Atossa Therapeutics Announces Year-End 2022 Financial Results and Provides Corporate Update
Key developments from Q4 2022 and year to date include:
Atossa Therapeutics (NASDAQ:ATOS)
Intraday Stock Chart
Friday 24 March 2023
Atossa Therapeutics, Inc. (Nasdaq: ATOS), a clinical stage biopharmaceutical company developing innovative proprietary medicines to address significant unmet needs in cancer, today announced financial results for the fiscal quarter and fiscal year ended December 31, 2022 and provided an update on recent company developments.
Key developments from Q4 2022 and year to date include:
Initiation and First Patient Dosed in Phase 2 EVANGELINE Study – EVANGELINE (Endoxifen Versus exemestANe GosEreLIn), is our Phase 2 randomized non-inferiority study of (Z)-endoxifen compared to exemestane plus goserelin as a neoadjuvant treatment for premenopausal women with Grade 1 or 2 ER+ / HER2- breast cancer. Participants receive neoadjuvant treatment for up to six months, followed by surgery. Several FDA-approved neoadjuvant therapies exist for ER- breast cancers, but few exist for ER+ patients, which account for approximately 78% of breast cancers. We expect to enroll approximately 175 patients at up to 25 sites across the United States.
Continued Enrollment in Phase 2 Karisma-Endoxifen Study – The Karisma-Endoxifen study is our randomized, double-blind, placebo-controlled trial of healthy, pre-menopausal women with increased breast density. The treatment cohort receives daily doses of (Z)-endoxifen for six months, over the course of which mammograms will be conducted to measure reduction in mammographic breast density (MBD). Patients will also be given a mammogram at 24 months to assess the durability of the MBD changes. MBD affects more than 10 million women in the United States and many millions more worldwide. Increased MBD reduces the ability of mammograms to detect cancer. Studies have also shown that women with MBD have an increased risk of developing breast cancer and that the higher the MBD, the higher the incidence of breast cancer. We expect to fully enroll the study by the end of 2023.
Initiation of New Study Arm in the Ongoing Phase 2 I-SPY 2 Clinical Trial – (Z)-endoxifen is being evaluated in a new study arm of the ongoing I-SPY 2 clinical trial. The I-SPY 2 trial evaluates neoadjuvant treatments for locally advanced breast cancer and is a collaborative effort among academic investigators from major cancer research centers across the United States, Quantum Leap Healthcare Collaborative, the U.S. Food and Drug Administration, and the Foundation for the National Institutes of Health (FNIH) Cancer Biomarkers Consortium. Approximately 20 patients will be treated with (Z)-endoxifen for up to 24 weeks prior to surgery.
Additional Intellectual Property Protection for (Z)-endoxifen – The United States Patent and Trademark Office granted a new patent (No. 11,572,334) directed to (Z)-endoxifen encapsulated in an enteric capsule. Enteric capsules have an acid resistant coating to prevent them from dissolving when they pass through the stomach. Enteric capsules are dissolved when they pass through an alkaline environment, which is usually when they reach the small intestine. Delivering oral (Z)-endoxifen via an enteric capsule prevents breakdown of the endoxifen in the stomach. This patent further reinforces Atossa’s broad Intellectual Property portfolio related to (Z)-endoxifen.
Investment in Dynamic Cell Therapies, Inc. (DCT) – DCT is a privately held, venture capital backed developer of CAR-T therapies in the pre-clinical phase of developing controllable CAR-T cells to address difficult-to-treat cancers. Its platform technology of dynamic control of engineered T-cells is designed to improve the safety, efficacy, and durability of CAR-T cell therapies. Our investment totaled $4.7 million and resulted in Atossa owning approximately 19% of the outstanding capital stock of DCT.
“Our focus remains on both helping reduce the incidence of breast cancer and changing the treatment paradigm for patients who are not benefiting from, or are unable to tolerate, currently approved therapies,” said Dr. Steven Quay, Atossa’s President and Chief Executive Officer. “With a strong balance sheet and three Phase 2 trials underway, we are well positioned to continue accelerating the development of (Z)-endoxifen, which we feel has the potential to address significant unmet needs across the continuum of breast cancer.”
YEAR ENDED DECEMBER 31, 2022, FINANCIAL RESULTS (IN THOUSANDS)
As of December 31, 2022, we had cash, cash equivalents and restricted cash of $111,000.
Results of Operations
Comparison of Years Ended December 31, 2022and 2021
Revenue and Cost of Revenue:
For the years ended December 31, 2022and 2021, we have no source of sustainable revenue and no associated cost of revenue.
The following table provides a breakdown of major categories within Research and Development (R&D) and General and Administrative (G&A) expenses for the years ended December 31, 2022 and2021, together with the dollar change in those categories:
|Research and Development|
|Research and Development Total||$||15,083||$||9,210||$||5,873|
|General and Administrative|
|General and Administrative Total||$||12,608||$||11,311||$||1,297|
Total operating expenses were $27,691for the year ended December 31, 2022, which wasan increase of $7,170, or 35%from the year ended December 31, 2021. Operating expenses for 2022consisted of R&Dexpenses of $15,083and G&Aexpenses of $12,608. Operating expenses for 2021consisted of R&D expenses of $9,210and G&A expenses of $11,311. Factors contributing tothe increasedoperating expenses in the year ended December 31, 2022 areexplained below.
R&DExpenses: R&D expenses for the year ended December 31, 2022, were $15,083, an increase of $5,873or 64% from total R&D expenses for the year ended December 31,2021of $9,210. Key changes were as follows:
- The increase in R&D expense was attributed primarilyto increased spending on clinical and non-clinical trials of $5,569 compared to the prior year perioddue to additional pre-clinical toxicology studies inour (Z)-endoxifen and AT-H201 programs as well as increasedtrial costs and manufacturing expenses for (Z)-endoxifen.
- R&D compensation increased$393 in 2022 compared to the prior year period due to increased headcount, salary, bonuses andbenefits during 2022.
- Stock-based compensation, which is a non-cash charge,increased$802 due to the increased number of options being expensedas well as theweighted average fairvalue of options amortizing in 2022 was higher compared to the prior year period.
- Professional fees increased $788 compared to the prior year period,due primarily to a CAR-T technology market analysis performed during 2022.
- In 2022, the Companyreceiveda refund of$1,000 from the research institutionwith whichthe Company had an exclusive right tonegotiate for the acquisition of the worldwide rights to two oncology R&D programs.In 2021, R&D expenses included $1,000attributable to the same one-time exclusivity fee.Finally, in 2022, wepaid $300for the exclusive right to negotiate with anotherCAR-T Company. Net,theexclusivity agreements caused a decrease in expenses of $1,700 compared to the prior year period.
G&A Expenses: G&A expenses were $12,608for the year ended December 31, 2022, an increase of $1,297, or 11%from total G&A expenses for the year ended December 31, 2021of $11,311.Key changes were as follows:
- The increase in G&A expense for the year ended December 31, 2022 compared to the prior year period, wasinpartattributable to the increase in compensation expense of$663 in 2022 due to an increase in headcount,hourly wages, salariesandbonus accruals.
- Non-cash stock-based compensationexpense also increased by $719due to the increased number of options being expensedas well as theweighted average fairvalue of options amortizing in 2022 was higher compared to the prior year period.
- Professional feesdecreased by $692 in 2022 compared to the prior year period, due primarily to a decrease inproxy costs for investor outreach.
- Legal feesincreased $601 in 2022 compared to the prior year period, due to higher patent activity in 2022 for (Z)-endoxifen and our immunotherapy research.
Interest Income:Interest incomewas $877for the year ended December 31, 2022 compared to the prior year period of $6. The increase isdue to theinvestment of an additional $50,000in a money market account during 2022 and higher average interest rates for the year ended December 31, 2022 compared to 2021.
|ATOSSA THERAPEUTICS, INC.|
|CONSOLIDATED BALANCE SHEETS|
|(amounts in thousands, except for par value)|
|As of December 31,|
|Cash and cash equivalents||$||110,890||$||136,377|
|Research and development tax rebate receivable||743||1,072|
|Other current assets||2,423||1,193|
|Total current assets||118,197||141,240|
|Investment in equity securities||4,700||-|
|Liabilities and Stockholders' Equity|
|Other current liabilities||19||21|
|Total current liabilities||5,568||3,126|
|Commitments and contingencies|
|Series B convertible preferred stock - $0.001 par value; 10,000 shares authorized; 1 shares issued and outstanding as of December 31, 2022 and December 31, 2021||-||-|
|Additional paid-in capital - Series B convertible preferred stock||582||582|
|Common stock - $0.18 par value; 175,000 shares authorized; 126,624 shares issued and outstanding as of December 31, 2022 and December 31, 2021||22,792||22,792|
|Additional paid-in capital - common stock||250,784||243,996|
|Total Stockholders' Equity||117,964||138,136|
|Total Liabilities and Stockholders' Equity||$||123,532||$||141,262|
|ATOSSA THERAPEUTICS, INC.|
|CONSOLIDATED STATEMENTS OF OPERATIONS|
|(amounts in thousands, except for per share amounts)|
|For the Year Ended|
|Research and development||$||15,083||$||9,210|
|General and administrative||12,608||11,311|
|Total operating expenses||27,691||20,521|
|Other expense, net||(146||)||(91||)|
|Loss before income taxes||(26,960||)||(20,606||)|
|Loss per share of common stock - basic and diluted||$||(0.21||)||$||(0.18||)|
|Weighted average shares outstanding - basic and diluted||126,624||116,950|
ABOUT ATOSSA THERAPEUTICS
Atossa Therapeutics, Inc. is a clinical-stage biopharmaceutical company developing innovative medicines in areas of significant unmet medical need in oncology with a current focus on breast cancer. For more information, please visit www.atossatherapeutics.com
General Counsel and Chief Financial Officer
Eric Van Zanten
VP, Investor and Public Relations
FORWARD LOOKING STATEMENTS
Forward-looking statements in this press release, which Atossa undertakes no obligation to update, are subject to risks and uncertainties that may cause actual results to differ materially from the anticipated or estimated future results, including the risks and uncertainties associated with any variation between interim and final clinical results, actions and inactions by the FDA, the outcome or timing of regulatory approvals needed by Atossa including those needed to commence studies of (Z)-endoxifen, lower than anticipated rate of patient enrollment, estimated market size of drugs under development, the safety and efficacy of Atossa’s products, performance of clinical research organizations and investigators, obstacles resulting from proprietary rights held by others such as patent rights, whether reduction in breast density or in Ki-67 or any other result from a neoadjuvant study is an approvable endpoint for (Z)-endoxifen, whether Atossa can complete acquisitions, and other risks detailed from time to time in Atossa’s filings with the Securities and Exchange Commission, including without limitation its periodic reports on Form 10-K and 10-Q, each as amended and supplemented from time to time.