SEC Filing | Taysha Gene Therapies

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10-Q

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 June 30, 2024


☐	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 August 12, 2024, the registrant had 204,943,306 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’ (Deficit) 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	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	56
Item 4.	Controls and Procedures	56
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 3.	Defaults Upon Senior Securities	58
Item 4.	Mine Safety Disclosures	58
Item 5.	Other Information	58
Item 6.	Exhibits	59
Signatures		60

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)



	June 30, 2024			December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	172,743		$	143,940
Restricted cash		449			449
Prepaid expenses and other current assets		3,278			3,479
Assets held for sale		2,000			2,000
Total current assets		178,470			149,868
Restricted cash		2,151			2,151
Property, plant and equipment, net		10,513			10,826
Operating lease right-of-use assets		8,971			9,582
Other non-current assets		288			304
Total assets	$	200,393		$	172,731
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	8,718		$	6,366
Accrued expenses and other current liabilities		11,875			12,284
Deferred revenue		13,583			18,106
Total current liabilities		34,176			36,756
Term loan, net		37,835			40,508
Operating lease liability, net of current portion		18,134			18,953
Other non-current liabilities		1,380			1,577
Total liabilities		91,525			97,794
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 June 30, 2024 and December 31, 2023		—			—
Common stock, $0.00001 par value per share; 400,000,000 shares authorized and 201,381,450 and 186,960,193 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		2			2
Additional paid-in capital		664,457			587,942
Accumulated other comprehensive income		2,405			—
Accumulated deficit		(557,996	)		(513,007	)
Total stockholders’ equity		108,868			74,937
Total liabilities and stockholders' equity	$	200,393		$	172,731

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 June 30,						For the Six Months Ended June 30,
	2024			2023			2024			2023
Revenue	$	1,112		$	2,395		$	4,523		$	7,101
Operating expenses:
Research and development		15,073			19,791			35,730			32,305
General and administrative		7,338			5,988			14,422			14,739
Total operating expenses		22,411			25,779			50,152			47,044
Loss from operations		(21,299	)		(23,384	)		(45,629	)		(39,943	)
Other income (expense):
Change in fair value of warrant liability		195			—			(142	)		—
Change in fair value of term loan		(1,279	)		—			(2,332	)		—
Interest income		1,440			223			3,133			542
Interest expense		(27	)		(1,440	)		(56	)		(2,814	)
Other (expense) income		42			3			37			(5	)
Total other income (expense), net		371			(1,214	)		640			(2,277	)
Net loss	$	(20,928	)	$	(24,598	)	$	(44,989	)	$	(42,220	)
Net loss per common share, basic and diluted	$	(0.09	)	$	(0.38	)	$	(0.19	)	$	(0.66	)
Weighted average common shares outstanding, basic and diluted		232,821,553			64,244,531			232,035,448			63,755,435

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 June 30,						For the Six Months Ended June 30,
	2024			2023			2024			2023
Net loss	$	(20,928	)	$	(24,598	)	$	(44,989	)	$	(42,220	)
Other comprehensive income:
Change in fair value of terms loan attributable to instrument specific credit risk		2,656			—			2,405			—
Comprehensive loss	$	(18,272	)	$	(24,598	)	$	(42,584	)	$	(42,220	)

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

Taysha Gene Therapies, Inc.

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

(in thousands, except share data)

(Unaudited)

For the Three Months Ended June 30, 2024


					Additional					Accumulated			Total
	Common Stock				Paid-in		Accumulated			Other			Stockholders'
	Shares		Amount		Capital		Deficit			Comprehensive Loss			Deficit
Balance as of March 31, 2024		187,018,275	$	2	$	591,166	$	(537,068	)	$	(251	)	$	53,849
Stock-based compensation		—		—		3,332		—			—			3,332
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 $5,024		14,361,113		—		69,957		—			—			69,957
Issuance of common stock upon exercise of stock options, net		2,062		—		2		—			—			2
Loss on instrument-specific credit risk		—		—		—		—			2,656			2,656
Net loss		—		—		—		(20,928	)		—			(20,928	)
Balance as of June 30, 2024		201,381,450	$	2	$	664,457	$	(557,996	)	$	2,405		$	108,868

For the Three Months Ended June 30, 2023


					Additional					Accumulated		Total
	Common Stock				Paid-in		Accumulated			Other		Stockholders'
	Shares		Amount		Capital		Deficit			Comprehensive Loss		Equity
Balance as of March 31, 2023		63,473,349	$	1	$	404,114	$	(419,063	)	$	—	$	(14,948	)
Stock-based compensation		—		—		2,222		—			—		2,222
Issuance of common stock in private placement, net of offering costs of $ 40		705,218		—		210		—			—		210
Issuance of common stock upon vesting and settlement of restricted stock units		254,070		—		—		—			—		—
Net loss		—		—		—		(24,598	)		—		(24,598	)
Balance as of June 30, 2023		64,432,637	$	1	$	406,546	$	(443,661	)	$	—	$	(37,114	)

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

Taysha Gene Therapies, Inc.

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

(in thousands, except share data)

(Unaudited)

For the Six Months Ended June 30, 2024


					Additional
	Common Stock				Paid-in		Accumulated			Accumulated Other		Total
	Shares		Amount		Capital		Deficit			Comprehensive Loss		Stockholders' Equity
Balance as of December 31, 2023		186,960,193	$	2	$	587,942	$	(513,007	)	$	—	$	74,937
Stock-based compensation		—		—		6,530		—			—		6,530
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 $5,024		14,361,113		—		69,957		—			—		69,957
Issuance of common stock upon vesting and settlement of restricted stock units		11,282		—		—		—			—		—
Issuance of common stock under ESPP		46,800		—		26		—			—		26
Issuance of common stock upon exercise of stock options		2,062		—		2		—			—		2
Gain on instrument-specific credit risk		—		—		—		—			2,405		2,405
Net loss		—		—		—		(44,989	)		—		(44,989	)
Balance as of June 30, 2024		201,381,450	$	2	$	664,457	$	(557,996	)	$	2,405	$	108,868

For the Six Months Ended June 30, 2023



					Additional							Total
	Common Stock				Paid-in		Accumulated			Accumulated Other		Stockholders'
	Shares		Amount		Capital		Deficit			Comprehensive Loss		Equity (Deficit)
Balance as of December 31, 2022		63,207,507	$	1	$	402,389	$	(401,441	)	$	—	$	949
Stock-based compensation		—		—		3,897		—			—		3,897
Issuance of common stock in private placement, net of offering costs of $ 40		705,218		—		210		—			—		210
Issuance of common stock upon vesting and settlement of restricted stock units, net		483,992		—		—		—			—		—
Issuance of common stock under ESPP		35,920		—		50		—			—		50
Net loss		—		—		—		(42,220	)		—		(42,220	)
Balance as of June 30, 2023		64,432,637	$	1	$	406,546	$	(443,661	)	$	—	$	(37,114	)

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 Six Months Ended June 30,
	2024			2023
Cash flows from operating activities
Net loss	$	(44,989	)	$	(42,220	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		647			674
Stock-based compensation		6,530			3,897
Research and development license expense		—			3,500
Change in fair value of warrant liability		142			—
Non-cash change in fair value of term loan		(268	)		—
Non-cash lease expense		619			603
Other		1			387
Changes in operating assets and liabilities:
Prepaid expenses and other assets		129			509
Accounts payable		2,365			2,123
Accrued expenses and other liabilities		(1,955	)		(1,324	)
Deferred revenue		(4,523	)		(7,101	)
Net cash used in operating activities		(41,302	)		(38,952	)
Cash flows from investing activities
Purchase of property, plant and equipment		(341	)		(3,852	)
Net cash used in investing activities		(341	)		(3,852	)
Cash flows from financing activities
Debt issuance costs for term loan		(18	)		—
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		70,481			—
Proceeds from issuance of common stock from private placement		—			500
Payment of offering costs		—			(387	)
Proceeds from common stock issuances under ESPP		26			50
Other		(43	)		(156	)
Net cash provided by financing activities		70,446			7
Net increase (decrease) in cash, cash equivalents and restricted cash		28,803			(42,797	)
Cash, cash equivalents and restricted cash at the beginning of the period		146,540			90,517
Cash, cash equivalents and restricted cash at the end of the period	$	175,343		$	47,720
Cash and cash equivalents		172,743			45,083
Restricted cash		2,600			2,637
Cash, cash equivalents and restricted cash at the end of the period	$	175,343		$	47,720
Supplemental disclosure of cash flow information:
Cash paid for interest	$	2,655		$	2,399
Supplemental disclosure of noncash investing and financing activities:
Issuance of warrants in connection with private placement		—		252
Research and development license not yet paid		—			3,500
Offering costs not yet paid		445			—

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

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, 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 June 30, 2024.

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 June 30, 2024, the Company had an accumulated deficit of $558.0 million. The Company expects to continue to incur significant expenses and operating losses for the foreseeable future.

On June 26, 2024, the Company entered into an underwriting agreement (the “June 2024 Underwriting Agreement”) with Jefferies LLC and Goldman Sachs & Co. LLC, as representatives of the several underwriters set forth therein (collectively, the “Underwriters”), to issue and sell 14,361,113 shares of the Company’s common stock and, in lieu of common stock to certain investors, pre-funded warrants to purchase 18,972,221 shares of its common stock in an underwritten public offering (the “June 2024 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 $2.25 per share of common stock and $2.249 per pre-funded warrant, which was the price to the public of each share of common stock sold in the June 2024 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 June 2024 Underwriting Agreement at a price of $2.115 per share and $2.114 per pre-funded warrant, respectively. See Note 10 for additional information. The initial closing of the June 2024 Offering occurred on June 27, 2024. In addition, the Company granted the Underwriters an option to purchase, for a period of 30 days, up to an additional 5,000,000 shares of common stock. On July 9, 2024, the Underwriters exercised their option to purchase an additional 3,235,000 shares of common stock. The total net proceeds from the June 2024 Offering were approximately $76.8 million, including the proceeds from the Underwriter’s option, after deducting underwriting discounts and commissions and offering expenses. See Note 16 for additional information.

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 June 30, 2024, the Company had cash and cash equivalents of $172.7 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, 2023, filed with the Securities and Exchange Commission (“SEC”) on March 19, 2024 (the “2023 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, 2023 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 2023 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 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 2023 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 2023 Annual Report.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting – Improvements to Reportable Segment Disclosures, to improve segment disclosure requirements under ASC 280, Segment Reporting, through enhancing disclosures about significant segment expenses. The guidance requires entities to provide significant segment expenses that are regularly provided to the chief operating decision maker and other segment expenses included in each reported measure of segment profitability. The ASU also enhances interim segment reporting requirements by aligning interim disclosures with information that must be disclosed annually in accordance with ASC 280. The guidance is effective for annual periods beginning after December 15, 2023, and interim periods

beginning after December 15, 2024, applied retrospectively with early adoption permitted. The Company is still evaluating the impact this ASU will have on its consolidated financial statements and related 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):


	June 30, 2024
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents – money market funds	$	172,103	$	172,103	$	—	$	—
Total assets	$	172,103	$	172,103	$	—	$	—
Liabilities:
Trinity Term Loans	$	37,835	$	—	$	—	$	37,835
Success Fee Derivative liability		800		—		—		800
SSI Warrant liability		596		—		—		596
Total liabilities	$	39,231	$	—	$	—	$	39,231


	December 31, 2023
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents – money market funds	$	142,425	$	142,425	$	—	$	—
Total assets	$	142,425	$	142,425	$	—	$	—
Liabilities:
Trinity Term Loans	$	40,508	$	—	$	—	$	40,508
Success Fee Derivative liability		800		—		—		800
SSI Warrant liability		454		—		—		454
Total liabilities	$	41,762	$	—	$	—	$	41,762

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 liability 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 Fee.

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):


	June 30, 2024		December 31, 2023
Prepaid research and development	$	1,502	$	1,412
Prepaid clinical trial		674		802
Deferred offering costs		601		681
Prepaid insurance		165		292
Prepaid bonus		130		—
Other		206		292
Total prepaid expenses and other current assets	$	3,278	$	3,479

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


	June 30, 2024			December 31, 2023
Leasehold improvements	$	2,117		$	2,117
Laboratory equipment		3,008			2,868
Computer equipment		1,271			1,133
Furniture and fixtures		864			864
Construction in progress		6,882			6,823
		14,142			13,805
Accumulated depreciation		(3,629	)		(2,979	)
Property, plant and equipment, net	$	10,513		$	10,826

Property, plant and equipment, net includes $0.8 million and $1.0 million of assets capitalized as finance leases as of June 30, 2024 and December 31, 2023, respectively.

Depreciation expense was $0.3 million and $0.4 million for the three months ended June 30, 2024 and 2023, respectively. Depreciation expense was $0.6 million and $0.7 million for the six months ended June 30, 2024 and 2023, respectively.

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


	June 30, 2024		December 31, 2023
Accrued research and development	$	2,613	$	3,467
Accrued compensation		2,885		3,423
Accrued clinical trial		2,178		1,851
Lease liabilities, current portion		1,754		1,646
Accrued professional and consulting fees		1,072		330
Warrant liability		596		454
Accrued severance		—		390
Other		777		723
Total accrued expenses and other current liabilities	$	11,875	$	12,284

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 June 30, 2024 and December 31, 2023 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 six months ended June 30, 2024 and 2023 (in thousands):


	Three Months Ended June 30,				For the Six Months Ended June 30,
	2024		2023		2024		2023
Operating lease cost	$	675	$	708	$	1,321	$	1,360
Variable lease cost		198		243		396		486
Total lease cost	$	873