Core Insights - aTyr Pharma, Inc. has appointed Eric Benevich to its Board of Directors, effective December 10, 2024, to support its commercialization efforts [1][2] - Mr. Benevich brings over 30 years of commercial experience in the pharmaceutical industry, having held significant roles at various biopharmaceutical companies [2] - aTyr is focused on developing first-in-class medicines from its proprietary tRNA synthetase platform, with its lead candidate being efzofitimod for treating interstitial lung disease [3] Company Overview - aTyr Pharma is a clinical stage biotechnology company that utilizes evolutionary intelligence to develop therapies targeting fibrosis and inflammation [3] - The company’s discovery platform aims to identify therapeutic intervention points by exploring signaling pathways from its library of tRNA synthetase-derived domains [3] - The lead therapeutic candidate, efzofitimod, is an immunomodulator currently in clinical development for immune-mediated disorders affecting the lungs [3]

SAN DIEGO, Nov. 15, 2024 (GLOBE NEWSWIRE) -- aTyr Pharma, Inc. (Nasdaq: ATYR) (“aTyr” or the “Company”), a clinical stage biotechnology company engaged in the discovery and development of first-in-class medicines from its proprietary tRNA synthetase platform, today announced that the Company will present two posters related to its tRNA synthetase candidate ATYR0101 at the Keystone Symposia on Fibrosis: Inflammation, Drivers, and Therapeutic Resolution, which is scheduled to take place December 8 – 11, 2024, ...

Efzofitimod Clinical Development and Trials - The company's lead therapeutic candidate, efzofitimod, has shown positive results in a Phase 1b/2a clinical trial for pulmonary sarcoidosis, with consistent dose response and improvements in key efficacy endpoints compared to placebo[75][76] - The global pivotal Phase 3 EFZO-FIT study for efzofitimod in pulmonary sarcoidosis completed enrollment of 268 patients, exceeding the target of 264, with topline data expected in Q3 2025[77] - The company initiated an Individual Patient Expanded Access Program for efzofitimod, allowing patients who complete the Phase 3 EFZO-FIT study to receive treatment outside the clinical trial[78] - A Phase 2 proof-of-concept study (EFZO-CONNECT) for efzofitimod in SSc-ILD was amended to include a 24-week open-label extension, with interim data expected in Q2 2025[79] Collaboration and Licensing Agreements - The company has a collaboration with Kyorin Pharmaceutical for the development and commercialization of efzofitimod in Japan, generating $20 million in upfront and milestone payments, with potential for an additional $155 million and tiered royalties[80] - Kyorin Agreement milestone payment of $10.0 million triggered by the first patient dosing in Japan for the EFZO-FIT study, recorded as revenue in 2022 and received in February 2023[91] - Total upfront and milestone payments from Kyorin Agreement to date: $20.0 million, with potential for an additional $155.0 million upon achieving development, regulatory, and sales milestones[91] Pipeline and Therapeutic Candidates - The company has identified target receptors for domains of two additional tRNA synthetases, forming the basis of new pipeline candidates[83] - ATYR0101, a fusion protein derived from aspartyl-tRNA synthetase, shows potential for treating multiple fibrotic diseases by inducing apoptosis of myofibroblasts in a TGFβ-dependent manner[84] - ATYR0750, a fusion protein derived from alanyl-tRNA synthetase, is a novel ligand to FGFR4, with potential therapeutic benefits in diseases related to inflammation and fibrosis[85] Financial Performance and Cash Position - As of September 30, 2024, the company had $68.9 million in cash, cash equivalents, restricted cash, and available-for-sale investments, sufficient to meet material cash requirements for at least one year[87] - The company raised $48.1 million in a February 2023 public offering and $21.4 million through an at-the-market offering program in the first nine months of 2024[89][90] - Net cash used in operating activities for the nine months ended September 30, 2024: $56.0 million, primarily due to increased costs for EFZO-FIT and EFZO-CONNECT studies and BLA preparation[92] - Net cash provided by investing activities for the nine months ended September 30, 2024: $23.3 million, driven by timing differences in investment activities[93] - Net cash provided by financing activities for the nine months ended September 30, 2024: $21.0 million, primarily from the issuance of common stock[94] Expenses and Cost Analysis - Research and development expenses expected to increase, primarily driven by clinical development and manufacturing of efzofitimod[106] - Research and development expenses increased to $14.8 million in Q3 2024, up from $10.3 million in Q3 2023, primarily due to a $3.5 million increase in efzofitimod expenses[110] - Efzofitimod expenses rose to $11.9 million in Q3 2024, compared to $8.5 million in Q3 2023, driven by the advancement of the EFZO-FIT study and increased manufacturing efforts[110] - General and administrative expenses increased to $3.3 million in Q3 2024, up from $2.6 million in Q3 2023, mainly due to higher personnel-related costs[111] - Research and development expenses for the nine months ended September 30, 2024, were $42.1 million, up from $29.5 million in 2023, with a $12.5 million increase in efzofitimod expenses[114] - General and administrative expenses for the nine months ended September 30, 2024, were $10.2 million, compared to $9.8 million in 2023, due to higher personnel-related costs and professional fees[115] - Efzofitimod expenses for the nine months ended September 30, 2024, were $34.2 million, up from $21.7 million in 2023, driven by the EFZO-FIT study and manufacturing efforts[119] - Total research and development expenses for the nine months ended September 30, 2024, were $42.1 million, up from $29.5 million in 2023, with a $12.6 million increase[119] Revenue and Other Income - License and collaboration agreement revenues were $0.2 million for the nine months ended September 30, 2024, down from $0.4 million in the same period in 2023[113] - Other income, net decreased to $0.8 million in Q3 2024, down from $1.3 million in Q3 2023, primarily due to a lower cash balance[112] - Other income, net for the nine months ended September 30, 2024, was $3.0 million, slightly down from $3.3 million in 2023, due to a lower cash balance[116] Corporate Operations and Leasing - Corporate headquarters lease base rent: $5.75 per square foot per month for the first 12 months, with annual upward adjustments of approximately 3.0%[100] - Financing lease liabilities as of September 30, 2024: $1.6 million, with $2.2 million in cash collateral included in restricted cash[101] Accounting and Financial Policies - Critical accounting policies and estimates remain consistent with those disclosed in the 2023 Annual Report[109] - General and administrative expenses include salaries, stock-based compensation, and costs for legal, accounting, and patent maintenance[107]

Financial Performance - Total revenues for Q3 2024 were $0, compared to $353,000 in Q3 2023, indicating a decrease in license and collaboration agreement revenues[12] - Consolidated net loss for Q3 2024 was $17.3 million, compared to a net loss of $11.3 million in Q3 2023[12] - General and administrative expenses for Q3 2024 were $3.3 million, compared to $2.6 million in Q3 2023[12] - Research and development expenses for Q3 2024 were $14.8 million, up from $10.3 million in Q3 2023, reflecting increased clinical trial costs[7] Cash and Investments - Cash and investments as of September 30, 2024, were $68.9 million, down from $101.7 million at the end of 2023[13] - Total assets as of September 30, 2024, were $91.6 million, down from $120.7 million at the end of 2023[13] - The company raised approximately $19.4 million in gross proceeds from an at-the-market offering after Q3 2024[7] Clinical Trials - Enrollment completed in the Phase 3 EFZO-FIT™ study with 268 patients, exceeding the target, and topline data expected in Q3 2025[5] - The Phase 2 EFZO-CONNECT™ study is ongoing, aiming to enroll up to 25 patients with interim data expected in Q2 2025[6] - The efzofitimod program showed statistically significant improvement in corticosteroid relapse rates, as published in the European Respiratory Journal[2]

Financial Position - The company has an accumulated deficit of $499.8 million as of June 30, 2024, and expects to continue incurring net losses for the foreseeable future[78]. - As of June 30, 2024, the company had cash, cash equivalents, restricted cash, and available-for-sale investments totaling $81.4 million, sufficient to meet material cash requirements for at least one year[78]. - Net cash used in operating activities for the six months ended June 30, 2024, was $42.8 million, compared to $12.6 million for the same period in 2023, primarily due to increased clinical study costs[83]. - Net cash provided by investing activities for the six months ended June 30, 2024, was $5.4 million, a significant improvement from $(42.3) million in 2023[84]. - Net cash provided by financing activities for the six months ended June 30, 2024, was $21.1 million, down from $57.5 million in 2023, mainly due to reduced proceeds from stock offerings[85]. - As of June 30, 2024, the company has $1.7 million in financing lease liabilities and $2.2 million in cash collateral for the financing lease[91]. Fundraising Activities - The company completed a public offering in February 2023, raising approximately $48.1 million from the sale of 23,125,000 shares at $2.25 per share[80]. - Under the Jefferies ATM Offering Program, the company sold 10,530,795 shares at an average price of $1.82 per share, generating net proceeds of approximately $18.4 million in 2023[81]. - Kyorin triggered a $10.0 million milestone payment for dosing the first patient in Japan in the EFZO-FIT study, recorded as revenue in 2022[82]. - Total milestone payments from the Kyorin Agreement to date amount to $20.0 million, with potential additional payments of up to $155.0 million upon achieving specific milestones[82]. Research and Development - The company initiated a global pivotal Phase 3 clinical trial (EFZO-FIT study) for efzofitimod, enrolling 268 patients, with topline data expected in Q3 2025[69]. - The EFZO-CONNECT study for efzofitimod in patients with systemic sclerosis-associated ILD is designed to enroll up to 25 patients, with interim data expected in Q2 2025[71]. - The company is developing additional tRNA synthetase candidates, including ATYR0101 and ATYR0750, targeting fibrosis and inflammation[75][76]. - The company expects research and development expenses to continue increasing, primarily for the clinical development of efzofitimod and other potential therapeutics[96]. - Research and development expenses increased to $14.0 million for the three months ended June 30, 2024, up from $9.8 million in 2023, representing a $4.1 million increase[100]. - Efzofitimod expenses accounted for $11.3 million in the three months ended June 30, 2024, compared to $6.8 million in 2023, reflecting a $4.5 million increase due to advancements in the EFZO-FIT study[100]. - Total research and development expenses for the six months ended June 30, 2024, were $27.3 million, an increase of $8.1 million from $19.2 million in 2023[103]. - Efzofitimod expenses for the six months ended June 30, 2024, were $22.3 million, up from $13.2 million in 2023, marking a $9.1 million increase[103]. Revenue and Expenses - The company has not generated any revenues from product sales to date and anticipates increased expenses related to ongoing clinical development and potential commercialization efforts[86]. - License and collaboration agreement revenues were $0.2 million for the six months ended June 30, 2024, with no revenues reported in the same period of the prior year[102]. - General and administrative expenses decreased to $3.3 million for the three months ended June 30, 2024, down from $3.7 million in 2023, a reduction of $0.4 million[101]. - General and administrative expenses for the six months ended June 30, 2024, were $6.8 million, a decrease of $0.3 million from $7.1 million in 2023[104]. - Other income, net for the six months ended June 30, 2024, was $2.2 million, compared to $2.1 million in 2023, showing a slight increase[105]. - Non-cash expenses related to research and development increased to $0.6 million for the three months ended June 30, 2024, from $0.5 million in 2023[101]. - Non-cash expenses for general and administrative purposes increased to $1.2 million for the six months ended June 30, 2024, from $1.0 million in 2023[104]. Market and Operational Considerations - The company continues to monitor macroeconomic uncertainties that may impact its operations and financial performance[77]. - The company has no sales or marketing capabilities and will need to expand its organization to support commercialization activities[86]. - The company has a lease agreement for approximately 24,866 rentable square feet with a base rent starting at $5.75 per square foot, subject to annual adjustments[90].

Exhibit 99.1 IMMEDIATE RELEASE Contact: Ashlee Dunston Director, Investor Relations and Public Affairs adunston@atyrpharma.com aTyr Pharma Announces Second Quarter 2024 Results and Provides Corporate Update Phase 3 EFZO-FIT™ study of efzofitimod in pulmonary sarcoidosis enrollment completed with 268 patients; topline data from this 52-week study expected in the third quarter of 2025. Ended the second quarter 2024 with $81.4 million in cash, cash equivalents, restricted cash and investments. SAN DIEGO – Augu ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements for Q1 2024, including balance sheets, statements of operations, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Highlights (in thousands) | Balance Sheet Highlights (in thousands) | March 31, 2024 (unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $6,808 | $22,544 | | Total current assets | $96,916 | $102,992 | | Total assets | $113,251 | $120,653 | | Total current liabilities | $15,979 | $16,416 | | Total stockholders' equity | $84,282 | $90,470 | - The company's cash and cash equivalents decreased significantly from **$22.5 million** at the end of 2023 to **$6.8 million** at the end of Q1 2024, reflecting cash used in operations[5](index=5&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statement of Operations (in thousands) | Statement of Operations (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total revenues | $235 | $0 | | Research and development | $13,364 | $9,379 | | General and administrative | $3,507 | $3,408 | | Loss from operations | $(16,636) | $(12,787) | | Net loss attributable to aTyr Pharma | $(15,491) | $(11,951) | | Net loss per share, basic and diluted | $(0.23) | $(0.29) | - The net loss for Q1 2024 increased to **$15.5 million** from **$12.0 million** in Q1 2023, primarily driven by a significant rise in research and development expenses[6](index=6&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (in thousands) | Cash Flow Summary (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(22,380) | $(590) | | Net cash used in investing activities | $(1,356) | $(38,172) | | Net cash provided by financing activities | $7,730 | $49,496 | | Net change in cash, cash equivalents and restricted cash | $(16,006) | $10,734 | - Net cash used in operating activities increased substantially to **$22.4 million** in Q1 2024 from **$0.6 million** in Q1 2023. Net cash from financing activities decreased significantly, primarily due to a large follow-on public offering in Q1 2023 that was not repeated in Q1 2024[13](index=13&type=chunk)[14](index=14&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company believes its existing cash, cash equivalents, restricted cash, and available-for-sale investments of **$87.7 million** as of March 31, 2024, are sufficient to meet material cash requirements for **at least one year** from the filing date[20](index=20&type=chunk) - In Q1 2024, the company recognized **$0.2 million** in collaboration revenue from Kyorin for drug product material sold for the Japan portion of the EFZO-FIT study. The company is eligible for up to an additional **$155.0 million** in future milestones from this agreement[53](index=53&type=chunk)[51](index=51&type=chunk) - During Q1 2024, the company sold **5,045,518 shares** of common stock through its "at-the-market" (ATM) offering program, generating net proceeds of approximately **$8.6 million**[60](index=60&type=chunk) - Subsequent to the quarter end, from April 1 to April 30, 2024, the company sold an additional **656,907 shares** through its ATM program for net proceeds of **$1.1 million**[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses therapeutic development, focusing on efzofitimod's clinical trials, R&D expenses, liquidity, and capital requirements [Overview](index=23&type=section&id=Overview) - The lead therapeutic candidate, **efzofitimod**, is being evaluated in a global pivotal **Phase 3 trial (EFZO-FIT™ study)** for patients with pulmonary sarcoidosis. Enrollment is expected to be completed in the **second quarter of 2024**[70](index=70&type=chunk)[73](index=73&type=chunk) - A **Phase 2 proof-of-concept clinical trial (EFZO-CONNECT™ study)** is underway to evaluate **efzofitimod** in patients with systemic sclerosis-associated ILD (SSc-ILD)[75](index=75&type=chunk) - The company's discovery pipeline includes **ATYR0101** and **ATYR0750**, which are being investigated for their therapeutic potential in immunology and fibrosis[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) - As of March 31, 2024, the company had cash, cash equivalents, restricted cash, and available-for-sale investments of **$87.7 million**, which is believed to be sufficient to fund operations for **at least one year**[82](index=82&type=chunk) - Net cash used in operating activities was **$22.4 million** for Q1 2024, a substantial increase from **$0.6 million** in Q1 2023. The increase was primarily due to higher costs for ongoing clinical trials and upfront payments for manufacturing efforts[87](index=87&type=chunk) - Financing activities in Q1 2024 provided **$7.7 million**, primarily from the ATM offering program. This is a significant decrease from Q1 2023, which included **$48.1 million** from an underwritten public offering[89](index=89&type=chunk)[84](index=84&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Operating Results (in thousands) | Operating Results (in thousands) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | License and collaboration revenues | $235 | $0 | | Research and development expenses | $13,364 | $9,379 | | General and administrative expenses | $3,507 | $3,408 | - Research and development expenses increased by **$4.0 million** year-over-year, mainly due to a **$3.7 million** increase in clinical trial costs for the EFZO-FIT and EFZO-CONNECT studies and a **$0.8 million** increase in manufacturing costs in preparation for a possible Biologics License Application (BLA)[105](index=105&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable, as permitted for smaller reporting companies - As a smaller reporting company, aTyr Pharma is not required to provide quantitative and qualitative disclosures about market risk[108](index=108&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal controls over financial reporting - The company's management concluded that its disclosure controls and procedures were **effective** as of the end of the quarter[110](index=110&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[111](index=111&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - As of the filing date, the company is not involved in any material legal proceedings[112](index=112&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section outlines key risks including clinical trial delays, novel therapeutic challenges, capital needs, third-party reliance, and IP protection - The company faces **substantial risk** related to clinical development, including **potential delays** in its EFZO-FIT and EFZO-CONNECT trials and the **lack of an established FDA regulatory pathway** for pulmonary sarcoidosis, which could hinder approval[114](index=114&type=chunk)[117](index=117&type=chunk)[125](index=125&type=chunk) - A **critical financial risk** is the need to **raise additional capital** to fund operations. The company has a history of **significant losses** and anticipates they will continue for the foreseeable future[114](index=114&type=chunk)[169](index=169&type=chunk)[174](index=174&type=chunk) - The company is **heavily reliant on third parties**, including its **collaboration with Kyorin** for development in Japan and its **dependence on Contract Development and Manufacturing Organizations (CDMOs)** for producing its product candidates[114](index=114&type=chunk)[180](index=180&type=chunk)[187](index=187&type=chunk) - The company's product candidates are based on a **novel therapeutic approach (tRNA synthetase biology)**, which presents **unique challenges and uncertainties** in development, regulatory approval, and market acceptance[114](index=114&type=chunk)[136](index=136&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=105&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities were reported during the period - There were **no unregistered sales** of equity securities in the reported quarter[312](index=312&type=chunk) [Item 3. Defaults Upon Senior Securities](index=105&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - There were **no defaults** upon senior securities during the period[312](index=312&type=chunk) [Item 4. Mine Safety Disclosures](index=105&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Mine safety disclosures are not applicable to the company's operations[312](index=312&type=chunk) [Item 5. Other Information](index=105&type=section&id=Item%205.%20Other%20Information) No other information required to be disclosed was reported for the period - There was no other information to report for the period[312](index=312&type=chunk) [Item 6. Exhibits](index=105&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, material contracts, and SOX certifications - The exhibits include **certifications** from the Principal Executive Officer and Principal Financial Officer, as well as **interactive data files (XBRL)**[312](index=312&type=chunk)[313](index=313&type=chunk)

Drug Development and Clinical Trials - Efzofitimod is a first-in-class biologic immunomodulator in clinical development for interstitial lung disease (ILD) with orphan drug designations from the FDA for sarcoidosis and systemic sclerosis (SSc) [12] - The EFZO-FIT study, a pivotal Phase 3 trial for efzofitimod in pulmonary sarcoidosis, is currently enrolling up to 264 subjects and aims to complete enrollment by Q2 2024 [14][15] - The Phase 1b/2a clinical trial demonstrated consistent dose response for efzofitimod on key efficacy endpoints, including improvements in lung function and symptom measures compared to placebo [13] - The primary endpoint of the EFZO-FIT study is steroid reduction, with secondary endpoints including forced vital capacity (FVC) and quality of life assessments [14] - The EFZO-CONNECT study for efzofitimod in patients with SSc-ILD was initiated in Q3 2023, with the first patient dosed in October 2023 [17][22] - The ongoing Phase 3 clinical trial, EFZO-FIT, aims to enroll up to 264 patients with symptomatic pulmonary sarcoidosis, evaluating the efficacy and safety of IV efzofitimod at doses of 3.0 mg/kg and 5.0 mg/kg [43] - The Phase 1 clinical trial of efzofitimod in healthy volunteers indicated that the drug was well-tolerated at all dose levels tested, with no significant adverse events [57] - The Phase 1b/2a clinical trial for efzofitimod in pulmonary sarcoidosis demonstrated a 58% overall steroid reduction from baseline and a 22% relative reduction compared to placebo in the 5.0 mg/kg treatment group [51] - The EFZO-CONNECT study, targeting SSc-ILD, is a 28-week trial with a planned enrollment of 25 patients, with the first patient dosed in October 2023 [17] - The Phase 2 clinical trial for efzofitimod in COVID-19 patients showed that a single IV dose was generally safe and well-tolerated, with a signal of activity in the 3.0 mg/kg cohort [56] Financial and Market Considerations - The Kyorin Agreement has generated $20.0 million in upfront and milestone payments, with potential for an additional $155.0 million upon achieving certain milestones [18] - The global market opportunity for pulmonary sarcoidosis and SSc-ILD is estimated to be between $2-3 billion [72] - The company has incurred significant losses since inception and anticipates continued losses for the foreseeable future [10] - The market for ILD treatments remains underserved, presenting a high unmet medical need for effective therapies [12] - The company faces significant uncertainty regarding coverage and reimbursement from third-party payors, which may limit sales of approved products [125][132] - Third-party payors are increasingly scrutinizing pricing and cost-effectiveness, potentially impacting reimbursement rates for approved products [126][129] - The U.S. government and state legislatures are implementing cost containment programs that may reduce the profitability of drug products, including price controls and mandatory discounts [127] Regulatory and Compliance - The FDA requires extensive preclinical and clinical testing before any new biologic can be marketed, which involves significant time and financial resources [96] - A Biologics License Application (BLA) must include all relevant data from preclinical studies and clinical trials, and FDA approval is required before marketing [104] - The FDA may issue a Complete Response Letter (CRL) if the BLA is not ready for approval, outlining deficiencies that need to be addressed [108] - The FDA grants orphan drug designation for drugs treating rare diseases affecting fewer than 200,000 individuals in the U.S., providing financial incentives and exclusivity for seven years if approved first [117][118] - The company is subject to various federal and state healthcare laws, including the Anti-Kickback Statute and the False Claims Act, which could impact operations [136] - The company has implemented safeguards to discourage improper payments under the U.S. Foreign Corrupt Practices Act (FCPA) [135] Research and Development Strategy - The company is focused on advancing efzofitimod toward regulatory approval and exploring its applications in other ILDs [21][22] - The company has advanced two additional tRNA synthetase programs, ATYR0101 and ATYR0750, into preclinical development [23] - The company plans to further elucidate the therapeutic potential of efzofitimod through mechanistic investigations, including in vitro and in vivo preclinical studies [23] - The company plans to invest significant financial and management resources to develop the appropriate commercial infrastructure for its product candidates [75] - The company aims to expand its intellectual property estate by filing patent applications for new methods of treatment and therapeutics [83] Employee and Operational Insights - As of December 31, 2023, the company had 59 employees, with 56 being full-time, including 36 in research and development roles [137] - The company emphasizes the importance of attracting and retaining talented employees to execute its strategy effectively [138] - The company operates in a single accounting segment, indicating a focused business model [141] Drug Mechanism and Efficacy - Efzofitimod targets the NRP2 receptor, which is upregulated during differentiation and activation of myeloid cells, potentially providing a novel therapeutic approach for immune-mediated and fibrotic diseases [32] - Efzofitimod has shown significant reduction in lung inflammation and fibrosis, improving respiratory function parameters in multiple animal models of lung fibrosis [29] - Efzofitimod has been shown to reduce lung and skin fibrosis in an animal model of systemic sclerosis (SSc-ILD), indicating its potential as a therapeutic candidate for this condition [42] - The company has demonstrated that efzofitimod downregulates key inflammatory cytokines such as IL-6, TNF-α, and IFN-γ in both animal models and human clinical trials [29] - Efzofitimod is a novel immunomodulatory Fc fusion protein that selectively modulates NRP2 to downregulate immune responses in inflammatory diseases [24]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37378 | --- | --- | --- | |-----------------------------------------------------------------------------------------|------ ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Unaudited H1 2023 financial statements show total assets at **$132.7 million**, a **$24.3 million** net loss, and **$57.5 million** from financing activities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 (unaudited) | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $12,313 | $9,981 | | Available-for-sale investments | $96,268 | $56,165 | | **Total Assets** | **$132,747** | **$95,786** | | Total current liabilities | $12,368 | $13,862 | | **Total Liabilities** | **$26,695** | **$24,502** | | **Total Stockholders' Equity** | **$106,052** | **$71,284** | Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $9,840 | $9,135 | $19,219 | $18,031 | | General and administrative | $3,718 | $3,449 | $7,126 | $6,931 | | **Loss from operations** | **($13,558)** | **($12,584)** | **($26,345)** | **($24,962)** | | **Consolidated net loss** | **($12,342)** | **($12,421)** | **($24,294)** | **($24,575)** | | **Net loss per share** | **($0.22)** | **($0.44)** | **($0.50)** | **($0.88)** | Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($12,600) | ($19,236) | | Net cash (used in) provided by investing activities | ($42,328) | $24,597 | | Net cash provided by financing activities | $57,514 | $1,520 | | **Net change in cash, cash equivalents and restricted cash** | **$2,586** | **$6,881** | - In February 2023, the company completed an underwritten follow-on public offering, raising approximately **$48.1 million** in net proceeds[51](index=51&type=chunk) - During the first six months of 2023, the company sold 4,332,210 shares of common stock through its at-the-market (ATM) offering program, generating net proceeds of approximately **$9.5 million**[52](index=52&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses efzofitimod's clinical development, including Phase 3 and planned Phase 2 studies, and highlights H1 2023 financing activities that bolstered cash to **$112.0 million** [Overview](index=16&type=section&id=Overview) The company focuses on efzofitimod for ILDs, with a pivotal Phase 3 study underway and a Phase 2 study planned, supported by a **$10.0 million** Kyorin milestone payment - The company's primary focus is on its lead product candidate, efzofitimod, for the treatment of interstitial lung disease (ILD), a group of immune-mediated disorders[62](index=62&type=chunk) - A global pivotal Phase 3 study, EFZO-FIT, is currently enrolling 264 subjects to evaluate efzofitimod in patients with pulmonary sarcoidosis, with the first patient dosed in September 2022[64](index=64&type=chunk) - A Phase 2 proof-of-concept study, EFZO-CONNECT, is planned to evaluate efzofitimod in patients with SSc-ILD and is expected to initiate in Q3 2023[65](index=65&type=chunk) - The collaboration with Kyorin for development in Japan generated a **$10.0 million** milestone payment in February 2023, with eligibility for up to an additional **$155.0 million** in milestones plus royalties[67](index=67&type=chunk)[74](index=74&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, the company held **$112.0 million** in cash and investments, bolstered by **$48.1 million** from a follow-on offering, **$9.5 million** from ATM sales, and a **$10.0 million** Kyorin milestone payment - As of June 30, 2023, the company had cash, cash equivalents, restricted cash, and available-for-sale investments totaling **$112.0 million** and an accumulated deficit of **$441.9 million**[71](index=71&type=chunk) - The company believes its current cash position is sufficient to meet material cash requirements for at least one year from the filing date of the report[71](index=71&type=chunk) Sources of Cash in H1 2023 (in millions) | Source | Net Proceeds | | :--- | :--- | | Underwritten Follow-On Public Offering (Feb 2023) | ~$48.1 | | At-the-Market (ATM) Offering Program | ~$9.5 | | Kyorin Agreement Milestone Payment | $10.0 | Summary of Net Cash Flow (in thousands) | Activity | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | | Operating activities | ($12,600) | ($19,236) | | Investing activities | ($42,328) | $24,597 | | Financing activities | $57,514 | $1,520 | [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Q2 2023 R&D expenses increased by **$0.7 million** to **$9.8 million** due to EFZO-FIT study costs, with similar trends for H1 2023 and slight G&A increases Comparison of Operating Expenses - Three Months Ended June 30 (in thousands) | Expense Category | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $9,840 | $9,135 | $705 | | General and administrative | $3,718 | $3,449 | $269 | - The **$0.7 million** increase in Q2 2023 R&D expenses was primarily due to a **$2.5 million** increase in clinical trial costs for the EFZO-FIT study, partially offset by a **$1.0 million** reduction in manufacturing costs and a **$0.7 million** decrease in early-stage research costs[96](index=96&type=chunk) Comparison of Operating Expenses - Six Months Ended June 30 (in thousands) | Expense Category | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $19,219 | $18,031 | $1,188 | | General and administrative | $7,126 | $6,931 | $195 | - The **$1.2 million** increase in H1 2023 R&D expenses was mainly due to a **$4.4 million** increase in EFZO-FIT clinical trial costs, offset by reductions of **$1.9 million** in manufacturing and **$1.5 million** in early-stage discovery costs[99](index=99&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable for the current reporting period - The company has indicated that this item is not applicable[104](index=104&type=chunk) [Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of the end of the quarter[106](index=106&type=chunk) - No changes in internal control over financial reporting were identified during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[107](index=107&type=chunk) [PART II. OTHER INFORMATION](index=23&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings and does not anticipate any material adverse effects from ordinary course claims - As of the reporting date, the company is not a party to any material legal proceedings[108](index=108&type=chunk) [Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks primarily related to clinical development, regulatory pathways, capital needs, historical losses, third-party reliance, and intellectual property protection - The company may face substantial delays in clinical trials and may fail to demonstrate safety and efficacy for its product candidates, including efzofitimod[110](index=110&type=chunk)[113](index=113&type=chunk) - The company will need to raise additional capital to fund operations and has a history of significant losses, which are expected to continue[110](index=110&type=chunk)[170](index=170&type=chunk)[179](index=179&type=chunk) - A significant risk is that the FDA has not approved any product for pulmonary sarcoidosis, meaning there is no established regulatory pathway, and the EFZO-FIT study may not be sufficient for approval[110](index=110&type=chunk)[121](index=121&type=chunk) - The company depends on collaborations, such as with Kyorin, and on third-party manufacturers (CDMOs), and the failure of these partners could materially harm the business[110](index=110&type=chunk)[186](index=186&type=chunk)[191](index=191&type=chunk) - The company's ability to compete depends on obtaining, maintaining, and protecting its intellectual property rights, which is uncertain and costly[111](index=111&type=chunk)[202](index=202&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the reporting period - None[316](index=316&type=chunk) [Defaults Upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - None[316](index=316&type=chunk) [Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[316](index=316&type=chunk) [Other Information](index=59&type=section&id=Item%205.%20Other%20Information) There was no other information to report for the period - None[316](index=316&type=chunk) [Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents, material contracts, and certifications - The exhibits include the company's Restated Certificate of Incorporation, Amended and Restated Bylaws, various warrants, and certifications by the Principal Executive Officer and Principal Financial Officer[317](index=317&type=chunk)