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

All right. We'll go ahead and get started. So good afternoon, everyone, and welcome to the second day of the Citizens Life Science Conference for the first time here in Miami. It's my pleasure to introduce Sana Biotechnology and presenting for the company or chatting with us about the company is CEO, Steve Harr. Steve, welcome, and thank you for this.

I never know exactly who's in the audience or who's listening on the webcast, whether they know the Sana story or not. And so I'd love to start off maybe in 2 to 4 minutes with an overview of Sana before we dive into some specific questions.

Sure. First of all, thank you for having me and the company come down here and enjoy beautiful sunny Miami. And thank you to people here in the audience and to those listening online. You probably know before I get started, we will make forward-looking statements and check out our risk factors in our recently filed 10-K. There, we try to do a very thorough job and help you understand all the things that could go -- or many of the things that could go wrong. I don't think we'll ever capture all of them. The -- we do our best. But anyway, Sana is about 7 years old and started with the idea that one of the most important transformations over the next couple of decades will be the ability to modulate genes and use cells as medicines. And it's obviously been a pretty tough time in that space over the last few years. But while that's been a difficult macro environment, we're making a lot of progress in really seeing that vision through. And when we started, we really wanted to go after 2 separate and what we thought were kind of really large challenges in making that vision a reality. And first off, like almost every disease is caused by a missing cell or a damaged cell. And we've known for a while that if you can transplant organs or even cells that, that can have a profound therapeutic benefit for people. But it's been really limited, in particular, in the cell therapy side and the transplant side by rejection of allogeneic cells. And so if you put my cells or anybody else's cells into you, your body will see them as foreign like a virus and reject them. And so we went -- and so the way people got around that was they've used your own cells or autologous cells. That's pretty limited in what you can do and it's very costly and difficult to manufacture or people have been given profound immunosuppression. And that's led to side effects like cancer, kidney failure, bad infections and things. And so we wanted to figure out, could we hide cells from the immune system. That's problem number one. I'm going to come to that in a second. Problem number two was you can more or less do whatever you want to a genome in a Petri dish, right? The scientists have made tremendous advances over the last couple of decades in how they can modulate and manipulate DNA and RNA. But the difficult part is actually delivering those reagents into cells in the body. And so we wanted to go after in vivo delivery. And we thought if you can deliver the reagents in a cell-specific way that is repeatable, that is specific -- sorry, specific, repeatable and scalable, we'd be able to do something that was pretty magical. And so that's basically what we went after, and we've been making progress on both. So on the cell -- hiding cells from the immune system, the most important project that we're after there is type 1 diabetes. Type 1 diabetes is a disease where the etiology is pretty clear. The immune system gets confused. It attacks a patient's pancreatic beta cells. And the beta cell is the only cell in our body that makes insulin. And so until 100 years ago, it was a death sentence pretty much instant within a few months. And people have done pretty well on insulin over the last 100 years. But even with the best possible therapy today, patients will live, on average, about 10 years less than they would if they didn't have the disease. And during that time, they're at risk of really low blood sugars and death, coma. They can get blindness. They can have amputations, kidney failure, heart disease, a number of different ailments. And their day-to-day living is really driven by this ability to -- the need to control their blood sugar and their insulin. And so it's a disease where we need to do better is basically the key. And there are about 10 million people that have this disease globally, around 2 million in the United States. So it's also a very prevalent and big issue. Over the last several decades, some progress has been made. So I told you it's missing beta cells, right? I'm going to use a different word, I'll call it pancreatic islet. So think of an islet as a beta cell plus a support structure around it. So a group in Canada figured out you could transplant pancreatic islets from a cadaver and that patients would do profoundly well. They are off insulin for decades potentially. But that's not a scalable source. It's not a -- it's a very variable source. And many patients have -- every patient has to be on lifelong immunosuppression. And these aren't that many people for whom immunosuppression is better than insulin. So over the last 5 years, several groups have shown you can take stem cells and make them into pancreatic islets and transplant those. Now you have a more replicable source. It's almost certainly more scalable, right? But you still have the problem of immunosuppression. So what we've now shown is through a series of first animal experiments, and now we've done this in a person. The person who was in the England Journal of Medicine last year, who has shown that we can make gene modifications to islets and transplant them and the cells survive and function, and we're now out over a year doing quite well. There will be an update, I guess, Friday on those data at a diabetes conference. And so I think we're -- all of the component parts are there for cure, right? And so we've been working on what we call a more scalable manufactured version. It's a gene-modified stem cell-derived islet. And that will be -- hopefully, we'll have an IND and start our Phase I study this year. We can get into it pretty quick to understand if it's working or not. And once we know it's working, I kind of think of this program as having -- once it works to make sure we can scale it. And that's step 2. But I think we have a very high probability given what's happened of it working. Not to say biology doesn't humble us or humiliate us from time to time. But we've really, I think, seen a lot of progress in the field. So that's part one. The other part we have is in vivo delivery, and I'll be -- I'll make this brief. You probably know there've been a number of programs that you may know, making in vivo CAR T cells. That's what we do. It is in preclinical settings and in particularly in nonhuman primates, I would argue that we have a best-in-class drug, both on safety, kind of tolerability and efficacy. We have to see how that translates into people. And we're not sure it's best-in-class in people yet. We hopefully will be starting that study this year and generating data as we move through this year. And I think within a year, we'll have an ability to give you real visibility into both of these drugs, and we can get why that -- and that's a platform. We can do more than one thing. So the first in vivo CAR T cell will be going into patients with non-Hodgkin lymphoma. If that works and looks good, we will expand into autoimmune diseases, other cancers, and then we can go into a different target as well to go after things like multiple myeloma. So that's kind of the company in a nutshell. I'm sure we have more in-depth questions. But I'll turn it back to you, Reni.

Yes. Thank you. Thank you for that overview and very comprehensive. Let's dive in.

[indiscernible].

No, no, no. That was actually really good. I was like I'm running out of questions now. But let's dive into the hypoimmune platform. Just maybe to let some of the investors understand, what are the actual gene edits that have taken place here? And it's been validated, if you will, with that one patient. We'll talk more about that one patient. But clearly, it's been validated even before that. So just what are the changes here, which you have been making?

So there are effectively 2 really important parts of the immune system. There's the adaptive immune system, which is T cells and B cells, B cells make antibodies. That's the part you hear a lot about. That's where vaccines go after. And that's relatively straightforward to deal with. You knock out 2 different genes to knock out things called MHC Class I and Class II. So all of our cells flash fingerprints of what's going on inside the cell all the time. And that's so that the immune system can kind of surveil our bodies. And we just take -- that goes away. So now the immune system can't see what's going on inside that cell. Other parts of the immune system, and particularly the innate immune system have figured out, hey, if that's -- if you've gotten rid of that fingerprint, I need to kill that cell. So then we need to figure out in the context of knocking out Class I and Class II, how do you turn off the innate immune system. So there -- and this is really the key inside of the company. Overexpressing CD47 in the context of knocking out Class I and Class II appears to really cloak these cells and hide them from immune recognition. And so they live and they thrive quite naturally. And to be clear, there's only one cell that's ever been transplanted at scale frequently in humanity without immunosuppression. That's red blood cells. You need to think about, we get the red blood cell transfusions all the time. And what's unique in our body about red blood cells is they don't express MHC Class I. They don't express MHC Class II, and they markedly overexpress CD47, right? And what at least that gives us confidence in is that there isn't some part of the immune system that's geared to kill cells like that, right? And so we then went and we validated this in in vitro assays and then we did animal assays, first mice, then humanized mice, then we did this in nonhuman primates across many, many different cell types and many different monkeys. We then moved into humans. And we've done this in 2 settings. One is we made an allogeneic CAR T cell. And with that allogeneic CAR T cell, what we showed is that there is no immune response to these cells and that these cells can survive and function. And all of that was published -- the immunology was published last summer in the Cell magazine or Cell journal. And then we've shown this in the type 1 diabetes setting, which is more complicated because not only do you have to hide the cell from allogeneic rejection, again, meaning someone else's cells into you, but these patients have an autoimmune response. They already have a preexisting immune response to kill that particular cell type. And so we're able to overcome both the allogeneic and the autoimmune. So I think it's pretty well validated now that this is a functional system. We can get into that patient and the data in a minute, if you like, but we've kind of looked across a number of different settings. And again, it doesn't mean that it will work every time. It doesn't mean that biology can't come up with some thing that really surprises us. But the I's have been dotted, the T's are crossed in getting to this next step of development, we hope is a functional cure for type 1 diabetes.

And so far, it has worked in every system. So far, really good, which I think continues to expand the platform. So let's talk about type 1 diabetes. You mentioned the number of patients. And so this is obviously a multibillion-dollar opportunity. You mentioned the Edmonton protocol where people have used cadaveric islet cells. You guys actually took cadaveric islet cells and then imposed this hypoimmune platform for the gene edits into that and inserted it into a patient. And that's the data that we've -- in the [indiscernible] and we've -- you had always said like, look, if it isn't rejected, I think, within a month or 2.

I said within a couple of weeks, you could say, but to be safe, let's go to a month.

Yes. And you said, if it's not rejected in a month It's not going to get rejected. And that's, in fact, what we're seeing, right? We saw that 1-year data. I don't think we've seen the data. You guys have put out a press release talking about how all these metrics continue to be measured. Can you just take us through specifically C-peptide and just everything -- the cells even, right, because I think you're doing MRIs, just everything that gives you confidence that, hey, this is doing well and this is [indiscernible].

Yes. So to take a step back, and Reni, thank you for kind of outlining it well, which is our goal is to do a gene-modified stem cell derived islet. That's a very complicated manufacturing process take us more time. And as a way to understand the biology and the immunology, we gene-modified cadaveric islets, meaning someone who recently deceased person donated their pancreas and the islets were isolated and they were gene modified. We knocked these 2 genes out and MHC class I and class IIb. It's knock out genes called beta-2 microglobulin and CIITA. And then we knocked in a gene that would overexpress CD47 and the cells were transplanted into the brachioradialis or forearm of a person with type 1 diabetes. This person had type 1 diabetes since 1987 and has never made -- has made his own insulin since then. So the way to measure what's happening is we kind of laid out 3 things. It's a relatively low dose, right? And so the first thing that you're looking for is a protein called C-peptide. So when islets make insulin, they actually make pro-insulin. And as it's secreted out of the body, it's chopped into -- it's cut by an enzyme into C-peptide and insulin. So it's a 1:1 ratio of C-peptide to insulin. And this person had undetectable C-peptide by laboratories for many, many years, right? So the first thing we want to do is can we detect C-peptide. That means these cells are living and they're producing and they're functioning, they're producing insulin, right? The second thing we wanted to see was would they function normally. So if you give someone something called the mixed meal tolerance test. Think of it as high sugar, high fat meal, does the insulin go up, right? Or the C-peptide go up? Again, then the third thing we were looking at is can you see them visually. And the best way to see this is a PET MRI. So the PET scan has a tracer, which goes to pancreatic beta cells. And as you might imagine, we don't have pancreatic beta cells in our forearm, right? And so if you're seeing beta cells light up in the arm, it's very indicative that the cells that we transplanted are still there and living. And the fourth thing is we did some immune assays, right? And those immune assays -- we're looking to see -- what we did is we took the blood from the patient and tested against residual product that we had to see, hey, is there an immune response against the product. And every -- this program has met every single endpoint that we have. It's been -- first of all, safety, it's very well tolerated. There have been no drug-related or drug potential side effects. The cells continue to survive. They continue to evade the immune system by these assays. They continue to be visible by PET/MRI out a year, and the patient continues to produce C-peptide and to see an increase when they eat. And that's all we could really ask for out of the study. There are some details in the data itself, which we can get into. But functionally, it's accomplished everything we hoped it would. And to your point, not surprising, no part of the immune system is emerging. There's nothing -- it's not like you give things that just sit around your body and after a year or 2, your body decides that's bad, we should probably get rid of it, right? It's very quick at recognizing pathogens, whether that's bacteria. In fact, we are all -- it's all set up to deal with viruses, bacteria. Our immune system wasn't contemplating us transplanting cells.

There you go. So this is that one patient. We already talked about why -- we had gotten these questions early on, like, oh, why don't they just work with the Edmonton Protocol and just use cadaveric cells. But you mentioned like it's not scalable. There was a lot involved in trying to match the donor cells with the right patient, right, the health of the cells.

Well, the only thing we match is -- on that is blood type. So there's Achilles heel on every system, right? Our Achilles heel is a preexisting neutralizing immune response against the cells that were -- against a cell surface protein will get us. And so we are always -- we have to deal with blood type, right? And so with the stem cell, that's easy to deal with. We have an O-negative donor. It's not easy. I think that's 0.5% of the population. So we had to find a young female O-negative donor, which I get into why all those things are true. But in this case, whoever the donor had to match blood type with the recipient, right? But that was the only matching that had to be done.

Okay. Okay. Well, let's switch gears just in the time we have remaining because I know everyone is focused on SC451. This is your induced pluripotent stem cell product. You want to file an IND and get into the clinic. Can you talk to us about the discussions with the FDA, the cGMP master cell bank that you -- I believe you have now and you have the genomic stability. Just what exactly it's going to take to move -- to get that IND filed and move into the clinic?

So as I mentioned earlier, manufacturing these drugs is relatively complex, but doable. So the first thing you have to make is it all starts with one single cell and that forever, your product derives from that one single cell. So from that one single cell, you'll derive something called the master cell bank. And that master cell bank is many vials of cells. And that's frozen, and we will make drug product from that, hopefully, in perpetuity, right? And so again, the testing around that is super important alignment with global regulators. And that relates to a host of different things that we test on. Number one, just normal things that you would do, you hope we do like sterility, right? That's super important. That's kind of the parts of GMP or good manufacturing practice. The second is every time our cells divide, it kind of makes a mistake or 2. In our 30 trillion cells in our body, we probably have every single mutation you can think of. But we have a system that's set up to control that, right? So it's very, very rare. It takes many years typically for cancer to form, if ever. We're doing something different. We're growing these cells up and we're putting them in a growth media that selects for cells that grow quickly, essentially, right? And so what we had to make sure of is we weren't selecting for tumor cells, right? And that was really hard. We were selecting for tumor cells for a long time. We are seeing certain cancer-causing mutations pop up. And the real kind of most important thing the company did over the last few years besides this immunology experiment was to figure out how to make a master gene-edited cells. So you have to break DNA, cut it, paste it back together again in ways that allowed for genomic stability over many, many, many, many divisions because we're -- if you think of average dose is around 1 billion. That means just call it 1.5 billion if you have testing. That means you 1.5 trillion cells to treat 1,000 people, right? It just -- the math gets so big very quickly, right? And it's a disease of 10 million people. So you need quadrillion cells, right? And so that's something that genomic stability took a long time. And then you want to -- as you do that, so you have to have sterility, genomic stability and then it needs to maintain potency, meaning it can go into any cell type that you can drive it to become any cell type in your body. And importantly, in this case, pancreatic islets, right? So that became our master cell bank. That sits in a freezer, actually a couple of freezers just in case something that happens that we can hopefully draw from for decades to come. So that is -- I think, again, without speaking directly for regulators, anyone, we've had discussions with regulators in various parts of the world, including the U.S. And I think broadly that we have alignment around the testing strategy and the release, and those are ready to go. So the second part to get is to manufacture is to actually make the cells, right? And so that is a complicated process, right, because you're taking stem cells, you grow them up and then you differentiate them into islets and then you make them into something that is delivered to a physician and they can transplant it. That we've done. We've done it. We've moved it from a research scale and research reagents to a Phase I scale with Phase I reagents. And we're in the process of tech transferring that into a GMP manufacturing facility. So that's long pole number one. That's the most important thing we have to get done or likely the most -- the long pull to get the IND done. We're in the middle of that. The second is we need to finish all the nonclinical testing, which includes like things like GLP tox studies when you transplant these cells into a mouse, do tumors grow. Like we've done this many, many times. We've followed them for -- we've shown you data out 15 months. it shouldn't happen. We've done this. We've tested it many times. Biology, you always throw the sigh of relief when it's done. But that one should be ready to go this year as well. And then you file your IND and you get the study going, right? You obviously, you have to align on the clinical protocol with the regulators. And again, I think there, we're at least at a pretty detailed level, have alignment with kind of important regulators around the world.

Perfect. Now when the FDA is kind of looking at this, are they -- you have as long-term follow-up as you can in nonhuman primate models and everything else. But do they still kind of worry? And do they try to ask you like, hey, if something goes wrong, is there a kill switch we can design? Is there any way that we can get rid of these cells in case something goes wrong? How should we think about it?

I can't speak for the FDA. I can speak for me, I worry, right? And I think we all worry. These are the patients who, but for us would otherwise likely live for decades, right? So we have an enormous responsibility in doing something that is safe. And to your point, now that we've cloaked these cells from the immune system, we want to make sure that they don't go awry, right? And so fortunately, and I think one of the things we can say is that we've hidden the cells from the immune system, but not from ourselves, right? And so we went about kind of addressing this problem in 3 ways: One, make the risk as low as possible, right? So that's partly about the genomic stability we talked about. You don't want cancer-causing gene mutations, and it's partly about product purity. You don't want other cells to keep dividing in your products. That's part one. make the risk really low. Part 2, develop a system where you can detect something early if it happens, right? And so again, we've been working on ensuring that we have blood tests and things that can detect these things early. The third is to get rid of them if it happens, right? And so there are 3 ways that we've addressed that. Number one, often these cells have been shot up through the portal vein into the liver and they're just disseminated, hard to see, hard to cut out. We're putting them in muscle for multiple reasons. But one of them is because we can see them under imaging, you can palpate them and you can actually extract it if you need to. Like surgically, that would be relatively straightforward. The second is we've embedded a kill switch into the product, right? And so on the same gene or plasmid that we insert the CD47 downstream of it, we put a known kill switch on that. We haven't disclosed what it is. A person could take a generally safe medicine that's approved by the FDA, and it will turn on a process that will kill that cell. The third thing we've done, and this we've shown works in nonhuman primates and across multiple human cancer cell lines is we -- this -- overcoming the immune response requires this overexpression of CD47. And people have been making antibodies to block CD47 as cancer therapies unrelated to this for about a decade now. And so we know that if we give those antibodies that it will kill those cells, at least in every system we've tested. We've never done that in humans. We never have to. But -- so we have, again, 3-pronged things, make it as least likely to happen as possible. So test the heck out of it, figure out how to detect it. And if you do detect it and it happens, get rid of it. And so we've tried to be really thorough about thinking about this. And my real hope is that we never see anything [indiscernible]. But I do think just no different than any other cell or gene therapy product. There's a requirement to follow patients for 15 years, right, by the FDA. I'm sure we'll be following people for at least 15 years with this product.

I could talk to you about this for like the next hour. It's a fascinating -- a, it's a fascinating program. You guys are the pioneers in this space as far as I'm concerned and really hoping -- looking forward to seeing this in the clinic. But in sort of the last maybe 40 seconds that I have left, I'd be remiss not to touch on the in vivo CAR-T program. There's been a ton of pharma interest, a lot of acquisitions that have been taking place on different platforms. You have a very unique platform compared to everybody else. Questions we get is, why is it unique? What's it going to take for you guys to potentially be taken out or the platform to be in-licensed since there's so much excitement.

Well, I'd say on this one, we made 2 fundamental bets when we started here, right? And these are not consensus views. Number one, that cell specificity in delivery matters. And by that, I mean, only go to the cell you want to go to. And I think many people say, no, you just need to get enough into the cell you're trying to get to. It doesn't matter where else you go. We would argue that it's important for safety, for immunogenicity and actually for manufacturability, right, since T cells are probably like 1.10% of the number of cells in your body, right? The second -- actually, less than that. The second is that we've decided you need -- we really believe you need to have a signal that integrates into the target cells DNA. And the reason for that is we might make, call it, 50 million, 100 million CAR T cells, but you might be trying to take out 200 billion, 500 billion B cells and tumor cells, right? And so that requires a multi-logarithmic expansion of the CAR-T cell. And if you don't integrate if you just stick a little mRNA in, progeny won't take the mRNA with it. So you can't grow them -- as your cells divide, you lose the CAR part of it, right, just because they stop growing. And so many of the acquisitions have basically been the exact opposite of that. Good enough is good enough. And mRNA is a preferred therapy because we think it might be safer, right? And so if it turns out that we're wrong on these, mRNA and LNP will probably beat us, right? I think what we have the potential versus those to do is have meaningfully better efficacy and much deeper remissions with cancer or in autoimmune diseases, right? And hopefully, these will be curative therapies for people. Versus other VLPs or virus-like particles, I think what you'll see hopefully is better tolerability and safety. We don't have time to get into why, but I think those are mostly delivered. Those are -- that's been seen preclinically. So we're optimistic that can happen. So now what is it? We'll be in human testing. We're optimistic it will work. We don't know it will. If it does, what will it take for a partnership to develop or something like that? I don't know. I do think in type 1 diabetes, we'd be hard-pressed to partner this except in a really special situation. One of the challenges of this in vivo CAR-T is it's a super competitive environment we're going into. So forget in vivo CAR-Ts, B-cell depletion more broadly, right? So you have small molecules, antibodies, antibody drug conjugates, T cell engagers, CAR-T cells, autologous, allogeneic and in vivo, right? And so having a really great development plan and executing on that very quickly is super important. And that may be something that we can do on our own by being very focused. That may be something where a partner can help us move that more quickly. So we'll be open to a partnership on that at the right time. But I think human data is super important here. And I think it will prove whether we have what we think we have or that it's a bit different as it gets into humans.

Terrific. Well, I know we'll have clinical data, hopefully, at the end of this year. So we're looking forward to it. Steve, thank you very much for joining us here.

Thanks for having us. I appreciate it.