PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Athira Pharma's Q1 2021 unaudited financials show cash and investments increased to **$357.7 million**, with a net loss of **$8.9 million** due to higher expenses [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2021, total assets increased to **$369.4 million** and stockholders' equity to **$363.2 million**, primarily due to a follow-on public offering Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $127,823 | $60,625 | | Short-term investments | $176,367 | $124,057 | | Total current assets | $311,568 | $192,337 | | Total assets | $369,414 | $279,563 | | **Liabilities & Stockholders' Equity** | | | | Total liabilities | $6,197 | $5,281 | | Total stockholders' equity | $363,217 | $274,282 | | Total liabilities and stockholders' equity | $369,414 | $279,563 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For Q1 2021, the company reported a net loss of **$8.9 million**, up from **$1.8 million** in Q1 2020, driven by increased R&D and G&A expenses Condensed Consolidated Statements of Operations (in thousands) | Account | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Research and development | $7,445 | $592 | | General and administrative | $3,336 | $675 | | **Total operating expenses** | **$10,781** | **$1,267** | | Loss from operations | ($10,781) | ($1,267) | | Grant income | $1,831 | $22 | | **Net loss** | **($8,866)** | **($1,805)** | | Net loss per share, basic and diluted | ($0.25) | ($0.48) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2021, operating activities used **$7.3 million**, investing activities used **$22.7 million**, and financing activities provided **$97.2 million**, leading to a **$67.2 million** net cash increase Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($7,305) | ($1,175) | | Net cash (used in) provided by investing activities | ($22,708) | $1 | | Net cash provided by financing activities | $97,211 | $1,840 | | **Net increase in cash and cash equivalents** | **$67,198** | **$666** | | Cash and cash equivalents, end of period | $127,823 | $2,722 | - The primary source of cash from financing activities in Q1 **2021** was **$97.2 million** in net proceeds from the follow-on public offering and stock option exercises[138](index=138&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's biopharmaceutical business, significant financing activities including a January **2021** follow-on offering, accounting policies, and confirm funding for at least the next **12** months - In January and February **2021**, the company completed a follow-on public offering, selling a total of **4,600,000** shares and raising approximately **$96.8 million** in net proceeds[21](index=21&type=chunk)[111](index=111&type=chunk) - The company received a grant from the National Institute on Aging (NIA) of the NIH, which could provide up to **$15.2 million** to support the ACT-AD Phase **2** clinical trial for ATH-1017. In Q1 **2021**, **$1.831 million** was recognized as grant income from this source[30](index=30&type=chunk)[29](index=29&type=chunk) - Based on its current operating plan, the company estimates its cash, cash equivalents, and investments of **$357.7 million** as of March **31**, **2021**, are sufficient to fund operations for at least the next **12** months[23](index=23&type=chunk)[109](index=109&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's focus on neurodegeneration with lead candidate ATH-1017, highlighting increased operating expenses from clinical trials and a strong financial position with **$357.7 million** in cash, expected to fund operations through at least **2022** - The company is a late clinical-stage biopharmaceutical company focused on developing small molecules to restore neuronal health and stop neurodegeneration. Its lead candidate, ATH-1017, is being evaluated in two trials for mild-to-moderate Alzheimer's disease: the LIFT-AD Phase **2/3** trial and the ACT-AD Phase **2** trial[95](index=95&type=chunk)[97](index=97&type=chunk) Anticipated Upcoming Milestones | Program (RoA) | Indication | Anticipated Upcoming Milestones | | :--- | :--- | :--- | | ATH-1017 (SC) | Alzheimer's Disease | LIFT-AD topline data by end of 2022; ACT-AD topline data by early 2022 | | ATH-1017 (SC) | Parkinson's Disease Dementia | Phase 2 initiation by end of 2021 | | ATH-1019/20 (PO) | Neuropsychiatric Indications | IND filing by end of 2021 | | ATH-1018 (PO) | Peripheral Indications | IND filing by end of 2022 | [Results of Operations](index=30&type=section&id=Results%20of%20Operations) In Q1 **2021**, total operating expenses increased from **$1.3 million** to **$10.8 million**, primarily due to higher R&D and G&A costs, leading to a net loss of **$8.9 million** versus **$1.8 million** in Q1 **2020** Research and Development Expenses Breakdown (in thousands) | Category | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Direct costs:** | | | | ATH-1017 | $6,188 | $349 | | Preclinical programs and other | $312 | $18 | | **Indirect costs:** | | | | Personnel-related costs | $852 | $176 | | Facilities and other costs | $93 | $49 | | **Total R&D Expenses** | **$7,445** | **$592** | - The increase in R&D expenses was primarily driven by a **$5.8 million** increase in costs for ATH-1017, related to start-up activities for Phase **2** clinical trials[123](index=123&type=chunk) - General and administrative expenses increased by **$2.6 million**, mainly due to a **$1.1 million** increase in personnel costs from higher headcount, a **$0.8 million** increase in insurance costs, and a **$0.4 million** increase in facilities costs[124](index=124&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) As of March **31**, **2021**, the company held **$357.7 million** in cash and investments, primarily from equity sales, sufficient to fund operations through at least **2022**, with future funding needs for full development - As of March **31**, **2021**, the company had **$357.7 million** in cash, cash equivalents and investments[106](index=106&type=chunk)[129](index=129&type=chunk) - The company estimates that its existing cash, cash equivalents and investments will be sufficient to fund its operating expenses and capital expenditure requirements at least through **2022**[109](index=109&type=chunk)[203](index=203&type=chunk) Recent Common Stock Sales (in millions) | Offering | Net Proceeds | | :--- | :--- | | September 2020 IPO | $186.4 | | October 2020 overallotment | $22.1 | | January 2021 follow-on | $84.1 | | February 2021 overallotment | $12.7 | | **Total** | **$305.3** | [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 Pharma, Inc. is not required to provide market risk disclosures - The company is not required to provide information on this item as it qualifies as a smaller reporting company[148](index=148&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of March **31**, **2021**, with no material changes in internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of March **31**, **2021**[150](index=150&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended March **31**, **2021**, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[151](index=151&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - The company is not currently a party to or aware of any proceedings that are expected to have a material adverse effect on its business[152](index=152&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks, primarily its dependence on the success of lead candidate ATH-1017, lengthy clinical development, intense competition, historical losses, and the need for substantial additional funding - The company is a late clinical-stage biopharmaceutical company with a limited operating history, and its ability to generate revenue depends on the success of its objectives, particularly the development of ATH-1017[7](index=7&type=chunk)[154](index=154&type=chunk)[156](index=156&type=chunk) - The company's therapeutic approach of using small molecules to target brain growth factors is novel, and clinical data is limited to Phase **1a/1b** trials involving only **11** Alzheimer's patients, with no certainty that future trials will yield similar results[7](index=7&type=chunk)[162](index=162&type=chunk) - The company has incurred significant losses since inception and expects to continue incurring them for the foreseeable future, requiring substantial additional funding to complete development and commercialization[7](index=7&type=chunk)[198](index=198&type=chunk)[202](index=202&type=chunk) - The company faces significant competition from larger pharmaceutical companies with greater financial resources and expertise in development, manufacturing, and commercialization[7](index=7&type=chunk)[181](index=181&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=85&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered equity sales and no material change in the planned use of IPO net proceeds during the period - There were no unregistered sales of equity securities in the reported period[380](index=380&type=chunk) - There has been no material change in the planned use of proceeds from the company's IPO[382](index=382&type=chunk) [Exhibits](index=86&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the quarterly report, including corporate documents, officer certifications, and XBRL data

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |----------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------- ...