Taysha Gene Therapies, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed March 28, 2023. This is an annual report, not a standalone fourth-quarter filing. Taysha is a clinical-stage gene therapy company with no approved products or product sales.
Financial performance and position
| Metric | FY2022 / Dec. 31, 2022 | FY2021 / Dec. 31, 2021 |
|---|---|---|
| Revenue | $2.5 million, from Astellas-related Rett research and development activities | $0 |
| Research and development expense | $91.2 million | $131.9 million |
| General and administrative expense | $37.4 million | $41.3 million |
| Impairment expense | $36.4 million | $0 |
| Net loss | $166.0 million | $174.5 million |
| Net loss per share, basic and diluted | $3.78 | $4.64 |
| Net cash used in operating activities | $88.4 million | $117.0 million |
| Cash and cash equivalents | $87.9 million | $149.1 million |
| Term loan, net | $38.0 million; $40.0 million principal | $37.2 million |
Gross margin is not meaningful because the company has no product sales. The 2022 revenue is collaboration-related, not product revenue. The company reported $33.6 million of deferred revenue at year-end, primarily related to Astellas obligations not yet satisfied.
Cash, cash equivalents and restricted cash declined by $61.2 million during 2022. Cash used in investing activities was $24.9 million, principally for facility-related capital expenditures and license payments; financing activities provided $52.1 million, mainly from equity offerings and the Astellas share issuance. The $40.0 million term loan carries an 11.25% rate at year-end, with interest-only payments through August 2024 and maturity in August 2026. The loan is secured by substantially all assets other than intellectual property and has restrictive covenants.
Material changes and unusual items
- R&D expense fell $40.7 million year over year, primarily due to lower manufacturing and raw-material purchases, license fees, third-party research costs and compensation. Lower G&A reflected reduced consulting and professional fees and lower headcount.
- The $36.4 million non-cash impairment followed the decision to stop building out the Durham, North Carolina manufacturing facility; the company said it would market the facility for sale or sublease.
- In March 2022, Taysha prioritized GAN and Rett syndrome and paused substantially all other R&D programs. Headcount declined 63% year over year by December 31, to 65 employees. Further reductions in spending were anticipated for 2023.
- Astellas paid a $20 million upfront amount for options relating to TSHA-120 and TSHA-102 and purchased 7.27 million shares for $30 million gross. Taysha also completed public and at-the-market offerings during 2022, increasing the share count and providing additional capital.
Business outlook, commentary and risks
- Liquidity and going concern: Taysha reported $87.9 million of cash and cash equivalents and estimated this would fund operations into the first quarter of 2024, based on assumptions. Separately, management stated that funding was insufficient to support currently planned programs for more than one year from the filing date. Management concluded its potential financing, partnering and asset-sale plans were not sufficiently finalized or within its control to alleviate substantial doubt about the company’s ability to continue as a going concern.
- TSHA-120 for GAN: The FDA considered MFM32 an acceptable primary endpoint but recommended additional patients in a randomized, double-blind, placebo-controlled design to support a BLA. FDA feedback allowed for regulatory flexibility and consideration of alternative designs using objective measures, given GAN’s rarity. The size of the safety database and demonstration of product comparability remain review issues; Taysha had submitted CMC comparability information and was awaiting feedback.
- TSHA-102 for Rett syndrome: As of the filing, Taysha expected to dose the first adult patient and report initial available clinical data in the first half of 2023, submit a UK pediatric CTA in mid-2023, and file a U.S. IND in the second half of 2023. These are forward-looking expectations, not reported outcomes.
- Astellas options: If Astellas exercises an option, the parties would negotiate a license agreement with upfront, milestone and royalty terms to be determined. The filing does not establish that the options were exercised.
- Key risks: Continued operating losses, need for additional financing and potential dilution; clinical, regulatory and manufacturing uncertainty; difficulty enrolling patients in ultra-rare disease trials; reliance on UT Southwestern and third-party manufacturers; loan covenants; and possible delays or costs associated with the halted manufacturing facility. The company reported no material legal proceedings.
Important facts for investors to verify
- Current cash, cash burn and updated runway assumptions, including the basis for management’s going-concern conclusion.
- Subsequent clinical progress for TSHA-102 and FDA-agreed study design, enrollment needs and CMC feedback for TSHA-120.
- Status, costs and proceeds, if any, from sale or sublease of the Durham facility.
- Outstanding loan balance, interest and covenant compliance, as well as any additional financing and resulting dilution.
- Whether Astellas exercises either option and the eventual economic terms of any license agreement.