On March 08, 2018 Atossa Genetics Inc. (NASDAQ:ATOS), a clinical-stage pharmaceutical company developing novel therapeutics and delivery methods for breast cancer and other breast conditions, reported 2017 financial results and provides a Company update (Press release, Atossa Genetics, MAR 8, 2018, View Source [SID1234524553]).

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Dr. Steve Quay, President and CEO, commented, "In the later part of 2017, we completed a Phase 1 Study of our proprietary oral and topical Endoxifen formulations, and we were pleased to report that all study objectives were met. We are now looking forward to opening enrollment in two Phase 2 studies. One will use our oral Endoxifen to treat breast cancer patients who are not responding to tamoxifen. Tamoxifen is the current FDA-approved standard of care for the approximately one million breast cancer survivors to prevent a recurrence and new cancer. The second study will use our topical Endoxifen to determine if it can reduce a condition called mammographic breast density, or MBD. Mammographic Breast Density is an independent risk factor for developing breast cancer. It affects approximately 10 million women in the U.S. We are also planning to commence an additional study with topical Endoxifen as well as a study using our intraductal microcatheters to deliver CAR-T or other immunotherapy," continued Dr. Quay.

Recent Developments

Atossa’s important recent developments include the following:

Successful Phase 1 Study. All objectives of Atossa’s recent Phase 1 study of its proprietary oral and topical formulations of Endoxifen were successfully met: there were no clinically significant safety signals and no clinically significant adverse events and both the oral and topical Endoxifen were well tolerated. In the topical arm of the study, low but measurable Endoxifen levels were detected in the blood in a dose-dependent fashion. In the oral arm of the study, participants exhibited dose-dependent Endoxifen levels that met or exceeded the published therapeutic level. The median time for patients in the study to reach the steady-state serum levels of Endoxifen while taking daily doses of Atossa’s oral Endoxifen was 7 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.

TRAP CAR-T Program. In October 2017, we announced that we are developing a novel method to deliver CAR-T cells into the ducts of the breast for the potential targeted treatment of breast cancer. This approach uses our proprietary intraductal microcatheter technology for the potential transpapillary, or "TRAP," delivery of either T-cells that have been genetically modified to attack breast cancer cells or various immunotherapies. We believe this method has several potential advantages including the reduction of toxicity by limiting systemic exposure of the T-cells or immunotherapy; improved efficacy by placing the T-cells or immunotherapy in direct contact with the target ductal epithelial cells that are undergoing malignant transformation; and, lymphatic migration of the CAR-T cells or immunotherapy potentially extending their cytotoxic actions into the regional lymph system, which could limit tumor cell dissemination. Our approach is in the R&D stage and is currently not FDA approved.

Expansion of Scientific Advisory Board. At the end of 2017, we added Dr. Carl Novina to our Scientific Advisory Board. Together with Dr. Jack Cuzick, we now have a world-renowned group advising on the scientific and medical aspects or our programs.

Capital Raising Activity. In 2017, we made significant improvements to our balance sheet by raising approximately $12 million in capital, which strengthened our balance sheet and improved our stockholder base with the addition of institutional biotech-focused investors.

Atossa’s 2018 potential milestones include:

First half of 2018 – opening the Phase 2 Study of topical Endoxifen to treat MBD at Stockholm South General Hospital in Sweden (which we plan to complete in 2018).

First half of 2018 – opening the Phase 2 Study of oral Endoxifen to treat patients who are not responding to Tamoxifen (which we plan to complete in 2018).

Second half of 2018 – commencing one or more studies to demonstrate safety and efficacy of administering TRAP CAR-T or another immunotherapy with our microcatheters.

Throughout 2018:
— Identifying additional opportunities for our Endoxifen formulations; and
— Continuing our Phase 2 study administering Fulvestrant with our microcatheters.

Breast Cancer Statistics

The American Cancer Society (ACS) estimates that approximately 250,000 women will be diagnosed with breast cancer in the United States this year and that approximately 40,000 will die from the disease. It is the second leading cause of cancer death in American women. Although about 100 times less common than women, breast cancer also affects men. The ACS estimates that the lifetime risk of men getting breast cancer is about 1 in 1,000; 2,470 new cases of invasive breast cancer will be diagnosed; and 460 men will die from breast cancer in 2017.

2017 Financial Results

Revenue and Cost of Revenue: For the years ended December 31, 2017 and 2016, we have no source of sustainable revenue and no associated cost of revenue.

Operating Expenses: Total operating expenses were $7,649,171 for the year ended December 31, 2017, which is a decrease of $319,419 or 4.0%, from the year ended December 31, 2016. Operating expenses for 2017 consisted of general and administrative (G&A) expenses of $4,859,369, R&D expenses of $2,328,087, and impairment of our Acueity intangible assets of $461,715.

General and Administrative Expenses: G&A expenses were $4,859,369 for the year ended December 31, 2017, a decrease of $1,619,824, or 25.0% from the total G&A expenses for the year ended December 31, 2016 of $6,479,193. G&A expenses consist primarily of personnel and related benefit costs, facilities, professional services, insurance, and public company related expenses. The 2017 decrease in G&A expense was primarily attributable to a reduction in payroll expenses resulting from deceased headcount, rent and exit costs incurred in 2016. At the beginning of 2016, our strategy shifted away from commercialization of medical devices towards focusing exclusively on development of our pharmaceutical and microcatheter candidates.

Research and Development Expenses: R&D expenses for the year ended December 31, 2017, were $2,328,087, an increase of $1,557,660, or 202% from R&D expenses in 2016 of $770,427. The increase in R&D expenses is attributed to salaries, manufacturing, and clinical trial expenses associated with our Endoxifen program for which manufacturing commenced at the beginning of 2017 and the clinical studies commenced in mid-2017. We expect our R&D expenses to increase throughout 2018 as we commence Phase 2 clinical studies of Endoxifen, continue the clinical trial of fulvestrant administered via our microcatheters and as we continue the development of other indications and therapeutics, including CAR-T and immunotherapies administered via our intraductal microcatheters.

Cash and Cash Equivalents: As of December 31, 2017, the Company had approximately $7.2 million in cash and cash equivalents and working capital of approximately $6.7 million.