Taysha Gene Therapies, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022; filed August 11, 2022. Taysha is a clinical-stage gene therapy company developing AAV-based treatments for central nervous system diseases. It has no approved products and has generated no product revenue.
Financial results and liquidity
| Metric | Q2 2022 / June 30, 2022 | Comparable period / prior year-end |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $23.1 million for Q2; $60.9 million for six months | $30.6 million for Q2 2021; $54.5 million for six months 2021 |
| General and administrative expense | $9.9 million for Q2; $21.3 million for six months | $10.1 million for Q2 2021; $18.4 million for six months 2021 |
| Net loss | $33.9 million for Q2; $84.0 million for six months | $40.9 million for Q2 2021; $73.0 million for six months 2021 |
| Net loss per share | $0.84 for Q2; $2.14 for six months | $1.09 for Q2 2021; $1.96 for six months 2021 |
| Cash and cash equivalents | $66.2 million | $149.1 million at December 31, 2021 |
| Operating cash used | $74.0 million for six months | $44.9 million for six months 2021 |
| Investing cash used | $19.5 million for six months | $9.0 million for six months 2021 |
| Debt | $40.0 million principal; $37.6 million net carrying value | $37.2 million net carrying value at December 31, 2021 |
Amounts are in U.S. dollars. The company also held $2.6 million of restricted cash, reported separately. No product gross margin is reported because there is no product revenue.
Material changes and management commentary
- Q2 operating expenses declined to $33.0 million from $40.8 million a year earlier, mainly reflecting lower third-party R&D and manufacturing costs. Six-month operating expenses rose to $82.3 million from $72.9 million, primarily due to employee compensation, clinical and regulatory activity, and severance.
- In March 2022, Taysha reprioritized its pipeline around GAN and Rett syndrome, planned small proof-of-concept studies in CLN1 and SLC13A5 deficiency, and continued CLN7 development with partners focused on the first-generation construct. Most other R&D activities were paused; workforce was reduced by approximately 35%.
- The company recorded $2.6 million of one-time severance and termination costs for the six months. It sold 2.0 million shares through its at-the-market program in April for $11.6 million net proceeds.
- Construction continued on the Durham GMP manufacturing facility. Property, plant and equipment was $61.0 million, including $56.3 million of build-to-suit construction costs.
Outlook, risks and contingencies
- Management estimated existing cash and cash equivalents, together with full access to the term-loan facility, would fund operating expenses and capital requirements into the fourth quarter of 2023. However, management concluded that funding was insufficient for more than one year from the filing date to support currently planned research and discovery programs and the facility build-out; planned financing and partnering measures were not finalized or within management’s control. The filing therefore states that substantial doubt exists about the company’s ability to continue as a going concern.
- Management expects lower R&D and G&A expenses for the remainder of 2022 following the reprioritization and workforce reduction, while emphasizing that substantial additional capital will be needed. Financing could involve equity dilution, debt, collaborations, licensing, or asset transactions; acceptable financing may not be available.
- Clinical and regulatory milestones remain uncertain. Taysha expected preliminary TSHA-102 Rett syndrome clinical data by year-end 2022. For TSHA-120 in GAN, pivotal-lot release testing was expected to finish in September 2022, with further health-authority discussions and feedback on a potential registration pathway anticipated by year-end 2022.
- The $40.0 million term loan bears interest at the greater of prime plus 3.75% or 7.00%; principal payments begin after the interest-only period ending August 31, 2024, with maturity on August 1, 2026. Additional borrowing is conditional, including clinical-program requirements and lender approval. The company reported covenant compliance at June 30, 2022.
- Material risks include clinical-trial and regulatory failure or delay, manufacturing and facility execution, ongoing cash burn and access to capital, potential dilution or licensing away valuable rights, and macroeconomic disruption. Taysha reported no material legal proceedings and no material changes to its previously disclosed risk factors other than the updates described in the filing.
Most important facts for investors to verify
- Cash runway assumptions, including whether the company can actually access the additional term-loan capacity and secure other financing before cash needs arise.
- Progress and results in the prioritized clinical programs, especially TSHA-102 and TSHA-120, and the timing and significance of regulatory feedback.
- Durham facility build-out costs, remaining commitments, and whether manufacturing and release testing meet regulatory requirements and timelines.
- Actual expense reductions after the reprioritization, compared with the six-month cash burn and management’s runway estimate.
- Potential dilution, debt costs and restrictions, and obligations under licensing agreements, including future milestone and royalty payments.