Clinical Development of ATYR1923 - The lead clinical product candidate, ATYR1923, is being developed for severe inflammatory lung diseases, with a focus on interstitial lung diseases (ILD) and COVID-19 related respiratory complications[19]. - ATYR1923 has completed enrollment in a Phase 1b/2a clinical trial, designed to evaluate safety, tolerability, and preliminary clinical activity, with results expected to guide future development[19]. - A Phase 2 study of ATYR1923 for COVID-19 patients showed positive data, meeting its primary endpoint of safety, with no drug-related serious adverse events reported[19]. - The Phase 1b/2a clinical trial of ATYR1923 for pulmonary sarcoidosis completed enrollment with 37 patients, exceeding the target of 36 patients[33]. - The primary endpoint of the Phase 2 clinical trial in hospitalized COVID-19 patients was met, demonstrating safety and tolerability with no drug-related serious adverse events[34]. - ATYR1923 showed a statistically significant reduction in serum amyloid A (SAA) levels, a marker of inflammation and fibrosis, in treated patients[34]. - The clinical trial for ATYR1923 is designed to evaluate multiple ascending doses of 1.0 mg/kg, 3.0 mg/kg, and 5.0 mg/kg[51]. - The study aims to assess the potential steroid-sparing effects of ATYR1923 while evaluating its pharmacokinetics and immunogenicity[52]. - ATYR1923 was generally well tolerated in a Phase 1b/2a clinical trial with no drug-related serious adverse events reported among 15 pulmonary sarcoidosis patients[56]. - The Phase 2 clinical trial for ATYR1923 in hospitalized COVID-19 patients enrolled 32 patients, exceeding the target of 30[63]. - Patients receiving the 3.0 mg/kg dose of ATYR1923 had a median time to recovery of 5.5 days compared to 6 days in the placebo group, with 83% achieving recovery by Day 6[64]. - ATYR1923 demonstrated a trend of overall improvement in 82% of analyzed biomarkers compared to placebo, indicating its potential as a therapeutic for severe inflammatory lung disease[65]. - The company aims to expedite the development of ATYR1923 for pulmonary sarcoidosis towards regulatory approval, leveraging data from ongoing clinical trials[27]. - The company aims to develop ATYR1923 for other interstitial lung diseases (ILD) based on insights gained from the pulmonary sarcoidosis trial[27]. - The therapeutic candidate pipeline includes new discovery programs for tRNA synthetases, focusing on immunology, fibrosis, and cancer[23]. - The company is also investigating ATYR1923's potential as a treatment for COVID-19 patients with severe respiratory complications due to its mechanism of action overlapping with inflammatory lung injury[62]. Financial Agreements and Collaborations - The company received an $8.0 million upfront payment and a $2.0 million milestone payment from Kyorin Pharmaceutical for the development and commercialization of ATYR1923 in Japan, with potential total payments of up to $165.0 million[20]. - Kyorin received exclusive rights to develop and commercialize ATYR1923 in Japan, with an upfront payment of $8.0 million and potential additional payments of up to $165.0 million upon achieving certain milestones[58]. - The Kyorin Agreement allows for termination by either party after the first anniversary with 90 days' notice, highlighting the agreement's flexibility[59]. - The Kyorin Agreement grants exclusive rights to develop and commercialize ATYR1923 for ILD in Japan, with an upfront payment of $8.0 million and potential additional payments of up to $165.0 million upon achieving certain milestones[58]. Research and Development Pipeline - The company is advancing its discovery pipeline, including ATYR2810, a monoclonal antibody targeting NRP2 for aggressive cancers, currently in preclinical development[21]. - New discovery programs from the tRNA synthetase platform are investigating the functionality of Alanyl-tRNA synthetase and Aspartyl-tRNA synthetase in immunology, fibrosis, and cancer[23]. - ATYR2810 is currently in preclinical development targeting the NRP2 receptor, which is associated with negative outcomes in various cancers[67][68]. - Preclinical data suggest that ATYR2810 could be effective against aggressive tumors, including triple-negative breast cancer, by blocking the NRP2/VEGF signaling pathway[69]. - The company is committed to advancing ATYR2810 through IND enabling studies to address unmet medical needs in aggressive cancers[28]. - The ATYR2810 program includes US patent applications for anti-neuropilin 2 antibodies, forming part of a broader IP strategy[107]. Regulatory and Compliance Challenges - The impact of the COVID-19 pandemic has caused delays in clinical trials and operations, affecting the company's ability to conduct business development activities[25]. - The company is subject to various federal and state laws targeting fraud and abuse in the healthcare industry, which may impact its operations[152]. - The company may face substantial risks related to regulatory compliance, including potential penalties and exclusion from government healthcare programs[155]. - The FDA requires substantial time and financial resources for obtaining regulatory approvals, which includes compliance with various federal, state, and local regulations[112]. - The FDA's approval process for biologics involves multiple phases, including preclinical testing, IND submission, and clinical trials, which require significant resources and time[115]. - The company must submit a Biologics License Application (BLA) to the FDA, which includes all relevant data from preclinical studies and clinical trials to establish safety and effectiveness[121]. - The FDA may condition BLA approval on the completion of additional clinical trials or post-market studies, which could impact the product's market entry[119]. - The FDA may issue a Complete Response Letter (CRL) if the BLA is not ready for approval, outlining deficiencies that need to be addressed before reconsideration[126]. - The FDA may grant accelerated approval for drugs based on surrogate endpoints that predict clinical benefit, requiring post-marketing trials to verify clinical benefits[129]. - Orphan drug designation can be granted for drugs treating rare diseases affecting fewer than 200,000 individuals in the U.S., providing financial incentives and potential exclusivity for seven years[135][136]. - Pediatric exclusivity can extend marketing protection by an additional six months if pediatric data is submitted in response to FDA requests[138]. - The approval process for drugs varies significantly across countries, with potential delays in obtaining regulatory approval outside the U.S.[140][141]. Intellectual Property and Manufacturing - The ATYR1923 patent portfolio includes over 220 issued patents or allowed applications, with expiration dates ranging from 2026 to 2034[97]. - The company is expanding its intellectual property estate by filing new patent applications for therapeutics and treatment methods[100]. - The pipeline of extracellular tRNA synthetase proteins is covered by multiple patent families, with expected expiration dates between 2026 and 2031[108]. - The company is eligible for patent term extensions of up to five years under the Hatch-Waxman Act for drugs approved by the FDA, but extensions cannot exceed a total of 14 years from the date of product approval[110]. - The company relies on trade secret protection for proprietary information, but there is a risk that third parties may independently develop equivalent information[111]. - The company relies on contract manufacturing organizations (CMOs) for the production of its product candidates, with no plans to build its own facilities[94]. - Current CDMOs and CROs are meeting manufacturing requirements, but delays in raw material delivery due to COVID-19 may impact production[96]. Market and Competitive Landscape - The biotechnology and pharmaceutical industries are highly competitive, with competitors potentially having greater resources and capabilities[85]. - Third-party payors are increasingly scrutinizing drug pricing and may not provide adequate reimbursement, impacting the profitability of approved products[143][144]. - The U.S. government has shown interest in implementing cost containment programs, which may affect drug pricing and reimbursement policies[145]. - In the European Community, governments influence pharmaceutical pricing through reimbursement rules, creating high barriers for new product entry[150].

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents aTyr Pharma's unaudited consolidated financial statements, including balance sheets, operations, equity, cash flows, and detailed accounting notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20September%2030,%202020%20(unaudited)%20and%20December%2031,%202019) Condensed Consolidated Balance Sheets (in thousands USD) | Metric | Sep 30, 2020 (unaudited) (in thousands USD) | Dec 31, 2019 (in thousands USD) | | :-------------------------------- | :------------------------------------- | :-------------------------- | | **Assets** | | | | Total current assets | $38,218 | $31,925 | | Total assets | $41,636 | $36,188 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $8,033 | $12,923 | | Total stockholders' equity | $31,998 | $21,026 | * Total current assets increased by **$6.293 million (19.7%)** from December 31, 2019, to September 30, 2020, primarily driven by an increase in cash and cash equivalents[10](index=10&type=chunk) * Total current liabilities decreased by **$4.890 million (37.8%)** over the same period, mainly due to a significant reduction in term loans[10](index=10&type=chunk) * Total stockholders' equity increased by **$10.972 million (52.2%)** from December 31, 2019, to September 30, 2020[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20and%20nine%20months%20ended%20September%2030,%202020%20and%202019%20(unaudited)) Condensed Consolidated Statements of Operations (in thousands USD) | Metric (in thousands USD) | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total revenues | $148 | $184 | $8,402 | $278 | | Research and development | $4,616 | $3,799 | $12,593 | $10,458 | | General and administrative | $2,044 | $1,883 | $6,780 | $6,836 | | Total operating expenses | $6,660 | $5,682 | $19,373 | $17,294 | | Consolidated net loss | $(6,600) | $(5,645) | $(11,295) | $(17,630) | | Net loss per share, basic and diluted | $(0.68) | $(1.47) | $(1.31) | $(5.55) | * Total revenues for the nine months ended September 30, 2020, significantly increased to **$8.4 million** from **$0.3 million** in the prior year, primarily due to a license agreement[13](index=13&type=chunk) * Research and development expenses increased for both the three-month and nine-month periods, reflecting progression in clinical trials for ATYR1923[13](index=13&type=chunk) * Consolidated net loss decreased for the nine months ended September 30, 2020, to **$(11.3) million** from **$(17.6) million** in the prior year, driven by higher revenues[13](index=13&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss%20for%20the%20three%20and%20nine%20months%20ended%20September%2030,%202020%20and%202019%20(unaudited)) Condensed Consolidated Statements of Comprehensive Loss (in thousands USD) | Metric (in thousands USD) | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Consolidated net loss | $(6,600) | $(5,645) | $(11,295) | $(17,630) | | Other comprehensive gain (loss) | $2 | $(1) | $(2) | $27 | | Comprehensive loss | $(6,598) | $(5,646) | $(11,297) | $(17,603) | * The comprehensive loss for the nine months ended September 30, 2020, was **$(11.3) million**, a decrease from **$(17.6) million** in the prior year, consistent with the net loss trend[16](index=16&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20three%20and%20nine%20months%20ended%20September%2030,%202020%20and%202019%20(unaudited)) Condensed Consolidated Statements of Stockholders' Equity (in thousands USD, except shares) | Metric (in thousands USD, except shares) | Balance as of Dec 31, 2019 | Balance as of Sep 30, 2020 | | :----------------------------------- | :------------------------- | :------------------------- | | Common Stock Shares | 3,891,787 | 9,990,962 | | Common Stock Amount | $4 | $10 | | Additional Paid-In Capital | $343,524 | $365,789 | | Accumulated Deficit | $(322,304) | $(333,596) | | Total Stockholders' Equity | $21,026 | $31,998 | * Common stock shares outstanding increased significantly from **3,891,787** at December 31, 2019, to **9,990,962** at September 30, 2020, primarily due to an underwritten follow-on offering and at-the-market offerings[19](index=19&type=chunk) * Additional paid-in capital increased by **$22.265 million**, reflecting proceeds from equity issuances[19](index=19&type=chunk) * Total stockholders' equity increased by **$10.972 million**, reaching **$31.998 million** as of September 30, 2020[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20nine%20months%20ended%20September%2030,%202020%20and%202019%20(unaudited)) Condensed Consolidated Statements of Cash Flows (in thousands USD) | Metric (in thousands USD) | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(9,900) | $(15,097) | | Net cash provided by investing activities | $3,697 | $6,145 | | Net cash provided by financing activities | $15,144 | $3,331 | | Net change in cash and cash equivalents | $8,941 | $(5,621) | | Cash and cash equivalents at end of period | $18,151 | $17,341 | * Net cash used in operating activities decreased by **$5.197 million**, from **$(15.1) million** in 2019 to **$(9.9) million** in 2020, primarily due to a reduced net loss[24](index=24&type=chunk) * Net cash provided by financing activities significantly increased to **$15.1 million** in 2020 from **$3.3 million** in 2019, driven by proceeds from equity offerings[24](index=24&type=chunk) * Cash and cash equivalents at the end of the period increased to **$18.151 million** in 2020 from **$17.341 million** in 2019[24](index=24&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) [Note 1. Organization, Business, Basis of Presentation and Summary of Significant Accounting Policies](index=10&type=section&id=1.%20Organization,%20Business,%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) * aTyr Pharma, Inc. is a Delaware-incorporated biotherapeutics company focused on discovering and developing innovative medicines based on novel biological pathways, including extracellular functionality and signaling pathways of tRNA synthetases[27](index=27&type=chunk)[85](index=85&type=chunk) * The company's condensed consolidated financial statements include its **98% majority-owned subsidiary**, Pangu BioPharma Limited, in Hong Kong[28](index=28&type=chunk) * The COVID-19 pandemic has caused significant disruptions, including delays in clinical trial enrollment (Phase 1b/2a pulmonary sarcoidosis), temporary facility closures, travel restrictions, and delays in R&D activities[30](index=30&type=chunk)[31](index=31&type=chunk) * The company has incurred accumulated deficits of **$333.6 million** as of September 30, 2020, and expects to continue incurring net losses, but believes existing cash and investments (**$36.1 million**) are sufficient for at least one year[32](index=32&type=chunk)[116](index=116&type=chunk) * Revenue recognition follows ASC Topic 606, recognizing revenue when promised goods or services are transferred to customers, either over time (e.g., R&D services) or at a point in time (e.g., license transfer)[39](index=39&type=chunk)[42](index=42&type=chunk) [Note 2. Fair Value Measurements](index=12&type=section&id=2.%20Fair%20Value%20Measurements) * Financial assets measured at fair value on a recurring basis include cash equivalents and available-for-sale investment securities, categorized into a three-tier hierarchy (Level 1, 2, 3)[50](index=50&type=chunk) Fair Value Measurements (in thousands USD) | Asset Category (in thousands USD) | Sep 30, 2020 Total Fair Value | Dec 31, 2019 Total Fair Value | | :------------------------------ | :------------------------------ | :------------------------------ | | Cash equivalents | $15,965 | $8,248 | | Available-for-sale investments | $17,995 | $21,934 | | Asset-backed securities | $2,234 | $6,304 | | Commercial paper | $5,587 | $7,568 | | Corporate debt securities | $8,174 | $8,062 | | United States Treasury | $2,000 | $0 | | Total assets measured at fair value | $33,960 | $30,182 | * As of September 30, 2020, all available-for-sale investments have maturity dates of less than one year and are in gross unrealized gain positions[52](index=52&type=chunk) [Note 3. License and Other Agreements](index=14&type=section&id=3.%20License%20and%20Other%20Agreements) * In March 2019, aTyr Pharma entered a research collaboration and option agreement with CSL Behring (CSL) for tRNA synthetase-derived product candidates, with CSL funding R&D activities[54](index=54&type=chunk) * Under the CSL Agreement, **$0.1 million** and **$0.4 million** in license revenue were recognized for the three and nine months ended September 30, 2020, respectively[59](index=59&type=chunk) * In January 2020, aTyr Pharma licensed ATYR1923 to Kyorin Pharmaceutical Co., Ltd. for interstitial lung diseases (ILDs) in Japan, receiving an **$8.0 million** upfront payment and eligibility for up to **$167.0 million** in milestones plus tiered royalties[60](index=60&type=chunk) * For the nine months ended September 30, 2020, **$8.0 million** in license revenue was recognized from the Kyorin Agreement[62](index=62&type=chunk) * Pangu BioPharma, aTyr's subsidiary, received a **$750,000** grant with HKUST in March 2020 to develop a high-throughput platform for bi-specific antibodies, with aTyr contributing **50%** of the project cost[64](index=64&type=chunk)[91](index=91&type=chunk)[93](index=93&type=chunk) [Note 4. Debt, Commitments and Contingencies](index=16&type=section&id=4.%20Debt,%20Commitments%20and%20Contingencies) * The company had term loans totaling **$20.0 million** from Silicon Valley Bank and Solar Capital Ltd., with interest-only payments until June 2018, followed by principal and interest payments through November 2020[67](index=67&type=chunk)[68](index=68&type=chunk) * As of September 30, 2020, the carrying value of Term Loans was **$1.3 million** principal outstanding, net of debt issuance costs and accretion of the final maturity payment[70](index=70&type=chunk) * Warrants to purchase common stock were issued to lenders in connection with the term loans, with an aggregate fair value of **$0.5 million**[71](index=71&type=chunk) Operating Lease Payments (in thousands USD) | Operating Lease Payments (in thousands USD) | Amount | | :-------------------------------------- | :----- | | 2020 | $254 | | 2021 | $1,031 | | 2022 | $1,062 | | 2023 | $404 | | Less: Amount representing interest | $(312) | | Present value of lease payments | $2,439 | | Less: Current portion of operating lease liability | $(834) | | Long-term operating lease liability | $1,605 | * The weighted-average remaining lease term for facility leases was **2.7 years** with a weighted-average discount rate of **9.6%** as of September 30, 2020[72](index=72&type=chunk) [Note 5. Stockholders' Equity](index=16&type=section&id=5.%20Stockholders'%20Equity) * Under the At-the-Market (ATM) Offering Program, the company sold **630,685 shares** of common stock for gross proceeds of **$2.5 million** during the nine months ended September 30, 2020[74](index=74&type=chunk) * In February 2020, an underwritten follow-on public offering generated approximately **$20.7 million** in total gross proceeds from the issuance of **4,870,588 shares** of common stock[75](index=75&type=chunk) * In September 2020, a common stock purchase agreement with Aspire Capital Fund, LLC committed Aspire Capital to purchase up to **$20.0 million** of common stock over **30 months**, though no shares were sold as of September 30, 2020[76](index=76&type=chunk) Common Stock Reserved for Future Issuance (Sep 30, 2020) | Common Stock Reserved for Future Issuance (Sep 30, 2020) | Shares | | :------------------------------------------------------- | :----- | | Common stock warrants | 13,904 | | Common stock options and restricted stock units | 582,582 | | Shares available under 2015 equity incentive plan | 383,292 | | Shares available under employee stock purchase plan | 76,917 | | Total | 1,056,695 | Stock-based Compensation Expense (in thousands USD) | Stock-based Compensation Expense (in thousands USD) | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :---------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and development | $64 | $82 | $194 | $285 | | General and administrative | $260 | $196 | $931 | $1,073 | | Total stock-based compensation expense | $324 | $278 | $1,125 | $1,358 | [Note 6. Subsequent Events](index=18&type=section&id=6.%20Subsequent%20Events) * Through November 12, 2020, the company sold an additional **194,496 shares** of common stock for **$0.7 million** gross proceeds via the ATM Offering Program[80](index=80&type=chunk) * On November 3, 2020, the Term Loans were fully repaid, including the final maturity payment[81](index=81&type=chunk) * On November 13, 2020, the ATM Offering Program amount was increased from **$10.0 million** to **$20.0 million**[81](index=81&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews the company's business, financial operations, and Q3 2020 results, discussing liquidity, capital, and COVID-19 impacts [Overview](index=19&type=section&id=Overview) * aTyr Pharma is a biotherapeutics company focused on novel biological pathways, specifically the extracellular functionality and signaling pathways of tRNA synthetases, with a global intellectual property estate[85](index=85&type=chunk) * The primary focus is on ATYR1923, a clinical-stage product candidate that downregulates immune responses by binding to the NRP2 receptor, in development for severe inflammatory lung diseases (ILDs) and being investigated for COVID-19[86](index=86&type=chunk)[88](index=88&type=chunk) * A Phase 1b/2a clinical trial for ATYR1923 in pulmonary sarcoidosis patients showed the study drug was generally well tolerated with no drug-related serious adverse events[87](index=87&type=chunk) * Enrollment for a Phase 2 clinical trial of ATYR1923 in hospitalized COVID-19 patients with severe respiratory complications was completed in October 2020, with topline data expected at the turn of the calendar year[88](index=88&type=chunk) * Kyorin Pharmaceutical Co., Ltd. initiated a Phase 1 trial of ATYR1923 in Japan in September 2020, following an **$8.0 million** upfront payment and potential milestones up to **$167.0 million**[89](index=89&type=chunk) * The company declared ATYR2810, an NRP2 antibody program, as an IND candidate in oncology in November 2020, targeting aggressive tumors where NRP2 is implicated[90](index=90&type=chunk) * The COVID-19 pandemic has caused delays in clinical trial enrollment, temporary facility closures, and disruptions to R&D activities, impacting the pulmonary sarcoidosis trial[95](index=95&type=chunk) [Financial Operations Overview](index=20&type=section&id=Financial%20Operations%20Overview) * The company's consolidated financial statements include aTyr Pharma, Inc. and its **98% majority-owned subsidiary**, Pangu BioPharma Limited[96](index=96&type=chunk) * Revenue recognition for the nine months ended September 30, 2020, included **$8.0 million** from the Kyorin Agreement and **$0.4 million** from the CSL Agreement[99](index=99&type=chunk)[100](index=100&type=chunk) * Research and development expenses are primarily driven by clinical trials for product candidates, including ATYR1923 in pulmonary sarcoidosis and COVID-19, and are expected to increase[101](index=101&type=chunk)[102](index=102&type=chunk) * General and administrative expenses consist mainly of salaries, stock-based compensation, legal, accounting, and patent-related costs[105](index=105&type=chunk) * Other expense, net, primarily includes interest income on cash and investments and interest expense on term loans[106](index=106&type=chunk) * Critical accounting policies involve significant estimates, particularly for clinical trials and R&D expenses, with additional uncertainty due to the COVID-19 pandemic[107](index=107&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Results of Operations (in thousands USD) | Metric (in thousands USD) | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Change (in thousands USD) | | :-------------------------------- | :------------------------------ | :------------------------------ | :----- | | Revenues | $148 | $184 | $(36) | | Research and development expenses | $4,616 | $3,799 | $817 | | General and administrative expenses | $2,044 | $1,883 | $161 | | Other expense, net | $(88) | $(147) | $(59) | * For the three months ended September 30, 2020, R&D expenses increased by **$0.8 million** due to the progression of ATYR1923 clinical trials, while G&A expenses increased by **$0.2 million** due to insurance costs[111](index=111&type=chunk)[112](index=112&type=chunk) Results of Operations (in thousands USD) | Metric (in thousands USD) | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | Change (in thousands USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | :----- | | Revenues | $8,402 | $278 | $8,124 | | Research and development expenses | $12,593 | $10,458 | $2,135 | | General and administrative expenses | $6,780 | $6,836 | $(56) | | Other expense, net | $(324) | $(614) | $(290) | * For the nine months ended September 30, 2020, revenues increased by **$8.1 million**, primarily from the Kyorin Agreement. R&D expenses increased by **$2.1 million** due to clinical trial progression[113](index=113&type=chunk)[114](index=114&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) * As of September 30, 2020, the company had **$36.1 million** in cash, cash equivalents, and available-for-sale investments, deemed sufficient for at least one year of operations[116](index=116&type=chunk) * Operations have been financed primarily through equity securities sales, convertible debt, and term loans since inception[117](index=117&type=chunk) * In 2020, significant capital was raised through an underwritten follow-on public offering (**$20.7 million** gross proceeds) and at-the-market offerings (**$2.5 million** gross proceeds)[118](index=118&type=chunk)[119](index=119&type=chunk) * A common stock purchase agreement with Aspire Capital Fund, LLC allows for the sale of up to **$20.0 million** in common stock over **30 months**[120](index=120&type=chunk) * Term Loans were fully repaid on November 3, 2020[121](index=121&type=chunk) Cash Flow Activity (in thousands USD) | Cash Flow Activity (in thousands USD) | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Operating activities | $(9,900) | $(15,097) | | Investing activities | $3,697 | $6,145 | | Financing activities | $15,144 | $3,331 | | Net change in cash and cash equivalents | $8,941 | $(5,621) | * Future funding requirements are uncertain and depend on clinical trial progress, R&D efforts, manufacturing, regulatory approvals, and potential collaborations, with additional challenges posed by the COVID-19 pandemic[127](index=127&type=chunk)[128](index=128&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, specifically interest rate and foreign currency exchange risks, and their potential financial impact * The company is exposed to interest rate risk on its cash, cash equivalents, and available-for-sale investments, totaling **$36.1 million** as of September 30, 2020[135](index=135&type=chunk) * A hypothetical **100 basis point** increase in interest rates would not have a material effect on the company's results of operations[135](index=135&type=chunk) * The company incurs expenses in foreign currencies (Pounds Sterling, Euro, Hong Kong dollar, Australian dollar) and is thus exposed to foreign currency exchange risk, but does not use hedging transactions[137](index=137&type=chunk) * A **10%** movement in the U.S. dollar to Pounds Sterling or U.S. dollar to Euro exchange rates would not have a material effect on the company's results of operations or financial condition[137](index=137&type=chunk) * Inflation has not had a material effect on the company's results of operations or financial condition during the periods presented[139](index=139&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and the absence of significant internal control changes * As of September 30, 2020, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[141](index=141&type=chunk) * No significant changes in internal control over financial reporting occurred during the three months ended September 30, 2020, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[142](index=142&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings, though routine claims may arise without material adverse effect * aTyr Pharma is not a party to any material legal proceedings as of the reporting date[143](index=143&type=chunk) * The company may be subject to various legal proceedings and claims in the ordinary course of business, but does not believe any would have a material adverse effect on results or financial condition[143](index=143&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks to the company's business, including financial, product development, regulatory, IP, operations, and commercialization [Summary of Risks Associated with Our Business](index=26&type=section&id=Summary%20of%20Risks%20Associated%20with%20Our%20Business) * Key risks include the need for additional capital, significant and ongoing losses, potential delays or failures in clinical trials, inability to commercialize product candidates, novel therapeutic approaches, undesirable side effects, reliance on collaborations, intellectual property protection challenges, and adverse effects from the COVID-19 pandemic[146](index=146&type=chunk)[148](index=148&type=chunk) [Risks related to our financial condition and need for additional capital](index=27&type=section&id=Risks%20related%20to%20our%20financial%20condition%20and%20need%20for%20additional%20capital) * The company will need to raise substantial additional capital through equity, debt, grants, or partnerships to fund operations, as current funds are sufficient for only one year[147](index=147&type=chunk) * Future funding requirements depend on clinical trial progress, R&D costs, manufacturing, regulatory review, intellectual property, commercialization, and potential acquisitions[149](index=149&type=chunk) * Failure to obtain timely funding could lead to curtailment or discontinuation of R&D programs, impacting business, financial condition, and results of operations[151](index=151&type=chunk) * Equity financing would dilute stockholders, while debt financing would increase fixed obligations and impose restrictive covenants. The COVID-19 pandemic exacerbates financing difficulties[152](index=152&type=chunk) [We have incurred significant losses since our inception and will continue to incur significant losses for the foreseeable future.](index=28&type=section&id=We%20have%20incurred%20significant%20losses%20since%20our%20inception%20and%20will%20continue%20to%20incur%20significant%20losses%20for%20the%20foreseeable%20future.) * The company has incurred net losses since its inception in 2005, with an accumulated deficit of **$333.6 million** as of September 30, 2020[154](index=154&type=chunk) * Significant expenses are expected to continue for R&D, clinical development, manufacturing, regulatory approvals, commercialization, and intellectual property maintenance[156](index=156&type=chunk) * Operating results may fluctuate significantly, and period-to-period comparisons may not indicate future performance[158](index=158&type=chunk) [We have never generated any revenue from product sales and may never be profitable.](index=29&type=section&id=We%20have%20never%20generated%20any%20revenue%20from%20product%20sales%20and%20may%20never%20be%20profitable.) * The company has not generated product sales revenue and does not anticipate doing so for the foreseeable future, if ever[159](index=159&type=chunk) * Profitability depends on successfully completing development, obtaining regulatory approvals, establishing manufacturing, launching and commercializing products, protecting IP, and achieving market acceptance[159](index=159&type=chunk)[160](index=160&type=chunk) [Risks related to the discovery, development and regulation of our product candidates](index=29&type=section&id=Risks%20related%20to%20the%20discovery,%20development%20and%20regulation%20of%20our%20product%20candidates) * Clinical trials are expensive, time-consuming, and uncertain, with potential for delays or failure to demonstrate safety and efficacy, which could harm the business[161](index=161&type=chunk) * Interim and preliminary clinical data are subject to change and may not be predictive of final results, potentially causing stock price volatility or impacting regulatory approval[169](index=169&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) * Difficulties in patient enrollment, especially for rare diseases or due to the COVID-19 pandemic, could delay or halt clinical trials, increasing costs and adversely affecting development[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) * The company's novel therapeutic approaches based on tRNA synthetase and NRP2 biology may face significant delays or fail to yield commercially viable drugs due to lack of precedent and unknown safety profiles[180](index=180&type=chunk)[181](index=181&type=chunk) * Undesirable side effects or safety issues from product candidates could delay or prevent regulatory approval, limit commercial labels, or lead to significant negative consequences post-approval[188](index=188&type=chunk)[191](index=191&type=chunk) * Manufacturing stoppages or challenges, including compliance with cGMP, contamination risks, and supply chain disruptions (exacerbated by COVID-19), could delay clinical trials or commercialization[194](index=194&type=chunk)[197](index=197&type=chunk)[199](index=199&type=chunk) * Regulatory approval is uncertain and may be delayed, limited in scope, or subject to post-marketing requirements, impacting commercial success[200](index=200&type=chunk)[207](index=207&type=chunk) [Risks related to our reliance on third parties](index=37&type=section&id=Risks%20related%20to%20our%20reliance%20on%20third%20parties) * The company depends on existing and future collaborations for R&D and commercialization, and their failure to perform satisfactorily could limit revenue and product validation[213](index=213&type=chunk)[214](index=214&type=chunk) * Reliance on third parties for manufacturing, protocol development, research, and clinical testing reduces control and poses risks if they fail to meet contractual duties, deadlines, or regulatory requirements[217](index=217&type=chunk)[218](index=218&type=chunk) * Using third-party CDMOs for manufacturing entails risks such as inability to negotiate favorable terms, termination of agreements, and disruptions to operations, potentially delaying development or commercialization[219](index=219&type=chunk)[221](index=221&type=chunk) * Sharing trade secrets with third parties increases the risk of misappropriation or disclosure, which could impair the company's competitive position[227](index=227&type=chunk) [Risks related to our intellectual property](index=41&type=section&id=Risks%20related%20to%20our%20intellectual%20property) * Inability to obtain, maintain, or protect intellectual property rights (patents, trade secrets) could hinder competition and commercialization of product candidates[230](index=230&type=chunk) * Patent applications may not issue, or issued patents may be challenged, narrowed, or invalidated, reducing protection and potentially impacting collaborations[232](index=232&type=chunk)[233](index=233&type=chunk) * Trade secret protection is difficult to maintain, and unauthorized disclosure or independent development by competitors could impair the company's competitive position[234](index=234&type=chunk)[235](index=235&type=chunk) * Claims of infringement by third parties could lead to costly litigation, substantial damages, or require licenses that may not be available on reasonable terms[239](index=239&type=chunk)[242](index=242&type=chunk) * Patent terms may be inadequate due to long development timelines, leading to competition from generics or biosimilars upon expiration[244](index=244&type=chunk) * Failure to comply with obligations in license agreements could result in loss of critical intellectual property rights[248](index=248&type=chunk) * Changes in patent law, such as the Leahy-Smith America Invents Act and recent Supreme Court rulings, increase uncertainty and costs for patent prosecution and enforcement[260](index=260&type=chunk)[262](index=262&type=chunk) [Risks related to our business operations](index=45&type=section&id=Risks%20related%20to%20our%20business%20operations) * Limited resources may lead to foregoing more profitable strategies or product candidates, and misallocation of resources could adversely impact the business[265](index=265&type=chunk) * The COVID-19 pandemic continues to adversely affect business operations, causing delays in clinical trials, disruptions to supply chains, and potential limitations on employee resources[266](index=266&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk) * Future success depends on retaining key employees, consultants, and advisors, and attracting qualified personnel, which is challenging due to intense competition and potential immigration restrictions[276](index=276&type=chunk)[277](index=277&type=chunk) * Internal restructuring activities, such as workforce reductions, may cause disruptions, loss of continuity, and may not achieve expected cost savings or efficiencies[279](index=279&type=chunk) * International operations expose the company to risks like differing regulatory requirements, reduced intellectual property protection, economic instability, and foreign currency fluctuations[282](index=282&type=chunk) * Misconduct by employees, investigators, or partners, including non-compliance with regulatory standards or fraud and abuse laws, could lead to significant penalties and reputational harm[284](index=284&type=chunk) * Product liability claims, even if unfounded, could result in substantial costs, litigation, reputational damage, and hinder commercialization efforts[285](index=285&type=chunk)[288](index=288&type=chunk)[289](index=289&type=chunk) * Non-compliance with healthcare fraud and abuse laws, data privacy laws (GDPR, CCPA), or other regulations could lead to significant penalties, fines, and operational restrictions[290](index=290&type=chunk)[291](index=291&type=chunk)[293](index=293&type=chunk) * Unfavorable global economic conditions, including those exacerbated by Brexit and COVID-19, could adversely affect the business by impacting capital raising and supply chains[295](index=295&type=chunk) * Natural disasters (e.g., earthquakes, floods) could severely disrupt operations, damage infrastructure, and lead to substantial expenses due to limited disaster recovery plans[296](index=296&type=chunk) [Risks related to the commercialization of our product candidates](index=49&type=section&id=Risks%20related%20to%20the%20commercialization%20of%20our%20product%20candidates) * Inability to establish sales, marketing, and distribution capabilities or secure third-party agreements could prevent revenue generation from approved product candidates[297](index=297&type=chunk)[298](index=298&type=chunk) * Lack of commercial manufacturing agreements and potential technical issues or regulatory inspection failures by CDMOs could harm commercialization efforts[300](index=300&type=chunk)[301](index=301&type=chunk) * Intense competition from larger pharmaceutical and biotechnology companies, with greater resources and more advanced therapies, could adversely affect commercial success[303](index=303&type=chunk)[304](index=304&type=chunk) * Market acceptance by physicians, patients, and third-party payors is crucial for commercial success, and failure to achieve adequate acceptance could prevent profitability[305](index=305&type=chunk)[306](index=306&type=chunk) * Uncertainty regarding insurance coverage and adequate reimbursement by third-party payors, coupled with increasing cost-containment initiatives and governmental scrutiny of drug pricing, could limit market access and revenue[307](index=307&type=chunk)[308](index=308&type=chunk)[309](index=309&type=chunk)[310](index=310&type=chunk) [Risks related to the ownership of our common stock](index=54&type=section&id=Risks%20related%20to%20the%20ownership%20of%20our%20common%20stock) * The market price of common stock is highly volatile due to various factors, including clinical trial results, regulatory decisions, competition, and macroeconomic conditions, potentially leading to investment losses[312](index=312&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk) * Executive officers, directors, and significant stockholders own approximately **36.0%** of voting stock, allowing them to exert significant control over corporate matters[315](index=315&type=chunk) * Future sales and issuances of equity securities, including through offerings and employee benefit plans, could dilute existing stockholders and depress the stock price[316](index=316&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk)[321](index=321&type=chunk)[322](index=322&type=chunk) * Failure to comply with Nasdaq listing requirements, such as the minimum bid price, could result in delisting, making it harder to trade stock and raise capital[323](index=323&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk) * The ability to use net operating losses (NOLs) to offset future taxable income may be limited by ownership changes (Section 382 of the Code) and regulatory changes (e.g., CARES Act, California state limits)[327](index=327&type=chunk)[328](index=328&type=chunk)[329](index=329&type=chunk) * The company does not intend to pay dividends on common stock, limiting stockholder returns to stock appreciation[330](index=330&type=chunk) * Provisions in corporate documents and Delaware law could make it difficult for third parties to acquire the company or remove current management, even if beneficial to stockholders[332](index=332&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk) [General Risk Factors](index=58&type=section&id=General%20Risk%20Factors) * Failure to comply with environmental, health, and safety laws and regulations could lead to fines, penalties, or significant costs[339](index=339&type=chunk)[340](index=340&type=chunk) * The company is subject to anti-corruption laws (e.g., FCPA), and non-compliance could result in criminal/civil penalties and reputational harm[341](index=341&type=chunk) * System failures, including cyber-attacks, could disrupt operations, lead to data loss, intellectual property theft, and delays in product development[343](index=343&type=chunk)[344](index=344&type=chunk) * Operating as a public company incurs significant costs and requires substantial management time for compliance initiatives (e.g., Sarbanes-Oxley, Dodd-Frank Act)[345](index=345&type=chunk) * As an 'emerging growth company,' reduced reporting requirements may make common stock less attractive to investors, potentially increasing stock price volatility[346](index=346&type=chunk) * Lack of research coverage or negative analyst reports could cause the stock price to decline[349](index=349&type=chunk) * The company has broad discretion in using its cash and investments, which may not yield significant returns, and is exposed to risks related to marketable securities[351](index=351&type=chunk) [Item 2. 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) This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period * No unregistered sales of equity securities or use of proceeds to report[352](index=352&type=chunk) [Item 3. Defaults Upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities during the reporting period * No defaults upon senior securities to report[353](index=353&type=chunk) [Item 4. Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company * Mine safety disclosures are not applicable[354](index=354&type=chunk) [Item 5. Other Information](index=59&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other information to report for the period * No other information to report[355](index=355&type=chunk) [Item 6. Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section provides a comprehensive list of exhibits filed with the Form 10-Q, including organizational documents, agreements, and certifications * The exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, specimen common stock certificate, various warrants, a Registration Rights Agreement, legal opinions, and certifications from the Principal Executive and Financial Officers[357](index=357&type=chunk)[358](index=358&type=chunk) [SIGNATURES](index=62&type=section&id=SIGNATURES) This section contains the required signatures of the registrant's authorized officers, certifying the filing of the Form 10-Q * The report is signed by Sanjay S. Shukla, M.D., M.S., President and Chief Executive Officer, and Jill M. Broadfoot, Chief Financial Officer, on November 13, 2020[362](index=362&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets and cash flows, for the periods ended June 30, 2020, and 2019 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Current Assets** | | | | Cash and cash equivalents | $21,632 | $9,210 | | Total current assets | $43,840 | $31,925 | | **Total Assets** | **$47,562** | **$36,188** | | **Current Liabilities** | | | | Term loans, net | $4,976 | $8,737 | | Total current liabilities | $9,799 | $12,923 | | **Total Stockholders' Equity** | **$35,938** | **$21,026** | Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $189 | $94 | $8,254 | $94 | | Research and development | $4,361 | $3,314 | $7,977 | $6,659 | | General and administrative | $2,146 | $2,421 | $4,736 | $4,953 | | Consolidated net loss | $(6,447) | $(5,848) | $(4,695) | $(11,985) | | Net loss per share | $(0.69) | $(1.80) | $(0.58) | $(4.23) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,345) | $(10,844) | | Net cash provided by (used in) investing activities | $1,957 | $(1,064) | | Net cash provided by financing activities | $14,810 | $3,453 | | **Net change in cash and cash equivalents** | **$12,422** | **$(8,455)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section details accounting policies, liquidity, COVID-19 risks, revenue recognition, debt obligations, and equity transactions - The company believes its existing cash, cash equivalents, and available-for-sale investments of **$41.4 million** as of June 30, 2020, are sufficient to meet anticipated cash requirements for at least one year from the filing date[30](index=30&type=chunk) - The COVID-19 pandemic has impacted the business by delaying enrollment in the Phase 1b/2a clinical trial for pulmonary sarcoidosis and causing disruptions to employee travel and R&D activities[29](index=29&type=chunk) - In January 2020, the company entered a license agreement with Kyorin for ATYR1923 in Japan, receiving an **$8.0 million upfront payment**. For the six months ended June 30, 2020, the company recognized **$8.0 million** in license revenue from this agreement[59](index=59&type=chunk)[61](index=61&type=chunk) - In February 2020, the company completed an underwritten follow-on public offering, raising total gross proceeds of approximately **$20.7 million**[74](index=74&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses business overview, financial performance, liquidity, ATYR1923 clinical development, revenue, R&D, and capital resources [Overview](index=17&type=section&id=Overview) aTyr is a biotherapeutics company focused on ATYR1923 for inflammatory lung diseases, with ongoing clinical trials and key collaborations - The company's primary focus is on ATYR1923, a clinical-stage product candidate for inflammatory lung diseases that downregulates immune responses by binding to the NRP2 receptor[84](index=84&type=chunk) - ATYR1923 is being evaluated in two clinical trials: a Phase 1b/2a trial in patients with pulmonary sarcoidosis and a Phase 2 trial in COVID-19 patients with severe respiratory complications[85](index=85&type=chunk)[86](index=86&type=chunk) - In January 2020, aTyr entered into a license agreement with Kyorin for the development and commercialization of ATYR1923 in Japan, receiving an **$8.0 million upfront payment** and eligibility for up to **$167.0 million** in milestones plus royalties[87](index=87&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) This section compares financial results, highlighting increased revenue from the Kyorin agreement and higher R&D expenses due to clinical trials Comparison of Results for the Six Months Ended June 30 (in thousands) | Account | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Revenues | $8,254 | $94 | $8,160 | | Research and development expenses | $7,977 | $6,659 | $1,318 | | General and administrative expenses | $4,736 | $4,953 | $(217) | - The **$8.16 million** increase in revenue for the first six months of 2020 was driven by **$8.0 million** from the Kyorin Agreement and **$0.3 million** from the CSL Agreement[115](index=115&type=chunk) - The **$1.3 million** increase in R&D expenses for the six-month period was primarily due to the progression of the ATYR1923 Phase 1b/2a trial in pulmonary sarcoidosis and the Phase 2 trial in COVID-19 patients[116](index=116&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses liquidity, capital resources, historical losses, current cash sufficiency, and recent financing activities - As of June 30, 2020, the company had **$41.4 million** in cash, cash equivalents, and available-for-sale investments, which is believed to be sufficient to fund operations for at least one year[119](index=119&type=chunk) - Net cash used in operating activities decreased to **$4.3 million** in the first six months of 2020 from **$10.8 million** in the same period of 2019, primarily due to the upfront payment from Kyorin[126](index=126&type=chunk) - Net cash provided by financing activities was **$14.8 million** for the first six months of 2020, mainly from an **$18.8 million** net proceed from a follow-on offering, offset by a **$4.0 million** loan repayment[128](index=128&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses exposure to market risks, specifically interest rate and foreign currency exchange risks, neither considered material - The company is exposed to interest rate risk through its investment portfolio and variable-rate term loans, but a **100 basis point** change in rates would not have a material effect on results[135](index=135&type=chunk)[138](index=138&type=chunk) - Foreign currency exchange risk exists due to expenses denominated in Pounds Sterling, Euro, Hong Kong dollar, and Australian dollar, but a **10%** movement in exchange rates is not expected to be material[139](index=139&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of the end of the quarter[142](index=142&type=chunk) - No significant changes in internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, such controls were identified during the three months ended June 30, 2020[143](index=143&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - As of the reporting date, the company is not a party to any material legal proceedings[145](index=145&type=chunk) [Item 1A. Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) This section provides a comprehensive overview of risks, including capital needs, ATYR1923 success, clinical development, third-party reliance, IP, and COVID-19 impact [Risks related to financial condition and need for additional capital](index=25&type=section&id=Risks%20related%20to%20our%20financial%20condition%20and%20need%20for%20additional%20capital) This subsection highlights historical losses, critical need for additional capital, funding uncertainty, and risks from existing debt - The company will need to raise additional capital to fund operations, as existing cash of **$41.4 million** is projected to be sufficient for only about one year[147](index=147&type=chunk) - The company has outstanding term loans secured by substantially all of its assets (excluding intellectual property), and a default could lead to the liquidation of collateral[153](index=153&type=chunk) - The company has incurred significant losses since inception, with an accumulated deficit of **$327.0 million** as of June 30, 2020, and expects to continue incurring losses[157](index=157&type=chunk) [Risks related to discovery, development, and regulation](index=28&type=section&id=Risks%20related%20to%20the%20discovery,%20development%20and%20regulation%20of%20our%20product%20candidates) This section details substantial risks in drug development, including clinical trial delays, novel therapeutic approach, patient enrollment, and regulatory uncertainty - The company may encounter substantial delays in clinical trials, such as the COVID-19-related delays in the ATYR1923 Phase 1b/2a trial in pulmonary sarcoidosis[164](index=164&type=chunk)[169](index=169&type=chunk) - The company's focus on extracellular tRNA synthetase and NRP2 biology represents a novel therapeutic approach, which carries risks as no drugs have been developed based on this approach[180](index=180&type=chunk) - Patient enrollment is a critical challenge, particularly for rare diseases like pulmonary sarcoidosis, and has been further complicated by the COVID-19 pandemic, which may cause patients to drop out or avoid participation[175](index=175&type=chunk)[176](index=176&type=chunk) [Risks related to reliance on third parties](index=37&type=section&id=Risks%20related%20to%20our%20reliance%20on%20third%20parties) This section highlights high dependence on third parties for collaborations, manufacturing, and clinical trials, introducing risks of delays and non-performance - The company depends on collaborations with Kyorin and CSL, which are subject to performance risks and potential termination, which could impact future revenue and development[217](index=217&type=chunk)[219](index=219&type=chunk) - The company relies entirely on third-party CDMOs for manufacturing and lacks long-term commercial supply agreements, creating risks of supply disruption, delays, and increased costs[223](index=223&type=chunk)[226](index=226&type=chunk) - Reliance on third-party CROs for clinical trials means a loss of direct control, and any failure by CROs to comply with regulations or protocols could compromise trial data and delay approvals[227](index=227&type=chunk)[228](index=228&type=chunk) [Risks related to intellectual property](index=40&type=section&id=Risks%20related%20to%20our%20intellectual%20property) This section details risks in obtaining, maintaining, and defending intellectual property, including patent uncertainty, trade secret protection, and infringement claims - The company's success depends on its ability to obtain and maintain patent protection for its technology and product candidates, a process that is expensive, time-consuming, and uncertain[232](index=232&type=chunk)[233](index=233&type=chunk) - The company could face costly litigation if third parties claim that its products infringe on their patents, which could block commercialization or require substantial damage payments[243](index=243&type=chunk)[246](index=246&type=chunk) - In addition to patents, the company relies on trade secrets, which are difficult to protect and may be misappropriated or disclosed, particularly when shared with third-party collaborators[238](index=238&type=chunk) [Risks related to business operations](index=46&type=section&id=Risks%20related%20to%20our%20business%20operations) This section covers key operational risks, including COVID-19 impact, personnel retention, international operations, product liability, and cybersecurity - The COVID-19 pandemic has adversely affected business operations, including delaying the Phase 1b/2a pulmonary sarcoidosis trial and creating enrollment challenges for the new COVID-19 trial[271](index=271&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - The company is highly dependent on retaining its principal executive team and other qualified scientific and technical personnel in a competitive industry[281](index=281&type=chunk) - The use of product candidates in clinical trials exposes the company to the risk of product liability claims, which could result in substantial liability and reputational harm[289](index=289&type=chunk) [Risks related to commercialization](index=52&type=section&id=Risks%20related%20to%20the%20commercialization%20of%20our%20product%20candidates) This subsection discusses significant commercialization challenges, including sales infrastructure, intense competition, market acceptance, and reimbursement uncertainty - The company currently has no sales, marketing, or distribution infrastructure and must either build these capabilities or enter into agreements with third parties, both of which carry significant risks[306](index=306&type=chunk) - The company faces intense competition from major pharmaceutical and biotech companies that have substantially greater financial, technical, and marketing resources[312](index=312&type=chunk)[313](index=313&type=chunk) - Commercial success is highly dependent on obtaining adequate insurance coverage and reimbursement from third-party payors like CMS and private insurers, which is uncertain and subject to downward pricing pressure[316](index=316&type=chunk)[319](index=319&type=chunk) [Risks related to ownership of common stock](index=54&type=section&id=Risks%20related%20to%20the%20ownership%20of%20our%20common%20stock) This section outlines risks for stockholders, including stock price volatility, ownership concentration, potential dilution, and delisting risk - The market price of the company's common stock has been and is likely to continue to be highly volatile due to factors such as clinical trial results, regulatory decisions, and market conditions[321](index=321&type=chunk) - As of August 7, 2020, executive officers, directors, and 5% stockholders owned approximately **38.4%** of voting stock, giving them significant influence over stockholder-approved matters[326](index=326&type=chunk) - The company faces a risk of its common stock being delisted from the Nasdaq Capital Market if it fails to maintain continued listing requirements, such as the **$1.00** minimum bid price[336](index=336&type=chunk)[339](index=339&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the reporting period - None[352](index=352&type=chunk) [Item 3. Defaults Upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - None[353](index=353&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) No other information to report for the period - None[355](index=355&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents and CEO/CFO certifications - Lists exhibits filed with the report, including the Restated Certificate of Incorporation, Bylaws, CEO and CFO certifications (Sections 302 and 906), and XBRL interactive data files[358](index=358&type=chunk)[359](index=359&type=chunk)

Revenue and Financial Performance - The company recognized $7.9 million in license revenue under the Kyorin Agreement for the three months ended March 31, 2020[96]. - Revenues for the three months ended March 31, 2020, were $8.1 million, a significant increase from $0 in the same period of 2019[111]. - The company reported a net income of $2.1 million for the three months ended March 31, 2020, compared to a net loss of $6.1 million in the same period of 2019[121]. - As of March 31, 2020, the company had an accumulated deficit of $320.6 million and expected to continue incurring net losses for the foreseeable future[114]. - The company had cash, cash equivalents, and available-for-sale investments totaling $49.8 million as of March 31, 2020, which is expected to meet cash requirements for at least one year[114]. - Net cash provided by operating activities for the three months ended March 31, 2020, was $2.1 million, compared to net cash used of $6.0 million in the same period of 2019[121]. - The company completed a follow-on public offering in February 2020, raising approximately $20.7 million in gross proceeds[120]. Research and Development - The company is currently enrolling a proof-of-concept Phase 1b/2a clinical trial for ATYR1923 in patients with pulmonary sarcoidosis[85]. - The company anticipates increased research and development expenses primarily related to the ATYR1923 clinical trials and other potential therapeutics[103]. - Research and development expenses increased to $3.6 million for the three months ended March 31, 2020, up from $3.3 million in 2019, primarily due to the progression of the Phase 1b/2a clinical trial for ATYR1923[112]. - The company is investigating ATYR1923's potential as a treatment for COVID-19 patients with severe respiratory complications, with a Phase 2 clinical trial expected to provide data this year[86]. - The company has received a grant of approximately $750,000 to develop a high-throughput platform for bi-specific antibodies, funded by the Hong Kong government's Innovation and Technology Commission[89]. Agreements and Collaborations - The company has entered into a research collaboration with CSL Behring, which includes potential payments of up to $4.25 million per tRNA synthetase program, totaling $17.0 million if all four programs advance[98]. - The company has entered into a license agreement with Kyorin for the development and commercialization of ATYR1923 in Japan, with Kyorin funding all related activities[87]. - The company is eligible to receive an additional $167.0 million in aggregate upon achieving certain development, regulatory, and sales milestones under the Kyorin Agreement[87]. Operational Challenges - The company has experienced delays in clinical trial enrollment and operations due to the COVID-19 pandemic, impacting the timeline for top-line results[104]. Financial Risks and Exposures - The company has financed operations primarily through equity securities and convertible debt, with no revenues generated from product sales to date[115][126]. - The company is exposed to interest rate risk, with Term Loans bearing interest at variable rates, which could increase expenses by approximately $0.1 million annually with a 1% rate increase[133]. - The company incurs expenses in foreign currencies, including Pounds Sterling, Euro, Hong Kong dollar, and Australian dollar, which may affect its financial position due to exchange rate fluctuations[134]. - The company does not engage in foreign currency hedging transactions, leaving it exposed to foreign currency exchange risks[134]. - A 10% movement in the U.S. dollar to Pounds Sterling or Euro exchange rates would not have a material effect on the company's results of operations or financial condition[134]. - Inflation has increased costs related to labor, manufacturing, clinical trials, and research and development, but has not materially affected the company's financial results[135]. Future Projections - The company anticipates significant commercialization expenses if marketing approval is obtained for any product candidates, necessitating substantial additional funding[125].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 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 ATYR PHARMA, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or orga ...

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, 2019 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 ATYR PHARMA, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporatio ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including detailed notes on accounting policies, collaboration agreements, debt, and equity activities [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202019%20(unaudited)%20and%20December%2031%2C%202018) Presents the company's financial position, including assets, liabilities, and equity, at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2019 | December 31, 2018 | | :-------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $14,507 | $22,962 | | Available-for-sale investments, short-term | $27,891 | $26,583 | | Total current assets | $43,871 | $50,803 | | Total assets | $48,762 | $52,746 | | Total current liabilities | $11,304 | $10,833 | | Total liabilities and stockholders' equity | $48,762 | $52,746 | | Total stockholders' equity | $30,226 | $33,650 | | Accumulated deficit | $(310,686) | $(298,701) | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202019%20and%202018%20(unaudited)) Details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Collaboration revenue | $94 | $— | $94 | $— | | Research and development expenses | $3,314 | $6,484 | $6,659 | $12,634 | | General and administrative expenses | $2,421 | $3,476 | $4,953 | $7,546 | | Net loss | $(5,848) | $(10,412) | $(11,985) | $(21,079) | | Net loss per share, basic and diluted | $(1.80) | $(4.88) | $(4.23) | $(9.89) | | Weighted average common stock shares outstanding | 3,244,920 | 2,133,790 | 2,834,079 | 2,132,113 | [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202019%20and%202018%20(unaudited)) Reports the net loss and other comprehensive income/loss components for the specified periods Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :---------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(5,848) | $(10,412) | $(11,985) | $(21,079) | | Change in unrealized gain on available-for-sale investments, net of tax | $51 | $8 | $28 | $35 | | Comprehensive loss | $(5,840) | $(10,361) | $(11,957) | $(21,044) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202019%20and%202018%20(unaudited)) Outlines changes in the company's equity, including net loss, stock issuances, and stock-based compensation Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | Balance as of Dec 31, 2018 | Balance as of Jun 30, 2019 | | :---------------------------------------------------------------- | :------------------------- | :------------------------- | | Total Stockholders' Equity | $33,650 | $30,226 | | Net loss (Q1 2019) | — | $(6,137) | | Net loss (Q2 2019) | — | $(5,848) | | Issuance of common stock from at the market offerings, net of offering costs | — | $1,381 (Q1) + $1,146 (Q2) | | Issuance of common stock from registered direct offering, net of offering costs | — | $4,918 | | Stock-based compensation | — | $571 (Q1) + $509 (Q2) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202019%20and%202018%20(unaudited)) Summarizes cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(10,844) | $(19,764) | | Net cash (used in) provided by investing activities | $(1,064) | $18,576 | | Net cash provided by (used in) financing activities | $3,453 | $(631) | | Net change in cash and cash equivalents | $(8,455) | $(1,819) | | Cash and cash equivalents at end of period | $14,507 | $19,272 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Organization, Business, Basis of Presentation and Summary of Significant Accounting Policies](index=8&type=section&id=1.%20Organization%2C%20Business%2C%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's core business in tRNA synthetase biology, significant financial events like the reverse stock split and accumulated deficit, and key accounting policy adoptions - aTyr Pharma, Inc. is focused on the discovery and development of innovative medicines based on novel immunological pathways, specifically the extracellular functionality of **tRNA synthetases**[24](index=24&type=chunk)[80](index=80&type=chunk) - A **1-for-14 reverse stock split** of issued and outstanding common stock became effective on June 28, 2019, with retrospective effect for all periods presented[27](index=27&type=chunk)[288](index=288&type=chunk) - As of June 30, 2019, the company had an **accumulated deficit** of **$310.7 million** and expects to incur **net losses** for the foreseeable future. Existing cash, cash equivalents, and available-for-sale investments of **$42.4 million** are believed to be sufficient for one year from the filing date[28](index=28&type=chunk)[109](index=109&type=chunk) - The company adopted **ASU No. 2016-02, Leases (Topic 842)**, on January 1, 2019, recognizing a **$3.5 million** right-of-use asset and a corresponding lease liability on the balance sheet[31](index=31&type=chunk)[38](index=38&type=chunk)[63](index=63&type=chunk) - In March 2019, the company entered into a research collaboration and option agreement with **CSL Behring**, recognizing **$94 thousand** as collaboration revenue for the three months ended June 30, 2019[34](index=34&type=chunk)[51](index=51&type=chunk)[56](index=56&type=chunk) [2. Fair Value Measurements](index=11&type=section&id=2.%20Fair%20Value%20Measurements) This note outlines the company's fair value measurement hierarchy for financial assets, primarily investment securities, which are mostly classified as Level 2 due to the use of observable inputs other than quoted prices - Fair value measurements are categorized into a three-tier hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[45](index=45&type=chunk)[46](index=46&type=chunk) Assets Measured at Fair Value (in thousands) as of June 30, 2019 | Asset Category | Total | Level 1 | Level 2 | Level 3 | | :--------------------------------- | :---- | :------ | :------ | :------ | | Cash equivalents | $10,828 | $10,828 | $— | $— | | Available-for-sale investments, short-term: | | | | | | Asset-backed securities | $7,191 | $— | $7,191 | $— | | Commercial paper | $13,404 | $— | $13,404 | $— | | Corporate debt securities | $7,296 | $— | $7,296 | $— | | **Total assets measured at fair value** | **$38,719** | **$10,828** | **$27,891** | **$—** | - As of June 30, 2019, all available-for-sale investments have effective maturity dates of less than one year and are in gross unrealized gain positions[49](index=49&type=chunk) [3. Research Collaboration](index=12&type=section&id=3.%20Research%20Collaboration) This note details the research collaboration and option agreement with CSL Behring, where CSL funds R&D activities for product candidates derived from tRNA synthetases and offers potential milestone-based option fees - In March 2019, a research collaboration and option agreement was signed with **CSL Behring** for the development of product candidates from up to four **tRNA synthetases**, with **CSL** funding all related R&D activities[51](index=51&type=chunk)[82](index=82&type=chunk) - **CSL Behring** will pay up to **$4.25 million** per synthetase program (totaling **$17 million** if all four advance) in option fees based on research milestones and their decision to continue development[52](index=52&type=chunk)[82](index=82&type=chunk) - The company recognized **$94 thousand** as collaboration revenue for the three months ended June 30, 2019, using a cost-based input method, with research milestones being fully constrained until **CSL** proceeds to the next phase[55](index=55&type=chunk)[56](index=56&type=chunk) [4. Debt, Commitments and Contingencies](index=13&type=section&id=4.%20Debt%2C%20Commitments%20and%20Contingencies) This note describes the company's term loan agreements, including outstanding principal and future payments, the impact of adopting new lease accounting standards on operating lease liabilities, and details related party transactions - The company has **$20.0 million** in term loans with **Silicon Valley Bank** and **Solar Capital Ltd.**, with **$11.3 million** principal outstanding as of June 30, 2019, bearing interest at the prime rate plus 4.10%[57](index=57&type=chunk)[58](index=58&type=chunk)[60](index=60&type=chunk)[139](index=139&type=chunk) Future Principal Payments for Term Loans (in thousands) | Year | Amount | | :--- | :----- | | 2019 | $4,000 | | 2020 | $7,333 | | **Total** | **$11,333** | - As of June 30, 2019, the present value of operating lease payments is **$3.3 million**, with a weighted average remaining lease term of 3.9 years and a discount rate of 9.6%[63](index=63&type=chunk)[65](index=65&type=chunk) - The research funding agreement with **The Scripps Research Institute** was terminated in November 2018. The Strategic Advisor Agreement with **Dr. John D. Mendlein** was terminated effective September 2019[66](index=66&type=chunk)[67](index=67&type=chunk) [5. Stockholders' Equity](index=15&type=section&id=5.%20Stockholders'%20Equity) This note details the company's equity financing activities, including at-the-market (ATM) offerings and a registered direct offering, as well as the conversion of preferred stock and stock-based compensation expenses - The **ATM** Offering Program with **Cowen and Company, LLC** was terminated in May 2019, having sold 193,670 shares for net proceeds of **$1.4 million** during the six months ended June 30, 2019[68](index=68&type=chunk)[112](index=112&type=chunk) - A new **ATM** Offering Program with **H.C. Wainwright & Co., LLC** was established in May 2019 for up to **$10.0 million**, under which 252,872 shares were sold for net proceeds of **$1.1 million** during the three months ended June 30, 2019[69](index=69&type=chunk)[113](index=113&type=chunk) - In April 2019, a registered direct offering sold 660,154 shares of common stock for gross proceeds of approximately **$5.0 million**[73](index=73&type=chunk)[111](index=111&type=chunk) - In January 2019, 641,991 shares of **Class X Convertible Preferred Stock** were converted into 229,283 shares of common stock[72](index=72&type=chunk) Stock-based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $87 | $536 | $203 | $860 | | General and administrative | $422 | $675 | $877 | $1,279 | | **Total** | **$509** | **$1,211** | **$1,080** | **$2,139** | [6. Subsequent Events](index=17&type=section&id=6.%20Subsequent%20Events) This note reports on equity sales conducted after the reporting period through the ATM Offering Program with Wainwright - In July 2019, the company sold an additional 358,815 shares of common stock through its **ATM** Offering Program with Wainwright, generating net proceeds of **$1.9 million**[77](index=77&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, liquidity, and capital resources, detailing the ongoing net losses, research and development focus, and financing activities, including the impact of recent accounting changes and future funding requirements [Overview](index=17&type=section&id=Overview) aTyr Pharma is a biotherapeutics company focused on novel immunological pathways, particularly tRNA synthetase biology, with its lead product candidate ATYR1923 in clinical trials for interstitial lung diseases. The company has consistently incurred net losses and relies on equity and debt financing - The company is a biotherapeutics company focused on the discovery and development of innovative medicines based on novel immunological pathways, specifically the extracellular functionality of **tRNA synthetases** and the **Resokine pathway**[80](index=80&type=chunk)[81](index=81&type=chunk) - **ATYR1923**, a fusion protein and selective modulator of **Neuropilin-2 (NRP2)**, is the clinical-stage product candidate, currently in a **Phase 1b/2a** proof-of-concept clinical trial for pulmonary sarcoidosis (an interstitial lung disease)[81](index=81&type=chunk) - A research collaboration and option agreement was entered with **CSL Behring** in March 2019 for the development of product candidates from up to four **tRNA synthetases**, with **CSL** funding R&D activities and potential option fees up to **$17 million**[82](index=82&type=chunk) - The company has incurred consolidated **net losses** of **$12.0 million** for the six months ended June 30, 2019, and **$21.1 million** for the six months ended June 30, 2018, with an **accumulated deficit** of **$310.7 million** as of June 30, 2019[87](index=87&type=chunk)[146](index=146&type=chunk) [Financial Operations Overview](index=18&type=section&id=Financial%20Operations%20Overview) This section details the company's organizational structure, the impact of adopting new lease accounting standards, its revenue recognition policies for collaboration agreements, and the primary components of its research and development and general and administrative expenses - The condensed consolidated financial statements include the accounts of aTyr Pharma, Inc. and its 98% majority-owned subsidiary in Hong Kong, **Pangu BioPharma Limited**[88](index=88&type=chunk) - The adoption of **ASU No. 2016-02 (Leases)** on January 1, 2019, resulted in the recognition of a right-of-use asset and a lease liability on the condensed consolidated balance sheets[89](index=89&type=chunk) - Revenue from collaboration agreements is recognized in accordance with **ASC 606 and ASC 808**, using a cost-based input method to measure proportional performance[93](index=93&type=chunk) - Research and development expenses primarily consist of salaries, preclinical and clinical development costs, manufacturing, **CRO** fees, and laboratory supplies, and are expected to increase with the advancement of the **ATYR1923** program[94](index=94&type=chunk)[96](index=96&type=chunk) - General and administrative expenses mainly include salaries, legal and patent services, insurance, occupancy costs, and information systems costs[98](index=98&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) The company reported a significant decrease in both research and development and general and administrative expenses for the three and six months ended June 30, 2019, compared to the prior year, primarily due to a workforce reduction and termination of a research collaboration Comparison of Results of Operations (in thousands) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :----- | | Research and development expenses | $3,314 | $6,484 | $(3,170) | | General and administrative expenses | $2,421 | $3,476 | $(1,055) | | Other income (expense), net | $(207) | $(452) | $245 | | Metric | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :----- | | Research and development expenses | $6,659 | $12,634 | $(5,975) | | General and administrative expenses | $4,953 | $7,546 | $(2,593) | | Other income (expense), net | $(467) | $(899) | $(432) | - The decrease in R&D expenses was primarily due to a **$1.5 million** (three months) / **$2.6 million** (six months) reduction in personnel costs from the May 2018 reduction in force, and a **$0.5 million** (three months) / **$1.0 million** (six months) decrease from the terminated research collaboration with **The Scripps Research Institute**[103](index=103&type=chunk)[106](index=106&type=chunk) - The decrease in G&A expenses was mainly attributed to an **$0.8 million** (three months) / **$1.9 million** (six months) reduction in personnel costs and a decrease in professional fees[104](index=104&type=chunk)[107](index=107&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) The company continues to incur losses and relies on existing cash and future capital raises through equity offerings, debt financings, or collaborations to fund its operations, particularly for advancing ATYR1923 and other R&D activities - As of June 30, 2019, the company had an **accumulated deficit** of **$310.7 million** and expects existing cash, cash equivalents, and available-for-sale investments of **$42.4 million** to be sufficient for one year[109](index=109&type=chunk) - Operations have been financed primarily through the sale of equity securities (**ATM** offerings, registered direct offering) and term loans[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) Summary of Net Cash Flow Activity (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(10,844) | $(19,764) | | Net cash (used in) provided by investing activities | $(1,064) | $18,576 | | Net cash provided by (used in) financing activities | $3,453 | $(631) | | Net decrease in cash | $(8,455) | $(1,819) | - Substantial additional funding will be required for ongoing activities, including clinical development of **ATYR1923**, other R&D, and potential commercialization efforts[119](index=119&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company assesses its exposure to market risks, including interest rate risk on investments and variable-rate debt, and foreign currency exchange risk from international operations, concluding that these risks do not currently have a material effect on its financial condition or results of operations - The company is exposed to interest rate risk on its **$42.4 million** in cash, cash equivalents, and available-for-sale investments, and its variable-rate Term Loans. A **100 basis point increase** in interest rates would not materially affect results of operations[124](index=124&type=chunk)[126](index=126&type=chunk) - **Foreign currency exchange risk** arises from expenses denominated in Pounds Sterling, Euro, Hong Kong dollar, and Australian dollar. While not hedged, fluctuations, including those related to Brexit, have not had a significant impact[127](index=127&type=chunk) - **Inflation has not had a material effect** on the company's results of operations or financial condition during the periods presented[128](index=128&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures, concluding they were effective as of June 30, 2019, and reported no significant changes in internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's **disclosure controls and procedures were effective** at the reasonable assurance level as of June 30, 2019[130](index=130&type=chunk) - **No significant changes in internal control over financial reporting** were identified during the three months ended June 30, 2019[131](index=131&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings and does not anticipate any existing claims to have a material adverse effect on its financial condition or operations - The company is not a party to any **material legal proceedings** at this time and does not believe any current claims would have a **material adverse effect** on its results of operations or financial condition[132](index=132&type=chunk) [Item 1A. Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) This section details various risks that could significantly impact the company's business, including those related to its financial condition, the discovery and development of product candidates, reliance on third parties, intellectual property, business operations, and the ownership of its common stock [Risks related to our financial condition and need for additional capital](index=25&type=section&id=Risks%20related%20to%20our%20financial%20condition%20and%20need%20for%20additional%20capital) The company faces significant financial risks due to its substantial accumulated deficit and ongoing losses, requiring continuous capital raises through equity or debt, which could lead to dilution or restrictive covenants, and may not be available on favorable terms - The company will need to raise substantial additional capital to fund its operations, including clinical trials, regulatory approvals, and commercialization efforts, and may need to seek funds sooner than planned[134](index=134&type=chunk)[135](index=135&type=chunk) - Failure to obtain timely funding could force the company to curtail, delay, or discontinue research and development programs or commercialization efforts[136](index=136&type=chunk) - Future equity or debt financings could dilute stockholders, increase fixed payment obligations, and impose restrictive covenants on business activities[137](index=137&type=chunk)[139](index=139&type=chunk) - The company has incurred **significant losses** since inception, with an **accumulated deficit** of **$310.7 million** as of June 30, 2019, and expects to continue incurring **net losses** for the foreseeable future[146](index=146&type=chunk)[148](index=148&type=chunk) - The company has never generated revenue from product sales and does not anticipate doing so for the foreseeable future, making profitability dependent on successful product development and commercialization[150](index=150&type=chunk)[152](index=152&type=chunk) [Risks related to the discovery, development and regulation of our product candidates based on tRNA synthetase biology](index=29&type=section&id=Risks%20related%20to%20the%20discovery%2C%20development%20and%20regulation%20of%20our%20product%20candidates%20based%20on%20tRNA%20synthetase%20biology) Developing novel tRNA synthetase-based therapeutics involves substantial risks, including potential delays or failures in clinical trials, difficulties in patient enrollment, the emergence of undesirable side effects, and complex manufacturing and regulatory challenges, all of which could impede commercialization - Clinical trials are expensive, time-consuming, and uncertain, with risks of delays, clinical holds, or failure to demonstrate safety and efficacy, which could delay or prevent regulatory approval[153](index=153&type=chunk)[154](index=154&type=chunk) - The novel therapeutic approach of **tRNA synthetase** and **NRP2** biology presents challenges in defining indications, obtaining regulatory approval from agencies with limited experience, and educating medical personnel[163](index=163&type=chunk)[164](index=164&type=chunk) - Difficulties in identifying, recruiting, enrolling, and retaining sufficient patients, especially for rare diseases like pulmonary sarcoidosis, could delay or terminate clinical trials[160](index=160&type=chunk)[161](index=161&type=chunk) - Product candidates may cause undesirable side effects (e.g., antibody development, infusion-related reactions), potentially leading to trial interruptions, more restrictive labeling, or denial of regulatory approval[172](index=172&type=chunk)[173](index=173&type=chunk) - Manufacturing biologics is complex and highly regulated, with reliance on **CDMOs** posing risks of stoppages, delays, product loss due to contamination or equipment failure, and challenges in scaling production[178](index=178&type=chunk)[181](index=181&type=chunk) - Regulatory approval is uncertain and may be subject to limitations on indications, conditions of approval, or costly post-marketing studies, and expedited designations (breakthrough, fast track) are not guaranteed[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) [Risks related to our reliance on third parties](index=36&type=section&id=Risks%20related%20to%20our%20reliance%20on%20third%20parties) The company's heavy reliance on third parties for manufacturing, clinical trials, and research introduces risks such as unsatisfactory performance, supply disruptions, and the potential for trade secret misappropriation or disclosure, which could significantly harm product development and commercialization - The company relies on third parties for product manufacturing, protocol development, research, and preclinical and clinical testing, reducing its direct control over these critical activities[193](index=193&type=chunk) - Reliance on contract development and manufacturing organizations (**CDMOs**) for **ATYR1923** carries risks including inability to negotiate favorable terms, termination of agreements, and disruptions to operations, potentially delaying clinical development or commercialization[195](index=195&type=chunk)[198](index=198&type=chunk) - Reliance on third-party **CROs** and clinical investigators means limited influence over their performance, and their failure to comply with **GCPs** or recruit sufficient patients could delay regulatory approval[199](index=199&type=chunk)[201](index=201&type=chunk) - Sharing trade secrets with third-party manufacturers, collaborators, and consultants increases the risk of competitors discovering proprietary information or unauthorized use/disclosure, impairing the company's competitive position[203](index=203&type=chunk)[204](index=204&type=chunk) [Risks related to our intellectual property](index=38&type=section&id=Risks%20related%20to%20our%20intellectual%20property) The company's competitive position is highly dependent on its ability to obtain, maintain, and protect intellectual property rights, which is challenging due to the complexity of patent law, potential for infringement claims, limitations of patent terms, and difficulties in enforcing rights globally - Obtaining and maintaining patent protection is uncertain due to complex legal and scientific questions, potential for invalidation, and the risk that patents may not adequately cover product candidates or prevent competitors[207](index=207&type=chunk)[208](index=208&type=chunk) - Reliance on trade secret protection is vulnerable to disclosure, independent development, or inadequate legal recourse, which could impair the company's competitive position[209](index=209&type=chunk) - The company faces risks of costly litigation from third-party claims of patent infringement, potentially leading to substantial damages, royalties, or the inability to commercialize product candidates[213](index=213&type=chunk)[214](index=214&type=chunk)[216](index=216&type=chunk) - Patent terms may be inadequate to protect product candidates for a sufficient period due to long development and regulatory review timelines, potentially leading to early competition from generics or biosimilars[217](index=217&type=chunk) - The company may not be able to obtain necessary licenses for third-party intellectual property on reasonable terms, or disputes may arise with licensors, potentially hindering product development and commercialization[218](index=218&type=chunk)[222](index=222&type=chunk)[224](index=224&type=chunk) - Protecting intellectual property rights globally is expensive and challenging, as foreign laws may offer less extensive protection, making it difficult to prevent infringement in certain countries[236](index=236&type=chunk)[237](index=237&type=chunk) - Changes in patent law, including recent legislative and judicial developments, could diminish the value of patents, increase prosecution costs, and weaken the ability to obtain and enforce new patents[233](index=233&type=chunk)[234](index=234&type=chunk) [Risks related to our business operations](index=44&type=section&id=Risks%20related%20to%20our%20business%20operations) Operational risks include the potential for misallocating resources, challenges in retaining key personnel, disruptions from internal restructuring, complexities of international operations, risks of employee misconduct, exposure to product liability claims, and vulnerabilities to system failures and cyber-attacks - Limited resources may lead to foregoing or delaying pursuit of potentially more profitable strategies or product candidates, impacting commercial potential[238](index=238&type=chunk) - The company's success is highly dependent on retaining key executive, scientific, and technical personnel, and competition for skilled individuals is intense[239](index=239&type=chunk) - Internal restructuring activities, such as the May 2018 workforce reduction, can cause disruptions, write-offs, and divert management attention, without guaranteed cost savings or efficiencies[240](index=240&type=chunk) - International operations (e.g., research in Hong Kong, clinical trials in Australia/Europe) expose the company to risks like differing regulatory requirements, reduced IP protection, economic instability, and foreign currency fluctuations[241](index=241&type=chunk) - The company is exposed to risks of fraud or misconduct by employees, principal investigators, consultants, and commercial partners, potentially leading to regulatory sanctions, reputational harm, or significant fines[243](index=243&type=chunk) - The use of product candidates in clinical trials and commercial sales exposes the company to product liability claims, which could result in substantial liability, costs, and negative impacts on regulatory approvals and reputation, with insurance coverage potentially being inadequate[244](index=244&type=chunk)[245](index=245&type=chunk) - Information technology systems are vulnerable to cyber-attacks, natural disasters, and other failures, risking data loss, operational interruption, reputational harm, and delays in product development[251](index=251&type=chunk)[252](index=252&type=chunk) - Compliance with federal and state healthcare fraud and abuse laws, as well as health information privacy and security laws (including **GDPR**), is critical, with non-compliance potentially leading to significant penalties and operational restructuring[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk) - Operating as a public company incurs significant legal, accounting, and compliance costs, and management must devote substantial time to new initiatives, potentially diverting resources from core business activities[256](index=256&type=chunk) - Unfavorable global economic conditions (e.g., Brexit) or natural disasters (e.g., earthquakes in San Diego) could adversely affect business operations, financial condition, and ability to raise capital[258](index=258&type=chunk)[259](index=259&type=chunk) [Risks related to the commercialization of our product candidates](index=48&type=section&id=Risks%20related%20to%20the%20commercialization%20of%20our%20product%20candidates) Commercialization of product candidates is subject to significant risks, including the inability to establish effective sales and marketing capabilities, secure commercial manufacturing, intense competition from other pharmaceutical companies, and uncertainties regarding market acceptance, insurance coverage, and reimbursement policies - The company lacks internal sales, marketing, and distribution infrastructure and must either build these capabilities (expensive, time-consuming) or partner with third parties, which may result in lower revenues or less control[260](index=260&type=chunk)[261](index=261&type=chunk) - Commercial manufacturing capabilities for product candidates have not been secured, and reliance on a limited number of third-party manufacturers poses risks of delays, technical issues, and supply disruptions[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk) - The biotechnology and pharmaceutical industries are intensely competitive, with larger, better-resourced competitors potentially developing more effective, safer, or cheaper therapies, or achieving earlier market penetration[266](index=266&type=chunk)[267](index=267&type=chunk) - Commercial success depends on market acceptance by physicians, patients, and third-party payors, which is uncertain for novel products and may require significant resources for education[268](index=268&type=chunk)[269](index=269&type=chunk) - Insurance coverage and reimbursement status for newly approved products are uncertain, and failure to obtain adequate coverage and profitable payment rates could limit marketability and revenue, especially with increasing cost-containment pressures globally[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk) [Risks related to the ownership of our common stock](index=50&type=section&id=Risks%20related%20to%20the%20ownership%20of%20our%20common%20stock) Ownership of the company's common stock carries risks including high market price volatility, significant control exerted by executive officers and principal stockholders, potential dilution from future equity sales, reduced attractiveness due to 'emerging growth company' status, and the risk of Nasdaq delisting - The market price of the common stock is **highly volatile** and subject to wide fluctuations due to factors such as clinical trial results, regulatory decisions, competition, and general market conditions[274](index=274&type=chunk)[275](index=275&type=chunk) - Executive officers, directors, and principal stockholders beneficially own approximately **45.5%** of the voting stock, enabling them to exert **significant control** over matters requiring stockholder approval[276](index=276&type=chunk) - As an '**emerging growth company**,' reduced reporting requirements may make the common stock less attractive to investors, potentially leading to a less active trading market and increased stock price volatility[277](index=277&type=chunk)[278](index=278&type=chunk) - Future sales and issuances of equity or debt securities, including through **ATM** offerings and registered direct offerings, could result in **significant dilution** to existing stockholders[280](index=280&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk) - Lack of or negative research coverage by securities analysts could cause the stock price to decline[285](index=285&type=chunk) - The company faces the risk of **Nasdaq delisting** if it fails to maintain minimum financial and listing requirements, such as the **$1.00** minimum bid price, which could adversely affect liquidity and stock price[287](index=287&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk) - The ability to use **net operating loss carryforwards (NOLs)** and other tax attributes may be limited by ownership changes under **Sections 382 and 383 of the Internal Revenue Code**[292](index=292&type=chunk) - The company does not intend to pay **no dividends** on its common stock, limiting stockholder returns to stock appreciation[293](index=293&type=chunk) - Provisions in the company's amended and restated certificate of incorporation and bylaws, along with **Delaware law**, could make it more difficult for a third party to acquire the company or remove current management[294](index=294&type=chunk)[295](index=295&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds for the period - **None**[297](index=297&type=chunk) [Item 3. Defaults Upon Senior Securities](index=55&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities for the period - **None**[298](index=298&type=chunk) [Item 4. Mine Safety Disclosures](index=55&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[299](index=299&type=chunk) [Item 5. Other Information](index=55&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - **None**[300](index=300&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including organizational documents, warrant agreements, sales agreements, and various certifications - The exhibits include the **Restated Certificate of Incorporation**, **Certificate of Amendment**, **Amended and Restated Bylaws**, various **Warrant to Purchase Stock agreements**, **Common Stock Sales Agreements**, and **certifications required by Rules 13a-14(a) or 15d-14(a) and 18 U.S.C. Section 1350**[302](index=302&type=chunk)[303](index=303&type=chunk) [SIGNATURES](index=57&type=section&id=SIGNATURES) The report is officially signed by the company's President and Chief Executive Officer, Sanjay S. Shukla, M.D., M.S., and Chief Financial Officer, Jill M. Broadfoot, on August 14, 2019 - The report was signed on **August 14, 2019**, by **Sanjay S. Shukla, M.D., M.S., President and Chief Executive Officer**, and **Jill M. Broadfoot, Chief Financial Officer**[307](index=307&type=chunk)[308](index=308&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION ATYR PHARMA, INC. (Exact name of registrant as specified in its charter) 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 March 31, 2019 or ☐ TRANSITION REPORT UNDER SECTION 13 OF 15(d) OR THE EXCHANGE ACT OF 1934 From the transition period from to Commission File Number 001-37378 Indicate by check mark whether the registrant is a large accelera ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 ☐ 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 ATYR PHARMA, INC. (Exact Name of Registrant as Specified in its Charter) (State or other jurisdiction of incorporation Delaware 20- ...