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 this Quarterly Report on Form 10-Q and 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
In
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proof-of-concept trial run by UT Southwestern, and we reported preliminary
clinical safety data for the first patient in history to be intrathecally dosed
at 1.0x1015 total vg with the first-generation construct 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-102, TSHA-118, TSHA-120 and
TSHA-121, as well as initiate and complete additional clinical trials of
TSHA-105 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 gene therapy product candidates for monogenic diseases of the CNS in both rare and large patient populations, with exclusive options to acquire several 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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Clinical Programs
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. There are an estimated 5,000 affected GAN patients in addressable markets.
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-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.
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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
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 patients with GAN 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.
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 demonstrated 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 DRG inflammation, a topic of considerable interest within the gene therapy arena, 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, tissue from the GAN knockout mice treated with an intrathecal (IT) 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 reduce 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
At 1-year post-gene transfer, a clinically meaningful and statistically significant slowing or halting of disease progression was seen with TSHA-120 at the highest dose of 3.5E14 total vg (n=3). The change in the rate of decline in the MFM32 score improved by 5 points in the 3.5E14 total vg cohort compared to an 8-point decline in natural history.
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Although the change in the MFM32 score was clinically meaningful, we might have expected a greater change in the MFM32 score compared to natural history in the first year but one patient in the high dose cohort was a delayed responder. At the 12-month follow-up visit, the patient had a 7-point decline in the MFM32 total score that was similar to the slope of the natural history curve as shown below. Notably, from Year 1 post gene transfer to Year 2, this patient's change in the MFM32 score remained unchanged suggesting stabilization of disease at 2 years post-treatment. At that 2-year post treatment timepoint, there was a 9-point improvement in the patient's MFM32 score compared to the estimated natural history decline of 16 points. The annualized estimate of natural history over time assumes the same rate of decline as in Year 1.
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An additional analysis was performed to examine the change in the rate of decline in the MFM32 score of all therapeutic doses combined (n=12). As shown below, the change in the rate of decline in the MFM32 score improved by 7 points by Year 1 compared to the natural history decline in the MFM32 score of 8 points. This result was clinically meaningful and statistically significant.
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A Bayesian analysis was conducted on the 1.2E14 total vg, 1.8E14 total vg and 3.5E14 total vg dose cohorts at Year 1 to assess the probability of clinically meaningful slowing of disease progression as compared to natural history. This type of statistical analysis enables direct probability statements to be made and is both useful and accepted by regulatory agencies in interventional studies of rare diseases and small patient populations. As shown in the table below, for all therapeutic dose cohorts, there was nearly 100% probability of any slowing of disease and a 96.7% probability of clinically meaningful slowing of 50% or more following treatment with TSHA-120 compared to natural history data.
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There remained consistent improvement in TSHA-120's effect over time on the mean change from baseline in the MFM32 score for all patients in the therapeutic dose cohorts compared to the estimated natural history decline over the years. By Year 3, as depicted below, there was a 10-point improvement in the mean change from baseline in MFM32 score for all patients in the therapeutic dose cohorts.
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In addition to the compelling three-year data, there was one patient at Year 5 whose MFM32 change from baseline improved by nearly 26-points in the 1.2E14 total vg dose cohort compared to the estimated natural history decline of 40 points by this timepoint.
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Below is an additional analysis of the mean change from baseline in MFM32 score for the therapeutic dose cohorts compared to natural history at patients' last visit. As shown, TSHA-120 demonstrated increasing improvement in the mean change in MFM32 score from baseline over time.
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Additional Endpoints
Sensory nerve action potential, or SNAP, was assessed through nerve conduction
studies in patients with GAN. Natural history data from the
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TSHA-120-treated patients demonstrated a durable improvement in SNAP response compared to natural history. Five of the twelve patients treated demonstrated a response. One patient demonstrated near complete recoverability to normal from zero at the time of treatment.
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Once SNAP reaches zero, natural history suggests sensory function is presumed non-recoverable. Among patients treated with 1.2E14 total vg or greater of TSHA-120, the three patients with a positive value at baseline maintained a positive SNAP at last study visit with the longest span of 3 years to date and continue to improve.
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Below are individual patient SNAP change from baseline from treated patients who showed a positive response including their run-in natural history.
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Biopsies of TSHA-120-treated patients confirmed presence of regenerative nerve clusters. Below is pathology data from biopsies of the superficial radial sensory nerve in 11 out of 11 patient samples analyzed. The remaining two samples were unable to be assessed due to biopsy limitations. Peripheral nerve biopsies from the superficial radial sensory nerve were obtained at baseline and at 1 year post gene therapy transfer. Data consistently generated an increase in the number of regenerative clusters observed at Year 1 compared to baseline, indicating active regeneration of nerve fibers following treatment with TSHA-120. Data also indicated improvement in disease pathology, providing evidence that the peripheral nervous system can respond to treatment.
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Loss of vision has been frequently cited by patients and caregivers as a symptom they find particularly debilitating and would like to see improvement in following treatment. Patients were analyzed for visual acuity using a standard Logarithm of the Minimum Angle of Resolution, or LogMAR. An increase in LogMAR score represents a decrease in visual acuity. A LogMAR score of 0 means normal vision, approximately 0.3 reflects the need for eyeglasses, and a score value of 1.0 reflects blindness. Based on natural history,
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individuals with GAN experience a progressive loss in visual function as indicated by an increase in the LogMAR score. Ophthalmologic assessments following treatment with TSHA-120 demonstrated preservation of visual acuity over time compared to the loss of visual acuity observed in natural history. Stabilization of visual acuity was observed following treatment with TSHA-120 as demonstrated below.
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The thickness of the retinal nerve fiber layer or RNFL was also examined as an objective biomarker of visual system involvement and overall nervous system degeneration in GAN. Treatment with TSHA-120 resulted in stabilization of RNFL thickness and prevention of axonal nerve degeneration compared to diffuse thinning of RNFL observed in natural history as measured by optical coherence tomography, or OCT. Analysis by individual dose groups, as seen on the graph below, demonstrated relatively stable RNFL thickness which is in contrast to the natural history of GAN, where RNFL decreases. Overall, these data provide new evidence of TSHA-120's ability to generate nerve fibers and preserve visual acuity.
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Safety and Tolerability
As of
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We currently have up to six years of longitudinal data in individual patients with GAN and collectively 53-patient years of clinical safety and efficacy data from our ongoing clinical study. Treatment with TSHA-120 was well-tolerated with no significant safety issues. There was no increase in incidence of adverse events with increased dose, no dose-limiting toxicity, no signs of acute or subacute inflammation, no sudden sensory changes and no drug-related or persistent elevation of transaminases. Adverse events related to immunosuppression or study procedures were similar to what was seen with other gene therapies and transient in nature.
We believe the comprehensive set of evidence generated across disease manifestations, depicted in the table below, support a robust clinical package for TSHA-120 in GAN.
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In order to deliver a robust chemistry, manufacturing, and controls, or CMC, data package to support licensure discussions, we have successfully completed six development and GMP lots of TSHA-120 with our contract development and manufacturing organization, or CDMO, partner. We have also completed a comprehensive side-by-side biochemical and biophysical analysis of
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current and previous clinical lots. Our CDMO utilizes the same Pro10TM manufacturing platform used to produce the original GAN lots, therefore reducing which is intended to reduce comparability risk. Five development lots ranging from 2L to 250L scale and one full-scale 500L GMP lot were analyzed side-by-side with the current TSHA-120 clinical lot using a comprehensive analytical panel that meets current regulatory requirements including assays for critical attributes such as product and process residuals, empty/full ratio, genetic integrity, potency and strength.
The side-by-side analysis demonstrated that the newly produced TSHA-120 lots were generally comparable to the original clinical trial material in impurity profile including host cell contaminants, residual plasmid, empty particle content, aggregate content and genomic integrity. These results supported our biophysical and biochemical comparability of the newly produced lots. Furthermore, we developed product-specific GAN potency methods which have also demonstrated that the previous and current clinical lots were functionally indistinguishable. Validation of our potency release assay is now underway.
We have applied our panel of release assays for side-by-side testing of the original clinical trial material and our commercial grade lots. Shown below are eight of the most critical attributes of TSHA-120.
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First, all results demonstrated that both the clinical and commercial grade lots were of a high purity and lacked significant levels of host cell or process contaminants such as protein and, DNA or and aggregated species. Vector purity was in excess of 95% for all three lots and host cell protein contamination was below detection. In addition, and aggregation of all lots was very low. Host cell and plasmid DNA contamination are also important attributes to discuss with regulatory agencies since carryover represents a theoretical immunogenicity or oncogenicity risk. Residual plasmid and host cell DNA were similar for all lots, indicating a similar safety profile for both products. Empty capsids are a key attribute for AAV vectors since empty capsids can stimulate immune responses to the vector and reduce potency. All three lots were highly enriched in full particles. Potency of AAV vectors is a key measure that correlates with clinical efficacy. We developed a number of product-specific potency assays to measure the functional activity of our product which is reported relative to a reference standard. These assays recapitulated the biological activity of TSHA-120 starting with transduction of GAN knockout cell lines. Activity is measured by quantitation of transgene RNA or protein expression as two independent and complimentary readouts. We observed good agreement with both readouts and high activity of all three lots against our reference suggesting that the lots are of high and comparable activity.
Overall, these results support that our early clinical and pivotal lots are biochemically and biophysically similar and based on these results we believe they should perform identically in a clinical study.
Recently, regulators have encouraged sponsors to conduct deeper analysis of product contaminants not covered by standard release assays to better assess product safety and comparability. To comply with this guidance, we have added Pac-Bio next generation sequencing to our product characterization panel to better understand the nature of nucleic acid contaminants in our products. This method not only allows us to identify the source of the nucleic acid, but also the fragment size, and sequence variability, which also needs to be considered when assessing AAV safety and efficacy. Our analysis of the clinical trial lot and commercial grade pivotal batches demonstrated that the source and composition of transgene and contaminating host and plasmid
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DNA are nearly identical and provided further support that for a conclusion that the nature of our product is unchanged between our early clinical and pivotal batches as noted in the below pie charts.
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The TSHA-120 pivotal lot, which yielded over 50 patient doses of TSHA-120 at the highest dose cohort of 3.5E14 total vg, is expected to complete quality release testing by end of the third quarter of 2022. This material positions us for future BLA-enabling activities and commercial production. These lots were also placed on stability to provide critical shelf-life data in support of our BLA filing.
In
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. The estimated
prevalence of Rett syndrome is 350,000 patients worldwide and the disease occurs
in 1 of every 10,000 female births worldwide. 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. Currently, there are no approved
therapies for the treatment of Rett syndrome, which affects more than 350,000
patients worldwide, according to the
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
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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-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. Pharmacologic activity of TSHA-102 following IT administration was assessed in the MECP2 knockout mouse model of Rett syndrome across three dose levels and three age groups (n=252). A one-time IT injection of TSHA-102 significantly increased survival at all dose levels, with the mid to high doses improving survival across all age groups compared to vehicle-treated controls. Treatment with TSHA-102 significantly improved body weight, motor function and respiratory assessments in MECP2 knockout mice. An additional study in neonatal mice is ongoing, and preliminary data suggest normalization of survival. Finally, an IND/CTA-enabling 6-month Good Laboratory Practice, or GLP, toxicology study (n=24) examined the biodistribution, toxicological effects and mechanism of action of TSHA-102 when intrathecally administered to Non-Human Primates, or NHPs, across three dose levels. Biodistribution, as reflected by DNA copy number, was observed in multiple areas of the brain, sections of spinal cord and the DRG. Importantly, mRNA levels across multiple tissues were low, indicating miRARE regulation is minimizing transgene expression from the construct in the presence of endogenous MECP2 as expected, despite the high levels of DNA that were delivered. No toxicity from
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transgene overexpression was observed, confirmed by functional and histopathologic evaluations demonstrating no detrimental change in neurobehavioral assessments and no adverse tissue findings on necropsy.
In neonatal knockout Rett mice, treatment with TSHA-102 resulted in near normalization of survival as shown below. A single intracerebroventricular, or ICV, injection of TSHA-102 at a dose of 8.8E10 vg/mouse (Human Equivalent Dose of 2.86E14 vg/participant) within 48 hours after birth in Mecp2-/Y male mice significantly extended the survival of the animals as shown below. All cohorts, including vehicle, were sacrificed at 34 weeks. Preliminary data demonstrated approximately 70% of the treated Mecp2-/Y males survived to 34 weeks of age compared to 9 weeks in the vehicle-treated Mecp2-/Y male.
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In addition, neonatal knockout Rett mice demonstrated normalization of behavior
following treatment with TSHA-102 as assessed by the Bird Score, a composite
measure of six different phenotypic abilities. Knockout animals were initially
assessed at 4 weeks of age with a mean
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In summary, we believe the totality of preclinical data generated to date, specifically including the mouse pharmacology study to ascertain minimally effective dose, the two toxicology studies (wild type rat and wild type NHP) and the recent mouse neonatal data, represents the most robust package supporting clinical advancement of TSHA-102 in Rett syndrome as shown below.
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Safety and biodistribution assessments in NHPs were presented in
We submitted a CTA for TSHA-102 in
We have received orphan drug designation and rare pediatric disease designation
from the FDA and orphan drug designation from the
TSHA-121 for CLN7 Disease
The first-generation construct for the CLN7 program was developed in the
laboratory of
CLN7 disease is a rare, fatal and rapidly progressive neurodegenerative disease that is a form of Batten disease. CLN7 is caused by autosomal recessive mutations in the MFSD8 gene that results in lysosomal dysfunction. Disease onset occurs around two to five years of age, with death often ensuing in young adolescence. Patients experience gradual nerve cell loss in certain parts of the brain and typically present with seizures, vision loss, speech impairment and mental and motor regression. Currently, there are no approved therapies to treat CLN7 disease, which impacts an estimated 4,000 patients globally. Preclinical data in rodents supported advancement of the first-generation construct into a Phase 1 clinical proof-of-concept study in patients with CLN7 disease. In an in vivo efficacy study, IT administration of the first-generation construct to MFSD8 knockout mice with high or low doses resulted in clear age and dose effects with early intervention and high dose achieving the best therapeutic benefits. IT high dose of the first-generation construct in younger knockout mice resulted in: 1) widespread MFSD8 mRNA expression in all tissues assessed; 2) nearly complete normalization of impaired open field and rotarod performance at 6 and 9 months post injection; 3) more than doubled
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median life expectancy (16.82 months versus 7.77 months in untreated knockout mice); and 4) maintenance of healthy body weight for a prolonged period of time. Toxicology studies in wild type rodents demonstrated safety and tolerability of IT administration of the first-generation construct.
Clinical safety data presented at WORLDSymposium in
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 1,000 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 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
There is currently an open IND for the CLN1 program. We submitted a CTA filing
for TSHA-118 which was approved by
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
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. SLC13A5 deficiency is caused by bi-allelic loss-of function mutations in the SLC13A5 gene, which codes for a sodium dependent citrate transporter, or NaCT, that is largely expressed in the brain and liver. To date, all tested mutations result in no or a greatly reduced amount of the citrate in the cells. Diminished NaCT
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function leads to loss of neuronal uptake of citrate and other metabolites such
as succinate that are critical to brain energy metabolism and function. Affected
children have impairments in gross motor function and speech production with
relative preservation of fine motor skills and receptive speech. Currently,
there are no approved therapies for SLC13A5 deficiency, and treatment is largely
to address symptoms. The estimated prevalence of SLC13A5 deficiency is 1,900
patients in the
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
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 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.
The UT Southwestern Agreement expires on a country-by-country and licensed product-by-licensed product basis upon the expiration of the last valid claim of a licensed patent in such country for such licensed product. After the initial research term, we may terminate the agreement, on an indication-by-indication and licensed product-by-licensed product basis, at any time upon specified written notice to UT Southwestern. Either party may terminate the agreement upon an uncured material breach of the agreement or insolvency of the other party.
License Agreement with
In
In connection with the Queen's University Agreement, we paid
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amounts received by us in connection with the sale of a priority review voucher related to a licensed product, not to exceed a low eight-figure amount.
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
In
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
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
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In
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.
We believe our financial results for the six 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:
• employee-related expenses, including salaries, bonuses, benefits,
stock-based compensation, severance costs and 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;
• 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;
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• 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 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. Due to the strategic reprioritization of programs and reduction in
force announced in
• 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 principally of salaries and related costs for personnel in executive and administrative functions, including stock-based compensation, severance costs, 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 decrease in the
future due to the strategic reprioritization and reduction in force that was
announced in
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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 Ended June 30,
2022 2021
Operating expenses:
Research and development $ 23,118 $ 30,643
General and administrative 9,867 $ 10,129
Total operating expenses 32,985 40,772
Loss from operations (32,985 ) (40,772 )
Other income (expense):
Interest income 27 40
Interest expense (912 ) (194 )
Other expense (3 ) -
Total other expense, net (888 ) (154 )
Net loss $ (33,873 ) $ (40,926 )
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 was
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Results of Operations for the Six Months ended
The following table summarizes our results of operations for the six months
ended
For the Six Months
Ended June 30,
2022 2021
Operating expenses:
Research and development $ 60,917 $ 54,497
General and administrative 21,336 18,365
Total operating expenses 82,253 72,862
Loss from operations (82,253 ) (72,862 )
Other income (expense):
Interest income 41 106
Interest expense (1,761 ) (194 )
Other expense (11 ) -
Total other expense, net (1,731 ) (88 )
Net loss $ (83,984 ) $ (72,950 ) 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 was
Interest Income
Interest income for the six months ended
Liquidity and Capital Resources
Overview
Since our inception, we have not generated any revenue and have incurred
significant operating losses. As of
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preferred stock for gross proceeds of
On
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 decrease in connection with our ongoing activities largely due to the
strategic reprioritization of product candidates and the reduction in force
announced in
As of
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 the fourth quarter of 2023. This estimate reflects our
strategic prioritization efforts to improve operating efficiency previously
announced in
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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-102,
TSHA-105, TSHA-118, TSHA-120, TSHA-121 and any current and future product
candidates that we advance;
• our ability to access sufficient additional capital on a timely basis and
on favorable terms, including with respect to our term loan facility with
Silicon Valley Bank ;
• the extent to which we develop, in-license or acquire other product
candidates and technologies in our gene therapy product candidate
pipeline;
• 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
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Cash Flows
The following table shows a summary of our cash flows for the six months ended
For the Six Months Ended June 30,
2022 2021
Net cash used in operating activities $ (74,012 ) $ (44,851 )
Net cash used in investing activities (19,540 ) (9,032 )
Net cash provided by financing activities 10,688 -
Net change in cash, cash equivalents and restricted cash
Operating Activities
For the six months ended
For the six months ended
Investing Activities
During the six months ended
Financing Activities
During the six 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 Securities Act of 1933, as amended, for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We elected 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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