Good afternoon, ladies and gentlemen, and welcome to the aTyr Pharma First Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will be given at that time. As a reminder, this conference is being recorded for replay purposes. It is now my pleasure to hand the conference call over to Ashlee Dunston, aTyr's Director of Investor Relations and Corporate Communications. Ms. Dunston, you may begin.
Thank you, operator, and good afternoon, everyone. Thank you for joining us today to discuss aTyr's first quarter 2022 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, subsequently filed quarterly reports on Form 10-Q, and in 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 first quarter 2022 results conference call. We are very pleased with the start of 2022 as we work to develop a new class of medicines from our tRNA synthetase biology platform. Throughout the first quarter, we continued to make important progress with our efzofitimod clinical program in pulmonary sarcoidosis, our initial interstitial lung disease or ILD indication. With the receipt of FDA orphan drug designation for efzofitimod for sarcoidosis and a positive end-of-phase II meeting with the FDA, we are on track to initiate a planned registrational study in pulmonary sarcoidosis in the third quarter of this year. As we begin, I will summarize a few highlights since we last spoke in March. We announced that posters for efzofitimod in pulmonary sarcoidosis were accepted for presentation at the American Thoracic Society, or ATS, International Conference.
We received FDA orphan drug designation for efzofitimod for the treatment of systemic sclerosis, or SSc, also known as scleroderma. We presented preclinical data in a poster at the American Association for Cancer Research, or AACR, annual meeting for ATYR2810, or 2810, our lead anti-neuropilin 2, or NRP2, antibody in cancer. We have had a highly productive first quarter and a good start to the year. The second quarter is shaping up to be a very important period as we prepare to present clinical data from the phase I-B/IIa study of efzofitimod in pulmonary sarcoidosis at ATS next week and anticipate the potential publication of a related manuscript.
We are focused on operational preparation for upcoming planned registrational study, so the balance of the year may center upon initiating the study in the U.S. and Europe and supporting our partner, Kyorin Pharmaceutical, with the anticipated launch of the study in Japan.
Let us discuss our clinical program for efzofitimod first. Efzofitimod is a potential first-in-class immunomodulator for fibrotic lung disease. Efzofitimod is a novel Fc fusion protein based on 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 cytokine and chemokine signaling and reduce inflammation and fibrosis. NRP2 is upregulated on key immune cells known to play a role in inflammation and is enriched in inflamed lung tissue. Efzofitimod binds selectively to NRP2 and therefore has the potential to normalize the immune system, serving to resolve inflammation and prevent progressive fibrosis, thereby stabilizing lung function and alleviating morbidity and mortality for patients.
We are developing efzofitimod as a potential treatment for patients with fibrotic lung disease, initially focusing on patients with ILD, a group of rare immune-mediated disorders that can cause progressive fibrosis of the lung. Our initial ILD indication for efzofitimod is pulmonary sarcoidosis, which 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 commonly called pulmonary sarcoidosis, and the lungs are affected in more than 90% of sarc patients. The formation of these granulomas is driven by persistent aberrant inflammation, which if left untreated, can lead to irreversible scarring or fibrosis and 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 with pulmonary sarcoidosis in the U.S., although estimates do vary.
About half of these patients will require some form of systemic therapy, and 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 is a substantial need for safer, more effective treatments that could reduce or replace the requirement for chronic corticosteroid or other immunosuppressive therapy and prevent disease progression. Because this is an orphan disease and treatment options are limited, we applied for and received FDA orphan drug designation for efzofitimod for the treatment of sarcoidosis.
We recently generated clinical proof of concept for efzofitimod based on the positive results from a phase Ib/IIa study in pulmonary sarcoidosis that we reported in September 2021. The study, which included a forced steroid taper, demonstrated safety, tolerability, and consistent dose response for efzofitimod on key efficacy endpoints and improvements compared to placebo, including measures of steroid reduction, lung function, sarcoidosis symptom measures, and inflammatory biomarkers. According to medical experts, 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. These findings confirm the potential of efzofitimod to be a tremendously impactful therapy. We are excited to present additional data from this study in two posters at ATS next week.
Some of the clinical findings that we will present for the first time include greater details regarding steroid reduction and improvements in lung function. Notably, we will also present details of the biomarker data for the first time. The hallmark lung granulomas in patients with pulmonary sarcoidosis are comprised of immune cells that secrete pro-inflammatory chemokines and cytokines, and if left untreated, can promote aberrant inflammation both systemically and locally that lead to fibrosis. Standard of care agents such as oral corticosteroids can suppress inflammation, but may come with toxicity, and in some cases can over-suppress the immune system, leading to increased risks. The ability of efzofitimod to effectively control inflammatory and sarcoidosis disease biomarkers in a dose-dependent manner over 24 weeks in the context of a corticosteroid taper are very important findings, as they are the first demonstration of efzofitimod's anti-inflammatory mechanism in pulmonary sarcoidosis patients.
We encourage you to review the posters, which will be available on our website once they are presented. During ATS, we also plan to host a company reception. The event will bring together sarcoidosis medical experts, principal investigators, advocacy organizations, analysts, investors, and members from aTyr's management team, providing an opportunity to learn more about our efzofitimod clinical program and the ways in which we can all work together to deliver a potential new treatment to patients in need. A presentation featuring leading sarcoidosis experts, Dr. Daniel Culver, Director of Diffuse Parenchymal Lung Disease at the Cleveland Clinic, and Dr. Robert Baughman, Emeritus Professor of Medicine at the University of Cincinnati, will review results from the phase Ib/IIa study and discuss the outlook for the planned registrational study.
In addition to the posters at ATS, we also anticipate the potential publication of a related manuscript with the full results of the study in a major medical journal in the very near future. An additional abstract further exploring the molecular and cellular mechanisms of action of efzofitimod in sarcoidosis that was previously accepted for presentation at ATS will instead be submitted for inclusion at another medical conference later this year. As we mentioned, we have been busy preparing for the next stage of efzofitimod's clinical development in pulmonary sarcoidosis. We had a positive end of phase II meeting with the FDA that provided productive feedback regarding trial duration, dose evaluation to assess the optimal dose for chronic use, and endpoint prioritization, including discussion around outcome measures that would best support the evaluation of efzofitimod's efficacy, including a combination of both objective and subjective clinically meaningful outcomes.
Preparations for the study are underway, and we are on track to initiate this study in the third quarter of this year. While our primary focus for efzofitimod is on our planned registrational study in pulmonary sarcoidosis, efzofitimod's mechanism of action, compelling translational and clinical data, and the shared immune pathology in ILD strongly suggest that efzofitimod could have potential to treat other ILD indications as well. One such ILD that carries a high unmet need is in ILD that results from underlying systemic sclerosis, also known as scleroderma. Scleroderma is a chronic progressive autoimmune disease characterized by inflammation and fibrosis of connective tissues throughout the body. More than half of all patients with underlying scleroderma may develop ILD, which is the primary cause of death in these patients.
Like sarcoidosis, SSc-ILD results from an uncontrolled, persistent immune response, which, if left untreated, can result in scarring that permanently causes loss of lung function. Also, like sarcoidosis, current treatment options are limited. The pathology of SSc-ILD is driven by the same immune cells that are central to sarcoidosis pathology. An NRP2 efzofitimod binding partner is upregulated on these cells, particularly on macrophages. Furthermore, efzofitimod has been shown to reduce lung and skin fibrosis in animal models of fibrotic disease such as scleroderma and IPF, where it matched or outperformed approved known anti-fibrotic agents, including nintedanib and pirfenidone. Nintedanib was recently approved for slowing the rate of lung function decline in scleroderma ILD patients, but did not display any effects on the underlying disease or patient quality of life in those clinical trials.
We believe our differentiated mechanism of action targeting NRP2 on immune cells has the potential to translate into benefit not only on lung function, but on the underlying disease as well. It's estimated that approximately 100,000 people in the U.S. are affected with scleroderma. We recently obtained FDA orphan drug designation for efzofitimod for the treatment of scleroderma, which validates the anti-fibrotic effects of efzofitimod observed in those previously mentioned preclinical models of ILD. Now let's take a few minutes to discuss our preclinical programs, including 2810, an anti-NRP2 antibody in development for cancer. NRP2 is a cell surface receptor that plays a key role in lymphatic development and in regulating inflammatory responses. In cancer, NRP2 is upregulated on a variety of solid tumors and is particularly expressed in many aggressive cancers.
Increased NRP2 expression is linked to worsened patient outcomes in several cancers, which may include the promotion of drug resistance to certain current therapies such as chemotherapy or targeted agents, metastasis, tumor recurrence, and overall survival. 2810 is a fully humanized monoclonal antibody that selectively and functionally blocks the interaction between NRP2 and VEGF, one of its primary ligands. VEGF is a validated mediator of tumor survival and growth and correlates with tumor invasiveness and metastasis. Current therapies that directly target classic VEGF-R signaling do not block neuropilin 2. Preclinical data suggests that blocking VEGF interaction through NRP2, that ATYR2810 may be an effective novel therapeutic antibody with a differentiated approach that can target aggressive cancers through the inhibition of metastasis and enhance chemosensitivity. Last month, we presented some important findings at AACR that characterized the effects of 2810 in highly aggressive tumor subtypes.
Research showed that highly aggressive cancers and those associated with metastasis, including triple-negative breast cancer, or TNBC, were responsive to treatment with 2810 in combination with chemotherapy. Importantly, treatment with 2810 alone is able to inhibit metastasis in models of TNBC, consistent with an emerging understanding of NRP2/VEGF signaling as a driver of metastasis and therapy resistance. Additional findings provided key insights regarding 2810's ability to impact the lineage plasticity of cancer cells, which contributes to their ability to differentiate into states that are known to play a role in metastasis. Notably, 2810 has been shown to downregulate ZEB1, a central regulator of these processes in different model systems, including patient-derived organoids and patient-derived xenografts.
The poster highlighted work that characterized the gene expression signatures of breast cancer cells that respond to 2810 treatment in combination with chemotherapy, paving the way for bioinformatic analysis that may help with clinical development design. We're in the process of completing the required work for 2810 to support its planned clinical development in oncology, and we expect to initiate a phase I study of 2810 in cancer patients in the second half of this year. I'll now turn it over to our Chief Financial Officer, Jill Broadfoot, to review our financial results.
Thank you, Sanjay. I'm happy to report that we ended the first quarter 2022 with $98.7 million in cash equivalents, and investments. Research and development expenses were $8.9 million for the first quarter of 2022, which consisted primarily of product development and manufacturing costs for efzofitimod and our 2810 programs. General and administrative expenses were $3.5 million for the first quarter of 2022. Common shares outstanding were approximately 28.1 million, and fully diluted shares were 29.2 million as of March 31, 2022. As we head towards the planned registrational study for efzofitimod, we feel confident that with our current cash position of nearly $100 million, a clean balance sheet with no debt, and support from several high-quality, long-term-focused investors, we are in a very good position to carry out our upcoming catalyst.
Now I'd like to turn the call back over to Sanjay before we open it up to Q&A.
Thanks, Jill. As Jill mentioned, we feel like we are in a very good position amidst what I'm sure we can all acknowledge is a very challenging environment for biotech. We have an experienced management team in place and have actively been building out the team as our programs progress. We have clinical proof of concept data for a novel therapeutic for sarcoidosis, a rare disease that has limited to no treatments. We believe our clinical execution, which includes investing early in our manufacturing in order to have drug product available to meet timelines, puts us in a leading position to bring a transformative product to the market for this debilitating disease. Additionally, we have preclinical data and strong scientific rationale to expand this program to other ILDs, in addition to other preclinical pipeline candidates that are progressing.
Finally, with our tRNA synthetase biology platform and strong intellectual property portfolio surrounding it, we have an opportunity to replicate what we've done with efzofitimod and one tRNA synthetase with some of the other tRNA synthetase gene families. For a company of our stage and size, we're well capitalized coming off an oversubscribed follow-on financing last fall and have been good stewards of our capital. We continue to take a deliberative approach to the programs that we choose to invest in to drive the most meaningful value for the company. We appreciate your interest and continued support. At this time, Jill and I will be happy to take your questions.
Thank you. At this time, I would like to inform everyone in order to ask a question, press star 1 on your cell phone keypad. Again, that is star 1 to ask a question. We have your first question from Hartaj Singh with Oppenheimer. Your line's open.
Great. Thanks for the questions and the update. I apologize if there's a little bit of background noise. Sanjay, looking forward to ATS and the company presentation. Not to front run your presentation, but as you've been gearing up for this, what are some of the aspects of the data that really excite you, especially in terms of the unmet need out there in pulmonary sarcoidosis? Any updates to protocol design for the registrational trial, number of patients, has that been updated, number of sites, et cetera, anything you could share there? Lastly, for ATYR2810, how do you see that phase I? Would it be a classic dose escalation with dose expansion, basket trial? Would it be in a specific tumor type? Thank you for all the questions.
Good questions, Hartaj. Thank you. I will start with the easiest one first. The protocol design details, sites, duration, I am just going to ask you hold off for one week. We have a pretty detailed presentation next week at ATS with Dr. Culver and Dr. Boffmann. We anticipate many of the thought leaders from around the world to be in San Francisco, and everyone is really anxious to get started and see those details. I am going to hold off on that as next Monday we are going to be outlining really all those details you want in the protocol design.
As I have mentioned before, we put this out previously, we had a really important and what I would call a successful end of phase II meeting where we really got clarity around the design of the trial and the doses to proceed forward with the duration of the trial, the number of patients, and really the most important thing is, which of our endpoints should we prioritize? We are in a unique position because we actually hit on all of those endpoints. I think this goes to your point about what are we excited about. We are really the first potential therapy here that has seen this level of improvement in lung function, symptom scores, controlling biomarkers. In all of those endpoints, we saw really better effects than any of us or the experts would have expected.
We did all of that while reducing steroids, something that really hasn't been done before in the field. I think this really, really positions our therapy to be a transformative therapy, and you are starting to see even the agency start to recognize that with our ODD for scleroderma, another condition where it is a debilitating fibrosing condition. When we talk about sort of the marketplace opportunity here, we have always been very conservative and said there is a multi-billion dollar market opportunity. As we start to generate the data we produce, we clearly are a leading therapy, and we are set up really well here with this trial. I will be able to go through those details next week. With regard to 2810, we are honing in on that clinical strategy. We clearly like 2810 for a number of tumor types.
Your question around will it be a basket trial or whether or not we actually will focus in on one tumor type, stay tuned with that. We can go in either of those two directions. Again, we have seen effects with 2810 in a number of solid tumor environments. It seems to play a really, really nice role in blunting metastasis, and we know that that also comes with the ability to enhance chemotherapy. We are working now through that program. I really want to get the sarcoidosis trial launched, and then we will come back to you around plans, and inevitably everyone will want to see the protocol design for 2810 in the future as well.
Great. Thank you, Sanjay. Thanks for the updates. I am looking forward to the updated ATS and through the rest of the year.
Thanks.
We have your next question from Zegbeh Jallah with ROTH Capital Partners. Your line is open.
Hi. Thanks for taking my questions and congrats on the progress, especially for efzofitimod. Really excited that you will be starting the pivotal study or registrational study by the third quarter 2022. That is pretty fast. I was just wondering if you could just comment on some of the things that have the investigators excited about this program and your plans around clinical execution. How many sites do you plan to have? I think I may overlap with what you just said, but just comment a little bit more on that and how you expect the cadence of that to pick up over time. At what point do you start with Alfred's in Europe and even in Japan?
Great. Thanks for the question, Zegbeh. We have been fast, and we have been fortunate, not only reading out the data, but quickly having that sort of correspondence with the FDA. Now we are in a position to start, as you said, very quickly here. The timelines between our last data readout and when I expect to initiate this trial is a quick turnaround. In between there, we have obviously had to also discuss things with our partner in Japan. I am really proud of the way that we have executed in this "downtime" between these two trials, the last trial reading out and this next trial starting. We want to start fast with this trial. We have more demand worldwide with at least eight to 10 countries very, very interested in participating.
I am going to be having many discussions next week in San Francisco with those investigators that are traveling.
ATS is the preeminent respiratory meeting. As I said, our event is going to be where we will be able to outline all of the details that everybody wants to see. We think that is the best moment for us to put everything out where we have the greatest number of eyes on our story. Our clinical execution, I think what people sometimes forget is we were able to execute, enroll, and read out our trial with minimal disruption during COVID. This was a severe respiratory disease we are talking about. I have no doubt that our clinical operations team is two standard deviations better than really anybody out there in the industry, because many companies had to abandon trials during COVID. We were in respiratory, we completed a trial.
I think that speaks to also efzofitimod, that the patients, they really continued to come into the clinic and did everything that they needed to do because obviously they were feeling good and the drug was doing something for them. I think that is what I am excited about. I am excited to get more patients in this next trial. I am looking forward to next Monday where we can go through all of the details that I am sure you want.
Thank you. The last one here is just about 2810. I know you kind of noted that the study will be starting in the second half of 2022, but you previously commented on working through some manufacturing issues. I was just kind of confirming if getting the drug product manufactured is a limiting factor here regarding the timeline. I know you are still going to work on disclosing the indications, but I was just wondering, the clinicians you have spoken to about the program, how excited are they and have they been actually talking about maybe even having you explore other combinations beyond chemo?
Yeah. For your first question, we invested rather early in sort of the manufacturing development plan. If you recall, for 2810, we qualified for a bit of a faster track program that Lonza had. We are not in any way rate limited by that. I think it is fortunate that we actually planned ahead. Right now there are a lot of supply issues with a number of CDMOs out there. Our timelines are not going to be affected because we did invest quite early in making sure that this was organized well. We are looking forward to starting that trial on time. Really, your second question around indications, we have shown data consistently in a number of models here that, again, as an anti-metastatic, as something that basically potentiates chemotherapy, we are seeing that rather consistently.
This last data that we presented at AACR, I think got most of the notice from most of the clinical oncologists that we have something really differentiated. Right now it is really around honing in on which of those neuropilin 2-enriched tumors we want to move into. We have shown a lot of good data over the last couple of years. This program is built well, has a cogent preclinical program, and now we are basically looking forward to starting the phase I trial. As I mentioned, there are some approaches here to look at basket versus not. I think right now that is what the team is working through, and we will be coming back to the public with the plans there later this year.
Thanks, Sanjay. Just a follow-up on the last one about potential combinations beyond chemo. I know I am getting ahead of myself, but just kind of excited again.
There is some evidence that we are seeing with different combinations. I think you are probably listening to what is occurring right in our research team meetings, because I think right now it is something where we are looking at different types of combo therapies. As you are aware, combination therapy is something that a lot of companies are looking at. How do they enhance and potentiate existing products? We are continuing to produce more evidence there, and it could very well be something that we incorporate in our next protocol, looking at a combination from a known marketed therapy. Stay tuned. I know you are excited to hear more about that program, but there will be more data coming.
Thanks, and congrats again on the progress.
We have your next question from Yale Jen with Laidlaw & Company. Your line is open.
Good afternoon, and congrats with all the progress, and I anticipate more next week. Two quick questions here. The first one is for the scleroderma. What is your current thought or maybe the gating factors before you formally committed to a clinical study?
That is a great question, Yale. I think right now we are really focused on the sarcoidosis trial and getting that on track and launched. My point is, we had data previously in a scleroderma model. I think following our data release for sarcoidosis, it really validated the compound as potentially being a game changer in ILD. Because we have this data in an animal model, we submitted for that ODD and quickly got a green light on that. So scleroderma ILD is another very serious, debilitating condition, high degree of mortality. You will see us dig in a little bit more as we think about how do we want to position efzofitimod in that program. But right now, I am really focused on getting sarcoidosis launched. We may continue to do more work in the background to potentially validate efzofitimod in scleroderma.
There are some things that we can do from a research and mechanistic point of view. I alluded to the fact that one of our posters we are going to be just holding back as we have more data to present now. I think this is another area for the public to start paying attention to, because the market opportunity just grows tremendously as you start to move into other interstitial lung diseases, of which, as I point out, there is really no therapy like ours that has shown physiologic and quality of life benefit.
Okay, great. Maybe one more question here. Slightly actually quite forward-looking at this point, which is in the cancer side, a few weeks ago, there was an ODAC meeting talking about that the FDA seems to have greater preference for a placebo-controlled study versus a single-arm study. I know it is still early for 2810 at this stage, but will that have any impact on your thoughts going forward in terms of how to think about the future study design and other sort of aspect? Thanks.
We are monitoring very closely the comings and goings from the FDA. Sometimes the consistency is something that may not always be there, but from the cancer division, we are paying very close attention to how they are thinking about oncology drug development. We want to be crisp with our execution on the oncology side as well, similar to what we have done on the respiratory side. I think you are right, that we are looking very closely at the design, what is the next gen type design they want to see. As more and more therapies start to fail as they get into second, third line and more treatment resistance, we think 2810 is positioned really well as a therapy that can aid existing therapies in addressing some of the resistance you start to see there.
As I said, as an anti-metastatic, we are well-differentiated compared to as a potential anti-metastatic, we are really well-differentiated to some of the other things out there. Again, stay tuned on that protocol, that design. As we get into the second half of the year, I will be able to give you more details as we get closer to the launch of 2810's phase I trial.
Okay, great. Thanks. Again, congrats on all the progress.
Thanks, Yale.
Again, if you would like to ask a question, press star one on your telephone keypad. Again, that is star one to ask a question. I am showing no further questions at this time. I would like to turn the conference back to Mr. Sanjay Shukla, President and CEO, for any closing remarks.
Well, thanks everybody for listening. This was a quick update. Obviously, we are going to have another meaty update in about a week at American Thoracic Society. I am really looking forward to seeing some of the analysts that are traveling out to that event. Appreciate the questions here, and we will certainly be talking to you in the near future. Thank you for your support.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.