```markdown [Summary Risk Factors](index=4&type=section&id=Summary%20Risk%20Factors) [Summary of Principal Risks](index=4&type=section&id=Summary%20of%20Principal%20Risks) Athira, a clinical-stage biopharmaceutical firm, faces risks from limited operating history, significant losses, uncertain drug development, and funding needs - The company is a clinical-stage biopharmaceutical firm with a limited operating history and has incurred **significant losses** since inception[8](index=8&type=chunk)[10](index=10&type=chunk) - Development of the primary drug candidate, ATH-1105, is uncertain and may not lead to a marketable product, with research concentrated in high-risk nervous system degenerative disorders[8](index=8&type=chunk) - **Substantial additional funding** is required to finance operations and complete drug development, with failure to raise capital potentially forcing program delays or elimination[8](index=8&type=chunk) - The company faces risks from potential delisting from Nasdaq due to non-compliance with listing requirements and has been subject to activist stockholder actions[10](index=10&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Athira Pharma's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with accompanying notes [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets decreased to \$43.5 million, primarily due to reduced cash, while total liabilities also significantly decreased to \$6.2 million Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | \$26,422 | \$48,438 | | Total current assets | \$39,853 | \$54,841 | | Total assets | \$43,513 | \$58,779 | | Accrued liabilities | \$4,199 | \$12,402 | | Total liabilities | \$6,183 | \$13,938 | | Total stockholders' equity | \$37,330 | \$44,841 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For Q1 2025, net loss significantly reduced to \$9.1 million (\$0.23 per share) from \$26.3 million in Q1 2024, primarily due to lower R&D expenses Q1 Operating Results (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Research and development | \$4,302 | \$21,236 | | General and administrative | \$5,234 | \$6,451 | | Total operating expenses | \$9,536 | \$27,687 | | Loss from operations | (\$9,536) | (\$27,687) | | Net loss | (\$9,143) | (\$26,337) | | Net loss per share | (\$0.23) | (\$0.69) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity decreased by \$7.5 million to \$37.3 million in Q1 2025, driven by net loss partially offset by stock-based compensation - **Total stockholders' equity** decreased by **\$7.5 million** during **Q1 2025**, from **\$44.8 million** to **\$37.3 million**[18](index=18&type=chunk) - The main drivers of the change in equity were the **net loss** of **\$9.1 million** and stock-based compensation of **\$1.6 million**[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities decreased to \$14.7 million in Q1 2025, with a total net decrease in cash of \$22.0 million, ending the period at \$27.1 million Q1 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | (\$14,665) | (\$25,804) | | Net cash (used in) provided by investing activities | (\$7,351) | \$13,041 | | Net cash provided by financing activities | \$0 | \$0 | | Net decrease in cash | (\$22,016) | (\$12,763) | | Cash, cash equivalents and restricted cash, end of period | \$27,053 | \$78,452 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail liquidity, confirming \$36.7 million cash sufficient for 12 months, and explain the September 2024 restructuring and R&D expense breakdown - As of **March 31, 2025**, the company had **\$36.7 million** in **cash, cash equivalents, and investments**, which is estimated to be sufficient to fund operations for at least the next **12 months**[26](index=26&type=chunk)[27](index=27&type=chunk) - In **September 2024**, the company underwent a restructuring, reducing its workforce by approximately **70%**. The remaining **\$0.4 million** in accrued costs were settled in **Q1 2025**[49](index=49&type=chunk)[50](index=50&type=chunk) R&D Expenses by Program (in thousands) | Program | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Fosgonimeton (ATH-1017) | \$1,307 | \$14,263 | | ATH-1105 | \$924 | \$0 | | ATH-1020 | \$5 | \$82 | - **Total unrecognized compensation cost** related to non-vested stock options was **\$7.7 million** as of **March 31, 2025**, expected to be recognized over a weighted-average period of **1.99 years**[79](index=79&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, strategic shift to ATH-1105 after fosgonimeton's failure, significant expense reductions, and the need for future funding despite current liquidity - The company has paused development of its previous lead candidate, fosgonimeton, after its Phase **2/3** LIFT-AD trial failed to meet primary and key secondary endpoints in **September 2024**[94](index=94&type=chunk) - The company's focus has shifted to the clinical development of ATH-1105, an orally available small molecule for the potential treatment of ALS. A Phase **1** trial was completed in **November 2024**, showing a favorable safety profile[93](index=93&type=chunk) - Athira is exploring strategic alternatives, including a potential merger, sale, or other transactions, and has engaged Cantor Fitzgerald & Co. as an advisor[100](index=100&type=chunk) - Existing **cash, cash equivalents, and investments** of **\$36.7 million** as of **March 31, 2025**, are expected to fund operations and capital requirements through at least the next **12 months**[104](index=104&type=chunk)[125](index=125&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Total operating expenses decreased by **66%** to \$9.5 million in Q1 2025, primarily driven by an **80%** reduction in R&D costs due to the fosgonimeton program Operating Expense Comparison (in thousands) | Expense Category | Q1 2025 | Q1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Research and development | \$4,302 | \$21,236 | (\$16,934) | (80)% | | General and administrative | \$5,234 | \$6,451 | (\$1,217) | (19)% | | **Total operating expenses** | **\$9,536** | **\$27,687** | **(\$18,151)** | **(66)%** | - The **\$16.9 million** decrease in **R&D expenses** was primarily driven by a **\$13.0 million** reduction in costs for the fosgonimeton program, following the completion of its Phase **2/3** LIFT-AD trial[118](index=118&type=chunk) - **General and administrative expenses** decreased by **\$1.3 million**, mainly due to a **\$1.6 million** reduction in personnel-related expenses, partially offset by a **\$0.6 million** increase in legal expenses[119](index=119&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company had \$36.7 million in cash, sufficient for 12 months, but anticipates needing future funding, potentially via its \$75.0 million ATM facility - The company has an existing "at the market" (ATM) equity offering facility to sell up to **\$75.0 million** in common stock, but no securities have been sold under this program as of the report date[125](index=125&type=chunk) Cash Flow Summary for Q1 (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | (\$14,665) | (\$25,804) | | Net cash (used in) provided by investing activities | (\$7,351) | \$13,041 | | Net decrease in cash | (\$22,016) | (\$12,763) | - **Net cash used in operations** in **Q1 2025** was **\$14.7 million**, consisting of a **\$9.1 million** **net loss**, adjusted for non-cash charges of **\$1.9 million** and a **\$7.4 million** increase in net operating assets[130](index=130&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Athira is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Athira is exempt from providing quantitative and qualitative disclosures about market risk under Item **305** of Regulation S-K[143](index=143&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as March 31, 2025, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of **March 31, 2025**[145](index=145&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended **March 31, 2025**, that have materially affected, or are reasonably likely to materially affect, internal controls[146](index=146&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) As of March 31, 2025, the company is not party to any legal proceedings expected to materially adversely affect its business or financial condition - The company is not currently party to any legal proceedings expected to have a material adverse effect on its business[148](index=148&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section outlines numerous risks, including those related to business, drug development (ATH-1105 dependence), financial stability, strategic alternatives, regulatory approval, and potential Nasdaq delisting - The company's prospects are highly dependent on the successful development of ATH-1105, as development of its previous lead candidate, fosgonimeton, has been paused[158](index=158&type=chunk) - The company will require **substantial additional funding** and may be forced to delay or eliminate programs if unable to raise capital. Existing cash is projected to last through at least the next **12 months**[200](index=200&type=chunk)[202](index=202&type=chunk) - The company is exploring strategic alternatives, but there is no assurance that this process will result in a transaction. This process is costly and diverts management attention[225](index=225&type=chunk) - The company failed to comply with Nasdaq's minimum bid price requirement and transferred to the Nasdaq Capital Market to gain an additional **180-day** grace period (until **October 13, 2025**) to regain compliance, which may involve a reverse stock split[402](index=402&type=chunk)[403](index=403&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=105&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period covered by this report - There were no sales of unregistered equity securities in the reported quarter[440](index=440&type=chunk) [Item 5. Other Information](index=105&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the last fiscal quarter - No director or officer adopted or terminated a Rule **10b5-1** or non-Rule **10b5-1** trading arrangement in the last fiscal quarter[443](index=443&type=chunk) [Item 6. Exhibits](index=106&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate documents and certifications from the Principal Executive and Financial Officers - The exhibits include certifications from the CEO and principal financial officer pursuant to Sections **302** and **906** of the Sarbanes-Oxley Act[445](index=445&type=chunk) ```

[Business and Pipeline Update](index=1&type=section&id=Business%20and%20Pipeline%20Update) Athira Pharma focuses on advancing ATH-1105 for ALS, having completed a Phase 1 study and planning patient dosing in late 2025 - The company's primary focus is advancing ATH-1105 as a potential therapy for ALS, citing encouraging preclinical evidence of improved nerve function and a favorable safety profile in human trials[3](index=3&type=chunk) - Completed the first-in-human Phase 1 clinical trial of ATH-1105 in 80 healthy volunteers, which demonstrated a favorable safety profile and supported continued development[1](index=1&type=chunk)[5](index=5&type=chunk) - The company is on schedule to enable the dosing of ALS patients in late 2025, with full results from the Phase 1 healthy volunteer trial expected in the second half of 2025[1](index=1&type=chunk)[3](index=3&type=chunk)[5](index=5&type=chunk) - Athira will present Phase 1 and nonclinical efficacy data for ATH-1105 at the 4th Annual ALS Drug Development Summit on May 13, 2025[7](index=7&type=chunk)[8](index=8&type=chunk) [Exploration of Strategic Alternatives](index=2&type=section&id=Exploration%20of%20Strategic%20Alternatives) Following the LIFT-AD trial failure, Athira is exploring strategic alternatives with Cantor Fitzgerald & Co. and has paused fosgonimeton development - After the LIFT-AD trial for fosgonimeton failed to meet its endpoints in September 2024, the company initiated a process to explore strategic alternatives to maximize stockholder value[10](index=10&type=chunk) - Cantor Fitzgerald & Co. has been engaged to act as an advisor in the strategic alternatives process[10](index=10&type=chunk) - Further development of fosgonimeton, including its open-label extension trial, has been paused[10](index=10&type=chunk) [First Quarter 2025 Financial Results](index=2&type=section&id=Financial%20Results) Athira reported a reduced net loss of **$9.1 million** in Q1 2025, driven by lower R&D expenses, with **$36.7 million** in cash Q1 2025 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Cash, cash equivalents and investments | $36.7 million | N/A | | Net cash used in operations | $14.7 million | $25.8 million | | R&D Expenses | $4.3 million | $21.2 million | | G&A Expenses | $5.2 million | $6.5 million | | Net Loss | $9.1 million | $26.3 million | | Net Loss per Share | $0.23 | $0.69 | - The decrease in R&D expenses was primarily driven by lower costs associated with the fosgonimeton program and reduced personnel-related expenses[10](index=10&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Athira's total assets decreased to **$43.5 million** as of March 31, 2025, primarily due to reduced cash, with total liabilities also significantly decreasing Condensed Consolidated Balance Sheets (in thousands) | Account | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $26,422 | $48,438 | | Total assets | $43,513 | $58,779 | | **Liabilities and Stockholders' Equity** | | | | Total liabilities | $6,183 | $13,938 | | Stockholders' equity | $37,330 | $44,841 | | Total liabilities and stockholders' equity | $43,513 | $58,779 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported a net loss of **$9.1 million** for Q1 2025, a significant improvement from **$26.3 million** in Q1 2024, driven by reduced operating expenses Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Research and development | $4,302 | $21,236 | | General and administrative | $5,234 | $6,451 | | **Total operating expenses** | **$9,536** | **$27,687** | | **Net loss** | **$(9,143)** | **$(26,337)** | | **Net loss per share, basic and diluted** | **$(0.23)** | **$(0.69)** |

Core Viewpoint - Athira Pharma is advancing its clinical development of ATH-1105 as a potential treatment for amyotrophic lateral sclerosis (ALS), with a focus on demonstrating safety and efficacy in upcoming trials [2][3][5]. Clinical Development & Pipeline Programs - ATH-1105 is a next-generation small molecule designed to modulate the neurotrophic hepatocyte growth factor (HGF) system, which is involved in neuroprotection and anti-inflammatory pathways [4][5]. - The Phase 1 clinical trial of ATH-1105 was completed in November 2024, involving 80 healthy volunteers, and showed a favorable safety profile [8]. - Full results from the Phase 1 trial are expected to be shared in the second half of 2025, with plans to begin dosing ALS patients by late 2025 [3][8]. Financial Results - As of March 31, 2025, the company reported cash, cash equivalents, and investments totaling $36.7 million, down from $51.3 million at the end of 2024 [12]. - Research and Development (R&D) expenses for the quarter were $4.3 million, significantly lower than $21.2 million for the same period in 2024, primarily due to reduced costs associated with the fosgonimeton program [12]. - The net loss for the quarter was $9.1 million, or $0.23 per share, compared to a net loss of $26.3 million, or $0.69 per share, for the same quarter in 2024 [12][19]. Upcoming Presentation - Athira will present Phase 1 and nonclinical efficacy data for ATH-1105 at the 4th Annual ALS Drug Development Summit from May 12-14, 2025, in Boston, Massachusetts [6][7].

Clinical Trials and Drug Development - The primary and secondary endpoints of the Phase 2 ACT-AD clinical trial of fosgonimeton in Alzheimer's Disease (AD) were not met, with a post hoc analysis showing a non-statistically significant improvement in cognitive performance [153]. - The topline data from the Phase 2/3 LIFT-AD clinical trial of fosgonimeton indicated that neither the primary endpoint nor key secondary endpoints reached statistical significance compared to placebo at 26 weeks [154]. - Following the LIFT-AD results, the company announced a focus on advancing the clinical development program for ATH-1105 as a potential treatment for Amyotrophic Lateral Sclerosis (ALS) [155]. - ATH-1105 completed its first-in-human Phase 1 clinical trial in November 2024, demonstrating a favorable safety profile and tolerability in healthy volunteers [155]. - The company has decided to pause further development of fosgonimeton after its Phase 2 ACT-AD clinical trial did not meet primary and secondary endpoints [169]. - The Phase 1a/b clinical trial of fosgonimeton enrolled 88 patients, with only 11 patients having mild-to-moderate Alzheimer's Disease (AD), showing some improvements in brain network activity [168]. - The company may initiate open-label trials for its product candidates, which could introduce biases affecting the interpretation of results [172]. - There is a high attrition rate for drug candidates in clinical trials, with many failing to demonstrate safety and efficacy despite earlier promising results [170]. - The company may face significant challenges in developing and commercializing drug candidates for CNS and PNS disorders, including regulatory approval and optimal dose selection [166]. - Clinical development is lengthy and expensive, with uncertain outcomes, and early studies may not predict results in larger trials [167]. Financial Position and Revenue Generation - The company anticipates no revenue from drug product sales for the next several years, if ever, as it has no approved drug products [159]. - The company reported that as of December 31, 2024, it had cash, cash equivalents, and investments totaling $51.3 million, which is expected to fund operations for at least the next 12 months [203]. - The company incurred net losses of $96.9 million and $117.7 million for the years ended December 31, 2024 and 2023, respectively, with an accumulated deficit of $406.1 million as of December 31, 2024 [208]. - The company has not generated any revenue from drug product sales and anticipates significant future expenses related to research and development, including clinical studies and manufacturing [210]. - The company has federal net operating loss carryforwards of approximately $196.0 million generated after the 2017 tax year, which will carry forward indefinitely but are subject to an 80% limitation of taxable income [219]. - The company recorded a full valuation allowance related to its net operating losses and other deferred tax assets due to uncertainty regarding future realizations [222]. - The company has financed its operations primarily through the sale of common stock and convertible notes, with limited income from grants and stock option exercises [209]. Regulatory Challenges and Compliance - The regulatory approval processes for the company's drug candidates are lengthy and unpredictable, potentially delaying commercialization and revenue generation [231]. - The company has not submitted for or obtained regulatory approval for any drug candidate, and it is possible that none will ever receive approval [233]. - The lengthy approval process and unpredictability of clinical trial results may result in failure to obtain regulatory approval for drug candidates, significantly harming the company's business and prospects [235]. - A small percentage of drugs in development successfully complete the FDA approval process, indicating high risks associated with regulatory approval [236]. - Regulatory authorities may approve drug candidates for fewer or more limited indications than requested, affecting commercialization strategies [235]. - Obtaining regulatory approval in one jurisdiction does not guarantee approval in others, leading to potential delays and increased costs [243]. - The FDA's ability to review and approve new products can be affected by various factors, including political changes and funding levels, which may disrupt normal operations [250]. - The company intends to seek FDA feedback before pursuing accelerated approval for drug candidates, with no assurance of successful submission or timely approval [253]. - Legislative changes, including the FDORA, have reformed the accelerated approval pathway, potentially impacting clinical development plans and regulatory approvals [254]. - The company faces potential legal and regulatory challenges related to healthcare fraud and abuse laws, which could expose it to penalties and reputational harm [267]. Strategic Partnerships and Competition - The company is actively seeking a partner for the development of ATH-1105 through joint collaboration agreements or non-dilutive funding [201]. - The company faces significant competition in the biotechnology and pharmaceutical industries, which could negatively impact its commercial opportunities [197]. - The company faces significant competition in establishing strategic partnerships, which may delay the development and commercialization of drug candidates [281]. - Collaborators may not commit sufficient resources to marketing and distribution, impacting the success of drug products [286]. - The company may need to obtain additional capital to fund development or commercialization activities if unable to secure partnerships [282]. Intellectual Property Risks - The company’s success depends on its ability to protect intellectual property, with uncertainties surrounding patent applications and potential challenges from competitors [325]. - The patent application process is fraught with risks, including the possibility of non-compliance leading to loss of patent rights and challenges to the validity of issued patents [329]. - The validity and enforceability of patents are uncertain, and pending applications may not result in effective patent protection for drug candidates [334]. - The risk of patent infringement claims from third parties is significant, which could lead to liability for damages and hinder commercialization efforts [344]. - The biopharmaceutical industry is subject to extensive litigation regarding patent rights, increasing the risk of infringement claims against the company [345]. Operational and Market Risks - The company may face increased expenses and operational risks associated with any strategic transaction, which could adversely affect its financial condition [228]. - The company may struggle to obtain sufficient product liability insurance, which could inhibit commercialization efforts [315]. - Uncertainty in insurance coverage and reimbursement for newly approved products could limit the company's ability to market drugs and generate revenue [316]. - Adequate coverage and reimbursement from governmental and private payors are critical for the acceptance of new products, and lack thereof could hinder commercialization [317]. - The company anticipates pricing pressures due to cost containment trends in the healthcare industry, which may impact demand and pricing for drug candidates [319]. - International marketing efforts may face additional risks, including differing regulatory requirements and economic instability in foreign markets [324].

Athira Pharma Full Year 2024 Financial Results and Business Update [Clinical Development & Pipeline Programs](index=1&type=section&id=Clinical%20Development%20%26%20Pipeline%20Programs) Athira updated on key drug candidates, highlighting ATH-1105's successful Phase 1 and fosgonimeton's paused development [ATH-1105 (for ALS)](index=1&type=section&id=ATH-1105%20%28for%20ALS%29) ATH-1105 successfully completed Phase 1 with favorable safety, progressing towards ALS patient dosing in 2025 - Completed a first-in-human Phase 1 double-blind, placebo-controlled clinical trial with **80 healthy volunteers** in November 2024[5](index=5&type=chunk) - The Phase 1 trial results showed ATH-1105 has a **favorable safety profile** and was well-tolerated, supporting continued clinical development[5](index=5&type=chunk) - The company remains on track to enable the dosing of ALS patients in **2025**[1](index=1&type=chunk)[3](index=3&type=chunk)[5](index=5&type=chunk) [Fosgonimeton (ATH-1017) (for Alzheimer's)](index=2&type=section&id=Fosgonimeton%20%28ATH-1017%29%20%28for%20Alzheimer%27s%29) Fosgonimeton's LIFT-AD Phase 2/3 trial for Alzheimer's did not meet endpoints, leading to development pause - In September 2024, the LIFT-AD Phase 2/3 clinical trial of fosgonimeton in mild-to-moderate Alzheimer's disease **did not meet its primary or key secondary endpoints**[6](index=6&type=chunk) - Following the trial results, Athira **paused further development** of fosgonimeton, including its open-label extension clinical trial[9](index=9&type=chunk) [Exploration of Strategic Alternatives](index=2&type=section&id=Exploration%20of%20Strategic%20Alternatives) Athira's board initiated exploring strategic alternatives to maximize stockholder value, engaging Cantor Fitzgerald & Co - The company is exploring strategic alternatives focused on **maximizing stockholder value** after receiving the topline results of the LIFT-AD trial[9](index=9&type=chunk) - **Cantor Fitzgerald & Co.** has been engaged to act as an advisor in this process[9](index=9&type=chunk) - While continuing the development of ATH-1105, the company is also exploring **partnering options**[9](index=9&type=chunk) [Financial Results](index=2&type=section&id=Financial%20Results) Athira reported a reduced net loss for FY2024, driven by decreased R&D and G&A expenses, impacting cash and investments [Key Financial Highlights (FY 2024)](index=2&type=section&id=Key%20Financial%20Highlights%20%28FY%202024%29) Key financial highlights for FY2024 include changes in cash, expenses, and net loss, alongside a legal expense accrual Key Financial Highlights (FY 2024) | Financial Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Cash, Cash Equivalents & Investments | $51.3 million | $147.4 million | -$96.1 million | | R&D Expenses | $70.7 million | $93.8 million | -$23.1 million | | G&A Expenses | $26.1 million | $33.3 million | -$7.2 million | | Net Loss | $96.9 million | $117.7 million | +$20.8 million | | Net Loss Per Share | $2.52 | $3.09 | +$0.57 | - A legal expense of **$4.1 million** was accrued in 2024 related to a settlement with the U.S. Department of Justice concerning an NIH grant[9](index=9&type=chunk) [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed balance sheets detail the company's financial position, including assets, liabilities, and equity for 2024 and 2023 Condensed Consolidated Balance Sheets | Balance Sheet (in thousands) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $48,438 | $90,584 | | Total assets | $58,779 | $160,245 | | **Liabilities & Equity** | | | | Total liabilities | $13,938 | $30,057 | | Stockholders' equity | $44,841 | $130,188 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The condensed statements of operations detail the company's operating expenses, loss from operations, and net loss for 2024 and 2023 Condensed Consolidated Statements of Operations and Comprehensive Loss | Statement of Operations (in thousands) | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Research and development | $70,682 | $93,790 | | General and administrative | $26,093 | $33,304 | | Total operating expenses | $100,902 | $125,466 | | Loss from operations | ($100,902) | ($125,466) | | Net loss | ($96,940) | ($117,672) | | Net loss per share, basic and diluted | ($2.52) | ($3.09) |

Core Insights - Athira Pharma has completed a Phase 1 clinical study of ATH-1105, a potential treatment for amyotrophic lateral sclerosis (ALS), and is on track to begin dosing ALS patients in 2025 [1][3][8] Clinical Development & Pipeline Programs - ATH-1105 is a novel, orally available small molecule designed to modulate the neurotrophic hepatocyte growth factor (HGF) system, which is aimed at treating neurodegenerative diseases including ALS, Alzheimer's disease, and Parkinson's disease [5][4] - The Phase 1 clinical trial of ATH-1105 involved 80 healthy volunteers and demonstrated a favorable safety profile, supporting its continued development [8] - Preclinical evidence indicates that ATH-1105 has shown significant improvements in motor and nerve function, as well as biomarkers of inflammation and neurodegeneration [8] Financial Results - As of December 31, 2024, Athira reported cash, cash equivalents, and investments of $51.3 million, a decrease from $147.4 million in 2023 [13] - Research and Development (R&D) expenses for 2024 were $70.7 million, down from $93.8 million in 2023, primarily due to reduced costs associated with the fosgonimeton program [13] - The net loss for the year ended December 31, 2024, was $96.9 million, or $2.52 per share, compared to a net loss of $117.7 million, or $3.09 per share, for the previous year [13][17] Strategic Alternatives - Following the topline results of the LIFT-AD trial, Athira is exploring strategic alternatives to maximize stockholder value and has engaged Cantor Fitzgerald & Co. as an advisor [9] - The company has paused further development of fosgonimeton while continuing to advance ATH-1105 and explore potential partnerships [9]

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[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%2E%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) The unaudited financial statements show a net loss of $81.9 million for the nine months ended September 30, 2024, with cash and investments of $68.9 million, reflecting restructuring and legal expenses [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The company's financial position shows a decrease in total assets from $160.2 million at year-end 2023 to $86.2 million as of September 30, 2024 Condensed Consolidated Balance Sheet Data (in thousands) | | September 30, 2024 (unaudited) | December 31, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $82,002 | $154,729 | | **Total Assets** | $86,246 | $160,245 | | **Total Current Liabilities** | $27,751 | $28,840 | | **Total Liabilities** | $28,663 | $30,057 | | **Total Stockholders' Equity** | $57,583 | $130,188 | Condensed Consolidated Statements of Operations Data (in thousands, except per share data) | | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2024 | | :--- | :--- | :--- | | **Total Operating Expenses** | $29,621 | $85,336 | | **Loss from Operations** | $(29,621) | $(85,336) | | **Net Loss** | $(28,741) | $(81,937) | | **Net Loss Per Share** | $(0.75) | $(2.13) | Condensed Consolidated Statements of Cash Flows Data (in thousands) | | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(71,157) | $(74,460) | | **Net cash provided by investing activities** | $57,642 | $88,698 | | **Net cash provided by financing activities** | $160 | $341 | | **Net (decrease) increase in cash** | $(13,355) | $14,579 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's financial condition, including $68.9 million in cash, a 70% workforce reduction, and significant legal expenses for settlements and investigations - As of September 30, 2024, the company had **$68.9 million** in cash, cash equivalents, and investments[17](index=17&type=chunk)[18](index=18&type=chunk) - Management estimates this will be sufficient to fund operations and capital expenditures for at least the next **12 months**[17](index=17&type=chunk)[18](index=18&type=chunk) - On September 15, 2024, the company initiated a restructuring to terminate approximately **70% of its workforce**, expecting to incur about **$2.8 million** in severance costs[40](index=40&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - As of September 30, 2024, a liability of **$2.3 million** was accrued for severance costs[40](index=40&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - The company recorded a **$10.0 million** legal settlement expense for a securities class action, with an expected **$1.6 million** insurance recovery[69](index=69&type=chunk)[76](index=76&type=chunk) - An additional **$4.1 million** legal expense was recorded in Q3 2024 related to a government investigation[69](index=69&type=chunk)[76](index=76&type=chunk) - The company's license agreement with WSU includes potential future milestone payments of **$300,000** upon initiation of a Phase 3 trial and **$600,000** upon marketing approval for the first licensed product[54](index=54&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic shift to ATH-1105 for ALS, a 70% workforce reduction, decreased R&D expenses, and $68.9 million in cash and investments [Overview & Recent Developments](index=26&type=section&id=Overview%20%26%20Recent%20Developments) The company shifted focus to ATH-1105 for ALS after fosgonimeton's trial failure, initiating a strategic review and a 70% workforce reduction - Following the failure of the LIFT-AD trial for fosgonimeton to meet its endpoints, the company has paused its development and shifted focus to the clinical development of **ATH-1105 for Amyotrophic Lateral Sclerosis (ALS)**[112](index=112&type=chunk)[116](index=116&type=chunk) - The company is exploring strategic alternatives, which may include an acquisition, merger, sale of assets, or other transactions, to maximize stockholder value[123](index=123&type=chunk)[132](index=132&type=chunk) - On September 15, 2024, the company committed to a workforce reduction of approximately **70%** to decrease costs and support strategic priorities, including the development of ATH-1105[134](index=134&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Total operating expenses decreased to $85.3 million for the nine months ended September 30, 2024, driven by reduced R&D and G&A, despite new legal expenses Comparison of Results of Operations (in thousands) | | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Research and development** | $61,312 | $70,110 | $(8,798) | (13%) | | **General and administrative** | $19,897 | $26,342 | $(6,445) | (24%) | | **Legal expense** | $4,127 | $— | $4,127 | 100% | | **Total operating expenses** | $85,336 | $96,452 | $(11,116) | (12%) | | **Net loss** | $(81,937) | $(90,387) | $8,450 | (9%) | - The decrease in R&D expenses for the nine months ended Sep 30, 2024 was primarily due to a **$12.1 million** decrease in fosgonimeton program costs, partially offset by a **$6.8 million** increase in ATH-1105 program costs associated with its Phase 1 trial[153](index=153&type=chunk) - A legal expense of **$4.1 million** was recorded during the third quarter of 2024 in connection with the Department of Justice investigation[149](index=149&type=chunk)[155](index=155&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2024, the company had $68.9 million in cash and investments, deemed sufficient for 12 months, with an unutilized $75.0 million ATM program - As of September 30, 2024, the company had **$68.9 million** in cash, cash equivalents and investments[159](index=159&type=chunk) - The company estimates that its existing cash and investments are sufficient to fund operating expenses and capital expenditure requirements through at least the next **12 months**[161](index=161&type=chunk) - The company has an active sales agreement for an "at the market" (ATM) equity offering of up to **$75.0 million**, but has not sold any securities under this program as of the report date[161](index=161&type=chunk) Summary of Cash Flows (in thousands) | | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(71,157) | $(74,460) | | **Net cash provided by investing activities** | $57,642 | $88,698 | | **Net cash provided by financing activities** | $160 | $341 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Athira Pharma, Inc. is not required to provide the information for this item - The company is not required to provide information for this item as it qualifies as a smaller reporting company[178](index=178&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of September 30, 2024, with no material changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2024[180](index=180&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, internal controls[181](index=181&type=chunk) [PART II. OTHER INFORMATION](index=40&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company provides updates on significant legal matters, including a $10.0 million securities class action settlement, dismissed derivative actions, and an ongoing government investigation - The securities class action lawsuit was settled for **$10.0 million**, with final court approval granted on November 1, 2024[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) - The company recorded the expense in Q4 2022 and an associated **$1.6 million** insurance recovery in Q4 2023[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) - The shareholder derivative actions were consolidated and settled, with final court approval granted on July 18, 2024, and the case dismissed[199](index=199&type=chunk)[200](index=200&type=chunk) - The company paid the related fee and expense award in Q3 2024[199](index=199&type=chunk)[200](index=200&type=chunk) - The company is cooperating with a Civil Investigative Demand from the Department of Justice received in November 2022, and a legal expense of **$4.1 million** was recorded in Q3 2024 based on developments[201](index=201&type=chunk)[202](index=202&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) The company faces extensive risks including clinical development uncertainty, financial needs, potential Nasdaq delisting, strategic review outcomes, and litigation [Risks Relating to Business and Drug Development](index=42&type=section&id=Risks%20Relating%20to%20Our%20Business%20and%20the%20Development%20of%20Our%20Drug%20Candidates) Business risks include limited operating history, high dependence on ATH-1105 success in neurodegenerative disorders, and potential harm from former CEO's research misconduct investigation - The company's prospects are highly dependent on the successful development of **ATH-1105**, as development of its previous lead candidate, fosgonimeton, was paused after the Phase 2/3 LIFT-AD trial failed to meet its primary and key secondary endpoints[210](index=210&type=chunk)[216](index=216&type=chunk) - The company's focus on neurodegenerative disorders is a high-risk field that has seen very limited success in product development[222](index=222&type=chunk)[223](index=223&type=chunk) - An independent special committee found that the former CEO altered images in her doctoral research, which, along with an ongoing review by WSU, could adversely affect the company's reputation, in-licensed patents, and grants[251](index=251&type=chunk)[253](index=253&type=chunk)[255](index=255&type=chunk) [Risks Relating to Financial Position and Capital Needs](index=52&type=section&id=Risks%20Relating%20to%20Our%20Financial%20Position%20and%20Capital%20Needs) The company has a history of significant losses and requires substantial additional funding, with future capital needs uncertain given the strategic review - The company will require substantial additional funding to finance operations and complete the development of ATH-1105, and failure to raise capital when needed may force delays or elimination of drug development programs[276](index=276&type=chunk) - The company has incurred significant losses since inception, with an accumulated deficit of **$391.1 million** as of September 30, 2024, and anticipates continued losses for the foreseeable future[286](index=286&type=chunk)[287](index=287&type=chunk) - The ability to use net operating loss (NOL) carryforwards to offset future taxable income may be subject to limitations due to past or future "ownership changes" under Section 382 of the Internal Revenue Code[299](index=299&type=chunk) [Risks Relating to Strategic Process](index=56&type=section&id=Risks%20Relating%20to%20Strategic%20Process%20and%20Potential%20Strategic%20Transaction) The ongoing strategic alternatives exploration offers no guarantee of success, is costly, and may lead to dissolution with uncertain stockholder distributions - There is no assurance that the company's exploration of strategic alternatives will result in a successful transaction, and the process is costly and time-consuming[303](index=303&type=chunk)[304](index=304&type=chunk) - If a strategic transaction is not completed, the board may decide to pursue a dissolution and liquidation, where the amount of cash available for distribution to stockholders is uncertain and depends on reserving for liabilities[312](index=312&type=chunk) [Risks Relating to Ownership of Our Common Stock](index=89&type=section&id=Risks%20Relating%20to%20Ownership%20of%20Our%20Common%20Stock) Risks to common stock ownership include potential Nasdaq delisting, price volatility, activist stockholder actions, and reduced disclosure as an emerging growth company - The company's common stock is at risk of being delisted from Nasdaq for failure to comply with the minimum **$1.00 per share** closing bid price requirement and the minimum **$50 million** market value of listed securities requirement[536](index=536&type=chunk)[537](index=537&type=chunk) - The market price of the company's common stock has been and may continue to be volatile due to factors such as clinical trial results, competitor announcements, and regulatory developments[542](index=542&type=chunk)[543](index=543&type=chunk) - Actions by activist stockholders have been disruptive in the past and could cause uncertainty about the company's strategic direction in the future[548](index=548&type=chunk) - In September 2024, the company initiated a workforce reduction of approximately **70%**, which carries risks including failure to achieve expected cost savings and negative impacts on morale and employee retention[571](index=571&type=chunk)[576](index=576&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=98&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period covered by this report - There were no recent sales of unregistered equity securities[594](index=594&type=chunk) [Item 5. Other Information](index=98&type=section&id=Item%205.%20Other%20Information) During the last fiscal quarter, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the last fiscal quarter[595](index=595&type=chunk) [Item 6. Exhibits](index=99&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including corporate governance documents, employment and separation agreements, and required SEC certifications - The report includes exhibits such as the Amended and Restated Certificate of Incorporation, employment and separation agreements for key personnel, and certifications by the CEO and CFO[597](index=597&type=chunk)

Exhibit 99.1 Athira Pharma Reports Third Quarter 2024 Financial Results and Pipeline and Business Updates Expects to complete healthy volunteer Phase 1 clinical study of ATH-1105 by year end and begin dosing ALS patients in 2025 BOTHELL, Wash., November 7, 2024 – Athira Pharma, Inc. (NASDAQ: ATHA), a clinical-stage biopharmaceutical company focused on developing small molecules to restore neuronal health and slow neurodegeneration, today reported financial results for the quarter ended September 30, 2024, a ...