aTyr Pharma, Inc. (NASDAQ:LIFE) Q4 2023 Earnings Call Transcript

aTyr Pharma, Inc. (NASDAQ:LIFE) Q4 2023 Earnings Call Transcript March 14, 2024

aTyr Pharma, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon, ladies and gentlemen, and welcome to the aTyr Pharma fourth quarter and full year 2023 conference call. At this time, all participants are in a listen only mode. [Operator Instructions]. 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 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 2023 operating results and corporate updates. 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 research and discovery program. Jill will review our financial results and our current financial position before handing it back to Sanjay to open the call up 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 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 forward-looking statements, which speak only as of the day 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.

Sanjay Shukla: Thank you, Ashlee. Good afternoon, everyone, and thank you for joining us for our fourth quarter and full year 2023 results conference call. At aTyr, we are leveraging evolutionary intelligence to translate tRNA synthetase biology into new therapies for fibrosis and inflammation. Our lead therapeutic candidate, Efzofitimod, is a first-in-class biologic immunomodulator based on a naturally occurring, long enriched splice variant of the tRNA synthetases, HARS. Efzofitimod selectively modulates activated myeloid cells via neuropilin-2 or NRP-2 to resolve inflammation without immune suppression and potentially prevent the progression of fibrosis. 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.

2023 was an important year for aTyr as we progressed and expanded our Efzofitimod clinical development program, which now includes two ongoing clinical studies, the Phase 3 EFZO-FIT study in patients with pulmonary sarcoidosis, a major form of ILD; and the Phase 2 EFZO-CONNECT study in patients with ILD related to systemic sclerosis, which is known as SSc or more commonly, scleroderma. Throughout the past year, we have also greatly enhanced our mechanistic understanding of the way in which Efzofitimod is confirming its anti-inflammatory effects. NRP-2 is highly expressed on activated immune cells doing an inflammatory response, notably myeloid cells, including monocytes and macrophages. By binding NRP-2, Efzofitimod guides the differentiation of monocytes at the site of inflammation into a macrophage subtype that is less pro-inflammatory to resolve aberrant inflammation.

Dysregulated inflammation is a hallmark of myelo-driven diseases such as ILD, where persistent, uncontrolled inflammation can lead to the progression of fibrosis. With this new understanding, we now have even greater clarity and confidence as to why Efzofitimod may represent a breakthrough in treatment for ILD. Our lead indication for Efzofitimod is pulmonary sarcoidosis, the most prevalent form of ILD, where approximately 70% of patients will have symptomatic disease and nearly 20% will develop lung fibrosis. Current standard of care is primarily oral corticosteroids, a highly toxic treatment that has limited clinical evidence, is broadly immunosuppressive, and comes with side effects resulting in a high disease burden for patients. EFZO-FIT is a global pivotal Phase 3 study evaluating Efzofitimod compared to placebo in the context of a four steroid taper in patients with pulmonary sarcoidosis.

This study is currently enrolling at more than 90 centers in nine countries. We’re pleased with the progress we’ve made thus far with this study, which is expected to be the largest interventional study ever conducted in sarcoidosis. Completing enrollment in EFZO-FIT is our primary focus and we anticipate doing so in the second quarter of this year. In the past few months as patients have completed the 52-week EFZO-FIT study, we’ve received multiple inquiries from study principles — study principal investigators, or PIs, whose patients have requested to continue treatment once they completed the trial. While aTyr PIs and patients are all blinded to what treatment patients received as part of the study, either Efzofitimod or placebo, the feedback we’ve received has suggested that some patients have performed well and want to continue on study drug rather than returning to the treatment regimen they had prior to the study.

For some patients that may entail resuming or increasing steroid dose, which many patients are reluctant to do. Based on this feedback, we decided to implement an individual patient expanded access program or TAP for patients who complete EFZO-FIT. This individual patient EAP is design to allow access to Efzofitimod for patients who all have or are in the process of completing EFZO-FIT beyond the duration of the clinical trial. The company PIs and patients will remain blinded to treatment that occurred as part of EFZO-FIT. Safety is a key component of any EAP. We were able to implement this program based on the existing safety database from prior Efzofitimod clinical studies and additional safety and tolerability data from a Data Safety & Monitoring Board or DSMB review of data from EFZO-FIT, which included the evaluation of patients that completed 52 weeks of treatment.

The DSMB review recommended the study proceed without modification, suggesting no major safety concerns. And while many types of EAPs are typically implemented after data from a study has been unblinded, we decided to implement this individual patient EAP early not only based on feedback and demand, but in part to continue to support those patients who have dedicated their time and entrusted us with their health by participating in this important study. This program reflects our ongoing commitment to the sarcoidosis community as we work to develop a safe and effective treatment for those in need. Our second indication for Efzofitimod is SSc-ILD. SSc is a form of connective tissue disease where ILD commonly occurs and is a leading cause of mortality.

Current treatment options are limited and like sarcoidosis, do not treat the underlying disease or improve quality of life. EFZO-CONNECT is a Phase 2 proof-of-concept study evaluating Efzofitimod compared to placebo in patients with SSc-ILD. This study, which dosed the first patient last quarter, is currently open for enrollment at multiple centers in the US. We’re focused on generating data from this study in 2024, and we expect to provide an update on the study later this year. We estimate that the two indications that comprise our current clinical program for Efzofitimod, pulmonary sarcoidosis and SSc-ILD collectively represent a potential $2 billion to $3 billion global market opportunity. This does not include any upside potential and other forms of the more than 200 ILDs, where Efzofitimod’s unique mechanism of action to address complex immune pathology and desirable safety profile may be able to disrupt standard of care.

While our primary focus is our clinical program for Efzofitimod, we continue to leverage our intellectual property or IP estate covering domains from all 20 human tRNA synthetases and utilize our platform as an engine to generate new pipeline candidates. tRNA synthetases are ancient essential proteins that have evolved novel domains to regulate diverse pathways, extracellularly, in humans. By identifying extracellular receptors and signaling pathways for these domains, we can elucidate the role these proteins play in cellular response and explore disease areas where they may have therapeutic benefit. Our two most advanced tRNA synthetases candidates in preclinical development are ATYR0101 and ATYR0750, both of which have specific interactions with targets that have implications in fibrosis.

These targets include latent transforming growth factor beta binding protein one or LTBP1 and fibroblast growth factor receptor four or FGFR4, respectively. ATYR0101, which is derived from a domain of the tRNA synthetases DARS exerts its anti-fibrotic effects by selectively inducing a proptosis of myofibroblasts targeting a key hallmark of fibrosis pathology, which is the persistence of activated myofibroblasts. This mechanism may support broad therapeutic application in indications like lung, liver, and kidney fibrosis. The hidden biology that we have been able to unlock from our platform continues to inspire us, including the way in which some of these appended domains like Efzofitimod interact extracellularly with previously under the radar targets like NRP-2 and in particular, its role as an immune regulator or bind more well-known targets in unique ways like ATYR0101 and ATYR0750.

This platform, which is based on signaling pathways that have evolved over billions of years to maintain homeostasis is an excellent example of bio innovation and has the potential to disrupt traditional drug discovery, a process that is increasingly reliant on exploiting existing signaling pathways to generate therapies. Our conviction to the potential of tRNA synthetases biology to lead the transformative medicines continues to grow stronger as our research advances. I’ll now turn it over to our Chief Financial Officer, Jill Broadfoot, to review our financial results.

Jill Broadfoot: Thank you, Sanjay. We ended 2023 with $101.7 million in cash, restricted cash, cash equivalents and investments. Collaboration and license revenue related to the Kyorin agreement was $0.4 million for the year ended 2023, which consisted of drug product materials sold to Kyorin for the Japan portion of EFZO-FIT. As a reminder, Kyorin, our partner for the development and commercialization of Efzofitimod demand for ILD in Japan, where they are responsible for costs related to EFZO-FIT in Japan. And purchase drug product material from us with a small markup. Under this agreement, we have received $20 million in upfront and milestone payments from this partnership to date, and we are eligible to receive up to an additional $155 million, which is primarily related to certain development and regulatory milestones.

Research and development expenses were $42.3 million for the year ended 2023, which consisted primarily of clinical trial costs for 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 million for the year ended 2023. Based on our current operational plans and existing cash we, maintain our prior financial guidance and believe our cash runway is expected to be sufficient to fund the company through the filing of a biologics license application for Efzofitimod and pulmonary sarcoidosis. This takes into account the continued allocation of the majority of our resources to our Efzofitimod clinical development program, which is our main value driver for the company while also committing judicious resources to our tRNA synthetases pipeline candidates to maintain an active discovery program and advance our IP estate.

Furthermore, our forecast for our cash guidance does not include any potential future milestone payments from Kyorin or any proceeds that may result from additional potential partnerships or sources of non-dilutive funding. So it does consider our proceeds from the prudent use of our at-the-market facility. We implemented this operational plan more than a year ago, driven by our emphasis on maximizing efficiency and adapting to prevailing macroeconomic conditions, and this plan continues to be an effective way to meet our primary corporate objectives relative to optimal capital utilization. Now, I’d like to turn the call back over to Sanjay before we open it up to Q&A.

Sanjay Shukla: Thanks, jill. As we look back on the past year, we’re filled with optimism for the future. Our scientific expertise in understanding tRNA biology is unparalleled across the industry. We’re leveraging this unique biology and harnessing Ancient genetic codes developed throughout the course of billions of years in a trillion species. While other companies are just beginning to explore the untapped potential of tRNA biology we’re leading the way with our decades of understanding this science, which we have leveraged to progress a Phase 3 therapeutic candidate. It’s not just our understanding of the endless frontier of tRNA synthetase biology that sets us apart. Scleroderma represents the reality, not just the concept, of a potential near-term, meaningful tRNA-based therapy that can change the lives of patients.

We’re on the cusp of a once-in-a-generation therapy for sarcoidosis engineered from our natural physiology and are marching towards the chance to transform the lives of ILD patients. tRNA sarcoidosis is only the starting point for how have Efzofitimod may be able to help millions of ILD patients. As the only biotech company in Phase 3 development for this indication, we note the accelerating pipeline of candidates not just for sarcoidosis, but also for ILD more broadly. Other biopharmaceutical companies who are following our lead also see the multibillion-dollar market opportunity in this space. While these companies have yet to show proof of concept have Efzofitimod well beyond that, with patients requesting to remain on treatment as they complete our current trial in sarcoidosis due to the benefits they are experiencing.

So we believe it’s just the beginning for us here at aTyr. New validated targets are emerging from our evolutionary intelligence or AI driven drug discovery platform. Alternatively, artificial intelligence or AI driven drug discovery is really in its infancy, and these unproven hyped approaches do not have the advantage of our AI drug discovery engine. aTyr is uncovering hidden functions embedded in our genetic code that were developed throughout evolution encompassing infinite real-life biological experiments in over a trillion species over billions of years. Just think about that. The synthetase domains that we have mapped have developed over billions of years since the beginning of the tree of life. Since the evolution of complex systems, all species, including humans share these same genetic domains that were created over billions of years of biological stress and strain, allowing all species to thrive, and overcome disease and dysfunction.

As companies embark on computational models and approaches to quote-unquote, find new and novel targets. aTyr meanwhile has an IP library of hundreds of potentially efficacious proteins just waiting to be unleashed from our own genetic programming, leveraging novel domains that have been tested and validated since the beginnings of life, that we now look to target towards current day disease and dysfunction. I hope you can now better understand why we’re so optimistic here at aTyr, not only in the short term with Efzofitimod, but also in the long-term potential aTyr to become the next transformative biotech company of our time. We appreciate your interest at this time. Jill and I will be happy to take your questions.

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Q&A Session

Operator: [Operator Instructions]. Our first question comes from Gregory Renza with RBC Capital Markets. You may proceed.

Gregory Renza: Great. Good afternoon, Sanjay, and Jill. Congrats on the progress. Thanks for the updates and thanks for taking my questions. And Sanjay, maybe just going to the expanded access program, it’s great to hear the color you’ve provided. I Just wanted to ask if you could maybe put into context the significance of this to you and to Efzofitimod, especially as these blinded patients are undergoing the considerable taper for the trial? And then secondly, just any other details that you are seeing, whether it’s the patterns from the centers where that or what that demand is in order to have these patients and these trial participants to continue and with respect to the program and then, I have a follow-up as well. Thanks.

Sanjay Shukla: Sure, Greg, thanks for the question. So really over the last, I would say six months, if you will we have been hearing I’ve been hearing directly from the call, I’d say at this point, dozens of PIs around the world about how happy they are with the performance of the study drug of the study drug. I’m going to highlight say that over and over again, because we don’t know if successful it’s Efzofitimod or Placebo, and how their patients are performing quite well in the trial. It had reached the point however, that patients now rolling off the trial, frankly, don’t want to go back on steroids if they have been able to taper off or increase their steroids. Many of these patients have been on steroids for five, 10, sometimes 20 years.

So this has offered a real unique opportunity in this trial to live their lives with a lot less or no steroids. So it had gotten to the point where I thought it’s best for us to even think about MEAP really early on. Most of these programs are put in place after you unblind and you finish the trial. But with data, obviously, we’re looking at data next year. We wanted to be able to really fulfill our mission to really be patient oriented patient first and look to implement this program. Since we’ve put out the note, I think it’s been received even with more interest. This is certainly something that is a relief to a lot of these patients. And I do think that it’s a typical for a company to do this sort of thing ahead of data release. I would much rather have patients wanting to remain in the trial and happy to get out of the trial, put it that way.

So I think for me clinically when I think about this clinically. I think we’re doing the right thing here, ethically as well. And I think it’s probably the best biomarker you could ask for in my opinion.

Gregory Renza: Yeah, that’s helpful appreciate the color. And then just maybe shifting to EFZO-CONNECT just thinking about that, trial open for enrollment across these multiple centers. And that I think I heard you mention an update should come later this year. Just with respect to that uptake, what is your objective there? Of course, we’re all interested in the 12-week skin assessment as well but just curious how we should be thinking about that. Is it more procedural in nature? Or is it something where like to at least look and see some details of that program. Thanks again and Congrats.

Sanjay Shukla: Sure, so we’re just in that phase now where I think you’ll see six, eight, 10 centers up and ready to enroll at this point. Getting that first patient in last quarter was important, but now we’re getting into the meat of these sites being able to enroll. And like I said, we’ll have a good idea later this year around what kind of data we’ll put out here. There are opportunities with that data set to look at things, even a three month endpoint, which is some of the skin scoring that you pointed out there. But like I said, I want to see how we do here in the first half of the year with regards to enrolling in that trial now that we are approaching more or less full activation or nearing full activation of the centers that we want to get up and enrolling and screening for that trial.

Operator: Thank you. One moment for questions. Our next question goes from Joe Pantginis with H.C. Wainwright, and you may proceed, everybody.

Joe Pantginis: Hey everybody, good afternoon. Thanks for taking the questions. Sanjay, I want to start more, start first also with the EAP. So it’s pretty intriguing, like you said, to be able to have an EAP ahead of data. And if I heard you correctly, both physicians and patients remain blinded even after exiting EFZO-FIT as to what they had been previously on. So first, was curious if you could provide any more color or anecdotes that the physicians are giving you with regard to wanting to be into the EAP. You alluded to, maybe quote that they were, patients are feeling better, but are there any more details you can share around that? Second, what are the general logistics of setting up an EAP? And related to that, what are the cost implications? Thanks.

Sanjay Shukla: Yeah, great questions, Joe. So I think just at a high level without sort of getting into specific endpoints, what it really comes down to is these physicians have to put these patients have to put these patients back on something which was presumably steroids as they entered the trial. And now the patients are refusing to want to do that. So it speaks to the lack of options that we have here for sarcoidosis. These patients, of course, are not so fibrotic that they need the antifibrotics, so now there’s a quandary. Patients are doing well, and they’ve tasted kind of the best experience recently in their recent care, whether it’s removing steroids partially or completely. So I think we have to sort of step up here because many of the experts were sort of in a quandary now.