Sanjay Shukla - President, Chief Executive Officer Jill Broadfoot - Chief Financial Officer

Good afternoon, ladies and gentlemen and welcome to the aTyr Pharma, Second Quarter 2020 Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder to our conference call, 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, operator and good afternoon everyone. Thank you for joining us today to discuss aTyr's second quarter operating results and corporate update. We are joined today by Dr. Sanjay Shukla, our President and CEO. On the call Sanjay will provide an update on our corporate strategy, including the clinical development of ATYR1923 and our research program in Neuropilin-2 or NRP2 and tRNA synthetase biology. I will then review the financial results and our current financial positioning before handing it back to Sanjay to open the call up 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 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, 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. Good afternoon everyone and thank you for joining us for our second quarter 2020 results conference call. As we begin with our second quarter update, I would like to take a moment to acknowledge that as we are now in the second half of the year, we have adapted rather quickly to operate in the new normal due to the COVID-19 global pandemic. I'm extremely proud of the aTyr team, our partners, and all of the physicians and patients who continue to remain responsibly dedicated to our research and development activities, even in light of the urgent and immediate medical care attention and resources required in response to the pandemic. I'm particularly inspired by our research team and collaborators who continue to generate important preclinical and translational findings, resulting in published data despite the current challenges and considerations of working on-site in the lab. And our clinical team who has really worked tirelessly to initiate a new trial on COVID-19 entirely remotely and entirely virtually. It is a testament to the community that we are trying to build here and continue to expand upon even in these trying times. Now let's get started with our quarterly review and corporate update. During the second quarter of 2020 and subsequent period, aTyr continued to progress the development of our lead program ATYR1923. I'm pleased to report that the majority of sites for our trial in pulmonary sarcoidosis have resumed clinical trial activities, and as previously mentioned, we initiated a new trial on COVID-19 patients with severe respiratory complications in June. Additionally, we have continued to drive value and build momentum with our pipeline. We generated valuable preclinical data from our NRP2 antibody program in oncology that validates the high quality and specificity of those antibodies and their potential to…

Thank you, Sanjay. Total revenues were $8.3 million and $0.1 million for the six months ended June 30, 2020 and 2019 respectively. Revenues for 2020 consisted primarily of the $8.0 million upfront payment under the Kyorin Agreement. As previously mentioned, we are eligible for an additional $167 million in payments upon achievement of certain milestones. Now that Kyorin has been cleared to begin clinical development work in Japan, we begin to track towards some of the development milestones which could result in further payment. Revenues for 2019 consisted of license revenue under the CSL agreement. Research and development expenses were $8 million and $6.7 million for the six months ended June 30, 2020 and 2019 respectively. The increase in research and development expenses was due primarily to clinical trial activities for 1923 and pulmonary sarcoidosis and COVID-19. General and administrative expenses were consistent between quarters at $4.7 million and $5 million for the six months ended June 30, 2020 and 2019 respectively. As of June 30, 2020 aTyr had $41.4 million in cash, cash equivalents and investments and we continue to expect to end the year with more than $20 million in cash, consistent with prior guidance. In addition, as of June 30, 2020 our term loan balance decreased to $5 million and we intend to fully extinguish this debt in the coming months. Now, I'd like to turn the call back over to Sanjay before we open it up to Q&A.

Thank you, Jill. We appreciate all of your interest and continued support and look forward to providing updates in the future. At this time Jill and I will be happy to take your questions.

[Operator Instructions] Our first question comes from the line of Zegbeh Jallah with ROTH Capital. Your line is open.

Thanks guys and congrats on the progress. Just have two questions; the first one, the ongoing Phase 2 COVID study has a primary outcome of safety. But for the subsequent studies that you are going to do, after which you know what do you think the primary outcome could be? Are you going to you know be relegated to something that the FDA has predefined as an approval for endpoint or do you have some liberty to look at your secondary efficacy outcomes and then kind of decide what to make your primary outcome?

So hi Zegbeh, that’s a very good question. I think one of the things that the FDA is really doing here with a lot of the COVID trials is trying to develop at least a framework, if not a master protocol on what's approvable. On the therapeutic side, they haven't quite come out yet on things that they might be looking for in a Phase 3 trial, but I think what you can see from some of their emergency use authorizations, certainly decreasing hospital stay has led to at least emergency approval for Remdesivir. Mortality of course – well, 30 day mortality is a standard measure we look at here that I'm sure the FDA would also want us to look at in this trial. Normalization of some of those clinical endpoints, this is something that when we put the protocol forward, they like the fact that we're trying to look at hypoxia and seeing if we can normalize things there sooner than later. And then I think some of the metrics around hospitalization, utilization, you know days in the hospital avoiding ICU stay, decreasing ICU stay, all of these are being measured in the current trial. My expectation is they will probably prioritize 30 day mortality and certainly if you have any signal on being able to discharge patients sooner rather than later, I think that portends really well as a approvable end point.

Thank you. And then the follow-up one here is, for this study [which is clinically fixed] [ph] on safety, you did say that you're not enrolling patients that are on ventilators, but are you thinking that you may narrow the patient population a little bit more and would you be using you know what we’re seeing with some other studies, the WHO scale to kind of define that patient population?

Yeah, I mean I think it’s two-pronged here. Number one, our biology of our drug unlike some of those other drugs being used in pre-ventilated patients, we think we are differentiated that our drug works better potentially when you administer it early in the inflammatory response, directly interfacing and modulating the T-cells before you get into some of that cytokine storm. So I think that's first of all part of the attraction of going into an earlier population. If in fact we are successful with this trial, much as you've seen some of those later phase drugs potentially being used upstream in “milder patients,” you could see our drug potentially being used in the ICU setting. In that case, yes, we'll have to look at those ordinal scales that you highlighted there. We didn’t have to follow that so much here, because we're not focusing on those patients. So I actually think that if we show activity in this trial, given the nature of how dynamic COVID-19 is right now, my expectation is docs will want to use it even for those ventilated patients just because of the nature of that we're trying to find good drugs in the tool kit right now to help these folks.

And I think that makes sense based on what you said with regard to still seeing NRP2 upregulated [indiscernible] in patients. It could be attractive you know even so in some of those later patients as well, that could be interesting. And then I guess I have one final one actually. Just wondering if you're going to have another pre-planned CHT analysis? It was nice to see that you guys made it past the first one. Was there another one planned before the study reads out?

This is the only one that was required and pre-planned by the FDA. It doesn't mean that we’ll, as this is a safety study, continue to actively monitor safety, and we have the ability to of course reach out to our DSMB as much as we'd like in this study. But as per our protocol and discussions with the FDA, you know given that there wasn't specific experience with our drug in this population, they asked for a quick look here, which we did you know with the first five patients.

Thank you. Glad to be see that you’re making progress on both of these studies.

Thank you.

Thank you. Our next question comes from the line of Hartaj Singh with Oppenheimer. Your line is open.

Great, thank you. Thanks for the questions and thanks to all of the updates Sanjay and Jill. Just a couple of questions; one is, to follow up on the questions from the previous analyst. You know the cocktail antibodies from Regeneron for example are being tried Sanjay in patients you know that are in a preventative fashion, and both an acute setting, so patients don’t have the disease. You know with your work 1923, do you think that it could actually go from the ICU maybe into the ER or maybe even in a preventive study. I know that you need a lot of data to see, to get there, but could you see that progression so similar to what’s happening in the cocktail antibodies and I just got a couple of follow-ups.

Yes, we do think that if you show activity in this cohort of patients, the potential to go upstream or downstream in the progression of COVID-19 is certainly on the table. In particular, upstream you know patients that are maybe in the ER, you want to make sure that you're not interfering with their normal host immune response, because probably 80% of folks can get through this infection either asymptomatically or with mild symptoms staying at home. But yes, the ER setting could be an area where, especially when hospitals are really full of hospital bed, you're seeing a lot of patients who typically wouldn’t have been discharged in the past, now being asked to convalesce at home, sometimes even with a little bit of oxygen at home. So certainly that's an avenue for us once we demonstrate activity here, and then downstream as a combo therapy, I think docs are right now searching for any and all things in the tool kit here to basically address morbidity or mortality in an effort to kind of get this crisis under control. Once we establish safety and selectivity in this trial, I believe both of those avenues open up for us.

Great! And then on the pulmonary sarcoidosis trial, I had a question on – you know as you’re getting the sites back up and if you've gotten a lot more information you know from the site you had to get back up and patients that you were tracking to finish this study. Do you think that between now and the trial reads out, you might have to make some protocol adjustments or amendments, you know based on you know just changes from COVID-19. Do you think you could pretty much finish the trial under the current protocol and read it out you know without the - and keep the protocol so robust and have no changes to it.

That's a great question. You know at this time I don't expect any major protocol changes. I also think we're pretty late in the game right now to have another amendment. I think one thing to keep in mind when you work in respiratory trials, and because this is a respiratory infection, a lot of hospitals have protocols in place around to vigorous pulmonary function testing, because you know that these patients, they're blowing pretty hard kind of all over the place. So we're working with those centers in the sense that there could be some modifications there in the capture of some of those PFTs, if in fact they don't want these patients using the sort of spirometry tool they have in the hospital. So that might be the only tweak, I would say is important for folks to understand that. We may have to use slightly different spirometry tools depending on what the hospital wants to do.

Great! And then the last question I had is just on the NRP2 antibody candidate that you’re going to declare for oncology later this year. What are your sort of publications that you can kind of expect to see from that, you know from a pre-clinical setting over the next sort of six to 18 months?

So as we just put out really our first you know initial efficacy data, which you know is rather promising in this triple negative breast cancer model, we want to be able to explore other models, other solid tumor models. So I think I expect to see more publications, looking a little bit more closely at breast cancer of course, but then in other areas where Neuropilin-2 expression, the literature has been shown to be upregulated in pancreatic, prostate, glioblastoma, areas like that. That's where our discovery teams will be looking at those tumor models, because that will allow us to not only declare an IND candidate, but then to basically focus in on for example which two or three tumor settings provide the most rational approach to advance to an IND.

Great! Thank you Sanjay, thanks for all the questions.

Thanks Hartaj.

Thank you. Our next question comes from the line of Joe Pantginis with H.C. Wainwright. Your line is open.

Sanjay and Jill, thanks for taking the question. Hope you are all well and your families. Two questions, really just focusing on trial logistics. So first for the Phase 1b/2a, maybe just a little more detail about sites being resumed. Do you need to get any sort of re-IRB approvals or what are some of the logistical rate limiting steps there?

Hi Joe, good question. No, we do not need to go back to the IRB from the standpoint of restarting all the way at that point. So that would certainly be an administrative rate limiting step that we're not hindered by. I think the main thing here are given that we were recruiting at a vigorous clip prior to COVID-19, what’s re-limiting here is understanding how many patients will come back into the clinic, what's the density? While a center can be opened, some centers will be 100% and other center might just say, we only want 50% of the sarcoidosis patient that we would typically have roaming in the halls here, coming back in here. So we're going to have to observe here at the rate of screening and enrollment. As you can imagine, just like anything else, whether it's a school or restaurant or hospital, I mean all of these institutions are working with their local health departments and monitoring their local COVID incidents in determining how aggressive or not they want to reopen here. So that's something that is the next step here, but I think it's a great sign that now the lights are on at a majority of our centers. Now it's a matter of observing what happens here, so that we can complete enrolment.

That's very helpful, thanks. And then regarding the Phase 2 COVID study, a lot of questions you’ve obviously been asked. So it's really surrounding the conduct of the study and just curious, obviously we're talking about different lines before potentially, are we sort of going more into the ER for example. But I guess for the current study, what are the plans on how you look at concomitant therapies, like with regard to maybe as a patient getting remdesivir or you know some other steroids or you know anything under the sun basically to treat the inflammatory syndrome.

Yes, so I mean the key clarifications we have is really around remdesivir, which you know as an antiviral works very, very differently and frankly probably works better like most antiviral if you administer quite early to interfere with replication. So remdesivir is allowed in our study, and you know it’s sort of background standard of care right now at a number of centers. So because we have a placebo arm in our trial, we have to allow what is currently background standard of care. Dexamethasone is being used also here and there in a pulsatile manner as a background therapy, but dexamethasone is not something that you can also blast a patient with for a long period of time. So those are the two I would say standard issue of care drugs that are used. Some of those other monoclonal that are being used more in the ICU when a patient spikes a certain cytokine, you know we were not really playing in that space. So don’t see a lot of interference and certainly the recent data from the IL-6 antagonistshave you know clearly indicated that those drugs are not working really well. So lot less competition then there was maybe a few months ago, and I think a better clarity here. You know one thing that’s come out of our trial is as patients and doctors have been able to manage this infection a little bit better, we are seeing folks being - they are taking the time on putting them on the ventilator. We’ve seen this, we’ve heard this nationwide. So what's happening is, there is a greater proportion of patients that are hospitalized and not on mechanical ventilation. So I think the key thing right now is also these hospitalization stays which can be quite long in these patients survival and mortality benefit is certainly being observed, if you keep people off the vent, but you still see these patients staying in the hospital quite a bit of time with significant amounts of information. We think that sets us up really well to be an attractive therapy as we get into COVID next year.

Great, thanks a lot.

Thank you. At this time I would like to turn the call back over to Sanjay for closing remarks.

Well, thanks everyone. Again to reiterate, I really appreciate the interest. Lots of updates today and great questions from our analysts. We will be in touch in the future. Thank you again, everyone.

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