aTyr Pharma, Inc.
Q4 2020 Earnings Call Transcript

Published: 23 Mar 2021

[Operator:]

Good afternoon, ladies and gentlemen, and welcome to the aTyr Pharma Fourth Quarter and Full Year 2020 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 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 fourth quarter and full year 2020 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, preclinical program for ATYR2810 and our research programs in neuropilin-2 or NRP2 and tRNA synthetase biology.

[Dr. Sanjay Shukla:]

Thank you, Ashlee. Good afternoon, everyone, and thank you for joining us for our fourth quarter and full year 2020 results conference call. Amidst the backdrop of the COVID-19 pandemic, 2020 was a highly productive period for aTyr, which included significant clinical research and discovery advancements that we expect to yield value for the company throughout 2021. We've remained focused on our clinical program for our lead therapeutic candidate, ATYR1923 or 1923, and we have advanced and expanded this program a great deal in the past year. We're tracking towards a readout for our proof-of-concept study for our lead interstitial lung disease or ILD indication, pulmonary sarcoidosis in the third quarter of this year. We anticipate these readouts having recently gained key mechanistic insights regarding 1923's anti-inflammatory effects in patients from biomarker data obtained from a study we completed in patients with COVID-19. We advanced our preclinical program in cancer for our lead anti-NRP2 antibody, ATYR2810 or 2810, and we initiated discovery programs for 2 tRNA synthetases. We're highly encouraged by our progress and look forward to building upon our clinical and preclinical programs and discovery pipeline from our novel biology platform as we move forward this year.

[Jill Broadfoot:]

Thank you, Sanjay. We're proud to report $10.5 million in total revenues for 2020. Our revenues for 2020 consisted primarily of license and collaboration agreement revenues, which we received from Kyorin Pharmaceuticals. As you're aware, in January 2020, we entered into a collaboration and license agreement with Kyorin, for the development and commercialization of 1923 for ILD in Japan, for which we received an $8 million upfront payment. In addition, we received a $2 million milestone payment in January 2021 for a Phase 1 milestone that was achieved by Kyorin in Japan in December 2020. On the expense side, our research and development expenses were $17.3 million and $14 million for the years ended December 31, 2020 and 2019, respectively. The increase was due primarily to the progression of 1923 clinical activities in both pulmonary sarcoidosis and COVID-19 patients with severe respiratory complications. General and administrative expenses were consistent between periods at $9.1 million and $9.4 million for the years ended December 31, 2020 and 2019, respectively. From a balance sheet perspective, we are now well positioned for the further development of our lead programs. Consistent with previous guidance in November 2020, we repaid all long-term loans. And exceeding our previous guidance of ending the year with greater than $20 million in cash, we ended the year with $31.7 million in cash, cash equivalents and investments. In addition, since year-end, we've raised over $25 million in cash in addition to receiving the $2 million Kyorin milestone payment. We raised approximately $9.9 million in gross proceeds from our at-the-market offering program before deducting commissions and offering expenses and raised approximately $15.3 million in gross proceeds from our purchase agreement with Aspire Capital Fund, LLC. While we won't be giving specific guidance this year for ending cash, we do expect our research and development expenses to increase as we continue to develop 1923 and 2810 and move forward in our discovery programs. Now I'd like to turn the call back over to Sanjay before we open it up to Q&A.

[Dr. Sanjay Shukla:]

Thanks, Jill. Overall, we're very pleased with what we achieved in 2020 and are proud of our significant progress. We have a potential proof-of-concept readout for 1923 in pulmonary sarcoidosis in sight. Now supported by a mechanistic proof-of-concept from our biomarker results from our trial in COVID-19 patients. We have a preclinical program for our lead anti-NRP2 antibody, 2810, undergoing IND-enabling studies in cancer. And we have 2 tRNA synthetase discovery programs with target receptors identified and ready to be explored. We started the year with a major license deal for 1923 for ILD in Japan with Kyorin, a partnership that has already brought in $10 million in payments. We had an onerous debt structure that we've been able to eliminate. We exceeded our previous guidance for our 2020 year-end cash position, and through milestone payments and use of available equity vehicles, we've raised over $25 million in the first quarter of this year. We're already off to a great start in 2021, and we look for that momentum to continue in the year to come. We appreciate your interest, your continued support. Look forward to providing updates in the future. At this time, Jill and I will be happy to take your questions.

[Operator:]

. Our first question will come from the line of Hartaj Singh from Oppenheimer.

[Hartaj Singh:]

Great. One question on 2810, which is what stage of sort of IND enabling is it at, Sanjay? And then as you're going to be presenting this data on breast cancer and follow-up on non-small cell lung cancer, you had a pretty heavy-duty addition to your Board, your scientific advisory board, as you indicated, in the oncology area. Where do you think you'd see the initial usage of 2810? I mean, breast cancer, non-small cell lung cancer, would it be more monotherapy, more combination therapy once your IND-enabling work is done? And I just got a quick follow-up on that, too.

[Dr. Sanjay Shukla:]

Yes. So for 2810 this year, we very much are in that stage of looking at in-vivo efficacy model. So testing different solid tumor models where neuropilin is implicated. And as you point out, we've already seen good data in triple-negative breast cancer year-on-year now with additional data coming out of AACR and now new data in lung cancer. So we're continuing to look at a few other tumor models. But towards the second half of this year, we'll take a look at that in state of animal efficacy data and determine really which tumor environment will be the best indication for us to move into once we get into patients. But we'll also learn along the way, as you point out, whether or not our therapy is best positioned as a monotherapy on top of another therapy to unlock more efficacy or even be able to be used in conjunction with chemotherapy. So all of those answers will be laid out here over the course of this year, which is also why we really want to bring in expertise in the oncology space. And someone like Dr. Varner and even Dr. Mercurio previously added last year, their experts with regards to this biology, and they serve as great guides for us. In the meantime, there's also quite a bit of work on the tox side that we have to complete prior to the IND submission, so I would say stay tuned. We continue to demonstrate and learn more about where 2810 can be best used, which tumor environment. And then from that standpoint, we will also learn whether or not it's best used as a monotherapy or as a combination. We're testing it both ways.

[Hartaj Singh:]

Yes. And then, Sanjay, I think you made the point that 1923 designed as chronic therapy, right, which is maybe one of the rate-limiting steps for the COVID-19 trial where you could only give it once. For 2810, I assume that, that antibody would be designed in such ways to be given kind of in this acute cancer setting, correct?

[Dr. Sanjay Shukla:]

Yes, I think that's yet to be determined. But in general, that is, in general, how you think about biologics here in antibodies that are targeted. So it's meant to be a targeted therapy. The relative manner in which we dose and the PK of that is yet to be worked out, but we will certainly have that mapped out here before we move into a clinical indication.

[Hartaj Singh:]

Great. And then my last question is just on the CSL Behring collaboration. Can you just give us an update as to when we could see sort of next steps there? And then also, what kind of milestones could be hitting maybe this year or next year?

[Dr. Sanjay Shukla:]

Yes. So that's a collaboration where our findings that we've been able to really bring back over the fence here around AARS and DARS. Much of that work came out of that collaboration. And aTyr owns the areas of oncology from those findings. So we really -- we're excited to have them sort of on our side of the fence here. With regards to further work with CSL, I think right now, we are really focusing on internally moving these forward as they fall within a therapeutic sort of area of expertise that CSL doesn't really have. So as it turns out, these findings have really benefited us. And we now are moving forward with some of those NK cell activities internally here.

[Operator:]

Our next question will come from the line of Joe Pantginis from H.C. Wainwright.

[Joe Pantginis:]

Sanjay, my questions are going to focus right now on just continuing to build the profile for 1923. So as we look towards the third quarter update for sarcoidosis, are we going to have the ability to see biomarker data as it's built into the sort of the clinical trial protocols based on what you guys just announced, especially for SAA? And then sort of related, when do you think we might be able to get visibility for additional ILDs as well, especially since you mentioned that SAA has implications towards other ILDS?

[A - Dr. Sanjay Shukla:]

Yes. Joe, so one thing to remember that's unique about what we've been able to take advantage of, if you will, from the COVID-19 study is readily assay-able serum biomarkers. These patients are coming in not only severely inflamed in their no lungs, but they're also presenting with a lot of, in the case of our study, 17 highly elevated biomarkers that we can assay just by pulling blood. In ILD patients, they tend to be severely inflamed locally there in the lung, less so systemically. So from a biomarker perspective, we would -- the best way to do this is to do a bronchoscopy and really try to grab tissue from the lungs, which is patients really don't like that as much. So in the ILD sense, this mechanistic proof-of-concept that we were able to demonstrate in COVID-19, we think carries over but let's also understand that assaying systemic biomarkers is a little trickier in ILD patients. Nonetheless, looking at the literature and looking at BAL fluid and bronchoscopy, what's there in the literature, the sensitive cytokines that we impact are the very same ones that we already know from the literature are highly elevated right there in the lungs of ILD patients. So we rely on the experts. In Europe, of course, there's a little bit more of a tendency to assay lung and biopsy and bronchoscopy, not so much here in the U.S. But with these findings, I think it gives us really, really good confidence that we've got an anti-inflammatory that directly impacts some of the most important cytokines and chemokines that are involved in the pathology of ILD. And I think when we think about our trial that's leading out here, we will be looking at serum biomarkers, but I think the greater sensitivity here is probably being able to see clinical change mainly through the reduction of steroids in that study. I think that's the real activity endpoint to pay attention to.

[Joe Pantginis:]

Got it. And that clarification as well. So keeping with this indication, I was just curious if you -- obviously, I know you would say we should ask them, but any updates around the Kyorin study?

[Dr. Sanjay Shukla:]

Yes. I would just say that things are progressing as planned. Kyorin has their own IR and PR group that they do. So I can't speak to what they will put out or won't for that. But I will say that we are on track to have Kyorin join our next trial, which will be a worldwide registrational trial, we expect in sarcoidosis, a number of experts and centers are teed up to get started, and we do not anticipate any delays with any hiccups there with the clinical development plan that we are working on with them.

[Joe Pantginis:]

Got it. Got it. And then my last question, I think, is pretty quick because with regard to your comments about COVID-19 and potential next steps. Obviously, it's an ever-changing landscape that you alluded to, but maybe can you take a stab at sort of what the low-hanging fruit is regarding your decision tree, especially as the therapeutic landscape evolves to decide whether you want to move it forward?

[Dr. Sanjay Shukla:]

Well, I think the key thing here is we have seen even recently that dexamethasone is having even greater utility, not only in patients that are hospitalized on the vent, but also those who are not on the vent. And we experienced that in our trial. There was a potentially -- a potential confounder to a lot of our data. As it turns out, we've shown and we've talked about today that the additional benefit of 1923 is very apparent here. When you look at the clinical and the biomarker readouts that we presented, above and beyond dexamethasone, our drug is showing utility. Our view is that if there's a sensitive or a population that might be resistant to dexamethasone in COVID-19, that could be a low-hanging fruit. But we just don't know the epidemiology of that cohort yet. Is it tens of millions of patients, millions of patients, 10,000 patients? We don't know. What I do know is that there's potentially 100,000 pulmonary sarcoidosis patients that are a sensitive population with pathology that we know our drug can impact looking at our preclinical data and also now from this COVID-19 data. So I think with that ever-evolving landscape and the fact that we have this very, very near-term readout coming, we're squarely focused on thinking about sarcoidosis and are excited to potentially make an impact here as we are really the leader in ILD work compared to any worldwide biopharma.

[Operator:]

. Our next question will come from the line of Zegbeh Jallah from ROTH Capital.

[Zegbeh Jallah:]

I think I just have a couple of different questions. I think the first will just kind of piggyback off of the COVID question. And I know, like you said, Sanjay, you're trying to kind of see how the clinical landscape evolves and learn a little bit more about those patients that might be unable to be treated with dexamethasone or be somewhat resistant. And so I think it would just be interesting if your pulmonary sarcoidosis data is really encouraging. Do you think that will actually influence your decision to move forward with the COVID study as well?

[Dr. Sanjay Shukla:]

So your question, Zegbeh, is if we saw good data in sarcoidosis, does that change our mind for COVID? Is that right?

[Zegbeh Jallah:]

Yes, especially since you're going to have 5-milligram data as well and be able to better see the importance of that higher dose?

[Dr. Sanjay Shukla:]

So that's a very good point. We're testing the highest dose in sarcoidosis. So certainly, if we see a dose-dependent sort of improvement in the sarcoidosis patients, look, I think we all understand that as a small company, we would love to -- we've been encouraged to run 5 Phase 2 trials, and I said this before, that if we were a large pharma, there's a number of indications we could move into. We try to be very careful about how we manage our cash. We also try to move into programs that we think can generate value in the near term. Right now, with COVID, there isn't a solid landscape out there given a lot of the movement there. We've shown 3 milligrams could be potentially useful in an acute indication. Frankly, I think our drug could be used in any acute interstitial pneumonia. I think we've demonstrated that could be useful, whether you have viral pneumonia of COVID etiology or other etiology. But the drug is really built really, really well as a chronic treatment, a treatment that can be used in chronic conditions like ILD. And we see the ILD market, as in our eyes, a multi -- a several billion-dollar market, where there's a green space of a commercial opportunity, but a dearth of really good treatments, good safe treatments. And then the last thing I'll add here is, this is an environment ILD where patients want to get off steroids, where in the acute ICU setting, you're throwing steroids at these patients because you're just trying to keep them alive. So we're in -- on the ILD side of the defense here, the -- we wanted to compete with steroids because the PI, the patients, everyone wants to get off steroids there. I think it's a huge opportunity for us. And now with some of this biomarker data, we can really see some daylight here.

[Zegbeh Jallah:]

And Sanjay, definitely agree that the biomarker data does set some positive expectations for the readout. And so regarding the readout, just wanted to know if the pandemic had any of the data points. Is there something that's going to be missing just as a heads up of what the impact could have been?

[Dr. Sanjay Shukla:]

Yes. I think you can look at certain things where you may have some impacts -- getting patients in every center is a little bit different. They want to keep patients safe. There can be missing data points here and there. We're trying to minimize that as much as possible. I would say the key things here are because you're under some COVID restrictions, certain, for example, visits where you have pulmonary function testing kind of centrally there at the hospital, some hospitals don't want patients kind of blowing a lot of -- sort of aspirating a lot of air there. So we're trying to basically use local PFTs to sort of cover these sort of things. That might be an area where we don't think it's going to be a problem. But you might see a slight replacement there around how we report pulmonary function testing. Pet scans are another thing where not all institutions -- are they prioritizing Pet scans right now? It's not -- it's an exploratory endpoint for us. So you could be -- there could be some patients there. We also have missing data there, too. But I think the key thing here is that from a safety and from a steroid-sparing perspective, we have really, really the ability to preserve most of the data from this trial.

[Zegbeh Jallah:]

And then another point you made was with Kyorin and participation perhaps in the large global study, a Phase 3 study. And so I was just wondering when might you move into your next study after this data readout?

[Dr. Sanjay Shukla:]

We'll be moving into that study after this readout assuming this readout is good, and we feel good about moving forward. We'll sit down with regulators, and we'd like to start the trial next year. We feel as though we already have good alignment on the rationale of our drug, the relative nature of what the trial should look like based on trials that have been run previously in the ILD space. And we also know that as probably -- as the leading ILD development company right now, there's a real need for a Phase 3 trial in these patients right now. So we would be looking to move into that trial next year. I can't give you guidance just yet on what quarter we would look to start that because I think it's a little premature for that. But we would be looking to move into this trial and do it with Kyorin and potentially other partners next year.

[Zegbeh Jallah:]

Perfect. And yes, I was going to squeeze you on the quarter, specific quarter. But regarding partnerships, you just mentioned, I actually had it on my list of questions to ask. 2810, it sounds like you are working on the preclinical tox studies with the IND. So it sounds like you can execute on that independently. Or perhaps, you might want to do a partner, but I think I'm more worried about the early-stage work you talked about that came out of your collaboration with CSL. Is that something that you will want to partner early, just looking at your cash balance and how you're allocating capital?

[Dr. Sanjay Shukla:]

Yes. I mean, compared to about a year ago where we really just had 1 program. Now we have 3. We have a clinical program that's about to have readouts. We have a preclinical program that's in IND-enabling work. And then we've got discovery programs, not only on the NRP2 antibody side, but now with these 2 exciting new fragments that we found have balanced natural killer cells. So we have to really look at all we can accomplish kind of on our own. The great thing is now we have more opportunities to have those sort of business development conversations. It's something I don't guide to with regards to if and when a partnership can happen. Kyorin came in quite early. I think that was a rather transformative deal we did at the beginning of 2020. Now we have more opportunities for our BD team to reach out and more options. If partners are interested in interesting oncology data around an exciting new target like neuropilin-2, we will have data sets to present to them. If they're interested in going a little bit earlier with discovery programs and now our are anchored to potentially natural killer cells, I think this is also more options. So certainly, a lot more options this year than we've ever had really, really previously at aTyr. We have a pipeline here that has clear -- 3 clear verticals, clinical, preclinical and discovery, all of which we will look to potentially engage partners, if it's the right thing for us to do for ourselves and shareholders.

[Operator:]

And I'm not showing any further questions from the queue. I would just turn it over to Sanjay for any closing remarks.

[Dr. Sanjay Shukla:]

Well, I thank everyone for their interest, certainly had a lot of information to go through this year. I think that's reflective around the number of things that we have going on, very important year for us. We're excited, in particular, for these readouts here in our sarcoidosis trial. I thank everyone for their interest, and we will keep you up-to-date and speak to you in the future. Thanks again.

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.