SQZ: First Quarter 2022 Operational and Financial Results

By John Vandermosten, CFA



On May 10, 2022, SQZ Biotechnologies Company (NYSE:SQZ) reported 1Q:22 financial and operational results in a press release concurrent with the filing of its Form 10-Q.

Achievements for the first quarter ending March 31, 2022 and to-date include:

➢ John Maraganore, Ph.D. joins as Strategic Advisor – January 2022

➢ FDA clears IND for eAPC HPV in HPV16+ tumors – January 2022

Publication of preclinical research featuring SQZ APC T cell activation – February 2022

Awarded $2 million grant from NIH for Parkinson’s research – March 2022

Granted Fast Track Designation for SQZ-PBMC-HPV – April 2022

➢ Initiated enrollment in monotherapy stage of COMMANDER-001 trial – 2Q:22

SQZ generated first quarter 2022 revenues of $2.9 million and incurred operating expenses of $23.9 million resulting in net loss of ($21.1) million or ($0.75) per share.

For the quarter ended March 31, 2022, compared to the same period ending March 31, 2021:

➢ Collaboration revenue totaled $2.9 million, down 47% from $5.5 million, due to an extension of the period over which partner revenues are recognized and a reduction in the number of performance obligations outstanding;

➢ Research and development expenses totaled $17.0 million, up 15% from $14.7 million on higher expenditure for the eAPC program and greater personnel costs. Increases were also attributable to increased activity related to the AAC program and other programs, specifically efforts to develop a point-of-care system. Higher costs were offset by a $2.3 million decline in PBMC program spending and lower platform-related external services;

➢ General and administrative expenses were $6.9 million, rising 13% from $6.1 million on increases in personnel-related and professional, consultant and patent related costs, while facility costs remained stable;

➢ Net loss was ($21.0) million, compared to ($15.4) million, or ($0.75) and ($0.59) per share, respectively.

Cash and equivalents as of March 31, 2022 totaled $122.9 million. SQZ continues with no debt on its balance sheet. Cash burn for 1Q:22 was ($20.6) million, nominally offset by financing cash flows of $29,000 related to option exercise.

Upcoming milestones include:

➢ Investor R&D event – May 19, 2022

➢ APC monotherapy and initial combination data – 2H:22

➢ AAC HPV monotherapy interim data presentation – 2H:22

➢ eAPC HPV monotherapy interim data presentation – 2H:22

➢ AAC or eAPC IND-enabling activities for KRAS mutant solid tumors – 2H:22

➢ Celiac disease IND submission – 1H:23

NIH Grant for Parkinson’s Disease

In late March, SQZ announced receipt of a $2 million SBIR Phase II grant from the National Institute of General Medical Sciences, a division of the National Institutes of Health (NIH). The funds will be allocated to develop cell engineering methods designed to reprogram a patient’s own immune cells directly into dopamine-producing neurons, a potential novel therapeutic approach for the treatment of Parkinson’s disease. One of the benefits of the cell squeeze approach is its use of a patients’ own cells which can sidestep the need for immunosuppressants. The approach would directly create dopamine-producing neurons in the brain and could provide a new paradigm of treatment for Parkinson’s patients. Success in this endeavor may lead to further advances applicable to treatment of multiple sclerosis (MS) and Type 1 diabetes. SQZ presented preclinical data demonstrating Cell Squeeze’s ability to generate neurons from induced human pluripotent stem cells through the delivery of an mRNA encoding for a fate-specifying transcription factor. The presentation was held at the 2021 International Society for Stem Cell Research annual meeting.

Publication Discussing SQZ TAC Platform Ability to Induce Tolerance in Type 1 Diabetes

An April 4 press release summarized SQZ’ ability to induce multiple key mechanisms of antigen-specific tolerance and protect against Type 1 diabetes. The support for the assertion was provided in the publication Frontiers in Immunology and demonstrated that Tolerizing Antigen Carriers (TACs) can induce multiple key mechanisms of antigen-specific tolerance in various model systems, including deletion of autoreactive T cells, anergy, and expansion of regulatory T cells (Tregs) capable of bystander suppression. In an in vivo model of type 1 diabetes, the TAC treatment was able to combat active autoimmune responses and prevent hyperglycemia.

The data generated in the publication will be used to support an investigational new drug (IND) application for TAC in celiac disease. Celiac has a similar causal disease antigen and T cell driven pathology as Type 1 diabetes, providing support for its use in the gluten-related autoimmune disorder. Findings of the preclinical work include delayed and prevented onset of disease, reduction of disease driving T cells, increase in regulatory T cells and bystander suppression.

Preclinical Data Demonstrating eAPC Stimulation of Killer T Cell Activity Using Multiplexed mRNA

SQZ Biotechnologies filed a press release on April 11 highlighting the ability of the eAPC platform to deliver multiple mRNAs encoding for disease specific antigens along with immune stimulators produced a synergistic effect that materially increased killer T cell expression in humanized mouse models. The data was presented at the American Association for Cancer Research (AACR) 2022 Annual Meeting and demonstrated the ability to induce a robust killer T cell response against specific diseases and the opportunity to increase the number of patients who could potentially benefit from eAPC therapeutic candidates.

SQZ’ COMMANDER-001 Phase I/II clinical trial, evaluating SQZ-eAPC-HPV employs the enhanced approach and delivers MRNA coding for HPV-specific E6 and E7 antigens, CD86 costimulatory factor, and IL-12 cytokines. Enrollment was recently initiated for the COMMANDER-001 trial and will continue with expected interim data provided in 2H:22.

Fast Track Designation Granted for SQZ-PBMC-HPV

The FDA granted SQZ Fast Track Designation for its lead cell therapy candidate, SQZ-PBMC-HPV as presented in an April 27th press release. Fast Track provides regulatory benefits for drug candidates that treat serious and life-threatening diseases where no treatment exists or where the proposed treatment may provide materially better treatment than existing alternatives. The designation can increase a sponsor’s communication with the FDA, provide eligibility for Accelerated Approval and Priority Review and allow for rolling review of a BLA.

Non-clinical Studies Using Point-of-Care Manufacturing System at ASGCT

A May 5 release heralded the presentation of non-clinical data regarding the point-of-care (PoC) manufacturing system at the 2022 American Society for Gene and Cell Therapy (ASGCT) Annual Meeting on May 18. In collaboration with STEMCELL Technologies, SQZ will co-develop and commercialize a research-use-only (RUO) microfluidic intracellular delivery system. The goal of the RUO unit is to increase access and enable rapid, cost efficient manufacturing for cell therapies. The collaboration expects to leverage STEMCELL’s life sciences research and product development capabilities and complement STEMCELL’s cell isolation and culture products.

Data related to the PoC system will be presented by STEMCELL at ASGCT, all on the evening of May 18. Titles of the various lectures include: A Decentralized and Integrated Manufacturing System for the Rapid and Cost-Effective Production of Cell Therapy Drug Products. Other presentations at ASGCT include A New Benchtop System for Simple and Versatile Introduction of Macromolecules into Human Lymphocytes by Microfluidic Squeezing and Rapid, Gentle, and Scalable Engineering of Hematopoietic Stem Cells Using Vector-Free Microfluidic Cell Squeeze® Technology also to be presented.

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1. Source: SQZ Press Release, May 5, 2022.