Sangamo Therapeutics Inc (SGMO) 2021 Q2 法說會逐字稿

Good day, everyone, and thank you for standing by. Welcome to the Sangamo Second Quarter of 2021 Teleconference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions) I would now like the conference over to your speaker today, the Head of the Corporate Communications, Ms. Aron Feingold. Please go ahead.

Good afternoon, and thank you for joining us today. With me this afternoon on this call are several members of the Sangamo executive leadership team, including Sandy Macrae, Chief Executive Officer; Mark McClung, Chief Business Officer; Prathyusha Duraibabu, Chief Financial Officer; Jason Fontenot, Chief Scientific Officer; Rob Schott, Head of Development; and Bettina Cockroft, Chief Medical Officer. Slides from our corporate presentation can be found on our website, sangamo.com, under the Investors and Media section on the Events and Presentations page.

This call includes forward-looking statements regarding Sangamo's current expectations. These statements include, but are not limited to, statements relating to potential value drivers, clinical catalysts and advancement of our preclinical pipeline; plans and time lines for enrolling and conducting clinical trials and presenting clinical data; potential clinical data outcomes; our 2021 financial guidance; our expectations regarding our financial performance and sufficiency of our cash resources; and other statements that are not historical facts. Actual results may differ materially from what we discuss today. These statements are subject to certain risks and uncertainties that are discussed in our filings with the SEC, specifically our annual report on Form 10-K for the fiscal year ended December 31, 2020, as supplemented by our quarterly report on Form 10-Q for the fiscal quarter year ended June 30, 2021.

The forward-looking statements stated today are made as of this date, and we undertake no duty to update such information, except as required by law. On this call, we discuss our non-GAAP operating expenses. Reconciliation of this measure to our GAAP operating expenses can be found in today's press release, which is available on our website.

Now I'd like to turn the call over to our CEO, Sandy Macrae.

Thank you, Aron, and good afternoon to everyone on the call. This is an exciting time at Sangamo as we look forward to multiple clinical catalysts over the next several quarters, representing potential near-term value drivers. At the same time, we're advancing our promising preclinical pipeline that focuses on our differentiated CAR-Treg approach for autoimmune diseases and genome engineering for CNS diseases towards INDs. They represent potential midterm value drivers.

Beyond that, we continue to invest in early-stage research to further mine value from our core zinc finger platform. We continue to make steady progress on our wholly-owned Fabry disease Phase I/II clinical study. During the quarter, we dosed the fourth patient. And based on initial safety data from patients dosed to date, the Safety Monitoring Committee endorsed dose escalating to the third dose as planned under the certain protocol. We are currently screening patients for the third dose cohort and expect to dose the first 2 patients in this third cohort by the end of the year. We will make a decision on when to first present initial data from this study, depending on clinical time lines and will publicly announce our plans when available.

In addition, we currently have 3 sites open in what we believe is the first-in-human CAR-Treg study, and we plan to enroll the first patient by the end of this year. We are very excited about this study. We believe this proof of concepts that are evaluating TX200 and kidney transplant rejection will help us understand CAR-Treg pharmacology and biology in humans as well as advance process development knowledge. We hope this study establishes the foundation for a portfolio of wholly-owned CAR-Treg therapies for autoimmune indications.

In the fourth quarter of this year, we and Pfizer expect to present 2-year results from the Phase I/II ALTA study in hemophilia A. We look forward to having a clear understanding of durability through 2 years from the 5 patients in the high-dose cohort from the Phase I/II ALTA study as well as from the Phase III data from additional patients that we expect to read out in 2022. Together, these data will be highly informative about the potential product profile.

In addition, later this year, we and our partner, Sanofi, expect to share initial Phase I/II data from our PRECIZN-1 study at an upcoming medical meeting. The study is investigating SAR445136 for the treatment of sickle cell disease. We expect to report interim efficacy and safety data from the first 4 patients dosed with at least 3 months of follow-up.

Finally, Biogen recently selected a fourth neurological disease gene target under a collaboration agreement, and we have begun early research activities and therapies addressing this target.

This quarter, our former General Counsel, Gary Loeb, made the personal decision to leave Sangamo for another opportunity. We thank him and wish him well in his future. However, we are pleased today to announce that we have promoted Scott Willoughby to General Counsel and Corporate Secretary. Scott has contributed significantly to Sangamo, overseeing all corporate law and compliance matters since he joined us in March 2020. Scott has over 20 years of legal experience with expertise in corporate governance, SEC reporting, corporate finance, compliance, mergers and acquisitions and transactions.

In addition to Scott's appointment, our executive team was recently strengthened by the appointment of our new Chief Financial Officer, Prathyusha Duraibabu. Prathyusha has served as Sangamo's Principal Accounting Officer for nearly 2 years. She has contributed significant with a wealth of experience and her proven track record in optimizing financial strategy and operations, driving organizational change and building diverse teams. It is so pleasing to promote from within talented individuals, and I look forward to Scott and Prathyusha's leadership.

And with that, I'll turn the call over to Prathyusha for a financial update.

Thank you, Sandy, and good afternoon. It has been my pleasure to serve as Sangamo's Chief Financial Officer for the past few months, and I look forward to continued interaction with all of you as we progress our business forward. Our financial results for this quarter are available in the press release issued this afternoon, which can be found on our website.

This quarter, we continue to invest in the advancement of our clinical programs, our preclinical research pipeline and expanding our in-house manufacturing capabilities. We ended the quarter with approximately $579 million in cash, cash equivalents and marketable securities. We believe that our balance sheet remains strong and will allow us to reach several important R&D milestones, including the potential submission of a BLA for our hemophilia A product candidate.

Turning to 2021 full year guidance. We would like to reiterate the guidance we've provided in our prior call. We continue to expect non-GAAP operating expenses, which excludes estimated noncash stock-based compensation expense of approximately $30 million to be in the range of $255 million to $275 million for the year.

We will now turn it over to the operator to open the line for questions. Operator?

(Operator Instructions) And our first question is from Maury Raycroft of Jefferies.

This is Kevin on the line for Maury today. So for TX200, there are some prior disclosures I think from TxCell, which discussed use of FOXP3 and use of antivirus. And there are a number of CAR-Treg competitors moving forward in the space. On the technical side, what should investors be focused on when trying to appreciate differentiation of Sangamo's approach with TX200 versus what competitors are doing?

So this -- thank you for your question. I think this is one that would be best answered by Jason, our Chief Scientific Officer. Jason?

Yes. Thank you, Sandy. I -- so Sangamo, the partnership that Sangamo started with TxCell with the acquisition of the legacy TxCell group brought together our extraordinary genomic engineering platform with the expertise that TxCell had built in Treg biology over the years. And that work has only grown and matured over the last years as we continue to push forward our TX200 program as well as programs that we are advancing behind that for multiple sclerosis and inflammatory bowel disease.

And in addition to that, we are very invested in moving from autologous cell therapies to allogeneic cell therapies through the use of our zinc finger genomic engineering platform and through our partnership with Mogrify and then our internal work on iPSCs. So the real differentiator for me between what Sangamo is doing and what these new entrants into the field are is simply the breadth of expertise that we have and the time that we've invested here. And we're super excited about the programs and the potential to really transform the treatment of autoimmune disease.

Great. And then just on the AAV side. So when considering discussion on AAV safety and evading the immune system, Sangamo has been an innovator there. Are there any new developments on the AAV side that you can talk about, particularly with AAVs that can be used with your neuro programs?

So thank you for that question, too. We continue to invest in a group within Jason's organization that are looking at optimizing AAV use with the CMS. We spoke about this, this year as ASGCT, and we'll talk about it as the data evolves. We have some very smart scientists doing this. And we are of opinion that delivery is so important for genomic engineering. It goes hand-in-hand with the molecular biology of the zinc fingers. And we look forward to showing more data in the months to come.

And our next question is from Yanan Zhu of Wells Fargo Securities.

So a question on the Fabry disease program. I guess I'm wondering, for you to determine a dose to move into the dose expansion, what data point -- or data points would you pay attention to? And what kind of a follow-up would you require in order to make that call? And also each day's dose level has only 2 patients. Do you feel that you have enough data points to make a determination of the dose for the expansion? And lastly, how many patients do you think you would enroll into the dose expansion study?

Thank you, and important questions about a study that is -- that we're very passionate about. So can I turn this to Mark, and then get Rob to add in from a clinical point, but let's start with Mark.

Yes, Zhu, thanks for your question. A lot of these questions are related to the trial. I mean, as you're probably aware, the STAAR study's primary end point is safety and tolerability. The secondary endpoints are pharmacodynamics of alpha-Gal A and the presence of the substrates in the plasma over time as well as the impact on eventual ERT administration. What I'll do is maybe hand it over to Rob to answer the specific questions in terms of where we're at with the dosing cohorts and how we will progress into the expansion cohort. Rob?

Yes, thank you. Very good questions. We have announced that the DMSB (sic) [DSMB], the Data Safety and Monitoring Board (sic) [Data and Safety Monitoring Board], has met and has endorsed our moving to the third dose cohort. So we have fulfilled the safety requirements and additional requirements for the independent DMSB (sic) DSMB to allow us to proceed to our highest dose cohort. We're not disclosing at this point the specifics of that, but we are moving to that cohort and plan to dose the next 2 patients in the cohort this year. And we'll be sharing data along the clinical time lines that are appropriate. But again, the most important piece of information that we're sharing with respect to your question is that the DMSB (sic) DSMB approved unanimously the third dose cohort.

And our next question is from Geoff Meacham, Bank of America.

It's Aspen on for Geoff. So just kind of follow-up on the last question. Can you remind us on the dose levels, the 3 dose levels for Fabry? I know obviously, in some other gene therapy trials in the past, the lower doses that were in play is adequate and higher doses kind of addressed the level of efficacy. Some other companies are looking for different programs. I guess I'm just trying to get a sense of is it that what we're seeing here? Or was this dose escalation always kind of part of the plan? And if based on those dose escalation, is the primary driver the alpha-Gal A levels that you're looking at to see?

So let me say this, and I know this is -- this must be so frustrating for all of you. We have not revealed the dose levels before going in other than those 3 cohorts. We have learned a great deal from the hemophilia A study about the kind of levels that are appropriate. And it's always a patient -- efficiency about starting at a dose that gives the patient some hope of benefit versus being prudent for something that is the first time it's ever gone into human. And we are immensely grateful for patients coming and taking that first dose, not knowing until we see the results, whether there's been any benefit to them. So we're going to have 3 doses, and we hope to be able to describe the dose effect across the 3 doses.

Okay. And maybe just one quick follow-up. So the FDA sourcing an AdCom, I think, in early September on AAV. Maybe just help us frame what your expectations for that are if you'll be at all involved in that meeting. I would love to hear your opinion on that.

We have a group of our staff that will be attending virtually or in person that meeting. Each company has dosed so few patients with AAV that the agency has the greatest store of knowledge on the safety and efficacy of AAV. And so I am looking forward to the meeting and looking forward to hearing the things that the agency sees across many programs. So we can all learn and that patients can be protected as much as possible.

And our next question is from Gena Wang of Barclays.

My first question, also a follow-up on the Fabry disease program. I just wanted to ask exactly what kind of level -- if you can give a little bit more quantitative answer regarding what volume you're looking for to define as the right dose. For example, the lyso-Gb3, are we talking about over 50% reduction or even below ERT level? So this is the first question.

Second question is the hemophilia A program. Just wondering if 2-year Factor VIII level has some decline, do you expect FDA will ask for longer than 1 year follow-up for the Phase III study?

Good afternoon, Gena. So let me answer those questions in reverse order. The Pfizer is handling the communication and the regulatory interactions around the hemophilia A. And I'm so pleased that our baby has been with Dr. Pfizer, and I know that they will do a great job in having those regulatory conversations. Around Fabry, Mark, do you want to discuss the outlook we're looking for, for -- to determine success?

Yes. (inaudible) Sorry, apologies. The program goal is to look for a predictable, durable expression of the alpha-Gal A enzyme and then to see whether or not the results in accumulation of the substrate of Gb3 and soluble derivative lyso-Gb3 go down. We've not commented on the amounts that we're expecting to see. As Sandy mentioned, we dosed the first 4 patients. We're moving into screening for the third dose cohort, which is terrific. And hopefully, we'll have an update for you by the end of the year in terms of when you might start seeing some of that data.

Sorry, I'd be pressing. Just wondering, I understand you cannot talk about the first 2 cohort data, but just wondering what is your goal to determine, okay, that's the right dose?

We'll not comment on that, Gena. I mean I know some of the other companies have commented on the percent substrate reduction, AVROBIO has done that, but we've -- our belief is, obviously, we want to see a fairly significant reduction in the substrate because that seems to link to the improvement or the -- in the decline of the eGFR, which is really important for patients.

But Gena, I want to strike a note of caution as you interpret the AVROBIO data. The reduction in Gb3 will depend on -- or lyso-Gb3 will depend on where you start. So if you have a high level of lyso-Gb3 and your compound is effective, you'll get a reduction. If your lyso-Gb3 is already at a low level due to ERT or addition, it's -- we'll do the reduction. The dramatic graph that AVROBIO shows is an artifact of the patient that they recruited.

And our next question is from Ritu Baral of Cowen.

I want to just follow up on Fabry again. Can you -- I know you can't really tell us about the safety findings, but can I ask if what has been observed and learned in the cohorts to date and the preclinical, I guess, investigation to date? What does it tell you about the safety of the program? And not just the standard AD, liver or complement issues but also cardiac safety within the Fabry population, just given competitive programs have shown signals. Is this something worth leading patients out for? Or is this something that could be unique to various programs? And then I have a follow-up.

So let me answer that slightly tangentially. It's remarkable because we have dosed with AAV6 across a number of programs. And other than the occasional immune response, allergic response or the occasional ALT, considering how much virus we're giving, it is remarkably safe. These viruses are -- the safety of them is very encouraging.

The second thing is that we do not determine safety ourselves. We have a DSMB that overviews all of the safety and allows us to carry on. I imagine that Freeline has a DSMB or some safety monitoring committee that had them -- that would have judged their cardiac events and given them counsel on whether or not they could advance. We have heard very clear unanimous response from our DSMB.

Got it. That is very helpful. And then just because manufacturing build-out is prominently featured in the update, how should we be thinking about CapEx allocation for the manufacturing build-out across the lead programs?

Prathyusha, can you answer that?

Our manufacturing build-out is going to be based on what we need across the different programs. And we will assess it in the next 6 years -- 6 months to 18 months.

I am so glad we invested in manufacturing 18 months, 2 years ago. And they are on -- they have completed the manufacturing. They are on track to do cell therapies, manufacturing in Brisbane and [Hong Kong] by the end of the year. And the reason I say that is there is the -- between idea and clinical material and manufacturing is over a year, no matter who does it. And there is a keynote at the CMO store manufacturing slots. But more importantly, if you look at what's happened with other AAV companies, it's about quality of manufacturing is the most important regulatory discussion. And I feel by having our research group side-by-side with our manufacturing group to do process development, we have the best chance of the best product, and the process is the product. And so I think it was a wise investment we make.

Got it. And then, Sandy, I just want to triangulate your comments into the slides that were sent around today, especially in relation to the Biogen collaboration. You had mentioned progress in the Biogen program with the -- with an undisclosed target. I want to make sure it's that, like on Slide 22, you have alpha synuclein, tauopathies and undisclosed. You are referring specifically to that undisclosed neurology target? Or should we be thinking about progress in 1 of the 3?

Jason, can you help us entangle that? How many targets are on the go now in Biogen?

We now have 4. Sorry about that. We now have 4 targets in the Biogen collaboration. And we're thrilled to see them pressing. It's great to be working with a partner like Biogen. I think that the fact that we are progressing on all of these targets is a reflection of just how much confidence the Biogen team has and the work that the Sangamo team is doing to support these programs. So I'm really looking forward to when Biogen can tell everyone more about the targets and about the work that we're doing. And when it's appropriate, we'll certainly be able to publish the work that we've been doing to support the team.

And Jason, before you go, back on you, we had -- we recently had a very positive meeting with them and the team from NIBR.

Yes, yet another -- we gave you another example of the work that we're doing in the CNS and another example of what I think is one of the really differentiated aspects of our platform, both from a functionality point of view and in our ability to use zinc finger, transcriptional activators and transcriptional repressors to modify cells in a therapeutically relevant way. So we're really excited about that collaboration as well, and we're looking forward to the output of both of those collaborations and kind of building on the expertise in the CNS area that is supporting both of those programs. We are also advancing some internal effort in the CNS, and we'll be talking about those when it's appropriate as well.

Got it. You've got 2 undisclosed neurology targets with Biogen along with 502 alpha synuclein and 501 tauopathy, correct?

Correct. Correct.

And for the last and final question, from Ben Burnett of Stifel.

This is Kailie Briza on for Ben Burnett. We just have a question around TX200. And I was just wondering if you could elaborate on how the CAR is designed. And if you've disclosed, is it costimulatory domain? As well as what you expect the expansion connects to be in the transplant setting relative to what we've seen in oncology.

Jason, we haven't said much on this. Can you give whatever guidance you can?

Yes. So I am not sure if we have disclosed the construct for our CAR. But needless to say, we are leveraging the learnings from the oncology field. And the advancements that have been made in cell therapy in oncology is what we're building upon. Without that work, there would not be the CAR-Treg programs that we're advancing.

That being said, there is some very different biology of work within regulatory T cells. And that's where the work that the TxCell team did, and then since the acquisition, the Sangamo team have been doing over the years to really understand the optimal CAR construct and the optimal ways to purify ourselves and expand ourselves in advance of infusing into the patient. It's all really paying off because this is work that is specific to Tregs and there are things that were not obvious based on the oncology experience. And that deep understanding of the Treg biology is what we're bringing to bear on the TX200 program, and we're really excited to see it move forward.

I was wondering also if you would be able to give any details of when you expect to disclose proof-of-concept data for the study.

I'm very anxious to answer this one.

Well, I -- let me help you with that one, Jason. We haven't guided it...

Yes, we haven't guided, and we'll do that as soon as it's appropriate. It's a -- the first thing that we're testing is the safety, obviously. And when we have data available, we will certainly share it, but we haven't disclosed that at the moment.

Thank you, everyone. And at this point, I would like to turn it over to Aron Feingold, the Head of the Corporate Communications.

Thank you once again for joining us today and for your questions. We look forward to keeping you updated on our future development.

And this concludes today's conference call. Thank you, everyone, for your participation. You may now all disconnect. Thank you so much.