to mid- single digit percentage, on aggregate net sales of licensed products, subject to tiered minimum annual royalty payments ranging from the low- to mid- hundreds of thousands of dollars.

Unless earlier terminated, the License Agreement will continue on a country-by-country basis until the later of (i) the date on which the last valid claim of the license patents expires or otherwise lapses, (ii) the end of any government or regulatory exclusivity period, and (iii)10 years following the date offirst sale of licensed product in such country.

Note 9. ** 2020 Cash Incentive Bonus Plan**

In* August 2020,the Board approved the CIB Plan. The CIB Plan was subsequently amended, as described below on March 6, 2025.The CIB Plan was established as an “at-risk” cash bonus program that would reward CIB Plan participants with additional cash compensation in lockstep with significant increases in the Company’s market valuation (as measured by market capitalization or potential merger consideration). The CIB Plan is considered “at-risk” because CIB Plan participants willnot* receive a cash bonus unless the Company’s market valuation increases significantly and certain other conditions specified in the CIB Plan are met. Specifically, CIB Plan participants willnot be paid any cash bonuses unless (1) the Company completes 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 CIB Plan. CIB Plan participants will be paid all earned cash bonuses allocated under the CIB Plan in the event of a Merger Transaction.

Because of the inherent discretion and uncertainty regarding the CIB Plan requirements, the Company has concluded that a CIB Plan grant date hasnot occurred as of* June 30, 2025.*

The Company’s market valuation for purposes of the CIB Plan is determined based on either (1) the closing price ofone share of the Company's common stock on the Nasdaq Capital Market multiplied by the total issued and outstanding shares and options to purchase shares of the Company, or (2) the aggregate consideration payable to security holders of the Company in a Merger Transaction. This constitutes a market condition under applicable accounting guidance.

The CIB Plan (as amended* March 6, 2025)triggers a potential cash bonus each time the Company’s market valuation increases significantly, up to a maximum $5 billion in market capitalization (or up to a maximum $8 billion in merger consideration). The CIB Plan specifies incremental amounts between $200 million and $5 billion in market capitalization (or $8 billion in merger consideration) (each increment, a “Valuation Milestone”). Each Valuation Milestone triggers a potential cash bonus award in a pre-set amount defined in the CIB Plan. Each Valuation Milestone based on market capitalization must be achieved and maintained forno* less than 20 consecutive trading days for CIB Plan participants to be eligible for a potential cash bonus award (the “Market Capitalization Conditions”).

Payment of cash bonuses is deferred until such time as (1) the Company completes a Merger Transaction, or (2) the Compensation Committee determines the Company has sufficient cash on hand to render payment (each, a “Performance Condition”), neither of which* mayever occur. Accordingly, CIB Plan participants may*never be paid a cash bonus that is awarded under the CIB Plan, even if the Company’s market capitalization increases significantly.

The CIB Plan is accounted for as a liability award. The fair value of each Valuation Milestone award will be determined once a grant date occurs and will be remeasured each reporting period. Compensation expense associated with the CIB Plan will be recognized over the expected achievement period for each of the Valuation Milestones, when a Performance Condition is considered probable of being met.

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In* October 2020,the Company achieved thefirst* Valuation Milestone based on market capitalization. Subsequently in2020, the Compensation Committee approved a potential cash bonus award of $6.5 million in total for all CIB Plan participants (after taking into account a* March 2023CIB Plan amendment), subject to future satisfaction of a Performance Condition. There isno* continuing service requirement for CIB Plan participants once the Compensation Committee approves a cash bonus award.

During the year ended* December 31, 2021,the Company achieved 11 additional Valuation Milestones based on market capitalization. The achievement of these 11 milestones in2021* triggered a non-discretionary potential Company obligation to the Company’s Chairman, President and CEO (assuming such person holds allthree such offices) of $74.3 million (after taking into account a* March 2023CIB Plan amendment) and contingent upon future satisfaction of a Performance Condition. However,no compensation expense has been recorded andno* payments have been made sinceno grant date has occurred andno Performance Conditions are considered probable of being met.

No Valuation Milestones were achieved during thesix months ended* June 30, 2025and the years ended December 31, 2024,*2023 and2022.

On* February 13, 2025,the Compensation Committee concluded thatno discretionary cash bonus amounts would be awarded for the 11 Valuation Milestones achieved in2021* nor for any remaining CIB Plan Valuation Milestones which havenot been achieved. Thus, the only CIB Plan participant who could be eligible for cash bonus amounts based on future Valuation Milestone achievement is the Chairman, President and CEO (assuming such person holds allthree such offices), providing that, other than in connection with a Merger Transaction,no bonus payments will be made to such person unless and until the U.S. Food and Drug Administration has approved simufilam for any indication.

As discussed in Note10, on* January 24, 2025,the Delaware Court of Chancery entered a Final Order and Judgment approving the Stipulation and dismissing an action related to the CIB Plan with prejudice. The Final Order and Judgment required the Company to further amend the CIB Plan, as provided in the Stipulation, which was completed on March 6, 2025.The March 6, 2025Amendment specifies that upon the occurrence of a Merger Transaction, the Chairman, President and CEO (assuming such person holds allthree* such offices) willnot be entitled to any payments in respect of any Market Capitalization Conditions, but will instead be entitled to receive a bonus payment based upon the Merger Transaction only. Cash bonuses to the Chairman, President and CEO (assuming such person holds allthree offices) arenot subject to discretionary allocation under the CIB Plan.No person currently holds allthree offices of Chairman, President and CEO.

No actual cash payments were authorized or made to participants under the CIB Plan through* June 30, 2025and the date of filing of this Quarterly Report on Form10*-Q.

Note10. Contingencies

The Company is, and from time to time, the Company* maybecome, involved in litigation or other legal proceedings and claims, including U.S. government inquiries, investigations and Citizen Petitions submitted to the U.S. Food and Drug Administration ("FDA"). In addition, the Company has received, and from time to time may*receive, inquiries from government authorities relating to matters arising from the ordinary course of business. The outcome of these proceedings is inherently uncertain. Regardless of outcome, legal proceedings can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. At this time,no assessment can be made as to their likely outcome or whether the outcome will be material to the Company other than as disclosed below. The Company believes that its total provisions for legal matters are adequate based upon currently available information.

Government Investigations

Beginning in* August 2021,*the Company has received subpoenas, a Civil Investigative Demand (“CID”) and other requests for documents and information from the Department of Justice (“DOJ”) and document requests from the SEC, each seeking corporate information and documents concerning the research and development of simufilam and/or SavaDx. The Company has been providing documents and information in response to these subpoenas, the CID and requests for information.

On* September 26, 2024,the Company announced that it had reached a settlement with the SEC resolving the SEC investigation of the Company’s disclosures regarding its Phase2b* clinical trial of simufilam for the treatment of Alzheimer’s disease (the “Phase2b Study”) and related matters. The SEC also agreed to a settlement withtwo former senior employees of the Company. Pursuant to these settlements, the U.S. District Court for the Western District of Texas (the “Texas District Court”) entered final consent judgment on* October 18, 2024,on a complaint filed by the SEC against the Company and itstwo* former senior employees. The Company has neither admitted nor denied the allegations of the complaint. The SEC’s complaint alleged that certain disclosures by the Company regarding the Phase2b Study violated certain federal securities laws and SEC rules, including negligence-based disclosure violations of Sections17(a)(2) and17(a)(3) of the Securities Act of1933, as amended (the “Securities Act”), as well as recordkeeping and reporting requirements under the Securities Exchange Act of1934, as amended (the “Exchange Act”). The complaint alleges that the Company’s SEC reports and other public statements regarding the Phase2b Study negligently contained materially misleading statements and omissions. The SEC’s allegations with respect to the Company’stwo former employees relate to these employees’ roles in such disclosures. Under its settlement, the Company consented to a permanent injunction against future violations of Section17(a) of the Securities Act, Section13(a)(1) of the Exchange Act and Rules12b-20, 13a-1, 13a-11 and13a-13 under the Exchange Act. In addition, the Company paid a civil monetary penalty of*$40* million in* November 2024.*

The Company continues to cooperate with the DOJ related to requests for documents and information, including those related to conduct alleged in the indictment of Dr. Hoau-Yan Wang announced by DOJ on* June 28, 2024.The Company cannot predict the outcome or impact of ongoing matters, including whether a government authority maypursue an enforcement action against the Company or others. The Company doesnot* at this time anticipate, however, that DOJ will bring criminal charges against or seek a criminal resolution with the Company.

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Securities Class Actions and Shareholder Derivative Actions

Between* August 27, 2021and October 26, 2021,*four putative class action lawsuits were filed alleging violations of the federal securities laws by the Company and certain named officers. The complaints rely on allegations contained in Citizen Petitions submitted to FDA and allege that various statements made by the defendants regarding simufilam were rendered materially false and misleading. The Citizen Petitions were all subsequently denied by FDA. These actions were filed in the Texas District Court. The complaints seek unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company's securities.

On* June 30, 2022,a federal judge consolidated thefour class action lawsuits intoone case (the “Consolidated Securities Action”) and appointed a lead plaintiff and a lead counsel. Lead plaintiff filed a consolidated amended complaint on August 18, 2022on behalf of a putative class of purchasers of the Company’s securities between September 14, 2020and July 26, 2022.On May 11, 2023,the Texas District Court dismissed with prejudice plaintiffs’ claims against defendant Nadav Friedmann, PhD, MD, our former Chief Medical Officer and a Company director, who is now deceased, but otherwise denied defendants’ motion to dismiss. Defendants filed an answer to the consolidated amended complaint on July 3, 2023.On February 22, 2024,plaintiffs filed a motion to supplement their complaint to extend the putative class period through October 12, 2023.The Texas District Court granted that Motion on June 12, 2024,and plaintiffs filed a supplemental complaint on June 13, 2024.On November 13, 2024,Plaintiffs filed asecond* motion to supplement their complaint. On* March 13, 2024,plaintiffs filed a Motion for Class Certification. On February 25, 2025,the Texas District Court denied Plaintiff’s motion for class certification without prejudice, explaining that rulings on pending motions, including specifically Plaintiffs’second motion to supplement their complaint, could affect disposition of class certification. On May 21, 2025,the Texas District Court granted Plaintiffs’second motion for leave to file asecond* supplemented complaint and instructed Plaintiffs to refile their motion for class certification. Plaintiffs filed theirsecond supplemental complaint on* May 22, 2025,and reasserted their motion for class certification on June 20, 2025.*That motion is pending.

On* February 2, 2024,a putative class action lawsuit was filed, purportedly on behalf of the Company, alleging violations of the federal securities law by the Company and certain named officers. The complaint relies on an October 12, 2023article that describes a purported leaked report of alleged scientific misconduct by a scientific collaborator of the Company at City University of New York (the “CUNY Article”). The complaint alleges that various statements made by the defendants regarding simufilam were rendered materially false and misleading by this article. The action was filed in the U.S. District Court for the Northern District of Illinois (the “Illinois District Court”). The complaint seeks unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company’s securities between August 18, 2022and October 12, 2023.On May 28, 2024,*the Illinois District Court transferred this action to the Texas District Court, where it was consolidated into the Consolidated Securities Action.

The parties to the Consolidated Securities Action met for mediation in* May 2025.The Company and the lead plaintiffs for the Consolidated Securities Action are in the advanced stages of settlement discussions. In light of these discussions, the Company has reserved a loss contingency of $31.25 million on its condensed consolidated balance sheet as of June 30, 2025*relating to a potential settlement of the Consolidated Securities Action.

The Company doesnot expect such settlement of the Consolidated Securities Action, if realized, to resolve the shareholder derivative actions or the2024 Securities Class Action, each discussed below.

On* November 4, 2021,a shareholder derivative action related to the initial four class action lawsuits filed in the Texas District Court was filed, purportedly on behalf of the Company, in the Texas District Court, asserting claims under the U.S. securities laws and state fiduciary duty laws against certain named officers and the members of the Company’s Board. This complaint relies on the allegations made in Citizen Petitions that were submitted to (and subsequently denied by) FDA. The complaint alleges, among other things, that the individual defendants exposed the Company to unspecified damages and securities law liability by causing it to make materially false and misleading statements, in violation of the U.S. securities laws and in breach of their fiduciary duties to the Company. The derivative case seeks, among other things, to recover unspecified compensatory damages on behalf of the Company arising out of the individual defendants’ alleged wrongful conduct. Although the plaintiff in this derivative case doesnot* seek relief against the Company, the Company has certain indemnification obligations to the individual defendants. Between* November 4, 2021and June 20, 2023,four additional shareholder derivative actions were filed alleging substantially similar claims, two in the Texas District Court, one in Texas state court (Travis County District Court) andone in the Delaware Court of Chancery. On July 5, 2022,thethree actions in the Texas District Court were consolidated into a single action. All of the foregoing derivative actions are currently stayed pending further developments in the Consolidated Securities Action described above. On November 9, 2023,*another shareholder derivative action alleging substantially similar claims was filed in the Texas District Court. The parties to that case expect that it will be consolidated into the existing consolidated federal court shareholder derivative action.

Beginning on* March 18, 2024,two shareholder derivative actions related to the February 2024class action lawsuit originally filed in the Illinois District Court were filed, purportedly on behalf of the Company, in the Illinois District Court, asserting claims under the U.S. securities laws and state fiduciary duty laws against certain named officers and the members of the Company’s Board. The complaints rely on the CUNY Article. The complaints allege, among other things, that the individual defendants exposed the Company to unspecified damages and securities law liability by causing it to make materially false and misleading statements, in violation of the U.S. securities laws and in breach of their fiduciary duties to the Company. The derivative cases seek, among other things, to recover unspecified compensatory damages on behalf of the Company arising out of the individual defendant’s alleged wrongful conduct. Although the plaintiffs in these derivative cases donot* seek relief against the Company, the Company has certain indemnification obligations to the individual defendants. On* September 6, 2024,thesetwo cases were consolidated and stayed pending further developments in the shareholder class action initially filed in the Illinois District Court on February 2, 2024.*

Due to the stage of the foregoing shareholder derivative actions, the Company is unable to predict the outcome or estimate the amount of loss or range of losses that could potentially result from such derivative lawsuits.

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On* December 13, 2024,a putative class action lawsuit (the“2024* Securities Class Action”) was filed, purportedly on behalf of the Company, alleging violations of the federal securities law by the Company and certain named officers. The complaint alleges that various statements made by the defendants regarding simufilam were revealed to be materially false and misleading by the release of top-line results for the Company’s RETHINK-ALZ Phase3 clinical trial on* November 25, 2024.The2024* Securities Class Action was filed in the Texas District Court. The complaint seeks unspecified compensatory damages and other relief on behalf of a purported class of purchasers of the Company’s securities between* February 7, 2024,and November 24, 2024.The Company believes that the likelihood of an unfavorable outcome isnot* probable, however, it is reasonably possible that the Company* may*incur a loss. The Company is unable to reasonably estimate the amount or range of potential loss at this time.

On* August 19, 2022,a shareholder derivative action was filed, purportedly on behalf of the Company, in the Delaware Court of Chancery, asserting claims under state fiduciary duty laws against certain named officers and members of the Company’s Board (the “CIB Derivative Action”). The complaint alleges, among other things, that the individual defendants breached their fiduciary duties by approving the CIB Plan in August 2020.The complaints sought unspecified compensatory damages and other relief. On January 6, 2023,the plaintiffs filed an amended complaint. Defendants filed a partial answer to the amended complaint on March 10, 2023,and moved to partially dismiss the amended complaint on March 14, 2023.*

On* May 28, 2024,the parties in the CIB Derivative Action entered into a Stipulation and Agreement of Settlement, Compromise, and Release (the “Stipulation”) to resolve the CIB Derivative Action. The Stipulation and exhibits thereto, including the proposed Notice of Pendency of Settlement of Class and Derivative Action (the “Notice”) and [Proposed] Scheduling Order with Respect to Notice and Settlement Hearing (the “Scheduling Order”), were filed in the Delaware Court of Chancery on May 28, 2024.*

On* June 26, 2024,the Delaware Court of Chancery entered the Scheduling Order, which included approval of the Notice. The Delaware Court of Chancery held a settlement hearing on September 9, 2024.On January 24, 2025,the Delaware Court of Chancery entered a Final Order and Judgment approving the Stipulation and dismissing the CIB Derivative Action with prejudice. Pursuant to the Final Order, the Company paid $1 million in attorneys’ fees and expenses in February 2025,which was recorded in accounts payable and other accrued expenses at December 31, 2024.*

Subject to the ongoing settlement discussions regarding the Consolidated Securities Action, the Company intends to defend all pending shareholder derivative actions and securities class actions vigorously.

Anti-SLAPP Lawsuit

On* August 6, 2024,a lawsuit was filed in the District Court for the Southern District of New York which, as amended and as joined by intervenor plaintiffs, asserts claims, including a claim under the New York Anti-SLAPP Law, against the Company and againsttwo former officers to whom the Company has certain indemnification obligations. The amended complaint and the complaint in intervention seeks costs and damages relating to a defamation action filed by the Company against the plaintiffs and subsequently dismissed voluntarily and without prejudice by the Company. The Company has reached an agreement in principle to settle the claims brought by the intervenor plaintiffs and is negotiating a comprehensive settlement with mutual releases between the Company and the intervenor plaintiffs. The Company intends to defend vigorously the claims brought by the remaining plaintiffs. The Company has reserved a loss contingency of $4.0 million on its condensed consolidated balance sheet as of June 30, 2025*relating to potential settlement with the intervenor plaintiffs and other claimants.

Litigation Contingencies

In connection with ongoing litigation, the Company has reserved an amount of $35.25 million, including the $31.25 million loss contingency for the Consolidated Securities Action, for potential settlements at* June 30, 2025.The Company recorded loss continencies totaling $32.25 million during thethree* months ended* June 30, 2025.The Company recorded loss continencies totaling $35.25 million during thesix* months ended* June 30, 2025.The Company believes that the likelihood of an unfavorable outcome is reasonably possible and has accrued this amount as the best estimate of potential loss. The final outcome of the litigation in which the Company is involved maydiffer from the reserved amount, and additional losses may*be incurred.

Note11. Warrant Dividend Distribution

On* January 3, 2024,the Company made a distribution to the holders of record of the Company’s common stock in the form of warrants to purchase shares of common stock. Each holder of record of the Company's common stock as of the close of business on December 22, 2023*received four warrants for every 10 shares of common stock (rounded down for any fractional warrant) resulting in the issuance of approximately 16.9 million warrants.

Each warrant entitled the holder to purchase, at the holder’s sole expense and exclusive election, at an exercise price of $33.00 per warrant, one andone-half shares of common stock (rounded down for any fractional shares). Payment for shares of common stock upon exercise of warrants was required to be in cash.

On* April 15, 2024,the Company announced that all outstanding warrants would be redeemed on May 7, 2024 (the “Redemption Date”). The redemption price was equal to 1/10 of $0.01 per warrant. The warrants were exercisable at any time starting on January 3, 2024*until the business day prior to the Redemption Date. There areno remaining warrants currently outstanding.

The warrants were subject to the terms and conditions of the Warrant Agreement (including Form of Warrant), dated* January 3, 2024,between Cassava Sciences, Inc., Computershare Inc., and Computershare Trust Company, N.A. as filed in a Current Report on Form8*-K with the SEC on* January 3, 2024.*The warrants were listed and traded separately from the Company's common stock on the Nasdaq Capital Market under the ticker “SAVAW”.

From* January 3, 2024to March 31, 2024,a total of approximately 674,000 warrants were exercised resulting in net proceeds to the Company of approximately $22.3 million. The Company issued approximately 1.0 million shares of common stock from the exercise of warrants through March 31, 2024.*

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Subsequent to* March 31, 2024and through the Redemption Date, a total of approximately3.15* million warrants were exercised resulting in gross proceeds to the Company of approximately*$104.0* million. The Company issued approximately 4.7 million shares of common stock from the exercise of warrants from* March 31, 2024*through the Redemption Date.

Gross proceeds in2024 from the warrant distribution totaled approximately $126.3 million from the issuance of approximately 5.7 million common shares at $22.00 per share. Total net proceeds of the warrant distribution were approximately $123.6 million after deducting exercise expenses and commissions.

After thefirst $20 million of gross proceeds, the Company was obligated to pay a commission of 2.5% of the gross proceeds from the sale of shares of common stock from warrant exercises to the Company's financial advisor for the warrant distribution. Total cost of warrant exercises through the Redemption Date were approximately $2.7 million.

Costs of the warrant distribution totaling approximately $537,000 were recorded as general and administrative expenses in the statements of operations upon distribution of the warrants on* January 3, 2024.*

The outstanding warrants are classified as liabilities in accordance with ASC480 and ASC815, which requires the warrants to be measured at initial fair value on* January 3, 2024and at each reporting period thereafter, with the changes in fair value recognized as a non-cash gain or loss in our consolidated statements of operations. As of September 30, 2024,*there wereno warrants outstanding.

During the period from common stock warrant distribution on* January 3, 2024*to the Redemption Date, changes in the Company's common stock warrants liability and warrants outstanding were as follows (in thousands):

There wereno warrants outstanding at* June 30, 2025.*

Note12. Restructuring Activities

On* January 7, 2025,the Company announced a reduction in its workforce by 10 employees, a reduction of 33% (the “Workforce Reduction”). The Company communicated the Workforce Reduction to affected employees on January 7, 2025.*

The Company incurred approximately $0.4 million ofone-time costs in connection with the Workforce Reduction, primarily related to severance payments. The Company's Workforce Reduction was completed, and the associated costs and cash payments were made, during thefirst quarter of2025.

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