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

Good afternoon, everyone. Thank you so much for joining us. Really pleased to have Steve Harr, President and CEO of Sana here with us. Steve, to start here, could you provide a high-level overview on the key programs where they stand, how the company is positioned heading into the second half of this year, given you have a slew of catalysts coming up and where you're most focused over the mid- to long term?

Yes. First off, thank you, everybody, for joining us. It takes a brave soul to put on the jacket and maybe even a tie in the sweltering heat and humidity of Miami in June. So very much appreciate it. And thank you, Salveen, for -- and Goldman Sachs for inviting us. Thrilled to be here. So I think you probably know as well, we'll be making forward-looking statements along the way, so feel -- please do take a look at our risk factors in our 10-Q. We spent a good bit of time writing them, and hopefully, they can be helpful in navigating the rest of the company. So where are we? What are we up to? What are we excited about? The -- we have 4 different drugs in human testing right now in 7 different indications. And hopefully, we'll have data from all 4 of these therapeutic candidates this year. And each of them in certain degrees, to a certain degree, are built off of the foundation of 1 of the company's technologies, which is what we call hyperimmune cells and hyperimmune cells have been gene-modified to hide them from allogeneic rejection. So put myself into you, you're going to recognize them as foreign and kill them. And we've seen that in transplant. So it's kind of [indiscernible] scientific field for years. And we've made a lot of progress, we think, in being able to hide cells from allogeneic and potentially autoimmune rejection. And we've shown this now across many, many different species in many different settings and including in the a host of nonhuman primate studies that have been published in journals, journals like the major journals in cell and things like that. So take a look if you're interested. The -- I might kind of walk through them in maybe even order of when we might see data and maybe the inverse order when they started in the human. So we have -- type 1 diabetes is a relatively simple disease in some regards. Unfortunately, a patient's immune system gets confused and obliterates pancreatic beta cells. And so the patient no longer is able to secrete insulin in a glucose-dependent fashion. And a 100 years ago, up to 100 years ago, that person died pretty quickly. And 100 years ago, there was an invention of insulin. And the goal of what we're doing is to take a stem cell, gene modify it so that it has these edits that will allow it to hide it from immune system and then grow it into a pancreatic beta cell and transplant that. And hopefully, you have a patient who has normal blood glucoses euglycemia for life without any immunosuppression. And so the first part of us understanding if we really nailed this in people is we're kind of taking a short head to get there. And so for the last about 20 years, diabetics, some diabetics around the world have been transplanted with cadaveric islets or primary islets from people who donate their pancreas. And what we're doing -- and they tend to work and there are a number of people walking around who are off of insulin, but they have to be immunosuppressed as if they've got an organ transplant. So what we're trying to do is gene modify these primary islets and see if we can hide them from allogeneic and autoimmune rejection. And if we can, then I would argue that a cure for type 1 diabetes becomes inevitable. We may not be the 1 who actually nails it and takes it to market and figures it all out. But at that point, you will have figured out all of the component boxes that you need to kind of make this happen. And so we should know that very soon, right? I mean we've said our goal is to have data in the first half of this year. I won't promise you that won't slip into 3Q. It could still be now in the first half -- or it could slip, but it's coming up very soon. And the goal is simple, right? We already -- the fields already proven that transplanting an adequate number of cadaveric islets will lead to euglycemia for these people. So what we're trying to do in the Phase I safety study, they show that we can transplant these gene-modified cells and if they live and function without any immunosuppression. And maybe kind of 3 layers you could get of efficacy. One is that you have a -- you see these cells survive and there's no immune response to them. And you see them survive on a radiographic like an MRI. And that's a good outcome. We're going to feel really good about it. But we'll always be a little bit nervous if those are really the cells we think they are, right? And so the best outcome, I think, that's realistic is that we see something called C-peptide and stably expressed over time. So when a beta cell makes insulin, it actually makes pro-insulin and it's secreted as insulin and C-peptide. And so when you see stable C-peptide, you know the beta cells functioning and making insulin in a stable way. So that's the goal of the stable C-peptide. And again, we did -- we hope to have data very soon. In some ideal world, the patient could have normal blood glucoses and either decrease or even off insulin. I wouldn't expect that from a Phase I study and since we've described this, our first in-human study. We've said that's your investment thesis, you should probably hold off and invest later. It could happen but is unlikely. And so that's really the 3 levels of efficacy and should be coming soon. The second drug, and I was probably longer winded than you wanted me to be. So I'll be relatively quick with these other ones, and then you can ask questions. And when things might come -- the B cell-mediated autoimmune disorders. And those are diseases like lupus, vasculitis, multiple sclerosis, myositis, a number of them. And we have a study that started in 3 different indications: Lupus nephritis, extrarenal lupus and ANCA-associated vasculitis. And for some of you who are older like me, you may have learned that as Wegener's [ or is ] granulomatosis. That's the old name for it. And what we've seen or the field has seen is that at least in some people's hands, autologous CAR T cells, targeting CD19 when given can be curative or potentially curative, that's probably the best word to say for these diseases. And for the last 20 years, there have been B cell depleting agent being developed for autoimmune disorders. And what's become clear is that the more the therapy depletes B cells, the better the patient does. And what it looks like with these CAR T cells is you may be eliminating the pathogenic B cell that makes antibodies and you get an effective cure. I don't know -- we don't know how long that will last, but at least it seems like you get durable remissions with no medicines. And so we started a trial. Our goal is to see kind of these allogeneic CAR T cells that we make, work as well as the autologous CAR T cells. We dosed the first patient a while ago, maybe few months -- maybe a few weeks ago, I know it was 4 or 5, 6 weeks ago. And we'll begin to get data as the summer progressed. So we should have something by the end of the year. Reasonable place to be would be something like the American College of Rheumatology or American Society of Hematology. We should -- you're not going to be determined if the drug works, but you can really begin to see does this smell if we're at the right dose? Does this begin to smell -- the real benefits we're seeing from autologous cells, but we've done this in a way that's readily scalable and very predictable and off-the-shelf and ready for patients. And the last have 2 studies in different blood cancers, lymphoma leukemia with a CD19 CAR T cell. And we also have a CD22-targeted CAR T cell for people who have failed a CD19 CAR T cell like Yescarta. The CD19, the trial started over a year ago. We should have a good bit of data by the end of the year. I think most people are looking to do. The field has been a little disappointed by progress of the CD19 CAR T cells. I think we think it's been pretty clear why they fail and that is immune rejection of allogeneic cells. And so our goal is to put -- transplant these hyperimmune cells and that the immune system won't see them and that they will provide a patient benefit that's at least as good as what you see with autologous CAR T cell. The best measure of that today, there's been 6-month complete response rates. I think that's kind of the hurdle that everybody is looking for us to clear data like that before the end of the year at something like ASH. Then there's the CD22 CAR T cell just getting going. It will have a handful of patients, again, probably towards the end of the year. So that's where we are. I can go into more detail on any of those.

Let's start with the IST study for type 1 diabetes. And help us understand how many patients you'll report data on as well as the translational risk of using the cadaver cells.

Yes. So IST is investigator-sponsored trial. So because we're not trying to commercialize these cadaveric highlights is being done through -- a partnership with an academic center. And so if you look at the -- if you kind of just take a step back, we're trying to prove whether or not the gene modifications we make, hide these cells from allogeneic and autoimmune recognition. I've asked a lot of people to come up with how you can come up with a false positive, meaning that it looks like you hide these cells, but it's not really true. And I haven't heard from a single person, a single reason how you can get a false positive. So I think in NF1, there's plenty, right? And if you have NF1 where you've done that, that's going to be in [indiscernible] everybody, but it's going to be broadly applicable in the type 1 diabetes population. So I mean, 1 patient is adequate. In terms of duration of follow-up, if you transplant any organ or cell into somebody without immunosuppression, it will be rejected in about a week or under a week. In patients who no longer tolerate immunosuppression and it has to be withdrawn, their cells will be killed within about 7 days. So our transplant team would argue that within 2 weeks, you pretty much know if it works. We might wait a little longer than that before we chat about it, just to make sure that you see that it's working. But in NF1, I think is plenty to tell you if the technology is working. And vice versa, if you see robust immune rejection of those cells, again, I would say in NF1, it's telling you that is inadequate and it's unlikely that it's going to be working broadly. So I think it's 1 of those things that doesn't take a lot of data.

If you see positive data here, just walk us through your own trial that you would take forward and how you would think about changes that need to be made or what you do on the floor there.

Again, just so we're kind of all speaking with the same playbook. The study that we're doing is gene modifying beta cell or pancreatic islets in the aggregate, that have been isolated from a cadaver and transplanting them into a patient. That's a really good proof of concept and -- but it's not a readily scalable solution for patients. So what we've been developing there our gene-modified throughput stem cells that we differentiate into islets, islets full of beta cells that we can hopefully make it -- significant scale and transplant into a disease that has 8 million people and growing around the world -- and so there are 4 -- I kind of [ started ] 4 real scientific challenges for that real drug. We call that SC451. One is can you overcome the immune rejection of B cells? We shouldn't imminently, right? The second has been making a gene [Audio Gap] comfortable with the genomic stability over time of these cells times. So just for context, we kind of make 1 or 2 mistakes in our genome every time we have a cellular division. And so much of our body is set up to deal with them and tie those cells. Here, what we're doing is we're putting cells into a media that enriches for cells that grow quickly. And so what you really don't want to do is have clonality because clonality over time could lead to some kind of a tumor, right? And so it's taken us more time than we thought it would to get really comfortable that we have controlled the genomic stability of this master cell bank. We think we're there. When we went -- if you look back at when we went public a few years ago, we would have told you we'd be dosing the first patient about now in this study, and we're not ready. It took us a few extra years to get there. So that's problem #2. We think it's in the rearview mirror. Problem #3 is making cells in enough purity potency in yields to run a Phase I study, Phase I/II. I think that, that -- we've got that. I mean I wouldn't again guarantee it, you got to the long-term HOT studies that's kind of the -- what we're waiting for -- so what we'll need to do for the IND to ensure you have the purity where something doesn't pop up unexpectedly. But I think we got that. The fourth challenge is making this at enough purity potency yield to be able to treat and make a number of 100,000 people per year. We're not close, right? We have a lot of work to do. And that's something that is going to be a real scientific challenge. It's not yet a scale challenge. It's still a scientific challenge for the next -- at least a number of years. So that's kind of where we are on the journey. We kind of went to something where we've put out INDs if they're going to happen this year. So we don't have any if that's not going to be this year. We would have told you if it were. Hopefully, it's not too far beyond that.

Pivoting to the autoimmune program here, clearly, with CD19 in these disorders, it seems validated to a degree as a target. But with regard to your platform, help us understand the ability to kind of derisk with your own asset, but then how you would...

Sorry, how do we what?

Derisk with your own asset, given the technology, but then also your outlook in terms of what is commercially relevant given it's a very different population from cancer.

For the different platforms that are out there? Yes. So first off, these B-cell autoimmune disorders, they're just -- it's gigantic. And unfortunately, there are still a number of people who are suffering from these diseases. The majority of which are women and many of which are young women. And so there's a lot of -- there's a big unmet need. And I think what we've learned over the last 25 years is that there are lots of ways to turn off and turn down B cells. And the better the therapy is at doing it, the bigger the therapeutic benefit has been. And that's true for antibodies. That's true probably for ADCs, and it's almost going to be true for these T cell engaging bispecifics. Now the challenge is that antibodies while they're very good, don't get into tissue. And we're -- that you have these at-- we have B cells -- the antibodies are made from basically B cells and tissue-resident plasmablast. And these tissue-resident plasmablast antibodies can't reach. They don't have the value attribution to do that. And so they're unlikely to ever be curative. And every case to date, they've actually required some additional immunosuppression, right? They're almost never used alone. So they're going to be important. We're going to have to grapple with them, but I don't think they are category killers. And you then have other modalities, other cellular therapies, right? Which are trying to take out B cells and plasma asset. So the question for any cellular therapy, you have to ask yourself is what kind of do you have around its biodistribution? And does it get into the tissues where these tissue-resident plasmablast reside. These tissue-resident germinal centers you have. And really, to date, the only cell that's shown itself to do that readily has been a T cell. So I'd expect that a number of different type of T cells autologous CAR T cells to work. Allogeneic CAR T cells may or may not work. We have to prove they do. I think 1 of the things we've learned from cancer is persistence of a CAR T cell or how long it is around the body is really important in being able to clear out every single last cell of cancer. And the challenge for the field in allogeneic CAR T cells has been getting CAR T cells that stick around long enough like an autologous cell. We think we've done that, but we have to prove that to you. Within these B-cell muted autoimmune orders, we don't even really know if persistence is a feature or a bug, right? And so I think you'll see a number of different companies trying to develop allogeneic CAR T cells, some of which are really good at hiding from immune rejection, some of which aren't and they may or may not, there's ones that aren't, may or may not be adequate. They may be better for all we know. So I get why they're doing them. So it will be a field that we learn for a while. Based on our cancer data and our preclinical data, I mean, I'm pretty confident we'll get rid of B cells. I don't know if we'll do it in a way that you have the efficacy you've seen from autologous CAR T cells yet. I mean, they've just been I mean, they've been really surprising to me how great the data are. And I would love for our therapy to work that well. And we can deliver. I mean, if the data -- if the dose is similar to what it is in autologous CAR T cells, our current manufacturing process will make over 700 batches per run. So to put that into context, I think sometimes that number is hard to fathom. If an autologous CAR T cell does 100 manufacturing runs, their best case scenario is they treat 100 patients. If we do 100 manufacturing runs per year, we treat 70,000. And so the ability to really commercialize this and make a broad impact for patients, it's just -- it will be very, very different. And I think we can deliver -- it's off the shelf and ready to go tomorrow for the physician. So fingers crossed.

On a more technical side here. Is it understood why when autoimmune B cells are depleted with the B cell population that repopulates comes back as nonself reactive.

Why it comes back -- what?

It's nonself-reactive.

It's not reacting to the auto -- so -- yes, so I think there's no real understanding of this. But I think there are some hypotheses. So you have -- the B cell lineage, you go just very simply, kind of like a pre-B cell, B cell, memory B cell plasmablast, plasma cell, right? It's kind of how things go. So plasma cells sit in your bone marrow, right? And they make a little bit of antibody and they turn back on -- when generally when you see the stimulus again. And so there's some hypothesis around there, and they're usually CD19 negative that those cells will stick around like a vaccine because the antigen is no longer there to stimulator. They become plasma cells. They sit in there, and that isn't impacted at all by a CD19 CAR T cell. So then all of the -- when you have persistent stimulus. You continue to express CD19 in the B cell receptor when you get rid of all of those cells. And you don't really -- you have to get rid of every single pathologic cell. And if you do, then there's no -- it's just -- then they're just back into randomness, will the patient develop an autoimmune disorder again. Will they get exposed to something like a virus where a B cell gets confused, it has a molecular mimicry for its own organs. And so -- but your B cells come back. They just don't have any of the memory of what they used to have. So if you look at George [indiscernible] data, so the way that our B cells, we make IgM, that's how every B cell is. and you class switch into IgG or IgA or IgE, right? And that's based upon the stimulus. And what you see is when the cells come back, it's all IgM, meaning they got rid of all of the things downstream -- that kind of are going against anything. So if you actually had an ongoing infection and you got this therapy, it wouldn't be a good thing, right? So that's -- you don't want to do that. That's a little bit about why I think you're getting back. It just -- think of it as control all the leader of your computer. It works a lot of times, I'll tell you -- I've stopped calling IT and at least try to control-all delete. And that's really what you're doing to the B cell population.

Given your approach in the homogeneity of the cell type, can you do a basket trial in autoimmune...

Can you say -- what?

Can you do a basket trial in autoimmune disease?

Yes. So -- we have an IND that's open for 3 different indications in the B cell-mediated autoimmune disorders. First 1 is extrarenal lupus, second 1 of lupus nephritis and the third 1, as I mentioned, is ANCA-associated vasculitis. And we can add more indications to that as we go. And so it gives us more -- I think we were allowed to do that because we have a safety database that's evolving and emerging in the cancer setting, and it's the exact same drug, right? And in fact, the first patients treated are with the exact same manufacturing batch, right, to just decrease risk. And then we'll modify that as we go forward. So we're able to -- we still have to wait until we find our dose. There's still that really like it's like watching paint dry sometimes in the CAR T space, where you can only treat a patient every 28 days. And it always turns into 6 or 7 weeks as you get to day 28 and the patient then gets lymphodepleted and then they get scheduled and all that. But every 6 or 7 weeks, we'll treat some with. And once you clear a dose, we can really kind of get going across many, many indications.

Pivoting over to the oncology programs here. Help us understand when we see the 291 data later this year. how you're thinking about next steps if the data looks strong. what you're thinking about with regard to next steps? If the data looks strong?

In oncology, yes. It's a great. I think that's a source of a lot of internal dialogue. And we actually just brought in a new head of this space for us of blood cancer is a guy named John [indiscernible], who ran lymphoma and leukemia J&J. I want to make sure that he has a chance to really weigh in. So the B cell cancers, right? You've got all these non-Hodgkin lymphomas, right? Follicular -- a lot of indolent lymphomas and then the more aggressive things like large B cell lymphoma. You then have the acute leukemia and chronic leukemias and they work really to varying degrees in all of these different indications. So our challenge is this stuff will probably work at least to some degree, how [indiscernible]. And then you already know in the first few patients, we had some complete responses, right? So our challenge is navigating a field with a number of different competitors, including autologous CAR T cells, where you're seeing survival data that's continuing to evolve and is evolving in a nice way. And these T cell engagers, right, bispecifics, which create a very crowded marketplace. So most likely, we'll go into some broader thing like second and third line lymphoma as well as CLL. That's kind of the base case. Right now, most of the autologous CAR T cells have shown a benefit against in head-to-head trials against autologous transplants in the second line setting. The majority of uses in the third line setting, but in transplant centers, you're seeing them displace more and more in the second line. And we have to both -- we probably have to develop broadly because most of the community and most cancer patients aren't going to get these in the second line is that's the only place your label is. It can be a little limiting. So we'll -- but at the same time, in the places that do the most volume, they're moving the second line. So we'll do both. So I think that's probably end up. And the way the rate limiter there is both data and manufacturing. So when you begin a registration study, really with the -- particularly with the cellular therapies or gene therapies generally, where the product characteristics are less well understood than a pill, right? You really need to begin your registration study with your commercial process. And so we are in the throes of launching -- I'm sorry, of locking our commercial product, then we are -- we'll tech transfer it into the manufacturing. And that's kind of a late next year kind of thing. So we've got some time. It's not -- to run more studies to understand where we go, just manufacturing is a rate limiter.

Right. Great. Let me up to the audience for any questions. Let me keep going here. Talking about business development and partnering strategy. You've talked about, well, you have about $300 million in cash and guided to a specific cash burn this year. How are you thinking about just overall cash runway and BD aspects with regard to your portfolio?

I'll start by saying I think we think about it a lot, right? I mean it's -- developing the cellular therapies is expensive. And there's no way around that, right? And 1 of the beautiful things of something like an allogeneic cell is the scale that you can do it, but 1 of the challenges of that is the very early investments that you have to make in that scale and product comparability. And even things like GMP grade, guide RNAs, mRNA, plasmids, all these things. So we've burn a lot of money. We do own 100% worldwide rights to all of our assets. That includes things that are in human testing that we already talked about as well as whole platforms that we have -- we're getting into like our in vivo delivery capability. And it's unsustainable for us to do that. And I've generally kind of taken the view that small companies, we have 1 competitive advantage, and that's what we can make faster and better decisions just because we're focused in small and nimble and big companies will beat us on everything related to resources, capital, even people, geographic reach. And so the challenge of most partnerships is that you get a big company decision-making a little company particularly early in development. What we've really been trying to get to is past the periods of proof of concept in humans where we really understand the drug product and the critical decisions are going to be on things that are very long tail, like your Phase III development plan and your commercial regulatory strategy. And at that point, it makes more sense to have a global partner. We will not be able to launch these drugs everywhere in the world, right? And so we're not that far away from when we might consider a partnership and that would be in all of these areas in type 1 diabetes, B cell-mediated autoimmune disorders and cancer -- in oncology. So most likely, we'll continue to raise money as well through the equity markets, but it will not be -- the gross burn will be a lot lower because we'll have partnerships coming in, but to bring cash and defray some of the spending over time. But we're not going to rush it. It's a long-term commitment that you're making these partnerships and the wrong partner, the wrong structure can be the death nail for a company. So we're in no urgency to do that, assuming that you guys and the investor community continue to help us support develop these drugs.

Steve, 1 last question here. You touched base on the other platform that you have as well as SanaX, which is a vertical working on kind of novel approaches here in cell therapy. Help us understand how you think about prioritizing the efforts to those other 2 verticals when the in vivo might move into the clinic.

So like the in vivo delivering things? Yes. So prioritization has been really challenging for us in many regards. We've had the good fortune of several things working, right? And so -- and even things have dropped into our lap like these B cell-mediated autoimmune disorders, which are going to be very capital intensive, and we're in the middle of a land grab, right, to get to really get a number of different indications and develop these drugs as quickly as we can for patients. And so that's something that both is a great opportunity, and it's been limiting and some of the things we can do. So we started the company with 2 main kind of platforms or ideas. One was to be able to develop technology that would allow us to hide cells from allogeneic rejection because that would allow us to really scale the cell therapy, which to date has been either limited by autologous delivery or the toxicity of immunosuppression. The other is to -- is in vivo delivery. So you can kind of do whatever you want to a cell in a petri dish. The challenge is getting the material into a cell in vivo. And we have a cell-specific delivery capability that can deliver a bunch of different payloads. It can do genetic reagents, base [ reagents ]. It can integrate day, it can do proteins, mRNA, that kind of thing. So we actually -- the lead drug there goes -- targets CD8 positive T cells. And we're moving forward the in vivo CAR T cell. And we went through GLP tox studies last year, which showed very nice delivery to circulating T cells and really -- and no off targets. And it was quite encouraging. We did the GMP tech transfer, and we were ready to go. We just didn't -- we couldn't really execute the bandwidth to do 5 INDs last year. And so we kind of put that back into a research phase where we're trying to make them a little bit better, more potent and such. And so -- that's something we would like to bring forward. I don't know. We have 1 or 2 kind of killer experiments we're doing right now. And assuming they work, I don't know if that will be by the company as a partner. You'd even see us spinning it out into a [ NewCo ], but we need to move it forward. We can't just leave it on ourselves, and we'll figure that out. And some of the -- I think we would all like to do it ourselves, in vivo delivery with no lymphodepletion to make a CAR T cell in the autoimmune setting, in particular, it seems like the killer app. And so we'd like to do that ourselves if we can, but we may or may not have the wherewithal to do it. So that's kind of that platform. It's also in development for delivery to HSCs or hematopoietic stem cells for diseases like sickle cell. We've had some success there. We've shown you guys some data at an Analyst Day about a year ago. You'll see us publish some really good information, I think, showing the ability to either gene edit or base edit into HSCs in a cell-specific way within the context of really flawed animal models, so put that caveat, and we'll publish that in a really -- in a good journal as the year progresses most likely. So stay tuned for that. It's a nice platform. We will develop it at some point. We can only digest so much right now though.

Great. Well, with that, thank you so much, Steve.

Thank you for the time and your attention. Take care.