10-Q 1 tsha-10q_20220930.htm 10-Q tsha-10q_20220930.htm
false Q3 0001806310 --12-31 P2Y P4Y P4Y P10Y P4Y P3Y P6Y1M6D P6Y1M6D P6Y P9Y2M12D P8Y7M6D P8Y7M6D P7Y6M 0001806310 2022-01-01 2022-09-30 xbrli:shares 0001806310 2022-11-08 iso4217:USD 0001806310 2022-09-30 0001806310 2021-12-31 iso4217:USD xbrli:shares 0001806310 2022-07-01 2022-09-30 0001806310 2021-07-01 2021-09-30 0001806310 2021-01-01 2021-09-30 0001806310 us-gaap:CommonStockMember 2022-06-30 0001806310 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001806310 us-gaap:RetainedEarningsMember 2022-06-30 0001806310 2022-06-30 0001806310 us-gaap:AdditionalPaidInCapitalMember 2022-07-01 2022-09-30 0001806310 us-gaap:CommonStockMember 2022-07-01 2022-09-30 0001806310 us-gaap:RetainedEarningsMember 2022-07-01 2022-09-30 0001806310 us-gaap:CommonStockMember 2022-09-30 0001806310 us-gaap:AdditionalPaidInCapitalMember 2022-09-30 0001806310 us-gaap:RetainedEarningsMember 2022-09-30 0001806310 us-gaap:CommonStockMember 2021-06-30 0001806310 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001806310 us-gaap:RetainedEarningsMember 2021-06-30 0001806310 2021-06-30 0001806310 us-gaap:AdditionalPaidInCapitalMember 2021-07-01 2021-09-30 0001806310 us-gaap:CommonStockMember 2021-07-01 2021-09-30 0001806310 us-gaap:RetainedEarningsMember 2021-07-01 2021-09-30 0001806310 us-gaap:CommonStockMember 2021-09-30 0001806310 us-gaap:AdditionalPaidInCapitalMember 2021-09-30 0001806310 us-gaap:RetainedEarningsMember 2021-09-30 0001806310 2021-09-30 0001806310 us-gaap:CommonStockMember 2021-12-31 0001806310 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001806310 us-gaap:RetainedEarningsMember 2021-12-31 0001806310 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-09-30 0001806310 us-gaap:CommonStockMember 2022-01-01 2022-09-30 0001806310 us-gaap:RetainedEarningsMember 2022-01-01 2022-09-30 0001806310 us-gaap:CommonStockMember 2020-12-31 0001806310 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001806310 us-gaap:RetainedEarningsMember 2020-12-31 0001806310 2020-12-31 0001806310 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-09-30 0001806310 us-gaap:CommonStockMember 2021-01-01 2021-09-30 0001806310 us-gaap:RetainedEarningsMember 2021-01-01 2021-09-30 0001806310 us-gaap:EmployeeStockOptionMember 2022-01-01 2022-09-30 0001806310 tsha:SalesAgreementMember tsha:SalesAgentMember srt:MaximumMember 2021-10-05 xbrli:pure 0001806310 tsha:SalesAgreementMember tsha:SalesAgentMember 2021-10-05 2021-10-05 0001806310 tsha:SalesAgreementMember 2022-09-30 0001806310 tsha:SalesAgreementMember 2022-04-01 2022-04-30 0001806310 tsha:SecuritiesPurchaseAgreementMember us-gaap:PrivatePlacementMember tsha:AstellasMember 2022-10-31 0001806310 tsha:SecuritiesPurchaseAgreementMember us-gaap:PrivatePlacementMember tsha:AstellasMember 2022-10-01 2022-10-31 0001806310 tsha:AstellasMember 2022-10-01 2022-10-31 0001806310 tsha:UnderwritingAgreementMember 2022-10-31 0001806310 tsha:UnderwritingAgreementMember 2022-10-01 2022-10-31 0001806310 us-gaap:LeaseholdImprovementsMember 2022-09-30 0001806310 us-gaap:LeaseholdImprovementsMember 2021-12-31 0001806310 tsha:LaboratoryEquipmentMember 2022-09-30 0001806310 tsha:LaboratoryEquipmentMember 2021-12-31 0001806310 us-gaap:ComputerEquipmentMember 2022-09-30 0001806310 us-gaap:ComputerEquipmentMember 2021-12-31 0001806310 us-gaap:FurnitureAndFixturesMember 2022-09-30 0001806310 us-gaap:FurnitureAndFixturesMember 2021-12-31 0001806310 us-gaap:ConstructionInProgressMember 2022-09-30 0001806310 us-gaap:ConstructionInProgressMember 2021-12-31 0001806310 tsha:BuildToSuitLeaseMember 2022-09-30 0001806310 tsha:PayrollAndPayrollRelatedCostsMember 2022-09-30 0001806310 tsha:TermLoanThroughDecemberThirtyOneTwentyTwentyOneMember tsha:TermLoanFacilityMember 2021-08-12 0001806310 tsha:TermLoanThroughDecemberThirtyOneTwentyTwentyOneMember tsha:TermLoanFacilityMember 2021-08-12 2021-08-12 0001806310 tsha:TermLoanFromJanuaryOneTwentyTwentyTwoUntilSeptemberThirtyTwentyTwentyTwoMember tsha:TermLoanFacilityMember 2021-08-12 0001806310 tsha:TermLoanFromJanuaryOneTwentyTwentyTwoUntilSeptemberThirtyTwentyTwentyTwoMember tsha:TermLoanFacilityMember 2022-09-30 0001806310 tsha:TermLoanFromJanuaryOneTwentyTwentyTwoUntilSeptemberThirtyTwentyTwentyTwoMember tsha:TermLoanFacilityMember 2021-08-12 2021-08-12 0001806310 tsha:TermLoanFromJanuaryOneTwentyTwentyTwoUntilSeptemberThirtyTwentyTwentyTwoMember tsha:TermLoanFacilityMember 2022-01-01 2022-09-30 0001806310 tsha:TermLoanFromOctoberOneTwentyTwentyTwoUntilMarchThirtyOneTwentyTwentyThreeMember tsha:TermLoanFacilityMember 2021-08-12 0001806310 tsha:TermLoanFromOctoberOneTwentyTwentyTwoUntilMarchThirtyOneTwentyTwentyThreeMember tsha:TermLoanFacilityMember 2021-08-12 2021-08-12 tsha:Program 0001806310 tsha:TermLoanFromAprilOneTwentyTwentyThreeUntilDecemberThirtyOneTwentyTwentyThreeMember tsha:TermLoanFacilityMember 2021-08-12 0001806310 tsha:TermLoanFromAprilOneTwentyTwentyThreeUntilDecemberThirtyOneTwentyTwentyThreeMember tsha:TermLoanFacilityMember 2021-08-12 2021-08-12 0001806310 tsha:TermLoanFacilityMember 2021-08-12 0001806310 tsha:TermLoanFacilityMember 2021-12-31 0001806310 tsha:TermLoanFacilityMember 2022-09-30 0001806310 2021-08-12 0001806310 us-gaap:PrimeRateMember 2021-08-12 2021-08-12 0001806310 2021-08-12 2021-08-12 0001806310 tsha:TermLoanThroughAugustThirteenTwentyTwentyThreeMember 2021-08-12 2021-08-12 0001806310 tsha:UTSouthwesternAgreementMember 2020-04-01 2020-04-30 tsha:Product 0001806310 tsha:UTSouthwesternAgreementMember 2019-11-30 0001806310 tsha:UTSouthwesternAgreementMember 2020-03-31 0001806310 tsha:QueensAgreementMember us-gaap:ResearchAndDevelopmentExpenseMember 2020-04-01 2020-04-30 0001806310 tsha:QueensAgreementMember srt:MaximumMember 2020-02-21 0001806310 tsha:QueensAgreementMember 2022-01-01 2022-09-30 0001806310 tsha:AbeonaCLN1AgreementsMember 2020-08-01 2020-08-31 0001806310 tsha:AbeonaCLN1AgreementsMember 2020-10-01 2020-10-31 0001806310 tsha:AbeonaCLN1AgreementsMember 2020-01-01 2020-12-31 0001806310 tsha:AbeonaCLN1AgreementsMember 2021-01-01 2021-12-31 0001806310 tsha:AbeonaCLN1AgreementsMember srt:MaximumMember 2020-08-31 0001806310 tsha:AbeonaTherapeuticsIncMember tsha:AbeonaRettAgreementMember 2020-01-01 2020-12-31 0001806310 srt:MaximumMember tsha:AbeonaTherapeuticsIncMember tsha:AbeonaRettAgreementMember 2020-10-29 0001806310 tsha:AbeonaTherapeuticsIncMember tsha:AbeonaRettAgreementMember 2022-01-01 2022-09-30 0001806310 tsha:AbeonaTherapeuticsIncMember tsha:AbeonaRettAgreementMember 2022-07-01 2022-07-31 0001806310 tsha:AcquisitionOfWorldwideRightsForTSHA120ForTreatmentOfGiantAxonalNeuropathyMember 2021-03-01 2021-03-31 0001806310 tsha:AcquisitionOfWorldwideRightsForTSHA120ForTreatmentOfGiantAxonalNeuropathyMember 2021-03-31 0001806310 tsha:AcquisitionOfWorldwideRightsForTSHA120ForTreatmentOfGiantAxonalNeuropathyMember 2021-01-01 2021-09-30 0001806310 tsha:AcquisitionOfWorldwideRightsForTSHA120ForTreatmentOfGiantAxonalNeuropathyMember 2022-01-01 2022-09-30 0001806310 tsha:LicenseAgreementForCLN7Member 2022-03-01 2022-03-31 0001806310 tsha:LicenseAgreementForCLN7Member 2022-03-31 0001806310 tsha:TwoThousandTwentyEquityIncentivePlanMember us-gaap:CommonStockMember 2020-07-01 0001806310 tsha:TwoThousandTwentyEquityIncentivePlanMember us-gaap:CommonStockMember 2020-09-16 0001806310 tsha:TwoThousandTwentyStockIncentivePlanMember 2020-09-16 0001806310 tsha:TwoThousandTwentyEquityIncentivePlanMember 2020-09-16 0001806310 tsha:TwoThousandTwentyStockIncentivePlanMember 2020-09-16 2020-09-16 0001806310 tsha:TwoThousandTwentyStockIncentivePlanMember 2021-01-01 0001806310 tsha:TwoThousandTwentyStockIncentivePlanMember 2022-01-01 0001806310 tsha:TwoThousandTwentyStockIncentivePlanMember 2022-01-01 2022-09-30 0001806310 tsha:EmployeeStockPurchasePlansMember srt:MaximumMember 2020-09-16 0001806310 tsha:EmployeeStockPurchasePlansMember 2020-09-16 2020-09-16 0001806310 tsha:EmployeeStockPurchasePlansMember 2020-09-16 0001806310 tsha:EmployeeStockPurchasePlansMember 2022-01-01 0001806310 tsha:EmployeeStockPurchasePlansMember 2022-01-01 2022-09-30 0001806310 tsha:TwoThousandTwentyEquityIncentivePlanMember tsha:CancelledOptionsMember tsha:CertainEmployeesAndConsultantsMember 2020-07-01 2020-07-01 0001806310 tsha:TwoThousandTwentyEquityIncentivePlanMember us-gaap:RestrictedStockUnitsRSUMember 2020-09-02 2020-09-02 0001806310 tsha:TwoThousandTwentyEquityIncentivePlanMember 2022-01-01 2022-09-30 0001806310 us-gaap:EmployeeStockOptionMember tsha:TwoThousandTwentyStockIncentivePlanMember 2022-07-01 2022-09-30 0001806310 us-gaap:EmployeeStockOptionMember tsha:TwoThousandTwentyStockIncentivePlanMember 2022-01-01 2022-09-30 0001806310 us-gaap:EmployeeStockOptionMember tsha:TwoThousandTwentyStockIncentivePlanMember srt:MinimumMember 2022-01-01 2022-09-30 0001806310 us-gaap:EmployeeStockOptionMember tsha:TwoThousandTwentyStockIncentivePlanMember srt:MaximumMember 2022-01-01 2022-09-30 0001806310 us-gaap:EmployeeStockOptionMember 2021-07-01 2021-09-30 0001806310 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-09-30 0001806310 us-gaap:EmployeeStockOptionMember 2021-12-31 0001806310 us-gaap:EmployeeStockOptionMember 2022-09-30 0001806310 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-12-31 0001806310 us-gaap:RestrictedStockUnitsRSUMember tsha:TwoThousandTwentyEquityIncentivePlanMember us-gaap:ShareBasedCompensationAwardTrancheOneMember 2020-09-02 2020-09-02 0001806310 us-gaap:RestrictedStockUnitsRSUMember tsha:TwoThousandTwentyEquityIncentivePlanMember us-gaap:ShareBasedCompensationAwardTrancheTwoMember 2020-09-02 2020-09-02 0001806310 us-gaap:RestrictedStockUnitsRSUMember tsha:TwoThousandTwentyEquityIncentivePlanMember us-gaap:ShareBasedCompensationAwardTrancheThreeMember 2020-09-02 2020-09-02 0001806310 us-gaap:RestrictedStockUnitsRSUMember tsha:TwoThousandTwentyEquityIncentivePlanMember tsha:ShareBasedCompensationAwardTrancheFourMember 2020-09-02 2020-09-02 0001806310 us-gaap:RestrictedStockUnitsRSUMember 2022-09-30 0001806310 us-gaap:RestrictedStockUnitsRSUMember 2022-01-01 2022-09-30 0001806310 us-gaap:RestrictedStockUnitsRSUMember 2021-12-31 0001806310 us-gaap:RestrictedStockMember tsha:TwoThousandTwentyEquityIncentivePlanMember tsha:PresidentAndChiefExecutiveOfficerMember 2020-07-01 2020-07-01 0001806310 us-gaap:RestrictedStockMember 2022-09-30 0001806310 us-gaap:RestrictedStockMember 2022-01-01 2022-09-30 0001806310 us-gaap:RestrictedStockMember 2020-07-01 2020-07-01 0001806310 us-gaap:RestrictedStockMember 2021-12-31 0001806310 2022-02-28 0001806310 2022-02-01 2022-02-28 0001806310 us-gaap:ConstructionInProgressMember 2022-01-01 2022-09-30 0001806310 us-gaap:ResearchAndDevelopmentExpenseMember 2022-07-01 2022-09-30 0001806310 us-gaap:ResearchAndDevelopmentExpenseMember 2021-07-01 2021-09-30 0001806310 us-gaap:ResearchAndDevelopmentExpenseMember 2022-01-01 2022-09-30 0001806310 us-gaap:ResearchAndDevelopmentExpenseMember 2021-01-01 2021-09-30 0001806310 us-gaap:GeneralAndAdministrativeExpenseMember 2022-07-01 2022-09-30 0001806310 us-gaap:GeneralAndAdministrativeExpenseMember 2021-07-01 2021-09-30 0001806310 us-gaap:GeneralAndAdministrativeExpenseMember 2022-01-01 2022-09-30 0001806310 us-gaap:GeneralAndAdministrativeExpenseMember 2021-01-01 2021-09-30 0001806310 us-gaap:RestrictedStockUnitsRSUMember 2022-01-01 2022-09-30 0001806310 us-gaap:RestrictedStockUnitsRSUMember 2021-01-01 2021-09-30 0001806310 us-gaap:RestrictedStockMember 2022-01-01 2022-09-30 0001806310 us-gaap:RestrictedStockMember 2021-01-01 2021-09-30 0001806310 us-gaap:EmployeeStockOptionMember 2022-01-01 2022-09-30 0001806310 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-09-30 utr:sqft 0001806310 tsha:DurhamLeaseMember 2020-12-17 0001806310 tsha:DurhamLeaseMember 2020-12-17 2020-12-17 0001806310 tsha:DurhamLeaseMember 2022-09-30 0001806310 tsha:DurhamLeaseMember 2022-01-01 2022-09-30 0001806310 tsha:ExitAndDisposalActivitiesMember 2022-01-01 2022-03-31 0001806310 tsha:ExitAndDisposalActivitiesMember 2022-01-01 2022-09-30 0001806310 srt:MaximumMember 2021-07-01 2021-09-30 0001806310 tsha:AstellasMember 2022-10-21 2022-10-21 0001806310 us-gaap:PrivatePlacementMember tsha:SecuritiesPurchaseAgreementMember tsha:AstellasMember 2022-10-21 0001806310 us-gaap:PrivatePlacementMember tsha:SecuritiesPurchaseAgreementMember tsha:AstellasMember 2022-10-21 2022-10-21 0001806310 tsha:UnderwritingAgreementMember 2022-10-26 0001806310 tsha:UnderwrittenPublicOfferingMember tsha:UnderwritingAgreementMember 2022-10-26 0001806310 tsha:UnderwritingAgreementMember 2022-10-26 2022-10-26 0001806310 tsha:UnderwritingAgreementMember 2022-10-31 2022-10-31

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-39536

 

Taysha Gene Therapies, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

84-3199512

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

3000 Pegasus Park Drive Ste 1430

Dallas, Texas

75247

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (214) 612-0000

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.00001 per share

 

TSHA

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  

As of November 8, 2022, the registrant had 62,442,281 shares of common stock, $0.00001 par value per share, outstanding.

 

 

 

 


 

Table of Contents

 

 

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Taysha Gene Therapies, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

2022

 

 

December 31,

2021

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

34,306

 

 

$

149,103

 

Prepaid expenses and other current assets

 

 

8,696

 

 

 

10,499

 

Total current assets

 

 

43,002

 

 

 

159,602

 

Restricted cash

 

 

2,637

 

 

 

2,637

 

Deferred lease asset

 

 

630

 

 

 

667

 

Property, plant and equipment, net

 

 

63,954

 

 

 

50,610

 

Other non-current assets

 

 

1,245

 

 

 

440

 

Total assets

 

$

111,468

 

 

$

213,956

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

15,251

 

 

$

21,763

 

Accrued expenses and other current liabilities

 

 

17,888

 

 

 

29,983

 

Total current liabilities

 

 

33,139

 

 

 

51,746

 

Build-to-suit lease liability

 

 

25,496

 

 

 

25,900

 

Term loan, net

 

 

37,773

 

 

 

37,192

 

Other non-current liabilities

 

 

3,934

 

 

 

3,735

 

Total liabilities

 

 

100,342

 

 

 

118,573

 

Commitments and contingencies - Note 9

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

Preferred stock, $0.00001 par value per share; 10,000,000 shares authorized and no shares issued and outstanding as of September 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.00001 par value per share; 200,000,000 shares authorized and 41,175,939 and 38,473,945 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

 

1

 

 

 

 

Additional paid-in capital

 

 

357,065

 

 

 

331,032

 

Accumulated deficit

 

 

(345,940

)

 

 

(235,649

)

Total stockholders’ equity

 

 

11,126

 

 

 

95,383

 

Total liabilities and stockholders' equity

 

$

111,468

 

 

$

213,956

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

1


 

Taysha Gene Therapies, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(Unaudited)

 

 

 

 

For the Three Months

Ended September 30,

 

 

For the Nine Months

Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

16,391

 

 

$

39,528

 

 

$

77,308

 

 

$

94,025

 

General and administrative

 

 

8,683

 

 

 

11,153

 

 

 

30,019

 

 

 

29,518

 

Total operating expenses

 

 

25,074

 

 

 

50,681

 

 

 

107,327

 

 

 

123,543

 

Loss from operations

 

 

(25,074

)

 

 

(50,681

)

 

 

(107,327

)

 

 

(123,543

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

9

 

 

 

37

 

 

 

50

 

 

 

143

 

Interest expense

 

 

(1,241

)

 

 

(543

)

 

 

(3,002

)

 

 

(737

)

Other expense

 

 

(1

)

 

 

 

 

 

(12

)

 

 

 

Total other expense, net

 

 

(1,233

)

 

 

(506

)

 

 

(2,964

)

 

 

(594

)

Net loss

 

$

(26,307

)

 

$

(51,187

)

 

$

(110,291

)

 

$

(124,137

)

Net loss per common share, basic and diluted

 

$

(0.64

)

 

$

(1.35

)

 

$

(2.77

)

 

$

(3.31

)

Weighted average common shares outstanding, basic and diluted

 

 

40,937,808

 

 

 

38,003,954

 

 

 

39,761,764

 

 

 

37,495,537

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

2


 

Taysha Gene Therapies, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(Unaudited)

 

For the Three Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance as of June 30, 2022

 

 

41,020,086

 

 

$

1

 

 

$

352,342

 

 

$

(319,633

)

 

$

32,710

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,470

 

 

 

 

 

 

4,470

 

Issuance of common stock upon vesting and settlement of restricted stock units

 

 

82,780

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under ESPP

 

 

73,073

 

 

 

 

 

 

253

 

 

 

 

 

 

253

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(26,307

)

 

 

(26,307

)

Balance as of September 30, 2022

 

 

41,175,939

 

 

$

1

 

 

$

357,065

 

 

$

(345,940

)

 

$

11,126

 

 

 

For the Three Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance as of June 30, 2021

 

 

38,391,165

 

 

$

 

 

$

320,571

 

 

$

(134,076

)

 

$

186,495

 

Stock-based compensation

 

 

 

 

 

 

 

 

5,086

 

 

 

 

 

 

5,086

 

Issuance of common stock upon vesting and settlement of restricted stock units

 

 

82,780

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(51,187

)

 

 

(51,187

)

Balance as of September 30, 2021

 

 

38,473,945

 

 

$

 

 

$

325,657

 

 

$

(185,263

)

 

$

140,394

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

3


 

Taysha Gene Therapies, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(Unaudited)

 

 

For the Nine Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2021

 

 

38,473,945

 

 

$

 

 

$

331,032

 

 

$

(235,649

)

 

$

95,383

 

Stock-based compensation

 

 

 

 

 

 

 

 

14,172

 

 

 

 

 

 

14,172

 

Issuance of common stock, net of sales commissions and other offering costs of $392

 

 

2,000,000

 

 

 

1

 

 

 

11,608

 

 

 

 

 

 

11,609

 

Issuance of common stock upon vesting and settlement of restricted stock units

 

 

628,921

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under ESPP

 

 

73,073

 

 

 

 

 

 

253

 

 

 

 

 

 

253

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(110,291

)

 

 

(110,291

)

Balance as of September 30, 2022

 

 

41,175,939

 

 

$

1

 

 

$

357,065

 

 

$

(345,940

)

 

$

11,126

 

 

 

For the Nine Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2020

 

 

37,761,435

 

 

$

 

 

$

312,428

 

 

$

(61,126

)

 

$

251,302

 

Stock-based compensation

 

 

 

 

 

 

 

 

13,229

 

 

 

 

 

 

13,229

 

Issuance of common stock upon vesting and settlement of restricted stock units

 

 

712,510

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(124,137

)

 

 

(124,137

)

Balance as of September 30, 2021

 

 

38,473,945

 

 

$

 

 

$

325,657

 

 

$

(185,263

)

 

$

140,394

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

 

 

4


 

Taysha Gene Therapies, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(110,291

)

 

$

(124,137

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation expense

 

 

808

 

 

 

283

 

Research and development license expense

 

 

1,250

 

 

 

6,750

 

Stock-based compensation

 

 

13,940

 

 

 

13,229

 

Other

 

 

616

 

 

 

450

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

1,980

 

 

 

(1,530

)

Accounts payable

 

 

(3,217

)

 

 

16,000

 

Accrued expenses and other liabilities

 

 

(7,753

)

 

 

12,179

 

Due to related party

 

 

 

 

 

(8

)

Net cash used in operating activities

 

 

(102,667

)

 

 

(76,784

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchase of research and development license

 

 

(4,250

)

 

 

(6,000

)

Purchase of property, plant and equipment

 

 

(18,310

)

 

 

(7,034

)

Net cash used in investing activities

 

 

(22,560

)

 

 

(13,034

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from Term Loan, net

 

 

 

 

 

29,978

 

Proceeds from issuance of common stock, net of sales commissions

 

 

11,640

 

 

 

 

Payment of shelf registration costs

 

 

(319

)

 

 

 

Proceeds from common stock issuances under ESPP

 

 

253

 

 

 

 

Other

 

 

(1,144

)

 

 

 

Net cash provided by financing activities

 

 

10,430

 

 

 

29,978

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(114,797

)

 

 

(59,840

)

Cash, cash equivalents and restricted cash at the beginning of the period

 

 

151,740

 

 

 

251,253

 

Cash, cash equivalents and restricted cash at the end of the period

 

$

36,943

 

 

$

191,413

 

Cash and cash equivalents

 

 

34,306

 

 

 

188,785

 

Restricted cash

 

 

2,637

 

 

 

2,628

 

Cash, cash equivalents and restricted cash at the end of the period

 

$

36,943

 

 

$

191,413

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

1,758

 

 

$

110

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

 

 

 

 

 

Property, plant and equipment in accounts payable and accrued expenses

 

 

3,366

 

 

 

6,658

 

Acquisition of property, plant and equipment funded by landlord

 

 

 

 

 

606

 

Deferred offering costs not yet paid

 

 

40

 

 

 

204

 

Purchase of research and development license not yet paid

 

 

 

 

 

750

 

Build-to-suit lease liability

 

 

 

 

 

26,607

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

 

 

5


 

 

Note 1—Organization and Description of Business Operations

Taysha Gene Therapies, Inc. (the “Company” or “Taysha”) was originally formed under the laws of the State of Texas on September 20, 2019 (“Inception”). Taysha converted to a Delaware corporation on February 13, 2020, which had no impact to the Company’s par value or issued and authorized capital structure.

Taysha is a patient-centric gene therapy company focused on developing and commercializing AAV-based gene therapies for the treatment of monogenic diseases of the central nervous system in both rare and large patient populations.

Sales Agreement

On October 5, 2021, the Company entered into a Sales Agreement (the “Sales Agreement”) with SVB Securities LLC (f/k/a SVB Leerink LLC) and Wells Fargo Securities, LLC (collectively, the “Sales Agents”), pursuant to which the Company may issue and sell, from time to time in its sole discretion, shares of its common stock having an aggregate offering price of up to $150.0 million through the Sales Agents. In March 2022, the Company amended the Sales Agreement to, among other things, include Goldman Sachs & Co. LLC as an additional Sales Agent. The Sales Agents may sell common stock by any method permitted by law deemed to be an “at-the-market offering” as defined in Rule 415(a)(4) of the Securities Act, including sales made directly on or through the Nasdaq Global Select Market or any other existing trade market for the common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to prevailing market prices, or any other method permitted by law. The Sales Agents are entitled to receive 3.0% of the gross sales price per share of common stock sold under the Sales Agreement. In April 2022, the Company sold 2,000,000 shares of common stock under the Sales Agreement and received $11.6 million in net proceeds. No other shares of common stock have been issued and sold pursuant to the Sales Agreement as of September 30, 2022.

Liquidity and Capital Resources

The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Pursuant to ASC 205, Presentation of Financial Statements, the Company is required to and does evaluate at each annual and interim period whether there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. In its Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, the Company concluded that there was insufficient funding available to allow the Company to fund its currently planned research and discovery programs and the build-out of its GMP manufacturing facility for a period exceeding one year from the filing of those financial statements, and that those conditions raised substantial doubt about the Company’s ability to continue as a going concern. 

 

In October 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) and an option agreement (the “Option Agreement,” together with the Securities Purchase Agreement the “Astellas Transactions”) with Audentes Therapeutics, Inc. (d/b/a Astellas Gene Therapy) (“Astellas”), pursuant to which the Company agreed to issue and sell 7,266,342 shares of its common stock for aggregate proceeds of $30.0 million and received a one-time payment in the amount of $20.0 million (the “Upfront Payment”), respectively, for total gross proceeds of $50.0 million. Also in October 2022, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Goldman Sachs & Co. LLC (the "Underwriter”) to issue and sell 14,000,000 shares of common stock for at a price of $2.00 per share. The Underwriter has an option, for a period of 30 days, to purchase up to an additional 2,100,000 shares of the Company’s common stock at a price of $1.88 per share. The net proceeds are expected be approximately $25.6 million, or approximately $29.6 million if the Underwriter exercises in full its option to purchase additional shares of Common Stock, in each case after deducting underwriting discounts and commissions and estimated offering expenses. See Note 12 for additional information.

 

The Company has concluded that these additional cash flows provide the Company with sufficient liquidity to satisfy its obligations for at least twelve months following the date of the issuance of these condensed consolidated financial statements. Accordingly, the Company has concluded that there is no longer substantial doubt about the Company’s ability to continue as a going concern.

 

The Company has incurred operating losses since inception and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of September 30, 2022, the Company had an accumulated deficit of $345.9 million. Losses are expected to continue as the Company continues to invest in its research and development activities. Future capital requirements will depend on many factors, including the timing and extent of spending on research and development and the market acceptance of the Company’s products. The Company will need to obtain additional financing in order to complete clinical

6


 

studies and launch and commercialize any product candidates for which it receives regulatory approval. There can be no assurance that such financing will be available or will be on terms acceptable to the Company.

 

Note 2—Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States ("GAAP") as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X and are consistent in all material respects with those included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission ("SEC") on March 31, 2022 (the “2021 Annual Report”). In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. The consolidated balance sheet as of December 31, 2021 is derived from audited financial statements, however, it does not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes in the Company’s 2021 Annual Report.

Principles of Consolidation

The accompanying interim condensed consolidated financial statements include the accounts of Taysha and its inactive wholly owned U.S. subsidiaries as well as two foreign subsidiaries incorporated during 2021. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates and assumptions in the Company’s financial statements relate to the determination of the fair value of the common stock prior to the Company’s initial public offering (“IPO”) in September 2020 (as an input into stock-based compensation), and estimating preclinical manufacturing accruals and accrued or prepaid research and development expenses. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Significant Accounting Policies

There have been no changes in the Company’s significant accounting policies as disclosed in Note 2 to the audited consolidated financial statements included in the 2021 Annual Report.

Comprehensive Loss

Comprehensive loss is equal to net loss as presented in the accompanying condensed consolidated statements of operations.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), as amended, with guidance regarding the accounting for and disclosure of leases. This update requires lessees to recognize the liabilities related to all leases, including operating leases, with a term greater than 12 months on the balance sheets. This update also requires lessees and lessors to disclose key information about their leasing transactions. This guidance will become effective for the Company for annual reporting periods beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. The new standard requires the use of one of the following two approaches, either (1) retrospectively to each prior reporting period presented in the financial statements with the cumulative effect recognized at the beginning of the earliest comparative period presented, or (2) retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment. The Company commenced its implementation efforts of this new accounting standard during the quarter and concluded that the cumulative impact of the adoption will be recorded as an adjustment to accumulated deficit as of January 1, 2022, and prior periods will not be adjusted. Upon adoption, the Company expects to recognize right-of-use assets and lease liabilities in the consolidated balance sheet related to operating leases.

7


 

Additionally, upon adoption, the Company expects to derecognize the build-to-suit asset and obligation (see Note 9) related to the construction-in-progress as the Company does not control the building during the construction period.

Note 3—Balance Sheet Components

Prepaid expenses and other current assets consisted of the following (in thousands):

 

 

 

September 30,

2022

 

 

December 31,

2021

 

Prepaid research and development

 

$

5,182

 

 

$

5,218

 

Prepaid clinical trial

 

 

2,284

 

 

 

3,298

 

Deferred offering costs

 

 

722

 

 

 

545

 

Prepaid insurance

 

 

74

 

 

 

148

 

Prepaid bonus

 

 

54

 

 

 

427

 

Other

 

 

380

 

 

 

863

 

Total prepaid expenses and other current assets

 

$

8,696

 

 

$

10,499

 

 

Property, plant and equipment, net consisted of the following (in thousands):

 

 

 

September 30,

2022

 

 

December 31,

2021

 

Leasehold improvements

 

$

2,091

 

 

$

2,067

 

Laboratory equipment

 

 

2,069

 

 

 

1,095

 

Computer equipment

 

 

1,127

 

 

 

1,098

 

Furniture and fixtures

 

 

897

 

 

 

845

 

Construction in progress

 

 

59,058

 

 

 

46,004

 

 

 

 

65,242

 

 

 

51,109

 

Accumulated depreciation

 

 

(1,288

)

 

 

(499

)

Property, plant and equipment, net

 

$

63,954

 

 

$

50,610

 

 

Included in construction in progress at September 30, 2022 was $59.0 million of costs associated with the Build-to-Suit lease (see Note 9), which includes $3.1 million of capitalized payroll and payroll-related costs.

Depreciation expense was $0.3 million and $0.8 million for the three and nine months ended September 30, 2022, respectively. Depreciation expense was $0.2 million and $0.3 million for the three and nine months ended September 30, 2021, respectively.

 

Accrued expenses and other current liabilities consisted of the following (in thousands):

 

 

 

September 30,

2022

 

 

December 31,

2021

 

Accrued research and development

 

$

8,027

 

 

$

11,895

 

Accrued compensation

 

 

4,914

 

 

 

7,703

 

Accrued license fees

 

 

 

 

 

3,500

 

Accrued property, plant and equipment

 

 

1,655

 

 

 

2,644

 

Accrued clinical trial

 

 

889

 

 

 

1,659

 

Accrued professional and consulting fees

 

 

823

 

 

 

1,091

 

Other

 

 

1,580

 

 

 

1,491

 

Total accrued expenses and other current liabilities

 

$

17,888

 

 

$

29,983

 

 

Note 4—Loan with Silicon Valley Bank

8


 

On August 12, 2021 (the “Closing Date”), the Company entered into a Loan and Security Agreement (the “Term Loan Agreement”), by and among the Company, the lenders party thereto from time to time (the “Lenders”) and Silicon Valley Bank, as administrative agent and collateral agent for the Lenders (“Agent”). The Term Loan Agreement provides for (i) on the Closing Date, $40.0 million aggregate principal amount of term loans available through December 31, 2021, (ii) from January 1, 2022 until September 30, 2022, an additional $20.0 million term loan facility available at the Company’s option upon having three distinct and active clinical stage programs, determined at the discretion of the Agent, at the time of draw, (iii) from October 1, 2022 until March 31, 2023, an additional $20.0 million term loan facility available at the Company’s option upon having three distinct and active clinical stage programs, determined at the discretion of the Agent, at the time of draw and (iv) from April 1, 2023 until December 31, 2023, an additional $20.0 million term loan facility available upon approval by the Agent and the Lenders (collectively, the “Term Loans”). The Company drew $30.0 million in term loans on the Closing Date and $10.0 million in term loans in December 2021. The Company did not draw on the additional $20.0 million tranche prior to its expiration on September 30, 2022.

 

The interest rate applicable to the Term Loans is the greater of (a) the WSJ Prime Rate plus 3.75% or (b) 7.00% per annum. The Term Loans are interest only from the Closing Date through August 31, 2024, after which the Company is required to pay equal monthly installments of principal through August 1, 2026, the maturity date.

 

The Term Loans may be prepaid in full through August 12, 2023 with payment of a 1.00% prepayment premium, after which they may be prepaid in full with no prepayment premium. An additional final payment of 7.5% of the amount of Terms Loans advanced by the Lenders (“Exit Fee”) will be due upon prepayment or repayment of the Term Loans in full. The Exit Fee of $3.0 million was recorded as debt discount and has also been fully accrued within non-current liabilities as of September 30, 2022. The debt discount is being accreted using the effective interest method over the term of the Term Loans within interest expense in the condensed consolidated statements of operations.

The obligations under the Term Loan Agreement are secured by a perfected security interest in all of the Company’s assets except for intellectual property and certain other customarily excluded property pursuant to the terms of the Term Loan Agreement. There are no financial covenants and no warrants associated with the Term Loan Agreement. The Term Loan Agreement contains various covenants that limit the Company’s ability to engage in specified types of transactions without the consent of the Lenders which include, among others, incurring or assuming certain debt; merging, consolidating or acquiring all or substantially all of the capital stock or property of another entity; changing the nature of the Company’s business; changing the Company’s organizational structure or type; licensing, transferring or disposing of certain assets; granting certain types of liens on the Company’s assets; making certain investments; and paying cash dividends.

The Term Loan Agreement also contains customary representations and warranties, and also includes customary events of default, including payment default, breach of covenants, change of control, and material adverse effects. The Company was in compliance with all covenants under the Term Loan Agreement as of September 30, 2022. Upon the occurrence of an event of default, a default interest rate of an additional 5% per annum may be applied to the outstanding loan balances, and the Lenders may declare all outstanding obligations immediately due and payable and exercise all of its rights and remedies as set forth in the Term Loan Agreement and under applicable law.

During the nine months ended September 30, 2022, the Company recognized interest expense related to the Term Loan of $2.5 million.

Future principal debt payments on the loan payable as of September 30, 2022 are as follows (in thousands):

 

Year Ending December 31,

 

 

 

 

2022

 

 

 

2023

 

 

 

2024

 

 

6,667

 

2025

 

 

20,000

 

2026

 

 

13,333

 

Total principal payments

 

 

40,000

 

Unamortized debt discount

 

 

(2,227

)

Term Loan, net

 

$

37,773

 

9


 

 

 

Note 5—Research, Collaboration and License Agreements

UT Southwestern Agreement

On November 19, 2019, the Company entered into a research, collaboration and license agreement (“UT Southwestern Agreement”) with the Board of Regents of the University of Texas System on behalf of The University of Texas Southwestern Medical Center (“UT Southwestern”). Under the UT Southwestern Agreement, UT Southwestern is primarily responsible for preclinical development activities with respect to licensed products for use in certain specified indications (up to investigational new drug application-enabling studies), and the Company is responsible for all subsequent clinical development and commercialization activities with respect to the licensed products. UT Southwestern will conduct such preclinical activities for a two-year period under mutually agreed upon sponsored research agreements that were entered into beginning in April 2020. During the initial research phase, the Company has the right to expand the scope of specified indications under the UT Southwestern Agreement.

In connection with the UT Southwestern Agreement, the Company obtained an exclusive, worldwide, royalty-free license under certain patent rights of UT Southwestern and a non-exclusive, worldwide, royalty-free license under certain know-how of UT Southwestern, in each case to make, have made, use, sell, offer for sale and import licensed products for use in certain specified indications. Additionally, the Company obtained a non-exclusive, worldwide, royalty-free license under certain patents and know-how of UT Southwestern for use in all human uses, with a right of first refusal to obtain an exclusive license under certain of such patent rights and an option to negotiate an exclusive license under other of such patent rights. The Company is required to use commercially reasonable efforts to develop, obtain regulatory approval for, and commercialize at least one licensed product.

On April 2, 2020, the Company amended the UT Southwestern Agreement to include the addition of another licensed product and certain indications, and a right of first refusal to the Company over certain patient dosing patents. No additional consideration was transferred in connection with this amendment. In March 2022, the Company and UT Southwestern mutually agreed to revise the payment schedules and current performance expectations of the current sponsored research agreements under the UT Southwestern Agreement and defer payments by fifteen months.

The UT Southwestern Agreement expires on a country-by-country and licensed product-by-licensed product basis upon the expiration of the last valid claim of a licensed patent in such country for such licensed product. After the initial research term, the Company may terminate the agreement, on an indication-by-indication and licensed product-by-licensed product basis, at any time upon specified written notice to UT Southwestern. Either party may terminate the agreement upon an uncured material breach of the agreement or insolvency of the other party.

In November 2019, as partial consideration for the license rights granted under the UT Southwestern Agreement, the Company issued 2,179,000 shares of its common stock, or 20% of its then outstanding fully-diluted common stock, to UT Southwestern. As additional consideration, UT Southwestern was entitled to receive additional shares if their holdings fell below 10% on a fully-diluted basis before or as a result of the completion of a qualified financing. In March 2020, following the initial closing of the Series A convertible preferred stock agreement, which met the definition of such qualified financing, the anti-dilution feature expired and no additional shares were issued. UT Southwestern no longer owns such shares of common stock as of January 2022. The Company does not have any future milestone or royalty obligations to UT Southwestern under the UT Southwestern Agreement other than costs related to maintenance of patents.

Queen’s Agreement

On February 21, 2020, the Company entered into a license agreement with Queen’s (the “Queen’s Agreement”) to obtain the exclusive perpetual, royalty-bearing license, with the right to sublicense through multiple tiers, under certain patent rights and know-how of Queen’s, including certain improvements to such patent rights and know-how, to develop products in any field which use one or more valid claims of the patents licensed under the Queen’s Agreement (the “Licensed Patents”), or the technology, information and intellectual property related to the patents licensed under the Queen’s Agreement (together with the Licensed Patents, the “Licensed Products”), and to make, have made, use, sell, offer for sale, import and export Licensed Products and otherwise exploit such patents and know-how for use in certain specified indications. In exchange for the rights granted to the Company, the Company made a cash payment of $3.0 million in April 2020 which was recorded within research and development expenses in the consolidated statements of operations for the year ended December 31, 2020 since the acquired license does not have an alternative future use. The Company is obligated to make aggregate cash payments of up to $10.0 million upon the completion of a combination of regulatory milestones and up to $10.0 million upon the completion of a combination of commercial milestones. In further consideration of the rights granted, beginning with the Company’s first commercial sale of the Licensed Products, the Company will also pay an annual

10


 

earned royalty in the low single digits on net sales of Licensed Products, subject to certain customary reductions,