Sangamo Therapeutics Inc (SGMO) 2020 Q1 法說會逐字稿

Good afternoon, and welcome to the Sangamo Therapeutics Teleconference to discuss first quarter 2020 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 Communications and Investor Relations.

Good afternoon, and thank you for joining us today. With me this afternoon 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; Mark McClung, Chief Business Officer; and Bettina Cockroft, Chief Medical Officer.

Slides from our corporate presentation can be found at our website, sangamo.com, under the Investors and Media section in 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 our pipeline of genomic medicine product candidates; our ability to develop, obtain regulatory approval for and commercialize therapies to treat certain diseases and the timing availability and costs of such therapies; plans and time lines for Sangamo and our collaborators to conduct clinical trials and share clinical data, and the potential for these trials to provide clinical benefit to patients; the potential to use certain technologies to develop our therapies; the financial and operational impacts of our collaborations; plans and time lines for building and opening manufacturing facilities; the evolving COVID-19 pandemic; and our expectations regarding our financial performance and resources.

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 and uncertainties that are discussed in documents that we file with the Securities and Exchange Commission, specifically, in our most recent quarterly report on Form 10-Q filed today and our annual report on Form 10-K. The forward-looking statements stated today are made as of this date, and we undertake no duty to update such information except as required under applicable law.

On this call, we discuss a non-GAAP financial measure. 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 measure. The comparable GAAP measure and reconciliations of GAAP to the non-GAAP measure discussed on this call are included in today's press release, which is available on our website.

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

Thank you, McDavid, and good afternoon to everyone on the call. Typically, when I come together with the Sangamo executive team to talk to you about our business every quarter, we are in the boardroom of the headquarters in Brisbane, California. Today, due to the COVID-19 pandemic, we're all in our home offices, one of the many adaptations we've all had to make in these unprecedented circumstances.

At Sangamo, over the last 2 months, we've worked together to minimize any impact of the pandemic on our business, and I believe that we are in a very strong position. Last month, we were very pleased to announce the closing of our collaboration agreement with Biogen to develop gene regulation therapies for Alzheimer's disease, Parkinson's disease, neuromuscular and other neurological diseases. We've received from Biogen $225 million in proceeds from the sale of the stock and an additional $125 million upfront license fee payment. With this $350 million received from Biogen in addition to the $363 million in cash resources that we reported on our March 31 balance sheet, we believe we have the financial strength to execute on our wholly owned and partnered development programs beyond multiple important milestones, including the potential filing of the BLA for SB-525 for hemophilia A.

In response to COVID-19, Sangamo has prioritized employee safety and welfare while responsibly advancing the business. Following the shelter-in-place guidance from government authorities in the middle of March, we asked all nonlab employees to work from home. We also implemented modified lab operations and updated safety protocols to continue critical research and manufacturing work while protecting employee safety and adhering to social distance guidance. In the labs, we are strategically prioritizing projects to keep our business on track, including focusing on research activities for partnered programs. We're also conducting clinical activities cautiously so as not to contribute unnecessarily to the current strain on the health care system while staying in close communication with trial sites to protect the safety of the patients in their trial.

We continue to be optimistic that our AAV manufacturing facility in our Brisbane headquarters will be operational by the end of this year. We also expect our cell therapy manufacturing units in Brisbane, California and in Valbonne, France to be opened by the end of 2021. Furthermore, we are keeping in regular contact with our CDMO partners and as of now, do not anticipate any COVID-19-related manufacturing delays with our activities.

Despite the challenges of the current environment, we continue to actively pursue new partnerships, both inbound to access new technology as well as out-licensing deals such as established ones that we already have with Pfizer, Gilead, Sanofi, Biogen and Takeda. An important example of an inbound partnership is our recently announced collaboration, an exclusive license with Mogrify, a Cambridge U.K. company developing novel cell conversion technology that has the potential to serve as a renewable cell source. Under the terms of this agreement, Sangamo aim to use Mogrify's proprietary cell conversion technology to develop allogeneic zinc-finger protein, gene-engineered CAR-Treg cell therapies using iPSC-derived regulatory T cells. This license agreement will diversify our options and complement our current efforts as we develop off-the-shelf allogeneic CAR-Treg cell therapies. We believe that this exciting collaboration has the potential to accelerate the development and manufacturing of novel renewable cell source Treg therapies.

We are also continuing our discussions on out-licensing opportunities. As a reminder, our strategy for collaborations is to advance select development programs in partnership with biopharmaceutical companies in situations where we believe that our partners' financial resources or clinical and therapeutic area expertise may enable more rapid development and availability of new treatment to patients.

Before I turn the call over to the team, I want to update you on some of the recent transitions amongst my direct reports that are a natural part of Sangamo's evolution as we advance our clinical development and strategic partner. Over the last 3 years, we've added Executive Vice Presidents to lead manufacturing, legal, finance and R&D. In our latest executive appointment, as we look to the future and pursue the need for commercial development expertise and capabilities, Mark McClung has joined Sangamo as Chief Business Officer and now leads commercial strategic planning, alliance management and corporate and business development. Mark has a distinguished career leading commercial organizations, including GSK, Onyx and Amgen in highly competitive therapeutic areas that require deep scientific knowledge and where innovative products have disrupted the standards of care and where successful product development occurs as a result of a tightly integrating patient and physician insights into late-stage clinical development programs.

Stéphane Boissel, our EVP of Corporate Strategy, will be leave Sangamo at the end of July and plans to return to an entrepreneurial project. Stéphane joined Sangamo in 2018 after we acquired TxCell, now Sangamo, France, which Stéphane led as CEO. His energy and vision resulted in our recent Biogen transaction, which is one of the largest preclinical collaboration deals ever in the biopharmaceutical industry. Stéphane's impactful contribution to Sangamo will endure for many years.

With that, I will turn the call over to our Chief Medical Officer, Bettina.

Good afternoon. In light of the COVID-19 pandemic, Sangamo is working very closely with all our clinical trial site partners to devise individualized plans to protect the safety of every patient enrolled in our studies as well as the continued integrity of our trial data. After we have established a plan for each patient, we work with sites and IRBs to establish appropriate procedures. In some cases, trial site partners have been reducing or pausing clinical trial work to redirect capacity and resources to COVID-19 patients. At other sites, clinical trial patients are still being screened and enrolled, but may not be dosed until an appropriate time is identified.

In addition to adapting our clinical operations for this new situation, we are implementing procedures now so that as the COVID-19 crisis subsides, we'll be able to resume operations as quickly and as efficiently as possible. To do this, we're keeping in close contact with our trial site partners and continuing to identify potential patients that may be suitable for enrollment. In some cases, we're also using this time to further optimize clinical operations processes and engage with regulatory agencies. We're also working closely with our collaboration partners to track the status of our joint development programs.

Turning now to some clinical updates, commencing with SB-525 or PF-07055480 hemophilia A gene therapy. We transferred operations of the fully enrolled Phase I/II ALTA study to Pfizer, along with the IND at the end of last year. We're working closely together with Pfizer to identify an appropriate opportunity this year to provide an update on the results that were shared at ASH 2019 from the high-dose expansion cohort. Pfizer continues to target dosing the first patient in the Phase III study in H2 2020. Pfizer is working to minimize any potential disruptions to the schedule due to the ongoing COVID-19 pandemic and continues to recruit patients into the Phase III lead-in study. Pfizer recently updated clinicaltrials.gov with the Phase III study protocol and have informed us that they plan to provide additional updates on the Phase III trial in due course.

Moving now to our wholly owned gene therapy ST-920 for Fabry disease. We've successfully screened and enrolled patients into the STAAR study, and we are awaiting for a safe and appropriate time to initiate dosing the first patient.

In conjunction with our partner, Sanofi, we're evaluating gene-edited cell therapies for 2 hemoglobinopathies: ST-400 for beta-thalassemia and BIVV003 for sickle cell disease. ST-400 and BIVV003 are both designed to induce the synthesis of fetal hemoglobin. This is achieved by gene-edited knockout of the erythroid specific enhancer of the BCL11A gene, which encodes a strong repressor of the gamma globin gene. In beta-thalassemia, if fetal hemoglobin is expressed at high enough levels, it may substitute for a patient's absent or impaired levels of beta globin. We have enrolled and dosed 5 patients into the failed study, evaluating ST-400 for beta-thalassemia.

In sickle cell disease, increased fetal hemoglobin synthesis may provide the patient with functional hemoglobin and help down-regulate the abnormal sickle hemoglobin that results in painful sickle cell crisis and other disease features. Sanofi has also been enrolling patients into the PRECIZN-1 study, evaluating BIVV003 in sickle cell disease and dosed the first patient last year.

New analysis of the study's data will be shared when the 2 studies have accumulated a sufficient number of the patients and follow-up. No additional beta-thalassemia patients in a failed study will be treated until the data from both studies has been collected and analyzed. Sanofi will, in the meantime, continue enrolling sickle cell patients into the PRECIZN-1 study. We will look for an appropriate time to present data from both these studies at a future date.

I'd like to conclude by addressing a few programs that we are monitoring closely with regard to potential impact by COVID-19. We continue to make progress with additional regulatory approvals for the Phase I/II STEADFAST study, evaluating our first-in-human CAR-Treg cell therapy TX200 in HLA-A2 mismatched kidney transplantation. We expect to dose the first patient in this study in 2021.

Moving on now to KITE-037, an allogeneic anti-CD19 CAR-T cell product being developed by Kite, a Gilead company. Kite has informed us that there is a potential for a COVID-related delay to the initiation of the KITE-037 clinical trial.

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

Thank you, Bettina, and good afternoon, everyone. We're pleased to share our financial results for the first quarter of 2020. We reported a net loss of $42.9 million or $0.37 per share compared to a net loss of $42.2 million or $0.41 per share for the same period in 2019. The revenues were $13.1 million compared to $8.1 million for the same period in 2019.

Turning to expenses. Non-GAAP operating expenses, which exclude stock compensation, were $52 million compared to $47.4 million in 2019. 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 manufacturing capabilities.

Moving to the balance sheet. We ended the quarter with $363 million in cash, cash equivalents and marketable securities. Following the end of Q1, we received $350 million from Biogen from the sale of stock and the upfront license fee. As Sandy mentioned earlier, we believe we have the balance sheet strength to take us through important R&D milestones, including the first potential filing of the BLA for SB-525 for hemophilia A.

Turning to 2020 full year guidance. We are reiterating our previously shared financial guidance and anticipate non-GAAP operating expense, which excludes estimated stock compensation expense of $25 million to be in the range of $245 million to $260 million in 2020.

At this time, we do not expect any material negative financial impact from COVID-19 to our operating expense guidance. We will continue to monitor the situation and provide an update in the future. In the meantime, we will continue to be good stewards of capital.

I'll now turn it back to Sandy for closing remarks.

Thank you, Sung. This quarter marks an important milestone with the closing of the Biogen agreement, which both significantly strengthened our balance sheet and represents yet another vote of confidence in our highly differentiated zinc-finger protein genomic medicine platform from a top biopharmaceutical company.

In these unprecedented times, I've observed tremendous resilience and adaptiveness from our employees. And this has kept our business moving forward, including ongoing business development discussions, continued research and technical operations in our laboratories, and continued partnerships with our clinical trial sites. We feel a great sense of confidence in our business and in our ability to weather the COVID-19 crisis due to our balance sheet strength, strategic investments in infrastructure and to the prudent plans that we have established to facilitate our rapid return to more normal operations as this crisis subsides.

Operator, we are ready for questions.

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

First question is just on hemophilia A. So with the Phase III trial posted to clinicaltrials.gov, can you talk more about the design at this time, including dose, steroid use and what estimates are and how long it's going to take to enroll the study?

Maurice, thanks for your question. As you can imagine, the Phase III trial is under the control and communication of Pfizer, and they will give all announcements about the design of the trial, and we want to respect that relationship with them. Everything they have told us so far guides to the trial moving ahead as planned. One of the advantages of our partnership with Pfizer is they're a global organization that can take the trial to where the patients are available and where the COVID impact is less. So we look forward to them sharing more information with you as the year progresses.

Understood. Understood. And then for Fabry, you guys have mentioned before that you had more patient screen failures than you initially expected. Just wondering if you've implemented enrollment criteria changes. And have those been helping?

Bettina, would you be able to talk to that?

Yes, of course. So we have been looking at implementing some changes. And as you will have noted from the communication today, we have actually enrolled patients into the Fabry study. Now of course, during the COVID pandemic, we are being very cautious as to assessing the best timing for dosing the first subject. But we have had an uptick, and that has resulted in inclusion of patients into the study.

And Bettina, you feel that the changes you made to the protocol permitted that and facilitated that?

Exactly. Absolutely, absolutely.

Okay. And then last quick one was just on -- wondering if you have formalized plans to conduct a renal biopsy for Gb3 reduction in this initial part of the study. Or could that come in later on? Maybe if you could just talk more about what the plans are.

We haven't discussed our plans for the Gb3 and for renal biopsy. As you can imagine, that is a complex issue about patient benefit and the risk of a renal biopsy. We are very appreciative of the FDA trying to make medicines for Fabry, get to patients as quickly as possible by allowing registration quicker with the renal biopsy and are very aware of that and are incorporating it into our plans.

Our next question comes from Gena Wang of Barclays.

I have 2 questions. The first is regarding hemophilia A update and second question regarding Fabry disease. For hemophilia A update, I understand Pfizer emphasized the importance of an 18-month data. Giving follow-up from last ASH, is it fair to say 4Q this year likely would be a good timing to show data? And for the Fabry disease, you did mention you enrolled several patients. Just wondering how many patients? And also, is it still possible to present the initial data beginning of next year? Also, can you remind us the first dose for Fabry disease?

So let me take the first question before passing you on to Bettina, but warning you that we haven't talked about the first dose yet. But if I could do the hemophilia A, unfortunately, the world -- time moves at just the same rate, and patients are only now coming out to their 18-month point, and that's very weak patients, and it will take throughout the rest of the -- this and the next quarter for the majority of patients to reach their 18-month point. So Pfizer will lead all communications as part of the deal for a transition like this. You agree which company will lead all communications, and that is in Pfizer's hands, and they will decide when they have data that they will share with you all. I know this is frustrating, but it has to be a single company that leads that.

And Bettina, can you talk about our enrollment in Fabry?

Yes. Absolutely. So as far as Fabry is concerned, to address your last question first, we're going to be showing data after we've completed dose escalation across the 3 cohorts that we have in our protocol. We want to make sure that we present a mature data set that can represent the safety and efficacy of ST-920. And in terms of which doses we were planning to test, we have said low, medium and high. We will disclose specific doses at an appropriate point in the future. What I can say is we've learned a lot about AAV6 through our SB-525 hemophilia A program. And we've made protocol amendments in the Fabry program to take those learnings and also FDA guidance into account. So we look forward to updating further on this in the future.

Okay. How many patients already have enrolled?

I think we're not disclosing...

Yes, exactly. We're not disclosing that. But we have patients enrolled. We have interest from sites. And it's just a matter of us choosing when to dose the first patient. I'm sure you would agree that we need to choose wisely because the patients will have to come in for monitoring, and we want to make sure that they're safe and that the health service is not overstressed.

Our next question comes from Whitney Ijem of Guggenheim.

I wanted to follow up on Fabry. So I guess, first, can you give us any color on the entry criteria that were adjusted that kind of facilitated enrollment? Just curious if we could learn more there. And then the second question is on the endpoints. You mentioned you won't present data until you have a complete data set. I guess what does that mean in terms of follow-up? And kind of what endpoints are you tracking? Or is that a 12-month kind of safety thought that's reflected on clin trials.

So Whitney, thank you for your question. The criteria that we adjusted were not things about antibody criteria like gene therapy things. They were more our understanding of what Fabry patients looked like and what are the right patients to put into the study. Each time a company like ours goes into a new disease, we learn from the first few patients, and Bettina and her team have done an excellent job in simply understanding what patients are available. When we say we won't talk about the study until it's complete, what we mean is that we've gone through the -- each of the dose cohorts. And as soon as we have biochemistry data from each of the dose cohorts, the low, medium and high, as Bettina has said, we will share them with you. You're absolutely right that there will be follow-on data that will look at additional parameters, including, in some patients, biopsy. But we hope to be able to share the biochemistry initially and talk to you about the results of our intervention.

Got it. And just a quick follow-up. In terms of the biochemistry, what particular endpoints, I guess, are you looking at there? And what's the cutoff? I guess is it like 3 months or 6 months of biochemistry you want to have at that higher dose to kind of be the threshold for announcing the data?

We haven't described that. You've been with us for a long time, and you understand our cautiousness in speaking too soon and waiting for the results to stabilize so as we can most inform you and most inform the patient community.

(Operator Instructions) Our next question comes from Ritu Baral of Cowen.

I'm going to take another stab at the Fabry screening criteria question. Can't help myself. I understand that there's different aspects to the disease. And as you said like there's -- there have been other companies in Fabry gene therapy and they've maybe not optimized initial patients in. Specifically -- specific to Fabry, are you more interested in proving the effect in Fabry manifestations of kidney? Can you talk about how you think about unmet need in kidney versus unmet need in cardiac, maybe other organ systems as you think about the disease, the patient you want and the unmet need across ERT, small molecule and some of your gene therapies addressing the condition?

So I'm going to let Bettina talk to this in a moment, but you can imagine, this is the first time any of us have moved a gene therapy into Fabry. And with the first few patients, we learned about the effect, pharmacology, the plasma levels. And with the first few kidney biopsies, we will learn from those. So I think it would be premature for me to declare what is the right thing to do. We, last week or the week before, had 3 Fabry patients take part in a company-wide Zoom conversation, talking about the things that still both of them. And it's clear that Fabry patients are not receiving all the benefit they need, and there's still a medical need. But Bettina, would you like to talk to that?

Yes, of course. And as you say, Sandy, we've had conversations with many experts in the field of Fabry to address exactly we do what you're highlighting kidney and cardiac and other organs being affected. What we should point out at this point in our trial, this is a Phase I/II trial, is our primary objective at this point is of safety and tolerability of ST-920. And so we hope to see similar safety and tolerability as we saw with the AAV6-based gene therapy, SB-525. And moving on from there, as we learn, we can focus on the organs that make most sense moving forward to address that unmet need.

Got it. And then, Sandy, you mentioned -- as you guys are moving forward with activities, you mentioned some additional regulatory meetings that you're engaged -- going to engage with regulatory agencies with some of the new bandwidth that you have in COVID. Could you elaborate on what sort of regulatory meetings you might need? I mean obviously, Treg is moving into the clinic. Fabry is moving into the clinic. Can you give us a little color around that?

So can I make sure I understand your question? You're asking, are we having additional regulatory meetings with the agency or with agencies around COVID?

No, not around COVID, but in your comments initially around how there have been changes with work streams with COVID. It sounded like you had the opportunity to engage with regulatory agencies some more on programs or I may have misunderstood you. I -- but I'd love to know what regulatory meetings are planned, say, in the next quarter or 2 on the programs.

So I'm going to pass this to Bettina to help out on this one, and then I'm going to make more general comments. Bettina?

Yes. Absolutely. So you're absolutely right, we mentioned this earlier on today. What we're focusing on mainly, and you've picked it up, is TX200, specifically where we are engaging with regulatory agencies, especially the various European ones in the various countries that we are initiating our TX200 study in. So we are getting through all those regulatory approval processes for that study. And that study is receiving a lot of feedback even during this pandemic. Many of the agencies are still working hard. But that's exactly what we're engaging in.

And then on a more general basis -- but on a more general basis, we have not had specific comments with the agency -- with any agency about how COVID impacts our program. I sit on the Board of Bio, and there we have a regular conversation about how companies with -- in some ongoing studies are having to make modifications to the protocol and modifications of how to collect data. And the agency, particularly the FDA, has been very understanding about that. Sangamo haven't had to have those conversations, if that's what your question is.

Got it. The last question, sorry. Sandy, you also mentioned that you may be considering other partnerships -- partnership opportunities. Can you talk to the programs now in your current lineup that you think would be most appropriate for a partnership versus Sangamo taking them forward?

So if you think of what happened with Biogen, there was one of those products, the tau for Alzheimer's that we've been speaking to you all for a while about, 1 synuclein that we've spoken for 3 months, and the other 10 were things that none of us knew were in the Sangamo pipeline. There are things that we could partner that you are aware of, and we have no plans at the moment to further partner our existing assets in the pipeline that you think of as Sangamo's. But there are also many other targets within the genome, even within the CNS space that are not part of our current go-ahead portfolio, but the others are interested in.

Our next question comes from James Birchenough of Wells Fargo Securities.

This is Yanan dialing in for Jim. So first, a question on the Alzheimer's program in collaboration with Biogen. Wondering, have you decided what might be the optimal delivery route for that program, whether it's IV or intraparenchymal-type injections? And also, secondarily, is there a milestone, the first milestone that you think you will be communicating around? So just wondering the time line, for example, nomination of a candidate or first IND. So any sense of when that might be?

So a bit like what we've said with Pfizer, it will be Biogen to make this communication. But I wonder if Adrian could comment on routes of delivery and Stéphane on milestones. So Adrian, perhaps, first?

Yes. Thanks, Sandy, and thanks for the question. We -- as Sandy said, we haven't disclosed the route of delivery and that will be -- we'll leave it to Biogen to do that. But I will just say, for example, if you look at -- I don't know if you'll be following ASGCT over this week, but we'll be talking about some of our attempts to derive new serotypes using directed evolution and so on in our capsid libraries. So we've got an active program doing that. And obviously, anything that comes out of those programs will be relevant to the work of Biogen. But it's fair to say that we're considering a range of different delivery routes. So at this point, wouldn't want to be more specific than that.

And that's the presentation by David Ojala.

Yes, that's right, Sandy, where we make these capsid libraries with different peptide insertions and insertion sites using a range of different parental serotypes.

Yes. Stéphane, whether contract is constructed?

So yes, Sandy, we closed the Biogen deal only a few weeks ago, and we had the onboarding of the collaboration only a few days ago. So we need to be a little patient for the collaboration to really get started for the steering committee to meet before we can make any update as to the time line on the various products we are going to work on with our friends at Biogen.

But the first start-up meeting was very successful out here.

Oh, it was. And despite a very bizarre or unique setting because it was totally virtual, and we had something like 80 persons, a combination of Biogen and Sangamo employees on the phone and Zoom as well, and it was a real success despite, again, kind of a bizarre setting to start with.

That's very helpful. And then just 2 quick questions regarding the Fabry disease program. Just wondering, what is your competitive positioning against other AAV Fabry gene therapy approaches? And what's your impression from the initial biomarker data regarding enzyme that was presented recently? And whether you are -- in your -- sorry, whether in your low-dose cohort -- starting dose cohort, you think you can achieve similar or higher in terms of enzyme level?

So can I just clarify your question? Are you saying in the second part of this, are you -- who you are comparing against, Freeline or AVROBIO or -- Freeline?

AAV, yes, Freeline.

So let me see if I can answer both of these. None of us can claim that we have something different until we get into the clinic and see the results in patients. And therefore, that's why we're going to wait and complete the study at all 3 doses. I don't think it would be helpful for us to compare our low dose versus Freeline's low dose because all that matters is the final dose that you take into the clinic. We are pleased with the design of our study, we're pleased with the animal results and we're looking forward to showing clinical results. And as Bettina emphasized, this study is about safety. So we will be looking at liver enzymes, we'll be looking at cardiac enzymes, we'll be making sure that this is the safest possible because it's only when you have that, that you can then start to compare on efficacy.

I'm showing no further questions at this time. I'd like to turn the call back over to Sandy Macrae for any closing remarks.

Thank you all for your interest. Thank you all for doing this virtually. We are very fortunate at Sangamo to be able to proceed with a virtual team and our lab staff in the laboratories, and we look forward to sharing more results with you as the year progresses.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you for participating. You may all disconnect. Have a great day.