aTyr Pharma, Inc. (NASDAQ:ATYR) Q4 2024 Earnings Call Transcript

aTyr Pharma, Inc. (NASDAQ:ATYR) Q4 2024 Earnings Call Transcript March 13, 2025

aTyr Pharma, Inc. beats earnings expectations. Reported EPS is $-0.18, expectations were $-0.23.

Operator: Good afternoon, ladies and gentlemen, and welcome to the aTyr Pharma Fourth Quarter and Full Year 2024 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that 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, aTyr’s Senior Director of Investor Relations and Public Affairs. Ms. Dunston, you may begin.

Ashlee Dunston: Thank you, and good afternoon, everyone. Thank you for joining us today to discuss aTyr’s fourth quarter and full year 2024 operating results and corporate update. We are joined today by Dr. Sanjay Shukla, our President and CEO; Ms. Jill Broadfoot, our CFO; and Dr. Leslie Nangle, Vice President of Research. On the call, Sanjay will provide an update on our corporate strategy, including our clinical program for efzofitimod. Leslie will discuss our research and discovery programs, while 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 want 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 provisions 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 our other SEC filings. Undue reliance should not be placed on our forward-looking statements, which speak only as of the date they are made as facts and circumstances underlying those 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.

Sanjay Shukla: Thank you, Ashlee. Good afternoon, everyone, and thank you for joining us for our fourth quarter and full year 2024 results conference call. At aTyr, we’re on a mission to translate tRNA synthetase biology into new therapies for fibrosis and inflammation. Our lead therapeutic candidate, efzofitimod, is a first-in-class biologic immunomodulator that selectively modulates activated myeloid cells via neuropiln-2, or NRP2, to resolve inflammation without immune suppression and potentially prevent fibrosis progression. We’re developing efzofitimod as a treatment for patients with interstitial lung disease, or ILD, a group of rare immune-mediated disorders that can cause chronic inflammation and fibrosis of the lungs.

2024 was an important year for aTyr as we completed enrollment in our global pivotal Phase 3 EFZO-FIT study of efzofitimod in patients with pulmonary sarcoidosis, a major form of ILD that is our lead indication. This is the largest interventional study ever conducted in pulmonary sarcoidosis, and we look forward to releasing top-line data from this study in the third quarter of this year. EFZO-FIT is a randomized, double-blind, placebo-controlled, 52-week study. It consists of three parallel cohorts randomized equally to either 3 milligrams per kilogram or 5 milligrams of kilogram of efzofitimod or placebo dosed intravenously monthly for a total of 12 doses. The study enrolled 268 patients at 85 centers in 9 countries. The trial design incorporates a forced steroid taper with steroid reduction as the primary endpoint of the study.

Secondary endpoints include measures of sarcoidosis, quality of life, and lung function. Patients who complete the study and wish to receive treatment with efzofitimod outside of the clinical trial are eligible to participate in an Individual Patient Expanded Access Program, or EAP. The EAP was implemented primarily based on feedback from multiple study principal investigators, or PIs, whose patients requested to continue treatment once they completed the study. These patients will receive 5 milligrams per kilogram of efzofitimod while in the EAP. However, PIs, patients, and the company remain blinded to the EFZO-FIT treatment assignments of these EAP patients. Additionally, we have now held 4 positive data and safety monitoring board, or DSMB, reviews for this study, all of which have identified no safety concerns and recommended that the study continue unmodified.

The most recent pre-planned independent review indicates that the study continues to track well from a safety standpoint. We remain confident in the favorable safety profile we have seen for efzofitimod to date, which we believe is a key value proposition of the drug. And, finally, we’ll get our first look at the blinded baseline demographic and disease characteristics of the patients enrolled in the study at the upcoming American Thoracic Society Conference, or ATS, which is scheduled to take place mid-May in San Francisco. In a poster, we will be able to get a sense for the profile of the patients enrolled, including baseline steroid dose and background immunomodulator use, and how the profile matches the inclusion and exclusion criteria for the study.

As part of our planning for the Phase 3 readout for EFZO-FIT, we recently held a Type C meeting with the U.S. Food and Drug Administration, or FDA. The main objective of this meeting was to discuss the statistical analysis plan, or SAP, for the study, including how the primary and secondary endpoints are assessed statistically. For the primary endpoint, we determined how steroid reduction will be analyzed in the SAP. As we previously discussed, we initially proposed that we measure steroid reduction based on calculating the average daily steroid dose between week 12 and week 48, which is a protocol-specified post-steroid taper period. We viewed this as a conservative way of measuring steroid reduction in the study. Based on FDA feedback, we will now measure steroid reduction as the absolute change from baseline to week 48.

We feel this change creates a more simplified assessment to capture potential steroid delta between groups. The statistical powering for this study remains intact, and we are pleased with the clarification around how we will measure steroid reduction. With limited clinical studies in sarcoidosis as a benchmark, we are pioneering a path forward to measure how we can potentially improve the lives of these patients. While we brought you up to date on EFZO-FIT, I want to take a few minutes to provide you with critical insights into the pulmonary sarcoidosis landscape in the U.S. that have emerged from some of our early pre-commercial activities. We believe these findings support a potentially larger market opportunity for efzofitimod in sarcoidosis.

Pulmonary sarcoidosis is a disease characterized by the formation of granulomas or clumps of immune cells predominantly in the lungs. The current standard of care is oral corticosteroids, which may help improve symptoms in the short-term, but come with serious side effects with long-term use. And despite the use of steroids and other off-label immunosuppressive agents, many patients have disease that progresses, with around 20% developing lung fibrosis, which can lead to organ failure and death. There remains a lack of safe and effective treatments available for these patients. It is typically reported that sarcoidosis affects close to 200,000 people in the U.S., with 90% of patients having lung involvement. A third-party claims analysis, which we conducted late last year, confirms that number and shows that the number of patients diagnosed with lung involvement similar to the population enrolled in our Phase 3 trial is 30% higher than previously estimated.

Since the U.S. Epidemiology numbers most frequently referenced were published nearly a decade ago, we were not surprised that the population has grown. Furthermore, when we looked at treatment practices such as the number of patients that require any treatment and those that are prescribed steroids, we saw that nearly 75% of diagnosed patients are prescribed steroids, which is well above previous estimates in the U.S. and at the upper range as to what is reported globally. Furthermore, the claims also showed significant mortality and hospitalization rates, which speak to the high unmet medical need for this disease. When it comes to pricing through additional payor research that we conducted, we continue to see positive feedback from payors regarding their willingness to reimburse for an on-label biologic and sarcoidosis.

We are encouraged by the reimbursement landscape we’ve seen recently where some rare disease product launches have included steroid reduction as part of the label and are priced at a premium. In some, we believe the findings from these recent activities support the patient’s and physician’s need and strong desire for a product like efzofitimod. We view efzofitimod as a potential frontline steroid-reducing agent in patients with moderate to severe disease, which could address 50% to 75% of all sarcoidosis patients. We’ve previously stated that we estimate a total global market opportunity for efzofitimod in ILD at $2 billion to $5 billion, and our updated research supports a market where sarcoidosis represents a significant portion of that range.

Some of these insights that we’ve discussed will be presented in two posters at ATS in May. And this work has enhanced our understanding of the sarcoidosis market in the U.S. in a way that will be foundational for preparing for some of our upcoming commercial readiness activities. Finally, as we start to plan for commercial readiness, we recently appointed Eric Benevich, who is currently the Chief Commercial Officer for Neurocrine Biosciences to our Board of Directors. Eric brings a wealth of experience in launching high-value pharmaceuticals, including, most recently, a product for a rare disease that has a steroid reduction component as part of its Phase 3 clinical trial and FDA approval package. We anticipate his contributions will be highly valuable as we advance efzofitimod to a commercial product.

Now, let’s turn to our second indication for efzofitimod, ILD-related systemic sclerosis, or SSc, which is also known as scleroderma. SSc is a form of connective tissue disease, where ILD commonly occurs, and is a leading cause of mortality. Current treatment options for SSc-ILD are limited, and like sarcoidosis, they do not treat the underlying disease or improve quality of life. EFZO-CONNECT is a Phase 2 randomized, double-blind, placebo controlled, proof-of-concept, 28-week study to evaluate 2 fixed doses of efzofitimod, 270 milligrams or 450 milligrams compared to placebo. Patients are dosed intravenously monthly for a total of 6 doses. This study is currently enrolling patients with limited and diffuse SSc-ILD at multiple centers in the U.S. The primary endpoint of the study is lung function as measured by forced vital capacity, and key secondary endpoints include symptom control and skin assessments.

We expect to release interim data from the study in the second quarter of this year. The interim data will focus on skin assessments, measured at baseline in week 12 for approximately 8 patients, including patients on drug and placebo. We plan to present findings for skin histopathology, including immune biomarkers, and the modified Rodnan skin score, which will provide insight regarding potential changes in skin tissue. Skin manifestations in SSc highly impact the quality of life for these patients, and other therapies showing improvement in these measures have had limited to no success. This interim data may provide us with an early signal related to skin changes, and may help inform the clinical development strategy for this indication. Because we plan to evaluate skin assessments in the interim data, and do not plan to include any data related to lung function, we see limited read through from this data to the Phase 3 top-line data in pulmonary sarcoidosis, that we will present later this year.

I will now turn the call over to Leslie Nangle, our Vice President of Research, to discuss our research and discovery programs.

Leslie Nangle: Thank you, Sanjay. While we have focused quite a bit on efzofitimod in the clinic, it will be useful to comment on efzofitimod’s unique mechanisms of action, or MOA, as this is truly a first-in-class drug candidate. Since we started this program, we have greatly enhanced our mechanistic understanding of efzofitimod’s immunomodulatory activity. And we are pleased to report that just yesterday, we published an extensive manuscript in the journal Science Translational Medicine, which outlines the MOA and all of the preclinical data generated for efzofitimod from concept to clinic. The article describes the foundational science, detailed preclinical studies, and discovery work behind efzofitimod. This includes how it is engineered from a splice variant of the tRNA synthetase HARS, which is enriched in human lung tissue and upregulated by inflammatory cytokines in lung and immune cells.

It also describes its specific and selective binding to NRP2, which is a cellular receptor highly expressed by myeloid cells in active sites of inflammation. Through this binding, it inhibits the expression of pro-inflammatory receptors and cytokines, thereby downregulating inflammatory pathways in macrophages. This mechanism can subsequently disrupt the cycle of chronic inflammation and fibrosis. This type of top-tier peer-reviewed journal requires extensive vetting by the broader scientific community, with multiple independent reviewers performing a comprehensive audit of all of the work that we have generated. This process itself demands the utmost transparency in our work. Therefore, we believe this publication validates the immune regulatory properties and extracellularly mediated mechanisms we have demonstrated for efzofitimod as it relates to reducing inflammation and fibrosis.

Furthermore, it considerably reinforces the basis for the application of efzofitimod in chronic inflammatory conditions. It strengthens the scientific rationale for our clinical program in ILD, as well as encourages the potential development of other tRNA synthetase-based therapeutics for disease prevention. We are very proud that the novel science that drives efzofitimod is being recognized on the world stage. To publish this extensive body of work in such an esteemed journal is a momentous accomplishment for our research team and speaks to the nature of the high quality work that aTyr produces. While we have focused much of today’s conversation around efzofitimod, I want to remind you that the splice variant that forms the backbone of efzofitimod comes from our robust intellectual property estate, covering domains from all 20 human tRNA synthetases.

And we utilize our platform and unique drug discovery process as an engine to generate new pipeline candidates. With efzofitimod and HARS, we have demonstrated that this tRNA synthetase fragment has a previously undiscovered extracellular function. And we continue to interrogate other tRNA synthetase fragments to identify roles they may play in cellular response and altered disease states. We currently have two preclinical candidates from other tRNA synthetases, where we have identified their interactions with targets and therapeutic areas where they may play a role. Both of these candidates, ATYR0101 and ATYR0750, interact with receptors that affect fibrosis. We are exploring ATYR0101 in both lung and kidney fibrosis where we recently presented data at a Keystone Symposia that shows its ability to induce myofibroblast apoptosis through a novel anti-fibrotic mechanism.

We are exploring ATYR0750 in liver disorders based on the strong connection to its target, which is FGFR4. We are really proud of the innovative work that we have done with efzofitimod and the advancement of the program to date. We look forward to replicating that process with some of our current and yet to be discovered candidates. I will now turn it over to our Chief Financial Officer, Jill Broadfoot, to review our financial results.

Jill Broadfoot: Thank you, Leslie. We ended 2024 with $75.1 million in cash, restricted cash, cash equivalents, and investments. Subsequent to the end of the fourth quarter 2024, we raised approximately $18.8 million in gross proceeds from our at-the-market, or ATM, offering program. Collaboration and license revenue related to the Kyorin agreement was $0.2 million for the year ended 2024, which consisted of drug product material sold to Kyorin for the Japan portion of EFZO-FIT. Kyorin is our partner for the development and commercialization of efzofitimod for ILD in Japan, and we now have received over $20 million under this agreement to date, including milestones, where we are eligible to receive up to $155 million in additional milestone payments, which are primarily geared towards regulatory and commercial milestones for sarcoidosis.

Research and development expenses were $54.4 million for the year ended 2024, which consisted primarily of clinical trial costs for the EFZO-FIT and EFZO-CONNECT studies, manufacturing costs for the efzofitimod program, and research and development costs for the efzofitimod and discovery programs. General and administrative expenses were $13.8 million for the year ended 2024. Based on our current cash position, we have updated our financial guidance and believe our cash runway is expected to be sufficient to fund the company’s operations through 1-year following the Phase 3 EFZO-FIT readout. We view this runway as important as it covers key upcoming inflection points for the company, including the Phase 3 EFZO-FIT readout and a potential filing of a Biologics License Application for efzofitimod in pulmonary sarcoidosis.

In addition to extending our cash runway, we plan to use some of the ATM proceeds to help fund our commercial readiness plan. Now, I’d like to turn the call back over to Sanjay before we open it up to Q&A.

Sanjay Shukla: Thanks Jill. When we assess our current position, we feel incredibly pleased with our efzofitimod program and are enthusiastic about the future. We’re poised to seize an extraordinary opportunity and our excitement for the rest of 2025 is unmatched. Our latest validating publication in Science Translational Medicine confirms our understanding of efzofitimod’s mechanism of action. Our Phase 3 sarcoidosis trial has progressed through four successful DSMB reviews, bolstering our confidence in the therapy safety profile. And new claims data from sarcoidosis patients suggest a growing multi-billion-dollar market with little competition. Our journey began with our innovative biology platform which advanced from research to clinical stage through transparent seamless execution, while upholding a high level of scientific and medical rigor.

A groundbreaking advancement for sarcoidosis may be within our reach. One that could greatly enhance the company’s trajectory and elevate aTyr to new heights in the biotechnology sector. We greatly appreciate your interest. At this time, we’ll be happy to take your questions.

Q&A Session

Operator: Thank you. [Operator Instructions] And our first question comes from Derek Archila with Wells Fargo. Your line is open.

Derek Archila: Hey, there. Thanks for taking the questions and congrats on all the progress. So just first question, I guess maybe, Sanjay, can you shed some light on how measuring the absolute change in steroid reduction at baseline now to week 48 versus the current way that you had set it up in terms of the average cumulative steroid dose? How does that impact the trial? I know you noted the powering remains intact, but I guess maybe just remind us the powering of the trial and I have a follow-up.

Sanjay Shukla: Sure, Derek. So previously, as I mentioned, we were looking at the average steroid dose in that week 12 through week 48 period, basically taking the patient diary information from every single day, they report their prednisone and dividing by the number of dose. It’s a fairly conservative way of looking at all the peaks and valleys combined with our steroid taper and that protocol that’s occurring simultaneous to that treatment period. But after some feedback and discussions with the FDA, the view was to look at just the change from week 0 to week 48. This is something that we’re very happy with. I think in many ways this allows us to simplify the manner in which we analyze our data. It allows us to look simply at the starting dose essentially and the ending dose.

Remember, during this period, we’re trying our best to taper patients and continue to re-taper to zero. The assumption now is many of those peaks and valleys by the time the study ends should allow us to potentially maximize the steroid delta that we see in these patients. With regard to powering, it remains over 90%, 90% powered that either 3 or the 5 milligram dose shows a STAT-SIG steroid reduction compared to placebo. That has not changed. And with focusing now on the absolute change as opposed to percent change, we think that’s also a better framework that’s more relevant to patients and providers.

Derek Archila: Super helpful. And then just a follow-up here. I know you highlighted in the prepared comments, there was investigator and patient enthusiasm for the EAP. So just wanted to ask, if you have any idea in terms of the percent of the patients who are in the trial rolling over into the expanded access or a new program there? Thanks.

Sanjay Shukla: Yeah. It’s a common question I get. How many patients? What’s the percent? And I want to start by saying, we have seen continued interest, growing interest, but the issue really here is that not all countries and not all centers can participate based on their local regulatory requirements. I’ve said this before, countries like Japan, for example, do not have a pathway to participate in an EAP type program. So, you’d have to subtract out all of those regions that aren’t involved and then try to come up with a quote unquote crude measure of response, which is what I think a lot of investors want to do here. What I can say is, the interest is still very robust. I was just with about 30 experts recently this past weekend.

There continues to be more and more interest to participate in the EAP. We have committed to helping patients who are performing well in the trial to roll into this EAP, but it’s an individual site by site decision, because, of course, we are not in a formal open label type extension. So, I’m very pleased with the progress. I think it’s a great signal, great interim biomarker, if you will. And we’re going to continue to support those patients to move into that EAP. But, again, to get into specific numbers and try to get into the math, it’s probably not helpful. And just as a reminder, we are blinded. We’re blinded to what these patients are on during the trial. So there’s always a chance that all of these patients are on placebo that they have been able to taper more or less off their steroids and it doesn’t have anything to do with the drug.

So people know me to be rather conservative in my messaging. I just think it’s a great signal to see that patients who are finishing a trial want to remain in the trial. That to me as a former clinician speaks very powerful to what something is happening during the trial.

Derek Archila: Got it. Understood. Very helpful. Thanks, Sanjay.

Operator: And the next question will come from Yasmeen Rahimi with Piper Sandler. Your line is open.

Yasmeen Rahimi: Great. Thank you so much for taking the questions and congrats on all the exciting progress and exciting year ahead of us. I got two quick questions. One is maybe, was it the market research around managing patients with steroid reduction that led to engage with the agency to make this change from a sort of clinical perspective? Just maybe if you could kind of shed light how that meeting came about and why that change – the change makes absolute sense, but maybe the question would be why implement it now and the rationale behind it. That’s sort of question one. And question two is really exciting to see the baseline demographics from the study here upcoming at ATS. Could you maybe help us understand what we should be looking for?

Obviously, it’s a tremendous study with globally lots of work went into it. So just kind of help us framework on what are some of the measures that we should be looking closely to in terms of this patient population? And I’ll jump back in the queue.

Sanjay Shukla: Sure. Yes. Three questions. I will take the first one and say that the market research is not necessarily really connected to this type of meeting. This is a little inside baseball biostatistics that typically before you lock your database, you would have all the rules set up with the biostats division. And as a former biostatistician, it’s important that we really agree to all the pre-hoc analysis. I think far too many times in biotech, we implement rules and then after data comes out, we start to do post-hoc analysis and cherry pick and cut and slice the data. And I wish more biopharmas wouldn’t do that. So we’re very rigorous and I like to be very rigorous around, hey, let’s get everything pre-hoc, organized down to the details exactly how do you want us to program and even look at some of this steroid reduction.

Now, we have proposed something that I viewed as a fairly conservative way of looking at steroids and the average daily steroid dose. Upon interacting with the FDA here, their view was this approach would be fine. The suggested approach where we’re looking at just a simplified change from baseline. I’m not going to disagree with that. I’m going to go ahead and implement that approach. Because as I said, I think this actually allows us to potentially maximize a signal at the end of the trial. Remember, there’s a forced steroid taper component. Placebo patients will get the benefit of that reduction of the forced steroid taper. But, now, looking at the end of the trial, the clinical team and I view this as potentially a way to maximize a signal here, because as I pointed out, all those peaks and valleys that occur over the course of the trial now should be adequately handled, observed and, now, we’ll have a true measure at the end of the trial.

Your second question was really around the baseline demographics. It’s important to put this out. The community is really interested. They want to see data as quickly as possible. Many of our PIs have said, can we take a look at background immunomodulator use? We just want to see the data. We like to see what the average daily steroid dose is, duration of disease, things of that nature. So these are all important things for us to show to the community, and we already have that data. It’s just baseline data. So why not put it out at a major medical conference? The important thing for investors to pay attention to is that average prednisone dose. I’ll remind everyone in the last trial, the Phase 2 trial, we had an average dose somewhere in that 11 to 13 range.

This trial where we’re enrolling patients with a slightly lower basement dose of 7.5 milligrams, expect that prednisone dose maybe a little bit lower, but we want to take a look at that. And then that helps with all the investors that want to do the modeling with regards to how much steroid delta you want to see there. So, it’s important to get this baseline data out there, make sure we more or less enroll per the IE criteria in our trial.

Yasmeen Rahimi: Thank you so much. We’re very much looking forward to it.

Operator: And our next question will come from Faisal Khurshid with Leerink Partners. Your line is open.

Faisal Khurshid: Hey, Sanjay, thanks for taking the question. Nice to be on the call with you guys. I just wanted to ask, so in terms of the placebo arm, I guess for the steroid tapering in general, I think in the past you said that patients would have to try to taper to zero 3 times over the course of this 48 weeks. So with this change now, like what happens if a patient is mid taper at week 48? Like does that mean that they’ll kind of have a steroid level that’s sort of being impacted by this forced taper for what you’re measuring for the primary endpoint?

Sanjay Shukla: Yeah, great question. So the first thing I’ll say is with the relative length of the trial, our expectation is in particular in those placebo patients, we have adequate time here to unmask their disease and not only unmask the disease, but have as you point out several rounds of trying to basically re-taper them. So, we still are going to continue with that protocol in that manner. Now, you point out an example, I would say maybe an extreme example, what if a patient in that last dosing period is actually trying to be re-tapered. So, again, this is a very, very specific question for a specific circumstance. But, typically, when you look at a change from baseline, it’s not that you’re looking at the point estimate on that day of that visit.

Typically, what you’re looking at is a trailing average of, say, 28 days. So that’s, again, a very wonky biostats and programming question that you’ve asked there. So in that case, if somebody is in an active taper, we have a look back there of those 28 days. That’s occurring for all of the patients there. My view is most patients will have reached their, what I would call, resting dose as a placebo patient and their resting dose of a potential EFZO treated patient. And we’ll know that over the course of those last 28 days. That’s why we believe that this allows us to potentially maximize the differences you may see from change from baseline within each cohort. Does that help?

Faisal Khurshid: Yeah, super helpful. Thank you for clarifying. And then if I could ask, just in terms of the how should we think about the durability of the drug impact now that you’re kind of doing the analysis in a way that really emphasizes the end of the study?

Sanjay Shukla: Oh, I love that you asked that question, because we were talking about this week. Durability is going to be really important with this trial. And this is one way that it signals a potential durable response. I wouldn’t say things like time to relapse and time to clinical worsening are other ways that you can look at it. I’ll remind everyone that from our last data, the pooled analysis showed that these two treatment doses kept people 93% of the patients in that small dataset from relapsing in 6 months, whereas you saw 55% of the sub-therapeutic and placebo patients relapse. So as a comparison, that’s an indication of durability. This is the way we’re measuring this endpoint is certainly going to allow us a clue to see if the drug is actually has durable response, but we’re also going to be looking at time to relapse as a tertiary analysis.

Many of the experts, they really care about that. So that’s something that also, I think, we can potentially see a statistical win on, albeit it’s not a primary or secondary endpoint. But definitely durability is something that we’re bullish on right now with our therapy.

Faisal Khurshid: Great. Thank you for taking the questions.

Operator: And our next question will come from Prakhar Agrawal with Cantor Fitzgerald. Your line is open.

Prakhar Agrawal: Hi. Thank you for taking my questions and congrats on the progress. So, firstly, I think in the Phase 1/2 for the 5 milligram per kg dose, the 1.6 milligram per day steroid reduction that was seen was during the post-taper period. So if you can remind us what would you see in the overall time period based on the new definition here? That’s my first question. And the second question, maybe if you mentioned that the powering remains intact, but did the powering decrease versus the initial assumption that may have been very conservative to begin with? And lastly, if you can comment on what did the FDA say on FEV1 at the Type C meeting or was there any discussion around that? Thank you so much.

Sanjay Shukla: Yeah, I’ll take the last part first. Little to no discussions on PFTs. I think this speaks to a much greater interest in steroid reduction and frankly the king sarcoidosis. So with regard to FEV1 specifically, that is an important PFT for obstructive disease and many of these patients of course have obstructive disease. We’ll look at that again as a tertiary endpoint. But my general sense is, there’s much more of a focus and we had much more of a discussion around steroid reduction. You asked around powering, again, the powering assumptions still remain the same. If anything, and I’m going to probably have to set some time aside with you and our biostatistician, the powering remains the same over 90% powered.

We may in fact be able to, as I’ve said before, looked for a 3 and 3.5 milligram percent, absolute difference – excuse me, not percent. Now, I think it’s probably skewing closer to 3 milligrams. So even with the same powering assumptions, this new way of analyzing the data may allow us to, as I said, potentially maximize the difference here, maybe not even as high a bar, slightly lower, but that’s something that we’ll confirm. And, again, I want to keep the powering here at 90%. Your first part of the question, Prakhar, was – can you just repeat that again?

Prakhar Agrawal: Yeah. So, I think, in the Phase 1/2 for the high dose, the 1.6 milligram per day steroid reduction was for the post-taper period. So if you apply the same definition as the new endpoint, if you can remind us what would you see there?

Sanjay Shukla: Right. So we haven’t analyzed it in that manner. What I can tell you is the placebo population had the benefit of the forced steroid reduction in that trial. So if you just sort of qualitatively think about this, if you remove that and you just focus at the end of the trial, we knew that over 50% of the patients in those sub-therapeutic doses were not doing well at the end of the trial. They were, have been rescued and managed at a much higher dose. So, just from a qualitative standpoint, given the fact that we held the line and did pretty well with our 3 and 5 milligram doses and placebo got worse over time, I think, you can see that that number would grow, but we haven’t gone back and back calculated that. It’s a good question. But, I think qualitatively you could probably understand that delta would be certainly larger than 1.6.

Operator: And our next question will come from Gregory Renza with RBC Capital Markets. Your line is open.

Gregory Renza: Hey, good evening, Sanjay, and team. Congrats on the progress and thanks for taking my question. Sanjay, maybe just spinning to EFZO-CONNECT and scleroderma ILD, it’s nice to see the detail on the 8 patients on the dataset you’ll be showing on drug and placebo coming up soon. Just curious as you’ve certainly cautioned on not reading through to EFZO-FIT, of course, just wanted to have you comment a bit on what you are looking for, what do you want to learn from the dataset and especially as you talk about the white space with EFZO and other fibrotic diseases, to what extent could this data help guide the directionality there? Thanks so much.

Sanjay Shukla: Sure, Greg. Thanks for the question. So, absolutely, I think the focus on skin, as you can imagine, we’re not really looking so much really at all for skin for sarcoidosis. The skin readouts represent an extremely high bar. Let me first start by saying scleroderma ILD patients, the primary morbidity that they really complain about and care about and, unfortunately, have not been able to address with any of the therapies is improving skin. None of the approved therapies made a dent in helping with clinical symptom or quality of life. So, we take this seriously. We also know it’s a very high bar. Why do we think it’s worth looking at skin pathology? Well, we saw a lot of neuropilin expression and even our paper from Science TM that just came out has experts in other areas of inflammatory disease with refractory therapies very much interested.

Scleroderma is an area where we see neuropilin expression in those skin plaques. So it makes sense for us from an experimental point of view to really interrogate what’s happening there. Do we see any pathology benefit? Do we see any kind of impact? Again, no therapy has been able to move the needle at all. Can we see something there with immune biomarkers? Now, with that as a context, it’s okay then in my mind to look at a small dataset, because if we do see something, I think it would be pretty amazing. And, I think, it could open up EFZO’s potential in a number of other systemic diseases, which is where experts continually ask me, can this be used outside of the lung? With our recent paper that just came out, it has attracted more interest from other areas in rheumatology, dermatology.

This is something that could be quite exciting for the therapy. So as of now, we’re really focused on the lung as a franchise with efzofitimod. But you can start to see with the mechanistic validation that we, Leslie outlined in the Science TM paper, this really looks like an opportunity that how do you best position efzofitimod and this is a first step looking at skin perhaps in scleroderma patients. So, I think, it’s a fair fight right now to take a look here, see if we can actually move the needle. It may actually impact where we want to go with efzofitimod with regard to scleroderma patients. Could it open up a more systemic opportunity? We know that’s a much, much larger market. And, we’re also competing with some rather large players right now in that space.

But we feel as though we can go toe to toe with them regardless of how big they are from a pharmaceutical perspective.

Gregory Renza: That’s great, Sanjay. I really appreciate it. Look forward to the data.

Operator: And our next question will come from Joe Pantginis with H.C. Wainwright. Your line is open.

Joe Pantginis: Everybody, good afternoon. A couple of questions, if you don’t mind. So first, Sanjay, the later part of your comments, you’re talking about patients that may not go on to an EAP, maybe not knowing what the drug is on, etcetera. You listed several reasons. So just curious, maybe you can share some nuances of the disease itself in that, what is the potential to see steroid reductions or even going to zero without therapeutic interventions?

Sanjay Shukla: That’s a great question, Joe. And I think what we are now really uncovering and want to really think about with this EAP is as patients start to get into longer-term therapy with efzofitimod. Again, I don’t know what they were on during the trial, but now I know they’re receiving 5 milligrams per kilogram. And as they continue to remain in the EAP, the question becomes, are we inducing things more than just management of active inflammation? Is there are we inducing any signs of remission? So this is a different study. It’s quite exciting to those patients, but for them to be off steroids many times for the first time in maybe a decade, this is just a welcome relief to them. So the EAP is something that I’m really proud of as we look to get more patients in this EAP, how do we then potentially, if our drug is successful with the readouts, how do we then morph that into a more formal EAP or a registry?

This is going to answer some of those questions where you start to say, okay, what is the drug doing long-term? It’s that durability question. I think it’s both exciting, but it also opens up some questions around once we get into 18 or 24 months of good management of these patients, what are the implications for a drug like ours? How does it impact pricing? And how do we as a company prepare ourselves for what seems to be a larger market than anyone ever anticipated. So both exciting, challenging, but I think it’s something that we look forward to knowing once we unlock and unblind from this current trial.

Joe Pantginis: Got it. Thanks for that. And then maybe from a reminder standpoint, can you let us know about your current manufacturing readiness, not only for development indications, but also for potential early commercialization, any early on needs?

Sanjay Shukla: Yeah. We invested significant capital a few years ago ahead of time to prepare for a commercial readiness strategy with our drug supply, a launch readiness plan, and we made those changes from a clinical group grade partner to a commercial grade partner. Now, we remain on track. That’s going to be an important component to our submission. It’s something the FDA CMC division, CMC group certainly keeps tabs on where we are. Because if we have good data, we want to have drug ready for these patients. As I told you, 20% of these patients, upwards to 20% have significant morbidity and a potential mortality rate in certain age groups that are even higher than that. So these patients can’t wait. So for us to be ready as a biopharma, we made those investments.

If anything right now, we have to look at this new epi data and, say, do we have to be ready to have this as a bigger opportunity? We know I can tell you that and I’ve said this to many of you, the interest from strategics, for example, is the highest it’s ever been because I think the market even with some of those potential strategics we talked to, they are realizing it’s a much larger market. We’ve had a hand in that by leading the way in sarcoidosis, we’ve opened up people’s eyes, more data equals more publications, more understanding. We continue to lead that way with this claims database that we’ll have some data around and the treatment landscape posted at ATS. This is going to fundamentally start to establish a burgeoning market of which we’re really the worldwide leader right now with EFZO.

Joe Pantginis: Thanks for the color.

Operator: And our next question will come from Liang Chang with Jefferies. Your line is open.

Liang Chang: Hey, good afternoon. Thank you for taking our questions. This is Liang on for Roger. So, just want to circle back to the statistical plan change. So wondering if you can give us any color on what are the drivers from FDA side to change that statistical analysis plan to the current one? Anything more you see from your Phase 1/2 that’s more supporting this plan, current plan?

Sanjay Shukla: Well, I’m probably not going to comment what exactly is in the FDA’s head, because if I knew that, I’d have another career. But, I think, it’s really about simplification. And if anything, what we proposed, we thought was rather conservative, as I said, lacking in bias approach, a simplified assessment was certainly always on the table. But when you sit down with the FDA and specifically the biostats reviewers, you listen to what they guide you towards and sometimes you take it quickly, I will say that. So this is an approach, I think, again, as we are trailblazing here, creating a new path, some of this is working closely with the regulators there. So we may have ways in which we are thinking about analyzing things that from an academic or clinical point of view makes sense to us, but they’re going to provide a little bit of that regulatory color.

And, again, if something is a little bit more simplified for them, like I said, we’re going to go ahead and take that win. And we do see this as a more streamlined approach that as I said, we think can help us.

Liang Chang: Absolutely. Thank you. Thanks, Sanjay. Maybe one more question on upcoming interim analysis for scleroderma program. So I understand there will be like 8 patients. So, what’s the distribution between different doses and placebo? And how I understand that that will be focusing on high bar of the skin analysis. So just wonder how would that result affect your ongoing plan?

Sanjay Shukla: Yes, I’d imagine, I don’t have obviously the treatment assignments for these patients as of yet. We’ll do that when we take, when we pull down on these 8 patients. But I anticipate they will include treated and placebo patients, just based on the block randomization and how we enroll these patients. That’s what I anticipate at this time.

Liang Chang: And how should we think about the results regarding any changes on your ongoing clinic trial?

Sanjay Shukla: Any change – you’re saying what are the assessments we’ll look at with those 8 patients?

Liang Chang: Yeah.

Sanjay Shukla: Yeah, it’s going to largely…

Liang Chang: What’s your impact?

Sanjay Shukla: Right, right. Well, again, these are patients, these skin samples will look at histopathology to see if there’s any kind of fibrotic improvement. We’ll be looking at immune biomarkers. We’ve seen of course in animals that the drug performs quite well, but now we have access at the cellular level to potentially see things. The one thing with sarcoidosis not having the ability to biopsy the granulomas that wouldn’t be ethical in the trial. This allows us in this trial to really look at what’s happening right there at the site of inflammation with these patients. So having the access to the skin samples allows us to see if things are really moving right there in these patients. And, of course, there’s also some clinical sub-scoring with something called the Rodnan skin score.

Again, that’s something that no approved therapies have improved. So this is why those rheumatologists in particular are really interested to see if efzofitimod moves a needle at all in these samples. If it does, I think as I said, it unlocks a number of other potential systemic opportunities in the rheumatology space.

Liang Chang: Got it. Thanks.

Operator: And our next question will come from Dev Prasad with Lucid Capital Markets. Your line is open.

Dev Prasad: Hey, everyone. Congrats on the progress and thank you for taking my question. I have a couple of questions. One on Expanded Access Program. I’m wondering whether you plan to use the data in BLA in any ways. And, secondly, like, do you have significant data from EAP prior to BLA submission?

Sanjay Shukla: Okay. So the first question – answer the second. The first thing is, we’re not slowing down our BLA timelines by wanting to really take a look at this data. Now, this is outside of our trial. So it’s not housed in a database that we own. There are a number of investigators that they have the ability to, if they wanted to pull together investigator-initiated trial, that could be a possibility. I’m in discussions with some of them about potentially what would that look like. Again, that would sit outside of our trial. So I don’t want I want everyone to understand about slowing down the BLA timelines. And, again, we updated our guidance today that we preserved not only the readout, our BLA timelines, but now effectively have more than a year of cash from our readout, our Phase 3 readout.

So we don’t want to slow anything down. Will there be any meaningful analysis from those EAP patients? Again, that depends on whether or not investigators want to have some data out, whether anecdotally or bundled together with some of the sites there. So stay tuned for that. I would love to actually have some data come out in parallel. I think it could potentially really help our BLA discussions if we show in fact long-term durable effects of EFZO. And then, of course, from a safety perspective, it doesn’t hurt to even have some more data. So stay tuned. I do think that’s something that could potentially really benefit us in 2026.

Dev Prasad: Great. Just one more. If you can talk about the next pipeline product and potential IND, do you plan to evaluate EFZO in other ILD diseases or the path will be to bring next program like 101 or 750 into clinic? Thank you.

Sanjay Shukla: I think right now we’re enthusiastic to do both. I think efzofitimod clearly mechanistically now could have relevance in a number of other ILDs. And as I pointed out here, we’re talking about upwards to a $5 billion market. When you get outside of sarcoidosis, scleroderma, ILD, RA, myositis ILD, these are all markets that incrementally, there’s no therapy out there that would be considered above ours if we are successful here with sarcoidosis. There’s a lot of legacy products, biologics, other immunosuppressive agents. So I’m continually, for example, in discussions with those autoimmune ILD experts that how can we move into these areas. Pneumonitis, hypersensitivity pneumonitis is another big area that EFZO could potentially work from a mechanistic standpoint.

With regard to pipeline, 101 has produced some rather outstanding effects as an anti-fibrotic and what I would consider a true anti-fibrotic in that it is initially looking like it modulates myofibroblasts. So our goal would be to expand efzofitimod look at other indications. I think there would be a significant demand in other ILDs certainly. And then with regard to our pipeline, we clearly have a first class research team here that can generate outstanding discoveries. So moving 0101 and 0750 into areas like lung fibrosis, kidney fibrosis, liver disorders, that would certainly be in the cards here. And it’s why I think this is a real big inflection moment for us as a company with this Phase 3 readout.

Dev Prasad: All right. Thank you.

Operator: I show no further questions at this time. I would now like to turn the call back over to Sanjay for closing remarks.

Sanjay Shukla: Well, I want to thank everyone for a number of great questions today. A lot of enthusiasm and interest that I can hear on the other side of the line. We certainly appreciate everyone’s interest. It has been a journey for us. We’re really proud of the work we’ve done. I’ll just highlight one last thing here. Again, I go back to that publication. As a company here with 20 to 25 researchers, we’re competing with companies, for example, like Roche and Novartis, places I’ve worked with thousands in research departments. And to have a publication in Science TM, I think this is our second one in the last 5 years, thousands of publications over the last 5 years in that journal. I can only count 5 companies who have had two major publications and we made the cover this time with these discoveries.

And of those five, we’re talking about major big pharma players with thousands of people. So a big shout out to our research team here in San Diego, 20 to 25 folks here strong under the leadership of Leslie. And we’re producing discoveries and insights and really fulfilling the mission of translating this rather unique biology into meaningful medicine. So really, really proud of the work we’ve done here. I’ll end with that. Look forward to seeing all of you, many of you on the road as we get closer here to Phase 3 readouts later this year. So thank you all for your interest.

Operator: This does conclude today’s conference call. Thank you for participating. You may now disconnect.