What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-11 compared with 2022-05-16 · 192 added, 109 removed, 407 unchanged (43% of the section changed)

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Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make.

These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in our Annual Report.

The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.

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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 April 2021, we acquired exclusive worldwide rights to TSHA-120, a clinical-stage, intrathecally dosed AAV9 gene therapy program for the treatment of giant axonal neuropathy, or GAN.

A Phase 1/2 clinical trial of TSHA-120 is being conducted by the National Institutes of Health, or NIH, under an accepted investigational new drug application, or IND.

We reported clinical safety and functional MFM32 data from this trial for the highest dose cohort of 3.5x10 14 total vg in January 2022, where we saw continued clinically meaningful slowing of disease progression similar to that achieved with the lower dose cohorts, which we considered confirmatory of disease modification.

We reported clinical safety and functional MFM32 data from this trial for the highest dose cohort of 3.5E14 total vg in January 2022, where we saw continued clinically meaningful slowing of disease progression similar to that achieved with the lower dose cohorts, which we considered confirmatory of disease modification.

We recently completed a commercially representative GMP batch of TSHA-120 which demonstrated that the pivotal lots from the commercial grade material were generally analytically comparable to the original clinical trial material.

Release testing for this batch is currently underway and expected to be completed in September 2022.

Additional discussions with Health Authorities are planned to discuss these comparability data and a potential registration pathway with feedback anticipated by the end of 2022.

For Rett syndrome, we submitted a Clinical Trial Application, or CTA, filing to Health Canada in November 2021 and announced initiation of clinical development of TSHA-102 under the approved CTA in March 2022.

We recently completed a commercially representative GMP batch of TSHA-120 and release testing for this batch is currently underway.

We expect to report preliminary clinical data for TSHA-102 in Rett syndrome by year-end 2022.

We recently executed an exclusive option from UT Southwestern to license worldwide rights to a clinical-stage CLN7 program.

The CLN7 program is currently in a Phase 1 clinical proof-of-concept trial run by UT Southwestern, and we reported preliminary clinical safety data for the first patient in history to be intrathecally dosed at 1.0x10 15 total vg with the first-generation construct in December 2021.

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

The CLN7 program is currently in a Phase 1 clinical

proof-of-concept trial run by UT Southwestern, and we reported preliminary clinical safety data for the first patient in history to be intrathecally dosed at 1.0x10 15 total vg with the first-generation construct in December 2021.

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

We will conduct small proof-of-concept studies in CLN1 disease and SLC13A5 deficiency that we believe can further validate our platform.

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We do not have any product candidates approved for sale and have not generated any revenue from product sales.

We have funded our operations primarily through the sale of equity, raising an aggregate of $307.0 million of gross proceeds from our initial public offering and private placements of our convertible preferred stock.

We have funded our operations primarily through the sale of equity, raising an aggregate of $319.0 million of gross proceeds from our initial public offering and private placements of our convertible preferred stock as well as sales of common stock pursuant to our Sales Agreement (as defined below).

In addition, we drew down $30.0 million and $10.0 million in term loans on August 12, 2021 and December 29, 2021, respectively.

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Since our inception, we have incurred significant operating losses.

Our net losses were $50.1 million for the three months ended March 31, 2022 and $32.0 million for the three months ended March 31, 2021.

As of March 31, 2022, we had an accumulated deficit of $285.8 million.

Our net losses were $84.0 million for the six months ended June 30, 2022 and $73.0 million for the six months ended June 30, 2021.

As of June 30, 2022, we had an accumulated deficit of $319.6 million.

We expect to continue to incur significant expenses and operating losses for the foreseeable future.

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Our current pipeline, including the stage of development of each of our product candidates, is represented in the table below:

Recent Developments

Clinical Programs

TSHA-120 for Giant Axonal Neuropathy (GAN)

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Steven Gray and is the first AAV9 gene therapy candidate to deliver a functional copy of the GAN gene under the control of a JeT promoter that drives ubiquitous expression.

We have received orphan drug designation and rare pediatric disease designation from the FDA for TSHA-120 for the treatment of GAN.

In May 2022, we received orphan drug designation from the European Commission for TSHA-120 for the treatment of GAN.

We have received orphan drug designation and rare pediatric disease designation from the U.S.

Food and Drug Administration, or the FDA, for TSHA-120 for the treatment of GAN.

In April 2022, we received orphan drug designation from the European Commission for TSHA-120 for the treatment of GAN.

There is an ongoing longitudinal prospective natural history study being led by the NIH, that has already identified and followed a number of patients with GAN for over five years with disease progression characterized by a number of clinical assessments.

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A Phase 1/2 clinical trial of TSHA-120 is being conducted by the NIH under an accepted IND.

The ongoing trial is a single-site, open-label, non-randomized dose-escalation trial, in which patients are intrathecally dosed with one of 4 dose levels of TSHA-120 – 3.5x10 13 total vg, 1.2x10 14 total vg, 1.8x10 14 total vg or 3.5x10 14 total vg.

The ongoing trial is a single-site, open-label, non-randomized dose-escalation trial, in which patients are intrathecally dosed with one of 4 dose levels of TSHA-120 – 3.5E13 total vg, 1.2E14 total vg, 1.8E14 total vg or 3.5E14 total vg.

The primary endpoint is to assess safety, with secondary endpoints measuring efficacy using pathologic, physiologic, functional, and clinical markers.

To date, 14 patients have been intrathecally dosed and twelve patients have at least three years’ worth of long-term follow up data.

At 1-year post-gene transfer, a clinically meaningful and statistically significant slowing or halting of disease progression was seen with TSHA-120 at the highest dose of 3.5x10 14 total vg (n=3).

The change in the rate of decline in the MFM32 score improved by 5 points in the 3.5x10 14 total vg cohort compared to an 8-point decline in natural history.

At 1-year post-gene transfer, a clinically meaningful and statistically significant slowing or halting of disease progression was seen with TSHA-120 at the highest dose of 3.5E14 total vg (n=3).

The change in the rate of decline in the MFM32 score improved by 5 points in the 3.5E14 total vg cohort compared to an 8-point decline in natural history.

Although the change in the MFM32 score was clinically meaningful, we might have expected a greater change in the MFM32 score compared to natural history in the first year but one patient in the high dose cohort was a delayed responder.

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An additional analysis was performed to examine the change in the rate of decline in the MFM32 score of all therapeutic doses combined (n=12).

As shown below, the change in the rate of decline in the MFM32 score improved by 7 points by Year 1

compared to the natural history decline in the MFM32 score of 8 points.

As shown below, the change in the rate of decline in the MFM32 score improved by 7 points by Year 1 compared to the natural history decline in the MFM32 score of 8 points.

This result was clinically meaningful and statistically significant.

A Bayesian analysis was conducted on the 1.2x10 14 total vg, 1.8x10 14 total vg and 3.5x10 14 total vg dose cohorts at Year 1 to assess the probability of clinically meaningful slowing of disease progression as compared to natural history.

A Bayesian analysis was conducted on the 1.2E14 total vg, 1.8E14 total vg and 3.5E14 total vg dose cohorts at Year 1 to assess the probability of clinically meaningful slowing of disease progression as compared to natural history.

This type of statistical analysis enables direct probability statements to be made and is both useful and accepted by regulatory agencies in interventional studies of rare diseases and small patient populations.

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By Year 3, as depicted below, there was a 10-point improvement in the mean change from baseline in MFM32 score for all patients in the therapeutic dose cohorts.

In addition to the compelling three-year data, there was one patient at Year 5 whose MFM32 change from baseline improved by nearly 26-points in the 1.2x10 14 total vg dose cohort compared to the estimated natural history decline of 40 points by this timepoint.

In addition to the compelling three-year data, there was one patient at Year 5 whose MFM32 change from baseline improved by nearly 26-points in the 1.2E14 total vg dose cohort compared to the estimated natural history decline of 40 points by this timepoint.

Below is an additional analysis of the mean change from baseline in MFM32 score for the therapeutic dose cohorts compared to natural history at patients’ last visit.

As shown, TSHA-120 demonstrated increasing improvement in the mean change in MFM32 score from baseline over time.

Secondary Endpoints

Additional Endpoints

Sensory nerve action potential, or SNAP, was assessed through nerve conduction studies in patients with GAN.

Natural history data from the NIH suggest rapid and irreversible decline in sensory function early in life in patients with GAN.

SNAPs are within normal limits early in life and rapid reduction in SNAP amplitude occurs around the age of symptom presentation.

As demonstrated below, all patients with classic GAN have an abnormally low SNAP by the age of 4, reflective of compromised sensory neuronal function.

By age 9, all patients had an irreversibly absent SNAP.

The results from these nerve conduction studies reflect the clinical progression of patients with GAN.

TSHA-120-treated patients demonstrated a durable improvement in SNAP response compared to natural history.

Five of the twelve patients treated demonstrated a response.

One patient demonstrated near complete recoverability to normal from zero at the time of treatment.

Once SNAP reaches zero, natural history suggests sensory function is presumed non-recoverable.

Among patients treated with 1.2E14 total vg or greater of TSHA-120, the three patients with a positive value at baseline maintained a positive SNAP at last study visit with the longest span of 3 years to date and continue to improve.

Below are individual patient SNAP change from baseline from treated patients who showed a positive response including their run-in natural history.

Biopsies of TSHA-120-treated patients confirmed presence of regenerative nerve clusters.

Below is pathology data from biopsies of the superficial radial sensory nerve in 11 out of 11 patient samples analyzed.

The remaining patient samples are currently being analyzed.

These biopsies confirmed that treatment with TSHA-120 stimulated active regeneration of axons.

There was an increase in the number of regenerative clusters observed at Year 1 compared to baseline, indicating active regeneration of nerve fibers following TSHA-120 treatment.

The remaining two samples were unable to be assessed due to biopsy limitations.

Peripheral nerve biopsies from the superficial radial sensory nerve were obtained at baseline and at 1 year post gene therapy transfer.

Data consistently generated an increase in the number of regenerative clusters observed at Year 1 compared to baseline, indicating active regeneration of nerve fibers following treatment with TSHA-120.

Data also indicated improvement in disease pathology, providing evidence that the peripheral nervous system can respond to treatment.

Loss of vision has been frequently cited by patients and caregivers as a symptom they find particularly debilitating and would like to see improvement in following treatment.

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A LogMAR score of 0 means normal vision, approximately 0.3 reflects the need for eyeglasses, and a score value of 1.0 reflects blindness.

Based on natural history, individuals with GAN experience a progressive loss in visual function as indicated by an increase in the LogMAR score.

Based on natural history,

individuals with GAN experience a progressive loss in visual function as indicated by an increase in the LogMAR score.

Ophthalmologic assessments following treatment with TSHA-120 demonstrated preservation of visual acuity over time compared to the loss of visual acuity observed in natural history.

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Safety and Tolerability

To date, there are 53 patient-years of clinical data to support TSHA-120’s favorable safety and tolerability profile.

As of January 2022, there were 53 patient-years of clinical data to support TSHA-120’s favorable safety and tolerability profile.

TSHA-120 has been well-tolerated at multiple doses with no signs of significant acute or subacute inflammation, no sudden sensory changes and no drug-related or persisting transaminitis.

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Importantly, TSHA-120 was safely dosed in the presence of neutralizing antibodies as a result of the combination of route of administration, dosing and immunosuppression regimen.

Currently in the GAN program, we have up to six years of longitudinal data in individual patients and collectively 53-patient years of clinical safety and efficacy data from our ongoing clinical study.

We currently have up to six years of longitudinal data in individual patients with GAN and collectively 53-patient years of clinical safety and efficacy data from our ongoing clinical study.

Treatment with TSHA-120 was well-tolerated with no significant safety issues.

There was no increase in incidence of adverse events with increased dose, no dose-limiting toxicity, no signs

of acute or subacute inflammation, no sudden sensory changes and no drug-related or persistent elevation of transaminases .

There was no increase in incidence of adverse events with increased dose, no dose-limiting toxicity, no signs of acute or subacute inflammation, no sudden sensory changes and no drug-related or persistent elevation of transaminases.

Adverse events related to immunosuppression or study procedures were similar to what was seen with other gene therapies and transient in nature.

In September 2021, we submitted a request for a Scientific Advice meeting with an ex-US regulatory agency for TSHA-120 and had a meeting in January 2022.

Additional discussions with other Health Authorities are planned and regulatory feedback is anticipated mid-2022.

We have finalized plans for commercial grade material and initiated development of the comparability protocol to support regulatory submissions.

We recently completed a commercially representative GMP batch of TSHA-120 and release testing for this batch is currently underway.

We anticipate completion of a validation lot by the third quarter of 2022.

In addition, we expect to hold discussions with major regulatory agencies focused on the registration pathway for TSHA-120.

We will continue our institutional readiness activities, patient identification and maximizing patient access.

Lastly, we anticipate several publications of these data by the NIH in collaboration with Taysha.

We believe the comprehensive set of evidence generated across disease manifestations, depicted in the table below, support a robust clinical package for TSHA-120 in GAN.

In order to deliver a robust chemistry, manufacturing, and controls, or CMC, data package to support licensure discussions, we have successfully completed six development and GMP lots of TSHA-120 with our contract development and manufacturing organization, or CDMO, partner.

We have also completed a comprehensive side-by-side biochemical and biophysical analysis of

current and previous clinical lots.

Our CDMO utilizes the same Pro10 TM manufacturing platform used to produce the original GAN lots, therefore reducing which is intended to reduce comparability risk.

Five development lots ranging from 2L to 250L scale and one full-scale 500L GMP lot were analyzed side-by-side with the current TSHA-120 clinical lot using a comprehensive analytical panel that meets current regulatory requirements including assays for critical attributes such as product and process residuals, empty/full ratio, genetic integrity, potency and strength.

The side-by-side analysis demonstrated that the newly produced TSHA-120 lots were generally comparable to the original clinical trial material in impurity profile including host cell contaminants, residual plasmid, empty particle content, aggregate content and genomic integrity.

These results supported our biophysical and biochemical comparability of the newly produced lots.

Furthermore, we developed product-specific GAN potency methods which have also demonstrated that the previous and current clinical lots were functionally indistinguishable.

Validation of our potency release assay is now underway.

We have applied our panel of release assays for side-by-side testing of the original clinical trial material and our commercial grade lots.

Shown below are eight of the most critical attributes of TSHA-120.

First, all results demonstrated that both the clinical and commercial grade lots were of a high purity and lacked significant levels of host cell or process contaminants such as protein and, DNA or and aggregated species.

Vector purity was in excess of 95% for all three lots and host cell protein contamination was below detection.

In addition, and aggregation of all lots was very low.

Host cell and plasmid DNA contamination are also important attributes to discuss with regulatory agencies since carryover represents a theoretical immunogenicity or oncogenicity risk.

Residual plasmid and host cell DNA were similar for all lots, indicating a similar safety profile for both products.

Empty capsids are a key attribute for AAV vectors since empty capsids can stimulate immune responses to the vector and reduce potency.

All three lots were highly enriched in full particles.

Potency of AAV vectors is a key measure that correlates with clinical efficacy.

We developed a number of product-specific potency assays to measure the functional activity of our product which is reported relative to a reference standard.

These assays recapitulated the biological activity of TSHA-120 starting with transduction of GAN knockout cell lines.

Activity is measured by quantitation of transgene RNA or protein expression as two independent and complimentary readouts.

We observed good agreement with both readouts and high activity of all three lots against our reference suggesting that the lots are of high and comparable activity.

Overall, these results support that our early clinical and pivotal lots are biochemically and biophysically similar and based on these results we believe they should perform identically in a clinical study.

Recently, regulators have encouraged sponsors to conduct deeper analysis of product contaminants not covered by standard release assays to better assess product safety and comparability.

To comply with this guidance, we have added Pac-Bio next generation sequencing to our product characterization panel to better understand the nature of nucleic acid contaminants in our products.

This method not only allows us to identify the source of the nucleic acid, but also the fragment size, and sequence variability, which also needs to be considered when assessing AAV safety and efficacy.

Our analysis of the clinical trial lot and commercial grade pivotal batches demonstrated that the source and composition of transgene and contaminating host and plasmid

DNA are nearly identical and provided further support that for a conclusion that the nature of our product is unchanged between our early clinical and pivotal batches as noted in the below pie charts.

The TSHA-120 pivotal lot, which yielded over 50 patient doses of TSHA-120 at the highest dose cohort of 3.5E14 total vg, is expected to complete quality release testing by end of the third quarter of 2022.

This material positions us for future BLA-enabling activities and commercial production.

These lots were also placed on stability to provide critical shelf-life data in support of our BLA filing.

In September 2021, we submitted a request for a Scientific Advice meeting for TSHA-120 to the United Kingdom’s Medicines and Healthcare products Regulatory Agency, or MHRA, and were granted a meeting in January 2022.

MHRA agreed on our commercial manufacturing and release assay testing strategy including potency assays and we plan to dose a few additional patients with commercial grade material, which will be released in September 2022.

Finally, MHRA was supportive of our proposal to perform validation work on MFM32 for GAN as a key clinical endpoint and for us to explore the MFM32 items with patients and families as part of this process.

Given the positive comparability data for TSHA-120 that we recently received, additional discussions with Health Authorities to discuss these data and potential registration pathway are planned with regulatory feedback anticipated by year-end 2022.

TSHA-102 for Rett Syndrome

TSHA-102, a neurodevelopmental disorder product candidate, is being developed for the treatment of Rett syndrome, one of the most common genetic causes of severe intellectual disability, characterized by rapid developmental regression and in many cases caused by heterozygous loss of function mutations in MECP2, a gene essential for neuronal and synaptic function in the brain.

The estimated prevalence of Rett syndrome is 350,000 patients worldwide and the disease occurs in 1 of every 10,000 female births worldwide.

We designed TSHA-102 to prevent gene overexpression-related toxicity by inserting microRNA, or miRNA, target binding sites into the 3’ untranslated region of viral genomes.

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Mice were subjected to phenotypic scoring and a battery of tests including gait, hindlimb clasping, tremor and others to comprise an aggregate behavioral score.

miRARE attenuated miniMECP2-mediated aggravation in wild type aggregate phenotype severity scores.

miRARE attenuated

miniMECP2-mediated aggravation in wild type aggregate phenotype severity scores.

Mice were scored on an aggregate severity scale using an established protocol.

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miRARE-mediated genotype-dependent gene regulation was demonstrated by analyzing tissue sections from wild type and knockout mice treated with AAV9 vectors given intrathecally.

When knockout mice were injected with a vector expressing the mini-

MECP2 transgene with and without the miRARE element, miRARE reduced overall miniMECP2 transgene expression compared to unregulated miniMECP2 in wild type mice as shown below.

When knockout mice were injected with a vector expressing the mini-MECP2 transgene with and without the miRARE element, miRARE reduced overall miniMECP2 transgene expression compared to unregulated miniMECP2 in wild type mice as shown below.

TSHA-102 demonstrated regulated expression in different regions of the brain.

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An additional study in neonatal mice is ongoing, and preliminary data suggest normalization of survival.

Finally, An IND/CTA-enabling 6-month GLP toxicology study (n=24) examined the biodistribution, toxicological effects and mechanism of action of TSHA-102 when intrathecally administered to NHPs across three dose levels.

Biodistribution, as reflected by DNA copy number, was observed in multiple areas of the brain, sections of spinal cord and the dorsal root ganglion (DRG).

Finally, an IND/CTA-enabling 6-month Good Laboratory Practice, or GLP, toxicology study (n=24) examined the biodistribution, toxicological effects and mechanism of action of TSHA-102 when intrathecally administered to Non-Human Primates, or NHPs, across three dose levels.

Biodistribution, as reflected by DNA copy number, was observed in multiple areas of the brain, sections of spinal cord and the DRG.

Importantly, mRNA levels across multiple tissues were low, indicating miRARE regulation is minimizing transgene expression from the construct in the presence of endogenous MECP2 as expected, despite the high levels of DNA that were delivered.

No toxicity from transgene overexpression was observed, confirmed by functional and histopathologic evaluations demonstrating no detrimental change in neurobehavioral assessments and no adverse tissue findings on necropsy.

In May 2022 at the International Rett Syndrome Foundation (IRSF) meeting, there were two oral presentations titled “Safety and Biodistribution Assessment in Non-Human Primates (NHPs) of a miniMeCP2 AAV9 Vector for Gene Replacement Therapy of Rett Syndrome” and “Rett Syndrome in Adulthood:

The Caregiver Perspective.” At the ASCEND National Summit, there was one oral presentation titled “Putting Patients at the Center.”

At the upcoming 25th Annual Meeting of the American Society of Gene & Cell Therapy (ASGCT) meeting in May 2022, the following oral and poster presentations and symposium will occur:

We have received orphan drug designation and rare pediatric disease designation from the FDA and orphan drug designation from the European Commission for TSHA-102 for the treatment of Rett syndrome.

No toxicity from

transgene overexpression was observed, confirmed by functional and histopathologic evaluations demonstrating no detrimental change in neurobehavioral assessments and no adverse tissue findings on necropsy.

In neonatal knockout Rett mice, treatment with TSHA-102 resulted in near normalization of survival as shown below.

A single intracerebroventricular, or ICV, injection of TSHA-102 at a dose of 8.8E10 vg/mouse (Human Equivalent Dose of 2.86E14 vg/participant) within 48 hours after birth in Mecp2-/Y male mice significantly extended the survival of the animals as shown below.

All cohorts, including vehicle, were sacrificed at 34 weeks.

Preliminary data demonstrated approximately 70% of the treated Mecp2-/Y males survived to 34 weeks of age compared to 9 weeks in the vehicle-treated Mecp2-/Y male.

In addition, neonatal knockout Rett mice demonstrated normalization of behavior following treatment with TSHA-102 as assessed by the Bird Score, a composite measure of six different phenotypic abilities.

Knockout animals were initially assessed at 4 weeks of age with a mean Bird Score of 4.

Over the course of the study, TSHA-102 improved the behaviors (as assessed by the Bird aggregate score) of TSHA-102 treated mice as shown below.

In summary, we believe the totality of preclinical data generated to date, specifically including the mouse pharmacology study to ascertain minimally effective dose, the two toxicology studies (wild type rat and wild type NHP) and the recent mouse neonatal data, represents the most robust package supporting clinical advancement of TSHA-102 in Rett syndrome as shown below.

Safety and biodistribution assessments in NHPs were presented in May 2022 at the International Rett Syndrome Foundation (IRSF) meeting along with the caregiver perspective on Rett syndrome in adulthood.

At the ASCEND National Summit, there was an oral presentation on “Putting Patients at the Center.” Finally, mouse pharmacology, rat and NHP toxicology data were presented at the 25th Annual Meeting of the American Society of Gene & Cell Therapy (ASGCT).

We submitted a CTA for TSHA-102 in November 2021 and announced initiation of clinical development under a CTA approved by Health Canada in March 2022.

We are advancing TSHA-102 in the REVEAL Phase 1/2 clinical trial which is an open-

label, dose escalation, randomized, multicenter study that will examine the safety and efficacy of TSHA-102 in adult female patients with Rett syndrome.

We are advancing TSHA-102 in the REVEAL Phase 1/2 clinical trial which is an open-label, dose escalation, randomized, multicenter study that will examine the safety and efficacy of TSHA-102 in adult female patients with Rett syndrome.

Up to 18 patients will be enrolled.

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We expect to report preliminary clinical data for TSHA-102 in Rett syndrome by year-end 2022.

We have received orphan drug designation and rare pediatric disease designation from the FDA and orphan drug designation from the European Commission for TSHA-102 for the treatment of Rett syndrome.

TSHA-121 for CLN7 Disease

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We recently executed an exclusive option from UT Southwestern to license worldwide rights to a clinical-stage CLN7 program.

The CLN7 program is currently in a Phase 1 clinical proof-of-concept trial run by UT Southwestern, and we reported preliminary clinical safety data for the first patient in history to be intrathecally dosed at 1.0E15 total vg with the first-generation construct in December 2021.

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

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2) nearly complete normalization of impaired open field and rotarod performance at 6 and 9 months post injection;

3) more than doubled median life expectancy (16.82 months versus 7.77 months in untreated knockout mice);

3) more than doubled

median life expectancy (16.82 months versus 7.77 months in untreated knockout mice);

and 4) maintenance of healthy body weight for a prolonged period of time.

Toxicology studies in wild type rodents demonstrated safety and tolerability of IT administration of the first-generation construct.

Clinical safety data presented at WORLDSymposium in February 2022 for the first-generation construct from the ongoing clinical trial following IT administration further demonstrated that the first-generation construct was well-tolerated at multiple doses including 1.0x10 15 total vg, which is the highest dose administered in humans ever for a gene therapy product.

Clinical safety data presented at WORLDSymposium in February 2022 for the first-generation construct from the ongoing clinical trial following IT administration further demonstrated that the first-generation construct was well-tolerated at multiple doses including 1.0E15 total vg, which is the highest dose administered in humans ever for a gene therapy product.

No adverse immune responses were noted, including no evidence of dorsal root ganglion toxicity or brain inflammation across all subjects.

Moreover, stabilization in sural nerve conduction supported the absence of dorsal root ganglia inflammation.

The ongoing trial includes three patients dosed to date, with two patients treated at the highest dose of 1.0x10 15 total vg.

The ongoing trial includes three patients dosed to date, with two patients treated at the highest dose of 1.0Ex15 total vg.

Complete blood counts revealed no signs of bone marrow suppression or clinically significant bone marrow reactivity, and CSF analysis revealed no signs of pleocytosis.

A fourth patient was recently dosed at 1.0x10 15 total vg in March 2022.

A fourth patient was recently dosed at 1.0E15 total vg in March 2022.

TSHA-118 for CLN1 Disease

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We acquired exclusive worldwide rights to certain intellectual property rights and know-how relating to the research, development and manufacture of TSHA-118 (formerly ABO-202) in August 2020 pursuant to a license agreement with Abeona Therapeutics Inc., or Abeona.

TSHA-118 has been granted orphan drug designation, rare pediatric disease designation and fast track designation from the FDA and orphan drug designation from the European Medicines Agency for the treatment of CLN1 disease.

There is currently an open IND for the CLN1 program.

We submitted a CTA filing for TSHA-118 which was approved by Health Canada in 2021 and have initiated clinical development.

TSHA-105 for SLC13A5 Deficiency

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To date, all tested mutations result in no or a greatly reduced amount of the citrate in the cells.

Diminished NaCT function leads to loss of neuronal uptake of citrate and other metabolites such as succinate that are critical to brain energy metabolism and function.

Diminished NaCT

function leads to loss of neuronal uptake of citrate and other metabolites such as succinate that are critical to brain energy metabolism and function.

Affected children have impairments in gross motor function and speech production with relative preservation of fine motor skills and receptive speech.

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Royalties are payable on a licensed product-by-licensed product basis and country-by-country basis until expiration of the last valid claim of a licensed patent covering such licensed product in such country and the expiration of any regulatory exclusivity for such licensed product in such country.

Additionally, we are obligated to pay Queen’s University a low double-digit portion of any amounts received by us in connection with the sale of a priority review voucher related to a licensed product, not to exceed a low eight-figure amount.

Additionally, we are obligated to pay Queen’s University a low double-digit portion of any

amounts received by us in connection with the sale of a priority review voucher related to a licensed product, not to exceed a low eight-figure amount.

In connection with a separate research grant agreement with Queen’s University, we reimbursed Queen’s University for certain manufacturing production costs totaling $3.8 million in fiscal year 2020.

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

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

License Agreement with Abeona (CLN1 Disease)

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In addition, concurrent with the Abeona CLN1 Agreement, we entered into a purchase and reimbursement agreement with Abeona, pursuant to which we purchased specified inventory from Abeona and reimbursed Abeona for certain research and development costs previously incurred for total consideration of $4.0 million paid in fiscal year 2020.

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 has been classified as an investing outflow in the condensed consolidated statements of cash flows for the three months ended March 31, 2022.

No additional milestone payments were made or triggered during the three months ended March 31, 2022.

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 the Abeona CLN1 Agreement, and therefore we 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 has been classified as an investing outflow in the condensed consolidated statements of cash flows for the six months ended June 30, 2022.

No additional milestone payments were made or triggered during the six months ended June 30, 2022.

The Abeona CLN1 Agreement expires on a country-by-country and licensed product-by-licensed product basis upon the expiration of the last royalty term of a licensed product.

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In March 2022, our 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 the Rett Agreement.

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

This milestone fee was not paid as of March 31, 2022 and has been recorded in accrued expenses and other current liabilities.

We recorded $1.0 million within research and development expenses in the condensed consolidated statements of operations for the six months ended June 3 0 , 2022.

This milestone fee was not paid as of June 3 0, 2022 and has been recorded in accrued expenses and other current liabilities.

This milestone fee was paid in July 2022.

The Abeona Rett Agreement expires on a country-by-country and licensed product-by-licensed product basis upon the expiration of the last royalty term of a licensed product.

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We have been actively monitoring the COVID-19 situation and its impact globally.

Our financial results for the three months ended March 31, 2022 were not impacted by COVID-19.

We believe our hybrid and remote working arrangements have had limited impact on our ability to maintain internal operations during the three months ended March 31, 2022.

The extent to which COVID-19 may impact our business and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the duration of the outbreak, the effectiveness of actions to contain and treat COVID-19, the efficacy, availability and adoption of vaccines and other treatments, both domestically and globally, and the impact of new variants or mutations of the coronavirus, such as the Delta variant.

We believe our financial results for the six months ended June 30, 2022 were not significantly impacted by COVID-19.

We believe our hybrid and remote working arrangements have had limited impact on our ability to maintain internal operations during the six months ended June 30, 2022.

Although we have not experienced any material business shutdowns or interruptions due to the COVID-19 pandemic, we cannot predict the scope and severity of any potential business shutdowns or disruptions in the future, including to our planned clinical trials and preclinical studies.

Any such shutdowns or other business interruptions could result in

material and negative effects to our ability to conduct our business in the manner and on the timelines presently planned, which could have a material adverse impact on our business, results of operation and financial condition.

Any such shutdowns or other business interruptions could result in material and negative effects to our ability to conduct our business in the manner and on the timelines presently planned, which could have a material adverse impact on our business, results of operation and financial condition.

Further, disruption of global financial markets and a recession or market correction, including as a result of the COVID-19 pandemic, the ongoing military conflict between Russia and Ukraine and the related sanctions imposed against Russia, and other global macroeconomic factors such as inflation, could reduce the Company’s ability to access capital, which could in the future negatively affect the Company’s liquidity and could materially affect the Company’s business and the value of its common stock.

Components of Results of Operations

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Results of Operations

Results of Operations for the Three Months ended March 31, 2022 and 2021

The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021 (in thousands):

For the Three Months Ended March 31,

Results of Operations for the Three Months ended June 30, 2022 and 2021

The following table summarizes our results of operations for the three months ended June 30, 2022 and 2021 (in thousands):

For the Three Months Ended June 30,

Operating expenses:

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Other expense

Total other income (expense), net

Total other expense, net

Research and Development Expenses

Research and development expenses were $37.8 million for the three months ended March 31, 2022, compared to $23.9 million for the three months ended March 31, 2021.

The $13.9 million increase was primarily attributable to an increase of $9.3 million in employee compensation, which included $2.2 million of severance and one-time termination costs in connection with the strategic reprioritization of programs completed in March 2022 and $1.0 million of non-cash stock-based compensation.

Additionally, in the three months ended March 31, 2022 we incurred an increase of $2.9 million of expenses in research and development manufacturing and other raw material purchases.

We also incurred an increase of $1.7 million of third-party research and development consulting fees, primarily related to GLP toxicology studies and clinical study activities.

Research and development expenses were $23.1 million for the three months ended June 30, 2022, compared to $30.6 million for the three months ended June 30, 2021.

The $7.5 million decrease was primarily attributable to a decrease of $3.8 million in third-party research and development primarily related to GLP toxicology studies, a decrease of $3.2 million in research and development manufacturing, and lower employee compensation expenses of $0.5 million.

General and Administrative Expenses

General and administrative expenses were $11.5 million for the three months ended March 31, 2022, compared to $8.2 million for the three months ended March 31, 2021.

The increase of approximately $3.3 million was primarily attributable to $2.9 million of incremental compensation expense, which included $0.4 million of severance and one-time termination costs and $0.7 million of non-cash stock-based compensation.

We also incurred an increase of $0.4 million in professional fees related to insurance, investor relations/communications, accounting, and market research.

General and administrative expenses were $9.9 million for the three months ended June 30, 2022, compared to $10.1 million for the three months ended June 30, 2021.

The decrease of approximately $0.2 million was primarily attributable to a decrease of $1.1 million in professional fees related to market research, recruiting, accounting, and patient advocacy activities.

This was partially offset by $0.9 million of incremental employee compensation expenses.

Other Income (Expense)

Interest Expense

Interest expense for the three months ended March 31, 2022 primarily consisted of interest expense incurred under the Term Loan Agreement.

Interest expense was $0.9 million for the three months ended June 30, 2022, compared to $0.2 million for the three months ended June 30, 2021.

The increase of approximately $0.7 million was primarily attributable to interest expense incurred under the Term Loan Agreement which we entered into in the third quarter of 2021.

Results of Operations for the Six Months ended June 30, 2022 and 2021

The following table summarizes our results of operations for the six months ended June 30, 2022 and 2021 (in thousands):

For the Six Months

Ended June 30,

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense):

Interest income

Interest income for the three months ended March 31, 2022 and 2021 primarily consisted of interest earned on our savings account.

Interest expense

Other expense

Total other expense, net

Research and Development Expenses

Research and development expenses were $60.9 million for the six months ended June 30, 2022, compared to $54.5 million for the six months ended June 30, 2021.

The $6.4 million increase was primarily attributable to an increase of $8.9 million in employee compensation, which included $2.2 million of one-time severance and termination costs in connection with the reduction in force announced in March 2022.

We also incurred an increase of $2.6 million of clinical study CRO activities and consulting for regulatory and clinical studies.

This was partially offset by a year-over-year decrease of $5.1 million in research and development licensing fees and manufacturing expenses.

General and Administrative Expenses

General and administrative expenses were $21.3 million for the six months ended June 30, 2022, compared to $18.4 million for the six months ended June 30, 2021.

The increase of approximately $2.9 million was primarily attributable to $3.7 million of incremental employee compensation expenses, which included $0.4 million of one-time severance and termination costs and $1.2 million of non-cash stock-based compensation.

This was partially offset by a year-over-year decrease of $0.8 million in professional fees related to insurance, legal, recruiting and patient advocacy activities.

Other Income (Expense)

Interest Expense

Interest expense was $1.8 million for the six months ended June 30, 2022, compared to $0.2 million for the six months ended June 30, 2021.

The increase of approximately $1.6 million was primarily attributable to interest expense incurred under the Term Loan Agreement which we entered into in the third quarter of 2021.

Interest Income

Interest income for the six months ended June 30, 2022 and 2021 primarily consisted of interest earned on our savings account.

Liquidity and Capital Resources

Since our inception, we have not generated any revenue and have incurred significant operating losses.

As of March 31, 2022, we had cash and cash equivalents of $96.6 million.

From inception through March 31, 2022, we have funded our operations primarily through equity financings, raising an aggregate of $307.0 million in gross proceeds from our initial public offering and private placements of convertible preferred stock.

As of June 30, 2022, we had cash and cash equivalents of $66.2 million.

From inception through June 30, 2022, we have funded our operations primarily through equity financings, raising an aggregate of $319.0 million in gross proceeds from our initial public offering and private placements of convertible preferred stock as well as sales of common stock pursuant to our Sales Agreement.

Specifically, between March and July 2020, we closed on the sale of an aggregate of 10,000,000 shares of Series A convertible preferred stock for gross proceeds of $30.0 million.

In July and August 2020, we closed on the sale of an aggregate of 5,647,048 shares of Series B convertible preferred stock for gross proceeds of $96.0 million.

In July and August 2020, we closed on the sale of an aggregate of 5,647,048 shares of Series B convertible

preferred stock for gross proceeds of $96.0 million.

In September 2020, we raised gross proceeds of $181.0 million in our initial public offering.

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LLC as an additional Sales Agent.

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

In April 2022, we sold 2,000,000 shares of common stock pursuant to the Sales Agreement and received net proceeds of $11.6 million.

No other shares of common stock have been issued and sold pursuant to the Sales Agreement as of June 30, 2022.

Funding Requirements

To date, we have not generated any revenues from the commercial sale of approved drug products, and we do not expect to generate substantial revenue for at least the next few years.

If we fail to complete the development of our product candidates in a

timely manner or fail to obtain their regulatory approval, our ability to generate future revenue will be compromised.

If we fail to complete the development of our product candidates in a timely manner or fail to obtain their regulatory approval, our ability to generate future revenue will be compromised.

We do not know when, or if, we will generate any revenue from our product candidates, and we do not expect to generate significant revenue unless and until we obtain regulatory approval of, and commercialize, our product candidates.

We expect our expenses to decrease in connection with our ongoing activities largely due to the strategic reprioritization of product candidates and the reduction in force announced in March 2022.

W e will continue the research and development of, initiate clinical trials of and seek marketing approval for specific product candidates, as well as continue the build out of our cGMP manufacturing facility in Durham, North Carolina .

We will continue the research and development of, initiate clinical trials of and seek marketing approval for specific product candidates, as well as continue the build out of our cGMP manufacturing facility in Durham, North Carolina.

In addition, if we obtain approval for any of our product candidates, we then expect to incur significant commercialization expenses related to sales, marketing, manufacturing and distribution.

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If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

As of March 31, 2022, our material cash requirements consisted of $51.5 million in total lease payments entered into since inception.

As of June 30, 2022, our material cash requirements consisted of $49.9 million in total lease payments entered into since inception.

Our most significant purchase commitments consist of approximately $6.0 million related to the build-out of our cGMP manufacturing facility and $4.0 million in cancellable purchase obligations to our CROs.

We believe that our existing cash and cash equivalents, along with full access to the term loan facility will enable us to fund our operating expenses and capital requirements into the fourth quarter of 2023.

This estimate reflects our strategic prioritization efforts to improve operating efficiency, including pausing research and development activities on our preclinical programs, limiting patient enrollment to focus on proof-of-concept studies in CLN1 and SLC13A5, ceasing the TSHA-101 clinical trial and reducing headcount by approximately 35% in March 2022.

This estimate reflects our strategic prioritization efforts to improve operating efficiency previously announced in March 2022.

We will require additional capital to fund the research and development of our product candidates, to fund our manufacturing activities, to fund precommercial activities of our programs and for working capital and general corporate purposes.

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the costs of operating as a public company.

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain

marketing approval and achieve product sales.

In addition, our product candidates, if approved, may not achieve commercial success.

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We are continuing to assess the effect that the COVID-19 pandemic may have on our business and operations.

The extent to which COVID-19 may impact our business and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the duration of the outbreak, the duration and effect of business disruptions and the short-term effects and ultimate effectiveness of the travel restrictions, quarantines, social distancing requirements and business closures in the United States and other countries to contain and treat the disease, the efficacy, availability and adoption of vaccines, both domestically and globally, and the impact of new variants or mutations of the coronavirus, such as the Delta variant .

While the potential economic impact brought by, and the duration of, the COVID-19 pandemic may be difficult to assess or predict, a continued and growing pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.

In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock.

The following table shows a summary of our cash flows for the three months ended March 31, 2022 and 2021 (in thousands):

For the Three Months Ended March 31,

The extent to which COVID-19 may impact our business and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the duration of the outbreak, the duration and effect of business disruptions and the short-term effects and ultimate effectiveness of the travel restrictions, quarantines, social distancing requirements and business closures in the United States and other countries to contain and treat the disease, the efficacy, availability and adoption of vaccines, both domestically and globally, and the impact of new variants or mutations of the coronavirus .

Further, disruption of global financial markets and a recession or market correction, including as a result of the COVID-19 pandemic, the ongoing military conflict between Russia and Ukraine and the related sanctions imposed against Russia, and other global macroeconomic factors such as inflation, could reduce our ability to access capital, which could in the future negatively affect our liquidity and the value of our common stock.

The following table shows a summary of our cash flows for the six months ended June 30, 2022 and 2021 (in thousands):

For the Six Months Ended June 30,

Net cash used in operating activities

Net cash used in investing activities

Net cash used in financing activities

Net cash provided by financing activities

Net change in cash, cash equivalents and restricted cash

Operating Activities

For the three months ended March 31, 2022, our net cash used in operating activities of $40.8 million primarily consisted of a net loss of $50.1 million, primarily attributable to our spending on research and development expenses.

The net loss of $50.1 million was partially offset by adjustments for non-cash items, primarily stock-based compensation of $5.3 million, and the add back of the regulatory milestone and upfront license fees of $1.3 million.

The $50.1 million net loss was also partially offset by a $2.3 million increase in the cash provided by operating assets and liabilities, primarily resulting from an increase in accounts payable.

For the three months ended March 31, 2021, our net cash used in operating activities of $22.0 million primarily consisted of a net loss of $32.0 million, primarily attributable to our spending on research and development expenses.

The net loss of $32.0 million was partially offset by adjustments for non-cash items, primarily the upfront license fee of $5.5 million to HHF related to the acquisition of TSHA-120 and stock-based compensation of $3.6 million.

For the six months ended June 30, 2022, our net cash used in operating activities of $74.0 million primarily consisted of a net loss of $84.0 million, primarily attributable to our spending on research and development expenses.

The net loss of $84.0 million was partially offset by adjustments for non-cash items, primarily stock-based compensation and depreciation expense of $10.0 million.

For the six months ended June 30, 2021, our net cash used in operating activities of $44.9 million primarily consisted of a net loss of $73.0 million, primarily attributable to our spending on research and development expenses.

The net loss of $73.0 million was partially offset by adjustments for non-cash items, primarily the up-front license fee of $5.5 million to HHF related to the acquisition of TSHA-120 and stock-based compensation of $8.1 million.

The $73.0 million net loss was also partially offset by a $14.1 million source of cash provided by operating assets and liabilities, primarily resulting from an increase in accounts payable and accrued expenses.

Investing Activities

During the three months ended March 31, 2022, investing activities used $11.4 million of cash primarily attributable to the regulatory milestone payment of $3.0 million paid to Abeona pursuant to the CLN1 Agreement, and capital expenditures related to our in-house manufacturing facility and office space.

During the three months ended March 31, 2021, investing activities used $0.5 million of cash attributable to capital expenditures related to computer and lab equipment.

During the six months ended June 30, 2022, investing activities used $19.5 million of cash primarily attributable to the regulatory milestone payment of $3.0 million paid to Abeona pursuant to the CLN1 Agreement, and $16.3 million in capital expenditures related to our in-house manufacturing facility.

During the six months ended June 30, 2021, investing activities used $9.0 million of cash attributable to the up front license fee payment of $5.5 million to acquire exclusive worldwide rights to TSHA-120, for the treatment of GAN, and $3.5 million in capital expenditures related to our in-house manufacturing facility and office space.

Financing Activities

During the three months ended March 31, 2022, financing activities used $0.2 million of cash, which is primarily attributable to the payment of shelf registration costs, and other financing transactions, which are partially offset by ESPP contributions.

During the six months ended June 30, 2022, financing activities provided $10.7 million of cash, which is primarily attributable to $11.6 million net proceeds from the sale of 2,000,000 shares of common stock pursuant to the Sales Agreement and $0.3 million of ESPP contributions.

The proceeds were partially offset by the payment of shelf registration costs, and other financing transactions.

No financing activities took place during the six months ended June 30, 2021.

Off-Balance Sheet Arrangements

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In April 2012, the Jumpstart Our Business Startups Act of 2012, or JOBS Act, was enacted.

Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards.

Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of

the Securities Act of 1933, as amended, for complying with new or revised accounting standards.

Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

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We are also a “smaller reporting company,” meaning that the market value of our shares held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year.

We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held

by non-affiliates is less than $700 million.

If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

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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 2. Management’s Discussion and Analysis