August 26, 2020

 

Via EDGAR and Courier

 

U.S. Securities and Exchange Commission

Division of Corporation Finance

Office of Life Sciences

100 F Street, N.E.

Washington, D.C. 20549

 

 

Ladies and Gentlemen:

 

On behalf of our client, Athira Pharma, Inc. (the “Company”), we submit this letter in response to comments from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) contained in its letter dated August 20, 2020, relating to the above-referenced Draft Registration Statement on Form S‑1 (the “Draft Registration Statement”).  On behalf of the Company, we are concurrently publicly filing via EDGAR a revised draft of the Registration Statement (the “Registration Statement”).

In this letter, we have recited the comments from the Staff in italicized, bold type and have followed each comment with the Company’s response. Except for page references appearing in the headings and Staff comments below (which are references to the Draft Registration Statement), all page references herein correspond to the pages of the Registration Statement.

Prospectus Summary
Overview, page 1

austin        beijing        boston        brussels        hong kong        london        los angeles        new york        palo alto
san diego        san francisco        seattle        shanghai        washington, dc        wilmington, de

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Securities and Exchange Commission

August 26, 2020

Page 2

 

In response to the Staff’s comment, the Company has revised its disclosures on pages 1, 4, 88 and 128 of the Registration Statement. With respect to the other above referenced statements, the Company respectfully submits that they are not statements that imply efficacy, but are rather factual descriptions of qEEG and P300 latency results from the Phase 1 trial. For example, on page 1 of the Registration Statement, the Company states “Nonclinical studies and Phase 1 clinical trials with ATH-1017 demonstrated improvements in brain network activity indicating potentially positive effects on brain function. In the AD subjects, multiple dosing of ATH-1017 significantly improved brain activity as measured by P300 latency, a functional measure that is highly correlated with cognition.” We respectfully submit that the second sentence of this disclosure, as revised, adequately clarifies that the improvements in brain network activity are based on the measurements of P300 latency, and not a conclusion as to the efficacy of ATH-1017.

P300 latency is a well-established objective measure that reflects the cognitive state, and is prolonged in patients with cognitive impairment such as AD. The P300 signal is generated by a neuronal network across several brain regions as cognitive processing occurs. Disruptions to neuronal health and synaptic function lead to disruptions in the network and result in prolonged (or worsening) P300 latencies and reduced cognitive processing in AD and other dementing conditions. Our data demonstrate an improvement in the prolonged P300 latencies in AD patients upon ATH-1017 treatment, suggesting that treatment improved brain function (cognitive processing) because the direction of change was towards historically established P300 latency values for healthy individuals. Similar to P300 latency, qEEG measures, which are generated by synchronous neuronal activity across networks, are also disrupted in AD patients due to impaired brain function and AD patients display reduced gamma power. Our data demonstrate an increase in gamma power, suggesting an improvement in the ability of the neuronal networks to generate gamma waves in patients with reduced gamma activity.

In response to the Staff’s comment, the Company has revised its disclosures on pages 5 and 131 of the Registration Statement, as well as on pages 8, 120, 131 and elsewhere.

Our Pipeline and ATH Platform, page 3

 

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Securities and Exchange Commission

August 26, 2020

Page 3

 

In response to the Staff’s comment, the Company has revised its pipeline table and related disclosures on pages 3, 89, and 108 of the Registration Statement to remove the reference to ATH-Discovery, the shaded portions of the lines in the table, and the second line for the AD indication and to add clarifying disclosure regarding ATH-1017 for the treatment of PDD. We respectfully advise the Staff that ATH-1018 and ATH-1019 have progressed beyond discovery phase. ATH-1018 and ATH-1019 are lead compounds that have been identified through rigorous screening efforts in which they have demonstrated the ability to significantly activate the target HGF/MET system, and have displayed desired drug-like characteristics including oral bioavailability, stability, and optimized pharmacokinetics. They have shown positive effects in relevant preclinical models, indicating in vivo activity. ATH-1018 and ATH-1019 are advancing to additional in vivo testing towards INDs. In addition, we would draw the Staff’s attention to page 78 of the Registration Statement where the Company intends to disclose that a significant portion of the use of proceeds from the offering contemplated by the Registration Statement will be dedicated to development activities related to ATH-1018 and ATH-1019. We respectfully submit that each program is material to the Company’s business and an investor’s understanding of the Company’s prospects and therefore warrants inclusion in the pipeline table. In addition, we respectfully submit that the description of the Company as a “late” clinical stage biopharmaceutical company is appropriate. It is common practice for a biopharmaceutical company that has initiated a clinical trial that may be sufficient to support approval to be referred to as “late” clinical stage. Based on its discussions with the U.S. Food and Drug Administration, the results of the LIFT-AD trial could potentially support the approval of ATH-1017, if the trial results provide evidence that ATH-1017 is both effective and safe for the proposed indication. The Company expects to initiate the Phase 2/3 LIFT-AD clinical trial in early September and anticipates including disclosure to that effect in a future amendment to the Registration Statement.

Our Strategy, page 5

In response to the Staff’s comment, the Company has revised its disclosures on pages 5 and 108 of the Registration Statement.

Implications of being an emerging growth company, page 10

In response to the Staff’s comment, we have provided the Staff with all written communications presented to potential investors in reliance on Section 5(d) of the Securities Act on a supplemental basis by letter of even date herewith. These materials are only being made available for viewing by potential investors during the Company’s presentations, and no copies are being retained by any potential investor.

 

To the extent the Company conducts additional meetings, it expects to use the same or similar materials, and the Company undertakes to provide the Staff with copies of any additional written communications that are presented to potential investors in the future by it or anyone authorized to do so on its behalf in reliance on Section 5(d) of the Securities Act of 1933, as amended, whether or not such potential investors retain copies of such communications.

 

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Securities and Exchange Commission

August 26, 2020

Page 4

 

 

Risk Factors
Our development of ATH-1017 may never lead to a marketable product, page 21

In response to the Staff’s comment, the Company has revised its disclosure on page 20 of the Registration Statement.

Our approach to targeting brain growth factors through the use of small molecules is based on a novel therapeutic approach, page 22

In response to the Staff’s comment, the Company has revised its disclosures on pages 21 and 126 of the Registration Statement.

Market, Industry and Other Data, page 77

In response to the Staff’s comment, the Company has revised its disclosure on page 77 of the Registration Statement.

Our Differentiated Approach, page 114

In response to the Staff’s comment, the Company has revised its graphics on pages 115 and 116 of the Registration Statement.

Figure 12. ATH-1017 Had a Large and Rapid Effect on P300 Latency in AD Subjects, page 120

 

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Securities and Exchange Commission

August 26, 2020

Page 5

 

In response to the Staff’s comment, the Company has revised its disclosure on pages 122 and 123 of the Registration Statement.

Event-related Potential, page 125

In response to the Staff’s comment, we are providing the requested support on a supplemental basis by letter of even date herewith.

Our Neuropsychiatric Program (ATH-1019), page 131

In response to the Staff’s comment, we are providing the requested support on a supplemental basis by letter of even date herewith.

Our Collaboration and Grant Agreements
Washington State University Research Foundation License Agreement and Amended and Restated Washington State University License Agreement, page 137

In response to the Staff’s comment, the Company has revised its disclosure on page 141 of the Registration Statement to include disclosure regarding the termination provisions of the WSU license agreement and has filed the agreement as an exhibit to the Registration Statement. We would respectfully draw the Staff’s attention to page 91 of the Registration Statement, where the Company discloses that it is obligated to pay WSU a royalty in the mid-single digits of net sales. We respectfully submit that this disclosure is adequate for an investor to assess the WSU license agreement and that additional disclosure would not be material to an investor and would be competitively harmful to the Company. The Company does not expect the joint ownership of the patents included in the WSU license agreement to materially affect the licenses of such patents or the development of any of the Company’s product candidates.

Principal Stockholders, page 174

 

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Securities and Exchange Commission

August 26, 2020

Page 6

 

In response to the Staff’s comment, the Company has revised its disclosures on pages 182 and 183 of the Registration Statement to identify the natural person or persons who have voting and investment control of the shares held by the entities affiliated with RTW Investments LP and Viking Global Opportunities Illiquid Investments Sub-Master LP and to clarify the nature of Mr. Edelman’s beneficial ownership over the shares held by Perceptive Life Sciences Master Fund Ltd. We are still obtaining information related to identifying the natural person or persons who have voting and investment control of the shares held by entities affiliated with Franklin Templeton Investments and will further address the Staff’s comment in a pre-effective amendment to the Registration Statement or in a subsequent response letter.

Financial Statements
Notes to Financial Statements
7. Significant Agreements, page F-15

The Company respectfully advises the Staff that terms of the contracts with the Washington Life Sciences Discovery Fund (“LSDF”) provide LSDF the right to receive cash payments upon the occurrence of expected triggering events, each of which is disclosed on page F-15 of the Registration Statement. In assessing whether the contracts with LSDF met the definition of a financial liability, the Company considered whether LSDF would receive creditor rights in the event of a liquidation of the Company. The Company believes that LSDF would be considered as a creditor in the event of a liquidation and therefore, the contracts embody a liability thereby precluding classification as a component of stockholders’ equity. The definition of a financial liability includes “an obligation on one entity to deliver cash or another financial instrument to a second entity” and LSDF’s creditor rights impose such an obligation on the Company. Accordingly, the Company concluded that the contracts with LSDF met the definition of a financial liability.

To determine the accounting for the grant liability, the Company considered the scope exceptions from fair value accounting included in ASC 825-10-15-4 and noted that the grant liability did not meet any of the scope exceptions. Therefore, the Company made the election to account for the grant liability at fair value with changes in fair value recognized as a component of earnings at the end of each reporting period.

 

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Please direct any questions regarding the Company’s responses or the Registration Statement to me at (206) 883‑2524 or mnordtvedt@wsgr.com.

 

 

 

 

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Securities and Exchange Commission

August 26, 2020

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