Taysha Gene Therapies, Inc. — Q3 2022 Form 10-Q
Period: Quarter and nine months ended September 30, 2022. Taysha is a clinical-stage AAV gene-therapy company with no approved products and no product revenue. Financial amounts below are in millions of dollars unless otherwise stated.
Financial performance and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development | $16.4 | $39.5 | $77.3 | $94.0 |
| General and administrative | $8.7 | $11.2 | $30.0 | $29.5 |
| Total operating expenses | $25.1 | $50.7 | $107.3 | $123.5 |
| Net loss | $26.3 | $51.2 | $110.3 | $124.1 |
| Basic and diluted loss per share | $0.64 | $1.35 | $2.77 | $3.31 |
As of September 30, cash and cash equivalents were $34.3 million, restricted cash was $2.6 million, and current assets were $43.0 million versus current liabilities of $33.1 million. Total liabilities were $100.3 million; stockholders’ equity was $11.1 million. Term loan debt was $37.8 million net of discount ($40.0 million principal), and the build-to-suit lease liability was $25.5 million. No operating margin is meaningful because the company had no revenue.
For the first nine months, operating cash use was $102.7 million, investing cash use was $22.6 million, and financing provided $10.4 million. Cash, cash equivalents and restricted cash declined $114.8 million to $36.9 million. Capital expenditures were $18.3 million, primarily for the manufacturing facility and laboratory. The company raised $11.6 million net from an April stock sale.
Changes versus comparable periods
- Q3 net loss narrowed by $24.9 million year over year, mainly as R&D expense fell $23.1 million. The company cited lower manufacturing and raw-material spending, third-party development consulting, and employee compensation.
- Nine-month net loss narrowed by $13.8 million, while R&D declined $16.7 million, partly offset by higher compensation costs, including restructuring-related costs. G&A increased $0.5 million.
- Interest expense increased to $3.0 million for the nine months from $0.7 million, primarily reflecting the Silicon Valley Bank term loan.
- Operating cash use increased $25.9 million year over year, despite the smaller net loss, including because payables and accrued liabilities declined rather than providing cash as in 2021.
Outlook, material developments and risks
- In March 2022, Taysha reprioritized around GAN and Rett syndrome, planned small proof-of-concept studies in CLN1 and SLC13A5, and continued CLN7 work with partners. It paused substantially all other R&D and reduced headcount by about 35%. Management expected lower R&D spending in the second half of 2022.
- Management reported TSHA-120 GAN clinical and manufacturing comparability progress and expected FDA end-of-Phase 2 meeting feedback after formal minutes, anticipated in mid-January 2023. Preliminary adult-cohort TSHA-102 Rett data and initiation of a female pediatric trial were expected in the first half of 2023. These are forward-looking expectations, not results.
- At September 30, Taysha had an accumulated deficit of $345.9 million and had previously concluded that substantial doubt existed about its ability to continue as a going concern. Subsequent October financing and Astellas proceeds led management to conclude that substantial doubt was alleviated and that liquidity was sufficient for at least 12 months after the financial statements’ issuance.
- Subsequent transactions included a $30.0 million gross private placement to Astellas for 7,266,342 shares, a $20.0 million Astellas option-agreement payment, and an October follow-on offering that closed with $25.6 million net proceeds. The underwriter’s option for additional shares had not been exercised as of the filing date. Management said cash and these proceeds were expected to fund operations into the first quarter of 2024; further capital will be needed.
- Astellas received exclusive options concerning TSHA-120 and TSHA-102. Exercise would require subsequent good-faith license negotiations, with future upfront, milestone and royalty terms to be determined; the options do not themselves establish a completed license.
- The $40.0 million term loan is interest-only through August 2024, with principal payments thereafter and maturity in August 2026. The company did not draw the additional $20.0 million tranche that expired September 30, 2022; further borrowing is conditional. It reported covenant compliance at quarter-end.
- Key risks include clinical and regulatory uncertainty, manufacturing and facility execution, continued cash burn and reliance on future financing. The filing also cites potential capital-market and supplier effects from inflation, COVID-19 and the Russia-Ukraine conflict. No material litigation was reported.
Important facts for investors to verify
- Actual receipt and availability of the Astellas $20.0 million payment, and the final net proceeds and share dilution from the October transactions.
- Whether management’s stated runway into Q1 2024 remains supported by actual spending, trial plans and facility costs.
- FDA feedback and the development, clinical data and regulatory path for TSHA-120 and TSHA-102, including whether stated milestones were met.
- Current scope and spending plans for paused, partnered and proof-of-concept programs, and any additional restructuring or financing needs.
- Term-loan terms, remaining conditional borrowing availability, and the company’s ability to meet obligations as principal repayment approaches.