Greetings and welcome to Taysha Gene Therapies Fourth Quarter and Full-Year 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Hayleigh Collins, Director, Head of Corporate Communications and Investor Relations. Thank you. You may begin.

Thank you. Good afternoon and welcome to Taysha’s full-year 2023 financial results and corporate update conference call. Earlier today, Taysha issued a press release announcing financial results for the full-year ended December 31 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; 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 therapeutic and commercial potential of TSHA-102 including the reproducibility and durability of any favorable safety results initially seen in our first and second patients dosed in the REVEAL trial to positively impact quality of life and alter the course of disease in the patients we seek to treat in our research, development and regulatory plans for our product candidates, including timing for our clinical trials and reporting results therefrom, and our current cash resources supporting our plan's operating expenses and capital requirements into 2026. These statements may 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 in future operating results, discovery and development of product candidates, strategic alliances and intellectual property, as well as matters that are not historical facts or information. Various risks may 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 regulatory actions for product candidates are dependents 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 Securities and Exchange Commission, including in our annual report on Form 10-K for the year ended December 31, 2023, that we file today. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, March 19, 2024. 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.

Thank you, Hayleigh and welcome everyone to our 2023 full-year financial results and corporate update conference call. Today, I will begin with a brief update on our corporate and clinical activities, then Dr. Suku Nagendran, President and Head of R&D of Taysha, will provide an update on our lead TSHA-102 program and clinical evaluation for the treatment of Rett syndrome. Kamran Alam, our Chief Financial Officer, will follow up with a financial update. I will provide closing remarks and open the call up for questions. In 2023, we made tremendous progress on the development of TSHA-102, our lead gene therapy program and clinical evaluation for the treatment of Rett syndrome, which is a rare neurodevelopmental disorder with significant unmet medical need. This included generating initial clinical data in adult patients and expanding the trial into the adolescent population, obtaining regulatory clearance to initiate the clinical evaluation of TSHA-102 and two additional geographies, and dosing the first patient in our pediatric trial. Importantly, we believe these accomplishments enable us to focus our efforts this year on generating critical, long-term clinical data in a broad range of ages and stages of Rett syndrome patients across multiple geographies. We now have two ongoing first-in-human trials evaluating the safety and preliminary efficacy of TSHA-102. The REVEAL Phase 1/2 Adolescent and Adult Trial in Canada and the U.S. and the REVEAL Phase 1/2 Pediatric Trial in the United States with clearance in the U.K. Today we are excited to report longer-term clinical data from our first two adult patients treated with a low dose of TSHA-102 in our adolescent and adult trial. As a reminder, our ongoing review of Phase 1/2 adolescent and adult trial is a first-in-human, open-label, randomized dose escalation and dose expansion trial evaluating the safety and preliminary efficacy of TSHA-102 in…

Thank you, Sean, and good afternoon, everyone. I'm pleased to provide an update on our TSHA-102 gene therapy program in clinical evaluation for the treatment of Rett syndrome. Rett syndrome is a rare neurodevelopmental disorder caused by mutations in the X-linked MECP2 gene encoding methyl CpG-binding protein 2 or MeCP2 protein, which is essential for regulating neuronal and synaptic function in the brain. This disorder is characterized by loss of communication and hand function, slowing and regression of development, motor and respiratory impairment, seizures, intellectual disabilities, and shortened life expectancy. Rett syndrome progression is divided into four key stages, beginning with early onset stagnation at six to 18 months of age followed by rapid regression, plateau and late motor deterioration. 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 small molecule and simple gene therapy approaches. But we believe our construct equipped with the novel miRNA responsive autoregulatory element or miRARE can appropriately address this challenge and provide therapeutic benefit. As a reminder, TSHA-102 is a self-complementary intrathecally delivered AAV9 gene transfer therapy designed as a one-time treatment. Because of the risk associated with both under and over expression of MeCP2, we have combined high throughput MicroRNA profiling and genome mining to create miRARE, a novel miRNA target panel designed to mediate MeCP2 expression in the central nervous system on a cell-by-cell basis. With miRARE, endogenous microRNA, which activated in the presence of MeCP2 are thought to base pair with targets in the viral genome encoded mRNA and ultimately decrease protein expression levels through RNA interference. Thus, TSHA-102 is expected to provide the necessary function of the…

Thank you, Suku, and good afternoon. Revenue for the full-year ended December 31, 2023, was $15.5 million, compared to $2.5 million for the full-year ended December 31, 2022, as revenue was derived entirely from our option agreement with Astellas Gene Therapies. The increase in revenue is primarily a result of Rett syndrome research and development activities performed in 2023. Research and development expenses were $56.8 million for the full-year ended December 31, 2023, compared to $91.2 million for the full-year ended December 31, 2022. The decrease was due to reduced research and development head count, lower research and development manufacturing expenses and a reduction in third-party research and development consulting fees mainly related to preclinical studies and IND-enabling toxicology studies. General and administrative expenses were $30 million for the full-year ended December 31, 2023, compared to $37.4 million for the full-year ended December 31, 2022. The decrease was primarily attributed to a reduction in compensation expenses as a result of lower headcount and reduced corporate insurance and consulting expenses. Net loss for the full-year ended December 31, 2023 was $111.6 million or $0.96 per share, as compared to a net loss of $166 million or $3.78 per share for the full-year ended December 31, 2022. The net loss includes a non-recurring and non-cash expense of $34.5 million related to the change in fair value from the prefunded warrants as a result of the August 2023 private placement financing. As of December 31, 2023, Asia had $143.9 million in cash and cash equivalents. The company continues to expect that its current cash resources will support planned operating expenses and capital requirements into 2026. I will now turn the call back over to Sean for his closing remarks. Sean?

Thank you, Kamran. As you heard today, we've made significant progress in the clinical development of our TSHA-102 program. We are highly encouraged by the safety profile and durable response reported at reduced steroid levels and the longer-term data from both patients in the low dose of our Reveal adolescent and adult trial. These continued improvements in both adult patients with advanced Stage 4 Rett syndrome, coupled with the IDMC's approval to dose the second pediatric patient following a review of the initial clinical data from the first pediatric patient dose with TSHA-102 reinforced the transformative potential of TSHA-102 across a broad population of patients with Rett syndrome. Building on the momentum from 2023, we believe 2024 is poised to be a transformational year for the company. This year, we're focused on data generation across a broad range of ages and stages of patients with Rett syndrome in multiple geographies with the goal of completing dosing in part of both trials with the low and high dose of TSHA-102 to inform the next phase of the studies. With many clinical catalysts expected in the year ahead, we look forward to providing additional updates on our progress. With that, I will now ask the operator to begin our Q&A session. Operator?

Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Whitney Ijem with Canaccord. Please proceed with your question.

Hey, guys. Thanks for all the updates. I guess to limit myself to one, just can you help set expectations into the pediatric data mid-year and in particular, our understanding of Stage 3, and I think you guys have talked about this a little bit before, but is that the disease is kind of stable, more variable and potentially some improvements in terms of the natural history. So how should we be thinking about kind of what you could show an initial update versus maybe over the longer term in the pediatric updates as we go through the year? Thanks.

Thanks, Whitney. I guess I would say that, number one, keep in mind that the pediatric patients will likely be in a severity range of CGI-S of between 4% and 6%, which is similar to what's happening in the adolescent and adult trial. And I think if you talk to the KOLs out there, you'd get very consistent feedback that that's the most appropriate severity range to study in a first-in-human trial for gene therapy with this particular disease. So I think, Whitney, to answer your question, you're going to see a bit of a spectrum of patients, right? Someone who's a four is going to be different than someone who's a six. We've seen that with our first two adult patients here. The time to impact it's a new population. You'd like to think that you should see a relatively similar time to effect and hopefully, initial magnitude of effect is relatively similar depending upon the severity of the disease, it's also possible that it could take longer to see change in someone that's less severe versus more severe. So if you think about a midyear readout, I would say that we dosed our first patient at the end of 2023. So we'd likely have between four to six months of data at that particular time. We've guided to dosing the second patient this quarter. So you're probably talking between two to three months of data for that patient and potentially early data for the third patient depending upon the timing of that particular dosing. So hopefully, that gives you a little bit of flavor of what to expect.

That does, thanks.

Thank you.

Our next question comes from the line of Salveen Richter with Goldman Sachs. Please Proceed with your question.

Hey guys, good evening. This is Elizabeth on for Salveen. Thank you for taking our question and congrats on the data. Mechanistically, what is your hypothesis around what is driving the RSBQ improvement for Patient 1 at week 25, noting that, that score was relatively flat from week four to 12? And then how should we think about expectations for the particular score metric on the forward? Thank you.

I can go first and Suku can jump in. But I would say with patient number one, the changes that you saw in RSBQ were primarily driven by anxiety going down, general mood improving and hand function improvement. Those are the three main drivers in the latest decrease in that particular scale. I would just say one potential hypothesis right now on some of the mood aspects is that -- these patients are on very high levels of steroids for a long period of time. And we'll have to see how other patients do as well. But one potential is that you're reducing the steroids the level of irritability, the impact on sleep, just the overall mood could be improving as a result of that. Put another way, it's possible that the steroids somewhat masked benefits until they're either reduced significantly or further withdrawn. So we're quite encouraged by what we've seen in that aspect of things. And hopefully, that gives you a bit of perspective on how we're thinking of it and will lead at this juncture.

Got it, thank you.

Thank you.

Our next question comes from the line of Kristen Kluska with Cantor Fitzgerald. Please proceed with your question.

Hi everyone, thanks for taking my question and congrats on these data updates I wanted to ask about the leap anecdote you shared for Patient 1. So we understand that sleep issues are very common in Rett syndrome patients, but they can present pretty differently depending on the type of mutation. So can you speak more to the background expected for this patient based on their mutation. And essentially what difficulties they were having sleeping through the night. So was there any fleet screaming or laughing or other notable effects and essentially what you believe is happening that you were able to see the drastic change there? Thank you.

Yes. So that's an important question because as you pointed out, many patients with Rett syndrome do have significant sleep abnormalities and sometimes they also correlated with the respiratory abilities that can coexist. And in this Patient 1, what was observed by the parents was that this patient never ever seem to have a reasonable night sleep and always had a very disruptive night sleep, which included restraint features, night teas, et cetera. And post gene therapy, the feedback from the carrier, especially the father was that this patient was now sleeping through the night, and that's the first time he was getting a good nice sleep. So obviously, the gene therapy itself, I think we're speculating what we think is restoring a MECP2 function in the sleep centers and probably helping with many features of sleep that resulted in this patient being restored to almost a normal state. Your second question, I think, was on seizures. So patient one is thought to have about two to four seizure a year, I'm sorry, you have a.

Yes, sorry. No the question was just on the differences about sleep disturbances relative to the mutations that they experience do they have.

So this first patient had a large deletion, which resulted in a severe phenotype. But to my knowledge, I don't think -- the severity of the genotype is necessarily correlated with the severity of the sleep abnormalities that correlation doesn't seem to be clear. So -- but this patient and Patient 1 had serious sleep abnormalities. And if your question also is that what is the actual pathophysiology behind it, I don't think anybody fully understands that. But all I can tell you is the clinical observation is that the gene therapy appears to have restored normal sleep patterns. Does that help?

Yes. Thank you so much. Appreciate it.

Thank you.

Our next question comes from the line of Gil Blum with Needham & Company. Please proceed with your question.

Good afternoon. Let me also add my congratulations on progress. So just one from us. Can you may be put into context the burden experience by adult red patients from being on steroids on a daily basis? And are steroid ever tapered during the standard of care for adult patients during the natural course of the disease?

Yes. So that's another good question. So immunosuppression or immuno modulation, in general, is not used to treat Rett patients in a disease-modifying fashion. It has been tried in the past using drugs like sirolimus or prednisolone or hydrocortisone to treat Rett syndrome, but it hasn't had any positive impact on disease duration, severity or outcome. So what we're seeing in our trial though is because it's a gene therapy trial, steroids and [Indiscernible] being used as immunomodulatory agents to allow us to get all that initial period where there might be some theoretical risk of the treatment itself.

Our next question comes from the line of Joon Lee with Truist. Please proceed with your question.

Hi, good afternoon. This is Mehdi on for Joon and congrats on the quarter, and that for taking our questions. We have a couple, if I may. First, could you please elaborate on the safety and efficacy of using a fixed dose for patients as young as three years old to adults. And if you expect to achieve a comparable exposure level in the CNS of these patients?

The answer to that, I can start would be that the overall CNS fluid volume between a three-year-old and an adult actually is very -- there's very little difference, which is why we're comfortable the IDMC is comfortable the regulators have all been comfortable based on the preclinical data using that fixed dose in the same -- across patient populations, essentially.

And the other question is how do you envision a registrational trial would look like if data supports. And if you think MDRI, as a measure could be considered given the nature of the disease requiring multiple domain improvement analysis.

I would say a couple of things. As it relates to clinical trial design, I think the headline is we feel like there's multiple pathways that we can go down and multiple endpoints that are there for consideration, which is a good place to be at this particular juncture. We've always been very steadfast in our view that we were going to use Part A to get to a better informed view and that we would have a discussion with the FDA prior to starting Part B of the study if we wanted to refine endpoints and refine our trial design. So that was one of the reasons we put out a press release out a few weeks ago when we announced that the IDMC had allowed us to go to the higher dose earlier because we think that step will hopefully provide more clarity to us relative to endpoints and potentially trial design as well. So we can't say anything declared right now about what exactly we're going to do. I would say we're -- we continue to be very encouraged of the pathway that we're on to be further informed in the coming quarters that can help us with the FDA. And I think in terms of the endpoints, again, we know that there's a pathway there with CGI and RSBQ and there may be additional endpoints for consideration that, again, we think we'll be better informed on as we continue to step through dosing patients, particularly at the high dose. Hopefully, that makes sense.

Thank you.

Thank you.

Yes, thanks for taking our questions.

Our next question comes from the line of Yanan Zhu with Wells Fargo. Please proceed with your question.

Oh, great. Thank you for taking our questions. Congrats on the progress. So I was wondering since the first patient seeing a pediatric trial has gone through the six-week safety monitoring committee evaluation, wondering is there any color from that patient in terms of improvement that could be consistent with what you are seeing in the adult trial or in general, potential for such improvement in the pediatric population?

Really appreciate the question. I just would -- I'd go back to -- we dosed the first patient, the pediatric patient at the very end of December. And about a week later, we put out a press release saying that we wanted to begin to disclose data on a cohort basis and that we felt that was the most appropriate thing to do versus going patient by patient. And so all I can tell you at this point in time is that the IDMC saw the initial pediatric data as well as the data that we just reported on the two adults. And that was in their calculus as they decided that we could go to the high dose in the adolescent in an adult study, and we could proceed to dosing the second adolescent patients. So beyond that, we really prefer not to comment and foresee our path forward to disclosing that data in a more fulsome manner at midyear.

Understood. Thank you for the answer. If I may do a quick follow-up question on the Patient 1, Patient 2 in the adult data set. We can see clearly patient 1 has continued improvement or new improvement in RSBQ. Patient 2 have new improvement in RMBA. But interestingly, the other endpoint for those patients seems to be pretty flat. Do you -- so how do you think about that? And is there a potential for the other endpoint to also improve in the future? Thank you.

If you're referring to like CGI-I would say this -- is that what you're talking about?

Sorry, sorry, CGI-I, I fully appreciate even maintenance of the prior numbers according to our check with the doctors, that's a very, very encouraging sign to have those minimum improved ratings maintained following in a follow-up and also to have the much improved for the other patient maintained. Those are great achievements. I'm talking about RSBQ and RMBA, where both patients had one score improve and the other score relatively flat. Yes, that's what I'm talking.

I got you. So in Patient number 1. So first of all, the RMBA is administered by the clinician in the hospital. The RSBQ is provided by the caregivers in the home setting and they ask different questions, okay? So it's a little difficult to put apples to oranges. But I would say this, we actually asked the primary investigator this same question. And what she said was the Patient number 1 has gotten very aware of what's going on in her surroundings. If I showed you the video from pretreatment, she was very, very, almost like in a catatonic state in a wheelchair, really not interacting. Now she's much more aware. She's trying to communicate and vocalize. And basically, what the PI told us is she does not like going through the testing at the hospital. She gets irritated and she doesn't want to cooperate. And at this point, she has the strength to not cooperate. So that has been driving some of the it's driving the score that you're seeing. She's essentially not necessarily cooperating with some aspects of the disease of the testing, where in the home setting, she's getting very much a comfortable situation and sees the parents are seeing. The other thing I would say is that some of the improvement that I mentioned earlier in the RSBQ, the patient one had was in the anxiety, the general mood aspect of things, that is not captured in the RMBA. So that's one aspect there. On Patient 2 her RMBA improved significantly, and it was driven essentially by her socialization, her interest in communicating with people and also her seizures. Those were big drivers. In the RSBQ, neither of those is addressed. Neither one of those is quantified. And in the RSBQ, again, she had an elevation in anxiety and some of the Niton behaviors, which again -- if you think about what I said about patient 1, steroids, that could also be the case. She has had a bit of an issue with tolerating the steroids. So hopefully, again, that gives you some perspective on those two things. And Suku had something to add as well.

Yes. And also for Patient 2, I would highlight the seizures were decreased by 95% post gene therapy treatment. So this patient had, I think, eight to 16 seizures a month, and other than one seizure day 13 post treatment, the patient has had no new seizures and also the use of a combination antiepileptic meds have dropped by 25%. That is a big deal from a clinical standpoint and for the parents and caregivers and from an activities of daily living standpoint. The second thing you should note is in Patient 2, some of the hand function and stereotypic movements have decrease, which also makes it promising that this patient may eventually get independent functionality of the hand. And there is something else that goes on in about 40% of these patients with Rett syndrome which is the upper and lower extremities, have abnormal circulation, which means the hands and feet get quite cool and at times painful, and you would note in Patient 2 and Patient 1 that resolve post-gene therapy treatment. So other than RMB and RSBQ, which obviously we focus on for different reasons, these major clinical observations, I think, could be life changing in this stage of population.

Our next question comes from the line of Jack Allen with Robert W. Baird. Please proceed with your question.

All right. Thanks for taking the question, and congratulations on the progress. I'm looking to zoom out a little bit and take attention to the established collaboration that you have. It seems like you're really developing data quite quickly, especially with the pediatric low-dose data expected in the middle of this year and the potential initial high dose data later this year. Can you remind us of the structure of the Astellas deal and how it relates to the rep program? And what measures are in place to ensure you get a fair deal. I believe the option was fairly open-ended when that deal was struck?

Yes. I mean essentially, what Astellas has is a right to negotiate an option with us, an exclusive right that they have there's no predetermined terms to your particular point. The option period gets triggered after a number of -- about a handful of pediatric patients have, call it, six months of data or so. So there's no time punch at this particular point in time. Where Astellas has to come in and either request an opt-in or not, that's likely a 2025 topic. The other point that I want to really stress is that Astellas certainly has line of sight to things, but it doesn't -- the agreement itself doesn't preclude another party who might be interested in the program or in the company from making an unsolicited offer. That's fine. We would just have to notify Astellas of that and they would have the ability to counter, if you will. But there's no blocking right in it. Hopefully, Jack, that gives you some perspective on that. Or did you have a follow-up?

Yes, that's great color. I actually do have a brief follow-up around enrollment. How are you thinking about enrollment in these studies in any inter patient staggers I know your competitor has recently announced that they're extending a lower dose cohort and they're allowed to dose concurrence. At what point do you think you could get to concurrent dosing? And what's the current stagger between patients are now?

The current staggers 42 days and an IDMC meeting before you can proceed to the next patient. I think that it's a bit of a of an art and a science. I think it's -- when you have enough data that you can make a request to remove the stagger, I think for us, a good we took the three patients' worth of data and said we think based on this data, we've demonstrated safety, preliminary efficacy. And based on the preclinical data, there's a rationale to go to a higher dose and we're able to do that. So instead of dosing 3 low-dose patients in the adult study we were able to do two patients and then move to the higher dose, which we think is going to be more informative to the overall program and potentially better for patients. So if you apply that logic, there would be a point in time where we would be comfortable potentially going to the IDMC and talking about removing the stagger and that's just something we'll have to do when we feel that we've got data that we feel sufficient to support that request in an incredible manner.

Got it. Great thanks so much for the color and congratulations again on the progress.

Thanks, Jack.

We have time for one last question. Our last question comes from the line of Silvan Tuerkcan with Citizens JMP. Please proceed with your question.

Yes, thank you. Congrats on the great update. And thank you for taking my question. I just -- I have a question about your dose roughly going ahead, you can double the dose faster than you expected. Can you just talk about what that means in the -- in terms of the efficacy results that you're hoping for? Do you think there could be a greater increase? Or what is your hope for the higher dose here?

I'll start and ask Suku to chime as well. But first of all, when you look at the preclinical data, there is a dose response. So you would expect there to be a greater response moving to the higher dose. What's driving that? You anticipate that by giving roughly more dose that you'd be transducing more cells, you'd be generating more MECP2 in the cells that need more MECP too and that overall, you should have a more significant clinical effect than what was seen in the low dose. Anything else?

Great. Thank you. Yes, if I may have a quick…

That is all the time we have for questions. I would like to hand it back to management for closing remarks.

Okay. I just want to thank everyone for taking the time, and I appreciate you listening to the story and we're eager to continue to progress in 2024 and generate additional data and hopefully more value-creating milestones for the investors and care for the patients. So thank you, and have a good night.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.