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

Okay. Go ahead and get started. Thanks, everyone, for joining. This is the fireside chat with Sana Biotechnology. Very happy to have with me Steve Harr. Steve, thanks for joining us. Really appreciate it.

Thank you, Vikram and thanks, everybody, for joining and appreciate Morgan Stanley give us the invitation. All these lights are very bright. Very hard to see out there.

And before I forget, let me make sure to read this disclosure statement. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representatives.

Think I'll do the same thing. We're going to make forward-looking statements. We spend a lot of time on our risk factors during our filings. Take a look at them. They're quite educational.

Okay. Great. So Steve, appreciate your time. Quite a lot to talk about within Sana's platform within the pipeline. Maybe the best place to start just to level set for everyone because I'm not sure where everyone is in their understanding of the platform. Just talk about the thesis that drove the formation of the company, some of the underlying science for the hypoimmune platform, maybe a little bit on the fusogen platform and then we can go into specifics on the program from there.

Sure. So, thanks. And when we started the company, it was kind of around this basic belief that one of the most transformational things that will happen in medicine over the next several decades is the ability to use cells and modify genes as medicines. And what we thought we would do is go after we thought were the most readily tractable but important challenges. And it led us down 2 paths, right? And so, if we want to be able to transplant cells at scale, we have to figure out how to overcome allogeneic rejection. And if you put myself into you, your immune system is going to recognize them and kill them. And you can overcome that with autologous cells. There are only a few cells that you can do that with, and it's very difficult to scale. We can overcome that with immunosuppression, but that really is never going to work for a lot of patients. So this is fundamental to being able to importantly -- most importantly, to really turn pluripotent stem cells into a therapeutic category. It also will have broader applications. And so that led us down the path of creating a thing we call our hypoimmune platform, which we'll get into the science behind that in a second. The second thing we want to be able to do is to modify genes inside the body. And you can more or less do anything you want to a genome, to RNA in a petri dish. And the real challenge is in delivering the reagent to the cells inside the body. And so, we went after the goal of being able to deliver any payload to any cell in a predictable and repeatable way. And so -- in specific and treatable way. And that led us down the path to this fusogen technology, which is the other technology. So those were the 2 founding elements, being able to overcome immune rejection and then delivery. So with that, we've had to build some other capabilities. To really leverage the hypoimmune platform, we need to understand the cell. So that's made us really build capabilities around T cells and also pluripotent stem cells. To really exploit the ability to deliver, we've had to really develop a technology to actually incorporate the genetic reagents into these virus-like particles or VLTs because of genome modifications. That's kind of the technology we built the company around. As it turns out, this hypoimmune technology, we've been trying to transplant cells for, I don't know, 70 years, 80 years, and they're consistently rejected without immunosuppression. And the fact there's only one cell type we can really do that with, and that's red blood cells. We do readily do that. If we get this right, right, we think we can develop 3 different really important categories in the very near term, right? One is being able to make allogeneic CAR T cells to go after blood cancers. And our first drug is in human testing. Hopefully, we'll have some data later this year, and we'll continue to have a lot more data as we move forward. And there we have 3 different CARs that we've licensed where we think we have validated CAR, it's basically a validated payload, and a platform we can deliver it with. And we can go after CD19 cancers lymphoma, we can go after CD22 expressed in cancer, which is really CD19 failures and then myeloma with BCMA. It can be a big category for the company. The second is taking these CAR T cells and going after autoimmune disorders. And it's about a year ago when the first presentation came around applying CAR T cells to autoimmune disorders. And if you haven't looked at the data, it's worth spending time with. It's transformative. We've never seen people talk about potentially curing autoimmune diseases. And there -- and this is what we haven't talked about before. We'll file our IND in the first part of 4Q. We'll be -- it will go after multiple indications from the outset. We'll have an opportunity to have data really as we move through 2024 across a host of different indications. Then the third is being able to apply this technology to beta cells, right, and to hopefully create a single therapy where type 1 diabetics are euglycemic, meaning normal glucose levels with no insulin and no immunosuppression. And we'll get our first [indiscernible] around where that's possible as early as hopefully the end of this year. So that's a little bit around where that's going. We'll get into how it works and why in a second, but that's what we've been up to.

Great. Great. Maybe we can talk about SC291, your CD19 program, just because I think it's top of mind for a lot of people just because you guided to initial data there by the end of the year. First question, how is the construct structurally different from a regular CD19 CAR? What makes it engineered to be a hypoimmune product?

Yes. So the autologous CAR T cells, they insert a single gene generally, right, the chimeric antigen receptor. And that's the CAR, right? It's got an antibody-like fragment that recognizes the tumor, and it's got a little costimulatory domain like a gas pedal and then it's got the T cell signaling. So that's everything it has. The different about this and we're putting an allogeneic CAR T cell is we need to deal with 2 different problems. One is, if I put my T cells into you, I'm going to try to kill you. And so we have to knock out the T cell receptor so that my T cell won't recognize yourself. That's part one. The second part is your immune cell is going to try to kill my T cell. That's called host-versus-graft disease. And there, you have to deal with 2 elements of the immune system. The first is something called the adaptive immune system, the B and T-cells. We hear a lot about that, in particular, of late around vaccines, right? That's relatively easy to deal with. We knock on MHC Class I and Class II. And that's been known for a while. The problem is that actually was discovered hundreds of thousands of years ago by viruses and cancers, right? And so, we evolved something called natural killer cells to deal with cells that don't express MHC Class I and Class II. And that's called part of the innate immune system. And that's been a real challenge for the field now for 20 years, 30 years. And that's where overexpression the CD47 appears to turn off that entire arm of the immune system. And what we have shown is that we've solved the problem of transplant rejection for non-human primates, we've solved it for mice, we've solved it for humanized mice. And we really just need to see that all of that on preclinical evidence translate into people. So really what's different between this and like a regular autologous CAR T cell is 3 different gene knockouts. We knock out TCR alpha, that's to deal with graft-versus-host disease; we knock out MHC Class I, MHC Class II, then we knock in CD47. So that's to deal with your host versus my T cell disease. So it's 5 gene modifications. It's a very -- it's a complicated manufacturing process, as you might imagine.

Sure, sure. Okay. That's helpful. Now maybe staying on SC291, but a bit more of a technical question. So a good amount of focus on this initial data set. Just [indiscernible] expectations for us in terms of what you're hoping to establish with this data? Which question do you hope to be able to answer here? And which questions do you think are going to require further data sets beyond this initial one?

So I kind of think of it as peel back the onion of [ evidence ] right? So, what's the most important question for the company is through the data we've seen in monkeys and mice and all the non-clinical data transferring to people, right, and that's most of the risk. So the next question would be, okay, yes, you've done that -- I'll see how we get to that -- do you guys make really good CAR T cells, right? And the next set of data would be okay, does that translate to clinical benefit, right? And then I'd say, can you consistently manufacture it, right? That would be kind of the 4 big questions. The question #1. We have a living, right? You take a healthy volunteer cells and you gene edit them, it turns out that not 100% of cells get gene edited. It's about 80%-85% have all the gene edits. We can make lemonade. Because what happens here, what we know is that in every allogeneic CAR T cell to date, the patient's immune system is suppressed. The cells CAR Ts grow. The immune system comes back. Then within a few days, all of the CAR T cells are gone. So what should happen here if our drug works like we think it does, that when the immune system comes back, instead of all of it going away, we'll go from 85% to 100% of calls being fully edited. Because then what you know is you have cell survival in the context of an intact immune system. So that's really, I think, most of the risk of the company, right? Have you actually solved the problem of allogeneic transplant rejection? And that's not a very complicated question to answer, right? You need to see cells grow, then you need to see the non-edited cells go away [indiscernible] [ if it comes back ]. Second level of evidence. You make good CAR T cells. There, you probably want to see a nice level of complete responses and then you want to see the cells persist for a while, right, which is a combination of immunology and how well we make them. So that will take a decent amount of time, not forever. We should know the first question, hopefully, sometime this year. Second question, maybe, maybe not, right? Third question, you make good CAR T cells, what's going to be on your label? What does your durable complete response rate look like? That requires wow, right, because you need to have a lot of patients out at least 6 months. 3 out of 8, little different than 3 out of 4, right? You need a lot of them. And so that's going to be a year from now, right? And the fourth question is, can you repeatedly manufacture and get comparable safety and efficacy? It's going to take us a few years, right? So that's how I'd like to think about it. Let's get -- let's figure out the biggest question. Does this immunology really work? Because the probability is to make good CAR T cells, right? We have good people. The probability of you making CAR T cells is it's going to translate into really nice clinical benefit, right? There's not a lot of risk in those. Not 0, but the real risk is upfront.

Sure. So to kind of summarize that, and correct me if I'm mistaken anything here, it sounds like this initial data set focused on responses, T-cell persistence, durability likely a next year type of event.

Might be. I still don’t know what's -- I mean we don't know what's going to happen, but the durability requires lots of patients out 3 months plus, right? And this trial hasn't gone on that long. So if we get fortunate and -- it's a dose escalation study, right? The approved CAR T cells are all kind of 100 to 150 million cells per patient. We're starting out at 60, then 120, then 200. It may be that with healthy volunteers, 60 million is more than enough. It may be because of all these gene edits, we need 200 million, right? And so I think we've captured the sandwich of where it's likely to reside, and we just have to see how the data play out.

Got it. And I mean you alluded to this point, but just to put a fine point on it, these modifications that you're making that are the foundation of the hypoimmune platform, assuming the data trends well, things work out well, what are the complexities that would stop someone else from trying to do the exact same thing? Or how long would it take some on us to try to replicate what you've been able to do, assuming the data trends well?

So I'll start with, we have intellectual property. So we have to deal with that, right? They would also -- there's a lot of intellectual property across our supply chain. They have to deal with that, right? When you go to make 5 gene edits or gene modifications, there are a couple of things there. The #1, it's a very complex supply chain even if you -- in an intellectual property. And then you have to actually characterize what you do, right? Because you can easily have an off-target effect that's not good, right? When you're doing all this, the cells could not react well to all of the gene edited agents. And so, it's a multi-year process to manufacture. We have a great intellectual property. I think the best way to make sure that people have to [ grapple ] the challenge is just execute. The best thing is execute and create clinical data and get out there and it will be very difficult to displace us unless you're meaningfully better, right? But yes, we have a lot to protect us, but you can't say never say never. And I'm pretty sure that if it turns out that these 3 gene edits, gene modifications are adequate to really overcome immune rejection, there's probably a different way to do it. Like someone will figure out a different way to do it, right? And we feel that it will happen. There is no indelible monopoly in our industry.

Sure. Okay. When you think about your other CAR product candidates, I mean, you've spoken previously about CD22, BCMA, I guess, first, the housekeeping question, where do these programs stand right now? And then 2, how are -- how should people think about the data that comes from CD19 and what the read-through is in your opinion, if any, to these other CAR programs?

So 3 other near-term ones, right, maybe 2 other very near term ones. One is taking the CD19 [ CAR ] autoimmune disorder, right? Previously we've said soon, we're not telling you we'll do it in a matter of weeks, right? We'll file an IND in multiple indications, right? Hopefully, you'll have a good bit of data as you move through 2024 across multiple indications. I think that is an area where -- and what we're doing today --and where it compares us to autologous itself, right, there, if it turns out to what we do really works, we'll just be the lead and we'll have a much more readily manufacturable process, right? So that we could be very, very, very valuable. We then have a CD22 CAR. That is a -- there's a CD22 CAR construct that's been validated in the autologous CAR setting. We licensed the rights to that. So, it's a validated CAR construct. And all we do from CD19 and CD22 has changed one little DNA sequence and one release assay. So, one would think that if it works in one, the biologic risk is extraordinarily low, and it working in the CD22 setting. So what we will do -- our plan there is to go into CD19 CAR T cell failures. It's an area where today the average patient lists about 4 or 5 months. They don't have really any viable therapeutic alternatives. And it could actually be the first drug approved for the company because it will move -- if it works very, very rapidly. And again, it's been validating the autologous CAR setting. So, BCMA, the exact same thing where we licensed a validated CAR in the autologous setting. It's a CAR construct from a company called [indiscernible] where they have over 96% MRD negativity rate at 28 days. Over 80% of patients still have undetectable cancer by MRD, the most sensitive [indiscernible] at 1 year. The data are best in class for the field. And all we do, again, is change with the construct in the DNA and we insert and then one release assay. So again, it should work there. IND maybe next year. We've been reticent to -- all the preclinical work is done, but we need to do the manufacturing campaign. It takes a little over a year. We want to have a nice, robust balance sheet to do that. And we have to be careful how quickly we invest in things. And so, it could be starting this year, it may -- IND could be next year, could be in the following year depending upon how things play out. And it's really -- it's really about it. So that's 3 different new CARs that could be in the clinic within the next 15 months, 2 within the next, call it, INDs in the next quarter, right? And hopefully, a lot of clinical data coming from the end next year.

Okay. All right. Around 10 or some minutes left. Maybe let's send it to T1D. A good amount of focus here on that program as well. So you've mentioned that there's an investigator-sponsored study in T1D where there's some initial data expected by year-end. Just walk us through how that study is designed, what do you expect to learn, how people should interpret that data.

So I think you everyone recognize it. The type 1 diabetes is a disease where the immune system attacks the patients on beta cells. And they get rid of them and they no longer make insulin, right? And so up until 100 years ago this year, it was the death sentence, and now you get insulin. And it's still a very large unmet need where if you have type 1 diabetes, it kind of takes over a patient's life in terms of what they're going to eat, how sick are they, how much they exercise. And you have about a 15-year shorter life expectancy. And in that timeframe, patients have blindness, amputations, kidney failure, whole bunch of other risks. So that's the setting. So what we've learned over time is that, one, you can take cadaveric islets from someone who just recently died, isolate, take the pancreas, isolate the islet cells and transplant those. And with immunosuppression, patients can be insulin free for a long period of time. It's been done thousands of times now in the world. Very difficult to find patients for whom lifelong immunosuppression is better than lifeline insulin and very difficult to scale that manufacturing, right? The second thing we've learned is that you can take pluripotent stem cells and make them into islet cells, right, at least in a couple of patients, and then setting up profound immunosuppression and see, again, the same type of insulin free normal glucose levels. The unknown question that really get someone curious, can we get rid of immunosuppression? That's really what this study is testing. So our program in the long run it's called SC451, and it's a gene-edited stem cell that we make into islets and then transplant. Our goal is very simple: one transplant, normal glucose for life, no insulin, no immunosuppression. So, the real question is, can we get rid of immunosuppression? We've shown that, yes, you can in non-human primates. We've done this, right? Yes, you can in all of the animal models, including when we create ourselves for autoimmunity in mice or humanized mice. The question is really, can we do it in people? So what we're doing here is a center that does cadaveric islet transplants at a high level -- it's sponsoring with regulators -- a study where we will do our gene modification on cadaveric islets and just transplant them in the patient, no immunosuppression, and see what happens. So the goal of the study is to see can we overcome allogeneic of someone else's cells and autoimmune rejection of cells. And that's really quick to learn, right? So if you were to transplant normal cells, unedited cells, they would be dead within about a week. So the goal is to see cell survival anytime beyond 2 weeks. Like our transplant immunologists, they said we're going to pop the champagne at 2 weeks. I asked them to have a beer, and I would love to have it out on -- like just feels better in a month, but the really the immune system will come and get you after that, right? And that's the primary goal. So how do you see if they're still alive? The simplest level of evidence is to actually just to image them, right, and say, okay, these cells are alive and we're not seeing an immune response to them, right? That's really pretty good. And that's our first goal. The second is if you actually have enough functional cells, we should be able to see a protein called C-peptide. And the way that insulin is made in ourselves is actually it's made in something called proinsulin, and then when it's secreted, you secrete insulin and C-peptide. It gets cut. And so, every time we make, we secrete insulin in our body, we also secrete C-peptides. The type 1 diabetic has no C-peptides because they have no insulin. And so if you see C-peptide as detectable and stable, you will know that not only have we overcome immune cell -- that's our like rejection -- we have functional beta cells in patient as stable. The third level of evidence would be that, hey, the patient is off insulin or doesn't need much insulin. So the doses we start at, it's reasonable to think we can get to #2. We might get to #3, right, with no insulin, but that might be a bit too high of a bar. We'll see. And you'll know it very quickly because a week or 2 in, these cells should be dead. So if they're alive and thriving, we've kind of done it. And that would be spectacular. Because at that point, as I said earlier, you now know that a cure for type 1 diabetes is inevitable, right? Someone has already shown that you can do cadaveric islet with immunosuppression. So, what else has shown you can make islets from stem cells, and we will have shown you can get rid of the immunosuppression. So now it's just a matter of somebody to put it all together. We hope it's us. And our goal is an IND next year with the real product, but we'll see. So to really -- just to be clear, it's a long-winded explanation -- this is a test of immunology. The question isn't can you make beta cells that will make enough insulin, the answer is yes. It's a cooler study to do. But ultimately, the goal here is to answer the immunology question.

Got it. Got it. Are there any major differences between the cells being used in the investigator-sponsored study? And the 451 product you'd be filing an [ IPO ]?

Yes.

What are those?

So one is -- so you take the investigator-sponsor trial in a study. A pancreas is harvested from somebody who just died, right? And the islets are isolated, and we gene modify the islets. And first off, they're mature islets, they were working in a person, they're differentiated cell. The second is we're going to have kind of a [indiscernible] product. Some cells will be fully edited, right -- never be perfect edit, some won't be, right? And those are the -- and with the stem cell-derived product, what you have is you have the beauty that you start with a single cell where you know that you have all of the appropriate gene edits in them, right, gene modifications. And that's a purer product, but you're going to then grow them from stem cells into islets, right? And that's a challenging thing to do repeatedly at scale, right? And so, there's -- we have to make sure we really control the type of cell that comes out. And to be clear, I think most of it don't really -- we're not trying to make beta cells, but we're really making our glucose-sensitive insulin secreting cells. That's what we test for, right? And we're trying to understand really how all the other functions in the beta cell we may or may not have.

Got it. Final question for you on SD451 then, much of an IND filed, what could a path to a pivotal program look like for that setting?

It's probably long, right? I mean if you just look -- the first part is there's a dose escalation portion of Phase I, and just generally, all of these gene modified cells where some of the toxicity profile pops up a little later. In the early dose-finding studies, it's a reasonable interval between patients, right? Once you have that [indiscernible] and you have a scale locked manufacturing process, it's pretty straightforward. I'm not even sure -- it's a randomized study, right? You're going to have people who would die, right, without insulin. And if you remove insulin and they have you glycemia, this product works. So just getting a safety data in enough people. I mean, I don't think it's hundreds of people for years. I think it's pretty straightforward. The hard part will be I think the rate limiter might be one, the dose finding portion of it. And #2 is, there's no question, our manufacturing process as it sits today is not adequate to supply a huge population of patients. So, we will have to change the manufacturing process and that will take time.

Right. Okay. Got it. We have 3 minutes left. Any questions from the audience? If not, we can keep you going. Steve, maybe we can pivot from the programs then to kind of thinking about like the business and the portfolio a bit more comprehensively. So you've alluded to kind of capital considerations a couple of times throughout the conversation here. Are there parts of the pipeline that you think are just more inherently amenable?

More part -- more what?

More just amenable to being partnered away or establishing partnerships for.

Well, I think it's hard -- partnering away, it sounds like you're giving away your children, right?

Establishing a partnership.

I think I'll start with -- we have 100% worldwide rights to everything in our portfolio. I don't think there's anything that, over time, we will own -- we will not partner at least in some parts of the world. And generally what happens in partnerships, in my perspective at least, is little companies should lose based on every objective and measure you can think of. And the only thing we have is because we're smaller and more focused, we have crisper, faster decision-making. So, you end up doing a partnership too early and you often end enough with small company resources and big company decision-making. So the later we can go, hopefully, the more we go towards big company resource -- decision making because -- sorry, resources because they have the global infrastructure we need. And hopefully, we can hold onto that small company decision-making. So that's -- like we don't want to do it too early because that can really, really bleed a lot of value out of the company. So -- but we will partner, you know, allogeneic CAR T cells and oncology, we will partner allogeneic CAR T cells and autoimmune disorders, and we will partner type 1 diabetes. There's no way we're going to out-license things and launch them globally. It just won't happen. So that -- the great thing about partnerships is that they both bring in capital and may decrease your burn, right? The downside to them is that they can slow a program down if you don't have complete strategic alignment and kind of synergistic capabilities and clarity around decision missing. So we're in no rush to do it, but we will do them. We will do them across the portfolio.

Got it. Okay. Great. Maybe I'll ask one final question to close this out because we don't have too much time left. Let's touch on manufacturing maybe. Came up a couple of times in the conversation...

Which one?

Manufacturing. So just educate us a little bit about current capacity, how far that gets you for your current development plans.

So I'll start with -- I don't think manufacturing generally in this space is so much about capacity as much as it's a scientific problem. And it's a process development and analytical development to really understand and control your product. Within the CAR T cells, if you look at the current manufacturing that we have, I don't think we need to do anything to launch this and be successful with really nice cost structure globally. And so to take a single -- so if you take a single manufacturing run, and you assume in oncology, we use the middle dose and in autoimmune, we use around the low dose, so from manufacturing run, we would get about 450 patients in oncology and around 1,000 patients in autoimmune. That includes all the holdbacks for testing. So that means if you run 100 batches per year, which isn't that hard to imagine, that's 45,000 oncology patients or 100,000 autoimmune patients per year. So we get enough capacity from our current runs that we have drugs in our shelves that we will use from the oncology setting for these autoimmune studies that are about to start. And it's a totally different than what people think about the autologous setting. This is scaled. It's ready to go. [ Pluripotent ] stem cells are different, right? They're -- we're taking a process that can allow us -- big enough to allow us predictably to make hopefully enough cells for a nice clinical study. We have to get to -- imagine if we're really successful here and we make enough drug product for 100,000 patients per year and we do that for a decade, and it works, and it's a single treatment, it never goes away, after a decade, we've only treated 20% of the people in the U.S. and Europe. I can't understand how we're going to get to enough manufacturing capacity to really satiate to them, if it truly works like we hope it does. It may be we have to dose every decade or 2, right? And that again is -- or every 5 years -- and that really bleeds in the number of patients we can save. So that's a scientific challenge, like really trying to control an entire genome and cell as you move across trillions of divisions, right? And that's one we still have some work to do on. So if we've got the T-cell thing nailed, a lot of work to do with the beta cells with other [indiscernible] in our portfolio.

Got it. Okay. Great. With that, we're actually out of time. Steve, thanks so much for joining us. Really appreciate it.

Thank you, everybody, for your time and your...