Sangamo Therapeutics Inc (SGMO) 2005 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to your fourth quarter 2005 Sangamo BioSciences conference call. My name is Liz, and I will be your coordinator for today. [OPERATOR INSTRUCTIONS] I would now like to turn the call over to your host for today's presentation, Dr. Elizabeth Wolffe. Please go ahead.

Good afternoon and thank you for joining Sangamo's management team on our conference call to discuss the company's fourth quarter and year-end 2005 financial results. Also present during this call are several members of Sangamo's senior management including 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 and year-end financial results, and finally Edward and Dale will update you on our most advanced ZFP therapeutic programs. Following that, we will open the call for questions.

As we begin, I'd 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 that are detailed in the documents that the company 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 include 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 turn the call over to Edward.

Thank you, Liz, and thanks to all of you for joining us for our 2005 fourth quarter and year-end conference call. On this call I will briefly review our fourth quarter accomplishments and then ask Greg to update you on our Q4 and year-end financial results. In the second half of the call I've asked Dale to give you an update on the status of our clinical program in diabetic neuropathy. Finally, I will wrap up with a review of our 2006 objectives.

2005 was a year of significant and quantifiable progress for Sangamo. We initiated and completed the enrollment and treatment in our Phase I clinical trial of SB-509, a ZFP therapeutic for the treatment of diabetic neuropathy. This puts us in a position to begin a Phase II clinical trial in the second half of this year.

Early in the fourth quarter we announced an agreement with Dow AgroSciences that successfully monetized our ZFP gene regulation and gene modification technology and intellectual property in plant agriculture. The execution of this agreement with DAS is additional validation of the power and breadth of our technology and is the beginning of what I believe will be a spectacular partnership with significant near-term and long-term benefits for both of our companies.

A few weeks after completing the DAS agreement we also completed our first financing since our IPO in 2000 raising $18.2 million in a registered direct offering. This transaction, along with the up-front payment made by DAS and their participation in this financing has further strengthened our balance sheet.

We also executed a number of other corporate collaborations in the latter part of 2005. We expanded existing research collaborations with Life Scan and J&J in our regenerative medicine program and with Pfizer in enhanced protein production, an area where we continue to leverage our ZFP gene regulation and gene modification technology platform.

We continued our tradition of presenting data at major scientific and clinical conferences and publishing in high-impact peer review journals. In December we presented data from our HIV/CCR5 program at ICAAC, one of the largest infectious disease meetings in the world. These breakthrough data were the first demonstration that cells can be made resistant to HIV infection through modification with our zinc finger nucleases, or ZFNs. Additional data were presented earlier this week at the Conference for Retroviruses and Opportunistic Infections, or CROI, by our clinical collaborators at the University of Pennsylvania, demonstrating that ZFN modified cells are able to survive and grow in culture in conditions where they are exposed to the HIV virus for prolonged periods of time.

Finally, our partner, Edwards Lifesciences, provided an important update on their ZFP therapeutic angiogenesis program on their year-end conference call last week. Edwards announced that they are planning to initiate a Phase II clinical trial in critical limb ischemia before the end of 2006 -- pretty good news to start off a new year.

So as you can see, 2005 was a very busy and productive year in which we made significant progress in every aspect of our business. However, before we move on to our plans for 2006, I would like to turn the call over to Greg to summarize our fourth quarter and year-end financial results. Greg?

Thank you, Edward. For the fourth quarter of 2005, our consolidated net loss was $2.7 million, or $0.10 per share. In the comparable quarter of 2004, our consolidated net loss was $3 million, or $0.12 per share.

Our research and development expenses were $3 million for the three months ended December 31, 2005, as compared to $2.5 million for the fourth quarter 2004. General and administrative expenses were $1.3 million for the fourth quarter of 2005 compared with $1.1 million for the same period last year. Revenues for the fourth quarter of 2005 were $1.4 million as compared to fourth quarter 2004 revenues of $200,000.

For the 12-month period ended December 31, 2005, our consolidated net loss was $13.3 million or $0.51 per share compared with a consolidated net loss of $13.8 million, or $0.55 per share in the comparable period in 2004.

Revenues for 2005 were $2.5 million as compared to $1.3 million in the same period of 2004. Total operating expenses for the years ended December 31, 2005 and 2004, were $16.2 million and $16 million, respectively.

Finally, I am very pleased to report that due to the $7.5 million up-front payment received in connection with our DAS agreement, the registered direct offering, which generated net proceeds of $18.2 million and our continued careful management of our cash, we ended 2005 with cash, cash equivalents, investments, and interest receivable of $47.2 million. And on that note, I will now turn the call back over to Edward.

Thank you, Greg. As you can see from our fourth quarter and year-end financial results, we begin 2006 with a solid cash position that will allow us to aggressively prosecute our clinical development programs and see our Phase II clinical trial in diabetic neuropathy through to completion. Looking forward, while we anticipate that we will execute a ZFP therapeutics agreement in 2006, even in the absence of such a collaboration, we expect to end 2006 with approximately $30 million in cash and cash equivalents.

A year ago on this call we announced our first human clinical trial was open and that we were preparing to enroll patients. As we begin 2006, I am very pleased to say that we have completed the enrollment and treatment stages of that trial and are currently completing the follow-up phase of the study. These data, the first human clinical data for a ZFP therapeutic, will be presented in the next few months and based upon this study, we are preparing to initiate our first Phase II human clinical trial in the second half of this year. By any measure, these are significant advances for our company.

I would like to ask Dale to provide you with more information on our proposed plans for the diabetic neuropathy program this year. Dale?

Thanks, Edward. In November, ahead of our earlier timelines, we announced the completion of enrollment and treatment in our Phase I clinical trial of SB-509 for diabetic neuropathy. Further, we reported that we have not observed any drug-related serious adverse events or dose-limiting toxicity suggesting that this drug is well tolerated in man. As Edward said, this was a significant milestone for us and ZFP therapeutics in general.

Just to remind you, SB-509 is the ZFP transcription factor that is designed to activate the endogenous vascular endothelial growth factor, or VEGF, gene. VEGF is a highly conserved potent and direct neurotrophic and neuroprotective factor. Finally, what differentiates SB-509 from many of the other potential DN products under development is that our product is designed to directly address the underlying problem of nerve damage and has shown promising results in an animal model of the condition.

From a demographics perspective, most of you know that diabetes is a growing problem and that diabetic neuropathy is a significant problem for as many as 50% of the currently 14 million diagnosed diabetics in the U.S. and more than double this number in Europe and Japan. We are focused on sensory motor peripheral neuropathy, the initial symptoms, which are pain and tingling in the hands and feet and then 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. Nearly 100,000 amputations are performed on diabetics each year in the U.S. alone.

Unfortunately for these patients, the only approved therapies are for the pain symptoms associated with the diabetic neuropathy and only very strict glucose control can halt progression of this condition. We believe that SB-509 may provide a therapeutic solution for this significant unmet medical need with a sizable and expanding market.

As Edward mentioned, we are now completing the follow-up period for the patients and the final cohorts of the Phase I trial. We anticipate that Dr. David Cornblatt of Johns Hopkins University School of Medicine, the principal investigator of the trial, will present the first clinical data for this program on April 6 at the American Academy of Neurology, or AAN, meeting in San Diego. Additional follow-up data will be presented in June at the American Diabetes Association meeting in Washington, D.C.

What should you expect from these data presentations? As many of you know, the phase I study was a single-blind dose escalation trial primarily designed to evaluate clinical and laboratory safety and to determine the maximal tolerated dose of SB-509. All study participants were treated at a single outpatient visit with SB-509 injected into the skeletal muscle in a distribution pattern tracking along the major nerves in the leg.

Throughout the study, and at one, two, three, and six months post-treatment, the safety, tolerability, and clinical effects of SB-509 treatment on lower-limb diabetic neuropathy have been evaluated. Clinical and laboratory safety are being measured by history, physical exam, and blood tests. Effects on the neuropathy are being measured by evaluation of symptoms, neurological examination, quantitative sensory testing, and electrophysiologic testing. Importantly, the study design enables us to evaluate the treated leg and to compare these baseline measurements in each patient, in addition, are where evaluation patient symptoms compare to baseline. This design may also allow us to determine changes in patient symptoms after treatment. These are the type of data you may expect to be presented in April and in June by our clinical collaborators.

Based upon our initial observations, we are on track to initiate a Phase II clinical trial in the second half of this year. Currently, we are in the process of completing the additional toxicology studies and GNP manufacturing needed for a multi-dose trial and are identifying and qualifying additional clinical sites for the new trial.

The Phase II human clinical trial of SB-509 in patients with mild to moderate diabetic neuropathy will be placebo-controlled, repeat dosing trials, and patients will receive either treatment or placebo in both legs. The trial design that we have discussed with the FDA includes three treatment groups. The first treatment group will receive SB-509 by intramuscular injection in both legs in three treatments spaced every two months. The second group will receive three treatments of SB-509, spaced every three months, and the third group will receive placebo.

We envision that we would enroll approximately 100 patients; that accrual will take approximately 12 months; and subject follow-up will be completed six months after the last patient is treated.

Once again, we will be measuring clinical effects by evaluation of symptoms, by neurologic examination and electrophysiological testing. More details will be released once the protocol has been finalized and approved by the FDA. But, needless to say, we are encouraged, and I am personally excited to be moving this novel drug to the next stage of development. Edward.

Thank you, Dale. As you have heard from Dale, in the first half of 2006, we expect to present data for our Phase I diabetic neuropathy trial in two clinical meetings and to initiate a Phase II trial in the second half of this year.

We also have an update from our partner, Edwards Lifesciences, on the progress of their program in peripheral artery disease, or PAD. Last week, during their year-end conference call, Edwards' CEO, Mike Musallem, said that their Phase I clinical trials in intermittent claudication and critical limb ischemia are continuing at the NIH and Duke University, respectively. Additionally, he announced that Edwards is planning to initiate a multi-center, Phase II clinical trial in critical limb ischemia before the end of this year. Edwards also plans to continue the Phase I intermittent claudication trial at NIH.

In addition to these two Phase II clinical trials that we expect to be in progress by the end of 2006, we also expect to begin a Phase I clinical trial of our ZFN gene modification of CCR5 in T-cells by the end of this year. For those of you who are keeping score at home, this adds up to two Phase II clinical trials and two Phase I clinical trials, ongoing, in 2006.

As I mentioned earlier, we also expect to establish important new corporate collaborations in 2006. We are increasingly focused on developing strategic partnerships for our ZFP therapeutics as well as commercializing and monetizing our technology through additional enabling technology agreements. I look forward to providing you with more information on our progress in this area on future calls.

You should also expect to see important new publications and presentations of clinical and preclinical data from our ZFP therapeutic programs in major scientific and clinical journals and at disease-specific medical meetings. In 2006, we expect to release preclinical data from our programs in congestive heart failure, neuropathic pain, and nerve regeneration as well as from our ZFN gene modification programs.

Finally, and perhaps most importantly, we will present our first clinical data from our Phase I DN trial at the AAN meeting in San Diego on April 6th, and the ADA meeting in Washington in early June.

Lastly, our agreement with DAS and our recent financing have significantly strengthened our balance sheet. However, excluding those two events, our total cash used in 2005 was $11.7 million. In 2006, with our Phase II trial for DN in progress, and a new Phase I trial for HIV/CCR5 being initiated, we believe that our net cash used will be approximately $17 million and, therefore, we expect to end this year with approximately $30 million in cash and cash equivalents.

Incidentally, this guidance does not take into account a therapeutic corporate partnership that we anticipate establishing around one of our ZFP therapeutic programs.

In conclusion, 2005 was a year of matriculation and transformation for Sangamo. Our accomplishments over the past 12 months have positioned us for an even more significant 2006. From a clinical perspective, we will initiate our first Phase II clinical trial and an additional new Phase I trial in HIV. Our partner, Edwards Lifesciences, will initiate their own Phase II ZFP therapeutic clinical trial in critical limb ischemia.

From a financial perspective, we have put ourselves in a strong position to start 2006. You can expect us to continue to carefully manage our expenses while working hard and wisely to establish strategic partnering relationships that monetize the technology value we have created.

2006 will be a year of notable firsts for Sangamo. The first clinical data from a ZFP therapeutic program will be presented, and the first Phase II -- the first two Phase II clinical trials will be initiated. These are important value-creating steps towards our ultimate goal to develop ZFP therapeutics as a new and highly differentiated class of human pharmaceuticals.

We sincerely appreciate your help and support along this journey, and we look forward to keeping you informed of our progress. This completes our prepared comments. I would now like to open the call up for questions.

[OPERATOR INSTRUCTIONS]

Charles Duncan, JMP Securities.

Congratulations on a very good year of progress. Edward, I had a question on 509, unfortunately, Dale did a great job anticipating all my and probably investor questions on the protocol design and stuff, going forward. He talked about getting that trial done in 12 months in terms of accrual, correct?

Yes.

With regard to the Phase I you had also talked about getting that done within 12 months or so, as I recall.

I think that was our original guidance.

And you beat that?

We did.

Now, in that trial did you sequentially accrue patients -- did you accrue a patient and see how they did and then accrue another patient?

Yes, again, like all Phase I safety trials, we had to enroll patients at dose level, evaluate them for safety, wait two weeks, and then enroll the next series of patients. For the Phase I, actually, all this takes a little bit longer because you can't just enroll everybody at once. So the advantage of Phase II is that, even though if the number is higher, you are at a set dose level, and there is less concern with respect to escalating dose toxicity.

And you can enroll patients in parallel, correct?

Yes. You can enroll as many as you want at any given time.

Total number of patients you expect in Phase II?

Approximately 100.

I wanted to move on to Edwards Lifesciences and the collaboration there. I don't cover the company. I understand they are fairly conservative. Can you help us interpret what it means for them to put that critical limb ischemia on a track to Phase II? What went into their decision-making besides the obviously, that the drug is safe in Phase I?

Well, I can't answer that because I don't know what their thinking process was, and I can't even agree with the original assumption, or their last assumption that they've shown safety in the Phase I trial, because I haven't seen those data.

What I can say is what's publicly known, and that is that the trial at Duke is an open label repeat dosing trial, and I think after that, Charles, I'm really reporting what Edwards said on their conference call.

And then, finally, in terms of protein collaboration, is there any way that we can increase visibility on how those are going in terms of -- are there specific deliverables that you need to provide, say, for example, to Pfizer this year?

The answer is absolutely yes. There are deliverables that we have under those agreements, and I think the way that I'd encourage you to follow us is by our announcements of collaborations and extensions of collaborations, and the milestones in those collaborations.

Edward Tenthoff of Piper Jaffray.

Congratulations on a great year. I want to spend a little bit of time on the gene modification HIV program. It looks like some incremental good data out today -- three parts to this -- what has to be done before the IND? And can you give us an idea of what that Phase I is going to look like? And specifically, what I'm getting at is, would that be in infected patients? And then the third part, and I can go back through these if it's too long of a list, but what is -- just remind us what is the therapeutic protocol? In other words, how would the drug be administered/delivered?

Okay, so, just to repeat, what are the next steps in moving toward the IND, what does the Phase I trial look like, and what's the process involved in modification of T-cells and so on, right?

And delivery back to patients.

And delivery, okay, I'm going to turn over to Dale on all three of those.

Basically, what we're going to do in the Phase I trial is to infuse T-cells from a patient that have been genetically modified so that the CCR5 locus has been modified, and the cells will no longer express CCR5. And so the next steps -- what we've demonstrated now in terms of research-related activity is protection and expansion of these cells in tissue culture in vitro.

What we now will do is, we have selected our top ZFN candidate, and we'll be developing methods to modify T-cells at a clinically relevant scale, approximately 1 billion cells, and develop a GNP manufacturing methodology.

In addition, and parallel to this, we will be performing the required safety-type assessments, both in tissue culture and in some animal models to assess the safety of this type of T-cell infusion. And may I remind you that this area has been highly evolved for over the last 10 to 12 years in HIV, and there have been a number of studies, and the regulatory and manufacturing procedures for this is actually fairly well established at this time. So we will basically be plugging into this type of T-cell therapy in HIV.

Just to clarify the GNP manufacturing, or the cell manufacturing facility -- would that be outsourced or is that something that you would want to establish at Sangamo?

Right now it will be outsourced. We'll be using the facility at University of Pennsylvania. Bruce Levine heads that along with Carl June, and they have a long track record of HIV T-cells clinical trials, and have an up-and-running active manufacturing unit now that has several HIV T-cell therapy trials in progress.

So the second question was the patient type, and right now the fairly standard way in which these T-cell therapies or immunotherapies are being introduced in HIV is to take patients who have stable HIV RNA but – and are on HAART therapy. And these patients can actually have a fairly good level of HIV RNA with respect to control. Over the course of years, we'll eventually deplete their CD4 cells. So, again, these aren't patients who are completely respondent to HAART, these are patients who escaped but have stable HIV RNA and are on a HAART regimen that is still tolerable to them.

These patients, we will start again just like the diabetes trial, with a dose escalation of the gene-modified T-cells, usually starting at a dose of 10 to the 8th cells or 100 million cells, and then dose escalating -- the clinical doses that we know can achieve good, stable, long-term engraftment with approximately 1 billion to 10 billion cells given at least three to six doses. So that will be the design of the first trial.

End points we will look at will be, obviously, safety, and the standard HIV end points of HIV RNA CD4 count, and there are other parameters such as immune response parameters that we will also look at.

What we'd like to do is establish a protected population of C4 T-cells in the patients and hopefully these cells will expand and provide an immune response against HIV.

And then the very last part of this question is how complicated of a program and trial is this? The reason I ask is with all of the interest in CCR5 now, is this a program that you might consider partnering earlier in order to bring in that money, validate the program, but also bring in that very important drug development disease-specific expertise?

Why don't you address the process, and David or I will address the partnering.

There's been a lot of experience -- actually, I've been involved with these types of studies for a long period of time. So I think it's very easily manageable in the Phase I, II, III from a technical perspective, production of the cells for enough patients, and to accrue and recruit these types of patients. So I think from a difficulty point of view, I think, since it's a fairly well established type of area, that I don't foresee any significant technical or execution-related pitfalls.

And then from a partnering perspective, Ted, this is the first part of a broader approach at CCR5 that employs initially modified T-cells but ultimately we also want to evaluate these nucleases in hematopoietic progenitors, and we also want to evaluate this on more of an in vivo approach, and those will be ongoing work that we're evaluating. So it is the sort of thing that we would talk about from a partnering point of view. You're categorically correct, CCR5 is a very attractive target for groups interested in HIV, and I think we have a multi-prong approach here that may well be attractive from a partnering perspective.

John Sullivan, Leerink Swann.

Hey, everyone, this is [Isaac] in for John. Just quickly, with all the clinical development you guys have in the hopper for this year, I was wondering how you would characterize near-term issues for Sangamo in terms of building clinical development capability, and do you think you have more hiring to do?

I'll give you a short answer, if Dale wants to add to it, he can do that. Dale is expert in managing multiple clinical trials, that's what he has done in all his career. And I think he's one of the most efficient people I've worked with in terms of internal people and then leveraging external resources and CROs. So, yes, we will be adding internally in several areas, but right now I think we're well staffed or at least in terms of the balance between internal and external resources to manage both the Phase II DN work as well as the CCR5 program. Dale?

In the last five years, I'd say, within bigger companies and also within smaller companies due to the varying amount of work that is required, say, over a five-year cycle in a clinical group or a development group, there has been an establishment of an outsourcing type of structure. So you don't have to hire 100 CRAs and then you don't need them in two years and have to lay off three-quarters of them.

So the types of management structures that have been developed for critical development have really consisted of, within a small company like this or a bigger company, is to have a smaller group of managers to really know what they're doing and then hire in the contract resources that you need for the day-to-day execution of the clinical trials on an as-needed basis or on a project-related basis. So I think the clinical development field has changed quite a bit, and this allows us to really tailor the cost of your resources to what you actually need over the period of time that you're developing the drug.

Okay, great, and so just to clarify -- it sounds like that -- I know we kind of went through the CCR5 stuff pretty clearly or thoroughly but it sounds like your internal assets and personnel are sufficient to handle that initiative as well.

Yes.

David Wood, America's Growth Capital.

A couple of questions -- first, Edward, when you talk about a therapeutic ZFP partnership this year, what gives you confidence there? Do you have ongoing discussions, a, and then, b, what's in play here? Are there preclinical compounds? Is SB-509 for DN, is that something that's potentially partnerable?

I'll give you the short answer and the long answer. The short answer is yes and yes. So yes, we're in discussions, and, yes, the preclinical and DN programs are part of those discussions. The longer answer is, we are in various stages of discussions with major pharmaceutical companies, and those continue to progress. From a partnering perspective, David, it goes back to the premise of the company -- we are able to apply the technology to any gene target, and we've tried to pick those where there are clear technical advantages to what we can do. Therefore, partnering programs at a preclinical level or clinical level are really then a question of value and realizing a fair value from those.

One of the reasons, if not the principal reason we went out and raised the $18 million-plus that we did in the fourth quarter was to put ourselves in the financial position so that we can clearly drive this Phase II clinical trial through to completion if we want to and if we need to, so that we're not going to be in any way, shape, or form, compromised on the terms of a deal around DN. We can drive that program ourselves, and therefore in a position to get fair value for that. And we're also in discussions around preclinical programs.

I appreciate you framing your thinking on that. The other question I had, I guess this is for Dale, is when you think about the Phase II in the mild to moderate DN population, is that ultimately the population that you would use in a Phase III? I guess the other way of saying that is this Phase II -- can we look at that as something that would be -- you can extend it into a Phase III and have similar patients and similar end points?

Yes, definitely. So this is the area where there is the most potential to heal the nerve. With severe diabetes, the nerves are often actually gone, and based on this study, there should be the ability to proceed directly in mild to moderate and then also on the efficacy, decide on expanded indications such as more severe again but maybe with a more intensive regimen and then potentially other neuropathies, such as HIV neuropathy.

Okay, okay, great, and then last thing, Dale, I don't know if you're willing to speculate, but when you think about the Edwards trial in critical limb ischemia Phase II, what do you think that they look at? Do they look at healing of ulcers or pain reduction? Can you give us some sense of what you think that trial would look like?

Well, for critical limb ischemia, the sine qua non of the condition is pain, or resting pain, and that's due to hypoxia of the tissue. And that is generally the most important clinical end point. Then all the other end points, if they have an ulcer, yes, healing of the ulcer; if they have gangrenous toes, healing of that; whether or not -- how many proceed on to amputation. All those types of things are secondary end points, but each patient-specific artery and severity of PD is so different, that it's hard to control for those particular end points. I would suspect that pain is really near the top in terms of their end points for relief.

Again, David, I know you know this -- Dale's comments are from his experience and perspective. We have no input from Edwards on this, and those comments don't relate necessarily to Edwards' trial.

Sure, sure, no, just trying to get one expert's thoughts, going forward. I appreciate it, thank you.

Charles Duncan of JMP Securities.

A quick question on the Dow collaboration -- you said that there has been some good progress in the near-term and long-term benefits. Can you help us understand a little bit more about how to see that value of that collaboration?

Sure, Charles, let me give you some numbers, and then I'd ask any of my colleagues to chime in. But the basic structure is as follows -- that the agreement with DAS initially is a three-year option to a commercial license. They paid an up-front payment of $7.5 million. They are funding research at Sangamo over a three-year period at $2 million a year. They put $4 million into this last financing. We are eligible for an additional $4 million in technology milestone payments, and then anytime during this three-year option period, they can exercise their option to acquire a commercial license, and that's a $6 million license fee. Post that, we will receive milestones and royalties on any products that Dow develops using the technology, and Dow also has the right to sub-license the technology within the field, and we will receive 25% of any revenues associated or related to those sub-licenses. So that's the macro issue, Charles.

I think anybody that's looked at the lay press over the last three, six, nine, 12 months, there has been an enormous amount of momentum and progress in terms of the acceptance of biotechnology products and biotechnology crops around the world, particularly I'm speaking about the EU. And so this is a timely opportunity.

The principal interest, and I'll ask Philip to comment in a moment, but the principal interest is in the use of a nuclease technology to do two things -- one, to do targeted insertion of large sequences of DNA at a specific and known site in a plant genome. And, secondly, to use the nuclease technology to do very precise knockouts of any gene that we want to go after, or Dow wants to go after. Thus affecting metabolic pathways in a way that can direct those pathways towards agronomically more valuable end points, more valuable oils, more differentiated protein content, different textures in food.

So it's a way -- and in doing that, those disruptions, the process leaves nothing behind. These are transient expressions of the nucleases. So it's a very powerful science, and Dow is I think very excited about applying it, and, if successful, could be a new platform for the development of genetically modified organisms.

Philip -- adding or subtracting?

You said everything.

Can you give us any color on if there is a test organism, soy, or whatever, that they're working on right now to really explore the technical feasibility?

Obviously, key to the collaboration is to demonstrate the ability of the nucleases to work across multiple plant species. Many of the milestones relate to exactly that type of demonstration.

So you're looking there, probably, at several different types of --

The great feature of the ZFN technology is it really is -- it plugs into two ancient biologically conserved phenomenon, and the first is DNA binding proteins and their ability to bind their sequences in the genome; and the second is the DNA repair processes that drive the gene correction, gene modification activities that we see in cells. And so, yes, we expect to be at the -- this technology's advance really is it should be broadly applicable across, essentially, all species, plant or animal.

And then, Phil, are there any specific timeframes that you think that you'd be able to update the Street on, you know, progress in this collaboration?

I think that will be, but that will happen in the terms of announcements of milestone payments.

I agree with that and very much I would also say that that will be a function of what DAS is interested in talking about as well.

And then this is a little tongue-in-cheek, but are we someday going to see the Sangamo logo on a tomato?

You know, I don't know.

Good year. Thanks.

You have no further questions at this time.

Thank you. We'd like to thank you for joining us, and we look forward to speaking with you again when we release our first quarter financial information. We'll be available later today if there are any follow-up questions. Thank you.

Ladies and gentlemen, thank you for joining today's conference call. We thank you for your participation. You may now disconnect. Have a good day.