On November 8, 2023 Sana Biotechnology, Inc. (NASDAQ: SANA), a company focused on changing the possible for patients through engineered cells, reported financial results and business highlights for the third quarter 2023 (Press release, Sana Biotechnology, NOV 8, 2023, View Source [SID1234637272]).
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"We continue to execute on our plans to develop our hypoimmune technology, with the potential to deliver data from four different clinical settings in 2023 and 2024," said Steve Harr, Sana’s President and Chief Executive Officer. "We have increased confidence that this platform can prevent immune recognition of allogeneic cells, unlocking the potential for important medicines in blood cancers, B-cell-mediated autoimmune diseases, and type 1 diabetes, and we look forward to sharing data later this year and next. With our recent strategic repositioning, we expect 2024 operating cash burn to be below $200 million, enabling multiple clinical data readouts with our current balance sheet and a cash runway into 2025."
Recent Corporate Highlights
Human proof of concept data in multiple clinical settings – including oncology, autoimmune diseases, and type 1 diabetes – expected in 2023 and 2024
The ARDENT trial evaluates SC291, an ex vivo HIP-modified CD19-directed allogeneic CAR T cell therapy, in patients with B-cell malignancies. The goal of the hypoimmune platform is to overcome the immunologic rejection of allogeneic cells, which, if successful with SC291, may result in longer CAR T cell persistence and a higher rate of durable complete responses for these patients.
Enrollment in the ARDENT Phase 1 study continues, and initial clinical data are expected in 2023 and more robust data expected in 2024.
The CTA was submitted for an IST evaluating an ex vivo HIP-modified primary human pancreatic islet cell therapy in patients with type 1 diabetes patients. The goal of the study is to show that transplantation of HIP-modified pancreatic islets is safe, evades immune recognition, survives, and functions without immunosuppression.
Initial HIP proof of concept data are expected in 2023 and 2024.
Sana is developing SC451, a hypoimmune-modified stem-cell derived pancreatic islet cell therapy for patients with type 1 diabetes. Sana expects insights from the IST to inform the development of SC451.
The IND has been submitted for SC291 for the treatment of multiple B-cell-mediated autoimmune diseases, and preliminary clinical data are expected in 2024.
The IND is on track for submission in 4Q 2023 for SC262, an ex vivo HIP-modified CD22-directed allogeneic CAR T cell therapy, for the treatment of B-cell lymphomas and leukemias in patients who have failed CD19-directed CAR T therapies. Preliminary clinical data are expected in 2024.
Preclinical data are scheduled for presentation at ASH (Free ASH Whitepaper) in December regarding HIP-modified CD22-directed and GPRC5D-directed allogeneic CAR T cells and topics related to fusogen specificity, extracorporeal delivery, and applications in targeting hematopoietic stem cells.
Third Quarter 2023 Financial Results
GAAP Results
Cash Position: Cash, cash equivalents, and marketable securities as of September 30, 2023 were $268.6 million compared to $434.0 million as of December 31, 2022. The decrease of $165.4 million was primarily driven by cash used in operations of $201.6 million and cash used for the purchase of property and equipment of $6.0 million. The decrease in cash was offset by net proceeds of $27.0 million from at the market equity offerings during the nine months ended September 30, 2023. The lease for our previously planned manufacturing facility in Fremont, California (the Fremont facility) was terminated during the third quarter of 2023, and the letter of credit of $6.7 million associated with this lease was returned to Sana and is included in cash and cash equivalents as of September 30, 2023.
Research and Development Expenses: For the three and nine months ended September 30, 2023, research and development expenses, inclusive of non-cash expenses, were $65.6 million and $205.8 million, respectively, compared to $76.7 million and $222.0 million for the same periods in 2022. The decrease of $11.1 million for the three months ended September 30, 2023 compared to the same period in 2022 was primarily due to decreased laboratory and research costs associated with lower research and development headcount, personnel-related costs, and third-party manufacturing costs at contract development and manufacturing organizations (CDMOs). The decrease of $16.2 million for the nine months ended September 30, 2023 compared to the same period in 2022 was primarily due to decreased laboratory and research costs, personnel-related costs, including non-cash stock-based compensation expense, third-party manufacturing costs at CDMOs, costs to acquire technology, and costs related to the Fremont facility that are now included in general and administrative expense. These decreases were partially offset by increased clinical development costs, non-cash lease costs for Sana’s planned manufacturing facility in Bothell, Washington (the Bothell facility), and depreciation. Research and development expenses include non-cash stock-based compensation of $5.7 million and $18.4 million, respectively, for the three and nine months ended September 30, 2023, and $7.4 million and $20.6 million, for the same periods in 2022.
Research and Development Related Success Payments and Contingent Consideration: For the three and nine months ended September 30, 2023, Sana recognized gains of $82.6 million and $55.8 million, respectively, in connection with the change in the estimated fair value of the success payment liabilities and contingent consideration in aggregate, compared to gains of $6.1 million and $79.4 million for the same periods in 2022. 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 and nine months ended September 30, 2023, inclusive of non-cash expenses, were $19.2 million and $52.5 million, respectively, compared to $15.5 million and $48.2 million for the same periods in 2022. The increase of $3.7 million for the three months ended September 30, 2023 compared to the same period in 2022 was primarily due to a loss on termination of lease associated with the Fremont facility (Fremont lease) and an increase in patent and other legal fees. These increases were partially offset by a decrease in insurance costs. The increase of $4.3 million for the nine months ended September 30, 2023 compared to the same period in 2022 was primarily due to an increase in patent and other legal fees, a loss on termination of the Fremont lease, non-cash stock-based compensation, costs related to the Fremont facility, which were formerly in research and development expense, and consulting fees. These increases were partially offset by the write-off of construction in progress costs in 2022 for the Fremont facility, and a decrease in insurance costs.
Net Loss: Net income for the three months ended September 30, 2023 was $1.0 million, or $0.00 per share, and net loss for the nine months ended September 30, 2023 was $195.1 million, or $1.01 per share. Net loss for the three and nine months ended September 30, 2022 were $85.1 million, or $0.45 per share, and $189.0, or $1.01 per share, respectively.
Non-GAAP Measures
Non-GAAP Operating Cash Burn: Non-GAAP operating cash burn for the nine months ended September 30, 2023 was $187.2 million compared to $219.8 million for the same period in 2022. 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, costs related to the early termination of the Fremont lease, non-recurring items, and the purchase of property and equipment.
Non-GAAP General and Administrative Expenses: Non-GAAP general and administrative expenses for the three and nine months ended September 30, 2023 was $16.5 million and $49.8 million, respectively, compared to $15.5 million and $43.8 million for the same periods in 2022. Non-GAAP general and administrative expense excludes the loss on termination of the Fremont lease and the write-off of construction in progress costs incurred in connection with the Fremont facility in 2022.
Non-GAAP Net Loss: Non-GAAP net loss for the three and nine months ended September 30, 2023 was $79.0 million, or $0.41 per share, and $248.3 million, or $1.28 per share, respectively, compared to $91.2 million, or $0.48 per share, and $264.0 million, or $1.42 per share for the same periods in 2022. Non-GAAP net loss excludes non-cash expenses and gains related to the change in the estimated fair value of contingent consideration and success payment liabilities, the loss on termination of the Fremont lease, and the write-off of construction in progress costs incurred in connection with the Fremont facility in 2022.
A discussion of non-GAAP measures, including a reconciliation of GAAP and non-GAAP measures, is presented below under "Non-GAAP Financial Measures."