Taysha Gene Therapies - Q2 2023

Transcript

Operator (participant)

Good morning. Welcome to Taysha Gene Therapies's Second Quarter 2023 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a brief question-and-answer session. As a reminder, this webcast is being recorded today, August 14th, 2023. I will now turn the call over to Hayleigh Collins, Director, Head of Corporate Communications. Please go ahead.

Hayleigh Collins (Director and Head of Corporate Communications)

Thank you. Good morning, welcome to Taysha's Second Quarter 2023 Financial Results and Corporate Update Conference Call. Earlier today, Taysha issued a press release announcing financial results for the second quarter of 2023. A copy of this press release is available on the company's website and through our SEC filings. Joining me on today's call are Sean Nolan, Taysha's CEO, Sukumar Nagendran, President and Head of R&D, and Kamran Alam, Chief Financial Officer. We will hold a question-and-answer session following our prepared remarks. Please note that on today's call, we will be making forward-looking statements, including statements relating to the existing clinical data for TSHA-120 and TSHA-102, and the therapeutic and commercial potential of TSHA-120 and TSHA-102.

These statements include the expected timing and results of clinical trials for our product candidates and other clinical and regulatory plans, and the market opportunity for those programs. This call may also contain forward-looking statements relating to Taysha's growth, forecasted cash runway, and future operating results, discovery and development of product candidates, strategic alliances, and intellectual property, as well as statements involving the timing, size, and completion of the Private Placement Financing we announced today, and other matters that are not historical facts or information. Various risks may cause Taysha's actual results to differ materially from those stated or implied in such forward-looking statements.

These risks include uncertainties related to the timing and results of clinical trials of, and regulatory interactions for our product candidates, our dependence upon strategic alliances and other third-party relationships, our ability to obtain patent protection for our discoveries, limitations imposed by patents owned or controlled by third parties, and the requirements of substantial funding to conduct our research and development activities. For a list and description of the risks and uncertainties that we face, please see the reports we have filed with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31st, 2022, and our quarterly report, Form 10-Q, for the quarter ended June 30th, 2023, that we filed today. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, August 14th, 2023.

Taysha undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as may be required by applicable securities laws. With that, I would now like to turn the call over to our CEO, Sean Nolan.

Sean Nolan (CEO)

Thank you, Hayley, and welcome everyone, to our 2023 second quarter financial results and corporate update conference call. Today, I will begin with a brief corporate update. Suku Nagendran, President and Head of R&D of Taysha, will provide an update on our clinical development programs. Kamran Alam, our Chief Financial Officer, will then follow up with a financial update. I will provide closing remarks and open the call up for questions. There are two main areas of focus for today's call. First, we are pleased with the recent progress we've made in our two lead investigational programs, with particular emphasis this morning on the initial data from the first patient dosed in the adult Rett syndrome trial.

Second, we are very pleased to have significantly strengthened our balance sheet with a Private Placement Financing that is expected to result in gross proceeds of approximately $150 million from a prestigious group of existing and new investors, which I will discuss in greater detail shortly. Let's begin with an update on our lead clinical programs. For TSHA-102 in Rett syndrome, the Independent Data Monitoring Committee, or IDMC, recently convened to review the initial clinical data from the first patient dosed with TSHA-102, following the patient's required 42-day evaluation period. Based on encouraging initial clinical data, the IDMC recommended that continuation of the REVEAL Phase 1/2 trial and provided clearance to dose the second patient in the first cohort.

We are pleased to share that early data from the first adult patient showed TSHA-102 was well tolerated, with no treatment-emergent TSHA-102 related serious adverse events as of the six-week assessment. We also have seen early improvements in key efficacy measures evaluating the overall disease and signs and symptoms of Rett syndrome, as well as clinical observations supporting improvements in multiple domains, including autonomic function, vocalization, as well as gross and fine motor skills. Suku will review these data in further detail shortly. We believe the initial safety data and clinical improvements across key efficacy endpoints seen this early, at four weeks post-treatment in the first adult patient with severe disease, reinforces the transformative potential of TSHA-102 to address the root cause of Rett syndrome.

Importantly, these early data indicate that the miRNA-Responsive Auto-Regulatory Element, or miRARE technology is mediating MECP2 expression in the central nervous system on a cell-by-cell basis, supporting the regulatory control of miRARE. We are highly encouraged by the initial data of TSHA-102 and are focused on continuing to explore its therapeutic potential, with the dosing of the second patient expected later in the current quarter. We also recently received IND clearance from the U.S. FDA to initiate clinical development of TSHA-102 in pediatric girls five to eight years of age. We have submitted a CTA to the MHRA for TSHA-102 in pediatric patients with Rett syndrome, which will expand our clinical evaluation to patients with earlier stages of disease progression.

For TSHA-120 in GAN, our new comprehensive data analysis utilizing a disease progression model, or DPM, was submitted to the FDA, and we plan to review the potential regulatory pathways for TSHA-120 with the agency later in the current quarter. This morning, we also announced that we entered into a securities purchase agreement for a Private Placement Financing, or PIPE, that is expected to result in gross proceeds of approximately $150 million from a group of new and existing top-tier investors. The Private Placement Financing was led by new investor RA Capital Management, with participation from a large institutional investor, PBM Capital, RTW Investments, LP, Venrock Healthcare Capital Partners, and TCGX, as well as other key investors.

We are pleased by the support from this prestigious group of investors, which we believe highlights the enthusiasm for our TSHA-102 program and the early clinical readout of the first patient treated in our REVEAL trial. We expect that the net proceeds from the PIPE, together with our existing cash and cash equivalents, will extend our runway into the third quarter of 2025 to primarily support the clinical development of TSHA-120 in Rett syndrome and provide support for TSHA-120 program activities in GAN, working capital, and other general corporate purposes. Kamran will review this transaction in greater detail. This capital infusion significantly bolsters our balance sheet and enables us to focus on execution as we endeavor to deliver on key value-creating milestones.

Over the next six months, we plan to continue to advance our two lead clinical programs, including generating additional clinical data in adults, and expand our clinical footprint into pediatric patients for TSHA-102 and Rett syndrome, and reviewing the potential regulatory pathway for TSHA-120 with the FDA. I will now turn the call over to Suku to provide a more in-depth discussion of our clinical programs in Rett syndrome and GAN. Suku?

Sukumar Nagendran (President and Head of R&D)

Thank you, Sean, good morning, everyone. I will begin with updates on TSHA-102, our investigational gene therapy program in clinical evaluation for the treatment of Rett syndrome. As Sean mentioned, we are pleased to share with you today the initial safety and efficacy data from the first adult Rett syndrome patient dosed in cohort one, low dose, with TSHA-102 in our REVEAL Phase 1/2 trial. Based on these initial data, we believe our product candidate has transformative potential. As a reminder, TSHA-102 utilizes a novel miRARE platform designed to mediate MECP2 expression in the central nervous system on a cell-by-cell basis without risk of overexpression. The X-chromosome inactivation and silencing of MECP2 expression that occurs randomly with Rett syndrome results in a mixture of cells that are either deficient in or express MECP2 normally.

This heterogeneity in MECP2 expression is what makes Rett syndrome challenging with traditional gene therapy approaches, but we believe our novel miRARE technology can appropriately address this challenge and potentially provide therapeutic benefits. TSHA-102 is currently being investigated in the ongoing REVEAL Phase 1/2 trial, a first-in-human, open-label, randomized dose escalation and dose expansion study evaluating the safety and preliminary efficacy of TSHA-102 in adult females with Rett syndrome due to MECP2 loss-of-function mutation. Following the IDMC's prespecified review of the initial clinical data from the first adult patient dosed with TSHA-102, the IDMC recommended the continuation of the REVEAL Phase 1/2 trial and provided clearance to dose the second patient in the first cohort. It is important to understand that the REVEAL trial was designed to primarily measure safety in adult patients.

We have seen a well-tolerated safety profile in the first adult patient with no treatment-emergent TSHA-102-related serious adverse events as of the six-week assessment post-treatment. Due to the severity and progressive nature of the disease, we did not expect to see efficacy in adults with Rett syndrome, particularly in patients with stage four of Rett syndrome, the late motor deterioration stage, which is the most advanced stage of the disease. It typically begins around 10 years of age and can last for years or decades. It's marked by reduced mobility, muscle weakness, joint contractures, and scoliosis, and can lead to the inability to walk. However, it is evident that we have seen improvements in efficacy as early as four weeks post-treatment in the first-stage patient with severe stage four Rett syndrome, dosed with TSHA-102.

Specifically, the principal investigator of the REVEAL trial observed clinical improvements in multiple domains, including autonomic function, vocalization, and growth and fine motor skills. To provide you with clear and collective picture, prior to treatment with TSHA-102, the patient was in constant state of hypertonia. She had limited body movements, required constant back support, and had lost fine and gross motor function early in childhood. She has not been able to sit unassisted for over a decade. 4 weeks following treatment, we have observed improvements in breathing patterns and sleep quality and duration, including the normalization of nighttime behavior. The patient's vocalization has also improved, with an increased social interest. Video evidence demonstrated the patient's improvement in growth and fine motor skills, including the gained ability to sit unassisted for three minutes for the first time in over a decade.

The patient also demonstrated the ability to unclench her hand and hold an object steadily for the first time since infancy, as well as use her fingers to touch a screen. The clinical improvement demonstrated in key efficacy measures four weeks post-treatment provides supportive evidence that reinforces these clinical observations. Specifically, we measured Clinical Global Impression-Improvement or CGI-I, which is a scale that has been adapted to Rett syndrome. It is a clinician-reported assessment of overall improvement following treatment, and it accounts for key aspects of the disease, including language, communication, ambulation, hand use, attentiveness, eye contact, seizures, and autonomic function. CGI-I uses a 7-point scale, with 1 being very much improved and 7 being very much worse. With the first patient, four weeks post-treatment, an overall score of 2, indicating much improved, was reported.

Additionally, the Clinical Global Impressions-Severity scale, or CGI-S, is a clinician-reported assessment of the overall severity of a patient's illness that uses a 7-point scale, with 1 being normal, not at all ill, and 7 being extremely ill. At four weeks post-treatment, a 1-point improvement from the baseline score of 6, indicating severely ill, to a score of 5, indicating markedly ill, was demonstrated. Notably, the Rett Syndrome Behaviour Questionnaire, or RSBQ, which is a 45-item questionnaire that assesses Rett syndrome characteristics, demonstrated a total score improvement of 23 points from the baseline score of 52 to a score of 29, four weeks post-treatment. Specifically, RSBQ subscale total scores demonstrated the normalization of nighttime behavior, as well as improvements in breathing, general mood, and hand behaviors post-treatment. The Seizure Diary demonstrated no quantifiable seizure events through weeks post five weeks treatment.

There was no marked change at four weeks post-treatment in the Revised Motor Behavioral Assessment, or RMBA, which is a 24-question clinical reported scale measuring disease behaviors of Rett syndrome. In addition to these measures, we are collecting a plethora of data and measuring various endpoints per the protocol. Data collected will further inform our thinking relative to optimal primary endpoint selection for registrational study purposes. The critical takeaway here, though, is that the positive efficacy response seen in validated measures in the first adult patient dosed with TSHA-102, coupled with the improvements observed in autonomic function, vocalization, and fine and gross motor skills, are encouraging and we believe support the therapeutic potential of TSHA-102. Moving forward, we intend to provide additional clinical updates from the REVEAL trial quarterly.

We expect to dose the second patient later in the current quarter and anticipate continued dosing of adult patients throughout the second half of the year. We have also initiated efforts to expand our clinical evaluation to children with earlier stages of disease progression. Recently received IND clearance from the FDA to initiate clinical development of TSHA-102 in pediatric patients. We have also submitted a CTA to the MHRA for TSHA-102 in pediatric patients with Rett syndrome. With recent IND clearance, we plan to initiate the clinical evaluation of TSHA-102 in part A of the dose-finding study, which is focused on identifying the maximum administered dose and maximum tolerated dose in pediatric girls five-eight years of age with Rett syndrome.

The safety and efficacy data and the maximum administered dose and maximum tolerated dose selected from part A will be reviewed by the regulatory agency and the IDMC prior to initiating part B of the study in pediatric girls aged three-eight years. Data from part A will be assessed to determine final elements of part B, such as hierarchy of efficacy and points, and study duration can be further assessed. Part B will evaluate TSHA-102 in two age cohorts, an expanded five-eight years of age, with a one-to-one randomization of randomized to treat cohort or delayed treatment cohort, and a cohort for three-five years of age. As a reminder, no approved disease-modifying therapies that treat the genetic root cause of Rett syndrome are currently available, and there is high unmet medical need.

TSHA-102 has already received Orphan Drug and Rare Pediatric Disease designation from the U.S. FDA and has been granted Orphan Drug designation from the European Commission for the treatment of Rett syndrome. The estimated addressable patient population with typical Rett syndrome, caused by a pathogenic, likely pathogenic MECP2 mutation, is between 15,000 and 20,000 patients in the U.S., E.U., and U.K. We are encouraged by the initial efficacy and safety data and look forward to sharing additional updates throughout the year. Now let's turn to TSHA-120 for the treatment of GAN, an ultra-rare neurodegenerative indication with no approved treatments or established regulatory pathway. As Sean mentioned, we have submitted our comprehensive data analysis utilizing the newly developed disease progression model, or DPM, and plan to discuss a potentially regulatory pathway for TSHA-120 in GAN with the FDA in the current quarter.

New analysis of multiple functional, electrophysiological, and biological and structural endpoints in patients treated with TSHA-120, compared to the natural history cohort using a disease progression model, demonstrate a treatment effect in objective and clinically meaningful endpoint. Importantly, we believe these findings that we overviewed at our R&D day in June, address FDA feedback on both the heterogeneity of disease progression in GAN and the effort-dependent nature of MFM-32 as a primary endpoint in an unblinded study. The FDA indicated that it's open to regulatory flexibility in a controlled trial setting and is willing to consider study designs alternative to randomized, double-blind, placebo-controlled trial, if they utilize objective measurements to demonstrate a relatively large treatment effect that is self-evident and clinically meaningful. We look forward to having a collaborative dialogue with the FDA regardless, regarding the potential registrational path.

Lastly, with respect to manufacturing, FDA feedback on our CMC Module 3 amendment concluded that the analytical data is sufficient to support the comparability of a pivotal lot and release for use in clinical studies. I will now turn the call over to Kamran to discuss our financial results. Kamran?

Kamran Alam (CFO)

Thank you, Suku. Research and development expenses were $19.8 million for the three months ended June 30, 2023, compared to $23.5 million for the three months ending June 30, 2022. The $3.7 million decrease was due to lower compensation expense as a result of reduced headcount and fewer manufacturing batches and other raw material purchases. General and administrative expense were $6 million for the three months ended June 30, 2023, compared to $9.9 million for the three months ended June 30, 2022. The decrease of $3.9 million was due to reduced general and administrative compensation as a result of lower headcount, consulting, and professional fees.

Net loss for the three months ended June 30, 2023, was $24.6 million, or $0.38 per share, as compared to a net loss of $34.1 million, or $0.85 per share, for the three months ended June 30, 2022. As of June 30, 2023, Taysha had $45.1 million in cash and cash equivalents. Subsequent to the close of the second quarter, as Sean highlighted, we announced a private placement that resulted in gross proceeds of $150 million and is expected to close August 16, before deducting placement, agent commissions, and operating expenses.

Under the terms of the transaction, Taysha is selling an aggregate of 122,412,376 shares of its common stock at a price of $0.90 per share, and in lieu of common stock to certain investors, pre-funded warrants to purchase up to an aggregate of 44,250,978 shares of common stock at a purchase price of $0.899 per pre-funded warrant. The pre-funded warrant will have an exercise price of $0.001 per share of common stock, be immediately exercisable, subject to certain beneficial ownership blockers, and are re-receipt of stockholder approval of an increase in the number of authorized shares of our common stock.

Which we will first seek to obtain at a special meeting of stockholders to be held, no later than December 31, 2023, and the pre-funded warrants will remain exercisable until exercised in full. As Sean noted, our cash runway, including the expected net proceeds from this private placement, now extends into the third quarter of 2025. I will now turn the call back over to Sean for his closing remarks. Sean?

Sean Nolan (CEO)

Thank you, Kamran. As you heard today, we have made significant progress in our two lead clinical programs, including the generation of the initial clinical data in the REVEAL Phase 1/2 trial in Rett syndrome, that we believe reinforces the therapeutic potential of TSHA-102. We are excited to potentially bring a transformative treatment option to the Rett syndrome community. Collectively, we believe that the data from our two lead clinical programs continues to support our gene therapy approach and the therapeutic potential of our programs to address severe unmet needs in monogenic central nervous system disease. In the second half of the year, we expect to continue dosing additional adult patients with TSHA-102 in our REVEAL Phase 1/2 trial in Rett syndrome and provide quarterly updates on available clinical data.

Additionally, we have begun clinical site trial initiation activities for the U.S. pediatric Rett syndrome trial and anticipate dosing the first pediatric patient in the first quarter of 2024. We expect to receive feedback from the MHRA in the second half of 2023 for the proposed pediatric study, which will further inform program timelines in the U.K. For TSHA-120 and GAN, we look forward to having a regulatory discussion with the FDA regarding a potential path forward for TSHA-120 and GAN later this quarter. With our balance sheet substantially strengthened, we believe we are well positioned to execute across key upcoming value-creating milestones for our Rett syndrome and GAN programs. With that, I will now ask the operator to begin our Q&A session. Operator?

Operator (participant)

Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Once again, that's star one. One moment while we pull our first question. Our first question comes from Xuejun Zhu with Wells Fargo. Please proceed.

Xuejun Zhu (Executive Director)

Hi, thanks for taking our questions, and congrats on the, all the progress and the initial data, which sounds extremely exciting, for patients. Could you remind me, the, maybe I missed this, the age of this patient, the, who is, obviously an adult patient? Can you speak to how does this data compare with the approved therapy DAYBUE, and whether you have additional observations at later time points beyond the sixth week, that was noted in the press release and on the call? Thank you.

Sean Nolan (CEO)

Thanks, Jun, appreciate it. Let me, let me take a high-level perspective on that, and then I'll turn it over to Suku for a little bit more detail. This, this patient was, was 20 years of age. She has stage four disease, which is the most severe form of the disease. You know, I think what, what I'd ask Suku to do is, is kinda just really describe the, the patient, you know, for, for the audience here so we can try to characterize just, just where she was, you know, physically and what she was and wasn't able to do. Suku can also do a bit of a comparison to the trofinetide, although, again, it, it, there's a lot of caveats there with, you know, one patient versus, you know, they had significantly more patients.

It's cross study comparisons, what have you. We can only give a high level perspective on that. You know, I will answer the third question, Jun, which was basically, you know, the data that we're reporting is the data that has been quality controlled and presented to the IDMC. We don't have line of sight to additional data subsequent to that. We plan to provide updates on a quarterly basis, you know, with quality control data, you know, that is ready for presentation. With that, I'll turn it back over to Suku. Suku, if you could characterize that patient high level and put into context.

Sukumar Nagendran (President and Head of R&D)

Yeah.

Sean Nolan (CEO)

What we're seeing here, that'd be great. Thank you.

Sukumar Nagendran (President and Head of R&D)

Yeah, yeah, thanks, Sean, and, and thanks for the question, Jun. So this patient is a 20-year-old female with severe Stage 4 Rett syndrome, okay. As I think Sean described. The data is, the data as is because given per the protocol, we have only access to the four-week assessment and the six-week assessment at this point in time. This patient, as I said, is a female, who was hypertonic, had contractures, was literally either in a wheelchair with, inability to really use her upper/lower extremities, was unable to sit, with, with, over the last decade and had decreased tone of her neck and was unable to vocalize or really socially interact as well. Furthermore, this patient also had, multiple episodes of, you know, respiratory insufficiency, where she would have spells or apneic spells where she couldn't breathe, coupled with hyperventilation.

She also had significant sleep abnormalities, where she would wake up at night and essentially not have a quiet night, where her parents were also constantly disturbed from a, I guess, a social standpoint. Frankly, also had a history of seizures, usually, especially when the Dilantin levels dropped to subtherapeutic levels. Again, to emphasize, this was a 20-year-old female with severe Stage 4 Rett syndrome. Now, as far as the response goes, you know, we've already described that the patient, once given our intrathecal gene therapy, started showing clinical responses within one week post gene therapy. Then at four weeks, we've already shared the assessments with you, and at six weeks, video evidence shows that this patient was able to sit up almost minutes without assistance. The back support was not necessary at that point in time.

She was quite socially interactive and was attempting to vocalize, including saying the word mama multiple times during the day. Furthermore, she was also moving her upper and lower extremities and moving her fingers of both upper extremities and was also able to grasp a toy or a ball, which was observed by the PI and the parents. Furthermore, she was also able to use her lower extremities against gravity, which she has been unable to do for a very long time. What is incredibly important is the impact that the gene therapy also had on the autonomic features, which is her ability suddenly post-gene therapy to now sleep throughout the night without waking up and screaming, which also enabled her parents to sleep through the night.

Furthermore, her respiratory abnormalities, which are due to autonomic irregularities, which include apneic spells or inability to breathe or holding her breath, coupled with hyperventilation episodes, are also decreased significantly. Furthermore, at the time of assessments done per the protocol, the seizure activity was absent per the Seizure Diary and EEGs reviewed by the PI at that point in time. Finally, as Sean said, this is one patient dosed with the lower dose of our gene therapy, where we saw these clinical results, which we think are quite relevant and one could consider quite impactful. To compare that to trofinetide, one patient versus a very large randomized clinical trial of almost 200 patients, I will attempt to do that, but with the caveat.

The trofinetide or DAYBUE Phase 3 trial used as their primary endpoints for approval, CGI-I and the Rett Syndrome Behavior Questionnaire, and they used a combined endpoint. To give you some comparison here with our one patient, CGI-I, assessed at four weeks, gave us a score of two, which, when talking to experts who actually designed CGI-I, told us that was quite clinically relevant. In the trofinetide trial, 12 weeks post-treatment in the Phase 3, when the treatment arm was compared to the placebo arm, the actual change between the two arms was, as I recall, around 0.37, which was significant from a p-value standpoint. If you look at RSBQ, the behavior questionnaire, for our one patient, the change four weeks post-treatment was a number 23, which was quite big for that one patient with our gene therapy.

The average change between the treatment arm to the placebo arm in the trofinetide trial, from what I recall, was around 4.7. Sean, you may want to correct me. I think that's the number I remember, which reached a significant p-value. The broadest or the largest decrease in that trial in patients, if you look at the range, was a change of 10. For us, we had one patient who had an improvement of 23 points, which was far larger than the average range seen within the trofinetide trial. My hope is if we continue to see these kind of impactful clinical changes, both from a purely clinical observation standpoint, which one would consider quite impactful, and from these measures of CGI and RSBQ, the differences could be quite different compared to the trofinetide data set.

I'm going to stop there and hand this back over to Sean to add anything of additional color. Thank you, Sean.

Sean Nolan (CEO)

Thanks, Suku. We'll take the next question, please.

Operator (participant)

Our next question comes from Jack Allen with Baird. Please proceed.

Jack Allen (VP of Equity Research and Biotech Senior Research Analyst)

Great. Thank you so much for taking the questions, and congratulations on all the progress. I guess, maybe one for Suku. If you could talk a little bit more about the, the progression of response in this patient. It seems like you have data from one, four, and six weeks. I'd, I'd love to hear a little bit about the changes you're seeing over time. I know it's really early from that regard. Then, just as a secondary question, any color as you can... that you, that you can share as it relates to the sharing of this data with Astellas would be great as well. Thanks so much.

Sean Nolan (CEO)

Thanks a lot, Jack. I appreciate it. You, I, Suku, I'll take the Astellas question and then, and then turn it over to you. I think everybody is aware that, that Astellas has an observer seat on our board. You know, that the data that, that has been shared publicly here in the press release has been presented to the board. Astellas is, is very aware of that data and all the data that, that is currently available in the trial. They've seen everything that the, the company has seen to date. With that, Suku, you wanna, you wanna take the question about the, you know, the progression and what we're seeing over time? And maybe just one more comment from me, just so everyone has the, the timeline here.

The efficacy endpoints that we're talking about were measured at week four per the protocol. There's safety data out to 6 weeks per the protocol. Then there was video evidence that was generated at six weeks that looked at, you know, gross and fine motor skills in particular. That's what we have right now. With that, Suku, you want to talk a little bit about the progression and the effect over time that the investigator has seen?

Sukumar Nagendran (President and Head of R&D)

Yeah. Yeah, thank you, Sean, and thanks for kind of clarifying that timeline. I think that's very helpful for everybody on the call. As Sean highlighted, what I'm going to talk about right now is up to six weeks post gene therapy, given that the patient was dosed on May 31st. I cannot comment beyond that because, as Sean pointed out, per protocol, there are visits ongoing, data is being accumulated, and that has to be further analyzed and cleaned up from a database standpoint, okay? What is important here to note is that, you know, our gene therapy has self-complementary technology. Once it is given to the patient, it turns on very quickly within 48-72 hours.

What was absolutely fascinating is that when we first went into this adult study, where the patients were dosed 18 years and older, we were told that this is really a safety study. We would not see really any clinical efficacy, given that these patients, were in their latest or worst stage of disease. What we observed, though, was one week post gene therapy, the investigator noted that the patient started improving significantly from a clinical evaluation standpoint and observation standpoint, both from her aspect as well as from the parents' aspect. Furthermore, there was significant impact on the autonomic dysfunction that I already commented on previously, which includes breathing abnormalities, seizure activity, and sleep, overnight.

Furthermore, this improvement continued, as Sean pointed out, four weeks in, where not only did the clinical improvements continue to improve at that point in time, but also other measures, which included CGI-I, CGI-S, and also the Rett Syndrome Behaviour Questionnaire, which all further validated that our gene therapy was having real clinical impact. At six weeks time point, we have video evidence that actually shows that the patient is able to sit up without assistance, did not need the back support of a wheelchair or the hospital bed, didn't need the significant use of a brace that supported her back. She was also able to move her head and track quite effectively and was very socially interactive and was also attempting to vocalize.

This was quite a change compared to her baseline and baseline assessments and videos that showed her quite inactive, hypertonic, flaccid, and at the same time, unable to really move her legs or her extremities in an appropriate manner and was not very socially interactive and was not vocalizing much. I hope that gives you a perspective of the dramatic impact of the gene therapy on this, first adult patient that we have dosed with severe stage four Rett syndrome. Thank you.

Jack Allen (VP of Equity Research and Biotech Senior Research Analyst)

That's great, color. Thank you so much, and congratulations again on the progress.

Sukumar Nagendran (President and Head of R&D)

Thanks, Sean.

Jack Allen (VP of Equity Research and Biotech Senior Research Analyst)

All right.

Operator (participant)

The next question comes from Kristen Kluska with Cantor Fitzgerald. Please proceed.

Kristen Kluska (Equity Research Analyst)

Hi, good morning, everybody. Congrats on the progress as well as your private placement. For Rett, our understanding is that Stage 4 typically begins after around 10 years old. This particular patient potentially had been in the stage for some time, if our understanding is correct, thus progressed quite a bit. Can you talk about how much variability in terms of baseline factors you would expect to see in adults in general? Again, you know, I think our expectations here were, was just to check the box on safety. How are you also thinking about maybe, you know, how this one patient changes the way you're thinking about expectations across other adults as well as pediatrics? Thank you.

Sean Nolan (CEO)

Thanks a lot. You know, just, just to take on that second question first, you know, Suku mentioned this early on, is that, you know, as we talk to the experts in the field about the adult study, you know, there was, there was a very strong consensus, and I would say there was a unanimity, frankly, that we really shouldn't expect to see anything from an efficacy perspective, which is why we, we kind of shared that view, you know, with all of you, and that this would really be a safety-focused study. You know, Suku will comment on this in a little bit, but given that this is a neurodevelopmental disease and, you know,

you know, theoretically, there's always been a view that, that perhaps you really can have a greater impact on the disease since, you know, full damage may not have occurred, you know, cellular death may not have occurred, like it would in a you know, degenerative disease. I think what this is showing is that there's a lot for us to learn about this, this particular disease state. It's certainly very encouraging to see, I think, across the clinical domains, when you look at the, the autonomic nervous system and the breathing and the sleeping, and you look at the gross motor function, and, and you look at the, the, the vocalization and how she wants to, to socialize and be part of things, it's, it's very, very striking.

You know, what I would say is that we, we wanna get through, you know, let's say, the, the first cohort of patients, and I think it's gonna help us really be more informed about endpoint selection, as an example. Keep in mind, too, we also are, are at the low dose. I mean, so we also can, can step up the dosing and, and see if there's a greater effect there. The way we've designed the trial is that we are using a number of endpoints. Suku mentioned a plethora of endpoints. You know, we're gonna evaluate that and determine as, as we go forward, you know, what would be the best, you know, for us from an endpoint perspective that really captures the impact of the disease. With that, let me do this. Let me turn it over to Suku.

You know, Suku, feel free to, to expand on what I just said there, and then maybe you could also just talk a little bit about, you know, patient variability, and symptom variability with people at, at Stage 4 of the disease.

Sukumar Nagendran (President and Head of R&D)

Yeah. Thanks for that, Sean. What I'd like to do first is to answer your question by taking you back to preclinical models. In my experience with drug development, I have only once seen a preclinical model translate one-to-one into the human, and that was in the work we did on Zolgensma, with spinal muscular atrophy type 1, where the delta seven mouse model translated one-to-one into the human. With Rett syndrome, given the disease state itself and given how severe this patient was, I didn't expect to see this kind of one-to-one translation, but that is what we are seeing here as well.

As you probably are aware, we have done a fair amount of work using the Rett syndrome rodent models at P02, P7, P14, and P28 with our gene therapy that shows significant improvement in survival, motor function, and autonomic dysfunction. We've also, you know, spoken to many clinical as well as preclinical experts who've done decades worth of work on different rodent models, including at P35 and P46. Where an increase in the MECP2 levels of, say, 5%-10% above baseline with appropriate therapies can actually restore function and improve survival. Lo and behold, I think that's what we saw with this first patient who had severe Stage 4 Rett syndrome. I guess what I'm saying is, I didn't expect to see this type of clinical impact in such a short time.

Now, working backwards, I think the preclinical data set and the understanding of the disease pathophysiology now is explanatory to see why we are having this kind of impact with our gene therapy. Again, to answer your question about disease variability, as you said, stage four technically begins around age 10, but as the disease progresses and the children get, or the female patients with Rett syndrome get older, their disease does tend to get much severe. I think if you see this kind of response with a severe stage four patient, I'm quite cautiously optimistic that in patients with different types of presentations of stage four Rett syndrome, especially if they are much younger than age 20, we should have clinical impact that is hopefully meaningful and will change patients' lives and their caregivers or parents' lives as well.

From an endpoint standpoint, as Sean pointed out, we have many endpoints that are hypothesis generating, not testing. As we gather more and more data, then we hope to use these as our endpoints for the confirmation trials. With the caveat, though, if we see this type of clinically meaningful or transformative results consistently across patients as we dose them both in the adult and eventually in the pediatric trials, then I think the clinical data will speak for itself beyond even these functional measures that we have built in, very similar to what we may see or have seen with the Zolgensma trials when we went to the FDA and other regulatory agencies. I sincerely hope that TSHA-102 will continue to have meaningful clinical impact for these patients and change their lives. Thanks for the question, by the way. Sean, back to you.

Sean Nolan (CEO)

Thank you, Suku. Next question, please.

Operator (participant)

Our next question comes from Silvan Türkcan with JMP Securities. Please proceed.

Silvan Türkcan (Managing Director)

Yeah, good morning. Congrats on the data and the placement, and thanks very much for taking my question. Just going back to the safety side for the MECP2 duplication syndrome, which is one of the safety risks here, how far are we out of the woods with this one patient? When could we, you know, should this onset, if there would have been complications, already been seen, or what is the timeline until we can estimate fairly confidently that that is not a problem and miRARE is working well? Then I have a question about the sleep. The sleep improvement, obviously, in our discussions with KOL, that's been one of the main problems with adult patients that doctors really saw the burden.

How, the sleep that we measure the improvement, is that every night, is it every other night? Could you please give us some more color around the improvement of sleep? Thank you so much. Congrats again.

Sean Nolan (CEO)

Thanks a lot, Silvan. Yeah, Suku, would you mind taking both of those questions, one regarding sleep and the other regarding the timing of... and maybe even describing what the MECP2 duplication, how would that manifest itself? What would it look like? Is that something that the IDMC would have picked up on, you know, in their review of the safety data? I'll turn it back to you.

Sukumar Nagendran (President and Head of R&D)

Yeah. Yeah, thanks, Sean. By the way, Silvan, those are very good, important questions that we were also grappling with when we were initially, you know, working on the protocols in the past, but also evaluating this patient. I'm going to try and walk you through and linking, kind of the science behind the MECP2 expression levels and clinical manifestations, but also the miRARE technology, and link it to, I would say, the clinical findings. Keep in mind, though, that our construct has miRARE, which is a regulatory element, right? That is part of the construct that is sensitive to endogenous MECP2 production that works through the endogenous microRNA, that then modulates our exosome construct and regulates the amount of MECP2 produced by our gene therapy.

Essentially, in the animal models and nonhuman primate work, we had reassurance that this miRARE technology actually works very well, especially in cells within, either the rodent models or now in the human, that have normal MECP2 levels. Now, the reason I have confidence based on this one patient set of data, and obviously I'd love to see this reproduced as we dose more patients, is that the construct, our construct, started having clinical results within one week post-treatment. It turned on very quickly and therefore, the patient continued to improve per assessment, especially with impact, as you pointed out, on sleep, which is a difficult aspect of the disease to treat.

Frankly, if the MECP2 production by our construct actually went beyond the therapeutic range, you would have seen abnormal manifestations, both clinically and I assume on some of the questionnaires that we used to assess the patient, which included the RSBQ. Those measurements have reassured us up to now that the patient is doing quite well clinically, but the expression levels of MECP2 within each cell is at an appropriate level to control the neural network that the MECP2 protein level actually controls within the cell, that has still continued to result in positive clinical manifestations. Working backwards, though, again, keep in mind our assessment is at four and six weeks at this point in time, as we have shared.

Given the rapidity of the positive clinical impact, my assumption, again, at this point in time, is if there were going to be features of duplication syndrome, which frankly, clinically is very similar to Rett syndrome with some differences, especially when it comes to patient activity. There might be other psychiatric features of mania and ADD that can also manifest as part of duplication syndrome that has not been observed. The IDMC, when they reviewed the data in mid-

Operator (participant)

The operator, Suku's line disconnected. I will try to reconnect. I will bring the next speaker through.

Sean Nolan (CEO)

This is Sean. You know, while we wait for Suku to dial back in, I, I think the other part of the question that Silva asked was around sleep. All I can say to that, without Suku being on the call, is, is that from a caregiver-reported and clinician-reported perspective, there was dramatic impact on the sleep, noticed almost immediately by the family, that she was sleeping through the night. When you look at some of the subscales of the RSBQ, which is caregiver-generated, the score went to, I want to say it was, it was almost normal. In, in fact, it was, it was a, a normal indication. It was, it was a very distinctive improvement, you know, from the parents' perspective in terms of her quality of sleep.

With that, why don't we ask for the next question?

Operator (participant)

The next question comes from Joon Lee with Truist Securities. Please proceed.

Joon Lee (Managing Director and Senior Biotech Analyst)

Hey, congrats on the progress, and thanks for taking our questions. You know, the results from the REVEAL study are stunning at face value, but is there any CSF biomarker or EMG you can couple with to complement the findings and confirm target engagement? Can you put the findings of the single patient, which again, sounds impressive in the context of natural history study, what gives you confidence that the findings are real and not noise? This is really for Suku, but anything you can share, Sean, would be appreciated. Thank you.

Sean Nolan (CEO)

Okay. Let me ask, is Suku on the call? All right, well, then I'm gonna do my best while we, we deal with this. You know, to, to answer your, your first question about the biomarkers, I know that there is no direct way to measure, as an example, what's happening with the levels of MECP2, because it's not freely able to be captured. You, you would ultimately... You'd be in a very negative situation, like looking at autopsy and doing biopsies and things like that, to really determine that. At this point in time, there are no real biomarkers that we're aware of, that would allow you to capture, you know, the, the activity that you're seeing in MECP2.

It really would be the manifestations clinically and, and what types of improvements are you seeing there. You know, as it relates to, is this, is this real? You know, I understand the, the perspective of the one patient, and, and look, we, we caveat that as well. I think what, what's so dramatic about this is that, you know, when you, when you talk to the KOLs and the people that treat Rett patients on a daily basis, Stage 4 is exceptionally severe. I mean, Suku did a good job painting the picture of the patient, but essentially envision somebody that for a, a decade at least, has been unable to sit unassisted, has been in a wheelchair, has to wear a back brace to have some semblance, semblance of the, you know, the ability to hold themselves, you know, upright.

They have to be supported when they're sitting, you know, to look around the room. Very, very poor muscle tone, you know, very hard to hold the head up, very hard to track, unable to hold, you know, hold objects in their hand. I would just say, you know, based on the video that I've seen, is that, you know, very, very quiet, you know, very kind of much within herself, I would say, in terms of vocalization and communication. Just very, very quiet, very, very placid. After treatment, again, the physician reported, and we've seen the video where, you know, she can. You put her into a sitting position, and she can sit there, you know, for three-five minutes. That's...

You know, if Suku was here, he'd say that's demonstration of, of axial strength. You know, she's getting, you know, muscle tone back into her, like her limb girdle region, if you will, and, and has the strength to, to do that. Much more movement and coordination of the upper extremities and beginning to see something, some activity in the legs. Suku, good to have you back on board. I've been doing my best to, to paint the picture of, of the patient. You know, Suku, maybe you should take it from here, but the question was really around, you know, is this effect real?

You know, is, is there a lot of heterogeneity in these patients and maybe they have, you know, periods where they're very, very difficult, you know, they're very severe in their symptoms, and then they get better? You know, I tried to paint the picture of what she looked like before and after, but I, I think they, the folks would appreciate hearing it from, from an MD more than myself.

Sukumar Nagendran (President and Head of R&D)

Yes. Thanks, Sean, by the way, I apologize, I just suddenly got disconnected. Anyway, I'm back on. When it comes to Stage 4 Rett, I know somebody asked this question previously as well. Beyond age of 10, as the patients worsen and get into the severe stage, I think the heterogeneity, based on my discussions with many of the experts, gets less and less. What is important to note, though, is that in this patient, and again, we've, we've described the patient's profile to many experts. They have seen the videos on the CDA, and they do all accept the fact that the response, yes, was clinically dramatic, but it is pretty obvious because the patient continues to consistently demonstrate the improvements compared to baseline.

I've already described some of these improvements that go way beyond just the autonomic dysfunction, which by itself I thought was dramatic, but also the fact that the patient could not sit up without support for over a decade, is able to do that. There's restoration of axial muscle tone and neck tone. There's now restoration of function of the upper extremities, which is the ability to hold a ball or an object, and also the ability that she appears to now attempt to interact socially and also attempt to vocalize, which I hope over time will turn into more words and maybe even string sentences together. Collectively speaking, this is a dramatic response, and I assume the younger the patient in that Stage 4 period, we will have to assess each patient based on their baseline to see what type of improvement you will see clinically.

Remember, DAYBUE get, got approved on CGI-I and the RSBQ, and hopefully, we will see these kinds of dramatic changes in CGI-I and the RSBQ as well in the patients we treat, whether it's the pediatric population or the adult population, that will further cement the impact of our gene therapy. I hope that helps address any concern around variability, but in this specific patient, a 20-year-old female with severe Stage 4, again, I emphasize, we did not expect to see any kind of efficacy impact of our gene therapy this quickly. Again, I'm cautiously optimistic that we can reproduce this result and hopefully make a big difference in the Rett syndrome patients' lives and their caregivers. Thanks, Sean. Back to you.

Sean Nolan (CEO)

Suku, can you also just confirm that there is no, to our knowledge, there's no biomarker available to measure MECP2 levels?

Sukumar Nagendran (President and Head of R&D)

That's correct. At the present time, we do not have the ability to measure MECP2 levels in the cell or in the serum or in the CSF. The biomarkers that are out there, and we are collecting, you know, CSF and serum samples to look at different biomarkers. These biomarkers, such as neurofilament levels, BDNF, et cetera, do not have enough data yet to correlate to activity levels from a clinical standpoint. We will continue to collect the samples, and hopefully, when there's more data, maybe we might be able to link some of these biomarkers to clinical impact of our product. The caveat, though, is given how quickly our gene therapy works from a clinical impact standpoint, biomarkers may not be necessary if we continue to have this kind of clinical impact. I'll leave it at that for now, Sean.

Sean Nolan (CEO)

Thanks, Suku. Next question, please.

Operator (participant)

Once again, to ask a question, please press star one on your telephone keypad. Our next question comes from Gil Blum with Needham. Please proceed.

Gil Blum (Senior Biotech Analyst)

Good morning, everyone, thanks for squeezing us in. Very impressive data set, especially given how early it is. I would love your thoughts here on how you think this data could evolve over time. You know, we're used to seeing functional measure take quite a while to, to really ramp up. Thank you.

Sean Nolan (CEO)

Thanks, Gil. I'll take a stab at that and then turn it over to Suku. In terms of, of, of how the, the data can evolve over time, I, I think that, you know, from my perspective, based on, you know, talking to the KOLs and, and understanding, you know, the, the disease states, I, I think it's, it's a bit speculative to say, you know, what, what might happen. I mean, my view is basically that what we've seen thus far in a Stage 4 patient is, is very dramatic, very unprecedented. So I think the question you're getting at, Gil, is, you know, is there gonna be an incremental improvement over the course of time? Is she gonna continue to get better? You know, those are unknowns.

I think this is a major first step, and I think what we can do to potentially help, and I know Suku's team is working on this, but, you know, is there physical therapy that can be done to help her get stronger and utilize the muscle tone that she's beginning to regain? You know, can she work with, you know, speech pathologists and what have you, to gain, you know, further utilization and ability to communicate? You know, those types of things I think are, you know, unprecedented in Rett patients, so I think we're blazing new ground. I think it also highlights the fact that, you know, the sooner that you get into the treatment, you know, probably the best outcome you can possibly get.

to, to basically have this level of impact on a Stage 4, 20-year-old adult, you know, I think really is encouraging, you know, for the broader patient population out there. Suku, please, feel free to augment anything that I, that I have said.

Sukumar Nagendran (President and Head of R&D)

Sean, I mean, I think, you've explained it quite well. One piece of information I would add, Gil, again, with the disclosure and disclaimer, this is absolutely speculative, is that my team, the experts who've seen the CGI-I, CGI-F data, RSBQ data, were quite surprised and impressed with how rapid the impact and how big the impact was on this one patient when it comes to the scales and the changes versus baseline. Obviously, it's a one-patient comparison to the trofinetide data set.

What I would state again, speculatively, is if we see these type of consistent results in the adult patients that we are dosing, let's say in the next, I don't know, five to six patients, the dramatic nature of the change, if that continues, then I think that should correlate hopefully with the clinical impact as well, which could lead to hopefully, very useful discussions with regulatory agencies for the future. My caveat is, it's one patient. I would like to see this reproduced and then let it develop for the program, and hopefully also, influence the regulatory pathway in the most appropriate way possible. Thanks for that question, Gil.

Sean Nolan (CEO)

The other thing that I would add to that too, Gil, is that, you know, oftentimes when you look at a population of, of, you know, people affected by a disease, the real question is: Who are the treatable patients? Who can derive a benefit? I think, you know, if we see, you know, the next couple of patients have, you know, a similar type of effect, I think what's so encouraging and exciting for the Rett community is that, you know, there could be a much broader population, you know, that 15,000-20,000 patients that could derive a very significant and meaningful benefit, you know, from gene therapy. Thank you very much. Next question?

Operator (participant)

There are no further questions. This concludes our question and answer session. I'll turn back to Mr. Nolan for his final remarks.

Sean Nolan (CEO)

I really appreciate everyone joining the call this morning. Wish everyone a very happy day. Take care, we'll talk soon. Thank you.

Operator (participant)

Thank you again for joining today's teleconference. You may disconnect your lines at this time. Thank you for your participation.