Great. Good afternoon, everybody. Thanks for joining us for the next session. I'm Matthew Harrison, one of the biotech analysts here at Morgan Stanley. Really pleased to have Steve Harr, the CEO of Sana with me. Just quickly before we get started, I need to read a disclosure statement. Please note that all important disclosures, including personal holdings disclosures and Morgan Stanley disclosures, appear on the Morgan Stanley public website at morganstanley.com/researchdisclosures. With that, Steve and I are gonna switch places. He's gonna ask questions, I'm gonna answer now.
Oh, great. That'll be fun. I think people might enjoy that more.
Steve, thanks for being here. I thought maybe a good place to start is just, I think everybody's heard of Sana, but maybe doesn't know sort of the two platform technologies that you have. Maybe set everybody in the right place and talk to them about why you've brought this together and what the idea for the company is.
Sure. First of all, thank you, Matthew, and to Morgan Stanley and everybody here for joining us. We of course will be making forward-looking statements, and we spend a lot of time writing our risk factors to take a perusal of them, if you wanna learn a little bit more about what could go wrong. The company is about now. It's coming up on almost four years old, right? It was founded under the premise of, you know, we wanted to. That engineered cells and the ability to modulate cells and genes would be the most important transformation in medicine over the next couple decades. We thought we could build, you know, an important company around that. We wanted to be able to do two things.
One, to change a cell or repair it inside the patient's body or in vivo, right? Really control or change DNA or control the RNA. The second is to be able to build a cell from scratch, really to be able to put it back and replace a cell that was too far damaged or missing. To really go about that, we explored and thought about what are the most important and actually tractable challenges in making that happen, and came really to two very distinct and different conclusions. If we wanna be able to deliver something or modify a cell in vivo or inside a patient, really, you can do. You've been able to do for years now almost anything you want to the genome or to RNA in a Petri dish.
The most difficult challenge has actually been delivering the payload into the cells, right? Our goal at the outset was to really go after delivery and to be able to deliver any payload, so DNA, RNA, protein, you could do gene editing, base editing, whatever, to any cell in a specific and repeatable way. Now, to be really clear, we haven't cracked that. But every time you do one of those four things, you open up whole new areas of medicine. I'm gonna talk about one of our platforms, which is called Fusogens, gets into cell-specific delivery, and then we can use that to deliver all kinds of different payloads, whether that's gene editing machinery, base editing, prime editing, insert DNA, whatever you wanna do, modify it.
The other is, you know, if you wanna replace cells, which is like, we call it ex vivo cell engineering. These are the diseases that most of us and most of our loved ones will suffer from. You know, to be really clear, it's hard. To make an important medicine, you have to build a cell at scale that will engraft, meaning kind of go to where you stick around the patient's body, function as you want it to, and then persist. Sounds easy, right? Just make it and get it in there and get it to function and persist. To be a good medicine, you have to do all four at the same time. Of those, the most important challenge has been cellular persistence, right?
Since the advent of transplant medicine, you know, now 70 years ago, allogeneic cells, my cells into you, your body will see them as foreign and reject them. There have been a couple ways to get around that. One is, by really immunosuppressing the patient. That works in very severe illnesses, but isn't really generalizable. The other is what, you know, many have done, which is autologous cells, or using, you know, the great example being autologous CAR T-cells. That is very difficult to scale and only really works for a couple of cell types. Our second platform is really going after this persistence issue by trying to hide cells from, or from immune detection, and therefore we have, you know, immune evasion, right? Hypoimmune platform.
That's really, when the company was founded, those are the two things we set out to do was cell-specific delivery with diverse payloads and then really this hypoimmune platform. We've actually made a lot of progress. I'll start with the latter. The fundamental insight here is it really started as some of the stem cell biologists began to understand the power of pluripotent stem cells, you know, call it 15 years ago, and quickly realized that they really were almost useless unless you could overcome this problem of rejection, right? A couple of different groups that actually helped us found the company, one at Harvard and one at Stanford, went to their immunology colleagues and got the same advice. This is actually not that hard, just figure out the paradox of pregnancy.
The paradox of pregnancy is that we're each half mom and half dad, and the only reason we're here together today is our mothers didn't reject us when we were in utero. Really, what is different about the maternal fetal border from the way we exist, you know, day to day? Actually, we came up with really what looks to be a viable solution. You, when you're trying to protect cells from being rejected by the immune system, you have to grapple with two different arms of the immune system. One is the adaptive immune system, and that's T-cells and B-cells and antibodies. They've kind of all.
That's actually relatively easy, and we've known how to do that for years, and you knock out or disrupt something called MHC class I and class II. The other problem is the innate immune system. By the way, cancers figured this out, viruses figured this out. They really try to suppress MHC class I and class II. We've evolved the innate immune system to detect these cells. It's like natural killer cells and things like that. That's the challenge. We seem to have figured out the only system that we've ever seen where you can really protect cells from both the adaptive and the innate immune system. Now we have transplanted, again, we're not aware of anybody doing this, multiple cell types into all kinds of different locations in non-human primates.
You know, we've done this in mice and humanized mice and ferrets and other species, and now we just have to figure out if it works in humans. I'll come back to how we do that. The other platform, as you mentioned, this is cell-specific delivery. Again, when you're faced with a complex biologic problem, one thing to figure out is Mother Nature solved it already, right? Mother Nature, viruses go to specific cells in our bodies, right? If you think about COVID, it only goes to cells that express the ACE2 receptor. Our cells have figured out ways to communicate with each other, and a great example is that sperm only goes to egg. It doesn't go to any other cell that it runs into along the way.
They utilize, for the cell-specific delivery, the same system that's called a fusogen. What we did is we took these fusogens and figured out how to engineer them to go after the cell types that we wanna go after. We're able to get cell-specific delivery of payloads. We've shown we can kind of do this in a mediocre way, with just about any cell you gave us. The hard part is to do it in a really good way. The first place we're trying to do that is going directly and only into T cells and delivering a CAR directly to a T cell to make it inside the body, which you can get into again. We, you know, we're three and a half years old. We're about 500 people.
We've actually built now, you know, probably four or five different platforms/capabilities. These two will now. You know, we've gone through, I think, the most rigorous proof of concepts you can in preclinical studies. We've completed more or less all of the GMP and pharm tox work that needs to be done. I'd say more or less, we're not quite. You have to dot i's and cross t's. Hopefully, we'll have a couple of INDs in this year and the substantial pipeline behind that. If we sit here a year from now, we'll know if, you know, if these platforms are really working.
Okay, great. Thank you, Steve. Why don't we start with hypoimmune. I guess the first thing is compare and contrast the relative difficulty of the two platforms. I think you started to do that, but you know, how do you think about the path forward for hypoimmune and how straightforward that is?
Yeah.
versus fusogen, and just how should investors think about that?
Yeah. Well, one of the things about the hypoimmune platform is, in some regards, it's the die have been cast, right? We figured out what we think is a biologic way to sort of, you know, to hide cells from the immune system, and it works, you know, across multiple species. Whether or not it works in humans is something that we'll figure out in the next nine months or so. The first place we're applying it is in the allogeneic CAR T-cells. It's actually a complex supply chain, and there's a lot of work that goes into making these, but once we have them now, this is really relatively straightforward. If we're able to hide these cells from immune detection, and we'll know that within a few months of dosing patients, right?
It is very straightforward for us to develop allogeneic CAR T cells across a multitude of different targets, CD19, CD20, BCMA. We've got a few others kind of in there. We're already at a scale where we can do thousands of patients very easily, right? That's really straightforward. When you move, the next place you wanna move it is to apply this to stem cell-derived products. There, we would put these hypoimmune edits into pluripotent stem cells and make them into different cell types to transplant. The most advanced is type 1 diabetes, where type 1 diabetes is basically the immune system attacks and kills the beta cells in a patient, and they can no longer secrete insulin when glucose goes up.
The goal is to just replace those cells, and hopefully, with a one-time treatment, you have a chance to cure patients, right? We can get into why we think that will work. That's complicated, though. Like, when you're gene editing and growing out stem cell-based products, that's actually really complex sciences. Again, we can get into that. That's not as straightforward as the allogeneic. Allogeneic CAR T cells is really like, if this biology works, we'll. This is an execution company for a while with a lot of value. This stem cell stuff has some scientific risk still. The fusogen platform is more complicated. The hard part in the fusogen platform generally is manufacturing this stuff consistently at scale, right?
We can do this in a way where we can run early phase I studies, which we can get into in a second. But you know, really manufacturing this at a scale where we're hitting our aspiration of around global access, you know, at a reasonable cost of goods, we have some work to do, right? It's true when you're entering human testing for most antibodies, the big difference is over the last 20-25 years, you now have a pathway to know that antibodies will work. We have some, you know, scientific discoveries we're gonna have to make along the way to ensure that we can do this at the scale that we envision.
Okay, great. Hypoimmune, let's talk about allo CAR T. What's your first IND? What's the path to IND there? I think and then maybe we can talk about, you know, what you think success looks like once you dose this in a clinic.
Sure. The first drug, we call it SC291, SonaSelf. That's SC291. It targets CD19 positive cancers, I should say. It's a well-validated, understood target. You know, we're basically in the final throes of all of our process transfer into the GMP manufacturing. You know, the path to file an IND is just hoping we don't get unlucky with supply chain issues and things as we're doing that, and we should have that done this year. If we don't, we'll miss it likely by a couple weeks just 'cause something happens along the way. That would be the. It's really straightforward to figure out if this works or not. I mean, what we've seen over and over again is that actually your active pharmaceutical ingredient matters, right?
When you make these CAR T-cells, you need them to stick around for long enough to not just depress the tumor or kill a lot of tumor cells, but to completely eradicate it. That's been seen with autologous CAR T-cells. That's been seen with allogeneic CAR T-cells. The field today has been really stuck in the allogeneic CAR T-cell with around a month of these cells persisting. I think if you start to see these things at two or three months, we'll have a, you know, a best-in-class program. If you start to see it at six months, which I think is entirely in the realm of plausibility, we'll have a good chance at something better than autologous CAR T-cells.
I would advise, I know what I'll be looking at to figure out where we are in the competitive marketplace is, at two or three months, we're gonna be competitive with autologous, but we'll have a lot easier manufacturing and stuff, and it's available off the shelf. If it's a lot more than that, we'll end up with, I think, much higher durable complete response rates than what's been seen to date. That's what I'd focus on. We'll know that, you know, pretty quickly. We'll see that within, you know, months of beginning to dose patients.
For durability, that's irrespective of the dose level.
Well, you need to see these cells grow well, too.
Yeah.
I mean, I would wanna see. I should be careful with that. I would wanna see that you get a lot of complete response. If cells grow well, you get complete responses, and then they persist.
Okay.
The cells persist. I mean, you didn't know if you didn't have that first part, I wouldn't really care if they were still around.
Right. I guess, does that mean we can still expect to see that in the first, you know, what's called first year, or is it gonna take a little bit longer? I know we're gonna ask-
If it isn't clear by the end of next year, it probably will never be, assuming that we execute well.
Okay.
Great.
Okay.
It's just not that complicated biologically.
Okay.
If it is, like I think the great thing here is if it happens to do what we hope it will do and we think it will do, then not only can you do the CD19 CAR T-cells, but right behind that we'll have, you know, multiple allogeneic CAR T-cells. If it works, the T-cell space is harder, I think, than things like beta cells. If it works there, I think most immunologists will tell you it's gonna work in protecting these beta cells from allogeneic rejection as well. It's a really straightforward both to creating hopefully a, an important product, but then really validating this platform more broadly.
Which then I guess gets us to the next spot, which is type 1 diabetes. There, I guess the issue is more about cell line than it is about. 'Cause you'll, you know, hopefully if you get there, right, we'll know whether the platform works. It's a question about cell line and can you take these iPSCs, can you make the right edits, and can you actually grow them out. Where are we in cell line development?
Yeah.
How to think about the risk and the complication there?
Well, we can make the right edits. The risk, the risks are. The biggest, I think, like, understood issue with all these stem cells is that every time our cells divide, you get on average one mutation. Now you're doing this billions and billions and billions of times, right? You're gonna have. You're growing them in a media that selects for cells that really grow well, right? What you wanna make sure of is that you're not selecting for cells that can become a cancer, right? That's ultimately what the risk is in this space. You can't. You have to have genomic heterogeneity, 'cause if you don't, then you have a tumor, right? If you have everything looking exactly the same.
You have to do it in a way where you feel good about, you know, the integrity and the control that you have around the genome. You know, we are in the process of making the master cell banks and sub-cloning out the cells that have the edits that we want, right? Both deletions and insertions, and that have the genomic integrity that we're hoping for, right? That's kinda where we are. You then grow them up, run your GLP tox studies, and run our GMP manufacturing in parallel, and hopefully begin to be able to file an IND next year.
In terms of, you know, as we think about updates and you telling us about where you are in terms of de-risking the cell line, is the first time we're gonna hear about that because you filed the IND or do you think we might hear about it, you know, like?
I think.
... you've been able to make a change at a cell line.
I guess generally no news is good news, right?
Okay.
You know, it's hard to. Yeah, that's probably the best way to say it.
Yeah. Okay. That's fine. Maybe we'll flip to Fusogen then and maybe you could just detail a little bit more about where you are in your ability to make these cells right now.
Yeah. I'd maybe do the same thing that you asked before. Like what do we have to do to get an IND?
Yeah.
Where, like where do we have to go from there? To take a step back, if we make this allogeneic, these allogeneic doses a quarter, let alone a year. It's just not complex. It's totally different with this Fusogen platform, right? We're going forward in the first-in-human study with a process. It's okay, right? In terms of what I call scale and, you know, kinda where we wanna be. I'll start with where we are for the IND, and then what we need to do to get manufacturing, and then what success looks like maybe. We're finishing up all of the GLP tox studies and the GMP manufacturing run. Seems to be fine. You know, again, no news is good news.
We've done all this stuff before in non-GLP settings and things, and so we should be able to file this year. The next step would be looking at getting this stuff into humans. Again, you'd expect it to happen within a few months of clearing an IND. You know, the success in phase one, and then I could maybe go that route, and then the manufacturing. You know, we are. We still have work to do to get to the scale and potency that we wanna do, get to ultimately. Our goal in this fusogen program was to do two things. It's to safely deliver the cells, I would say the genetic material, without having to send things off to the autologous cells, without having to send it off to a manufacturing facility, right?
To then really get really great gene transfer in the body, right? That, with no lymphodepletion. We want no chemotherapy, which is a bit of a complication, right? That's our goal. If you can do that, make great cells and no lymphodepletion, that's gonna be a great platform. I would think about phase I of those goals. What we've tried to do is start with what I call a phase 0, phase IA type study, right? We will actually, the way we're gonna start is to ensure we get safety, the first few patients we're going to take the blood out of the patient and put it back in. Inject the virus when it's outside the body and put it back. We call it extracorporeal dosing.
There's no manipulation that happens ex vivo. It's just a way to increase exposure. The goal is to show that we can safely get gene transfer and CAR expression, right? If you can do that, it's just a matter of dose when you're gonna get enough, right? That's our first-in-human goal. It also validates the platform then, 'cause it says we can get cell-specific delivery in a safe way, right? That's goal number one, just gene transfer and CAR expression. Goal number two would be to begin to see expansion and tumor begin to eradicate. There's some chance that happens in phase one. I should say, the first doses of phase one.
There's some chance we have to go to higher doses, but if you have gene transfer, we'll get there. To really get to the highest doses we want to, we're modifying our manufacturing process. The work on that is more or less done. We'll lock the second generation process any day now. We'll then. It'll take about a year to get into GMP. We would then, you know, go through dose escalation and phase IB slash everything else, starting the latter parts of next year. You know, the most important element of that is validating the platform and showing that we can get the gene in. There is one extra biologic risk in not doing lymphodepletion, to be really clear. That the chemo.
With every single, adoptive T-cell program, whether that's TILs or CAR T-cells, patients get lymphodepleting chemotherapy. That lymphodepleting chemotherapy, no one really knows what it does, right? It definitely leads to higher levels of IL-7 and IL-15. These are cytokines that help cells grow. It may not be necessary. We have a lot of reason to believe from animal data that it won't be. It may be necessary in cancer patients. We really wanna see, first risk, gene transfer. Second risk, can we get away with no cytokine support lymphodepletion, right?
I think a couple follow-up questions. The first one is around cell expansion, and so what do we know about how quickly you can get expansion? I guess what I'm really asking is, how low do you have to start on dose levels? Because you may not understand, right, the dose range, or do you understand the dose range correctly?
We don't understand the dose, to be really clear. We had well, my favorite story on this, or most maybe informative story. The first time we showed this program to external advisors, we had one advisor who is from Penn, and she said, "Your animal data are great, you know, but they're in animals with just B cells. They don't have tumors in monkeys. When you go into humans, because there's cancer everywhere, you're gonna have to start a lot lower, 'cause you could run into CAR T toxicity." Someone, this other guy from Chicago said, "Oh, I completely disagree, because cancers tend to suppress T cells' ability to grow.
You're gonna need to go at least a log higher than what you did in non-human primates." I think there's a lot of uncertainty around where that will be. I think we're gonna be in a dose, though, where you get transduction, CAR expression, right? We can play with the dose.
I gotcha. That's why from your viewpoint, the first thing is to look about safe gene transfer.
Yeah
whether you have a CAR, and then you have to solve the dose.
No one's ever done this, right? Whatever you start with, you know, no one's ever done something like this, like in vivo making a CAR T-cell. First thing is safety. You can't really have Water's safe, right? You can't really have safety unless you have evidence of biological activity. If you really wanna have a safety study, the first thing you have to do is to say, "We can get these genes into cells at a relevant number, right? And then the rest of it will take care of itself with dose and other things over time.
Okay, second question is, first gen manufacturing platform versus second gen manufacturing process. How high can you get in dose? I guess, why do you feel confident that you need the second gen to get to a high enough dose? Or just how should people think about that?
The limiter for us in a lot of gene therapies in dosing is actually concentration. Like, how much can you put. There are three elements of these programs. You have to have potency, right? Purity and yield, right, in terms of manufacturing. Potency and purity drive how much drug you can actually deliver in a given amount of volume. In order to get to some of the higher doses, we know we have to either have greater potency or greater purity, right? Purity is mainly, if you've ever looked at measures of these viral based drugs, there's like physical titer and infectious titer that people will talk about.
Physical titer is just the number of particles that you have, and infectious titer is the number of particles that have all the machinery and can actually do the work you want it to do. There's usually a pretty big gap between those two as you start out. The more you bring that gap closer to each other, the more you can concentrate product and the more drug we can deliver. We have plenty from a yield perspective, right? We can make enough of this stuff, but we have to be able to concentrate it enough. That's how. Boy, I know that to get to the highest doses that we might need, we're gonna have to have another manufacturing process.
It isn't that we can't make enough of it's that we can't infuse enough of it safely without putting patients at risk of something like congestive heart failure.
Okay. Got it. Just to round that out, it sounds like with Hypoimmune, maybe within a year of time of dosing, we should have a pretty good idea of what's happening. Fusogen, it sounds like this is a multi-year process, or how best to think about that?
Yeah. It depends what you want. If you want a drug, if you wanna know this is like, this is a drug that you're gonna be full throttle towards registration. You'll know that in the hypoimmune platform, and you'll be gonna get a sense of it, I think, next year. You'll know it, right? The fusogen, you'll know this is platform work. Can I actually, in a cell-specific way, deliver genetic content in vivo safely?
Next year.
Next year.
Okay.
What you won't know is necessarily. We might get lucky.
Yeah.
We might not get lucky. Like luck, you know, you can't rely upon luck. Do we have an adequate... You know, have we maximized, maxed out dose yet? We might get there. Again, it might work at the lower doses. We just have no clue. To give you a sense, again, someone said log lower. Two really smart people. Log lower, log higher than where you were in non-human primates, right? We'll start at the lower end of that range, and if we have to get the higher end, we'll, you know, to really get great efficacy, then it will take, you know, at least in early 2024 to see it.
Okay, great. Maybe in the last two minutes here, just remind us where you are from a capital perspective. What are some of the things you've done to sort of preserve capital, and just how you're thinking about funding the business?
Yeah. We have enough money to last us into early 2025, right? What we did recently was first of all, we moved where we're building our manufacturing plant from the Bay Area to the Seattle area. Saved us a lot of money. The second is that we really kind of focused and prioritized our resources so that almost everything that we're spending is going to our first four product candidates and things behind that. They have activity, but a lot of the expensive stuff is gated on platform validation. You know, if you said you will know if we ran the company to E, right?
To empty, which you know is hard to do, and we did no partnerships, we own 100% world rights to everything, we'll be able to turn over the cards of four different drugs. We won't do that, of course. We'll have to either do partnerships or capital for each. We'll have enough money to understand at least the first two drugs in humans, and how well they're working before we have to raise capital, giving ourselves a really nice buffer before we will raise capital, really. We really wanna make sure that we understand both platforms, you know, before we go forward and re-approach investors.
Great. Well, perfect. Steve, thanks for being here. I appreciate it.
Thank you. I really appreciate it. Thank you, everybody, for your time and attention. We actually did a lot preclinically in 2020, 2021. The last 18 months have been focused on, really on execution for manufacturing and toxicity, GLP toxicity studies. In the next, you know, six to 12 months, I think you're gonna see a lot of, you know, information emerge around how well these things work in humans, which will, I think, meaningfully change the overall risk profile and therefore, hopefully, the value and opportunity set for the company.
Great. Thank you.
Thanks.