SOURCE: Atossa Genetics, Inc.

Atossa Genetics, Inc.

November 12, 2015 16:01 ET

Atossa Genetics Announces Third Quarter 2015 Financial Results and Provides Company Update

Conference Call to Be Held Today at 4:30 pm Eastern Time

SEATTLE, WA--(Marketwired - Nov 12, 2015) - Atossa Genetics, Inc. (NASDAQ: ATOS) today announced third quarter 2015 financial results and provided an update on recent company developments. 

Dr. Steven C. Quay, Chairman, CEO & President, commented, "We are very pleased with our ongoing progress in establishing our two Phase II pharmaceutical clinical programs, topical Afimoxifene Gel and intraductal Fulvestrant, both of which have extensive patent portfolios. Today we are announcing that the National Cancer Institute has approved protocol development for a study to be funded by them using Afimoxifene Gel in their Cancer Prevention Clinical Trials Program. With respect to intraductal Fulvestrant, we are on track to commence the study in women with ductal carcinoma in situ, or DCIS, during December 2015."

Dr. Quay added, "We are taking a number of steps to address recent adverse changes in Medicare reimbursement for our pharmacogenomics test and to improve our pharmacogenomics test revenue, including the recent addition of additional sales personnel, targeting conditions and drugs that provide a higher rate of reimbursement, and enhancing sales incentives to drive sales volume."

Concluding, Dr. Quay commented, "We have much to look forward to in the last quarter of 2015 and into 2016. Our Phase II pharmaceutical development programs are expected to produce a number of value-creating milestones over the next six months for our shareholders."

Recent Corporate Developments 

Important recent corporate developments include the following:

  • Announced today that the National Cancer Institute, Division of Cancer Prevention, has approved a Letter of Intent submitted by a member of the Consortia for Cancer Prevention Clinical Trials Program for the study of Afimoxifene Gel in women with DCIS. The Consortia includes five major medical research centers: the University of Arizona, Northwestern University, Mayo Clinic Foundation, M. D. Anderson Cancer Center and the University of Wisconsin.
  • Held an advisory meeting in San Francisco with leading breast surgeons and oncologists and received advice on the clinical pathway and commercial opportunities for Afimoxifene Gel.
  • Announced FDA acceptance of our Investigational New Drug Application to begin a Phase II clinical trial of Fulvestrant for the potential treatment of DCIS and cancer using Atossa's patented intraductal microcatheter and patented methods of delivering pharmaceuticals.
  • Filed an application with the American Medical Association for a CPT code for the collection of nipple aspirate fluid at a doctor's office.
  • Signed manufacturing and quality agreements with AAIPharma Services Corp. / Cambridge Major Laboratories, Inc. (AAI/CML) for the manufacturing of a clinical supply for 4-Hydroxytamoxifen, the active pharmaceutical ingredient in Afimoxifene Gel. 
  • Received approval to begin a clinical study in Israel to evaluate Atossa's ForeCYTE breast aspirator in the collection of nipple aspirate fluid.
  • Hired Janet Rose Rea, M.S.P.H. as VP Regulatory Affairs and Quality.
  • Atossa Genetics' laboratory received ISO 15189:2012 certification.
  • Promoted Scott Youmans to Chief Operating Officer.

Third Quarter 2015 Financial Results  

For the three months and nine months ended September 30, 2015, we had total net revenue of $772,244 and $5,339,669, respectively, consisting of pharmacogenomics testing, compared to $3,426 and $37,425 of revenue in the same periods in 2014, which consisted of additional cash collections on NAF cytology tests performed in 2013. Our pharmacogenomics test was launched in the fourth quarter of 2014 and we did not generate revenue in 2014 prior to that. In March 2015, we introduced the FullCYTE Breast Aspirator in the U.S. and the ForeCYTE Breast Aspirator in the EU; however, we have not generated any revenue in 2015 from sales of these products.

For the three months and nine months ended September 30, 2015, gross profit totaled $458,838 and $1,963,598, respectively, which was attributable to pharmacogenomics testing, compared to $3,426 and $37,425, in the same period in 2014. Total cost of revenue for the three months and nine months ended September 30, 2015 was $313,406 and $3,376,071, respectively, consisting of costs relating to pharmacogenomics testing services; there was no cost of revenue during the same periods in 2014 as the only revenue generated during those periods was from additional cash collections on NAF cytology tests performed in 2013.

For the three months ended September 30, 2015, total operating expenses were $4,846,294, consisting of general and administrative (G&A) expenses of $3,017,909, research and development (R&D) expenses of $1,090,349, and selling expenses of $738,036, representing an increase of $1,597,613, or 49% from $3,248,681 in the same period in 2014, consisting of G&A expenses of $2,043,138, R&D expenses of $923,169, and selling expenses of $282,374. Operating expenses for the nine months ended September 30, 2015 were $12,828,874 consisting of G&A expenses of $8,413,891, R&D expenses of $2,398,032, and selling expenses of $2,016,951. Operating expenses increased $3,948,736, or 44% from $8,880,138 for the same period in 2014 consisting of $6,280,102 in G&A expenses, $1,856,439 in R&D expenses, and $743,597 in selling expenses.

The increase in selling expenses is mainly due to increases in compensation expenses, travel, and advertisement as a result of the ForeCYTE and FullCYTE launch in Europe and the United States. We expect that our selling expenses will continue to increase during 2015, as we build a sales force in the United States to support primarily the services offered by the NRLBH, pharmacogenomics tests and potentially other tests.

G&A expenses consist primarily of personnel and related benefit costs, facilities, professional services, insurance, and public company related expenses. The increase in G&A expenses is mainly due to an increase in compensation expenses, professional fees, and recruiting fees as we increased our headcount to support the launch of our new products. The increase also reflects an increase in bad debt expenses as a result of significant increases in revenue and also higher than expected denials on non-Medicare appeals from prior periods.

We expect our G&A and selling expenses to continue to grow throughout 2015 as we hire additional administrative and manufacturing personnel to support the increased sales and operating activities as we promote, market and sell our pharmacogenomics testing and our other products and services under development.

The increase in R&D expenses is attributed to additional R&D expenditures on the launch and development of ForeCYTE and FullCYTE in the first quarter of 2015. We expect that our R&D expenditures will continue to grow as we develop our new products and tests in the pipeline, including Afimoxifene Gel, our intraductal microcatheters and our NextCYTE test and other laboratory tests we may develop. We will add additional full-time employees and incur additional costs to continue the development of our products and services under development, including the development of our potential pharmaceuticals and conducting clinical studies.

Conference Call Information

Management will host a conference call on Thursday, November 12, 2015 at 4:30 pm eastern time to review financial results and corporate highlights. Following management's formal remarks, there will be a question and answer session.

To listen to the call by phone, interested parties within the U.S. should call 1-866-652-5200 and International callers should call 1-412-317-6060. All callers should ask for the Atossa Genetics conference call. The conference call will also be available through a live webcast at www.atossagenetics.com. Details for the webcast may be found on the Company's IR events page at http://ir.atossagenetics.com/ir-calendar.

A replay of the call will be available approximately one hour after the end of the call through December 12, 2015. The replay can be accessed via Atossa's website or by dialing 877-344-7529 (domestic) or 412-317-0088 (international) or Canada Toll Free at 855-669-9658. The replay conference ID number is 10075755.

About Atossa Genetics

Atossa Genetics, Inc. is focused on improving breast health through the development of pharmaceuticals to treat breast health conditions and through the commercialization of medical devices and laboratory services. The laboratory services are being developed by its subsidiary, The National Reference Laboratory for Breast Health Inc. The laboratory's services and the Company's medical devices are being developed so they can be used as companions to therapeutics to treat various breast health conditions. For more information, please visit www.atossagenetics.com.

Forward-Looking Statements

Forward-looking statements in this press release are subject to risks and uncertainties that may cause actual results to differ materially from the anticipated or estimated future results, including the risks and uncertainties associated with actions by the FDA, the outcome or timing of regulatory approvals needed by Atossa to sell its products, responses to regulatory matters, including recalls of products, Atossa's ability to achieve its objectives, successfully complete clinical studies, continue to manufacture and sell its products, and the safety and efficacy of Atossa's products and services, performance of distributors, whether Atossa can launch and commercialize in the United States and foreign markets the additional tests, devices and therapeutics in its pipeline in a timely and cost effective manner, and other risks detailed from time to time in Atossa's filings with the Securities and Exchange Commission, including without limitation its periodic reports on Form 10-K and 10-Q, each as amended and supplemented from time to time. Atossa does not undertake any obligation to update any forward-looking statement.

   
   
ATOSSA GENETICS INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
   
    September 30,     December 31,  
    2015     2014  
    (Unaudited)        
Assets                
                 
Current assets                
  Cash and cash equivalents   $ 7,839,439     $ 8,500,718  
  Restricted cash     275,000       -  
  Accounts receivable, net     1,055,059       297,958  
  Prepaid expenses     201,652       247,207  
  Inventory, net     170,860       39,788  
    Total current assets     9,542,010       9,085,671  
                   
  Furniture and equipment, net     484,544       357,532  
  Intangible assets, net     1,768,812       1,920,645  
  Deferred financing costs     509,375       351,961  
  Other assets     52,649       48,193  
    Total assets   $ 12,357,390     $ 11,764,002  
                 
Liabilities and Stockholders' Equity                
                 
Current liabilities                
  Accounts payable   $ 1,179,329     $ 594,357  
  Accrued expenses     934,675       444,861  
  Payroll liabilities     1,156,000       1,056,705  
  Short-term lease obligations     -       76,025  
  Other current liabilities     22,601       42,228  
    Total current liabilities     3,292,605       2,214,176  
                   
  Deferred rent     5,688       2,483  
  Long-term lease obligations     -       49,216  
    Total liabilities     3,298,293       2,265,875  
                 
                 
Stockholders' equity                
  Preferred stock - $.001 par value; 10,000,000 shares authorized, 0 shares issued and outstanding     -       -  
  Common stock - $.001 par value; 75,000,000 shares authorized, 30,446,260 and 24,564,058 shares issued and outstanding     30,446       24,564  
  Additional paid-in capital     55,001,918       44,648,103  
  Accumulated deficit     (45,973,267 )     (35,174,540 )
    Total stockholders' equity     9,059,097       9,498,127  
                 
  Total liabilities and stockholders' equity   $ 12,357,390     $ 11,764,002  
   
   
   
ATOSSA GENETICS INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(UNAUDITED)  
   
    For the Three Months Ended
September 30,
    For The Nine Months Ended
September 30,
 
    2015     2014     2015     2014  
Net revenue   $ 772,244     $ 3,426     $ 5,339,669     $ 37,425  
Cost of revenue     313,406       -       3,376,071       -  
    Gross profit     458,838       3,426       1,963,598       37,425  
Operating expenses:                                
  Selling     738,036       282,374       2,016,951       743,597  
  Research and development     1,090,349       923,169       2,398,032       1,856,439  
  General and administrative     3,017,909       2,043,138       8,413,891       6,280,102  
    Total operating expenses     4,846,294       3,248,681       12,828,874       8,880,138  
Operating loss     (4,387,456 )     (3,245,255 )     (10,865,276 )     (8,842,713 )
Other income (expense)     69,345       (140 )     66,549       (2,189 )
Loss before income taxes     (4,318,111 )     (3,245,395 )     (10,798,727 )     (8,844,902 )
Income taxes     -       -       -       -  
Net loss   $ (4,318,111 )   $ (3,245,395 )   $ (10,798,727 )   $ (8,844,902 )
Loss per common share - basic and diluted   $ (0.15 )   $ (0.13 )   $ (0.39 )   $ (0.37 )
Weighted average shares outstanding, basic & diluted     28,766,012       24,537,379       27,500,855       23,860,843  

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