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Taysha Gene Therapies Inc. Common Stock (NASDAQ:TSHA)
Q4 2020 Earnings Call
Mar 03, 2021, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the Taysha Gene Therapies full-year 2020 financial results and corporate update conference call. [Operator instructions] As a reminder, this call is being recorded today, March 3, 2021. I will now turn the call over to Dr. Kimberly Lee, senior vice president of corporate communications and investor relations.

Please go ahead.

Kimberly LeeSenior Vice President of Corporate Communications and Investor Relations

Thank you, and good morning, and welcome to Taysha’s full-year 2020 financial results and corporate update conference call. Joining me on today’s call are RA Session II, Taysha’s president, CEO, and founder; Dr. Suyash Prasad, chief medical officer and head of R&D and Kamran Alam, chief financial officer. After our formal remarks, we will conduct the question-and-answer session and instructions will follow at that time.

Earlier today, Taysha issued a press release announcing financial results for the full year ended December 31, 2020. A copy of this press release is available on the company’s website and through our SEC filings. Please note that on today’s call, we will be making forward-looking statements, including statements relating to the safety and efficacy and the therapeutic and commercial potential of our investigational drug candidate. These statements may include the expected timing and results of clinical trials for our drug candidates and the regulatory status and market opportunity for those programs as well as Taysha’s manufacturing plants.

This call may also contain forward-looking statements relating to Taysha’s growth and future operating results, discovery and development of drug candidates, strategic alliances, and intellectual property as well as 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 and preclinical studies of our drug 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.

This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, March 3, 2021. 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. I would like to turn the call over to our president, CEO, and founder, RA Session II.

RA Session IIPresident, Chief Executive Officer, and Founder

Thank you, Kim. Good morning, and welcome, everyone, to our first corporate update and financial results conference call. We hope you and your family continue to remain safe and healthy. In the past year, we have made significant progress on our corporate initiatives.

I will elaborate on some of our key achievements and upcoming expected milestones. And then we will turn the call over to Suyash and Kamran for updates on our pipeline developments and financial results, respectively. 2020 was a highly successful and foundational year for the company, marked by many significant milestones. Since March 2020, we have raised gross proceeds of $307 million, which included approximately $181 million in gross proceeds from the completion of a successful IPO last September that included participation from a significant number of high-quality healthcare-focused institutional investors, which increased our visibility within the broader investment community.

This was one of the fastest seed to IPOs in biotech history, which we consider a reflection of the team’s commitment and our investors’ confidence in our innovative approach to gene therapy. Central to Taysha’s success is our strategic collaboration with the UT Southwestern Medical Center gene therapy program. One of the premier academic medical centers in the world. We hold an exclusive worldwide royalty-free license from UT Southwestern to discover, develop and commercialize gene therapies for our pipeline.

Our collaboration with UT Southwestern is led by Dr. Steven Gray and Berg Minassian. Dr. Gray is an associate professor in the Department of Pediatrics at UT Southwestern and an expert in the development of AAV-based gene therapies for CNS disorders.

Dr. Minassian is the Division Chief of Child Neurology and Faculty at the Children’s Medical Center Research Institute at UT Southwestern and a seasoned clinician in the diagnosis, management, and treatment of rare pediatric neurological diseases. Through our partnership, we are advancing a deep and sustainable pipeline that currently consists of 25 gene therapy product candidates. Our portfolio targets monogenic diseases of the central nervous system across three distinct franchises: neurodegenerative diseases, neurodevelopmental disorders, and genetic epilepsies.

By leveraging synergies across our programs, we are well-positioned to advance our current pipeline while actively developing our novel next-generation platforms, to expand the limits of gene therapy into indications that are currently unaddressable with available technologies. We are complementing our efforts to expedite the development of our current programs by working closely with regulatory authorities, and we have already secured rare pediatric disease and orphan drug designations from the FDA for six product candidates. TSHA-101 for GM2 gangliosidosis, TSHA-102 for Rett syndrome, TSHA-103 for SLC6A1 haploinsufficiency, TSHA-104 for SURF1-associated Leigh syndrome, TSHA-105 for SLC13A5 deficiency, and TSHA-118 CLN1 infantile disease. Our relationship with patient advocacy organizations and research foundations remains very important to us.

As such, we continue to establish further strategic partnerships, including with Invitae and AllStripes to support access to genetic testing and earlier diagnosis of patients with CNS disease and to inform the understanding of the natural history, disease burden, and patient diagnostic journey. We believe this will also accelerate our efforts to enroll patients for our clinical trials. Part of our approach to accelerate the development of our pipeline is integrating our R&D and G&P manufacturing capabilities to sufficiently meet the clinical demand of our extensive portfolio. Our three-pillar approach to manufacturing includes our partnership with UT Southwestern, where we have access to a 500-liter GMP-compliant manufacturing suite for early phase clinical and IND-enabling toxicology materials.

And our manufacturing partnership with Catalent for the early phase and pivotal clinical supply. The third pillar is the establishment of our internal 187,000 square foot commercial-scale GMP-compliant manufacturing facility with multiple production suites and an initial capacity of 2,000 leaders to support preclinical through commercial GMP manufacturing for our pipeline. We believe the addition of an internal facility will enable us to drive efficiencies and scalability across our manufacturing supply chain in order to meet the potential demand of our multiple concurrent programs. We expect to initiate construction on this facility later this year.

As part of our manufacturing strategy, we are also spending time and effort on our CMC characterization, potency assays, titering assays, and other associated lab work. Our employees are foundational to our ability to quickly advance the development of gene therapies. Taysha is growing at such an incredible pace that we have more than doubled our employee base to approximately 80 in just the last three months. Moreover, we expect to expand the team to approximately 150 employees by year end to support our robust development and corporate initiatives.

We are privileged to have our efforts augmented through partners and advisors who are trailblazers in the gene therapy space. Beyond our strategic collaboration with Dr. Gray and Minassian. We are fortunate to be advised by an independent internationally renowned scientific advice with academic credibility and significant industry experience.

And a seasoned board of directors consisting primarily of industry-leading gene therapy executives in With their support, we believe we are uniquely positioned for sustained success as we further our R&D initiatives and advance our next-generation technology platforms. We anticipate a transformational year as we expect to report first-in-human clinical data for TSHA-101 and GM2 gangliosidosis and launched four candidates into Phase 1/2 studies following acceptance of their INDs or CTAs. We have currently advanced an additional five therapies into IND or CTA-enabling studies and have initiated four new programs into preclinical development. Importantly, we expect to advance our next-generation technologies to optimize key components of AAV-based gene therapy.

We look forward to leverage our capabilities to pioneer novel approaches to address vector capacity and to continue to innovate as it pertains to payload design. Lastly, we will continue to evaluate opportunities to maximize the value of our existing pipeline. I will now turn the call over to Suyash to provide an update on our R&D initiatives. Suyash, please go ahead.

Suyash PrasadChief Medical Officer and Head of R&D

Thanks, RA. As RA mentioned, Taysha has a robust portfolio of 25 gene therapy product candidates for monogenic diseases of the CNS. Our candidates target broad therapeutic categories of immense unmet medical needs, including neurodegenerative diseases, neurodevelopmental disorders, and genetic epilepsies. Our approach to developing gene therapies centers on the use of AAV9 delivered directly to the spinal fluid, or CSF, using intrathecal administration.

We believe these intrathecally delivered AAV9 based gene therapies are an appropriate and valid method of delivering gene therapy to treat neurological disease and which has some clinical precedent now. AAV9 has been widely characterized across numerous preclinical and completed clinical trials and has a well-delineated by distribution, safety, tolerability, and efficacy profile. In comparison to other AAV serotypes, AAV9 administration through lumbar intrathecal injection has been shown to result in significant transduction of multiple cells within the CNS and clinical benefit in some therapy areas. We manufacture our product candidates using a mammalian suspension-based process designed to efficiently scale to support our clinical and commercial development needs.

The utilization of the AV9 capsid across our product portfolio enables us to manufacture each product with minimal process changes since our product candidates differ only in their payload, specifically the therapeutic transgene. We believe this combination of AAV9 manufacturing suspension and delivered intrathecally will allow us to effectively and efficiently advance the gene therapy candidates in our product pipeline. One of our lead neurogenerative disease product candidates is TSHA-101, which is currently in a Phase 1/2 trial for the treatment of infantile GM2 gangliosidosis, which includes disease and Sandhoff disease. GM2 gangliosidosis is lysosomal storage to resulting from a deficiency in the beta-hexosaminidase, an enzyme often referred to as leading to an accumulation of GM2 gangliosidosis in lysosomes, neuronal cell damage, and ultimately neuronal cell death.

There are no approved therapies for the treatment of GM2 gangliosides and care is generally palliative. The most common and severe form is infantile GM2 gangliosidosis, which approximately 80% to 85% of patients diagnosed with this form. Infantile GM2 ganglioside is characterized by HEXA enzyme activity levels, less than 0.1%. And while gangliosidosis is characterized by activity, which is 0.5% to 2% of normal activity.

Children usually present with symptoms in the first few weeks of life and experience rapid neurodegeneration, culminating in death before the age of four. Patients with juvenile GM2 gangliosides rarely survive beyond their mid-teens. onset GM2 gangliosidosis patients have enzyme activity levels, typically in the range of 2% to 4% of normal activity and they live a normal life span despite having some considerable comminutive and challenges. We believe that reaching a level of 5% of normal activity will result in a significant reduction in accumulated substrate and improvement in clinical outcome.

It is important to note that HEXA is a heterodimer, consisting of an alpha subunit and a beta subunit. What’s unique about TSHA-101 is that is the first and only transgene in clinical development. By linking the human HEXA and genes, which are the genes that code for the alpha subunit and the beta subunit of beta-hexosaminidase A and having them being driven off the same promoter, we are ensuring the expression of each subunit of beta A at the appropriate one to one ratio within each cell. We believe this is the most efficient way to produce high levels of functioning, heterodimeric HEXA within each sale.

In preclinical studies, we observed a significant improvement in survival in mice across all dose levels of intrathecally administered TSHA-101 as compared to mice treated with it alone. We observed a similar dose-dependent response in behavioral assessments of mice evaluating the motor function and the dose-dependent decrease in gangliosidosis accumulation in brain tissue, all of which suggest a restoration of HEXA enzyme activity. Notably, no adverse findings or evidence of toxicity attributable to TSHA-101 were observed. In December, Queen’s University, Ontario received the approval of its clinical trial application, or CTA, from Health Canada for its Phase 1/2 clinical trial of TSHA-101 in patients with infantile GM2 gangliosidosis.

Patients will be evaluated over one year with an additional longer-term extension period to monitor ongoing safety, developmental progression, and select efficacy measures. In addition to evaluating safety and tolerability, the key efficacy inputs will include biomarkers and assessments of hypotonia and motor function. As noted earlier, we believe this achievement 5% HEXA1 activity in CSF will result in a considerably improved clinical phenotype, and we would consider that a positive outcome. Queens University expects to report preliminary safety and biomarker data in the second half of 2021.

In the U.S., we intend to submit an IND in the second half of 2021. And if accepted, we intend to initiate a Phase 1/2 trial in the second half of this year. We are also working to address the progressive fetal neurodegenerative disease, CLN1. CLN1 disease is a rare lysosomal disorder caused by loss of function mutations in the CLN1 gene, which results in a lack of the enzyme protein of thioesterase or PPT1.

Our product candidate, TSHA-118 is designed to reduce a functional CLN1 gene using an AAV9 vector and has the potential to be the first disease-modifying therapeutic for this disease. Preclinical studies demonstrated that intrathecal treatment with TSHA-118 significantly extended survival of CLN1 knockout mice with enhanced survival and behavioral outcomes correlating with the treatment at younger ages. We expect to initiate a Phase 1/2 clinical trial of TSHA-118 in the second half of this year under a currently open IND. The trial is expected to enroll up to 18 patients with CLN1 disease with primary endpoints evaluating the safety and appropriate developmental milestones.

Our third lead certainly candidate TSHA-102 is in development for the treatment of Rett syndrome, a severe neurodevelopmental disorder. In most cases, caused by loss of function mutations in the MECP2G. or MECP2 is a protein essential for neuronal and synaptic function in the brain. For effective treatment, needs to be titrated to correct the deficiency, while avoiding the adverse effects associated with too much MECP2.

Given that Rett syndrome is an x-linked dominant disease unless the patients are with differential expression of MECP2 in different cells, the regulation of to appropriate levels needs to occur on a cell by cell basis. Accordingly, to prevent harmful dose hopes of transgene-expressing factors while avoiding subtherapeutic levels, our partners at UTSW have designed a proprietary method of transgene regulation called % auto regulatory elements. is a novel NIR-related target positioned in the untranslated region of the gene therapy construct that binds to endogenous down regulatory micro RNAs that are activated in the presence of high levels of MECP2. Through this approach, TSHA-102 is designed to maintain transgene expression levels in the cells of the brain within appropriate physiological parameters.

In preclinical studies, TSHA-102 demonstrated a favorable tolerability profile in wild-type mice and increased survival in the mass model. We intend to submit an IND or CTA for TSHA-102 in the second half of this year and to initiate a Phase 1/2 trial by the end of the year, which will evaluate the safety, tolerability, and preliminary efficacy. We are proud to say that we have transitioned from a preclinical to a clinical-stage company, and we continue to build momentum on our R&D initiatives. This year, we plan to initiate four Phase 1/2 trials and advance four product candidates into IND or CTA enabling studies as well as four new undisclosed programs into preclinical studies.

We will continue to work closely with the FDA and other regulatory agencies to advance our candidates through development to potential commercialization. Importantly, we will continue to advance a sustainable pipeline by leveraging our next-generation platform technologies. As part of this initiative, we recently established a collaboration with Dr. Dennis Law and the Genomics Institute Clinic to further push the boundaries of AAV vector engineering by developing next-generation minigene payloads that have the potential to overcome current limitations of packaging capacity, which is a critical barrier to treating genetic diseases not addressable by conventional AAV gene therapy technologies.

This may enable us to effectively treat a wider range of devastating CNS diseases. We will also continue to develop new constructs and to innovate on new payloads in partnership with UT Southwestern. With that, I’ll turn the call over to Kamran to review our financial results.

Kamran AlamChief Financial Officer

Thank you, Suyash. This morning, I will discuss key aspects of our full-year 2020 financial results. More details can be found in our Form 10-K, which will be filed with the SEC shortly. As indicated in our press release today, R&D expenses were $31.9 million for the year ended December 31, 2020, compared to $1 million from company inception on September 20, 2019, to December 31, 2019.

The increase was primarily due to the company’s development programs as a result of increased manufacturing-related spending, clinical and preclinical activities, and headcount. G&A expenses were $11.1 million for the year ended December 31, 2020, compared to $0.1 million from company inception on September 20, 2019, to December 31, 2019. The increase was primarily due to an increase in personnel costs resulting from increased headcount, professional service fees, and other corporate-related expenses. Other expenses were $17 million for the year ended December 31, 2020, which were noncash in nature and represented the change in fair value of the preferred stock tranche liability associated with the Series A convertible preferred stock.

Net loss for the year ended December 31, 2020, was $60 million or $3.40 per share as compared to a net loss of $1.1 million or $0.12 per share for the period from company inception on September 20, 2019, to December 31, 2019. We ended 2020 with $251.3 million in cash and cash equivalents, which included the $165.9 million in net proceeds from the company’s IPO completed in September 2020. We expect that our working capital will be sufficient to fund operations into 2023, which includes the development, regulatory and operational milestones, RA outlined earlier. And with that, I will hand the call back to RA.

RA Session IIPresident, Chief Executive Officer, and Founder

Thanks, Kamran. As you heard, we had an extremely productive 2020 and are excited and energized to execute on our operational goals for 2021. We believe our robust pipeline reflects the power and potential of our platform. By leveraging our unique strength and the many synergies across our programs, we expect to drive future sustained innovation of our pipeline.

From a strategic standpoint, collaborations have been the cornerstone of Taysha’s success to date. And we will continue to evaluate other opportunities to maximize the value of our existing portfolio as well as to potentially expand it. Through persistence and dedication, we will continue to strive toward creating and capturing value as we advance our gene therapy programs into the clinic and expand our product pipeline of novel CNS treatment options in the months and years ahead. I will now ask the operator to begin our Q&A session.

Operator?

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from Salveen Richter with Goldman Sachs. You may proceed with your question.

Elizabeth WebsterGoldman Sachs — Analyst

Good morning, and thank you for taking our question. This is Elizabeth on for Salveen. Could you remind us of what would be clinically meaningful and sort of what you’re looking for in the clinical data in GM2 at year-end ’21 and specifically as it relates to hypotonia and the motor function improvements you mentioned? And then similarly, your initial thoughts on what you would be hoping to see from the first data in SURF1?

RA Session IIPresident, Chief Executive Officer, and Founder

We appreciate the question. So what I’ll do is I’ll turn it over to Suyash and could address this question.

Suyash PrasadChief Medical Officer and Head of R&D

Thanks, RA, and thanks, Elizabeth. Yes, GM2. So as you know, we have an open IND equivalent to CTP in the calendar. And we’re guiding to biomarker data during the second half of this year and clinical data — preliminary clinical data by the end of this year.

So in terms of what we’re expecting to see and what we believe will be clinically meaningful, I think the first thing we will see is an increase in the biomarker activity, specifically HEXA in the CSF. So this is the enzyme that’s missing in GM2 gangliosidosis And I expect what will happen is that we’ll dose a patient intrathecally. We will take CSF samples subsequent to that. The first sample will be one month after dosing, and I would expect to see an increase in biomarker activity at that time point.

Now as you may recollect, the different phenotypes of GM2 have different levels of underlying biomarker activity. The infantile form, which is most severely progressive runs at less than 0.1% activity. The juvenile forms, which disease, usually results in death in the teens run between about 0.5% activity, and the adulthood onset form of the normal life expectancy, usually run between 2% and 4% activity. So we actually think that lifting the biomarker level up to about 5% will result in a really dramatically improved clinical phenotype.

So I would hope to see that — we would consider that a significant improvement from a biomarker perspective. Which, as I say, I think we’ll see relatively early on. We’ll see some improvement by about the one-month time point, and I would hope to see even further improvement by the three-month time point at which point will take another CSF sample and look for that biomarker activity. From a clinical efficacy perspective, the kinds of endpoints we’re looking at, of course, we were looking at safety and tolerability as a Phase 1/2 study.

And then gross motor and fine motor milestones, specifically things such as the ability to sit upright, the ability to reach out the object, the ability to fix and follow. And the specific milestones will be a little bit dependent on the age of the child. But we should see a stabilization or a lack of ongoing regression of milestones certainly with the preliminary clinical data. And in addition to that, we’ll be looking at scale such as the, in turn, the daily scale adaptive behavior scale.

And all of these assessments will be video uploaded to a server, and then they can be double scored by external rater, like seizure activity, frequency, medications, quality of life, and caretaker burden assessments. Now the degree of improvement we’ll see is a little unclear. What I think we should see is certainly stabilization or an ongoing halting of progression. And this will somewhat depend on how early we treat the children.

The intent is to treat the children as early as possible before the ongoing progressive neuronal loss has a chance to take hold. And therefore, allow for as much recoverability and reversibility of the disease as possible. Let me start that. Hopefully, I give you some context on what we expect to see over the coming year.

RA Session IIPresident, Chief Executive Officer, and Founder

And so, yes, I believe there was a question on SURF1, and maybe we just want to comment on cost activity, citrate levels in lactate.

Suyash PrasadChief Medical Officer and Head of R&D

Of course, yes. Sorry, that was the second part of the question, of course. So SURF1 is a mitochondrial disease. And once again, I think of the endpoints and two group things, the biomarker-type endpoints and also clinical special specific endpoints or clinical markers or progression.

On the biomarker side of things, the markets we’re looking at are COX activity, which is the part of the respiratory chain that’s defective in mitochondrial disease. And we’ll also be looking at lactate levels and pyruvate levels. Now from the lactate and pyruvate perspective with some of these mitochondrial diseases, and to remind you, SURF1 is the commonest cause of Leigh syndrome, which presents usually the first year of life with a severe neurological disorder. And from a biomarker perspective, we’ll be looking at the COX activities, I’ll say, but also lactate levels, which are an indicator of the fact that the body is producing energy because they might are dysfunctional in this situation.

So levels are usually elevated at baseline, both in serum and in CSF and, on exercise, you actually see a much greater increase in lactate levels than you would in a normal healthy individual. So what we should see as the treatment takes hold, there’s a nice improvement in COGS activity. So is an improvement in the actual respiratory function of the respiratory chain, the production of energy, but also a drop in lactate levels, and one of them metabolized pyruvate? That’s on the biomarker side. On the clinical side, we’ll be performing many of these developmental milestones once again to the daily scale, the GMFM, specifically, there’s some mitochondrial disease scales will be looking at such as the Pediatric disease scale, the And then, of course, EEGs, MRIs and respiratory function to the respiratory functions, specifically breathing function as opposed to respiratory change function is also significantly compromising children with serve deficiency.

RA Session IIPresident, Chief Executive Officer, and Founder

Elizabeth, does that answer your question? OK.

Elizabeth WebsterGoldman Sachs — Analyst

Yes. It does. Thank you.

RA Session IIPresident, Chief Executive Officer, and Founder

Thank you.

Operator

Thank you. Our next question comes from Gbolahan Amusa with Chardan. You may proceed with your question.

Gbolahan AmusaChardan — Director of Research, Head of Healthcare Research

Hi. Good morning. Thanks for taking the call, and congrats on the progress with headcount and product candidate expansion. Just wanted to touch on the two and maybe tie them together a little bit.

But could you discuss your priorities on hiring to get to the 150 on headcount mentioned by year-end? And how do you maintain the synergies among the 25 product candidates in terms of investigating them?

RA Session IIPresident, Chief Executive Officer, and Founder

Yes. I appreciate the question. So I think when you think about headcount and the way that we’re going to be hiring this year, I think you would see us default heavily toward the R&D side. But obviously, we’re going to be hiring across the board, across both our in corporate functions.

But I would say the majority of the hiring is going to take place primarily in our manufacturing group. Obviously, we announced our signing of the lease of our 187,000 square foot facility, which we’ve initiated construction on this year in Durham. And we’ve previously disclosed that upon commissioning that facility we’ll house about 200 employees. And so obviously, there’s going to be a big push to hire to support that facility and that growth.

But we’ll also be hiring across the board in group clinical development, clinical operations to support the number of clinical trials that we have ongoing this year and that we anticipate initiating next year. As well as in our regulatory group. Obviously, the number of submissions across the board, both with the FDA and ex U.S. are going to be substantial.

And so we’re going to need to hire to support that. But, in general, we’ll need to also increase just general corporate support across the entire organization. That means HR function, finance function, legal functions, which we already hired the leadership in those key positions and will be — and those guys will be building out the team. So that’s the way that we’re looking and prioritizing hiring, but we’re heavily defaulting toward the R&D side to support kind of the progression of the portfolio.

It’s moving fast, and we want to make sure that we have the bodies on hand and the resources on hand to keep it moving. Could you repeat your second question?

Gbolahan AmusaChardan — Director of Research, Head of Healthcare Research

It was about synergies, but I think I got a sense of it, but could I just shift a little bit and ask how you acquired the last seven product candidates, it to 25? I mean, for example, why didn’t you already have done a IPO, and does this mean that there are more opportunities to pull-in from UT Southwestern?

RA Session IIPresident, Chief Executive Officer, and Founder

Yes. It’s a great question. So I think the short answer to your question is, yes, there are more opportunities to pull-in from UT Southwestern. I think the way that we’ve evaluated opportunities over the last year has been quite organic and it’s been quite collaborative with our team at UT Southwestern.

So typically, either the Taysha team will come up with a target, identify a target that we’ll like to pursue, and then we’ll present that at the JSE to UT Southwestern to see if it’s feasible, fits our strategy and the available technology that we have in our hands today is appropriate. And so we’ve been fortunate to be able to identify a number of targets that fit within our three distinct franchises: neurodegenerative diseases, neurodevelopmental disorders, and genetic epilepsies. And what we’ve tried to do is in areas where we think gene therapy can play a role, but may not necessarily be addressable by conventional technology, we’ve gone out and sought out partnerships and collaboration to kind of address those limitations. Similarly, to what we’ve done with Dennis at Cleveland Clinic around genetic epilepsy.

And so when you start to think about that, that considerably opens up space of what we’re able to go after. There’s more than 7,000 monogenic diseases to tackle, albeit our focus is going to be on the CNS. But I don’t think there’s any shortage of targets to go after where there is a considerable unmet medical need.

Gbolahan AmusaChardan — Director of Research, Head of Healthcare Research

Great. Thanks, RA.

RA Session IIPresident, Chief Executive Officer, and Founder

Awesome.

Operator

So our next question comes from Raju Prasad with William Blair. You may proceed with your question.

Raju PrasadWilliam Blair — Analyst

Thanks for taking the question, and congrats on the progress. Just a question on the payload enhancements that you guys are making or the focus on it. Can you just talk a little bit about — I know you’re using kind of a single strand AAV construct for the GM2 program and then program. Can you just talk a little bit about what you’re hoping to learn about those kinds of construct improvements from these first programs? And a question on manufacturing

RA Session IIPresident, Chief Executive Officer, and Founder

I appreciate the question, Raj. And so maybe I’ll start, and then I’ll turn it over to go a little bit more in-depth. The way that we think about our technology is really in two buckets. What we’ve tried to do is take validated gene therapy technology that’s been proven out in the clinic, and essentially, couple that with a very targeted novel payload design.

So what does that mean to us? Validated gene therapy technology starts with AAV9 as a vector has been proven safe and effective across multiple indications in the clinical setting and now in the commercial setting, with the approval of Zolgensma. Now Zolgensma up to over a thousand patients have been treated to date. The second piece of that is our use of intrathecal delivery as a chosen route of administration. This allows us to target the CNS broadly.

Docs have been given medicine across multiple modalities. In a safe and effective way in an outpatient setting. It allows us to abate mutualizing antibodies by starting on the right side of the blood-brain barrier. And obviously, the proof is in the data.

When used in combination with AAV9 in the clinic, this is most notably demonstrated in the Avexis Novartis strong trial, which reported data in SMA last year. The in six trial and CLN3 trial where they just actually updated their data sets recently at World Symposium. And also the first delivered gene therapy trial, which was pioneered by our chief scientific collaborator, Dr. Steven Gray in a collaboration with the NIH and neuropathy.

And so again, we feel strongly controlling for these key components of gene therapy improves overall probability of success and reduce its risk. This is extremely important. What we’ve decided to innovate and be very targeted as it pertains to payload design. So in the case of us, what does that look like? We are fortunate to have the first bicistronic payload in the clinic where we’ve particularly packaged two genes in a single AAV9 construct to deliver those two genes at the optimal one-to-one ratio.

That’s our program in GM2. And in the case of Rett syndrome, we’ve built in a self-regulatory feedback loop to cap expression at wild-type levels, to guard against overexpression-associated toxicity, which is a real issue in Rett syndrome, and we use our MI rare platform to do that. In some cases, the gene is just too big to fit inside a self-complementary AAV9. So what we’ve done is we’ve vectorized an RNA approach.

This is our approach in where we’ve taken a short hairpin RNA to target the silencing mechanism of the silent paternal allele in order to restore wild-type expression and to guard against overexpression-associated toxicity. And in some cases, we want to knock down the production of a toxic protein. This is the case in our associated program. So again, we’ve been very thoughtful and targeted in the way that we’ve gone about payload design.

And really try to fit the best payload for that particular indication, but still wrapped in what we consider validated technology. In the case of our GM2 program, this is a bicistronic construct, single-stranded with the P2 peptide linker in between the two genes in order to drive expression, running off a single promoter in order to drive expression at the optimal one to one ratio. And we feel good about this construct because, one, that we ensure the optimal endogenous one to one ratio by packaging both genes into a single construct, but we’re able to also take advantage of cost correction because in the case of this particular lysosomal storage disorder, like many, the enzyme here HEXA is to So the goal is to essentially transduce cells at an extremely high rate, turn those cells into biofactories in order to secrete the enzyme out of that particular cell, so it could be taken up by cells that weren’t transduced by the construct. So that’s really the approach.

That’s really the approach in GM2. So I’ll turn it over to you to see if you have any additional comments.

Suyash PrasadChief Medical Officer and Head of R&D

Thanks, RA. Thanks for the question. I think you covered most of it — I think I just emphasized a couple of brief points. The first is, as RA mentioned, AAV9 and intrathecal administration of HEK293 mammalian cell-derived product, we feel is a very — is the best way of delivering drug to within the cell, specifically a very stable genetic medicines within the cell.

And the payload is where creativity and innovation come in, whether it’s a bicistronic factor, short hand element, gene replacement therapy or our approach to many genes. And this is one of the more exciting things we’ve done recently, which is this partnership with Dennis Lal with the Cleveland Clinic. And this focuses on the discovery evaluation, I guess, the translation of genetic biomarkers, in particular, into clinical care. And the aggregates of these large genetic clinical, biological data sets, really paving the way for a personalized approach to medicine.

Now specifically, what we’ll be doing is we’ll be looking at genes that are two big to fitting the AAV9 capsid, of which there are a number. And he’ll be focusing specifically on our genetic epilepsies platform initially. And what he’s going to do is he’s going to be able to map out these large genomes, and in the very disciplined, focused, systematic way, just create a number of different constructs that take out most of the nonfunctional domains such that we can actually fit gene into the AVV9 capsid. Hilton creates those designs, sends UTS, create the vector constructs, and stick several of them into the mouse model to demonstrate proof of concept for — and select a specific construct for a particular disease.

And so that’s one of the things I’m more excited about currently on the payload design element. And once again, that focus will be on the genetic epilepsies currently. I’ll stop there.

Raju PrasadWilliam Blair — Analyst

Great. Thanks. And then just a quick follow-up on manufacturing. Can you just remind us the program, you have clinical material from them, I believe.

And is that enough to go commercial? Or how is that process from clinical to commercial for that specific program there work?

RA Session IIPresident, Chief Executive Officer, and Founder

No. That’s a great question, Raj. I appreciate it. So in our CLN1 program, we actually received comparability material from which we’re actually transitioning to our commercially scalable HEK293 suspension platform, which is what’s going to actually be going into the clinic.

So the goal with this particular study if the regulatory agency agrees is to be more of an adaptive of design. And basically, what that means is that that study would be a Phase 1, 2, 3 study, all kind of within a single trial and a single protocol. And the goal is to be ready to move quickly to commercialization upon the end of that study, and that basically means treating patients with commercial-grade GMP material. So what we’ve done is we’ve actually initiated a GMP manufacturing run through our partners at Catalent.

And as you know, Catalent is the only licensed CDMO that’s actually actively producing a commercial AAV9 product in Zolgensma. And so we’re pretty fortunate to have strong strategic collaboration and a strong history with Catalent, where they’re actually producing this GMP material, along with our Red syndrome material along with a couple of others. We’re currently running for GMP runs concurrently across our manufacturing platform, which includes Catalent but also UT Southwestern in order to meet our clinical needs this year. So we’re pretty fortunate to have the substantial capacity, but we will be using commercial-grade GMP material produced at Catalent to treat CLN1.

We also have our chief technical officer, Brett Porter on the line. Bret, any additional comments?

Unknown speaker

No. Thanks, RA. Never one. RA is exactly right, specifically regarding the CLN1 program, we’re partnering really closely with Catalent, and we’re really deep into our tech transfer and manufacturing process for that program.

And like RA mentioned, we’re partnering both with Catalent for a number of our candidates that we’re pursuing IND first-in-human studies this year as well as UT Southwestern. And what we are leveraging from Avion is the plasmid construct that was designed as part of that partnership.

RA Session IIPresident, Chief Executive Officer, and Founder

Thanks, Brett. Any additional questions, Raj?

Raju PrasadWilliam Blair — Analyst

No. I’m good. Thanks. Appreciate it.

RA Session IIPresident, Chief Executive Officer, and Founder

Thanks.

Operator

Thank you. Our next question comes from Matthew Harrison with Morgan Stanley. You may proceed with your question.

Matthew HarrisonMorgan Stanley — Analyst

Great. Good morning. Thanks for taking the questions. I guess two for me.

One, just on the GM2 IND in the U.S., is there any sort of manufacturing or comparability of the material that you need to do before you can file that? Maybe just remind us what you need to do in terms of filing that in the U.S.? And if you want to wait and include some clinical data to help the FDA on the dose? And then second, on CLN1, I know you just talked about it briefly. But I guess the question here is, can you just think about how big that study actually needs to be? I know that’s a pretty rare disorder in terms of how quickly, I guess, the real question is, how quickly you might be able to enroll in such a study like that?

RA Session IIPresident, Chief Executive Officer, and Founder

Thanks for the question, Matt. So maybe I’ll take the second question first and allow Suyash to go a little bit more in-depth on both CLN1 and GM2. But just to address the epidemiology of CLN1. We expect that there is approximately about 900 to 1,000 patients in the U.S.

and Europe with CLN1 infantile disease. And there’s a considerable founder effect in certain parts of the world, i.e., Finland and Germany, where the prevalence is actually overexpressed. And so we do know that there’s a couple of clinical sites out there that have already identified a number of patients and that we don’t think that there would be a substantial issue actually enrolling in the study, albeit we do believe the study would be a global study and would have multiple sites around the world as in most of the clinical trials that we’re going after. So we actually don’t see that as an issue.

I’ll pause there, turn it over to Suyash. Maybe you have some additional comments on what we’re looking for in CLN1. And then maybe you want to comment on our path to the U.S. study in GM2.

Suyash PrasadChief Medical Officer and Head of R&D

Sure. Well, with regard to CLN1, yes, as areas already mentioned, we have the open line in the U.S. We have our sites selected currently. And both in the U.S.

and also in Europe, we will also be planning clinical trial activity in the CLN1 program in Europe. And potentially broader, as RA mentioned, it’s likely to be a global study. With the numbers of patients, 900 to 1,000 patients in the U.S. and EU currently, it’s like a small study will only be necessary from a regulatory perspective, especially given that there’s a huge unmet need, it’s a disease which results in an early death usually by the age of about six or seven.

And there’s no current treatments available for this condition. So when you take all those things into consideration, usually, a small study will be enough to actually gain either full approval or an accelerated treatment with some post-marketing commitments. I think the other thing I think is important to remember for this particular program in terms of clinical trial operations and recruitment, there’s actually two large natural history studies that are ongoing, one based in the U.S. and 1 one based in Germany, and we’re speaking closely with the investigators of those and essentially clinical trial sites.

So patients will be able to roll over from the natural history study onto the drug study once it’s set up. And we also have a nice background cohort of longer term, prospectively collected natural history data, which, as you know, is very important from a rare disease perspective. And you may also all be familiar with this recent guidance that was published by the FDA on the gene therapy development for neurodegenerative diseases, which spoke specifically about historical controls being critical and important and very valuable, especially if there’s an unmet medical need, especially when the inclusion of concurrent control may not be practical or ethical or as will be the case in a disease with a very rapid on-site and rapid fatality. And also, when you’re building the fact that we’re expecting to see a large effect, both from a biomarker perspective and from a clinical perspective, all these factors roll into the fact that the — the fact there is ongoing natural history work, both in the U.S.

and in Europe, we’re very beneficial for the enrollment and operationalization of the clinical trial. In addition to that, we are also speaking with a key opinion in where there is a mutation for this particular condition. And there’s a nice pool of patients there. So I do anticipate enrollment will be an issue.

And as we’ve already mentioned, we have an open IND and this study should be kicking off in the second half of this year.

RA Session IIPresident, Chief Executive Officer, and Founder

Let me stop there. That was CLN1. Any more questions on that, Matt, before I go on to GM2?

Matthew HarrisonMorgan Stanley — Analyst

No, Suyash. That was great. Thanks.

RA Session IIPresident, Chief Executive Officer, and Founder

Great. So on GM2, and I guess your question is — I want to make sure I’m answering the right question. This was was a question similarly how we’re going to operationalize the study and —

Matthew HarrisonMorgan Stanley — Analyst

The GM2 question was really just about what you need to do to file the U.S. IND, and if you want to wait for a certain amount of data to be able to provide the FDA in terms of starting dose or other things that maybe could speed up the U.S. clinical study?

RA Session IIPresident, Chief Executive Officer, and Founder

Sure. I think the only thing — we’re actually very comfortable with starting dose. As you know, for these diseases, which are rare and severe, we like to dose on the high side. So we’re going in with a total dose of which is a high dose being given intrathecally targeting specifically the brain, the CNS, the PNS tissue.

But there’s actually a low dose of incapacity systemically administered gene therapies, which are being given on a per kilo basis. So from a dose selection perspective, we’re actually quite comfortable. What we are doing in addition to the Canadian studies, we’re doing some additional tox work in the rat, specifically a wild-type rat toxicology study to facilitate discussions with the regulators. And part of the reason we’re doing this is just, as you know, at the moment, the FDA seemed a little more conservative.

We have plenty of good tox data already enough to certainly to the IND equivalent in Canada. But we just felt it would be appropriate, and as part of our general approach to mitigating risk from a tox perspective, we want to do an additional tox study. And we have time to do that before starting the clinical trial in the U.S. for GM2, which, as you know, will be in the second half of this year.

And just that feeds into our general approach to toxicology, which I’ll briefly mention, which is we want to really mitigate as much risk as possible early on. And so our standard approach for toxicology is three species. So NHP tox, tox plus chronic mouse model tox, which — and we’re woven back into the plans for all our programs unless there’s a specific reason why we don’t need all three. I’ll stop there and Matt.

Hopefully, that’s answered your question.

Matthew HarrisonMorgan Stanley — Analyst

OK. Thank you, Matt. Operator, next question.

Operator

Thank you. [Operator instructions] Our next question comes from Biren Amin with Jefferies. You may proceed with your question.

Biren AminJefferies — Analyst

Yes. Hi, guys. Thanks for taking my questions. Maybe just to start on GM2.

Can you just talk about how many patients you plan to enroll, the pace of enrollment in Canada? And then I think on the biomarker data later this year with HEXA, how much follow will we get when you present this data? And I guess, what type of improvement do we need to see?

RA Session IIPresident, Chief Executive Officer, and Founder

Thanks for the question. So maybe I’ll start and then I’ll turn it over to Suyash for some specifics on what we’re looking for in GM2. So the goal of that study in Canada is to enroll approximately four patients. These patients would be under 12 months of age, so essentially infantile patients.

And we really believe the earlier you treat, you’re going to have the better outcome, and this will be consistent with multiple gene therapies clinical trials and clinical data that’s been generated over the last few years in the gene therapy space. What we’re not doing is going to guide to kind of enrollment timing. But what we will do is a guide to when we expect to have preliminary data, which we have publicly disclosed that we expect to have preliminary biomarker data in the second half of this year. So that’s essentially what we’re guiding to.

But essentially, the enrollment target for that study is approximately for patients. And those patients would be under 12 months of age. Suyash, maybe you want to comment on kind of what we expect to see, what we would consider, I essentially — I think the basis of the question is what we would consider a win in that clinical trial?

Suyash PrasadChief Medical Officer and Head of R&D

Sure. Absolutely. I’ll make one additional comment on enrollment. Just to let you know that the cadence of enrollment, obviously, with these rare disease gene therapy studies, there’s a little bit of staggering between patients.

You can’t enroll them all at once even if you have them lined up, just from a safety perspective, you have to dose a patient, observe them, usually for a period of two to three months before dosing the next patient. And then observe that patient before dosing the next one. So there is that cadence to enrollment as well that needs to be taken into consideration. What do we hope to see, what we expect from perspective? I think once again, with most of our programs, you’ve got to look at it from the perspective of what we’re hoping to see from a biomarker perspective and then also what we’re having to see clinically.

We anticipate seeing an increase in the HEXA activity in the CSF, perhaps hopefully, as one month after dosing time point. Certainly, I would expect to see that for a three-month after dosing time point. Well, the other biomarker will be doing at the same time will not just be levels of enzyme, but also looking at reduction of GM2 which is the accumulated substrate that the enzyme is attempting to break down. So we saw a nice drop in the GM2 over time in our preclinical studies, in the model.

So we expect to see a nice drop in the accumulated substrate in the CSF. In parallel to HEXA levels go up. And as already mentioned, I think the BI level we expect to see we feel we would — which we consider a positive out and is 5% activity. As with all these secreted listerine, a little bit of enzyme goes a long way because the enzyme can break down waste products in one cell, can leave that cell and enter another cell, do the same thing, and keep going from cell to cell to cell.

So in line with the fact that the clinical phenotypes are very closely correlated to biomarker levels, and you need a little bit to actually result in a normal lifespan, we think a little bit will go a long way into 5% levels of biomarker should be more than enough. On the clinical side of things, you’re never going to recover lost neurons. So with these diseases, these last disorders, you got the buildup of accumulative substrate in the lysosome base well. They rupture.

They leak out their content and of course, damage to the tissue, which is what results in an ongoing progressive loss of neurons and the clinical features. So you never get to actually recover neuronal cells. Once one is gone, it’s gone, which is why areas mentioned that the earlier we treat the more likely and a good outcome. So we’re actually specifically dosing younger patients in the GM2 study for two reasons.

First of all, these patients have the most severe disease and the highest unmet need, but also if we can treat earlier before there is this chance for the neuro loss to take hold, then that will be better. I would hope to see, therefore, at least stabilization of motor function. So I’d hope to see a stoppage in the loss of milestones, and I’d hopefully stabilization the CHOP intend scores declining. But also in addition to that, given the recoverability and reversibility, the recoverability, and the plasticity associated with the brain in children, I’d like to see some function recover from a motor perspective from a language perspective.

And also importantly, we’ll be looking at seizure activity for these kids. It’s one of the most distressing and disposing parts of the disease. And I’d hope to see some stabilization and hope some improvement, i.e. reduction in frequency activity of reduction of seizure medications.

And coupled with those improvements in quality of life and caretaker burden. Let me stop there, and hopefully, that’s answered your question.

Biren AminJefferies — Analyst

Yes. Great. Thank you.

RA Session IIPresident, Chief Executive Officer, and Founder

Thanks, Biren.

Operator

Thank you. Our next question comes from Kevin DeGeeter with Oppenheimer. You may proceed with your question.

Zhiqi HeOppenheimer & Co. Inc — Analyst

Hi. This is Zhiqi calling on behalf of Kevin. Just a final question on — can you tell us more about the next-generation technology platform, more particularly on the back of where are we — and where should we expect for our next?

RA Session IIPresident, Chief Executive Officer, and Founder

No. Great question, and thank you for asking it. It’s a platform we’re actually quite excited about. Initial data from a proof-of-concept study conducted by our collaborators over at UT Southwestern doctors Stephen Gray and Rachel Bailey was actually presented at ASGCT last year where they actually proved the fact that direct dosing to the nerve could actually enable redosing of AAV9 specifically.

And this was actually presented in an oral presentation last year at ASCCT. So this was a technology where we are quite excited about and quite excited to move forward into large animal studies later this year, and hopefully, eventually, into the clinic. I’ll stop there and turn it over to and allow to go through the actual process and what we would hope to see in the ongoing development of this platform.

Suyash PrasadChief Medical Officer and Head of R&D

Sure. Yes. Thanks for the question. Yes, it’s an interesting approach, a really creative approach to trying to manage this issue of redosing.

What yes as you know is a key issue for the field. What I will say, though, is actually for our programs with brain tissue that doesn’t turnover, particularly rapidly. We do expect to see durable, sustainable effect with our gene therapies. But having said that, we do want to spend some time focusing on this nerve redosing platform.

And there’s two pieces to this. Would it — well, practically what it involves is a direct injection of gene therapy, the same construct we’re using for HEK293AV9 into the nerve, which you access through the back of the neck, the vegas nerve is a nerve that comes off the brain stem tenth cranial nerve, and it’s actually quite accessible surgically at the back of the neck. Now you can actually inject a small amount of gene therapy drug in that, and it travels up and down both through antegrade and retrograde transduction along with nerve fibers through up into the brain and also throughout the whole of the autonomic system. So it does two things.

The first is it helps improve the features of autonomic nervous system dysfunction, which is often compromised in many of the CNS and PNS disorders that we’re managing. Because some of these symptoms are often overlooked, mainly because they relate more to the automatic activity of the body as opposed to conscious activity of the body. Things such as motility, breathing, the activity of the diaphragm, the activity of the heart, and blood pressure control. So for example, in diseases such as Rett, where you do get automakers system dysfunction because you have these breathing these periods of rapid breathing, followed by very slow shallow breathing, the quite distressing for them to see.

So there is an autonomic nervous system dysfunction that can be treated by this approach. We’ve seen some very nice data, as RA mentioned, in the preclinical models. The second and perhaps more important approach is it enables redosing. So once the AAV9 vector has been given intrathecally, you can’t actually readminister when you administered directly into the nerve, and you can do that for two reasons.

Because the intrathecal space is somewhat immunoprivileged, it’s not fully immunoprivileged. And also, when you directly inject that’s also somewhat immunoprivileged because you’re not getting antibodies crossing the blood-brain the intrathecal space and you don’t have the presence of antibodies in the nerve tissue itself. So for those reasons, it was thought, well, we may be able to redose using this different approach, simply by using a different route of administration. Steve has done some really nice work, and he’s demonstrated it in the animal model.

And the next steps to do some more animal work and some future time point think about filing an IND and trials. Of course, we’re not guiding that at the moment. We’re still in the very early stages of preclinical work. Hopefully, that gives you some background to what had to achieve there.

Zhiqi HeOppenheimer & Co. Inc — Analyst

That’s very helpful. Thank you.

RA Session IIPresident, Chief Executive Officer, and Founder

Thank you. Thanks for the question.

Operator

There are no further questions. I will now turn the call over to Mr. Session for his closing remarks.

RA Session IIPresident, Chief Executive Officer, and Founder

Thank you, everyone, for joining us on the call. We are very proud of what we accomplished in the year since our initial funding. We have transitioned from a private to public and preclinical to clinical-stage company. We have rapidly expanded our team with exceptional talent and advisors.

And we have advanced our next-generation technologies and expanded our manufacturing capabilities to support our unparalleled gene therapy pipeline. We look forward to the continued advancement of our programs and to keeping you updated on our progress. We hope you guys have a wonderful week. Thank you for joining us.

Operator

[Operator signoff]

Duration: 71 minutes

Call participants:

Kimberly LeeSenior Vice President of Corporate Communications and Investor Relations

RA Session IIPresident, Chief Executive Officer, and Founder

Suyash PrasadChief Medical Officer and Head of R&D

Kamran AlamChief Financial Officer

Elizabeth WebsterGoldman Sachs — Analyst

Gbolahan AmusaChardan — Director of Research, Head of Healthcare Research

Raju PrasadWilliam Blair — Analyst

Unknown speaker

Matthew HarrisonMorgan Stanley — Analyst

Biren AminJefferies — Analyst

Zhiqi HeOppenheimer & Co. Inc — Analyst

All earnings call transcripts

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