On August 4, 2021 Sana Biotechnology, Inc. (NASDAQ: SANA), a company focused on creating and delivering engineered cells as medicines, reported financial results and business highlights for the second quarter of 2021 (Press release, Sana Biotechnology, AUG 4, 2021, View Source [SID1234585842]).
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"We continue to be pleased with the progress across our in vivo and ex vivo technology platforms and programs as well as our progress in recruiting great people and building the infrastructure necessary to achieve our long-term vision of using engineered cells as medicines," said Steve Harr, Sana’s President and Chief Executive Officer. "In the second quarter, we presented data demonstrating the survival and immune evasion for transplanted hypoimmune cells into non-human primates without immunosuppression, an important step in enabling the use of engineered cells as medicines more broadly across multiple diseases. We also signed a long-term lease to enable the build out of a clinical trial and commercial manufacturing facility capable of supporting our broad pipeline. I would particularly like to thank the Sana team, who despite the ongoing complex operating environment of COVID continues to make progress in moving our product candidates forward, with a goal of beginning human studies for multiple medicines per year beginning as early as next year."
Recent Corporate Highlights
Presented data showing survival of transplanted stem cells in non-human primates without immunosuppression at a plenary session at the International Society for Stem Cell Research 2021 Virtual Annual Meeting. The transplanted cells incorporated Sana’s hypoimmune gene modifications that enable immune evasion, demonstrating a key step toward widespread treatment of disease using engineered cells.
Announced a lease agreement to develop a 163,000 square foot manufacturing facility in Fremont, California to support the manufacture of late-stage clinical development and early commercial product candidates across our technology platforms.
Second Quarter 2021 Financial Results
GAAP Results
Cash Position: Cash, cash equivalents, and marketable securities as of June 30, 2021 were $930.8 million compared to $412.0 million as of December 31, 2020, an increase of $518.8 million. Sana successfully completed its initial public offering in February 2021 and issued 27.0 million shares of common stock, including 3.5 million shares pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a price of $25.00 per share, for net proceeds of $626.4 million.
Research and Development Expenses: For the three and six months ended June 30, 2021, research and development expense, inclusive of non-cash expenses, was $45.0 million and $86.9 million, respectively, compared to $30.0 million and $56.4 million for the same periods in 2020. The increases of $15.0 million and $30.5 million for the three and six months ended June 30, 2021, respectively, were due to an increase in personnel expenses related to increased headcount to expand Sana’s research and development capabilities, costs for preclinical studies, costs for laboratory supplies, and facility costs. Research and development expenses include non-cash stock-based compensation of $3.1 million and $5.8 million for the three and six months ended June 30, 2021, respectively, and $0.9 million and $1.6 million for the same periods in 2020.
Research and Development Related Success Payments and Contingent Consideration: For the three and six months ended June 30, 2021, we recognized a gain of $76.0 million and an expense of $51.0 million, respectively, in connection with the change in the estimated fair value of the success payment liabilities and contingent consideration, compared to $51.9 million and $52.8 million for the same periods in 2020. For the three and six months ended June 30, 2021, we recognized a gain of $83.2 million and an expense of $32.4 million, respectively, in connection with the change in the estimated fair value of the success payment liabilities, compared to expenses of $37.9 million and $38.5 million for the same periods in 2020. The decreases of $121.1 million and $6.1 million during the three and six months ended June 30, 2021, respectively, were due to changes in our market capitalization and stock price during the relative periods. For the three and six months ended June 30, 2021, we recognized expenses of $7.2 million and $18.6 million, respectively, in connection with the change in the estimated fair value of contingent consideration and $14.0 million and $14.3 million, respectively, for the same periods in 2020. The decrease of $6.8 million during the three months ended June 30, 2021 and the increase of $4.3 million during the six months ended June 30, 2021 were due to changes in the discount rate and scientific progress made toward the achievement of milestones during the relative periods.
General and Administrative Expenses: General and administrative expenses for the three and six months ended June 30, 2021, inclusive of non-cash expenses, were $12.5 million and $24.3 million, respectively, compared to $6.0 million and $12.0 million for the same periods in 2020. The increases of $6.5 million and $12.3 million in the three and six months ended June 30, 2021, respectively, were primarily due to increased personnel-related expenses attributable to an increase in headcount to build our infrastructure, legal fees to support our patent portfolio and license arrangements, insurance associated with being a public company, consulting fees, and facility costs. General and administrative expenses include stock-based compensation of $1.8 million and $3.3 million for the three and six months ended June 30, 2021, respectively, and $0.2 million and $0.3 million for the same periods in 2020.
Net Income (Loss): Net income for the three months ended June 30, 2021 was $18.7 million, or $0.10 per share, and net loss for the six months ended June 30, 2021 was $161.9 million, or $1.08 per share, compared to net losses of $87.8 million, or $7.18 per share, and $120.7 million, or $10.47 per share, for the same periods in 2020.
Non-GAAP Measures
Non-GAAP Operating Cash Burn: Non-GAAP operating cash burn for the six months ended June 30, 2021 was $89.8 million compared to $56.9 million for the six months June 30, 2020. 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 Research and Development Expenses: Non-GAAP research and development expenses for the three and six months ended June 30, 2021 were $45.0 million and $86.9 million, respectively, compared to $28.9 million and $55.0 million for the same periods in 2020. Non-GAAP research and development expenses excludes one-time costs to acquire technology.
Non-GAAP Net Loss: Non-GAAP net loss for the three and six months ended June 30, 2021 was $57.3 million, or $0.32 per share, and $110.9 million, or $0.74 per share, compared to $34.8 million, or $2.85 per share, and $66.4 million, or $5.76 per share, for the same periods in 2020. Non-GAAP net loss excludes one-time costs to acquire technology and non-cash expenses related to the change in the estimated fair value of contingent consideration and success payment liabilities.
A discussion of non-GAAP measures, including a reconciliation of GAAP and non-GAAP measures, is presented below under "Non-GAAP Financial Measures."