Taysha Gene Therapies Inc (TSHA) 2020 Q4 法說會逐字稿

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.

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 candidates. These statements may include the expected timing and results of clinical trials for our drug candidates and the regulatory status and market opportunities for those programs as well as Taysha's manufacturing plans.

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 fact 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.

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 development 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 health care-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 Dr. Berge Minassian. Dr. Gray is the 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 3 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 6 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 Batten disease.

Our relationship with patient advocacy organizations and research foundations remain 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 GMP manufacturing capabilities to sufficiently meet the clinical demand of our extensive portfolio. Our 3-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 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 liters 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 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 3 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 advisers, who are trailblazers in the gene therapy space.

Beyond our strategic collaboration with Dr. Gray and Dr. Minassian, we are fortunate to be advised by an independent internationally renowned scientific advisory board with academic credibility and significant industry experience, and a seasoned Board of Directors consisting primarily of industry-leading gene therapy executives insight. 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 in GM2 gangliosidosis and launch 4 candidates into Phase I/II studies following acceptance of their INDs or CTAs. We have currently advanced an additional 5 therapies into IND or CTA-enabling studies and have initiated 4 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.

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 need, including neurodegenerative diseases, neurodevelopmental disorders and genetic epilepsies. Our approach to developing gene therapies centers on the use of AAV9 delivered directly to the cerebrospinal fluid, or CSF, using intrathecal administration. We believe this 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 is well delineated by its 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 mammalian HEK293 suspension-based process designed to efficiently scale to support our clinical and commercial development needs. The utilization of the AAV9 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 delivering intrathecally will allow us to effectively and efficiently advance the gene therapy candidates in our product pipeline.

One of our lead neurodegenerative disease product candidates is TSHA-101, which is currently in a Phase I/II trial for the treatment of infantile GM2 gangliosidosis, which includes Tay-Sachs disease and Sandhoff disease. GM2 gangliosidosis is a lysosomal storage disorder resulting from the deficiency in the beta-hexosaminidase A enzyme, often referred to as HEXA, leading to an accumulation of GM2 ganglioside in lysosomes, neuronal cell damage and ultimately neuronal cell death. There are no approved therapies for the treatment of GM2 gangliosidosis, and care is generally palliative.

The most common and severe form is infantile GM2 gangliosidosis, with approximately 80% to 85% of patients diagnosed with this form. Infantile GM2 gangliosidosis is characterized by HEXA enzyme activity levels less than 0.1%, while juvenile GM2 gangliosidosis is characterized by HEXA enzyme activity, which is 0.5% to 2% of normal activity. Children usually present with symptoms in the first few weeks of life and then experience rapid neurodegeneration, culminating in death before the age of 4. Patients with juvenile GM2 gangliosidosis rarely survive beyond their mid-teens.

Adult-onset GM2 gangliosidosis patients have HEXA enzyme activity levels typically in the range of 2% to 4% of normal HEXA activity and may live a normal lifespan despite having some considerable cognitive and neuropsychiatric challenges. We believe that reaching a level of 5% of normal HEXA 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 it's the first and only bicistronic transgene in clinical development. By linking the human HEXA and HEXB genes, which are the genes that code for the alpha sub unit 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-hexosaminidase A at the appropriate 1:1 ratio within each cell. We believe this is the most efficient way to produce high levels of functioning, heterodimeric HEXA within each cell.

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 vehicle alone. We observed a similar dose-dependent response in behavioral assessments of mice evaluating motor function and the dose-dependent decrease in ganglioside 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 approval of its clinical trial application, or CTA, from Health Canada for its Phase I/II clinical trial of TSHA-101 in patients with infantile GM2 gangliosidosis. Patients will be evaluated over 1 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 endpoints will include biomarkers and assessment of hypotonia and motor function.

As noted earlier, we believe that achieving 5% HEXA enzyme activity in CSF will result in a considerably improved clinical phenotype, and we would consider that a positive outcome. Queen's 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 I/II trial in the second half of this year.

We are also working to address the progressive fatal neurodegenerative disease, CLN1. CLN1 disease is a rare lysosomal storage disorder caused by loss-of-function mutations in the CLN1 gene, which results in a lack of the enzyme palmitoyl-protein 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 I/II 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 safety and appropriate developmental milestones.

Our third lead 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 MECP2 gene. MECP2, or MecP2, is a protein essential for neuronal and synaptic function in the brain. For effective treatment, MECP2 expression needs to be titrated to correct the MECP2 deficiency, whilst avoiding the adverse effects associated with too much MECP2. Given that Rett syndrome is an X-linked dominant disease, unless the patients are mosaics, with differential expression of MECP2 in different cells, the regulation of MECP2 to appropriate levels needs to occur on a cell-by-cell basis.

Accordingly, to prevent harmful doses of transgene-expressing factors while avoiding subtherapeutic levels, our partners at UTSW have designed a proprietary method of transgene regulation called miRARE or microRNA auto regulatory elements. miRARE is a novel miRNA target panel positioned in the untranslated region of the gene therapy construct that binds to endogenous downregulatory microRNAs 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 knockout mice model. We intend to submit an IND or CTA for TSHA-102 in the second half of this year and to initiate a Phase I/II trial by the end of the year, which will evaluate 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 4 Phase I/II trials and advance 4 product candidates into IND- or CTA-enabling studies as well as 4 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 Lal at the Genomics Institute Cleveland Clinic to further push the boundaries of AAV vector engineering by developing next-generation mini-gene 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.

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.

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 towards 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?

(Operator Instructions) Our first question comes from Salveen Richter with Goldman Sachs.

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?

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

Thanks, RA, and thanks, Elizabeth. Yes, GM2, so as you know, we have an open IND equivalent to CTA up in Canada. 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, beta-hexosaminidase A. 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 1 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 serious disease, but usually results in death in the teens, run between about 0.5% activity; and the adulthood onset form with a 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 we would hope to see that -- we'd 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 1-month time point, and I would hope to see even further improvement by the 3-month time point at which point we'll take another CSF sample and look at that biomarker activity.

From a clinical efficacy perspective, the kinds of endpoints we're looking at, of course, we're looking at safety and tolerability as it's Phase I/II study. And then gross motor and fine motor milestones, specifically things such as the ability to sit upright, the ability to reach out and grasp an 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 scales such as the CHOP INTEND, the Bayley scale, Vineland Adaptive Behavior Scale. And all these assessments will be videoed, uploaded to a server, and then they can be double scored by external rater. We'll look at 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 be somewhat dependent 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 stop there. Hopefully, I've given you some context on what we expect to see over the next -- the coming year.

And Suyash, I believe there was a question on SURF1, and maybe we just want to comment on COX activity, citrate levels and lactate.

Of course, yes. Sorry, I -- that was the second part of the question, of course. So SURF1 is a mitochondrial disease. And once again, I think of the endpoints in 2 group things, the biomarker type endpoints and also clinical specific endpoints or clinical markers of progression. On the biomarker side of things, the markers we're looking at are COX activity, which is the aspect -- 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 cytochrome C oxidase deficient Leigh syndrome, which presents usually in the first year of life with a severe neurological disorder. And from a biomarker perspective, we'll be looking at the COX activities, as I say, but also lactate levels, which are an indicator of the fact that the body is producing energy anaerobically rather than aerobically because the mitochondria are dysfunctional in this situation. So lactate levels are usually elevated at baseline, both in serum and in CSF and has -- 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 treatment takes hold is a nice -- an improvement in COX activity. So this 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 the metabolites of lactate, pyruvate. That's on the biomarker side.

On the clinical side, we'll be performing many of these developmental milestones once again, the Bayley scale, the GMFM, the CHOP. Specifically, there's some mitochondrial disease scales we'll be looking at such as the Newcastle Mitochondrial Disease Paediatric Scale, the NMDPS. And then, of course, EEGs, MRIs and respiratory function, the respiratory functions, specifically breathing function as opposed to respiratory change function is also significantly compromising children with SURF1 deficiency.

Elizabeth, does that answer your question?

Yes, it does.

Our next question comes from Gbolahan Amusa with Chardan.

Congrats on the progress with headcount and product candidate expansion. Just wanted to touch on the 2 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?

Yes, I appreciate the question, Bola. 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 towards the R&D side. But obviously, we're going to be hiring across the board, across both R&D and 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 Suyash's 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 towards the R&D side to support kind of the progression of the portfolio. It's moving fast, and we want to make sure we're -- that we have the bodies on hand and the resources on hand to keep it moving.

Bola, could you repeat your second question?

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 7 product candidates taking it to 25? I mean, for example, why didn't you already have done an IPO, and does this mean that there are more opportunities to pull-in from UT Southwestern?

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 -- it'll 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 3 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 Lal at Cleveland Clinic around genetic epilepsy. And so when you start to think about that, that considerably opens up the 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 considerable unmet medical need.

So our next question comes from Raju Prasad with William Blair.

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 the miRARE program. Can you just talk a little bit about what you're hoping to learn about those kind of construct improvements from these first programs? And I've got a question on manufacturing facility.

No, I appreciate the question, Raj. And so maybe I'll start, and then I'll turn it over to Suyash to go a little bit more in depth. The way that we think about our technology is really in 2 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 very targeted novel payload design. So what does that mean to us? Validated gene therapy technology, it starts with AAV9 as a vector, it 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 is up to about over 1,000 patients that 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 giving intrathecal medicine across multiple modalities in a safe and effective way in an outpatient setting. It allows us to abate neutralizing 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 Amicus CLN6 trial and CLN3 trial where they just actually updated their datasets recently at WORLD Symposium; and also the first intrathecally delivered gene therapy trial, which was pioneered by our scientific -- Chief Scientific Collaborator, Dr. Steven Gray, in a collaboration with the NIH in giant axonal 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. Where we've decided to -- 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 essentially packaged 2 genes in a single AAV9 construct to deliver those 2 genes at the optimal 1:1 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 miRARE platform to do that.

In the case -- 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 Angelman 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 MAPT-associated tauopathies 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 2 genes in order to drive expression -- running off a single promoter in order to drive expression at the optimal 1:1 ratio. And we feel good about this construct because, one, we ensure the optimal endogenous 1:1 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 secreted. 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.

Suyash, I'll turn it over to you to see if you have any additional comments.

Thanks, RA. Thanks for the question. I think you covered most of it. I think I'll just emphasize a couple of brief points. The first is, as RA has 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 medicine to within the cell. And the payload is where the creativity and the innovation comes in, whether it's a bicistronic factor, short hairpin RNA, the miRARE autoregulatory 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 at the Cleveland Clinic. And Dennis focuses on the discovery, evaluation, I guess, the translation of genetic biomarkers, in particular, into clinical care. And he aggregates 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 too big to fit into 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 the mini-gene into the AAV9 capsid. He will then create those designs, send those to UTSW, they 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.

Great. And then just a quick follow-up on manufacturing. Can you just remind us the Abeona 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 works?

No, that's a great question, Raj. I appreciate it. So in our CLN1 program, we actually received comparability material from Abeona, 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 design. And basically, what that means is that, that study would be a Phase I/II/III 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 a strong strategic collaboration and a strong history with Catalent, where they're actually producing this GMP material along with our Rett syndrome material along with a couple of others.

We're currently running 4 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 substantial capacity, but we will be using commercial-grade GMP material produced at Catalent to treat CLN1. We also have our Chief Technical Officer, Fred Porter, on the line. Fred, any additional comments?

No. Thanks, RA. 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 for IND first-in-human studies this year as well as UT Southwestern. And what we are leveraging from Abeona is the plasmid construct that was designed as part of that partnership.

Our next question comes from Matthew Harrison with Morgan Stanley.

I guess, 2 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 and in terms of how quickly -- I guess, the real question is, how quickly you might be able to enrolling such a study like that?

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 Batten disease. And there's a considerable founder's 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 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, Suyash, 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.

Sure. Well, with regard to CLN1, yes, as RA has already mentioned, we have the open IND 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 has mentioned, this is 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 of 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 6 or 7. 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 a full approval or an accelerated approval 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 2 large natural history studies that are ongoing, 1 based in the U.S. and 1 based in Germany, and we're speaking closely with the investigators of those and essentially there'll be 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 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 unmet medical need, especially when the inclusion of a concurrent control may not be practical or ethical as will be the case in a disease with a very rapid onset and rapid fatality.

And also when you're building the fact that we're expecting to see a large treatment effect, both from a biomarker perspective and from a clinical perspective, all these factors roll into the fact that 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 leader in Finland whether they've found a mutation for this particular condition as there's a nice pool of patients there. So I don't anticipate enrollment will be an issue. And as we've already mentioned, the -- we have an open IND and this study should be kicking off in the second half of this year.

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

No, Suyash, that was great.

Great. So on GM 2, and I guess your question is -- I want to make sure I'm answering the right question. This was -- was the question similarly that how we're going to operationalize the study and seek enrollment?

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?

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 5^14 total vg, which is a high dose being given intrathecally targeting specifically the brain, the CNS, the PNS tissue. But it's actually a low dose if when compared to systemically administered gene therapies, which are being given on a vg 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 seem a little more conservative. We have plenty of good tox data already enough to submit the IND equivalent in Canada. But we just felt it'd be appropriate, and as part of our general approach to mitigating risk from a tox perspective, we want to do 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.

So -- 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 3 species. So NHP tox, rat tox, plus chronic mouse model tox, which -- and we've woven that into the plans for all our programs, unless there's a specific reason why we don't need all 3.

I'll stop there, Matt. Hopefully, that's answered your question.

(Operator Instructions) Our next question comes from Biren Amin with Jefferies.

So maybe just to start on GM2. Can you just talk about how many patients you plan to enroll, pace of enrollment in Canada? And then I think on the biomarker data later this year with HEXA, how much follow-up will we get when you present this data? And I guess, what type of improvement do we need to see?

Thanks, Biren, 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 4 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 therapy 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 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 4 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?

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 2 to 3 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.

From a -- what do we hope to see, what we expect 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, the 1-month after dosing time point. Certainly, I would expect to see that for the 3-month after dosing time point. What the other biomarker will be doing at the same time will not just be levels of enzyme, but also looking at reduction of GM2 ganglioside, which is the accumulated substrate that the enzyme is attempting to break down. So we saw a nice drop in the GM2 ganglioside over time in our preclinical studies in the outcome from the mice model. So we expect to see a nice drop in the accumulated substrate in the CSF in parallel to seeing the HEXA levels go up.

And as already mentioned, I think the biomarker level we expect to see, the biomarker with the level where we feel we would -- which we consider a positive outcome is 5% activity. As with all these secreted lysosomal enzymes, a little bit of the enzyme goes a long way because the enzyme can break down waste products in 1 cell, can leave that cell, then 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 with biomarker levels, and you only need a little bit to actually result in a normal lifespan, we think a little bit will go a long way and so 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 lysosomal storage disorders, you got the buildup of accumulated substrate in the lysosome base well. They rupture, they leak out their acidic enzymatic content and cause damage to the neuronal 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 RA has mentioned that the earlier we treat, the more likely we are to have a good outcome. So we're actually specifically dosing younger patients in the GM2 study for 2 reasons. First of all, these are the patients that have the most severe disease and the highest unmet need, but also if we can treat earlier before there is this chance for the neuronal 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 see stabilization of the 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 functional recover from a motor perspective from a speech and language perspective. And also importantly, we'll be looking at seizure activity for these kids. It's one of the most distressing and disturbing parts of the disease. And I'd hope to see some stabilization and hope to see some improvement, i.e., reduction in seizure frequency activity, a reduction in seizure medications and coupled with that improvements in quality of life and caretaker burden.

Let me stop there. And hopefully, that's answered your question.

Our next question comes from Kevin DeGeeter with Oppenheimer.

This is on Zhiqi He, on behalf of Kevin. Just a final question. Can you tell us more about the next-generation technology platform, more particularly on the vagus nerve redosing, where are we and what should we expect for the next?

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, Dr. Stephen Gray and Dr. Rachel Bailey was actually presented at ASGCT last year where they actually proved the fact that direct dosing to the vagus nerve could actually enable redosing of AAV9 specifically. And this was actually presented in an oral presentation last year at ASGCT. So this was a technology we're 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 Suyash and allow Suyash to go through the actual process and what we would hope to see in the ongoing development of this platform. Suyash?

Sure. Yes, thanks for the question. Yes, it's an interesting approach, a really creative approach to try and to manage this issue of redosing, which as we 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 vagal nerve redosing platform. And there's 2 pieces to this. What it -- well, practically what it involves is a direct injection of gene therapy, the same construct we're using for HEK293 AAV9 into the vagus nerve, which you access through the back of the neck. The vagus nerve is a nerve that comes off the brainstem to the 10th 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 nervous system. So it does 2 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 gastrointestinal 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 get -- you do get an autonomic nervous system dysfunction because you have these breathing abnormalities, there's these periods of rapid breathing, followed by very slow shallow breathing, that would be quite distressing for the parents 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 has 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 re-administer when you administer directly into the vagus nerve. And you can do that for 2 reasons for the -- because the intrathecal space is somewhat immunoprivileged, it's not fully immunoprivileged. And also, when you directly inject into the vagus nerve, that's also somewhat immunoprivileged because you're not getting antibodies crossing the blood-brain barrier to go into the intrathecal space and you don't have the presence of antibodies in the vagal 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.

As Steve has done some really nice work, and he's demonstrated it in the animal model, and the next step is to do some more animal work and some future time point think about filing an IND and start the clinical 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 we're hoping to achieve there.

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

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 advisers. 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.

Thank you, ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect.