Seven analysts cut price target for Taysha on FDA advice and job cuts

Six weeks after taking on additional duties as CEO of Taysha Gene Therapies (TSHA)Chairman of the Board, Sean P. Nolan, on Tuesday delivered adverse news to investors, analysts and gene therapy market watchers: earlier expectations for FDA approval at the end of this year or early next year for the company’s lead gene therapy candidate, TSHA-120 in giant axon neuropathy (GAN), to be put on hold.

In charting a regulatory approval path for TSHA-120 in GAN, the FDA is recommending a randomized, placebo-controlled clinical trial that the company says is beyond its means.

“We don’t have a randomized, placebo-controlled trial in the budget,” Nolan told analysts Tuesday during a conference call. “From a feasibility perspective, we don’t believe any particular design is feasible.”

The FDA has accepted as acceptable Taysha’s endpoint of improvement in the rate of decline of the 32-item Motor Function Measure (MFM32), a motor function assessment used to assess fine and gross motor skills in patients with neuromuscular disorders. But the agency told Taysha that MFM32 may have subjective bias unless evaluated in a blinded, placebo-controlled trial.

This recommendation emerged during a Type B meeting between agency officials and Taysha executives. Nolan said Taysha is awaiting a response from the FDA to additional questions submitted by the company, which focused on the trial design and the totality of evidence sought by the agency. Questions include how many patients should be recruited and how to control the natural unblinding that would occur due to the use of immunosuppression in the trial.

Among those attending the Type B meeting were executives from Astellas Gene Therapy, which has a 15% stake in Taysha after investing $50 million in the Dallas-based gene therapy developer. Under the agreement, announced in October 2022, Astellas has secured options for exclusive licenses for TSHA-120 and Taysha’s other clinical-stage adeno-associated virus (AAV)-based gene therapy candidate, TSHA- 102 for Rett syndrome.

Astellas also obtained an effective right of first refusal to acquire Taysha. The deal with Astellas extended Taysha’s cash trail through the first quarter of 2024.

Asked by Silvan Tuerkcan, PhD, director and equity research analyst covering the biotechnology and biopharmaceutical industries for JMP Securities, if the FDA’s insistence on a randomized clinical trial would mark the end of the GAN program or a transfer of the program to Astellas , Nolan replied, “What we would do is reassess all the strategic options for the program and determine the best options for our patients and for the company.”

Nolan also said that Astellas executives “were involved in some of the planning for this meeting. They attended the meeting. They are up to date with everything we do. We have a very collaborative relationship with them.

“I would say we are aligned with them (Astellas). That’s about all I should say,” added Nolan.

Job cuts, personnel changes

Nolan also revealed on the call that Taysha – a developer of gene therapies for monogenic diseases of the central nervous system in rare and large patient populations – implemented “operational, structural and personal changes” as a result. a “thorough” review of its business, in order to improve the company’s execution of its plans.

Investors seeking additional information during the conference call heard Nolan acknowledge that the changes to operations included job cuts and changes in responsibilities for many remaining employees, although he did not disclose. the number of positions cut by the company, or in which areas of Taysha.

“Operational measures taken include the formation of cross-functional teams, changes in the pace of meetings and changes to the governance structure aimed at improving coordination, collaboration and facilitating the flow of information. Steps have also been taken to further streamline headcount and expenses,” Nolan said. “The organizational structure has been consolidated, flattened and further modified to streamline decision-making and strengthen accountability. Personnel changes included both reductions in some areas and extensions of responsibility in other areas to make it easier to run the business.

“I believe the recently implemented operational, structural and personnel actions position us well as we strive to execute our near-term milestones,” Nolan said.

Nolan was named CEO in December 2022, succeeding company founder RA Session II, who stepped down from day-to-day management but remains on the board. At the same time, Taysha named Sukumar (Suku) Nagendran, MD, a Taysha board director and veteran biotech executive, as president and head of R&D.

“Small Compelling Reason”

Analysts reacted quickly to news of the FDA meeting and corporate cutbacks, with at least seven of them lowering their 12-month price targets for Taysha shares.

JMP Securities’ Tuerkcan cut its firm’s price target from $6 to $4. Jefferies analyst Eun Yang, PhD went further, downgrading the company’s rating on Taysha stock from ‘Buy’ to ‘Hold’ and cutting the company’s price target by 89% , from $14 to $1.50.

“We see few compelling reasons to buy the stocks,” Yang concluded in a research note on Tuesday. “While we await a further update from the FDA on TSHA-120 and the 2nd active’s preliminary human data in 1H23, we do not believe they provide significant benefit from here.”

Yang referred to Taysha’s current expectation that it will provide initial clinical data – primarily safety data from the first two adult patients – by the end of June for the “second asset” TSHA-102, currently at study in a phase I/II trial in adults with Rett Syndrome (NCT05606614).

Taysha also announced plans to file a clinical trial application in the UK in mid-2023, which will be followed by an IND filing with the FDA in the second half of this year. These filings could extend the clinical program of TSHA-102 to pediatric patients.

Increased risk

Jack K. Allen, CFA, senior research analyst at Baird, lowered his firm’s price target on Taysha from $10 to $6, citing increased risk surrounding the GAN program as a result. Allen maintained Baird’s “outperforming” rating on the stock, as “we see room for regulators to be open to a smaller study after further discussions with Taysha management.”

“We have reduced our probability of success for the TSHA-120 program to 40% given this regulatory update, which leads us to lower the price target to $6.

Four other analysts joined Allen, Tuerkcan and Yang in lowering their price targets on Taysha stock:

  • Gil Blum, PhDSenior Analyst of Needham’s Biotech Research Team, $16-$6.
  • whitney i ammanaging director and senior biotechnology analyst at Canaccord Genuity, from $17 to $13.
  • Joon Lee, MD, Ph.D.director and senior biotech analyst at Truist Securities, $15 to $4
  • Geulah Livshits PhD, a senior research analyst at Chardan covering biotech companies, $16 to $6. Almost three months earlier, on November 9, 2022, Livshits halved Chardan’s price target for Taysha from $32 to $16.

Investors followed analysts’ lead, responding with a stock selloff that sent Taysha stock prices tumbling 26%, dropping from $1.64 to $1.21. The stock began to rebound soon after the market closed, up 4% at $1.26 nearly four hours later in after-hours trading, but dipped 1% at $1,198 on Thursdays from 11:40 a.m.

TSHA-102 is a self-complementary AAV serotype 9 (AAV9) gene replacement therapy delivered intrathecally, and the first and only gene therapy for Rett syndrome to reach the clinic. TSHA-102 applies Taysha’s novel miRNA-Responsive Auto-Regulatory Element (miRARE) platform, designed to regulate transgene expression in a genotypically cell-by-cell manner. The miRARE technology is intended to prevent toxicity associated with transgene overexpression and may potentially be used in other indications.

TSHA-120 is an intrathecally administered AAV9 gene replacement therapy delivering the gene gigaxonin for the treatment of giant axonal neuropathy (GAN). TSHA-120 is currently being evaluated in an ongoing Phase I/II clinical trial (NCT02362438).

Both candidates have received orphan drug and rare pediatric disease designations from the FDA, as well as orphan drug designation from the European Commission.

Leaders and laggards

  • Evelo Biosciences (EVLO) actions dropped 25% from $1.04 to $0.7789 on Wednesday after the company announced it was cutting its workforce among cost-cutting measures expected to extend its cash trail into the third quarter. The moves followed Evelo acknowledging that its Phase II trial (NCT05121480) evaluating EDP1815 in atopic dermatitis missed its primary endpoint due to an unusually high placebo response rate in the first three cohorts evaluated. The primary endpoint was the proportion of patients who achieve at least a 50% improvement in the Eczema Area and Severity Index (EASI50) compared to placebo at week 16. data from the fourth cohort are expected in the second quarter.
  • Hill BioPharma (HILS) actions more than doubled, zooming 156% Tuesday, at $1.72 at 10:02 a.m., before ending the day up 79%, to $1.20 from $0.671. Hillstream said it has signed an exclusive agreement of undisclosed value granting the Dana-Farber Cancer Institute an option to access Hillstream’s Quatramer™ tumor targeting platform to target the MUC1-C oncoprotein. If Dana-Farber exercises its option, Hillstream will develop anti-MUC1-C antibodies to selectively deliver its lead candidate, the modulator of iron-mediated cell death (IMCD) HSB-1216, designed to target cancer stem cells via the induction of ferroptosis. Hillstream explains that MUC1-C could fight cancers such as metastatic triple negative breast cancer, small cell lung cancer, Merkel cell carcinoma and neuroendocrine prostate cancer.

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