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spk02: Good afternoon, ladies and gentlemen, and welcome to the 8th Tower Farmer fourth quarter and full year 2022 conference call. At this time, all participants are on a listen-only mode. Later, we'll conduct a question and answer session, and instructions will be given at that time. As a reminder, this conference call is being recorded for replay purposes. It is now my pleasure to hand the conference over to Ashley Dunstan, 8th Tower's Director of Investor Relations and Corporate Communications. Ms. Dunstan, you may begin.
spk04: Thank you, and good afternoon, everyone. Thank you for joining us today to discuss ATIRE's fourth quarter and full year 2022 operating results and corporate update. We are joined today by Dr. Sanjay Shukla, our president and CEO, and Ms. Jill Broadfoot, our CFO. On the call, Sanjay will provide an update on our corporate strategy, including our clinical program for EpsoCitimod and research and discovery programs. Jill will review the financial results and our current financial position before handing it back to Sanjay to open the call 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 and 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, subsequently filed quarterly reports on Form 10-Q, and in our other SEC filings. 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, Atire 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.
spk00: Thank you, Ashley. Good afternoon, everyone, and thank you for joining us for our fourth quarter and full year 2022 results conference call. At Atire, we're working to develop a new class of medicines from our tRNA synthetase biology platform with a current focus on disease areas related to inflammation and fibrosis with a high unmet medical need. Our lead therapeutic candidate, efsofitamide, is a novel immunomodulator that down-regulates innate immune responses in uncontrolled inflammatory disease states via selective modulation of Neuropilin 2, or NRP2. We're developing efsofitamide as a potential treatment for patients with interstitial lung disease, or ILD, a group of rare immune-mediated fibrotic lung disorders, with the goal of resolving inflammation to prevent the progression of fibrosis in order to improve outcomes for patients. 2022 was an important year for ATAR, as we advanced epizofitamide to a global pivotal Phase III study in patients with pulmonary sarcoidosis, the most prevalent form of IOD that affects nearly 200,000 people in the U.S. and more than 1.2 million worldwide. Despite current treatments and standard of care, which is primarily steroids, approximately half of patients will develop progressive disease and nearly one in five of all patients will develop lung fibrosis. There remains a need for safer and more effective treatments, including those that reduce steroid burden for patients. This phase three study, which is known as FSOFIT, is currently enrolling at multiple centers in the US, Europe, and Japan. We're pleased with the current pace of enrollment and we expect to provide additional details regarding the progress of this study in the future. Our strategy for Epsom Phenomod includes investigating the role this novel immunomodulator may play as a potential treatment for other more inflammatory forms of ILD. We announced last month that we are expanding the clinical development program for Epsom Phenomod to include a Phase II study in patients with ILD associated with systemic sclerosis, which is known as SSC, or more commonly, scleroderma. This is a major type of connective tissue disease that affects nearly 100,000 people in the U.S., with up to 80% of these patients developing ILD, which is the leading cause of death in these patients. We see SSC ILD as a logical second indication to explore For esophitimib, based on the clinical proof of concept demonstrated in pulmonary sarcoidosis patients and the translational effects seen in an animal model of SSC, where esophitimib was shown to reduce lung and skin fibrosis. Additionally, the path of pathology of SSCID is driven by the same immune cells that are central to pulmonary sarcoidosis pathology. And RP2 is upregulated on these cells and is also implicated in scleroderma. Furthermore, like sarcoidosis, standard of care is limited and current treatments are not disease-modifying and do not improve quality of life. We recently received clearance of an investigational new drug application by the US FDA for a Phase II study of esophitamide in patients with SSC-ILD, and we're planning to initiate this study later this year. This Phase II study is expected to be a randomized double-blind placebo-controlled proof-of-concept study to evaluate the efficacy, safety, and tolerability of F-sulfidamide in patients with SSCIOD. This is expected to be a 28-week study with three parallel cohorts randomized to either high or low dose F-sulfidamide or placebo, dosed intravenously monthly for a total of six doses. The study intends to enroll 25 patients with progressive disease who are currently receiving background mycophenolate therapy at multiple centers in the U.S. The primary objective of the study is to evaluate the efficacy of multiple doses of intravenous efsofitamide on pulmonary, cutaneous, and systemic manifestations in patients with SSC-ILD. We expect to provide additional details about the study once it begins. This program expansion increases the potential market opportunity for efsofitamide in these forms of ILD. Taken collectively, We believe there is a multi-billion dollar global market opportunity for efsofitamide in pulmonary sarcoidosis and SSCILD, and situates HR as the biotech leader in ILD. While our primary focus is our clinical program for efsofitamide, we continue to leverage our intellectual property estate, covering fragments from all 20 human tRNA synthetases, and utilize our platform as an engine to generate potential pipeline candidates and identify therapeutic targets. By leveraging the advanced technology made available to us through our research collaboration with Dual Systems Biotech, we have the opportunity to increase productivity in our discovery engine and efficiently generate new therapeutics from our tRNA synthetase domain library. As a reminder, in addition to Absofinamab, this platform has recently generated data characterizing the extracellular targets for two previously uncharacterized tRNA synthetase domains, which identified specific interactions with key targets involved in fibrosis. We're excited to advance pipeline candidates through the discovery phase and unlock the unique biology underlying these novel pathways while we work to complete our two clinical trials for efsofitamide. We also plan to actively explore ways to accelerate these discovery programs including through business development. I'll now turn it over to our Chief Financial Officer, Jill Broadfoot, to review our financial results.
spk05: Thank you, Sanjay. Our results of operations included research and development expenses of $42.8 million for the year ended 2022, which consisted of clinical development costs for the Phase III ESOFIT study, manufacturing costs for the FSOFIDIMOD and ATYR 2810 programs, and research and development costs for the FSOFIDIMOD and Discovery programs. Also, our general and administrative expenses were $14 million for the year ended 2022. We ended the year 2022 with $69.3 million in cash, restricted cash, cash equivalents, and investments. Subsequent to the end of the year, we received a 10 million milestone payment in connection with a current agreement that was related to their initiation of the FSOFIT study in Japan. And we generated gross proceeds of approximately 52 million from the public offering of common stock. Based on our current operational plans and existing cash, we believe our cash runway extends into 2026. which is expected to be sufficient to fund the company through the readouts for our two esophitimod clinical trials. This takes into account the allocation of resources to programs that are driving the most meaningful value for the company, namely the clinical development program for esophitimod and maintaining an active discovery program with our tRNA synthetase pipeline candidates where we intend to continue to identify targets for some of our tRNA synthetase fragments, but not proceed with more costly late-stage preclinical activities. We expect this strategy to reduce our spend on late-stage preclinical activities by over 30% compared to the prior year. In addition to program allocation, This forecast does not take into account any potential financial upsides, such as the opportunity for additional milestone payments from Kirin, our partner for the development and commercialization of Essofitimod for ILD in Japan. While the forecast does consider some partial proceeds from the prudent use of our at-the-market facility, it also does not include any additional proceeds that may result from business development efforts. Now I'd like to turn the call back over to Sanjay before we open it up to Q&A.
spk00: Thank you, Jill. As mentioned, 2022 was a year of significant accomplishments for ADTR. As we now start 2023, we believe we have the financial resources and a strategic plan to carry us through the next inflection point of the company. Moving forward with our focus on executing our two clinical trials and generating discovery targets from our pipeline, we intend to only hold an annual fourth quarter and full-year conference call to discuss our financial results and provide operational updates. On a go-forward basis, in order to streamline our internal process, we'll release quarterly results by press release only. We plan to continue to provide a high degree of transparency regarding the progress of our programs and pipeline through press releases, presentations, and events. So in closing, we appreciate your interest. At this time, Jill and I will be happy to take your questions.
spk02: Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star 11 on your telephone. Again, to ask a question, please press star 11. One moment for our first question. Our first question comes from the line of Gregory Renza of RBC. Your line is open.
spk03: Great. Thanks, Sanjay and team. Congrats on the progress, and thanks for taking my questions. Sanjay, to the extent possible, it would be great to hear just a little bit more about the scleroderma ILD trial. It's great to hear that getting up and running. And just as you think about setting that up, certainly with the 28-week study, it looks like there's the possibility of having some clarity on this indication prior to the efsofit trial. So I'm just curious how you think about how that could kind of inform our understanding of efsofitimab in clinic. And then maybe just related to that, as we think about the fixed doses of 270 and 450, how we should think about that as it pertains to the dosing in the efsofit trial. Thanks so much.
spk00: Sure, Greg. Good question. So SSCIOD is something that years ago we we thought about actually moving into before sarcoidosis. We had quite a bit of debate with pulmonologists, rheumatologists around the world. They actually wanted us to move into both indications. But back then, as a sub $10 million market cap company, we had to prioritize, and our view was we needed to establish proof of concept. Sarcoidosis was picked, but it's always been in the back of the mind of many of the rheumatology experts that efsofitimod could be useful in this indication. Back in 2017, 2018 time period, we ran a very, very difficult mouse model comparing efsofitimod to Nintenitib. In that model, efsofitimod did a really nice job, and in the early phase of that model, out-competed Nintenitib, showing significant amelioration of lung and skin fibrosis. So always been in the back of our mind that this could be a natural expansion. What we've seen in the market after our proof of concept is an overwhelming interest by more rheumatologists and pulmonary experts on the autoimmune side to try efsofitamide with their patients. Some of the rheumatologists involved in our last trial immediately after our results wanted to attempt to use efsofitamide because there really isn't anything out there for these patients. Microfenolate is used systemically, but once you develop ILD and you have scleroderma, it can really be perhaps the most serious morbidity for these patients, and mortality rates basically approach 75 to 80% in some of these patients. So we knew we had strong rationale. As it turns out, last summer, one of the, through some of the interactions even with the FDA, there were questions about moving into other forms of ILD, and we quickly received a fast-track designation based on our preclinical data. So over the last several months, we sat down with those experts. We wrote a protocol that we think now can establish proof of concept in that indication. We think this effectively doubles the market opportunity for efsofitamide. We always thought it was a solid opportunity in sarcoidosis, but now with SSC as well, we clearly are in a multi-billion dollar space, and we're the leader. We're the furthest along here. With regard to the trial, it is a six-month trial, but we want to be able to establish a signal, primarily looking at lung. I'll be able to provide more details, probably through a KOL call as well, where we can learn a little bit more about scleroderma But the existing drugs that are out there, even those that are approved, show limited, limited efficacy, mostly just less reduction of decline of FVC. We think our drug can do better. And none of those therapies that are out there for patients do anything for quality of life. They don't move the needle at all with skin inflammation or fibrosis. So F-sulfidamide provides a real strong opportunity for us to move into scleroderma ILD while keeping our eyes on the ball with sarcoidosis. With regards to dosing, we are and we have contemplated a fixed dose. This is just going to allow us to have a little bit more commercial knowledge around our drug. It's a small point, but the 450 and 270 milligrams that you point out, they approximate 5 milligrams per kilogram and 3 milligrams per kilogram from our current trial. It's just going to give us the opportunity to look at our drug from a fixed dose versus a weight-based dose in preparation to commercialize the drug. So it's going to give us a little bit more data looking at it in this manner in this trial. Nonetheless, I think we can get the data and I expect to get the data in 2024. I'll probably guide to exactly when that would be, and that would be ahead of when we expect sarcoidosis readouts, which I think right now are on track, as I said, for Q1 2025. So, there's two real opportunities here, you know, I would say in the next several years for F. sulfidamod to demonstrate not only clinical proof concept in this indication, but clinical efficacy in sarcoidosis, and this is why we think we're really poised to be the leader in a space that we're the furthest along.
spk03: That's great. Very helpful. Maybe I'll sneak in a more near-term quick one. Just with respect to ATS coming up in May, I'm just curious if there's anything you wanted to highlight for those posters and presentation, and just mainly around what should we and the physician community be looking at in order to to really just enhance their confidence and our confidence in SFIDMA's mechanism of action. Thanks again, and congrats on the progress, Sanjay.
spk00: Thanks, Greg. And to mention ATS, thank you for prompting that. We have two, I think, really exciting data points coming out there. The first you mentioned is the mechanism of action. We've made significant strides, I would say, in the last six to nine months in fully understanding You're going to see some more data come out at ATS pointing to how efsofitamide modulates myeloid cells. This is something that I think is going to be really useful for us to help enrollment, but also to start to give those clinicians a better understanding of how the drug is basically changing the immune system. So we have a presentation that has been upgraded to a symposia. And I would expect to have a full house there as most of the clinicians really want to now understand how did we see some of the outstanding effects we saw in our last trial. I'll also add that we also have a small exposure response analysis poster that's going to be coming out for those of you that understand what this means. It basically looks at our last phase two data, gives us further confidence that as you administer basically more afsofitamide, we see better and better response. So this was a third party analysis done by a sophisticated PK PD group that is well known to many folks and will be, everyone will see it on the poster. This is another way that we can look at our phase two data and say the trends we observed, when we now look at it from a more sophisticated statistical PK modeling perspective, the more drug you give with F-sulfidamide, the better the response. And it also highlights that we're approaching Emax, which means a five milligram dose is about 88, 90% to its maximal benefit. Remember, the outstanding benefits we saw in quality of life, steroid reduction, NFVC, have never really been seen before. Those three things, we check the box there that experts have been wanting for the last 50 years. This exposure response will provide even further confidence for those clinicians who really want to see some of the pharmacokinetic data. So two very important presentations at ATS. We'll also be spending a lot of time with our investigators, our worldwide investigators, not just from the U.S., but also from Europe and Japan. So it will be a busy week for us or five days for us in D.C. in May.
spk02: Thank you. One moment, please. Our next question comes from the line of Joseph Pantagenas of HC Wainwright. Your line is open.
spk06: Hi, my name is Sarah. I'm for Joe. Thanks for taking the questions. Just following up on the earlier question regarding SSC ILD, are there plans currently to initiate the Phase II study outside the U.S. and then within the U.S.? Are there particular regions you would expect to see outperform in this study? Thanks.
spk00: Good question. So our current plan is to focus on the U.S. We want to be able to leverage, frankly, the sites that we already have activated in sarcoidosis. Why is this important? Things such as contracts, legal, startup, it's already been negotiated on the sarcoidosis side. So I'll use, for example, I'm using this as an example, the Cleveland Clinic, which is our lead center for the sarcoidosis trial. Colleagues down the hall in the same pulmonary group will want to launch in F-sulfidamide. So operationalizing and getting startup, I think we can be a lot faster than a typical biotech by leveraging the existing sites that are interested and who have the patience in SSC-ILD. We have a lot of interest in Europe and Japan to participate, but right now the plans are just to sort of stick to the US. It is a smaller trial, 25 patients. We're aiming to get proof of concept in this trial. We think focusing on the US here is the best way for us to get readouts as quickly as possible. Right now that's a plan I really feel good about, given the fact that we have existing relationships with more than 30 centers in the U.S. And we're not going to need 30 centers for this trial. We'll probably focus on a core, say, 10 or 12 once we launch.
spk06: Okay, great. Yeah, that's helpful. And if I could, I'll ask one more. You reported dosing your first patient last month with your partner in Japan. Can you give any color on the current enrollment trajectory there? Anything you can reveal about likely size or anything regarding trajectory in Japan in general? Thanks.
spk00: I mean, we're thrilled with getting started there. Of course, that kicked off a $10 million. We've received a $10 million milestone payment from our partner, Curin. It's a very important component of our trial. We expect to potentially enroll about somewhere in the neighborhood of about 10% of our patients from Japan. So you're looking at, say, 25, 26 patients. Thus far, the trajectory has been great in Japan. I've been very happy with the performance there. In general, also the pace of enrollment, I'm very encouraged by where we are globally. So right now there's competition between sites and countries, and we continue to generate goodwill that way. The goal here is to really focus on executing this trial, and Japan is an important component, and thus far very pleased with the fast start there.
spk06: Great. Thank you so much.
spk02: Thank you. One moment, please. Our next question comes from the line of Yeo Jin of Laidlaw. Your line is open.
spk01: Great. Thanks for taking the questions and congrats on the progress. In terms of SSC-ILD trials, I recall one of the secondary endpoint in the skin analysis about 12 weeks versus the primary endpoint of 24 weeks. I'm just curious what the sort of rationale behind it, and I have another follow-up.
spk00: Yeah, Yael. We are going to be able to look at cutaneous readouts in SSC-ILD. As you point out, at about 12 weeks in the protocol, we're going to do some sampling to be able to look at, first of all, any kind of immune cell change that we see in those skin plaques. We may look at some of the visual changes, quality of life, things of that nature. So the advantage of SSC-ILD is easier access to skin readouts. Unlike sarcoidosis, where a very small percentage of patients have cutaneous nodules, these scleroderma patients are going to have skin manifestations And we believe efsofitamide could positively impact these manifestations. So we'll be looking at 12 weeks to see if we see any changes, you know, any changes at the local histopath level, but also just clinically as well. So it is going to allow us to have an early read on the skin readouts while we really focus on lung, which has been the approved endpoint for the existing therapies for efsofitamide.
spk01: Okay, great. Maybe just one more question here that given the phase two, given this study will be on the stable background medicine, would this to initially consider a quote unquote second line therapy, or you have other thoughts in terms of how to position the drug, this drug in the FSC, ILD space and effects?
spk00: Yeah, so mycophenolate is the standard of care for when you have scleroderma. Some docs can try other kinds of immunosuppressants as well, but scleroderma typically is treated systemically by mycophenolate. And mycophenolate does a pretty good job in helping those patients. However, once you develop interstitial lung disease, this is a much more serious complication. And there, mycophenolate has not been able to really show the same utility as it does systemically. we need a better therapy for these patients. And that's a more serious diagnosis. So once you progress to become fibrotic in your lungs and you have inflammation, now you have SSC-ILD. And this is where we think efsofitamide can have an advantage and play a role. So it could work on top of microphenolate. It can help these patients in a way microphenolate can't. So in many ways, it would be a first-line therapy for SSC-ILD, but it would be an add-on therapy for scleroderma patients. What I don't know is If efsofenamide could also have some systemic effects, we're going to be looking at that as well because we are looking at cutaneous, pulmonary, and systemic. And there's also the potential for efsofenamide to do some positive things for these patients systemically working with or without microphenolate. So this is going to be allowed in the next trial. Most patients I would expect to be on microphenolate. Could there be some that are not? various reasons. Tox could be a reason. Well, then efsofitamide could be attractive. So we'll be able to look at, you know, with or without microfilament. But right now, I would anticipate most of these patients will be already on that for their systemic disease.
spk01: Okay, great. That's very helpful and appreciate that and congrats on all the progress so far.
spk00: Thanks, Yil.
spk02: Thank you. I'm showing no further questions at this time. Let's turn the call back over to Sanjay Shukla for any closing remarks.
spk00: Great questions today. Appreciate everyone's interest. Tough tape today. Tough day to put out earnings. But I really think that moving forward, we are going to be focusing on execution here. Really paramount for us to keep our heads down, move these trials forward, and aim for readouts here. and expect good things here in 2024 and 2025. So thank you all for your interest. Be well.
spk02: Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.
spk05: The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 1 1.
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