Sangamo Therapeutics Inc (SGMO) 2002 Q2 法說會逐字稿

My name is April and I will be your conference facilitator today. At this time I would like to welcome everyone to the Sangamo quarterly conference call. All lines have been placed on mute to prevent any background noice.

After the speakers' remarks there will be a question-and-answer period. If you would like to ask a question during this time simply press star, then the number one, on your telephone keypad. If you would like to withdraw your question press the pound key. Thank you.

Ms. Wolffe, you may begin your conference.

Thank you.

Good afternoon and thank you for joining us for Sangamo's quarterly teleconference. Today we'll be discussing our progress during the second quarter and our financial results, which were released today at approximately 1 p.m. Pacific Daylight time.

Joining me are several members of Sangamo's senior management team including Edward Lanphier, our President and Chief Executive Officer; and Carl Pabo, our Chief Scientific Officer. Edward and Carl will update you on several of our recent activities and discuss some of the exciting scientific and commercial opportunities that were enabled by our ZFP transcription factor technology platform. After our prepared remarks we will have time for questions.

As we begin I'd like to remind everyone that the projections and forward-looking statements we discuss during this conference call are based upon the information that we currently have available. This information will likely change over time. By discussion our current perception of the market and the future performance of Sangamo with you today we are not undertaking an obligation to provide updates in the future. Actual results may differ substantially from what we discuss today and no one should assume that at a later date that our comments from today are still valid.

We alert you to be aware of risks that are contained in documents that the companies files with the Securities and Exchange Commission, specifically our quarterly reports on Form 10-Q and our annual report on Form 10-K. These documents detail important factors that could cause the actual results of the company's operations to differ materially from those contained in our projections or forward-looking statements.

Now I'd like to introduce Edward.

Thank you, Liz. Hello and welcome to our second quarter conference call.

Two years ago this summer the sequence of the human genome was published. I know this because hanging on my office wall is a framed copy of the New York Times front page from June 27th, 2000, with the bold headline, "Genetic code of human life is cracked by scientists." However, hanging next to the front page is an equally sized frame containing the front page of the science section of the New York Times from that same day. That headline reads, "Now the hard part, putting the genome to work." Today, two years later, the science section seems to have had a more relevant perspective.

Over the past several years biotech and pharmaceutical companies and academic laboratories have validated targets at an incredible rate, providing an understanding of how a given medical condition is related to either the overexpression of a disease gene or the underexpression of a therapeutic gene. The relevance of genomics in pharmaceutical research and development is undeniable.

At Sangamo our ability to engineer zing finger DNA-binding proteins to specifically recognize and bind to any gene pemits us to build novel transcription factors that can turn on or turn off any disease-related gene. Over the past two years we have proven that our ZFP transcription factor technology platform can be applied to direct therapeutic regulation of virtually any gene. By mimicking the way in which essentially every organism on our planet has evolved to control the expression of DNA, we are in a very unique position to accelerate the characerization of gene function as well as, and even more importantly, to develop a new class of therapeutics capable of turning on therapeutically beneficially genes or turning off disease-related genes.

Further, because ZFP's act directly on the DNA they have several clinically important and differential advantages over conventional small molecule drugs, proteins or monoclonal antibodies.

Another commercial benefit of using ZFP transcription factors to regulate a therapeutically important gene is that these endogenous genes, genes as they exist inside a cell or an organism, cannot be patented. This gives Sangamo the ability to provide solutions for small molecule drug discovery to companies that would normally be unable to develop drug targets due to patents on the cDNA of that gene.

The breadth and robustness of our technology married with the intellectual property advantages creates a very powerful commercial platform for the development of new therapeutics in this post-genomic era. This is our vision and our mission. Our focus and the subsequent allocation of our scientific resources follows from this and includes our therapeutic initiatives in cardiovascular disease and cancer, as well as new ZFP therapeutic initiatives in neurobiology and ophthalmic applications.

We told you earlier this year that we have several challenging but important objectives. From a business development perspective we expect to establish at least six new corporate collaborations from universal gene tools, small moledule drug discovery or protein production, as well as pursue larger-value initiatives such as broader strateic collaborations and significant government grants. We also promised to release new scientific data in high-impact peer review journals and at major scientific meetings to broaden the appreciation for the breadth and differential advantages of our technology. Finally, and in line with our core business philosophy, we promised continued growth in revenues and preservation of the strength of our balance sheet.

What I plan to do today is to review the further progress that we have made in these endeavors over the past several months and reiterate our commitment to these important and value-adding - value-creating objectives.

First, I'd like to ask Carl Pabo, our Chief Scientific Officer, to update you on our scientific progress over the past several months.

Carl.

Thank you, Edward.

Before I begin I would like to take this opportunity to introduce myself to those of you I have not yet had the opportunity to meet. Before joining Sangamo almost one year ago, I was professor of biophysics and structural biology at MIT and also was an investigator with the Howard Hughes Medical Institute. I've been elected to the National Academy of Sciences and the American Academy of Arts and Sciences.

When I chose to leave academia several people asked me why I would give up such a highly successful and secure academic career to move to California and join Sangamo. The short answer, as it would for most people in my profession, involved the exciting scientific opportunities here.

My entire career has been invested in gaining an understanding of the structure of proteins that interact with DNA and of how that structure determines their DNA-binding function and their capability to regulate gene expression. In the mid '80s, while is was professor of biophysics and molecular biology at the Johns Hopkins Medical School, my research focus turned to a particular class of DNA-binding proteins called zinc fingers or ZFPs. These proteins are the most abundant and versatile DNA-binding motiffs found in nature and are present in organisms ranging from yeast to man. As part of the transcription factor the ZFP motiff serves to bind specifically and tightly to a target site in a gene and thus regulates gene expression. As you know, these proteins form the basis for our technology here at Sangamo.

While at Hopkins we crystalized the complex of a mouse zinc finger DNA-binding protein, ZFP 268, and the DNA sequence to which it bound. We published the analysis of that crystal structure in 1991 in Science Magazine. The crystal structure revealed that each of the three zinc finger domains of the protein found in the major groove of the DNA double , that each finger had a similar relationship to the DNA, and that each finger recognized three base pairs of DNA.

We could immediately see that this structure provided a framework for understanding how zinc fingers recognized DNA and we predicted that it would provide a useful basis for the design of novel DNA-binding proteins. As you know, designing novel and highly specific DNA-binding proteins is one of Sangamo's core compentencies.

In later work, both at Hopkins and at MIT, I continued to focus on understanding the structural and energetic principals of protein DNA interaction. I also worked on the design and selection of ZFPs with the aim of being able to eventually use this knowledge in the development of novel transcription factors that would enable the highly specific control of endogenous gene expression.

That vision is what led me here to Sangamo and it is extremely exciting that we have achieved this goal. I knew from my early association with Sangamo in my role as Chairman of the Scientific Advisory Board, that my current position would offer me a unique opportunity to do outstanding science while developing an entirely new class of gene-specific therapeutic agents.

One of the other advantages of having interacted with the company in the role of Chairman of SAB is that I came on board knowing the quality and dedication of the scientists who already worked at Sangamo. As I moved here I was fortunate to inherit a group of extremely high-caliber scientists recruited from internationally-recognized laboratories all over the world. The atmosphere at Sangamo is very dynamic, with incredible in intellectual energy but also with a clear and unambiguous focus on developing product that will have significant clinical and commercial value.

As you will hear, the science at Sangamo is going very well and that sustains and motivates us further. As scientists we also naturally look to the long-term goals and we believe that what we are doing will ultimately lead to a paradyn shift in therapeutic product development.

Evidence of our dedication, focus and accomplishments was presented at the recent American Society for Gene Therapy meeting that was held in Boston in June. Sangamo had a significant presence at this meeting. Several of our scientists and academic collaborators presented papers and abstracts reviewing data from our two major therapeutic initiatives in cardiovascular angiogenesis and cancer, and from several internal research efforts.

In addition, our Director of Delivery Technology, Dr. Kaye Spratt, and our collaborator, Dr. Frank Giordano, who is assistant professor of internal medicine and cardiology at Yale University School Medicine, were each invited to chair scientific sessions at the meeting. Dr. Giordano presented clinical - pre-clinical data on our lead therapeutic product candidate, a ZFP transcription factor designed to upregulate the endogenous VEGF gene and thereby stimulate the growth of new blood vessels in patients afflicted with severs ischemic cardiovascular peripheral vascular disease. Such new vessels, if functional and intact, have the potential to bypass bocked arteries, thereby improving improving blood to oxygen-starved tissues.

Data presented at the meeting demonstrated that our ZFP transcription factors designed to activate the endogenous VEGF gene induced healither and more mature vasculature than that stimulated by a cDNA encoding a single isoform of the VEGF protein in the mouse ear model for angiogenesis.

These studies were carried out by Dr. Giordano in collaboration with several Sangamo scientists including Dr. Ed . And these studies were sponsored by our partner Edwards Lifesciences. The details of these data are very encouraging both with respect to the VEGF program as well as for the ZFP transcription factor therapeutics in general.

The data showed that the expression of the ZFP transcription factor in the mouse ear model resulted in increased levels of and increased vessel density compared with controls. These vessels inducted by our ZFP transcription factor were, quote, "healthy and did not leak." In contrast, blood vessels induced by the single splice variant, VEGF 165, which has been evaluated in several clinical trials, demonstrated spontangous hemorraghe so that the ears appeared red and bloodshot.

The data presented highlight several important differential technical advantages of our ZFP transcription factor technology platform. By activating the endogenous VEGF gene using a engineered ZFP we enabled the production of all the natural isoforms of the VEGF protein in the same way shows - as observed in nature. These studies reported by Dr. Giordano indicate that activation of all of isoforms of VEGF is likely to promote the generation of normal and less leaky vasculature.

We believe that these data are quite sigificant. Simultaneous induction of all splice forms provides a critical advantage for a therapeutic intended to stimulate new blood vessel formation in diseased or damaged heart or skeletal muscle. These data support and validate our program to develop ZFPs as a novel and effective treatment for ischemic cardiovascular and peripheral vascular diseases. To that end, further pre-clinical studies and clinically relevant animal models are currently underway and we plan to file an IMD in the second half of next year.

Data were also presented at AFGT from our program to develop a novel cancer vaccine. This program combines the therapeutic anti-cancer adenovirus developed by Onyx Pharmaceuticals with our ZFP gene activation technology. The existing Onyx are designed so they specifically target cancel cells and will not replicate in normal tissue.

Our strategy is to add a ZFP that will give the factor a further therapeutic advantage. Specifically, we have designed a ZFP transcription factor capable of activating the endogenous gene encoding granulocyte macrophage colony stimulating factor or GM-CSF. Adding this to the Onyx should lead to the stimulation of an active immune response against the patients tumor-specific antigens and thus should potentiate an anti-tumor antibody response to metastic cancer and micrometastic disease.

Additionally, once the cancer cell is it should release more newly replicated virus that also carries the ZFP transcription factor. And this should be capable of infecting and destroying other cancer cells.

The data presented by Dr. Andreas Reik at AFGT showed that we have designed several ZFP transcription factors that efficiently upregulate human GM-CSF, MR&A and protein levels in a wide variety of tumor cell lines. We also demonstrated that we could significantly increase the level of gene activation that we observed by using combinations of different ZFPs and by certain activation domains. Importantly, the data also showed that the ZFPs function in the presence of the replication adenovirus.

We are currently putting these ZFP transcription factors into the Onys to assess their effect on cells and tumor models. We expect to have data from these tests by the end of this year.

Yet another presentation of AFGT showcased research from an internally-driven program. We presented data showing for the first time the inducible regulation of an endogenous gene using a ZFP transcription factor that can be switched on or made active by administration of a small molecule drug. In our studies, conducted by Dr. Carolyn Dent, we used a switchable ZFP transcription factor that contained the gene switch incorporating a progesterone receptor binding domain.

The inclusion of the gene switch regulatory domain fused to an engineered ZFP allows the transcription factor to be switched from an active - to an active form by administration of an unique small moledule drug. The regulation is very tight, meaning it is not leaky and thus we did not see any gene activation in the absense of the drug.

The studies also show that the levels of activation can be dose-dependent based upon the amount of small moledule added. These data are very important. We have shown that we can precisely regulate a chromosomal gene inside a cell using a switchable ZFP transcription factor and an orally administered drug. This capability for regulatable expression is important in gene therapy applications and it allows control of both the duration of the exposure to the therapeutic gene product and that the level of expression of the gene product and thus gives the flexibility of more precise dosing.

In fact, this ability to achieve small moledule regulation has been described by some scientists as being the Holy Graille of gene therapy. The type of data we have published and presented give me enormous confidence in our ability to engineer zinc finger DNA-binding protein transcription factors to specifically recognize an intended DNA sequence and regulate the expression of that target endogenous gene. This is unquestionably an extraordinarily powerful scientific platform.

I also have a great deal of confidence in our ability to generate ZFP transcription factors capable of turning on or turning off virtually any gene in virtually any organism. As necessary we can do this in a condition manner that can be controlled by small molecule drugs. The breadth and depth of this technology is astonishing and still unfolding and I am thrilled to have the opportunity to lead the Sangamo scientific team as we develop and apply this exciting science.

Edward.

Thanks, Carl, that was great.

I'd like to take a few more minutes of your time and mention a couple of other highlights from the quarter. In addition to the ZFP Therapeutics data we presented at AFGT we are also allocating internal resources to additional therapeutic targets. A program tha we recently initiated is in the area of macular degeneration, a common age-related problem and a major cause of blindness in the developed world. This condition, as well as diabetic retiopathy, a problem with similar pathology, results from the aborrant growth of blood vessels behind the eye. Resulting new capillaries leak blood into the eye, damaging light-sensitive nerve cells.

These condition effect approximately eight million Americans with around 200,000 new cases diagnosed each year in the U.S. Of these cases approximatley 25,000 result in blindness. Currently there are no adquate therapies.

We have successfully engineered ZFP transcription factors that upregulate the expression of the gene encoding pigment epithelium factor or PDF over fivefold. PDF is a potent angiostatin that is secreted by cells in the retina. Using conventional gene transfer technology our ZFPs can be readily and sustainably delivered to the retina. We are currently testing their effects in a mouse model of age-related macular degeneration with a leading group of scientists at University College in London.

Over the past several years or so you have heard me talk about a growing business of ours, the development of novel cell lines for use in the area of high-throughput small molecule screening, antibody discovery and enhanced protein production. A natural extension of this in an area where we are - that we are actively pursuing is the field of tissue engineering for use in regenerative medicine. ZFP transcription factors have multiple commercial applications in this field and include uses in cell immortalization as well and therapeutic approaches such wound healing, diabetes, Parkinson's, and other neuro-degenerative diseases.

We also have recently initiated a project in tractable neuropathic pain. I was forward to updating you in these very interesting therapeutic programs in future calls.

Finally, earlier this month we announced a new collaboration with Icogen, an emerging drug discovery company focused on ion channels. We will use our ZFP transcription factors to develop cell lines that over express specific ion channels of therapeutic importance. Icogen will use the engineered cell lines in their drug discovery screening program.

The agreement provides for an up-front payment, research funding, product development milestones, and royalties on product sales. As is typical in our approach to small molecule screening collaborations, this agreement is non-exclusive.

As I mentioned in our last call, this area of small molecule discovery is a growing area of our business, particularly, for instance - for instances where the intellectual property covering cDNA patents has prevented companies from pursuing drug discovery of these targets. This is an intellectual property barrier of increasing importance for many pharmaceutical companies. Our technology is ideally suited to provide companies with a viable workaround solution to gene patents. This is based in both the science of gene activation as well as in the fundamentals of patent law.

A basic tenet of biotechnology patent law is that genes and proteins cannot be patented as they occur in nature, or more specifically, within the context of the original cell or organism. A patent can only be granted if a gene or protein has been isolated or purified so that it can be used outside its original context. Endogenous genes cannot be patented.

Sangamo's ZFP transcription factor technology provides companies with a means of over-expressing any therapeutically relevant target by upregulating a cell's native or endogenous gene rather than having to introduce the clone version of that gene into the cell.

On exactly this topic or ZFP transcription factor technology was featured in an article in this month's Scientific American entitled, "Legal Circumvention, Molecular Switches Provide a Route Around Existing Gene Patents." Please let me know if you would like a copy of this article. I think it does a very nice job of explaining a complicated but very important aspect of our business.

So, our progress continues on all fronts: scientific, product development, intellectual property, and business development. Having reviewed some of the events from the second quarter, let me turn to the financial results that we released earlier this afternoon.

In the second quarter of this year our consolidated quarter net loss was $3.4 million or 14 cents per share, compared with a core net loss of $1.7 million or eight cents per share in the second quarter of 2001. Revenues in 2002 second quarter were 366,000 and consisted primarily of Universal Gene Tools and revenues from partnerships in the areas of human therapeutics and planned agriculture. Cash and cash equivalent at the end of the quarter was $55.4 million.

As we have previously stated, we expect to end 2002 with approximately $50 million in cash. Given our operating strategy, this cash puts us in a strong financial position for at least the next several years.

As most of you have heard me say in the past, but it bears repeating today, we view Sangamo and manage Sangamo as a emerging technology company. While we have enormous confidence in our ability to monetize our technology value through the development of clinically important proprietary products, we are not as yet an emerging financial story. I caution investors interested in quarter-to-quarter financial that our revenues and earnings do not yet provide a measure of our progress or our value.

As Carl and I have stated, we believe that our core technology is one of, if not the, most powerful technology in therapeutics and drug discovery in the post-genomic era. This brings me full circle back to my opening observations about the second anniversary of the publication of the human genome.

We find ourselves at Sangamo in the unique and even daunting position of possessing what some have called the keys to the kingdom, a technology platform capable of regulating the expression of any gene in essentially any genome. That is our science. We also find ourselves capable of apply this science commercially to any gene. That is a function of patent law.

I know this is a busy time for all of you. I would like to thank you for taking the time to listen to our comments. I look forward to keeping you appraised of our progress and now invite your questions.

At this time I would like to remind everyone in order to ask a question please press star, then the number one, on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Your first question comes from the line of Charles .

Hi, Ed.

Hey, Charles.

So a couple of questions. First of all, in terms - in terms of the Gene Tool or the corporate collaboration revenue, we have seen a couple of companies - other companies come in light in corporate collaboration revenue but be OK in terms of therapeutic's revenue. So is this a trend that we're seeing in pharma or is the result of - or is your result of coming at revenue that was slightly under our expectations, you know, something that speaks to the zinc finger technology? I know that you had guided to revenue of $7 to $8 million for this year. Could you speak to the trends in the - in the pharma industry and then talk to us about that guidance for year end?

Sure. I'll break them in two pieces, first the revenue guidance, and then your more macro question about trends in sort of genomics and functional genomics.

We have reiterated our revenue objectives in the context of our overall cash position. We expect to end the year with at least $50 million in cash, and as you've heard on this call, have reiterated that. We gave updated revenue guidance on the Webcasted presented we gave in June at the William Blair conference where we reiterated our goal of having revenues this year in the seven million range with at least two million of that dependent upon completing one of the strategic - larger strategic collaborations that we're working on. And we reiterate that guidance here.

So and finally, as I think you know, we have not given any quarter-to-quarter financial guidance and so wouldn't really have any comments on anybody's quarterly numbers. But am quite comfortable in giving you the reiterated cash as well as revenue guidance that we've given in the past.

In terms of trends, I'll speak to that and then if Eric Rhodes, who's here with us, wants to add to that I'm happy to do that.

One of the things that we see that's changed a lot over the last couple of years, Charles - and I know you're very close to this as well, is a significant both evolution - but quite frankly a matriculation of the genomic question moving from, you know, what do these genes do, what are their roles, what are their functions, and the whole issue of validation to having many validated targets and needing to move those forward from a therapeutic product development perspective. And so much of our focus right now from a business development perspective is really on these main areas that we've discussed in the past, using zinc fingers directly as therapeutics, using zinc fingers to build cell lines that could be used for high-throughput small molecule screening, and using zinc fingers as super promoters to significantly augment the expression of the production of protein pharmaceuticals and monoclonal antibodies.

So maybe that addresses your questions in terms of revenue guidance and trends, if not, we're happy to expand.

Well, just to provide maybe a little bit more color on the kind of discussion that you're having with pharmaceutical companies or other strategic partners. What are some of the drivers to demand in their interests in, you know, your technology and some of the key, I'll call it pieces of information, you need to provide them before they're willing to sign deals?

Great question. I'll give you a little bit of guidance, then I'll ask Eric to expand.

I think we're we see again the principal focus right now in terms of our technology and the fit with pharma is the major area of interest and really significant interest is in using this to build cell lines that over express an endogenous gene where they are prevented from moving forward on that target principally based on intellectual property constraints.

And, Eric, you want to just expand on that?

Yeah.

Hi, Charles.

Hi.

I think the concept that Edward said and maybe you alluded to, the taking the information that pharma companies want to see out to them so that they actually believe in the approach and are getting ready to use it is something that we've been focusing on.

At our last quarterly call we talked about a market study that we had done to find out what the needs were of pharma companies that were facing sort of this growing patent issue. And from that study we derived a lot of key information about exactly what sort of stuff they wanted to see. We took that last - the time leading into that quarter with those results and this last quarter to really build up a very strong case for how the s can be used in that platform, and we've begun to now take that information out to the pharma companies. It's being very, very warmly received. We will also be sort of rolling this out at a conference coming up in September, the Society of Biomolecular Screening, in the fall, so the story is growing, the story is consistent, and I would say that the informatin that we've now generated and taken out to these companies is getting a much higher level of interest, and I think you will see them starting to move towards closing on some of these deals.

And Charles, just to add to that, at the SBS meeting, which is in Europe in the fall, we have two presentations there, one by Casey Case, one by Mike , where we will publicly present for the first time data on two small-molecule screening approaches that Eric referred to that we're now showing to the pharma companies under confidentiality. So we'll have all of that available to you publicly in ...

September?

September.

Okay, and I guess that's a good segue, I am sorry for taking up all the time here, or some of--a lot of the time here. But in terms of your therapeutic product development programs, which are primarily in research stages I understand, but are there any potential data events--you had a great second quarter in terms of that, but how about in the second half?

What have you done for me lately, right Charles?

Well, no, what--more importantly, what can we look forward to in the second half?

Right, no I .

I think the--there's a couple of main things. For the second half, in terms of small-molecule screening, the SBS meeting is really going to be a bit of a coming-out party for us on that, and for the first time we will present and publish the data on use of for high throughput small molecule screening. In terms of direct in vivo work, we--as we have given guidance to before, we expect to have a major publication by our collaborator, Frank , and ourselves, published this summer, which will, in a major peer-review journal, outline the progress that we've made in activation of the endogenous gene in animal models, and I--we're looking forward to that. We have continued progress with the collaboration, and should have data on that by the end of the year, and we will certainly, either in this type of form, or in others, keep you updated on that progress.

Okay, thank you.

Sure, thank you.

There are no further questions at this time.

Charles, you didn't take a high percentage of the time, you took it all. Can you come back?

You do have a question from the line of .

Sorry guys, I missed the instructions for how to punch in. I was hoping they would repeat them before they closed it.

Hey .

My question, actually is in regards to the announcement that you had yesterday, with the grant that you received. A couple questions about that. I see from the release that the grant is to be paid over a four-year period. Are those--is it safe to assume that those are equal payments over that time period? And then maybe you could further elaborate on your strategy, , I believe that you are--I believe that you were trying to receive other grants, and if not--if you're not comfortable talking about what areas you're working on other grants, maybe you could just talk to us about the strategy with which you approach that.

All good questions, , I appreciate it. I'm going to ask Pete Bluford, who is here, to give you a direct answer to your questions relating to the fetal hemoglobin grant that we've received, and then I'll come back and give you a fairly specific sense of what we're doing in the area of federal research grants. Pete?

Hi , this is Pete Bluford, and the answer to your question is yes, the payments are spread out equally over a four-year period of time. Was there another aspect to that question?

I don't know, was there another...

You know what, while we're on it, maybe you could speak a little bit to how the relationship is with the University of Alabama, is that correct?

University of Alabama at Birmingham, the laboratory of Tim , who is the chairman of the department of Biochemistry and Molecular Genetics, at University of Alabama. Tim and his group have, over the last few years, developed a very unique and proprietary model to model sickle-cell disease in rodent models, and related hemoglobinopathies.

So , anything else on the announcement we made yesterday? I have one general comment on it, but anything else specifically?

No.

So one general comment is, and I tried to make this in the announcement, but again, I think it's just another example of how our technology can be used with some significant differential advantages, and I think those--you know, we have a long way to go, but could some have some significant clinical advantages over alternative approaches, and certainly the sickle-cell approach, regulation of the fetal hemoglobin gene, it's an extremely large gene, a very difficult gene to get into any kind of vectors. We can go in with relatively small amounts of expression of a and get robust expressions of the fetal hemoglobin gene. That's something that could address significant market, again with differential technical advantages. And again, I know you know this, and I'm--on a call like this I'm preaching to the choir, but the basic argument is we can apply that to any gene, and that's really our goal. So it's not a lot of money, but it's continued, I think validation of the role of our technology with a very, very highly regarded academic in this phase with a good model.

To your more general question, I actually appreciate it, because we've done a lot of work in this area, and we haven't had a chance to really talk about it. I'm going to look at Carl and--after I finish, and ask him to let me know, but I think we've filed, since the beginning of this year, five significant grants. Some of them relate to . As you know, has gotten quite a bit of money lately, and as it relates to more post-September 11 kind of funding. We've also filed grants in the area of our regulatory DNA diagnostics technology, as well as in the area of plant agriculture. So those are all cooking, and I hope that in the second half of the year, we'll have more to say to you about the progress that we've made on that.

Great, thank you.

Great, thanks .

At this time, I would like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. There are no further questions at this time.

Okay. Let's see, I have a closing line here. We'd like to thank you for joining us, and we look forward to speaking with you again when we release our third quarter results. We will be available later on today if there are any follow-up questions. Thank you very much.

This concludes today's conference call. You may now disconnect.