Taysha Gene Therapies (NASDAQ:TSHA) jumped 50% overnight after Japan’s Astellas Pharma (OTCMKTS:ALPMY) bought 15% of the company and exclusive marketing rights to its genetic therapies.
Taysha is working on two Adeno Associated Virus (AAV) therapies for genetic brain disorders. The most important may be TSHA-102 against Rett’s Disease, for which there is no known cure.
TSHA Stock: Astellas Rising
Adeno Associated Viruses are considered the safest way of altering human genes, especially for nervous system disorders like Rett’s. The native virus does not cause disease, so altering its genome, then infecting a body with it can in theory “fix” a harmful mutation. But there remain challenges of safety and efficacy. Turning promising science into usable drugs can take years.
I compare gene therapy companies like Taysha to oil wildcatters from the 1930s. Many promising lab therapies don’t work out in clinical trials. But a single success can result in a gusher of money. What was true in the oil patch is also true in the lab. It helps to have a deep-pocketed partner.
Astellas is best known for its cancer drugs. It has a $24 billion market cap and has been working on gene therapies for about three years. Astellas bought Audentes Therapeutics of San Francisco for $3 billion in 2020. While that deal has been troubled by patient deaths and the cancellation of a drug for Duchenne muscular dystrophy, Astellas still bought a manufacturing plant in North Carolina for making AAV drugs this year.
The deal is a lifeline for Taysha, whose stock is down 90% in 2022. The company went public in 2020 at $20/share. The overnight jump of 50% brings the price to $2.29.
Taysha needs the money because it has burned through most of its initial public offering (IPO) cash and has yet to bring a drug to market. The company had just $66.2 million in cash as of June 30.
What Happens Next?
This is not a short-term deal. The Astellas money will help Taysha continue its research, but positive results are needed before it’s more than a speculation. Until there’s a breakthrough in a clinical trial, even Astellas is speculating.
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On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.