aTyr Pharma, Inc. — Q2 2015 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2015. Financial statements are unaudited; amounts below are in U.S. dollars unless noted. aTyr is a clinical-stage biotechnology company developing Physiocrine-based medicines for severe rare diseases, with Resolaris as its lead candidate. It reported no product revenue.
Key financial metrics
| Metric | Q2 2015 | Q2 2014 | Six months 2015 | Six months 2014 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $7.5 million | $3.6 million | $14.1 million | $8.0 million |
| General and administrative expense | $3.4 million | $1.7 million | $5.7 million | $3.3 million |
| Net loss | $11.1 million | $5.6 million | $20.2 million | $11.7 million |
| Net loss per share, basic and diluted | $0.74 | $6.85 | $2.53 | $14.69 |
| Cash used in operating activities | Not separately reported | Not separately reported | $17.5 million | $11.2 million |
At June 30, 2015, cash and cash equivalents were $63.1 million, short-term investments $39.9 million, and long-term investments $44.7 million—$147.7 million combined. Total assets were $153.1 million. The company reported approximately $6.8 million of commercial bank debt net of discount in the debt note, with $3.5 million classified as long-term; the balance-sheet debt subtotals do not appear to reconcile exactly to the note disclosure. It had no available borrowing capacity under its bank facility. No operating margin or profit margin is meaningful because the company had no revenue.
Changes and notable transactions
- Expenses and losses increased substantially year over year. Q2 R&D expense rose $3.9 million, primarily from Resolaris clinical development and manufacturing costs and higher compensation. Q2 G&A rose $1.7 million, reflecting increased personnel, public-company costs, and intellectual-property work.
- In May 2015, aTyr completed its IPO of 6.164 million shares at $14 per share, raising approximately $75.9 million net. Earlier in 2015, it raised approximately $75.6 million net from Series E preferred stock. The IPO converted outstanding preferred stock into common shares and materially changed the capital structure and share count.
- Six-month financing cash inflows were $149.8 million, mainly from the preferred financing and IPO. Investing cash outflow of $83.1 million primarily reflected purchases of investment securities; cash increased by $49.2 million during the period.
- The $2.0 million landlord-affiliated convertible note and approximately $0.5 million accrued interest were repaid in May. The company also issued TSRI common stock valued at $1.4 million, recorded as R&D expense.
Outlook, commentary, and risks
- Management said existing cash, cash equivalents, and investments should fund anticipated requirements for at least the next 12 months. It also expects significant future losses and says additional capital will be needed to complete development, pursue approval, and potentially commercialize candidates; future financing may dilute shareholders or impose other restrictions.
- aTyr expected initial results from its exploratory Phase 1b/2 Resolaris trial in adult FSHD patients in the fourth quarter of 2015 or early 2016, subject to regulatory interactions and enrollment. No formal revenue or earnings guidance was provided.
- The U.S. Resolaris IND had been removed from full clinical hold but remained on partial clinical hold for doses above 3.0 mg/kg. The company intended to submit additional supporting information in the second half of 2015; lifting the hold was not assured.
- A manufacturing campaign for Resolaris drug substance did not meet specifications; no nonconforming material was administered, and the manufacturer began a replacement campaign. aTyr also entered a Fujifilm services agreement for process development and clinical-trial supply, with milestone payments up to a mid-seven-figure total.
- Key risks include clinical efficacy and safety uncertainty, limited rare-disease patient pools, manufacturing and supply dependence, regulatory delays, and the need for additional funding. The filing also disclosed Alexion’s challenge to the Resolaris trademark; aTyr was assessing its response. The company reported no material legal proceedings.
Important facts for investors to verify
- Current Resolaris trial enrollment, timing and results, and whether the FDA partial clinical hold is lifted or affects planned doses.
- Cash burn and investment balances, the cash-runway assumption, and the debt balance given the apparent difference between balance-sheet subtotals and the debt note.
- Progress and specifications of replacement Resolaris manufacturing, including readiness for later-stage trials.
- Financing needs and potential dilution, including the effect of the IPO share conversion and equity awards.
- Resolution of the Resolaris trademark dispute and any effect on branding or commercialization plans.