Sana Biotechnology Inc Aktie

Great. Hello everyone. I'm Max Skor, a biotech analyst with Morgan Stanley. And before we get started, for important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. And with that, I'm happy to introduce Steve Harr, CEO of Sana Biotechnology. Thank you very much for joining me today.

Max, thanks for having us. I appreciate it.

So, maybe just to get started. If you -- we'll give you the stage, introduce Sana's story, maybe set up recent progress, and what we should focus on going into the end of the year?

Sure. I'm sure everybody here recognizes we'll make forward-looking statements, and like you, I have my own little risk factor. Please read our 10-Q for looking at those risk factors. Now, we started the company around the idea that one of the most important transformations that will occur in medicine over the coming 20 years or so is the ability to engineer cells. And we wanted to do this in a way that allowed us to go after diseases that are highly prevalent with scalable platforms that could access patients broadly.

And we chose to go after two problems. I am excited to say shortly we should be getting going on studies for them and really understanding their impact on human health. So, first one is if you transplant someone else's cells into your body, your body will see them as foreign and try to reject them or will reject them. And it's been a major limitation for transplant medicine for decades. And we went after the idea of trying to hide allogeneic cells, a transplant, from immune recognition. Turns out that the technique we use seems to hide them, at least in some cases, not only from allogeneic, but also autoimmune rejection.

And probably the most visible or potentially most important program that we're working on is a one-time functional cure for Type 1 diabetes. And Type 1 diabetes is actually a pretty simple disease from far away, which is the immune system gets confused and attacks and kills the pancreatic beta cell. The beta cell is the only cell in our body that makes insulin. And before the advent of endogenous insulin about 103 years ago, patients just starved to death. Their cells couldn't get any sugars over the course of several months.

Since then, people have done a lot better, but they still -- it's still not great. And so even with the best therapy today, your average Type 1 diabetic will live about a decade shorter than someone without it. And to put that into perspective, that's about the same for a 20-year-old being diagnosed with Type 1 diabetes as being diagnosed with either metastatic -- sorry, being diagnosed with breast cancer or HIV. And during that time, it's a very complex life, right? Every meal, every time you exercise, every time you get a little bit sick, you're trying to adjust your insulin. And so these people deserve something better.

About 20 -- so, if you take a step back and say, okay, the missing cell is the pancreatic beta cell. I'm going to go back and forth between beta cell and islet. Just think of it as, islet is the beta cell plus its support structure. About 25 years ago, a guy named James Shapiro, and then others have followed, started isolating pancreatic islets from recently deceased people's pancreases. And it turns out it works very effectively. They're transfused in the liver, and people have lived for decades without any insulin. So, normal blood glucose is no insulin.

The challenge is that it's not a very replicable supply source, right? There's a lot of variability. It's not very scalable. And people have to be on extraordinary immunosuppression, like an organ transplant, and there just aren't that many people for whom the risks of immunosuppression are less than the risk of diabetes, right? So, -- but there are thousands of people around the world who have gotten this.

So, over the last several years, others have begun to show that you can take pluripotent stem cells, either embryonic stem cells or induced pluripotent stem cells, iPSCs, and you can grow them and mature them into pancreatic islets. And there seems to be a more replicable outcome, which is kind of working in almost everybody. Two, it seems to be that it's probably more scalable, although I don't think we've asked that question for sure. But people are still on lifelong immunosuppression. And again, so the limit that they impact.

Over the last several years, what we've shown is we can make some gene modifications. First, we showed in vitro, then in mice, and then in non-human primates. And we showed it in people. We actually did this in Type 1 diabetic, published in Journal of Medicine that we can gene modify these islets, transplant them into a person with Type 1 diabetes, and they will survive and function. And the last update in The New England Journal of Medicine is at 14 months. So, no immunosuppression, cells doing really well.

So, now you have all the component parts together for a one-time curative therapy for Type 1 diabetes. And what we have is a gene modified iPSC-cell derived islet. So, we made a handful of gene edits. We made a master cell bank. We've grown them and then now we'll differentiate them into islets. We've been working hard at this. I think we're almost there. Our goal is to get the IND cleared this year and start our Phase I study this year. I'll go through this, but you should know pretty quickly if this works or not. I'm sure you'll ask me questions about it.

I think it's probably worth a second question, but people get bored of me rambling. We have another platform, though, and that is if you, our goal at that point was to go after another big problem, which is you can do more or less anything you want to a genome in a petri dish. The hard part has been delivering it into the cells in the body. And so, we wanted to develop a platform that would allow us to go after the challenge of being able to deliver to any cell in a specific, repeatable, and with any payload way.

We seem to have made some real progress on that. And so, our most advanced program is in vivo CAR T-cell. We've been at this for a while. You know, we have a platform that we believe gives us some very specific advantages we can get into versus others. They've got a little bit ahead of us, so I hope it does play out that it's been worth the time to make a best-in-class therapy. I'm quite confident if you were a non-human primate, this would be the best-in-class therapy, and whether or not that's true with a human, we'll have to see. But again, our goal is to get that study started soon and start generating data and get that out in the not too distant future.

Okay, great. Let's start with the Type 1 Diabetes Program. Stepping back, you talked about The New England Journal of Medicine paper. The follow-up UP421 data showed continued islet cell survival and insulin production without immunosuppression through 14 months. What do you expect the October presentation to add to investors' understanding of durability, immune evasion, or cell function?

I said this from the beginning, there's nothing that will get you after about a month from the immune system. So, these cells are going to live until they die. When they die, it will be because of something related to these cadaveric islets, most likely. And so, when they live, it doesn't mean that our cells, which are stem cell-derived islets, will live in the long run. If they die, it doesn't mean our cells will die. We got immune evasion. And now we need -- we need to put these stem cell derived islets in and ensure that they last for hopefully decades for people. So, unless something really surprising came up, like there's some new twist in the immune system that killed these things, I don't think you'll learn anything as you watch this for longer. I've kind of been pretty clear on that for a while. I don't view any update around us learning that things are still alive as being material. I would view if they died, and that was because of immune response to the material we would tell you. But otherwise, just assume they're doing fine.

Okay, then let's fast forward then to progress towards starting the SC451 Phase I/II trial. We could break it out. I can ask specific questions, but what are the gating factors? What are the challenges? Lay that out for us.

Historically, the biggest challenge for us, it took us years to figure this out, was trying to make a genomically stable GMP master cell bank. I'll explain what that all means. So, it turns out -- so we gene-edited a pluripotent stem cell. We knock two genes out, we knock two in. And as we did that, what we'd find is we grew these in -- because you start with one cell and you're going to grow every patient, let's just say it's around a billion cells as a dose. Every thousand patients is a trillion. To go after a disease of 10 million people, you need quadrillion cells.

So, as we grew up the number of cells, we would start to see mutations arise. And essentially, it's the DNA repair enzymes, because you put things in growth media that selects for cells that grow quickly. The cells that grow quickly are those that don't stop to fix their genome. So, the biggest challenge is doing that when we did it. So, once we did that, it's actually been pretty rapid.

And we had three work streams we're working our way through. Number one is just being clinically ready. Right, you have the clinical trial protocol aligned with everybody outside the company, regulators, physicians, others. And then in this case, because we're delivering this product, we send some live cells into a hospital where they have to be stored, processed, and then actually put into the muscle of the patient. We need to make sure that was replicable and good. So, that was part one. We feel very good about where we are there. And particularly at a collaboration we signed earlier this year with the Mayo Clinic, they've been quite helpful in ensuring we did that in a replicable and hopefully reproducible way across sites.

Number two is, it's all kinds of non-clinical studies that get done. The things that are normally done, GLP tox studies, biodistribution efficacy. Some things that are specific to what we do, genomic stability. Again, you don't want cancer causing mutations in these cells. And then another one is, we have a safety switch we put in. So, that in case something did go wrong, we would kill the cells. That's preliminarily all done. We don't have the final study reports in our hands yet, but I think that can be off all of our worry lists.

The third thing is manufacturing. Right, so, these are complex medicines, and we need to both transfer, we need to both lock a process and then transfer it in from our research labs into a GMP, or good manufacturing practice, manufacturing suite, and then have it done by their hands, not our scientists' hands, but their employees' hands. So, we're finishing that. So, hopefully, that goes very well. We'd like to believe we're going to file this IND, get it cleared, and start our Phase I study this year. We don't know if we'll dose anybody this year. I think that's another question. Like we want to make sure it's the right patient at the end of the year, around the holidays. We'll hopefully get all that done soon.

Okay, can you talk about the trial design, the number of patients you anticipate enrolling, and just timelines in general?

Yes. I think that there are three things you're trying to learn. Well, let's just say you always try and learn safety. That's the most important aspect of any Phase I study. So, let's put that in. And there are two main safety things to be worried about. One, at least as far as we know from afar, one is when you put in these stem cell derived islets, some of them don't live. They don't engraft, right? That's what will always happen when you put cells in. And they're full of insulin granules when they release. We need to make sure we don't have severe hypoglycemia or low blood sugar in the short term. Super easy to deal with if you have it, hopefully, which is just IV sugar. The second thing is in the long run tumors. And that's going to take many patients. So, safety, very clear.

So, then what we wanna know is, is first off, does the technology or what we've seen, the immune evasion in this end of one study we did, transfer into these gene modified stem cells? If that occurs, I would argue, the majority of the risk is out of the program, right? Because we're going to transplant cells into a patient with a pre-existing immune response against beta cells, or islet cells, right, with no immunosuppression, they should be rejected in a matter of days. And if they're not, if these cells are living, let's just use it as a marker, a month out, they're probably going to live for years and years. So, that's question one. Does that happen? I think that will be super important. And if it does happen, it will be a very important event for our company.

The second is we're not just trying to make a great technology, we're actually trying to make a drug, right? And the goal of the drug is normal blood sugars or euglycemia with no more insulin shots and no immunosuppression. If we use the experience of others, that may take us a quarter or two to ensure we have potent enough cells and we get the efficacy we want. And that could happen again pretty early in the year. The third thing is, is this a consistent result? Is this going to happen in more or less everyone? Is it going to be some subset of patients? And that may take us a bit longer to figure out, but we like to think we can figure that out maybe as we move through next year. So, our Phase I study set up is around a dozen patients. We can kind of flux it in a new direction. And we want to make sure we have a good solid dose and that these things really work. And I think then it's pretty straightforward to move into a registration study, assuming it all works as we hope it does.

And how have interactions gone with regulators, everything on track in that regard?

Yes. Okay, we have a, yes, it's -- it's an important field. I think from a regulatory perspective, they understand the unmet need. It's a very vocal patient group because they haven't had anything really novel in a century. I think with the human data that we have in this N of 1 experience, there's a lot of curiosity about how well that will translate to people. So, we found that regulators around the world in many jurisdictions have been helpful in helping us navigate questions in the path forward.

And maybe you can comment a bit more on the...

It does not mean they're easy. It means they're transparent, right?

The deal you signed with the Mayo Clinic earlier in the year, the implications of that, and maybe looking out further, any strategic partnership you think would be valuable, or are you interested in that?

I'll start with the Mayo Clinic. It's been just a tremendous partner to date in what we, the collaboration with them. I have to say from my perspective it's exceeded, at least my expectations. In the very near term, they were trying to help us with two challenges, right? In the long run, we hope they can help us with more. One is really de-risking this period, this black box, from the time the drug product leaves our hands until when the patient leaves the hospital, right? And there are elements of product storage, there are elements of product preparedness. We're sending it in a media that has to, that you can't put all that, to keep it alive for a while, you have to concentrate the cells down so you don't put all that media into your muscle. There are elements of delivery, getting the cells into the right muscle at the right time and with the right needles and all that stuff. Then elements of taking care of the patient. We wanted to make sure we're standardized in a way that it could be reproducible across many sites. It's been really great for that.

And they also came with a bit of cash for us. There was a $25 million investment in the company at a premium, which is helpful because we're an early stage company. Our cost of capital is high, and that was quite helpful. Those are two things that came with it to date. I think we're both optimistic there'll be more as we go forward.

And then view on potential strategic partners going forward.

We'll have to see. I mean, I always kind of think of this. If you knew the answer to these four questions, you would know how this movie plays out with this drug. One is, does it work? And you'll learn that very quickly. Two is, can we figure out how to scale manufacturing, right? This is a disease of 10 million people. There are 500,000 new patients a year. I mean, if we somehow like cure 100,000 people per year, the prevalence pool will still be growing. So, we have to figure out scale. And then the third is, can we figure out a commercial model for a curative therapy of a highly prevalent disease? I mean, those are the three big, like, giant macro questions. And the fourth one is, how do we finance our company through all that, right?

So, we know big pharma partners can help with the latter. And I don't think they can help us answer the question, does it work, because the drug's kind of being made. The cards are on the table. We haven't been able to flip them over yet. And so, we'll have to see if they can help us with these others or if it's just, again, never say never, because you never know what the financial conditions are of companies. Certainly, if they can grow the pie for us, that's very, very attractive. If they can de-risk these kind of existential questions for us, that'd be very, very attractive. It's not clear yet that anybody can, because the questions haven't been answered. Not that we're better than they are, it's just the questions haven't been answered. And then it would be great to have a bigger pie with lower risk and more capital. Those are all good things, but we'll see if anybody can ever do that. I kind of like the idea of taking this forward a while on our own, but that isn't always the right answer for patients. And we'll do what we think is the right thing for the therapy and for all of our stakeholders.

Okay. Not pressing you to look too far ahead, but the cadence of updates. Should we expect by the end of the year, we'll get a press release that the Phase I trial has started, and then first quarter...

I think investors have been very clear to us that IND clearance is very material in their mind just given the complexity of this medicine, how hard it's been for us to make it above and beyond that we'll figure it out when it happens. But I think that's something that's very material to us. So, we'll make sure that that's something. If it happens, they get to make sure. So, we'll be waiting for that press release. I don't think we want to give a blow-by-blow of everything that happens because it just, it takes away, it puts unnecessary pressure around things that sometimes the better answer's a week later. Right.

That's fair.

Just to make sure that they get the best answer.

Okay, maybe we can pivot to the rest of your platform, SG293. If you can introduce it, where you're at, and I can ask some specific follow-up questions.

This is an in vivo CAR T program, leveraging a platform we call the Fusogen platform. This particular drug makes a CD19 targeted CAR T-cell, which we intend to initially develop in the setting of blood cancers, in particular non-Hodgkin lymphoma, with a goal of things, a safety profile allows it to move into things like autoimmune disease, where I think it could be, if a safety profile allows it, really, really transformative.

We did three things that are different than the field in making this platform. We'll see how they play out as being clinically important. The first assumption that we made was that you want exquisite specificity in delivery. Meaning, you only want to go to T-cells. I think many others have taken a different view. I'll tell you one of our board members had a different view around this, and so, it's not like it's crazy, which is you just want to get enough of the genetic material into your target cell, the T-cell. You can make enough CAR T-cells, and that's your major thing. Our view has been, though, that for safety reasons, for reasons around immunogenicity, even just for manufacturability, just because T-cells are a small number of the cells in your body that you want to be exquisitely specific. And I think we're confidently can say we've established that within the context of the technologies that are out there. I can get into why if you want.

The second is that you want to have a signal that integrates into the target cell. So, what that means is, we put in the cell DNA and that DNA goes into the chromosome of the target T-cell. And so, when you CAR T-cells, you might make 100 million of them, right? Really, if you're really good at in a patient. But you have you and I have probably a hundred billion B-cells, and in and if you tie B-cells plus tumors, you have hundreds of billions of cells that have to be killed. Your CAR T-cell is going to have to go through log multi logarithmic expansion or growth to kill all of the cells. And if you don't integrate into the chromosome, the signal won't go to the progeny cell, right? So, mRNA, there's a lot of really smart people who have spent a lot of money and they could be right. I'm not saying we're right. These are just assumptions we made, right? Specificity matters. You want to do integration over mRNA. Okay. Smart people are making a different bet. And they we make, and integration has its own safety issue, right? It's got at least a theoretical idea that could go in the wrong spot of your genome.

The third thing that we made a bet on we is that you wanted to dissociate entry of your genetic material from activation of the T-cell. And so, what you've seen is that all the other people who are doing these virus-like particles, more or less, are trying to use CD3 as the way that they get to T-cells. And that has led to a new toxicity, which is a peri-infusion toxicity, which in some cases has put people in the ICU on blood pressure and has actually led to people getting around the time of infusion very high dose steroids, 20 milligrams of dexamethasone, which if you've ever taken steroids, it's a lot of steroids. And so, but with these three things, we think because we've dissociated those two things, we can get entry without over activation. We can get the DNA going into the progeny cells and we only go into T-cells and that will give us a clinical advantage. We need to see that that's true in humans, right?

And so, the next step is to get into humans. We've been working towards starting an investigator-initiated trial in China imminently. We had some things that slowed down a bit. There was some adverse publicity around in other studies, some people who had -- who died in China. And I think that, that just led to people dotting their i's and crossing their t's. I don't think in any way it's going to impact our ability to get this done. But last week, we told people, instead of data later this year, it's probably going to be in the first half of 2027. But so, it's still coming at us. If that works in the lymphoma setting, we will expand to other cancers. If the safety profile allows it, we will go into the autoimmune space, where I think, again, the benefits can be profound. There's no lymphodepleting chemotherapy. There's all kinds of things that are maybe different than other. And if that also works, we have a second drug targeting BCMA. That's ready to go into human testing, but we're capital constrained small company and we figure we don't need to do two drugs the same platform until we see the first one work.

Okay, that's fair. Could you just comment on what would constitute meaningful early proof of concept across the CAR T generation? Is it safety, durability? Kind of set the stage for what we can expect in the first half of next year.

I think you want to see a reasonable safety profile with complete responses, like elimination of the tumor. And I think we have something better. So, for those of you who don't know, I've been I was in the CAR T space for a while, like an old company that did this. And one of the things that we weren't always sure of, particularly in a lymphoma setting, was whether a complete response would translate into a durable complete response or maybe like a functional cure. And it turned out that if people's CAT scans or PET scans, PET-CT scans were negative at six months, they almost never recurred, right? That's a long time to wait as you're going through dose escalation studies to figure out if you're at the right dose.

We have a new technology. It's a ctDNA, or it's kind of tumor DNA, circulating tumor DNA. And this really allows you early to understand, is a patient likely at a dose, with a therapy, that's likely to lead to a durable, complete response? And so, I think we learn pretty quickly, do you have complete responses with undetectable ctDNA in a drug that is reasonably safe? If you have that, it's going to be a really important drug. The bar is probably you want to do as well as autologous CAR T-cells. If you're -- that error bar of that, the ease of use of this, a lack of lymphodepleting chemotherapy, which comes with a lot of toxicity, is probably pretty attractive, right? If it's better, that's a no-brainer, or if it's moderately worse, then you may be compete with T-cell engagers, or you have to figure out if you really have a drug, right? I mean, that's kind of at least an error bar of what to think about.

Okay. Before moving on to maybe some macro questions, I wanted to pivot briefly back to diabetes and just ask if SC451 data are positive, what would regulators need to see before Sana could transition into a registrational program, particularly around patient population, safety database, efficacy, durability, et cetera?

Yes. I don't know the answer to that question is the clear answer. We haven't engaged any regulator on the on the planet around what a registration study will look like. I think that from my own perspective, what we would to see is a few things. One, I kind of think that we kind of outlined there would be three different periods of manufacturing. There's good enough for Phase I. We have that, but just barely. Then there is good enough for, you call like a early commercial launch. And to do that, that gets into number of patients and you wanna have reasonable gross margins. You have to have that in place at the start of your registration cohort. You're not going to be able to change your manufacturing process meaningfully while you're doing that. And we have some work to do to get there. We've made a lot of progress over the last six months. I'm way more optimistic than I was at the beginning of the year that this is going to be readily doable. But we're not done, to be clear. And the third will then be tens and tens of thousands of people, hopefully at very attractive gross margins.

The -- to get to the process lock on that phase in that registration study is likely the rate limiter to registration cohort, right? You're going to have, as I said, like there's, do you have any short-term safety issues to deal with? As far as we know, which again, you never know until you know, the major thing we need to ensure is that we can deal with the short-term risk of severe hypoglycemia. So, we can do that, which seems readily doable, then, at least as I think about it, the other risk would be long-term these things ever cause tumors, right? You need lots of people for long-term follow-up. I think the registration study should be relatively limited, I don't know if that's true or not, with pretty meaningful post-marketing follow-up, but we'll have to see. And then it's a manufacturing question. So, I don't think there's a lot in there that we need to grapple with.

Now, what we want to make sure of is that we have a consistency of result. And if it's an inconsistent result, that we understand what patients it's more or less likely to work in. We want to get the dose reasonably right. I mean, it's hard to imagine you can overdose this stuff. I mean, it's glucose sensitive, it's in secretion. But because we will be capacity limited for years and years, if we give people 2x the dose, we will help half as many patients as we might otherwise do it. So, that's not helpful. We need to make sure we get in that big dose kind of right. We want to make sure the manufacturing process. In terms of patient population, patient population we're looking at is very broad. It's not everybody, but it's most people over 18 with Type 1 diabetes. We may add change most to even more as part of our Phase I. I'd like to think we'd get into a pediatric population if this works in a relatively urgent fashion start with 16 plus, 12 to 12 plus, and then you get a little more. It's clearly parents and those kids really want something like this. It's a big burden for them. So, we're going to go through all that, but I don't think any of them are gating necessarily the starting of a registration study.

Okay. And then just in regards to financials, could you just talk about your cash runway, capital allocation? Any color around that.

Yes. So, at the end of the second quarter, we had $160 million. We said that gets us in the middle of next year, assuming we continue to run the business as we do today, which is our goal. I don't think you cut your way into making these things work. Right. The goal, I'd just say we'd like to bring more money in the company in the not too distant future. We're not urgent about it or anything like that. I would like to think with reasonable clinical data, it's a good time for us to be thinking hard about financing the company and our partnerships, everybody that understands what kind of where we're allocating that cash, what we need, and what the inflection points are. We have the capital we need to get to the next set of value inflection points, which is, do these drugs work? And again, if they do, we're going to need to make sure we do more. If they don't, it's going to be messy. Neither one do. But we'll figure that out if it happens. And our goal is, our hope is that they both do.

In terms of capital allocation today, the vast majority of it goes to this Type 1 diabetes project. It is an enormously complex drug. This is an aggregation of novel transplant immunology, CRISPR gene editing, stem cell biology, and kind of really difficult scale manufacturing, right? Kind of in one drug, and it has to be done. You can't outsource these things, right? These things are done inside of the company. But we've done it now, hopefully, and at least we can turn the card over, and if it works, we'll get the privilege of playing out the next round.

Great. So, with about four minutes to go, if you can entertain a couple macro questions. How is the rise of China innovation changing your competitive positioning, your thoughts on R&D, or maybe how BD plays out long term?

We've developed these medicines ourselves and they're enormously complicated. So, we're just going to stick to our knitting and do what we do. And we're not looking to bring in other molecules or anything else in near term. I presume that China has been wonderful at innovating on the sciences of scale and manufacturing, that as we go through it, this thing happens to work, that we'll have to make sure that we continue to focus on scale and cost of goods so that we can deliver this at a reasonable value to patients and payers around the world.

I think they've been very thoughtful in innovating around how to get proof of concept in humans at a reasonable level of regulatory burden and cost. Some of those things, I think, are being applied in the U.S. states are in the process of trying to figure that. More of them need to be. But we will never be able to apply them all. And then we have the challenge in that there are these many of these companies have subsidies and things from them and we have the other benefit, which is why we're here, right? Really robust and rich and deep capital markets expertise that resides in the U.S. And so, that's part of what we hopefully have the opportunity to leverage in making important medicine.

Great. And then question number two, AI implementation. Is Sana taking on AI, leveraging it internally? What are your thoughts on the future?

We're not taking it on. I mean, it's pretty powerful.

Sorry, bad choice of word.

Leveraging it. I mean, we do. I kind of divide it into three major categories as we think about it. One is just knowledge extraction. I think it's super powerful for that. I think most people use it. There's kind of no excuse for showing up to a meeting and saying, I don't know what we're talking about today. I haven't heard or learned about this. You can always show up with a reasonable level of knowledge. They can also help people accelerate their understanding of complex things with what's known in the field pretty rapidly, right?

The second would be operating efficiencies, and that's kind of in areas that relate to how we run our business, right, whether that's in finance. There's a lot of the G&A functions. There's some elements of clinical trial I think we're getting some of that, right? It's helpful. I don't think it's like mind-boggling helpful, but it's helpful on the margin.

The third are things like creativity enhancements, like really making novel therapies and things because of it. That's not an area we currently have really kind of gotten much out of it. Partly related to we kind of have what we think we need and we just need to understand it in humans. And so, that's a -- we're exquisitely focused on that. So, that's kind of how we've divided it and kind of where we're getting what we can out of it.

Okay. In the last minute, anything...

Please don't send me any AI-generated emails like that kind of stuff. Those are just to delete it, right? Anything -- they're not true productivity enhancers because no one reads them.

Last minute, anything I missed or anything you'd like to call out?

Well, I'd just -- I could just highlight, we've been at this for a while. We went out and when I started the company, the goal was to do something that if it happened to work -- there were two goals and we decided what to do, broadly. One was if it happened to work, we want it to be transformative, not something incremental. And the second is for it to be complex and complicated, and that had to do with just the type of people that are attracted to it. It's also just what's worth doing, right? And I think we nailed finding those things, and it's been hard. And we've made a lot of, we've had some setbacks along the way, we've made a lot of progress. And we're now sitting here, and I was saying to someone, sometimes it's felt a little like we're waiting for Godot. Right. Godot, Godot's going to show up. And we will be in a position, we believe, to deliver to you, to patients, and all our stakeholders an understanding of what these drugs do over the next several quarters.

Most importantly, we're really focused on trying to understand is the technology that we've really proved in humans already to work translate with into this gene modified stem cell-derived islet. Because if it does, a cure for people with Type 1 diabetes becomes absolutely inevitable. That's our focus. That's what we really want to deliver for patients. We want to deliver for others. And we're hopeful we can do it.

Great. Well, thank you very much for joining us today, Steve. Appreciate it.

Thank you, Max. Thank you, everybody in the audience.

We'll kind of level-set. And...

You can add '27, if you'd like.

Yes. So first of all, I think most people here recognize we'll make forward-looking statements. So feel free to take a look at our 10-Q for risk factors.

So we've been working hard for a while on developing 2 different important -- what we think could be important platforms. One is what we call our hypoimmune platform. And that has the goal of hiding allogeneic cells from immune recognition. And it gives us a chance to really scale the use of cell therapy broadly.

And our primary asset has been this drug we call SC451, which is in development, for people with type 1 diabetes. And our goal is very simple. It's a functional cure. It is 1 injection of cells that will lead to normal blood sugars or euglycemia, with no immunosuppression, for life for these patients. We can go into why that might work as we chat.

But we have made a lot of progress. We've shown that the technology works in a different setting, which is cadaveric-derived islets, which is less scalable. So we really want to develop a real drug. And we're very close to being able to figure this out. We've been working hard this year on an IND and hopefully beginning our clinical trial. And happy to say that so far, so good.

So there are 3 really important parts of getting an IND ready. One is your clinical package, in that it's both trial design and also how are you really going to deliver this medicine to patients. It's a real operational Rubicon to get this type of a therapy to patients. I think we've made real -- should feel really confident around our ability to move forward there.

Second is a nonclinical or preclinical package, which includes things like GLP tox studies and biodistribution and efficacy, and in the case of this, genomics and other things. And again, I think that's now in the -- more or less in the rearview mirror. We have preliminary results across the board and we're going to have a final report. But I think people can feel pretty good that that's not going to end up being an impediment to us moving forward.

The third is to both lock down a manufacturing process and then to transfer it, along with all your assays and supply chain and things, into a GMP manufacturing facility. And again, we've made real progress on that. We're in the final throes of transferring in the process and doing the types of runs you need to kind of validate that this works in that site.

So we're not out of the woods yet, but it certainly seems like we're getting very close and that we'll be in a place to start the study soon. And so once that happens, we go into kind of data flow, right, I think that was part of your answer. I think -- by the way, I do think that clearing an IND in a complex medicine like this is not a trivial endeavor and probably has some meaningful value.

We then will be looking really on a couple of things clinically. One, does what we've seen before, which is this platform seems to work, really translate into this setting? And what we mean by that is, can we transplant these gene-modified, stem cell derived islets into the muscle of a patient and see them survive and really function over time, right? And the most important part of that is evading immune detection.

And we should know that within about a month, right? And so we view that as being super important, because it will tell you that this thing's kind of inevitable, right? So most of the risk is in that. I don't know if most of the value is on that. You guys decide where you're going to place value.

Once we've done that, then you want to see, okay, these cells really work as well as you hoped they do and you have the medicine that you want, right? That could be dosed and things like that. And then what you want to see is a person become -- have normal sugars, blood sugars, more or less, with no insulin and no immunosuppression. And what we've seen in the field is that generally takes a few months longer to understand, and so we'll be watchful for that.

And the third is how consistent are these results. Is this happening every time more or less? Is it happening most of the time, some of the time? And that will take a little bit longer. But I think we'll learn all of those things through 2027.

We also are moving forward into Phase I with a process that's good enough for Phase I, which we can talk about what that means more in a bit. But it's not really yet at a scale that we're ready for, for commercial. And I think next year, we have a real chance, we're making a lot of progress to be able to tell you if that's going to be something that slows us down and moving towards a registration study or if we're ready to go. Those are the kind of really important things with that.

Our second platform is an ability to deliver genetic payloads to cells in vivo. And I think you recognize -- my apologies. You can more or less do anything you want to in a cell and its genome in a Petri dish. Hard part is doing this inside the body. And so we've been focused on delivery for a while. And we have a technology we call fusogen, which allows for cell-specific delivery. And we're making an in vivo CAR T cell with this. And we've made some fundamental assumptions along the way that we think will lead to a better and safer and more durable effect with this therapy.

It's complicated, our path forward, which just means we've fallen a little bit behind, some people are ahead of us. But we think we have a chance to really have a best-in-class medicine, and we can again talk about what that means. But I think in animals, that's kind of been true, right? And so now we need to show that in humans.

And the first drug is a drug we call SG293, and that makes it -- it delivers a genetic payload that, in vivo or inside the body, makes CD19 targeted CAR T cells. We're initially going to go after this in cancer. And if safety profile looks good and things, we may go after autoimmune diseases after that.

Our goal had been to start that study about now. We're doing this in China through an IIT. Things got a little bit more complicated over the past several months. It's not a matter of if it's going to happen, it's a matter of when. The other day, we kind of let people know this might take us into 2027 to get our data, first half 2027. And so it's disappointing to us, but it's not the end of the world.

Behind that, we have another BCMA-targeted CAR T cell that we can develop with this in vivo technology, assuming this works. So I think there's a lot of other things behind that. So that's a little bit about the technologies we have and what we'll see over the next, call it, 6 to 12 months.

That's great. So that's a lot to dig into. And maybe we start, of course, with the T1D, the type 1 diabetes program. As you mentioned, you're getting the technology transferred to a GMP facility, working towards that. And I think in the past, we've talked about release assays and maybe the order and the requirements that goes within that, given the manufacturing process here. I mean can you maybe share a little bit about if that's what you're still working on? Has FDA given you a clear sort of requirement on that aspect?

Well, it's a complicated question. So one, whenever you're transferring in technology, you're transferring in supply chain, right, you're transferring in manufacturing, the process itself of making the drug, and then you transfer in the assays, right? And so all of those things need to be done.

Really to kind of put the pin on being done, you really want to kind of validate your assays with product that had been made inside the facility. And so give us a bit -- that's probably one of the long poles, the last thing to get done. But generally, I think we're confident that the assays have been transferred in and are in a good shape.

Do we have what the FDA requires for release and things? I think we have general alignment with regulators in multiple parts of the world around what we need to do to release this drug. Is there -- do we know that for sure, that they want to ask us to do something else? We don't. And I think some of that is -- always would depend upon their final review and reviewing our clinical protocol and nonclinical tox and package and all those things. But I think we are -- we feel like we're in good shape of knowing what we need to do and being able to do it to make this drug and release it and test it in people.

Got it. So you have a great feel for what's required to get you over the IND filing?

We believe we do.

Okay. That's great. And then when you think about the FDA and some of the leadership changes that have happened recently, you've spent a lot of time discussing this with the regulators, like have there been any shift with the agency's enthusiasm for really focusing on advancing type 1 diabetes with the leadership changes? Or has that enthusiasm remained intact?

I don't think we know the answer to that question. I do think what we know is that we were fortunate to have, in the last FDA Commissioner, someone who was an islet transplant surgeon and who understood the profound unmet need that these patients faced and the lack of options that you really have in type 1 diabetes, and the impact that that disease has on patients over time.

Most -- our interactions are with day-to-day regulators. And I think that they remain very focused on doing the right thing for this patient population as well. And I don't think that we should expect that there's any real change. But always you never really know how the world will evolve.

But I think that if you look around the world, there is a clear understanding of the unmet need in this space, in a way that I find very different from things that I've been involved with in the past. I mean countries and regulators reach out to us, not vice versa. That's not always true, but that has happened.

And so we believe we have many viable paths forward to develop this drug, and that you have a patient population that's 10 million people, right? It's like it's an extraordinarily large patient population, spread across multiple geographies in the world. And that both presents opportunity and complexity, right? Because different regulators may want different things. And some of those things maybe help us along the way and allow us to navigate forward in a safe and urgent way, and other things may force us to take a bit more time.

And just a bit of a housekeeping question. When you file the IND and when the IND is accepted, do you plan to disclose both to the Street or?

It's very clear to us, based upon what people have said to us, that IND acceptance is something that they would view as a material outcome for the company. Whether or not it ends up being that the IND, having been filed, that just feels like we could get you guys death by a thousand cuts with disclosing everything we do. But if it ends up being something that we think we need to do because we view it as material at the time, we'll certainly do it.

Okay. All right. Understood. And then you talked about how you can get to proof of concept pretty quickly, 30 days after that first patient's dose, but...

Potentially. I mean the first patient may not graft, you may have other things. But I think potentially, yes.

Sure. In theory. And so how quickly do you think you could initiate that first-in-human study after you confirm IND acceptance?

Yes. I don't think we want to get into kind of like day-by-day blows around this. I don't think that would be helpful for people. But I do think that what is useful for people to recognize is that we have done a lot of work beforehand that puts us in a good position, but you never know until you get there, to move from IND clearance to rapidly being able to dose the first patient.

There are a whole bunch of things that have to happen with that though, right? You get the IND clearance, you have to -- IRBs need to get approved, you need to get clinical contracts, filing. All those things have to happen, with the final clinical protocol, right? You then need to have -- finish all the screening. And of course, there needs to be a drug product that's brought to the site and it's kind of finally released for that patient.

And so that may happen relatively quickly. It may take us more time than we anticipated. But I don't think this is going to be one of those things that takes quarters, which many trials do.

Okay. So perhaps a little bit more rapid than the average trial.

I think we can do that more rapidly than the average, but I don't want to give out -- I don't think we know yet, right?

Fair. Fair. It's good to be cautious. And you mentioned the finalized clinical trial protocol, that you need that in hand to start the study, obviously. Is that finalized or near finalized in how you have designed the study?

We like to think it's finalized. But you have to have final approval from regulators...

Pending that.

Yes.

Okay. Pending that, like from your perspective, unless they ask for something else, the study is designed?

It's done, ready to enroll. But again, they reserve the right to ask for a lot of things, right?

And then sometimes they do. And you've talked about this before, you have maybe investigators lined up with interest, sites that are already sort of outlined, that you're targeting. Like all of that has been...

The sites are chosen. It's done. There's a lot that needs to be done. If we just think through training around this. You send the drug somewhere, it's live cells, and that's -- first of all, to send it, it's in a media to keep it alive that you wouldn't want to put all that into the muscle of a patient, right? So there's -- first of all, live cells have to be accepted. They have to be held in the right way because you don't want them to die. They need to be then processed, and they need to be injected into the patient.

And all of that is something that you would not want to just spring upon a site overnight. And we've done a lot of work on training on that. And we will continue to train sites around that. But that's something that we very early felt the need to identify and finalize the sites that we intend to use so that we could ensure -- not ensure, I guess, but maximize the probability that we have a safe and effective delivery of these cells.

And you disclosed a partnership with the Mayo Clinic in the spring, I believe. Is that something -- because you mentioned training your sites. Like is that something that the Mayo Clinic, with its expertise in running clinical trials, like could you standardize that with them, like the training for administering this drug?

Yes, it's been -- actually, it's been a really productive collaboration, and thrilled we did it. And you're right in like, early on, that's a lot of what we've spent time focused on with them, which is ensuring -- I kind of think of it like there's this black box that occurs from the time the drug leaves our hands until the time that the patient leaves the hospital. We need to make sure it's done as well, as repeatably and as safely as possible.

And really, it's been wonderful to work with them really hand in glove to kind of work our way through some of that. And there have been things that have identified -- that we've identified that probably increased our probability of success, by working with them. And that's something that's very valuable to us. Every 1% increase in probability of success is very valuable.

Yes, for sure. And then when you think about the dose that you'll need to drive insulin independence, do you think you have a great feel for what that dose is? Or is there going to be some dose optimization built into that Phase I study?

I think you always want to know a little bit more about dose. I think we know some things, right? So all -- those of us who don't have diabetes probably have, let's just say, 1 billion, 1.2 billion islets -- or I should say cells, islet cells. And we know that when people lose about -- adults lose about 50%, 60% of their islet cells. Again, we can -- you can translate this into beta cells in a second if you wanted to, but you lose -- you begin to manifest diabetes. So you probably need to have some number like 400 million or 500 million cells that engraft and function in order to get there. So there are a number of -- to get to be insulin-independent, right?

There are a number of variables in there. One is, what percentage of those cells actually engraft, right? And we're going into a relatively less studied site, which is intramuscular. We believe that that will be better. We have animal data that suggest that will be better. But we don't know for sure that those engraftment rates will be higher than going into the portal vein, which is more of the industry standard, right -- or I should say, the field standard. The second is we don't know for sure how potent our cells are, right? I mean might they be a little bit different, produce a little more insulin, a little less insulin?

And so we will want to make sure that we look at those a little bit. I think we have a general sense of where we need to be though. It's not like -- we could talk about the fusogens where I think we could be logarithmically off. Here, we don't want to overdose patients. I don't think there'll be a toxicity issue. But if you -- again, we all have many more cells that we're going to put in. And you're -- one of the requirements of this is that you make glucose-sensitive insulin secretion, meaning that if glucose is low, you don't secrete insulin, right? If glucose is high, you do. And so the dosing self-titrates itself anyway.

But almost certainly, given the size of the unmet need, with millions and millions of people, we'll be capacity constrained for years. And so if we're over -- if we're giving a patient 2x the number of doses they need, we're only helping 50% of the number of patients we could, right? So we do want to make sure we understand the dose.

Right. Exactly. Yes. So maybe -- and that's a great segue on manufacturing. When you think about the capacity that you have today with the process that you have, where you think you need to be for a registration study versus ideally where you'll be from commercialization, how should we think of what that capacity looks like across from now until several years into the future?

Yes. So I kind of think of it as, I think we've talked about this, in 3 different periods. There's good enough for Phase I. That's what we do today, and just barely, right? To be clear. I think that some of the Phase I enrollment will be paced by how quickly we release drug product.

Number two is good enough for early commercialization. And early commercialization is going to be the exact same process that you used for your registration study, right? And that's going to be necessary to really lock down.

And the third will be good enough for the long run. And in the long run, you're looking at -- again, if you treat 100,000 people per year, you're only cutting the global growth rate from 5% to 4%, right? So there's just a lot of work we have to do to get to the numbers that could get to something like that.

There are always 2 things to think about. One is like you can make more batches per run or scale up the process. And that's really often -- what we're dealing with here is a science problem, and we're really in that phase. There's then make more batches, right? And that's more of a capital problem, and that's going to -- scaling out. We're not yet to that place. So what we're really working on right now is ensuring we have the scale-up of batches per run, that is adequate to really give us a very robust and successful launch.

And of course, that does also include a commercially viable cost of goods, right? We can't have this cost more than we can -- than a patient is able to pay. And so we have to -- we make sure we're working on both of those things, which is a viable cost of goods as well as a viable number. But I think we can do that in very short order. We've made a lot of progress on that. We're not done, to be clear, but we've made a lot of progress on that.

To get to the kind of the third period, which is that to be able to treat tens and tens of thousands of people a year, we have work to do still. That, we haven't even really begun. So we've begun the other, and I'd say we've made more progress more rapidly than we might have anticipated 6 months ago or something.

And when you look at the overall iPSC field, I think everybody is trying to figure out how to scale. Like are there learnings around the field? Or is this all proprietary per each company right now because there's just a competitiveness aspect?

I think it remains proprietary. I'm not saying that there aren't things that are becoming better known. So much of this is likely going to be solved by technologies that other companies develop that might be used, right? And so different types of bioreactors or things. Those things are proprietary and are probably shared.

Some of them are -- but everything is going to always be bespoke anyway. These cell lines are just fickle. They're fickle. So when we went through, just as an example, a research grade of our cell line to the GMP grade, it wasn't totally different, but it's a little different. You have to change your recipe just a hair, right? And so the lessons, even if you shared them, may not be applicable across this.

But the simple way to think about this is like biologic manufacturing has been scaled over several decades, and it's been done very well, right? It was very difficult in the 1990s and it's not much different than a pill today. The challenge of it was trying to figure out how do you create a kind of a metabolic milieu or environment where these cells can live and thrive, right? And so they're pumping out protein or whatever they're doing.

We need to do that, right? We need our cells to do that and survive. At the same time, we need to rapidly change the environment so that we can change the cell signaling, so they go from pluripotent stem cell to -- you can go to endoderm, ectoderm, mesoderm next, right? And then you go down that path to what we're trying to make, which is islet cells. And those 2 things can be in juxtaposition to each other, right? Stable metabolic milieu versus like rapidly changing your environment. And that is ultimately, I think, the challenge that everybody has to grapple with.

But you believe it's solvable. Like we're going to get to, at some point, that more robust commercial scale, the third tier that you're discussing?

I believe it's 100% solvable. If you believe it's solvable you can make thousands and thousands of doses, 100%. And I presume it's solvable at making millions of doses at some point, right? I don't think you should expect that to be in 2026, right? I mean there's like -- this is -- all science challenges take time to solve.

Yes. Fair enough. And I think the potential of this type of therapy is quite clear and well understood. So rooting for you to get there.

Well, I hope it's well -- and I think it's sometimes hard to put your arms around how large the opportunity is. And one of the ways I kind of begin to just try to frame it is if -- I mentioned this earlier, there are 10 million people more or less with type 1 diabetes, and it continues to grow at a pretty robust rate globally. And so there are about 500,000 new people a year.

And so if really this works perfectly, right? It works in 100% of people, with 1 injection and they never need another therapy for life. And we scale this and we make 100,000 doses per year. We will take the global growth rate from 5% to 4%. If you just launch this in the United States, you would take, let's call it 1.5 million to 2 million people in the United States, around 70,000 to 80,000 new people diagnosed every year in the United States, you would barely cut into the new incidence pool again, right? And it will at least get to go and shrink the market a little bit, you'll get to shrink it, the prevalence pool will be treated. But it will take a long time, it will take real advances in the technology.

And no one company is going to win this, right? It is one of those things when you say, do we -- is there more -- pretty competitive sharing around manufacturing? There probably should be just because it's not going to be -- there's space from -- no one company can own something this big, right? It will take multiple players to really get there.

Now it may turn out we're wrong and this only works in a fraction of the people who have the disease, and then it's a bit more of an adjustable challenge near term. But we're optimistic that it will work in most people.

And I guess is there anything else about the opportunity that you think the Street is under-appreciating? Or anything else you want to emphasize before I move on to spend a little bit of time on fusogen?

I think it's often hard to get your arms around, this is a field that has, I think, a patient population and families that have the kind of passion and impact of some of these orphan diseases. And so sometimes it gets kind of put into like that orphan disease camp in people's heads. It is a very, very large market. And it is a very large unmet need. Again, it presents both opportunity and challenges for us. But I think that that portion of it is sometimes difficult for people to get their arms around.

The second is, I think sometimes people overestimate the impact that the current standard of care has provided for patients. It's wonderful. Until 1923, getting type 1 diabetes was a death sentence in months, right? And there have been, over the course of particularly the last 20 years, superb advances in glucose monitoring, types of insulin, insulin pumps.

But at the end of the day, if you get the best possible care in the United States, you face a lifespan that is somewhere between 7 to 10 years less than expected. And to put that into perspective, if you're a 22-year-old woman, that is the same thing as if you got diagnosed with HIV or breast cancer, right? And so I think sometimes the impact of this disease on the daily lives of patients and the impact long term on their -- not only their quality of life, but also their mortality, is grossly underestimated. And so that is something that I think gives us an opportunity to do something pretty special.

Actually, just thought of a question. So when you think about the opportunity, obviously, you're going after adults first, when and if can you go after the pediatric population as well?

As soon as I think we're comfortable with the safety profile. I think it may be very quick to move to something like 16-plus, and then it might be not that long to move to 12-plus. But again, I think we have to get comfortable. These are -- we're giving gene-modified, stem cell-derived cells into people who otherwise would live for decades, right, most likely. Some people die of severe hypoglycemia or something, most people will live for decades.

So expanding that population beyond people who, one, can give their own informed consent, is something we have to kind of think through, right? Two, to people who just live a lot longer. That's where your greatest impact will be ultimately, is giving it to young people, right? Because that's -- we can cut off the macrovascular and microvascular complications in type 1 diabetes before they ever, ever happen. You know they reverse somewhat with normalizing glucose. That's been shown in islet transplants. But preventing it from ever happening is still way better.

And so we'll get there. It probably is not next year, but it's not much further than that away to start nibbling away at that population.

Got it. Okay. Well, so then let's switch gears and focus a little bit on the fusogen pipeline. You mentioned that you were planning a China IIT. There has been a little bit of turmoil there. But you said it's going to happen, it's just going to be perhaps delayed. What do you need to do to make that study initiate?

I'd say a couple of things. One, the way that it's going, there's things that you would kind of -- I might call rubber stamps that become signatures. So that's just -- it just takes time, right? We're also working to ensure that if some of those things don't become signatures, it does not have a material delay to the program. But it will happen. In the middle of it, it's a little bit frustrating, but we'll get to the other side of this.

This is a drug that has been very well tested in the preclinical setting, right? We have probably done more nonhuman primate studies than we should admit. And we have -- because we've just been really trying to ensure that we are delivering something that can be effective and safe in people -- not ensure, maximize the probability. You can never ensure. And we have a very robust nonclinical package. We've made the drug. It's ready to go. And so it will happen.

Okay. And there's been a lot of focus on safety, I think, for across CAR T, all modalities really at this point, and particularly in China. So I guess how -- when you're thinking about the Phase I design, how are you thinking about dosing to start to really ensure that there isn't a major safety effect that could derail the program?

Well, first of all, when you're thinking through safety, safety has been something that we have designed into the program from the get-go, right? And there are a number of differences with this drug versus, say, kind of the standard way that in vivo CAR T cells have been made to date.

Number one is we have this -- we believed from the get-go that true cell specificity in delivery is super important. And I think others would say that actually the most important thing is just getting enough signaling to the target cells. I think it's reasonable, right, it's reasonable. Great. But what that -- we think it means less off-target, less immunogenicity and, hopefully, more manufacturability, because it just turns out, T cells are rare, right?

Number two is we really worked to dissociate the portal of entry, which for most of these virus-like particles is CD3, from activating the T cell, right? Because that portal of -- when you bind CD3, these T cells get very activated. And I'll come back to what the potential implications of this may be. But that can lead to a robust early immune response, which can be toxic. It also can exhaust these cells, which may deplete your efficacy.

So first of all, it goes down to how you design the program. We've done some other things like remove the CAR from the cell surface -- or the VLP surface, right? And so it's actually always going to be, a way these producer cells are made, when you make a virus-like particle, you could have CAR, and that can lead to delivery to off-target cells, in particular some of your maybe cancer cells or things you may not want to be. And that's both an immunogenicity problem and it may also be a broader safety issue. So again, start with safety in how you design it.

Number two is start with safety in how you -- how we monitor what we do. So you know that there are kind of 4 CAR T associated toxicities to worry about. One is specific for in vivo CAR T cells, and that's just kind of peri-infusion toxicity that we've seen in the field. In fact, some patients have almost died from, right? And now patients are broadly getting high-dose steroids before treatment and stuff.

We think because we have not -- we're not -- and what we've seen in animals, ours is very well tolerated. We've had a little bit of fever. It could be taken care with a Tylenol, right? In nonhuman primates. So we'll come back to how we start dosing. But the first thing is, again, how you design, hopefully, we'll have less peri-infusion toxicity.

CRS and ICANS are -- cytokine release syndrome and the severe neurotoxicities we're seeing here, again, are usually associated with activated CAR T cells when you put this product in. I would never claim we're not going to have those things. I think these are related to the drug's mechanism. But by having less activated cells at the outset, maybe we are able to reduce that.

The fourth is one that people haven't paid enough attention to, but I think some of the challenges in the autoimmune space has driven it, which is this kind of immune effector hemolytic syndrome. That's been present for this class of drugs for as long as they've been around. I think it was underappreciated early because it's kind of can be confused with cytokine release syndrome. And it manifests a little bit later, it manifests differently and is treated a little bit differently. But again, that is very much associated with kind of robustly activated cells.

And so -- but that's been seen. And I think anybody who tells you they don't have that problem is probably -- and away from seeing at least a little bit of it, right? Because it's been seen across targets, it's been seen across companies and it's been seen across indications. It doesn't mean that a target or an indication or a process couldn't make it better or worse. It's not to say that. But I think it probably is something we all need to be thoughtful of. And we have, again, trained physicians and have protocols to deal with each of those 4 side effects.

The last thing that we've done is we will probably -- we will certainly start dose -- you've seen some in the field start dose so high that patients almost died, right? You've seen some in the field that started at doses where it's taken them 3 or more doses to get it into the effective range. And you've seen some who've kind of had it, fortunately, kind of pretty good right out of the gate.

We're likely in the too low or pretty good out of the gate. I don't know where we'll fall because it's very difficult to translate as you move across species into a disease setting really what things will look like. But it may take us a dose or 2 to get to where we want to be. It may not. We'll see. But if we make a mistake, certainly given what you've said and certainly just given good Phase I drug development, our mistake out of the gate will be towards patient safety and the fact that maybe we need to get -- if anything, it will be too low, not too high, we hope. That's what we believe.

Got it. Seems prudent. Well, we are rapidly running out of time. So Steve, I'm just going to turn it back to you to share any closing remarks you might have, maybe remind us of the cash runway and just close it out with again, what we can expect from you over the next, call it, 12 months.

Those are 3 very different things. Cash runway. We closed last quarter with $160 million, and that will get us about a year from then. We're going to need some more money. We don't see any like urgent need right now. We've got -- the second part of this, we have a lot going on and it's coming up very soon. Around those things is we both understand our capital needs and investors understand kind of where the capital will be deployed. I think those are probably better times to raise money. But we'll be tactical as we need to be, and we do want to kind of replete our balance sheet over time.

We have a lot coming over the next 12 to 18 months. Some of it is going to be pretty quick, those related to things like type 1 diabetes and maybe understanding do we really have a drug with this SG293, right? Putting them into kind of their long-term competitive profiles and understanding, does this work in everybody, most, some, things like that, will take more time, right? But I think we can solve all of that in the next -- in 2027.

And so there's a lot that will happen here, and we're optimistic. We've tested these medicines as rigorous as we can, and that they are going to be things that go into humans that provide meaningful clinical benefit. That doesn't always happen and so we're always anxious to turn over those cards and ensure that the hypotheses we've built this company around really turn out to be true.

Yes. We're looking forward to it. Well, thank you so much, Steve. This has been wonderful. I really appreciate the time. Thank you.

Always love talking to you, Sam. Thanks.

Great. Thanks, everyone, for being here. My name is Yanan Zhu. I'm one of the biotech analysts here at Wells Fargo. I'm very delighted to be joined by Steve Harr, CEO of Sana Biotechnology. Thank you so much, Steve, for being here.

Thanks for having us.

Great. I was just wondering if you could kick us off with a company overview before we dive into questions.

Sure. Just as everybody knows, we'll be making forward-looking statements. So, please check out our disclosures and risk factors in our most recent 10-Q. We also posted a presentation and an 8-K today. So -- and the company was founded really around 2 technologies, and they're both, kind of, about to really, kind of, move into humans, and we'll hopefully have a really good idea around how they're working. One is our goal has always been to really figure out how to scale engineered cells and be able to go after highly prevalent diseases with either cell therapy or gene therapy, depending on how you think about it.

So, the first platform we started the company around was the goal of hiding cells from immune detection. And the goal of that and the most promising program we have there is a potentially 1-time treatment for people with type 1 diabetes. And that's making progress and should be something that we can file with the FDA this year and hopefully start a Phase I study.

The technology, just to take a step back, type 1 diabetes, about 10 million people in the world have it. If you are 22 years old and you have the choice between breast cancer, HIV, and type 1 diabetes, it turns out that type 1 diabetes will have the shortest expected lifespan. And that's with best therapy, and that you can imagine the day-to-day stress of that disease. You may know people with it. It's very difficult to manage. And people have challenges with both hypoglycemia or too low blood sugars and then all the complications long term of hyperglycemia are too high.

And we know a few things about it. First of all, the disease is one where the immune system attacks the beta cell, the pancreatic beta cell. It's the only cell in our body that makes insulin. And about 100 years ago, it became clear that you could give exogenous insulin, and it went from being an instant death sentence to something people can live for decades with, right? Over the last 25 years, some real progress has been made to understand how we might move towards a more definitive curative therapy though.

About 25 years ago, a group of people starting in Canada started transplanting pancreatic islets. Think of an islet as beta cells plus their support structure. They would transplant these islets from a recently deceased cadaver. And people do very well. They can live for decades off insulin with normal blood sugars. It's not a scalable source. It's a very variable source. And it just turns out there aren't that many people for whom lifelong immunosuppression, because this is, again, a transplant of cells, is better than lifelong insulin. But thousands of people have gotten this.

Over the last few years, several groups have shown that you can take pluripotent stem cells and mature them into pancreatic islets and transplant them. That's probably a more scalable source. It looks like it's more consistent, but people still remain on lifelong immunosuppression.

And we've now shown in a single patient, which is all we ever wanted to treat that in the cadaveric islet space, that we can gene-modify islets and transplant them into a person with type 1 diabetes, and the patient has been -- has been able to see these cells function, engraft and persist for now, the last publication is 14 months. It's been published twice in the New England Journal of Medicine actually. And it's really the first example, I think, that any of us are aware of, where we have transplanted cells with no immunosuppression.

So, now all the component parts are there for hopefully a curative therapy, and that's this drug SC451. It's a gene-modified stem cell-derived pancreatic islet. The goal is a 1-time intramuscular injection with hopefully a functional cure for the person with this disease. And by that, we mean normal blood glucoses with no insulin and no immunosuppression, hopefully, for decades of life. And we'll dose the first patient shortly, shortly being not defined, but it's coming up on us.

The second platform we have is an ability to deliver, an ability for cell-specific delivery in vivo. And the first place we're applying that technology is in vivo CAR T cells. And we have been at this for a while, and we made some very specific choices. And we've seen some people get a little bit ahead of us in line where they've shown some very promising and exciting data in the field.

We've worked very hard to ensure cell-specific delivery. We worked very hard to try to minimize the risk of off-target safety events and on-target safety events. And again, that's a program, the lead asset called SG293, which is a CD19 CAR T, so, I'm sure we'll get into a little bit more.

Our goal has been to get into and start human testing very soon, right? For clarity, we've been doing this outside the United States, and it is an IIT, an investigator-initiated trial that we're trying to do in China.

Things have definitely gotten more complicated in China over the course of the last, let's just say -- let's say 3 to 6 months. It's probably going to take us a bit longer than we hope to get that done. I don't know exactly what that means. It might be 1 or 2 quarters slower than to get the human data than we hoped, but it will get there.

And we've spent a lot of time, again, on this medicine really trying to create a very clear scientific pathway. We've shown in nonhuman primates the ability to do cell-specific delivery, meaning we're only getting the T cells, and we see the therapeutic effect we want to. So, we're optimistic that this will also have some very exciting data, but you never know until you get into humans and you see what biology gives you.

Great. Great. Thanks for the very helpful background. So, let's talk about SC451. So, this one, you hope to make an IND filing and start Phase I/II as early as this year. I was wondering in terms of the remaining items before the IND filing such as GLP tox studies and tech transfer to contract manufacturer, where are you on those activities? What are some of the other remaining items that you are still working on?

Yes. So, basically, whenever you're, kind of, putting together these beginning of the clinical study, 3 main work streams, right? You've got a clinical work stream of trial protocol. And with this case, because of the novelty and complexity of delivery, that's been a lot of work to ensure we have that.

I think we're quite comfortable and confident with where we are on that. The second is your -- I'll call it the nonclinical package, which includes the GLP toxicology study, but includes a lot of other things. And that's pretty much complete. It's -- all the important studies have been done, and I think we can be pretty confident.

Preliminary results, at least things are all good. We have to get all the final study reports done. And then we're finishing up the tech transfer into the manufacturing -- the GMP manufacturing facility. That's still ongoing. It's -- we're actually hopefully pretty near completion on that as well. But that's one that -- that's the long pole in the tent, if you will, to filing the IND and starting the study.

Got it. And are there other important items or not so much?

Not so much. I think we're in pretty good shape otherwise. I mean I'd say otherwise in a negative way, but I think the other things are -- the boxes have been checked more or less.

Got it. Got it. What about testing and release assays? Is that something that you need to align with FDA for the IND filing? Or is that for later?

You need -- well, we've benefited from a pretty open dialogue with a number of different regulatory agencies. And these are complicated medicines. They are -- you have a gene-modified master cell bank, right, of pluripotent stem cells. And there's a lot of concern reasonably about introducing off-target edits, about the editing process actually creating stress on the cells. And also just as these cells grow and divide, you're starting essentially with 1 cell. And every patient is, call it, 1 billion, 1.5 billion cells. That means to treat 1,000 people, you need over 1 trillion cells. So, you're going through many, many, many divisions, right?

And what we need to make sure of is that the product is what we think it is, right? And the first part of that is that the genome is safe, right? And that you haven't done things like select for cells that have mutations that have been associated with cancer, that type of thing. That's something that we spent a lot of time on.

We've been very transparent around that we had some challenges with early, but feel very good about where we are today. But the second is you want to make sure you have the product you think you do, right, which is and all the different cells that go into making an islet are there and are -- and you have control of the drug and it's potent and it looks to be safe. So, there's a lot of testing that gets done on these cells. And I think we have a really good idea of what we need to do, and we're doing it.

Got it. Got it. But those are not gating on the IND filing or.

Well, I mean, just when you think through tech transfer, right, into a GMP facility, you have a whole host of things that get transferred in. One is just like actually the supply chain, right, has to be -- come through their system, right? The second is you then have to make the program, the product itself. And the third is you have to transfer in all of the release assays, right?

So, somebody has to do them using, kind of, on-site or real time. And so those things are still ongoing. I mean to say that there's nothing left on assay validation would be premature. I don't think there's a -- you should be worried about it, but it's not done.

Okay. Got it. Got it. Very helpful. So with the -- looking forward, once the trial started, I was just curious how -- what is the earliest clinical signal that you might see -- and then what is the soonest that investors might hear about it? Like how long do you want to accumulate data before you talk about them?

I think we're going to be transplanting in on -- sorry, we're going to be transplanting gene-modified cells with no immunosuppression. What you know based upon all transplant literature is that those cells should be rejected in a matter of days. If we see these cells continue to function and persist, let's just call it with no immune attack on them, let's say, they go out like a month or something.

Just like what happened with the single patient in this Uppsala investigator-sponsored trial where we put in these gene-modified cadaveric islets. I think that was viewed by most as being very material. I think we would probably agree with that assessment. And it's probably -- if you do see that, the probability of running any other immunologic issue is quite low. And so that period of time is like super, super important.

So I, kind of, think of it, does it -- are you able to get engraftment and function and it persist? If yes, then the second thing becomes, are you able to get people off insulin, right? So do we have the right dose, the cells high quality? And so do we have more or less normal blood sugars or, kind of, the ability to -- for a patient to have a hemoglobin A1c of less than 7 with no insulin.

Then the third will be, is it replicable, right? So those to me are the 3 major questions, do we evade the immune detection? Is this actually a drug, right, which is -- and then is it really replicable? And if we're like 6 out of 6, they're going to feel this most people, right? If we're 3 out of 6, you're probably going to say, I'd like to see a little bit more, right? I mean we'll have to see how it all plays out. But I think you'll learn a lot next year.

Got it. Okay. Got it. Got it. Got it. So I know you're not -- but we will have data next year, but you probably couldn't be more granular in terms of when we might have the initial approval.

I think that these are super complex medicines and very complicated studies. And trying to get precise about when you have data will sacrifice accuracy for precision. And so accuracy is what I gave you. I think it's just we have to see, kind of, how this all plays out.

Okay. Got it. Got it. So, I guess the next question is, how much data, how many patients do you need to see before you talk to FDA and start thinking about next steps?

Well, you have to already start thinking about next steps, to be clear, right? I say that there are, kind of, like 3 major questions for this drug, which is, one, does it work? Second is, if it works, can you really scale it, right, at a reasonable cost of goods. And again, to put that in context with 10 million people growing at 5% a year, if we treat 100,000 people a year, all you do is take the global growth rate from 5% to 4%, right? And so we've got like some -- we have -- there's a big scale opportunity and challenge ahead of us. And the third then is if you can scale it, how do you figure out a commercial model for a highly prevalent curative therapy.

We are already working on the scale question for what I'd call registration/early commercial launch process because you're going to need to -- it's a 9 to -- it's always like 6 to 12 months to transfer something into a GMP facility. And I think that if things go really well, this can move pretty quickly into a registration study.

I don't know exactly how many patients it's going to take if it's working in everybody. It's going to take fewer patients than if it was working in some, right? And so -- but I don't think it's -- this is dozens and dozens of patients. This is likely something less than that to really get our arms around it.

Great.

And there is no placebo, right? There's no placebo effect here, right? You know what will happen. People who don't take insulin and type 1 diabetes won't live, right? People who don't take immunosuppression with a transplant will see those rejected. So either this -- it works and it's very clear where we have some more work to do.

Got it. Got it. I think Dr. Carlsson will present at EASD next month. Could there be any new information there such as longer follow-up than 14 months?

There might be. I don't view that longer follow-up is that important anymore, right? Just to be clear, I've said that since 28 days though. So it's likely going to continue to be around. There isn't really an immunologic issue that's likely where it's headed. You may -- we're not really -- we're not transplanting these cadaveric islets next time. And so you're not going to learn a lot about the durability of the cells we transplant. Our cells could be worse, our cells could be better. My expectation is that these cells will last for at least for a while longer.

I don't know how long before they exhaust. They came from a 60-year-old person who died who had a hemoglobin A1c of 6.2%. And so it's not like they were probably already getting, kind of, petered out, and we'll just have to see, kind of, how it all goes. Okay. Actually, I'm not sure what he's presenting. I mean I think that's still a month away and to be determined.

Great. Great. So I think maybe this is definitely an exciting time for type 1 diabetes and for the company's very differentiated platform, definitely looking forward to the initiation of the trial and data next year.

Yes, me too. I joke around sometimes, it feels like sometimes we're waiting for Godot and Godot is finally showing up. So hopefully, we'll have an opportunity to understand in people. Again, I kind of -- I sometimes have given this analogy that it's like others in the field have made an electric car, right? The people who have done the islet transplants before.

It turns out it wasn't that useful to have you plugged in, right? And so we showed with that New England Journal of Medicine paper that we could make a lithium battery essentially, right? And now we need to put together the whole thing and see can we really get this to go. Everything suggests that this should work, right? I think I've been around long enough to know that biology, in particular, immunology, have a distinct way of humbling us. And so I'll be excited to see the data. And hopefully, we'll be delivering something that's really helpful for people who deserve a better and new treatment.

Yes. Well said. Let's rotate to another area that you pioneered and years ago, that is in vivo CAR T. So this area has seen a lot of activities over the last couple of years. As we watch the number of acquisitions and partnerships formations across the space, I was wondering what do you think are the pharma companies going after? And how is your program positioned in this landscape?

Yes. A lot of them going after things they think work. Whether or not they end up working, we'll have to see. I mean, again, just to go to biology, nothing ever plays out like -- not everything will play out like I hope it does. But what we did, that's different. So at the very beginning of this program, we made 3 really, kind of, intentional choices. And we'll end up seeing how these were really good choices to make or we make things complicated.

One is we believe cell specificity is super important. And that includes not going into the liver and not going into antigen-presenting cells. And I think if you look at our data to date, I'm pretty confident we have a best-in-class therapy around that. Now that may not -- the alternative hypothesis is that it isn't that important. You just need to get enough into the target cell, which is the T cell. And if that turns out to be right, we will overcomplicate things, right?

The second is because you have, let's call it, you and I probably have 100 billion B cells. And if you have cancer, you probably have 100 billion more cancer cells, and you're only maybe making 100 million CAR T cells. We've always believed you need to integrate the DNA into the target cell, so you can get that multi-logarithmic expansion and growth to kill because you have way more target cells to kill than you have CAR T cells. And that may be right. I think that early human and animal data suggests it's likely to be right. But if that's not right, I mean mRNA is a lot easier to do, and that's people don't like the idea of the integrating signal because it does have some at least theoretical risks.

The third thing we did is we've dissociated entry from activation, right? And what I mean by that is most of these companies are using something like CD3 to enter the cell. And that, and what you've seen to date is a new category of side effects come across in this field with a per-infusion toxicity. It's being dealt with high-dose steroids. We're optimistic that we will have something better around that.

We don't know that for sure because we don't know exactly. We have to put in people and see. But we use a different molecule to enter the cell, which allows us to titrate in activation of the cell, not overly stimulate the T cell and hopefully have a safer therapy and maybe a longer-lasting therapy because you won't exhaust the cells with the CD3 activation. But if you're using your CD3 as your activation and entry portal, you may end up overstimulating these cells.

Those are the 3 things we've done differently. They may turn out to be really valuable in the clinic and they may not. And you don't really know until you get into people. It definitely has slowed us down to do it this way, right? We -- as you said, we, kind of, pioneered this and been at this for a while and companies have jumped ahead of us in line. So I hope that they turn out to be really important for patients because they were intentional choices we made.

Can I follow up on the point of not targeting through CD3 -- is that the CD8 targeting method? Or is it...

Yes. So we're using CD8 to enter the cell. Those are your -- kind of your effector, here's your killer cells. Now the flip side of that, again, everything has a cost, right, is we're not entering CD4 helper cells or regulatory cells, right? It doesn't look like that's going to be important based on what we know and the information we have, but I think that's still plausible that you wish you had a bit more activity by having made CD4 cells. But the benefit of it is it's a much more specific delivery.

And we're able to, again, titrate in the activation of these cells with a little CD3 co-display on the VLP, on the virus-like particle rather than using it -- and if you're using your portal of entry, you can't turn down your activation without lowering your potency because you're using CD3. Just CD3 is a very potent activator. It's what is -- everybody who makes an ex vivo CAR T cell in some way binds to CD3, they, kind of, get these cells going. There's an old drug called OKT3, which is a CD3 activator that was used. I remember from when I was in medical school and residency just being a very difficult medicine to administer because of again, the cytokine storm or per-infusion toxicity took place.

Okay. Any comment on CD7? So some companies are using CD7. Does that stimulate the T cell? Or could it achieve entry without activation data?

I'd like to see some more CD7 data before you can make a true determination on that.

Got it. Yes. Yes. So that's super helpful to understand the differentiation and potential. So I think you alluded to this earlier. I think you were thinking about data this year. So that's apparently you're referring to activities in China that you're working on, but perhaps 1 or 2 quarters, even some recent development. So any thoughts on -- maybe let me ask you this question.

So once this study enters the clinic, how quickly do you think -- this is the cancer study, right? So maybe 2 questions here. Does this mean that you are more focused on cancer than autoimmune disease? Two, for a cancer study, how quickly can you get a sense of how well the drug works?

I would really like to think that we're able to develop this medicine in both the oncology setting and the autoimmune diseases. That being said, I think what you've seen even over the last few weeks from others in the field is that the safety bar is higher in the autoimmune space.

And so we feel it's appropriate to start in the oncology setting and really understand the potency and safety and efficacy of this program. And if it works as we hope it does, which includes both potency and a really tolerable side effect profile, we'd like to move rapidly into autoimmune diseases. But we have to see what the clinical profile looks like. And so how quickly can you see, is that the question?

Right.

It's a little hard to know. Again, you're -- the way that these -- one of the reasons these VLPs, these particles are complicated is that they're all like derivations in some way of lentivirus, which is in some way a derivation of HIV. And actually, that's a species-restricted virus, right? So it doesn't infect most nonhuman primates. And so you're using some surrogate vector into a normal monkey, right, because they don't have cancer, right? It's not a disease model. The mice model are simple, like that's easy. But I think you really need to get into humans to understand dose, right, because you're using a surrogate in a nonhuman primate.

And so you could have something where you've seen a company that's dosed too high, patients almost died. We've seen another company that started out and it took them a few doses to get to the therapeutic dose. And we've seen one that it seemed like from the outset, the first -- they were, kind of, in the right ballpark with their dose. And which one we end up being, I don't think we know, right? And so it could happen very quickly. I doubt we're too high. I think we've learned enough that you want to, kind of, come in carefully.

But we may be too low. We may be just right, and that will determine how long it takes us because it's just -- you have to get through the dose-finding portion. It's a novel therapy, a very -- it's a first-in-class type of technology. And it just -- sometimes you get fortunate and you're at the right dose and more frequently, you got to kind of go through some of the dose finding. So we'll see.

I do think it's pretty quick once you get here to know does it work. To really understand is it -- if you take just a big 10,000-foot 50,000-foot view, B cell depleters is a very, very competitive space, right? You've got pills, antibodies, ADCs, T cell engagers, you've got CAR T cells, you've got in vivo CAR T cells, you've got different technologies in the in vivo space and kind of how we fit into that competitive landscape will take more patients than a handful, right, of efficacy.

But that early efficacy can be very, very helpful in understanding does this technology really work like we hope it does.

Got it. Got it. So I think you alluded to this very -- I hope we can get some of your insights. This is regarding the autoimmune indication, Novartis and BMS announcing study pause due to severe immune or inflammatory reactions after their rapidly manufactured CAR Ts were administered to autoimmune disease patients. You have a lot of experience with CAR T. Can you talk about what you think the cause there might be? Does it have anything to do with this rapid manufacturing process? And maybe related to in vivo CAR T, like could there be any read-through given that their T cells are pretty -- very quick turnaround, whereas in vivo, I think no turnaround at all.

Well, I take a step back. This -- the side effect that they've described is a well-known side effect of CAR T cells, right? And if you -- it's this immune-mediated hemolytic syndrome, right? And -- it was probably missed in the very early days of the CAR T field is probably underrepresented on labels based on kind of what is reality because it smells a lot like cytokine release syndrome.

It happens just a little bit later, and it actually has a different treatment, right? And so first thing I'd say is this is -- anybody who thinks that this is not their problem is in the CAR T space is fooling themselves. This is all of our problem, right?

I think we have to -- it's just like you're going to have cytokine release syndrome, you're going to have neurologic toxicity. You're going to have this stuff over time. It's been seen across different targets, across different manufacturing platforms, across different diseases, right? So those things are true, right? Number 2, is there something about this patient population or something about the medicines that these companies are making that specifically are heightened risk.

I don't think we know enough. I think it would be way too premature to kind of -- they haven't told us what happened. You do know that this is often a very treatable issue. So it might just be that there's some physician education that needs to take place, but you need to treat really early in the course of this hemolytic syndrome. And again, if they were treated for cytokine release syndrome, that's not going to have done the trick.

So I look forward to learning more. I like to think that you won't have this issue in at least our technology, where, again, we're hopefully activating the T cell less. I don't think we could confidently say that without a lot of experience. It's a rare side effect. But if you're treating hundreds of people, you may start to see a little bit. And I don't think you can say you don't have the issue after 5, 10, 15 people. It's just -- it's going to take us more time.

So stay tuned. I do think this is something that it's a great reminder that these are amazingly wonderful medicines and they give people potentially a very rapid cure to some very dismal diseases, but they are very potent medicines, and we have to be careful and mindful as we're treating people with them.

Got it. Got it. I really appreciate the perspective. In the remaining time, I was wondering, can you talk about your cash runway? And how do you think about capitalizing the company?

Yes. I see our clock at 0, so we're better than that. But I'll try to be brief. I'll try to be brief. We have about $160 million. We've said it will last us into the middle of next year. We've got a lot of things coming up with a number of data points. We've generally said managing through 2026 and until we get to data, we're going to be pretty tactical about things and just make sure that we maintain some buffers so that if things don't go as we hopefully do, we've got a little bit of time.

If we're fortunate enough to have some good data across either one or both of these programs, I think we'll be in a strong position to rebuild the balance sheet and capitalize the company more fully. We certainly would like to have multiple years of cash on our balance sheet at some point in the not-too-distant future. But that may be through business development, that may be through raising equity, it may be through something else. We'll have to see.

Great. Great. Thank you. As you said, we have come to the end of the session. I want to thank you again, Steve, for a very, very helpful and enlightening session.

Thank you, and thanks, everybody, for your time and attention.

Great. Thanks, everyone.

Good afternoon. Thank you so much for joining us. It's a pleasure to have with us Sana and from Sana, President and CEO, Steve Harr. Steve, thank you for being here.

And to start, can you provide a quick overview of where the company stands today, your strategic focus on the type 1 diabetes and in vivo CAR-T franchises and key catalysts for the second half and beyond?

Sure. Well, first off, Salveen, thank you, and thank you, Goldman Sachs, for having us. And thank you for everybody in the room and online who is joining us. Yes. So maybe just one last thing I'd say, I think you know we'll make forward-looking statements. So please refer to our SEC -- most recent SEC filing, our 10-Q for risk factors.

So take a step back. The company when we started it, we had a vision. And that vision was to try to go after and tackle what we thought were the most important challenges in making our vision a reality, which was turning this idea of engineering cells or modifying cells into medicines. And so we went after 2 different platforms and technologies. One, if you take a step back and think about almost every disease you can think of is caused by either a missing and damaged cell or a cell that's kind of gone awry.

And so to go after missing or damaged cells, we wanted to be able to make cells outside the body and transplant them. And to do that, you have to have cells that you can manufacture at scale that will engraft function and persist. And the challenge -- the largest challenge has been persistence, right, since you have been a transplant medicine, essentially allogeneic rejection. You put someone else's cells into your body, it will see them as foreign and reject them.

And so we went after this with a thing we call the hypoimmune platform, which its goal was to hide cells from detection by the recipient's immune system. And we'll come back. We've made tons of progress, I'll run about that in a second. The second was if you take a step back, the other thing you want to be able to do is fix cells and fix their DNA and their RNA. And you can do almost anything you want to, to a cell in a Petri dish. And the real challenge has always been delivery, right?

And so what we wanted to do is come with a delivery system that allows us to deliver genetic payloads in a specific and repeatable way. And we really focused on cell specificity in doing that, and that's something that we've now created this fusogen platform, one which you brought up. So with the hypoimmune platform, what we're going after is type 1 diabetes. And again, I'm going to just kind of peel the onion back a little bit.

Type 1 diabetes is a giant problem. I have a daughter who's about to graduate from college this weekend. And I looked up a few months ago. And if you have a 22-year-old female and she's diagnosed with HIV behind door 1, breast cancer behind door 2 or type 1 diabetes behind door 3, it turns out the shortest expected lifespan is actually type 1 diabetes. And in that time, they have this challenge of trying to grapple with meals and blood sugars and lows and highs and they can have blindness, amputation, heart attacks, strokes, all those things. And so we have to do better for this group of people.

And in fact, 10 million people globally, right? I mean it's growing 5% a year. It's a really big problem. And we know what the issue is. The immune system gets confused and kills the pancreatic beta cell in the patient. And up until 103 years ago, it was a death sentence. They just died. And since that time, we've had insulin, but it's just not good enough. Now I'm going to get into what we do. So again, I'm going to peel the onion back. If you take about 25 years ago, it started with a guy named James Shapiro in Canada, he figured out how to isolate pancreatic islets.

We think of it as an islet as a beta cell plus support structure from a pancreas of someone who died and transplant them into someone type 1 diabetes, and it works, right? It's been published in The New England Journal of Medicine and other places. The challenge is it's not a very scalable and replicable supply source and patients have to be on lifelong immunosuppression just like an organ transplant.

And there aren't that many people for whom -- immunosuppression is better than lifelong insulin. So thousands of people have gotten it, but its impact is pretty limited. Over the last few years, you've seen several groups take pluripotent stem cells, grow them or differentiate them into islets and transplant them and they work, right, again, published in The New England Journal of Medicine. And it seems to be more predictable. It works pretty much every time.

But the patient population is still pretty limited who benefit from it. It's important. I'm not going to say it's not important. But it's still -- there aren't that many people whom lifelong insulin is better than lifelong -- sorry, worse than lifelong immunosuppression. And what we've now been able to show is that we can make gene modifications and we can hide these cells from immune recognition, again, published in The New England Journal of Medicine. And so now you have all the component parts together for a cure, a functional cure. This will happen. I think it's now inevitable, we may not do it, we may stub our toe along the way. I hope it does, and we're a long ways towards that goal.

To your question on that one, we've been working really hard, and we can get into doing what, and moving a gene-modified stem cell-derived pancreatic islet therapy into people that will be a single injection into the muscle and will be a functional cure for people with type 1 diabetes. Normal blood sugar, no insulin, no immunosuppression for life. After -- I tell people, it's like we've been waiting for Godot. I think Godot is finally coming, right?

So our goal is to file our IND and begin the Phase I study this year. I think it will be really pretty quick that we begin to understand if this works or not. If you transplant normal cells into someone with type 1 diabetes because they will be rejected within days. So if we see that this person has cells that are living in [indiscernible] or so, they're functioning, they're making insulin themselves when you get into how you measure that, you'll know that this probably is going to work.

The second -- so that will happen very quickly as we start testing people. The second element will be, are these people that were able to get off insulin, right? You probably know that within a few months, right? So you can see, first of all, cell survival, then do you get normal glucose with no insulin. And then you're going to want to know how generalizable is this, right? So if we're kind of 6 out of 6 or 7 out of 7 at the beginning, you're going to feel really good. If we're kind of like 3 out of 6, 4 out of 8, something like that, you're going to say, give me a few more, error bars are still pretty big.

But we'll learn all of this over the next, call it, 12 to 18 months, right? We'll know through 2027, we'll be able to figure out even the kind of replicability of this. And I think after that, it's pretty straightforward to move into a registration study. It's a lot of work to do. But that program, I think, has got a lot of promise and a lot of work and super excited to see how this turns out.

We've also been making this in vivo CAR-T platform. And you've probably seen there's a lot of excitement in the field about this. CAR-Ts generally over the last 12 years or so have just had dramatic effects in patients, right? In particular, you can cure somewhere between 1/3 to 50% of people with lymphoma, leukemia and multiple myeloma, and we're starting to see its impact in autoimmune disorders. But its utility has been really, really underpenetrated, right?

And that relates to both complexity of manufacturing as well as the chemotherapy. So the goal of the in vivo CAR-T platform is to actually just make the drug inside the patient, give them a single dose of the transgene and they'll make the CAR-T in their blood. And that will go and find all your pathologic cells, be that tumor cells or B cells in autoimmune. I think if you were to look at all the nonclinical data in nonhuman primates, we have a best-in-class molecule. Others have moved a bit faster than us now, so they're ahead of us. So we need to see how it really -- and again, nonhuman primates don't always predict what happens in humans. We have to see what happens in humans.

So our first drug is called SG293. It targets CD19. We'll dose patients this year. Maybe we'll learn if it works or not this year. We don't know what the exact dose will be. And so if we're on dose, it happens pretty quickly. If we have to go higher, we'll take a little longer -- no, I think that much longer. And we'll know well in later year if this is working or not. If it works, you can see a rapid expansion into more -- we'll go into non-Hodgkin lymphoma to start other tumors, then we'll go into autoimmune diseases.

And then we have a second drug called SG227 to go after multiple myeloma. So a lot will happen for the company as about the next 6 to 12 months during that time. I'm super excited about both programs because of all of the work that's been done both in the field and inside our company to derisk them.

I love that they're idiosyncratic biologic risk. Like there's no correlation between what happens to the fusogen in vivo and with our type 1 diabetes. And that, I think, means we have a pretty good shot of having at least 1 and maybe 2 really important medicines as we look forward. So that was probably a longer answer than you wanted, but you always get -- you don't wind me up, you can't slow it down.

Steve, you've been here since kind of the beginning of this evolution in cell therapy, right, from the autologous to the allogeneic to the in vivo as where we are today. And the optimization efforts that have played out here with the technologies with delivery have extended, I think, as we've gone on over time. So when you look at in vivo, how long do you think it's going to be to kind of optimize for that perfected ability to deliver in patients?

I don't know what you mean by optimize. I presume -- I mean, I'm astounded by the fact that in 1995 or so, there is the discovery of the first really powerful B-cell depleting agent, which was Rituxan, right? And we're still sitting here 30 years later, 30-plus years later, talking about better B-cell depleters, right?

So I don't know if I'm perfected, but I do think that we're at a place now where they are more than adequate to drive safety and efficacy in a simplified regimen for patients. So I think the key elements in moving forward are, one, mass deliverability, right, ease of use, off the shelf like a drug that physicians, payers and patients are used to.

Number two, if we can get rid of this chemotherapy, right? It's -- you always hear about CAR-T toxicities. They never tell -- you have to actually read through the labels. It actually took me a while at a CAR-T company to figure out how frequently we were causing things like severe infections and other things, right? And so you want to get rid of the chemotherapy.

The third is it needs to have a -- it needs to be curative, right? I think there's something magical that happens when a person who has been kind of near death doorstep is cured of a disease. And so making people live longer is helpful. Actually, having the privilege of uttering the word cure is super important. It needs to happen at least in 1/3 to 50% of people. It's not competitive with current technologies.

So I think those are all of the -- and then you can't be adding significant new toxicity. There is -- with these in vivo CAR T cells, there's been the emergence of kind of a new toxicity, which is a peri-infusion cardiovascular collapse, right, we can call that. And I think that's been increasingly managed with a single dose of relatively high-dose steroids, right?

I'm optimistic that our mechanism will allow us to either get around that or have a lot less of that. But you never know until you get into humans. But when you get into single treatments with very limited toxicity, like a few days of fever kind of thing, leading to cures of very deadly diseases and very prevalent diseases that are very -- in the autoimmune setting, it's going to be transformative, and they're going to have a very important place across a number of different indications.

How is your technology differentiated from other VLPs and the LNP mRNA approaches that are employed by competitors and in vivo?

Super important question. I'll start. The company made 2 fundamental assumptions when we started down this path. And again, what you're trying to do is make a CAR-T in the body, right? The first assumption that we made was that specificity will matter. And by that, we mean only deliver the genetic payload to the T cell. Don't go into liver and lung and a whole bunch of other cells. And we think that matters because, one, just safety, right?

Two is immunogenicity. You get other cells, you can create immune response to your therapy. The third is manufacturability. T cells are a small number of the cells in your body. So if only 5% of your drug is getting into T cells, you have to make 20% more or 200x more. The second is that we made -- we have a belief that you want to -- with the CAR-T specifically, you want to integrate your signal into your target cells DNA. And the reason is even the best case scenario, you might make like 100 million CAR T cells. If you're just -- you and I have something like 100 billion B cells, let alone how many cancer cells you might have in the body.

And so it's very difficult to make that math work of eliminating all of the target cells without these CAR T cells expanding. And expansion is basically divide and your DNA goes with both protein. So others made the exact opposite bet. And probably LNPs/mRNA is the exact opposite bet, which is, one, you don't want to integrate. mRNA is going to be good enough and it can be safer, right, because you're not going to break the DNA.

Two, it doesn't matter what other cells you get into, just get into enough T cells. If that turns out that they're right, my sense is people would rather take mRNA than DNA. And my other sense is that they're easier to manufacture. So they'll probably be very difficult competitors for us. Most of these other virus-like particles, and I can get into why, they've all made the bet that you need to integrate, right? But most of them have made a bet that specificity is less important than we have, right?

And I have to say the data -- early data, right? You're talking about handfuls of patients to date. But at least from several different sponsors, you have early data that are very compelling, right? And so we'll have to see if our specificity really does lead to a safety, immunogenicity does manufacturability advantage or not. I'm optimistic that we'll have an important medicine and how it fits into these dynamic competitor environments, we'll just have to see over the course of the next year or so.

On in vivo, your in vivo CD19 CAR-T candidate, SG293, you presented data at ASGCT, demonstrating robust CAR-T generation and B-cell depletion in NHPs without lymphodepleting chemotherapy. Can you just frame this data and your confidence in the drug and help us understand when we're going to see next data from this program?

Yes. So there's a lot that we -- I think we figured out in that, right? We figured out how to deliver genetic payload safely and efficiently to the target cell. We figured how to do that without going into other cells, right? Including some very easy cells get into like the liver. The third thing is we figured out what tricks we needed to do to really get these CAR T cells to expand and function inside -- really deplete the target cell, which while not causing any toxicity issues, right? And I don't think that's true for others. So it's -- we're very optimistic about this working.

The next set of data will be in humans, most likely, right? I don't want to guarantee this works, but I'll be surprised if it doesn't work. I think there's still a reasonable chance you run into a safety problem, right? There's still -- it's a first-in-human study new technology. You have to figure out how do we make sure we have that. There's still -- it's a very competitive space. And so the bar is higher than it working. The bar is offering the patient the best solution available to it. And so we'll have to figure those things out as we go forward.

But I think with those nonhuman primate data, I think we go in with a lot of optimism and confidence that this will work, right? And now we just have to see how that really translates into people. And we'll begin to generate data soon, right? And so the answer isn't that far away. And ideally, what you'll see is in lymphoma patients that very rapidly within a month or so or less, they're moving from a very difficult situation into a deep complete response that hopefully is a durable cure for them.

The drug uses CD8 as a source of entry, while many of your competitors use CD3, which has been associated with toxicity. How confident are you that a differentiated CD8 entry mechanism will translate to a meaningfully better tolerability profile in humans?

I think it's a good assumption. I don't think it's guaranteed. I had the -- I was in medical school when this drug OKT3 came out, and it was a drug that targeted CD3. And you saw these people just go into what we're seeing in some of these other drugs is like profound cardiovascular collapse. And so we were very intentional for several reasons. That's one of them about not -- of dissociating entry from activation, right?

So we weren't going to target CD3. And we have our own risk with CD8. I think it should be safer, but there's no guarantee, right? Our own risk is that our T cells are made of both CD8 and CD4 cells, right? And the patient will have plenty of CD4 cells around to serve as helper cells to kind of kick start the CD8s, but we have to see that work. It seems to work in our nonclinical models in animals and nonhuman primates.

But that's -- if I were on the other side of it, I'd point to that and say that's the thing you have to make sure that you get as good of efficacy with your CD8-only entry. We're optimistic that's true. 99% of the work is done by the CD8 cell. You can -- there are people who only get CD8 CAR T cells, and they seem to do pretty well, but we'll have to see how it plays out.

Let's say you have positive Phase I data here in non-Hodgkin's lymphoma. What is that profile that you need to see to decide to move further into oncology and also potentially autoimmune?

A good question. I mean you hate to be overly precise about Phase I data because you're learning as you go, right? And I think the first is that it needs to be just the combination of safety and efficacy need to be super compelling. And without getting into -- I'll come back to numbers in a second. But as you -- if new safety signals emerge like they did with these first in vivo CAR T cells, we figure out how to manage that, right? I think that's the first thing we have to really focus on.

If you look at the CD19-directed CAR T cells, autologous CAR T cells, it's kind of like 1/3 of patients or so end up with a durable complete response, you look at large B-cell lymphoma, probably 50% or more with indolent lymphomas, right? So we'll be in the more aggressive lymphomas to start, you'd like to see at least 1/3 or so, right? I mean the error bar is going to be pretty big, right? So ideally, you're well above it because that makes you feel better about the error bar getting -- you'd rather have to -- have room to degrade than have to hope that you get better as you move into Phase II. But let's just call it 1/3-ish is the right place to go.

The second is that's in oncology, right? So you have lymphoma, leukemias you can go after. The other will be in the autoimmune space. And the move in the autoimmune space, I'd say 2 things that you'll be really looking for. One, the safety bar is just higher, right? These are patients who will live for decades. And you're trying to offer them a onetime treatment that's curative and allows them to go back to their old way of life or at least get them into a durable remission for 5, 10, 15 years, but you can't tolerate the same level of toxicities. And so safety will be a bigger question.

The second is you could see that we have really deep B-cell depletion and complete B-cell resets. And maybe the efficacy isn't quite there on the cancer side. So your safety -- your efficacy bar might be a little lower, right? And so I think we have to kind of see what the profile looks like to see exactly where we go, but we have such a great opportunity, I hope, to go into more -- to continue to move forward in lymphoma to expand into other tumor types and to move into autoimmune very quickly if the profile allows us to.

Pivoting here over to the type 1 diabetes data. So we've now seen 14 months data from the ISP demonstrating long-term cell survival and function without any immunosuppression. How does the ISP differ from your lead program here, SC451? And what key takeaways from the data support that development?

Yes. So making a gene-modified stem cell-derived islet, which is what we're trying to do, turned out to be probably harder than I thought it would be, right? And it's taken us some time. And during that time, we had an opportunity to learn. And so what we did with this UP421, the team gene -- and by the way, the first time the scientists who drove this program, she's wonderful, came to me and said, I want to do this. I want to gene modify cadaveric islets and we'll transplant them into humans and see if they survive and function. I was like, that's a terrible idea. I'm glad she prevailed, right?

And I think it really does derisk our program. So what we were trying to do in that study was take -- it was a 62-year-old person who died suddenly and he donated his pancreas. And the team isolated his pancreatic islets and gene modified them. And we were pretty good at the gene modifications, but not perfect. And so only about -- because you're knocking 2 genes out, you're knocking 1 in. And so you only end up with like 40% of the cells or so being fully modified, right? So first difference is you're putting a pretty dirty product, right, not dirty, unsafe dirty, but dirty like some of them are fully edited, some of them are not edited at all, some of them are partially edited, right?

And it's from a 62-year-old who had a hemoglobin A1c of 6.2. So they're not the perfect islets either, right? The second is because of that, it was put in a lower dose, right? So our goal was not to cure the patient. It was to see we're going to put no immunosuppression on board. These cells should be killed within a matter of days. Will they survive and function. So when we first learned this -- the guy who got them, he's 42 years old, and he was making insulin for the first time since 1987. It was like just that statement alone is wild, right?

And he's had no immunosuppression and these cells continue to function and survive or survive and function out 14-plus months, right? That's just the last time that we tested them. They'll be tested again shortly. The stem cell derived islet program, you take one cell and you modify it. And that cell is your -- you have 100% confidence of what the genome is, right? You sequence everything. We then grow that cell. into many, many stem cells, right? And just as an example, it's 1 billion cell dish per patient, a total of 1.5 billion with release assays and things. That means to treat 1,000 people that's 1.5 trillion cells. We started at 1, right?

But you know the genome. So you have to grow them up to a bunch of stem cells and then you differentiate them into pancreatic islets. And so from the outset, we will be dosing patients again with no immunosuppression, again, with a single simple procedure into the muscle. But this time, we hope it at a therapeutic dose. And this time, 100% of the cells will be edited. So that actually should be easier in some regards, right? We know that patients develop an immune response to the partially edited or unedited cells.

They develop a robust immune response or he developed. In this case, hopefully, these cells, there's no immune response at all to them. And people will go off and do very well. We'll have to see. It's obviously to shoot for a cure is a high bar, right? If we can do it, it will be transformative for type 1 diabetes, and it will be transformative for us. And we'll see where we are pretty shortly.

Now that the master iPSC cell bank is established with regulatory alignment, can you walk us through the remaining gating factors for the IND?

Yes. We're pretty far along and they're becoming fewer and fewer, but they're still not 0. Just generally, things you have to do, align on clinical development plan and really kind of create a clinical protocol, I think you can be confident that's kind of being done. The second is you have to kind of have a nonclinical testing plan, right? You're looking for evidence of efficacy, biodistribution, GLP toxicology, all those things.

That is getting pretty close to being done, but not quite done. And everything we're doing that we've done before, it's low probability something happens. But if something bad happens, it could set us back a bit, right? The third is we have to finish our manufacturing tech transfer. So what's happened to date is the drug has been manufactured inside of our company by our people.

And now we have to [indiscernible] CDMO, where it's done [indiscernible] people. We're doing that. It will happen, right? It may not happen at exactly the pace we hope it does. I'm optimistic that it will. But those are the only 2 things left to do, finish the nonclinical testing, finish tech transfer and actually make the drug in the GMP setting and then off we go.

Can you talk to the Phase I study design here, what the inclusion criteria is, what the type of patients and how many you want to enroll and how you'll select the starting and step-up doses?

Yes. So we want the patient population to reflect the need in the real world. And so it's more or less all comers between the ages of 18 and 65. It's not entirely true. There are a few corner cases. We want -- and someone who has like a heart attack last week that would be confusing to put them in a clinical trial. There will be some things like that, that won't be in there, but it's 18- to 65-year-old hopefully, on the back end of -- we'll talk -- you'll bring up Phase I in a second question.

But on the back end of finishing that initial Phase I, we can move into some younger people where there's a lot of desire to have a product and some older people, right, where I think people who are 65 and older still want to get off insulin. So it's pretty much -- just think as all comers, more or less. I think the Phase I study will be relatively limited in size, call it, 12 to 15 patients. Our goal will be to get people off insulin with no immunosuppression.

And from there, it hopefully is relatively straightforward to move forward. I think we kind of know what the right dose is in the transplant literature. So there are thousands of people who have gotten these cadaveric islets and they get around 1,000 IEQs or insulin equivalents, right? And that then translates to around 1 billion cells-ish, right?

So that's going to end up [indiscernible] that within an error bar [indiscernible] the Vertex, which is in a registration study, there are 800 million cells in example. So again, that's within the error bar, right, of 1 billion cells. And so that's -- I'm guessing around where you want to be. Unlike the CAR-Ts, I could see us being logarithmically wrong on the first dose. I'll be surprised if we're off at all, but if we're off by more than 20%, 30%.

And what is that bar on C-peptide production and length of follow-up that you'd want to see in order to move to a pivotal?

I don't think I care as much about C-peptide. So just take a step back. When an beta cell makes insulin, it actually makes something called pro-insulin. And when it's secreted, it's cleaved into insulin and C-peptide. So C-peptide is a one-to-one measure of how much insulin the patient is actually making. So the actual number is probably around -- most of us walk around with around 200-ish, is the number.

But what we really want is the patient to be -- have normal blood sugars off insulin. So it's not a biomarker-based benefit. I think we're really looking for the clinical benefit to move forward. And for duration, I mean, I think you're going to want to see this for more than a month, although I don't think it needs to happen after a month. But after 6 to 12 months, if you're seeing these stable, they should be stable for a prolonged period of time. That's probably the Phase I-ish time when you say, okay, let's go.

The barrier to moving into a registration study is unlikely to be clinical. It's more likely to be manufacturing, right? And we have a process that's good enough for Phase I. I don't think we would want to commercialize this process yet. And there are 2 elements we want to keep working on. One is scale and the second is cost of goods. And I kind of think we'll go through 3 periods of manufacturing.

One is good enough for Phase I. The second is good enough for early commercialization. You need to have that process locked before you can begin a registration study, right? And then the third will be good enough to treat tens and tens of thousands of people, right? I mean this is a disease that's so prevalent. If we somehow cure 100,000 people a year and they only need one dose and it works in everybody, like in the most idealistic scenario, all you've done globally is take the growth rate of type 1 diabetes from 5% to 4%, right? So this is a marketplace where we have to be ready to scale and deliver this medicine at a quantity that we haven't seen from cellular therapies to date.

How long do you think it will take you to be good enough for manufacturing for Phase I to pivotal and be early commercial?

I wish I knew the answer for sure. We're making a lot of progress. I don't think -- I mean I think it will happen sometime next year. Now that will then -- it takes you 9 to 12 months to kind of move from locking a process into something that you could move into a registration study. So let's just say that sometime in 2028, we could be ready to go. I don't know when that will be though. I think that we're too far away from it still, and we have some more work to do.

And there are always 2 answers to in these manufacturing challenges, which are very simple, I love math, cells per year is kind of like cells per run times runs per year, right? I think of cells per run as a science problem and scaling up, runs per year is a capital problem and scaling out, right? And it can be solvable with the capital and scaling out once you get to a certain threshold, but we have to make sure we're at least at that threshold.

Maybe a last question here. Where do you stand now from a balance sheet capacity basis?

Yes. So we ended last quarter with around $100 million. We raised around $95 million last quarter, partly through a collaboration, pretty novel, Mayo Clinic invest in the company. And then we did a financing -- a small financing with a single -- a great health care-focused investor. We -- that put us $195 million pro forma. It gives us money middle of next year-ish. That gives us enough money to turn the card over on both of these drugs.

I think we'd like to go into that period with a little bit better balance sheet. The Mayo Clinic has an option to invest another $25 million. That expires late this summer. That would make us feel a little better going into things. I think that that's a little bit more of the kind of buffer we need. So fingers crossed that we have another -- some more progress on our relationship with them.

And that's kind of it. I mean it's -- what I like is that it gives us enough money to get through both these data points. We will need to raise more money. I don't love hanging out here. I know Brian, our CFO, doesn't love -- he's only been here for 3 or 4 months and losing sleep over days or weeks of when your data come is not an ideal way to run the company over time.

And we want to take the balance sheet, which is still, I think, a weakness of the company and turn it into something that's neutral. I don't think it will be a strength, right? We're not going to be AAA rated or anything. But -- and likely, we will wait to do that until we have a much better sense of what our capital needs are. And those capital needs will be defined by the progress that we have from these programs.

So our goal is -- our hope is that we have the privilege of accelerating and increasing our investment across both these programs as we move through -- or both these platforms as we move through next year. And I think we'll have access to capital to do that. And -- but that's kind of where we are.

Great. Well, with that, thank you so much, Steve.

Well done. Thanks, everybody. Appreciate your time and attention. Thank you.

Thank you.

Session with Sana Biotechnology. My name is Alec Stranahan. I cover SMid Biotech at Bank of America, and I'm also the analyst covering Sana. Pleased to be joined today by Steve Harr, President and CEO of Sana. Thanks for being here, Steve.

Thank you for having us.

Yes, I appreciate it. Looking forward to the conversation.

It's actually a dry hot day in Vegas.

Exactly. I guess maybe to start, Steve, I guess, significantly tightened Sana's focus over the past year. How would you sort of describe the company's identity today? Is it primarily a type 1 diabetes company? Is it in vivo CAR T company? Or is it -- is there a common thread maybe underlying?

As you know, we'll make forward-looking statements, so people can take a look at our 10-Q, which was filed last night actually for some really up-to-date risk factors. So Anyway, thank you for having us. And so the I guess what I would say is it's no different than when we started the company. And our goal is to engineer cells, right? And there are 2 different ways that you can engineer cells. One is you do it outside the body. And your goal in that scenario generally is to replace cells that are either missing or damaged, right, and transplant them in and hopefully can replace them. The second is we can engineer them in vivo or inside the person. And there, the goal is to repair a damaged cell or to change the signaling so it can have a different function. And so we continue to do both of those. And as all or many novel biology and things are, it proved to be very challenging, and it's taken us some time to get to where we are. And to your point, I do think we have a clear focus right now. I would say for good or for bad, and as an investor that might be for good, as an operator might be for bad, these are very, very correlated risks, right? And so within type 1 diabetes, this is a really big market. I think it's sometimes easy to forget or underestimate the problem and scale of type 1 diabetes. And to give you a sense of the unmet need, actually was looking this up earlier, I have a 22-year-old daughter. And if your 22-year-old daughter could be diagnosed with breast cancer, HIV or type 1 diabetes, the shortest life expectancy is actually type 1 diabetes, right? And of those, obviously, the day-to-day management of that in terms of like every meal, every activity you do every time you get sick. Am I going to dinner with Brian, who sometimes shows up late, Mickey who's a slow eater, how do I have to modify what I actually -- how much insulin I take. Those things are in their decision-making every day. And the second is it's 10 million people, and people often ask us about competition, and we may go there, I don't know. But I always just say I don't worry about it. That's not being arrogant. It's being -- let's just assume like the greatest thing possible happens, and that is somehow we -- this works, and it works perfectly. It works one treatment and a person never has to take another therapy. It works 100% of the time. And we scale it, and we're curing 100,000 people a year of type 1 diabetes. We'll take the global growth rate from 5% to 4%. It is so much -- if we just launched in the United States, we take the U.S. growth rate from 4% to a negative 1%, right? So it's a large enough market that you have to assume that others will play around. There will be other ways to solve this problem. And I think the more successful all of us are, the better it is. The in vivo CAR T is a totally different risk. It can we -- there's a much more vibrant and dynamic competitive environment we have to go and deal with. And that's something where speed, breadth of clinical development and our overall profile is going to be really important in figuring out where do we fit in as hopefully the best answer for patients. So I'll pause there for my introduction, but that's literally what we're up to.

No, that's great. Maybe we can start with type 1 diabetes. We saw really kind of groundbreaking proof of concept. Now you've got follow-up in that patient up to month 14. I guess what would it take or is it already happening in terms of number of patients, duration of follow-up to really have full conviction in the program before really scaling manufacturing at?

I'd separate those 2. So I want to take a step back. Type 1 diabetes, we know what its problem is, right? It's the immune system comes in and it kills the pancreatic beta cell. The pancreatic beta cell in the patient is the only cell in the body that makes insulin. So up until 100 years ago, that was a death sentence, right? You couldn't get sugar from the bloodstream into the patient's cells. So they start to death ironically, right? Even the sugars are sky high. And there is -- in 1923, there's the advent of exogenous insulin. And people have done okay. They've done pretty well, right, but not great. About 25 years ago, a scientist in Canada, James Shapiro discovered that you could take pancreas from someone who just died, isolate the islet. And I'm going to go back and forth. So just I'll pause here for a second. Pancreatic beta cells are the cells that make insulin. Think of an islet as a beta cell and a support structure. It's the easiest way to think about it. And so to isolate islets and transplant them into patients. And he found that if they got enough islets, they could be insulin-free for a long, long, long time and do very well. But they had to be on lifelong immunosuppression like any organ transplant. So that's not good. There aren't that many people who are lifelong insulin is better or worse than lifelong immunosuppression, right? And getting cells from a cadaver is neither scalable nor replicable, right, it's very, very low quality. So over the last few years, but that's a huge proof of concept. That's step one. Step 2, over the last few years, we've seen several parties take stem cells, grow them and then differentiate them in islets, right, and transplant them. So now you have a much more replicable supply source and it's almost certainly meaningfully more scalable, right? But you still have the problem of immunosuppression. And so what this study did that you mentioned is the first example that I'm aware of where we took gene-modified cells for a patient who was a -- recently deceased donor, right? And we took his pancreas, isolated and gene modified them and transplanted them into a person who had type 1 diabetes since 1987. So this person is now for the last 14 months been making insulin for the first time in over 40 years, and he's doing it with no immunosuppression. So we now know that you can get 3 things, right, long-term transplants to your patients. Second thing, you can make them from stem cells. Third thing, if you put the right gene edits in them, you can no longer -- you can transplant without the need for immunosuppression. So now I would argue a cure is inevitable. Like someone has to take and put the whole thing together, and that's what we're doing with SC451, our drug. So hopefully, we'll know the answer to that within a year. Our goal is to start the study this year and figure things out pretty quickly. But I would argue that the cure is inevitable, just someone has to put all that together. So to your question, what do we need to know for manufacturing, we haven't -- I would think about manufacturing as 3 phases for us. One is good enough for Phase I. We're finishing -- like we're in the midst of making this stuff, right, the tech transfer into a CMO. It's good enough for Phase I, but not much more than that, just to be clear.

The second is good enough for a really nice commercial launch. I think of that as thousands and thousands of people per year. We have work to do on that. And it's not an investment number. That's a -- I'll come back to that.

And the third is tens and tens of thousands of people per year what we talked about earlier, and that's going to take us some time to get to.

That middle one, we're already investing in. But that's -- again, I'm going to divide this into 2 problems, cells per run, number of runs, right? That's how many cells you get a year. Cells per run is a science problem. Number of runs the capital problem, right? So right now, we're on the science problem. And we are going at that full steam. We didn't start doing that, though, until we knew we had the Phase I process done. But right now, we're going full steam with that problem. I'm more optimistic than I was 3 to 6 months ago that we'll get through that. And ultimately, it will be a capital problem. But first, we have to make some science advances to go to. That's how I think about that in terms of answering your question.

No, that's helpful. And I guess in terms of the IND filing that you're working on for 451, is the last gating steps just sort of the GLP tox? Or is it the tech transfer to the CMO that you mentioned? And I guess, how close are those 2 to completion? What are sort of the best estimates for when first patient dosing happens?

I hope they're pretty close, right? Which one ends up being a rate limiter is you never really know until they're done. I would bet you it's probably getting manufacturing all buttoned up. It's a complicated drug to make. I don't want to kind of sugarcoat that. And our Phase I process is a Phase I process. It's not a commercial process. There are a lot of things we still need to automate, scale and clean up. But I think it will be good enough, but we're in the middle of that tech transfer. Things could always go a little better than we planned. That rarely happens. Things can always take a little bit longer than we plan. I think we have some buffer build in our time lines, but that's probably going to take us the longest amount of time. We are also finishing up the nonclinical testing, right, which is a whole host of things related to GLP tox, efficacy, genomic stability, a whole host of things. Again, I think those should go -- those are getting pretty close to being wrapped up. They're not done until they're wrapped up, something could always surprise you, right? And can end up being the long pole in the tent. But for right now, we seem to be on pace with both of them to kind of meet our goal. What we said is we will both hope if the things go as we hope they will, we will both clear our IND this year and get the study going. Exactly when we'll have data will lead to another time to figure out.

Yes. Yes. I think you've noted that proof of concept could come pretty quickly, maybe within like weeks of dosing, whether the cells engraft, whether they evade rejection, produce insulin, et cetera. I guess what are sort of the data points you hope to gain initially to know that the new drug product that you've made is doing what you hoped in replicating.

So -- I mean, just approach this, first of all, like from the most important thing in a first-in-human study with a very -- this is CRISPR gene-edited stem cell-derived islets, right? It's a combination of gene editing, stem cell biology, immunology, it's a novel way of delivering these things. So the first thing is safety we need to get through. But that's -- I know that's not what you're talking about. But once we have safety, if you transplant -- we're going to transplant these cells with no immunosuppression. This is a -- we're transplanting the cell the patient already has a known immune response to, right? It's already killed all their own beta cells. And we're transplanting the allogeneic cell. I mean it's coming from someone else. It should be gone within days, right? And if it's not, and it's there -- just like with that previous proof of concept, we said if it's there at a month, it's going to be there in a year, right? So I think it is there at a month, we're going to feel really good that in this new way of manufacturing this, we've overcome transplant, allogeneic and autoimmune rejection. The next thing is it was a really low dose that we transplanted, right? So I want to -- we don't want to just see a really low dose of -- so take a step back. When your beta cell makes insulin, it actually makes something called pro-insulin. And then when it's secreted from the cell, that's cleaved in a C-peptide and insulin. So the amount of C-peptide in your blood is a direct measurement of how much insulin the patient is making, right? And so we want to see that the C-peptide at 1 month is very robust, right? It's on its way much higher than what it was. And that gives us a sense this is likely going to be that something works. So that's step one. That can happen very quickly.

Step 2 is we're actually not trying to overcome allogeneic and autoimmune rejection, right? We're trying to make a drug product where a patient will be able to come off insulin, have normal blood glucose and never be on an immunosuppression, right? So we want to see that. And that likely takes a quarter or 2, right? If you look at -- that usually takes a while to kind of get these cells to really kind of function really well afterwards. So let's say, there's the first step, which is can you transplant them successfully. Second is you get people off insulin. And then the third is how replicable is that, right? And let's just say we're 5 out of 5 or 6 out of 6, you're going to feel really pretty good about it, right? Let's say we're 3 out of 6. You're probably going to say I want to see some more, right? And so exactly how long that takes, we'll have to see. But again, those are the types of things I think we'll figure out next year as we move through the year. So I'd expect pretty early, we'll figure out, hey, do these cells overcome immune rejection and function. And maybe as we move through the middle of the year, this time of the year, next year, we start to understand, have we truly gotten -- and we're going to get people off insulin, right? Do we have the right dose, all that stuff. And then the latter part will be later in the year most likely.

Okay. And when it comes to 451, you've got the things that the company can control, right, on the manufacturing and the lot-to-lot reproducibility. And then you've got the clinical handling at the hospital, right? How does the Mayo partnership that you signed recently sort of establish a good foundation?

That's a super important question. Like one of the things that's concerned us is what happens from the time the drug product leaves our hands to when the patient goes home, right? There's so much that has to happen in that period around these are live cells, right? They have a very short window that they are actually going to live. They have to be taken from their shipping container and prepared for transplant. They then have to actually be transplanted with a procedure that is replicable across many, many surgeons across many, many sites over time, right? They have to standardize how you take care of those patients so that afterwards, we can be confident that they will safely go home and hopefully function quite well. So that's really to start with, I hope we get a lot out of this collaboration. They've been wonderful so far. We're only a few weeks in, but I actually have to say it might be the honeymoon phase, but the first few weeks are better than I hoped. But we're just learning a lot about that portion of it. How do you ensure that we have something that is standardizable, that is safe, that will deliver this product in a predictable way to patients. And that's what it's for. And so far, so good.

Okay.

They're really good at that stuff.

Yes. Yes. Yes. No, that makes a lot of sense. And I guess you alluded to questions that you get around the competitive landscape. I agree like it's such a large TAM. It's kind of a moot point. But Vertex, I think CRISPR has had something in the works for a little while anyway. I guess how do you sort of see fast followers given that you've now kind of proven the mechanism?

Well, I think that we can't claim they're fast followers until our actual drug really works. So let's -- we'll first get there. But again, I think it's -- I would like to be first in what we do. I think there's some real value in that. I also think there's a lot of value from learning from the field. And there's no doubt we've learned from the field. I'll give you an example is one of the things that Vertex saw early in their trials is stem cells sometimes don't engraft perfectly, they die and they release insulin granules. And some people ended up with low blood sugar. Super easy to treat, give them sugar, right? So now we know that, that's one of the things they have to monitor from. And I hope that they can learn from us some things that we do and learn as we progress as well. And our goal here is to make progress for the field. And I'm sure that if we -- if our stuff works, I'm sure we'll have -- we'll do fine, and I'm very confident there will be competitors.

And there's a lot of know-how when it comes to actually making...

Ton of know-how.

And you're actually building that out from scratch.

Well, there's a lot -- like -- yes, it took us years to make -- to actually define this problem. And that is these stem cells are a little bit genomically unstable. When you gene edit and become even more unstable and you end up selecting for, if you're not very, very careful, mutations that you would kind of select for cells that grow quickly. That's called cancer, right? And so that's the know-how it took us to get around. Defining the problem though, I think others now can run more rapidly behind us and say, okay, we have to go after that challenge really early. They know it's there, right? We're pretty transparent about where they can be. We have to be because we're pretty small and this has -- if things had gone perfect, we would have treated the first patient a while ago, right? And we learned, right? It took us some time to make that -- the science really work.

Yes. Yes. Maybe just for the sake of time, I want to talk about the in vivo CAR T platform. This is really the emerging part of the fusogen platform that you guys have built the company off of. Maybe we can talk about 293. I don't know if you want to give a quick sort of intro on that, but whether it's the B-cell depletion you're seeing in monkeys or anything else that you're seeing coming out of that program and sort of what you hope to replicate?

Let me start with there's this in vivo CAR T space. And there are 2 broad sets of technologies and then within one that we're in, they're like cousins, right? And there were 2 very, very essential assumptions we made at the outset of this, right? And that is that you're going to try to make -- so the idea of these in vivo CAR T cells is you're going to deliver some type of genetic material to a T cell, they're going to make it into a CAR T cell that can go and attack some target cell, it's a cancer cell or a B cell or whatever you want. And we made 2 critical assumptions. One is that cell specificity and delivery really matters. You only want to go to T cell. There's an alternative viewpoint, which is you just need to get enough T cells to have efficacy, right? And don't worry about the off-target stuff -- they'll take care of themselves. The second is we thought -- we feel like because you're going to make, I don't know, 100 million CAR T cells and you have tens of billions or hundreds of billions of cells you have to eliminate, you have to get the DNA to integrate into the T cell so that you can get what we see with CAR T cells is a logarithmic expansion and grow. Like every time they see a target cell, they kill it and they divide. You go from 1 to 2 to 4 to 8, you just keep dividing to have many, many cells that will kill. So those are the 2 assumptions. If we're wrong, other technologies will end up being faster and easier, to be very clear, right? And so we believe we're right, but we really believe cell specificity matters and you have to integrate. That's part one. That's part of the competitive landscape. With what we've seen, I think that the big differences that we have versus others in this kind of like virus-like particle space is we're more specific, at least in preclinical settings. And I think we have a different way of entering the cell. Both of those should end up if preclinical science is right, being safety advantages, right? It may prove that that's easy to see in a clinic. It may prove to be really hard in the clinic. It may prove that we have some other problem, right? And so you dose a patient, you don't know. But what we see in the nonhuman primate, which is a really good model, right, of efficacy. So what we're trying to do is we give them a single injection of our drug and it makes a CAR T cell that will target B cells in the monkey. And we see a dose-dependent complete elimination of detectable B cells, right? And that's true. And then whether we look at peripheral B cells, lymph nodes, spleen, and then you see this thing that you have seen with George Schett's data in the autoimmune setting where we have this B cell reset. I mean it's all naive cells that come back. So it's kind of control the lead on that B cell repertoire. And that's something we haven't really seen from others, right, where it's just clearly just naive cells coming back. And we also seem to have a very good toxicity profile. So it's very cells specific. You don't find this in the liver. You just don't find it. I challenge you to look at any other data and see that. You don't find it good out of tissue. You don't find it in the heart. You don't find it in the lung. It is just in T cells, right? The second is there's been this kind of infusion reaction that many have seen in the field that's been pretty challenging. And we don't seem to have that at least in nonhuman primates. So a little bit of a fever. One dose of tylenol was all the animal needed and did very well. And so we think we'll have a differentiated drug on safety, maybe on potency and efficacy because we can have a better safety profile. But these are -- this is a novel category of drugs, and we need to get into humans and see what it looks like, and we'll start doing that this year. So we're optimistic, but we have to see what happens.

Okay. Obviously, this is a pretty hot space. We've seen large pharmas stepping in through M&A. I guess, versus some others that are in the field, would you say it's really the specificity of the edit that's the driver.

It depends. I mean, LNP mRNA, 2 things, right? One is integration, second is specificity. The cells of the delivery, not the edit, the specificity of delivery. So those things that are going to be in the liver, it's just mRNA. When you do the cell divides, mRNA won't go into the progeny, right? And so you only have a limited -- you can redose it, but you have a limited number of cells that can kill. It's unlikely that's as potent. But maybe good enough. I mean, I don't think we know, right? We see that. That hasn't really been tested in humans yet in a really robust way. The second is -- but those -- there have been a number of acquisitions in that space of and off of preclinical data, right? The second is you have these virus-like particles. And there, you integrate your signal into the target cells DNA, right? And there, the difference in what we have versus others, others have had human data when they've done these partnerships and acquisitions. And we need to get that. And I think that will help us understand what we have. And from there, we'll figure out what the right path forward is for us to develop this drug.

Okay. And I guess in terms of gating the go forward, obviously, we'll see how the activity of 293 looks in people. You recently nominated a BCMA directed asset to 227 that could enter clinical study as early as maybe middle of next year. Is that -- is pushing that asset forward sort of dependent on 293? Or are they separate?

Yes. If it turned out that we deliver this -- our delivery vehicle is not safe. we're not going to do 2. If it turns out that our delivery vehicle does not work, we're not going to do 2. If it turns out that it works, we're ready to exploit that opportunity with taking forward this drug 293, which targets CD19 in oncology. We're going to take it forward in autoimmune diseases, and we'll be ready to take forward at BCMA not long after that. And so it's really more ensuring that we're prepared. It's not -- getting prepared is not that expensive, actually executing is expensive. And so -- and both in terms of opportunity cost for patients, but also capital for us. And so if it turns out that stuff isn't safe or effective, we won't take it forward. It's the second drug, right? But if it is, we'll be ready.

Okay. And I guess the initial step is in oncology, autoimmune, you mentioned. Is that something -- I guess it depends on sort of the activity you're seeing, but would you want to invest to push it forward just broadly across both of those verticals yourselves? Or would you seek to partner? And I guess, which indications?

Yes. When you look at -- take the broad category of B-cell depletion, it's hugely competitive, right? You have -- almost every large company has got several mechanisms. They got pills, they've got antibodies. They've got antibody drug conjugates. They've got T cell engagers. They've got CAR T cells. They've got in vivo CAR T cells. They've got all these different ways to go about this. And therefore, being really a little bit broader in our clinical development and getting -- rapidly finding the place where our technology is the best answer for the patient is really important. It's likely going to happen more rapidly and more broadly with a partner than it will alone, right, particularly when we think assuming success that this type 1 diabetes is kind of a generational opportunity. So would we partner that? I think that in most scenarios, if we can find a good partner, it will be partnered. It will end up being that the pie is so much larger with a partner that you can divide some of the economics, right? And when you don't grow the pie, that's hard to partner. In some partnerships, you shrink the pie, right, because you just make decision-making so complicated. But I think that's when the pie grows. And so it seems like the CAR T assets broadly will be things that over time, again, we can't control when we get to the right arrangement. But over time, we will be better off in partnership than trying to do them ourselves. Or type 1 diabetes, I don't know the answer to that. I think of like it's very simple. Does it work? Drugs that will be made. So kind of that question caps out of the back, right? Can you scale it? If it works, can you scale it? It's a totally different technology, so unclear, others can help us. If you can scale it, can you commercialize a curative therapy in a truly broad market, again, something that's going to take some real novel creativity, right? And then the fourth is how do you pay for all that? Very clearly, pharma can help us with the latter. We have to think through the first 3. And if we feel like it's enough of it and they help with #4, we may end up with a partnership. If not, I think it will be really valuable and hold on to for cells for a while.

Yes. Yes. Kind of champagne problems once you see the...

The activity that -- first the assay doesn't work.

All right. Well, with that, I think we'll leave it there since we're out of time. But Steve, thank you so much for the great conversation, and thanks, everyone, for attending.

Yes. Thanks, everybody, for their time and attention, and thank you, Alec.

Thank you.

All right. We'll go ahead and get started. So good afternoon, everyone, and welcome to the second day of the Citizens Life Science Conference for the first time here in Miami. It's my pleasure to introduce Sana Biotechnology and presenting for the company or chatting with us about the company is CEO, Steve Harr. Steve, welcome, and thank you for this.

I never know exactly who's in the audience or who's listening on the webcast, whether they know the Sana story or not. And so I'd love to start off maybe in 2 to 4 minutes with an overview of Sana before we dive into some specific questions.

Sure. First of all, thank you for having me and the company come down here and enjoy beautiful sunny Miami. And thank you to people here in the audience and to those listening online. You probably know before I get started, we will make forward-looking statements and check out our risk factors in our recently filed 10-K. There, we try to do a very thorough job and help you understand all the things that could go -- or many of the things that could go wrong. I don't think we'll ever capture all of them. The -- we do our best.

But anyway, Sana is about 7 years old and started with the idea that one of the most important transformations over the next couple of decades will be the ability to modulate genes and use cells as medicines. And it's obviously been a pretty tough time in that space over the last few years. But while that's been a difficult macro environment, we're making a lot of progress in really seeing that vision through. And when we started, we really wanted to go after 2 separate and what we thought were kind of really large challenges in making that vision a reality. And first off, like almost every disease is caused by a missing cell or a damaged cell. And we've known for a while that if you can transplant organs or even cells that, that can have a profound therapeutic benefit for people.

But it's been really limited, in particular, in the cell therapy side and the transplant side by rejection of allogeneic cells. And so if you put my cells or anybody else's cells into you, your body will see them as foreign like a virus and reject them. And so we went -- and so the way people got around that was they've used your own cells or autologous cells. That's pretty limited in what you can do and it's very costly and difficult to manufacture or people have been given profound immunosuppression. And that's led to side effects like cancer, kidney failure, bad infections and things. And so we wanted to figure out, could we hide cells from the immune system. That's problem number one. I'm going to come to that in a second.

Problem number two was you can more or less do whatever you want to a genome in a Petri dish, right? The scientists have made tremendous advances over the last couple of decades in how they can modulate and manipulate DNA and RNA. But the difficult part is actually delivering those reagents into cells in the body. And so we wanted to go after in vivo delivery. And we thought if you can deliver the reagents in a cell-specific way that is repeatable, that is specific -- sorry, specific, repeatable and scalable, we'd be able to do something that was pretty magical. And so that's basically what we went after, and we've been making progress on both.

So on the cell -- hiding cells from the immune system, the most important project that we're after there is type 1 diabetes. Type 1 diabetes is a disease where the etiology is pretty clear. The immune system gets confused. It attacks a patient's pancreatic beta cells. And the beta cell is the only cell in our body that makes insulin. And so until 100 years ago, it was a death sentence pretty much instant within a few months. And people have done pretty well on insulin over the last 100 years. But even with the best possible therapy today, patients will live, on average, about 10 years less than they would if they didn't have the disease.

And during that time, they're at risk of really low blood sugars and death, coma. They can get blindness. They can have amputations, kidney failure, heart disease, a number of different ailments. And their day-to-day living is really driven by this ability to -- the need to control their blood sugar and their insulin. And so it's a disease where we need to do better is basically the key. And there are about 10 million people that have this disease globally, around 2 million in the United States. So it's also a very prevalent and big issue.

Over the last several decades, some progress has been made. So I told you it's missing beta cells, right? I'm going to use a different word, I'll call it pancreatic islet. So think of an islet as a beta cell plus a support structure around it. So a group in Canada figured out you could transplant pancreatic islets from a cadaver and that patients would do profoundly well. They are off insulin for decades potentially. But that's not a scalable source. It's not a -- it's a very variable source. And many patients have -- every patient has to be on lifelong immunosuppression. And these aren't that many people for whom immunosuppression is better than insulin.

So over the last 5 years, several groups have shown you can take stem cells and make them into pancreatic islets and transplant those. Now you have a more replicable source. It's almost certainly more scalable, right? But you still have the problem of immunosuppression. So what we've now shown is through a series of first animal experiments, and now we've done this in a person. The person who was in the England Journal of Medicine last year, who has shown that we can make gene modifications to islets and transplant them and the cells survive and function, and we're now out over a year doing quite well. There will be an update, I guess, Friday on those data at a diabetes conference.

And so I think we're -- all of the component parts are there for cure, right? And so we've been working on what we call a more scalable manufactured version. It's a gene-modified stem cell-derived islet. And that will be -- hopefully, we'll have an IND and start our Phase I study this year. We can get into it pretty quick to understand if it's working or not. And once we know it's working, I kind of think of this program as having -- once it works to make sure we can scale it. And that's step 2. But I think we have a very high probability given what's happened of it working. Not to say biology doesn't humble us or humiliate us from time to time. But we've really, I think, seen a lot of progress in the field. So that's part one.

The other part we have is in vivo delivery, and I'll be -- I'll make this brief. You probably know there've been a number of programs that you may know, making in vivo CAR T cells. That's what we do. It is in preclinical settings and in particularly in nonhuman primates, I would argue that we have a best-in-class drug, both on safety, kind of tolerability and efficacy. We have to see how that translates into people. And we're not sure it's best-in-class in people yet. We hopefully will be starting that study this year and generating data as we move through this year. And I think within a year, we'll have an ability to give you real visibility into both of these drugs, and we can get why that -- and that's a platform. We can do more than one thing.

So the first in vivo CAR T cell will be going into patients with non-Hodgkin lymphoma. If that works and looks good, we will expand into autoimmune diseases, other cancers, and then we can go into a different target as well to go after things like multiple myeloma. So that's kind of the company in a nutshell. I'm sure we have more in-depth questions.

But I'll turn it back to you, Reni.

Yes. Thank you. Thank you for that overview and very comprehensive. Let's dive in.

[indiscernible].

No, no, no. That was actually really good. I was like I'm running out of questions now. But let's dive into the hypoimmune platform. Just maybe to let some of the investors understand, what are the actual gene edits that have taken place here? And it's been validated, if you will, with that one patient. We'll talk more about that one patient. But clearly, it's been validated even before that. So just what are the changes here, which you have been making?

So there are effectively 2 really important parts of the immune system. There's the adaptive immune system, which is T cells and B cells, B cells make antibodies. That's the part you hear a lot about. That's where vaccines go after. And that's relatively straightforward to deal with. You knock out 2 different genes to knock out things called MHC Class I and Class II. So all of our cells flash fingerprints of what's going on inside the cell all the time. And that's so that the immune system can kind of surveil our bodies. And we just take -- that goes away. So now the immune system can't see what's going on inside that cell. Other parts of the immune system, and particularly the innate immune system have figured out, hey, if that's -- if you've gotten rid of that fingerprint, I need to kill that cell. So then we need to figure out in the context of knocking out Class I and Class II, how do you turn off the innate immune system.

So there -- and this is really the key inside of the company. Overexpressing CD47 in the context of knocking out Class I and Class II appears to really cloak these cells and hide them from immune recognition. And so they live and they thrive quite naturally. And to be clear, there's only one cell that's ever been transplanted at scale frequently in humanity without immunosuppression. That's red blood cells. You need to think about, we get the red blood cell transfusions all the time. And what's unique in our body about red blood cells is they don't express MHC Class I. They don't express MHC Class II, and they markedly overexpress CD47, right? And what at least that gives us confidence in is that there isn't some part of the immune system that's geared to kill cells like that, right?

And so we then went and we validated this in in vitro assays and then we did animal assays, first mice, then humanized mice, then we did this in nonhuman primates across many, many different cell types and many different monkeys. We then moved into humans. And we've done this in 2 settings. One is we made an allogeneic CAR T cell. And with that allogeneic CAR T cell, what we showed is that there is no immune response to these cells and that these cells can survive and function. And all of that was published -- the immunology was published last summer in the Cell magazine or Cell journal.

And then we've shown this in the type 1 diabetes setting, which is more complicated because not only do you have to hide the cell from allogeneic rejection, again, meaning someone else's cells into you, but these patients have an autoimmune response. They already have a preexisting immune response to kill that particular cell type. And so we're able to overcome both the allogeneic and the autoimmune. So I think it's pretty well validated now that this is a functional system. We can get into that patient and the data in a minute, if you like, but we've kind of looked across a number of different settings. And again, it doesn't mean that it will work every time. It doesn't mean that biology can't come up with some thing that really surprises us. But the I's have been dotted, the T's are crossed in getting to this next step of development, we hope is a functional cure for type 1 diabetes.

And so far, it has worked in every system. So far, really good, which I think continues to expand the platform. So let's talk about type 1 diabetes. You mentioned the number of patients. And so this is obviously a multibillion-dollar opportunity. You mentioned the Edmonton protocol where people have used cadaveric islet cells. You guys actually took cadaveric islet cells and then imposed this hypoimmune platform for the gene edits into that and inserted it into a patient. And that's the data that we've -- in the [indiscernible] and we've -- you had always said like, look, if it isn't rejected, I think, within a month or 2.

I said within a couple of weeks, you could say, but to be safe, let's go to a month.

Yes. And you said, if it's not rejected in a month It's not going to get rejected. And that's, in fact, what we're seeing, right? We saw that 1-year data. I don't think we've seen the data. You guys have put out a press release talking about how all these metrics continue to be measured. Can you just take us through specifically C-peptide and just everything -- the cells even, right, because I think you're doing MRIs, just everything that gives you confidence that, hey, this is doing well and this is [indiscernible].

Yes. So to take a step back, and Reni, thank you for kind of outlining it well, which is our goal is to do a gene-modified stem cell derived islet. That's a very complicated manufacturing process take us more time. And as a way to understand the biology and the immunology, we gene-modified cadaveric islets, meaning someone who recently deceased person donated their pancreas and the islets were isolated and they were gene modified. We knocked these 2 genes out and MHC class I and class IIb. It's knock out genes called beta-2 microglobulin and CIITA. And then we knocked in a gene that would overexpress CD47 and the cells were transplanted into the brachioradialis or forearm of a person with type 1 diabetes. This person had type 1 diabetes since 1987 and has never made -- has made his own insulin since then.

So the way to measure what's happening is we kind of laid out 3 things. It's a relatively low dose, right? And so the first thing that you're looking for is a protein called C-peptide. So when islets make insulin, they actually make pro-insulin. And as it's secreted out of the body, it's chopped into -- it's cut by an enzyme into C-peptide and insulin. So it's a 1:1 ratio of C-peptide to insulin. And this person had undetectable C-peptide by laboratories for many, many years, right?

So the first thing we want to do is can we detect C-peptide. That means these cells are living and they're producing and they're functioning, they're producing insulin, right? The second thing we wanted to see was would they function normally. So if you give someone something called the mixed meal tolerance test. Think of it as high sugar, high fat meal, does the insulin go up, right? Or the C-peptide go up? Again, then the third thing we were looking at is can you see them visually. And the best way to see this is a PET MRI.

So the PET scan has a tracer, which goes to pancreatic beta cells. And as you might imagine, we don't have pancreatic beta cells in our forearm, right? And so if you're seeing beta cells light up in the arm, it's very indicative that the cells that we transplanted are still there and living. And the fourth thing is we did some immune assays, right? And those immune assays -- we're looking to see -- what we did is we took the blood from the patient and tested against residual product that we had to see, hey, is there an immune response against the product.

And every -- this program has met every single endpoint that we have. It's been -- first of all, safety, it's very well tolerated. There have been no drug-related or drug potential side effects. The cells continue to survive. They continue to evade the immune system by these assays. They continue to be visible by PET/MRI out a year, and the patient continues to produce C-peptide and to see an increase when they eat. And that's all we could really ask for out of the study.

There are some details in the data itself, which we can get into. But functionally, it's accomplished everything we hoped it would. And to your point, not surprising, no part of the immune system is emerging. There's nothing -- it's not like you give things that just sit around your body and after a year or 2, your body decides that's bad, we should probably get rid of it, right? It's very quick at recognizing pathogens, whether that's bacteria. In fact, we are all -- it's all set up to deal with viruses, bacteria. Our immune system wasn't contemplating us transplanting cells.

There you go. So this is that one patient. We already talked about why -- we had gotten these questions early on, like, oh, why don't they just work with the Edmonton Protocol and just use cadaveric cells. But you mentioned like it's not scalable. There was a lot involved in trying to match the donor cells with the right patient, right, the health of the cells.

Well, the only thing we match is -- on that is blood type. So there's Achilles heel on every system, right? Our Achilles heel is a preexisting neutralizing immune response against the cells that were -- against a cell surface protein will get us. And so we are always -- we have to deal with blood type, right? And so with the stem cell, that's easy to deal with. We have an O-negative donor. It's not easy. I think that's 0.5% of the population. So we had to find a young female O-negative donor, which I get into why all those things are true. But in this case, whoever the donor had to match blood type with the recipient, right? But that was the only matching that had to be done.

Okay. Okay. Well, let's switch gears just in the time we have remaining because I know everyone is focused on SC451. This is your induced pluripotent stem cell product. You want to file an IND and get into the clinic. Can you talk to us about the discussions with the FDA, the cGMP master cell bank that you -- I believe you have now and you have the genomic stability. Just what exactly it's going to take to move -- to get that IND filed and move into the clinic?

So as I mentioned earlier, manufacturing these drugs is relatively complex, but doable. So the first thing you have to make is it all starts with one single cell and that forever, your product derives from that one single cell. So from that one single cell, you'll derive something called the master cell bank. And that master cell bank is many vials of cells. And that's frozen, and we will make drug product from that, hopefully, in perpetuity, right? And so again, the testing around that is super important alignment with global regulators. And that relates to a host of different things that we test on. Number one, just normal things that you would do, you hope we do like sterility, right? That's super important. That's kind of the parts of GMP or good manufacturing practice.

The second is every time our cells divide, it kind of makes a mistake or 2. In our 30 trillion cells in our body, we probably have every single mutation you can think of. But we have a system that's set up to control that, right? So it's very, very rare. It takes many years typically for cancer to form, if ever. We're doing something different. We're growing these cells up and we're putting them in a growth media that selects for cells that grow quickly, essentially, right? And so what we had to make sure of is we weren't selecting for tumor cells, right? And that was really hard. We were selecting for tumor cells for a long time. We are seeing certain cancer-causing mutations pop up. And the real kind of most important thing the company did over the last few years besides this immunology experiment was to figure out how to make a master gene-edited cells.

So you have to break DNA, cut it, paste it back together again in ways that allowed for genomic stability over many, many, many, many divisions because we're -- if you think of average dose is around 1 billion. That means just call it 1.5 billion if you have testing. That means you 1.5 trillion cells to treat 1,000 people, right? It just -- the math gets so big very quickly, right? And it's a disease of 10 million people. So you need quadrillion cells, right? And so that's something that genomic stability took a long time. And then you want to -- as you do that, so you have to have sterility, genomic stability and then it needs to maintain potency, meaning it can go into any cell type that you can drive it to become any cell type in your body. And importantly, in this case, pancreatic islets, right?

So that became our master cell bank. That sits in a freezer, actually a couple of freezers just in case something that happens that we can hopefully draw from for decades to come. So that is -- I think, again, without speaking directly for regulators, anyone, we've had discussions with regulators in various parts of the world, including the U.S. And I think broadly that we have alignment around the testing strategy and the release, and those are ready to go. So the second part to get is to manufacture is to actually make the cells, right? And so that is a complicated process, right, because you're taking stem cells, you grow them up and then you differentiate them into islets and then you make them into something that is delivered to a physician and they can transplant it. That we've done. We've done it.

We've moved it from a research scale and research reagents to a Phase I scale with Phase I reagents. And we're in the process of tech transferring that into a GMP manufacturing facility. So that's long pole number one. That's the most important thing we have to get done or likely the most -- the long pull to get the IND done. We're in the middle of that. The second is we need to finish all the nonclinical testing, which includes like things like GLP tox studies when you transplant these cells into a mouse, do tumors grow. Like we've done this many, many times. We've followed them for -- we've shown you data out 15 months. it shouldn't happen. We've done this. We've tested it many times. Biology, you always throw the sigh of relief when it's done. But that one should be ready to go this year as well. And then you file your IND and you get the study going, right? You obviously, you have to align on the clinical protocol with the regulators. And again, I think there, we're at least at a pretty detailed level, have alignment with kind of important regulators around the world.

Perfect. Now when the FDA is kind of looking at this, are they -- you have as long-term follow-up as you can in nonhuman primate models and everything else. But do they still kind of worry? And do they try to ask you like, hey, if something goes wrong, is there a kill switch we can design? Is there any way that we can get rid of these cells in case something goes wrong? How should we think about it?

I can't speak for the FDA. I can speak for me, I worry, right? And I think we all worry. These are the patients who, but for us would otherwise likely live for decades, right? So we have an enormous responsibility in doing something that is safe. And to your point, now that we've cloaked these cells from the immune system, we want to make sure that they don't go awry, right? And so fortunately, and I think one of the things we can say is that we've hidden the cells from the immune system, but not from ourselves, right? And so we went about kind of addressing this problem in 3 ways: One, make the risk as low as possible, right? So that's partly about the genomic stability we talked about.

You don't want cancer-causing gene mutations, and it's partly about product purity. You don't want other cells to keep dividing in your products. That's part one. make the risk really low. Part 2, develop a system where you can detect something early if it happens, right? And so again, we've been working on ensuring that we have blood tests and things that can detect these things early. The third is to get rid of them if it happens, right? And so there are 3 ways that we've addressed that. Number one, often these cells have been shot up through the portal vein into the liver and they're just disseminated, hard to see, hard to cut out. We're putting them in muscle for multiple reasons. But one of them is because we can see them under imaging, you can palpate them and you can actually extract it if you need to. Like surgically, that would be relatively straightforward.

The second is we've embedded a kill switch into the product, right? And so on the same gene or plasmid that we insert the CD47 downstream of it, we put a known kill switch on that. We haven't disclosed what it is. A person could take a generally safe medicine that's approved by the FDA, and it will turn on a process that will kill that cell. The third thing we've done, and this we've shown works in nonhuman primates and across multiple human cancer cell lines is we -- this -- overcoming the immune response requires this overexpression of CD47. And people have been making antibodies to block CD47 as cancer therapies unrelated to this for about a decade now. And so we know that if we give those antibodies that it will kill those cells, at least in every system we've tested. We've never done that in humans. We never have to.

But -- so we have, again, 3-pronged things, make it as least likely to happen as possible. So test the heck out of it, figure out how to detect it. And if you do detect it and it happens, get rid of it. And so we've tried to be really thorough about thinking about this. And my real hope is that we never see anything [indiscernible]. But I do think just no different than any other cell or gene therapy product. There's a requirement to follow patients for 15 years, right, by the FDA. I'm sure we'll be following people for at least 15 years with this product.

I could talk to you about this for like the next hour. It's a fascinating -- a, it's a fascinating program. You guys are the pioneers in this space as far as I'm concerned and really hoping -- looking forward to seeing this in the clinic. But in sort of the last maybe 40 seconds that I have left, I'd be remiss not to touch on the in vivo CAR-T program. There's been a ton of pharma interest, a lot of acquisitions that have been taking place on different platforms. You have a very unique platform compared to everybody else. Questions we get is, why is it unique? What's it going to take for you guys to potentially be taken out or the platform to be in-licensed since there's so much excitement.

Well, I'd say on this one, we made 2 fundamental bets when we started here, right? And these are not consensus views. Number one, that cell specificity in delivery matters. And by that, I mean, only go to the cell you want to go to. And I think many people say, no, you just need to get enough into the cell you're trying to get to. It doesn't matter where else you go. We would argue that it's important for safety, for immunogenicity and actually for manufacturability, right, since T cells are probably like 1.10% of the number of cells in your body, right? The second -- actually, less than that.

The second is that we've decided you need -- we really believe you need to have a signal that integrates into the target cells DNA. And the reason for that is we might make, call it, 50 million, 100 million CAR T cells, but you might be trying to take out 200 billion, 500 billion B cells and tumor cells, right? And so that requires a multi-logarithmic expansion of the CAR-T cell. And if you don't integrate if you just stick a little mRNA in, progeny won't take the mRNA with it. So you can't grow them -- as your cells divide, you lose the CAR part of it, right, just because they stop growing. And so many of the acquisitions have basically been the exact opposite of that. Good enough is good enough. And mRNA is a preferred therapy because we think it might be safer, right? And so if it turns out that we're wrong on these, mRNA and LNP will probably beat us, right?

I think what we have the potential versus those to do is have meaningfully better efficacy and much deeper remissions with cancer or in autoimmune diseases, right? And hopefully, these will be curative therapies for people. Versus other VLPs or virus-like particles, I think what you'll see hopefully is better tolerability and safety. We don't have time to get into why, but I think those are mostly delivered. Those are -- that's been seen preclinically. So we're optimistic that can happen. So now what is it? We'll be in human testing. We're optimistic it will work. We don't know it will. If it does, what will it take for a partnership to develop or something like that? I don't know.

I do think in type 1 diabetes, we'd be hard-pressed to partner this except in a really special situation. One of the challenges of this in vivo CAR-T is it's a super competitive environment we're going into. So forget in vivo CAR-Ts, B-cell depletion more broadly, right? So you have small molecules, antibodies, antibody drug conjugates, T cell engagers, CAR-T cells, autologous, allogeneic and in vivo, right? And so having a really great development plan and executing on that very quickly is super important. And that may be something that we can do on our own by being very focused. That may be something where a partner can help us move that more quickly. So we'll be open to a partnership on that at the right time. But I think human data is super important here. And I think it will prove whether we have what we think we have or that it's a bit different as it gets into humans.

Terrific. Well, I know we'll have clinical data, hopefully, at the end of this year. So we're looking forward to it. Steve, thank you very much for joining us here.

Thanks for having us. I appreciate it.

All right. Welcome back to the 46th Annual TD Cowen Healthcare Conference. I'm Marc Frahm from the biotech team here. Next up, we're really pleased to have with us from Sana Biotech, their CEO and President, Steve Harr.

Maybe to start off with, Steve, do you want to kind of give a kind of overview and level set people on Sana, what you've been working on? And what do you view as kind of the key value-creating milestones for investors over the next 12, 24 months or so?

Well, first, thank you for having us. And thank you to everybody who's joined us here in the room as well as online. It's a great pleasure to have a chance to tell you about our progress. So as you probably know, we make a few forward-looking statements, and so do refer to our filings. We spend a lot of time on the risk factors. So the company was founded with really a goal of going after 2 super challenging problems in taking this exciting field of cell and gene therapy and turning into something that was going to be more actionable and something that would have a broader impact.

And the 2 things that we chose to go after, one, figuring out if whether or not and how we could hide cells from immune recognition when transplanted. And since the advent of transplant medicine, one of the real challenges has been that you put someone else's cells into your body or an organ, you will reject it. You'll see this for is rejected. And the way people have overcome that historically has been profound immunosuppression, which has a lot of toxicity and really limits the applicability of the technologies or to use autologous cells. And again, those are very difficult to scale and manufacture. So first thing was can we hide cells from the immune system.

The second is I think you know you can more or less do anything you want to the genome in a petri dish. And the real challenge is delivering the reagents to the cells in the body. And so we really wanted to go after this idea of being able to really be able to deliver any payload to any cell in a repeatable and specific way. I'm pleased to say both in terms of overcoming immune rejection and in vivo delivery, we've made a lot of progress. And I think we'll know, again, within that time frame, you're talking about very clearly whether or not what we're doing has a broad impact or we still have more work to do.

I think the crown jewel of the company and the drug that I think gets people most excited is a potential onetime curative treatment for people with type 1 diabetes. And so type 1 diabetes is a disease where a patient's immune system gets confused and it knocks out all the beta cells in the pancreas. And the beta cell is the only cell in the body that makes insulin. Up until 100 years ago, it was a death sentence. Over the last 100 years, it's been something that people can live with, with insulin and glucose monitoring.

But just to give you a sense of the scale and the challenge. Number one, if you're 22 years old and you're diagnosed with -- you would think this would be -- if you have HIV, breast cancer or type 1 diabetes, type 1 diabetes has the shortest expected lifespan today. It's pretty incredible, right? And the number of people that have type 1 diabetes in the U.S. alone is more than the number of people who have HIV and multiple sclerosis. So it just also gives you a sense of the scale of what this is.

And progress has been made, and I think we're going to -- we've got this. So about 25 years ago, a group in Canada began transplanting pancreatic islets. So I'm going to use 2 different terms. Beta cells make the insulin and think of islets as beta cells plus their support structure, right? So people started transplanting pancreatic islets, and they found it from cadavers that people could remain off insulin for a decade plus.

The challenge is it's not a scalable or replicable supply source and people have to be on lifelong immunosuppression. And that's very toxic, and there just aren't that many people for whom lifelong immunosuppression is better than lifelong insulin. So the impact -- there are thousands of people who have gotten it, but the impact has been pretty limited.

Over the course of the last several years, several different parties have shown that you can take stem cells, pluripotent stem cells and make them into pancreatic islets and transplant those. That's a much more replicable supply source. It's almost certainly more scalable, but they've still had the challenge of immunosuppression. And what we've shown over the course of last year, published in the New England Journal of Medicine is that we can get rid of the immunosuppression.

So now all of the component parts are there for a curative therapy. And it's a gene-modified stem cell-derived pancreatic islet. And we'll transplant that intramuscularly. We will get through the -- hopefully, the regulatory process in the U.S. and other countries this year and start the study. I think it's going to be relatively straightforward to understand if this is working or not.

We kind of think of 3 separate value inflection points or time points that you can understand. One, do these cells in graft function and overcome immune recognition? I think you know that within a matter of a handful of weeks. The second question is, do you get normal blood glucose? Meaning just like what I have with no insulin, no immunosuppression in patients who will not need insulin or monitoring or immunosuppression for years and years.

I think we'll know that within several months after the -- let's call it, 2 to 6 months after we start doing this. And then the third question will be, is this really replicable across many, many patients? And I think again, if it's like others, it seems to work in basically every patient, you'll probably know that within a handful of patients. Let's kind of think of like the next, call it, under 24 months for the company for that program.

The second is we have an in vivo CAR T cell. I'll be very brief on that. I can get into that technology and the competitive landscape. But we expect to start a study this year and begin generating data. And again, within 12 months, have a pretty good idea of if is this really working. This is a CD -- this is a single shot where you inject a virus-like particle that goes directly to T cells and makes an in vivo CAR T cell.

So I think you'll -- what we're taking that forward in first is blood cancers. So things like non-Hodgkin lymphoma. Hopefully, we would know, again, pretty quickly if that's working, if you're getting people safely into a complete response. And if you know the CAR T cell field at all, it's -- I've been involved with it for a long time.

It's had a tremendous impact. Its impact has been limited somewhat by scalability and complexity of manufacturing, as well as some of the toxicities that come with the CAR T cells and the complexities of lymphodepletion. And hopefully, we're able to navigate all of those with a single treatment and make the CAR T cell in the body and people do well.

So a lot of information coming in the not-too-distant future and optimistic based on the work we've done that we have really exciting therapies for both of them.

Okay. Thanks for that overview. Maybe starting still at a bit of a high level with 451, the islet program. Just there's a few other -- you started to touch on it a little bit in your comments, but there's a few other islet programs out there that are either in the clinic or getting close to the clinic as well. Just maybe compare and contrast how Sana's approach is different, particularly about some of the ones that are also kind of hoping to have gotten rid of immune suppression as well.

Yes. So I'll just start by saying that there are approximately 10 million people in the world with type 1 diabetes. If I get super optimistic about our manufacturing, I can see us treating 100,000 people or something like that. I mean that's like super, super optimistic. And if you do that, all you do is take the global growth rate from 5% a year to 4%. So there's plenty of room for competition.

That's going to be my first thing I'd say. And I presume that others will find out different approaches to make this something that really does work. So you mentioned a few of them. So Vertex is a company that is ahead of us, and they have a -- they have a regular stem cell-derived islet where they're going after a very sick group of people who have both high blood sugars persistently as well as multiple severe hypoglycemic or low blood sugar events per year. And that's a very sick population and in need of something much better and they're doing this with immunosuppression.

So it's a smaller market, but it's one that has a very big unmet need and hopefully, they're successful. There are other companies that are doing kind of hypoimmune attacks. And there are 2 parts of the immune system to think about. There's the adaptive immune system of B and T cells, and that reacts to specific signals. And there, everybody is kind of doing the same thing, which is knock out Class I and Class II, right?

And then when you do that, our immune -- the innate immune system says, hold on a minute I don't want these cells here, and it tries to kill them. And in particular, natural killer cells will knock them out. And different people have tried different approaches. We overexpressed a protein called CD47. We've shown it works in all kinds of animal models. We've now shown in humans. It's actually when you take a step back, the most -- the only cell that's transplanted successfully is our red blood cells. And what's unique about red blood cells, they have no MHC Class I, no MHC Class II and they markedly overexpress CD47.

That's not what we do, why we do it, but it does tell you that there's no part of the immune system is set up specifically to take out those cells. So others are looking at different proteins instead of CD47 to try to take out natural killer cells. I think some people have shown interesting things in, in vitro assays. And in some cases, those haven't translated into humans.

Others have just shown what they're doing in vitro, and they may translate into humans, and we'll just have to see what happens. Century is one of the people ask us instead of CD47, they use CD300A. They also have an IgG degraded enzyme on their cell surface. A great group of scientists, the Chief Scientific Officer used to work at Sana. So I have no reason to think that they won't figure something out over time, and we'll be rooting for them.

Okay. Maybe more specifically on your program, just kind of what is the status of Sana's work to kind of establish that master cell bank and show that comparability and reproducibility of lots to get the FDA comfortable.

So making these drugs is very complicated. I'll start there. And the first step and really -- so you're taking one cell. And forever, that single cell will be all of your product is derived from, right? And so that starts with -- you take -- in our case, it was a young female, O negative blood type female, and we reprogrammed her cells back into an induced pluripotent stem cell. You then need to do all kinds of testing to ensure that the genome is really in a good place still, right? We then gene modified that.

We knocked 2 genes out and we knocked 2 genes in, right? We knocked out MHC Class I, MHC Class II, and we knock in overexpression of CD47, and we put in a safety switch just in case something goes wrong, we can kill the cells. And then as we did that for years and the field -- we and others in the field have struggled with gene mutations popping up, right? And in particular, there are a couple of DNA repair enzyme defects that seem to be selected for as you're rapidly growing cells.

And so for us, the key was to see that we could do this. So we had a GMP genomically stable master cell bank that retained pluripotency and effectively made pancreatic islet cells. And that took us a long time, and we now have done that. And we -- with an O negative donor, and we have clear alignment with multiple regulators around the world that again, around the testing and what we have there. So that's done. It's released. It sits in a several different -- we don't keep a single -- we keep them separate, freezers in different geographies just in case something happens.

And from that, so what you do is you thought a single vial of master cell bank and then you'll make hundreds of vials of working cell bank. And again, you'll freeze those, right? Then you'll take one vial of working cell bank and then we'll grow that into a number of different stem cells, iPS cells and then you make islets. So think of it as like for every cell you get in, you get one cell out. It's not quite like that, but it's close enough, right?

So if it doses circa 1 billion cells, you need 1 billion iPS cells more or less at the start and then to get for one patient, right? And that will -- you'll make them into pancreatic islets. And then all that is, is like think of like an embryo, right? You go from stem cell to like remember anybody took biology, mesoderm, ectoderm, endoderm, -- it was about there why I tended to fall sleep. And -- but once you have definitive endoderm, you can start making for gut and then you go to pancreas and then endocrine pancreas. You have to go through that system -- and that's what we do for manufacturing.

So how do you get reproducibility? Number one, you have to have -- again, we start with the same cell product every time, which helps. But you have to have really a very robust manufacturing process with -- it's a lot of testing that goes into this. And as bad as I said, type 1 diabetes is, and it is a very difficult disease to live with, if you have family or friends or anybody that lives with it. That being said, but for us, these patients would likely live for decades. So we have a very high safety bar we have to have to ensure that we're not doing something like causing a tumor in the patient.

Okay. And what needs to happen still to ultimately file and have an accepted IND in the next -- within '26. Is it filling out the IND and you have all the data? Is there still data that needs to be generated? Just ...

I'd like to think we can fill out the IND. This is where I am. Although it always takes longer than you think to kind of put together study reports and things like that. But the -- there are 2 things that have to be completed. One is to complete the nonclinical testing package. And the most -- the longest pole in the tent on that is just finishing GLP toxicology studies.

We've done many animal studies for a long, long time. One would like to think that all we're doing is replicating things we've done in the past under GLP conditions. And hopefully, that will turn out to be something that's done. The second thing is that we have to transfer the manufacturing from we do it first in our labs, and then you have to make it with GMP material, right, and have a real process.

And you have to move it into a GMP manufacturing facility with operators who are manufacturers, not operators who are research scientists. And so we have to finish the tech transfer. So it's finish the GLP tox study, finish tech transfer, make drug, release it and get go.

And what is the -- as you get closer to the IND, what is kind of the disclosure plan? Do you plan on telling investors once those steps have been done to your satisfaction internally, not talking until an IND is cleared or somewhere in between?

I don't know. I don't know. That's a good question. I think some of it is our obligations to tell people what is deemed to be material. And I'm pretty sure that given the challenges that this field has had, the challenge that we've had, that clearing an IND would be very important and people want to know that. Steps along the way, I think I don't know if we'll need to disclose every -- we won't disclose everything we do. But maybe we'll do filing. I have no idea, we would definitely let you know. We'll let you know we probably -- we have data, too, pretty clear.

I think you know pretty quickly, again, within -- if the cells engraft, if you have overcome with this product, immune recognition and immune rejection. They function. They need to function really well. If you guys have read -- for those of you who don't know, we did a human study last year where we gene modified islets that we've taken out of a person who has recently deceased.

So they're cadaveric primary islets. And we dosed a low dose into the muscle of a person with type 1 diabetes. And what we've shown is that those cells both evade immune detection and they continue to function. The last time we showed data, we're out at 12 months plus. It was a low dose. And so it was -- so you're seeing in endogenous insulin production. The way you measure that is when a beta cell makes insulin, it actually makes something called proinsulin, and it's secreted as C-peptide plus insulin in a one-to-one molar basis.

And so you know if you're seeing C-peptide and someone who's never -- hasn't had it in years and years and years that the patient is making insulin for -- on their own for the first time. And so we've just seen -- what we need to see in the stem cell-derived product is we're not going to give a very low dose. We're going to give a much higher dose. And we'd like to see that they're really making lots of insulin. And the goal is to get them off of all insulin shots.

And that's a good segue into the Phase I design. Is that initial -- your expected initial dose? Obviously, as you just said, it's going to be much higher than what you did in that IC with the cadaver cells. But is it high enough that you would expect it to actually achieve those goals of getting people off insulin -- or it's still -- you're still going to need to likely do some dose escalation to get to that bigger goal?

I don't know. I know the doses. We know the doses. We have alignment with regulators on what that will be. We will probably disclose that at a different time just because it's a relatively competitive space. The -- if you I like to think that we are at a dose that will be therapeutically efficacious. If anybody knows Vertex's program, they had -- the first patient was a front page New York Times article.

That first patient had half of their regular dose and was off insulin and fine. I'd like to think we'll be well within the range of what we will get people off of insulin, that first dose. But you learn as you go. Biology has this super stubborn way of humbling us. And so hopefully, we will be in the right range, but we'll learn that as the study goes on.

And so the first thing you'll be tracking, right, is that C-peptide production. What level of C-peptide production do you think you need to get to, to get physicians and the patient comfortable enough that they maybe start backing off, if not completely removing?

They won't be looking at C-peptide. They'll be watching the patients' glucose in real time. You're going to see patients are going to come off of insulin. You have to watch -- so first thing is going to happen is patients get there -- you're going to want the patient to be relatively well controlled because you don't want glucose toxicity on your beta cells. And they're going to put these cells in. And if the fields -- some of them will die and they release insulin.

So you have to manage them through that so they don't get too low blood glucose. And then you'll just see these cells gradually engraft and get better and better, right, over the course of several months. Patients will almost certainly through that entire time, be tapering off of insulin. So they will know. You'll know. People are -- every person in here will have a continuous glucose monitor. And they will be -- all of them will be on automatic insulin pumps and that feedback loop will be just titrating them off of insulin over a couple of months.

But to truly have a patient off of insulin, you probably want -- just to give you a sense, a C-peptide level of around 200 per meal is what we would have, something like that. So those types of things will predict that people will do very well off insulin.

Okay.

By what I mean is exogenous insulin. So insulin shots because they will have -- they'll be making their own insulins. They won't need insulin shots anymore.

You mentioned before the cadaver transplant trial that you supported last year was doing injections intramuscular versus some of the historic cadaver work had often been through portal vein. Are you going to stay with the subcu in the muscle or? So...

Again, if you take a step back just for people here, the insulin, I love like the -- every field has very predictable challenges. And one of the challenges of any cell therapy is can you get the cells to engraft, right? And so one of the great things is when you can go into a field where somebody else is taking the time to figure that out, right?

And there have now been thousands of cadaveric islet transplants and there have been many stem cell dried islet transplants. And the vast majority of those have been with the large bore needle into the portal vein with -- under some kind of radiologic guidance and then they're injecting the portal vein up into the liver.

So we're not doing that for several reasons. One is we're putting in gene-modified stem cell-derived cells that are kind of invisible to the immune system. And that makes some people a little bit uncomfortable if they're kind of all over the place, you can't find them, you can't monitor them. And so we put them in the muscle, which has been used a lot. I'll come back to that. So you can see them. And you could always if something went right, just hopefully, just cut them out, right?

The second is when you do this intraportal, it's very difficult to scale that. It's done under interventional radiology. And about 5% of people end up in the hospital, either from clotting or because they're so likely to clot, they get anticoagulated and they bleed. And we want to get rid of that problem because you're not going to democratize it. You're not going to get -- if you have 10 million people with this disease and 500,000 of them end up in the hospital, that's really bad, right?

And then the third is that when you put -- you're not supposed to have somatic cells in your bloodstream, right? That's -- usually it's because cancer has like sort of metastasize. So our immune system will immediately recognize and kill regular cells in your bloodstream. That's called immediate blood-mediated immune response, IBMIR. And so we wanted to get rid of that because you lose a lot of cells.

So we chose to go into the muscle. It turns out, by the way, that the most common surgical endocrine transplant is every time someone gets their thyroid removed, the surgeon has to dissect out the parathyroid. If they don't, you can die from not being able to metabolize calcium. And they put -- they grind up the parathyroid and they put it into the fore muscle of the person. And it happens about 14,000 times a year in the United States, and it works every time.

So this is really well studied, very well validated. You can transplant endocrine tissue. And we've done it now. All of our animal studies are done as we've done in humans, right? And we will put it into muscle. We think it's safer. We think it's more it's going to be more scalable, and it's certainly going to be easier to monitor from that.

Okay. And what has that experience with that IST in Sweden taught you about kind of how to enroll or conduct a trial in this space besides the obvious of not having to match a cadaver donor to a patient? What other -- are there other kind of exclusion, inclusion criteria that you plan to approach differently? And maybe more broadly than just that IC because there are like the Vertex trial that you mentioned before.

I think our goal is for every person with type 1 diabetes to get access to this drug. everyone. You don't start that way, but you start pretty close to that, right? So we'll start at 18 and older. We're not going to start on kids, but I think we'll get into that pretty rapidly. And you want to avoid some things that can confuse you, like someone who just had a heart attack, you wouldn't want to put them in the study. They have another one, you might think is drug related, it might not be. So we'll have some things like that, but it will be a pretty broad patient population.

I don't think that -- if we can't enroll this study, you should really worry about us because this would be a very broad patient population with many, many patients who are eligible. And the fact even that we have an O negative donor, we don't have to match anything like blood type, it's massive. So it's any transplant, that's an issue, and that's -- we would able to take care of that.

Okay. And so if we roll the clock forward a year, 1.5 years from now, hopefully, you start to have that clinical data rolling out that looks impressive. What do you need to do to then be able to scale to keep moving forward?

Yes. I would say there are really 3 -- there are 4 important questions for the company related to type 1 diabetes. Number one, does it work? Once it works, can you scale it? Once you scaled it, can you figure out the commercial model for a onetime curative treatment, right, all of which is different, right? And then the fourth question underlines all that is just capital to do it all, right? Those are kind of the major questions for the company.

Scaling, manufacturing is challenging in something like this. And I wouldn't want you to think that we've already done it. And I kind of look at scale in 3 buckets for us. One will be make enough drug to run a Phase I study. I think we can do that now, right? And so then we lock that process and the scientists start working on the second stage, which is make enough drug to have a really nice, viable early commercial launch, right?

And then the third will be broad access. We don't need to solve for the third right out of the gate because there will be other things that slow us down, like I'm not going to launch around the world at once. You have to train sites how to do this intramuscular injection, you have to get reimbursement, all those things, right? So -- but I do think we need -- you need to be at that process before you can begin a registration study, right?

So what makes scaling hard? I think it's like the very simplest thing. If you just took it back and say, okay, well, Biologics Manufacturing, it took a while to scale. What did they solve? What they solved was you had a bunch of these cells that were supposed to spit out protein and you want to have a stable metabolic milieu, right? Just so all of the cells are kind of under the -- we're able to just do the same thing.

So we have to do that and the way that we're taking a stem cell and making it into an islet. And so you're changing the signaling environment very rapidly. So you can go from stem cell to endoderm to blah, blah, blah, right? And so you have to figure out how do I maintain a stable metabolic milieu while I'm rapidly changing the signaling environment, right? And the faster you do that, the more sheer stress you put on the cells and the more likely it is you get genomic mutations. The slower you do it, the more likely it is you make a little bit of stomach, right? You get off-target cells, make a little bit of GI tract.

And those things, particularly if they're not terminally differentiated, may keep dividing in the patient, right? And so you don't want those things. So that's -- at the heart of it, that's the challenge, right? And so we'll figure it out. It will probably be less than everybody hopes for out of the gate. And -- but I think we'll get there to where it's a very commercially important drug, and we'll just keep making progress on it.

Okay. We're starting to get a long time, but maybe move to 293, the in vivo CAR that you touched on a minute ago at the beginning. Maybe how does that fusogen platform differ from some of the other CAR in vivo CAR programs that are out there because we have seen quite a bit of M&A volume around these technologies.

I'm going to start just scientifically, we made 2 big bets. I hope they're both right. One is that cell specificity really matters. And I think that's not clear that most people don't believe that. They actually think just getting enough into your target cell is really the goal. We're trying to avoid all the off targets because they can get into why.

The second is within the CAR T, you could do this with an mRNA, which some people would view as safer because it doesn't integrate into DNA of the cell you're going to after the T cell in this case. What we want to see is we're going to take -- make 100 million, maybe 10 million, who knows, CAR T cells, and you want to take out 100 billion B cells and tumor cells, right? So you need logarithmic growth of your CAR-T.

So we made the bet that one specificity matters; and two, you have to integrate into the target T cell. So that's like the heart of what we've done that's different. So there are 2 different platforms that people are using at the highest level. There's kind of the mRNA LNPs. And you've seen a lot of strategic activity in those, right? And that is a bet that just good enough is good enough and that you don't need to integrate, right? They're easier -- if it turns out that they're good enough, they're a lot easier to make than what we're doing.

And I think that pharma is -- that's where you've seen more strategic activity because it feels more like a drug to people, right? We think this virus-like particle or VLP is the way to go. I get -- ours is more specific than others in its delivery, and it has different ways of giving the cell, which I think will end up being safer. They've shown to be -- a couple of companies have shown quite impressive early efficacy data, right, where they're getting basically all patients have undetectable myeloma.

I'm hoping we can do something similar on efficacy where it really works well and then it's a bit safer. And we'll start to learn that this year. So I mean, I can get into why they're different. We have a different way of targeting cells than others, which is -- which leads to the -- will hopefully be better safety profile.

Yes. So how would those safety differences manifest? Because is it on the kind of traditional metrics we think about with CAR T cells of CRS and things like that? Or it's something completely different?

Yes. So 3 things to worry about safety-wise in these VLPs. First off, what you've seen is unlike with regular CAR Ts, there's like acutely a very substantial acute reaction. So it's had -- it's had Grade 3, 4 liver toxicity, grade 3, 4 cardiovascular effects within the first day or 2. And it's basically because most of them are utilizing CD3 to enter the cell. And CD3 is what we use to activate T cells. So these T cells are overactivated, right? So that we don't do.

Second is you should worry about the regular CRS and ICANS, right? And you could see it even being worse than with an autologous CAR T cell because an autologous CAR T cell, you're giving someone chemotherapy and you're knocking out a lot of the target cells, right? And we're not going to do that. We're just going to give them a single injection. In animals, that doesn't prove out to be true so far. I think it's because it takes a while to make these in vivo CAR T cells grow. I'm hopeful that we will maintain its safety.

The third theoretical risk that we have is we are going to integrate the DNA into the target cell, right? And I don't find that to be -- I mean, that's something we have to study and be thoughtful around. But 40 million, 50 million people in the United States -- I'm sorry, in the world have had HIV, and you're using HIV integrase to get in. And none of them have ever gotten a T cell like a tumor or something. So it does seem to predict to be relatively safe. I'm not saying it will never happen. We need to monitor it, but I think this will be very safe.

So those are the 3 things. And acute reaction is something where I think you'll see a big difference and hopefully, no liver toxicity and hopefully no cardiovascular collapse. And again, you can see some of those things in the off-target binding and other things in preclinical models. And we look for -- to be very well tolerated in nonhuman primates. And so hopefully, we'll translate to people.

And I think you promised data late this year earlier.

It will generate data.

Generate -- so okay, what is the -- like when is the disclosure? Is it that you see some CAR T cells being made, some B cells being killed? Or is it like an induction of a CR?

I think it's when we think we can tell you something that's meaningful. And I'm pretty sure within the type 1 diabetes space within a very small error bar, I could tell you what the right dose is, right? I think with these, we could be a log off on dose very easily, right? And so exactly if we're going to nail the first dose with the right dose level, maybe pretty quickly, right?

Might we be off by a log or something like that? It's possible and -- we'll either be too high and then we'd have to disclose it because a lot of toxicity issues or we'll be too low and we need to keep going up. I'm pretty sure we're going to work hard not to be too high. You never know, but you'd rather not do something detrimental to people.

Okay. Unfortunately, that -- we're going to have to cut it off there. We're over time. But thanks a lot, Steve, and everybody in the room as well as online.

Thank you, Marc. And yes, we'll be around everybody has questions.

Welcome, everyone, to the 44th Annual JPMorgan Healthcare Conference. My name is Tess Romero, and I'm one of the senior biotech analysts here at JPMorgan. Our next presenting company is Sana. And presenting on behalf of the company, we have President and CEO, Steve Harr.

Steve, over to you.

Thank you, Tessa, and thank you, JPMorgan, for having us here, and I appreciate everybody joining us here in the room and online. I think you probably know, we'll make some forward-looking statements. Take a look at our 10-Q for our risk factors.

I really appreciate the chance to tell you a little bit about what we've been up to. And we started this company not that long ago with 2 main goals. And our real drivers were to be able to overcome allogeneic rejection in cell therapy, meaning if we really wanted to make this cell therapy a universal and widely available therapy, we had to figure out how to stop rejection of foreign cells.

So if you put someone else's cells into your body, your body will see them as foreign and reject them. And so our first goal was to do that. The second goal was to figure out how do we deliver genetic payloads to cells. It's really easy to do everything in a petri dish now across the genome. And the hard part is getting the genetic material in the cell.

And I'm thrilled to tell you we've made some real progress across both of those. And we brought focus. And so the focus of what we're trying to do with immune rejection is now around type 1 diabetes. And we'll get into this more, but this is a really large disease. It's a disease up until a little over 100 years ago, it was an immediate death sentence within a few months. With the advent of insulin, patients live, but it's still an area with a lot of unsatiated demand, and we need better alternatives.

We made a lot of progress last year. We showed that we could transplant cells and evade the immune system. We made a master cell bank, which we'll talk about. We've made a lot of progress on manufacturing. And we had a chance to talk to regulators from many parts of the world and really align on what we are going to do going forward.

We hope to file our IND this year and begin the Phase I study. And one of the things I want to outline for you is this is a therapy where the proof of concept and the -- is very quick. And we should know if what we saw -- if we're able to evade the immune system, if we're transplanting really functional cells. And if we're able to meet our goal, and our goal is very clear. It's a functional cure of type 1 diabetes.

Moving over to the in vivo delivery side, and we've made a lot of progress there as well. And we're focusing on CAR T cells, and that's what we're going to talk about today. We actually could do other things. Even a few months ago, we published in Nature Biotech delivery to HSCs or hematopoietic stem cells, gene editing, base editing agents.

But I think most of you know CAR T cells have been really transformative for many people with blood cancers. And it looks like they're going to have a big impact for people with a number of autoimmune diseases. Unfortunately, they're not for everybody right now. And only about 20% of people even in the most saturated markets who should get these drugs are getting them.

And in vivo CAR T cells, where there's been some progress, really give us a chance to get rid of the conditioning chemotherapy that patients have to ease delivery, to have them available off the shelf and to hopefully democratize access.

And I think what we can show you is that we've made really real progress here. And if you were a monkey, which I know none of us are, I would be very confident in telling you I think we have a best-in-class therapy. But what we -- we had the opportunity to do this year is to actually prove that in humans. And we do believe we'll be able to deliver you some data from this platform in 2026.

So taking a step back, type 1 diabetes, I was -- like many of you, when I'm trying to figure out how a new problem or a new way to articulate something, I decided to have a little dialogue with my favorite chat box. And I asked some questions and how long does a patient who's diagnosed with type 1 diabetes, what's the impact on their expected life if they receive best therapy? And they said about a decade. So that's right. So I knew it was on to something.

And I asked to compare it to what it was like if you were a 20-something year old and you were diagnosed with type 1 diabetes. It was shocking. You are better off being diagnosed with breast cancer or HIV than you are with type 1 diabetes on the simple metric of how long will you live. We have a lot of work we need to do to make this a better outcome for patients.

The second thing I asked you was if we were able to cure it, like what's the equivalent number of people? And if you could cure type 1 diabetes, it would be equivalent in the United States of curing both HIV and multiple sclerosis. So this is a very large unmet need. This is a place where patients still are not receiving adequate therapy.

And even in that time, their burden is so much more than any other disease, every meal, every time you exercise, every time you get a little bit sick, you're having to modulate your insulin and your food intake and they have a daily burden around that. And in that time, they have risk of blindness, amputation, heart attacks, stroke, and we can do better -- and kidney failure. We can do better.

So we know what the disease is. The disease is actually relatively straightforward. The patient's immune system attacks and kills the pancreatic beta cell. The pancreatic beta cell is the only cell in the body that makes insulin.

I'm going to talk about both beta cells and islets and just think of islets as beta cells and their support infrastructure, right? So our goal is quite simple. We want to make a onetime treatment that leads to normal blood glucoses, where patients no longer take insulin and they receive no immunosuppression. And all of the component parts are here now.

So about 25 years ago, James Shapiro in Canada began transplanting islets that were isolated from a recently deceased person, so cadaveric islets, and he would transplant them into people with type 1 diabetes. And these people, many of them have been able to stay off insulin for 10-plus years. The challenge is it's not a very good supply score. It doesn't scale, and there's a lot of variability in the types of islets that come from someone who recently died.

And the second is patients have to remain on long-term immunosuppression, which leads to risk of cancer, infections, kidney failure, liver failure and other things. And there just aren't that many people for whom lifelong immunosuppression is better than lifelong insulin. But thousands of people have gotten this therapy.

Over the last several years, several groups have shown that you can take pluripotent stem cells and make them into islets and transplant them. And you actually seem to have solved some of the challenges of product variability, very, very predictable and robust efficacy in doing that. Unfortunately, though, the patients still need to stay on lifelong immunosuppression.

And what we've shown, and we'll show you a bit more data here in a couple of minutes, is that we can eliminate the immunosuppression. And therefore, now all of the component parts are together to make a cure. And they're big enough -- that each of these individually was a New England Journal of Medicine paper, the ultimate arbitrary of clinical data, ours came out over the summer, take a look at it.

But these are -- this looks like now we can do this. So how did we do it? Allogeneic rejection is basically your immune system recognizing these cells as foreign and kicking them out. And so there are 2 parts of your immune system that we have to grapple with.

The first is the adaptive immune system of B and T cells. And the way we deal with that is we knock out MHC Class I and Class II. That's relatively straightforward. Others have tried it. The challenge is once you do that, you have something called the innate immune system. And the innate immune system will immediately and particularly NK cells kill those cells. And so the company's insight, our scientists insight was that overexpressing CD47 in the context of knocking out Class I and Class II overcomes both the adaptive and innate immunity.

So we've published a lot on this. We've shown this not just in our labs. We've done this in mice, in humanized mice, in nonhuman primates, and we've done this in oncology. And now we've done this in a patient in type 1 diabetes, and they've been published across a number of high-profile journals. So take a look if you really want to dig into our science.

And I'll spend a little bit around this clinical study now because it is really important in showing how we can overcome immune rejection, both allogeneic, meaning someone else's cells and the autoimmune, meaning the type 1 diabetics, preexisting immune response to pancreatic beta cells.

And what we did was in collaboration with a group in Sweden, there was a donor pancreas from a person who was recently deceased. It was a 62-year-old person, it actually had relatively high hemoglobin A1c of 6.2 and took those cells and gene modified them, knocked out Class I and Class II, and we knocked in CD47. And then we took those cells and put them into the arm of a person with type 1 diabetes.

The patient received absolutely no immunosuppression. The patient had diabetes for over 40 years and made 0 insulin, had a documented negative C-peptide for many, many years. And we look to see what we would find. So it was a low dose first-in-human study. So the first thing we were looking for was safety. The second thing we're looking for is immune evasion.

And the best way to figure out those cells are really still around and functioning is to look for something called C-peptide. So when a beta cell makes insulin, it actually makes pro-insulin. And as it's secreted out of the body, that is cleaved into insulin and C-peptide. So measuring C-peptide is a 1:1 molar ratio of how much insulin you have in your body. And so that's really the goal. The goal is safety and see if these cells would survive and function.

So I'm happy to say the patient is now out over a year. He's doing well. He continues -- we haven't had any drug-related or potentially drug-related adverse events. The cells are surviving. The cells continue to function. We can see them on PET, MRI, and we continue to have immune evasion.

So I'll show you the data here. So you have on the left is C-peptide. And you see at baseline, it's undetectable. And you can see on the right hand actually, even with a meal, the patient secretes no C-peptide at all. And then you see on the left-hand side that you continue to be able to detect C-peptide now out at a year, at 9 months in a year and that you continue to see some level of increase with a meal.

Now it does look like the C-peptide levels are coming down a little bit over time, not unexpected as we talked about. The way we would -- we don't expect these cells to live forever. If their donors old, and this is someone who -- this is a low dose and these cells are stressed. They're working 100% of every day.

And so what we were looking for is if they went down very quickly, we should think it might be an immune attack. If they go down gradually, it's probably just the cells petering out as they get older. And so we have no evidence here of immune response and a continued function of these cells. So we're thrilled of what we're doing. And you can see these cells on PET, MRI. This is a PET scan where the reagent that's given recognizes beta cells. This is a PET of the [ 4 arm ]. We don't have beta cells in our arm. They're in our pancreas. And so very clear pictorial evidence that these cells are continuing to survive and the function as normal beta cells in the arm of the patient.

And then we did an immune analysis. So one of the lemons of what we did is that when you make these cadaveric islets, some cells are fully edited and some cells are only partially edited and some cells actually got no gene editing at all. And they were all transplanted in the patient. And making lemonade out of that lemon, we've been able to take the drug product and test it over time against the patient's blood and to see what really happens, we have any evidence of an immune response.

And we've done B cells, T cells, NK cells. We can get into the details, but this is just looking at everything in the patient. And what you see on the left is if you transplant a cell, it takes -- actually, there's no reaction at very baseline because -- but -- and it takes time, really just like a week, and they develop an immune response that rapidly kills unedited cells, normal unedited cells from the donor. And that remains true even after 12 months. If you have partially edited cells, we've knocked out Class I and Class II.

Now you have this -- we talked about this NK cell thing that's set up to kill those things. And there, you can see that they would kill that today, kill at baseline, it kills it at 12 months. And in the fully edited cells, what you see here is that they can completely evade immune detection and these cells survive and thrive in -- at least in this in vitro assay.

So we're quite excited to say that we've now out over a year. The patient continues to do well. He continues to make his own insulin for the first time since the 1980s. And we have evidence of survival both by C-peptide and by MRI, PET scan and no evidence at all of any immune response to these cells. It's not really our goal, though. Our goal is to [ make ] a scalable therapy.

I'm not touching anything, by the way. If that's going to happen. I apologize for the...

Is it possible to sit down? And continue on your presentation with that mic right there. And just go ahead and go with the...

You want me to sit down?

Yes.

I don't like sitting down. I'll step back. I have too much energy to sit down if you guys know me. So I'll try to step -- stay back from this and not touch anything on the stand. The -- our goal though is to take a single stem cell. And what we had -- we took is an o-negative stem cell, meaning it's a universal donor, gene modify it once and make a master cell bank. And that single stem cell then becomes the product that we make forever into islets for patients.

And so you take a stem cell, you grow them out, you then differentiate them into islets, you store them and you deliver them hopefully as a single therapy into the muscle of a patient. And again, the goal is quite simple. treatment, no insulin, no immunotherapy, no more fingersticks or monitoring and no immunosuppression, right? And our goal is to file the IND, I'll show you and begin our Phase I study this year.

The -- we made a lot of progress last year. I just told you a little -- if you take a step back, a few years ago, we outlined 4 scientific challenges to really making this work. The first one is to overcome allogeneic and autoimmune rejection. I think we've done that, and you can see -- the human data show you that.

The second is to make a gene-modified master cell bank that doesn't -- that can continue to make pancreatic beta cells, but that doesn't create genomic mutations. And it's been a huge problem in the field. If you look just through the literature, you see BCOR, p53, these cancer-causing mutations showing up all of the time. And we've done that.

And we've done it not only in a research setting, we've now done it and released it with our GMP, master cell bank. We've aligned with regulators from around the world around how we're going to test this and take this forward. It's a gigantic accomplishment for the company.

We've begun the tech transfer our Phase I process into our CDMO. We're working really hard on -- sorry, the other 2 things we're making the product at a -- out of potency, purity and yield for Phase I. We can do that. And we've started to move that into a CDMO. The third is -- fourth is to make this at a purity, potency and yield to treating a disease of 10 million people. We have a lot of work to make that happen still, and we'll talk a little bit more about that. That's the scale-up work. But we started to do that and make some progress.

We've had this great opportunity to have dialogues with regulators from many, many parts of the world. And we have alignment around the master cell bank, the preclinical testing plan, a lot of the manufacturing, and we're beginning to get the final alignment around what the clinical program looks like as well. We're in the middle of our -- the nonclinical testing that needs to be done to move this into humans. That will be done hopefully later this year. And we've actually started to really get the sites going to start our Phase I study. And so this is -- feels like it's been a ways off, but it's starting to turn really real.

So what do we have to do next? We have to finish our nonclinical tox studies. We have to finish the tech transfer and make the material for Phase I. I really want to make progress in scaling for commercialization this year. We have to file the IND in the United States and the equivalent. We'll do this in more than one geography from the outset and start our Phase I study. And that's really what we're looking to do in the near term.

And one last thing. So Phase I is going to actually be really, I think, straightforward to understand how well this works. Remember, we knew within a few weeks after transplanting the cadaveric islets if this had really -- this had evaded the immune system and these cells are functioning. Similarly, we hope to see very early immune evasion and endogenous immune insulin production through C-peptide. That should be pretty straightforward.

We should be able to get insulin independence within a matter of months. And so it's not that far away before we're going to know the answer to whether or not what we have is actually going to be work, potentially be scalable and to really be transformative for patients with type 1 diabetes.

So I want to move and talk a little bit about this in vivo capability. It's been a while since we really delved into it together. So taking a step back, we're always looking to leverage insights from Nature to figure out how we do this. And the way we've gone about making cell-specific delivery is to modify something called a paramyxovirus, one of the paramyxoviruses so that it's specific for the cells we're targeting.

And think of a paramyxovirus, it's got 2 components, a logicated system to get into cells. There's a G or guide, and there's an F, which is fusion. So we mutate the G, so it recognizes nothing. We then put in a receptor or something that will recognize a cell surface protein. And when it binds, that G undergoes a confirmational change that tickles the F. And then the F will deliver payload on the right-hand side directly into the cytoplasm of the target cell. We don't go into the endosome, and that's really different than other mechanisms. And it leads to cell-specific delivery directly into the endosome for a patient.

And so the way to turn this into a CAR T cell, I think many people understand this, that little fusosome, think of that as our medicine, and it will specifically target just a T cell. And it will deliver the genetic payload, which is in the middle panel is that little blue minus sign. And that will encode for a gene -- it's a gene that encodes for a protein that makes the chimeric antigen receptor, the yellow kind of wise on the cell surface.

And that CAR, when it sees a target cell, whether that's a B cell or a tumor or a plasma cell, whatever we're trying to go after, we will do 2 things. It will kill its target and it will divide. And so then you get amplification and more and more drug available to take out all of the tumor. And then when you've cleaned out the body, they just kind of recede and go away.

And so hopefully, this allows us to eliminate the conditioning chemotherapy. It simplifies manufacturing. And because we're not manipulating the cells out ex vivo like in a CAR T cell, we should make better T cells as well.

So we made 2 really critical assumptions. It's a competitive field that we made 2 critical assumptions when we started this program. One, cell-specific delivery matters. You don't want to go into other cells. We think that lowers off-target toxicity risk. It definitely lowers immunogenicity risk, we can go through some time, and it improves manufacturability. If you're delivering a lot of your product to the liver, you have to make a lot just to get it to the T cell.

The second is we think that integration of the DNA into the T cell is super important. And the reason being that you're super optimistic and you think about making 100 million CAR T cells, you have -- we each have hundreds of billions of B cells, let alone tumor cells in our body. And so to really take a drug where you're only delivering a small number of the actual active pharmaceutical ingredient and eliminate many, many, many target cells, you're going to have to get some level of expansion. If it turns out those 2 things are wrong, others will have simpler solutions like mRNA and LNP. But this is the assumption that we made to move forward.

So a few years ago, we were moving forward a drug called SG299. We ran a GLP tox study. It was 8 monkeys in the treatment arm, different doses, and we had a control arm. And we -- our fusogen, the way we target the cell has cross-reactivity between humans and this nonhuman primate, but our CAR didn't. So it makes it a really great model to see pharmacokinetics or what is -- where does your drug go? It doesn't make a great model for efficacy and how does it really work.

And what you see here is we've got very potent dose-dependent transduction of the target cell in the animals, let's call it, 15%, 20% -- we then looked -- and this is something that's very unique to our platform. It was a very specific delivery. And you see no off-target cells, I should say, delivery to the liver. You see nothing in the testes. We can show other cells like HSCs and things. This is a cell-specific delivery, which is very, very important for safety.

But we then worried that we didn't have a really good way to test efficacy. And as we did test efficacy by changing the CAR, it works, but it probably didn't work well enough. And so we really went back and spent the last couple of years figuring out why. And a lot of this has to do with restriction. Our T cells don't like to have these viruses transduce or infect them.

And what we learned is that you can overcome that restriction in several different ways. One of them is a novel fusogen that we use. The second is that we'll show you, we did some other work to it. And finally, we wanted to minimize -- so it turns out when you make these virus-like particles, not only do you have the fusogen on the cell surface, the CARs on the cell surface, right? And that can lead to immunogenicity risk and delivery of your payload to the wrong cells, maybe the cancer cells. You don't want to do that.

So we got rid of that, and that's our new drug. That's where we are today, and I'll show you a little bit of that. So what that looks like is, number one, we changed the fusogen. Number two, we add a little bit of CD3 at very low doses. At higher doses, if it's kind of -- you'll overstimulate the T cell. And you see that sometimes with very rapid fever and cytokine storms and things like that within a few hours of transduction with other therapies.

And the third thing we did is we got rid of the CAR on the cell surface. So this is just a little bit about the novel fusogen. On the right-hand side is a way that I think many people do this. They use a fusogen called DSPG, which is what's our normal lentivirus. They blind it and they put a target agent on it. And you can see on the top row, it gets into T cells, but you see in all the other rows, it gets in a lot of other cells as well.

The second is the middle column is our old drug, SG299. And you can see it gets into T cells like we hope. It's a lot better specificity, but it still gets into -- the PHH stands for primary human hepatocytes. So it still can get a little bit in the liver. And what you see on the left-hand side is an exquisitely specific delivery and doesn't get into other cell types. So then we went to do this in monkeys.

And again, here, we used a surrogate because the CAR doesn't cross-react with the monkey B cell. So what we were looking for is this -- we use a CD20 CAR instead, is can we deliver this safely, right? Look for -- do you have fevers, other things? Do you have -- can you get CAR T cells to show up in circulation? Can you get rid of B cells and then we did biopsies and necroscopy just to see what else we can see. And the results were exactly what we would hope they would be. This is just a high dose, but what we do get is a dose-dependent. You see these CAR T cells expand just like they do if you put them in and make them in a manufacturing facility.

The second thing is you look in the blood and we get rid of all of the circulating B cells. That's the target of the CAR that we have. We then looked at the lymph nodes, and you can see that they're clean and that's a real measure of deep B cell depletion. And finally, on the right, you have this B cell reset.

And one of the things that happened over the last couple of years is as CAR T cells have moved in the autoimmune setting, Georg Schett and others have displayed -- have shown us that if you can get this B cell reset, that predicts maybe a long-term care for a person with these diseases. So this is a great result for us. We did the necroscopy as well, and we didn't see any cells and other tissues. And so we're ready to move forward.

We think there's a potential here. We have a best-in-class in vivo CAR-T platform. It works in CD19, but it also works in a whole bunch of other areas. It's pretty modular. It takes a few months' work to add BCMA, CD22 and others. We hope to have our first trial going this year. We'll probably start in cancer and move very rapidly into autoimmune diseases. And we think we'll be in a position to report out clinical data sometime this year.

So we think the next 12 to 18 months can be really exciting and important for the company. There's a lot of validation that a functional cure of type 1 diabetes is possible. It's a real unmet need. What SC451 does, that's the name of our drug product. It assembles all of the component parts into a single therapy that we hope can -- it is scalable, and we're going to file our IND and start our Phase I study, and we hope to have very rapid proof of concept. We think it can happen pretty quickly.

And with the fusogen, as we said, we're going to be moving forward with what we think a drug that has a best-in-class profile. We have to show that in people. And our goal is to begin to show you human data as the year progresses, and really to help you understand how this translates into people.

So with that, I think we're going to have a little conversation, aren't we, Tessa?

Yes. Thank you so much, Steve. Always a loaded and robust presentation from you every year. So it seems like, Steve, you feel comfortable enough with the pushes and pulls that you need to complete before you can be in the clinic with SC451 to provide that fine-tuned and definitive guidance today of 2026. Can you just clarify how much work do you need to be manufacturing ready for Phase I versus commercial? Can you help us just understand the distinctions between those 2?

There's a lot to be done. So Phase I think the question is -- can you hear me?

Yes.

Okay. I think just -- I'm going to interpret the question is how much work -- how much difference is there between Phase I process and kind of a commercial. There's a lot of difference, right? And so a Phase I is pretty simple. It's kind of like let's just say it's going to be 10, 15 patients, right? And this is a disease of 10 million people. And so that's a completely different scale. And the challenge in moving to that scale is several fold.

But the biggest, as you think about just regular biologic manufacturing, the way I kind of simplify this, is that what you're trying to do is you have a cell line and you want to just pump out a protein, right? And so to do that, you want a very consistent and constant environment to maintain that producer cell health.

Here, what we have to do is you have to take these stem cells and you have to drive them or differentiate them from -- you start a stem cell, you go to endoderm, you then go down the path of like making it foregut and all the way to pancreas, endocrine pancreas and then is it. And the challenge in that is that you have to continually change the environment that the cell lives in. And so if you change it super quickly, you end up with a lot of sheer stress, and that leads to genomic mutations. And we do not want to transplant cells with cancer mutations in them.

If you do it slowly, the cells can kind of wander off and you end up with a little bit of GI tract, maybe a little bit of stomach. And those cells aren't terminally differentiating. They might just keep dividing post transplant. That's not truly cancer. But if we want this to last in a patient for decades, having a stomach growing in your muscle for 20, 30 years is more than a nuisance, right? And so -- we really have to work hard to maintain that purity and that genomic stability as we go across scale. And I think it's very doable. I don't think it's hard to make a lot of beta cells. I think we have to make sure we don't make other cells we don't want.

Yes. Okay. And just to be clear, is your manufacturing process, are you ready for Phase I today?

Yes, we're ready to go. We're in the process of tech transfer in the Phase I.

Okay. And what is the work...

Well, again, we -- that doesn't mean tech transfer sometimes has complications, right? And so it doesn't mean everything is guaranteed. Things can still happen and slow us down, and that's kind of it's -- inevitably is if we're trying to do something this complicated and this novel, I'm pretty sure we should all align on this.

There will be a few speed bumps along the way. And we don't know what they are. We don't know when they are. And we just need to make sure we have the organizational, cultural, financial resiliency that those are just little speed bumps, and they're not determinative in the company's outcome.

Okay. Great. And can you just clarify what the nonclinical aspects you're still working on for 451?

Well, you always have 2 things that you have to -- multiple things you have to do. One is you have an efficacy model, you get the FDA, two is you have your toxicology, your GLP tox, which is kind of think of it as an animal or other safety study. And those things have to wrap up before we're ready to file.

Okay. And of course, presuming once you file the IND, you'll definitely have conversations with the FDA. But can you just give us a little bit of a snapshot of what the kind of engagement has been with the FDA on this program?

What the -- what has been?

With the FDA.

What has been?

Around the program. What the dialogue has been like?

Just what the dialogue has been about? Yes. I think a few things are true, and this is true of the FDA and other regulators. I think they have a very significant understanding of the unmet need in type 1 diabetes. And they're very, very engaged. I think the second is particularly with the human data that we have in the cadaveric islet setting, they understand the transformative potential of what we're trying to do.

The third thing is they understand the complexity of what we're doing. This is a combination of novel immunology gene editing and stem cell biology. And so I don't want you to walk away thinking that this is super simple from a regulatory perspective. They're very engaged. I think they have -- they're not easy, but they're very helpful in helping us navigate through all of this and very clear in their expectations.

The other thing I would say just compared to some other experiences I've had is because of the level of unmet need and maybe the proof of concept in what we've done, we have very easy -- not easy, is that right -- very ready access to people. And that's not always true as you're moving through the regulatory process. I think many people recognize you may have one pre-IND meeting or something like that or you may have an interactive a pre-IND meeting. We've had the good fortune to have a number of dialogues to help us navigate the complexity of this novel area.

Okay. And can you talk a little bit about from a Phase I trial standpoint, like you had a nice slide somewhere in your deck around your kind of potential clinical trial design. From an enrollment standpoint, like what are the types of patients that you would enroll?

We'll enroll -- it's a very broad population. Just to start with, we're not going to enroll a little kids on the outset, and we're probably not going to -- so it will be adults with type 1 diabetes. We probably don't want someone who had a heart attack yesterday just because that could complicate your safety analysis. But it's a pretty broad population without many exclusion criteria.

Our hope is that we will have nice Phase I data, and then we can move into younger patients pretty quickly, whether that's 16 and then down to 12 and then lower. And we'll then start to target and add some of the higher-risk populations that have had recent cardiovascular events or something like that.

But the goal here is all comers, more or less. This is -- if you -- for example, and this is a dialogue we've had with the sites. If you said, well, there's a hemoglobin A1c, they have to be poorly controlled. They have to be, let's just say, they're over 7. Patients will just let it float up over 7 and enroll in the study. And that's not doing them a service or anybody else. So I think it will be a pretty broad population of patients.

Okay. And will it be a U.S. study only?

No, we will expand beyond the United States. The U.S. and other geographies. It may be that someone says we can't do it in their geography and it might even include the U.S., but our -- every intention is that it's U.S. and other geographies.

Okay. And to me, it seems like the Phase I trial that you laid out, like it seems pretty straightforward. There's no real nuances that we should be thinking about, correct?

Well, I mean, there's complexity, right, delivering the drug, ensuring that at different sites, we've really helped them understand how we can predictably and safely put -- administer the drug into the intravascular site. But from a trial design perspective, I don't mean to insult our clinical -- our Chief Medical Officer and clinical trial team, but this should be relatively straightforward. Yes. The complexities on other parts of the development.

Okay. And can you give us a little bit of a framework for like what kind of investment is ultimately required to get this to approvability for Sana?

Through what?

From now to being an approvable product. Like what is the level of investment here really look like and as people trying to think about it, right, and the path forward for the asset?

So the clinical development pathway, as you said, is pretty straightforward. I don't expect that to be really complicated either in Phase I or kind of the registration study. The investment in manufacturing is -- could be very -- could be more meaningful. And I kind of think of scale manufacturing on 2 different vectors.

One is the number of doses per manufacturing run, and that's a science problem, right? The second is number of manufacturing runs. That's generally a capital problem, right? We're still in the science problem, right? I think we have to really increase the number of doses per manufacturing run. That's people. It's not tons of people. It's tons of -- it's a good group of really smart people who understand what they're doing with different experiences. And then we'll be in the capital problem.

So the amount of money we put in somewhat has to do with how much -- how big you want your launch to be, right? With 10 million people, if you just go to the United States, I'll just give you -- this kind of always gets me. If we treat 100,000 people a year, and there were no new patients diagnosed with type 1 diabetes. It would take us 100 years to treat everybody with this disease. A cell therapy with 100,000 patients per year is an extraordinary number.

So we will have a lot of scale work to do. And my guess is it will be an ongoing investment, a little bit like you see in some other areas where there will be some of it that's pre-approval. There will be a lot of it that's post approval, though as well.

Yes. So it's kind of like a little bit -- little by little as you go kind of...

Hopefully more than little by little, but, yes.

But like steady through the process. Steady for the process.

Yes, steady. Yes. Agreed. Right.

Okay. What has you excited? Well, you talked a little bit about your nonclinical work with SG293. What do you ultimately want to come away with having learned about the product as we exit the year as you talked a little bit about first-in-human data.

I want to see that we can deliver this safely. And there are 2 elements of delivering this in vivo CAR T cell safely. There is an initial kind of per infusion reaction that's been seen in the field. And that can be pretty severe insulin. I want to see what we've seen in nonhuman primates, and that is that we don't have that, right? The second is we want to see that we get this -- make a medicine that makes a best-in-class CAR T cell, right? And so if this is in lymphoma, you'd like to start seeing complete responses, right.

And moving in the autoimmune setting, you'd like to see patients off of therapy in a complete remission, right? So that's what we're looking for. If it's an ALL, those are all things we'll go through. You want to see patients who are in a complete response. You want to see like that -- again, safety, that normal CAR T function that you see in a really well-made autologous CAR T cell. And then you want to see that the target, whether that's a cancer cell or a B cell is gone and the patient gets to go back to the life they had before they are diagnosed with this disease.

Okay. And is it your plan to move this forward, whether it's in B cell cancers or B cell-mediated autoimmune diseases yourself? Or is this something you'd rather have a partner for?

It's a great question. Like one of the things that's so different about type 1 diabetes, I think it's not that it's not a competitive field, but it's so big and there aren't that many people who are trying to do this. If you go into kind of strategies to deplete B cells, plasma cells and track these cancers, you're pretty hard-pressed to find a large company in the world that doesn't have some strategy to go after them. And therefore, speed and breadth of the clinical program is really important.

So this is an asset that should be partnered over time because we're not going to be able to move likely as a single company where we have relatively -- we're relatively capital starved with a lot of our money going and a lot of our focus going to type 1 diabetes. We're not going to be able to move as fast alone as we could with somebody else. So you're right. And we can also move that into other targets more rapidly, CD19, BCMA, oncology, autoimmune diseases. And so it will benefit from a partner over time.

When? I think often partnerships are best once you have a little bit of human data. And that -- so we'd like to kind of get that taken care of here in the not-too-distant future.

Okay. Great. With less than a minute to go on the clock here, I think that might be a good place to leave it. Thank you so much, Steve, for being here.

Thank you, Tessa, and thank you, everybody, in the room. Appreciate it.

Bye. Thank you.

Thank you all for joining. Pleasure to have Steve join us. I still -- I always mention this. Steve did the very first fireside I ever did at any conference, which was back as CFO of Juno, and we've been talking about cell therapy since. And I feel like some of the themes we've been discussing even at Sana are now very prominent in vivo CAR-T in particular, across a lot of companies and a lot of players emerging.

So Steve, why don't you kick it off? And I think maybe just remind us about the platform, but also remind us about how Sana is playing in vivo CAR-T because it's fashionable and everyone is playing in there, but I feel like you guys are not necessarily just starting up in there, for example.

Yes. First of all, thank you, everybody, for joining. Thank you to Evercore for having us. I'm sure you guys recognize, we may make a few forward-looking statements, so feel free to check out our 10-Q for the risk factors. The company actually -- we were founded on these couple of ideas. One is to be able to hide cells from immune detection and make cells to replace missing cells. And the other is to be able to deliver payloads to specific cells in vivo. And both of these seem to be working right now. And so our -- probably the asset that people care the most about or we spend most time on is a drug called SC451. And the goal of this is a functional cure of type 1 diabetes. Take a step back. Type 1 diabetes is a disease of about 9 million people. It's growing very rapidly, about 15 billion by 2040. They have -- what happens is a person's immune system attacks and kills the pancreatic beta cell, that's known, right? The beta cell is the only cell in the body that makes insulin.

So up until 102 years ago, a patient would die pretty quickly once they were diagnosed. Their cells would just starve to death. And with the invention of insulin over the last 100 years, it's gradually gotten better, but it's still a disease where with the best care, a person is going to live 10 to 15 years less. It is a life where you're making 140 executive decisions every day about what to eat and how many carbs am I having and how much insulin should I take. And it's a disease where the whole time, you're worried about too low of blood sugars, which can lead to death very quickly or too high of blood sugars, which lead to long-term problems of blindness, amputation, heart attack, stroke, kidney failure, all kinds of things. And so it's a giant problem. And there -- what we've learned over the last 20 years is that a group led by James Shapiro in Canada showed that you could take islets -- pancreatic beta cell is a missing cell and islet is a beta cell plus a support structure, let's just call it that, right?

So you can take isolate islets from a pancreas for someone who recently died and transplant them. And if you give enough of those islets and you give immunosuppression like you would get with an organ transplant, patients can live for a decade plus without any insulin. Normal blood sugar is off insulin. The problem is it's not a scalable supply source. It's a very variable supply source. And there aren't that many people for whom lifelong immunosuppression is better than lifelong insulin, right? So thousands of people have gotten this, but it's not a curative. It's not a scalable solution. Over the last couple of years, several groups have shown that you can take stem cells, pluripotent stem cells and grow them in a manufacturing process into islets and transplant them. And they really do work. It's a more scalable solution. It's a more predictable solution, but you still have the problem of immunosuppression.

So it's not very likely to be something that's broadly utilizable. What we showed beginning through the course of this year has been that we can transplant -- we can gene-modify islets, transplant them into a person and these cells persist and function with no immunosuppression. It's actually a transformative result. I've never seen allogeneic cells transplanted without immunosuppression. And it gives us all the pieces put together to make a functional cure for type 1 diabetes, which is a single treatment with no more insulin, no more monitoring, no more glucose and no immunosuppression. So that program is most of the focus of the company. It can be a very -- I think, a very substantial product. We have an IND that will hopefully be occurring next year. We've talked about IND and beginning the study as we move into 2026.

So these 2 patients with data, that was not with an IND because I couldn't find them on...

Yes. So what we did before was with a -- we took a cadaveric islet and gene modified it at a low dose. And so what we were doing here is we're gene modifying a pluripotent stem cell and growing it into many, many doses and make it into islet and then it becomes a replicable scale process. So the goal is with the first drug was -- the first trial was just to see could you see these cells survive and function. From here on out, our goal is to cure the patient, right? It is to see the cells survive function and eliminate their need for insulin going forward.

So -- but just so I'm clear, the 2 patients' worth of data...

Just 1 patient.

That is the same patient. Okay.

That patient was done with...

It was at day 28 and week 12, I think.

Well, we've done weeks, month 6.

Okay.

We have month 12...

But the 1 patient was done through a trial or at a...

It was done at a clinical study run out of Uppsala University in Sweden.

I see. Okay. Okay. Okay. So it's one patient worth of data. So I remember last year, when we had this chat, I remember you left it at either we engraft or we don't engraft. So it's going to be pretty straightforward. And I think as we sit here today, it looks like you were able to hit all your...

If it did engraft, you'd either see if it worked. If it were graft, you see if they evade the immune system or not, and they do.

Correct.

So now we're in the process of making the scalable solution.

Makes sense. So the product and the process that was used in that patient, how meaningfully does it differ or not versus what's being...

How many what?

The product that was used in that 1 patient, how does it differ or not versus what's going into the IND?

How does it differ?

How does it differ or is there a differ at all?

That was a -- a person died, a donor person died, donated their pancreas. The -- so those islets were isolated, they were gene modified. So about 40% of all the cells were fully gene modified. We knock 2 genes out, we knock in. And the rest of them were not. And so it was done at a low dose, and that's it. So now the main -- the real drug, so you start with a pluripotent stem cell from a single donor that will be your product forever. We do the gene modifications. From that point forward, there's no more gene editing. There's a master cell bank that never gets changed, and it's our drug, hopefully, in 2050 for millions of people. And that single cell will be made into trillions of cells.

Got it. I see.

And you will take those stem cells, you will differentiate them into islets and every patient is getting the exact same product, hopefully, right?

Makes sense. Makes sense. And then also remind us, Steve, what's the data currently in the marketplace on stem cell-derived islet transplants that are out there. I think they occur, but the engraftment rate is not the same and it's not as successful.

So there is -- so Vertex has done this very successfully published in England Journal of Medicine. They were 12 out of 12 patients who reached a year are insulin-free. They put it in the portal vein. It worked. patients are immunosuppression, but it works, right? And there's been another group in China they actually took a patient -- they took a person who had a type 1 diabetes and a liver transplant. So they were already on immunosuppression. They then made the patient's own blood cells back into pluripotent stem cell, grew them up into islets and transplant them with immunosuppression. So it was an autologous pancreas. And again, that worked. That patient is doing very well. But again, they had to be on profound immunosuppression to overcome the autoimmune reaction. So what we have done is we've done these gene modifications that prevent the patient's autoimmune system from seeing this and prevents their allogeneic system from seeing it.

Right. Got it. So in the Swedish data set that was generated, you focused a lot on graft survival on MRI and then you also focus a lot on C peptide. Are those the 2 parameters we'll be tracking? Or will MRI not be as...

Well, again, the previous study, you want to see did they survive and function. So you look at MRI, we look at PET MRI, so you could see that they were insulin secreting cells, right? You know you don't have those in your arm. We then looked at -- so when islet's beta cell makes insulin, actually makes pro-insulin. And it's secreted -- when it's secreted, it's cleaved in the C-peptide and insulin. So when you have C-peptide in your blood, it's a 1:1 number with how much insulin you're making, right? So these are people who had diabetes and had no C-peptide, now they have stable C-peptide in this person. And then when this person eats, their C-peptide goes up. Again, you see this stably and happening over 6 months. That's not our goal going forward. Our goal going forward is to give a high enough dose that you want to see those things, you want to see the cell surviving, you want to see C-peptide, but you want to have enough of a dose that they have a normal blood sugar and they are completely off insulin and they get to live the life that I live.

Right. So what is that dose that you think will enable you to get there? And could you remind us what was the dose used in that suite?

So in that study, fully edited cells is probably 60 million, 70 million cells. If you look at the data from just the field, it usually takes around 1 billion cells to get to euglycemia. So that's around the right number.

Okay. So the goal -- so as you're growing it, you need $1 billion per patient.

Pretty much, yes, more or less.

Okay. And where is the production right now in terms of getting ready for IND in terms of the cell bank that you're populating?

So we've had multiple meetings with regulators around the world, multiple meetings with the FDA in alignment of what we need to do going forward. So we have to do 2 things to get to human testing. One is complete tech transfer and GMP manufacturing. Two is complete our GLP tox stuff. They will happen. We've done all the studies that will need to be done already. It need to be done in a GLP setting with the current lock kind of process and off we go.

Got it.

So I mean we could face slip-ups along the way. That happens all the time in these things. But generally, we'll get through them. It's a matter of when, not if. And I think we're far enough along and confident enough of what we have that we think that there's a high probability, no guarantees that we'll able to get this done in 2026 and start the study next year. And data come very quickly once you start the study.

I mean, presumably, you can get proof of concept -- I mean, you kind of already have it, but you'll get it super fast on the actual sort of insulin...

[indiscernible] very straightforward.

So you go...

So the challenge in this will be scaling manufacturing. We need to take a Phase I manufacturing process and modify it and something that is really good enough for early commercial launch, right? Because you have to have a registration study, you won't be able to change it. And again, I think that, that's something we can get done. And then I think the actual clinical trial, if you look at, again, others in the field, they're doing a Phase I, II, III program of 50 patients in aggregate.

So I guess where are the bottlenecks then on the scale up? And where is it that you're spending most time on that? Or what is it that the company is still trying to figure out or working its way through?

I think the hardest part of -- so you're -- what we know like this is like a protein biologic. You're taking a cell and you're getting to spit out a bunch of protein. And all you care about is that protein and the antibody is the same every time, right? What we're trying to do is make the exact same cell, which is a very complicated function each time. And there are 2 challenges, I think, as you're going through this that are the biggest to scale. One is as you go through all of the manufacturing, let's say that you end up with a lot of the risk of genomic instability. So you'll see problematic mutations arise. Let's just say, mutations in genes that encode for DNA repair is the most common thing. And you probably don't want to transplant as an example, 1 billion cells with p53 missing, right? It makes sense you wouldn't want to do that. So genomic stability is part one.

The second is product purity. So it's actually not that hard to kind of make these things. But when you're making them, you're going through normal development pathways. You go like you start out with an pluripotent stem cell, it then becomes like endoderm, then it becomes foregut and then it becomes -- if you end up with some stomach or some GI tract, those aren't terminally differentiated cells. They'll just keep growing in the patient. And if this is going to be there for 10, 15, 40 years, you don't want a bunch of stomach growing in some other or wherever we will transplant this in muscle. You want to grow in the muscle. And so genomic stability and product purity are going to be -- are the biggest challenge as you get into making many, many, many, many cells.

So on the genomic stability, I guess, once you have like -- once you're sort of able to boil down to the cell, which you want to then grow off of, stability would just need time to be able to prove that. No?

Well, it took us years to make a cell line. I'm not aware of -- I think it has been a problem for the field broadly, where you gene edit it and maintain genomic stability with a pluripotent stem cell. It's been super hard. I think that we got there a lot because of the cell line we're using, a lot because of the process that we're using those 2 things. And I think it took a little bit of luck. I don't think there's any way around that. I think you need all 3 to make it happen.

Got it. Does FDA want to see a certain amount of time duration, once these...?

There's a lot of testing that goes into this. It's not time, it's many, many, many divisions. So I'm not going to get into what you do, but there's a lot of genomic testing that's done that you're looking for, first of all, the gene edits, are they on target, right? The second is, do you have chromosomal rearrangements. Those happen that just as you make changes, you grow these stem cells, little parts get clipped off or 15 ends up on 13, whatever it is. Then you have to look for the risk of these cancer genes popping up. And you have to look for -- do your cells do what they're supposed to do genomically, do you have any mutations, any gene that matters for the function of the cell you're going after?

Got it.

It's rigorously, rigorously tested. And that's what a big part of what we spent the last few years on is getting that done. And then last year, you're getting alignment with global regulators on what you need to have to release a master cell bank in an area like this.

Got it. How should I think about cell viability once the transplant does happen? How should I think about that?

Think about what?

Cell viability and...

Hopefully, it's for decades and decades.

Okay.

We've seen that happen in the cadaveric islet transplant field. Competitors or others in the field are out several years with stem cell. I don't see the reason why they'd be less. In fact, they might be more.

And remind me, I think you mentioned in mice no MHC 1, no MHC2, right?

What's that?

No MHC 1, no MHC2. So there shouldn't be NK cell attackable.

So if you just knock out MHC class I and class II, NK cells will kill them. So -- and that's been the challenge of the field. And our insight was that overexpressing CD47 in the context of knocking out MHC class I and class II protect cells from NK cells, it protects cells from T cells, it protects cells from B cells, protect cells from macrophages. So you overcome both the innate immune system and the adaptive immune system. And again, we've shown this in all kinds of in vitro assays. We've shown this in mice, humanized mice, monkeys. We've now shown it in humans across several different diseases and cell types. This works, right? And so now what we need to do is just put it in -- put the whole system together and put it into humans safely and then see it scale.

Got it. My last question. Based on some of the data you can generate next year, could it form the basis of a breakthrough designation?

Could what?

Could it form the basis of a breakthrough designation?

I don't think that, that's very challenging for us.

Being able to get to that.

Yes. Yes. Without getting -- yes, I think that, that...

I only say because, look, it may not be challenging given the biology that exists and as long as it proves through on an in vivo basis. I'm asking because just from a market perspective, oftentimes, that's a trigger for a lot of people to start paying attention to that who may have been on the sidelines. So it's a realistic possibility of Phase I data.

True. I mean I don't know when, but I mean I think these data would be -- they're transformative -- they fit all the criteria.

Okay. How many patients worth of manufacturing do you have ready for Phase I? How many patients can you dose in Phase I?

Phase I, our goal -- so if you look at the field, you would think that the Phase I would be 12, 15 patients. That would be the goal.

And you're ready for that by, let's say, March?

I'm not saying when. We said next year, 2026. But my guess, you're not going to dose everybody -- you're going to have some little stagger to begin with, right? And then we'll treat patients.

Got it. Excellent.

So in vivo CAR-T, I'll go through very quickly.

All right.

So in vivo CAR-T, what we do is we do cell-specific delivery of some type of genetic payload. And what we're doing in the case of the CAR-T is we're delivering a DNA plasmid, right? So we made 2 fundamental assumptions at the beginning of this program. If they're both true, I think we have a best-in-class. Number one is that cell specificity matters, you do not want to get off-target cells. So we believe that because it improves your manufacturability, it improves your immunogenicity risk and it improves your safety profile, right? And pretty much everything else I've looked at some of the cells over the liver and other places, right? The second is that you want to put in a payload that will integrate in the DNA. So you could do mRNA. But the math problem here is you might make 100 million CAR T cells, and you need to make even 500 million, but you might make 1 billion, but you're going to try to get rid of hundreds of billions of cells. And so you can't redose yourself out of that problem. And so you need to see logarithmic or exponential growth of your CAR T cell.

And so that was basically the 2 assumptions. If we turn out not to be -- those 2 things aren't true, others have made other platforms that will be simpler to make and people kind of prefer mRNA to integrate DNA if they don't need it. So we will have made things very complicated. If they both turn out to be true, I think we have best-in-class data. We can show in nonhuman primates, which is a very good system that we can deliver specifically the T cells that we make a CAR T cell, they expand like you'd expect to see with an autologous. It looks like an autologous cell. You give no lymphodepletion, though. You then see all the B cells go away in the blood. You biopsy lymph nodes, there are no B cells left. When the B cells come back, you see what you saw with George Chet's data in lupus that you now are full of just naive T cells. So you've seen that B cell reset. So that's a very good biomarker of a very deep effective safe B-cell depletion. So I'm very optimistic about this. It needs to come into humans. What's that?

What's your -- you're not a viral vector, are you?

It's a VLP. It's a virus-like particle.

It's a virus-like particle.

So it's -- it has -- the manufacturing is very similar to what you would utilize for like a lentivirus.

Got it.

The targeting and things like that are different.

Got it. Last question, I guess, again, on this topic, just to wrap it up. There's been some feedback that on some in vivo CAR-T approaches, you dose and let's say, you dose 10 patients, but 2 just don't develop any CAR-T at all.

A what?

You dose 10 patients, but 2 out of 10 may not develop any CAR-T at all. And this has happened on some programs, and this is like anecdotal feedback from pharmas that have looked at everybody's programs. Why would -- in your opinion, why would that be happening? Or does that just explain some of the limitations of how tricky this stuff is in practice?

So I don't know that -- we have a very predictable effect in nonhuman primates. What you have with T cells is, first of all, in a patient, particularly someone who's been sick, who's been on many, many chemotherapies or many, many immunosuppressants, they may have different fitness of their T cell. They actually may have actually expression of different restriction enzymes that allow it to happen. They may have different immune systems that have some type of immunogenicity to what's already been put in there. I think all of those things could happen without knowing details of this...

Okay. [indiscernible]

It's certainly -- I don't know of many medicines that work at 100% of people, right? And so we don't -- and I wouldn't know without the details. But those 3 things all seem very viable.

Okay.

And T cell fitness would be a big one.

T cell fitness, T cell fitness is key. Fantastic. Well, thank you so much. This was very helpful.

Thank you.

I'm really looking forward to staying in touch to your Phase I stuff.

Your biotech analyst here at Citi. And today, it's my pleasure to be hosting Sana Biotechnology for a fireside chat at Citi's Global Healthcare Conference. I'm joined today by CEO, Steve Harr. Steve, thank you so much for being here today.

Thank you for having me, Samantha.

Well, so why don't we just start off with a little bit of an overview on Sana. I know you recently streamlined our pipeline to focus on SC451, which is your T1D islet cell product. And also SG293, which is your in vivo CAR T product. Just talk a little bit about that decision and what Sana looks like going forward?

Sure. First of all, thanks, everybody, for joining us, both in the room and online. And I think you guys know we'll be making forward-looking statements. So feel free to check out our risk factors. And we spend a lot of time out of and so they're using worth reading. A couple of thoughts here. One, I'll start with type 1 diabetes. So type 1 diabetes is actually really well understood disease, right? It's a -- from just the highest level, the patient's immune system has attacked and knocked out the pancreatic beta cell. And the pancreatic beta cell is the only cell in the body that makes insulin. So prior to the advent of insulin therapy about 100 years ago, it was a death sentence and patients would rapidly start to death over the course of a few months and a pretty gruesome death.

And even like 40 or 50 years ago, when you talk to people, the only way that people were taking insulin, but the only way to check their sugars and things like that was by their urine, right? So it's been a very gradual improvement of patients' quality of life and outcome. But if you look today, there are over 9 million people, almost 10 million people who have type 1 diabetes. It's growing at a rate where it's supposed to be about $15 million within 15 years. The patient -- even if they manage it with the best possible care today, they have on average about a 10-year shorter expected lifespan. During that time, they make about 140 executive decisions every single day about what they're going to eat, how much insulin to take, what carbohydrates they have? Are they feeling a little sick.

For a young woman, it might be what time of the month is it, all those types of things impact how people think and what they take. And at the same time, they have to worry that they could die from too low blood sugar and that most likely they're going to face a long-term future, where they have risk of blindness, amputation, heart attack, stroke and death.

And so it's a disease. It's a giant unmet need. And it's been known for about the last 20 years that if you can replace pancreatic islets, patients can come off insulin. They actually do quite well. And there is a group up in Canada led by James Shapiro, who started transplanting cadaveric islets into people with type 1 diabetes. The problem is it's not a very scalable source. They get them from cadavers, right? It's a very variable source based upon kind of things that happened around the time of death for the donor. And patients have to be on lifelong immunosuppression, really no different than having an organ transplant. That leads to all kinds of side effects. There really aren't that many people for whom lifelong immunosuppression is better than lifelong insulin. So it's done. People get transplants around the world, and there are hundreds of them done every year, but it's never really scaled into a real solution.

Over the last several years, several groups have shown that you can take stem cells, pluripotent stem cells and grow them into pancreatic beta cells. And when transplanted, they will also very predictably actually improve patient outcomes and get them off of insulin. So it's more scalable it's certainly more replicable, but you still have this problem of immunosuppression. And over the last several -- over the last year, what we've shown is we can make a few gene modifications, I'm happy to get into and that with those gene edits, these cells are invisible to the immune system. They both overcome allogeneic, meaning kind of transplant rejection as well as the autoimmune destruction that typically occurs in type 1 diabetes. So now all the component parts are there for a onetime curative therapy, which is our goal, a single treatment. In our case, it's intramuscular injection that allows these patients to live the rest of their lives with no more insulin, no immunosuppression, no monitoring and normal blood sugars.

And our goal is an IND and to begin a clinical study next year. We think that it will be very quick to read out whether or not first we've overcome immune rejection with our stem cell-derived therapy and then also to see hopefully euglycemia or normal blood glucose. Then you're really looking at a challenge of scaling the manufacturing -- and I think as you've heard from -- we'll get into this, I think, later from the FDA today, as recently as today, but also we've heard from regulators around the world that should be a relatively straightforward, at least clinical path to the market. That's that one. We're really quite optimistic. We own 100% worldwide rights to it. We think it can be one of the more important medicines that has been created. But there also were a lot of challenges to us getting there. The in vivo CAR T cell is a bit different. It's obviously -- so here what we do is -- we take a virus-like particle and engineer it to deliver a payload directly to a specific cell type and the in vivo CAR T case is to a T cell.

And the goal is to be able to give a patient a single treatment with no lymphodepleting chemotherapy like what people have with autologous CAR T cells. And be able to go after a host of different blood cancers, whether that's lymphoma, leukemia or ultimately myeloma as well as autoimmune disorders like lupus, scleroderma and others. At the beginning of this program, we made 2 critical bets, and they're really important to understanding how good our platform is. One is that cell specificity matters, meaning you want to deliver the payload just to your target cell. And we believe that to be true because one, just manufacturability, right? If most of your cells are in T cells. So if it's going to deliver most of your -- even if a small percentage of liver cells are transduced, it will be the vast majority of the drug product.

The second is immunogenicity, right? If you get in into antigen presenting cells, you're going to have problems with immune responses against CAR T -- against the CAR.

And the third is just general safety. That's part 1 bet that cell specificity matters. The second is that you need to integrate into the T cell to get the right level of killing. You're probably making a couple of hundred million CAR T cells, but you're trying to kill a couple of hundred billion target cells, which means you have to log rhythm -- multi-logarithmically grow or expand your T cells. And so our thought is that just simply put an mRNA and it will get diluted. So if it turns out we're wrong on those 2 bets, we've made things complicated, right? If it turns out we're right. I think we have a best-in-class medicine. I'm quite convinced if we're right and if you were a nonhuman primate, you would want our medicine. It really -- it looks quite promising. And we need to get that into humans.

We've given our guidance for 2027. There are paths we get this done next year. The path we get it done, actually get data next year, we'll have to see kind of how that all plays out. But that's also exciting. It's a little bit different. It's a more competitive space, right? There are -- and -- but I think it is a relatively well understood and straightforward space for us to develop into. So those are the 2 things that we're really focused on in the company right now.

It's a great overview, Steve. It gives me a lot to work with here. So why don't we just start with type 1 diabetes. And you mentioned that the IND and potentially a Phase I, both cleared IND cleared potentially and Phase I start as early as '26. And I know you have multiple interactions with FDA over the last several months. And as you noted, we had a keynote speaker this morning, Dr. Marty Makary, who called out specifically type 1 diabetes islet cell transplants without immunosuppression as a key focus for the administration. So I guess just given your guidance and FDA's interest, can you just share a bit about where you currently stand in preparing the IND and if you're able to share any context from what FDA feedback has been on that process?

Yes. So first off, our goal is to both to bring this drug forward in the United States and also to bring it forward in a few other geographies. So we're engaged with dialogues with regulators around the world. I think the feedback has been generally very consistent. And the 2 things that we need to do, which I'll come back to where the important risks are the 2 things we need to do to move this medicine into human testing are 1 complete or nonclinical toxicology package and 2 is complete GMP manufacturing. So this is a -- so what the medicine is we took a -- you take a donor cell, a single donor a long time ago, reprogram that cell back into a pluripotent stem cell. That's your starting material. We then gene modify it once. We knock out 2 genes and we knock 2 in. And that cell is rigorously tested and that, that cell is a starting material, hopefully forever for our drug product.

It took us a long time to make that cell and not see genomic mutations pop up from time to time. And so we really -- it took us several years of really hard work, and I would argue maybe a little bit of luck to see this really play out as it has.

But we now have a master cell bank that retains pluripotency and does not mutate as you go through what is likely trillions of divisions over time, right? And so that's been hard for us. So now our main risk -- the main risk of this drug is safety, right? I mean it will probably work. We've proven every component part of it. And there are really 2 safety risks that we worry about. One is just in the very short-term severe hypoglycemia, cells die, release insulin, It's about 24 hours. It's been seen in other trial, super easy -- it shouldn't be complicated to manage, right, just monitor the patient if they have it just get a little glucose.

The second is that over the long-term, off-target sales becoming -- or target cells with mutations becoming tumors, right? And so that's what we really have to work hard on preventing as we go through our preclinical testing as we make modifications in our manufacturing process to ensure that we have the safety that is necessary for a population, while this is a very, very high unmet need, and it is a very unsatiated patient population, they will live for decades, but for us, right? And so we have a real responsibility to put -- to make this medicine as safe as we can. And so that's where we spend a lot of our time right now is that safety part of it.

Generally, regulators. So to your point, I mean, I think we still have to ensure we have global consensus around what our clinical protocol is going to look like. I think we know we have alignment with at least several geographies and we can then move into human testing, I think, in a really straightforward way. You can look at one of our -- there's a company out there that's done a Phase I/II/III study with immunosuppression. It's going after a smaller patient population, right, people have a very severe form of the disease. Their Phase I/II/III program in aggregate was around 50 patients, about 13 in Phase I and about 37 in Phase II/III. I think that's a reasonable guide. I could make arguments why we should be smaller. We don't have immunosuppression. I can make arguments why we should be more patients. We're going to go after a much broader patient population, pretty much anybody with type 1 diabetes.

And we'll have to see kind of how our safety profile emerges and if it ends up probably being pretty close to that 50 number.

For the nonclinical piece on safety, how are you preparing that in terms -- in the way that gives FDA confidence on the potential cancer aspect of the safety package?

Yes. I want to get into too much of it, but there are I mean, first off, just a rigorous testing of the genome of the cell that we started with. And there are some things you have to really worry about at the outset off-target edits easy to look for, right? Genomic recombinations as you go through division. You have chromosomes that are a little bit unstable because there are stem cells and also chromosomes that could be a little bit unstable because they've been gene-edited. That's complicated to look for. We have to do that.

The third is not seeing mutations at predisposed patients or should predispose those cells to become tumors. And that's been -- that's taken us a long time to deal with, but the testing is relatively straightforward. And so that's part of the safety profile, and then you have to do things to ensure your product purity is high, meaning most of the tumors that you would worry about, let's just -- you're going -- going from a stem cell to endoderm and then you go to like primitive gut and ultimately, you go into making a pancreatic islet, which is a beta cell and it's called support structure.

Any off-target cell along the way, particularly something like stomach or gut could continue to divide, right? And you see that in the academic literature all over the place. And you really don't want a bunch of stomach over 20 years dividing in your arm, right? It going to become much more than a new sense if it keeps going. And so really working hard to ensure we have the right product purity so that, that doesn't happen.

Right. Okay. That makes sense. But the takeaway here is that you've had alignment that you can take that lead GMP master cell line forward for this ID. Is that confirmed at this point?

Yes.

That's great.

We're good to go.

Okay. Love to hear it.

And that was like just -- I think the reason that for those who aren't as close to us, you may not have heard people talk a lot about a master cell bank and making any product in the past very frequently. It's like the cell that you start with. We really struggled with this, and it took us a few years to really make this happen. And if you talk to large companies around the -- in our industry would tell you that these just don't exist. These like gene modified pluripotent master cell banks and GMP made it GMP. And ours is also O negative, meaning that it can go into any type of a donor. And so putting that all together has taken us many years and several more years than I thought it would, which is why we had to be so transparent upon it because we struggle with it. And it's now in the rearview mirror.

Great. I'm glad that we've passed that. So looking forward to hopefully hearing when you have that IND cleared. And from that standpoint, how quickly do you think you could initiate a Phase I trial and get it up and running?

Pretty quickly. It's not overnight, right? That's why it wasn't true. When we changed our guidance at the end of the third quarter to say our goal was both to get the IND done to start the trial next year. That was intentional to give you a little sense that we're increasingly confident of the timeline and it's not towards the very end of the year to be able to pull that off.

Right. Right. Of course. And for the manufacturing for Phase 1, I think you've said in the past that you have capacity to be able to support a Phase I trial, correct?

Scale. I mean capacity is now probably scale is hard. It's only like 13 patients. We can do this for Phase I, but it's a Phase I process. I don't want to fool anybody. We have real work to do to turn this into a process that we're comfortable with a scale for launch, right? And so you have to have your launch process finish before you can start a registration study. You're not going to be able to make any substantial changes. And so that really, I think, is a long pole in the tent to us probably starting a registration study, although we've begun to really, I think, figure out what we need to do and make some progress around what that would look like. And again, if you just say there are 10 million-ish people on this, if you just kind of just even 2 million in the United States, 100,000 people a year it would take you 20 years to treat the people in the United States, assuming no new patients, right? It would take you 100 and some years to treat the global population.

So we have a lot of work to do to get to even a scale that is important for patients. I don't think we'll start at 100,000 people. I'll be very clear. I think that's something that's really kind of aspirational. But our goal is to not be at something where we're smell like a CAR T cell, right?

I mean, so is it possible that you would be able to complete your Phase I and then have a gap clinically as you solve the scaling problem. Like I guess I'm trying to get a feel for like the timeline of when you might have enough to support the Phase III and also have that process locked in sufficient for commercial.

I think the clinical path is super straightforward, but to know exactly how long it will take probably requires us to have global alignment around any staggers that might be in that study as well as any dose escalation. But my assumption is a long pole in the tent is starting a registration study is actually manufacturing. It won't be terrible from your perspective because you'll get some longer-term follow-up, right? And -- but you'll know the first patients pretty quickly, if this is working. I mean there are people around the world who would have approve this regulator is on a very small number of patients that happens to work because the competitive products you have -- you're giving with a known toxic drug, right? You're giving it with substantial immunosuppression or patients are stuck with insulin that's really problematic for them. But we have some work to do on the manufacturing side to ensure we can consistently deliver at a scale that's important something for patients.

You're not the only one that's developing an iPSC cell line for various indications. There's Parkinson's, there's other type 1 diabetes programs. I mean is there a community or learnings that as a field can help aid you in the manufacturing process? Or is it truly like Sana specific based on this...

There are learnings -- now just order of magnitude, the number of dopaminergic neurons that someone might transplant is probably less than 10 million, right? If you look at the order of -- the number of islets cells that someone might transplant, it's circa 1 billion, right? And there are way more patients with type 1 diabetes and Parkinson's disease. And so you just have a -- it's a bigger scale problem. But there are elements of this that are very, very universal. As an example, you want to grow your pluripotent stem cells at the beginning before you start differentiating that would be used for any product, right? Whether it's -- and that would be true probably for -- there are a number of people using embryonic stem cells and induce pluripotent stem cells. And that should be very similar. You're trying to do to maintain pluripotency and genomic stability, right? And that learning is something that will be important across the field.

Is there anything that partnering with the FDA can help accelerate and obviously, the clinical piece, but does FDA have any sort of insight into the manufacturing scalability piece as well or?

I think if the FDA had insight, they wouldn't tell us. I mean my experience with the FDA is they're extraordinarily good at maintaining company's trade secrets. They're just a really well-run organization.

Right. No, I didn't mean it from that perspective. Okay. All right. Got it. So then...

There's something the industry could come together and work on, right? That's different. But industry consortiums or things like that or working with the CDMOs, but it won't come from regulators.

Okay. So then, I guess, what are your latest thoughts on partnering type 1 diabetes? Is that on the table at all in the near-term future? Is that something you would need to finance the company?

Well, We can finance the company, right? I mean we can raise equity capital is expensive for us, right? So as I think about a partnership, they can do 2 things, right? They -- we know we're selling off a portion of our future cash flows, right? If that happens to work. So in exchange, you'd like to have 2 things happen. One, we'd really like to increase and improve the company's financial resiliency. I mean I just look at something like this. It's like a stem -- a gene-modified stem cell-derived therapy. The probability we face a little hiccup along the way is pretty high, right? And financial resiliency gives you the ability in the rearview mirror, you look at that, and that was a little speed bump. No financial resiliency and it can have an impact on returns for your shareholders and stakeholders, even your ability to move it forward in the right way.

So -- but the second is you'd like to think it improves the probability of success or in some other way, increases the size of the pie because otherwise, you're just fighting over crumbs, right? And -- so if we're just dividing up the pie, it's not useful. We want to really see an improvement and probably success. So as we talk to potential partners, I mean, one, we have a high bar for doing this, doing something just given owning 100% worldwide rights for this as we start to unlock data over the not-too-distant future, can be very valuable for our stakeholders. And there aren't companies that have inherently substantial capabilities in bringing forward scaled stem cell-derived therapies, right? Just hasn't yet -- there hasn't been one approved in the planet yet.

So we're looking for someone who can really help us with that, improve our probability of success, right? And that's going to have to be a good economic deal too. We're not going to do this for some royalty in the future or something that would be just a death of the company. The -- and the 2 biggest challenges outside of capital because capital drives time, right? We'll be scaling this manufacturing to something that could meet the demands. I kind of think of it, though, is there are 2 elements of scale. There's number of doses per manufacturing run and then there's a number of manufacturing runs.

And a number of doses per manufacturing run is a science problem. Number of manufacturing runs is a capital problem, right? And so finding a partner who helps us with the science problem is way harder than finding a partner who can help us with the capital problem. And so we've really been pushing anybody who wants to just engage in partnerships, say, how do you help us -- how can you help us solve this science problem, which is making more cells every manufacturing run.

The second is it's not going to be straightforward, and I don't like to give people thinking about things that are not, but it's not going to be straightforward commercializing a curative therapy, right? I mean it's a onetime payment and this is a disease that affects millions of people. Hepatitis C was a challenge for the system to digest and it was much smaller. And it was a relatively short course of therapy. Society is winning in a big way from all the work that Gilead and others did to really solve the hepatitis C epidemic. But that was a challenge for a few years for society to digest, and this is a much, much, much -- this is millions and millions of people, right? So some -- we know we're going to need a partner to help us at some point, it's going to be different solutions in different parts of the world. It's not going to be -- and even in the United States, there's likely a private market and a government-based solution that we're going to have to grapple through with and work our way through.

So those are the things we ask to a partner. I'm sure that someone will come up with something to help us over time. But we're in no rush because we can take this forward ourselves, at least for the foreseeable future because the risk we're grappling with are things where I think our team is really well situated to solve.

Right. So you can definitely get through Phase I proof of concept in humans on your own?

No problem.

Yes. Okay.

I think we can solve the scale. I think we'll solve the scale problem on our own. It won't be a big company does it for us. The capital -- long-term, we might be better off with a partner to solve some of those other things. But the science part of it, I actually think we're making we're kind of making progress what we need to do.

Got it. Okay.

Yes. Can you do you mind us using your microphone since we're on a webcast. If not, I'll just repeat it.

Yes. I was wondering here if part of scaling up for you guys is also about data management, right? I mean the very few patients, but the data type that you're looking at is very heavy, right? I mean it's molecular data, it's very, very dense. As you scale up the company and deliver your drug your therapies to kind of a greater population. Do you see like a growing challenge around data management for you guys? Or is that not really part of the picture?

I don't think so, but I'll give you a caveat. This -- if you're going from a -- every manufacturing run is going to be its own -- it's going to be a little bit different, right? And if we want to treat -- let's say it's around 1 billion cells. That means every 1,000 people is 1 trillion cells. It means every -- and so we are like 30 trillion cells, right? We have all kinds of mutations all over our body and a system that's set up to control them. We're going to need to figure out how do we tease out when bad things are happening, what led to them and how do we make that less likely and/or how do we identify it early and stop that run. I said something, sorry. So that part of it -- I think the manufacturing part of it will be very significantly related to data management. The -- some of the other clinical developments should be really straightforward here, right? I mean our goal is patients come in, they have to take insulin many, many times a day, all kinds of form, they're of it, right? It's like it's 0,1, right? So hopefully, we're going to have an analog type outcome on this.

Bit of naive question. How do you actually inject the cells into the pancreas? Or do you have some other mechanism -- and the number of cells what happens to these sales long-term. I'm sure you've done some animal work despite what our commissioner said that you've done some sizing pigs or some other animals to show how well do. I don't think we go to pancreas.

I don' think we'll go in the pancreas. It's going to be super -- we're going to do something much easier, but a little different. So the current standard just take a step back. So there have been thousands of panc islet transplants done. And what is done is a large bore needle is put into the inferior vena cava and they are injected up -- sorry, the portal vein and they're injected up into the liver. And that's what they -- but we don't want to do that for a host of reasons. It's space limited. There are a lot of toxic. So what we've actually been doing in -- we did in our first in-human studies put it in the muscle where you have a lot of capacity. We know that every year, there are approximately 14,000 thyroidectomies done in the United States. And each of those, the parathyroid is dissected out ground up and put into the forearm of the patients. So you can put -- you can put endocrine tissue and it functions very well in the muscle. It's done some in Europe where they now are putting islet transplants into the muscle.

And so we're doing muscle. It's not quite as simple as you just inject it. If you go through the New England Journal of Medicine paper, it was done on a 18 different tracks very slowly was how they did it so that you don't end up creating a big bolus of cells that can't get oxygen essentially and sugar to survive.

And so we'll just put in muscle. And the goal is, again, they've been gene modified, so the immune system doesn't recognize them. And some of them almost certainly will die in the course of that transplant. And so part of what we need to continue to do is work to ensure we solve that Amazon last mile problem, which is getting the cells into -- from our hands into the muscle of the patient.

And how do you get the cells to stay in the muscle?

Do you say it again?

How do you get the cells to stay.

They just grab, they stay. If they -- and in fact, what happens if they leave, is they'll end up in the bloodstream and they'll be killed. It's one of the reasons not to put them you have some -- we all have something called the immediate blood mediated immune response. And it will -- we're not supposed to have somatic cells in our bloodstream, right, because it's probably a tumor or something. So they get killed almost instantaneously. And so the goal is they need to engraft and stay, and they do. Like that's part of the -- one of the things that we do as part of the pre-IND work as you do biodistribution work to make sure you can't find cells in other parts of the body. And it's been done now in humans and other places without a problem. And we've done it in nonhuman primates and in animals, other animals.

And the level of insulin produced by a certain number of cells at that constant is that constant level as you get a steady state?

You don't want a constant level of insulin.

I'm asking you.

You want a glucose-sensitive insulin secretion, right? And so just like our natural pancreas. One of the beautiful parts of this drug is there is no such thing as far as I'm aware, as an overdose, right? You and I have a lot of islets and so you get this glucose sensitive insulin secretion. That's part of the release criteria of the product is ensuring that you do have a glucose sensitive insulin secretion. And did you have a follow-up?

About the regulatory approval process across regulators, MHRA, European regulators, Asia-based versus FDA. In your experience in early conversation, is it the same path when you submit for...

So my experience in cell and gene therapy broadly is it's similar but different. And different countries may have different clinical requirements and certainly, different countries have different manufacturing requirements. Within the context of this, what we've started out from the outset is to try to get alignment in different areas, really, hopefully, using the FDA as the template for others to grapple with. And then go forward with that. But the goal is to do a universal application and a universal process.

And then this disease is really very much focused in the United States, Europe, the Middle East. It is in other parts of the world that's in Asia, but it's not nearly -- if you look at -- there's a very much of a geographic and maybe a hereditary -- or definitely in a hereditary component of this is somehow mix to create this higher risk. And so Nordic region, the United States, Middle East countries, those are some of the higher prevalences, Canada prevalence of disease.

Steve, is there anything that didn't get brought up yet about type 1 diabetes that you think it's really important for everyone to know.

I mean I just always think -- I think the thing that can be lost in all of the science and all of the -- this is a really unsatiated patient population. They're very engaged, right, and pushing a medicine forward. And it's a very large opportunity. Like there are very few opportunities in my career that I've been around for a long time that I've seen where it's this many people with this type of impact that you can have. And what we need to do is to make sure we do this both urgently and safely. I think that will be our biggest challenge is making sure we are again, despite the fact that there's very high unmet need and patients really want something different. They will live for a long time without this therapy. And so we need to make sure we're not doing anything that puts that at risk and only makes it better.

Got it. Okay. And so I wanted to spend our last several minutes just on the in vivo CAR T platform. You gave us a little teaser. Can you just tell us how that works and why it's differentiated from the other approaches that are in the field.

So there are basically 2 approaches in the field. There's people who are trying to take lipid nanoparticles, similar to what was in like vaccines and things like that to deliver some type of a payload to cells. Those tend to go to the liver, but they've worked really hard to have less of it go to the liver and all some of it go to T cells and things like that. Those companies tend to put mRNA in it, which doesn't integrate into your DNA, It sits there, which has some safety advantages, at least theoretical safety advantages, but these cells tend to go through many, many, many divisions. I'll come back in a second.

So there's a group of companies that do something called virus-like particles or VLPs. And really, what you're doing there is taking some virus structure and modifying it so that it doesn't replicate anymore so that hopefully we will target a certain cell type and that it can deliver the payload that you want since what we've done.

So what we do is we take a -- we're the only company who does this take a paramyxovirus and modify it. And the beautiful part of it a paramyxovirus is it's a logic-gated system to enter a cell, right? So we're able to get both cell-specific delivery, and we never go into the endosome and instead, we go directly in the cytoplasma in the cell we target. And the reason that's super important is any other delivery mechanism pretty much requires endocytic to uptake into an endocyte before it goes into the cell.

So they end up anything that sticks to, whether -- if they have a CAR on the cell surface, which every VLP does it may end up in a tumor cell, right? If you have a -- if you end up on an antigen-presenting cell, you're going to end up in that cell, and that's going to present for immunogenicity that's going to kind of create immunogenicity problems. And so we get very cell-specific delivery in a way that others don't. And we just go into T cells. We've shown this across multiple nonhuman primate studies. That's the main difference of what we're doing. We've done this. We can do this in HSCs. We'll publish a paper very shortly that shows cell-specific delivering of gene editing agents, either kind of a CRISPR/Cas9 or base editing to modify hematopoietic stem cells. I think that's really exciting, but we need to focus first on getting it to work in the first place, which is we're targeting which is in vivo CAR T cells.

And that's a good lead-in because there's been a lot of interest from pharma strategics in the in vivo CAR T, but there's also potentially a lot of interest in HSC editing as well from an in vivo standpoint given busulfan conditioning that's required today for sickle cell disease, gene editing therapies. How do you think about potentially partnering this program across all of the cell types that you can target?

I think it would be an excellent one for the company to partner. It's something where -- we have said I think the company's capital -- we're not limitless in our capital. We're pretty capital constrained. I think our shareholder base is very aligned on the importance of type 1 diabetes. And so to the extent that we are paying to develop anything in this in vivo delivery capability, it's a little bit with our shareholders gradually being drug along. Because they really are big believers in type 1 diabetes. It doesn't mean we shouldn't do it. But I do think a partner can really help us accelerate what we're able to do. And within -- even within the fusogen platform, you have so many different places, so we can do in vivo CAR T, CD19, in vivo CAR T cancer and autoimmune. You can go into BCMA, we can go into -- and we have constructs for all of that. We can go into novel targets, we can go into solid tumors. We can go into things like CD22 who then can go into HSCs, right?

So all of those -- you can partner this away without selling the farm in type 1 diabetes is a single asset, right? And so that becomes more complicated for us to partner and retain long-term value in other assets.

Have you had any interactions with pharma on any of these programs, if you're able to share?

Sure. I would say the big difference I tell people this for a while is that within the context, it's changing a little bit. But in the context of the stem cell drive therapy, the interest is relatively narrow. That's not for every company in the world, but it's pretty deep where we're having dialogues more. Within the context of the in vivo CAR T, I think there's a lot of just kicking tires. You're seeing more companies get very -- we have such, I think, good nonhuman primate data that there's more interest in that. But we are -- there's still -- there are kind of 2 camps that the strategics fall into. They want the simplicity of the LNP mRNA that happens to work it's just a lot easier to manufacture, right? We will have made this system really complicated. If it doesn't work, then you're going to need something like what we're doing.

And I do think that what we have is very differentiated nonclinical data, and we need to get human data to see if it compares with others that are starting to create in the clinic with patients, and we haven't done that yet.

And you mentioned in the beginning that 2027 is your current guidance for IND for this program, but maybe you could pull that forward. Could you just talk through some of the levers that could allow you to do that?

I just need to go to a different geography, right? So there are just some complexities in manufacturing, we have to grapple with that we don't have to deal with in some other places that allow us to move faster. Finally, you get data before we can get a U.S. IND done.

Okay. Was there a question? Okay. So I guess, what would make you choose to move to the other geographies?

We need to make sure it's something we can do, right? We just need to make sure it's something we can do. I mean we're pretty -- for a company that's relative -- again, going back, I don't want to overplay, but we're relatively capital constrained, right? We're a pretty small company. And so speed to human data is something that can be very important for us being able to properly invest in these assets, understand them.

Got it. Okay. Well, then in our last minute, Steve, maybe you could just recap some of the things that we can look forward to over the next 12 months? And anything you really want to emphasize for investors to understand about Sana?

Well, let's start with, I think we're entering a period where it's -- I feel like [indiscernible] is finally coming. We've been working on this type 1 diabetes program and trying to move into humans for a while. And we've gone through a number of stages that we've meaningfully derisked, right? We've actually done these gene edits in cadaveric islets and seeing that we can transplant cells into people or into a person and that they survive and function for the long-term. And that's a massively derisking event both for the type 1 diabetes, but also for the platform more broadly. This should work, right? I mean again, I think that every part of the type 1 diabetes platform that we put together has been tested in a human and been shown to work.

And so now we put all the component parts together and make it happen. And we're at the cusp of having that happen. We will be hopefully in the clinic next year. That means data -- and data will come very quickly once that happens. It's longer than I hoped it would be from when we start out, it's taking more capital than I thought it might. It also looks to be way more transformative and much more likely to happen than I thought it was. I mean that's a good part about these things. The in vivo -- so that is the company's major focus going forward will be type 1 diabetes. I don't see that changing.

The in vivo CAR T offer a wonderful opportunity for us to continue to diversify a little bit or just begin to diversify and/or to bring in a bit of capital for the company. It's a super promising platform. Again, if you were a nonhuman primate, I'm very convinced this is the medicine of all of that have been brought forward you'd want to take. And I know none of you are. And so we need to see if that translating to people. And I'm optimistic it will, but we have to see that happen. And that all can happen -- it's all going to happen finally relatively short-term for this industry. So it's an exciting time for us. That's how I'll end it.

Yes, absolutely. Very exciting next couple of years for Sana. Well, thank you, Steve. This has been wonderful. I really enjoyed it, and thank you so much for being here.

Thanks.

Well, hello, everyone. I'm Maxwell Skor, biotech analyst with Morgan Stanley. I'm happy to host Sana and Steve Harr, CEO.

Before we get started, I just want to read a brief disclosure. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

So with that, I'd like to introduce Steve Harr. And for those in the audience who aren't familiar, maybe Steve, if you can give us an introduction on Sana and key takeaways.

Sure. First of all, thank you for having us. Thank you, Morgan Stanley. Thank you everybody for joining us, both here in the room and online.

I'm sure you recognize as well, we're making forward-looking statements. I'll do my end of the disclosure, which is take a look at our most recent 10-Q filing for risk factors.

So look, Sana, so we're approaching now about 6 or 7 years old. And we were founded under the idea that one of the most important transformations that will take place in medicine over the next several decades will be the ability to modify genes and use cells as medicines. And our aim is to build a defining company of that era. I don't think there's anything despite a really difficult operating environment in the cell and gene therapy space, which we get into why I think that is there and what we need to -- how we grapple with it. There's nothing that's dispelled that idea.

And we set out with really 2 important goals or ideas. The first is we want to be able to transplant cells. And since the advent of transplant medicine, the major issue that has held the field back has been allogeneic rejection. And the way people have gotten around that has been either autologous cells, which are not that scalable and they don't work for every cell type or really, really significant immunosuppression. You put someone else's cells into your body, you will reject them. And that's been the history of the industry.

And so part one was we wanted to overcome allogeneic transplant rejection. And I'm going to show you or tell you a little bit about it. I think we've done that. I think we've now proven that multiple times in people, and it's been published in places like New England Journal of Medicine and Cell and things like that.

The second thing we wanted to be able to do was to repair ourselves. And so the goal there is to be able to deliver genetic material, either DNA, RNA, even proteins to cells in a specific, repeatable way. And really, what we have shown is that we can do this clearly, at least in nonhuman primates, delivering a genetic material in a very cell-specific way. And I think it's pretty clear that at least with preclinical data, we have a best-in-class asset. Now others are starting to make a little bit of progress in humans, and we need to show that as well in people. But -- so really substantial progress.

And so if you take a step back where we are with the cell delivery or cell replacement, the most important and exciting area we're looking at is type 1 diabetes. Type 1 diabetes is a relatively simple disease to understand. It's about -- it's the patient or a person's immune system attacks and kills the pancreatic beta cell. The beta cell is the only cell in your body that makes insulin. And so up until 101 years ago, it was a death sentence. And then there was the invention of -- discovery of exogenous insulin. And exogenous insulin helps, but there are 9 million people today with type 1 diabetes, and that's growing, and it's supposed to be about 15 million people within 15 years.

A person diagnosed with type 1 diabetes has on average with the best care 10 years or less of life expectancy. In most of the world, that's 20, 30 years less life expectancy. During that time, they have risks of amputations, blindness, heart attacks, stroke, kidney failure, and then if the sugars get too low, coma or death. And if you talk to anybody with type 1 diabetes, they'll tell you that it takes over their lives, right? It's every moment of every day. You're thinking about my insulin, my sugar is, what am I -- my exercise, what am I doing?

So we have a really rare opportunity to move forward with what looks like a transformational curative therapy. So our goal with this is very simple. A single treatment that leads to euglycemia or normal blood sugars, with no more insulin, no more monitoring, no more immunosuppression for life. And I think we can comfortably say now this will happen. And so what -- again, we may not do it. We can make a mistake, or we have safety issues or time, but it will happen.

And so why are we so confident? So as I said, the disease is super simple to understand. It's a missing pancreatic beta cell. And so about, let's say, 25 years ago, starting with James Shapiro's group in Canada, people started to transplant pancreatic islets from cadaver. So think about an islet as the pancreatic beta cell plus some support cells around it, right? So they could isolate islets and transplant those into people with type 1 diabetes.

And what you saw was, you're now seeing people out 15, 20 years off insulin and doing quite well. But it's not a really scalable or replicable supply source. And you also have the challenge that there aren't that many people for whom lifelong immunosuppression is better than lifelong insulin.

So over the last few years, you've seen several different groups show that you can take stem cells and grow them or differentiate them into pancreatic islets. So now you have what looks like a more scalable and definitely more replicable supply source. But you still have the challenge of immunosuppression. And so just with -- this year, what we've shown is that we can gene modify with the edits we make and get into what they are and why.

These cadaveric islets. And patient -- the first person is making his own insulin for the first time in over 40 years. And that data from that patient was actually just published in the New England Journal of Medicine. And the official like print version came out last week as editorial as it goes through the mechanism of the drug. And it's a transformational finding, right? It's very rare that anyone gets into New England Journal of Medicine.

And so I think that now you have all the component parts together to create this curative therapy. So what is our goal is we've made a gene-modified pluripotent stem cell, and we will grow that into islets. And so the most challenging part of that for us has been making that first cell that's your drug product forever, the master cell bank. We've now accomplished that. We get into that.

And this drug is called SC451, and I'm very optimistic that this has -- is a therapy that can reach our goal for people with type 1 diabetes, which is a single treatment with new glycemia and no immunosuppression and no insulin for life.

So that's the major part of the company. I'm sure we'll get into the other parts. So we have the in vivo delivery capability. And we also apply the same hypoimmune technology, which is what we use to hide cells from immune system to make allogeneic CAR T cells. There are a couple of different drugs in development there. But that's a little bit of overview of what we're up to.

That's great. Thank you very much for that introduction and congratulations on the New England Journal of Medicine publication. So maybe just to level set on -- in regards to the data you've demonstrated to date, how UP421 has been formed or translated to the stem cell-derived SC451. So maybe just walk us through the clinical relevancy of what you've shown so far and maybe some of the safety issues that you've overcome.

Well, I guess -- let's take a step back. So this UP421 that you referred to, this is -- so what we did -- what we wanted to figure out was -- so what we're trying to do is gene modify a stem cell. And that one single cell, you will grow into over time, quadrillion-plus cells, right? It's trillions and trillions because it's 1 billion cells per patient, right? So you figure 100 -- 1,000 patients a trillion cells, and there are -- 15 million people with the disease, right? So it's a lot of cells.

And so the most challenging aspect of that has been is, every time we divide the cell, you get a mutation or 2 or 3. And usually, it's on noncoding regions and it doesn't matter. But what we're doing here is putting cells in growth media that selects for cells equal quickly. And so what we found was some clonality would emerge typically in DNA repair enzyme. And we didn't want to -- a good example of this is like people love I think it's like a TP53 mutation. You don't want to transplant patients in cells that have a p53 mutation. I think that would just be a bad idea.

And so we spent a lot of time, energy and dollars figuring out how to make these cells and grow them through many, many, many new divisions without seeing problematic mutations emerge.

So that has been the most important safety aspect that's taken us a long time and a lot of time and energy to overcome. And while we were doing that, and now I go to your question, we want to figure out, hey, this thing, this hypoimmune technology where it's shown its work in some humans in CAR T cells. And it's shown that it works in every preclinical model we've looked at, does it translate into the type 1 diabetes space. And the type 1 diabetes, you have 2 problems. They have to overcome, one, allogenic rejection, again put someone else's cells into you, you will reject them. So we have to figure out how do we hide it from your immune system.

The second is you actually already have a preexisting immune response to the cells we're transplanting even an autologous cell would not work, the patient would just kill it. They have an autoimmune disease.

So we wanted to ensure that worked in people. And while we were playing -- not playing around, working hard on the master cell bank, we did this investigator-sponsored study in Sweden, where we took cadaveric islets, so islets from recently deceased person, isolated them and did our gene edits. And to see, hey, could we see here that these cells would survive and function. That's all that we were looking for. So it's a safety study, a relatively low dose.

And what we also want to see is can we do this and deliver the cells in a different way than what's been done historically? Because historically, most islet transplants, what happens is they are injected into the portal vein of a patient and then the cells are shot up into the liver.

And the challenges with that is, first of all, it has to be done under interventional radiology. So for a disease with 15 million people, it's not that scalable.

The second is that when they go into the liver, they tend to cause clots. And because of that, patients are anticoagulated. So about 5% of patients actually end up in the hospital either from a clot or a bleed. And again, those are things we don't want. We're trying to really do something that is scalable.

The third is a bunch -- you're not supposed to have cells in your body and your bloodstream. And so your immune system will kill them, right, pretty quickly. So you want to get on. So we put the cells in the arm. So we do gene modified stem cells -- sorry, gene-modified islets from a pancreas of a recently deceased person and put them into the muscle in the arm of a person with type 1 diabetes.

And the person is now out, we've shown data out 6 months. He's making his own insulin for the first time since 1987. And he's doing really well. It's a really exciting outcome. That's not a scalable solution. And so we're making sure we're working on our scalable solution, which is the stem cell derived. But it -- I think it solves -- it answers the question, is type 1 diabetes a cure? Will somebody get this curative therapy? The answer is yes. Like we need to be the ones that put the pieces together. We should be the ones. It's our technology, but we need to actually execute and get it done.

There are reasons because we have the real safety issues and things like that and time and capital, we have to make it happen. We can go through what all those are. But it was a super important study, I think, for the field of type 1 diabetes. It's a super important study for the field of transplant. I mean it's the first time you've seen really something like this ever, right, you can transplant a cell with no other treatments. In no way they they're suppressed immune system at all, and you see the cells survive and thrive. And it's a super important study for Sana.

That's great. And so thinking about the next phase of innovation at Sana SC451, I believe you guided to filing an IND next year at some point. But just thinking about the learnings you've taken so far, how are you going to evaluate durability? Are you going to be doing any imaging? How are we going to understand the viability of these cells going forward?

Simplest way to understand the viability is the physical outcome of it. The outcome for the person. So -- and there are ways to measure what you're doing. So when a pancreatic beta cell makes insulin, it actually makes something called pro insulin. And when pro insulin is secreted from the cell, it's cleaved into C-peptide and insulin. And so first of all, C-peptide is relatively stable and measurable in your blood. So the amount of C-peptide is a 1:1 direct measurement of the amount of insulin your body is producing. And when you inject insulin, there's no C-peptide, right?

And so the first way you're going to follow this is what happens with C-peptides. You actually can find it? Is it at physiologically relevant levels? Does it go up when you eat? Does it go back down when you're not eating, all of those things.

The second thing is we want to see these people off insulin. There's no way you get off insulin. You'll die if you stop getting insulin as a patient pretty quickly, right? So you're not getting off insulin. That's super easy to measure, right?

But the third is we will do little sub studies where you can look at the images of the patient. It doesn't need to be done in every patient. It's a lot to ask them to keep coming in. We'll do PET/MRIs, and some of them, we showed that where you can actually label -- put -- you can actually find beta cells, and we see them. It's in New England Journal of Medicine article. You see them and it's actually left arm of the person with type 1 diabetes. So we will do all of those things to -- to be able to measure this. It should be relatively straightforward.

And the durability is something where you're putting terminally differentiated cells that should live a long time to a long, long, long time. Like we have the beta cells we have. And so hopefully, this last 3 decades, you're not going to learn that in phase -- you're going to learn it over time. You're not going to learn it early. I think it's a clinically very relevant drug with relatively short survival. Let's say, I think you ask a patient, they said, well, you have this happen once a year, that's no problem. That would be awesome, right? I can get rid of the injections of insulin. I can get rid of monitoring my glucose.

I don't think that's a good business. We have to -- scaling these medicines is not simple. We're in no way do we have a direct path to being able to treat all the people in the world with type 1 diabetes yet.

We also have to do it at a cost that makes sense for society, it makes sense for the patient and it makes sense for our investors, right? So all of that has to happen. So that's dosed to the patient every 6 to 12 months. I don't see that circle being square. I think that will be a -- not a viable business. But clinically it would be super viable.

Okay. So in regards to the IND filing for SC451, what are the gating factors right now, if you could just level set expectations on the trial design? And any feedback you've gotten from regulators?

Yes. So simple, IND, you have to do 2 major things. We have to do a number of things, but one of them is a nonclinical package, which includes GLP toxicology studies and efficacy studies to justify what you're doing.

We have to complete all of that we would call representative material, right? We've done it. We've actually transplanted with the exact cell line we're using, the exact same cells, starting cell and with a research product, we've done this in mice and seen them 15 months out. It looks great. No histologic abnormalities. They work really well. We have to do that now with kind of what we would term representative material, finish doing that with representative materials better ways. That's track 1.

Track 2 is GMP manufacturing, right? You move from making it at a research scale and with research quality reagents into making it with the GMP -- in a clinical trial scale with GMP quality reagents. So those are the 2 things. You got to get them both done. The latter will happen. It probably just has some time risk to it, right? The safety studies you have to make sure that adverse things don't happen.

So the second part of that is a clinical study. I kind of like to think that if you're a good clinical development is super rational and you're changing as fewer variables as possible over time. Like a good way to think about the way to start this is has worked with the Swedish study.

Why wouldn't you start and try to replicate that? Well, the only really difference is the product itself, right? And that's a very broad patient population, but it's not all type 1 diabetics, right? There's a certain exclusion criteria in there. Over time, we will work to expand that into younger people, this is 18 and over, into older people. There was an upper limit of age. There are elements. If you have had a recent heart attack, you don't really want to -- you really don't want to start with that person. If you had a recent cancer because if it comes back, that will complicate our understanding, does that happen from our drug or from something else.

So relatively healthy people who just look at their individual medicine paper. That's probably the way to start. It may be a little bit different, but it should be more or less the same.

Third, interactions with regulators. I think they've been really constructive. And those are both with the FDA and I think our very early experience in other parts of the world. And I think there's generally a recognition that this is a different therapy than anything that's been out there, and there's generally a recognition that it can be very transformative.

And so it's different than the interactions we have, for example, the allogeneic CAR T cell, which are fine. But this is a much more productive. It doesn't mean it's easy, but I think it's transparent around what it is that we think we need to do.

And before moving on, could you comment at all on the competitive landscape? I think the Vertex is also in the space. Anything you'd call out there?

Well, I think for right now, we're kind of in our own competitive landscape. In that, we're getting rid of -- having a simple -- if you define the therapy is what we want is we want to be able to get patients to have normal blood sugars with no immunosuppression and no insulin.

I am sure others are going to figure it out. There are a host of other companies that are playing around this space. I'm confident that many of them are really great science companies and someone else will figure some of that. But for right now, I think we have a very unique place and we need to really work urgently to get this into humans and continue to have that. That's kind of where things are.

The other thing that we've done, I think, is different than maybe what some others have done is, one of the challenges of immunology is there are many aspects of immunology that you have to protect against. And we actually do have an Achilles' heel, right? We have an Achilles heel. If you have preexisting neutralizing antibodies. And the most common thing for that is blood type. I think that's common really, if you look across all these places.

And so we worked really hard to go forward with an O-negative line because that allows us to be -- that's a universal donor. I think a lot of the other cell lines that people are working with are limited by blood type because it's just so hard to find these O-negative donors or lines. We have to make some ourselves, we brought -- we licensed them in. And so I think we have a number of areas of competitive advantage. I presume others are going to work really hard because there have been -- there are a lot of really great companies that have been playing around this space for over 10 years. That will, at some point, make some progress.

But I'm -- for right now, I'm optimistic that we get the chance to at least figure this -- figure out if our stuff works in, for the first time, in people. And then we've got a really leverage and execute on that lead time advantage. But other people are doing important things for patients. It's just slightly -- some of those things will be in smaller patient populations, right, or sicker patient populations and for the ones that we're going after, I think we have a pretty unique perspective.

Yes. Just doubling down a bit on that because you hinted at inclusion, exclusion criteria for the potential Phase I trial. Could you just give us some thoughts on what the target patient population would be initially? And then how you expand that addressable population?

Well, over time, I want every person who has type 1 diabetes to get this drug. And I've yet to meet a person who has type 1 diabetes who if this hits his clinical profile says, no I don't want it. No, I want to see 15 years of data, I want to see that.

It's a very unsatiated patient population. And so early on, we'll start with adults, right? They will quickly move into adolescence, and it will take longer to get into young children. Early on, we will probably again, not have people who've had a heart attack and things like that. But over time, you want to get this to them. I mean people who have cardiovascular disease, it's so clear that if you get their sugars under control, they benefit dramatically.

People -- so we will expand it stepwise through clinical development. But we're not looking for -- we're looking for all comers. It's not like it's people who have poorly controlled type 1 diabetes. Why would you punish somebody? They'll just make it fully controlled, right? They will. I mean if you say, hey, you have to have an elevated hemoglobin A1c. I will guarantee you that people will have that hemoglobin A1c within 3 to 6 months.

But if you said, hey, if there's a certain number of hypoglycemic events, that seems like a bad idea, but we won't go down that path. But they would find a way to make that happen. I mean it's a pretty unsatiated group of people. And I would like to make this available to all of them over time.

So Steve, I think you noted this at the beginning. Maybe you can talk about why it's been so challenging for companies in the cell and gene therapy space of late? And what potentially could be a tipping point or an inflection point near term?

I don't know the tipping point. I think there are 2 challenges that we're all facing. One is the capital intensity of this space, right? And the capital intensity is something where it's not only expensive to make these therapies, but so much of it relates to manufacturing that you are investing a lot of those dollars at risk before you have clinical proof of concept that says, hey, this definitely works. So that's part one.

And part two is, we still haven't exactly figured out as a society how or whether we really want to pay for curative therapies, right? You look at the simplest and best example of a scaled cure would probably be Gilead's hepatitis C drug. And if you guys -- if you were -- and that was one where through a very short bolus of time, they were able to treat many, many people with a very, very grievous disease. And society really struggled with it, right? And it wasn't -- in the grand scheme of things, it wasn't that expensive at the end of the day, right? Just a lot of people.

And so right now, so much of cell and gene therapy has been for niche populations, our goal here is to go after a population as big of a hepatitis C, right? I mean this is 15 million people. If we have to go and take care of all type 1 diabetes, this will be really helpful for a lot of type 2 diabetics, too, right, who are very brittle and poorly controlled diabetes.

We have to figure out as a society how, and we're going to pay for this. And I think those are the 2 things that sit back and hold you back. And there isn't like some handful of examples where you look and you say, man, they built an unbelievably great business so far. And I think that's the other challenge. So to me, the tipping points come when people begin to make real money from this, investors wake up and say, I don't want to miss that, right? Because the science is moving pretty quickly. I don't think this is a science problem right now. This is a capital problem.

Okay. That's helpful. So beyond type 1 diabetes, you have a lot of other things going on in the pipeline, advantages of fusogen platform? Anything you'd like to call out or key near-term readouts that we can expect?

So fusogen platform, what this is, is it's a capability to do cell-specific delivery of genetic material in vivo. And so we chose to go after a couple of cell types early. We did T cells, where I think what I already described to you is probably a best-in-class nonpreclinical data set in nonhuman primates things like that.

The second is we went after HSCs and be able to deliver gene editing agents and things like that. I think we have maybe the only thing that's really kind of working there. The third is we did hepatocytes and tons of things work there, so we stopped doing it, right? And so within the in vivo CAR T, we made 2 really big assumptions.

One is that cell specificity on delivery matters. And we think it matters for 2 reasons. One is safety, right? You don't need to go into other cells because it just can create toxicities or immunogenicity and things like that. The second is manufacturability. You don't have that many T cells. So it turns out if you go into every cell in your body to get into enough T cells, you're going to have to make a ton of drug that's going in, for example, your liver as well. And so it's both safety and manufacturability. And we've done it. We've done this now. We've shown very clearly in nonhuman primates as an example, the ability to make a CAR T cell that only goes -- more or less only goes through T cells. It goes to the target -- cell surface target we pick. But it's not -- you can't find that liver. You can't find it in gonadal tissue. You can't find the lungs and things where other technologies show up.

And we get, as an example, deep B-cell depletion, clean lymph nodes, a B-cell reset to all naive cells, right, afterwards. And we can predictably get that now in nonhuman primates. Maybe showing you a bit of data on that, we'll show you more. I think I can convince you with the data we have that this is something that is pretty good or really good.

So you've seen a lot of strategic activity happening in this space of late. Our biggest Achilles' heel in that is that all the strategic activity that is taking place is taking place with assets that have a bit of human data. And we don't have -- we have a good bit of nonhuman primate mouse data, but not human data. So we most likely need to get that across the goal line.

Our challenge is that we're pretty capital constrained as we talked earlier. And I think the type 1 diabetes is such a rare opportunity with such a high risk-adjusted return. It's not that a guaranteed return, but a high risk-adjusted return that it believes us to make sure that we're allocating our capital efficiently to that.

And right now, we don't know how we're going to push forward this fusogen platform to get the human data. That's -- it may be that we do a bit more work and wait until our cost of capital is lower. It may be that some -- we end up partnering the asset. And I could even see that we kind of spin it out into mostly Sana-owned or partially investor-owned where they can -- an investor can solely invest in that. And we get the data and either we buy it back or we sell it, the whole thing to someone else.

And so we'll figure out a way to get the right money to it. It is a really promising platform. And what you have is this chance from, again, a single therapy as an outpatient, for example, to deliver and make CAR T cells, no lymphodepletion, no chemotherapy, right? And a relatively scalable manufacturing process. I don't know if it's fully scalable yet because we don't know the dose with something that we think can have a really meaningful clinical benefit for people. So we got to figure that out.

So just touching briefly on capital allocation. I know you raised recently extended your runway. Any commentary around capital allocation beyond what you've said previously and just your overall runway?

Yes. I'll start. We need more money. I mean just to be very clear, we're not across the goal line for what we really need. I presume progress will lower our cost of capital over time, but we'll need to raise more money. And whether that through partnerships, I'd say nontraditional things or things that haven't been done before, which I think are may be available to us. We're working hard on some of them and/or equity with shareholders will figure that out.

From a capital allocation perspective, as I said, we will focus what we need to get type 1 diabetes across the goal line. We will do that. I would really like to find the capital to push forward the in vivo delivery because I think it's a space that has a lot of important progress being made. There's a good bit of strategic activity. And to the extent we just sit on this asset, it's probably using value, right?

We then have a couple of clinical stage allogeneic CAR T programs. And I think it's pretty clear that they work at least to some extent, right? We -- they evade the immune system. Actually, we just published this 2 weeks ago in a Cell journal showing in the human data set, our ability to evade the immune system.

And they do work. I mean as an example, you can -- you see B-cell depletion, right? They need to see -- do they -- are they -- I kind of always say are they okay, good or great? We'll start with that, with the autoimmune study. To me, okay. Yes, it works, but it's probably not quite as good as an autologous CAR T cell. And good is it works and we have a much simpler and more scalable process for both the clinician -- for the clinician, the patient and manufacturing, right? And great is it's better.

The challenge with that is, as I look at the outside world and what you guys are doing, I think there are only 2 publicly traded, maybe there are 3, stand-alone CAR T companies that have a positive enterprise value. So our challenge is then saying, okay, can we create a data set that both makes investors rerate the space and declare us the winner from Phase I.

The odds are pretty low on that, right? And so we've been very focused on finding a partner because I think that's the best way forward for this asset. I think we can pull it off.

And so if we don't, we may not even go forward with it because I'm not sure the capital allocation is going to make sense in a time period where we have a couple of other very high, we think, risk-adjusted return investments to me. But it is something that we're optimistic about. I think it would be good for people and good for patients, and if we can do this. It's a scale process. It works. It's a lot cheaper to make than an autologous CAR T. But we need to kind of figure out where this is going relatively soon.

Okay. So we have been asking a couple of just broader questions to all of our companies. In regards to China's rise in biotech innovation, how are you thinking about your competitive position here? And will this influence your R&D or BD strategy at all?

I'll just start with type 1 diabetes. We just need to get it right. I think we need to focus on our own knitting and not get too distracted by what happens in the outside world.

So there are 2 main -- I kind of think just broadly what's happening in China, interesting. One, sometimes it's cheaper, right? And that cheaper can relate to people cost and just being a bit more scrappy. And I'd like to think we can be at least as scrappy. And two is, there are elements on the regulatory side where they're able to move much faster, right? And that's a lot with nonclinical or GLP tox studies as well as some of the manufacturing. And then you get into people, right, again, it's the same thing, where it's like something is cheaper, right?

And right now, our -- I think we just need to get our own stuff right. I don't know if anybody -- there's some faster or, I'd say, lower bar process that we'd want to embark on related to these -- particularly the stem cell-derived therapies.

I think this works outside of safety issues. Right now, we've proven all of the components of efficacy. And so we need to replicate those components that are super important for efficacy and not run into a safety issue. And the best way not to turn into a safety issue in a person is to get it right in the preclinical setting first, right?

And I think you also have to remember, we're putting a gene-modified stem cell-derived therapy into a patient population that, but for our therapy, would live for decades, most likely, right?

So we have a high bar we have to meet to justify doing that. And I think we need to make sure we test it early, and I don't think there's a faster, easier way to do that when you have such a novel technology. So a long-winded way of saying it's really not something that I think we nor our investors should be myopically focused on. We should be aware of, but not myopically focused on. It's different for other spaces, right?

Yes. That's true.

And even in the CAR T, every time you look up, there's like another -- there are -- there, you run the problem, what's the right target? If you have the right target, what's the right modality? If you have the right target and right modality, what's the right company, right?

But because you don't know some of those answers, fast matters, fast and cheap matters, right? So you see all kinds of times where there's a target with multiple type modalities where people are moving quickly. And some of the Chinese companies are moving quite quickly.

So in that space, it's very much a part of what we have to grapple with and think about because you see an ability to more rapidly move different modalities into human testing and see, hey, does this really work or not, right?

Lastly, from the regulatory side, is there anything you'd call out as being meaningful or impactful thinking specifically FDA, MFN or tariffs? I know we're early, but, yes.

I think that we're at a stage where the most important aspect of what we think about is the FDA, right? I think that -- I'd like to think that given the novelty of this therapy and the interaction to that debate that this will be a constructive relationship.

I will tell you, it's not going to be an easy relationship, only in that I think there are a lot of very difficult assays and safety things we need to work our way through. But what makes it productive is it's transparent, right? And so I think that will continue to be the case. We have to make sure we hold up our end of the bargain on that, too.

MFN, at the end of the day, I think it's a long ways away. There are a lot of things that could happen. And I like to think that we're developing a therapy that has a global price to it anyway.

Tariffs, the supply chain is expensive. So adding cost to the supply chain is something that is complicated for us. So I hope that those are not permanent aspects of our cost structure. We'll grapple with that if that happens.

This is a drug that likely needs to be manufactured at least somewhat proximal to the ultimate end delivery place, at least some end-stage manufacturing. So it will be done if there are tariffs that will end up being done in the United States regardless, but we have them, right, we'll do that for a while here. So I don't really worry about it too much. We think a lot about the FDA, and we'd like to maintain our relationship with them and see how that goes.

Well, I think that's time. Thank you very much, Steve. Really appreciate your time.

Thank you. Thanks, everybody.

Great. Thanks, everyone, for being here. My name is Yanan Zhu. I'm one of the biotech analysts here at Wells Fargo. It is my great pleasure to be doing this fireside chat with Steve Harr, CEO of Sana Biotechnology. Steve, thank you so much for being here.

Thank you for having me, and I really appreciate Wells Fargo putting this together. And I'm sure you know we'll be making forward-looking statements during this time, and people may want to take a look at our disclosures and risk factors in the 10-Q. We spend a lot of time writing them. They're usually worth reading.

Great. Great. Steve, perhaps you could start us off by providing an overview of the company and also review the catalysts investors should pay attention to in the next 6 to 12 months.

Sure. I like the former question. I'll let you guys figure out what the stock catalysts are. I'm pretty thoughtful on how we're building the business and maybe how we think about progress that we're making and then you guys can figure out what will happen to the stock price. A couple of things that I'll just take a step back. We were founded with the idea that cell and gene therapy would be one of the more important transformations in medicine over the coming decades. And there's nothing that we've seen over the last few years, even though it's been a super challenging field that in any way, waivers in our view that, that's going to happen.

We went out and created 2 technologies. One, really trying to -- let's just take a step back, almost every disease that you can think of is caused by either missing or dysfunctional cells. And we thought well, if we can -- the key to replacing a cell is to be able to manufacture it at scale so that will engraft, function and persist. In order to do all of that, the most fundamental part of that is likely probably overcoming allogeneic rejection.

To date, the way people have grappled with that challenge -- and by the way, allogeneic rejection, what that means is you put someone else's cell into your body, your body will see it as foreign and reject it. And the way that people have grappled with that to date is one of two things. One is a profound immunosuppression, which has a lot of side effects and really limits the applicability of these therapies or autologous cells. Autologous cells are both difficult and expensive to scale as well as there are only so many cells you can actually really do that -- make that kind of therapy with.

So the first thing was overcoming rejection. And I'm happy to say, and we'll walk through this, we have done that. You can see that now in all kinds of preclinical models in animals, nonhuman primates, mice, humanized mice, but we've done across a couple of different settings in humans and published it in places like cell journals and very recently in New England Journal of Medicine.

The other technology the company was founded around was the ability to deliver payloads in vivo. And we call that our fusogen technology. And there, our goal is to deliver different payloads, DNA, RNA, protein in a cell-specific way. And again, I think we -- it's an area where we've made real progress. I think we've done it. We've shown we can do this in a very effective way in nonhuman primates. The field has begun to really pick up with a lot of strategic activity, and we need to show that we can do this in humans. That's the next step in doing that.

So what that has left us with is really 3 categories of therapies that we're pushing forward. The first, and I think the one that has the most external excitement is type 1 diabetes. Type 1 diabetes, as you know, from a -- mechanistically, it's a relatively simple disease. The patient's immune system just attacks and kills all of the patient's pancreatic beta cells. Pancreatic beta cells are the only cell in our body that is able to make insulin. And up until 100 years ago, I'd say 101 years ago to be precise, the diagnosis of type 1 diabetes is death sentence. And at that time, there was the introduction of exogenous insulin shots. And so where we are today is you have a disease that affects over 9 million people. It's growing actually much faster than the population. Estimates are there will be 15 million people within about 15 years.

If you have the best possible care in the world, which is in the United States today, you probably have about a decade shorter life expectancy. And if you're not really careful, it's probably more like 20 years shorter. And during that time, life is fraught with side effects from too high of blood sugar like amputation, blindness, kidney failure, heart attack, stroke and many others. And -- and you also have the problems with too low blood sugars, which are coma and even death. And it's an hourly burden for patients throughout their life. And so it's an area with a lot of unmet need and one where we think we can make a substantial difference. I'm sure we're going to talk about that where we are more broadly, but we've shown in humans that we can -- our goal is very simple. We want to give a single treatment that allows a patient to live for life with normal blood sugars, no more insulin, no more monitoring of their blood glucose and no immunosuppression. And it will happen.

Again, we may not make it happen, but that outcome will happen and all the component parts now, I think, with the data we presented in the England Journal of Medicine are there. The second area for the company, as I mentioned, is this in vivo delivery capability. And we'll get into that. But the area where we're applying that first is a generation of in vivo CAR T cells, which basically takes the CAR T process, as you know, from the autologous CAR T setting, where the cells are taken from a patient and manufactured into CAR T cells, which are then put back into the patient with the goal of either going after certain blood cancers or autoimmune diseases.

Our goal is to do this in a single shot into the patient's vein and to make the CAR T cells inside the body, eliminate the need for things like conditioning chemotherapy, which are very challenging for patients and hopefully see comparable or better efficacy. And that's true. We've shown this in nonhuman primates. So we'll come to that. The third area is allogeneic CAR T cells. Allogeneic CAR T cells are -- have been in development for over a decade across multiple different companies. And the biggest challenge that people faced was that this allogeneic rejection. You put someone else's cells in your body will see them as foreign and reject them. And again, we've shown we've overcome that. So we're developing our allogeneic CAR T cells, one for the treatment of different autoimmune diseases and two, for the treatment of certain blood cancers. And optimistic we have something that really does work. I will say it's a more challenging field right now.

I kind of look at the world, and I see only a handful, maybe 2 stand-alone CAR T companies broadly that have a positive enterprise value. And we don't always get the privilege of doing what we want to do. We get the privilege of doing what we want to do that other people will pay for because we are dependent upon either our investors' capital or some type of a partnership. And so we'll have data that will more clearly define where those drugs are soon, and we'll have to see if that is enough to generate a partnership and/or external investor excitement. If neither one happens, it may be difficult for us to continue to develop them. So I'll pause there for a minute, but that's really what's going on inside the company across 3 different areas.

In terms of areas that we think a lot about for marking where we are this -- I'll start with -- I think that the diabetes program can be one of the more valuable therapies in development. It's a very large market that is very unsatiated and where I think we'll be able to the drug works as we hope over time, to sell as much of this as we can make. And so I think the most important value inflection points for the company will be progress with that therapy. And if you think about the most important value inflection point, it is showing that our vision is true. And what does that mean?

That is a patient with -- who has controlled blood sugars with no insulin and no immunosuppression. So we've guided to an IND as early as next year. That means we're trying to get it done next year. That's our every expectation. Things don't always go according to expectations, but we'll see. And it shouldn't be that long afterwards where you begin to see real proof of concept in people. And we can go through other things. But to me, that's the defining moment for the company that we're really working our way towards.

Great. Thanks for that very comprehensive overview and.

Hope I've put you asleep.

No, no. This is a...

8 in the morning, right? You got to, yes.

Let's do talk about the type 1 diabetes program and start from the recent data that you put out, very exciting data showing that this is an investigator-sponsored trial of a -- of a primary islet cell. But in that setting, in the first patient treated, those cells appear to be in the body functioning for 6 months as of the last follow-up, which I think is unprecedented in terms of the duration. I was wondering, has there been additional follow-up since that update? How might the data look? And when might we hear about another update?

I'm going to just start by putting these data into context. And so I think one of the things that I mentioned earlier was this disease, type 1 diabetes is relatively straightforward. It's patient has no pancreatic beta cells, right? And so I'm going to go back and forth. The pancreatic islet is basically beta cells in a support structure. It's alpha beta cells, beta cells, delta cells. And what was discovered about 25 years ago and published in the Journal of Medicine by James Shapiro is that cadaveric islets, meaning taking the pancreas from someone who recently died and donates their pancreas and isolating the islets and transplanting that into a patient can lead to normal blood glucoses out now well out over 15 years or so.

The challenge with that has been that, one, cadavers aren't a great source, right? And so it's neither replicable, right? There's a lot of variability in the donor nor is it scalable. And the bigger challenge has been that the patient has to have profound immunosuppression, right, like an organ transplant. And there just aren't that many people for whom lifelong immunosuppression is better than lifelong insulin. The second, over the last few years, we've seen several different parties show that you can take pluripotent stem cells, make them into pancreatic islets and transplant them into patients and see really, again, great outcomes for these patients. That is a more scalable source. It is a more replicable source, but you still have the challenge of immunosuppression. And again, there just aren't that many people who that's really the right therapy for.

And so our goal here was to show that with the genomic modifications that we make to overcome both allogeneic and autoimmune recognition of these cells, we could transplant allogeneic islets and see no evidence of immunosuppression. That was the goal, right? And -- the way we -- so it's a phase -- it's a first-in-human safety study. And so the dose is low. So the goal wasn't to get the patient off of insulin. And the goal was to show that they did -- that they would -- that their immune system wouldn't recognize and kill those cells. And I'd say hands-down mission accomplished. The patient is doing well. All of our endpoints are met. He's making his own insulin now for the first time since really the 1980s, so in 40-some years. And there is very clear evidence by something called C-peptide, which is a biomarker.

So when a beta cell makes insulin, it actually makes something called pro-insulin. And as it's excreted from the cell, it's cleaved into insulin and C-peptide. The C-peptide is a one-to-one measure of the amount of insulin that the body is making. So what you see is the patient is making his own insulin. They then had a mixed meal tolerance test, which looks to say, hey, do they function? Do you see increased insulin production when a patient eats. And again, we saw that, and you see it very -- work very well over the course of the study so far, 6 months.

And you can see with imaging. So first with MRIs over time and then also with a PET scan that specifically looks for pancreatic beta cells that these cells are surviving. And now you can see with the C-peptide that they're functioning. And so it was a great proof of concept. And what it means to me is now all the component parts. You know beta cell transplants work. You know you can make them from stem cells, and you now know that you can gene modify them to hide them from the immune system. So all the component parts are there for that functional cure we talked about. And we just need to make that happen, right?

And so that patient continues to your question, continues to be followed. I think in the original discussion of this, we'd mentioned the patient had been treated in early December. And so that means he's now out over 9 months. I don't know. I know of no recent data. What I would tell you is we will update you over time as the patient continues to do well. I think you should assume the patient does very well. The immune system should have already killed these cells if it was going to. So I would view it as material if they die, we'll tell you. If they happen to live, we'll leave it to the -- our investigators to present them at scientific forums because that's -- I would presume that's a likely outcome for a while.

Got it. Got it. So as you mentioned, this is the first-in-human study. So you start -- the investigators study started at a very low dose. I think that's roughly 7% of what's needed for insulin independence. Do you think as the dose gets higher, you will have the same evasion of the immune system kind of effect?

Yes. Yes. So this is actually -- one of the things that's interesting about the cadaveric islet, the gene modifications we do are on cells after they've already differentiated. There are many, many of them. And so we're pretty good at gene editing, but we're not perfect. And so we actually -- because we make pre-gene modifications, we knock out 2 genes and we knock in. Actually, in aggregate, that means that under 50% of the cells had all of the edits we want. And so what you see -- and there are some cells that have none of the edits you want, right? What you see then is you actually see in the paper, and you can see this, a very robust immune response against the cells that are either unedited or partially edited and that the cells that are fully edited evade immune detection.

So this isn't immunosuppression. This isn't about dose. At this dose, you see a very robust immune response. The difference in the stem cell-derived product that we're working on is 100% of the edits will have the gene modification that we're looking for, because you start with a single cell, right we've done all the gene edits to, and we grow them up and then we make them into pancreatic islets.

And so actually, I expect that they will do even better because you won't have an immune response, a local immune response to other cells around you. But there's no -- every reason to believe, every reason to believe that higher dose will translate to a comparable immune agent with it. It's not a dose effect. Because you already know at the dose we had that there's a robust immune response on edited cells or partially edited cells. This will be fine. And you also know that you can give people things like vaccines with tiny amounts of dose and then you see robust -- this isn't -- the immune system isn't kind of dose dependent, right? And it's threshold dependent, but not dose dependent.

Great. Yes. That's very reassuring. I was wondering, is there additional patients -- are there additional patients?

Absolutely note. We have no intention doing that.

Okay.

The proof of concept has happened, right? And just to give you a sense, I mean, I know that people think sometimes well N-of-1, you'd like to see more patients. To your earlier point, this has never happened before. There's never an example of someone having transplanted cells into a normal immune system without immune rejection. And I think the fact that the New England Journal of Medicine not only chose to publish it, but wrote an editorial, which came out yesterday, if you look at the print version of England Journal of Medicine, tells you how profound the effect is. So the proof of concept is done.

So now we need to focus on the real therapeutic. And the real therapeutic requires a higher dose, and we would want to move forward with something that you could turn not just into a scientific proof of concept, but a scalable therapeutic that we can get to patients around the world. We're not interested in making -- in scientific experiments, we're interested in making therapies for people.

Great. So let's do talk about the path to that iPSC product you're going to put into the clinic. So what are the remaining gating items before you can put that into the clinic? And you did say that at a recent update that you had some recent FDA interact meeting, which increased your confidence in moving forward with your iPSC product. Can you share any takeaways from that meeting?

Yes. Maybe just take a step back. The drug is called SC451, and it is a gene-modified stem cell-derived pancreatic islet therapy. And so what that means is that the first and most important step and the most challenging step for us to date has been you need to start -- you need to make a gene-modified master cell bank. So you start your product forever comes from a single cell, right? And so the way we -- this happened is we took a host of different cell lines over the course of the last 5, 6 years, we've looked at 100-plus lines. We really wanted an O negative line because that can go into every patient. If you use an A positive patient as a donor as an example, then only A or AB blood types will be able to get your therapy. So O negative, which means 100% of the population get this. And we -- the goal was to make a cell that was genomically stable over time.

So you're -- when you grow these cells, just like any cell, every time a cell divides, it makes a couple of mistakes. Usually a noncoding DNA, it doesn't matter. But when you start with the cell and every dose is a billion cells, right? So if you want to treat 1,000 people you're making a trillion cells. You want to treat 100,000 people, you're making 100 trillion cells. You're going to have a lot of genetic mutations that can accumulate. And if you're not really careful, those mutations will show up in DNA repair enzymes because they're going to allow the cells to grow faster.

And as an example, you don't really want to -- I think most people know p53 as a mutation, for example, you don't want to transplant a billion cells in a patient with p53 mutation. That's just probably not a good idea, right? And so we spent a lot of time and more time than we thought it would in making this master cell bank with a stable genome, meaning that we don't see emergence of problematic mutations. And then also it retains pluripotency, meaning it can go and grow into many, many different types of cells, including pancreatic islets. It was way more challenging than we thought it would be, but we've now done that. And what we really spent time with the FDA is aligning around what the criteria would be for releasing and continuing to maintain that master cell bank.

So it's a very big step forward. As far as I'm aware, and again, just talking to potential partners in the large pharma world and things, this has been a huge challenge for the field. This is not a Sana-specific problem, making it -- once you start gene editing these stem cells, you introduce a lot of genomic instability. And so really figuring out the cell line, the conditions, and I think it's a little bit of luck because it's just time to make this happen is a big accomplishment and something that likely gives us a multiple year of competitive advantage and something that should derisk the company dramatically for a long period of time.

So what's left to get to the IND now that we have that. But to do the GLP tox study, you have to do it with the cell line that you're going to use. That's your product forever, right? And so we need to get alignment around that cell line to finish that out, and we need to do the GMP manufacturing tech transfer and run, right? So we've been making these cells at a research scale for a long -- research -- with research reagents, I should say, for a long time. And now we've transfers over to GMP reagents, which has a lot to do with just documentation and documentation at your suppliers and things like that, not just documentation inside the company. So finish that process, get it into a manufacturing facility, make and release the drug. So finish the tox study, release drug, IND filed, hopefully, then we begin to treat patients.

Got it.

And I'll get into this a little bit, but manufacturing these stem cell-derived products is not simple. And there are several really important elements to this. I kind of always think about manufacturing as purity potency yield, right? You're looking at all those things. And uniquely in this space, purity plays an important role in safety. So purity is often in small molecules, you're just trying to make sure you don't have some weird off-target reaction or maybe an allergic reaction to an excipient. Here, purity comes to -- down to other cells that you might transplant. And other cells you might transplant can cause tumors and things like that, they're continuing to divide. And so ensuring that we have the right purity potency is -- purity and potency is really, really important. And we'll get to yield at some point, I'm sure, because scaling these is very complicated.

Got it. Got it. And the FDA interact meeting takeaways, if any?

As I said, I think we have alignment a way to go -- 2 things, alignment in our -- around the master cell -- there's a pre-master cell bank, there's a master cell bank and there's a working cell bank. So pre-master cell bank is the cells you actually start with, you take them and you make master cell bank. That's your product for forever, right? And you need many, many vials of that and then you make a working cell bank that you make the drug from each time. So alignment around what that all looks like. And then the other is most -- alignment around most of our preclinical testing package from the Interact meeting. The most of is there are certain elements that you can't discuss with the Interact that require the pre-IND meeting. And so that's not at that [indiscernible] separately.

Got it. And IND could happen as early as 2026, right?

We always say as early as, and it's a convention we adopted a while ago. That means it's our goal, but we also want to articulate and make sure you recognize that we don't always -- some of our goals can get hit, right? And science is complicated and things can have a little bit of a setback. And so -- but it's our goal. I think we've got a nice buffer built in. It's every expectation we have right now, but we also understand this is really novel science, and it may not happen next year.

Got it. Got it. Maybe 2 questions on the desired product profile. One, on durability. What is the minimum bar that will be required by patients, physicians for this type of treatment? I think you.

I think the minimum bar required by the patients is likely a lot lower than the minimum bar required by us. I think if you were to ask a patient and they were to get this, for example, once per year, they'd be very happy with that. I mean if you can imagine all the injections that they deal with on a daily basis. This is a very complex drug to manufacture and scale. And I think if a patient end up being treated once per year, it wouldn't be commercially viable. It's just -- we wouldn't be able to make enough of it and the cost of goods would be too high. So I don't yet know where that bar really sits from a company perspective. My guess is you want it to last at least 5 to 10 years. And I would love it to last for life. There's not a reason why it shouldn't last for life biologically.

And so that will be our goal is that it lasts a long, long time, hopefully many decades. And again, if you just take the scale challenge here, so 15 million people in 2040, so that means you treat 100,000 patients per year. And that's it. No one else ever gets -- the disease is stable from there. It stops growing, right? 100,000 people per year, which is -- would be an enormously successful cell therapy and enormous successful drug, I think. It would take you 150 years to treat all the people around the world. If you just did the United States, it would take you over 25 years. And so that just gives you a sense of the scale challenge ahead of us. So if we are now having to treat every patient every 5 years or something, that becomes something we're never going to be able to meet our goal, which is to make this drug very broadly accessible to patients around the world.

Got it. That's a very helpful way to look at this topic. On delivery, do you intend it to be fully insulin independence? And if so, I think you would need to put in 15x more cells than what the IST put in, right?

Yes. So the field is actually pretty well defined around this. And I don't know if these numbers are going to be exactly where we end up. But if you look at cadaveric islets, people have been doing them, there are thousands of them have been done. It typically takes 2 to 4 different pancreas -- donor pancreas to get that to work. It's around 1 billion cells, right? So Vertex just published their program in the New England Journal of Medicine and their dose is 800 million cells. So just think of it as circa 1 billion cells. I mean, just plus or minus. So we might be -- and the variables in that, that we have to work through, one, our manufacturing process, we may end up with slightly different potency than some of these. It might be a little higher, it might be a little lower, right?

The second is immunosuppression, in particular, the calcineurin inhibitors that are used in immunosuppression are actually quite toxic to these drugs and -- sorry, this therapy, the beta cells. And so it may be because of that, we get away with a lower dose. And there's some evidence of that from the cadaveric islet field that when you get rid of the calcineurin inhibitors, you have a better effect.

The third is our site of delivery is different. And so the most common way to deliver these cells is through an intraportal injection, meaning into the portal vein, which is a big vein that drains into your liver. And there are a couple of challenges with that, not very scalable. It has to be done on interventional radiology. Two, when cells go into your blood, they shouldn't be there. It's usually a tumor or something. So we have something called an immediate blood-mediated immune response, IBMIR, that will kill many cells right away. And hopefully, we don't have that. And then the cells may just engraft differently in the liver versus where we plan to put them, which is in the muscle. And so that may lead to a higher dose, it may lead to a lower dose. And -- but when you're thinking about what's the dose, just think circa 1 billion cells.

And it's practical to put that many into the muscle in the arm, right?

It is practical to put that in. And just again, even as you look at the cell dose that was delivered in the study of the Uppsala study, remember, the majority of cells weren't gene edited. So you were delivering several hundred million cells to get the, let's call it, 60 million to 80 million cells that were all gene edited, right? And so it's very practical. But exactly how we do that and in what muscle or muscles might want to do muscles is something we're still working through because you don't want to do is inject a big bolus of liquid and create like a compartment syndrome inside of your muscle where you can't. You need to get perfusion.

And you can see -- if you look at those -- if you look at the pictures, the MRIs in New England Journal of Medicine, what you'll see is little dots, right? And those little dots are little pellets or beads, they're not really beads, but they're little aggregations that are put in there. So you don't want to just inject a big old bolus of cells, and it's a gradual injection as the needle is being pulled back.

Yes. Yes. Great. Thanks for all those insights. Perhaps let's talk about the in vivo CAR T efforts here. I think this is certainly an area that's getting attention from pharma. Kite did a deal, AstraZeneca did a deal. AbbVie did also earlier did the deal. So are you getting interest from pharma for your program? Could this potentially be an area for nondilutive financing through partnership?

Maybe. Let's take a step back. So what we're trying to do is deliver cells, I said deliver genetic material to T cells, right, to make a CAR T cell and hopefully have the therapeutic effect of that CAR T cell that we're intending. And so what we started with is a -- making a CD19 CAR T cell, right? So you could do this with other targets. And that drug is called SG-299.

In nonhuman primates, we've shown that we can get -- we have very cell-specific delivery. You don't see any signal in the liver in a GLP tox study or gonadal tissue or other tissues, right? And you get a really nice delivery of payload, right? And we've shown that we get deep B-cell depletion, meaning you can't find B cells even in lymph nodes. And that when they do come back, you get this B-cell reset that people have been looking for in the autoimmune space.

So I think that what we've shown in the preclinical setting is a best-in-class profile and that, that best-in-class profile is true if you believe that cell-specific delivery really matters. So you don't want to have off-target cells and you believe you want to have integrating DNA, right, to really kind of allow for expansion with CAR T cells. If you think that you can use nonspecific delivery, others are actually quite good at that. And we just may have made things too complicated, right, if that's what you believe. But the thing that you've seen in all of the strategic transactions is at least some human data, which we don't have, right?

And so most likely to really unlock value, human data is very, very important. And so where are we in that process? We're ready to move towards an IND. The long pole in the tent for that is the GMP manufacturing, which is about -- let's call it about a year from when we say go. And what's preventing us from saying go right now is we need money to move this forward. This is not an easy time to be doing cell and gene therapy. We think the type 1 diabetes is a very, very unique and high return, risk-adjusted return opportunity.

And so in order to move through this IND, we need to bring capital either into the company in some way or spin this out to move it forward. And so we will either find the money, may wait a little bit of time until our cost of capital is lower, partner this, as you mentioned. But with the partnership, the most important part of that for me is enabling this to move forward because I think there's a lot of value unlock and/or spin it out into some kind of a, let's call it, a majority-owned entity where capital is really dedicated to pushing just that therapy forward.

So I think that, to your point, given all of the strategic activity in this space, a little bit of human data can unlock a lot of value with this platform. And it's not going to work for just one therapy. It's one of these things where it either doesn't work, which, again, I think we've got really promising nonhuman primate data, but we need to see that in humans. And if it does work, it's likely going to work for multiple different CARs, right? It's unlikely to be just one. It's going to be CD19, BCMA and a whole host of other novel targets.

Right, right. Lastly, if we may briefly touch on your allogeneic effort. Can you talk about where the program is the differentiation from other allogeneic efforts -- other companies?

Well, I think the differentiation for the allogeneic efforts is that we overcome allogeneic rejection, right? And we're able to do this with what we call normal lymphodepletion with autologous CAR T cell. And again, we've shown that. It's now been published. It was published in a cell journal just last week. Again, looking at the human data from those studies, showing that we've overcome the allogeneic recognition and rejection of these cells. So that gives us an opportunity to hopefully move forward with a profile that is comparable or maybe even better, but hopefully comparable to autologous CAR T cells efficacy, both in oncology and autoimmune setting and with a much easier and more scalable manufacturing process. So that's what's different. That's our goal.

I think we have to show that we can do that in humans, and those are the data that we will have hopefully soon. And then we need to make sure that someone moves this forward. My sense is investors are so skeptical on the CAR T cell space. Again, every -- most -- every company has a negative enterprise value that it will be a therapy that will do better we move forward with a partner. There's -- again, there's -- the pharmaceutical industry is much more optimistic than investors are around what this can do. And hopefully, we're able to do something like that. If we can't get a partner for this, it's unlikely to move forward. I think we'll be able to do that, though.

Got it. With that, I think we are at time. So I wanted to thank you, Steve, for your insight pleasure and for being with us.

Thanks, everybody, for their time and attention.

Great. Everyone, have a great day.

Thank you for being here. My name is Sam Semenkow, I'm one of the Biotech analysts here at Citi. And today, it's my pleasure to be hosting Steve Harr for a fireside chat. Steve, thank you so much for being here.

Thank you for having me, Sam, and thanks to Citi for having us. And I will always say that one thing that just in case people are listening more online and things, we will make forward-looking statements. And we have a whole bunch of risk factors in our most recent 10-Q. We spent a lot of time writing those and take a look at them. There's usually -- there's always good information on those. So please do read them.

Great. So thank you, Steve. So why don't we just kick it off at the top and tell us about Sana and where you are as a company today?

Sure. So we're now about 6.5 years old. So we're not that old of a company, but we're old enough to have done a few things, made a few mistakes and made some real progress. And so we started the company with the idea that over the next several decades, one of the most important advances in medicines would be the ability to modify cells and use them as medicines. And that's not a popular thing right now, but I think there's nothing that we've seen this -- show that to be anything but likely to be true. And with that, we wanted to tackle two scientific challenges.

One was if you think about replacing a cell or transplanting the cell, you want to be able to make a cell at scale that will engraft function and persist. And the biggest challenge in that equation has been persistence and in particular, overcoming allogeneic rejection. And people have gone about that in two different ways. One is by severe or -- sorry, significant immunosuppression like an organ transplant. The other has been with autologous cells, neither of which is very scalable or addressable for the broad population. So that's the first thing we went after.

The second is we want to be able to deliver payloads in vivo. And so the goal was to be able to deliver any payload to any cell in a specific and repeatable way. And the technology we started with -- allowed us to do any payload DNA, RNA protein, and be very specific in the cells that we went after. And so we've actually made really good progress in both of them. And I think we have best-in-class platforms in both of those. And in particular, that's left us with three real areas of products or platforms, let's call them.

One is a drug called, SC451, which is a gene-modified stem-cell derived pancreatic islet. And it is a potentially curative -- onetime curative therapy for people who are living with type 1 diabetes. It's a massive unmet need. There are 9 million people in the world that have this. It's growing. If you have this disease, if you have the best possible care right now, you probably live about a decade less than someone without diabetes and most people are probably more like 20 years less. And during that time, you have risk for amputations, blindness, heart attack, stroke, kidney failure. And the other problem, not too high blood sugar, but too low, which is coma and/or death. And it's a disease where there hasn't really been a meaningful change in the standard of care in 100 years, and where I think we have a real opportunity to make a very important medicine.

The second area is -- and we can talk a lot about that, I'm guessing, because that's probably the area of most investor interest. The second area is our in vivo delivery capability. And in particular, right now, we're focused on in vivo CAR T cells. I think we've shown really best-in-class data in the nonhuman primate, and that's not in people. It's an area where strategic activity has picked up a lot lately, in particular, for programs that have shown at least one or two patients worth of human data. And so we are ready to move towards human data. We have to figure out how we come up with the money to do that. I think that's something that we're really working towards. But it's a program we're very excited about.

And the third is allogeneic CAR T cells. And we have a couple of different drugs in development for allogeneic CAR T cells. Yes, I think one of the things we said in the past is -- look what we've shown is, first of all, with allogeneic cells, you want to avoid immune rejection. You put someone else's cells into you, you will kill them. You recognize you will kill them. We've shown we can do -- we can avoid immune detection. And actually, we just had a paper published with data in that last week, it was one of the cell journals, again showing with -- that we avoid immune detection.

So we're quite confident that we have a drug that works here. We've shown you that a CD19 CAR T cell that we make will lead to deep B-cell depletion in patients with cancer. And that's the goal of the autoimmune setting. So we have to define if this drug is okay, good or great. That's part one. And part two is we have to come up with a capital to move it forward.

I think it's pretty clear right now. I think there are only two stand-alone CAR T companies in the world that have a positive enterprise value. And one of them has a couple of billion dollars of sales, and the other one has a drug that may be thought of as best-in-class. And what we have to figure out is can we come up with enough data that investors are going to want to continue to invest in this? Or is this a program we have to either partner or move on from? Because we will not starve our type 1 diabetes asset. It is the most transformative asset in the company. And that gives you just a sense of these three areas and probably the fourth area that everybody likes to talk about, which is capital. So it is a hugely important part of our future. So that's where we are and what we're up to.

Thank you for that overview. You're correct. I do have a bunch of questions on type 1 diabetes. So let's start there.

So you recently had the FDA Interact meeting with some feedback that you've framed as positive. So I guess what gives you confidence out of that meeting that you can take your lead GMP cell line forward for the type 1 diabetes program?

Yes. I want to move -- take two steps back, and [ I'm going to walk us through that ] and then I'm going to tell you -- I'm going to answer your question because I think the reason we're confident we can do this because we have alignment on what we need to do. That's the simplest answer, and we can do it. We've done it.

The -- as you take a step back, type 1 diabetes is actually a relatively simple disease to understand. It's a missing pancreatic beta cell, right? The patient's immune system has killed the beta cell. So I'm going to talk about islets. Pancreatic islet is simply just pancreatic alpha, beta and delta cells. You could also think about as pancreatic beta cells and its support structure, right?

And what -- about 25 years ago, James Shapiro and then others have shown that -- began to show that you can transplant cadaverically-derived pancreatic islets and that would actually be curative for a period for a patient with type 1 diabetes. Often some people are out now 15, 20 years. Cadaveric islets aren't a very scalable and replicable supply source. And these patients, the people who get the cells have to be on lifelong immunosuppression. And so there hasn't had -- it's been important for some people, but it hasn't transformed the field. It just turns out there aren't that many people who are on lifelong immunosuppressants [ rather than ] lifelong insulin.

Over the last few years, several different groups have shown that you can take pluripotent stem cells and make them into islets. And that may be a more scalable source. It's certainly more replicable. But you still have this challenge, which is the immunosuppression. And very recently in the New England Journal of Medicine, just published this study for us, we showed that we could get rid of this immunosuppression. So now really a cure is kind of inevitable, right?

Again, I hope we're the ones that do it. We seem to be the most advanced in this field, but someone's going to do this. So there are really kind of a handful of scientific challenges of turning that vision into a reality. And really, they relate at this point because they've already shown you can overcome allogeneic and autoimmune rejection to a couple of things related to manufacturing.

And the most important and the most challenging is what you're getting at, making a gene-modified pluripotent stem cell-based master cell bank. So what that really means is you're making a single cell where you made all the gene modifications. And from that single cell forever, you are going to grow out all of your product. It's going to divide, divide and divide, and then you're going to differentiate it from stem cells into a pancreatic islet.

And the challenge that we faced over many years is that we would see as we went through many, many divisions, the emergence of some types of mutations. And I always give the example of something like a [ p53 ] mutation. I think most people would recognize that's a pretty bad mutation to have and that leads to a high risk of cancer. And we don't want to transplant those types of cells into a person.

And it's taken us a long time to develop a gene-modified stem cell bank where we didn't see emergence of mutations. And we've done it. So we then need to align with the FDA around all the release criteria. So this could be our source for good, right? And I think we have alignment with them. We can do what we need to do. We've done what we need to do. And it's a relatively straightforward path.

And now we need to do two things to get to an IND, which I'm sure you're going to ask me about. But the master cell bank is something that you should feel very good we have in our hands.

And how long have you had that master cell bank? How long have you looked for mutations as those cells divide?

Well, we've been looking -- so this single cell we've had for several years. It's been through many, many, many divisions. It's actually made it to where we made islets from it, using more or less our current process, and where we transplanted them into mice and they continue to function for 15 months with no evidence, we talk about this a little bit of any tumors or histologic abnormalities.

And we're quite -- this has been really, really well studied. It's been through many, many, many divisions. We can -- enough to make enough product for decades. So this is something that I think it's a pretty special cell, right. Again, always people ask how you get it? I think it's a lot about the quality of the cell you start with. It's somewhat -- it's a lot about the process you use to make it, and it's somewhat about luck, right?

Even in the run we made, we got -- I don't know, you get like 30 cells that have all the right edits in them and all the right locations, we're very confident, and only one didn't having mutations happen, right? And so I think there is an element of luck to it, too.

Okay. And so...

We looked at probably 1,000 -- 100 and some lines. This is not overnight process or a little bit of like, oh, we tried a couple of times, and turned out one time it worked. This was a lot of hard work.

And again, this is the cell line that went into the mice and it's been into the NHPs as well?

Never been in nonhuman primates.

Nonhuman. Okay. So it's a different cell line. That wasn't a nonhuman primate...

You can't really transplant lines across species. You can do it on a human immune system, in a mouse, right? I mean you can knock out the immune system in a mouse. But you couldn't do it in a nonhuman primate, it would reject a human cell. We have different like glycosylation patterns on our proteins.

Okay. And so what do you need to do before you can file an IND?

Yes. So there are two main bodies of activities that we still have to do. One is all of the -- to finish up and -- do all and finish all of the nonclinical package. In the nonclinical package, there are things like GLP toxicology studies, and the main risk in a gene-modified stem-cell derived product we really worried about is tumors, right? There are other things to worry about, but that's the main risk, right?

And then the second aspect -- and that -- we also have to do within that nonclinical package efficacy studies, some other things. The second thing you do -- we have to do is complete our GMP manufacturing. And that really, at this point, is final process lock, tech transfer to the manufacturing site, and then actually doing the runs and then releasing the drug product.

So just think of it as two tracks, preclinical toxicology studies, GMP manufacturing. All of which we've done, but all of which have to be redone in kind of the right setting in the right way.

And they're happening in parallel?

They're in parallel, yes.

Okay. When do you think you'll be in a place to give maybe more narrow guidance than as early as 2026?

After we got -- after we've done it.

Does that suggest that we could find out that the IND is filed once it's filed? Or would you give potentially...

I don't know. I don't see any reason to do it beforehand. The thing is about this, maybe we would -- just because there was some reason too, if there was a delay, we would have got buffer built into this. But you do multiple engineering runs, for example, at a manufacturing site. Are you going to have 100% success rate? Maybe. But every time you have a failed run, let's say you get -- takes you 4 to get 3 good runs. That's another month, 1.5 months, maybe 2 months to fix it, who knows. And so we need to make sure that we -- I'd rather be accurate than precise. And right now, the accuracy is next year. I think we've got some buffer built into that. But there may not be, right? And I think to be more precise on that right now is probably not correct.

Okay. Would you need to engage with FDA ahead of filing for the IND? Or do you have everything you need from...

We'll talk to them tomorrow.

You'll talk to them tomorrow. Is there anything specific that you're able to share along the process? Is it just locking in that manufacturing process and the release assays?

The -- so we did an interact meeting, we will do -- generally, there's a pre-IND meeting. We may have more than one -- we'll likely have more than one interaction with the FDA. The things that you're most -- you want to make sure that they are aligned with you on exactly what you're doing in your GLP tox study. And that actually cannot, if you look on the website, be the topic in your interact meeting, it's not allowed to be. So that's part 1.

Part 2 is your final release criteria. And you want to have that as late in the process as you can as you know more and more about where you are in your analytical package. It's really not the manufacturing process. It's the analytical package that you need to align with them on. And in particular, and you can see this in both what we and competitors do. So this is a little bit of a different drug.

So you manufacture -- we manufacture the cells. And we then kind of -- you're almost done, and you cryopreserve them. And you can then hold them and leave them frozen for a long time. The drug is then ordered. The cells are thawed. And at that point, they are re-clustered into a -- like a -- it's called a cluster or pseudo islet, right? And they're -- they have the final release and they're sent to the manufacturing site. They need to be utilized relatively quickly after that, right.

And one of the things we need to figure out is what tests will we do at that cryopreservation step, where we have all kinds of time, right? And what steps do we need to do at the time they've been kind of clustered where we have very limited time, right? To do a lot of analysis. And so we need to do as much as we can upfront. But in order to do as much as we can upfront, we need to prove to ourselves and then regulators that what we do upfront directly correlates to what happens at the final release. Does that make sense?

It does, yes. So you'll have to do some of those up -- you have to do like a bioequivalence between the two in a way?

Quite the right word bioequivalence, but that's fair way to think about it, yes.

Understood. Okay. And so then how quickly once you have IND clearance, could you move this into a Phase I study?

Very quickly. I mean this is a -- there are -- this is a very competitive -- in a good way for us. I think there are a lot of sites that would like to be a part of this. There are a lot of patients that really like to be a part of this study. Sites that take 3 to 6 months to get their process started won't be part of the early Phase I study. We just won't do it. There are enough places that are willing to do contracting and other work at risk. And so I think it can be done very quickly.

I say that within the context of I'm always surprised at how long it takes these medical centers and CROs and companies. And I don't -- I'm not trying to blame them, only to kind of align on the simple elements of contracting and as you go through an [ IRB, ] post histone you can have an [ IRB ] that just doesn't meet for a month, right? It just happens to be that they can't get a quorum. And then you delayed a month, right? And so those types of things happen, but it should be very quick. And once it's cleared, I would think the first patient treated is a matter of days, or hours. It's not going to take very long.

And should we expect that first patient to be your initial disclosure like you did with the investigator-sponsored trial or -- I'm not sure? It's a little early. I know I'm pushing you.

I think, yes, we filed an IND, which is probably material. We cleared an IND, which is almost certainly material for us. We dosed the first patient. I mean at some point, you guys will have a little fatigue of like kind of press releases...

We'll see. Okay. So it sounds like the path to getting to that Phase I trial is pretty well outlined in your mind and as you've described. What do you think the -- how do you envision the market opportunity once you establish proof-of-concept and you have registrational data? What...

Our goal is to make this is broadly accessible to patients with type 1 diabetes as possible. That doesn't mean that all the data will be available to everybody, right? And so as an example, a lot of patients with type 1 diabetes who -- particularly those who are living it for decades and decades are at very high risk for cardiovascular -- adverse cardiovascular outcomes. We're unlikely going to want to have a patient who has a high risk of heart attack in a month or two in our study.

And so there will be elements that we restrict around -- kind of preexisting conditions that I think will go away over time, but just as -- so that we have a clearer idea of any safety signal if it's caused by our drug, or it's caused by the disease, we're going to want to kind of be narrower. We almost certainly will start in adults. I can't imagine that not to be true. And then gradually work our way back into adolescents and then younger and younger.

So I would presume the initial population is probably pretty similar to the initial enrollment criteria you see in the New England Journal Medicine paper that we did for the cadaveric islets. And I would also presume that over the course of even a Phase I development plan, we can grow that. And -- but it will not -- even at the launch, it will not be all 9 million people with type 1 diabetes, but I hope it's a vast majority.

And again, things that we've done as much as we can to do that, we're getting -- we started by really looking at almost every O negative cell line we could find on the planet and blood type matters. And so you can see even in other programs that if you have A blood type you probably -- I'd like to say, an A blood type, you may only be able to treat 40% of the population, right? Or if you are a B blood type, it's going to be even smaller than that. And so by having an O negative, we can hopefully treat 100% of addressable patients.

There will -- again, I think we'll get to a very large, large percentage of the 9 million people pretty quickly.