aTYR PHARMA INC Q1 FY2021 Earnings Call

Good afternoon, ladies and gentlemen, and welcome to the aTyr Pharma First Quarter 2021 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference is being recorded for replay purposes. It is now my pleasure to hand the conference call over to Ashlee Dunston, aTyr's Director of Investor Relations and Corporate Communications. Ms. Dunston, you may begin.

Thank you, operator, and good afternoon everyone. Thank you for joining us today to discuss aTyr's first quarter 2021 operating results and corporate update. We are joined today by Dr. Sanjay Shukla, our President and CEO; Ms. Jill Broadfoot, our CFO; and Leslie Nangle, Vice President of Research. On the call, Sanjay will provide an update on our corporate strategy, including our clinical program for ATYR1923; Leslie will provide an update on our research and discovery programs in neuropilin-2, including our pre-clinical program for ATYR2810 and our bi-specific antibody program with our subsidiary, Pangu BioPharma. Jill will review the financial results and our current financial positioning before handing it back to Sanjay to open the call up for any questions. Before we begin, I would like to remind everyone that except for statements of historical facts, the statements made by management and responses to questions on this conference call are forward-looking statements under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Please see the forward-looking statement disclaimer in the company's press release issued this afternoon as well as the risk factors in the company's SEC filings and included in our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made, as facts and circumstances underlying these forward-looking statements may change. Except as required by law, aTyr Pharma disclaims any obligation to update these forward-looking statements to reflect future information, events, or circumstances. I will now turn the call over to Sanjay.

Thank you, Ashlee. Good afternoon, everyone, and thank you for joining us for our first quarter 2021 results conference call. 2021 is shaping up to be an impactful year for the company. During the first quarter, we made meaningful progress with our clinical, pre-clinical, and research and discovery programs. We remain focused on advancing our lead therapeutic candidate ATYR1923, or 1923. With enrollment completed in our Phase 1b/2a clinical trial in pulmonary sarcoidosis, our interstitial lung disease or ILD indication, we are tracking towards a readout from this important proof-of-concept study. Having gained key mechanistic insights regarding 1923 anti-inflammatory effects in patients from data obtained from our Phase 2 clinical trial in COVID-19 with severe respiratory complications, we look forward to the readout expected in the third quarter of this year. Furthermore, we generated additional ATYR2810, or 2810, our anti-neuropilin-2 or NRP2 antibody in pre-clinical development for cancer. As we begin, let me summarize a few additional highlights since we last spoke in March. We appointed pulmonary sarcoidosis advocate Andrea Wilson, Co-Founder and former President and member of the Board of Directors of the Foundation for Sarcoidosis Research, or FSR, as a patient advisor to the company. In collaboration with the FSR, we're participating in a Virtual Town Hall on Steroids and Sarcoidosis to discuss the burden of steroids and the need for new therapeutic options. Details have been posted related to the annual meeting of the American Association for Cancer Research on pre-clinical data for 2810 in models of triple negative breast cancer and non-small cell lung cancer. We entered into an agreement with Lonza, a leading contract development and manufacturing organization, for the manufacture of 2810 to support the progression of 2810 to clinical stage development. Pangu BioPharma, or Pangu, our Hong Kong subsidiary, together with the Hong Kong University of Science and Technology, achieved a milestone for the first year of a two-year project funded in part by a grant from the Hong Kong government Innovation and Technology Commission to develop a high throughput platform for the development of bi-specific antibodies targeting NRP2. And finally, we promoted Dr. Leslie Nangle to Vice President of Research. Dr. Nangle will serve as a member of our executive leadership team, managing research and scientific operations. We're highly encouraged by what we've accomplished this year thus far. I look forward to building upon our Hong Kong pre-clinical programs and discovery pipeline from our novel biology platform forward this year. Let's begin with our clinical program for 1923. We're developing 1923 as a potential treatment for severe inflammatory lung disease. 1923 is a potential first-in-class immunomodulator that downregulates aberrant immune responses in inflammatory disease states. 1923 has been shown pre-clinically to downregulate inflammatory cytokine and chemokine signaling and reduce inflammation and fibrosis. NRP2 is upregulated on key immune cells known to play a role in inflammation and is enriched in inflamed lung tissue. 1923 binds selectively to NRP2 and therefore has the potential to normalize the immune system, serving to resolve inflammation and prevent progressive fibrosis, thereby stabilizing lung function and alleviating morbidity and mortality. Our lead program is focused on ILD, a group of rare immune-mediated disorders that cause progressive fibrosis of the lung. Our initial ILD indication is pulmonary sarcoidosis, the most inflammatory form of ILD, which is characterized by the formation of granulomas, or clumps of immune cells, in the lungs. If not treated, it can lead to irreversible scarring and diminished lung function. Current treatment options are limited and often include treating the inflammation with corticosteroids or other immunosuppressive therapies, which have limited efficacy and serious long-term toxicity. Additionally, many patients do not respond to this current standard of care. There remains a need for a novel treatment option for patients with progressive disease with better efficacy and a more favorable side effect profile. We recently spent some time deepening our understanding of the need for these treatment options for patients with sarcoidosis, including the role of steroids, and we've made a concerted effort to better work with the needs of the community. As part of these efforts, we have now appointed Andrea Wilson, a sarcoidosis patient advocate, as an advisor to the company. Andrea has dedicated the past 20 years to promoting awareness and generating support to accelerate research to find a cure for this disease. She co-founded the FSR, the leading international non-profit organization dedicated to finding a cure and improving care for these patients, and previously served as President and a member of its Board of Directors. Her firsthand knowledge, long-standing advocacy experience, and relationship with the sarcoidosis community will help support patient strategies for advancing the 1923 clinical program in pulmonary sarcoidosis and we look forward to her contributions in the future. Officially, April was Sarcoidosis Awareness Month and as part of our efforts to draw attention to this chronic debilitating disease, we were invited by the FSR to participate in a Virtual Town Hall on steroids and sarcoidosis to discuss treatment options and strategies for patients living with sarcoidosis. I was honored to join this panel, which included two sarcoidosis patients and a leading pulmonologist. This panel provided a real-world and firsthand perspective, highlighting the toxic effects of steroids and shedding light on the need for better and more effective treatments. The majority of sarcoidosis patients will receive steroids at some point during the course of treatment. Corticosteroids are highly associated with obesity, malaise, decreased bone density, cataracts, hyperglycemia, and hypertension. Each of these side effects on their own are a condition to treat and manage. Currently used steroid-sparing agents, such as cytotoxic immunosuppressants, have limited clinical evidence supporting their use in sarcoidosis and are associated with significant side effects such as infection, liver toxicity, and even malignancies. We believe that patients deserve better. 1923 presents a potential option to do better. In clinical studies to date, 1923 has shown a favorable safety profile. This includes data from a Phase 1 study in healthy volunteers, a Phase 2 study in patients with COVID-19 related severe respiratory complications, and two data safety monitoring board reviews from the ongoing Phase 1b/2a study in pulmonary sarcoidosis. In each of these studies, 1923 was assessed to be generally safe and well-tolerated with no drug-related serious adverse events. Based on recent proof of mechanism and its favorable safety profile, 1923 could be a transformative alternative to steroids and other available treatments with improved patient outcomes. As a reminder, our ongoing trial in pulmonary sarcoidosis is a Phase 1b/2a randomized double-blind placebo-controlled multiple ascending dose clinical trial in 37 pulmonary sarcoidosis patients. This trial consists of three cohorts testing doses of 1, 3, and 5 milligrams per kilogram of 1923 or placebo, dosed intravenously once a month for six months. The primary objective of this study is to evaluate the safety and tolerability of multiple ascending doses of 1923. Secondary objectives include assessment of the potential steroid-sparing effects of 1923 in addition to other exploratory assessments such as lung imaging, lung function assessed by pulmonary function tests, and relevant serum biomarkers. Based on our trial design, an integral element of this study is the steroid burden in the 1923 treatment groups compared to placebo. As we'll discuss here today, due to the side effects and toxicity in available treatments, there is a crucial need for alternatives to existing treatment options including steroids. We look forward to the results of the study which we expect to report in the third quarter of this year. I'd like to now turn the call over to Dr. Leslie Nangle, VP of Research. As I mentioned, we recently promoted Leslie to the company's executive leadership team to manage research and scientific operations. Leslie has dedicated her career to tRNA synthetases and the pathways they regulate, having studied under the professor who is aTyr's co-founder and having served in scientific research roles at aTyr since joining the company in 2007. We're very pleased to have her with us today to review recent updates from our research pipeline starting with our NRP2 antibody program.

Thank you, Sanjay. I'm thrilled to continue my tenure at aTyr and expand the scope of my responsibilities related to our research and scientific operations, particularly at a time when we are really starting to see some encouraging results from the work that we've been piecing together over the past few years. About two years ago, we initiated collaborations with experts in the NRP2 biology field to help advance our program. It is extremely gratifying to see these collaborations bear fruit, particularly in regards to helping us better understand the underlying mechanism of our therapeutic antibodies targeting NRP2. I am very pleased to be here today to discuss some of the exciting research that we've been generating both in-house and with our collaborators. I'll begin with a bit of background about NRP2, which is a compelling therapeutic target in a number of disease areas, including oncology and inflammation. NRP2 is upregulated on a variety of solid tumors such as breast, renal, lung, and glioblastoma, and it's particularly highly enriched in aggressive tumors. In addition, as we reported earlier this year, NRP2 is highly expressed on key immune cells implicated in regulating cancer progression, including tumor-associated macrophages and myeloid-derived suppressors among others. High NRP2 expression has been linked to worse patient outcomes in several cancers, which in some cases may include drug resistance to current therapies, such as chemotherapy or targeted agents, tumor recurrence, and reduced overall survival. Antibodies that can selectively block different aspects of NRP2 signaling pathways may have therapeutic potential in these aggressive cancers where NRP2 is implicated. aTyr has generated a panel to selectively target distinct domains of NRP2 including those interacting with some ligands, VEGF, and certain chemokines such as CCL21. The roles of NRP2 and VEGF signaling in the tumor microenvironment and its importance in the progression of certain aggressive cancers is becoming increasingly validated. 2810 is a fully humanized monoclonal antibody developed and optimized internally by our antibody engineering team, specifically to functionally block the interaction between NRP2 and VEGF. Based on compelling pre-clinical data in oncology models, both human-derived and animal, we selected this candidate to advance to investigational new drug or IND-enabling activity. Just last month, we presented two posters at this year's American Association for Cancer Research Annual Meeting, which build upon our pre-clinical work related to 2810 and strengthen our understanding of blockade-mediated NRP2 signaling as a potential approach to inhibiting tumor growth. The research presented in these posters was conducted in collaboration with leading cancer researcher Dr. Arthur Mercurio, one of our scientific advisors, and his lab at the University of Massachusetts Medical School. These posters represent significant progress we have made towards understanding part of the underlying mechanism by which blocking NRP2-VEGF signaling in tumor cells can inhibit tumor growth and metastasis. Specific insights strengthen the link between NRP2 and a seminal process involved in tumor progression, epithelial-mesenchymal transition, or EMT, which is the acquisition of mesenchymal or stem cell-like features by epithelial cells in the tumor that confer migratory and invasive properties to the cells. EMT is of great importance in the tumor microenvironment, regulating tumor growth, progression, and the metastatic cascade, as well as being implicated in tumor immune suppression. The data we presented demonstrate the therapeutic potential of inhibiting EMT through blocking the NRP2-VEGF signaling pathways in various types of solid tumors. In the work we presented, we generated two types of tumors with high NRP2 expression: triple-negative breast cancer, or TNBC, and non-small cell lung cancer. In TNBC, patient-derived organoids as well as tumor xenograft models, 2810 sensitized tumors to two widely used anti-cancer therapeutics, including the chemotherapeutic agent cisplatin and the targeted VEGF therapy bevacizumab, increasing the anti-tumor effects of each agent. Furthermore, treatment with 2810 was shown to downregulate genes associated with EMT and stemness, in particular downregulating the expression of SNAI1 (Snail), a central regulator of these processes. This data suggests that 2810's ability to impact EMT may be a mechanism that mediates its anti-tumor effects. In addition to TNBC, we have also generated data demonstrating efficacy in other solid tumor models, including non-small cell lung cancer, both as a single agent and in combination with chemotherapy. The ability of this antibody to promote the differentiation of aggressive tumor cells away from a stem cell phenotype and render them more susceptible to conventional cancer therapies has the potential to be a significant advancement because resistance, tumor recurrence, and metastasis are major challenges for patients with aggressive cancer. We continue to invest in 2810 and its ability to block the NRP2-VEGF signaling pathways, including its effect on sensitizing aggressive cancers to chemotherapy, in particular through its effect on inhibiting EMT and cancer stem cell properties. We expect to present more findings from our research on this evolving mechanism, including in models of patient-derived xenograft at the upcoming conference on cancer stem cells scheduled for later this month. We are very pleased with the pre-clinical data generated for 2810 thus far and plan to leverage the progress that we've made in further understanding its mechanism of action both on tumor cells themselves, as well as critical immune cells in the tumor microenvironment to build a compelling data package to inform our clinical strategy for 2810 in treating aggressive solid tumors. We really look forward to continuing IND-enabling activities for 2810 and are committed to progressing this program to clinical stage development. Last month, we announced that we've entered into an agreement with Lonza for the manufacture of 2810. We are very pleased to be working with a partner with extensive proven capabilities in antibody manufacturing for the production of our first anti-NRP2 antibody. Having a manufacturing commitment at this stage of development for 2810 is especially important due to the strain in the supply chain and increased demand for biopharma manufacturing, which was in part a result of the uptick in activity due to the COVID-19 pandemic. We feel that investing in and securing these capabilities now will help us to best serve this program moving forward. In addition to our in-house antibody engineering platform that is developing antibodies to selectively target distinct domains of NRP2, our Hong Kong subsidiary Pangu is working on a bi-specific approach based on NRP2's role in regulating inflammatory processes and interaction with various co-receptors. We believe that bi-specific antibodies present a unique approach to create highly specific agonists in the system, which may be therapeutically relevant in certain disease states. Last year Pangu together with the Hong Kong University of Science and Technology, or HKUST, was awarded a grant of approximately $750,000 from the Hong Kong government Innovation & Technology Commission to develop a high throughput platform for the development of bi-specific antibodies targeting NRP2. We are pleased to have announced this week that Pangu and HKUST have achieved a milestone set forth in the first year of the project. An integral part of this project was the development and implementation of a novel single-cell antibody discovery approach, which has so far yielded numerous candidate high-affinity NRP2 co-receptor antibodies targeting VEGFR2 and PLXNA1 currently in screen and functional assets. Bi-specific antibody approaches are increasingly being considered as a novel and differentiated approach to relevant targets and present a unique pipeline opportunity for us to explore. We are very excited about this progress thus far and look forward to the outcome of the second year of this project. With that, I will turn it over to our Chief Financial Officer Jill Broadfoot to review our financial results.

Thank you, Leslie. Total revenues were $0 and $8.1 million for the three months ended March 31st, 2021 and 2020, respectively. Revenues for the three months ended March 31st, 2020 consisted primarily of license and collaboration agreement revenues under the company’s license agreement with Kyorin. Research and development expenses were $4.5 million and $3.6 million for the three months ended March 31st, 2021 and 2020, respectively. The increase was due primarily to manufacturing costs related to 1923, increased research and development expenses related to 2810, and increased expenses related to the research program between Pangu, HKUST and the Hong Kong government. General and administrative expenses were consistent between periods at $2.7 million and $2.6 million for the three months ended March 31st, 2021 and 2020, respectively. During the first quarter of 2021, the company raised gross proceeds of $9.9 million through its at-the-market offering program with H.C. Wainwright & Co., LLC and $15.3 million through its common stock purchase agreement with Aspire Capital Fund, LLC. As of March 31st, 2021, we had $50.6 million in cash, cash equivalents, and investments. We expect our expenses to continue to increase in 2021 as research and development of 1923 and 2810 progress. This includes additional manufacturing costs for both 1923 and 2810 to prepare for future clinical trials. Now, I'd like to turn the call back over to Sanjay before we open it up to Q&A.

Thanks Jill. Our accomplishments this year to date reflect the hard work, dedication, and thoughtful approach that we have invested in our clinical and pre-clinical programs. The readout for our Phase 1b/2a proof-of-concept study of 1923 in pulmonary sarcoidosis represents a key inflection point and a solid foundation. We have invested heavily in a robust portfolio of translational work for 1923, which we believe presents a strong rationale for its potential in inflammatory lung disease. We are implementing the same thoughtful approach for 2810, generating pre-clinical data and evolving our understanding of the mechanism of action to inform our clinical strategy in cancer. We have sufficient capital to take us through the readout in pulmonary sarcoidosis and to launch a Phase 2 trial for 2810 in cancer, which supports our ongoing activity to generate value for the company as we progress throughout the year. We appreciate your interest and continued support and look forward to providing you updates in the future. At this time, Jill, Leslie, and I would be happy to take your questions.

Your first question comes from the line of Hartaj Singh from Oppenheimer. Your line is open.

Thank you. Hi, everyone. Good afternoon. It's Jackie in for Hartaj. Thanks for taking our questions. First, regarding the upcoming readout, I remember when last year you announced the trial had slowly recruited; I think that study had enrolled 36 patients, and today's trial shows 37 patients. So, maybe first, just wondering, did some patient drop and then you reenroll an additional patient? And then second, obviously 37 is not an even number; I was just wondering which treatment or placebo group that additional patient fit into, which cohort that person is in? And third, are you going to announce the last patient last visit? Thanks.

Sure. Thanks Jackie. So, we have previously announced that we had met target enrollment. At that time, as you can imagine, several patients were in the queue. One additional patient at that time resulted in the final count being 37. I think ethically it would be difficult to turn away an eligible patient who had passed screening. So that occurred right at the time when we were announcing that we met target enrollment. So, the final enrollment is 37. Your second question is really around which cohort: they have not been reassigned back into our one- or three-milligram cohorts; they are in our five-milligram cohort. So the most important point here is, it's not a backfill, it's simply a patient who had moved through screening at the same time as our 36 patients and therefore we felt it was right to allow that patient to join. So, it is an over-enrollment, not a major issue, and not anything tactical, but really more around clinical operations and ethics. With regard to last patient last visit, that’s something we'll consider. I think the main thing is we're on target to have a full readout here in the third quarter. That's really what we're focused on: completing follow-up for those 37 patients and any follow-up visits. We are very much on track to have a Q3 readout.

Got it. Thank you for that. And then, great event with the Sarcoidosis Foundation last night about side effects of steroids. If you could talk a bit more on the side effects from non-steroidal steroid-sparing drugs, both short-term and long-term? And then second, thinking about your upcoming third quarter readout, what types of data should we be expecting there? Will it be steroid reduction, time to achieve that, or different readouts across those cohorts? If you could help us frame what to expect with that release that would be great.

Yes, great questions about some of the toxic effects. You heard quite a bit about what steroids can do from a patient who highlighted many aspects — one patient in particular on that call really talked a lot about weight gain and some of the other effects such as mood changes, irritability, and insomnia. So many of the things that we see with steroids are quite toxic to these patients. For patients that have moved on to even heavier immunosuppressants, that's where you can see more serious complications — things such as a higher degree of infection risk and malignancy is also a concern once you actually move to those agents. Many of those agents were originally approved for chemotherapy, so you are talking about a heavy, toxic burden with some of the more potent immunosuppressants that these patients may advance to. There's a tremendous amount of interest and it is accelerating in the search for alternative therapy, which I mentioned could be transformative in changing the paradigm and how we treat sarcoidosis. One of the ways — and probably the most important way we're going to be looking at activity — is the focus on steroid burden. Experts have said this is a key way they will benchmark and feel confident about the activity of 1923. We will be looking at and highlighting things in the upcoming months around expectations with regards to percentage reduction, absolute reduction, and cumulative steroid burden over six months — how much we can reduce steroid use overall. These are all the things that we're focused on. We'll look to potentially host another event to set expectations. From what I understand from the experts, they are looking for a signal of steroid reduction in this trial, and I think that could increase clinical confidence as we move into Phase 3 if we are able to observe that in our current trial.

Got it. That's very helpful. And then last question is, I saw a press release earlier this week about a bi-specific candidate coming from the University of Hong Kong. You talked about the rationale for the bi-specific format. What kind of advantages can that provide versus combination therapy or a more specific monoclonal format?

Yes, I'll comment and then ask Leslie to chime in as well. Our strategy is to further understand the biology while progressing our in-house monoclonal antibodies targeting specific domains of neuropilin-2. Our work has informed us that co-receptors are really interesting partners, and they can modulate interactions with other receptors such as integrins and other VEGF receptors, which Leslie pointed out. So, how do we leverage and learn more about that mechanism and potentially even create new types of molecules? The Pangu collaboration, funded in part through non-dilutive capital from the Hong Kong government, on the bi-specific approach is really exciting. I think it offers us another opportunity to create a new pipeline of discovery candidates by mining that side of the biology. Leslie, do you want to add anything about some of the opportunities and how those other receptor engagements with neuropilin-2 might be leveraged?

Sure, Sanjay. I mean, I think one important aspect of this is that it provides us an opportunity to expand our antibody engineering into the bi-specific realm, and to bring on some cutting-edge technologies and advance them with non-dilutive funding. Under this grant, the aim is really to set up a platform. Sanjay is absolutely right that if you're thinking about NRP2 as a receptor, it often comes together with these other types of co-receptors, and there are novel ways to tune those interactions and create agonists. Most of the time with monoclonal antibodies, we're going to be blocking the natural ligand of NRP2. In this case, we can actually bring the co-receptor and NRP2 together to derive signaling. In certain disease states, for example, you may want to agonize that pathway and that could drive a therapeutic response. So it lets us come at the biology from a different angle as well.

I'll just add one other thing. Bi-specifics are an emerging and important modality — a few bi-specifics are now on the market and that market has grown rapidly. So it's really a technology for us to explore as part of a platform approach. The fact that we can access grants from the Hong Kong government to support this work is a smart way for us to tap into what could be a large commercial and strategic opportunity in the future.

Great. Thanks for all the color and really appreciate the answers. Thank you.

Next question comes from the line of Emanuela Branchetti from H.C. Wainwright. Your line is open.

Good afternoon, guys, and thank you for taking my question. While waiting for the data, in fact with higher doses of 1923 and the potential pivotal trial, are you planning to do any formulation work to explore the possibility of a different formulation for ATYR1923 other than IV?

Hi Emanuela. So that's a great question. As a small company, we want to establish proof-of-concept with our IV administration. From a patient perspective, certainly once-a-month therapy is attractive, but from a lifecycle perspective, patients may prefer something even easier to administer. Many companies consider subcutaneous administration as they advance lifecycle planning. I think from a formulation standpoint your question makes a lot of strategic sense, but first things first: we're going to establish proof-of-concept here, and then absolutely we can look at formulations that make therapy more attractive to patients, perhaps subcutaneous administration that could be dosed less frequently, such as every three to six months, which you see with some therapies as they advance in lifecycle planning.

Sure. Thank you for that. And with regards to the high-throughput platform being developed by Pangu, should we expect multiple INDs coming forward from this program? And can you give us a sense of your expectation in terms of timelines? Also, how should we see potential clinical development of assets? Would they start in China and then move to the U.S., or how are you thinking about that?

Yes, it is early. We tend to first understand the biology and then advance discovery. The goal here is to identify a discovery opportunity that leads to an IND candidate from this platform. I hesitate to put a firm timeline on it at this moment because we have just gotten through the first milestone. But as we progress, that's the kind of update to expect: whether we have a discovery candidate emerging from the platform. With regard to development strategy and how we would interface with development in China, it's a little early to be definitive. Hong Kong is a distinct environment but increasingly connected to mainland capabilities. We'll be working on strategy and will update you as we have clarity. The immediate objective is to emerge with a new discovery pipeline candidate from that platform.

Sure. Thank you. And, again, another forward-looking question. When looking at the results reported at AACR in the triple-negative breast cancer models, ATYR2810 seems to inhibit tumor growth when used in conjunction with cisplatin and bevacizumab. You talked before about the mechanism of action behind these effects. How do you think the drug would be best positioned for the treatment of triple-negative breast cancer, should you decide to move forward with clinical development in this population?

Sure. I'll have Leslie chime in, but clearly TNBC is a very aggressive form of cancer where there is still much room to improve efficacy and overcome resistance. There have been strides in recent years, but resistance remains an issue and recurrence can develop. We are learning that 2810 can add utility not only by inhibiting tumor growth but also by sensitizing tumors that might become resistant to existing therapies. We have a mechanistic understanding of how that might occur, which helps inform positioning. Leslie, would you like to add specifics about the data?

Yes, absolutely. We have generated the most data in triple-negative breast cancer because of our collaboration with Dr. Arthur Mercurio’s lab at UMass. That's where much of our early data is coming from. We're seeing interesting results in patient-derived tumor organoids, where 2810 sensitizes organoids to chemotherapy and anti-VEGF treatment. Mechanistically, we see gene expression changes indicating reversal of EMT and stemness in the presence of 2810, which supports the idea that this is a population that could particularly benefit from a therapy that targets EMT-associated features and stem-like properties.

Got it. Thank you very much.

Your next question comes from the line of Zegbeh Jallah from ROTH Capital Partners. Please go ahead.

Hi, guys. Thanks for taking my questions, and congrats Leslie, really exciting for you. Just a couple of questions. First, in terms of the relationship with Pangu, I just wanted to make sure that you're retaining full rights to the bi-specific platform, or is that some kind of agreement that you have in place?

Yes, that's a great question, Zegbeh. And yes, we are retaining full rights for the work that we do there. That is a key component of retaining the value of what we believe is a strong opportunity for us to explore bi-specific approaches.

Thank you. And then the next one, again a follow-up for 1923. I know we're still waiting for the data, but like someone else alluded to on the call, the foundation you participated on articulated concerns about using steroids in patients with pulmonary sarcoidosis. Is the Kyorin study set up in terms of figuring out if patients who use less steroids—that is, is that going to be the same setup for your Phase 2 or potential pivotal study?

Yes. We are well positioned to interrogate an endpoint that is increasingly recognized as clinically meaningful: steroid burden. The FSR has been engaging with the FDA to educate on clinically meaningful endpoints, including steroid reduction. We believe that steroid-sparing could be an important element of a primary or composite endpoint, particularly given growing momentum from patient advocacy and clinical experts. Historically we thought higher doses would be required to demonstrate that effect, but patients and clinicians are increasingly seeking steroid alternatives, and our therapy, based on proof-of-mechanism and safety to date, could be considered as a first-line option in some cases. We'll continue to engage with regulators to define the pivotal endpoint strategy, but momentum is building for steroid reduction to be an important component of a primary endpoint or a composite primary endpoint.

Thanks, Sanjay. And then the last follow-up here: on your progress with the NRP2 antibody and AACR data, and the partnership with Lonza — what else is left to be done for the IND? And finally, any updates on the CSL Behring discovery efforts you previously mentioned, focusing on NK cell biology?

With regard to next steps for the neuropilin program, we'll continue to evaluate different in vivo tumor models to identify where 2810 has the best effects and to focus on the most appropriate indication for the first cancer trial. You can expect to see follow-on translational data for the remainder of the year to help inform that decision. We'll also complete the required toxicology work needed before moving into the clinic. This is another reason why the Lonza collaboration is important: they are a preeminent CDMO and will help ensure clinical material is ready to go. Securing manufacturing early is critical given supply chain and demand pressures in biomanufacturing. Regarding our earlier findings related to NK cell biology and prior discovery efforts, we still have a lot of interest and are working to mature those findings and identify receptor candidates. We want to validate those receptor targets thoroughly before sharing more publicly, and when ready we expect to present findings via publication or abstract. That program is tracking well and we will update as milestones are met.

Perfect. Thanks again and congrats on the progress.

Your next question comes from the line of Yale Jen from Laidlaw. Your line is open.

Good afternoon, and thanks for taking the question. First, a forward-looking one about 1923: if the readout in the third quarter is robust, I assume you would advance into a potential pivotal study. My question is whether the steroid-sparing type of endpoint could be accepted as a primary endpoint, or would you need more functional endpoints as part of a primary endpoint to potentially gain approval?

Thanks, Yale. Certainly our plans will involve interaction with the FDA to propose a path to a pivotal trial. For a rare disease, timing is important and patients need therapies sooner rather than later. We've seen growing momentum and advocacy around steroid reduction as a clinically meaningful endpoint. Engaging with the patient community and FSR has helped raise the profile of the toxicity burden of steroids. I believe steroid-sparing could be accepted as a primary endpoint or as a component of a composite primary endpoint, and we will continue to engage with regulators worldwide to define the best path forward. Right now, momentum is building for steroid reduction to be included centrally in endpoint strategy.

Okay, great. That's very helpful. Another question: for 2810, which appears to affect EMT — that seems like a space with few direct competitors. Do you have any comments about whether you've found competing programs in this EMT area, or whether you could potentially be first-in-class if successful?

Yale, we're a science-driven company and we are comfortable being bold when the biology supports it. Our findings over the last two years on EMT are encouraging. We think this could potentially be a backbone or enabling therapy if we are able to modulate mesenchymal and stem-like properties of tumor cells. It is an area that remains relatively underexplored, and our mechanistic data suggest a meaningful opportunity to address resistance and recurrence. We are pursuing it and believe it could position us as a leader in this space if the data continue to support the approach.

Okay, great. And maybe a last question on the bi-specific approach: NRP2 is not necessarily a classic immuno-oncology checkpoint, but given its role in the tumor microenvironment, could bi-specifics be designed to engage checkpoint-related or other immune-related targets to enhance anti-tumor immunity?

Yes, that makes sense and is exactly the sort of thinking behind the bi-specific approach. The idea is you can bring together co-receptors or other target receptors with NRP2 to modulate signaling. That could include design strategies to modulate immune responses if the biology supports it. We'll let the mechanism and data drive the best approach. Leslie, do you want to add?

Absolutely. We have observed expression of NRP2 on immune cells located in the tumor microenvironment, such as tumor-associated macrophages and myeloid-derived suppressor cells. We presented a poster earlier this year showing that expression pattern. We're actively investigating how NRP2 on those cells interplays with tumor cell phenotypes and the EMT-related biology. Depending on the mechanism, a bi-specific that engages checkpoint or other immune targets could make sense, but we will let data guide whether a bi-specific approach or monoclonal strategy is optimal. We're open to the best way to drug these biology-driven targets, and stay tuned as we generate more mechanistic and translational data.

Okay, great. Thanks a lot. And again, congrats on the progress so far.

And there are no further questions over the phone line at this time. I would like to turn the call back over to Sanjay Shukla, sir.

Thank you. Great questions today, and obviously a lot of interest in not only our clinical program but the advances we're making in neuropilin biology and the bi-specific platform at Pangu as well. I think many of you have picked up on a really intriguing new area that opens up a lot of potential for our pipeline. We really appreciate the questions and interest from everyone today and look forward to speaking with you on future calls. So thanks, everyone, and be well.

Ladies and gentlemen, this concludes today's conference call. We thank you all for participating. You may now disconnect. Have a great day.