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Item 1. Business

2022-03-15 compared with 2021-03-24 · 304 added, 276 removed, 355 unchanged (62% of the section changed)

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Built on more than a decade of foundational science on extracellular tRNA synthetase biology and its effect on immune responses, we have built a global intellectual property estate directed to a potential pipeline of protein compositions derived from 20 tRNA synthetase genes and their extracellular targets, such as neuropilin-2 (NRP2).

Our lead clinical product candidate, ATYR1923, is a selective modulator of NRP2 that downregulates both the innate and adaptive immune responses in uncontrolled inflammatory disease states.

We are developing ATYR1923 as a potential disease-modifying therapy for patients with severe inflammatory lung diseases with high unmet medical need.

This includes interstitial lung diseases (ILD), a group of rare immune-mediated disorders that cause progressive fibrosis of the lung, and severe respiratory complications caused by COVID-19.

We selected pulmonary sarcoidosis as our first ILD indication and recently completed enrollment in a Phase 1b/2a multi-center clinical trial.

The study has been designed to evaluate the safety, tolerability, steroid-sparing effect and immunogenicity of multiple doses of ATYR1923 and to evaluate established clinical endpoints and certain biomarkers to assess preliminary clinical activity of ATYR1923.

The results of this study will guide future development of ATYR1923 in pulmonary sarcoidosis and provide insight for the potential of ATYR1923 in other ILD such as chronic hypersensitivity pneumonitis (CHP) and connective tissue disease related ILD (CTD-ILD).

In response to the COVID-19 pandemic, we conducted a Phase 2 study in patients with COVID-19 related severe respiratory complications.

The study was designed to evaluate the safety and preliminary efficacy of ATYR1923 as compared to placebo through the assessment of key clinical outcome measures.

In early 2021, we reported positive data which showed that the trial met its primary endpoint of safety, demonstrating that a single, intravenous (IV) dose of ATYR1923 was generally safe and well-tolerated in both the 1.0 and 3.0 mg/kg treatment groups, with no drug-related serious adverse events.

The study also showed a signal of activity in the 3.0 mg/kg cohort.

In addition, patients treated with ATYR1923 demonstrated a trend of overall improvement in key biomarkers analyzed compared to placebo.

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

(Kyorin) for the development and commercialization of ATYR1923 for ILD in Japan.

Under the agreement (the Kyorin Agreement), Kyorin received an exclusive right to develop and commercialize ATYR1923 in Japan for all forms of ILD.

Under the terms of the Kyorin Agreement, Kyorin is obligated to fund all research, development, regulatory, marketing and commercialization activities in Japan.

In September 2020, Kyorin began dosing patients in a Phase 1 clinical trial of ATYR1923 (known as KRP-R120 in Japan) and completed the last subject visit in December 2020.

The Phase 1 clinical trial, which was conducted and funded by Kyorin, is a placebo-controlled clinical trial to evaluate the safety, pharmacokinetics (PK) and immunogenicity of ATYR1923 in 32 healthy Japanese male volunteers.

Results from this study are intended to enable Kyorin to initiate patient clinical trials in ILD in Japan.

We received an $8.0 million upfront payment in January 2020 and a $2.0 million milestone payment in January 2021 upon completion of enrollment in the Phase 1 clinical trial, and 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 conjunction with our clinical development of ATYR1923, we have in parallel been advancing our discovery pipeline of NRP2 antibodies and tRNA synthetases.

In November 2020, we declared our lead Investigational New Drug (IND) candidate in oncology from our NRP2 antibody program, ATYR2810.

ATYR2810 is a fully humanized monoclonal antibody that specifically and functionally blocks the interaction between NRP2 and one of its primary ligands, vascular endothelial growth factor (VEGF).

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

NRP2 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.

Our lead therapeutic candidate, efzofitimod (the non-proprietary name for ATYR1923), is a fusion protein comprised of the immunomodulatory domain of histidyl-tRNA synthetase fused to the fragment crystallizable (Fc) region of a human antibody, and serves as a selective modulator of NRP2 that downregulates innate and adaptive immune response in inflammatory disease states.

We are developing efzofitimod as a potential disease-modifying therapy for patients with fibrotic lung diseases with high unmet medical need.

This includes interstitial lung diseases (ILD), a group of rare immune-mediated disorders that cause progressive fibrosis of the lung.

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.

In September 2021, we announced positive results and clinical proof-of-concept from the Phase 1b/2a clinical trial in 37 patients with pulmonary sarcoidosis.

Efzofitimod was safe and well-tolerated at all doses administered with no serious drug-related adverse events or signal of immunogenicity.

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 U.S.

Food and Drug Administration (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.

As a result of the meeting, we intend to initiate a planned registrational trial of efzofitimod in the third quarter of 2022.

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

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 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 September 2020, Kyorin began dosing patients in a Phase 1 clinical trial of efzofitimod (known as KRP-R120 in Japan) and completed the last subject visit in December 2020.

The Phase 1 clinical trial, which was conducted and funded by Kyorin, 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.

We received an $8.0 million upfront payment in January 2020 and a $2.0 million milestone payment in January 2021 upon completion of enrollment in the 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.

In January 2022, the FDA granted efzofitimod an orphan drug designation for the treatment of sarcoidosis.

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

In November 2020, we announced ATYR2810 as our lead Investigational New Drug (IND) candidate in oncology from our NRP2 antibody program.

ATYR2810 is a fully humanized monoclonal antibody that is designed to specifically and functionally block the interaction between NRP2 and one of its primary ligands, 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.

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 second half of 2022.

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.

The two-year project is being funded by the Hong Kong government’s Innovation and Technology Commission under the Partnership Research Program (PRP).

The project is being funded by the Hong Kong government’s Innovation and Technology Commission (ITC) under the Partnership Research Program (PRP).

The PRP aims to support research and development projects undertaken by companies in collaboration with local universities and public research institutions.

The grant is expected to fund approximately 50% of the total estimated project cost, and we expect to contribute the remaining 50%.

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 with no additional cost s .

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

In February 2021, we announced two new discovery programs from our tRNA synthetase platform.

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We are also advancing our preclinical pipeline of tRNA synthetases and NRP2 targeting candidates through internal research efforts, industry and academic collaborations.

The impact of the COVID-19 pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world.

Impacts to our business have included the delay in enrollment of our 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 employee's ability to travel and delays in certain research and development activities.

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’ ability to travel and delays in certain research and development activities.

Other potential impacts to our business include, but are not limited to disruptions to or delays in other clinical trials, third-party manufacturing supply and other operations, the potential diversion of healthcare resources away from the conduct of clinical trials to focus on pandemic concerns, interruptions or delays in the operations of the FDA or other regulatory authorities, and our ability to raise capital and conduct business development activities.

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Key elements of our strategy include the following:

Develop ATYR1923 to address unmet medical needs within inflammatory lung diseases.

We believe that by establishing proof-of-concept in pulmonary sarcoidosis, we can gain insight to the potential of ATYR1923 in other ILD, such as CHP and CTD-ILD.

Our resources are devoted to completing our ATYR1923 Phase 1b/2a clinical trial and, if that trial is successful, we believe we can expedite development of ATYR1923 for pulmonary sarcoidosis towards regulatory approval.

In addition, success in our ATYR1923 Phase 1b/2a trial and our Kyorin Agreement, could give us the opportunity to potentially launch additional Phase 2 clinical trials for both CHP and CTD-ILD.

We plan on leveraging data from our ATYR1923 Phase 2 clinical trial in COVID-19 patients with severe respiratory complications for our mechanistic understanding of ATYR1923 and for its application in ILD.

Future development plans in COVID-19 are being assessed in light of the evolving pandemic and therapeutic landscape and availability of non-dilutive financing.

Develop efzofitimod to address unmet medical needs within fibrotic lung diseases.

Based on the positive results and clinical proof-of-concept from our efzofitimod Phase 1b/2a clinical trial in September 2021, we believe we can expedite development of efzofitimod for pulmonary sarcoidosis toward regulatory approval.

In addition, the positive results from our efzofitimod Phase 1b/2a trial, as well as funding from the Kyorin Agreement, could give us the opportunity to potentially launch additional Phase 2 clinical trials of efzofitimod for both CHP and CTD-ILD.

Develop ATYR2810 to address unmet medical needs within certain aggressive cancers where NRP2 is implicated and continue to expand our knowledge on the therapeutic potential of NRP2 antibodies by utilizing our leadership position in this emerging area of biology.

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These associations may represent new therapeutic drug opportunities, such as ATYR2810.

We are currently focused on completing IND enabling studies to allow us to take ATYR2810 into the clinic.

We are committed to translating this area of newly discovered biology to therapeutic applications, both with our internal research and through academic collaborations.

Build a diverse pipeline of biologics based on our understanding of extracellular tRNA synthetase biology.

We continue to deepen our expertise in production of biologic product candidates based on tRNA synthetases with the goal of developing programs

with multiple therapeutic modalities.

We have proven this with the announcement of our AARS and DARS discovery programs.

We are currently focused on completing IND enabling studies to enable us to commence clinical development of ATYR2810.

We are committed to translating this area of newly discovered biology to therapeutic applications, both through our internal research and academic collaborations.

Build a diverse pipeline of biologics product candidates based on our understanding of extracellular tRNA synthetase biology.

We believe the positive results and clinical proof-of-concept from our efzofitimod Phase 1b/2a clinical trial in September 2021 validate our tRNA synthetase biology platform.

We continue to deepen our expertise in the production of biologic product candidates based on tRNA synthetases with the goal of developing programs with multiple therapeutic modalities.

We believe we have proven this with the announcement of our AARS and DARS discovery programs.

Through our internal research efforts and both industry and academic collaborators, we intend to further our product development efforts in this area.

Overview of ATYR1923

We are developing ATYR1923 as a potential therapeutic for patients with inflammatory lung diseases.

Our primary focus is in ILD, a group of immune-mediated fibrotic lung disorders with significant unmet need.

ATYR1923 works by selectively modulating NRP2 to downregulate the innate and adaptive immune responses in uncontrolled inflammatory disease states to resolve inflammation and prevent subsequent fibrosis.

Pre-clinically, we have demonstrated the therapeutic potential of ATYR1923 in a number of preclinical models of lung injury, fibrosis and inflammation, both in vitro and in rodents.

We have also characterized the pathways by which it exerts its immunomodulatory effects.

We announced data from a first-in-human Phase 1 clinical trial of ATYR1923 in June 2018.

This randomized, double-blind, placebo-controlled study investigated the safety, tolerability, immunogenicity, and PK of intravenous ATYR1923 in 36 healthy volunteers.

The results indicate that the drug was generally well-tolerated at all dose levels tested, with no significant adverse events and the observed PK profile supports the potential for a once-monthly dosing regimen.

A comprehensive review of the preclinical and Phase 1 data in consultation with key opinion leaders led to our selection of pulmonary sarcoidosis as the first clinical indication for ATYR1923, as well as confirmation of the potential of ATYR1923 in other severe inflammatory lung diseases.

In December 2020, we completed the target enrollment of a proof-of-concept Phase 1b/2a clinical trial of ATYR1923 in patients with pulmonary sarcoidosis and expect to report data from this trial in the third quarter of 2021.

This Phase 1b/2a study is a multiple-ascending dose, placebo-controlled, first-in-patient study of ATYR1923 that has been designed to evaluate the safety, tolerability, immunogenicity and PK profile of multiple doses of ATYR1923.

Secondary endpoints include the evaluation of steroid sparing effect and other established clinical endpoints along with potential biomarkers to assess preliminary activity of ATYR1923.

In January 2021, we completed final enrollment in the Phase 1b/2a clinical trial with a total of 37 patients exceeding the target enrollment of 36 patients.

In early 2021 we announced data from a Phase 2 clinical trial of ATYR1923 in hospitalized COVID-19 patients with severe respiratory complications.

The study met its primary endpoint of safety and tolerability, with no drug-related serious adverse events reported.

The study also showed a signal of activity in the 3.0 mg/kg cohort.

In addition, patients treated with ATYR1923 demonstrated a trend of overall improvement in key biomarkers analyzed compared to placebo.

In particular, patients treated with ATYR1923 had greater reduction in levels of several inflammatory cytokines and chemokines, including interferon gamma (IFNγ), interleukin-6 (IL-6) and monocyte chemoattractant protein 1(MCP-1).

Furthermore, patients treated with ATYR1923 also had a statistically significant reduction in levels of serum amyloid A (SAA), a marker of inflammation and fibrosis that has implications in sarcoidosis.

Overview of Efzofitimod

We are developing efzofitimod as a potential therapeutic for patients with fibrotic lung diseases.

Our primary focus is in ILD, a group of rare immune-mediated fibrotic lung disorders with significant unmet medical need.

Efzofitimod works by selectively modulating NRP2 to downregulate the innate and adaptive immune responses in uncontrolled inflammatory disease states to resolve inflammation and prevent subsequent fibrosis.

Pre-clinically, we have demonstrated the therapeutic potential of efzofitimod in a number of preclinical models of lung injury, fibrosis and inflammation, both in vitro and in rodents.

We have also characterized the pathways by which efzofitimod exerts its immunomodulatory effects.

In June 2018, we announced data from a first-in-human Phase 1 clinical trial of efzofitimod conducted in Australia.

This randomized, double-blind, placebo-controlled study investigated the safety, tolerability, immunogenicity, and PK of intravenous efzofitimod in 36 healthy volunteers.

In the study, the drug was observed to be generally well-tolerated at all dose levels tested, with no significant adverse events and the observed PK profile supported the potential for a once-monthly dosing regimen.

A comprehensive review of the preclinical and Phase 1 data in consultation with key opinion leaders led to our selection of pulmonary sarcoidosis as the first clinical indication for efzofitimod, as well as our belief of the potential of efzofitimod to treat other fibrotic lung diseases.

In September 2021, we announced positive results and clinical proof-of-concept from a Phase 1b/2a clinical trial in 37 patients with pulmonary sarcoidosis.

Efzofitimod was safe and well-tolerated at all doses with no drug-related serious adverse events or signal of immunogenicity.

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, 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 pulmonary sarcoidosis.

We intend to initiate a planned registrational trial in the third quarter of 2022.

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 CHP and CTD-ILD.

Background and Mechanism of Action

ATYR1923 is a selective modulator of NRP2 that downregulates the innate and adaptive immune response in uncontrolled inflammatory disease states.

The ATYR1923 program was initiated to leverage our knowledge of the extracellular proteins derived from the histidyl-tRNA synthetase (HARS) family to develop a therapeutic which would possess the N-terminal immuno-modulatory activities of HARS.

The gene for HARS gives rise to a number of splice variants, and though most of these have lost their catalytic activity, many retain the N-terminal domain (HARS amino acids 2-60).

This N-terminal domain was appended to HARS during evolutionary development of multicellular organisms and is not essential for protein synthetic activity, is not generally found in prokaryotic organisms, and is retained with high homology across mammalian species.

Alternative splicing of HARS may be differentially regulated during cellular growth and differentiation, unlike the constitutive high level expression of the full length protein, suggesting that these splice variants may play a differential role in growth and cellular development.

Recently, significant progress has been made in elucidating the role of extracellular HARS derived proteins, including the identification of a putative cellular receptor of the HARS N-terminal domain through screening via a cell microarray system in which over 4,500 cell surface proteins are represented.

This screening approach identified two NRP2 isoforms (Neuropilin 2A and 2B) as the only convincing and specific binding partners of the HARS N-terminal domain.

Interactions of HARS with NRP2 appear to be specifically mediated by the HARS N-terminal domain of HARS, and binding of the HARS N-terminal domain of HARS is specific to NRP2 with no observable binding to NRP1, which is the most closely related cell surface receptor.

A domain that is structurally similar to the HARS N-terminal domain (termed the WHEP domain) is found in other amino-acyl tRNA synthetases, yet these

domains do not exhibit binding to NRP2, indicating this is a highly specific interaction.

The discovery of the HARS N-terminal /NRP2 axis represents a previously unknown mechanism of biological regulation, which may act as a homeostatic regulator of several cellular processes mediated through the neuropilin receptor.

The deregulation of these processes may lead to a spectrum of diseases, which could be selectively targeted by modulating the HARS N-terminal /NRP2 axis to address the underlying disease etiology.

NRP2 is a pleiotropic co-receptor participating in a broad array of biological pathways including, immunomodulation, lymphangiogenesis, neuronal development and remodeling, cellular growth, migration and differentiation, and cancer development.

These biological processes are mediated through a complex interplay of several signaling systems including the semaphorins/plexin receptor family, the VEGF-C/VEGFR3 receptor family, as well as chemokine ligand 21 driven trafficking and integrin signaling pathways.

Growing evidence indicates that NRP2 influences myeloid cell biology such as activation and recruitment to inflammatory sites.

Efzofitimod is a novel immunomodulatory Fc fusion protein in development for the treatment of fibrotic lung diseases.

Efzofitimod is a selective modulator of NRP2 that downregulates innate and adaptive immune responses at a cellular level in uncontrolled inflammatory disease states and prevents subsequent fibrosis.

Efzofitimod is a novel molecular entity comprised of a human 59 amino acid protein fused to the Fc region of human immunoglobulin 1 (IgG1).

It acts as an extracellular immunomodulator.

The amino acid sequence of the active moiety corresponds identically to the extracellularly active immunomodulatory domain of histidyl-tRNA synthetase (HARS) amino acids 2 to 60 (HARS 2-60).

The gene for HARS gives rise to a number of splice variants, and though most of these have lost their catalytic activity, they all retain the N-terminal domain (HARS amino acids 2-60).

This N-terminal domain, non-essential for the enzyme’s protein synthesis activity that is required in all living organisms, was appended to HARS during the evolutionary development of multicellular organisms and retained with high sequence identity across mammalian species, but is not found in lower organisms.

One splice variant (SV9), which encodes only the N-terminal domain of the protein, is enriched in human lung tissue.

Expression of this HARS splice variant is increased following inflammatory cytokine stimulation (IFN- g and TNF- a , two key players in the initiation of lung inflammation and fibrosis) followed by subsequent secretion, indicating it is being regulated in response to local inflammation.

Furthermore, HARS, specifically the N-terminal domain, is targeted by autoantibodies in a rare autoimmune disorder (known as anti-Jo-1 syndrome).

Anti-Jo-1 syndrome is characterized by extensive activation and migration of immune cells into lung and muscle and is classically associated with the triad of ILD, myositis, and arthritis.

It is hypothesized that the sequestration of HARS may play a causal role through disruption of its homeostatic immune-regulatory effects.

NRP2 was identified as the sole binding partner for efzofitimod through screening via a cell microarray system in which over 4,500 cell surface proteins are represented.

This screening approach identified two NRP2 isoforms (Neuropilin 2A and 2B) as the only convincing and specific binding partners of efzofitimod.

The binding site was confirmed to be within the “turn” of the helix-turn-helix

structure of the HARS N-terminal domain comprised within efzofitimod.

B inding of efzofitimod is specific to NRP2 with no observable cross-reactivity to NRP1, which is the most closely related cell surface receptor in both protein sequence and structure .

A domain that is structurally similar (but divergent in protein sequence) to the HARS N-terminal domain ( termed the WHEP domain) is found in other amino-acyl tRNA synthetases, yet these domains do not exhibit binding to NRP2, indicating this is a highly specific interaction.

Interestingly , binding of efzofitimod occurs in a manner distinct from the more well-characterized ligands of NRP2 including VEGF and semaphorin 3F ( SEMA3F ) , and does not interfere with NRP2 dimerization with their co-receptors.

Thus, the HARS N-terminus appears to be a newly discovered ligand for NRP2 , as opposed to an antagonist.

The discovery of the HARS N- terminus /NRP2 signaling axis represents a previously unknown mechanism of biological regulation, in which this novel ligand of NRP2 may act as a homeostatic regulator of aberrant immune responses.

NRP2 is a cell surface receptor that is present on multiple immune cell types, including certain myeloid cells and subsets of T-cells.

NRP2 expression is often upregulated upon inflammatory insult or stimulation.

Growing evidence indicates that NRP2 predominantly influences myeloid cell biology such as activation and recruitment to inflammatory sites.

For instance, NRP2 expression on alveolar macrophages regulates airway inflammatory responses to inhaled lipopolysaccharide.

ATYR1923 development builds upon our understanding of the biology of the extracellular activity of HARS.

This novel molecular entity acts as a selective modulator of NRP2 downregulating the innate and adaptive immune response in inflammatory disease states .

ATYR1923 is a fusion protein comprised of the immuno-modulatory domain of HARS fused to the FC region of a human IgG1 antibody.

In sarcoidosis, NRP2 expression has been shown to be localized within the sarcoid granulomas, highly expressed in Langhans giant cells which are myeloid in nature.

Efzofitimod has been shown to significantly reduce lung inflammation and fibrosis, reduce immune cell trafficking to the lung and improve respiratory function parameters in multiple animal models of lung fibrosis.

Furthermore, efzofitimod has demonstrated consistent downregulatory effects on inflammatory and pro-fibrotic cytokines and chemokines in both animal disease models and human clinical trials.

Efzofitimod appears to primarily impact IL-6, TNF- a , IFN- g , MCP-1 and IP-10, markers that have been implicated in the pathology of fibrotic lung diseases.

Efzofitimod is a potential first-in-class immunomodulator that may present a novel mechanism of action to therapeutically control or balance immune responses that are drivers of lung fibrosis.

Preclinical Development

Our preclinical estate of translational animal models were selected to help inform and de-risk clinical development of ATYR1923.

We have evaluated the biological activity and safety of ATYR1923 across a diverse set of experimental lung disease models, representative of all the major forms of ILD (sarcoidosis, CHP, CTD-ILD and idiopathic pulmonary fibrosis (IPF)), as well as in normal animals, looking for signals of activity and potential biomarkers, while confirming tolerability and a favorable safety profile.

In these models, ATYR1923 has significantly reduced histological lung fibrosis and inflammation, restored normal lung function, reduced lung protein levels of several inflammation and fibrosis-related cytokines and chemokines (e.g.

IFN-γ, MCP-1/CCL2, IL-6) and reduced counts of immune cells in BAL central to ILD pathology (e.g.

neutrophils).

These data have been presented in posters at key respiratory conferences over the past few years (e.g.

Our preclinical estate of translational animal models was selected to help inform and de-risk clinical development of efzofitimod.

We have evaluated the biological activity and safety of efzofitimod across a diverse set of experimental fibrotic lung disease models, representative of the four major forms of ILD (sarcoidosis, CHP, CTD-ILD and idiopathic pulmonary fibrosis (IPF)), as well as in normal animals, looking for signals of activity and potential biomarkers, while confirming tolerability and a favorable safety profile.

In these models, efzofitimod has significantly reduced histological lung fibrosis and inflammation, restored normal lung function, reduced lung protein levels of several inflammation and fibrosis-related cytokines and chemokines (e.g.

IFN-γ, MCP-1/CCL2, IL-6) and reduced counts of immune cells in bronchoalveolar lavage (BAL) central to ILD pathology (e.g., neutrophils).

These data have been presented in posters at key respiratory conferences over the past several years (e.g.

the American Thoracic Society (ATS) International Congress) and are available for review on our website.

ATYR1923 and NRP2 receptor

NRP2 is a pleiotropic cell surface receptor known to be expressed on a number of different immune cell types that plays a key role in regulating inflammatory responses.

ATYR1923 is a fusion protein combining a novel immunomodulatory domain from histidyl-tRNA synthetase (HARS) and a human IgG1 Fc.

ATYR1923 inhibits cytokines and chemokines involved in the regulation of inflammatory and fibrotic responses and reduces inflammation-dependent fibrosis in animal models of interstitial lung diseases.

ATYR1923 has previously demonstrated potent immunomodulatory activity in vitro and in vivo .

We sought to characterize the molecular basis for ATYR1923’s immuno-modulatory properties and demonstrated that ATYR1923 specifically and selectively binds to NRP2 on the cell surface.

These findings indicate that modulation of the NRP2 signaling pathway with ATYR1923 could be a novel therapeutic approach to immune-mediated diseases such as pulmonary sarcoidosis.

We identified NRP2 as the specific binding partner to ATYR1923, has an emerging role in the regulation of inflammatory responses.

Sarcoidosis is characterized by the formulation of granulomas, clumps of inflammatory cells, in one or more organs of the body.

Little is known about the role of NRP2 in immune regulation and disease, in particular very little is known about the expression of NRP2 in sarcoidosis patients.

We sought to characterize NRP2 expression patterns on immune cells implicated in the pathology of sarcoidosis.

Through in vitro and in vivo models, NRP2 was shown to be expressed in samples obtained from lung and skin of sarcoidosis patients and NRP2 expression was detected on key immune cells known to play an important role in inflammation and granuloma formation.

These findings highlight the potential of ATYR1923 to exert its effect on various immune cells directly related to the pathology of the target patient population.

These data were presented in posters at the ATS International Virtual Meeting in August 2020.

Based on our translational biology program, which demonstrated activity across distinct experimental animal models either driven by direct lung injury or systemic pathology, along with our understanding of the ATYR1923 and NRP2 interaction and the cell types impacted by the mechanism of action of our drug, we decided to move the program forward into patient clinical trials in ILD.

Efzofitimod and NRP2 receptor

NRP2 is known to be expressed on a number of different immune cell types that play a key role in regulating inflammatory responses.

Efzofitimod is a fusion protein combining a novel immunomodulatory domain from HARS and a human IgG1 Fc.

Efzofitimod inhibits cytokines and chemokines involved in the regulation of inflammatory and fibrotic responses and reduces inflammation-and fibrosis in animal models of ILD.

Efzofitimod has previously demonstrated potent immunomodulatory activity in vitro and in vivo .

We sought to characterize the molecular basis for efzofitimod’s immunomodulatory properties and demonstrated that efzofitimod specifically and selectively binds to NRP2 on the cell surface.

These findings indicate that modulation of the NRP2 signaling pathway with efzofitimod could be a novel therapeutic approach to immune-mediated and fibrotic diseases such as pulmonary sarcoidosis.

Sarcoidosis is characterized by the formulation of granulomas, clumps of inflammatory cells found in one or more organs of the body and denoted by the presence of Langhans giant cells which are myeloid in nature.

NRP2 was shown to be expressed in samples obtained from lung and skin of sarcoidosis patients with high NRP2 expression detected on key immune cells known to play an important role in inflammation and granuloma formation, including the Langhans giant cells.

In work carried out in collaboration with Dr.

Elliot Crouser’s laboratory at The Ohio State University utilizing an established ex vivo assay of granuloma formation, it was demonstrated that an efzofitimod analog containing the identical immunomodulatory HARS domain exhibited statistically significant reduction of granuloma formation generated from sarcoid peripheral blood mononuclear cells (PBMCs).

Given the importance of granulomas in the pathology and progression of pulmonary sarcoidosis and the known ability of efzofitimod to disrupt inflammatory

responses, we hypothesize that efzofitimod may play a role in regulating sarcoid granuloma formation.

T hese findings highlight the potential of efzofitimod to exert its effect on various immune c ells directly related to the pathology of the target patient population.

These data were presented in posters at the ATS International Virtual Meeting in August 2020 and the European Society International Congress in September 2021.

Based on our translational biology program, which demonstrated activity across distinct experimental animal models either driven by direct lung injury or systemic pathology, along with our understanding of efzofitimod’s mechanism of action, we decided to move the program forward into patient clinical trials in ILD.

ILD, Pulmonary Sarcoidosis, and the Role of Immunology

The primary target population for ATYR1923 are ILD.

ILD are a group of immune-mediated disorders which can cause progressive fibrosis of the lung.

The current primary target population for efzofitimod is ILD, a group of immune-mediated disorders which can cause progressive fibrosis of the lung.

There are over 200 different types of ILD, of which the four major forms are:

pulmonary sarcoidosis, CHP, CTD-ILD, and IPF.

We have focused our development efforts on progressive, immune-mediated forms of ILD, with limited

therapeutic options, that have as the potential to be impacted by ATYR1923.

We have focused our development efforts on progressive, immune-mediated forms of ILD, with limited therapeutic options, that has the potential to be impacted by efzofitimod .

These lung conditions are recognized as having a measurable immune-mediated pathology, involving both innate and adaptive immune mechanisms that contribute to pathogenesis, and can result in progressive disease leading to fibrosis and death.

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The disorder usually begins in the lungs, skin or lymph nodes, but can affect almost any organ.

Sarcoidosis in the lungs is called pulmonary sarcoidosis and affects over 90% patients.

Estimates of prevalence vary;

but generally indicate that approximately 200,000 Americans live with pulmonary sarcoidosis.

Sarcoidosis in the lungs is called pulmonary sarcoidosis and affects over 90% of sarcoidosis patients.

Estimates of prevalence vary, but generally indicate that approximately 200,000 Americans are currently living with pulmonary sarcoidosis.

The prognosis for patients with pulmonary sarcoidosis ranges from benign and self-limiting to chronic, debilitating fibrotic disease and mortality.

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For patients with pulmonary sarcoidosis, the primary goal of treatment is to improve the patient’s symptoms and quality of life, while secondarily managing the inflammation associated with the granulomas that could lead to the development of more permanent fibrosis and impairment of pulmonary function.

ATYR1923 may provide a therapeutic benefit in pulmonary sarcoidosis by providing an immunomodulatory function to help resolve inflammation.

Moreover, the mechanism of action of ATYR1923 in T-cells and macrophages potentially overlaps with the cellular pathology observed in pulmonary sarcoidosis.

In preclinical studies, ATYR1923 has been observed to inhibit cytokines involved in regulation of inflammatory and immune responses and attenuate T-cell activation, while also modulating macrophage endosome maturation.

Related to our mechanistic studies, we have also discovered that NRP2 is up-regulated during activation of myeloid cells including macrophages, dendritic cells and neutrophils, and that ATYR1923 can bind to NRP2 on these cell types.

Furthermore, ATYR1923 has been observed to significantly reduce inflammation-dependent pulmonary fibrosis and improve respiratory function parameters in bleomycin-induced animal models of ILD, particularly when administered during the inflammatory phase of the disease.

We believe that by inhibiting the chronic inflammatory response in these patients, ATYR1923 may be able to restore immune balance and prevent progressive fibrosis, thereby providing a safer, potentially more effective alternative to oral corticosteroids and other immunosuppressive therapies that currently comprise the standard of care for patients with symptomatic pulmonary sarcoidosis.

E fzofitimod may provide a therapeutic benefit in pulmonary sarcoidosis by providing an immunomodulatory function to help resolve inflammation.

Moreover, the mechanism of action of efzofitimod in T-cells and macrophages potentially overlaps with the cellular pathology observed in pulmonary sarcoidosis.

In preclinical studies, efzofitimod has been observed to inhibit cytokines involved in regulation of inflammatory and immune responses and attenuate T-cell activation, while also modulating macrophage endosome maturation.

Furthermore, efzofitimod has been observed to significantly reduce inflammation-dependent pulmonary fibrosis and improve respiratory function parameters in bleomycin-induced animal models of ILD, particularly when administered during the inflammatory phase of the disease.

We believe that by inhibiting the chronic inflammatory response in these patients, efzofitimod may be able to restore immune balance and prevent progressive fibrosis, thereby providing a safer, potentially more effective alternative to oral corticosteroids (OCS) and other immunosuppressive therapies that currently comprise the standard of care for patients with symptomatic pulmonary sarcoidosis.

Clinical Development

ATYR1923 Phase 1b/2a Clinical Trial –Pulmonary Sarcoidosis

We initiated a proof-of-concept Phase 1b/2a clinical trial for ATYR1923 in December 2018 following FDA acceptance of our IND application filed in October 2018.

The Phase 1b/2a clinical trial is a randomized, double-blind, placebo-controlled multiple-ascending dose, first-in-patient study with IV ATYR1923 in 36 patients.

The study is being conducted in patients with pulmonary sarcoidosis undergoing an oral corticosteroids (OCS) tapering regimen, in three cohorts of 12 patients each, at dose levels of 1.0 mg/kg, 3.0 mg/kg and 5.0 mg/kg.

We completed enrollment for this trial in December 2020 and expect to report top line data in the third quarter of 2021.

The primary objective of the study is to evaluate safety and tolerability of multiple ascending doses of ATYR1923.

Secondary objectives include assessment of the potential steroid-sparing effects of ATYR1923.

In addition, ATYR1923 PK and immunogenicity following multiple dose administration will be evaluated.

Additional endpoints of interest include the exploratory assessment of the efficacy of ATYR1923 for the treatment of pulmonary sarcoidosis by evaluating changes over time in:

Efzofitimod Phase 1b/2a Clinical Trial –Pulmonary Sarcoidosis

We initiated a proof-of-concept Phase 1b/2a clinical trial for efzofitimod in December 2018.

The Phase 1b/2a clinical trial was a randomized, double-blind, placebo-controlled multiple-ascending dose, first-in-patient study with IV efzofitimod in 37 patients.

The study was conducted in patients with pulmonary sarcoidosis undergoing an OCS tapering regimen, in three cohorts of 12 patients each, at dose levels of 1.0 mg/kg, 3.0 mg/kg and 5.0 mg/kg.

The primary objective of the study was to evaluate safety and tolerability of multiple ascending doses of efzofitimod .

Secondary objectives included assessment of the potential steroid-sparing effects of efzofitimod .

In addition, efzofitimod’s PK and immunogenicity following multiple dose administration were evaluated.

Additional endpoints of interest included the exploratory assessment of the efficacy of efzofitimod for the treatment of pulmonary sarcoidosis by evaluating changes over time in:

fluorodeoxyglucose-positron emission tomography (FDG-PET)/CT lung imaging;

lung function assessed by percent predicted forced vital capacity (FVC% predicted) and diffusing capacity of the lungs for carbon monoxide;

serum biomarkers of interest;

serum biomarkers of

health-related quality of life assessments and questionnaires;

and measurement of skin lesions (for patients with cutaneous involvement at baseline).

This study consists of three staggered dose cohorts.

Each cohort will consist of three periods:

This study consisted of three staggered dose cohorts.

Each cohort consisted of three periods:

a screening period, a 20-week placebo-controlled treatment period, and a four-week follow-up period ending with final study assessments at Week 24.

Within each cohort, 12 patients were randomized 2:1 to ATYR1923 (N=8) or placebo (N=4).

Study drug is administered via IV infusion every four weeks for a total of six doses (20 weeks of treatment).

The ATYR1923 doses levels being evaluated are 1.0 mg/kg, 3.0 mg/kg and 5.0 mg/kg.

Starting on Day 15 patients will begin a taper (reduction) in OCS according to specific guidelines from their starting dose of 10-25 mg/day of prednisone (or equivalent) to a target dose of 5.0 mg/day, to be completed on or before Day 50.

The OCS dose will be tapered through Week 24 and patients will be followed for the remainder of the study to determine their ability to maintain on this 5.0 mg dose.

Within each cohort, 12 patients were randomized 2:1 to efzofitimod (N=8) or placebo (N=4).

Study drug was administered via IV infusion every four weeks for a total of six doses (20 weeks of treatment).

The efzofitimod doses levels being evaluated were 1.0 mg/kg, 3.0 mg/kg and 5.0 mg/kg.

Starting on Day 15 patients began a taper (reduction) in OCS according to specific guidelines from their starting dose of 10-25 mg/day of prednisone (or equivalent) to a target dose of 5.0 mg/day, to be completed on or before Day 50.

The OCS dose was tapered through Week 24 and patients were followed for the remainder of the study to determine their ability to maintain on this 5.0 mg dose.

Optionally, further reductions in the OCS dose to below 5.0 mg/day may be attempted after the Week 16 visit, if determined by the investigator to be feasible.

Patients who require an increase in OCS dose at any time in the study were to continue to receive blinded study drug and be followed through to the end of the study.

Cohorts 1 through 3 were enrolled sequentially in a staggered manner.

After a minimum of six patients of a given cohort received at least three IV infusions of study drug (ATYR1923 or placebo), cumulative unblinded safety data was reviewed by a data safety monitoring board (DSMB).

Enrollment in the next scheduled (higher dose) cohort began after this review was completed, dose escalation was approved by the DSMB, and the remaining six patients were enrolled in the ongoing cohort.

Dose escalation continue d in this manner until the highest planned dose level of ATYR1923 was reached.

In December 2019, we announced the results of a pre-planned, blinded interim analysis of safety and tolerability, the primary endpoint of our Phase 1b/2a clinical trial.

Study drug (ATYR1923 or placebo) was observed to be generally well tolerated with no drug-related serious adverse events, consistent with the earlier Phase 1 study results in healthy volunteers.

Adverse events (AEs) were mostly mild or moderate in severity and assessed by the study investigators as unrelated to study drug.

Interim safety data results were from 15 pulmonary sarcoidosis patients who had received a minimum of one dose of blinded study drug (ATYR1923 or placebo).

The average age of patients evaluated was approximately 51 years.

The patient population consisted of 53% males and 47% females, of which 73% were Caucasian and 27% were African American.

No induction of anti-drug antibodies was observed with repeat dosing of study drug.

There were no notable trends for clinical laboratory values or vital signs.

In December 2020, we completed enrollment and are now focused on demonstrating activity of ATYR1923 and advancing our trial to provide evidence of the potential of ATYR1923 as a treatment option to improve the lives of patients with pulmonary sarcoidosis.

Patients who required an increase in OCS dose at any time in the study were to continue to receive blinded study drug and be followed through to the end of the study.

In September 2021, we announced positive results and clinical proof-of-concept from the Phase 1b/2a clinical trial in 37 patients with pulmonary sarcoidosis.

Efzofitimod was safe and well-tolerated at all doses with no drug-related serious adverse events or signal of immunogenicity.

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, sarcoidosis symptom measures and inflammatory biomarkers.

Key safety and clinical efficacy findings for efzofitimod from the study include:

Safe and well-tolerated at all doses:

No dose-relationship with most common adverse events associated with underlying disease;

No drug-related serious adverse events;

No signal of immunogenicity.

Dose response and consistent positive findings across key efficacy endpoints:

Steroid reduction of 58% overall from baseline and 22% relative reduction compared to placebo in steroid usage post taper in the 5.0 mg/kg treatment group;

Complete steroid taper to 0 mg achieved and maintained for 33% of patients in the 5.0 mg/kg treatment group compared to no patients in any other group;

Absolute improvement in forced vital capacity (FVC) as a measure of lung function at week 24 of 3.3% in the 5.0 mg/kg treatment group compared to placebo, with an improvement in FVC of > 2.5%, considered clinically meaningful;

Clinically meaningful improvement over placebo observed for dyspnea (shortness of breath), cough, fatigue and the King’s Sarcoidosis Scores for Lung and General Health in 5.0 mg/kg treatment group;

Dose dependent trends of improvement in key inflammatory biomarkers compared to placebo including IL-6, MCP-1, IFN-γ, IP-10 and TNFa as well as key sarcoidosis markers including ACE, IL-2Ra and SAA with tightest control in the 5.0 mg/kg treatment group;

FDG-PET-CT was not evaluable due to incomplete data primarily caused by operational issues related to the ongoing COVID-19 pandemic.

Efzofitimod Phase 2 Clinical Trial – COVID-19 with Severe Respiratory Complications

In response to the ongoing COVID-19 pandemic, we conducted a Phase 2 clinical trial of efzofitimod in patients with COVID-19 related severe respiratory complications.

The study was designed to evaluate the safety ad preliminary efficacy of efzofitimod compared to placebo through the assessment of key clinical outcome measures.

In early 2021, we reported positive data which showed that the trial met its primary endpoint of safety, demonstrating that a single, intravenous (IV) dose of efzofitimod was observed to be generally safe and well-tolerated in both the 1.0 and 3.0 mg/kg treatment groups, with no drug-related serious adverse events.

The study also showed a signal of activity in the 3.0 mg/kg cohort.

In addition, patients treated with efzofitimod demonstrated a trend of overall improvement in key biomarkers analyzed compared to placebo.

We plan on leveraging data from our efzofitimod Phase 2 clinical trial in COVID-19 patients with severe respiratory complications for our mechanistic understanding of efzofitimod and for its application in ILD.

Efzofitimod Phase 1 Clinical Trial – Healthy Volunteers

In June 2018, we announced results of our first-in-human Phase 1 clinical trial of efzofitimod conducted in Australia.

This randomized, double-blind, placebo-controlled study evaluated the safety, tolerability, immunogenicity, and PK of IV efzofitimod in healthy volunteers.

The Phase 1 clinical trial enrolled 36 healthy volunteers who were randomized to one of six sequential cohorts and received a single infusion of IV efzofitimod or placebo.

Ascending efzofitimod doses by cohort ranged from 0.03 mg/kg to 5.0 mg/kg.

The results indicate that the drug was observed to be generally well-tolerated at all dose levels tested, with no significant adverse events or induction of anti-drug antibodies observed following efzofitimod dosing or throughout the one-month follow-up period.

The PK profile of efzofitimod following single-dose administration was linear across the evaluated dose range.

Higher efzofitimod doses yielded sustained serum concentrations through the end of the one-month follow-up period that were above the predicted therapeutic threshold, supporting the potential for a once-monthly dosing regimen.

Kyorin Agreement

In January 2020, we entered into the Kyorin Agreement for the development and commercialization of ATYR1923 for ILD in Japan.

Pursuant to the terms of the Kyorin Agreement, Kyorin received exclusive rights to develop and commercialize ATYR1923 in Japan for all forms of ILD and is obligated to fund all research, development, regulatory, marketing and commercialization activities in Japan.

We are responsible for supplying all drug product for Japan, as well as supporting development activities for ATYR1923.

In September 2020, Kyorin began dosing of its Phase 1 clinical trial of ATYR1923 (known as KRP-R120 in Japan) and completed the last subject visit in December 2020.

The Phase 1 trial, which is being conducted and funded by Kyorin, is a placebo-controlled study to evaluate the safety, PK and immunogenicity of ATYR1923 in 32 healthy Japanese male volunteers.

Results from this clinical trial are intended to enable Kyorin to initiate patient trials in ILD in Japan.

In January 2020, we entered into the Kyorin Agreement for the development and commercialization of efzofitimod for ILD in Japan.

Under the terms of the Kyorin Agreement, Kyorin received exclusive rights 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.

We are responsible for supplying all drug product for Japan, as well as supporting development activities for efzofitimod .

In September 2020, Kyorin began dosing of its Phase 1 clinical trial of efzofitimod (known as KRP-R120 in Japan) and completed the last subject visit in December 2020.

The Phase 1 trial, which was conducted and funded by Kyorin, was a placebo-controlled study to evaluate the safety, 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.

We received an $8.0 million upfront payment in January 2020 and a $2.0 milestone payment in January 2021 upon completion of enrollment in the 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.

Unless earlier terminated, the term of the Kyorin Agreement continues until the expiration of the royalty obligations.

Following the first anniversary of the effective date of the Kyorin Agreement, Kyorin has the right to terminate the agreement for any reason upon 90 days advance written notice to the Company.

Either party may terminate the Kyorin Agreement in the event that the other party breaches the agreement and fails to cure the breach, becomes insolvent or challenges certain of the intellectual property rights licensed under the agreement.

ATYR1923 Phase 1 Clinical Trial – Healthy Volunteers

In June 2018, we announced results of our first-in-human Phase 1 clinical trial of ATYR1923 conducted in Australia.

This randomized, double-blind, placebo-controlled study evaluated the safety, tolerability, immunogenicity, and PK of intravenous (IV) ATYR1923 in healthy volunteers.

The Phase 1 study enrolled 36 healthy volunteers who were randomized to one of six sequential cohorts and received a single infusion of IV ATYR1923 or placebo.

Ascending ATYR1923 doses by cohort ranged from 0.03 mg/kg to 5.0 mg/kg.

The results indicate that the drug was generally well-tolerated at all dose levels tested, with no significant adverse events or induction of anti-drug antibodies observed following ATYR1923 dosing or throughout the one-month follow-up period.

The PK profile of ATYR1923 following single-dose administration was linear across the evaluated dose range.

Higher ATYR1923 doses yielded sustained serum concentrations through the end of the one-month follow-up period that were above the predicted therapeutic threshold, supporting the potential for a once-monthly dosing regimen.

In parallel, as described above we expanded our knowledge of the therapeutic potential of ATYR1923 by conducting several in vivo and in vitro models to further elucidate its potential clinical utility.

These translational research data, as well as the Phase 1 clinical trial results and discussions with key opinion leaders, helped to guide our development plans for ATYR1923.

In September 2018, we announced pulmonary sarcoidosis as the indication for our next study.

ATYR1923 Phase 2 Clinical Trial – COVID-19

In response to the COVID-19 pandemic, we are investigating ATYR1923’s potential as a treatment for COVID-19 patients with severe respiratory complications.

The inflammatory lung injury related to COVID-19 may be similar to that of ILD.

By targeting aberrant immune responses, we believe that ATYR1923’s mechanism of action has substantial overlap with this disease pathology.

June 2020, we initiated a Phase 2 randomized, double blind, placebo-controlled clinical trial of ATYR1923 in hospitalized COVID-19 patients with severe respiratory complications who did not require mechanical ventilation , at hospitals in the U.S and Puerto Rico .

Patients enrolled in the trial were randomized 1:1:1 to a single IV dose of either 1.0 or 3.0 mg/kg of ATYR1923 or placebo.

Patients were followed for 60 days post treatment.

The trial was not powered for statistical significance and was designed to evaluate the preliminary safety and preliminary efficacy of ATYR1923 as compared to placebo through the assessment of key clinical outcome measures.

In October 2020, we completed enrollment of 32 patients exceeding the target enrollment of 30 patients.

In early 2021, we announced positive results and reported that the trial met its primary endpoint of safety in moderate to severe hospitalized COVID-19 patients, demonstrating that a single, IV dose of ATYR1923 was generally safe and well-tolerated in both the 1.0 and 3.0 mg/kg treatment groups, with no drug-related serious adverse events.

The study demonstrated a signal of activity through clinical improvement in the 3.0 mg/kg treatment group with the assessment of time to recovery, defined as either achieving a WHO ordinal scale score of ≤3 or hospital discharge with no requirement of supplemental oxygen.

Patients who received the 3.0 mg/kg dose of ATYR1923 experienced a median time to recovery of 5.5 days compared to six days in the placebo group.

In addition, 83% of patients in the 3.0 mg/kg treatment group achieved recovery by Day 6, compared to 56% in the placebo arm.

Patients in the 1.0 mg/kg treatment group experienced a median time to recovery of seven days.

Biomarker data confirms that at baseline, patients enrolled in the ATYR1923 treatment arms compared to placebo had higher levels of inflammatory cytokines and known COVID-19 biomarkers including ferritin, D-dimer and C-reactive protein (CRP), indicating a more inflamed patient population in the ATYR1923 treatment arms.

Demographic and baseline disease characteristics data included in the results showed that the ATYR1923 treatment groups had more patients over the age of 65, with severe hypoxia or with multiple comorbidities compared to placebo, factors associated with a greater risk of COVID-19 complications and worse outcomes.

All patients in the study received standard of care treatment at the time of enrollment, which included remdesivir and/or dexamethasone.

At the Day 60 day follow up, we saw no disability or long-term limitation of activities in patients treated with 3.0 mg/kg treatment group as compared to placebo.

In addition, patients treated with ATYR1923 demonstrated a trend of overall improvement in key biomarkers analyzed compare to placebo.

Specifically, patients treated with ATYR1923 demonstrated a trend of overall improvement in 82% (14 of 17) of biomarkers analyzed compared to placebo.

Notably, the cytokines that we saw reduced to the greatest extent as a result of ATYR1923 treatment in these COVID-19 patients are the same cytokines we have seen ATYR1923 downregulate in our animal models.

The data provides the first-in-patient mechanistic proof-of-concept for ATYR1923.

These findings further demonstrate the potential of ATYR1923 as a therapeutics for severe inflammatory lung disease, including pulmonary sarcoidosis and other ILD.

We plan on leveraging data from our ATYR Phase 2 clinical trial for our ILD programs and will move the program forward based upon the competitive landscape and the availability of non-dilutive financing.

Overview of ATYR2810

We have generated a panel of antibodies to selectively target distinct domains of NRP2, including those interacting with VEGF, semaphorins and certain chemokines/chemokine receptors, such as CCL21/CCR7.

NRP2 interacts with several different protein ligands individually through these distinct domains to mediate signaling through diverse biological pathways associated with different disease states, creating an opportunity to modulate different aspects of NRP2-mediated signaling selectivity for distinct therapeutic applications.

ATYR2810 is the first IND candidate to arise from our internal research program designing monoclonal antibodies to selectively target the NRP2 receptor and its associated signaling pathways.

ATYR2810 is a fully humanized monoclonal antibody that specifically and functionally blocks the interaction between NRP2 and one of its primary ligands VEGF.

ATYR2810 is currently in preclinical development for cancer.

NRP2 is highly expressed in certain tumors, the lymphatic system and on key immune cells implicated in cancer progression.

ATYR2810 is currently 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 second half of 2022.

NRP2 is highly expressed in certain highly aggressive, solid tumors, the lymphatic system and on key immune cells implicated in cancer progression, including tumor associated macrophages and myeloid derived suppressor cells, among others.

Increased NRP2 expression is associated with negative outcomes in many cancers, including resistance to targeted therapies, metastasis and worsened overall survival.

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, such as breast cancer, renal cell carcinoma and lung cancer, is becoming increasingly validated.

Blocking VEGF signaling through NRP2 is a differentiated approach from targeting VEGF or VEGF-R, directly in that current therapeutic approaches do not disrupt this pathway.

Antibodies that can selectively block different aspects of the NRP2 signaling pathway, including the NRP2/VEGF axis, may have therapeutic potential in aggressive cancers where NRP2 is implicated.

Preclinical Development

Preclinical data suggest that ATYR2810 could be effective against certain types of solid tumors, including highly aggressive tumors such as triple-negative breast cancer.

There is a growing body of evidence that expression of NRP2 is enriched in treatment-resistant, dedifferentiated cancer cells expressing mesenchymal markers.

Furthermore, NRP2/VEGF signaling is implicated in enhanced tumor metastasis promoted by the process of epithelial-to-mesenchymal transition in breast cancer.

ATYR2810 blocks binding of VEGF to NRP2 and had demonstrated tumor inhibitory effects and increased sensitivity to chemotherapy in human-derived organoids and other in vitro models of triple-negative breast cancer.

We believe we have generated a body of compelling preclinical data in both human-derived and animal models that suggest that ATYR2810 could be effective against certain types of solid tumors, including highly aggressive tumors such as triple-negative breast cancer and non-small cell lung cancer.

There is a growing body of evidence that expression of NRP2 is enriched in treatment-resistant,

dedifferentiated cancer cells expressing mesenchymal markers.

Furthermore, NRP2/VEGF signaling is implicated in enhanced tumor metastasis promoted by the process of epithelial-to-mesenchymal transition (EMT) in breast cancer.

ATYR2810 blocks binding of VEGF to NRP2 and has demonstrate d tumor inhibitory effects and increased sensitivity to chemotherapy in solid tumor models .

In triple-negative breast cancer patient-derived organoids (PDO), as well as patient-derived tumor xenograft (PDX) models, ATYR2810 administered in combination with widely used anti-cancer therapeutics, including the chemotherapeutic agent cisplatin or the targeted VEGF antibody bevacizumab—increa sed the anti-tumor effects of each agent.

Furthermore, treatment with ATYR2810 was shown to downregulate genes associated with EMT and stemness, in particular down-regulating expression of Zeb1, a central regulator of these processes.

EMT is the acquisition of mesenchymal or stem cell-like features by epithelial cells in the tumor that confer migratory and invasive properties to these cells.

EMT is of great importance in the tumor microenvironment regulating tumor growth, progression, and metastatic cascade, as well as being implicated in tumor evasion of the immune system.

The data suggests that ATYR2810’s ability to impact EMT may be one mechanism by which it mediates its anti-tumor effects and demonstrates the therapeutic potential of inhibiting EMT through blocking the NRP2/VEGF signaling axis in various types of solid tumors.

In addition to triple-negative breast cancer, we have also generated data suggesting efficacy in other solid tumor models, including non-small cell lung cancer, both as a single agent and in combination with chemotherapy.

ATYR2810’s ability to promote the differentiation of aggressive tumor cells away from a stem cell phenotype and render them more susceptible to conventional cancer therapies has the potential to be a significant advancement because therapy resistance, which is associated with tumor recurrence and metastasis, is a major challenge for patients with aggressive cancers.

These findings suggest that targeting the NRP2/VEGF pathway may be an effective therapeutic strategy for breast cancer and potentially other aggressive solid tumors where many patients remain unresponsive to currently available treatments.

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Our Discovery Engines

We are actively working on NRP2 receptor biology pathways of interest to select additional product candidates for preclinical and clinical investigation in a variety of disease settings through efforts internally, as well as with collaborators in academia.

NRP2 is a pleiotropic cell surface receptor that was originally identified based on its role in axon guidance during neuronal development, and subsequently shown to be important in the development of the lymphatic and immune system.

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Recent evidence suggests that there are high levels of NRP2 expression found on multiple immune cell types, which may play important roles in migration, antigen presentation, phagocytosis and cell-to-cell interactions.

NRP2 is expressed in various cells of the immune system such as B cells, T-cells, NK cells, neutrophils, dendritic cells and macrophages, including alveolar macrophages.

NRP2 is expressed in various cells of the immune system such as B-cells, T-cells, natural killer (NK) cells, neutrophils, dendritic cells and macrophages, including alveolar macrophages.

It plays an important role in the regulation of immune cell activation and migration including endosome maturation, the modulation of autophagy and efferocytosis.

This suggests that NRP2 may be an important regulator of biological responses in a number of different disease settings with potential for therapeutic intervention.

We are collaborating with leading academic groups working on these pathways and we are excited to contribute to advancing the understanding of NRP2 biology and how it may play a role in certain diseases.

We continue to research the ways in which NRP2 utilizes common mechanisms, including VEGFs and semaphorins, to regulate diverse pathways.

We believe our growing evidence base of data on the functions of NRP2 will allow us to select and develop additional novel product candidates for various diseases with unmet need.

We believe our growing evidence base of data on the functions of NRP2 will allow us to select and develop additional novel product candidates for various diseases with unmet medical need.

tRNA Synthetase Biology

Extracellular tRNA synthetase biology represents a novel set of potential physiological modulators and therapeutic targets.

Using ATYR1923 as a model, we have developed a process to advance novel tRNA synthetase domains from a concept to clinical product candidate.

This process leverages our early discovery work as well as current scientific understanding of tRNA synthetase protein structure, gene splicing and tissue-specific regulation to identify potentially active protein domains.

Using efzofitimod as a model, we have developed a process to advance novel tRNA synthetase domains from a concept to therapeutic candidate.

This process leverages our early discovery work as well as current scientific understanding of tRNA synthetase evolution, protein structure, gene splicing and tissue-specific regulation to identify potentially active protein domains.

Screening approaches are employed to identify target cells and extracellular receptors for these tRNA synthetase-derived proteins.

These cellular systems can then be used in mechanism-of-action studies to elucidate the role these proteins play in cellular responses and their potential therapeutic utility.

We are working to identify new tRNA synthetase based drug candidates through our internal discovery efforts as well as industry and academic collaborations.

In February 2021, we announced two new discovery programs from our tRNA synthetase platform.

These programs will investigate the functionality of selected fragments of AARS and DARS in immunology, fibrosis and cancer.

Initial experiments will be designed to explore the role of AARS and DARS fragments on natural killer cell biology while also exploring activities related to newly identified receptor candidates for these fragments.

These discovery programs were the result of a research collaboration and option agreement with CSL Behring which was terminated in February 2021.

These cellular systems can then be used in mechanism-of-action studies to elucidate the role these proteins play in cellular responses and their

potential therapeutic utility.

We are working to identify new tRNA synthetase based drug candidates through our internal discovery efforts and academic collaborations.

Utilizing our novel approach, we identified target cells and potential receptors for fragments of AARS and DARS, gaining insights into their potential biological activity in immunology, cancer and fibrosis.

This includes data demonstrating that these extracellular tRNA synthetase fragments bind to innate and adaptive immune cells, including macrophages and NK cells.

NK cells have emerged as an important therapeutic target in cancer immunotherapy.

In 2022, we plan to further elucidate the therapeutic potential of these additional tRNA synthetase molecules through mechanistic investigations, including in vitro and in vivo preclinical studies.

Hong Kong University of Science and Technology

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Following the completion of the research grants, Pangu BioPharma funded research with respect to development of aminoacyl tRNA synthetase protein therapeutics pursuant to annual joint research agreements.

As a result of work performed under these agreements, HKUST researchers with support from Pangu BioPharma were instrumental in discovering a splice variant of HARS that liberates the smaller, active HARS amino acid 2-60 from the full-length tRNA synthetase

and has been shown to modulate the immune system.

To date, researchers at HKUST have discovered over 200 novel compositions that are covered in issued patents and have published six articles detailing their research in peer-reviewed scientific journals.

To date, HKUST researchers have discovered over 200 novel compositions that are covered in issued patents and have published six articles detailing their research in peer-reviewed scientific journals.

In March 2020, we announced that Pangu BioPharma, together with 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 fact that NRP2 interacts directly with various co-receptor molecules, including certain plexins, integrins and chemokine receptors like CCR7, makes it a prime target for bi-specific antibodies that can target both receptors simultaneously and modulate the activity of these signaling complexes.

The two-year project is being funded by the Hong Kong Government’s Innovation and Technology Commission under the Partnership Research Program.

The grant is expected to fund approximately 50% of the total estimated project cost, and we expect to contribute the remaining 50%.

The project is being funded by the Hong Kong Government’s Innovation and Technology Commission (ITC) under the Partnership Research Program.

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

In April 2020, we entered a research grant agreement with HKUST and the Hong Kong Special Administrative Region for this grant (the Grant Agreement).

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 with no additional cost.

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

Key milestones achieved for the first year of the project included building out a highly-skilled research team to establish an innovative antibody discovery platform at HKUST.

An integral part of this project was the development and implementation of a novel single-cell antibody discovery approach which yielded numerous candidate high-affinity NRP2/co-receptor antibodies targeting VEGFR3 and PlexinA1 being screened in functional assays.

The second year of the project aims to identify the most productive pairings, optimize mid-scale production/purification and prioritize lead candidate bi-specific antibodies based on activity in therapeutically relevant cell-based assays.

Bi-specific antibody approaches are increasingly being considered as a novel and differentiated approach to relevant targets and present a unique pipeline opportunity for us to explore.

Pangu BioPharma is the sole beneficial owner of all resulting intellectual property rights from the research performed under these agreements, subject to the right of HKUST’s subsidiary to use certain background intellectual property of HKUST in conducting the research and, in the event Pangu BioPharma applies for individual funding of any work under the research programs, compliance with the terms and conditions of any written agreement covering ownership of such funded works.

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Our competitors may succeed in developing, acquiring or licensing on an exclusive basis, drug products that are more effective, safer or less costly than any product candidate that we may develop.

Although we believe we are the only company engaged in the discovery and development of therapeutics based on novel functions of tRNA synthetases and NRP2 receptor biology, we are aware of other companies that could compete with our clinical stage product candidate, ATYR1923, for the treatment of pulmonary sarcoidosis, other ILD and other severe inflammatory lung diseases as described below.

For patients with pulmonary sarcoidosis, the primary goal of treatment is typically to improve the patient’s quality of life, while secondarily managing the inflammation that could lead to the development of more permanent fibrosis and impairment of pulmonary function.

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Long-term OCS use is associated with significant side effects including substantial weight gain, development of insulin resistance, osteoporosis, and risk of infection.

Alternatives, such as cytotoxic immunosuppressive agents (e.g.

methotrexate) have been used as steroid-sparing agents, however, these therapies can also have significant side effects and toxicities, including malignancies.

Alternatives, such as cytotoxic immunosuppressive agents (e.g., methotrexate) have been used as steroid-sparing agents, however, these therapies can also have significant side effects and toxicities, including infections and malignancies.

Patients who have progressive disease despite OCS or other immunosuppressive therapy are sometimes given biologic immunomodulators, such as the TNF inhibitors infliximab or adalimumab.

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Given the known toxicities of long-term OCS, immunosuppressive and immunomodulatory biologic therapeutic regimens, treatment of patients with sarcoidosis is limited to those who are symptomatic and whose disease is considered active.

presence of granulomas from sarcoidosis define the disease as active, and granulomatous inflammation is the major cause of fibrosis in pulmonary sarcoidosis.

The presence of granulomas from sarcoidosis define the disease as active, and granulomatous inflammation is the major cause of fibrosis in pulmonary sarcoidosis.

Studies to date have not clearly demonstrated that OCS or other immunomodulatory therapies prevent disease progression or formation of fibrosis.

We believe t here remains a substantial unmet need for safer , more effective therapies for sarcoidosis that could reduce or replace the requirement for long-term OCS therapy.

If ATYR1923 is successful for the treatment of pulmonary sarcoidosis, we believe it may have applications in other ILD indications and potentially in other severe forms of lung inflammation .

We believe there remains a substantial unmet need for safer, more effective therapies for sarcoidosis that could reduce or replace the requirement for long-term OCS therapy.

If efzofitimod is successful for the treatment of pulmonary sarcoidosis, we believe it may have applications in other ILD indications and potentially in other severe forms of inflammatory or fibrotic lung disease.

Immunosuppressive therapy has traditionally been used to treat most ILD despite little evidence demonstrating safety or efficacy in these indications.

The exception is a specific form of ILD, IPF, where immunosuppressive treatment was demonstrated to be harmful in clinical trials.

We are aware of two FDA approved products with indications for the treatment of a subset of ILD indications .

We are aware of three FDA approved products with indications for the treatment of a subset of ILD indications.

Esbriet (pirfenidone), a pyridine marketed globally by F.

Hoffmann-La Roche Ltd., Shionogi & Co., Ltd.

and ILDONG Pharmaceutical Co., Ltd., was approved by FDA in 2014 for the treatment of IPF and in 2021 was granted priority review from the FDA for the treatment of adults with unclassifiable ILD.

Ofev (nintedanib), a small molecule tyrosine-kinase inhibitor marketed globally by Boehringer Ingelheim International GmbH, was approved by FDA in 2014 for the treatment of IPF.

In 2019 Ofev received FDA approval for s lowing the rate of decline in pulmonary function in patients with systemic sclerosis-associated ILD (SSc-ILD) and in 2020 the approval was further expanded to include patients with chronic fibrosis ILD with a progressive phenotype.

These therapies have been demonstrated to slow decline in lung function as measured by FVC in controlled clinical studies but are associated with significant side effects, continued symptoms, and progressive disease in the majority of patients.

There are a number of companies engaged in the clinical development of potential treatments for various forms of ILD, including Boehringer Ingelheim International GmbH, F.

Hoffmann-La Roche Ltd, Novartis Pharmaceuticals Corporation, Bristol-Myers Squibb Company, FibroGen Inc., Galapagos NV, Gilead Sciences, Inc., Pliant Therapeutics, Inc.

and Mallinckrodt plc among others;

however, most development activity is focused on IPF, with limited activity in other major forms of ILD.

In addition to competition we may face in ILD, there is a significant effort across the pharmaceutical and biotech industries to address the ongoing COVID-19 pandemic.

Many companies have developed, are developing, or are testing in clinical trials, new and repurposed treatments for COVID-19 patients.

Particular focus has been given to vaccines, anti-viral drugs and immunomodulators.

ATYR1923, as an immunomodulator, will compete with generic treatments, such as the corticosteroid, dexamethasone as well as established products such as Actemra (tocilizumab), currently marketed for different indications by F.

and ILDONG Pharmaceutical Co., Ltd., was approved by the FDA in 2014 for the treatment of IPF.

Ofev (nintedanib), a small molecule tyrosine-kinase inhibitor marketed globally by Boehringer Ingelheim International GmbH, was approved by the FDA in 2014 for the treatment of IPF.

In 2019 Ofev received FDA approval for slowing the rate of decline in pulmonary function in patients with systemic sclerosis-associated ILD (SSc-ILD) and in 2020 the approval was further expanded to include patients with chronic fibrosis ILD with a progressive phenotype.

Actemra (tocilizumab), an anti-IL6 antibody marketed globally by F.

Hoffmann-La Roche Ltd.

and Chugai Pharmaceutical Co Ltd., was approved by the FDA in 2021 for slowing the rate of decline in pulmonary function in adult patients with SSc-ILD.

These therapies have been demonstrated the ability to slow decline in lung function as measured by FVC in controlled clinical studies but are associated with significant side effects, continued symptoms, and progressive disease in the majority of patients.

There are a number of companies engaged in the clinical development of potential new treatments for ILD, including Boehringer Ingelheim International GmbH, F.

Hoffmann-La Roche Ltd, Novartis Pharmaceuticals Corporation, Galapagos NV, Mallinckrodt plc., Horizon Therapeutics, Xentria, Inc., SarcoMed USA and Kinevant Sciences GmbH among others.

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

The primary goal of cancer treatment is to remove the tumor, rid the body of wandering cancer cells, and prevent a recurrence.

Pre-clinical evidence suggests that ATYR2810 may present a unique mechanism of action for increasing responsiveness to chemotherapy and preventing metastasis, that may prove complimentary to currently available treatment options and improve patient outcomes.

The commercial and development landscape in oncology is fiercely competitive.

There are a number of approved therapies that target different mechanisms driving tumor growth, resistance and metastasis including chemotherapy, radiotherapy, targeted therapy and immunotherapy, with over 70 new initial drug approvals by the FDA since 2015, and over 120 new FDA approval notices (new indications or initial approvals) in the last two years.

There are even more potential new therapies in clinical development with over 100 new treatments projected to be approved in the next five years.

The majority of major pharmaceutical companies list oncology as a core therapeutic focus area.

In addition, there are many specialized oncology focused biotechnology and specialty pharmaceutical companies currently marketing and/or developing a range of cancer therapies.

Even though we are not aware of any other companies working on therapeutic approaches specifically targeting the NRP2/VEGF axis, or targeting cancers where NRP2 is implicated, other mechanisms or modalities may prove to be as or more effective, or safer than ATYR2810 in the same indications we are pursuing.

Sales and Marketing

We intend, where strategically appropriate, to build the commercial infrastructure necessary to effectively support the commercialization of our product candidates, if and when we believe a regulatory approval of the first of such product candidates in a particular geographic market appears imminent.

We may elect to utilize strategic partners, distributors, or contract sales forces to assist in the commercialization of our products in selected geographic locations or for particular indications.

For example, we have licensed the rights to Kyorin to develop and commercialize ATYR1923 in Japan.

We may elect to utilize strategic partners, distributors, or contract sales forces to assist in the commercialization of our product candidates in selected geographic locations or for particular indications.

For example, we have licensed the rights to Kyorin to develop and commercialize efzofitimod in Japan.

Additional capabilities important to the marketing of therapeutics include the management of key stakeholders such as managed care organizations, group-purchasing organizations, specialty pharmacies, and government accounts.

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Manufacturing

We currently contract with third parties for the manufacturing and testing of our product candidates for preclinical studies and clinical trials and intend to do so in the future.

We currently contract with third parties for the manufacturing and testing of our product candidates, including efzofitimod and ATYR2810, to support preclinical studies and clinical trials, and we intend to do so in the future.

We do not own or operate manufacturing or testing facilities for the clinical or commercial production of our product candidates.

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The use of contracted development and manufacturing organizations (CDMOs), and contract research organizations (CROs), is cost-efficient and has eliminated the need for our direct investment in manufacturing facilities and additional resources early in development.

Although we rely on CDMOs and CROs, we have personnel with extensive biologics development and manufacturing experience to oversee such CDMOs and CROs.

ATYR1923 is a fusion protein that is expressed in recombinant E.coli by expression in inclusion bodies and refolding to recreate the native structure.

We have worked with CDMOs in the United States and internationally on the development and current Good Manufacturing Practices (cGMP) for the successful production of ATYR1923 preclinical and clinical drug substance and drug product.

We contracted with CROs to conduct labeling, storage and distribution of ATYR1923 to clinical sites.

Although we rely on CDMOs and CROs, we employ personnel with extensive biologics development and manufacturing experience to oversee such CDMOs and CROs.

Efzofitimod is a fusion protein that is expressed in recombinant E.coli by expression in inclusion bodies and refolding to recreate the native structure.

ATYR2810 is recombinant monoclonal antibody to NRP2 that is produced recombinantly in mammalian cells, and then purified using industry standard monoclonal antibody production techniques.

We have worked with CDMOs in the United States and internationally on the development and scaled up manufacture of both product candidates using current Good Manufacturing Practices (cGMP) to produce drug substance to support preclinical and clinical development, as well as for the production of drug product.

We have also contracted with CROs to conduct the labeling, storage and distribution of our product candidates to clinical sites.

To date, our CDMOs and CROs have met our manufacturing requirements for clinical development and we expect that our current CDMOs and CROs are capable of providing sufficient quantities of our product candidates to meet our anticipated clinical development needs.

However, are currently experiencing delays due to the COVID pandemic in the delivery of key raw materials which are essential for the production of ATYR1923, the result of which may cause delays and shortfalls in our ability to manufacture sufficient ATYR1923, and other clinical candidates, to meet our projected clinical development needs.

However, we, and our CDMOs and CROs are currently experiencing delays due to the ongoing COVID-19 pandemic in the delivery of key raw materials which are essential for the production of efzofitimod , the result of which may cause delays and shortfalls in our ability to manufacture sufficient efzofitimod , and other clinical candidates, to meet our projected clinical development needs.

Currently we have sufficient efzofitimod on hand to meet our projected needs for the planned registrational trial to be initiated in 2022.

Patents and Proprietary Rights

We strive to protect the proprietary technologies that we believe are important to our business, including seeking and maintaining patent protection intended to cover the composition of matter of our product candidates, their methods of use, related technology and other inventions that are important to our business.

We own, or have exclusive licenses to, over 220 issued patents or allowed patent applications with predicted expiration dates ranging from 2026 to 2034.

We own, or have exclusive licenses to, over 220 issued patents or

allowed patent applications with predicted expiration dates ranging from 2026 to 2034.

In addition to patent protection, we also rely on trade secrets and careful monitoring of our proprietary information to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.

Our success will depend significantly on our ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how related to our business, defend and enforce our patents, maintain our licenses to use intellectual property owned by third parties, preserve the confidentiality of our trade secrets and operate without infringing the valid and enforceable patents and other proprietary rights of third parties.

We also rely on know-how, continuing technological innovation and in-licensing opportunities to develop, strengthen, and maintain our proprietary position in the field of extracellular tRNA synthetase biology, their receptors and associated signaling pathways, including, for example, antibody therapeutics to NRP2.

A third party may hold intellectual property, including patent rights, which is important or necessary to the development of our products.

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Such proceedings could result in us incurring substantial costs, even if the eventual outcome is favorable to us.

Our ATYR1923 patent portfolio is comprised of a number of patent families related to derivatives of HARS, including the HARS amino 2-60, related splice variants, combinations with other therapeutics, and next-generation product forms with modified therapeutic activity or pharmacokinetic characteristics.

As of March 2021, our ATYR1923 patent portfolio includes a patent family that is jointly owned by us and our 98% owned subsidiary, Pangu BioPharma, and includes issued patents, in the United States, Australia, Canada, China, Europe, Japan and Hong Kong, and pending patent applications in the United States.

Our efzofitimod patent portfolio is comprised of a number of patent families related to derivatives of HARS, including the HARS amino 2-60, related splice variants, combinations with other therapeutics, and next-generation product forms with modified therapeutic activity or pharmacokinetic characteristics.

As of March 2022, our efzofitimod patent portfolio includes a patent family that is jointly owned by us and our 98% owned subsidiary, Pangu BioPharma, and includes issued patents in the United States, Australia, Canada, China, Europe, Japan and Hong Kong, and pending patent applications in the United States.

patents are expected to expire between 2030 and 2031, absent any patent term extension for regulatory delays, and the ex-U.S.

patents, and patents that issue from these patent applications, if any, are expected to expire in 2030, absent any patent term extension.

The ATYR1923 patent portfolio includes another patent family jointly owned by us and Pangu BioPharma, which includes patent applications directed to related splice variants of HARS.

This patent family includes issued patents in the United States, Australia, China, Japan, New Zealand and Hong Kong.

A patent application is allowed/pending in the United States and Canada.

The efzofitimod patent portfolio includes another patent family jointly owned by us and Pangu BioPharma, which includes patent applications directed to related splice variants of HARS.

This patent family includes issued patents in the United States, Australia, Canada, China, Japan, New Zealand and Hong Kong.

The issued patents and any patents that issue from these patent applications, if any, are expected to expire in 2031, absent any patent term extension.

Also included within the ATYR1923 patent portfolio are issued patents and pending patent applications directed to specific product forms of ATYR1923, and other HARS splice variants, including patent families directed to FC fusion proteins, and combinations for treating lung inflammation, among other indications.

One family directed to specific FC fusion proteins includes issued patents in Australia, the United States, Europe, Hong Kong, and Japan, and pending applications in the United States, Canada,

China, Hong Kong , India, and Japan.

Also included within the efzofitimod patent portfolio are issued patents and pending patent applications directed to specific product forms of efzofitimod , and other HARS splice variants, including patent families directed to Fc fusion proteins, and combinations for treating lung inflammation, among other indications.

One family directed to specific Fc fusion proteins includes issued patents in Australia, the United States, Europe, Hong Kong, and Japan, and pending applications in the United States, Canada, China, Hong Kong, India, and Japan.

If issued, the patents that derive from the patent applications are predicted to expire between 2034 and 2038, absent any patent term extensions.

We filed two US patent applications and corresponding international patent applications under the PCT that are directed to our first generation of domain-specific anti-neuropilin 2 (NRP2) antibodies, including affinity-matured and humanized antibodies.

Certain of the anti-NRP2 antibodies display preferential functional activity on the VEGF and semaphorin pathways, and form one element of a multilayered approach to develop an anti-NRP2 antibody IP portfolio.

ATYR2810 and Discovery NRP2 A ntibodies

We filed various US patent applications and corresponding international patent applications under the Patent Cooperation Treaty (PCT) that are directed to our first generation of domain-specific NRP2 antibodies, including affinity-matured and humanized antibodies such as our product candidate ATYR2810, and antibodies that selectively bind to specific splice isoforms of NRP2.

Certain of the anti-NRP2 antibodies display preferential functional activity on the VEGF, semaphorin, and other signaling pathways, and form one element of a multilayered approach to develop an anti-NRP2 antibody IP portfolio.

Any patents issuing from these patent applications are expected to expire between 2039 and 2040, absent any patent term extension.

tRNA Synthetase

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Additional patent applications have also been separately filed on GARS (Glycyl-tRNA synthetase), DARS, YARS (tyrosyl-tRNA synthetase), and other tRNA synthetases, and any patents issuing from these patent applications are expected to expire between 2026 and 2030, absent any patent term extension.

In addition, we are actively expanding our patent portfolio directed to antibodies to NRP2, including therapeutic compositions, methods of use and diagnostic uses.

Currently the anti-NRP2 patent portfolio includes two patent families directed to murine humanized antibody therapeutics.

Any patents issuing from these patent applications are expected to expire between 2039 and 2040, absent any patent term extension.

The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained.

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FDA approval is required before any new unapproved biologic or dosage form, including a new use of a previously approved biologic, can be marketed in the United States.

Biologics are also subject to other federal, state, and local statutes and regulations.

Biologics are also subject to other

federal, state, and local statutes and regulations.

If we fail to comply with applicable FDA or other requirements at any time during the product development process, clinical testing, approval process or after approval, we may become subject to administrative or judicial sanctions.

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Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, detailed information about the investigational biologic product is submitted to the FDA in the form of a BLA requesting approval to market the product for one or more indications.

ATYR1923, ATYR2810 and our other potential product candidates are proteins that will be regulated as biological products subject to the BLA marketing pathway.

E fzofitimod , ATYR2810 and our other potential product candidates are proteins that will be regulated as biological products subject to the BLA marketing pathway.

Under federal law, the submission of most BLAs is subject to an application user fee, and the sponsor of an approved BLA is also subject to an annual prescription drug product program fee.

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After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA.

In January 2022, the FDA granted efzofitimod an orphan drug designation for the treatment of sarcoidosis.

Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process, but it entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, and user-fee waivers.

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By way of example, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the ACA) contains provisions that may reduce the profitability of drug products, including, for example, increased rebates for drugs sold to Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to federal health care programs.

There have been executive, judicial and Congressional challenges to certain aspects of the ACA, as well as efforts by the Trump administration to repeal or replace certain aspects of the ACA.

While Congress has not passed comprehensive repeal legislation, it has enacted laws that modify certain provisions of the ACA.

For example, the Bipartisan Budget Act of 2018 (the BBA), among other things, amended the ACA, effective January 1, 2019, to reduce the coverage gap in most Medicare Part D plans, commonly referred to as the “donut hole.” The BBA also extended the coverage gap discount program to include biosimilars starting in 2019.

Legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act of 2017, included a provision which repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” In addition, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the ACA-mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminated the health insurer tax.

On December 14, 2018, a U.S.

District Court

Judge in the Northern District of Texas (Texas District Court Judge), ruled that the individual mandate is a critical and inseverable feature of the ACA, and therefore, because it was repealed as part of the Tax Cuts and Jobs Act of 2017, the remaining provisions of the ACA are invalid as well.

Supreme Court is currently reviewing the case, although it is unclear when a decision will be made or how the Supreme Court will rule.

Although the Supreme Court has not yet ruled on the constitutionality of the ACA, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.

The executive order also instructs certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

It is unclear how the Supreme Court ruling, other such litigation, and the healthcare reform measures of the Biden administration will impact the ACA and our business.

Additionally, the Trump administration used several means to propose or implement drug pricing reform, including through federal budget proposals, executive orders and policy initiatives.

There have been executive, judicial and Congressional challenges to certain aspects of the ACA.

For example, legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act of 2017, included a provision which repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On June 17, 2021, the Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress.

Thus, the ACA will remain in effect in its current form.

Prior to the Supreme Court ruling, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period for purposes of obtaining health insurance coverage through the ACA marketplace.

The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare,

including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

It is possible that the ACA will be subject to judicial or Congressional challenges in the future.

It is unclear how any such challenges and the healthcare reform measures of the Biden administration will impact the ACA and our business.

In addition, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics.

Such scrutiny has resulted in several recent congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products.

For example, on July 24, 2020 and September 13, 2020, President Trump announced several executive orders related to prescription drug pricing that attempted to implement several of the Administration’s proposals.

The FDA also released a final rule, effective November 30, 2020, implementing a portion of the importation executive order providing guidance for states to build and submit importation plans for drugs from Canada.

The FDA concurrently released a final rule and guidance in September 2020 implementing a portion of the importation executive order providing pathways for states to build and submit importation plans for drugs from Canada.

Further, on November 20, 2020, the U.S.

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The implementation of the rule has been delayed by the Biden administration from January 1, 2022 to January 1, 2023 in response to ongoing litigation.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have also been delayed pending review by the Biden administration until March 22, 2021.

On November 20, 2020, CMS issued an interim final rule implementing President Trump’s Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries, effective January 1, 2021.

On December 28, 2020, the United States District Court in Northern California issued a nationwide preliminary injunction against implementation of the interim final rule.

As a result of litigation challenging the Most Favored Nation model, on December 27, 2021, CMS published a final rule that rescinds the Most Favored Nation model interim final rule.

Additionally, in July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,” with multiple provisions aimed at prescription drugs.

In response to Biden’s executive order, on September 9, 2021, HHS released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles.

No legislation or administrative actions have been finalized to implement these principles.

It is unclear whether these or similar policy initiatives will be implemented in the future.

Congress is also considering additional health reform measures.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

Additional state and federal healthcare reform measures may be adopted in the future, particularly in light of the new presidential administration.

Further, it is possible that additional governmental action is taken in response to the COVID-19 pandemic.

Additional state and federal healthcare reform measures may be adopted in the future.

Further, it is possible that additional governmental action is taken in response to the ongoing COVID-19 pandemic.

In the European Community, governments influence the price of pharmaceutical products through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of those products to consumers.

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The laws that may affect our ability to operate include:

the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or

the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or

recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;

federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent;

federal civil and criminal false claims laws and civil monetary penalty laws, including the civil False Claims Act, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent;

the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;

the federal transparency laws, including the provision of the ACA referred to as the federal Physician Payments Sunshine Act, that requires drug and biologics manufacturers to disclose payments and other transfers of value provided to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors) and teaching hospitals and ownership interests of physicians and their immediate family members.

Beginning in 2022, applicable manufacturers also will be required to report such information regarding its payments and other transfers of value to physician assistants, nurse practitioners , clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives during the previous year;

the federal transparency laws, including the provision of the ACA referred to as the federal Physician Payments Sunshine Act, that requires certain drug and biologics manufacturers to disclose payments and other transfers of value provided to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), certain other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals and ownership interests of physicians and their immediate family members;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, which imposes certain requirements on HIPAA covered entities and their business associates relating to the privacy, security and transmission of individually identifiable health information;

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If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including significant administrative, civil and criminal penalties, exclusion from participation in government healthcare programs, such as Medicare and Medicaid and imprisonment, disgorgement, damages, fines, additional reporting requirements and regulatory oversight and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Employees and Human Capital Resources

As of December 31, 2021 , we had 53 employees, 49 of which were full-time employees.

None of our employees are represented by labor unions or covered by collective bargaining agreements.

32 of our employees serve in roles related to research and development, clinical, manufacturing and regulatory affairs, and 17 serve in general and administrative capacities.

As of December 31, 2021, all our employees were based in the United States.

We also engage temporary consultants and contractors.

All of our employees are “at–will,” which means that each employee can terminate his or her relationship with us and we can terminate our relationship with him or her, at any time.

None of our employees are represented by a labor union or covered by collective bargaining agreements.

We consider our relationship with our employees to be good.

We compete in the highly competitive biotechnology industry.

Attracting, developing and retaining talented employees is crucial to executing our strategy and our ability to compete effectively.

Our ability to recruit and retain such talent depends on several factors, including compensation and benefits, talent development and career opportunities, and work environment.

To that end, we invest in our employees to be an employer of choice.

Our Code of Business Conduct and Ethics (Code of Conduct) ensures that our core values of respect, integrity, collaboration, innovation, trust, and excellence are applied throughout our operations.

Our Code of Conduct serves as a critical tool to help all of us recognize and report unethical conduct, while preserving and nurturing our culture of honesty and accountability.

The physical health, financial wellbeing, work-life balance and mental health of our employees is vital to our success.

Our environmental, health and safety team stays abreast of local, regional and global concerns and trends and ensures safety procedures are in place to mitigate workplace injuries and safety risks.

Our employees are required to complete training in various safety procedures for the laboratories and manufacturing facilities and specialized safety training based on particular job duties.

Our Designated Safety Officers and response teams oversee safety-related initiatives and a safety committee that provides input on safety procedures, practices, and policies.

Our employees are required to wear personal protective equipment relevant for their particular job duties.

Occupational injuries at our facilities are extremely low and are always investigated to determine if any environmental or other changes need to be implemented.

Since the onset of the COVID-19 pandemic, strict safety protocols have been put in place for employees working on-site, including following federal and local guidelines and mandates to ensure the safety of our workforce.

We provide the necessary personal protective equipment who are working in our facility.

Regular communication and training about the virus and how individuals can protect themselves and others is ongoing with employees.

Financial Information about Segments

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What changed 10-K

Item 1. Business