Atea Pharmaceuticals Inc

1. Nature of Business

Business Overview

Atea Pharmaceuticals, Inc., together with its wholly owned subsidiary, Atea Pharmaceuticals Securities Corporation, is referred to herein on a consolidated basis as “Atea” or the “Company”.

The Company is a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing oral antiviral therapeutics to improve the lives of patients suffering from serious viral infections. The Company’s lead product candidate, the regimen of bemnifosbuvir, a nucleotide NS5B inhibitor, and ruzasvir, an NS5A inhibitor is being developed for the treatment of hepatitis C virus (“HCV”). In April 2025, the Company commenced enrollment of patients in the HCV Phase 3 program evaluating the regimen.

Liquidity and Capital Resources

As of March 31, 2025, the Company had $425.4 million in cash, cash equivalents and marketable securities, which the Company believes will be sufficient to fund the share repurchase program discussed in Note 15 and its operations for a period through at least twelve months from the issuance date of these consolidated financial statements.

The Company is a party to an amended and restated open market sales agreement (“Sales Agreement”) with Jefferies LLC (“Jefferies”), under which the Company may from time to time offer and sell shares of its common stock (“Common Stock”) for an aggregate offering price of up to $200.0 million, through or to Jefferies, acting as sales agent or principal. The shares will be offered and sold under the Company’s shelf registration statement on Form S-3 and a related prospectus declared effective by the Securities and Exchange Commission (the “SEC”) on November 19, 2024. The Company has agreed to pay Jefferies a commission of 3.0% of the aggregate gross proceeds from each sale of shares, reimburse legal fees and disbursements and provide Jefferies with customary indemnification and contribution rights. As of March 31, 2025, no shares have been issued under the Sales Agreement.

Risks and Uncertainties

The Company is subject to risks and uncertainties common to clinical-stage biopharmaceutical companies. These risks include, but are not limited to, potential failure of preclinical and clinical studies, uncertainties associated with research and development activities generally, competition from technical innovations of others, dependence upon key personnel, compliance with governmental regulations, the need to obtain marketing approval for any product candidate that the Company may develop, the need to gain broad acceptance among patients, payers and health care providers to successfully commercialize any product for which marketing approval is obtained and the need to secure and maintain adequate intellectual property protection for the Company’s proprietary technology and products. Further, the Company is currently dependent on third-party service providers for much of its preclinical research, clinical development and manufacturing activities. Product candidates currently under development, including most notably the regimen of bemnifosbuvir and ruzasvir for the treatment of HCV, will require significant amounts of additional capital and additional research and development efforts, and all will require regulatory approval, prior to commercialization. Even if the Company is able to generate revenues from the sale of its product candidates, if any are approved and commercialized, it may not become profitable. If the Company fails to become profitable or is unable to sustain profitability on a continuing basis, then it may be unable to continue its operations at planned levels and be forced to reduce its operations.

The Company may seek additional capital through one or more of a combination of financing through the sale of additional equity securities, debt financing, or funding in connection with any new collaborative relationships it may enter into or other arrangements. There can be no assurance that the Company will be able to obtain such additional funding, on terms acceptable to the Company, on a timely basis or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s existing stockholders. Geopolitical events, including civil or political unrest and terrorism, have resulted in a significant disruption of global business and financial markets. In addition, recent or future market volatility, increased inflation and higher interest rates, if sustained, may increase the Company’s cost of financing and may restrict our access to potential sources of future liquidity.

2. Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The unaudited interim condensed consolidated financial statements of the Company included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) as found in the Accounting Standards Codification (“ASC”), Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”) and the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such SEC rules and regulations. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 6, 2025.

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheet as of March 31, 2025, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025 and 2024, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2025 and 2024, and the condensed consolidated statements of cash flows for the three months ended March 31, 2025 and 2024 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2025, the results of its operations for the three months ended March 31, 2025 and 2024 and its cash flows for the three months ended March 31, 2025 and 2024. The results for the three months ended March 31, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025, or any other interim period.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Atea Pharmaceuticals, Inc. and its wholly-owned subsidiary, Atea Pharmaceuticals Securities Corporation. All intercompany amounts have been eliminated in consolidation.

Significant Accounting Policies

The significant accounting policies used in the preparation of these condensed consolidated financial statements are consistent with those as described in the Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 6, 2025.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date. The Company does not believe that the adoption of recently issued standards have or may have a material impact on its condensed consolidated financial statements and disclosures.

3. Marketable Securities

As of March 31, 2025 and December 31, 2024, the Company held 22 and 21 securities that were in an unrealized loss position of $38 and $64, respectively. The Company has the intent and ability to hold such securities until recovery. As a result, the Company didnot record any charges for credit-related impairments for its marketable debt securities for the three months ended March 31, 2025.

As of March 31, 2025 and December 31, 2024, none of the securities had remaining maturities longer than one year.

The Company received proceeds of $208,246 and $223,998 from sales and maturities of marketable securities during the three months ended March 31, 2025 and 2024.

4. Fair Value Measurements

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:

The Company’s assets with fair value categorized as Level 1 within the fair value hierarchy include money market funds. Money market funds are publicly traded mutual funds and are presented as cash equivalents on the unaudited condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024.

The Company’s assets with fair value categorized as Level 2 within the fair value hierarchy include treasury obligations, government agency securities, asset-backed securities, commercial paper and corporate bonds with fair values determined by utilizing information from third party pricing sources for identical or similar assets and liabilities in active market.

There were no transfers between Level 1, Level 2 or Level 3 categories during the three months ended March 31, 2025.

5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

6. Common Stock

As of March 31, 2025, the authorized capital of the Company included 300,000,000 shares of Common Stock, of which 85,579,475 shares of the Common Stock were issued and outstanding. On all matters to be voted upon by the holders of the Common Stock, holders of the Common Stock are entitled to one vote per share. The holders of the Common Stock have no preemptive, redemption or conversion rights.

7. Stock-based Compensation

In October 2020, the Company’s shareholders approved the Company’s 2020 Incentive Award Plan (“2020 Plan”). The 2020 Plan initially provided for the issuance of up to 7,924,000 shares of Common Stock and for the grant of incentive stock options or other incentive awards to employees, officers, directors and consultants of the Company. The number of shares of Common Stock that may be issued under the 2020 Plan is also subject to increase on the first day of each calendar year equal to the lesser of i)5% of the aggregate number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year or ii) such smaller number of shares as is determined by the board of directors. Through December 31, 2024, the shares available under the 2020 Plan were increased by 16,622,139 shares since the inception of the 2020 Plan. In January 2025, the shares of the Common Stock available under the 2020 Plan were increased by 4,223,152 shares. As of March 31, 2025,5,374,694 shares of Common Stock were available for future issuance under the 2020 Plan.

The 2020 Plan replaced and is the successor of the Company’s 2013 Equity Incentive Plan, as amended (“2013 Plan”). In the event of any cancellation of an outstanding option award under the 2013 Plan, the shares underlying the cancelled option award will be made available for grant under the 2020 Plan.

Stock Options

The following table summarizes stock option activity:

During the three months ended March 31, 2025, the Company granted 2,933,228 stock options with an aggregate grant date fair value of $6,419.

The aggregate intrinsic value of options granted is calculated as the difference between the exercise price of the options and the estimated fair value of the Common Stock for those options that had exercise prices lower than the fair value of the Common Stock.

Option grants generally vest over a service period ofthree orfour years and have a contractual term often years. As of March 31, 2025, total unrecognized compensation expense related to stock option awards was $20,941, which is being recognized over a remaining weighted average period of 2.6 years.

Restricted Stock Units

During the three months ended March 31, 2025, the Company granted 913,464 restricted stock units to employees and directors under the 2020 Plan with an aggregate grant date fair market value of $2,795.

The restricted stock unit awards vest inthree annual installments. Below is the activity related to restricted stock units for the three months ended March 31, 2025.

As of March 31, 2025, total unrecognized compensation expense related to restricted stock units was $7,405, which is being recognized over a remaining weighted average period of 1.8 years.

Performance-based Restricted Stock Units

During the three months ended March 31, 2022 the Company granted 724,970 performance-based restricted stock units (“2022 PSUs”) to employees with an aggregate grant fair value of $5,298. The performance period for the 2022 PSUs ran from February 1, 2022 through January 31, 2025 to achieve up to six defined performance metrics. The Company achieved two metrics which equates to 50% of the grant date fair value to be recognized as expense. On January 31, 2025,50% of the 2022 PSUs vested and the remaining 50% will vest on January 31, 2026 subject to continued employment. The Company recorded compensation expense of $116 and $0 for the three months ended March 31, 2025 and 2024, respectively. Expense for the unvested 50% shares is being recognized through January 31, 2026.

During the three months ended March 31, 2024, the Company granted 1,057,900 performance-based restricted stock units (“2024 PSUs”) to employees with an aggregate grant date fair value of $4,401. The 2024

PSUs providefor a performance period from February 1, 2024 through January 31, 2027 to achieve up to four defined performance metrics. The percentage of 2024 PSUs eligible to vest will be determined based on the number of metrics achieved during the performance period and may range from 0% to 200%. As of March 31, 2025 two metrics were deemed probable of achievement resulting in expense recognition of 75% of the grant date value of the 2024 PSUs. Compensation expense is being recognized from the grant date through the final vest date of January 31, 2027. The Company recorded compensation expense of $271 and $120 for the three months ended March 31, 2025 and 2024, respectively.

During the three months ended March 31, 2025, the Company granted 1,045,600 performance-based restricted stock units (“2025 PSUs”) to employees with an aggregate grant date fair value of $3,200. The 2025 PSUs provide for a performance period from February 1, 2025 through January 31, 2028 to achieve up to four defined performance metrics. The percentage of 2025 PSUs eligible to vest will be determined based on the number of metrics achieved during the performance period and may range from 0% to 200%. As of March 31, 2025 none of the metrics were deemed probable of achievement. The Company recordedno compensation expense for the three months ended March 31, 2025.

The following table summarizes the activity related to performance-based restricted stock units:

As of March 31, 2025, total unrecognized compensation expense related to performance-based restricted stock units was $2,292, which is being recognized over weighted average period of 2.1 years.

Employee Stock Purchase Plan

In October 2020, the Company’s shareholders approved the employee stock purchase plan (“ESPP”). The Company initially reserved a total of 1,187,000 shares of its Common Stock for issuance under the ESPP. The ESPP provides that the number of shares reserved and available for issuance under the ESPP will be increased on January 1 of each calendar year by 1% of the number of shares of the Common Stock issued and outstanding on the final day of the immediately preceding calendar year or such lesser amount as specified by the board of directors. Through December 31, 2024, the number of shares of the Common Stock available for issuance under the ESPP was increased by 1,667,231. In January 2025 the number of shares of the Common Stock available for issuance under the ESPP was increased by 844,630.

The Company issued 54,296 and 58,555 shares for proceeds of $138 and $150 during the three months ended March 31, 2025 and 2024, respectively.

Stock-based Compensation Expense

Stock-based compensation expense by award type included within the unaudited condensed consolidated statements of operations and comprehensive loss was as follows:

Stock-based compensation expense is classified as follows:

8. Net Loss Per Share

Basic and diluted earnings per share are calculated as follows:

The following shares were excluded from the computation of the net loss per share for the three months ended March 31, 2025 and 2024, respectively, due to the net loss during the periods as their effect is antidilutive.

9. Leases

The Company has a non-cancelable operating lease agreement for its office space in Boston, Massachusetts at 225 Franklin Street ("225 Lease"). The 225 Lease commencement date was January 1, 2022 and the 225 Lease runs through December 31, 2026. The 225 Lease doesnot contain any options for renewal or extension.

The following assets and liabilities are recorded on the Company’s condensed consolidated balance sheet as of March 31, 2025.

Future minimum payments under the 225 Lease, currently the Company’s only operating lease as of March 31, 2025 were as follows.

For each of the three months ended March 31, 2025 and 2024, the Company recorded operating lease costs of $161, relating to its operating lease agreements.

10. Income Taxes

The Company recorded income tax expense of $203 and $231 for the three months ended March 31, 2025 and 2024, respectively.

The Company maintained a full valuation allowance through March 2025 due to uncertainty regarding its ability to utilize deferred tax assets.

11. Commitments and Contingencies

License Agreement

In December 2021, the Company entered into a license agreement (“Merck License Agreement”) with MSD International GmbH, an affiliate of Merck & Co, Inc. (“Merck”) for the development, manufacture and commercialization of ruzasvir. Ruzasvir is the NS5A inhibitor the Company is developing in combination with bemnifosbuvir for the treatment of HCV.

Pursuant to the terms of the Merck License Agreement, the Company obtained from Merck a worldwide exclusive (subject to certain reserved rights to conduct internal research) and sublicensable license under certain Merck patents and know-how to research, develop, manufacture, have manufactured, use, import, export, sell, offer for sale, and otherwise commercialize ruzasvir or products containing ruzasvir (each a “Product”) for all therapeutic or prophylactic uses in humans.

In addition to a non-refundable upfront payment that the Company made in February 2022, the Company will be required to pay Merck milestone payments upon its achievement of certain development, regulatory and sales-based milestones. Additionally, the Company will pay Merck tiered royalties based on annual net sales of Products ranging from high single digits to mid-teens percentages. The Company’s royalty payment obligations will continue until the later of (i) the expiration of the last to expire valid claim of a licensed Merck patent claiming such Product and (ii) a period of years after the first commercial sale of such Product in such country. The Company may terminate the Merck License Agreement for convenience upon prior written notice. The first milestone in the amount of $5,000 became due and payable and the related expense was recognized in April 2025 upon the initiation of the HCV Phase 3 clinical trial referred to as C-Beyond. The Company expects to recognize the milestone payment as research and development expense in the three months ending June 30, 2025. The next potential milestone under the Merck License Agreement, in the amount of $10,000, is payable upon the acceptance by the US Food and Drug Administration of a new drug application covering a product candidate including ruzasvir which the Company expects will be the regimen of bemnifosbuvir and ruzasvir for the treatment of HCV.

Contingent Consulting Fee

The Company has an agreement with a consultant that requires payment of a success fee calculated as a percentage of certain product sales, subject to a cumulative maximum payout of $5,000. This success payment is contingent upon the occurrence of future events and the timing and likelihood of such payment is neither probable nor estimable.

Indemnification

The Company enters into certain types of contracts that contingently requires the Company to indemnify various parties against claims from third parties. These contracts primarily relate to (i) the Company’s bylaws, under which the Company must indemnify directors and executive officers, and may indemnify other officers and employees, for liabilities arising out of their relationship with the Company, (ii) contracts under which the Company must indemnify directors and certain officers and consultants for liabilities arising out of their relationship with the Company, and (iii) procurement, service or license agreements under which the Company may be required to indemnify vendors, service providers or licensees for certain claims, including claims that may be brought against them arising from the Company’s acts or omissions with respect to the Company’s products, technology, intellectual property or services.

From time to time, the Company may receive indemnification claims under these contracts in the normal course of business. In the event that one or more of these matters were to result in a claim against the Company, an adverse outcome, including a judgment or settlement, may cause a material adverse effect on the Company’s future business, operating results or financial condition. It is not possible to determine the maximum potential amount payable under these contracts since the Company has no history of prior indemnification claims and the unique facts and circumstances involved in each particular claim will be determinative.

12. Benefit Plan

The Company’s defined contribution plan under Section 401(k) of the Internal Revenue Code (“401(k) Plan”) covers substantially all employees who meet minimum age and service requirements. Under the terms of the 401(k) Plan, the Company records matching contributions up to 4% of the participant’s eligible compensation. During the three months ended March 31, 2025 and 2024, the Company recognized expense of $317 and $401, respectively, relating to matching contributions to the 401(k) Plan.

13. Related Party Transactions

During the year ended December 31, 2021, the Company entered into a consulting agreement with an entity controlled by one of its directors. The agreement provides for an annual retainer of $110. The Company recognized expense in the amount of $27 in each of the three months ended March 31, 2025 and 2024.

In May 2022, the Company entered into a consulting agreement with one of its directors. No expense related to this agreement was recognized during the three months ended March 31, 2025 and 2024.

14. Segment Information

The Company operates asone operating segment, focused on discovering, developing and commercializing antiviral therapeutics. The determination of a single business segment is consistent with the consolidated financial information regularly provided to the Company’s Chief Executive Officer (“CEO”) who is also the Chief Operating Decision Maker (“CODM”). As CODM, the CEO, uses consolidated, single-segment financial information for purposes of evaluating performance, making operating decisions, allocating resources, and planning and forecasting for future periods.

The CODM assesses performance and decides how to allocate resources based on consolidated net loss. This measure is used to monitor budget versus actual results to evaluate the performance of the segment.

The CODM reviews cash, cash equivalents and marketable securities as a measure of segment assets. As of March 31, 2025 and December 31, 2024, the Company’s cash, cash equivalents and marketable securities were $425,436 and $454,721, respectively.

The following table illustrates information about significant segment expenses and segment operating loss for the three months ended March 31, 2025 and 2024:

(1)Research and development expense for the three months ended March 31, 2025 and 2024 excludes stock based compensation of $3,440 and $5,981, respectively.

(2)External costs consist primarily of preclinical, clinical and manufacturing related activities.

(3)General and administrative expense for the three months ended March 31, 2025 and 2024 excludes stock based compensation of $3,511 and $6,605, respectively.

(4)Other segment items include interest income and other, net and income tax expense.

15. Subsequent Event

In April 2025, the Company’s Board of Directors authorized the repurchase of up to $25,000 of its Common Stock.