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

So welcome to the first day of the BofA Health Care Conference. My name is Geoff Meacham. I'm the senior biopharma analyst. We are thrilled today to have Sana with us. And speaking on behalf of Sana is President and CEO Steve Harr. Steve, good to see you.

Great to see you, Geoff.

So we have some questions, but maybe just give us -- for those on the webcast or in the audience that are not as familiar with the story, just give us kind of a high-level view, and then we'll get into -- right into some clinical programs.

Great. Thank you for having us. And I think all of you guys know, we'll be making forward-looking statements, and you can reference our recent 10-Q filing for risk factors. We spent a lot of time on them. So take a look. So the company was founded on the idea of being able to make cell therapies for prevalent diseases at scale and broadly accessible. We went after some of the big problems of cell and gene therapy to start. One of those was the ability to transplant allogeneic cells, in particular, to overcome immune rejection of allogeneic cells. In other words, in vivo delivery, which I'm happy to get into a bit later. We'll start with the rejection. So you try to put myself into someone else, they'll be seen as foreign like a virus and rejected. And to date, the way the fields tried to overcome that is 1 of 2 things, either utilizing autologous cells, which are very difficult to scale, or immunosuppressing patients, knocking out their immune system, which can be very difficult to tolerate. So our goal has been to figure out really the underlying basis of transplant rejection, be able to make cells at a scale that could act as a therapeutic and to be able to transplant them into anybody. And if you take a step back, pretty much every disease you can think of is caused by damage to or a missing cell. And so it's an opportunity to go after a lot of very prevalent and important diseases. So we've made a lot of progress. I'll give you just a sense of the technology. There are 2 really important arms of the immune system you have to grapple with. One is called the adaptive immune system, which is B and T cells. You kind of all hear about that with vaccines and things. And the other is the innate immune system, which is often evolved to deal with things that the B and T cells don't see. And the real challenge has been that we know how to knock out the recognition from B and T cells, but cancers and virus has figured that a long time ago. So our innate immune system, in particular, natural killer cells, will deal with those cells. So the real key has been trying to figure out how to turn off, in particular, natural killer cells. And we think we've done it. And we've now shown we've transplanted cells across all kinds of different species, including nonhuman primates, in different locations for very long periods of time. And we haven't seen really any evidence of immunologic recognition or rejection. We've shown you some data -- early data in humans that are very consistent. And we're now looking at developing drugs. Right now, we have 4 clinical trials ongoing across 7 different indications, all of which you hope to have data in this year in big areas like blood cancers, lupus, type 1 diabetes, areas like that. That's a little bit about us.

Yes, perfect.

So let's talk a little bit about the type 1 diabetes program, probably the most topical in your meetings. So give us a background, Steve, on the nonhuman primate data, kind of what you learned and how you expect that to be one of the lead indicators of what you could see in humans. And also what are the challenges with that?

Yes. So step back, type 1 diabetes, the immune system of the patient recognizes and kills the beta cells, pancreatic beta cells in that patient. Beta cells make insulin. So up until 100 years ago, these people just died pretty quickly. And with the advent of insulin, people have done reasonably well. But it's -- there's still about a 10- to 15-year shorter expected life span and a lot of complications that come along the way. And so the goal is very simple, is to be able to replace those cells, transplant them into the patient and for them to have normal blood glucoses off of insulin and with no immunosuppression. So today, what's known is that, one, people have been -- for about the last 20 years have been doing primary islet transplant. So they take islets from the pancreas of someone who recently died, a cadaver, and they are transplanting the patient with significant immunosuppression. And they work for a lot of patients. There are many people who are -- have euglycemia or normal blood glucose off of insulin. But they have 2 challenges. One, it's a very variable and difficult to scale manufacturing supply, and that leads to different outcomes for patients. And two, they're on immunosuppression their entire life. And there aren't that many people for whom lifetime immunosuppression is better than lifetime insulin, right? So then others have shown that you can make stem cells into beta cells and transplant those into people. And again, what you've seen is that patients can really do quite well off of insulin with normal blood glucoses. But again, there aren't that -- so now you have a more scalable and replicable manufacturing supply, but you still have the challenge of immunosuppression. So the last leg of the 3-legged stool to get to a cure is to be able to say we can get rid of the immunosuppression. So that's been our primary driver here. So what we've shown in nonhuman primates is that we can induce type 1 diabetes chemically and eliminate their beta cells. And that animal will have florid diabetes, insulin dependent, transplant, gene modified, islet cells with no immunosuppression. And that animal will be euglycemic off insulin with no immunosuppression for the duration of the study. We did this for 6 months. We then gave them a drug that would block one of our -- CD47, which you over-express to hide it from the cells. And those cells were rapidly eliminated, and the animal went back up in diabetes. So now you have proof of concept that -- really around showing in a nonhuman primate that you can transplant cells, get euglycemia with no immunosuppression. So we're taking that into humans. And the really only difference in what we did in the nonhuman primate in our ongoing human study is, one, it's humans, right? And that's important, right? There could be differences in the immunology in nonhuman primate and human primate, but they're probably pretty small. Two is a mechanism of type 1 diabetes. It was chemically induced with the nonhuman primate, and it is autoimmune in the person. And we can get into -- I think we've done a really thorough job of showing why we're not too worried about the autoimmune reaction against these cells, but it's not a 0 risk, right? The third element is it will be a smaller dose. It's a first-in-human study, right, and things like that. And so our goal is not to see what we saw in nonhuman primates. We may get fortunate to see that. But in a first-in-human study, what we want to see is that these cells -- we'll transplant them into the arm of a person. The cells survive and that they function, right? And there's no immunosuppression. So the way you measure cell survival is most base function level would be radiologically. So you get MRI, see cells there, no immune response to these cells. That's baseline. The next best and really what I think should be the goal of the study is to see C-peptide levels that are stable. So when a beta cell makes insulin, what it does, it actually makes pro-insulin. And when it's secreted, it's made -- you secrete C-peptide in insulin. Pro-insulin becomes C-peptide insulin. So if you see C-peptide, you know the patient is making their own insulin. So if you see stable, no immunosuppression C-peptide, that said, these beta cells have survived and they're functioning. The third would be that we get rid of their insulin. I think that's not realistic in the first set of patients. It could happen, but it wouldn't be your base case. So that study should have data soon. It will tell us, hopefully, whether or not we truly crack the code on allogeneic and autoimmune rejection in the type 1 diabetic. If it works, I would say that at that point, a cure becomes more or less inevitable, right? We might screw it up. It may not be Sana that gets it done, but the field will figure it out.

And just along those lines, Steve, when you look at the persistent rates, what does -- what do you think success looks like? Is it 1 month, 6 months, like a year?

Success is a long, long time, right? But what should be true is that if you transplant -- if you do an organ transplant into a person and you don't immunosuppress that person, that organ or those cells will be rejected in a matter of days. So they'll be gone within 7 to 10 days. If you have a patient who has to come off their immunosuppression for some reason, they will reject an organ within about a week. So by a couple of weeks, you kind of know if it's going to work or not, right? There's nothing that should pop up after that. We've kind of laid out arbitrarily a month is a nice time to see. Nothing should happen after that. I'd still like to see it last -- we want it to last a lot longer than that for the patient's sake. Patient will benefit from this. But you should know if it works or not that early.

So this immune-cloaking approach, if you want to call it that, outside of type 1 diabetes, it obviously has many more other applications. Like what is sort of the menu of what you guys are thinking about?

Menu is broad. The focus of the company to date is around things in human testing a few things behind them. In human testing, we've got cloaked T cells, so allogeneic CAR T cells that we're developing for both B cell-mediated autoimmune disorders as well as blood cancers. We have the type 1 diabetes program. Behind that, we've got a glial progenitor cell program for different neurologic disorders. And you'll see other cell types over time. I mean you can do a lot of things with this. You can do a lot more of it than we can, right? And so we'll think about that over time with potential partners. Every one of these -- to be really clear, every one of these stem cell derived products is really complicated manufacturing. It's not a plug and play.

And let's talk about that just with respect to Sana's capabilities and kind of the steps that you've taken to build versus partner versus buy and how that could change over time as you potentially move up to larger clinical scale and then commercial down the road.

Yes. So different in T cells and type 1 diabetes. Within the allogeneic CAR T cell space, it's a really complicated supply chain. So it's a combination of CDMOs and partners and things we do ourselves, right, to be clear. We're building out our own manufacturing plant in Bothell, Washington, where for a large portion of our portfolio, our goal is to run the registration study and launch the drug from there. We kind of -- I think in the allogeneic CAR T cell program, we probably solve the scale problem, right? We can make hundreds of doses per manufacturing run. We do still have to prove that when you get -- it's a donor that gives you these cells. So that across different donors, we have a consistent efficacy and safety profile. I think that's -- I'm assuming that's cracked, we can make plenty of drug to treat. It's not -- if you look at what the likely dose is in autoimmune as an example, if it works like the autologous setting, we'd make 700-ish doses per manufacturing run. That means out of 100 manufacturing runs a year, you'd get 70,000 patients. It just isn't that complicated to think about autologous company doing 70 manufacturing runs. I mean we'll have more safety studies we do, but generally, it's like -- it's pretty straightforward. So that's not that challenging. Type 1 diabetes is more complicated, right? And there are 3 kind of critical manufacturing risks along the way. Kind of think of them. One is making a gene-modified master cell bank where you're comfortable with the genomic integrity over time because it can -- every time you cell divide, you make a couple of mistakes. It's kind of what allows us to evolve. And we want to make sure that, that doesn't occur in a way that we're selecting for cells that become cancerous, right? So that's part 1. We spent a lot of time on that. Part 2 is be able to make enough cells in adequate purity potency and yield for a Phase I/II study. I feel like we're pretty good at that, right? I wouldn't put that into your big risk category. I mean it's not 0. And part 3 is be able to make enough drug to be able to supply a market that has 8 million people, right? That's a big, big step. And we have a lot of work to do to be able to do that. And you have to do that a certain extent at the time you begin a registration study. It's not that far in the future. So there's -- it's a scientific leap to be able to do that, right? And we can do some of it, but we'll need to really grow that capability. A lot of that science, some of that is capital, right? It's not really just scaling up, right? You've got to -- or kind of building more factories. It's really we have to kind of get more from every run, right?

Makes sense. So let's talk about -- so 291. So we talked about the type 1 diabetes and B cell malignancies. I guess to take a step back, I mean, when you guys first IPO-ed, the idea was CD19 and leukemias, lymphomas, BCMA for myeloma. And that kind of model has evolved since then, right? I mean these markets have gotten pretty competitive. There's a lot out there. And you guys have sort of shifted a little bit with respect to type 1 diabetes. So the focus has evolved. But for 291, talk about kind of what we could expect from the first set of data, maybe set the stage for that.

Yes. I guess I might characterize it a bit differently, but it's not way off. I mean there's no question that when you look at lymphoma, leukemia, multiple myeloma, they're very competitive landscapes and that as we go into those with an allogeneic CAR T cell, if you assume it works as well as we hope it does, we still have to grapple with autologous CAR T cells and bispecifics and things like that. And they're entrenched. They're getting survival data. They're moving upstream, all of those things. Those are things we kind of thought would happen, but they definitely -- it's a competitive marketplace. We have to grapple with that. And we have had though this -- we've always had an interest in autoimmune disorders. The data that came out of Germany from Dr. Schett are just so transformative in terms of kind of how you think about that, the B cell mediated autoimmune diseases. This idea that you might have curative intent at the time of a treatment is like not really in the -- was in the lexicon of people 5 years ago or even 3 years ago. And we have to be focused on that because in there, one, there are a lot more people that we can help, right? Two, I would argue that the allogeneic players have a much of a much bigger impact. And we're running alongside them, or we can even maybe beat everybody to market because we've invested already in the manufacturing. And if it really works, they'll have to grapple with us instead of us having to grapple with them, or there is something to that. But the autologous CAR T cells work in that space, and they'll have a place. The bispecifics work. They'll have a place. And we'll still have to grapple with them over time.

So if you look at autoimmune though, overall and including some of the more orphan-ish inflammation conditions compared to classic sort of hem/onc, right? I mean you have a different risk/benefit profile, chronic therapy versus somebody who has a cancer. And I think it's just FDA and EMA look at that a little bit differently from risk/benefit. Talk about that in terms of the context of your -- the platform at Sana and what you could do to kind of get -- have a competitive safety, tolerability profile in addition to obviously efficacy, which leads a lot of [ these ].

Yes. So these diseases are different within themselves, and they're different from blood cancers in some regards, right? You have to do some arm wrestling to convince me that a lot of lupus nephritis is different and risks in like an early-stage lymphoma patient, right? They both have pretty difficult outcomes in front of them with a lot of toxic medicines and things. If you can offer people a onetime curative medicine, that would be really just spectacular, right? It's probably the same with multiple sclerosis and certain lupuses, Wegener's granulomatosis or ANCA-associated vasculitis. Again, some of these are really bad. You go into something like an IgA nephropathy, it's more middle of the road. It's not quite as bad disease, right? [ I'm not saying minimize what they have ], but they -- it's not quite as cream of an outcome. So we have to, first of all, start in diseases where patients are quite sick, right? But patients are trading off chemotherapy, steroids, other [ dis-incs ] that are really toxic. For potentially onetime treatment, they're done with their disease, right? So that's part 1. Part 2, within the allogeneic platform, we have a couple of potential advantages. So if you look at that lymphoma risk, it's popping up, right, within the T cell space -- the CAR T cell space and B cell malignancies. What you've seen it looks like is these are secondary malignancies related to either viruses in the patient's T cells or as a consequence of all the chemotherapy they've gotten, right? They haven't really seen it from CAR insertion, right? And so if that's true, we have a couple of advantages. We can screen out preexisting T cell viruses, right? We can actually screen out certain insertions if we need to, right? And we will be donating to the patients -- the drug will come from a healthy donor and sent to somebody who's been undergoing T cell toxic therapies for many, many years. So there's at least a theoretic benefit in terms of fewer T cell lymphomas and infection risk. But I like our chances in the autoimmune setting for that reason. And I think there will be a number of patients for whom it will be transformative. I don't think it will work as well for everybody. And as the early data out of Germany, we're 100% complete responses with no one recurring, that's just -- life doesn't work that well. Drugs don't work that well. And we're working in some. Some people will probably recur. Hopefully, we don't have any meaningful toxicities and we go forward. I think it can be a really, really important drug class. If you look at the B cell depleting agents, they transformed a number of different therapies. They've done very well commercially. And these are substantially more potent than the antibodies.