GlobeNewswire Inc | Nov 13, 2020 09:30AM EST

November 13, 2020

SEATTLE, Nov. 13, 2020 (GLOBE NEWSWIRE) -- Atossa Therapeutics, Inc. (Nasdaq: ATOS), a clinical-stage biopharmaceutical company seeking to discover and develop innovative medicines in areas of significant unmet medical need with a current focus on breast cancer and COVID-19, today announced financial results for the third quarter ended September 30, 2020, and provided an update on recent company developments.

Key recent developments included:

-- Significantly advanced the development of AT-301 proprietary nasal spray as potential at-home treatment against COVID-19, with completion of a randomized, placebo controlled, double-blinded Phase 1 study and a preliminary assessment of the blinded data indicating that AT-301 was safe and well tolerated by participants at two different dose levels in both single and multiple dose forms over 14 days. -- Applied for regulatory approval from the European Medical Product Authority to commence a Phase 2 clinical study of Endoxifen in Sweden to reduce mammographic breast density (MBD). -- Announced interim findings following 18 months of an Expanded Access (or compassionate use) single-patient study of Endoxifen. The patient in the study had no cancer recurrence and suffered no side effects. Endoxifen did not cause other safety and tolerability concerns in this patient.

Our COVID-19 nasal spray program has progressed very well during the quarter, with our Phase 1 study of AT-301 nasal spray demonstrating good safety and tolerability at two different dose levels in both single and multiple dose forms over a 14-day trial period, said Dr. Steven Quay, Atossas President and Chief Executive Officer. We are very encouraged by these preliminary results. In the next 30 days we plan to file a pre-IND meeting request with the FDA and, subject to their input, plan to immediately commence a Phase 2 study, either in the U.S. or abroad, in patients recently diagnosed with COVID-19.

We believe AT-301 nasal spray is unique among the various therapies under development for COVID-19. While other companies are focused on therapies for patients being treated in hospitals, we are developing AT-301 for at-home use for the vast majority of COVID-19 patients who do not require hospitalization. Although great progress has been made by companies developing vaccines, it has become clear that a vaccine wont provide a complete solution to the pandemic. No vaccine will be 100 percent effective and surveys have shown that many people wont take a vaccine even when one becomes available. Similar to the seasonal flu where vaccines dont provide complete community protection and people also rely on therapies, our AT-301 nasal spray therapy should form an important and necessary component of a comprehensive response to the COVID-19 pandemic, added Dr. Quay.

Upcoming 2020 milestones include the following:

-- File pre-IND meeting request with FDA for AT-301 nasal spray for potential at-home treatment of COVID-19. -- Commence Phase 2 study in Sweden for our Endoxifen to reduce MBD.

September 30, 2020 Financial Results

For the three and ninemonths ended September30, 2020and 2019, we have no source of sustainable revenue and no associated cost of revenue.

Operating Expenses Total operating expenses were approximately $3,509,000 and$10,382,000 for the three and ninemonths ended September30, 2020, respectively, consisting of R&D expenses of approximately $1,659,000 and $4,251,000, respectively, and general and administrative ("G&A") expenses of approximately $1,850,000 and $6,131,000, respectively.Total operating expenses were approximately $3,298,000and $14,649,000 for the three and ninemonths ended September30, 2019, respectively, consisting of R&Dexpenses of approximately $1,684,000 and $5,747,000, respectively, and G&Aexpense of approximately $1,614,000 and $8,901,000, respectively. Total operating expense for theninemonths ended September30, 2020as compared to the same period in 2019 decreased approximately $4,267,000 or 29%and for the three months ended September 30, 2020 as compared to the same period in 2019 increased approximately $211,000 or 6%.

Research and Development Expenses R&D expenses for the three months ended September30, 2020, were approximately $1,659,000, which were comparable tototal R&D expenses for the three months ended September30, 2019, of approximately$1,684,000.R&D expenses for the ninemonths ended September30, 2020, were approximately $4,251,000, adecrease of approximately $1,496,000 or 26% from total R&D expenses for the ninemonths ended September30, 2019, of approximately $5,747,000. The decrease in R&D expense is attributed primarily to a decrease in stock-based compensation of approximately $2,165,000,which is a non-cash charge, offset by an increase in salaries, professionalfees and clinical trials expenses of approximately $669,000, as compared to the same period in 2019. We expect our R&D expenses to increase for the remainder of 2020as we seek to commence a studyof AT-H201,complete our Phase 1 study of AT-301, launch a Phase 2 clinicaltrialof Endoxifen in women with high breast density, and continue the development of other indications and therapeutics.

General and Administrative Expenses G&A expenses were approximately $1,850,000 for the three months ended September30, 2020, an increase of approximately $236,000, or 15% from the total G&A expenses for the three months ended September30, 2019, of approximately $1,614,000. The $236,000 increase in G&A expenses for the three month period ended September 30, 2020,is mainly attributedto an increase in legal, professional fees and insurance costs.G&A expenses were approximately $6,131,000 for the nine months ended September30, 2020, adecrease of approximately $2,770,000, or 31% from the total G&A expenses for the ninemonths ended September30, 2019, of approximately $8,901,000. G&A expenses consist primarily of personnel and related benefit costs, facilities, professional services, insurance, and public company related expenses. The decrease in G&A expenses for the nine monthperiodended September30, 2020,is mainly attributed to a decrease in stock-based compensation expense of approximately $3,535,000, which is a non-cash charge, offset by an increase inlegal, professional fees and insurance costsof approximately $765,000compared to the same period in 2019.

As of September 30, 2020, the Company had approximately $9.2 million in cash and cash equivalents.

About Atossa Therapeutics

Atossa Therapeutics, Inc. is a clinical-stage biopharmaceutical company seeking to discover and develop innovative medicines in areas of significant unmet medical need with a current focus on breast cancer and COVID-19. For more information, please visit www.atossatherapeutics.com.

Forward-Looking Statements

Forward-looking statements in this press release, which Atossa undertakes no obligation to update, are subject to risks and uncertainties that may cause actual results to differ materially from the anticipated or estimated future results, including the risks and uncertainties associated with any variation between interim and final clinical results, actions and inactions by the FDA, the outcome or timing of regulatory approvals needed by Atossa including those needed to commence studies of AT-H201, AT-301 and Endoxifen, lower than anticipated rate of patient enrollment, estimated market size of drugs under development, the safety and efficacy of Atossas products, performance of clinical research organizations and investigators, obstacles resulting from proprietary rights held by others such as patent rights, whether reduction in Ki-67 or any other result from a neoadjuvant study is an approvable endpoint for oral Endoxifen, and other risks detailed from time to time in Atossas filings with the Securities and Exchange Commission, including without limitation its periodic reports on Form 10-K and 10-Q, each as amended and supplemented from time to time.

Company Contact:Atossa Therapeutics, Inc.Kyle Guse CFO and General CounselOffice: 866 893-4927kyle.guse@atossainc.com

Investor Relations Contact:Core IROffice:(516) 222-2560ir@atossainc.com

Source: Atossa Therapeutics, Inc.

ATOSSA THERAPEUTICS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS

As of As of September 30, December 31, 2020Assets (Unaudited) 2019 Current assets Cash and cash equivalents $ 9,105,950 $ 12,581,136 Restricted cash 110,000 110,000 Prepaid expenses 1,484,251 862,344 Research and development tax rebate 439,205 739,656 receivableOther current assets 178,911 26,130 Total current assets 11,318,317 14,319,266 Furniture and equipment, net 25,429 34,350 Intangible assets, net 45,417 68,542 Right-of-use asset 31,279 50,479 Other assets 17,218 17,218 Total Assets $ 11,437,660 $ 14,489,855 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 682,612 $ 293,171 Accrued expenses 85,173 77,888 Payroll liabilities 752,847 899,420 Lease liability 30,063 39,371 Other current liabilities 14,671 12,892 Total current liabilities 1,565,366 1,322,742 Long term liabilities Lease liability long term 1,217 11,108 Total Liabilities 1,566,583 1,333,850 Commitments and contingencies Stockholders' equity Preferred stock - $0.001 par value;10,000,000 shares authorized; 623and 671 shares issued and 1 1 outstanding as of September 30, 2020and December 31, 2019, respectivelyAdditional paid-in capital - Series 622,999 670,999 B convertible preferred stockCommon stock - $0.18 par value;175,000,000 shares authorized;10,464,250 and 9,130,984 shares 1,883,553 1,643,565 issued and outstanding as ofSeptember 30, 2020 and December 31,2019, respectivelyAdditional paid-in capital 111,780,197 104,912,480 Accumulated deficit (104,415,673 ) (94,071,040 )Total Stockholders' Equity 9,871,077 13,156,005 Total Liabilities and Stockholders' $ 11,437,660 $ 14,489,855 Equity

The accompanying notes are an integral part of these condensed consolidated financial statements.

ATOSSA THERAPEUTICS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)

For the Three Months Ended For the Nine Months Ended September September 30, 30, 2020 2019 2020 2019 Operating expensesResearch and $ 1,659,075 $ 1,684,215 $ 4,250,934 $ 5,747,399 developmentGeneral and 1,849,741 1,613,983 6,130,698 8,901,197 administrativeTotaloperating 3,508,816 3,298,198 10,381,632 14,648,596 expensesOperating loss (3,508,816 ) (3,298,198 ) (10,381,632 ) (14,648,596 )Other income 17,745 12,284 36,999 26,846 Loss before (3,491,071 ) (3,285,914 ) (10,344,633 ) (14,621,750 )income taxesIncome taxes - - - - Net loss $ (3,491,071 ) $ (3,285,914 ) $ (10,344,633 ) $ (14,621,750 )Loss percommon share - $ (0.34 ) $ (0.36 ) $ (1.09 ) $ (1.77 )basic anddilutedWeightedaverage sharesoutstanding - 10,162,770 9,130,057 9,496,222 8,283,302 basic anddiluted

The accompanying notes are an integral part of these condensed consolidated financial statements.