sensei(SNSE) - 2022 Q4 - Annual Report

Cautionary Notice Regarding Forward-Looking Statement This report contains forward-looking statements that involve substantial risks and uncertainties Forward-Looking Statements This report contains numerous forward-looking statements concerning the company's financial condition, business strategy, and future operational plans - Forward-looking statements cover the company's financial condition, business strategy, and future operational plans, using words such as “designed to,” “intended to,” “may,” “will,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “likely,” and “continue”[7] - Risks associated with forward-looking statements include clinical trial results, business interruptions (like COVID-19), timing and likelihood of regulatory approvals, manufacturing and commercialization capabilities, market opportunities, competitive position, intellectual property, reliance on third parties, financing needs, financial performance, and the impact of laws and regulations[8][10] - The company undertakes no obligation to publicly update forward-looking statements, even if new information becomes available in the future, unless required by law[9] PART I This section details the company's business operations, product pipeline, risk factors, and properties Item 1. Business Sensei Biotherapeutics is an immuno-oncology company developing next-generation cancer therapies through its TMAb™ platform - The company is an immuno-oncology firm focused on discovering and developing next-generation cancer therapies[11] - Through its TMAb™ platform, the company develops highly selective therapies designed to selectively inhibit immunosuppressive signals or activate immunostimulatory signals within the tumor microenvironment to unleash T-cells against tumors[11] - The company currently has three product candidates in early-stage development: SNS-101, SNS-102, and SNS-103[14] Overview The company develops next-generation cancer therapies via its TMAb™ platform to release T-cells against tumors - The company utilizes its TMAb™ platform to develop next-generation cancer therapies, aiming to release T-cells against tumors by selectively disabling immunosuppressive signals or activating immunostimulatory signals in the tumor microenvironment[11] - The TMAb platform aims to address immunotherapy resistance and believes its products and technology have significant market potential, as the PD-1/PD-L1 inhibitor market is projected to exceed $90 billion by 2026, yet approximately 70% of patients do not benefit[12] Our Pipeline The company's pipeline includes three product candidates targeting immunosuppressive signals based on the TMAb platform - The company currently has three investigational products based on the TMAb platform targeting immunosuppressive signals: SNS-101, SNS-102, and SNS-103[14][15] - SNS-101, a conditionally active monoclonal antibody targeting VISTA, had its IND submitted to the FDA in March 2023, with plans to initiate a Phase I/II clinical trial in 2023[15] - SNS-102 targets VSIG4, and SNS-103 targets CD39, with candidate selection and initiation of IND-enabling studies for both expected in 2023[15] Our TMAb Platform The TMAb platform generates human monoclonal antibodies that are selectively activated in the tumor microenvironment - The TMAb platform consists of human monoclonal antibodies that are selectively activated in the tumor microenvironment, targeting immune checkpoints or other key immune pathways[16] - TMAb antibodies leverage unique tumor characteristics, such as acidity (low pH, around pH 6.0), to achieve selective activation within the tumor, avoiding extra-tumoral activity[17] - The company uses yeast surface display technology to screen for rare clones that exhibit desired binding properties under "tumor-like" biochemical parameters, such as pH 6.0 versus pH 7.4[18] Our Portfolio of Product Candidates The company's portfolio features three conditionally active monoclonal antibodies targeting VISTA, VSIG4, and CD39 SNS-101: Conditionally Active Monoclonal Antibody Targeting VISTA SNS-101 is a lead candidate targeting VISTA, designed for selective binding at low pH to enhance anti-tumor immunity - SNS-101 is a conditionally active human monoclonal antibody targeting VISTA, designed to overcome the challenges of previous anti-VISTA antibodies and potentially become the first approved anti-VISTA therapy[20] - VISTA is highly expressed on immune cells, and its presence in tumors often predicts a poor prognosis; effective VISTA blockade can significantly modulate the tumor microenvironment, promoting T-cell effector function and anti-tumor activity[21] - SNS-101 is designed with three key parameters: blocking VISTA's binding to PSGL-1 at low pH; selectively binding VISTA at low pH to avoid TMDD and off-target side effects; and utilizing an Fc-functional IgG backbone to activate FcgR+ myeloid cells within the tumor[25][31] SNS-101 Affinity Analysis | Monovalent Affinity (KD) [nM] | pH 6.0 | pH 7.4 (No Pharmacologically Relevant Binding) | | :---------------------------- | :----- | :--------------------------------------------- | | SNS-101 | 0.218 | 132 | - Preclinical studies showed that SNS-101 enhanced the anti-PD-1 response in a VISTA-KI mouse MC38 tumor model, dose-dependently increased tumor-infiltrating CD8 T-cells, and promoted a shift toward a pro-inflammatory and anti-tumor state[37] - In a human VISTA knock-in mouse model, SNS-101 monotherapy showed modest tumor growth inhibition (36%), while combination therapy with anti-mPD-1 significantly inhibited tumor growth by 77% (P<0.0001) and provided a 50% survival benefit[41] - The company has entered into collaboration agreements with the University of Washington and the National Cancer Institute (NCI) to further study the mechanism of action of SNS-101 and expand its development[47][48] - The company submitted an IND application for a Phase I/II clinical trial of SNS-101 to the FDA in March 2023, with plans to initiate the trial in 2023 to evaluate its safety and efficacy as a monotherapy and/or in combination with cemiplimab in patients with advanced solid tumors[49] SNS-102: Conditionally Active Monoclonal Antibody Targeting VSIG4 SNS-102 is a conditionally active antibody targeting VSIG4, a potent inhibitor of T-cell proliferation on macrophages - VSIG-4 is highly expressed on macrophages and is a potent inhibitor of T-cell proliferation, also suppressing pro-inflammatory macrophage activity through metabolic reprogramming[52][53] - The expression of VSIG-4 in normal tissues (such as liver Kupffer cells) indicates a significant peripheral target sink, which could lead to off-target toxicity, making it suitable for the TMAb approach[54] - The company has identified eight pH-sensitive VSIG4 parental antibodies and is currently conducting further lead optimization and characterization, with candidate selection expected in 2023[55] SNS-103: Conditionally Active Monoclonal Antibody Targeting ENTPDase1 (CD39) SNS-103 is a conditionally active antibody targeting CD39, a key enzyme that degrades extracellular ATP and suppresses anti-tumor immunity - ENTPDase1 (CD39) is the upstream rate-limiting enzyme that degrades extracellular ATP, and its upregulation leads to reduced extracellular ATP and a weakened anti-tumor immune response[56] - CD39 is upregulated in tumors but also expressed in normal tissues (such as endothelial cells), which could lead to off-target binding and toxicity, making it a strong candidate for the TMAb approach[57] - The company has identified eight pH-selective CD39 parental antibodies and is currently conducting further optimization, with candidate selection expected in 2023[58] Manufacturing The company relies on contract manufacturing organizations (CMOs) for the production of its TMAb product candidates - The company relies on contract manufacturing organizations (CMOs) to produce its TMAb product candidates and requires them to comply with cGMP and all applicable laws and regulations[59] - CMOs are responsible for producing bulk drug substance and finished drug product and may also be responsible for filling and labeling products for commercial sale[59] Intellectual Property The company protects its technology and inventions through patents, data exclusivity, and trade secrets - The company protects and enhances its proprietary technology, inventions, and improvements through patent rights, data exclusivity, market exclusivity, and patent term extensions[60] - As of March 1, 2023, the company owned two issued U.S. patents, four issued foreign patents, two pending U.S. patent applications, and one international patent application[69] - The company owns one U.S. non-provisional patent application and one international patent application covering composition of matter and method claims for the SNS-101 product candidate, with an expected patent term until 2042[70] Adimab Agreement The company has a collaboration agreement with Adimab for antibody discovery and optimization - The company entered into an amended collaboration agreement with Adimab, LLC on July 14, 2021, to utilize its platform for antibody discovery and optimization[71] - The company is required to pay Adimab technology access fees, milestone payments (up to $275,000 per research program), and a development and commercialization option exercise fee ($500,000)[71] - For commercialized products, the company is required to pay Adimab royalties in the low- to mid-single-digit percentages of worldwide annual net sales[71] - SNS-101 is subject to the terms of the Adimab agreement, and the company exercised its development and commercialization option for the SNS-101 research program in December 2022, having paid $825,000[72] Trademarks, Trade Secrets and Know-How The company protects its brand and proprietary information through trademarks and confidentiality agreements - The company's trademark portfolio currently includes two registered trademarks and one trademark application[73] - The company protects its trade secrets, know-how, and proprietary information through confidentiality agreements and requires employees, consultants, and others to sign invention assignment agreements[73][74] Competition The company faces intense competition from large pharmaceutical companies and other biopharmaceutical firms - The biotechnology and pharmaceutical industries are highly competitive, and the company faces competition from large pharmaceutical companies, biopharmaceutical companies, academic research institutions, and government agencies[75][76] - Key competitors include AstraZeneca, Bristol Myers Squibb, Gilead Sciences, Merck, Novartis, Pfizer, and Roche/Genentech, as well as other immuno-oncology companies developing antibodies targeting VISTA[78] - Many competitors have greater financial resources and expertise in research and development, manufacturing, regulatory approvals, and marketing[79] - Key competitive factors include product safety, efficacy, convenience, and cost of treatment[81] Government Regulation The company's products are subject to extensive regulation by government authorities in the U.S. and other countries - The research, development, testing, manufacturing, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing, and import and export of biological products are subject to regulation by federal, state, and local governmental authorities in the United States and by governmental authorities in other countries[82] U.S. Biological Product Development Biological products in the U.S. are regulated by the FDA and require a Biologics License Application for marketing approval - In the United States, the FDA regulates biological products under the Federal Food, Drug, and Cosmetic Act (FDCA) and the Public Health Service Act (PHSA) and their implementing regulations[83] - Before a biological product can be marketed, it must receive FDA approval through a Biologics License Application (BLA), a process that involves preclinical studies, IND submission, clinical trials (Phase I, II, III), and FDA review and approval[85][86][87][90][96] - The FDA offers programs such as fast track, priority review, accelerated approval, and breakthrough therapy to expedite the development and review of biologics that meet specific criteria[102][103][104][105] - Post-market, products are subject to ongoing FDA regulatory requirements, including monitoring and reporting adverse events, restrictions on promotion and advertising, and cGMP compliance[110][111] U.S. Healthcare Reform and Other U.S. Healthcare Laws The company's operations are subject to various healthcare laws and reforms aimed at preventing fraud and controlling costs - The company's operations are subject to healthcare laws and regulations, including the federal Anti-Kickback Statute, False Claims Act, HIPAA, and the Sunshine Act, which are designed to prevent fraud and abuse[113][114][115] - The Affordable Care Act (ACA) has had a significant impact on healthcare financing and the pharmaceutical industry, including biosimilar competition, changes to Medicaid drug rebate calculations, and the Medicare Part D coverage gap discount program[122] - The Inflation Reduction Act of 2022 (IRA) authorizes HHS to negotiate prices for certain high-expenditure, single-source drugs and biologics covered under Medicare and imposes rebates for price increases that exceed inflation[128] - States are actively passing legislation and implementing regulations to control drug and biologic pricing, including price or patient reimbursement limits, discounts, product access restrictions, and marketing cost disclosure measures[129] U.S. Patent-Term Restoration and Marketing Exclusivity U.S. law provides for patent term extensions and marketing exclusivity periods to compensate for regulatory review time - Under the Hatch-Waxman Amendments, U.S. patents may be eligible for a patent term extension of up to five years to compensate for patent term lost during product development and FDA review[133] - The Biologics Price Competition and Innovation Act created an abbreviated approval pathway for biosimilars and interchangeable biologics and provides a 12-year data exclusivity period for the reference biologic[134] - Pediatric exclusivity can add six months to existing regulatory exclusivity periods or patent terms[135] U.S. regulation of companion diagnostics Companion diagnostics are regulated as medical devices by the FDA and require marketing authorization or approval - Companion diagnostics are considered medical devices and require marketing authorization or approval from the FDA, typically in parallel with the therapeutic product[136][137] - The approval process for companion diagnostics (PMA) is rigorous and time-consuming, requiring extensive preclinical and clinical data and compliance with the Quality System Regulation (QSR)[138][139] European Union Drug Development Drug development in the EU is strictly regulated, with a new regulation aiming to harmonize clinical trial rules - Preclinical and clinical studies in the EU are strictly regulated, with the EU Clinical Trials Directive 2001/20/EC aiming to harmonize the regulatory framework, though implementation varies among member states[145] - The newly enacted EU Clinical Trials Regulation EU No 536/2014 will unify the rules for clinical trials in the EU, simplifying approval and adverse event reporting procedures and increasing transparency[146] European Union Drug Review and Approval Drugs in the European Economic Area require a Marketing Authorization based on a risk-benefit assessment - In the European Economic Area (EEA), medicinal products require a Marketing Authorization (MA) to be commercialized, which can be a Community MA (via the centralized procedure for biotech, orphan drugs, etc.) or a national MA (via mutual recognition or decentralized procedures)[147][148] - The EMA or the competent authorities of the Member States conduct a risk-benefit assessment based on the product's quality, safety, and efficacy[148] European Union Orphan Designation and Exclusivity The EU offers incentives like market exclusivity for drugs designated as orphan medicinal products for rare diseases - The EMA's Committee for Orphan Medicinal Products grants orphan drug designation to promote the development of products for rare diseases affecting fewer than five in 10,000 people[149] - Orphan drug designation provides benefits such as fee reductions and a ten-year period of market exclusivity, which may be reduced to six years if the product becomes sufficiently profitable[150] European Union Drug Marketing EU drug marketing is subject to strict anti-bribery laws and transparency requirements for payments to physicians - The EU prohibits providing benefits to physicians to induce prescriptions, governed by national anti-bribery laws such as the UK Bribery Act 2010[151] - Payments made to physicians must be publicly disclosed, and agreements with physicians often require prior notification and approval from employers, professional organizations, and regulatory bodies[152] European Data Collection The collection and use of personal health data in the EU are governed by the stringent GDPR - The collection and use of personal health data in the EU are governed by the Data Protection Directive and the General Data Protection Regulation (GDPR), which impose strict requirements on the processing, security, and transfer of personal data[153] - Violations of the GDPR can result in substantial fines (up to €20 million or 4% of global consolidated annual revenue) and other administrative penalties[153] Rest of the World Regulation Regulatory requirements for drugs vary by country but generally adhere to international ethical and quality standards - Requirements for clinical trials, product licensing, pricing, and reimbursement vary in countries outside the EU and the U.S. (such as in Eastern Europe, Latin America, or Asia), but all must comply with GCP requirements and the ethical principles of the Declaration of Helsinki[154] - Failure to comply with foreign regulatory requirements can result in fines, suspension or withdrawal of regulatory approvals, product recalls, operating restrictions, and criminal prosecution[155] Reimbursement Product sales depend on coverage and reimbursement from third-party payors, which is uncertain and subject to cost-containment pressures - Product sales depend on coverage and reimbursement from third-party payors (government health programs, commercial insurance, managed care organizations); there is no uniform policy in the U.S., and coverage must be sought on a payor-by-payor basis[156][157] - Coverage and reimbursement for companion diagnostic tests must be obtained independently of the companion drug or biologic[157] - The U.S. government, state legislatures, and foreign governments have shown a strong interest in controlling healthcare costs, which could reduce drug profitability[158] - The American Rescue Plan Act of 2021 eliminated the cap on Medicaid drug rebates, effective January 1, 2024[159] - Under the Medicare Part D program, drug prices may be lower than anticipated, and private payors often follow Medicare's coverage policies and payment limitations[160] - In most foreign countries, drug prices must be approved before they can be legally sold and are often significantly lower than in the United States[163] Employees and Human Capital Resources The company had 28 full-time employees as of March 2023 and recently implemented a restructuring plan - As of March 1, 2023, the company had 28 full-time employees[164] - On December 5, 2022, the company's Board of Directors approved a restructuring plan to reduce its workforce by approximately 40% to lower operating expenses and focus on the development of the TMAb platform[165] - Restructuring-related expenses are estimated to be $1.3 million, primarily for one-time employee termination costs, and are expected to be substantially complete in the first quarter of 2023[165] - The company's human capital objectives include identifying, recruiting, retaining, incentivizing, and integrating existing and new employees and consultants, and using equity incentive plans to attract and retain talent[166] Corporate Information The company's common stock is listed on the Nasdaq Global Market under the ticker symbol "SNSE" - The company's common stock is listed on the Nasdaq Global Market under the ticker symbol “SNSE”[167] - The company was originally incorporated in Maryland in 1999 as Panacea Pharmaceuticals, Inc., and later reincorporated in Delaware in December 2017, changing its name to Sensei Biotherapeutics, Inc[167] Available Information The company's SEC filings are available free of charge on its corporate website - The company's annual reports (Form 10-K), quarterly reports (Form 10-Q), current reports (Form 8-K), and amendments are available free of charge on its website at www.senseibio.com[169](index=169&type=chunk) Item 1A. Risk Factors The company faces significant risks related to financing, product development, regulatory approval, and market competition - The company requires additional funding to complete product development; failure to obtain necessary capital in a timely manner may force it to delay, limit, reduce, or terminate product development or commercialization efforts[173][175] - The company has incurred significant losses every year since inception, expects to continue to incur losses for the next several years, and may never achieve or maintain profitability[173][184] - The company's development efforts are at an early stage; if it is unable to advance its products through clinical development, obtain regulatory approval, and ultimately commercialize them, or if it experiences significant delays, its business will be materially harmed[173][192] - The company is highly dependent on third parties for its preclinical and planned clinical trials, and these third parties may not perform satisfactorily, including failing to meet deadlines or comply with applicable regulatory requirements[173][230][231] - The regulatory approval process is long, time-consuming, and inherently unpredictable, and if the company is ultimately unable to obtain regulatory approval for its product candidates, its business will be substantially harmed[197][261] - The company operates in a rapidly changing industry and faces intense competition, which could result in other companies discovering, developing, or commercializing products before or more successfully than the company[173][296] - If the company is unable to obtain and maintain patent protection for its technology and product candidates, or if the scope of the patent protection is not sufficiently broad, competitors could develop and commercialize similar or identical technology and biologics, impairing the company's ability to commercialize its products[174][316] - The company's computer systems or data, or those of its collaborators or contractors, may be compromised, leading to adverse consequences such as regulatory investigations, litigation, fines, business interruptions, and reputational harm[385][386] Risks Related to Our Financial Position The company requires substantial additional funding and has a history of net losses, with no guarantee of future profitability - The company needs substantial additional funding to meet its financial needs and business objectives; if it cannot raise the required capital, it may be forced to delay, reduce, or completely stop product development or commercialization efforts[175] - Raising additional capital may cause dilution to existing stockholders, and new investors could obtain rights superior to those of common stockholders[180][181] - The company has incurred losses since its inception, with net losses of $48.6 million in 2022 and $36.8 million in 2021, and an accumulated deficit of $197.8 million as of December 31, 2022[184] - The company expects to continue to incur significant expenses and operating losses in the future as it advances product development, seeks regulatory approvals, builds sales and marketing infrastructure, hires personnel, and maintains its intellectual property[186] Risks Related to the Development of our Product Candidates The company's early-stage product candidates face high uncertainty regarding clinical success and regulatory approval - The company's product candidates are in preclinical development, and there is a high degree of uncertainty regarding their success in clinical trials, obtaining regulatory approval, and commercialization[192] - As an innovative antibody targeting VISTA, the therapeutic benefits of SNS-101 have not been proven in humans and may not demonstrate the pharmacological benefits shown in preclinical studies in patients[194] - The regulatory approval process is long, time-consuming, and unpredictable, and may require additional information, clinical trials, or manufacturing process modifications, thereby delaying or preventing approval[197][198][199][200] - Clinical trials are difficult, time-consuming, and expensive to design and implement, with uncertain outcomes, and results from preclinical studies or early clinical trials are not necessarily predictive of success in later-stage trials[207][210][211] - Interim and preliminary clinical data may change significantly as more patients are enrolled and more data becomes available, and may differ from final data[213][214] - Difficulty in patient enrollment could delay or adversely affect clinical development activities[217][219] - The market opportunity for product candidates may be limited, primarily targeting patients who are unsuitable for or have failed previous treatments, and market size estimates may be inaccurate[220][222] - Adverse side effects or other safety risks of product candidates could delay or prevent approval, lead to the suspension or termination of clinical trials, limit the commercial profile of an approved label, or result in significant negative consequences after marketing[223][224][225] Risks Related to Manufacturing and our Dependence on Third Parties The company relies heavily on third-party CROs and CMOs for research and manufacturing, with limited control over their performance - The company relies on third-party CROs, academic institutions, research sites, and clinical investigators for preclinical studies and clinical trials, and has limited control over their performance[231] - If third parties fail to successfully carry out their contractual duties or meet regulatory requirements, it could delay or prevent the completion of studies, affecting product development and commercialization[231][237] - The company expects some of its product candidates, including SNS-101, to be evaluated in combination with third-party drugs, and has limited control over the supply, regulatory status, and approval of these drugs[241] - The company relies on CMOs to manufacture SNS-101 and other product candidates; if CMOs are unable to provide sufficient quantities or materials at an acceptable cost, it could delay or hinder development and commercialization[244][245] - CMO facilities must be authorized by the FDA and comply with cGMP requirements; failure to obtain or maintain approval could require finding alternative facilities, severely impacting development[246] - Collaboration agreements with third parties may not lead to the development, regulatory approval, or successful commercialization of product candidates[258] - Employees, principal investigators, CROs, and consultants may engage in misconduct or illegal activities, including non-compliance with regulatory standards and requirements, which could result in regulatory sanctions and reputational damage[260] Risks Related to Regulatory Approval of our Product Candidates and Other Legal Compliance Matters Failure to obtain or delays in regulatory approval would severely harm the company's ability to commercialize its products - If the company is unable to obtain, or if there are delays in obtaining, regulatory approval for its product candidates, it will not be able to commercialize them, or commercialization will be delayed, and its ability to generate revenue will be materially impaired[261] - Obtaining and maintaining regulatory approval in one jurisdiction does not guarantee successful approval in other jurisdictions[266][267] - Even if a product candidate receives regulatory approval, the company will be subject to ongoing regulatory obligations and scrutiny, which may result in additional costs and could face post-market studies, marketing and labeling restrictions, or even recalls or market withdrawal if unexpected safety issues are discovered[268][269][270] - If the company fails to successfully validate, develop, and obtain regulatory approval for any required companion diagnostic tests, or if there are significant delays, it may not be able to obtain approval or realize the full commercial potential of these product candidates[272][273] - The company's relationships with customers, healthcare professionals, and third-party payors will be subject to applicable anti-kickback, fraud and abuse, and other healthcare laws and regulations, which could lead to significant penalties[274][275][276] - Healthcare legislative reform measures, such as the ACA and IRA, could have a material adverse effect on the company's business and results of operations, including changes to drug pricing and reimbursement[277][278][279][280][281] - The company is subject to operational laws such as the UK Bribery Act 2010, the U.S. Foreign Corrupt Practices Act of 1977, and other anti-corruption laws, export control laws, import and customs laws, and trade and economic sanctions laws[286][288] - Failure to comply with environmental, health, and safety laws and regulations could result in fines or penalties or generate costs that could have a material adverse effect on the success of the business[290][291] Risks Related to the Commercialization of our Product Candidates Successful commercialization is uncertain and depends on building sales capabilities, market acceptance, and adequate reimbursement - If the company is unable to establish sales, marketing, and distribution capabilities or fails to enter into agreements with third parties for these functions, it may not be able to successfully commercialize its product candidates[292][293][295] - The company operates in a rapidly changing industry and faces intense competition, which could result in other companies discovering, developing, or commercializing products before or more successfully than the company[296][299][301] - Even if a product candidate receives marketing approval, it may fail to gain market acceptance among physicians, patients, third-party payors, and other members of the medical community, thus failing to achieve commercial success[302][303][304] - Coverage and adequate reimbursement for product candidates may not be available, which would make it difficult to sell them profitably, even if approved[306][307][309][310] - Product liability lawsuits against the company could cause it to incur substantial liabilities and limit the commercialization of any products that may be developed[311] - Insufficient funding for the FDA, SEC, and other government agencies could hinder their ability to hire and retain key leadership and other personnel, preventing the timely development or commercialization of new products and services, or otherwise preventing these agencies from performing their normal functions on which the company's business operations rely[313][315] Risks Related to Our Intellectual Property The company's success depends on its ability to obtain, maintain, and defend its intellectual property rights - If the company is unable to obtain and maintain patent protection for its technology and product candidates, or if the scope of the patent protection is not sufficiently broad, competitors could develop and commercialize similar or identical technology and biologics, impairing the company's ability to commercialize its products[316][317][320] - Third parties may initiate legal proceedings alleging that the company is infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the business[325][326][327][328] - The company may need to license intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms[329] - The company may be involved in lawsuits to protect or enforce its intellectual property, which could be expensive, time-consuming, and unsuccessful[331][332] - The company may face claims from third parties that it or its employees have misappropriated their intellectual property, or claims of ownership over what the company considers its own intellectual property[333][336] - Any trademarks the company may obtain could be infringed or successfully challenged, thereby harming the business[337][338] - If the company is unable to protect the confidentiality of its trade secrets, its business and competitive position would be harmed[339][340] - The company may not be able to protect its intellectual property rights throughout the world, as filing for patents in all countries is costly and intellectual property protection in some countries is less stringent than in the United States[341][342][343] - Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and non-compliance could result in reduced or lost patent protection[344] Risks Related to our Business Operations The company's future success depends on managing growth and retaining key personnel - The company will need to expand its organization and may experience difficulties in managing its growth, particularly in recruiting and retaining talent with experience in immuno-oncology[345][346] - The company's future success depends on its ability to retain key members of its senior management and to attract, retain, and motivate qualified personnel[347][348] - Future acquisitions or strategic collaborations could increase capital needs, dilute stockholder equity, result in debt or contingent liabilities, and pose other risks[349][350] Risks Related to our Securities and our Status as a Public Company The company's stock price may be volatile, and it faces increased costs and compliance burdens as a public company - The trading price of the company's common stock may be highly volatile, and investors could lose all or part of their investment[352][353] - Securities litigation or shareholder activism could negatively impact the company's business and operations, resulting in substantial expenses, hindering the execution of business and growth strategies, and affecting the stock price[356][358] - A substantial number of the company's outstanding shares are restricted from immediate resale but may enter the market in the near future, which could cause a significant decline in the company's stock price[359][361] - If the company fails to maintain an effective system of internal control over financial reporting, it may not be able to accurately report its financial results or prevent fraud[362] - The company's status as an “emerging growth company” and a “smaller reporting company” allows for reduced reporting requirements, which may make its common stock less attractive to investors[363][366] - The company does not intend to pay cash dividends on its common stock for the foreseeable future, and investors should not rely on dividend income[368] - The company's ability to use its net operating losses to offset future taxable income may be subject to certain limitations, such as those under Section 382 of the Internal Revenue Code[369][370] - As a public company, the company has incurred and will continue to incur significantly increased costs, and management is required to devote substantial time to new compliance initiatives[371][372][374] - The company's certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States will be the exclusive forums for the vast majority of disputes between the company and its stockholders, which could limit a stockholder’s ability to obtain a favorable judicial forum for disputes[375][377] - Insiders have substantial influence over the company and could cause the company to take actions that may not be in the best interests of the company or its stockholders[378] General Risk Factors The company faces general risks including health pandemics, cybersecurity threats, and business interruptions - Health epidemics, including the COVID-19 pandemic, could adversely affect the company's business, operations, and clinical development plans and timelines[379][380][381][382][383][384] - The company's computer systems or data, or those of its collaborators or other contractors or consultants, may be compromised, leading to adverse consequences including regulatory investigations or actions, litigation, fines and penalties, significant disruptions to product development programs, and reputational harm[385][386] - The company is subject to various privacy and data security laws, and failure to comply with them could harm its business[387][388][389][390][391][392] - Business disruptions could seriously harm the company's future revenue and financial condition and increase its costs and expenses[393] - If equity research analysts do not publish research or publish unfavorable research or reports about the company, the price and trading volume of its common stock could decline[394][395] Item 1B. Unresolved Staff Comments Unresolved staff comments are not applicable to this report Item 2. Properties The company leases office and laboratory space in Boston, MA, and Rockville, MD - The company leases office and laboratory space in Boston, Massachusetts, and Rockville, Maryland[397] - The company plans to sublease its existing lease in Boston (expiring September 2026) and has leased smaller office space to align with its restructuring plan[397] - The company believes its existing facilities are sufficient for its ongoing needs and that additional facilities can be obtained on commercially reasonable terms[397] Item 3. Legal Proceedings The company is not currently involved in any material legal proceedings - The company is not currently involved in any material legal proceedings[398] - The company may from time to time be involved in other litigation or legal proceedings arising in the ordinary course of business[398] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to this report PART II This section covers the company's stock market information and management's analysis of financial condition and results of operations Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the Nasdaq under "SNSE," and it does not plan to pay cash dividends - The company's common stock is listed on the Nasdaq Global Market under the ticker symbol “SNSE”[403] - As of March 1, 2023, the company had 30,958,364 shares of common stock outstanding, held by 216 holders of record[403] - The company has never declared or paid cash dividends and plans to retain all available funds and future earnings to finance the development and growth of its business for the foreseeable future[402][368] - The company completed its Initial Public Offering (IPO) in February 2021, with net proceeds of $138.5 million, primarily used for the development of SNS-101 and other TMAb platform product candidates[404][406] Item 6. Reserved This item is reserved Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The company is a pre-revenue immuno-oncology firm with a net loss of $48.6 million in 2022 and sufficient cash to fund operations into the second half of 2025 - The company is an immuno-oncology firm focused on discovering and developing next-generation cancer therapies through its TMAb™ platform[413] - The company currently has no approved products and has not generated any revenue from product sales, and does not expect to do so for the next several years[415] Net Loss | Metric | Year Ended December 31, 2022 (in thousands of U.S. dollars) | Year Ended December 31, 2021 (in thousands of U.S. dollars) | | :------- | :---------------------------------------------------------- | :---------------------------------------------------------- | | Net Loss | (48,588) | (36,794) | - As of December 31, 2022, the company had an accumulated deficit of $197.8 million[416] - The company expects its existing cash, cash equivalents, and marketable securities ($107.1 million as of December 31, 2022) to be sufficient to fund its operating expenses and capital expenditure requirements into the second half of 2025[435][446] Overview The company develops selective therapies via its TMAb™ platform and plans to initiate a Phase I/II trial for SNS-101 in 2023 - The company develops highly selective therapies through its TMAb™ platform, designed to selectively inhibit immunosuppressive signals or activate immunostimulatory signals within the tumor microenvironment to unleash T-cells against tumors[413] - The company currently has three product candidates in early-stage development: SNS-101, SNS-102, and SNS-103, and plans to initiate a Phase I/II clinical trial for SNS-101 in 2023[414][416] - The company has received cumulative gross proceeds of $123.4 million from equity and convertible debt financings and $138.5 million in net proceeds from its 2021 IPO[415] Components of Our Results of Operations The company's operating results are primarily driven by research and development and general and administrative expenses - Research and development expenses include costs for preclinical studies, clinical trials, contract manufacturing, personnel, regulatory activities, license agreements, and laboratory materials and facilities[419][421] - R&D expenses are expected to increase significantly in the coming years as the company increases personnel costs, conducts preclinical studies and clinical trials, and prepares regulatory filings for its product candidates[422] - General and administrative expenses primarily consist of salaries and related costs for executive, administrative, finance, and legal personnel, as well as facility, patent, and professional services fees[425] - Other income (expense) includes realized gains and losses on short-term investments, gain on extinguishment of debt, accrued expenses, and interest expense on short-term investments[427] - The company has not recorded any income tax benefit since inception, as it believes its net operating loss and tax credit carryforwards are not likely to be realized[428] Comparison of Years Ended December 31, 2022 and 2021 The company's net loss increased to $48.6 million in 2022 from $36.8 million in 2021 due to higher operating expenses Operating Results Comparison (in thousands of U.S. dollars) | Metric | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | Change | | :--------------------- | :---------------------- | :---------------------- | :------- | | R&D Expenses | 30,383 | 21,662 | 8,721 | | G&A Expenses | 19,805 | 15,820 | 3,985 | | Total Operating Expenses | 50,188 | 37,482 | 12,706 | | Operating Loss | (50,188) | (37,482) | (12,706) | | Total Other Income | 1,600 | 688 | 912 | | Net Loss | (48,588) | (36,794) | (11,794) | - R&D expenses increased by $8.7 million, primarily due to increases in manufacturing contracts ($5.8 million), preclinical studies ($2.4 million), facility and equipment leases ($1.1 million), restructuring costs ($0.8 million), external research fees ($0.7 million), and personnel costs ($0.5 million)[432] - G&A expenses increased by $4.0 million, mainly due to increases in personnel costs ($0.9 million), franchise and other non-income taxes ($0.7 million), consulting fees ($0.6 million), recruiting costs ($0.4 million), D&O liability insurance ($0.3 million), board fees ($0.3 million), and external communication fees ($0.2 million)[433] - Other income increased by $0.9 million, primarily due to a $1.4 million increase in investment income, partially offset by a $0.5 million decrease from a gain on extinguishment of debt in 2021[434] Liquidity and Capital Resources The company has not generated revenue and expects existing cash to fund operations into the second half of 2025 - The company has not generated any product revenue and has continuously incurred net losses and negative operating cash flows[435] Cash Flow Summary (in thousands of U.S. dollars) | Metric | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :----------------------------------- | :---------------------- | :---------------------- | | Net cash used in operating activities | (39,026) | (30,259) | | Net cash provided by (used in) investing activities | 49,949 | (143,118) | | Net cash (used in) provided by financing activities | (287) | 163,940 | | Net increase (decrease) in cash and cash equivalents | 10,636 | (9,437) | - In 2022, operating activities used $39.0 million in cash, primarily due to a net loss of $48.6 million, partially offset by $8.6 million in non-cash charges[438] - In 2022, investing activities provided $49.9 million in cash, mainly from $97.1 million in sales and maturities of short-term investments, partially offset by $46.9 million in purchases of short-term investments[439] - In 2022, financing activities used $0.3 million in cash, primarily from $0.6 million in principal payments on finance leases, partially offset by $0.2 million in proceeds from stock option exercises and $0.1 million from ESPP purchases[440] - As of December 31, 2022, the company had $6.4 million in operating lease payment obligations and $2.7 million in finance lease payment obligations[442][443] - The company expects its existing cash and cash equivalents to be sufficient to fund its operating expenses and capital expenditures into the second half of 2025[446] - The company anticipates funding its operations through equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements, and currently has no committed external sources of funds[447] Critical Accounting Estimates The company's critical accounting estimates include accrued R&D expenses and stock-based compensation - Critical accounting policies are those that require subjective estimates and judgments about uncertain matters and could have a material impact on the company's financial condition and results of operations[450] - Accrued R&D expenses: The company estimates the costs of preclinical development and clinical trials based on progress information and data provided by service providers (CROs, CMOs, research labs, consultants)[451][452] - Stock-based compensation: The company measures all stock-based awards based on their estimated fair value on the grant date and recognizes the compensation expense over the service period[454] - The fair value of stock options is estimated using the Black-Scholes option-pricing model, with inputs including the closing price of common stock, volatility, expected term, risk-free interest rate, and expected dividend yield[455] Recent Accounting Pronouncements Recently issued accounting standards are not expected to have a material impact on the company's financial statements - The company does not expect recently issued accounting standards, such as ASU No. 2016-13 on credit losses for financial instruments, to have a material impact on its financial statements[456][544] Emerging Growth Company and Smaller Reporting Company Status The company qualifies as an emerging growth company and a smaller reporting company, allowing for reduced disclosure requirements - The company qualifies as an “emerging growth company” (EGC) under the JOBS Act, allowing it to take advantage of reduced disclosure and exemption requirements[457][542] - The company has elected not to “opt out” of the extended transition period and will adopt new or revised accounting standards on the timeline for private companies[459] - The company is also a “smaller reporting company” and can continue to rely on certain disclosure exemptions, such as providing only two fiscal years of audited financial statements in its Form 10-K report[460][461] Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide information under this item Item 8. Financial Statements and Supplementary Data The required financial statements are included in this annual report, with an index available in Item 15 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company has had no changes in or disagreements with its accountants on accounting and financial disclosure Item 9A. Controls and Procedures Management has concluded that the company's disclosure controls and internal control over financial reporting were effective - As of December 31, 2022, the company's management, including the CEO and CFO, evaluated and concluded that its disclosure controls and procedures were effective[465] - Management assessed and concluded that, as of December 31, 2022, the company's internal control over financial reporting was effective, based on the COSO framework[466] - As the company qualifies as an emerging growth company, this report does not include an attestation report from its registered public accounting firm on the effectiveness of internal controls[467] - There were no material changes in the company's internal control over financial reporting during the fourth quarter of 2022[468] Item 9B. Other Information Other information disclosures are not applicable to this report Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Disclosures regarding foreign jurisdictions that prevent inspections are not applicable to this report PART III This section provides information on directors, executive compensation, and corporate governance, incorporated by reference Item 10. Directors, Executive Officers and Corporate Governance Information required by this item will be incorporated by reference from the company's amended annual report on Form 10-K/A - Information for this item will be incorporated by reference from the amended annual report on Form 10-K/A[473][474] - The company has adopted a Code of Business Conduct and Ethics, applicable to all employees, officers, and directors, which is available on its website[474] Item 11. Executive Compensation Information required by this item will be incorporated by reference from the company's amended annual report on Form 10-K/A - Information for this item will be incorporated by reference from the amended annual report on Form 10-K/A[475] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information required by this item will be incorporated by reference from the company's amended annual report on Form 10-K/A - Information for this item will be incorporated by reference from the amended annual report on Form 10-K/A[475] [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=83&type=section&id=Item%2013.%20Ce