What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-07 · 72 added, 41 removed, 195 unchanged (37% of the section changed)

27 unchanged sentences

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.

We expected the study to enroll up to 264 subjects with pulmonary sarcoidosis at multiple centers in the United States, Europe, Brazil, and Japan.

The study design incorporates a forced steroid taper.

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The DSMB reviews concluded that the study could continue unmodified.

In July 2024, we completed enrollment of 268 patients, exceeding target enrollment.

Topline data from the study are anticipated in the third quarter of 2025.

In July 2024, we completed enrollment of 268 subjects with pulmonary sarcoidosis at multiple centers in the United States, Europe, Brazil, and Japan, exceeding target enrollment.

In July 2025, we completed the last patient visit in the EFZO-FIT study.

Topline data from the study are expected in mid-September 2025.

In February 2024, we announced an Individual Patient Expanded Access Program (Individual Patient EAP).

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Secondary endpoints include certain measures regarding safety and tolerability.

In July 2024, we amended the study to add an open label extension (OLE) to patients.

In July 2024, we amended the study to add an OLE to patients.

Patients who complete the study and wish to receive ongoing treatment with efzofitimod are eligible to participate in the 24-week OLE.

Based on current enrollment projections, we expect to report interim data from the study in the second quarter of 2025.

In June 2025 we announced interim data from the study showing three out of four efzoftimod-treated diffuse SSc-ILD patients showed clinically important improvement based on the modified Rodnan Skin Score (mRSS) assessment at 12 weeks and that efzofitimod was generally safe and well tolerated at all doses.

We are continuing enrollment and moving toward the 24-week endpoints, including the evaluation of the lung function endpoints to evaluate the ILD component of the disease.

In January 2020, we entered into a collaboration and license agreement (Kyorin Agreement) with Kyorin for the development and commercialization of efzofitimod for the treatment of ILD in Japan.

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Early data suggest ATYR0101 exerts its antifibrotic effects by inducing apoptosis of myofibroblasts in a TGFβ dependent manner.

We believe ATYR0101 may have broad therapeutic applications in multiple fibrotic diseases, such as pulmonary fibrosis, SSc, liver fibrosis and kidney fibrosis.

We believe ATYR0101 may have broad therapeutic applications in multiple fibrotic diseases, such as lung and kidney fibrosis.

ATYR0750 is a fusion protein derived from a domain of alanyl-tRNA synthetase (AARS).

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

As of March 31, 2025, we had an accumulated deficit of $546.9 million, and we expect to continue to incur net losses for the foreseeable future.

As of March 31, 2025, we had cash, cash equivalents, restricted cash and available-for-sale investments of $78.8 million.

As of June 30, 2025, we had an accumulated deficit of $566.5 million, and we expect to continue to incur net losses for the foreseeable future.

As of June 30, 2025, we had cash, cash equivalents, restricted cash and available-for-sale investments of $83.2 million.

We believe that our current cash, cash equivalents, restricted cash 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.

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Sources of Cash

From our inception through March 31, 2025, 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 June 30, 2025, 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.

We rely primarily on the Jefferies ATM Offering Program for financing our activities.

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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 Jefferies ATM Offering Program.

During the year ended December 31, 2024, we sold an aggregate of 20,653,450 shares of common stock at a weighted-average price of $2.02 per share for proceeds of approximately $40.3 million under the Jefferies ATM Offering Program, net of offering costs.

During the three months ended March 31, 2025, we sold an aggregate of 4,941,895 shares of common stock at a weighted-average price of $3.93 per share for proceeds of approximately $18.8 million under the Jefferies ATM Offering Program, net of offering costs.

During the year ended December 31, 2024, we sold an aggregate of 20,653,450 shares of common stock at a weighted-average price of $2.02 per share for net proceeds of approximately $40.3 million under the Jefferies ATM Offering Program.

During the six

months ended June 30, 2025, we sold an aggregate of 8,771,725 shares of common stock at a weighted-average price of $4.32 per share for net proceeds of approximately $36.7 million under the Jefferies ATM Offering Program.

Kyorin Agreement Milestone Payments

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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,

Net cash provided by (used in):

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Operating activities.

Net cash used in operating activities for the three months ended March 31, 2025 and 2024 was $15.4 million and $22.4 million, respectively.

The net cash used during the three months ended March 31, 2025 and 2024 was primarily for on-going costs for efzofitimod development and pre-commercialization activities.

The decrease in net cash used in operating activities during the three months ended March 31, 2025 as compared to the same period in 2024 was due primarily to the timing of certain upfront efzofitimod manufacturing payments made during the three months ended March 31, 2024.

Net cash used in operating activities for the six months ended June 30, 2025 and 2024 was $29.3 million and $42.8 million, respectively.

The net cash used during the six months ended June 30, 2025 and 2024 was primarily for on-going costs for efzofitimod development and pre-commercialization activities.

The decrease in net cash used in operating activities during the six months ended June 30, 2025 as compared to the same period in 2024 was due primarily to the timing of certain upfront efzofitimod manufacturing payments made during the six months ended June 30, 2024.

Investing activities.

Net cash used in investing activities for the three months ended March 31, 2025 and 2024 was $4.4 million and $1.4 million, respectively.

Net cash (used in) provided by investing activities for the six months ended June 30, 2025 and 2024 was $(1.1) million and $5.4 million, respectively.

The fluctuation in net cash 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 three months ended March 31, 2025 and 2024 was $18.6 million and $7.7 million, respectively.

Net cash provided by financing activities for the three months ended March 31, 2025 primarily consisted of $18.8 million in proceeds from the issuance of common stock through the Jefferies ATM Offering Program, net of offering costs.

Net cash provided by financing activities for the three months ended March 31, 2024 consisted of $8.6 million in proceeds from the issuance of common stock through the Jefferies ATM Offering Program, net of offering costs and of which $0.8 million was included in accounts receivable as of March 31, 2024.

Net cash provided by financing activities for the six months ended June 30, 2025 and 2024 was $36.5 million and $21.1 million, respectively.

Net cash provided by financing activities for the six months ended June 30, 2025 primarily consisted of $36.7 million in net proceeds from the issuance of common stock through the Jefferies ATM Offering Program.

Net cash provided by financing activities for the six months ended June 30, 2024 consisted of $21.3 million in net proceeds from the issuance of common stock through the Jefferies ATM Offering Program.

Material Cash Requirements

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To the extent we raise additional capital through the sale of equity, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.

If we raise additional funds through collaborations, strategic partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, our other technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.

If we raise additional funds through

collaborations, strategic partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, our other technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.

The incurrence of additional indebtedness would increase our fixed payment obligations and may require us to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

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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 March 31, 2025, our material cash requirements from known contractual and other obligations consisted primarily of (i) an operating lease for our corporate headquarters and laboratory space, and (ii) our master financing lease agreement for various research and development and informational technology equipment.

As of June 30, 2025, our material cash requirements from known contractual and other obligations consisted primarily of (i) an operating lease for our corporate headquarters and laboratory space, and (ii) our master financing lease agreement for various research and development and informational technology equipment.

Corporate Headquarters Facility Lease

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The amendment increased the total rentable square feet from 23,696 rentable square feet to 24,866 rentable square feet.

We provided a $0.7 million security deposit in the form of a letter of credit which is included in restricted cash as of March 31, 2025.

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, 2025.

Financing Lease

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 $1.3 million as of March 31, 2025.

Additionally, as of March 31, 2025, we have $1.7 million in cash collateral for the financing lease, and this amount is included in restricted cash.

We did not have any off-balance sheet arrangements as of March 31, 2025.

Financing lease liabilities totaled $1.2 million as of June 30, 2025.

Additionally, as of June 30, 2025, we have $1.7 million in cash collateral for the financing lease, and this amount is included in restricted cash.

We did not have any off-balance sheet arrangements as of June 30, 2025.

Financial Operations Overview

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was incorporated in the State of Delaware in September 2005.

The unaudited condensed consolidated financial statements in this Quarterly Report include our accounts and our 98% majority-owned subsidiary in Hong Kong, Pangu BioPharma, as of March 31, 2025.

The unaudited 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, 2025.

All intercompany transactions and balances are eliminated in consolidation.

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• costs to acquire, develop and manufacture preclinical study and clinical trial materials and to support biologics license application (BLA) filing activities with contracted development and manufacturing organizations (CDMOs);

• costs to support our pre-commercialization efforts;

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

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We primarily outsource our clinical trial administration to CROs, and we outsource our manufacturing of clinical trial materials to CDMOs.

These outsourced expenses are typically substantially higher than the expenses we incur on our other product candidates which are all currently

in preclinical development.

These outsourced expenses are typically substantially higher than the expenses we incur on our other product candidates which are all currently in preclinical development.

As such, we separately track and report on the majority of our research and development expenses associated with the advancement of efzofitimod.

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Results of Operations

Comparison of the Three Months Ended March 31, 2025 and 2024

The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2025 and 2024

The following table summarizes our results of operations for the three months ended June 30, 2025 and 2024 (in thousands):

Three Months Ended June 30,

Research and development expenses:

Efzofitimod expenses

Preclinical development and other shared research and development expenses

Non-cash expenses (depreciation and stock-based compensation)

Total research and development expenses

General and administrative expenses:

Other general and administrative expenses

Non-cash expenses (depreciation and stock-based compensation)

Total general and administrative expenses

Other income (expense), net

Research and development expenses.

Research and development expenses were $15.4 million and $14.0 million for the three months ended June 30, 2025 and 2024, respectively.

The increase of $1.4 million was due primarily to an increase of $1.0 million in manufacturing costs for preparation toward a potential BLA filing.

Preclinical development and other shared research and development expenses increased by $0.3 million, and was primarily attributable to increased discovery costs for our preclinical product candidates.

Non-cash expenses increased by $0.1 million primarily due to increased non-cash stock-based compensation expense.

We expect research and development expenses to increase as we advance toward the potential commercialization of efzofitimod.

General and administrative expenses.

General and administrative expenses were $4.9 million and $3.3 million for the three months ended June 30, 2025 and 2024, respectively.

Other general and administrative expenses increased by $1.2 million primarily due to higher personnel related costs and pre-commercialization costs.

Non-cash expenses increased by $0.4 million primarily due to increased non-cash stock-based compensation expenses.

We expect general and administrative expenses to increase as we incur pre-commercialization costs to prepare for the potential commercialization of efzofitimod.

Other income (expense), net.

Other income (expense), net was $0.8 million and $1.0 million for the three months ended June 30, 2025 and 2024, respectively.

The change was primarily a result of lower interest income earned on lower cash balances as well as lower interest rates as compared to the same period in the prior year.

Comparison of the Six Months Ended June 30, 2025 and 2024

The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024 (in thousands):

Six Months Ended June 30,

License and collaboration agreement revenues

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License and collaboration agreement revenues.

Revenues of $0.2 million for the three months ended March 31, 2024 consisted of drug product material sold to Kyorin for the Japan portion of the EFZO-FIT study.

Revenues of $0.2 million for the six months ended June 30, 2024 consisted of drug product material sold to Kyorin for the Japan portion of the EFZO-FIT study.

Research and development expenses.

Research and development expenses were $11.8 million and $13.4 million for the three months ended March 31, 2025 and 2024, respectively.

The decrease of $1.6 million was due primarily to a decrease of $2.2 million in efzofitimod expenses for the EFZO-FIT study since the enrollment was completed in July 2024 as well as decreased manufacturing costs due to the timing of certain manufacturing activities being completed.

Preclinical development and other shared research and development expenses increased by $0.5 million, and was primarily attributable to increase in discovery costs for our preclinical product candidates.

Research and development expenses were $27.2 million and $27.3 million for the six months ended June 30, 2025 and 2024, respectively.

The decrease of $0.1 million was due primarily to a decrease of $2.1 million in EFZO-FIT expense due the completion of the last patient visit in July 2025 offset by an increase of $1.1 million in manufacturing costs due to the timing of certain manufacturing activities being completed.

Preclinical development and other shared research and development expenses increased by $0.8 million, and was primarily attributable to increased discovery costs for our preclinical product candidates.

Non-cash expenses increased by $0.3 million primarily due to increased non-cash stock-based compensation expense.

Despite the decreased expenses as compared to the same period in the prior year, we expect research and development expenses to increase as we advance clinical and manufacturing efforts toward possible commercialization of efzofitimod.

We expect research and development expenses to increase as we advance toward the potential commercialization of efzofitimod.

General and administrative expenses.

General and administrative expenses were $4.0 million and $3.5 million for the three months ended March 31, 2025 and 2024, respectively.

Other general and administrative expenses increased by $0.1 million primarily due to higher personnel related costs.

General and administrative expenses were $8.9 million and $6.8 million for the six months ended June 30, 2025 and 2024, respectively.

The increase of $2.0 million was due primarily to higher personnel related costs and pre-commercialization costs.

Non-cash expenses increased by $0.7 million primarily due to increased non-cash stock-based compensation expenses.

We expect general and administrative expenses to increase as we incur pre-commercialization costs to prepare for the possible commercialization of efzofitimod.

Other income (expense), net.

Other income (expense), net was $0.9 million and $1.1 million for the three months ended March 31, 2025 and 2024, respectively.

The change was primarily a result of lower interest income earned on lower cash balances as compared to the same period in the prior year.

We expect general and administrative expenses to increase as we incur pre-commercialization costs to prepare for the potential commercialization of efzofitimod.

Other income, net.

Other income, net was $1.7 million and $2.2 million for the six months ended June 30, 2025 and 2024, respectively.

The change was primarily a result of lower interest income earned on lower cash balances as well as lower interest rates as 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 2. Management’s Discussion and Analysis