Sangamo Therapeutics Inc (SGMO) 2004 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Sangamo BioSciences Fourth Quarter Teleconference. My name is Erica(ph) and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. If at any time during the call you require assistance, please press star followed by zero and a coordinator will be happy to assist you.

I would now like to turn the presentation over to your host for today’s call, Dr. Wolffe. Please proceed, Madam.

Thank you. Good afternoon and thank you for joining Sangamo’s management team for an update on our recent activities, including our fourth quarter and year end financial results. Present on today’s call are Edward Lanphier, President and Chief Executive Officer; Dr. Dale Ando, Vice President of Therapeutics and Chief Medical Officer; and Greg Zante, Senior Director of Finance and Administration.

Following this introduction, Edward will review fourth quarter activities, highlighting Sangamo’s recent events, Greg will then briefly review fourth quarter financial results and, finally, Edward and Dale will update you on specific ZFP-Therapeutic programs and review our anticipated 2005 milestones. Following that we will open up the floor for questions.

As we begin, I would like to remind everyone that the projections and forward-looking statements that we discuss during this conference call are based upon the information that we currently have available. This information will likely change over time. By discussing 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 at a later date that our comments from today are still valid. We alert you to be aware of risks, which are detailed in documents that the Company filed with the Securities and Exchange Commission, specifically our Quarterly Reports on Form 10-Q and our Annual Report on Form 10-K. These documents include important factors that could cause the actual results of the Company’s operations to differ materially from those contained in our projections and forward-looking statements.

Now, I would like to turn the call over to Edward.

Thank you, Liz, and thanks to all of you for joining us on our 2004 fourth quarter and year end conference call. 2004 was a transitional year for Sangamo, a year in which we realized our goal of moving our ZFP-Therapeutics into human clinical trials. The filing of our first investigational new drug application, or IND, the first with our partner Edwards Lifesciences, and more recently our own IND was the culmination of years of hard work by many people. And while the IND’s were the highpoints of last year, they were really only two accomplishments amongst many.

On today’s call, our goal is to first briefly review our 2004 and other recent accomplishments, including our year end financial results. Second, update you on the status of two of the most visible ZFP-Therapeutic programs, our clinical program in diabetic neuropathy and our program for the specific disruption of the CCR5 gene as a treatment for HIV/AIDS, and finally I will review our anticipated 2005 milestones.

As I said earlier, the highpoint of 2004 was the initiation of human clinical trials of our ZFP-Therapeutics and the emergence of Sangamo as a therapeutic product development company. We announced just a few weeks ago the filing of Sangamo’s first IND to initiate a Phase I clinical trial of our ZFP transcriptional activator of the VEGF-A genes for the treatment of diabetic neuropathy. I am very pleased to announce today that this IND is now active.

As you know, this is the second clinical trial of the ZFP-Therapeutics. The first trial, the treatment of intermittent claudication, a symptom of peripheral artery disease, is ongoing at the NIH and is being managed by our partner, Edwards Lifesciences. As you have heard me say in the past, Edwards is running this trial and I encourage you to look to them for updates on its progress.

Throughout 2004 we continued to publish data in high impact scientific journals. In October, in the American Heart Association Journal of Circulation, we published data from preclinical animal efficacy studies that supported the filing of the IND for peripheral artery disease. These studies of the VEGF ZFP-Therapeutics were carried out in the rabbit ischemic hind limb model and were conducted in the laboratory of Dr. Brian Annex, the Director of Vascular Medicine at Duke University Medical Center.

In summary, when ischemic rabbit limbs were treated with our ZFP transcription factor, the investigators observed increased production of all of the major splice variants of the VEGF-A gene, leading to statistically significant improvement in endothelial cell proliferation, blood vessel formation, and increases in blood flow. Importantly and uniquely, the data showed that these improvements were observed at the earliest time points when the limbs were most ischemic. You should expect to see more preclinical data from our ZFP-Therapeutic programs published and presented throughout 2005.

The end of 2004 and the beginning of 2005 also saw important business development success at Sangamo. In September, we announced a collaboration with LifeScan, a Johnson & Johnson company and a leader in blood glucose monitoring and diabetes management. That provides LifeScan with our proprietary ZFPs for use in a program intended to develop therapeutic cell lines as a potential treatment for diabetes. In December, we were pleased to announce an expansion of our initial relationship with LifeScan to include additional gene targets important in diabetes and regenerative medicine.

More recently, we announced two new Enabling Technology Agreements in the area of enhanced protein production, the first with Pfizer and a second with Amgen. We will provide our zinc finger gene activation and zinc finger nuclease technology to Pfizer and our high-producing chosen(ph) cell line to Amgen, both of whom will assess the feasibility of the technology for use in enhancing mammalian cell-based protein pharmaceutical production. This is an area of active discussion with other leading companies, and you should anticipate more announcements of this type throughout 2005.

We are also increasing our business development activities around our ZFP-Therapeutic programs. In anticipation of this at the end of December, we successfully recruited David Ichikawa as our Senior Vice President of Business Development. David is an experienced industry veteran who will play a key role developing and implementing our strategy to secure the commercial success of our ZFP-Therapeutics. We are very pleased to have him join our management team.

Finally, we were honored when Sangamo was recognized by the World Economic Forum as one of 29 technology pioneers for 2005. The companies selected as a technology pioneer is “truly innovative, has potential long-term impact on business and society, is expected to show the signs of a long-term market leader, and its technology must be proven.” It won’t surprise any of you who know me when I say that I think we fit that description pretty damn well.

And with that burst of humility, I would like to turn the call over to Greg to summarize the fourth quarter and year end financial results. Greg?

Thank you, Edward. For the fourth quarter of 2004, our consolidated net loss was $3 million or $0.12 per share. In the comparable quarter of 2003 our consolidated net loss was $1.7 million or $0.07 per share.

Our research and development expenses were $2.5 million for both the three months ended December 31, 2004 and 2003.

General and administrative expenses were $1.1 million for the fourth quarter of 2004 compared with $553,000 for the same period last year. This increase in G&A expenses primarily reflects increased expenses related to compliance with Section 404 of the Sarbanes-Oxley Act and other professional services.

Revenues for the fourth quarter of 2004 were $200,000 as compared to fourth quarter of 2003 revenues of $1 million.

For the 12-month period ended December 31, 2004, our consolidated net loss was $13.8 million or $0.55 per share compared with a consolidated net loss of $10.4 million or $0.42 per share in the comparable period in 2003.

Revenues for 2004 were $1.3 million as compared to $2.6 million in the same period of 2003. This decrease in revenue is principally attributable to low revenues recognized from our therapeutic partnership with Edwards Lifesciences as a result of the fulfillment of our preclinical research obligations and Edwards’ completion of payments for those activities under the agreement.

Total operating expenses for the year ended December 31, 2004 and 2003 were $16 million and $14.3 million respectively.

Finally, I am very pleased to report that we ended 2004 with cash, cash equivalents, investments, and interest receivable of $33.5 million.

And on that note, I will now turn the call back over to Edward.

Thanks, Greg. As you can see from our fourth quarter and year end financial results, we continue to carefully manage our cash even as we aggressively prosecute our clinical development programs. Therefore, I too am pleased to report that we ended 2004 with an even stronger balance sheet than we had originally expected. This does not happen by accident, and I would like to thank and acknowledge the role of everyone at Sangamo who make this fiscal discipline possible. Because of their efforts, we believe that our current cash position represents roughly 2-plus years of cash. However, before I elaborate further on guidance for 2005, I would like to turn the call over to Dale, who is going to give you a detailed update on the progress of two of our therapeutic development programs. Dale?

Thanks, Edward. As you heard, we filed our first IND for SB-509 of ZFP-Therapeutics™ that upregulates the expression of the VEGF-A gene for the treatment of diabetic neuropathy. This therapeutic approach takes advantage of the potent direct neurotrophic and neuroprotective effects of VEGF, and we believe may provide a therapeutic solution for a significant unmet medical need with a sizable and expanding market.

As many of you know, there are 14 million Americans currently diagnosed with diabetes, and diabetic neuropathy is a significant problem for as many as 50 percent of the patients who have had diabetes for greater than 10 years. We were focused initially on peripheral neuropathy, the initial symptoms of which are pain and tingling in the hands and feet and eventual loss of strength and numbness in the extremities. This frequently results in injuries, particularly in the feet, that may not heal, eventually ulcerate, and can lead to amputation. Approximately 86,000 amputations are performed on diabetics each year. Unfortunately, for these patients there are only approved therapies for pain symptoms associated with diabetic neuropathy and only very strict glucose control can halt progression of this condition.

Sangamo has developed a ZFP activator of VEGF-A to treat diabetic neuropathy. As we presented at our Analysts’ Day in September and will publish with our collaborator, Dr. David Tomlinson, later this year, a single treatment with the VEGF activating ZFP transcription factor has shown a statistically significant improvement in limbs’ nerve conduction velocities in a diabetic rat model.

I am pleased to report today that the 30-day FDA IND review has passed and our IND is active. The principle investigator of this study is Dr. David Cornblath of Johns Hopkins University School of Medicine in Maryland. However, the trial will take place at multiple centers in the U.S., and we expect to have sites in California and Texas as well. We expect the Institutional Review Board or IRB approval process to be completed for these centers very soon. As each center becomes active and is ready to begin screening subjects for enrollment, we will make the information available on our website.

The study is a single-blind dose-escalation file and is primarily designed to evaluate the clinical and laboratory safety and to determine the maximum tolerable dose of SB-509 when given as a single treatment by intramuscular injection. The secondary objective is to evaluate the clinical effects of SB-509 treatment on lower limb diabetic neuropathy. Clinical effects will be measured by evaluation of symptoms and neurologic examinations and electrophysiologic testing.

Patients with mild to moderate diabetic neuropathy, as judged by thorough clinical criteria, will be screened before acceptance into this study, and all patients will be treated with SB-509 in one way and placebo in the other. The physician treating the subjects will be blinded to whether or not they are administering SB-509 or placebo.

While patient safety will be monitored throughout the study, visits at 1, 2, 3, and 6 months will include neurological examinations and electrophysiologic testing. Although the clinical trial is intended to be a dose-escalation study, we will be observing the clinical effects of the treatment and placebo against the baseline symptoms in each patient and look for examples of improvement in symptoms or on neurological evaluation.

Subjects will receive injections at a distribution that allows us to target particular nerves in the legs and feet. The first dose level will be injected in a distribution to treat nerves in the foot; the second will be distributed to include nerves in the outside of the lower leg and foot; the third for the whole lower leg and foot; and the fourth for the major nerves in the whole leg from the thigh down.

We anticipate that the trial will take 12 to 18 months to complete and expect to treat approximately 12 patients. We look forward to providing you with additional details after we have treated the first patient.

I would now like to briefly turn to our zinc finger nuclease gene modification program, and in particular our program for the therapeutic disruption of the CCR5 gene.

As you know, our programs in both gene correction and gene disruption make use of a proprietary ZFP technology and a cell’s natural mechanism for DNA repair. Using ZFNs, or engineered zinc finger proteins, linked DNA cutting enzymes called endonucleases, Sangamo scientists have been able to target a double-strand break in DNA to a specific site in the genome. This break can be targeted to correct a site of the mutations that causes a monogenic disease such as a single mutation responsible for sickle cell anemia. Alternatively, the break and the use of the expression(ph) of target genes takes us encoding(ph) a functionally normal protein.

This is the basis for our ZFP-Therapeutics that we’re developing for the treatment of HIV and AIDS. The ability to use zinc finger nucleases to interrupt a gene allows us to take advantage of a naturally occurring mutation of the CCR5 gene that has been shown to make patients resistant to HIV. This application of the ZFP platform and the intensive clinical development of T-cell gene therapy over the last 10 years can be combined to allow us to protect the most important cell in an HIV patient, the CD4 T-cell.

Patients who are resistant to HIV or can live with HIV for decades without developing AIDS, so-called long-term nonprogressors, have been studied intensively in order to understand how this protection occurs. The best example of a protective mechanism against HIV infection is the CCR5 mutation. This mutation alters a critical coreceptor, CCR5, but is used by the virus to enter a cell. This example of nature shows us that if we could interrupt CCR5 in the CD4 T-cells of a patient with HIV, then we could protect these cells and ultimately the patient from progressive HIV infection and depletion of the CD4 T-cell population.

Inhibitors of HIV binding to CCR5 has shown some effectiveness in early clinical studies, but these inhibitors are not able to eliminate CCR5 completely. This is extremely important since only one CCR5 receptor amongst the thousands in the surface of a T-cell is needed for HIV to infect the cell.

We believe that there are several advantages to our approach. With only a transit(ph) expression of our ZFNs, we believe that we can protect key immune cells and permanently remove the CCR5 HIV coreceptor from the cell’s surface. This treatment would be specific and permanent for each cell and could be used in combination with other therapies. Furthermore, the ZFN mediated gene disruption should not exert a selective pressure on the HIV that would cause mutations and escape of the virus, enabling it to compensate and get around a nonfunctional cellular receptor by mutating its own genome. This is in stark contrast to observations in patients undergoing retroviral therapies that puts selective pressure on the virus to mutate and become resistant to the drug.

As you may have recently read recently, a new strain of HIV, a so-called super HIV, has reportedly been identified in a patient in New York. Initial reports suggest that this virus is multiply drug resistant. The patient in question has a virus that did not respond to three or four types of anti-retroviral drugs commonly prescribed.

Clearly, there is a need for a new approach that provides a protective reservoir of cells against HIV. Our first clinical target will be to interrupt the CCR5 receptors and CD4 T-cells in HIV patients who are on but beginning to fail anti-retroviral or HAART therapy. In this situation, there is a tremendous expansion of HIV in the body, 10 billion viral particles a day, that results in the death of over 2 billion CD4 positive T-cells per day. This eventually leads to an exhaustion of the CD4 compartment and the opportunistic infections that characterize AIDS.

In our trial in this patient population, we plan to isolate their T-cells and use CCR5 specific ZFNs to disrupt the CCR5 gene in order to create a protective cell population. After characterization and safety testing, we would then transfuse these modified cells back into the patient.

Our academic and clinical collaborator, Carl June at the University of Pennsylvania, has developed methods for genetically modified CD4 T-cells in HIV and has active clinical trials in progress. These established methods have allowed adopted transfer of CD4 T-cells that have lasted for years in the HIV patient. We have been working with Carl and his colleagues at Penn to test our ZFNs and T-cells and generate proof of concept in an invitro challenge model designed to directly test model replication or lack thereof in ZFN modified cells.

To date, we have identified ZFNs that allow us to disrupt the CCR5 gene in cell culture systems. We expect to have preliminary data showing gene disruption at the CCR5 locus in T-cells for Dr. June to present later this month at the Conference for Retrovirology and Opportunistic Infections in Boston. The invitro work will be followed by experiments in animal models to further characterize the modified T-cells with the aim of presenting these data later in the year at the Interscience Conference on Antimicrobial Agents in Chemotherapy or ICAAC. If all goes well, our goal is to file a first IND in this area by the end of the year.

This is just one approach in which we intend to employ with our CCR5 and ZFNs. Another cell population that we would like to evaluate with the CCR5 ZFNs is bone marrow derived in hematopoietic stem cells whose modification could potentially provide permanently protected populations of all the immune cell types.

Ultimately, we will also test the feasibility of an in vivo product in the vial approach that will use the natural infectivity of adenovirus to deliver CCR5 ZFNs to macrophages, dendritic cells, stem cells, and T-cells.

We and our collaborators believe that ZFN mediated gene modification has enormous potential, and we are working hard to realize this opportunity and to rapidly translate our initial successes in the clinical trial. We look forward to keeping you informed of our progress, and as you have heard, we try to update the scientific community on our achievements in this program later this month and throughout the year. Edward?

Thank you, Dale. As you can see, this is a very exciting, a very important, and what will likely be a very visible aspect of our ZFP-Therapeutic platform. We look forward to keeping you abreast of our progress over the next few weeks and months.

As we have said, 2004 was an important year for us, but as we all look forward, 2005 will be even more eventful and should bring increased visibility to Sangamo. You should expect to see the publication and presentation of preclinical data from our ZFP-Therapeutic gene regulation programs in congestive heart failure, neuropathic pain, and nerve regeneration, as well as from our ZFN gene correction programs in high-impact scientific journals and in relevant scientific meetings. In particular, we expect the publication of data from our gene correction program focused on monogenic diseases in a major scientific journal in the next few months.

You should also anticipate increased visibility around the CCR5 HIV gene disruption program, first at the retroviral meeting later this month, at ASGT in June, and again in September at ICAAC.

We also expect that additional clinical trials will be initiated in 2005. Our goal, albeit ambitious, is to file an IND for our first HIV program, ZFN gene disruption of CCR5 in T-cells, by the end of this year.

In addition, Edwards Lifesciences stated during their Analysts’ Day in December that the success of the preclinical program and data that was recently published in circulation has meant that they have attracted interest from a number of clinical centers that want to conduct human clinical trials. They went on to say that they will initiate a clinical trial for the more severe form of PAD, critical limb ischemia, in 2005 at Duke University Medical Center. They also expect to complete the preclinical animal efficacy studies for the use of the VEGF ZFP for the treatment of ischemic heart disease in 2005 prior to starting a trial at Yale University School of Medicine.

You should also plan to see new corporate collaborations in 2005. We are increasingly focused on commercializing and monetizing our technology through further Enabling Technology Agreements. We have also begun to more systematically explore strategic partnerships for our ZFP-Therapeutics with major pharmaceutical and biotechnology companies.

Finally, you should expect us to accomplish these objectives while continuing to maintain the strength of our balance sheet. In 2004, our total cash used was just under $11 million. In 2003, it was approximately $8 million, and in 2002, $10 million. We expect this trend to continue and believe that we will end 2005 with approximately $20 million in cash and cash equivalents. Thus, we believe that the $33.5 million with which we started this year represents approximately 2-plus years of operating capital.

In conclusion, 2004 was a year of transition and matriculation for Sangamo. Our goal is to continue on this path and make 2005 a year of increased visibility in the scientific community, increased visibility with the pharmaceutical community, increased visibility with investors and analysts, and most importantly with the clinical community and the patients with unmet medical needs that may be uniquely and differentially addressed by our ZFP technology and therapeutic product development platform.

This completes our prepared comments. I would like to now open the call up for your questions.

(OPERATION INSTRUCTIONS). And your first question comes from Charles Duncan of JMP Securities.

Yes. Good afternoon, folks, and congratulations on a good year. A couple of quick questions -- first is, Edward, if you could help us understand the timing on the diabetic neuropathy trial. Can you give us a little bit more color on, you know, whether or not it’s 12 months or 18 months to completion? You talked about treating 12 patients in that. Help us to understand the timing on that, please.

Sure. Charles, I don’t have a whole lot more color for you beyond what we said in the script. I think our estimate in terms of timing is in the 12- to 18-month range and we anticipate accrual length of approximately 12 patients in a Phase I dose-escalation trial.

And so the timing is a function of accrual or is it because of the sequential nature with which you’re going to test, you know, dose the patient and then do the kind of functional tests that Dale spoke of?

It’s both of those, Charles. It is accrual and then the follow-up as well as the time frames with which we are following these patients.

Okay, and then my next question is related to the HIV program. You talked about possibly being able to file your IND this year, first IND in that program which would be an awesome step, but you also characterized it as being aggressive. Can you help us understand what are some of the kind of studies that -- preclinical studies that are undergoing that you need to get information on before you could move that forward?

Sure, Charles, let me give you a brief plan and then turn it over to Dale to give you a little more color. I appreciate your characterization of it. As we said, it’s a stretch objective for us. It would be spectacular to get this IND filed this year. We have a lot of work ahead of us, so I’ll ask Dale to characterize some of the steps in that process.

Okay, thanks.

Basically for these clinical trials to occur, right now it’s undergoing the initial selection of the optimal zinc finger nuclease. And the next step is basically identifying the gene transfer methodology to transfer in these -- the zinc finger into T-cells. In parallel with this is proof of concept studies with protection against HIV in tissue cultures and in animals.

The GMP(ph) development of GMP manufacturing programs really requires a period of what’s called FOST(ph) development where you have to work out the methodology in which to manufacture under very strict FDA GMP conditions, then gene transfer vector, and then subsequently the production of the T-cells from the HIV patient. So this is what takes the time is to go through the detailed GMP manufacturing process and make sure that everything complies with that and works according to what is expected and that we maintain the properties of the T-cells to be protected against HIV.

In addition, there’s likely the regulatory views of this will most likely include the FDA and the NIH, and those types of meetings have to be taken into account.

Any other questions, Charles?

Sir, your next question comes from Isaac Ro of Leerink Swann.

Hi, Isaac.

Hey, guys. How are you? Good. Just a couple of quick questions here -- I’m wondering if you could maybe first give a little bit of color on any kind of progress that’s being made in your gene correction program and more specifically, you know, what possible monogenic diseases for the ZFP approach might be relevant beyond the sickle cell anemia or HIV?

Sure. Let me give you a quick response, Isaac, and then see if either Philip or Dale want to amplify on it. So we are now in the process of optimizing the delivery of the zinc finger nucleases and DNA, the donor DNA, to CD34 cells. That’s a process that Dale outlined that’s similar to what we’re doing in the T-cell program. That methodology we believe will then be general for multiple monogenic diseases, and we are moving forward or have moved forward on a couple of them. SCID is one that is of significant advancement for us. We have a big interest in various hematological diseases, including beta thalassemia and sickle cell anemia, and other immunodeficiency diseases in the near term such as Wiscott-Aldridge.

But right now, we’re in a phase where we’re optimizing the delivery of both the nucleases and the donor DNA to CD34 cells.

Great. Thanks. Hello?

Yes, over here.

Okay. Yes, and then the second item would be a question regarding -- just to clarify on the VEGF(ph) administration for the VEGF candidate in diabetic neuropathy, is it a single injection or a series of injections?

It’s a series of injections in a single visit, and I’ll ask Dale to give you a little more color on that.

The patients will be injected into specific muscular areas in the foot, and these are areas that anatomically correlate to the nerves that provide innervation to the various parts of the leg. As I mentioned earlier, initially the injections will target what’s called the sural nerve which goes from the top of the foot, then the peroneal nerve which is on the lateral side of the foot, then the tibial peroneal sural nerve which will cover the whole lower leg, and then what’s called the muscle center that are innervated by the sciatic nerve, which is the thigh. So there’s a specific anatomic logic that is used as far as the sites of injections so that we can adequately cover all these nerves.

Okay, great. And then, finally here, just could you go through just how does the process for finding patients in the trial for intermittent claudication -- how is that progressing just given the single-site nature?

It’s actually a multi-center study. I’m sorry. Oh, PAD. I’m sorry. Actually, in terms of PAD, Isaac, you need to really speak to the Edwards group on that.

Okay, thank you.

And your next question comes from John Ferguson(ph) of FIC(ph).

Hi, guys. Thanks for taking my question.

Hi, John.

I guess I’ll just start off with CCR5, since we spoke -- you know, you spent a lot of time talking about that today. In terms of a therapeutic partnership, have there been any discussions around your CCR5 program, particularly in light of the therapeutic advantages to your approach and the relatively narrow differentiation among CCR5 drugs currently in clinical trials?

John, at this point we’re not going to comment on any given program and corporate partnering or commercial discussions on that. So, I think it’s premature to talk about any of the programs until they’re much farther down the line.

Okay. And, you know, you have this big, strong interest in your technology from some pretty big names in the industry, I mean in the last couple of months. You’ve seen Pfizer, Amgen, J&J. Given this visibility along with the tremendous results that you guys have achieved in boosting protein yield, could you comment on whether you’re seeing a similar level of interest among other companies, particularly generic companies? And I guess I’m specifically curious as to whether there have been any inquiries about applying your technology to a specific drug or perhaps like a low-cost generic version of Epogen?

Yes, all good points, John. The interest in both augmenting yield, the production efficiencies in protein pharmaceutical production of mammalian cells, as well as actually augmenting some of the characteristics of proteins using our zinc finger nuclease approach is generating quite a bit of interest in big pharmaceutical companies with programs in the common proteins or monoclonal antibodies and broadly in the area of biotech companies in those areas. As we said on the call, this is an area of increasing interest both externally as well as emphasis from a business development internally, and you should expect to see more of these types of collaborations of the Pfizer and Amgen nature throughout 2005.

And that does include some interest from generic companies or is this just on the branded side?

It covers the gamut of groups that have an interest in protein pharmaceuticals as well as monoclonal antibodies.

I didn’t catch on the call if there was any guidance on when we might see the production yield data published in a scientific journal. Is that in the offing over the next (multiple speakers)?

It is in the offing and, again, when we have I think a real tangible visibility on the timing, we’ll certainly discuss that.

Okay. And then I guess just a final question here is I know that you have indicated that Pfizer and Amgen are not commercially enabled under the announced deals. Have there been any discussions or are you entertaining or willing to entertain discussions on an exclusive type of access?

At this point, we’re not. We think that we’re able to leverage the success that we’ve had both in yield enhancement as well as in modification of cell lines nonexclusively, and most companies seem to be quite amenable to that kind of approach.

Okay. Great. Thank you very much.

And your next question comes from David Wood of Rodman & Renshaw.

Good afternoon. Thanks for taking my call. Just, Edward, the first question I have is for the cash utilization for ’05. I’m assuming that you don’t have baked in there any sort of impact from a partnership, or do you have some assumptions regarding additional deals similar to the Amgen and Pfizer deals?

Good question, David. The -- as you know, we’re not going to give highly specific top line guidance. We’ll guide to the cash number, but in terms of what’s baked in to that cash number, our -- what I would characterize is conservative revenue assumptions. So things like the Pfizer agreement and the Amgen agreement and expected additional Enabling Technology collaborations are baked into that number. But I would say that we’ve tried to give you a number that is not dependent upon significant top line growth.

Okay, great. In regards to the SB-509 study, I was just wondering if you could give us the PI’s name again, the PI from Johns Hopkins?

Sure. Dale?

It’s David Cornblath who is a neurologist at Johns Hopkins.

Okay. And the other question I had regarding -- regarding -- if we can think about the market for a second, Dale, you mentioned the number of diabetics and the percentage that have some sort of neuropathy after 10 years of disease and you’re focusing on peripheral neuropathies. Can you give us a sense of what that opportunity is? Are there hard numbers out there in terms of characterizing peripheral neuropathies in diabetics? Do you have any sense of what those numbers look like?

It’s hard to get the number of the 14 million who have had disease for 10 years, but in general it’s, you know, diabetes does not kill you. It just basically is a chronic disease over the course of 15 to 20 years. So it’s a major proportion, whether it’s 50, 60, 70 -- I can’t say the number. But given the fact that it’s a disease that exists in the majority of the patients for up to two decades, most people will generally say, “Well, it’s around half.”

Okay.

It’s a hard number to find because nobody gets statistics. Nobody generates good statistics of “How many years have you had diabetes in this total population?” You know, it’s not a number that you can go to the literature and find and give you a hard number that we can back up.

Okay. You had mentioned 86,000 amputations for diabetics per year. If you step back and think about what you’re trying to accomplish with VEGF-A, is the point where patients are at the amputation stage, do you see that as being the initial use of the drug or do you think it’s earlier? Can you give us any sense of where in the treatment paradigm this approach may be used? I realize you’re kind of looking out here a bit, but just give us somewhat of a sense?

Like you said, it’s hard to predict, and if we can document regeneration, we should be able to help the patients with significant neuropathy. After a certain point, the nerve is gone. So I think the patients who are going to the O.R. in three weeks for an amputation are not in the group that we’re eventually going to take. But there are a lot of patients who are way -- you know, way before that time who have significant disruption of their nerves but still have the nerves intact, and that if we can show regeneration that would be the best population.

Okay, great. Thanks. Thanks very much.

Thanks, David.

And your next question comes from William Hall(ph) of Piper Jaffrey.

Hey there, guys. Just a quick question -- I’m sorry, I missed part of the conference call. Just for financials, was there anything that drove the reduction in R&D expense quarter-over-quarter from the third quarter?

Nothing that jumps out at any of us. No, Will(ph).

Okay.

Greg’s telling me it was flat quarter-over-quarter from the third quarter.

Oh. I have--

From the last year.

I meant from -- sequentially, from third quarter of this year. Then I thought I have 30 -- 3.6 and it decreased to 3.5.

Greg says there were external costs related to contract manufacturing.

Oh, okay. Thank you.

Sure.

Your next question comes from Charles Duncan. And Mr. Duncan has withdrawn his question and you have no more questions at this time.

Great. We would like to thank you for joining us and we look forward to speaking with you again when we release our first quarter financial information. In the next two weeks, we will also be presenting at the Bio CEO and Investor Conference in New York, the Leerink Swann & Co. Inaugural Healthcare Conference in New York, and the JMP Securities Research Conference in San Francisco. All of these presentations will be webcast and we will issue press releases with the specific information as to the times of each presentation. Thank you very much.

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect.