Atossa Therapeutics, Inc.ATOSNASDAQ
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Operator: Good morning, everyone, and welcome to the Atossa Therapeutics Fourth Quarter and Full Year 2024 Earnings Conference Call. My name is Joelle, and I will be your conference operator today. All participants will be in a listen-only mode. [Operator Instructions] A replay of this call will be available on the Investor Relations section of the Atossa Therapeutics website after its conclusion. I will now turn the call over to Michael Parks, Vice President of Investor Relations at Atossa Therapeutics. Michael, please proceed.
Michael Parks: Thank you, Joelle. Good morning, everyone, and welcome to Atossa Therapeutics conference call to discuss our year-end 2024 financial results and business update. The press release on these financial results was issued this morning and can be found in our Investors section of the corporate website at atossatherapeutics.com. On this morning's call, a team will provide a business overview of our progress in 2024 and recent events. Before we begin, I want to remind you that today's webcast contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements represent management's judgment as of today and may involve risks and uncertainties that could cause actual results to differ materially from those expressed and or implied by these statements. For more information on such risks and uncertainties, you are strongly encouraged to refer to our filings with the SEC, which are available from the SEC website or our corporate website. Any forward-looking statements represent our views as of today, March 25, 2025. Joining me today on the call are Dr. Steven Quay, Atossa’s Chairman, Chief Executive and President; as well as Heather Rees, our Chief Financial Officer. I will now turn the call over to Dr. Steven Quay for our business update. Dr. Quay?
Steven Quay: Thank you, Michael, and good day to everyone joining us. We appreciate your time and continued support of Atossa during today's call, I'll provide an overview of our recent corporate developments and strategic priorities, as well as clinical progress updates on our lead program (Z)-endoxifen. Then Heather will discuss our full year 2024 financial results, and we will conclude with a Q&A session. However, before we provide those updates I just want to take a moment to talk about the critical challenges practitioners face with endocrine therapy and breast cancer and the significant unmet needs that remain in this treatment landscape. First, we all know that endocrine therapy has been a cornerstone of treatment for hormone receptor-positive breast cancer. However, despite being a [mean-state](ph) therapy, there are still major gaps and areas for improvement. One of the biggest issues we see is patient adherence. 30% to 50% of patients stop taking their adjuvant endocrine therapy before they're supposed to. This could be caused by side effects, daily pill fatigue or other quality-of-life factors, all of which underscore the need for more tolerable and patient-friendly options. Another point to consider is efficacy, while endocrine therapy can be highly effective for many women not all patients get the long-term benefits they need. We're looking to develop a treatment that not only prevents recurrence, but also improves overall outcomes, especially for those with tougher disease profiles. Resistance to endocrine therapy remains a serious hurdle, ultimately leading to disease progression in many cases. There is a pressing need for therapies that can circumvent or delay the onset of resistance to extend the window of effective treatment. We also need strategies that can effectively induce apoptosis or programmed cell death in the tumor cells, a therapy that reliably triggers tumor-specific cell death could significantly enhance treatment results and patient survival. Finally, beyond these points, the broader breast cancer community is calling our treatments with fewer side effects, better tolerability and higher patient adherence. Meeting these needs could greatly improve both patient's quality of life and the clinical efficacy of endocrine therapy. Now that we've identified the high unmet needs in endocrine therapy for breast cancer, ranging from early patient discontinuation to drug resistance. Let's turn our focus to what we believe is a very promising solution (Z)-endoxifen. This is an innovative next-generation anti-estrogen therapy that we believe could address many of the gaps we just discussed. [(Z)-endoxifen] (ph) stands apart from current endocrine therapies due to its potent anti-estrogenic activity. It not only targets estrogen receptors very effectively but may also help overcome issues related to patient metabolism and drug resistance, challenges clinicians often face with existing treatments like tamoxifen, the pro-drug form from which (Z)-endoxifen drives. Several factors set (Z)-endoxifen apart. First, there's enhanced potency compared to older agents, the (Z)-endoxifen is able to achieve higher, more consistent blood levels, resistant mitigation. Its unique mode of action may help delay or reduce development of resistance. And finally, tumor cell apoptosis. Laboratory research suggests (Z)-endoxifen can induce robust apoptosis in breast cancer cells, a key goal in stopping disease progression. One of the most exciting aspects of (Z)-endoxifen is its flexibility. We believe it could play a role across the spectrum of breast cancer care from early prevention treatment to more advanced metastatic disease. This versatility may also offer a valuable backbone for combination therapies particularly in settings where common mutations like PIK3CA, AKT1, and PTEN are factors in driving tumor growth. With a more tolerable safety profile and a dosing strategy designed to minimize side effects, we believe that (Z)-endoxifen could also improve patient adherence. By addressing some of the quality of life challenges that often lead to early discontinuation of endocrine therapy, we hope this agent will help more patients complete their full course. So in summary (Z)-endoxifen aims to tackle the exact issues we discussed on the third slide enhancing efficacy, reducing resistance, inducing meaningful tumor cell apoptosis and improving overall adherence and tolerability. This is precisely why we view it as a next-generation anti-estrogen with the potential to set a new benchmark in breast cancer treatment. Our goal is simple but ambitious to deliver a best-in-class therapy that significantly improves patient outcomes. So the question is, how do we get from where we are today to delivering a treatment that tens or hundreds of thousands of women they benefit from tomorrow. Let me begin by elaborating on our recent decision to advance our lead program, (Z)-endoxifen in metastatic breast cancer. We are incredibly excited to advance this indication and confident in our impact that we can have for patients at this stage. It is a clinical setting of high unmet need marked by limited durability of response and significant side effects from existing treatment options. We believe there is a compelling rationale to prioritize this area first, potentially leading to a more streamlined path to regulatory approval and faster time to market, not only in metastatic, but for earlier disease as well. Importantly, our confidence in (Z)-endoxifen for metastatic breast cancer is supported by compelling clinical investigations. First, in a Phase I study by Dr. Matthew Goetz, the lead investigator of the Evangeline trial, (Z)-endoxifen demonstrated robust plasma concentration, unaffected by cytochrome genotypes and showed clinically meaningful activity in women, endocrine refractory ER-positive HER2-negative metastatic breast cancer is a remarkable ability for a drug. Next, notably the study observed a clinical benefit rate of approximately 26% in patients who had already progressed on multiple prior therapies, underscoring the agent's potential in difficult-to-treat settings. And additionally, a related Phase II study further suggested that (Z)-endoxifen can prolong progression-free survival relative tamoxifen in certain subgroups such as those who have not been treated previously with CDK4/6 inhibitors with nearly a five-month greater progression-free survival. These data are very encouraging and by pursuing a metastatic indication first, we believe we can expedite patient access to (Z)-endoxifen, especially for those who urgently need new therapeutic approaches. More information on our registrational path will be forthcoming, including our target subpopulation trial design and the potential for a combination therapy. We are excited about this path and look forward to keeping you updated. We also announced our commitment to continue an active dialogue with the FDA regarding the potential for (Z)-endoxifen in earlier disease settings like breast cancer prevention and neoadjuvant therapy, which generally require larger and longer clinical trials. Importantly, we believe the metastatic indication first approach will help us with this goal. Late last year, we presented five abstracts, three of which were EVANGELINE focused at the San Antonio Breast Cancer Symposium. These presentations outlined strong pharmacokinetic and tolerability data for our Phase II Evangeline trial in premenopausal women with ER-positive HER2-negative breast cancer. Substantial tumor suppression was observed with (Z)-endoxifen at multiple dose levels and the four-week Ki-67 was less than 10%, generally above 85% of the women. Moreover, (Z)-endoxifen was very well tolerated with no significant grade 3 or 4 toxicities. The previously disclosed gynecological events at the 80-milligram dose we plan to continue under an amended protocol that compares a 40-milligram per day regimen of (Z)-endoxifen plus ovarian function suppression to exemestane plus OFS. Using the four-week Ki67 reduction as the primary endpoint will also include a single-arm cohort of (Z)-endoxifen monotherapy at 40 milligrams per day over 24 weeks to gather additional safety and efficacy data. Additionally, the San Antonio data from our Phase II KARISMA-Endoxifen study showed that low doses of (Z)-endoxifen significantly reduced mammographic breast density, a key marker in breast cancer. A 1-milligram dose lowered MBD by 17.3 percentage points while a 2-milligram dose achieved a 23.5% reduction, both highly significant when compared to the placebo group. Importantly, the 1-milligram dose exhibited no meaningful difference in adverse events relative to placebo, suggesting (Z)-endoxifen favorable safety and tolerability profile. Our focus on metastatic breast cancer first is driven by both clinical urgency for patients and a potential pathway to expedited approval. We believe this approach can enable a quicker route to market and paved the way for future label expansions into prevention and neoadjuvant settings, which as I said, are larger and longer trials in any case. We remain steadfast in executing our research and regulatory strategies confident that (Z)-endoxifen can transform how we treat and ultimately prevent various stages of breast cancer. I'll now hand the call over to our Chief Financial Officer, Heather Rees, to walk us through our financial results for the full year 2024. Please go ahead, Heather Rees.
Heather Rees: Thank you, Dr. Quay, and good morning, everyone. I will discuss our financial results for the full year 2024 period, which ended on December 31. On the next slide, I'll emphasize a few key financial highlights from the quarter, but I encourage you to consider those remarks in the context of the full disclosures covered in our Annual Report on Form 10-K. In looking at our income statement, total operating expenses for the year were $27.6 million, down from $31.4 million in 2023, a decrease of $3.8 million. This reduction reflects disciplined spending in both R&D and G&A. R&D expenses declined by $3.2 million from $17.3 million in 2023 to $14.1 million in 2024. The key drivers were a reduction of $2.6 million in clinical and preclinical spending on our (Z)-endoxifen trials and drug development program. R&D compensation also decreased by $500,000, mainly reflecting lower non-cash stock-based compensation expense year-over-year. G&A expenses totaled $13.5 million in 2024 versus $14.0 million in the prior year, a $500,000 decrease. Compensation expense was down $1.9 million due to lower non-cash stock-based compensation expense year-over-year and lower salary, bonus and benefits due to the payment of severance costs to our previous CFO in 2023. Professional fees increased by $1.8 million year-over-year, primarily stemming from higher legal and investor relation costs along with accounting fees tied to public company expenses incurred in 2024. Insurance expense was down by $400,000, reflecting successfully renegotiated premiums. Interest income was $4.1 million for the year, a slight decrease in 2023 due to a lower average invested balance in 2024. As previously disclosed, we wrote off our remaining investment in dynamic cell therapies of $1.7 million as they ceased operations in the fourth quarter of 2024. Our net loss for 2024 was $25.5 million or $0.20 per share versus $30.1 million or $0.24 per share in 2023. We closed the year with $71.1 million in cash and cash equivalents providing a healthy runway to advance (Z)-endoxifen and other research initiatives. Overall, from a cash and operating standpoint, we are well positioned to keep hitting clinical milestones. We'll continue to focus our resources on programs that we believe have the biggest potential for patient impact and shareholder return. With that, I'll turn the call back to Dr. Quay for closing remarks.
Steven Quay: Thank you, Heather. We remain encouraged by our clinical progress and the broader potential of (Z)-endoxifen to address critical gaps in breast cancer treatment, especially in metastatic disease where new options are urgently needed. We are grateful for the support of our shareholders and clinical partners and most importantly, the patients who inspire our missions. We appreciate your attention today. Operator, we are now ready to open the call for questions.
Operator: Thank you. We will now begin the question-and-answer portion of today’s call for analyst. [Operator Instructions] Your first question comes from Emily Bodnar with H.C. Wainwright. Your line is now open.
Emily Bodnar : Hello, good morning. Thanks for taking my questions. I have a couple, but maybe just to start this one -- can you provide us some timing around when you'd be able to initiate a study in the metastatic setting and whether you are thinking about and starting with the Phase II study? Or is this going to be a Phase III study? Thank you.
Steven Quay: Thanks for the question, Emily. Let me go ahead and take it, Michael and Heather. We are in the process now of consulting with a set of key opinion leaders will advise us on some of the nuances, some of the details in the metastatic setting. And then we will transition to discussions with the FDA in which some of these parameters were worked out. So it's a little premature to be talking about some of those details, but over the next, let's say, four months to six months, that will be the plan. So the KOL folks will weigh-in, and then we'll talk to the FDA.
Emily Bodnar : Okay. Great. And then maybe on the EVANGELINE trial, could you just provide an update on where you are with enrollment of the trial and when we may see additional data from the 40 mg dose? And then separately, a question on the primary endpoint. So for the monotherapy, you said you're looking at [24-week 67] (ph) but in combo, only 4 weeks, so maybe just comment on why the discrepancy? Thank you.
Steven Quay: Yes. So we'll be giving updates at some upcoming meetings with respect to enrollment and the interim data results. The primary endpoint difference has to do with the requirements around getting an early look at Ki-67 values at four weeks. And so that's why there is that difference in that particular arm of the trial.
Emily Bodnar : Okay, great. Thanks for taking the questions.
Steven Quay : Thank you.
Operator: [Operator Instructions] Your next question comes from Ed Woo with Ascendiant Capital. Your line is now open.
Edward Woo: Yeah. Congratulations on the progress. As you continue or you pursue your metastatic breast cancer, do you anticipate pursuing it globally? Will you be also talking to European or Australian FDA counterparts?
Steven Quay: Yes, that's a great question here. We are focusing pretty razor sharp on the U.S. FDA process because it's our opinion that if we can streamline that process and get full definition around the clinical trial, the parameters of the trial, the number of patients, et cetera, then and only then is it the right time to go outside to other major markets, if I could call it that. So 2025 is going to be a U.S. FDA focused year to get all of this part of it right. And I think you should assume those other kinds of markets and regions are going to be early next year.
Edward Woo: Great, well, thank you for answering my questions and I wish you guys good luck. Thank you.
Steven Quay: Thank you.
Operator: There are no further questions at this time. I will now turn the call over to Dr. Quay for closing remarks.
Steven Quay: Well, thank you. I appreciate everyone's attention here and following us. 2024 was an excellent year, as you can see both clinically and financially, and 2025 looks equally exciting with a plan in metastatic breast cancer treatment with events coming up around meetings with the KOLs to define some of the parameters, the detailed parameters of a typical clinical trial concurrence with the FDA around what the proper design is and then we execute. So we thank you for your attention, and we thank you for your support for Atossa Therapeutics. And most of all, we think the patients were helping us with this path and hopefully, the patients we will help in the future. Thanks again, and we will end the call now.
Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect. A replay will be available on our website for the next 30 days. We appreciate your participation. Have a great day.