Taysha Gene Therapies, Inc. [TSHA] Filings

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10-Q 1 tsha-10q_20220930.htm 10-Q tsha-10q_20220930.htm

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

☐	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.

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

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Balance Sheets	1
	Statements of Operations	2
	Statements of Stockholders’ Equity	3
	Statements of Cash Flows	5
	Notes to Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	54
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	56
Signatures		57

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.

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.

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

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

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

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

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.

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

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

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

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

Taysha Gene Therapies, Inc. [TSHA] Filings
10-Q	[2022-11-08]
10-Q	[2022-08-11]
10-Q	[2022-05-16]
10-K	[2022-03-31]
10-Q	[2021-11-10]
10-Q	[2021-08-16]
10-Q	[2021-05-11]
10-K	[2021-03-03]
10-Q	[2020-11-12]
S-1	[2020-09-02]