Earnings Call Transcript - TSHA Q4 2024

Operator, Operator

Ladies and gentlemen, good morning. And welcome to the Taysha Gene Therapies full year 2024. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Hayleigh Collins, Director, Head of Corporate Communications and Investor Relations. Please go ahead.

Hayleigh Collins, Director, Head of Corporate Communications and Investor Relations

Good morning, and welcome to Taysha Gene Therapies' full year 2024 financial results and corporate update conference call. Earlier today, Taysha issued a press release announcing financial results for the full year ended December 31, 2024. 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 Chief Executive Officer, Sukumar Nagendran, President and Head of R&D, and Kamran Alam, Chief Financial Officer. We will hold a question-and-answer session following our prepared remarks. Please note that on today's call, we will be making forward-looking statements including statements concerning the potential of TSHA-102, including the reproducibility and durability of any favorable results initially seen in the patient's dose-to-date clinical trials to positively impact quality of life and alter the course of disease in the patients we seek to treat. Our research, development, and regulatory plans for product candidates including the timing of initiating additional trials and reporting data from our clinical trials, the potential for the product candidate to receive regulatory approval from the FDA or equivalent foreign regulatory agencies, the clinical potential of intrathecal administration, the market opportunity for our programs, and the current cash resources supporting our planned operating expenses and capital requirements into the fourth quarter of 2026. 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 matters that are not historical facts or information. Various risks may cause actual results to differ materially from those stated or implied in such forward-looking statements. For a list and description of the risks and uncertainties that we face, see the reports we have filed with the Securities and Exchange Commission including in our annual report on Form 10-K for the full year ended December 31, 2024, that we filed today. This conference call contains time-sensitive information and is accurate only as of the date of this live broadcast, February 26, 2025. 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.

Sean Nolan, Chief Executive Officer

And welcome, everyone, to our full year 2024 financial results and corporate update conference call. I will begin with a brief update on our recent activities, then Dr. Sukumar Nagendran, President and Head of R&D of Taysha, will provide an update on our lead TSHA-102 gene therapy program and clinical evaluation for Rett syndrome. Kamran Alam, our Chief Financial Officer, will follow up with a financial update. I will provide closing remarks and open the call up for questions. The past year has been marked by exceptional execution as we have focused on generating critical longer-term clinical data across our two REVEAL Phase 1/2 trials to further elucidate the therapeutic potential of TSHA-102 and inform the development plan for the next phase of the trials. We are pleased with the pace at which our TSHA-102 program is advancing across a broad range of ages and stages of patients with Rett syndrome. Importantly, we believe the progress we have made has set the stage for a highly impactful 2025, as we focus on advancing TSHA-102 toward the pivotal phase of the REVEAL trials. I'm pleased to share that both the high and low dose of TSHA-102 continued to demonstrate an encouraging safety profile. TSHA-102 was generally well tolerated with no treatment-related serious adverse events or dose-limiting toxicities in the ten pediatric, adolescent, and adult patients dosed across our two REVEAL trials, as of the February 2025 data cut-off. Importantly, we have completed dosing of the ten patients in Part A, the dose escalation portion, of the REVEAL Phase 1/2 adolescent/adult and the REVEAL Phase 1/2 pediatric trial. This includes six patients in cohort two evaluating the high dose of TSHA-102 at 1e15 total vector genomes, and four patients in cohort one evaluating the low dose of TSHA-102 of 5.7e14 total vector genomes. This maturing dataset continues to support our advancement toward the pivotal Part B trial as part of our ongoing discussions with the FDA. From the outset, our strategy has been to utilize Part A of our trials to generate a dataset that informs our development plan for Part B, which is the pivotal phase of the trials. With dosing of the ten patients in Part A complete, we believe we have a strong maturing dataset in hand that enables us to further solidify the regulatory pathway for TSHA-102 with the FDA. Previously, we announced that following regulatory meetings with the FDA regarding our ongoing TSHA-102 development plan, we intend to focus on objective measures that clinically capture improvements in the core features of Rett syndrome in Part B of our REVEAL trials. Recall, the clinical data presented from the adult and pediatric patients with varying genotypes and disease severity, including those with the most advanced stage of Rett syndrome, treated with the low dose of TSHA-102, consistently showed clinical improvements and functional gains across multiple domains as early as four weeks post-treatment. That persisted and strengthened over time. That included improvements in functional gains across the domains of fine and gross motor function, socialization and communication, autonomic function, and seizure events. Importantly, the functional gains consistently seen in the treated patients that we've reported to date directly represent improvements in activities of daily living that are meaningful to caregivers. Since then, to further assess the therapeutic potential of TSHA-102, we have continued to evaluate the four patients in the low dose cohort and have expanded our dataset by completing dosing of the six pediatric, adolescent, and adult patients in the high dose cohort. We continue to believe that functional outcomes are the most relevant, objective, and clinically meaningful assessments of the treatment effect of TSHA-102 in patients with Rett syndrome, where functional gains or restoration of lost function are not expected to occur in the untreated population. As such, based on our ongoing discussions with the FDA and the totality of the clinical data we have collected, our goal is to advance TSHA-102 toward a pivotal trial design that objectively assesses functional gains across key clinical domains impacted in Rett syndrome, to bring TSHA-102 to patients as expeditiously and as safely as possible. We remain encouraged by our productive, ongoing discussions with the FDA through the Regenerative Medicine Advanced Therapy, or RMAT, mechanism and the strong maturing dataset we have in hand that provides us the further ability to solidify the regulatory pathway for TSHA-102. We look forward to providing an update on the pivotal Part B trial design in the first half of 2025. We also expect to provide an update on the clinical data from the low and high dose cohorts across our adolescent/adult trial as well as our pediatric trial in the first half of 2025. As we prepare for these critical milestones, we remain highly confident in our differentiated gene therapy candidate which we believe has the potential to provide meaningful benefit to a broad population of patients with Rett syndrome using a minimally invasive delivery approach. I will now turn the call over to Suku to provide more context on these advancements that further support our development approach for TSHA-102. Suku.

Sukumar Nagendran, President and Head of R&D

Thank you, Sean. Good morning, everyone. As Sean mentioned, we have made significant progress on the advancement of the TSHA-102 program. TSHA-102 is a one-time intrathecally delivered gene therapy that was strategically designed to enable optimal and controlled transgene expression on a cell-by-cell basis across the central nervous system. Recall we have two ongoing Phase 1/2 REVEAL trials evaluating TSHA-102 in an adolescent and adult trial taking place in Canada and the U.S. for patients aged 12 and older with stage four Rett syndrome, and a pediatric trial taking place in the U.S., the U.K., and Canada for patients 5 to 8 years of age with stage three Rett syndrome. We are currently evaluating TSHA-102 in Part A, the dose escalation portion of both trials, evaluating two dose levels. As Sean mentioned, our approach from the outset has been to utilize Part A to generate a dataset that will inform the key elements of the Part B pivotal trial. We previously announced that following regulatory meetings with the FDA regarding our ongoing TSHA-102 development plan, we intend to focus on objective measures that clinically capture improvements in the core features of Rett syndrome. To put this in perspective, I will review key characteristics of Rett syndrome. Rett syndrome is a rare progressive neurodevelopmental and neural network disease that inhibits neuronal development and leads to complications across multiple domains including fine and gross motor function, socialization and communication, autonomic function, and seizures. It is a heterogeneous condition where individuals experience different levels of clinical severity based on their distinct genetic background. However, despite differences in disease severity, patients generally follow a common trajectory regarding the achievement of functional and developmental skills. Rett syndrome typically begins with normal development during the first six to 18 months of life. Individuals acquire some skills and reach certain developmental milestones in fine motor, gross motor, and communication and socialization, such as the ability to grasp and hold objects, sit independently, and use single words. However, this progress is followed by a period of regression, where individuals lose many of these previously acquired functional skills and milestones, typically resulting in the loss of purposeful hand function, motor coordination, and verbal communication. They also start to develop new disease features such as hand stereotypies and autonomic dysfunction, including breathing, sleep, and cardiac abnormalities. Following this regression, affected individuals typically enter a plateau period during the ages of five to six, during which they are highly unlikely to gain new functional skills or developmental milestones or regain skills that have been lost due to disease progression. Individuals will continue to experience a decline over time. These functional impairments and disease features typically result in the loss of independence as patients are unable to perform daily activities or communicate needs. They usually require 24/7 care and lifelong assistance in daily tasks, placing a significant burden on caregivers that impacts their quality of life. There is a high unmet need for this devastating disease. Patients being evaluated in our REVEAL Phase 1/2 trials are in the post-regression phase of the disease, where functional gains or restoration of lost function are not expected to occur in the untreated population. In our REVEAL trial, we have reported clinical data from the low dose cohort showing pediatric and adult patients with advanced disease gaining functional skills across the domains of fine motor, gross motor, and socialization and communication which directly represent improvements in activities of daily living. This included beginning to use eating utensils, sitting independently, standing up from a chair independently, and the ability to use an eye gaze communication device. These outcomes have shaped our interaction with the FDA regarding the optimal regulatory pathway for TSHA-102. Based on our data-driven findings and ongoing discussions, we continue to believe that functional outcomes are the most relevant, objective, and clinically meaningful assessments of the treatment effect of TSHA-102 in patients with Rett syndrome. As a result, we anticipate that our pivotal trial design will be distinct from previously approved treatments for Rett. We continue to work closely with the FDA to further solidify the regulatory path for TSHA-102, based on the maturing safety and efficacy dataset from Part A that we now have in hand. I will now turn the call over to Kamran to discuss financial results. Kamran?

Kamran Alam, Chief Financial Officer

Thank you, Suku. Research and development expenses were $66.0 million for the full year ended December 31, 2024, compared to $56.8 million for the full year ended December 31, 2023. The $9.2 million increase in the year ended December 31, 2024, was driven by good manufacturing practices, or GMP, batch activities for the intended commercial manufacturing process for TSHA-102 and additional clinical trial activities across the two REVEAL Phase 1/2 clinical trials in 2024. General and administrative expenses were $29.0 million for the full year ended December 31, 2024, compared to $30.0 million for the full year ended December 31, 2023. The decrease of $1.0 million was primarily due to the decrease in issuance costs allocated to the liability classified 2023 pre-funded warrants associated with the August 2023 financing. Net loss for the full year ended December 31, 2024, was $89.3 million, or $0.36 per share, compared to a net loss of $111.6 million, or $0.96 per share, for the full year ended December 31, 2023. As of December 31, 2024, Taysha had $139.0 million in cash and cash equivalents. We continue to expect that our current cash resources will support planned operating expenses and capital requirements into the fourth quarter of 2026. I will now turn the call back over to Sean for his closing remarks. Sean?

Sean Nolan, Chief Executive Officer

Thank you, Kamran. This is an exciting time for the TSHA-102 clinical development program. With critical progress made that we believe strongly positions us for success as we work to bring TSHA-102 to the Rett syndrome community as expeditiously as possible. In what we expect to be a transformative year ahead, we are focused on advancing TSHA-102 toward the pivotal phase of the REVEAL trials. With the dosing of the ten patients in Part A for both of our trials complete, we have a strong maturing dataset in hand to further solidify the regulatory pathway for TSHA-102 with the FDA. We remain encouraged by our productive ongoing discussions with the FDA and are focused on execution as we prepare for key late-stage milestones expected in the first half of 2025, including providing an update on the pivotal trial design for TSHA-102 and clinical data across the high and low dose cohorts in both our REVEAL trials. With that, I will now ask the operator to begin our Q&A session. Operator.

Operator, Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Our confirmation tone will indicate your line is in the question queue. You may press star and two if you'd like to remove your question from the queue. It may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we request you limit yourself to one question and one follow-up question per participant. One moment, please, while we poll for questions. The first question comes from the line of Kristen Kluska from Cantor Fitzgerald. Please go ahead.

Kristen Kluska, Analyst (Cantor Fitzgerald)

Hi. Good morning. Congrats on completing the enrollment of Part A. Given that you've had several recent FDA interactions through your RMAT designation, can you generally speak to the number of people that are involved in the conversations? Essentially, what I'm trying to get at is, is it one person that's been supportive of talking about this path forward, or is it several? I think this is something that investors are focusing on given some of the recent layoffs we've seen at the FDA.

Sean Nolan, Chief Executive Officer

Thanks for the question, Kristen. I can say that consistently, in our discussions subsequent to obtaining RMAT, where we've had multiple meetings in 2024 and started meetings in 2025 with the FDA, we've generally had 15 to 20 people in attendance from the FDA. That includes senior-level staff. Nicole Verdant has been included in all those meetings. We have not, thus far, seen any impacts from the new administration as related to our approach. We've seen consistent broad attendance from the FDA across clinical, CMC, preclinical, and other relevant disciplines.

Kristen Kluska, Analyst (Cantor Fitzgerald)

Very helpful. Thanks. I'll get back in the queue.

Operator, Operator

The next question comes from the line of Salveen Richter from Goldman Sachs. Please go ahead.

Salveen Richter, Analyst (Goldman Sachs)

Good morning. Thanks for taking my questions. With regard to the ongoing discussions with the FDA, has there been any change regarding what they're looking for from functional gains since the last update? And are there any additional details you can share about what functional gains and key domains they're most interested in here?

Sean Nolan, Chief Executive Officer

Yes, Salveen. The FDA discussions we've had through 2024 and into 2025 have been very consistent. Since we started reporting data, we've focused on functional outcomes, gains of function, and restoration of function. That's always been our lead, and in our discussions with the FDA we've taken a similar approach. Considering the disease and our gene therapy program, we have consistently stated that the best approach would be to show clear clinically meaningful objective improvements. We believe we've reported those to date across patients regardless of age, stage, or genotype. In our discussions with the FDA, we've been consistent about how we think about a potential trial design and what endpoints would be relevant. They have been constructive and positive in those discussions. They have not tried to steer us down a different path and they've continued to encourage us to do two things: one, continue to let the datasets mature and dose more patients, and two, use natural history data to further contextualize the clinical data. We recently shared our natural history assessments with the FDA and that is part of the ongoing discussion. Regarding key domains, the FDA and caregivers emphasize the domains that Suku outlined: communication and socialization, fine motor function, gross motor function, and seizures. The FDA has not suggested a hierarchy at this point; they have acknowledged that all of these domains are clinically meaningful depending on the patient.

Salveen Richter, Analyst (Goldman Sachs)

Yes. Thank you.

Operator, Operator

The next question comes from the line of Chris Raymond from Piper Sandler. Please go ahead.

Chris Raymond, Analyst (Piper Sandler)

Thanks and congrats on the progress. On the competitive setup and the broader Rett gene therapy landscape, your competitor is forging ahead with a low dose similar to your high dose. So far your high dose looks pretty good. Talk about differentiating factors we should be looking for as clinical pictures for both therapies emerge.

Sean Nolan, Chief Executive Officer

Chris, I'll speak to what's publicly disclosed. We ultimately want additional therapeutic options for the Rett community. The more options, the better. We feel our choice to use self-complementary technology leads to faster protein production compared with a single-stranded vector. If you can mediate expression of MECP2 on a cell-by-cell basis — producing protein in sufficient and robust quantities in deficient cells while avoiding expression in healthy cells — you should see clinical effects sooner and potentially stronger with our construct. That should improve over time, reflected in time-on-therapy data. At the high dose we're guided to a total of six patients across pediatrics, adolescents, and adults, with a preference that the majority have a minimum of six months on drug to provide a robust dataset. We also plan to update our analysis of natural history because that helps contextualize the data. That's the plan we're working toward.

Chris Raymond, Analyst (Piper Sandler)

Very helpful. As a follow-up, how open-minded do you feel the FDA is regarding endpoints? Could they default to established subjective measures like CGI-I or CGI-S, or are they open to other approaches?

Sean Nolan, Chief Executive Officer

The FDA has not guided us to a specific endpoint. In one of our early RMAT meetings, they noted that some scales are exploratory and that for a single-arm trial you should use clinically objective, assessable measures. CGI-I and CGI-S can be informative but are subjective and generally not suitable as a primary endpoint in a single-arm trial. The FDA has been open-minded and evidence-driven. They have not imposed a preconceived endpoint for a gene therapy. They are allowing the data to inform the appropriate path.

Sukumar Nagendran, President and Head of R&D

If I may add, in my experience, when a therapy is truly effective and impacts a clinically meaningful outcome, the FDA tends to focus on that outcome because it justifies rapid approval so patients can access the therapy. If a product is less transformative, regulators may rely on existing subjective scales, even if those scales are not fully validated for capturing the impact of a gene therapy. Those measures can still be used as secondary endpoints but for transformative products, regulators often prioritize direct, clinically meaningful measures.

Chris Raymond, Analyst (Piper Sandler)

Got it. Thank you.

Operator, Operator

The next question comes from the line of Maury Raycroft from Jefferies. Please go ahead.

Maury Raycroft, Analyst (Jefferies)

Hi. Good morning. Congrats on the progress. As of the February 25th safety cutoff, do you think you're past a critical point for treatment-related serious adverse events or dose-limiting toxicities in these patients?

Sean Nolan, Chief Executive Officer

Maury, historically in gene therapy trials, if there is a treatment-related SAE or DLT it often appears within the first two to six weeks. We recently had an IDMC meeting that reviewed the patients' data, and thus far we feel encouraged by the safety profile. I'll ask Suku to add his clinical perspective.

Sukumar Nagendran, President and Head of R&D

Maury, regarding the intrathecal route for our program in Rett syndrome, the approach has been generally well-tolerated across intrathecal gene therapies. We have seen no treatment-related SAEs or dose-limiting toxicities of concern. The most common clinical observation following intrathecal dosing is a mild elevation in liver enzymes, thought to be immune-related, and typically controlled with corticosteroids. These elevations tend to be mild and manageable. Our patients are on prednisone prophylactically, and common post-dosing observations have been mild and controlled. Overall, we have not seen safety signals of major concern.

Maury Raycroft, Analyst (Jefferies)

Got it. Thank you.

Operator, Operator

The next question comes from the line of Yanan Zhu from Wells Fargo. Please go ahead.

Yanan Zhu, Analyst (Wells Fargo)

Thanks for taking the question. How close are you to an agreement on the endpoint? Will alignment come before the first-half data update? Also, regarding the functional gain primary endpoint, can you comment on the bar for the level of change and the time point at which those changes can be achieved at this point?

Sean Nolan, Chief Executive Officer

We feel positive about the discussions because we have not deviated from our position for over a year. We continue to have constructive discussions, and our preference would be to provide the regulatory update coincident with the clinical data update so analysts and investors can fully assess the path forward alongside the data. We believe we are on track to do that in the first half of 2025, but final sequencing depends on how discussions progress. Regarding the bar for functional gains, for competitive reasons we won't disclose detailed thresholds today. Clinically meaningful changes include outcomes we have reported, such as sitting unassisted, improvements in communication, the ability to use words with meaning, and transitions from sitting to standing. Those are meaningful from both clinical and caregiver perspectives. We have a more detailed plan for assessment and time points, and we expect to finalize specifics as we align with the FDA.

Yanan Zhu, Analyst (Wells Fargo)

Great. Thanks for the color.

Operator, Operator

The next question comes from the line of Jack Allen from Baird. Please go ahead.

Jack Allen, Analyst (Baird)

Thank you. Congrats on the progress. What are the gatekeeping aspects related to reaching alignment with the FDA? Is there a specific meeting you want to have or new data to present? Is this being done on a rolling basis and you'll know when you reach alignment? Is there a catalyst in the next few months to reach regulatory alignment? Also, a quick follow-up on the timing of the high-dose dosing relative to the acute SAE window.

Sean Nolan, Chief Executive Officer

Jack, our discussions are ongoing and we continue to share updated clinical data with the FDA. We recently shared our natural history analysis for the first time with the FDA and they are reviewing it. Data maturation as patients accrue more time on therapy is part of the dialogue. There is no single hurdle; it's the confluence of updated data and natural history context and back-and-forth discussion. We feel encouraged and remain on track to provide the first-half update.

Sukumar Nagendran, President and Head of R&D

Regarding acute safety, the most common clinical observation after intrathecal gene therapy dosing is a mild elevation in liver enzymes within the first four to six weeks, typically controlled with prednisone. In systemic gene therapy you might see larger enzyme elevations, but intrathecal dosing tends to be more modest. Our patients are on corticosteroid prophylaxis, and based on experience and what we've observed, I have no specific safety concern at this time. We continually review outcomes against peer programs and industry experience to ensure the best approach.

Jack Allen, Analyst (Baird)

Thanks for the color. Congrats again.

Operator, Operator

The next question comes from the line of Joon Lee. Joon, please go ahead.

Joon Lee, Analyst

Could you provide some color on the steroid suppression regimen? You left that up to the company earlier. It seems there is currently a combination of steroids and sirolimus with a six-month taper for sirolimus. How should we think about the final approach and any plans to change this as you move toward commercialization?

Sean Nolan, Chief Executive Officer

We have used a combination of steroids and sirolimus in our regimen, with sirolimus implemented as a six-month taper in our current approach. We have been encouraged by the safety profile observed so far, with very mild and manageable elevations in liver enzymes across treated patients. That gives us confidence in the approach. It is possible that we may modify the regimen headed toward commercialization, including the potential to not use steroids long term, but that will be based on ongoing safety data and further evaluation.

Sukumar Nagendran, President and Head of R&D

The dosing regimen was designed based on scientific rationale, consultant recommendations, and industry precedence. We continue to innovate as data accumulates to optimize outcomes. The company performs ongoing due diligence and consults external gene therapy experts when finalizing regimens. We also compare our approach to other programs to ensure we present data that is clinically meaningful and aligned with FDA guidance. That process is continuous.

Operator, Operator

The Q&A session is now completed, and this concludes our call for today. Thank you to everyone for joining us. Have a great day.