Atea Pharmaceuticals(AVIR) - 2025 Q1 - Quarterly Report

Special Note Regarding Forward-Looking Statements This section outlines forward-looking statements regarding the company's business and financial performance, emphasizing their inherent risks and uncertainties - This report contains forward-looking statements concerning the company's business, clinical development timelines, future financial performance, and strategic plans. These statements are based on current beliefs and are not guarantees of future performance[6] - Forward-looking statements cover clinical trials, product development, financial estimates, and the share repurchase program - Forward-looking statements involve significant risks and uncertainties, with actual results potentially differing materially[7][9][10] Summary Risk Factors This section summarizes key risks: product dependency, limited operating history, regulatory hurdles, and the need for additional financing - The company's business is highly dependent on the success of its lead product candidate, the regimen of bemnifosbuvir and ruzasvir for the treatment of HCV[14] - The company has a limited operating history, has incurred significant operating expenses, has no products generating commercial revenue, and may not achieve or maintain profitability[14] - Key operational risks include the lengthy and unpredictable regulatory approval process, potential for substantial delays and costs in clinical trials, and dependence on third parties for manufacturing[14] - Other significant risks include the need for substantial additional financing, potential for intellectual property disputes, dependence on key personnel, and the impact of unstable market and economic conditions[14][15] PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited financial statements show a $34.3 million net loss for Q1 2025, primarily due to lower R&D, and a strong $425.4 million liquidity position Condensed Consolidated Balance Sheets Total assets decreased to $439.96 million as of March 31, 2025, mainly due to marketable securities, with accumulated deficit growing to $398.49 million Condensed Consolidated Balance Sheet Data (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $119,394 | $64,696 | | Marketable securities | $306,042 | $390,025 | | Total Assets | $439,964 | $464,668 | | Total Liabilities | $28,880 | $25,801 | | Accumulated Deficit | ($398,492) | ($364,220) | | Total Stockholders' Equity | $411,084 | $438,867 | Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss improved to $34.27 million (or $0.40 per share) for Q1 2025, driven by a substantial decrease in research and development expenses Statement of Operations Highlights (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Research and development | $29,584 | $57,575 | | General and administrative | $9,457 | $12,231 | | Total operating expenses | $39,041 | $69,806 | | Net loss | ($34,272) | ($63,169) | | Net loss per share | ($0.40) | ($0.75) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved to $30.56 million in Q1 2025, with cash and cash equivalents increasing to $119.39 million by period-end Cash Flow Summary (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($30,563) | ($39,865) | | Net cash provided by investing activities | $85,608 | $56,802 | | Net increase in cash and cash equivalents | $54,698 | $17,087 | | Cash and cash equivalents at end of period | $119,394 | $160,910 | Notes to Condensed Consolidated Financial Statements Notes detail the company's focus on its HCV regimen, strong $425.4 million liquidity, a $5.0 million Merck milestone, and a $25.0 million share repurchase program - The company's lead product candidate is the regimen of bemnifosbuvir and ruzasvir for the treatment of HCV; enrollment in the Phase 3 program began in April 2025[28] - A $5.0 million milestone payment to Merck became due in April 2025 upon initiation of the HCV Phase 3 clinical trial[71] - In April 2025, the Board of Directors authorized a share repurchase program for up to $25.0 million of its Common Stock[83] Stock-based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Research and development | $3,440 | $5,981 | | General and administrative | $3,511 | $6,605 | | Total | $6,951 | $12,586 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strategic shift to its HCV program, highlighting a reduced net loss and a strong $425.4 million capital position sufficient through 2027 Overview The company focuses on its lead HCV program (Phase 3 initiated), discontinued its COVID-19 program, and authorized a $25 million share repurchase - The company's primary objective is to develop its HCV regimen of bemnifosbuvir and ruzasvir as a differentiated, pan-genotypic, protease inhibitor-free therapeutic[91] - The COVID-19 program was discontinued after the Phase 3 SUNRISE-3 trial failed to meet its primary endpoint in September 2024[100] - A workforce reduction of ~25% in Q1 2025 is expected to generate aggregate cost savings of approximately $15.0 million through 2027[102] - The company engaged Evercore LLC to explore a broad range of strategic alternatives to enhance stockholder value, a process which is ongoing[105] Results of Operations Q1 2025 R&D expenses decreased by $28.0 million and G&A by $2.8 million, narrowing net loss to $34.3 million from $63.2 million Comparison of Results of Operations (in thousands) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $29,584 | $57,575 | ($27,991) | | General and administrative | $9,457 | $12,231 | ($2,774) | | Net loss | ($34,272) | ($63,169) | $28,897 | - The decrease in R&D expenses was primarily driven by lower external spending related to the COVID-19 Phase 3 SUNRISE-3 clinical trial, which was completed in 2024[126] Liquidity and Capital Resources As of March 31, 2025, the company held $425.4 million in liquidity, deemed sufficient to fund operations and the $25 million share repurchase through 2027 - The company had cash, cash equivalents, and marketable securities of $425.4 million as of March 31, 2025[131] - Management believes available capital will be sufficient to fund the Share Repurchase Program and planned operations through 2027[131] Cash Flow Summary (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($30,563) | ($39,865) | | Net cash provided by investing activities | $85,608 | $56,802 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its $425.4 million liquidity, with a 10% rate change not expected to materially impact fair value - The company's main market risk is interest rate sensitivity on its $425.4 million portfolio of cash, cash equivalents, and marketable securities[150] - Due to the short-term maturities and low-risk profile of its investments, a 10% change in interest rates is not expected to have a material effect on the company's financial position[150] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Management, including the principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[153] - There were no material changes in the company's internal control over financial reporting during the first quarter of 2025[154] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings - As of the report date, the company is not subject to any material legal proceedings[157] Risk Factors This section details significant risks: financial, clinical, regulatory, commercialization, third-party reliance, and intellectual property disputes Risks Related to Financial Condition and Capital Requirements This section outlines financial vulnerabilities: limited operating history, no commercial revenue, a $398.5 million accumulated deficit, and the need for additional financing - The company has a limited operating history, no approved products, and an accumulated deficit of $398.5 million as of March 31, 2025[159][163] - A failure to obtain necessary additional capital could force the company to delay, limit, reduce, or terminate product development or commercialization efforts[171] Risks Related to Discovery, Development, and Regulatory Approval Success depends on the lead HCV product candidate navigating a lengthy, uncertain clinical and regulatory pathway, with risks including Phase 3 failure and FDA non-approval - The business is highly dependent on the successful development and regulatory approval of the bemnifosbuvir and ruzasvir regimen for HCV[186] - The regulatory approval process is inherently unpredictable, and the FDA may not approve the product or may grant a limited approval[193][195] - Difficulties in enrolling and retaining patients in clinical trials could delay development activities and adversely affect outcomes[220] Risks Related to Commercialization Commercialization risks include intense competition, challenges in market acceptance, securing favorable pricing and reimbursement, and building sales capabilities - The company faces intense competition from established pharmaceutical companies with approved, widely-accepted oral treatments for HCV, such as Gilead Sciences and AbbVie Inc.[307][310][312] - Commercial success is heavily dependent on obtaining adequate coverage and reimbursement from government and private payors, which is uncertain and subject to pricing pressures[315] - The company has no experience in commercializing a product and may not be successful in establishing sales, marketing, and distribution capabilities, either on its own or through collaborations[321] Risks Related to Manufacturing and Dependence on Third Parties The company relies entirely on third-party CMOs and CROs, posing risks to supply continuity and quality, with critical dependence on a sole Chinese supplier - The company relies on third-party manufacturers (CMOs) for all clinical trial materials and has no long-term supply contracts, increasing supply chain risk[342][343] - There is a sole supplier in China for the active pharmaceutical ingredient of ruzasvir, and all suppliers of regulatory starting materials for both bemnifosbuvir and ruzasvir are located in China, creating significant concentration and geopolitical risk[347][350] - The company is dependent on third-party CROs to conduct its clinical trials, and any failure by these parties to perform adequately could delay or prevent regulatory approval[355] Risks Related to Intellectual Property Intellectual property risks include potential infringement litigation from Gilead Sciences regarding bemnifosbuvir, and challenges to patents abroad - The company's commercial success depends on its ability to obtain, maintain, and enforce its intellectual property rights, which is uncertain[369] - Gilead Sciences has been issued U.S. patents ('361 and '529) with claims that purport to cover bemnifosbuvir, which could block commercialization or force the company to seek a license[380][381][389] - The company is facing Pre-Grant Oppositions in India challenging its patent applications for AT-511 and bemnifosbuvir, which could prevent patent issuance in that market[412][415] Unregistered Sales of Equity Securities and Use of Proceeds The company conducted no unregistered sales of equity securities and no share repurchases during Q1 2025 - The company did not repurchase any of its equity securities during the three months ended March 31, 2025[465] - There were no unregistered sales of equity securities in the period[466] Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2025 - During the three months ended March 31, 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement[467] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, material contracts, and officer certifications - A list of exhibits filed with the report is provided, including corporate governance documents, material contracts, and officer certifications[469] Signatures The quarterly report was duly signed and authorized on May 12, 2025, by the President and CEO, and the CFO - The quarterly report was duly signed and authorized on May 12, 2025, by Jean-Pierre Sommadossi, Ph.D., President and Chief Executive Officer, and Andrea Corcoran, Chief Financial Officer[472][474]