Taysha Gene Therapies, Inc. Q2 FY2021 Earnings Call

Welcome to the Taysha Gene Therapies Second Quarter 2021 Financial Results and Corporate Update Conference Call. As a reminder, this call is being recorded today, August 16, 2021. I will now turn the call over to Dr. Kimberly Lee, Senior Vice President of Corporate Communications and Investor Relations. Please go ahead.

Good morning, and welcome to Taysha’s second quarter 2021 financial results and corporate update conference call. Joining me on today’s call are RA Session II, Taysha’s President, CEO and Founder; Dr. Suyash Prasad, Chief Medical Officer and Head of R&D; and Kamran Alam, Chief Financial Officer. After our formal remarks, we will conduct a question-and-answer session and instructions will follow at that time. Earlier today, Taysha issued a press release announcing financial results for the second quarter ended June 30, 2021. A copy of this press release is available on the company’s website and through our SEC filings. Please note that on today’s call, we will be making forward-looking statements including statements relating to the safety and efficacy and the therapeutic and commercial potential of our investigational drug candidates. These statements may include the expected timing and results of clinical trials for our drug candidates and the regulatory status and market opportunity for those programs as well as patient manufacturing plans. This call may also contain forward-looking statements relating to Taysha’s growth and future operating results, discovery and development of drug candidates, strategic alliances and intellectual property as well as matters that are not historical facts or information. Various risks may cause Taysha’s actual results to differ materially from those stated or implied in such forward-looking statements. These risks include uncertainties related to the timing and results of clinical trials and preclinical studies of our drug candidates or dependence upon the strategic alliances and other third-party relationships; our ability to obtain patent protection for our discoveries, limitations imposed by patents owned or controlled by third parties and the requirements of substantial funding to conduct our research and development activities. For a list and description of the risks and uncertainties that we face, please see the reports we have filed with the Securities and Exchange Commission. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, August 16, 2021. Taysha undertakes no obligations to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as maybe required by applicable securities laws. With that, I’d now like to turn the call over to our President, CEO and Founder, RA Session II.

Thank you, Kimberly. As Kimberly mentioned, we made significant progress in the second quarter and continue to achieve important clinical advancements that further support a potential regulatory approval of our most advanced program, TSHA-120, which holds significant promise for patients with giant athermal neuropathy, or GAN. At our R&D Day, in addition to the compelling clinical data demonstrating halting of disease progression as assessed by the well-validated and established motor assessment tool, the MFM32, we presented new visual acuity data from the ongoing Phase 1/2 trial investigating TSHA-120 in patients with GAN. In children and adolescents with GAN, there is an ongoing and progressive deterioration in vision towards blindness, which is understandably one of the most challenging and upsetting symptoms from the perspective of the patient and family. With this new data, we were able to demonstrate a dose-dependent trend towards stabilization of visual acuity, i.e., the ability of AAV9 gene therapy to preserve visual function, which otherwise would be lost. We also discussed in depth the natural history data in GAN that was published in the highly regarded neurology journal, Brain earlier this summer. As a reminder, all GAN natural history data was generated and supported by the National Institute of Neurological Disorders and Stroke, or NINDS under the leadership of the principal investigator, Carsten Bönneman. Included in the publication was the largest cohort of genetically confirmed patients with early and late onset forms of GAN. This large cross-sectional analysis highlighted clinical differences between patients with early onset versus late onset GAN based on performance on the MFM32, a validated and well-known scale to measure strength and motor function as well as other functional motor scales and disease markers. Additionally, a robust assessment of many clinically relevant outcome measures for GAN was performed, including motor, sensory, respiratory, neurophysiologic, MRI and biopsy assessments. Moreover, this was the first clinical study ever to formally and comprehensively evaluate autonomic nervous system dysfunction in a cohort of individuals with GAN. Overall, this natural history study has been instrumental in clinical trial design for the ongoing Phase 1/2 trial and the data included in the Brain publication will serve as baseline data for the natural history comparator arm to the interventional study. As already noted, we remain on track to report clinical data from the highest dose cohort from this ongoing Phase 1/2 trial in the second half of this year and to provide a regulatory update on the program by year-end. We have also made significant progress across our preclinical programs. Positive preclinical data for TSHA-102 and Rett syndrome was published in the Journal of Brain that provided quantitative evidence of MIRA’s ability to exhibit genotype dependent regulation of the MECP2 gene expression on a cell-by-cell basis across different regions of the brain in both wild-type and knockout mouse models of Rett syndrome. We recently held productive and collaborative pre-IND CTA discussions with several key regulatory agencies and received positive feedback that supports our anticipated IND/CTA submission in the second half of this year. In GM2 gangliosidosis, we were able to discuss in detail at our R&D Day how the existing and in-depth natural history data on this condition informs us about disease progression and in particular motor development delays. We believe these data help provide a comparator for ongoing and future interventional trials. We continue to expect preliminary safety and biomarker data in the Queens University Phase 1/2 trial for TSHA-101 in the second half of this year. Specifically, we will be disclosing HEXA enzyme activity in serum and CSF and expect that 5% HEXA enzyme activity will be considered a positive result. In the U.S., we had a productive and informative meeting with the FDA. We remain on track to initiate a Phase 1/2 trial in the second half of this year. Moving on to our CLN1 program, additional preclinical data for TSHA-118 were presented at R&D Day, which demonstrated sustained preservation of motor function and rescue with higher doses of TSHA-118 and earlier intervention in CLN1 knockout mice. There are two ongoing natural history studies assessing CLN disease, which will help further our understanding of the disease, inform our clinical trial design and serve as comparative data in a future trial for TSHA-118. These two studies include a prospective observational study assessing the natural history of CLN diseases and the retrospective and the prospective study to characterize the age-at-onset of major symptoms and the relationship between age and severity. TSHA-118 currently has an open IND. We recently have very productive and collaborative meetings with several key regulatory agencies and received positive feedback that supports dosing of the first patient, which we anticipate should occur in the second half of this year. TSHA-118 has been granted orphan drug designation, rare pediatric disease designation and fast track designation from the FDA and orphan medicinal product designation from the EMA for the treatment of CLN1 disease. For TSHA-104 in SURF1-associated Leigh syndrome, we announced at R&D Day, new data demonstrating that even a small increase in COX-1 activity can significantly improve the clinical phenotype in these patients, further supporting our SURF1 gene replacement strategy with TSHA-104. Reduced tox activity also correlated with disease worsening in patient fibroblasts, further supporting the impact of COX activity on disease outcomes. This phenomenon draws correlations to other diseases that we are targeting, including GM2 and CLN1, where small increases in activity can have a pronounced physiological impact. We plan to file an IND/CTA for TSHA-104 in the second half of this year. Additionally, a natural history study that is part of our clinical development program is expected to enroll its first patient. At our R&D Day, Dr. Rachel Bailey, Assistant Professor in the Department of Pediatrics at UT Southwestern, presented positive preclinical data for TSHA-105 in SRC39 deficiency that demonstrated improvement of EEG activity and reduction in seizures and associated deaths in SLC13A5 knockout mice. We continue to advance TSHA-105 towards the clinic and expect that patients currently enrolling in an ongoing prospective natural history study would be available to enter our clinical trial. We are currently considering an open-label randomized dose escalation Phase 1/2 trial to examine the safety, tolerability, and preliminary efficacy of TSHA-105 in the treatment of SLC13A5 deficiency. Biomarkers include citrate levels in the plasma, urine and CSF. Moving on to TSHA-103 in SLC6A1 haploinsufficiency disorder, at our R&D Day, Dr. Kim Goodspeed, Assistant Professor in the Department of Pediatrics, Neurology and Psychiatry at UT Southwestern and Dr. Steven Gray, Associate Professor in the Department of Pediatrics at UT Southwestern and Chief Scientific Advisor at Taysha, highlighted the nature of the disease and the positive preclinical data to date. In SLC6A1 knockout and heterozygous mouse models, CNS administration of TSHA-103 rescued abnormal seizure activity, notably recently obtained positive data demonstrating rescue of functional measures such as nesting, open field activity, hind limb clasping and latency to fall from the rotarod. We are now evaluating dose and age response and finalizing the dose from our preclinical pharmacology experiments. We are also developing an interventional trial protocol. In APBD and Lafora, Dr. Berge Minassian, Division Chief of Pediatric Neurology at UT Southwestern and Chief Medical Advisor at Taysha provided an in-depth discussion about the nature of both diseases at our R&D Day and highlighted positive preclinical data that supports advancement of these programs. Specifically, TSHA-112 reduced GYS1 expression in the APBD knockout model, which resulted in decreased polyglucosan body formation in the mice brain. TSHA-111-LAFORIN and TSHA-111-MALIN reduced GYS1 expression in the LAFORIN and MALIN knockout models, which resulted in decreased Lafora body formation in the mice brain. We continue to make good progress on both programs and are currently developing an interventional trial protocol. Preclinical data for TSHA-113 in tauopathies presented at R&D Day demonstrated significant reduction in tau mRNA and protein levels, validating the potential use of AAV-mediated gene silencing to achieve lifelong reduction of tau protein levels and supporting further preclinical development for the treatment of tauopathies. Lastly, we were very excited to highlight at our R&D Day our novel approaches to treat Angelman syndrome. We are targeting the entire Angelman syndrome population via knockdown of UBE3A-ATS to unsilence the paternal allele and also using a gene replacement strategy on UBE3A to mimic the maternal UBE3A allele expression. We have shown compelling fluorescence images of the cerebellum that demonstrate UBE3A expression following administration of TSHA-106, our short hairpin RNA candidates. As you can see, our robust portfolio of clinical and preclinical candidates continues to advance expeditiously. And as I noted, we have a number of clinical and regulatory catalysts expected in the second half of the year. We will continue to provide updates on our programs throughout the year. With that, I will turn the call over to Kamran to review our financial results.

Thank you, Suyash. This morning, I will discuss our recent non-dilutive financing and key aspects of our second quarter 2021 financial results. More details can be found in our Form 10-Q, which will be filed with the SEC shortly. We recently secured a non-dilutive term loan financing for up to $100 million from Silicon Valley Bank, or SVB, with $40 million available at closing, of which Taysha has drawn $30 million. We have the option to draw down the remaining tranches subject to certain conditions. The interest rate is the greater of 7% or the Wall Street Journal prime rate plus 3.75%, and there are no financial covenants or warrants associated with this financing. We believe that full drawdown of this funding will extend our cash runway through multiple key value-creating milestones, including a potential regulatory approval of TSHA-120 in GAN without the need for additional financing. Moving on, as indicated in our press release today, R&D expenses were $30.6 million for the 3 months ended June 30, 2021 compared to $3.1 million for the 3 months ended June 30, 2020. The $27.5 million increase was primarily attributable to an increase of $10.3 million of expenses incurred in research and development, manufacturing and other raw material purchases, which included CGMP batches produced by Catalent and UT Southwestern. We incurred an increase in employee compensation expenses of $8.5 million, which included $2.2 million of non-cash stock-based compensation and $8.7 million in third-party research and development expenses, which includes clinical trial CRO activities, GLP toxicology studies and consulting for regulatory and clinical studies. G&A expenses were $10.1 million for the second quarter ended June 30, 2021 compared to $0.9 million for the second quarter ended June 30, 2020. The increase was primarily attributable to incremental compensation expense, which included non-cash stock-based compensation and additional consulting and professional fees. Net loss for the second quarter ended June 30, 2021 was $40.9 million or $1.09 per share as compared to a net loss of $21.2 million or $1.95 per share for the second quarter ended June 30, 2020. As of June 30, 2021, Taysha had $197.4 million in cash and cash equivalents. This does not include funds from the recently announced debt financing. And with that, I will hand the call back to RA.

Thank you. Our first question comes from the line of Salveen Richter with Goldman Sachs. Please proceed with your question.

Hey, good morning guys, and thank you for taking our question. This is Elizabeth on for Salveen. Just wanted to ask if you could provide a little bit more color on the nature of the pre-IND and CTA positive feedback you have gotten from regulatory agencies? And then just, I guess more broadly, what are some of the venues that Taysha could present the data into in the second half of 2021 and just Taysha’s approach to data releases on the forward?

Yes, thanks RA and thanks for the question, Elizabeth. We have had a very, very hectic schedule of regulatory activity over the past few months and that was purposeful. As you know, with our approach to regulatory engagement, we are filing in multiple jurisdictions for each of our programs. So we have probably had close to 10 regulatory interactions, which included the FDA and several other countries. In general, they have been very, very good. The tone has been collegial. We have been able to answer all their questions. There have been very few surprises along the way. I think it would be fair to say that the actual discussions themselves focused on a few topics of note, and I’ll bucket them into three categories. One is CMC and a large part of that is potency acid testing. And once again, we have a very similar approach across our programs. We have a very disciplined way of looking at potency. We start all the word early. So that discussion goes well, and there are no general surprises there. On the non-clinical side, we have a very robust package of toxicology across all our programs, which include a combination of mouse chronic tox rate 6-month tox and NHP tox, which could be 3 to 6 months. In general, most of the agencies are very favorable there. There are a few slight differences in what the expectations are, i.e., some agencies want a little more in terms of species and duration of time and some agencies want a little bit less. As we all know, the FDA tends to be a little more conservative. But once again, our plans are very robust and comprehensive. So the multiple agencies are generally very favorable for those. The third bucket of questions usually tends to be around clinical sub-design and endpoints. We’ve had – we give a lot of thought to our endpoints based on feedback from patients and families, feedback from key opinion leaders, and we write the protocol in a very disciplined way. We make sure that the majority of our developmental progression assessments are videos, and that adds robustness to the studies. So once again, those discussions go well also. Lots of interactions, lots of very good interactions, and we have a few more yet to come. But I would say that there have been really very few surprises, and the engagement has been collegial and very positive thus far. In fact, one of the agencies said to us at the last meeting, what we’re looking forward to seeing you next time. So I think that signifies the tone of the conversations.

Great. Thank you so much.

Thank you. Our next question comes from the line of Joon Lee with Truist Securities. Please proceed with your question.

Hi, thanks for taking our question and for the update. So the Rett syndrome, which is a relatively larger indication and a really interesting one, you guided to clinical data by year-end ‘22, but no mention of any biomarker data released in the press release. Are you skipping – are you planning to skip the biomarker data disclosure altogether in favor of the initial clinical data? This one just stood out to us given the planned biomarker data disclosures for the other programs. And also, is your micro-active response element something that is patented? Or is this more of a protected by in-house know-how? And I have a quick follow-up after that. Thank you.

Sure. I can take the question on the biomarker data, and then RA can talk about the IP. With regards to the biomarker data, it’s a great question, Joon. I really wish we had a good biomarker for Rett syndrome; many, many scientists and expert clinician physician scientists have been looking for a biomarker for this particular disease. But sadly, there isn’t a good blood-based biomarker or a good CSF biomarker. I think with regard to biomarkers, the best biomarker that we have, which is not very good, is probably EEG. The EEGs of children with the retro is abnormal, and it’s possible that we will see a modification in the EEG as an early biomarker of activity of the drug. But it’s not really a very well-established, robust, well-accepted biomarker, which is why we don’t specifically guide that biomarker day. If something looks interesting early, we will plan to share it. I mean I think the best hope for Rett is really to see what we see from a safety perspective and then from an efficacy perspective thereafter. We are however collecting blood and CSF and performing full metabolomics and proteomics analyses. So if something does crop up as an interesting useful biomarker, then we will see it there. I don’t hold much hope for that, frankly, because many experts have been looking for biomarkers for a long time. So ultimately, we are guiding to enrolling the study and starting the study by the end of this year and clinical data by the end of 2022. I’ll hand over to RA now for the IP question.

Excellent. Thank you. And just a quick follow-up for all your programs, given they all use the AAV9 vector, are your starting doses for all the other programs comparable? And is your dose escalation strategy also comparable between programs? Thank you.

Sure, I can. It’s a very good question. And in general, I would say, yes, we are approaching the first dose for each patient in each program. We’re ending up in a relatively similar ballpark of around 5E14 total vg, which, as you know, is a high dose being given directly to the brain and spinal cord with a low dose in terms of systemic exposure compared to systemic drugs that are dosed vg at a much higher protocol. Where I would say the programs differ a little bit is how aggressively we can accelerate or escalate the doses thereafter. It depends on a couple of factors. The most important factor is the therapeutic window that we have. For several of our programs, we have a very broad therapeutic window, such as CLN1 or GM2, where there is a secreted enzyme, so where a little bit of enzyme goes a long way. On the converse side, actually, overproducing the enzyme in supraphysiological quantities has no adverse impact whatsoever. So for those programs, we can accelerate and escalate the dose very rapidly. However, for programs such as Rett, where there is a relatively narrow therapeutic window, we have to be cautious in escalating the dose, despite the fact that we have the MRI platform, which self-regulates the proportion of MECP2 that’s being produced for Rett. Generally, we start in the same ballpark, but as we escalate the dose higher, we do that at a slightly different rate depending on the therapeutic window we have for each program.

Thank you.

Thank you. Our next question comes from the line of Laura Chico with Wedbush Securities. Please proceed with your question.

Good morning, guys. Thanks very much for taking the question. My first one, I was just wondering if you could spend a minute on the loan agreement and perhaps why you think this makes sense now? And just wanted to clarify, how does that change the cash runway estimates? My follow-up, just around expectations for the 35E14 dose in GAN. You’d already seem to have an effect at the lower doses, so just trying to understand which doses or dose would be advanced commercially? Thanks very much.

Absolutely. Thanks for the question, Laura. Yes, you’re right. The 1.8E14 dose looks very, very solid. We see clear stabilization of disease progression at that dose. We have had patients out for quite some time at that dose demonstrating sustainability of effect and that improvement is clinically relevant and meaningful. It halts the 8-point decline in the MFM32 scale, which translates to an 8-point improvement every year, 16 points over 2 years, etc. If you run the baseline analysis, we know that patients who are dosed at 1.8E14 will have a 98.1% chance of a clinically meaningful improvement. It’s a really solid dose, and the drug would frankly be approvable on that dose. What I will say is when Carsten Bönnemann and the NIH initially set out to scout a dose response going all the way up to 35E14 total vg, three patients have actually been dosed at a higher dose, and we will have data to share on the 1-year time point of those three patients in the second half of this year. My guess is that those patients will either show at least the same as the medium high dose of 1.8E14 or be slightly better. For these children with this relentlessly progressive neurological deterioration towards death, you have to give them every best chance of having the most significant clinical benefit. As we approach our regulatory meetings towards the end of this year, we will have this really wonderful data package. We will have the 3E14 data as part of the package, including the successful natural history study we have, dose responsiveness, clear stabilization of the disease at the medium low and medium high doses. I expect there will be at least the same in the high dose. We will have long-term safety, efficacy, and durability. I am looking forward to having those discussions with the regulators. In terms of commercialization, I think likely it will be the 2.5E14 dose that will be advanced. But as I said, the 1.8E14 would probably be more than enough as well. Let me stop there. Thank you.

Thank you.

Thank you. Our next question comes from the line of Gil Blum with Needham & Company. Please proceed with your question.

Good morning everyone and thanks for taking our question. So do you guys have any thoughts on the recent lifting of the Zolgensma clinical hold on the IT administration? And do you think this is just a change in the way the FDA views the risk-benefit for IT AAV gene therapy? And I have a follow-up.

Sure, thanks, RA, and thanks, Gil, for the question. I think that we’ve had 1 year, 1.5 years where the FDA has seemed to clamp down with clinical holds, both for safety matters and for CMC-related issues in the AAV gene therapy space. I do wonder if that’s changing now. We have the Zolgensma hold lifting recently. This morning, we also announced the lifting of the hold once again for an AAV9 gene therapy for Danon, the Rocket Pharmaceuticals program. I wonder if there has been a bit of a shift in the perspective of the FDA, and they are just getting a little more comfortable spending less time on COVID and more time on gene therapy now. I think specifically with our Zolgensma product, it’s definitely transferable to the wider AAV9 space. It’s good news for AAV9. As already mentioned, the clinical data from that intrathecal study was actually very, very positive. We saw clinically meaningful effects on the Hammersmith scale, which is used for slightly older children and the CHOP-INTEND in SMA Type 2 and Type 3. The doses are in the E14 ranges. You can learn a lot that is quite translatable to our programs as well. The issues for safety that have been listed with the NHP study. Our approach to toxicology, as I’ve mentioned, is very robust. Thus far, in our discussions with the FDA, they have been very accepting for an acceptable approach. I’m hoping this is shifting the FDA’s paradigm a little bit. The fact that Zolgensma is off clinical hold was good news for AAV as was the lifting of the hold for Danon disease this morning.

Alright, thank you for all the color. And could you maybe give us an idea of the number of patients you can currently treat with the GMP runs that you’ve conducted? Would these be sufficient for your initial clinical studies and the programs that you mentioned?

Thank you. Our next question comes from the line of Eun Yang with Jefferies. Please proceed with your question.

Thank you. I have a couple of questions regarding 120 on the clinical and regulatory update that we are expecting by end of this year. So will the highest core high-dose core data come out before the regulatory update? So that’s the first question. And second question is, so you’re going to be requesting an end of phase meeting with the FDA and engaging with AAV by year-end. So do you think you would have an update from the regulatory agency discussions or is it possible that you could request a meeting and be waiting for the meeting to happen potentially early next year? Thank you. Okay, thank you for the clarity. And I have one quick question on the financials. So in the second quarter, R&D, you have around $10 million in R&D manufacturing and other raw material purchases. So going forward, the third quarter, I mean, second half of this year, should we assume that R&D increases quarter-over-quarter? Would they be normalized from the first quarter run rate? Or with all the clinical programs advancing, would you expect R&D to increase from the second quarter run rate? Thank you.

Yes, thanks, RA and thanks for the question, Eun. As we continue down the clinical trial initiation and numerous programs in our portfolio, you can expect to see some additional clinical trial expenses incurred in the second half of this year and into 2022 as well.

Thank you. Our next question comes from the line of Raju Prasad with William Blair. Please proceed with your question.

Thanks for taking the question. I kind of just want to understand how the commercial scale-up and identification of patients is going, maybe particularly in 120, a lot of questions that we get are kind of related to how big that market opportunity is. So, maybe if you could just talk about the number of prevalent patients that you have identified and how you are kind of looking at building up the commercial scale-up? And then I got another follow-up. Great. Thanks. And then with the FDA panel coming up next month, obviously, we have seen some clinical holds come off with Zolgensma as well as Rocket’s Danon disease program this morning. I just wanted to get your thoughts on how you are looking at that panel moving forward?

Sure. Yes, thanks for the question, Raju. I think it’s going to be interesting. I am looking forward to seeing the panel, actually to see how the discussion goes. The way the FDA has structured the panel looks at five specific areas. They look for integration and oncogenicity risks, toxicity, thrombotic microangiopathy tissues and the nonclinical front of toxicity, especially related to DRG, and then clinical findings on neurotoxicity based on brain MRI findings. I think we are actually just looking forward to listening and learning. All those five areas if they are talking about, we have given considerable thought to and have mitigated against them, both by looking at them, as well as looking for some of these issues specifically in our preclinical work. For example, we look at DRGs in all of our preclinical NHP studies now. And thus far, we haven’t seen any signs of DRG inflammation. Not just looking at things from the nonclinical perspective, but we also build in appropriate mitigations into the clinical trial design as well, i.e. we built in monitoring of local hepatotoxicity tissues. We have built clinical monitoring to look at platelet counts, which gives a clue to early issues with thrombotic microangiopathy. We look at – we actually have it – it’s been an interesting discussion with the regulators about how to monitor for DRG inflammation over – in the clinical trial. We have come up with a good plan that the regulators have been very accepting of, which is looking at reflex testing periodically at each visit. We also include nerve conduction studies at baseline and the three-month period to the first year thereafter. We have been giving this a lot of thought. I am not expecting to hear anything at this meeting that is a big surprise to us. I am hoping to learn more detail around the mechanism of what’s happening. I am also hoping that they take the safety issues they are considering, and look at them from the context of the balance of risks and benefits in the patients because once again, for the patient communities that we are trying to serve, these are children who are demonstrating rapid progression towards death. In that context, some minor safety issues should not preclude a charter being included in the clinical trial or being dosed. Absolutely. Yes, it’s a good reminder. Thank you. We recently conducted another study for our GAN program where we looked at our re-dosing approach. Specifically, we administered a clinically meaningful dose of GAN factor and re-dosed some of the participants eight weeks after the initial dose. We collected data on all the participants, including those who received both one dose and those who had received two doses. We looked very carefully for any signs of toxicity or inflammation in the nervous system. Importantly, we saw no evidence of any kind of inflammation in any of the samples collected. From our perspective, this was very reassuring, particularly since this vector is already in clinical usage for us.

Great. Thanks.

Thank you. Our next question comes from the line of Yun Zhong with BTIG. Please proceed with your question.

Hi, thanks very much for taking my questions. So, first question on the GM2 program. Do you expect the biomarker data to include substrate reduction? And how long do you think the patient will need to be followed for you to see any signals suggesting clinical efficacy, please?

Sure. Thanks, Yun, for the question. I think it’s important to understand what’s expected after we dose a patient with GM2 and the normal course of events. RA is correct in stating that the biomarker data we will be presenting will include HEXA levels in the CSF and blood. You asked specifically about GM2 ganglioside reduction; we are of course measuring that. My guess is that it will take a little bit longer than the HEXA to change, so that will be a late disclosure. In terms of clinical improvement, my anticipation is that if you consider the cadence of events, we dose a patient, we should see a transient expression increase, possibly around three weeks post-dosing. By the first month, we should see a nice increase in the HEXA activity, and by three months after the initial dose, it should be maximal. I hope to see indications of clinical stabilization by about three months, though it may take longer, possibly up to six months. But this is a tentative timeline based on our current understanding.

Okay. And then on the Rett syndrome program, do you have a target range that you hope to see for the gene transiting expression to fall into? Would you just rely on the self-regulatory mechanism of the technology to focus more on the clinical endpoints, please?

Yes, this is a very good question. We have had several advisory boards for Rett, where we asked experts the same question about what range of MECP2 expression is optimal. There isn’t a consensus on whether we need to achieve exactly 100%, or if a range of 80% to 120% is acceptable, or what the upper limit should be. We know that levels above 200% lead to degradation. In animal studies, hitting around 150% seems to be the tipping point for some negative effects. Our intent is to maintain MECP2 levels generally physiological, around normal levels, being somewhat conservative. The way Steve Gray has designed the microRNA binding sites keeps levels generally below 100%, ideally between 90% and 100%. However, we cannot directly measure MECP2 expression in humans without invasive methods like biopsies, which are not ethically feasible except in unfortunate circumstances. Therefore, we will rely on clinical outcomes for assessing efficacy but aim to achieve physiological levels with our self-regulatory feedback loop.

Great. Thank you.

Thank you. Our next question comes from the line of Mike Ulz with Morgan Stanley. Please proceed with your question.

Hi guys. Thanks for taking the question. Just for the GM2 program, you are on track to give an update later this year. But assuming you get positive results there, are you planning to advance a single dose into the Phase 1/2 U.S. study or might you decide to advance multiple doses? And then secondly, do you need to make any process modifications to the material you plan to use in the U.S. study versus the material you are currently using in the Queens study? Thanks.

Sure. Yes. Thanks for the question, Mike. The good thing about GM2 is that it’s one of the programs with this very wide therapeutic window, which I have already touched on. You don’t need much to get a significant improvement. We are seeing that 5% HEXA activity will be more than enough to result in dramatic improvement. Based on existing data, infants suffering from this disease have less than 0.1% HEXA activity. When reaching around 2% to 3% HEXA activity, adult forms of the disease actually achieve normal life spans. Therefore, hitting 5% is likely to lead to considerable clinical improvement. Currently, the 14 total VG is a high dose when given intrathecally, but a relatively low dose compared to systemic gene therapy administered doses. We believe we are highly likely to see significant benefit with our 5e14 dose. If we observe positive outcomes in our ongoing studies, we would likely move forward with the 5e14 dose in the U.S. study and file based on that data. However, if there is potential for improvement, we absolutely have the option to elevate to the 1e15 dose. The study design for the U.S. is not finalized yet, and it’s fair that we will learn from the Canadian study before we finalize our design. But the 5e14 dose seems like it will be adequate. If there’s any room for improvement, we can go to the 1e15 if needed.

Great. Thank you.

Thank you. Our last question comes from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed with your question.

Hi, good morning. Thanks so much for taking my question. For the GAN program, could you please discuss what you hope to see on some of the assessments beyond MFM32, including muscle strength and brain imaging, especially in light of the understandings and the correlations that were reported with MFM32, including in the recent Brain publication? Specifically, what signals would help you further validate that the gene therapy is indeed slowing down the disease progression? Thank you.

Sure. Thanks for the question, Kristen. I could probably spend a good 10 to 15 minutes discussing this. There is a wealth of data being collected in this NIH study that is truly remarkable. The MFM32 assessment is vital; it is comparable to the CHOP INTEND designed for older children, designed around three domains: central strength, proximal muscle strength of the arms, shoulders, and hips, and distal strength, such as fingers and toes. We are seeing clear stabilization of disease with both the medium, low and medium high doses. The MFM32 declines by eight points a year in kids with GAN, representing clinically significant annual deterioration. A decline of four points is deemed clinically meaningful, and we have shown clear stabilization at both medium low and medium high doses. Additionally, we’ve presented data on visual acuity, notably via the LogMAR scale, which quantifies vision assessment. Traditionally, children with GAN see a deterioration in vision over time, which causes significant worry parents and families. In our initial data set, we are demonstrating that with treatment, the decline is halted. We have evidence from treated patients where visual function has been preserved, translating to a pattern similar to the MFM32 stabilization. Beyond muscle strength, we are looking at additional measures such as sensory evaluations and respiratory strength. I believe that muscle strength assessments will similarly stabilize, alongside other functional measures like the time to walk and respiratory metrics.

Great. Thank you for taking my question.

Thank you. And that concludes our question-and-answer session. I will turn the floor back to Mr. Session for any final comments.

Thank you. And this concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.