Sana Biotechnology, Inc. (SANA) Earnings Call Transcript & Summary

Good afternoon, everybody. Thanks for joining us for the next session here today. Very pleased to have Sana with us for the session. Quickly before we get started, I need to read a disclosure statement. Please note that all important disclosures including personal holdings disclosures and Morgan Stanley disclosures appear on the Morgan Stanley public website at morganstanley.com/researchdisclosures. And from Sana, we have Steve Harr, the CEO, joining with us. Steve, I'm going to turn it over to you to make some opening comments, and then we'll go right into Q&A.

Great. Thank you, Matthew. And since you made your disclosures, I'll do mine quickly, which is we'll probably be making forward-looking statements. And we and our lawyers, spend a bunch of time on the risk factors in the queue. So take a look at those before you make any decisions that can be very helpful in understanding our risks. So Sana was a company founded on the belief that one of, if not the most important transformation that will occur in medicine over the coming decades is the ability to modify genes and use cells as medicines is what we call engineered cells. And our goal is to build one of the leading companies of that era. And to make -- to kind of like go straight to the point, when you are -- one of the most important decisions that the company made when it was getting going was a lot of people want to pigeon hole us into being a gene therapy company or a cell therapy company. We really looked at those as the same thing, right? And so we are an engineered cell company. We just do it sometimes inside the body and sometimes out. What that's allowed us to do is build capabilities at a scale that we wouldn't have been able to otherwise it's allowed us to attract better people because the best people want to work where they have the biggest impact. And it's left us with a portfolio we actually have very different risks. One of the great things is the capabilities are relatively similar, but our risk profiles are quite different when we go in vivo or ex vivo. So the way we approached the in vivo gene modifications was a really simple idea and that is that in order to modify the genome, you have to deliver a payload, and that payload that has to do something, right? And it turns out that you can do most things you want to the genome in a petri dish. And the real challenge has been in vivo delivery. So we focused on the outset on delivery, with the goal of being able to deliver any payload, DNA, RNA, nuclease, protein, whatever, to any cell in a specific and repeatable way. And every time we do one of those 4 things, we kind of create a whole new category of medicines. And we started with technology that allows us to do cell-specific delivery. So it's for example, just to a CD8 T cell, and we can really deliver any type of payload like DNA, RNA and protein. And we then spent a lot of time and effort on our gene modification, gene editing capabilities as well. So that's one platform. On the ex vivo side, you want to be able to manufacture cells at scale that will engraft function and persist, right? That's how you make medicines. And the field has made really good progress in doing all of that with autologous cells, but they're really hard to do at scale. And then with allogeneic cells, it's very hard to get them to persist or hide from the immune system. And we really -- we made the choice to really start the company around some technologies that allowed us to hide cells from the immune system. And we've made really great progress. We can now show you -- in non-human primates, we can transplant allogeneic cells with no immunosuppression, they live out months and months, right? And so those are the kind of the platforms around which we found the company. We're moving forward with a pretty broad pipeline. They're probably about a dozen drugs in latter stage preclinical development for candidates, which we call them. And not all of them will make it. Our goal is to build a pipeline that allows us 2 to 4 INDs per year. We'll start as early as next year. And what comes out of the gate, we'll be really focused on T cells, right? There's an allogeneic T cell platform utilizing this cell cloaking or hypoimmune -- and then there is an in vivo CAR T cell generation, which is really from this ability to deliver payloads directly to cells in vivo. And we'll expand beyond that. I can get into that as we go. But that's just a little bit of the background. We certainly aren't a T cell company. T cells are an important part of what we do, and it's going to be the first part to go into humans and likely tell us we have more work to do. We're making real progress with these platforms, and we are then behind that areas where we leverage them going after a host of different diseases.

Great. Good. Thank you for that interest, Steve. So maybe we could take each of the 2 platforms sort of in hand and just walk through. So maybe we could start with fusogens. And just to give people some background because I'm sure not everybody is familiar with them even though there are a lot of fusogens out there. So what's a fusogen? How are you using it? And then why did you pick sort of in vivo CARs as the first way to go about sort of demonstrating their utility?

Yes. So first, one of my lessons has been, if you're faced with the complex biologic problems, see if Mother Nature has already solved it and if she has leveraged that system. And viruses are able to deliver genetic payloads in vivo in very specific ways in different cell types. For example, HIV only goes into your CD4 T cells, right? And the COVID only goes into cells that have the H2 receptor on it. And you then -- we have really leveraged this system in mammals, for example, human sperm only goes to human egg. It doesn't deliver static payload to any of the cells that it goes by on the way. And we really took that system and we're leveraging it in a cell-specific way. So what we did is we took a viral fusogen, we neutered it, so it no longer recognize anything. We then put on it a binding moiety. So we'll find the cell that we're interested in, it's called CD8 -- for CD8 T cell. And then we do a lot of protein engineering to build back up the potency of that ability to kind of like sphere into and deliver genetic payload into the cell target. So that's basically how we build them. We then put them -- you have to put that fusogen onto some lipid bilayer. It could be a cell, which we do. And it could also be on a viral-like particle, virus-like particle. And so what we started with was taking a modified lentivirus. So remember, lenti is a modified HIV. And we took the fusogen on lentivirus is something called VSV G that targets the LDL receptors, which means it gets into basically every cell in the body, right? And we get rid of that, and we put on our own fusogen so that we can get cell-specific delivery. And we can then put in different packaging. So we don't have to use all the random integration of lenti or we can choose to use it. It's our choice. So that's what we started with. And the reason we went after T cells first was, one, it just happened to be one of the first places we got this to work. And we can kind of get it to work in almost any cell type you ask us to, but where we got it to work with really high efficiency, right? The second is that we're using a payload -- a carrier that has a pretty limited volume of distribution, right? It doesn't go everywhere in your body. And that is beautiful from a safety perspective, if we're going after things that exists in the blood, bone marrow, spleen and liver. And it's challenging if you want it to go in the brain, right? Perhaps if you direct. But it's really nice from a safety perspective for us to go after T cells or HSCs just because they can get there pretty easily. It doesn't go a lot in other places. So that was -- it was kind of practical and biologic that led us there. It's kind of where we got it working first. And then maybe the third is it's a really simple place for us to prove this works well for now, right? We know the model. We know -- to make an example. We went after Alzheimer's disease, and we didn't have the right effect. We wouldn't know if we had the wrong biologic hypothesis or if our platform didn't work well enough. By going after creating a CD19 CAR T cell in vivo, it doesn't work really well where the biology has already been proven. If we get it right, it will be a very meaningful medicine. Because it's just a marked improvement on the way things are done today. And if we have a challenge, we'll know us because our platform isn't working. And we need to modify it, not because we had the wrong biologic hypothesis. CD19 CARs are clearly kill cancer cells, right? That was kind of why we chose that.

Okay. Great. Good. And then maybe since you're, obviously, not in patients yet, talk about the derisking data that you do have, especially the derisking data in animal models to give you confidence that you have solved some of the problems that you talked about.

Yes. So there are a couple of things that we've done. In vitro, we want to show as much as we can that we are specific and that we're highly efficient and getting into the right cells, right? So that's done. The second is to look at really in vivo. First of all, can we transduce a reasonable number of cells and models, which is true. And then what is the biologic impact, right? So 2 ways to test that. One is there is kind of a definitive mouse model that's been utilized for B cell malignancies across the board for CAR T cells. It's called the [ NM 6 ] mouse. And so there, what we do is we compare a single intravenous injection of our medicine into the mouse with kind of a CAR T cell that's been made outside the body and delivered. Our data is in the S-1 or our presentation, you can see we get comparable efficacy, right? The second, and I would say, a more challenging one is to put this into a normal immune monkey and deliver a CD20 CAR, it just turns out you have to do CD20 because CD19 doesn't cross-react between humans and monkeys. And see if we can deplete B cells, which is the target of CD19 or CD20, right? And that gives us a real insight into -- in a normal immune animal are we able to deliver with just a single intravenous infusion enough medicine to make enough CAR T cells to have a clear biologic effect. And there in the majority of monkeys, the first time we did this at a single dose, we saw really meaningful B cell depletion. And so that was -- to me, that's kind of the killer experiment. So that leaves us running really towards 3 things to get our human testing going. One is scaling GMP manufacturing, always easier said than done, right? The second is these animal models aren't really that -- they're not the same as going into a human cancer patient and doing our best to understand what should be our starting dose. The dose is really not clear. And the third is the normal -- is just farm tox work. Where does this go? Does it go anywhere besides T cells? And when it gets to whatever cells it goes to, how does it integrate? And we really cleared CD8 is on T cells and some NK cells, so we will get into NK cells, some NK cells as well. You can say that's good. And you can say that's not so good, depending upon your belief of NK cells. So I happen to think it's good. But that's a little bit around kind of where we are. [indiscernible] as could be in human testing, right, is if things go well, we'll be there, hopefully, next year, we'll get that -- off we go.

Yes. And maybe now it's a good time to touch on manufacturing, what you're doing there in terms of being ready and any sort of unique challenges that you face in manufacturing here different from some of the other cell therapies.

Yes. It's very different. So this is -- think of this more like AAV or lentivirus than a cell therapy. It's a gene therapy in terms of manufacturing. And if you watched this AAV panel a couple of weeks ago at the FDA, I think, one of things you noted was and if you watched it is the FDA is kind of getting to understand that maybe there's -- we measure dose and there are a cap since it have all the genetic material and there are some that don't, right? And this is a system that people have been working on for 20 years, right? So you can imagine a system that we are getting going. We have to really understand kind of what percentage of our cells are really well packaged and what happens in those that aren't. And then we have to scale that process in a kind of a proprietary way. And so again, like any gene therapy, you're going directly into the body, so you want it as pure as possible, right? So this is one where manufacturing is a challenge. And I feel good about where we are. We don't have a [indiscernible] T cross but I feel good about where we are to go in and run our first-in-human studies. I think if you said, where are you in terms of commercialization, we have work to do to be at the scale and I would say, quality and predictability of what we want to have for when we would want to globally commercialize this. I don't think that, that's unique. I mean antibodies have that. But antibodies you know exactly the road you take to get there. We're more like the antibodies 15, 20 years ago, where we're going to have to figure out some of that road as we progress going forward. So we have work to do for some of that.

Okay. Perfect. And then before we move on to hypoimmune and sort of ex vivo concepts, maybe just talk about beyond T cells, how you're thinking about using fusogens.

How are we thinking about doing what?

How are you thinking about using fusogen but beyond T cells?

Yes. So there's a lot to do in T cells, to be clear. And there are a couple of things that are true. One, using the care we use today, as I mentioned, our volume and distribution is somewhat limited. It's a great thing. The cell types that are most obvious for us to go after would be things in the liver, either hepatocytes or something like liver sinusoidal, endothelial cells, something like that, but different cells in the liver and then hematopoietic stem cells, right? And we can get at both of them. We have been a reasonable success. We know how to take that reasonable success and turn them into medicines, right? So if you look at those, both for prioritization and complexity reasons as well as just -- for bandwidth and biology reasons, that's a fair way to say it, those are early as are a couple of years out, right, because we're really focused next year on bringing forward the T cells. But -- and so what I would say is we exit T cells, I think, it becomes more and more important for us to think about what payload we put inside the cell and how we deliver it. And within T cells, we can rely upon millions of patients who have had HIV and thousands of patients who have had CAR T cells to say that when you go to T cells, you can integrate DNA safely and not lead to T cell malignancies. As you exit T cells and go into hematopoietic stem cells or hepatocytes or these cell types, we don't have that same comfort, right? It doesn't mean they're not safe because we don't have all that data. And it makes more sense to us in those to maybe go and deliver the gene editing payloads, whether that's simple things, call it CRISPR, TALEN or more complex things like base or prime editing or some other novel things that deliver bigger or different things and just knocking things out. So stay tuned. Those are the things that we're doing there. We're making real progress both in getting into the right cell and delivering interesting payloads.

Okay. Great. Good. Why don't we turn to hypoimmune then? And just like we did use it and maybe explain the concept behind the hypoimmune platform. And what your sort of first target is there?

Yes. So really as the field of stem cells got going in the [ odds ]. One of the first things that the real leaders realized was that unless you could overcome the problem of allogeneic rejection, the field will be pretty limited in its impact -- and for human therapeutics. And you put my cells in you, you're going to reject in this form. And a couple of different places got the same advice. And that was -- this isn't that complicated. Really, what you need to understand is a paradox of pregnancy. And the paradox of pregnancy is that we are -- all have mom and have dad. And the only reason we're on this call together is our mothers didn't reject us. But really, none or very few of us would be good organ transplant donors to our mothers. And so really what's different about that maternal fetal border was the question. Really, we came up with -- the team came has up with really clear road map, I think. And the system that was built really seems to be working. And so what we've done now, we -- so the challenge -- and this is where the field has struggled is you have to grapple with 2 arms of the immune system. There's the adaptive immune system of B and T cells. And there's a native immune system of things like macrophages and natural killer cells. And the way that you deal with the adaptive immune system generally is you get rid of MHC class I and class II, that's been known for a long time. The challenge is that, that's what viruses and cancers do to hide these cells in the immune system as well. And so we've evolved a natural killer cell to go after cells and miss this and really figuring out how to turn off both of those arms and immune system at the same time has been something that people have struggled with. And as far as I can tell, we're the first group that's really kind of gotten this to work. And again, we have to get to work in humans. Where we are is we've shown that we can inject allogeneic gene modified cells into monkeys. And with no immunosuppression, they will live for months and months and months. We can do that de novo. We can also first inject nongene-modified cells, which is the monkey will create an immune response to and reject and put ourselves in. So even when there is a preexisting immune response ourselves are hidden from the immune system. So it gives us like a lot of optimism that we can deliver allogeneic cells, whether that's T cells or stem cell drive, islet cells or anything else that we can do that, and we can redose if we need to, right? And we can do that even if a patient has a preexisting immune response like in type 1 diabetes and multiple sclerosis, and still hide these cells from the immune system. And so where we are generally is in -- we've done really -- I think, about as much monkey work as we need to, to get into human studies. And our -- we're really making GMP reagents and GMP therapeutics to move into human testing. Hopefully, we'll be -- get the IND in next year for the [ LOT ] program. That's where the odds are stacked in our favor, right? You're going to have -- you're creating -- we're putting an allogeneic T cell into a cancer patient who is immunosuppressed from cancer. They get a little conditioning chemotherapy because that's what you need to do to get any T cell, autologous T cell or allogeneic engraft. We're going to go with CD19 knock out the B cells until the day we probably need B cells to last for a few quarters, right? That's the easy one. The hard one, which we'll do, will hopefully be IND in 2023, if things go well is type 1 diabetes is probably the first place can you really go after really hard problems where you've got a pre-existing immune response to the cell. There's going to be no immunosuppression and you want this to last for years and years and years to be valuable. And those are a couple of programs that I'm really optimistic about. So that's a little of where we are.

No, that's perfect. And can you talk about cell lines, cells, like all the work -- because obviously, you've got the technology to avoid the immune system, but then another piece is getting the right cell lines, getting the right cells and production there. So where are you in that regard as well?

So let me -- really, we're applying this in 2 different camps, right? And so one is a donor-derived allogeneic T cells. It's like -- it might be you or me just donating T cells. And there, we have to do 3 things, right? We have to show that we can get very high efficiency in our gene modification, right? We're doing 5 modifications. It has to be very efficient. The second is that we can -- the second is we can create very high-quality T cells out of that, right, at scale. And then the third is that we can control the donor and donor variability for one, [ cooper ] patients, it's me and others for you that they get the same product, right? I feel we're really good on the first 2. The third one, not that we've had a problem yet, but we're still in the process of proving to ourselves so we can do that, right? So that's where we are on that. You then have the stem cell-derived hyperimmune cells. And that's like -- that's a more complicated endeavor. First of all, we have to start with a GMP, let's call them iPS cell bank with freedom to operate, right? And look, there's a lot in there. And once you have all of that, there are only a subset of those that meet our immunologic criteria and then you have to do 2 more things. You have to ensure that they really do go to the cell type you want. iPS cells sometimes love going to liver cells and hate going to beta cells as an example or heart cells, let's just say, right? They just -- they have predilections that they like to go. So the second is that you need genomic stability through that. And the way that the field has generally looked at this in the past has been karyotyping, which is a little bit like trying to figure out the patient has cancer by palpating their abdomen and there are more sensitive ways to do this and trust that we are doing them. That just takes time. And then we have to do the gene edits and then ensure that, again, we have a very stable -- we have genomic stability and then gene-edited iPS cell will go to a cell type we like. So it just takes time. It's very complicated. And making sure that we have GMP reagents all the way through that they're very high quality given -- and we don't know a lot about the biology yet and that we have freedom to operate. And we're working on all of those. And again, I feel really good about where we are, but it just takes time. And that's why with the iPS-derived hypoimmune cells, it will be a few years before we're in human testing. It's just because all of those things take time.

Okay. Okay. Good. Maybe a broader question just about initial data. So let's just for sake of argument, assume with both fusogen and hypoimmune, you can file an IND sometime next year and maybe in '23 or maybe it takes a little bit longer than that, you have some initial data. How do you think about that initial data in terms of, let's call it, derisking the overall platform? Like what does that do in terms of demonstrating safety or efficacy or just delivery across those platforms to then allow you to maybe move more aggressively across a range of different biologies?

Yes. So I would say -- so that gets it where is their correlated risk, right, in some regards, right? Because correlated risk, they just correlate upside, too. So with the allogeneic T cell program, the question is, have we really nailed the ability to hide cells from the immune system. Ultimately, that is the question. And there are 2 separate questions in there. One is when you do that to an allogeneic CAR T cell, do you see a meaningful clinical benefit in terms of durability of response. And that will define how valuable what we're doing is in the oncology field, right? We're behind. And if it turns out that they live longer, but it doesn't matter. Then that's a lot of work for not a lot of effort, right? Not a lot of upside, I should say. But the flip side of that is, if they live a long time, what you've done is you derisk the whole platform, right? And so now, when you think about the beta cell program, your probability of success goes way up your -- all of the other glial progenitor cells, all of these things that we're trying to hide from the immune system, they really do change in terms of how you think about it. So really, you are going to get -- you're getting to 2 questions that come out of that. One, does it matter clinically? Does it happen? And if it happens, do they live longer? Then the whole platform becomes more valuable. And then does it matter clinically, which then will tell you how valuable the [ LOT ] program is. So that's that. So then on the fusogen platform, what you're really asking is can we deliver enough? If this works, we can deliver payload in vivo in a relatively cell-specific way. It's really, can you do it well enough, right? And so I think to the extent that you can -- you get more comp and then you can manufacture that scale, right? You get more confident that these other cell types we're going after and we'll figure it out. We'll get there, right? And again, I think that in and of themselves, it will be very valuable. If you can show you a single injection, no conditioning chemotherapy, nothing else, one treatment in a patient might have a curative cancer therapy -- was really, hopefully, very limited toxicity. And ideally, no -- nothing more than what you get from a CAR T cell, maybe even less than what you get from a CAR T cell in CRS and neurotoxin, right? It might be worse. You have a really important drug for really generalizing the accessibility to patients. So that would be -- so I do think that they will have -- they're very independent platforms, and they're very independent in terms of the risk. But within each of them, they will read through to multiple programs. If we fail, well, you all say, boy, you got -- if it doesn't work for T cells, you can say, how is that ever going to work for other cells, right? We got some real thinking to do.

Yes. Yes. Okay. Good. So Steve, maybe in the last couple of minutes, we could just touch on some of the -- I guess, what should I say, more far out stuff that you're doing, maybe some of the cardiac regeneration work that you're doing or otherwise. I'll let you pick sort of what you think is most interesting, but maybe just give people a view into some of the other stuff you're working on.

It's always fun to talk about somewhere we just made a little bit of progress and that maybe people haven't paid that much attention to. So cardiac is a good one. So the idea here is that still, if you go through all this, the #1 killer in the world is heart disease. And heart disease is worse than all cancers put together, right? In the United States, they go neck and neck every year. And there really have been very limited novel medicines, right? And the problem is for most patients who have congestive heart failure. It's a disease where the cells are just gone, right? So you've had a heart attack or are not there yet. And so we need to put them back. And the challenges are threefold. You need to put in cells and engraft and function, right? You need to hide these cells from the immune system, and you need these cells to integrate with the electrical conduction system of the heart. And in particular, what we've seen is that, that first few weeks, there is a real risk of an arrhythmia. And we've shown you data that says, hey, we can put cells back into a monkey and that monkey will get largely recovered to almost normal heart function. It's a small end, so be careful with it, but they clearly recover at least meaningfully. We've shown improved data from our hyperimmune platform that at least in certain settings, you've got to hide cells from the immune system. So what we recently showed was that through a series of Chuck Murray through his lab is that we can make a series of gene edits, some you do turn on some you turn off and you make these cells that no longer are arrhythmogenic. And they integrate with absolutely no issue around arrhythmia. So what we haven't shown is that they function as well. We have to show that over time, right? We've shown the engraft, but we showed the function, but we need long-term function because you are knocking out some pretty important risk. Most of the time, I think about these ion channels and hearts being there for a reason. And so we still have that to do. But I look at that as a really good example of a heart problem that we tackled head on, and we're through really a combination of rational design and a little bit of luck, made some substantial progress over the last few months that could lead to a really great drug, which again, if all went well. So that will take a bit more time for us to enter into human testing to put all those edits and it would probably be, again, a few years out. But something that I would say is very exciting.

Okay. Great. Well, wonderful, Steve. Thanks for being here. Thanks for spending some time with us.

Always a pleasure. Great to see you, and thank you, everybody, for your time today. Appreciate it.