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Athira Pharma(ATHA) - 2021 Q3 - Quarterly Report
Athira PharmaAthira Pharma(US:ATHA)2021-11-09 16:00

PART I. FINANCIAL INFORMATION This section presents the unaudited financial statements, management's discussion and analysis, and disclosures on market risk and controls Item 1. Financial Statements (Unaudited) This section presents Athira Pharma's unaudited condensed consolidated financial statements, detailing balance sheets, income statements, and cash flows Condensed Consolidated Balance Sheets As of September 30, 2021, total assets increased to $347.3 million, driven by cash and investments, while liabilities and equity also grew Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $107,328 | $60,625 | | Total current assets | $238,992 | $192,337 | | Total assets | $347,331 | $279,563 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $9,386 | $4,405 | | Total liabilities | $11,094 | $5,281 | | Total stockholders' equity | $336,237 | $274,282 | Condensed Consolidated Statements of Operations and Comprehensive Loss For the nine months ended September 30, 2021, the company reported a net loss of $38.5 million, driven by increased R&D and G&A expenses Statement of Operations Summary (in thousands) | Metric | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Research and development | $30,176 | $8,099 | | General and administrative | $15,068 | $2,817 | | Total operating expenses | $45,244 | $10,916 | | Loss from operations | ($45,244) | ($10,916) | | Grant income | $6,499 | $22 | | Net loss | ($38,514) | ($12,253) | | Net loss per share | ($1.12) | ($2.38) | Condensed Consolidated Statements of Cash Flows This section details cash flows, showing net cash used in operating and investing activities, largely offset by cash provided by financing activities Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($24,921) | ($13,448) | | Net cash used in investing activities | ($25,452) | ($94,310) | | Net cash provided by financing activities | $97,076 | $271,427 | | Net increase in cash and cash equivalents | $46,703 | $163,669 | Notes to Unaudited Condensed Consolidated Financial Statements The notes provide detailed information supporting the financial statements, including business focus, financing, liquidity, and significant legal and operational contingencies - The company is a late clinical-stage biopharmaceutical company focused on developing small molecules to restore neuronal health and stop neurodegeneration27 - In January and February 2021, the company completed a follow-on public offering, raising net proceeds of approximately $96.8 million28 - As of September 30, 2021, the company had $339.4 million in cash, cash equivalents, and investments, estimated to fund operations for at least the next 12 months2930 - The company is subject to several putative securities class action lawsuits filed in June 2021, alleging false and misleading statements regarding former CEO Dr. Leen Kawas's research, with an unpredictable outcome828385 - Subsequent to the quarter's end, an independent special committee concluded that former CEO Dr. Leen Kawas altered images in her doctoral dissertation and research papers, leading to her resignation on October 18, 2021, and the appointment of Mark Litton as new CEO116120 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and results of operations, highlighting increased operating expenses, a net loss, and strong liquidity from recent equity offerings - The company is a late clinical-stage biopharmaceutical company focused on developing small molecules, with its lead candidate, ATH-1017, in Phase 2/3 and Phase 2 trials for Alzheimer's disease130133 Comparison of Operating Results (in thousands) | Metric | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Research & Development | $30,176 | $8,099 | | General & Administrative | $15,068 | $2,817 | | Loss from Operations | ($45,244) | ($10,916) | | Grant Income | $6,499 | $22 | | Net Loss | ($38,514) | ($12,253) | - The increase in R&D expenses was primarily driven by a $17.9 million increase in costs for ATH-1017 related to patient enrollment and clinical site activity for Phase 2 and Phase 2/3 trials171 - The increase in G&A expenses was primarily due to higher personnel-related costs ($4.6 million), legal costs ($2.6 million) related to litigation and the special committee investigation, and insurance costs ($2.2 million)172 - As of September 30, 2021, the company had $339.4 million in cash, cash equivalents, and investments, estimated to be sufficient to fund operations at least through 2022142145 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Athira Pharma is not required to provide the information requested under this item - The company is not required to provide quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company195 Controls and Procedures Management evaluated the company's disclosure controls and procedures, concluding they were effective as of September 30, 2021, with no material changes in internal control - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2021197 - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2021198 PART II. OTHER INFORMATION This section provides additional information, including legal proceedings, risk factors, equity sales, and exhibits Legal Proceedings This section details significant legal challenges, including consolidated securities class action lawsuits alleging false statements related to the former CEO's research - Three putative securities class action lawsuits were filed against the company and certain officers and directors in June 2021201202203 - The lawsuits allege violations of federal securities laws related to allegedly false and misleading statements about the company's business and the scientific integrity of former CEO Dr. Leen Kawas's research201202 - The three cases were consolidated into a single action in August 2021, with the company unable to predict the outcome or potential financial impact204 Risk Factors This section outlines significant risks, including limited operating history, dependence on ATH-1017, fallout from the former CEO's research investigation, and the need for substantial additional funding - An independent special committee found that former CEO Dr. Leen Kawas altered images in her doctoral dissertation and research papers, potentially harming the company's reputation, patents, and business prospects223224 - The company and certain directors/officers are defendants in securities class action lawsuits related to the former CEO's alleged misconduct, potentially incurring substantial costs and diverting management's attention473474 - The company's success is highly dependent on its lead product candidate, ATH-1017, which is based on a novel therapeutic approach and may never lead to a marketable product216217 - The company has incurred significant losses since inception ($79.6 million accumulated deficit as of September 30, 2021) and will require substantial additional funding to finance operations and complete product development277279 - The company relies on third parties to conduct clinical trials and manufacture product candidates, increasing risks related to quality control, supply chain disruptions, and regulatory compliance343348 - The company's intellectual property, including patents licensed from Washington State University, could be challenged, invalidated, or found unenforceable, particularly in light of the WSU investigation into the former CEO's research399400 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities and no material change in the planned use of IPO proceeds - There were no unregistered sales of equity securities in the reporting period502 - There has been no material change in the planned use of net proceeds from the company's IPO505 Defaults Upon Senior Securities This item is not applicable to the company for the reporting period Mine Safety Disclosures This item is not applicable to the company Other Information This item is not applicable to the company for the reporting period Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate documents, the former CEO's separation agreement, and officer certifications - A key exhibit filed is the Separation Agreement dated October 18, 2021, between the company and former CEO Leen Kawas508 - Standard officer certifications (SOX 302 and 906) and XBRL data files are included as exhibits508509510