All right, great. Thanks for the folks who've dialed in. Welcome to the Leerink Global Healthcare Conference. My name is Faisal Khurshid. I'm one of the Senior Biotech Analysts at Leerink. We have here with us today Dr. Sanjay Shukla, CEO of aTyr Pharma. I just launched in this company, actually, a few weeks ago. For anyone who knows Sanjay, he strikes me as a pretty intense, just hardcore drug developer. I saw him last night, and I was like, you know, Sanjay, let's just have fun with this today and make it a little spicy, a little interesting, and just go straight to the hard questions. Let's do it. The way that I pitch your stock is I tell people, this is my favorite three times to the upside, one time to the downside type of a stock setup, and the market's pricing in not a huge probability of success. I want to talk about why that is. We'll delve into that. Maybe just super quick, can you give us an intro to yourself and the company and what's in store for the year? Sure. Thanks for inviting us to Miami. I'm Sanjay Shukla, CEO. I'm a drug development physician. Worked in industry for about 25 years now. Big companies, also small biotechs, really focusing on rare disease. Always found myself working in areas where we're trying to break new ground with new therapies. Worked in lupus, lupus nephritis, myasthenia, pemphigus. Here at aTyr, we kept the tradition going, focusing on sarcoidosis. Really trying to translate a very intriguing new modality, new biology platform that comes out of the Scripps. Working in synthetase fragments and synthetase biology from the lab of Dr. Paul Schimmel. And we've been on a journey to show how we can take these proteinaceous fragments and make a meaningful medicine. We've landed on sarcoidosis, not because I'm a pulmonologist, but that's where the data took us. We try to be very data-oriented. Where do we see signals? We are also not fearful of breaking new ground and trailblazing, which is what we are doing with sarcoidosis now. Yeah, cool. Cool. In terms of where investors are on this, there's kind of three main pushbacks that I see investors have. One is this drug isn't real. It's inert. Two is the phase I, II data is all noise. Three, the phase III study, debatable whether it tests a meaningful endpoint and whether that would engender use in this population. I'm going to play bad cop on this. I want to kind of drill into each of those in sequence. Maybe we start with that second one, kind of the phase I, II study and just how to think about that. Can you walk us through kind of, in the phase I, II, pulmonary sarcoidosis, steroid-controlled disease, you do steroid tapering in that phase I, II. phase I, II steroid tapering protocol is a little bit different than what you're doing in phase III. Can you explain that difference and how that should color the investor interpretation of that data? Sure. I'll take a step back around that trial and maybe some of the skepticism, which is fair to first address. It was a small trial. It was a 37-patient trial, short trial, six months, in a disease that we thought we might be able to see a signal. We were hoping to see beyond just demonstrating safety, a signal potentially in steroid reduction. We hoped maybe we might see something with regards to quality of life, maybe some of the symptom scores improved. Maybe we would see some amount of lung function improvement, immune biomarkers. We were hoping to see some sort of trend there. As it turns out, we hit on all of those subjective and objective endpoints I just talked about. What I mean by hit on those, we showed a dose response. I would posit that it's extremely difficult in a small trial to see that consistent a signal emerge on whether you looked at a functional endpoint, a reduction of steroid endpoint, cough, fatigue, shortness of breath, immune biomarkers, a lot harder to do with an n of 37 versus an n of 3,700. It is that remarkable consistency that we saw that really gave me a lot of confidence that, hey, there's a real signal here. Dan Culver, our lead PI, who was the chair of pulmonary and critical care at Cleveland Clinic, said publicly, he said, you guys either got incredibly lucky, which is what I'll default to. I'm a biostatistician. Oh, it's just chance. Or you have a remarkable drug. I think the setup was to show some trends of efficacy. I believe most of the experts were really shocked to see that consistent dose response. You point out a couple of differences that might have emerged now in this current trial. We have enhanced the protocol, I think, to the upside here to amplify that signal. I'll get to steroid reduction next because that's the other question you had about endpoints. How do we take the signals we saw in that trial and amplify them? One of the things we noticed, first of all, is the patients that maybe had a little bit of difficulty improving tended to be the more fibrotic patients. One of the things we did very early on is we excluded any patient with fibrosis on high-res CT more than 20%. They're not in our current trial. I think the drug works best when there's more inflammatory substrate than fibrotic damage. That's one thing we did to enrich the trial, if you will. I think the other thing we did that is perhaps more important is we're studying the drug for much longer. What we noticed is in the placebo population, we saw about 55% of the patients worsen in this placebo and subtherapeutic populations. We saw only 7% of the patients in the what we call therapeutic doses maintain good quality of life and function. In a longer trial, what we expect is more of these placebo patients will fail. In six months, it's 50%-55%. That's what the experts expected. They think in a longer trial, it's going to be 80%-90% are not going to be able to really tolerate a low or no dose. I bring up that no dose component. We're pushing folks to zero in this current trial compared to five. That is going to certainly cause more of these placebo patients to more floridly fail, which is what I want to see. It is also going to give efzofitimod more upside. We capped the upside at 5 mg of prednisone, but now with the ability to maybe go down even further, I think the drug has more upside. I know placebo is going to be worse than what we saw in the last trial. You see both of those things occurring. Even in a, I'm not asking for the drug to perform that much better. We could actually see a statistical delta readily emerge. You asked about endpoints. I think it is fair for investors to understand the risk. We are trailblazing here. We are going after steroid reduction. Steroid reduction, in my view, and many of the experts' view, is the best surrogate for feel and function. We have a feel endpoint, a quality of life instrument that we're following, the King's sarcoidosis Questionnaire. It's a good academic validated instrument. It's never been tried in clinical trials. If I was sitting here right now saying, hey, we went after King's as the PRO as our first line primary, everyone would be saying, wow, there's never been a drug that's approved with a PRO alone. The people in the audience here would be more nervous about, I think, a PRO instrument. You've seen new drugs like TAVNEOS and Chronicity, NUCALA. They're getting steroid reduction as part of their label. The last thing I'll say is about FVC. Investors always ask me, why didn't you go with FVC as a primary? We did approach the FDA with FVC as a primary, but we were guided away from that because in sarcoidosis, patients, frankly, present with more obstructive and mixed disease than restrictive disease. It makes sense to follow it, but not as a primary. We have tried to be thoughtful based on feedback. We understand that we are trailblazing here. As the first company that goes into an indication, you generally are the ones that have to jump through that wall as opposed to over it. Done this again in lupus, myasthenia. The strides you make in some of those rare diseases as the first company, you get some benefit and some flexibility. I really believe we can actually plant the flag here, and then everybody else is going to have to beat efzofitimod if we are successful in sarc. Totally. I guess on the, so understanding that there's changes you made on the phase III versus phase I, II are meant to increase the likelihood of success, totally get it. From the investor perspective, investors are in the game of trying to predict success based on what's available and disclosed and precedent. From that perspective, the element of a placebo response, so in phase I, II, patients on placebo were able to reduce their steroids by about 46%, even though most of them were only pushed to five. They weren't pushed to zero. In this phase III, they're going to be pushed to zero. How should we think about the placebo response in terms of being able to reduce steroids just kind of naturally on placebo? This is a great question because on Saturday, I was with about 30 sarcoidosis experts in Chicago when we were just talking about endpoints. A couple of them pulled me aside and said, we see publicly how people, we call it placebo response. Let's now think about what those patients, how they responded. When we titrated folks down, you can reduce everybody's steroids. What typically will happen if you reduce a patient on steroids? They're going to get worse. They're not going to respond. The patients in our trial, I readily admit, we can get people down on steroids. What happens to them? Their cough gets worse. Their shortness of breath gets worse. Their FVC gets worse. This notion of the placebo response rate was 40%. No, those are the patients that tolerated a lot of morbidity in our trial. Nobody's responding to get off steroids. That word there is also something that I think people really need to contextualize. We can remove steroids. When you remove steroids, what happens? They get worse. Everything that happened in that trial was what we expected. Now, the patients who didn't flare, you look at their feel and function endpoints, they're doing quite poorly. It's just that they are tolerating a lot of that morbidity. They don't know what they're on. They're basically not doing well. I told many of the sarc patients in this trial, if you end up in placebo, you're not going to do well because I want to see that happen, but I'm also going to protect you and have a safety net where you can get rescued. I'll just want to level set there and think about this as that response comes out of a forced steroid taper. I'm making these patients unwell. Now, in a longer trial, what the experts have said is you're going to see less than 10% of the patients tolerate going to zero in a one-year trial. We're modeling for 30%. That means I'm trying to be conservative here and say, look, maybe magically three out of 10 of these patients can go to zero and be managed at zero, even though they typically have been sometimes managed for sometimes 10 years on 7.5 or 10 mg. How we contextualize response and these sort of things, it's a steroid withdrawal trial. I expect to see placebo patients worsen. If they remain well on the treatment arm, there you have a clear benefit. Yeah. It's interesting what you're saying that in phase I, II, you had these patients on placebo that kind of got to 5 mg, but then were just like there and suffering. In your phase III, this is like a trial conduct question then, right? It's like how do you, one, do you have enough time and is it consistent in terms of seeing the disease flare up? Is there consistency in making sure that the patients are not just sitting at 0 milligrams and 5 mg suffering, that they actually get back on steroids? We're assaying these patients much more robustly compared to the last trial where there it was a monthly investigator assessment. Here we're doing a bi-monthly tool, the PGA, where they are discussed every two weeks. We're assaying more frequently to pick up some of that worsening. We're using a validated tool, the Patient Global Assessment, to guide some of those titration decisions. I would say by going lower and watching these patients more often, yes, we should be able to pick that up. You talk about conduct, it's in the informed consent. These patients are so motivated to try therapies that get them off steroids. They are desperate to get off their steroids, which is we hear time and time again that get me off steroids or get me on the way to getting off steroids and I like your drug. Don't show me 37 ml FVC improvements. That means nothing to the patient in Birmingham or Washington, DC, or for that matter here in Miami. They want to be able to really disease modify. It starts with getting off steroids because steroids have modified their disease in another way. We had a rheumatologist, the Brigham one, said, I really like efzofitimod because it is actually a treatment for two diseases, for sarcoidosis and steroid toxicity. Right now, steroid toxicity is being recognized as a significant comorbidity in a number of these diseases, sarcoid being one of them. Yeah. So you talk about steroid reduction kind of being the first step or a surrogate to addressing feels and functions of the disease. Does that mean that you have to show an impact on quality of life to believe that the drug is real and doing something? I think the base TPP for the program is to show steroid reduction. At a minimum, let's maintain their quality of life and their function that they were on when they were previously on 10 or 15 mg. That is the starting base. Personally, me as a former clinical person, I'd like to see that quality of life. I'm betting on the fact that there's so much steroid burden in their quality of life. If you take that away, my view is the impact and the improvement on beyond just their physiology or things like weight loss, being able to move around more, it's going to be positive for their lung health. There's a lot of hidden burden there around other elements of steroids. I think it's addition by subtraction. Subtracting that, I think overall, the upside TPP here is, in fact, hey, we can reduce steroids and improve your quality of life. I think over time, which is why a one-year trial will be able to see some of that, hopefully. Got it. That makes sense. Just in terms of the phase III phase I, II differences, your phase III, you're tapering to zero, you're powered for a 3 mg difference in steroid reduction between drug arm and placebo arm. In phase I, II, the biggest difference you had between arms was like 2.2 mg. Different protocol, though. How should we think about that difference? Yeah. I think we can do a little bit better. Again, I'll reiterate how the trial was designed. It is a longer trial pushing patients to zero. Let's start with placebo. I'm expecting the average prednisone daily dose in the placebo arm to be a little bit worse than what we saw in the last trial. It was in the low sevens. I think in our modeling, we'd like it to be 7.5, maybe 8, somewhere in that range. Post taper. Post taper, right. Efzo, remember, has now a chance to go much more robustly below five to zero. Maybe we get another half milligram. I'm not asking for much. You do that, it's a 3mg-3.5 mg difference. In a longer trial where we force people down and we have more upside for the drug, that combination of those factors allow me to feel pretty good about a 30% or 35% reduction. I aimed higher. We had discussions with the agency. Should we try to go to five? Should it be 50% reduction? They reiterated any amount of reduction would be meaningful to them because they look at the cumulative burden of steroids. I also didn't want to power the trial too high. I didn't want to make the bar so high for us. Why should we? I do think we can do a little bit better. I'm asking for these things on the edges here that I think gets us there. Again, we're planting the flag then to see anybody who wants to follow us, now they have to beat standard of care. I guess I'd like to put it simply, right? The thesis is that by pushing to the lower steroid dose, by following the patients longer, you can eke out a little bit more effect on the drug arm and also realize a little bit more detriment on the placebo arm. That's how you get to 3 mg. That's your headline note for post-conference. There you go. That's it. Right. Interesting you said that. So the FDA recommended 3 mg as the delta to shoot for? Is that what you meant? No. They did not endorse any specific delta. They said any reduction would be useful. The agency looks at precedent. Is there any clinical validation for 2 or 3 or 4 mg being clinically meaningful? There is not. The clinicians, the experts in the field said, look, you peel away 3 mg a day. I will love that because I struggle from getting people on 10 just down to 9. If you peel away 3, that is 20 less a week. That is 80 mg-100 mg less a month. These patients are on steroids for sometimes 5, 10, 15 years. Removing all of that prednisone toxicity is going to have tremendous benefit for these patients. It is a good starting number. I think we will learn more from there, even following these trials. NUCALA is doing this. They're showing more and more patients have, over time, two, three years out, even more steroid reduction. We don't even get into the fact that there's also going to be a proportion of patients that get to zero and stay at zero. That sensitive population, it's also going to be important to see what is that number because we saw about 30% in the high dose group, albeit small trial, get to zero and stay at zero. That's going to be also important. Can I ask you to defend this 3 mg a little bit more? Because when we've done doc checks, when investors have done doc checks, it sounds like the feedback is a little bit mixed. Personally, when we spoke to docs, most of the docs said 3 mg, great, clinically meaningful. We'd love to see that. We had one doc we spoke to who was like, yeah, I'm not so sure if I really love a 3 mg difference or how impactful that is. Investors I've spoken to, it sounds like there's a little bit of mixed feedback out there. It sounds like you guys got the feedback from your experts and your advisory panels that 3 mg is great, sufficient. Can I ask you to defend that? There's another way to look at this. Remember, this is placebo adjusted. Drug labels aren't, they don't list placebo adjusted. If we are able to accomplish that, we effectively will have shown a 50% reduction. Let's just say everybody comes in at 10 on average. I can get folks on efzom at 4.5, and placebo turns out to be 7.5. There's your 3 mg. What the drug label will show is a 50% reduction. It will also be the first drug to show that you can get SARC patients to be managed at 5 or 5 or less. These numbers for pulmonologists are nice round numbers, 50%, 5 mg. The drug label is not going to say a whatever, 37% difference from placebo. It's going to talk about the gross numbers. Remember, in our previous trial, I do not highlight this that much. We showed a 58% reduction from starting dose. Everybody, again, wanted to focus on the 46% we saw in placebo. The placebo patients reduced and did worse. The drug arms reduced and did better. To me, that is something that I would like to see replicated in this next trial. If we got anywhere near that 50%, you are going to see a Delphi consensus probably come out in the next year. I would say 80%-85% of the world's sarcoidosis experts are going to be thrilled if a drug can peel off 50% from a starting dose. Yeah, totally. Oh, where is the time going? All right. I want to talk a little bit about what I think kind of comes up pretty often with respect to your story. You kind of mentioned off the bat that this was very cutting-edge science coming out of the Scripps Research in San Diego. The kind of bare thesis on your drug is that this is completely an internally developed scientific hypothesis. There's not a lot of external validation outside of aTyr for using tRNA synthetases as drugs for this target that people haven't heard of before. People are so skeptical these days. People say, oh, this drug looks like it's a nerd. Let's hear your defense of this. I think we've taken a stepwise approach, first trying to understand functional effects, then try to understand target biology. Then we ran over half a dozen animal models. Then we moved into the clinic. Since then, we published, I mean, we're one of the best published biotech companies. You will probably see an article coming out soon on the MOA of efzofitimod. I'd say it's probably the preeminent translational journal out there. We will stand behind all of the work we've done. I'm not afraid to say that, hey, it's a new modality and people aren't sure about it. That's why they're scared about the value. There are others, I'm sure everybody in the room here knows exactly the value thesis of AI drug discovery, but they're pouring billions of dollars of market cap there. We show everybody what we're doing. We like to be data-driven. In some ways, we follow some of the pedigree of Alnylam because Paul started that company and some of our bigger shareholders. Alnylam had to actually demonstrate that thesis in the 2000s. They were a dollar stock. They needed that first drug to get approved. Then RNA therapeutics became a thing. I'm not afraid to sort of say, OK, we have some work to do here. I will say that anytime you break ground on a new modality and you also have a new indication, you're setting yourself up for a lot of hard work. I'm proud of the work we've done. If we do this, you're not only validating efzofitimod for sarc, but you're validating the platform. Yeah. So how did you end up at pulm sarc? Because it is kind of interesting where it's like a new modality, new indication to kind of pave a path forward. People who are haters, there's a lot out there. They look at your story. They said, oh, there's risk on top of risk on top of risk. I mean, I think our functional effects were best on myeloid cells that were activated. And those myeloid cells were largely this protein is enriched in lung tissue. It brought us to lung and myeloid cells. I think the real kicker to me was when we discovered that Neuropilin, our receptor, was highly enriched on ISH and IHC in sarcoid granulomas. It lit up. That was on the cover of a journal about five years ago. Neuropilin, we had to also validate a new receptor. If you're talking about a completely different modality and a different receptor, it almost makes perfect sense to me that we should go after a disease like sarcoidosis. It's like a venn diagram of three real difficult concepts. It was an entry point that basically said, look, the target in which we modulate macrophages is highly expressed in the tissue of greatest pathology in sarcoidosis patients. In fact, this is why we went into scleroderma ILD as well, because scleroderma patients in their plaques also light up with Neuropilin. The target in which we modulate macrophages is highly, it's a very precision immunology approach. If this was cancer, people would say, oh, it makes perfect sense to me. You hit that receptor. That's a tumor you should go after. We borrowed from that. I don't think people quite realize that. Yeah, yeah, it makes sense. I want to get to the scleroderma readout next. Just talk about biology. What's interesting is your drug is the HARS tRNA synthetase, or the variant of it attached to an Fc region. Anti-synthetase syndrome is autoantibody formation against that HARS tRNA synthetase. Is there an ADA risk with your drug because there's a disease out there that is autoantibodies against this tRNA synthetase? There's always going to be a theoretical risk because we are in a synthetase modality. This is something that we've always paid attention to. Anti-synthetase syndrome presents with interstitial lung disease and myositis largely. There was always this view that could it be some sort of a pseudoclinical knockout? How we think we are protecting ourselves is this fragment is not the full length of Histidyl-tRNA synthetase. Jo-1 antibodies, which are the antibodies that are created for anti-synthetase, we think have epitopes across the whole Histidyl-tRNA synthetase. By going after a fragment, we're protecting ourselves. Nonetheless, we are watching this in our trials. Our previous trials, we did not see ADAs or Jo-1 disease emerge. We have just completed our fourth successful DSMB, where this is one of the top things they look at over and over again. This will be a class effect that you'll have to watch for. Thus far, it's trended really well. I just think that we don't share the same epitopes that induce that kind of disease with our therapy. Yeah, interesting. I want to come to the scleroderma ILD readout. What I want to ask you first is we had a panel in here like an hour ago. We had some docs who are rheumatologists, including one who runs the scleroderma center at a major academic medical center. One thing that they pointed out was it's such a tough disease to develop drugs in because the natural history of the disease, especially on skin, can be so variable over time. How are you thinking about kind of your upcoming data readout? What would you want to see to sort of feel good about that? That's a proof of concept. We understand it's an extremely difficult disease. Really, no therapies have improved lung symptoms, which is the predominant morbidity for these patients. It's the skin symptoms that ruin their lives. Again, we saw Neuropilin highly expressed on scleroderma plaques. Dr. Assassi at Houston said, I see it in my samples. We then confirmed it on our own. That's part of the reason why we went into it. I need to see that target receptor enriched in what the indication we go after. In the upcoming readouts, I am going to be focusing on skin. On Thursday, we have our earnings call. I'll get into a little bit more of what to expect. It is a more fibrotic disease. It is a disease that allows us to test efzofitimod in a disease that also has systemic manifestations. I think there's a lot of upside there. People ask about read-through. FVC is something we're looking at in that trial. That is going to be something where we're going to need to see all the patients. We saw good data in a mouse model. That is a proof of concept. Let's see how the drug does. I think it's a really good anti-inflammatory. Now we're moving it into more of a mixed inflammatory fibrotic type of disease. Let's see how we do there. Got it. That makes sense. All right, cool. We got two minutes, maybe one question to kind of wrap us up here. Or sorry, two questions to wrap us up. Two minutes, two questions. OK. You're going to present your baseline characteristics from the phase III in pulm sarc at the ATS meeting in May. What should investors look for in that data set? You want to look to see how some of the baseline characteristics matched or differed from the phase II trial. The biggest things are our steroid entry dose, which we expect to be a little bit lower because we have a slightly lower basement criteria compared to the last trial. You want to look at things like disease duration, entry FVC, more or less to look at these patients to see if they match similar to what we saw in the last trial. I think that's important. If there are any differences, we'll have an analysis of covariates. We'll treat everything as a covariate to basically normalize. I think it's a good first step to just kind of see how the 268 patients look like. Got it. OK. And then last question, what do you think investors misunderstand most about the company and the story? The biggest thing we always get is there has to be something wrong here that I can't figure out. I think, to be honest. Because of valuation? I think it's because of valuation. You put a 1 in front of our stock price, all of a sudden, everyone starts to get a lot more comfortable. If people really pay attention to the science, how we brought things forward, how much we publicly release, how transparent we are, and talk to some of the KOLs and some of the experts that we work with, I think they will actually see a real confidence signal there. When you work with a new modality, new target, new indication, I think that can be scary to investors. We are confident that if we're successful here, we can really unlock things not only for efzofitimod, not only for our pipeline, but really for aTyr itself to really get on the map in a way that I believe it should be afforded based on the data that we produce. Got it. All right, makes sense. One of the other issues is that the ChemoCentryx panel was incredibly confusing for aTyr Pharma, where docs really didn't understand steroid reduction, the randomization, the output. That was a few years ago, granted. Maybe you say, what is the issue from investors? That was a very confusing time for people. If there's progress made, either with the FDA, with the trial design, et cetera, how do we think about that? That read-through was quite difficult. It was. Let me just say for the mic, the question was on ChemoCentryx and how to think about the FDA panel and just the read-through to the current situation. We've learned from that. We've spoken to individuals who were in that session. John Stone is somebody who's really one of the main PIs and talked about glucocorticoid index and how steroid reduction plays a big role. You're absolutely right. The manner in which steroids were titrated and assessed there relied a lot on investigator opinion. I think the FDA has learned from that. It's why they insisted we have a validated tool, the PGA, to guide some of the titration. That was, I think, direct feedback from ChemoCentryx because it was a little bit of it took some time to sort through how they basically went through the steroid titration. We hardwired in a tool, really, I think, based around what happened there with ChemoCentryx. Some of the learnings are use a tool that has a shorter amount of recall bias. You're doing it very often every two weeks. We have implemented some of these things, not as sort of a direct consequence of what happened with ChemoCentryx, but take some of that learning and try to basically give the FDA a little bit more cover so that if we do produce something, they can say, look, this is actually how aTyr did things differently, and not make it so much just up to the investigator. Got it. Any last burning questions from the audience? All right, great. We'll wrap it up there. Thank you so much, Sanjay, for joining us. Thank you, everyone in the room and who dialed in as well. Appreciate you joining us.