Athira Pharma(US:ATHA)2025-05-09 20:15markdown [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)