SANA - Sana Biotechnology Is Technically Overbought So Buy It Later

2023-04-17 09:00:14 ET

Summary

• Sana Biotechnology has two recent pre-clinical studies that showed positive results.
• SANA shares were up >50% for the week, but prices are likely to slide down in the near-term.
• Sana Biotechnology doesn't know how to promote or position its pipeline, which has misled analysts.

Sana Biotechnology, Inc. ( SANA ) is a small (closing in on $1 billion market cap) biotechnology company focused on developing gene and cell therapies for various diseases. The 5-year old company based in Seattle, Washington, has no products and no company-sponsored studies yet conducted in people (Figure 1). So it’s no surprise that any positive pre-clinical news will move the stock.

Two such peer-reviewed pieces last week caused shares to skyrocket 57% (Figure 2), although they’re still 38% below last year. While these articles may bode well for Sana’s purported lead candidates in future human trials, investors have time to wait for better entry points.

Figure 1. Sana Pipeline

Figure 2. SANA 1-year price chart

The Science Translational Medicine paper published on April 12 researched humanized (expressing human genes), immunocompetent nonobese diabetic (“NOD”) mice using either autologous (using the patient’s own cells) or allogeneic (from different genetic donor) grafts. The study gives evidence that induced pluripotent stem cells (iPSC)-derived hypoimmune ("HIP") islet cell grafts or HIP-engineered pseudo-islets could both be better than allogeneic islet transplantation, mainly by foregoing the need for lifelong immunosuppression. Immunosuppressive drugs can cause serious adverse effects (SAEs) such as toxicity from destruction of the transplanted islet ? cells, kidney damage or exacerbation of pre-existing disease, serious infections or cancer. The HIP islets evaded both alloimmunity (rejection of transplant) and autoimmunity (body attack’s own cells) and the mice achieved blood glucose normalization within 2 weeks , while all allogeneic grafts were rejected by 10 days with no effect on glycemic control.

The study was short, and It’s not clear whether this success will translate to humans. NOD nonhuman primate models would yield better perspectives on longer-term immune rejection as well as longevity of the islet cells in the absence of immune response. Investors should note that the report doesn’t give proof of concept for iPSC-derived SC451 because there are still difficulties with controlling insulin production with the stem cell–based approach that no one has solved so far. If the investigator-sponsored trial shows positive results this year, Sana plans on submitting an Investigational New Drug Application ("IND") in 2024.

Chimeric antigen receptor ("CAR") T cell therapies are more prominent in oncology. The Nature Communications paper published on April 13 focused on HIP CAR-T cells targeting CD19, a protein commonly expressed in blood cancers. Designing "off-the-shelf" allogeneic (universal) CAR T cells from healthy donors is attractive because currently approved, custom-made autologous CAR-T cell therapies have high manufacturing costs and complexity, limited scalability, and inconsistent quality, and may cause SAEs such as graft-versus-host disease ((GVHD)), host-versus-graft disease, cytokine release syndrome and immune effector cell-associated neurotoxicity syndrome. In the study of NSG (immunodeficient) and immunocompetent allogeneic humanized mice, HIP CAR T cells exhibited superior (in the CD19+ Burkitt’s lymphoma cell line) or similar anti-tumor efficacy and duration compared to autologous CAR T cells, and had reduced risk of GVHD.

Finances and Takeaways

Cash and securities totaled $434 million as of December 31, 2022. Net loss in Q4 was $80.4 million, of which research and development expenses accounted for $63.9 million. This will only increase with the start of the clinical phase. Everybody writes about the cash burn.

Where other analysts make a mistake is the supposed lack of clinical data. SC262, which Sana licensed from the National Institutes of Health, has already been evaluated in multiple academic clinical trials. The latest data was presented at the American Society of Hematology Annual Meeting in December 2022. Stanford University conducted a Phase 1b trial on patients with relapsed/refractory B cell acute lymphoblastic leukemia that have relapsed following treatment with a CD19-directed CAR T therapy. Of the 18 patients infused, 75% achieved a complete response ("CR") or CR with incomplete hematologic recovery ("CRi"). Similarly, SC255 was licensed from Nanjing IASO Biotherapeutics and Innovent Biologics ( IVBIY ). IASO is evaluating the BCMA construct as part of an autologous CAR T candidate, CT103A. An example of such data was at ASH 2022. A Phase 1b/2 study in heavily pretreated patients with relapsed and/or refractory multiple myeloma demonstrated a CR rate of 74% in 100 patients.

To conclude, Sana errs by not highlighting its candidates as being clinically tested, even though by other investigators and foreign companies. The Nature article does support the development of SC291. The evasion feature of these HIP CAR T cells makes them resistant to both adaptive (e.g., macrophages and natural killer cells) and innate (T cells and B cells) immunity could be very advantageous, by maintaining treatment persistence without immunosuppression. SC291 can also be more easily and less expensively mass-produced. However, SANA is overbought as the relative strength index ("RSI") is over 70 and shares are above the upper Bollinger Band.

While there is little danger of prices falling to the $3’s, a biotech with no clear timeline on clinical catalysts could be forgotten by the market in a month or two. Just remember to tune back in due to the strong Sana Biotechnology, Inc. pipeline.

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