Biogen Inc (BIIB) 2019 Q4 法說會逐字稿

Good morning, and welcome to the Sangamo Therapeutics Teleconference to discuss Fourth Quarter 2019 Financial Results.

This call is being recorded.

I will now pass you over to the coordinator of this event, McDavid Stilwell, Senior Vice President of Corporate Communication and Investor Relations.

Thank you for joining us today.

Yesterday afternoon, we issued a press release announcing a global collaboration, and earlier this morning, we issued fourth quarter and full year 2019 results.

During our call today, we'll be referencing slides from our corporate presentation, which can be found at our website, sangamo.com, under the Investors + Media section in the Events + Presentations page.

This call includes forward-looking statements.

These statements include, but are not limited to, the timing and scope of Sangamo's genomic medicine platform and products, the potential for Sangamo's product candidates to provide clinical benefit to patients, Sangamo's collaborations including their financial and operational impacts, Sangamo's development and manufacturing plans and Sangamo's expectations regarding its financial performance.

Actual results may differ substantially from what we discuss today.

In addition, these statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are detailed in documents that the company files with the Securities and Exchange Commission, specifically, in our most recent annual report on Form 10-K and in our most recent quarterly report on Form 10-Q.

The forward-looking statements stated today are made as of this date, and Sangamo undertakes no duty to update such information except as required under applicable law.

On this call, we will discuss certain non-GAAP financial measures.

We believe this measure is helpful in understanding our past financial performance and our potential future results.

This is not meant to be considered in isolation or as a substitute for the comparable GAAP measures.

The comparable GAAP measures and reconciliations of GAAP to the non-GAAP measures discussed on this call are included in today's press release that's available on our website.

With me this -- or this morning on this call are several members of the Sangamo senior management team, including Sandy Macrae, Chief Executive Officer; Sung Lee, Chief Financial Officer; Stéphane Boissel, Head of Corporate Strategy; Adrian Woolfson, Head of Research and Development; Bettina Cockroft, Chief Medical Officer; and Melita Sun Jung, Head of Business Development.

On today's call, Sandy will discuss the Biogen collaboration we announced yesterday, Adrian will provide an overview of our zinc finger platform for neurological diseases and the clinical program update and Sung will review 2019 financials.

And now I'd like to turn the call over to Sandy.

Thank you, McDavid, and good morning to everyone on the call.

We're delighted to be here this morning.

Yesterday afternoon, Sangamo and Biogen announced an ambitious and expansive collaboration to develop genomic medicines for neurological diseases, including Alzheimer's disease and Parkinson's disease.

The collaboration will leverage Sangamo's proprietary zinc finger protein, or ZFP, technology to modulate the expression of genes involved in neurological diseases, such as tau for Alzheimer's, alpha synuclein for Parkinson's, a neuromuscular target and 9 of their neurological targets.

Upon closing the transaction, Sangamo will receive $350 million, which is comprised of $125 million upfront payment and $225 million in proceeds from the purchase by Biogen of approximately 24 million shares of Sangamo stock at a price of $9.21 per share.

In addition, Sangamo may receive up to $2.37 billion in other development, regulatory and commercial milestone payments, including up to $925 million in pre-approval milestone payments and up to $1.4 billion in first commercial sale and other sales-based milestone payments.

Sangamo will also be eligible to receive tiered high single-digit to sub-teen double-digit royalties from Biogen on potential net commercial sales of products arising from the collaboration.

The magnitude of this collaboration reflects the true value of our zinc finger platform technology, which are experienced and passionate scientists have worked to optimize for therapeutic applications and the immense promise of genomic medicine in neuroscience.

We are truly thrilled to be collaborating with Biogen, who are pioneers in neuroscience drug development and committed to the development of innovative medicines in this field.

Sangamo and Biogen agree that there is both urgent unmet patient need and the potential for medical breakthroughs in the field of neuroscience.

In the case of Alzheimer's and Parkinson's, the current standard of care treatments are symptom-focused, and there are no approved treatments to modify or slow the relentless progression of these devastating neurogenerative (sic) [neurodegenerative] diseases.

That's why the promise of genomic medicine to provide a onetime treatment that addresses the underlying cause of disease at a DNA level is so powerful.

A genomic medicine in the field of neuroscience offers a hope of potentially altering the natural history of the disease for patients.

At Sangamo, we feel responsibility and a sense of urgency to translate our promising signs into genomic medicines that can enter the clinic.

And that's why our strategy is to simultaneously develop our own proprietary product candidate pipeline and to partner when we need access to exceptional therapeutic area expertise or the financial resources to rapidly move our programs forward in the clinic.

We feel that the combination of our engineered zinc finger proteins, Biogen's unmatched neuroscience expertise, capability and infrastructure, along with our shared commitment to bring innovative neurological medicines to patients, establishes the foundation for a robust and compelling partnership.

We are excited at Biogen as both a partner and a strategic shareholder, and we look forward to working with them to advance these important programs.

As Biogen has said, they're equally excited to work with Sangamo to treat challenging neurological diseases of global significance, are committed to quickly progressing programs forward to IND applications.

Our cooperation with Biogen is an excellent example of the way that our research productivity [consciously] into value for shareholders.

We have frequently spoken about the latent potential of our ZFP platform, a technology, we believe, that we can engineer to address virtually any genomic target and which is able to generate an expansive pipeline.

Collaborations such as this one enabled us to activate the potential of the technology in partnership with therapeutic area leaders and to raise significant cash to fund our new and ongoing R&D activities.

To date, Sangamo has brought in approximately $700 million through license fees, milestones and equity from our partnerships.

In terms of future opportunities, in addition to royalties on net product sales, Sangamo could also earn up to $6.34 billion in potential milestone payments from our partnerships cumulatively.

We're diligent and intentional in the choice of our partnerships and take the necessary time to find the right partner and to negotiate specific rights that we're out licensing.

Today, we have entered into a strategic collaboration, starting with 3 targets with an option for 9 additional neurological targets to be selected by Biogen.

Beyond those 12 total targets, we retain the rights to the use of our technology and the hundreds of additional potential neurological disease targets.

And we will look for opportunities to advance additional programs so that we can bring innovative new medicines to patients and realize additional value for our shareholders.

These partnerships will be especially important as Sangamo enters a second wave of development, applying our genomic medicine technologies to disease areas with large patient populations and great unmet medical need.

In addition to starting our journey with Biogen, this quarter also marked an important milestone for Sangamo as we became a Phase III company.

We transferred the IND for SB-525 hemophilia A gene therapy to our development partner, Pfizer, who are planning to initiate a Phase III registrational trial later this year.

This brings us one step closer to our mission to bring our genomic medicines to patients.

Finally, before I turn the call over to my colleagues, I would like to congratulate the teams at Sangamo for the courage that is taken to trail place in this new era of -- a new area of genomic science in medicine and for the discipline and hard work that's been necessary to become a Phase III company and to execute an unprecedented neurological disease collaboration.

I'd like to say special thanks to Stéphane Boissel, our Head of Corporate strategy, and our teams in corporate development, business development and research, whose leadership and focus were instrumental in helping Sangamo enter into this important partnership.

With that, I will turn the call over to Adrian.

Thank you, Sandy.

Yesterday afternoon, we were delighted to announce our new collaboration with Biogen to develop Sangamo's proprietary engineered zinc finger protein technology into genomic medicines for neurological diseases of global significance.

The ability to switch genes on and to switch genes off in the brain precisely and with great specificity is a really exciting new development in the application of genomic medicines in neuroscience.

The first product candidates in the collaboration, ST-501 targeting tau and ST-502, which targets alpha synuclein, leverage Sangamo's pioneering genome regulation technology, zinc finger protein transcription factors, ZFP-TFs, which are currently delivered using adeno-associated viruses, AAVs, and function at the DNA level to selectively repress or activate the expression of specific genes to achieve the desired therapeutic effect.

Last year, Sangamo published a manuscript in Nature Medicine detailing the high selectivity, genome-wide specificity and the long-term tolerability of zinc finger protein TFs in preclinical models of Huntington's disease that provided proof-of-concept for this technology.

ZFP-TF can be engineered for a wide range of applications within the neurological disease area space, including for single-gene, tunable, pan-allelic regulation of targets, such as tau or alpha synuclein or allele-selective repression, as is the case with our Huntington's and ALS programs.

This technology also has many potential applications beyond neuroscience as it allows gene expression to be tuned to therapeutic levels in any cell type.

Sangamo's differentiated ZFP-TF technology provides several important benefits over other therapeutic strategies that are currently under investigation.

In the case of neurodegenerative diseases, such as Alzheimer's and Parkinson's, for example, is an accumulation of toxic misfolded proteins in neurons, and targeting a treatment to all the different forms of these proteins is incredibly difficult.

It is also challenging to target RNA as there's several copies of these molecules, and they come in multiple forms.

In contrast, however, by targeting the disease upstream of both the protein and the RNA complexity using ZFP-TFs, we were able to address the key drivers of the disease at the source by repressing their expression at the DNA level.

Furthermore, the prospect of a onetime administration of an AAV that can restrict the expression of ZFP-TFs to specific cell populations has many important potential advantages over other therapeutic modalities that are currently under clinical investigation.

In the case of Alzheimer's disease and other tauopathies, the progressive accumulation of toxic tau protein in the brain is linked to neuronal loss in clinical symptoms.

Reducing the total amount of tau expressed within neurons has been shown to provide benefit in animal models of tauopathies.

Similarly, misfolding and aggregation of alpha synuclein has been shown to play a central role in the cellular deficits associated with Parkinson's disease.

Consequently, reducing the expression of tau or alpha synuclein in the brain may have the potential to slow or even to halt the progression of Alzheimer's disease and Parkinson's disease, respectively.

The current marketed treatments target the symptoms of these diseases and would clearly be very compelling to have a treatment that both targets disease progression, but additionally also slows or completely arrests the disease pathology.

I'm really immensely excited about this collaboration because it unlocks a whole new area of medicine into the CNS.

Preclinical studies have demonstrated the ability of AAV vectors to efficiently deliver ZFP-TF that are targeted to tau ST-501 or alpha synuclein-targeted ST-502 and the result in highly specific potent and tunable repression of tau and of alpha synuclein.

Indeed, the preclinical data presented by Sangamo last year demonstrated significant reduction of tau expression in the nonhuman primate brain following administration of targeted ZFP-TFs.

We also presented preclinical data last December at our R&D day in New York City, which showed that more than half of the ZFP-TFs tested reduced the total alpha synuclein levels by greater than 50% in ex vivo cell culture system.

We're very excited to work with Biogen to further develop these assets and to progress them to IND-enabling studies.

Under the terms of our collaboration with Biogen, Sangamo will take the lead on early research activities aimed at the development of proprietary neurological AAV delivery vectors and ZFP-TFs that target therapeutically relevant genes.

Following this preclinical development phase, Biogen will assume sole responsibility for the IND-enabling studies, clinical development, regulatory interactions and also commercialization.

Turning now to some clinical updates.

We ended 2019 on a strong note, progressing our lead asset, SB-525, into a Phase III program with Pfizer and securing the necessary regulatory approvals to advance additional gene and cell therapy programs into Phase I/II clinical trials throughout the year.

Starting with SB-525 hemophilia A gene therapy.

In addition to the recent transfer of the program to Pfizer, we were pleased with the Phase I/II data that was presented at the ASH annual meeting in December.

The data showed that SB-525 was generally well tolerated and suggest the potential for sustained Factor VIII levels following treatment.

We will continue to observe the durability as the follow-up data accumulates.

Moving now to a follow-on and wholly-owned gene therapy ST-90 (sic) [ST-920] for Fabry disease.

We're currently screening patients in the STAAR clinical trial, which currently has 6 sites open in the U.S. The first European site was initiated in London this week.

ST-920 received Orphan Drug Designation from the European Medicines Agency in January.

At ASH last year, we presented preliminary information from the Phase I/II THALES study assessing ST-400, an ex vivo gene-edited cell therapy in patients with transfusion-dependent beta thalassemia in partnership with Sanofi.

We will continue to follow the data to understand the safety profile and potential clinical benefits of the treatment.

Also in partnership with Sanofi, the first patient was dosed in the Phase I/II PRECIZN-1 trial evaluating BIVV003, our related ex vivo gene-edited cell therapy for the treatment of sickle cell disease for which Sangamo received a $7.5 million milestone payment.

BIVV003 uses an identical zinc finger nuclease-mediated editing and manufacturing process to ST-400 with a mobilization regimen if the patient's cells differs.

Plerixafor is used in combination with G-CSF in beta thalassemia as compared with plerixafor alone for sickle cell disease as G-CSF is contraindicated in this patient population.

Moving on now to our first-in-human CAR-Treg cell therapy, TX200, and we're happy to say that we recently received a number of regulatory approvals, including clinical trial application authorization in the U.K. for the Phase I/II STEADFAST clinical study in HLA-A2 mismatch kidney transplantation.

We will continue to work closely with our oncology collaborator Kite as they advance Kite-037, an allogeneic anti-CD19 CAR-T therapy, into a clinical trial this year.

Finally, I would like to mention that we were pleased to see the FDA's guidance on gene therapy manufacturing and clinical developments of products that was published in January.

It is certainly immensely encouraging that the FDA recognizes the promise of gene therapy and is creating regulatory pathways for this new treatment modality.

We very much look forward to continuing our interactions with the FDA as we further develop and progress our genomic medicine pipeline.

I will now turn it over to Sung for an overview of the financial results.

Sung?

Thank you, Adrian, and good morning, everyone.

I'll first begin with the fourth quarter results.

We reported consolidated net income of $4.6 million or $0.04 per share compared to a net loss of $18.7 million or $0.18 per share for the same period in 2018.

Revenues were $54.9 million compared to $26.8 million for the same period in 2018.

The increase was primarily attributable to a $25 million milestone achieved for SB-525, our hemophilia A candidate partnered with Pfizer, and a $7.5 million milestone achieved for our sickle cell disease candidate partnered with Sanofi.

Total operating expenses were $53.4 million compared to $47.6 million for the same period in 2018.

Turning to the full year 2019 results.

Consolidated net loss was $95.2 million or $0.85 per share compared to a net loss of $68.3 million or $0.70 per share for 2018.

Revenues were $102.4 million compared to $84.5 million in 2018.

The increase in revenues was primarily attributable to milestones achieved with Sanofi and Pfizer as well as higher revenues related to our collaboration agreement with Kite-Gilead.

Total operating expenses, excluding stock-based compensation, were $188.3 million compared to $146.9 million in 2018.

The increase in operating expenses was primarily related to the company's overall headcount growth and facilities expansion to support the advancement of Sangamo's therapeutic pipeline and build-out of the in-house manufacturing facility.

As of December 31, 2019, the company had cash, cash equivalents, marketable securities and interest receivable of $385 million.

Turning to 2020 full year guidance.

We anticipate operating expenses, excluding stock compensation, to be in the range of $245 million to $260 million.

This range reflects investments to support our new collaboration with Biogen, continued progress towards GMP manufacturing capability and progression of our clinical programs.

And finally, as Sandy mentioned earlier, we're excited about the potential of the partnership with Biogen.

The collaboration has been approved by the Boards of Directors of both companies and is subject to customary closing conditions, including the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

This transaction is anticipated to close in the second quarter of 2020.

With the anticipated near-term cash from this transaction, combined with our existing cash balance, we have the wherewithal to execute on our wholly owned and partnered programs, potentially through Pfizer's first BLA filing of SB-525 for hemophilia A and beyond.

I will now turn it back to Sandy for closing remarks.

Thank you, Sung.

This is an exciting day at Sangamo, and I'm sure you all have lots of questions.

So let's just get straight to it.

Operator?

(Operator Instructions) Our first question comes from Maury Raycroft with Jefferies.

Congrats on the update.

It seems like a great deal.

To start, I'm wondering if you can say how far along the neuromuscular program is.

Maury, thank you for your question.

We haven't heard anything about this neuromuscular program, and it's a further unnamed target by Biogen.

But it's an exciting example of their confidence in our technology.

Got it.

And then for the 9 unselected targets, if Biogen does not select those by 2025, what happens?

And then for the 9 targets, can you talk about how long it could take to get a therapy ready for a target and just generally how resources will be used for these targets?

Let me pass that one on to Stéphane.

Maurice, so for the first part of your question, if those targets are not selected by the term of the 5-year collaboration time, we would be freed from the exclusivity under the Biogen agreement.

And for the second part of your question, can you please repeat it, please?

Sure.

Just wondering for the 9 targets, if you could talk about how long it takes to get one of them ready to actually get a product -- program ready for it and, just generally, how resources will be used for these different therapies.

Well, it's very variable.

I think it will depend on the target per ticket basis.

But we probably need between 9 to 18 months on a per target basis.

And that work will be, of course, conducted by Sangamo.

But what's been really pleasing about this platform is how effective the team have been at targeting new genes.

You saw at the R&D day that we showed evidence about Alzheimer's, which would -- tau for Alzheimer's, which we've been studying for a while.

We added in synuclein, which was really only done in a very short period of time.

And then Prion disease, which is not part of the deal, that's work that have only been going on for, I don't know, 3 to 6 months.

So we're very pleased at how quickly and effectively and successfully the team are able to create assets for new targets.

And I think that was one of the things that gave Biogen great confidence that we could succeed with their list.

Got it.

And and then if you can talk about rights to your novel CNS AAV vectors.

I guess does Biogen have any unique or exclusive rights to those vectors?

Stéphane?

Yes.

That's a very good question.

So Biogen will have access to our novel capsid, but on a nonexclusive basis, except when it comes to the target that are exclusively licensed to them.

Got it.

And can you say how important those vectors were for the decision to do the deal?

A very important consideration.

Maury, it's one of the thing -- Maury, if I may, it's one of the things that we have tried to explain why this deal has taken time to come to fruition is the whole field of both the zinc finger transcription factors and the vector technology and the delivery technology has had to be come together, and that's why we've waited and taken the necessary time to do the right deal.

And our next question comes from Whitney Ijem with Guggenheim Securities.

And I'll add my congrats, very exciting deal.

I'm going to stick with CNS and switch over and just ask a question on Huntington.

Curious if there's any update as it relates to the status of that program or any progress that you can speak to.

That program is now with our friends at Takeda, and they will give you updates on it.

Okay.

Got it.

And then moving over to Fabry, probably same question.

Just curious if there's any color you can give us or anything like that as you kind of continue to screen and enroll patients around when you plan to treat them?

So we will describe the results when the study has been completed, and we would expect to do that towards the turn of the year, beginning of next year.

Okay.

Can you confirm whether or not you have treated a patient at this point?

We will be recruiting patients throughout 2020.

Got it.

Okay, great.

We have not -- to be explicit, we have not recruited a patient.

Bettina, would you like to talk to that?

Absolutely.

Thank you.

So we've initiated 6 sites in the U.S. and actually participated in the initiation of the seventh site in London on Monday this week.

So we're currently screening patients.

And it's my priority, above all, to ensure the quality of the study by ascertaining that the right patients are included.

And so we have screened several patients, some of whom had borderline exclusion criteria and who are the screen failed.

Indeed, we've had more screen failures than we were expecting at the outset of the trial, but other patients continue to be in the screening phase.

And just as a reminder, screening can take up to 2 months to complete.

So we've also introduced protocol amendments that will optimize the inclusion criteria and will allow us to optimize those as well as address the FDA's recent guideline on -- guidance on Fabry disease.

(Operator Instructions) Our next question comes from Eric Joseph with JPMorgan.

I guess maybe just a first question on Fabry's, which is whether or not you're experiencing any competition for patients as you're screening here with other trials going on in this space.

And then secondly, on the Biogen deal, I'm just curious to get a sense of what some of the gating items are into initiating IND-enabling studies.

At the R&D Day, you projected that you'll be in IND for 501 in 2021 and then into 2020, with 502.

I'm just trying to get a better understanding of why you thought to do the deal here rather than at IND readiness, where even one would argue that you'd attract a higher value inflection point.

So if I could just say that Fabry is great that there are so many companies interested in it.

It's an important medical condition.

Our recruitment hasn't been limited by sites interest or investigator interest in our products.

In fact, they are very enamored by the preclinical data we've seen.

For the reason to do the deal at this stage, Stéphane?

Well, I think the question was about -- as to the time line.

So we have not disclosed updated time lines in partnership with Biogen.

What we can say today, Sandy, is that the next step for the tau and synuclein program is to conduct IND-enabling studies.

But it's way too early to comment on timing for entering the clinic or market for that matter.

I think we will update the market with Biogen in due time.

But I think part of Eric's question was why didn't you wait and do it till IND.

We have had such interest in preclinical candidates.

So I think this is a truly remarkable deal for the stage that the products are at.

And our next question comes from Debjit Chattopadhyay with H.C. Wainright.

Congrats on the deal and all the progress.

This is Aaron on for Debjit.

So can you tell us a little bit more color on the kind of data that Biogen has seen as far as if there's anything beyond what you've shown at the R&D Day?

And when might we expect updates on the Alta study?

And what kind of follow-up on the patient data might we see, well, as far as how long the follow-up would be?

Okay.

So let me spread the answers.

So Stéphane, do you want to talk about the deal?

And then Adrian, if you can talk about the Alta study.

Well, of course, Biogen was under CDA.

So they have seen much more than what we have presented at R&D Day, but we cannot elaborate on that.

Yes.

And we were in regular contact with Pfizer about the hemophilia A study.

They remain incredibly enthusiastic as do we.

Pfizer will provide the next update, and it's probably best if we leave it for them to announce when that happens.

I know they are eager to share the data when it reaches the important time points because they want to make sure that we are all aware of the advantages of this asset.

Okay.

And that might come at a medical conference or publication.

Pfizer are currently considering a number of different options.

But I really think it's probably best to leave it to them to mention that, the details.

And our next question comes from Jim Birchenough with Wells Fargo.

Let me add my congratulations on the terrific deal and all the progress.

Just sticking with neuroscience, do you have -- is there any data to benchmark the tau reductions and alpha synuclein reductions that you've seen with your approach and some of what Biogen already has in-house in terms of antibody or ASO approaches to those 2 targets?

That's a really good question, and I'm sure Biogen did that before they did the deal.

The -- I think -- I'll ask Adrian to comment in a moment.

But I think what Adrian tried to say was that with antibodies or even with RNA modulation, you hit subsets of the genes products and what we achieve is turning off at the source.

Adrian?

Yes.

You've got to remember the tau forms multiple different misfolded aberrant species from kind of low molecular weight forms, kind of oligomers through to complex high molecule weight misfolded species.

And as Sandy said, if you try and target this at the protein level, you can never really be certain that you're taking out the pathological misfolded species, right?

You can only take out certain molecular weight of misfolded protein.

And similarly, if you try and target it at the RNA level, there are related problems.

And the only way to be absolutely certain that you get rid of all the complex species that are generated when tau misfolds and all the (inaudible) and so on and so forth is to actually take it out at the level of the DNA and just switch it off.

And that's why we think this and why Biogen think that this is really probably the way forward in the future and, hopefully, will lead to a really significant increase in the way -- in the efficiency of treating this disease and hopefully a cure, actually.

And then maybe just to follow up on the question on AAV selection.

There was an article on Brain Science this week on neuroinflammation with AAVs and effects on dorsal root ganglion and spinal cord pathology.

When you look at your AAVs that you've developed, can you differentiate at that level?

And beyond that in terms of tropism for the right neurons, how does it compare to some of the technology that comes out of [UPenn], as an example.

That's a really good question.

And it's something we've been following carefully, and it's something we look at regularly across all cell types in the brain and in the spinal cord and dorsal root ganglion.

But we watch that field closely.

And with all of these conditions we treat with our genomic medicine, it's all about benefit/risk, and we are -- we and Biogen are confident that we have the right route forward.

So is that to say, Sandy, that you think your AAV stand out on that perspective of neuroinflammation specifically as well as tropism?

Well, let me be quite clear on what I'm saying is that we look carefully for neuroinflammation, both in the CNS and in the peripheral nervous system and particularly after the the work that was -- has come out over the past year in the dorsal root ganglion, and that would have to be something that our asset or vector did not cause for this to be a successful medicine and move forward.

Our next question comes from Gena Wang with Barclays.

I have a few questions regarding the Biogen deals.

Just wondering what threshold will trigger the double-digit royalty, and also, what is the broke-up fee.

Stéphane -- I thought that Stéphane -- what can you see?

Well, it's a tiered royalty scheme.

So the more Biogen will be selling, the more royalty or the higher royalty will be for us.

That's the way it works.

So we will reach double digit when we will have crossed a certain threshold in sales.

Okay.

So that threshold would be, I think for other deals, normally, is over $1 billion.

Is that in line with other deals, what we've seen in the space?

Nice try.

Sorry.

I'm afraid we can't disclose that.

There's -- it's one of the things that we've agreed not to share.

Okay.

So -- and then what is the breakout fee?

That's another thing that we haven't disclosed.

We have no concerns about the break up.

This deal is going well.

Okay.

And the last question is the CNS delivery.

Just wondering -- like for each indication, will you have to optimize the route of administration?

And what are the route of administration you are thinking about?

Yes.

So we're going to -- thanks for the question, by the way.

We're going to look to pair the optimal delivery solution with each target and indication which could include natural or engineered AAV serotypes.

And at our R&D Day in New York, David Ojala, who's leading our internal AAV engineering efforts using a directed evolutionary approach, show data on AAV serotypes that we've been developing for use in different neurological diseases.

And these and our ongoing work in these factors will be tested for use in our neurological targets with Biogen and may be utilized in the product candidates.

So basically, a number of different serotypes and exploring other routes as well.

Okay.

Last question, how could the Biogen collaboration accelerate your R&D [fining] for top programs?

So as part of any of these deals, you agree on a research plan.

And then the teams will get together over the coming weeks and months and agree on the best way forward together.

So our timings and our guidance, the timings remain, but -- and once the teams get together, we will encourage them to move this to patients as quickly as possible.

And our next question comes from Ritu Baral with Cowen.

I wanted to ask if there were any carve-outs for indications within the deal for Sangamo.

Any particular carve-outs in areas that you guys were most interested in?

And can you say anything broadly about where Biogen's focus is going forward for the additional 9 candidates?

It looks like now it seems to be neurodegeneration, neuromuscular.

But anything you can say to these points.

Then I've got a follow-up on Fabry.

Stéphane?

Yes.

Well, it's very important to understand that the deal with Biogen is an exclusivity on 12 targets, including tau and alpha synuclein.

But as you know, there are more than one relevant neurological target in the brain across the field of neurodegeneration, neurodevelopment, neuromuscular or even psychiatry.

And so we reserve the rights to either develop or to partner a very large list of other CNS target.

As far as your second question is concern, we have not disclosed anything, and we are not going to disclose anything about the list of the other targets unless Biogen authorized us to do so in the future when those target will be selected.

And Stéphane, it's fair to say, though, that for tau and the several indications for tau, those all belong to Biogen.

Yes.

There is no carve-out.

All indication targeting tau, for example, PSP or Alzheimer, will belong to Biogen.

Got it.

And can you talk to, I guess, the process before selection of the additional 9 targets?

Like is there a certain level of preclinical data or in vitro data you guys will generate and then a decision-making time period that Biogen has?

Or is it whatever they want to pick at whatever time within the 5 years?

Sandy, do you want me to answer?

Yes.

So we cannot disclose a lot of details.

But of course, we need to bring to Biogen, a certain technical package or a certain validation package.

And the deal is structured in a way that we are, at Sangamo, strongly incentivized to bring those package as rapidly as possible to Biogen.

Got it.

My next question was actually on some -- either learnings or more like questions what not to do.

In a competitor Fabry gene therapy program presented at WORLD, clinical Phase I/II AAV program that showed -- I believe it was myocarditis and troponin elevations in Fabry.

I was wondering if you guys saw that presentation, had thoughts on if that is a risk to any AAV in Fabry, is that something that was vector-specific and just sort of lessons from that program and dose as you think about your own.

Yes.

We saw that data.

And one is always careful to comment on safety issues that our friends and other companies have because you don't know all the details, and patient safety and lives are important.

What I can say, though, is with our AAV6, we've got a lot of experience now across hemophilia A and the IVPRP programs, and this is something we have not seen in clinic and we have not seen in any of our preclinical models.

So we are pleased that we haven't seen this issue, but we'll always remain vigilant and hope that [free line] find a way forward.

Is there a rationale, like a medical rationale for why they could see -- Fabry patients could see a unique toxicity because of Fabry cardiomyopathy?

So the Fabry patient as -- I think I know where you're going with the question.

The Fabry patients do have cardiac disease, and it may be that there is a susceptibility there, which is why as pleased we are with our safety profile up to now, we will watch with -- as everyone else will to make sure that our patients are protected.

And we start at the right dose, and we really look after these patients with all due caution.

Has that set in at all to your careful screening?

And can you talk to why you have such high screen failures so far?

So I would refer you to Bettina's answer.

Bettina, just -- we'd refer you to Bettina's answer.

The screening problem -- sorry, the screen challenge is not around to AAV-neutralized antibody.

That remains about 30%.

It's about understanding the disease and being very careful in choosing the right patients.

And I think we're all learning about Fabry's disease and which are the right patients and what data is available in their notes and how we can find them and bring them into the study.

And we look forward to bringing patients in very soon.

And our next question comes from Umer Raffat with Evercore ISI.

This is Mike DiFiore in for Umer, and huge congrats on the deal.

I have a question that's partially related to a previous question that was asked.

Given that Biogen is already developing ASO pipeline assets, specifically in Alzheimer's and Parkinson's, you said in -- not too long ago that this ASO approach may be suboptimal, and that it wouldn't be a complete silencing or turning off of genes.

So my question is will Sangamo's zinc finger nuclease approach, could it be complementary?

Or can these 2 approaches be used together in treating these diseases?

An interesting question, Adrian?

Yes.

I think there's almost certainly will be a role for both approaches, and I think it remains to be seen how they play together.

And I'm sure Biogen has very specific ideas about that, and probably best to leave it to their development team to go into that in more detail.

But to be clear, we hope that our product is the answer, and it's unnecessary to those with anything else.

And our next question comes from Salim Syed with Mizuho.

This is Benet from Salim's team at Mizuho.

First of all, congrats on your results and on the deal.

So just a couple of quick ones for us.

First, in your studies for these 2 candidates, ST-501 and 502, did you find any off-target genes unregulated?

And second, in the context of Parkinson's disease.

If I'm not wrong, since alpha synuclein has several transcription starting sites, are you targeting certain TSS?

Are there other?

These are very good questions.

Adrian?

Yes.

I didn't hear the second question.

But let me...

The second was about the various start sites or (inaudible).

I see.

Yes.

Yes.

So let me just talk about the first one.

So one of the really important differentiating features about our technology, say, for example, to CRISPR is that zinc fingers proteins are proteins, right?

Then that means that they're engineer-able in a way that it's just not possible to do with CRISPR.

And some of you would've seen we published really actually wonderful paper.

My colleague at Rebar's team wrote the paper, and they showed how they could reduce off-target for nucleases, which, of course, we're not using in this situation, but in the case of nucleases, by tuning the calculated weight of (inaudible).

In the case of transcription factors, we had another way of reducing off target.

And it was through the mutation of arginine residues, which make nonspecific contacts with the negative charge of the DNA helix.

And by mutating out those residues to glutamines, we could reduce off-target to virtually 0, and the data is actually really striking when you see it.

I mean, this is a phenomenal invention by our team because without these mutations, you get significantly more off-target.

So our reagents now contain these mutations.

So we believe we more or less completely eliminate off-target, and that probably makes them the safest reagents of this kind.

And of course, just on another related safety point, it needs a human, fully human proteins.

Remember that because both the repressor component and the zinc finger itself is derived from natural recapitulating -- natural human gene regulation in the brain.

So that's very different...

And Adrian, we would refer them to the patient on the paper on tau where we show that it's only the tau gene that is repressed.

So from an off-target point of view from tau, we have already published that data.

And for synuclein, the asset that we would take forward, we would plan to have it with a similar sensitivity.

Yes.

And the activation or repression, because we can do both, but in this case repression, is intrinsically localized or insulated to the target gene by the cell's native machinery that prevents the effect spreading to adjacent genes.

And then your question on synuclein, it's an interesting and very technical one, and we haven't revealed which of the start sites that we are targeting.

But again, it's within the ability of this technology to choose across the start sites and [tile] across that which one we're going to do.

So we will talk more of that in weeks and months to come.

Thank you.

And I'm showing no further questions at this time.

I'd like to turn the call back to Sandy Macrae for any closing remarks.

Thank you for joining us today and for your questions.

This really is an exciting day for Sangamo and for patients with devastating neurological diseases.

With our technology and Biogen's understanding of the science and the medicine and the patients are out there, we really hope we can do something special.

So we appreciate your support, and we look forward to keeping you updated on future developments.

Ladies and gentlemen, this concludes today's conference call.

Thank you for participating.

You may now disconnect.

Everyone, have a great day.