SEC Filing | Atea Pharmaceuticals, Inc.

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2022


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

For the transition period from _______________ to _______________

Commission File Number: 001-39661

ATEA PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	46-0574869
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
225 Franklin Street, Suite 2100 Boston, MA	02110
(Address of principal executive offices)	(Zip Code)

(857) 284-8891

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

AVIR

The Nasdaq Global Select Market

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

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

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

As of November 4, 2022, the registrant had 83,287,639 shares of common stock, $0.001 par value per share, outstanding.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, our clinical results and other future conditions. The words “aim,” “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” "on track," “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” or the negative of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking statements include, among other things, statements about:

•

our expectations relating to clinical trials for our product candidates, including projected costs, study designs or the timing for initiation, recruitment, completion, or reporting top-line data;

•

the potential therapeutic benefits of our product candidates and the potential indications and market opportunities therefor;

•

the potential of bemnifosbuvir to retain antiviral activity against circulating COVID-19 variants of concern and to treat COVID-19;

•

the safety profile and related adverse events of our product candidates;

•

our plans to research, develop and commercialize our current and future product candidates;

•

the potential benefits of any future collaboration we may enter into;

•

the timing of and our ability to obtain and maintain regulatory approvals for our product candidates;

•

the rate and degree of market acceptance and clinical utility of any products for which we may receive marketing approval;

•

our commercialization, marketing and manufacturing capabilities and strategy;

•

our estimates regarding future revenue, expenses and results of operations;

•

the progress of, timing of and amount of expenses associated with our research, development and commercialization activities;

•

our future financial position, capital requirements, needs for additional financing and the availability of such financing;

•

our business strategy;

•

developments relating to our competitors, competing treatments and vaccines and our industry;

•

our expectations regarding federal, state and foreign laws and regulations;

•

our ability to attract, motivate, and retain key personnel; and

•

the impact of COVID-19 on our business, including in particular the impact on our preclinical studies and clinical trials.

These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that may cause actual results to differ materially from current expectations include the initiation, execution and completion of clinical trials, uncertainties surrounding the timing of availability of data from our clinical trials, ongoing discussions with and actions by regulatory authorities, our development activities and those other factors we discuss in Part II, Item 1A. “Risk Factors.” You should read these Risk Factors and the other cautionary statements made in this report as being applicable to all related forward-looking statements wherever they appear in this report. The Risk Factors are not exhaustive and other sections of this report may include additional factors which could adversely impact our business and financial performance. Given these uncertainties, you should not rely on these forward-looking statements as predictions of future events. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

As used in this Quarterly Report on Form 10-Q, unless otherwise specified or the context otherwise requires, the terms “we,” “our,” “us,” and the “Company” refer to Atea Pharmaceuticals, Inc. and its subsidiary. All brand names or trademarks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

SUMMARY RISK FACTORS

Our business is subject to numerous risks and uncertainties, including those described in Part I, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. The principal risks and uncertainties affecting our business include the following:

•

There is significant uncertainty around our development of bemnifosbuvir as a potential treatment for COVID-19.

•

We are highly dependent on our management, directors and other key personnel.

•

We may expend resources in anticipation of potential clinical trials and commercialization of bemnifosbuvir, which we may not be able to recover if bemnifosbuvir is not approved for the treatment of COVID-19, we are not successful at commercializing bemnifosbuvir or bemnifosbuvir is rendered inferior or obsolete due to rapid changes in COVID -19 epidemiology as a result of the emergence of new SARS-CoV-2 variants or subvariants.

•

The market for new therapeutics for the treatment of COVID-19 may be reduced, perhaps significantly, if vaccines and current therapeutics remain effective in minimizing serious consequences of the disease.

•

Bemnifosbuvir will face significant competition from other treatments for COVID-19 that are currently marketed or are in development.

•

The COVID-19 pandemic and future variant fueled pandemic surges may materially and adversely affect our business opportunities, clinical trials and financial results.

•

We have a limited operating history and no organizational history of successfully developing or commercializing any approved antiviral products, which may make it difficult to evaluate the success of our business to date and to assess the prospects for our future viability.

•

We have incurred significant operating expenses since inception. We expect our expenditures will increase for the foreseeable future. We have no products that have generated any commercial revenue and we may never achieve or maintain profitability.

•

We will require substantial additional financing, which may not be available on acceptable terms, or at all. A failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or commercialization efforts.

•

Our ability to use our net operating loss carryforwards and other tax attributes to offset taxable income may be subject to certain limitations.

•

Our business is highly dependent on the success of our most advanced product candidates, including bemnifosbuvir. If we fail to successfully develop bemnifosbuvir for the treatment of COVID-19 or if our other product candidates for the treatment of hepatitis C ("HCV") or dengue fail in nonclinical or clinical development, or we are unable to obtain regulatory approval or successfully commercialize any of our product candidates, or are significantly delayed in doing so, our business will be harmed.

•

The regulatory approval processes of the U.S. Food and Drug Administration (“FDA”) and comparable foreign regulatory authorities are lengthy, expensive, time-consuming, and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates, we will be unable to generate product revenue and our business will be seriously harmed. Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain and may prevent us, or any future collaboration partners from obtaining approvals for and/or commercializing any product candidate we develop.

•

Clinical development, including enrollment of patients in clinical trials, is an expensive, lengthy and uncertain process. We may encounter substantial delays and costs in our clinical trials, or may not be able to conduct or complete our clinical trials on the timelines we expect, if at all.

•

We intend to develop certain of our product candidates in combination with other therapies, which exposes us to additional risks.

•

Our product candidates may be associated with serious adverse events, undesirable side effects or have other properties that could halt their clinical development, prevent their regulatory approval, limit their commercial potential or result in significant negative consequences.

•

We currently conduct clinical trials, and may in the future choose to conduct additional clinical trials, of our product candidates in sites outside the United States, and the FDA may not accept data from trials conducted in foreign locations.

•

Interim, topline and preliminary data from our clinical trials that we announce or publish from time to time may change as more data become available and are subject to audit and verification procedures that could result in material changes in the final data.

•

We may not be successful in our efforts to identify and successfully develop additional product candidates.

•

Risks related to healthcare laws and other legal compliance matters may materially and adversely affect our business and financial results.

•

Risks related to commercialization may materially and adversely affect our business and financial results.

•

Risks related to manufacturing and our dependence on third parties may materially and adversely affect our business and financial results.

•

Risks related to intellectual property may materially and adversely affect our business and financial results, including if we are unable to obtain, maintain, enforce and adequately protect our intellectual property rights with respect to our technology and product candidates, or if the scope of the patent or other intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully develop and commercialize our technology and product candidates may be adversely affected.

•

We have only a limited number of employees which may be inadequate to manage and operate our business.

•

Our business and operations may suffer in the event of system failures, deficiencies or intrusions which could materially affect our results.

•

We will need to expand our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.

•

We may engage in acquisitions or strategic partnerships that could disrupt our business, cause dilution to our stockholders, reduce our financial resources, cause us to incur debt or assume contingent liabilities, and subject us to other risks.

•

We or the third parties upon whom we depend may be adversely affected by natural disasters or other unforeseen events resulting in business interruptions and our business continuity and disaster recovery plans may not adequately protect us from such business interruptions.

•

Litigation against us could be costly and time-consuming to defend and could result in additional liabilities.

•

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.

•

Risks related to our common stock may materially and adversely affect our stock price.

•

If we fail to maintain effective internal control over financial reporting and effective disclosure controls and procedures, we may not be able to accurately report our financial results in a timely manner or prevent fraud, which may adversely affect investor confidence in our company.

•

If our information systems, or those maintained on our behalf, fail or suffer security breaches, such events could result in, without limitation, the following: a significant disruption of our product development programs; an inability to operate our business effectively; unauthorized access to or disclosure of the personal information we process; and other adverse effects on our business, financial condition, results of operations and prospects.

•

We could be subject to securities class action litigation.

iii

Table of Contents


		Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		i
SUMMARY RISK FACTORS		ii

PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24

PART II.	OTHER INFORMATION	25
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	88
Item 5.	Other Information	88
Item 6.	Exhibits	89
SIGNATURES		90

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ATEA PHARMACEUTICALS, INC. and Subsidiary

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(Unaudited)


	September 30, 2022			December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	176,410		$	764,375
Marketable securities		488,565			—
Accounts receivable		4,514			—
Prepaid expenses and other current assets		12,446			8,028
Total current assets		681,935			772,403
Property and equipment, net		1,810			23
Restricted cash		305			305
Operating lease right-of-use assets, net		2,526			161
Total assets	$	686,576		$	772,892
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	1,118		$	4,534
Accrued expenses and other current liabilities		13,805			52,152
Current portion of operating lease liabilities		711			197
Total current liabilities		15,634			56,883
Operating lease liabilities		2,585			—
Income taxes payable		5,170			5,932
Total liabilities		23,389			62,815
Commitments and contingencies (see Note 12)
Stockholders’ equity:
Preferred stock, $0.001 par value per share; 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2022, and December 31, 2021		—			—
Common stock, $0.001 par value; 300,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 83,287,639 and 83,102,730 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		83			83
Additional paid-in capital		689,407			653,964
Accumulated other comprehensive loss		(855	)		—
Retained earnings (accumulated deficit)		(25,448	)		56,030
Total stockholders’ equity		663,187			710,077
Total liabilities and stockholders’ equity	$	686,576		$	772,892

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

ATEA PHARMACEUTICALS, INC. and Subsidiary

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Collaboration revenue	$	—		$	32,811		$	—		$	159,187
Operating expenses
Research and development		4,905			43,019			54,396			109,394
General and administrative		11,376			11,939			36,355			32,597
Total operating expenses		16,281			54,958			90,751			141,991
Income (loss) from operations		(16,281	)		(22,147	)		(90,751	)		17,196
Interest income and other, net		4,382			53			5,560			162
Income (loss) before income taxes		(11,899	)		(22,094	)		(85,191	)		17,358
Income tax benefit (expense)		3,833			(6,100	)		3,713			(13,300	)
Net income (loss)	$	(8,066	)	$	(28,194	)	$	(81,478	)	$	4,058
Other comprehensive income (loss)
Unrealized gains (losses) on available-for-sale investments	$	(855	)	$	—		$	(855	)	$	—
Comprehensive income (loss)	$	(8,921	)	$	(28,194	)	$	(82,333	)	$	4,058
Net income (loss) per share attributable to common stockholders
Basic	$	(0.10	)	$	(0.34	)	$	(0.98	)	$	0.05
Diluted	$	(0.10	)	$	(0.34	)	$	(0.98	)	$	0.05
Weighted-average common shares outstanding
Basic		83,258,537			82,815,636			83,231,146			82,727,268
Diluted		83,258,537			82,815,636			83,231,146			88,462,074

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

ATEA PHARMACEUTICALS, INC. and Subsidiary

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)


	Common Stock				Additional Paid-in		Other			Retained Earnings			Total Stockholders’
	Shares		Amount		Capital		Comprehensive Loss			(Accumulated Deficit)			Equity
Balance—December 31, 2021		83,102,730	$	83	$	653,964	$	—		$	56,030		$	710,077
Issuance of common stock upon exercise of stock options		154,861		—		223		—			—			223
Stock-based compensation expense		—		—		11,661		—			—			11,661
Net income (loss)		—		—		—		—			(42,077	)		(42,077	)
Balance—March 31, 2022		83,257,591		83		665,848		—			13,953			679,884
Issuance of common stock upon exercise of stock options		—		—		—		—			—			—
Stock-based compensation expense		—		—		11,908		—			—			11,908
Net income (loss)		—		—		—		—			(31,335	)		(31,335	)
Balance—June 30, 2022		83,257,591		83		677,756		—			(17,382	)		660,457
Issuance of common stock upon exercise of stock options		1,012		—		7		—			—			7
Issuance of common stock under ESPP		29,036		—		140		—			—			140
Stock-based compensation expense		—		—		11,504		—			—			11,504
Other comprehensive loss		—		—		—		(855	)		—			(855	)
Net income (loss)		—		—		—		—			(8,066	)		(8,066	)
Balance—September 30, 2022		83,287,639	$	83	$	689,407	$	(855	)	$	(25,448	)	$	663,187


	Common Stock				Additional Paid-in		Other		Accumulated			Total Stockholders’
	Shares		Amount		Capital		Comprehensive Loss		Deficit			Equity
Balance—December 31, 2020		82,436,937	$	82	$	612,879	$	—	$	(65,160	)	$	547,801
Issuance of common stock upon exercise of stock options		300,000		1		470		—		—			471
Stock-based compensation expense		—		—		7,273		—		—			7,273
Net income (loss)		—		—				—		30,713			30,713
Balance—March 31, 2021		82,736,937		83		620,622		—		(34,447	)		586,258
Issuance of common stock upon exercise of stock options		40,000		—		57		—		—			57
Stock-based compensation expense		—		—		10,007		—		—			10,007
Net income (loss)		—		—		—		—		1,539			1,539
Balance—June 30, 2021		82,776,937		83		630,686		—		(32,908	)		597,861
Issuance of common stock upon exercise of stock options		270,142		—		795		—		—			795
Stock-based compensation expense		—		—		10,990		—		—			10,990
Net income (loss)		—		—		—		—		(28,194	)		(28,194	)
Balance—September 30, 2021		83,047,079	$	83	$	642,471	$	—	$	(61,102	)	$	581,452

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

ATEA PHARMACEUTICALS, INC. and Subsidiary

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2022			2021
Cash flows from operating activities
Net income (loss)	$	(81,478	)	$	4,058
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation expense		35,073			28,270
Depreciation and amortization expense		156			22
Accretion of premium and discounts on marketable securities		(2,465	)		—
Changes in operating assets and liabilities:
Accounts receivable		(4,514	)		—
Prepaid expenses and other current assets		(4,484	)		4,259
Other assets		—			(227	)
Accounts payable		(3,416	)		27,945
Accrued expenses and other liabilities		(39,109	)		33,278
Deferred revenue		—			(109,187	)
Operating lease liabilities		800			—
Net cash used in operating activities		(99,437	)		(11,582	)
Cash flows from investing activities
Additions to property and equipment		(1,943	)		—
Purchases of marketable securities		(486,955	)		—
Net cash used in investing activities		(488,898	)		—
Cash flows from financing activities
Cash flows from financing activities
Proceeds from issuance of common stock for exercise of stock options		230			1,323
Proceeds from issuance of common stock under ESPP		140			—
Net cash provided by financing activities		370			1,323
Net decrease in cash, cash equivalents and restricted cash		(587,965	)		(10,259	)
Cash, cash equivalents and restricted cash at the beginning of period		764,680			850,224
Cash, cash equivalents and restricted cash at the end of period	$	176,715		$	839,965