aTyr Pharma, Inc.
Q3 2020 Earnings Call Transcript

Published: 13 Nov 2020

[Operator:]

Good afternoon, ladies and gentlemen and welcome to the aTyr Pharma Third Quarter 2020 Conference Call. . It is now my pleasure to hand the conference over to Ashlee Dunston, aTyr's Director of Investor Relations and Corporate Communications. Ms. Dunston, you may begin.

[Ashlee Dunston:]

Thank you, operator, and good afternoon, everyone. Thank you for joining us today to discuss aTyr's third quarter 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 ATYR1923 and our research programs in neuropilin-2 or NRP2 and tRNA synthetase biology. Jill will review the financial results and our current financial positioning before handing it back to Sanjay to open the call up for any questions.

[Sanjay Shukla:]

Thank you, Ashlee. Good afternoon, everyone, and thank you for joining us for our third quarter 2020 results conference call. As we begin with our third quarter 2020 update, I would like to take a moment to acknowledge all the hard work and dedication from the aTyr team, our investigators, partners, collaborators and patients who have risen to the challenge of learning to operate under the unique circumstances that we have all experienced this year due to the COVID-19 global pandemic. With everyone's support and cooperation, we believe we are having an incredibly productive year even amidst the pandemic. Now let's get started with our quarterly review and corporate update. During the third quarter of 2020 and subsequent period, aTyr remained focused on our clinical program for our lead therapeutic candidate, ATYR1923. We now have 3 active clinical trials as part of this program. Most notably, we have completed enrollment in our Phase II trial in COVID-19 patients with severe respiratory complications, and we expect to report top line data from this study around the turn of the calendar year. Our trial in patients with pulmonary sarcoidosis and our partner Kyorin's trial in healthy volunteers in Japan both continue to enroll. In addition, we achieved key milestones in our research and discovery programs, where today, I am proud to announce that we have selected our lead candidate from our NRP2 antibody program in oncology. As we begin, I will summarize additional key highlights from the third quarter and subsequent period.

[Jill Broadfoot:]

Thank you, Sanjay. Net loss for the 3 and 9 months ended September 30, 2020 was $6.6 million and $11.3 million, respectively compared to $5.6 million and $17.6 million for the same period in 2019, respectively. While the third quarter net loss was slightly higher than prior year due to increased clinical activities, the decrease in net loss for the year was due primarily to $8 million from license revenue received under the Kyorin agreement. Under this agreement, we are eligible to receive payments upon achievement of certain development, regulatory and sales milestones. We expect to see the first of these milestone payments beginning in 2021. We ended the third quarter with $36.1 million in cash, cash equivalents and investments, and we continue to expect to end the year with more than $20 million in cash, consistent with prior guidance. Also, as of September 30, 2020, we have $3.1 million of term loans. However, on November 3, we fully repaid our term loans and retired our debt. We are happy to report that we no longer have any debt on our balance sheet. By paying off this debt, we are eliminating $8 million per year in principal and interest payment. To note, 2020, actually included close to $10 million in debt payments, which we will not have in 2021. We are very pleased with what we have been able to accomplish while upholding the responsibility of the $20 million of debt that was secured back in 2016. We expect to have the opportunity for a highly effective management of our cash burn in 2021 and beyond. Now I'd like to turn the call back over to Sanjay before we open it up to Q&A.

[Sanjay Shukla:]

Thank you, Jill. We appreciate everyone's interest and continued support and look forward to providing updates in the very near future. At this time, Jill and I will be happy to take your questions.

[Operator:]

. Your first question comes from the line of Hartaj Singh with Oppenheimer.

[Hartaj Singh:]

Great. Just a couple of questions. One is focused on ATYR1923 and COVID-19, your trial there. Sanjay, when I'm looking at the -- your primary and secondary endpoints on control , you've got some -- a few of them that are 60 days, some of them are day 14 of discharge. I know you're going to report results of this trial 60 days, I guess, roughly after last patient was enrolled. But how to think about some of those endpoints that are shorter? Is there a potential for an update if the results are better than expected sooner than that? Or really, it's just you got to wait for that 60-day period after the last patient visit to read it out? And I just got a couple of follow-ups.

[Sanjay Shukla:]

Yes. Hartaj, we actually are going to be prioritizing, I would say, the first 30 days of endpoints. So when we look to cut this data based on where we saw the sort of enrollment curve, we feel pretty good about being able to read out really most of what's occurred in the first month of the trial. We could certainly look at cutting things at different time points. But based on the trajectory of how patients enrolled and how they basically did this trial, we're going to have a nice data set, I would say, prioritizing that first month. It's that last 60-day visit where we wouldn't necessarily have a full data set. But that 60-day visit is largely safety when -- safety in its nature as a safety follow-up. So we feel pretty good about being able to have a complete message really by looking at those data past that first month, which is, I think, in line with most other companies on what they're presenting.

[Hartaj Singh:]

Great. And then just a question on the pulmonary sarcoidosis trial. I know you're restarting the third cohort with a readout sometime the first half next year. But has there been any changes -- because you have to pause enrollment and some of those patients might or might not have gotten a dose or missed a dose. In terms of your protocol, will anything change in the analysis plan for the pulmonary sarcoidosis trial when you read out? And I got another couple after that.

[Sanjay Shukla:]

Yes, we're not making changes to the statistical analysis plan. As I said, there sometimes can be some operational things that our team is allowing within the protocol individuals to enroll and be managed and followed in the trial. We've learned quite a bit about how to jump through those hoops right now, working with different centers, all the while keeping patients enrolled in our trial and trying to minimize any kind of missed visits, missed dosing, things of that nature. So I can tell you that since we've restarted, we've done a really good job of sticking to good operating guidance, practice integrity in our trial. And I also think that we've been able to successfully serially dose these patients. And I think that's really a job that our clinical operations team has done a really great job here on navigating this kind of different environment we're in, so that we minimize the things that you point out. We don't want any of that to happen. And we think we've done a great job there.

[Hartaj Singh:]

Yes. And Sanjay, will this sort of second kind of surge of infections and hospitalizations -- your pulmonary sarcoidosis patients have -- these are issues with the lung. Could there be any change in the trajectory of the third cohort enrollment with this kind of surge going on right now?

[Sanjay Shukla:]

We do not anticipate that. I think that has -- there's a couple of reasons for that. Number one, we've been able to figure out basically how to keep these patients safe, manage through the trial. And we have evidence of individuals being able to dose through and meet all of their -- more or less all their commitments in this trial safely. So by doing that at 1 or 2 sites, the remainder of our sites have seen that. And now we have a really nice ability to operationalize that across all our studies, even though some of them right now are going through a cresting of cases locally. So I think we've implemented some real time feedback. As I said, it hasn't impacted our statistical analysis plan. It just involved us to be a little bit more nimble on some operating elements. And we do not expect even at the current rate of COVID cases flaring all over the country, it is not slowing things down for us, and we don't anticipate it will.

[Hartaj Singh:]

Yes. And then just on the ATYR2810. You had mentioned breast cancer is possibly the first area you could go in with your IND. Would these be sort of -- what types of breast cancer patients would be -- the hormone sensitive? Or any thoughts there? Or it's still too early in terms of where you are in the IND filing process?

[Sanjay Shukla:]

I think we had obviously, some really nice data that we presented at AACR in triple-negative breast cancer. So this is a subcohort, a more aggressive cohort of breast cancer patients. So I think that's something that we definitely want to follow up on. With our new collaboration with Dr. Gemmill, we see entrants into lung cancer and potentially kidney cancer. But as part of our IND-enabling work, part of this is focusing in on which tumor types does 2810 show the best amount of early efficacy. So I will tell you that now antibody, we can now focus in on where we think it will be most effective. That's -- those are some clues on some early tumor environments that we're looking at a little bit more intensely, triple-negative breast cancer, also lung cancer and also looking a little bit at renal cell carcinoma as well.

[Hartaj Singh:]

Okay. And then do you expect to file that IND sometime in 2021? Or are you -- or is it -- when can we get some visibility on just when the filing would happen?

[Sanjay Shukla:]

We think we can file or at least get prepared to file right towards year-end next year. I think we've advanced our knowledge that it's not going to take us 18 or 24 months. We're looking at more like a 1-year time frame here. So a little bit early to provide guidance in the exact IND filing date, but we think that based on the data we see, if we continue to track and see similar kinds of efficacy signals throughout the course of the first half of 2021, I think we'll be in good shape towards the tail end of '20 to potentially file an IND or even do so right away at the beginning of 2022.

[Hartaj Singh:]

Yes. That makes sense. And my last question is to Jill, it's just on cash burn for next year. Assuming if your COVID-19 trials sort of end towards the latter part of this year, you don't have those interest payments next year, how do we think about just cash burn? I know that we're actually only a few months away from the fourth quarter call, JPMorgan, et cetera. But just how to think about cash burn for next year from an OpEx perspective, Jill?

[Jill Broadfoot:]

Hartaj, that's a good question because there are potentially going to be a lot of changes next year in our operations compared to this year. Next year, we could potentially be getting ready for a registrational trial for pulmonary sarcoidosis. We might be gearing up for COVID, which would require additional manufacturing. So we're actually looking at each of those activities and obviously, we're in our budgeting process right now. So it is too soon to give guidance. But I do think that given success and planning for success with these trials, we should be spending more on ramping up those clinical trial activities and/or manufacturing.

[Operator:]

Your next question comes from the line of Joe Pantginis with H.C. Wainwright.

[Joseph Pantginis:]

I wanted to focus on -- my question is really focusing on the speculative realm here. So assuming that the COVID study turns out positive, and Jill just sort of touched upon this as well with her comment, based on your wish list and based on regulatory feedback, what do you consider as next steps regard to study-wise? When could you potentially look towards an EUA? And what do you have in place currently for manufacturing purposes? And what do you envision needing?

[Sanjay Shukla:]

Yes. Joe, great questions. I think with good data, a lot of good things can happen with regards to, first off, accelerating into the next trial. We had to provide a manufacturing plan and the ability to move into that trial rather quickly when we first met with the FDA. So we do have drug product available to quickly move into the trial if we choose to do so, number one. Number two, getting feedback, I think, and the potential for emergency use authorization. I think you've seen a lot of therapies out there even with modest effects generate authorizations, even improving hospital stay by 1 day is viewed as a game changer in the current environment as we're in crisis mode. So we do think that if we can show benefit here because we've run a placebo -- a rigorous placebo-controlled trial under the guides of the FDA and we focused on the very same endpoints that have garnered these sorts of authorizations, we feel pretty good about the regulatory climate to move forward. Accessing other forms of grants, things of that nature, you see a lot of companies being able to also accelerate those discussions. We would expect to need to do some of that when we start to think about the commercial supply of 1923 targeted to COVID-19. So while we're game ready for the next trial, if we have good data, I would expect that we would rapidly advance discussions with the government. And there, you have seen quite an openness to accelerate manufacturing for small and large companies, assisting with that. And we're ready for that, and we would expect that if we have good data.

[Operator:]

Your next question comes from the line of Zee Jallah with ROTH Capital Partner.

[Zee Jallah:]

Congrats on the update. I was really happy to see that you've now selected an IND candidate or a preclinical candidate for your new COVID antibody 2810. And so really excited to see that. I think we can officially call you a autoimmune and oncology company now. Also, Sanjay, I think I heard you say that lot of the IND-enabling studies are underway or about to begin immediately. So happy to see that as well. But I think one of the things you also discussed early on is that you're kind of like the leader in the neuropilin space right now. So do you plan to do an event or something like that with KOLs to also kind of educate, not only investors, but the clinical community because I think that will be really important in terms of eventually initiating clinical studies and getting some support for that.

[Sanjay Shukla:]

Yes. Thanks, Zegbeh. Absolutely. I think as we are the leader in neuropilin biology now, and we have also got our arms around a significant expertise both internally with how we manufacture these antibodies and really are getting recognized now around how efficient and from an affinity point of view, we really are producing good technology here. And then externally, being able to work with the best and brightest, who have decades of experience in neuropilin research, people like Dr. Mercurio, Dr. Gemmill, absolutely. As we start to generate data and show activity in more of our tumor experiments, these are things that -- we like to be transparent, we like to publish, we like to put in abstracts. We like to get out there at medical conferences. And then once we have a repository of good data there, absolutely, I think it makes sense to pull together the investor community and really outline all of the things we've seen. We're building this program very much in the manner that we systematically and carefully built our 1923 program.

[Zee Jallah:]

And then another one I had, another pipeline development. I was really glad to see the recent announcement on your update in terms of target identification with your tRNA synthetase platform in cooperation with CSL. I think a lot of people see the platform. They know you have the partnership, but we hadn't heard much news. So it's really nice to see that -- some of that effort is now paying off. How else can we see some of the benefits of that? When is it perhaps going to end up in preclinical studies or additional preclinical studies? And then anything after that.

[Sanjay Shukla:]

Right. So as you can imagine, these are pretty exciting insights. Years ago, we discovered 1923 binds neuropilin-2 and that really launched multiple programs from that. With these results, these findings, of course, we're working closely with our partner around next steps. But we also want to get this data out in a scientific conference. We think they're meaningful, it's important. It's going to transform a whole, another pipeline opportunity for us. We want to do that in a rigorous scientific setting. That's when you'll get to know what these receptors are. As I said, some really nice signals there that can point us in other directions in cancer and other areas in fibrosis. Both things, I think, stay tuned. We'd like to debut this in more of a scientific setting. But it was important for us to get this out as we had committed to giving an update on where we were with the CSL collaboration.

[Zee Jallah:]

And as you talk about that, actually, I was just talking about educating people in NRP2, but it sounds like with this pipeline development, you could actually have a full R&D day. So looking forward to seeing what you guys do with some of this work. But I think a lot of folks are interested in the near-term clinical data that's coming up. So just clarification, I think, on a question that Hartaj asked, so for the readout that's coming up for the COVID-19 program or study with 1923, are we looking at 30-day data? Are we going to get anything less or more than that?

[Sanjay Shukla:]

Yes. I think you would -- we'd prioritize those clinical endpoints. We're going to be looking at -- we're going to be able to take it out to about 30 days. We should have complete data set for all of our patients at that point, from not only an activity standpoint, but also a safety standpoint. And then the only thing really remaining would be some of our bio-analytical work, some of the cytokine, that stuff will come in later with the 60-day safety data, and that would be an update. But I think at this top line result, we'll be able to pull together really all of these patients and how they've done in the critical period, which is -- I really think is in that first 2 to 4 weeks of being hospitalized. So this is something that I said we'll be looking at right at the turn of the calendar year. The exact date is still pending, but we're looking at that time frame, feel pretty confident we're going to land right there.

[Zee Jallah:]

And then just a final one here, and I don't think you have an answer for this one just yet, but for the pulmonary sarcoidosis study, it sounds like things are progressing. Are you at the stage now where you can provide more granular details or a time line as to when we can see the data from that? Or you'll provide that at a later time point?

[Sanjay Shukla:]

Not quite yet. I'm close, but stay tuned. We -- what I want to be able to do is once we effectively dose that 36th patient, and I know exactly when that is confirmed, I'll be able to then highlight exactly when -- what day next year, then we'll have -- what quarter next year we'll expect data. So that update will be coming once we dose that 36th patient.

[Operator:]

And there are no further questions at this time. I will now hand the conference back over to Mr. Sanjay Shukla.

[Sanjay Shukla:]

Well, thank you, everyone, for your time listening to our progress, and we look forward to being in touch in the very near future. Everyone stay safe, be well. Thank you.