Good afternoon, ladies and gentlemen, and welcome to aTyr Pharma Q4 and full year 2021 conference call. At this time, all participants are in listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. If anyone should require assistance during the conference, please press star then zero on your touch-tone telephone. As a reminder, this conference is being recorded for replay purposes. It's now my pleasure to hand the conference call over to Ashlee Dunston, aTyr Director of Investor Relations and Corporate Communications. Ms. Dunston, you may begin.
Thank you and good afternoon, everyone. Thank you for joining us today to discuss aTyr's Q4 and full year 2021 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 efzofitimod and our research and discovery programs in Neuropilin-2, including our preclinical program for ATYR2810. Jill will review the financial results and our current financial position before handing it back to Sanjay to open up the call for any questions.
Before we begin, I 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 provision 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, 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 date 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.
Thank you, Ashlee. Good afternoon, everyone, and thank you for joining us for our Q4 and full year 2021 results conference call. 2021 was a milestone year for aTyr, which culminated in clinical proof of concept for our lead therapeutic candidate, efzofitimod, which was formerly known as ATYR1923, and validation for our tRNA synthetase biology platform. The positive results reported from our phase I-B/II-A study on efzofitimod in pulmonary sarcoidosis suggests that this novel immunomodulator has the potential to be a transformative disease-modifying therapy for patients with this and other fibrotic lung diseases with high unmet need. We've carried this momentum into the start of 2022. The receipt of the U.S. Food and Drug Administration or FDA Orphan Drug Designation for efzofitimod for sarcoidosis underscores the significant unmet need for new patient treatments for these patients.
Our positive end-of-phase II meeting with the FDA has provided a path forward to initiate a planned registrational study of efzofitimod that will incorporate their feedback. Preparations for this study are underway, and we are on track to initiate the study in the Q3 of this year. We also remain on track with the IND-enabling work for ATYR2810 or 2810, our lead anti-Neuropilin-2 or NRP-2 antibody, and we expect to initiate a phase I study in cancer patients in the second half of this year. Importantly, the strength of the proof of concept data for efzofitimod provided the opportunity to generate the necessary capital to carry out the planned registrational trial, which we expect to be the highest value-driving catalyst for aTyr yet.
We ended 2021 with approximately $108 million in cash, and our strong balance sheet positions us well to advance our clinical programs and progress our pipeline in the year ahead. As we begin, I will summarize a few highlights since we last spoke in November. We will be proceeding with the advancement of efzofitimod in pulmonary sarcoidosis following a positive end of phase II meeting with the FDA. We received orphan drug designation from the FDA for efzofitimod for the treatment of sarcoidosis. We announced an agreement with FUJIFILM Diosynth Biotechnologies, a leading contract development and manufacturing organization for biologics, viral vaccines and viral vectors for the manufacture of efzofitimod. We had a poster accepted for presentation at the upcoming American Association for Cancer Research or AACR Annual Meeting that details additional preclinical data generated for ATYR2810 in cancer.
We're very proud with all that we accomplished in 2021, and we're off to a strong start thus far in 2022. That provides a solid foundation to execute on what we expect to be another highly productive year for aTyr. Let's begin talking about our clinical program for efzofitimod. Efzofitimod is a potential first-in-class immunomodulator for fibrotic lung disease. Efzofitimod is a novel Fc-fusion protein based on the naturally occurring splice variant of the lung-enriched tRNA synthetase HARS fragment that downregulates aberrant immune responses in inflammatory disease states. Efzofitimod has been shown preclinically to downregulate inflammatory cytokines and chemokine signaling and reduce inflammation and fibrosis.
NRP-2 is upregulated on key immune cells known to play a role in inflammation and is enriched in inflamed lung tissue. Efzofitimod binds selectively to NRP-2 and therefore has the potential to normalize the immune system, serving to resolve inflammation, prevent progressive fibrosis, and thereby stabilizing lung function and alleviating morbidity and mortality for patients. We're developing efzofitimod as a potential treatment for patients with fibrotic lung disease, initially focusing on patients with interstitial lung disease, or ILD, a group of rare immune-mediated disorders that can cause progressive fibrosis. Our initial ILD indication for efzofitimod is pulmonary sarcoidosis. Sarcoidosis is an inflammatory disease characterized by the formation of granulomas or clumps of immune cells in one or more organs of the body. Sarcoidosis that affects the lungs is called pulmonary sarcoidosis, and the lungs are affected in more than 90% of sarcoidosis cases.
The formation of these granulomas is driven by persistent aberrant inflammation, and if left untreated, it can lead to irreversible scarring or fibrosis, diminished lung function, which may lead to respiratory failure or the need for a lung transplant. We estimate there are close to 200,000 patients in the U.S. with pulmonary sarcoidosis, although estimates do vary, but half of all patients will require some form of systemic therapy, and unfortunately 30% of all patients will have chronic progressive disease despite available treatments. The current standard of care typically includes treating the inflammation with corticosteroids and other immunosuppressive therapies, which can help manage inflammation and alleviate symptoms such as cough and shortness of breath. However, they have no demonstrated efficacy on disease progression and can result in serious long-term toxicity. Additionally, many patients do not respond to currently available treatments.
There's substantial need for a safer, more effective treatment that could reduce or replace the requirement for chronic corticosteroid or other immunosuppressive therapy and prevent disease progression. Considering that pulmonary sarcoidosis is a rare disease with limited treatment options, we filed a request with the FDA to obtain Orphan Drug Designation for efzofitimod. Orphan Drug Designation is granted to support the development of medicines for patients with unmet needs for disorders affecting fewer than 200,000 people in the U.S. This designation provides certain benefits, including the potential for 7 years of market exclusivity following regulatory approval, exemption from FDA application fees, and tax credits for qualified clinical trials. We are pleased to announce earlier this year that the FDA granted Orphan Drug Designation for efzofitimod for sarcoidosis.
This designation emphasizes the need for new treatment options for these patients and will help support our advancing clinical program and future commercial strategy. The Orphan Drug Designation followed the positive results from our proof of concept study for efzofitimod in pulmonary sarcoidosis that we reported in September 2021. Let's briefly recap some of the key findings from that important study. Regarding safety and tolerability, monthly dosing of efzofitimod was safe and well-tolerated at all doses. There were no drug-related serious adverse events and no signals of immunogenicity. Regarding steroid reduction and some of the other exploratory assessments of efficacy, the study demonstrated a consistent dose response and improvements compared to placebo across all key efficacy endpoints.
These included steroid reduction of 58% overall from baseline compared to placebo in steroid usage post-taper in the 5 mg/ kg treatment group, and a 49% overall from baseline of reduction compared to placebo in the 3 mg / kg treatment group. Complete steroid taper to 0 mg was achieved and maintained for 33% of patients in the 5 mg/ kg treatment group, compared to no patients in any other group. Clinically meaningful improvement in forced vital capacity or FVC, which is a measure of lung function at week 24 of 3.3% in the 5 mg cohort and 2.8% in the 3 mg cohort, both compared to placebo. Clinically meaningful improvement over placebo observed for symptoms and sarcoidosis specific quality of life indices in the 5 mg and 3 mg treatment groups.
Finally, dose-dependent trends of improvement in key inflammatory biomarkers compared to placebo, with control seen in all efzofitimod-treated groups. To the best of our knowledge, this is the first randomized placebo-controlled trial of any therapy for pulmonary sarcoidosis that demonstrates effects on physiologic and quality-of-life measures concurrent with steroid reduction, and these findings confirm the potential of efzofitimod to be a tremendously impactful therapy. We plan to present some of these findings in more detail in several posters that have been accepted for presentation at the upcoming American Thoracic Society, or ATS, International Conference, which is scheduled to take place May 13-May 18 in San Francisco this year. We've also submitted a manuscript with full results to a major medical journal to be considered for publication in the near future.
Following the proof of concept results, we met with the FDA in a type D end-of-phase II meeting to discuss these data and subsequent clinical development and path to registration for efzofitimod for pulmonary sarcoidosis. We're very pleased with the productive feedback we received. As a result, we intend to initiate a planned registrational study of efzofitimod in the Q3 of this year. Following the FDA's review of the data package, including data from the non-clinical program, early clinical trials, and the recently completed phase I/II-A study, we are proceeding with the advancement of efzofitimod.
The FDA discussed endpoints that we detailed in our proposed registrational study and prioritization of outcome measurements that would best support the evaluation of efzofitimod's efficacy, including a combination of both objective and subjective clinically meaningful outcomes, as the assessment of these outcomes is what is most meaningful to providers and patients. The FDA advised the continued evaluation of multiple doses of efzofitimod in a longer duration study to establish a controlled safety database that supports the determination of the optimal dose for chronic use. While we saw the strongest efficacy effects in the 5 mg/kg treatment group in the phase I/II-A study, signals of efficacy demonstrated in the 3 mg/kg treatment group also warrant further exploration in order to assess the safest, most effective dose rather than only a maximum effective dose.
In addition, the FDA determined that the completed ongoing and planned non-clinical studies were considered supportive of clinical development, and a waiver of carcinogenicity studies requirement was granted. A waiver of that was granted. Based on the weight of evidence from the non-clinical studies, no additional animal safety studies are required for this novel biologic. We were fortunate to be joined in this meeting by some very strong supporters. This includes Dr. Robert Baughman, Professor of Medicine and Pulmonologist at the University of Cincinnati Medical Center. Dr. Baughman is a world-leading authority on sarcoidosis, and he came away from the meeting impressed that the FDA appreciated the need for a therapeutic that demonstrates a steroid-sparing effect in these patients. We were also joined by Mary McGowan, CEO of the Foundation for Sarcoidosis Research or FSR, who is our partner for the phase I/IIa study.
The FSR is a strong advocate regarding the need for safer, effective treatments, including those that focus on patient-centered outcomes, and serve as a critical and much-needed voice on behalf of the sarcoidosis community. This positive end of phase II meeting is an important milestone for aTyr Pharma, and we now have a path forward to initiate a planned registrational study of efzofitimod that will incorporate the feedback we receive from the FDA. As the most advanced clinical development program for pulmonary sarcoidosis, we have an opportunity to establish efficacy endpoints that demonstrate clinically meaningful treatment effects, which will serve as the basis for future FDA review of other therapies in this significantly underserved disease. Preparations for the study are underway, and we are on track to initiate this study in the third quarter of this year.
We're working to finalize the protocol, incorporating feedback from the FDA for an IND submission. We're planning for this study to be a large worldwide trial, spanning multiple centers throughout the U.S. and other countries. In response to our proof of concept data, we've received excellent interest from physicians who may wanna serve as investigators, and we intend to implement a robust clinical operations plan that will permit us to open numerous clinical trial sites to support timely completion of this next study. Kyorin Pharmaceutical Co., Ltd., our partner for efzofitimod for ILD in Japan, will be an important part of this study, having successfully completed a required phase I safety study of efzofitimod in healthy Japanese volunteers, which permits Kyorin to join this late-stage study in pulmonary sarcoidosis patients.
Kyorin will manage all operations and enrollment in Japan and may intend to use this data to support their own filing of efzofitimod in Japan. We've mentioned before, we plan to be active at the upcoming ATS conference in mid-May and anticipate being able to provide additional updates on this program at that time. Now let's take a few minutes to discuss our preclinical programs. Through a broad receptor screen for efzofitimod, which is derived from the tRNA synthetase HARS, we discovered its binding partner NRP-2 as a target. NRP-2 is a cell surface receptor that plays a key role in lymphatic development and in regulating inflammatory responses. NRP-2 binds to multiple ligands and co-receptors to influence various cellular functions, and we believe it's a compelling therapeutic target, not only in inflammation and fibrosis, but also cancer.
To approach this target in a manner distinct from efzofitimod, we developed a panel of blocking antibodies to selectively target distinct domains of this untapped target, including those interacting with semaphorins, VEGF, and certain chemokines such as CCL21. One of the blocking antibodies we developed, ATYR2810, is a fully humanized monoclonal antibody that selectively and functionally blocks the interaction between NRP-2 and VEGF. This novel antibody is our lead candidate to advance the clinical development for cancer, including aggressive solid tumors with increased NRP-2 expression, which is linked to worsened patient outcomes and promotion of resistance to certain current therapies in cancer. We've generated a body of compelling preclinical data in multiple aggressive solid tumor models, including triple-negative breast cancer and non-small cell lung cancers, demonstrating significant effects on tumor treatment of ATYR2810.
It is administered in combination with widely used anticancer therapeutics, including chemotherapeutic agents such as cisplatin or targeted VEGF antibody bevacizumab. We've gained key mechanistic insights regarding the ways in which ATYR2810 may mediate its antitumor effects, and as we continue to generate valuable data for ATYR2810 to determine tumor types and exact treatment settings in which this novel monoclonal antibody may demonstrate the most beneficial treatment effects. We plan to present some of these new findings in a poster at the upcoming AACR annual meeting on Monday, April 11 in New Orleans. The presentation will further characterize the shared elements that render certain solid tumor types responsive to ATYR2810 treatment. We're in the process of completing the required work for ATYR2810 to support its planned clinical development in oncology. We're currently finishing up some remaining IND-enabling activities and honing in on selection of an indication.
Manufacturing activities with our partner, Lonza, remain on track, and we expect to initiate a phase I study of ATYR2810 in cancer patients in the second half of this year. Finally, we continue to mine our tRNA synthetase biology platform, which is the foundation for aTyr science and approach to drug development, to discover new targets and signaling pathways affected by these extracellular fragments in order to yield new pipeline candidates. There are 20 tRNA synthetase gene families, and our intellectual property portfolio covers protein derivatives from all of these, with over 300 protein compositions patented. I'll now turn it over to our Chief Financial Officer, Jill Broadfoot, to review our financial results.
Thank you, Sanjay. I am happy to report that we ended 2021 with $107.9 million in cash equivalents, and investments. This includes net proceeds of approximately $80.6 million raised through a public offering in September 2021, a milestone payment received from our partner Kyorin, and use of our equity vehicles. On the expense side, research and development expenses were $23.3 million for the year ended 2021, which consisted primarily of product development costs for the efzofitimod and ATYR2810 programs. Program costs for efzofitimod included preparation for the upcoming planned registrational trial in pulmonary sarcoidosis, which included manufacturing of clinical trial material and initiation of technology transfer activities with FUJIFILM Diosynth Biotechnologies. Program costs for ATYR2810 included costs related to IND-enabling activities and the initiation of manufacturing activities with Lonza.
General and administrative expenses were $10.8 million for the year ended 2021. This included an increase in the number of employees as we prepare for the efzofitimod planned registrational trial in pulmonary sarcoidosis and a phase I clinical trial of ATYR2810 in cancer. Common shares outstanding were $27.8 million, and fully diluted shares were $29.2 million as of December 31, 2021. For 2022, we expect an increase in expenses as we prepare to initiate two clinical trials. In addition to the clinical trial costs, we will continue to incur manufacturing expenses for the tech transfer to FUJIFILM and additional clinical trial material manufacturing costs for both efzofitimod and ATYR2810. We expect some of those expenses to be offset by a potential double-digit milestone payment from Kyorin, which is based on certain clinical development goals that we expect to achieve this year.
With our current and projected year-end cash position, along with a clean balance sheet, we feel like we're in a strong position to carry out our key catalysts for this year. Now, I'd like to turn the call back over to Sanjay before we open it up to Q&A.
Thanks, Jill. Overall, we're delighted with all that we achieved in the past year, generating clinical proof of concept for our lead therapeutic candidate efzofitimod, which also validated our tRNA synthetase platform and NRP2 as a target. We progressed IND-enabling activities for 2810 and continued to use our tRNA synthetase engine to generate new targets and signaling pathways that warrant further exploration as potential pipeline candidates. We invested in manufacturing for both efzofitimod and 2810 to assure the necessary clinical trial material to support future studies, and we raised valuable capital that shored up our balance sheet and puts us in good position to continue to advance our programs. With the receipt of the Orphan Drug Designation for efzofitimod for sarcoidosis and the positive end-of-phase II meeting with the FDA, we're intending to initiate a planned registrational trial study in the Q3 of this year.
Our partner, Kyorin, in Japan will join this study, and we expect upcoming clinical development activities for efzofitimod this year to yield a milestone payment, adding to the $10 million received thus far under this licensing agreement. We're also on track to initiate our phase I study for ATYR2810 in cancer in the H2 of this year, which will put us with two newly initiated clinical trials for this year, which we expect to serve as key value drivers for aTyr in the years ahead. We appreciate your interest and continued support. At this time, Jill and I will be happy to take your questions.
Thank you, sir. Ladies and gentlemen, if you have a question at this time, please press star one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, press the pound key. Again, that's star one to ask a question. Your first question comes from the line of Kennen MacKay with RBC Capital Markets. Please go ahead.
Hi. Thanks for taking the question, and congrats on the progress. The first question is on ATYR2810. As you're moving that into the clinic, are there any indications or sort of broad classes of oncologic indications that stand out as potentially the most amenable to treatment, whether solid or liquid tumors? Or are there any biomarkers that could potentially be indicative of a higher likelihood of response based on your preclinical data? Second question is on efzofitimod, and just wondering what the final steps are towards getting the phase III design finalized and implemented as we get a little bit closer to Q3. Thanks, and congrats again.
Great. Thanks, Kennen, for the question. Your first question about 2810. We're very much anchored to solid tumors, and there was quite a bit of literature early on, which is why we targeted neuropilin here. That Neuropilin-2 was basically associated with some really poor prognosis and some pretty aggressive forms of cancer, triple-negative breast cancer, lung cancer, also renal cell neuroendocrine phenotypes. We really focus on solid tumors first and foremost, and we're now looking at those particular tumors where we've seen 2810 most effective in our preclinical animal models. What I've said here is we're focusing on those Neuropilin-2-enriched tumors.
It appears as though when resistance starts to develop for many of these cancers to current agents, we may be able to look at how neuropilin is further expressed, perhaps as a resistance mechanism. This is the sort of work that we're currently going to be highlighting at AACR coming up here next month. I would say stay tuned here as we get closer to an indication. Just based on historically what you've seen here, we see some really nice effects of ATYR2810 in solid tumors. Expect this next indication to be a solid tumor that is enriched with a neuropilin signature. Now we continue to look at other biomarkers right now to hone in on which tumor types are most responsive.
We're doing so in a very sort of systematic, data-driven manner, so that once we launch the phase I trial, we expect ATYR2810 to demonstrate, you know, hopefully good objective response in whatever subclass of solid tumors we go after. Stay tuned there. I think that's a work that's nearly complete. We've progressed quite a bit here in the last couple of years. To your second question around efzofitimod. You know, really at this point, Kennen, we've taken the feedback from the FDA. There was a significant amount of feedback. One of the most productive meetings I've ever had in my career as a drug developer. Very collegiate, very collaborative. I think we are going to now be able to.
We have a clear understanding on how to prioritize the endpoints, the design of this trial, the statistical modeling and the assumptions. This will now be submitted as part of an IND package. Once we actually receive approval, that's the time for us to sort of then really get into all of the details. I wanna allow the FDA the ability to approve what they told us to go after. No reason. I think sometimes biotech companies can jump the gun here, and we don't wanna annoy our partners at the FDA. We feel pretty good about following the path that they've sort of mapped out for us in accordance with their guidance. I expect a successful IND here in the short future.
Perfect. Thank you.
Thank you. Your next question comes from the line of Ted Tenthoff with Piper Sandler. Please go ahead.
Great. Thanks very much for the update. Appreciating what you were just saying and that there's, you know, still a little bit of follow-up to have with the FDA for the phase III trial design. I'm wondering if you can give us a sense for what the doses or how many doses might be included in the registrational study. Would this go back to doses that were evaluated in the phase Ib plus IIa, or could this even look at potentially higher doses? Thanks.
Hi, Ted. A good question there. We are thrilled with the efficacy that we observed, certainly with 5 mg, but also with our 3 mg cohort. This was something that we discussed with the FDA. I think there was very much a viewpoint from the agency that we saw robust clinical efficacy in 3 mg as well. I think the guidance was perhaps, I'm paraphrasing here, but don't give up too soon on 3 mg. This will allow us to look at 3 and 5. I think one thing to remember with the biologic, there's always that concern that if you keep pushing the dose higher, will you find some kind of off-target effects?
We have been fortunate pre-clinically in non-human primates, healthy volunteers, this study, to have good, very good, consistent tolerability and no issues. As you can imagine, when you get into a larger trial, there's always that potential. We think by adding perhaps a 3 mg arm into the next trial, in addition to 5 mg, we'll be able to de-risk the program even further because it-
Yeah.
effectively gives us another shot on goal. In the event that we do see anything develop in 5 mg, 3 may be a very effective dose. This happens quite a bit with biologics. We like both of those 2 doses. To your question about going higher, we have done some post-hoc modeling with a very well-known clinical pharmacology group. We are very confident that we've achieved Emax at this point.
Yeah.
As we pointed out, the 5 mg effects we see here are so above and beyond the threshold of what is clinically important. We really think we have a winner, certainly at that dose.
Yeah.
If you look at our 3 mg data too, we also are beyond the clinical thresholds of improvement, meaningful improvement there as well. Both of those. We took that feedback to heart and, you know, I think it's a smart way of approaching the next trial.
Yeah, really helpful. I appreciate that color. Maybe just a quick follow-up. How big of a safety database is the FDA looking for? Or how many patients do you think you might need to enroll per arm with the control? Thanks.
Yeah, that's another great question. I mean, my general view is the, you know, safety database, the FDA for most indications, you know, they like, you know, around 200 patients that have had long-term
Mm-hmm.
Exposure. It's what I've always been trained in drug development to aim for that number. In rare disease, it can sometimes be hard to get to that number.
Sure.
Remember, we thus far have experienced human data north of, you know, 30, 40 patients, if you even go back to our healthy volunteer trial. In this next trial, for example, if we were to have these two doses go forward, you might actually have, you know, say, closer to 150 patients exposed in a trial that might be out to a year. You add that to the 30 or 40 patients that we previously have exposed to efzofitimod, we're getting closer to that safety database. This is another reason why it's good to also look at another dose in the next study. It adds to the body of evidence that your drug is safe and well-tolerated.
You can basically say, "Well, what does the efficacy look like between 3 and 5?" 'Cause both of them performed outstandingly in our last trial.
Yeah. Excellent. Really helpful. Thanks, Sanjay.
Thank you. Your next question comes from the line of Zegbeh Jallah with ROTH Capital. Please go ahead.
Yeah, thanks for taking my question. Just have a couple ones here for you. I think the first is just about whether or not the efzofitimod will need to go lower than 3 mg just because you mentioned needing to determine whether 3 mg was the minimum efficacious dose. Could you maybe have to explore 2 mg, for example?
No, I think at this point, you know, having tested 3 and 5, both observed as safe and both showing, you know, really nice activity in our previous trial, we're gonna go with what works. I think that's primarily what the discussion was with the FDA. I think those are the two doses to anchor on, as we think about, you know, the next trial.
Thanks, Sanjay. We've asked this one before, but I was just wondering if there was any change to the strategy around the patient population being enrolled into the study, meaning, you know, disease severity, because I think one of the key things that you wanted to do with the last study was make sure, you know, the patients weren't too far gone, meaning too fibrotic. Is that the same intent here to go after that same patient population and perhaps using, you know, very similar, enrollment criteria for the next study?
Yes. Yes, that's a great question. Again, we wanna stick to what's working, right? Not tinker too much with the outstanding results we had last time. You're right. From a rationale perspective, trying to get the patients that have a bit more inflammation, a bit less fibrosis, there, we're able to actually disease modify these patients a little bit easier. We will be putting criteria similar to what we had in our last trial. You might see a few more patients come in. One of the things we're discussing is potentially lowering the threshold of entry. When you go to Japan, other parts of the world, a heavier dose of prednisone might be 7.5.
This could also be something that we're thinking about in certain sort of, you know, areas of the world where practice might be a little bit different. The other thing to remember is we had this signal of patients getting to zero. That's really gotten a lot of patients interested to get involved in our trial. If you're sitting there at, say, 8 mg a day, and you've been taking that for the last decade, why shouldn't you maybe have the opportunity to try to get off steroids? That's the kind of patient population that I need to listen to potentially get involved in our trial. On the whole, we will be looking for a phenotype that is highly inflamed, not yet very much scarred, having that sort of end-stage sarcoidosis.
I think in a worldwide trial, we also have to think about how treatment is, you know, slightly different in different parts of the world, depending on practice patterns there. Stay tuned for that. I'm really excited to get the details out as soon as we get the green light, post an IND approval.
Thank you. I'll just double my last questions here. I think the next one is for Jill. You have a really strong cash balance, but I was just kind of wondering, in terms of the milestones from Kyorin, do you expect to receive another milestone payment, say, when you start the phase III study? Apologies if you've already mentioned this. Then the subsequent part about that is whether or not Kyorin, which is covering expenses associated with, you know, Japan, will also be helping with additional expenses since aTyr Pharma will also be leveraging some of the data in the U.S. and perhaps elsewhere as well. Then the last one is for 2810. Just wanted to clarify, you know, what's needed to kind of pin down the timing of the IND.
You generally said H2 of 2021. I was just wondering what are some factors driving that? Is it, you know, difficulty with determining the indication? Is it the manufacturing component? What's driving that fluidity and the timing of the IND? Thanks again and congrats on the progress.
Hi, Zegbeh . I'll take the Kyorin questions. With regards to the milestones that we've received, $10 million so far, we aren't allowed really to talk about the specific milestone triggers per se, but it will be related to the initiation of the phase III trial in their territory. That we are looking forward to. Hopefully they'll be joining the trial soon after we initiate in the Q3 . When they do initiate, their trial costs, like you said, they're paying for all of their trial costs. They aren't paying for anything in the U.S., so that's completely separate. We're able to structure the clinical trial so that we have kind of a good distinction between those two.
What they are also paying for is the clinical trial material that they'll be using in Japan, and that's a cost plus basis. It's just a small markup. That will be another way where we'll be able to generate a little bit of income in that third or fourth quarter of this year.
I'll take your 2810 question, Zegbeh. I mean, really, we wanna get the efzofitimod trial, you know, launched and on the track, you know, really nicely and launch that really first. We're prioritizing that. With regard to 2810, you know, I think what you're gonna see is a start to that trial, you know, shortly thereafter. You know, right now we're coalescing on indication selection. I think some of the academic work we have coming out there is gonna give you a better indication around the types of solid tumors we're targeting there. I would just say that, you know, right now we're excited to have two clinical trials really launch this year.
I think it provides a real view for investors to start thinking about these are the programs that are gonna drive future value here for us at aTyr.
Thanks, Sanjay. I'm looking forward to the data at AACR.
Me too. Thanks for the question.
Thank you. Your next question comes from the line of Yale Jen with Laidlaw & Company. Please go ahead.
Good afternoon, and thanks for taking the questions. My congrats to you guys as well. Just got two here. The first one is for Sanjay, that you did mention about the functional endpoints during your prepared remark. Are you suggesting or potentially that will be the primary endpoint to be considered for the phase III study, or are we reading too much into that and still to be determined?
We know that. You know, following feedback from the FDA, what I can tell you is, steroid reduction was a big discussion that we had, and I think you read some of the comments from Dr. Baughman that there was a real appreciation that, this in many ways may be the most meaningful endpoint for patients and providers. We also know FVC has been used for the IPF drugs to get approved, but there's an understanding that FVC may not be the best endpoint, from a primary perspective in sarcoidosis patients, because it's a bit more variable compared to the fibrotic, some more fibrotic lung diseases.
I think there was an appreciation that all of our endpoints moved in a really nice direction, steroid reduction, FVC improvement, symptom improvement. I think we had a sort of a bevy of opportunity here for the FDA to guide us. We've taken that guidance. We have now, you know, written a protocol. As I said, stay tuned here. But what I can maybe highlight here is how impressed everyone has been around the ability to reduce and potentially even get off steroids. That could really change the treatment paradigm for, you know, really millions of patients worldwide who suffer from fibrotic lung disease. We're really the first, as I said, therapy to show physiologic and QOL effects while also reducing steroids.
I think that is something that has the experts worldwide, you know, wildly excited about this as a therapy in the future.
Okay, great. That's very helpful. Maybe one more follow-up here, which is that during early part of this year, you guys had suggested that you guys also want to explore in other ILDs. Just curious what's your thought at this moment in terms of potential timeline on that. Since there's two type of ILDs that will be maybe most relevant to you guys at this moment, and any preference or any colors on that front.
I appreciate the question. Yeah. Yes, we've demonstrated really nice animal efficacy data in scleroderma-associated ILD and also pneumonitis models. So as you're aware, we believe the therapy can be useful in those indications as well, and patients do actually suffer from scleroderma-related interstitial lung disease and chronic hypersensitivity pneumonitis. You know, as a small company, we're prioritizing efzofitimod right now for pulmonary sarcoidosis. Those are indications we can consider potentially in the future. But as of now, for this year, we're really focusing on this next phase trial for efzofitimod and launching ATYR2810 in cancer. That's what our plan is for this year.
Okay, great. That's very helpful. Again, congrats on the progress.
Thank you. Your next question comes from the line of Joe Pantginis with H.C. Wainwright. Please go ahead.
Hi, guys. Good afternoon. Couple questions. Sanjay, you've gotten this question already in, I guess, three iterations so far, about the design of the pivotal study. I guess I would ask it this way. I certainly agree with you that a lot of biotechs in the past have jumped the gun, regarding, you know, discussions or talks with the FDA. You know, based on your experience, I would certainly, you know, think that you wouldn't have put out that press release unless you already had the minutes in hand. I guess I would talk to the minutes that have been, you know, published, if you will. I guess, you know, ask, you know, are there any open discussions about the endpoints, about what might be the primary?
It was a major part of our discussion. We received great guidance, and we know how to basically set up the hierarchy now. It's pretty definitive. You know, again, I'm gonna let the FDA you know give us the green light on everything that we discussed. You gotta be careful about putting this all out kind of, you know, in a press release. As I said, we know the endpoints which are prioritized. We understand the duration of the study. We have modeled the study now. You're gonna see a study that statistically, we're not going to cut any corners here.
We're gonna power it adequately so that when we hit that P- value, once the study reads out, we will have, obviously, then a productive discussion around, you know, efzofitimod's ability to move, you know, to the patients. What I can tell you is endpoints have been prioritized. Length of the trial, you know, I've mentioned the 3 mg and the 5 mg, a plan to move those two forward. It will be placebo-controlled worldwide. I think, you know, just from an ILD criteria, we wanna stick to what worked in the previous trial, and try to replicate those findings.
I understand. Thanks. Just one question sticking with pulmonary sarcoidosis and then a quick one on 2810. What, if anything, is Kyorin doing in the background while they're now other than, say, like manufacturing ramp-up or their own clinical trial preparedness, you know, ahead of the pivotal study?
Yes. Kyorin is going to obviously have their discussion with the, you know, Japanese PMDA, and, you know, that will follow, you know, very quickly here, prior to them launching in Japan. You know, drug product, we control that. We have drug supply. You know, unlike many biotechs, we invested quite a bit in manufacturing, you know, during the pandemic. We're glad we did that 'cause right now CDMOs are pushing most biotechs out 6, 12, 18 months. I'm glad I'm not reporting that kind of delay between starting the next trial. They in fact purchase material from us at a small premium.
Really for them, it's about getting that regulatory green light similar to us, and then in a staggered manner, they would, you know, start the trial, you know, opening up centers in Japan and enrolling patients there.
Got it. Just on ATYR2810, I wanna make sure I heard correctly or if I misheard you. When you said, you know, about completing the IND for ATYR2810, I think I heard you say about selecting an indication for the phase I. Is that correct, or is this more of a all comers in solids that, you know, might have the target expression?
Yeah, I think that's the key question, Joe, you know, when we submit that protocol for that IND, what does the design of that trial look like? Right now we're honing in on, you know, which if it is a basket trial, which exact solid tumors enriched with Neuropilin-2 that we wanna include in that trial, or do we wanna get a little bit more aggressive in focusing on, you know, one or two tumor types. That's the discussions we're having currently right now with our scientific advisors in the company and some of our board members who, you know, obviously have a lot of oncology experience. That's a program that as we start to put out more data here at AACR, you're gonna start to see, you know, which indications we're sort of bucketing.
The data is gonna tell us which, you know, where we should go. You know, as you know, we're a data-driven company. We follow the data to the outstanding results we had with efzofitimod. We are running the same playbook here with 2810.
Got it. Okay. Thank you.
Thank you. Your next question comes from the line of Hartaj Singh with Oppenheimer & Co. Please go ahead.
Great. Thank you. Thanks for the question. Sanjay, Jill, everyone, really nice update. I just got a few questions. Just go through them quickly. Sanjay, I know you're gonna wince when I ask the eighteenth question on the primary endpoint. It's not a primary endpoint question, but let me put it another way on the pivotal study. If you were, could it be possible, for example, to have an endpoint analogous to a primary where you have steroid reduction, you know, let's say over 24 weeks, and then, you know, FVC for the full readout.
Meaning that you could show steroid reduction over 24 weeks for, you know, over the placebo arm or the control arm, get approval an interim on that, and then read out the full study, for a full approval. Is something like that even possible in pulmonary sarcoidosis? And then I just got a couple of questions to follow up.
Well, I like your question, Hartaj. You should come to our clinical development strategy meetings. I like that. Our statisticians would love some of these ideas. You know, one thing about doing interim readouts, you give up some of your alpha when you do things like that. You know, I'm not sure necessarily if I would agree with that element of it. However, if you think about our trial having three people getting off steroids, a DSMB could certainly look at the risk-benefit, and if our next trial, we have a number of patients getting off steroids. That might be a better way for us to perhaps look at things in the interim.
Again, I don't wanna get into that yet until we actually put out the design. I like the way you're thinking about things here with regards to an objective and a subjective endpoint. Steroid reduction, FVC, those two endpoints are gonna play key roles here in the hierarchy as we start to actually, you know, design our next trial, because I think those two start to represent a pathway in my mind for a drug label that's really meaningful here. Patients really want to reduce their steroids. Providers wanna get people off steroids. FVC is another way for them to also look at that objectively to look at lung function.
We're fortunate in our trial that we saw the kinds of reductions, 58%, 49% with our two top doses and FVC improvement more than 2.5%. We had 2% and 3.3%. That kind of improvement has not been observed in this area of lung disease really ever, maybe for 15 years here. As I mentioned, none of this has ever been observed in a trial where we're also reducing steroids. I think we have something really profound here with efzofitimod. You know, bear with me with the primary endpoint. As I said, once we launch that protocol, you'll start to get a view on that hierarchy.
Yeah, no, that's great. That's great, Sanjay. Like you said, I mean, just a great data set you had last year and continue to do so. You know, just a quick question on commercial. I know it's like kinda getting ahead of ourselves, but you've been doing a lot of work, you and the team, in educating investors and I think reaching out to the patient and physician community on, you know, steroid reduction on, you know, pulmonary sarcoidosis, in a variety of venues. Can you expect that those sort of activities to ramp up, you know, over the next 12-24 months as you get ready to start the pivotal in phase III? Then I have one last question after that.
Well, absolutely. We've always thought this market is a $2 billion-$3 billion global market opportunity for efzofitimod. Our numbers are rather conservative when you compare them to what others think, especially some of the numbers when you think about ILD that big pharma has. This is a space where steroids. Patients need to get off steroids. We need to do better than steroids. Steroids are not helping with that progression of fibrosis. Efzofitimod right now as the most advanced therapy closest to the market has the ability to tap into this kind of market opportunity, $2 billion-$3 billion. That includes not only sarcoidosis, but other fibrotic lung diseases, where right now we need something better outside of IPF.
Even within IPF, those patients, remember, are just sort of keeping their lung function just at bay, but they are progressively getting worse. There has been, you know, quite a bit of interest with our data set, to also, you know, potentially look at efzofitimod in those patients that are flaring, you know, have inflammatory response. We feel really good that efzofitimod is gonna play an important role in fibrotic lung disease, you know, for years to come if we can actually get this drug approved. As I said, the market opportunity is something that is large. We will be talking a lot more about it as we get closer to the market here over the next year or two.
Great, Sanjay. Thank you. Last question. I don't wanna front-run, you know, front run your ATS data, and I'm sure you don't want to either. You know, look, between the data readout last year, and now you've had the time to talk to the FDA, you know, you've had time to talk to, you know, patient representative groups, clinicians, patients. I'm sure you spent a lot of time looking at the data and how people have felt about it. What are the things that you really want us to try to pay attention to? You know, not specific data points at ATS, but what is it about ATS that, you know, from all of your talking to patients, clinicians, regulators that really kinda excites you as you head into that conference?
Again, thank you for all the answers.
Yeah. I think as a preview to ATS, you know, the point here is our therapy, I think now will really be. You know, when you're in the earlier clinical trial, you're not sure a novel agent, what is it gonna do? But now that we are the furthest advanced therapy, and we have seen efficacy just across the board, steroid reduction, forced vital capacity improvement, symptom improvement, inflammatory biomarkers also well controlled. Very, very well controlled by 3 and 5 milligrams. It's that consistency of response. Now we just gotta show that durability in a longer trial, in the next trial.
I think what you're gonna see from experts out there in the field is how efzofitimod can really be, you know, a frontline therapy for not only sarcoidosis, but for really all fibrotic lung disease. Because steroids, you know, as I said before, on more academic calls, with some of the experts, steroids are poison. You know, in 40 or 50 years, we'll be looking back in the medical textbooks and talking about it as though, why did we give this poison to patients with all the cardiovascular metabolic effects. The health economics of steroids are horrible for patients, the day-to-day quality of life. We think we have a real winner there. You know, wrapping it all up, make sure the drug is safe.
Thus far, we're tracking really well with that, with the last couple years of work. I think it's gonna be a real coming out moment for efzofitimod. If we can launch it at American Thoracic Society, we expect to receive quite a bit of buzz from the medical community, because we know how important it is to have a game-changing therapy for these patients.
Great. Thank you, Sanjay and team. Really appreciate it.
We have no further question at this time. I will now turn the call back over to Mr. Sanjay Shukla for closing remarks.
Great. Well, great questions today. I know there's a lot of interest. We're right around the corner here from, hopefully really getting this, as I said, getting this trial on track here in the third quarter, initiated. Just a few more things to accomplish here with our friends at the FDA. But great questions today. Appreciate the interest, and we really look forward to keeping you up to date here in the coming months. Thanks again, everyone.
This concludes today's conference call. Thank you for participating. You may now disconnect.