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ATOS: Balance Sheet Boosted by Recent Financing

06/06/2017
By Grant Zeng, CFA

NASDAQ:ATOS

The company did not generate any revenue in the first quarter ended March 31, 2017. 

R&D expenses for the 1Q17 were approximately $544,000, compared to $149,971 for the 1Q16. 

G&A expenses for 1Q17 were approximately $1.1 million, compared to $2.18 million for 1Q16. 

Total operating expenses for 1Q17 were approximately $1.7 million, which decreased approximately $641,000, or 27.5%, from approximately $2.3 million for the three months ended March 31, 2016. 

Net loss for 1Q17 was $1.7 million ($0.45/share), as compared to a net loss of $2.3 million ($1.11/share) for the three months ended March 31, 2016.

As of March 31, 2017, Atossa (NASDAQ:ATOS) had $1.2 million in cash. 

In early April 2017, Atossa closed a public offering with gross proceeds to Atossa of approximately $4.4 million.

The offering included 664,000 Class A Units at a public offering price of $0.75 per Class A Unit, which consisted of 664,000 shares of Common Stock and Warrants to purchase 664,000 shares of Common Stock. The offering also included 3,502 Class B Units at a public offering price of $1,000 per Class B Unit, which consisted of 3,502 shares of Series A Convertible Preferred Stock convertible into a total of 4,669,333 shares of Common Stock and Warrants to purchase 4,669,333 shares of Common Stock. In addition, the underwriter exercised the over-allotment to purchase an additional 530,000 shares of Common Stock and Warrants to purchase 530,000 shares of Common Stock. The Warrants have a per share exercise price of $0.9375, are exercisable immediately and will expire five years from the date of issuance.

In late May 2016, Atossa entered into a $10 million stock purchase agreement with Aspire Capital Fund, LLC. Under terms of the agreement, Aspire has committed to purchase up to $10 million of Atossa's common stock over 30 months, based on prevailing market prices over a period preceding each sale.

We see the terms are favorable for Atossa. With this new secured financing commitment, as well as the sale of its diagnostics business, we think Atossa is in a better position to focus on its growth plan and create long term shareholder value.   

Update on Phase II Study of Fulvestrant 

On March 2, 2016, Atossa Genetics announced that the "007" trial, a Phase II study in women with ductal carcinoma in situ (DCIS) or invasive breast cancer slated for mastectomy, was open for enrollment. This study will assess the safety and tolerability of fulvestrant when delivered directly into breast milk ducts of these patients. 

This Phase II clinical trial is an open-label, non-randomized pharmacokinetic study (PK) study of the distribution of fulvestrant in women scheduled for mastectomy. The first 6 study participants will receive the standard intramuscular fulvestrant dose of 500 mg to establish the reference drug distribution. The subsequent 24 participants will receive fulvestrant by intraductal instillation utilizing Atossa's patented investigational microcatheter device. The total dose administered in this manner will not exceed 500 mg.

The primary endpoint of the clinical trial is to assess the safety and tolerability of intraductal administration of fulvestrant in women with DCIS or Stage 1 or 2 invasive ductal carcinoma prior to mastectomy. 

The secondary objective of the study is to determine if there are changes in the expression of Ki67 as well as estrogen and progesterone receptors between a pre-fulvestrant biopsy and post-fulvestrant surgical specimen. Mammography before and after drug administration in both groups will be performed to determine the effect of fulvestrant on breast density of the participant.

In early May 2017, Atossa announced that the Institutional Review Board associated with Montefiore Medical Center (Biomedical Research Alliance of New York IRB) has approved the Fulvestrant Microcatheter Phase II study that was recently transferred to Montefiore.

We are pleased that the study continues to move forward at Montefiore, which is a leading center for breast cancer treatment.

Atossa owns one issued patent and several pending applications directed to the treatment of breast conditions, including cancer, by the intraductal administration of fulvestrant and other pharmaceuticals.

According to the American Cancer Society, over 292,000 American women were diagnosed with breast cancer (both local and invasive) in 2015 and over 40,000 women died in 2015 due to their disease. Providing drug directly into the ducts targeting the site of the localized cancerous lesions could reduce the need for systemic anti-cancer drugs, and potentially reduce or eliminate the systemic side effects of the drugs and morbidity in such patients and ultimately improve patient compliance.

Update on Phase I Study of Endoxifen 

In March 2017, Atossa opened enrollment of a Phase I study of endoxifen. The objectives of this placebo-controlled, repeat dose study of 48 healthy female volunteers is to assess the pharmacokinetics of proprietary formulations of both oral and topical endoxifen dosage forms over 28 days, as well as to assess safety and tolerability.

The study is being conducted on behalf of Atossa by CPR Pharma Services Pty Ltd., Thebarton, SA, Australia.

In April 2017, Atossa fully enrolled the first of six cohorts (eight participants per cohort) in the above Phase I trial.  

On April 20, 2017
, Atossa announced that it had received a positive interim review on the Phase I study of endoxifen. The Independent Safety Committee reviewed the blinded data generated from the first cohort of the study (8 subjects) and concluded that the study may advance to the next dosing level.

In early May 2017
, Atossa received the second positive interim review on the Phase I study. The Independent Safety Committee reviewed the blinded data generated from the second cohort of the study (8 subjects) and concluded that the study may advance to the final topical dosing level.

On May 19, 2017
, Atossa announced that it completed enrollment in the topical arm of the Phase I dose escalation study of Endoxifen.

Atossa plans to commence a Phase II clinical study of endoxifen in the second half of 2017.

We are pleased that Atossa has made rapid progress in the Endoxifen Phase I study and are looking forward to new progress in the other half of the study which consists of 24 participants receiving an oral formulation of Endoxifen.

READ THE FULL RESEARCH REPORT HERE

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