Astellas entered gene therapy development via a $3 billion acquisition. Another deal now positions it to potentially expand its gene therapy franchise further. Astellas is taking a minority stake in Taysha Gene Therapies, an investment that also gives the Japanese pharmaceutical giant an exclusive option to license two gene therapies for rare diseases as well as first dibs on buying the company outright.
Taysha, which slashed its headcount by 35% earlier this year as part of a corporate shakeup that refocused its resources on developing two clinical-stage programs, gets $50 million to support those gene therapies. The Astellas investment gives the pharma giant a 15% stake in Dallas-based Taysha and a seat on its board of directors. If Astellas opts to exercise its option on one or both of the gene therapies, it would gain global development and commercialization rights.
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More specific financial details of the potential licensing of the programs—upfront payments, milestones, and royalties—will be negotiated if and when Astellas decides to exercise its options. Those decisions could come soon. Expiration of the options is triggered by upcoming data and regulatory events, the first of which could happen in January. Speaking during a conference call Tuesday, Taysha CEO R.A. Session said the agreement was the product of conversations between the two companies in the last four to five months.
“It ensured we get to meaningful value inflection points and meaningful data readouts, but also ensured both sides maintain significant optionality in the deal, and I think that’s extremely important,” he said.
Both of Taysha’s lead gene therapies are in clinical development for rare neurodegenerative disorders that have no FDA approved therapies. TSHA-120 is in development for giant axonal neuropathy (GAN), a disease that leads to problems in the peripheral and central nervous systems that manifest as weakness and loss of coordination, as well as seizures and intellectual disability. TSHA-102 is a gene replacement therapy for Rett syndrome, a disorder that leads to developmental problems including the loss of the ability to speak, walk, and breathe. This disorder mainly affects females, who develop normally until seven to 18 months of age. At that point, developmental skills regress and the babies start to lose muscle control. Patients with Rett can live into adulthood.
The GAN program is currently in Phase 1/2 testing. In January of this year, Taysha reported data for the highest dose group showing continued slowing of disease progression that the company said was similar to what was achieved in lower dose groups. The company said it considered those results confirmatory of disease modification. Session said a meeting with the FDA is scheduled for Dec. 13 to discuss the data and the potential pathway to a regulatory submission. Taysha expects to receive the formal minutes of that meeting by mid-January. According to a Taysha regulatory filing, the option to license the GAN program remains open until a period of time following Astellas’s receipt of the formal minutes from Taysha’s meeting with the FDA, all written feedback from the agency regarding that meeting, and all briefing documents sent by Taysha to the FDA.
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The Rett program is in early clinical development in both adults and children. The adult study is enrolling up to 18 women and is testing two different doses of the gene therapy. Astellas’s option is tied to a Phase 1/2 pediatric trial, which will also enroll females. That study is on track to begin in the first half of 2023, Session said. According to the deal terms, the option period for the Rett program continues until a certain period of time after Astellas receives data from this pediatric study, as well as certain data regarding the gene therapy. Session said he expects to have data from the first cohort of adult patients in the first half of next year. The adult study will read out before the pediatric study, which will be the primary patient population that Taysha will discuss with the FDA regarding a regulatory path forward.
For as long as the Rett option remains open, Taysha has agreed not to seek any offers or proposals that change the ownership of the company without first giving Astellas the opportunity to make an offer. Session said this right of first refusal was something important that Astellas wanted in the deal, tied to the Rett data.
“As we’ve all thought in the history of the company, Rett is going to be probably one of the biggest near term value-creating opportunities for Taysha,” Session said. “And essentially, Astellas would like to have some level of optionality, whether to license the program, or understanding the value of that program, the opportunity to put in some offer for the company.”
If Astellas makes an offer, the agreement calls for the two companies to negotiate the terms and conditions of the transaction. If the pharma giant does not make an offer within a certain amount of time, Taysha, which at its peak had a pipeline of 25 gene therapies, would be free to seek other bids.
“Taysha is an industry leader in CNS gene therapies and this partnership fits strategically with our long-term vision of expanding Astellas’ gene therapy capabilities, allowing the company to impact the lives of a broader range of patients with urgent unmet medical needs,” Astellas Chief Strategy Officer Naoki Okamura said in a prepared statement.
Astellas added gene therapies to its pipeline via the 2020 acquisition of Audentes Therapeutics, a clinical-stage developer of treatments for rare neuromuscular disorders. That deal followed other big pharma M&A moves: Novartis’s $8.7 billion purchase of AveXis in 2018 and Roche’s $4.8 billion buyout of Spark Therapeutics the following year.
Progress of the Audentes gene therapies has been stalled by safety problems. Patient deaths in a study testing a gene therapy for X-linked myotubular myopathy led to an FDA clinical hold that was still in place as of Astellas’s most recent financial report. Meanwhile, Astellas has continued its investment in gene therapy with the construction of a manufacturing facility in Sanford, North Carolina. Noting that Taysha has paused construction of its planned gene therapy manufacturing facility in nearby Durham, Session suggested his company would be able to utilize Astellas’s site. Astellas utilizes a similar gene therapy platform and its manufacturing process is close to Taysha’s, he said.
Taysha reported that its cash position as of Sept. 30 was $34.3 million. Chief Financial Officer Kamran Alam said the $50 million from Astellas extends Taysha’s cash runway into the fourth quarter of 2023. According to the Taysha regulatory filing, that cash breaks down to the purchase of more than 7.2 million shares valued at about $30 million. In addition to that private placement, Astellas agreed to make a one-time $20 million cash payment as partial consideration for the rights it has gained under the agreement.
[Update: The following two paragraphs added with analyst comment.] In a note to sent to investors late Tuesday, William Blair analysts wrote that based on the data so far in GAN, the gene therapy has three potential paths for FDA approval. The first is a submission based on the current data and comparability analysis of the manufacturing material. Alternatively, Taysha may need to dose “a few more patients” using the commercial material to confirm comparability before seeking approval. The third path is a pivotal study with the commercial material to support the submission of a biologics license application (BLA). Novartis’s gene therapy, Zolgensma, indicates the FDA’s likely preferred path, according to William Blair.
“Based on the approval pathway for Zolgensma and the agency’s guidance documents on gene therapies for neurodegenerative diseases, we believe that the FDA will likely require Taysha to dose a few patients with commercial-grade material before submitting a BLA, which would set the company up for potential commercial approval in late 2023 or early 2024,” the analysts wrote in the note.
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