Shares of tiny-cap biopharma Atossa Genetics Inc (NASDAQ:ATOS) are falling nearly 25% on Friday, after the company announced 2017 financial results yesterday afternoon. As a pre-revenue company, there wasn’t much to report on the income statement. However, the R&D expenses during 2017 shot up over 200%, and the company expects an increase throughout 2018 as lead programs mature and more early stage studies are initiated.
As of December 31, 2017, Atossa had approximately $7.2 million in cash and cash equivalents and working capital of approximately $6.7 million. With a cash burn rate of $8 to $9 million per quarter, investors’ confidence in the stock has clearly taken a hit amidst stock dilution concerns.
Indeed, Atossa will need a lot of cash going forward to fund the development of Phase 2 clinical studies of Endoxifen, the clinical trial of fulvestrant administered and the development of other indications and therapeutics, including CAR-T and immunotherapies administered via our intraductal microcatheters.
Alpha’s Scientist of Fortune, an expert with a background in biotechnology and genetics, commented, “My assumption is that the quarterly results came out and some people weren’t as happy with them. Their progress was fine – some of the timelines are a bit long. Most importantly, the company announced 7.2 million in cash and if their last year’s figures are applied to this year, they will need to raise significant capital this year. The Phase II trial will increase expenses, and therefore likely accelerate their cash burn.”
“Beyond this, with the additional funds needed, the money needs to come from somewhere – probably a secondary – which is why the shares are dropping. The company will need to reverse split soon if they are to maintain their listing (which may be another concern, just compounding these issues). This company is a long way from a marketed product. There will be significant ups and downs along the way. Down is the easiest for the market, as it doesn’t always need a reason, in my experience,” ASF continued.
Overall, Atossa CEO Dr. Steve Quay remains confident in the direction of the company: “In the later part of 2017, we completed a Phase 1 Study of our proprietary oral and topical Endoxifen formulations, and we were pleased to report that all study objectives were met. We are now looking forward to opening enrollment in two Phase 2 studies. One will use our oral Endoxifen to treat breast cancer patients who are not responding to tamoxifen. Tamoxifen is the current FDA-approved standard of care for the approximately one million breast cancer survivors to prevent a recurrence and new cancer. The second study will use our topical Endoxifen to determine if it can reduce a condition called mammographic breast density, or MBD. Mammographic Breast Density is an independent risk factor for developing breast cancer. It affects approximately 10 million women in the U.S. We are also planning to commence an additional study with topical Endoxifen as well as a study using our intraductal microcatheters to deliver CAR-T or other immunotherapy.”