life-10q_20210331.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from                 to              

Commission File Number: 001-37378

 

ATYR PHARMA, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

20-3435077

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

3545 John Hopkins Court, Suite #250, San Diego, CA

 

92121

(Address of principal executive offices)

 

(Zip Code)

(858) 731-8389

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

LIFE

The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of May 7, 2021, there were 16,064,643 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

 

 


 

 

ATYR PHARMA, INC.

FORM 10-Q

TABLE OF CONTENTS

 

 

Page

PART I. FINANCIAL INFORMATION

 

 

Item 1. Financial Statements

 

3

Condensed Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020

 

3

Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020 (unaudited)

 

4

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020 (unaudited)

 

5

Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2021 and 2020 (unaudited)

 

6

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited)

 

7

Notes to Condensed Consolidated Financial Statements (unaudited)

 

8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

15

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

21

Item 4. Controls and Procedures

 

21

PART II. OTHER INFORMATION

 

 

Item 1. Legal Proceedings

 

22

Item 1A. Risk Factors

 

22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

23

Item 3. Defaults Upon Senior Securities

 

55

Item 4. Mine Safety Disclosures

 

55

Item 5. Other Information

 

55

Item 6. Exhibits

 

56

SIGNATURES

 

58

 

 

2


 

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

aTyr Pharma, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

12,587

 

 

$

16,952

 

Available-for-sale investments

 

 

38,050

 

 

 

14,737

 

Other receivables

 

 

89

 

 

 

2,039

 

Prepaid expenses

 

 

1,408

 

 

 

1,803

 

Total current assets

 

 

52,134

 

 

 

35,531

 

Property and equipment, net

 

 

874

 

 

 

899

 

Right-of-use assets

 

 

1,886

 

 

 

2,083

 

Other assets

 

 

234

 

 

 

213

 

Total assets

 

$

55,128

 

 

$

38,726

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,161

 

 

$

1,431

 

Accrued expenses

 

 

2,400

 

 

 

3,572

 

Current portion of operating lease liability

 

 

890

 

 

 

861

 

Total current liabilities

 

 

4,451

 

 

 

5,864

 

Long-term operating lease liability, net of current portion

 

 

1,145

 

 

 

1,378

 

Commitments and contingencies (Note 4)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value per share; 5,000,000 undesignated authorized shares; Class X Convertible Preferred Stock issued and outstanding shares – 0 as of March 31, 2021 (unaudited) and December 31, 2020, respectively

 

 

 

 

 

 

Common stock, $0.001 par value per share; 21,425,000 authorized shares as of

March 31, 2021 and December 31, 2020, respectively; issued and outstanding shares – 16,011,385 (unaudited) and 11,018,954 as of March 31, 2021 and December 31, 2020, respectively

 

 

16

 

 

 

11

 

Additional paid-in capital

 

 

395,422

 

 

 

370,210

 

Accumulated other comprehensive loss

 

 

(57

)

 

 

(43

)

Accumulated deficit

 

 

(345,679

)

 

 

(338,528

)

Total aTyr Pharma stockholders’ equity

 

 

49,702

 

 

 

31,650

 

Noncontrolling interest in Pangu BioPharma Limited

 

 

(170

)

 

 

(166

)

Total stockholders' equity

 

 

49,532

 

 

 

31,484

 

Total liabilities and stockholders’ equity

 

$

55,128

 

 

$

38,726

 

 

See accompanying notes.

 

 

 

3


 

 

aTyr Pharma, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

 

(unaudited)

 

Revenues:

 

 

 

 

 

 

 

 

License and collaboration agreement revenues

 

$

 

 

$

8,065

 

Total revenues

 

 

 

 

 

8,065

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

4,516

 

 

 

3,616

 

General and administrative

 

 

2,686

 

 

 

2,590

 

Total operating expenses

 

 

7,202

 

 

 

6,206

 

Income (loss) from operations

 

 

(7,202

)

 

 

1,859

 

Total other income (expense), net

 

 

47

 

 

 

(107

)

Consolidated net income (loss)

 

$

(7,155

)

 

$

1,752

 

Net loss attributable to noncontrolling interest in Pangu BioPharma Limited

 

 

4

 

 

 

1

 

Net income (loss) attributable to aTyr Pharma, Inc.

 

$

(7,151

)

 

$

1,753

 

Basic, net income (loss) per share

 

$

(0.51

)

 

$

0.25

 

Shares used in computing basic net income (loss) per share

 

 

14,103,783

 

 

 

6,881,791

 

Diluted net income (loss) per share

 

$

(0.51

)

 

$

0.25

 

Shares used in computing diluted net income (loss) per share

 

 

14,103,783

 

 

 

6,884,797

 

See accompanying notes.

 

 

 

4


 

 

aTyr Pharma, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

 

(unaudited)

 

Consolidated net income (loss)

 

$

(7,155

)

 

$

1,752

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

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

 

 

(14

)

 

 

(13

)

Comprehensive income (loss)

 

$

(7,169

)

 

$

1,739

 

Comprehensive loss attributable to noncontrolling interest Pangu BioPharma Limited

 

 

4

 

 

 

1

 

Comprehensive income (loss) attributable to aTyr Pharma, Inc. common stockholders

 

$

(7,165

)

 

$

1,740

 

 

See accompanying notes.

 

 

 

5


 

 

aTyr Pharma, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

 

 

 

Three Months Ended March 31,2021 (unaudited)

 

 

 

Convertible

Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Other

Comprehensive

 

 

Accumulated

 

 

Noncontrolling

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Gain/(Loss)

 

 

Deficit

 

 

Interest

 

 

Equity

 

Balance as of December 31, 2020

 

 

 

 

$

 

 

 

11,018,954

 

 

$

11

 

 

$

370,210

 

 

$

(43

)

 

$

(338,528

)

 

$

(166

)

 

$

31,484

 

Issuance of common stock upon release of restricted stock units

 

 

 

 

 

 

 

 

4,177

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

1,988,254

 

 

 

2

 

 

 

9,619

 

 

 

 

 

 

 

 

 

 

 

 

9,621

 

Issuance of common stock from committed purchase agreement, net of offering costs

 

 

 

 

 

 

 

 

3,000,000

 

 

 

3

 

 

 

15,233

 

 

 

 

 

 

 

 

 

 

 

 

15,236

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

360

 

 

 

 

 

 

 

 

 

 

 

 

360

 

Net unrealized loss on investments, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14

)

 

 

 

 

 

 

 

 

(14

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,151

)

 

 

(4

)

 

 

(7,155

)

Balance as of March 31, 2021

 

 

 

 

$

 

 

 

16,011,385

 

 

$

16

 

 

$

395,422

 

 

$

(57

)

 

$

(345,679

)

 

$

(170

)

 

$

49,532

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,2020 (unaudited)

 

 

 

Convertible

Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Other

Comprehensive

 

 

Accumulated

 

 

Noncontrolling

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Gain/(Loss)

 

 

Deficit

 

 

Interest

 

 

Equity

 

Balance as of December 31, 2019

 

 

1,643,961

 

 

$

2

 

 

 

3,891,787

 

 

$

4

 

 

$

343,524

 

 

$

(40

)

 

$

(322,304

)

 

$

(160

)

 

$

21,026

 

Conversion of preferred stock to common stock

 

 

(1,643,961

)

 

 

(2

)

 

 

587,444

 

 

 

1

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon release of restricted stock units

 

 

 

 

 

 

 

 

2,679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

4,870,588

 

 

 

4

 

 

 

18,775

 

 

 

 

 

 

 

 

 

 

 

 

18,779

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

423

 

 

 

 

 

 

 

 

 

 

 

 

423

 

Net unrealized loss on investments, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

 

 

 

 

 

 

(13

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,753

 

 

 

(1

)

 

 

1,752

 

Balance as of March 31, 2020

 

 

 

 

$

 

 

$

9,352,498

 

 

$

9

 

 

$

362,723

 

 

$

(53

)

 

$

(320,551

)

 

$

(161

)

 

$

41,967

 

 

See accompanying notes.

 

 

 

 

6


 

 

aTyr Pharma, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

(unaudited)

 

Cash flows from operating activities:

 

 

 

Consolidated net income (loss)

 

$

(7,155

)

 

$

1,752

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

121

 

 

 

157

 

Stock-based compensation

 

 

360

 

 

 

423

 

Debt discount accretion and non-cash interest expense

 

 

 

 

 

129

 

Amortization (accretion) of premium (discount) of available-for-sale investment securities

 

 

51

 

 

 

(24

)

Amortization of right-of-use assets

 

 

176

 

 

 

201

 

Loss on disposal of property and equipment

 

 

 

 

 

6

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Other receivables

 

 

1,950

 

 

 

48

 

Prepaid expenses and other assets

 

 

395

 

 

 

188

 

Accounts payable and accrued expenses

 

 

(1,521

)

 

 

(578

)

Contract liability

 

 

 

 

 

(65

)

Operating lease liability

 

 

(204

)

 

 

(179

)

Net cash provided by (used in) operating activities

 

 

(5,827

)

 

 

2,058

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(17

)

 

 

(166

)

Purchases of available-for-sale investment securities

 

 

(25,678

)

 

 

(3,081

)

Maturities of available-for-sale investment securities

 

 

2,300

 

 

 

14,650

 

Proceeds from sale of property and equipment

 

 

 

 

 

3

 

Net cash provided by (used in) investing activities

 

 

(23,395

)

 

 

11,406

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock from at the market offerings, net of offering costs

 

 

9,621

 

 

 

 

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

 

 

15,236

 

 

 

 

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

 

 

 

 

 

18,779

 

Repayments on borrowings

 

 

 

 

 

(2,000

)

Net cash provided by financing activities

 

 

24,857

 

 

 

16,779

 

Net change in cash and cash equivalents

 

 

(4,365

)

 

 

30,243

 

Cash and cash equivalents at beginning of period

 

 

16,952

 

 

 

9,210

 

Cash and cash equivalents at the end of period

 

$

12,587

 

 

$

39,453

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.

 

 

 

7


 

 

aTyr Pharma, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

1. Organization, Business, Basis of Presentation and Summary of Significant Accounting Policies

Organization and Business

aTyr Pharma, Inc. (we, us, and our) was incorporated in the state of Delaware on September 8, 2005. We are focused on the discovery and development of innovative medicines based on novel biological pathways.

Principles of Consolidation

Our condensed consolidated financial statements include our accounts and our 98% majority-owned subsidiary in Hong Kong, Pangu BioPharma Limited (Pangu BioPharma). All intercompany transactions and balances are eliminated in consolidation.

Unaudited Interim Financial Information

The accompanying interim condensed consolidated financial statements are unaudited. These unaudited interim financial statements have been prepared in accordance with United States generally accepted accounting principles (GAAP) and follow the requirements of the United States Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. In our opinion, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of our financial position and our results of operations and cash flows for periods presented. These statements do not include all disclosures required by GAAP and should be read in conjunction with our financial statements and accompanying notes for the fiscal year ended December 31, 2020, contained in our Annual Report on Form 10-K filed with the SEC on March 24, 2021. The results of the interim periods are not necessarily indicative of the results expected for the full fiscal year or any other interim period or any future year or period.

 

Risks and Uncertainties

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. 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, inflation, 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.

Liquidity and Financial Condition

We have incurred net losses in each year since our inception in 2005, including a condensed consolidated net loss of $7.2 million for the three months ended March 31, 2021. As of March 31, 2021, we had an accumulated deficit of $345.7 million. We believe that our existing cash, cash equivalents and available-for-sale investments of $50.6 million as of March 31, 2021 will be sufficient to meet our anticipated cash requirements for a period of at least one year from the filing date of this Quarterly Report on Form 10-Q.

We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years at a minimum. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, we will need to raise substantial additional capital to fund our operations. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our preclinical and clinical development efforts and the timing and nature of the regulatory approval process for our product candidates. We anticipate that we will seek to fund our operations through equity offerings, grant funding, collaborations, strategic partnerships and/or licensing arrangements, and when we are closer to commercialization of our product candidates potentially through debt financings. However, we may be unable to raise additional capital or enter into such arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such arrangements when needed would have a negative impact on our financial condition and ability to develop our product candidates.

 

 

8


 

 

Use of Estimates

Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure for these items in our condensed consolidated financial statements and accompanying notes. The most significant estimates in our condensed consolidated financial statements relate to the fair value of equity issuances and awards, clinical trial and research and development expenses. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ materially from these estimates and assumptions.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform to the current year presentation. The reclassifications were not material to the condensed consolidated financial statements.

Leases

We follow Accounting Standards Codification (ASC) Topic 842, Leases in recording our operating and financing leases. For our long-term operating leases, we recognized a right-of-use asset and a lease liability in our condensed consolidated balance sheets. The lease liability is determined as the present value of future lease payments using an estimated rate of interest that we would pay to borrow equivalent funds on a collateralized basis at the lease commencement date. The right-of-use asset is based on the liability adjusted for any prepaid or deferred rent. We determine the lease term at the commencement date by considering whether renewal options and termination options are reasonably assured of exercise. We also made accounting policy elections not to apply the recognition requirements under Topic 842 to any of our short-term leases and to account for each separate lease and associated non-lease components as a single lease component for all of our leases. Under Topic 842 we determine if an arrangement is a lease at inception. Our right-of-use assets consist of an operating lease for our facility headquarters. We have a noncancelable operating lease that includes certain tenant improvement allowances and is subject to base lease payments, which escalate over the term of the lease, additional charges for common area maintenance and other costs. 

Rent expense for the operating lease is recognized on a straight-line basis over the lease term and is included in operating expenses in our condensed consolidated statements of operations.

Revenue Recognition

We evaluate our agreements under ASC Topic 606, Revenue from Contracts with Customers and ASC Topic 808, Collaborative Arrangements. We recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under our agreement, we perform the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation. As part of the accounting for these arrangements, we must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. We use key assumptions to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success.

We recognize revenue in one of two ways, over time or at a point in time. We recognize revenue over time when we are executing on our performance obligation over time and our partner receives benefit over time. For example, we recognize revenue over time when we provide research and development services. We recognize revenue at a point in time when we transfer control of a distinct performance obligation to our partner. For example, if a license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license.

Basic and Diluted Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents.

 

9


 

 

Diluted Net Income (Loss) Per Share

For the three months ended March 31, 2021, common stock from the following would have had an anti-dilutive effect on net loss per share (in common share equivalents):

 

Common stock warrants

 

 

13,760

 

Common stock options and restricted stock units

 

 

898,306

 

Employee stock purchase plan

 

 

1,602

 

Total

 

 

913,668

 

 

For the three months ended March 31, 2020, we had net income available to common stockholders. As a result, we computed diluted net income per share using the weighted average number of common shares and dilutive common equivalent shares outstanding during the period. Dilutive common equivalent shares outstanding included 3,006 shares of restricted stock units.

 

For the three months ended March 31, 2020, the calculation excluded the following common equivalent shares because the effect on diluted earnings per share was anti-dilutive:

 

Common stock warrants

 

 

13,904

 

Common stock options and restricted stock units

 

 

486,142

 

Employee stock purchase plan

 

 

1,958

 

Total

 

 

502,004

 

 

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (Topic 326), to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in Topic 326 replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Topic 326 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies. We expect the adoption of the amendments in Topic 326 to not have a material effect in our condensed consolidated financial position or results of operations when such amendment is adopted.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes to identify, evaluate, and improve areas of GAAP for which costs and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The amendments for Topic 740 simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. Topic 740 is effective for fiscal years beginning after December 15, 2020 which we adopted on January 1, 2021. The adoption did not have an effect on our condensed consolidated financial position or results of operations.

2. Fair Value Measurements

The carrying amounts of cash equivalents, prepaid and other assets, accounts payable and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments. Investment securities are recorded at fair value.

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 

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Level 1: Observable inputs such as quoted prices in active markets.

Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Financial assets measured at fair value on a recurring basis consist of investment securities. Investment securities are recorded at fair value, defined as the exit price in the principal market in which we would transact, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Level 2 securities are valued using quoted market prices for similar instruments, non-binding market prices that are corroborated by observable market data, or discounted cash flow techniques and include our investments in commercial paper, corporate debt securities and asset-bask securities. We have no financial liabilities measured at fair value on a recurring basis. None of our non-financial assets and liabilities are recorded at fair value on a non-recurring basis. No transfers between levels have occurred during the periods presented.

Assets measured at fair value on a recurring basis are as follows (in thousands):

 

 

 

 

 

 

 

Fair Value Measurements Using

 

 

 

Total

 

 

Quoted Prices in

Active Markets

for Identical

Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

As of March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

11,958

 

 

$

11,958

 

 

$

 

 

$

 

Available-for-sale investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-backed securities

 

 

1,008

 

 

 

 

 

 

1,008

 

 

 

 

Commercial paper

 

 

18,183

 

 

 

 

 

 

18,183

 

 

 

 

Corporate debt securities

 

 

18,859

 

 

 

 

 

 

18,859

 

 

 

 

Total available-for-sale investments

 

 

38,050

 

 

 

 

 

 

38,050

 

 

 

 

Total assets measured at fair value

 

$

50,008

 

 

$

11,958

 

 

$

38,050

 

 

$

 

 

 

 

 

 

 

 

Fair Value Measurements Using

 

 

 

Total

 

 

Quoted Prices in

Active Markets

for Identical

Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

As of December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

13,708

 

 

$

13,708

 

 

$

 

 

$

 

Available-for-sale investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-backed securities

 

 

2,219

 

 

 

 

 

 

2,219

 

 

 

 

Commercial paper

 

 

5,494

 

 

 

 

 

 

5,494

 

 

 

 

Corporate debt securities

 

 

7,024

 

 

 

 

 

 

7,024

 

 

 

 

Total available-for-sale investments

 

 

14,737

 

 

 

 

 

 

14,737

 

 

 

 

Total assets measured at fair value

 

$

28,445

 

 

$

13,708

 

 

$

14,737

 

 

$

 

 

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As of March 31, 2021 and December 31, 2020, available-for-sale investments are detailed as follows (in thousands):

 

 

 

 

 

March 31, 2021

 

 

 

Contractual Maturity

 

Gross

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Market Value

 

Available-for-sale investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-backed securities

 

Within 1 year

 

$

1,008

 

 

$

 

 

$

 

 

$

1,008

 

Commercial paper

 

Within 1 year

 

 

18,183

 

 

 

 

 

 

 

 

 

18,183

 

Corporate debt securities

 

1 to 2 years

 

 

18,866

 

 

 

 

 

 

(7

)

 

 

18,859

 

 

 

 

 

$

38,057

 

 

$

 

 

$

(7

)

 

$

38,050

 

 

 

 

 

 

 

December 31, 2020

 

 

 

Contractual Maturity

 

Gross

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Market Value

 

Available-for-sale investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-backed securities

 

Within 1 year

 

$

2,218

 

 

$

1

 

 

$

 

 

$

2,219

 

Commercial paper

 

Within 1 year

 

 

5,491

 

 

 

3

 

 

 

 

 

 

5,494

 

Corporate debt securities

 

Within 1 year

 

 

7,021

 

 

 

3

 

 

 

 

 

 

7,024

 

 

 

 

 

$

14,730

 

 

$

7

 

 

$

 

 

$

14,737

 

 

At each reporting date, we perform an evaluation of impairment to determine if any unrealized losses are other-than-temporary. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, and our intent and ability to hold the investment until recovery of its amortized cost basis. We intend, and have the ability, to hold our investments in unrealized loss positions until their amortized cost basis has been recovered.

 

As of March 31, 2021, all of our available-for-sale investments had a variety of effective maturity dates of less than two years. As of March 31, 2021, 15 out of 25 of the available-for-sale investments were in gross unrealized loss positions.

3. License, Collaboration and Other Agreements

Kyorin Pharmaceutical Co., Ltd.

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 interstitial lung diseases (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 study to evaluate the safety, pharmacokinetics and immunogenicity of ATYR1923. Results from this study are intended to enable Kyorin to initiate clinical trials in ILD in Japan. 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.

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. 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.

We assessed our license and collaboration with Kyorin in accordance with Topic 606 and concluded that Kyorin is a customer. We identified the following performance obligations under the Kyorin Agreement: 1) the license of ATYR1923 for ILD in Japan; and 2) free clinical trial material for Kyorin’s Phase 1 clinical trial. The $8.0 million upfront payment received from Kyorin is non-refundable and non-creditable and is considered fixed consideration. We determined that the relative stand-alone selling price was $7.9 million when the license was delivered to Kyorin in January 2020. We determined that the relative standalone selling price was $0.1 million for the free clinical trial material delivered to Kyorin in June 2020, using the “expected cost plus a margin” approach. In December 2020, Kyorin completed the last subject visit in its Phase 1 clinical trial of ATYR1923. This achievement triggered a $2.0

 

12


 

million milestone payment which we recognized as license and collaboration revenue in December 2020. We received the $2.0 million from Kyorin in January 2021.

For the three months ended March 31, 2021, there were no activities that triggered additional license and collaboration agreement revenue. For the three months ended March 31, 2020, we recognized $7.9 million as license and collaboration agreement revenue for the upfront payment received.

Both the milestones and royalty payments under the Kyorin Agreement are variable consideration. Since milestone payments are binary in nature, we will use the “most-likely” method to evaluate whether the milestones should be included as revenue. We will apply constraint to these amounts until the milestone is probable of being achieved. The royalties are dependent on future sales by Kyorin which are at the full discretion of Kyorin. Accordingly, we will apply a constraint to these amounts until the future sale sales have occurred.

Hong Kong University of Science and Technology

In March 2020, our subsidiary, 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 (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 will fund approximately 50% of the total estimated project cost, with aTyr contributing the remaining 50%. The research grant agreement between Pangu BioPharma, HKUST and the Government of the Hong Kong Special Administration Region became effective April 1, 2020.

All the contributions provided by the ITC are paid to HKUST and we record expenses under this grant award when incurred. Expenses for the three months ended March 31, 2021 and 2020 were $0.2 million and $0, respectively.

4. Debt, Commitments and Contingencies

Facility Leases

Future minimum payments under the non-cancelable facility lease and reconciliation to the operating lease liability as of March 31, 2021 were as follows (in thousands):

 

 

 

Operating Lease

 

2021

 

$

776

 

2022

 

 

1,062

 

2023

 

 

404

 

Less: Amount representing interest

 

 

(207

)

Present value of lease payments

 

 

2,035

 

Less: Current portion of operating lease liability

 

 

(890

)

Long-term operating lease liability, net of current portion

 

$

1,145

 

For each of the three months ended March 31, 2021 and 2020, we recorded an operating lease expense of $0.2 million. As of March 31, 2021, the weighted-average remaining lease term was 2.2 years and the weighted-average discount rate was 9.6%.    

 

5. Stockholders’ Equity

At the Market Offering Program

In May 2019, we entered into a sales agreement with H.C. Wainwright & Co., LLC (Wainwright) with respect to an at-the-market offering (ATM Offering Program) under which we could offer and sell shares of our common stock having an aggregate offering price of up to $10.0 million. In November 2020, we amended our sales agreement with Wainwright to increase the amount of the ATM Offering Program up to $20.0 million. Wainwright was entitled to a commission at a fixed rate equal to 3% of the gross proceeds. In March 2021, the ATM Offering Program with Wainwright automatically terminated upon the issuance and sale of all of the shares of common stock having an aggregate offering price of $20.0 million. For the three months ended March 31, 2021, we sold an aggregate of 1,988,254 shares of common stock at an average price of $4.99 per share for net proceeds of $9.6 million under the ATM Offering Program.

In March 2021, we entered into a Capital on DemandTM Sales Agreement with JonesTrading Institutional Services LLC (JonesTrading) for a new ATM Offering Program, pursuant to which we can sell from time to time, at our option, up to an aggregate of $25.0 million of shares of our common stock through JonesTrading, as sales agent or principal. JonesTrading is entitled to a

 

13


 

commission at a fixed rate equal of up to 3% of the gross proceeds. For the three months ended March 31, 2021, we did not issue any shares under this ATM Offering Program.

Underwritten Follow-On Public Offering

In February 2020, we completed an underwritten follow-on public offering of 4,235,294 shares of our common stock at a price to the public of $4.25 per share. In March 2020, the underwriters fully exercised their option to purchase additional shares resulting in the issuance of an additional 635,294 shares of common stock. The total gross proceeds from the underwritten follow-on public offering, including the underwriters’ option to purchase additional shares, was approximately $20.7 million, before deducting underwriting discounts, commissions and offering expenses payable by us.

Purchase Agreement

In September 2020, we entered into a common stock purchase agreement (Purchase Agreement) with Aspire Capital Fund, LLC (Aspire Capital), which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $20.0 million of shares of our common stock at our request from time to time during the 30 month term of the Purchase Agreement. Concurrently with entering into the Purchase Agreement, we also entered into a registration rights agreement with Aspire Capital, in which we agreed to file one or more registration statements, as permissible and necessary to register under the Securities Act of 1933, as amended, for the resale of the shares of our common stock that have been and may be issued to Aspire Capital under the Purchase Agreement. For the three months ended March 31, 2021, we sold an aggregate of 3,000,000 shares of common stock at an average price of $5.09 per share for net proceeds of $15.2 million under this Purchase Agreement.

Common Stock Reserved for Future Issuance

Common stock reserved for future issuance was as follows:

 

 

March 31, 2021

 

Common stock warrants

 

 

13,760

 

Common stock options and restricted stock units

 

 

898,306

 

Shares available under the 2015 equity incentive plan

 

 

63,391

 

Shares available under the employee stock purchase plan

 

 

75,315

 

 

 

 

1,050,772

 

 

Equity Incentive Plans

The following table summarizes our stock option activity under all equity incentive plans for the three months ended March 31, 2021:

 

 

 

Number of

Outstanding

Stock Options

 

 

Weighted

Average

Exercise Price

 

Outstanding as of December 31, 2020

 

 

576,534

 

 

$

23.33

 

Granted

 

 

326,456

 

 

$

4.52

 

Canceled/forfeited/expired

 

 

(12,184

)

 

$

25.47