Taysha Gene Therapies, Inc. Q3 FY2021 Earnings Call

Welcome to the Taysha Gene Therapies Third Quarter 2021 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a brief question-and-answer session. As a reminder, this call is being recorded today, November 10, 2021. I will now turn the call over to Dr. Kimberly Lee, Senior Vice President of Corporate Communications and Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to Taysha's third 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 third quarter ended September 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 product candidates. These statements may include the expected timing and results of clinical trials for our product candidates. Our expectations regarding the data necessary to support regulatory approval of Taysha-120, and the regulatory status and market opportunity for those programs, as well as Taysha's manufacturing plans. This call may also contain forward-looking statements relating to Taysha's growth and future operating results, discovering development and product candidates, strategic alliances, and intellectual property, as well as matters that are not of 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 product candidates, our dependence upon strategic alliances and other third-party relationships, our ability to obtain patent protection for discoveries, limitations imposed by patents owned or controlled by third parties, and requirements of substantial funding to conduct our research and development activities. For a list and a 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, November 10, 2021. Taysha undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as may be required by applicable securities laws. I'd now like to turn the call over to our President, CEO and Founder, RA Session II. RA?

Thanks, Kimberly. I appreciate that introduction. Good morning everyone, and thank you for joining us today. As Kimberly mentioned, we are excited to share our progress in advancing our clinical and preclinical programs while also strengthening our pipeline with complementary therapeutic approaches to address high unmet needs across monogenic diseases of the CNS. As the end of the year approaches, we are highly anticipating multiple data readouts across several of our lead clinical programs. Let me start with TSHA-120, our most advanced clinical program for the treatment of GAN. In December, we expect to report clinical safety and functional data from the high dose cohort. These data are generated by our partners under the leadership of the theoretical study, Carsten Bönneman. As a reminder, the clinician-rated MFM32 scale is a clinically validated and accepted regulatory endpoint that assesses motor function. Based on the prospectively collected data on the natural history of GAN, there is a predictable decline in the MFM32 score of approximately eight points per year across all patients, regardless of age. A four-point change in the MFM32 scale is considered clinically meaningful. We believe the high dose cohort should demonstrate continued slowing of disease progression, durability of effect, and safety comparable to that achieved for the lower doses. Regarding safety, we have up to six years of clinical safety data demonstrating no drug-related serious adverse events, no signs of acute or subacute inflammation, and no persistent elevation of transaminases. We anticipate publication of the clinical data in a peer-reviewed scientific journal in the near future. In September, we submitted the scientific advice from a major ex-US regulatory agency and received a preliminary meeting date for January 2022. We anticipate submitting additional requests to multiple regulatory agencies by the end of this year. As we think about the approval pathway for GAN in the United States, we view three possible scenarios with a potential to file for approval with the current data on hand, as the most likely scenario. Alternatively, the FDA could request we dose a few additional patients to demonstrate the compatibility or clinical effects between clinical and commercial-grade material. Lastly, the FDA may request us to perform a new clinical trial, which we view as the least likely option given the recently published guidance documents on gene therapies for neurodegenerative diseases. In Europe, we believe we would be able to use the current datasets upon conditional approval. We look forward to providing updates following our regulatory interactions.

Thanks, RA. We continue to advance our clinical and preclinical programs as well as strengthen our pipeline with complementary therapeutic approaches to address high unmet needs across monogenic diseases of the CNS. At the end of the year approaches, we are highly anticipating multiple data readouts across several of our lead clinical programs. Let me start with TSHA-120, our most advanced clinical program for the treatment of GAN. In December, we expect to report clinical safety and MFM32 functional data from the high dose cohort. These data are generated by our partners and collaborators of the NINDS under the leadership of Carsten Bönneman. As a reminder, the clinician-rated MFM32 scale is a clinically validated and accepted regulatory endpoint that assesses motor function. Based on the prospectively collected data on the natural history of GAN, there is a predictable decline in the MFM32 score of approximately eight points per year across all patients regardless of age. A four-point change in the MFM32 scale is considered clinically meaningful. To confirm modification of disease trajectory in comparison to the natural history study, we believe the high dose cohort should demonstrate continued slowing of disease progression, durability of effect and safety comparable to that which was achieved for the lower doses. Regarding safety, we have up to six years of clinical safety data demonstrating no drug-related serious adverse events, no signs of acute or subacute inflammation, and no persistent elevation of transaminases. We anticipate publication of this clinical data in a peer-reviewed scientific journal in the near future. In September, we submitted the scientific advice from a major ex-US regulatory agency and received a preliminary meeting date for January 2022. We anticipate submitting additional requests to multiple regulatory agencies by the end of this year.

Thank you, Suyash. This morning, I will discuss key aspects of our third quarter 2021 financial results. More details can be found in our Form 10-Q, which will be filed with the SEC shortly. As indicated in our press release today, R&D expenses were $39.5 million for the three months ended September 30, 2021, compared to $11.1 million for the same period in 2020. The $28.4 million increase was primarily attributable to an increase in expenses incurred in research and development manufacturing and other raw material purchases, which included cGMP manufacturing batches produced by Catalent and UT Southwestern. There was also an increase in employee compensation expenses of $10.7 million, which included $1.9 million of non-cash stock-based compensation. Additionally, $4.9 million was spent on third-party research and development expenses, which includes clinical trial CRO activities, GLP toxicology studies, and consulting for regulatory and clinical studies. This was partially offset by a decrease in licensing fees of $1.7 million. G&A expenses were $11.2 million for the three months ended September 30, 2021, compared to $4.0 million for the same period in 2020. The increase of approximately $7.2 million was primarily attributable to incremental compensation expense, which included $1.8 million of non-cash stock-based compensation. There was also an increase of $2.9 million in professional fees for legal, insurance, investor relations, communication, accounting, personnel recruiting, market research, and patient advocacy activities. Net loss for the three months ended September 30, 2021, was $51.2 million or $1.35 per share, compared to a net loss of $15 million or $1.28 per share for the same period in 2020. As of September 30, 2021, Taysha had $188.8 million in cash and cash equivalents.

I wonder if RA has dropped off for some reason. This is Suyash here.

Thank you. Our first question comes from Joon Lee with Truist Securities. Please go ahead with your question.

Hi, thanks for taking our questions and congrats on the impressive accomplishment in such a short period of time. For the GM2 program, you seem to be implying that you may be able to submit for approval with existing data from the Canadian site. If so, what jurisdiction do you think would be most amenable to this, and can you give us some historic proxy where something like this has happened? I have a follow-up.

Yes, thanks, Joon, and for the question. Yes, we're discussing our regulatory strategy on an ongoing basis. In the past few months, we've had multiple regulatory meetings across our portfolio of programs. We're really getting a lot of real-time information on the right approach for the pathway to approval. In essence, if we have patients we can screen in Canada for GM2, we can potentially file ex-US initially and gather clinical data from other countries. Regarding historical examples, I have worked on programs where studies started in ex-US before filing in Europe prior to the U.S. One such example is the CLN2 Brineura program. But there are also several examples of this strategy. Things are going well in Canada, so our focus remains on continuing enrollment in gathering clinical data there.

Great. Looking forward to the data in December. A second question on TSHA-120 in GAN, which you have very strong data. Are the materials used in the investigational study undergoing the same GMP and QA process as those produced in your GMP facilities? If they differ, what would you need to do to satisfy the FDA requirements and be able to commercialize or submit for approval with existing data? Thank you.

Great questions, Joon. We’ve spent a lot of time ensuring we characterize the product in terms of contaminants and captured ratios. We've brought that knowledge into our GAN program. A couple of weeks ago, the team visited the CDMO manufacturing the drug. Our Chief Technical Officer and Head of Regulatory spent a full week reviewing all processes to ensure they align. We feel very confident that the clinical materials used in clinical studies will be equivalent to what we will use for GAN program commercially. Thank you.

Good morning and thank you for taking our questions. Just a follow-up on the previous discussion regarding your production method and translatability across programs. Do you expect the FDA will be looking for a bridging study of any kind?

Thanks for the question, Gil. Yes, the GAN program is a bit of an outlier. We do need to ensure that all materials used are consistent with clinical and commercialization processes. While we may need a bridging study for GAN specifically, for the vast majority of our other programs, we aim to ensure commercial grade material is prepared ideally prior to the start of pivotal studies. The key is to have common quality and safety measures across all product constructs.

Hey, good morning, guys. Thanks for taking the questions. So first on the 120 program, could you discuss a little more about the timing after the January meeting? I'm trying to understand when we might have more clarity on the U.S. regulatory path for 120. It sounds like the base case is assuming ex-U.S. regions perceive the U.S.? Last question on 120, RA, you mentioned the second half would be released with commercial grade material. Are there any remaining headwinds or issues that could impact timing there? Thank you.

Yes, I'll provide some operational context here. We have great efficacy and safety data for GAN, which has been invaluable in our regulatory discussions. However, the regulatory agencies are busy, pushing some meetings to January. We anticipate having subsequent meetings shortly thereafter. While we do have multiple safety data confirming our hypothesis, the timeline and clarity on an approval strategy will become clearer once we review current data with the regulators later next year.

Hey guys, thanks for taking my questions. One on GM2, how many patients should we expect to see an update on in December? What is the duration of follow-up on HEXA enzyme expression you'll need to have robust discussions with regulators? Thanks.

We've got a decent group of patients enrolled, and we'll share the specific numbers during our updates in December. The follow-up on HEXA will span over 12 months post-dosing. The implications of the enzyme activity and clinical measures will heavily inform our regulatory discussions in the future.

Yes, good morning, and thanks for taking my question. Can you provide a big picture view about managing your rapidly expanding pipeline? What are your thoughts on potential prioritizations or partnerships given your manpower?

Thank you. There are no further questions. I will now turn the call back over to Mr. Session for additional or closing remarks. Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect.