GlobeNewswire Inc | Aug 13, 2020 09:30AM EDT

August 13, 2020

SEATTLE, Aug. 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 second quarter ended June 30, 2020, and provided an update on recent company developments.

Key recent developments included:

-- Received approval from the Australian Human ResearchEthics Committee(HREC) to open a Phase 1 clinical study in Australia using Atossas proprietary drug candidate AT-301 administered by nasal spray. As of August 3, 2020, all necessary approvals were obtained and enrollment is expected to begin in the coming weeks. -- Contracted with Avance Clinical Pty. Ltd. to conduct a clinical study of Atossas AT-301. Avance is a leading Australian clinical research organization and has successfully completed multiple clinical studies of Atossas proprietary Endoxifen. -- Announced successful in vitro testing of both of Atossas COVID-19 therapies under development: AT-301 and AT-H201. The preliminary study results show that AT-301 and the components of AT-H201 inhibit SARS-CoV-2 infectivity of VERO cells in a laboratory culture, which is the standard disease model used for initial screening of COVID-19 drug candidates. -- 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. -- Advanced product development programs with multiple key hires in clinical, regulatory, and chemistry manufacturing and controls. The hiring of these talented and highly accomplished individuals will help accelerate the advancement of Atossas development pipeline, which includes programs in breast cancer and COVID-19. -- Completed sales of all available shares under Atossas at-the-market financing program with total gross proceeds to Atossa of $5 million through July 2020. As of June 30, 2020, the Company had approximately $7.5 million in cash and cash equivalents and with this program we received an additional $4.3 million in July 2020.

We continue to progress both our Endoxifen and COVID-19 programs, said Dr. Steven Quay, Atossas President and Chief Executive Officer. Our COVID-19 programs continue to evolve at breakneck speed as we announced successful in vitro testing of the components of AT-H201 as well as our AT-301 nasal spray formulation, a contract with Avance Clinical in Australia to conduct the trial for AT-301 and receiving approval from the Australian ethics committee to initiate a Phase 1 clinical trial. The goal of our AT-301 program is to develop the therapy to treat COVID-19 patients that are not ill enough to require hospitalization. As we have previously stated, the U.S. Food and Drug Administration has accepted well-controlled, high quality studies conducted outside the U.S. and our existing relationship with Avance and their history of success with our other Phase 1 trials, expedited our ability to get the drug in the clinic, which in the case of COVID-19 is of paramount importance. Assuming a favorable outcome, we anticipate the results of this trial to be readily included in future applications with the FDA. We will also explore regulatory approval in Australia, where unfortunately COVID-19 cases are rising again.

Meanwhile we continue to add to the body of strong clinical evidence for our Endoxifin program with the interim findings following 18 months of an Expanded Access single patient study showing the patient had no cancer recurrence and suffered no side effects, added Dr. Quay.

Upcoming 2020 milestones include the following:

-- Receive regulatory approvals to initiate a Phase 2 study in Stockholm, Sweden using Atossas Endoxifen to reduce mammographic breast density (MBD). -- Commence enrollment in the Phase 2 study in Stockholm to treat MBD. -- Commence enrollment in the AT-301 Phase 1 study in Australia. -- Receive regulatory approval to initiate a clinical study of AT-H201. -- Commence enrollment in the clinical study of AT-H201.

June 30, 2020 Financial Results

For the quarter ended June 30, 2020, Atossa had no source of sustainable revenue and no associated cost of revenue.

Operating Expenses Total operating expenses were approximately $3,936,000 and$6,873,000 for the three and six months ended June 30, 2020, respectively, consisting of research and development (R&D) expenses of approximately $1,653,000 and $2,592,000, respectively, and general and administrative (G&A) expenses of approximately $2,283,000 and $4,281,000, respectively.Total operating expenses were approximately $7,286,000and $11,350,000 for the three and six months ended June 30, 2019, respectively, consisting of R&Dexpenses of approximately $2,612,000 and $4,063,000, respectively, and G&A expense of approximately $4,674,000 and $7,287,000, respectively. Total operating expense for the three and six months ended June 30, 2020as compared to the same period in 2019 decreased approximately $3,350,000 and $4,477,000 or 46%and 39%, respectively.

Research and Development Expenses R&D expenses for the three months ended June 30, 2020, were approximately $1,653,000, adecrease of approximately $959,000 or 37% from total R&D expenses for the three months ended June 30, 2019 of approximately$2,612,000.R&D expenses for the sixmonths ended June 30, 2020, were approximately $2,592,000, adecrease of approximately $1,471,000 or 36% from total R&D expenses for the sixmonths ended June 30, 2019of approximately $4,063,000. The decrease in R&D expense is attributed primarily to a decrease in stock-based compensation of approximately $2,097,000,which is a non-cash charge, offset by an increase in salaries, professionalfees and clinical trials expenses of approximately $626,000, as compared to the same period in 2019. We expect our R&D expenses to increase throughout 2020as we commence studies of AT-H201 and AT-301, additional Phase 2 clinicaltrialsof Endoxifen, and continue the development of other indications and therapeutics.

General and Administrative Expenses: G&A expenses were approximately $2,283,000 for the three months ended June 30, 2020, adecrease of approximately $2,391,000, or 51% from the total G&A expenses for the three months ended June30, 2019 of approximately $4,674,000. G&A expenses were approximately $4,281,000 for the sixmonths ended June 30, 2020, adecrease of approximately $3,006,000, or 41% from the total G&A expenses for the sixmonths ended June30, 2019, of approximately $7,287,000. 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 periodendedJune 30, 2020,is mainly attributed to a decrease in stock-based compensation expense of approximately $3,515,000, which is a non-cash charge, offset by an increase inlegal, professional fees and insurance costsof approximately $510,000compared to the same period in 2019.

As of June 30, 2020, the Company had approximately $7.5 million in cash and cash equivalents and in July 2020 Atossa received an additional $4.3 million in cash by completing the sale of all shares available under its at-the-market financing facility.

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 Counsel Office: 866 893-4927 kyle.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 June As ofAssets 30, December 31, 2020 2019 (Unaudited)Current assets Cash and cash equivalents $ 7,462,736 $ 12,581,136 Restricted cash 110,000 110,000 Prepaid expenses 1,464,366 862,344 Research and development tax rebate 760,622 739,656 receivableOther current assets 263,957 26,130 Total current assets 10,061,681 14,319,266 Furniture and equipment, net 29,440 34,350 Intangible assets, net 53,125 68,542 Right-of-use asset 44,235 50,479 Other assets 17,218 17,218 Total Assets $ 10,205,699 $ 14,489,855 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 1,032,707 $ 293,171 Accrued expenses 92,855 77,888 Payroll liabilities 655,408 899,420 Lease liability 39,515 39,371 Other current liabilities 6,188 12,892 Total current liabilities 1,826,673 1,322,742 Long term liabilities Lease liability long term 4,720 11,108 Total Liabilities 1,831,393 1,333,850 Commitments and contingencies Stockholders' equity Preferred stock - $0.001 par value;10,000,000 shares authorized; 626and 671 shares issued and 1 1 outstanding as of June 30, 2020 andDecember 31, 2019, respectivelyAdditional paid-in capital - Series 625,999 670,999 B convertible preferred stockCommon stock - $0.18 par value;175,000,000 shares authorized;9,303,878 and 9,130,984 shares 1,674,686 1,643,565 issued and outstanding as of June30, 2020 and December 31, 2019,respectivelyAdditional paid-in capital 106,998,222 104,912,480 Accumulated deficit (100,924,602 ) (94,071,040 )Total Stockholders' Equity 8,374,306 13,156,005 Total Liabilities and Stockholders' $ 10,205,699 $ 14,489,855 Equity



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

For the Three Months For the Six Months Ended June 30, Ended June 30, 2020 2019 2020 2019 Operating expensesResearch and $ 1,653,239 $ 2,611,948 $ 2,591,859 $ 4,063,184 developmentGeneral and 2,282,568 4,674,121 4,280,957 7,287,214 administrativeTotaloperating 3,935,807 7,286,069 6,872,816 11,350,398 expensesOperating loss (3,935,807 ) (7,286,069 ) (6,872,816 ) (11,350,398 )Other income 29,665 23,540 19,254 14,562 Loss before (3,906,142 ) (7,262,529 ) (6,853,562 ) (11,335,836 )income taxesIncome taxes - - - - Net loss $ (3,906,142 ) $ (7,262,529 ) $ (6,853,562 ) $ (11,335,836 )Loss percommon share - $ (0.43 ) $ (0.80 ) $ (0.75 ) $ (1.44 )basic anddilutedWeightedaverage sharesoutstanding - 9,187,588 9,126,153 9,159,286 7,852,907 basic anddiluted