10-K: Athira Pharma Focuses on ALS Drug After Disappointing Alzheimer's Trial

Sentiment:

Annual Results 27 February 2025 4:15 PM

Athira Pharma shifts its focus to ATH-1105 for ALS treatment after Phase 2/3 trial results for fosgonimeton in Alzheimer's disease fall short of statistical significance.

Capital raiseThe company will need to raise substantial additional capital to fund the development of its drug candidates.The company expects to finance its operations through the sale of equity, debt financings, or other capital sources, which could include income from collaboration, licensing or similar arrangements.In January 2023, the company entered into a sales agreement with Cantor Fitzgerald and BTIG to sell shares of its common stock having aggregate sales proceeds of up to $75.0 million through an ATM equity offering program.

Worse than expectedThe Phase 2/3 LIFT-AD clinical trial of fosgonimeton in AD did not meet its primary or key secondary endpoints.

Summary

Athira Pharma, a clinical-stage biopharmaceutical company, is now prioritizing the development of ATH-1105 for amyotrophic lateral sclerosis (ALS) after pausing development of fosgonimeton following unsuccessful Phase 2/3 trial results in Alzheimer's disease (AD).
The Phase 2/3 LIFT-AD trial for fosgonimeton did not meet its primary or key secondary endpoints, although some subgroups showed improvements.
ATH-1105, a novel, orally available small molecule, is designed to positively modulate the neurotrophic HGF system and has shown promise in preclinical models of ALS.
A Phase 1 trial of ATH-1105 in healthy volunteers demonstrated a favorable safety profile and tolerability, supporting further clinical development.
The company is actively seeking partnerships to advance the development of ATH-1105 and other drug candidates.
As of December 31, 2024, Athira had $51.3 million in cash, cash equivalents, and investments, which are expected to fund operations for at least the next 12 months.
The company reported net losses of $96.9 million for 2024 and $117.7 million for 2023.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While the company is focusing on a promising drug candidate (ATH-1105) and has sufficient cash for the near term, it also faces significant challenges, including past trial failures, ongoing losses, and the need to raise additional capital. The strategic review process adds uncertainty.

Positives

ATH-1105 has shown promising preclinical results in ALS models, improving motor neuron survival and function.
The Phase 1 trial of ATH-1105 demonstrated a favorable safety profile and tolerability in healthy volunteers.
The company has sufficient cash to fund operations for at least the next 12 months.
The company is actively seeking partnerships to advance the development of ATH-1105 and other drug candidates.

Negatives

The Phase 2/3 LIFT-AD trial for fosgonimeton in Alzheimer's disease did not meet its primary or key secondary endpoints.
The company has incurred significant losses since its inception and expects to continue incurring losses for the foreseeable future.
The company is dependent on raising additional capital to fund its operations.
The company is subject to various risks and uncertainties, including those related to clinical trials, regulatory approvals, and competition.

Risks

Clinical trials may be delayed or unsuccessful, and regulatory approvals may not be obtained.
The company faces significant competition from other pharmaceutical companies.
The company's success depends on its ability to protect its intellectual property.
The company may be subject to claims, lawsuits, and government investigations.
The market price of the company's common stock may be volatile.
Actions by activist stockholders could be disruptive and cause uncertainty about the strategic direction of the business.
The company may not be successful in identifying and implementing any strategic transaction and any strategic transactions that we may consummate in the future may not be successful.

Future Outlook

Athira expects to continue incurring operating losses for the foreseeable future as it continues to advance ATH-1105 and other drug candidates through preclinical studies and clinical trials, and seeks regulatory approvals. The company estimates that its existing cash, cash equivalents and investments will be sufficient to fund its operating expenses and capital expenditure requirements through at least the next 12 months following the date of this report.

Management Comments

Athira is actively reviewing options for partnerships or arrangements that will allow it to realize the potential of its drug candidates.

Industry Context

The biopharmaceutical industry is characterized by rapid technological advancement and intense competition. Athira faces competitive pressures from both large and small pharmaceutical companies, as well as academic and research institutions. The company's success depends on its ability to develop and commercialize products that are more effective, safer, or less expensive than existing treatments.

Comparison to Industry Standards

The document does not provide enough information to make a detailed comparison to industry standards.
However, it mentions that Athira faces competition from companies developing novel approaches, including those targeting other neurotrophic systems to address ALS and other neurological diseases.
Specific competitors mentioned include Helixmith (VM202) and Kringle Pharma (KP-100), both developing HGF/MET-directed therapies for ALS, which failed to reach statistical significance on efficacy endpoints in Phase 2 clinical trials.
The document highlights that ATH-1105 has the potential to offer neuroprotective and anti-inflammatory effects by targeting the HGF/MET system, with preclinical data demonstrating positive benefits across several biological and clinical measures.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Business Officer	Andrew Gengos	NA	October 3, 2024	Workforce reduction
Chief Operating Officer and Chief Development Officer	Rachel Lenington	NA	October 1, 2024	Workforce reduction

Legal Proceedings

The company settled a securities class action lawsuit for $10 million, with $1.6 million covered by insurance.
The company settled a shareholder derivative action for certain corporate governance reforms and the payment of a fee and expense award to plaintiffs counsel.
The company entered into a settlement agreement with the Department of Justice, OIG-HHS, and the qui tam lawsuit relator in which it agreed to pay approximately $4.1 million.

Stakeholder Impact

Shareholders: The company is exploring strategic alternatives to maximize stockholder value.
Employees: The company implemented a workforce reduction affecting approximately 70% of its employees.
Patients: The company is focusing on developing ATH-1105 for ALS, which could provide a new treatment option for patients with this disease.

Next Steps

Continue clinical development of ATH-1105 for ALS.
Seek partnerships to advance the development of ATH-1105 and other drug candidates.
Explore strategic alternatives to maximize stockholder value.

Key Dates

Date	Description
March 2011	Company incorporated in Washington as M3 Biotechnology, Inc.
October 2015	Company converted to a Delaware corporation and changed its name to Athira Pharma, Inc.
September 18, 2020	Common stock began trading on The Nasdaq Global Select Market under the symbol ATHA.
December 2020	Company accepted a grant from the National Institutes of Health (NIH) to support its ACT-AD Phase 2 clinical trial for fosgonimeton.
September 16, 2011	Leahy-Smith America Invents Act signed into law.
September 2024	Athira announced topline results for LIFT-AD, a Phase 2/3 clinical trial with fosgonimeton in mild-to-moderate AD, which did not meet its primary and key secondary endpoints.
September 2024	Athira committed to a workforce reduction that resulted in the termination of approximately 70% of its workforce.
November 2024	Athira completed a first-in-human Phase 1 double-blind, placebo-controlled trial that enrolled 80 healthy volunteers to evaluate single and multiple oral ascending doses of ATH-1105.
December 31, 2024	Athira entered into a settlement agreement with the Department of Justice, OIG-HHS, and the qui tam lawsuit relator in which it agreed to pay approximately $4.1 million.
January 2025	Athira paid the $4.1 million settlement to the Department of Justice, OIG-HHS, and the qui tam lawsuit relator.
February 20, 2025	There were approximately 41 holders of record of Athira's common stock.
August 2027	Expiration of corporate headquarters lease.

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