aTyr Pharma Inc (ATYR) 2018 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the aTyr Pharma Third Quarter 2018 Conference Call.

(Operator Instructions) 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 Jill Broadfoot, aTyr's Chief Financial Officer.

Ms. Broadfoot, you may begin.

Thank you, Chelsea.

Good afternoon, everyone, and thank you for joining us today to discuss aTyr's third quarter 2018 operating results and corporate update.

We are joined today by Dr. Sanjay Shukla, our President and CEO.

Sanjay will provide an update on our corporate strategy and the clinical development at ATYR1923.

I will then review the financial results before handing it back to Sanjay to open it up for 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 provisions 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 on the company's earnings press release that was issued after the close of market today as well as the risk factors in 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, Jill, and good afternoon, everyone.

If you recall at the end of our previous earnings call, we highlighted 2 upcoming milestones: announcing our Phase Ib/IIa protocol for the 1923 clinical trial in patients within a specific interstitial lung disease population and initiating this trial in the fourth quarter of this year.

I'm pleased to say that we're in position today to discuss both milestones.

In October, we announced our selection of pulmonary sarcoidosis as the disease indication for our upcoming ATYR1923 clinical study.

We believe by modulating the activity of key immune cells involved in this disease, 1923 has the potential to down-regulate inflammatory insult in pulmonary sarcoidosis patients, preventing further clinical morbidity and progression of disease.

From San Antonio, the site of the CHEST annual meeting, we hosted an educational webinar featuring Dan Culver, Director of the Interstitial Lung Disease Program at the Cleveland Clinic.

Dr. Culver is also the President-elect of the World Association of Sarcoidosis and Other Granulomatous Disorders and the Chair of the Scientific Advisory Board for the Foundation for Sarcoidosis Research.

During the webinar, Dr. Culver provided disease education on pulmonary sarcoidosis and its impact on patients.

We have benefited from Dr. Culver's expertise and experience in pulmonary sarcoidosis and have appreciated his feedback while we have developed our protocol for the upcoming study.

As described by Dr. Culver in the educational webinar, sarcoidosis is a disease that involves the activation of the immune system in a pattern that results in a clump of cells called the granuloma.

Sarcoidosis is a multisystem disease where about 90% to 95% of patients will have lung involvement.

The skin, eyes, liver, lymph nodes and other organs can also be involved.

Within this population, there are 3 categories of patients.

The first, those patients where the disease will resolve on its own, which ranges between 30% to 50%.

Approximately 10% to 20% of patients for whom there is no progression of fibrosis is the second group.

And the last remaining number of patients, this is where you see a chronic inflammation and active granuloma formation.

We believe approximately 30% of patients have this form of chronic unremitting inflammation with progressive organ impairment.

Estimates of prevalence vary, but we estimate that approximately 200,000 Americans live with pulmonary sarcoidosis.

Steroids are the primary treatment for pulmonary sarcoidosis.

Based on what we have learned from expert clinicians, steroids present significant complications for patients and are difficult to take as a long-term treatment.

As Dan noted in his presentation, clinicians generally like steroids because they work quickly.

But many say the toxicity cost is far too high.

Patients are in need of effective and tolerable treatment that targets immune cells and their involvement in the pathobiology of pulmonary sarcoidosis.

We plan to initiate a proof of concept Phase Ib/IIa multiple ascending dose, placebo-controlled, first-in-patient study with 1923 for the treatment of patients with pulmonary sarcoidosis later this quarter.

The study has been designed to evaluate safety and tolerability, steroid-sparing effect, immunogenicity and pharmacokinetics of multiple doses of 1923.

In addition, we intend to evaluate well-established clinical endpoints and potential biomarkers to further assess preliminary efficacy of 1923.

Our team has been working very hard to finalize our protocol and initiate this trial.

We recently filed our IND with the FDA, and I believe our aTyr team will be able to execute on our key objectives and deliver upon our clinical milestones, starting with the initiation of this Phase Ib/IIa clinical trial.

Our cohorts and design of the protocol is subject to regulatory review and approval, but I'd like to highlight some features of our proposed protocol.

Per our submission, up to 36 patients are planned to be enrolled in this study at up to 12 centers in the U.S. The study will consist of 3 staggered multiple dose cohorts.

Within each cohort, 12 patients will be randomized 2:1 to either 1923 or placebo.

Study drug will be administered via IV infusion every 4 weeks for a total of 6 doses, with a follow-up visit 4 weeks after the last infusion.

The proposed dosing levels of 1923 are 1, 3 and 5 milligrams per kilogram.

An important component of our submission is a proposed steroid taper for all patients in the trial, from a starting dose of 10 to 25 milligrams a day of prednisone to the target dose of 5 milligrams a day of prednisone to be completed before day 50.

We'll be following these patients for the remainder of the trial and evaluate their ability to maintain this sub-therapeutic 5-milligram dose of steroid while receiving 1923 or placebo.

Patients who develop an acute worsening of symptoms or are unable to adhere to the tapering regimen may receive rescue treatment with higher doses of steroid as clinically indicated.

By evaluating the dependency of steroids in this real-world manner, we believe we will be able to assess the potential for 1923 to be a steroid-sparing agent.

Per our submission, we also plan to explore preliminary efficacy of 1923 by evaluating changes over time in disease activity assessed by FDG-PET imaging; lung function assessed by forced vital capacity, or FVC; serum biomarkers, such as interleukin-2 receptor and angiotensin-converting enzyme levels; the state of immune cell energy in peripheral blood; health-related quality of life scales; and finally, analysis of skin lesions for those subset of patients that we enroll with cutaneous disease.

Our protocol design has been reviewed by over a dozen experts in the field and they've endorsed our approach.

Our goal is to evaluate patients over a treatment period with enough duration to provide not only a robust safety and immunogenicity profile for 1923, but also allow us the opportunity to potentially observe changes in clinically meaningful endpoints, in particular, reduction of steroid dependency.

We believe our preclinical and Phase I data supports the clinical development of ATYR1923 in pulmonary sarcoidosis.

Based on our discussions with experts, we also see potential future utility of 1923 in other interstitial lung disease indications, including chronic hypersensitivity pneumonitis, and connective tissue disease associated ILD, such as systemic sclerosis ILD and rheumatic arthritis ILD.

Before I pass it to Jill to discuss our financials, I want to take a moment to talk about some of our research activities.

As indicated in our last earnings call, we are actively initiating and conducting collaborative research at well-known academic institutions.

We're doing so to, first, broaden the range of our translational studies, to test for new potential biomarkers and evaluate further activity of 1923.

In addition, we want to advance our understanding of the role of 1923 and NRP-2 interactions in the regulation of immune responses.

And finally, to explore other biological settings in which 1923 and neuropilin-2 interaction plays a role, which could lead to additional potential therapeutic indications.

We plan to update you on the status of some of these efforts in the near future.

Our corporate strategy and overall mission remains the same in that we are critically focused on providing clinical translation of our science with our current resources.

With that, I'd like to turn it over to our Chief Financial Officer, Jill Broadfoot, to review our financial results.

Thank you, Sanjay.

Research and development expenses were $4.2 million and $16.8 million for the 3- and 9-month periods ending September 30, 2018, compared to $7.1 million and $24.8 million for the 3- and 9-month periods ending September 30, 2017.

The decreases were primarily related to the completion of ATYR1940 and ATYR1923 clinical studies in 2017 and related manufacturing expenses, along with a decrease in personnel-related costs.

General and administrative expenses were $2.5 million and $10 million for the 3- and 9-month periods ending September 30, 2018, compared to $3.7 million and $11.2 million for the 3- and 9-month periods ending September 30, 2017.

The decrease were primarily related to a reduction in personnel-related costs, consulting fees and professional fees.

As we mentioned on our last earnings call, net of our debt payments, we entered this year burning approximately $10 million per quarter in Q4 '17 and plan to exit the year burning approximately $6 million per quarter in Q4 of '18.

During the third quarter, we had a cash burn of $6.8 million, which included our final payment to The Scripps Research Institute under our collaboration which terminated this month.

Excluding such payment, our cash burn is in line with our expectations, and I'm very pleased with our reduction in operating expenses.

As of September 30, 2018, we had $56 million in cash, cash equivalents and investments.

Our net cash position is approximately $38.2 million as of September 30, 2018.

Our total net cash position includes approximately $17.8 million in debt from our loan facility.

Now I'd like to turn the call back over to Sanjay before we open it up to Q&A.

Thanks, Jill.

We spent 2018 focused on building the right scientific foundation to prepare for meaningful clinical trials and directing our efforts to the development of ATYR1923.

We look forward to achieving our goal of initiating our 1923 proof-of-concept Phase Ib/IIa trial in patients with pulmonary sarcoidosis later this year.

Thank you, everyone.

At this time, Jill and I will be happy to take your questions.

(Operator Instructions) And our first question will come from the line of Matthew Luchini with BMO Capital Markets.

This is Stephen Marshall on for Matthew.

I was just hoping to get a little more color on those possible future indications, kind of what the market opportunity is and why 1923 is a good choice for that.

So Stephen, good question.

So we've previously outlined that we thought our drug could have utility in a number of interstitial lung diseases.

If you remember, these interstitial lung diseases share a common pathobiology in that pro-inflammatory and fibrotic cells eventually lead to a fibrotic pattern progression in these diseases.

And we targeted those more pro-inflammatory conditions, such as sarcoidosis and CHP.

Ultimately, we've decided in this first trial to focus on pulmonary sarcoidosis as we think that this is probably the most efficient early proof of concept to really focus our resources on.

But the experts have clearly guided us that CHP and potentially those other connective tissue disease interstitial lung diseases would be next -- great next follow-on indications.

I think by establishing proof of concept in this study, we'll be able to springboard very quickly into those other indications because as I said, they all share a common immunopathology across all of these conditions.

When you think about market size, I mean, these are conditions that are segmented, for example, with CTD-ILD within RA and scleroderma.

So those numbers were -- we're kind of still working on with those experts.

But when you talk about CHP, this is a condition that's kind of emerging throughout the world.

You start to see similar rates of incidence and prevalence.

But depending on where you are in the world, this can also, frankly, have more patients than pulmonary sarcoidosis.

And when I think of the market opportunity, I see them all similar when you think about 200,000, 250,000 patients for each of these subgroups, and that sort of represents the 2/3 of the interstitial lung disease spectrum outside of IPF.

So in many ways, I think if you look at those IPF drugs, where they are multibillion dollar -- generating multibillion dollars of sales with 1/3 of the ILD population, I think on this side of the fence, it represents probably double of that.

So my guess is, there is somewhere near $4 million to $5 million -- $4 billion to $5 billion of opportunity in those more pro-inflammatory interstitial lung diseases that we plan to look at after we establish this proof of concept.

Our next question comes from the line of Katherine Xu with William Blair.

This Roland on for Katherine.

Could you talk about where you're hoping to see some pulmonary sarcoidosis study in 4Q '19 and when you might start pushing other indications into the clinic?

Sure, sure.

So I think the most important takeaway is we want to see a real sign of clinical activity in this trial.

Yes, we want to check the box and continue to demonstrate safety and tolerability as we've done with our Phase I trial.

But later this year, we want to read out some of those important clinical markers.

What the experts have told us is steroid dependency and burden is one area that would really make this believable in their eyes, that if we can maintain these patients and, in particular, demonstrate that a trend with -- from a dose-response element here, we have the opportunity to really establish that clinical activity.

We also have other ways in our trial to look at clinical activity.

We have a very strong imaging endpoint with PET scans.

This is something that's being used much more readily with experts and in trials looking at sarcoidosis.

And then we also are looking at pulmonary function test change with the FVC.

All of these things, we believe, can read out towards the end of 2019.

That's going to be dependent on some of our early recruitment, and I'll probably get back to you guys to let you know how we're tracking to that.

But what I'd like to see is, at a minimum, 2 of those first 2 cohorts, maybe the 1-milligram and the 3-milligram population, for us to have data at -- in Q4 next year.

If we're able to recruit faster, we may be able to read the whole trial out.

But I'm going to sort of come back to folks probably in the first half of next year on exactly what we're going to see.

But it is going to be really around those 3 endpoints, those activity endpoints that you want to pay most attention.

(Operator Instructions) Our next question comes from the line of Joel Beatty with Citi.

This is a follow-up to the last question.

You talked about those 3 different areas of the clinical activity you'd be looking for in the trial.

And I guess, could you maybe share some thoughts on the different characteristics of those endpoints in terms of which of those endpoints are kind of most important to the clinical improvement that you might expect to be important in later-stage trials?

And are there any of those endpoints that you think would have less noise in them that you can pick up a clear signal in a smaller, early stage study such as this one?

Yes, Joel, great question.

And I think kind of in order of how I've stressed the importance is the way you should think about it.

If we are able to sort of -- and we've gone pretty aggressive here with the steroid-sparing approach and that's per the guidance from nearly all the experts, that, that is in our mind and their mind the most believable sign of clinical activity with the least amount of variability.

Experts agree and data has shown that most patients cannot be maintained on 5 milligrams of prednisone.

Typically, what you'll see is the inability to keep that dose within 2 to 3 months based on data that's really out there in the literature.

So we're essentially sort of knocking the steroid dose down and then testing to see how these patients do and whether they can maintain that dose or not.

The idea here is we'd look at sort of their steroid dependency and the burden, the kind of the overall amount of steroids these patients receive.

And presumably, we expect to see 1923, that folks have been able to manage their disease symptoms a lot better compared to placebo.

You also want to look at disease activity, I think, by imaging.

This FDG-PET is also an important imaging endpoint.

This looks at inflammation in that sort of peripheral and sort of perivascular space there, how much sort of inflammation are we really impacting.

I think that's a sort of secondary efficacy endpoint to look at.

Lastly, I think FVC, you have to be able to look at that and try to see if we have improvement there.

But that's probably your most variable endpoint.

So I think in order of importance, we place a lot of importance in being able to sort of manage these patients with a low dose of steroids.

If we're able to do that, in particular, if we see a trend as we increase our doses, that's going to be a really important finding for us as we read out this trial.

And we have a question from the line of Joe Aguilera with Delos Advisors Limited.

Sanjay, Joe here.

What's the potential of a partnership for 1923?

And how are you looking at this going forward?

Before the data?

After the data?

Maybe you can give us some color.

Yes.

Joe, one of the things -- I don't really guide towards partnerships per se.

I mean, I think as we have created an attractive program with a robust translational state, certainly, we'll look to be opportunistic around any of those sort of opportunities.

We're really focused on getting this protocol nice and tight.

We believe we've done that, submitted the IND, and we're excited about getting the program started.

I think we will always look, with regard to any of our IP, at ways in which we can generate more value, and that includes partnership.

But at this time, I don't really have a guide there per se around when and if we'll partner this drug.

And that ends our Q&A session for today.

I would like to turn the call back to Dr. Shukla for his final remarks.

Thanks very much.

Thanks, everyone, for your time and attention today.

We look forward to providing updates in the months ahead.

Thank you very much.

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.