aTyr lays off 60% of workforce to fund 2nd attempt at phase 3 success for lung disease drug

Biotech aTyr lays off 60% of workforce to fund 2nd attempt at phase 3 success for lung disease drug By James Waldron Aug 10, 2026 4:27am aTyr Pharma layoffs lung disease Sixty per cent of aTyr Pharma’s workforce are heading for the exits as the biotech conserves resources for a second shot at phase 3 success in a type of lung disease. Last year, aTyr revealed that its immunomodulator efzofitimod had missed the primary endpoint in a late-stage study for people with moderate-to-severe forms of the inflammatory lung disease (ILD) pulmonary sarcoidosis. That trial was unable to show that efzofitimod was able to best placebo when it came to reducing the amount of daily oral corticosteroid these patients needed to take to treat their condition.

At the time, aTyr CEO Sanjay Shukla, M.D., blamed the failure on the placebo response rate and suggested the company planned to talk to the FDA about a path forward. That remains the plan, with aTyr having submitted a protocol for its next planned phase 3 study to the FDA in July. A response from the regulator is expected by the end of the month, aTyr said in an August 7 release.

But with $58.9 million in cash, equivalents and investments, the biotech was running short of ways to finance these phase 3 ambitions. As a result, the San Diego-based company announced that it is trimming its headcount by 60% to “align organizational resources to support the efzofitimod program in ILD.” It means aTyr will be left with around 20 full-time employees. The company’s Chief Financial Officer Jill Broadfoot will be among the departures, although Broadfoot will serve as a consultant.

The restructure is expected to produce annualized cost savings of around $13 million and stretch the company’s cash runway into late 2028. Even so, aTyr warned that the phase 3 study in pulmonary sarcoidosis will still “require the company to obtain additional capital through equity or debt offerings, grant funding, collaborations, strategic partnerships and/or licensing arrangements.” Efzofitimod is designed to modulate activated myeloid cells via neuropilin-2 to reduce lung inflammation and fibrosis. As well as that hoped-for phase 3 study, aTyr has pushed ahead with a phase 2 trial for efzofitimod in 23 patients with systemic sclerosis-related ILD, with a topline readout pencilled in for the first quarter of next year.

“We are proactively taking decisive, necessary action to focus our resources on our lead therapeutic candidate, efzofitimod, as we await feedback from the FDA on the protocol we submitted for our planned phase 3 study in pulmonary sarcoidosis patients with restrictive lung disease,” CEO Shukla said in Friday’s release. “This approach positions aTyr to advance this planned phase 3 study efficiently and continue completing the phase 2 EFZO-CONNECT study in systemic sclerosis-related ILD,” he added. “We remain confident in the potential of efzofitimod to become a meaningful therapy for patients with these forms of ILD, and these changes are essential to our ability to achieve that goal.” aTyr Pharma layoffs lung disease Biotech