Taysha Gene Therapies, Inc. — Q3 2020 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2020. Taysha is a preclinical gene-therapy company developing AAV-based treatments for central nervous system monogenic diseases. It had no approved products and generated no revenue. The company completed its IPO in September 2020 and began trading on Nasdaq.
Financial highlights
| Metric | Q3 2020 | Nine months ended September 30, 2020 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $11.1 million | $19.6 million |
| General and administrative expense | $4.0 million | $5.0 million |
| Total operating expenses | $15.0 million | $24.6 million |
| Net loss | $15.0 million | $41.7 million |
| Operating cash flow | Not separately presented | $(10.9) million |
| Cash and cash equivalents at September 30 | $278.6 million | |
| Total liabilities at September 30 | $11.6 million; no debt outstanding reported | |
| Accumulated deficit at September 30 | $42.8 million |
Margins are not meaningful because the company had no revenue. The comparative 2019 statement covers only the period from inception on September 20 through September 30, 2019, so it is not a full-quarter comparison.
Changes and financing
- Nine-month net loss included a $17.0 million noncash expense from remeasuring a Series A preferred-stock tranche liability. The liability was extinguished when milestone shares were issued; it was not an ongoing operating expense.
- Cash from financing activities was $292.5 million for the nine months, primarily from $167.1 million of net IPO proceeds, $95.8 million of net Series B proceeds and $29.6 million of net Series A proceeds. The IPO sold 9.05 million shares at $20 per share; preferred shares converted into common stock at closing.
- Management said existing cash was expected to fund operating expenses and capital requirements into 2023, while also warning that actual needs could arise sooner and that additional funding will be needed to complete development and potentially commercialize products.
Outlook, risks and unusual items
- Management expected to initiate a Phase 1/2 trial of TSHA-101 for GM2 gangliosidosis in Canada by year-end 2020 and planned IND submissions for TSHA-101, TSHA-102, TSHA-103 and TSHA-104 by the end of 2021. All lead candidates were still in preclinical development at the reporting date; these were plans, not completed milestones.
- The company expects substantial increases in research and development spending, clinical development, manufacturing, hiring and public-company costs. It estimated incremental annual public-company costs of $6–7 million.
- Key risks include clinical and regulatory uncertainty, gene-therapy safety and manufacturing challenges, dependence on UT Southwestern for preclinical work and manufacturing, difficulty enrolling patients in rare-disease trials, and the need for additional capital. COVID-19 had not materially affected results through September, but future trial and supply disruptions remained possible.
- Taysha disclosed receiving an August 2020 letter from REGENXBIO concerning AAV9 patents and an offer to discuss a license. The company said it would review the letter; the referenced patents were described as expiring in 2026.
- At September 30, $7.0 million related to the Abeona CLN1 license and clinical materials was recorded in accounts payable; the company reported paying Abeona in October. The Queen’s license includes up to $20 million in regulatory and commercial milestone payments plus royalties; the Abeona CLN1 agreement includes up to $26 million in regulatory and $30 million in sales milestones per product, plus royalties.
- Subsequent events included October partnerships with Invitae and a Rett-syndrome license from Abeona, including a $3.0 million upfront fee, and a November manufacturing partnership with Catalent. The company reported no material legal proceedings.
Important facts for investors to verify
- Whether clinical-trial and IND timelines were achieved, and the current status of each program.
- Cash burn, forecast assumptions and whether the stated runway into 2023 remains supportable as development and manufacturing costs rise.
- Potential dilution from equity awards and future fundraising; 37,761,435 common shares were outstanding as of November 12, 2020.
- Resolution and potential cost of the AAV9 patent issue, as well as the terms and obligations of license and collaboration agreements.
- Whether manufacturing capacity, patient identification and enrollment, and COVID-19 conditions affect development plans.