ACOGF: 2021 Operational & Financial Results

By Lisa Thompson

OTC:ACOGF

READ THE FULL ACOGF RESEARCH REPORT

Alpha Cognition, Inc. ACOGF released 2021 operational and financial results on April 28, 2022 and concurrently filed its annual report with SEDAR.

Highlights from the fourth quarter and to-date include:

➢ Acceptance of Investigational New Drug application (IND) for ALPHA-1062 in mild to moderate AD - September 2021

➢ Closing of CA$14.4M public offering¹ - October 2021

➢ Formation of Scientific Advisory Board - October 2021

➢ Investor Relations agreements - October 2021

➢ CEO update - October 2021

➢ Cedric O'Gorman, MD, MBA appointed Chief Medical Officer - December 2021

➢ Preclinical functional data for ALPHA-1062 in TBI - December 2021

➢ Preclinical histology data for ALPHA-1062 in TBI - February 2022

➢ Preclinical data for Alpha-0602 announced – March 2022

For the calendar year of 2021 versus the calendar year of 2020, both ending December 31^st:

➢ No revenues were generated in either period;

➢ Research and development expenses totaled $8.0 million, up 71% from $4.7 million on increased activity in the development of Alpha-1062 and Alpha-0602;

➢ General and administrative expenses rose 129% to $4.1 million from $1.8 million on the addition of new executives and personnel, additional consulting services from investor relations firms, increased accounting and legal expenses related to the closing of the business combination with ACI Canada, and greater share-based compensation among other lesser factors;

➢ Total operating expenses rose 87% to $12.1 million from $6.5 million;

➢ Net other items were ($7.4) million dominated by loss on revaluation of derivative liability related to warrants;

➢ Net loss was ($19.5) million vs. ($5.8) million or ($0.37) and ($0.13) per share, respectively.

As of December 31, 2021, cash and equivalents totaled $11.3 million. This amount compares to a $5.9 million at the end of December 2020. In terms of debt, Alpha Cognition carries a promissory note issued in March 2015 to Neurodyn Life Sciences for the acquisition of Alpha-1062 held on the balance sheet at $1.1 million. Cash used in operations for 2021 was ($9.9) million compared with cash used of ($14.7) million in 2020. Financing cash flows totaled $14.9 million, bolstered by funds generated by share issuances and warrant exercises, partially offset by share issuance costs and interest paid on promissory notes.

Alpha Cognition Upcoming Milestones

➢ Alpha-0602 (gene therapy) pre-clinical results – March 2022

➢ Addition of Don Kalkofen as CFO – April 2022

➢ Alpha-1062 pivotal trial results in AD – 2Q:22

➢ Alpha-1062 patient tolerability study start in AD – 2Q:22

➢ FDA meeting to discuss ongoing development of Alpha-1062 – mid-2022

➢ NDA submission for Alpha-1062 in AD – 3Q:22

➢ IND submission for Alpha-1062 in mild TBI – 4Q:22

➢ Alpha-0602 pre-clinical study (2^nd mammal) start – 4Q:22

➢ Alpha-1062 potential FDA approval for mild to moderate AD – 2Q:23

➢ Alpha-1062 patient tolerability study topline results in AD – 2Q:23

➢ Alpha-0602 2nd mammal pre-clinical study top-line results – 2Q:23

➢ Alpha-1062 potential label change – 4Q:23

➢ Initiation of Alpha-1062 combination (BABE) study – 4Q:23

Alpha-1062 Mild Traumatic Brain Injury (mTBI) Program

Alpha-1062 is being investigated in mild traumatic brain injury and is at a preclinical stage of development. According to the Management of Concussion and Mild Traumatic Brain Injury 2020 data, three million individuals are affected by this condition in the United States annually. In contrast to the oral form administered for AD, Alpha-1062 for mTBI will be administered using a nasal spray. A mammal model is being investigated to determine neurobehavioral and cognitive improvement of drug treatment, as compared to injured without treatment and uninjured cohorts in a three-arm study. In December, results of the neurobehavioral and cognitive improvement were released and demonstrated a statistically significant improvement in treated animals over their untreated counterparts. Furthermore, results for treated injured animals obtained results equal with uninjured animals in four of five neuro-behavioral primary endpoints. Additional histology work was discussed in a press release and analyst call and will be presented at an upcoming conference. Results showed a dramatic benefit from Alpha-1062 where sufficient brain tissue was saved in treated animals compared with vehicle. All IND-necessary studies have been completed and next steps are to meet with the FDA which is expected to occur in the latter part of 2Q:22. If the IND is cleared by the FDA, the mTBI program could advance immediately to a Phase II study.

Summarized findings from the histological pre-clinical study of Alpha-1062 vs. vehicle in mTBI announced in February 2022. Results from the trial demonstrated:

➢ Statistically significant reduction in lesion size measured at 35 days after injury;

➢ Preserved hippocampal structure;

➢ Statistically significant reduction in neuronal cell loss. The number of neurons in the Alpha-1062 treated animals were equivalent to those in the uninjured cohort of animals at the end of treatment;

➢ Statistically significant enhanced neurogenesis as evidenced by an increase in the number of neuron precursor cells and new neurons in the dentate gyrus, which plays a critical role in learning, information processing and mood regulation.

Alpha-0602 Program Update

In February 2020, Alpha-0602 was granted orphan drug designation by the FDA for the treatment of amyotrophic lateral sclerosis (ALS). This was followed by other in vivo and in vitro preclinical work

On March 29, 2022, Alpha Cognition announced positive preclinical data for its progranulin program designated Alpha-0602 for the treatment of ALS. The study evaluating Alpha-0602 demonstrated "abundant" progranulin expression in motor neurons and decreased motor neuron cell death when observed in in vitro models. When evaluating in vivo models response to Alpha-0602, the candidate reversed the motor neuron toxicity resulting from suboptimal levels of TDP-43 and Fused-In-Sarcoma (FUS). In an ALS mouse model, Alpha-0602 was delivered using an adeno-associated virus (AAV) vector, was successfully transduced into the central nervous system (CNS) cells and was successful in increasing the cerebrospinal fluid (CSF) levels of progranulin. During the treatment period, the mice gained weight throughout the 10-week study in contrast to the untreated animals which did not. Study investigators employ weight gain as a proxy for therapeutic benefit of Alpha-0602.

Additional preclinical work for Alpha-0602 is ongoing and is expected to be complete in 2Q:22, following which, safety studies will be launched in animal models. The goal of this work is to prepare for an IND application to be filed with the FDA in 2H:22. Alpha Cognition expects to run Phase I to Phase III trials for the use of progranulin or its Granulin Epithelin Modules (GEMs) in the treatment of ALS.

Management Changes

On April 12, 2022, Alpha Cognition filed a press release stating that it had replaced its contract Chief Financial Officer Jeremy Wright with permanent CFO Don Kalkofen. Mr. Kalkofen was previously CFO of Protagonist Therapeutics PTGX. He received his B.A. in accounting from Washington State University and is a CPA and Certified Global Management accountant. The press release went on to announce that Michael McFadden, the company's CEO, was appointed to the Board of Directors.

Initiating Coverage

On March 7^th, 2022, we initiated coverage on Alpha Cognition. In the report we provide a review of AD, its prevalence, death rate relative to other common diseases and economic impact. We then shift towards other aspects of the disease including its etiology, diagnosis and the mechanism behind neurotransmission which are key to understanding galantamine's mechanism of action. A review of other products approved for AD is provided including several in development. Alpha Cognition's 505(b)(2) pathway to approval is also described. Following this background, we introduce Alpha-1062, providing the history behind the drug, its mechanism of action, most common side effects and observed benefits as promulgated in a broad spectrum of clinical research. Our report then moves on to a short description of the other programs in the company's portfolio. The following sections discuss Alpha Cognition's intellectual property rights and patents and provide a financial and operational review of the company including upcoming milestones and introduce management. Risks to the company are highlighted along with a summary of peers and competitors and their market size. We complete our review with a detailed discussion of our assumptions behind the company's valuation.

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1. Alpha Cognition was able to successfully raise CAD$14.4 million in gross proceeds, selling 9.6 million shares at CAD$1.50 and issuing 9.6 million warrants with an exercise price of CAD$1.75. 660,000 broker warrants were also issued, each entitling the holder to purchase a share at CAD$1.50.

2. January 2022 Corporate Presentation