By David Bautz, PhD
NASDAQ:ATOS
READ THE FULL ATOS RESEARCH REPORT
We are initiating coverage of Atossa Therapeutics, Inc. (NASDAQ:ATOS) with a valuation of $22.00. Atossa is a clinical-stage biopharmaceutical company that is repositioning (Z)-endoxifen, an active metabolite of tamoxifen, as a multi-indication endocrine therapy with applications in both rare diseases and oncology. Tamoxifen is a pro-drug and must be metabolized to its active components, however many patients lack the liver enzymes to adequately metabolize the drug and thus do not reach therapeutic levels of (Z)-endoxifen. The direct administration of (Z)-Endoxifen addresses many of the shortcomings of tamoxifen due to the fact that it is not a pro-drug and does not require liver metabolism, thus adequate therapeutic levels of the compound are more easily attained with fewer side effects compared to tamoxifen.
Strategic Pivot to Rare Diseases – Atossa has recently shifted its development focus toward rare disease indications, with McCune-Albright Syndrome (MAS) emerging as a potential lead program. MAS is a rare pediatric endocrine disorder characterized by precocious puberty and other hormone-driven abnormalities, with no approved disease-modifying therapies currently available. We believe MAS represents the most efficient and potentially expedited path to market for (Z)-endoxifen given its well-defined biology and high unmet medical need. In addition, the company recently received Rare Pediatric Disease designation (which makes it eligible for a Priority Review Voucher upon approval) and will be pursuing Orphan Drug Designation.
Expansion into Additional Rare Disease Indications – Beyond MAS, Atossa is expanding into other rare disease opportunities, including Duchenne muscular dystrophy (DMD) and symptomatic female carriers of DMD (D-CAP). D-CAP in particular lacks approved therapies and shares key pathological features with DMD, including inflammation, fibrosis, and muscle degeneration. The dual mechanism of (Z)-endoxifen, combining estrogen receptor modulation with protein kinase C (PKC) inhibition, provides a strong rationale for therapeutic activity in these conditions.
Refocused Oncology Strategy Centered on Partnerships – While breast cancer remains an important component of the pipeline, Atossa is shifting away from a single-agent commercialization strategy in metastatic disease toward a partnership-driven approach focused on combination therapy. The company’s participation in the I-SPY 2 trial platform highlights this strategy, with (Z)-endoxifen being evaluated both as a monotherapy and in combination with agents such as abemaciclib (Verzenio®) and elagolix (Orlissa®). These studies are designed to optimize endocrine therapy, particularly in premenopausal women, where current treatment approaches often require ovarian suppression and are associated with significant side effects.
Regulatory and Development Progress – Following a Type C meeting with the U.S. Food and Drug Administration (FDA) in November 2025, Atossa received feedback on potential expedited regulatory pathways and development strategies for (Z)-endoxifen. The company is expected to pursue additional regulatory interactions in 2026, including pre-IND discussions related to its rare disease programs. We anticipate that the shift toward indications such as MAS could enable more streamlined clinical development relative to larger oncology indications.
Valuation
We value Atossa using a probability-adjusted discounted cash flow model that takes into account potential future revenues for (Z)-endoxifen in MAS, DMD, and D-CAP along with the potential sale of PRVs obtained from approvals in MAS and DMD, for which Rare Pediatric Disease Designation has been conferred by the FDA for both indications.
For MAS, we estimate there are approximately 3,500 individuals in the U.S. and approximately 8,500 in the E.U. and Japan. Given it is an ultra-orphan indication, we model for a yearly cost for (Z)-endoxifen of $120,000. Using a peak market share of 20% results in peak sales of approximately $60 million in the U.S. and $75 million outside the U.S. We model for approval in the U.S. in 2029 and outside the U.S. in 2030 and for peak sales to occur seven years after launch. We assume that Atossa will market the drug in the U.S. and enter into a commercialization partnership for sales outside the U.S. and receive a 12% royalty on net sales. Using a 15% discount rate and a 50% probability of approval leads to an NPV for MAS of $25 million.
For DMD, we estimate there are approximately 14,000 boys affected by the disease in the U.S. and approximately 15,000 in the E.U. and Japan. Using a peak market share of 40% in all jurisdictions results in peak sales estimates of $400 million in the U.S. and $250 million outside the U.S. We model for approval in the U.S. in 2030 and outside the U.S. in 2031 and for peak sales to occur seven years after launch. We model for Atossa to market the drug in the U.S. and to enter into a commercialization partnership for sales outside the U.S. and receive a 12% royalty on net sales. Using a 15% discount rate and a 25% probability of approval leads to an NPV for DMD of $95 million.
For D-CAP, we estimate there are approximately 12,000 symptomatic female carriers of DMD in the U.S. and approximately 18,000 in the E.U. and Japan. Using a peak market share of 15% in all jurisdictions results in peak sales estimates of $250 million in the U.S. and $175 million outside the U.S. We model for approval in the U.S. in 2030 and outside the U.S. in 2031 and for peak sales to occur seven years after launch. We model for Atossa to market the drug in the U.S. and to enter into a commercialization partnership for sales outside the U.S. and receive a 12% royalty on net sales. Using a 15% discount rate and a 25% probability of approval leads to an NPV for D-CAP of $65 million.
For the PRVs, we model for them to be sold shortly after they are issued to the company in 2029 for MAS and 2030 for DMD. Based on recent sales of PRVs, we model for them to be sold for $150 million each. Using a 15% discount rate and a 50% probability in MAS and a 33% probability in DMD leads to an NPV of $49 million and $28 million, respectively.
Combining the NPVs for each of the indications, PRVs, the current cash on hand, and the potential cash from stock options leads to a net present value for Atossa of approximately $330 million. Dividing by the fully diluted share count of 10.2 million shares, plus an additional 5.0 million shares for future dilution, leads to a valuation of $22.00.
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