PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company reported a consolidated net loss of $12.2 million for Q1 2022, increasing from $7.2 million in Q1 2021, driven by higher operating expenses, with cash and investments at $98.7 million and an accumulated deficit of $384.4 million [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets decreased to $104.8 million from $115.5 million, primarily due to reduced available-for-sale investments, while total stockholders' equity declined to $98.4 million reflecting the net loss Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 (unaudited) | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $8,324 | $2,336 | | Available-for-sale investments | $90,342 | $105,575 | | **Total Assets** | **$104,776** | **$115,537** | | **Liabilities & Equity** | | | | Total current liabilities | $6,269 | $6,013 | | Total stockholders' equity | $98,374 | $109,126 | | **Total Liabilities and Stockholders' Equity** | **$104,776** | **$115,537** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2022, the company reported a net loss of $12.2 million, or ($0.44) per share, compared to $7.2 million in Q1 2021, primarily due to a significant rise in operating expenses, especially research and development Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | Research and development | $8,896 | $4,516 | | General and administrative | $3,482 | $2,686 | | **Total operating expenses** | **$12,378** | **$7,202** | | **Loss from operations** | **($12,378)** | **($7,202)** | | **Net loss attributable to aTyr Pharma, Inc.** | **($12,153)** | **($7,151)** | | Net loss per share, basic and diluted | ($0.44) | ($0.51) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was $10.1 million for Q1 2022, offset by $14.6 million from investing activities and $1.5 million from financing, resulting in a $6.0 million net increase in cash and equivalents to $8.3 million Cash Flow Summary (in thousands) | Activity | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($10,119) | ($5,827) | | Net cash provided by (used in) investing activities | $14,626 | ($23,395) | | Net cash provided by financing activities | $1,481 | $24,857 | | **Net change in cash and cash equivalents** | **$5,988** | **($4,365)** | | **Cash and cash equivalents at end of period** | **$8,324** | **$12,587** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's biotherapeutics business, confirming **$98.7 million** in cash is sufficient for at least one year, outlining potential **$165.0 million** Kyorin milestones, and describing recent financing activities including an ATM offering program - The company believes its existing cash, cash equivalents, and available-for-sale investments of **$98.7 million** as of March 31, 2022, are sufficient to meet material cash requirements for at least one year from the filing date[25](index=25&type=chunk) - Under the Kyorin Agreement for efzofitimod in Japan, aTyr is eligible for up to an additional **$165.0 million** in development, regulatory, and sales milestones, plus tiered royalties[46](index=46&type=chunk)[49](index=49&type=chunk) - In Q1 2022, the company sold **260,455 shares** for net proceeds of approximately **$1.5 million** under its Prior ATM Offering Program[55](index=55&type=chunk) - In April 2022, a new ATM Offering Program was established with Jefferies for up to **$65.0 million**[62](index=62&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's focus on efzofitimod and ATYR2810, with efzofitimod's registrational trial planned for Q3 2022, noting increased R&D and G&A expenses in Q1 2022, and confirming a **$98.7 million** cash position sufficient for at least one year [Overview](index=15&type=section&id=Overview) aTyr Pharma focuses on its tRNA synthetase biology platform, advancing efzofitimod for fibrotic lung diseases with a registrational trial planned for Q3 2022, and ATYR2810 for oncology with a Phase 1 trial in H2 2022, while efzofitimod received orphan drug designation for sarcoidosis and systemic sclerosis - The company's primary focus is efzofitimod, a clinical-stage product candidate for fibrotic lung diseases, with a registrational trial planned to initiate in Q3 2022 following positive Phase 1b/2a results[67](index=67&type=chunk) - ATYR2810, an IND candidate for oncology from the NRP2 antibody program, is in preclinical development, with a Phase 1 clinical trial planned for the second half of 2022[70](index=70&type=chunk) - The FDA granted efzofitimod orphan drug designation for the treatment of sarcoidosis in January 2022 and for systemic sclerosis in April 2022[69](index=69&type=chunk) [Liquidity and Capital Resources](index=16&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2022, the company held **$98.7 million** in cash and investments, expected to fund operations for at least one year, with financing primarily from equity sales including an **$80.6 million** follow-on offering and a new **$65.0 million** ATM program - As of March 31, 2022, the company had cash, cash equivalents and available-for-sale investments of **$98.7 million**, sufficient to meet material cash requirements for at least one year[74](index=74&type=chunk) - In September 2021, a follow-on public offering generated net proceeds of approximately **$80.6 million**[76](index=76&type=chunk) - In April 2022, the company established a new at-the-market (ATM) offering program with Jefferies for up to **$65.0 million**, after terminating a prior ATM program under which it raised **$1.5 million** in Q1 2022[78](index=78&type=chunk)[79](index=79&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) In Q1 2022, R&D expenses increased by **$4.4 million** to **$8.9 million** due to higher manufacturing and preclinical development, while G&A expenses rose by **$0.8 million** to **$3.5 million** from increased compensation and professional fees Comparison of Operating Expenses (in thousands) | Expense Category | Three Months Ended Mar 31, 2022 | Three Months Ended Mar 31, 2021 | Increase/(Decrease) | | :--- | :--- | :--- | :--- | | Research and development | $8,896 | $4,516 | $4,380 | | General and administrative | $3,482 | $2,686 | $796 | - The **$4.4 million** increase in R&D expenses was mainly due to a **$3.2 million** rise in product development and manufacturing costs for efzofitimod and ATYR2810, and a **$0.7 million** increase in preclinical development[102](index=102&type=chunk) - The **$0.8 million** increase in G&A expenses was primarily due to a **$0.5 million** increase in compensation-related expenses and a **$0.3 million** increase in professional fees[103](index=103&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that this item is not applicable - Not Applicable[106](index=106&type=chunk) [Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting identified during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of the end of the quarter[108](index=108&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[109](index=109&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=21&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings and does not expect any current claims in the ordinary course of business to have a material adverse effect - The company is not a party to any material legal proceedings at this time[111](index=111&type=chunk) [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) The company outlines significant risks including its history of losses, need for capital, challenges in developing novel product candidates, reliance on third parties, intellectual property issues, and potential adverse effects from the COVID-19 pandemic and competition [Risks Related to Financial Condition and Need for Capital](index=22&type=section&id=Risks%20related%20to%20our%20financial%20condition%20and%20need%20for%20additional%20capital) The company has a history of significant losses, with an accumulated deficit of **$384.4 million**, and will require substantial additional capital to fund operations and clinical trials, which may lead to dilution and may never result in profitability - The company will need to raise additional capital to fund operations, and its cash of **$98.7 million** is projected to be sufficient for at least one year, but this may change[114](index=114&type=chunk) - The company is a pre-commercial entity with a history of significant losses, including a **$12.2 million** net loss for Q1 2022 and an accumulated deficit of **$384.4 million** as of March 31, 2022[119](index=119&type=chunk) [Risks Related to Discovery, Development, and Regulation](index=25&type=section&id=Risks%20related%20to%20the%20discovery%2C%20development%20and%20regulation%20of%20our%20product%20candidates) The company's novel product candidates face inherent risks including potential clinical trial delays, failure to demonstrate safety and efficacy, patient enrollment difficulties, manufacturing challenges for biologics, and regulatory hurdles due to the novel therapeutic approach - The company's product candidates represent a novel therapeutic approach, and there is a risk they may not result in commercially viable drugs due to unforeseen challenges in development, regulatory approval, and manufacturing[141](index=141&type=chunk) - There is a risk of substantial delays in clinical trials due to issues like patient enrollment for rare diseases, regulatory holds, and operational issues, some of which were previously caused by the COVID-19 pandemic[126](index=126&type=chunk)[137](index=137&type=chunk) - Manufacturing biologics like efzofitimod is complex and susceptible to contamination, equipment failure, and other issues, and the company relies on CDMOs and is currently transferring its manufacturing process to an additional CDMO, which carries risk[154](index=154&type=chunk)[159](index=159&type=chunk) [Risks Related to Reliance on Third Parties](index=33&type=section&id=Risks%20related%20to%20our%20reliance%20on%20third%20parties) The company's success is highly dependent on third parties, including its collaboration with Kyorin for efzofitimod in Japan, and reliance on CDMOs for manufacturing and CROs for clinical trials, where unsatisfactory performance could significantly delay development - The company depends on its collaboration with Kyorin for the development and commercialization of efzofitimod in Japan, with future milestone and royalty payments contingent on Kyorin's success[172](index=172&type=chunk) - The company relies on third-party CDMOs for all manufacturing and does not have its own internal manufacturing capabilities, currently relying on a single CDMO for ATYR2810 and transferring the process for efzofitimod to a second CDMO[177](index=177&type=chunk)[180](index=180&type=chunk) - The company relies on third-party CROs and clinical investigators to conduct its clinical trials, which reduces direct control over performance and compliance with regulations like Good Clinical Practices (GCPs)[182](index=182&type=chunk) [Risks Related to Intellectual Property](index=36&type=section&id=Risks%20related%20to%20our%20intellectual%20property) The company's success depends on obtaining and maintaining patent protection for its novel technologies, facing risks that patents may not issue, be challenged, or be insufficient, alongside the potential for third-party infringement claims and adverse changes in patent law - The company's success depends on obtaining and maintaining patent protection for its product candidates, but the patenting process is uncertain and expensive, and issued patents may be challenged or invalidated[187](index=187&type=chunk)[189](index=189&type=chunk) - The company may face claims that its products infringe on the patent rights of third parties, which could lead to costly litigation and potentially block commercialization[195](index=195&type=chunk) - The company relies on license agreements for certain intellectual property and could lose these rights if it fails to comply with its obligations under these agreements[203](index=203&type=chunk) [Risks Related to Business Operations](index=41&type=section&id=Risks%20related%20to%20our%20business%20operations) The company faces operational risks including adverse effects from the COVID-19 pandemic, dependence on retaining key personnel in a competitive industry, and exposure to stringent data privacy laws and cybersecurity threats that could lead to penalties and disruption - The business has been and could continue to be adversely affected by the COVID-19 pandemic, which has caused delays in clinical trials and may disrupt supply chains and employee resources[222](index=222&type=chunk)[223](index=223&type=chunk) - The company is highly dependent on its principal executive team and key scientific personnel, and faces intense competition for skilled employees in the biotechnology industry[230](index=230&type=chunk)[231](index=231&type=chunk) - The company is subject to complex data privacy and security laws (e.g., HIPAA, GDPR, CCPA) and faces risks from cyber-attacks, where a security breach could result in significant fines, litigation, and reputational harm[241](index=241&type=chunk)[293](index=293&type=chunk) [Risks Related to Commercialization](index=47&type=section&id=Risks%20related%20to%20the%20commercialization%20of%20our%20product%20candidates) Commercialization risks include the need to build sales infrastructure or rely on third parties, intense competition, and the uncertainty of market acceptance and adequate reimbursement from third-party payors subject to pricing pressure and healthcare reform - The company currently lacks sales, marketing, and distribution infrastructure and will need to build these capabilities or partner with third parties to commercialize any approved products[251](index=251&type=chunk) - The biotechnology industry is intensely competitive, and competitors may develop more effective or less costly therapies, or achieve regulatory approval sooner[256](index=256&type=chunk)[257](index=257&type=chunk) - Commercial success depends on obtaining adequate coverage and reimbursement from third-party payors like CMS and private insurers, which is uncertain and subject to significant pricing pressure and healthcare cost-containment initiatives[260](index=260&type=chunk)[263](index=263&type=chunk) [Risks Related to Common Stock Ownership](index=50&type=section&id=Risks%20related%20to%20the%20ownership%20of%20our%20common%20stock) The company's stock price is expected to remain highly volatile, with significant insider control, and future equity sales will cause dilution, while the company does not intend to pay dividends and its NOLs are subject to limitations - The market price of the common stock has been highly volatile, with a closing price range between **$2.17** and **$12.48** per share from January 2020 to May 2022[268](index=268&type=chunk)[269](index=269&type=chunk) - As of May 4, 2022, executive officers, directors, and 5% holders owned approximately **42.1%** of the voting stock, allowing them to exert significant influence over corporate matters[270](index=270&type=chunk) - Future sales of equity through existing agreements (Aspire Capital, Jefferies ATM) and potential future offerings will cause dilution to existing stockholders and could depress the stock price[272](index=272&type=chunk)[275](index=275&type=chunk)[278](index=278&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities during the period - None[305](index=305&type=chunk) [Other Information](index=56&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this item - None[308](index=308&type=chunk) [Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with the Form 10-Q, including corporate governance documents, material contracts, and certifications by the CEO and CFO - The exhibits include the company's 2022 Inducement Plan, forms of stock option agreements, and certifications from the Principal Executive Officer and Principal Financial Officer[311](index=311&type=chunk)[312](index=312&type=chunk)

Clinical Development - The lead therapeutic candidate, efzofitimod, demonstrated positive results in a Phase 1b/2a clinical trial involving 37 patients with pulmonary sarcoidosis, showing consistent dose response on key efficacy endpoints and improvements compared to placebo[20]. - The company plans to initiate a registrational trial for efzofitimod in the third quarter of 2022, targeting pulmonary sarcoidosis and other interstitial lung diseases (ILDs) such as chronic hypersensitivity pneumonitis (CHP) and connective tissue disease-related ILD (CTD-ILD)[30]. - The Phase 1b/2a clinical trial for efzofitimod included 37 patients with pulmonary sarcoidosis, demonstrating safety and tolerability across all doses[55][59]. - Efzofitimod demonstrated a well-tolerated safety profile in a Phase 1 clinical trial with 36 healthy volunteers, with no significant adverse events reported[62]. - The ongoing COVID-19 pandemic has caused delays in clinical trial enrollment and other research activities, impacting the company's operations[28]. - The company has faced delays in clinical trials, particularly with the Phase 1b/2a trial of efzofitimod due to operational issues related to the COVID-19 pandemic, impacting data evaluation[185]. - The company acknowledges that interim and preliminary data from clinical trials may change as more patient data become available, which could affect business prospects[192]. - The company has not yet commenced or completed any human clinical trials designed to demonstrate efficacy to the satisfaction of the FDA, which is critical for obtaining marketing approval[195]. - The company has not extensively studied efzofitimod's activity in patients with interstitial lung disease (ILD), raising concerns about its therapeutic relevance[208]. Product Candidates - Efzofitimod is designed to selectively modulate NRP2 to downregulate immune responses in inflammatory disease states, with preclinical models demonstrating its therapeutic potential[34]. - ATYR2810, a fully humanized monoclonal antibody targeting NRP2, is in preclinical development for aggressive cancers, with plans to initiate a Phase 1 clinical trial in the second half of 2022[23]. - Efzofitimod is a potential first-in-class immunomodulator targeting immune-mediated disorders, specifically pulmonary sarcoidosis[44]. - The primary target population for efzofitimod is interstitial lung disease (ILD), with a focus on progressive, immune-mediated forms[51]. - The company aims to expand applications of efzofitimod to additional immune-mediated diseases and advance ATYR2810 for cancer indications[217]. Financials and Funding - As of December 31, 2021, the company had cash, cash equivalents, and available-for-sale investments of approximately $107.9 million, expected to meet material cash requirements for at least one year[172]. - The company incurred consolidated net losses of $33.8 million, $16.2 million, and $23.8 million for the years ended December 31, 2021, 2020, and 2019, respectively, with an accumulated deficit of $372.3 million as of December 31, 2021[178]. - The company has not yet generated any revenues from product sales and does not anticipate doing so for the foreseeable future[182]. - The company may seek additional capital through equity or debt offerings, collaborations, or licensing arrangements to fund its operations[172]. - The company anticipates incurring significant costs associated with the commercialization of any approved product candidates, which may exceed expectations due to potential additional clinical trials required by regulatory agencies[184]. Regulatory and Compliance - Efzofitimod received orphan drug designation from the FDA in January 2022 for the treatment of sarcoidosis[22]. - The FDA regulates biologics under the Federal Food, Drug, and Cosmetic Act, requiring approval before marketing any new biologic or dosage form[119]. - The process for obtaining FDA approval involves substantial time and financial resources, with no guarantee of timely approval for product candidates[121]. - A Biologics License Application (BLA) must include all relevant data from preclinical studies and clinical trials, and must demonstrate the safety and effectiveness of the product[129]. - The FDA may condition BLA approval on the sponsor's agreement to conduct additional clinical trials post-approval, known as Phase 4 clinical trials[126]. - The company must comply with Good Clinical Practice (GCP) requirements during clinical trials, which include obtaining informed consent from all research subjects[123]. - The FDA's approval process includes inspections of manufacturing facilities to ensure compliance with current Good Manufacturing Practices (cGMP)[130]. - The company is subject to various regulatory compliance risks, including the U.S. Foreign Corrupt Practices Act and federal civil and criminal false claims laws[161][164]. Market and Competition - The biotechnology and pharmaceutical industries are highly competitive, with potential competition from companies with greater resources[89]. - The oncology market is highly competitive, with over 70 new drug approvals by the FDA since 2015 and more than 100 new treatments projected to be approved in the next five years[96]. - The U.S. government and third-party payors are increasingly scrutinizing pharmaceutical pricing, affecting reimbursement rates[151]. - The marketability of approved products may suffer if adequate coverage and reimbursement are not provided by payors[157]. Intellectual Property - The company has a patent portfolio for efzofitimod that includes over 220 issued patents and allowed patent applications, with expiration dates ranging from 2026 to 2034[102]. - The efzofitimod patent portfolio includes families directed to specific product forms and splice variants, with expected expiration between 2030 and 2038[111]. - The company is expanding its intellectual property estate by filing new patent applications for novel therapeutic compositions and methods[106]. - The company relies on trade secrets and careful monitoring to protect proprietary information that is not suitable for patent protection[103]. Challenges and Risks - The ongoing COVID-19 pandemic has broadly impacted clinical trials, leading to delays in patient enrollment and data availability, particularly for the efzofitimod trial[191]. - The company faces challenges in recruiting suitable patients for clinical trials due to the rarity of certain diseases, which could delay or halt development[198]. - The company faces risks associated with undesirable side effects that could delay or prevent regulatory approval of its product candidates[212]. - The company is developing efzofitimod and ATYR2810, facing challenges related to public perception of safety and adoption of new therapeutics[205].

Financial Position - As of September 30, 2021, the company had an accumulated deficit of $363.7 million and cash, cash equivalents, and available-for-sale investments of $116.4 million, expected to meet cash requirements for at least one year[76]. - The company has incurred losses and negative cash flows from operations since inception, with expectations to continue this trend for the foreseeable future[76]. - The company expects to finance cash needs through equity offerings, collaborations, and strategic partnerships until substantial product revenues are generated[89]. - The company faces risks related to funding requirements and may need to delay or limit product development if additional funds cannot be raised[90]. Cash Flow - The company reported net cash used in operating activities of $24.99 million for the nine months ended September 30, 2021, compared to $9.9 million for the same period in 2020[84]. - The company reported net cash used in investing activities of $(42.2) million for the nine months ended September 30, 2021, compared to $3.7 million for the same period in 2020[86]. - Net cash provided by financing activities for the nine months ended September 30, 2021 was $80.6 million from common stock issuance, compared to $18.8 million for the same period in 2020[87]. Clinical Development - The Phase 1b/2a clinical trial of ATYR1923 in patients with pulmonary sarcoidosis showed positive results in 37 patients, demonstrating safety and a consistent dose response on key efficacy endpoints[68]. - The company plans to initiate a registrational trial for ATYR1923 for pulmonary sarcoidosis next year based on positive clinical trial results[68]. - The company is advancing its discovery pipeline, including the lead IND candidate ATYR2810 for oncology, with plans to submit an IND application and initiate a Phase 1 clinical trial in 2022[72]. - The company anticipates increased research and development expenses in the current and future years, primarily for ATYR1923 and ATYR2810[97]. Revenue and Expenses - License and collaboration agreement revenues were $0 for the nine months ended September 30, 2021, a decrease of $8.4 million compared to $8.4 million in 2020[108]. - The company has not generated any revenues from product sales to date and expects significant commercialization expenses if marketing approval is obtained for product candidates[88]. - Research and development expenses increased to $17.3 million for the nine months ended September 30, 2021, up from $12.6 million in 2020, reflecting a $4.7 million rise in product development and manufacturing costs[109]. - General and administrative expenses rose to $8.1 million for the nine months ended September 30, 2021, compared to $6.8 million in 2020, an increase of $1.3 million[108]. - General and administrative expenses increased to $8.1 million for the nine months ended September 30, 2021, up from $6.8 million in 2020, representing a $1.3 million increase[110]. - Other income improved to $0.2 million for the nine months ended September 30, 2021, compared to a loss of $(0.3) million in 2020, primarily due to the repayment of term loans[111]. Collaborations and Agreements - In January 2020, the company entered into a collaboration agreement with Kyorin Pharmaceutical for the development of ATYR1923 in Japan, receiving an upfront payment of $8.0 million and a milestone payment of $2.0 million[71]. - The company received an $8.0 million upfront payment and a $2.0 million milestone payment from Kyorin under a collaboration agreement for ATYR1923[93]. Stock and Share Issuance - The company completed a follow-on public offering in September 2021, raising approximately $80.6 million from the sale of 10,781,250 shares at $8.00 per share[79]. - The company sold an aggregate of 3,000,000 shares at an average price of $5.09 per share for net proceeds of $15.2 million under a common stock purchase agreement with Aspire Capital[83]. Subsidiaries and Arrangements - The company has a 98% majority-owned subsidiary in Hong Kong, Pangu BioPharma, included in its consolidated financial statements[92]. - The company currently has no off-balance sheet arrangements during the periods presented[113]. - There are no applicable quantitative and qualitative disclosures about market risk[114].

Financial Position - The company reported an accumulated deficit of $356.1 million as of June 30, 2021, and expects to continue incurring net losses for the foreseeable future[72]. - As of June 30, 2021, the company had cash, cash equivalents, and available-for-sale investments totaling $44.1 million, sufficient to meet anticipated cash requirements for at least one year[72]. - The company reported net cash provided by financing activities of $26.1 million for the six months ended June 30, 2021, primarily from stock issuances[79]. Operating Activities - For the six months ended June 30, 2021, net cash used in operating activities was $(13.5) million, compared to $(4.3) million for the same period in 2020[79]. - The company has not generated any revenues from product sales to date and expects expenses to increase as it advances clinical development of ATYR1923 and other therapies[82]. Clinical Development - The company completed enrollment in a Phase 1b/2a clinical trial for ATYR1923, targeting pulmonary sarcoidosis, and expects to report data in mid-September 2021[65]. - A Phase 2 study of ATYR1923 in COVID-19 patients showed that a single IV dose was generally safe and well-tolerated, with a signal of activity in the 3.0 mg/kg cohort[66]. - The company is advancing its discovery pipeline, including the lead IND candidate ATYR2810 for oncology, which is in preclinical development[68]. - The company has faced delays in clinical trials due to the COVID-19 pandemic, impacting the timelines and costs of ongoing studies[92]. Revenue and Expenses - For the three months ended June 30, 2021, license and collaboration agreement revenues were $0, a decrease of $189,000 compared to $189,000 in the same period of 2020[97]. - For the six months ended June 30, 2021, license and collaboration agreement revenues were $0, a decrease of $8.3 million compared to $8.3 million in the same period of 2020[102]. - Research and development expenses increased to $7.7 million for the three months ended June 30, 2021, up from $4.4 million in 2020, primarily due to a $3.5 million increase in manufacturing costs for ATYR1923[99]. - Research and development expenses for the six months ended June 30, 2021, were $12.2 million, an increase of $4.2 million from $8.0 million in 2020, driven by a $3.8 million increase in manufacturing costs for ATYR1923[103]. - General and administrative expenses rose to $2.7 million for the three months ended June 30, 2021, compared to $2.1 million in 2020, mainly due to a $0.4 million increase in payroll-related expenses[100]. - General and administrative expenses for the six months ended June 30, 2021, were $5.5 million, up from $4.7 million in 2020, primarily due to a $0.5 million increase in payroll-related expenses[104]. - The company anticipates an increase in research and development expenses in the current and future years, primarily related to the clinical development of ATYR1923 and ATYR2810[91]. Collaborations and Agreements - The company received an $8.0 million upfront payment and a $2.0 million milestone payment from Kyorin Pharmaceutical for the development of ATYR1923 in Japan, with potential additional payments of up to $165.0 million[67]. - The company received an $8.0 million upfront payment and a $2.0 million milestone payment from Kyorin, with potential additional payments of up to $165.0 million upon achieving certain milestones[86]. - The company has entered into a Capital on Demand Sales Agreement with JonesTrading for an ATM Offering Program with an aggregate offering price of up to $25.0 million[78]. Off-Balance Sheet Arrangements - The company has no off-balance sheet arrangements as defined by SEC regulations[107].

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and related disclosures [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and detailed notes for the periods presented [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$55.1 million** by March 2021, driven by investments, with equity rising to **$49.5 million** | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Total assets | $55,128 | $38,726 | +$16,402 | | Cash and cash equivalents | $12,587 | $16,952 | -$4,365 | | Available-for-sale investments | $38,050 | $14,737 | +$23,313 | | Total current liabilities | $4,451 | $5,864 | -$1,413 | | Total stockholders' equity | $49,532 | $31,484 | +$18,048 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a **$7.2 million net loss** in Q1 2021, a shift from net income, due to absent collaboration revenue and increased R&D | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | Change (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | License and collaboration agreement revenues | $0 | $8,065 | -$8,065 | | Research and development expenses | $4,516 | $3,616 | +$900 | | General and administrative expenses | $2,686 | $2,590 | +$96 | | Consolidated net income (loss) | $(7,155) | $1,752 | -$8,907 | | Basic, net income (loss) per share | $(0.51) | $0.25 | -$0.76 | | Shares used in computing basic net income (loss) per share | 14,103,783 | 6,881,791 | +7,221,992 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company reported a **$7.2 million comprehensive loss** in Q1 2021, reflecting net loss and unrealized investment losses | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | Change (in thousands) | | :---------------------------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | | Consolidated net income (loss) | $(7,155) | $1,752 | -$8,907 | | Change in unrealized loss on available-for-sale investments, net of tax | $(14) | $(13) | -$1 | | Comprehensive income (loss) | $(7,169) | $1,739 | -$8,908 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased to **$49.5 million** by March 2021, primarily due to **$24.8 million** from stock issuances | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Total Stockholders' Equity | $49,532 | $31,484 | +$18,048 | | Common Stock Shares Outstanding | 16,011,385 | 11,018,954 | +4,992,431 | | Additional Paid-In Capital | $395,422 | $370,210 | +$25,212 | | Accumulated Deficit | $(345,679) | $(338,528) | -$7,151 | - Issuance of common stock from at-the-market offerings, net of offering costs, contributed **$9.6 million in proceeds**[19](index=19&type=chunk) - Issuance of common stock from committed purchase agreement, net of offering costs, contributed **$15.2 million in proceeds**[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash and equivalents decreased by **$4.4 million** in Q1 2021, driven by investing and a shift to cash used in operations | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | Change (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Net cash provided by (used in) operating activities | $(5,827) | $2,058 | -$7,885 | | Net cash provided by (used in) investing activities | $(23,395) | $11,406 | -$34,801 | | Net cash provided by financing activities | $24,857 | $16,779 | +$8,078 | | Net change in cash and cash equivalents | $(4,365) | $30,243 | -$34,608 | | Cash and cash equivalents at end of period | $12,587 | $39,453 | -$26,866 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide essential context to financial statements, detailing accounting policies, agreements, and equity activities [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 section details the company's business, accounting policies, and the impact of COVID-19 on operations - The company is focused on the discovery and development of innovative medicines based on novel biological pathways, specifically extracellular functionality and signaling pathways of tRNA synthetases[24](index=24&type=chunk) - The company incurred a condensed consolidated **net loss of $7.2 million** for the three months ended March 31, 2021, and had an **accumulated deficit of $345.7 million** as of March 31, 2021[28](index=28&type=chunk) - Existing cash, cash equivalents, and available-for-sale investments of **$50.6 million** as of March 31, 2021, are believed to be **sufficient for at least one year** from the 10-Q filing date[28](index=28&type=chunk) - The COVID-19 pandemic has delayed enrollment in the Phase 1b/2a clinical trial for pulmonary sarcoidosis, led to patient discontinuations, temporary facility closures, travel restrictions, and R&D delays[27](index=27&type=chunk) - The company adopted ASU No. 2019-12, Income Taxes (Topic 740), on January 1, 2021, which did not have a **material effect** on its financial position or results of operations[40](index=40&type=chunk) [2. Fair Value Measurements](index=10&type=section&id=2.%20Fair%20Value%20Measurements) This section details the company's financial assets measured at fair value, categorized by valuation inputs | Asset Category | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Cash equivalents (Level 1) | $11,958 | $13,708 | | Available-for-sale investments (Level 2): | | | | Asset-backed securities | $1,008 | $2,219 | | Commercial paper | $18,183 | $5,494 | | Corporate debt securities | $18,859 | $7,024 | | Total available-for-sale investments | $38,050 | $14,737 | | Total assets measured at fair value | $50,008 | $28,445 | - As of March 31, 2021, 15 out of 25 available-for-sale investments were in gross unrealized loss positions, with all having maturity dates of less than two years[47](index=47&type=chunk) [3. License, Collaboration and Other Agreements](index=12&type=section&id=3.%20License%2C%20Collaboration%20and%20Other%20Agreements) This section outlines key license and collaboration agreements, including revenue recognition and grants - In January 2020, the company entered into a collaboration and license agreement with Kyorin for ATYR1923 in Japan, receiving an **$8.0 million upfront payment** and a **$2.0 million milestone payment** in January 2021[48](index=48&type=chunk)[50](index=50&type=chunk) | Revenue Type | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | License and collaboration agreement revenues | $0 | $7,900 | - Pangu BioPharma, a subsidiary, received a grant of **approximately $750,000** with HKUST for a two-year project to build a high-throughput platform for bi-specific antibodies, with aTyr contributing **50% of the project cost**[53](index=53&type=chunk) [4. Debt, Commitments and Contingencies](index=14&type=section&id=4.%20Debt%2C%20Commitments%20and%20Contingencies) This section details the company's lease obligations and other contractual commitments | Lease Payments | Amount (in thousands) | | :------------------------------------ | :----------------------------- | | 2021 | $776 | | 2022 | $1,062 | | 2023 | $404 | | Less: Amount representing interest | $(207) | | Present value of lease payments | $2,035 | | Less: Current portion of operating lease liability | $(890) | | Long-term operating lease liability, net of current portion | $1,145 | - As of March 31, 2021, the **weighted-average remaining lease term was 2.2 years** and the **weighted-average discount rate was 9.6%**[55](index=55&type=chunk) [5. Stockholders' Equity](index=14&type=section&id=5.%20Stockholders'%20Equity) This section details changes in stockholders' equity, including capital raising activities and stock-based compensation - Sold 1,988,254 shares of common stock for **net proceeds of $9.6 million** under the ATM Offering Program with Wainwright, which terminated in March 2021[56](index=56&type=chunk) - Sold 3,000,000 shares of common stock for **net proceeds of $15.2 million** under a Purchase Agreement with Aspire Capital[60](index=60&type=chunk) - Entered into a **new $25.0 million ATM Offering Program** with JonesTrading in March 2021, with no shares issued during the quarter[57](index=57&type=chunk)[58](index=58&type=chunk) | Metric | March 31, 2021 (in thousands) | March 31, 2020 (in thousands) | Change (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Stock-based compensation expense | $360 | $423 | -$63 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operations, strategic focus, clinical programs, liquidity, and capital [Overview](index=16&type=section&id=Overview) aTyr Pharma focuses on novel biotherapeutics, with lead candidate ATYR1923 for inflammatory lung diseases and ATYR2810 for oncology - aTyr Pharma is a biotherapeutics company focused on the discovery and development of innovative medicines based on novel biological pathways, specifically the extracellular functionality and signaling pathways of tRNA synthetases and their extracellular targets like neuropilin-2 (NRP2)[67](index=67&type=chunk) - Lead clinical product candidate, ATYR1923, is a selective modulator of NRP2 being developed for severe inflammatory lung diseases (ILD), including pulmonary sarcoidosis, and showed positive safety data in a Phase 2 study for COVID-19 related severe respiratory complications[68](index=68&type=chunk)[69](index=69&type=chunk) - ATYR2810, a fully humanized monoclonal antibody targeting NRP2, is in preclinical development for aggressive cancers[71](index=71&type=chunk) - New discovery programs for Alanyl-tRNA synthetase (AARS) and Aspartyl-tRNA synthetase (DARS) in immunology, fibrosis, and cancer were announced in February 2021[73](index=73&type=chunk) - The COVID-19 pandemic has delayed enrollment in the Phase 1b/2a clinical trial for pulmonary sarcoidosis, led to patient discontinuations, temporary facility closures, travel restrictions, and R&D delays[74](index=74&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) The company has an **accumulated deficit of $345.7 million**, with **$50.6 million** in cash, relying on equity sales for funding - **Accumulated deficit of $345.7 million** as of March 31, 2021, with expected continued net losses[75](index=75&type=chunk) - Cash, cash equivalents, and available-for-sale investments totaled **$50.6 million** as of March 31, 2021, **sufficient for at least one year** of anticipated cash requirements[75](index=75&type=chunk) - Primary funding sources include equity securities sales, convertible debt, venture debt, term loans, and license/collaboration agreement revenues[76](index=76&type=chunk) | Cash Flow Activity | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Net cash provided by (used in) operating activities | $(5,827) | $2,058 | | Net cash provided by (used in) investing activities | $(23,395) | $11,406 | | Net cash provided by financing activities | $24,857 | $16,779 | - Future funding requirements are uncertain and depend on clinical trial progress, regulatory approvals, manufacturing, and commercialization efforts, with plans to seek additional capital through equity, grants, collaborations, or debt[85](index=85&type=chunk)[86](index=86&type=chunk) [Financial Operations Overview](index=20&type=section&id=Financial%20Operations%20Overview) Financial operations show no Q1 2021 collaboration revenue, increased R&D, and consistent G&A expenses - **No license and collaboration agreement revenue was recognized** for the three months ended March 31, 2021, compared to **$7.9 million in the prior year**, following the upfront payment and milestone from the Kyorin agreement[92](index=92&type=chunk)[100](index=100&type=chunk) | Expense Category | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | Change (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Research and development | $4,516 | $3,616 | +$900 | | General and administrative | $2,686 | $2,590 | +$96 | - The increase in R&D expenses was primarily due to **$0.4 million higher manufacturing-related costs for ATYR1923** and **$0.4 million for ATYR2810 R&D**[101](index=101&type=chunk) - Critical accounting policies and estimates have **not materially changed** from those disclosed in the 2020 Annual Report[99](index=99&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Q1 2021 saw no collaboration revenue, increased R&D, stable G&A, and improved other income due to debt repayment | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | Increase / (Decrease) (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | License and collaboration agreement revenues | $0 | $8,065 | $(8,065) | | Research and development expenses | $4,516 | $3,616 | $900 | | General and administrative expenses | $2,686 | $2,590 | $96 | | Other income (expense), net | $47 | $(107) | $(154) | - The increase in R&D expenses was primarily due to **$0.4 million higher manufacturing related costs for ATYR1923** and **$0.4 million of research and development expenses related to ATYR2810**[101](index=101&type=chunk) - The change in other income (expense), net, was primarily a result of term loans which were paid in full in November 2020[102](index=102&type=chunk) [Recent Accounting Pronouncements](index=22&type=section&id=Recent%20Accounting%20Pronouncements) The company refers to Note 1 for details on recently issued accounting pronouncements - Refer to Note 1 for details on recent accounting pronouncements[103](index=103&type=chunk) [Off-Balance Sheet Arrangements](index=22&type=section&id=Off-Balance%20Sheet%20Arrangements) The company did not have any off-balance sheet arrangements during the periods presented - The company did not have any **off-balance sheet arrangements** during the periods presented[104](index=104&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section indicates **no material quantitative or qualitative disclosures** about market risk - The company has **no material quantitative or qualitative disclosures about market risk**[105](index=105&type=chunk) [Item 4. Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no significant changes in internal control - Disclosure controls and procedures were evaluated as **effective at the reasonable assurance level** as of March 31, 2021[107](index=107&type=chunk) - **No significant changes in internal control over financial reporting occurred** during the three months ended March 31, 2021[108](index=108&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, and other required disclosures [Item 1. Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) The company is **not a party to any material legal proceedings** that would adversely affect its operations - The company is **not a party to any material legal proceedings** at this time[109](index=109&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant investment risks, including financial condition, product development, and IP [Summary of Risks Associated with Our Business](index=23&type=section&id=Summary%20of%20Risks%20Associated%20with%20Our%20Business) Investing involves **substantial risks**, including capital needs, ongoing losses, clinical trial failures, and COVID-19 impacts - **Key risks include the need for additional capital, significant ongoing losses, potential delays or failures in clinical trials, challenges in commercializing novel therapeutic approaches, undesirable side effects, reliance on third-party collaborations, intellectual property protection issues, and the adverse effects of the COVID-19 pandemic**[112](index=112&type=chunk) [Risks related to our financial condition and need for additional capital](index=23&type=section&id=Risks%20related%20to%20our%20financial%20condition%20and%20need%20for%20additional%20capital) The company needs substantial additional capital, faces ongoing losses, and future equity financing will dilute shareholders - The company **needs to raise additional capital or enter strategic partnerships to fund operations**, as **current cash ($50.6 million as of March 31, 2021) is sufficient for only about one year**[113](index=113&type=chunk) - **Failure to obtain timely funding could lead to curtailment, delay, or discontinuation of research/development programs or commercialization efforts**[115](index=115&type=chunk) - The company has **incurred net losses since its 2005 inception**, including a **$7.2 million net loss** for Q1 2021, and has an **accumulated deficit of $345.7 million** as of March 31, 2021[120](index=120&type=chunk) - The company **expects to continue incurring significant expenses and operating losses for the foreseeable future**, as it has **not generated any revenue from product sales**[122](index=122&type=chunk)[124](index=124&type=chunk) [Risks related to the discovery, development and regulation of our product candidates](index=25&type=section&id=Risks%20related%20to%20the%20discovery%2C%20development%20and%20regulation%20of%20our%20product%20candidates) Clinical trials face risks of delays, failures, and patient enrollment challenges, with novel approaches being unproven and potential side effects - Clinical trials are **expensive, time-consuming, often delayed, and uncertain**, with **risks of failure at any stage**, potentially preventing or delaying regulatory approval[126](index=126&type=chunk) - **Patient enrollment in clinical trials, especially for rare diseases like pulmonary sarcoidosis, is challenging and can be further impacted by factors like the COVID-19 pandemic, leading to delays or discontinuations**[138](index=138&type=chunk)[139](index=139&type=chunk) - The company's **novel therapeutic approaches based on extracellular tRNA synthetase and NRP2 biology are unproven**, posing challenges in defining indications, obtaining regulatory approval, and ensuring safety and efficacy[141](index=141&type=chunk)[142](index=142&type=chunk) - **Undesirable side effects or safety issues**, such as antibody development or infusion-related reactions, could **delay or prevent regulatory approval or limit commercialization**[148](index=148&type=chunk)[149](index=149&type=chunk) - The **FDA may not accept data from clinical trials conducted outside the United States**, potentially delaying development plans[146](index=146&type=chunk) [Risks related to our reliance on third parties](index=34&type=section&id=Risks%20related%20to%20our%20reliance%20on%20third%20parties) Reliance on third-party collaborators, CDMOs, and CROs introduces risks of non-performance, supply disruptions, and loss of control - The company's revenue depends on collaborators' performance (e.g., Kyorin for ATYR1923 in Japan), over which it has **limited control**, and agreements can be terminated[171](index=171&type=chunk)[173](index=173&type=chunk) - **Reliance on third-party CDMOs and CROs for manufacturing and clinical testing introduces risks such as inability to negotiate favorable terms, reduced control, termination of agreements, and disruptions to operations**[174](index=174&type=chunk)[176](index=176&type=chunk)[179](index=179&type=chunk) - **Manufacturing biologics is complex and susceptible to product loss, contamination, and equipment failure**, and processes may not be adaptable across different product candidates[157](index=157&type=chunk) - Sharing trade secrets with third parties increases the **risk of disclosure or misappropriation**, potentially impairing competitive position[183](index=183&type=chunk)[184](index=184&type=chunk) [Risks related to our intellectual property](index=38&type=section&id=Risks%20related%20to%20our%20intellectual%20property) Success depends on robust, yet uncertain, patent and IP protection, facing risks of infringement claims and trade secret disclosure - **Obtaining and maintaining patent protection is expensive, time-consuming, and uncertain**, with **risks that patent applications may not issue, or issued patents may be challenged, narrowed, or invalidated**[185](index=185&type=chunk)[187](index=187&type=chunk) - The **limited lifespan of patents means protection may expire before or shortly after product commercialization**, potentially leading to competition from generics or biosimilars[198](index=198&type=chunk) - **Reliance on trade secrets for non-patentable know-how carries risks of disclosure, misappropriation, or independent discovery by competitors**[189](index=189&type=chunk)[190](index=190&type=chunk) - The company faces **potential claims of infringement from third parties, which could lead to costly litigation, substantial damages, or the need to obtain licenses on unfavorable terms or at all**[194](index=194&type=chunk)[197](index=197&type=chunk) - **Changes in patent law, such as the Leahy-Smith America Invents Act and recent Supreme Court rulings, could diminish the value of patents and increase uncertainties and costs**[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) [Risks related to our business operations](index=42&type=section&id=Risks%20related%20to%20our%20business%20operations) Limited resources, COVID-19 impacts, personnel retention, international operations, and compliance risks affect business - **Limited resources may lead to foregoing more profitable strategies or product candidates**, impacting business success[219](index=219&type=chunk)[220](index=220&type=chunk) - The **COVID-19 pandemic continues to cause significant disruptions, including delays in clinical trials, supply chain issues, and challenges in raising capital**[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - Future success is **highly dependent on attracting and retaining key employees, consultants, and advisors in a competitive industry with a shortage of skilled personnel**[228](index=228&type=chunk)[229](index=229&type=chunk) - International operations (e.g., Hong Kong subsidiary, international clinical trials) expose the company to risks like **differing regulatory requirements, reduced intellectual property protection, and economic instability**[232](index=232&type=chunk)[233](index=233&type=chunk) - The company is exposed to **risks of fraud or misconduct by employees, investigators, consultants, and partners, including non-compliance with regulatory standards and healthcare fraud/abuse laws**[234](index=234&type=chunk) - **Product liability claims**, even if successfully defended, could result in **substantial costs, reputational harm, and delays** in regulatory approvals or commercialization[235](index=235&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk) - **Non-compliance with stringent and evolving data privacy and security laws** (e.g., GDPR, CCPA) could lead to **government enforcement actions, fines, and material adverse impacts** on the business[239](index=239&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk)[245](index=245&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) Commercialization faces risks from lack of infrastructure, manufacturing, intense competition, and uncertain market acceptance/reimbursement - The company **lacks sales, marketing, and distribution infrastructure** and faces risks in building its own or relying on third parties, potentially leading to **high costs, delays, or lower profitability**[249](index=249&type=chunk)[250](index=250&type=chunk) - The company has **not secured commercial manufacturing capabilities** and relies on third-party CDMOs, posing **risks to full-scale production, process validation, and supply continuity**[251](index=251&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk) - The biotechnology and pharmaceutical industries are **intensely competitive**, with larger competitors possessing **greater resources**, potentially developing **more effective or cheaper therapies**, or achieving **earlier market penetration**[254](index=254&type=chunk)[255](index=255&type=chunk) - Commercial success depends on **market acceptance by physicians, patients, and third-party payors**, which is **uncertain and requires significant resources for education**[256](index=256&type=chunk)[257](index=257&type=chunk) - **Obtaining adequate insurance coverage and reimbursement is crucial but uncertain**, with significant delays and varying policies among payors[258](index=258&type=chunk) - International sales are subject to **governmental price controls and cost-containment initiatives**, potentially leading to **lower revenues and profits**[259](index=259&type=chunk)[260](index=260&type=chunk) - **Heightened governmental scrutiny on pharmaceutical pricing and healthcare reform measures** (e.g., ACA, executive orders) create **pricing pressures and uncertainty** for future product commercialization[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk) [Risks related to the ownership of our common stock](index=53&type=section&id=Risks%20related%20to%20the%20ownership%20of%20our%20common%20stock) Common stock price is volatile, influenced by clinical results and dilution from equity sales, with no dividends planned - The **market price of common stock is highly volatile**, influenced by factors such as clinical trial results, regulatory decisions, competition, and macroeconomic conditions[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) - Executive officers, directors, and 5% holders collectively own **approximately 29.1% of voting stock**, enabling them to exert **significant control** over company matters[267](index=267&type=chunk) - Future sales and issuances of equity securities (e.g., remaining **$4.8 million** under Aspire Capital Purchase Agreement, **$25.0 million** ATM Offering Program) will **dilute existing stockholders and could depress the stock price**[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk) - The company has **substantial net operating losses (NOLs)** that may be subject to **limitations** (e.g., Section 382 of the Code, state tax limits) in offsetting future taxable income, potentially **increasing future tax liability**[274](index=274&type=chunk)[275](index=275&type=chunk)[276](index=276&type=chunk) - The company does **not intend to pay cash dividends on common stock**, meaning stockholder returns will be **limited to stock appreciation**[277](index=277&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk) [General Risk Factors](index=57&type=section&id=General%20Risk%20Factors) General risks include environmental compliance, cyber-attacks, public company costs, anti-corruption, and litigation exposure - **Non-compliance with environmental, health, and safety laws could lead to fines, penalties, or significant costs**[285](index=285&type=chunk)[286](index=286&type=chunk) - **System failures, cyber-attacks, and security breaches** (including data loss, unauthorized access) pose significant risks to proprietary and sensitive information, potentially causing **operational disruptions, reputational harm, and increased costs**[287](index=287&type=chunk)[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk) - Operating as a public company incurs **significant legal, accounting, and compliance costs**, requiring **substantial management time**[297](index=297&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**[293](index=293&type=chunk) - The **stock price can be affected by securities analysts' research and reports**, and the company is exposed to the risk of securities class action litigation[298](index=298&type=chunk)[299](index=299&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) **No unregistered sales of equity securities or use of proceeds were reported** - **No unregistered sales of equity securities or use of proceeds were reported**[301](index=301&type=chunk) [Item 3. Defaults Upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) **No defaults upon senior securities were reported** - **No defaults upon senior securities were reported**[302](index=302&type=chunk) [Item 4. Mine Safety Disclosures](index=60&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is **not applicable** to the company - **Mine Safety Disclosures are not applicable to the company**[303](index=303&type=chunk) [Item 5. Other Information](index=60&type=section&id=Item%205.%20Other%20Information) **No other information was reported** - **No other information was reported**[304](index=304&type=chunk) [Item 6. Exhibits](index=61&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the 10-Q report, including organizational documents and certifications - The **exhibits include restated certificates of incorporation, amended bylaws, specimen common stock certificates, warrants, employment agreements, sales agreements, equity incentive plans, code of business conduct and ethics, and certifications** (e.g., Rule 13a-14(a), 18 U.S.C. Section 1350)[306](index=306&type=chunk)[307](index=307&type=chunk) SIGNATURES The report is formally signed by the company's President, CEO, and Chief Financial Officer - The report was signed by Sanjay S. Shukla, M.D., M.S., President and Chief Executive Officer, and Jill M. Broadfoot, Chief Financial Officer, on May 14, 2021[310](index=310&type=chunk)[311](index=311&type=chunk)

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 ...