Taysha Gene Therapies, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; unaudited. Taysha is a clinical-stage AAV gene therapy company and has generated no product revenue. Its candidates remain in clinical or preclinical development.
Financial position and results
| Metric | Q1 2022 / March 31, 2022 | Comparable period / Dec. 31, 2021 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $37.8 million | $23.9 million in Q1 2021 |
| General and administrative expense | $11.5 million | $8.2 million in Q1 2021 |
| Total operating expenses | $49.3 million | $32.1 million in Q1 2021 |
| Net loss | $50.1 million; $1.31 per share | $32.0 million; $0.87 per share in Q1 2021 |
| Operating cash used | $40.8 million | $22.0 million in Q1 2021 |
| Investing cash used | $11.4 million | $0.5 million in Q1 2021 |
| Cash, cash equivalents and restricted cash | $99.3 million, including $96.6 million unrestricted cash | $151.7 million at Dec. 31, 2021 |
| Term loan | $40.0 million principal; $37.4 million net carrying value | $40.0 million principal outstanding |
| Total liabilities / stockholders’ equity | $115.3 million / $50.7 million | $118.6 million / $95.4 million at Dec. 31, 2021 |
Margins are not meaningful because the company had no revenue. The $50.1 million net loss increased $18.1 million year over year. Operating cash use rose $18.8 million. Cash, cash equivalents and restricted cash declined $52.5 million during the quarter. Accumulated deficit was $285.8 million.
Material changes and operating developments
- In March, Taysha reprioritized its pipeline around GAN and Rett syndrome, planned small proof-of-concept studies in CLN1 and SLC13A5, and said CLN7 development would continue with partners focused on the first-generation construct. Other R&D activities were paused; the company also ceased the TSHA-101 clinical trial.
- Headcount was reduced by approximately 35%. The company recorded $2.6 million of severance and termination costs, with substantially all accrued payments expected by June 30, 2022.
- R&D expense increased $13.9 million year over year, reflecting higher employee compensation (including severance), manufacturing and raw-material costs, and third-party research and clinical work. G&A increased $3.3 million, primarily due to compensation and professional fees.
- Investing cash use included $8.4 million of property and equipment purchases and a $3.0 million CLN1 regulatory milestone payment. Construction in progress was $50.5 million, largely related to the Durham manufacturing facility.
- In March, Health Canada approved the TSHA-102 CTA, triggering a $1.0 million regulatory milestone expense. Taysha reported initiation of clinical development and expected preliminary Rett clinical data by year-end 2022.
- For TSHA-120, management reported clinical safety and functional data it viewed as supportive of disease modification; a commercially representative GMP batch had been completed, with release testing underway.
Liquidity, outlook and risks
- Management stated that $96.6 million of cash and cash equivalents was expected to fund planned operations for at least 12 months from issuance of the statements. Separately, it estimated existing cash plus full access to the term loan facility could fund operations into Q4 2023, incorporating the reprioritization, program pauses and workforce reduction. These estimates depend on spending plans and access to financing.
- The term loan bears interest at the greater of prime plus 3.75% or 7.00%; interest-only payments run through August 2024, with maturity in August 2026. Additional $20 million tranches available in 2022 and early 2023 require three active clinical-stage programs at the lender’s discretion; a later $20 million tranche requires lender approval. The company reported covenant compliance at March 31, 2022.
- Taysha expected lower R&D and G&A expenses for the remainder of 2022 following reprioritization, while continuing selected development and Durham facility construction. It anticipates needing substantial additional funding and cautioned that financing may not be available on acceptable terms.
- At March 31, 2022, disclosed material cash requirements included $51.5 million of lease payments, approximately $12.0 million of manufacturing-facility build-out commitments, and $8.1 million of cancellable CRO purchase obligations.
- In April 2022, after quarter-end, Taysha sold 2.0 million shares under its ATM sales agreement for $12.0 million gross proceeds ($11.6 million net). The agreement permits up to $150 million in aggregate sales; no shares had been sold under it by March 31.
- Risks include clinical and regulatory uncertainty, future funding needs, manufacturing scale-up and execution, and potential delays or disruption to trials and suppliers. Management said COVID-19 had not significantly affected Q1 results, but future effects were uncertain. The filing also identified possible adverse effects from global economic conditions and Russia’s invasion of Ukraine.
- No material legal proceedings were reported. Management concluded disclosure controls were effective; payroll processing moved to a new provider during the quarter.
Most important facts for investors to verify
- Whether the stated runway assumptions remain valid, including availability of conditional debt tranches and the pace of cash use.
- Progress, enrollment, safety and timing for TSHA-102 and TSHA-120, including release testing and manufacturing milestones.
- Execution and cost of the Durham facility build-out and the extent of remaining purchase and lease commitments.
- Effects of the pipeline reprioritization, halted programs and workforce reduction on planned timelines and future expenses.
- Further ATM issuance, potential dilution, and any additional capital needs or financing terms.