Conference Transcript - SABS 2026-02-25

Leland Grishel, Analyst — Oppenheimer

Great. Thank you, and welcome, everyone, to our next presenting company here at Oppenheimer's 36th Annual Healthcare Life Sciences Conference. I'm Leland Grishel, one of the biotech analysts with FIRM, and we are gratified and delighted to have with us SABS, S-A-B Therapeutics, the ticker is S-A-B-S, which we cover within Outperform, and we like the story very much. And we have with us from the company Sam Reich, who's the chief executive officer. We'll be having a fireside chat with Sam. And if you have any questions you'd like to pop in, please submit those through the portal. So welcome, Sam. Nice to be here. And I think, you know, there may be some who are less familiar with the SAB story. if you could just kind of give a quick intro to your mission, the asset that you're developing, what indications you're pursuing here in type 1 diabetes.

Samuel J. Reich, CEO

Sure. So our mission at SAB Bio is to transform what it means to get a type 1 diabetes diagnosis by developing a therapy to change the course of disease and not just manage the symptoms. And we're a clinical stage biotech company with our lead asset being an antithymocyte immunoglobulin for the treatment of type 1 diabetes. Our lead product is called SAB142. It's a human antithymocyte immunoglobulin to immune modulate and lead to self-tolerance in patients with type 1 diabetes to preserve their beta cells or the cells that make insulin. And we are currently studying it in a phase 2b trial, which has a pivotal study. Type 1 diabetes is a multi-billion dollar market opportunity. It's a major unmet medical need, and there's a tremendous urgency by the patient and doctor community for new therapies to help these patients continue to make their own insulin. Our drug is made on a wholly owned platform, which is called TC bovine, which allows us to make fully human immunoglobulin drugs. And that gives us multi-level intellectual property protection, which includes trade secrets, know-how, patents, your typical biotech patent lifespan, as well as the fact that this drug modality has no biosimilar pathway. So there's no pathway within regulatory agencies to make a generic version of this drug, which gives SAB-142 really long-term exclusivity.

Leland Grishel, Analyst — Oppenheimer

Great. So that's a great intro. And as you mentioned, yeah, so T-Zield, this is a Sanofi product. This was first approved about three, four years ago to delay the onset of stage 3 type 1 diabetes in those eight years and older with stage 2 disease. and that's given as a 14-day IV course and, you know, delays progression by about two years versus placebo. You know, how has that approval changed the landscape in terms of, you know, running the gamut screening, diagnosis, and then also expectations for disease-modifying therapy here? And how does that unmet need differ, you know, by age and stage in the scope of the diabetes illness.

Samuel J. Reich, CEO

Okay. So that's a multi-pronged question. Let's start with how did it change the field? I mean, the prevention drug T-Shield and then the acquisition by Sanofi. So now T-Shield is a Sanofi drug, is a monoclonal against T-cells. And it was approved in stage two, which is an earlier stage indication, which we can talk more about. But it really showed doctors, patients, Wall Street, the fact that this is a big medical need, that there's more to do than just manage patients with insulin, that preserving beta cells has a clear benefit to the patients. In stage two, when T-Shield preserves beta cells, it gives the patient more time before they need insulin, which is delayed progression of the disease. And that really shed light on the space and paved the way for the space. Stage two, the indication in which T-Shield is approved today, is a much smaller market. So these patients are hard to identify because they're not symptomatic and they have to go in and voluntarily screen for autoantibodies. So it's a much smaller and very different market than stage three, our initial market. and hopefully T-Shield to be approved in stage three, where the vast majority of the patients are diagnosed and identified. But demonstration that we can intervene with these patients and preserve their ability to make insulin was really groundbreaking. And we're very, you know, very grateful to the T-Shield developers for that.

Leland Grishel, Analyst — Oppenheimer

Now, can you, you know, let's focus on your asset, SAB142. Can you walk us through, you know, really how that works. You know, we know it is a kind of fully human, not humanized, but fully human bovine-derived polyclonal antibody product that's designed to basically, you know, exhaust pathogenic CD4 T-cells while preserving Tregs. That's right. Could you kind of maybe, you know, expound a bit on that and why that's kind of the way to go here with respect to preserving beta cells?

Samuel J. Reich, CEO

Yes. So just as a general background, type 1 diabetes patients are autoimmune patients that have autoantibodies attacking the beta cells of their pancreas where insulin is made. And a first-line therapy should preserve beta cells so patients can continue to make their own insulin. Our drug, SAB142, is a human antithymocyte immunoglobulin, which induces T-cell exhaustion while preserving Tregs, which has been shown to preserve beta cells and improve glycemic function. It's been shown with a reference analog. So that mechanism of action has been proven by a drug called thymoglobulin, which is a rabbit antithymocyte immunoglobulin, which induces T-cell exhaustion while preserving T-regs. And the results with thymoglobulin in newly diagnosed type 1 diabetes patients is that after receiving the drug, they have preserved beta cells as compared to placebo, and they have reduced HbA1c as compared to placebo. So this mechanism of action that SAB142 has, has been invalidated by a rabbit version of our drug. The rabbit version of our drug has safety problems and can't be redosed. This is a chronic disease. So the two liabilities for thymoglobulin or the rabbit drug, which has proven to be efficacious, is that it causes serum sickness, and it can't be redosed because of the generation of anti-drug antibodies as well as serum sickness. And that is because it is a rabbit polyclonal antibody. So, our drug is a human polyclonal antibody. We have already shown it does not cause serum sickness, and it can be re-dosed, and these patients need chronic dosing. So we have the mechanism of action that's proven efficacious to preserve beta cells and improve glycemic control. And by making a human version of the rabbit drug, we have a drug that does not cause serum sickness and can be re-dosed. So this has an acceptable safety profile for long-term chronic use to continue to preserve the patient's beta cells as long as possible for their whole lives, perhaps.

Leland Grishel, Analyst — Oppenheimer

And, you know, how should we, you know, think about 142 then, you know, and the way it works as translating into a much better safety profile, you know, versus rapid ATG. I mean, clearly issues here with serum sickness and also, you know, lymphodepletion.

Samuel J. Reich, CEO

Yes. So there are three key differences between rabbit antithymocyte globulin and human antithymocyte globulin. The first is because it's foreign, it causes serum sickness, which comes like a week after dosing. So the patients have moved on, and then they get these horrible symptoms of rash and fever and are really miserable for several days. And it's a week later, so it's very tough to manage. Also, serum sickness would be worse upon redosing, and it can be fatal, so redosing would be very dangerous. The rabbit molecule, rabbit foreign protein, is also immunogenic, and the majority of patients develop anti-drug antibodies. So in addition to the serum sickness, the drug can't be redosed for efficacy reasons, because the drug will, every time it's dosed, it's only been dosed once to date, but would become ineffective due to neutralizing anti-drug antibodies. It would be very unsafe due to serum sickness. Lastly, the rabbit antibody, the FC receptor on the rabbit antibody, induces antibody-dependent cell killing, or ADCC, and that actually kills important immune cells and T-cells and lymphocytes. And that suggests that those patients may be immune compromised, which is something we really don't want to do for chronic use or young patients or patients that would otherwise be healthy. So the human FC receptor and the human immunoglobulin does not cause serum sickness, shows no ADAs. We've already shown we can redose and the second dose has the same effect as the first dose and does not lymphode deplete because the human FC receptor on our drug does not lead to antibody-dependent cell killing. So the patients should be fully immune-competent and then be something suitable for chronic use without fears of immunocompromising to patients.

Leland Grishel, Analyst — Oppenheimer

Right, so that could be a really big feature, right? Retreatment, you know, maybe a couple times a year even with yours versus versus the rabbit, which I don't think you can really give more than once or twice because of the immune risks. So you have the Safeguard Phase 2B study, which you've moved into, and this is a newly diagnosed stage three. And just to be clear for everyone, stage three and stage two is sometimes people get confused, stage three is when people actually have like diagnosable clinical type one diabetes and stage two is kind of the, you know, you're sort of biologically going in that direction, but not manifesting clinically like you do in stage three. So can you, you know, for us outline safeguards key features in terms of, you know, the patients you're enrolling as well as the dosing regimen? You're looking at a primary endpoint of C-peptide. Maybe tell us a bit about that and the regulatory implications. And then also, of course, the other endpoints like insulin and HbA1c, which everyone knows in the diabetes space. And what would you see here as being clinically meaningful here that would be impactful to practice?

Samuel J. Reich, CEO

Yeah. So the Safeguard Study is a global phase 2b study in newly diagnosed type 1 diabetes patients. That is stage 3, newly diagnosed stage 3 type 1 diabetes patients that are within 100 days of diagnosis. And there are three arms. The patients are from age five to 40. So we have adults, pediatrics, and adolescents, the whole sort of age range. And there are three arms, 2.5 mg per kg, 1.5 mg per kg, and placebo. The patients will be dosed every six months in one of those three arms. The arms will be stratified by age. There'll be a relatively even distribution of adults, adolescents, and pediatrics. The primary endpoint is C-peptide at year one. And so you asked a little bit about C-peptide. C-peptide is the validated, accepted endpoint that shows beta cell mass and function, some combination of beta cell mass and function. The objective for treating a newly diagnosed patient is to preserve beta cell mass and function. That is the patient's ability to make their own insulin. So the endpoint is preservation of C-peptide, and if you do that, your drug is efficacious. Clinically meaningful preservation of C-peptide is generally considered to be 40% preservation compared to placebo. and these patients have other things going on. So we certainly want to look at other secondary endpoints. And right now it's not quite clear how essential they are for regulatory approval, but the secondary endpoints people are interested in, which we'll all be looking at, are HbA1c. And if you reduce HbA1c, you've proven that the patients have better glycemic control, which translates to many, many benefits in health. Insulin use, frequency of hypoglycemic events, which can be quite, you know, just, you know, are very apparent to patients in their day-to-day management of the disease. And time and range, which is now that patients wear continuous glucose monitors, we can measure how much time they spend in range, which actually is probably slightly more precise than HbA1c, which gives you a ballpark about range and time and range shows us in real time how much time the patients have are in the normal range.

Leland Grishel, Analyst — Oppenheimer

Terrific. And in terms of full enrollment and top-line data, I think you've given some guidance there if you could reiterate rate that?

Samuel J. Reich, CEO

So we're planning and on track to have the last patient in by the end of 2026, this year, and be able to share top-line data from the trial in the second half of 2027. All right, terrific.

Leland Grishel, Analyst — Oppenheimer

And, you know, the Ravid ATG, so that the MEL trial, which I think you would have referenced, so I've seen data from that relatively recently. So you saw improvements in C-peptide and in A1C in newly diagnosed patients, but we did see, as you had also mentioned, sustained meaningful lymphodepletion in CD4 and CD8 T-cells at least at the 2.5 milligram per kilogram dose cohort and some other safety concerns. So, I mean, what have we learned from the MELD-ATG data set and maybe some other ATG experiences that you've baked into your development of SAB142 in its design and dosing? And are there other competitor or interim readouts in type one diabetes immunotherapy that we should all just sort of have in our radar as you continue to execute on safeguard?

Samuel J. Reich, CEO

Yeah. So before MELD, there was a trial called TN19. TN19 was conducted by TrialNet, which is a U.S. consortium of diabetes researchers. And that was a study in newly diagnosed patients that were given a low dose of thymoglobulin or placebo. And at one year, they showed meaningful preservation of peptide and a reduction in HbA1c, both statistically significant. And that's the foundation for our program. The drug did everything that we wanted to do after a single dose and sort of set the basis for our program because it still was encumbered by serum sickness and the inability to redose. Then MELD was conducted. Another very similar study, it was conducted by European researchers in Anodia. And it was a very similar study, but they dose range to lower doses. And that data came out in September. And for a second time in a second patient set with the same drug, thymoglobulin showed it preserved C-peptide and reduced HbA1c. Really, very firmly establishing this mechanism of action and drug modality as efficacious in these patients. What we learned new in MELD that we hadn't learned in the TN19 study was related to dose ranging. And what we saw was, so if the anchor dose or the established effective dose was 2.5 mg per kg, and in MELD, they included lower doses and carried forward 0.5 mg per kg and compared it to 2.5 mg per kg at one year. And 0.5 mg per kg, also showed efficacy. It showed preservation of C-peptide and reduction in HbA1c. So for a second time, we see that thymoglobulin is efficacious, or this mechanism of action is efficacious. And we also learned that lower is still efficacious. And so there is kind of a Goldilocks dose with this drug therapy, which we learned from MELD, which is very helpful. Also, the lower dose had less lymphodepletion, so lymphodepletion has now been sort of officially separated from efficacy, and as R doesn't have lymphodepletion, that provides even more confidence that lymphodepletion is a liability and not a benefit. And if you go low enough, you can lose exhaustion, because they had a lower dose they dropped, and we can look at lower doses and see you don't have exhaustion. So you can't go too low, but you don't want to go too high, which was firmly established by MELD. So we really have a large amount of data and support for our program guiding us and reducing risk.

Leland Grishel, Analyst — Oppenheimer

All right, good. And Safeguard has been described by you guys as a registrational intent trial. How should investors think about that in practical terms? I mean, would this single phase 2B be sufficient for approval? We did see the FDA come out with a statement recently that, you know, a single pivotal study could be sufficient for most cases for approvals. You know, would there be additional safety or durability, potentially real-world data that may be of interest to regulators, you know, as they contemplate, you know, your guys' program becoming, you know, commercially available?

Samuel J. Reich, CEO

So we have agreement with FDA that this is a pivotal study. So we have the right powering, the right endpoints, the right patient population for this to be a registrational study. So it's kind of a de facto phase three. We believe based on precedent and our experience in this space that it will be sufficient. We do have time between now and BLA to augment the program without causing any delays. Were there to be more patients needed or more exposure needed, we'll have time and dialogue with the FDA to add any programs needed between now and then. But at this point, we do believe it's sufficient. And we are planning on any kind of additional studies now that we believe would be supportive of filing and getting and approval.

Leland Grishel, Analyst — Oppenheimer

Great. Yeah. Okay, good. And as we look toward, you know, it's a little bit of time away, you know, second half, 27, but are there other events coming out of the company, presentations, maybe regulatory interactions, although it sounds like you guys are pretty much caught up there, I don't know, biomarkers, anything else that we may see that could kind of help investors learn more and track the progress?

Samuel J. Reich, CEO

So a few things we can look forward to in 26 are, of course, enrollment updates, which allow everyone to sort of track the time to that major event of turning over data. We do have sort of more interesting data from our phase one that we completed and locked out last year that we'll be sharing at scientific venues, which we think are interesting updates for the market. And any program updates as it relates to, you know, building on our Diapone Diabetes program with SAB142 and building our data set, we'll announce this year.

Leland Grishel, Analyst — Oppenheimer

Excellent. Great. And, you know, the commercial opportunity here would seem to be pretty sizable, given the transformative potential of 142. So could you, you know, of walk us through is what you see as the addressable market in newly diagnosed stage three, and how could that expand if you move earlier into stage two, sort of a prevention type of setting, also considering retreatment, and how are you beginning to think about pricing in a post-T-SHIELD world?

Samuel J. Reich, CEO

Yeah. So there are 64,000 new patients diagnosed every year in the US alone. That is an addressable market. We need to preserve their beta cells. In addition to that, we have redosing. So we will accumulate patients, which increases that overall market size. And we do want to go earlier and catch patients earlier in stage two. And I think right now it's hard to quantify that increase in the TAM, because the vast majority of the addressable market today is newly diagnosed patients. But as the field progresses, and there are interventions available, we believe more and more patients will be diagnosed in stage two, and we want our therapy to be available to them. and that offers the promise of keeping a patient insulin-free. So we plan on studying the drug in phase two, eventually getting that added to the label. And there's probably some nominal increase to the available market, but as patients get diagnosed in stage two, we want to be there for them to preserve their beta cells and perhaps keep them insulin-free. As far as pricing, it's very early days. We're just beginning to build out our commercial program and prepare for that. What I can say is that right now, T-Shield is priced at $200,000. That's a guidepost. It's very early days. But technically speaking, when you have a superior drug, you can charge a premium for it. And that's where we are in pricing today.

Leland Grishel, Analyst — Oppenheimer

Okay. And what preparatory work are you doing already on the commercial front? Market development, campaign leader engagement, management, maybe kind of a screening infrastructure, how are you weighing also kind of go at a lone launch versus partnering with a larger company that may be in the diabetes or immunology Well, as a business and a board of directors and management team, we are prepared and ready to launch this drug and be a commercial company.

Samuel J. Reich, CEO

We are beginning to explore the patient provider journey, willingness to pay, where the market is, where the patients get diagnosed, and what we need to address with what kind of a force, which I think should be relatively small because most of these patients are treated at institutions, something very addressable. Early messaging around how this drug can help patients and why they should use it. A lot of planning so that we're ahead of the curve.

Leland Grishel, Analyst — Oppenheimer

And TGL recently qualified for the new commissioner's priority review voucher, and Sanofi recently filed an SBLA based on the PROTECT data for stage three. So, you know, seems like a supportive development for the, you know, overall effort here in terms of SAB. So, you know, how does that inform or validate the broader opportunity for disease-modifying therapies like 1, 4, 2 and, you know, any precedent here that impacts your own regulatory strategy?

Samuel J. Reich, CEO

So Sanofi filed an SBLA. They had only for stage three type one diabetes. They have only hit on C-peptide. They didn't hit on secondary endpoints. So if we believe that they had interacted with FDA and got agreement, that suggests that they have agreement that C-peptide is sufficient for an approval, which just lowers the bar or the threshold for getting a drug approved. We believe we'll hit on secondary endpoints based on what we know of our drug and thymoglobulin. But worse, T-Shield to get approved in stage three, it would create a precedent and establish that the FDA believes C-peptide is sufficient for an approval. We'll see. Hopefully we'll hear news soon.

Leland Grishel, Analyst — Oppenheimer

Yeah, no, a good one to watch. And as we think about, you know, 142 and T-SHIELD, you know, if you have those on the market, ultimately targeting overlapping patient populations at different stages, you know, how do you envision, you know, their roles, you know, kind of in a sequential format, competitively, complementarily? Do you see a potential scenario in which a newly diagnosed, you know, type 1 diabetes patient initially receives T-SHIELD, but then given that T-SHIELD is not really intended for repeat use, could then that patient subsequently receive 142 as a maintenance therapy?

Samuel J. Reich, CEO

Yeah, that's a great question. So there's two very key differentiations which give SAB-142 advantages over T-SHIELD. First, to date in all the clinical trials, T-SHIELD has not shown a reduction in HbA1c. It has shown a preservation of C-peptide, but not reduction in HbA1c, whereas the mechanism of action we employed has shown both. So with that one conclude, it has superior efficacy. And that's a pretty big differentiator if we get that. But if you just take the dosing regimen alone, T-SHIELD requires 12 days of dosing and thymoglobulin and SAB142 require two days of dosing. We have talked about this extensively with the doctors that treat these patients. The 12-day dosing is very difficult, and it's leading to a lot of patients who just say no. And actually, some patients who are hearing about our clinical trial are just waiting. So if the drugs had similar efficacy, and we believe ours is superior, 12-day dosing versus two-day dosing, and we have real-world knowledge, is a massive differentiator. So we do believe that will be very competitive. In terms of follow-up dosing, I would hope a T-SHIELD patient could get our drug. I mean, that's not something we're studying. I know that it's something of great interest because there will be patients that got T-SHIELD that will want to continue to preserve beta cells, and that's some possibility out there, but it's not something we're exploring. We do believe that we will take significant market share due to superior efficacy and a vastly superior dosing regimen.

Leland Grishel, Analyst — Oppenheimer

So almost at the time here, but just want to review kind of catalysts for the company, completion of enrollment and safeguard by end of this year, looking at top line data, second half of next year. You've been successful in your financing pursuits. So cash balance, if you could remind us your runway.

Samuel J. Reich, CEO

At the end of 25, we had $140 million in cash. The runway fully funds safeguard through top-line data plus about a one-year runway, so we have cash through 2028.

Leland Grishel, Analyst — Oppenheimer

Excellent. Great. Well, I think we'll conclude here. Thank you all for zooming in, and thank you, Sam, for joining us, and looking forward to everyone coming to one of our next sessions here at the conference. Have a great day. You too. Thank you for having me.