What changed in this filing

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Item 1. Financial Statements

2022-08-11 compared with 2022-05-16 · 122 added, 99 removed, 319 unchanged (41% of the section changed)

23 unchanged sentences

Preferred stock, $ 0.00001 par value per share;

10,000,000 shares authorized and no shares issued and outstanding as of March 31, 2022 and December 31, 2021

10,000,000 shares authorized and no shares issued and outstanding as of June 30, 2022 and December 31, 2021

Common stock, $ 0.00001 par value per share;

200,000,000 shares authorized and 38,473,945 issued and outstanding as of March 31, 2022 and December 31, 2021

200,000,000 shares authorized and 41,020,086 and 38,473,945 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

7 unchanged sentences

For the Three Months

Ended March 31,

Ended June 30,

For the Six Months

Ended June 30,

Operating expenses:

7 unchanged sentences

Other expense

Total other income (expense), net

Total other expense, net

Net loss per common share, basic and diluted

4 unchanged sentences

(in thousands, except share data)

For the Three Months Ended March 31, 2022

For the Three Months Ended June 30, 2022

Stockholders'

Balance as of December 31, 2021

Balance as of March 31, 2022

Stock-based compensation

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

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

Balance as of June 30, 2022

For the Three Months Ended June 30, 2021

Stockholders'

Balance as of March 31, 2021

For the Three Months Ended March 31, 2021

Stock-based compensation

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

Balance as of June 30, 2021

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)

For the Six Months Ended June 30, 2022

Stockholders'

1 unchanged sentence

Stock-based compensation

Balance as of March 31, 2021

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

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

Balance as of June 30, 2022

For the Six Months Ended June 30, 2021

Stockholders'

Balance as of December 31, 2020

Stock-based compensation

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

Balance as of June 30, 2021

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

2 unchanged sentences

(in thousands)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash flows from operating activities

16 unchanged sentences

ESPP contributions

Net cash used in financing activities

Proceeds from issuance of common stock, net of sales commissions

Net cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

11 unchanged sentences

Purchase of research and development license not yet paid

Build-to-suit lease liability

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

9 unchanged sentences

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 will be entitled to receive 3.0 % of the gross sales price per share of common stock sold under the Sales Agreement.

As of March 31, 2022, no shares of common stock had been issued and sold pursuant to the Sales Agreement .

The Company sold 2.0 million shares under the Sales Agreement in April 2022 (see Note 12).

Liquidity and Capital Resources

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 June 30, 2022.

Going Concern

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.

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 March 31, 2022, the Company had an accumulated deficit of $ 285.8 million.

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.

As of March 31, 2022, the Company had cash and cash equivalents of $ 96.6 million which the Company believes will be sufficient to fund its planned operations for a period of at least twelve months from the date of issuance of these condensed consolidated financial statements.

In December 2019, the novel coronavirus that causes the disease COVID-19 emerged and has subsequently spread worldwide.

The Company has been actively monitoring COVID-19 and its impact globally.

Management believes the financial results for the three months ended March 31, 2022 were not significantly impacted by the COVID-19 pandemic.

In addition, management believes the Company’s remote and hybrid working arrangements have had limited impact on the Company’s ability to maintain internal operations during the three months ended March 31, 2022.

The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition will depend on future developments that are highly uncertain, including new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19.

As of June 30, 2022, the Company had an accumulated deficit of $ 319.6 million and cash and cash equivalents of $ 66.2 million .

Losses are expected to continue as the Company continues to invest in its research and development activities.

Management believes that there is presently 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 date of this filing with the Securities and Exchange Commission.

These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.

In response to these conditions and to meet the Company’s capital requirements, management plans to use its current cash on hand, along with access to the term loan facility (see Note 4), and some combination of the following:

(i) dilutive and/or non-dilutive financings, (ii) out-licensing or strategic alliances/collaborations, and (iii) out-licensing or sale of its non-core assets.

If the Company raises additional funds through collaborations, strategic alliances, business development or licensing arrangements with third parties, the Company might have to relinquish valuable rights to its technologies, future revenue streams, research programs or product candidates.

However, these plans have not yet been finalized and are not within the Company’s control, and therefore cannot be deemed probable.

As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Note 2—Summary of Significant Accounting Policies

6 unchanged sentences

The accompanying interim condensed consolidated financial statements include the accounts of Taysha and its inactive wholly owned U.S.

subsidiaries that were incorporated during 2020 , and two foreign subsidiaries incorporated during 2021 .

subsidiaries as well as t wo foreign subsidiaries incorporated during 2021 .

All intercompany transactions and balances have been eliminated in consolidation.

17 unchanged sentences

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 has not yet concluded

which approach will be utilized to adopt the new standard and is currently evaluating the impact of this standard on its condensed consolidated financial statements.

The Company has not yet concluded which approach will be utilized to adopt the new standard and is currently evaluating the impact of this standard on its condensed consolidated financial statements.

Note 3—Balance Sheet Components

3 unchanged sentences

Deferred offering costs

Prepaid bonus

Prepaid insurance

Prepaid bonus

Total prepaid expenses and other current assets

7 unchanged sentences

Property, plant and equipment, net

Included in construction in progress at March 31, 2022 was $ 50.4 million of costs associated with the Build-to-Suit lease (see Note 9), which includes $ 3.0 million of capitalized payroll and payroll-related costs.

Depreciation expense was $ 0.3 million for the three months ended March 31, 2022 and less than $ 0.1 million for the three months ended March 31, 2021.

Included in construction in progress at June 30, 2022 was $ 56.3 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 $ 0.5 million for the three and six months ended June 30, 2022, respectively.

Depreciation expense was less than $ 0.1 million and $ 0.1 million for the three and six months ended June 30, 2021, respectively.

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

Accrued research and development

Accrued severance

Accrued compensation

1 unchanged sentence

Accrued property, plant and equipment

Accrued professional and consulting fees

Accrued clinical trial

Accrued professional and consulting fees

Total accrued expenses and other current liabilities

7 unchanged sentences

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 March 31, 2022.

The Exit Fee of $ 3.0 million was recorded as debt discount and has also been fully accrued within non-current liabilities as of June 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.

10 unchanged sentences

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 March 31, 2022.

The Company was in compliance with all covenants under the Term Loan Agreement as of June 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 three months ended March 31, 2022, the Company recognized interest expense related to the Term Loan of $ 0.9 million.

Future principal debt payments on the loan payable as of March 31, 2022 are as follows (in thousands):

During the six months ended June 30, 2022, the Company recognized interest expense related to the Term Loan of $ 1.4 million.

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

Year Ending December 31,

5 unchanged sentences

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.

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.

12 unchanged sentences

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.

The Company is aware that UT Southwestern no longer owns such shares of common stock as of January 2022.

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.

3 unchanged sentences

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, and a percentage of non-royalty sublicensing revenue ranging in the low double digits.

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, and a percentage of non-royalty sublicensing revenue ranging in the low double digits.

Royalties are payable, on a Licensed Products-by-Licensed Products and a country-by-country basis, until expiration of the last valid claim of a Licensed Patent covering such Licensed Products in such country and the expiration of any regulatory exclusivity for such Licensed Products in such country.

No additional milestone payments were made in connection with the Queen’s Agreement during the three months ended March 31, 2022.

No additional milestone payments were made in connection with the Queen’s Agreement during the six months ended June 30, 2022.

Abeona CLN1 Agreements

8 unchanged sentences

The Company may terminate the Abeona License Agreement for convenience upon specified prior written notice to Abeona.

In December 2021 the Company’s CTA filing for TSHA-118 for the treatment of CLN1 disease was approved by Health Canada and therefore triggered a regulatory milestone payment in connection with this agreement.

In December 2021, the Company’s Clinical Trial Application (“CTA”) filing for TSHA-118 for the treatment of CLN1 disease was approved by Health Canada and therefore triggered a regulatory milestone payment in connection with this agreement.

The Company recorded $ 3.0 million within research and development expenses in the consolidated statements of operations for the year ended December 31, 2021.

The milestone fee was paid in January 2022 and classified as an investing cash outflow in the condensed consolidated statements of cash flows for the three months ended March 31, 2022.

The milestone fee was paid in January 2022 and classified as an investing cash outflow in the condensed consolidated statements of cash flows for the six months ended June 30, 2022.

Abeona Rett Agreement

8 unchanged sentences

In March 2022, the Company’s CTA filing for TSHA-102 for the treatment of Rett Syndrome was approved by Health Canada and therefore triggered a regulatory milestone payment in connection with this agreement.

T he Company recorded $ 1.0 million within research and development expenses in the condensed consolidated statements of operations for the three months ended March 31, 2022.

The Company recorded $ 1.0 million within research and development expenses in the condensed consolidated statements of operations for the six months ended June 30, 2022.

The $ 1.0 million regulatory milestone fee was paid in July 2022.

Acquisition of Worldwide Rights for TSHA-120 for the treatment of GAN

1 unchanged sentence

TSHA-120 is an intrathecally dosed AAV9 gene therapy currently being evaluated in a clinical trial for the treatment of GAN.

The trial is being conducted by the National Institutes of Health in close collaboration with a leading patient advocacy group focused on finding treatments and cures for GAN.

The trial is being conducted by the National Institutes of Health (“NIH”) in close collaboration with a leading patient advocacy group focused on finding treatments and cures for GAN.

TSHA-120 has received rare pediatric disease and orphan drug designations from the U.S.

3 unchanged sentences

Under the terms of the GAN Agreement, in exchange for granting the Company the exclusive worldwide rights to TSHA-120, HHF received an upfront payment of $ 5.5 million and will be eligible to receive clinical, regulatory and commercial milestones totaling up to $ 19.3 million, as well as a low, single-digit royalty on net sales upon commercialization of the product.

In exchange for the license rights, the Company recorded an aggregate of $ 5.5 million within research and development expenses in the condensed consolidated statements of operations for the three months ended March 31, 2021, since the acquired license does not have an alternative future use.

No additional milestone payments were made in connection with the GAN Agreement during the three months ended March 31, 2022.

In exchange for the license rights, the Company recorded an aggregate of $ 5.5 million within research and development expenses in the condensed consolidated statements of operations for the six months ended June 30, 2021, since the acquired license does not have an alternative future use.

This license fee was paid in April 2021 and has been classified as an investing outflow in the condensed consolidated statements of cash flows for the six months ended June 30, 2021.

No additional milestone payments were made in connection with the GAN Agreement during the six months ended June 30, 2022.

License Agreement for CLN7

In March 2022, the Company entered into a license agreement with UT Southwestern (the “CLN7 Agreement”) pursuant to which the Company obtained an exclusive worldwide, royalty-bearing license with right to grant sublicenses to develop, manufacture, use, and commercialize licensed products for gene therapy for CLN7, a form of Batten Disease In connection with the CLN7 Agreement, the Company will pay a one-time up-front license fee of $ 0.3 million.

In March 2022, the Company entered into a license agreement with UT Southwestern (the “CLN7 Agreement”) pursuant to which the Company obtained an exclusive worldwide, royalty-bearing license with right to grant sublicenses to develop, manufacture, use, and commercialize licensed products for gene therapy for CLN7, a form of Batten Disease In connection with the CLN7 Agreement, the Company paid one-time up-front license fee of $ 0.3 million.

The Company recorded the up-front license fee in research and development expense in the condensed consolidated statements of operations since the acquired license does not have an alternative future use.

The up-front license fee was classified as an investing cash outflow in the condensed consolidated statements of cash flows for the six months ended June 30, 2022.

The Company is obligated to pay UT Southwestern up to $ 7.7 million in regulatory-related milestones and up to $ 7.5 million in sales-related milestones, as well as a low, single-digit royalty on net sales upon commercialization of the product.

Note 6—Stock-Based Compensation

On July 1, 2020, the Company’s board of directors approved the Existing Plan which permits the granting of incentive stock options, non-statutory stock options, stock appreciation rights, RSAs, RSUs and other stock-based awards to employees, directors, officers and consultants.

On July 1, 2020, the Company’s board of directors approved the 2020 Equity Incentive Plan (“Existing Plan”) which permits the granting of incentive stock options, non-statutory stock options, stock appreciation rights, RSAs, RSUs and other stock-based awards to employees, directors, officers and consultants.

On July 1, 2020, 3,529,412 shares of common stock were authorized for issuance under the Existing Plan.

On September 16, 2020, the Company increased the number of shares of common stock authorized for issuance under the Existing Plan to 3,845,294 .

On September 16, 2020, the Company’s stockholders approved the New Plan, which became effective upon the execution of the underwriting agreement in connection with the IPO.

The number of shares available for future issuance under the New Plan is the sum of (1) 3,390,168 new shares of common stock, (2) 209,841 remaining shares of common stock reserved under the Existing Plan that became available for issuance upon the effectiveness of the New Plan and (3) the number of shares of common stock subject to outstanding awards under the Existing Plan when the New Plan became effective that thereafter expire or are forfeited, canceled, withheld to satisfy tax withholding or to purchase or exercise an award, repurchased by the Company or are otherwise terminated.

The number of shares of common stock reserved for issuance under the New Plan will automatically increase on January 1 of each year, for a period of ten years , from January 1, 2021 continuing through January 1, 2030 , by 5 % of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Company’s board of directors.

On January 1, 2021 the Company’s board of directors increased the number of common stock reserved for issuance under the New Plan by 1,434,934 shares.

On January 1, 2022 the Company’s board of directors increased the number of common stock reserved for issuance under the New Plan by 1,923,697 shares.

As of September 16, 2020, the approval date of the New Plan (as defined below), no additional awards will be granted under the Existing Plan.

The terms of the Existing Plan will continue to govern the terms of outstanding equity awards that were granted prior to approval of the New Plan.

On September 16, 2020, the Company’s stockholders approved the 2020 Stock Incentive Plan (“New Plan”), which became effective upon the execution of the underwriting agreement in connection with the IPO.

Initially, the number of shares available for future issuance under the New Plan was the sum of (1) 3,390,168 new shares of common stock, (2) 209,841 remaining shares of common stock reserved under the Existing Plan that became available for issuance upon the effectiveness of the New Plan and (3) the number of shares of common stock subject to outstanding awards under the Existing Plan when the New Plan became effective that thereafter expire or are forfeited, canceled, withheld to satisfy tax withholding or to purchase or exercise an award, repurchased by the Company or are otherwise terminated.

The number of shares of common stock reserved for issuance under the New Plan automatically increases on January 1 of each year, for a period of ten years , from January 1, 2021 continuing through January 1, 2030 , by 5 % of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Company’s board of directors.

On January 1, 2021 the Company’s board of directors increased the number of shares of common stock reserved for issuance under the New Plan by 1,434,934 shares.

On January 1, 2022 the Company’s board of directors increased the number of shares of common stock reserved for issuance under the New Plan by 1,923,697 shares.

Furthermore, on September 16, 2020, the Company’s stockholders approved the Employee Stock Purchase Plan (“ESPP”), which became effective upon the execution of the underwriting agreement in connection with the IPO.

The maximum number of shares of common stock that may be issued under the ESPP will not exceed 362,000 shares of common stock, plus the number of shares of common stock that are automatically added on January 1st of each year for a period of up to ten years , commencing on the first January 1 following the IPO and ending on (and including) January 1, 2030 , in an amount equal to the lesser of ( i ) one percent ( 1.0 %) of the total number of shares of capital stock outstanding on December 31st of the preceding calendar year, and (ii) 724,000 shares of common stock.

No shares were added to the ESPP in 2021, and no issuances have been made under the ESPP as of December 31, 2021 .

On January 1, 2022, the Company’s board of directors increased the number of common stock reserved for issuance under the ESPP by 384,739 .

No issuance s have been made under the ESPP as of March 31, 2022 .

No shares were added to the ESPP in 2021 .

On January 1, 2022, the Company’s board of directors increased the number of shares of common stock reserved for issuance under the ESPP by 384,739 .

No issuance s have been made under the ESPP as of June 3 0 , 2022 .

Stock Options

6 unchanged sentences

Accordingly, the Company continues to recognize the remaining compensation cost of the Cancelled Options over the vesting period of the RSUs.

For the three months ended March 31, 2022, 1,902,100 shares of common stock under the New Plan were awarded with a weighted-average grant date fair value per share of $ 4.24 .

For the three months ended June 30, 2022, 777,852 shares of common stock under the New Plan were awarded with a weighted-average grant date fair value per share of $ 4.13 .

For the six months ended June 30, 2022 2,679,952 shares of common stock under the New Plan were awarded with a weighted-average grant date fair value per share of $ 4.21 .

The stock options vest over one to four years and have a ten-year contractual term.

The following weighted-average assumptions were used to estimate the fair value of stock options that were granted during the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

The following weighted-average assumptions were used to estimate the fair value of stock options that were granted during the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30,

Six Months Ended June 30,

Risk-free interest rate

2 unchanged sentences

Expected volatility

The following table summarizes stock option activity, during the three months ended March 31, 2022:

The following table summarizes stock option activity, during the six months ended June 30, 2022:

Life (in years)

4 unchanged sentences

Options expired

Outstanding at March 31, 2022

Options to be forfeited due to severance

Vested and expected to vest at March 31, 2022

Options exercisable at March 31, 2022

The aggregate intrinsic value in the above table is calculated as the difference between the fair value of the Company’s common stock as of March 31, 2022 and the exercise price of the stock options.

As of March 31, 2022, the total unrecognized compensation related to unvested stock option awards granted was $ 47.4 million, which the Company expects to recognize over a weighted-average period of approximately 3.3 years.

Outstanding at June 30, 2022

Vested and expected to vest at June 30, 2022

Options exercisable at June 30, 2022

The aggregate intrinsic value in the above table is calculated as the difference between the fair value of the Company’s common stock as of June 30, 2022 and the exercise price of the stock options.

As of June 30, 2022, the total unrecognized compensation related to unvested stock option awards granted was $ 37.3 million, which the Company expects to recognize over a weighted-average period of approximately 3.1 years.

No stock options were exercised during the period.

6 unchanged sentences

The RSUs are subject to a service-based vesting condition.

The RSUs were also subject to a liquidity-based performance vesting condition that was met upon the closing of the IPO.

The Company at any time may accelerate the vesting of the RSUs.

Such shares are not accounted for as outstanding until they vest.

As of March 31, 2022, the total unrecognized compensation related to unvested RSUs granted, including the remaining compensation cost associated with the RSUs granted on September 2, 2020 in exchange for the Cancelled Options, was $ 9.6 million which is expected to be amortized on a straight-line basis over the weighted-average remaining vesting period of approximately 1.2 years.

As of June 30, 2022, the total unrecognized compensation related to unvested RSUs granted, including the remaining compensation cost associated with the RSUs granted on September 2, 2020 in exchange for the Cancelled Options, was $ 8.6 million which is expected to be amortized on a straight-line basis over a weighted-average period of approximately 2.0 years.

The Company's default tax withholding method for RSUs is the sell-to-cover method, in which shares with a market value equivalent to the tax withholding obligation are sold on behalf of the holder of the RSUs upon vesting and settlement to cover the tax withholding liability and the cash proceeds from such sales are remitted by the Company to taxing authorities.

The Company’s RSU activity for the three months ended March 31, 2022 was as follows:

The Company’s RSU activity for the six months ended June 30, 2022 was as follows:

Nonvested at December 31, 2021

1 unchanged sentence

Cancelled or forfeited

Nonvested at March 31, 2022

Nonvested at June 30, 2022

Restricted Stock Awards

RA Session II, the Company’s President and Chief Executive Officer, was awarded 769,058 RSAs under the Existing Plan on July 1, 2020, which are expected to vest over a three-year term, subject to continuous employment.

As of March 31, 2022, the total unrecognized compensation related to unvested RSAs granted was $ 1.5 million which is expected to be amortized on a straight-line basis over the weighted-average remaining vesting period of approximately 0.4 years.

As of June 30, 2022, the total unrecognized compensation related to unvested RSAs granted was $ 1.1 million which is expected to be amortized on a straight-line basis over a weighted-average period of approximately 0.8 years.

The fair value of these RSAs at the grant date of July 1, 2020 was $ 5.28 per share.

The Company’s RSA activity for the three months ended March 31, 2022 was as follows:

The Company’s RSA activity for the six months ended June 30, 2022 was as follows:

Nonvested at December 31, 2021

Restricted stock granted

Nonvested at March 31, 2022

Nonvested at June 30, 2022

Employee Stock Purchase Plan

2 unchanged sentences

An employee’s payroll deductions under the ESPP are limited to 15 % of the employee’s compensation and employees may not purchase more than 1,800 of shares of Taysha common stock during any offering period.

During the three months ended March 31, 2022, stock-based compensation expense related to the ESPP was not material.

During the three months ended March 31, 2022, $ 0.1 million of stock-based compensation expense was capitalized as part of construction in process (see Note 3).

The following table summarizes the total stock-based compensation expense for the stock options, ESPP, RSAs and RSUs recorded in the condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021 (in thousands):

For the Three Months Ended March 31,

During the six months ended June 30, 2022, stock-based compensation expense related to the ESPP was not material.

During the six months ended June 30, 2022, $ 0.2 million of stock-based compensation expense was capitalized as part of construction in process (see Note 3).

The following table summarizes the total stock-based compensation expense for the stock options, ESPP, RSAs and RSUs recorded in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021 (in thousands):

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Research and development expense

4 unchanged sentences

The following table represents the calculation of basic and diluted net loss per common share (in thousands, except share and per share data):

For the Three Months Ended March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Weighted-average shares of common stock outstanding used to compute net loss per common share, basic and diluted

Net loss per common share, basic and diluted

The following common stock equivalents outstanding as of March 31, 2022 and 2021 were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti‑dilutive:

The following common stock equivalents outstanding as of June 30, 2022 and 2021 were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti‑dilutive:

Unvested RSUs

6 unchanged sentences

There is no provision for income taxes because the Company has incurred operating losses and capitalized certain items for income tax purposes since its inception and maintains a full valuation allowance against its net deferred tax assets.

reported amount of income tax expense for the period differs from the amount that would result from applying the federal statutory tax rate to net loss before taxes primarily because of the change in valuation allowance.

As of March 31, 2022, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for the year ended December 31, 2021.

The reported amount of income tax expense for the period differs from the amount that would result from applying the federal statutory tax rate to net loss before taxes primarily because of the change in valuation allowance.

As of June 30, 2022, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for the year ended December 31, 2021.

Note 9—Commitments and Contingencies

2 unchanged sentences

In the normal course of business, the Company enters into contracts that contain a variety of indemnifications with its employees, licensors, suppliers and service providers.

The Company’s maximum exposure under these arrangements is unknown at March 31, 2022.

The Company’s maximum exposure under these arrangements is unknown at June 30, 2022.

The Company does not anticipate recognizing any significant losses relating to these arrangements.

Total lease expense, inclusive of lease incentives, under all operating lease agreements amounted to $ 0.3 million and $ 0.1 million for the three months ended March 31, 2022 and 2021, respectively.

Total lease expense, inclusive of lease incentives, under all operating lease agreements amounted to $ 0.3 million and $ 0.1 million for the three months ended June 30, 2022 and 2021, respectively, and $ 0.6 million and $ 0.1 million for the six months ended June 30, 2022 and 2021, respectively.

On December 17, 2020, the Company entered into a lease agreement (the “Durham Lease”) with Patriot Park Partners II, LLC, a Delaware limited liability company (the “Durham Landlord”), pursuant to which the Company agreed to lease approximately 187,500 square feet of a manufacturing facility located at 5 National Way, Durham, North Carolina (the “Facility”).

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The Company was not required to provide a security deposit in connection with its entry into the Durham Lease.

The Company will be responsible for constructing interior improvements within the Facility.

The Company is responsible for constructing interior improvements within the Facility.

The Company was required to place $ 2.6 million in an escrow account which will be released when the improvements are substantially complete.

The escrow funds are recorded as restricted cash on the condensed consolidated balance sheet as of March 31, 2022.

The escrow funds are recorded as restricted cash on the condensed consolidated balance sheet as of June 30, 2022.

The Durham Landlord has the right to terminate the Durham Lease upon specified events of default, including the Company’s failure to pay rent in a timely manner and upon the occurrence of certain events of insolvency with respect to the Company.

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Additionally, construction costs incurred as part of the build-out and tenant improvements are also capitalized within property, plant and equipment, net.

Costs of approximately $ 4.6 million have been capitalized during the three months ended March 31, 2022, related to both equipment purchases and the build-out of the leased Facility, as well as capitalization of interest and certain payroll and payroll-related costs.

Costs of approximately $ 10.6 million have been capitalized during the six months ended June 30, 2022, related to both equipment purchases and the build-out of the leased Facility, as well as capitalization of interest and certain payroll and payroll-related costs.

The Company will assess and determine if the build-to-suit asset and corresponding liability should be de-recognized upon completion of construction.

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Development of the CLN7 program will continue in collaboration with existing partners with future clinical development to focus on the first-generation construct.

All other research and development activities have been paused to increase operational efficiency.

Substantially all other research and development activities have been paused to increase operational efficiency.

In connection with prioritization of programs, the Company reduced headcount by approximately 35 % across all functions.

In accordance with ASC 420, Exit and Disposal Activities, the Company recorded one-time severance and termination-related costs of $ 2.6 million in the condensed consolidated statements of operations for the three months ended March 31, 2022, primarily within research and development expenses.

The Company expects the payment of all accrued severance termination-related costs to be substantially complete by June 30, 2022.

The following table summarizes the accrued severance activity recorded in connection with the reduction in workforce for the three months ended March 31, 2022:

As of March 31, 2022

Accrued severance recorded

Severance paid

Accrued severance balance

In accordance with ASC 420, Exit and Disposal Activities, the Company recorded one-time severance and termination-related costs of $ 2.6 million in the condensed consolidated statements of operations for the six months ended June 30, 2022, primarily within research and development expenses.

Payments of accrued severance and termination-related costs are substantially complete as of June 30, 2022.

Note 11 – Retirement Plan

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Eligible employees may contribute a percentage of their annual compensation, subject to Internal Revenue Service limitations.

The Company contributed $ 0.4 million to the 401(k) retirement savings plan for the three months ended March 31, 2022.

Note 12 — Subsequent Events

Sales Agreement

In April 2022, the Company issued 2,000,000 shares under the Sales Agreement and received gross proceeds of $ 12.0 million.

The Company contributed $ 0.1 million and $ 0.6 million to the 401(k) retirement savings plan for the three and six months ended June 30, 2022, respectively.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements