CervoMed: H2 2024 Data For DLB Program A Major Inflection Point (NASDAQ:CRVO)

CervoMed (NASDAQ:CRVO) has been enrolling for its phase 2b RewinD-LB study, which is using neflamapimod for the treatment of patients with dementia with Lewy bodies [DLB]. The reason to note this biotech is that it had stated that it is on track to complete enrollment of this trial in the 1st half of 2024. Not only that but from there, it is said that it will be able to release results from this phase 2b study in the 2nd half of 2024. This is going to be a major inflection point for the biotech and it will be a final factor in showing whether or not neflamapimod is capable of treating this patient population. Besides such data establishing the mechanism of action of this drug, it would also accomplish the ability to move toward other neurodegenerative diseases.

That’s because it is in phase 2 ready mode in its pipeline to use it to target other indications, like: Alzheimer’s Disease, Frontotemporal Dementia and Recovery after ischemic stroke. The final item to note is that it is in the process of completing a private placement agreement that it had done with several institutional investors. Upon completion of this financial transaction, it is expected that CervoMed will have enough cash on hand to fund its operations through the end of 2025. Regardless, this will be enough to get it through the important inflection point noted above, which would be the release of data from the phase 2b Rewind-LB study.

Neflamapimod For The Treatment Of Patients With Dementia With Lewy Bodies

The main clinical program in the company’s pipeline would be the use of neflamapimod for the treatment of patients with dementia with Lewy bodies, which is in the process of being explored in the ongoing phase 2b RewinD-LB study. Dementia with Lewy bodies [DLB] is a progressive dementia disorder where there is an effect on several functions of a person. The functions that are impacted by this neurodegenerative disease are as follows:

• Logical reasoning
• Ability to think
• Being able to function independently

What does the “Lewy bodies” component of this disease mean? In essence, Lewy bodies are deposits of protein in the brain which have a negative effect on the three functions I listed directly above. Worst of all is that the disease progresses towards other symptoms such as hallucinations. In addition, it is believed that there is a cross between Dementia with Lewy Bodies and Parkinson’s Disease [PD]. As such, it is believed that these patients with DLB also tend to have symptoms closely similar to this other neurological disorder. Some symptoms that these patients also experience, besides hallucinations, are:

• Confusion
• Difficulty being able to solve issues
• Being dizzy
• Erratic hand or body movements
• Sleep disorders being present

Of course, any data readout is risky when it comes to biotech, but if neflamapimod proves itself to be successful in this ongoing phase 2b Rewind-LB study, then it will be able to go after a very large market opportunity. It is said that the global Lewy body Dementia treatment market is projected to reach $8.45 billion by 2033. Especially, if the mechanism of action of this drug is proven. That is, this drug might potentially be the first disease-modifying treatment for DLB. The ability to target the p38 protein and get rid of synaptic dysfunction could in turn result in the ability to possibly treat/reverse DLB. What is p38 alpha and what does it have to do with synaptic dysfunction? The thing is that the p38 alpha protein is responsible for running interference of neurons in a patient’s brain. This interruption of neuronal functioning leads to synaptic dysfunction. Hopefully, the ability to target the underlying cause of this disorder with the targeting of this protein is achieved, but this remains to be seen from the release of new data.

As I stated above, the use of neflamapimod is being evaluated in the phase 2b RewinD-LB study, which is treating patients with Dementia with Lewy bodies [DLB]. This trial is expected to recruit a total of 160 patients who are to be randomized to receive either of the following treatments:

• 40 mg of neflamapimod three-time daily
• Placebo three-times daily

The treatment period for the randomized portion of this phase 2b study is expected to last for 16 weeks. The primary endpoint of this trial is going to be a “Change in Clinical Dementia Rating Scale -Sum of Boxes” [CDR-SB]’ of neflamapimod treated patients versus those who instead were given placebo. What is this CDR-SB score and why is it important? This is a rating scoring system that measures several of the impaired functions I noted above that occur in dementia patients. The patients will be scored between a range of “0” to “18” points, with the higher score indicating a worsening of cognitive impairment. In the end, it must be shown that the patients treated with neflamapimod achieve a statistically significant improvement of CDR-SB compared to that of what is achieved for placebo patients. One other item to note is that CDR-SB is a scoring system that can be utilized for Alzheimer’s Disease studies as well. Thus, if a positive outcome is achieved here with respect to this endpoint in the phase 2b Rewind-LB study, then this would be major proof that the drug works well in treating this DLB patient population. Enrollment of this study is expected to happen in the 1st half of 2024 and from there, it is expected that topline results from it will be released in the 2nd half of 2024.

It remains to be seen if the primary endpoint of the study CDR-SB or any other endpoint will be met with statistical significance, but CervoMed is in a good spot in that it has already published a multitude of clinical results in a peer-reviewed medical journal. That is, several efficacy endpoints from the phase 2a AscenD-LB study were published in the Journal of Prevention of Alzheimer’s Disease [JPAD], under the title “Phase 2a learnings incorporated into RewinD-LB, a phase 2b clinical trial of neflamapimod in dementia with Lewy bodies”. It was shown in the EEG activity data that the drug was able to have a major impact on functional connectivity of the brain. With respect to MRI activity, it was noted that there was a great improvement in functional connectivity and volume of the basal forebrain. To increase the odds of clinical success, the company decided to not only incorporate the CDR-SB as part of the primary endpoint of this trial, but to also only enroll pure DLB patients. What do “pure DLB” patients mean? These are patients who have plasma ptau181 levels below a specific cut off.

Financials

According to the 10-K SEC Filing, CervoMed had cash and cash equivalents of $7.8 million as of December 31, 2023. One thing to note is that the company has also been able to receive funds from the National Institutes of Health’s National Institute on Aging [NIA] to advance its pipeline. It enacted a private placement agreement with several leading healthcare investors, for a total up to $149.4 million. There is to be a $50 million upfront financing payment to CervoMed, followed by the ability to obtain up to an additional $99.4 million that is tied to the exercise of warrants.

Each Unit of this offering is expected to have a purchase price of $19.74. The thing about this offering is that it has warrants included and could be utilized depending on a few factors. The Series A warrants being enacted as part of this offering have an initial exercise price of $32.94 per share, which is a 100% premium to the last sale on March 27, 2024. They could be immediately exercised or could be utilized in two different conditions being met of either:

• Expiration date of April 1, 2027 coming
• or 180 days after the date of a company announcement with respect to positive topline data from the phase 2b RewinD-LB clinical study, which is evaluating neflamapimod for the treatment of patients with Lewy bodies

With the most recent financing expected to close on April 1, 2024, it believes that it has enough proceeds to operate its business through the end of 2025.

This makes sense as the company burns approximately $1.85 million of cash per quarter. Going forward a phase 3 study is going to require additional resources and thus it may have to raise additional cash as that time approaches. One way it could avoid the need to raise cash, to fund a phase 3 study, would be by establishing a partnership with a big pharmaceutical partner. In that instance, it would be able to obtain a huge cash infusion to easily move this program forward. Of course, that’s if positive results are achieved from the phase 2b RewinD-LB study in Q4 of 2024.

Risks To Business

There are several risks that investors should be aware of before investing in CervoMed. The first risk to consider would be with respect to the advancement of neflamapimod for the treatment of patients with Dementia with Lewy bodies [DLB], which is being explored in the ongoing phase 2b RewinD-LB study. The goal of this trial is to hit the primary endpoint, which is CDR-SB of drug compared to placebo. There is no assurance that this drug will able to achieve this primary endpoint with such statistical significance, nor that any other clinical efficacy endpoint is going to be achieved.

The second and final risk to consider would be with respect to the possible advancement of neflamapimod toward the treatment of other possible neurological disorders. As I stated above, other indication in the pipeline that are being targeted include: Alzheimer’s Disease, Frontotemporal Dementia and Recovery after ischemic stroke. Even though there has been substantial evidence that this drug works in treating patients with DLB, there is no guarantee that it will be able to work for all of these other indications.

Conclusion

CervoMed is nearing a few milestones in 2024, which could potentially boost the value of it for shareholders. The first smaller one would be the announcement of completion of enrollment of the phase 2b RewinD-LB study in the 1st half of 2024. From there, it is expected that results from this particular study will be released in the 2nd half of 2024. Hopefully, it is successful, because the global Lewy body Dementia treatment market is projected to reach $8.45 billion by 2033. Not only would shareholders be rewarded for a positive outcome, but the patients who are suffering from this terrible neurodegenerative disorder will benefit as well. That’s because the goal of advancing neflamapimod is not just to be an effective treatment only, but one whereby it could target the underlying cause of the disease. Proving to effectively reverse synaptic dysfunction would be a major step forward toward advancing other parts of its pipeline. With a few catalysts on the way in 2024, plus the positive data published thus far in a peer-reviewed medical journal of neflamapimod for DLB, I believe that investors could benefit from any potential gains.