Sangamo Therapeutics Inc (SGMO) 2006 Q3 法說會逐字稿

Good day ladies and gentlemen, and welcome to the Sangamo BioSciences third quarter teleconference.

[OPERATOR INSTRUCTIONS]

As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to Dr. Elizabeth Wolffe, please proceed, ma'am.

Thank you. Good afternoon and thank you for joining Sangamo's management team on our conference call to discuss the Company's third 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, Dr. Philip Gregory, Vice President of Research and Greg Zante, Vice President of Finance and Administration.

Following this introduction, Edward will review our recent activities, Greg will then briefly review third quarter financial results and finally Dale and Philip will update you on our lead therapeutic programs in diabetic neuropathy, our HIV/AIDS program, and some recent data in a model of spinal cord injury. 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 we view 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 and documents that the Company filed through the Securities and Exchange Commission. Specifically, our quarterly reports on Form 10Q and our annual report on Form 10K.

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 on our third quarter 2006 conference call.

On this call, I will briefly review some of the recent activities and then ask Greg to update you on our third quarter financial results. In the second half of this call, Dale will provide you with an update on the status of our Phase II clinical trial in diabetic neuropathy.

Philip will summarize the recent data from our ZFN Therapeutic for HIV/AIDS that were presented at ICAAC last month and expand on what this means for our program. In addition, Philip will introduce our preclinical program in spinal cord injury and elaborate on the very encouraging data that were presented at the recent annual meeting of the society for neurology. Finally, I will wrap up with a review of our expected milestones and events for the remaining months of 2006.

The past few months have seen some significant events for Sangamo on the corporate, clinical, and scientific fronts. To summarize, we recently announced an important agreement with the Juvenile Diabetes Research Foundation, or JDRF. The agreement provides for up to $3 million of funding towards our Phase II clinical trial with SB-509 for diabetic neuropathy. More on this important partnership later on this call.

Sangamo scientists and collaborators made a number of high-profile presentations of preclinical data that were very well received. The most visible was our presentation of data at the 46th annual Interscience Conference on Antimicrobial Agents and Chemotherapy or ICAAC where we announced data demonstrating that human immune system cells can be made permanently modified and made permanently resistant to HIV infection by treatment with zinc finger DNA binding protein nucleuses or ZFNs.

In addition to the long-term survival data, we also presented promising new data on our process development efforts in this program. Most recently, our clinical collaborator from the Toronto western research institute, Dr. Michael Failings presented early but provocative data from our collaborative preclinical work in a spinal cord injury model at the annual meeting for the Society of Neuroscience. Philip will provide you with more detail on both of these programs later in the call.

Finally, in September, we presented additional Phase 1 clinical data at the annual meeting of the European Association For the Study of Diabetes, which is the major diabetes meeting in Europe and an important venue from both a clinical and industrial perspective.

As you can see, we made very important progress on several fronts in this past quarter and we will provide you with more detail later in this call. However, before Philip and Dale update you on our clinical and preclinical programs, I would like to ask Greg to summarize the third quarter financial results.

Greg?

Thank you, Edward.

For the third quarter of 2006, our consolidated net loss was $2.8 million or $0.09 per share. In the comparable quarter of 2005 our consolidated net loss was $3.7 million or $0.14 per share. Our research and development expenses were $3.9 million for the three months ended September 30, 2006 as compared to $3 million for the third quarter of 2005.

General and Administrative expenses were $1.6 million for the three-month period ending September 30, 2006, and $1.2 million for the third quarter of 2005. The increase in total expenses for the third quarter of 2006 was attributable to increased personnel and lab supply expenses primarily due to increased head count in the research and development departments.

Total expenses also included a non-cash charge of $565,000 during the third quarter ended September 30, 2006 for employee stock-based compensation. Revenues for the third quarter of 2006 were $1.8 million as compared to third quarter 2005 revenues of $412,000.

Third quarter 2006 revenues were from Sangamo's agreement with Dow AgroSciences, DAS, federal government research grants, enabling technology research agreements, and human therapeutics collaborations. Increase in revenues for the third quarter of 2006 compared with 2005 was primarily attributable to revenues from the DAS agreement that we entered into in the fourth quarter of 2005.

Finally I'm pleased to report that we ended the third quarter of 2006 with approximately $57 million in cash and cash equivalents, and now expect to end 2006 with approximately $52 million in the bank. On that very positive note, I will now turn the call back over to Edward.

Thanks, Greg.

As you just heard we continue to be in good financial shape as we head into the final months of 2006 and prepare for a very busy 2007. While we will provide 2007 financial guidance later this year, we now plan to end 2006 and start 2007 with greater than $52 million in cash and cash equivalents versus the $50 million we had previously discussed, a solid cash position.

As you all know, our lead ZFP therapeutic, SB-509 is moving through the clinical research process on schedule and with no drug related serious adverse events. We have completed the Phase IA study and are continuing to recruit and treat subjects in our ongoing Phase IB study. The data from both of these trials have been presented in the U.S. and Europe at the leading diabetes neurology meetings and we expect to present additional data from the Phase IB study at several clinical meetings in 2007.

Today Dale will update you on our Phase II trial. As you heard earlier and based on the progress that we have made in this clinical program, we have recently completed a $3 million funding agreement with the juvenile diabetes research foundation. This is one of the largest sums that JDRF has ever awarded as part of their innovative industry discovery and development partnership program and we believe that that level of support is a significant validation of our efforts and accomplishments to date.

And with that preamble, I will turn it over to Dale.

Thanks, Edward.

As many of you know, our initial clinical safety studies using a single treatment of SB-509 demonstrated that our ZFP Therapeutic was well tolerated in subjects with mild to moderate diabetic neuropathy and we have observed no drug related serious adverse events or SAEs. The important additional point to note is that based on the Phase I data, we were able to administrator SB-509 at a dose that has been shown to be pharmacologically effective in animal studies.

This is significant and in contrast to other neurotrophic agents that have previously attempted to address the underlying cause of the nerve damage and neuropathy. These include growth factors such as nerve growth factor or NGF. While these other factors have proved infectious in animal models in neuropathy, adverse drug related events in Phase I trials have prevented them from being used safely in humans at therapeutically effective doses their development has been halted.

Based on the safety and anecdotal clinical affects observed in the Phase I studies, we are moving forward with plans to initiate our first Phase II clinical trial by the end of this year. The Phase II trial of SB-509 is a double blind placebo controlled repeat dosing study enrolling patients with mild to moderate diabetic neuropathy. Each subject will receive either treatment with SB-509 or placebo in both legs. The trial design is intended to evaluate the clinical affects of SB-509 and the safety and durability of these clinical affects in repeat--in a repeat dosing study.

The SB-509 treatment group will receive intramuscular injections of 30 milligram of SB-509 in each leg or a total dose of 60 milligrams. Treatment will occur once every two months for four months, mark time 0, 60 days and 120 days. The placebo treatment group will receive the same series of injections on the same schedule.

We envision that we will enroll approximately 100 patients and treat one-third with placebo and two-thirds of the subjects with SB-509. We anticipate that approval will take approximately 12 months. Subjects' follow-up will continue for seven months after the last treatment and we expect that the data from this trial will be available in mid-2008.

This is a multicenter study and we plan to open up the 10 clinical sights. We currently have four sites online and ready to start screening subjects and are in the process of qualifying the other sites. As before, we'll be monitoring the safety of SB-509 as in the Phase I studies, we'll also access a broad range of clinical affects of the treatment including changes in pain and in neurologic status, which include electro physiology and quantitative sensory testing.

The primary assessment of clinical benefit involves the evaluation of nerve function using a composite measure, the total neuropathy score or TNS. A composite scoring system is regarded as a comprehensive approach to evaluating changes in nerve health.

The TNS combines information obtained from ten separate measurements, including qualitative assessment of symptoms, neurological exams, and quantitative measurement of nerve conduction velocity, the speed at which a nerve can conduct a signal, as well as quantitative sensory testing or QST, a measurement of vibration threshold sensitivity.

In addition to these neurological measurements, we'll also assess changes in nerve integrity by examining the changes of the density of nerve fibers in the skin after treatment with SB-509 or placebo. We believe that it is important to collect a broad range of data in order to give us as much information as possible about the health of the nerves of the subject's post treatment. This will ultimately provide us with the most information about the optimum dosing and schedule for treatment for a pivotal trial.

Importantly, the only approved products to treat this condition have been pain killer based on modest improvement in the visual analog scale or VAS scores. We're developing a drug to treat the underlying condition of nerve damage, and as such, want to ensure that we assembled data packages that not only have the support of neurologists, but also sufficiently comprehensive to address clinical safety and mechanisms and clinical benefit with the FDA.

The financial support provided by our new arrangements with JDRF will offset some of the costs of this broad arrange of tests that we are undertaking. We also appreciate the confidence and validation of this program that is implicit in such support by the JDRF an internationally recognized foundation that promotes cutting edge research on diabetes.

Finally, the Phase II study is designed to be double blinded. Once the study begins, we do not plan to provide clinical updates until the final subjects are treated. We currently expect this to be the middle of 2008.

Having said that, our Phase IB trial is ongoing and as Edward said, we do expect to publish and present this data in 2007. We also plan to provide you with more details of this overall program at our analyst briefing in New York in December.

And now I would like to turn the call over to Philip, who will discuss recently presented data from our preclinical program in HIV/AIDS and nerve regeneration.

Thank you, Dale.

As many of you know, we presented data from our CCR5 HIV program at the 46th annual Interscience Conference on Antimicrobial Agents and Chemotherapy or ICAAC this year. At this meeting, we showed data demonstrating the T-cells treated with our CCR5 specific ZFNs become permanently resistant to HIV.

These significant results aroused a great deal of interest at the meeting. Notably, our abstract was selected by the ICAAC organizing body from the many thousands submitted to be highlighted to the media, a fact that also helped to increase interest in the presentation.

Our clinical goal is to treat T-cells of HIV-infected individuals with CCR5 specific ZFNs rendering them permanently resistant to HIV infection by disrupting CCR5 function. The result of ZFN action is analysis in outcome to the natural CCR5 delta 32 mutation found in individuals who resist HIV infection.

We believe that this will generate a reservoir of T-cells in the patients that is permanently resistant to HIV infection and will be able to fight both opportunistic infections and HIV itself. The data reported ICAAC demonstrates that using ZFN, we can successfully create this HIV-resistant population of T-cells. We showed that these ZFN-modify cells survive long-term continuous exposure to HIV and selectively expand to the point that by the end of the experiment they represented nearly all of the cells in the population.

In addition, and of greater significance to the therapeutic goal of the program, we reported on our evaluation of different delivery approaches, including placid DNA (inaudible) expiration and adenoviral vectors to deliver the CCR5 specific ZFNs. While both methods support a ZFN mediated CCR5 disruption of T-cells we reported that adenoviral delivery yielded firstly significantly improved CCR5 gene disruption deficiency, and secondly T-cell survival, which together result in a 10-fold increase in CCR5 modified cells compared with non-viral methods.

Why does this matter? This progress not only increases the raw number of non-infectible T-cells return to the patient, but also increases again by 10-fold the diversity of the T-cell repertoire we protect from HIV infection. This gives us ten times the chance of protecting the HIV specific the T-cells in the patient and ten times the chance of fully protecting the patient from opportunistic infections.

This important discovery represents a very exciting development for us. The order of magnitude improvement in T-cell modification materially affects the quality of the clinical experiment that we can carry out in the first Phase I trial.

If, as these data suggest, we can employ a adenoviral vector to deliver our ZFN and not only significantly increase the number of cells in which the CCR5 gene is modified, but also have more of these modified cells survive and expand in vivo, then we expect to have a substantially superior product for administration in our Phase I trial.

We believe that this advance has the potential to yield a significantly better clinical outcome and in the end our goal is to manufacture a product that gives us the very best chance of clinical success.

This program is obviously a top priority for us. While we have largely completed the necessary evaluation of the plasma-based delivery approach, we have decided to thoroughly pressure test this significant advance in adenoviral delivery to T-cells and rapidly determine which method will give us the best results at full clinical scale.

We are working with our collaborators at the University of Pennsylvania to develop processes based upon both delivery methods. The potential impact on the clinical experiment compels us to evaluate the two approaches head to head before making a delivery mode efficient and committing to a clinical trial.

If ongoing large scale experiments support the data presented at ICAAC, we intend to develop the clinical process based upon adenoviral delivery. We look forward to updating you on these important developments and decisions at our analyst briefing in December.

Next I would like to update you on our nerve regeneration work. As most of you know, our ZFP Therapeutic for diabetic neuropathy, SB-509, is a ZFP (inaudible-heavy accent) that has designed to activate the endogenous, vascular and [defelio] growth factor or VEGF gene. VEGF has been demonstrated to be a highly conserved protons and direct neurotroughic and neuroprotectant factor.

These observations were born out by our own preclinical results which demonstrated that SB-509 was effective in protecting motor and sensory nerve function from a disease induced nerve damage in animal models of diabetes. There has been a great deal of interest in this approach, particularly from neurologists who understand the real need for a Therapeutic which is neuroprotective and neuroregenerative.

There are several potential additional applications for such a drug beyond diabetic neuropathy. These include the treatment of neuropathy caused by other insults such as chemotherapy or more direct nerve injury such as spinal cord injury or SCI. We currently have several collaborations with leading neurologists applying our ZFP transcription factor to the treatment of nerve crushed and spinal cord injury models.

Earlier there month at the Society For Neuroscience meeting in Atlanta, Georgia, our collaborator, Dr. Michael Failings, (inaudible-heavy accent) in neural repair and generation at the Toronto Western Research Institute presented data from an animal model of SCI. These data demonstrated that our VEGF ZFP transcription factor, the active agent in SB-509 had a statistically significant positive affect on a number of measures of nerve health and integrity.

Dr. Failings is a Christopher Reeve Foundation scientific advisory council member and a leading expert in the molecular mechanisms and treatment of spinal cord injury. He and his colleagues demonstrated in a rat model that local treatment of the spinal cord at the time of injury with our VEGF ZFP TF resulted in increased levels of the three major isoforms of the VEGF protein and resulted in a neuroprotected affect with a specifically significant decrease in nerve fiber degeneration and post injury nerve cell death.

We are very excited about this data, as is Dr. Failings and we are working together to complete additional preclinical animal studies and to move this novel therapeutic approach toward the clinic.

With that update on two of our preclinical programs, I'll turn the call back over to Edward.

Thank you, Philip.

As you have heard from Dale and Philip, there is a lot going on at Sangamo. So what can you expect in these last few months of 2006? First, we look forward to announcing the initiation of our Phase II clinical trial in diabetic neuropathy later this year and are obviously very pleased to have the support and confidence of JDRF in our efforts to develop this novel therapeutic.

We continue to explore additional opportunities to monetize our technology and intellectual property with agreements in the cell engineering and protein production field and I look forward to updating you on our continued success in that area in the not-too-distant future.

In that same vein, last year we announced a significant agreement Dow AgroSciences for the application of our ZFP technology platform in plant agriculture. I am pleased to report that this collaboration is going very well and we expect to be in a position to provide you with more visibility on our collective progress in the near future.

Finally, establishing larger, strategic partnerships in significant commercial and clinical areas that leverage our technology and intellectual property continues to be core to our business model. This approach--this business model has already allowed us to realize value in several markets, diversify our revenue sources, reduce our overall technology risk, and create an operating plan that minimizes cash used in operations.

As such, I am very pleased to report that we are on track to end this year with approximately $52 million in cash and cash equivalents. As I mentioned earlier, we will host our annual analyst briefing on December 6th, in New York. This is a bit later than first planned due to scheduling conflicts, and I apologize for any inconveniences.

At this event, we plan to update you on the status of our ongoing programs as well as to set the scene for what to expect from Sangamo in 2007 as we continue to make progress towards our ultimate goal to develop ZFP Therapeutics as a new and highly differentiated class of human pharmaceuticals.

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

[OPERATOR INSTRUCTIONS]

Your first question comes from the line of Alastair Mackay with Garp Research and Securities, pleas proceed.

Hi. Good afternoon. You may have covered this, I missed a part of the call in the middle.

For the diabetic neuropathy trial, what's to be the patient number for both arms of the trial? Phase II?

Yes, Alastair, thank you for the question. The Phase II trial is currently anticipated to be approximately at 100 subjects and the ratio between treated and placebo will be two-thirds treated, one-third placebo.

Great, and that leads to the next question which is, in opening discussions with the FDA about a pivotal trial, can you share any information about the projected size of that trial, assuming that safety and efficacy data continue to look encouraging?

Alastair, we have not had that discussion with the FDA, so, no, there's nothing else at this time.

Sure. Great. On a different subject, could you comment a little bit on the share count for this quarter given the secondary IPO, it looks a little bit on the low side from what one might project?

Well, Alastair, I can tell you that the numbers are audited numbers, so I'm confident the share count in the release is accurate. We have approximately 35.5 and that's an approximate number--34.5 million shares outstanding, so I'll just refer you to our announcement today and then our follow-up 10Q, which we'll be filing shortly.

Great. No problem at all.

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

Hey, guys, good afternoon.

Hey, John.

A couple of quick questions. First of all, would you be comfortable contrasting your CCR5 modulating approach for HIV, would you contrast it for investors benefit to some of the molecule approaches to CCR5 innovation that we hear about among some competitors. Could you do that?

Delighted to do that. Why don't I ask Dale to take a shot at it first, and then Phillip and I will get it afterward if there's anything to still add. Dale?

The chemical CCR5 inhibitors, they basically act by competing for the CCR5 at the surface of the cell and that requires taking a medication constantly and because of the variability of the viral population within a patient, not every virus is effectively blocked at CCR5.

Our control is completely different. Rather than trying to use a chemical to protect the population of cells, we plan to modify the cells permanently with one treatment and fuse it back into the patient. That way, there's no further medications that the patient has to take and the cell, since it has been genetically modified at CCR5 no longer has CCR5 and is permanently resistant to HIV.

So they're very separate approaches. So, basically, one is elimination of CCR5 through our method and the other basically is competing constantly at the cell surface using a chemical.

Philip, do you want the add?

I'd just add that one of the ways I think about it, obviously less technical but from a more of a mathematical perspective is that round numbers, there are a couple of thousand CCR5 receptors on a T-cell and there are round numbers 100 billion T-cells in a person, and it only takes two CCR5 receptors for HIV to infect that cell.

If you go through that math and realize that's an awful lot of small molecule or antibody antagonists that have to be there 24 hours a day, seven days a week, 365 days a year, you can run into issues in terms of potential toxicities in long-term exposure.

So as Dale suggested, coming at it from exactly the opposite perspective, potentially, as Phillip said [recopitulating] the [phenocides] that we know to be protected, we think has a --takes advantage mechanistically of the validation of CCR5 without some of the issues associated with high level systemic drugs.

Thanks, very helpful.

Sure, thanks, John.

Your next question comes from the line of Pamela Bassett with Cantor Fitzgerald

Hi, everybody. Congratulations on a great quarter. You may have answered this. I was interrupted a couple of times. When are you--what's the latest on filing for CCR5?

I'll turn it over to Philip and Dale.

I apologize if you've already answered that.

I'll turn it over to Philip and Dale to add more color on what we presented, but what we talked about is updating on the data we presented at ICAAC and particular the order of magnitude improvements that we've seen in the T-cell modification using the adenoviral approach.

We're right now in the process of really pressure testing both of the plasma and (inaudible) approach and the work that we've seen with adenovirus in large scale studies and that will largely drive our decision in terms of clinical time lines. That's what we've discussed, Pamela. I don't know if that answers your question.

Okay, so there isn't a target date in mind yet?

Our plan is to try and complete these large scale experiments by our analyst briefing in early December.

Okay.

And we plan to update from a time line point of view, then.

That's helpful, thank you.

[OPERATOR INSTRUCTIONS]

Your next question comes from the line of Navdeep Jaikaria with Rodman & Renshaw, please proceed.

I have a couple questions. In your clinical trials, let's say you have multiple injections of SB-509. Is this like a (inaudible-heavy accent).

Yes, it's a plasma or naked DNA formulated with a poloxyma, so it's non-viral.

So it's not viral?

Yes, it's non-viral, and as Dale said it's a repeat dosing trial. Each patient will receive three treatments two months a apart, so times 0, 60 days, and 120 days and then we'll follow those patients for another seven months post the last treatment.

It's very, very nice for you guys to secure $3 million of funding from JDRF. Can you just tell me like a little bit of how much this can--to which way--what will be the total cost?

We haven't given formal guidance on the total cost of the trial, but the $3 million is certainly a material impact on the overall cost.

Let me follow-up with a share question. It's kind of from my perspective. You seem to have a few shares understanding in this quarter than the earlier quarter. Are we going to see those trends hold?

I think the share count is larger year-over-year. I think the issue is in terms of a loss per share and that's largely a function of the fact that our revenues are up substantially year-over-year.

What I have here is for the second quarter your average spending is 31.3 and for this quarter you have only 30.7. It's just kind of funny because the difference is very small.

That's over a larger share count, so it's weighted to the number of shares.

Oh, all right. So that's--thanks a lot.

Thank you.

Your next question is a follow-up question from the line of John Sullivan with Leerink Swann, please proceed.

Hey, guys. One more big picture question, if you wouldn't mind, would you mind contrasting your ZFP-based DNA modulating approach to treating disease to some of the competing RNA modulating approaches in the market today?

Sure, why don't I start off and then ask Philip to talk a little bit about that. I think the theme I would introduce for you John, is permanent versus transient. And Philip could probably give you some of the details on that.

Sure, and as you know, I think you're referring to the RNAI based approaches. These are approaches to regulating the amount of transcripts that a particular gene that may be involved in a disease that we wish to suppress. So the idea is that you place the RNAI molecule and try to shut down the transcript.

The problem there is that you have to hit those very large number of transcript molecules there are on per cell and as a consequence, it's quite difficult in terms of the delivery to provide enough of RNAI to knock down all of the transcripts for that particular gene and therefore completely knock out the gene. So these RNAI knockdowns tend to be suppressions or knockdowns rather than knockouts.

Our approach plays the advantage of the fact that there are in fact nucleuses target the genome. There are simply two copies of most genes in a cell and therefore from a target number perspective, we have to hit only those two targets in that cell to affect a complete knockout of the gene.

This is affecting the process at one earlier cath point in the pathway at the DNA level rather than the RNA level and therefore resulting in a complete obliteration of that particular gene product. And there's an absolute knockdown if you like, or knockout rather than a knockdown that can be achieved via transcriptional process.

That help, John?

Yes. Thanks, very much. Some of these RNAI based approaches have been thought to be limited in the disease stakes that they can cover because of their--because of this characteristic that was just described, mainly the knockdown rather than knockout. Do you think of your approach as likewise limited?

I think that the argument I'd make there is really now a delivery system issue. When we modify a gene such as CCR5.

We need only transient expression, short term expression of the nucleuses in order to continue to have a knockout phenotype from RNAI, you need constitutive or ongoing expressional presence of the RNAI. It really is a function at that point of whether just short-term delivery can create a permanent knockout and a permanent in this case protected phenotype or biology, or whether you can deliver something long-term with repeated administration.

That's as you know quite a challenge. So most of the work so far has been in terms of RNAI has been focused on relatively short-term expression or short-term expressional presence that the RNAI can provoke a positive biological outcome.

Philip, do you want to add anything?

The only thing to add is similarity in that both approaches don't require any sort of "druggability" of the final end product. Both approaches actually uses a DNA or an RNA substrate, we don't require a gene product that has a (inaudible) activity or a receptive finding activity that would be a more classical drug target.

Thanks so much.

Thanks, John.

Your next question is a follow-up question from the line of Alastair Mackay with GARP Research. Please proceed, sir.

Hi, you've talked about some really encouraging results from both VEGF with SB-509 and with the CCR5 ZFN approach. Especially with SB-509, it's certainly really nice to see one molecule potentially able to be therapeutic in so many different applications.

Is there any thought there at Sangamo that you can share with us about what a novel leading candidate for a ZFP might be for the next rounds that would graduate from preclinical to clinical?

Well, we're going to be talking more, Alastair, at the analyst briefing about some of our preclinical programs and giving a little more insight into 2007. That's the first answer.

The second answer is, we are pretty open and aggressive about both publishing and presenting our work in preclinical studies and our collaborators, so over time you should expect to see quite a few different zinc finger transcription factors as well as nucleuses to quite a few different targets and the biology or outcomes that those provoke.

We'll give more color in terms of direct development activities in December, but throughout '07, you should expect to see publications and presentations of preclinical data around other targets.

Okay. That's great. Thank you.

Thanks, Alastair.

Your next question also a follow-up from the line of Navdeep Jaikaria with Rodman and Renshaw. Please proceed.

Your technology looks like it's superior (inaudible--heavy accent) for sale?

That is not our business model.

I'm just kind of curious. I have a question follow-up on the CCR5 technology. In your case, it's basically a (inaudible-heavy accent) T-cell, right? So from what I understand, you can expect that (inaudible-heavy accent) those cells are more or less differentiated.

So what is the life span for those cells when you put them back? How often do you think you have to readministrator these? Do you have any kind of sense as to what would be the cost for this approach?

There's been a lot of work on (inaudible) T-cell adopted immunotherapy. And basically a third of the circulating cells are what's long-term memory cells. They're the cells that when you're-- when people are immunized as a child provide long-term immunity to measles or mumps when people are 70 or 80 years old.

So the long-term memory population is very well understood now in immunology. From previous work, we know we have to inject approximately three doses of one-time cells and that will result in circulating cells for up to a year.

And we can easily easily make with our current technology 100 times 10 is 1/10 of T-cells using what's called wave technology. So the pharmacology is well understood and we understand what dose we need to give.

Thank you, that's very helpful.

[OPERATOR INSTRUCTIONS]

At this time, there are no more questions in queue.

I would like to turn the call over to Mr. Edward Lanphier for closing remarks. Please proceed, sir.

Thank you.

We'd like to thank you for joining us and we look forward to speaking with you again at the Rodman and Renshaw Health Care Conference next week in New York, at the JMP Securities Health Care Conference in Boston on November 16th and at the Piper Jaffrey Health Care Conference in New York at the end of November. We will be available later today if there are any follow-up questions.

Thank you for attending today's conference. This concludes the presentation, you may now disconnect. Good day.