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, 2020
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)
|
Registrant’s telephone number, including area code (858)
731-8389
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 8, 2020, there were 9,352,498 shares of the registrant’s
common stock, par value $0.001 per share, outstanding.
ATYR
PHARMA, INC.
FORM 10-Q
TABLE OF CONTENTS
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,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(unaudited)
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
39,453
|
|
|
$
|
9,210
|
|
Available-for-sale investments
|
|
|
10,376
|
|
|
|
21,934
|
|
Prepaid expenses and other assets
|
|
|
545
|
|
|
|
781
|
|
Total current assets
|
|
|
50,374
|
|
|
|
31,925
|
|
Property and equipment, net
|
|
|
1,281
|
|
|
|
1,270
|
|
Right-of-use assets
|
|
|
2,643
|
|
|
|
2,821
|
|
Other assets
|
|
|
149
|
|
|
|
172
|
|
Total assets
|
|
$
|
54,447
|
|
|
$
|
36,188
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
748
|
|
|
$
|
847
|
|
Accrued expenses
|
|
|
1,908
|
|
|
|
2,376
|
|
Contract liability
|
|
|
143
|
|
|
|
208
|
|
Current portion of operating lease liability
|
|
|
780
|
|
|
|
755
|
|
Current portion of long-term debt, net of issuance costs and
discount
|
|
|
6,866
|
|
|
|
8,737
|
|
Total current liabilities
|
|
|
10,445
|
|
|
|
12,923
|
|
Long-term operating lease liability, net of current portion
|
|
|
2,035
|
|
|
|
2,239
|
|
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 and 1,643,961 as of March 31, 2020
(unaudited) and December 31, 2019, respectively
|
|
|
—
|
|
|
|
2
|
|
Common stock, $0.001 par value per share; 10,714,286 authorized
shares; issued and outstanding shares – 9,352,498 and 3,891,787 as
of March 31, 2020 (unaudited) and December 31, 2019,
respectively
|
|
|
9
|
|
|
|
4
|
|
Additional paid-in capital
|
|
|
362,723
|
|
|
|
343,524
|
|
Accumulated other comprehensive loss
|
|
|
(53
|
)
|
|
|
(40
|
)
|
Accumulated deficit
|
|
|
(320,551
|
)
|
|
|
(322,304
|
)
|
Total aTyr Pharma stockholders’ equity
|
|
|
42,128
|
|
|
|
21,186
|
|
Noncontrolling interest in Pangu BioPharma Limited
|
|
|
(161
|
)
|
|
|
(160
|
)
|
Total stockholders' equity
|
|
|
41,967
|
|
|
|
21,026
|
|
Total liabilities and stockholders’ equity
|
|
$
|
54,447
|
|
|
$
|
36,188
|
|
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,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(unaudited)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
License revenues
|
|
$
|
8,065
|
|
|
$
|
—
|
|
Total revenues
|
|
|
8,065
|
|
|
|
—
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
3,616
|
|
|
|
3,345
|
|
General and administrative
|
|
|
2,590
|
|
|
|
2,532
|
|
Total operating expenses
|
|
|
6,206
|
|
|
|
5,877
|
|
Income (loss) from operations
|
|
|
1,859
|
|
|
|
(5,877
|
)
|
Total other expense, net
|
|
|
(107
|
)
|
|
|
(260
|
)
|
Consolidated net income (loss)
|
|
|
1,752
|
|
|
|
(6,137
|
)
|
Net loss attributable to noncontrolling interest in Pangu BioPharma
Limited
|
|
|
1
|
|
|
|
—
|
|
Net income (loss) attributable to aTyr Pharma, Inc.
|
|
$
|
1,753
|
|
|
$
|
(6,137
|
)
|
Basic net income (loss) per share
|
|
$
|
0.25
|
|
|
$
|
(2.54
|
)
|
Shares used in computing basic net income (loss) per share
|
|
|
6,881,791
|
|
|
|
2,418,674
|
|
Diluted net income (loss) per share
|
|
$
|
0.25
|
|
|
$
|
(2.54
|
)
|
Shares used in computing diluted net income (loss) per share
|
|
|
6,884,797
|
|
|
|
2,418,674
|
|
See accompanying notes.
4
aTyr
Pharma, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Loss)
(in thousands)
|
|
Three Months Ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(unaudited)
|
|
Consolidated net income (loss)
|
|
$
|
1,752
|
|
|
$
|
(6,137
|
)
|
Other comprehensive gain (loss):
|
|
|
|
|
|
|
|
|
Change in unrealized gain (loss) on available-for-sale investments,
net of tax
|
|
|
(13
|
)
|
|
|
20
|
|
Comprehensive income (loss)
|
|
$
|
1,739
|
|
|
$
|
(6,117
|
)
|
Comprehensive loss attributable to noncontrolling interest Pangu
BioPharma Limited
|
|
|
1
|
|
|
|
—
|
|
Comprehensive income (loss) attributable to aTyr Pharma, Inc.
common stockholders
|
|
$
|
1,740
|
|
|
$
|
(6,117
|
)
|
See accompanying notes.
5
aTyr
Pharma, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands)
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019 (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, 2018
|
|
|
2,285,952
|
|
|
$
|
2
|
|
|
|
2,186,389
|
|
|
$
|
2
|
|
|
$
|
332,407
|
|
|
$
|
(60
|
)
|
|
$
|
(298,701
|
)
|
|
$
|
—
|
|
|
$
|
33,650
|
|
Conversion of preferred stock to common stock
|
|
|
(641,991
|
)
|
|
|
—
|
|
|
|
229,283
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Issuance of common stock from at the market offerings, net of
offering costs
|
|
|
—
|
|
|
|
—
|
|
|
|
193,670
|
|
|
|
—
|
|
|
|
1,381
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,381
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
571
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
571
|
|
Net unrealized gain on investments, net of tax
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(6,137
|
)
|
|
|
—
|
|
|
|
(6,137
|
)
|
Balance as of March 31, 2019
|
|
|
1,643,961
|
|
|
$
|
2
|
|
|
|
2,609,342
|
|
|
$
|
2
|
|
|
$
|
334,359
|
|
|
$
|
(40
|
)
|
|
$
|
(304,838
|
)
|
|
$
|
—
|
|
|
$
|
29,485
|
|
See accompanying notes.
6
aTyr
Pharma, Inc.
Condensed
Consolidated Statements of Cash Flows
(in thousands)
|
|
Three Months Ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Cash flows from operating activities:
|
|
(unaudited)
|
|
Consolidated net income (loss)
|
|
$
|
1,752
|
|
|
$
|
(6,137
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
157
|
|
|
|
167
|
|
Stock-based compensation
|
|
|
423
|
|
|
|
571
|
|
Debt discount accretion and non-cash interest expense
|
|
|
129
|
|
|
|
201
|
|
Accretion of discount of available-for-sale investment
securities
|
|
|
(24
|
)
|
|
|
(106
|
)
|
Amortization of right-of-use assets
|
|
|
201
|
|
|
|
169
|
|
Loss on disposal of property and equipment
|
|
|
6
|
|
|
|
—
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Collaboration receivable
|
|
|
—
|
|
|
|
(630
|
)
|
Prepaid expenses and other assets
|
|
|
236
|
|
|
|
97
|
|
Accounts payable and accrued expenses
|
|
|
(578
|
)
|
|
|
(985
|
)
|
Contract liability
|
|
|
(65
|
)
|
|
|
630
|
|
Operating lease liability
|
|
|
(179
|
)
|
|
|
—
|
|
Net cash provided by (used in) operating activities
|
|
|
2,058
|
|
|
|
(6,023
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(166
|
)
|
|
|
(10
|
)
|
Purchases of available-for-sale investment securities
|
|
|
(3,081
|
)
|
|
|
(13,995
|
)
|
Maturities of available-for-sale investment securities
|
|
|
14,650
|
|
|
|
10,650
|
|
Proceeds from sale of property and equipment
|
|
|
3
|
|
|
|
—
|
|
Net cash provided by (used in) investing activities
|
|
|
11,406
|
|
|
|
(3,355
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock through at the market
offerings, net of offering costs
|
|
|
—
|
|
|
|
1,381
|
|
Proceeds from issuance of common stock through underwritten
follow-on offering, net of offering costs
|
|
|
18,779
|
|
|
|
—
|
|
Repayments on borrowings
|
|
|
(2,000
|
)
|
|
|
(2,000
|
)
|
Net cash provided by (used in) financing activities
|
|
|
16,779
|
|
|
|
(619
|
)
|
Net change in cash and cash equivalents
|
|
|
30,243
|
|
|
|
(9,997
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
9,210
|
|
|
|
22,962
|
|
Cash and cash equivalents at the end of period
|
|
$
|
39,453
|
|
|
$
|
12,965
|
|
|
|
|
|
|
|
|
|
|
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
immunological 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, 2019, contained in our Annual Report on Form 10-K
filed with the SEC on March 26, 2020. 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.
Reverse Stock Split
On June 28, 2019, we filed a Certificate of Amendment to our
Restated Certificate of Incorporation with the Secretary of State
of the State of Delaware to effect a 1-for-14 reverse stock split
of our issued and outstanding common stock. The reverse stock split
became effective at 5:00 p.m. Eastern Time on June 28, 2019 and our
common stock began trading on a split-adjusted basis on The Nasdaq
Capital Market on July 1, 2019. The accompanying condensed
consolidated financial statements and notes thereto give
retrospective effect to the reverse stock split for all periods
presented. All issued and outstanding common stock, options and
warrants exercisable for common stock, restricted stock units,
preferred stock conversions to common stock and per share amounts
contained in our condensed consolidated financial statements have
been retrospectively adjusted.
Risks and Uncertainties
In December 2019, COVID-19, a novel strain of coronavirus, was
first reported in Wuhan, China, has been declared a pandemic by the
World Health Organization and has spread to over 100 countries,
including the United States. The impact of this pandemic has been
and will likely continue to be extensive in many aspects of
society, which has resulted in and will continue to cause
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, 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 U.S. Food and Drug
Administration or other regulatory authorities, and our ability to
raise capital and conduct business development activities.
.
8
Liquidity
and Financial Condition
We have incurred losses and negative cash flows from operations
since our inception. As of March 31, 2020, we had an accumulated
deficit of $320.6 million and we expect to continue to incur net
losses for the foreseeable future. We believe that our existing
cash, cash equivalents and available-for-sale investments of $49.8
million as of March 31, 2020 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, but not
limited to, 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. As a result
of the COVID-19 pandemic and actions taken to slow its spread, the
global credit and financial markets have recently experienced
extreme volatility and disruptions, including diminished liquidity
and credit availability, declines in consumer confidence, declines
in economic growth, increases in unemployment rates and uncertainty
about economic stability. If the equity and credit markets continue
to deteriorate, it may make any additional debt or equity financing
more difficult, more costly and more dilutive. Our failure to raise
capital or enter into applicable arrangements when needed would
have a negative impact on our financial condition and ability to
develop our product candidates.
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 of contingent assets and liabilities in
our condensed consolidated financial statements and accompanying
notes. The most significant estimates in our condensed consolidated
financial statements relate to the clinical trials 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. Though the impact of the COVID-19
pandemic to our business and operating results presents additional
uncertainty, we continue to use the best information available to
us in our critical accounting estimates.
Leases
We follow Accounting Standards Codification (ASC) Topic 842,
Leases in recording our
operating and financing lease. 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 did not
elect the hindsight practical expedient. 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
included 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.
We elected the package of practical expedients permitted under the
transition guidance within the new standard, which among other
things, allowed us to exclude from our condensed consolidated
balance sheets recognition of leases having a term of 12 months or
less (short-term leases) and we elected to not separate lease
components and non-lease components for our long-term leases.
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)
9
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
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 and adjusted for the weighted average number of common
shares outstanding that are subject to repurchase.
Diluted Net Income (Loss) Per Share
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
|
|
|
|
|
502,004
|
|
For the three months ended March 31, 2019, common stock from the
following would have had an anti-dilutive effect on net loss per
share (in common share equivalents):
Class X Preferred Stock (if-converted to common stock)
|
|
|
587,445
|
|
Common stock warrants
|
|
|
477,639
|
|
Common stock options and restricted stock units
|
|
|
404,977
|
|
Employee stock purchase plan
|
|
|
1,610
|
|
|
|
|
1,471,671
|
|
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
are effective for fiscal years beginning after December 15, 2022,
including interim periods within those fiscal years for small
reporting companies. We are currently evaluating the impact of
Topic 326 and do not expect the adoption of this guidance will have
a material impact on our condensed consolidated financial position
or results of operations.
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
10
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,
and interim periods within those fiscal years. Early adoption is
permitted. An entity that elects early adoption must adopt all the
amendments in the same period. We are currently evaluating
the impact of
Topic 740
and do not expect the adoption of this guidance will have a
material impact 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. Based on the borrowing
rates currently available to us for loans with similar terms, which
is considered a Level 2 input, we believe that the carrying
value of our long-term debt approximates their fair value.
Investment securities are recorded at fair value.
The accounting guidance defines fair value, establishes a
consistent framework for measuring fair value and expands
disclosure for each major asset and liability category measured at
fair value on either a recurring or nonrecurring basis. Fair value
is defined as an exit price, representing the amount that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants. As such, fair
value is a market-based measurement that should be determined based
on assumptions that market participants would use in pricing an
asset or liability. As a basis for considering such assumptions,
the accounting guidance establishes a three-tier fair value
hierarchy, which prioritizes the inputs used in measuring fair
value as follows:
Level 1: Observable inputs such as quoted prices in active
markets.
Level 2: Inputs, other than the quoted prices in active markets
that are observable either directly or indirectly.
Level 3: Unobservable inputs in which there is little or no market
data, which require the reporting entity to develop its own
assumptions.
Financial assets measured at fair value on a recurring basis
consist of investment securities. Investment securities are
recorded at fair value, defined as the exit price in the principal
market in which we would transact, representing the amount that
would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants. Level 2
securities are valued using quoted market prices for similar
instruments, non-binding market prices that are corroborated by
observable market data, or discounted cash flow techniques and
include our investments in corporate debt securities and commercial
paper. We have no financial liabilities measured at fair value on a
recurring basis. None of our non-financial assets and liabilities
is 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, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents
|
|
$
|
34,674
|
|
|
$
|
34,674
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Available-for-sale investments, short-term:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset-backed securities
|
|
|
3,100
|
|
|
|
—
|
|
|
|
3,100
|
|
|
|
—
|
|
Commercial paper
|
|
|
5,076
|
|
|
|
—
|
|
|
|
5,076
|
|
|
|
—
|
|
Corporate debt securities
|
|
|
2,200
|
|
|
|
—
|
|
|
|
2,200
|
|
|
|
—
|
|
Total short-term investments
|
|
|
10,376
|
|
|
|
—
|
|
|
|
10,376
|
|
|
|
—
|
|
Total assets measured at fair value
|
|
$
|
45,050
|
|
|
$
|
34,674
|
|
|
$
|
10,376
|
|
|
$
|
—
|
|
11
|
|
|
|
|
|
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, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents
|
|
$
|
8,248
|
|
|
$
|
8,248
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Available-for-sale investments, short-term:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset-backed securities
|
|
|
6,304
|
|
|
|
—
|
|
|
|
6,304
|
|
|
|
—
|
|
Commercial paper
|
|
|
7,568
|
|
|
|
—
|
|
|
|
7,568
|
|
|
|
—
|
|
Corporate debt securities
|
|
|
8,062
|
|
|
|
—
|
|
|
|
8,062
|
|
|
|
—
|
|
Total short-term investments
|
|
|
21,934
|
|
|
|
—
|
|
|
|
21,934
|
|
|
|
—
|
|
Total assets measured at fair value
|
|
$
|
30,182
|
|
|
$
|
8,248
|
|
|
$
|
21,934
|
|
|
$
|
—
|
|
As of March 31, 2020 and December 31, 2019,
available-for-sale investments are detailed as follows (in
thousands):
|
|
March 31, 2020
|
|
|
|
Gross
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Market Value
|
|
Available-for-sale investments, short-term:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset-backed securities
|
|
$
|
3,102
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
3,100
|
|
Commercial paper
|
|
|
5,077
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,077
|
|
Corporate debt securities
|
|
|
2,200
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
2,199
|
|
|
|
$
|
10,379
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
10,376
|
|
|
|
December 31, 2019
|
|
|
|
Gross
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Market Value
|
|
Available-for-sale investments, short-term:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset-backed securities
|
|
$
|
6,299
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
6,304
|
|
Commercial paper
|
|
|
7,568
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,568
|
|
Corporate debt securities
|
|
|
8,057
|
|
|
|
5
|
|
|
|
—
|
|
|
|
8,062
|
|
|
|
$
|
21,924
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
21,934
|
|
As of March 31, 2020, all of our available-for-sale investments had
a variety of effective maturity dates of less than one year. As of
March 31, 2020, four out of ten of the available-for-sale
investments were in gross unrealized loss positions.
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.
3. License and Other Agreements
CSL Behring
In
March 2019, we entered into a research collaboration and option
agreement with CSL Behring (CSL) for the development of product
candidates derived from up to four tRNA synthetases from our
preclinical pipeline (CSL Agreement). Under the terms of the CSL
Agreement, CSL will fund all research and development activities
related to the development of the applicable product candidates for
the duration of the collaboration. CSL reimburses us for all
research and development activities. The research and
12
development
activities will be performed in six phases by both parties. The
first phase totaling $0.6 million was funded in May 2019 and future
phases will be funded on a quarterly basis.
In addition, CSL will pay a total of up to $4.25 million per
synthetase program ($17.0 million if all four synthetase programs
advance) in option fees based on achievement of research milestones
and CSL’s determination to continue development. As of March 31,
2020, no research milestone has been met. Moreover, aTyr will grant
CSL an option to negotiate licenses for worldwide rights to each
investigational new drug (IND) candidate that emerges from this
research collaboration. Specific license terms will be negotiated
during an exclusivity period following the exercise of each program
option.
CSL has the right to terminate the CSL Agreement in its entirety or
with respect to one or more synthetases upon 45 days notice. Either
party has the right to terminate the agreement upon material breach
of obligation or insolvency.
We assessed our research collaboration with CSL in accordance with
Topic 606 and concluded that CSL is a customer. We identified the
following performance obligations under the CSL Agreement: 1)
research services; and 2) participation in the Joint Steering
Committee. We concluded that the performance obligations are
interrelated and do not have a standalone basis. CSL has the right
to terminate the research collaboration upon 45 days notice, which
is considered to be the legally enforceable contract term.
Therefore, during the first phase of research services, we have a
45 day performance obligation and all research services beyond the
initial 45 days performance obligation are considered a material
right. In addition, each phase of research services represents a
separate customer option since CSL must provide written notice of
its intent to advance to the next phase.
Under the CSL Agreement, CSL is obligated to pay us for the costs
incurred by us under the research programs. The payment of $0.6
million for the first phase of the research program received in May
2019 was considered fixed consideration and we will recognize
revenue on the payment for the research service performance
obligation as the services are performed. We are utilizing a cost-based input method to
measure proportional performance and to calculate the corresponding
amount of revenue to recognize. We believe this is the best measure
of progress because other measures do not reflect how we transfer
the performance obligation to our counterparty. In applying the
cost-based input methods of revenue recognition, we use actual
costs incurred relative to budgeted costs to fulfill the combined
performance obligation. These costs consist primarily of
third-party contract costs and internal full-time equivalent
effort. A cost-based input method of revenue recognition requires
us to make estimates of costs to complete the performance
obligations. The cumulative effect of revisions to estimated costs
to complete the performance obligations will be recorded in the
period in which changes are identified and amounts can be
reasonably estimated. A significant change in these assumptions and
estimates could have a material impact on the timing and amount of
revenue recognized in future periods.
The option fees based on research milestones under the CSL
Agreement are variable consideration. Because they are binary in
nature, we will use the “most-likely” method to evaluate whether
the milestones should be included. However, the milestones are only
payable upon CSL’s decision to proceed to the next research phase
for any program, and are therefore subject to CSL’s sole
discretion. Accordingly, the milestones are fully
constrained and we will not recognize revenue related to these
amounts until we have received notification from CSL that they
would like to proceed with the next phase of a research
program. For the three months ended March 31, 2020, we
recognized $0.2 million as license revenue under the CSL
Agreement.
Kyorin Pharmaceutical Co., Ltd.
In January 2020, we
entered into a license agreement with Kyorin Pharmaceutical Co.,
Ltd. (Kyorin) for the development and commercialization of ATYR1923
for interstitial lung diseases (ILDs) in Japan. Under the
collaboration and license agreement with Kyorin (Kyorin Agreement),
Kyorin received an
exclusive right to develop and commercialize ATYR1923 in Japan for
all forms of ILDs. We received an $8.0 million upfront payment and
we are eligible to receive an additional $167.0 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. Under the
terms of the Kyorin Agreement, Kyorin will fund all research,
development, regulatory, marketing and commercialization activities
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 research 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 ILDs 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 for
13
the free
clinical trial material
to be provided
by
us
to Kyorin
was $0.1 million,
using the “expected cost plus a margin” approach.
As of March 31, 2020, we recognized $7.9
million
as
license revenue under the Kyorin Agreement.
We expect to recognize $0.1 million
in
revenue for the free
clinical trial material
upon delivery to Kyorin.
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 we have received notification
from Kyorin that the milestone has been 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 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 is
effective April 1, 2020.
4. Debt, Commitments and Contingencies
Term Loans
In November 2016, we entered into a loan and security agreement and
subsequently entered amendments (collectively, the Loan Agreement),
for term loans with Silicon Valley Bank (SVB) and Solar Capital
Ltd. (Solar, and together with SVB, the Lenders), to borrow up to
$20.0 million issuable in three separate tranches (the Term Loans),
$10.0 million of which was funded in November 2016, $5.0 million of
which was funded in June 2017 and $5.0 million of which was funded
in December 2017.
Under the Loan Agreement, we are obligated to make interest only
payments through June 1, 2018, followed by consecutive equal
monthly payments of principal and interest in arrears through the
maturity date of November 18, 2020. Accordingly, we started paying
the Term Loans in June 2018. The Term Loans bear interest at the
prime rate, as reported in The Wall Street Journal on the last date
of the month preceding the month in which interest will accrue,
plus 4.10%. A final payment equal to 8.75% of the funded amounts is
payable when the Term Loans become due or upon the prepayment of
the respective outstanding balance. We have the option to prepay
the outstanding balance of the loan in full, subject to a
prepayment fee ranging from 1.0% to 3.0% depending upon when the
prepayment occurs, including any non-usage fees.
The obligations under the Term Loans are secured by liens on our
tangible personal property and we agreed to not encumber any of our
intellectual property. The Term Loans include a material adverse
change clause, which enables the Lenders to require immediate
repayment of the outstanding debt. The material adverse change
clause covers a material impairment in the perfection or priority
of the Lenders’ lien in the underlying collateral or in the value
of such collateral, material adverse change in business operations
or condition or material impairment of our prospects for repayment
of any portion of the remaining debt obligation.
As of March 31, 2020, the carrying value of our Term Loans
consisted of $5.3 million principal outstanding less the debt
issuance costs of $0.1 million and the accretion of the final
maturity payment of $1.8 million. We intend to pay our Term Loans
in full, including the final maturity payment by the fourth quarter
of 2020. The debt issuance costs have been recorded as a debt
discount which are being accreted to interest expense over the life
of the Term Loans.
In connection with the first tranche, we issued warrants to the
Lenders to purchase an aggregate of 3,415 shares of our common
stock with an exercise price of $43.93 per share. In connection
with the second tranche, we issued warrants to the Lenders to
purchase an aggregate of 1,489 shares of our common stock with an
exercise price of $50.37 per share. In connection with the third
tranche, we issued warrants to each of the Lenders to purchase an
aggregate of 1,433 shares of our common stock with an exercise
price of $51.98 per share. The warrants are immediately exercisable
and have a maximum contractual term of seven years. The aggregate
fair value of the warrants was determined to be $0.5 million using
the Black-Scholes option pricing model and was recorded as a debt
discount which is being accreted to interest expense over the life
of Term Loans.
14
Facility
Leases
Future minimum payments under the non-cancelable facility lease and
reconciliation to the operating lease liability as of March 31,
2020 were as follows (in thousands):
|
|
Operating Lease
|
|
2020
|
|
$
|
754
|
|
2021
|
|
|
1,031
|
|
2022
|
|
|
1,062
|
|
2023
|
|
|
404
|
|
Less: Amount representing interest
|
|
|
(436
|
)
|
Present value of lease payments
|
|
|
2,815
|
|
Less: Current portion of operating lease liability
|
|
|
(780
|
)
|
Long-term operating lease liability
|
|
$
|
2,035
|
|
For each of the three months ended March 31, 2020 and 2019, we
recorded an operating lease cost of $0.2 million. As of March 31, 2020, the
weighted-average remaining lease term was 3.2 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 may offer and sell
shares of our common stock having an aggregate offering price of up
to $10.0 million. Wainwright is entitled to a commission at a fixed
rate equal to 3% of the gross proceeds. During 2019, we sold an aggregate of
611,687 shares of common stock at an average price of $5.43 per
common share for net proceeds of $3.0 million under the ATM
Offering Program. We did not utilize the ATM Offering Program
during the three months ended March 31, 2020.
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.
Common Stock Reserved for Future Issuance
Common stock reserved for future issuance is as follows:
|
|
March 31, 2020
|
|
Common stock warrants
|
|
|
13,904
|
|
Common stock options and restricted stock units
|
|
|
489,148
|
|
Shares available under the 2015 Plan
|
|
|
132,725
|
|
Shares available under the 2015 ESPP
|
|
|
78,697
|
|
|
|
|
714,474
|
|
Equity Incentive Plans
The following table summarizes our stock option activity under all
equity incentive plans for the three months ended March 31,
2020:
|
|
|
|
|
|
|
|
|
|
|
Number of
Outstanding
Stock Options
|
|
|
Weighted
Average
Exercise Price
|
|
Outstanding as of December 31, 2019
|
|
|
351,078
|
|
|
$
|
|