GlobeNewswire Inc | May 14, 2021 09:15AM EDT

May 14, 2021

SEATTLE, May 14, 2021 (GLOBE NEWSWIRE) -- Atossa Therapeutics, Inc. (Nasdaq: ATOS), a clinical-stage biopharmaceutical company seeking to discover and develop innovative medicines in oncology and infectious disease with a current focus on breast cancer and COVID-19, today announces financial results for the fiscal quarter ended March 31, 2021, and provides an update on recent company developments.

Key developments from Q1 2021 and to date include:

-- Atossa concluded its open-label Phase 2 clinical study of oral Endoxifen administered in the window of opportunitybetween diagnosis of breast cancer and surgery based on positive results allowing acceleration of the Endoxifen program in the United States -- Announced updated findings following 24 months of an Expanded Access (or compassionate use) single-patient study of Endoxifen for breast cancer. 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 -- Received a Safe to Proceedletter under the Expanded Access Pathway from the FDA permitting the use of Atossas oral Endoxifen as a treatment in an ovarian cancer patient and began treatment -- Announced final results from its Phase 1 double-blinded, randomized, placebo-controlled clinical study using Atossas proprietary drug candidate AT-301 administered by nasal spray. AT-301 was considered to be safe and well tolerated in healthy male and female participants in this study at two different dose levels over 14 days. AT-301 is being developed for at home use for patients recently diagnosed with COVID-19 -- Completed financing transactions with net proceeds of approximately $136 million beginning in December 2020 through the end of Q1

Atossas 2021 Annual Stockholder Meeting is scheduled for today, May 14, 2021 at 1 p.m. Pacific Time. As part of the meeting, Atossa management has decided to withdraw from consideration the proposal to increase authorized shares of common stock by 325 million.

During the first quarter of 2021 we continued our two key development programs, namely our Phase 2 study of oral Endoxifen for the window of opportunity between diagnosis of breast cancer and surgery and our Phase 1 study of AT-301 nasal spray for at-home use for patients recently diagnosed with COVID-19, said Dr. Steven Quay, Atossas President and Chief Executive Officer. In addition, we continued our ongoing expanded access program with Endoxifen in which the drug continues to be well tolerated and breast cancer recurrence has not been seen clinically. We also received an important authorization from the FDA for an additional expanded access treatment program in an ovarian cancer patient. Combined with very encouraging results in our COVID-19 program with AT-301 nasal spray, we continued to make great progress over the quarter.

In the meantime, we leveraged favorable conditions in the capital markets to strengthen our balance sheet over the last few months placing Atossa in a good position to execute on these and potential additional business opportunities during the remainder of 2021. As a result, we are diligently moving our existing programs forward, while actively exploring the possibility for strategic expansion into other areas where we might see near-term milestones and results. We look forward to continuing to update our stockholders on these opportunities as they develop, concluded Dr. Quay.

Quarter Ended March 31, 2021 Financial Results

For the quarter ended March 31, 2021, Atossa has no source of sustainable revenue and no associated cost of revenue.

As of March31, 2021, the Company had cash, cash equivalents and restricted cash of approximately $137.7million.

Operating ExpensesTotal operating expenses were $3,531,000 for the quarter ended March 31, 2021, compared to $2,937,000 during the same period of 2020, an increase of $594,000 or approximately 20%. Operating expenses for 2021consisted of research and development ("R&D") expenses of $1,379,000 and general and administrative ("G&A") expenses of $2,152,000. Operating expensesfor 2020 consisted of R&D expenses of $939,000, and G&A expenses of $1,998,000.

Research and Development ExpensesR&D expenses for the three monthsended March31, 2021, were $1,379,000, an increase of $440,000 or 47% from total R&D expenses for the same period in2020of $939,000. The increase in R&D expense is attributed primarilyan increase in clinical trial expense of approximately $319,000 and an increase in salariesof approximately $118,000 due to the addition of employees, as compared to the same period in 2020. We expect our R&D expenses to continue to increase into 2021 as we seek to commence a studyof AT-H201,completestudiesof 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 ExpensesG&A expenses were $2,152,000 for the three monthsended March31, 2021, an increase of $154,000, or 8% from the total G&A expenses for the three monthsended March 31, 2020, of $1,998,000. The increasein G&A expenses for the three monthsended March31, 2021,is mainly attributedto an increase in insurance and professional fees of approximately $286,000 offset by a reduction in legal fees and compensationof approximately $152,000 compared to the same period in 2020. G&A expenses consist primarily of personnel and related benefit costs, facilities, professional services, insurance, and public company related expenses.

About Atossa Therapeutics

Atossa Therapeutics, Inc. is a clinical-stage biopharmaceutical company seeking to discover and develop innovative medicines in oncology and infectious diseases 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 March 31, As of 2021 December 31, Assets (Unaudited) 2020 Current assets Cash and cash equivalents $ 137,573,593 $ 39,553,671 Restricted cash 110,000 110,000 Prepaid expenses 2,550,452 1,813,902 Research and development tax rebate 720,029 634,940 receivableOther current assets 77,239 657,662 Total current assets 141,031,313 42,770,175 Furniture and equipment, net 15,835 20,632 Intangible assets, net 8,917 13,375 Right-of-use asset 8,013 18,053 Other assets 16,468 17,218 Total Assets $ 141,080,546 $ 42,839,453 Liabilities and Stockholders' EquityCurrent liabilities Accounts payable $ 722,281 $ 1,588,613 Accrued expenses 151,155 93,367 Payroll liabilities 490,001 963,665 Common stock warrant liability - 13,003,075 Lease liability 8,013 18,053 Other current liabilities 7,697 4,748 Total current liabilities 1,379,147 15,671,521 Commitments and contingencies Stockholders' equity Preferred stock - $0.001 par value;10,000,000 shares authorized; 620and 621 shares issued and 1 1 outstanding as of March 31, 2021and December 31, 2020, respectivelyAdditional paid-in capital - Series 619,999 620,999 B convertible preferred stockCommon stock - $0.18 par value;175,000,000 shares authorized;120,824,368 and 47,548,835 shares 21,748,374 8,558,778 issued and outstanding as of March31, 2021 and December 31, 2020,respectivelyAdditional paid-in capital 229,498,725 129,887,146 Accumulated deficit (112,165,700 ) (111,898,992 )Total Stockholders' Equity 139,701,399 27,167,932 Total Liabilities and Stockholders' $ 141,080,546 $ 42,839,453 Equity

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

For the Three Months Ended March 31, 2021 2020 Operating expenses Research and development $ 1,378,487 $ 938,620 General and administrative 2,152,241 1,998,389 Total operating expenses 3,530,728 2,937,009 Operating loss (3,530,728 ) (2,937,009 )Other expense (7,341 ) (10,411 )Loss before income taxes (3,538,069 ) (2,947,420 )Income taxes - - Net loss $ (3,538,069 ) $ (2,947,420 )Loss per common share - basic and $ (0.04 ) $ (0.32 )dilutedWeighted average shares outstanding - 92,587,168 9,130,984 basic and diluted