atos20220331

atos20220331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number: 001-35610

ATOSSA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware	26-4753208
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

107 Spring Street	98104
Seattle, WA	(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (206) 325-6086

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.18 par value	ATOS	The Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock, $0.18 par value per share, outstanding as of May 6, 2022, was 126,624,110.



PART I. FINANCIAL INFORMATION


ITEM 1.	Condensed Consolidated Financial Statements – Unaudited	3

	Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	3

	Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021	4

	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2022 and 2021	5

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	6

	Notes to Condensed Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	23

ITEM 4.	Controls and Procedures	23

PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings	24

ITEM 1A.	Risk Factors	24

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

ITEM 3.	Defaults upon Senior Securities	38

ITEM 4.	Mine Safety Disclosures	38

ITEM 5.	Other Information	38

ITEM 6.	Exhibits	39

SIGNATURES		40

	*As of March 31,*
	*2022*			*As of December 31,*
Assets	*(Unaudited)*			*2021*
Current assets
Cash and cash equivalents	$	131,486		$	136,377
Restricted cash		110			110
Prepaid expenses		3,874			2,488
Research and development rebate receivable		668			1,072
Other current assets		710			1,193
Total current assets		136,848			141,240

Other assets		630			22
Total Assets	$	137,478		$	141,262

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	1,596		$	1,717
Accrued expenses		120			204
Payroll liabilities		593			1,184
Other current liabilities		13			21
Total current liabilities		2,322			3,126

Total Liabilities		2,322			3,126

Commitments and contingencies (Note 13)

Stockholders' equity
Preferred stock - $0.001 par value; 10,000 shares authorized; 1 share issued and outstanding as of March 31, 2022 and December 31, 2021		-			-
Additional paid-in capital - Series B convertible preferred stock		582			582
Common stock - $0.18 par value; 175,000 shares authorized; 126,624 shares issued and outstanding as of March 31, 2022 and December 31, 2021		22,792			22,792
Additional paid-in capital - common stock		245,802			243,996
Accumulated deficit		(134,020	)		(129,234	)
Total Stockholders' Equity		135,156			138,136
Total Liabilities and Stockholders' Equity	$	137,478		$	141,262

	*For the Three Months Ended March 31,*

	*2022*			*2021*

Operating expenses
Research and development	$	1,499		$	1,379
General and administrative		3,248			2,152
Total operating expenses		4,747			3,531
Operating loss		(4,747	)		(3,531	)
Other expense, net		(39	)		(7	)
Loss before income taxes		(4,786	)		(3,538	)
Income taxes		-			-
Net loss	$	(4,786	)	$	(3,538	)
Loss per common share - basic and diluted	$	(0.04	)	$	(0.04	)
Weighted average shares outstanding - basic and diluted		126,624			92,587

	Series B Convertible Preferred Stock							Common Stock
					Additional							Additional					Total
	*Shares*		*Amount*		*Paid-in Capital*			*Shares*		*Amount*		*Paid-in Capital*		*Accumulated Deficit*			*Stockholders' Equity*
Balance at December 31, 2020		1	$	-	$	621			47,550	$	8,559	$	129,887	$	(111,899	)	$	27,168
Cumulative effect of adopted accounting standard		-		-		-			-		-		9,732		3,271			13,003
Issuance of common stock and warrants, net of issuance costs of $5,493		-		-		-			41,211		7,418		62,250		-			69,668
Issuance of common stock upon warrant exercise		-		-		-			32,063		5,771		26,989		-			32,760
Conversion of Series B convertible preferred stock to common stock		-		-		(1	)		-		-		1		-			-
Compensation cost for stock options granted		-		-		-			-		-		640		-			640
Net loss		-		-		-			-		-		-		(3,538	)		(3,538	)
Balance at March 31, 2021		1	$	-	$	620			120,824	$	21,748	$	229,499	$	(112,166	)	$	139,701

	As of March 31,		As of December 31,
	*2022*		*2021*
Prepaid research and development	$	2,927	$	1,853
Prepaid insurance		613		461
Professional services		293		124
Other		41		50
Total prepaid expenses	$	3,874	$	2,488

	March 31,		December 31,
	2022		2021
Accrued bonuses	$	241	$	894
Accrued vacation		229		183
Accrued payroll		123		107
Total payroll liabilities	$	593	$	1,184

March 31, 2022	Estimated Fair Value		Level 1		Level 2		Level 3
Assets:
Money market account	$	51,797	$	51,797	$	-	$	-


December 31, 2021	*Estimated Fair Value*		*Level 1*		*Level 2*		*Level 3*
Assets:
Money market account	$	51,796	$	51,796	$	-	$	-

Warrant liability
Beginning balance	$	13,003
Reclassification of equity upon adoption of accounting standard		(13,003	)
Issuance of warrants		-
Change in fair value		-
Ending balance	$	-

	Outstanding Warrants to Purchase Shares		Exercise Price Per Share		Expiration date
May 2018 warrants		762	$	4.05	May 30, 2022
December 2020 warrants		6,490	$	1.00	December 11 2024-June 21, 2025
January 2021 warrants		4,500	$	1.055	July 8, 2025
March 2021 warrants		10,525	$	2.88	September 22, 2025
		22,277

	Three Months Ended March 31,
	2022			2021
Numerator
Net loss attributable to common shareholders	$	(4,786	)	$	(3,538	)
Denominator
Weighted average common shares outstanding used to compute net loss per share, basic and diluted		126,624			92,587
Net loss per share of common stock, basic and diluted	$	(0.04	)	$	(0.04	)

	Three Months Ended March 31,
	2022
Risk-free interest rate		1.86% - 2.53%
Expected term (in years)		5.51 - 6.11
Dividend yield		-
Expected volatility		117% - 128%

	Number of Underlying Shares		Weighted- Average Exercise Price Per Share		Weighted- Average Contractual Life Remaining in Years		Aggregate Intrinsic Value
Outstanding as of January 1, 2022		10,027	$	2.82			$	1,006
Granted		2,722		1.25
Exercised		-		-
Forfeited		-		-
Expired		-		-
Outstanding as of March 31, 2022		12,749		2.48		8.42	$	-
Exercisable as of March 31, 2022		7,279		2.82		7.67
Vested and expected to vest		12,749	$	2.48		8.42	$	-

	●	The impact of the ongoing coronavirus pandemic and the degree to which the pandemic negatively impacts our supply chain, clinical trial enrollment and timing, nonclinical study timing, and our ability to access capital markets;

	●	whether we can obtain approval from the U.S. Food and Drug Administration (FDA), and foreign regulatory bodies, to commence our clinical trials, including our planned COVID-19 and Endoxifen trials, and to sell, market and distribute our therapeutics under development;

	●	our ability to successfully initiate and complete clinical trials of our pharmaceutical candidates under development, including our COVID-19 therapies and Endoxifen (an active metabolite of Tamoxifen), and whether those trials will meet their objectives;

	●	the success, cost and timing of our product and drug development activities and clinical trials, including whether our studies using our COVID-19 therapies and Endoxifen will enroll a sufficient number of subjects or be completed in a timely fashion or at all;

	●	our ability to contract with third-party suppliers, manufacturers and service providers, including clinical research organizations, and their ability to perform adequately;

	●	our ability to successfully develop and commercialize new therapeutics currently in development or that we might identify in the future and in the time frames currently expected;

	●	our ability to successfully defend litigation and other similar complaints that may be brought in the future, in a timely manner and within the coverage, scope and limits of our insurance policies;

	●	our ability to establish and maintain intellectual property rights covering our products;

	●	our expectations regarding, and our ability to satisfy, federal, state and foreign regulatory requirements;

	●	the accuracy of our estimates of the size and characteristics of the markets that our products and services may address;

	●	whether the final study results will vary from preliminary study results that we may announce;

	●	our expectations as to future financial performance, expense levels and capital sources;

	●	our ability to attract and retain key personnel; and

	●	our ability to raise capital.

	●	regulatory (FDA, MPA, TGA) meetings and approvals could be delayed;
	●	protocol review groups (IRB, HREC, IEC, etc.) meetings and approvals could be delayed;

		Incorporated by Reference Herein
Exhibit No.	Description	Form	Date


31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act	Filed herewith

31.2	Certification Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act	Filed herewith

32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith

32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith

101.INS	Inline XBRL Instance Document

101.SCH	Inline XBRL Taxonomy Extension Schema Document

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

/s/ Steven C. Quay
President and Chief Executive Officer
(On behalf of the Registrant)

/s/ Kyle Guse
Kyle Guse
Chief Financial Officer, General Counsel and Secretary
(As Principal Financial and Accounting Officer)