Taysha Gene Therapies, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Unaudited results are compared with Q1 2020; balance sheet figures are compared with December 31, 2020. Taysha is a clinical-stage AAV gene-therapy company and has not generated product revenue.
Financial results and liquidity
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $23.9 million | $5.5 million |
| General and administrative expense | $8.2 million | Less than $0.1 million |
| Total operating expenses / operating loss | $32.1 million | $5.6 million |
| Net loss | $32.0 million | $5.4 million |
| Net loss per share, basic and diluted | $0.87 | $0.50 |
| Operating cash used | $22.0 million | $1.7 million |
| Investing cash used | $0.5 million | None |
| Financing cash flow | None | $18.0 million provided |
Cash and cash equivalents were $228.7 million at quarter-end, down $22.6 million from year-end 2020. Total assets were $242.8 million; total liabilities were $20.0 million, with no debt reported on the balance sheet. Stockholders’ equity was $222.9 million and accumulated deficit was $93.2 million. Current assets of $239.6 million exceeded current liabilities of $19.0 million. Operating cash use was partly offset by noncash stock compensation and the $5.5 million TSHA-120 license fee, which remained accrued at quarter-end.
Profitability and operating margins are not meaningful because the company had no revenue and incurred losses. No product-sales revenue is expected in the foreseeable future.
Material changes and notable items
- Net loss increased to $32.0 million from $5.4 million. Management attributed the rise in R&D expense mainly to increased employee costs, manufacturing and raw-material purchases, sponsored research, consulting and the TSHA-120 license; G&A rose with compensation, professional fees, insurance, recruiting and public-company costs.
- In March, Taysha obtained exclusive worldwide rights to clinical-stage TSHA-120 for giant axonal neuropathy (GAN). The $5.5 million upfront license charge was expensed because the acquired technology had no alternative future use. HHF may receive up to $19.3 million in clinical, regulatory and commercial milestones, plus a low-single-digit royalty on sales.
- Capital investment included $0.5 million of cash purchases of property and equipment. Net property, plant and equipment increased to $2.5 million from $0.3 million.
- Stock-based compensation was $3.6 million for the quarter. Unrecognized compensation at March 31 included $37.0 million for options and $15.4 million for RSUs; these are future expense estimates, not cash obligations.
Outlook, management commentary and risks
- Management expects significant operating losses and rising R&D and manufacturing spending as it advances clinical and preclinical programs, expands capabilities and builds out a cGMP manufacturing facility. The filing says existing cash should fund planned operations for at least 12 months from issuance of the statements; elsewhere, MD&A says cash is expected to fund operations and capital requirements into 2023. These are management estimates based on assumptions, not a guarantee.
- Planned 2021 milestones included a TSHA-120 clinical and regulatory update by year-end; TSHA-101 preliminary safety and biomarker data in the second half and preliminary clinical data by year-end; a U.S. TSHA-101 IND and trial initiation; and IND/CTA submissions for TSHA-102 and TSHA-104 in the second half, with trials planned by year-end. Taysha also planned a 2021 IND/CTA submission for one additional named program.
- For TSHA-120, management reported 14 patients dosed in an NIH Phase 1/2 trial and described dose-related slowing of disease progression in two dose cohorts, with six patients followed for more than three years. These are company-reported analyses, including comparisons with natural-history data; additional data, including from the highest-dose cohort, were expected later in 2021.
- The company has no approved products and says it will need substantial additional capital to complete development and potentially commercialize candidates. Financing may be unavailable or dilutive or may require unfavorable terms; development timelines, safety, efficacy, regulatory review and manufacturing scale-up are uncertain.
- Long-term facility commitments are material: the Durham manufacturing-facility lease commenced April 1, 2021 and has an expected term of approximately 15.5 years, with two five-year extension options. The Dallas office lease is expected to run approximately 10 years; estimated minimum payments over its initial term are $4.9 million.
- Management said COVID-19 had not materially affected Q1 results or internal operations, but future impacts on trials, preclinical work, operations and access to capital remain uncertain. No material legal proceedings were reported, and the filing disclosed no material change to previously reported risk factors.
Most important facts for investors to verify
- Reconcile the cash-runway statements: at least 12 months from financial-statement issuance versus funding into 2023, and assess the assumptions behind both.
- Track actual cash burn, planned R&D and facility spending, and the timing and terms of any additional financing.
- Verify progress against the stated 2021 clinical and regulatory milestones, especially TSHA-120, TSHA-101, TSHA-102 and TSHA-104.
- Assess the strength and limitations of TSHA-120 results, including patient numbers, follow-up, dose cohorts, endpoints and reliance on historical controls.
- Monitor manufacturing-facility construction, lease obligations, and potential milestone, royalty and other license payments.