Shares of ATYR Pharma Inc (ATYR) surged 23.15% in after-hours trading on Monday, staging a partial recovery following a devastating 80% plunge during the regular session. The volatility came after the clinical-stage biotechnology company announced that its Phase 3 EFZO-FIT study of efzofitimod in pulmonary sarcoidosis failed to meet its primary endpoint.

The company reported that the study did not achieve its main goal of demonstrating a statistically significant change from baseline in mean daily oral corticosteroid dose at week 48. This setback dealt a significant blow to ATYR's most advanced program, causing investors to flee the stock during regular trading hours. The primary endpoint aimed to show a larger reduction in daily steroid use after 48 weeks compared to a placebo.

Despite the disappointing results, ATYR Pharma stated that efzofitimod showed improvements across multiple clinically relevant efficacy endpoints. The company plans to engage with the U.S. Food and Drug Administration to determine the path forward for efzofitimod in pulmonary sarcoidosis, a condition that affects approximately 200,000 people in the United States. The after-hours rebound suggests that some investors may see the massive sell-off as an overreaction, potentially creating a buying opportunity. However, the stock remains significantly below its previous levels, reflecting the uncertainty surrounding the company's future prospects following this major setback in its drug development pipeline.