aTyr Pharma, Inc. (ATYR) Earnings Call Transcript & Summary

Good morning, everyone. My name is Ted Tenthoff. I'm the senior biotechnology analyst at Piper Sandler. Thank you for joining us for our virtual Lung Day. I'd like to thank my colleague, Yasmeen Rahimi, for organizing this day and also for aTyr Pharmaceuticals (sic) [ aTyr Pharma ] for joining us. aTyr is developing a new class of medicines focused on immune modulatory role of amino-acyl tRNA synthetases or ARS, which are known to be involved in protein synthesis. However, based on discoveries by Founder Paul Schimmel and subsequent work at aTyr with academic collaborators have also been recognized to have a role in extracellular signaling. Company recently reported positive Phase II data on their lead asset, ATYR1923, which we'll discuss today. Online is my good friend, Dr. Sanjay Shukla, CEO; and also Jill Broadfoot, who's the CFO. Thanks both for joining us so early.

So I'm going to start with questions. [Operator Instructions] So Sanjay, perhaps you can start it off by describing these discoveries around tRNA synthetases. What are the dual roles of these proteins? And how is aTyr targeting them for therapeutic development?

Sure, Ted. Thanks for inviting me to the talk today. So as you mentioned, our work is really around a class of enzymes in all of our bodies called tRNA synthetases. These are enzymes that we have within ourselves. And they basically make -- help us make proteins. And for a long time, that's all we really understood that -- what these enzymes do. What Dr. Schimmel discovered at Description Institute, and previously he was at MIT, was that these enzymes, there's about 20 of these enzymes as a class of enzymes. For some reason, they break apart into fragments, and these fragments migrate out of the cells. These fragments then travel to different local tissue systems, organ systems. And there, they seem to play a very, very different role, like nonenzymatic. These fragments seem to be involved in the immune system. And what we have discovered at aTyr is, we can harness these fragments and target them in particular for diseases in immunology and cancer, for example. So our job at aTyr is really make medicines from this emerging class of immunology that is really in all of our own bodies. It comes from our old physiology, and we're learning rather quickly around the potent ability of these fragments to serve potentially as anti-inflammatory agents as we've seen in our lead program.

That's really cool biology. So what exactly have you done to identify these different family members and really elucidate their immune function? And what are you doing with respect to patenting these discoveries?

Yes. So there are about 300 of these fragments. So of the 20 original enzymes, we've mapped about 300 fragments from these 20. And we have an intellectual property estate ring-fencing all of these fragments. We have spent the better part of the early history at aTyr really beginning to understand and map this library of immune players that aTyr is solely responsible for and has ownership for from a patent perspective. So really strong patent estate from this new class of biology. From there, what we have done is, mapped a little bit more with regards to the specific characteristics of these fragments. And a few of these, we have, of course, taken forward in our understanding -- discovery and understanding, learning about what is the sort of parent enzyme they come from and also where these fragments seem to traffic. One of them, of course, we learned quite a bit, and that's a fragment of histidyl tRNA synthetase, which seem to be a potent regulator of lung inflammation. So we followed that signal many years ago, which led us to our most advanced clinical program, ATYR1923.

So let's pick that up and discuss it, and I believe the target is neuropilin-2. So maybe you can tell us about, firstly, this target and then how ATYR1923 works.

You're absolutely correct. Neuropilin is what -- one of these fragments, a fragment of histidyl tRNA synthetase, the fragment in the lungs that we learned in a receptor screen of about 5,000 lung receptors. Several years ago, we got a very, very selective hit on neuropilin-2. Then we went looking into [ literature ] to learn about neuropilin-2. As it turns out, it is a cell surface receptor that's highly expressed on immune cells during inflammatory response in the lungs. So now we begin to really understand that here's a fragment that traffics in the lungs, seems to play a role in the lung inflammation. How is it doing that? It binds neuropilin-2, which is expressed on immune cells during an inflammatory response. So this is the process in which we expect to discover new medicines from our whole class of biology. Let's first understand the characteristics where these fragments are playing a role, then let's understand how they are doing that, through which modulating what kinds of cells, and then what specific receptor they are engaging. This has allowed us to really cogently move into clinical translational and clinical studies.

So let's pick up on the clinical side because you recently reported positive Phase II data on ATYR1923 in pulmonary sarcoidosis. And maybe you can start by describing this disorder. What is pulmonary sarcoidosis? How many patients are affected by it?

Pulmonary sarcoidosis is a form of interstitial lung disease. And we -- when we saw this fragment having properties -- anti-inflammatory properties in animal studies, then we began to learn the receptor mechanism. We started to look at this class of lung diseases called ILD, interstitial lung diseases. What interstitial lung diseases are, are aberrant immune-mediated inflammatory diseases that cause a chronic state of inflammation that for some patients also tips over and these patients develop fibrosis. Pulmonary sarcoidosis is one of the most inflammatory forms. Many folks may have heard of idiopathic pulmonary fibrosis. That's another form, another large bucket of interstitial lung disease. And then there's also other forms such as chronic hypersensitivity pneumonitis; and also the connective tissue disease-related ILDs such as Scleroderma ILD, RA-ILD. So this is a class of maybe about 200 different ILDs, but those 4, pulmonary sarcoidosis, chronic hypersensitivity pneumonitis, the connective tissue disease ILDs and IPF, form the biggest classes of interstitial lung disease. What's important about interstitial lung disease is that they all have a common immune pathology, and it's the aberrant immune response to different stimuli. Sometimes you know what that stimulate is. It could be something a known environmental agent which causes CHP. It's also how it presents in the lungs. Sarcoidosis, even though we don't know the etiology, has a very characteristic presentation. And most sarcoidosis patients have these granulomas in the lungs. And what are granulomas? They are clumps of immune cells that for some reason in sarcoidosis patients aggregate in the lungs. And these granulomas, these clumps, then form a target for our bodies to basically attack with inflammatory cells. Unfortunately, for those patients, that loop does not turn off. This is a constant target, if you will, where that aberrant immune response causes an active and chronic inflammation. Sarcoidosis is a disease that you've seen about 200,000 patients in the U.S. About -- unfortunately, about half of these patients have to be put on a day-to-day therapy, which is quite often steroids -- high doses of steroids. That comes with significant toxicity month-on-month, year-on-year. And unfortunately, what you have is 30,000 to 50,000 patients a year progress and become fibrotic. Once you become fibrotic, mortality kind of falls off the cliff here. So you start to see in advanced sarcoidosis, 20%, 25% of the patients can die and/or they need a lung transplant. So very serious condition. Unfortunately, we don't have good therapies. The therapies we have are quite toxic. And as I said, this is one of the larger buckets of interstitial lung disease that we are looking to attack with our lead candidate.

And I do have to congratulate you on the Phase II data because this was not an easy condition to go after and not an easy trial to run, and I really think you guys hit it out of the park on this one. So walk us through the Phase II trial design, if you would, and really tell us about these remarkable results.

Sure. So we embarked on a Phase II study, as you mentioned, in pulmonary sarcoidosis several years ago. And we were able to also battle through COVID and get the trial completed and read out, which I really thank our operations team. Clinical and operations team did a phenomenal job with our centers. We enrolled 37 pulmonary sarcoidosis patients, all confirmed via biopsy. So they have these granulomas in the lungs, so pulmonary sarcoidosis patients who had advanced into a progressive disease that they required a day-to-day steroid. All of these patients received anywhere between 10 to 25 milligrams of prednisone, and in many cases, they had been on that dose for several years. What we look to do is, follow these patients over 6 months in a double-blind placebo-controlled randomized trial, where we are testing 3 doses of our therapy: 1, 3 and 5 milligrams per kilogram. Within each cohort of patients, and we tried to break them up into 12 patients each, 8 patients received our therapy and 4 received placebo. So cohort 1 had 8 patients getting 1 milligram per kilogram, cohort 2 had about 8 patients that received 3 milligrams per kilogram, and cohort 3 had about 8 patients that received 5 milligrams per kilogram. And in each of those cohorts, we also had 4 placebo patients. These patients were given our therapy once a month IV. It's a 1-hour IV infusion. And then we followed these patients for 6 months to see how they did. One of the most unique components of our trial, which was really the first time that this was attempted in this area of lung disease, is we incorporated a rather aggressive steroid taper. Over the first 8 weeks of the trial, we asked all patients to really bring down their steroids down to 5 milligrams. We work with the experts to have a fixed and aggressive steroid taper so that by week 8 everybody, hopefully, was on 5 milligrams. And then we followed them. And what we expected to see is if our drug had activity, those folks would be able to maintain or keep that taper. And in the placebo population, we expected those folks to get worse. That is in actuality what happened here. And there is a number of other endpoints to be followed, symptoms also looking at forced vital capacity. These were the endpoints that we read out, and I can also describe them.

So please -- firstly, even maybe before we get into the individual points, I would actually like to take a little bit of time on each of these, especially the lung function improvement was important. But maybe starting with just steroid dosing concept. How profound was that? What percentage -- what did patients actually get? Maybe from your experience in talking to your opinion leaders, how profound is that steroid reduction to their lives and health?

So steroids, as you know, over time can lead to a significant burden of toxicity for these patients. They can range in cardiovascular, metabolic, mood. Steroids wreck these patients' lives, and many of the experts view them as, frankly, poisonous to these patients. But it's the only way that these patients are able to address that chronic inflammation and deal with really the cough and shortness of breath that comes with sarcoidosis. Unfortunately, steroids over time do not prevent the progression of fibrosis. And in some cases, some of the experts even view that they might precipitate fibrosis. So this is the scary proposition these patients have. About half of those 200,000 patients need steroids daily. So in our trial, we saw patients taking steroids for 7, 8, 9 years. What experts try to do is try to get you down to a steroid dose where you will tolerate the toxicity while balancing the quality of life. You can still live your life, and you don't have that sort of day-to-day cough, shortness of breath. But the challenge is you generally will end up somewhere in that 10 to 25 range. And as you can imagine, even if you or I took 10 milligrams of prednisone every day, after couple of weeks, we would just feel horrible. But as I said, these patients are taking this for a year. So we see the addressable population at somewhere around 90,000 to 100,000 patients. And then as I said, again, to reiterate, these therapies are preventing progression of fibrosis. So while they're doing a good job of managing day-to-day symptoms, they really are not, in our mind, disease-modifying and helping these patients avoid that really long-term scary outcome, which can be transplant or death. So that's how we think our therapy is really rather transformative because we expect that pathology, yes.

I think the overall reduction was somewhere in the order of 58%, and that was a [ 27% ] relative reduction for placebo. So this is a meaningful reduction in steroids. Let's talk about lung function because, I mean, that was a real positive surprise to see that delta. I think you guys improved lung function by 3.3% over 24 weeks. So maybe just confirm that I got those numbers right. But also tell us what -- put that in perspective for us. What does that lung function actually mean? Is that clinically relevant?

Yes. So you pointed out that we were able to reduce steroids by 58% in the 5-milligram group. So what the experts have taught me is, if we can reduce steroids by 50%, that's outstanding. And we were able to see that -- almost saw that -- similar numbers in the 3-milligram dose, 49% there. So we thought our top 2 doses were quite active in replacing and getting people off steroids. What was unexpected, as you pointed out, is we thought, let's stable -- let's keep lung function stable. We certainly don't want to see it worsen. We were rather surprised to see improvements of the nature you described. Over 2.5% is viewed as really meaningful. The approved therapies for IPF, they show 2.5% less decline. We actually had, as some of the experts said were remarkable findings of 2.5%, 3.3% improvement in the 5-milligram dose. So these are the sort of findings you might expect if a therapy is working really, really well over the course of the year. But in just 6 months, our 5-milligram dose showed a 3.3% improvement. This was, as I said, very unexpected. And now we really started to get excited about our therapy. We were just hoping for more or less a stable sort of stay between that 0% to 1% maybe improvement, plus or minus 1%. But to see this amount of change early on, our KOLs' view, our drug is working rather fast and rather potently.

And what I'd love, too, is everything really was consistent. And again, that's on top of steroid reduction that you saw that FVC improvement. But you also showed benefits in sarcoidosis symptoms and also improvement in inflammatory and sarcoidosis markers. I know a lot of this is being saved for presentation or publication. But what else -- what are next steps here now that you have this great result in pulmonary sarcoidosis? And also, are there any biomarkers or even imaging approaches that you guys are evaluating or considering?

Yes. And as you point out, symptoms moved in the right direction, too, and not only just in the right direction. Patients saw substantial benefit in cough, shortness of breath, fatigue, all of the important measures. We use validated symptom scores that our drug, especially in 5 -- in the highest dose, showed substantial benefit above and beyond what is considered in the literature, the minimally clinically important difference. So we're seeing magnitudes of two, three, fourfold higher. So patients were able to bring that steroids, their lung function improved, and then their symptoms substantially improved. So this has us -- when you bundle all that together, it really is an outstanding outcome for this trial. Couple that with what you said biomarkers. We are saving some of this for medical conferences, but we saw similar findings, substantial improvement in all of the important biomarkers we looked at. I highlighted on the earning -- on the data release call. For example, interleukin 6, and TNF, we're seeing two, threefold improvement and the ability to actually control, and in some cases, even start to bring down those markets. Because when you get off steroids, you start to see these markers actually start to really rise. Our therapy kept everything at bay. So these are the validated biomarkers that I've learned to work with the experts to say these inflammatory biomarkers are really important. We got to keep these managed. And we saw a really, really tight control in the 3- and 5-milligram populations, another example of our drug showing durability across all of these endpoints.

And supporting the mechanism, absolutely.

And really supporting that mechanism, sure. When you talk about next steps, this has us really excited to move rather quickly into what we think is a next step registrational trial. We'll look to replicate these findings in a larger population. We're discussing now with the key opinion leaders and with our regulatory experts on how to basically create a powered study here for us to show statistical significance. But as I said, we have seen substantial effects here, so we feel as though we have the ability to design a smart trial. And if we can show these endpoints also hit in a larger trial, I think you would have an approvable product here that has really potential to, as I said, transform all interstitial lung diseases. All of these conditions I talked about require the sort of day-to-day steroid and that burden that if we can replace with our drug, a safer, more effective drug, well, isn't that what all patients really want?

How large do you think a registration -- appreciating that you're still kind of planning this out and all of this is moving very quickly. How large do you think a trial would be? Are there anything you can do to kind of tighten up the patient population and really sort of have a more homogeneous trial group? And then would end points likely be change in FVC at 52 weeks as with other of the interstitial lung diseases? What can you tell us even a high level about where that planning is going?

Yes. So this is precisely what we're doing now with the data. We're looking at the data to say how do we decrease variability even more, how do we amplify the signal and really how do we create a smart trial here to learn from any variability we saw around the IE criteria so that we can actually design a really well designed, and as you said, homogeneous population. We're looking at numbers somewhere around 200 patients here. This would be a worldwide trial in the U.S., Europe. A lot of interest after our data came out, a lot of centers saying they want to get involved. We also have a partner in Japan, Kyorin. They'll handle a lot of the Japanese sites. This is actually going to unlock potentially some milestone payments also through that collaboration. So this is something that -- it is a little bit of a moving target right now because it's pending regulatory discussion. I would expect for us to actually look to say, how do we, as you said, have a more homogeneous population. Probably around 200 patients, looking to advance probably our highest dose and comparing it to a placebo population. You're right, over 52 weeks, probably looking at a year study is what we're looking at. FVC is going to be a really important conversation with the FDA. But remember, symptoms are also really, really important here. The constellation of symptoms that we see improvement in all of them really gives us another really great option. You add on to that steroid reduction, we have 3 really strong endpoints where we saw really, really good benefit. So this is going to allow us to talk to the agency and smartly design a trial and say which end points here are the most important to you. The great thing is we have all of them to actually play with here. Great options here.

Yes. Great. And we're getting a little tight on time, but I want to make sure I ask what's the opportunity for 1923 as in other interstitial lung diseases, as you mentioned, sort of at the beginning of the conversation. Will you be looking at developing this drug more broadly than just pulmonary sarcoidosis?

Absolutely. Now that we've shown proof of concept in pulmonary sarcoidosis, those experts who are dealing with patients with more of the autoimmune ILDs, like RA or scleroderma; also those patients who have pneumonitis, pneumonitis space, hypersensitivity pneumonitis, 2 other highly inflammatory forms of ILD that we can move directly into advanced trials. Remember, we've shown our trial, our drug is safe and well tolerated. And now we have -- we know which are the active doses. So we can advance rather rapidly into those conditions, which also, in our mind, puts about 0.5 million -- 0.5 billion patients, 500,000 patients, in the U.S. suffer from all of these other more inflammatory forms of ILD. Our therapy becomes really the lead candidate worldwide to potentially address those patients.

Great. Well, thank you so much. And I just want to remind everybody that there's still a lot more to discuss about the aTyr story, including a preclinical NRP2 antibody for cancer. aTyr will be at Piper's Healthcare Conference -- virtual Healthcare Conference coming up at the end of November and early December. So please be sure to join us for them, and the company will be available for one-on-ones during the conference. So Sanjay and Jill, thank you so much for joining us today. Keep up the really exciting work here. It's a -- you've come a long way and always focused on the science and on the patients. I really appreciate that about what you've done. And it's just great to see the result now in the Phase II study.

Thank you, Ted. Be well.

Thank you, Ted.

Bye, everybody.

Bye-bye.

Bye.