Sana Biotechnology, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Sana is a preclinical-stage biotechnology company developing engineered cell therapies; it had no approved products and generated no revenue.
Financial performance and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $53.2 million | $40.1 million | $140.1 million | $96.5 million |
| Operating expenses | $83.4 million | $51.6 million | $245.6 million | $172.8 million |
| Net loss | $83.3 million | $51.5 million | $245.2 million | $172.1 million |
| Net loss per share | $0.46 | $3.76 | $1.53 | $14.05 |
| Cash used in operating activities | Not separately stated | Not separately stated | $141.0 million | $100.4 million |
At September 30, 2021, cash, cash equivalents and marketable securities totaled $866.1 million; total current assets were $612.8 million and total current liabilities were $92.0 million. The company reported no debt. Total liabilities were $402.7 million, including contingent consideration and success-payment liabilities. Stockholders’ equity was $830.1 million, and accumulated deficit was $674.6 million. No meaningful operating margin comparison is available because the company had no revenue.
For the nine months, investing activities used $172.1 million, including $24.7 million for property and equipment; financing activities provided $628.6 million, primarily from the IPO. Cash, cash equivalents and restricted cash increased by $315.5 million to $442.5 million. The company raised $626.4 million net in its February 2021 IPO, issuing 27.0 million shares at $25 per share.
Changes versus comparable periods
- Q3 net loss increased $31.8 million year over year; nine-month net loss increased $73.1 million.
- Nine-month R&D expense rose $43.7 million, mainly from higher personnel, research and laboratory, and facility costs. G&A expense rose $18.7 million, reflecting increased staffing, legal, insurance and public-company costs.
- Nine-month operating cash use increased $40.5 million. IPO proceeds drove a substantial increase in financing cash flow and liquidity.
- Fair-value changes in success-payment and contingent-consideration liabilities materially affected reported expenses but were non-cash. These items contributed $67.8 million of expense in the first nine months of 2021, versus $57.3 million in 2020.
Outlook, risks and notable items
- Management expects existing cash, cash equivalents and marketable securities to fund working capital and capital expenditure needs for approximately 36 months from the filing’s current operating plan. It expects expenses and operating losses to increase as research, preclinical development, clinical preparation and manufacturing capabilities expand; further financing may eventually be needed.
- All product candidates remained preclinical. Sana aimed to file multiple INDs in 2022 and 2023; these are plans, not assured milestones. It reported modest COVID-19-related delays, supply constraints and potential further disruption to research, manufacturing and future trials.
- In October 2021, after quarter-end, Sana entered a Beam Therapeutics license agreement and paid $50 million upfront. The agreement also provides for up to $65 million per licensed product in development and commercial milestones, plus royalties. A Sana director had a significant beneficial ownership interest in Beam.
- Potential obligations include up to $500 million of Cobalt contingent consideration, up to $500 million of Cobalt success payments, and up to $175 million of Harvard success payments. Their estimated fair values and related GAAP expenses can fluctuate substantially with stock price, market capitalization, milestone assumptions and other inputs.
- Key risks include unproven technology and preclinical programs, clinical and regulatory uncertainty, manufacturing build-out and supply challenges, dependence on third-party and licensed technology, financing needs, and possible dilution or cash demands from milestone and success-payment obligations. Management stated disclosure controls were effective at a reasonable-assurance level; no material legal proceedings were reported.
Investor verification checklist
- Track IND-enabling work and whether the targeted 2022–2023 IND filings remain achievable.
- Monitor operating cash burn, capital spending, and the assumptions underlying management’s approximately 36-month liquidity estimate, including the post-quarter Beam payment.
- Review changes in the fair value, timing and potential settlement form of Cobalt and Harvard obligations; these can materially alter GAAP results without equivalent current-period cash use.
- Assess progress, cost and timing of the Fremont manufacturing facility and Sana’s dependence on contract manufacturers and key material suppliers.
- Evaluate the scientific, regulatory, safety and execution risks of the preclinical platforms, and the terms and related-party aspects of the Beam agreement.