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00:05 Welcome to Athira Pharma’s Conference Call to discuss its Full-Year 2021 Financial Results and Business Update. At this time, all participants are in a listen-only mode. Following the conclusion of the prepared remarks, we will conduct a question-and-answer session and instructions will follow at that time.

This conference call is being recorded today, March 24, 2022. 00:28 I would like to turn the conference call over to Julie Rathbun, Head of Investor and Public Relations at Athira Pharma..

00:37 Thank you, operator. Following the close of the US financial market today we issued full-year 2021 financial results and recent business updates. This press release can be found on the Investors section of our website.

00:49 Before we begin, I'd like to remind you that during this call management will make forward-looking statements, which may include statements about research and clinical development plans and timelines and results of operations, the timing of and results from clinical trials and preclinical development activities, the potential efficacy, safety profile, future development plans, addressable market, regulatory success and commercial potential of our product candidate, the anticipated timing of IND or IND equivalent submissions and the initiation of future clinical trials for our product candidates, the efficacy of our clinical trial designs, our ability to successfully develop our proprietary development program, the timing and results of our interactions with regulators, the timing and anticipated enrollment in our clinical trials and the timing of potential publication, a presentation of future clinical data.

01:41 Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projected on today's call.

Athira is not under any obligation to update statements regarding the future or conform these statements in relation to actual results unless required by law.

02:04 On today's call, we are joined by Mark Litton, Ph.D., Athira’s President and Chief Executive Officer; Hans Moebius MD, Ph.D., Athira’s Chief Medical Officer; Rachel Lenington, Athira’s Chief Operating Officer; Glenna Mileson, Athira’s Chief Financial Officer; and Kevin Church Ph.D., Athira’s Executive Vice President of Research.

Following prepared remarks, we will open the call to your questions. 02:30 I'll now turn the call over to Dr. Mark Litton..

02:33 Thanks, Julie. And thank you all for joining us this afternoon. 2022 has gotten off to an exciting start with progress across a number of our key clinical programs.

Our achievements throughout 2021, including the completion of the Phase 2 ACT-AD enrollment laid the groundwork for us to pursue our clinical and corporate strategy and we are looking forward to the results of these efforts.

03:00 To date, the New Year has been highlighted by the dosing of the first patient in our Phase 2 study of fosgonimeton or fosgo in Parkinson's disease dementia and dementia with Lewy bodies.

The peer reviewed publication of our Phase 1 study results of fosgo and the presentation of preclinical evidence supporting our novel innovative approach to restoring neuronal health and slowing neurodegeneration across our lead program with fosgo and our first oral candidate ATH-1020.

03:38 In addition to our considerable clinical progress, we expanded our Board of Directors with the addition of two talented industry leaders Dr.

Michael Panzara, an industry veteran with more than 20 years of CNS drug development and commercialization experience and Grant Pickering, a proven life sciences leader with considerable experience across all stages of corporate and clinical development. Our growing body of scientific and clinical evidence is compelling.

It gives us further confidence in our clinical development programs. 04:15 Importantly, we are on track to have top line data from our Phase 2 ACT-AD study in the second quarter and expect to complete enrollment in our potentially pivotal Phase 3 LIFT-AD study in the third quarter.

These are exciting inflection points for Athira and we are gearing up for an especially active year ahead. 04:34 With that, let me turn the call over to our Chief Medical Officer, Dr. Hans Moebius for a review of our clinical development pipeline. For those of you who don't know Hans.

Hans is an internationally recognized expert in neuropsychiatric drug development and regulatory strategy. He has led the development and approval of several drugs, including memantine and has been instrumental in shaping the development strategy for fosgo.

Hans has taken the lessons learned in his decades of drug development to increase the probability of technical and regulatory success for our lead clinical program. 05:16 With that, Hans, the floor is yours..

05:20 Thank you Mark for that generous introduction. As many of you know in the past 20 years of Alzheimer’s disease research and development were spent trying to replicate effects seen in transgenic animal models into humans, namely by monoclonal antibodies in order to achieve disease modification.

This approach requires us to treat early pre-dementia stage Alzheimer’s disease and there was far less attention to mild to moderate stage Alzheimer’s disease.

05:54 At Athira we have undertaken a novel mechanistic approach that does not follow this search for the holy grail of disease alteration, but rather focuses on the symptomatic stage as a first step.

Our approach is to develop small molecule therapeutics for a broad range of neurodegenerative diseases, including Alzheimer’s disease, by promoting the HGF/MET system, a naturally occurring mechanism to repair and restore neuronal health. HGF/MET is critical for healthy brain function.

MET receptor expression is reduced in Alzheimer’s disease and other neurological diseases. 06:41 Our late-stage product candidate is a small molecule product with an active metabolite that is brain penetrable and positively modulates the activity of the HGF/MET system with high specificity.

We have demonstrated this extensively in preclinical models and have used electrophysiology, both quantitative EEG and the objective task related measure of event related potential P300 latency to determine an active dose range.

The compelling pharmacodynamic results from a small cohort of Alzheimer’s disease subjects in our Phase 1b study, as well as supportive long-term toxicology results gave us confidence to initiate a Phase 2 and 3 clinical development program.

07:33 The study design was discussed with the FDA in order to gain agreement that the Phase 3 LIFT-AD study could potentially serve as a pivotal trial if successful. The Phase 2 trial was branded ACT-AD and the Phase 3 trial LIFT study. Their design is largely mirroring.

For example, diagnostics, severity range, doses, double blind duration and most outcomes. Those trials started in parallel, so the smaller Phase 2 trial will readout first, allowing us to leverage insights from the ACT-AD results for the optimization of the LIFT-AD statistical analysis plan.

08:23 Importantly, we are able to do this without a formal interim analysis in the Phase 3 trial, which carries statistically penalties and inevitably brings operational delays.

In short, both ACT-AD and LIFT-AD are randomized double blind placebo-controlled trials evaluating 40 milligram and 70 milligram fosgo daily for the treatment of mild to moderate AD.

Participants are randomized evenly to two dose groups and the placebo group to receive a subcutaneous injection of fosgo or placebo once daily over a double-blind period of 26 weeks. 09:09 The primary endpoint of ACT-AD is changed in event related potential P300 latency, functional objective measure of working memory processing speed.

Secondary endpoints in ACT-AD include ADAS-Cog11, the measure of cognition, ADCS-CGIC, a measure of global clinical change and ADCS-ADL23, a measure of functional abilities. In addition, we are assessing the plasma pharmacokinetics of fosgo in this patient population. Enrollment of ACT-AD was completed last October with 77 participants enrolled.

And as Mark noted earlier, we are on track to report top line data in the second quarter of 2022. 10:01 The Phase 3 LIFT-AD study is currently enrolling up to 420 subjects in the US.

In contrast to ACT-AD, LIFT-AD has a composite primary endpoint, the Global Statistical Test, which is an unweighted and unbiased mathematical algorithm that combines the scores from ADAS-Cog 11 and either ADCS-CGIC or ADCS-ADL23, which are amongst the secondary endpoints.

10:33 You may recall that earlier this year, we opportunistically expanded the target recruitment number for the study by approximately 120 patients in order to strengthen the statistical power of these secondary endpoints. We believe this will enhance the potential for filing a new drug application based on a single pivotal clinical study.

The increased sample size and resulting power for ADAS-Cog11 is based on the unchanged original statistical modeling and is consistent with the design of previous Phase 3 trials in the treatment of mild to moderate Alzheimer’s disease.

11:20 As noted earlier, if we leverage insights from the ACT-AD trial analysis in the second quarter to optimize and refine the statistical analysis plan for LIFT-AD. Moving forward, we anticipate completing enrollment in LIFT-AD in the third quarter of 2022, resulting in topline data in the first half of 2023.

11:51 There is a growing body of preclinical and clinical evidence in support of targeting the HGF/MET neurotrophic system. The encouraging results from the Phase 1a/b study of fosgo recently published in the peer-reviewed journal of Alzheimer’s disease.

To summarize, fosgo was well tolerated across a wide dose range from a [indiscernible] does linear and pharmacodynamics suggest human blood brain barrier penetration.

The statistically significant large reduction of ERP P300 latency in the Alzheimer’s disease cohort on active drug versus placebo treatment may be suggestive of enhanced synaptic function and ultimately the potential pro cognitives of fosgo.

Second, the baseline demographics of ACT-AD presented last week at the AD/PD Annual Meeting demonstrate a well-balanced trial population appropriate to replicate these initial Phase 1b findings on ERP P300, which is the functional measure of working memory processing speed.

13:06 Finally, in this type of population one would expect to see about 20% to 35% of discontinuations largely due to treatment-emergent adverse events. Our models assumed 20% drop out rate and we can now report that the discontinuation rate for ACT-AD was considerably below that rate, coming in at approximately 14%.

This factor the absence of target organ toxicity is a favorable result. Consequently, the majority of subjects completing ACT-AD have opted to participate in the 26-week open label extension study. Remember, 2/3 of subjects have been on active drug during the double blind portion of the study.

We think this speaks to the tolerability of this novel intervention, in particular, in an elderly frail polypharmacy population with increased susceptibility to adverse events. Because positive modulation of HGF/MET is not dependent or based on a specific pathology or hypothesis, we expanded in parallel into other neurodegenerative indications.

14:29 Earlier this year we initiated our SHAPE study, a randomized double blind placebo-controlled parallel group Phase 2 trial evaluating fosgo in subjects with Parkinson's disease dementia or dementia with Lewy bodies.

This proof of concept study will enroll approximately 75 individuals in the US, utilizing the same dose regiment as AST-AD and LIFT-AD over the same double-blind treatment course of 26 weeks.

The primary endpoint for SHAPE is also the composite Global Statistical Test utilizing cognitive change and P300 latency, which has also been shown to be affected in Parkinson's disease dementia. Secondary endpoints including motor and non-motor [scales] (ph).

Since most Parkinson's disease patients develop dementia, this is an area of high medical need with only one approved drug on the market.

15:34 In addition to expanding the indications for fosgo, we are advancing another compound from our discovery group ATH-1020, compelling preclinical results were presented at the recent American Society for Experimental Neurotherapeutics Annual Meeting which showed that ATH-1020 demonstrated in vitro and in vivo efficacy, including its ability to augment MET activation, promote activation of downstream signaling pathways and in distinct animal models address depression-like behaviors and normalize an electroencephalography hallmark of schizophrenia.

Following clearance of our investigational new drug application with the FDA in January, the study is now underway and dosing for the first subject with ATH-1020 in the Phase 1 human pharmacology trial is no imminent.

16:40 In summary, Athira is pursuing a diverse clinical development pipeline, both in terms of target indication and development stages. We believe that our work will provide a bolus of data for presentation and publication in the years ahead that will hopefully translate into new medicines for patients in need.

And at the same time, will create shareholder value. 17:10 With that overview, let me turn the call back to Mark..

17:16 Thanks, Hans for that detailed review of our clinical programs. Given how closely we are to topline data from our Phase 2 study, we are still frequently asked, so what does success look like for ACT-AD? Obviously, achieving statistical significance on the primary P300 endpoint would be a success.

In addition, should we see trends in some of the key secondary endpoints, we would also see that as a big win. We say trends, because this study was not powered to show statistical significance in these cognitive clinical and functional endpoints.

17:55 That said, we are hopeful that we will see some trends towards clinical benefit as this would corroborate our thesis and further support our confidence in a favorable outcome in our Phase 3 LIFT-AD study.

Our goal with fosgo is to bring clinical benefit to patients suffering with neurodegenerative diseases and to provide tangible, rapid and lasted -- lasting cognitive improvement with our novel approach. We want to provide patients with what is most important to them, memory improvements and extended independents.

This is most critical in the mild to moderate patients where the rate of cognitive and behavioral declines is seen most dramatically. 18:43 It is also important as the mild-to-moderate AD segment accounts for nearly 80% of all Alzheimer’s patients, and 78% of these patients are currently on marketed drugs.

There is a real need for innovation in this space and we believe our unique HGF/MET approach can help fill this void. As we move closer to a potentially pivotal Phase 3 data readout next year, we have spent considerable time evaluating the market opportunity and market access.

Currently, there are 55 million people suffering with Alzheimer’s disease worldwide. And that number is expected to grow to 100 million by 2050, given the aging population and other dynamics. 19:34 Currently there are only three to four drugs available to treat mild-to-moderate Alzheimer's disease.

And as we've noted, there is considerable room for improvement. Contrast that with cancer drugs, which have a multitude of treatment options across a variety of targets and it underscores how woefully under developed Alzheimer’s disease treatment options are today.

Importantly, given this gap, we see there is room for a lot more success for any number of players in the sector. 20:08 Now let me turn to a brief review of our financials. We continue to invest in our clinical development programs with a focus on advancing fosgo towards approval, with an overarching goal to benefit patients worldwide.

We are prudently building our team in order to deliver on the potential of our novel HGF/MET platform. We are keenly aware of the trust put in us by you, our shareholders and we work diligently to be good stewards of those resources by balancing our investments disciplined financial management.

20:43 Now, let's look at the details of our financial results. Our research and development expenses were $42.8 million for the year ended December 31, 2021 as compared to $13.3 million for the full year ended December 31, 2020.

The increase was driven primarily by cost related to an increased clinical trial activities, expanded personnel and increased preclinical research and development expenses. 21:15 General and administrative expenses were $21.2 million for the year ended December 31, 2021 as compared to $6.7 million for the same quarter in 2020.

These were primarily due to an increased personnel expense as we expanded headcount and infrastructure and it includes insurance, legal, facilities, new product planning and investor relation costs.

21:41 We had a net loss of $54.9 million or $1.49 per share basic and diluted for the year ended December 31, 2021 compared to a net loss of $19.9 million or $1.67 per share basic and diluted for the year ended December 31, 2020.

Importantly, we ended 2021 with cash, cash equivalents and investments of $319.7 million compared to $268.2 million as of December 31, 2020. This puts us in a strong position to support our lead clinical programs through important potentially value creating data readouts and beyond.

22:31Before we open the call to your questions, I'd like to remind you that we are joined by Rachel Lenington, our Chief Operating Officer; Kevin Church, our EVP of Research; and Glenna Mileson, our CFO. Collectively, our team has presided over the development, approvals and successful launches of many meaningful drugs.

22:53 In closing, I want to take a moment to thank the talented and dedicated Athira team, who are all working tirelessly in pursuit of our goals. The energy and excitement at Athira is very high as we truly believe we have a unique opportunity to reshape the course of neurodegenerative diseases.

We look forward to making our vision a reality for these patients. 23:21 With that, operator, let's open the call up for questions..

23:27 Certainly. [Operator Instructions] Our first question comes from the line of Andrew Tsai with Jefferies..

23:46 Thanks, and good afternoon. Thanks for all the updates. First question is just a high level one on ACT-AD. Can you remind us how you're thinking about sharing the topline release in Q2? There's a lot you could share in terms of the number of endpoints that you have.

So how much are you planning to share? Will we see efficacy curves out to six months? I guess, what should we be expecting? Thanks..

24:13 Thank you, Andrew. So just to expect, the primary endpoint is P300 and we will show hopefully statistically significant data throughout six months for P300. And then the plan is to show ADAS-Cog11 and we're hopeful to see trends, because ADAS-Cog11, as you know, is not powered to be statistically significant.

So, those were -- be the colors that we will show. We do plan to give more color in upcoming scientific conference. So to be clear in your things, we probably will not show the graphs over time..

24:58 Got it. And just a reference point would be helpful on these harder endpoints on ADAS-Cog, CGIC, ADL.

What do the approved drugs for mild-moderate Alzheimer’s show at six months for these three efficacy endpoints?.

25:19 Sure. So, now we're talking historically. I think I'm going to hand that over to Hans to answer on that..

25:27 In the mild to moderate Alzheimer’s disease population in a 26-week or six months trial you would historically expect to see two to three point benefits over placebo.

That is, however, highly dependent on the individual setting and the placebo decline that has been adverse, there were a number of clients that were showing little placebo decline in the past..

26:06 Okay. And then my last question is, can you share some interesting AD/PD data update on ACT-AD? I think 50% to 60% of your patients in this study are on acetylcholinesterase inhibitor. So 40% are, I believe, treatment-naive. I believe that naturally the old studies in the past probably were done in naive patients.

So here -- if 50% to 60% of patients are on a combo therapy, how does that dynamic affect both the placebo and the drug arm on ADAS-Cog? Thanks..

26:51 Okay. You go Hans..

26:55 Okay. So you're correct, I reported on average quite precisely 60%, currently taking cholinergic medication. And in historical trials indeed the number was smaller.

I will remind that also in Phase 1b we had drug naive subjects, and as always in Phase 1 trials, we believe that it can only be helpful to support the traffic situation of cholinergic neurons that are, of course, together with other transmitter addressed neurons, key areas in the brain that are responsible for memory and [language] (ph).

So we do see that as rather an advantaged than a potential disadvantage..

28:05 Thanks. Very good. Thanks for all the color..

28:08 Thanks, Andrew..

28:11 Thank you. And our next question comes from the line of Paul Matteis with Stifel..

28:17 Great. Thanks so much for the detail you're offering. I wanted to clarify a couple of things if I might. So one is, I guess for LIFT the hope here is that, you hit on both cognition and function, is that right? Is that still your assumption that ADAS-Cog alone would not be enough to get registered.

And if that's right, how much flexibility do you see on which functional scale you need to succeed on? And how much time do you have, I guess, to pre-specify which you're using in the Global Statistical Test? 28:53 And then the one last thing I just wanted to ask at a curiosity.

Not sure if you're willing to disclose, but just when you look at the baseline data in ACT, right? You did a number of different baseline data cuts which is appreciated. When you look at patients across disease severity at baseline, do you see any association with their baseline P300 latency? Thanks so much..

29:18 Yeah. Let me answer the last question first. We have not specifically looked in that difference of baseline. We have been looking into the baseline of the entire Group. And what we found was that, the mean baseline in ACT was 381 milliseconds plus-minus 4.1, which is very well in keeping with published data in the same target population.

29:55 I think your second question related to the selection and the time of the selection for the co-key secondaries in LIFT and the time we have.

The answer is, we have plenty of time, because in quarter two -- within quarter two we will have unblinded results from ACT, which allows us irrespective of an effect size that we may or may not see, we will see the sources of variance.

And that is particularly valuable for us because it really allows us to optimize the statistical analysis plan for LIFT. And on that occasion, we will then also define which additional co-key secondary endpoint in addition to ADAS-Cog11 will be defined. And usually the last moment to file the statistical analysis plan is before unblinding.

But I think we have plenty of time to do that way before. 31:04 And the first question you will – please quickly give me a reminder of what you were –.

31:12 Yeah. I was just kind of making sure that you agree with the premise that you likely need to hit cleanly on both the cognitive and functional endpoint for registration.

And the only reason why I'm asking is, Mark's prepared remarks surrounding sharing ADAS-Cog in the top line, but it doesn't sound like you're going to share any functional scales and I'm honestly a little bit sure why that is. But yeah, maybe you can just give any more color would be great..

31:37 Yeah. Look, I think in keeping with the philosophy of the FDA, it is really important to look at the totality of the data. And that requires a bit of time and this will also require a good discussion.

And so beyond the initial publication via press release, we are obviously aiming to discuss this totality of the ACT findings in the context of a scientific conference as quickly as possible.

And I think that is in any event the better place for such an in-depth analysis, which by the way, let me add that to what was said before, also has to include, of course, safety and tolerability data..

32:35 [Multiple Speakers] Just to remind you that this is only 77 patients, right? So it's just going to be exploratory on the co-secondary endpoints. That's not [indiscernible] for that..

32:47 Yeah. Totally understood. Thanks very much..

32:52 Thanks, Paul..

32:54 Thank you. And our next question comes from the line of Corinne Jenkins with Goldman Sachs..

33:02 Hey, good afternoon, everyone. I just had one quick follow up.

In terms of the ACT-AD study, have you taken a blinded look at the data? And if so, is there any color that you can provide on that?.

33:22 We are very careful in this type of approach. And since the trial is still blinded, I cannot comment on any such behind its findings..

33:39 Okay. And then, I think maybe as an enrollment update on LIFT, since you announced the expansion. I'm just curious if there's -- I know [indiscernible] used, are really good enrollment and then we had Omicron.

I’m curious if you could provide any color on kind of the pace of enrollment in LIFT and actually [indiscernible] the data timing there?.

33:58 Yeah. Corinne, we're still shooting for getting complete enrollment -- by the end of Q3. So that's what we're pushing for..

34:06 And will you announce that when you hit enrollment inflation or is that some data that you won’t disclose?.

No, no. We will definitely -- we will announce that as we've completed enrollment..

34:18 Great. Thank you so much..

34:20 Thanks, Corinne..

34:23 Thank you. And our next question comes from the line of Jason Butler with JMP Securities..

34:30 Hi, thanks for taking the questions. Just one on the cognition trends you look for ACT. Mark, I think you said you're not going to show the graphs, but just how should we think about the potential time course of impact on cognition here versus the relatively rapid effects you see on P300 -- P300 in the Phase 1 trial.

Do other -- the correlation there between P300 and cognition timelines for other drugs, is that relevant here?.

35:05 Yeah. So let me answer the first. Taking the question about timing. Right. So we're looking for what happens over six months. So we will -- at the end of six months, we will announce that there was a difference of X, Y and Z for P300 and ADAS-Cog 11, just to show a difference, because truly the ADAS-Cog 11 is really, really important.

But Hans, do you want to invite many of that. Hans can you mentioned when the placebo effect goes away over time..

35:41 Yeah. Well, in this type of trial you would expect placebo response anywhere between six and 12 weeks, but this is then disappearing and that's why we are running 26-week trials to really escape any potential placebo effect.

I wanted to add that we are after entry of the baseline we have the first assessment of both, P300 and ADAS-Cog 11 after two weeks and then we have multiple visits ending with visit eight after 26 weeks.

So of course, we are at all these time points looking at the development of P300 and ADAS-Cog 11, hoping to show that there development goes hand in hand in replication of the data, as you know from the literature..

36:47 Got it. And then just a couple of quick questions on the SHAPE Trial.

Could you just maybe remind us of the mechanistic rationale in PDD and DLB? Do you see the same kind of dysfunction in the HGF/MET system that you see in Alzheimer's patients? And then I think it's pretty clear what potential impacts of the ACT results on the LIFT trial, but are there any changes that you would consider making to the SHAPE trial based on the results you get from ACT.

Thanks..

37:21 Yeah. Look, the answer is no.

So this is really opening up and quite different type of dementia investigation and we are indeed in a situation where P300 latency extension has been described also for Parkinson's disease dementia and the underlying mode of action rationale and it's very much in keeping with what we have been presenting and have before.

It's the whole cascade of neurotrophic effect that do not stop at the NYCO striatal system. So the specific neuronal population that is affected in Parkinson's disease, at least in the beginning before it is spreading out could theoretically benefit from positive modulation of the HGF/MET system. And that's what we are leveraging..

38:32 Okay, great. That's helpful. Thanks for taking the questions..

38:36 Thanks, Jason..

38:39 Thank you. I'll now turn the call back over to Dr. Mark Litton for any closing remarks..

38:47 Thank you everyone for taking the time today. And we're really looking forward to an exciting 2022. Thanks so much..

38:57 Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect..