aTyr Pharma Inc (ATYR) 2018 Q1 法說會逐字稿

Welcome to the aTyr Pharma First Quarter 2018 Conference Call.

(Operator Instructions)

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

Thank you. Good morning everyone and thank you for joining us today to discuss aTyr's First Quarter 2018 Operating Results and Corporate Updates.

We are joined today by Dr. Sanjay Shukla our President and CEO and Dr. David King our Chief Scientific Officer.

Sanjay will provide some comments on our announcement today regarding our program prioritization and corporate restructuring. David will provide an update on our research activities highlighting the identification of the receptor for ATYR1923 or 1923 and its potential impact on our clinical development program. Finally, Sanjay will 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 in response to the questions on this conference call are forward-looking statements under the safe harbor provisions 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 before the open 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 reports 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.

Thank you, Mark and good morning everyone.

The Company initiated development on a panel of human antibodies from our immuno-oncology ORCA program last year towards the filing of an IND. This development was based on our early preclinical studies which were conducted with mouse monoclonal antibodies and whose results were presented at the ASCO-SITC Symposium and the American Academy for Cancer Research earlier this year.

Unfortunately, new preclinical data observed over the last month did not show sufficient levels of efficacy to justify further development of our panel of human antibodies therefore this time the Company will no longer be proceeding with IND enabling-activities for the ORCA program including GMP manufacturing.

Our research team will be conducting additional research studies as we reevaluate the program to better understand these recent findings however let me be clear, given the insufficient efficacy we recently observed for the panel of antibodies in our program we will be pausing the further development for such antibodies. We do not plan to further advance ORCA unless we are able to generate data that we believe will be robust in the highly competitive immuno-oncology space.

As a management team we carefully evaluated the resources we would need to advance our programs towards meaningful patient data. Based on our evaluation we have prioritized our 1923 program and the Company has implemented a corporate restructuring to focus on its further clinical development.

This corporate restructuring will result in an immediate workforce reduction of approximately 30% as well as additional anticipated cost-saving measures. The decision to reduce headcount was extremely difficult and I want to sincerely thank all of our impacted employees and their families for all of their outstanding efforts and commitment to aTyr.

Looking ahead to the second half of the year we expect our cash-burn from operations to significantly decrease as a result of this restructuring and our program prioritization providing us an extended cash runway.

Our goal will be to prioritize the clinical development of our 1923 program and achieve significant clinical milestones with our currently available financial resources.

Today we believe that the 1923 program gives us our best chance to create shareholder value and our most immediate opportunity to make a meaningful impact on the lives of patients.

I'm pleased to now provide an update on this program and share with you our excitement around its potential. As a reminder our 1923 therapeutic candidate is focused on the development of an engineered Resokine protein as a potential therapy for the treatment of immune-mediated diseases.

I'm happy to report that we've completed enrollment in our Phase 1 Healthy Volunteer Study dosing all the way up to the highest dose cohort of 5 milligrams per kilogram. We look forward to providing topline results from this trial later this quarter.

We recently presented our research on the immunomodulatory function of the Resokine iMod domain from 1923 at the American Academy for Immunology Annual Meeting in Austin, Texas on May 6th.

The take away message from these published studies was that Resokine may function as a circulating immune set-point moderator through actions by its immunomodulatory domain. Our 1923 program fuses this domain of Resokine to the FC region of a human antibody. We hope to see in our Phase 1 results confirmation of our preclinical data that this improves the formal co-kinetic profile of the candidate and supports once-a-month dosing.

In parallel to our ongoing Phase 1 study we're 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 indications for future clinical trials for 1923.

Our goal is to generate data from a patient trial for our 1923 therapeutic candidate with our extended cash runway as a result of our restructuring and program prioritization. Over the next several months we plan to convene with expert clinicians and key opinion leaders to assist us to in designing this trial in the best indication.

Our team will evaluate three key areas for 1923: number one Phase 1 clinical trial results; number two, the integrity of our translational investigations specifically in some of our ongoing animal mechanistic studies; and number three, perhaps most importantly, how the Neuropilin-2 receptor interacts with 1923.

Our research team has made great strides in understanding the mechanism of action of the Resokine pathway and our 1923 therapeutic candidate. Today we announce that we have identified a specific binding partner for the Resokine iMod domain Neuropilin-2 or NRP-2. David will provide an overview of how we discovered the receptor, what it is, and how this will support our translational studies leading to further clinical development of 1923.

The knowledge we seek to gain on NRP-2 and how it interacts with 1923 may be the most informative when it comes to selecting the right disease or diseases for us to focus on.

Our strategy and overall mission of the Company remains steadfast. We are critically focused on providing clinical translation of our signs with our current resources. I am convinced that our HR team will be able to execute on our key objectives and deliver upon our clinical milestones.

With that I'd like to turn it over to our Chief Scientific Officer, David King, to provide a brief overview of our identification of NRP-2 and its interaction with 1923. David.

Thank you, Sanjay, it will be my pleasure. We are excited to share our identification of NRP-2 as the receptor for our 1923 therapeutic campaign. Today we will provide an overview of how we identified this receptor, what it is, and what we have learned about it and how it may impact our clinical development of 1923.

We conducted screens on over 4,500 human membrane proteins in collaboration with Retrogenix. Retrogenix is a UK biotechnology Company that has a human cell microarray system to display the majority of human transmembrane proteins in the format well-suited for screening and discovery of novel protein-protein interactions.

The screens resulted in the identification of Neuropilin-2 or NRP-2 as a specific binding partner for 1923. Binding was confirmed using multiple techniques including Surface Plasmon Resonance or SPR with a soluble form of NRP-2 binding to cells, expressing NRP-2 by flow cytometry and microscopy an enzyme-linked immunosorbent assay or ELISAs.

So, what is Neuropilin-2 or NRP-2? NRP-2 is a pleiotropic, cells surface receptor that was originally identified based on its role in axon guidance during neuronal development and subsequently shown to be important in the development of the lymphatic system. Recently it's emerged that NRP-2 also plays an important role in the adult immune system.

NRP-2 combines multiple-like enzyme co-receptors to influence these multiple functional roles including interactions with Type 3 semaphorins and plexins to impact neural development and also forms a vascular endothelial growth factor especially VEGF-C which is involved in lymphangiogenesis.

So, it has a well-established role in the development of the neural and lymphatic systems and recent data suggests it has an emerging role in the adult immune system.

Our team is collaborating with established groups working on these pathways and we're excited to learn more about NRP-2 and how it may play a role in certain diseases and how it interacts with other known receptors.

We will continue to research the ways in which NRP-2 utilizes common mechanisms including VEGF-C and Semaphorin 3F to regulate diverse pathways.

Recent evidence suggests that there are high levels of NRP-2 expression found on multiple immune cell types which may play important roles in migration of immune cells, axon presentation, phagocytosis, and cell-cell interactions.

The role of Neuropilin-2 in the immune system has been described in several recent publications including from the group of Schellenberg et al from the University of Technology in Dresden, Germany and Roy et al from the University of Nebraska, Medical Center both in 2017. This suggests that Neuropilin-2 may be an important regulator of immune response in a number of different settings with potential for therapeutic intervention.

We at aTyr are currently evaluating the role of the NRP-2 interaction with 1923 in the control of immune responses and designing optimal therapeutic approaches to modulate this newly discovered pathway in a number of diseases with high unmet medical need.

The discovery of the receptor for 1923 represents a significant achievement and advancement in our understanding of this program and its underlying biology. We are just now beginning to elucidate the potential therapeutic implications of this -- of this discovery and its impact on our translational science.

We look forward to providing you further updates on our research of NRP-2 and 1923.

Sanjay will now take you through our financial results. Sanjay.

Thanks David. Identifying and understanding the receptor NRP-2 is an exciting, an important development for our 1923 program and I want to thank you and your team for your hard work.

Now our financials. Research and development expenses were 6.2 million and 9.2 million for the quarters ended March 31st, 2018 and 2017, respectively. The decrease was due primarily to a 1.9 million decrease related to the completion of ATYR1940 clinical studies and a decrease of 1.1 million related to lower product manufacturing cost.

General and administrative expenses were 4.1 million and 4.0 million for the quarters ended March 31st, 2018 and 2017 respectively. As of March 31st 2018, the Company had $74.1 million in cash, cash equivalents and investments.

As a result of today's restructuring announcement, we anticipate cash-burn from operations to be significantly less in the second half of 2018. In 2017 our annual cash-burn from operations was approximately $43 million and we now project -- we're now predicting our cash-burn from operations to be 10 to $12 million less in 2018. We're committed to developing 1923 and understanding the importance of its receptor NRP-2.

Today we announced some difficult choices that management had to make. As CEO of aTyr I want to ensure our culture is one of following the science and learning from more data. We have learned much about this new area of biology and our call today reflects this.

Looking ahead we are encouraged by the opportunity to build a successful Company over time but it starts with effectively translating our science in the clinic. Our goal will be to create shareholder-value with our current team and resources.

To summarize our path forward, during the remainder of 2018 we expect to achieve the following milestones: announce topline results from our 1923 Phase 1 trial next month; complete translational work for 1923; provide updates on the importance of the NRP-2 receptor for 1923.

We continue to believe 2018 will be a year focused 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 Neuropilin-2 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.

+++q&a

(Operator Instructions)

And our first question comes from Matt Luchini from BMO Capital. Your line is open.

So, I guess may be first on ORCA if you could provide a little bit more color on what was seen or rather not seen in between SITC and today and then I guess you know, looking really at 1923.

You know, it seems like there is, you've talked a little bit about the data next month as being the next you know, most near-term milestone, looking at NRP-2 could you just give a little bit more color on you know, and specificity on why or how you think that this is going to be particularly important from an indication selection perspective? I think that will be useful to understand. Thanks.

Sure Matt. Good questions. So, first on ORCA you know, obviously we were involved in a number of preclinical testing and you know, recently over the last month we learned of this new data with our human antibody so we've been really evaluating our plans you know, since then.

It's not that we didn't see efficacy with ORCA it just wasn't sufficient enough for us to justify the necessary investment to complete you know, in this very competitive IO market so I think what we previously saw was data with mouse monoclonal antibodies, at this step we saw you know, additional data that at this point has us now focusing on 1923.

With your next question around NRP-2, I'll answer a little bit David might chime in here too but I think fundamentally understanding the receptor and how this receptor works upstream to regulate the immune system is really going to be fundamental to that indication selection process.

As David mentioned there is a number of references, recent publications around NRP-2 so that's accelerating biology around that receptor and we're intersecting with that at this point so I think it's really exciting. It's known to do some things and neural lymphatic development but as David mentioned there's you know, a number of investigations that are looking at the immune system.

So, I think this is going to be really important for us to understand this receptor really, really well. We'll be doing so over the coming months and I think that's going to really tightly help us with our translational story so we can you know, really derisk the clinical trial -- the next clinical trial as much as possible.

I don't know if there's anything else you want to add David?

Yes. I would just say I think it's you know, it makes a big difference to our translational efforts, it gives us a lot more of the molecular understanding of what's going on the pathway so that really aids both our mechanistic studies and our translation to the clinic.

Okay, thank you.

And our next question comes from Catherine Xu from William Blair. Your line is open.

Wondering with the 30% reduction in workforce can you remind us how many people that is and what function? That will be very helpful.

And with regard to the Phase 1 study for 1923 what type of PD partners are you looking at in that study? And also, with the discovery of NRP-2 does that mean what kind of impact will it have on the initial indications that we talked about before such as (inaudible)?

Sure, great. Thanks Catherine.

So, the first question was around the reduction, 19 individuals that were impacted. This is really across the organization at all levels but I would say primarily was in our CMC and manufacturing group and research teams; I would say that that probably formed the majority of that. We believe we have a you know, a really good team now to take forward 23.

And your point to 23, the next near-term turn here is around a clinical trial -- I'll first answer the NRP-2 part, NRP-2 and what we know about it biology and what we're learning very quickly about it biology is it does still fit into our thesis around impacting T-cell-mediated in particular interstitial lung disease.

It actually has a number of other applications that were learning very quickly about specifically around its role in lymphangiogenesis that David mentioned.

So, I think it's important for us to consume you know, as much information about NRP-2 as quickly as possible because it's a kind of a burgeoning space in itself so we think we still have the right thesis there are to attack an interstitial lung disease.

What's going to be important in what you highlight is our next study is going to have to have some crisp PD readouts and those can include things from an assay point of view or in they can also be from the point of view of a something clinical-changing, something bending there in the disease.

I think with our knowledge with NRP-2 we're going to be better positioned to do both of those things. It's going to occur in the coming months now but I think our indication selection process is really going to be tied now to our quick understanding of NRP-2 and I think we would want to see something that we can assay and what I would like to see from a clinical point of view is something changing and something we show activity in these patients.

I think that's what's going to be important when I say clinically meaningful data point coming out of this next trial.

And our next question comes from Ted Tentoff from Piper Jaffray. Your line is open.

Great, thank you very much for the update. And I want to get a sense for the magnitude of cost savings or if you can provide a little bit more clarity on cash runway? Thank you.

Sure, sure Ted. Thanks for the question. So, as I mentioned in 2018 our burn was about 43 million, we anticipate possibly 10 to $12 million less this year. This does not include some of the debt service that we have, we have a venture debt of approximately of 20 million so this is really not factored into those savings.

We believe that we've now created runway to adequately plan for a meaningful Phase 2 trial for 23, with an important clinical readout so I think that's really the important take away here is that we now have sort of clear-the-runway if you will to put in to give it its best chance of success.

And I think our knowledge of NRP-2 is really the element that has me the most excited because as David mentioned we now have a real molecular understanding so I think that's -- that's the near-term thing we're focused on but over the long-term I think we've been able to now really create you know, sufficient runway for us to take this to a meaningful clinical catalyst.

That's helpful. And how quickly do you think you could start a Phase 2 study and when would you anticipate reported data on 1923, that -- would that be next year or into 2020?

Yes. So, I think we have a goal, we'd like to be in the clinic later this year, towards the end of the year. I think with our knowledge now of the receptor, that's really going to accelerate our thinking but I'm not sure if we'll accelerate that goal because we want to make sure that we have the right indication pick.

So, I think that's still very much our goal and then 2019 becomes that time period where we really run the bulk of the trial. Now an indication could be something that you have a readout sooner or later--

Yes.

-- that really depends on the design of the trial and as I said that's going to be I think our most near-term objective at this point; pick the indication, get the design right, I think we now have enough time. I think what you could see is, you know, I'm not guiding to this but you know, late 2019 we want to be in a position to really you know, talk about some of that clinical data, maybe early 2020 but it really depends on that design so--

Yes.

-- so those are -- those are just placeholders I think but now we have adequate time to really do something meaningful.

Excellent, I appreciate the update.

And our next question comes from Cory Kasimo from J.P. Morgan. Your line is open.

Hi this is Carmen on for Cory. Thanks for taking the question.

So, not to harp on this but do you see your goal the future for harnessing the Resokine pathway in the development of cancer therapeutics and through your work on the ORCA program were any other potential targets identified that could [affect the] further evaluation?

You know, the ORCA program, obviously right now we've messaged you know, that our intent is really to prioritize 23. You know, at this point what we want to do, we're not going to guide towards the future there but we are going to you know, look at some things mechanistically and I think it still has some potential there. Near-term though I think we're really focused on 23 and we prioritized that program.

You know, with regard to your question about could the utility of the pathway itself, I mean obviously this is a new area of biology so you know, we'll continue to learn more about it and its clinical utility even NRP-2 has some hints there where you see real intersection between autoimmunity, cancer.

I mean there's an axis here that we're playing you know, within this axis so I do think that you know, there's an opportunity to look at some things but we very much so I think are encouraged by the potential of what we're learning and accelerating our knowledge with 23 so we'd really prioritize our resources accordingly.

And our next question comes from Joel Beatty from Citi. Your line is open.

So, for 23 could you discuss what the key steps are between now and selecting the indications for Phase 2 and finalizing the trial design?

You know, I think first and foremost, it's really around evaluating everything we understand about now Neuropilin-2 you know, that's really has I think accelerated things from a molecular and translational understanding as David mentioned. We'll be completing some of our translational data package.

Previously I'd mentioned that we had run a number of new kind of animal models over the first half of this year and that was going to sort of aid our planning; we'll be able to take both of those insights, those important research insights, sit down with the scientific, the physician community because they have to be educated just as we are learning very quickly around what we know around Resokine biology.

Once we do those three things, I think then you get into designing, picking the indication and designing the trial.

So, those three things are going to be our most near-term objectives so that we can name an indication and get in a trial with the goal of getting into that trial towards the end of this year.

And then a question on NRP-2, have you looked at the HARS protein you know, which I believe 1923 is based on and assess you know, whether NRP-2 is a target of HARS?

Yes, great questions. So, we are looking into that, I mean specifically 1923 binds NRP-2, something that we are also you know, looking at its interaction with HARS and other tRNA synthetases but as David mentioned it's a specific receptor to 23. I think that information is really what we're focused on.

With regard to other areas of Resokine biology, sure, we'll sort of layer that knowledge into this but I think the important thing here is now that we have this understanding around how 1923 binds to NRP-2 this is really I think the key point that we now wanting to interrogate so that we can downstream, really focus on that PD assay that people want and PD markers that you want in the next trial.

And that does end our question-and-answer session for today, I would like to turn the call back to Dr. Sanjay Shukla for his final remarks.

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

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