What changed in this filing

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Item 1. Business

2023-03-22 compared with 2022-02-28 · 430 added, 325 removed, 232 unchanged (76% of the section changed)

We are a clinical-stage biopharmaceutical company seeking to develop proprietary innovative medicines in areas of significant unmet medical need in oncology and infectious diseases, with a current focus on breast cancer, other breast conditions and COVID-19.

Our drug under development for breast cancer and other breast conditions is Endoxifen which is being developed primarily in two settings:

one to reduce tumor cell activity in breast cancer patients in the neoadjuvant setting, meaning prior to surgery;

and another to reduce dense breast tissue in women.

Our two COVID-19 drugs under development are AT-H201, an inhalation therapy to improve lung function of moderate to severely ill, hospitalized COVID-19 patients;

and AT-301, a nasal spray for COVID-19 patients for at-home use.

A key feature of the original SARS-CoV-2 virus that is retained in both the Delta and Omicron variants, is the furin cleavage site found on the spike protein which facilitates viral infection.

Our COVID-19 programs under development are designed to interact with this cleavage site so they are expected to be effective against both current and future COVID-19 variants that continue to contain a furin cleavage site.

Our business strategy is to advance our programs through clinical studies including with partners, and opportunistically add programs in areas of high unmet medical need through acquisition, collaboration, or internal development.

We are a clinical-stage biopharmaceutical company developing proprietary innovative medicines in areas of significant unmet medical need in oncology, with a current focus on breast cancer and other breast conditions.

Our lead drug candidate under development is oral (Z)-endoxifen which we are developing in two settings:

one to treat breast cancer by reducing tumor cell activity prior to surgery and another to reduce breast tissue density in women. More than ten million women in the U. S and millions more worldwide have elevated breast density, which reduces the ability of mammograms to detect cancer and increases the risk of breast cancer.

Currently, there is no FDA-approved treatment for breast density.

We believe there is also a significant unmet need for breast cancer treatments in premenopausal women prior to surgery, as the typical treatment for the majority of early-stage breast cancer patients currently involves ovarian function suppression, which can induce premature menopause and dramatically impact a patient’s quality of life. 

We have been granted two U.S.

patents covering our proprietary (Z)-endoxifen and we have numerous applications pending in the U.S.

and in other countries.

Our business strategy is to advance our programs through clinical studies, including with partners, and opportunistically add programs in areas of high unmet medical need through acquisition, minority investment, collaboration or internal development.

Summary of Leading Programs

Endoxifen is an active metabolite of tamoxifen which is an FDA-approved drug to treat and prevent breast cancer in high-risk women.

We are developing a proprietary form of Endoxifen which is administered orally for the potential treatment of breast cancer and women with breast density. We have successfully completed three Phase 1 clinical studies (including a study in men) and two Phase 2 clinical studies with our proprietary Endoxifen (one with our oral Endoxifen and one with our topical Endoxifen).

We have also completed significant pre-clinical development and have developed clinical manufacturing capabilities through qualified third parties.

Endoxifen for Women with Breast Density.

 Mammographic breast density (MBD) is an emerging public health issue affecting over 10 million women in the U.S.

Studies conducted by others have shown that MBD increases the risk of developing breast cancer and that reducing MBD can reduce the incidence of breast cancer.

 In December 2021, we commenced a Phase 2 study of our proprietary oral Endoxifen.

The study, known as the Karisma-Endoxifen study, is a Phase 2, randomized, double-blind, placebo-controlled, dose-response study of our proprietary oral Endoxifen in healthy premenopausal women with measurable breast density.

The primary objective of the study is to determine the dose-response relationship of daily Endoxifen on breast density reduction.

Secondary endpoints will assess safety and tolerability, and the trial includes an exploratory endpoint to assess durability of the breast density changes.

The study is being conducted at the South General Hospital in Stockholm and will include approximately 240 participants who will receive daily doses of Endoxifen or placebo for six months.

The study is being led by principal investigator Per Hall, M.D., Ph.D., Department of Medical Epidemiology and Biostatistics at Karolinska Institutet.

 Based on input from the FDA and Swedish Medical Products Agency, reduction in MBD may not be an approvable indication unless we can demonstrate that our Endoxifen also reduces the incidence of breast cancer.

We may therefore conduct additional studies of Endoxifen to assess its correlation with the risk of breast cancer and/or reduction in the incidence of new breast cancers.

 Endoxifen for Neoadjuvant Treatment of Breast Cancer.

We are also developing Endoxifen to treat breast cancer in the neoadjuvant setting, which is the administration of a therapy before the surgical treatment, with a current focus on breast cancers that are classified as estrogen receptor positive (ER+).

Although there are numerous neoadjuvant treatments for breast cancers that are not ER+, there are few neoadjuvant treatments for ER+ breast cancer which comprises about 78% of all breast cancers.

We believe there is a compelling need for therapy with our Endoxifen in this setting.

In December 2021, we completed a pre-investigational new drug (PIND) meeting with the FDA.

The purpose of the meeting was to obtain input from the FDA on pre-clinical, clinical, manufacturing and regulatory matters in the U.S.

for our proprietary Endoxifen to treat breast cancer.

Based in part on the feedback from the FDA, we plan to open an investigational new drug (IND) application for a multi-center Phase 2 study to further advance our Endoxifen in the neoadjuvant setting.

We plan to focus our development on pre-menopausal women with ER+, human epidermal growth factor receptor negative (HER2-) breast cancer for whom the current treatment options typically includes drugs that suppress ovarian function and essentially force the patient into menopause.

 We recently completed a Phase 2 study in Australia which enrolled 7 newly diagnosed patients with ER+ and stage 1 or 2 invasive breast cancer, requiring mastectomy or lumpectomy.

In February 2021, we concluded that the study produced positive results and that continuing enrollment in the study would not be necessary in advancing the program.

We therefore discontinued the study based in part on results from the first six patients. In June 2021, we reported final results from the study of all 7 patients which showed that tumor cell proliferation in study participants was reduced by an average of 65%, as measured by Ki-67 expression, which is a common measure of tumor cell activity in breast cancer. 

 AT-301 for COVID-19 . 

AT-301 is our proprietary drug formulation candidate intended for nasal administration in patients immediately following diagnosis of COVID-19 but who have not yet exhibited symptoms severe enough to require hospitalization.

It is intended for at-home use to reduce symptoms of COVID-19 and to slow the infection rate so that a person’s immune system can more effectively fight COVID-19.

AT-301 is being developed with a nasal spray delivery mechanism because many COVID-19 patients are infected via the nasal passage.

Our nasal spray formulation AT-301 is being designed to contain ingredients that can potentially block SARS-CoV-2 viral entry gene proteins in nasal epithelial cells by interfering with spike protein activation by host proteases, by masking receptor binding domains via electrostatic mechanisms, and by providing a generalized mucoadhesive epithelial barrier.

In October 2020, we completed enrollment in a Phase 1 study of AT-301 which was a double-blinded, randomized, and placebo-controlled safety study of AT-301 nasal spray in 32 healthy adult subjects. An evaluation of the data indicated that there were no serious adverse events, no discontinuations, and only one of the subjects in the study experienced adverse events that were considered related to the study drug and moderate in severity.

We concluded that our AT-301 nasal spray was safe and well tolerated in this study.

We received input from the FDA on this program in 2021 and based in part on that input, we are now preparing to conduct additional pre-clinical studies.

Following that, we expect to apply to the FDA to commence a Phase 2 study in the United States.

We may also seek to develop our AT-301 nasal spray to potentially help prevent COVID-19 infection — particularly for people in high-risk environments, such as people living with an infected patient, people living and working in healthcare facilities, emergency responders or teachers.

AT-H201 for COVID-19 . AT-H201 is a proprietary combination of two drugs previously approved by the FDA to treat other diseases.

It is intended to improve compromised lung function for moderate to severely ill, hospitalized COVID-19 patients by inhalation. 

We received input from the FDA on potential pathways to develop AT-H201 and the FDA requested that we provide, among other things, additional pre-clinical results and other information on AT-H201. 

In September 2021 we began enrollment in Australia in a Phase 1/2a study of AT-H201 and in February 2022, we began enrollment in the second of four parts of the study.

The study plans to enroll 60 healthy participants and moderately ill hospitalized COVID-19 patients.

The Australian regulatory authority will review data after each part of the study before we may proceed with subsequent parts of the study.

Because the final part of the study in COVID-19 infected patients may require that we use additional study sites, approval of that part of the study, and additional sites will depend on COVID-19 infections and may therefore be delayed.

Impact of the Novel Coronavirus

The continued spread of the COVID-19 pandemic is affecting the U.S.

and global economies and may affect the Company’s operations and those of third parties on which the Company relies, including causing possible disruptions in the supply of the Company’s Endoxifen, AT-H201, AT-301, the pace of enrollment in our clinical trials and the conduct of current and future clinical trials.

(Z)-endoxifen.

(Z)-endoxifen is an active metabolite of tamoxifen, which is an FDA-approved drug to treat and prevent breast cancer in high-risk women.

We are developing a proprietary form of (Z)-endoxifen which is administered orally for the potential treatment of breast cancer and reduction of breast density.

We have completed four Phase 1 clinical studies (including a study in men) and two Phase 2 clinical studies with our proprietary (Z)-endoxifen (including oral and topical formulations).

We have also completed significant pre-clinical development and have established clinical manufacturing capabilities through qualified third-parties.

(Z)-endoxifen for Women with Measurable Breast Density.

 Mammographic breast density (MBD) is an emerging public health issue affecting over ten million women in the U.S.

Studies conducted by others have shown that MBD increases the risk of developing breast cancer and that reducing MBD may reduce the incidence of breast cancer.

 In December 2021, we commenced a Phase 2 study of our proprietary oral (Z)-endoxifen.

The study, known as the Karisma-(Z)-endoxifen study, is a Phase 2, randomized, double-blind, placebo-controlled, dose-response study of our proprietary oral (Z)-endoxifen in healthy premenopausal women with measurable breast density.

The primary objective of the study is to determine the dose-response relationship of daily (Z)-endoxifen on breast density reduction.

Secondary endpoints will assess safety and tolerability.

The study also includes an exploratory endpoint to assess durability of the breast density changes.

The study is being conducted in Stockholm, Sweden and will include approximately 240 participants, at full enrollment, who will receive daily doses of oral (Z)-endoxifen or placebo for six months after they enroll.

We expect to complete enrollment in this study by the end of 2023. 

 Based on input from the FDA and Swedish Medical Products Agency, reduction in MBD may not be an approvable indication unless we can demonstrate that our (Z)-endoxifen also reduces the incidence of breast cancer.

We may therefore conduct additional studies of (Z)-endoxifen to assess its correlation with the risk of breast cancer and/or reduction in the incidence of new breast cancers.

(Z)-endoxifen for Neoadjuvant Treatment of Breast Cancer.

We are also developing (Z)-endoxifen to treat estrogen receptor positive (ER+) / human epidermal growth factor receptor 2 negative (HER2-) breast cancer in the neoadjuvant setting, which is the administration of a therapy before the main treatment, which is usually surgery. Although there are neoadjuvant treatments for breast cancers that are not ER+, there are few neoadjuvant treatments for ER+ breast cancer, which comprises about 78% of all breast cancers and the treatments that are available typically involve ovarian function suppression which can induce premature menopause and significantly impact quality of life.

We believe there is a compelling need for therapy with our (Z)-endoxifen in this setting.

 In October 2022, we received authorization from the U.S.

FDA for our Investigational New Drug (IND) application for oral (Z)-endoxifen. The study, “A Randomized Phase 2 Noninferiority Trial of (Z)-endoxifen and Exemestane + Goserelin as Neoadjuvant Treatment in Premenopausal Women with ER+/HER2- Breast Cancer,”

also known as “EVANGELINE,”

is an open-label, randomized, Phase 2 study designed to investigate (Z)-endoxifen for the neoadjuvant treatment of premenopausal women ages 18 and older with early stage (Grade 1 or 2) ER+/HER2- breast cancer.

In February 2023, we enrolled the first patient in this study.

 In March 2023, we announced that (Z)-endoxifen will be evaluated in a new study arm of the ongoing I-SPY endocrine program.

This portion of the study targets patients with newly ER+ invasive cancer.

The I-SPY trial is a collaborative effort among academic investigators from 20 major cancer research centers across the U.S., Quantum Leap Healthcare Collaborative, the FDA, and the Foundation for the National Institutes of Health (FNIH) Cancer Biomarkers Consortium.

Atossa will supply (Z)-endoxifen and provide financial support to Quantum Leap for this study.

Inhaled HNAC, or "AT-H201."   AT-H201 was under development as a potential treatment for COVID-19;

however, due to the rapidly shifting treatment landscape and introduction of effective vaccines and treatments, in late 2022 we shifted to the treatment of patients with compromised lung function due to the damaging effects of cancer treatment. We are scheduled to conclude our study in healthy volunteers with AT-H201 in early 2023, but we do not expect to advance the program further in 2023, as we direct our focus on our (Z)-endoxifen programs.

Recent Investment in CAR-T Company

On December 23, 2022, we closed our previously announced investment in Dynamic Cell Therapies, Inc.

(DCT), a privately-held, venture-capital backed, developer of CAR-T therapies.

DCT is in the pre-clinical phase of developing controllable CAR-T cells to address difficult-to-treat cancers.

Its platform technology of dynamic control of engineered T-cells is designed to improve the safety, efficacy and durability of CAR-T cell therapies.

While its initial focus is hematologic malignancies, it's possible that its innovative approach could also have broad applicability in solid tumors and autoimmune diseases.

Atossa’s investment in DCT, which totaled $4.7 million, resulted in Atossa owning approximately 19% of the outstanding capital stock of DCT as of December 31, 2022.

Impact of the Ongoing Coronavirus Pandemic

The ongoing COVID-19 pandemic may affect our operations and those of third-parties on which we rely, including causing possible disruptions in the supply of (Z)-endoxifen, the pace of enrollment in our clinical trials and the conduct of current and future clinical trials.

In addition, the COVID-19 pandemic may affect the operations of the U.S.

FDA and other health authorities, including similar entities/agencies in Sweden and Australia, which could result in delays in meetings, reviews and approvals.

Additionally, while the potential economic impact brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the global financial markets may reduce the Company’s ability to access capital, which could negatively impact the Company’s short-term and long-term liquidity.

The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change.

We do not yet know the full extent of potential delays or impacts on our business, financing or clinical trial activities or on healthcare systems or the global economy;

however, we have not experienced a significant delay in the enrollment or the drug supply for our ongoing and planned clinical studies, including studies of Endoxifen, AT-301 and AT-H201. In recent weeks the number of reported cases of COVID-19 has declined in many countries.

If this trend continues it may be difficult to enroll in our COVID-19 clinical studies. We will continue to monitor future enrollment in studies for potential restrictions on site visits, mammograms or the impositions of new restrictions on trials as a result of the COVID-19 pandemic. 

We were incorporated in 2009 and our common stock is currently quoted on The Nasdaq Capital Market under the symbol “ATOS.”

As the COVID-19 pandemic reaches endemic stages, the extent to which it may continue to impact our operations, including COVID-19-related delays or other impacts on our business, financing or clinical trial activities or on healthcare systems or the global economy as a whole, remains highly uncertain and difficult to predict;

however, as of March 16, 2023, we have not experienced a significant delay or disruption in the enrollment or the drug supply for our ongoing clinical studies.

Our Programs Under Development

Endoxifen Programs

Endoxifen is one of the metabolites of an FDA-approved drug called tamoxifen, which has been FDA-approved and widely used for over 40 years to both treat and prevent breast cancer.

Tamoxifen is a “pro-drug”, in that it must be metabolized into active components (“metabolites”) in order to be effective. 

Despite the success of tamoxifen in treating ER+ breast cancer, its systemic side effects have led to generally low acceptance as a therapy to reduce the risk of breast cancer.

(Z)-endoxifen Programs

(Z)-endoxifen is the most active metabolite of the drug called tamoxifen, which has been FDA-approved and widely used for over 40 years to both treat and prevent breast cancer.

Tamoxifen is a “pro-drug,” in that it must be metabolized into active components (“metabolites”) to be effective. Despite the success of tamoxifen in treating ER+ breast cancer, its systemic side effects have led to generally low acceptance as a therapy to reduce the risk of breast cancer.

These systemic side effects relate to estrogen agonist activity on the endometrium and the activation of coagulation pathways, leading to an increased risk of uterine events and thromboembolism.

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Other limiting aspects of tamoxifen are that some people lack liver enzymes to adequately metabolize it and it can take a long time for many patients to reach therapeutic levels.

Up to 50% of breast cancer survivors who are taking tamoxifen do not produce therapeutic Endoxifen levels (meaning they are “refractory”) for a number of reasons including that they, due to their genotype, do not have the requisite liver enzymes. We believe our proprietary oral Endoxifen, in part because it is not a pro-drug and does not need to be metabolized by the liver, may overcome some of the shortcomings of tamoxifen.

We estimate that approximately ten million women in the U.S.

Up to 50% of breast cancer survivors who take tamoxifen do not achieve therapeutic (Z)-endoxifen levels (meaning they are “refractory”) for a number of reasons, including that they, due to their genotype, do not have the requisite liver enzymes.

We believe our proprietary oral (Z)-endoxifen, in part because it is not a pro-drug and does not need to be metabolized by the liver, may overcome some of the shortcomings of tamoxifen.

We estimate that approximately ten million women in the U.S.

have MBD, for which there is no FDA-approved treatment.

MBD is an emerging public health issue and studies conducted by others have shown that MBD increases the risk of developing breast cancer and that reducing MBD can reduce the incidence of breast cancer.

MBD is an emerging public health issue and studies conducted by others have shown that MBD increases the risk of breast cancer and that reducing MBD may reduce the incidence of breast cancer.

Although oral tamoxifen is approved to prevent breast cancer in “high-risk”

women (typically based on responses to a questionnaire), it is used by less than 5% of women with an increased risk of developing breast cancer because of the actual or perceived side effects and risks of tamoxifen.

We believe our Endoxifen may provide an option for women to proactively reduce the density of their breasts.

Moreover, our Endoxifen may improve mammography accuracy and patient care by unmasking cancerous tumors that are otherwise hidden by breast density.

federal and state legislation requires that women be notified if they have MBD.

We believe our (Z)-endoxifen may provide an option for women to proactively reduce the density of their breasts.

Moreover, our (Z)-endoxifen may improve mammography accuracy and patient care by unmasking cancerous tumors that are otherwise hidden by breast density.

federal and state legislation require that women be notified if they have MBD.

These notifications typically state that women with MBD have a higher risk of developing breast cancer, and that mammography may not be as effective in detecting breast cancer because the MBD can “mask”

the detection of cancers.

cancers which can hinder detection.

Our Phase 1 Studies

 In September 2019, we completed additional Phase 1 work using our capsule Endoxifen and a new modified-release tablet form of our oral Endoxifen.

Study results showed that the capsule and tablet were safe and well-tolerated.

Because the pharmacokinetic profile of the tablet did not meet the desired pharmacokinetic profile, we do not expect to further develop the tablet. 

In 2017 we completed a comprehensive Phase 1 study in 48 healthy women in Australia using both the topical and oral forms of our proprietary Endoxifen.

The objectives of this double-blinded, placebo-controlled, Phase 1 study were to assess the pharmacokinetics of our proprietary Endoxifen dosage forms as single (oral) and repeat (oral and topical) doses, as well as to assess safety and tolerability.

In 2020, we completed a Phase 1, randomized double-blinded, placebo-controlled study in 12 healthy females in Australia to evaluate safety, tolerability and pharmacokinetics of 4 mg delayed release tablets.

There were no adverse safety signals in this single dose study.

In 2019, we completed a double-blinded, parallel design Phase 1 study in 24 healthy females randomized to either active or placebo in Australia to evaluate pharmacokinetics of our 4 mg capsule (Z)-endoxifen and a new 4 mg modified-release tablet form of our (Z)-endoxifen, as well as to assess safety and tolerability.

Study results showed that the capsule and tablet were safe and well-tolerated. 

In 2018, we completed a placebo controlled, three arm, Phase 1, dose escalation study of our topical (Z)-endoxifen (2, 6 and 10 mg) for 28 days in 24 healthy males in Australia.

Results showed that various dose levels of our topical (Z)-endoxifen were safe and well tolerated.

In 2017, we completed a Phase 1 study in 49 healthy women in Australia using both the topical and oral capsule forms of our proprietary (Z)-endoxifen to assess the pharmacokinetics of our proprietary (Z)-endoxifen dosage forms as single (oral) and repeat (oral capsule 1, 2 and 4 mg and topical 2, 6 and10 mg) doses, as well as to assess safety and tolerability.

The study was conducted in two parts based on route of administration.

There were no clinically significant safety signals and no clinically significant adverse events: both the oral and topical Endoxifen were well tolerated.

In the topical arm of the study, there were low but detectable Endoxifen levels in the blood in a dose-dependent fashion and in the oral arm of the study participants exhibited dose-dependent Endoxifen levels consistent with published reports of the therapeutic range.

The median time for patients in the study to reach the steady-state serum levels of Endoxifen while taking daily doses of oral Endoxifen was approximately seven days.

Published literature indicates that it takes approximately 50-200 days for patients to reach steady-state Endoxifen levels when taking daily doses of oral tamoxifen.

Finally, the median time for patients in the study to reach the maximum serum level of Endoxifen after taking Atossa’s oral Endoxifen ranged from 4 to 8 hours (depending on dose).

The 4 mg dose of Endoxifen produced a maximum serum level of Endoxifen in 4 to 8 hours at levels above the generally accepted threshold for a therapeutic effect on estrogen-dependent breast cancer.

We have also completed a double-blinded, placebo controlled, three arm Phase 1 study of our topical Endoxifen in men which showed that various dose levels of our topical Endoxifen were safe and well tolerated by the 24 study participants over 28 days of dosing.

There were no clinically significant safety signals and no clinically significant adverse events:

both the oral and topical (Z)-endoxifen were well tolerated.

In the topical arm of the study, there were low but detectable (Z)-endoxifen levels in the blood in a dose-dependent fashion, and in the oral arm of the study, participants exhibited dose-dependent (Z)-endoxifen levels consistent with published reports of the therapeutic range.

The median time for patients in the study to reach the steady-state serum levels of (Z)-endoxifen while taking daily doses of oral (Z)-endoxifen was approximately seven days.

Published literature indicates that it takes approximately 50-200 days for patients to reach steady-state (Z)-endoxifen levels when taking daily doses of oral tamoxifen.

Finally, the median time for patients in the study to reach the maximum serum level of (Z)-endoxifen after taking Atossa’s oral (Z)-endoxifen ranged from four to eight hours (depending on dose).

The 4 mg dose of (Z)-endoxifen produced a maximum serum level of (Z)-endoxifen in four to eight hours at levels above the generally accepted threshold for a therapeutic effect on estrogen-dependent breast cancer.

Our Phase 2 Studies

In December 2021, we completed a pre-investigational new drug meeting with the FDA.

The purpose of the meeting was to obtain input from the FDA on pre-clinical, clinical, manufacturing and regulatory matters in the U.S.

for our proprietary Endoxifen to treat breast cancer.

Based in part on the feedback from the FDA, we plan to open an IND for a multi-center Phase 2 study to further advance our proprietary oral proprietary Endoxifen in the neoadjuvant setting.

We plan to focus our development on pre-menopausal women with ER+, HER2- breast cancer for whom the current treatment options typically include aromatase inhibitors combined with drugs that suppress ovarian function and essentially force the patient into menopause.

In December 2021, we began to enroll participants in a Phase 2 clinical study of oral Endoxifen in women with increased MBD.

The study, known as the Karisma-Endoxifen study, is a Phase 2, randomized, double-blind, placebo-controlled, dose-response study of our proprietary Endoxifen in healthy pre-menopausal women with increased breast density.

The primary objective of the study is to determine the dose-response relationship of daily oral Endoxifen on MBD reduction, with secondary endpoints to assess safety and tolerability, and an exploratory endpoint to assess durability of the MBD changes after the study drug has been discontinued.

It is being conducted by South General Hospital in Stockholm and includes approximately 240 participants who will receive daily doses of oral Endoxifen or placebo for six months.

The study is being led by principal investigator Per Hall, M.D., Ph.D., Department of Medical Epidemiology and Biostatistics at Karolinska Institutet.

In February 2021, we concluded a Phase 2 study of our oral Endoxifen in Australia.

In October 2022, we received authorization from the FDA to initiate our Phase 2 study of neoadjuvant (Z)-endoxifen in premenopausal women with ER+/HER2- breast cancer.

This study is now open for enrollment.

The study, “A Randomized Phase 2 Noninferiority Trial of (Z)-endoxifen and Exemestane + Goserelin as Neoadjuvant Treatment in Premenopausal Women with ER+/HER2- Breast Cancer,”

also known as “EVANGELINE,”

This study is a multicenter study in the U.S., is expected to enroll approximately 175 patients and is designed with two cohorts:

(1) a pharmacokinetics (PK) Run-In Cohort to investigate pharmacokinetics and identify a dose for the Treatment Cohort, and (2) a Treatment Cohort. In February 2023, we enrolled our first patient in the study.

The primary objective of the study is to assess whether the endocrine sensitive disease rate at four weeks with (Z)-endoxifen is non-inferior to exemestane plus goserelin in premenopausal women with ER+/HER2- breast cancer.

Endocrine sensitivity, or the effect of endocrine therapy on the tumor, will be measured by Ki-67%, a biomarker for tumor cell proliferation.

Ki-67 is known to be prognostic for 5-year disease-free survival in the neoadjuvant endocrine treatment of ER+/HER2- breast cancer.

The neoadjuvant setting of this study will allow Atossa to investigate several translational endpoints using paired tumor samples.

Patients will be enrolled with the intent of surgical treatment in the involved breast(s) after completing neoadjuvant treatment.

Patients will receive neoadjuvant treatment for up to six months.

Surgery will be performed within seven days of the last dose of treatment.

In December 2021, we began to enroll participants in a Phase 2 clinical study of oral (Z)-endoxifen in women with elevated MBD.

The study, known as the Karisma-Endoxifen study, is a Phase 2, randomized, double-blind, placebo-controlled, dose-response study of our proprietary (Z)-endoxifen in healthy pre-menopausal women with elevated breast density.

The primary endpoint of the study is the change from baseline MBD at six months, with secondary endpoints to assess safety and tolerability, and an exploratory endpoint to assess durability of the MBD changes after the study drug has been discontinued.

It is being conducted by South General Hospital in Stockholm and is expected to include approximately 240 participants, at full enrollment, who will receive daily doses of oral (Z)-endoxifen or placebo for six months after they enroll.

The study is being conducted in Stockholm, Sweden.

In February 2021, we concluded a Phase 2 study of our oral (Z)-endoxifen in Australia.

The study enrolled patients newly-diagnosed with ER+ and HER2- stage 1 or 2 invasive breast cancer, requiring mastectomy or lumpectomy.

Patients received our proprietary oral Endoxifen for at least 14 days from the time of diagnosis up to the day of surgery.

The primary endpoint was to determine if the administration of oral Endoxifen reduces the tumor activity as measured by Ki-67 (a measure of cellular proliferation that correlates with tumor growth).

Patients received our proprietary oral (Z)-endoxifen for at least 14 days from the time of diagnosis up to the day of surgery.

The primary endpoint was to determine if the administration of oral (Z)-endoxifen reduces tumor activity as measured by Ki-67.

The secondary endpoints were safety and tolerability and assessment of the study drug on expression levels of both estrogen and progesterone receptors.

In June 2021, we concluded that the study produced substantially positive results and that continuing enrollment in the study would not be useful in advancing the program.

The final results from the 7 women in the study indicated that six of the 7 patients had 65% reduction in Ki-67 and 7/7 had Ki-67<25% at the time of surgery. 

There were no adverse safety signals or laboratory findings.  

In April 2019, Stockholm South General Hospital in Sweden completed a randomized, double-blinded placebo-controlled Phase 2 study of our topical Endoxifen in women with measurable MBD.

The study was led by principal investigator Dr.

Per Hall, MD, Ph.D., Department of Medical Epidemiology and Biostatistics at Karolinska Institutet.

The primary endpoint of this pilot study was to determine if topical Endoxifen reduces individual MBD as measured by mammography.

In June 2021, we concluded that the study produced substantially positive results and that continuing enrollment in the study would not be useful in advancing the program.

The final results from the seven women in the study indicated a 65% reduction in Ki-67. There were no adverse safety signals or laboratory findings.

In April 2019, we completed a randomized, double-blinded placebo-controlled Phase 2 study of our topical endoxifen in women with measurable MBD in Stockholm, Sweden.

The primary endpoint of this pilot study was to determine if topical endoxifen reduces individual MBD as measured by mammography.

Secondary endpoints included demonstrating safety and tolerability.

The primary objective was to determine if topical Endoxifen reduces MBD, and if so by how much, in order to calculate the sample size for statistical significance in a future trial.

The study enrolled 90 participants who were equally randomized to three different groups (30 per group):

The study enrolled 90 participants who were equally randomized to three different groups (30 participants per group):

10 mg topical endoxifen;

and 20 mg topical endoxifen.

Participants applied the study drug to each breast daily for a maximum of six months.

Each participant received a baseline (pre-treatment) mammogram, and additional mammograms at month 3 and 6, or at the time of study exit.

Once the study was completed, all mammograms were interpreted and MBD determined and any changes that occurred per participant recorded. 

In June 2019, we reported preliminary analysis from our Phase 2 study of proprietary daily topical Endoxifen to reduce MBD, showing significant (p=0.02) and rapid reduction in MBD at the 20 mg daily dose level.

Participants applied the study drug to each breast daily for a maximum of six months.

Each participant received a baseline (pre-treatment) mammogram, and additional mammograms at months three and six, or at the time of study exit.

Once the study was completed, all mammograms were interpreted and MBD determined, and any changes that occurred were recorded. 

In June 2019, we reported preliminary analysis from our Phase 2 study of proprietary daily topical endoxifen to reduce MBD, showing significant (p=0.02) and rapid reduction in MBD at the 20 mg daily dose level.

MBD was reduced by an average of 14.3% in the group applying 20 mg daily topical endoxifen, which was statistically significant (p = 0.02).

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Approximately 72 participants eventually developed skin rashes and local irritation and did not complete a full six months of dosing.

However, these results which are based on MBD measurements at the time of enrollment in the study and again at the time dosing ended, show that even in those participants who dropped out of the study due to skin reactions, Endoxifen reduced MBD in a mean of 55 and 88 days for the 20 mg and 10 mg groups, respectively. Our initial evaluation indicates that the skin reactions are due to the active pharmaceutical ingredient. We are not currently planning to further develop our topical Endoxifen.

AT-H201 Inhalation Therapy for COVID-19

AT-H201 uses a novel combination of two drugs that have been previously approved by the FDA for other diseases.

It is intended to improve compromised lung function for moderate to severely ill, hospitalized COVID-19 patients by inhalation. We also intend to study AT-H201 to potentially treat long haul COVID-19 survivors.

In May 2020, we completed in vitro testing of AT-H201 that showed that the components of AT-H201 inhibit SARS-CoV-2 infectivity of VERO cells, which is a standard cell type being used to study infectivity of the coronavirus.

The AT-H201 components were found to be at least four times more potent than Remdesivir and at least 20 times more potent than Hydroxychloroquine.

Potency was measured by microscopic examination of the cytopathic effect caused by SARS-CoV-2 in VERO cells.

We received input from the FDA on potential pathways to develop AT-H201 and the FDA requested that we provide, among other things, additional pre-clinical and other information on AT-H201.

In September 2021 we began enrollment in Australia in a Phase 1/2a study of AT-H201.

In December 2021 we completed enrollment in the first of four parts of the study and in February 2022 we started enrollment in the second part.

The study plans to enroll 60 healthy participants and moderately ill hospitalized COVID-19 patients.

The Australian regulatory authority will review data after each part of the study before we proceed to subsequent parts of the study.

Because the final part of the study in COVID-19 infected patients may require that we use additional study sites, approval of that part of the study, and additional sites may be at a later date depending on COVID-19 infections.

AT-301 Nasal Spray for COVID-19

AT-301 is our proprietary drug candidate intended for nasal administration in patients immediately following diagnosis of COVID-19 but who have not yet exhibited symptoms severe enough to require hospitalization.

It is intended for at-home use to reduce symptoms of COVID-19 and to slow the infection rate so that a person’s immune system can more effectively fight COVID-19.

AT-301 is being developed with a nasal spray delivery mechanism because many COVID-19 patients are infected via the nasal passage.

In July 2020, we completed in vitro testing of AT-301 which showed that AT-301 inhibits SARS-CoV-2 infectivity of VERO cells in a laboratory culture. 

We may also develop our AT-301 nasal spray to potentially help prevent COVID-19 infection —

particularly for people in high-risk environments, such as people living with an infected patient, people living and working in healthcare facilities, emergency responders or teachers.

 While the traditional vaccines have reduced the spread of COVID-19 infections, it is also clear to us that therapies such as AT-301 nasal spray will also play an important role, particularly as the COVID-19 virus variants have necessitated booster vaccines and potentially the development of vaccines that are variant-specific.

Deadlier and/or more transmissible variants of COVID-19 continue to develop and reach the U.S.

and in many other countries, questions continue to remain regarding how effective current and future vaccines may be against these and future variants.

Additionally, none of the currently available vaccines are 100% effective, they may have side effects in selected populations and effectiveness is expected to diminish over time.

For these reasons, we believe therapies like ours will provide valuable protection even as vaccines continue to be developed and deployed.

 We have completed a Phase 1, double-blinded, randomized, and placebo-controlled safety study of AT-301 nasal spray in 32 healthy adult subjects who were divided into two study groups.

Part A consisted of two single-dose cohorts receiving either active therapy, AT-301B, or the placebo comparator AT-301, at two different doses.

Part B was a multiple dose arm with cohorts receiving either AT-301A or AT-301B for 14 days at two different doses.

The primary objectives of the study were to evaluate the safety and tolerability of single and multiple doses of AT-301 administered via nasal instillation to healthy volunteers. Secondary objectives were to assess the incidence and severity of local irritation and bronchospasm following administration of AT-301 via nasal instillation.

The study was conducted in Australia.

Final analysis of the data from the study indicates that there were no serious adverse events, no discontinuations, no bronchospasms, and only one subject of the 32 subjects in the study experienced adverse events that were considered moderate in severity and all other adverse events were considered mild.

Our assessment is that AT-301 nasal spray was safe and well tolerated in this study.

The most common treatment-related adverse events observed with AT-301 treatment with either single or multiple doses were nasal discomfort and sneezing.

In January 2021, we received input from the FDA on the AT-301 program and based in part on that input, we are now preparing to conduct an additional pre-clinical study, and following that, we expect to apply to the FDA to commence a Phase 2 study in the United States.

However, these results which are based on MBD measurements at the time of enrollment in the study and again at the time dosing ended, showed that even in those participants who dropped out of the study due to skin reactions, endoxifen reduced MBD in a mean of 55 and 88 days in the 20 mg and 10 mg groups, respectively.

Our initial evaluation indicates that the skin reactions are due to the active pharmaceutical ingredient.

We are not currently planning to further develop our topical endoxifen.

 AT-H201 

for Lung Injury Caused by Cancer Treatments

AT-H201 consists of a proprietary combination of two drugs previously approved by the FDA to treat other diseases. AT-H201 is intended to be inhaled via nebulizer with the goal of preventing or reducing lung injury from COVID-19.

In July 2022, we completed dosing in a placebo-controlled Phase 1/2a study of AT-H201 in healthy participants in Australia.

The study originally had four cohorts:

Part A –

a single ascending dose cohort;

Part B –

a multiple ascending dose cohort;

Part C –

a combination part in healthy individuals;

and cohort D –

a combination in COVID-19 infected patients.

After we completed dosing in cohorts A, B and C of the study, we decided not to proceed with cohort D;

rather, we shifted the development of AT-H201 due to the rapidly shifting treatment landscape and introduction of effective vaccines and treatments for COVID-19, which more closely aligns with our oncology focus by continuing development of AT-H201 in patients with compromised lung-function due to the damaging effects of cancer treatment, including, for example, lung injury caused by radiation treatment, which is poorly treated with current therapies and is often irreversible.

One type of injury caused by cancer treatment is radiation induced lung injury (or, RILI), which is damage to the lungs caused by ionizing radiation administered to treat cancer.

RILI is a significant issue for patients undergoing radiation treatment for various forms of cancer and is often irreversible. For instance, RILI affects 30-40% of lung cancer patients, and approximately 35% of esophageal cancer patients. In non-small cell cancer patients receiving concurrent chemotherapy and radiation therapy, the incidence of RILI is estimated to be greater than 60%.

We believe RILI affects a significant number of patients across multiple cancer types and that there is a meaningful need for new treatments.

We do not plan to advance our AT-H201 program in 2023 as we focus our resources on our (Z)-endoxifen programs.

Other Programs;

Immunotherapy/CAR-T Programs

Our immunotherapy/CAR-T programs are in early stage of development.

On November 26, 2020, we entered into a sponsored research agreement with Dana-Farber Cancer Institute, Inc.

The agreement provides that Atossa will support research of cytokine-coated nanoparticles for the potential treatment of breast cancer in research being conducted by Carl Novina, MD, Ph.D.

Much of the recent success in the field of chimeric antigen receptor therapy, or CAR-T, has relied on the systemic delivery (for example a needle injection into the blood stream) of the CAR-T which is intended to treat various non-solid tumor cancers, such as blood cancers.

Recent Investment in CAR-T Company.

 On December 23, 2022, we closed our previously announced investment in DCT, a privately-held, venture-capital backed, developer of CAR-T therapies.

DCT is in the pre-clinical phase of developing controllable CAR-T cells to address difficult-to-treat cancers.

Its platform technology of dynamic control of engineered T-cells is designed to improve the safety, efficacy, and durability of CAR-T cell therapies.

While its initial focus is hematologic malignancies, it's possible that its innovative approach could also have broad applicability in solid tumors and autoimmune diseases.

Atossa’s investment in DCT, which totaled $4.7 million, resulted in Atossa owning approximately 19% of the outstanding capital stock of DCT.

Much of the recent successes in the field of chimeric antigen receptor therapy, or CAR-T, has relied on the systemic delivery (for example, a needle injection into the blood stream) of the CAR-T which is intended to treat various non-solid tumor cancers, such as blood cancers.

One concern with this systemic approach is that it does not target the location of the cancer and it can have adverse effects, including deadly “cytokine storms.”

Moreover, CAR-T treatments delivered systemically can be as high as $500,000 per patient.

We have filed patent applications on a novel method to deliver CAR-T cells or other types of immunotherapy into the milk ducts of the breast, the location where most breast cancers originate for the potential targeted treatment of breast cancer.

Our immunotherapy/CAR-T programs are in early stage of development.

On November 26, 2020, we entered into a sponsored research agreement with Dana-Farber Cancer Institute, Inc.

The agreement provides that Atossa will support research of cytokine-coated nanoparticles for the potential treatment of breast cancer, which was conducted by Carl Novina, MD, Ph.D.

This research project is now substantially complete.

We have filed patent applications on a novel method to deliver CAR-T cells or other types of immunotherapy into the milk ducts of the breast, the location where most breast cancers originate for the potential targeted treatment of breast cancer.

This approach uses targeted intraductal delivery of either T-cells that have been genetically modified to attack breast cancer cells or various other immune-therapies.

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We have not begun, and may not be successful in completing, pre-clinical and clinical studies of our CAR-T technology.

We paid a fee of $1,000,000 in June 2021 to a U.S. leading research institution for the exclusive right to negotiate for the period of six months for the acquisition of the world-wide rights to two oncology R&D programs.

This agreement was amended on December 3, 2021, which extended the negotiation term through April 18, 2022. Those negotiations concluded in February 2022 without reaching a definitive agreement and the research institution agreed to return the $1,000,000 million fee as they did not honor their obligation and cancelled the agreement. 

Potential Breast Cancer Market Opportunities

We believe that, based in part on a January 2017 study by Defined Health Inc.

(now called Cello Health Bioconsulting), a leading market research firm, the potential U.S.

market for our Endoxifen in the breast cancer treatment and prevention settings is up to $1 billion annually. 

The American Cancer Society (ACS) estimates that in the U.S.

in 2022, 287,850 women will be diagnosed with breast cancer, 47,550 of which will be under the age of 50 and 43,250 of which will die from the disease.

We believe that, based in part on a study by Defined Health Inc.

(now Lumanity), a leading market research firm, the potential U.S.

market for our (Z)-endoxifen in the breast cancer treatment and prevention settings is up to $1 billion annually. The American Cancer Society (ACS) estimates that in the U.S.

in 2023, 297,790 women will be diagnosed with breast cancer and about 43,700 women will die from breast cancer.

Approximately 80% of breast cancers are ER+.

Although about 100 times less common than in women, breast cancer also affects men.

Breast cancer also affects men, though the incidence is around 100 times lower than in women.

The ACS estimates that in the U.S.

in 2022, 2,710 new cases of invasive breast cancer will be diagnosed in men, and 530 men will die from breast cancer.

Potential COVID-19 Market Opportunities

According to the COVID-19 Dashboard by the Center for Systems Science and Engineering at Johns Hopkins University, as of the date of this report, more than 390 million cases of COVID-19 have been reported world-wide and over 5.7 million people have died from the disease.

We believe the potential market for an at-home therapy like AT-301 is large given that most COVID-19 patients are not hospitalized and instead recover at home. Furthermore, our products could provide benefit to those who are infected with new variants that may escape vaccine protection or individuals who are vaccinated with break-through infections.

Vaccines have been approved for the prevention of COVID-19;

however, their effectiveness may decrease over time and may not be effective against all variants of the novel coronavirus.

Currently, the only FDA approved treatment for COVID-19 is Remdesivir for certain COVID-19 patients.

In addition, emergency use authorization has been granted for two new oral antiviral agents, several monoclonal antibodies, and the use of convalescent plasma for certain COVID-19 patients.

The impact of these on the development of our COVID-19 programs is unknown.

There remains a significant unmet medical need for therapies to be approved for the treatment of all individuals infected with the virus.

 A key feature of the original SARS-CoV-2 virus, and that is retained in both the Delta and Omicron variants, is the furin cleavage site found on the spike protein which facilitates viral infection.

Our COVID-19 programs under development are designed to interact with this cleavage site so they are expected to be effective against both current and future COVID-19 variants that continue to contain a furin cleavage site.

in 2023, 2,800 new cases of invasive breast cancer will be diagnosed in men, and 530 men will die from breast cancer.

Our Capital Resources

We have not yet established an ongoing source of revenue sufficient to cover our operating costs and allow us to continue as a going concern.

We have not yet established an ongoing source of revenue sufficient to cover our operating costs and allow us to continue as a going concern.

Our ability to continue as a going concern is dependent on obtaining adequate capital to fund operating losses until we become profitable.

We plan to obtain additional capital resources by selling our equity securities and borrowing from stockholders or others when needed.

However, we cannot assure you that we will be successful in accomplishing any of these plans and, if we are unable to obtain adequate capital, we could be forced to cease operations. We do not anticipate any revenue until our pharmaceutical programs are developed, including receiving all necessary regulatory approvals, and until we successfully commercialize these programs.

As of December 31, 2021, we had cash and cash equivalents of $136,377,000.

Our capital raising activity in the past fiscal year consisted of the following:

On January 6, 2021, the Company entered into a securities purchase agreement with certain institutional and accredited investors relating to the offering and sale of 23,850,000 shares of Company common stock, par value $0.18 per share and warrants to purchase 17,887,500 shares of common stock.

The combined purchase price for one share of common stock and a warrant to purchase 0.75 shares of common stock was $1.055.

Subject to certain ownership limitations, the warrants are exercisable upon issuance.

The warrants will expire on the 4.5-year anniversary of the date of issuance and have an exercise price of $1.055 per share.

The common stock and warrants have been registered under the Securities Act of 1933, as amended.

The offering closed on January 8, 2021, with net proceeds to the Company from the offering of approximately $23.3 million, after deducting fees and expenses.

On March 22, 2021, the Company entered into a securities purchase agreement with certain institutional and accredited investors relating to the offering and sale of 17,361,100 shares of our common stock, par value $0.18 per share.

Concurrently with the offering, and pursuant to the purchase agreement, the Company also commenced a private placement whereby it issued and sold warrants exercisable for an aggregate of up to 13,020,825 shares of common stock.

The combined purchase price for one share of common stock and a purchase warrant to purchase 0.75 shares of common stock is $2.88.

Subject to certain ownership limitations, the warrants are exercisable upon issuance.

The warrants will expire on the 4.5-year anniversary of the date of issuance. Subsequent to the issuance of the warrants, the Company filed a registration statement on Form S-3 (File No.

333-255411) to cover the sale of an aggregate of 13,020,825 shares of common stock issuable upon exercise of the warrants which was declared effective by the SEC on April 29, 2021. The net proceeds to the Company from the offering and the private placement are approximately $46.4 million, after deducting fees and expenses.

Warrant Activity  

During 2021, the Company received $43.8 million from the exercises of warrants.

The 2021 warrant exercises resulted in the reduction of approximately 37.5 million warrants, and the issuance of approximately 37.5 million shares of common stock. There were no warrant exercises during 2020.

However, we cannot assure you that we will be successful in accomplishing any of these plans and, if we are unable to obtain adequate capital, we could be forced to cease operations.

We do not anticipate any revenue until our pharmaceutical programs are developed, including receipt of all necessary regulatory approvals, and we successfully commercialize these programs.

As of December 31, 2022, we had cash and cash equivalents of approximately $111 million.

We did not raise any capital in the past fiscal year.

Potential Uses of Capital Resources

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We may also use our capital resources to invest directly or indirectly in business opportunities in healthcare or other industries including through purchases of equity in other companies.

These investments may be in special purpose acquisition companies either as a sponsor or as an equity investor. Our business plan may evolve to require more capital resources than currently contemplated either because our existing programs progress more quickly or at a greater expense than currently anticipated or because we add additional programs. 

These investments may include investing in special purpose acquisition companies either as a sponsor or as an equity investor.

Our business plan may evolve to require more capital resources than currently contemplated either because our existing programs progress more quickly or at a greater cost than currently anticipated or because we may add additional programs.

Research and Development Phase

Research and development (R&D) costs are generally expensed as incurred. R&D expenses include, for example, manufacturing expense for our drugs under development, expenses associated with clinical trials and associated salaries and benefits.

We have entered into various research and development contracts with research institutions, clinical research organizations, clinical manufacturing organizations and other companies.

We are in the research and development phase and are not currently marketing any products or services.

We do not anticipate generating revenue unless and until we develop and launch our pharmaceutical programs.

Research and development (R&D) costs are generally expensed as incurred.

R&D expenses include, for example, manufacturing expense for our drugs under development, expenses associated with clinical trials and associated salaries and benefits.

We have entered into various research and development contracts with research institutions, clinical research organizations, clinical manufacturing organizations and other companies.

Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and payments made in advance of performance are reflected in the accompanying consolidated balance sheets as prepaid expenses.

We accrue for estimated costs incurred for ongoing research and development activities.

When evaluating the adequacy of the accrued expenses, we analyze progress of the services, including the phase or completion of events, invoices received and contracted costs.

Significant judgments and estimates may be made in determining the prepaid or accrued balances at the end of any reporting period.

Actual results could differ from our estimates.

R&D expenses also include an allocation of the CEO's salary and related benefits including bonus and non-cash stock-based compensation expense based on an estimate of total hours expended on research and development activities. 

Our CEO is involved in the development of the Company's drug candidates and oversight of the related clinical trial activity.

Research and development expenses for the years ended December 31, 2021 and 2020 were approximately $9,210,000 and $6,608,000, respectively. 

We accrue for estimated costs incurred for ongoing research and development activities.

When evaluating the adequacy of the accrued expenses, we analyze the progress of the services, including the phase or completion of events, invoices received and contracted costs.

Significant judgments and estimates may be made in determining the prepaid expense or accrued expense balances at the end of any reporting period.

Actual results could differ from our estimates.

R&D expenses also include an allocation of the CEO's salary and related benefits, including bonus and non-cash stock-based compensation expense based on an estimate of total hours expended on research and development activities. Our CEO is involved in the development of the Company's drug candidates and oversight of the related clinical trial activity.

Research and development expenses for the years ended December 31, 2022 and 2021 were approximately $15.1 million and $9.2 million, respectively. 

Intellectual Property 

We own patent applications directed to Endoxifen, treatments for COVID-19, and immunotherapies such as CAR-T therapies.

We commonly seek patent claims directed to compositions of matter to therapeutics, including Endoxifen as well as methods of using such compositions.

For each of our products, we have filed and expect to file multiple additional patent applications.

As of January 15, 2022, based on a review of our patent estate, we own and are pursuing 83 pending patent applications (11 U.S.

applications, including 1 allowed U.S.

application, and 72 international applications) directed to our Endoxifen, immunotherapies such as CAR-T therapeutics and COVID-19 therapeutics programs.

 As a company focused on therapies in oncology and infectious diseases, we are not developing or commercializing any of our medical devices, including our breast aspirator devices, transportation kits, tools for breast surgeons, and nipple aspirate fluid (NAF) cytology tests or methods of using such devices, kits or tests –

nor do we maintain an inventory of our medical devices.

We continue to evaluate our patent portfolio on an ongoing basis and, as a clinical-stage pharmaceutical company, no longer file, prosecute, maintain, or defend our patents and patent applications directed to any of our medical devices, kits, tests, and compositions not core to our business or to methods of using the foregoing due to short patent terms remaining on them and changed business goals.

 As of January 15, 2022, the following are the estimated number of patents (2) related to our programs that we are currently pursuing.

We own patents directed to (Z)-endoxifen and patent applications directed to (Z)-endoxifen, therapies for respiratory conditions, other therapies, and immunotherapies such as CAR-T therapies.

We commonly seek patent claims directed to compositions of matter of therapeutics, including (Z)-endoxifen, as well as methods of using such compositions.

For each of our products, we have filed multiple patent applications and expect to file multiple additional patent applications.

As of January 31, 2023, based on a review of our patent estate, we own two issued patents (one U.S.

patent and one international patent) directed to our (Z)-endoxifen therapies, therapies for respiratory conditions, other therapies, immunotherapies such as CAR-T therapies, and viral detection programs and are pursuing 75 pending patent applications (19 U.S.

applications, including one allowed U.S.

application, and 56 international applications, including two allowed international applications).

Subsequent to January 31, 2023, we were issued an additional U.S.

patent directed to our (Z)-endoxifen therapies.

We continue to evaluate our patent portfolio on an ongoing basis and, as a clinical-stage pharmaceutical company, no longer file, prosecute, maintain, or defend our patents and patent applications directed to any devices or diagnostics, and compositions not core to our business or to methods of using the foregoing due to short patent terms remaining on them and changed business goals.

As of January 31, 2023, the following are the estimated number of patents related to our programs that we are currently pursuing.

Issued Patents (1,2,3)

Pending Applications (1, 2, 3)

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International

Endoxifen Programs

COVID-19 Programs

International

(Z)-endoxifen programs

Respiratory and viral programs

Immunotherapy/CAR-T program

Other therapies programs

1. Each patent application includes at least one claim or disclosure directed to a listed therapeutic/program.

The patent counts in the table above may differ from the total numbers of the patent applications in the Atossa portfolio as the patent counts in the table above reflect that a patent application may have claims directed to more than one type of therapeutic/program.

The patent counts and the approximate expiry dates disclosed herein and in our patent estate are subject to change, for example, in the event of changes in the law, post-grant patent challenges, or legal rulings affecting our patents and applications or if we become aware of new information or amend our business goals.

The patent counts and the approximate expiration dates disclosed herein and in our patent estate are subject to change, for example, in the event of changes in the law, post-grant patent challenges, or legal rulings affecting our patents and applications or if we become aware of new information or amend our business goals.

The standards that the U.S.

Patent and Trademark Office, or USPTO, and foreign patent offices use to grant patents are not always applied predictably or uniformly and can change.

Consequently, our pending patent applications may not be allowed and, if allowed, may not contain the type and extent of patent claims that will be adequate to conduct our business as planned.

Additionally, any issued patents we currently own or obtain in the future may have a shorter patent term than expected or may not contain claims that will permit us to stop competitors from using our technology or similar technology or from copying our products.

The standards that the USPTO, and foreign patent offices use to grant patents are not always applied predictably or uniformly and can change.

Consequently, our pending patent applications may not be allowed and, if allowed, may not contain the scope, type and extent of patent claims that will be adequate to conduct our business as planned.

Consequently, our pending patent applications may not be allowed and, if allowed, may not contain the type and extent of patent claims that would be adequate to conduct our business as planned.

Additionally, any issued patents we currently own or may obtain in the future may have a shorter patent term than expected or may not contain claims that will permit us to stop competitors from using our technology or similar technology or from copying our products.

Manufacturing, Clinical Studies and Associated Operations

Our drug development strategy utilizes third-party contractors for the procurement and manufacture, as applicable, of raw materials, active pharmaceutical ingredients and finished drug products, as well as for storage, and distribution of our products and associated supply chain operations.

We also plan to rely on third parties to conduct nonclinical and clinical studies of our drugs under development.

We also rely on third-parties to conduct nonclinical and clinical studies of our drugs under development.

As our development programs advance, we expect that our manufacturing, pre-clinical and clinical studies, and related operational requirements will correspondingly increase.

Each third-party contractor undergoes a qualification process by Atossa subject matter experts prior to signing any service agreement and initiating any third-party work.

Integral to our development strategy is our quality program, which includes standard operating procedures and specifications with the goal that our work complies with Good Clinical (GCP), Good Laboratory (GLP) and Good Manufacturing Practices (cGMP), and other applicable global regulations.

We require that each third-party contractor is qualified by Atossa subject matter experts prior to signing any service agreement and initiating any third-party work.

Integral to our development strategy is our quality program, which includes standard operating procedures and specifications with the goal that our work complies with Good Clinical Practices (GCP), Good Laboratory Practices (GLP) and Current Good Manufacturing Practices (cGMP), and other applicable global regulations, when appropriate.

We expect and confirm that selected service providers meet or exceed our expectations for compliance with these standards in providing services and products that meet our requirements.

We believe our operational strategy of utilizing qualified contractors and suppliers in the foregoing manner allows us to direct our financial and managerial resources to development and commercialization activities, rather than to the establishment and maintenance of manufacturing and clinical infrastructure.

We believe our operational strategy of utilizing qualified contractors and suppliers in the foregoing manner allows us to direct our financial and managerial resources to development and commercialization activities, rather than to the establishment and maintenance of manufacturing and clinical infrastructure.

Government Regulation

Drug Regulations

We are subject to extensive regulation by the FDA and other federal, state, and local regulatory agencies.

We are subject to extensive regulation by the FDA and other federal, state, and local regulatory agencies.

The Federal Food, Drug, and Cosmetic Act, or the FDCA, and its implementing regulations set forth, among other things, regulations for the execution of clinical studies, and the requirements for the testing, development, manufacture, quality control, safety, effectiveness, approval, labeling, storage, record keeping, reporting, distribution, import, export, advertising and promotion of our products.

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member states remain essential in many respects.

 In the U.S., the FDA regulates drugs under the FDCA and its implementing regulations, through review and ultimately approval of the New Drug Applications (NDAs).

Also see the “Non-U.S.

Regulation”

section below in connection with the position in the United Kingdom (UK).

In the U.S., the FDA regulates drugs under the FDCA and its implementing regulations, through review and ultimately approval of the New Drug Applications (NDAs).

NDAs require extensive studies and submission of a large amount of data by the applicant, which is an amalgamation of data obtained under Investigational New Drug Applications (INDs) and other supporting available information.

For a discussion of U.S.

privacy laws, see “Privacy and Security of Health Information and Personal Information;

Standard Transactions”

Drug Development

Nonclinical Testing:

Before testing any compound in human subjects in the U.S., extensive nonclinical data are required.

Nonclinical testing generally consists of toxicological and pharmacological studies in animals.

Studies must be performed in compliance with the FDA’s GLP regulations and the U.S.

Nonclinical testing generally consists of safety, toxicology and pharmacology studies in animals.

Many of these studies must be performed in compliance with the FDA’s GLP regulations and the U.S.

Department of Agriculture’s Animal Welfare Act.

IND Application:

In nearly all cases, human clinical trials in the U.S.

cannot commence until an IND is submitted to the FDA for review and a “Safe to Proceed”

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Clinical Trials:

Clinical trials involve the administration of the drug to healthy human volunteers or to patients, under the supervision of a qualified investigator according to a vetted and approved protocol.

The conduct of clinical trials is subject to extensive regulation, including compliance with the FDA’s bioresearch monitoring regulations and GCP requirements, which establish standards for conducting, recording data from and reporting the results of, clinical trials, and are intended to assure that the data and reported results are credible and accurate, and that the rights, safety, and well-being of study participants are protected.

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Each protocol is reviewed by the FDA as part of the IND application.

In addition, each clinical trial must be reviewed, approved, and conducted under the auspices of an institutional review board, or IRB, at the institution conducting the clinical trial.

In addition, each clinical trial must be reviewed, approved, and conducted under the auspices of an institutional review board, or IRB.

Companies sponsoring the clinical trials, investigators, and IRBs also must comply with regulations and guidelines for obtaining informed consent from the study subjects, complying with the protocol and investigational plan, adequately monitoring the clinical trial and timely reporting adverse events.

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Data from a foreign study not conducted under an IND application may be submitted in support of an NDA if the study was conducted in accordance with GCP and the FDA is able to validate the data.

A study sponsor is required to submit certain details about active clinical trials and clinical trial results to the National Institutes of Health for public posting on http://clinicaltrials.gov.

A study sponsor is required to submit certain details about applicable active clinical trials and clinical trial results to the National Institutes of Health for public posting on http://clinicaltrials.gov.

Human clinical trials are typically conducted in three sequential phases, although the phases may overlap with one another:

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Phase 1 clinical trials generally are intended to determine the metabolism and pharmacologic actions of the drug, the side effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness.

Phase 2 clinical trials generally are controlled studies that involve a relatively small sample of the intended patient population and are designed to develop data regarding the product’s effectiveness, to determine dose response and the optimal dose range and to gather additional information relating to safety and potential adverse effects.

Phase 3 clinical trials are conducted after preliminary evidence of effectiveness has been obtained and are intended to gather the additional information about safety and effectiveness necessary to evaluate the drug’s overall risk-benefit profile, and to provide a basis for physician labeling.

Phase 2 clinical trials generally are controlled studies that involve a relatively small sample of the intended patient population and are designed to develop data regarding the product’s effectiveness, to determine dose response and the optimal dose range and to gather additional information relating to safety and potential adverse effects.

Phase 3 clinical trials are conducted after preliminary evidence of effectiveness has been obtained and are intended to gather the additional information about safety and effectiveness necessary to evaluate the drug’s overall risk-benefit profile, and to provide a basis for physician labeling.

Generally, Phase 3 clinical development programs consist of expanded, large-scale studies of patients with the target disease or disorder to obtain statistical evidence of the efficacy and safety of the drug, or the safety, purity, and potency of a biological product, at the proposed dosing regimen.

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Data obtained from clinical activities are not always conclusive and may be subject to alternative interpretations that could delay, limit, or prevent regulatory approval.

There are regulatory pathways that can accelerate the speed with which a product can be developed, including a Special Protocol Assessment (SPA), break-through therapy designation, etc.

There are regulatory pathways that can accelerate the speed with which a product can be developed, including a Special Protocol Assessment (SPA), break-through therapy designation, among others.

The designations are obtained from the FDA on a case-by-case basis and do not guarantee the ultimate approval of a product for commercialization.

Drug Approval

Assuming successful completion of the required clinical testing, the results of the preclinical studies and of the clinical trials, together with other detailed information, including information on the manufacture and composition of the investigational product, are submitted to the FDA in the form of an NDA requesting approval to market the product for one or more indications.

Assuming successful completion of the required clinical testing, the results of the preclinical studies and of the clinical trials, together with other detailed information, including information on the manufacture and composition of the investigational product, are submitted to the FDA in the form of an NDA requesting approval to market the product for one or more indications.

The testing and approval process requires substantial time, effort and financial resources.

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Even if a product is approved by a regulatory authority, satisfactory prices may not be approved for such product.

Drug Marketing Authorization.

In the E.U., which includes Sweden where our (Z)-endoxifen breast density study is being conducted, and in Iceland, Norway and Liechtenstein (together, the European Economic Area or EEA), after completion of all required clinical testing, medicinal products may only be placed on the market after obtaining a Marketing Authorization (MA).

To obtain a MA of a drug under European Union regulatory systems, an applicant can submit a Marketing Authorization Application (MAA), through, amongst others, a centralized or decentralized procedure.

Centralized Authorization Procedure .

In the E.U., marketing authorizations for medicinal products can be obtained through several different procedures founded on the same basic regulatory process.

The centralized procedure is mandatory for certain medicinal products, including orphan medicinal products, medicinal products derived from certain biotechnological processes, advanced therapy medicinal products and certain other new medicinal products containing a new active substance for the treatment of certain diseases.

It is optional for certain other products, including medicinal products that are significant therapeutic, scientific or technical innovations, or whose authorization would be in the interest of public or animal health.

The centralized procedure allows a company to submit a single application to the EMA which will provide a positive opinion regarding the application if it meets certain quality, safety, and efficacy requirements.

Based on the opinion of the EMA, the European Commission makes a final decision to grant a centralized marketing authorization which is valid in all 27 E.U.

Member States and three of the four European Free Trade Association states (Iceland, Liechtenstein and Norway).

Cancer products are usually required to go through the centralized procedure.

Unlike the centralized authorization procedure, the decentralized marketing authorization procedure requires a separate application to, and leads to separate approval by, the competent authorities of each E.U.

Member State in which the product is to be marketed.

One national competent authority selected by the applicant, the Reference Member State, assesses the application for marketing authorization.

Following a positive opinion by the competent authority of the Reference Member State the competent authorities of the other E.U.

Member States, Concerned Member States are subsequently required to grant marketing authorization for their territory on the basis of this assessment except where grounds of potential serious risk to public health require this authorization to be refused.

The mutual recognition procedure is similarly based on the acceptance by the competent authorities of the Concerned Member States of the marketing authorization of a medicinal product by the competent authorities of other Reference Member States.

The holder of a national marketing authorization granted by a Reference Member State may submit an application to the competent authority of a Concerned Member State requesting that this authority mutually recognize the marketing authorization delivered by the competent authority of the Reference Member State.

Similar to accelerated approval regulations in the U.S., conditional marketing authorizations can be granted in the E.U.

The centralized procedure provides for the grant of a single MA that is issued by the European Commission (the EC) following the scientific assessment of the application by the European Medicines Agency (the EMA) that is valid for all E.U.

Member States as well as in the three additional EEA Member States.

The centralized procedure is mandatory for certain medicinal products, including for medicines developed by means of certain biotechnological processes, products designated as orphan medicinal products, advanced therapy medicinal products (ATMP), and medicinal products with a new active substance indicated for the treatment of certain diseases (e.g., AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and viral diseases).

For medicinal products containing a new active substance not yet authorized in the EEA before May 20, 2004 and indicated for the treatment of other diseases, medicinal products that constitute significant therapeutic, scientific or technical innovations, or for which the grant of a MA through the centralized procedure would be in the interest of public or animal health at the E.U.

level, an applicant may voluntarily submit an application for a marketing authorization through the centralized procedure.

Under the centralized procedure, the Committee for Medicinal Products for Human Use (the CHMP), established at the EMA, is responsible for conducting the initial assessment of a drug.

The CHMP is also responsible for several post-authorization and maintenance activities, such as the assessment of modifications or extensions to an existing marketing authorization.

Under the centralized procedure, the timeframe for the evaluation of an MAA by the EMA’s CHMP is, in principle, 210 days from receipt of a valid MAA.

However, this timeline excludes clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the CHMP, so the overall process typically takes a year or more, unless the application is eligible for an accelerated assessment.

Accelerated evaluation might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of a major public health interest, particularly from the point of view of therapeutic innovation.

Upon request, the CHMP can reduce the time frame to 150 days if the applicant provides sufficient justification for an accelerated assessment.

The CHMP will provide a positive opinion regarding the application only if it meets certain quality, safety and efficacy requirements.

This opinion is then transmitted to the EC, which has the ultimate authority for granting MA within 67 days after receipt of the CHMP opinion.

Decentralized Authorization Procedure . Medicines that fall outside the mandatory scope of the centralized procedure have three routes to authorization:

(i) they can be authorized under the centralized procedure if they concern a significant therapeutic, scientific or technical innovation, or if their authorization would be in the interest of public health;

(ii) they can be authorized under a decentralized procedure where an applicant applies for simultaneous authorization in more than one E.U.

member state;

or (iii) they can be authorized in an E.U.

member state in accordance with that state’s national procedures and then be authorized in other E.U.

countries by a procedure whereby the countries concerned agree to recognize the validity of the original, national marketing authorization (mutual recognition procedure).

The decentralized procedure permits companies to file identical MA applications for a medicinal product to the competent authorities in various E.U.

Member States simultaneously if such medicinal product has not received marketing approval in any E.U.

Member State before.

This procedure is available for medicinal products not falling within the mandatory scope of the centralized procedure.

The competent authority of a single E.U.

Member State, known as the reference E.U.

Member State, is appointed to review the application and provide an assessment report.

Under this procedure, an applicant submits an application based on identical dossiers and related materials, including a draft summary of product characteristics, and draft labeling and package leaflet, to the reference E.U.

Member State and concerned E.U.

Member States.

The reference E.U.

Member State prepares a draft assessment report and drafts of the related materials within 120 days after receipt of a valid application.

Subsequently each concerned E.U.

Member State must decide whether to approve the assessment report and related materials.

Member State cannot approve the assessment report and related materials on the grounds of potential serious risk to public health, the disputed points are subject to a dispute resolution mechanism and may eventually be referred to the EC, whose decision is binding for all E.U.

Member States.

Risk Management Plan.

 All new MAAs must include a Risk Management Plan (RMP), describing the risk management system that the company will put in place and documenting measures to prevent or minimize the risks associated with the product.

RMPs are continually modified and updated throughout the lifetime of the medicine as new information becomes available.

We need to submit an updated RMP:

(i) at the request of EMA or a national competent authority, or (ii) whenever the risk-management system is modified, especially as the result of new information being received that may lead to a significant change to the benefit-risk profile or as a result of an important pharmacovigilance or risk-minimization milestone being reached.

The regulatory authorities may also impose specific obligations as a condition of the MA.

RMPs and Periodic Safety Update Reports (PSURs) are routinely available to third parties requesting access, subject to limited redactions.

MA Validity Period .

Marketing Authorizations have an initial duration of five years.

After these five years, the authorization may subsequently be renewed on the basis of a reevaluation of the risk-benefit balance.

Once renewed, the MA is valid for an unlimited period unless the EC or the national competent authority decides, on justified grounds relating to pharmacovigilance, to proceed with only one additional five-year renewal.

Applications for renewal must be made to the EMA at least nine months before the five-year period expires.

Exceptional Circumstances/Conditional Approval .

Similar to accelerated approval regulations in the U.S., conditional marketing authorizations can be granted in the E.U.

by the European Commission in exceptional circumstances.

A conditional marketing authorization can be granted for medicinal products where a number of criteria are fulfilled: i) although comprehensive clinical data referring to the safety and efficacy of the medicinal product have not been supplied, the benefit/risk balance of the product is positive, ii) it is likely that the applicant will be in a position to provide the comprehensive clinical data, iii) unmet medical needs will be fulfilled and iv) the benefit to public health of the immediate availability on the market of the medicinal product concerned outweighs the risk inherent in the fact that additional data are still required.

A conditional marketing authorization can be granted for medicinal products where, although comprehensive clinical data referring to the safety and efficacy of the medicinal product have not been supplied, a number of criteria are fulfilled, including:

(i) the benefit/risk balance of the product is positive, (ii) it is likely that the applicant will be in a position to provide the comprehensive clinical data, (iii) unmet medical needs will be fulfilled by the grant of the MA and (iv) the benefit to public health of the immediate availability on the market of the medicinal product concerned outweighs the risk inherent in the fact that additional data are still required.

A conditional marketing authorization must be renewed annually.

Even if a product receives authorization in the E.U., there can be no assurance that reimbursement for such product will be secured on a timely basis or at all.

Pricing and Reimbursement Environment.

E ven if a medicinal product obtains a marketing authorization in the E.U., there can be no assurance that reimbursement for such product will be secured on a timely basis or at all.

Individual countries comprising the E.U.

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and may never succeed in obtaining widespread reimbursement arrangements therein.

The national authorities of the individual E.U.

The national authorities of the individual E.U.

Member States are free to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices and/or reimbursement of medicinal products for human use.

Member States adopt policies according to which a specific price or level of reimbursement is approved for the medicinal product.

Member States adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market, including volume-based arrangements and reference pricing mechanisms.

Health Technology Assessment, or HTA, of medicinal products is becoming an increasingly common part of the pricing and reimbursement procedures in some E.U.

Member States.

Member States include the U.K, France, Germany and Sweden.

Reference pricing used by various E.U.

Member States and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices.

In some countries, we may be required to conduct a clinical study or other studies that compare the cost-effectiveness of our product candidates, if any, to other available therapies in order to obtain or maintain reimbursement or pricing approval.

There can be no assurance that any country that has price controls or reimbursement limitations for medicinal products will allow favorable reimbursement and pricing arrangements for any of our products.

Historically, medicinal products launched in the E.U.

do not follow price structures of the U.S.

and generally published and actual prices tend to be significantly lower.

Publication of discounts by third party payers or authorities and public tenders may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries.

Health Technology Assessment (HTA) of medicinal products is becoming an increasingly common part of the pricing and reimbursement procedures in some E.U.

Member States, including France, Germany, Ireland, Italy and Sweden.

The HTA process, which is governed by the national laws of these countries, is the procedure according to which the assessment of the public health impact, therapeutic impact and the economic and societal impact of use of a given medicinal product in the national healthcare systems of the individual country is conducted.

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Member States.

The HTA generally focuses on the clinical efficacy and effectiveness, safety, cost and cost-effectiveness of individual medicinal products as well as their potential implications for the healthcare system.

Those elements of medicinal products are compared with other treatment options available on the market.

The outcome of HTA regarding specific medicinal products will often influence the pricing and reimbursement status granted to medicinal products by the regulatory authorities of individual E.U.

Member States.

A negative HTA of one of our products by a leading and recognized HTA body could not only undermine our ability to obtain reimbursement for such product in the E.U.

Member State in which such negative assessment was issued, but also in other E.U.

Member States.

For example, E.U.

Member States that have not yet developed HTA mechanisms could rely to some extent on the HTA performed in other countries with a developed HTA framework, when adopting decisions concerning the pricing and reimbursement of a specific medicinal product.

On January 31, 2018, the European Commission adopted a proposal for a regulation on health technology assessment.

This legislative proposal is intended to boost E.U.

level cooperation among E.U.

Member States in assessing health technologies, including new medicinal products, and providing the basis for cooperation at the E.U.

level for joint clinical assessments in these areas.

The proposal provides that E.U.

Member States will be able to use common HTA tools, methodologies and procedures across the European Union, working together in four main areas, including joint clinical assessment of the innovative health technologies with the most potential impact for patients, joint scientific consultations whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify promising technologies early, and continuing voluntary cooperation in other areas.

Individual E.U.

Member States will continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technology, and making decisions on pricing and reimbursement.

Member States could choose to delay participation in the joint work until three years after the rules enter into force, it will become mandatory after six years.

The European Commission has stated that the role of the HTA regulation is not to influence pricing and reimbursement decisions in the individual E.U.

Member States, but there can be no assurance that the HTA regulation will not have effects on pricing and reimbursement decisions.

The HTA entered into force on January 11, 2022 and applies as of January 2025 followed by a further three-year transitional period during which E.U.

member states must fully adapt to the new system.

To obtain, reimbursement or pricing approval in some countries, including the E.U.

Member States, we may be required to conduct studies that compare the cost-effectiveness of our product candidates to other therapies that are considered the local standard of care.

There can be no assurance that any country will allow favorable pricing, reimbursement and market access conditions for any of our products, or that we will be feasible to conduct additional cost-effectiveness studies, if required.

In certain of the E.U.

Member States, medicinal products that are designated as orphan medicinal products may be exempted or waived from having to provide certain clinical, cost-effectiveness and other economic data in connection with their filings for pricing/reimbursement approval.

Post-Approval Regulation

Similarly, to the U.S., both marketing authorization holders and manufacturers of medicinal products are subject to comprehensive regulatory oversight by the EMA and the competent authorities of the individual E.U.

Member States both before and after grant of the manufacturing and marketing authorizations.

Failure by us or by any of our third-party partners, including suppliers, manufacturers and distributors to comply with E.U.

Similarly, to the U.S., both marketing authorization holders and manufacturers of medicinal products are subject to comprehensive regulatory oversight by the EMA, the EC and/or the competent regulatory authorities of the individual E.U.

Member States.

This oversight applies both before and after grant of the manufacturing licenses and marketing authorizations.

It includes control of compliance with E.U.

good manufacturing practices rules, manufacturing authorizations, pharmacovigilance rules and requirements governing advertising, promotion, sale, and distribution, recordkeeping, importing and exporting of medicinal products.

Failure by us or by any of our third-party partners, including suppliers, manufacturers and distributors to comply with E.U.

laws and the related national laws of individual E.U.

Member States governing the conduct of clinical trials, manufacturing approval, marketing authorization of medicinal products and marketing of such products, both before and after grant of marketing authorization, may result in administrative, civil or criminal penalties.

Member States governing the conduct of clinical trials, manufacturing approval, marketing authorization of medicinal products and marketing of such products, both before and after grant of marketing authorization, statutory health insurance, bribery and anti-corruption or other applicable regulatory requirements may result in administrative, civil or criminal penalties.

These penalties could include delays or refusal to authorize the conduct of clinical trials or to grant marketing authorization, product withdrawals and recalls, product seizures, suspension, withdrawal or variation of the marketing authorization, total or partial suspension of production, distribution, manufacturing or clinical trials, operating restrictions, injunctions, suspension of licenses, fines and criminal penalties.

The holder of an E.U.

marketing authorization for a medicinal product must also comply with E.U.

marketing authorization for a medicinal product must also comply with E.U.

pharmacovigilance legislation and its related regulations and guidelines, which entail many requirements for conducting pharmacovigilance, or the assessment and monitoring of the safety of medicinal products.

These rules can impose on central marketing authorization holders for medicinal products the obligation to conduct a labor-intensive collection of data regarding the risks and benefits of marketed products and to engage in ongoing assessments of those risks and benefits, including the possible requirement to conduct additional clinical studies, which may be time consuming and expensive and could impact our profitability.

Non-compliance with such obligations can lead to the variation, suspension, or withdrawal of the marketing authorization for the product or imposition of financial penalties or other enforcement measures.

These pharmacovigilance rules can impose on central marketing authorization holders for medicinal products the obligation to conduct a labor-intensive collection of data regarding the risks and benefits of marketed products and to engage in ongoing assessments of those risks and benefits, including the possible requirement to conduct additional clinical studies or post-authorization safety studies to obtain further information on a medicine’s safety, or to measure the effectiveness of risk-management measures, which may be time consuming and expensive and could impact our profitability.

MA holders must establish and maintain a pharmacovigilance system and appoint an individual qualified person for pharmacovigilance, who is responsible for oversight of that system.

Key obligations include expedited reporting of suspected serious adverse reactions and submission of Periodic Safety Update Reports (PSURs) in relation to medicinal products for which they hold MAs.

The EMA reviews PSURs for medicinal products authorized through the centralized procedure.

If the EMA has concerns that the risk benefit profile of a product has varied, it can adopt an opinion advising that the existing MA for the product be suspended, withdrawn or varied.

The agency can advise that the MA holder be obliged to conduct post-authorization Phase IV safety studies.

If the EC agrees with the opinion, it can adopt a decision varying the existing MA.

Failure by the MA holder to fulfill the obligations for which the EC’s decision provides can undermine the ongoing validity of the MA.

More generally, non-compliance with pharmacovigilance obligations can lead to the variation, suspension or withdrawal of the marketing authorization for the product or imposition of financial penalties or other enforcement.

The manufacturing process for medicinal products in the E.U., is highly regulated:

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Manufacturing requires a manufacturing authorization, and the manufacturing authorization holder must comply with various requirements set out in the applicable E.U.

laws, regulations and guidance, including Directive 2001/83/EC, Directive 2003/94/EC, Regulation (EC) No 726/2004 and the European Commission Guidelines for Good Manufacturing Practice.

laws, regulations and guidance, including Directive 2001/83/EC, Directive 2003/94/EC, Regulation (EC) No 726/2004 and the European Commission Guidelines for Good Manufacturing Practice (GMP).

These requirements include compliance with E.U.

cGMP standards when manufacturing medicinal products and active pharmaceutical ingredients, including the manufacture of active pharmaceutical ingredients outside of the E.U.

GMP standards when manufacturing medicinal products and active pharmaceutical ingredients, including the manufacture of active pharmaceutical ingredients outside of the E.U.

with the intention to import the active pharmaceutical ingredients into the E.U.

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Member States.

We and our third-party manufacturers are subject to cGMP, which are extensive regulations governing manufacturing processes, stability testing, record keeping, and quality standards as defined by the EMA, the competent authorities of E.U.

Member States and other regulatory authorities.

The EMA reviews Periodic Safety Update Reports for medicinal products authorized in the E.U.

If the EMA has concerns that the risk benefit profile of a product has varied, it can adopt an opinion advising that the existing marketing authorization for the product be suspended or varied and can advise that the marketing authorization holder be obliged to conduct post-authorization safety studies.

The EMA opinion is submitted for approval by the European Commission.

Failure by the marketing authorization holder to fulfill the obligations for which the approved opinion provides can undermine the on-going validity of the marketing authorization.

The manufacturer or importer must have a qualified person who is responsible for certifying that each batch of product has been manufactured in accordance with GMP, before releasing the product for commercial distribution in the E.U.

or for use in a clinical trial.

Manufacturing facilities are subject to periodic inspections by the competent authorities for compliance with GMP.

Sales and Marketing Regulations

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In addition, other legislation adopted by individual E.U.

Member States may apply to the advertising and promotion of medicinal products.

These laws require that promotional materials and advertising in relation to medicinal products comply with the product’s Summary of Product Characteristics, or SmPC, as approved by the competent authorities.

Member States may apply to the advertising and promotion of medicinal products and may differ from one country to another.

These laws require that promotional materials and advertising in relation to medicinal products comply with the product’s Summary of Product Characteristics (SmPC) as approved by the competent authorities.

The SmPC is the document that provides information to physicians concerning the safe and effective use of the medicinal product.

It forms an intrinsic and integral part of the marketing authorization granted for the medicinal product.

Promotion of a medicinal product that does not comply with the SmPC is considered to constitute off-label promotion.

The off-label promotion of medicinal products is prohibited in the E.U.

The applicable laws at E.U.

level and in the individual E.U.

Member States also prohibit the direct-to-consumer advertising of prescription-only medicinal products.

All advertising and promotional activities for the product must be consistent with the approved SmPC and therefore all off-label promotion of medicinal products is prohibited.

Direct-to-consumer advertising of prescription-only medicinal products is also prohibited in the E.U.

Violations of the rules governing the promotion of medicinal products in the E.U.

could be penalized by administrative measures, fines and imprisonment.

These laws may further limit or restrict the advertising and promotion of our products to the general public and may also impose limitations on our promotional activities with health care professionals.

Anti-Corruption Legislation

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Interactions between pharmaceutical companies and physicians are also governed by strict laws, regulations, industry self-regulation codes of conduct and physicians’

codes of professional conduct developed at both E.U.

codes of professional conduct developed at both the E.U.

level and in the individual E.U.

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The provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of medicinal products is prohibited in the E.U.

The provision of benefits or advantages to physicians is also governed by the national anti-bribery laws of the E.U.

Member States.

Violation of these laws could result in substantial fines and imprisonment.

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Member States.

These requirements are provided in the national laws, industry codes or professional codes of conduct, applicable in the individual E.U.

Member States.

Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.

Data Privacy and Protection

Data protection laws and regulations have been adopted at E.U.

Data protection laws and regulations have been adopted at the E.U.

level, with related implementing laws in individual E.U.

Member States which impose significant compliance obligations.

For example, the E.U.

Data Protection Directive, as implemented into national laws by the E.U.

Member States, imposes strict obligations and restrictions on the ability to collect, analyze, and transfer personal data, including health data from clinical trials and adverse event reporting.

Furthermore, there is a growth towards the public disclosure of clinical trial data in the E.U.

has adopted a comprehensive overhaul of its data protection regime from an E.U.

Data Protection Directive with national legislative approaches to a single European Economic Area Privacy Regulation, the General Data Protection Regulation 2016/679/E.U.

(GDPR), which came into effect on May 25, 2018.

The GDPR extends the scope of the E.U.

data protection law to the processing of personal data carried out by companies not established in the E.U., where such processing relates to (a) the offering of goods or services to data subjects who are in the E.U., or (b) the monitoring of the behavior of data subjects who are in the E.U.

It imposes a strict data protection compliance regime with severe penalties of up to the greater of 4% of total worldwide annual turnover of the preceding financial year and €20 million, and it provides for new rights (such as the “right to be forgotten”

and “portability”

of personal data), obligations related to the implementation of appropriate security measures, personal data breach notification requirements, as well as restrictions on the processing of health data.

Member States may also impose additional requirements in relation to health, genetic and biometric data through their national implementing legislation.

Furthermore, there is a growth towards the public disclosure of clinical trial data in the E.U.

which also adds to the complexity of processing health data from clinical trials.

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Data protection authorities from the different E.U.

Member States may interpret the E.U.

Data Protection Directive and national laws differently, which adds to the complexity of processing personal data in the E.U., and guidance on implementation and compliance practices are often updated or otherwise revised.

Apart from exceptional circumstances, the E.U.

Data Protection Directive prohibits the transfer of personal data to countries outside of the European Economic Area that are not considered by the European Commission to provide an adequate level of data protection including the U.S.

Further, the E.U.

has recently adopted a comprehensive overhaul of its data protection regime from the current national legislative approach to a single European Economic Area Privacy Regulation, the General Data Protection Regulation 2016/679/EU (GDPR), which came into effect on May 25, 2018.

The GDPR extends the scope of the E.U.

data protection law to all foreign companies controlling, processing, and/or using data of E.U.

It imposes a strict data protection compliance regime with severe penalties of up to the greater of 4% of worldwide turnover and €20 million and includes new rights such as the “right to be forgotten”

and “portability”

of personal data, with more onerous requirements related to pseudo-anonymization and anonymization of personal data.

Further, the scope of “personal data”

has been expanded to include genetic data, and data concerning health and adverse event reporting from clinical trials.

Member States may interpret the GDPR differently, which adds to the complexity of processing personal data in the E.U., and guidance on implementation and compliance practices are often updated or otherwise revised.

In addition, the GDPR imposes specific restrictions on transfer of personal data to countries outside of the EEA that are not considered by the European Commission to provide an adequate level of data protection, which includes the U.S.

Appropriate safeguards are required to enable such transfers.

Among the appropriate safeguards that can be used, the data exporter may use standard contractual clauses (SCCs).

In this respect, recent legal developments in Europe have created complexity and compliance uncertainty regarding certain transfers of personal data from the EEA.

In particular, on July 16, 2020, the Court of Justice of the European Union (CJEU) invalidated the E.U.-U.S.

Privacy Shield Framework (the Privacy Shield) under which personal data could be transferred from the EEA to U.S.

entities who had self-certified under the Privacy Shield program.

While the CJEU upheld the adequacy of the SCCs as an adequate personal data transfer mechanism, it specified that their use must be assessed on a case-by-case basis.

When relying on SCCs, the data exporters are also required to conduct a transfer risk assessment to verify if anything in the law and/or practices of the destination country may impinge on the effectiveness of the SCCs in the context of the transfer at stake and, if so, to identify and adopt supplementary measures that are necessary to bring the level of protection of the data transferred to the E.U.

standard of essential equivalence.

Where no supplementary measure is suitable, the data exporter should avoid, suspend or terminate the transfer.

Since the UK formally left the E.U.

on January 31, 2020 (Brexit) and the transition period during which E.U.

laws continued to apply to the United Kingdom expired on December 31, 2020, E.U.

laws now only apply to the UK with respect to Northern Ireland, as laid out in the Protocol on Ireland and Northern Ireland.

and UK have concluded a trade and cooperation agreement (TCA), which entered into force on May 1, 2021.

The TCA includes provisions affecting the life sciences sector (including on customs and tariffs) but areas for further discussion between the E.U.

and UK remain.

In addition, there are some specific provisions concerning pharmaceuticals.

These include the mutual recognition of GMP, inspections of manufacturing facilities for medicinal products and GMP documents issued.

The TCA does not, however, contain wholesale mutual recognition of UK and E.U.

pharmaceutical regulations and product standards.

Since January 1, 2021, the E.U.

laws which have been transposed into UK law through secondary legislation continue to be applicable as “retained EU law.”

As there is no general power to amend these regulations, the UK government has adopted the Medicines and Medical Devices Act 2021 (MMDA), which seeks to address this regulatory gap through introducing regulation-making, delegated powers covering the fields of human medicines, clinical trials of human medicines, veterinary medicines and medical devices.

The purpose of the MMDA is to enable the existing regulatory frameworks to be updated, with the powers granted under it only exercisable in relation to four pieces of legislation:

the Human Medicines Regulations 2012, the Medicines for Human Use (Clinical Trials) Regulations 2004, the Medicines (Products for Human Use) Regulations 2016 and limited parts of the Medicines Act 1968 (specifically those parts which make provision related to pharmacies).

It is then further restricted to amending or updating only those provisions stated in the act, which include clinical trials.

Specified provisions of the MMDA entered into force on February 11, 2021 when the legislation formally became law.

The remaining provisions came into effect within two months of February 11, 2021 or will come into effect otherwise as stipulated in subsequent statutory instruments.

On September 22, 2022, the Retained EU Law (Revocation and Reform) Bill was introduced to the UK Parliament.

It is not clear if the Bill will come into effect but, if passed in its current form, it would automatically revoke most retained E.U.

law at the end of 2023 as part of a “sunset clause.”

This would not apply to retained EU law that was domestic primary legislation.

The possibility of an automatic withdrawal of a multiplicity of retained EU law provisions could create significant legislative uncertainty and could have a negative impact on our business operations.

Additionally, following Brexit, companies also have to comply with the UK’s data protection laws, including the UK GDPR, which is based on the GDPR.

Privacy and Security of Health Information and Personal Information;

Standard Transactions

We are subject to state and federal laws and implementing regulations relating to the privacy and security of the medical information of the patients it treats.

The principal federal legislation is part of HIPAA.

Pursuant to HIPAA, the Secretary of the Department of Health and Human Services, or HHS, has issued final regulations designed to improve the efficiency and effectiveness of the healthcare system by facilitating the electronic exchange of information in certain financial and administrative transactions, while protecting the privacy and security of the patient information exchanged.

International regulations (such as the current Directive 95/46/EC and the GDPR and their implementing regulations) also provide privacy protection to clinical trial participants of their personal health care information.

We take appropriate steps to protect the privacy of our clinical study participants.

We are subject to state and federal laws and implementing regulations relating to the privacy and security of the medical information of the patients we treat.

The principal federal legislation is the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 

(collectively,  HIPAA).

Pursuant to HIPAA, the Secretary of the Department of Health and Human Services (HHS), has issued final regulations designed to improve the efficiency and effectiveness of the healthcare system by facilitating the electronic exchange of information in certain financial and administrative transactions, while protecting the privacy and security of the patient information exchanged.

State statutes and regulations also regulate the privacy and security of patients’

medical information, and these laws vary from state to state, are sometimes contradictory with one another, and are often more restrictive than HIPAA.

International regulations (such as the GDPR and UK GDPR) also provide privacy protection to clinical trial participants of their personal health care information.

We intend to take appropriate steps to protect the privacy of our clinical study participants.

However, the documentation and process requirements of applicable privacy and security regulations are complex and subject to interpretation.

Failure to comply with applicable privacy and security regulations could subject us to sanctions or penalties, loss of business and negative publicity.

Federal and State Fraud and Abuse Laws

The federal healthcare Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce referrals or in return for purchasing, leasing, ordering, or arranging for the purchase, lease, or order of any healthcare item or service reimbursable under a governmental payor program.

The federal healthcare Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce referrals or in return for purchasing, leasing, ordering, or arranging for the purchase, lease, or order of any healthcare item or service reimbursable under a governmental payor program.

The definition of “remuneration”

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Although full compliance with these provisions ensures against prosecution under the federal Anti-Kickback Statute, the failure of a transaction or arrangement to fit within a specific safe harbor does not necessarily mean that the transaction or arrangement is illegal or that prosecution under the federal Anti-Kickback Statute will be pursued.

From time to time, the Office of Inspector General, or OIG, issues alerts and other guidance on certain practices in the healthcare industry.

From time to time, the Office of Inspector General, (OIG), issues alerts and other guidance on certain practices in the healthcare industry.

In October 1994, the OIG issued a Special Fraud Alert on arrangements for the provision of clinical laboratory services.

The Fraud Alert set forth a number of practices allegedly engaged in by some clinical laboratories and healthcare providers that raise issues under the “fraud and abuse”

The Special Fraud Alert set forth a number of practices allegedly engaged in by some clinical laboratories and healthcare providers that raise issues under the “fraud and abuse”

laws, including the Anti-Kickback Statute.

Compliance Program

Compliance with government rules and regulations is a significant concern throughout the industry, in part due to evolving interpretations of these rules and regulations.

Other Healthcare Laws

Our products are subject to various other healthcare-related laws regulating fraud and abuse, R&D, pricing, sales and marketing practices, and the privacy and security of health information.

Among other things, these laws and others generally (a) prohibit the provision of anything of value in exchange for the referral of patients or for the purchase, order, or recommendation of any item or service reimbursed by a federal healthcare program, including Medicare and Medicaid;

(b) require that claims for payment submitted to federal healthcare programs be truthful;

and (c) require the maintenance of certain government licenses and permits.

Specific health-care laws and regulations that we are subject to include:

the federal Physician Self-Referral Law, which prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, and prohibits the entity from presenting or causing to be presented claims to Medicare for those referred services;

the federal civil and criminal false claims laws, including the False Claims Act (“FCA”), which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other federal healthcare programs that are false or fraudulent.

Moreover, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA;

the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier;

the federal Physician Payments Sunshine Act which requires certain applicable manufacturers of drugs, devices, biologics and medical supplies for which payment is available under certain federal healthcare programs, to monitor and report to CMS, certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors);

certain other healthcare providers, including physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, certified nurse-midwives, and teaching hospitals;

as well as ownership and investment interests held by physicians and their immediate family members;

federal consumer protection and unfair competition laws, which broadly regulate marketplace activities that potentially harm customers;

state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to item or services reimbursed by any third-party payor, including commercial insurers;

state laws requiring device companies to comply with specific compliance standards, restrict payments made to healthcare providers and other potential referral sources, and report information related to payments and other transfers of value to healthcare providers or marketing expenditures and state laws related to insurance fraud in the case of claims involving private insurers.

Compliance 

Compliance with government rules and regulations is a significant concern throughout the industry, in part due to evolving interpretations of these rules and regulations.

We seek to conduct our business in compliance with all statutes and regulations applicable to our operations.

To this end, we have established a compliance program that reviews for regulatory compliance procedures, policies, and facilities throughout our business.

Failure to comply with applicable requirements may subject us to administrative or judicial sanctions, such as clinical holds, refusal of regulatory authorities to approve or authorize pending product applications, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, monetary penalties, injunctions and/or criminal prosecution.

As of the date of filing this report, we employ two executive officers, four full-time employees and two part-time employees.

As of the date of filing this Annual Report, we employ two executive officers and nine full-time employees.

We expect that we will hire more employees as we develop our current and future programs. 

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The principal purposes of our equity and bonus plans are to attract, retain and motivate personnel through the granting of stock-based and cash-based compensation awards, to align our interests and the interests of our stockholders with those of our employees and consultants.

Our compensation committee approves associated merit increases and annual incentive bonus payments during the first quarter annually.

The Compensation Committee of our Board of Directors approves associated merit increases and annual incentive bonus payments to our executives during the first quarter annually.

When needed, we augment our employee base with outside consultants who specialize in various fields.

On March 29, 2021, the Board of Directors approved an amendment to the 2020 Stock Incentive Plan to increase the plan by 15 million shares.

This amendment was approved by the stockholders on May 14, 2021.  

Executive officers

Information about our Executive Officers

The names of our executive officers and their ages as of December 31, 2022, are as follows:

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Quay, M.D., Ph.D.

Quay has served as Chief Executive Officer, President and Chairman of the Board of Directors of the Company since the Company was incorporated in April 2009.

Quay is certified in Anatomic Pathology with the American Board of Pathology and completed both an internship and residency in anatomic pathology at Massachusetts General Hospital, a Harvard Medical School teaching hospital.

He is a former faculty member of the Department of Pathology, Stanford University School of Medicine.

Quay is an inventor, with 87 U.S.

patents, 139 pending patent applications and is a named inventor on patents covering five pharmaceutical products that have been approved by the U.S.

Quay has served as Chief Executive Officer, President and Chairman of the Board of Directors of the Company since the Company was incorporated in April 2009.

Quay is certified in Anatomic Pathology with the American Board of Pathology, completed both an internship and residency in anatomic pathology at Massachusetts General Hospital, a Harvard Medical School teaching hospital, and is a former faculty member of the Department of Pathology, Stanford University School of Medicine.

Quay is a named inventor on 89 U.S.

patents, 810 published international patent applications, and is named inventor on patents covering seven pharmaceutical products that have been approved by the U.S.

Food and Drug Administration.

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in 1977 and a Ph.D.

in 1975 from the University of Michigan Medical School.

He also received his B.A.

in 1975 from the University of Michigan.

He received his B.A.

degree in biology, chemistry and mathematics from Western Michigan University in 1971.

He was selected to serve on the Company’s Board of Directors because of his role as a founder of the Company, as well as his qualifications as a physician and the principal researcher overseeing the research, preclinical, clinical and regulatory development of the Company’s pharmaceutical programs.

Kyle Guse, Esq., CPA (inactive).

  Mr.

Guse has served as Chief Financial Officer, General Counsel and Secretary since January 2013.

Guse has served as Chief Financial Officer, General Counsel and Secretary of the Company since January 2013.

His experience includes more than 25 years of counseling life sciences and other rapid growth companies through all aspects of finance, corporate governance, securities laws and commercialization.

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from Santa Clara University School of Law.

We currently maintain director’s and officer’s insurance, key-man life insurance for our Chief Executive Officer, commercial general and office premises liability insurance, insurance on our clinical studies, and product errors and omissions liability insurance for our products and services.

Research and Development Phase

We are in the research and development phase and are not currently marketing any products or services.

We do not anticipate generating revenue unless and until we develop and launch our pharmaceutical programs.

We currently maintain director’s and officer’s insurance, commercial general and office premises liability insurance, insurance on our clinical studies, and product errors and omissions liability insurance for our products.

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What changed 10-K

Item 1. Business