aTyr Pharma, Inc.
Q2 2018 Earnings Call Transcript

Published: 15 Aug 2018

[Operator:]

Good morning, ladies and gentlemen, and welcome to the aTyr Pharma Second Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, instructions will be given at that time. [Operator Instructions] As a reminder to our audience, this conference is being recorded for replay purposes. It is now pleasure to hand the conference to Mark Johnson, Senior Director of Investor Relations. Sir you may begin.

[Mark Johnson:]

Thank you Nicole. Good afternoon everyone and thank you for joining us today to discuss aTyr's second quarter 2085 operating results and corporate update. We are joined today by Dr. Sanjay Shukla our president and CEO. Dr. David King our chief scientific officer and Joe Broadfoot our Chief Financial Officer who joined us only a couple of weeks ago. Sanjay we'll provide an update on our corporate strategy and the clinical development of 80 WIAR 1923. Dave will provide an update on the research activities highlighting the translational studies which have been undertaken to further support upcoming patient clinical trial for 1923. Joe will review the financial results before handing it back to Sanjay to open it up to the question and answer session 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 payments involve risks and uncertainties that can cause actual results to differ materially from those in such forward looking statements. Please read the forward looking same disclaimer on the company's earnings press release issued after the close of market today as well as the risk factors in the company's equity filings and included in our most recent annual report on Form 10K and quarterly reports on Form 10. Q underlying should not be placed on forward looking statements which speak only as of the date they are made in its facts and circumstances under the line the forward looking statements may change except as required by law a disclaims any obligation to update the forward looking statements reflect future information events or circumstances. I will now turn the call over to Sanjay.

[Sanjay Shukla:]

Thank you, Mark and good afternoon everyone. Before we begin I'd like to take this opportunity to welcome Joel Broadfoot to our team as Chief Financial Officer. As Mark mentioned Jill joined us a couple of weeks ago and I'm excited to have Jill join us as our business partner and a key member of our executive management team. Joe will be joining us on the road this fall and she looks forward to meeting with many of you in person. So if you recall at the end of our previous earnings call we highlighted three upcoming milestones number one announcing top line results from our 1923 Phase 1 trial number 2 updating our translational activities for 1923 and number three updating our understanding of the Neural flow into receptor or RPE 2 with 1923. I'm pleased to say that we are in position today to discuss all three. We will provide an update on our critical progress of our lead therapeutic candidate in 1923 which is in development for the treatment of patients with immune mediated interstitial lung disease. Over the past several months we have gained a deeper understanding of the 1923s mechanism of action, its interaction with the NRP-2 receptor and its potential clinical utility to series of in vivo in vitro, designed to answer important questions supporting our first patient trial initiating later this year. We have already been able to present much of this research at scientific and patient competencies including recently at the American Academy of immunology annual meeting in Austin Texas in May, the American Thoracic Society or ATSI annual meeting in San Diego, also in May and just last month at the Scleroderma Foundation National Patient Education Conference in Philadelphia. In addition to this important foundational research we have also completed and announced data from our Phase 1 clinical trial testing 1923 and healthy volunteers. This was a randomized double blind placebo controlled study designed to investigate the safety, tolerability, immunogenicity and pharmacokinetics of intravenous 1923. The study enrolled 36 healthy volunteers who were randomised to one of six cohorts and received a single infusion of intravenous 1923 at doses ranging from 0.3 milligrams per kilogram to 5 milligrams per kilogram or placebo. We were happy to report that the drug was generally well tolerated at all dose levels tested with no significant adverse event or induction of anti-drug antibody observed following 1923 dosing or throughout the one month follow up period. The PK profile 1923 following single dose administration was dose proportional across the evaluated dose range higher doses yielded sustained concentrations through the end of the one month followed - the follow up period that were above the predicted therapeutic threshold. Supporting the potential for a once monthly dosing regimen.. This is an important finding from this study, as once monthly dosing is much more attractive to patients and clinicians as we prepare to embark on enrolling a meaningful patient trial by the end of the year. Over the next several weeks we'll be meeting with expert clinicians in the field of interstitial lung disease to discuss our potential indications and proposed protocols for upcoming 1923 trial. At this time we believe this trial will be a phase one be slashed to a multiple standing dose placebo controlled first inpatient study with the objective of evaluating the safety tolerability and immunogenicity of multiple doses of 1923. And importantly, we plan to evaluate several established functional pulmonary endpoints, imaging endpoint patient reported outcome measures and potential biomarkers. Our goal will be to evaluate patients over treatment period with enough duration to provide not only a robust safety and human genetic profile for 1923 but also allow us the opportunity to potentially observe changes in clinically meaningful endpoints. Following confirmation of our study plans with key opinion leaders. We plan to initiate this trial in the fourth quarter of this year. We will identify the specific interstitial lung disease indication and finalize our protocol and we'll provide an update of such before handing the call over to David. I'd like to highlight a collaborative study between aTyr, our subsidiary Pingu biopharma, the Scripps Research Institute and several other academic institutions. This study was the subject of one of the two recent publications referenced in our press release earlier this afternoon. The study suggested that you know alanine Tijani some details are for it has potential to be independent of tyrannize symptoms activities and protein translation and suggest that this foreign activity is essential for normal function in multiple organs. As we continue to elucidate a greater understanding of tyrannize in today's biology we see great value in collaborating with academic institutions to further this knowledge we are currently initiating additional collaborative research of well-known academic institutions to broaden the range of our translational studies to test new potential biomarkers and activity to advance our understanding of the role of 1923 slash and Arpey to interaction in the regulation of immune responses and finally to explore other biological situations in which the 1923 and Arpey 2 interaction plays a role which could lead to additional potential therapeutic indications. Our strategy in the overall mission of the company remains steadfast and we are critically focused on providing clinical translation of our science using our current resource. I believe that our entire team will be able to execute on our key objectives and deliver upon our clinical milestones starting with the initiation of our Phase 1 B to a clinical trial later this year. With that I'd like to turn it over to our Chief Scientific Officer David King to provide a brief overview of our research activities which are being used to support our 1923 clinical development

[David King:]

Thank you Sanjay. As you can tell our research and development teams have been working hard this summer and we have some important and progressive updates which I will summarize today. The most important goal for our research efforts is to support the upcoming Clemmie clinical patient trial the 1923 such we are evaluating activity across a diverse set of experimental lung disease models looking for signals of activity potential biomarkers. This work includes not only some of the Beebo work that we've presented recently but also in vitro studies to help define appropriate cell populations for target engagement Funchess dynamic and we are also working on collaborative translational studies to fully explored the potential clinical utility from 1923 where a strong rationale for an up to biology. We are evaluating binding of 1923 to immune cells under various disease conditions and generating a set of improved reagents to aid development of target engagement assets. These include 1923 specific monoclonal antibodies and antibodies to the end Oputa Receptor Related to our mechanistic studies. We have a few early findings to share with you today. And P2 is up regulated during activation of Marlo's cells including macrophages dendritic cells and neutrophils 1923 binds to and are P2 as is being regulated on the cell types and in addition we recently just also discovered the interaction of 1923 with some additional cell types a finding that contributing to additional IP filings covering potential uses of 1923. These findings are consistent with our InVivo translational studies based on the effects on immune cell activity and the efficacy of 1923 in rodent mice and induced lung injury experiment's which represents a yes. In May of this year we hypothesized that administration of 1923 might modulate immune responses in multiple organs including the lung and the skin. We tested this hypothesis in a clever dogmatist chronic Rafferty's host disease murine model of systemic sclerosis we employed a minor possibility antigen mismatch model which has been reported to mimic many of the pathological symptoms of human disease. Briefly bone marrow transplant aside from 22 mice were transplanted into a whole body irradiated recipient biopsy my weekly intravenous treatment with 1923 only zero point four milligrams per kilogram as compared with daily oral intend to them that 60 milligrams per kilogram. With the administration beginning at day seven early intervention or a day 21 the late intervention the model was helpful as it may be the cause of inflammatory and fiberoptics disease in the lungs and skin at an accelerated pace. The seven time point represents a time when information was still dominant and by day 21 parties courses mostly fiberoptic as expected Nintendo decreased lung and skin fibrosis in the model qualifying the data were obtained in this experiment 1923 beginning on day 7 exhibited robust and consistent therapeutic activity in both skin and lung as revealed by significantly decreased thickness in the skin and logical fibrosis or Ashraf's score in the lungs in comparison to the untreated control the number of my fiberglass and the hydroxy protein a college in content was also significantly reduced in both observed effects to weekly dosing of 1923 was similar to those observed with daily dosing of Nintendo that late intervention with 1923 at zero point four milligrams per kilogram was not significantly effective dosing paradigm consistent with our hypothesis that 1923 may be acting preferentially on disease undergoing an active inflammatory process. We are particularly excited to see data in the scleroderma GVs team model which is consistent with direct lung injury models that we've previously presented eight year in 2017 and 2018 in this model the damage to both lung and skin is indirect from a systemic GBH The reaction. And yet we see consistent therapeutic activity with 1923 supporting our therapeutic hypothesis and the potential of this compound interstitial lung cancer. Personally I think the progress we have made on our translational biology program is convincing efficacy across distinct animal models either driven by direct injury or systemic pathology. It's very encouraging and Tighes that our improved understanding of the 1923 and OP2 interaction and the cell types involved in the mechanism of action about drug we are well-placed to move the program forward. We've got probably turned over to Joe Broadfoot to review our financial results.

[Joe Broadfoot:]

Thank you, David. And thank you everyone for calling in today. In the short time I have been interacting with the team here. I've been thoroughly impressed with the caliber of science and their level of expertise. David's team has been worth extremely hard to support the upcoming clinical trial for 1923. It is truly an exciting time to join a tire and I look forward to talking to and meeting with most of you in the coming months. Now let's discuss the financials research and development expenses were six point five and twelve point six million dollars for the three and six month period ending June 30th 2018 compared to eight point four and seventeen point six million for the three and six month period ending June 30th 2017. The decreases were primarily related to lower clinical trial costs and lower costs related to product manufacturing. This was partially offset by some increased expenses related to employee severance and other termination benefits related to the restructuring plan announced in May 2018 Jenolan administrative expenses were flat at three point five and seven point five million dollars for the three and six month period ending June 30th 2018 and 2017. Although Jiyane costs will be decreased. Going forward these initial cost savings related to the restructuring plan announced in May were offset by some increased expenses related to employee severance and other related terminations benefits as we mentioned the program prioritization and corporate restructuring will significantly reduce our operational cash burn in the second half of 2018. To give you some idea of the cost savings net of our debt payments we entered this year earning approximately 10 million dollars per quarter in the fourth quarter of 17 and plan to exit the year earning approximately 6 million per quarter in the fourth quarter of 18. That represents a 40 percent reduction in operating expenses year over year as of June 30th 2018. We had sixty four point three million dollars in cash equivalents and investments are net cash position of approximately 45 million dollars. As of June 30th 2018 our total cash position includes approximately nineteen point three million dollars in debt from our loan facility. As of June 2018 we have begun paying down the principal of that debt facility. We made our first principal payment of approximately point seven million dollars in June and we will be making quarterly principal payments of approximately 2 million dollars until the loan is paid off in late 2020. Now I'd like to turn the call back over to Sanjay before we open it up to Q and A [indiscernible] 2018 of your focus on building the right side of the probation to prepare for meaningful clinical trials. And I'm very proud of our team for everything we have accomplished today. Our team is excited. We feel confident we pursue our goal to successfully to a way or novel biology and McQuillen going forward we are focused on achieving the following milestones announcing our Phase 1 B to a protocol for the 1923 clinical trial in patients with specific interstitial lung and initiating this trial in the fourth quarter of this year. Thank you everyone at this time David Giel and I will be happy to take your questions.

[Operator:]

Thank you. [Operator Instructions] And our first question comes from Ted Tenthoff from Piper Jaffray.

[Ted Tenthoff:]

Great, thanks. Thanks for the update. Looking forward to the transition that's taking place and partner critical Kobe the current chair, question on the one to test. Can you talk a little bit more about the case Sharon. Sharon anything along those lines or when should we be giving more.

[Sanjay Shukla:]

Hello. Hello. Sure. Sure. Thanks for the question Ted. So you know as we had previously you talked about this therapy and its futility in interstitial lung disease. We we've highlighted the fact that those conditions in particular that have a bit more of a pro inflammatory component in among the ideas that that was the hypothesis where we thought 1923 would work. These included conditions as previously highlighted like - hypersensitivity new [indiscernible] scleroderma - we still very much feel as though especially now that we've read out a lot of our translational data that we have some real convincing efficacy guiding us and confirming that that's the right direction at this point. We're in the last stages here to really just confirm with the key opinion leaders on which of those indications would be the best fit. We also have to balance some operational feasibility and look for readouts look to enroll patients. So now we're sort of turning the page. We've confirmed some things from our translational stage they feel good about really a number of those indications. But I'll be working hard now in the coming weeks to now focus in on the specific indication the structure that I provided to you around the type of trial it will be you know that sort of guide you around the framework that is going to be one to study.

[Ted Tenthoff:]

Thank you. We'll be hearing more about all that. Great thanks that crumbling fast.

[Operator:]

[Technical Difficult] Your line is out.

[Unidentified Analyst:]

Good afternoon. I have kind of two tough questions in a way. So since 1923 is more anti-inflammatory than type of Rodeck of course you're looking at diseases that are more useful al-Mutairi. But I just want to have a sense of what you think the magnitude of the benefit in the indication would be what kind of target day you're looking at. You know did you need to do some kind of combination therapy with my type of broad occasion to achieve better results eventually for the patients. And then the other question is for David. You mentioned there you generate about antibodies against our Putu receptor. I just wonder what you have found if you could share activity of the antibody versus 1923.

[Sanjay Shukla:]

Great thanks for the questions. I'll handle the first one. I think you're right Kathryn to think about this in the sense that we are really focused much more on the anti-inflammatory ability of 1923 as we think about our clinical strategy. We want to go into areas where we can get a quicker readout a cleaner readout in a clinically meaningful readout while we have a lot of interest in using 1923 for example. On top of untenanted we're perfect and only in IPF I think we're a smarter strategy to focus a little bit more on the inflammatory side for wildy. I'll remind everyone that IPF only represents about a third of the aisle the spectrum. The other two thirds are primarily driven by a bit more of a pro inflammatory a lot more recall inflammatory signal. There's a significant amount of morbidity associated there. That's where we really want to attack and demonstrate activity. I think down the road of course we have opportunities to be add on therapy but what we really see the use of the green space from a clinical and regulatory strategy. We also see an opportunity operationalized quickly patients have a need. They don't have good therapies. We know those other therapies in IPF don't work. So this is really where I think the community is really excited about us getting into one of those more inflammatory mediated interstitial lung diseases. I'll turn it over to David ANSES second question. Sure. So regarding the BNR Putu antibodies. So 1923 is actually a pretty potent molecule. And also as you heard it has a nice long half-life with potential months we don't think so the antibodies that we made we made those primarily to set up our PD target engagement at. Having said that we have a really nice panel of antibodies that cover multiple different epitopes on the end of Q2 molecule. So we are also conducting research on those to see if any of those might happen additional to caissons thank you thank you.

[Operator:]

And our next question comes from Matthew Glucina from BMO Capital. Your line is now open.

[Matthew Glucina:]

Great. Thanks for taking the question. So I guess first on the Phase 1 2 study could you just confirm that we've previously sort of talked about how the gating factor is ahead of time and that's what you're going to be an evaluation of NPR to complete the translational data package and meeting with Kelter got some indication selection. So could you just sort of put a little bit more specificity around if each of those three items are they number three is not complete. But number one and number two if they are complete and if they're not what's left and then as it relates to the pulmonary and imaging endpoints I was just wondering if you could. I was hoping you could please put a little bit more specificity around what types of things which types of endpoints typically looking at and what level of you know sort of detail we should expect when the initial data comes out. Thanks.

[Sanjay Shukla:]

Sure. Sure. Good question on that. So absolutely right about your first sort of notion that you know we clearly went through this summer looking to accomplish number one you know getting to a Phase 1 trial checking the box there on that early safety and tolerability that has been accomplished we message that earlier this summer. The next part was we wanted to finish our readouts of the Translational data look at a number of different models. We feel really confident now in particular that we've seen a direct injury model. There are good efficacy from 1923 and a systemic model. Also there are good efficacy 1923 now so that's so that's been checked off now. Now we're really in that last I think final stage share coalesce. All this data in front of key opinion leaders a lot of interest very encouraging excitement from the pulmonologist who are clamoring for a therapy a safe immuno modulator that can be used in that sort of more inflammatory lung. So that's really the last component. Now what we do know about the protocol will go into is there is going to be a constellation of endpoints regardless of which specific id you're looking at. With regard to PFG the way to think about it depending on the indication SGV or SBIC are likely to be sort of the lead up to you that you would look at. But it really depends on which of those interstitial lung diseases you focus on that could be a slight tweak one might be used as a primary and the other secondary. When you think of the imaging for the most part high risk t is what really looked at very carefully and it's more or less validated imaging endpoint for all of the genesis of lung disease. But for example things like PET imaging looking at inflammation in lymph nodes that's in particular gaining traction in particular with regard to snarkily. You'll see that in some protocols that are out there with some of the experimental snarkily protocols that are out there. Lastly when you think of patient reported outcomes you're thinking about Kauf you're thinking about relief of shortness of breath on exertion. Those are the common sort of consolation of your Portate outcome measures that are used commonly in these types of patients. And then lastly the biomarkers that's going to be dependent specifically again on which indication which there can be biomarkers depending on which of those IDs you look at that we would want to track. So that gives you a little bit of color around the specific types of buckets of endpoints we're looking at the details of that and which ones we anchored to you know really will sort of bear out once we specifically pick out the specific aisle that we start to with. No that's helpful. Thank you.

[Operator:]

Thank you. And next question comes from Joel Beatty from Citi.

[Joel Beatty:]

Hi good afternoon. Thanks for taking the question. Seems kind of a little bit about that the timing that might be expected from Phase 1 2a just from the Samsung would this be a trial that we know Nolan Seath data from until the end of the trial or the open label where you see it over time and potentially change the trial design the different depending on what seeing the different doses are in trend looks like. Could you elaborate on that a little bit?

[Sanjay Shukla:]

Yes Joel. I mean these are the sort of discussions we're having right now. Decline of lithium I think the way to think about this is we want to have the ability to of course maintain the integrity of the trial first and foremost run it for a duration that creates a clinically meaningful output but depending on what those endpoints for example are we may have the ability to sort of draw them down in the interim analysis and look at a little bit more rapidly than another endpoint. So there could be utility to look at cost sooner than later. For example if you're looking at one indication that could be the opportunity look at a biomarker in which case the biomarker may be as we may see change in the biomarker earlier than the final readout. So I think it's important for us to once we actually get the protocol and the indication picked out to carefully walk everyone through when that will be sort of sort of launch points of evaluating efficacy. You know in the end we're looking for a way to actually run this trial again and again see a clinically meaningful output. But I think there's going to be ability for us to have some optionality on interim endpoints while preserving that the relative integrity of the trial. So you know I think stay tuned and it's something that you know we really want to get back to you on credit.

[Joel Beatty:]

Thank you.

[Operator:]

Thank you. And this is our question-and-answer session for today. I would like to turn the call back to Dr. Sanjay Shukla for his final remarks.

[Sanjay Shukla:]

Thanks very much. Thanks for your time and attention today. We very much look forward to providing updates in the months ahead. Thank you again.

[Operator:]

Ladies and gentlemen we thank you for participating in today's\ conference this concludes today's program and you may all disconnect. Everyone have a great day.