Taysha Gene Therapies, Inc. Q2 FY2023 Earnings Call

Good morning. Welcome to Taysha Gene Therapies Second Quarter 2023 Financial Results and Corporate Update Conference Call. As a reminder, this webcast is being recorded today, August 14, 2020. I will now turn the call over to Hayleigh Collins, Director, Head of Corporate Communications. Please go ahead.

Thank you. Good morning, and welcome to Taysha's second quarter 2023 financial results and corporate update conference call. Earlier today, Taysha issued a press release announcing financial results for the second quarter of 2023. A copy of this press release is available on the company's website and through our SEC filings. Joining me on today's call are Sean Nolan, Taysha's CEO; Sukumar Nagendran, President and Head of R&D; and Kamran Alam, Chief Financial Officer. Please note that on today's call, we will be making forward-looking statements, including statements relating to the existing clinical data for TSHA-120 and TSHA-102 and the therapeutic and commercial potential of TSHA-120 and TSHA-102. These statements include the expected timing and results of clinical trials for our product candidates and other clinical and regulatory plans and the market opportunity for those programs. This call may also contain forward-looking statements relating to Taysha's growth, forecasted cash runway and future operating results, discovery and development of product candidates strategic alliances and intellectual property as well as statements involving the timing, size and completion of the private placement financing we announced today and other 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 regulatory interactions for our product candidates, our dependence upon 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, including our annual report on Form 10-K for the year ended December 31, 2022, and our quarterly report Form 10-Q for the quarter ended June 30, 2023, that we filed today. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, August 14, 2023. 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. With that, I would now like to turn the call over to our CEO, Sean Nolan.

Thank you, Hayleigh, and welcome, everyone, to our 2023 second quarter financial results and corporate update conference call. Today, I will begin with a brief corporate update, then Suku Nagendran, President and Head of R&D of Taysha will provide an update on our clinical development programs. Kamran Alam, our Chief Financial Officer, will then follow up with a financial update. I will provide closing remarks and open the call up for questions. There are two main areas of focus for today's call. First, we are pleased with the recent progress we've made in our two lead investigational programs, with particular emphasis this morning on the initial data from the first patient dosed in the adult Rett syndrome trial. Second, we are very pleased to have significantly strengthened our balance sheet with the private placement financing that is expected to result in gross proceeds of approximately $150 million from a prestigious group of existing and new investors, which I will discuss in greater detail shortly. Let's begin with an update on our lead clinical programs. For TSHA-102 in Rett syndrome, the Independent Data Monitoring Committee, or IDMC, recently convened to review the initial clinical data from the first patient dosed with TSHA-102 following the patient's required 42-day evaluation period. Based on encouraging initial clinical data, the IDMC recommended the continuation of the REVEAL Phase I/II trial and provided clearance to dose the second patient in the first cohort. We are pleased to share that early data from the first adult patient showed TSHA-102 was well tolerated with no treatment-emergent TSHA-102 related serious adverse events as of the six-week assessment. We have also seen early improvements in key efficacy measures, evaluating the overall disease and signs and symptoms of Rett syndrome as well as clinical observations supporting improvements in multiple domains, including autonomic function, vocalization as well as gross and fine motor skills. Suku will review these data in further detail shortly. We believe the initial safety data and clinical improvements across key efficacy endpoints seen this early at four weeks post treatment in the first adult patient with severe disease reinforces the transformative potential of TSHA-102 to address the root cause of Rett syndrome. Importantly, these early data indicate that the miRNA-Responsive Auto-Regulatory Element, or miRARE technology is mediating MECP2 expression in the central nervous system on a cell-by-cell basis, supporting the regulatory control of miRARE. We are highly encouraged by the initial data of TSHA-102 and are focused on continuing to explore its therapeutic potential with the dosing of the second patient expected later in the current quarter. We also recently received IND clearance from the U.S. FDA to initiate clinical development of TSHA-102 in pediatric girls 5 to 8 years of age. And we have submitted a CTA to the MHRA for TSHA-102 in pediatric patients with Rett syndrome, which will expand our clinical evaluation to patients with earlier stages of disease progression. For TSHA-120 in GAN, our new comprehensive data analysis utilizing a Disease Progression Model, or DPM, was submitted to the FDA, and we plan to review the potential regulatory pathways for TSHA-120 with the agency later in the current quarter. This morning, we also announced that we entered into a securities purchase agreement for a private placement financing or PIPE, that is expected to result in gross proceeds of approximately $150 million from a group of new and existing top-tier investors. The private placement financing was led by new investor, RA Capital Management, with participation from a large institutional investor, PBM Capital, RTW Investments, LP, Venrock Healthcare Capital Partners and TCGX as well as other key investors. We are pleased by the support from this prestigious group of investors, which we believe highlights the enthusiasm for our TSHA-102 program and the early clinical readout of the first patient treated in our REVEAL trial. We expect that the net proceeds from the PIPE together with our existing cash and cash equivalents, will extend our runway into the third quarter of 2025 to primarily support the clinical development of TSHA-120 and Rett syndrome and provide support for TSHA-120 program activities in GAN, working capital, and other general corporate purposes. This capital infusion significantly bolsters our balance sheet and enables us to focus on execution as we endeavor to deliver on key value-creating milestones. Over the next six months, we plan to continue to advance our two lead clinical programs, including generating additional clinical data in adults and expand our clinical footprint into pediatric patients for TSHA-102 and Rett syndrome, and reviewing the potential regulatory pathway for TSHA-120 with the FDA. I will now turn the call over to Suku to provide a more in-depth discussion of our clinical programs in Rett syndrome and GAN. Suku?

Thank you, Sean, and good morning, everyone. I will begin with updates on TSHA-102, our investigational gene therapy program in clinical evaluation for the treatment of Rett syndrome. As Sean mentioned, we are pleased to share with you today the initial safety and efficacy data from the first adult Rett syndrome patient dosed in cohort 1, low dose with TSHA-102 in our REVEAL Phase I/II trial. Based on these initial data, we believe our product candidate has transformative potential. As a reminder, TSHA-102 utilizes a novel miRARE platform, designed to mediate MECP2 expression in the central nervous system on a cell-by-cell basis without risk of over-expression. The X-chromosomal inactivation and silencing of MECP2 expression that occurs randomly with Rett syndrome results in a mixture of cells that are either deficient in or express MECP2 normally. This heterogeneity in MECP2 expression is what makes Rett syndrome challenging with traditional gene therapy approaches, but we believe our novel miRARE technology can appropriately address this challenge and potentially provide therapeutic benefits. TSHA-102 is currently being investigated in the ongoing REVEAL Phase I/II trial, a first-in-human open-label randomized dose escalation and dose expansion study evaluating the safety and preliminary efficacy of TSHA-102 in adult females with Rett syndrome due to MECP2 loss of function mutation. Following the IDMC's pre-specified review of the initial clinical data from the first adult patient dosed with TSHA-102, the IDMC recommended the continuation of the REVEAL Phase I/II trial and provided clearance to dose the second patient in the first cohort. It is important to understand that the REVEAL trial was designed to primarily measure safety in adult patients. We have seen a well-tolerated safety profile in the first adult patient with no treatment-emergent TSHA-102 related serious adverse events as of the six-week assessment post treatment. Due to the severity and progressive nature of the disease, we did not expect to see efficacy in adults with Rett syndrome, particularly in patients with Stage IV of Rett syndrome, the late motor deterioration stage, which is the most advanced stage of the disease. It typically begins around 10 years of age and can last for years or decades. It's marked by reduced mobility, muscle weakness, joint contractors and scoliosis, and can lead to the inability to walk. However, it is evident that we have seen improvements in efficacy as early as 4 weeks post treatment in the first stage patients with severe Stage IV Rett syndrome dosed with TSHA-102. Specifically, the principal investigator of the REVEAL trial observed clinical improvements in multiple domains, including autonomic function, vocalization, and growth and fine motor skills. To provide you with a clear and collective picture, prior to treatment with TSHA-102, the patient was in a constant state of hypotonia. She had limited body movements, required constant back support, and had lost fine and gross motor function early in childhood. She has not been able to sit unassisted for over a decade. Four weeks following treatment, we have observed improvements in breathing patterns and sleep quality and duration, including the normalization of night-time behavior. The patient's vocalization has also improved with an increased social interest. Moreover, video evidence demonstrated the patient's improvement in gross and fine motor skills, including the gained ability to sit unassisted for three minutes for the first time in over a decade. The patient also demonstrated the ability to unclasp her hands and hold an object steadily for the first time since infancy as well as use fingers to touch a screen. The clinical improvement demonstrated in key efficacy measures, four weeks post treatment provides supportive evidence that reinforces these clinical observations. Specifically, we measured clinical global impression improvement or CGI-I, which is a scale that has been adapted to Rett syndrome. It is a clinician-reported assessment of overall improvement following treatment. And it accounts for key aspects of the disease, including language, communication, ambulation, hand use, attentiveness, eye contact, seizures, and autonomic function. CGI-I uses a seven-point scale with 1 being very much improved and 7 being very much worse. With the first patient four weeks post-treatment and overall score of 2, indicating much improved was reported. Additionally, the Clinical Global Impression Severity Scale, or CGI-S, is a physician-reported assessment of the overall severity of a patient's illness that uses the seven-point scale with 1 being normal, not at all ill, and 7 being extremely ill. At four weeks post treatment, a one-point improvement from the baseline score of 6 indicating severely ill to a score of 5 indicating markedly ill was demonstrated. Notably, the Rett Syndrome Behavior Questionnaire or RSBQ, which is a 45-item questionnaire that assesses Rett syndrome characteristics demonstrated a total score improvement of 23 points from the baseline score of 52 to a score of 29, four weeks post treatment. Specifically, RSBQ subscale total scores demonstrated the normalization of night-time behavior as well as improvements in breathing general board and hand behavior post treatment. The seizure diary demonstrated no quantifiable seizure events through week 5 of treatment. There were no marked changes four weeks post-treatment in the Revised Motor Behavior Assessment or R-MBA, which is a 24-question clinician-reported scale measuring disease behaviors of Rett syndrome. In addition to these measures, we are collecting a plethora of data and measuring various endpoints for the protocol. Data collected will further inform our thinking relative to optimal primary endpoint selection for registrational study purposes. The critical takeaway here is that the positive efficacy response seen in validated measures in the first adult patient dosed with TSHA-102, coupled with the improvements observed in autonomic function, vocalization, and fine and gross motor skills are encouraging, and we believe support the therapeutic potential of TSHA-102. Moving forward, we intend to provide additional clinical updates on the REVEAL trial quarterly. We expect to dose the second patient later in the current quarter and anticipate continued dosing of adult patients throughout the second half of the year. We have also initiated efforts to expand our clinical evaluation to children with earlier stages of disease progression and recently received IND clearance from the FDA to initiate clinical development of TSHA-102 in pediatric patients. We have also submitted the CTA to the MHRA for TSHA-102 in pediatric patients with Rett syndrome. With recent IND clearance, we plan to initiate the clinical evaluation of TSHA-102 in part A of the dose finding study, which is focused on identifying the maximum administered dose and maximum tolerated dose in pediatric girls aged 5 to 8 years with Rett syndrome. The safety and efficacy data and the maximum administered dose and maximum tolerated dose selected from Part A will be reviewed by the regulatory agency and the IDMC prior to initiating Part B of the study in pediatric girls aged 3 to 8 years. Data from Part A will be assessed to determine final elements of Part B, such as hierarchy of efficacy endpoints and study duration can be further assessed. Part B will evaluate TSHA-120 in 2 age cohorts and expanded 5 to 8 years of age with a one-to-one randomization of randomized to treat cohort or delayed treatment cohort in a cohort for 3 to 5 years of age. As a reminder, no approved disease-modifying therapies that treat the genetic root cause of Rett syndrome are currently available, and there is a high unmet medical need. TSHA-102 has already received orphan drug and rare pediatric disease designations from the U.S. FDA and has been granted orphan drug designation from the European Commission for the treatment of Rett syndrome. The estimated addressable patient population with typical Rett syndrome caused by a pathogenic likely pathogenic MECP2 mutation is between 15,000 and 20,000 patients in the U.S., EU, and U.K. We are encouraged by the initial efficacy and safety data and look forward to sharing additional updates throughout the year. Now let's turn to TSHA-120 for the treatment of GAN, an ultra-rare neurodegenerative indication with no approved treatment or established regulatory pathway. As Sean mentioned, we have submitted our comprehensive data analysis utilizing the newly developed disease progression model or DPM and plan to discuss the potential regulatory pathway for TSHA-120 in GAN with the FDA in the current quarter. New analysis of multiple functional, electrophysiological, biological, and structural endpoints in patients treated with TSHA-120 compared to the natural history cohort using a disease-progression model demonstrate the treatment effects in objective and clinically meaningful endpoint. Importantly, we believe these findings that we overviewed at our R&D Day in June, address FDA feedback on both the heterogeneity of disease progression in GAN and the effort-dependent nature of MFM32 as a primary endpoint in an unblinded study. The FDA indicated that it's open to regulatory flexibility in the controlled trial setting and is willing to consider study designs alternative to randomized double-blind placebo-controlled trials if they utilize objective measurements to demonstrate a relatively large treatment effect that is self-evident and clinically meaningful. We look forward to having a collaborative dialogue with the FDA regarding the potential registrational path. Lastly, with respect to manufacturing, FDA feedback on our CMC module 3 amendment concluded that the analytical data is sufficient to support the comparability of a pivotal lot and release for use in clinical studies.

Thank you, Suku. Research and development expenses were $19.8 million for the three months ended June 30, 2023, compared to $23.5 million for the three months ending June 30, 2022. The $3.7 million decrease was due to lower compensation expense as a result of reduced headcount and fewer manufacturing batches and other raw material purchases. General and administrative expenses were $6 million for the three months ended June 30, 2023, compared to $9.9 million for the three months ended June 30, 2022. The decrease of $3.9 million was due to reduced general and administrative compensation as a result of lower headcount, consulting, and professional fees. Net loss for the three months ended June 30, 2023, was $24.6 million or $0.38 per share as compared to a net loss of $34.1 million or $0.85 per share for the three months ended June 30, 2022. As of June 30, 2023, Taysha had $45.1 million in cash and cash equivalents. Subsequent to the close of the second quarter, as Sean highlighted, we announced a private placement that resulted in gross proceeds of $150 million and is expected to close August 16 before deducting placement agent commissions and operating expenses. Under the terms of the transaction, Taysha is selling an aggregate of 122,412,376 shares of its common stock at a price of $0.90 per share, and in lieu of common stock to certain investors, pre-funded warrants to purchase up to an aggregate of 44,250,978 shares of common stock at a purchase price of $0.899 per pre-funded warrant. The pre-funded warrants will have an exercise price of $0.001 per share of common stock. The immediately exercisable subject to certain beneficial ownership blockers and our receipt of stockholder approval of an increase in the number of authorized shares of our common stock, which we will first seek to obtain at a special meeting of stockholders to be held no later than December 31, 2023, and the pre-funded warrants will remain exercisable until exercised in full. As Sean noted, our cash runway, including the expected net proceeds from the private placement, now extends for the third quarter of 2025. I will now turn the call back over to Sean for his closing remarks.

Thank you, Kamran. As you heard today, we have made significant progress in our two lead clinical programs, including the generation of the initial clinical data in the REVEAL Phase I/II trial in Rett syndrome, that we believe reinforces the therapeutic potential of TSHA-102. We are excited to potentially bring a transformative treatment option to the Rett syndrome community. Collectively, we believe that the data from our two lead clinical programs continues to support our gene therapy approach and the therapeutic potential of our programs to address severe unmet needs in monogenic central nervous system disease. In the second half of the year, we expect to continue dosing additional adult patients with TSHA-102 in our REVEAL Phase I/II trial in Rett syndrome and provide quarterly updates on available clinical data. Additionally, we have begun clinical site trial initiation activities for the U.S. pediatric Rett syndrome trial and anticipate dosing the first pediatric patient in the first quarter of 2024. We expect to receive feedback from the MHRA in the second half of 2023 for the proposed pediatric study, which will further inform program timelines in the U.K. For TSHA-120 in GAN, we look forward to having a regulatory discussion with the FDA regarding a potential path forward for TSHA-120 in GAN later this quarter. With our balance sheet substantially strengthened, we believe we are well positioned to execute across key upcoming value-creating milestones for our Rett syndrome and GAN programs. With that, I will now ask the operator to begin our Q&A session. Operator?

First question comes from Yanan Zhu with Wells Fargo.

Congrats on all the progress and the initial data, which sounds extremely exciting for patients. So could you remind me, the age of this patient who is obviously an adult patient? And can you speak to how do these data compare with the approved therapy they do? And whether you have additional observations at later time points beyond the six weeks that was noted in the press release and on the call?

Zhu, appreciate it. Let me take a high-level perspective on that, and then I'll turn it over to Suku for a little bit more detail. But this patient was 20 years of age. She has Stage IV disease, which is the most severe form of the disease. And I think what I'd ask Suku to do is kind of just really describe the patient for the audience here, so we can try to characterize just where she was physically and what she was and wasn't able to do. Suku can also do a bit of a comparison to the trofinetide, although again, there's a lot of caveats there with one patient versus they had significantly more patients, it's cross-study comparisons, what have you. So we can only give a high-level perspective on that. And I will answer the third question, Zhu, which was basically the data that we're reporting is the data that has been quality controlled and presented to the IDMC. So we don't have line of sight to additional data subsequent to that. We plan to provide updates on a quarterly basis with quality controlled data that is ready for presentation.

Thanks, Sean, and thank you for the question, Zhu. We are discussing a 20-year-old female patient with severe Stage IV Rett syndrome. As Sean mentioned, we currently have access only to the 4-week and 6-week assessments due to the protocol. This patient has been hypotonic, has contractures, and has been mostly in a wheelchair, unable to use her upper or lower extremities for over a decade. She also had decreased neck tone and was unable to vocalize or interact socially. Additionally, she experienced multiple respiratory insufficiency episodes, including apneic spells, and significant sleep issues where she would disrupt her parents' rest. Moreover, she has a history of seizures, particularly when her Dilantin levels fell to therapeutic ranges. To reiterate, this is a 20-year-old female with severe Stage IV Rett syndrome. Regarding her response to the intrathecal gene therapy, the patient began to show improvements within a week after treatment. At four weeks, we shared the assessments, and by six weeks, video evidence showed that she could sit up for almost three minutes unaided, without back support. She became socially interactive and attempted to vocalize, including saying "mama" multiple times throughout the day. She also demonstrated movement in her upper and lower extremities and was able to grasp toys, as noted by the principal investigator and her parent. She managed to use her lower extremities against gravity, something she hadn't done for a long time. Importantly, the gene therapy significantly improved her autonomic features, allowing her to sleep through the night without waking up, which also helped her parents sleep better. Her respiratory issues, previously linked to autonomic irregularities, also decreased notably after treatment. The seizure activity, noted in the seizure diary and EEG reviewed by the principal investigator, was absent at the time of the assessments. As Sean mentioned, this is based on one patient who received the lower dose of our gene therapy, but the results are significant and potentially impactful. In comparison with the trofinetide data, it’s important to note that this single patient’s experience contrasts sharply with a larger clinical trial involving almost 200 patients. The primary endpoints for the trofinetide trial included CGI-I and the Rett syndrome behavior questionnaire, using a combined endpoint approach. For our patient, the CGI-I score measured at 4 weeks was 2, which, according to experts in its design, is clinically significant. In comparison, between the treatment and placebo arms of the trofinetide trial, the change at 12 weeks post-treatment was approximately 0.37, which was statistically significant. For the RSBQ score, our patient saw a change of 23 points at 4 weeks post-treatment, a noteworthy improvement compared to the average change of about 4.7% seen between the treatment and placebo arms in the trofinetide trial, where the highest decrease recorded was 10%. We had one patient with a 23-point improvement, which is substantially greater than the average range in the trofinetide trial. My hope is that if we continue to observe such clinically meaningful changes from both direct clinical observations and from CGI and RSBQ measures, the outcomes may show considerable differences when compared to the trofinetide dataset. I'll stop here and return the floor to Sean for any further insights.

Our next question is from Jack Allen with Baird.

Congratulations on your progress. I have a question for Suku. Could you elaborate on the progression of response in this patient? It appears you have data from one, four, and six weeks. I would like to hear about the changes you're observing over time, understanding that it's still early. Also, as a secondary question, any information you can share regarding the sharing of this data with Astellas would be appreciated.

Jack, appreciate it. Suku, I'll take the Astellas question and then turn it over to you. So I think everybody is aware that Astellas has an observer seat on our board. So the data that has been shared publicly here in the press release has been presented to the board. Astellas is very aware of that data and all the data that is currently available in the trial. So they've seen everything that the company has seen to date. With that, Suku, do you want to take the question about the progression, and what we're seeing over time, and maybe just one more comment from me, just so everyone has the timeline here. The efficacy endpoints that we're talking about were measured at week 4 for the protocol. And their safety data out to 6 weeks for the protocol. And then there was video evidence that was generated at 6 weeks that looked at gross and fine motor skills in particular. So that's what we have right now. And so with that, Suku, do you want to talk a little bit about the progression and the effect over time that the investigator has seen?

Yes. Thank you, Sean, and thanks for kind of clarifying that timeline. I think that's very helpful for everybody on the call. So as Sean highlighted, what I'm going to talk about right now is up to 6 weeks post gene therapy given that the patient was dosed on May 31. I cannot comment beyond that because as Sean pointed out per protocol, there are visits ongoing, data is being accumulated and that has to be further analyzed and cleaned up from a database standpoint. What is important here to note is that our gene therapy has self-complementary technology. So once it is given to the patient, it turns on very quickly within 48 to 72 hours. And what was absolutely fascinating is that when we first went into this study, where the patients were dosed 18 years and older, we were told that this is really a safety study. We would not see really any clinical efficacy given that these patients, when they are in the latest or worst stage of disease, what we observed though was one week post gene therapy, the investigator noted that the patient started improving significantly from a clinical evaluation standpoint and observation standpoint, both from her aspect as well as from the parent aspect, but furthermore, there was a significant impact on the autonomic dysfunction that I already commented on previously, which includes breathing abnormalities, seizure activity, and sleep overnight. Furthermore, this improvement continued, as Sean pointed out, 4 weeks in, where not only did the clinical improvements continue to improve at that point in time, but also other measures, which included CGI-I, CGI-S, and also the Rett syndrome behavior question, which all further validated that our gene therapy was having real clinical impact. And at the 6-week time point, we have video evidence that actually shows that the patient is able to sit up without assistance, did not need the back support of a wheelchair or the hospital bed, didn't need the significant use of a brace that supported her back. She was also able to move ahead and track quite effectively and was very socially interactive and was also attempting to vocalize. This was quite a change compared to the baseline and baseline assessments and videos that showed her quite inactive hypotonic, flaccid and at the same time, unable to really move her legs or upper extremities in an appropriate manner and was not very socially interactive and was not localizing much. So I hope that gives you a perspective of the dramatic impact of the gene therapy on this first adult patient that we have dosed with severe Stage IV Rett syndrome.

The next question comes from Kristen Kluska with Cantor Fitzgerald.

Congratulations on the progress and your private placement. For Rett syndrome, we understand that Stage IV typically starts around the age of 10, meaning this particular patient may have been in that stage for some time if our understanding has significantly advanced. Can you discuss the variability in baseline factors you would expect to see in adults generally? Initially, our expectation was to confirm safety, but how does this one patient influence your expectations for other adults as well as pediatric cases?

Just to take down that second question first. Suku mentioned this early on, is that as we talk to the experts, in the field about the adult study, there was a very strong consensus. And I would say there was unanimity, frankly, that we really shouldn't expect to see anything from an efficacy perspective, which is why we kind of shared that view with all of you and that this would really be a safety-focused study. And Suku will comment on this in a little bit, but given that this is a neurodevelopmental disease. And theoretically, there's always been a view that perhaps you really can have a greater impact on the disease since full damage may not have occurred, cellular death may not have occurred like it would in a neurodegenerative disease. I think what this is showing is that there's a lot for us to learn about this particular disease state. And it's certainly very encouraging to see, I think, across the clinical domains when you look at the autonomic nervous system and the breathing in the sleeping and you look at the gross motor function, and you look at the vocalization, and how she wants to socialize and be part of things, it's very, very striking. So what I would say is that we want to get through let's say, the first cohort of patients. And I think it's going to help us really be more informed about endpoint selection as an example. And keep in mind, too, we also are at the low dose. I mean so we also can step up the dosing and see if there's a greater effect there. So the way we've designed the trial is that we are using a number of endpoints. Suku mentioned, a plethora of endpoints we're going to evaluate that and determine as we go forward, what would be the best for us from an endpoint perspective that really captures the impact of the disease.

Yes. So thanks for that, Sean. So what I'd like to do first is to answer your question by taking you back to preclinical models. In my experience with drug development, I have only one seen a preclinical model translate one-to-one into the human. And that was in the work we did on Zolgensma with spinal muscular atrophy type 1, where the delta 7 mouse model translated one-to-one into the human. Now with Rett syndrome, given the disease state itself and given how severe this patient was, I didn't expect to see this kind of one-to-one translation but that is what we are seeing here as well. As you probably are aware, we have done a fair amount of work using the Rett syndrome rodent models a P02, P7, P14, and P28 with our gene therapy that shows significant improvement in survival, motor function, and autonomic dysfunction. We've also spoken to many clinical as well as preclinical experts who've done decades worth of work on different rodent models, including a P35 and P46, where an increase in the MECP2 levels of, say, 5% to 10% above baseline with appropriate therapies can actually restore function and improve survival. And low and behold, I think that's what we saw with this patient, who are severe Stage IV Rett syndrome. So I guess what I'm saying is I didn't expect to see this type of clinical impact in such a short time. But now working backwards, I think the preclinical data set and the understanding of the disease pathophysiology now is explanatory to see why we're having this kind of impact with our gene therapy. And again, to answer your question about disease variability as you said, Stage IV technically begins around age 10. But as the disease progresses and the children get older, their disease does tend to get much severe. And I think if you see this kind of response with a severe Stage IV patient, I'm quite cautiously optimistic that in patients with different types of presentations of Stage IV Rett syndrome, especially if they are much younger than age 20, we should have a clinical impact that is hopefully meaningful and will change patients' lives and their caregivers or parents' lives as well. And then from an endpoint standpoint, as Sean pointed out, we have many endpoints that are hypothesis generating, not testing. And as we gather more and more data, then we hope to use these as our endpoints for the confirmation trials with the caveat, though, if we see this type of clinically meaningful or transformative results consistently across patients as we dose them both in the adult and eventually in the pediatric trial, then I think the clinical data will speak for itself beyond even these functional measures that we have built in very similar to what we may see or have seen with the Zolgensma trials when it went to the FDA and other regulatory agencies. So I sincerely hope that TSHA-102 will continue to have meaningful clinical impact for these patients and change their lives.

Our next question comes from Silvan Tuerkcan with JMP Securities.

Congratulations on the data and placement. Regarding the safety aspect of the MECP2 duplication syndrome, which poses a safety risk, how are we progressing with this patient? When should we expect any complications to arise, if they are going to occur? What timeline allows us to confidently determine that it is not an issue and that miRARE is functioning well? Additionally, I have a question about the sleep improvements. In discussions with key opinion leaders, it has been noted that sleep issues significantly burden adult patients. Can you provide more details on how the improvement in sleep has been measured? Is it consistent every night or every other night?

Thank you, Silvan. Suku, could you please address both questions? One is about sleep, and the other pertains to the timing and description of the MECP2 duplication, including how it typically manifests and what it might look like. Additionally, is this something that the IDMC would have noted in their review of the safety data? I'll pass it back to you.

Thank you, Sean. Silvan, those are important questions that we also considered while developing the protocols and evaluating this patient. I'm going to explain the connection between the science of MECP2 expression levels and clinical outcomes, along with the miRARE technology and its relevance to clinical findings. It's important to note that our construct includes miRARE, which acts as a regulatory element sensitive to natural MECP2 production. This operates through endogenous microRNA to modulate our exosome construct, regulating the MECP2 output from our gene therapy. In our animal models and non-human primate studies, we found that this miRARE technology performed effectively, particularly in cells, whether in rodent models or now in humans with normal MECP2 levels. My confidence is built on data from one patient, and I look forward to confirming these results as we treat more patients. The construct showed clinical effectiveness within one week of treatment, leading to continued improvement, especially in sleep, which is challenging to manage in this disease. If MECP2 production from our construct exceeded the therapeutic range, we would have observed abnormal clinical signs or results from assessments like the RSBQ. So far, these measurements indicate that the patient is doing well, with MECP2 expression levels being appropriate to maintain the neural networks controlled by this protein, resulting in positive clinical outcomes. However, our assessment has only been at 4 and 6 weeks so far, and given the quick positive impact noted, my assumption is that if features of duplication syndrome arise, which is somewhat akin to Rett syndrome but with differences in patient behavior, then other psychiatric symptoms such as mania and ADD may also emerge, but so far, these have not been observed. The IDMC reviewed the data in mid...

This is Sean. We wait for Suku to dial back in. I think the other part of the question that Silvan asked was around sleep. And all I can say to that without Suku being on the call is that from a caregiver reported and clinician reported perspective, there was a dramatic impact on the sleep noticed almost immediately by the family that she was sleeping through the night. And when you look at some of the subscales of the RSBQ, which is caregiver generated, the score went to, I want to say it was almost normal. In fact, it was a normal indication. So it was a very distinctive improvement from the parent's perspective in terms of her quality of sleep. So with that, why don't we ask for the next question.

Our next question comes from Joon Lee with Truist Securities.

Congratulations on the progress. The results from the REVEAL study are at baseline value, but is there any CSF biomarker or EMG that could complement the findings and confirm target engagement? Also, can you share the findings of the single patient, which sound impressive in the context of the natural history study? What gives you confidence that these findings are valid? I know this is primarily directed at Suku, but any insights you can provide, Sean, would be appreciated.

Okay. Let me ask if Suku is on the call. All right. Well, I’ll do my best while we manage this. To answer your first question about the biomarkers, there’s no direct way to measure what's happening with the levels of MECP2 because it cannot be easily captured. Ultimately, you would be in a challenging situation like looking at autopsy results and doing biopsies to truly determine that. Currently, there are no known biomarkers that would allow us to capture the activity in MECP2; it really relies on clinical manifestations. What types of improvements are you observing there? Regarding the reality of this, I understand the perspective of the one patient, and we acknowledged that as well. What’s striking about this is that when you talk to the key opinion leaders and the people who treat Rett patients daily, stage IV is incredibly severe. Suku did a good job illustrating the patient’s condition, envisioning someone who has been incapable of sitting without assistance for at least a decade, dependent on a wheelchair and requiring a back brace to maintain some upright position. They need support even when sitting to look around, exhibit very poor muscle tone, struggle to hold their head up, and find it difficult to grasp objects. Based on the video I’ve seen, this patient appears very quiet and withdrawn. In terms of vocalization and communication, she is very quiet and placid. After treatment, however, the physician reported, and we have seen in the video, that when placed in a sitting position, she can maintain that for 3 to 5 minutes. If Suku were here, he’d say this demonstrates axial strength. She is regaining muscle tone, especially in the limb-girdle region, and exhibiting increased movement and coordination in her upper extremities, with some activity beginning to appear in her legs. Suku, it’s good to have you back. I’ve been trying to depict the patient’s condition, so maybe you could elaborate from here. The question really revolves around whether this effect is real. There is considerable variability in these patients; sometimes their conditions are extremely challenging, but they do show improvement. I’ve attempted to describe her condition before and after treatment, but I'm sure the audience would appreciate hearing more from a medical professional like you.

Thanks Sean. And by the way, I apologize. I just sadly got disconnected. So anyway, I'm back on. So when it comes to stage IV Rett, I know somebody asked this question previously as well. Beyond age of 10, as the patients worsen and getting to the severe stage, I think the heterogeneity based on my discussions, many of the experts get less and less. And what is important to note though is that in this patient, and again, we've described the patient's profile to many experts that have seen the videos and the CDA, and they do all except the fact that the response yet, was clinically dramatic, but it is pretty obvious because the patient continues to consistently demonstrate the improvement compared to baseline. And I've already described some of these improvements that go way beyond just the autonomic dysfunction, which by itself, I thought was dramatic but also the fact that the patient could not sit up without support for over a decade is able to do that. The restoration of axial muscle tone and neck tone, there's now restoration of function of the upper extremities, which is the ability to hold a ball on an object and also the ability that she appears to now attempt to interact socially and also attempt to vocalize, which I hope over time will turn into more words and maybe even shrink sentences together. So collectively speaking, this is a dramatic response, and I assume the younger the patient in that stage for a period, we will have to assess each patient based on their baseline to see what type of improvement you will see clinically. But remember, they got approved on CGI-I and the RSBQ. And hopefully, we will see these kinds of dramatic changes in CGI-I and RSBQ as well in the patients we treat, whether it's the pediatric population or the adult population that will further cement the impact of our gene therapy.

There are no further questions. This concludes our question-and-answer session. I'll turn back to Mr. Nolan for his final remarks.

I really appreciate everyone joining the call this morning. I wish everyone a very happy day. Take care, and we'll talk soon. Thank you.

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