Taysha Gene Therapies faces the potential delisting of its shares for trading below their required minimum price—the latest in a series of setbacks for the Dallas-based company, which recently canceled plans for a $75-million manufacturing facility in Durham, NC.
The gene therapy developer has been cited by Nasdaq for a share price that has fallen below $1 a share for 30 consecutive business days. Taysha’s shares on the Nasdaq Global Select Market traded at 70 cents a share on Monday—83% below its share price 12 months ago of $4.22.
Taysha has until October 23 to regain compliance, it said in a regulatory filing—but could gain another 180 days if it qualifies for transferring its shares to the less exclusive Nasdaq Capital Market, which has less stringent financial and liquidity requirements.
“We are actively monitoring the price of our common stock and identifying solutions to regain compliance with the listing requirements,” Taysha said in a statement to GEN. “To ensure preparedness, we plan to authorize Taysha’s Board of Directors to institute a reverse stock split, should market conditions require it.”
In a proxy statement filed on April 27, Taysha requested that shareholders vote at its 2023 Annual Meeting of Stockholders on June 22 to give the company’s board the option of authorizing that reverse split.
“However, we are firmly focused on remedying this naturally through execution and communication of the key value-driving milestones we anticipate occurring in the second half of the year,” Taysha added.
Anticipated milestones
Those anticipated milestones include a few related to TSHA-102, a self-complementary intrathecally delivered adeno-associated virus serotype 9 (AAV9) gene transfer therapy being developed for Rett syndrome.
Taysha expects to expand its clinical study of TSHA-102 by submitting an Investigational New Drug (IND) application to the FDA to study the gene transfer therapy in Rett syndrome during the second half, while continuing its assessment of TSHA-102 in adult Rett syndrome patients by continuing to dose adult patients in the Phase I/II REVEAL trial (NCT05606614) assessing Taysha’s TSHA-102 in adult Rett syndrome.
The milestones are based on Taysha dosing its first adult patient with Rett syndrome in REVEAL and generating initial clinical data, primarily on safety, for TSHA-102 in adults. Taysha has said both are expected to occur by the end of the first half of this year. REVEAL could also include patients as young as 15 years old, if the company obtains FDA approval for a protocol amendment it has submitted—an amendment “which we believe will further expedite enrollment,” Taysha stated in March.
In mid-2023, Taysha expects to have submitted a Clinical Trial Application to the U.K.’s Medicines and Healthcare Products Regulatory Agency seeking to conduct a clinical study of TSHA-102 in pediatric patients with Rett syndrome.
TSHA-102 uses a novel miRNA-Responsive Auto-Regulatory Element (miRARE) platform designed to regulate cellular MECP2 expression. TSHA-102 has been granted Orphan Drug and Rare Pediatric Disease designations from the FDA, as well as the European Commission (EC)’s Orphan Drug designation.
Taysha’s lead gene therapy candidate is TSHA-120, a self-complimentary intrathecally delivered AAV9 gene therapy under clinical study for giant axonal neuropathy (GAN). TSHA-120 has received Orphan Drug and Rare Pediatric Disease designations from the FDA and has been granted EC Orphan Drug status.
In January, Taysha CEO and Board Chairman Sean P. Nolan acknowledged to analysts that the company’s earlier expectations of FDA approval late this year or early next TSHA-120 in GAN had to be put on hold. The FDA disrupted Taysha’s anticipated authorization timeline when it mapped a regulatory approval path for TSHA-120 in GAN that included recommending a placebo-controlled randomized clinical trial—a study that according to Taysha is beyond its means.
The FDA has acknowledged as acceptable Taysha’s endpoint of improvement in the rate of decline in the 32-item Motor Function Measure (MFM32), an assessment of motor function used to evaluate fine and gross motor ability in patients with neuromuscular disorders. But in an earlier meeting between FDA officials and Taysha executives, the agency told Taysha that MFM32 may have subjective bias and is a relevant primary endpoint only in the setting of a randomized double-blind placebo-controlled trial.
Challenge acknowledged
In an FDA response disclosed by Taysha to its follow-up questions to minutes of the earlier meeting, the agency acknowledged Taysha’s challenge in executing and enrolling such a study design due to the ultra-rare nature of GAN.
“The FDA was open to acceptance of more uncertainty due to difficulty in enrolling a sufficient number of patients and regulatory flexibility in a controlled trial setting. In addition, the FDA indicated it was willing to consider alternative study designs utilizing objective measurements to demonstrate a relatively large treatment effect that is self-evident and clinically meaningful,” Taysha stated on April 5 in a stock prospectus. “The FDA acknowledged that the size of the safety database will be a review issue and acceptance of the existing safety data from treated patients will depend on demonstration of product comparability.”
“FDA is open to regulatory flexibility in a controlled trial setting and willing to consider alternative study designs utilizing objective measurements to demonstrate a relatively large treatment effect that is self-evident and clinically meaningful,” Taysha said in March when it announced fourth-quarter and full-year 2022 results.
Taysha will submit a formal meeting request to the FDA during this quarter. The company is waiting to hear back from the agency on its chemistry, manufacturing, and controls (CMC) module 3 amendment submission, designed to detail its commercial process product manufacturing and drug comparability analysis.
One analyst concluded that Taysha’s ongoing dialogue with FDA may draw investors to the company’s stock:
“Moving forward, we view the near-term risk:reward of Taysha shares positively, noting investor sentiment could start to reverse course over the coming quarters should the new management team be able to work with an increasingly receptive FDA to carve out an accelerated approval pathway in GAN,” Jack K. Allen, senior research analyst with Baird, wrote in a research note.
Nolan also told analysts in January that the company had implemented “operational, structural, and personnel changes” following a “thorough” review of its business. Those changes included job cuts and additional responsibilities for many remaining staffers, though he did not disclose how many (or which) positions the company had eliminated.
“Operational actions taken include cross functional team formation, meeting cadence changes, and modifications to governance structure intended to improve coordination, collaboration, and facilitate information flow. Steps were also taken to further rationalize headcount and expense,” Nolan said. “Organizational structure was consolidated, flattened, and further modified to streamline decision-making and bolster accountability. Personnel changes included both reductions in some areas and expansions of responsibility in other areas to facilitate company execution.”
The FDA dispute over TSHA-120 and job cuts led seven analysts to cut their 12-month price targets for Taysha shares—though the company thinks that setback is only temporary. “We remain confident that the measures taken early in 2023 to enhance our operating efficiency and improve overall execution will drive our value,” Taysha told GEN.
Value proposition?
Signs of Taysha’s ability to drive value may emerge on Thursday, when the company is set to report first-quarter results. Taysha finished 2022 with a net loss of $166.014 million, compared with a $174.523 million net loss in 2021. The company’s sole revenue for both Q4 and 2022 consisted of $2.502 million from Astellas Gene Therapy, which holds a 15% stake in Taysha after investing $50 million in the Dallas gene therapy developer.
As part of that deal last October, Astellas gained options for exclusive licenses for TSHA-120 and another Taysha clinical-phase adeno-associated virus (AAV)-based gene therapy candidate, TSHA-102 for Rett syndrome. Astellas also gained an effective right of first refusal to acquire Taysha.
Taysha finished 2022 with $87.88 million in cash and cash equivalents, down 41% from $149.103 million as of December 31, 2021.
“The company continues to expect that its current cash resources will support planned operating expenses and capital requirements into the first quarter of 2024,” Kamran Alam, Taysha’s CFO, told analysts on March 28 on the company’s quarterly earnings call.
“We made the decision to discontinue the buildout of the North Carolina manufacturing facility to help preserve capital as we work to develop our two lead clinical programs in GAN and Rett syndrome, with the goal to bring potentially transformational treatments to patients as quickly and safely as possible,” Taysha stated. “Currently, we are in the process of actively looking for buyers for the North Carolina manufacturing facility.”
Taysha signaled it was backing out of the manufacturing facility in January, when it asked the state of North Carolina to terminate an economic incentive agreement valued at more than $5 million that the state and company hammered out when the plan was announced in December 2000.
At the time, the North Carolina Economic Investment Committee had approved for Taysha a $4.8 million Job Development Investment Grant (JDIG) tied to achieving incremental job creation and investment targets over the grant’s 12-year period. Also, North Carolina Community Colleges agreed to provide approximately $360,000 in customized training to support the facility project.