All right. Welcome, everyone, to 2025 Jefferies Global Healthcare Conference. My name is Roger Song, one of the senior analysts cover SMID-cap Biotech in the U.S. It's my pleasure to have the next fireside chat with aTyr Pharma's CEO, Sanjay. Good afternoon, Sanjay.
Hi, Roger. How are you?
Very good. All right. Why not we just get right into your lead program for the pulmonary sarcoidosis? I know you have recently had some exciting data from the other indication, but let's focus on the lead indication for now. Understanding you recently presented some baseline data in a blended fashion at ATS, maybe just give some highlights for that presentation, and then we can go to some of the details.
Sure. At ATS in San Francisco, a few weeks ago, we presented the baseline demographics from our current phase III pulmonary sarcoidosis study. Much of that data was as we expected. We looked at baseline characteristics such as race, gender, age of the sarcoidosis patients, and nothing really jumped out at us, very much akin to what we expected and what we saw in the phase II trial. One of the elements was also to look at the baseline, the average steroid dose at entry, and we expected it to be slightly lower in comparison to the phase II trial, primarily due to the fact that we are enrolling a population of anywhere between 7.5-25 mg of prednisone at the entry of the trial. This is slightly different than last trial, which was 10-25 was the entry criteria.
We expected that number to be a little bit lower, closer to 10, and it was 10.5. Again, within our modeling, did not change really any of our power calculations. I think it was a nice bit of data to get out there early. The PIs were obviously quite excited just to see new sarcoidosis data and very excited now for full readouts next quarter. I think it was mission accomplished in San Francisco.
Excellent. The baseline 10.5 for your phase three, and remind us, what's the phase two baseline for the steroid use?
The average in phase two was closer to 12, 13 mg. As I said, this slightly lower entry criteria, it does not surprise us. The important thing here is patients per treatment guidelines are still expected to be treated with this moderate phenotype of SARC from anywhere between 10-15 mg. That's traditionally the amount pulmonologists aim for. So 10.5 is within that ballpark. Some of the doses below 10 are primarily driven by, frankly, better controlled, better well-managed patients, I should say, in Europe and Japan, where honestly they just see the patients more often. They perhaps do a little bit better job of not overdosing with prednisone, whereas here in the U.S., you might see a patient every six months at best.
Got it. You say it's within your expectation. That's good. In terms of the statistical implication of that, with a little bit lower baseline, would that impact your assumption around the percentage of reduction and absolute reduction for that?
No, because we had modeled to be around 10. If it had come back at eight or nine, we may have had to tweak the power calculations, but pretty much spot landed to where we expected. There were some other comments around looking at dyspnea score. Numerically, it may appear, it may appear that there's a slightly milder population. We had some questions there. Everyone has to remember that in the last trial, we allowed some more, described them as perifibrotic patients. This trial, we are excluding those patients by conducting a background baseline high-risk CT. We are expected to see a little bit less MRC dyspnea of three and four, and that was the case. More importantly, the way we are enriching based on symptoms, we're not relying on the MRC, which is a four-point scale.
We're really using something called the KSQ Lung, the King Sarcoidosis Questionnaire Lung Subscore, which is a 42-point scale, much more sensitive to pick up active cough and shortness of breath. That is really the criteria we're using to ensure we've got a symptomatic patient. Those are just some nuggets of information from that poster.
Got it. With a little bit lower baseline, do you think it's more difficult or easier to lower the overall use of the steroid?
What we found is sarcoidosis patients, frankly, the lower dose they're managed at, the more sensitive they are to any further reductions. I look at it that these patients who are at 10 or even 7.5 are really finely torqued down to a breaking point, if you will. What I've been told by the experts worldwide is even moderate reductions from 7.5 or 10, one or two milligrams can precipitate a flare. This is honestly the way we've designed the trial. We want to have steroids withdrawn. We want to see flare. We expect that flare to, of course, occur much more so in the placebo population. We want to see if the drug can hold the line and do better than what it did in the last trial and perhaps even show more steroid-sparing benefits.
There's still adequate delta, if you will, even with this slightly, very slight lower average daily prednisone entry dose.
Got it. Okay. All right. That's good. Another update, not that reason, but I believe in the last earnings call, it seems you got some feedback from the FDA in terms of statistical plan. Maybe just give us some recap. What's the recommendation from the FDA? Seems to play in favor to the trial design. Tell us about the implication as well.
Sure. We, as typically most sponsors do, before you have a major phase three readout, you're going to lock down your statistical analysis plan. You have a quick type C meeting with the stats group just to make sure that everything, all your docs are in a row. You want to do as much pre-hoc planning in your statistical analysis plan to avoid a lot of post-hoc analyses. Our primary endpoint was and always it has not changed, and that is looking at reduction of steroids. The manner in which we proposed to look at this change was to compare baseline values for each cohort to the reduction that you observe in the end of the trial. The previous version was to look at an average of the last nine months. We know what dose each patient was on.
We take that number, we add it up and divide by the number of days. It is an area under the curve type of approach, very, very conservative way to look at all the waxing and waning you might see in a steroid population, steroid-treated population. What the FDA advised is let's just simplify here and look at the last four weeks. When you compare that end dose, you do not need to take an average of the last nine months, just look at the last month. There is emerging evidence that the FDA wants sponsors in phase three to look at change from baseline in this standard manner. The commentary was this just simplifies things, just focus at the end.
What this does for us is frankly, because it reduces the variability, not to get too statistically wonky, but the standard deviation will be lower at the end, which in turn actually increases the power for us to detect now a smaller difference. Yes, Roger, this materially is slightly better. The threshold now to show stat SIG is 0.4-0.5 mg less than it was two months ago. This clarification, I think, is an important checkbox. It is materially, I think, incrementally positive for us. It also, as I said, allows us to look at things in a simplified manner.
Got it. Just remind us what's the power assumption right now. This is absolute reduction, not a percentage reduction.
Correct. We are looking for absolute daily 3 mg benefit is what we are aiming for. That is another thing we honed in on. Should we look at percent change or absolute? The absolute is what we are anchoring to. We will look at percent change as well as a tertiary endpoint. It is going to be part of our outputs. With regard to powering, the trial was always overpowered. We are trying to go in with a single pivotal approach. The trial is powered more than 90% to show either 5 mg per kg of efzofitimod or 3 mg per kg of efzofitimod monthly is statistically superior to placebo. We have an opportunity of, I would say, two real live efficacious doses, two shots on goal to test each of them to see if one or both beats placebo.
Just to clarify, 3 mg difference compared to placebo compared to the change from the baseline. And then the other one is 5 mg compared to the baseline or 50%.
No, no. Our doses, the dose of efzofitimod is either you either get 5 mg per kg or 3 mg per kg. Both of those dose cohorts are tested against placebo to detect at a minimum a 3 mg difference.
Yeah. 3 mg difference compared to placebo.
Correct.
Okay. From baseline. Got it. Okay. Very good. Also, this is a power and then it's overpowered. What is the clinical meaning for reduction in practice and understanding you have a different baseline, but in general, your advisor told you, okay, I want to see 5 mg reduction or 50% reduction, something like that.
If you take a step back, this is a chronic disease where steroids are administered every day. What experts have said, any amount of reduction, I would love to see that. Why? Because it adds up. Even a 1 mg reduction every day is 7-8 mg less a week, 30-35 a month. It just adds up because these patients are on sometimes steroids for years. That's the holistic view. Now, our view in the last trial, we saw a 1, 1.5 to 2 mg placebo-adjusted difference. We think we can do a little better in this trial. Why do we think we can do better? It's a longer trial, so we expect to see separation increase, our drug to continue to have a durable benefit and more and more placebo patients fail.
The other thing that's really important is the last trial we forced everybody down to five. We're forcing everyone to zero. By forcing them to zero, we expect to have a more florid placebo failure response, which also aids the delta. The last point is I just think the drug can do a little bit better. I'm asking you to squeeze out a little bit more juice. In the end, if efzofitimod patients eventually are shown to be managed in those cohorts, say under 5 mg, that's a nice optical. Pulmonologists like these raw optical numbers. I'm not saying it's grounded in any clinically meaningful threshold. You say the drug can get you from 10 to 5. That's a 50% reduction. That's a nice round number. For decades, they've been trying to manage these patients under 7.5.
To get to five would be a nice optical number. The last thing I'll say is the number of patients that can be steroid spared completely is also going to be an important proportional analysis we'll look at. When you look at other drugs and recently, for example, chronicity has been approved in CAH. One of our board members, Eric Benovich, pointed out that the signal they saw of about 20% of patients getting off steroids completely, that's a big hook to the agency. We are already seeing in our trial, we're blinded, patients who are able to get steroid-free and remain steroid-free for nine months. That's a big deal. These patients sometimes have been on steroids for years and now they've had this steroid holiday. Why is that happening?
If it's attributed to the drug and we've got a healthy proportion, that also is, I think, a very compelling bit of evidence to get the drug approved.
Got it. Okay. Yeah. Seems your power even already beyond the clinically meaningful reduction because every mg steroid matters. Also, people want to see, ideally, they want to see five and 50% reduction compared to the baseline.
Those are ideal, I would say, when you talk to experts, the 30 top experts in the world, there's probably a developing Delphi consensus that hopefully will come out next year. They're looking for a drug that can reduce steroids 50%. That's an excellent threshold for them. They're looking for a drug that can help them manage patients with under 5 mg. This is efzofitimod could be that first approved therapy, the major drug in the toolkit, the first drug in the toolkit that they can use to really more safely, adequately control patients. Remember, avoid all those downstream symptoms of steroid effects. Steroid burden is the number one thing that these patients just, frankly, don't care so much about things like lung function. They want to get off steroids because they're getting diabetes, they're getting hypertension, obesity, sleep apnea. There's just a huge number of comorbidities.
Unfortunately, SARC patients have, as Dan Culver at the Cleveland Clinic taught me, he said, it's a devil's bargain. I either have to take this toxic therapy to live with my SARC or the SARC is going to also ravage my body.
Yeah. And then probably this 50% reduction up to five can be the practice changing, going to be the standard of care if that's achieved.
Yes. Treatment guidelines are all like right now based on low value of evidence. We're going to produce a high degree of evidence. Whatever happens with this trial, they're going to have to really, in Europe and the ATS guidelines are going to need to change either way. Hopefully the changes to list efzofitimod now as a top-line therapy. And to be honest, if we're wrong, they're going to have to rip up the guidelines because aTyr will have demonstrated you've practiced managing these patients wrong for the last 70 years. You can do so on basically little to no steroids.
Yeah. Awesome. You did mention the lung function. Understanding you designed the study and the FDA actually asked, allow or greenlight the use of the steroid reduction as the primary endpoint. How should we think about the lung function from the trial or any other efficacy endpoint?
I think lung function, as you pointed out, we were guided away from that as using it as a primary. That is a smart call. I will explain why. Forced vital capacity is an endpoint that has been used in the IPF approvals. In IPF, we know the natural history of decline, so you can model out an improvement because you expect to see 5-10 point declines in IPF. Unfortunately, in sarcoidosis adults, forced vital capacity is not as predictive. I have seen sarcoidosis patients with normal forced vital capacity with a lot of cough and shortness of breath. I have also seen individuals with very poor forced vital capacity, but they look great. They have no overt morbidity. It is highly variable. Some of this also has to do with the fact that sarcoidosis adult patients are presenting not just with restrictive disease.
Forced vital capacity is something you follow if you are restricted and you can't really squeeze your lungs. Many SARC adult patients are presenting with obstructive disease, upper airway. You would actually want to look at FEV1. Some present with diffusion limited. DLCO is useful. There are different phenotypes of SARC patients. We are already seeing clusters in our trial. To be honest, we're going to look at FEV1. We're going to look at DLCO. We're going to have an arsenal of endpoints ready at our disposal to have a discussion to frankly educate regulators. In case you're wondering, all of those PFTs also moved in a nice dose-responsive manner from our phase II trial. I feel very optimistic that our therapy, regardless of the phenotype that SARC patient presents with, will be able to make a dent in their function.
Excellent. Okay. In terms of the market opportunity, understanding you did some claims data analysis, seems this is a large population. Just give us an overview of what they're thinking about the targeted population, second line, intermittent use of the steroid. Just give us some numbers there.
Sure. We presented also at ATS a very comprehensive and, to be honest, the first up-to-date EPI study in the last 15 years in SARC adults. A lot of buzz around that poster. What it showed is SARC adults is now approaching that periorphan phase. When I started this program years ago, the estimates were 150,000, 180,000 patients. It keeps creeping up. That 200,000 number is still out there, but there are some indications that this is larger than that. What I can tell you is steroid-dependent patients are much larger than we originally modeled for. We always thought perhaps 50% of the patients in the US would be steroid-dependent. When you look at the claims data and just look at the coding, we are seeing 150,000, 160,000 patients in the US are on steroids or steroid plus immunomodulators.
That is our target patient population, the steroid-dependent population. We are talking about 30%-60% higher than we originally modeled for. We have to prepare for that larger demand that could want to be on our therapy. This is why we think the market opportunity is materially larger. In addition, we continue to do pricing work. The pricing estimates we have are on a broad range. We have anchored on the conservative side. Most of our early discussions have us pegged in the low $100s. We now are learning that in particular, if we hit these thresholds I am talking about, payers are going to be more apt to offer a higher price. Tabnios is close to $200,000. That is showing a lot of steroid-sparing benefit in ankylosing spondylitis. I do think larger market equals bigger demand. If we have robust results, I think we are seeing a willingness.
I do think everyone should remember nothing has been approved. Even those off-label third-line infliximab patients, there are 15,000-20,000 in the US. I would say they would immediately convert over. When I have discussions with my board, the biggest thing now is preparing for a bigger market. Not being prepared for that is not going to be acceptable. We are really gearing up. I think adding commercially minded experts to our team and our board and leadership team has really helped us crystallize and get our plans together. As soon as we have data, if positive, the next question is going to be regulatory and commercial. We're not going to have a minute to rest.
All right. So we're going to keep you busy, but we're going to first look at the first phase III data, which is in 3Q upcoming. Okay, great. So we look at the landscape for the pulmonary sarcoidosis. We don't see many development there. Is that true? So anything you are really keeping on and then why you don't have that? Maybe because people don't understand the market opportunity or it's tough to treat the indication.
When we started the program, we were the first one to really swim out from shore for SARC adults. I think it's a tough indication. We understand that, but we felt our drug could have good utility there. Since then, we had a number of companies follow us. Unfortunately, several opportunities recently have failed. Looking at individual cytokine therapy, Novartis had a trial that they shut down in phase , did not show efficacy looking at a specific interleukin 17, I believe, strategy. IL-1 has failed in the past. Another trial failed looking at an anti-GMCSF approach. I think those individual cytokine approaches are now, you're seeing, they don't really work in a multimodal capacity in a multimodal disease like SARC adults. We have a drug that has nice multimodal pan cytokine, modulates macrophages directly. Now we are five to six years ahead of the nearest SARC trial.
Big head start, unfortunately for patients, a couple of trials that have actually fallen by the wayside while we continue to march forward. We can see the shore ahead of us. We've almost swum all the way across. Was not easy. We were the first company ever to complete and enroll a phase III global SARC adults trial. We're planting a flag here. This is a major accomplishment for us as a small San Diego biotech. Wasn't easy. We got it done. Now looking forward to the results.
Excellent. Yeah. It's an accomplishment. We'll look forward to the data. Okay. You do have this as the lead indication, pulmonary sarcoidosis, but also just this week, earlier this week, you gave us some interim data from your SSc- ILD populating the phase two skin kind of a biomarker readout. Maybe just give us some context how you see, how should we see the data, and then what's the next step for that program?
Sure, sure. Had to get that interim data ready for Jefferies, right? Otherwise, why come to New York? I have something new to talk about, Roger. This was an interim readout from a scleroderma-related ILD study that we are conducting, a proof of concept trial, testing efzofitimod in 25 patients, a high and low dose of efzofitimod compared to placebo in the U.S. only. What we are hoping to see is over six months lung function improvement. Here, these patients have restrictive phenotype and FVC is the gold standard for approval. We've seen tocilizumab and intended to get approved for this therapy. Unfortunately, those therapies do not impact what is the biggest problem for these scleroderma patients. It's not the lung symptoms, it's their skin. No therapy has ever improved skin.
In our trial, we thought at a very early time point, let's look at skin biopsy at 12 weeks. What I was hoping to see is, do we see some biomarker improvements, some things moving directionally? Yes, we did see that in a number of patients. What I was hoping to see is when we look at the skin biopsy, do we see some cellular improvement emerging? Yes. We see some things there, some fibroblast changes. That's good. Was not really expecting what we saw on the clinical subscores. The Rodnan skin score is the gold standard. It's a pinch test where you look at 17 different areas in the body in these scleroderma patients and look at the skin fibrosis. Sophisticated rheumatology practitioners know how to conduct this test. An improvement there would be nice.
An improvement more than four points is something that you look for in a year. That's clinically meaningful. We saw this occur in three of the eight patients. More importantly, we saw it in three of the four diffuse scleroderma patients. That's where the test is really most relevant. Limited disease patients, obviously, these patients, the test is not as relevant. In the diffuse, the patients who have the worst form of skin scleroderma, we saw three out of four already show what would be viewed as clinical response. It's very surprising. Unexpected development, a great early sign that we have activity beyond the lung. Let's see if we can hold that in these patients and let's see if we can improve on that in the remaining 16-17 patients for this trial. Great early signal. Mechanistically, it made sense to us.
It's a tougher, harder disease to treat. If we are a therapy that improves the lungs, which we expect to see in this trial, and we improve skin, I think this is a really game-changing technology for scleroderma patients. Also, if we continue to see skin improvement, the drug might be considered something you could use in systemic sclerosis, just even outside of the lung. So much better than we expected, much better than I expected. I'm very pleased with this small data set. Let's see if we can continue to build on that once we get the final readouts for SSc.
When will be the final readout?
Yeah, I knew you were going to ask that. This is a tougher trial to enroll. I'm not going to offer guidance right now when we're going to get that. I think the question many investors had today were, will you have more data between now and SARC adults? We won't. Even if we enrolled the last patient today, it still takes at least six months of therapy. Do not expect to see SSc full readouts until certainly after SARC. We'll update the market when we have line of sight on that.
Yeah. Do you see the read-through to the skin biopsy data to your sarcoidosis? Not necessary.
What I've always said is skin and scleroderma reading out to lung and SARC is not a read-through. I'm owning that and saying, even though it's good, it's still not a read-through. I think it was a very high bar. I think lung changes in scleroderma could certainly perhaps be a read-through, but you need at least six months of therapy and readouts to really adequately assess the lung. Look, they're different diseases. It's a tougher, more fibrotic disease. Efzofitimod is now being tested in a different, tougher population, one with more mixed fibrotic inflammatory disease. It's a great first sign. Honestly, readout in skin, in scleroderma, in looking at lung for SARC, I'm not going to get too, too excited about that right now.
Okay. Good. So this product is actually in the pretty broad mechanism. How do you think about the other indication potentially, particularly if you have positive sarcoidosis and the SSc lung function and maybe expand to the other ILD?
A lot of interest already that we have to hold back in other forms of connective tissue disease ILD. When you think of those patients who have RA or Sjogren's or myositis and they have concomitant ILD, really bad outcomes in those subphenotypes. No drug, there's a checkerboard of off-label drugs and these patients are really struggling. You think about hypersensitivity pneumonitis, cHP, chronic hypersensitivity pneumonitis, poor therapies there, very fibrotic, a lot of cough for these patients. That is based on environmental exposure. Unfortunately, those patients do not have much to use other than things like steroids or heavy-handed immunosuppressants. We really believe on the more pre-fibrotic phase of ILDs, efzofitimod can own that market. This is why we think this could be a multi-billion dollar opportunity upwards to $5 billion, maybe even more than $5 billion if we can capture all of these patients.
The most important value prop here is let's address their inflammation before these patients inevitably become fibrotic. Because you become fibrotic, that's really when morbidity and mortality fall off the cliff. So efzofitimod could be a really game-changing technology for ILD as we incrementally move into those other forms of interstitial lung disease.
Excellent. All right. We timed up, but just the cash position and then what's the current runway guidance?
We're in really good shape. We were guided recently that we have adequate cash to get through not only the readouts, but another year past the readouts. I feel as though we're in really good shape there. Obviously, we're very close to this readout in Q3 and we're tracking to a spot landing here in Q3 on this major catalyst, which certainly from a respiratory perspective is one of the most major. I think even in biotech in general is really hoping for good things.