Taysha Gene Therapies, Inc. (NASDAQ:TSHA) Q4 2022 Earnings Call Transcript

Taysha Gene Therapies, Inc. (NASDAQ:TSHA) Q4 2022 Earnings Call Transcript March 28, 2023

Operator: Greetings, and welcome to the Taysha Gene Therapies Fourth Quarter and Full-Year 2022 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Hayleigh Collins, Director and Head of Corporate Communications. Thank you, Ms. Collins. You may begin.

Hayleigh Collins: Thank you. Good afternoon, and welcome to Taysha’s fourth quarter and full-year 2022 financial results and corporate update conference call. I’m Hayleigh Collins, Taysha’s recently appointed Director and Head of Corporate Communications. I will also be overseeing Investor Relations activities. Ever in corporate communications experience in rare diseases having previously served in a similar role at Jaguar Gene Therapy. I’m excited to join Taysha at this pivotal time and look forward to working with the team to help bring potentially life-changing therapies to patients with rare diseases with high unmet medical needs. Earlier today, Taysha issued a press release announcing financial results for the fourth quarter and full-year 2022.

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. 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 relating to the existing clinical data for TSHA-120 and the therapeutic and commercial potential of TSHA-120 and TSHA-102. These statements may include expected timing and results of clinical trials of 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 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 of, 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 that we have filed with the Securities and Exchange Commission including our Annual Report on Form 10-K for the year ended December 31, 2022.

This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, March 28, 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 law. With that, I would now like to turn the call over to our CEO, Sean Nolan.

Sean Nolan: Thank you, Hayleigh, and welcome, everyone to our 2022 fourth quarter and full-year financial results and corporate update conference call. Today, I will begin providing a brief corporate outlook for 2023. Then Suku Nagendran, President and Head of R&D of Taysha will provide an update on our clinical development programs followed by a financial update from Kamran Alam, our Chief Financial Officer. I will then provide closing remarks before opening the call up for questions. The actions taken earlier this year to improve execution and expedite progress with our two lead clinical programs in Rett syndrome and GAN are having a positive effect. For TSHA-102 in Rett syndrome, we remain on track to execute across our timelines for both initial available safety data and regulatory submissions this year and our ongoing Phase I/ II REVEAL adult study.

Suku will provide further details here shortly. For TSHA-120 in GAN, an ultra-rare disease with no currently approved treatments. We recently received constructive feedback from the FDA regarding our follow-up questions to the Type B end-of-Phase II meeting. We are completing a comprehensive review of the data from the ongoing natural history and interventional trial including functional, biological and electrophysiological assessments. The preliminary analysis appears encouraging and we believe there are some compelling new findings that we intend to share with the FDA to further discuss a potential regulatory path forward. Again, Suku will discuss this in further detail shortly. In the year ahead, we remain focused on achieving the anticipated near-term milestones in our Rett syndrome and GAN programs and continue to work towards our mission of bringing transformational new treatments to patients with these devastating neurodegenerative diseases.

I will now turn the call over to Suku to provide a more in-depth discussion of our Rett syndrome and GAN programs. Suku?

Sukumar Nagendran: Thank you, Sean, and good afternoon, everyone. First, I will start with an update on TSHA-102, our gene therapy program for the treatment of Rett syndrome. As a reminder, TSHA-102 utilizes an innovative miRNA-Responsive Auto-Regulatory Element or miRARE platform designed to regulate the cellular expression of MECP2 for the treatment of Rett syndrome. TSHA-102 has received orphan drug and rare pediatric disease designations from the FDA and has been granted orphan drug designation from the European Commission. In our REVEAL Phase I/II trial in adult patients with Rett syndrome, we recently initiated screening for the first potential patient and we anticipate dosing the first patient in the first half of the year.

We remain on track to report initial available clinical data, primarily on safety, for TSHA-102 in the first half of 2023 and plan to provide quarterly update on available clinical data thereafter. Importantly, we recently submitted a protocol amendment to allow patients as young as 15 years old to be included in the study, which we believe will further expedite enrollment. In the second half of the year, we intend to continue dosing patients with Rett syndrome in our REVEAL trial. For our study in pediatric patients with Rett syndrome, we plan to submit a CTA to the UK MHRA for TSHA-102 in mid-2023. We also have an IND application submission to U.S. FDA planned in the second half of the year. Now let’s turn to TSHA-120 for the treatment of GAN, which to reiterate is an ultra-rare neurodegenerative indication with no approved treatments or established regulatory pathway.

TSHA-120 has received orphan drug and rare pediatric disease designations from the FDA and has been granted orphan drug designation from the European Commission. In regards to manufacturing, we recently submitted a CMC module 3 amendment submission to the FDA detailing our commercial process product manufacturing and drug comparability analysis. As Sean mentioned, we also received feedback from the FDA in response to our follow-up questions to the formal Type B end-of-Phase II meeting minutes. The FDA clarified MFM32, the primary efficacy scale discussed at the FDA Type B end-of-Phase II meeting, as a relevant primary endpoint only in the setting of a randomized double blind controlled trial, while also acknowledging Taysha’s challenge in executing and enrolling such a study design due to the ultra-rare nature of GAN.

As such, the FDA is open to regulatory flexibility in a controlled trial setting and is willing to consider alternative study designs utilizing objective measurements to demonstrate a relatively large treatment effect that is self-evident and clinically meaningful. We are completing a comprehensive review of data from the ongoing natural history and interventional trial including functional, biological and electrophysiological assessments, which will inform our plans for future interactions with the FDA. The ongoing analysis include functional assessments of MFM32 and Ataxia as progressive gait and limb ataxia, is a common clinical manifestation observed in patients with GAN that often leads to loss of ambulation by the second decade. Additionally, we continue to analyze functional and structural aspects of the retina and optic nerve given that GAN patients experience deterioration of visual acuity and optic nerve degeneration over time.

We are also conducting several objective biological and electrophysiological assessments including sensory nerve action potential, nerve and skin biopsies, ganglion cell and retinal nerve fiber layer thickness, brain and spine MRI images and muscle responses to nerve activation to determine whether there is a relatively large treatment effect that is self-evident and clinically meaningful. We intend to continue a collaborative dialogue with the FDA regarding the potential registrational path to bring TSHA-120 patients with GAN who reiterate have no approved treatments or established regulatory pathway. We plan to submit a formal meeting request to the agency in the second quarter of 2023 to further discuss the potential regulatory pathway forward for this ultra-rare disease.

I will now turn the call over to Kamran to discuss financials. Kamran?

Kamran Alam: Thank you, Suku. Research and development expenses were $13.9 million for the three months ended December 31, 2022, compared to $37.9 million for the three months ended December 31, 2021. Research and development expenses were $91.2 million for the full-year ended December 31, 2022, compared to $131.9 million for the full-year ended December 31, 2021. The $40.7 million decrease was primarily attributable to a decrease of $20.3 million in research and development manufacturing and other raw material purchases and a $9 million decrease in license fees. The decrease in research and development expenses for the year ended December 31, 2022 was also attributable to a $12 million decrease in third-party research and development fees, mainly related to non-clinical and toxicology studies and a $4.7 million decrease in compensation expense as a result of lower headcount.

Overall, lower research and development expenses for the year ended December 31, 2022 were partially offset by higher clinical trial expenses of $2.4 million and higher severance expense of $2.9 million in 2022. General and administrative expenses were $7.3 million for the three months ended December 31, 2022, compared to $11.8 million for the three months ended December 31, 2021. General and administrative expenses were $37.4 million for the year ended December 31, 2022, compared to $41.3 million for the year ended December 31, 2021. The decrease of approximately $3.9 million was primarily attributable to $5 million of lower consulting professional fees and reduced compensation expenses driven by lower headcount in 2022. Lower general and administrative expenses were partially offset by $1.1 million of severance expense.

Net loss for the three months ended December 31, 2022 was $55.7 million, or $0.99 per share, as compared to a net loss of $50.4 million, or $1.32 per share, for the three months ended December 31, 2021. In November 2022, we recorded a $36.4 million non-cash, non-recurring impairment charge related to the North Carolina manufacturing facility. Currently, we are in the process of actively looking for buyers for the North Carolina manufacturing facility. The net loss for the three months ended December 31, 2022 was partially offset by revenue of $2.5 million recognized related to the Astellas Transactions. Net loss for the full-year ended December 31, 2022 was $166 million or $3.78 per share, as compared to a net loss of $174.5 million, or $4.64 per share, for the full-year ended December 31, 2021.

As of December 31, 2022, Taysha had $87.9 million in cash and cash equivalents. The company continues to expect that its current cash resources will support planned operating expenses and capital requirements into the first quarter of 2024. I will now return the call back over to Sean for his closing remarks. Sean?

Sean Nolan: Thank you, Kamran. I am pleased with the progress we have made with our two lead programs during the first few months of 2023, including initiating screening of the first potential patient in the adult Rett study and submitting a protocol amendment that should further expedite patient enrollment. For GAN, we are encouraged by the constructive feedback received from the FDA and the preliminary assessment of the comprehensive data analysis to support a formal meeting request in the second quarter to further discuss the potential regulatory path forward. Our focus throughout this year will be on the execution and delivering across our planned milestones for Rett syndrome and GAN programs. We look forward to providing further updates throughout 2023. With that, I will now ask the operator to begin our Q&A session. Operator?

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Q&A Session

Operator: Thank you. We will now be conducting a question-and-answer session. Thank you. And our first question is from Yanan Zhu with Wells Fargo Securities. Please proceed with your question.

Unidentified Analyst: Hi. Thanks for taking our question. This is on for Yanan. So my question is on the Rett syndrome program, so given that acadia’s DAYBUE is now approved for Rett syndrome patients aged five to 20, how would that affect your clinical study count in enrollment, particularly for the UK study? And do you need to include DAYBUE into your trial design? Thank you.

Sean Nolan: Thank you very much for the question. We’ve thought in our planning and I’d like to ask Suku to provide some perspective on that. Suku?

Sukumar Nagendran: Yes. Thanks, Sean. This is an important question that you asked because I think getting a product approved for a terrible disease like Rett, I think, is very important for the whole disease state and the patient population. What I would also identify is that by having trofinetide approved, it also increases the awareness of the disease state amongst the physician and patients communities, which could potentially increase the number of accessible prevalent patients and also result in, I think, some serious discussion at the state and federal level when it comes to newborn screening, which could further increase the number of patients available from an incident standpoint. So what I’m saying is collectively this could be a real plus for the whole disease community, but also for sponsors like us who are doing interventional trials.

Now to address your question about whether €“ once you have an approved product like trofinetide, where the mechanism of action obviously is very different from our product TSHA-102, which addresses the root cause of the disease, we would ideally like to treat patients that are treatment naive such that we can optimize and show the FDA and other regulatory authorities and the patient communities and the healthcare providers who treat this disease that this €“ our product will have significant impact on clinical progression of disease. Now that is the hope, but the caveat is as you ask, if there is an approved product, there is always possibility that we may have to have a arm which has a combination product evaluation as well, and that is something we would be happy to discuss further with the regulators and take it on a case-by-case basis.

But my team is already considering this in the protocol designs for the future. Sean, anything else you’d like to add?

Sean Nolan: The only other thing I would add is, is that, given the half life of the product and some of the adverse event profile, there’s opportunity for patients that take the drug may not be able to stay on it. So you’ve got a pool of, call it, non-treated patients that you could potentially access. And we experienced with Zolgensma study is that even with the addition of SPINRAZA, patients would be willing to either wait or wash out from taking those other medicines. So we’ll certainly keep an active eye on the impact that trofinetide is having. We’ve given it a great deal of consideration into our scenario planning for clinical trial designs and we remain confident that we’ll be able to enroll patients in the U.S. and in other geographies including Canada and the UK. So thank you.

Sukumar Nagendran: And Sean, if I can add one more point. Also, if you look at the trofinetide label, the discontinuation rates in the trials are very high due to GI symptoms and I’ve forgotten the exact numbers, but you may have to look that up. I think it was anywhere from, I don’t know, 70% to even 90% in some of the trials. So that may have significant impact on more patients being available even though this product is available for patients with Rett syndrome.

Unidentified Analyst: Got it. Very clear. Thank you.

Operator: Thank you. Our next question is from Whitney Ijem with Canaccord. Please proceed with your question.