aTYR PHARMA INC 10-Q

Item 1. Financial Statements aTyr Pharma, Inc. Condensed Consolida ted Balance Sheets (in thousands, except share and per share data) March 31, December 31, 2026 2025 (unaudited) Assets Current assets: Cash and cash equivalents $ 10,008 $ 10,743 Available-for-sale investments 56,505 67,944 Other receivables 477 873 Prepaid expenses 586 677 Total current assets 67,576 80,237 Restricted cash 1,805 2,235 Property and equipment, net 4,237 4,263 Operating lease, right-of-use assets 5,441 5,524 Financing lease, right-of-use assets 447 596 Other assets 148 148 Total assets $ 79,654 $ 93,003 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 2,755 $ 3,891 Accrued expenses 7,458 9,791 Current portion of operating lease liability 890 836 Current portion of financing lease liability 596 630 Total current liabilities 11,699 15,148 Long-term operating lease liability, net of current portion 10,063 10,308 Long-term financing lease liability, net of current portion 151 259 Commitments and contingencies (Note 4) Stockholders’ equity: Preferred stock, $ 0.001 par value per share; 5,000,000 undesignated authorized shares as of March 31, 2026 (unaudited) and December 31, 2025, respectively; no shares issued or outstanding as of March 31, 2026 (unaudited) and December 31, 2025 — — Common stock, $ 0.001 par value per share; 170,000,000 authorized shares as of March 31, 2026 (unaudited) and December 31, 2025; issued and outstanding shares – 98,051,212 as of March 31, 2026 (unaudited) and 98,031,104 as of December 31, 2025 98 98 Additional paid-in capital 674,861 673,554 Accumulated other comprehensive loss ( 70 ) ( 8 ) Accumulated deficit ( 616,955 ) ( 606,164 ) Total aTyr Pharma, Inc. stockholders’ equity 57,934 67,480 Noncontrolling interest in Pangu BioPharma Limited ( 193 ) ( 192 ) Total stockholders’ equity 57,741 67,288 Total liabilities and stockholders’ equity $ 79,654 $ 93,003 See accompanying notes. 3 aTyr Pharma, Inc. Condensed Consolidated S tatements of Operations (in thousands, except share and per share data) Three Months Ended March 31, 2026 2025 (unaudited) Operating expenses: Research and development $ 7,317 $ 11,814 General and administrative 4,119 3,959 Total operating expenses 11,436 15,773 Loss from operations ( 11,436 ) ( 15,773 ) Total other income (expense), net 644 892 Consolidated net loss ( 10,792 ) ( 14,881 ) Net loss attributable to noncontrolling interest in Pangu BioPharma Limited 1 1 Net loss attributable to aTyr Pharma, Inc. $ ( 10,791 ) $ ( 14,880 ) Net loss per share, basic and diluted $ ( 0.11 ) $ ( 0.17 ) Shares used in computing net loss per share, basic and diluted 98,043,839 86,485,126 See accompanying notes. 4 aTyr Pharma, Inc. Condensed Consolidated Statements of Comprehensive Loss (in thousands) Three Months Ended March 31, 2026 2025 (unaudited) Consolidated net loss $ ( 10,792 ) $ ( 14,881 ) Other comprehensive loss: Change in unrealized loss on available-for-sale investments, net of tax ( 62 ) ( 26 ) Comprehensive loss ( 10,854 ) ( 14,907 ) Comprehensive loss attributable to noncontrolling interest in Pangu BioPharma Limited 1 1 Comprehensive loss attributable to aTyr Pharma, Inc. common stockholders $ ( 10,853 ) $ ( 14,906 ) See accompanying notes. 5 aTyr Pharma, Inc. Condensed Consolidated Statements of Stockholders’ Equity (in thousands, except share data) Three Months Ended March 31, 2026 (unaudited) Common Stock Additional Paid-In Other Comprehensive Accumulated Noncontrolling Total Stockholders’ Shares Amount Capital Gain/(Loss) Deficit Interest Equity Balance as of December 31, 2025 98,031,104 $ 98 $ 673,554 $ ( 8 ) $ ( 606,164 ) $ ( 192 ) $ 67,288 Issuance of common stock upon release of restricted stock units 20,108 — — — — — — Stock-based compensation — — 1,307 — — — 1,307 Net unrealized loss on investments, net of tax — — — ( 62 ) — — ( 62 ) Net loss — — — — ( 10,791 ) ( 1 ) ( 10,792 ) Balance as of March 31, 2026 98,051,212 $ 98 $ 674,861 $ ( 70 ) $ ( 616,955 ) $ ( 193 ) $ 57,741 Three Months Ended March 31, 2025 (unaudited) Common Stock Additional Paid-In Other Comprehensive Accumulated Noncontrolling Total Stockholders’ Shares Amount Capital Gain/(Loss) Deficit Interest Equity Balance as of December 31, 2024 84,038,922 $ 84 $ 602,021 $ ( 40 ) $ ( 532,046 ) $ ( 187 ) $ 69,832 Issuance of common stock upon release of restricted stock units 21,108 — — — — — — Issuance of common stock upon exercise of stock options 900 — 2 — — — 2 Issuance of common stock from at-the-market offerings, net of offering costs 4,941,895 5 18,752 — — — 18,757 Stock-based compensation — — 1,178 — — — 1,178 Net unrealized loss on investments, net of tax — — — ( 26 ) — — ( 26 ) Net loss — — — — ( 14,880 ) ( 1 ) ( 14,881 ) Balance as of March 31, 2025 89,002,825 $ 89 $ 621,953 $ ( 66 ) $ ( 546,926 ) $ ( 188 ) $ 74,862 See accompanying notes. 6 aTyr Pharma, Inc. Condensed Consolidated S tatements of Cash Flows (in thousands) Three Months Ended March 31, 2026 2025 (unaudited) Cash flows from operating activities: Consolidated net loss $ ( 10,792 ) $ ( 14,881 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 162 167 Stock-based compensation 1,307 1,178 Accretion of discount of available-for-sale investment securities ( 255 ) ( 523 ) Amortization of right-of-use assets 232 216 Changes in operating assets and liabilities: Other receivables 396 748 Prepaid expenses and other assets 91 2,159 Accounts payable and accrued expenses ( 3,467 ) ( 4,322 ) Operating lease liability ( 191 ) ( 162 ) Net cash used in operating activities ( 12,517 ) ( 15,420 ) Cash flows from investing activities: Purchases of property and equipment ( 138 ) — Purchases of available-for-sale investment securities ( 5,868 ) ( 23,105 ) Maturities of available-for-sale investment securities 17,500 18,685 Net cash provided by (used in) investing activities 11,494 ( 4,420 ) Cash flows from financing activities: Proceeds from issuance of common stock through option exercises — 2 Proceeds from issuance of common stock from at-the-market offerings, net of offering costs — 18,757 Principal paid on finance lease liabilities ( 142 ) ( 131 ) Net cash (used in) provided by financing activities ( 142 ) 18,628 Net change in cash, cash equivalents and restricted cash ( 1,165 ) ( 1,212 ) Cash, cash equivalents and restricted cash at beginning of period 12,978 14,006 Cash, cash equivalents and restricted cash at the end of period $ 11,813 $ 12,794 Cash and cash equivalents at the end of period $ 10,008 $ 10,362 Restricted cash at the end of period 1,805 2,432 Cash, cash equivalents and restricted cash at the end of period $ 11,813 $ 12,794 Supplemental disclosure of cash flow information: Interest paid $ 17 $ 28 Purchases of property and equipment in accounts payable $ 15 $ 17 See accompanying notes. 7 aTyr Pharma, Inc. Notes to Condensed Consolid ated Financial Statements (Unaudited) 1. Organization, Business, Basis of Presentation and Summary of Significant Accounting Policies Organization and Business We were incorporated in the state of Delaware on September 8, 2005. We are a clinical stage biotechnology company leveraging evolutionary intelligence to translate tRNA synthetase biology into new therapies for fibrosis and inflammation. tRNA synthetases are ancient, essential proteins that have evolved novel domains that regulate diverse pathways extracellularly in humans. Our discovery platform is focused on unlocking hidden therapeutic intervention points by uncovering signaling pathways driven by our proprietary library of domains derived from all 20 tRNA synthetases. Principles of Consolidation Our unaudited condensed consolidated financial statements include our accounts and our 98 % majority-owned subsidiary in Hong Kong, Pangu BioPharma Limited (Pangu BioPharma). All intercompany transactions and balances are eliminated in consolidation. Unaudited Interim Financial Information The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP) and follow the requirements of the U.S. Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. In our opinion, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of our financial position and our results of operations and cash flows for periods presented. These statements do not include all disclosures required by U.S. GAAP and should be read in conjunction with our financial statements and accompanying notes for the fiscal year ended December 31, 2025, contained in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 5, 2026. The results of the interim periods are not necessarily indicative of the results expected for the full fiscal year or any other interim period or any future year or period. Liquidity and Financial Condition We have incurred net losses and negative cash flows from operations since our inception in 2005, including a consolidated net loss of $ 10.8 m illion for the three months ended March 31, 2026. As of March 31, 2026, we had an accumulated deficit of $ 617.0 million. We currently have an “at-the-market” offering program (the Jefferies ATM Offering Program) through an Open Market Sale Agreement SM with Jefferies LLC (Jefferies). We did not utilize the Jefferies ATM Offering Program during the three months ended March 31, 2026. 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. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, we will need to raise substantial additional capital to fund our operations. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our preclinical and clinical development efforts and the timing and nature of the regulatory approval process for our product candidates. We anticipate that we will seek to fund our operations through equity offerings, grant funding, collaborations, strategic partnerships and/or licensing arrangements, and when we are closer to commercialization of our product candidates potentially through debt financings. 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. We believe that our existing cash, cash equivalents, restricted cash and available-for-sale investments of $ 68.3 million as of March 31, 2026 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. Restricted Cash As of March 31, 2026, restricted cash was approximate ly $ 1.8 mil lion, which was held as a security deposit in conjunction with our corporate headquarters facility lease and financing leases as discussed further in Note 4 - Commitments and Contingencies. 8 Allowance of Credit Losses For available-for-sale investments in an unrealized loss position, we first assess whether we intend to sell, or if it is more likely than not that we will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through earnings. For available-for-sale investments that do not meet the aforementioned criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, we consider the severity of the impairment, any changes in interest rates, market conditions, changes to the underlying credit ratings and forecasted recovery, among other factors. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in interest income through an allowance account. Any impairment that has not been recorded through an allowance for credit losses is included in other comprehensive income (loss) on the unaudited condensed consolidated statements of operations and comprehensive loss. We elected the practical expedient to exclude the applicable accrued interest from both the fair value and amortized costs basis of our available-for-sale investments for purposes of identifying and measuring an impairment. Accrued interest receivable on available-for-sale investments is recorded within other receivables on our unaudited condensed consolidated balance sheets. Our accounting policy is to not measure an allowance for credit loss for accrued interest receivable and to write-off any uncollectible accrued interest receivable as a reversal of interest income in a timely manner, which we consider to be in the period in which we determine the accrued interest will not be collected by us. Use of Estimates Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure for these items in our unaudited condensed consolidated financial statements and accompanying notes. The most significant estimates in our unaudited condensed consolidated financial statements relate to clinical trial and research and development expenses. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ materially from these estimates and assumptions. Accrued Expenses Accrued expenses include salaries, wages, benefits costs, consulting fees, legal and research and development costs. We have entered into contractual arrangements related to our clinical studies with clinical research organizations (CROs) and contracted development and manufacturing organizations (CDMOs) and recognize expense based on work completed and efforts expended pursuant to our contractual arrangements. We make estimates of our accrued CRO costs as of each balance sheet date based on facts and circumstances known at the time and include total trial management costs, sites activated, patients enrolled and number of patient visits. We estimate the time period over which services will be performed and the level of effort to be expended in each period. There may be instances in which payments made to our service providers including CROs and CDMOs, will temporarily exceed the level of services provided and result in a prepayment of the expense. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid expense balance accordingly. Historically, our estimated accrued liabilities have materially approximated actual expenses incurred. Leases We determine if an arrangement is a lease at inception. Short-term leases with an initial term of 12 months or less are not recorded on our balance sheet. For long-term leases with an initial term of greater than 12 months, we recognize a right-of-use asset (ROU) and a lease liability based on the present value of future lease payments using an estimated rate of interest that we would pay to borrow equivalent funds on a collateralized basis at the lease commencement date. We determine the lease term at the commencement date by considering whether renewal options and termination options are reasonably assured of exercise. Rent expense for operating leases is recognized on a straight-line basis over the lease term and is included in operating expenses in our unaudited condensed consolidated statements of operations. For financing leases, interest expense and amortization of the ROU is included in operating expenses in our unaudited condensed consolidated statements of operations and variable lease payments are expensed as incurred. If a lease is modified, the modified contract is evaluated to determine whether it is or contains a lease. If a lease continues to exist, the lease modification is determined to be a separate contract when the modification grants the lessee an additional ROU that is not included in the original lease and the lease payments increase commensurate with the standalone price for the additional ROU. A lease modification that results in a separate contract will be accounted for in the same manner as a new lease. 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 ROU asset. Our ROU assets consist of a non-cancelable operating lease for our corporate headquarters and financing leases for various research and development and information technology equipment. 9 We do not separate lease and non-lease components for our long-term leases. Revenue Recognition We evaluate our agreements under Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers and ASC Topic 808, Collaborative Arrangements . We recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under our agreement, we perform the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation. As part of the accounting for these arrangements, we must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. We use key assumptions to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success. We recognize revenue in one of two ways, over time or at a point in time. We recognize revenue over time when we are executing on our performance obligation over time and our partner receives benefit over time. For example, we recognize revenue over time when we provide research and development services. We recognize revenue at a point in time when we transfer control of a distinct performance obligation to our partner. For example, if a license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. Net Loss Per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock method. Dilutive common stock equivalents are comprised of warrants for common stock, options and restricted stock units outstanding under our stock option plans and estimated shares to be purchased under our employee stock purchase plan. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to our net loss position. Potentially dilutive securities not considered for the calculation of diluted net loss per share are as follows (in common stock equivalents): March 31, 2026 2025 Common stock options and restricted stock units 13,835,392 9,420,566 Employee stock purchase plan 40,707 34,143 Total 13,876,099 9,454,709 Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (CODM) in making decisions regarding resource allocation and assessing performance. We view our operations and manage our business in one operating segment, which includes all activities related to the discovery and development of our product candidates. Our CODM is our Chief Executive Officer , who reviews and evaluates consolidated research and development expenses, general and administrative expenses, net loss, net cash used in operating activities and our consolidated cash and cash equivalents for purposes of making operating decisions, allocating resources and planning and forecasting future periods. 10 The table below summarizes the significant expense categories regularly reviewed by our CODM for the three months ended March 31, 2026 and 2025. Three Months Ended March 31, 2026 2025 Research and development expenses: Efzofitimod expenses $ 3,535 $ 8,804 Preclinical development and other shared research and development expenses 3,355 2,560 Non-cash expenses (depreciation and stock-based compensation) 427 450 Total research and development expenses 7,317 11,814 General and administrative expenses: Other general and administrative expenses 3,076 3,064 Non-cash expenses (depreciation and stock-based compensation) 1,043 895 Total general and administrative expenses 4,119 3,959 Other segment items (1) 644 892 Consolidated net loss $ ( 10,792 ) $ ( 14,881 ) (1) Other segment items includes interest income and interest expense. Recent Accounting Pronouncements In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items on the face of the income statement. The standard is effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of the standard on our consolidated financial statements and related disclosure. 2. Fair Value Measurements The carrying amounts of cash equivalents, prepaid and other assets, accounts payable and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments. Investment securities are recorded at fair value. The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices in active markets. Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly. Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Financial assets measured at fair value on a recurring basis consist of investment securities. 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 U.S. government agencies securities. We have no financial liabilities measured at fair value on a recurring basis. None of our non-financial assets and liabilities are recorded at fair value on a non-recurring basis. No transfers between levels have occurred during the periods presented. 11 Assets measured at fair value on a recurring basis are as follows (in thousands): Fair Value Measurements Using Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) As of March 31, 2026 Assets: Current: Cash equivalents $ 7,345 $ 7,345 $ — $ — Available-for-sale investments: Commercial paper 23,753 — 23,753 — Corporate debt securities 27,729 — 27,729 — Municipal bonds 5,023 — 5,023 — Total available-for-sale investments 56,505 — 56,505 — Total assets measured at fair value $ 63,850 $ 7,345 $ 56,505 $ — Fair Value Measurements Using Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) As of December 31, 2025 Assets: Current: Cash equivalents $ 7,916 $ 7,916 $ — $ — Available-for-sale investments: Commercial paper 33,626 — 33,626 — Corporate debt securities 29,281 — 29,281 — Municipal bonds 5,037 — 5,037 — Total available-for-sale investments 67,944 — 67,944 — Total assets measured at fair value $ 75,860 $ 7,916 $ 67,944 $ — As of March 31, 2026 and December 31, 2025, available-for-sale investments are detailed as follows (in thousands): March 31, 2026 Contractual Maturity Gross Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Market Value Available-for-sale investments: Commercial paper Within 1 year $ 23,756 $ 3 $ ( 6 ) $ 23,753 Corporate debt securities Within 1 year 27,747 — ( 18 ) 27,729 Municipal bonds Within 1 year 5,022 1 — 5,023 $ 56,525 $ 4 $ ( 24 ) $ 56,505 December 31, 2025 Contractual Maturity Gross Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Market Value Available-for-sale investments: Commercial paper Within 1 year $ 33,602 $ 24 $ — $ 33,626 Corporate debt securities Within 1 year 29,269 17 ( 5 ) 29,281 Municipal bonds Within 1 year 5,031 6 — 5,037 $ 67,902 $ 47 $ ( 5 ) $ 67,944 12 We evaluate our available-for-sale debt securities for credit losses when the amortized cost basis exceeds fair value. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in interest income through an allowance account. Unrealized gains and losses that are not credit-related are included in accumulated other comprehensive loss. When evaluating an investment for impairment, we review factors such as the severity of the impairment, changes in underlying credit ratings, our intent to sell or the likelihood that we would be required to sell the investment before its anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. We recorded no allowance for credit losses in the unaudited condensed consolidated statements of operations and comprehensive loss during the three months ended March 31, 2026. As of March 31, 2026, all available-for-sale investments had a variety of effective maturity dates of less than one year . As of March 31, 2026, 11 out of 18 available-for-sale investments were in a gross unrealized loss position, all of which have held this status for less than one year. As of March 31, 2026 and December 31, 2025, accrued interest receivable on available-for-sale investments was $ 0.4 million for each period. 3. License, Collaboration and Other Agreements Kyorin Pharmaceutical Co., Ltd. In January 2020, we entered into a collaboration and license agreement (Kyorin Agreement) with Kyorin Pharmaceutical Co., Ltd. (Kyorin) for the development and commercialization of efzofitimod for the treatment of interstitial lung disease (ILD) in Japan. Under the Kyorin Agreement, Kyorin received an exclusive right to develop and commercialize efzofitimod in Japan for all forms of ILD, and is obligated to fund all research, development, regulatory, marketing and commercialization activities in Japan. In 2020, Kyorin conducted and funded a Phase 1 clinical trial of efzofitimod (known as KRP-R120 in Japan). The Phase 1 clinical trial was a placebo-controlled clinical trial to evaluate the safety, pharmacokinetics (PK) and immunogenicity of efzofitimod in 32 healthy Japanese male volunteers. Efzofitimod was observed to be generally well-tolerated with no drug-related serious adverse events, and PK findings were consistent with previous studies of efzofitimod. Kyorin has also participated in the EFZO-FIT study as the local sponsor in Japan. In February 2023, Kyorin dosed the first patient in Japan in the EFZO-FIT study which triggered a $ 10.0 million milestone payment to us. To date, the Kyorin Agreement has generated $ 20.0 million in upfront and milestone payments to us. We assessed our license and collaboration with Kyorin in accordance with Topic 606 which applies to delivered goods or services to a customer and concluded that Kyorin is a customer. For the three months ended March 31, 2026 and 2025, t here were no activities that triggered additional license and collaboration agreement revenue under the Kyorin Agreement. On May 12, 2026 we received notice of termination of the Kyorin Agreement with Kyorin. Refer to our discussion of the termination in Note 6 – Subsequent Events. 4. Commitments and Contingencies Operating Leases Corporate Headquarters Facility Lease In May 2022, we entered into a non-cancelable facility lease that is subject to base lease payments that started at $ 5.75 per square foot of rentable area per month for the first 12 months of the lease and which escalate 3.0 % annually over the term of the lease, and additional charges for common area maintenance and other costs. The term of the lease (the Lease Term) commenced on March 20, 2023 (the Lease Commencement Date) and will continue for 124 months from the Lease Commencement Date. We also have one option to extend the Lease Term for five years . In April 2024, we entered into a lease amendment for additional common area amenities, effective as of June 2023. 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, 2026. 13 Future minimum payments under the facility lease and a reconciliation to the operating lease liability as of March 31, 2026 were as follows (in thousands): Operating Leases 2026 $ 1,346 2027 1,916 2028 1,975 2029 2,035 2030 and thereafter 7,802 Less: Amount representing interest ( 4,121 ) Present value of lease payments 10,953 Less: Current portion of operating lease liability ( 890 ) Long-term operating lease liability, net of current portion $ 10,063 For each of the three months ended March 31, 2026 and 2025, we recorded an operating lease expense of $ 0.4 million. As of March 31, 2026, the weighted-average remaining lease term was 7.3 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. Future minimum payments under the financing lease and reconciliation to the financing lease liability as of March 31, 2026 were as follows (in thousands): Financing Leases 2026 $ 518 2027 264 Less: Amount representing interest ( 35 ) Present value of lease payments 747 Less: Current portion of financing lease liability ( 596 ) Long-term financing lease liability, net of current portion $ 151 As of March 31, 2026, the weighted-average remaining lease term was 1.0 years and the weighted-average discount rate was 8.4 %. As of March 31, 2026, we have a $ 1.1 million deposit held as collateral for the leased equipment, and this deposit is included in restricted cash. Litigation On October 9, 2025 and October 22, 2025 , two substantially similar putative securities class action complaints were filed in the U.S. District Court for the Southern District of California, naming aTyr Pharma, Inc. and our Chief Executive Officer, Sanjay Shukla. The complaints assert that we and Mr. Shukla violated Section 10(b) of the Exchange Act of 1934, as amended (the Exchange Act), and SEC Rule 10b-5, by making materially false or misleading statements related to efzofitimod. The complaints also assert that Mr. Shukla violated Section 20(a) of the Exchange Act. Plaintiffs seek class certification, an award of unspecified damages, and award of reasonable costs and expenses, including attorneys’ fees and expert fees, and further relief as the court may deem just and proper. On February 9, 2026, the court consolidated the two cases and appointed co-lead plaintiffs to oversee the litigation. On May 1, 2026, co-lead plaintiffs filed an Amended Consolidated Complaint. The Amended Consolidated Complaint is based on the same underlying allegations as the original complaints, asserts the same claims and seeks the same relief, and adds our Chief Financial Officer, Jill M. Broadfoot, as a defendant. Under the current schedule, the deadline to respond to the Amended Consolidated Complaint, including by filing a motion to dismiss, is July 17, 2026. Any opposition to a motion to dismiss is due August 28, 2026 , with any reply due September 28, 2026 . We make provisions for liabilities when they are both probable that a liability has been incurred and the amount can be reasonably estimated. No such liability has been recorded related to this matter. With regard to legal fees, such as attorney fees related to this matter or any other legal matters, we recognize such costs as incurred. 5. Stockholders’ Equity At the Market Offering Programs In April 2022, we entered into an Open Market Sale Agreement SM with Jefferies implementing the Jefferies ATM Offering Program. In December 2024, we amended the Jefferies ATM Offering Program. Under the Jefferies ATM Offering Program we may 14 offer and sell, from time to time and at our option, up to an aggregate of $ 215.0 million of shares of our common stock (inclusive of $ 65.0 million of sales made prior to the amendment) through Jefferies, acting as sales agent. 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. We did not utilize the Jefferies ATM Offering Program during the three months ended March 31, 2026. During the year ended December 31, 2025, we sold an aggregate of 13,887,177 shares of common stock at a weighted-average price of $ 4.94 per share for net proceeds of approximately $ 66.4 million under the Jefferies ATM Offering Program. Common Stock Reserved for Future Issuance Common stock reserved for future issuance was as follows: March 31, 2026 Common stock options and restricted stock units 13,835,392 Shares available under the 2015 equity incentive plan 2,305,370 Shares available under the 2022 inducement plan 167,567 Shares available under the employee stock purchase plan 574,212 16,882,541 The following table summarizes our stock option activity under all equity incentive plans for the three months ended March 31, 2026: Number of Outstanding Stock Options Weighted- Average Exercise Price Outstanding as of December 31, 2025 9,591,504 $ 3.82 Granted 3,974,091 $ 0.71 Canceled/forfeited/expired ( 139,607 ) $ 12.52 Outstanding as of March 31, 2026 13,425,988 $ 2.81 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 March 31, 2026 2025 Expected term (in years) 5.77 – 6.08 6.02 – 6.08 Risk-free interest rate 3.7 % – 3.9 % 4.1 % – 4.5 % Expected volatility 105.5 % – 106.7 % 75.9 % – 77.2 % Expected dividend yield 0.0 % 0.0 % The following table summarizes our restricted stock unit activity under all equity incentive plans for the three months ended March 31, 2026: Number of Outstanding Restricted Stock Units Weighted-Average Grant Date Fair Value Balance as of December 31, 2025 20,108 $ 5.52 Granted 446,940 $ 0.71 Released ( 20,108 ) $ 5.52 Cancelled ( 37,536 ) $ 0.71 Balance as of March 31, 2026 409,404 $ 0.71 15 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 March 31, 2026 2025 Research and development $ 283 $ 304 General and administrative 1,024 874 Total stock-based compensation expense $ 1,307 $ 1,178 6. Subsequent Events On May 12, 2026, we received notice of termination of the Kyorin Agreement with Kyorin. Kyorin elected to terminate the Kyorin Agreement without cause in accordance with the terms of the Kyorin Agreement, and the termination will become effective 90 days after the date of receipt of the notice of termination (the Termination Date). Under the terms of the Kyorin Agreement, Kyorin received exclusive rights to develop and commercialize efzofitimod in Japan for all forms of interstitial lung disease and is obligated to fund all research, development, regulatory, marketing and commercialization activities in Japan until the Termination Date. We are responsible for supplying all drug product for Japan, as well as supporting development activities for efzofitimod, until the Termination Date. As a result of the termination of the Kyorin Agreement, we will not be entitled to receive any further milestone or other payments, including $ 155.0 million in the aggregate that would have been due upon achievement of certain development, regulatory and sales milestones, as well as tiered royalties on any net sales in Japan. Both parties will also cease to have any development or commercialization obligations after the Termination Date and the licenses we granted to Kyorin pursuant to the Kyorin Agreement will cease to be in effect after the Termination Date. Following the Termination Date, the rights to develop and commercialize efzofitimod in Japan for all forms of ILD will revert to us. Consequently, we will hold the rights to develop and commercialize efzofitimod globally.