Welcome, everyone. This is the Atossa Therapeutics Webinar, and we'll be getting started at 3:00 P.M. after the hour. Thank you. Hello, this is Craig with RedChip Companies. Thank you for joining today's event with Atossa Therapeutics, which trades on the Nasdaq under the ticker ATOS. With us today, we have Steven Quay, Chairman of the Board and Chief Executive Officer of Atossa. We will begin with a brief presentation in a moment, and then we will answer your questions. Users may submit a question at any time by using the Q&A tool at the bottom of the Zoom window. Before we begin, please allow me to read the Safe Harbor Statement. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
All statements pertaining to future financial and/or operating results, along with other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management, constitute forward-looking statements. Any statements that are not historical fact should also be considered forward-looking statements. Of course, forward-looking statements involve risks and uncertainties. I now turn this webinar over to Steven. Please go ahead.
Thanks, Craig. It's great to be here, and it's great to be talking to the shareholders this afternoon. As you've already indicated, I will be making forward-looking statements today, and so any investment decisions should be made after reviewing our filings with the SEC. Atossa Therapeutics is addressing a multi-billion dollar market opportunity with a rapidly growing estrogen receptor positive breast cancer market. Our molecule (Z)-endoxifen has demonstrated broad utility across the entire breast cancer paradigm, from prevention—that is, women at high risk of cancer but do not have cancer currently; the neoadjuvant setting, where a woman has been recently diagnosed and treatment is used before definitive surgery; adjuvant setting after that, after that definitive surgery; and then in the metastatic setting. We are developing and continue to develop a robust and growing IP portfolio with broad protections both in the U.S. and abroad.
We have an experienced leadership team and a world-renowned advisor group and a very strong financial position with nearly two years of runway and no debt on our balance sheet. Here is the leadership team, as you can see. Heather Rees is our Chief Financial Officer and Secretary. Claudia Lopez, our VP of Clinical Development. Delly Behen , SVP of Business Operations, and Michael Parks, VP of Investor and Public Relations. Our advisors are from all over the world, beginning with Dr. Per Hall at the Karolinska Institutet in Stockholm, Sweden. Dr. Laura Esserman, Professor at UCSF and the I-SPY Principal Investigator. Dr. Matthew Goetz, M.D. from the Mayo Clinic, the Principal Investigator of the EVANGELINE Trials. Finally, David Lyden from Weill Cornell in New York City, studying triple-negative breast cancer on our behalf.
There is a high unmet need in estrogen receptor breast cancer and estrogen therapy for breast cancer involving sort of three pillars, if I can call it that. One is that 40%-50% of the patients discontinue adjuvant endocrine therapy at some point during their treatment. This is primarily due to adverse side effects. Secondly, almost 1/2 of all patients do not respond to first-line therapy, which is aromatase inhibitors and drugs that address the CDK4/6 pathway. Finally, about 60% of patients do not respond to second-line therapy, which is the injected fulvestrant drug. Although endocrine therapy remains the mainstay for patients, there are numerous unmet needs that still exist, primarily in four areas: improved efficacy as needed, reduced resistance after therapy when the tumors no longer become responsive, inducing apoptosis. This is a very important principle.
Most estrogen therapies stop the cells from growing but do not cause cell death. Programmed cell death is called apoptosis. Having a drug in this space to induce apoptosis would be a unique profile. Finally, improved adherence. That is, patients will continue to take the drug for the prescribed period of time. This, again, is primarily related to the side effects associated with any given therapy. As a reminder, endoxifen, (Z)-endoxifen that we are developing, which is shown down here, I hope you can see I am circling it with my cursor, is the active ingredient of what we now know is a pro-drug tamoxifen. As shown here in this cartoon at the left, tamoxifen in the GI tract is taken up by the liver.
Here is tamoxifen, and it undergoes two metabolic steps to end up with (Z)-endoxifen, and they can be in either order with respect to the enzymes in the liver. You can either add a hydroxyl group here to make 4-hydroxytamoxifen in the first step, or you can remove one of the amines to make N-desmethyl-tamoxifen. Finally, you can remove this amine in this pathway here to reach endoxifen. All of these drugs are eliminated from the body by putting a sugar on them to make them more water-soluble. Again, with the concept that tamoxifen produces 21 different chemicals in the body, not all of which, most of which do not have any activity, some of which have detrimental activity, we believe that focusing on the drug within the 21 chemicals that tamoxifen forms, (Z)-endoxifen, provides a new paradigm with broad clinical utility.
As we like to say, (Z)-endoxifen is not your grandmother's tamoxifen or your mother's aromatase inhibitor. There are sort of five principles that we use to talk about endoxifen. I'm just moving this area. First, it has superior estrogen receptor antagonism. This is the primary interaction, the primary mechanism of action for this drug. What it's intended to do is to get between estrogen and the estrogen receptor and block estrogen from binding. In the normal setting, without (Z)-endoxifen present, estrogen will bind to the receptor, the receptor will go into the nucleus, and turn on various protein synthesis that leads to growth of the cancer. If you can block that first step of estrogen binding, you then prevent the downstream activities.
The ability to do that for (Z)-endoxifen is superior to the other current treatments, making it best in class with respect to that primary mechanism of action. Now, I've talked before here recently about the fact that all of these drugs do not produce apoptosis or programmed cell death. There is a pathway that (Z)-endoxifen addresses called the PKCß 1 pathway, which is completely separate. It's sort of next to and parallel with the estrogen receptor pathway. This PKCß 1 pathway leads to what is called programmed cell death, which is a series of steps that end with a pathway called AKT, but which the cell undergoes an organized process to actually die in a very deliberate fashion. Apoptosis is what it's called. Uniquely, (Z)-endoxifen addresses this particular pathway. Now, I spoke a little bit about resistance.
When you use endocrine therapy like this and block the interaction between estrogen and its receptor, Darwin's evolutionary process eventually steps in, and mutations in the estrogen receptor will arise which prevent the drug from interacting and therefore release the inhibition that has been occurring. This can typically take a year or two or even three or four years, but it's a pretty robust process where most women, more than 50% of women on long-term endocrine therapy of some kind, will end up with an estrogen receptor resistant mutation. Uniquely, again, (Z)-endoxifen is operative in those settings. It's so powerful in its inhibition that even when the estrogen receptor mutates in the three or four positions that it typically does, about 75% of all mutations, (Z)-endoxifen is still active. This is an important attribute because, again, in the absence of (Z)-endoxifen and with the other drugs, typically resistance occurs.
At that point, you may have to be using chemotherapy, which is certainly a much harsher, stronger kind of inhibition for the cancer. We believe that (Z)-endoxifen has an improved safety and tolerability profile, which again is really important for adherence. That is the concept that women will take the therapy as indicated by their doctor for the period of time that it should be taken. Side effects, severe side effects will often prevent a woman from doing that. Of course, you get no benefit if you're not taking the drug. This is a critical factor. By having a low adverse event profile, we enhance the ability to make this tolerable. Finally, for all of these pharmacodynamic features, (Z)-endoxifen is a superior combination therapy.
As most of you know, oncology is now evolving to multiple therapies at various points in the care path for a woman. (Z)-endoxifen partners very well with some of the commonly used drugs, other drugs outside of the estrogen receptor modifier class. (Z)-endoxifen can be positioned in all stages of ER+ breast cancer treatment paradigm. I mentioned this at the very beginning. If you think of women, there are sort of four levels of breast cancer treatment. One, of course, is prevention. If you can identify women at high risk by, for example, their density on a mammogram and treat that density, you have the potential to actually prevent breast cancer in the first place.
When breast cancer does occur, you have the opportunity to treat it during the neoadjuvant phase, which is that four to six-month window of time between the diagnosis and the definitive surgery. If you can stop the tumor from growing, if you can shrink the tumor by MRI during that period of time, you make the surgery easier, you make radiation therapy more effective. Neoadjuvant treatment is a very important phase in the overall outcome for women with breast cancer. Once definitive surgery has occurred, your goal is then to prevent local recurrence in the breast that had the cancer and a new cancer in the contralateral breast. We know that once a woman has cancer in one breast, she has a three to five-fold increased risk of cancer in the other breast. That's what the purpose of the adjuvant treatment is.
It's typically five years of drug. And then finally, in those women who continue to have their cancer progress, when it becomes metastatic, which means it's left the breast, it's now in other organs. It typically goes to the bone, it can go to the lung, it can go to the brain. You're in the metastatic phase. This is very important because this year you're not looking for cures at this point in time, but you're looking for quality of life and extending life. Again, a drug that can work in that very difficult, challenging treatment position, the metastatic setting, but with a very attractive safety profile, is an immense benefit to women because of the quality of life at this point in their care path. As we've indicated earlier, we began 2025 with the important goal of identifying the fastest path to FDA approval.
We brought together a world-renowned group of FDA advisors, of clinicians in breast cancer treatment from around the world. The outcome of that very intense multi-month process was that we have identified the metastatic setting as our priority indication and our major focus. This provides the fastest path to market and the highest probability of success in the market. It is a very efficient clinical and regulatory path, and it is actually quite common for new drugs that are appearing on the market. It allows us to rapidly bring (Z)-endoxifen to patients who need it most. It strengthens the foundation for our expansion into the other three areas of prevention, neoadjuvant, and adjuvant by providing a great deal of safety data and allowing it in the market. It is certainly right-sized for Atossa's programs where we are addressing a $42 billion market that is projected for the year 2030.
The value proposition here is pretty simple. The pharmacodynamic effects, the stable disease response for (Z)-endoxifen in all of the trials we've done indicate that it's a potential next-generation endocrine therapy. The very tolerable safety profile, I just can't emphasize this enough, makes it a promising backbone for combination therapy. We have additional phase II studies underway, which will allow reporting to shareholders of our progress. Now, here's a bit of science, if I could, in the preclinical settings. What you're seeing here is (Z)-endoxifen's activity in various tumor models where I'm using the arrow here. If you do not treat the tumors, of course, over a month period of time here, it continues to grow in this particular setting. Whether you use tamoxifen or aromatase inhibitors, you eventually see that only (Z)-endoxifen is able to actually make the tumors smaller in this particular model.
Here in a different model, you again see the uninhibited growth of the cancer, the inhibition by various agents like exemestane and fulvestrant, and finally the (Z)-endoxifen where the tumors are stable for the entire experiment. This does translate into the clinic where you can see here, for example, this is an MRI of a patient. I misspoke. It's a CT of a patient with a cancer that you can see here. After a few months of treatment, you see the cancer is virtually gone. In a study of progression-free survival in postmenopausal women, you actually see that comparing tamoxifen to (Z)-endoxifen, there is almost a six-month difference in the progression-free survival. This was highly significant. The p-value is 0.002 here in this experiment. In our own studies, we've seen similar efficacy in a very quick setting. Ki-67 is a measurement of cell division.
When you see a percentage here of 30% or 25% or 20%, what that means is that out of 100 cells under the microscope, 20 or 25 or 30 are dividing at the moment that the biopsy was taken. At baseline, you see a range of Ki-67s from about 5% to about 35%. After just 28 days of treatment, you see that all of these are scaling down, and most of them are getting at or near 10%, which is a threshold that is commonly considered clinically significant with respect to long-term outcomes. Following this out two cycles later, looking at three cycles or about three months of treatment, you can see here that by MRI, the tumors are actually getting smaller in all of these patients to degrees between 10% and literally 100%. As I've indicated, (Z)-endoxifen partners very well with existing combination drugs.
We've done a great deal of work both in silico using AI, the most advanced AI systems available for pharmacological development, to show that (Z)-endoxifen is probably the best agent to partner with the CDK4/6 class of agents. As you know, in the I-SPY TRIAL with Lilly's CDK4/6 inhibitor, abemaciclib, we are in clinical trials with that combination. It also looks to have potential in combining with other standard-of-care drugs currently in the clinic. So far, in 100s of patients, (Z)-endoxifen is safe and well tolerated in the preclinical and early clinical settings. Preclinical settings, the thing to look for was that it does not induce bone loss. Typically, the estrogen therapies will cause bone loss in women, which can produce frailty, which can produce falls, broken bones, and the like.
The other area to look at in the preclinical studies was in the uterine stimulation or as measured by the wet weight of the uterus. (Z)-endoxifen has minimal stimulation of uterine endometrial activity, which is important for off-tissue on-target effects. In the clinic, (Z)-endoxifen is extremely well tolerated and has been used at up to 360 mg per day for up to five years with relatively few adverse events. In the metastatic setting, it's been used between 20 mg and as high as 160 mg without identifying a clear maximum tolerated dose. Now, let me just pause there because in oncology, it is literally unheard of to have an oncology drug that doesn't have an MTD. The fact that we have difficulty identifying that with (Z)-endoxifen is just a tribute to the safety profile of this drug.
In the EVANGELINE trial that is currently ongoing, where we're looking at grade one and two estrogen-receptor breast cancers in the neoadjuvant setting, 40 and 80 mg doses are being tested. It is generally well tolerated with the majority of AEs being mild and moderate in severity. In the early disease areas, we have reported in the past on prevention and on neoadjuvant in the prevention trials called the KARISMA trial run out of the Karolinska Institutet in Stockholm, Sweden. This was intended to look at the ability to inhibit mammographic breast density, which is a finding on mammogram. Basically, the background is whiter than it should be. This is an established risk factor of about fivefold-eightfold with respect to future breast cancer.
It's literally on the scale of the genetic modifications that Angelina Jolie has, for example, in the BRCA genes, which led to a bilateral mastectomy for her. In a six-month trial on these women with high mammographic breast density, we saw a highly significant reduction in density at both 1 mg and 2 mg compared to placebo. Importantly, at the 1 mg dose, we saw adverse events which were not significantly different from placebo, from a sugar pill. Of course, that's really important in the prevention setting where you're treating women who do not have a disease but are at high risk of getting breast cancer. In the neoadjuvant trials, we've already reported the majority, 85% of women reached the - 10% response rate threshold in 28 days. In the I-SPY TRIAL, 95% of the participants completed what was expected to be a 75% dosing adherence.
There was early evidence of proliferation both in the Ki-67 reduction and in the imaging where almost 78% showed a decrease in the mean tumor volume by MRI. (Z)-endoxifen is highly differentiated from the current therapies, be they tamoxifen, the aromatase inhibitors, or the injected drug, fulvestrant. In the coming remainder of 2025 and into 2026, there are a number of milestones that shareholders can watch for. During the first half here of 2025, we have put together a global steering committee to help pick and design the metastatic setting clinical trials. We have put together a PI group to select and refine this process. We are in the process of selecting contract research organizations to run this international trial for us.
Of course, we need FDA concurrence with this, and we're in the process of working with the FDA to look at our protocol to be sure all of the nuances of the protocol are appropriate. During the second half of the year, you should see early reports on the FDA meetings with respect to the metastatic setting. We intend to have our first patient in the registration trial before the end of this calendar year. Finally, there'll be continued regulatory readouts of our early disease programs. The first and second half of 2026 will see continued efforts with I-SPY readouts and combination updates with our metastatic setting drugs. Again, continued readouts on the early programs. As a reminder, we have nearly two years of cash on hand at our current burn rate and zero debt.
Our burn rate will go up as we get into the regulatory trials for FDA approval, but we feel we're in a very good cash position. Of course, again, there's zero debt on the balance sheet. As a reminder, we had $65 million in cash at the end of March. At the midpoint of May, stock market cap was $140 million. Stock price was $1.06. We have some outstanding warrants, but no debt or other balance sheet issues. As a reminder, we are addressing a multi-billion dollar market in the estrogen receptor positive breast cancer. We've demonstrated broad utility with (Z)-endoxifen across the breast cancer paradigm for metastatic to prevention, neoadjuvant, and adjuvant. We have a robust and growing IP portfolio giving us protection both in the U.S. and globally. An experienced leadership team. We've all done this before.
I've invented seven drugs that are FDA approved, including the gadolinium that's used in MRI imaging. We have a strong financial position with two years of runway and zero debt. Thank you for your attention, and we'll take questions now.
Thank you, Steve. Press the Q&A button at the bottom of your Zoom window and type in your question. We can only accept written questions today. We have a very large crowd. We already have some questions submitted here. Can you update us on any discussions with strategic partners for larger prevention neoadjuvant trials and what key deal terms you're targeting to de-risk enrollment?
Sure. We began last year with a deliberate effort to identify potential partners for our programs. This process led to a series of discussions.
We're not going to go into details more on current discussions that we might be having at this point in time. You should assume that we believe that partnering this drug both with companies that have potential combinations as well as companies in the standalone oncology area is a major priority for the company.
Understanding the importance of CRO selection in the metastatic setting, can you please provide an update on which CROs you have selected to support you with this effort?
Yeah. We are in the bake-off phase of CROs at this point in time. We are interviewing them, checking references, talking to people who have used them before. We will announce the CRO selection when this process is completed. We understand, obviously, it's a very important process because running a large registration trial on an international basis is an important skill set.
We are very pleased with the candidates who have showed an interest in doing this for us. As I indicated, when we have made our selection, we will let our shareholders know.
What progress has been made on manufacturing scale-up or securing additional API supply for (Z)-endoxifen to support anticipated phase III enrollment volumes? Also, how do you anticipate this impacting your burn rate?
Yeah. Very important question here, especially with some of the, I guess, the tariff activities going on around the world. About a year and a half ago, perhaps two years ago, we began the process of moving our manufacturing into the United States from where we were a couple of years ago in Taiwan and then Italy. We now make (Z)-endoxifen at a facility in the United States. There are no tariff issues there.
We have deliberately done the scale-up and some of the initial work necessary to prepare what is called the CMC section of the new drug application. As most of you know, all drug applications have three sections: the manufacturing, the non-clinical, and the clinical section. They are roughly 1/3, 1/3, 1/3 in terms of their size. We began even last year in the fourth quarter the process of preparing the CMC section for registration for (Z)-endoxifen. There actually is a process at the FDA where the manufacturing section can be introduced early. You can begin review of that before the non-clinical and clinical sections are completed. We expect to take advantage of that pathway at an appropriate time in the future.
In your recent announcement regarding your pursuit of a metastatic indication, you mentioned that there would also be ongoing discussions with the FDA on your programs in earlier disease. Are there any updates on ongoing or planned meetings with the FDA to align on registrational endpoints or accelerated approval pathways?
Sure. As we've indicated, the first registration, the first FDA approval of (Z)-endoxifen will be in the metastatic setting. Having said that, we continue to have conversations with the FDA, typically in the written form. When I say conversations, I think everyone should know that that is translated into written documents going in and written responses coming back and the like in our other programs.
Because it's absolutely critical that we work with the FDA on all of the details of clinical trials to be sure that the data we generate is fully supported for registration efforts in the safety and the efficacy of our drugs.
What's the current status and expected timeline of the INTAS and GINA patents litigation? And how might those outcomes impact your IP exclusivity when?
Sure. That's an important question. We are in the process of working with our attorneys on the steps that are necessary to run this to ground. We feel highly confident of our positions. We think that in addition to the two patents that are in this process, we have a wide patent portfolio beyond the two patents there that will provide a great deal of value with respect to our shareholders and the company.
Given recent insider purchases, do you have any internal targets for insider ownership? Are there plans for additional share buybacks or other accretive capital action?
Sure. We do not comment on insider purchases ahead of time. As you have indicated, there have been recent insider purchases that have been made. At the present time, we have no intent to buy back stock by the company itself.
Our final question today. Have you utilized the ATM program since your last update? If so, what capacity remains and at what trigger prices?
Yeah. Important question. As you know, with respect to good housekeeping for any biotech company, we put in place with Jefferies an ATM instrument last year. At this point in time, we have made no purchases under this. We believe that with our current stock price, this is the position we are going to hold.
We think we're undervalued at this point in time. We have two years of cash. There is no short-term intention to use the ATM. It has not been used yet.
Thank you very much. Thank you to the audience for your questions today. For more information about Atossa Therapeutics, reach us at 1-800-REDCHIP or email us at atos@redchip.com. Visit RedChip's investor information page for Atossa. It is atosinfo.com. There you can view and download the investor presentation and fact sheet and sign up for news alerts on Atossa. RedChip is excited to announce the launch of RedChat, our advanced AI assistant designed to empower investors with instant in-depth insights on thousands of small-cap and microcap stocks. Try it now on atosinfo.com or go to red.chat. Watch Small Stocks, Big Money, RedChip's program featuring exciting small-cap companies every Saturday at 7:00 P.M. Eastern on Bloomberg, USA.
Finally, please join RedChip's next webinar with FatPipe on Wednesday, May 28th at 4:15 P.M. U.S. Eastern. Register for all RedChip webinars at redchip.com/events, where you can also view an archived version of today's webinar. Thanks again to our many participants today. Thank you, Steven.
Thank you. It's been a pleasure.