On August 4, 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 second quarter 2022 (Press release, Sana Biotechnology, AUG 4, 2022, View Source [SID1234617548]).

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"We are pleased with the continued progress this quarter both across our platforms and with our product candidates. We made executive hires in critical operational roles, executed on key pre-IND activities for both SC291 and SG295, made business decisions that extend our cash runway to allow more potential clinical data readouts across multiple drug candidates with our current balance sheet, and presented important preclinical data across multiple platforms at various scientific conferences," said Steve Harr, Sana’s President and Chief Executive Officer. "We are well-positioned with our current resources to file INDs across several platforms with multiple drug products in both 2022 and 2023, and our team is enthusiastic to understand the potential of these medicines to improve outcomes for patients."

Continued progress in building Sana’s hypoimmune ex vivo platform and in vivo fusogen platform with presentations at AACR (Free AACR Whitepaper), ASGCT (Free ASGCT Whitepaper), ADA, and ISSCR

Ex vivo hypoimmune platform (HIP): Sana’s HIP platform makes multiple genomic modifications to cells with the goal of preventing allogeneic transplant rejection, and importantly includes modifications to prevent both adaptive and innate immune recognition and rejection. Presented data showed survival of transplanted allogeneic HIP cells of several different types – including pancreatic islet cells, cardiomyocytes, and retinal pigment epithelial (RPE) cells – in a variety of locations in non-human primates. Sana also presented data showing that HIP allogeneic regulatory T cells function and are able to evade immune detection in preclinical models. These cells have the potential to treat a variety of autoimmune disorders. Finally, Sana scientists presented in vitro and in vivo data showing that exposure to an anti-CD47 antibody leads to elimination of HIP induced pluripotent stem cells (iPSCs) as well as HIP pancreatic islet cells. These data provide a path for a potential safety strategy as well as validation of the mechanism of immune protection. Sana’s pipeline includes HIP-modified cells to replace damaged or missing cells in the body in a number of different diseases, including, among others, cancer, type 1 diabetes, cardiac disease, and various neurologic conditions.
HIP pancreatic islet cells: Type 1 diabetes is a disease where a person’s immune system destroys one’s own pancreatic beta cells, which are a key component in pancreatic islets. Presented data showed that transplanted HIP pancreatic islet cells evade allogeneic immune response and autoimmune response in a type 1 diabetes mouse model. These data build upon previous in vitro data showing that HIP pancreatic islet cells are not recognized by serum from type 1 diabetic patients, including no T cell or antibody recognition. HIP technology is incorporated in SC451, Sana’s islet cell product candidate, which has a goal of filing an IND in 2023 for the treatment of type 1 diabetes.
In vivo fusogen platform: Presented additional preclinical data utilizing retargeted fusosomes for in vivo delivery of genetic payloads to various cells, including CD8+ T cells, CD4+ T cells, and human hepatocytes. This technology is the backbone of Sana’s in vivo delivery platform and is incorporated into various product candidates, including SG295.
Announced expected cash runway into 2025 to enable multiple data readouts across the platforms; largest part of cash savings from plans to relocate manufacturing facility to Bothell, Washington

Expect cash runway into 2025 enabling multiple data readouts across the platforms based on current timelines for lead programs. The extension includes a slowed pace of investment for multiple programs with INDs expected in 2024 and beyond.
Announced decision to move Sana’s manufacturing plant from Fremont, CA to Bothell, WA, resulting in approximately $100 million in expected cost savings over the next three years. As part of this decision, Sana signed a lease agreement to develop an approximately 80,000 square foot manufacturing facility in Bothell, WA. The facility will be designed to support the late-stage clinical and early commercial manufacturing of multiple product candidates across the portfolio.
Announced key executive hires and appointments, building on the company’s scientific excellence and operational capabilities

Strengthened the leadership team with the appointments of Snehal Patel to lead internal and external manufacturing and Julie Lepin to lead regulatory affairs.
Second Quarter 2022 Financial Results

GAAP Results

Cash Position: Cash, cash equivalents, and marketable securities as of June 30, 2022 were $579.6 million compared to $746.9 million as of December 31, 2021. The decrease of $167.3 million was primarily driven by cash used in operations of $149.2 million and cash used for the purchase of property and equipment of $11.9 million. Cash used in operations includes $6.2 million of upfront payments related to licensing technology for our 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 six months ended June 30, 2022, research and development expenses, inclusive of non-cash expenses, were $72.5 million and $145.2 million, respectively, compared to $45.0 million and $86.9 million for the same periods in 2021. The increases of $27.5 million and $58.3 million were due to increases in personnel expenses related to increased headcount to expand Sana’s research and development capabilities, increased third-party manufacturing costs for contract development and manufacturing organizations including pass-through costs for materials, facility and other allocated costs, research and laboratory costs, and costs to acquire technology complementary to our own. Research and development expenses for the three and six months ended June 30, 2022 include non-cash stock-based compensation of $7.4 million and $13.1 million, respectively, and $3.1 million and $5.8 million for the same periods in 2021.

Research and Development Related Success Payments and Contingent Consideration: For the three and six months ended June 30, 2022, we recognized non-cash gains of $17.9 million and $73.4 million, respectively, in connection with the change in the estimated fair value of the success payment liabilities and contingent consideration in aggregate, compared to a gain of $76.0 million and an expense of $51.0 million for the same periods in 2021. The value of these potential liabilities can fluctuate significantly with changes in our market capitalization and stock price.

General and Administrative Expenses: General and administrative expenses for the three and six months ended June 30, 2022, inclusive of non-cash expenses, were $18.3 million and $32.7 million, respectively, compared to $12.5 million and $24.3 million for the same periods in 2021. The increases of $5.8 million and $8.4 million, respectively, were primarily due to the write-off of construction in progress costs incurred in connection with the previously planned Fremont facility which will be replaced by the Bothell facility. The increases were also due to personnel-related expenses attributable to an increase in headcount to support our continued research and development activities, increased facility and information technology costs, including rent. These increases were partially offset by a decrease in legal fees. General and administrative expenses for the three and six months ended June 30, 2022 include stock-based compensation of $2.5 million and $4.5 million, respectively, and $1.8 million and $3.3 million for the same periods in 2021.

Net Loss: Net loss for the three and six months ended June 30, 2022 was $72.5 million, or $0.39 per share, and $103.9 million, or $0.56 per share, respectively, compared to net income of $18.7 million, or $0.10 per share, and net loss of $161.9 million, or $1.08 per share for the same periods in 2021.
Non-GAAP Measures

Non-GAAP Operating Cash Burn: Non-GAAP operating cash burn for the six months ended June 30, 2022 was $155.4 million compared to $89.8 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 six months ended June 30, 2022 was $13.8 million and $28.3 million, respectively, compared to $12.5 million and $24.3 million 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 previously planned Fremont facility, which will be replaced by the Bothell facility.

Non-GAAP Net Loss: Non-GAAP net loss for the three and six months ended June 30, 2022 was $85.9 million, or $0.47 per share, and $172.8 million, or $0.93 per share, respectively, compared to $57.3 million, or $0.32 per share, and $110.9 million, or $0.74 per share 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 previously planned Fremont facility, which will be replaced by the Bothell facility.
A discussion of non-GAAP measures, including a reconciliation of GAAP and non-GAAP measures, is presented below under "Non-GAAP Financial Measures."