Atossa Therapeutics(ATOS) - 2025 Q2 - Quarterly Results

Company Overview and Q2 2025 Highlights 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 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] - The company has a strong balance sheet and plans to file an IND submission, advancing its metastatic clinical program[3] - 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] Clinical and Regulatory Progress 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 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] - 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] - The Agency indicated no additional general toxicity or neurotoxicity studies are required and confirmed the cardiac safety assessment monitoring protocol is sufficient[4] - An Investigational New Drug (IND) application filing with the FDA is expected in Q4 2025[4] I-SPY2 Endocrine Optimization Sub-Study Results 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] - 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] - Median functional tumor volume decreased by 77.7 percent from baseline to surgery, and the longest tumor diameter dropped by 36.8 percent[5] - 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] Other Ongoing Phase 2 Programs 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] - 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] Intellectual Property and Strategic Outlook 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 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] - 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] - 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] Strategic Outlook & Upcoming Milestones 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] - Targeting IND submission in Q4 2025, in alignment with feedback under the FDA Project Optimus initiative[9] - 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] Financial Performance for Q2 2025 Atossa's Q2 2025 financial performance shows increased operating expenses, decreased interest income, and a higher net loss, with reduced cash balances Operating Expenses 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] - Factors contributing to the increased operating expenses were primarily related to higher Research & Development expenses[7] Research & Development (R&D) Expenses 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] - Increases in R&D compensation expenses were due to increases in headcount[10] - Increases in R&D professional fees and other were primarily attributable to higher consulting fees related to our (Z)-endoxifen program[10] General & Administrative (G&A) Expenses 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] - 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] Interest Income 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] Condensed Consolidated Balance Sheets 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] - Total current liabilities increased by $1.85 million from December 31, 2024, to June 30, 2025[22] Condensed Consolidated Statements of Operations 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] Product Candidate Profile: (Z)-Endoxifen (Z)-endoxifen is a potent SERM developed by Atossa, demonstrating activity in resistant tumors and a favorable safety profile About (Z)-Endoxifen (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] - It also targets protein kinase C beta 1 (PKCβ1) and seems to deliver comparable or superior bone-protective effects relative to tamoxifen[13] - 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] - 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] About Atossa Therapeutics Atossa Therapeutics is a clinical-stage biopharmaceutical company focused on transforming breast cancer treatment with its lead candidate, (Z)-endoxifen About Atossa Therapeutics 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] - 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] - Atossa is committed to advancing its robust clinical research programs to improve patient outcomes while creating sustainable value for shareholders[16] Forward-Looking Statements and Contact Information This section outlines forward-looking statements, associated risks, and contact details for investor and public relations inquiries Forward-Looking Statements 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] - 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] - 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] Contact Information 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]