Sana Biotechnology (NASDAQ:SANA) shares have been on an almost constant downward trajectory over the past year but that all changed dramatically on Wednesday.
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Shares blasted 160% higher after the company announced promising results from a groundbreaking diabetes treatment study. The treatment involves transplanting specially engineered pancreatic cells (called UP421) into a patient with type 1 diabetes.
The cells are designed using Sana’s innovative HIP (hypoimmune) technology, which allows them to avoid being attacked by the immune system. Just seven days after the procedure, the patient showed a significant increase in C-peptide levels (a marker of insulin production), reaching about 10 pmol/L (picomoles per liter). Importantly, this insulin production continued steadily for 28 days, the length of the follow-up so far, and the cells successfully integrated without the need for immune-suppressing drugs.
Additional MRI and immune system data confirmed that the transplanted cells were surviving well, and any immune response observed was directed only at a small number of donor cells that weren’t fully modified.
Cowen analyst Marc Frahm has no doubt as to the importance of the readout. “Taken together,” he said, “this establishes POC that the HIP modified islet cells are (1) able to evade the immune system, and (2) function in vivo to drive biological effects in patients. Additionally, there were no AEs or SAEs associated with the drug. We think this has meaningfully derisked Sana’s most significant scientific question mark.”
While there are still uncertainties about “clinical scalability,” commercialization, and the timeline for development, Frahm sees these challenges more as engineering and management “execution issues” rather than scientific or biological ones. As a result, the analyst believes the “risk profile around Sana’s ultimate success has been dramatically reduced.” With that in mind, the analyst is now factoring type 1 diabetes into his valuation model.
“We look forward to management providing greater clarity in the months to come regarding the development of a GMP-compliant islet cell line, and updates for HIPs additional applications (allo-CAR T, glial cells, etc.),” Frahm further said.
To this end, Frahm has now upgraded his SANA rating from Hold (i.e., Neutral) to Buy, although he has no fixed price target in mind. (To watch Frahm’s track record, click here)
Other analysts do have targets, and they see plenty of upside left here. The average price target stands at $11.67, making room for further gains of ~171%. All told, based on a mix of 4 Buys and 3 Holds, the stock claims a Moderate Buy consensus rating. (See SANA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
