8-K: Athira Pharma Reports Full Year 2024 Financial Results and Provides Pipeline Updates

Athira Pharma announces its full year 2024 financial results, highlighting progress in its pipeline, particularly with ATH-1105 for ALS treatment, and ongoing exploration of strategic alternatives.

Summary

• Athira Pharma reported its financial results for the year ended December 31, 2024.
• The company completed a Phase 1 clinical study of ATH-1105 in healthy volunteers and is on track to begin dosing ALS patients in 2025.
• The company is exploring strategic alternatives to maximize stockholder value and has engaged Cantor Fitzgerald & Co. as an advisor.
• Further development of fosgonimeton has been paused while the company explores partnering options.
• Cash, cash equivalents, and investments totaled $51.3 million as of December 31, 2024, compared to $147.4 million at the end of 2023.
• Net cash used in operations was $97.2 million for the year ended December 31, 2024, compared to $100.8 million for the year ended December 31, 2023.
• Research and Development expenses were $70.7 million for the year ended December 31, 2024, compared to $93.8 million for the year ended December 31, 2023.
• General and Administrative expenses were $26.1 million for the year ended December 31, 2024, compared to $33.3 million for the year ended December 31, 2023.
• A legal expense of $4.1 million was accrued in connection with a settlement agreement with the United States Department of Justice related to Athira's NIH grant.
• Net loss was $96.9 million, or $2.52 per share, for the year ended December 31, 2024, compared to a net loss of $117.7 million, or $3.09 per share, for the year ended December 31, 2023.

Sentiment

Score: 4

Explanation: The sentiment is neutral to slightly negative due to the failed clinical trial, decreased cash position, and exploration of strategic alternatives, balanced by the progress with ATH-1105.

Positives

• ATH-1105 demonstrated a favorable safety profile and was well-tolerated in healthy volunteers in the Phase 1 trial.
• Athira is on track to enable dosing ALS patients with ATH-1105 in 2025.
• Preclinical evidence supports ATH-1105's potential, showing improvements in nerve and motor function, biomarkers, and survival in ALS models.
• The company is actively exploring strategic alternatives to maximize stockholder value.
• Research and Development and General and Administrative expenses decreased compared to the previous year.

Negatives

• The LIFT-AD Phase 2/3 clinical trial of fosgonimeton did not meet its primary or key secondary endpoints.
• Further development of fosgonimeton has been paused.
• Cash, cash equivalents, and investments decreased significantly from $147.4 million in 2023 to $51.3 million in 2024.
• The company reported a net loss of $96.9 million for the year ended December 31, 2024.

Risks

• The success of ATH-1105 in preclinical models may not translate to clinical efficacy in ALS patients.
• The exploration of strategic alternatives may not result in a favorable outcome for the company or its stockholders.
• The company's cash reserves are decreasing, raising concerns about its ability to fund future operations.
• Regulatory authorities could object to protocols, amendments and other submissions.
• Athira may not be able to recruit sufficient patients for its clinical trials.

Future Outlook

Athira is focused on advancing ATH-1105 as a potential therapy for ALS and is on track to enable dosing ALS patients in 2025; the company is also exploring strategic alternatives to maximize stockholder value and partnering options for fosgonimeton.

Management Comments

• Mark Litton, Ph.D, President and Chief Executive Officer of Athira, stated that they look forward to the opportunity to continue to advance ATH-1105 as a potential therapy for ALS.
• Mark Litton noted that ATH-1105 has demonstrated a consistent ability to improve motor and nerve function, enhance neuronal survival, and improve biomarkers of inflammation and neurodegeneration in preclinical models.

Industry Context

Athira's focus on neurodegenerative diseases like ALS and Alzheimer's aligns with a growing need for effective treatments in these areas; the company's exploration of strategic alternatives reflects the challenges faced by many biotech companies in funding and advancing drug development programs.

Comparison to Industry Standards

• Many biopharmaceutical companies developing treatments for neurodegenerative diseases, such as Biogen, Eisai, and Roche, are also investing heavily in research and development.
• Athira's decision to explore strategic alternatives after the LIFT-AD trial results is a common response in the industry when a key clinical trial fails to meet its endpoints, similar to what happened with Axovant Sciences after their Alzheimer's drug failed in clinical trials.
• The cash burn rate of $97.2 million is relatively high for a company of Athira's size, and they will need to manage their resources carefully or secure additional funding to continue operations, similar to other clinical-stage biotech companies like Cassava Sciences and Anavex Life Sciences.

Legal Proceedings

• A legal expense of $4.1 million was accrued during the year ended December 31, 2024, in connection with a settlement agreement reached with the United States Department of Justice related to Athira's NIH grant.

Stakeholder Impact

• Shareholders face uncertainty due to the exploration of strategic alternatives and the failed clinical trial.
• Employees may experience job insecurity depending on the outcome of the strategic alternatives exploration.
• ALS patients may benefit from the continued development of ATH-1105.
• The pause in fosgonimeton development impacts Alzheimer's patients who were hoping for a new treatment option.

Next Steps

• Enable dosing ALS patients with ATH-1105 in 2025.
• Continue exploration of strategic alternatives.
• Explore partnering options for fosgonimeton.

Key Dates