[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and related notes, along with management's discussion and analysis of financial condition and results of operations [Item 1. Condensed Consolidated Financial Statements - Unaudited](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20-%20Unaudited) This section presents the unaudited condensed consolidated financial statements of Atossa Therapeutics, Inc. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's financial position, performance, and significant accounting policies [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $57,857 | $71,084 | | Total current assets | $62,517 | $74,457 | | Total assets | $64,515 | $76,444 | | Total current liabilities | $6,820 | $4,967 | | Total liabilities | $6,820 | $4,967 | | Total stockholders' equity | $57,695 | $71,477 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | 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 | $5,502 | $3,553 | $9,659 | $7,302 | | General and administrative | $3,538 | $3,552 | $6,795 | $6,784 | | Total operating expenses | $9,040 | $7,105 | $16,454 | $14,086 | | Operating loss | $(9,040) | $(7,105) | $(16,454) | $(14,086) | | Interest income | $645 | $1,073 | $1,365 | $2,211 | | Net loss | $(8,423) | $(6,049) | $(15,141) | $(11,927) | | Net loss per share (basic and diluted) | $(0.07) | $(0.05) | $(0.12) | $(0.10) | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) - Total stockholders' equity decreased from **$71,477 thousand** at December 31, 2024, to **$57,695 thousand** at June 30, 2025, primarily due to a net loss of **$15,141 thousand** for the six months ended June 30, 2025, partially offset by stock-based compensation[13](index=13&type=chunk) Total Stockholders' Equity (in thousands) | Metric (in thousands) | December 31, 2024 | June 30, 2025 | | :-------------------- | :---------------- | :------------ | | Common Stock Amount | $23,488 | $23,488 | | Additional Paid-in Capital | $261,256 | $262,615 | | Accumulated Deficit | $(211,792) | $(226,933) | | Total Stockholders' Equity | $71,477 | $57,695 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(13,218) | $(9,229) | | Net cash used in investing activities | $(9) | $(9) | | Net cash provided by financing activities | $— | $304 | | Net decrease in cash, cash equivalents and restricted cash | $(13,227) | $(8,934) | | Cash, cash equivalents and restricted cash, ending balance | $57,967 | $79,636 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies, financial instruments, equity, and commitments, supporting the consolidated financial statements [NOTE 1: NATURE OF OPERATIONS](index=7&type=section&id=NOTE%201%3A%20NATURE%20OF%20OPERATIONS) - Atossa Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing proprietary innovative medicines in oncology, specifically breast cancer and other breast conditions, since its incorporation in 2009[19](index=19&type=chunk) [NOTE 2: LIQUIDITY AND CAPITAL RESOURCES](index=7&type=section&id=NOTE%202%3A%20LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - The Company has incurred net losses and negative operating cash flows since inception, with a **net loss of $15.1 million** and **$13.2 million cash used in operations** for the six months ended June 30, 2025[20](index=20&type=chunk) - As of June 30, 2025, the Company had **$57.9 million in cash and cash equivalents** and **$55.7 million in working capital**, which management believes is sufficient to fund operations for at least one year[20](index=20&type=chunk) - Future funding will rely on public/private equity offerings, debt financings, or corporate collaborations, with no assurance of availability or favorable terms[20](index=20&type=chunk) [NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=7&type=section&id=NOTE%203%3A%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - The financial statements are prepared under GAAP for interim information, with all necessary adjustments included, and operating results for the six months ended June 30, 2025, are not indicative of the full year[21](index=21&type=chunk)[22](index=22&type=chunk) - Significant estimates include stock-based compensation and clinical trial accruals, which may differ from actual results[23](index=23&type=chunk) - R&D costs, including manufacturing, preclinical/clinical trials, and associated compensation, are expensed as incurred[32](index=32&type=chunk) - The Company is assessing the impact of recently issued FASB ASUs on disaggregation of income statement expenses (ASU 2024-03) and income tax disclosures (ASU 2023-09), effective for annual periods beginning after December 15, 2026, and December 15, 2024, respectively[37](index=37&type=chunk)[38](index=38&type=chunk) [NOTE 4: PREPAID EXPENSES AND OTHER CURRENT ASSETS](index=9&type=section&id=NOTE%204%3A%20PREPAID%20EXPENSES%20AND%20OTHER%20CURRENT%20ASSETS) Prepaid Expenses and Other Current Assets (in thousands) | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Prepaid pre-clinical and clinical trial deposits | $366 | $350 | | Prepaid insurance | $278 | $628 | | Prepaid professional services | $231 | $68 | | Other | $200 | $119 | | Total | $1,075 | $1,165 | [NOTE 5: ACCRUED EXPENSES](index=11&type=section&id=NOTE%205%3A%20ACCRUED%20EXPENSES) Accrued Expenses (in thousands) | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Accrued pre-clinical and clinical trial costs | $1,777 | $700 | | Accrued professional services and other | $423 | $219 | | Total | $2,200 | $919 | [NOTE 6: PAYROLL LIABILITIES](index=11&type=section&id=NOTE%206%3A%20PAYROLL%20LIABILITIES) Payroll Liabilities (in thousands) | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Accrued bonuses | $615 | $1,305 | | Accrued vacation | $261 | $226 | | Accrued payroll and benefits | $178 | $331 | | Total | $1,054 | $1,862 | [NOTE 7: OTHER CURRENT LIABILITIES](index=11&type=section&id=NOTE%207%3A%20OTHER%20CURRENT%20LIABILITIES) - The Company recorded a **$1.5 million liability** in Other current liabilities as of June 30, 2025, and December 31, 2024, related to uncertainty regarding the sustainability of its Australian R&D tax incentive position under audit, following a taxpayer alert in December 2023[43](index=43&type=chunk) [NOTE 8: FAIR VALUE OF FINANCIAL INSTRUMENTS](index=11&type=section&id=NOTE%208%3A%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) Fair Value of Financial Instruments (in thousands) | Asset (in thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :------------------- | :----------------------- | :--------------------------- | | Money market fund | $57,395 | $68,543 | - All money market fund assets are classified as **Level 1** in the fair value hierarchy, indicating they are valued using quoted market prices in active markets[44](index=44&type=chunk) [NOTE 9: STOCKHOLDERS' EQUITY](index=12&type=section&id=NOTE%209%3A%20STOCKHOLDERS'%20EQUITY) - The Company is authorized to issue **350,000,000 shares of common stock** ($0.18 par value) and **10,000,000 shares of preferred stock** ($0.001 par value)[45](index=45&type=chunk)[46](index=46&type=chunk) - During the three and six months ended June 30, 2025, **5 shares of Series B convertible preferred stock** were converted into **1,420 shares of common stock**[48](index=48&type=chunk) - As of June 30, 2025, **15,025,000 warrants** to purchase common stock were outstanding, with expiration dates in July and September 2025. No warrant exercises occurred in the first six months of 2025[59](index=59&type=chunk)[60](index=60&type=chunk) [NOTE 10: NET LOSS PER SHARE](index=15&type=section&id=NOTE%2010%3A%20NET%20LOSS%20PER%20SHARE) - Potentially dilutive shares (stock options, convertible preferred stock, and warrants) were excluded from diluted net loss per share calculations for all periods presented because their inclusion would be anti-dilutive[61](index=61&type=chunk) Potentially Dilutive Shares | Potentially Dilutive Shares | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Options to purchase common stock | 22,588,052 | 16,910,002 | 21,615,289 | 17,110,496 | | Series B convertible preferred stock | 164,916 | 165,338 | 165,126 | 165,338 | | Warrants to purchase common stock | 17,528,434 | 21,217,343 | 17,682,113 | 21,358,065 | | Total | 40,281,402 | 38,292,683 | 39,462,528 | 38,633,899 | [NOTE 11: INCOME TAXES](index=15&type=section&id=NOTE%2011%3A%20INCOME%20TAXES) - No income tax provision was recorded for the three and six months ended June 30, 2025, and 2024, due to a **full valuation allowance** against net deferred tax assets resulting from cumulative losses[63](index=63&type=chunk)[64](index=64&type=chunk) [NOTE 12: COMMITMENTS AND CONTINGENCIES](index=15&type=section&id=NOTE%2012%3A%20COMMITMENTS%20AND%20CONTINGENCIES) - Intas Pharmaceuticals Ltd. filed two petitions (PGR and IPR) with the USPTO's PTAB on April 3, 2025, seeking to invalidate two of the Company's patents (**U.S. Patent No. 12,071,391** and **11,261,151**) related to 'Methods for Making and Using Endoxifen'[65](index=65&type=chunk)[66](index=66&type=chunk) - The Company intends to vigorously contest these petitions, believing the patents are valid and enforceable, with decisions expected by **September 8, 2025**[67](index=67&type=chunk) - As of June 30, 2025, the Company's estimated non-cancellable commitment under third-party clinical trial service provider agreements was **$7.9 million**[69](index=69&type=chunk) [NOTE 13: STOCK BASED COMPENSATION](index=17&type=section&id=NOTE%2013%3A%20STOCK%20BASED%20COMPENSATION) Stock-Based Compensation Expense (in thousands) | Expense Category (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 | $157 | $120 | $288 | $236 | | General and administrative | $639 | $232 | $1,071 | $533 | | Total stock-based compensation expense | $796 | $352 | $1,359 | $769 | - As of June 30, 2025, unrecognized compensation cost for unvested options was **$4.7 million**, expected to be recognized over a weighted-average period of **1.7 years**[72](index=72&type=chunk) - The Company granted **4,242,547 options** to purchase common stock to employees and directors during the three months ended June 30, 2025, with a weighted average grant date fair value of **$0.75** for options granted during the six months ended June 30, 2025[71](index=71&type=chunk) [NOTE 14: DEFINED CONTRIBUTION PLAN](index=17&type=section&id=NOTE%2014%3A%20DEFINED%20CONTRIBUTION%20PLAN) Employer Matching Contributions (in thousands) | Employer Matching Contributions (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 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Defined contribution plan | $63 | $37 | $138 | $114 | [NOTE 15: SEGMENTS](index=17&type=section&id=NOTE%2015%3A%20SEGMENTS) - The Company operates as a **single segment**, with the Chief Operating Decision Maker (CEO Steven C. Quay) evaluating performance and allocating resources at the Company-level using condensed consolidated financial statements[74](index=74&type=chunk)[75](index=75&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting key financial trends, operational activities, and future outlook. It covers the company's strategic focus on breast cancer therapeutics, progress in clinical trials for (Z)-endoxifen, and detailed analysis of operating expenses, liquidity, and capital resources [Forward-Looking Statements](index=18&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements regarding future results, industry prospects, and financial position, made in reliance on safe harbor provisions, but actual outcomes may differ materially due to various risks and uncertainties[77](index=77&type=chunk)[78](index=78&type=chunk) - Key uncertainties include macroeconomic conditions, regulatory approvals, ability to commercialize products, success of clinical trials, intellectual property protection, and ability to raise capital[77](index=77&type=chunk)[84](index=84&type=chunk) [Company Overview](index=20&type=section&id=Company%20Overview) - Atossa Therapeutics is a clinical-stage biopharmaceutical company focused on developing innovative medicines for breast cancer and other breast conditions, with **oral (Z)-endoxifen** as its lead drug candidate[79](index=79&type=chunk) - The company holds **six U.S. and ten international patents** for (Z)-endoxifen, providing protection through at least **November 17, 2038**[80](index=80&type=chunk) - In early 2025, Atossa strategically decided to pursue a **metastatic breast cancer indication** for (Z)-endoxifen, receiving positive FDA feedback for a proposed dose optimization trial, targeting an IND submission in **Q4 2025**[82](index=82&type=chunk) [Summary of Our Leading Programs](index=21&type=section&id=Summary%20of%20Our%20Leading%20Programs) - The company has completed **four Phase 1 and two Phase 2 clinical studies** for its proprietary oral (Z)-endoxifen, a Selective Estrogen Receptor Modulator (SERM)[87](index=87&type=chunk) - The Karisma-(Z)-endoxifen Phase 2 study for mammographic breast density (MBD) showed significant MBD reduction (**17.3% for 1mg**, **23.5% for 2mg**) with a favorable safety profile for the **1mg dose**, but MBD reduction alone may not be an approvable indication without demonstrating breast cancer incidence reduction[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - The EVANGELINE Phase 2 study for neoadjuvant treatment of ER+/HER2- breast cancer is comparing (Z)-endoxifen **40 mg/day** plus OFS to exemestane plus OFS, based on findings from an **80 mg/day cohort** that showed substantial tumor suppression (**85% Ki-67 response**) and good tolerability[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - Updated results from the I-SPY 2 EOP study showed **95% participant completion**, median Ki-67 reduction from **10.5% to 5%** by Week 3, and a **77.7% decrease in median functional tumor volume** from baseline to surgery, with (Z)-endoxifen being well tolerated[100](index=100&type=chunk) [Research and Development Phase](index=25&type=section&id=Research%20and%20Development%20Phase) - The Company is currently in the research and development phase and does not anticipate generating revenue until its pharmaceutical programs are developed and launched[102](index=102&type=chunk) [Commercial Lease Agreement](index=25&type=section&id=Commercial%20Lease%20Agreement) - The Company entered into a new operating lease for office space in Seattle, Washington, on March 3, 2025, for **$2 thousand per month** for **12 months**, replacing a previous lease[103](index=103&type=chunk) - An additional operating lease for office space was entered into on December 20, 2024, for **$1 thousand per month** for **12 months**[104](index=104&type=chunk) [Critical Accounting Estimates](index=25&type=section&id=Critical%20Accounting%20Estimates) - There have been no material changes to the Company's critical accounting estimates during the six months ended June 30, 2025, from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024[106](index=106&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) - The Company generated **no revenue** for the three and six months ended June 30, 2025, and 2024[107](index=107&type=chunk) - Total operating expenses increased by **$1.9 million (27%)** to **$9.0 million** for the three months ended June 30, 2025, and by **$2.4 million (17%)** to **$16.5 million** for the six months ended June 30, 2025, compared to the same periods in 2024[108](index=108&type=chunk) Operating Expenses (in thousands) | Expense Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | % Change (YoY) | | :--------------- | :--------------------------- | :--------------------------- | :----------- | :------------- | :--------------------------- | :--------------------------- | :----------- | :------------- | | R&D Expenses | $5,502 | $3,553 | $1,949 | 55% | $9,659 | $7,302 | $2,357 | 32% | | G&A Expenses | $3,538 | $3,552 | $(14) | (0)% | $6,795 | $6,784 | $11 | 0% | | Interest Income | $645 | $1,073 | $(428) | (40)% | $1,365 | $2,211 | $(846) | (38)% | - R&D expenses increased primarily due to higher clinical and non-clinical trial costs (**$1.6 million for Q2**, **$1.5 million for H1**) and increased compensation (**$0.2 million for Q2**, **$0.4 million for H1**) and professional fees (**$0.2 million for Q2**, **$0.5 million for H1**) related to (Z)-endoxifen trials and headcount[109](index=109&type=chunk)[110](index=110&type=chunk) - G&A compensation increased due to non-cash stock-based compensation, while professional fees decreased due to lower legal and investor relations costs[115](index=115&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) - The Company had **$57.9 million in cash and cash equivalents** and **$55.7 million in working capital** as of June 30, 2025, believing it has sufficient cash for at least the next **12 months**[114](index=114&type=chunk) - Net cash used in operating activities increased by **$4.0 million** to **$13.2 million** for the six months ended June 30, 2025, compared to **$9.2 million** in the prior year, driven by increased clinical trial and compensation expenses, partially offset by lower interest income and professional fees[114](index=114&type=chunk)[115](index=115&type=chunk) - The Company expects ongoing operating losses and will require substantial additional capital, which may be raised through equity offerings, debt financings, or collaborations, with no assurance of availability or acceptable terms[118](index=118&type=chunk)[119](index=119&type=chunk) - The Company received a Nasdaq non-compliance letter on **February 21, 2025**, for failing to maintain a minimum **$1.00 bid price** and has until **August 20, 2025**, to regain compliance[120](index=120&type=chunk) - The estimated non-cancellable commitment for third-party clinical trial service providers was **$7.9 million** as of June 30, 2025[121](index=121&type=chunk) [Recently Issued Accounting Pronouncements](index=30&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) - Refer to Note 3 for details on recently issued accounting pronouncements, including FASB ASUs on disaggregation of income statement expenses and income tax disclosures[125](index=125&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Atossa Therapeutics, Inc. is exempt from providing quantitative and qualitative disclosures about market risk as per Item 305(e) of Regulation S-K - The Company is not required to provide quantitative and qualitative disclosures about market risk due to its status as a **smaller reporting company**[126](index=126&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting. Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control during the quarter [Evaluation of Disclosure Controls and Procedures](index=30&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - As of June 30, 2025, the Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were **effective** at a reasonable assurance level[129](index=129&type=chunk) [Changes in Internal Control Over Financial Reporting](index=30&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - There were **no changes** in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[130](index=130&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits, providing comprehensive disclosures beyond financial statements [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 12 of the Condensed Consolidated Financial Statements for a discussion of the Company's legal proceedings, stating that no other current proceedings are expected to have a material adverse effect on its financial position, results of operations, or cash flows - The Company is involved in legal proceedings, as detailed in Note 12, but does not believe any other current matters will have a **material adverse effect** on its financial position, results of operations, or cash flows[133](index=133&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks and uncertainties that could adversely affect Atossa Therapeutics' business, financial condition, and stock price. These risks span operational challenges, intellectual property concerns, industry-specific regulatory and competitive pressures, and factors related to its public securities [Summary of Risk Factors](index=31&type=section&id=Summary%20of%20Risk%20Factors) - Investing in the Company's securities involves a **high degree of risk**, and potential investors should carefully consider the detailed risks outlined in this report[134](index=134&type=chunk) - Risks include those related to business operations, intellectual property, the pharmaceutical industry, and the securities markets[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) [Risks Related to our Business](index=31&type=section&id=Risks%20Related%20to%20our%20Business) - The Company has a history of operating losses, with a **net loss of $15.1 million** for the six months ended June 30, 2025, and expects to continue incurring losses, making profitability uncertain[141](index=141&type=chunk)[144](index=144&type=chunk) - Substantial additional capital will be needed to fund future operations, and the Company may be unable to raise funds on acceptable terms, potentially forcing it to curtail or cease operations[144](index=144&type=chunk)[147](index=147&type=chunk) - The Company is highly dependent on third-party service providers for manufacturing, testing, and clinical trial activities, and any failure or delay by these parties could harm the business[168](index=168&type=chunk)[171](index=171&type=chunk) - The Company's ability to use net operating loss carryforwards (NOLs) and research tax credits may be limited by ownership changes under Sections 382 and 383 of the Internal Revenue Code[186](index=186&type=chunk) - The Company recorded a **$1.5 million liability** for potential Australian R&D tax rebate disqualification, and future changes in estimates could further increase expenses[189](index=189&type=chunk) [Risks Related to our Intellectual Property](index=33&type=section&id=Risks%20Related%20to%20our%20Intellectual%20Property) - Commercial success depends on protecting proprietary technology through patents, trade secrets, and trademarks, but the Company faces challenges in obtaining and enforcing patent protection globally, especially given the complex and uncertain patent landscape in the biotechnology and pharmaceutical industries[192](index=192&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) - Third-party claims of intellectual property infringement could prevent or delay drug development, incur substantial expenses, and potentially lead to injunctions, damages, or the need for costly licenses[207](index=207&type=chunk)[209](index=209&type=chunk) - Changes in U.S. patent law, including post-issuance review procedures like IPR, could diminish patent value and increase prosecution and enforcement costs, as demonstrated by the invalidation of **U.S. Patent No. 11,572,334**[197](index=197&type=chunk)[202](index=202&type=chunk) [Risks Related to Our Industry](index=33&type=section&id=Risks%20Related%20to%20Our%20Industry) - Legislative or regulatory reforms, including changes by the FDA and foreign agencies, could make it more difficult and costly to obtain regulatory approval, manufacture, market, and distribute products[213](index=213&type=chunk)[214](index=214&type=chunk) - Disruptions at government agencies, such as the FDA, due to budget cuts, workforce reductions, or policy changes, could negatively affect the review of regulatory submissions and delay clinical trial timelines[215](index=215&type=chunk)[216](index=216&type=chunk) - Failure to comply with complex government regulations concerning patient privacy (HIPAA, GDPR, UK GDPR) and medical records could result in significant fines, penalties, litigation, and reputational harm[217](index=217&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) - The Company faces intense competition from large pharmaceutical and biotechnology companies, as well as academic institutions, many of which have greater financial resources and experience, particularly in the rapidly evolving field of AI-driven drug discovery[232](index=232&type=chunk)[233](index=233&type=chunk) [Risks Related to the Securities Markets and Investment in our Securities](index=33&type=section&id=Risks%20Related%20to%20the%20Securities%20Markets%20and%20Investment%20in%20our%20Securities) - The Company received a Nasdaq non-compliance letter on **February 21, 2025**, for failing to maintain a minimum **$1.00 bid price** and has until **August 20, 2025**, to regain compliance, with potential delisting consequences[239](index=239&type=chunk)[240](index=240&type=chunk) - The sale of a substantial number of common stock shares, including through 'at the market' offerings or by existing stockholders/warrant holders, could cause substantial dilution and a decline in the stock price[241](index=241&type=chunk) - The trading price of the Company's common stock has been and is likely to remain highly volatile due to various factors, including operating results, market conditions, regulatory actions, and geopolitical events[243](index=243&type=chunk)[246](index=246&type=chunk) - The Company has never paid dividends and does not anticipate doing so in the future, meaning capital appreciation is the sole source of gain for stockholders[244](index=244&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or issuer purchases of securities during the reporting period - No unregistered sales of equity securities occurred during the reporting period[253](index=253&type=chunk) - No issuer purchases of securities were made during the reporting period[254](index=254&type=chunk) [Item 3. Defaults Upon Senior Securities](index=68&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities during the reporting period[255](index=255&type=chunk) [Item 4. Mine Safety Disclosures](index=68&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[256](index=256&type=chunk) [Item 5. Other Information](index=68&type=section&id=Item%205.%20Other%20Information) This section reports that no director or Section 16 officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No director or Section 16 officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[257](index=257&type=chunk) [Item 6. Exhibits](index=69&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer, and Inline XBRL documents - Exhibits include certifications of the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, and Inline XBRL documents[260](index=260&type=chunk) [Signatures](index=70&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q, confirming its submission on behalf of Atossa Therapeutics, Inc. by its Chairman, President, and Chief Executive Officer, Steven C. Quay, and Chief Financial Officer, Heather Rees, on August 12, 2025 - The report was signed on **August 12, 2025**, by Steven C. Quay, Chairman, President and Chief Executive Officer, and Heather Rees, Chief Financial Officer[264](index=264&type=chunk)

[Company Overview and Q2 2025 Highlights](index=1&type=section&id=Company%20Overview%20and%20Q2%202025%20Highlights) Atossa Therapeutics reports significant progress in its clinical pipeline, strong financial health, and confidence in advancing its lead candidate, (Z)-endoxifen, towards IND submission [CEO Statement](index=1&type=section&id=CEO%20Statement) Dr. Steven Quay, Chairman and CEO, emphasized the company's measurable progress, strong balance sheet, and confidence in executing the upcoming IND submission for (Z)-endoxifen in metastatic breast cancer, aiming to demonstrate substantial intrinsic value - Atossa is making meaningful progress across its pipeline, supported by constructive FDA interactions for (Z)-endoxifen in metastatic breast cancer[3](index=3&type=chunk) - The company has a strong balance sheet and plans to file an IND submission, advancing its metastatic clinical program[3](index=3&type=chunk) - Atossa is confident in its focused execution and scientific rigor to demonstrate the substantial intrinsic value of the company and the impact of (Z)-endoxifen[3](index=3&type=chunk) [Clinical and Regulatory Progress](index=1&type=section&id=Clinical%20%26%20Regulatory%20Developments) The company achieved positive FDA feedback for (Z)-endoxifen, reported strong Phase 2 results, and continues to advance other clinical programs [FDA Feedback on (Z)-Endoxifen Program](index=1&type=section&id=Positive%20FDA%20Feedback%20on%20(Z)-Endoxifen%20Program) The FDA provided constructive feedback, supporting Atossa's proposed dose optimization trial for ER+/HER2- metastatic breast cancer and confirming no additional toxicity studies are required, enabling an IND filing in Q4 2025 - FDA provided constructive feedback supporting the proposed dose optimization trial for ER+/HER2- metastatic breast cancer and allowing the Company to meet Project Optimus requirements[4](index=4&type=chunk) - FDA agreed that existing clinical and nonclinical data are sufficient to initiate the monotherapy arm and agreed with the scientific rationale for combination therapy arms[4](index=4&type=chunk) - The Agency indicated no additional general toxicity or neurotoxicity studies are required and confirmed the cardiac safety assessment monitoring protocol is sufficient[4](index=4&type=chunk) - An Investigational New Drug (IND) application filing with the FDA is expected in Q4 2025[4](index=4&type=chunk) [I-SPY2 Endocrine Optimization Sub-Study Results](index=1&type=section&id=I-SPY2%20Endocrine%20Optimization%20Sub-Study%20Results) Full results from the Phase 2 pilot within the I-SPY2 trial for low-dose (Z)-endoxifen monotherapy showed 95% dosing completion, a median Ki-67 drop from 10.5% to 5% by Week 3, and significant tumor volume reduction, with favorable safety - Primary endpoint achieved with **95 percent** of subjects completing at least 75 percent of planned dosing[5](index=5&type=chunk) - Median Ki-67 dropped from **10.5 percent** at baseline to **5 percent** by Week 3, with **65 percent** achieving Ki-67 ≤ 10 percent[5](index=5&type=chunk) - Median functional tumor volume decreased by **77.7 percent** from baseline to surgery, and the longest tumor diameter dropped by **36.8 percent**[5](index=5&type=chunk) - Safety was favorable, with adverse events predominantly Grade 1; only three Grade 3 events occurred in a single patient and were deemed unrelated to the study drug; no Grade 4 or Grade 5 events were reported[5](index=5&type=chunk) [Other Ongoing Phase 2 Programs](index=3&type=section&id=Other%20ongoing%20Phase%202%20Programs) Patient recruitment for the I-SPY2 combination therapy (40 mg (Z)-endoxifen and abemaciclib) is proceeding faster than anticipated, with 41 patients initiated. Atossa also continues to evaluate (Z)-endoxifen in two other Phase 2 trials for DCIS and ER+/HER2- breast cancer - Patient recruitment for the I-SPY2 Endocrine Optimization Pilot Analysis (combination therapy of **40 mg (Z)-endoxifen** and Eli Lilly's abemaciclib) continues at a faster rate than anticipated, with **41 patients** initiated as of July 29, 2025[9](index=9&type=chunk) - Atossa continues to evaluate (Z)-endoxifen in two other Phase 2 trials: one in women with ductal carcinoma in situ (DCIS) and one in women with ER+/HER2- breast cancer[9](index=9&type=chunk) [Intellectual Property and Strategic Outlook](index=3&type=section&id=Intellectual%20Property%20%26%20Patent%20Portfolio) Atossa strengthened its IP portfolio with new patents and is focused on key strategic milestones, including IND submission and advancing clinical trials [Intellectual Property & Patent Portfolio](index=3&type=section&id=Intellectual%20Property%20%26%20Patent%20Portfolio_sub) Atossa strengthened its intellectual property with a new U.S. patent (No. 12,281,056) for enteric oral formulations of (Z)-endoxifen, enhancing purity, stability, and bioavailability. The company is vigorously defending two patents currently under post-grant challenges, noting that the majority of its IP remains unaffected - In mid-May 2025, Atossa announced the issuance of U.S. Patent No. **12,281,056**, containing **58 claims** relating to the enteric oral formulations of (Z)-endoxifen, including features of improved purity, stability, and bioavailability[9](index=9&type=chunk) - Two of Atossa's patents (U.S. Patent Nos. **11,261,151** and **12,071,391**) are currently the subject of post-grant challenges, which are common for high-value pharmaceutical IP, and the company remains confident in its ability to vigorously defend them[9](index=9&type=chunk) - Atossa holds four additional issued U.S. patents with over **200 total claims** covering proprietary manufacturing methods, stable crystalline forms, and multiple sustained-release and enteric oral formulations of (Z)-endoxifen[9](index=9&type=chunk) [Strategic Outlook & Upcoming Milestones](index=3&type=section&id=Strategic%20Outlook%20%26%20Upcoming%20Milestones) Atossa is focused on executing its breast cancer development strategy, with key upcoming deliverables including selecting a CRO, disclosing dose-ranging trial design, targeting IND submission in Q4 2025, and advancing enrollment in ongoing Phase 2 trials. The company is also working with the FDA on regulatory strategies for broader breast cancer indications - Key upcoming deliverables include the announcement of a Contract Research Organization (CRO) selected to execute the metastatic dose ranging study and disclosure of dose-ranging trial design[9](index=9&type=chunk) - Targeting IND submission in **Q4 2025**, in alignment with feedback under the FDA Project Optimus initiative[9](index=9&type=chunk) - Advancing enrollment and data generation from ongoing Phase 2 trials and working with the FDA on regulatory strategies for breast cancer indications beyond metastatic breast cancer[9](index=9&type=chunk) [Financial Performance for Q2 2025](index=3&type=section&id=Financial%20Performance%20for%20Q2%202025) Atossa's Q2 2025 financial performance shows increased operating expenses, decreased interest income, and a higher net loss, with reduced cash balances [Operating Expenses](index=3&type=section&id=Operating%20Expenses) Total operating expenses increased by $1.9 million (27.2%) for the three months and $2.4 million (16.8%) for the six months ended June 30, 2025, compared to the prior year, primarily due to higher R&D costs **Total Operating Expenses:** | Period | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :----- | :------------------ | :------------------ | :-------------------- | :------- | | 3 Months Ended Jun 30 | $9,040 | $7,105 | $1,935 | 27.2% | | 6 Months Ended Jun 30 | $16,454 | $14,086 | $2,368 | 16.8% | - Total operating expenses increased by **$1.9 million** and **$2.4 million** for the three and six months ended June 30, 2025, respectively, compared to the prior year[7](index=7&type=chunk) - Factors contributing to the increased operating expenses were primarily related to higher Research & Development expenses[7](index=7&type=chunk) [Research & Development (R&D) Expenses](index=3&type=section&id=Research%20%26%20Development%20(R%26D)%20Expenses) R&D expenses increased significantly by 55% for the three months and 32% for the six months ended June 30, 2025, primarily due to increased spending on (Z)-endoxifen trials, drug development costs, higher headcount, and consulting fees **Research and Development Expense Breakdown (in thousands):** | Category | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change | % Change | | :----------------------------- | :-------------------------- | :-------------------------- | :----- | :------- | :-------------------------- | :-------------------------- | :----- | :------- | | Clinical and non-clinical trials | $4,089 | $2,501 | $1,588 | 63% | $6,836 | $5,384 | $1,452 | 27% | | Compensation | $856 | $679 | $177 | 26% | $1,736 | $1,305 | $431 | 33% | | Professional fees and other | $557 | $373 | $184 | 49% | $1,087 | $613 | $474 | 77% | | **Total R&D Expense** | **$5,502** | **$3,553** | **$1,949** | **55%** | **$9,659** | **$7,302** | **$2,357** | **32%** | - Clinical and non-clinical trial expenses increased due to increases in spend related to our (Z)-endoxifen trials, including drug development costs[10](index=10&type=chunk) - Increases in R&D compensation expenses were due to increases in headcount[10](index=10&type=chunk) - Increases in R&D professional fees and other were primarily attributable to higher consulting fees related to our (Z)-endoxifen program[10](index=10&type=chunk) [General & Administrative (G&A) Expenses](index=5&type=section&id=General%20and%20Administrative%20(G%26A)%20Expenses) G&A expenses remained relatively flat for both the three and six months ended June 30, 2025. Compensation increased due to non-cash stock-based compensation, while professional fees and other decreased due to lower legal and investor relations costs **General and Administrative Expense Breakdown (in thousands):** | Category | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change | % Change | | :----------------------------- | :-------------------------- | :-------------------------- | :----- | :------- | :-------------------------- | :-------------------------- | :----- | :------- | | Compensation | $1,564 | $1,031 | $533 | 52% | $3,026 | $2,356 | $670 | 28% | | Professional fees and other | $1,794 | $2,269 | $(475) | (21)% | $3,408 | $3,949 | $(541) | (14%) | | Insurance | $180 | $252 | $(72) | (29)% | $361 | $479 | $(118) | (25)% | | **Total G&A Expense** | **$3,538** | **$3,552** | **$(14)** | **(0)%** | **$6,795** | **$6,784** | **$11** | **0%** | - G&A compensation expenses increased primarily due to increases in non-cash stock-based compensation expense (**$0.4 million** for three months, **$0.5 million** for six months)[18](index=18&type=chunk) - G&A professional fees and other decreased due to decreases in legal fees (**$0.3 million** for three months, **$0.2 million** for six months) and investor relations costs (**$0.1 million** for three months, **$0.3 million** for six months)[18](index=18&type=chunk) [Interest Income](index=5&type=section&id=Interest%20Income) Interest income decreased by $0.4 million (39.9%) for the three months and $0.8 million (38.3%) for the six months ended June 30, 2025, compared to the prior year, due to decreases in the average balance invested in the money market account **Interest Income (in thousands):** | Period | 2025 | 2024 | Change | % Change | | :----- | :--- | :--- | :----- | :------- | | 3 Months Ended Jun 30 | $645 | $1,073 | $(428) | (39.9)% | | 6 Months Ended Jun 30 | $1,365 | $2,211 | $(846) | (38.3)% | - The decreases in interest income were due to decreases in the average balance invested in our money market account[12](index=12&type=chunk) [Condensed Consolidated Balance Sheets](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, total assets decreased to $64.5 million from $76.4 million at December 31, 2024, primarily driven by a reduction in cash and cash equivalents. Total liabilities increased, while total stockholders' equity decreased **Condensed Consolidated Balance Sheets (Key Figures, in thousands):** | Item | June 30, 2025 | December 31, 2024 | Change | | :------------------------ | :------------ | :---------------- | :----- | | Cash and cash equivalents | $57,857 | $71,084 | $(13,227) | | Total current assets | $62,517 | $74,457 | $(11,940) | | Total assets | $64,515 | $76,444 | $(11,929) | | Total current liabilities | $6,820 | $4,967 | $1,853 | | Total liabilities | $6,820 | $4,967 | $1,853 | | Total stockholders' equity | $57,695 | $71,477 | $(13,782) | - Cash and cash equivalents decreased by **$13.2 million** from December 31, 2024, to June 30, 2025[22](index=22&type=chunk) - Total current liabilities increased by **$1.85 million** from December 31, 2024, to June 30, 2025[22](index=22&type=chunk) [Condensed Consolidated Statements of Operations](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Atossa reported a net loss of $8.4 million for Q2 2025, up from $6.0 million in Q2 2024, and a net loss of $15.1 million for the six months ended June 30, 2025, compared to $11.9 million in the prior year period, primarily due to increased operating expenses **Condensed Consolidated Statements of Operations (Key Figures, in thousands):** | Item | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change | | :-------------------------------------- | :-------------------------- | :-------------------------- | :----- | :-------------------------- | :-------------------------- | :----- | | Total operating expenses | $9,040 | $7,105 | $1,935 | $16,454 | $14,086 | $2,368 | | Operating loss | $(9,040) | $(7,105) | $(1,935) | $(16,454) | $(14,086) | $(2,368) | | Interest income | $645 | $1,073 | $(428) | $1,365 | $2,211 | $(846) | | Net loss | $(8,423) | $(6,049) | $(2,374) | $(15,141) | $(11,927) | $(3,214) | | Net loss per share - basic and diluted | $(0.07) | $(0.05) | $(0.02) | $(0.12) | $(0.10) | $(0.02) | - Net loss per share increased from **$(0.05)** to **$(0.07)** for the three months ended June 30, 2025, and from **$(0.10)** to **$(0.12)** for the six months ended June 30, 2025[24](index=24&type=chunk) [Product Candidate Profile: (Z)-Endoxifen](index=5&type=section&id=About%20(Z)-Endoxifen) (Z)-endoxifen is a potent SERM developed by Atossa, demonstrating activity in resistant tumors and a favorable safety profile [About (Z)-Endoxifen](index=5&type=section&id=About%20(Z)-Endoxifen_sub) (Z)-endoxifen is a highly potent Selective Estrogen Receptor Modulator (SERM) developed by Atossa in a proprietary enteric oral formulation to ensure optimal bioavailability. It targets estrogen receptors and PKCβ1, showing activity even in resistant tumors and bone-protective effects, with no maximum tolerated dose identified in over 700 subjects - (Z)-endoxifen is a highly potent Selective Estrogen Receptor Modulator (SERM) with demonstrated ability to inhibit—and potentially degrade—estrogen receptors, showing activity even in tumors that have developed resistance to other endocrine therapies[13](index=13&type=chunk) - It also targets protein kinase C beta 1 (PKCβ1) and seems to deliver comparable or superior bone-protective effects relative to tamoxifen[13](index=13&type=chunk) - Atossa is developing a proprietary enteric oral formulation of (Z)-endoxifen that bypasses stomach acid, which would otherwise convert the active (Z)-isomer to its inactive (E)-form, allowing for optimal bioavailability and therapeutic integrity[14](index=14&type=chunk) - Well tolerated in over **700 subjects** (healthy volunteers and breast cancer patients), with doses up to **360 mg/day** administered and no maximum tolerated dose (MTD) identified, supporting continued dose-ranging exploration[14](index=14&type=chunk) [About Atossa Therapeutics](index=5&type=section&id=About%20Atossa%20Therapeutics) Atossa Therapeutics is a clinical-stage biopharmaceutical company focused on transforming breast cancer treatment with its lead candidate, (Z)-endoxifen [About Atossa Therapeutics](index=5&type=section&id=About%20Atossa%20Therapeutics_sub) Atossa Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on transforming breast cancer treatment. Its lead candidate, (Z)-endoxifen, is a potent SERM for various breast cancer settings, with the company committed to advancing clinical research and creating shareholder value - Atossa Therapeutics, Inc. is a clinical-stage biopharmaceutical company dedicated to transforming breast cancer treatment through innovative science and patient-focused solutions[16](index=16&type=chunk) - The Company's lead product candidate, (Z)-endoxifen, is a highly potent SERM designed for use across the breast cancer spectrum, including prevention, neoadjuvant, adjuvant, and metastatic settings[16](index=16&type=chunk) - Atossa is committed to advancing its robust clinical research programs to improve patient outcomes while creating sustainable value for shareholders[16](index=16&type=chunk) [Forward-Looking Statements and Contact Information](index=5&type=section&id=FORWARD%20LOOKING%20STATEMENTS) This section outlines forward-looking statements, associated risks, and contact details for investor and public relations inquiries [Forward-Looking Statements](index=5&type=section&id=FORWARD%20LOOKING%20STATEMENTS_sub) The press release includes forward-looking statements about the company's development strategy, (Z)-endoxifen program, regulatory approvals, and financial performance, which are subject to various risks and uncertainties - This press release contains certain information that may constitute forward-looking statements regarding the Company's development strategy, related milestones, data related to the (Z)-endoxifen program, and the safety, tolerability and efficacy of (Z)-endoxifen[17](index=17&type=chunk) - Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including risks associated with obtaining patent coverage, macroeconomic conditions, FDA actions, and clinical trial outcomes[19](index=19&type=chunk) - The company does not intend to update any forward-looking statements, whether as a result of new information, future events or circumstances or otherwise, except as required by law[19](index=19&type=chunk) [Contact Information](index=7&type=section&id=Contact) Contact details for investor and public relations are provided for inquiries - Contact: Michael Parks, VP, Investor and Public Relations, 484-356-7105, michael.parks@atossainc.com[20](index=20&type=chunk)

Core Insights - Atossa Therapeutics has received positive feedback from the FDA regarding its (Z)-endoxifen program for metastatic breast cancer, indicating no additional toxicity studies are required and supporting the company's planned IND submission [3][4][6] - The company reported strong results from the I-SPY2 trial, demonstrating the efficacy of (Z)-endoxifen as a monotherapy, with significant reductions in Ki-67 levels, a key biomarker for cancer cell proliferation [4][11] - Atossa is strategically focused on advancing its clinical programs while maintaining a strong balance sheet, avoiding the use of its ATM facility at current undervalued share prices [2][6] Clinical & Regulatory Developments - The FDA's feedback supports Atossa's proposed dose optimization trial in ER+/HER2- metastatic breast cancer, allowing the initiation of the monotherapy arm and combination therapy arms [3] - Atossa plans to file an IND application in Q4 2025, aligning with FDA's Project Optimus initiative [3][6] Clinical Trial Readouts & Scientific Validation - In the I-SPY2 trial, 95% of subjects completed at least 75% of planned dosing, with a median Ki-67 reduction from 10.5% to 5% by Week 3 [4] - The median functional tumor volume decreased by 77.7% from baseline to surgery, indicating significant tumor response [4] Financial Overview - Total operating expenses for Q2 2025 were $9.0 million, an increase from $7.1 million in Q2 2024, driven by higher R&D costs related to (Z)-endoxifen trials [6][20] - Research and development expenses rose to $5.5 million for Q2 2025, up from $3.6 million in Q2 2024, reflecting increased spending on clinical trials [7][20] Intellectual Property & Patent Portfolio - Atossa holds a robust intellectual property portfolio, including recent patents related to (Z)-endoxifen formulations, which provide substantial protection for its lead program [15] - The company is currently facing post-grant challenges on two patents but remains confident in defending its intellectual property [7][15] Strategic Outlook & Upcoming Milestones - Key upcoming milestones include the IND submission for (Z)-endoxifen and advancing enrollment in ongoing Phase 2 trials [6][15] - Atossa is also exploring regulatory strategies for additional breast cancer indications beyond metastatic cases [6][15]

Core Viewpoint - Atossa Therapeutics has received positive feedback from the FDA regarding its proposed dose optimization trial for (Z)-endoxifen, aimed at treating ER+/HER2- metastatic breast cancer, which is a significant milestone for the company [1][2][3] FDA Feedback and Clinical Development - The FDA's constructive responses affirm key elements of Atossa's clinical development plan, eliminating the need for a virtual pre-IND meeting and facilitating a potential IND submission by Q4 2025 [2][3] - The FDA supports Atossa's dose optimization strategy and agrees with the existing nonclinical data package, enhancing confidence in the company's regulatory approach [3][7] Dose Optimization Strategy - The FDA has confirmed that existing clinical and nonclinical data are sufficient to initiate Part A (monotherapy) of the proposed dose optimization study, providing guidance on study design enhancements [7] - Atossa plans to explore multiple dose levels in its upcoming clinical study to define the optimal dose for combination therapy, aligning with the FDA's Project Optimus initiative [6][7] Combination Study Support - The FDA agrees with the scientific rationale for combining (Z)-endoxifen with standard-of-care therapies for breast cancer, which helps narrow the strategic approach for the potential IND [7] Cardiac Safety and Nonclinical Data - The FDA has confirmed that Atossa's cardiac safety assessment plan, including ECGs and QT interval monitoring, is sufficient for the monotherapy portion of the trial [7] - The existing nonclinical safety data package is deemed adequate, allowing Atossa to proceed without additional toxicity studies [7] Next Steps and Strategic Momentum - Atossa will announce plans for the target patient population, combination backbone, and overall trial design for the upcoming dose-ranging study in the coming weeks [7] - The company is positioned to maintain strategic momentum and meet regulatory milestones, aiming to deliver (Z)-endoxifen to patients and enhance shareholder value [5][10] About (Z)-Endoxifen - (Z)-endoxifen is a potent Selective Estrogen Receptor Modulator (SERM) that inhibits and potentially degrades estrogen receptors, showing activity in tumors resistant to other therapies [8][10] - Atossa is developing an oral formulation of (Z)-endoxifen that is enteric-coated to ensure optimal bioavailability and therapeutic integrity [9] Clinical Trials and Intellectual Property - Atossa is prioritizing (Z)-endoxifen for metastatic breast cancer, currently evaluating it in three Phase 2 trials [10] - The program is supported by a growing global intellectual property portfolio, including recently issued U.S. patents [10]

Core Viewpoint - Atossa Therapeutics has received positive feedback from the FDA regarding its proposed dose optimization trial for (Z)-endoxifen, aimed at treating ER+/HER2- metastatic breast cancer, which is a significant milestone for the company [1][2][3] FDA Feedback and Clinical Development - The FDA's constructive responses affirm key elements of Atossa's clinical development plan, eliminating the need for a virtual pre-IND meeting and facilitating a potential IND submission by Q4 2025 [2][3] - The FDA supports Atossa's dose optimization strategy and agrees with the existing clinical and nonclinical data, allowing the initiation of Part A (monotherapy) of the proposed study [7] Strategic Momentum and Future Plans - Atossa is positioned to maintain strategic momentum and meet regulatory milestones, aiming to deliver (Z)-endoxifen to patients and enhance shareholder value [5] - The company plans to announce details regarding the target patient population, combination therapies, and overall trial design for the upcoming dose-ranging study in the coming weeks [7] Project Optimus and Dose Exploration - The FDA's Project Optimus initiative emphasizes data-driven dose exploration to maximize benefits and minimize toxicity, which aligns with Atossa's upcoming clinical study plans [6] - Atossa will explore multiple dose levels in its study to define the optimal dose for combination therapy while ensuring a balance between efficacy and patient safety [6] (Z)-Endoxifen Overview - (Z)-endoxifen is a potent Selective Estrogen Receptor Modulator (SERM) that inhibits and potentially degrades estrogen receptors, showing activity in tumors resistant to other therapies [8] - The compound is being developed in a proprietary oral formulation that is enteric-coated to ensure optimal bioavailability and therapeutic integrity [9] Clinical Trials and Intellectual Property - Atossa is prioritizing (Z)-endoxifen for metastatic breast cancer, currently evaluating it in three Phase 2 trials [10] - The program is supported by a growing global intellectual property portfolio, including recently issued U.S. patents and pending applications worldwide [10]

(Z)-endoxifen's Potential & Differentiation - (Z)-endoxifen is a novel, next-generation anti-estrogen with best-in-class potential across the breast cancer treatment paradigm[8] - (Z)-endoxifen is potentially a superior ER antagonist, being 100-fold more potent vs other SERMs, and demonstrates superior antitumor efficacy in preclinical and clinical studies[7] - (Z)-endoxifen inhibits clinically relevant ESR1 mutants, an acquired resistance mechanism to aromatase inhibitors[7] - (Z)-endoxifen has the potential to avoid current negative "on target off tissue" effects, potentially improving safety & tolerability and adherence[7] Clinical Trial Results & Regulatory Path - In a Phase II trial, CDK4/6 inhibitor-naïve patients had improved Progression-Free Survival (PFS) with (Z)-endoxifen compared to tamoxifen, with median PFS of 7.2 months versus 2.4 months, HR=0.42 (95% CI 0.22-0.80), Log rank test P=0.002[12] - The KARISMA trial showed a 17.3 percentage point reduction (p<0.01) in mammographic breast density with 1 mg of (Z)-endoxifen compared to a minimal change in the placebo group of 0.27 percentage points[13] - In an ongoing neoadjuvant clinical study, (Z)-endoxifen has demonstrated promising early efficacy with 1 CR and multiple PRs[14] Financials - The company's research and development expenses were $14.117 million in 2024, compared to $17.334 million in 2023[21] - The company's general and administrative expenses were $13.504 million in 2024, compared to $14.043 million in 2023[21] - The company's net loss was $(25.504) million in 2024, compared to $(30.094) million in 2023[21]

Atossa Therapeutics Conference Summary Company Overview - Atossa Therapeutics (NASDAQ: ATOS) focuses on breast cancer and oncology, addressing a multi-billion dollar opportunity in estrogen receptor positive breast cancer with its lead molecule, Z endoxifen [3][52]. Key Points and Arguments - **Market Opportunity**: Atossa is targeting a significant market in estrogen receptor positive breast cancer, with Z endoxifen showing potential from prevention to metastatic treatment [3][52]. - **Intellectual Property**: The company boasts a robust and growing intellectual property portfolio, with 92 patents held by the CEO, indicating strong future value for shareholders [4][52]. - **Financial Position**: Atossa is in a strong financial position, with over $65 million in cash as of March 31, providing approximately two years of operational runway and no debt [5][50][51]. - **Leadership Team**: The company has an experienced leadership team and advisory group, including experts from renowned institutions like the Mayo Clinic and UCSF [6][52]. Product Differentiation - **Z endoxifen's Unique Properties**: - It has superior estrogen receptor antagonism, which is crucial as 75% of breast cancers are driven by estrogen receptors [16][52]. - It triggers apoptosis, a unique mechanism that differentiates it from other endocrine therapies [10][18][52]. - Improved adherence due to a favorable side effect profile compared to existing treatments like tamoxifen and aromatase inhibitors [11][20][52]. Clinical Insights - **Unmet Needs**: Approximately 40-50% of patients stop taking current treatments due to adverse events, highlighting the need for better-tolerated therapies [7][8][52]. - **Efficacy Data**: Clinical trials have shown significant reductions in tumor size and improved patient outcomes with Z endoxifen compared to traditional therapies [33][45][52]. - **Combination Therapies**: Ongoing research indicates that Z endoxifen may work synergistically with CDK4/6 inhibitors, enhancing treatment efficacy [21][36][52]. Regulatory Strategy - **FDA Engagement**: Atossa is actively engaging with the FDA to expedite the approval process for Z endoxifen, focusing on the metastatic setting as the first target for approval [29][48][52]. - **Upcoming Trials**: The company aims to initiate its first patient in an FDA-approved registration trial by the end of 2025, with ongoing trials in prevention and neoadjuvant settings [50][52]. Conclusion - Atossa Therapeutics is positioned strongly within the breast cancer treatment landscape, with a promising drug candidate, a solid financial foundation, and a strategic approach to regulatory approval and market entry [52].

Summary of Atosa Therapeutics Webinar Company Overview - **Company**: Atosa Therapeutics - **Ticker**: ATOS (NASDAQ) - **Market Focus**: Estrogen receptor positive breast cancer, addressing a multibillion dollar market opportunity [5][39] Key Points and Arguments Product Development - **Drug**: Z endoxifen, a prodrug of tamoxifen, is being developed for various stages of breast cancer treatment including prevention, neoadjuvant, adjuvant, and metastatic settings [5][11][39] - **Market Potential**: The market for estrogen receptor positive breast cancer is projected to reach $42 billion by 2030 [25] - **Clinical Utility**: Z endoxifen shows broad clinical utility and aims to address significant unmet needs in breast cancer treatment, particularly in improving efficacy and reducing resistance to therapy [8][9][39] Clinical Insights - **Efficacy**: Approximately 50% of patients discontinue adjuvant endocrine therapy due to side effects, and nearly 60% do not respond to second-line therapies [8][9] - **Unique Mechanism**: Z endoxifen not only blocks estrogen receptor binding but also induces apoptosis, which is a critical mechanism lacking in current therapies [10][15] - **Resistance**: Z endoxifen remains effective even in cases of estrogen receptor mutations, which occur in over 50% of long-term endocrine therapy patients [16][17] Safety and Tolerability - **Adverse Events**: Z endoxifen has a low adverse event profile, enhancing patient adherence to treatment [18][32] - **Combination Therapy**: The drug is positioned as a promising backbone for combination therapies, showing compatibility with existing treatments [19][30] Regulatory Strategy - **FDA Approval Pathway**: The company is prioritizing the metastatic setting for FDA approval, which is expected to provide the fastest path to market [24][36] - **Ongoing Discussions**: Atosa is actively engaging with the FDA to align on registrational endpoints and accelerated approval pathways [47] Financial Position - **Cash Reserves**: Atosa has approximately $65 million in cash with nearly two years of runway and zero debt [37][39] - **Market Capitalization**: As of May, the company's market cap was $140 million, with a stock price of $1.06 [39] Additional Important Information - **Intellectual Property**: Atosa has a robust and growing IP portfolio providing protection in the US and globally [6][39] - **Leadership Team**: The company boasts an experienced leadership team with a history of successful drug development [6][40] - **Clinical Trials**: Ongoing trials include the EVANGELINE trial for grade one and two estrogen receptor breast cancers in the neoadjuvant setting [32][34] Conclusion Atosa Therapeutics is positioned to make significant advancements in the treatment of estrogen receptor positive breast cancer with its lead product Z endoxifen, backed by a strong financial position and a clear regulatory strategy aimed at addressing a substantial market need.

Core Insights - Atossa Therapeutics has reported promising results from the Phase 2 Endocrine Optimization Pilot sub-study, demonstrating the bioactivity of low-dose (Z)-endoxifen in treating stage II/III ER+/HER2- breast cancer [1][4] Group 1: Study Results - No participants achieved a pathologic complete response (pCR), with residual cancer burden (RCB) classes indicating moderate to extensive disease [3] - The study showed a median Ki-67 suppression from 10.5% at baseline to 5% by Week 3, with 65% of patients achieving Ki-67 ≤ 10% [6] - Median functional tumor volume decreased by 77.7% from baseline to surgery, with the longest tumor diameter reduced by 36.8% [6] Group 2: Drug Profile - (Z)-endoxifen is a potent Selective Estrogen Receptor Modulator (SERM) that can inhibit and potentially degrade estrogen receptors, showing activity in resistant tumors [5] - The drug targets PKCβ1, an oncogenic signaling protein, at clinically achievable blood levels, and offers comparable or superior bone protection compared to tamoxifen [5] Group 3: Future Directions - Atossa is enrolling participants in an additional I-SPY2 cohort testing (Z)-endoxifen at a 40 mg daily dose, with top-line data expected in 2026 [4] - The company is focused on developing (Z)-endoxifen for metastatic breast cancer, supported by a growing intellectual property portfolio [8]

Drug Development - The company is developing (Z)-endoxifen for breast cancer treatment, with a focus on metastatic breast cancer, aiming for a streamlined regulatory pathway[85] - The FDA has authorized the Investigational New Drug (IND) application for (Z)-endoxifen, with a Phase 2 study enrolling approximately 190 patients planned[98] - The ongoing Phase 2 DCIS study aims to evaluate (Z)-endoxifen's suitability for long-term active surveillance in women with ductal carcinoma in situ, with approximately 100 patients expected to be treated[96] - The treatment cohort for the neoadjuvant study of (Z)-endoxifen was initiated in April 2025, comparing it to exemestane plus OFS[100] - The company plans to conduct additional studies to assess (Z)-endoxifen's correlation with breast cancer risk reduction, as advised by the FDA[94] - (Z)-endoxifen achieved a primary endpoint with 95% of patients receiving over 75% of planned treatment, showing a 69% reduction in Ki-67 and a 30.4% reduction in functional tumor volume after three weeks[102] - The company has completed four Phase 1 and two Phase 2 clinical studies for (Z)-endoxifen, demonstrating its potential in treating breast cancer and reducing breast density[89] Financial Performance - Total operating expenses increased to $7.4 million for the three months ended March 31, 2025, up from $7.0 million in the same period in 2024, reflecting a $0.4 million increase[110] - Research and Development (R&D) expenses totaled $4.2 million for the three months ended March 31, 2025, an 11% increase from $3.7 million in 2024[111] - Compensation expenses within R&D rose by 41% to $0.9 million, while professional fees increased by 123% to $0.5 million for the same period[111] - Interest income decreased to $0.7 million for the three months ended March 31, 2025, down from $1.1 million in 2024, due to a lower balance in the money market account[112] - Net cash used in operating activities was $5.96 million for the three months ended March 31, 2025, compared to $4.70 million in 2024, reflecting a $1.3 million increase[115] - As of March 31, 2025, the company had $65.1 million in cash and cash equivalents, sufficient to fund projected operating requirements for at least the next 12 months[115] - The company has an estimated non-cancellable commitment of $9.4 million for clinical trial service providers as of March 31, 2025[122] - The company is not currently generating revenue and does not anticipate doing so until pharmaceutical programs are developed and launched[104] Intellectual Property - The company has been granted six U.S. and ten international patents for (Z)-endoxifen, with protection extending through at least November 17, 2038[83] Corporate Strategy - The company aims to opportunistically add programs in areas of high unmet medical need through acquisition or collaboration[84] - The company is focused on advancing its clinical studies and successfully commercializing new therapeutics[82] Compliance and Regulatory Issues - The company received a letter from Nasdaq regarding non-compliance with the minimum bid price requirement, with a deadline to regain compliance by August 20, 2025[121]