Shares of aTyr plunge 80%, analysts downgrade ratings as lead drug fails trial

Freedom Broker and other analysts have downgraded aTyr Pharma, a small-cap developer of therapies for pulmonary sarcoidosis, after its lead drug candidate failed to show meaningful results over placebo in final-phase trials. Freedom Broker analysts said the outcome reduces the likelihood of approval and undermines the company’s financial outlook.

Freedom Broker cut its rating on aTyr Pharma from “buy” to “hold” and slashed its target price nearly tenfold to $1 a share, according to a note seen by Oninvest.

The downgrade followed trial results showing that aTyr’s lead drug candidate, efzofitimod, performed little better than placebo in the final phase of testing. The stock collapsed 83% in a single session on September 15, closing at $1 per share.

Other analysts revised their calls too. Cantor Fitzgerald’s Prakhar Agrawal downgraded the stock to “neutral," while Faisal Khurshid of Leerink Partners cut his rating to “market perform,” BioPharma Dive reported.

ATyr tested efzofitimod in patients with pulmonary sarcoidosis, an inflammatory disease that often leads to fibrosis and impairs blood oxygenation. Current treatment relies on long-term use of steroids, which can cause side effects and require additional medications. ATyr claimed efzofitimod could significantly reduce steroid use.

The results told a different story. Patients on efzofitimod reduced their average daily steroid dose to 2.79 mg, while those on placebo cut theirs to 3.52 mg, a difference the company acknowledged was not clinically significant.

“Achieving complete steroid withdrawal in a record 40% of patients in the placebo group came as a surprise to the researchers. Based on real-world data from medical practice, this figure should not have exceeded 10-15%,” Freedom Broker said in its note.

ATyr maintains that efzofitimod is effective and plans to meet with regulators to discuss next steps.

Freedom Broker estimates the meeting could take place in the first quarter of 2026 but sees a lower likelihood of approval than before, which represents a setback for the company’s financial outlook. In August, Freedom Broker analysts projected aTyr’s first revenue in 2027 at $59.6 million; they now forecast less than $30.0 million.

Leerink’s Khurshid said it will be difficult for aTyr to “make its case” given the “unclear relevance” of the reported benefits.

Beyond sarcoidosis, aTyr is also testing efzofitimod for scleroderma, an autoimmune connective tissue disease, now in the second of three clinical trial phases. But Cantor Fitzgerald’s Agrawal warned that aTyr may have a tough time bouncing back with the ongoing trial in scleroderma-related lung disease, as that condition is in “an even riskier indication.”

The AI translation of this story was reviewed by a human editor.