10-Q
0001620463--12-31falseQ30001620463us-gaap:CommonStockMember2021-01-012021-03-310001620463atha:TowThousandAndTwentyEmployeeStockPurchasePlanMember2021-09-300001620463us-gaap:FairValueInputsLevel2Memberatha:LongTermInvestmentsMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001620463us-gaap:ConvertiblePreferredStockMember2019-12-310001620463us-gaap:AdditionalPaidInCapitalMember2021-03-310001620463atha:WashingtonStateUniversityLicenseAgreementMember2015-12-310001620463us-gaap:CommonStockMember2020-07-012020-09-300001620463atha:ExercisePriceOneMemberatha:EmployeesAndDirectorsMember2021-09-300001620463us-gaap:RetainedEarningsMember2021-04-012021-06-300001620463atha:SharesAvailableForFutureGrantUnderEmployeeStockPurchasePlanMember2020-12-310001620463us-gaap:RetainedEarningsMember2019-12-310001620463atha:PhaseThreeClinicalTrailInitiationOfLicenseAgreementMemberatha:WashingtonStateUniversityLicenseAgreementMember2015-12-310001620463atha:NationalInstitutesOfHealthGrantMember2020-12-310001620463us-gaap:CommonStockMember2020-12-310001620463us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMemberus-gaap:CashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001620463us-gaap:ConvertiblePreferredStockMember2020-03-310001620463us-gaap:OverAllotmentOptionMember2021-02-012021-02-280001620463us-gaap:CommonStockMember2021-03-310001620463atha:NonEmployeesMemberatha:ExercisePriceThreeMember2021-09-300001620463us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001620463srt:MinimumMemberatha:ExercisePriceTwoMember2021-01-012021-09-3000016204632020-07-012020-09-300001620463atha:LaboratoryAndOfficeFacilitiesMemberatha:BothellWashingtonMember2021-01-012021-09-300001620463us-gaap:RetainedEarningsMember2021-03-310001620463us-gaap:CommonStockMember2021-01-012021-09-3000016204632020-03-310001620463atha:UnsecuredConvertibleNotesMember2021-01-012021-09-300001620463us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-09-300001620463us-gaap:SubsequentEventMember2021-10-172021-10-180001620463us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001620463us-gaap:AdditionalPaidInCapitalMember2020-06-300001620463us-gaap:CommonStockMember2020-03-310001620463atha:SeriesBConvertiblePreferredStockMember2020-06-300001620463atha:SeriesB1ConvertiblePreferredStockMember2020-05-012020-06-300001620463atha:WashingtonStateUniversityLicenseAgreementMember2021-09-300001620463us-gaap:RetainedEarningsMember2020-06-300001620463us-gaap:RetainedEarningsMember2020-03-310001620463atha:EmployeeStockPurchasePlanMember2021-01-012021-09-300001620463atha:UnsecuredConvertibleNotesMember2021-09-300001620463us-gaap:RetainedEarningsMember2020-01-012020-03-310001620463atha:FollowOnPublicOfferingMember2021-01-012021-01-310001620463us-gaap:AdditionalPaidInCapitalMember2020-09-300001620463atha:WashingtonLifeServicesDiscoveryFundGrantAgreementMember2020-09-300001620463atha:EmployeesAndDirectorsMember2021-01-012021-09-300001620463us-gaap:RetainedEarningsMember2021-09-300001620463us-gaap:CommonStockMember2020-09-300001620463us-gaap:CommonStockMember2021-07-012021-09-300001620463atha:AdvisorsMember2020-01-012020-09-3000016204632021-06-3000016204632020-04-012020-06-300001620463us-gaap:RetainedEarningsMember2021-01-012021-03-310001620463us-gaap:RetainedEarningsMember2020-09-300001620463us-gaap:FairValueInputsLevel2Memberatha:LongTermInvestmentsMemberus-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001620463us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:CashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001620463us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-09-3000016204632021-11-050001620463atha:UniversityOfWashingtonSeattleMemberatha:LaboratoryAndOfficeFacilitiesMember2021-09-300001620463us-gaap:ConstructionInProgressMember2020-12-310001620463atha:EmployeesAndDirectorsMember2021-09-3000016204632020-01-012020-12-310001620463atha:SeriesB1ConvertiblePreferredStockMember2020-06-300001620463atha:LongTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001620463srt:MaximumMemberatha:ExercisePriceTwoMember2021-01-012021-09-3000016204632020-06-3000016204632019-12-310001620463atha:WangVAthiraPharmaIncMember2021-01-012021-09-300001620463atha:LaboratoryEquipmentMember2020-12-310001620463us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001620463us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001620463atha:AlzheimersAssociationMember2021-01-012021-03-310001620463atha:EmployeesAndDirectorsMember2020-01-012020-09-300001620463atha:AlzheimerSAssociationPartCloudResearchGrantMember2020-12-310001620463atha:StockOptionsToPurchaseCommonStockMember2021-01-012021-09-300001620463us-gaap:CommonStockMember2020-01-012020-03-310001620463atha:TwoThousandAndTwentyEquityIncentivePlanMember2021-01-012021-09-300001620463us-gaap:RestrictedStockMember2021-01-012021-09-300001620463srt:MaximumMemberus-gaap:FairValueMeasurementsRecurringMember2021-01-012021-09-300001620463us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001620463us-gaap:FairValueInputsLevel2Memberus-gaap:CashEquivalentsMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001620463us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001620463us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001620463us-gaap:RetainedEarningsMember2021-06-300001620463us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001620463us-gaap:LeaseholdImprovementsMember2021-09-300001620463atha:AlzheimersAssociationMember2019-01-310001620463atha:UnsecuredConvertibleNotesMember2018-12-3100016204632020-01-012020-03-310001620463srt:MaximumMemberatha:ExercisePriceOneMember2021-01-012021-09-3000016204632021-01-012021-09-300001620463atha:ExercisePriceThreeMembersrt:MinimumMember2021-01-012021-09-300001620463atha:TowThousandAndTwentyEmployeeStockPurchasePlanMember2021-01-012021-09-300001620463us-gaap:FairValueInputsLevel2Memberatha:LongTermInvestmentsMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001620463us-gaap:CommonStockMember2021-09-300001620463atha:NationalInstitutesOfHealthGrantMember2021-01-012021-09-300001620463atha:ExercisePriceThreeMembersrt:MaximumMember2021-01-012021-09-300001620463atha:SeriesB1ConvertiblePreferredStockMemberatha:UnsecuredConvertibleNotesMember2020-05-012020-05-310001620463atha:SeparationAgreementMemberus-gaap:SubsequentEventMember2021-10-172021-10-180001620463us-gaap:CommonStockMember2020-06-300001620463us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-09-300001620463us-gaap:CashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001620463us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001620463atha:WashingtonLifeServicesDiscoveryFundGrantAgreementMember2015-12-310001620463atha:JawandhaVAthiraPharmaIncMember2021-01-012021-09-300001620463atha:SharesAvailableForFutureGrantUnderEmployeeStockPurchasePlanMember2021-09-300001620463atha:UnsecuredConvertibleNotesMember2020-05-012020-05-310001620463us-gaap:RetainedEarningsMember2020-07-012020-09-300001620463us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001620463atha:EmployeesAndDirectorsMemberatha:ExercisePriceTwoMember2021-09-300001620463us-gaap:ResearchAndDevelopmentExpenseMember2021-07-012021-09-3000016204632021-03-310001620463us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001620463us-gaap:CommonStockMember2019-12-310001620463atha:LaboratoryAndOfficeFacilitiesMemberatha:BothellWashingtonMember2021-09-300001620463srt:MinimumMemberus-gaap:FairValueMeasurementsRecurringMember2021-01-012021-09-300001620463us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001620463atha:TwoThousandAndTwentyEquityIncentivePlanMember2021-09-300001620463us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMemberus-gaap:CashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001620463us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001620463us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001620463atha:StockOptionsToPurchaseCommonStockMember2020-01-012020-09-300001620463atha:ExercisePriceFourMembersrt:MinimumMember2021-01-012021-09-300001620463atha:SharesIssuableUponTheExerciseOfOutstandingCommonStockOptionsMember2020-12-310001620463us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001620463us-gaap:CommonStockMember2020-04-012020-06-300001620463us-gaap:AdditionalPaidInCapitalMember2019-12-310001620463atha:UnsecuredConvertibleNotesMember2019-12-310001620463atha:SeriesBConvertiblePreferredStockMemberatha:ClassOfWarrantOrRightPurchasePriceOneMember2020-06-300001620463atha:NonVestedRestrictedStockAwardsMember2020-01-012020-09-300001620463us-gaap:ConvertiblePreferredStockMember2020-06-300001620463atha:ExercisePriceFourMembersrt:MaximumMember2021-01-012021-09-300001620463atha:SharesIssuableUponTheExerciseOfOutstandingCommonStockOptionsMember2021-09-300001620463atha:NonEmployeesMember2021-09-3000016204632020-12-310001620463atha:LaboratoryEquipmentMember2021-09-300001620463atha:LongTermInvestmentsMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001620463us-gaap:OverAllotmentOptionMember2021-02-280001620463us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001620463atha:WashingtonStateUniversityLicenseAgreementMemberatha:PhaseTwoClinicalTrailInitiationOfLicenseAgreementMember2020-01-012020-12-310001620463us-gaap:FairValueInputsLevel2Memberus-gaap:CashEquivalentsMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001620463atha:NationalInstitutesOfHealthGrantMember2021-09-300001620463us-gaap:CommonStockMember2021-06-300001620463srt:MaximumMemberatha:LaboratoryAndOfficeFacilitiesMemberatha:BothellWashingtonMember2021-09-300001620463atha:NonEmployeesMemberatha:ExercisePriceTwoMember2021-09-300001620463us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001620463atha:ExercisePriceThreeMemberatha:EmployeesAndDirectorsMember2021-09-300001620463atha:NationalInstituteOnAgingOfTheNationalInstitutesOfHealthMember2020-12-012020-12-310001620463atha:WashingtonStateUniversityLicenseAgreementMemberatha:LicensedProductsMember2021-01-012021-09-300001620463atha:NonEmployeesMemberus-gaap:RestrictedStockMember2020-12-310001620463us-gaap:FairValueInputsLevel2Memberatha:LongTermInvestmentsMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001620463us-gaap:ResearchAndDevelopmentExpenseMember2020-07-012020-09-300001620463us-gaap:RestrictedStockMember2020-12-310001620463us-gaap:AccountingStandardsUpdate201602Member2021-09-300001620463atha:AdvisorsMember2021-01-012021-09-300001620463us-gaap:GeneralAndAdministrativeExpenseMember2020-07-012020-09-300001620463us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001620463atha:WashingtonStateUniversityLicenseAgreementMember2015-01-012015-12-310001620463atha:FurnitureFixturesAndComputerEquipmentMember2021-09-300001620463atha:WashingtonLifeServicesDiscoveryFundGrantAgreementMember2015-01-012015-12-310001620463us-gaap:AdditionalPaidInCapitalMember2020-12-310001620463us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001620463atha:NationalInstitutesOfHealthGrantMember2021-07-012021-09-300001620463us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001620463us-gaap:RetainedEarningsMember2020-04-012020-06-300001620463atha:NationalInstituteOnAgingOfTheNationalInstitutesOfHealthMember2020-12-310001620463us-gaap:AccountingStandardsUpdate201807Member2021-09-300001620463atha:SharesAvailableForFutureGrantUnderTwoThousandTwentyEquityIncentivePlanMember2020-12-310001620463us-gaap:ConstructionInProgressMember2021-09-300001620463atha:UnsecuredConvertibleNotesMember2020-05-310001620463us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-09-300001620463us-gaap:NonoperatingIncomeExpenseMemberatha:WashingtonLifeServicesDiscoveryFundGrantAgreementMember2020-01-012020-12-310001620463us-gaap:CommonStockMember2021-04-012021-06-300001620463us-gaap:ConvertiblePreferredStockMember2020-07-012020-09-300001620463us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001620463us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001620463atha:AlzheimersAssociationMember2019-01-012019-12-310001620463us-gaap:AdditionalPaidInCapitalMember2020-03-3100016204632020-09-300001620463us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001620463us-gaap:CommonStockMemberus-gaap:IPOMember2020-09-300001620463atha:SlyneVAthiraPharmaIncMember2021-01-012021-09-300001620463us-gaap:RestrictedStockUnitsRSUMembersrt:ScenarioForecastMember2021-11-012021-11-300001620463us-gaap:RetainedEarningsMember2020-12-3100016204632021-07-012021-09-300001620463us-gaap:GeneralAndAdministrativeExpenseMember2021-07-012021-09-300001620463atha:WashingtonLifeServicesDiscoveryFundGrantAgreementMember2014-01-012014-12-310001620463us-gaap:RetainedEarningsMember2021-07-012021-09-300001620463atha:ExercisePriceFourMemberatha:EmployeesAndDirectorsMember2021-09-300001620463atha:SeriesBConvertiblePreferredStockMember2020-05-012020-06-3000016204632021-04-012021-06-300001620463atha:ExercisePriceOneMembersrt:MinimumMember2021-01-012021-09-300001620463us-gaap:AdditionalPaidInCapitalMember2021-06-300001620463atha:AlzheimerSAssociationPartCloudResearchGrantMember2020-01-012020-09-3000016204632021-09-300001620463srt:MinimumMemberatha:LaboratoryAndOfficeFacilitiesMemberatha:BothellWashingtonMember2021-09-300001620463us-gaap:ConvertiblePreferredStockMember2020-04-012020-06-300001620463atha:SharesAvailableForFutureGrantUnderTwoThousandTwentyEquityIncentivePlanMember2021-09-300001620463us-gaap:CashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001620463us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-09-300001620463us-gaap:AdditionalPaidInCapitalMember2021-09-3000016204632021-01-012021-03-310001620463us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:CashEquivalentsMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001620463us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300001620463atha:FollowOnPublicOfferingMember2021-01-3100016204632020-01-012020-09-30xbrli:purexbrli:sharesatha:Segmentiso4217:USDxbrli:sharesiso4217:USD

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2021

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____ to ____

Commission File Number: 001-39503

 

Athira Pharma, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

45-3368487

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

 

18706 North Creek Parkway, Suite 104

Bothell, Washington 98011

(Address of principal executive offices)

(425) 620-8501

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

ATHA

The Nasdaq Stock Market LLC

 

 

(The Nasdaq Global Select Market)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of November 5, 2021 there were 37,351,104 shares of registrant’s common stock, $0.0001 par value per share, outstanding.

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

5

Item 1.

Financial Statements (Unaudited)

5

 

Condensed Consolidated Balance Sheets

5

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

6

 

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity

7

 

Condensed Consolidated Statements of Cash Flows

8

 

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

37

Item 4.

Controls and Procedures

37

PART II.

OTHER INFORMATION

38

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

39

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

90

Item 3.

Defaults Upon Senior Securities

91

Item 4.

Mine Safety Disclosures

91

Item 5.

Other Information

91

Item 6.

Exhibits

92

Signatures

93

 

This report includes our trademarks and registered trademarks, including Athira, Athira Pharma, the Athira logo, and other trademarks or service marks of Athira. Each other trademark, trade name or service mark appearing in this report belongs to its holder.

 

2


 

SUMMARY RISK FACTORS

 

Our business is subject to numerous risks and uncertainties, including those highlighted in the section of this report captioned “Risk Factors.” The following is a summary of the principal risks we face:

We are a late clinical-stage biopharmaceutical company with a limited operating history.
Our ability to generate revenue and achieve profitability depends significantly on our ability to achieve a number of objectives.
Our development of ATH-1017 may never lead to a marketable product.
Our approach to targeting brain growth factors through the use of small molecules is based on a novel therapeutic approach, which exposes us to unforeseen risks. We have limited data from our Phase 1a/1b clinical trial, including only 11 patients with mild to moderate Alzheimer’s disease, and we cannot be certain that future trials will yield similar data. In addition, our use of electroencephalogram methods to gather data requires placement of electrodes on a subject’s scalp and, if not properly placed, we may be unable to obtain the data sought or data obtained may be unreliable.
An independent special committee of our board of directors engaged in a review of papers co-authored by our former chief executive officer in connection with her doctoral research at Washington State University. The special committee’s findings included that she altered images in her 2011 doctoral dissertation and at least four research papers that she co-authored while a graduate student at Washington State University, and published from 2011 to 2014, that we cited challenged research papers in certain communications and applications, and that WSU’s dihexa patent, exclusively licensed to us, incorporated certain of these altered images. Washington State University has undertaken a review of claims of potential research misconduct involving our former chief executive officer’s doctoral research at Washington State University. We cannot predict when WSU’s investigation will be completed or what conclusions WSU will reach.
We have concentrated our research and development efforts on the treatment of central nervous system and peripheral degenerative disorders, a field that has seen very limited success in product development.
Clinical development involves a lengthy and expensive process with an uncertain outcome, and results of early, smaller-scale preclinical studies and clinical trials with a single or few clinical trial sites may not be predictive of eventual safety or effectiveness in large-scale pivotal clinical trials across multiple clinical trial sites. We may encounter substantial delays in clinical trials, or may not be able to conduct or complete clinical trials on the expected timelines, if at all.
If we experience delays or difficulties in the enrollment and/or retention of patients in clinical trials, our regulatory submissions or receipt of necessary marketing approvals could be delayed or prevented.
We and certain of our directors and executive officers have been named as defendants in lawsuits that could result in substantial costs and divert management’s attention.
We face significant competition, and if our competitors develop and market technologies or products more rapidly than we do or that are more effective, safer, or less expensive than the product candidates we develop, our commercial opportunities will be negatively impacted.
The continuing effects of the novel coronavirus disease, or COVID-19, pandemic, including the recent emergence of new, highly contagious variants thereof, could adversely impact our business, including our nonclinical studies and clinical trials.
We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.
We will require substantial additional funding to finance our operations, complete the development and commercialization of ATH-1017, and evaluate other and future product candidates. If we are unable to raise this funding when needed, we may be forced to delay, reduce, or eliminate our product development programs or other operations.
The regulatory approval processes of the U.S. Food and Drug Administration and other comparable foreign regulatory authorities are lengthy, time consuming and inherently unpredictable. If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals for our product candidates, we will not be able to commercialize, or will be delayed in commercializing, our product candidates, and our ability to generate revenue will be materially impaired.

3


 

We plan to rely on third parties to conduct our nonclinical studies and clinical trials. If these third parties do not properly and successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval of or commercialize our product candidates.
Even if approved, our product candidates may not achieve adequate market acceptance among physicians, patients, healthcare payors and others in the medical community necessary for commercial success.
We have never commercialized a product candidate before and may lack the necessary expertise, personnel and resources to successfully commercialize any products on our own or together with suitable collaborators.
Our success depends on our ability to protect our intellectual property and our proprietary technologies.
If the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical product candidates would be adversely affected.
The market price of our common stock may be volatile, which could result in substantial losses for investors.

Our Risk Factors are not guarantees that no such conditions exist as of the date of this report and should not be interpreted as an affirmative statement that such risks or conditions have not materialized, in whole or in part.

4


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Athira Pharma, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

September 30,
2021

 

 

December 31,
2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

107,328

 

 

$

60,625

 

Short-term investments

 

 

128,447

 

 

 

124,057

 

Unbilled grant receivable

 

 

2,079

 

 

 

1,300

 

Prepaid expenses and other current assets

 

 

1,138

 

 

 

6,355

 

Total current assets

 

 

238,992

 

 

 

192,337

 

Property and equipment, net

 

 

3,061

 

 

 

2,649

 

Operating lease right-of-use asset

 

 

1,504

 

 

 

936

 

Long-term investments

 

 

103,649

 

 

 

83,509

 

Other long-term assets

 

 

125

 

 

 

132

 

Total assets

 

$

347,331

 

 

$

279,563

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

959

 

 

$

1,158

 

Accrued liabilities

 

 

8,148

 

 

 

3,123

 

Current operating lease liability

 

 

279

 

 

 

124

 

Total current liabilities

 

 

9,386

 

 

 

4,405

 

Operating lease liability, less current portion

 

 

1,708

 

 

 

876

 

Total liabilities

 

 

11,094

 

 

 

5,281

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, $0.0001 par value; 900,000,000 shares
   authorized at September 30, 2021 and December 31, 2020,
   respectively;
37,351,104 and 32,485,784 shares issued
   and outstanding at September 30, 2021 and December 31,
   2020, respectively

 

 

4

 

 

 

3

 

Additional paid-in capital

 

 

415,785

 

 

 

315,288

 

Accumulated other comprehensive income

 

 

4

 

 

 

33

 

Accumulated deficit

 

 

(79,556

)

 

 

(41,042

)

Total stockholders' equity

 

 

336,237

 

 

 

274,282

 

Total liabilities and stockholders'
   equity

 

$

347,331

 

 

$

279,563

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


 

Athira Pharma, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

10,707

 

 

$

5,830

 

 

$

30,176

 

 

$

8,099

 

General and administrative

 

 

7,119

 

 

 

1,567

 

 

 

15,068

 

 

 

2,817

 

Total operating expenses

 

 

17,826

 

 

 

7,397

 

 

 

45,244

 

 

 

10,916

 

Loss from operations

 

 

(17,826

)

 

 

(7,397

)

 

 

(45,244

)

 

 

(10,916

)

Grant income

 

 

2,079

 

 

 

 

 

 

6,499

 

 

 

22

 

Other income (expense), net

 

 

73

 

 

 

(1,059

)

 

 

231

 

 

 

(1,359

)

Net loss

 

$

(15,674

)

 

$

(8,456

)

 

$

(38,514

)

 

$

(12,253

)

Unrealized (loss) gain on available-for-sale securities

 

 

(33

)

 

 

7

 

 

 

(29

)

 

 

7

 

Comprehensive loss attributable to common
   stockholders

 

$

(15,707

)

 

$

(8,449

)

 

$

(38,543

)

 

$

(12,246

)

Net loss per share attributable to common
   stockholders, basic and diluted

 

$

(0.42

)

 

$

(1.12

)

 

$

(1.12

)

 

$

(2.38

)

Weighted-average shares used in computing
   net loss per share attributable to common
   stockholders, basic and diluted

 

 

37,312,356

 

 

 

7,564,538

 

 

 

34,315,047

 

 

 

5,155,338

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


 

Athira Pharma, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ (Deficit) Equity

For the Three and Nine Months Ended September 30, 2021 and 2020

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

Total

 

 

 

Convertible
Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Other
Comprehensive

 

 

Accumulated

 

 

Stockholders’
(Deficit)

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity

 

Balance as of January 1, 2020

 

 

2,617,386

 

 

$

17,051

 

 

 

 

3,641,449

 

 

$

 

 

$

1,364

 

 

$

 

 

$

(21,087

)

 

$

(19,723

)

Issuance of common stock upon
   exercise of common stock options

 

 

 

 

 

 

 

 

 

220,043

 

 

 

 

 

 

176

 

 

 

 

 

 

 

 

 

176

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

58

 

 

 

 

 

 

 

 

 

58

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,805

)

 

 

(1,805

)

Balance as of March 31, 2020

 

 

2,617,386

 

 

$

17,051

 

 

 

 

3,861,492

 

 

$

 

 

$

1,598

 

 

$

 

 

$

(22,892

)

 

$

(21,294

)

Issuance of common stock upon
   exercise of common stock options

 

 

 

 

 

 

 

 

 

58,006

 

 

 

 

 

 

62

 

 

 

 

 

 

 

 

 

62

 

Issuance of Series B convertible
   preferred stock and common stock
   warrants, net of issuance costs
   of $
3.5 million

 

 

9,372,765

 

 

 

70,971

 

 

 

 

 

 

 

 

 

 

10,591

 

 

 

 

 

 

 

 

 

10,591

 

Issuance of the Series B-1 convertible
   preferred stock upon conversion of
   convertible notes

 

 

512,858

 

 

 

4,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of common stock warrants

 

 

 

 

 

 

 

 

 

688,067

 

 

 

 

 

 

55

 

 

 

 

 

 

 

 

 

55

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49

 

 

 

 

 

 

 

 

 

49

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,992

)

 

 

(1,992

)

Balance as of June 30, 2020

 

 

12,503,009

 

 

$

92,537

 

 

 

 

4,607,565

 

 

$

 

 

$

12,355

 

 

$

 

 

$

(24,884

)

 

$

(12,529

)

Issuance of common stock upon
   exercise of common stock options

 

 

 

 

 

 

 

 

 

262,285

 

 

 

 

 

 

304

 

 

 

 

 

 

 

 

 

304

 

Proceeds from initial public offering,
   net of underwriters' discounts and
   commissions and issuance costs
   of $
3.3 million

 

 

 

 

 

 

 

 

 

12,000,000

 

 

 

1

 

 

 

186,445

 

 

 

 

 

 

 

 

 

186,446

 

Conversion of convertible preferred stock

 

 

(12,503,009

)

 

 

(92,537

)

 

 

 

12,503,009

 

 

 

2

 

 

 

92,535

 

 

 

 

 

 

 

 

 

92,537

 

Exercise of common stock warrants

 

 

 

 

 

 

 

 

 

1,714,536

 

 

 

 

 

 

1,050

 

 

 

 

 

 

 

 

 

1,050

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

111

 

 

 

 

 

 

 

 

 

111

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

7

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,456

)

 

 

(8,456

)

Balance as of September 30, 2020

 

 

 

 

$

 

 

 

 

31,087,395

 

 

$

3

 

 

$

292,800

 

 

$

7

 

 

$

(33,340

)

 

$

259,470

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

Total

 

 

 

Convertible
Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Other
Comprehensive

 

 

Accumulated

 

 

Stockholders’
(Deficit)

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity

 

Balance as of January 1, 2021

 

 

 

 

$

 

 

 

 

32,485,784

 

 

$

3

 

 

$

315,288

 

 

$

33

 

 

$

(41,042

)

 

$

274,282

 

Issuance of common stock upon
   exercise of common stock options
   and vesting of restricted stock units

 

 

 

 

 

 

 

 

 

64,527

 

 

 

 

 

 

70

 

 

 

 

 

 

 

 

 

70

 

Proceeds from follow-on public offering,
   net of underwriters' discounts and
   commissions and issuance costs

 

 

 

 

 

 

 

 

 

4,600,000

 

 

 

1

 

 

 

96,761

 

 

 

 

 

 

 

 

 

96,762

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

974

 

 

 

 

 

 

 

 

 

974

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

(5

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,866

)

 

 

(8,866

)

Balance as of March 31, 2021

 

 

 

 

$

 

 

 

 

37,150,311

 

 

$

4

 

 

$

413,093

 

 

$

28

 

 

$

(49,908

)

 

$

363,217

 

Issuance of common stock upon
   exercise of common stock options

 

 

 

 

 

 

 

 

 

85,593

 

 

 

 

 

 

119

 

 

 

 

 

 

 

 

 

119

 

Issuance of common stock under
   employee stock purchase plan

 

 

 

 

 

 

 

 

 

15,867

 

 

 

 

 

 

229

 

 

 

 

 

 

 

 

 

229

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,109

 

 

 

 

 

 

 

 

 

1,109

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

9

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,974

)

 

 

(13,974

)

Balance as of June 30, 2021

 

 

 

 

$

 

 

 

 

37,251,771

 

 

$

4

 

 

$

414,550

 

 

$

37

 

 

$

(63,882

)

 

$

350,709

 

Issuance of common stock upon
   exercise of common stock options
   and vesting of restricted stock units

 

 

 

 

 

 

 

 

 

99,333

 

 

 

 

 

 

130

 

 

 

 

 

 

 

 

 

130

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,105

 

 

 

 

 

 

 

 

 

1,105

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(33

)

 

 

 

 

 

(33

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,674

)

 

 

(15,674

)

Balance as of September 30, 2021

 

 

 

 

$

 

 

 

 

37,351,104

 

 

$

4

 

 

$

415,785

 

 

$

4

 

 

$

(79,556

)

 

$

336,237

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

7


 

Athira Pharma, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(38,514

)

 

$

(12,253

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Stock-based compensation