aTyr Pharma, Inc.(ATYR) - 2023 Q2 - Quarterly Report

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