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

Welcome to the second day of the afternoon session of the BofA Healthcare Conference. I'm Geoff Meacham. I'm the senior biopharma analyst here, and we're thrilled to have Sana Biotech, President and CEO, Steve Harr. Steve, welcome.

Thank you, Geoff. It's super fun to see you and people in person. It's been a long time.

Yes. It has been a long time. Well, to start off with sort of a 30,000 foot view, you guys. There's a lot going on, different technologies. I know you can be a little long-winded, so I'll just say...

It can be. It can be.

Appreciate -- if you give us that.

So first of all, we will make forward-looking statements, and we spent a bunch of time, right, in our K and Q. So take a gander at it and to see some things that we think could go wrong. So the company was built on the fundamental belief that the one of, if not the most important transformation that will occur in medicine over the next several decades, is the ability to modify cells. Basically modify genes and use cells as medicines, and we call that engineered cells. And our goal is -- our aspirations, [ we want to ], these are pretty simple and is to be able to repair any cell in the body and to replace cells that are too far damaged or missing. And we've built 3 platforms around that. One, for replacing cells, one of the most fun -- if you take a step back, you want to make cells at scale, that will engraft in the body, that will function, as they are supposed to and they won't persist. And the biggest challenge has been cellular persistence, and in particular, overcoming immunologic rejection. So a core platform and technology as a company, has been building is around cloaking cells or making them hypoimmune, hiding them from immune attack and making them at scale. We've also got a lot of capabilities on a platform around stem cell biology and stem cells. And then we also -- in order to be able to repair cells in vivo, really simplistically, I think what everybody is trying to do, is deliver some gene-modifying payload and then alter the gene or gene expression. It turns out it's relatively easy to do the latter. I mean you can do basically anything you want to sell in a petri dish or in vitro. And the hard part has been delivery. And so we've really focused a large effort as well on in vivo delivery of payloads. And so the goal is to be able to deliver any payload DNA, RNA protein to any cell in a specific and repeatable way, and we started with a platform around cell specificity in what we deliver. So just to a T-cell or just to hepatocyte for example. So it's -- we've made real progress. We hopefully will have a couple of INDs in this year. We'll kind of know pretty quickly if the platforms are performing as we think they should. I mean it won't take us too many patients to figure that out. We've set up a pipeline behind that, where we think we can deliver at least 2 INDs per year for the near to medium term. Our biggest challenge in getting there is, actually just capabilities and technical operations or manufacturing. We just can't get more than 2 or 3 through a year. And so we're about 400 some people. We've got a nice strong balance sheet. We have capabilities really across a host of areas. And so hopefully, we're in a place where we can move from, I think, doing some wonderful things to animals, where we are -- or I should say, to models, where we induce some type of a disease to really doing wonderful things for people, who unfortunately have a disease. And that's our goal for the coming years.

Perfect. Well, one of the platforms you guys have developed is called fusogen and maybe just give us a quick tech background or to that for those that are not familiar. But it is a newer modality when you look at sort of ex-vivo cell therapy. And so there's a lot that you could add on to that, and there's a lot of different indications you can go after. So help us with kind of the technology itself, and then where you think you could go beyond just the same targets that other folks are working on or some novelty?

Sure. So I think the way we approach problems was, if we were faced with a complex biologic challenge, to have mother nature solved it herself. And when you look at delivery, actually, mother nature is actually quite good at delivering certain payloads in-vivo to cell-specific way. A great example we all know is COVID, right, where it only delivers its genetic payload to cells that express the H2 receptor. And so really what we did, the fusogen platform is -- used 2 words, fusogen and fusosome. So fusogen is a targeting moiety, and the fusosome is the whole medicine, right, with everything in it. So the fusogen, what we do is, we basically reprogram a viral fusogen, so that it will no longer recognize its target, and we can put on some other cell surface or I should say, cell recognizing moiety, like a SCFE or VHH, a little antibody. And we can go after, let's just say, CD8 cells or CD4 cells or you can go after hepatocytes with certain things or HSCs. And we're really pretty good at doing this, and if you give us a cell type, we'll probably be able to target it in a specific way in a petri dish. The real challenge is that scaling that and getting it potent enough to turn it into a medicine, that is you can make it scale in vivo. And so we then take that fusogen and put it on a fusosome. And the fusosome is basically any -- I think it was anything with a lipid bilayer. So it could be a virus, a virus like particle, where you have -- or a cell, are great examples, we do them all. And we put some type of gene modification machinery in there. We could do simple things like using viral integrases. We can do a bit more complex, things like using gene editing machinery. You can do really complicated things like prime editing or pay setting and deliver those as well. So all of that can be delivered within that fusosome. So a lot of it is basically about getting payloads to a specific cell efficiently, and then we have to work on getting the right payload into the cell. So we're applying that first really simplistically, because it's the most straightforward to make -- we target CD8+ cells to deliver the payload to, and we'll just insert a CD19 CAR. And the rationale from our perspective is, when you are developing new platforms, you have platform risk, disease biology risk, does it do what it is, intervening an important biology, and then a clinical development risk. Can you prove it? So we want to isolate the platform risk, so that we're not -- so if it doesn't go well, we know what to fix. And then if it goes well, we get the privilege of taking on more biodisease biology. So that will, hopefully, the first medicine using the fusogen platform should have, hopefully, have an IND this year.

And one of your first INDs is going to be on CD19. So that's the field that a lot of folks -- people have used it as sort of a proof of concept of their respective technology. Are you guys looking at it that way, or is it more you can -- you feel like you can meaningfully beat the assets out there with the improvements that you've made with the technology?

So -- as I think you know, I had the privilege of being part of the CAR-T cell space from some of its inception. And one of the more frustrating elements to me is like, there's little -- there's not much that I can think of, that I'm as confident about scientifically, is the fact that lymphoma and leukemia should be like hepatitis C, where we should be able to cure the vast majority of patients with these diseases with a single [ sound ]. And we're in a place right now, where a couple of things are true. First off, around 80,000 people a year die of lymphoma and leukemia in the U.S. and Europe alone. And in the history of humanity, only a few thousand people have gotten a CAR-T cell. So we have a lot of work to do, to ensure that we are able to really get these to patients. The second is of those who get one, maybe a third benefit. And a number of patients don't respond, and of those who do, many relapse. I think we have really clear pathways to improve upon all 3 of those aspects. On time scale delivery to patients, higher response rates and much higher durable response rates. So I look at this as a -- we're still in the area like -- just trying to say that hepatitis C was done when someone launched Intron A, it was important, and it made a really big difference for people. But we can do so much better. So I look at it as much more is like, yes, it's yes and yes, we would love to have that proof on our platforms. So we have 2 different ways of targeting right now. And we would really think -- and we really think we can make important medicines as well.

Right. And given that this is your first IND, obviously, it will improve the execution piece of it, but just help us with all the steps that have gotten into this that you've lined up, with respect to like manufacturing and clinical regulatories. A lot of people and processes that you've had to sort of forward integrate?

Yes. So we have 2 INDs that hopefully we'll get done this year. So there's a lot that goes into both of them. I'll give you like a really great example of the complexity of this. Our allogeneic CAR-T cell has 6 different GMP manufacturing steps. We had to make starting cells, we had to make guide RNAs, mRNAs, plasmids that you insert, so these are viral insertions, insertions to the virus itself, and then the end product itself, all of which require GMP manufacturing. So it's not like an antibody where there's one, right? The beautiful part of it is an allogeneic CAR-T cell, I think we make really great cells, and we make them at a scale, that I'd be totally comfortable commercializing the drug with today, let alone for Phase I. I think the fusogen is much more complicated to scale. And you're obviously right, we're still in the process of scaling the manufacturing and doing all the preclinical pharm, tox studies. It's a novel platform. And there, we will need to scale this process meaningfully more, for it to be at a stage where I think it's commercially really exciting, right? [ Highly ] is different than an antibody. Except with the antibody, you know exactly what to do now. It's more like an antibody in the [ 19 cell ], where there's some challenges ahead of us. The other things around building clinical operations, building the development, putting the regulatory infrastructure in place. We have the great fortune of a really experienced team who has done this multiple times, and we'll get it done. Like that's not the part of Sana that should force you to lose sleep.

Right. Well, the other indication to is myeloma, right? So BCMA -- so kind of the same question -- I mean there's been a lot of companies that go after this, again, as a proof of concept as well. There's very similar. There's multiple therapies that are approved. They're not always highly effective. So what do you -- is there an argument for raising the bar on this indication as well?

Yes. Well, I would say for a couple of things. One, it's just amazing what's happened in myeloma over the course of the last 15 years. And there are still a number of people, unfortunately, will die off, not with myeloma. I also think it's a much more complicated clinical and competitive landfill to navigate. In particular -- and by the way, if we sat here 3 or 4 years ago, we probably would have said the same thing after the launch of the CD38 antibodies. And since that time, I think the data from J&J and Legend in particular, is just spectacular and really set a high bar for all of us that want to come in the field. The flipside of that is, these are -- it's very difficult to scale autologous CAR-T cell manufacturing, and if these are going to move into the first or second or even third line setting in that disease, somebody is going to have to crack the code around scaled manufacturing. And I'm optimistic that we can do that. We have to prove 2 things to you. One is that our technology, which in animals and nonhuman primates, hides ourselves from immune recognition and rejection, translates into humans. Like I don't think anybody has ever shown this in nonhuman primates, but we certainly haven't shown it yet in humans. So if we can do that, I firmly believe that cellular persistence will translate into durable complete responses. We then in the BCMA case, have to ensure we have a CAR, which is as efficacious and potent as what the standard of care is today. We licensed a program from a company in China called IASO, expressly because the data are so compelling. You have to always be careful. It's about an 80-patient study done in China, where there are some different characteristics of patients. But they have -- similar to what we've seen from the leaders in this field and over 90% MRD rate, similar complete response rates. And we don't have 2-year efficacy data yet. But I think MRD is or minimal residual disease negativity, is the greatest predictor of durable responses. And I think we're quite optimistic that we can get you with both, right, which is both a great CAR itself and really great sales that are hidden from the immune system. So we'll see.

Right. Yes. And along those lines, when you think about the CD19 and BCMA, both as having approved therapies already out there today, is there a regulatory challenge do you think? I mean you're obviously not going to run a head-to-head study, but you have to compare yourself to a standard-of-care that well-accepted KOLs and everyone knows. So is there a special sort of hurdle that you have to kind of get over?

So I'll start within Phase I. I don't see anything from a regulatory perspective, but I do see a [ risk ] to come back to. I think from a registration study perspective, I don't think we can honestly answer that question, right? We're not there yet. And the world could certainly change from where we are today. I think we're in the middle of a of a double-edged sword as you're watching, for example, the CD19 space where we just had an approval in second line and then I think there might be a second one coming up shortly. And that's a wonderful and big expansion of the potential market. I think it also makes it more complicated to enroll patients in a clinical study. So I think that will be something we have to work through, without a question and we need to really kind of have our operational chops in order. But it's -- from a regulatory perspective, I don't think it's an issue.

Got you. Okay. Let's switch gears to the other programs that you have in preclinical for broad diseases, diabetes, CNS, cardiovascular programs. So give us kind of a sense for how you can match larger-scale indications with some of the technologies that you feel the most enthusiastic?

So I certainly didn't set out to build a CAR-T company, right? And that was -- and it's turned out that that's been a wonderful place -- a great place for us to show, I think, to really improve the platform. And as you said earlier, hopefully make a big impact. But the goal of the company is much broader. And I think that the next place that you can really see progress, if we're successful in hiding cells and immune system, is type 1 diabetes. And type 1 diabetes, I think as people know, is very simplistically, the immune system has knocked out a single cell in the body, the beta cell. And we need to replace that. And we need to replace it in a way, where 2 things are true. One, you have insulins -- I should say, glucose-sensitive insulin secretion, which is great. So many cells in our body, pretty much anything else, trying to find exactly what you need is complicated, right? Like what is the T cell? What's a heart cell, what's a neuron? Actually, we know what we need here. We need glucose-sensitive insulin secretion. And the second so we need high things from the immune system, right? So if we can see that, we'll be in a really great place. So what have we learned? First off, we've shown now in nonhuman primates across multiple cell types, that we can transplant cells in vivo. Allogeneic cells with no immunosuppression and these cells will engraft and live with no immune recognition. It's hard to overstate how excited our team was when they saw that. I think the second thing that we've tried to do, is really understand -- so there's allogeneic rejection of foreign cells, that's problem #1. Problem #2, when you're going into this space is, autoimmune rejection. So the immune system that's already there and attacking beta cells. So that's a harder one for us to test with animal models. But we've done it as best we can, taking human samples and expose them to ourselves. And I think we have a lot of reason to believe, that we can hide cells from autoimmune rejection. The third thing we need to show, is that you can take stem cells and make them into beta cells at scale. I think Vertex did a wonderful thing for the field, by first off, showing that, that's possible, right, in the setting of immunosuppression. And -- we know that at least -- as we look at these cells, we can do it in a way that really works well and get it in animal models. And the fourth is, we now need to put together our GMP supply chain, and that's really complicated, right? It's hard to understate the complexity of understanding genomic variability in stem cell-based products. There aren't great examples of companies, many companies who made gene-edited stem cells, that they then grow up. So it will take us some time, and I think if things go well, this is when we file an IND next year. I think many people inside of our company would say this is the most valuable asset that we have by far. And it's one where you don't really have to worry about competition or things like that. I think the disease is such a problem, that if we can get this right, we will do something really important for patients.

And Steve, from a regulatory perspective, what do you see as a rate-limiting step? What do you have to show sort of preclinically, to give you more confidence in like a seamless path, in an area like type 2 diabetes?

Well, I think that the question in the field as you've gotten to know more is, how do you define an acceptable level of genomic heterogeneity in cells that you're, first of all, dividing multiple times and then differentiating. As you do that, your genome will wander a little bit. And you will have definitely gene expression changes. So we measure the gene. We measure gene expression, we major epigenetic regulation, in all of these cells, all the way through that. And understanding what is signal from noise, I think it's really important. You have to do this at a scale, that will allow you to attack relatively rare variance, right? So you're doing a lot of single cell sequencing and interrogating these cells. That's the timeline. There's a -- regulators don't know what to do with that information yet, just like we don't. So I don't think this is more of a regulatory question, as much as it is us getting -- having a high bar, and getting comfortable and then we partnering with them. I would say whenever you're thinking through like an unknown, we try to divide it in some simple things, define and limit the scope of the problem, so we're doing that. Be able to monitor inside the human, if something goes awry. So making sure we have really good ability to catch things like, if something did turn into something bad. And third is we will intervene and putting a suicide switch, something like that. So I think that because we have -- suicide switch is a really a great ability to monitor, we'll be able to get ourselves comfortable with some unknowns here. And I'd expect just like what you've seen in CAR-Ts or in gene editing, that the regulatory bars were much broader than they are today and regulators have tightened things as they learn more. We'll start both of us from a stance of learning, and the bars will get more challenging over time.

Yes. I hear you. I think from a regulatory perspective, if you look at some of the more orphan indications, say, sickle cell, if you look at the hemophilia program, there's a lot of gene therapies that are in development today that are smaller indications and not large-scale studies. But nobody is formally addressing the cardiovascular disease, type 2 diabetes. And so do you think there could be some flexibility into what are you assuming basically is the question, as you move forward to from Phase I to a bigger...

I think sickle cell in hemophilia, big diseases and compared to the things that we're doing. One of the things I sometimes get frustrated with and what we've been able to accomplish is the field to date is, that most of the diseases that we've been able to create, really great medicines for things that most of us haven't heard of. I think one of our real challenges and challenges -- real challenges to turn this into a field where we're affecting the diseases that most of our love ones will suffer from. So -- and I don't think there's anything that regulators have against more prevalent diseases. I do think as you get into broader -- as you get into less sick patient populations, your safety bar has to rise, right? So it's one of the questions that we always ask, is we're going with a new technology? Are the patients sick enough to justify the risk of the unknowns of a novel technology, right? And I think that's a really important question to keep asking. But I think where it comes in the more -- you can't go forward and price a drug that will place, that will bankrupt the system, right? And therefore, it behooves us, not only to learn how to manufacture things at scale as we're trying to tackle more prevalent diseases, but to do it at a cost that allows us to price in a way, that society can both afford and probably wins, right? Society needs to win, not just the company.

Right... Yes. And so if you look at the level of investment you've already made in the business, maybe talk about -- because you're addressing some big questions, right? And so do you want to do this alone over the long term? Like what are the considerations that you could have for partnering with others that may offer something unique, right, either capital or scale or expertise?

Yes. So a couple of things. One, I don't think anybody in our industry has ever built a company with a sustainable R&D engine and globally launched their first product. And companies who have launched their first product globally, have relied upon M&A and licensing, and companies that have had wonderful pipelines had to partner in particular, ex U.S. Moderna may be, they rule [ that proves ] the exception, right? But the -- and so I think we recognize that we have to partner globally to be successful. And a lot of it is just do with just bandwidth. It's hard to build this -- all these capabilities from scratch. So I always think the big company should beat little companies in every single attribute, except we can make faster and better decisions, because we're focused. So I think what's most important in a partnership is, you would love to have big company resources and little company decision-making. And often you end up with big company decision-making and little company resources, right? So we -- that's bleeding out value. So I think the most important element for us is, both capabilities that a partner brings and also decision-making and control. I'd say -- so all those things are true. The other is -- none of us are - -can live in a vacuum and not pay attention to the external markets. And I think anybody who will have a very different view of their ability to finance their company alone today, than they might have a couple of years ago. So I think capital is something that any development stage company has to be thinking pretty hard about, and we certainly are as well. So those 3 things are true, right? We want decision-making. We want capabilities. We -- a big part of that is ex U.S. or global development and commercialization. And capital is scarcer than it was not that long ago, right? It's the reality we live in.

But you still want to be on the offensive side of things, right? And if you see a newer technology or a newer skillset to be on the lookout for bringing that in-house, and the IASO deal is an example of it, right?

You'll see us do a few more things. Some things we've done and haven't disclosed that we will, over time. Some things we will do and around, bringing in some different technologies, and we're definitely still looking at it. I would also say one of the more -- companies are always just like, I think, man or nature, where we're battling with dying from starvation or indigestion. And given kind of the throughput right now in our pipeline, I think we run much more of a risk around indigestion than starvation. And so I don't think we can be as -- have the same voracious appetite we did a few years ago. All that being said, this is a field cell and gene therapy, where the pace of innovation is so great, that all of us run the risk of disintermediation, right? And so we have to be on the lookout for novel technologies in our core fields all the time. Be ready to act. This is kind of a core part of what we built the company around. And we're still investing in something we call SanaX, run by Richard Mulligan, which is an internal effort to kind of go off and create some of those novel next-generation technologies.

And from a capital perspective, just kind of remind us of the cash after your successful IPO last year that you have, and maybe some of the considerations, as you start to hit critical mass from INDs this year and then the following?

So we -- I would hate to be exactly wrong, but a little over $660 million or so as we reported yesterday. It's plenty of cash to keep us going for a while. We recognize we're a public company and probably always want to keep 12 to 18 months at the minimum, right in cash. We have enough of a runway to ensure, that we can get -- understand what our drugs are in the clinic, that are going forward later this year. We'd always love to have a longer runway, as I think, most would. And there's no doubt this company will need more capital over time. But we can play the hand out or at least understand the hand that we have. I don't think we play -- we can understand our hand a bit better before we need to raise more cash.

Right. Right. But partnerships are not -- at this point in your -- in the company evolution, probably not a great source of nondilutive company?

They're not a great -- I think that you never really know when a great partner is going to come around, with something that makes a bunch of sense for both of us. But if you call us, we'll pick up the phone, and we will tell you to go away. But we also aren't making a bunch of phone calls, trying to find things.

All right. Got you. Perfect. All right. With that, we're out of time. So Steve, thanks so much.

Thank you, Geoff, and thanks, everybody, for your time. Enjoy Vegas.