ALPMF - Taysha: The FDA Just Stuck A Major Blow To Their Plans

Summary

• Taysha has a good chance of scoring with the GAN indication.
• Astellas may license this program if that happens.
• However, the FDA's request for more patients is a critical problem.

Since its IPO in September 2020, Taysha Gene Therapies ( TSHA ) stock price has been on a consistent decline. Starting out at $20, it went up to $35 for a brief spell, but it has been downhill ever since. The stock currently trades at $1.5, and even a major collaboration with Astellas ( OTCPK:ALPMF ) has not helped.

Taysha's pipeline looks like this:

So they have three clinical stage candidates, TSHA-120, TSHA-118 and TSHA-102.

A brief overview of the company would go like this: launched in 2020 to develop monogenic gene therapies for CNS diseases. First proof of concept (preclinical) data from a program in Angelman Syndrome, which does not seem to be on the current pipeline any longer. First clinical (?) safety data from a program in CLN7 disease, a form of Batten Disease, which, again, does not seem to be on the pipeline anymore, although there's a program in CLN1 disease, which is another genetic subtype of Batten Disease. Then in January 2022, the first real data - from the high dose cohort for TSHA-120 in giant axonal neuropathy, or GAN. The data showed marked improvements across all dose cohorts at various time durations. Key data :

• The high dose cohort of 3.5x1014 total vg led to a 5-point improvement in the change in the rate of decline in MFM32 score by year 1, compared to natural history decline of 8 points, the company said. 32-item Motor Function Measure (MFM32) is a key measure used to assess the functional abilities of patients with neuromuscular diseases.

• Across all therapeutic dose cohorts, there was a 7-point improvement in the rate of decline in MFM32 score by year 1, compared to natural history decline of 8 points.

• By year 3, the mean change in MFM32 was a 10-point improvement for all therapeutic dose cohorts, compared to the estimated natural history decline of 24 points.

There are 5000 patients in the company's addressable markets (according to orphanet , to date 50 families have been identified, although the number should be substantially more). This is a terrible pediatric, hereditary disease where patients become wheelchair-bound in the second decade of their lives, and " typically die in the third decade from respiratory failure." There are no approved treatments. There has not even ever been any other trial run by the industry outside of this one - here .

Taysha, earlier in preclinical studies, also showed positive data for this indication:

Treatment with AAV/JeT-GAN restored the normal configuration of IFs [intermediate filaments] in patient fibroblasts within days in cell culture and by 4 weeks in GAN KO mice.

While there are risks associated with the AAV9 vector, and the market is really small and largely undiagnosed, this data is a proof of concept for the whole Taysha platform. This is what caused Astellas to take an interest in Taysha - not just the GAN indication alone, but the platform itself was partly validated by this early data.

Taysha's other clinical stage program is for Rett Syndrome. A phase 1/2 trial is ongoing for TSHA-102.

Astellas paid $50mn to pick up a 15% stake in TSHA stock. In exchange, Astellas received an option to license these two gene therapies after end of phase 2 meeting minutes have been received from the FDA (for GAN), and the company provides ??Astellas access to certain clinical data from the female pediatric study (for Rett). As the company mentions:

Regulatory update for TSHA-120 in GAN following receipt of formal meeting minutes from the Type B end-of-Phase 2 meeting with FDA expected in mid-January 2023

This is then a major catalyst for this small company because once they get positive feedback from the FDA, Astellas may decide to license the program for an upfront fee, plus milestones and royalties. This will be a major deal here for TSHA.

Astellas also received one seat on Taysha's board of directors. If Astellas decided to exercise its option, there will be a separate and hopefully larger agreement and payments.

Update after the FDA minutes

As I was preparing this report, the FDA came back with a request to Taysha to dose more patients to support a marketing application for TSHA-120. The FDA suggested a placebo-controlled, double-blinded design for these extra patients. The company has requested more clarity from the FDA on the design and data requirements for approval. This has led to a selloff in the stock, and a restructuring effort at Taysha. Astellas may not opt in to the program now, as well. On the positive side, the FDA has agreed to MFM32 as an acceptable endpoint for the trial.

Financials

TSHA is a microcap with a market cap of $109mn and a cash reserve of $34mn. On top of that, Astellas invested $50mn. Immediately after the Astellas investment, TSHA ran a $28mn offering. They should have approximately $90mn at this moment. Research and development expenses were $16.4 million for the three months ended September 30, 2022, while general and administrative expenses were $8.7 million. That leaves them with a cash runway till the first quarter of 2024. Now with the added expense of more patients in the trial, the funds may not last long.

In December, TSHA brought in Chair of the Board of Directors, Sean P. Nolan, as the new CEO. Mr Nolan was the CEO of gene therapy company AveXis before it was bought out by Novartis.

Bottomline

TSHA is trading at 52-week lows. They will now need a new trial before they can submit a BLA, which will drain resources and time. My opinion before the FDA's response was that this was a risky stock but maybe worth a small investment given the decent GAN data. The data is still good, and they do have some cash. However, this is now an even riskier investment, even with the Astellas interest and the GAN data.

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