What changed in this filing

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Item 1. Financial Statements

2022-11-14 compared with 2022-08-15 · 177 added, 155 removed, 568 unchanged (37% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30,

Current assets:

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Preferred stock, $ 0.001 par value per share;

5,000,000 undesignated authorized shares as of June 30, 2022 (unaudited) and December 31, 2021;

Class X Convertible Preferred Stock, issued and outstanding shares –

0 as of June 30, 2022 (unaudited) and December 31, 2021

5,000,000 undesignated authorized shares as of September 30, 2022 (unaudited) and December 31, 2021;

no shares issued or outstanding as of September 30, 2022 (unaudited) and December 31, 2021

Common stock, $ 0.001 par value per share;

85,000,000 and 42,500,000 authorized shares as of June 30, 2022 (unaudited) and December 31, 2021, respectively;

85,000,000 and 42,500,000 authorized shares as of September 30, 2022 (unaudited) and December 31, 2021, respectively;

issued and outstanding shares –

28,127,458 and 27,793,035 as of June 30, 2022 (unaudited) and December 31, 2021, respectively

29,009,382 and 27,793,035 as of September 30, 2022 (unaudited) and December 31, 2021, respectively

Additional paid-in capital

10 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses:

13 unchanged sentences

(in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Consolidated net loss

Other comprehensive loss:

Change in unrealized loss on available-for-sale investments, net of tax

Change in unrealized gain (loss) on available-for-sale investments, net of tax

Comprehensive loss

6 unchanged sentences

(in thousands, except share data)

Three and Six Months Ended June 30, 2022 (unaudited)

Three and Nine Months Ended September 30, 2022 (unaudited)

Comprehensive

13 unchanged sentences

Balance as of June 30, 2022

Three and Six Months Ended June 30, 2021 (unaudited)

Issuance of common stock from at-the-market offerings, net of offering costs

Stock-based compensation

Net unrealized gain on investments, net of tax

Balance as of September 30, 2022

Three and Nine Months Ended September 30, 2021 (unaudited)

Comprehensive

14 unchanged sentences

Balance as of June 30, 2021

Issuance of common stock upon exercise of stock options

Issuance of common stock from at-the-market offerings, net of offering costs

Issuance of common stock from underwritten follow-on offering, net of offering costs

Stock-based compensation

Net unrealized loss on investments, net of tax

Balance as of September 30, 2021

See accompanying notes.

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

23 unchanged sentences

Proceeds from issuance of common stock from committed purchase agreement, net of offering costs

Proceeds from issuance of common stock from underwritten follow-on offering, net of offering costs

Principal paid on finance lease liabilities

Net cash provided by financing activities

34 unchanged sentences

Food and Drug Administration or other regulatory authorities, and our ability to raise capital and conduct business development activities.

Further, in February 2022, the U.S.

and global financial markets experienced volatility following the invasion of Ukraine by Russia, which has led to, and may continue to lead to, additional disruptions to trade, commerce, pricing stability, credit availability and supply chain continuity globally.

It is uncertain what the long-term impact of the ongoing Ukraine-Russia conflict may have on our business.

In addition to the ongoing COVID-19 pandemic, global economic and business activities continue to face widespread macroeconomic uncertainties, including labor shortages, inflation and monetary supply shifts, recession risks and potential disruptions from the Russia-Ukraine conflict, which has resulted in volatility in the U.S.

and global financial markets and which has led to, and may continue to lead to, additional disruptions to trade, commerce, pricing stability, credit availability and supply chain continuity globally.

It is uncertain what the long-term impact of the ongoing Ukraine-Russia conflict may have on our business and we continue to actively monitor the impact of these macroeconomic factors on our results of operations, financial condition and cash flows.

The extent of the impact of these factors on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected timeframe, will depend on future developments, which are uncertain and cannot be predicted;

however, any continued or renewed disruption resulting from these factors could negatively impact our business.

Liquidity and Financial Condition

We have incurred net losses in each year since our inception in 2005, including a consolidated net loss of $ 12.4 million and $ 24.6 million for the three and six months ended June 30, 2022, respectively.

As of June 30, 2022, we had an accumulated deficit of $ 396.9 million.

We believe that our existing cash, cash equivalents, restricted cash and available-for-sale investments of $ 89.3 million as of June 30, 2022 will be sufficient to meet our material cash requirements from known contractual and other obligations for a period of at least one year from the filing date of this Quarterly Report on Form 10-Q.

We have incurred net losses in each year since our inception in 2005, including a consolidated net loss o f $ 13.2 million and $ 37.8 million for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2022, we had an accumulated deficit of $ 410.1 million.

We believe that our existing cash, cash equivalents, restricted cash and available-for-sale investments of $ 79.6 million as of September 30, 2022 will be sufficient to meet our material cash requirements from known contractual and other obligations for a period of at least one year from the filing date of this Quarterly Report on Form 10-Q.

We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years at a minimum.

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However, we may be unable to raise additional capital or enter into such arrangements when needed on favorable terms or at all.

Our failure to raise capital or enter into such arrangements when needed would have a negative impact on our financial condition and ability to develop

our product candidates.

Our failure to raise capital or enter into such arrangements when needed would have a negative impact on our financial condition and ability to develop our product candidates.

Restricted Cash

As of June 30, 2022, restricted cash consisted of approximately $ 0.7 million, which was held as a security deposit in conjunction with our new facility lease as discussed further below in Note 4 –

As of September 30, 2022, restricted cash consisted of approximately $ 2.2 million, which was held as a security deposit in conjunction with our new facility lease and financing leases as discussed further below in Note 4 –

Commitments and Contingencies.

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For a modification that is not a separate contract, we reassess the lease classification using the modified terms and conditions and the facts and circumstances as of the effective date of the modification and recognize the amount of the remeasurement of the lease liability for the modified lease as an adjustment to the corresponding lease ROU asset.

Our ROU assets consist of an operating lease for our facility headquarters and financing leases for various research and development and information technology equipment.

Our ROU assets consist of the Lease (as defined below) and the non-cancelable operating lease for our existing office and laboratory space and financing leases for various research and development and information technology equipment.

We do not separate lease and non-lease components of our long-term leases.

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Potentially dilutive securities not considered for the calculation of diluted net loss per share are as follows (in common stock equivalents):

Six Months Ended June 30,

Nine Months Ended September 30,

Common stock warrants

2 unchanged sentences

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No.

2016-13, Financial Instruments –

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Investment securities are recorded at fair value, defined as the exit price in the principal market in which we would transact, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Level 2 securities are valued using quoted market prices for similar instruments, non-binding market prices that are corroborated by observable market data, or discounted cash flow techniques and include our investments in commercial paper, corporate debt securities and asset-backed securities.

Level 2 securities are valued using quoted market prices for similar instruments, non-binding market prices that are corroborated by observable market data, or discounted

cash flow techniques and include our investments in commercial paper, corporate debt securities and asset-backed securities.

We have no financial liabilities measured at fair value on a recurring basis.

6 unchanged sentences

for Identical

As of June 30, 2022

As of September 30, 2022

Cash equivalents

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Total assets measured at fair value

As of June 30, 2022 and December 31, 2021, available-for-sale investments are detailed as follows (in thousands):

June 30, 2022

As of September 30, 2022 and December 31, 2021, available-for-sale investments are detailed as follows (in thousands):

September 30, 2022

Contractual Maturity

4 unchanged sentences

Municipal bonds

Within 1 year

December 31, 2021

8 unchanged sentences

We intend, and have the ability, to hold our investments in unrealized loss positions, if any, until their amortized cost basis has been recovered.

As of June 30, 2022, all available-for-sale investments had a variety of effective maturity dates of less than two years .

As of June 30, 2022, all available-for-sale investments were in gross unrealized loss positions and have been in such loss positions less than 12 months .

As of September 30, 2022, all available-for-sale investments had a variety of effective maturity dates of less than two years .

As of September 30, 2022, all available-for-sale investments were in gross unrealized loss positions of which 7 of 26 available-for-sale investments with a market value of $ 13.4 million were at a loss position greater than 12 months .

License and Other Agreements

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We received an $ 8.0 million upfront payment in January 2020 and a $ 2.0 million milestone payment in January 2021 following completion of enrollment in the Phase 1 clinical trial.

Kyorin plans to join our Phase 3 clinical trial of efzofitimod in pulmonary sarcoidosis patients (EFZO-FIT study) , and all study activity in Japan will be funded by Kyorin.

Kyorin has joined our Phase 3 clinical trial of efzofitimod in pulmonary sarcoidosis patients (EFZO-FIT study) , and all study activity in Japan will be funded by Kyorin.

We are eligible to receive up to an additional $ 165.0 million in the aggregate upon achievement of certain development, regulatory and sales milestones, as well as tiered royalties ranging from the mid-single digits to mid-teens on net sales in Japan.

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We received the $ 2.0 million from Kyorin in January 2021.

During the three and six months ended June 30, 2022 and 2021, there were no activities that triggered additional license and collaboration agreement revenue under the Kyorin Agreement.

During the three and nine months ended September 30, 2022 and 2021, there were no activities that triggered additional license and collaboration agreement revenue under the Kyorin Agreement.

The remaining milestones and royalty payments under the Kyorin Agreement are variable consideration.

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The research grant agreement between Pangu BioPharma, HKUST and the Government of the Hong Kong Special Administration Region became effective April 1, 2020 .

The term of the project was initially for two years and in December 2021, due to the ongoing COVID-19 pandemic, was extended for an additional six months to September 30, 2022 with no additional costs.

In May 2021, we announced that Pangu BioPharma and HKUST achieved certain milestones for the first year of the project.

The project was completed as of September 30, 2022.

All the contributions provided by the ITC are paid to HKUST and we record expenses under this grant award when incurred.

Expenses for the three months ended June 30, 2022 and 2021 were $ 45,000 and $ 0.1 million, respectively.

Expenses for the six months ended June 30, 2022 and 2021 were $ 0.1 million and $ 0.3 million, respectively.

Expenses for the three months ended September 30, 2022 and 2021 were $ 27,000 and $ 0.1 million, respectively.

Expenses for the nine months ended September 30, 2022 and 2021 were $ 0.1 million and $ 0.3 million, respectively.

Commitments and Contingencies

Operating Leases

Future minimum payments under the non-cancelable operating lease for our existing office and laboratory space and reconciliation to the operating lease liability as of June 30, 2022 were as follows (in thousands):

Operating Lease

Amount representing interest

Present value of lease payments

Current portion of operating lease liability

Long-term operating lease liability, net of current portion

For each of the three months ended June 30, 2022 and 2021, we recorded an operating lease cost of $ 0.2 million.

For each of the six months ended June 30, 2022 and 2021, we recorded an operating lease cost of $ 0.5 million.

As of June 30, 2022, the weighted-average remaining lease term was 0.9 years and the weighted-average discount rate was 9.6 %.

We have a non-cancelable facility lease that is subject to base lease payments, which escalate over the term of the lease, additional charges for common area maintenance and other costs.

In July 2018, we entered into a lease amendment that reduced the space we lease from 24,494 square feet to 20,508 square feet and extended the lease term to May 2023 .

With the lease amendment, we do not have an option to extend the lease.

In May 2022, we entered into a lease (the Lease) with San Diego Creekside, LLC (Landlord), as lessor, pursuant to which we agreed to lease from Landlord approximately 23,696 rentable square feet (subject to increase pursuant to the terms of the Lease) of office and laboratory space.

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We are entitled to an allowance of $ 5.5 million for tenant improvements, including an option to utilize an additional allowance of up to $ 0.6 million, which, if used by us, would be repaid by us as additional monthly base rent, amortized at eight percent ( 8.0 %) per annum during the Lease Term.

We provided a $ 0.7 million security deposit in the form of a letter of credit which is included in restricted cash as of June 30, 2022.

We provided a $ 0.7 million security deposit in the form of a letter of credit which is included in restricted cash as of September 30, 2022.

Future minimum payments under the Lease and the non-cancelable operating lease for our existing office and laboratory space and reconciliation to the operating lease liability as of September 30, 2022 were as follows (in thousands):

Operating Lease

2027 and thereafter

Amount representing interest

Present value of lease payments

Current portion of operating lease liability

Tenant improvement allowance not yet received

Long-term operating lease liability, net of current portion

For each of the three months ended September 30, 2022 and 2021, we recorded an operating lease cost of $ 0.3 million and $ 0.2 million, respectively.

For each of the nine months ended September 30, 2022 and 2021, we recorded an operating lease cost of $ 0.8 million and $ 0.7 million, respectively.

As of September 30, 2022, the weighted-average remaining lease term was 10.4 years and the weighted-average discount rate was 8.8 %.

Financing Leases

In April 2022, we entered into a master financing lease agreement to lease various research and development and information technology equipment over a 48-month term.

Financing lease payments for equipment received in June 2022 will start in July 2022.

Future minimum payments under the non-cancelable financing lease and reconciliation to the financing lease liability as of June 30, 2022 were as follows (in thousands):

Future minimum payments under the non-cancelable financing lease and reconciliation to the financing lease liability as of September 30, 2022 were as follows (in thousands):

Financing Lease

1 unchanged sentence

Present value of lease payments

Current portion of operating lease liability

Long-term operating lease liability, net of current portion

As of June 30, 2022, the weighted-average remaining lease term was 4.1 years and the weighted-average discount rate was 8.76 %.

Current portion of financing lease liability

Long-term financing lease liability, net of current portion

As of September 30, 2022, the weighted-average remaining lease term was 3.8 years and the weighted-average discount rate was 7.2 %.

We provided a $ 1.5 million deposit to be held as collateral for the leased equipment, and this deposit is included in restricted cash as of September 30, 2022.

Stockholders’

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During 2021, we sold an aggregate of 986,267 shares of common stock at a weighted-average price of $ 4.75 per share for net proceeds of $ 4.4 million under the Prior ATM Offering Program.

During the six months ended June 30, 2022, we sold an aggregate of 260,455 shares of common stock at a weighted-average price of $ 6.07 per share for net proceeds of approximately $ 1.5 million under the Prior ATM Offering Program.

During the nine months ended September 30, 2022, we sold an aggregate of 260,455 shares of common stock at a weighted-average price of $ 6.07 per share for net proceeds of approximately $ 1.5 million under the Prior ATM Offering Program.

In April 2022, we terminated the Prior ATM Offering Program.

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Jefferies is entitled to a fixed commission rate of up to 3.0 % of the gross sales proceeds of shares sold under the ATM Offering Program.

During the six months ended June 30, 2022, we sold an aggregate of 69,251 shares of common stock at a weighted-average price of $ 2.80 per share for gross proceeds of approximately $ 0.2 million under the ATM Offering Program.

During the nine months ended September 30, 2022, we sold an aggregate of 951,175 shares of common stock at a weighted-average price of $ 3.55 per share for net proceeds of approximately $ 3.1 million under the ATM Offering Program.

Purchase Agreement

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Concurrently with entering into the Purchase Agreement, we also entered into a registration rights agreement with Aspire Capital, in which we agreed to file one or more registration statements, as permissible and necessary to register under the Securities Act of 1933, as amended, for the resale of the shares of our common stock that have been and may be issued to Aspire Capital under the Purchase Agreement.

During the six months ended June 30, 2021, we sold an aggregate of 3,000,000 shares of common stock at a weighted-average price of $ 5.09 per share for net proceeds of $ 15.2 million under the Purchase Agreement.

During the six months ended June 30, 2022, there were no issuances or sales under the Purchase Agreement.

During the nine months ended September 30, 2021, we sold an aggregate of 3,000,000 shares of common stock at a weighted-average price of $ 5.09 per share for net proceeds of $ 15.2 million under the Purchase Agreement.

During the nine months ended September 30, 2022, there were no issuances or sales under the Purchase Agreement.

Inducement Grants

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Each option vests over a period of four years , with 25 % of the shares vesting on the one-year anniversary of the applicable vesting commencement date and the remaining 75 % vesting in equal monthly installments over three years , subject to continuous employment.

In March 2022, we granted nonstatutory stock options under our Inducement Plan to purchase an aggregate of 58,400 shares of our common stock, each with an exercise price of $ 5.24 per share as inducement awards to 10 new employees.

In May 2022, we granted nonstatutory stock options under our Inducement Plan to purchase an aggregate of 113,400 shares of our common stock, each with an exercise price of $ 3.48 per share as inducement awards to four new employees.

During the nine months ended September 30, 2022, we granted nonstatutory stock options under our Inducement Plan to purchase an aggregate of 192,400 shares of our common stock, with a weighted-average exercise price of $ 4.04 per share as inducement awards to new employees.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance was as follows:

June 30, 2022

September 30, 2022

Common stock warrants

3 unchanged sentences

Shares available under the employee stock purchase plan

The following table summarizes our stock option activity under all equity incentive plans for the six months ended June 30, 2022:

The following table summarizes our stock option activity under all equity incentive plans for the nine months ended September 30, 2022:

Stock Options

2 unchanged sentences

Canceled/forfeited/expired

Outstanding as of June 30, 2022

Outstanding as of September 30, 2022

The assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Expected term (in years)

13 unchanged sentences

Expected dividend yield

The following table summarizes our restricted stock unit activity under all equity incentive plans for the six months ended June 30, 2022:

The following table summarizes our restricted stock unit activity under all equity incentive plans for the nine months ended September 30, 2022:

Number of Outstanding

2 unchanged sentences

Balance as of December 31, 2021

Balance as of June 30, 2022

Balance as of September 30, 2022

Stock-based Compensation

The allocation of stock-based compensation for all options and restricted stock units and stock issued pursuant to our employee stock purchase plan is as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

1 unchanged sentence

Total stock-based compensation expense

Subsequent Events

From July 1, 2022 through August 12, 2022, we sold an aggregate of 497,588 shares of common stock at a weighted-average price of $ 3.38 per share through the ATM Offering Program for net proceeds of $ 1.6 million.

On August 8, 2022, we granted nonstatutory stock options under our Inducement Plan to purchase an aggregate of 20,600 shares of our common stock, each with an exercise price of $ 3.70 per share as inducement awards to four new employees.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Food and Drug Administration (FDA) granted efzofitimod an orphan drug designation for the treatment of sarcoidosis and in April 2022, for the treatment of systemic sclerosis (also known as scleroderma).

In August 2022, the FDA granted efzofitimod fast track designation for the treatment of pulmonary sarcoidosis.

In August 2022, the FDA granted efzofitimod fast track designation for the treatment of pulmonary sarcoidosis, and in September 2022, the FDA granted efzofitimod a second fast track designation for the treatment of scleroderma associated ILD.

In December 2018, we designed a Phase 1b/2a multiple-ascending dose, double-blind, placebo-controlled clinical trial in patients with pulmonary sarcoidosis, a major form of ILD, to evaluate the safety, tolerability, immunogenicity and steroid-sparing effect of efzofitimod, and conduct other exploratory assessments of efficacy, such as lung function.

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Additionally, the study demonstrated consistent dose response for efzofitimod on key efficacy endpoints and improvements compared to placebo, including measures of steroid reduction, lung function, pulmonary sarcoidosis symptom measures and inflammatory biomarkers.

Based on the results of this study, we met with the FDA in February 2022 and presented these data and our plans for subsequent clinical development and path to registration for efzofitimod for the treatment of pulmonary sarcoidosis.

Based on the results of the Phase 1b/2a clinical trial, we believe efzofitimod has potential applications in the treatment of other ILD, such as chronic hypersensitivity pneumonitis and connective tissue disease related ILD.

In May 2022, we announced our intent to initiate, in the third quarter of 2022, a global pivotal Phase 3 randomized, double-blind, placebo-controlled clinical trial to evaluate the efficacy and safety of efzofitimod in patients with pulmonary sarcoidosis (the EFZO-FIT study).

Based on the results of this study, we met with the FDA in February and have had continued correspondence to discuss these data and our plans for subsequent clinical development and path to registration for efzofitimod for the treatment of pulmonary sarcoidosis.

In addition, based

on the results of the Phase 1b/2a clinical trial, we believe efzofitimod has further potential applications in the treatment of other ILD, such as chronic hypersensitivity pneumonitis and connective tissue disease related ILD, including scleroderma-associated ILD.

During the third quarter of 2022, we initiated a global pivotal Phase 3 randomized, double-blind, placebo-controlled clinical trial to evaluate the efficacy and safety of efzofitimod in patients with pulmonary sarcoidosis (the EFZO-FIT study).

The EFZO-FIT study is a 52-week study consisting of three parallel cohorts randomized equally to either 3.0 mg/kg or 5.0 mg/kg of efzofitimod or placebo dosed intravenously once a month for a total of 12 doses.

The study intends to enroll 264 subjects

with pulmonary sarcoidosis at multiple centers in North America, Europe and Japan.

The study is currently enrolling and intends to enroll 264 subjects with pulmonary sarcoidosis at multiple centers in the United States, Europe and Japan.

The trial design incorporates a forced steroid taper.

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Secondary endpoints include measures of lung function and sarcoidosis symptoms.

To date, since our announcement in May 2022, we have had multiple interactions with regulatory authorities in the United States, European Union and Japan along with the submission of study protocol and clinical trial applications to regulatory authorities, ethics committees and institutional review boards.

In addition, site selection, qualification and initiations for several trial sites have occurred, as well as an investigator meeting for U.S.

We are on track to enroll the first patient in this study in the third quarter of 2022.

In September 2022, we dosed the first patient in this study.

In January 2020, we entered into a collaboration and license agreement (Kyorin Agreement) with Kyorin Pharmaceutical Co., Ltd.

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We received an $8.0 million upfront payment in January 2020 and a $2.0 million milestone payment in January 2021 following completion of enrollment in the Phase 1 clinical trial.

Kyorin plans to join the EFZO-FIT study, and all study activity in Japan will be funded by Kyorin.

Kyorin has joined the EFZO-FIT study, and all study activity in Japan will be funded by Kyorin.

We are eligible to receive up to an additional $165.0 million in the aggregate upon achievement of certain development, regulatory and sales milestones, as well as tiered royalties ranging from the mid-single digits to mid-teens on net sales in Japan.

In parallel with our clinical development of efzofitimod, we have been advancing our discovery pipeline of NRP2 antibodies.

ATYR2810 is our lead candidate in oncology from our NRP2 antibody program.

ATYR2810 is a fully humanized monoclonal antibody that is designed to selectively and functionally block the interaction between NRP2 and vascular endothelial growth factor (VEGF).

NRP2 is a pleiotropic cell surface receptor that is highly expressed on certain tumors and increased NRP2 expression is associated with worse outcomes in many cancers, such as overall survival, metastasis and resistance to targeted therapies.

VEGF is a validated mediator of tumor growth and plays a role in immune evasion in the tumor microenvironment.

The role of NRP2 and VEGF signaling in the tumor microenvironment and its importance in the progression of certain aggressive cancers is becoming increasingly validated.

ATYR2810 is in preclinical development for the potential treatment of certain aggressive cancers where NRP2 is implicated, and we plan to initiate a Phase 1 clinical trial in the fourth quarter of 2022.

Discovery Pipeline

In parallel with our clinical development of efzofitimod, we have been advancing our discovery pipeline of tRNA synthetases and NRP2 antibodies.

In February 2021, we announced two new programs from our discovery pipeline of tRNA synthetases.

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In June 2022, we announced that the target receptor of the fragment AARS-1 was identified as fibroblast growth factor receptor 4, indicating that AARS-1 may have therapeutic potential in fibrosis, inflammation and cancer.

In October 2022, we entered into a research collaboration with Dualsystems Biotech AG (Dualsystems), a company specializing in custom proteomics, aimed at accelerating drug discovery and generating new therapeutics based on our extensive intellectual property portfolio.

Under the collaboration, which is exclusive with respect to tRNA related molecules, Dualsystems will utilize their proprietary receptor screening technology and research expertise to attempt to identify and validate 10 new target receptors for tRNA synthetases by 2025.

We have also advanced our preclinical pipeline of NRP2 targeting antibody candidates through internal research efforts, industry and academic collaborations.

ATYR2810 is our product candidate in oncology from our NRP2 antibody program.

ATYR2810 is a fully humanized monoclonal antibody that is designed to selectively and functionally block the interaction between NRP2 and vascular endothelial growth factor (VEGF).

VEGF is a validated mediator of tumor growth and plays a role in immune evasion in the tumor microenvironment.

The role of NRP2 and VEGF signaling in the tumor microenvironment and its importance in the progression of certain aggressive cancers is becoming increasingly validated.

ATYR2810 is in preclinical development for the potential treatment of certain aggressive cancers where NRP2 is implicated.

Due to current market conditions, we intend to focus our resources on prioritizing our efzofitimod program .

Therefore, we have made the strategic decision not to use internal resources to initiate a Phase 1 study of ATYR2810 this year.

We intend to pursue alternative non-dilutive avenues, including academic collaborations, to advance this program.

In March 2020, our subsidiary, Pangu BioPharma Limited (Pangu BioPharma), together with the Hong Kong University of Science and Technology (HKUST) was awarded a grant of approximately $750,000 to build a high-throughput platform for the development of bi-specific antibodies.

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The ITC funded approximately 50% of the total estimated project cost, and we contributed the remaining 50%.

The term of the project was initially for two years and in December 2021, due to complications arising from the ongoing COVID-19 pandemic, was extended for an additional six months to September 30, 2022 with no additional cost.

In May 2021, we announced that Pangu BioPharma and HKUST achieved certain milestones for the first year of the project.

The project was completed as of September 30, 2022.

Impact of the COVID-19 Pandemic and Other Geopolitical and Macroeconomic Conditions

The impacts of the ongoing COVID-19 pandemic on our business have included the delay in enrollment of our now completed Phase 1b/2a clinical trial in patients with pulmonary sarcoidosis and the discontinuation of some patients in that trial, temporary closures of portions of our facilities and those of our licensees and collaborators, disruptions or restrictions on our employees’

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and global financial markets experienced volatility following the invasion of Ukraine by Russia, which has led to disruptions to trade, commerce, pricing stability, credit availability and supply chain continuity globally.

In response to the invasion, the United States, United Kingdom and European Union (EU), along with others, imposed significant new sanctions and export

controls against Russia, Russian banks and certain Russian individuals and may implement additional sanctions or take further punitive actions in the future.

The full economic and social impact of the sanctions imposed on Russia (as well as possible future punitive measures that may be implemented), as well as the counter measures imposed by Russia, in addition to the ongoing military conflict between Ukraine and Russia, which could conceivably expand into the surrounding region, remains uncertain;

In response to the invasion, the United States, United Kingdom and European Union (EU), along with others, imposed significant new sanctions and export controls against Russia, Russian banks and certain Russian individuals and may implement additional sanctions or take further punitive actions in the future.

The full economic and social impact of the sanctions imposed on Russia (as well as possible future punitive measures that may be implemented), as well as the counter measures imposed by Russia, in addition to the ongoing Ukraine-Russia conflict, which could conceivably expand into the surrounding region, remains uncertain;

however, both the conflict and related sanctions have resulted and could continue to result in disruptions to trade, commerce, pricing stability, credit availability and supply chain continuity in both Europe and globally, and has introduced significant uncertainty into global markets.

As a result, our business and results of operations may be adversely affected by the ongoing military conflict between Ukraine and Russia, particularly to the extent it escalates to involve additional countries, further economic sanctions or wider military conflict.

As a result, our business and results of operations may be adversely affected by the ongoing Ukraine-Russia conflict, particularly to the extent it escalates to involve additional countries, further economic sanctions or wider military conflict.

In addition to the ongoing COVID-19 pandemic and the ongoing Ukraine-Russia conflict, global economic and business activities continue to face widespread macroeconomic uncertainties, including labor shortages, inflation and monetary supply shifts, and recession risks, which has resulted in further volatility in the U.S.

and global financial markets and which has led to, and may continue to lead to, additional disruptions to trade, commerce, pricing stability, credit availability and supply chain continuity globally.

The ultimate long-term impact of the COVID-19 pandemic, the ongoing Ukraine-Russia conflict and other evolving geopolitical and macroeconomic conditions on our business is uncertain, although we continue to actively monitor the impact of these factors on our results of operations, financial condition and cash flows.

however, any continued or renewed disruption resulting from these factors could negatively impact our business.

Liquidity and Capital Resources

We have incurred losses and negative cash flows from operations since our inception.

As of June 30, 2022 and December 31, 2021, we had an accumulated deficit of $396.9 million and $372.3 million, respectively, and we expect to continue to incur net losses for the foreseeable future.

As of June 30, 2022 and December 31, 2021, we had cash, cash equivalents, restricted cash and available-for-sale investments of $89.3 million and $107.9 million, respectively.

We believe that our current cash, cash equivalents and available-for-sale investments will be sufficient to meet our material cash requirements from known contractual and other obligations for a period of at least one year from the date of this Quarterly Report.

As of September 30, 2022 and December 31, 2021, we had an accumulated deficit of $410.1 million and $372.3 million, respectively, and we expect to continue to incur net losses for the foreseeable future.

As of September 30, 2022 and December 31, 2021, we had cash, cash equivalents, restricted cash and available-for-sale investments of $79.6 million and $107.9 million, respectively.

We believe that our existing cash, cash equivalents, restricted cash and available-for-sale investments as of September 30, 2022 will be sufficient to meet our material cash requirements from known contractual and other obligations for a period of at least one year from the date of this Quarterly Report.

We believe we will meet longer-term material cash requirements from known contractual and other obligations through a combination of cash, cash equivalents, restricted cash and available-for-sale investments.

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Sources of Cash

From our inception through June 30, 2022, we have financed our operations primarily through the sale of equity securities and convertible debt, venture debt, term loans and through license and collaboration agreement revenues.

From our inception through September 30, 2022, we have financed our operations primarily through the sale of equity securities and convertible debt, venture debt, term loans and through license and collaboration agreement revenues.

Public Offerings

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Jefferies is entitled to a fixed commission rate of up to 3.0% of the gross sales proceeds of shares sold under the ATM Offering Program.

During the three and six months ended June 30, 2022, we sold an aggregate of 69,251 shares of common stock at a weighted-average price of $2.80 per share for gross proceeds of approximately $0.2 million under the ATM Offering Program.

During the nine months ended September 30, 2022, we sold an aggregate of 951,175 shares of common stock at a weighted-average price of $3.55 per share for net proceeds of approximately $3.1 million under the ATM Offering Program.

In March 2021, we entered into a Capital on Demand TM Sales Agreement with JonesTrading Institutional Services LLC (JonesTrading) for an at-the-market offering program (the Prior ATM Offering Program), pursuant to which we were entitled to sell from time to time, at our option, up to an aggregate of $25.0 million of shares of our common stock through JonesTrading, as sales agent or principal.

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During 2021, we sold an aggregate of 986,267 shares of common stock at a weighted-average price of $4.75 per share for net proceeds of $4.4 million under the Prior ATM Offering Program.

During the six months ended June 30, 2022, we sold an aggregate of 260,455 shares of common stock at a weighted-average price of $6.07 per share for net proceeds of approximately $1.5 million under the Prior ATM Offering Program.

During the nine months ended September 30, 2022, we sold an aggregate of 260,455 shares of common stock at a weighted-average price of $6.07 per share for net proceeds of approximately $1.5 million under the Prior ATM Offering Program.

In April 2022, we terminated the Prior ATM Offering Program.

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During 2021, we sold an aggregate of 3,000,000 shares of common stock at a weighted-average price of $5.09 per share for net proceeds of $15.2 million under the Purchase Agreement.

During the six months ended June 30, 2022, there were no issuances or sales under the Purchase Agreement.

As of June 30, 2022, $4.8 million remains available for issuance and sale under the Purchase Agreement.

During the nine months ended September 30, 2022, there were no issuances or sales under the Purchase Agreement.

As of September 30, 2022, $4.8 million remains available for issuance and sale under the Purchase Agreement.

Kyorin Agreement Milestone Payments

We received an $8.0 million upfront payment in January 2020 and a $2.0 million milestone payment in January 2021 following completion of the last subject visit in Kyorin’s Phase 1 clinical trial, and we are eligible to receive up to an additional $165.0 million in the aggregate upon achievement of certain development, regulatory and sales milestones, as well as tiered royalties ranging from the mid-single digits to mid-teens on net sales in Japan.

During the three and six months ended June 30, 2022, there were no activities that triggered additional license and collaboration agreement revenue under the Kyorin Agreement.

During the three and nine months ended September 30, 2022, there were no activities that triggered additional license and collaboration agreement revenue under the Kyorin Agreement.

HKUST Grant Agreement

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The ITC funded approximately 50% of the total estimated project cost, and we contributed the remaining 50%.

During the three and six months ended June 30, 2022, we did not receive any further grants from the ITC or otherwise.

During the three and nine months ended September 30, 2022, we did not receive any further grants from the ITC or otherwise.

The project was completed as of September 30, 2022.

The following table sets forth a summary of the net cash flow activity for each of the periods indicated (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash provided by (used in):

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Operating activities.

Net cash used in operating activities for the six months ended June 30, 2022 and 2021 was $(19.2) million and $(13.5) million, respectively.

The increase in net cash used in operating activities resulted primarily from increased research and development expenditure as efzofitimod has advanced and we continued to advance our discovery efforts in our pipeline of NRP2 antibodies and tRNA systhetases.

Net cash used in operating activities for the nine months ended September 30, 2022 and 2021 was $(31.5) million and $(25.0) million, respectively.

Investing activities.

Net cash provided by (used in) investing activities for the six months ended June 30, 2022 and 2021 was $24.6 million and $(27.4) million, respectively.

Net cash provided by (used in) investing activities for the nine months ended September 30, 2022 and 2021 was $45.2 million and $(42.2) million, respectively.

The fluctuation in net cash provided by (used in) investing activities resulted primarily from the timing differences in investment purchases, sales and maturities, and the fluctuation of our portfolio mix between cash equivalents and investment holdings.

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Financing activities.

Net cash provided by financing activities for the six months ended June 30, 2022 consisted primarily of $1.5 million in proceeds from the issuance and sale of common stock through the Prior ATM Offering Program, net of offering costs.

Net cash provided by financing activities for the six months ended June 30, 2021 consisted primarily of $10.9 million of proceeds from the issuance and sale of common stock, net of offering costs, through the Prior ATM Program and an agreement implementing an at-the-market offering program with H.C.

Net cash provided by financing activities for the nine months ended September 30, 2022 consisted primarily of an aggregate of $4.6 million in proceeds from the issuance and sale of common stock through the ATM Offering Program and Prior ATM Offering Program, net of offering costs.

Net cash provided by financing activities for the nine months ended September 30, 2021 consisted primarily of $80.6 million in net proceeds from the issuance of common stock in an underwritten follow-on public offering, net of offering costs, $14.1 million of proceeds from the issuance and sale of common stock, net of offering costs, through the Prior ATM Program and an at-the-market offering program with H.C.

Wainwright & Co., LLC, which was automatically terminated in March 2021, and $15.2 million of proceeds from the issuance and sale of common stock through the Purchase Agreement, net of offering costs.

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To date, we have not generated any revenues from product sales.

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue to advance efzofitimod in clinical development, including manufacturing and technology

transfer activities for efzofitimod, continue IND-enabling studies and manufacturing activities for ATYR2810, continue our research and development activities with respect to other potential therapies based on tRNA synthetase biology and NPR2 biology, and seek marketing approval for product candidates that we may develop.

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue to advance efzofitimod in clinical development, including a change in our CRO, manufacturing and technology transfer activities for efzofitimod, continue our research and development activities with respect to other potential therapies based on tRNA synthetase biology and NPR2 biology, and seek marketing approval for product candidates that we may develop.

In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.

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Our future capital requirements are difficult to forecast and will depend on many factors, including:

the type, number, scope progress, expansions, results, costs and timing of, our clinical trials and preclinical studies for our product candidates or other potential product candidates or indications which we are pursuing or may choose to pursue in the future;

the costs, timing and outcome of regulatory review of our product candidates;

delays of our planned clinical trials of efzofitimod and ATYR2810;

any resulting cost increases as a result of the ongoing COVID-19 pandemic, economic slowdowns, recessions or market corrections, inflation, rising interest rates and tightening of credit markets ;

delays of our planned clinical trials of efzofitimod;

any resulting cost increases as a result of the ongoing COVID-19 pandemic, the ongoing Ukraine-Russia conflict, other geopolitical and macroeconomic conditions, including labor shortages, economic slowdowns, recessions or market corrections, inflation and monetary supply shifts, rising interest rates and tightening of credit markets ;

the number and characteristics of product candidates that we pursue;

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We may be unable to raise additional funds on acceptable terms or at all.

As a result of the ongoing COVID-19 pandemic and actions taken to slow its spread, the global credit and financial markets have experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, inflation, rising interest rates and uncertainty about economic stability.

Additionally, the invasion of Ukraine by Russia in February 2022 has resulted in further volatility in the U.S.

and global financial markets, which has led to disruptions to trade, commerce, pricing stability, credit availability and supply chain continuity globally.

The full economic and social impact of the sanctions and export controls imposed on Russia, Russian banks and certain Russian individuals by the United States, the United Kingdom and the EU, along with others, or any additional sanctions or punitive actions imposed or taken in the future in response to the invasion, remains uncertain, and could continue to result in significant uncertainty in the global markets, disruptions to trade, commerce, pricing stability, credit availability and supply chain continuity in both Europe and globally.

If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive.

If we are unable to raise additional funds, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

As of June 30, 2022, our material cash requirements from known contractual and other obligations consisted primarily of (i) our non-cancelable operating lease for our existing office and laboratory space (our Existing Lease), (ii) our new facility lease that we entered into in May 2022 (our New Facility Lease), and (iii) our master lease agreement that we entered into in April 2022 (our New Financing Lease) for various research and development and informational technology equipment.

Our Existing Lease is non-cancelable and subject to base lease payments, which escalate over the term of the lease, additional charges for common area maintenance and other costs.

As of September 30, 2022, our material cash requirements from known contractual and other obligations consisted primarily of (i) our non-cancelable operating lease for our existing office and laboratory space, (ii) the Lease that we entered into in May 2022, and (iii) our master financing lease agreement that we entered into in April 2022 for various research and development and informational technology equipment.

Our non-cancelable operating lease is subject to base lease payments, which escalate over the term of the lease, additional charges for common area maintenance and other costs.

In July 2018, we entered into a lease amendment that reduced the space we lease from 24,494 square feet to 20,508 square feet and extended the lease term to May 2023.

With the lease amendment, we do not have an option to extend the Existing Lease.

In May 2022, we entered into the New Facility Lease with San Diego Creekside, LLC (Landlord), as lessor, pursuant to which we agreed to lease from Landlord approximately 23,696 rentable square feet (subject to increase pursuant to the terms of the New Facility Lease) of office and laboratory space.

The term of the lease (the New Facility Lease Term) will commence upon the earlier of April 1, 2023 or the completion of certain leasehold improvements to the Premises (as defined in the New Facility Lease), but not sooner than March 1, 2023 (the New Facility Lease Commencement Date) and continue for 124 months from the New Facility Lease Commencement Date.

We also have one option to extend the New Facility Lease Term for five years.

With the lease amendment, we do not have an option to extend our non-cancelable operating lease.

The term of the lease (the Lease Term) will commence upon the earlier of April 1, 2023 or the completion of certain leasehold improvements to the Premises (as defined in the Lease), but not sooner than March 1, 2023 (the Lease Commencement Date) and continue for 124 months from the Lease Commencement Date.

We also have one option to extend the Lease Term for five years.

Base rent during such extension period would be at the fair market rent for the Premises.

Under the terms of the New Facility Lease, the base rent during the first 12 months of the New Facility Lease Term will be $5.75 per square foot of rentable area per month, subject to certain upward adjustments of approximately 3.0% annually.

We are entitled to an allowance of $5.5 million for tenant improvements, including an option to utilize an additional allowance of up to $0.6 million, which, if used by us, would be repaid by us as additional monthly base rent, amortized at eight percent (8.0%) per annum during the New Facility Lease Term.

We provided a $0.7 million security deposit in the form of a letter of credit which is included in restricted cash as of June 30, 2022.

In April 2022, we entered into the New Financing Lease to lease various research and development and information technology equipment over a 48-month term.

Financing lease payments for equipment received in June 2022 will start in July 2022.

Our material cash requirements from known contractual obligations have not otherwise changed materially since our Annual Report on Form 10-K for the year ended December 31, 2021.

We did not have any off-balance sheet arrangements as of June 30, 2022.

Under the terms of the Lease, the base rent during the first 12 months of the Lease Term will be $5.75 per square foot of rentable area per month, subject to certain upward adjustments of approximately 3.0% annually.

We are entitled to an allowance of $5.5 million for tenant improvements, including an option to utilize an additional allowance of up to $0.6 million, which, if used by us, would be repaid by us as additional monthly base rent, amortized at eight percent (8.0%) per annum during the Lease Term.

We provided a $0.7 million security deposit in the form of a letter of credit which is included in restricted cash as of September 30, 2022.

In April 2022, we entered into a financing lease to lease various research and development and information technology equipment over a 48-month term.

Financing lease liabilities total $0.8 million as of September 30, 2022.

Additionally, we provided $1.5 million in cash collateral for the financing lease, and this amount is included in restricted cash as of September 30, 2022.

Except as described above, our material cash requirements from known contractual obligations have not otherwise changed materially since our Annual Report on Form 10-K for the year ended December 31, 2021.

We did not have any off-balance sheet arrangements as of September 30, 2022.

Financial Operations Overview

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was incorporated in the State of Delaware in September 2005.

The condensed consolidated financial statements in this Quarterly Report include our accounts and our 98% majority-owned subsidiary in Hong Kong, Pangu BioPharma as of June 30, 2022.

The condensed consolidated financial statements in this Quarterly Report include our accounts and our 98% majority-owned subsidiary in Hong Kong, Pangu BioPharma as of September 30, 2022.

All intercompany transactions and balances are eliminated in consolidation.

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We received an $8.0 million upfront payment and a $2.0 milestone payment and we are eligible to receive an additional $165.0 million in the aggregate upon achievement of certain development, regulatory and sales milestones, as well as tiered royalties ranging from the mid-single digits to mid-teens on net sales in Japan.

Kyorin plans to join the EFZO-FIT study, and all study activity in Japan will be funded by Kyorin.

During the three and six months ended and June 30, 2022 and 2021, there were no activities that triggered additional license and collaboration agreement revenue under the Kyorin Agreement.

Kyorin has joined the EFZO-FIT study, and all study activity in Japan will be funded by Kyorin.

During the three and nine months ended September 30, 2022 and 2021, there were no activities that triggered additional license and collaboration agreement revenue under the Kyorin Agreement.

Research and Development Expenses

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costs to acquire, develop and manufacture preclinical study and clinical trial materials;

costs incurred under clinical trial agreements with clinical research organizations (CROs) and investigative sites;

costs incurred under clinical trial agreements with CROs and investigative sites;

costs for laboratory supplies;

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Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

We expect that the levels of our research and development expenses will continue to increase in future years and will consist primarily of costs related to our clinical development and manufacturing of efzofitimod for patients with pulmonary sarcoidosis, including the costs associated with technology transfer to an additional CDMO of efzofitimod, our preclinical development, planned clinical development and manufacturing of ATYR2810 and other potential therapeutics based on tRNA synthetase biology and NRP2 biology.

We expect that the levels of our research and development expenses will continue to increase in future years and will consist primarily of costs related to our clinical development and manufacturing of efzofitimod for patients with pulmonary sarcoidosis, including the costs associated with the change in our CRO and the technology transfer to an additional CDMO of efzofitimod, and other potential therapeutics based on tRNA synthetase biology and NRP2 biology.

We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future preclinical studies and clinical trials of our product candidates.

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Actual results may differ materially from these estimates under different assumptions or conditions.

Though the impact of the ongoing COVID-19 pandemic to our business and operating results presents additional uncertainty, we continue to use the best information available to us in our critical accounting estimates.

Though the impact of the ongoing COVID-19 pandemic, the ongoing Ukraine-Russian conflict and other geopolitical and macroeconomic conditions on our business and operating results presents additional uncertainty, we continue to use the best information available to us in our critical accounting estimates.

We discuss our accounting policies and assumptions that involve a higher degree of judgment and complexity within Note 2 to our audited consolidated financial statements in our 2021 Annual Report.

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Results of Operations

Comparison of the Three Months Ended June 30, 2022 and 2021

The following table summarizes our results of operations for the three months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30,

Comparison of the Three Months Ended September 30, 2022 and 2021

The following table summarizes our results of operations for the three months ended September 30, 2022 and 2021 (in thousands):

Three Months Ended September 30,

Research and development expenses

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Research and development expenses.

Research and development expenses were $9.1 million and $7.6 million for the three months ended June 30, 2022 and 2021, respectively.

The increase of $1.5 million was due primarily to an increase of $1.0 million in start-up costs for the EFZO-FIT study , an increase of $0.9 million in preclinical development for ATYR2810 and our discovery programs and an increase of $0.7 million in compensation related expenses.

The increase was offset by a decrease of $1.1 million in manufacturing costs for efzofitimod due to timing of completion of certain manufacturing activities.

Research and development expenses were $9.9 million and $5.1 million for the three months ended September 30, 2022 and 2021, respectively.

The increase of $4.7 million was due primarily to $3.0 million in start-up costs for the EFZO-FIT study , $0.7 million in increased manufacturing costs for efzofitimod and ATYR2810, an increase of $0.5 million in preclinical development expenses for ATYR2810 and our discovery programs, and an increase of $0.4 million in personnel related expenses.

General and administrative expenses.

General and administrative expenses were $3.4 million and $2.8 million for the three months ended June 30, 2022 and 2021 respectively.

The increase of $0.7 million was due primarily to an increase of $0.3 million in compensation related expense, an increase of $0.2 million in professional fees, an increase of $0.1 million in travel related expenses and an increase of $0.1 million in utilities expenses.

General and administrative expenses were $3.6 million and $2.6 million for the three months ended September 30, 2022 and 2021 respectively.

The increase of $1.0 million was due primarily to an increase of $0.7 million in personnel related expense, and an increase of $0.2 million in professional fees.

Other income (expense), net.

Other income (expense), net was $0.2 million and $53,000 for the three months ended June 30, 2022 and 2021, respectively.

The increase was primarily a result of interest earned on higher cash, cash equivalents, restricted cash and available-for-sale investments balances as of June 30, 2022 compared to the same period in the prior year, which resulted from an underwritten follow-on offering in September 2021.

Comparison of the Six Months Ended June 30, 2022 and 2021

The following table summarizes our results of operations for the six months ended June 30, 2022 and 2021 (in thousands):

Six Months Ended June 30,

Other income (expense), net was $0.2 million and $59,000 for the three months ended September 30, 2022 and 2021, respectively.

The increase was primarily a result of interest earned on higher cash, cash equivalents, restricted cash and available-for-sale investments balances, which resulted from an underwritten follow-on offering in September 2021, as well as higher interest rates as of September 30, 2022 compared to the same period in the prior year.

Comparison of the Nine Months Ended September 30, 2022 and 2021

The following table summarizes our results of operations for the nine months ended September 30, 2022 and 2021 (in thousands):

Nine Months Ended September 30,

Research and development expenses

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Research and development expenses.

Research and development expenses were $18.0 million and $12.2 million for the six months ended June 30, 2022 and 2021, respectively.

The increase of $5.9 million was due primarily to an increase of $0.8 million in start-up costs for the EFZO-FIT study , $2.0 million in product development and manufacturing costs for efzofitimod and ATYR2810, an increase of $1.6 million in preclinical development for ATYR2810 and our discovery programs, and an increase of $1.5 million in compensation related expenses.

Research and development expenses were $27.9 million and $17.3 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase of $10.6 million was due primarily to $3.6 million in start-up costs for the EFZO-FIT study , $2.8 million in increased manufacturing costs for efzofitimod and ATYR2810, an increase of $2.0 million in personnel related expenses, and an increase of $2.4 million in preclinical development expenses for ATYR2810 and our discovery programs.

General and administrative expenses.

General and administrative expenses were $6.9 million and $5.5 million for the six months ended June 30, 2022 and 2021, respectively.

The increase of $1.4 million was due primarily to an increase of $0.9 million in compensation related expenses, an increase of $0.3 million in professional fees, an increase of $0.1 million in travel related expenses and an increase of $0.1 million in utilities expenses.

General and administrative expenses were $10.6 million and $8.1 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase of $2.5 million was due primarily to an increase of $1.5 million in personnel related expenses, and an increase of $0.5 million in professional fees.

Other income (expense), net.

Other income (expense), net was $0.4 million and $0.1 million for the six months ended June 30, 2022 and 2021, respectively.

The increase of $0.3 million was primarily a result of interest earned on higher cash, cash equivalents, restricted cash and available-for-sale investments balances as of June 30, 2022 compared to the same period in the prior year, which resulted from an underwritten follow-on offering in September 2021.

Other income (expense), net was $0.6 million and $0.2 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase of $0.5 million was primarily a result of interest earned on higher cash, cash equivalents, restricted cash and available-for-sale investments balances, which resulted from an underwritten follow-on offering in September 2021 as well as higher interest rates as of September 30, 2022 compared to the same period in the prior year.

Recent Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements