Atossa Genetics Q4 2024 Earnings Call Transcript

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March 25, 2025

Key Takeaways

  • Atosa highlighted critical gaps in hormone receptor–positive breast cancer treatment, including 30–50% early discontinuation rates, therapy resistance and the need for more tolerable options to improve patient adherence and outcomes.
  • The next-generation antiestrogen Zendoxifen demonstrates enhanced potency, consistent plasma levels, potential to delay resistance, and induction of robust tumor cell apoptosis in preclinical and early clinical studies.
  • Phase 1/2 EVANGELINE data showed a ~26% clinical benefit rate in endocrine-refractory ER+ HER2– metastatic breast cancer, a ~5-month PFS advantage over tamoxifen in select subgroups, and a favorable safety profile with no Grade 3/4 toxicities.
  • Management is prioritizing a U.S. metastatic breast cancer indication for Zendoxifen to potentially expedite FDA approval and plans key opinion leader and FDA discussions over the next 4–6 months before broader label expansion.
  • In 2024, operating expenses dropped to $27.6 million from $31.4 million, net loss narrowed to $25.5 million, and cash reserves of $71.1 million underpin continued R&D and upcoming clinical milestones.
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Earnings Conference Call
Atossa Genetics Q4 2024
00:00 / 00:00

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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 with a question-and-answer session following the company's prepared remarks. 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
VP of Investor Relations at Atossa Therapeutics

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, the 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 in or implied by these statements.

Michael Parks
VP of Investor Relations at Atossa Therapeutics

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 25th, 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
Chairman, CEO and President at Atossa Therapeutics

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 in 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 mainstay therapy, there are still major gaps and areas for improvement. One of the biggest issues we see is patient adherence.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

30%-50% of patients stop taking their adjuvant endocrine therapy before they're supposed to. This can 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.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

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 for treatments with fewer side effects, better tolerability, and higher patient adherence. Meeting these needs could greatly improve both patients' 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 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.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

Challenges clinicians often face with existing treatments like tamoxifen, the pro-drug form from which Z-endoxifen derives. Several factors set Z-endoxifen apart. First, there's enhanced potency. Compared to older agents, 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. 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. Its 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.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

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. 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.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

The question is, how do we get from where we are today to delivering a treatment that tens or hundreds of thousands of women may 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.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

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 phenotypes and showed clinically meaningful activity in women with endocrine refractory ER-positive, HER2-negative metastatic breast cancer. This 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. Additionally, a related phase II study further suggested that Z-endoxifen can prolong progression-free survival relative to 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.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

More information on our registrational path will be forthcoming, including our target subpopulation, trial design, and the potential for a combination therapy. We're 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.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

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. With previously disclosed gynecological events at the 80 mg dose, we plan to continue under an amended protocol that compares a 40 mg per day regimen of Z-endoxifen plus ovarian function suppression to exemestane plus OFS, using the four-week Ki-67 reduction as the primary endpoint. We'll also include a single-arm cohort of Z-endoxifen monotherapy at 40 mg 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.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

A 1 mg dose lowered MBD by 17.3 percentage points, while a 2 mg dose achieved a 23.5% reduction, both highly significant when compared to the placebo group. Importantly, the 1 mg dose exhibited no meaningful difference in adverse events relative to placebo, suggesting Z-endoxifen's 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 pave 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.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

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.

Heather Rees
CFO at Atossa Therapeutics

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.

Heather Rees
CFO at Atossa Therapeutics

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.

Heather Rees
CFO at Atossa Therapeutics

Interest income was $4.1 million for the year, a slight decrease from 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're 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
Chairman, CEO and President at Atossa Therapeutics

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, clinical partners, and most importantly, the patients who inspire our mission. 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 analysts. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question.

Operator

Your first question comes from Emily Bodnar with HC Wainwright. Your line is now open.

Emily Bodnar
Emily Bodnar
Vice President of Equity Research at HC Wainwright

Hi, good morning. Thanks for taking the 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're thinking about starting with the phase II study, or is this going to be a phase III study? Thank you.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

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 who will advise us on some of the nuances, some of the details in the metastatic setting. We will transition to discussions with the FDA in which some of these parameters are worked out.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

It's a little premature to be talking about some of those details, but over the next, let's say, four to six months, that will be the plan. The KOL folks will weigh in, and then we'll talk to the FDA.

Emily Bodnar
Emily Bodnar
Vice President of Equity Research at HC Wainwright

Okay, great. 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? Separately, a question on the primary endpoint. For the monotherapy, you said you're looking at 24-week Ki-67, but in combo, only four weeks. Maybe just comment on why the discrepancy. Thank you.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

Yeah. 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. That is why there is that difference in that particular arm of the trial.

Emily Bodnar
Emily Bodnar
Vice President of Equity Research at HC Wainwright

Okay, great. Thanks for taking the questions.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

Thank you.

Operator

Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Ed Woo with Ascendiant Capital. Your line is now open.

Ed Woo
Ed Woo
Director of Research and Senior Analyst at Ascendiant Capital

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
Chairman, CEO and President at Atossa Therapeutics

Yeah, 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, etc., then and only then is it the right time to go outside to other major markets, if I could call it that. 2025 is going to be a U.S. FDA-focused year to get all of this part of it right. I think you should assume those other kinds of markets and regions are going to be early next year.

Ed Woo
Ed Woo
Director of Research and Senior Analyst at Ascendiant Capital

Great. Thank you for answering my questions, and I wish you guys good luck. Thank you.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

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
Chairman, CEO and President at Atossa Therapeutics

Thank you. I appreciate everyone's attention here and following us.

Steven Quay
Chairman, CEO and President at Atossa Therapeutics

2024 was an excellent year, as you can see, both clinically and financially. 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. We thank you for your attention. We thank you for your support for Atossa Therapeutics. Most of all, we thank the patients who are 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.

Analysts
    • Ed Woo
      Director of Research and Senior Analyst at Ascendiant Capital
    • Emily Bodnar
      Vice President of Equity Research at HC Wainwright
    • Steven Quay
      Chairman, CEO and President at Atossa Therapeutics
    • Michael Parks
      VP of Investor Relations at Atossa Therapeutics
    • Heather Rees
      CFO at Atossa Therapeutics
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