aTyr Pharma Inc (ATYR) 2017 Q4 法說會逐字稿

Welcome to the aTyr Pharma Fourth Quarter 2017 Conference Call.

As a reminder to our audience this conference is being recorded for replay purposes.

It is now my pleasure to hand the conference over to Mark Johnson, Senior Director of Investor Relations.

Thank you for joining us today to discuss aTyr's fourth quarter and full-year 2017 operating results and corporate update. We're joined today by Dr. Sanjay Shukla, our President and CEO and Dr. David King, our Chief Scientific Officer.

Sanjay will be sharing his strategic vision for aTyr over the next couple of years as well as some important highlights from 2017 and early 2018. David will provide an overview of data from our immuno-oncology ORCA program that we recently presented at the American Society of Clinical Oncology Society for Immunotherapy for Cancer or ASCO-SITC. Finally, Sanjay will provide an update on ATYR1923, our interstitial lung disease program and review the financial results before opening it up to the question-and-answer session.

Before we begin, I would like to remind everyone that except for statements of historical facts, the statements made by management and responses to questions on this conference call are forward-looking statements under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. These statements involved 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 on the Company's earnings press release issued after the close of the market today as well as the risk factors and the Company's SEC filings and included in our most recent annual report on Form 10-K and quarterly report on Form 10-Q.

Undue reliance should not be placed on forward-looking statements which speak only as of the date they are made and 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.

I'd like to start with a brief refresher for everyone on aTyr and our mission. aTyr Pharma is a clinical stage biotechnology Company engaged in the discovery and clinical development of innovative medicines using its knowledge of tRNA synthetase biology. aTyr has discovered novel extracellular functions of proteins derived from a number of tRNA synthetase genes, a family of more than 20 genes that influence immune function and other activities in ways that were previously unknown.

Our mission is to translate our understanding of this newly discovered biology into novel first-in-class drug programs for conditions with high unmet medical need. Built on more than a decade of foundational science on extracellular tRNA synthetase biology and its effect on immune responses, we have built a global intellectual property estate directed to all 20 human tRNA synthetases as well as our product candidates.

Proteins derived from the histidyl-tRNA synthetase or HARS gene, both full length and splice variants, are present in human circulation and play an important role in modulating immune responses. We refer to these extracellular HARS proteins as Resokine to differentiate them and their immunomodulatory activity from intracellular HARS, which are involved in protein synthesis.

We at aTyr are currently focused on therapeutic translation of this Resokine pathway. Our initial pipeline of product candidates targets this immunomodulatory Resokine pathway to address diseases with an immune component. Today we will provide updates on our ORCA, ATYR1923 and Resolaris programs. 2017 was a year of meaningful evolution for our Company as we focused our R&D efforts on our ORCA and 1923 programs.

Our ORCA program is focused on the development of antibodies to target the Resokine pathway as a potential immunotherapy for the treatment of cancer. In the second half of last year, we unveiled this program and subsequently selected and initiated development on a panel of antibodies. Building off the initial data presented at ASCO-SITC in January, we expect to present and publish more data in support of our ORCA program this year.

Our ATYR1923 therapeutic candidate is focused on the development of an engineered Resokine protein as a potential therapy for the treatment of immune-mediated diseases with early translational research indicating potential utility in interstitial lung diseases. In the fourth quarter, we initiated our first clinical trial with our 1923 candidate in healthy volunteers.

I'm happy to report that enrollment has run smoothly and we remain on track to report top-line results from this study in the second quarter of this year. Our Resolaris program or ATYR1940 is focused on the development of a Resokine protein as a potential therapy for the treatment of rare muscular dystrophies. Our early exploratory trials produced encouraging signs of activity.

However, we have prioritized our portfolio and have made the decision to not advance this program unless we secure a strategic development partner. Based on this decision, we're currently not spending significant internal resources, financial or otherwise, on 1940. We are excited about the promise of our ORCA and 1923 development programs and our strategy is to advance both of these programs into potential later stage trials.

As you may recall, I joined aTyr as Chief Medical Officer in March of 2016. And in November of 2017, I assumed my current role as President and CEO. Since then, we as a Company have made a commitment to strengthening our mechanistic and translational research to better position ourselves for future clinical development across all of our programs.

This research will allow us to better understand how to utilize the Resokine pathway as a therapeutic intervention point for both our ORCA and 1923 programs. I'm extremely proud of the high quality and impactful work produced by our research and manufacturing teams and I'm happy to announce today that Ashraf Amanullah has been promoted to Senior Vice President, Biologics Development and Manufacturing and David King has been promoted to Chief Scientific Officer.

Ashraf has been instrumental in enabling the development and manufacturing of all of our programs since joining in November of 2015. Previously, Ashraf held senior level CMC roles at Gilead and Genentech where he built and led world-class CMC organizations. At aTyr, Ashraf has built internal capabilities for the development of both microbial and cell culture derived protein therapeutics and also has responsibility for all end-to-end outsource manufacturing and supply chain.

David joined us in September of 2016 and since then we have significantly advanced our understanding of the Resokine pathway under his leadership, leveraging his experiences in discovery and development of biologics gained at Medarex, Celltech and AnaptysBio. David has actively built up our immunology and translational expertise, enhancing our ability to make better program decisions.

We have a number of insights into this Resokine pathway and we plan to publish in scientific publications and present at conferences this year. Earlier this year in January, we presented initial data introducing our ORCA program at ASCO-SITC.

Now, I'd like to turn it over to our Chief Scientific Officer, David King, to share an overview of that presentation and provide an update on our ORCA program.

As Sanjay mentioned, I had the opportunity to present for the first time publicly some of our early preclinical research on the potential link of the Resokine pathway to cancer at the ASCO-SITC conference held this past January in San Francisco.

The presentation was the first introduction of our ORCA program to the scientific community. In it, we described the Resokine pathway and its potential immunomodulatory activity and also provided data from in vitro and in vivo experiments as preclinical evidence supporting our hypothesis that the Resokine pathway plays an important role in immunomodulation.

We highlighted the potential link between the Resokine pathway and cancer by comparing Resokine levels in cancer patients to healthy volunteers. We observed the potential upregulation of Resokine in the presence of various types of cancers. In these experiments across over 450 patients, we detected elevated levels of Resokine in the population of cancer patients across 15 different tumor types, suggesting this to be a highly druggable target.

It's important to remember that Resokine is present in circulation, which means levels of Resokine can be measured using simple liquid biopsies as opposed to tumor biopsies required with many other immuno-oncology agents. We ended the presentation with data highlighting the antitumor activity of antibodies that can block the Resokine pathway. We believe these antibodies act through up regulation of antitumor immune responses.

The data compared the in vivo efficacy of anti-Resokine antibodies to a combination of anti-PD-L1 and anti-CTLA4 antibodies. Tumor growth was measured over 21 days in a B16-F10 mouse melanoma syngeneic tumor model. Our analyses compared the anti-Resokine treatment group and the combination anti-PD-L1, anti-CTLA4 treatment group to a control group of animals treated with a nonspecific immunoglobulin G. Tumor growth was significantly lower than the control with both treatment groups and we were excited to see the tumor growth appeared to trend the lowest in the anti-Resokine treatment group.

Our antibodies targeting Resokine have also outperformed established checkpoint inhibitors in a number of other animal models. Now we plan to highlight some of those findings at the upcoming American Association for Cancer Research or AACR meeting in April of 2018, in Chicago.

We will also present some combination studies with established therapies that suggest both the potential improvement, even compared to monotherapy. Our initial hypothesis is that multiple tumor types may have hijacked the Resokine pathway to aid in the invasion of host anti-tumor immune responses. We are excited to develop antibodies from the ORCA program to block the Resokine pathway which we hope we'll aid in enabling effective anti-tumor responses.

Currently, we are conducting preclinical development and have initiated CMC activities including cell line development and selected a CDMO for GMP manufacturing. In addition to AACR, we plan to present data from the ORCA program at several additional scientific meetings over the next 12 months and we're preparing to file an IND for an antibody from the ORCA program next year.

Sanjay will now discuss our 1923 program and take you through our financial results.

ATYR1923 is our next-generation agonist to the Resokine pathway being developed for the potential treatment of interstitial lung disease. This program was developed by using only the N-terminal immunomodulatory domain of the Resokine protein and fusing this domain to the Fc region of a human antibody. There are number of FDA approved Fc-fusion proteins, making this a well-established modality for delivery of protein therapeutics with good exposure characteristics.

Our in vivo experiments have verified that 1923 administration and results in long exposure and prolonged the N-terminal or iMod domain, immunomodulatory activity. We're currently testing 1923 in a Phase I clinical trial. This randomized, double-blind, placebo-controlled study will investigate the safety, tolerability, immunogenicity and pharmacokinetics of intravenous 1923 in healthy volunteers.

We anticipate learning more about the safety profile and tolerability of 1923, as well as characteristics of its pharmacokinetics in humans to better aid in the design of therapeutic dosing. As previously highlighted, this trial is on track to complete as scheduled and we plan to release top-line data in the second quarter of 2018.

In parallel, we are expanding our knowledge of the potential for 1923 by conducting studies in several additional preclinical models to further elucidate its potential clinical utility. This information provides us optionality in selecting the best indication for future clinical trials for our 1923 program. Preclinical evidence of 1923 activity in the bleomycin model of pulmonary fibrosis was presented at the American Thoracic Society or ATS annual meeting in Washington D.C. in May of 2017.

In addition, more preclinical work supporting 1923 utility in interstitial lung disease will be presented at this year's ATS meeting in San Diego, in May. Although we currently have preclinical evidence that 1923 might be beneficial for patients with interstitial lung diseases, we are carefully building as much evidence for the translation of the program in the clinic prior to developing a protocol.

We plan to keep the patient, medical expert and investment community up-to-date this year as we examine the results from the Phase I clinical trial and formulate our path forward towards future patient trials with 1923.

Now for our financials. We ended the year with $85.1 million of cash and investments compared $76.1 million at the end of 2016. R&D expenses were $5.3 million for the quarter and $30.1 million for the full year 2017, compared to $9.1 million and $42.8 million for the same period in 2016. The decreases in R&D expenses were primarily driven by the decreasing cost related to manufacturing and clinical trial costs for ATYR1940, partially offset by clinical trials initiated for ATYR1923.

G&A expenses were $5.9 million for the quarter, $17.1 million for the full-year 2017 compared to $3.4 million and $15.1 million for the same period in 2016. The increases were primarily related to non-cash stock based compensation related to the departure of certain officers in the fourth quarter of 2017, partially offset by a reduction in professional fees.

We're committed to developing ORCA and ATYR1923 and are pleased that through our successful financing last year we have expanded our cash runway, allowing us to advance both programs towards meaningful patient trials. In addition, our research team continues to further elucidate the potential activity from different areas of extracellular tRNA synthetase biology and work towards the development of new product candidates.

To summarize our path forward, over the next 12 months we expect to achieve the following models. Present updates from our ORCA program at key scientific conferences; announce top-line results from our 1923 Phase I healthy volunteer trial; complete translational work for 1923 and select an indication for patient trials; initiate a patient trial for 1923; publish updates on our understanding of tRNA synthetase biology and specifically our knowledge of the Resokine pathway and its mechanism of action.

And finally, advance our research efforts toward the discovery of new therapeutic candidates, based on different tRNA synthetase genes.

We believe 2018 will be a year focus on building the right scientific foundation to prepare for meaningful clinical trials. And we believe delivering on these key milestones will best position us for the successful translation of our science into the clinic.

We remain confident in delivering upon our mission to develop innovative therapeutics based on our knowledge of tRNA synthetase biology and we look forward to updating you on our progress in the months ahead.

Thank you everyone. At this time David and I will be happy to take your questions.

(Operator Instructions)

Matthew Luchini, BMO.

For 1923, could you talk a little bit about the goals for the healthy volunteer study? And obviously we want to confirm a safe and tolerable product, but can you talk a little bit about it more in terms of what you are hoping to show from a profile point of view? And, how do you expect to communicate that information, will it be a press release or do you expect that data to be held for a medical meeting?

And then, assuming that the data shows the profile that you are looking for, how do we think about the timing as we move from that Phase I study into a potential in human Phase II study? Which means basically when do you think you might be able to announce an indication for that study?

First off with the Phase I healthy volunteer trial, as you pointed out safety and tolerability is really the key focus there in this first trial as we look to implement and to prepare 1923 for patients.

But, I think one of the things to pay attention to is we want to establish a robust PK profile. We think that we have the ability here to confirm that 1923 has the ability to be dosed once a month. So looking at our PK data, I think getting that support in enabling us to check the box there that we could potentially have a once a month dosing schedule for our Phase II work could be particularly attractive. I think that's an important additional element that we want to read out with that trial.

With regards to communicating that, we would press release that information. As I mentioned, there could be some top-line information in conjunction with the ATS coming out in May. When we'll be in Phase II which I think was really your second question, our focus is to complete this Phase I trial but there's a number as I said translational experiments. Those experiments I think will provide an estate of evidence to work with the medical expert community, work together with them in conjunction with our Phase I data and then we can effectively plan a Phase II program around an indication. We'll provide those updates in the coming months after ATS and then when we have those readouts.

In particular, I think another important meeting for us as a Company, is ERS in Paris in September, so I think those are the important time points for us to be guiding towards that indication selection.

So, we'll be releasing this information, more in the form of press releases rather than hard anchors to those meetings. But, I think those are important meetings for us that we will be active at.

And can you just remind us the doses that are in the Phase I and talk to us briefly about the rationale behind them?

Sure, so we did a number of obviously modeling experiments early on looking at our preclinical data. We got six cohorts in that single standing dose study, starting out at 0.03 mg per kilogram and can potentially work up to 5 milligrams per kilogram.

Thank you. Cory Kasimov, J.P. Morgan.

This is Carmen on for Cory.

How should we think about the ramp of operating expenses throughout 2018, given all that's going on with 1923 and perhaps some changes in the composition of G&A?

Well, it's a planning year, as I've mapped out around our indication selection. With regards to our expenses, we're working on the clinical planning for 1923. Once we actually have that protocol, we'll probably be able to guide a little bit better as to our 2019 cost and how we're looking at that.

With regard to G&A costs, you may have picked up on some of the one-time non-cash amounts that came in the fourth quarter. And as I mentioned, those increases were primarily related to non-cash stock-based compensation that we brought into the fourth quarter of 2017.

And then coming out of the presentation of ORCA preclinical data in January, what has been the most interesting data point so far that's resonating with physicians?

A couple of things and David pointed out the fact that I think first of all it's novel biology. It's a unique pathway in that it has -- that data points [out] seems to be upregulated across all the cancer types we tested, with over 450 patients there. I think the fact that it's a novel pathway certainly has gotten a lot of folks interested.

Secondly, I think the fact that Resokine is in circulation and we have a potential to have a liquid biopsy approach, that's also particularly intriguing to the expert community.

I would also just add I think our antitumor efficacy data is quite good in difficult-to-treat models, and that compared to established checkpoint therapy, this is quite attractive.

(Operator Instructions)

Joel Beatty, Citi.

This is Shawn calling in for Joel.

On your ORCA program, what can we learn from patients with antisynthetase syndrome that would support the ORCA clinical development program?

The anti-synthetase syndrome is a rare syndrome where, in essence, patients are developing antibodies to more or less release circulating Resokine, that's primary JO-1 antibody syndrome. And this occurs rarely when those patients break tolerance.

And what happens in those patients presents us a very interesting, if you go clinical knockout, around our hypothesis. When they develop antibodies, typically these patients develop myositis, interstitial lung disease, sometimes it can have some dermatologic findings. But what you see especially in the lung and muscle tissues is a florid infiltration and immune invasion of T-cells.

So that gives us a lot of confidence around this clinical knockout that antibodies directed against the Resokine pathway, certainly unleash T-cells. In that disease in particular, it's targeted against those two tissue systems.

With regards to ORCA, we hope to harness as we believe tumors hijacking this system to immunoshield themselves from T-cells. So, our hypothesis is really guided by that very real important clinical knockout you see in anti-synthetase syndrome.

As a quick follow-up to that, although it's probably very rare because anti-synthetase syndrome is a rare disease in itself, but is there any clinical data of anti-synthetase patients that also have cancer or any prognostic information there?

The group that really looks into this is The Myositis Consortium; they meet every two years. That was one of the questions they asked last year. They haven't really explored this enough with not enough data. There's mixed evidence there. I think a bit more data and a little bit more work has to look at this correlation as you point out.

There doesn't seem to be just quite yet enough evidence to point us in that direction. There could be a suggestion there but I think that community is still working on figuring out that question. And, I think that the distinction is between adults and pediatric data cohorts that they're working on.

In regards to the liquid biopsy in the ORCA program, at what point during tumor progression does Resokine really get elevated and do you see this liquid biopsy as more of diagnostic or prognostic?

We don't know the answer to that yet. That's something that we're actively investigating. We are looking at patients which have good clinical histories at the moment, so that we can understand that question. The data that we have so far hasn't been analyzed to that level of detail, so we don't yet know the answer to that question but we hope too soon.

Our primary focus is obviously developing a therapeutic not a diagnostic, but of course with any program it's good to have some accompanying diagnostic measurement that can help you assess the therapy as you go along and maybe select or triage patients that have upregulated the pathway. So, we're continuing our research in that area exactly to answer those types of questions.

That ends our Q&A session for today. I would like to turn the call back over to Dr. Sanjay Shukla for his final remarks.

Thanks very much. Thanks everyone for your time and attention today. We look forward to providing updates as our science and programs advance. Thanks again.

And with that, ladies and gentlemen, we thank you for participating in today's conference. This concludes the program and you may all disconnect. Have a wonderful day.