LIFE

Thank you for standing by. Welcome to the Ethos Technologies Q1 2026 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Aaron Turner, Vice President of Investor Relations. Please go ahead.

Good afternoon, and welcome everyone to Ethos Technologies' first quarter of fiscal year 2026 earnings call. We will be discussing the results announced in our press release issued after the market closed today. With me today are Ethos CEO, Peter Colis, and our CFO, Chris Capozzi. Today's call is being webcast and will also be available for replay on our Investor Relations website at investors.ethos.com. A slide presentation accompanies this call and can be viewed in the Event section of our Investor Relations website.

During this call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding our financial outlook for the second quarter of full fiscal year 2026, our expectations regarding financial and business trends, impacts from go-to-market initiatives, growth strategy, and business aspirations and product initiatives, including future product releases and white label platform arrangements, and the expected benefits of such initiatives. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends. These forward-looking statements are subject to a number of risks and other factors.

For a discussion of these risks and other factors, please see the information under forward-looking statements in our financial results press release issued today and our presentation materials, as well as the more detailed discussion in our SEC filings available on our investor relations website and on the SEC website at www.sec.gov. Although we believe that the expectations reflected in the forward-looking statements are reasonable, our actual results may differ materially. All forward-looking statements made during this call are based on information available to us as of today. We do not assume any obligation to update these statements as a result of new information or future events, except as required by law. In addition to the U.S. GAAP financials, we will discuss certain non-GAAP financial measures.

While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. A reconciliation to the most directly comparable U.S. GAAP measures is available in the presentation that accompanies this call, which can be found on our investor relations website. Now, let me turn the call over to Peter.

Good afternoon, everyone, and welcome to our first quarter 2026 earnings call. Q1 is our seasonally strongest quarter, and this was an exceptional one. We delivered $193 million in revenue, representing 104% year-over-year growth, more than doubling our top line year-over-year. This is on the back of three straight years of over 50% revenue growth. We generated adjusted EBITDA of $34 million, and we protected over 88,000 new families, bringing our cumulative total to over 600,000 activated policies to date. We also achieved a Rule of 40 score of 121, a result that reflects both the velocity of our growth and the discipline of our execution. Put simply, this quarter demonstrated that Ethos is a business that gets better as it gets bigger.

Our goal at Ethos is to become the largest provider of life insurance in the world. We built a vertically integrated platform that owns the full consumer journey from marketing and application through underwriting, policy issuance, policy administration, and long-term servicing. That control lets us deliver a level of speed, accessibility, and approval rates that simply do not exist in the legacy life insurance industry. Turning to the business highlights that drove this quarter's performance. In our direct channel, the virtuous data cycle is spinning faster than ever. By continuing to refine every layer of our vertical stack from initial user experience to our core underwriting algorithms, we've driven meaningful compounding improvements in our conversion rates and maintained strong unit economics at higher levels of ad spend. Q1's direct revenue growth of 136% reflects that compounding advantage.

In our third-party channel, the agencies we added through 2025 are now ramping in a meaningful way. Those newer agencies now represent a double-digit percentage of third-party revenue, their contributions are accelerating. Revenue in the third-party channel reached $47 million in Q1, representing 42% year-over-year growth, demonstrating that our agency recruitment strategy and onboarding is translating directly to results. On the product front, we saw early indicators of product market fit for our accumulation indexed universal life insurance product, which continues to exhibit healthy growth in our third-party channel. We deepened our relationship with Banner Life to launch two new whole life products, a simplified issue whole life and guaranteed issue whole life. These products expand our coverage of the final expense market.

We also demonstrated our ability to rapidly launch new products as we went from concept to launching in market in under five months. With these additions, Ethos now offers 12 products across six carriers, including multiple term life, multiple whole life, and multiple IUL products. That breadth strengthens our value proposition to both consumers and agents and expands our addressable market and improves the redundancy of our product portfolio. We also announced our new partnership with Liberty Mutual, one of the most recognized insurance brands in the country. Liberty Mutual will leverage Ethos' proprietary underwriting engine and platform to deliver a digital-first life insurance experience, instant decisions, no medical exams, and just a few simple health questions. When companies with the scale, resources, and brand recognition of Liberty Mutual select Ethos as their partner, it speaks directly to the strength of what we have built.

Most recently, we became the first life insurance provider to build a dedicated experience directly inside the world's most used AI assistant, ChatGPT. We're focused on removing the friction that people experience throughout the life insurance purchase process and meeting people where they are to initiate that purchase. As more consumers turn to AI to get answers, Ethos will be there for them. We look to the rest of 2026, we remain focused on three durable growth vectors. First, growing our ecosystem by bringing more consumers into our direct channel and recruiting more agents to our platform. Second, enhancing our platform by making agents more productive and increasing our share of their sales. Third, expanding our product portfolio to broaden our addressable market. Every new client improves our risk models, client and agent experience, and the machine learning models that power our advertising spend.

Better risk models improve our pricing and unit economics for our clients, our carrier partners, and Ethos. More scale and underwriting experience allows us to grow our product portfolio and carrier panel. A broader product portfolio enables us to capture more of an agent's sales and recruit different types of agencies. Our unified end-to-end platform captures and analyzes granular data across the consumer and agent journeys. While the legacy industry is hindered by on-prem technology and manual processes, our vertically integrated digital platform fuels a virtuous data cycle that is spinning faster and faster. With that, I'll pass it to Chris for a review of our first quarter 2026 financial results.

Thanks, Peter, and good afternoon, everyone. I'll begin with a review of our first quarter results, walk through our outlook for the second quarter and the full-year 2026 before opening up for questions. As Peter noted, Q1 was an exceptional quarter. We more than doubled revenue year-over-year, achieved strong profitability, and raised full-year guidance, all while absorbing a one-time non-cash charge that I'll walk you through in detail. Before reviewing the details of our results, I'd like to remind everyone that some of the financial measures and metrics I'll discuss today are presented on a non-GAAP basis, which we believe provides additional insight into our performance. With that in mind, let me walk you through the details behind our results.

In the first quarter, we delivered $193 million in revenue, representing 104% growth from the same period last year. In our direct channel, first quarter revenue increased to $146 million, representing 136% year-over-year growth. This performance reflects the compounding advantage of our vertically integrated platform. By continuously refining everything from the initial user experience to our core underwriting algorithms, we've expanded the universe of consumers that we can profitably reach. In the first quarter, we more than doubled our advertising spend versus the fourth quarter of 2025 while maintaining consistent efficiency, demonstrating that our unit economics scale with our growth. In our third-party channel, first quarter revenue was $47 million, representing 42% year-over-year growth.

This growth was driven in part by new agencies onboarded throughout 2025, which accounted for a double-digit percentage of third-party revenue in Q1. Moving to our non-financial metrics, we activated 88,373 policies in the first quarter. The average revenue per policy was $2,185. Our first quarter contribution profit was $59 million, representing a 30% contribution margin. Included in this result is a one-time non-cash charge of $16.5 million related to third-party agent compensation expense, which flows through the sales and marketing line on the income statement. This charge reflects updates to our agent compensation expense and persistency estimates, reflecting both maturing cohort experience and the impact of recent operational improvements.

As these cohorts matured and additional observed experience was accumulated, we were able to identify that early-stage policy persistency was better than had originally been projected and that there were opportunities to increase the precision of our clawback billing and the methodology for estimating clawback events. Together, these factors resulted in lower agent compensation clawbacks and therefore higher agent compensation expense than had originally been projected for policies activated through the company's third-party channel in the second half of 2024 and throughout 2025. Collectively, these factors are positive developments for the long-term health of our third-party business.

To understand why fewer compensation clawbacks lead to higher compensation expenses, it helps to briefly walk through the mechanics. When a third party policy is activated, we record the gross compensation paid to the agent as an expense and then estimate and book an offsetting amount representing the portion of that gross compensation that we expect to recover through a clawback of unearned compensation if the policy lapses within the first year. That offsetting amount is carried on the balance sheet as a prepaid asset. As previously disclosed, these estimates and the process for arriving at them involve a degree of judgment and complexity, particularly in our third party channel, which has scaled rapidly and where our ability to predict agent compensation clawbacks continues to mature alongside our growing cohort history.

In this case, the combination of additional observed experience and a series of operational improvements resulted in a lower rate of estimated compensation clawbacks than we had originally projected for these cohorts, requiring a $16.5 million dollar reduction in our prepaid asset balance, which is the source of the one-time non-cash charge. The updated agent compensation expense estimate is embedded in our go-forward guidance. For modeling purposes, we expect blended contribution margins to be in the mid 30% range going forward. Moving to adjusted EBITDA. Our first quarter adjusted EBITDA was $34 million, representing a margin of 17% and 42% year-over-year growth, both of which reflect the impact of the $16.5 million charge I discussed earlier.

Combined with our 104% revenue growth, this quarter's Rule of 40 score of 121 demonstrates that even in a quarter that included a one-time charge of this magnitude, our underlying platform economics remain exceptionally strong. Regarding stock-based compensation, our Q1 SBC and related taxes were $196 million. Included in this amount is $183 million related to a vesting condition that was satisfied upon the completion of our IPO in January. As of March 31st, 2026, our cash equivalents, and investments totaled $224 million, including $33.5 million in net proceeds from the IPO. We ended the quarter with a commission receivable balance of $345 million, up 19% from the prior quarter, representing estimated future cash flows already earned but not yet received.

This balance is a direct reflection of the scale and quality of our activated policy base, and we view it as an important indicator of the embedded cash generation potential of our platform. Our Q1 cash flow from operating activities was $31 million, representing 189% year-over-year growth. During Q1, we amended the payment terms with one of our carrier partners, which provided a one-time $13.9 million timing benefit to CFOA. Excluding this item, CFOA was approximately $17 million. Now I'll walk through our expectations for the second quarter and full fiscal year 2026. Our updated guidance reflects the revised agent compensation expense assumptions that I walked through earlier. The strength of our Q1 performance and our confidence in the trajectory of both channels give us the conviction to raise our full-year revenue and adjusted EBITDA outlook.

For the second quarter of 2026, we expect total revenue in the range of $114 million-$118 million. At the midpoint, this represents 31% year-over-year growth. We also expect adjusted EBITDA in the range of $20 million-$22 million. For the full-year 2026, we're raising our total revenue guidance and now expect revenue in the range of $561 million-$565 million. At the midpoint, this represents 45% year-over-year growth. We also expect adjusted EBITDA in the range of $103 million-$107 million. In 2026, we're focused on driving sustainable revenue growth by further diversifying our revenue sources through the continued ramp of our new product lines, the strategic expansion of our third party channel, and the continued market share gains in our direct channel.

Our new partnership with Liberty Mutual is an early proof point of a broader opportunity, licensing our proprietary underwriting engine and platform to establish brands that want to compete in the digital first life insurance market. By deepening our brand recognition and leveraging the inherent efficiencies of our vertically integrated platform, we are well-positioned to capture significant market opportunity while meeting our profitability targets. With that, I'll turn the call over to the operator to begin the Q&A session. Operator?

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Colin Sebastian of Baird. Your line is now open.

Hey, guys. Thanks very much for taking the question. Impressive results in Q1. Was hoping you could unpack a bit more the incremental marketing spend or the unlocks that you were able to find that allowed you to add scale and in customer acquisition spend. I guess given the Q2 guidance, that implies that maybe you sort of hit the upper limits of that ROAS or maybe there was some more seasonality factors that I think, Peter, you might have mentioned. If you could go into that, it would be helpful. Thank you.

Hi, Colin. Thanks for the question. It's important to remember that Q1 is one of our strongest seasonal quarters, and Q2 one of the less strong ones. You know, I'll say that we've, you know, set a prudent guidance philosophy. We're still early into Q2, but we've seen just continued strength and momentum throughout April and early May into Q2. Generally, when I think about what drove the outsized direct growth, it's more than just marketing innovations and spend unlocks, you know, in and of itself. Because we are a vertically integrated, you know, end-to-end technology company, we have a lot of real estate to keep optimizing.

It could be marketing, but it also could be gains in data infrastructure, the end-to-end conversion funnel, underwriting, pricing, persistency, mortality. All these things eventually influence our unit economics, and then, as you described, our ability to reinvest in incremental spend. We see so we do not think that we are encountering the upper bounds of spend in short.

Got it. Maybe one quick follow-up on the, on the average revenue per policy expanding. Was that specifically related to the new accumulation product, or is there something broader in the platform that you're seeing?

Colin, that's primarily attributed to channel mix. As you note, if you contrast sequential performance Q4 to Q1, you'll note that direct mixed up as a percentage of revenue, and that's generally gonna be the driver of the increase in ARPU that you're seeing there. We've seen some early signs of product market fit with that accumulation IUL product that we launched with Sammons back in the fourth quarter, but still too nascent to materially impact ARPU at this point.

Got it. Thank you very much.

Thank you. Our next question comes from the line of Ross Sandler of Barclays. Your line is now open.

Hey, guys. Two questions. Could we talk about the advertising cost in the first quarter, like what the expense was, and then what the, you know, I guess the efficiency that you saw in the DTC channel, like kind of what was the key driver of that? I know we had sort of an easy comp from 1Q a year ago when Meta made some of those policy changes. Just can you walk us through the, you know, the upside that you saw in DTC? What was the driver of that? Then I have to ask the obligatory ChatGPT question. We saw the app within the app concept from a couple days ago. Just overall thoughts on, you know, what you want to accomplish with this new channel and, you know, how important you think it will be to Ethos in the future. Thanks a lot.

Hey, Ross. Thanks for the question. I'll take the ChatGPT one first. You know, generally, as the end-to-end digital buying platform, I think we are best positioned in the industry to capture any changes of consumer behavior. At the minimum, I expect LLMs will play a bigger and bigger role in consumer research ahead of a purchase, and could be one day a material source of client origination for us. We do have a sophisticated GEO initiative focused on taking advantage of this. We're excited about the app. We'll have to wait and observe how the LLM's monetization strategy evolves, and how they augment the customer experience.

What I would point to is historically, you know, including the Meta change that you referenced last year, our data models and our intelligent acquisition engine have an exceptional track record of adapting quickly at the cutting edge of changes in the digital acquisition landscape. I think we're best prepared for whatever does come at us. Life insurance funnels generally are very complex, right? We've got identity verification, reflexive questioning, third-party data pulls for underwriting, you know, really lengthy funnels where chat may not be the best interface for client engagement. It's not necessarily intuitive that the entire transactional process will move into LLMs as the default. We're excited to experiment with this and see where it goes.

Ross, in terms of the return on ad spend, we'll plan to disclose that going forward on an annual basis. To help frame up the Q1 performance, I'd highlight that our return on ad spend was consistent on both a sequential and year-over-year basis. As we noted earlier, you know, we were really pleased by our ability to more than double the ad spend on a sequential basis while maintaining unit economics, demonstrating of course, that we're not only able to scale revenue, but profits as well.

All right. Thank you. Our next question comes from the line of Eric Sheridan of Goldman Sachs. Your line is now open.

Thanks so much for taking the question. Wanted to know if we can go a little bit deeper in how you're thinking about the product pipeline evolving over the next 12 to 18 months. What visibility do you have into that pipeline today? How much might be assumed in some of your forward commentary, and how much could potentially be upside dynamic relative to forecasts? What you would expect the receptivity to that pipeline to be against the broader end demand market. Thank you so much.

Thanks, Eric, for the question. You know, we have a track record of launching around three to four new products per year. The team is hard at work on new products that we're not yet ready to disclose. What I would say is, you know, it's important to understand our guidance philosophy. We ascribe very little revenue in our forecasting to newer, less proven products. We like to see it before we put it into the plan. If we look at our last couple of products, accumulation IUL is off to a great start. It's demonstrating, you know, early signs of clear product market fit within a variety of different third-party agencies.

You know, just as a reminder, that's a permanent life insurance product with very compelling investment feature performance and delivering that incredible Ethos 10-minute purchase process. We also recently launched a cancer insurance product with Aflac. That's still in the early innings of testing and iteration, it's too early to make a judgment call on its impact. You know, cancer insurance is typically not sold outside of the workplace in the U.S., we think it's a really compelling value proposition given the rate of cancer diagnoses. More to come over the subsequent quarters on the new product front.

Thank you. Our next question comes from the line of Ron Josey of Citi. Your line is now open.

Great. Thanks for taking the question. I wanted to follow up. I think, Peter, you were just talking about IUL off to a great start, particularly with the third-party partners here and early days with the cancer product. Talk to us a little bit more about IUL in terms of the results thus far, what lessons learned you have here so that as newer products launch, you can implement to see sort of continued overall strength. When it comes to obviously direct had a pretty impressive quarter, and I know we talked about channel mix and marketing spend. Any additional insights on perhaps newer channels that you went after this quarter would be helpful. Thank you.

Got it. Great questions. On IUL, you know, if you take a step back, IUL is the largest, you know, subcategory within life insurance. You know, it combines the ability to, you know, grow investment returns with tax-deferred properties while also delivering protection for your family. You know, historically, it's been more of a product just dedicated to the high net worth market. With Ethos, we're making it more and more accessible to the mass affluent market, which is really important because there's not only demand from clients, there's demand for it from agents for this. Whenever we launch a new complicated product like accumulation IUL, there's some period after launch of iteration and testing and refinement, then launching day two features that, you know, are fast follows that are requested from agents.

We've been going through all those motions and just watching very clear month-over-month-over-month sequential growth with the product. You know, we're happy with the early experience. We're very happy with the agent receptivity. It's also worth noting we have a direct-to-consumer IUL selling initiative that we're excited to roll this product out to as well, which has been a nice growing part of our direct business.

On the direct marketing mix, what I would say, you know, we talked about last quarter is over time, a larger and larger percentage of Ethos' marketing spend has been shifting towards what I call top of funnel channels, where clients are not necessarily looking for life insurance, but we are approaching them and, you know, presenting the concept of life insurance and showing them that they can buy it easily and simply, right? These are channels like television, radio, social media, et cetera. In Q1, we saw a continued, you know, a continued trend where more and more of the spend is able to shift into those upper funnel channels, while not compromising on ROAS and efficiency.

We love that because it's really showing that it's a scalable model that is not constrained by the implicit number of people who have intent to buy life insurance on a various given day. We're able to generate demand. Our teams are hard at work at continuing to improve marketing and open up more channel scale within those large top of funnel channels, and then continue to be the winner in all bottom of funnel channels like search and affiliates.

Great. Thank you.

Thank you. Our next question comes from the line of Michael McGovern of Bank of America.

Hey, guys. Thanks for taking my question. Could you just talk about kind of the big beat in revenue that you had in Q1 relative to the rest of the full-year guidance, which kind of implies a deceleration in revenue growth from here? I hear you that you're not encountering the upper bound in marketing spend, but is there anything else driving a level of deceleration in revenue growth from here? Any sort of pull forward or macro change or anything to call out there?

Mike, nothing to call out on the macro front. We're really pleased to see the level of acceleration in both channels here in the first quarter. As Peter noted, you know, the quarter is off to a strong start. We've got a good April behind us here. I think what you're seeing in the go-forward revenue guide there is really just us navigating the seasonal deceleration as we transition from the first quarter to the second quarter and of course, an appropriate level of prudence in terms of our forward guide.

Got it. Thank you. Can you speak to the Liberty Mutual partnership a little bit more when it comes to licensing your proprietary engine to them? When does that layer into the model more meaningfully? Given it's such a meaningful carrier, can you just discuss how that impacts the flywheel overall from here? Thank you.

Mike, great question. We're excited about it. Strategically, this allows us to reach more customers by, you know, utilizing Liberty Mutual's brand awareness and trust that they've built up in the marketplace. It allows them to amortize the technology and the product suite and the just incredible life insurance experience that we've built. Even though it's early days, it's contributing nicely. Both of us are excited to keep growing together. I think thematically, Ethos simplifies life insurance buying so much that it allows non-life insurance experts, like Liberty Mutual, to confidently sell the product knowing that, hey, it's gonna deliver a great experience, it's gonna have high approval rates, great prices, it's gonna be fast and easy. They don't have to worry about disappointing their customers, right?

Where they have an existing relationship and financial, you know, incentive to do well by. Ethos kinda uniquely unlocks a lot of potential partnerships like this. We're excited to keep digitally embedding our experience on other platforms, which we think is a fairly replicable model. We will seek more partnerships like this in the future.

Thank you.

Thank you. Our next question comes from the line of Pablo Singzon of JPMorgan. Your line is now open.

Hi, good evening. First question, the change in assumption that resulted in the charge, did that have any effect on revenues or are you using a different lapse schedule for revenues than, I guess, agent comp?

Yeah, Pablo, it did have a small effect on revenue this quarter. We did record a small favorable persistency adjustment to revenue. We didn't call it out because it was not material, so think of it as a low single-digit percentage effect on revenue. As you think about that $16.5 million one-time non-cash charge that we alluded to in our prepared remarks, improved early stage persistency was one of multiple contributing factors to the charge. The largest factor I would say was just the absence of substantial experience, which of course we gained over the course of the first quarter and what ultimately informed our decision to update our estimate.

Other contributing factors were some of the operational enhancements that I alluded to earlier in my comments, specific to how we bill, chargebacks to agents, as well as just increasing the overall precision of our forecasting methodology now that we have a more substantial base of accumulated experience.

Makes sense. Then second question I had was on the guidance. I think, you know, revenues, roughly speaking, went up, full-year revenue guidance went up by like 9%, 10%. EBITDA went up by 4% or 5%. Is the drag there mostly from the, you know, this change in assumptions for clawbacks or are there other parts of the operations like, I don't know, like marketing efficiency overall or just a general investments that are contributing to the drag in EBITDA? Thank you.

Yeah, that's correct, Pablo. If you, if you were to back out the one-time charge, you know, contribution margins would have been 39%. If you back that one-time charge out, at the EBITDA line, we would have reported 26% EBITDA. As we mentioned earlier, as you think about the go-forward run rate contribution margins, we think mid-30% makes sense there, which reflects a couple of points of erosion due to the change in estimate. That's the go-forward run rate impact. Otherwise, you know, ex that charge, incredibly strong margins here in Q1.

Thank you.

Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. Our next question comes from the line of Carol Jamil of Citizens. Your line is now open.

Yes. Hi. Just a quick follow-up on the Liberty Mutual deal. Can you comment if there's any exclusivity around this deal, or do you think you can strike similar deals with other carriers? Thank you.

That's a great question. There is not exclusivity around this deal.

Okay.

Okay. Thank you. I'm showing no further questions at this time. I would now like to turn it back to management for closing remarks.

Great. Thank you all for joining us today, and we will speak with you again next quarter.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day. Thank you for standing by, and welcome to the Ethos Technologies, Inc. Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first today, Aaron Turner, Head of Investor Relations. Please go ahead.

Good afternoon, and welcome, everyone, to Ethos Technologies fourth quarter of fiscal year 2025 earnings call. We will be discussing the results announced in our press release issued after the market closed today. With me today are Ethos CEO, Peter Colis; and our CFO, Chris Capozzi. Today's call is being webcast and will also be available for replay on our Investor Relations website at investors.ethos.com. A slide presentation accompanies this call and can be viewed in the Events section of our Investor Relations website. During this call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding our financial outlook for the first quarter and full fiscal year 2026, our expectations regarding financial and business trends, impacts from go-to-market initiatives, growth strategy and business aspirations and product initiatives, including future product releases and additional carrier partnerships and the expected benefits of such initiatives. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends. These forward-looking statements are subject to a number of risks and other factors. For a discussion of these risks and other factors, please see the information under Forward-Looking Statements in our financial results press release issued today and our presentation materials as well as the more detailed discussion in our SEC filings available on our Investor Relations website and on the SEC website at www.sec.gov. Although we believe that the expectations reflected in the forward-looking statements are reasonable, our actual results may differ materially. All forward-looking statements made during this call are based on information available to us as of today, and we do not assume any obligation to update these statements as a result of new information or future events, except as required by law. In addition to the U.S. GAAP financials, we will discuss certain non-GAAP financial measures. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. A reconciliation to the most directly comparable U.S. GAAP measures is available in the presentation that accompanies this call, which can be found on our Investor Relations website. Now let me turn the call over to Peter.

Good afternoon, everyone, and welcome to our fourth quarter 2025 earnings call. At Ethos, we are on a mission to protect families by democratizing access to life insurance and empowering agents at scale. And I'm pleased to share that in Q4, we continued our strong execution. We delivered $110.1 million in revenue in Q4, representing a 65% year-over-year revenue growth, and achieved adjusted EBITDA of $26 million and an adjusted EBITDA margin of 23%. We activated over 54,000 new policies this quarter, bringing us to over 500,000 policies activated through Q4. We also ended the year with over 15,000 agents selling on our platform in 2025. For the full year 2025, we generated revenue of $388 million, representing growth of 52%. This marks our third consecutive year with growth over 50%. We also generated a Rule of 40 score of 75, demonstrating our ability to balance growth and profitability. For those of you joining us for the first time and as a refresher for others, I'd like to share an overview of how Ethos is transforming the buying, selling and underwriting process of life insurance. Our goal at Ethos is to become the largest issuer of life insurance in the world. We built a vertically integrated platform that owns the full consumer journey, from marketing and application through underwriting, policy issuance, policy administration and long-term servicing. That control lets us deliver a level of speed, accessibility and approval rates that don't exist in the legacy life insurance industry. Our automated data-driven underwriting engine processes hundreds of thousands of data points per application, leveraging pharmaceutical records, medical claims billing data and more. The engine then applies over 1 million rules of logic and over 800 adaptive questions to make accurate risk-adjusted pricing decisions in real time. Our 95% instant decisioning rate would be tremendously difficult to achieve without our proprietary engine and logic IP developed over the previous 6 years. Surrounding the engine is the industry's only natively built 100% digital and modern vertically integrated technology platform. Ethos draws tremendous strength and competitive moat from our application engine, underwriting engine, admin system, payments and commissions infrastructure, agent operating system, unified data infrastructure and AI and ML layers. To achieve our 98% gross margin, we have leveraged those AI and machine learning layers on top of our data infrastructure to deliver lead level revenue predictions, better agent quality, more accurate policy recommendations and automated fraud management that traditional carriers simply cannot replicate. Our moat is structural. Every application engine, underwriting decision, issued policy, retention event and claim feeds back into our system. More data improves risk selection and better risk selection strengthens carrier performance. Stronger carrier performance expands take rates, capacity and product breadth. Simply put, our platform gets better as it gets bigger. Our advantage is a cutting-edge technology platform and years of structured underwriting data, real-time feedback loops and deeply integrated carrier relationships trained on our unified system. A significant portion of our team are engineers and data scientists. That shows up in the model. Revenue scales without proportional headcount growth, automation expands margins and underwriting accuracy improves with data density. Our 3-sided technology platform serves consumers, agents and carriers alike. For consumers, Ethos transforms what can be an 8-week purchase process into as little as 10 minutes online. We've removed the friction, no invasive medical exams, no long waits, no endless coordination between multiple parties, just a seamless tech-driven experience. For agents, we transform their workflow, allowing them to sell policies instantly and accelerate their working capital cycle. Our agent operating system transforms how agents sell life insurance and how agencies operate. By digitizing the sale, Ethos allows agents to focus on what they do best, building relationships and growing their business. Agents can control the application or send clients a link to self-serve. Agents use Ethos to market to their consumers, nurture their pipeline, sell instantly, track incentives and rewards, automate payments and automate agency operations. In the absence of the Ethos Agent OS, agents are stuck using multiple unintuitive legacy platforms. For carriers, we deliver scaled incremental growth on modern technology, and we prioritize their underwriting profitability above our own. That is why these relationships are deep, long term and expanding. For many of our carriers, Ethos is their single largest source of new life premiums. We are proud of the 6 carriers we work with today. We've intentionally focused our carrier network, which allows Ethos to form stronger relationships with each carrier. For Ethos, this translates into better pricing, prioritization on the carrier's IT road map and faster product development. Historically, we've introduced 3 to 4 new products a year. And in Q4, we brought 2 new products to market with 2 new carriers. Our accumulation indexed universal life product with North American Sammons targets consumers who are looking for protection as well as investment features in their life insurance products. We also launched a supplementary health product with Aflac that allows us to provide additional coverage like cancer insurance. We believe these products open up new revenue streams and expand our addressable market, strengthening the ecosystem that fuels our growth. Looking ahead, we see 3 durable growth vectors. First, growing our ecosystem by bringing more consumers into our direct channel and recruiting more agents to the platform; second, enhancing our platform by making agents more productive and increasing our share of their sales; and third, expanding our product portfolio to broaden our addressable market. Ethos is a business that gets better as it gets bigger. All 3 constituents on our platform benefit from our scale and extensible nature, delivering great network effects. Every new client improves our risk models, client and agent experience and marketing machine learning models efficiency. Better risk models improve pricing and unit economics for our clients, our carrier partners and Ethos. More scale and underwriting experience allow us to grow our product portfolio and carrier panel, delivering more value to clients and agents. A broader product portfolio both enables us to capture more of an agent sales and recruit different types of agencies. Our unified end-to-end platform captures and analyzes granular data across both the consumer and agent journeys. While the legacy industry is hindered by on-prem technology and manual processes, our end-to-end digital platform fuels a virtuous data cycle that is spinning faster and faster. As an example, in 2023, it typically took around 3 weeks to reach statistically significant results in our product development and marketing experiments. As of January 2026, it takes us as few as 3 days. This dramatically increases our testing velocity, allowing us to run more experiments in parallel, iterate faster and bring successful innovations to market with greater speed and confidence. This quarter's results prove that our 3-sided technology platform has strong product market fit with consumers, agents and carriers alike. With that, I will pass it to Chris for a review of our fourth quarter 2025 financial results.

Thanks, Peter, and good afternoon, everyone. To begin, I'll review the highlights of our fourth quarter results. Then I'll outline our expectations for the first quarter and the full year 2026 before opening up to your questions. We concluded the fourth quarter with consistent execution across several key strategic priorities. Our financial results demonstrate both strong top line momentum across our direct-to-consumer and third-party channels and the earnings power of our platform. Before reviewing the details of our results, I'd like to remind everyone that some of the financial measures and metrics that I'll discuss today are presented on a non-GAAP basis, which we believe provides additional insight into our performance. With that in mind, let me walk you through the details behind our results. In the fourth quarter, we delivered $110.1 million in revenue, representing a 65% increase from the same period last year. In our direct channel, fourth quarter revenue increased to $74.2 million, representing 93% year-over-year growth. This performance was fueled by optimized advertising spend and innovation up and down our vertical stack. By refining everything from the initial user experience to our core underwriting algorithms, we've driven meaningful compounding improvements in our conversion rates. In our third-party channel, fourth quarter revenue was $35.9 million, representing a 27% increase over the same quarter last year. This growth was driven by an increase in both active agents and revenue per agent. Moving to our nonfinancial metrics. We activated 54,714 policies in the fourth quarter, representing 42% year-over-year growth. The average revenue per policy was $2,012. The fourth quarter was also strong from an efficiency perspective. We recorded a contribution profit of $47.2 million, representing a 43% contribution margin. As a reminder, we define contribution profit as gross profit less sales and marketing expenses. This includes agent payments and underwriting costs for nonactivated policies but excludes noncash stock-based compensation and allocated overhead. We continue to maintain a 2-month payback on variable costs while prioritizing growth of contribution profit dollars. By diversifying our product portfolio to reach historically underserved segments, we're maximizing the yield on every dollar of marketing spend and leveraging the fixed investments in our technology stack. Fourth quarter adjusted EBITDA was $25.8 million, representing a margin of 23%. This quarter's performance reflects our commitment to balancing growth and operational efficiency. We remain focused on disciplined spending and strategic investments in both of our go-to-market channels. As of December 31, 2025, our cash, cash equivalents and investments totaled $157.4 million, and we ended the year with a commission receivable balance of $290 million, which we expect will convert to cash over the coming years. Now I'll walk you through our expectations for the first quarter and full fiscal year 2026. For the first quarter of 2026, we expect total revenue in the range of $144 million to $146 million. At the midpoint, this represents 53% year-over-year growth. We also expect adjusted EBITDA in the range of $30 million to $32 million. For the full year 2026, we expect total revenue in the range of $510 million to $514 million. At the midpoint, this represents 32% year-over-year growth. We also expect adjusted EBITDA in the range of $99 million to $103 million. In 2026, we're focused on driving sustainable growth by further diversifying our revenue sources, specifically through the continued ramp of our new product lines and the strategic expansion of our third-party and direct-to-consumer channels. By deepening our brand recognition and leveraging the inherent efficiencies of the Ethos platform, we are well positioned to capture significant market opportunity while meeting our profitability targets. And with that, I'll turn the call over to the operator to begin the Q&A session. Operator?

[Operator Instructions] Our first question comes from the line of Eric Sheridan of Goldman Sachs.

Maybe 2, if I can. First, Peter, what do you see as the biggest strategic priorities for the company when you think about the way you've laid out the potential for revenue growth in 2026 that you're most focused on executing against to deliver against that top line performance? And then maybe a second question would be, as you continue to scale the platform, what is the landscape like in terms of deploying marketing dollars and earning a stable to rising return on marketing dollars as a growth stimulant for the business?

Thanks for the question, Eric. We're glad to be here. We're excited to be on this first earnings call with you all. First, let's talk about our priorities for 2026. I'll talk about our kind of business-as-usual priorities and then AI as well. Business-as-usual priorities. We have 3 very durable vectors for growth. The first is recruit more clients to the platform and recruit more agents to the platform. The second is make agents more productive through optimizations to the agent operating system. And then the third is to broaden our product portfolio and enhance the value that we are delivering on a per product basis. And so when you look at our results over the past year and when we think about the guidance that we've provided going forward, all 3 of those vectors are really firing with full cylinders. So we're excited to just continue executing and doing a great job across all of those. The second is really taking advantage and implementing AI across every vector of the company, whether it's -- and which we have been doing for the past year, whether it's accelerating engineering, analytics, marketing, client service, agent service, fraud management models, agent quality, automating operations, internal tooling and more. This has really been a key driver behind our 98% gross margins and our client satisfaction ratings, if you look at our NPS of over 70 for the past year. So we think there's a lot more opportunity to continue harnessing the power of AI and improve. Second, as far as the landscape of efficient marketing dollar spend, if you look at this past year and if you look at our results in Q4, I really think it's an illustration where we were able to grow our direct business in Q4 at really an eye-popping rate with consistent year-over-year direct-to-consumer unit economics. And that's really the virtuous data cycle spinning at full speed, where we are a business that gets better as we get bigger, our machine learning models that power our marketing become more intelligent. We're able to run more user experience optimization tests that improve the conversion rates and efficiency. We are able to approve more people at better prices as we get better at risk management with underwriting. We're able to negotiate better take rates or better client pricing. We're able to become more efficient at administrating clients and post purchase. So really, the machine is getting more intelligent and more efficient as it gets bigger. The second component of that is really we have a diverse panel of marketing channels where we're not overly reliant on any one given channel. The majority of our spend is in upper funnel channels where the user is not looking for life insurance like television, social media, radio, et cetera. And that's great because those channels are really scalable at the right unit economics for us.

And our next question comes from the line of Ross Sandler of Barclays.

Great. Peter, I was just curious, so the market seems very jittery around the AI topic, not as it relates to how you guys might be using it internally, but more how consumers use agentic AI for research or prospecting in the process of buying various types of insurance, including life insurance. So I was just curious like how are you guys thinking about the opportunity as it relates to partnering or integrating with third-party agentic AI services? Or how you see this playing out as it relates to the purchase funnel for buying life insurance in general?

Yes. Thanks, Ross. It's a great question. So AI is a huge opportunity for us to further accelerate both our growth and our profitability as a company. We have been and will continue to be, I think, uniquely positioned to harness the advancing powers of AI really across all the dimensions of the business that I spoke to earlier, while doing so, operating in a highly regulated industry. If you just take a step back before we talk to the specifics of consumer behavior and online shopping, carriers rely on really -- the incumbent carrier set really relies on a disjointed mix of on-premise and vendor-managed systems built on top of a fragmented data infrastructure, which is oftentimes filled with low quality and conflicting data. Conversely, because we have a native end-to-end technology platform with a cutting-edge data infrastructure, it's really enabled us to embed AI and ML across the entire business. And so I think there's a lot more opportunity to continue harnessing the power of AI to improve. If you think about sales and marketing specifically, which consists for us of advertising spend and agent commissions, it's our largest expense. And so if AI reduces the cost of distribution or changes the medium in which life insurance is bought, as the leading D2C provider in the category, these shifts in consumer behavior should uniquely be an accelerant to our growth and our margin expansion. And I would say that our advantage isn't really just access to AI tools, which are widely available. It's really a native platform, years of structured underwriting data, real-time feedback loops and deeply integrated carrier relationships that are trained into a unified system. Our moat is structural, I would say. Every application engine, underwriting engine, issued policy, retention event and claim feeds back into our system, and it makes our AI and ML models more intelligent and more efficient. Like simply put, our machine gets better as it gets bigger. We have specific initiatives related to GEO, where we are maximizing that opportunity as a source of user acquisition and further building our brand as consumers use LLMs for research. And we have -- we are actively focused on integrating with these LLMs in the manner that you described, where I think we are most uniquely and best able to do that given our incredible native technology platform.

And our next question comes from the line of Colin Sebastian of Baird.

I guess I'm curious, as you move into some of the more adjacent products, what you launched in Q4 as well as what's in the pipeline. Curious how much is embedded in the outlook from those new products, maybe how quickly they're ramping? And then the additional investment necessary to -- from both the perspective of customer acquisition as well as back-end data, the data platform and integrations there, how much is required incrementally as you sort of roll out those additional products? That would be helpful.

That's a great question, Colin. Thanks for it. I'll first talk about our guidance, then I'll talk about the specific products. So just important to understand our guidance philosophy, we ascribe very little revenue in our forecasting to newer or less proven products. We really take a wait-and-see approach. It's early days for both of the products that we launched in Q4. As a reminder, we launched a new accumulation indexed universal life insurance product, and we launched a cancer insurance product. We are seeing healthy agent adoption of our accumulation IUL product. That is a permanent life insurance product with a compelling investment feature performance and the same incredible Ethos 10-minute purchase process. So we're encouraged. It's early days, but we're excited for it to continue growing and compounding. Our cancer insurance product, it's really early innings of testing and iteration. So I think it's too early to make a judgment call on its potential. While cancer insurance is not typically sold outside the workplace in the U.S., we think it's a compelling value proposition given the rate of cancer diagnosis. If you look at our track record historically, we tend to launch around 3 to 4 new products per year. Our teams are actively working on new products with more in the pipeline. As far as the incremental investment needed when we launch a new product, launching a new product can take anywhere from 4 months to up to a year for the more complicated ones. And it's really a company-wide effort across not only building that new product but integrating it with our distribution systems with all of our analytics and our infrastructure. So there is incremental cost to launch each new product. It's not massive. It's more the time and effort to do it right and set up these deep integrations and build the relationships with our carrier partners.

Our next question comes from the line of Ron Josey of Citi.

Peter, I wanted to better understand the 93% growth in D2C revenue from this past quarter. And I know we talked about sales and marketing and advertising and the ability to really target. But specifically, I would love your thoughts on just what changes were made to the product or the application path that drove that and any insights on conversion rates because of these changes. So question number one is on the 93% growth in D2C and product changes that might be driving greater conversion rates. And then I think the second durable vector you mentioned, make agents more productive, optimized through the Agent OS. We now have 15,000 agents on the platform. I think that's a notable step-up from the last disclosure. So just talk to us about the drivers that's attracting more agents to the platform here.

It's a great question. Thank you so much, Ron. So on the first topic, it really wasn't any one change to the platform that drove that exceptional direct growth. It was really the vertically integrated up and down the cycle seeing gains. So we saw gains in efficiency of our marketing models. As they've gotten larger, they've gotten more intelligent. We saw a number of user experiment improvements, which are leading to more people buying life insurance. We saw gains in underwriting being able to approve more people at better prices. So it's really up and down the vertically integrated stack. I think when you think about our direct business in comparison to a lot of other direct businesses, we benefit from having a very deep stack of real estate on which to optimize. And there's -- and so we've been able to really consistently improve our unit economics, and we expect to be able to going forward, which allows us to then go and increase our marketing spend across a myriad of channels. And if you look at year-over-year, we've increased marketing spend really across the portfolio of marketing channels, both our upper funnel channels where people are not looking for life insurance as well as bottom-of-funnel channels where people are looking for life insurance. And within our category, we're really winning in both of those parts of the advertising market. Drivers of agent growth to the platform, it's really a combination of adding new agencies and growth of our more tenured agency partners. And if you think about our agency business, it's a highly reoccurring model where we benefit not only from the new agencies, but the more tenured partners on the platform, right? When we add a new partner, they roll Ethos out to their existing agents. And then those agents repeatedly sell policies and that agency is constantly recruiting more new agents onto the platform at no incremental cost to us. And then Ethos can make those agents more productive through enhancements to our operating system. And then ultimately, we attempt to grow our share of that agency sales by broadening and enhancing our product portfolio. And so if you look at this past year's results, we saw excellent growth both in the more tenured cohort of agencies as well as productive new agencies who are joining the platform.

Our next question comes from the line of Lee Horowitz of Deutsche Bank.

So you mentioned sort of impressive unit economic stability in the quarter despite the really fast growth in the D2C business. I guess can you expand upon that and how you're looking at perhaps unit economics on a go-forward basis? Why is this maybe not the right time to lean into growth given sort of the competitive landscape that you're playing against as the only scaled digital player left in the market? And then secondly, there's certainly some opportunities to expand the monetization of the platform over the longer term into perhaps some more traditional recurring revenue streams. I guess how are you thinking about that opportunity set and where that may sit in sort of your list of many priorities as you grow your business?

That's a great question, Lee. Thanks for asking it. So I'll start on how we think about the right balance between growth and profitability in our direct business. If you take a step back, really the standard that we hold ourselves to is whether or not we're selling through our direct business or our third-party business and whether or not we're selling a term or a whole life or an indexed universal life product, we really attempt to be cash profitable by month 2 of the policy's life cycle, right? And so we have a very efficient working capital cycle, and we build up a contribution margin over that life of the policy. And so we take that in -- we think about that as a constraint to the growth model. In all direct businesses, unit economics are the governor. And so we're looking at how efficiently can we grow at the standard of unit economics that we want to achieve. So that's how I would think about just generally the rate at which we grow our advertising spend. And remember, we're constantly improving our platform, improving unit economics, which then allows us to increase advertising spend or bench higher unit economic gains. As far as our revenue model, we don't have any near-term plans to change it. We're really focused on becoming the largest issuer of life insurance. And it's an incredibly important market where we have a unique opportunity and advantage by virtue of having built this modern digital machine that is vertically integrated that is a 3-sided platform, delivering incredible value proposition to clients, agents and carriers. And so we're accumulating great momentum and advantage in this market, and that's really our focus going forward at this point.

And our next question comes from the line of Michael McGovern of Bank of America.

I have 2. First, could you speak to your carrier relationship dynamics underpinning guidance for the full year of 2026? Like for example, do you have any multiyear contracts that might be coming up and there's any assumptions around the negotiations or anything on that front? And then secondly, could you speak to kind of the relative strength in your revenue growth guidance in Q1 relative to the full year? Are there any assumptions throughout the second half of the year that changed relative to Q1?

Mike, thank you for the question. Our carrier partner contracts are typically evergreen. I wouldn't think about any material upcoming negotiations that are influential in our guidance. If you think about our existing panel of carrier partners, there's much more demand and capacity for Ethos premiums than there is supply of Ethos premiums today. Now we don't want a panel of 30 off-the-shelf carrier products. We've intentionally built a focused panel of carriers where we really work to co-develop custom proprietary products with deep technical and operational integrations from the carriers into our unified platform. Importantly, scale with our partners provides Ethos the necessary position in negotiating the economics we have today. And that scale in the relationship puts our priorities at the front of the carriers' IT and operational road maps, where we often have to dislodge some other important work on their road map related to maintaining a legacy system or some other initiative they have. Now when the 10-K flips in the near future, you'll see our carrier concentration disclosure decline by around 10 percentage points within our existing 6 partners, and we've built a considerable amount of redundancy into our business among our 10 products in the portfolio, given that we have multiple products in multiple categories. It's also important to remember that in our contracts, we typically have an extended notice of cancellation period that lasts well beyond the time that's required for us to build a new product with a new carrier. So we expect to continue building more products with more partners in the future, and we're very happy with our existing panel of carriers.

And Mike, in terms of the revenue guidance, the Q1 guidance reflects very strong operational momentum that we've carried into 2026. The new policy activations in January were strong. February is pacing ahead of internal targets. So I think when we look beyond Q1, we continue to be very encouraged by the momentum of growth in the direct channel, and as Peter noted, the contributions that we're starting to see from new agencies that we brought on to the platform in 2026 that are fueling revenue growth -- I'm sorry, we brought on the platform in 2025 that are helping fuel revenue growth here in 2026. And I think you're seeing some of that confidence flow through these gains in the full year revenue guidance that we shared with you. Other things to think about just as you model revenue throughout the year, as we've noted in the past, our business does exhibit seasonality, with Q1 and Q4 being our strongest quarters from a seasonal perspective and then 2Q and 3Q seeing much less seasonal effects. In terms of revenue mix, you'll tend to see the direct business index up here in the first quarter. You kind of think of it as like a 75-25 split. And then for the year, it probably takes on a profile along the lines of a 2/3, 1/3 mix, again, weighted towards direct. But very consistent, I think what you've seen in terms of our historic performance, it really is what informs our 2026 guidance.

[Operator Instructions] Our next question comes from the line of Pablo Singzon of JPMorgan.

So first question, DTC sales have historically been a minor portion of overall industry sales in life insurance. So the question is, what is your long-term view of the opportunity here and are there differences of note between the customers you cater to in DTC versus the customers that legacy DTC providers have historically served? So that's question one. And then question 2 is about your agency strategy, right? So can you just talk about your strategy for adding agency partners? On the carrier side, it sounds like your approach is to target category leaders for specific verticals, which makes sense if you think about the growth impact you want to deliver. But on the agency side, I'd be interested to hear about your thought process for selecting which agencies to partner with.

Pablo, thanks for the great questions. On the first question about generally what is our long-term view for direct. I think that before Ethos, direct was very difficult to do. And our innovations really up and down the entire stack by building a completely native technology platform, by innovating and being able to accelerate underwriting, by bringing elite level tech execution and go-to-market execution really has made it possible. And Ethos is really the first demonstration of scaled, profitable unit economics in this category. And I think that if you fast forward the future, this market could take a similar dynamic to where the auto market -- the auto insurance market went through over the last couple of decades, where you had a purely agent-dominated high transactional friction-heavy process. And a company like GEICO or Progressive was able to make it simple and easy and online. And over time, direct went from an insignificant part of the market to roughly half or a bit more than half of the market. I really think that Ethos has the potential to deliver the same kind of transformation of the life insurance market. And I think part of it -- a large part of it is also going to be incremental to the existing market today. So one of the things we love about the life insurance business is it's highly reoccurring in that every year, around 10 million Americans are going to buy life insurance whether or not Ethos exists, right? And they're pushed into that purchase journey by virtue of having new children, getting married, taking on a mortgage or debt, having health scares, watching their parents age. And Ethos is really the most efficient way for those families to get protected and we're also the most efficient way for agents to sell. And so we're excited to continue capturing both that large reoccurring demand. And then we're also excited to protect families that wouldn't otherwise have gotten protected that year that because we make it so simple and easy and efficient, they're able to take a step that they otherwise wouldn't have taken through a more traditional high-friction experience. As far as how we go about bringing agencies onto a platform, we try to be really thoughtful about which ones are going to be successful and appreciate our incredible value proposition for agents, which is a very fast transactional velocity, right? The ability to sell a policy in 10 minutes instead of taking weeks to sell a policy, that frees up so much time and space for them to go prospect for clients and convince them to buy instead of case managing people through a bureaucratic process. And then we are paying agents very quickly as well, which allows them to reinvest those commissions into prospecting and lead buying to go find more clients. So we look for agents that really have a match with our transactional velocity, that have a match for the products that we have in our portfolio. And the agent onboarding process, it's a fairly organic process, I would say, where it's typically an agency to agency or agent to agent referral where someone says, "Hey, I've had a great experience with Ethos. I launched them in the past year, and they now account for x percent of my sales." And the agents really love it. So we're excited for that organic agency onboarding process to continue evolving. The other thing I would say is that if you look at the latest indexed universal life product that we launched with a carrier partner, it's a first unique distribution model for Ethos where it's a combined effort between the carrier's distribution team and Ethos' distribution team of bringing it to market. And so how we'll benefit from that is it will accelerate agents coming into the platform that, that carrier might have relationships with that we previously have not served. And so those agents are going to come into the agent platform, and we're going to do a great job serving them into that new accumulation indexed universal life product.

I'm showing no further questions at this time. I'll now turn it back to Aaron Turner for closing remarks.

Great. Thank you all for joining us today on our first call as a public company, and we'll speak with you all again next quarter.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to the aTyr Pharma Fourth Quarter and Full Year 2024 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder, this conference is being recorded for replay purposes. It is now my pleasure to hand the conference call over to Ashlee Dunston, aTyr’s Senior Director of Investor Relations and Public Affairs. Ms. Dunston, you may begin.

Thank you, and good afternoon, everyone. Thank you for joining us today to discuss aTyr’s fourth quarter and full year 2024 operating results and corporate update. We are joined today by Dr. Sanjay Shukla, our President and CEO; Ms. Jill Broadfoot, our CFO; and Dr. Leslie Nangle, Vice President of Research. On the call, Sanjay will provide an update on our corporate strategy, including our clinical program for efzofitimod. Leslie will discuss our research and discovery programs, while Jill will review the financial results and our current financial position before handing it back to Sanjay to open up the call for any questions. Before we begin, I want to remind everyone that except for statements of historical facts, the statements made by management and responses to questions on this conference call are forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Please see the forward-looking statement disclaimer in the company’s press release issued this afternoon, as well as the risk factors in the company’s SEC filings and included in our most recent annual report on Form 10-K, subsequently filed quarterly reports on Form 10-Q, and in our other SEC filings. Undue reliance should not be placed on our forward-looking statements, which speak only as of the date they are made as facts and circumstances underlying those forward-looking statements may change. Except as required by law, aTyr Pharma disclaims any obligation to update these forward-looking statements to reflect future information events or circumstances. I will now turn the call over to Sanjay.

Thank you, Ashlee. Good afternoon, everyone, and thank you for joining us for our fourth quarter and full year 2024 results conference call. At aTyr, we’re on a mission to translate tRNA synthetase biology into new therapies for fibrosis and inflammation. Our lead therapeutic candidate, efzofitimod, is a first-in-class biologic immunomodulator that selectively modulates activated myeloid cells via neuropiln-2, or NRP2, to resolve inflammation without immune suppression and potentially prevent fibrosis progression. We’re developing efzofitimod as a treatment for patients with interstitial lung disease, or ILD, a group of rare immune-mediated disorders that can cause chronic inflammation and fibrosis of the lungs. 2024 was an important year for aTyr as we completed enrollment in our global pivotal Phase 3 EFZO-FIT study of efzofitimod in patients with pulmonary sarcoidosis, a major form of ILD that is our lead indication. This is the largest interventional study ever conducted in pulmonary sarcoidosis, and we look forward to releasing top-line data from this study in the third quarter of this year. EFZO-FIT is a randomized, double-blind, placebo-controlled, 52-week study. It consists of three parallel cohorts randomized equally to either 3 milligrams per kilogram or 5 milligrams of kilogram of efzofitimod or placebo dosed intravenously monthly for a total of 12 doses. The study enrolled 268 patients at 85 centers in 9 countries. The trial design incorporates a forced steroid taper with steroid reduction as the primary endpoint of the study. Secondary endpoints include measures of sarcoidosis, quality of life, and lung function. Patients who complete the study and wish to receive treatment with efzofitimod outside of the clinical trial are eligible to participate in an Individual Patient Expanded Access Program, or EAP. The EAP was implemented primarily based on feedback from multiple study principal investigators, or PIs, whose patients requested to continue treatment once they completed the study. These patients will receive 5 milligrams per kilogram of efzofitimod while in the EAP. However, PIs, patients, and the company remain blinded to the EFZO-FIT treatment assignments of these EAP patients. Additionally, we have now held 4 positive data and safety monitoring board, or DSMB, reviews for this study, all of which have identified no safety concerns and recommended that the study continue unmodified. The most recent pre-planned independent review indicates that the study continues to track well from a safety standpoint. We remain confident in the favorable safety profile we have seen for efzofitimod to date, which we believe is a key value proposition of the drug. And, finally, we’ll get our first look at the blinded baseline demographic and disease characteristics of the patients enrolled in the study at the upcoming American Thoracic Society Conference, or ATS, which is scheduled to take place mid-May in San Francisco. In a poster, we will be able to get a sense for the profile of the patients enrolled, including baseline steroid dose and background immunomodulator use, and how the profile matches the inclusion and exclusion criteria for the study. As part of our planning for the Phase 3 readout for EFZO-FIT, we recently held a Type C meeting with the U.S. Food and Drug Administration, or FDA. The main objective of this meeting was to discuss the statistical analysis plan, or SAP, for the study, including how the primary and secondary endpoints are assessed statistically. For the primary endpoint, we determined how steroid reduction will be analyzed in the SAP. As we previously discussed, we initially proposed that we measure steroid reduction based on calculating the average daily steroid dose between week 12 and week 48, which is a protocol-specified post-steroid taper period. We viewed this as a conservative way of measuring steroid reduction in the study. Based on FDA feedback, we will now measure steroid reduction as the absolute change from baseline to week 48. We feel this change creates a more simplified assessment to capture potential steroid delta between groups. The statistical powering for this study remains intact, and we are pleased with the clarification around how we will measure steroid reduction. With limited clinical studies in sarcoidosis as a benchmark, we are pioneering a path forward to measure how we can potentially improve the lives of these patients. While we brought you up to date on EFZO-FIT, I want to take a few minutes to provide you with critical insights into the pulmonary sarcoidosis landscape in the U.S. that have emerged from some of our early pre-commercial activities. We believe these findings support a potentially larger market opportunity for efzofitimod in sarcoidosis. Pulmonary sarcoidosis is a disease characterized by the formation of granulomas or clumps of immune cells predominantly in the lungs. The current standard of care is oral corticosteroids, which may help improve symptoms in the short-term, but come with serious side effects with long-term use. And despite the use of steroids and other off-label immunosuppressive agents, many patients have disease that progresses, with around 20% developing lung fibrosis, which can lead to organ failure and death. There remains a lack of safe and effective treatments available for these patients. It is typically reported that sarcoidosis affects close to 200,000 people in the U.S., with 90% of patients having lung involvement. A third-party claims analysis, which we conducted late last year, confirms that number and shows that the number of patients diagnosed with lung involvement similar to the population enrolled in our Phase 3 trial is 30% higher than previously estimated. Since the U.S. Epidemiology numbers most frequently referenced were published nearly a decade ago, we were not surprised that the population has grown. Furthermore, when we looked at treatment practices such as the number of patients that require any treatment and those that are prescribed steroids, we saw that nearly 75% of diagnosed patients are prescribed steroids, which is well above previous estimates in the U.S. and at the upper range as to what is reported globally. Furthermore, the claims also showed significant mortality and hospitalization rates, which speak to the high unmet medical need for this disease. When it comes to pricing through additional payor research that we conducted, we continue to see positive feedback from payors regarding their willingness to reimburse for an on-label biologic and sarcoidosis. We are encouraged by the reimbursement landscape we’ve seen recently where some rare disease product launches have included steroid reduction as part of the label and are priced at a premium. In some, we believe the findings from these recent activities support the patient’s and physician’s need and strong desire for a product like efzofitimod. We view efzofitimod as a potential frontline steroid-reducing agent in patients with moderate to severe disease, which could address 50% to 75% of all sarcoidosis patients. We’ve previously stated that we estimate a total global market opportunity for efzofitimod in ILD at $2 billion to $5 billion, and our updated research supports a market where sarcoidosis represents a significant portion of that range. Some of these insights that we’ve discussed will be presented in two posters at ATS in May. And this work has enhanced our understanding of the sarcoidosis market in the U.S. in a way that will be foundational for preparing for some of our upcoming commercial readiness activities. Finally, as we start to plan for commercial readiness, we recently appointed Eric Benevich, who is currently the Chief Commercial Officer for Neurocrine Biosciences to our Board of Directors. Eric brings a wealth of experience in launching high-value pharmaceuticals, including, most recently, a product for a rare disease that has a steroid reduction component as part of its Phase 3 clinical trial and FDA approval package. We anticipate his contributions will be highly valuable as we advance efzofitimod to a commercial product. Now, let’s turn to our second indication for efzofitimod, ILD-related systemic sclerosis, or SSc, which is also known as scleroderma. SSc is a form of connective tissue disease, where ILD commonly occurs, and is a leading cause of mortality. Current treatment options for SSc-ILD are limited, and like sarcoidosis, they do not treat the underlying disease or improve quality of life. EFZO-CONNECT is a Phase 2 randomized, double-blind, placebo controlled, proof-of-concept, 28-week study to evaluate 2 fixed doses of efzofitimod, 270 milligrams or 450 milligrams compared to placebo. Patients are dosed intravenously monthly for a total of 6 doses. This study is currently enrolling patients with limited and diffuse SSc-ILD at multiple centers in the U.S. The primary endpoint of the study is lung function as measured by forced vital capacity, and key secondary endpoints include symptom control and skin assessments. We expect to release interim data from the study in the second quarter of this year. The interim data will focus on skin assessments, measured at baseline in week 12 for approximately 8 patients, including patients on drug and placebo. We plan to present findings for skin histopathology, including immune biomarkers, and the modified Rodnan skin score, which will provide insight regarding potential changes in skin tissue. Skin manifestations in SSc highly impact the quality of life for these patients, and other therapies showing improvement in these measures have had limited to no success. This interim data may provide us with an early signal related to skin changes, and may help inform the clinical development strategy for this indication. Because we plan to evaluate skin assessments in the interim data, and do not plan to include any data related to lung function, we see limited read through from this data to the Phase 3 top-line data in pulmonary sarcoidosis, that we will present later this year. I will now turn the call over to Leslie Nangle, our Vice President of Research, to discuss our research and discovery programs.

Thank you, Sanjay. While we have focused quite a bit on efzofitimod in the clinic, it will be useful to comment on efzofitimod’s unique mechanisms of action, or MOA, as this is truly a first-in-class drug candidate. Since we started this program, we have greatly enhanced our mechanistic understanding of efzofitimod’s immunomodulatory activity. And we are pleased to report that just yesterday, we published an extensive manuscript in the journal Science Translational Medicine, which outlines the MOA and all of the preclinical data generated for efzofitimod from concept to clinic. The article describes the foundational science, detailed preclinical studies, and discovery work behind efzofitimod. This includes how it is engineered from a splice variant of the tRNA synthetase HARS, which is enriched in human lung tissue and upregulated by inflammatory cytokines in lung and immune cells. It also describes its specific and selective binding to NRP2, which is a cellular receptor highly expressed by myeloid cells in active sites of inflammation. Through this binding, it inhibits the expression of pro-inflammatory receptors and cytokines, thereby downregulating inflammatory pathways in macrophages. This mechanism can subsequently disrupt the cycle of chronic inflammation and fibrosis. This type of top-tier peer-reviewed journal requires extensive vetting by the broader scientific community, with multiple independent reviewers performing a comprehensive audit of all of the work that we have generated. This process itself demands the utmost transparency in our work. Therefore, we believe this publication validates the immune regulatory properties and extracellularly mediated mechanisms we have demonstrated for efzofitimod as it relates to reducing inflammation and fibrosis. Furthermore, it considerably reinforces the basis for the application of efzofitimod in chronic inflammatory conditions. It strengthens the scientific rationale for our clinical program in ILD, as well as encourages the potential development of other tRNA synthetase-based therapeutics for disease prevention. We are very proud that the novel science that drives efzofitimod is being recognized on the world stage. To publish this extensive body of work in such an esteemed journal is a momentous accomplishment for our research team and speaks to the nature of the high quality work that aTyr produces. While we have focused much of today’s conversation around efzofitimod, I want to remind you that the splice variant that forms the backbone of efzofitimod comes from our robust intellectual property estate, covering domains from all 20 human tRNA synthetases. And we utilize our platform and unique drug discovery process as an engine to generate new pipeline candidates. With efzofitimod and HARS, we have demonstrated that this tRNA synthetase fragment has a previously undiscovered extracellular function. And we continue to interrogate other tRNA synthetase fragments to identify roles they may play in cellular response and altered disease states. We currently have two preclinical candidates from other tRNA synthetases, where we have identified their interactions with targets and therapeutic areas where they may play a role. Both of these candidates, ATYR0101 and ATYR0750, interact with receptors that affect fibrosis. We are exploring ATYR0101 in both lung and kidney fibrosis where we recently presented data at a Keystone Symposia that shows its ability to induce myofibroblast apoptosis through a novel anti-fibrotic mechanism. We are exploring ATYR0750 in liver disorders based on the strong connection to its target, which is FGFR4. We are really proud of the innovative work that we have done with efzofitimod and the advancement of the program to date. We look forward to replicating that process with some of our current and yet to be discovered candidates. I will now turn it over to our Chief Financial Officer, Jill Broadfoot, to review our financial results.

Thank you, Leslie. We ended 2024 with $75.1 million in cash, restricted cash, cash equivalents, and investments. Subsequent to the end of the fourth quarter 2024, we raised approximately $18.8 million in gross proceeds from our at-the-market, or ATM, offering program. Collaboration and license revenue related to the Kyorin agreement was $0.2 million for the year ended 2024, which consisted of drug product material sold to Kyorin for the Japan portion of EFZO-FIT. Kyorin is our partner for the development and commercialization of efzofitimod for ILD in Japan, and we now have received over $20 million under this agreement to date, including milestones, where we are eligible to receive up to $155 million in additional milestone payments, which are primarily geared towards regulatory and commercial milestones for sarcoidosis. Research and development expenses were $54.4 million for the year ended 2024, which consisted primarily of clinical trial costs for the EFZO-FIT and EFZO-CONNECT studies, manufacturing costs for the efzofitimod program, and research and development costs for the efzofitimod and discovery programs. General and administrative expenses were $13.8 million for the year ended 2024. Based on our current cash position, we have updated our financial guidance and believe our cash runway is expected to be sufficient to fund the company’s operations through 1-year following the Phase 3 EFZO-FIT readout. We view this runway as important as it covers key upcoming inflection points for the company, including the Phase 3 EFZO-FIT readout and a potential filing of a Biologics License Application for efzofitimod in pulmonary sarcoidosis. In addition to extending our cash runway, we plan to use some of the ATM proceeds to help fund our commercial readiness plan. Now, I’d like to turn the call back over to Sanjay before we open it up to Q&A.

Thanks Jill. When we assess our current position, we feel incredibly pleased with our efzofitimod program and are enthusiastic about the future. We’re poised to seize an extraordinary opportunity and our excitement for the rest of 2025 is unmatched. Our latest validating publication in Science Translational Medicine confirms our understanding of efzofitimod’s mechanism of action. Our Phase 3 sarcoidosis trial has progressed through four successful DSMB reviews, bolstering our confidence in the therapy safety profile. And new claims data from sarcoidosis patients suggest a growing multi-billion-dollar market with little competition. Our journey began with our innovative biology platform which advanced from research to clinical stage through transparent seamless execution, while upholding a high level of scientific and medical rigor. A groundbreaking advancement for sarcoidosis may be within our reach. One that could greatly enhance the company’s trajectory and elevate aTyr to new heights in the biotechnology sector. We greatly appreciate your interest. At this time, we’ll be happy to take your questions.

Thank you. [Operator Instructions] And our first question comes from Derek Archila with Wells Fargo. Your line is open.

Hey, there. Thanks for taking the questions and congrats on all the progress. So just first question, I guess maybe, Sanjay, can you shed some light on how measuring the absolute change in steroid reduction at baseline now to week 48 versus the current way that you had set it up in terms of the average cumulative steroid dose? How does that impact the trial? I know you noted the powering remains intact, but I guess maybe just remind us the powering of the trial and I have a follow-up.

Sure, Derek. So previously, as I mentioned, we were looking at the average steroid dose in that week 12 through week 48 period, basically taking the patient diary information from every single day, they report their prednisone and dividing by the number of dose. It’s a fairly conservative way of looking at all the peaks and valleys combined with our steroid taper and that protocol that’s occurring simultaneous to that treatment period. But after some feedback and discussions with the FDA, the view was to look at just the change from week 0 to week 48. This is something that we’re very happy with. I think in many ways this allows us to simplify the manner in which we analyze our data. It allows us to look simply at the starting dose essentially and the ending dose. Remember, during this period, we’re trying our best to taper patients and continue to re-taper to zero. The assumption now is many of those peaks and valleys by the time the study ends should allow us to potentially maximize the steroid delta that we see in these patients. With regard to powering, it remains over 90%, 90% powered that either 3 or the 5 milligram dose shows a STAT-SIG steroid reduction compared to placebo. That has not changed. And with focusing now on the absolute change as opposed to percent change, we think that’s also a better framework that’s more relevant to patients and providers.

Super helpful. And then just a follow-up here. I know you highlighted in the prepared comments, there was investigator and patient enthusiasm for the EAP. So just wanted to ask, if you have any idea in terms of the percent of the patients who are in the trial rolling over into the expanded access or a new program there? Thanks.

Yeah. It’s a common question I get. How many patients? What’s the percent? And I want to start by saying, we have seen continued interest, growing interest, but the issue really here is that not all countries and not all centers can participate based on their local regulatory requirements. I’ve said this before, countries like Japan, for example, do not have a pathway to participate in an EAP type program. So, you’d have to subtract out all of those regions that aren’t involved and then try to come up with a quote unquote crude measure of response, which is what I think a lot of investors want to do here. What I can say is, the interest is still very robust. I was just with about 30 experts recently this past weekend. There continues to be more and more interest to participate in the EAP. We have committed to helping patients who are performing well in the trial to roll into this EAP, but it’s an individual site by site decision, because, of course, we are not in a formal open label type extension. So, I’m very pleased with the progress. I think it’s a great signal, great interim biomarker, if you will. And we’re going to continue to support those patients to move into that EAP. But, again, to get into specific numbers and try to get into the math, it’s probably not helpful. And just as a reminder, we are blinded. We’re blinded to what these patients are on during the trial. So there’s always a chance that all of these patients are on placebo that they have been able to taper more or less off their steroids and it doesn’t have anything to do with the drug. So people know me to be rather conservative in my messaging. I just think it’s a great signal to see that patients who are finishing a trial want to remain in the trial. That to me as a former clinician speaks very powerful to what something is happening during the trial.

Got it. Understood. Very helpful. Thanks, Sanjay.

And the next question will come from Yasmeen Rahimi with Piper Sandler. Your line is open.

Great. Thank you so much for taking the questions and congrats on all the exciting progress and exciting year ahead of us. I got two quick questions. One is maybe, was it the market research around managing patients with steroid reduction that led to engage with the agency to make this change from a sort of clinical perspective? Just maybe if you could kind of shed light how that meeting came about and why that change – the change makes absolute sense, but maybe the question would be why implement it now and the rationale behind it. That’s sort of question one. And question two is really exciting to see the baseline demographics from the study here upcoming at ATS. Could you maybe help us understand what we should be looking for? Obviously, it’s a tremendous study with globally lots of work went into it. So just kind of help us framework on what are some of the measures that we should be looking closely to in terms of this patient population? And I’ll jump back in the queue.

Sure. Yes. Three questions. I will take the first one and say that the market research is not necessarily really connected to this type of meeting. This is a little inside baseball biostatistics that typically before you lock your database, you would have all the rules set up with the biostats division. And as a former biostatistician, it’s important that we really agree to all the pre-hoc analysis. I think far too many times in biotech, we implement rules and then after data comes out, we start to do post-hoc analysis and cherry pick and cut and slice the data. And I wish more biopharmas wouldn’t do that. So we’re very rigorous and I like to be very rigorous around, hey, let’s get everything pre-hoc, organized down to the details exactly how do you want us to program and even look at some of this steroid reduction. Now, we have proposed something that I viewed as a fairly conservative way of looking at steroids and the average daily steroid dose. Upon interacting with the FDA here, their view was this approach would be fine. The suggested approach where we’re looking at just a simplified change from baseline. I’m not going to disagree with that. I’m going to go ahead and implement that approach. Because as I said, I think this actually allows us to potentially maximize a signal at the end of the trial. Remember, there’s a forced steroid taper component. Placebo patients will get the benefit of that reduction of the forced steroid taper. But, now, looking at the end of the trial, the clinical team and I view this as potentially a way to maximize a signal here, because as I pointed out, all those peaks and valleys that occur over the course of the trial now should be adequately handled, observed and, now, we’ll have a true measure at the end of the trial. Your second question was really around the baseline demographics. It’s important to put this out. The community is really interested. They want to see data as quickly as possible. Many of our PIs have said, can we take a look at background immunomodulator use? We just want to see the data. We like to see what the average daily steroid dose is, duration of disease, things of that nature. So these are all important things for us to show to the community, and we already have that data. It’s just baseline data. So why not put it out at a major medical conference? The important thing for investors to pay attention to is that average prednisone dose. I’ll remind everyone in the last trial, the Phase 2 trial, we had an average dose somewhere in that 11 to 13 range. This trial where we’re enrolling patients with a slightly lower basement dose of 7.5 milligrams, expect that prednisone dose maybe a little bit lower, but we want to take a look at that. And then that helps with all the investors that want to do the modeling with regards to how much steroid delta you want to see there. So, it’s important to get this baseline data out there, make sure we more or less enroll per the IE criteria in our trial.

Thank you so much. We’re very much looking forward to it.

And our next question will come from Faisal Khurshid with Leerink Partners. Your line is open.

Hey, Sanjay, thanks for taking the question. Nice to be on the call with you guys. I just wanted to ask, so in terms of the placebo arm, I guess for the steroid tapering in general, I think in the past you said that patients would have to try to taper to zero 3 times over the course of this 48 weeks. So with this change now, like what happens if a patient is mid taper at week 48? Like does that mean that they’ll kind of have a steroid level that’s sort of being impacted by this forced taper for what you’re measuring for the primary endpoint?

Yeah, great question. So the first thing I’ll say is with the relative length of the trial, our expectation is in particular in those placebo patients, we have adequate time here to unmask their disease and not only unmask the disease, but have as you point out several rounds of trying to basically re-taper them. So, we still are going to continue with that protocol in that manner. Now, you point out an example, I would say maybe an extreme example, what if a patient in that last dosing period is actually trying to be re-tapered. So, again, this is a very, very specific question for a specific circumstance. But, typically, when you look at a change from baseline, it’s not that you’re looking at the point estimate on that day of that visit. Typically, what you’re looking at is a trailing average of, say, 28 days. So that’s, again, a very wonky biostats and programming question that you’ve asked there. So in that case, if somebody is in an active taper, we have a look back there of those 28 days. That’s occurring for all of the patients there. My view is most patients will have reached their, what I would call, resting dose as a placebo patient and their resting dose of a potential EFZO treated patient. And we’ll know that over the course of those last 28 days. That’s why we believe that this allows us to potentially maximize the differences you may see from change from baseline within each cohort. Does that help?

Yeah, super helpful. Thank you for clarifying. And then if I could ask, just in terms of the how should we think about the durability of the drug impact now that you’re kind of doing the analysis in a way that really emphasizes the end of the study?

Oh, I love that you asked that question, because we were talking about this week. Durability is going to be really important with this trial. And this is one way that it signals a potential durable response. I wouldn’t say things like time to relapse and time to clinical worsening are other ways that you can look at it. I’ll remind everyone that from our last data, the pooled analysis showed that these two treatment doses kept people 93% of the patients in that small dataset from relapsing in 6 months, whereas you saw 55% of the sub-therapeutic and placebo patients relapse. So as a comparison, that’s an indication of durability. This is the way we’re measuring this endpoint is certainly going to allow us a clue to see if the drug is actually has durable response, but we’re also going to be looking at time to relapse as a tertiary analysis. Many of the experts, they really care about that. So that’s something that also, I think, we can potentially see a statistical win on, albeit it’s not a primary or secondary endpoint. But definitely durability is something that we’re bullish on right now with our therapy.

Great. Thank you for taking the questions.

And our next question will come from Prakhar Agrawal with Cantor Fitzgerald. Your line is open.

Hi. Thank you for taking my questions and congrats on the progress. So, firstly, I think in the Phase 1/2 for the 5 milligram per kg dose, the 1.6 milligram per day steroid reduction that was seen was during the post-taper period. So if you can remind us what would you see in the overall time period based on the new definition here? That’s my first question. And the second question, maybe if you mentioned that the powering remains intact, but did the powering decrease versus the initial assumption that may have been very conservative to begin with? And lastly, if you can comment on what did the FDA say on FEV1 at the Type C meeting or was there any discussion around that? Thank you so much.

Yeah, I’ll take the last part first. Little to no discussions on PFTs. I think this speaks to a much greater interest in steroid reduction and frankly the king sarcoidosis. So with regard to FEV1 specifically, that is an important PFT for obstructive disease and many of these patients of course have obstructive disease. We’ll look at that again as a tertiary endpoint. But my general sense is, there’s much more of a focus and we had much more of a discussion around steroid reduction. You asked around powering, again, the powering assumptions still remain the same. If anything, and I’m going to probably have to set some time aside with you and our biostatistician, the powering remains the same over 90% powered. We may in fact be able to, as I’ve said before, looked for a 3 and 3.5 milligram percent, absolute difference – excuse me, not percent. Now, I think it’s probably skewing closer to 3 milligrams. So even with the same powering assumptions, this new way of analyzing the data may allow us to, as I said, potentially maximize the difference here, maybe not even as high a bar, slightly lower, but that’s something that we’ll confirm. And, again, I want to keep the powering here at 90%. Your first part of the question, Prakhar, was – can you just repeat that again?

Yeah. So, I think, in the Phase 1/2 for the high dose, the 1.6 milligram per day steroid reduction was for the post-taper period. So if you apply the same definition as the new endpoint, if you can remind us what would you see there?

Right. So we haven’t analyzed it in that manner. What I can tell you is the placebo population had the benefit of the forced steroid reduction in that trial. So if you just sort of qualitatively think about this, if you remove that and you just focus at the end of the trial, we knew that over 50% of the patients in those sub-therapeutic doses were not doing well at the end of the trial. They were, have been rescued and managed at a much higher dose. So, just from a qualitative standpoint, given the fact that we held the line and did pretty well with our 3 and 5 milligram doses and placebo got worse over time, I think, you can see that that number would grow, but we haven’t gone back and back calculated that. It’s a good question. But, I think qualitatively you could probably understand that delta would be certainly larger than 1.6.

And our next question will come from Gregory Renza with RBC Capital Markets. Your line is open.

Hey, good evening, Sanjay, and team. Congrats on the progress and thanks for taking my question. Sanjay, maybe just spinning to EFZO-CONNECT and scleroderma ILD, it’s nice to see the detail on the 8 patients on the dataset you’ll be showing on drug and placebo coming up soon. Just curious as you’ve certainly cautioned on not reading through to EFZO-FIT, of course, just wanted to have you comment a bit on what you are looking for, what do you want to learn from the dataset and especially as you talk about the white space with EFZO and other fibrotic diseases, to what extent could this data help guide the directionality there? Thanks so much.

Sure, Greg. Thanks for the question. So, absolutely, I think the focus on skin, as you can imagine, we’re not really looking so much really at all for skin for sarcoidosis. The skin readouts represent an extremely high bar. Let me first start by saying scleroderma ILD patients, the primary morbidity that they really complain about and care about and, unfortunately, have not been able to address with any of the therapies is improving skin. None of the approved therapies made a dent in helping with clinical symptom or quality of life. So, we take this seriously. We also know it’s a very high bar. Why do we think it’s worth looking at skin pathology? Well, we saw a lot of neuropilin expression and even our paper from Science TM that just came out has experts in other areas of inflammatory disease with refractory therapies very much interested. Scleroderma is an area where we see neuropilin expression in those skin plaques. So it makes sense for us from an experimental point of view to really interrogate what’s happening there. Do we see any pathology benefit? Do we see any kind of impact? Again, no therapy has been able to move the needle at all. Can we see something there with immune biomarkers? Now, with that as a context, it’s okay then in my mind to look at a small dataset, because if we do see something, I think it would be pretty amazing. And, I think, it could open up EFZO’s potential in a number of other systemic diseases, which is where experts continually ask me, can this be used outside of the lung? With our recent paper that just came out, it has attracted more interest from other areas in rheumatology, dermatology. This is something that could be quite exciting for the therapy. So as of now, we’re really focused on the lung as a franchise with efzofitimod. But you can start to see with the mechanistic validation that we, Leslie outlined in the Science TM paper, this really looks like an opportunity that how do you best position efzofitimod and this is a first step looking at skin perhaps in scleroderma patients. So, I think, it’s a fair fight right now to take a look here, see if we can actually move the needle. It may actually impact where we want to go with efzofitimod with regard to scleroderma patients. Could it open up a more systemic opportunity? We know that’s a much, much larger market. And, we’re also competing with some rather large players right now in that space. But we feel as though we can go toe to toe with them regardless of how big they are from a pharmaceutical perspective.

That’s great, Sanjay. I really appreciate it. Look forward to the data.

And our next question will come from Joe Pantginis with H.C. Wainwright. Your line is open.

Everybody, good afternoon. A couple of questions, if you don’t mind. So first, Sanjay, the later part of your comments, you’re talking about patients that may not go on to an EAP, maybe not knowing what the drug is on, etcetera. You listed several reasons. So just curious, maybe you can share some nuances of the disease itself in that, what is the potential to see steroid reductions or even going to zero without therapeutic interventions?

That’s a great question, Joe. And I think what we are now really uncovering and want to really think about with this EAP is as patients start to get into longer-term therapy with efzofitimod. Again, I don’t know what they were on during the trial, but now I know they’re receiving 5 milligrams per kilogram. And as they continue to remain in the EAP, the question becomes, are we inducing things more than just management of active inflammation? Is there are we inducing any signs of remission? So this is a different study. It’s quite exciting to those patients, but for them to be off steroids many times for the first time in maybe a decade, this is just a welcome relief to them. So the EAP is something that I’m really proud of as we look to get more patients in this EAP, how do we then potentially, if our drug is successful with the readouts, how do we then morph that into a more formal EAP or a registry? This is going to answer some of those questions where you start to say, okay, what is the drug doing long-term? It’s that durability question. I think it’s both exciting, but it also opens up some questions around once we get into 18 or 24 months of good management of these patients, what are the implications for a drug like ours? How does it impact pricing? And how do we as a company prepare ourselves for what seems to be a larger market than anyone ever anticipated. So both exciting, challenging, but I think it’s something that we look forward to knowing once we unlock and unblind from this current trial.

Got it. Thanks for that. And then maybe from a reminder standpoint, can you let us know about your current manufacturing readiness, not only for development indications, but also for potential early commercialization, any early on needs?

Yeah. We invested significant capital a few years ago ahead of time to prepare for a commercial readiness strategy with our drug supply, a launch readiness plan, and we made those changes from a clinical group grade partner to a commercial grade partner. Now, we remain on track. That’s going to be an important component to our submission. It’s something the FDA CMC division, CMC group certainly keeps tabs on where we are. Because if we have good data, we want to have drug ready for these patients. As I told you, 20% of these patients, upwards to 20% have significant morbidity and a potential mortality rate in certain age groups that are even higher than that. So these patients can’t wait. So for us to be ready as a biopharma, we made those investments. If anything right now, we have to look at this new epi data and, say, do we have to be ready to have this as a bigger opportunity? We know I can tell you that and I’ve said this to many of you, the interest from strategics, for example, is the highest it’s ever been because I think the market even with some of those potential strategics we talked to, they are realizing it’s a much larger market. We’ve had a hand in that by leading the way in sarcoidosis, we’ve opened up people’s eyes, more data equals more publications, more understanding. We continue to lead that way with this claims database that we’ll have some data around and the treatment landscape posted at ATS. This is going to fundamentally start to establish a burgeoning market of which we’re really the worldwide leader right now with EFZO.

Thanks for the color.

And our next question will come from Liang Chang with Jefferies. Your line is open.

Hey, good afternoon. Thank you for taking our questions. This is Liang on for Roger. So, just want to circle back to the statistical plan change. So wondering if you can give us any color on what are the drivers from FDA side to change that statistical analysis plan to the current one? Anything more you see from your Phase 1/2 that’s more supporting this plan, current plan?

Well, I’m probably not going to comment what exactly is in the FDA’s head, because if I knew that, I’d have another career. But, I think, it’s really about simplification. And if anything, what we proposed, we thought was rather conservative, as I said, lacking in bias approach, a simplified assessment was certainly always on the table. But when you sit down with the FDA and specifically the biostats reviewers, you listen to what they guide you towards and sometimes you take it quickly, I will say that. So this is an approach, I think, again, as we are trailblazing here, creating a new path, some of this is working closely with the regulators there. So we may have ways in which we are thinking about analyzing things that from an academic or clinical point of view makes sense to us, but they’re going to provide a little bit of that regulatory color. And, again, if something is a little bit more simplified for them, like I said, we’re going to go ahead and take that win. And we do see this as a more streamlined approach that as I said, we think can help us.

Absolutely. Thank you. Thanks, Sanjay. Maybe one more question on upcoming interim analysis for scleroderma program. So I understand there will be like 8 patients. So, what’s the distribution between different doses and placebo? And how I understand that that will be focusing on high bar of the skin analysis. So just wonder how would that result affect your ongoing plan?

Yes, I’d imagine, I don’t have obviously the treatment assignments for these patients as of yet. We’ll do that when we take, when we pull down on these 8 patients. But I anticipate they will include treated and placebo patients, just based on the block randomization and how we enroll these patients. That’s what I anticipate at this time.

And how should we think about the results regarding any changes on your ongoing clinic trial?

Any change – you’re saying what are the assessments we’ll look at with those 8 patients?

Yeah.

Yeah, it’s going to largely…

What’s your impact?

Right, right. Well, again, these are patients, these skin samples will look at histopathology to see if there’s any kind of fibrotic improvement. We’ll be looking at immune biomarkers. We’ve seen of course in animals that the drug performs quite well, but now we have access at the cellular level to potentially see things. The one thing with sarcoidosis not having the ability to biopsy the granulomas that wouldn’t be ethical in the trial. This allows us in this trial to really look at what’s happening right there at the site of inflammation with these patients. So having the access to the skin samples allows us to see if things are really moving right there in these patients. And, of course, there’s also some clinical sub-scoring with something called the Rodnan skin score. Again, that’s something that no approved therapies have improved. So this is why those rheumatologists in particular are really interested to see if efzofitimod moves a needle at all in these samples. If it does, I think as I said, it unlocks a number of other potential systemic opportunities in the rheumatology space.

Got it. Thanks.

And our next question will come from Dev Prasad with Lucid Capital Markets. Your line is open.

Hey, everyone. Congrats on the progress and thank you for taking my question. I have a couple of questions. One on Expanded Access Program. I’m wondering whether you plan to use the data in BLA in any ways. And, secondly, like, do you have significant data from EAP prior to BLA submission?

Okay. So the first question – answer the second. The first thing is, we’re not slowing down our BLA timelines by wanting to really take a look at this data. Now, this is outside of our trial. So it’s not housed in a database that we own. There are a number of investigators that they have the ability to, if they wanted to pull together investigator-initiated trial, that could be a possibility. I’m in discussions with some of them about potentially what would that look like. Again, that would sit outside of our trial. So I don’t want I want everyone to understand about slowing down the BLA timelines. And, again, we updated our guidance today that we preserved not only the readout, our BLA timelines, but now effectively have more than a year of cash from our readout, our Phase 3 readout. So we don’t want to slow anything down. Will there be any meaningful analysis from those EAP patients? Again, that depends on whether or not investigators want to have some data out, whether anecdotally or bundled together with some of the sites there. So stay tuned for that. I would love to actually have some data come out in parallel. I think it could potentially really help our BLA discussions if we show in fact long-term durable effects of EFZO. And then, of course, from a safety perspective, it doesn’t hurt to even have some more data. So stay tuned. I do think that’s something that could potentially really benefit us in 2026.

Great. Just one more. If you can talk about the next pipeline product and potential IND, do you plan to evaluate EFZO in other ILD diseases or the path will be to bring next program like 101 or 750 into clinic? Thank you.

I think right now we’re enthusiastic to do both. I think efzofitimod clearly mechanistically now could have relevance in a number of other ILDs. And as I pointed out here, we’re talking about upwards to a $5 billion market. When you get outside of sarcoidosis, scleroderma, ILD, RA, myositis ILD, these are all markets that incrementally, there’s no therapy out there that would be considered above ours if we are successful here with sarcoidosis. There’s a lot of legacy products, biologics, other immunosuppressive agents. So I’m continually, for example, in discussions with those autoimmune ILD experts that how can we move into these areas. Pneumonitis, hypersensitivity pneumonitis is another big area that EFZO could potentially work from a mechanistic standpoint. With regard to pipeline, 101 has produced some rather outstanding effects as an anti-fibrotic and what I would consider a true anti-fibrotic in that it is initially looking like it modulates myofibroblasts. So our goal would be to expand efzofitimod look at other indications. I think there would be a significant demand in other ILDs certainly. And then with regard to our pipeline, we clearly have a first class research team here that can generate outstanding discoveries. So moving 0101 and 0750 into areas like lung fibrosis, kidney fibrosis, liver disorders, that would certainly be in the cards here. And it’s why I think this is a real big inflection moment for us as a company with this Phase 3 readout.

All right. Thank you.

I show no further questions at this time. I would now like to turn the call back over to Sanjay for closing remarks.

Well, I want to thank everyone for a number of great questions today. A lot of enthusiasm and interest that I can hear on the other side of the line. We certainly appreciate everyone’s interest. It has been a journey for us. We’re really proud of the work we’ve done. I’ll just highlight one last thing here. Again, I go back to that publication. As a company here with 20 to 25 researchers, we’re competing with companies, for example, like Roche and Novartis, places I’ve worked with thousands in research departments. And to have a publication in Science TM, I think this is our second one in the last 5 years, thousands of publications over the last 5 years in that journal. I can only count 5 companies who have had two major publications and we made the cover this time with these discoveries. And of those five, we’re talking about major big pharma players with thousands of people. So a big shout out to our research team here in San Diego, 20 to 25 folks here strong under the leadership of Leslie. And we’re producing discoveries and insights and really fulfilling the mission of translating this rather unique biology into meaningful medicine. So really, really proud of the work we’ve done here. I’ll end with that. Look forward to seeing all of you, many of you on the road as we get closer here to Phase 3 readouts later this year. So thank you all for your interest.

This does conclude today’s conference call. Thank you for participating. You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to the aTyr Pharma fourth quarter and full year 2023 conference call. At this time, all participants are in a listen only mode. [Operator Instructions]. As a reminder, this conference is being recorded for replay purposes. It is now my pleasure to hand the conference call over to Ashlee Dunston, aTyr's Director of Investor Relations and Public Affairs. Ms. Dunston, you may begin.

Thank you, and good afternoon, everyone. Thank you for joining us today to discuss aTyr's fourth quarter and full year 2023 operating results and corporate updates. We are joined today by Dr. Sanjay Shukla, our President and CEO, and Ms. Jill Broadfoot, our CFO. On the call, Sanjay will provide an update on our corporate strategy, including our clinical program for Efzofitimod and research and discovery program. Jill will review our financial results and our current financial position before handing it back to Sanjay to open the call up for any questions. Before we begin, I would like to remind everyone that except for statements of historical facts, the statements made by management and responses to questions on this conference call are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Please see the forward-looking statement disclaimer in the company's press release issued this afternoon as well as the risk factors in the company's SEC filings and included in our most recent Annual Report on Form 10-K subsequently filed Quarterly Reports on Form 10-Q and in our other SEC filings. Undue reliance should not be placed on forward-looking statements, which speak only as of the day they are made as facts and circumstances underlying these forward-looking statements may change. Except as required by law, aTyr Pharma disclaims any obligation to update these forward-looking statements to reflect future information events or circumstances. I will now turn the call over to Sanjay.

Thank you, Ashlee. Good afternoon, everyone, and thank you for joining us for our fourth quarter and full year 2023 results conference call. At aTyr, we are leveraging evolutionary intelligence to translate tRNA synthetase biology into new therapies for fibrosis and inflammation. Our lead therapeutic candidate, Efzofitimod, is a first-in-class biologic immunomodulator based on a naturally occurring, long enriched splice variant of the tRNA synthetases, HARS. Efzofitimod selectively modulates activated myeloid cells via neuropilin-2 or NRP-2 to resolve inflammation without immune suppression and potentially prevent the progression of fibrosis. We're developing Efzofitimod as a treatment for patients with interstitial lung disease or ILD, a group of rare immune-mediated disorders that can cause chronic inflammation and fibrosis of the lungs. 2023 was an important year for aTyr as we progressed and expanded our Efzofitimod clinical development program, which now includes two ongoing clinical studies, the Phase 3 EFZO-FIT study in patients with pulmonary sarcoidosis, a major form of ILD; and the Phase 2 EFZO-CONNECT study in patients with ILD related to systemic sclerosis, which is known as SSc or more commonly, scleroderma. Throughout the past year, we have also greatly enhanced our mechanistic understanding of the way in which Efzofitimod is confirming its anti-inflammatory effects. NRP-2 is highly expressed on activated immune cells doing an inflammatory response, notably myeloid cells, including monocytes and macrophages. By binding NRP-2, Efzofitimod guides the differentiation of monocytes at the site of inflammation into a macrophage subtype that is less pro-inflammatory to resolve aberrant inflammation. Dysregulated inflammation is a hallmark of myelo-driven diseases such as ILD, where persistent, uncontrolled inflammation can lead to the progression of fibrosis. With this new understanding, we now have even greater clarity and confidence as to why Efzofitimod may represent a breakthrough in treatment for ILD. Our lead indication for Efzofitimod is pulmonary sarcoidosis, the most prevalent form of ILD, where approximately 70% of patients will have symptomatic disease and nearly 20% will develop lung fibrosis. Current standard of care is primarily oral corticosteroids, a highly toxic treatment that has limited clinical evidence, is broadly immunosuppressive, and comes with side effects resulting in a high disease burden for patients. EFZO-FIT is a global pivotal Phase 3 study evaluating Efzofitimod compared to placebo in the context of a four steroid taper in patients with pulmonary sarcoidosis. This study is currently enrolling at more than 90 centers in nine countries. We're pleased with the progress we've made thus far with this study, which is expected to be the largest interventional study ever conducted in sarcoidosis. Completing enrollment in EFZO-FIT is our primary focus and we anticipate doing so in the second quarter of this year. In the past few months as patients have completed the 52-week EFZO-FIT study, we've received multiple inquiries from study principles -- study principal investigators, or PIs, whose patients have requested to continue treatment once they completed the trial. While aTyr PIs and patients are all blinded to what treatment patients received as part of the study, either Efzofitimod or placebo, the feedback we've received has suggested that some patients have performed well and want to continue on study drug rather than returning to the treatment regimen they had prior to the study. For some patients that may entail resuming or increasing steroid dose, which many patients are reluctant to do. Based on this feedback, we decided to implement an individual patient expanded access program or TAP for patients who complete EFZO-FIT. This individual patient EAP is design to allow access to Efzofitimod for patients who all have or are in the process of completing EFZO-FIT beyond the duration of the clinical trial. The company PIs and patients will remain blinded to treatment that occurred as part of EFZO-FIT. Safety is a key component of any EAP. We were able to implement this program based on the existing safety database from prior Efzofitimod clinical studies and additional safety and tolerability data from a Data Safety & Monitoring Board or DSMB review of data from EFZO-FIT, which included the evaluation of patients that completed 52 weeks of treatment. The DSMB review recommended the study proceed without modification, suggesting no major safety concerns. And while many types of EAPs are typically implemented after data from a study has been unblinded, we decided to implement this individual patient EAP early not only based on feedback and demand, but in part to continue to support those patients who have dedicated their time and entrusted us with their health by participating in this important study. This program reflects our ongoing commitment to the sarcoidosis community as we work to develop a safe and effective treatment for those in need. Our second indication for Efzofitimod is SSc-ILD. SSc is a form of connective tissue disease where ILD commonly occurs and is a leading cause of mortality. Current treatment options are limited and like sarcoidosis, do not treat the underlying disease or improve quality of life. EFZO-CONNECT is a Phase 2 proof-of-concept study evaluating Efzofitimod compared to placebo in patients with SSc-ILD. This study, which dosed the first patient last quarter, is currently open for enrollment at multiple centers in the US. We're focused on generating data from this study in 2024, and we expect to provide an update on the study later this year. We estimate that the two indications that comprise our current clinical program for Efzofitimod, pulmonary sarcoidosis and SSc-ILD collectively represent a potential $2 billion to $3 billion global market opportunity. This does not include any upside potential and other forms of the more than 200 ILDs, where Efzofitimod's unique mechanism of action to address complex immune pathology and desirable safety profile may be able to disrupt standard of care. While our primary focus is our clinical program for Efzofitimod, we continue to leverage our intellectual property or IP estate covering domains from all 20 human tRNA synthetases and utilize our platform as an engine to generate new pipeline candidates. tRNA synthetases are ancient essential proteins that have evolved novel domains to regulate diverse pathways, extracellularly, in humans. By identifying extracellular receptors and signaling pathways for these domains, we can elucidate the role these proteins play in cellular response and explore disease areas where they may have therapeutic benefit. Our two most advanced tRNA synthetases candidates in preclinical development are ATYR0101 and ATYR0750, both of which have specific interactions with targets that have implications in fibrosis. These targets include latent transforming growth factor beta binding protein one or LTBP1 and fibroblast growth factor receptor four or FGFR4, respectively. ATYR0101, which is derived from a domain of the tRNA synthetases DARS exerts its anti-fibrotic effects by selectively inducing a proptosis of myofibroblasts targeting a key hallmark of fibrosis pathology, which is the persistence of activated myofibroblasts. This mechanism may support broad therapeutic application in indications like lung, liver, and kidney fibrosis. The hidden biology that we have been able to unlock from our platform continues to inspire us, including the way in which some of these appended domains like Efzofitimod interact extracellularly with previously under the radar targets like NRP-2 and in particular, its role as an immune regulator or bind more well-known targets in unique ways like ATYR0101 and ATYR0750. This platform, which is based on signaling pathways that have evolved over billions of years to maintain homeostasis is an excellent example of bio innovation and has the potential to disrupt traditional drug discovery, a process that is increasingly reliant on exploiting existing signaling pathways to generate therapies. Our conviction to the potential of tRNA synthetases biology to lead the transformative medicines continues to grow stronger as our research advances. I'll now turn it over to our Chief Financial Officer, Jill Broadfoot, to review our financial results.

Thank you, Sanjay. We ended 2023 with $101.7 million in cash, restricted cash, cash equivalents and investments. Collaboration and license revenue related to the Kyorin agreement was $0.4 million for the year ended 2023, which consisted of drug product materials sold to Kyorin for the Japan portion of EFZO-FIT. As a reminder, Kyorin, our partner for the development and commercialization of Efzofitimod demand for ILD in Japan, where they are responsible for costs related to EFZO-FIT in Japan. And purchase drug product material from us with a small markup. Under this agreement, we have received $20 million in upfront and milestone payments from this partnership to date, and we are eligible to receive up to an additional $155 million, which is primarily related to certain development and regulatory milestones. Research and development expenses were $42.3 million for the year ended 2023, which consisted primarily of clinical trial costs for EFZO-FIT and EFZO-CONNECT studies manufacturing costs for the Efzofitimod program, and research and development costs for the Efzofitimod and discovery programs. General and administrative expenses were $13 million for the year ended 2023. Based on our current operational plans and existing cash we, maintain our prior financial guidance and believe our cash runway is expected to be sufficient to fund the company through the filing of a biologics license application for Efzofitimod and pulmonary sarcoidosis. This takes into account the continued allocation of the majority of our resources to our Efzofitimod clinical development program, which is our main value driver for the company while also committing judicious resources to our tRNA synthetases pipeline candidates to maintain an active discovery program and advance our IP estate. Furthermore, our forecast for our cash guidance does not include any potential future milestone payments from Kyorin or any proceeds that may result from additional potential partnerships or sources of non-dilutive funding. So it does consider our proceeds from the prudent use of our at-the-market facility. We implemented this operational plan more than a year ago, driven by our emphasis on maximizing efficiency and adapting to prevailing macroeconomic conditions, and this plan continues to be an effective way to meet our primary corporate objectives relative to optimal capital utilization. Now, I'd like to turn the call back over to Sanjay before we open it up to Q&A.

Thanks, jill. As we look back on the past year, we're filled with optimism for the future. Our scientific expertise in understanding tRNA biology is unparalleled across the industry. We're leveraging this unique biology and harnessing Ancient genetic codes developed throughout the course of billions of years in a trillion species. While other companies are just beginning to explore the untapped potential of tRNA biology we're leading the way with our decades of understanding this science, which we have leveraged to progress a Phase 3 therapeutic candidate. It's not just our understanding of the endless frontier of tRNA synthetase biology that sets us apart. Scleroderma represents the reality, not just the concept, of a potential near-term, meaningful tRNA-based therapy that can change the lives of patients. We're on the cusp of a once-in-a-generation therapy for sarcoidosis engineered from our natural physiology and are marching towards the chance to transform the lives of ILD patients. tRNA sarcoidosis is only the starting point for how have Efzofitimod may be able to help millions of ILD patients. As the only biotech company in Phase 3 development for this indication, we note the accelerating pipeline of candidates not just for sarcoidosis, but also for ILD more broadly. Other biopharmaceutical companies who are following our lead also see the multibillion-dollar market opportunity in this space. While these companies have yet to show proof of concept have Efzofitimod well beyond that, with patients requesting to remain on treatment as they complete our current trial in sarcoidosis due to the benefits they are experiencing. So we believe it's just the beginning for us here at aTyr. New validated targets are emerging from our evolutionary intelligence or AI driven drug discovery platform. Alternatively, artificial intelligence or AI driven drug discovery is really in its infancy, and these unproven hyped approaches do not have the advantage of our AI drug discovery engine. aTyr is uncovering hidden functions embedded in our genetic code that were developed throughout evolution encompassing infinite real-life biological experiments in over a trillion species over billions of years. Just think about that. The synthetase domains that we have mapped have developed over billions of years since the beginning of the tree of life. Since the evolution of complex systems, all species, including humans share these same genetic domains that were created over billions of years of biological stress and strain, allowing all species to thrive, and overcome disease and dysfunction. As companies embark on computational models and approaches to quote-unquote, find new and novel targets. aTyr meanwhile has an IP library of hundreds of potentially efficacious proteins just waiting to be unleashed from our own genetic programming, leveraging novel domains that have been tested and validated since the beginnings of life, that we now look to target towards current day disease and dysfunction. I hope you can now better understand why we're so optimistic here at aTyr, not only in the short term with Efzofitimod, but also in the long-term potential aTyr to become the next transformative biotech company of our time. We appreciate your interest at this time. Jill and I will be happy to take your questions.

[Operator Instructions]. Our first question comes from Gregory Renza with RBC Capital Markets. You may proceed.

Great. Good afternoon, Sanjay, and Jill. Congrats on the progress. Thanks for the updates and thanks for taking my questions. And Sanjay, maybe just going to the expanded access program, it's great to hear the color you've provided. I Just wanted to ask if you could maybe put into context the significance of this to you and to Efzofitimod, especially as these blinded patients are undergoing the considerable taper for the trial? And then secondly, just any other details that you are seeing, whether it's the patterns from the centers where that or what that demand is in order to have these patients and these trial participants to continue and with respect to the program and then, I have a follow-up as well. Thanks.

Sure, Greg, thanks for the question. So really over the last, I would say six months, if you will we have been hearing I've been hearing directly from the call, I'd say at this point, dozens of PIs around the world about how happy they are with the performance of the study drug of the study drug. I'm going to highlight say that over and over again, because we don't know if successful it's Efzofitimod or Placebo, and how their patients are performing quite well in the trial. It had reached the point however, that patients now rolling off the trial, frankly, don't want to go back on steroids if they have been able to taper off or increase their steroids. Many of these patients have been on steroids for five, 10, sometimes 20 years. So this has offered a real unique opportunity in this trial to live their lives with a lot less or no steroids. So it had gotten to the point where I thought it's best for us to even think about MEAP really early on. Most of these programs are put in place after you unblind and you finish the trial. But with data, obviously, we're looking at data next year. We wanted to be able to really fulfill our mission to really be patient oriented patient first and look to implement this program. Since we've put out the note, I think it's been received even with more interest. This is certainly something that is a relief to a lot of these patients. And I do think that it's a typical for a company to do this sort of thing ahead of data release. I would much rather have patients wanting to remain in the trial and happy to get out of the trial, put it that way. So I think for me clinically when I think about this clinically. I think we're doing the right thing here, ethically as well. And I think it's probably the best biomarker you could ask for in my opinion.

Yeah, that's helpful appreciate the color. And then just maybe shifting to EFZO-CONNECT just thinking about that, trial open for enrollment across these multiple centers. And that I think I heard you mention an update should come later this year. Just with respect to that uptake, what is your objective there? Of course, we're all interested in the 12-week skin assessment as well but just curious how we should be thinking about that. Is it more procedural in nature? Or is it something where like to at least look and see some details of that program. Thanks again and Congrats.

Sure, so we're just in that phase now where I think you'll see six, eight, 10 centers up and ready to enroll at this point. Getting that first patient in last quarter was important, but now we're getting into the meat of these sites being able to enroll. And like I said, we'll have a good idea later this year around what kind of data we'll put out here. There are opportunities with that data set to look at things, even a three month endpoint, which is some of the skin scoring that you pointed out there. But like I said, I want to see how we do here in the first half of the year with regards to enrolling in that trial now that we are approaching more or less full activation or nearing full activation of the centers that we want to get up and enrolling and screening for that trial.

Thank you. One moment for questions. Our next question goes from Joe Pantginis with H.C. Wainwright, and you may proceed, everybody.

Hey everybody, good afternoon. Thanks for taking the questions. Sanjay, I want to start more, start first also with the EAP. So it's pretty intriguing, like you said, to be able to have an EAP ahead of data. And if I heard you correctly, both physicians and patients remain blinded even after exiting EFZO-FIT as to what they had been previously on. So first, was curious if you could provide any more color or anecdotes that the physicians are giving you with regard to wanting to be into the EAP. You alluded to, maybe quote that they were, patients are feeling better, but are there any more details you can share around that? Second, what are the general logistics of setting up an EAP? And related to that, what are the cost implications? Thanks.

Yeah, great questions, Joe. So I think just at a high level without sort of getting into specific endpoints, what it really comes down to is these physicians have to put these patients have to put these patients back on something which was presumably steroids as they entered the trial. And now the patients are refusing to want to do that. So it speaks to the lack of options that we have here for sarcoidosis. These patients, of course, are not so fibrotic that they need the antifibrotics, so now there's a quandary. Patients are doing well, and they've tasted kind of the best experience recently in their recent care, whether it's removing steroids partially or completely. So I think we have to sort of step up here because many of the experts were sort of in a quandary now. So I think it speaks to the fact that, as I said, this is a really strong biomarker in my mind to have this kind of demand from centers and from patients. With regards to how would this logistically be administered here in the US, it typically is a direct submission from the PI. I would think of this as more like classical compassionate use as opposed to some of the EAPs we know of when drugs are approved and we're waiting for them to get to the market. So this would be an individual PI at their center cross-referencing our ILD and submitting into the FDA. Because we have some of those positive risk evaluations from a DSMB perspective, we feel as though we're also in good shape to support this vertical. And we may provide small grants to kind of help patients with some of their travel or maybe even some infusion costs. That's going to be on a case-by-case level. But this will be something that the centers themselves will bear a little bit more of the financial burden, if you will. We'll provide drug for free and we're in good shape from a drug supply perspective. But I do not expect, nor should any of the investors expect, that this will materially impact really our cash position. We have the drug, we have the drug supply. We'll help out with some administrative templates and things like that and maybe perhaps some small stipends to help patients. When you look at Europe, you look at other places around the world, that's going to be really a little bit more specific. Each country, for example, in Europe, some of them have more formal pathways that are more streamlined, similar to here in the US. Other regions, we're working more closely with individual hospitals in determining how best to provide drug to those patients that want it. So it's an atypical program, but I also think it speaks to our commitment to really respond to this demand from patients and PIs.

Very, very helpful. And then I guess when you consider being in a pivotal study right now that we'll go into, call it roughly mid next year and the Phase 2 SSc study, how would you sort of characterize at this moment your manufacturing needs to get beyond that and to potential commercialization for EFZO?

Yeah, so we had transitioned a few years ago to a more commercially oriented and scalable type of partnership. So we're in really good shape here to essentially have drug manufactured, clear all the hurdles also with the FDA to support a launch with some of those initial batches and runs more or less mapped out here. Of course, -- if you go out five, seven years from now, I wouldn't say we have that type of capacity, but in the short term here to get through our clinical program and the early commercialization work, we're in good shape here. And we're also fortunate that the manufacturers here in the US, so we have good control, good line of sight. I know things are happening worldwide with manufacturers right now where there's a lot of controversy if it's not US based, but we're de-risked there as well by having a good manufacturing plan. That we also spend a lot of time talking to regulators with to make sure --they want to make sure that we have that drug product ready for patients because there's going to be a high amount of demand assuming this drug gets approved. These patients have been, as I said, waiting for a therapy their whole lives.

Well, that five to seven year comment would be a great problem to have, but thanks for all the comments, Sanjay.

Sure.

Thank you. Our next question comes from Yasmeen Rahimi with Piper Sandler. You may proceed.

Hey, Dean, this is for Yas. Congrats on the continued progress and thanks for taking our questions. For EFZO-FIT, do you still need additional sites to bring enrollment to the finish line? And is there actually an opportunity for additional enrollment beyond the 264 patients? And second, could you provide more color on the percentage or number of patients continuing from EFZO-FIT to the EAP program?

Yeah, so 264 is kind of our goal. A lot of that is based on our power calculations. It assumes that you can have a nominal dropout rate. So we're well-powered, actually overpowered in many ways compared to other Phase 3 trials. 92% powered here, 264 is our goal we still view that as a solid number there. It allows for also a buffer that if you had 10% of the patients discontinue for any reason, you'd still be able to hit your power calculation. So we're still set with that number sometimes you can see trials that might be a few patients over or a few patients under. A lot of that has to do with patient screening right there at the end. In our last trial, which was the 36 patient trial, we had eligible patients the day we stopped screening. We ended up having a few more patients, one more patient enrolled in that trial because they were screen eligible and we don't want sort of shut down enrollment if someone is already screened and is eligible. So I would say that we're still going to be right in that ballpark there of 264. With regards to how many are going to move into the EAP, we don't know yet. We are continuing to generate requests. As you can imagine, as more and more patients finish the trial, we may get more patients interested. My early read on it is we're well built here to have a substantial number of patients. If they want the drug, we're ready to provide it. But I don't have an exact number, but we are prepared to potentially give the EAP program, have it there for a very, very large number of patients. We'll have to wait and see what kind of demand it continues. Early on right now, I will say, since we put the announcement, we probably had even more demand since we put the announcement out.

Thank you. Our next question comes from Yale Jen Laidlaw & Co. You may proceed.

Good afternoon, and thanks for taking the questions. I came in late, so maybe if you can reiterate a little bit in terms of EFZO-FIT enrollment. I know the press release indicated it's on track was there any other color of that? Then I have another question.

No, Yale very much on track. Very much feeling good. You know, about Q2 this year, so very much on track.

Okay, great, that's good. And you mentioned a few preclinical programs and they look very interesting at this juncture. Was those the programs you intend to partner out at some point, or what will be the path you are thinking about moving forward with those preclinical programs?

Well, I think it's, I mean, for everything as a biotech, like kind of where we are, you always have to look at partnering and those sorts of opportunities. If there's no shortage of interest, obviously we have a rather novel platform here, and the platform now is generating more and more validated opportunities. So that will be something that we'll look at. We always look at these sort of potential arrangements. At the same time, we also are potentially, sitting on assets here that really are producing signals really never seen before. When you talk about being able to induce apoptosis of myofibroblasts, I don't think you'll hear too many companies really seeing those kinds of early signals. So that's where this biology, I think, it's important for everyone to understand. There's hidden potential here, there's hidden potential efficacy here. And I think what aTyr is doing is really looking at these genetic codes and saying, where can they best be applied where there is disease and dysfunction. Well? So unlike, you know, generations of MeToo therapies that have been out there that are not disease modifying, I think all of our approaches, Efzofitimod and even some of the pipeline approaches we have here are, we have a very, very high bar here. They have to be disease modifying, they have to really be showing activity here that is two standard deviations better than most-- opportunities out there. And I think we want to be careful about-- giving away these gems too early, but we're open to talk to big players at all times.

Okay, great. Maybe just speaking one more question here, which is that, as you said, the trial is on track to complete enrollment second quarter. And just curious, in terms of the current in Japan, given they have smaller size, have they already completed any colors on that? And thanks.

Yeah, I can't really get into who's completed it. I mean, it more or less is competitive enrollment. There aren't hard caps per se, country by country. We have our goals on what we want, where we want to get to. So I wouldn't think of it as a separate trial. We've said in the past that a region like Japan, you might expect 25 to 30 patients there. So Japan, like the rest of the world that we're working in right now, very much on track, you know, to meet our projections to get this trial wrapped up here in Q2, at least enrollment.

[Operator Instructions]. Our next question comes from Robert LeBoyer with NOBLE Capital Markets. You may proceed.

Good afternoon and congratulations on all the progress. I also have a question on the expanded access program and was wondering whether you're going to be compiling endpoints and other data that can be used in the BLA or whether you can present some of the extension some of the extension study data at medical meetings either before the data is announced or afterwards.

Yeah, it's a great question, Robert. So just want to highlight one thing here is this is being conducted outside of our protocol and that's being done for a few reasons. Number one, we want to hit our BLA timelines and submit, finish the primary trial, if you will, the primary portion of the trial and submit that. This secondary piece of the trial is sitting outside of our protocol. Why are we doing it that way? Well, first of all, health authorities didn't mandate that we do any kind of open label extension. There was no known safety risks observed early in the program, in our last program. And we had long-term safety data already from this trial. So there was really no need to have a more formal open label extension or anything like that. So this trial will be done outside of the boundaries of our protocol. Now, already I would say many academics are really interested in looking at patients 18, 24 months out, perhaps with or without efzofitimod long-term. So I can't say that there would not be an academic consortium of some of our experts that would want to put out this data. I would support that. I think they could look at different things that within the confines of our own protocol, we haven't been able to look at-- to look at long-term, you know, steroid reduction effects. Some of the early promising things we see with regards to things like weight loss,-- it was always theoretical. You get off steroids, you could help with weight. You know, we're seeing some-- rather remarkable signals there it's early, it's anecdotal. This might be something that we could look at, those investigators could look at in some sort of academic survey. They may want to look at some sort of imaging data two or three years later. But right now we're focused on getting this drug approved, getting the BLA out. Those trickle of that kind of interesting data could almost be a headstart to Phase 4. That's the way I look at it. We also don't want to spend money on that sort of-- downstream side of the fence right now. But I think there's going to be some intriguing potential there to collect data, not only for the patients that continue in the trial, but also those that might have to revert back to steroids and see what happens with those patients. But I think it's a great question, Robert. Really nice how you're thinking about that. And it's already things that-- experts are noodling over, potentially to do something outside of the trial.

Thank you. I would now like to turn the call back over to Sanjay for any closing remarks.

Great. Well, we thank everybody's interest. Great questions today. I know there's a lot of expectation of everyone's really looking forward to getting this trial wrapped up here we are too. Appreciate everyone's interest here. Thank you for following us and look forward to talking to you in the future. Thanks again.

Thank you for your participation. You may now disconnect.