aTyr Pharma Inc (ATYR) 2022 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the aTyr Pharma Third Quarter 2022 Conference Call. (Operator Instructions)

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, and good afternoon, everyone. Thank you for joining us today to discuss aTyr's third quarter 2022 operating results and corporate update. We are joined today by Dr. Sanjay Shukla, our President and CEO; Ms. Jill Broadfoot, our CFO; and Dr. Leslie Nangle, our VP of Research. On the call, Sanjay will provide an update on our corporate strategy, including our clinical program for efzofitimod and research and discovery programs. 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 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 third quarter 2022 results conference call.

The third quarter saw the initiation of EFZO-FIT, a global pivotal Phase III study of our lead therapeutic candidate, efzofitimod, in patients with pulmonary sarcoidosis, the most prevalent form of interstitial lung disease or ILD. We dosed the first patient in this study in September, meeting aggressive timelines and guidance. Amid current market conditions, we intend to focus our resources on prioritizing EFZO-FIT, which is our highest value program, to ensure a timely and successful completion of this study.

As we begin, I will summarize a few additional highlights since we last spoke in August. We announced a publication of results from the Phase Ib/IIa study of efzofitimod in patients with pulmonary sarcoidosis in the peer-reviewed medical journal CHEST. We presented a poster at the European Respiratory Society or ERS, International Congress on findings for an antibody for immunohistochemical detection of Neuropilin-2 or NRP2 in patient tissue samples. NRP2 is efzofitimod's binding partner, and these findings suggest that this antibody may provide an extremely useful clinical tool, potentially aiding in patient selection or stratification.

We received FDA Fast Track Designation for efzofitimod for the treatment of systemic sclerosis, SSc or scleroderma-associated ILD. We announced a research collaboration with Dualsystems Biotech AG, a company specializing in custom proteomics to identify and validate 10 new target receptors for tRNA synthetases from our intellectual property or IP by 2025. This collaboration is a way to potentially accelerate drug discovery efforts and identify new drugs from our platform.

And finally, we received a notice of allowance from the U.S. Patent and Trademark Office for anti-neuropilin-2 monoclonal antibodies, which is the first to be granted to our IP estate for this program. We've experienced another quarter of crisp operational execution, both internally and in cooperation with our partners and collaborators, and we anticipate a strong finish to the year.

Now let's focus on some more specific updates around our clinical program for efzofitimod. As a reminder, efzofitimod is a first-in-class immunomodulator for fibrotic lung disease. Efzofitimod is a novel Fc fusion protein based on the 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. The NRP2 receptor is upregulated on key immune cells during active 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.

We're developing efzofitimod as a potential treatment for patients with ILD, a group of rare immune-mediated fibrotic lung disorders. Our initial ILD indication is pulmonary sarcoidosis. Sarcoidosis is the most prevalent ILD and is characterized by the formation of granulomas, which can occur in any organ, but predominantly affects the lung. If left untreated, this can lead to irreversible scarring or fibrosis, which greatly increases the risk of death.

We estimate that there are close to 200,000 patients with pulmonary sarcoidosis in the U.S., and around 150,000 in the major European markets with another 20,000 in Japan. Up to 75% of patients require treatment for their disease and approximately half of these will have progressive disease despite treatment. Around 1 in 5 of all patients will go on to develop lung fibrosis.

First-line treatment is typically corticosteroids, which may effectively control symptoms, but are associated with severe debilitating side effects, particularly with chronic treatment. In patients unresponsive to steroid treatment, cytotoxic immunosuppressants or biologic immunomodulators may be used, but are also known to cause serious side effects. The use of all of these therapies is empiric and not supported by current clinical evidence standards.

We believe the addressable market for efzofitimod in the 3 geographies mentioned is around 200,000 patients. Even with conservative assumptions, this represents a significant market opportunity in sarcoidosis alone.

Efzofitimod has received Orphan Drug Designation and Fast Track Designation from the FDA for sarcoidosis. We see upside potential for efzofitimod in other forms of ILD. This includes indications such as scleroderma-related ILD, where we have also garnered FDA Orphan Drug and Fast Track Designation, also other connective tissue disease-related ILDs and chronic hypersensitivity pneumonitis, among others. These diseases share overlapping immune pathology with sarcoidosis and others, having limited treatment options. And efzofitimod has demonstrated efficacy in animal models of these diseases. Taken collectively, this represents a multibillion dollar market opportunity for efzofitimod in ILD, and aTyr is poised as a front runner in this expansive opportunity.

Now let's recap the data we have generated for efzofitimod and some updates on the current EFZO-FIT study. In September 2021, we reported clinical proof-of-concept for efzofitimod based on positive results from a Phase Ib/IIa study in pulmonary sarcoidosis. 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.

Just this past week, the full results from this study were published online in the peer-reviewed medical journal CHEST with Dr. Daniel Culver, Chief of Pulmonary Medicine at the Cleveland Clinic, serving as the lead author. This marks the first peer-reviewed publication of clinical data for efzofitimod or for that matter, any tRNA synthetase derived therapy in a major medical journal. These data indicate that efzofitimod is providing substantial benefit to patients, improving lung function and symptoms of cough, shortness of breath and fatigue, all while reducing their toxic steroid burden.

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. With the full data set now available for review, we expect this publication will generate additional education, awareness and support for efzofitimod among the specialist and generalist provider community, particularly as we are currently enrolling for EFZO-FIT.

EFZO-FIT is a global pivotal Phase III randomized double-blind placebo-controlled study to evaluate the efficacy and safety of efzofitimod in patients with pulmonary sarcoidosis. It is a 52-week study consisting of 3 parallel cohorts, randomized equally to either 3 milligrams per kilogram or 5 milligrams per kilogram of efzofitimod or placebo, dosed intravenously once a month for a total of 12 doses. The study intends to enroll 264 patients with pulmonary sarcoidosis at multiple centers in the U.S., Europe and Japan.

The trial design incorporates a forced steroid taper and the primary endpoint of the study is steroid reduction. Secondary endpoints include measures of lung function and sarcoidosis symptoms. We've dosed the first patient in the study and have several sites in the U.S. open for enrollment. We expect additional sites to open in the U.S. later this year.

And we'll remind you that this is a global study. We held a productive meeting with European investigators during ERS in September and we now have rapidly achieved regulatory approval to proceed with the study in a number of countries, including the U.K., Netherlands, France and Spain. We anticipate sites opening for enrollment in those countries in the coming months and early 2023.

Finally, our partner, Kyorin Pharmaceutical, has also completed submission of the Clinical Trial Notification or CTN in Japan, and we could see a center there open for enrollment by the end of the year. We're highly encouraged by the rapid pace of this progress as it permits us to initiate the study in those regions and signifies alignment with these regulators on the trial design, including the steroid sparing primary endpoint. I want to give kudos to our regulatory group led by Dr. Bob Ashworth for skillfully navigating towards these regulatory approvals.

EFZO-FIT is expected to be the largest interventional study for patients with sarcoidosis to-date. It is also the largest study that aTyr has undertaken in the history of the company. We're laser-focused on assuring that this study receives the resources it requires and we intend to focus our resources on EFZO-FIT to ensure its completion.

So shifting to our preclinical and discovery programs, let's discuss some of the progress with our pipeline. This includes ATYR2810 or 2810. And today, we'd like to provide a strategic update regarding this program, which we have advanced to be Phase I ready.

Due to current market conditions and the need for prioritization of capital, most importantly, focusing our resources on the EFZO-FIT study, we made the strategic decision not to use our internal resources to initiate a Phase I study of 2810 this year. We intend to look at other potential non-dilutive avenues, including academic collaborations or other funding sources to bring this program forward.

Multiple academic centers are particularly interested in advancing 2810 in rare aggressive cancers where many patients remain unresponsive to currently available treatments, such as neuroendocrine prostate and pancreatic neuroendocrine tumors. Recent published literature regarding the role of NRP2 in these types of cancers and interest from these centers have encouraged us to consider interrogating an anti-NRP2 agent such as 2810 in these indications.

This includes an exciting publication recently from one of our key collaborators, Dr. Kaustubh Datta, and his colleagues from the University of Nebraska Medical Center, indicating the role of NRP2 in promoting metastasis and conferring therapeutic resistance in neuroendocrine-like prostate cancer, which outlines the potential for the therapy in this aggressive tumor type.

As a reminder, 2810 is Phase I ready having completed IND-enabling activities, including GMP manufacturing and GLP tox studies. And we have been granted allowance from the U.S. Patent and Trademark Office for the patent for anti-NRP2 antibodies, which covers us for 2810.

I'll close with reiterating how excited we are with our tRNA synthetases platform and what it has yielded thus far as we get closer to our mission of translating our tRNA synthetases biology into new therapeutics for fibrosis, inflammation and cancer.

We've advanced efzofitimod, which is derived from a fragment of histidyl-tRNA synthetase or HARS into now a Phase III study. Meanwhile, we've identified and validated the receptor target for a fragment of another tRNA synthetases, alanyl-tRNA synthetase or AARS, and we expect to reveal the receptor of yet a third fragment, this one from aspartyl-tRNA synthetase or DARS in the near future.

I'll now turn it over to our Chief Financial Officer, Jill Broadfoot, to review our financial results.

Thank you, Sanjay. We ended the third quarter 2022 with $79.6 million in cash, restricted cash, cash equivalents and investments. Research and development expenses were $9.9 million for the third quarter 2022, which consisted of product development and manufacturing costs for the efzofitimod and 2810 programs as well as startup costs for the Phase III EFZO-FIT study. General and administrative expenses were $3.6 million for the third quarter 2022. Common shares outstanding were approximately 29 million and fully diluted shares were 34 million as of September 30, 2022.

From a balance sheet perspective, we are comfortable with our current cash position, which we believe enables us to carry out the most meaningful value driving catalyst for the company. While running a large global Phase III study in a rare disease such as EFZO-FIT is capital intensive, we do share a portion of the cost with our partner Kyorin, who is responsible for the cost of all operations and patient costs in Japan and purchases drug supply from us with a small markup. And as a reminder, under our agreement with Kyorin, we are eligible to receive up to an additional $165 million in milestone payments, of which the majority are development and regulatory related.

As we stated on the call today, we have made some important decisions around our pipeline that will allow us to better manage our cash. At this point in time, we have a financial and strategic plan for the company to fund operations till the data readout for EFZO-FIT. This plan contemplates our current cash balance, the potential for milestones from Kyorin and potential proceeds from the use of our existing equity vehicle.

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

Thank you, Jill. We are a highly dedicated team with a track record of exceptional execution, and we continue to make outstanding progress with efficient use of capital. We understand that the markets have been challenging as of late and certainly know that they do not in any way adequately reflect the intrinsic value of the company, including the data and progress we've generated for efzofitimod, considering its stage of development as a late phase asset and its potential to address a multibillion dollar market. The prioritization we've discussed today provides us with the ability to ensure adequate resources to successfully advance the highest value driving catalyst for the company.

I'll close with a comment recently from one of our top shareholders, who told me aTyr is a platform company that's generating transformative research and clinical opportunity from our tRNA synthetase biology estate. This is a company that I think is poised right now to be a leader in an area of interstitial lung disease, where, as I mentioned, we are the front runner. So we appreciate your interest, continued support.

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

(Operator Instructions) And our first question will come from Gregory Renza of RBC.

This is (inaudible) on for Greg. Congrats on the progress. Maybe first on the Phase III trial. Some companies in the space are seeing some clinical trial conduct slow down. Could you just provide some color on what you're seeing around site activation and enrollment cadence as well as your confidence level in the guided timeline of the Phase III trial?

Sure. So it's quite early to necessarily get into projections and the trajectory. But what I can tell you is, the excitement from the PIs worldwide. They've been waiting 20 years, sometimes longer for a therapy like this to get to this stage. So certainly from that perspective, I think you can look at the pace of our regulatory approvals and even the fact that we were able to get a patient enrolled basically about 3 months from getting the green light from the FDA. This speaks to the rapid sort of interest and uptake to enter our trial.

I also think the data we produced is checking the box in all the areas that these experts have been waiting for, probably going back really 50 years. A drug that can reduce -- improve symptoms, improve lung function and all doing that while reducing steroids. This has never been seen before.

So what do I anticipate? I anticipate a fast start. I'm glad we've started fast with the first patient. I also have seen the quick pace of regulatory approvals. I will be at 3 sites next week. So I think it's something -- it's off to a fast start here. We're going to have to watch to see as this is the largest sarcoidosis trial ever, how we really progress here. And I think I'll have a better estimate of that once we get a good 30, 40 centers up. And let's allow them to enroll. Let's allow them to enroll for a few months. I think our publication is also really, really important. This is the first major sarcoidosis publication from a clinical trial I'd say going back to the infliximab data in the 2000.

So this is a field that's hungry to actually interrogate efzofitimod. They like the initial data. And I can tell you that patients certainly are responding well in that we are really trying to address their steroid burden. So I will get back to you to see how we're doing here, but early signs here are very, very encouraging.

That's great. And then maybe secondly, could you talk a little about your latest development strategy in scleroderma ILD? And what do you see as the key differentiation of the mechanism of action that could drive clinical potential in this indication?

Great. Yes. So scleroderma I think is something that -- in honesty is an adjacent condition. We are seeing a number of pulmonologists and rheumatologists after seeing our EFZO data in sarcoidosis become very interested. Conversely, we've also received, maybe rather surprisingly, some nice designations early from the FDA.

Scleroderma ILD represents probably the worst form of scleroderma. It's where some of the morbidity and mortality is just really quite dramatic and these patients don't have treatment options.

So while we have a good kind of feel from patients and providers and regulators, we have to be careful about thinking about how do we keep our eyes focused on sarcoidosis first. So at this point, I think we are really keeping the eyes on sarcoidosis. But it is really encouraging that based on really our data and even going back to our preclinical data, we have animal efficacy showing efzofitimod can impact sclerodermatous plaques and lung inflammation in mice. So the translation is there. So the story is there. But right now, we are staying focused on sarcoidosis.

Last thing I'll say is, we are looking more closely at neuropilin expression in scleroderma patients. There's anecdotal evidence that neuropilin is quite upregulated in some of those sclerodermatous plaques. But I think we have some time to look more closely at that. But certainly that is an opportunity that -- if we had abundant resources and infinite resources, certainly is another large market opportunity sitting there for us.

And our next question will come from Joe Pantginis of H.C. Wainwright.

So first, just a little more on EFZO-FIT. Obviously, it's early and just wanted to see -- I'm not implying these are any rate-limiting steps, but wanted to get your sort of early views on how you view the ease of screening patients? And any particular geographies even in just the U.S. that you might see outperform even before the European sites come onboard?

Yes. A great question. We've made some tweaks to our protocol based on our last study that I think are going to address some of your points here. Number one, moving into Europe and Japan, there tends to be slightly less steroid administered in those patients. That could have to do with the physiology of those patients. But also there's a larger cohort of African Americans or black patients here in the U.S., which typically those patients have a more severe disease and may require more steroids.

With that in mind, we've lowered the threshold in this current protocol to allow entry at 7.5 milligrams as opposed to 10. We think this is going to help us enroll and better fits the sort of treatment paradigm of Japan and Europe, where they tend to use a little bit less. So I'll start there and say that's going to help us.

I'll also say that compared to the last study where PET scans were used as an inclusion criteria and have now fallen out of favor 5 years later, we're now using HRCT, which is going to be a little bit easier to administer and readout, more commonly viewed as a better instrument to detect fibrotic patients or not. We want to exclude those patients that are highly fibrotic and bring those patients in that are inflamed. HRCT is, I would say, a more validated instrument than PET scan. This is going to help us. So I think those are 2 early sort of tweaks that we've made in this protocol to allow for easier entry into our trial.

And then the last thing I'll say is, our data from the last study. The fact that we showed steroid reduction and we are the first therapy to really ever show the ability to improve symptoms and lung function while reducing steroids, this is really important to patients.

So now that there's that experience from that last trial, patients are very, very interested in our therapy because we're not just showing nominal improvement in 1 or 2 endpoints, it's really all the endpoints. And the one they care most about is, "Can I get off steroids or can this help me reduce my steroid burden?" That's going to be a real attractive asset for us as we think about enrolling worldwide.

That's helpful. And then when you just look at the, especially in this current environment -- glad to see you guys being thoughtful about your resources. So how would you describe how much you're putting your background overall NRP to work not on the back burner, but just sort of pausing a little bit from a cash spend standpoint?

Yes. I mean, I think 2810 is something that frankly when I think about its opportunity, we've landed on these indications that this is the best fit for 2810. So moving forward, these really rare third-line cancers and especially these neuroendocrine phenotypes is really the indication where it makes most sense for 2810 to advance. Now when you think about these rare cancers, they can be slow to enroll. Certain academic centers are specialists in these sort of rare types of cancers.

So it makes sense for us to partner with those academic experts. And because these are rare cancers, we actually have more access to non-dilutive ways of funding because there is money out there for these sort of rare cancers. So it's an intersection of our data, number one, pointing us in that direction that these are cancers that we should actually target with 2810. And conversely, it allows us to also work with academics, which, at the end of the day, serves us well under these current conditions. So it's an intersection of really I think our data, the opportunity with these experts in these rare cancers. And then the fact that given current conditions, we're grateful that we're probably going to have avenues at these centers.

So I think it makes sense for us based on a lot of different factors to progress the program side by side with these centers. And conversely, of course, it does help us focus on efzofitimod as well.

And our next question will come from Hartaj Singh of Oppenheimer.

Sanjay, we just got a different kind of question. I think it might be a little early for this. But just first question is, we kind of -- we did a survey of high prescribing physicians for pulmonary sarcoidosis and we were -- I mean, we shouldn't have been -- we were shocked at just how much they use steroids and how much they want -- not want to use steroids, right? 90-plus percent -- 100% use steroids and 90-plus percent want their patients to get off steroids or reduce steroids. So there's this burden, right?

And you've talked about all of the patient numbers that go into potential efzofitimod. What about on the value side? Like --I mean, has any -- have you done preliminary work as to what could be comps for an efzofitimod towards the data? Was to recapitulate itself in Phase III and it was to get approved? What sort of comps are we thinking about assuming the drug gets approved? And I just got a follow-up question.

We have spent some time this last quarter looking a little bit more closely at that. We've done our own internal analysis actually with an external firm that has interviewed experts and done some early payer work that you might be hinting to. Our estimates were a little light. And I think we're all learning that, first of all, more patients are on steroids than we expect. It's a bigger issue and patients want to get off steroids.

Conversely, from a pricing standpoint, most experts have come back to us and say the pricing of this drug -- if we start to see these kinds of steroid reduction effects while also improving lung function, improving quality of life, it could be upwards to kind of what Humira is getting. That's probably on the high end. But you look at those drugs like Ofev and Esbriet. These are drugs that generate billions of dollars of revenue for Roche and BI. Our drug would I think fall into a similar pricing bucket. Look, those drugs just reduce the -- they reduce the lung function decline. Our drug is preserving and improving lung function. It's improving symptoms, which those drugs are not doing. And it's doing so while removing steroid.

So I think we're very confident now that from a pricing standpoint, we would approach some of those similar IPF drugs, which is why a lot of the modeling estimate is not only internally, but also with some of you guys have been actually changing. So I do feel better, again, after our data, that it's generating a bit more confidence that the pricing of the -- the potential pricing of the drug could be much higher than we initially expected.

Yes. No, that's great, Sanjay. And then the other question I just have is, I was at ERS and there was a lot of data presented by larger companies. But I was a little surprised, not in a bad way, but just how much buzz there was around your presentations, even though I think you had a far greater presentation at ATS. What are you thinking in terms of strategic sort of view?

There seemed to be a buzz as aTyr being kind of a small-cap company with a product that could play really well to a multinational company that wants to take this product out into many countries, many geographies all over the world. What are you thinking aside from [churn] in that regards?

Yes. I think it's a factor of a couple of things. First, the data needs to get absorbed. I mean, we put it out at ATS. It takes a minute to kind of get worldwide. I think the publication is really going to help us, and we've already seen even in the couple of days it's been up, we have new interest from other parts of the world. Pulmonologists are busy. They're managing a lot of conditions. Outside of the specialists -- this is why I said the generalist will start to pick up on this.

The other thing that's happening is we're seeing a contraction in the ILD space with a number of companies kind of moving out of the space. They're finding their therapies are not working as well in preclinical and early phase testing. You see larger companies moving out of the space.

So this is why we feel like aTyr is getting that buzz that you picked up on at Barcelona that our therapy is doing things previously not seen in sarcoidosis with other therapies. And we are the furthest along. Combine that with some competition kind of going away here, we think that can help us certainly enroll. And again, we could be -- we could come out of this sort of at the top of the wave here in a few years as what I think is a leading ILD company.

Last thing I'll say about ERS, and I think you picked up on this. Interstitial lung disease is where asthma and COPD was about 15 years ago. At the ERS conference it was around 2000, 2005. Better new steroid sparing therapies were needed and they came out. LAMA-LABA, some of the antimuscarinics, things like that for asthma and COPD.

Now the shift for respiratory experts is: "How do we get better drugs in ILD?" You've seen United do some things with pulmonary hypertension ILD. But right now, we are kind of the leader right now for -- we certainly are for sarcoidosis, but our therapy is something that could be really useful in a number of those other conditions. This is why we think it's a multi-billion dollar opportunity. And we're hopeful to get noticed more and more in the sort of coming years as we get this data out.

Our next question will come from Edward Tenthoff of Piper Sandler.

I appreciate the update and really applaud the execution, especially on the Phase III. I understand the focus. And one of the things I've always appreciated, Sanjay, about aTyr is your close relationships with the academic labs. I think it's a really smart way to be advancing 2810.

My question kind of has to do with sort of the broader utility of the platform. And are there opportunities to do partnerships with biotechs or Big Pharmas around some of these other areas? Or is the goal really to do a lot of the early work yourselves and then do more kinds of product type deals in the future?

Yes. I do think the efzofitimod data has clearly validated our platform, and we're seeing that through interest with -- really across the spectrum, academics, other companies really digging in. Our Dualsystems collaboration is really about taking the lid off of our synthetases state. We think we can do it faster, better, and frankly, cheaper now with this collaboration. As we crank out new targets -- and thus far, this summer, we had a new target with fibroblast growth factor coming out of one of our synthetases targets -- I think we're going to have optionality now. We're going to have the ability to say, "Hey, do we want to take some of these forward?"

We're not going to be able to take all 10 forward ourselves Let's just be honest. Not all 10 are going to be necessarily winners. That's the other thing: we like to be honest here at aTyr. But I think what's going to happen here is, we're going to have an opportunity to look at these, and frankly, engage in potential partnerships. That's another thing I'm willing to talk too much about. But I do think that now we're at a position where we've generated more interest than ever in aTyr.

aTyr was very much a show me something story. We've done that. Now we have a process. Now we even have a partnership with a group out of Zurich that can I think yield a number of pipeline opportunities. And I would say some of these will keep kind of under our umbrella. Others, we're going to have opportunities to partner. And I think that's something to expect here and prepare for in the years to come.

And our next question will come from Yale Jen of Laidlaw & Company.

Due to your resources sort of focusing, do you still will conduct a preclinical study for some new targets? Or whether that approach -- that department would also shrink their budget as well?

No, I think this is really related to 2810 and the clinical program as you can imagine moving into clinical studies. That's where it really starts to get expensive. We have a mechanism now in process that certainly from a discovery and preclinical standpoint, there's no slowing down. In fact, you'll see acceleration in outputs.

But again, we are very, very capital efficient with some of those efforts. It's really moving into the clinic, where, right now, EFZO-FIT being the largest and a late phase program, we just thought it was smarter for us to really, really reiterate and focus resources there.

But from a pipeline and discovery standpoint, no, these are all opportunities that we're going to still pursue. I think for 2810, we simply are taking a different strategy with that, which I think will do 2 things. Number one, it will put it in a home and perhaps with some academic groups that frankly will be able to move it forward at virtually little to no cost to us. So we can still advance the therapy that way. But I think the game plan right now is to generate certainly more pipeline opportunities.

And then we can decide. We can see -- I've always said, "Let's look at the data and then let's figure out how we want to move this forward." It's an approach we've always taken. We want to be data driven. And I think from a pipeline perspective, no, there is no contraction there.

Okay. Great. That's very helpful. As we talk about 2810, do you have some estimate in terms of the dollar could be saved without the clinical work over the next few years? Do you have some sort of rough estimate on that?

So I didn't -- how many dollars could be saved?

Right. Yes.

Yes. I don't think we have -- I'll let Jill also answer here. I wouldn't necessarily look at hard estimates here. Because one of the things is, these are rare tumor types, which -- I think one thing we just have to call out here: it can take much longer to enroll in these rare phenotypes. So this is another part of our strategy, that, who is best prepared, who has these sorts of patients and access to them. So I think from a time perspective, that's where we actually save quite a bit. From just a rough dollar perspective, Jill, do you want to add?

Yes. From a dollar perspective, it's not as significant. And obviously, it depends upon the trial design, which we've looked at a couple of different trial designs depending upon how we wanted to approach this. But you could say on average from clinical cost maybe around $10 million or so. But it's really what Sanjay was talking about, is how long that takes. So that $10 million doesn't really include all of that overhead and distraction to the company as well that could occur over that 2 year -- 2-plus year period.

That's right. Yes. Early phase clinical oncology trials can sometimes take -- there's a number of hurdles to move through. It's also a rare phenotype. But roughly speaking, I think $10 million for a program like that is a comp that most companies would look at there.

The distraction part is --I wouldn't necessarily say that -- we're able to do a lot of things here at aTyr, but I think this is the best thing for us, and frankly, putting it in the hands of folks who maybe have these patients with neuroendocrine phenotype. They're quite excited to move the asset forward there. And it also comes with the benefit that we may be able to tap into funding because we are focusing on these more rare and ultra-aggressive tumor types.

Okay. Great. And maybe the last question here is that in terms of the clinical study in Japan, are you guys going to reveal in terms of probably the size and maybe any other colors of that part of the trial?

Yes. I would say, roughly speaking, a region like Japan, regulators typically like to see at least from a global trial at least about 10% of the patients come from that region. An indication -- a rare disease like this, partners are piggybacking off of our global data. So it's obviously difficult to enroll and power a trial in a specific region like Japan. But I would anticipate right now early on somewhere around 10% of our patients will need to come from Japan, somewhere around that range.

Our next question will be from Sean Kim of JonesTrading.

And I apologize if I'm repeating questions that have been asked previously. But for the Phase III EFZO-FIT trial, can you kind of remind me what the statistical plan has been, including the statistical powering? Also, how much of a separation from placebo has been baked into that kind of calculation?

Sure. Happy to do that. So our trial is powered. We have 264 patients, 3 dose arms, there's a 5 milligram, a 3 milligram and a placebo arm, and each arm is 88 patients. We powered this trial over 90% -- 92% to be exact, for either the 3 milligram or the 5 milligram dose of showing statistical superiority to placebo. So we have essentially 2 shots on goal with either of these 2 at a much higher clip. Typically, you want to power these studies at, at least 80%. We've actually done them both -- with both of these doses at over 90%.

In layman's terms, what are we trying to show in steroid reduction? An absolute reduction of somewhere between 2.5 to 3 milligrams difference is in our eyes meaningful. In the eyes of experts, for example, if you have a patient coming in at 10 milligrams and getting on EFZO, it gets him down to 7.5, that's meaningful benefit. It may not seem like a lot for us, but every day removing 2 to 3 milligrams of Prednisone, this adds up. Removing that decreases the overall cumulative burden. And over the course of 6, 9, 12 months, this is going to help you with cardiovascular, metabolic, neuro effects of what steroids do.

So hope that provides a little bit of color there. Very, very well powered. I'm a little bit -- very particular about statistics, having a background in that. So I think that's something that we wanted to overpower, if you will. And we have 2 shots on goal to essentially show about that 2.5 and 3 milligram difference.

Okay. That's very helpful. And I guess just one follow-up question on that is, you have 3 arms with 3 mg and 5 mg and placebo. Just curious what's the rationale behind going after 2 different doses versus just going after a higher dose that might provide improved efficacy and maybe increased (inaudible)?

Yes. So this was actually an initial approach and dialogue we had at the end of Phase II meeting, because our last data set showed that 5 was rather outstanding. But even the agency pointed out that our effects in 3 milligram are actually quite good. We showed improvement in symptoms. We showed lung function improvement. And we showed a reduction of about 49% in the 3 milligram arm.

The view was it would be good to also interrogate that dose because it provides a backup to if 5 milligram, for example, we see any emerging toxicity. Now we haven't seen any toxicity with any of our doses from the last trial. But let's also understand that, that data set had less than 10 patients in arm. Now we're getting up to close to 90 patients in arm. So there is a possibility, of course, that safety at any time might emerge as you start to look at more and more patients.

By having the 3 milligram dose, it also de-risks any potential emerging safety signal that might exist. And this has occurred -- I've had this occur in another program at a previous company I was at, where we -- the backup dose, it was good that we actually had it in there, because there were some tolerability issues and it allowed the lower dose to get approved. So this was something actually at the behest of the agency. I actually thought it was a good idea. It's the reason why our numbers have bumped up.

Previously, I was telling investors with 1 dose and 1 placebo the trial could probably be adequately powered at somewhere around 220, 230 patients. When you add this additional arm and you still want to be over 90%, this is how we get closer to 264. So I think it's a combination of de-risking for a potential effect that may or may not emerge. We don't think it will. And it gives us another shot on goal.

And how about the timing and the sequence of different events? So from clinicaltrials.gov information, it looks like the trial is scheduled or expected to complete in May '24, early '25. So is that the kind of ballpark timing that I should be kind of expecting the study to complete?

And also related to that is, for the other programs, scleroderma and CHD, would you be expecting to complete the EFZO-FIT trial and see the outcome before kind of embarking on Phase II for the other programs? Or the 2 programs be a sequence somewhere in between as far as timeline goes?

At this point, I'll answer the second part first. At this point, we're focused on this one indication. So while we have some encouraging signals with additional ILD indications, right now, we're focused on this trial and focused on getting it done.

When you look at clinicaltrials.gov, we have to put down something. This is our best early estimate. But as we get into enrollment, I'll be able to look at that, and say, "Does that timing still make sense?" Should it be pulled in? Should it go out further? This will be predicated on how we do here really over the next 6 months. But most sponsors have to put something, an early estimate. And I think we have that for something like January 2025 right now.

Okay. And I guess my last question is about the cash runway. I haven't seen the guided number on the press release, so I just want to make sure if I'm not missing anything. Have you guided the cash runway? And also now that you are not pursuing 2810 development, how much of additional kind of expansion that we cannot expect from -- in terms of cash runway from kind of not working on 2810?

Yes. This is Jill. We don't typically give a cash runway because we look at it by projects. And like we said during the script, we do have financial and strategic plans to be able to get through the data readout for EFZO-FIT. So that's using our current cash. We'll be getting milestones from Kyorin. And then also use of the current equity vehicles that we have out there right now.

We're saving some money from not doing 2810 in the clinic, like we just discussed with I-Eh. Those types of trials just generally typically are maybe around $10 million-ish. But it's more -- that's just the cost of the trial. It's more the time that those take and the overhead that is needed just to continue running those over a period of 2 or plus longer years.

And I'll just reiterate. We're still retaining that value for 2810. So any IP -- that's the other reason we talked a little bit about -- we had some patent language in this script. We're still retaining that value of any data that's also coming out of these potential collaborations. So I think it's a really smart way for us to move things forward in the hands of experts, spend less cash ourselves, but still retain that upside should we see signals in those neuroendocrine phenotypes.

And our last question will come from Kumar Raja of ROTH.

So with regard to the clinical trial side from the Phase II trial, what are you seeing in terms of those sites coming onboard in the Phase III trial? And also you talked a little bit about the side effect profile. So what are your expectations in terms of the dropout rate here in the Phase III trial?

So the trials -- for the trial sites that were previously involved, we are seeing obviously good uptake initiation. These were all centers in the U.S. And those that were involved previously, obviously, are very, very excited about participating in the next trial. If you look at our CHEST publication, you can look at each of those investigators on that publication. All of those sites are going to be what I would consider our lead sites. And some of these are bulky academic institutions, but even some of the timelines of approval has been rather quick in my estimation on how quickly we're moving things forward. That's because we have good data. That's because we have the data that we can talk about.

And those local ethics and IRB committees, I think our team is doing a really, really good job. But I also have to tip my hat to those institutions that they are also responding quickly, because they want to get patients into this trial. And I know many of these centers are also prioritizing our study over even any other sarcoidosis smaller trials that are out there, early phase trials. They realize a late phase trial like this is really, really important. So I think that's key.

You also asked the question about dropout. With 264, the estimation we have here and what we built into the power calculations is 7 to 8 patients per arm if we have that kind of cushion. So I want to be at 240 patients. So the worst case scenario here is 24 patients or so, 8 per arm. And then that would actually not impact the power calculations as long as we stay within that.

And other than reasons outside of our control -- sometimes there's some operational reasons -- we do not expect anyone necessarily to need to drop out, to go back to say standard of care, because that's written into our protocol. So if folks are not doing well, they can go back up on their steroids. In fact, we want that to happen because we think that's going to happen at a much, much more greater rate in the placebo population. So nonetheless, we still have a cushion of, as I said, 7 to 8 patients per arm for dropouts.

And I'm showing no further questions. I would now like to hand the call to Sanjay for closing remarks.

Well, I want to thank everybody. Great questions today, lots of questions. We appreciate it. Really staying, obviously, laser-focused here on the EFZO-FIT trial. I appreciate -- a lot of updates today, some strategic decisions that we've made. Look forward to interacting in the near future. And we really thank everyone's support listening on the line here, our investors. Thank you so much.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.