[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, along with notes, reflecting significant losses and decreased cash and investments [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $19,888 | $48,438 | | Short-term investments | $9,935 | $2,837 | | Total current assets | $32,218 | $54,841 | | Total assets | $35,545 | $58,779 | | Total current liabilities | $2,981 | $13,135 | | Total liabilities | $3,559 | $13,938 | | Total stockholders' equity | $31,986 | $44,841 | - Total assets decreased from **$58.8 million** at December 31, 2024, to **$35.5 million** at June 30, 2025, primarily due to a significant reduction in cash and cash equivalents[13](index=13&type=chunk) - Total liabilities decreased from **$13.9 million** to **$3.6 million**, mainly driven by a decrease in accrued liabilities[13](index=13&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $3,661 | $22,154 | $7,963 | $43,390 | | General and administrative | $3,630 | $5,874 | $8,864 | $12,325 | | Total operating expenses | $7,291 | $28,028 | $16,827 | $55,715 | | Net loss | $(6,966) | $(26,859) | $(16,109) | $(53,196) | | Net loss per share (basic and diluted) | $(0.18) | $(0.70) | $(0.41) | $(1.39) | - Net loss significantly decreased by **74%** for the three months ended June 30, 2025, to **$6.966 million** from **$26.859 million** in the prior year, and by **70%** for the six months ended June 30, 2025, to **$16.109 million** from **$53.196 million**[15](index=15&type=chunk) - Research and development expenses decreased by **83%** for the three months and **82%** for the six months, primarily due to pausing the fosgonimeton program and reduced personnel-related costs[15](index=15&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | Balance as of Jan 1, 2025 | Balance as of June 30, 2025 | | :-------------------- | :------------------------ | :-------------------------- | | Common Stock Shares | 39,040,945 | 39,439,326 | | Additional Paid-In Capital | $450,982 | $454,240 |\ | Accumulated Deficit | $(406,146) | $(422,255) | | Total Stockholders' Equity | $44,841 | $31,986 | - Total stockholders' equity decreased from **$44.841 million** at January 1, 2025, to **$31.986 million** at June 30, 2025, primarily due to net losses[18](index=18&type=chunk) - Issuance of common stock upon vesting of restricted stock units and under the employee stock purchase plan contributed to an increase in common stock shares and additional paid-in capital[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- |\ | Net cash used in operating activities | $(21,664) | $(48,134) | | Net cash (used in) provided by investing activities | $(6,910) | $39,603 | | Net cash provided by financing activities | $24 | $148 | | Net decrease in cash, cash equivalents and restricted cash | $(28,550) | $(8,383) | | Cash, cash equivalents and restricted cash, end of period | $20,519 | $82,832 | - Net cash used in operating activities decreased significantly from **$48.1 million** in H1 2024 to **$21.7 million** in H1 2025, primarily due to a reduced net loss and changes in operating assets and liabilities[20](index=20&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - Investing activities shifted from providing **$39.6 million** in H1 2024 to using **$6.9 million** in H1 2025, mainly due to changes in purchases and maturities of available-for-sale securities[20](index=20&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. Description of Business](index=10&type=section&id=1.%20Description%20of%20Business) Athira Pharma is a clinical-stage biopharmaceutical company focused on developing small molecules to restore neuronal health and slow neurodegeneration - Athira Pharma, Inc. is a clinical-stage biopharmaceutical company focused on developing small molecules to restore neuronal health and slow neurodegeneration[22](index=22&type=chunk) - The company has funded operations primarily through equity sales, raising **$407.4 million** net cash proceeds since inception through June 30, 2025[23](index=23&type=chunk)[99](index=99&type=chunk) - As of June 30, 2025, cash, cash equivalents, and investments totaled **$29.8 million**, estimated to fund operations for at least the next 12 months[24](index=24&type=chunk)[25](index=25&type=chunk)[101](index=101&type=chunk) [2. Significant Accounting Policies](index=10&type=section&id=2.%20Significant%20Accounting%20Policies) This section details the company's significant accounting policies, including financial statement preparation, restricted cash, R&D costs, and recent accounting pronouncement adoption - Financial statements are prepared in conformity with U.S. GAAP and include operations of its wholly-owned Australian subsidiary[26](index=26&type=chunk) - Restricted cash of **$631 thousand** at June 30, 2025, and December 31, 2024, serves as collateral for corporate credit cards[30](index=30&type=chunk)[31](index=31&type=chunk) - Research and development costs are expensed as incurred, including direct and indirect costs for drug discovery and development[35](index=35&type=chunk)[38](index=38&type=chunk) - The company adopted ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, in fiscal year 2025, with no material impact expected[50](index=50&type=chunk) [3. Fair Value](index=16&type=section&id=3.%20Fair%20Value) This section outlines the fair value measurements of financial assets, primarily consisting of Level 1 and Level 2 instruments Financial Assets Measured at Fair Value (in thousands) | Financial Asset (in thousands) | Level | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :----------------------------- | :---- | :----------------------- | :--------------------------- | | Money market fund | 1 | $31 | $30 | | U.S. government debt and agency securities | 2 | $2,584 | $10,299 | | Commercial paper | 2 | $11,692 | $19,393 | | Total cash equivalents | | $14,307 | $29,722 | | Short-term investments: Commercial paper | 2 | $500 | $1

[Introduction and Second Quarter 2025 Business Update](index=1&type=section&id=Introduction%20and%20Second%20Quarter%202025%20Business%20Update) Athira Pharma reported Q2 2025 financial results and pipeline updates, highlighting encouraging ATH-1105 Phase 1 data and ongoing strategic alternatives exploration [Overview of Q2 2025 Results and Strategic Direction](index=1&type=section&id=Overview%20of%20Q2%202025%20Results%20and%20Strategic%20Direction) Athira Pharma reported its financial results for the second quarter ended June 30, 2025, alongside updates on its pipeline and business, highlighting encouraging Phase 1 data for ATH-1105 and its ongoing exploration of strategic alternatives to maximize stockholder value - Athira Pharma reported financial results for the quarter ended **June 30, 2025**, and provided recent pipeline and business updates[1](index=1&type=chunk) - CEO Mark Litton expressed satisfaction with the progress of **ATH-1105** as a potential therapy for **ALS**, citing encouraging **first-in-human safety and pharmacokinetic data** from its **Phase 1 clinical trial**[2](index=2&type=chunk) - The company has substantially completed preparation activities for a future clinical trial of **ATH-1105** in people living with **ALS**, subject to continued exploration of strategic alternatives focused on maximizing stockholder value[2](index=2&type=chunk) [Clinical Development & Pipeline Programs](index=1&type=section&id=Clinical%20Development%20%26%20Pipeline%20Programs) This section details the clinical progress of ATH-1105, including positive Phase 1 data, and the discontinuation of fosgonimeton development after LIFT-AD trial failures [ATH-1105 Development Update](index=1&type=section&id=ATH-1105%20Development%20Update) ATH-1105, a novel small molecule designed to modulate the HGF system, is in clinical development for ALS, with its Phase 1 trial demonstrating a favorable safety and tolerability profile, dose-proportional pharmacokinetics, and CNS penetration, supported by robust preclinical evidence - **ATH-1105** is a novel, orally available, brain-penetrant, next-generation small molecule drug candidate designed to positively modulate the neurotrophic **HGF system** for potential treatment of neurodegenerative diseases, including **ALS**[4](index=4&type=chunk) - Data from the **first-in-human Phase 1 clinical trial** (completed **November 2024**) showed a **favorable safety profile**, was **well tolerated** in healthy volunteers, and demonstrated **dose proportional pharmacokinetics** and **central nervous system (CNS) penetration**[4](index=4&type=chunk)[7](index=7&type=chunk) - Preclinical evidence supports **ATH-1105's potential**, demonstrating **statistically significant improvements** in nerve and motor function, biomarkers of inflammation and neurodegeneration, and survival in various models of **ALS**[7](index=7&type=chunk) [Fosgonimeton (ATH-1017) Development Update](index=2&type=section&id=Fosgonimeton%20(ATH-1017)%20Development%20Update) 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, leading to a pause in its further development - In **September 2024**, Athira announced topline results from the **LIFT-AD Phase 2/3 clinical trial** of **fosgonimeton** in mild-to-moderate **Alzheimer's disease**, which **did not meet its primary or key secondary endpoints**[5](index=5&type=chunk) - Biomarker and subgroup data from the **LIFT-AD study** were **directionally consistent** with the broad neuroprotective mechanism of action[5](index=5&type=chunk) - Following the **LIFT-AD results**, Athira **paused further development of fosgonimeton**, including the related open label extension clinical trial[8](index=8&type=chunk) [Exploration of Strategic Alternatives](index=2&type=section&id=Exploration%20of%20Strategic%20Alternatives) Following LIFT-AD trial results, Athira initiated a strategic review to maximize stockholder value, engaging Cantor Fitzgerald & Co. as an advisor [Strategic Review and Advisor Engagement](index=2&type=section&id=Strategic%20Review%20and%20Advisor%20Engagement) Following the topline results of the LIFT-AD trial, Athira initiated an exploration of strategic alternatives aimed at maximizing stockholder value and engaged Cantor Fitzgerald & Co. as an advisor for this process - Following Athira's receipt of the **topline results of LIFT-AD**, the company made the determination to explore **strategic alternatives** focused on maximizing stockholder value[8](index=8&type=chunk) - Athira engaged **Cantor Fitzgerald & Co.** to act as an advisor in this process[8](index=8&type=chunk) - Further development of **fosgonimeton**, including the related open label extension clinical trial, was **paused** while continuing the development of **ATH-1105** and exploring partnering options[8](index=8&type=chunk) [Second Quarter 2025 Financial Results](index=2&type=section&id=Financial%20Results) Athira's Q2 2025 financial results show a reduced net loss due to decreased R&D and G&A expenses, alongside a decline in cash and investments [Key Financial Highlights (Q2 2025)](index=2&type=section&id=Key%20Financial%20Highlights%20(Q2%202025)) Athira reported a significant reduction in net loss for Q2 2025 compared to Q2 2024, primarily due to substantial decreases in R&D and G&A expenses, while the company's cash position decreased from the end of 2024 Cash, cash equivalents and investments (millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Cash, cash equivalents and investments | $29.8 million | $51.3 million | Expense Category (millions) | Expense Category | Q2 2025 | Q2 2024 | YoY Change | | :------------------------ | :------ | :------ | :--------- | | Research and Development | $3.7 million | $22.2 million | -83.3% | | General and Administrative | $3.6 million | $5.9 million | -38.9% | Net Loss (millions) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :------------------------ | :------ | :------ | :--------- | | Net Loss | $7.0 million | $26.9 million | -74.0% | | Net Loss per Share | $0.18 | $0.70 | -74.3% | - Net cash used in operations was **$21.7 million** for the **six months ended June 30, 2025**, compared to **$48.1 million** for the **six months ended June 30, 2024**[8](index=8&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Athira's total assets were $35.5 million, a decrease from $58.8 million at December 31, 2024, primarily driven by a reduction in cash and cash equivalents, with total liabilities also decreasing significantly Balance Sheet Items (thousands) | Balance Sheet Item | June 30, 2025 (unaudited, thousands) | December 31, 2024 (thousands) | | :-------------------------------- | :------------------------ | :---------------- | | Cash and cash equivalents | $19,888 | $48,438 | | Short-term investments | $9,935 | $2,837 | | Other short-term assets | $2,395 | $3,566 | | Other long-term assets | $3,327 | $3,938 | | **Total assets** | **$35,545** | **$58,779** | | Current liabilities | $2,981 | $13,135 | | Long-term liabilities | $578 | $803 | | **Total liabilities** | **$3,559** | **$13,938** | | Stockholders' equity | $31,986 | $44,841 | | **Total liabilities and stockholders' equity** | **$35,545** | **$58,779** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the three months ended June 30, 2025, Athira reported a net loss of $7.0 million, or $0.18 per share, a substantial improvement from a net loss of $26.9 million, or $0.70 per share, in the prior year period, primarily due to reduced operating expenses Operating Expenses and Loss (Three Months Ended June 30, thousands) | Operating Expenses (Three Months Ended June 30,) | 2025 (thousands) | 2024 (thousands) | | :----------------------------------------------- | :--------------- | :--------------- | | Research and development | $3,661 | $22,154 | | General and administrative | $3,630 | $5,874 | | **Total operating expenses** | **$7,291** | **$28,028** | | Loss from operations | $(7,291) | $(28,028) | | Other income, net | $325 | $1,169 | | **Net loss** | **$(6,966)** | **$(26,859)** | | Unrealized (loss) gain on available-for-sale securities | $1 | $99 | | **Comprehensive loss attributable to common stockholders** | **$(6,965)** | **$(26,760)** | | Net loss per share attributable to common stockholders, basic and diluted | $(0.18) | $(0.70) | | Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | 39,092,961 | 38,379,733 | [About Athira Pharma, Inc.](index=2&type=section&id=About%20Athira%20Pharma%2C%20Inc.) Athira Pharma is a clinical-stage biopharmaceutical company focused on developing small molecules to restore neuronal health and slow neurodegeneration [Company Overview and Mission](index=2&type=section&id=Company%20Overview%20and%20Mission) Athira Pharma is a clinical-stage biopharmaceutical company based in the Seattle area, dedicated to developing small molecules that restore neuronal health and slow neurodegeneration by modulating the neurotrophic HGF system - Athira Pharma, Inc. is a **clinical-stage biopharmaceutical company** focused on developing **small molecules** to restore neuronal health and slow neurodegeneration[7](index=7&type=chunk) - The company aims to alter the course of neurological diseases by advancing drug candidates that modulate the neurotrophic **HGF system**[3](index=3&type=chunk)[9](index=9&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains cautionary forward-looking statements regarding Athira's drug candidates and future plans, subject to various clinical, regulatory, and financial risks [Disclaimer and Risk Factors](index=3&type=section&id=Disclaimer%20and%20Risk%20Factors) This section serves as a cautionary statement, indicating that the communication contains forward-looking statements subject to various risks and uncertainties, which could cause actual results to differ materially from expectations - This communication contains '**forward-looking statements**' regarding Athira's drug candidates, future development plans, potential efficacy, commercial potential, and exploration of strategic alternatives[10](index=10&type=chunk) - These statements are based on management's current expectations and are subject to **numerous risks and uncertainties**, including that data from preclinical and clinical trials may not support safety, efficacy, and tolerability; development may cease or be delayed; and regulatory authorities could object to submissions[10](index=10&type=chunk) - Other risks include potential negative interactions with other treatments, **FDA regulatory delays**, financial condition assumptions being incorrect, adverse economic conditions, competition, and risks related to strategic alternatives[10](index=10&type=chunk) [Investor & Media Contact](index=4&type=section&id=Investor%20%26%20Media%20Contact) This section provides contact information for investor and media inquiries, listing Julie Rathbun from Athira Pharma [Contact Information](index=4&type=section&id=Contact%20Information) This section provides the contact details for investor and media inquiries, listing Julie Rathbun from Athira Pharma - Contact information for investor and media inquiries is provided, listing **Julie Rathbun** from Athira Pharma[11](index=11&type=chunk)

Core Insights - Athira Pharma, Inc. announced favorable results from a Phase 1 clinical trial of ATH-1105, indicating a good safety and tolerability profile, which supports its continued development for treating ALS [1][5][3] - The company is on track to initiate a clinical trial in ALS patients by late 2025 [1][3] Group 1: ATH-1105 Overview - ATH-1105 is a novel, orally available small molecule designed to modulate the neurotrophic HGF system for potential treatment of neurodegenerative diseases, including ALS [2] - The Phase 1 trial involved 80 healthy volunteers and evaluated both single and multiple ascending doses of ATH-1105, completed in November 2024 [5] Group 2: Clinical Trial Results - The Phase 1 trial demonstrated a favorable safety profile and good tolerability in healthy volunteers, supporting further clinical development [5][7] - Data from the trial showed dose proportional pharmacokinetics and CNS penetration, reinforcing the drug's potential for ALS treatment [7][8] Group 3: Future Development Plans - The company plans to present data at the 4th Annual ALS Drug Development Summit, highlighting ATH-1105's effects on ALS validated biomarkers [1][3] - Preclinical evidence supports ATH-1105's potential, showing significant improvements in nerve and motor function, inflammation biomarkers, and survival in ALS models [4]

```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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