Sangamo Therapeutics Inc (SGMO) 2006 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first quarter 2006 Sangamo BioSciences conference call. My name is Jeff, and I will be your coordinator for today. [OPERATOR INSTRUCTIONS] I would now like to turn the presentation over to your host for today's conference, Mr. Elizabeth Wolffe. Please, proceed, ma'am.

Thank you, Jeff. Good afternoon, and thank you for joining Sangamo's management team on our conference call to discuss the Company's first quarter 2006 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, our Senior Director of Finance and Administration. Following this introduction, Edward will review our recent activities, Greg will then briefly review first quarter financial results, and, finally, Edward and Dale will update you on our ZFP Therapeutic program. Following that, we will open the call up 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 any 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 documents that the Company files with the Securities and Exchange Commission, specifically our quarterly report 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 operation 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 first quarter 2006 conference call. On this call, I will briefly review our recent highlights and then ask Greg to update you on our first quarter's financial results. In the second half of this call, Dale will provide you with an update on the status of our clinical program in diabetic neuropathy. We have made important progress in this program and have some new developments to discuss with you today. Finally, I will wrap up with a review of our expected milestones and events for the coming year.

In the first quarter of 2006, we announced progress in our three leading ZFP Therapeutic clinical development program -- diabetic neuropathy, our program with Edwards Lifesciences for critical limb ischemia, and our CCR5 for HIV/AIDS. One of the most -- one of the most significant milestones in our Company's history was the presentation of the first-ever human clinical data for a ZFP Therapeutic. The results of our Phase I clinical trial of SB-509 were presented on April 6th at the American Academy of Neurology meeting.

The data showed that our ZFP Therapeutic was safe and well tolerated in subjects with mild to moderate diabetic neuropathy. We reported that we did not observe any serious adverse events, or SAEs, or any dose-limiting toxicity. And, most importantly, we successfully treated the subjects at a dose that we had previously demonstrated to be effective in preclinical animal studies. In addition, we reported that a single treatment of SB-509 generated anecdotal improvements in symptoms of pain, numbness, and nerve testing in a number of the subjects.

Needless to say, with these encouraging data from the Phase I study, we are looking forward to starting the Phase II trial in the second half of this year as planned. Dale will comment in more detail later in the call on the data that were presented at AAN, our plans for further clinical studies, and our expectations for future presentations of clinical data later this year.

Earlier this quarter, on their 2005 year-end conference call, our partner, Edwards Lifesciences provided an important update on their ZFP Therapeutic angiogenesis program. They announced that they planned to initiate a Phase II clinical trial in critical limb ischemia, or CLI, in 2006. We also expect that data from the Phase I CLI clinical study will be presented later this year. Thus, by the end of 2006, we anticipate that there will be two ongoing Phase II human clinical trials of ZFP Therapeutics.

We continue to make substantial progress on our first zinc finger nuclease, or ZFN Therapeutic, designed to modify the gene encoding the CCR5 receptor. In March, we announced an agreement with MaxCyte, a company that has developed a non-viral cell loading technology. We have initiated a research and development plan to development MaxCyte's GMP-compliant system to load CCR5-specific ZFN into T-cells. Finalizing this agreement is another step towards our filing an IND for this program.

Finally this quarter, in our Enabling Technology program, we entered into a second agreement with Pfizer Incorporated that expanded the scope of our research collaboration in the field of enhanced protein production. Pfizer is funding further research at Sangamo, and we will use zinc finger technology to develop additional cell lines for enhanced protein production. Over the past year, we have enjoyed a very productive collaboration with Pfizer, and expect that the -- and believe that the expansion of this agreement is evidence of the success of that relationship. We anticipate that we will establish additional agreements with other companies in this area in 2006.

So 2006 is off to a very good start. Before Dale updates you on some of our important new developments in our diabetic neuropathy program, I would like to turn the call over to Greg to summarize the first quarter financial results. Greg?

Thank you, Edward. For the first quarter of 2006, our consolidated net loss was $2.7 million, or $0.09 per share. In the comparable quarter of 2005, our consolidated net loss was $3.6 million, or $0.14 per share. Our research and development expenses were $3.6 million for the three months ended December 31st, 2006, as compared to $2.7 million for the first quarter of 2005. General and administrative expenses were $1.8 million for the first quarter of 2006, compared with $1.1 million for the same period last year.

As of January 1st, 2006, we have adopted Statement of Financial Accounting Standards, No. 123R and are reporting employee stock-based compensation expense in our GAAP results for the first time. This non-cash charge was $430,000 during the first quarter ended March 31st, 2006. Revenues for the first quarter of 2006 were $2.1 million, as compared to first quarter of 2005 revenues of $256,000.

Finally, I'm pleased to report that we ended the first quarter of 2006 with cash, cash equivalent, investment, and interest receivable of $42.7 million.

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

Thanks, Greg. As you can see from our first quarter financial results, even as we prepare to initiate a Phase II clinical trial, submit a new IND, and move a half a dozen preclinical programs forward, we continue to carefully manage our expenses. I am pleased to say that we main on track to end 2006 with approximately $30 million in cash and cash equivalents.

As you all know, our lead ZFP Therapeutic, SB-509, is moving forward on schedule, and the initial human safety data are as expected. I have asked Dale to take a few minutes to update you on the depth and breath of our diabetic neuropathy clinical programs. Specifically, he will summarize the data that were presented at the AAN meeting and further elaborate on some of the data and tests that were carried out as part of the evaluations of subjects' symptoms.

In addition, he will describe for the first time a new and ongoing Phase Ib study that we initiated late last year. As data from the Phase Ia portion of the clinical trial was coming in, suggesting that SB-509 was well tolerated, we initiated a Phase Ib to further expand the safety and clinical profile of SB-509 in preparation for a Phase II repeat dosing trial. Today, we will update you on the progress of this trial.

Finally, Dale will also discuss the protocol for the Phase II study that we plan to begin later this year. Dale?

Thanks, Edward. As Edward said, the presentation of the first human clinical data for a ZFP Therapeutic at the American Academy of Neurology meeting on April 6th was a significant milestone for us and for our ZFP Therapeutic platform. Just to remind you, SB-509 is a 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. In a rat model of diabetes, SB-509 was demonstrated to be effective in protecting motor and sensory nerve function from a diseased-induced nerve damage. These data will be published in the June 2006 issue of the Journal of General Diabetes, a journal of the American Diabetes Association.

The Phase I study that we initiated just over a year ago, 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. Twelve subjects with mild to moderate diabetic neuropathy were enrolled and treated. All received a single treatment of SB-509 in one leg. Four dose levels of drug were tested -- 1, 5, 15, and 30 milligrams -- injected into the skeletal muscle in a pattern tracking along the distribution of major nerves in the leg. All 12 study participants had been diagnosed with mild to moderate diabetic neuropathy. Eleven of the participants had Type II diabetes and one had Type I. No subjects dropped out of the study.

Throughout the study, at 1, 2, 3 and 6 months post-treatment, in addition to the safety and tolerability of SB-509 treatment, the investigators evaluated clinical effects on lower-limb diabetic neuropathy in these subjects. The data presented at AAN demonstrated that SB-509 is well tolerated and that there were no dose-limiting toxicities. Importantly, we were able to test this ZFP Therapeutic at a pharmacologically effective dose that had been shown to be efficacious in animal studies.

This is in contrast to other approaches that have been previously attempted to address the underlying cause of the nerve damage in neuropathy. It includes growth factors, such as NGF and enzyme inhibitors, such as aldose reductase inhibitors. While these agents proved efficacious in animal models of neuropathy, adverse drug-related events prevented them from being used safely in humans at therapeutically effective doses and their development was halted.

The clinical effects observed in this trial, while anecdotal, generated interest at AAN from neurologists who appreciate the need for a treatment approach that addresses the underlying problem of nerve damage to improve upon the palliative approaches of pain control that are the current standard of care.

The test conducted during this Phase I trial and that we will continue to employ in future studies include a standard battery of blood tests and physical exams were used to measure clinical and laboratory safety of the drug. We did not observe any serious adverse events, although some subjects experienced mild to moderate injection site reactions that were reversible in few days.

Subjects were also evaluated for neurological changes, including changes in pain perception, numbness, vibration sensitivity, strength, sensation, reflexes, and nerve conduction studies to determined the effects of SB-509 on the neuropathy. Pain was assessed using one of the most frequently-used measurement scales in health care research -- the Visual Analog Scale, or VAS. The VAS is 11-point scale, from 0-10, with 0 being equivalent to no pain at all and 10 being worst possible pain.

Although five of the subjects on the trial continued to see worsening of their pain, we observed that 50% of the subjects experience a 2-point decrease in VAS. We were pleasantly surprised by this result, as this was only a one-time treatment. As far as we know, it is the first report, albeit anecdotal, of an effective VEGF on pain.

Other sensory symptoms were assessed by questionnaire, and 50% of subjects reported a decrease from present to absent in numbness. For evaluation of nerve function, a composite measure of the total neuropathy score, or TNS, was also used to evaluate clinical effect. The TNS combines information obtained from 10 separate measurements, including -- symptoms, neurologic exam, nerve conduction measurements, and quantitative sensory testing. 50% of subjects saw a 2-point decrease in TNS.

Finally, data from the quantitative sensory testing, or QST, which uses a device called the Vibratron II that measures a subject's threshold of perception of vibration in both toes, reported that of 12 subjects treated, 9 reported a 2-point decrease in QST. As Edward mentioned, after completing the enrollment and treatment of the first 12 subjects, we initiated a new Phase Ib extension of the study.

As we reported at the AAN meeting, the Phase Ia study demonstrated that a dose of 30 milligrams administered to one leg was well tolerated. Following good clinical research practices, we had first replicated in humans the single-leg dosing protocol, an effective range that we had used in the animal study. We have extended the safety analysis of a single treatment of 30 milligrams of SB-509 in one leg to a total dose of 60 milligrams administered in both legs, or 30 milligrams per leg.

The protocol for this new Phase Ib study is, once again, the single-blind study conducted in diabetics with mild to moderate diabetic neuropathy. Subjects were randomized and administered either SB-509 or placebo in both legs by intramuscular injection, in a pattern that tracked the anatomy of the major nerve.

Two dose levels of SB-509 are being tested. At the first dose level, at which accrual has been completed, three subjects were administered placebo, and three subjects were treated with a total of 30 milligrams of SB-509, 15 milligrams per leg. A further six subjects have been treated at the second dose level, three with placebo, and three with a total dose of SB-509 administered at 30 milligrams per leg. We expect to recruit a further 18 subjects to this top-dose cohort, nine treated with placebo and nine treated with SB-509 in both legs.

Subjects in the Phase Ib will be monitored as before, for both the safety and tolerability of SB-509 treatment, as well as evaluation of pain, clinical effects on lower-limb diabetic neuropathy at 1, 2, 3, and 6 months post-treatment. I can report so far that we have observed no SAEs and no dose-limiting toxicity. Minor, reversible injection site reactions were observed at the highest dose tested in both the placebo and the SB-509 group.

We have applied to present these data at a number of clinical conferences throughout the year, and I -- we look forward to keeping you informed of the progress of our Phase Ia and Phase Ib results.

Based upon these collective observations, we remain on track to initiate a Phase II clinical trial in the third quarter of this year. Additional toxicology studies and GMP manufacturing needed for a multi-dose trial have been completed, and we're identifying and qualifying additional clinical sites for the new trial.

The Phase II trial of SB-509 patients with mild to moderate diabetic neuropathy will be double-blind, placebo-controlled, repeat dosing trial, and subjects will receive either treatment or placebo in both legs. The trial design includes two treatment groups and is primarily intended to evaluate the durability of the repeat treatment. The SB-509 treatment group will receive intramuscular injections in both legs, in three treatments spaced every two months. The placebo treatment group will receive the same series of injections on the same schedule. We envision that we enroll approximately 100 patients, that accrual will take approximately 12 months, and subject follow-up will continue for 12 months after the subject enrollment.

Once again, we will be assessing effects of the treatment on pain, and measuring clinical effects by evaluation of symptoms, neurological examination, as well as electrophysiological testing. We will also monitor the safety and immunogenicity of repeat dosing. More details will be released once the trial begins, but needless to say, we are encouraged by the results to date from the Phase Ia and Ib trials, and are excited to be moving this novel drug to the next stage of development. Edward?

Thank you, Dale. We are, obviously, very pleased with the initial data from the Phase Ia trial. As you heard from Dale, we did not observe any SAEs or dose-limiting toxicities, allowing us to treat subjects in the pharmacologically effective dose range that have been shown to be efficacious in animal models. In addition, we saw encouraging anecdotal effects on clinical symptoms.

The Phase Ib extension that we have initiated in a -- we initiated as a new initiative and will provide data from the bilateral treatment. We have already completed the treatment of six subjects at the15-milligram-per-leg dose and six subjects at the 30-milligram-per-leg dose. We expect to treat another 18 subjects, for a total of 24 subjects, at this top dose level. We look forward to presenting the full-term follow-up data from the Phase Ia study as well as data from the Phase Ib extension of our diabetic neuropathy trial at appropriate clinical meetings throughout 2006.

In addition to our enthusiasm for this novel therapeutic, the physicians who see the problem of diabetic neuropathy every day are excited about the potential of our approach. As the clinical investigator for this trial, Dr. Mark Kipnes, noted in a recent teleconference organized by one of our analysts, quote, There is a major void in our area of medicines to treat neuropathy, and, really, no drug that gets to the heart of the matter in terms of nerve damage and trying to prevent or repair the damage. Sangamo has a drug that may do just that. It is not like taking -- or giving a Tylenol to suppress a fever, leaving the underlying cause ongoing. This is a drug that may actually hit the nail on the head, end quote.

For all of us, that kind of response to the initial trial is very encouraging.

As I briefly mentioned earlier in the call, we also had an update from our partner, Edwards Lifesciences, on the progress of their program in peripheral artery disease, or PAD. During their year-end conference call and again on their recent first quarter call, Edwards announced that they planned to initiate a Phase II clinical trial in critical limb ischemia before the end of this year. This is also encouraging news.

In addition to these two Phase II trials that we expect to be in progress by the end of 2006, we also expect to file an IND for our ZFN gene modification of CCR5 in T-cells by the end of this year. Putting it all together, we expect 2006 to be a significant -- a year of significant clinical progress and look forward to updating you at medical meetings and on future calls as data become available.

We will also present data from our preclinical programs over the course of the year. In fact, from our program to develop a ZFP Therapeutic for age-related macular degeneration, we are presenting today data at the Annual Meeting of the Association for Research and Vision and Ophthalmology, or ARVO, the largest and most highly-respected vision research organization in the world.

We also expect to establish new corporate collaborations this year. We are increasingly focused on developing strategic partnerships for our ZFP Therapeutics, as well as continuing to monetize our technology through additional Enabling Technology Agreement. I look forward to providing you with more information on our progress in this area on future calls.

Finally, you can expect us to continue to carefully manage our expenses, while working to establish additional strategic relationships that monetize the technology value we are creating. In 2006, with our Phase II trial in DN in progress, and a new IND for HIV CCR5, our net cash used will be approximately $17 million. We, therefore, expect to end this year with approximately $30 million in cash and cash equivalents. Incidentally, this guidance does not take into account any new therapeutic corporate partnerships that we might establish around one of our therapeutic programs later this year.

The progress that we have made in the quarter represents important and fundamental steps towards our ultimate goal to develop ZFP Therapeutics as a new and highly-differentiated class of human pharmaceuticals. We look forward to updating you at several investor conferences this quarter. Dr. Philip Gregory, our Vice President of Research, will be presenting at the Rodman & Renshaw 3rd Annual Global Healthcare Conference to be held on May 15th and 16th. And I will be presenting at the GARP 3rd Annual Investors Conference that same week.

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

[OPERATOR INSTRUCTIONS] And your first question comes from Edward Tenthoff of Piper Jaffray. Please proceed.

Great, thank you. And congratulations on achieving the milestone with the data presentation this quarter.

Thanks, Ted.

Just two real quick questions. Firstly, with the Phase Ib, how do you know that 30 mgs per leg is sufficient? And is it worth going higher in order to maximize effect?

Let me turn that over to Dale to respond.

Yes. On the first level from the pharmacology in the animal study, the 30 milligrams per leg is almost exactly 1 mg per kilo, which was the efficacy that we had seen in the animal study. The second, in terms of the spatial distribution of the injection along the course of the nerves, we feel that we -- that basically this injection pattern maximally saturates the nerves that we are trying to affect. To truly understand the maximal dose often takes a series of additional studies looking at a range of doses. But I think the current dose for this Phase II puts us, I think, squarely -- with the data that we have -- within the efficacious range.

Great. And you said that for the Phase II it will be three doses every two months. So does that mean that you're going to dose three times every two months? In other words, you're going to dose for six months or -- ?

No. The doses will be given at the beginning, or time 0, and at two months and four months.

Okay, good. And, then, just one last quick question. Were the strong 1Q revenues due to the new Pfizer extension?

The strong 1Q revenues were due to a couple of things -- primarily, the relationship with Dow AgroSciences, but also the relationship with Pfizer, LifeScan, Johnson & Johnson, and our ATP grant.

And do you think that this is sustainable going forward?

Certainly, the Dow AgroSciences component is sustainable going forward.

Okay. Thanks.

Your next question comes from the line of Navdeep Jaikaria of Rodman & Renshaw. Please proceed.

Actually, this is Sean Wu standing in for Navdeep. Congratulations on a great quarter and all the milestones you have achieved.

Thanks, Sean.

I have a couple questions. The first one is -- If Edwards started a Phase II trial, are you going to receive an economic milestone payment for that?

Sean, we haven't given formal guidance on exactly when the next milestones will be in Edwards. I will tell you that the milestones total about $30 million, if any of our products make it all the way through to commercialization. And those milestones are based upon both clinical as well as commercial milestones. And as that time gets closer, we will have more to say about the specific next milestone in the Edwards agreement.

Excellent. So are you then saying -- probably going to establish more partnerships. Would they be the size of Edwards, or, like, the size of the one Alnylam has established with Novartis?

Well, good question. The type of relationships that we're talking about are a little more focused, more akin to a specific gene within a specific disease area. I won't comment on the Alnylam, Novartis relationship, but that's certainly much broader than the types of structures that we're contemplating. And in terms of the financial magnitude or financial value, I think the Street should expect us to do deals that are well within the, sort of, comparables that one sees either clinical programs, Phase 1/2 clinical programs, or if it happens to be a preclinical program for one of our preclinical programs.

May I ask a final question if you have time?

Sure.

In terms of your site Phase I trial of that MaxCyte-based technology enhanced loading. So, essentially, you are doing an ex vivo personalized study, because it appears that the T-cells will have to be isolated from individual patients?

That's correct, Sean. The program, the proof of concept that we're contemplating for the first zinc finger nuclease clinical trial will employ autologous T-cells. Those will be modified ex vivo, and we are evaluating and developing the MaxCyte non-viral cell loading technology for that or with that. And, then, those modified cells would be characterized and then reinfused back into the patient. And that's the process we plan for our first proof of concept study of a zinc finger nuclease.

Sounds very interesting.

Thank you.

Do you have any kind of, like, a success or promising results we can reference?

Any promising results with what?

With this technology, this procedure.

Yes. Philip, you want to briefly comment on our work so far?

Yes, there will be a poster presentation on the use of nucleases with the MaxCyte technology at the [AOCT] meeting, and those abstracts have just gone online. So that's probably the most recent will be at AOCT.

Great. Thanks.

Actually, I was more referring to other people's examples, like, to advanced stages.

We don't have any examples of that. But, I guess, I refer you to MaxCyte.

Okay. Thank you, so much.

Thanks, Sean.

All right.

Your next question comes from the line of Charles Duncan with JMP Securities, please proceed.

Good afternoon, folks, and congratulations on a good quarter.

Thanks, Charles.

Edward, I wanted to have you or Dale really comment on some of the data that we saw at AAN. I know he did a great job of running through it, but give us some color on, kind of, 50% of the patients seeing changes. What do you think about that Dale, both in terms of magnitude and in terms of also, would you have guessed that you'd see effect in 50% of the changes, or did that exceed your expectation?

I think we were very pleasantly surprised by that frequency. And if you look at the trial design, there was basically a 30-fold difference in doses given in cohorts that were only three patients per group. So to have half of the patients show evidence of some type of improvement I think is quite encouraging for us.

I know the neurologists I talked to when I was there was pretty impressed as well. One of them, though, commented on the Visual Analog Scale. Is that -- is the changes in pain, is that important for diabetic neuropathy, and can you give us some thoughts on, really, mechanism of action with VEGF in pain?

Yes, it's -- in terms in patients with diabetic neuropathy, there are medications out there to treat pain, but they often are associated with side effects. I think from a mechanistic point of view, it was very important for us because the damage in diabetes is mediated on the small unmyelinated nerve fibers. These are often the fibers that mediate sensation such as pain, vibration, or a sensation of sharpness or a pin prick. I think from a mechanistic point of view, it was very encouraging for us that we're seeing improvements in the constellation of nerve fiber anatomies that are characteristic of the pathologic damage in diabetes.

Does that suggest that there might be even a broader potential uses -- usage beyond diabetic neuropathy for -- ?

Yes. So, the pathophysiology of neuropathy can occur in many diseases, such as HIV, for example. Yes, this is very encouraging and suggests that the somewhat pleiotropic nature of VEGF in both neuroregeneration, neuroprotection and effecting both neurons and glial cells may be advantageous in the neuropathy treatment area in general.

Another observation you made with that data was that, actually in some patients, you saw effects on the contralateral leg. Can you give us some thoughts as to what that might mean?

Okay. So there is always a treatment effect, as you know from discussion with Dr. Kipnes, these patients come in, they actually get professionals to look at their feet and legs. And they have better access to control their glucose, maintenance of foot hygiene, et cetera. So one possibility is that they were just getting more frequent, better medical care.

The other possibility is that there is actually a more systemic effect of the VEGF injections than we had anticipated in animal studies. And we're currently evaluating that in terms of looking at circulating VEGF levels, for example, or in animal studies, seeing whether there may be some transport of the VEGF zinc finger into more central areas of the spine. But that's a very interesting area that we're trying to dissect out at this time.

Charles, we have several other groups that would like to ask questions, would you mind getting back into the queue?

Not a problem.

Thanks.

Sure.

Your next question comes from the line of John Sullivan with Leerink Swann. Please proceed.

Hi, guys. Good afternoon.

Hi, John.

A couple of quick ones. First of all, the CCR5 program, the ZFN program, can you just give some sense of what work on -- has to be done between now and year end in order to get the IND filed on schedule?

Yes. Why don't we do that from a fairly high level? Phillip you want to take it? Dale?

Yes, so at this point, we are in the process of developing a very novel gene transfer using plasma DNA of the zinc finger nucleases into patient's primary T-cell. The process that has to occur now is basically development of a GMP manufacturing process that is controlled, that has standard operating procedures, and that can be reproducible at a scale -- not the research scale that it is now, but a clinical scale, which in the T-cell world is about a billion cells in terms of manipulation. And once that process is developed, then a series of engineering and manufacturing runs to assure that we have the process under control and that all the testing is consistent with the, I guess, the results that we expect.

And, then, in the meantime, using these manufactured cells, we will be evaluating them for both function and safety for the types of analyses that are required by the FDA for an IND submission. And this process takes time, for example, the full final process will take on the order of probably 14 to 21 days to accomplish in the manufacturing, and the testing can take up to two months. And, so, the next phase is really incorporating the very detailed, Good Manufacturing Practice execution of this type of trial.

Okay. Thanks, very much, for that. And, then, shifting gears, last question. Dow AgroSciences deal from last fall, are there any milestones that we might see? Any tangible evidence of progress that we might see in the crop improvement area from Dow?

That's a good question, John. There are milestones built into our agreement, as a matter of fact they are quantifiable. We have -- we're eligible for about $4 million in total milestones. We are discussing with Dow the type of things that we will or they will be comfortable in talking about, and what those milestones will be. So I can't tell you today when and where we'll be doing that, but I can tell you there are milestones, they're worth $4 million to us if we achieve all of them. And it's our collective goal to find appropriate times to talk about those.

Okay. Obviously, the ultimate deliverable is products, though, right?

Say that again? I'm sorry.

Obviously, the ultimate deliverable is products. And will we be made aware if products come out of these -- come out of this work?

Well, I think, initially the deliverables are mainly, sort of, research goals. And that's what's most likely to come out of the next, sort of year or so's worth of collaborative research. But, yes, a lot of these are focused on product development, and -- but, obviously, that takes a bit longer. So, initially, I think -- I mean, the hope would be that we'll be able to talk about some of the research accomplishments, and, then, later, maybe towards products.

Thanks, very much.

Thanks, John.

Your next question comes from the line of Alastair Mackay of GARP Research and Securities. Please proceed.

Hi, good afternoon. Thank you for the update on the diabetic neuropathy progress. Based on what you -- what you presented and what you know from the animal research, could you speculate a little bit about what the treatment might look like for a patient? This is probably a good example of a treatment, in that it's a difficult, somewhat intractable chronic disease. So one might expect that the patient would be going back repeatedly for treatments. Would -- do you have any idea about the timing of the treatments? Would the treatments be administered by a primary care physician? Or would it require a visit to a specialty facility? Things along those lines.

To answer your last question first, the physician who will actually administer the treatment will be a neurologist. And the neurologists are actually trained in -- basically administering products near nerves. And they have a -- actually a significant experiences based on treatment in Botox.

The Phase II trial is basically designed to evaluate a year as a treatment unit. And the patient will be treated at month 0, 2, and 4. And we anticipate that the effect would last up to a year -- and then, again, diabetes is not cured -- then the patient could come in for repeat treatment. So the design of Phase II trial is treatment 0, 2, and 4, and will be evaluating the patient over a complete year.

Great. Thank you, very much.

Thanks, Alastair.

[OPERATOR INSTRUCTIONS] And you have a follow-up question from Mr. Edward Tenthoff. Please proceed, sir.

Great. Thank you for taking my follow-up question. Just a quick one on a comment that Dale made with respect to systemic transcription of VEGF. Could you envision any potential side effects that could be caused by systemic delivery of a zinc finger protein for VEGF?

So this -- VEGF has been used in clinical trials for almost a decade. The initial use of VEGF in biotechnology was by Genentech for peripheral arterial disease and then in constant fusion with myocardial infarction. And there were probably 5 to 600 patients treated with systemic VEGF. There was no evidence of any tumor progression. And since -- at the beginning of those studies by Genentech, fairly standard screening procedures were used to make sure that patients didn't have tumors. And we used those same screening procedures now as were used 10 years ago, and have since been used in studies with adenoviral VEGF and then the plasmid VEGF by [Idner] and VEGF-C by Corautus. So there's been a lot of experience, actually, so far with systemic VEGF and treatment and no significant incidents of development of any spontaneous tumors.

Great. Thank you.

You also have a follow-up question from Mr. Charles Duncan. Please proceed.

Thanks, guys, for taking up my follow-up question.

Sure.

With regard to the upcoming data presentations, can you give us some insights on what you might be able to present at ADH, just broad strokes?

That will be the initial set of 12 patients in the Phase Ib, and then longer term information on the original cohort.

So longer term follow-up?

On the original cohort, and, then, the new data on the first two dose levels in the Phase Ib.

Oh, very good. Okay. And, then, with regard to corporate collaboration, Edward, that you mentioned, can you give us some insights as to what types of companies you're talking to? Would they be neuro-focused companies or diabetology-focused companies? And give us some insights as to you are you very-early-stage conversation with them? Or kind of at the term-sheet negotiation stage?

So, Charles, we're talking about -- we're talking to a broad spectrum of pharmaceutical and biotechnology companies in the corporate partnering space, because as you know, we have programs that really cover many areas. If your question is specifically about the diabetic neuropathy program, we're in discussions with major pharmaceutical companies who have a strong interest in both existing products that are approved in the area of diabetic neurology, principally pain medications and antidepressants. And we're also in discussions with companies who have a strong interest in the whole field of diabetes.

What I'm asking, Edward, really, is, kind of, to flip this question back on you, why would you partner this program at this stage?

Look, Charles, it goes back to the whole business strategy of the Company. As you know, this is a platform. Our goal is to establish this technology as a new class of human therapeutics. We think we're going to have an opportunity over the next -- the near term, the mid term, and the long term to development a pipeline of highly-differentiated, novel therapeutics from a mechanistic perspective can address diseases where -- in a different way than conventional approaches. Our goal is to continue to add value across our pipeline and at appropriate points and for fair value monetize programs when we think we can take them farther forward with a partner faster and better. So you should look for us over the next several years to continue to look at partnerships across the stage of development of our pipeline and continue to monetize the technology value that we're creating.

But you're fully prepared to commence stage two yourself and perhaps take it further?

We are fully prepared to do that. And, then, the financing that we completed in the fourth quarter, along with the up-front funding from the Dow AgroSciences deal have the financial wherewithal to not only start, but complete the treatment of the Phase II clinical trial.

So it sounds like a partnership is maybe a nice-to-have, but not a requirement for making good progress?

I would say we enter in those discussions from a position of financial strength.

Okay. Good deal, thanks.

Ladies and gentlemen, due to time constraints this ends the question-and-answer portion. I'd like to turn the call back over to Mr. Edward Lanphier. Please proceed.

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

Ladies and gentlemen, this concludes today's presentation. You may now disconnect. Good day.