ATYR Pharma 3 Trial Failure
September, 2025
NEW YORK—Bivora Capital Management (“BCM”), a long/short investment partnership, today released a detailed research report on ATYR Pharma (“ATYR”), outlining the firm’s short thesis and the scientific and financial factors that led to BCM’s successful positioning ahead of the company’s Phase 3 trial results for pulmonary sarcoidosis.
On the release of ATYR’s Phase 3 data for efzofitimod, the company’s investigational therapy for pulmonary sarcoidosis, the trial failed to meet its primary endpoint. Following the negative readout, ATYR’s stock declined sharply, validating BCM’s long-term short position and resulting in a single-day return of 74.49% for the firm.
“We believed the probability of success for ATYR’s Phase 3 trial was extremely low. The underlying science, clinical data, and drug development strategy did not support the company’s valuation.”
BCM’s analysis allowed the firm to position on the opposite side of institutional long exposure from firms such as Jefferies and Octagon Capital—both of whom had been publicly optimistic on ATYR.
Background on Pulmonary Sarcoidosis
Pulmonary sarcoidosis is a chronic inflammatory lung disease characterized by the accumulation of granulomas—clusters of immune cells—in lung tissue. Despite being recognized for over a century, treatment options remain limited, and no curative therapy exists.
The current standard of care involves corticosteroids, which can temporarily reduce inflammation but are associated with significant side effects, including:
Weight gain
Osteoporosis
Cataracts
Increased infection risk
Mood instability and insomnia
Psychosis in severe cases
Given these limitations, the field has seen numerous failed attempts to introduce targeted anti-inflammatory therapies.
Key Reasons BCM Anticipated Trial Failure
1. Weak and Inconsistent Phase 2 Data
The Phase 2 trial enrolled only 25 patients, a statistically small sample for a heterogeneous disease.
The study failed to meet its own primary endpoint, raising serious questions regarding efficacy.
Dose-response inconsistency was evident: the 5 mg/kg dose performed worse than the 3 mg/kg dose, contradicting normal pharmacodynamic expectations.
ATYR’s grouping of the 1 mg/kg cohort with placebo further obscured data integrity.
“These patterns suggested data manipulation intended to present the drug more favorably than results justified.”
2. Disease Biology Not Supportive of ATYR’s Mechanism
Pulmonary sarcoidosis is known to spontaneously resolve in a meaningful subset of patients, complicating interpretation of clinical trial results.
Historical data shows multiple anti-inflammatory agents have failed to demonstrate durable benefit, suggesting no single root cause and limited suitability for monotherapy solutions.
ATYR’s preclinical studies did not demonstrate meaningful reduction in granulomas, the central pathological feature of the disease.
ATYR targeted neuropilin-2 (NRP2), a mechanism with limited scientific validation in this context.
3. Reverse Drug Discovery Process
Rather than discovering a therapy designed for sarcoidosis, ATYR identified efzofitimod first and subsequently attempted to match it to a viable disease indication. This reverse-engineered approach increases clinical risk and reduces mechanistic clarity.
4. Financial Considerations
At the time of the trial, ATYR held cash reserves of roughly $100 million. BCM estimated a failed Phase 3 outcome would result in a 70–90% decline in equity value, given the absence of pipeline depth or alternative revenue streams.
Market Positioning
Leading institutional firms—including Jefferies and Octagon Capital—were long ATYR heading into the data release. Despite the presence of larger, well-capitalized players on the opposite side of the trade, BCM executed a short position based on independent scientific assessment, probability analysis, and valuation discipline.
“Our thesis diverged significantly from market consensus,” Chun said. “But the science, data integrity issues, and trial structure pointed clearly toward failure.”
BCM’s positioning resulted in a 74.49% gain in a single trading day following the announcement.