Alpha Cognition Q1 2025 Earnings Report

Alpha Cognition EPS Results

• Actual EPS: -$0.20
• Consensus EPS: -$0.58
• Beat/Miss: Beat by +$0.38
• One Year Ago EPS: N/A

Alpha Cognition Revenue Results

• Actual Revenue: $2.93 million
• Expected Revenue: $0.50 million
• Beat/Miss: Beat by +$2.43 million
• YoY Revenue Growth: N/A

Alpha Cognition Announcement Details

• Quarter: Q1 2025
• Date: 5/15/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 15, 2025
• Conference Call Time: 4:30PM ET

Alpha Cognition (NASDAQ:ACOG), Inc. is a clinical stage biopharmaceutical company that develops treatments for underserved neurodegenerative diseases such as Alzheimer's Dementia and Amyotrophic Lateral Sclerosis. The company was founded in 2000 and is headquartered in Vancouver, Canada.

Alpha Cognition Q1 2025 Earnings Call Transcript

Key Takeaways

• AlphaCognition reported the ZUNVEIL launch is off to a strong start with approximately 500 bottles ordered in five weeks and about $1 million in net sales through April 30.
• The company secured its first ex-U.S. business development deal with CMS Pharmaceuticals for China and other Asian territories, targeting H2 2025 distribution and modest royalties in 2026, with another deal expected in late 2025.
• AlphaCognition received U.S. Patent Office approval for its composition-of-matter patent on pH-dependent release tablets—extending protection through February 2044—and added it to the Orange Book.
• In Q1, the operating loss narrowed to $3.7 million (from $4.4 million) and net loss to $2.0 million (from $5.0 million), while cash and equivalents stood at $45.5 million and the company is now debt-free.
• The company reiterated full-year 2025 expense guidance of $38 million to $42 million and affirmed that existing capital should support operations to achieve positive cash flow by year three.

Presentation

[Operator]

Greetings, and welcome to the AlphaCognition Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Henry Du, AlphaCognition's Interim CFO. Thank you. You may begin.

[Henry Du, Interim CFO, VP of Finance & Accounting at Alpha Cognition]

Thank you, Sachi. Good afternoon, everyone, and thank you for joining us today for AlphaCognition's First Quarter twenty twenty five Financial Results Conference Call. Today, after the close of market, the company issued a press release announcing these results. On the call with me are AlphaCognition Chief Executive Officer, Michael McFadden and Chief Operating Officer, Lauren DeAngelo. Today's call is being made available via the Investors section of the company's website at www.alphacognition.com.

[Henry Du, Interim CFO, VP of Finance & Accounting at Alpha Cognition]

During the course of this call, the management may make certain forward looking statements regarding future events and the company's future performance. These forward looking statements reflect AlphaCognition's current perspective on existing trends and information. Any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, including those in the Risk Factors section of the company's latest SEC filings. Actual results may differ materially from those projected in these forward looking statements. For the benefit of those of you who may be listening to the replay, this call is being held and recorded on 05/15/2025.

[Henry Du, Interim CFO, VP of Finance & Accounting at Alpha Cognition]

Since then, the company may have made additional announcements related to the topics discussed. Please reference the company's most recent press releases and current filings with the SEC. AlphaCognition declines any obligation to update these forward looking statements except as required by applicable securities laws. I'll now turn the call over to Michael. Michael?

[Michael McFadden, Director & CEO at Alpha Cognition]

Thank you, Henry. Good afternoon everyone and thanks for taking the time to join us on today's call. This is an exciting quarter for AlphaCognition as it marks our first quarter of recorded revenue for ZUNVEL, our treatment for mild to moderate Alzheimer's disease. The first quarter of twenty twenty five was characterized by a successful ex US business development deal, an additional US patent approval and the commercial launch of ZUNVEL. First, I'll make a few comments on the business development front.

[Michael McFadden, Director & CEO at Alpha Cognition]

We've already made significant progress with our first ex U. S. Partner, CMS Pharmaceuticals, who's representing Zenveil Research and Development and Distribution in China and other Asian territories. We expect our first territory distribution initiation in the second half of twenty twenty five in a small territory and expect regulatory submission for approval in China in Q4 of twenty twenty five. The company anticipates modest royalty revenue from the CMS deal in 2026.

[Michael McFadden, Director & CEO at Alpha Cognition]

The company is in advanced discussions with another company in an additional territory and expects an additional business development deal in the latter part of 2025. That deal, if consummated, will generate revenues for AlphaCognition in 2026. In February, the company received patent notice from the U. S. Patent Office that our composition of matter patent coated tablets for pH dependent release of benzylantamine was approved.

[Michael McFadden, Director & CEO at Alpha Cognition]

That patent adds to the Alpha Cognition patent portfolio and provides additional patent protection through 02/1944. In April, the patent was accepted in the Orange Book. We've also received notice from FDA that the company requests for a patent extension of an early method of use patent will be extended and we expect to hear the date of that extension in Q3 of this year. Now regarding our commercialization activities, we believe ZUNVEL launch is off to a great start. The qualitative feedback is above our expectations and we're hearing positive patient treatment stories that indicate the product works and patients are tolerating Zunveil as our data indicated they would.

[Michael McFadden, Director & CEO at Alpha Cognition]

Prescriptions are being written as early as the first call by our sales team and this tells us the data is compelling and the need to treat is high. We have multiple abstracts accepted for presentation at the upcoming AAIC meeting in July and anticipate additional manuscripts later in the year. Our goals in 2025 with our commercial launch are to establish Zunveil as a core therapy, deliver breadth of prescriptions across nursing homes and build our prescription base of experience with gerontology groups that will grow exponentially in 2026. We anticipate approximate size of our team will be fairly consistent year over year with single digit increases in headcount possible as the company grows its business or advances its pipeline. We continue to believe the capital the company has raised is sufficient for AlphaCognition to move to a positive cash flow position in year three if we execute according to our plan.

[Michael McFadden, Director & CEO at Alpha Cognition]

After Henry provides an update on our financials, Lauren will provide more color on the launch and the metrics we're looking at. Henry?

[Henry Du, Interim CFO, VP of Finance & Accounting at Alpha Cognition]

Thank you, Michael. Good afternoon again, everyone. As I review our first quarter results, please refer to today's press release and 10 Q that were filed earlier this afternoon. Starting with our operating results. For the first quarter of twenty twenty five, our operating loss declined to $3,700,000 versus $4,400,000 during the same period in 2024.

[Henry Du, Interim CFO, VP of Finance & Accounting at Alpha Cognition]

The improvement was largely attributed to initial net product revenues from Sundal of $347,000 in the last two weeks of March and recognized licensing revenue of $2,600,000 from the company's exclusive licensing agreement with CMS. This was partially offset by an increase in general and administrative costs associated with our commercial launch readiness activities, including hiring of sales force and consulting fees as well as noncash stock based compensation expense. Turning to net income performance. For the first quarter of twenty twenty five, we reported a net loss of $2,000,000 or $0.13 per share, a decrease of $3,000,000 compared to a loss of 5,000,000 or $0.87 per share in the same quarter last year. This was primarily driven by an increase in interest income and favorable changes in the fair value of derivative liabilities.

[Henry Du, Interim CFO, VP of Finance & Accounting at Alpha Cognition]

Now moving on to the balance sheet. As of 03/31/2025, the company had approximately $45,500,000 in unrestricted cash and cash equivalents, primarily due to the cash generated from the fourth quarter twenty twenty four capital raise. Additionally, in the first quarter of twenty twenty five, we successfully retired our outstanding $900,000 debt obligation with NLS. As of 03/31/2025, the company maintains a debt free balance sheet, reinforcing our financial strength and flexibility. The company has a strong balance sheet with sufficient liquidity to launch Lindeville into long term care segment of the market.

[Henry Du, Interim CFO, VP of Finance & Accounting at Alpha Cognition]

Lastly, a word on guidance. While we are not providing revenue guidance at this time, we are reiterating our full year 2025 expense guidance, which remains in the range of $38,000,000 to $42,000,000 We continue to believe this range appropriately reflects the investments needed to support our commercial operations and corporate objectives this year. In summary, we made meaningful progress in the first quarter of twenty twenty five marked by reduced operating and net loss, initial revenue contributions from Sunbelt and a strong liquidity position. These results reflect disciplined financial management and early signs of commercial traction. We remain focused on executing our strategic priorities and delivering value to our stakeholders.

[Henry Du, Interim CFO, VP of Finance & Accounting at Alpha Cognition]

With that, I will now turn the call over to Lauren to discuss commercial progress. Lauren?

[Lauren D'Angelo, COO at Alpha Cognition]

Thank you. Thank you, Henry. I'm pleased to provide an update on our commercial progress following the launch of ZUNVAIL, which is now available nationwide. We officially launched just over a month ago and I'm excited to report that the early response from the market has been both encouraging and validating. Our commercial strategy was purpose built for the long term care segment where the need for effective and tolerable Alzheimer's therapies is significant.

[Lauren D'Angelo, COO at Alpha Cognition]

And Zunveil is already making an impact. As of April 1, Zunveil became reimbursable by Medicare, a critical milestone for long term care access. This enables access to our drug and the Medicare system, a required and critical factor in our segment. Despite launching with no payer contracts in place, we've seen that nearly all of the Zunveil orders have been filled successfully with or without a prior authorization. That speaks volumes about both the market demand and the clinical confidence providers already have in ZunVail.

[Lauren D'Angelo, COO at Alpha Cognition]

The feedback from healthcare professionals has been overwhelmingly positive. Our sales team is energized and reports that the message around ZunVail's clinical benefits and its differentiation in this space is resonating clearly. So let's dive into some early launch metrics. As of last Friday, May 9, just five weeks post Medicare approval, we've seen approximately 500 bottles ordered, a meaningful indicator of real world demand and growing confidence among providers. We're also seeing repeat riders, which we take as strong signals of clinical adoption and satisfaction.

[Lauren D'Angelo, COO at Alpha Cognition]

In the first month, we can report sixty six percent of our top tier long term care targets have been engaged by our field force with approximately 1,400 unique homes reached. Approximately 100 unique accounts have placed orders with half of them already reordering, indicating satisfaction with their results. This equates to an average of 17 orders per day in just the first five weeks. And even more importantly, the wholesalers are restocking initial orders and we have already seen our initial stocking of the five milligram dose replenished. And last, but certainly not least, I am pleased to share that we have generated approximately $1,000,000 in net sales through April 30, just four weeks into the launch.

[Lauren D'Angelo, COO at Alpha Cognition]

The feedback from clinicians is consistent. They see Zundale as a much needed option for long term care patients, offering the right combination of cognitive benefit, tolerability, and ease of administration. We're also encouraged by the early signals of market access. We've seen minimal restrictions, a strong signal of payer confidence in SunVille's value proposition. Many plans have implemented a simple or single step prior authorization, making it easier for prescribers in the long term care setting to initiate therapy without administrative burden.

[Lauren D'Angelo, COO at Alpha Cognition]

This level of access without contracts so early in launch is encouraging and supports continued momentum as we expand coverage. We are engaged in conversations with the key plans and many national and regional plans have indicated they're closely watching our prescription volume and utilization trends before making formulary decisions. We view this as a standard part of the access curve for new product and remain confident that our early uptake will support broader inclusion over the coming quarters. From a promotional perspective, our multichannel strategy is delivering results. Our digital promotional educational programs are underway, and early response from the field suggests strong receptivity.

[Lauren D'Angelo, COO at Alpha Cognition]

We have presented to over 100 healthcare providers through our virtual webinars to date. Our medical team has engaged with approximately 150 providers and these interactions have been initiated by the healthcare provider, demonstrating strong interest from our customers. We know that disrupting entrenched prescribing behaviors in long term care and working through the initial market access takes time, but these early results show clear momentum and strong execution by our team. With each week, awareness, adoption, and enthusiasm for ZunVail continues to build. Overall, it's been a highly productive first month.

[Lauren D'Angelo, COO at Alpha Cognition]

We've validated demand, executed our launch plan with precision and laid a strong foundation for continued growth as we expand access and awareness in the months ahead. I'll now hand it over to Michael for Q and A.

[Michael McFadden, Director & CEO at Alpha Cognition]

Thank you, Lauren. In summary, the team is excited about the commercial launch of Zunveil. I think you hear that in Lauren's comments today. Qualitative feedback from physicians, pharmacists and long term care facilities that support of a drug that's both efficacious and well tolerated. Our physician and pharmacy engagement is very high and our payer restrictions are about as expected.

[Michael McFadden, Director & CEO at Alpha Cognition]

The company believes we have a disruptive opportunity with Zunveil and we'll focus this quarter on our selling efforts, continuing to exercise financial discipline and our ex US operational execution. Operator, we'll now take questions.

[Operator]

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

[Operator]

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. The first question is from Ram Selvaraju from H. C. Wainwright. Please go ahead.

[Raghuram Selvaraju, Managing Director, Healthcare Equity Research at H.C. Wainwright & Co., LLC]

Thanks very much for taking my questions and congratulations on all this impressive progress in a very short period of time. I wanted to ask, first of all, some questions about the commercial metrics that were provided. And if you could maybe give us additional details on some of these fronts. In particular, the following four aspects. Firstly, if you can give us a sense of how many repeat prescribers there are at this point in time, and how you expect that number to evolve going forward.

[Raghuram Selvaraju, Managing Director, Healthcare Equity Research at H.C. Wainwright & Co., LLC]

Secondly, if you can give us a sense of the length of time the first patients in, so to speak, have been on therapy and what you expect to be the average length of time patients stay on therapy given the enhanced safety and tolerability profile of this drug relative to other older generation acetylcholinesterase inhibitors? Thirdly, if you could just walk us through the prior authorization requirement for Zunveil as it stands today? And then lastly, not sure whether you would be in a position to do this at this point, but any color and granularity you could give would be helpful. If you can give us a sense of how you expect contracting to evolve over the course of the next three to six months. Thank you.

[Michael McFadden, Director & CEO at Alpha Cognition]

You, for the question. Lauren, why don't I take the first part of that question and then have you walk through some of the metrics. So on the length of time patients have been on therapy, we were approved by Medicare for reimbursement April 1. We had patients on drug April 1. Orders were submitted.

[Michael McFadden, Director & CEO at Alpha Cognition]

Patients were initiated therapy. So the longest time patients have been on is since April 1. Now we have seen that number increase every week, week over week and now we have patients on a range of one to six weeks. We anticipate the patients, as long as they're benefiting from efficacy of the drug and they're seeing the tolerability that we are hearing about thus far, they could be on this drug the remainder of their life as Alzheimer's is a debilitating progressive disease. We know that the data shows very clearly these drugs slow progression of disease.

[Michael McFadden, Director & CEO at Alpha Cognition]

Zunveil minimizes the behaviors that occur with disease. So we believe that physicians will keep patients on drug as long as they're tolerating the drug and it's working for them. I'll mention one other comment. We've had many patients on drug already. We've had no reports thus far of any adverse events relative to GI and no adverse events relative to insomnia.

[Michael McFadden, Director & CEO at Alpha Cognition]

Now it's early and we may not be hearing all of the adverse event reporting that does exist. But it's very encouraging to us that we've seen so far a very tolerable drug with these patients. I'll turn it over to Lauren to talk about repeat RXers and our payer work. Lauren?

[Lauren D'Angelo, COO at Alpha Cognition]

Sure. Thanks, Michael. So far, we look at it from an account basis as we think about the nursing homes who are placing orders for our product. And of the 100 unique accounts who have actually written orders or written prescriptions, more than half of them have already written again. What we're seeing, if you think about a bell curve for prescribers, our initial orders are coming from that far right.

[Lauren D'Angelo, COO at Alpha Cognition]

So we've got a pretty good number who are writing a lot of prescriptions. And then where the market is, is actually that middle of the bell curve. That's what's gonna move the market. We've seen initial uptake from them. And with that group, it's gonna take a little bit more time till they're writing a lot of product repeatedly.

[Lauren D'Angelo, COO at Alpha Cognition]

But we're seeing more than half the accounts have already placed an additional order. As it relates to the prior authorization detail, I can honestly say this has been the best I've seen out of my 20 launches. Now I don't want to get you guys too excited. We know that with more demand for our product and this pretty big initial uptake that those restrictions may get tighter as plans start to pay attention. But just, I know you asked for a specific example in terms of what the PA detail looks like.

[Lauren D'Angelo, COO at Alpha Cognition]

They've been pretty simple. So it varies across all the plans. I have a running list of the Medicare plans and what some of their prior auth restrictions look like. I'd say about half are pretty easy. You check the box.

[Lauren D'Angelo, COO at Alpha Cognition]

Has the patient already tried a generic? Is there a reason the patient can't use one of the formulary products? We've seen many simple PAs for more than half of the key plans. There are some others that we've seen that might require, have they failed a generic? What is a specific reason that they can't use a formulary drug?

[Lauren D'Angelo, COO at Alpha Cognition]

And why this drug? What we haven't seen, which is not typical that I've experienced in the past, is having to prove it. So many of these prior authorizations are actually just check boxes. They're not having to provide documentation. So we're pretty pleased with what we're seeing from what they're requiring from a PA level.

[Lauren D'Angelo, COO at Alpha Cognition]

There's only one plan where we've seen a double step at it, failed two generics out of all the plans that we're kind of keeping track of. So that's one. And then as that goes into contracting, we are continuing to engage with the key plans across our Medicare space. As you guys know, there's really five key plans that matter. We are talking to all of them.

[Lauren D'Angelo, COO at Alpha Cognition]

We are pleased with our conversations. We are progressing those conversations. A couple of them are waiting and seeing, which is very typical of an access curve. They want to see what our initial utilization and uptick looks like. So we expect over the next couple of quarters, we will have specific data to show.

[Lauren D'Angelo, COO at Alpha Cognition]

And we're feeling very positive about contracting. But I do want to note, we're seeing nearly every prescription go through without any contracts. We know we can be successful in this space without coverage. Obviously, we're going to work to get coverage in 2026 to make it easier from an administrative perspective. But we feel really good about where we're at, the restrictions we're seeing, and the growth that we can get even without coverage.

[Lauren D'Angelo, COO at Alpha Cognition]

Did we hit everything wrong? Did we answer all the questions? I wrote them down. I think we hit them.

[Raghuram Selvaraju, Managing Director, Healthcare Equity Research at H.C. Wainwright & Co., LLC]

Yes, there were just three other aspects I was hoping you could talk through if I Firstly, when you talk about the world beyond Medicare, what does that look like? Give us a sense of the commercial plans and the total number of covered lives that we might be talking about as we get beyond Medicare and how relevant that is likely to be for the future of this drug. When we talk about the prior authorizations, I'm specifically interested in whether or not you think in the future, a prior authorization requirement might emerge that specifically asks whether the patient has previously tried and failed galantamine, if you think that's to develop mainly because, you know, we all know the usage patterns and donepezil is far more widely used than That doesn't seem very practical, but just wanted to see if you think that's likely to emerge in the future. And then lastly, with respect to the ways in which you might look to promote the drug going forward, just wanted to see what your thoughts were on two specific aspects. One is sampling as well as the advertising aspect of this and what specific promotional channel you anticipate is likely to be most appropriate for a drug like this. Thank you.

[Lauren D'Angelo, COO at Alpha Cognition]

Sure, thank you. So as it relates to the percentage of plans and percentage of lives, if you look at the nursing home setting, I I would say 80% is pure Med D, right? So you've got some cash, some Medicaid. I mean, commercial would be very, very minimal in the long term care nursing setting. Remember, we're going after long term stay patients who are living in a nursing home.

[Lauren D'Angelo, COO at Alpha Cognition]

Now, as we look to expand into neurology in the future, we will pursue commercial contracts. And that's just kind of a natural step after we get Medicare, Medicaid, we'll move into the commercial plans. Right now, it's not as a big deal for us. I think you were kind of looking for the future. In the future, we will go after the commercial plans.

[Lauren D'Angelo, COO at Alpha Cognition]

It's still a pretty small percentage when you look at the overall Alzheimer's market, considering most of the average age of Alzheimer's is 80 years old. There are some early onset, no question, that would be on a commercial plan. So our focus right now is Medicare Part D plans. We are on the list for Medicaid. We're out there, depending upon the state right now is when we become effective.

[Lauren D'Angelo, COO at Alpha Cognition]

So many states, you can get our drug on Medicaid, and what we're finding is the Medicaid plans are not requiring prior authorizations. Some states, our Medicaid coverage will become effective by mid May, end of May, June, but by federal law, every state in this country, you can get access to perspective. And then again, we are going to move to our next tier of commercial plans once we complete our work with Medicare and contracting. As your question relates to the galantamine, we do not expect that to be a very specific question on a prior authorization. We have not seen that to date.

[Lauren D'Angelo, COO at Alpha Cognition]

Again, I've got a running list of what some of these plans are asking for as we're submitting our Zunveil orders. We do not expect that to be an issue because 75% are on donepezil or have failed donepezil. That's really the market leader. What we see is the question around have they tried a generic? Now there has been a couple where they say have they tried donepezil, riv or galantamine, but they haven't specifically called out galantamine.

[Lauren D'Angelo, COO at Alpha Cognition]

And we do not expect that to be something that they'll focus on moving forward. And then as it relates to our promotional strategy and what that will require as we move forward with the drug, right now our focus is on execution in the nursing home. We know we've got to knock it out of the park this year in order to expand into other segments of the market. The reason we love long term care and was one of our main strategies for launching here is it does require minimal promotional spend relative to a neuro sales force that requires 75 sales reps, that requires all this surround sound, direct to consumer, driving the caregiver in. So with long term care, our promotional efforts right now is how do we make the biggest impact with our current customers?

[Lauren D'Angelo, COO at Alpha Cognition]

So we are looking at all kinds of alternatives on how we're reaching these customers. We've had, as I mentioned, a digital program on webinars where we're able to access our customers. We've been conducting a number of different advisory boards to get feedback on how we can reach more of our customers. We're participating in all the key long term care conferences. Now, Ram, as we move forward, and our goal is to expand into neurology at some point, we will then offer sampling.

[Lauren D'Angelo, COO at Alpha Cognition]

Sampling's not actually allowed in the long term care setting, so we have no samples today. When we look to expand into neurology, we will allow sampling. We would look for more of your surround sound advertising once you go big and you're kind of going out to the retail market. For now though, our spend, you know, we're maximizing our spend with really getting to as many nursing home accounts as we can.

[Raghuram Selvaraju, Managing Director, Healthcare Equity Research at H.C. Wainwright & Co., LLC]

Thank you so much. Exciting stuff.

[Lauren D'Angelo, COO at Alpha Cognition]

Thank you.

[Operator]

The next question is from Michael Freeman from Raymond James. Please go ahead.

[Michael Freeman, Equity Research Analyst - Healthcare at Raymond James Financial]

Hey. Good afternoon. Congratulations on all this progress. This sounds like a sensational early launch. I wonder of course, you're focused on long term care, and this seems like a very rational market to to be starting with for all the reasons you've just mentioned. I wonder you know, I know it's the first month, but I wonder if there have been any sort of indications of interest from practitioners or even patients or the families from outside of the long term care setting interested in gaining access to the drug.

[Lauren D'Angelo, COO at Alpha Cognition]

Sure, and that's a great question. And yes, we have seen interest outside of long term care. We've got our website where the provider or the caregiver can go on and request information about the product. We have had outreach. We had outreach from the retail setting even since the approval prior to the launch.

[Lauren D'Angelo, COO at Alpha Cognition]

And we are every request that we get for a conversation, we are having that conversation. The reason we went to the three large wholesalers so that SunVille would be accessible at any pharmacy across the country, we know there's going to be spillover. There's also physicians who treat in the long term care who might have a day in the typical retail environment. And that will carry over as well. So, we have had reach out.

[Lauren D'Angelo, COO at Alpha Cognition]

We started getting reach out literally once we got the approval for the drug. And we are definitely following up on those. We have a system in place where the rep will go call on that retail doctor if we're getting a request. And our medical team is doing quite a bit of that work as well.

[Michael Freeman, Equity Research Analyst - Healthcare at Raymond James Financial]

Gotcha. Okay. Thank you, Lauren.

[Lauren D'Angelo, COO at Alpha Cognition]

Sure.

[Michael Freeman, Equity Research Analyst - Healthcare at Raymond James Financial]

And, you know Sure.

[Michael Freeman, Equity Research Analyst - Healthcare at Raymond James Financial]

And, Michael, you you touched on this with the earlier set of questioning, but I wonder if you could provide any color you can, of course recognizing this is the first month of patients on drug. Any early feedback around, you you touched on adverse events. I wonder if there's, you know, any commentary around efficacy or just like any feedback you're getting from these early patients on drug?

[Michael McFadden, Director & CEO at Alpha Cognition]

Yeah, I'll speak globally and then let maybe Lauren, I think it'd be really helpful for her to share a couple patient examples with the group because that's really enthused our team. It's enthused our company on what we're hearing specific to patient treatment by the doctors. I'll just say globally, we're most excited that we're seeing early efficacy with the drug. We are seeing efficacy at the starting dose, five milligrams. We're hearing that from doctors and patients.

[Michael McFadden, Director & CEO at Alpha Cognition]

And we have yet to hear a report of an adverse event reported to the company for GI. Not to say it's not happening but we would have anticipated to have a number of those reports if the drug was having an impact on GI as doctors are trying the drug for the first time. So those, that global feedback enthuses the company a lot and it's above expectations so far for our leadership team and our medical team. Lauren, why don't you share one or two patient stories on what we're hearing because I think that really brings this to life for the group that's Sure,

[Lauren D'Angelo, COO at Alpha Cognition]

absolutely. And these are my favorite too. So I've got a handful of these of examples where the reps will kind of call us and say, you're never gonna believe this. So one of the more impactful stories we've heard came from a care facility that had a particularly challenging patient. The staff had come to expect daily behavioral outbursts, so much so that they would brace themselves every day at three p.

[Lauren D'Angelo, COO at Alpha Cognition]

M. When just like clockwork, this patient would actually go to the nursing station and just cause significant chaos. The resident was described as very unpleasant, was known for throwing her phone at the staff and other residents, and the family had even stopped visiting due to the difficulty of her condition. Now, the physician was initially skeptical of yet another Alzheimer's treatment that sounded good to be true. So he wanted to try our product, Zunveil, on his most challenging patient.

[Lauren D'Angelo, COO at Alpha Cognition]

Shortly after starting Zunveil, one day the nurses waited for the usual three p. M. Incident, but it never came. So they looked at each other wondering what was going on, and they actually became pretty concerned. And so they went looking for her in the home and eventually found this patient calmly engaged in conversation with another resident at a table.

[Lauren D'Angelo, COO at Alpha Cognition]

It was the first time in over a year she had shown that kind of connection or calm. Since then, the facility has shared with us they've reduced her use of Ativan and even reached out to her family encouraging them to visit again. So this is a really impactful story. Obviously, it's illustrative. It was a story shared with us.

[Lauren D'Angelo, COO at Alpha Cognition]

We recognize gun veil is not indicated for agitation, but just really wanted to share this. Because now this facility is so bought in that they're obviously placing more orders. Another patient was previously on donepezil and trazodone, which is an antidepressant often used for sleep in the nursing home. She was frequently up at night ringing her call bell and then she would wander the halls during the day in this dazed, they described it as a zombie like state. After transitioning to Zunveil and discontinuing donepezil treatment, the patient's sleeping through the night for the first time in years.

[Lauren D'Angelo, COO at Alpha Cognition]

And of course, this has impacted her ability to engage throughout the day. The beautiful part of this is her family members have noticed a significant change and have actually told the staff that she has to stay on ZunVail no matter what. So here's just two examples. I have so many more. They give me the chills, but these are the kind of stories that we're hearing from the field.

[Lauren D'Angelo, COO at Alpha Cognition]

And of course, we expect that with more examples like these, it'll create advocates for ZunVeil. We'll see a lot of pushback on the insurance plans and the prior authorizations. And this is kind of how it gets started. These types of early experiences is really what you know, will get us moving and the momentum that we'll continue to see.

[Michael Freeman, Equity Research Analyst - Healthcare at Raymond James Financial]

Okay. That's that's wonderful. That's really heartwarming, actually. I I'm now curious. I I mean, like, all this all this early feedback and all the all the Mhmm.

[Michael Freeman, Equity Research Analyst - Healthcare at Raymond James Financial]

The information that you'll get over time, do you do you anticipate collating this, like, in into a, you know, a peer reviewed publication? Like, do you intend to do sort of real world evidence trials or sort of thing such that this evidence can be published, you know, in a single place, you know, like, demonstrating, you know, this true to world information around how the drug's working?

[Michael McFadden, Director & CEO at Alpha Cognition]

Michael, it's a great question. Our medical team is very active right now in executing medical strategy to communicate the information both that we're seeing in the market and that we're seeing on drugs. So we submitted multiple abstracts. They've been accepted for AAIC. We have more abstracts that have been submitted.

[Michael McFadden, Director & CEO at Alpha Cognition]

We expect acceptance of those in other long term care medical meetings. But that's just the start. Toward the end of the year, we anticipate completing a retrospective data analysis that will give us insight into how Zunveil is being used in the nursing home, the types of patients it's being used for, and we believe some of the benefits that it demonstrates in both sleep in the absence of GI side effects, and certainly last but not least in the behaviors that these patients suffer from. So I think there'll be additional data the latter part of this year that we will have completed. We'll submit that for publication.

[Michael McFadden, Director & CEO at Alpha Cognition]

Additionally, there are physicians already that are telling us they want to submit case reports because some of the responses that they are seeing from their patient cohort, they feel like it's worthy of putting into the literature. So we'll stay tuned for that type of information to be submitted to journals as well.

[Michael Freeman, Equity Research Analyst - Healthcare at Raymond James Financial]

Wonderful. Okay, look forward to that. Last question is on money. So I mean, this is relatively soon after your last update. But wondering how you're feeling about your balance sheet and being able to deliver your full long term care rollout.

[Michael Freeman, Equity Research Analyst - Healthcare at Raymond James Financial]

And how are you thinking about the cash you have bringing the company to potentially breakeven?

[Michael McFadden, Director & CEO at Alpha Cognition]

Henry, you want to take that question?

[Henry Du, Interim CFO, VP of Finance & Accounting at Alpha Cognition]

Sure, Michael. Thank you. So we're very comfortable with our balance sheet. We're glad to report that we are debt free. So we don't have any kind of interest payments to make and worry about.

[Henry Du, Interim CFO, VP of Finance & Accounting at Alpha Cognition]

We're encouraged by ourselves. So we do feel very comfortable that we can still continue to fund our operations and our commercialization without having to raise any money at the moment.

[Michael Freeman, Equity Research Analyst - Healthcare at Raymond James Financial]

Okay. Thank you very much. I'll pass the line.

[Michael McFadden, Director & CEO at Alpha Cognition]

Thank you, Michael.

[Operator]

The next question is from Dave Storms from Stonegate. Please go ahead.

[Dave Storms, Director of Equity Research at Stonegate Capital Partners]

Hey, good evening everyone and thank you for taking my questions. Congrats on all the success so far. Just want to start, I thought I caught on the prepared remarks that you've targeted about two thirds of your tier one LTC targets. When we think about patient penetration among those, does alpha cognition anticipate, excuse me, what kind of penetration do you anticipate in those facilities during this first year?

[Lauren D'Angelo, COO at Alpha Cognition]

And so the simplest way to describe that is if you think about any given home across the country, obviously specific to the territories we're marketing, about seven out of ten patients have Alzheimer's disease. And if you think about, and there's a high treatment rate along after your Alzheimer's diagnosis. So if you've got one hundred patients in a home, seventy patients have Alzheimer's disease. And what we know, and especially as we're learning, as we've just launched this product, about half of those patients are not on any treatment. They've already tried a generic in the past and failed, couldn't tolerate it, for whatever reason couldn't get the efficacy, probably due to the tolerability.

[Lauren D'Angelo, COO at Alpha Cognition]

Half of those patients are not on drugs. The other half of those patients we know are currently on medicine, and we know that more than half of those patients are gonna drop off by the end of the year. Now, as we get out there and we communicate the Zunveil story, physicians are seeing us used in both of those patient types. Looking at the patients who have tried and failed, aren't on treatment today, perfect candidate for Zunveil, but they're also looking at the patients who are currently on drugs trying to tolerate it, know they're gonna drop off, and they're switching them to Zunveil. So we see a pretty deep penetration, as you can imagine.

[Lauren D'Angelo, COO at Alpha Cognition]

And a significant portion of that seventy patients who have Alzheimer's disease will eventually be a candidate for a drug, either by the time they drop off or more than half of them have already dropped off in our candidates. Does that help?

[Dave Storms, Director of Equity Research at Stonegate Capital Partners]

That's incredibly helpful. Thank you. And just with that, given penetration and noting that you've hired a full commercial field team, launched them nationwide, do you believe the current sales force and infrastructure is sufficient to scale with that market? Or how should we think about that?

[Lauren D'Angelo, COO at Alpha Cognition]

Yeah, so right now, oh, ahead Michael, you wanna answer?

[Michael McFadden, Director & CEO at Alpha Cognition]

Yeah, I'll just say we feel like we have 80% coverage with our current territory alignment with the current sales team that we have. We're always analyzing the market and looking at the response to the market of our promotion. And we could see small single digit increases in that sales force to further penetrate some markets that are opportunistic. But it won't be a meaningful impact to our spend over the course of 2025.

[Dave Storms, Director of Equity Research at Stonegate Capital Partners]

Understood. Very helpful. Thank you. And then just kind of drilling in a little further, net revenue for Q1, you mentioned was $3.47 following this March launch. How should we interpret that figure in terms of initial stocking versus maybe the underlying demand?

[Lauren D'Angelo, COO at Alpha Cognition]

Sure, that's a great question. So, when we prior to launch, we did minimal stocking across the wholesalers. We are very unlike other companies. I've been at those companies. I've stocked a ton, right?

[Lauren D'Angelo, COO at Alpha Cognition]

You stock two months, three months of inventory, and it takes you quite a bit of time to get through the inventory. We did not go that route. We stocked minimally at all of our major distribution centers that were surrounded by sales rep. The good news and what I can confidently say, we stocked both five milligrams and ten milligrams. We have already depleted all of our five milligrams.

[Lauren D'Angelo, COO at Alpha Cognition]

As you can imagine, drug could get written April 1, May first, they're titrating up to the ten milligrams. So we are completely depleted through our initial stocking. Those have already been reordered. Many of those are being reordered and they have been reordered over the past month. And then the ten milligram, we're almost completely through that initial stocking as well.

[Lauren D'Angelo, COO at Alpha Cognition]

So and we continue to see orders from the wholesalers every day. So it's looking very good. But I can confidently say we've already depleted our initial stocking for the fives and we're almost there for the tens because we've got to kind of get through the rest of the month that would be the titrated patients from April.

[Dave Storms, Director of Equity Research at Stonegate Capital Partners]

Understood. Very helpful. Thank you. One last one for me, if I could. Just zooming out a little bit and thinking about maybe some recent U.

[Dave Storms, Director of Equity Research at Stonegate Capital Partners]

S. Policy developments. Are you concerned with any impact to the long term pricing power or formula dynamics in Medicare Advantage and other long term care plans?

[Michael McFadden, Director & CEO at Alpha Cognition]

No, I think we expect to see in The US market, we expect to see consistency at least in the Alzheimer's category. I think from a general, I'll take a step even further back, from a general pricing pressure issue for pharmaceutical companies, been a lot of talk about tariffs this year. We manufacture our product in The US, so there's no impact from tariffs to our company. We secure our API outside The US, but it's a small percentage of total product cost. So we don't anticipate our gross margin will be impacted by any tariffs that The US chooses to put in place.

[Michael McFadden, Director & CEO at Alpha Cognition]

On the reference pricing, there's a lot of noise this week from the Trump administration regarding reference pricing. But this has already been put forward in 2021. It was struck down by the court. We don't have the details this round to see how it's different or the same. But we feel that we're taking a wait and see approach.

[Michael McFadden, Director & CEO at Alpha Cognition]

We'll watch to see if there are any additional changes that occur and we're already prepared to act if we feel like that would impact our US pricing. But from Medicare standpoint, we anticipate business as we see it today for the remainder of this year, into next year because that process is already underway for 2026.

[Dave Storms, Director of Equity Research at Stonegate Capital Partners]

That's all very helpful. Thank you for taking my questions and good luck in the second quarter.

[Michael McFadden, Director & CEO at Alpha Cognition]

Thank you, Dan.

[Lauren D'Angelo, COO at Alpha Cognition]

Thank you.

[Operator]

There are no further questions at this time. I would like to turn the floor back over to Michael McFadden for closing comments.

[Michael McFadden, Director & CEO at Alpha Cognition]

Thank you operator and thanks everybody for joining us today. I think you hear the excitement of the team about our commercial launch of Zunveil. I'll reiterate, we will be focused this quarter on our selling efforts. We'll continue to watch our spending to make sure we're spending on the right things and we're exercising financial discipline. And then we'll continue to progress our medical plans to share more information about SunVel in The US market and also our ex US operational execution to make sure that we take full advantage of our Asia partnership. Thanks again for attending. Everyone have a great day.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Henry Du, Interim CFO, VP of Finance & Accounting
• Michael McFadden, Director & CEO
• Lauren D'Angelo, COO

Analysts

• Raghuram Selvaraju, Managing Director, Healthcare Equity Research at H.C. Wainwright & Co., LLC
• Michael Freeman, Equity Research Analyst - Healthcare at Raymond James Financial
• Dave Storms, Director of Equity Research at Stonegate Capital Partners