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

Good afternoon, ladies and gentlemen, and welcome to the Sana Biotechnology Uppsala Data Release Conference Call. Our host for today's call is Nikki Keith, Sana's Vice President, Finance. [Operator Instructions] I would now like to turn the call over to your host, Nikki Keith, you may begin.

Thank you, Jen. Welcome to our Uppsala Data Release Conference call. Joining today's call from Sana are Steve Harr, our President and Chief Executive Officer; Sonja Schrepfer, our Head of the Hypoimmune Platform; Dhaval Patel, our Chief Scientific Officer; and Gary Meininger, our Chief Medical Officer. Earlier today, Sana released top line results from the Uppsala investigator-sponsored clinical trial by means of a press release that can be found on our website at www.sana.com. During this call, we will make a number of statements that are forward-looking, including statements regarding our vision, progress and business plans, including related to our HIP technology and type 1 diabetes program, the potential impact and application of the data we will discuss today, including the possibility of developing a curative single treatment for type 1 diabetes, and the potential ability and impact of deriving an off-the-shelf allogeneic therapy that does not require immunosuppression at scale using our HIP technology. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projected on today's call. We undertake no obligation to publicly update with any forward-looking statements. With that, I'll turn the call over to Steve.

Thank you, Nikki, and thanks to all for joining. We believe the data we will discuss today are transformative for Sana, the cell therapy field and most importantly, patients with type 1 diabetes. Cell therapy has offered significant promise, but its impact has been limited in large part because of immune rejection of allogeneic cells. Sana's goal has been to change the field by overcoming this immune destruction. We make a series of genetic modifications to cells, which we call our hypoimmune platform or HIP, rendering them invisible through recipient's immune system. We have carefully studied and published preclinical data supporting this platform and develop foundational intellectual property to protect our investment. We have also released early results with SC291, an allogeneic CAR T targeting CD19, where data are consistent with the conclusion that cells with HIP gene modifications evade immune detection. That said, the most rigorous test in the area we think we can have the most transformative impact is in type 1 diabetes. Over the past several decades, patients with type 1 diabetes have begun to receive islet transplants, either from cadavers or stem cell derived. And many of these patients are off insulin therapy for over a decade, but they must take strong immunosuppression, which has meaningful side effects and limits impact. In order to make a curative cell therapy for the broad type 1 diabetes population, we need to get rid of immunosuppression. We and our collaborators at Uppsala University in Sweden designed a study to explore whether HIP-modified primary islet cells can evade immune detection, survive and function after transplant into a patient with type 1 diabetes. As previously discussed, we believe that a single patient in this study can be transformative. Without immunosuppression, unmodified islet cells will be rejected. We have met all the goals for this study. The patient who received HIP-modified islet cells and no immunosuppression is doing well and is now making his own insulin for the first time in decades. When combined with progress elsewhere in the field as well as with our own HIP-edited stem cell-derived pancreatic islets, today's data make us optimistic that a curative single treatment for type 1 diabetes, meaning normal blood glucose with no insulin injections and no immunosuppression is now likely inevitable. We still have work to do to make it a reality. That said, we have every intention of delivering this transformative therapy for patients. We also believe the immunization seen with pancreatic islet cells is generalizable across a number of cell types, and we will continue to press forward with this technology across our portfolio. Anybody with type 1 diabetes or with a family member or a close friend with type 1 diabetes knows that insulin therapy is not curative and the tremendous lifelong burden that the disease and insulin therapy place on patients and their caregivers. Today, approximately 8.4 million people worldwide are living with type 1 diabetes and current estimates are that unfortunately, prevalence will double over the next 15 years, meaning that almost 17 million people will have the disease. The current lifelong economic burden of type 1 diabetes is estimated to exceed $800 billion in the United States alone. Despite a number of recent advances, most patients do not reach recommended glucose targets and type 1 diabetes remains a significant unmet need. Insulin is not a cure and the diabetes community is not satisfied. Type 1 diabetes is a disease of missing beta cell. and replacing that cell has a chance to be curative. For the past several decades, some patients with type 1 diabetes have received an allogeneic primary islet cell transplant. Some of these patients are now off insulin for over a decade, and the FDA approved the first primary islet therapy for type 1 diabetes in 2023. However, the impact of these therapies has been quite limited. The cadaveric source of the islet cells significantly limits the scalability and leads to meaningful variability in product quality. Patients also need strong immunosuppression. There just aren't that many patients for whom lifelong immunosuppression is better than lifelong insulin therapy. But the transplants have proven that replacing missing islet cells at the right dose can have transformative clinical impact. Over the past several years, several groups have shown that it's possible to make pancreatic islets from stem cells. Transplanting stem cell-derived islets has led to meaningful early clinical benefit. Stem cell islets are likely a more consistent product and have the potential to help the scale challenge. However, little has been done to deal with the immune destruction of the transplanted cells and recipients still require strong immunosuppression. Therefore, the final leg in the stool to create a potential curative therapy for type 1 diabetes is eliminating the need for immunosuppression. If we can show that we can transplant pancreatic islets without any immunosuppression and see them survive and function at that point, we believe a cure becomes inevitable. We know we can dose higher over time given the progress elsewhere. The study we are discussing today was designed with that goal. We can then put all the elements together for SC451. It's worth taking a -- briefly taking a step back to better understand our approach to allogeneic rejection and progress to date. There are 2 arms of the immune system, the adaptive immune system of B and T cells and the innate immune system of cells such as natural killer cells and macrophages. Knocking out the expression of MHC Class I and Class II can deal with the adaptive immune system, but natural killer cells kill cells without these proteins. Sana's insight is that overexpression of CD47 in the context of knocking out MHC Class I and Class II hide cells from both the innate and adaptive immune system. The team at Sana, led by Dr. Sonja Schrepfer, who joined us at the founding of the company after a career studying transplant immunology, most recently as a professor at UCSF and who you will hear from shortly, has made significant progress, over many years, in understanding this biology. We have published multiple papers in cell, nature and science journals, updating the scientific community on many aspects of this progress. I want to highlight one study with particular impact for type 1 diabetes. We have previously shown that transplanted allogeneic pancreatic islets in nonhuman primates leads to rapid immune rejection of the cells. In this study, we explored whether HIP-edited pancreatic islets could survive and reverse type 1 diabetes. First, we induced type 1 diabetes in the animal chemically. We then isolated islets from the pancreas of healthy allogeneic nonhuman primates and made the HIP gene edits. After developing type 1 diabetes, the animal required insulin therapy to manage the blood glucose and to survive. After 2 months, the team transplanted modified pancreatic islets and the nonhuman primate maintained, essentially, normal blood glucose for months with no insulin or immunosuppression. Six months after transplant, we infused the animal with an antibody, the CD47, which, as expected, led to immune clearance of the cells. The animal rapidly redeveloped diabetes, proving the transplanted cells led to the benefit. On the right-hand side of the slide, you see the measurement of C-peptide. Pancreatic beta cells make proinsulin, which is cleaved into equal amounts of C-peptide and insulin when secreted, making C-peptide a direct measurement of insulin production. The C-peptide levels show the animal making its own insulin and correspond to the clinical benefit on the left. This study is the first and only study that we are aware of that shows a reversal of type 1 diabetes in a nonhuman primate without the use of any immunosuppression. We embarked with collaborators at Uppsala University to understand if the survival and function seen in preclinical studies and in humans with SC291 translated into people with type 1 diabetes. In essence, the study replicates this nonhuman primate study with 3 important differences. First, it is in humans, allowing us the opportunity to definitively understand the platform in people. Second, the etiology of type 1 diabetes is autoimmune rather than drug-induced, meaning that we will need to overcome both allogeneic and autoimmune rejection of the transplanted cells. And third, as a first-in-human study, we examined a low dose of HIP-modified islets to initially establish the safety and function without immunosuppression. And as a result, it is not intended to show improvement in glycemia and/or reduction in insulin administration. Instead, we embarked optimistic that we might be able to see sustained secretion of C-peptide. I will now turn the call over to Sonja to walk you through the results of the study.

Thank you, Steve. UP421 is the world's first hypoimmune or HIP edited allogeneic primary islet cell graft transplanted into a patient with type 1 diabetes without any immunosuppression. This clinical study was a first-in-human investigator-sponsored trial or IST. The sponsor is Uppsala University Hospital with Dr. Paula [ Karlsson ] as the principal investigator. The patient was dosed in early December, and we are now reporting the interim analysis data 4 weeks after the transplantation. The patient received allogeneic hypoimmune or so-called HIP modified pancreatic islet cells into the forearm muscle and the drug product is named UP421. It's important to note that the study was not designed to show improvement in glycemia and/or reduction in exogenous insulin administration, but rather to demonstrate safety, immune evasion and cell survival without immunosuppression. The target cell dose was low and reflects approximately 2% to 7% of the amount of islet cells needed for insulin independence. The transplantation was performed with matching blood types between donor and recipient. The recipient's HbA1c was 10.9%. He is 42 years old and has had type 1 diabetes for several decades. The manufacturing of UP421 took 7 days and the drug product passed all release criteria. The transplantation was performed at Uppsala University Hospital without any immunosuppressive medication. So no steroids, no supportive medication to facilitate allogeneic cell survival. You see on the pictures here, the procedure and the team. All interim primary and secondary endpoints were met. The primary end point of safety was achieved and no adverse or severe adverse events related to the drug product were reported. I will now go into further details on the secondary endpoints on the next slide. Function and persistence of pancreatic islet cells were detectable by production of stable levels of circulating C-peptide, a marker of insulin production. In contrast, the patient didn't have detectable C-peptide before he received the transplant. As you can see in the graph, the baseline is below the limit of detection. Seven days after the HIP islet transplantation, the C-peptide is present and remained stable at all time points through day 28, demonstrating the survival and the function of the cells. The measured C-peptide levels correlated with the low cellular dose transplanted. The red curve shows that 28 days after HIP islet transplantation, C-peptide is present and stimulated in the mixed meal tolerance test or MMTT. In contrast, you see the flat gray line in the graph, which shows that the C-peptide before the transplantation was below the limit of detection during the MMTT. The magnetic resonance imaging or MRI shows further evidence of graft survival 28 days after transplantation. The red arrows in the zoomed-in picture indicate the location of some examples of the injected cells. No inflammation and no safety or pathological related observations were made by the radiologist. The immune analysis was performed using the donor islet cells and the patient's different immune compartments containing T cells, donor-specific antibodies for the adaptive immunity and natural killer or NK cells for the innate immunity and whole blood. On the left, you see the [ drug ] product contains a mixture of HIP and non-HIP islet cells, which is an opportunity for us because now we can analyze the immune response of the patient against these different cell populations. As you can see, HIP islet cells have HLA-1, 2 knockout and CD47 overexpression. The double knockout or DKO islet cells have HLAs 1 and 2 eliminated, but don't overexpress CD47. And the wild-type islet cells express HLA Class I and Class II. On this slide, you see the immune response of the patient's T cells at several time points after the transplantation. The data on the left for the wild-type islets show a high blue bar at day 7, indicating the peak of the patient's T cell response. The bars then decline over time. This T cell activation results in killing of the wild-type islet cells, as you can see in the killing assays at the bottom. The very same T cells of the patient are showing no activation or killing of the double knockout islet cells or the HIP islet cells at any time point. This slide shows the development of donor-specific antibodies by the patient's B cells against the wild-type islet cells. On the left, you see the high blue bar at day 7 after transplantation. And then as expected, the switch from the IgM to the IgG antibodies around day 14. The donor-specific antibodies did not bind to the double knockout islet cells or hypoimmune islet cells since the antibodies recognize the donor HLA, which has been knocked out. So far, the data in the middle and the right columns look similar. Double knockout and HIP islet cells are overcoming the adaptive immune barrier due to the HLA knockout. However, in the innate immune analysis, you can now see why the CD47 overexpression is needed. The patient's NK cell killed the double knockout islet cells as expected due to the missing cells. The HIP islet cells on the right were not killed by the NK cells due to the CD47 overexpression. This -- to study the adaptive and the innate immune responses together in a high bar study, the patient's whole blood immune cells and the serum containing antibodies, complement were incubated with the donor islet cells. As you can see, the wild-type islet cells were killed due to an adaptive immune response. The double knock islet cells were killed by innate immune cells. But HIP islet cells on the right were not killed at any time point. In these videos, you can see with your own eyes how HIP islet cells evade the adaptive and the innate immune killing. To visualize the islet cells, we stained them for the videos in green. Wild-type islets are on the left, double knockout islet cells, you see in the middle and HIP islet cells are on the right. These videos show the data at day 7 after transplantation, which was the peak of the immune response. So you see how fast the wild-type islets are killed by the adaptive immunity and the double knockout islet cells by the innate immunity. And you can see how the HIP islet cells of the donor are evading the recipient's immune response and are not killed. In summary, this first-in-human safety trial demonstrated at the interim analysis that the transplantation of HIP primary islet cells are safe with no adverse or severe adverse events related to the [ drug ] product. Stable C-peptide, after transplantation, was increase after the mixed meal tolerance test, demonstrated survival and function of the HIP islet cells, which is supported by the MRI. The [ drug ] product was a mixture of partially and fully gene-edited islet cells, which allowed us for detailed immune response analysis. Immune responses against all partially edited islet cells were observed but HIP primary islet cells evaded the allogeneic and autoimmune responses in spite of the rejection of partially edited islet cells. This proof-of-concept study for the HIP platform shows that transplanted fully allogeneic islet cells survive and function without any immunosuppression. So my vision for the future is that this platform provides off-the-shelf therapies without the need for immunosuppression for anyone, anytime, anywhere. And now I will turn over to Dhaval to discuss progress with SC451, our HIP-edited stem cell-derived pancreatic islet program.

Thank you, Sonja. Truly exciting and groundbreaking work with a clear proof of concept that HIP modifications protect allogeneic primary islet cells from the host immune system without any immunosuppression. Congratulations on proving your hypothesis. Our next steps towards translating this cool and transformative science into a therapeutic that is accessible to the many patients with type 1 diabetes who could benefit is developing SC451, which is a readily available off-the-shelf allogeneic immune evading islet cell product from GMP-compliant pluripotent stem cells, or PSCs, that can be manufactured at scale and delivered intramuscularly as a onetime therapy without immunosuppression. This has not been easy, and there have been 4 major challenges to realizing our vision. First is overcoming the immune rejection without immunosuppression. We believe that this challenge has now been solved, as you have heard. Second is differentiating PSCs into islet cells at a purity, potency and yield to enable clinical trial dosing. Many groups have done this successfully, and so has Sana. I'll show you this a little bit later. Thirdly, generating a gene-modified master cell bank, or MCB from a GMP-compliant PSC line that is genetically stable and remains so after gene editing as well as through the many divisions and differentiation into islet cells. This is a hurdle that's increasingly being recognized by many and has been a challenge for us. The good news is that after a very long, tough and rigorous process, we now have a research cell bank line that meets the criteria we've outlined. We're working to transition this line to an MCB or generate a new one under GMP conditions. Lastly, manufacturing enough product to treat the patients that need it. The scale, as Steve already mentioned, may be quite large. As an example, if we want to treat around 1% of the type 1 diabetes population, we'll need to manufacture around 100 trillion HIP-modified islet cells annually. We're working on it. I want to show you some representative research data to show the scientific feasibility of SC451. As shown on the left, we can HIP-modify PSCs and show that they're immune-evasive in vitro. We can differentiate PSCs into islet cells at a high purity. The dot plot shows a single cell sequencing analysis, highlighting insulin mRNA expression of such differentiated islet cells, and this one has approximately 60% beta cells. Aggregated islets are viable as shown by the DTZ stain. We have a process expected to yield billions of islet cells from a single vial of starting material, which gives a yield that should be sufficient for Phase I studies. Our plan is to administer SC451 into muscle. This slide shows that PSC-derived islet cells readily engraft in immunodeficient mice and become highly vascularized. Finally, the HIP-modified PSC-derived islet cells are potent and persist for more than a year in muscle. The first graph shows that the PSC-derived islet cells implanted into the thigh muscle of immunodeficient mice controls blood glucose levels in the diabetic mice within 4 weeks. And this control is maintained for as long as we've tested so far, which is 458 days or more than 64 weeks. These human islet cells produce C-peptide that's easily detectable in the blood and the production is glucose sensitive. Lastly, the morphology of the engrafted islet cells remains normal through day 458 and immunohistochemistry shows that the islet cells contain C-peptide, are highly vascularized and maintain high levels of CD47. I'm incredibly excited by SC451, which has the potential to cure type 1 diabetes without the need for immunosuppression. I believe we now have all of the pieces in place to move forward rapidly. With that, I'll turn it over to Gary Meininger, our Chief Medical Officer, for a few concluding comments.

Thank you, Dhaval. I hope you all can see the tremendous potential of SC451. Transplanting cells without any immunosuppression is a significant discovery for the field of cellular therapy. Transplanting pancreatic islets into a person with type 1 diabetes without any immunosuppression, overcoming both the autoimmune and allogeneic rejection of these cells and seeing the patient make his own insulin is truly transformative. I have devoted my career in clinical practice and industry to developing therapies for diabetes, including islet cell therapies and have had the privilege of serving as the industry representative on the FDA advisory panel for drugs in the endocrinology and metabolism division, including diabetes. In addition, I am a person with type 1 diabetes and the father of a child with the disease. I know firsthand the disease's impact and the limitations of current therapies. As you have heard from Dhaval, we still have work to do to make our vision for patients with type 1 diabetes a reality. I know our team has the resilience to see it through. I have never been more optimistic that a cure, no more insulin with normal blood glucoses and no immunosuppression is truly inevitable and within reach for us all. With that, I will turn it back to Jen, who will open the line up for questions.

[Operator Instructions] And our first question today will come from Samantha Semenkow with Citi.

And let me just say congratulations on the great data and the great results here that you presented. My question is, maybe you can just talk a little bit more about how translatable you anticipate this data to be. This is just the one patient, it's great data. But how does this translate to the overall general type 1 diabetes population? And then just secondly, are you able to discern the degree of durability you'd expect from a HIP-modified islet cell based on the data you generated to date?

Thank you, Sam, for the question. Maybe I'll start and turn it over to Sonja. I'll just say one way to think about this is you ran millions of experiments. Every single cell should have been rejected and would have been rejected without immunosuppression and you didn't have these HIP edits. And the fact that this is visible at both the level that you can see on MRI and that you can see with detectable C-peptide in the blood I think gives you a sense of the number of experiments that's been run. The second, in terms of the broad type 1 diabetes population and everything we've seen to date, there is no reason to believe that these data are general -- not generalizable to every single patient. We may learn something along the way. Biology has this tendency to teach us things, particularly immunology. But this is a generalizable result for the broad population of patients. Sonja, do you want to add to that and maybe talk a little bit with the second questions she had?

Yes, this is a study with islet cells. But in the preclinical models, we studied the hypoimmune edits in so many more cell types. Some examples are endothelial cells, smooth muscle cells, cardiomyocytes, RPEs, induced pluripotent stem cells and T cells. And we have seen that the edits work for all of those cell types. So they don't seem to be only working in certain cell types as of all the cells we tested so far.

Our next question will come from Vikram Purohit with Morgan Stanley.

Okay. Great. My first one was on the dose level. You mentioned that this was a low initial dose. So I just wanted to ask, kind of based on these results, how are you contemplating stepping up the doses through the Uppsala study? And then secondly, could you just walk us through the steps that you need to take to progress from a research cell bank to a master cell bank? You spoke about that a little bit during the prepared remarks, but if you could provide a bit more color, that would be helpful.

I think I'll probably just take both of these really, Vikram. In terms of -- sorry, in terms of the dose level -- I'm sorry, I just forgot the question. I think it was the second answer.

How are you going to step up the doses?

Are we going to do this again? Sorry. Maybe. I think maybe. The team's focus is on the stem cell-derived product. We don't want to take away from something that -- any effort or focus or capital away from an effort to really bring forward a therapy that we think could treat hundreds of thousands or millions of patients with this disease. That being said, there are some things we could learn from a higher dose, and we may do it over the course of the next year or so. So hold tight, but don't make that your baseline expectation. I hope that's helpful. In terms of all the work that goes in a master cell bank, as you can imagine, that's one of those very proprietary aspects of manufacturing that we're not anxious to get into the details around. As you know, we've spent several years getting this right. We think we've got it, and we don't see any need to share it.

Our next question comes from Marc Frahm with TD Cowen.

Congrats on the data as well. Maybe just following up a little bit on the last question. Steve, can you -- or Sonja, maybe -- can you maybe frame the cell dose that you have used here and kind of what you've learned about the amount of C-peptide that's able to produce versus how much larger of a dose do you think you ultimately need to do either within a transplant setting like this or ultimately with the iPSC to kind of get to those levels that truly are deriving the cure, not just the kind of proof of concept of avoiding the immune system?

Yes. So Marc, Sonja is going to answer that question. As a place of background, though, our dose -- our upper limit of dose is limited by regulators as a first-in-human study. So that was a limitation. And Sonja, over to you to kind of -- the calculation on role.

Yes. Yes. So to Steve's point, it is a safety trial. So we were limited, of course, with the dose. You saw it on the slide. The dose calculated, we have approximately 2% to 7% of the dose you would need to have to achieve insulin independence in islet transplantation that even means a few transplantations. You usually don't achieve that with 1 islet transplantation. So the dose refers to that the C-peptide levels I showed you. They correlate to that really low dose we dosed. So they are in the range that would -- what you would expect in that dose we dosed.

I think it's safe to say, Marc, that obviously, it's -- we have more to learn. But with what we know, the dose looks to be comparable to what's been seen by others in the field for unedited cells. So we're going to -- that's a good baseline assumption for you.

Our next question will come from Salveen Richter with Goldman Sachs.

This is Mark on for Salveen. Just also congrats on the data. Finally, we've been waiting for this and it's really exciting. It's good to see this positive data. Hello, can you guys hear me?

Yes, we can, Mark. Go ahead.

Okay. So I guess my question was on the read-through from this cadaveric cell study to the stem cell-derived islet cell program. I know you guys kind of spoke to some of these read-throughs, but if you could kind of elaborate on that and also speak to any potential differences between the 2 and maybe where there is no read-through. And maybe any additional questions beyond just the manufacturing scaling that may need to be answered to lend greater confidence to the SC451 program?

I'll take the first part of that and maybe, Dhaval, you could take the second. I think the read-through is super clear. And in fact, one of the beautiful parts about the stem cell-derived therapy is that we will start with a single cell. And what that means is that 100% of cells will have the desired gene edits. So this is actually a more complicated study immunologically than what we're going to do in the future because we were putting in cells that didn't have the gene edits and that we knew the immune system would reject. And their immune system did reject them. And you can see that in the data Sonja showed, and you still saw the HIP-modified cells evade immune detection. So when we go into stem cells, every single cell is going to be right. And I think that's going to make it actually better. Dhaval, do you want to talk to the second?

I think you already answered it, but what's the second part?

The second part is anything besides manufacturing scale up, and maybe just always, whenever we talk about manufacturing, there is reproducibility. It's always purity, potency, yield reproducibility, right? Those are kind of your 4 tenements of manufacturing that we need to make sure that we nail. Again, as Dhaval said, we think we've kind of got all of those for the Phase I. We need to make sure we've got the master cell bank. But we have a big challenge in front of us to really meet the broad population of type 1 diabetics going forward.

Translatability is pretty straightforward. We haven't seen much differences so far between what we're doing and what others have and also the primary islets. So I think straightforward from that regard. It is not a straightforward activity overall.

Next question will come from Emily Bodnar with H.C. Wainwright.