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Preheat oven to 350°F. Lightly coat a 7-by-11-inch baking dish with cooking spray.
Heat a medium saucepan over medium heat for 1 minute. Add 2 tablespoons tomato paste; cook, stirring constantly, until fragrant, about 30 seconds. Stir in 1½ cups cream, 3 thyme sprigs, 2 bay leaves, the grated garlic, 1 teaspoon Italian seasoning and ¾ teaspoon salt. Cook, undisturbed, until just warmed through, about 2 minutes. Remove from heat and let stand to infuse the herbs, about 10 minutes. Discard the thyme sprigs and bay leaves.
Arrange half of the sliced squash (about 3 cups) in the prepared baking dish. Pour in half of the infused cream (about ¾ cup) and sprinkle with half of the chopped sun-dried tomatoes (about 2½ tablespoons). Repeat with the remaining squash, cream and sun-dried tomatoes. Gently press the mixture with clean hands to coat the squash evenly.
Cover tightly with foil and bake for 30 minutes. Uncover and sprinkle with 1 cup mozzarella. Continue baking, uncovered, until the squash is fork-tender, the cheese is golden in spots, and the sauce is bubbling around the edges, 30 to 35 minutes more.
Let stand for 15 minutes. Sprinkle with 1 tablespoon basil. Garnish with thyme leaves, if desired.