Sana Biotechnology, Inc. (NASDAQ: SANA), a company focused on
creating and delivering engineered cells as medicines, today
reported financial results and business highlights for the third
quarter 2022.
“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.”
About Sana
Sana Biotechnology, Inc. is focused on creating and delivering
engineered cells as medicines for patients. We share a vision of
repairing and controlling genes, replacing missing or damaged
cells, and making our therapies broadly available to patients. We
are a passionate group of people working together to create an
enduring company that changes how the world treats disease. Sana
has operations in Seattle, Cambridge, South San Francisco, and
Rochester.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains forward-looking statements about
Sana Biotechnology, Inc. (the “Company,” “we,” “us,” or “our”)
within the meaning of the federal securities laws, including those
related to the company’s vision, progress, and business plans;
expectations for its development programs, product candidates and
technology platforms, including its pre-clinical, clinical and
regulatory development plans and timing expectations, including
with respect to the expected timing of IND filings for the
Company’s product candidates; the Company’s expectations with
respect to the potential therapeutic benefits and impact of its
development programs; the Company’s expectations regarding the
timing, substance, and impact of the data from its clinical trials;
the Company’s expected cash runway; potential ability of the
Company’s HIP platform to make genomic modifications to allogeneic
cells to hide them from immune detection and the potential benefits
associated therewith; the potential capabilities of the Company’s
manufacturing process for its SC291 program; the potential of the
Company’s SG295 program to generate CAR T cells in vivo; the
potential advantages of the second-generation manufacturing process
for the Company’s SG295 program; the potential ability of the
Company’s SC276 program to treat patients with B cell malignancies
who have either failed previous CAR T therapies or are naïve to CAR
T therapy; and the potential ability of the Company’s HIP platform
to make genetic modifications to islet cells to allow them to evade
both allogeneic and autoimmune rejection in type 1 diabetes. All
statements other than statements of historical facts contained in
this press release, including, among others, statements regarding
the Company’s strategy, expectations, cash runway and future
financial condition, future operations, and prospects, are
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as “aim,”
“anticipate,” “assume,” “believe,” “contemplate,” “continue,”
“could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,”
“may,” “objective,” “plan,” “positioned,” “potential,” “predict,”
“seek,” “should,” “target,” “will,” “would” and other similar
expressions that are predictions of or indicate future events and
future trends, or the negative of these terms or other comparable
terminology. The Company has based these forward-looking statements
largely on its current expectations, estimates, forecasts and
projections about future events and financial trends that it
believes may affect its financial condition, results of operations,
business strategy and financial needs. In light of the significant
uncertainties in these forward-looking statements, you should not
rely upon forward-looking statements as predictions of future
events. These statements are subject to risks and uncertainties
that could cause the actual results to vary materially, including,
among others, the risks inherent in drug development such as those
associated with the initiation, cost, timing, progress and results
of the Company’s current and future research and development
programs, preclinical and clinical trials, as well as the economic,
market and social disruptions due to the ongoing COVID-19 public
health crisis. For a detailed discussion of the risk factors that
could affect the Company’s actual results, please refer to the risk
factors identified in the Company’s SEC reports, including but not
limited to its Quarterly Report on Form 10-Q dated November 2,
2022. Except as required by law, the Company undertakes no
obligation to update publicly any forward-looking statements for
any reason.
Investor Relations & Media:Nicole
Keithinvestor.relations@sana.commedia@sana.com
Sana Biotechnology,
Inc.Unaudited Selected Consolidated Balance Sheet
Data
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
|
|
(in thousands) |
|
Cash, cash equivalents, and marketable securities |
|
$ |
511,573 |
|
|
$ |
746,877 |
|
Total assets |
|
|
898,102 |
|
|
|
1,129,407 |
|
Contingent consideration |
|
|
141,130 |
|
|
|
153,743 |
|
Success payment liabilities |
|
|
35,710 |
|
|
|
102,525 |
|
Total liabilities |
|
|
332,083 |
|
|
|
400,905 |
|
Total stockholders' equity |
|
|
566,019 |
|
|
|
728,502 |
|
Sana Biotechnology,
Inc.Unaudited Consolidated Statements of
Operations
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(in thousands, except per share data) |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
76,735 |
|
|
$ |
53,245 |
|
|
$ |
221,964 |
|
|
$ |
140,121 |
|
Research and development related success payments and contingent
consideration |
|
|
(6,062 |
) |
|
|
16,753 |
|
|
|
(79,428 |
) |
|
|
67,778 |
|
General and administrative |
|
|
15,514 |
|
|
|
13,433 |
|
|
|
48,240 |
|
|
|
37,731 |
|
Total operating expenses |
|
|
86,187 |
|
|
|
83,431 |
|
|
|
190,776 |
|
|
|
245,630 |
|
Loss from operations |
|
|
(86,187 |
) |
|
|
(83,431 |
) |
|
|
(190,776 |
) |
|
|
(245,630 |
) |
Interest income, net |
|
|
1,173 |
|
|
|
158 |
|
|
|
2,149 |
|
|
|
409 |
|
Other income (expense),
net |
|
|
(106 |
) |
|
|
10 |
|
|
|
(406 |
) |
|
|
24 |
|
Net loss |
|
$ |
(85,120 |
) |
|
$ |
(83,263 |
) |
|
$ |
(189,033 |
) |
|
$ |
(245,197 |
) |
Net loss per common share -
basic and diluted |
|
$ |
(0.45 |
) |
|
$ |
(0.46 |
) |
|
$ |
(1.01 |
) |
|
$ |
(1.53 |
) |
Weighted-average number of
common shares - basic and diluted |
|
|
189,303 |
|
|
|
181,827 |
|
|
|
187,645 |
|
|
|
160,515 |
|
Sana Biotechnology,
Inc.Changes in the Estimated Fair Value of Success
Payments and Contingent Consideration
|
|
Success
PaymentLiability(1) |
|
|
ContingentConsideration(2) |
|
|
Total Success Payment Liability and Contingent
Consideration |
|
|
|
(in thousands) |
|
Liability balance as of December 31, 2021 |
|
$ |
102,525 |
|
|
$ |
153,743 |
|
|
$ |
256,268 |
|
Changes in fair value - gain |
|
|
(54,910 |
) |
|
|
(528 |
) |
|
|
(55,438 |
) |
Liability balance as of March 31,
2022 |
|
|
47,615 |
|
|
|
153,215 |
|
|
|
200,830 |
|
Changes in fair value - gain |
|
|
(14,098 |
) |
|
|
(3,830 |
) |
|
|
(17,928 |
) |
Liability balance as of June 30,
2022 |
|
|
33,517 |
|
|
|
149,385 |
|
|
|
182,902 |
|
Changes in fair value - expense (gain) |
|
|
2,193 |
|
|
|
(8,255 |
) |
|
|
(6,062 |
) |
Liability balance as of September
30, 2022 |
|
$ |
35,710 |
|
|
$ |
141,130 |
|
|
$ |
176,840 |
|
Total change in fair value for
the nine months ended September 30, 2022 |
|
$ |
(66,815 |
) |
|
$ |
(12,613 |
) |
|
$ |
(79,428 |
) |
(1) Cobalt Biomedicine, Inc. (Cobalt) and the Presidents of
Harvard College (Harvard) are entitled to success payments pursuant
to the terms and conditions of their agreements. The success
payments are recorded at fair value and remeasured at each
reporting period with changes in the estimated fair value recorded
in research and development related success payments and contingent
consideration on the statement of operations. (2) Cobalt is
entitled to contingent consideration upon the achievement of
certain milestones pursuant to the terms and conditions of the
agreement. Contingent consideration is recorded at fair value and
remeasured at each reporting period with changes in the estimated
fair value recorded in research and development related success
payments and contingent consideration on the statement of
operations.
Non-GAAP Financial Measures
To supplement the financial results presented in accordance with
generally accepted accounting principles in the United States
(GAAP), Sana uses certain non-GAAP financial measures to evaluate
its business. Sana’s management believes that these non-GAAP
financial measures are helpful in understanding Sana’s financial
performance and potential future results, as well as providing
comparability to peer companies and period over period. In
particular, Sana’s management utilizes non-GAAP operating cash
burn, non-GAAP research and development expense and non-GAAP net
loss and net loss per share. Sana believes the presentation of
these non-GAAP measures provides management and investors greater
visibility into the Company’s ongoing actual costs to operate its
business, including actual research and development costs
unaffected by non-cash valuation changes and certain one-time
expenses for acquiring technology, as well as facilitating a more
meaningful comparison of period-to-period activity. Sana excludes
these items because they are highly variable from period to period
and, in respect of the non-cash expenses, provides investors with
insight into the actual cash investment in the development of its
therapeutic programs and platform technologies.
These are not meant to be considered in isolation or as a
substitute for comparable GAAP measures and should be read in
conjunction with Sana’s financial statements prepared in accordance
with GAAP. These non-GAAP measures differ from GAAP measures with
the same captions, may be different from non-GAAP financial
measures with the same or similar captions that are used by other
companies, and do not reflect a comprehensive system of accounting.
Sana’s management uses these supplemental non-GAAP financial
measures internally to understand, manage, and evaluate Sana’s
business and make operating decisions. In addition, Sana’s
management believes that the presentation of these non-GAAP
financial measures is useful to investors because they enhance the
ability of investors to compare Sana’s results from period to
period and allows for greater transparency with respect to key
financial metrics Sana uses in making operating decisions. The
following are reconciliations of GAAP to non-GAAP financial
measures:
Sana Biotechnology,
Inc.Unaudited Reconciliation of Change in Cash,
Cash Equivalents, and Marketable Securities
toNon-GAAP Operating Cash Burn
|
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
(in thousands) |
|
Beginning cash, cash equivalents, and marketable securities |
|
$ |
746,877 |
|
|
$ |
411,995 |
|
Ending cash, cash equivalents,
and marketable securities |
|
|
511,573 |
|
|
|
866,112 |
|
Change in cash, cash
equivalents, and marketable securities |
|
|
(235,304 |
) |
|
|
454,117 |
|
Cash paid to purchase property and equipment |
|
|
16,274 |
|
|
|
24,660 |
|
Change in cash, cash
equivalents, and marketable securities, excluding capital
expenditures |
|
|
(219,030 |
) |
|
|
478,777 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Cash paid to acquire technology(1) |
|
|
- |
|
|
|
1,246 |
|
Net proceeds from issuance of common stock(2) |
|
|
(724 |
) |
|
|
(626,405 |
) |
Operating cash burn -
Non-GAAP |
|
$ |
(219,754 |
) |
|
$ |
(146,382 |
) |
(1) The non-GAAP adjustment of $1.2 million for the nine months
ended September 30, 2021 was the holdback payment related to the
acquisition of Cytocardia, Inc. in 2019.(2) Net proceeds of $0.7
million were received in connection with the at the market sales
agreement in the nine months ended September 30, 2022.
Sana Biotechnology,
Inc.Unaudited Reconciliation of GAAP to Non-GAAP
General and Administrative Expense
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(in thousands) |
|
General and administrative - GAAP |
|
$ |
15,514 |
|
|
$ |
13,433 |
|
|
$ |
48,240 |
|
|
$ |
37,731 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-off of construction in progress costs incurred in connection
with the previously planned Fremont facility(1) |
|
|
- |
|
|
|
- |
|
|
|
(4,474 |
) |
|
|
- |
|
General and administrative -
Non-GAAP |
|
$ |
15,514 |
|
|
$ |
13,433 |
|
|
$ |
43,766 |
|
|
$ |
37,731 |
|
(1) The Fremont facility will be replaced with
the Bothell facility.
Sana Biotechnology,
Inc.Unaudited Reconciliation of GAAP to Non-GAAP
Net Loss and Net Loss Per Share
|
|
Three Months EndedSeptember 30, |
|
|
Nine Months EndedSeptember 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(in thousands, except per share data) |
|
Net loss - GAAP |
|
$ |
(85,120 |
) |
|
$ |
(83,263 |
) |
|
$ |
(189,033 |
) |
|
$ |
(245,197 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in the estimated fair value of the success payment
liabilities(1) |
|
|
2,193 |
|
|
|
25,229 |
|
|
|
(66,815 |
) |
|
|
57,698 |
|
Change in the estimated fair value of contingent
consideration(2) |
|
|
(8,255 |
) |
|
|
(8,476 |
) |
|
|
(12,613 |
) |
|
|
10,080 |
|
Write-off of construction in progress costs incurred in connection
with the previously planned Fremont facility3) |
|
|
- |
|
|
|
- |
|
|
|
4,474 |
|
|
|
- |
|
Net loss - Non-GAAP |
|
$ |
(91,182 |
) |
|
$ |
(66,510 |
) |
|
$ |
(263,987 |
) |
|
$ |
(177,419 |
) |
Net loss per share - GAAP |
|
$ |
(0.45 |
) |
|
$ |
(0.46 |
) |
|
$ |
(1.01 |
) |
|
$ |
(1.64 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in the estimated fair value of the success payment
liabilities(1) |
|
|
0.01 |
|
|
|
0.14 |
|
|
|
(0.36 |
) |
|
|
0.39 |
|
Change in the estimated fair value of contingent
consideration(2) |
|
|
(0.04 |
) |
|
|
(0.05 |
) |
|
|
(0.07 |
) |
|
|
0.07 |
|
Write-off of construction in progress costs incurred in connection
with the previously planned Fremont facility(3) |
|
|
- |
|
|
|
- |
|
|
|
0.02 |
|
|
|
- |
|
Net loss per share -
Non-GAAP |
|
$ |
(0.48 |
) |
|
$ |
(0.37 |
) |
|
$ |
(1.42 |
) |
|
$ |
(1.18 |
) |
Weighted-average shares
outstanding - basic and diluted |
|
|
189,303 |
|
|
|
179,899 |
|
|
|
187,645 |
|
|
|
149,683 |
|
(1) For the three months and nine ended September 30, 2022, the
change in the estimated fair value related to the Cobalt success
payment liability was an expense of $2.4 million and a gain of
$56.5 million, respectively, compared to expenses of $21.8 million
and $46.9 million for the same periods in 2021. For the three
months and nine ended September 30, 2022, the gains related to the
Harvard success payment liability were $0.2 million and $10.3
million, respectively, compared to expenses of $3.4 million and
$10.8 million for the same periods in 2021.(2) The contingent
consideration was recorded in connection with the acquisition of
Cobalt. (3) The Fremont facility will be replaced with the Bothell
facility.
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