Taysha Gene Therapies, Inc. — Q2 2021 Form 10-Q
Business context and reporting period. Unaudited results cover the three and six months ended June 30, 2021; balance-sheet comparisons are to December 31, 2020. Taysha is a clinical- and preclinical-stage AAV gene-therapy developer focused on CNS monogenic diseases. It has no approved products and has generated no product revenue.
Key financial metrics
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $30.6 million | $3.1 million | $54.5 million | $8.6 million |
| General and administrative expense | $10.1 million | $0.9 million | $18.4 million | $1.0 million |
| Total operating expenses / operating loss | $40.8 million | $4.0 million | $72.9 million | $9.6 million |
| Net loss | $40.9 million | $21.2 million | $73.0 million | $26.7 million |
| Basic and diluted net loss per share | $1.09 | $1.95 | $1.96 | $2.45 |
At June 30, cash and cash equivalents were $197.4 million, down from $251.3 million at year-end 2020; accumulated deficit was $134.1 million. Current assets were $207.3 million and current liabilities $28.4 million. Total liabilities were $55.4 million, including a $26.2 million build-to-suit lease liability. No product margins are reported because the company has no product sales.
For the six months, operating cash use was $44.9 million, investing cash use $9.0 million, and financing cash flow was zero, reducing cash by $53.9 million. The company reported $33.9 million of net property, plant and equipment, largely construction in progress for its Durham manufacturing facility.
Material changes versus prior comparable periods
- Operating expenses rose sharply: Q2 total expenses increased to $40.8 million from $4.0 million; six-month expenses rose to $72.9 million from $9.6 million. Management attributed the increase mainly to manufacturing and raw-material purchases, employee compensation, third-party research and development, clinical and regulatory work, and public-company costs.
- Six-month net loss increased to $73.0 million from $26.7 million. The 2020 comparison included a $17.0 million non-cash charge for remeasurement of a preferred-stock tranche liability; no such charge was recorded in 2021.
- Cash declined by $53.9 million in the first half of 2021, versus a $11.2 million increase in the first half of 2020, when financing generated $18.4 million.
- Property, plant and equipment increased from $0.3 million to $33.9 million, principally reflecting the Durham facility build-out and related construction accounting.
Outlook, commentary and risks
- Management said the June 30 cash balance was expected to fund planned operations for at least 12 months from issuance of the statements. Including assumed full access to the $100 million term-loan facility entered into after quarter-end, management estimated funding into the second half of 2023; this depends on assumptions and access to conditional loan tranches.
- On August 12, 2021, Taysha borrowed $30 million under a facility providing up to $100 million in total. The stated rate is the greater of 7.00% or WSJ Prime plus 3.75%; payments are interest-only through August 2024, with maturity in August 2026. Additional draws are subject to conditions or lender approval. The loan is secured by company assets, excluding intellectual property, and includes restrictive covenants and a 7.5% final payment on amounts advanced.
- Management expects significant and rising research, clinical, manufacturing and commercialization-related spending, and says substantial additional funding will be needed. The company may need to delay, reduce or eliminate programs if financing is unavailable on acceptable terms.
- Pipeline plans included further TSHA-120 trial and regulatory updates by year-end 2021; planned TSHA-101, TSHA-102 and TSHA-104 regulatory submissions and clinical-trial steps in the second half of 2021; and a planned TSHA-118 Phase 1/2 trial start. These are forward-looking targets, not assured outcomes.
- For TSHA-120 in giant axonal neuropathy, the company reported 14 patients dosed and six with at least three years of follow-up. It described dose-related signals of slowed disease progression and said the treatment had been well tolerated to date; additional data, including from the highest-dose cohort, were expected in the second half of 2021. The trial is open-label and non-randomized, and the filing’s efficacy discussion includes comparisons with natural-history data.
- Management reported no significant financial or operating impact from COVID-19 through June 30, 2021, but warned that future disruptions could affect studies, trials, operations or access to capital. The filing reports no material legal proceedings and no material changes to previously disclosed risk factors other than risks associated with the new debt. Disclosure controls were assessed as effective.
Most important facts for investors to verify
- Whether clinical and regulatory milestones across the pipeline are achieved on the stated timelines, and how trial results compare with appropriate controls and natural-history data.
- Actual cash burn, manufacturing-facility spending and resulting runway versus management’s estimates, including the assumptions behind access to remaining debt capacity.
- The term-loan draw conditions, covenant compliance, interest cost and final payment, as well as the potential impact of secured debt on financial flexibility.
- Potential future license milestones, royalties and other development costs; several agreements specify material contingent payments.
- Share-based compensation and dilution: six-month stock-based compensation was $8.1 million, and 5.7 million potentially dilutive awards were excluded from diluted loss per share because they were anti-dilutive.