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

Hi everyone. Thanks for joining the session with Sana Biotechnology, and welcome to the 2025 Bank of America Healthcare Conference. My name is Alec Stranahan, Senior Biotech Analyst at Bank of America. I'm pleased to be joined today by Steve Harr, President and Chief Executive Officer of Sana. Steve, thanks for being here.

Yes. Thank you for having me, Alec's. Thank you, BofA for putting this together.

Yes. Great for joining us here in the audience.

Great. Well, Steve, maybe let's just jump in since we've got a shorter session today. Maybe we can talk about type 1 diabetes. I imagine this is the topic of the majority of your conversations with investors. Maybe just speak to the recent 12-week data that we saw from the patients treated in the study and how this maybe builds upon the data we saw earlier this year?

Yes. So a couple of things. First off, I'm sure you guys know we make forward-looking statements. We spend a lot of time on risk factors. So take a look if you want to understand the risk. So the -- take a step back. Diabetes is a very rare opportunity, right? It's this disease where it affects about 9 million people globally. Patients live on average about 10 to 15 years less than they would if they didn't have the disease. During that time, they have a very difficult day-to-day life. I think if you have any family or friends or you happen to be someone with type 1 diabetes, you know, it's on your mind all the time. And they're at chronic risk for things like low blood sugars and complications of high blood sugars like kidney failure, amputation, blindness, heart attack. There hasn't been a new drug really invented for this population since 1923 with insulin. And so it's a really -- it's a big unmet need where we need to do better for patients. What we do know is, first of all, type 1 diabetes is a very simple biology disease in some regards. It's missing beta -- pancreatic beta cells, right? So I'm going to talk about beta cells and islets. Islets are just alpha, beta and delta cells. Just humor me and let me slip back and forth. I appreciate that. But -- and so about 25 years ago, some people discovered that if you transplant islets -- pancreatic islets from someone who recently died, cadaveric islets, that patients can be insulin free. And they can be insulin free now and the people are out 10, 15-plus years. Are challenges with it, though the biggest one being that patients have to be on immunosuppression. And there just aren't that many patients who -- for whom lifelong on transplant level immunosuppression is better than lifelong insulin, right? So it's affected thousands of people have it, but not millions of people. The second was that the source isn't that great, right? So it's not a scalable source. And there's a lot of variability in quality based upon the conditions of death when the patient died also just do they have -- do they have some kind of like pre diabetes -- type 2 diabetes or other things. So -- it works, but it's not great. A few years ago, Vertex and a few others started showing that you can take stem cells, make them into pancreatic islets and transplant them into patients very successfully. I mean, I think the data are quite encouraging. That's proved that, that's probably a more scalable, it's certainly more replicable supply source. But you still have the challenge of immunosuppression. So we've shown that we can get rid of overcome allogeneic and autoimmune rejection in every preclinical model you can conceive of. And we really wanted to see this works in humans. And so we decided the fastest way to understand this was to gene modify primary islet cells or cadaveric islet cells and transplant them into a patient, first at a low dose, and that's done in the arm of the patient, very simple procedure. And so what we've shown is that we can transplant these islets and these islets survive and function. The patient is making his own insulin for the first time in over 30 years and he's now out, recently, we just gave the update 12 weeks with no sign at all of any immunologic response to these cells. I think it's safe to say, I've told you guys for a while once you got past a month, there's really nothing -- some new part of the immune -- there's no new part of the immune system that's going to pop up and become a problem. And so I think it's going to just keep showing these cells last as long as we keep them in them. So that's not our product. Our product, what we want to make it scalable, right? We're trying to treat the disease. It's millions of people. So this is a gene-modified pluripotent stem cells. That's very difficult. You take it and you divide it into many, many cells and you differentiate them into islets, [indiscernible] and you transplant them in the arm. And that's complicated, right? It's taken us a long time to get that ready. We'll get into it, but we're quite confident that we can have an IND next year and really begin treating people. And that when this happens, I don't see much risk to it working. I do see other risks. I mean there's -- we got time and capital. There's safety. And I think there's some real challenges still to scale this. But all of the component parts have been tested now. And so this should work. And it should be something that's really transformative where patients reach our goal. And our goal is very simple because what we've done with that to put the pin in your question at 12 weeks, we've now shown it's possible to have -- we put all the component parts to get people a normal blood glucose with no more insulin and no immunosuppression and hopefully, for life -- functional cure.

Yes. Yes. That would be transformative for patients. No more insulin is probably the goal here. So you'll continue to follow this patient simultaneous with scaling up SC451, which you said is the path forward. I guess maybe is additional follow-up beyond 12 weeks informative from that patient? Is there anything you're looking for there?

Personally, I don't think it's -- it's not a risk. But people who love will have a 6-month data at ADA. There's an abstract that's been -- it's a plenary session at the meeting on June 23. So I'm sure that's a nice thing. We'll publish this data, I think, in a very high-profile journal, which I think will help people as well to just get their arms around the biologic importance of this. I mean, this isn't just for type 1 diabetes. This is the first time they've ever had an allogeneic cells transplant into a normal immune individual with absolutely no immunosuppression, right? This is applicable. The technology is applicable elsewhere. And hopefully, that will be something we'll have the opportunity to push forward. But right now, we're focused on type 1 diabetes. So I'm sure everybody would like to see 6 months and then they'll want to see 1 year and there are people to take -- the more they see, the more convinced they are and more conviction they can have. But the immune system is relatively well understood. The immunology of transplant rejection, I think, is something that we have our arms around, and I'm optimistic that there's not a lot that will change.

Yes. Yes. Okay. That makes sense. And I guess on the scale-up, what's being done sort of as you're preparing for IND readiness?

Yes. So I'm going to use different words and scale-up because I think there are 2 elements of scale. So I've kind of outlined for people, there are 4 big scientific challenges to make this a curative broadly available medicine. The first is to overcome allogeneic and autoimmune rejection. So you don't have to give immunosuppression. We've done that. The second is to make -- to have a protocol where you can take a stem cell and make it into pancreatic islets. So the scale that allows you to run a Phase I study. We've done that. The third is to make a genomically-modified master cell bank. So a single cell, literally one cell that as you make trillions of cells has a stable genome. That's been super complicated for us. I think we've now done that. We have a meeting coming up with the FDA to confirm that we agree on testing around a host of things, but I think that we've done that. So that's all you really need to get to the first in-human study. You have to do GLP tox studies and put into a GMP manufacturing site. But those things are things we've done before and we just have to do with this cell. You then have the fourth challenge, which is to make this drug at a scale to be -- to treat a disease as 9 million people. We have a long way to go on that. And that's not something that we've done. And in fact, it's something where there's very little investment inside the company around. It's not to say there's 0, but we'll have to -- there will be a multi-logarithmic change necessary to get at that market. And again, just to put perspective on this, let's be super optimistic for a second. We're going to assume this we've really crushed it. It's one treatment. It works in everybody. They never actually get treated again and we treat -- we've scaled it. We've made 100,000 patient doses per year. Put your price on that. That's a huge, huge drug, right. At the end of a decade, we will have treated just around 10% of the type 1 diabetics globally. You will -- and so even that is not -- that gives you just a sense of how much work we have to do to kind of get at this. I have yet to meet a patient who, if our drug does what we say it will do doesn't want this drug, a single injection in the arm and [indiscernible] immunosuppression. That doesn't mean every single person will, but because we saw -- as you get selective who comes to you, but it is something where I think we have a lot of work to do to make it scalable. And it will not be something where we can most likely satiate demand out of the gate, right? But that's a future problem.

I mean even more immediate, we've spoken with a number of KOLs who treat type 1 diabetes patients. And we've heard that there's really no shortage of willing participants for the clinical study, right? So this is obviously not a rate-limiting factor.

As currently envisioned, right? I mean obviously, we have work to do, and we've to ensure there aren't safety issues and things like that. But we get a lot of reverse inquiry for people who would love to be in the study when it does happen. I'm optimistic you can enroll something very quickly.

Okay. And what does sort of the scope of a first or a Phase I for this program look like? Is it 30 patients, 40 patients?

Well, we have a -- there is a company, a large company that's developing a drug in phase -- a similar drug in type 1 diabetes. There are differences, right? So their drug requires -- it's in a more severe patient population that we'd be going after, and it also requires immunosuppression, right, in transplant. They actually had a patient die from immunosuppression side effects. So that -- but they did a Phase I study of around 15 patients, and they're doing a registration study of around 35 patients. So a total exposure of about 50 is what they've articulated. I could make an argument that ours should be smaller because we don't have the immunosuppression. I can make an argument that our should be bigger because we're going after a broader patient population. Where it ends up we'll have to see. But I don't think it's going to be an order of magnitude different than that. I think it's going to be in the -- within an error bar of that type of number. So my guess is that the rate limiter to actually starting a registration study is having a manufacturing process that we've locked that we're comfortable is good enough for the launch of the drug, right? It's not going to -- again, it's going to take time, and I think many years to get it to something that is our optimal scale, but we want to be good enough out of the gate to have a meaningful impact.

For the CMC presumably for the submission, you would want to a similar manufacturing process.

It has to be the same. If it's not, I mean, you need to have -- so if you think about -- really with the cell therapy, it's going to be very difficult to change your manufacturing process during clinical development -- sorry during your pivotal study, which means you have to have pivotal -- you have to lock that process probably a year before you start to treat the first patient just to give you a sense of the time line. So it's not that far away, where you have to get to a pivotal process lock, so it doesn't, again, slow you down dramatically in the development of the drug.

Okay. Okay. Maybe shifting gears. You do have other assets in the pipeline. GLEAM and VIVID are 2 ongoing studies that could yield data later this year. I think based on your updated guidance. Maybe just walk us through these programs and sort of what we should expect.

So another place we've tried to -- we're applying this hypoimmune platform is in making allogeneic CAR T cells. I mean I think many of you know the history of autologous CAR T cells. They're wonderful drugs. They've struggled with scale, right? And that's both in terms of reaching patients and also getting to a cost -- a reasonable cost of goods. In the autoimmune setting, which is one place we're developing, there's an additional challenge in that patients have to come off of immunosuppression to get to collect their cells, the original apheresis. And then they come back on their immunosuppression or they make the drug and they come back off. So it's a real burden on both the patient and the caregiver. What we're trying to -- what we're doing is applying these hypoimmune islets to overcome allogeneic rejection and applying them to the CAR T space. And we've shown you now that these cells are not recognized by the immune system. So I think that's a real step forward. We developed a drug called SC291, which is a CD19 targeted CAR T cell in the oncology setting. And we -- it just -- it doesn't seem like that that's a worthwhile place to go right now for us. We didn't feel that it was an adequate demand for it. I mean at the end of the day, what we were finding at least in the United States was that demand for these drugs is not limited by manufacturing capacity, it was limited really by distribution capacity for physicians and hospitals and their beds. And so we were rolling outside the United States just didn't have the capital going forward. But we did learn some things, right? What we did learn is that we -- and what we talked about that's important for autoimmune is that we can get -- we can safely get a dose-dependent and deep B-cell depletion. That's the goal in the autoimmune study is to get rid of B-cells. So now what we need to show is that, that translates in the autoimmune setting. And I have been very clear. I mean, I think this drug works. I mean so what we don't know is it okay, good or great. I kind of think of okay, like it works. But it's not quite as good as autologous cell, but we're more convenient, right? Good, right? We're as good as an autologous cell and we're more convenient. Great. We're better than an autologous cell and we're more convenient. And I think those are kind of the broadband. So I think we'll have enough data this year to understand are we one of -- we'll get rid of 1 of the 2 ends. Are we kind of okay, good? Are we good, great? I'm not sure we'll have enough to know for sure exactly where we land. Partly, that relates to the fields understanding of autologous cells is moderating as they modify as we learn more about them and partly relates to just where we are in our own drug development. So that's kind of that asset we'll have to see where we go with it. Then the second is a CD22 CAR T cell for patients who have failed a CD19 CAR. So as people know about half of patients or really 2/3 of patients don't end up with a long-term durable response. And CD22 in various settings has shown itself to be quite efficacious for those patients. Recently, there was a company that was developing CD22, where they had very nice early data and late relapses. That has made our job easier from a perspective of enrolling patients. I think it's made it harder from a perspective of do we have something that's really long-term clinically meaningful for patients because we're going to need to follow patients for a long enough period of time to understand is what we're doing different than what they did or is what we're doing going to fall under the same unfortunate biologic trap. And that's something we just learned this year, I think. We may or may not know enough to know if we're truly different in the long term. I think that's something that will maybe take a bit more time because the recurrences were relatively late.

Okay. Okay.

And because of that, just in a capital-constrained environment, we have to see what are we going to take forward, right? I looked this thing the other day, the enterprise value of cell and gene therapy companies. First of all, it's is very humbling. And if you look at noncommercial cell and gene therapy companies, there are only a handful of us that have positive enterprise values. And almost all of the CAR T cells have negative enterprise value. So for us to continue forward, we have to get one of two things to happen, right? Someone has to pay for this, right? So we have to convince investors that it's worth paying for our asset. And I think that means they have to both value our drug more than they do today and they probably have to value the class a little more or we'll partner with someone, hopefully who does. But those are the things that we're looking at right now around those drugs. And if neither of those things turn out to be true, we won't be able to keep going forward. I mean, I just -- we have to be realistic about where the world is.

Yes. I mean that kind of...

And we will not compromise the diabetes asset to be very clear.

Okay. That was going to be my next question, sort of how do you maximize ROI while balancing the cash investment today for these assets?

I do think -- and again, there's no guarantees of success in our industry. And we're particularly in a complicated space of gene edited stem cell-derived therapies. But this is a generation type opportunity in terms of size. It will work, right? It will work. We don't know if it will be safe. We don't know if we can scale it if it's a good business, but it will work. And if it does turn out that we are able to do that, it will be a very, very high ROI investment for people. And so we will not let that be capital starved and answer those questions.

Okay. I see we've got 10 minutes on the clock. Do we have...

There was no second.

Okay. I've got one more question, if you're okay, Steve. Since you've been -- you're an industry veteran, I'd be interested to hear your thoughts on the CBER appointments. We talked about the necessity of having long-term follow-up to fully understand what these assets are. I mean, that's something Prasad has also said, any shifts in the way that you're thinking about drug development, given the current appointments obviously, the development time lines span beyond different FDAs presumably. But any thoughts from your seat?

I think there's zero change what we're trying to do. I do think -- again, I don't know these people personally. I know of them. We've been around some of the same hoops over time. I am optimistic that when smart people get around the room who understand data that over time, good things happen. I'll give you 2 examples. I don't think this has any impact of what we're trying to do in type 1 diabetes. It should work in pretty much everybody. And if that turns out to be true and we're able to be safe and we're able to manufacture it. I don't see why any -- it will change. I think if we were still going after what we were doing in type -- in Oncology, right? We had a third-line allogeneic CAR T program where the hope was that we had something that was more readily accessible for patients than an autologous CAR T cell. I think that would be a tough part. I would think that if we were still going forward with that, it may have been something that required a lot more data than what we were currently -- than what we were thinking about. We're not, so it doesn't impact us. But I don't yet see a sea change in anything that we're contemplating. It doesn't mean that other parts of the industry won't have [indiscernible] to their place where it becomes more straightforward path and where it becomes more challenging. And we're just -- we'll have to figure that out.

Okay. Okay. Well, I want to be respectful of everyone's time. So I guess we should probably leave it there, Steve. But thanks for joining the conference and for the great conversation.

Thank you, Alec. And thanks, everybody, for your time and attention.

Thank you.