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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-39536

Taysha Gene Therapies, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	84-3199512
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3000 Pegasus Park Drive Ste 1430 Dallas, Texas	75247
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (214) 612-0000

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Common stock, par value $0.00001 per share

     TSHA

     The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 4, 2025, the registrant had 273,919,373 shares of common stock, $0.00001 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Balance Sheets	1
	Statements of Operations	2
	Statements of Other Comprehensive Loss	3
	Statements of Stockholders’ Equity	4
	Statements of Cash Flows	6
	Notes to Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	49
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	56
Signatures		57

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Taysha Gene Therapies, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)



	September 30, 2025			December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	297,344		$	139,036
Restricted cash		449			449
Prepaid expenses and other current assets		2,158			2,645
Total current assets		299,951			142,130
Restricted cash		2,151			2,151
Property, plant and equipment, net		6,805			7,485
Operating lease right-of-use assets		7,463			8,381
Other non-current assets		184			217
Total assets	$	316,554		$	160,364
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	5,438		$	3,592
Accrued expenses and other current liabilities		17,708			12,862
Deferred revenue		5,485			9,773
Total current liabilities		28,631			26,227
Term loan, net		50,852			43,942
Operating lease liability, net of current portion		16,506			17,361
Other non-current liabilities		1,576			1,309
Total liabilities		97,565			88,839
Commitments and contingencies - Note 13
Stockholders' equity
Preferred stock, $0.00001 par value per share; 10,000,000 shares authorized and no shares issued and outstanding as of September 30, 2025 and December 31, 2024		—			—
Common stock, $0.00001 par value per share; 700,000,000 shares authorized and 273,915,373 issued and outstanding as of September 30, 2025 and 400,000,000 shares authorized and 204,943,306 issued and outstanding as of December 31, 2024		3			2
Additional paid-in capital		903,578			677,859
Accumulated other comprehensive loss		(1,143	)		(4,031	)
Accumulated deficit		(683,449	)		(602,305	)
Total stockholders’ equity		218,989			71,525
Total liabilities and stockholders' equity	$	316,554		$	160,364

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Taysha Gene Therapies, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2025			2024			2025			2024
Revenue	$	—		$	1,788		$	4,288		$	6,311
Operating expenses:
Research and development		25,745			14,946			61,451			50,676
General and administrative		8,279			7,902			25,035			22,324
Impairment of long-lived assets		—			4,838			—			4,838
Total operating expenses		34,024			27,686			86,486			77,838
Loss from operations		(34,024	)		(25,898	)		(82,198	)		(71,527	)
Other income (expense):
Change in fair value of warrant liability		(292	)		75			(463	)		(67	)
Change in fair value of term loan		(1,534	)		(1,703	)		(4,525	)		(4,035	)
Interest income		3,169			2,107			6,354			5,240
Interest expense		(15	)		(24	)		(51	)		(80	)
Other expense		(37	)		(81	)		(261	)		(44	)
Total other income, net		1,291			374			1,054			1,014
Net loss	$	(32,733	)	$	(25,524	)	$	(81,144	)	$	(70,513	)
Net loss per common share, basic and diluted	$	(0.09	)	$	(0.10	)	$	(0.26	)	$	(0.29	)
Weighted average common shares outstanding, basic and diluted		353,309,524			267,824,045			307,175,982			244,052,057

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Taysha Gene Therapies, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands, except share and per share data)

(Unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2025			2024			2025			2024
Net loss	$	(32,733	)	$	(25,524	)	$	(81,144	)	$	(70,513	)
Other comprehensive income (loss):
Change in fair value of term loan attributable to instrument specific credit risk		(444	)		(4,733	)		2,888			(2,328	)
Comprehensive loss	$	(33,177	)	$	(30,257	)	$	(78,256	)	$	(72,841	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Taysha Gene Therapies, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(Unaudited)

For the Three Months Ended September 30, 2025


					Additional						Accumulated			Total
	Common Stock				Paid-in			Accumulated			Other			Stockholders'
	Shares		Amount		Capital			Deficit			Comprehensive Loss			Equity
Balance as of June 30, 2025		272,730,060	$	3	$	900,139		$	(650,716	)	$	(699	)	$	248,727
Stock-based compensation		—		—		3,285			—			—			3,285
Issuance of common stock and pre-funded warrants upon closing of underwritten public offering, net of underwriting discounts and commissions, and other offering costs of $(6)		—		—		(6	)		—			—			(6	)
Issuance of common stock upon vesting and settlement of restricted stock units, net		1,049,338		—		—			—			—			—
Issuance of common stock under ESPP		64,825		—		84			—			—			84
Issuance of common stock upon exercise of stock options		71,150		—		76			—			—			76
Loss on instrument-specific credit risk		—		—		—			—			(444	)		(444	)
Net loss		—		—		—			(32,733	)		—			(32,733	)
Balance as of September 30, 2025		273,915,373	$	3	$	903,578		$	(683,449	)	$	(1,143	)	$	218,989

For the Three Months Ended September 30, 2024


					Additional						Accumulated			Total
	Common Stock				Paid-in			Accumulated			Other			Stockholders'
	Shares		Amount		Capital			Deficit			Comprehensive Loss			Equity
Balance as of June 30, 2024		201,381,450	$	2	$	664,457		$	(557,996	)	$	2,405		$	108,868
Stock-based compensation		—		—		3,357			—			—			3,357
Issuance of common stock and pre-funded warrants upon closing of underwritten public offering, net of underwriting discounts and commissions, and other offering costs of $542		3,235,000		—		6,737			—			—			6,737
Issuance of common stock under ESPP		47,170		—		63			—			—			63
Issuance of common stock upon exercise of stock options, net		56,770		—		38			—			—			38
Issuance of common stock upon vesting and settlement of restricted stock units, net		222,916		—		(9	)		—			—			(9	)
Loss on instrument-specific credit risk		—		—		—			—			(4,733	)		(4,733	)
Net loss		—		—		—			(25,524	)		—			(25,524	)
Balance as of September 30, 2024		204,943,306	$	2	$	674,643		$	(583,520	)	$	(2,328	)	$	88,797

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Taysha Gene Therapies, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(Unaudited)

For the Nine Months Ended September 30, 2025


					Additional
	Common Stock				Paid-in			Accumulated			Accumulated Other			Total
	Shares		Amount		Capital			Deficit			Comprehensive Loss			Stockholders' Equity
Balance as of December 31, 2024		204,943,306	$	2	$	677,859		$	(602,305	)	$	(4,031	)	$	71,525
Stock-based compensation		—		—		9,769			—			—			9,769
Issuance of common stock and pre-funded warrants upon closing of underwritten public offering, net of underwriting discounts and commissions, and other offering costs of $14,329		57,777,777		1		215,645			—			—			215,646
Issuance of common stock upon exercise of pre-funded warrants		9,607,145		—		—			—			—			—
Issuance of common stock upon vesting and settlement of restricted stock units, net		1,299,156		—		(51	)		—			—			(51	)
Issuance of stock upon exercise of stock options		164,838		—		197			—			—			197
Issuance of common stock under ESPP		123,151		—		159			—			—			159
Gain on instrument-specific credit risk		—		—		—			—			2,888			2,888
Net loss		—		—		—			(81,144	)		—			(81,144	)
Balance as of September 30, 2025		273,915,373	$	3	$	903,578		$	(683,449	)	$	(1,143	)	$	218,989

For the Nine Months Ended September 30, 2024



					Additional									Total
	Common Stock				Paid-in			Accumulated			Accumulated Other			Stockholders'
	Shares		Amount		Capital			Deficit			Comprehensive Loss			Equity
Balance as of December 31, 2023		186,960,193	$	2	$	587,942		$	(513,007	)	$	—		$	74,937
Stock-based compensation		—		—		9,887			—			—			9,887
Issuance of common stock and pre-funded warrants upon closing of underwritten public offering, net of underwriting discounts and commissions, and other offering costs of $5,566		17,596,113		—		76,694			—			—			76,694
Issuance of common stock upon vesting and settlement of restricted stock units, net		234,198				(9	)		—			—			(9	)
Issuance of common stock under ESPP		93,970		—		89			—			—			89
Issuance of common stock upon exercise of stock options		58,832		—		40			—			—			40
Loss on instrument-specific credit risk		—		—		—			—			(2,328	)		(2,328	)
Net loss		—		—		—			(70,513	)		—			(70,513	)
Balance as of September 30, 2024		204,943,306	$	2	$	674,643		$	(583,520	)	$	(2,328	)	$	88,797

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Taysha Gene Therapies, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	For the Nine Months Ended September 30,
	2025			2024
Cash flows from operating activities
Net loss	$	(81,144	)	$	(70,513	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		846			941
Stock-based compensation		9,769			9,887
Change in fair value of warrant liability		463			67
Non-cash change in fair value of term loan		627			135
Debt issuance costs expensed under the fair value option		147			—
Impairment of long-lived assets		—			4,838
Non-cash lease expense		959			916
Other		264			678
Changes in operating assets and liabilities:
Prepaid expenses and other assets		401			(612	)
Accounts payable		1,973			(1,416	)
Accrued expenses and other liabilities		3,615			(1,527	)
Deferred revenue		(4,288	)		(6,311	)
Net cash used in operating activities		(66,368	)		(62,917	)
Cash flows from investing activities
Purchase of property, plant and equipment		(488	)		(376	)
Other		131			—
Net cash used in investing activities		(357	)		(376	)
Cash flows from financing activities
Proceeds from issuance of common stock and pre-funded warrants from underwritten public offering, net of underwriting discounts and sales commissions and other offering costs		215,716			77,140
Prepayment of 2023 Trinity term loan		(40,612	)		—
Proceeds from 2025 Trinity term loan, net		49,853			—
Debt issuance costs for term loan		—			(18	)
Payment of shelf registration costs		(33	)		—
Proceeds from common stock issuances under ESPP		159			89
Proceeds from stock option exercises		197			40
Other		(247	)		(210	)
Net cash provided by financing activities		225,033			77,041
Net increase in cash, cash equivalents and restricted cash		158,308			13,748
Cash, cash equivalents and restricted cash at the beginning of the period		141,636			146,540
Cash, cash equivalents and restricted cash at the end of the period	$	299,944		$	160,288
Cash and cash equivalents		297,344			157,688
Restricted cash		2,600			2,600
Cash, cash equivalents and restricted cash at the end of the period	$	299,944		$	160,288
Supplemental disclosure of cash flow information:
Cash paid for interest	$	3,949		$	3,980
Supplemental disclosure of noncash investing and financing activities:
Proceeds allocated to Success Fee liability	217				—
Property, plant and equipment in accounts payable and accrued expenses	41			133
Offering costs not yet paid		25			360

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Taysha Gene Therapies, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1—Organization and Description of Business Operations

Taysha Gene Therapies, Inc. (the “Company” or “Taysha”) was originally formed under the laws of the State of Texas on September 20, 2019. Taysha converted to a Delaware corporation on February 13, 2020, which had no impact to the Company’s par value or issued and authorized capital structure.

Taysha is a clinical-stage biotechnology company focused on advancing AAV-based gene therapies for severe monogenic diseases of the central nervous system.

Sales Agreement

On October 5, 2021, the Company entered into a Sales Agreement (the “Sales Agreement”) with SVB Securities LLC (f/k/a SVB Leerink LLC) and Wells Fargo Securities, LLC (collectively, the “Sales Agents”), pursuant to which the Company may issue and sell, from time to time in its sole discretion, shares of its common stock having an aggregate offering price of up to $150.0 million through the Sales Agents. In March 2022, the Company amended the Sales Agreement to, among other things, include Goldman Sachs & Co. LLC as an additional Sales Agent. The Sales Agents may sell common stock by any method permitted by law deemed to be an “at-the-market offering” as defined in Rule 415(a)(4) of the Securities Act (the “ATM”), including sales made directly on or through the Nasdaq Global Select Market or any other existing trade market for the common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to prevailing market prices, or any other method permitted by law. The Sales Agents are entitled to receive 3.0% of the gross sales price per share of common stock sold under the Sales Agreement. In April 2022, the Company sold 2,000,000 shares of common stock under the Sales Agreement and received $11.6 million in net proceeds. No other shares of common stock have been issued and sold pursuant to the Sales Agreement as of September 30, 2025.

On December 13, 2024, the Company filed a new shelf registration statement on Form S-3 following the expiration of its prior registration statement, in relation to the registration of common stock, preferred stock, debt securities, warrants and units or any combination thereof up to a total aggregate offering price of $300.0 million, including up to $100.0 million shares of common stock that may be offered and sold pursuant to the Sales Agreement.

On May 28, 2025, the Company notified the Sales Agents that it was suspending and terminating the prospectus (the “ATM Prospectus”) related to up to $100.0 million of the Company’s common stock issuable pursuant to the Sales Agreement. The Company will not make any sales of its securities pursuant to the Sales Agreement unless and until a new prospectus, prospectus supplement or a new registration statement is filed. Other than the termination of the ATM Prospectus, the Sales Agreement remains in full force and effect.

Liquidity and Capital Resources

The Company has incurred operating losses since inception and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. Losses are expected to continue as the Company continues to invest in its research and development activities. As of September 30, 2025, the Company had an accumulated deficit of $683.4 million. The Company expects to continue to incur significant expenses and operating losses for the foreseeable future.

On May 28, 2025, the Company entered into an underwriting agreement (the “May 2025 Underwriting Agreement”) with Jefferies LLC, BofA Securities, Inc., Piper Sandler & Co. and Barclays Capital Inc, as representatives of the several underwriters set forth therein (collectively, the “Underwriters”), to issue and sell 46,868,687 shares of the Company’s common stock and, in lieu of common stock to certain investors, pre-funded warrants to purchase 25,858,586 shares of its common stock in an underwritten public offering (the “May 2025 Offering”), pursuant to an effective shelf registration statement on Form S-3 and a related prospectus and prospectus supplement. The offering price to the public was $2.75 per share of common stock and $2.749 per pre-funded warrant, which was the price to the public of each share of common stock sold in the May 2025 Offering minus the $0.001 exercise price per pre-funded warrant. The Underwriters purchased the shares and the pre-funded warrants from the Company pursuant to the May 2025 Underwriting Agreement at a price of $2.585 per share and $2.584 per pre-funded warrant, respectively. See Note 10 for additional information. The initial closing of the May 2025 Offering occurred on May 30, 2025. In addition, the Company granted the Underwriters an option to purchase, for a period of 30 days, up to an additional 10,909,090 shares of common stock, which the Underwriters exercised in full on June 6, 2025. The total net proceeds from the May 2025 Offering were approximately $215.6 million, including the proceeds from the Underwriter’s option, after deducting underwriting discounts and commissions and offering expenses.

Future capital requirements will depend on many factors, including the timing and extent of spending on research and development and the market acceptance of the Company’s products. The Company will need to obtain additional financing in order to complete clinical studies and launch and commercialize any product candidates for which it receives regulatory approval. There can be no assurance that such financing will be available or will be on terms acceptable to the Company. As of September 30, 2025, the Company had cash and cash equivalents of $297.3 million, which the Company believes will be sufficient to fund its planned operations for a period of at least twelve months from the date of issuance of these unaudited condensed consolidated financial statements. The Company has based this estimate on assumptions that may prove to be wrong, and its operating plan may change as a result of many factors currently unknown to it. As a result, the Company could deplete its capital resources sooner than it currently expects. The Company expects to finance its future cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances or licensing arrangements. If the Company is unable to obtain funding, the Company would be forced to delay, reduce or eliminate some or all of its research and development programs, preclinical and clinical testing or commercialization efforts, which could adversely affect its business prospects.

Note 2—Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X and are consistent in all material respects with those included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2025 (the “2024 Annual Report”). In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. The condensed consolidated balance sheet as of December 31, 2024 is derived from audited financial statements, however, it does not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes in the Company’s 2024 Annual Report.

Principles of Consolidation

The accompanying interim condensed consolidated financial statements include the accounts of Taysha and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates and assumptions in the Company’s financial statements relate to the determination of the fair value of the common stock prior to the initial public offering (“IPO”) (as an input into stock-based compensation), estimating manufacturing accruals and accrued or prepaid research and development expenses, the measurement of impairment of long-lived assets, the valuation of the Trinity Term Loans (as defined below) that are carried at fair value and the allocation of consideration received in connection with the Astellas Transactions (as defined below). These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Significant Accounting Policies

There have been no changes in the Company’s significant accounting policies as disclosed in Note 2 to the audited consolidated financial statements included in the 2024 Annual Report.

Recently Adopted Accounting Pronouncements

There have been no significant changes in recently adopted accounting pronouncements from those disclosed in the section titled “Financial Statements and Supplementary Data” included in the 2024 Annual Report.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures, to improve expense disclosure requirements under ASC 220, Income Statement - Reporting Comprehensive Income, through enhancing disclosures about significant segment expenses. The guidance requires entities to provide additional disclosure about specific expenses by requiring entities to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following natural expenses (1) purchases of inventory, (2) employees compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion and amortization recognized as part of oil - and gas - producing activities or other types of depletion expenses. The tabular disclosure would also include certain other expenses, when applicable. The ASU also enhances interim segment reporting requirements by aligning interim disclosures with information that must be disclosed annually in accordance with ASC 220. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, applied either prospectively or retrospectively with early adoption permitted. The Company is still evaluating the impact this ASU will have on its disclosures.

Note 3—Fair Value Measurements

The Company’s financial instruments that are measured at fair value on a recurring basis consist of money market funds, the Trinity Term Loans, a success fee derivative liability and certain of the Company’s warrant liabilities.

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values (in thousands):


	September 30, 2025
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents – money market funds	$	295,708	$	295,708	$	—	$	—
Total assets	$	295,708	$	295,708	$	—	$	—
Liabilities:
Trinity Term Loans	$	50,852	$	—	$	—	$	50,852
Success Fee Derivative liabilities		1,519		—		—		1,519
SSI Warrant liability		901		—		—		901
Total liabilities	$	53,272	$	—	$	—	$	53,272


	December 31, 2024
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents – money market funds	$	138,308	$	138,308	$	—	$	—
Total assets	$	138,308	$	138,308	$	—	$	—
Liabilities:
Trinity Term Loans	$	43,942	$	—	$	—	$	43,942
Success Fee Derivative liability		930		—		—		930
SSI Warrant liability		438		—		—		438
Total liabilities	$	45,310	$	—	$	—	$	45,310

The Company classifies its money market funds, which are valued based on quoted market prices in an active market with no valuation adjustment, as Level 1 assets within the fair value hierarchy.

The Company’s Trinity Term Loans and Success Fee liabilities are classified as Level 3 measurements under the fair value hierarchy as the fair values were determined based on significant inputs not observable in the market. The fair values were determined utilizing a probability-weighted income approach, including variables for the timing of a success event and other probability estimates. See Note 7 for additional information on the Trinity Term Loans and Success Fees.

The Company’s SSI Warrant liability is classified as Level 3 measurements under the fair value hierarchy as the fair values were determined based on significant inputs not observable in the market. The fair values were determined using the Black-Scholes-Merton option pricing model to determine the fair value of the SSI Warrants (as defined below). See Note 10 for additional information on the SSI Warrants.

Note 4—Balance Sheet Components

Prepaid expenses and other current assets consisted of the following (in thousands):


	September 30, 2025		December 31, 2024
Prepaid research and development	$	839	$	841
Prepaid clinical trial		760		1,112
Deferred offering costs		57		135
Prepaid insurance		46		249
Other		456		308
Total prepaid expenses and other current assets	$	2,158	$	2,645

Property, plant and equipment, net consisted of the following (in thousands):


	September 30, 2025			December 31, 2024
Leasehold improvements	$	2,117		$	2,117
Laboratory equipment		3,170			3,130
Computer equipment		728			707
Furniture and fixtures		853			864
Construction in progress		4,322			4,251
		11,190			11,069
Accumulated depreciation		(4,385	)		(3,584	)
Property, plant and equipment, net	$	6,805		$	7,485

Property, plant and equipment, net includes $0.4 million and $0.7 million of assets capitalized as finance leases as of September 30, 2025 and December 31, 2024, respectively. During the nine months ended September 30, 2025, the Company sold equipment with a book value of zero and recorded a gain on the disposal of $0.1 million.

Depreciation expense was $0.2 million and $0.3 million for the three months ended September 30, 2025 and 2024, respectively. Depreciation expense was $0.8 million and $0.9 million for the nine months ended September 30, 2025 and 2024, respectively.

Accrued expenses and other current liabilities consisted of the following (in thousands):


	September 30, 2025		December 31, 2024
Accrued compensation	$	5,347	$	5,242
Accrued research and development		5,139		1,714
Accrued clinical trial		3,382		1,907
Lease liabilities, current portion		1,668		1,877
Warrant liability		901		438
Accrued professional and consulting fees		522		725
Accrued property, plant and equipment		—		207
Other		749		752
Total accrued expenses and other current liabilities	$	17,708	$	12,862

Note 5— Leases

The Company leases certain office, laboratory, and manufacturing space.

Dallas Lease

On January 11, 2021, the Company entered into a lease agreement (the “Dallas Lease”) with Pegasus Park, LLC, a Delaware limited liability company (the “Dallas Landlord”), pursuant to which the Company leases approximately 15,000 square feet of office space at 3000 Pegasus Park Drive, Dallas, Texas 75247 (the “Office Space”).

The Dallas Lease commenced on May 27, 2021, and has a term of approximately ten years. The Company has an option to extend the term of the Dallas Lease for one additional period of five years.

The Dallas Landlord has the right to terminate the Dallas Lease, or the Company’s right to possess the Office Space without terminating the Dallas Lease, upon specified events of default, including the Company’s failure to pay rent in a timely manner and upon the occurrence of certain events of insolvency with respect to the Company.

Dallas Lease Expansion

On December 14, 2021, the Company amended the Dallas Lease (the “Dallas Lease Amendment”) with the Dallas Landlord, pursuant to which the Company leases approximately 18,000 square feet of office space adjacent to the Office Space at 3000 Pegasus Park Drive, Dallas, Texas 75247 (the “Expansion Premises”).

The Dallas Lease Amendment commenced on July 1, 2022, and has a term of approximately ten years.

The Company is obligated to pay operating costs and utilities applicable to the Expansion Premises. Total future minimum lease payments under the Dallas Lease Amendment over the initial 10 year term are approximately $6.0 million. The Company is responsible for costs of constructing interior improvements within the Expansion Premises that exceed a $40.00 per rentable square foot construction allowance provided by the Dallas Landlord.

The Company has a right of first refusal with respect to certain additional office space on the 15th floor at 3000 Pegasus Park Drive, Dallas, Texas 75247 before the Dallas Landlord accepts any offer for such space.

Durham Lease

On December 17, 2020, the Company entered into a lease agreement (the “Durham Lease”) with Patriot Park Partners II, LLC, a Delaware limited liability company (the “Durham Landlord”), pursuant to which the Company agreed to lease approximately 187,500 square feet of a manufacturing facility located at 5 National Way, Durham, North Carolina (the “Facility”). The Durham Lease commenced on April 1, 2021 and is expected to have a term of approximately fifteen years and six months. The Company has two options to extend the term of the Durham Lease, each for a period of an additional five years.

The Company was not required to provide a security deposit in connection with its entry into the Durham Lease. The Company was responsible for constructing interior improvements within the Facility. The Company was required to place $2.6 million in an escrow account which was to be released when the improvements were substantially complete. In December 2023, the Company entered into an agreement with the landlord whereby the Company agreed to remove specified leasehold improvements which will be funded by the escrowed funds. The escrow funds are recorded as restricted cash on the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024 with $0.5 million recorded in current assets and $2.1 million in noncurrent assets. The Durham Landlord has the right to terminate the Durham Lease upon specified events of default, including the Company’s failure to pay rent in a timely manner and upon the occurrence of certain events of insolvency with respect to the Company.

Summary of all lease costs recognized under ASC 842

The following table summarizes the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating leases for the three and nine months ended September 30, 2025 and 2024 (in thousands):


	Three Months Ended September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
Operating lease cost	$	665	$	673	$	2,000	$	1,994
Variable lease cost		407		212		1,148		608
Total lease cost	$	1,072	$	885	$	3,148	$	2,602

Supplemental information related to the remaining lease term and discount rate are as follows:


	September 30, 2025			December 31, 2024
Weighted average remaining lease term (in years) – Finance leases		1.39			1.88
Weighted average remaining lease term (in years) – Operating leases		9.44			9.98

Weighted average discount rate – Finance leases		10.56	%		10.54	%
Weighted average discount rate – Operating leases		7.87	%		7.84	%

As of September 30, 2025, future minimum commitments under ASC 842 under the Company’s operating and finance leases were as follows (in thousands):


Year Ending December 31,	Operating			Finance
2025		738			114
2026		2,485			399
2027		2,577			—
2028		2,673			—
2029		2,779			—
Thereafter		14,284			—
Total lease payments		25,536			513
Less: imputed interest		(7,785	)		(33	)
Total lease liabilities	$	17,751		$	480
Lease liabilities, current		1,245			423
Lease liabilities, non-current		16,506			57
Total lease liabilities	$	17,751		$	480

Note 6—Astellas Agreements

On October 21, 2022 (the “Effective Date”), the Company entered into the Option Agreement (the “Option Agreement”) with Astellas Gene Therapies, Inc. (f/k/a Audentes Therapeutics, Inc. (d/b/a Astellas Gene Therapy))(“Astellas”), pursuant to which the Company granted to Astellas an exclusive option to obtain an exclusive, worldwide, royalty and milestone-bearing right and license (A) to research, develop, make, have made, use, sell, offer for sale, have sold, import, export and otherwise exploit, or, collectively, exploit, the product known, as of the Effective Date, as TSHA-120 (the “120 GAN Product”), and any backup products with respect thereto for use in the treatment of Giant Axonal Neuropathy (“GAN”) or any other gene therapy product for use in the treatment of GAN that is controlled by Taysha or any of its affiliates or with respect to which the Company or any of its affiliates controls intellectual property rights covering the exploitation thereof (a “GAN Product”) and (B) under any intellectual property rights controlled by Taysha or any of its affiliates with respect to such exploitation (the “GAN Option”). Subject to certain extensions, the GAN Option was exercisable from the Effective Date through a specified period of time following Astellas’ receipt of (i) the formal minutes from the Type B end-of-Phase 2 meeting between Taysha and the FDA in response to the Company’s meeting request sent to the FDA on September 19, 2022 for the 120 GAN Product (the “Type B end-of-Phase 2 Meeting”), (ii) all written feedback from the FDA with respect to the Type B end-of-Phase 2 Meeting, and (iii) all briefing documents sent by Taysha to the FDA with respect to the Type B end-of-Phase 2 Meeting. In September 2023, Astellas provided written notice of its decision not to exercise the GAN Option.

Under the Option Agreement, the Company also granted to Astellas an exclusive option to obtain an exclusive, worldwide, royalty and milestone-bearing right and license (A) to exploit any Rett Product (as defined below), and (B) under any intellectual property rights controlled by Taysha or any of its affiliates with respect to such exploitation (the “Rett Option”). Subject to certain extensions, the Rett Option was exercisable from the Effective Date through a specified period of time following Astellas’ receipt of (i) certain clinical data from the female pediatric trial and (ii) certain specified data with respect to TSHA-102, such data package the “Rett Data Package” and such period, the “Rett Option Period,” related to (i) the product known, as of the Effective Date, as TSHA-102 and any backup products with respect thereto for use in the treatment of Rett syndrome, and (ii) any other gene therapy product for use in the treatment of Rett syndrome that is controlled by Taysha or any of its affiliates or with respect to which the Company or any of its affiliates controls intellectual property rights covering the exploitation thereof (a “Rett Product”). The Company delivered the Rett Data Package to Astellas in mid-2025. Under the Option Agreement, Astellas was required to decide whether to exercise the Rett Option within 90 days after Astellas’ receipt of the Rett Data Package. In October 2025, the Rett Option expired without being

exercised. Following the expiration of the Option Agreement, the Company now holds unencumbered rights to the TSHA-102 program.

During the Rett Option Period, which has now expired, the Company agreed to (A) not solicit or encourage any inquiries, offers or proposals for, or that could reasonably be expected to lead to, a Change of Control (as defined in the Option Agreement), or (B) otherwise initiate a process for a potential Change of Control, in each case, without first notifying Astellas and offering Astellas the opportunity to submit an offer or proposal to the Company for a transaction that would result in a Change of Control. If Astellas failed or declined to submit any such offer within a specified period after the receipt of such notice, the Company would have the ability to solicit third party bids for a Change of Control transaction. If Astellas delivered an offer to the Company for a transaction that would result in a Change of Control, the Company and Astellas would have attempted to negotiate in good faith the potential terms and conditions for such potential transaction that would have resulted in a Change of Control for a specified period, which period may have been shortened or extended by mutual agreement. All of Astellas’ rights with respect to a Change of Control of the Company terminated as a result of the expiration of the Rett Option Period and the Option Agreement in October 2025.

As partial consideration for the rights granted to Astellas under the Option Agreement, Astellas paid the Company an upfront payment of $20.0 million (the “Upfront Payment”). Astellas or any of its affiliates had the right, in its or their discretion and upon written notice to the Company, to offset the amount of the Upfront Payment (in whole or in part, until the full amount of the Upfront Payment has been offset) against (a) any payment(s) owed to Taysha or any of its affiliates (or to any third party on behalf of the Company) under or in connection with any license agreement entered into with respect to any GAN Product or Rett Product, including, any upfront payment, milestone payment or royalties owed to Taysha or any of its affiliates (or to any third party on behalf of the Company) under or in connection with any such license agreement or (b) any amount owed to Taysha or any of its affiliates in connection with a Change of Control transaction with Astellas or any of its affiliates. As further consideration for the rights granted to Astellas under the Option Agreement, the Company and Astellas also entered into the Astellas Securities Purchase Agreement (as defined below).

Astellas Securities Purchase Agreement

On October 21, 2022, the Company entered into a securities purchase agreement with Astellas (the “Astellas Securities Purchase Agreement”), pursuant to which the Company agreed to issue and sell to Astellas in a private placement (the “Astellas Private Placement”), an aggregate of 7,266,342 shares (the “Astellas Private Placement Shares”), of its common stock, for aggregate gross proceeds of $30.0 million. The Astellas Private Placement closed on October 24, 2022. Pursuant to the Astellas Securities Purchase Agreement, in connection with the Astellas Private Placement, Astellas has the right to designate one individual to attend all meetings of the Board in a non-voting observer capacity. The Company also granted Astellas certain registration rights with respect to the Astellas Private Placement Shares.

Accounting Treatment

In October 2022, upon closing of the Astellas Private Placement and transferring the 7,266,342 shares to Astellas, the Company recorded the issuance of shares at fair value. Fair value of the shares transferred to Astellas was calculated in accordance with ASC 820, Fair Value Measurement by analyzing the Company’s stock price for a short period of time prior to and after the transaction date as traded on the NASDAQ. The NASDAQ trading data is considered an active market and a Level 1 measurement under ASC 820. The fair value was determined to be approximately $13.95 million or $1.92 per share. The $16.1 million difference between the $30.0 million paid by Astellas and the fair market value of shares issued was allocated to the transaction price of the Option Agreement.

The Company determined that the Option Agreement falls within the scope of ASC 606, Revenue from Contracts with Customers as the development of TSHA-102 for the treatment of Rett Syndrome and TSHA-120 for the treatment of GAN are considered ordinary activities for the Company. In accordance with ASC 606, the Company evaluated the Option Agreement and identified three separate performance obligations: (1) option to obtain licensing right to GAN, (2) option to obtain licensing right to Rett and (3) performance of research and development activities in the Rett development plan. The transaction price is determined to be $36.1 million which is comprised of the $20.0 million Upfront Payment and the $16.1 million allocated from the Astellas Private Placement.

To determine the standalone selling price (“SSP”) of the Rett and GAN options, which the Company concluded to be material rights, the Company utilized the probability-weighted expected return (“PWERM”) method. The PWERM method contemplates the probability and timing of an option exercise. At contract inception, the Company estimated that the probability of exercise was 50% for each of the GAN and Rett options. The SSP of the Rett research and development activities was estimated using an expected cost-plus margin approach. The standalone selling prices of the material rights and Rett research and development activities were then used to proportionately allocate the $36.1 million transaction price to the three performance obligations. The $36.1

million transaction price was recorded as deferred revenue on the condensed consolidated balance sheet at the inception of the Astellas Transactions.

The following table summarizes the allocation of the transaction price to the three performance obligations at contract inception (amounts in thousands):


	Transaction Price Allocation
Option to obtain license for Rett	$	5,485
Option to obtain license for GAN		2,317
Rett research and development activities		28,257
Total	$	36,059

Revenue allocated to the material rights will be recognized at a point in time when each option period expires or when a decision is made by Astellas to exercise or not exercise each option. Revenue from the Rett research and development activities will be recognized as activities are performed using an input method, according to the costs incurred as related to the total costs expected to be incurred to satisfy the performance obligation. The transfer of control occurs over this time period and is a reliable measure of progress towards satisfying the performance obligation.

The Company recognized no revenue from Rett research and development activities for the three months ended September 30, 2025 and recognized $1.8 million for the three months ended September 30, 2024. The Company recognized revenue of $4.3 million and $6.3 million from Rett research and development activities for the nine months ended September 30, 2025 and 2024, respectively.

The Company had $5.5 million of deferred revenue on the condensed consolidated balance sheet as of September 30, 2025 comprised of $5.5 million for the Rett Option. The $5.5 million of deferred revenue for the Rett Option will be recognized in the fourth quarter of 2025 following the expiration of the Rett Option in October 2025. The Company had $9.8 million of deferred revenue on the condensed consolidated balance sheets as of December 31, 2024 comprised of $5.5 million for the Rett Option and $4.3 million of Rett research and development activities.

Note 7 – Term Loans

2025 Loan with Trinity Capital

On August 7, 2025 (the “Trinity Refinance Date”), the Company entered into a Loan and Security Agreement (the “2025 Trinity Term Loan Agreement”), by and among the Company, the lenders party thereto from time to time (the “2025 Trinity Lenders”) and Trinity Capital Inc., as administrative agent and collateral agent for the 2025 Trinity Lenders (“Trinity”). The 2025 Trinity Term Loan Agreement provides for (i) on the Trinity Refinance Date, $50.0 million aggregate principal amount of term loans (“Tranche A”), (ii) from the Trinity Refinance Date until March 31, 2028 an additional $25.0 million term loan facility contingent on delivering evidence satisfactory to Trinity that the Company has submitted a biologics license application (“BLA”) to the FDA for TSHA-102 in Rett Syndrome (“Tranche B”), (iii) from the Trinity Refinance Date until March 31, 2029, an additional $25.0 million term loan facility contingent on delivering evidence satisfactory to Trinity that the Company has received BLA approval from the FDA for TSHA-102 in Rett Syndrome (collectively, the “2025 Trinity Term Loans”). The Company drew $50.0 million in term loans on the Trinity Refinance Date. The existing 2023 Trinity Term Loan Agreement was terminated and the existing 2023 Trinity Term Loans were repaid concurrently with entry into the 2025 Trinity Term Loan Agreement and the draw of Tranche A.

The interest rate applicable to the 2025 Trinity Term Loans is the greater of (a) the WSJ Prime Rate plus 4.00% or (b) 11.50% per annum. The 2025 Trinity Term Loans are interest only from the Trinity Refinance Date through 48 months from the Trinity Refinance Date, which may be extended to 60 months from the Trinity Refinance Date upon the satisfaction of certain milestones set forth in the 2025 Trinity Term Loan Agreement, after which the Company is required to pay equal monthly installments of principal through August 1, 2030 (the “New Maturity Date”). As of September 30, 2025, $50.0 million was outstanding on the 2025 Trinity Term Loan, recorded as Term Loan, net on the condensed consolidated balance sheet.

Future principal debt payments on the 2025 Trinity Term Loan Agreement as of September 30, 2025 are as follows (in thousands):


Year Ending December 31,
2025	$	—
2026		—
2027		—
2028		—
2029		11,969
2030		38,031
Total principal payments	$	50,000

On the Trinity Refinance Date, the Company paid a commitment fee of $0.1 million to Trinity. Upon any future draw of 2025 Trinity Term Loans, the Company is required to pay an additional commitment fee of 1.00% of the aggregate principal amount of such 2025 Trinity Term Loans.

The 2025 Trinity Term Loans may be prepaid in full (i) from the Trinity Refinance Date through August 7, 2026, with payment of a 3.00% prepayment premium, (ii) from August 8, 2026 through August 7, 2027, with payment of a 2.00% prepayment premium, and (iii) from August 8, 2027 through, but excluding, the New Maturity Date, with payment of a 1.00% prepayment premium. Upon repayment in full of the 2025 Trinity Term Loans, the Company will pay to Trinity an end of term payment equal to 5.00% of the original principal amount of the 2025 Trinity Term Loans.

The obligations under the 2025 Trinity Term Loan Agreement are secured by a perfected security interest in all of the Company’s assets except for certain customarily excluded property pursuant to the terms of the 2025 Trinity Term Loan Agreement. There are no financial or minimum cash balance covenants and no warrants associated with the 2025 Trinity Term Loan Agreement. The 2025 Trinity Term Loan Agreement contains various covenants that limit the Company’s ability to engage in specified types of transactions without the consent of Trinity and the New Trinity Lenders which include, among others, incurring or assuming certain debt; merging, consolidating or acquiring all or substantially all of the capital stock or property of another entity; changing the nature of the Company’s business; changing the Company’s organizational structure or type; licensing, transferring or disposing of certain assets; granting certain types of liens on the Company’s assets; making certain investments; and paying cash dividends.

The 2025 Trinity Term Loan Agreement contains customary representations and warranties, affirmative and negative covenants and events of default, including payment default, breach of covenants, change of control, and material adverse effects. Upon the occurrence of an event of default, a default interest rate of an additional 5.00% per annum may be applied to the outstanding loan balances, and the New Trinity Lenders may declare all outstanding obligations immediately due and payable and exercise all of its rights and remedies as set forth in the 2025 Trinity Term Loan Agreement and under applicable law.

The Company assessed the terms and features of the 2025 Trinity Term Loans and determined that the 2025 Trinity Term Loan constituted a debt modification under ASC 470-50, Debt - Modifications and Extinguishments (“ASC 450”). As such, the 2025 Trinity Term Loans are accounted for as a continuation of the original debt, and no gain or loss on extinguishment was recognized. The Company continues to apply the fair value option under ASC 825, Financial Instruments (“ASC 825”) which was initially elected at the time of the 2023 Trinity Term Loan Agreement.

Under the fair value option, the 2025 Trinity Term Loans are measured at fair value on a recurring basis, with changes in fair value recognized in other income (expense) in the condensed consolidated statements of operations. The Company has not elected to present interest expense separately from changes in fair value and therefore will not present interest expense associated with the 2025 Trinity Term Loans. Any changes in fair value attributable to instrument-specific credit risk are presented in other comprehensive income or loss, if material. Under the fair value option, debt issuance costs are expensed as incurred. The Company incurred $1.1 million of debt issuance costs, of which $0.1 million were paid to Trinity and $1.0 were paid to third parties associated with the 2025 Trinity Term Loans. The debt issuance costs were recorded within general and administrative expense in the condensed consolidated statements of operations for the nine months ended September 30, 2025.

In connection with the 2025 Trinity Term Loan Agreement, the Company entered into a Success Fee Agreement with Trinity which specifies the terms regarding a fee in the amount of $0.5 million plus 5% of the principal amount of the funded 2025 Trinity Term Loans under Tranche B (the “2025 Success Fee”). The 2025 Success Fee is payable upon the achievement of certain corporate development value-inflection milestones. The 2025 Success Fee survives the termination of the 2025 Trinity Term Loans and expires on the earlier of ten years from the Trinity Refinance Date, or payment in full in cash of the 2025 Success Fee. The Company determined that the 2025 Success Fee represents a freestanding financial instrument and should be accounted for as a derivative

liability under ASC 815, Derivatives and Hedging (“ASC 815”) and recorded a liability within other non-current liabilities on the consolidated balance sheet, at fair value on the Trinity Refinance Date and will be marked-to-market at the end of each reporting period with gains and losses recognized as a component of other income (expense) in the condensed consolidated statements of operations.

The proceeds from the 2025 Trinity Term Loans were allocated to the 2025 Success Fee and 2025 Trinity Term Loans based on their respective fair values on the Trinity Refinance Date. The fair values were determined utilizing a probability-weighted income approach, including variables for the timing of a success event and other probability estimates.

The Company determined the fair value of the 2025 Trinity Term Loans and the 2025 Success Fee using a probability-weighted income approach and recorded the loan at fair value of $49.8 million and the 2025 Success Fee liability at fair value of $0.2 million in the condensed consolidated balance sheet at issuance. The Company calculated the discounted cash flows of the 2025 Trinity Term Loans using a discount rate of 13.86% and adjusted for the probability of various repayment scenarios. The Company calculated the discounted cash flows of the 2025 Success Fee liability, using a discount rate of 13.86% then adjusted for the probability of achievement of certain corporate development value-inflection milestones.

2023 Loan with Trinity Capital

On November 13, 2023 (the “Trinity Closing Date”), the Company entered into a Loan and Security Agreement (the “2023 Trinity Term Loan Agreement”), by and among the Company, the lenders party thereto from time to time (the “Trinity Lenders”) and Trinity Capital Inc., as administrative agent and collateral agent for the Trinity Lenders (“Trinity”). The 2023 Trinity Term Loan Agreement provided for, on the Trinity Closing Date, $40.0 million aggregate principal amount of term loans (collectively, the “2023 Trinity Term Loans”). The Company drew the Trinity Term Loans in full on the Trinity Closing Date.

The interest rate applicable to the 2023 Trinity Term Loans was the greater of (a) the Wall Street Journal (“WSJ”) Prime Rate plus 4.50% or (b) 12.75% per annum. The 2023 Trinity Term Loans were interest only from the Trinity Closing Date through 36 months from the Trinity Closing Date, which could have been extended to 48 months from the Trinity Closing Date upon the satisfaction of certain milestones set forth in the 2023 Trinity Term Loan Agreement, after which the Company was required to pay equal monthly installments of principal through November 13, 2028 (the “Maturity Date”).

The 2023 Trinity Term Loans could have been prepaid in full (i) from the Trinity Closing Date through November 13, 2024, with payment of a 3.00% prepayment premium, (ii) from November 13, 2024 through November 13, 2025, with payment of a 2.00% prepayment premium, and (iii) from November 13, 2025 through, but excluding, the Maturity Date, with payment of a 1.00% prepayment premium. On the Trinity Closing Date, the Company paid to Trinity a commitment fee of 1.00% of the original principal amount of the 2023 Trinity Term Loans. Upon repayment in full of the 2023 Trinity Term Loans, the Company paid to Trinity an end of term payment equal to $0.6 million.

The obligations under the 2023 Trinity Term Loan Agreement were secured by a perfected security interest in all of the Company’s assets except for certain customarily excluded property pursuant to the terms of the 2023 Trinity Term Loan Agreement.

The Company assessed the terms and features of the 2023 Trinity Term Loans and determined that the Company was eligible to elect the fair value option under ASC 825. The 2023 Trinity Term Loans contain various embedded features and the election of the fair value option allowed the Company to bypass analysis of potential embedded derivatives and further analysis of bifurcation of any recognized financial liabilities. Under the fair value option, the financial liability is initially measured at its fair value on the issue date and subsequently remeasured at estimated fair value on a recurring basis at each reporting date. Changes in the fair value of the 2023 Trinity Term Loans, which include accrued interest, if any, are recorded as a component of other expense (income) in the condensed consolidated statements of operations. The Company did not elect to present interest expense separately from changes in fair value and therefore did not present interest expense associated with the 2023 Trinity Term Loans. Any changes in fair value caused by instrument-specific credit risk were presented separately in other comprehensive income or loss if material.

In connection with the 2023 Trinity Term Loans, the Company entered into a Success Fee Agreement with Trinity which specifies the terms regarding a fee in the amount of 10% of the principal amount of the funded 2023 Trinity Term Loans (the “2023 Success Fee”). The 2023 Success Fee is payable upon the achievement of certain corporate development value-inflection milestones. The 2023 Success Fee survives the termination of the 2023 Trinity Term Loans and expires on the earlier of ten years, or payment in full in cash of the Success Fee. The 2023 Success Fee remains in effect after the termination of the 2023 Trinity Term Loans upon entry into the 2025 Trinity Term Loan Agreement and the draw of Tranche A.

The Company determined that the Success Fee represents a freestanding financial instrument and should be accounted for as a derivative liability under ASC 815 and recorded a liability within other non-current liabilities on the consolidated balance sheet, at

fair value on the Trinity Closing Date and will be marked-to-market at the end of each reporting period with gains and losses recognized as a component of other income (expense) in the condensed consolidated statements of operations.

Fair Value

The 2025 Trinity Term Loans are accounted for as a continuation of the original debt in accordance with ASC 450, and the Company continues to apply the fair value option under ASC 825, which was initially elected at the time of the 2023 Trinity Term Loan Agreement. The Company remeasured the 2025 Trinity Term Loans, 2025 Success Fee and 2023 Success Fee as of September 30, 2025 using a probability weighted income approach. The Company calculated the discounted cash flows of the 2025 Trinity Term Loans using a discount rate of 13.43% and adjusted for the probability of various repayment scenarios. The Company calculated the discounted cash flows of the 2023 Success Fee and 2025 Success Fee, (the “Success Fees”), using a discount rate of 13.43% then adjusted for the probability of achievement of certain corporate development value-inflection milestones. As of September 30, 2025, the Company recorded the Tranche A Loan at a fair value of $50.9 million and the Success Fees at $1.5 million in the consolidated balance sheet.

The following table reconciles the change in fair value of the 2023 Trinity Term Loans and 2025 Trinity Term Loans, (the “Trinity Term Loans”), during the nine months ended September 30, 2025 (in thousands):


Trinity Term Loans
Beginning fair value balance as of January 1, 2025	$	43,942
Repayment of 2023 Term Loan		(40,612	)
Beginning fair value balance of 2025 Trinity Term Loan on August 7, 2025		49,783
Change in fair value reported in statements of operations		627
Change in fair value reported in comprehensive loss		(2,888	)
Ending fair value balance as of September 30, 2025	$	50,852

The following table reconciles the change in fair value of the Trinity Term Loans during the three months ended September 30, 2025 (in thousands):


Trinity Term Loans
Beginning fair value balance as of July 1, 2025	$	41,051
Repayment of 2023 Term Loan		(40,612	)
Beginning fair value balance of 2025 Trinity Term Loan on August 7, 2025		49,783
Change in fair value reported in statements of operations		186
Change in fair value reported in comprehensive loss		444
Ending fair value balance as of September 30, 2025	$	50,852

During the three and nine months ended September 30, 2025, the Company recorded $1.3 million and $3.9 million, respectively, of interest expense within change in fair value of term loans, all of which was paid as of September 30, 2025. During the three and nine months ended September 30, 2024, the Company recorded $1.3 million and $3.9 million, respectively, of interest expense within change in fair value of term loans, all of which was paid as of September 30, 2024.

The following table reconciles the change in fair value of the Success Fees liability during the nine months ended September 30, 2025 (in thousands):


Success Fees
Beginning fair value balance as of January 1, 2025	$	930
Beginning fair value balance of 2025 Success Fee on August 7, 2025		217
Change in fair value of Success Fees		372
Ending fair value balance as of September 30, 2025	$	1,519

The following table reconciles the change in fair value of the Success Fees liability during the three months ended September 30, 2025 (in thousands):


Success Fees
Beginning fair value balance as of July 1, 2025	$	1,229
Beginning fair value balance of 2025 Success Fee on August 7, 2025		217
Change in fair value of Success Fees		73
Ending fair value balance as of September 30, 2025	$	1,519

Note 8—Research, Collaboration and License Agreements

UT Southwestern Agreement

On November 19, 2019, the Company entered into a research, collaboration and license agreement (“UT Southwestern Agreement”) with the Board of Regents of the University of Texas System on behalf of The University of Texas Southwestern Medical Center (“UT Southwestern”). Under the UT Southwestern Agreement, UT Southwestern is primarily responsible for preclinical development activities with respect to licensed products for use in certain specified indications (up to investigational new drug application-enabling studies), and the Company is responsible for all subsequent clinical development and commercialization activities with respect to the licensed products. UT Southwestern will conduct such preclinical activities for a two-year period under mutually agreed upon sponsored research agreements that were entered into beginning in April 2020. During the initial research phase, the Company has the right to expand the scope of specified indications under the UT Southwestern Agreement.

In connection with the UT Southwestern Agreement, the Company obtained an exclusive, worldwide, royalty-free license under certain patent rights of UT Southwestern and a non-exclusive, worldwide, royalty-free license under certain know-how of UT Southwestern, in each case to make, have made, use, sell, offer for sale and import licensed products for use in certain specified indications. Additionally, the Company obtained a non-exclusive, worldwide, royalty-free license under certain patents and know-how of UT Southwestern for use in all human uses, with a right of first refusal to obtain an exclusive license under certain of such patent rights and an option to negotiate an exclusive license under other of such patent rights. The Company is required to use commercially reasonable efforts to develop, obtain regulatory approval for, and commercialize at least one licensed product.

On April 2, 2020, the Company amended the UT Southwestern Agreement to include the addition of another licensed product and certain indications, and a right of first refusal to the Company over certain patient dosing patents. No additional consideration was transferred in connection with this amendment. In March 2022, the Company and UT Southwestern mutually agreed to revise the payment schedules and current performance expectations of the current sponsored research agreements under the UT Southwestern Agreement and defer payments by fifteen months. In December 2023, the Company and UT Southwestern mutually agreed to terminate specific sponsored research agreements.

The UT Southwestern Agreement expires on a country-by-country and licensed product-by-licensed product basis upon the expiration of the last valid claim of a licensed patent in such country for such licensed product. After the initial research term, the Company may terminate the agreement, on an indication-by-indication and licensed product-by-licensed product basis, at any time upon specified written notice to UT Southwestern. Either party may terminate the agreement upon an uncured material breach of the agreement or insolvency of the other party. In December 2023 and March 2025, the Company transferred rights to specific indications back to UT Southwestern.

In November 2019, as partial consideration for the license rights granted under the UT Southwestern Agreement, the Company issued 2,179,000 shares of its common stock, or 20% of its then outstanding fully-diluted common stock, to UT Southwestern. The Company does not have any future milestone or royalty obligations to UT Southwestern under the UT Southwestern Agreement other than costs related to maintenance of patents.

Abeona CLN1 Agreements

In August 2020, the Company entered into license and inventory purchase agreements with Abeona Therapeutics Inc. (“Abeona”) for worldwide exclusive rights to certain intellectual property rights and know-how relating to the research, development and manufacture of ABO-202, an AAV-based gene therapy for CLN1 disease (also known as infantile Batten disease). Under the terms of the agreements, the Company made initial cash payments to Abeona of $3.0 million for the license fee and $4.0 million for purchase of clinical materials and reimbursement for previously incurred development costs in October 2020. In exchange for the license rights, the Company recorded an aggregate of $7.0 million within research and development expenses in the consolidated

statements of operations for the year ended December 31, 2020 since the acquired license or acquired inventory do not have an alternative future use. The Company is obligated to make up to $26.0 million in regulatory-related milestones and up to $30.0 million in sales-related milestones per licensed CLN1 product. The Company will also pay an annual earned royalty in the high single digits on net sales of any licensed CLN1 products. The license agreement expires on a country-by-country and licensed product-by-licensed product basis upon the expiration of the last royalty term of a licensed product. Either party may terminate the agreement upon an uncured material breach of the agreement or insolvency of the other party. The Company may terminate the license agreement for convenience upon specified prior written notice to Abeona.

In December 2021, a regulatory milestone was triggered in connection with this agreement and therefore the Company recorded $3.0 million within research and development expenses in the consolidated statements of operations for the year ended December 31, 2021. The milestone fee was paid in January 2022 and classified as an investing cash outflow in the consolidated statements of cash flows. No additional milestone payments were triggered in connection with this agreement during the nine months ended September 30, 2025.

Abeona Rett Agreement

On October 29, 2020, the Company entered into a license agreement (the “Abeona Rett Agreement”) with Abeona pursuant to which the Company obtained an exclusive, worldwide, royalty-bearing license, with the right to grant sublicenses under certain patents, know-how and materials originally developed by the University of North Carolina at Chapel Hill, the University of Edinburgh and Abeona to research, develop, manufacture, have manufactured, use, and commercialize licensed products for gene therapy and the use of related transgenes for Rett syndrome.

Subject to certain obligations of Abeona, the Company is required to use commercially reasonable efforts to develop at least one licensed product and commercialize at least one licensed product in the United States.

In connection with the Abeona Rett Agreement, the Company paid Abeona a one-time upfront license fee of $3.0 million which was recorded in research and development expenses in the consolidated statements of operations for the year ended December 31, 2020 since the acquired license does not have an alternative future use. The Company is obligated to pay Abeona up to $26.5 million in regulatory-related milestones and up to $30.0 million in sales-related milestones per licensed Rett product and high single-digit royalties on net sales of licensed Rett products. Royalties are payable on a licensed product-by-licensed product and country-by-country basis until the latest of the expiration or revocation or complete rejection of the last licensed patent covering such licensed product in the country where the licensed product is sold, the loss of market exclusivity in such country where the product is sold, or, if no licensed product exists in such country and no market exclusivity exists in such country, ten years from first commercial sale of such licensed product in such country.

The Abeona Rett Agreement expires on a country-by-country and licensed product-by-licensed product basis upon the expiration of the last royalty term of a licensed product. Either party may terminate the agreement upon an uncured material breach of the agreement or insolvency of the other party. The Company may terminate the agreement for convenience upon specified prior written notice to Abeona.

In March 2022, the Company’s clinical trial application, (“CTA”) filing for TSHA-102 for the treatment of Rett Syndrome was approved by Health Canada and therefore triggered a regulatory milestone payment in connection with this agreement. The Company recorded $1.0 million within research and development expenses and classified the payment as an investing cash outflow in the consolidated statements of cash flows. In May 2023, the Company dosed the first patient with TSHA-102 in the Phase 1/2 REVEAL trial evaluating the safety and preliminary efficacy of TSHA-102 in adult patients with Rett syndrome and therefore triggered a milestone payment in connection with the Abeona Rett Agreement. The Company recorded $3.5 million within research and development expenses in the condensed consolidated statements of operations for the year ended December 31, 2023. This milestone fee was paid in August 2023 and classified as an investing cash outflow in the consolidated statements of cash flows for the year ended December 31, 2023. No additional milestone payments were made or triggered in connection with this agreement during the nine months ended September 30, 2025.

Note 9—Stock-Based Compensation

On July 1, 2020, the Company’s board of directors approved the 2020 Equity Incentive Plan (“Previous Plan”) which permitted the granting of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and other stock-based awards to employees, directors, officers and consultants. As of September 16, 2020, the approval date of the New Plan (as defined below), no additional awards will be granted under the Previous Plan. The terms of the Previous Plan will continue to govern the terms of outstanding equity awards that were granted prior to approval of the New Plan.

On September 16, 2020, the Company’s stockholders approved the 2020 Stock Incentive Plan (“New Plan”), which became effective upon the execution of the underwriting agreement in connection with the IPO. The number of shares of common stock reserved for issuance under the New Plan automatically increases on January 1 of each year, for a period of ten years, from January 1, 2021, continuing through January 1, 2030, by 5% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Company’s board of directors (the “New Plan Evergreen Provision”). Pursuant to this provision, on January 1, 2025, the Company increased the number of shares of common stock reserved for issuance under the New Plan by 10,247,165 shares.

Furthermore, on September 16, 2020, the Company’s stockholders approved the Employee Stock Purchase Plan (“ESPP”), which became effective upon the execution of the underwriting agreement in connection with the IPO. The maximum number of shares of common stock that may be issued under the ESPP will not exceed 362,000 shares of common stock, plus the number of shares of common stock that are automatically added on January 1st of each year for a period of up to ten years, commencing on the first January 1 following the IPO and ending on (and including) January 1, 2030, in an amount equal to the lesser of (i) one percent (1.0%) of the total number of shares of capital stock outstanding on December 31st of the preceding calendar year, and (ii) 724,000 shares of common stock. Pursuant to this provision, on January 1, 2025 the Company increased the number of shares of common stock reserved for issuance under the ESPP by 724,000. The Company has issued an aggregate of 358,514 shares of common stock under the ESPP as of September 30, 2025.

On December 15, 2023, the Company’s board of directors adopted the Taysha Gene Therapies, Inc. 2023 Inducement Plan (the “Inducement Plan”). The Inducement Plan was adopted without stockholder approval pursuant to Nasdaq Listing Rule 5635(c)(4). The Board reserved 4,000,000 shares of the Company’s common stock for issuance under the Inducement Plan. On December 12, 2024, the Company reserved an additional 2,000,000 shares of the Company’s common stock for issuance under the Inducement Plan.

The only persons eligible to receive grants of Inducement Awards (as defined below) under the Inducement Plan are individuals who satisfy the standards for inducement grants under Nasdaq Listing Rule 5635(c)(4). The Inducement Plan will be administered by the Board and the Company’s Compensation Committee. Inducement Awards may only be granted by: (i) the Compensation Committee, provided such committee is comprised solely of “independent directors” (as defined by Nasdaq Listing Rule 5605(a)(2)) or (ii) a majority of the Company’s “independent directors.” An “Inducement Award” means any right to receive the Company’s common stock, cash or other property granted under the Inducement Plan (including nonstatutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards, performance cash awards or other stock-based awards).

The number of shares available for grant under the Company’s incentive plans were as follows:


	New			Inducement
	Plan			Plan			Total
Available for grant - January 1, 2025		701,430			2,999,700			3,701,130
Plan adjustments and amendments		10,247,165			—			10,247,165
Grants		(15,959,976	)		(2,640,000	)		(18,599,976	)
Forfeitures		1,136,093			1,283,950			2,420,043
Available for grant net of reserve - September 30, 2025		(3,875,288	)		1,643,650			(2,231,638	)

In August 2025, the Company’s board of directors approved the grant of 5,765,000 PSUs (as defined below) under the New Plan that are eligible to vest upon the achievement of various clinical and regulatory performance conditions. The grant of these awards exhausted the existing share reserve under the New Plan, and the Company used 3,875,288 shares of the shares to be issued on January 1, 2026 under the New Plan Evergreen Provision, which is permissible under section 2(c) of the New Plan, which limits the number of shares of common stock that may be issued pursuant to awards but does not limit the granting of awards. The Company expects to increase the shares of common stock reserved for issuance under the New Plan to cover the deficit on January 1, 2026 pursuant to the New Plan Evergreen Provision.

Stock Options

For the three months ended September 30, 2025, a total of 345,000 shares of common stock under the Inducement Plan were awarded with a weighted-average grant date fair value per share of $2.09. For the nine months ended September 30, 2025, a total of 9,503,984 shares of common stock under the New Plan and the Inducement Plan were awarded with a weighted-average grant date fair value per share of $1.44. The stock options vest over one to four years and have a ten-year contractual term.

The following weighted-average assumptions were used to estimate the fair value of time-based vesting stock options that were granted during the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Risk-free interest rate		3.88	%		3.99	%		4.32	%		4.04	%
Expected dividend yield		—			—			—			—
Expected term (in years)		6.1			6.1			6.0			6.1
Expected volatility		90	%		90	%		89	%		89	%

The following table summarizes time-based vesting stock option activity during the nine months ended September 30, 2025:

          
         Weighted

          
         Weighted

         Average

         Aggregate

          
         Average

         Remaining

         Intrinsic

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Taysha Gene Therapies, Inc. 10-Q