aTyr Pharma Inc (ATYR) 2018 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the aTyr Pharma's Fourth Quarter and Full 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, Carmen, and good afternoon, everyone.

And thank you for joining us today to discuss aTyr's fourth quarter and year-end 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 of 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 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 statements disclaimer on the company's earnings press release 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.

During the fourth quarter of 2018, we took a significant step forward in the development of our lead therapeutic candidate ATYR1923.

In October, we announced the selection of pulmonary sarcoidosis as the first disease indication for clinical development of 1923.

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

In December, we initiated a Phase Ib/IIa clinical trial, evaluating 1923, for the treatment of pulmonary sarcoidosis.

Importantly, we are running this trial in collaboration with the Foundation for Sarcoidosis Research and its clinical studies network, which is providing critical assistance with trial site initiation and patient recruitment.

This collaboration will promote the efficient execution of this important first-in-patient study.

We're currently in the process of patient enrollment and are bringing trial sites online.

As a reminder, this study is a multiple-ascending dose, placebo-controlled, first-in-patient study of ATYR1923, that has been designed to evaluate the safety, tolerability, steroid-sparing effect, immunogenicity and PK of multiple doses of 1923 as well as to evaluate established clinical endpoints and potential biomarkers to assess preliminary efficacy.

36 patients will be enrolled into 3 staggered multiple dose cohorts at doses of 1, 3 and 5 milligrams per kilogram and randomized 2 to 1 to receive either 1923 or placebo.

These are the top 3 doses that we evaluated in our single ascending dose Phase I study, and we believe each of these doses have therapeutic potential based on our translational efficacy data.

Study drug will be administered by IV every 4 weeks for a total of 6 doses.

Follow-up visits are planned for approximately 4 weeks following the last infusion.

Importantly at drug safety -- a Data Safety Monitoring Board for the study may permit us to advance to the next cohort halfway through the previous cohort, potentially reducing time lines as we look to advance 1923 through clinical development as efficiently as possible.

To evaluate steroid sparing-effect of 1923, we plan to taper the daily steroid dose of patients from a starting dose in a range of 10 to 25 milligrams of prednisone, down to 5 milligrams, before study day 50.

Then patients will be followed for the remainder of the study to determine their ability to maintain on this 5-milligram dose.

Patients who develop worsening cough and dyspnea will have their steroid dose increased to control these symptoms and validated symptom indexes will be used to monitor cough and dyspnea.

The initiation of the trial during the fourth quarter is a significant milestone for our company and one that we achieved on schedule according to our clinical plan.

Data from this trial will be the first look we have into the preliminary activity in 1923 in treating patients with pulmonary sarcoidosis.

If successful with this trial, we may have the opportunity to potentially address other serious inflammatory lung diseases that have no known cure.

We expect interim results from this study during the fourth quarter of this year.

A little bit of background on pulmonary sarcoidosis.

Patients with this disease have abnormal masses or nodules called granulomas, consisting of inflamed tissues that form in certain organs of the body and affect their normal structure and function.

The current standard of care is corticosteroids, which act as a powerful anti-inflammatory drug.

And while they can work quickly, they can also result in significant toxicities and many patients are refractory.

So for several reasons steroids are not ideal for long-term therapy.

In the past several years, we've seen mortality from pulmonary sarcoidosis appearing to increase with pulmonary fibrosis that leads to respiratory failure being the most common cause of sarcoidosis-related deaths.

So a new, tolerable and efficacious treatment option is urgently needed for these patients.

We estimate the patient population here to be approximately 200,000, although estimates do vary.

In terms of prevalence, patients with pulmonary sarcoidosis are stratified based on disease severity.

Many patients, we estimate 30% to 50%, have disease that resolves on its own.

And another 10% to 20% have disease that does not progress to fibrosis.

However, it is this third group who experienced progressive lung impairment that we are targeting.

So with 1923, we have an opportunity to improve the lives of a significant patient population.

And while our immediate focus will focus -- will remain on pulmonary sarcoidosis, we believe that 1923 with its unique mechanism of action, has potential clinical utility in other interstitial lung diseases, including chronic hypersensitivity pneumonitis and a connective tissue disease-related ILD.

We estimate the addressable market for these 3 unmet diseases to be in the $2 billion to $3 billion range, based on sales of leading antifibrotics such as pirfenidone and nintedanib.

So if we achieve proof-of-concept in this Phase Ib/IIa study in pulmonary sarcoidosis, we see significant opportunity to expand our pipeline in related diseases where 1923's unique mechanism of action could alter the progression of the disease.

While we are focused on the development of 1923, we also continue to advance early translational research activities in collaboration with a network of leading corporate and academic institutions.

To that end, subsequent to the end of the fourth quarter, we announced a research collaboration with CSL Behring for the development of product candidates derived from up to 4 tRNA synthetases from our preclinical pipeline.

CSL will fund all research and development activities related to the development of each candidate, and we will grant CSL an option to license worldwide rights for each IND candidate that emerges from this collaboration.

We are pleased to enter into this partnership that both further validates our early research capabilities and gives us the opportunity to earn up to $17 million in potential option fees,

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obtainment of research milestones and CSL's decision to continue development.

For those of you that are unfamiliar with our new partner, CSL Behring is a global biotherapeutics leader based in Melbourne, Australia, and employs more than 22,000 people delivering life-saving therapies in more than 60 countries.

CSL's new product development activities focus on innovative therapies, targeting multiple areas including immunology, hematology and other rare and serious medical conditions.

Recognizing that collaborations can speed the development of new therapeutics, these partnerships are a key element of CSL's long-term growth strategy.

aTyr looks forward to leveraging CSL's world-class R&D capabilities, during what we believe will be a long and mutually beneficial partnership.

We also announced the expansion of a pilot study and initiation of a research collaboration with the University of Nebraska Medical Center.

Data from the pilot study has provided further evidence that 1923 modulates immune cell biology, and a poster will be presented at the 2019 American Association for Cancer Research Annual Meeting coming up on April 3 in Atlanta.

Our expanded collaboration seeks to advance our understanding of NRP-2 biology and the regulation of immune responses and to explore additional therapeutic opportunities for 1923.

Specifically, we will investigate the role of 1923 in modulating the functional properties of myeloid cells, including macrophage biology, the involvement of individual NRP-2 co-receptors and ligands, and the impact of different anti-NRP-2 domain-specific antibodies in immunology and cancer biology.

Dr. Kaustubh Datta, Professor of Biochemistry and Molecular Biology at UNMC, will serve as the investigator for this collaboration.

Dr. Datta has published extensively in the field of NRP-2 biology and conducts research related to the molecular mechanisms of cancer progression and metastasis.

We're excited about this potentially groundbreaking research and look forward to providing updates on our progress on future calls.

Finally, just a few weeks ago at the Keystone Symposia 2019 Conference on myeloid cells in Santa Fe, we presented preclinical data, demonstrating 1923's unique ability to bind NRP-2, which is expressed on the surface of myeloid cells, both in vitro and in vivo.

This data is the first evidence of 1923's ability to down-regulate myeloid cells, specifically neutrophils during lung inflammation, giving us increased conviction in its mechanism of action as we progress through early clinical development.

In summary, we've seen significant progress this past year as we transition our innovative science into cogent clinical programs.

We then emphasize the data-driven approach to strategic portfolio decisions as we look to advance our science with transparency and efficient execution.

This approach has led us to make tough decisions as we did earlier in 2018 with an early-stage program where the data did not justify immediate further development, this led to difficult, yet appropriate corporate restructuring.

We focused our resources on the 1923 program and critically interrogated multiple transitional animal models of efficacy, with consistent readouts that supported further advancement into the clinic.

We conducted a successful Phase I single ascending dose trial using 1923 in 36 healthy volunteers, establishing initial safety and tolerability evidence for 1923.

We collaborated with the leading worldwide pulmonary experts to review our translational data and guided by these reviews, chose pulmonary sarcoidosis as our first clinical indication for 1923.

We subsequently submitted an IND application and launched our Phase Ib/IIa trial in late Q4.

The manner in which we systemic -- systematically mature the 1923 program, in our opinion, provides a roadmap to advance more of our synthetase biology portfolio.

Our recent collaboration with CSL Behring provides an important validation to aTyr's discovery and translational approaches to advancing potential novel therapeutic opportunities.

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 $3.5 million and $20.4 million for the 3- and 12-month periods ending December 31, 2018, compared to $5.3 million and $30.1 million for the 3- and 9-month periods ending December 31, 2017.

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

The decrease was partially offset by an increase in $1.1 million related to the initiation of our ATYR1923 Phase Ib/IIa clinical trial.

General and administrative expenses were $2.4 million and $12.4 million for the 3- and 12-month periods ending December 31, 2018, compared to $5.9 million and $17.1 million for the 3- and 9-month periods ending December 31, 2017.

The decreases were primarily related to a reduction in personnel-related costs and professional fees.

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

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

As of December 31, 2018, we had $49.5 million in cash, cash equivalents and investments.

Our net cash position was approximately $33.5 million as of December 31, 2018.

Our total net cash position includes approximately $16 million in debt from our loan facility.

Looking forward to 2019, we believe our cash burn will continue to stay steady with an anticipated burn of $23 million to $25 million net of debt.

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

Thanks, Jill.

So in closing, during 2018, we made notable progress on a number of fronts both clinically and operationally.

And we entered 2019 with significant momentum.

We are fast approaching an inflection point for our company later this year, with interim results from our ongoing proof-of-concept Phase Ib/IIa trial of ATYR1923, which if positive, will usher in a new era for our company.

We appreciate your interest and continued support.

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

(Operator Instructions) And our first question is from Joel Beatty with Citi.

This is Shawn Egan calling in for Joel.

Could you maybe frame expectations for your success for your interim look in 4Q?

I know you'll be looking at a number of meaningful endpoints for this [indication] such as like FEV and PET, skin lesions and steroid utilization.

Are any of these more meaningful than others in your view?

And what type of signals would give you confidence going forward?

Great.

Thanks, Shawn.

Nice to talk to you again.

I think what we will be looking for in Q4 is, of course, kind of an interim look on where we are.

From a starting point, this is a safety and tolerability study, first and foremost.

So I think those initial clues around how the safety of 1923 is holding up in particular in a multiple-ascending dose trial will be important for us to talk about.

You highlighted a number of efficacy endpoints that we're looking at.

I think one of the things we're really keen to determine here is whether or not 1923 can have a steroid-sparing effect.

So I think any kind of initial trends that we see improvement of steroid utilization, in particular in those early cohorts will be important.

With some of those other biomarkers and those endpoints that you point out, we may need to wait until final study results, PET scans might be an area where depending on the number of patients we enroll at that time, that's another intriguing trend that we could look at.

So I think when we think about the fourth quarter, I'll be providing an update a little bit more about what to expect, once we get a little bit more into our trial and we approach fourth quarter.

Great.

And regards to the steroid-sparing effect, could you talk about how the trial is designed?

Are both placebo and treated patients going to receive the taper?

And then just an incremental increase in steroid will be given when patients experience coughing?

Or is that roughly how it works?

Correct, correct.

So you've got it there that, in the sense that, all patients whether they receive 1923 or placebo are going to be knocked down over the first 50 days of the trial.

So there'll be, in essence, made unwell by being put on 5 milligrams.

And then we'll be looking for kind of a real-world clinical component here around depending on how folks cough and shortness of breath trend, the clinicians will have to titrate their steroids back up.

And we believe those patients on 1923 will be much better controlled at that -- those lower doses of steroids rather than the placebo patients, which we know, historically, will not be able to be managed at that 5-milligram dose and will more than likely have to go right back up to their previous pre-entry dose.

Great, that makes a lot of sense.

You mentioned 2 other indications that you guys might be pursuing in the future, CT-ILD and pneumonitis.

Are any of the endpoints in the Phase Ib/IIa kind of more or less -- to have more or less read through to those indications?

Similar endpoints, however, slightly different in the sense that these are interstitial lung diseases that also have a very pro-inflammatory component.

But movement with these diseases may require you to look at something like high-res CT, for example, a bit more than PET, you may be looking again at FVC like we are looking in our trial.

They may have different biomarkers of interest to follow, and I also think the relative sensitivity of these patients to therapy may require a longer trial.

But I do think based on our knowledge and our engagement with the pulmonary experts, they see those 2 as 2 very, very strong indications for us to move into after we develop POC in a pulmonary sarcoidosis population.

(Operator Instructions) And our next question is from Katherine Xu with William Blair.

So this is Katherine with William Blair.

So Sanjay, I'm just wondering, in fourth quarter, when you talk about the interim analysis, do you think you can get to 24 patients in that time, or is it going to be 12?

And also for CSL partnership, I wonder what kind of indications and also what synthetases they are?

Can you confirm they're not histidine tRNA?

And what indications are potentially contemplated for those programs?

Sure, Katherine.

Good questions.

I'll start from the top there.

Regarding the number of patients, I'll look to update the market midyear to just let folks know whether it's closer to 12 patients, 15, I really don't know at this point.

But I do think that once we kind of get into the season of the trial and progress a little bit more, I'll have a better handle on the number of patients to expect interim results.

Again, that's predicated on enrollment over the first half of this year.

So I'm going to come back to you on that probably next quarter.

With regard to the CSL collaboration; number one, I'll confirm, it does not include histidyl tRNA synthetase.

We haven't disclosed the 4 tRNA synthetases that we'll be working on, but I can confirm here it's not HARS, HARS is not one of them of these 4, these are 4 different opportunities.

When you talk about where this can go and what indications, it's a little bit early, but I will tell you that CSL's kind of goal in how they've sort of reframed their company as a company that was really known to be more of a plasma therapeutics leader, now they're really looking more in areas of immunology, hematology, neuroscience neurology.

So as you can imagine these are areas that we believe that should we follow up on some of the signals that we think are part of this portfolio.

That's the kind of areas that we would be looking to target.

With regard to specific disease indications, it's a little bit early, but maybe that provides you a little bit of the sort of buckets that aTyr and CSL is thinking about.

Katherine, does that answer your question?

Yes.

And I'm not showing any further questions in the queue.

I would like to pass the call back to Sanjay for his final remarks.

Sure.

Well, thank you, everyone for joining our call this afternoon.

We'll look forward to providing you more information at our next quarterly update in May.

Thank you, again.

And ladies and gentlemen, thank you for participating in today's conference.

This concludes the program and you may all disconnect.

Have a wonderful day.