SAB Biotherapeutics, Inc. (SABS) Earnings Call Transcript & Summary

Good morning, and welcome to the SAB Bio's conference call to discuss first quarter 2026 financial results and business updates. Listeners are invited to review the full text of the forward-looking statements from the morning's quarterly earnings press release. Company management may provide projections during the call, and actual results could differ materially due to several factors, including those outlined in the company's latest filings with the SEC. [Operator Instructions] this call is being webcast live and can be accessed on the Investors section of SAB Bio's website at ir.sab.bio, where a replay will be available. I'll now turn the call over to Samuel Reich, Chief Executive Officer of SAB Bio

Thank you, operator. Good morning, and thank you to everyone joining us for our first earnings call. We're excited to have you with us to share the progress our team has made in the first quarter, progress that sets a strong foundation for the rest of 2026 For those of you who may be new to our story, let me take a moment to introduce SAB Bio, our mission and our focus. SAB Bio is a clinical stage bio pharmaceutical company focused on developing fully human anti-thymocyte immunoglobulin for type 1 diabetes and other autoimmune diseases Our mission is to dramatically redefine what it means to be diagnosed with type 1 diabetes by developing a medicine to change the course of disease, not just treat the symptoms. Our lead product candidate, SAB-142, is a potentially disease-modifying redoseable immunotherapy in clinical development for the treatment of autoimmune type 1 diabetes. We produce SAB-142 using our proprietary TC bovine platform, which allows us to generate fully human immunoglobulin without the need for human donors. SAB-142 works by directly targeting multiple immune cells involved in destroying insulin-producing beta cells. This mechanism of action has been clinically validated in numerous clinical trials with rabbit anti-thymocyte globulin. We have generated highly positive Phase I data, demonstrating encouraging efficacy signals and a validated mechanism of action with sustained immuno modulation. SAB-142's Phase I data showed early C-peptide signals demonstrating beta cell preservation and a favorable safety profile, resulting in no serum sickness and low or no immunogenicity, allowing for chronic redosing. Following these results, we advanced SAB-142 into a registrational Phase IIb trial called Safeguard, which was initiated last year with the first patient dosed in December. We believe SAB-142 has the potential to fundamentally change how type 1 diabetes is treated and address a major unmet medical need. In the U.S., there are over 2 million people diagnosed with Stage III or symptomatic type 1 diabetes and approximately 64,000 patients newly diagnosed each year. Now to the first quarter update. I am thrilled with the progress our team has made this quarter. We executed on every front, and we're standing on business. The momentum is real and it's building. Here's how. Starting with the Safeguard trial, enrollment is progressing on schedule and remains on track to be completed by the end of this year, with top line data expected in the second half of 2027. We are continuing to activate multiple clinical trial sites across the U.S., Australia, New Zealand, the U.K. and the European Union. To remind everyone on the call, the Safeguard trial will enroll a total of 159 Stage 3 type 1 diabetes patients between the ages of 5 and 40, all within 100 days of diagnosis. It is structured in two parts. Part A, our dose-ranging study in 12 adult patients completed enrollment during the first quarter, representing a notable milestone. Part B, our randomized double-blind, placebo-controlled study enrolling 147 pediatric adolescent and adult patients was initiated in the first quarter and is actively enrolling now. Additionally, our study data monitoring committee recently approved the first step down to enroll patients ages 12 and older. The pace of enrollment and the enthusiasm from investigators reinforces the urgent and unmet need in the type 1 diabetes community for therapies that go beyond insulin management to actually address the underlying autoimmune disease. Another significant highlight this quarter was that we received written correspondence from the FDA confirming that C-peptide may serve as a surrogate endpoint for accelerated approval. This represents a meaningful derisking of our regulatory path. This written confirmation gives us greater confidence and clarity as we execute Safeguard and plan our path to market. We also recently shared new findings from SAB-142's Phase I study at the Immunology of Diabetes Society Congress. The data presented highlighted SAB-142's mechanism of action, along with demonstrating that the mechanism translates into clinical benefit for people with type 1 diabetes. The Phase I data for SAB-142 showed preservation of C-peptide levels correlated with evidence of T cell exhaustion. Of the four SAB-142 treated participants, three demonstrated a super responder profile with C-peptide levels at or above baseline at day 120. Those treated participants showed improved glycemic control with mean time in range increasing from 73% at baseline to 85% at day 120 without an associated increase in exogenous insulin use. While early in exploratory, these results are encouraging and further build confidence as we advance SAB-142 in the Safeguard trial. For more details, you can explore the full data presentation on our website. Finally, on the business side, on April 29, we executed a multiyear agreement with Emergent BioSolutions to support the process development as well as clinical and commercial manufacturing of SAB-142 in anticipation of regulatory approval. This agreement positions us to scale manufacturing in support of a potential commercial launch. We are confident in having such a capable and experienced partner like Emergent in place as we advance towards that milestone. And with that, I'll turn the call over to Lucy To, our Chief Financial Officer, to review our first quarter earnings and financial updates.

Thanks, Sam. We ended the first quarter with $217.6 million in cash, cash equivalents and available-for-sale securities as of March 31, 2026. This strong cash position provides us with an operational runway through 2028, fully supporting the execution of Safeguard and our pre-commercial activities. Contributing to this position was our public offering that was completed in March. Following the initial closing, the underwriters exercised their over allotment option, resulting in aggregate gross proceeds of approximately $95 million. We are well capitalized and well positioned to execute our plan. Our R&D expenses were $13.4 million for the first quarter of 2026 compared to $7.7 million for the same period in 2025. The increase is driven by the ongoing investments made to advance the SAB-142 program in the Safeguard trial, including site activation and patient enrollment. This is exactly where we expect to be investing. G&A expenses were $6.6 million for the first quarter of 2026 compared to $3.1 million for the same period in 2025. The increase was primarily driven by higher noncash stock-based compensation expenses and personnel-related costs associated with our expanded team. As we scale, these investments in our operational foundation are necessary and expected. Other income was $1.1 million for the first quarter of 2026 compared to $5.6 million for the same period in 2025. This decrease was driven by the change in fair value of warrant liabilities. As a result of these factors, net loss was $18.9 million for the first quarter of 2026 compared to $5.2 million for the same period in 2025. The financial results reflect the company that has the resources, discipline and runway to see Safeguard through to completion and to begin building towards commercial readiness. And with that, I can turn it back over to Sam for closing remarks before we open the call up for questions.

Thanks, Lucy. To close, I want to reiterate how much we believe in the mission we are pursuing. Type 1 diabetes affects millions of people globally. And today, the standard of care is insulin, which treats the symptoms but does not address the underlying disease. SAB-142 has the potential to change that and transform what it means to have a type 1 diabetes diagnosis. We entered 2026 with a clear plan, and we are executing against it. Part A of Safeguard is fully enrolled. Part B is underway. Our cash runway is secured through 2028. Our regulatory path has been derisked. We have a lot of work ahead of us, but we are exactly where we need to be, and we are focused on what matters most, completing Safeguard enrollment and advancing SAB-142 towards the patients who need it. We are grateful for the support of our investors, our investigators, our patients and our team. We look forward to continuing to update you on our progress. And with that, we're ready to take any questions.

[Operator Instructions] Our first question comes from Michael Yee with UBS.

This is Matt on for Mike. I wanted to ask if you could talk a little bit about mechanistically how SAB-142 and ATG broadly differentiated from CD3 antibodies and how this translates to both clinical activity and safety tolerability, especially as it relates to immunodepletion and immunomodulation and just how these work overall, that would be great.

Well, the anti-CD3 antibody is monoclonal. So it has a singular effect on one target. And when that drug gets into the range at which it's inducing exhaustion, it also has an impact on Tregs, which can be a counterproductive mechanism, which works against T cell exhaustion. Tregs are essential for self tolerance and having a negative impact on Tregs will have a negative impact on the patient's autoimmune condition. The -- both Thymoglobulin, which is rabbit Anti-thyimocyglobulin as well as SAB-142, which is human Anti-thyimocyglobulin, are able to be dosed because they're polyclonal and because they are binding multiple targets across the spectrum of T cells. We're able to induce T cell exhaustion at a very low dose in which Tregs are preserved or possibly even activated. And that is a cumulative benefit with the polyclonal approach rather than kind of a counterproductive effect, which happens -- which appears to happen with anti-CD3. And we believe that will lead to better clinical outcomes. I think something that's very important with the human Anti-thyimocyglobulin is that there's no immunogenicity and no serum sickness. And we showed in Phase I that we can safely redose and reinitiate that exhaustion. So another advantage, which is unique to our drug in comparison to both T Shield as well as thymoglobulin is that we can safely chronically dose to patients, maintain exhaustion and hopefully maintain preservation of beta cells indefinitely.

Does that answer your question, Michael? The next question comes from Iris Gao with Guggenheim.

This is Iris Gao Hanxing. Congratulations on the progress. My first question is really quick. So like would you plan to disclose the Part A data ahead of Part B? My second question is like I wonder if there is a pattern in the four patients from Phase I that could probably guide the design of indication expansion studies into established type 1 diabetes patients?

Sure. At this time, we don't have any plans on releasing patients from Part A. That's not in our current plans right now. So we're not guiding to that. Your second question, certainly. So the four patients dosed in Phase I were mature patients. They had the disease for 2 years or more. And in that patient population, we showed the desired effect, a very exciting outcome. So that does certainly provide support for this disease being effective in more mature patients, which we do intend to pursue. And that certainly expands our addressable market if we're able to capture that label, which we hope to do.

Our next question comes from Thomas Smith with Leerink Partners.

Congratulations on the progress. With respect to the written correspondence from FDA confirming C-peptide may be used as a surrogate endpoint for accelerated approval. Obviously, encouraging feedback. Can you just elaborate on the timing and the path for receiving that feedback and how this correspondence is similar or different from the feedback you received last year when you initiated Safeguard?

Well, we have developed the Safeguard study and our clinical regulatory plan along with correspondence with the FDA. And so this is a very important program to SAB. And so we believe we have full alignment and are very confident in our plan. So generally, our correspondence with FDA are written. And we updated as stated in the last response, we did receive confirmation that C-peptide is sufficient endpoint for an accelerated approval. So I'll just say that we've developed Safeguard and continue to work on our clinical regulatory plan with alignment with FDA and with confidence we're moving forward with -- following the expectations of the agency.

Got it. That's encouraging. And then with respect to Safeguard enrollment progress, nice to see Part A enrolled and the DMC approved the step down to patients 12 and older. Can you just walk us through the path from here on Part A? What's sort of the process and expected timing for potentially stepping down to dosing children five and older?

So we expect to step down to patients 5 and older in the coming months. As we mentioned, we have stepped down to 12 and above, which is a great first step. And we continue to look at safety out of the patients and follow the same path that we did to get to 12. And so as patients come in 12 and up and we collect enough patients, then we'll step down to 5 and older.

Our next question comes from Albert Lowe with Craig-Hallum.

Maybe along the lines of what you were just saying, can you tell us a little bit more about what kind of data the study data monitoring committee got to see to approve the step down?

Yes. So the Data Monitoring Committee decision is based on Part A safety data up to 4 weeks from randomization. So essentially looking at 4 weeks of safety data of those 12 patients. And based on that safety review, they approved opening enrollment to patients 12 and older.