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

And you disclosed a partnership with the Mayo Clinic in the spring, I believe. Is that something -- because you mentioned training your sites. Like is that something that the Mayo Clinic, with its expertise in running clinical trials, like could you standardize that with them, like the training for administering this drug?

Yes, it's been -- actually, it's been a really productive collaboration, and thrilled we did it. And you're right in like, early on, that's a lot of what we've spent time focused on with them, which is ensuring -- I kind of think of it like there's this black box that occurs from the time the drug leaves our hands until the time that the patient leaves the hospital. We need to make sure it's done as well, as repeatably and as safely as possible. And really, it's been wonderful to work with them really hand in glove to kind of work our way through some of that. And there have been things that have identified -- that we've identified that probably increased our probability of success, by working with them. And that's something that's very valuable to us. Every 1% increase in probability of success is very valuable.

Yes, for sure. And then when you think about the dose that you'll need to drive insulin independence, do you think you have a great feel for what that dose is? Or is there going to be some dose optimization built into that Phase I study?

I think you always want to know a little bit more about dose. I think we know some things, right? So all -- those of us who don't have diabetes probably have, let's just say, 1 billion, 1.2 billion islets -- or I should say cells, islet cells. And we know that when people lose about -- adults lose about 50%, 60% of their islet cells. Again, we can -- you can translate this into beta cells in a second if you wanted to, but you lose -- you begin to manifest diabetes. So you probably need to have some number like 400 million or 500 million cells that engraft and function in order to get there. So there are a number of -- to get to be insulin-independent, right? There are a number of variables in there. One is, what percentage of those cells actually engraft, right? And we're going into a relatively less studied site, which is intramuscular. We believe that that will be better. We have animal data that suggest that will be better. But we don't know for sure that those engraftment rates will be higher than going into the portal vein, which is more of the industry standard, right -- or I should say, the field standard. The second is we don't for sure how potent our cells are, right? I mean might they be a little bit different, produce a little more insulin, a little less insulin? And so we will want to make sure that we look at those a little bit. I think we have a general sense of where we need to be though. It's not like -- we could talk about the fusogens where I think we could be logarithmically off. Here, we don't want to overdose patients. I don't think there'll be a toxicity issue. But if you -- again, we all have many more cells that we're going to put in. And you're -- one of the requirements of this is that you make glucose-sensitive insulin secretion, meaning that if glucose is low, you don't secrete insulin, right? If glucose is high, you do. And so the dosing self-titrates itself anyway. But almost certainly, given the size of the unmet need, with millions and millions of people, we'll be capacity constrained for years. And so if we're over -- if we're giving a patient 2x the number of doses they need, we're only helping 50% of the number of patients we could, right? So we do want to make sure we understand the dose.

Right. Exactly. Yes. So maybe -- and that's a great segue on manufacturing. When you think about the capacity that you have today with the process that you have, where you think you need to be for a registration study versus ideally where you'll be from commercialization, how should we think of what that capacity looks like across from now until several years into the future?

Yes. So I kind of think of it as, I think we've talked about this, in 3 different periods. There's good enough for Phase 1. That's what we do today, and just barely, right? To be clear. I think that some of the Phase I enrollment will be paced by how quickly we release drug product. Number two is good enough for early commercialization. And early commercialization is going to be the exact same process that you used for your registration study, right? And that's going to be necessary to really lock down. And the third will be good enough for the long run. And in the long run, you're looking at -- again, if you treat 100,000 people per year, you're only cutting the global growth rate from 5% to 4%, right? So there's just a lot of work we have to do to get to the numbers that could get to something like that. There are always 2 things to think about. One is like you can make more batches per run or scale up the process. And that's really often -- what we're dealing with here is a science problem, and we're really in that phase. There's then make more batches, right? And that's more of a capital problem, and that's going to -- scaling out. We're not yet to that place. So what we're really working on right now is ensuring we have the scale up, the batches per run, that is adequate to really give us a very robust and successful launch. And of course, that does also include a commercially viable cost of goods, right? We can't have this cost more than we can -- than a patient is able to pay. And so we have to -- we make sure we're working on both of those things, which is a viable cost of goods as well as a viable number. But I think we can do that in very short order. We've made a lot of progress on that. We're not done, to be clear, but we've made a lot of progress on that. To get to the kind of the third period, which is that to be able to treat tens and tens of thousands of people a year, we have work to do still. That, we haven't even really begun. So we've begun the other, and I'd say we've made more progress more rapidly than we might have anticipated 6 months ago or something.

And when you look at the overall iPSC field, I think everybody is trying to figure out how to scale. Like are there learnings around the field? Or is this all proprietary per each company right now because there's just a competitiveness aspect?

I think it remains proprietary. I'm not saying that there aren't things that are becoming better known. So much of this is likely going to be solved by technologies that other companies develop that might be used, right? And so different types of bioreactors or things. Those things are proprietary and are probably shared. Some of them are -- but everything is going to always be bespoke anyway. These cell lines are just fickle. They're fickle. So when we went through, just as an example, a research grade of our cell line to the GMP grade, it wasn't totally different, but it's a little different. You have to change your recipe just a hair, right? And so the lessons, even if you shared them, may not be applicable across this. But the simple way to think about this is like biologic manufacturing has been scaled over several decades, and it's been done very well, right? It was very difficult in the 1990s and it's not much different than a pill today. The challenge of it was trying to figure out how do you create a kind of a metabolic milieu or environment where these cells can live and thrive, right? And so they're pumping out protein or whatever they're doing. We need to do that, right? We need ourselves to do that and survive. At the same time, we need to rapidly change the environment so that we can change the cell signaling, so they go from pluripotent stem cell to -- you can go to endoderm/ectoderm, medoderm next, right? And then you go down that path to what we're trying to make, which is islet cells. And those 2 things can be in juxtaposition to each other, right? Stable metabolic milieu versus like rapidly changing your environment. And that is ultimately, I think, the challenge that everybody has to grapple with.

But you believe it's solvable. Like we're going to get to, at some point, that more robust commercial scale, the third tier that you're discussing?

I believe it's 100% solvable. If you believe it's solvable you can make thousands and thousands of doses, 100%. And I presume it's solvable at making millions of doses at some point, right? I don't think you should expect that to be in 2026, right? I mean there's like -- this is -- all science challenges take time to solve.

Yes. Fair enough. And I think the potential of this type of therapy is quite clear and well understood. So rooting for you to get there.

Well, I hope it's well -- and I think it's sometimes hard to put your arms around how large the opportunity is. And one of the ways I kind of begin to just try to frame it is if -- I mentioned this earlier, there are 10 million people more or less with type 1 diabetes, and it continues to grow at a pretty robust rate globally. And so there are about 500,000 new people a year. And so if really this works perfectly, right? It works in 100% of people, with 1 injection and they never need another therapy for life. And we scale this and we make 100,000 doses per year. We will take the global growth rate from 5% to 4%. If you just launch this in the United States, you would take, let's call it 1.5 million to 2 million people in the United States, around 70,000 to 80,000 new people diagnosed every year in the United States, you would barely cut into the new incidence pool again, right? And it will at least get to go and shrink the market a little bit, you'll get to shrink it, the prevalence pool will be treated. But it will take a long time, it will take real advances in the technology. And no one company is going to win this, right? It is one of those things when you say, do we -- is there more -- pretty competitive sharing around manufacturing? There probably should be just because it's not going to be -- there's space from -- no one company can own something this big, right? It will take multiple players to really get there. Now it may turn out we're wrong and this only works in a fraction of the people who have the disease, and then it's a bit more of an adjustable challenge near term. But we're optimistic that it will work in most people.

And I guess is there anything else about the opportunity that you think the Street is under-appreciating? Or anything else you want to emphasize before I move on to spend a little bit of time on fusogen?

I think it's often hard to get your arms around, this is a field that has, I think, a patient population and families that have the kind of passion and impact of some of these orphan diseases. And so sometimes it gets kind of put into like that orphan disease camp in people's heads. It is a very, very large market. And it is a very large unmet need. Again, it presents both opportunity and challenges for us. But I think that that portion of it is sometimes difficult for people to get their arms around. The second is, I think sometimes people overestimate the impact that the current standard of care has provided for patients. It's wonderful. Until 1923, getting type 1 diabetes was a death sentence in months, right? And there have been, over the course of particularly the last 20 years, superb advances in glucose monitoring, types of insulin, insulin pumps. But at the end of the day, if you get the best possible care in the United States, you face a lifespan that is somewhere between 7 to 10 years less than expected. And to put that into perspective, if you're a 22-year-old woman, that is the same thing as if you got diagnosed with HIV or breast cancer, right? And so I think sometimes the impact of this disease on the daily lives of patients and the impact long term on their -- not only their quality of life, but also their mortality, is grossly underestimated. And so that is something that I think gives us an opportunity to do something pretty special.

Actually, just thought of a question. So when you think about the opportunity, obviously, you're going after adults first, when and if can you go after the pediatric population as well?

As soon as I think we're comfortable with the safety profile. I think it may be very quick to move to something like 16-plus, and then it might be not that long to move to 12-plus. But again, I think we have to get comfortable. These are -- we're giving gene-modified, stem cell-derived cells into people who otherwise would live for decades, right, most likely. Some people die of severe hypoglycemia or something, most people will live for decades. So expanding that population beyond people who, one, can give their own informed consent, is something we have to kind of think through, right? Two, to people who just live a lot longer. That's where your greatest impact will be ultimately, is giving it to young people, right? Because that's -- we can cut off the macrovascular and microvascular complications in type 1 diabetes before they ever, ever happen. You know they reverse somewhat with normalizing glucose. That's been shown in islet transplants. But preventing it from ever happening is still way better. And so we'll get there. It probably is not next year, but it's not it's not much further that away to start nibbling away at that population.

Got it. Okay. Well, so then let's switch gears and focus a little bit on the fusogen pipeline. You mentioned that you were planning a China IIT. There has been a little bit of turmoil there. But you said it's going to happen, it's just going to be perhaps delayed. What do you need to do to make that study initiate?

I'd say a couple of things. One, the way that it's going, there's things that you would kind of -- I might call rubber stamps that become signatures. So that's just -- it just takes time, right? We're also working to ensure that if some of those things don't become signatures, it does not have a material delay to the program. But it will happen. In the middle of it, it's a little bit frustrating, but we'll get to the other side of this. This is a drug that has been very well tested in the preclinical setting, right? We have probably done more nonhuman primate studies than we should admit. And we have -- because we've just been really trying to ensure that we are delivering something that can be effective and safe in people -- not ensure, maximize the probability. You can never ensure. And we have a very robust nonclinical package. We've made the drug. It's ready to go. And so it will happen.

Okay. And there's been a lot of focus on safety, I think, for across CAR T, all modalities really at this point, and particularly in China. So I guess how -- when you're thinking about the Phase I design, how are you thinking about dosing to start to really ensure that there's isn't a major safety effect that could derail the program?

Well, first of all, when you're thinking through safety, safety has been something that we have designed into the program from the get-go, right? And there are a number of differences with this drug versus, say, kind of the standard way that in vivo CAR T cells have been made to date. Number one is we have this -- we believed from the get-go that true cell specificity in delivery is super important. And I think others would say that actually the most important thing is just getting enough signaling to the target cells. I think it's reasonable, right, it's reasonable. Great. But what that -- we think it means less off-target, less immunogenicity and, hopefully, more manufacturability, because it just turns out, T cells are rare, right? Number two is we really worked to dissociate the portal of entry, which for most of these virus-like particles is CD3, from activating the T cell, right? Because that portal of -- when you bind CD3, these T cells get very activated. And I'll come back to what the potential implications of this may be. But that can lead to a robust early immune response, which can be toxic. It also can exhaust these cells, which may deplete your efficacy. So first of all, it goes down to how you design the program. We've done some other things like remove the CAR from the cell surface -- or the VLP surface, right? And so it's actually always going to be, a way these producer cells are made, when you make a virus-like particle, you could have CAR, and that can lead to delivery to off-target cells, in particular some of your maybe cancer cells or things you may not want to be. And that's both an immunogenicity problem and it may also be a broader safety issue. So again, start with safety in how you design it. Number two is start with safety in how you -- how we monitor what we do. So you know that there are kind of 4 CAR T associated toxicities to worry about. One is specific for in vivo CAR T cells, and that's just kind of peri-infusion toxicity that we've seen in the field. In fact, some patients have almost died from, right? And now patients are broadly getting high-dose steroids before treatment and stuff. We think because we have not -- we're not -- and what we've seen in animals, ours is very well tolerated. We've had a little bit of fever. It could be taken care with a Tylenol, right? In nonhuman primates. So we'll come back to how we start dosing. But the first thing is, again, how you design, hopefully, we'll have less peri-infusion toxicity. CRS and ICANS are -- cytokine release syndrome and the severe neurotoxicities we're seeing here, again, are usually associated with activated CAR T cells when you put this product in. I would never claim we're not going to have those things. I think these are related to the drug's mechanism. But by having less activated cells at the outset, maybe we are able to reduce that. The fourth is one that people haven't been enough attention to, but I think some of the challenges in the autoimmune space has driven it, which is this kind of immune effector hemolytic syndrome. That's been present for this class of drugs for as long as they've been around. I think it was underappreciated early because it's kind of can be confused with cytokine release syndrome. And it manifests a little bit later, it manifests differently and is treated a little bit differently. But again, that is very much associated with kind of robustly activated cells. And so -- but that's been seen. And I think anybody who tells you they don't have that problem is probably -- and away from seeing at least a little bit of it, right? Because it's been seen across targets, it's been seen across companies and it's been seen across indications. It doesn't mean that a target or an indication or a process couldn't make it better or worse. It's not to say that. But I think it probably is something we all need to be thoughtful of. And we have, again, trained physicians and have protocols to deal with each of those 4 side effects. The last thing that we've done is we will probably -- we will certainly start dose -- you've seen some of the field start dose so high that patients almost died, right? You've seen some in the field that started at doses where it's taken them 3 or more doses to get it into the effective range. And you've seen some who've kind of had it, fortunately, kind of pretty good right out of the gate. We're likely in the too low or pretty good out of the gate. I don't know where we'll fall because it's very difficult to translate as you move across species into a disease setting really what things will look like. But it may take us a dose or 2 to get to where we want to be. It may not. We'll see. But if we make a mistake, certainly given what you've said and certainly just given good Phase I drug development, our mistake out of the gate will be towards patient safety and the fact that maybe we need to get -- if anything, it will be too low, not too high, we hope. That's what we believe.

Got it. Seems prudent, Well, we are rapidly running out of time. So Steve, I'm just going to turn it back to you to share any closing remarks you might have, maybe remind us of the cash runway and just close it out with again, what we can expect from you over the next, call it, 12 months.

Those are 3 very different things. Cash runway. We closed last quarter with $160 million, and that will get us about a year from then. We're going to need some more money. We don't see any like urgent need right now. We've got -- the second part of this, we have a lot going on and it's coming up very soon. Around those things is we both understand our capital needs and investors understand kind of where the capital will be deployed. I think those are probably better times to raise money. But we'll be tactical as we need to be, and we do want to kind of replete our balance sheet over time. We have a lot coming over the next 12 to 18 months. Some of it is going to be pretty quick, those related to things like type 1 diabetes and maybe understanding do we really have a drug with this SG293, right? Putting them into kind of their long-term competitive profiles and understanding, does this work in everybody, most, some, things like that, will take more time, right? But I think we can solve all of that in the next -- in 2027. And so there's a lot that will happen here, and we're optimistic. We've tested these medicines as rigorous as we can, and that they are going to be things that go into humans that provide meaningful clinical benefit. That doesn't always happen and so we're always anxious to turn over those cards and ensure that the hypotheses we've built this company around really turn out to be true.

Yes. We're looking forward to it. Well, thank you so much, Steve. This has been wonderful. I really appreciate the time. Thank you.

Always love talking to you, Sam. Thanks.