TAYSHA GENE THERAPIES, INC. The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed
consolidated financial statements and related notes included in this Quarterly
Report on Form 10-Q and the audited financial statements and notes thereto as of
and for the year ended
Forward-Looking Statements
The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the "safe harbor" created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, "Risk Factors" in our Annual Report. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.
Note Regarding Trademarks
All brand names or trademarks appearing in this report are the property of their
respective holders. Unless the context requires otherwise, references in this
report to the "Company," "we," "us," and "our" refer to
Overview
We are a patient-centric gene therapy company focused on developing and
commercializing AAV-based gene therapies for the treatment of monogenic diseases
of the central nervous system, or CNS, in both rare and large patient
populations. We were founded in partnership with
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For Rett syndrome, we intend to submit an IND / CTA filing in
We have a limited operating history. Since our inception, our operations have
focused on organizing and staffing our company, business planning, raising
capital and entering into collaboration agreements for conducting preclinical
research and development activities for our product candidates. All of our lead
product candidates are still in the clinical or preclinical development
stage. We do not have any product candidates approved for sale and have not
generated any revenue from product sales. We have funded our operations
primarily through the sale of equity, raising an aggregate of
On
Since our inception, we have incurred significant operating losses. Our net
losses were
• continue to advance the preclinical and clinical development of our
product candidates and preclinical and discovery programs;
• conduct our ongoing clinical trials of TSHA-101 and TSHA-120, as well as
initiate and complete additional clinical trials TSHA-118, TSHA-102,
TSHA-121 and any other current and future product candidates that we
advance;
• seek regulatory approval for any product candidates that successfully
complete clinical trials;
• continue to develop our gene therapy product candidate pipeline and
next-generation platforms;
• scale up our clinical and regulatory capabilities;
• manufacture current Good Manufacturing Practice, or cGMP material for
clinical trials or potential commercial sales;
• establish and validate a commercial-scale cGMP manufacturing facility;
• establish a commercialization infrastructure and scale up internal and
external manufacturing and distribution capabilities to commercialize any
product candidates for which we may obtain regulatory approval;
• adapt our regulatory compliance efforts to incorporate requirements
applicable to marketed products;
• maintain, expand and protect our intellectual property portfolio;
• hire additional clinical, manufacturing quality control, regulatory,
manufacturing and scientific and administrative personnel;
• add operational, financial and management information systems and
personnel, including personnel to support our product development and
planned future commercialization efforts; and
• incur additional legal, accounting and other expenses in operating as a
public company.
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Our Pipeline
We are advancing a deep and sustainable product portfolio of 27 gene therapy product candidates for monogenic diseases of the CNS in both rare and large patient populations, with exclusive options to acquire four additional development programs at no cost. Our portfolio of gene therapy candidates targets broad neurological indications across three distinct therapeutic categories: neurodegenerative diseases, neurodevelopmental disorders and genetic epilepsies. Our current pipeline, including the stage of development of each of our product candidates, is represented in the table below.
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Recent Developments
TSHA-120 for Giant Axonal Neuropathy (GAN)
In
GAN is a rare autosomal recessive disease of the central and peripheral nervous
systems caused by loss-of-function gigaxonin gene mutations. The estimated
prevalence of GAN is 2,400 patients in the
Symptoms and features of children with GAN usually develop around the age of five years and include an abnormal, wide based, unsteady gait, weakness and some sensory loss. There is often associated dull, tightly curled, coarse hair, giant axons seen on a nerve biopsy, and spinal cord atrophy and white matter abnormality seen on MRI. Symptoms progress and as the children grow older they develop progressive scoliosis and contractures, their weakness progresses to the point where they will need a wheelchair for mobility, respiratory muscle strength diminishes to the point where the child will need a ventilator (usually in the early to mid-teens) and the children often die during their late teens or early twenties, typically due to respiratory failure. There is an early- and late-onset phenotype associated with the disease, with shared physiology. The late-onset phenotype is often categorized as Charcot-Marie-Tooth Type 2, or CMT2, with a lack of tightly curled hair and CNS symptoms with relatively slow progression of disease. This phenotype represents up to 6% of all CMT2 diagnosis. In the late-onset population, patients have poor quality of life but the disease is not life-
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limiting. In early-onset disease, symptomatic treatments attempt to maximize physical development and minimize the rate of deterioration. Currently, there are no approved disease-modifying treatments available.
TSHA-120 is an AAV9 self-complementary viral vector encoding the full length
human gigaxonin protein. The construct was invented by Dr.
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We have received orphan drug designation and rare pediatric disease designation from the FDA for TSHA-120 for the treatment of GAN.
There is an ongoing longitudinal prospective natural history study being led by
the
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deteriorated. Total MFM32 score also correlated with ambulatory status, where independently ambulant individuals performed better and had higher MFM32 scores than the non-ambulant group, as shown in the graph below.
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Patients also reported significant autonomic dysfunction based on the COMPASS 31 self-assessment questionnaire. In addition, nerve conduction function demonstrated progressive sensorimotor polyneuropathy with age. As would be expected for a neurodegenerative disease, younger patients have higher baseline MFM32 scores. However, the rate of decline in the MFM32 scores demonstrated consistency across patients of all ages, with most demonstrating an average 8-point decline per year regardless of age and/or baseline MFM32 score, as shown in the natural history plot below.
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A 4-point score change in the MFM32 is considered clinically meaningful, suggesting that GAN patients lose significant function annually. To date we have up to eight years of robust data from this study.
Preclinical Data
TSHA-120 performed well across in vitro and in vivo studies, and demonstrated improved motor function and nerve pathology, and long-term safety across several animal models. Of note, improved dorsal root ganglia, or DRG, pathology was demonstrated in TSHA-120-treated GAN knockout mice. These preclinical results have been published in a number of peer-reviewed journals.
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Additional preclinical data from a GAN knockout rodent model that had received AAV9-mediated GAN gene therapy demonstrated that GAN rodents treated at 16 months performed significantly better than 18-month old untreated GAN rodents and equivalently to controls. These rodents were evaluated using a rotarod performance test which is designed to evaluate endurance, balance, grip strength and motor coordination in rodents. The time to fall off the rotarod, known as latency, was also evaluated and the data below demonstrate the clear difference in latency in treated versus untreated GAN rodents.
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A result is considered statistically significant when the probability of the result occurring by random chance, rather than from the efficacy of the treatment, is sufficiently low. The conventional method for determining the statistical significance of a result is known as the "p-value," which represents the probability that random chance caused the result (e.g., a p-value = 0.01 means that there is a 1% probability that the difference between the control group and the treatment group is purely due to random chance). Generally, a p-value less than 0.05 is considered statistically significant.
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With respect to dorsal root ganglia, or DRG, inflammation that has been a topic of considerable interest within the gene therapy circles, in GAN and in the majority of diseases in our neurodegenerative franchise, the DRG have a significantly abnormal histological appearance and function as a consequence of underlying disease pathophysiology. Treatment with TSHA-120 resulted in considerable improvements in the pathological appearance of the DRG in the GAN knockout mice. Shown below is tissue from a GAN knockout mouse model with numerous abnormal neuronal inclusions containing aggregates of damaged neurofilament in the DRG as indicated by the yellow arrows. On image C, the tissue from the GAN knockout mice treated with an intrathecal injection of TSHA-120 had a notable improvement in the reduction of these neuronal inclusions in the DRG.
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When a quantitative approach to the reduction in inclusions in the DRG was applied, it was observed that TSHA-120 treated mice experienced a statistically significant reduction in the average number of neuronal inclusions versus the GAN knockout mice that received vehicle as illustrated below.
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Additionally, TSHA-120 demonstrated improved pathology of the sciatic nerve in the GAN knockout mice as shown below.
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Results of Ongoing Phase 1/2 Clinical Trial
A Phase 1/2 clinical trial of TSHA-120 is being conducted by the
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Six patients in the trial have been followed for more than three years. Patients dosed with 1.8x1014 total vg and 1.2x1014 total vg have shown sustained dose-dependent improvements in MFM32 scores for more than three years, as illustrated below.
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To date, TSHA-120 has been well-tolerated at multiple doses with no signs of
significant acute or subacute inflammation, no sudden sensory changes and no
drug-related or persistent elevation of transaminases. We expect to report
safety and MFM32 functional data from the highest dose cohort of 3.5x1014 total
vg in
Bayesian Analysis of TSHA-120
To gain further insight into the impact of TSHA-120 treatment on GAN disease progression and to add more robustness to the data, an additional analysis utilizing Bayesian statistical methodology was performed. Bayesian analysis is a useful method that enables direct probability statements about any unknown quantity of interest to be made, in this case, a statement around the probability of a clinically meaningful improvement in MFM32. Bayesian analysis also enables immediate incorporation into the analysis of data gathered as the trial progresses. It is a particularly appropriate approach for a clinical trial in a rare disease and is a way of statistically increasing the power of a clinical trial in a small patient population when used to incorporate auxiliary information such as historical data, or data that are being accumulated as the trial progresses. Importantly, it has been accepted by regulatory agencies in such cases. Below are the results of the Bayesian analysis of patient data from cohorts treated at 1.8x1014 total vg and 1.2x1014 total vg. As seen in the table, the analysis confirmed both the natural history data of an 8-point decline in the MFM32 total percent score per year, and importantly, that patients treated with 1.8x1014 total vg experienced an arrest of disease progression that was statistically significant. The Bayesian analysis confirms the positive findings that were seen with the frequentist approach.
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As shown below, the Bayesian efficacy analysis confirmed that TSHA-120 halted patients' pre-treatment rate of decline when compared to individual historical data. As shown on these graphs, the 1.8x1014 total vg dose halted patient pre-treatment rate of decline with an average annual slope improvement of 7.78 points while the 1.2x1014 total vg dose resulted in a clinically meaningful slowing of disease progression with an average annual slope improvement of 6.09 points. These results are consistent with a dose response relationship.
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Further analyses confirmed that there was a nearly 100% probability of clinically meaningful slowing of disease progression. As shown below, the 1.8x1014 total vg dose confirmed a virtually 100% probability of clinically meaningful slowing of disease compared to natural history decline of GAN patients while the 1.2x1014 total vg dose confirmed an approximately 85% probability of clinically meaningful slowing of disease and a virtually 100% probability of any slowing of disease.
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Data from eleven GAN patients were analyzed for visual acuity via the Logarithm of the Minimum Angle of Resolution (LogMAR). A dose-dependent trend towards stabilization of visual acuity, i.e., a slowed increase in LogMAR values, was observed
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and appeared to be independent of visual acuity at the time of treatment. This newly obtained GAN exploratory endpoint showed improvement in visual acuity as shown below.
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Currently in the GAN program, we have up to six years of longitudinal data in individual patients and collectively 55-patient years of clinical safety and efficacy data from our ongoing clinical study with no drug-related serious adverse events, no signs of acute or subacute inflammation, no sudden sensory changes and no drug-related or persistent elevation of transaminases.
In
We anticipate safety and functional clinical data for TSHA-120 from the highest
dose cohort of 3.5x1014 total vg in GAN in
TSHA-101 for GM2 Gangliosidosis
GM2 gangliosidosis, which comprises Tay-Sachs disease and Sandhoff disease, refers to a group of lysosomal storage disorders caused by accumulation of the GM2 ganglioside in the lysosomes of cells within the CNS. Gangliosides are lipid components of cell membranes particularly abundant in the plasma membranes of neurons. Accumulation of GM2 ganglioside is caused by a deficiency in the Hex A enzyme, which is responsible for hydrolysis, or breakdown, of the GM2 ganglioside. This accumulation results in lysosomal rupture, leading to a poorly understood inflammatory cascade that leads to neuronal cell death and neurodegeneration. The global incidence of GM2 gangliosidosis is approximately one per 150,000 live births. Approximately 80% to
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85% of patients are diagnosed with an infantile form of GM2 gangliosidosis, with
the remainder diagnosed with a juvenile or early-adulthood form of the disease.
There are no approved therapies for the treatment of GM2 gangliosidosis, and
care is generally palliative. Children diagnosed with GM2 gangliosidosis appear
normal at birth but experience rapid neurodegeneration, culminating in death
before the age of four, and patients with juvenile GM2 gangliosidosis rarely
survive beyond their mid-teens. The estimated prevalence of GM2 gangliosidosis
is 500 patients in the
The Hex A enzyme is a heterodimer composed of two subunits:
ß-hexosaminidase a (encoded in humans by the
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We believe that successful gene therapy to treat Tay-Sachs disease or Sandhoff
disease requires expression of the ? and ß subunits in a 1:1 ratio to ensure
that Hex A expression confers a therapeutic benefit. An imbalanced expression of
either subunit could result in the formation of a dysfunctional homodimer, or
identical proteins, which would limit the efficacy of the therapy. Several
therapeutic approaches utilize single vectors encoding either the ? or ß
subunit, while other approaches have utilized multiple vectors carrying
the
Similar to other lysosomal enzymes, Hex A is ubiquitously expressed and therefore concerns related to off-target effects or overexpression are limited. In addition, Hex A is secreted from transduced cells and can be taken up by neighboring cells to correct their phenotype, making it possible to cure these diseases without the need to transduce every cell, a process referred to as cross-correction. Studies suggest that restoring Hex A enzyme levels to approximately 10% of normal may result in complete phenotypic absence of the disease.
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Our Solution: TSHA-101
We are developing TSHA-101, a neurodegenerative product candidate, for the
treatment of GM2 gangliosidosis. TSHA-101 is a bicistronic, or dual loci of
transcription, HEXBP2A-
Because GM2 gangliosidosis is clinically well defined, we believe we can leverage that knowledge to develop TSHA-101 with a higher probability of clinical and regulatory success. If approved, we believe that TSHA-101 could have a transformational impact on these severely underserved patients and their families. As TSHA-101 is designed to secrete the Hex A enzyme from transduced cells, uptake of the enzyme by neighboring cells via cross-correction has the potential to result in therapeutic benefit independent of their transduction status. In addition, we believe Hex A enzyme activity in the serum and CSF can serve as a potential biomarker to detect and help verify treatment effects on GM2 gangliosidosis during the early stages of clinical development.
We have received orphan drug designation and rare pediatric disease designation
from the FDA and orphan drug designation from the
Based on natural history data, 2% to 4% Hex A enzyme activity in plasma
normalizes survival and significantly improves the clinical phenotype of GM2
gangliosidosis. We expect preliminary clinical safety data and HEX A enzyme
activity in plasma and CSF for TSHA-101 in GM2 gangliosidosis in
TSHA-121 for CLN7 Disease
The first-generation construct for the CLN7 program was developed in the
laboratory of
TSHA-118 for CLN1 Disease
CLN1 disease (one of the forms of Batten disease), a lysosomal storage disorder,
is a progressive, fatal neurodegenerative disease with early childhood onset
that has an estimated incidence of approximately 1 in 138,000 live births
worldwide. The estimated prevalence of CLN1 disease is 900 patients in the
In the infantile-onset form of CLN1 disease, clinical symptoms appear between six to 24 months and include rapid deterioration of speech and motor function, refractory epilepsy, ataxia and visual failure. Infantile-onset CLN1 patients are typically
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poorly responsive by five years of age and remain noncommunicative until their
death, which usually occurs by seven years of age. Late-infantile-onset CLN1
disease begins between two to four years of age with initial visual and
cognitive decline followed by the development of ataxia and myoclonus, or quick,
involuntary muscle jerks. Juvenile-onset CLN1 disease patients present between
the ages of five to ten years old, with vision loss as a first symptom followed
by cognitive decline, seizures and motor decline. Approximately 60% of the
children diagnosed with CLN1 disease in
All currently available therapeutic approaches for patients with CLN1 disease
are targeted towards the treatment of symptoms, and no disease-modifying
therapies have been approved. Gene therapy has shown promise in correcting forms
of neuronal ceroid lipofuscinoses, or
We believe that the introduction of a functional CLN1 gene using an AAV9 vector
delivered intrathecally to the CNS offers the potential of a disease-modifying
therapeutic approach for this disease. TSHA-118 is a self-complementary AAV9
viral vector that expresses human codon-optimized CLN1 complementary
deoxyribonucleic acid under control of the chicken ß-actin hybrid promoter. We
acquired exclusive worldwide rights to certain intellectual property rights and
know-how relating to the research, development and manufacture of
TSHA-118 (formerly ABO-202) in
TSHA-118 has been granted orphan drug designation, rare pediatric disease
designation and fast track designation from the FDA and orphan drug designation
from the
There is currently an open IND for the CLN1 program. We submitted an additional CTA filing for TSHA-118 and expect to initiate of a Phase 1/2 clinical trial by year-end 2021 and report preliminary clinical safety and PPT1 enzyme activity data in the first half of 2022.
TSHA-102 for Rett Syndrome
TSHA-102, a neurodevelopmental disorder product candidate, is being developed for the treatment of Rett syndrome, one of the most common genetic causes of severe intellectual disability, characterized by rapid developmental regression and in many cases caused by heterozygous loss of function mutations in MECP2, a gene essential for neuronal and synaptic function in the brain. We designed TSHA-102 to prevent gene overexpression-related toxicity by inserting microRNA, or miRNA target binding sites into the 3' untranslated region of viral genomes. This overexpression of MECP2 is seen in the clinic in patients with a condition known as MECP2 duplication syndrome, where elevated levels of MECP2 result in a clinical phenotype similar to Rett syndrome both in terms of symptoms and severity. TSHA-102 is constructed from a neuronal specific promoter, MeP426, coupled with the miniMECP2 transgene, a truncated version of MECP2, and miRNA-Responsive Auto-Regulatory Element, or miRARE, our novel miRNA target panel, packaged in self-complementary AAV9.
In
TSHA-102 extended knockout survival by 56% via IT delivery. In contrast, the unregulated miniMECP2 gene transfer failed to significantly extend knockout survival at either dose tested. Additionally, the unregulated full-length MECP2 construct did not demonstrate a significant extension in survival and was associated with an unacceptable toxicity profile in wild type mice.
In addition to survival, behavioral side effects were explored. Mice were subjected to phenotypic scoring and a battery of tests including gait, hindlimb clasping, tremor and others to comprise an aggregate behavioral score. miRARE attenuated miniMECP2-mediated aggravation in wild type aggregate phenotype severity scores. Mice were scored on an aggregate severity scale using an established protocol. AAV9/MECP2- and AAV9/miniMECP2-treated wild type mice had a significantly higher mean (worse) aggregate behavioral severity score versus that observed for saline-treated mice (p <0.05; at 6-30 and 7-27 weeks of age, respectively). TSHA-102-treated wild type mice had a significantly lower (better) mean aggregate severity score versus those of AAV9/MECP2- and AAV9/miniMECP2-treated mice at most timepoints from 11-19 and 9-20 weeks of age, respectively. No significant difference was observed between saline- and TSHA-102-treated wild type mice.
miRARE-mediated genotype-dependent gene regulation was demonstrated by analyzing tissue sections from wild type and knockout mice treated with AAV9 vectors given intrathecally. When knockout mice were injected with a vector expressing the mini-
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MECP2 transgene with and without the miRARE element, miRARE reduced overall miniMECP2 transgene expression compared to unregulated miniMECP2 in wild type mice as shown below.
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TSHA-102 demonstrated regulated expression in different regions of the brain. As shown in the graph and photos below, in the pons and midbrain, miRARE inhibited mean MECP2 gene expression in a genotype-dependent manner as indicated by significantly fewer myc(+) cells observed in wild type mice compared to knockout mice (p<0.05), thereby demonstrating that TSHA-102 achieved MECP2 expression levels similar to normal physiological parameters.
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In preclinical animal models, intrathecal myc-tagged TSHA-102 was not associated with early death and did not cause adverse behavioral side effects in wild type mice demonstrating appropriate downregulation of miniMECP2 protein expression as compared to unregulated MECP2 gene therapy constructs.
In addition, preclinical data demonstrated that miRARE reduced overall
expression of miniMeCP2 transgene expression and regulated genotype-dependent
myc-tagged miniMECP2 expression across different brain regions on a cell-by-cell
basis and improved the safety of TSHA-102 without compromising efficacy in
juvenile mice. Recently obtained pharmacology data demonstrated improvement in
survival, and respiratory and motor functions in disease relevant mouse models.
Finally, preliminary data from a GLP toxicology study in non-human primates
demonstrated no adverse findings at the highest dose tested suggesting that the
miRARE platform is successfully downregulating MECP2 expression to within normal
physiological levels. We have received orphan drug designation and rare
pediatric disease designation from the FDA and orphan drug designation from the
We intend to submit an IND / CTA for TSHA-102 in
TSHA-105 for SLC13A5 Deficiency
We are developing TSHA-105 for the treatment of SLC13A5 deficiency, a rare
autosomal recessive epileptic encephalopathy characterized by the onset of
seizures within the first few days of life. The estimated prevalence of SLC13A5
deficiency is 1,900 patients in the
Diminished NaCT function leads to loss of neuronal uptake of citrate and other metabolites such as succinate that are critical to brain energy metabolism and function. Currently, there are no approved therapies for SLC13A5 deficiency, and treatment is largely to address symptoms.
We are developing TSHA-105 as a gene replacement therapy for SLC13A5 deficiency. TSHA-105 is constructed from a codon-optimized human SLC13A5 gene packaged in a self-complementary AAV9 capsid.
We have received orphan drug designation and rare pediatric disease designation
from the FDA and orphan drug designation from the
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Angelman Syndrome Program - Two Approaches
We are pursuing two treatment strategies for the treatment of Angelman syndrome,
a neurodevelopmental disorder caused by a maternal deficiency of the UBE3A gene.
Angelman syndrome is characterized by profound developmental delay, ataxia and
gait disturbance, sleep disorder, seizures, heightened anxiety and aggression
and severe speech impairments. Angelman syndrome affects approximately one per
12,000 to 20,000 patients worldwide. The estimated prevalence of Angelman
syndrome is 55,000 patients in the
Angelman syndrome is an imprinting disorder in which the maternal gene is deficient and the paternal copy of UBE3A is intact but silenced by a long non-coding RNA, UBE3A antisense transcript, or UBE3A-ATS. Delivery of an ASO targeting UBE3A-ATS showed promising results in ameliorating Angelman syndrome symptoms in a transgenic mouse model.
There are two approaches to treat this genetic abnormality. Our UBE3A gene
replacement therapy is a cerebrospinal fluid-delivered AAV vector enabling dual
isoform UBE3A expression for the treatment of Angelman syndrome. The novel
construct, which was originally developed in the laboratories of Dr.
Our other approach is a vectorized knockdown approach to unsilence the paternal copy of the UBE3A gene by targeting the antisense transcript responsible for silencing the gene. Our gene therapy targets the UBE3A-ATS transcript through shRNA knock-down with an AAV-based strategy to achieve broad distribution of the shRNA expression cassette across the entire CNS following a single intrathecal dose.
We believe both the gene replacement and RNA-mediated knockdown strategies position Taysha as a world-leader in the discovery of treatments for Angelman syndrome.
License Agreements
Research, Collaboration and License Agreement with
In
In connection with the UT Southwestern Agreement, we obtained an exclusive, worldwide, royalty-free license under certain patent rights of UT Southwestern and a non-exclusive, worldwide, royalty-free license under certain know-how of UT Southwestern, in each case to make, have made, use, sell, offer for sale and import licensed products for use in certain specified indications. Additionally, we obtained a non-exclusive, worldwide, royalty-free license under certain patents and know-how of UT Southwestern for use in all human uses, with a right of first refusal to obtain an exclusive license under certain of such patent rights and an option to negotiate an exclusive license under other of such patent rights. We are required to use commercially reasonable efforts to develop, obtain regulatory approval for, and commercialize at least one licensed product.
In connection with the entry into the UT Southwestern Agreement, we issued to UT Southwestern 2,179,000 shares of our common stock. We do not have any future milestone or royalty obligations to UT Southwestern under the UT Southwestern Agreement, other than costs related to the maintenance of patents.
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License Agreement with
In
In connection with the Queen's University Agreement, we paid
In connection with a separate research grant agreement with
License Agreement with Abeona (CLN1 Disease)
In
In connection with the license grant, we paid Abeona a one-time upfront license
fee of
The Abeona CLN1 Agreement expires on a country-by-country and licensed product-by-licensed product basis upon the expiration of the last royalty term of a licensed product. Either party may terminate the agreement upon an uncured material breach of the agreement or insolvency of the other party. We may terminate the agreement for convenience upon specified prior written notice to Abeona.
License Agreement with Abeona (Rett Syndrome)
In
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Subject to certain obligations of Abeona, we are required to use commercially
reasonable efforts to develop at least one licensed product and commercialize at
least one licensed product in
In connection with the Abeona Rett Agreement, we paid Abeona a one-time upfront
license fee of
The Abeona Rett Agreement expires on a country-by-country and licensed product-by-licensed product basis upon the expiration of the last royalty term of a licensed product. Either party may terminate the agreement upon an uncured material breach of the agreement or insolvency of the other party. We may terminate the agreement for convenience.
Impact of COVID-19 on Our Business
We have been actively monitoring the COVID-19 situation and its impact globally.
Our financial results for the nine months ended
Components of Results of Operations
Revenue
To date, we have not recognized any revenue from any sources, including from product sales, and we do not expect to generate any revenue from the sale of products, if approved, in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.
Operating Expenses
Research and Development Expenses
Research and development expenses primarily consist of preclinical development of our product candidates and discovery efforts, including conducting preclinical studies, manufacturing development efforts, preparing for clinical trials and activities related to regulatory filings for our product candidates. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. Costs incurred in obtaining technology licenses through asset acquisitions are charged to research and development expense if the licensed technology has not reached technological feasibility and has no alternative future use. Research and development expenses include or could include:
• employee-related expenses, including salaries, bonuses, benefits,
stock-based compensation, other related costs for those employees
involved in research and development efforts;
• license maintenance fees and milestone fees incurred in connection with
various license agreements;
• external research and development expenses incurred under agreements with
consultants, contract research organizations, or CROs, investigative
sites and consultants to conduct our preclinical studies;
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• costs related to manufacturing material for our preclinical studies and
clinical trials, including fees paid to contract manufacturing
organizations, or CMOs;
• laboratory supplies and research materials;
• costs related to compliance with regulatory requirements; and
• facilities, depreciation and other allocated expenses, which include
direct and allocated expenses for rent, maintenance of facilities,
insurance and equipment.
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We plan to substantially increase our research and development expenses for the foreseeable future as we continue the development of our product candidates and manufacturing processes and conduct discovery and research activities for our preclinical programs. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future preclinical studies and clinical trials of our product candidates due to the inherently unpredictable nature of preclinical and clinical development. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future preclinical studies and clinical trials, regulatory developments and our ongoing assessments as to each product candidate's commercial potential. We will need to raise substantial additional capital in the future. Our clinical development costs are expected to increase significantly as we commence clinical trials. Our future expenses may vary significantly each period based on factors such as:
• expenses incurred to conduct preclinical studies required to advance our
product candidates into clinical development;
• per patient trial costs, including based on the number of doses that
patients received;
• the number of patients who enroll in each trial;
• the number of trials required for approval;
• the number of sites included in the trials;
• the countries in which the trials are conducted;
• the length of time required to enroll eligible patients;
• the drop-out or discontinuation rates of patients;
• potential additional safety monitoring requested by regulatory agencies;
• the duration of patient participation in the trials and follow-up;
• the phase of development of the product candidate;
• third-party contractors failing to comply with regulatory requirements or
meet their contractual obligations to us in a timely manner, or at all;
• the ability to manufacture of our product candidates;
• regulators or institutional review boards, or IRBs requiring that we or
our investigators suspend or terminate clinical development for various
reasons, including noncompliance with regulatory requirements or a
finding that the participants are being exposed to unacceptable health
risks; and
• the efficacy and safety profile of our product candidates.
General and Administrative Expenses
General and administrative expenses consist or will consist principally of salaries and related costs for personnel in executive and administrative functions, including stock-based compensation, travel expenses and recruiting expenses. Other general and administrative expenses include professional fees for legal, consulting, accounting and audit and tax-related services and insurance costs.
We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our expanded infrastructure, as well as the initiation and continuation of our preclinical studies and clinical trials for our product
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candidates. We also anticipate that our general and administrative expenses will
increase as a result of payments for accounting, audit, legal, consulting
services, as well as costs associated with maintaining compliance with Nasdaq
listing rules and
Results of Operations
Results of Operations for the Three Months ended
The following table summarizes our results of operations for the three months
ended
For the Three Months For the Three Months
Ended September 30, 2021 Ended September 30, 2020
Operating expenses:
Research and development $ 39,528 $ 11,057
General and administrative 11,153 3,984
Total operating expenses 50,681 15,041
Loss from operations (50,681 ) (15,041 )
Other income (expense):
Interest income 37 -
Interest expense (543 ) (1 )
Total other expense, net (506 ) (1 )
Net loss $ (51,187 ) $ (15,042 )
Research and Development Expenses
Research and development expenses were
General and Administrative Expenses
General and administrative expenses were
Results of Operations for the Nine Months ended
The following table summarizes our results of operations for the nine months
ended
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For the Nine For the Nine
Months Months
Ended Ended
September 30, September 30,
2021 2020
Operating expenses:
Research and development $ 94,025 $ 19,633
General and administrative 29,518 5,002
Total operating expenses 123,543 24,635
Loss from operations (123,543 ) (24,635 )
Other income (expense):
Change in fair value of preferred stock tranche liability - (17,030 )
Interest income 143 -
Interest expense (737 ) (28 )
Total other expense, net (594 ) (17,058 )
Net loss $ (124,137 ) $ (41,693 ) Research and Development Expenses
Research and development expenses were
General and Administrative Expenses
General and administrative expenses were
Other Income (Expense) Interest Expense
Interest expense for the three and nine months ended
Change in Fair Value of Preferred Stock Tranche Liability
On
On
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convertible preferred stock. We remeasured the fair value of the entire tranche
liability at
Liquidity and Capital Resources
Overview
Since our inception, we have not generated any revenue and have incurred
significant operating losses. As of
On
Funding Requirements
To date, we have not generated any revenues from the commercial sale of approved
drug products, and we do not expect to generate substantial revenue for at least
the next few years. If we fail to complete the development of our product
candidates in a timely manner or fail to obtain their regulatory approval, our
ability to generate future revenue will be compromised. We do not know when, or
if, we will generate any revenue from our product candidates, and we do not
expect to generate significant revenue unless and until we obtain regulatory
approval of, and commercialize, our product candidates. We expect our expenses
to increase in connection with our ongoing activities, particularly as we
continue the research and development of, initiate clinical trials of and seek
marketing approval for our product candidates, as well as build out of our cGMP
manufacturing facility in
We believe that our existing cash and cash equivalents, along with full access to the term loan facility, will enable us to fund our operating expenses and capital requirements into second half of 2023.
Because of the numerous risks and uncertainties associated with research, development and commercialization of biological products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:
• the scope, progress, costs and results of discovery, preclinical
development, laboratory testing and clinical trials for TSHA-101,
TSHA-118, TSHA-102, and TSHA-120 and any current and future product
candidates that we advance;
• the extent to which we develop, in-license or acquire other product
candidates and technologies in our gene therapy product candidate
pipeline;
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• the costs and timing of process development and manufacturing scale-up
activities associated with our product candidates and other programs as
we advance them through preclinical and clinical development;
• the number and development requirements of product candidates that we may
pursue;
• the costs, timing and outcome of regulatory review of our product candidates;
• our headcount growth and associated costs as we expand our research and
development capabilities and establish a commercial infrastructure;
• the costs of establishing and maintaining our own commercial-scale cGMP
manufacturing facility;
• the costs and timing of future commercialization activities, including
product manufacturing, marketing, sales, and distribution, for any of our
product candidates for which we receive marketing approval;
• the costs and timing of preparing, filing and prosecuting patent
applications, maintaining and enforcing our intellectual property rights
and defending any intellectual property-related claims;
• the revenue, if any, received from commercial sales of our product
candidates for which we receive marketing approval; and
• the costs of operating as a public company.
Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of product candidates that we do not expect to be commercially available in the near term, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the terms of these equity securities or this debt may restrict our ability to operate. The Term Loan Agreement contains negative covenants, including, among other things, restrictions on indebtedness, liens investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions. Any future additional debt financing and equity financing, if available, may involve agreements that include covenants limiting and restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, entering into profit-sharing or other arrangements or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.
We are continuing to assess the effect that the COVID-19 pandemic may have on
our business and operations. The extent to which COVID-19 may impact our
business and operations will depend on future developments that are highly
uncertain and cannot be predicted with confidence, such as the duration of the
outbreak, the duration and effect of business disruptions and the short-term
effects and ultimate effectiveness of the travel restrictions, quarantines,
social distancing requirements and business closures in
Cash Flows
The following table shows a summary of our cash flows for the nine months ended
For the Nine Months Ended September
30,
2021 2020
Net cash used in operating activities $ (76,784 ) $ (10,881 )
Net cash used in investing activities (13,034 ) (3,031 )
Net cash provided by financing activities 29,978 292,546
Net change in cash, cash equivalents and restricted cash
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Operating Activities
For the nine months ended
For the nine months ended
Investing Activities
During the nine months ended
Financing Activities
During the nine months ended
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined in the rules and regulations of the
Critical Accounting Policies and Significant Judgments and Estimates
There were no material changes to our critical accounting policies that are
disclosed in our audited consolidated financial statements for the year ended
Recent Accounting Pronouncements
See Note 2 to our unaudited condensed consolidated financial statements located in "Part I - Financial Information, Item 1. Financial Statements" in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements applicable to our condensed consolidated financial statements.
Emerging Growth Company and Smaller Reporting Company Status
In
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the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.
In addition, as an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:
• an exception from compliance with the auditor attestation requirements of
Section 404 of the Sarbanes-Oxley Act of 2002, as amended;
• reduced disclosure about our executive compensation arrangements in our
periodic reports, proxy statements and registration statements;
• exemptions from the requirements of holding non-binding advisory votes on
executive compensation or golden parachute arrangements; and
• an exemption from compliance with the requirements of the Public Company
Accounting Oversight Board regarding the communication of critical audit
matters in the auditor's report on financial statements.
We may take advantage of these provisions until we no longer qualify as an
emerging growth company. We will cease to qualify as an emerging growth company
on the date that is the earliest of: (i)
We are also a "smaller reporting company," meaning that the market value of our
shares held by non-affiliates is less than
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