ATYR - NASDAQ

Good afternoon, ladies and gentlemen, and welcome to the aTyr Pharma First Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question and answer, and instructions will be given the time. As a reminder, this conference is being recorded for replay purposes. It is now my pleasure to hand the conference call over to Ashlee Dunston, a Tyr's Director of Investor Relations and Corporate Communications. Ms. Dunston, you may begin.

Thank you, Operator. And good afternoon, everyone. Thank you for joining us today to discuss aTyr's first quarter 2022 operating results and corporate update. We are joined today by Dr. Sanjay Shukla, our President and CEO, and Ms. Jill Broadfoot, our CFO. On the call, Sanjay will provide an update on our corporate strategy, including our clinical program for Efzofitimod and our research and discovery programs in neuropilin-2, including our pre-clinical program for ATYR2810. Jill will review the financial results and our current financial position before handing it back to Sanjay to open up the call for any questions. Before we begin, I would like to remind everyone that except for statements of historical facts, the statements made by management and responses to questions on this conference call are forward-looking statements under the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Please see the forward-looking statement disclaimer in the company's press release issued this afternoon, as well as the risk factors in the company's SEC filings and included in our most recent annual report on Form 10-K subsequently filed quarterly reports on Form 10-Q and in other SEC filings. Undue reliance should not be placed on forward-looking statements which speak only as of the date they are made as facts and circumstances underlying these forward-looking statements may change, except as required by law, aTyr Pharma disclaims any obligation to update these forward-looking statements to reflect future information, events, or circumstances. I will now turn the call over to Sanjay.

Thank you, Ashlee. Good afternoon, everyone and thank you for joining us for our first quarter 2022 results conference call. We are very pleased with the start of 2022 as we work to developing new class of medicines from our tRNA synthetase biology platform. Throughout the first quarter, we continue to make important progress with our Efzofitimod clinical program in pulmonary sarcoidosis. Our initial interstitial lung disease or ILD indication, with the receipt of FDA orphan drug designation for Efzofitimod for sarcoidosis, and a positive and Endo Phase II meeting with the FDA. We are on track to initiate a planned registrational study in pulmonary sarcoidosis in the third quarter of this year. As we begin, I will summarize a few highlights since we last spoke in March. We announced that posters for Efzofitimod and pulmonary sarcoidosis, were accepted for presentation at the American Thoracic Society. or ATS, international conference. We received FDA orphan drug designation for Efzofitimod for the treatment of systemic sclerosis or SSC, also known as scleroderma. We presented preclinical data in a poster at the American Association for Cancer Research or AACR Annual Meeting for ATYR2810 or 2810, our lead anti-neuropilin-2 or NRP2 antibody in cancer. We've had a highly first quarter and a good start to the year. The second quarter is shaping up to be a very important period as we prepare to present clinical data from the Phase 1b/2a study of Efzofitimod in pulmonary sarcoidosis at ATS next week and anticipate the potential publication of our related manuscript. We're focused on operational preparation for upcoming planned registrational study. So the balance of the year may center upon initiating the study in the US and Europe and supporting our partner Kyorin pharmaceutical with the anticipated launch of the study in Japan. Let's discuss our clinical program for Efzofitimod first. Efzofitimod is a potential first-in-class immunomodulator for fibrotic lung disease. Efzofitimod is a novel Fc-fusion protein based on naturally occurring splice variant of the lung enriched tRNA synthetase HARS fragment that downregulates average Immune responses in inflammatory disease states. Efzofitimod has been shown pre-clinically to downregulate inflammatory cytokines and chemokine signaling and reduce inflammation and fibrosis. NRP2 is upregulated on key immune cells known to play a role in inflammation and is enriched in inflamed lung tissue. Efzofitimod binds selectively to NRP2 and therefore has the potential to normalize the immune system, serving to resolve inflammation and prevent progressive fibrosis, thereby stabilizing lung function and alleviating morbidity and mortality for patients. We're developing Efzofitimod as a potential treatment for patients with fibrotic lung disease, initially focusing on patients with ILD, a group of rare immune-mediated disorders that can cause progressive fibrosis of the lung. Our initial ILD indication for Efzofitimod is pulmonary sarcoidosis, which is an inflammatory disease characterized by the formation of granulomas or clumps of immune cells in one or more organs of the body. Sarcoidosis that affects the lungs is commonly called pulmonary sarcoidosis, and the lungs are affected in more than 90% of sarc patients. The formation of these granulomas is driven by persistent aberrant inflammation, which if left untreated, can lead to irreversible scarring or fibrosis and diminished lung function, which may lead to respiratory failure or the need for a lung transplant. We estimate there are close to 200,000 patients, with pulmonary sarcoidosis in the U.S although estimates do vary. But half of these patients will require some form of systemic therapy, and 30% of all patients will have chronic progressive disease despite available treatments. The current standard of care typically includes treating the inflammation with corticosteroids and other immunosuppressive therapies, which can help manage inflammation and alleviate symptoms such as cough and shortness of breath. However, they have no demonstrated efficacy on disease progression and can result in serious long-term toxicity. Additionally, many patients do not respond to currently available treatments. There is a substantial need for safer, more effective treatments that could reduce or replace the requirement for chronic corticosteroid or other immunosuppressive therapy and prevent disease progression. Because this isn't orphan disease and treatment options are limited, we applied foreign received FDA orphan drug designation for Efzofitimod for the treatment of sarcoidosis. We recently generated clinical proof-of-concept for Efzofitimod based on the positive results from a Phase 1b/2a study in points sarcoidosis that we reported in September 2021. The study which included a four steroid taper, demonstrated safety tolerability and consistent dose response for Efzofitimod on key efficacy endpoints and improvements compared to placebo, including measures of steroid reduction, lung function, sarcoidosis symptom measures, and inflammatory biomarkers. According to medical experts, this is the first randomized placebo-controlled trial of any therapy for pulmonary sarcoidosis that demonstrates effects on physiologic and quality of life measures concurrent with steroid reduction. These findings confirm the potential of Efzofitimod to be a tremendously impactful therapy. We're excited to present additional data from this study in two posters at ATS next week. Some of the clinical findings that we will present for the first time include greater details regarding steroid reduction and improvements in lung function. Notably, we will also present details of the biomarker data for the first time. The hallmark lung granulomas in patients with pulmonary sarcoidosis are comprised of immune cells that secrete pro-inflammatory chemokines and cytokines. And if left untreated, can promote aberrant inflammation both systemically and locally that lead to fibrosis. Center of care agents such as oral corticosteroids can suppress inflammation, but may come with toxicity and in some cases can over suppress the immune system leading to increase risks. The ability of Efzofitimod to effectively control inflammatory and sarcoidosis disease biomarkers in a dose-dependent manner over 24 weeks. In the context of a corticosteroid taper are very important findings as they are the first demonstration of Efzofitimod anti-inflammatory mechanism in pulmonary sarcoidosis patients. We encourage you to review the posters which will be available on our website once they are presented. During ATS, we also plan to host a company reception. The event will bring together sarcoidosis medical experts, principal investigators, advocacy organizations, analysts, investors, and members from aTyr's management team, providing an opportunity to learn more about our Efzofitimod clinical program, and the ways in which we can all work together to deliver a potential new treatment to patients in need. A presentation featuring leading sarcoidosis experts, Dr. Daniel Culver, Director of Diffused [Indiscernible] Lung Disease at the Cleveland Clinic. and Dr. Robert Hoffman, Emeritus Professor of Medicine at the University of Cincinnati, will review results from the Phase 1b/2a study and discuss the outlook for the planned registrational study. In addition to the posters at ATS, we also anticipate the potential publication of a related manuscript with full results of the study in a major medical journal in the very near future. An additional abstract further exploring the molecular and cellular mechanisms of action of Efzofitimod in sarcoidosis that was previously accepted for presentation at ATS will instead be submitted for inclusion at another medical conference later this year. As we mentioned, we've been busy preparing for the next stage of Efzofitimod clinical development in pulmonary sarcoidosis. We had a positive end of Phase 2 meeting with the FDA that provided productive feedback regarding trial duration, dose evaluation to assess the optimal dose for chronic use, and endpoint prioritization, including discussion around outcome measures that would best support the evaluation of Efzofitimod efficacy, including a combination of both objective and subjective clinically meaningful outcomes. Preparations for the study are underway and we are on track to initiate this study in the third quarter of this year. While our primary focus for Efzofitimod is on our planned registrational study in pulmonary sarcoidosis, Efzofitimod mechanism of action, compelling translational and clinical data and the shared immune pathology in ILD, strongly suggest that Efzofitimod could have potential to treat other ILD indications as well. One such ILD that carried the high unmet need is in ILD that results from underlying systemic sclerosis, also known as scleroderma. Scleroderma is a chronic progressive autoimmune disease characterized by inflammation and fibrosis of connective tissues throughout the body, where then half of all patients with underlying scleroderma may develop ILD, which is a primary cause of death in these patients, like sarcoidosis, SSC, ILD results from an uncontrolled persistent immune response, which if left untreated can result in scarring that permanently causes loss of lung function. Also like sarcoidosis, current treatment options are limited. The pathology of SFC ILD is driven by the same immune cell that are central to sarcoidosis pathology. An NRP2 Efzofitimod binding partner is upregulated on these cells, particularly on macrophages. Furthermore, Efzofitimod has been shown to reduce lung and skin fibrosis in animal models of fibrotic disease, such as scleroderma and IPF, where it matched or outperformed approved known anti-fibrotic agents, including intensive and pirfenidone. The tentative was recently approved for slowing the rate of lung function decline in scleroderma ILD patients, but did not display any effects on the underlying disease or patient quality of life in those clinical trials, we believe our differentiated mechanism of action targeting NRP2 on immune cells has the potential to translate into benefit not only on lung function, but on the underlying disease as well. It's estimated that approximately 100 thousand people in the US are affected with scleroderma. We recently obtained FDA orphan drug designation for Efzofitimod for the treatment of scleroderma which validates the anti-fibrotic effects of Efzofitimod observed in those previously mentioned pre-clinical models of ILD. Now let's take a few minutes to discuss our pre-clinical programs, including 2810, an anti-NRP2 antibody in development for cancer. NRP2 is a cell surface receptor that play the key role in lymphatic development and in regulating inflammatory responses. In cancer, NRP2 is upregulated on a variety of solid tumors and it's particularly expressed in many aggressive cancer. Increased NRP2 expression is linked to worsened patient outcomes in several cancers, which may include the promotion of drug resistance to certain current therapies such as chemotherapy or targeted agents, metastasis, tumor recurrence, and overall survival. 2810 is a fully humanized monoclonal antibody that selectively and functionally blocks the interaction between NRP2 and VEGF, one of its primary liger. VEGF is a validated mediator of tumor survival and growth, and correlates with tumor invasiveness and metastasis. Current therapies that directly target classic VEGF, VEGFR signaling do not block neuropilin-2. Preclinical data suggests that blocking VEGF interaction through NRP2, that ATYR2810 maybe an effective novel therapeutic antibody with a differentiated approach that can target aggressive cancers through the inhibition of metastasis and enhance chemo sensitivity. Last month we presented some important findings at AACR that characterize the effects of 2810 in highly progressive tumor subtypes. Research show that highly aggressive cancers and those associated with metastasis, including triple-negative breast cancer TNBC were responsive to treatment with 2810 in combination with chemotherapy. Importantly, treatment with 2810 alone is able to inhibit metastasis in models of TNBC. Consistent with an emerging understanding of NRP2 slash VEGF signaling as a driver of metastasis and therapy resistance. Additional findings provided key insights regarding 2810's ability to impact the lineage plasticity of cancer cells, which contributes to their ability to differentiate into states that are known to play a role in metastasis. Notably, 2810 has been shown to down regulate

Thank you, Sanjay. I'm happy to report that we ended the first quarter 2022 with $98.7 million in cash, cash equivalents, and investments. Research and development expenses were $8.9 million for the first quarter of 2022, which consisted primarily of product development and manufacturing costs for Efzofitimod and our 2810 programs, general and administrative expenses were $3.5 million for the first quarter of 2022. Common shares outstanding were approximately $28.1 million and fully diluted shares were $29.2 million as of March 31st, 2022. As we head towards the planned registrational study for Efzofitimod, we feel confident that with our current cash position of nearly $100 million, a clean balance sheet with no debt and support from several high quality long-term focused investors, we are in a very good position to carry out our upcoming catalysts. Now, I'd like to turn the call back over to Sanjay before we open it up to Q&A.

Thanks, Jill. As Jill mentioned, we feel like we're in a very good position amidst what I'm sure we can all acknowledge is a very challenging environment for biotech. We have an experienced management team in place and have actively been building out the team as our programs progress. We have clinical proof-of-concept data for a novel therapeutic for sarcoidosis, a rare disease that has limited to no treatments. We believe our clinical execution which includes investing early in our manufacturing in order to have drug product available to meet timelines puts us in a leading position to bring a transformative product to the market for this debilitating disease. Additionally, we have pre-clinical data and strong scientific rationale to expand this program to other ILDs. In addition to other pre-clinical pipeline candidates that are progressing. And finally, with our tRNA synthetase biology platform and strong intellectual property portfolio surrounding it, we have an opportunity to replicate what we've done with Efzofitimod, and one tRNA synthetase with some of the other tRNA synthetase gene families. For a company of our stage and size, we're well capitalized coming off and oversubscribed follow-on financing last fall, and have been good stewards of our capital. We continue to take a deliberative of approach to the programs that we choose to invest in to drive the most meaningful value for the company. We appreciate your interest and continued support. At this time, Jill and I will be happy to take your questions.

[Operator Instructions]. We have your first question from Hartaj Singh with Oppenheimer, your line is open.

Great. Thanks for the questions and the update. I apologize if there's a little bit of background noise. Just, Sanjay, looking for the ETFs and the company presentation. Not to front run your presentation, but as you've been hearing after this, what are some of the aspects of the data that really excites you, especially in terms of some of the unmet need out there in pulmonary sarcoidosis. And then can you update some protocol design with the registrational trial number of patients? Has that been updated? Number of sites, anything you could share there. And then lastly for HR2810, how do you do that Phase one would be a classics of dose escalation with dose expansion. Basket trial would've there been a specific tumor type? Thank you for all the questions.

Good question, Hartaj. Thank you, I'll start with the easiest one first, the protocol design details, sites, duration. I'm just going to ask you hold off for one week. We have a pretty detailed presentation next week at ATS with Dr. Culver and Dr. Bachmann. We anticipate many of the thought leaders from around the world to be in San Francisco. And everyone is really anxious to get started and see those details. So I'm going to hold off on that as next Monday, we are going to be outlining really all those details you want in the protocol design. As I've mentioned before, and we've put this out previously, we had a really important and what I would call a successful Endo-Phase II meeting where we really got clarity around the design of the trial in the doses to proceed forward with the duration of the trial, the number of patients. And really the most important thing is which of our endpoints should we prioritize? We are in a unique position because we actually hit on all of those endpoints. And I think you've disclosed to your point about what are we excited about. We are really the first potential therapy here that has seen this level of improvement in lung function, symptom scores, controlling biomarkers. In all of those endpoints, we saw really better effects than any of us or the experts would've expected. And we did all of that while reducing steroids. That's something that really hasn't been done before in the field. So I think this really, really positions our therapy to be a transformative therapy and you're starting to see even the agency start to recognize that with our ODD for Scleroderma, another condition where it's a debilitating fibrosing condition. So when we talk about sort of the marketplace opportunity here, we've always been very conservative and said there's a multibillion-dollar market opportunity. As we start to generate the data we produce, we're clearly are leading therapy and we're set up really well here with this trial. So I'll be able to go through those details next week. With regard to 2810, we are honing in on that clinical strategy. We clearly like 2810 for a number of tumor types. Your question around, will it be a basket trial? Or whether or not we actually rolled focus in on one tumor type? Stay tuned with that. We can go in either of those two directions. Again, we've seen effects with 2810 in a number of solid tumor environments. It seems to play a really, really nice role in blunting metastasis and we know that that also comes with the ability to enhance chemotherapy. So we are working now through that program. I really want to get the sarcoidosis trial launched, and then we'll come back to you around plans and inevitably everyone will want to see the protocol design for 2810 in the future as well.

Thank you, Sanjay. Thanks for the updates and looking forward to the update ATS and through the rest of the year.

Thanks.

We have your next question from

Hi. Thanks for taking my questions and congrats on the progress. Expressly for Efzofitimod, we're really excited that you'll be starting the pivotal study or registrational study by third quarter 2022. That's pretty fast, so l was just wondering if you could just comment on some of the things that have the investigator you'd excited about this program and your plans around clinical execution. How many insights do you plan to have? I think it may overlap with what you just said, but just kind of comment a little bit more in that. And how you expect the cadence if that's the kind of pick up over time and then what point do you start with Albert's in Europe and even in Japan?

Great, thanks for the question,

Thank you. And then of course the last one, you're just about 2010, I know you noted that that study will be starting in the second half of 2022, but you have previously commented on work-induced manufacturing issues that we're just confirming is getting a drug product manufactured is the limiting back to year regarding the timeline. And then I know you're still going to work on disclosing the indications, but I was just wondering, the clinicians you spoken to about the programs, how excited are they and have they been actually talking about, maybe even having you explore other combinations beyond chemo?

For your first question, we invested rather early in sort of the manufacturing development plan and if you recall, for 2810, we qualified for a bit of a faster track program that Lonza had. We are not in any way rate-limited by that, I think it's fortunate that we actually planned ahead. Right now there are a lot of supply issues with a number of CDMOs out there but our timelines are not going to be affected because we did invest quite early in making sure that this was organized well. So we are looking forward to starting that trial on time. Really, your second question around indications. We have shown data consistently in a number of models here that, again as an anti-metastatic, has something that basically potentiates chemotherapy. We are seeing that rather consistently. This last data that we presented at AACR I think got most of the notice from most of the clinical oncologists that we have something really differentiated. So right now it's a really around honing in on which of those neuropilin-enriched tumors we want to move into. We've shown a lot of good data over the last couple of years, this program is built well, has a cogent preclinical program and now we're basically looking forward to starting the Phase one trial. As I mentioned, there are some approaches here to look at basket versus not. I think right now, that's what the team is working through, and we'll be coming back to the public with the plans there later this year.

Thanks Sanjay. And just a follow-up in the last one about potential combinations beyond [Indiscernible]. I know I am getting ahead of myself, but just kind of excited again.

There are -- there is some evidence that we're seeing with different combinations. I think you're sort of probably thinking -- probably listening to what's occurring right in our research team meetings because I think right now it is something where we are looking at different types of combo therapies. As you are aware, combination therapy is something that a lot of companies are looking at, how did they enhance it and potentiate existing products. We are continuing to produce more evidence there. And it could very well be something that we incorporate in our next protocol, looking at a combination from a known marketed therapy. So stay tuned, I know you're excited to hear more about that program, but there will be more data coming.

Thank you. Congrats again on the progress.

We have your next question from Yale Jen with Laidlaw & Company, your line is open.

Good afternoon and congrats with all the progress and I anticipate more next week. Two quick questions here,. The first one is for the scleroderma, what's your occurred thought or maybe the gating factors before you are formally committed to a clinical study?

That's a great question, Yale. I mean, I think right now we're really focused on the sarcoidosis trial and getting that on track and launched. My point is, we had data previously in a Scleroderma model. I think following our data release for sarcoidosis, it really validated the compound is potentially being a game-changer in ILD. Because we have this data in an animal model, we submitted for that ODD and quickly got a green light on that. So, scleroderma ILD is a another very, very serious debilitating condition, high degree of mortality. You'll see us dig in a little bit more as we think about how do we want to position of Efzofitimod in that program. But right now, I'm really focused on getting sarcoidosis launched. We may continue to do more work in the background to potentially validate Efzofitimod in scleroderma. There's some things that we can do from a research and mechanistic point of view. I alluded to the fact that one of our posters were going to be just holding back as we have more data to present now. So I think this is another area for us, for the public to start paying attention to. Because the market opportunity just grows tremendously as you start to move into other interstitial lung diseases, of which as I point out, there is really no therapy like ours that has shown physiologic and quality of life benefit.

Okay, great. And maybe one more question here. [Indiscernible] actually quite forward looking at this point which is in the Cancer's side that earlier a few weeks ago, there's ODAC meeting talking about that the FDA seems to have greater preference for a placebo-controlled study versus a single-arm study. I know it's still early for 2810 at this stage but, will that has any impact on your thoughts come forward in terms how to think about the future study designs and the other symptom aspect. And, thanks.

So we're monitoring very closely the comings and goings from the FDA. Sometimes the consistency is something that may not always be there, but from the cancer division, we are paying very close attention to how they're thinking about oncology drug development. We want to be crisp with our execution on the oncology side as well, similar to what we've done in on the respiratory side. And I think you're right that we are looking very closely at the design. What's the next-gen type design they want to see as more and more therapies start to fail as they get into second, third line and more treatment resistance? We think 2810 is positioned really, really well as a therapy that can aid existing therapies in addressing some of the resistance you start to see there and then as I said, as an anti-metastatic, we are well differentiated compared to -- as a potential anti-metastatic we're really well differentiated to some of the other things out there. So again, stay tuned on that protocol, that design as we get into second half of the year, I'll be able to give you more details as we get closer to that launch of 2810's Phase one trial.

Okay. Great. Thanks. Again, congrats on all the progress.

Thanks, Yale.

[Operator Instructions]. I'm showing no further questions at this time. I would like to turn the conference back to Mr. Sanjay Shukla, President and CEO for any closing remarks.

Well thanks everybody for listening this is a quick update. Obviously, we are going to have another media update in about a week at American Thoracic Society. l'm really looking forward to seeing some of the analysts that are traveling out to that event. Appreciate the questions here and we will certainly be talking to you in the near future. Thank you for support.