Atossa Therapeutics, Inc. (Nasdaq: ATOS), a clinical stage
biopharmaceutical company developing innovative proprietary
medicines to address significant unmet needs in oncology with a
focus on breast cancer, today announces financial results for the
quarter ended September 30, 2023, and provides an update on recent
company developments.
Key developments from Q3 2023 and year to date include:
- 80% Enrollment in Ongoing Phase 2 Karisma-Endoxifen
Clinical Trial – the study is investigating (Z)-endoxifen
in premenopausal women with measurable breast density. Participants
receive daily doses of (Z)-endoxifen for six months, over the
course of which mammograms are conducted to measure reduction in
breast density. Full enrollment is expected by the end of 2023 and
data is expected in the second half of 2024.
- 80% Enrollment in Phase 2 I-SPY 2 Clinical
Trial – (Z)-endoxifen is being evaluated as a neoadjuvant
treatment in a study arm of the ongoing I-SPY 2 clinical trial. The
study arm targets patients with newly diagnosed estrogen
receptor-positive breast cancer whose tumors are predicted to be
sensitive to endocrine therapy but for whom chemotherapy is
expected to provide little or no benefit. Data is expected in the
second half of 2024.
- Initiation of Phase 2 Re-Evaluating Conditions for
Active Surveillance Suitability as Treatment: Ductal Carcinoma In
Situ (RECAST DCIS) Study – (Z)-endoxifen is being
evaluated as a treatment option in patients diagnosed with DCIS.
The RECAST DCIS study, which is organized by Quantum Leap
Healthcare Collaborative, is aimed at preventing the progression of
DCIS to breast cancer, which could significantly change the way
DCIS is treated. Dosing is expected to start in Q4 2023.
- Approval from Health Canada to Conduct Phase 2
EVANGELINE Clinical Trial in Canada – Atossa was
authorized to open sites and enroll patients in the Phase 2
EVANGELINE study throughout Canada.
- Research agreement with Weill Cornell Medicine
– partnership to study the potential of inducing estrogen receptor
(ER) expression in triple-negative breast cancer (TNBC). The goal
of this research is to determine if treating TNBC with
extracellular vesicles carrying the ER will convert the tumor to
ER+ and render it sensitive to treatment with Selective Estrogen
Receptor Modulators, including Atossa’s proprietary
(Z)-endoxifen.
- Appointment of Jonathan Finn to Atossa’s Board of
Directors – Mr. Finn has more than 25 years of experience
in the financial industry with a focus on early to mid-stage
biotech and technology companies. He currently serves as Executive
Vice President and Chief Investment Officer at Vantage Consulting
Group, an investment advisory firm.
“Q3 was another period of significant advancement for our
Company and our (Z)-endoxifen development program,” said Dr. Steven
Quay, Atossa’s President and Chief Executive Officer. “With two
Phase 2 trials approaching full enrollment, we are preparing for
expected data readouts in the second half of 2024. We also made
important progress with our EVANGELINE study by initiating the 80mg
PK run-in cohort and announced a fourth Phase 2 study in DCIS,
which like our trial in mammographic breast density, is
investigating (Z)-endoxifen in a population of women who are at
high risk of developing breast cancer. We expect data from these
four ongoing Phase 2 trials to further strengthen the growing body
of evidence that (Z)-endoxifen may play an important role in both
the prevention and treatment of breast cancer.”
Comparison of the Three Months
Ended September 30, 2023 and 2022
Operating Expenses:
The following table provides a breakdown of major categories
within Research and Development (R&D) and General and
Administrative (G&A) expenses for the three months ended
September 30, 2023 and 2022, together with the dollar and
percentage change in those categories:
|
|
September 30, 2023 |
|
|
September 30, 2022 |
|
|
Change |
|
|
% Change |
Research and Development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clinical and non-clinical
trials |
|
$ |
3,365 |
|
|
$ |
3,663 |
|
|
$ |
(298 |
) |
|
|
(8%) |
Compensation |
|
|
763 |
|
|
|
1,050 |
|
|
|
(287 |
) |
|
|
(27%) |
Professional fees and
other |
|
|
339 |
|
|
|
447 |
|
|
|
(108 |
) |
|
|
(24%) |
Research and
Development Total |
|
$ |
4,467 |
|
|
$ |
5,160 |
|
|
$ |
(693 |
) |
|
|
(13%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
Administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation |
|
$ |
1,534 |
|
|
$ |
1,743 |
|
|
$ |
(209 |
) |
|
|
(12%) |
Legal and professional
fees |
|
|
946 |
|
|
|
699 |
|
|
|
247 |
|
|
|
35% |
Insurance and other |
|
|
521 |
|
|
|
603 |
|
|
|
(82 |
) |
|
|
(14%) |
General and
Administrative Total |
|
$ |
3,001 |
|
|
$ |
3,045 |
|
|
$ |
(44 |
) |
|
|
(1%) |
|
Total operating expenses were $7,468 for the three months
ended September 30, 2023, which was a decrease of $737,
or 9%, from the three months ended September 30, 2022. Factors
contributing to the decreased operating expenses for the
three months ended September 30, 2023 are explained below.
Research and Development Expenses: R&D expenses for the
three months ended September 30, 2023 were $4,467,
a decrease of $693 from R&D expenses for the
three months ended September 30, 2022 of $5,160. Key changes
were as follows:
- The decrease in R&D expense was attributed primarily to
decreased spending on clinical and non-clinical trials of
$298 compared to the prior year period due to decreased
spending on (Z)-endoxifen trial costs.
- The decrease in R&D compensation expense for the three
months ended September 30, 2023 compared to the prior year
period was primarily attributable to the decrease in
non-cash stock-based compensation
expense of $300 due to the weighted average fair
value of options amortizing in 2023 being lower quarter over
quarter.
- The decrease in R&D professional fees for the three months
ended September 30, 2023 compared to the prior year period was
primarily attributable to the higher consulting fees in 2022
related to our immunotherapy research.
G&A Expenses: G&A expenses for the three months ended
September 30, 2023, were $3,001, a decrease of $44 from
total G&A expenses for the three months ended September 30,
2022 of $3,045. Key changes were as follows:
- The decrease in G&A compensation expense of $209 for the
three months ended September 30, 2023 compared to the prior year
period, was primarily attributable to the decrease in non-cash
stock-based compensation expense of $440 due to the weighted
average fair value of options amortizing in 2023 being lower
quarter over quarter. This decrease for the three months ended
September 30, 2023 was partially offset by an increase of $231 in
cash compensation due to increase headcount compared to
the prior year period.
- G&A legal and professional fees increased by $247 for
the three months ended September 30, 2023 compared to the
prior year period due to an increase in legal fees for
patent-related activity of $76 and an increase in professional
fees of $171 due to higher investor relations costs.
Interest Income: Interest income was $1,274 for the
three months ended September 30, 2023, an increase of
$1,080 from interest income of $194 for the three months
ended September 30, 2022. The increase was due to the higher
average balance invested in money market funds of $41,905 and
higher average interest rates for the three months ended September
30, 2023 compared to the prior year period.
Comparison of the Nine
Months Ended September 30, 2023 and
2022
Operating Expenses:
The following table provides a breakdown of major categories
within R&D and G&A expenses for the nine months
ended September 30, 2023 and 2022, together with the dollar and
percentage change in those categories:
|
|
September 30, 2023 |
|
|
September 30, 2022 |
|
|
Change |
|
|
% Change |
Research and Development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clinical trials |
|
$ |
8,239 |
|
|
$ |
6,772 |
|
|
$ |
1,467 |
|
|
|
22% |
Compensation |
|
|
2,696 |
|
|
|
3,249 |
|
|
|
(553 |
) |
|
|
(17%) |
Professional fees and
other |
|
|
745 |
|
|
|
776 |
|
|
|
(31 |
) |
|
|
(4%) |
Exclusivity agreements |
|
|
- |
|
|
|
(700 |
) |
|
|
700 |
|
|
|
(100%) |
Research and
Development Total |
|
$ |
11,680 |
|
|
$ |
10,097 |
|
|
$ |
1,583 |
|
|
|
16% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
Administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation |
|
$ |
6,153 |
|
|
$ |
5,573 |
|
|
$ |
580 |
|
|
|
10% |
Legal and professional
fees |
|
|
2,835 |
|
|
|
2,044 |
|
|
|
791 |
|
|
|
39% |
Insurance and other |
|
|
1,690 |
|
|
|
1,839 |
|
|
|
(149 |
) |
|
|
(8%) |
General and
Administrative Total |
|
$ |
10,678 |
|
|
$ |
9,456 |
|
|
$ |
1,222 |
|
|
|
13% |
|
Total operating expenses were $22,358 for the nine months
ended September 30, 2023, which was an increase of $2,805, or
14%, from the nine months ended September 30, 2022. Factors
contributing to the increased operating expenses for the
nine months ended September 30, 2023 are explained below.
Research and Development Expenses: R&D expenses for the
nine months ended September 30, 2023, were $11,680, an increase of
$1,583 from total R&D expenses for the nine months ended
September 30, 2022 of $10,097. Key changes were as
follows:
- The increase in R&D expense was primarily due to increased
spending on clinical and non-clinical trials of $1,467 compared to
the prior year period due to increased spending
on (Z)-endoxifen trial costs.
- The decrease in R&D compensation expense for the nine
months ended September 30, 2023 compared to the prior year
period was primarily due to a decrease in non-cash
stock-based compensation of $588. Non-cash stock-based
compensation decreased compared to the prior year
period due to the weighted average fair value of options
amortizing in 2023 being lower period over period.
- An exclusivity agreement refund in the prior year period
of $1,000 from a research institution with which the Company
had an exclusive right to negotiate for the acquisition of
worldwide rights of two oncology programs. No
exclusivity payments were made or refunded during the nine
months ended September 30, 2023.
G&A Expenses: G&A expenses for the nine months ended
September 30, 2023, were $10,678, an increase of
$1,222 from total G&A expenses for quarter ended September
30, 2022 of $9,456. Key changes were as follows:
- The increase in G&A compensation expense of $580 for
the nine months ended September 30, 2023 compared to the prior
year period partially due to an increase in cash compensation
expense of $1,133, offset by a decrease in non-cash
stock-based compensation of $553. The increase in compensation
expense compared to the prior year period was primarily
driven by salary and bonus severance costs for our
former General Counsel and Chief Financial Officer
(CFO) of $554, an increase of $579 due to compensation
for new employees as well as an increase in salaries, bonus and
benefits overall. Non-cash stock-based compensation
decreased by $553 in part due to a decrease in other
employee non-cash stock-based compensation expense of $873 due
to the decrease in the weighted average fair value of options
amortizing in 2023 was lower period over period. This
decrease was partially offset by the acceleration of
expense recognized for options granted to the CFO of
$320.
- G&A legal and professional fees increased by $791 for
the nine months ended September 30, 2023 compared to the
prior year period due to an increase in legal fees for higher
patent-related activity of $421 and an increase in
professional fees of $370 primarily due to
higher investor relations costs.
Interest Income: Interest income was $3,107 for the
nine months ended September 30, 2023, an increase of
$2,900 from interest income of $207 for the nine months
ended September 30, 2022. The increase was due to the higher
average balance invested in a money market funds of $44,513
and higher average interest rates for the nine months ended
September 30, 2023 compared to the prior year period.
Impairment Charge on Investment in Equity Securities: For the
nine months ended September 30, 2023, we wrote down our
investment in DCT by $2,990 due to an impairment. For the
nine months ended September 30, 2022 there was no
investment in equity securities or related
impairment.
About (Z)-Endoxifen(Z)-endoxifen is the most
active metabolite of the FDA approved Selective Estrogen Receptor
Modulator (SERM), tamoxifen. Studies by others have demonstrated
that the therapeutic effects of tamoxifen are driven in a
concentration-dependent manner by (Z)-endoxifen. In addition to its
potent anti-estrogen effects, (Z)-endoxifen at higher
concentrations has been shown to target PKCβ1, a known oncogenic
protein.
Atossa is developing a proprietary oral formulation of
(Z)-endoxifen that does not require liver metabolism to achieve
therapeutic concentrations and is encapsulated to bypass the
stomach as acidic conditions in the stomach convert a greater
proportion of (Z)-endoxifen to the inactive (E)-endoxifen. Atossa’s
(Z)-endoxifen has been shown to be well tolerated in Phase 1
studies and in a small Phase 2 study of women with breast cancer.
(Z)-endoxifen is currently being studied in four Phase 2 trials:
one in healthy women with measurable breast density, one in women
diagnosed with ductal carcinoma in situ, and two other studies
including the EVANGELINE study, in women with ER+/HER2- breast
cancer. Atossa’s (Z)-endoxifen is protected by three issued U.S.
patents and numerous pending patent applications.
About Atossa TherapeuticsAtossa Therapeutics,
Inc. is a clinical-stage biopharmaceutical company developing
innovative medicines in areas of significant unmet medical need in
oncology with a focus on breast cancer. For more information,
please visit www.atossatherapeutics.com
ContactEric Van ZantenVP, Investor and Public
Relations610-529-6219eric.vanzanten@atossainc.com
FORWARD LOOKING STATEMENTSThis press release
contains certain information that may constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. We may identify these forward-looking
statements by the use of words such as “expect,” “potential,”
“continue,” “may,” “will,” “should,” “could,” “would,” “seek,”
“intend,” “plan,” “estimate,” “anticipate,” “believe,” “future,” or
other comparable words. Forward-looking statements in this press
release are subject to risks and uncertainties that may cause
actual results, outcomes, or the timing of actual results or
outcomes, to differ materially from those projected or anticipated,
including risks and uncertainties associated with: macroeconomic
conditions and increasing geopolitical instability; the expected
timing of releasing data; any variation between interim and final
clinical results; actions and inactions by the FDA and foreign
regulatory bodies; the outcome or timing of regulatory approvals
needed by Atossa, including those needed to continue our planned
(Z)-endoxifen trials; our ability to satisfy regulatory
requirements; our ability to regain compliance with the continued
listing requirements of the Nasdaq Stock Market; our ability to
successfully develop and commercialize new therapeutics; the
success, costs and timing of our development activities, including
our ability to successfully initiate or complete our clinical
trials, including our (Z)-endoxifen trials; our anticipated rate of
patient enrollment; our ability to contract with third-parties and
their ability to perform adequately; our estimates on the size and
characteristics of our potential markets; our ability to
successfully defend litigation and other similar complaints and to
establish and maintain intellectual property rights covering our
products; whether we can successfully complete our clinical trial
of oral (Z)-endoxifen in women with mammographic breast density and
our trials of (Z)-endoxifen in women with breast cancer, and
whether the studies will meet their objectives; our expectations as
to future financial performance, expense levels and capital
sources, including our ability to raise capital; our ability to
attract and retain key personnel; our anticipated working capital
needs and expectations around the sufficiency of our cash reserves;
and other risks and uncertainties detailed from time to time in
Atossa’s filings with the Securities and Exchange Commission,
including without limitation its Annual Reports on Form 10-K and
Quarterly Reports on 10-Q. Forward-looking statements are presented
as of the date of this press release. Except as required by law, we
do not intend to update any forward-looking statements, whether as
a result of new information, future events or circumstances or
otherwise.
ATOSSA THERAPEUTICS, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(amounts in thousands, except for par value) |
(Unaudited) |
|
|
|
As of September 30, |
|
|
As of December 31, |
|
|
|
2023 |
|
|
2022 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
94,031 |
|
|
$ |
110,890 |
|
Restricted cash |
|
|
110 |
|
|
|
110 |
|
Prepaid expenses |
|
|
3,472 |
|
|
|
4,031 |
|
Research and development rebate receivable |
|
|
28 |
|
|
|
743 |
|
Other current assets |
|
|
7 |
|
|
|
2,423 |
|
Total current assets |
|
|
97,648 |
|
|
|
118,197 |
|
|
|
|
|
|
|
|
|
|
Investment in equity securities |
|
|
1,710 |
|
|
|
4,700 |
|
Other assets |
|
|
2,337 |
|
|
|
635 |
|
Total Assets |
|
$ |
101,695 |
|
|
$ |
123,532 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
718 |
|
|
$ |
2,965 |
|
Accrued expenses |
|
|
1,261 |
|
|
|
1,059 |
|
Payroll liabilities |
|
|
1,444 |
|
|
|
1,525 |
|
Other current liabilities |
|
|
21 |
|
|
|
19 |
|
Total current liabilities |
|
|
3,444 |
|
|
|
5,568 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
3,444 |
|
|
|
5,568 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
Series B convertible preferred stock - $0.001 par value; 10,000
shares authorized; 1 share issued and outstanding as of September
30, 2023 and December 31, 2022 |
|
|
- |
|
|
|
- |
|
Additional paid-in capital - Series B convertible preferred
stock |
|
|
582 |
|
|
|
582 |
|
Common stock - $0.18 par value; 175,000 shares authorized; 125,304
and 126,624 shares issued and outstanding as of September 30, 2023
and December 31, 2022, respectively |
|
|
22,792 |
|
|
|
22,792 |
|
Additional paid-in capital - common stock |
|
|
254,886 |
|
|
|
250,784 |
|
Treasury stock, at cost; 1,320 and 0 shares of common stock at
September 30, 2023 and December 31, 2022, respectively |
|
|
(1,475 |
) |
|
|
- |
|
Accumulated deficit |
|
|
(178,534 |
) |
|
|
(156,194 |
) |
Total Stockholders' Equity |
|
|
98,251 |
|
|
|
117,964 |
|
Total Liabilities and Stockholders' Equity |
|
$ |
101,695 |
|
|
$ |
123,532 |
|
ATOSSA THERAPEUTICS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS |
(amounts in thousands, except for per share
amounts) |
(Unaudited) |
|
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
4,467 |
|
|
$ |
5,160 |
|
|
$ |
11,680 |
|
|
$ |
10,097 |
|
General and
administrative |
|
|
3,001 |
|
|
|
3,045 |
|
|
|
10,678 |
|
|
|
9,456 |
|
Total operating expenses |
|
|
7,468 |
|
|
|
8,205 |
|
|
|
22,358 |
|
|
|
19,553 |
|
Operating loss |
|
|
(7,468 |
) |
|
|
(8,205 |
) |
|
|
(22,358 |
) |
|
|
(19,553 |
) |
Impairment charge on
investment in equity securities |
|
|
- |
|
|
|
- |
|
|
|
(2,990 |
) |
|
|
- |
|
Interest income |
|
|
1,274 |
|
|
|
194 |
|
|
|
3,107 |
|
|
|
207 |
|
Other expense, net |
|
|
(35 |
) |
|
|
- |
|
|
|
(99 |
) |
|
|
(123 |
) |
Loss before income taxes |
|
|
(6,229 |
) |
|
|
(8,011 |
) |
|
|
(22,340 |
) |
|
|
(19,469 |
) |
Income taxes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net loss |
|
|
(6,229 |
) |
|
|
(8,011 |
) |
|
|
(22,340 |
) |
|
|
(19,469 |
) |
Foreign currency translation
adjustment |
|
|
- |
|
|
|
(54 |
) |
|
|
- |
|
|
|
(54 |
) |
Comprehensive loss |
|
|
(6,229 |
) |
|
|
(8,065 |
) |
|
|
(22,340 |
) |
|
|
(19,523 |
) |
Loss per share of common stock
- basic and diluted |
|
$ |
(0.05 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.18 |
) |
|
$ |
(0.15 |
) |
Weighted average shares
outstanding - basic and diluted |
|
|
125,793 |
|
|
|
126,624 |
|
|
|
126,344 |
|
|
|
126,624 |
|
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