On November 2, 2022 Sana Biotechnology, Inc. (NASDAQ: SANA), a company focused on creating and delivering engineered cells as medicines, reported financial results and business highlights for the third quarter 2022 (Press release, Sana Biotechnology, NOV 2, 2022, View Source [SID1234622797]).
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"Our team is executing well, and 2023 is shaping up to be an important year for the company as we look forward to generating our first data in patients," said Steve Harr, Sana’s President and Chief Executive Officer. "For SC291, we expect to generate tumor response data and CAR T cell persistence data, which have the potential to highlight differentiation from current CAR T programs and provide generalizable insights on how preclinical results for our hypoimmune platform (HIP) will translate into patients. For SG295, our scientists have developed a second-generation process that is many times more potent and has the potential to lead to better efficacy, safety, and manufacturability. Given the promise and potential of this program, we will take more time to implement these changes and now expect to file the IND in 2023. Our team continues to make meaningful progress across our pipeline and platforms while maintaining a strong balance sheet to fund our lead programs through early clinical development."
Select Program Updates
SC291 (HIP-modified CD19-targeted allogeneic CAR T) – We remain on track to file an IND this year. Preclinical data continue to highlight the potential for the HIP platform to hide our allogeneic cells from immune detection, creating the potential for longer CAR T cell persistence and higher durable complete response rates in cancer patients. Additionally, our manufacturing process appears to create, in a replicable fashion, high quality T cells at a scale with the potential for hundreds of doses per batch. We intend to study this therapy in a range of B cell malignancies and report data beginning next year.
SG295 (in vivo CAR T with CD8-targeted fusogen delivery of a CD19-targeted CAR) – This program has the potential to generate CAR T cells in vivo (inside the patient), eliminating the need for conditioning chemotherapy and complex CAR T cell manufacturing. We have demonstrated the ability to safely and selectively deliver the CAR gene to T cells in vivo and to generate active CAR T cells in multiple preclinical models. Recently, our scientists have developed a second-generation manufacturing process that results in at least a 50X improvement in product potency, which we believe has the potential to translate into better efficacy, safety, and long-term manufacturability. We have decided to bring this second-generation process forward for our first-in-human studies in patients with B cell malignancies. While implementing this change will delay the IND filing until 2023, we believe the improved process has the potential to provide a better therapy for patients.
SC276 (HIP-modified, CD22/CD19-targeted allogeneic CAR T) – We remain on track for an IND in 2023. This program will incorporate the HIP platform, potentially offering greater persistence compared to other allogeneic CAR T therapies, and target CD22 and/or CD19 expressing cells. This therapy has the potential to treat patients with B cell malignancies who have either failed previous CAR T therapies or are naive to CAR T therapy.
SC451 (HIP-modified, stem-cell derived pancreatic islet cell therapy for patients with type 1 diabetes) – Preclinical data continue to highlight the potential for HIP modifications to allow these cells to evade both allogeneic and autoimmune rejection in type 1 diabetes. The goal of this therapy is to transplant hypoimmune islet cells with no immunosuppression into patients with type 1 diabetes so that these cells produce insulin in a physiologic manner in response to glucose. We now expect to file our IND in 2024, with early clinical data from this product candidate in 2024.
Third Quarter 2022 Financial Results
GAAP Results
Cash Position: Cash, cash equivalents, and marketable securities as of September 30, 2022 were $511.6 million compared to $746.9 million as of December 31, 2021. The decrease of $235.3 million was primarily driven by cash used in operations of $214.0 million and cash used for the purchase of property and equipment of $16.3 million. Cash used in operations includes $6.2 million of upfront payments related to licensing technology for the company’s CD22 and BCMA programs, $3.2 million of costs incurred related to the previously planned manufacturing facility in Fremont, CA (the Fremont facility) which will be replaced by the Bothell, WA site (the Bothell facility), as well as multiple cash payments that will not recur this year.
Research and Development Expenses: For the three and nine months ended September 30, 2022, research and development expenses, inclusive of non-cash expenses, were $76.7 million and $222.0 million, respectively, compared to $53.2 million and $140.1 million for the same periods in 2021. The increases of $23.5 million and $81.9 million, respectively, were largely due to increases in personnel-related expenses increased headcount to expand Sana’s research and development capabilities, increased third-party manufacturing costs, facility and other allocated costs, and research and laboratory costs. For the nine months ended September 30, 2022, the increase was also due to costs to acquire technology. Research and development expenses for the three and nine months ended September 30, 2022 include non-cash stock-based compensation of $7.4 million and $20.6 million, respectively, and $4.1 million and $9.9 million, respectively, for the same periods in 2021.
Research and Development Related Success Payments and Contingent Consideration: For the three and nine months ended September 30, 2022, Sana recognized non-cash gains of $6.1 million and $79.4 million, respectively, in connection with the change in the estimated fair value of the success payment liabilities and contingent consideration in aggregate, compared to expenses of $16.8 million and $67.8 million, respectively, for the same periods in 2021. The value of these potential liabilities may fluctuate significantly with changes in Sana’s market capitalization and stock price.
General and Administrative Expenses: General and administrative expenses for the three months ended September 30, 2022, inclusive of non-cash expenses, were $15.5 million compared to $13.4 million for the same period in 2021. The increase of $2.1 million was primarily due to operating costs associated with the Fremont facility and stock-based compensation expense. General and administrative expenses for the nine months ended September 30, 2022 were $48.2 million compared to $37.7 million for the same period in 2021. The increase of $10.5 million was primarily due to personnel-related expenses attributable to an increase in headcount to support Sana’s continued research and development activities, the write-off of construction in progress costs incurred in connection with the Fremont facility, and operating costs associated with the Fremont facility. These increases were partially offset by a decrease in legal fees. General and administrative expenses for the three and nine months ended September 30, 2022 include stock-based compensation of $2.6 million and $7.2 million, respectively, and $1.9 million and $5.2 million, respectively, for the same periods in 2021.
Net Loss: Net loss for the three and nine months ended September 30, 2022 was $85.1 million, or $0.45 per share, and $189.0 million, or $1.01 per share, respectively, compared to $83.3 million, or $0.46 per share, and $245.2 million, or $1.53 per share, respectively, for the same periods in 2021.
Non-GAAP Measures
Non-GAAP Operating Cash Burn: Non-GAAP operating cash burn for the nine months ended September 30, 2022 was $219.8 million compared to $146.4 million for the same period in 2021. Non-GAAP operating cash burn is the decrease in cash, cash equivalents, and marketable securities, excluding cash inflows from financing activities, cash outflows from business development activities, and the purchase of property and equipment.
Non-GAAP General and Administrative Expense: Non-GAAP general and administrative expense for the three and nine months ended September 30, 2022 was $15.5 million and $43.8 million, respectively, compared to $13.4 million and $37.7 million, respectively, for the same periods in 2021. Non-GAAP general and administrative expense excludes the write-off of construction in progress costs incurred in connection with the Fremont facility.
Non-GAAP Net Loss: Non-GAAP net loss for the three and nine months ended September 30, 2022 was $91.2 million, or $0.48 per share, and $264.0 million, or $1.42 per share, respectively, compared to $66.5 million, or $0.37 per share, and $177.4 million, or $1.18 per share, respectively, for the same periods in 2021. Non-GAAP net loss excludes certain one-time costs to acquire technology, non-cash expenses related to the change in the estimated fair value of contingent consideration and success payment liabilities, and the write-off of construction in progress costs incurred in connection with the Fremont facility.
A discussion of non-GAAP measures, including a reconciliation of GAAP and non-GAAP measures, is presented below under "Non-GAAP Financial Measures."