Sangamo Therapeutics Inc (SGMO) 2007 Q3 法說會逐字稿

Good afternoon, and welcome to the Sangamo BioSciences quarterly teleconference.

As a reminder, today's call is being recorded.

I will now pass you over to the coordinator of this event, Dr. Elizabeth Wolffe, Director of Corporate Communications.

Dr. Wolffe, please go ahead.

Thank you very much, Sarah.

Good afternoon, and thank you for joining Sangamo's management team on our conference call to discuss the Company's first quarter 2007 financial results.

Also present during this call are several members of Sangamo's senior management, including Edward Lanphier, President and Chief Executive Officer; Greg Zante, Vice President, Finance and Administration; and Dr. Dale Ando, Vice President of Therapeutic Development and Chief Medical Officer.

Following this introduction, Edward will review third quarter activities, highlighting Sangamo's recent events; Greg will briefly review third quarter financial results; and, finally, Edward and Dale will provide an update on our ZFP therapeutic clinical programs and upcoming events for the rest of the year. 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 the 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 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 thank you all for joining us for our 2007 third quarter conference call.

In keeping with the first half of this year, the third quarter has been a very busy and productive period for Sangamo, and we are looking forward to continuing on this same path for the rest of the year. After my brief roundup of the quarter's events, I've asked Greg Zante to summarize our financial results and Dale Ando to give you a detailed update on our ongoing clinical programs as well as two new Phase II clinical trials that we will introduce for the first time today.

As I think all of you know, there's a lot going on these days at Sangamo.

In early July, Sangamo and Sigma-Aldrich Corporation jointly announced the establishment of a major alliance to develop and commercialize high-value laboratory research reagents based upon our zinc finger DNA-binding protein technology. As part of the agreement, Sangamo received upfront payments of $13.5 million, and we are eligible to receive another $24 million in research, development and commercial milestones. Additionally, as ZFP-based products are sold into the research reagents market, we will receive royalties on product sales and will share substantially in any sublicense revenues. Like our Dow AgroSciences relationship, this is an important strategic partnership that leverages our substantial intellectual property and high-throughput ZFP generation capabilities with a recognized leader in their market.

Also in July, on the heels of the Sigma announcement, we completed a $30 million financing. This transaction, along with the upfront payments made by Sigma, has significantly strengthened our balance sheet. We have ended the third quarter with over $84 million and are now on track to end 2007 with approximately $80 million in cash and cash equivalents. I will say more about our financial outlook later on this call.

Speaking of our collaboration with Dow AgroSciences in plant agriculture, Sangamo was prominently highlighted during a teleconference that Dow Chemical Company hosted on September 14. During the call, the CEOs of both Dow Chemical and Dow AgroSciences described their interest in and enthusiasm for our very successful partnership, the power and breadth of our ZFP technology and the potential role for the ZFP technology platform in several of Dow's business units. I encourage all of you to visit the Dow Chemical Company website to listen to a replay of the call.

On the research and clinical development side, at the 47th Annual Interscience Conference on Antimicrobial Agents and Chemotherapy, or ICAAC, held in Chicago last month, our scientists presented data demonstrating that human CD4 T-cells can be permanently resistant to HIV infection by treatment with zinc finger nucleases and preferentially survive and expand in an animal after HIV infection. In addition, they reported on the successful zing finger nuclease modification of clinical-scale quantities of human CD4 T-cells. This demonstrates that these modified cells can be produced in the quantities required for the translation of this program into the clinic. Dale will update you on the progress of this program in just a few minutes.

So as we approach the final months of 2007, we have made major strides in achieving our long list of goals for the year, and, as you will hear in a moment, we have a number of new initiatives, including two new Phase II clinical trials, that we are looking forward to introducing to you today. However, before we elaborate further on each of these developments, I would like to ask Greg to summarize our third quarter and year-to-date financial results.

Greg?

Thank you, Edward.

For the third quarter of 2007, revenues were $2.3 million, compared with $1.8 million for the same period of 2006. Our research and development expenses were $5.9 million for the three months ended September 30, 2007, as compared to $3.9 million for the third quarter of 2006. Research and development expenses in the third quarter of 2007 were higher than in the same period of 2006 due primarily to increased expenses related to our ongoing and planned clinical trials. General and administrative expenses were $1.7 million for the third quarter of 2007, compared with $1.6 million for the same period last year.

Our consolidated net loss was $4.3 million, or $0.11 per share. For the comparable quarter of 2006, our consolidated net loss was $2.8 million, or $0.08 per share.

From a cash perspective, we ended the third quarter of 2007 with $84.2 million. This includes the $28 million in net proceeds from our recently completed financing and the $13.5 million we received from Sigma-Aldrich, both of which were third quarter events. Regarding our recent agreement with Sigma-Aldrich, note that there were three components to the $13.5 million we received -- an equity investment by Sigma in Sangamo common stock valued at $8.55 million, a $3.95 million license fee and $1 million of research funding. Sangamo plans to recognize the $1 million of research funding over a 12-month period and the $3.95 million license fee over the 36-month research period of the agreement.

Finally, with the Sigma-Aldrich agreement, the financing and our existing cash, we now plan to end the year with approximately $80 million in cash and cash equivalents.

On that positive note, I would like to turn the call back over to Edward.

Thanks, Greg.

As you heard earlier, largely due to the Sigma-Aldrich agreement, our recent financing and our careful cash management, we are now in a position to end 2007 with a significantly strengthened balance sheet. The additional capital obviously gives us a longer runway, and perhaps even more importantly provides us with the additional strength and flexibility as we continue discussions with major pharmaceutical companies regarding the development and commercialization of our ZFP therapeutic programs.

As you all know, our technology functions at the DNA level and employs the most abundant class of DNA binding proteins found in nature. This enables us to mimic the way genes are normally regulated in vivo and, we believe, has far-reaching consequences for the development of novel human therapeutics. Our lead compound, SB-509, up-regulates the expression of the VEGF-A gene, producing all the natural isoforms of the protein in their normal ratios. We have shown that this is critical to obtain the full range of the protein's complex biological effects on blood vessel growth and nerve protection and regeneration.

As you also know, we have published and presented quite extensively on the preclinical activity of SB-509 in animal models of diabetic neuropathy, spinal cord injury and peripheral artery disease, and more recently, at ADA, in our Phase Ib clinical studies, in diabetic neuropathy subjects. This ZFP transcription factor is clearly active in both angiogenesis and neuroregeneration. However, as you will hear later on this call, and as we will be presenting in more detail at the upcoming Society for Neuroscience meeting in early November, we and our preclinical and clinical collaborators have also observed that SB-509 may play a role in mobilizing stem cells into the peripheral blood. While the preclinical and clinical data are still emerging, we believe this observation may have potential significance regarding the mechanism of our drug.

Dale will give you more details about our plans to further explore these data and gain an understanding as to the possible role of stem cell mobilization in the action of SB-509, particularly as it pertains to our ZFP therapeutic programs in diabetic neuropathy, peripheral artery disease, spinal cord injury, stroke and a new clinical program we will introduce today in amyotrophic lateral sclerosis, more commonly known as ALS or Lou Gehrig's Disease. Dale will also give you an update on the status of all of our other clinical and late-stage preclinical programs.

So with that, let me turn the call over to Dale to give you more details.

Dale?

Thanks, Edward.

As Edward said, it is my pleasure to update you on the status of all our ongoing clinical and pre-R&D programs. In addition, I am very pleased to have the opportunity to introduce two new clinical programs, two new SB-509 Phase II studies.

The first new clinical program is in the very important area of stem cell mobilization. The study is based upon our observations that we have made in our Phase I clinical studies as well as by our collaborators in preclinical models. We plan to initiate the stem cell mobilization Phase II trial later this year. In addition, I will outline our plans to initiate another SB-509 Phase II clinical trial, a new study in the devastating neurological disease, ALS.

But first I would like to update you on the status of our first Phase II trial of SB-509 in subjects with mild to moderate diabetic neuropathy that we initiated late last year. Our growing but very experienced clinical team here at Sangamo has now opened up 18 clinical sites, and, as previously guided, we expect to complete the accrual of this trial by the end of this year. This trial is a repeat dosing double-blind study, and we are on track to have data from this Phase II study in the second half of 2008.

We also expect to have data in the second half of next year from our Phase II trial in moderate to severe diabetic neuropathy subjects with a blocked nerve. This is a single-blind study with a slightly different repeat dosing regimen.

We expect that both studies will give us valuable information as to the reproducibility and the durability of the encouraging effects that we have already observed in the Phase Ib study.

Speaking of the Phase Ib study, the next presentation of data from this trial will be taking place at the Society for Neuroscience annual meeting being held in San Diego in two weeks. While I cannot give you any details ahead of the embargoed presentation, I can tell you that we will present data from additional subjects and that the trends that we are seeing are consistent with data we presented in June at the scientific sessions of the American Diabetes Association.

In addition to presenting data on additional subjects, we will also highlight the interesting observations made in subjects on this trial of an increase in stem cells that appeared to be mobilized into the bloodstream in subjects that have been treated with SB-509. Preclinical studies using SB-509 have also shown increases in stem cells in bone marrow and in the peripheral blood.

As most of you know, stem cells have the remarkable potential to develop into many different cell types in the body and function naturally as the body's source of material for the repair and regeneration of damaged tissues. There are two characteristics that distinguish stem cells from other types of cells. One, stem cells can self-renew through cell division, giving rise to more stem cells, and, two, given certain conditions, they can be induced to become cells with a special function in the body, such as nerves and blood vessels.

It is believed that in response to long-range signals such as inflammation, stem cells are able to migrate through the blood circulation into areas of injury or degeneration and participate in the repair response. The stem cells that have been observed posttreatment with SB-509 are highly enriched in cell types thought to mediate tissue repair, including endothelial, mesenchymal, neural and hematopoietic progenitor cells.

Why is this so interesting? There are several reasons. As you know, there is a great deal of interest in the potential of stem cells in regenerative therapies. There are several ongoing clinical trials in indications such as MI, chronic heart failure and peripheral artery disease in which stem cells, isolated and purified from a subject's bone marrow, are injected into a subject's leg or heart to aid in the repair of vascular damage in such tissues. The therapeutic hypothesis is that stem cells from the bone marrow can repair damaged tissue and then (inaudible) to damaged tissue via the blood from the bone marrow. However, in chronic vascular disease and diabetic neuropathy, there are not enough cells naturally available in the bloodstream to carry out the repair, thus the need for additional isolated cells injected directly into the tissues to augment repair.

But what if treatment with SB-509 can enhance or stimulate this natural process of mobilization of bone marrow stem cells into the bloodstream, enabling them to repair damaged tissue such as nerves and blood vessels in the limb? This observation may contribute to the explanation of the positive effects that we have been observing in both preclinical and clinical studies with this drug, and their apparently relatively long duration of effect.

For these reasons we intend to start a Phase II placebo controlled trial in subjects with peripheral neuropathy to monitor their levels of circulating stem cells pre- and post-dosing with SB-509 and correlate this with improvements in neurological health. This will provide insight into other potential applications of the drug beyond neuropathy and peripheral vascular disease. Ultimately this may also serve as a pharmacodynamic surrogate biomarker, enabling a physician to easily monitor progress of the therapy after SB-509 administration.

We intend to initiate this new Phase II trial in the next few months and will provide you with more details about our trial design at our analyst briefing in December.

Finally, I look forward to presenting the stem cell mobilization data from the Phase Ib trial at the Society for Neuroscience meeting in a few weeks and elaborating on this very intriguing observation. Based on the data that we have seen in our diabetic neuropathy clinical trials, we are also very interested in exploring other serious neurological indications for this drug. As you know, we have an active preclinical program in spinal cord injury with Dr. Michael Fehlings in Toronto and have also initiated animal studies in models of traumatic brain injury.

Additionally, we have been approached by a number of clinical investigators who are expert in the field of amyotrophic lateral sclerosis, or commonly known as ALS or Lou Gehrig's Disease, to initiate a clinical program in ALS based upon the positive effects of SB-509 on diabetic neuropathy patients. ALS is a rapidly progressive and fatal neurologic disease that attacks the nerve cells that are responsible for controlling muscles. As the disease progresses, nerve cells degenerate and die, and patients lose their strength and their ability to move their arms, legs and body. Ultimately they lose the ability to breathe without the support of a ventilator. The ALS Society estimates that at any given time as many as 30,000 Americans have this ultimately fatal disease.

There is no cure or approved treatment to halt or reverse ALS, and the single FDA-approved drug, Rilutek, introduced over 10 years ago, only modestly slows the progression of the disease, improving survival by only three to six months. There are, however, several preclinical animal studies that suggest that VEGF, with its potent angiogenic and neurotrophic effects, may have therapeutic benefit for the treatment of ALS. Not surprisingly, all of these studies were carried out with single isoforms of VEGF.

Clinical investigators in this field are now very interested in testing our zinc finger transcription factor, which stimulates the production of all the natural isoforms of the VEGF, as well as their enthusiasm for the diabetic neuropathy clinical data. We are in discussion with several of these groups and are working on the details of the trial design. We plan to submit a protocol to the FDA in the near future, with the intention of starting a Phase II single-blind study in subjects with ALS in the first half of 2008. Again, we will provide more information as to the trial design and timing at our analyst briefing in early December.

The other clinical programs that we are pursuing with our VEGF-activating ZFP Transcription Factor are in peripheral artery disease. The first Phase I trial, a double-blind study in intermittent claudication, is ongoing at NIH. Two new sites that we have opened in Alabama and Wisconsin to recruit subjects into this trial are helping with the historically slow rate of accruals. The second clinical study, a Phase I trial of the more severe form of PAD, critical limb ischemia, is complete, and we are still in the follow-up phase. In recent meetings with Dr. Brian Annex from Duke, the principal investigator of this trial, we have discussed the possibility of submitting the data for presentation at a suitable scientific or clinical meeting in 2008.

Our pre-IND zinc finger nuclease therapeutic programs in HIV and glioblastoma continue to progress. The clinical programs of both -- the clinical protocols of both programs received unanimous approval by the Recombinant DNA Advisory Committee, or RAC, in June. We recently presented data at ICAAC from the CCR5 (inaudible) therapeutic program demonstrating that human CD4 T-cells can be made permanently resistant to HIV infection by treatment with our zinc finger DNA-binding protein nucleases and preferentially survive and expand in an animal after HIV infrastructure. In addition, we demonstrated (inaudible) modified human CD4 T-cells can be produced in critical scale quantities. We are in the process of generating final product for use in the clinical trial and are working closely with the University of Pennsylvania to complete the necessary approvals prior to initiating the trial.

In addition, at the pre-IND meeting, the FDA requested a novel long-term animal study with CCR-modified human T-cells. These experiments are in development, and we anticipate that will take approximately six months to complete and another few months to finalize the data for inclusion in the IND. As such we now expect to file the IND in the second half of next year.

In parallel, we have moved our zinc finger nuclease glioblastoma program forward very quickly, from plans on paper to completed RAC and pre-IND meetings in less than two years. The final product has now been generated and is in the final stages of manufacturing and characterization. This program is moving along well, and the IND will be filed once the final release testing is complete, which we anticipate will be in the first half of next year. Dr. Michael Jensen, our clinical collaborator, will also present his most recent data from this program at the American Society for Hematology, or ASH, meeting in the second week of December.

So, in conclusion, we are making very important progress in our ongoing clinical development activities, while simultaneously moving forward in a number of new directions. We continue to execute on our primary critical objective, completing the accrual of our two Phase II diabetic neuropathy trials, as we simultaneously add two new Phase II trials to our SB-509 neuroregeneration program.

The Annual Society for Neuroscience meeting will offer an opportunity to showcase the impressive clinical and preclinical data generated with our ZFP activator of VEGF in diabetic neuropathy, spinal cord injury and the very recent observations in stem cell mobilization. In addition, we will present preclinical data from a new program in neuropathic pain. These data have been generated in an animal model of cancer bone pain with the ZFP (inaudible) receptors identified to have a major role in neuropathic pain transmission. This is a program that we have not given a great deal of air time, but it is an important area of drug development.

I look forward to seeing many of you in San Diego and to updating you on our progress on future calls.

Edward?

Thanks, Dale.

As you have heard, we have a great deal going on, and our research and development groups are firing on all cylinders. We are developing our lead VEGF Zinc Finger Transcription Factor in a number of new and exciting directions and applications. We believe that exploring this observation of natural mobilization of stem cells in a new Phase II trial in subjects with diabetic neuropathy may provide us with valuable mechanistic and pharmacodynamic data that could aid in the ultimate development of this product for a number of neurological and vascular indications.

We are also very excited to be evaluating SB-509 in models of spinal cord injury, traumatic brain injury, and, as you heard today, in a major new initiative, a Phase II clinical trial in ALS. We will provide more information on the stem cell mobilization data at the Society for Neuroscience meeting in two weeks and will update you on these two new Phase II trials at our analyst briefing in December.

But perhaps most importantly, our most significant and challenging clinical development objective for 2007, the completion of accrual of our lead Phase II diabetic neuropathy trial, remains on track. Because of that accomplishment, we anticipate that by this time next year we will be in a position to present data from both of our Phase II clinical trials in diabetic neuropathy. At the same time, we will have two new Phase II clinical trials well underway, one in stem cell mobilization, the other in ALS. We will also have our first two zinc finger nuclease Phase I trials in glioblastoma and HIV up and running.

While we did not have time to discuss our very active and successful collaborations with Dow AgroSciences and Sigma-Aldrich on this call, we are delighted to respond to any questions you may have today. We also plan to update you on the substantial progress in these two areas in December.

Financially, we're in very good shape. We ended the third quarter with over $84 million, and even with these new clinical initiatives we now plan to end 2007 with approximately $80 million in cash and cash equivalents. I continue to be very pleased with our ability to create significant clinical and technology value while carefully controlling our expenses. I think we are as good at this as anyone in the industry.

Finally, while we will be providing more detailed guidance on our year-end call, even with all of the activities we have discussed today, we do not expect our burn rate in 2008 to be much different than that of 2007.

As always, our mission is to employ our zinc finger technology platform and intellectual property to build substantial and sustainable shareholder value through advancing clinical programs and thoughtful strategic partnerships while continuing to carefully manage our expenses. I believe that our progress thus far in 2007 is the best evidence to date of our ability to achieve this objective.

Finally, before we open up the call to your questions, I want to remind you that we will be providing additional updates on our progress at the JMP Securities Conference and the Piper Jaffray Conference, which are both in November, as well as the BMO Healthcare Conference on -- in early December. In addition, we will be hosting our annual shareholder and analyst briefing in New York in December. We will make webcasts of all these presentations available on the investor section of our website.

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

Thank you.

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We'll take our first question today from Joe Pantginis, Canaccord Adams.

Hi, guys. Good afternoon. Thanks for the update. A couple quick questions. Nice to see the progress with the new Phase IIs. With regard to the HIV program, could you just go into a little more color regarding the rate-limiting step now -- is that the long-term animal study -- and what that entails?

Yes, Joe, thanks very much for the question. Yes, that is the critical path. Let me ask Dale if there's anything more you want to add to that.

Yes, basically we'll be looking at the fate of human T-cells that are modified with our zinc finger nucleases in immunosuppressed animals. And this is a novel type of model, especially if we want to look at a significant duration of the lifespan of these cells in animals. So we are in the process of developing and understanding the methods for this, and then we'll be doing a pivotal study trying to look at the survival and safety of these T-cells in animals. And we anticipate this will take approximately six months.

And real fast on the ALS program, can you just sort of get into how you look at the delivery of the product in these patients and tissue targeting, etc.?

Yes, so basically the plasmid SB-509 as we're currently using it is targeting specific muscles in the lower leg, and we know from animal models that we will get expression of VEGF within those muscles. So in ALS, there are characteristic muscle groups that are very, very important for holding your arms up or keeping your head up or breathing, and we will be using the plasmid SB-509 injection in the similar manner that we're using it for diabetic neuropathy, to inject the VEGF zinc finger and activate VEGF within these muscles.

So such as direct injections into the diaphragm?

Yes, that's still under consideration, but there are a lot of other muscles that we can look at in terms of neck muscles, shoulder, abductors, etc., that we can look at and evaluate.

And, Joe, that's the sort of detail that we plan to provide in the first week of December during the analyst briefing.

Okay, thanks a lot. I'll get back in the queue.

Thanks, Joe.

And we'll take our next question from Pamela Bassett, Cantor Fitzgerald.

Hi. Thanks for taking my call. Congratulations.

Thanks, Pamela.

Very exciting work. Two quick questions. One, maybe I missed this, when is the Phase II for peripheral neuropathy planned to begin?

The Phase II trial --

The stem cell mobilization trial in --

Yes --

-- did I misunderstand?

-- is in the next few months. So we're moving very quickly to submit the protocol to the FDA, and that trial, that stem cell mobilization trial, should be up and going in the next few months. And we'll get more detail on timing, again, in December. But it's a relatively near-term event.

So that could be like year end or beginning of the year?

Yes, I'd say --

Okay.

-- (inaudible) first quarter.

First quarter. And can you talk a little bit, and as much as you can disclose, about how a partner might be looking at SB-509, because it really is a product platform, and are you going to be able to slice and dice the indications, and how would you think about doing that?

Well, Pamela, it's a very good question. It's a question that, again, without getting too far ahead of ourselves, I can tell you that we are actively dealing with. And do I think we're going to be successfully able to slice and dice, as you put it, these indications? Yes, I think we will. The opportunities here with SB-509 given both its angiogenic and potential for regenerative effects cover several indications, and multiple indications, and I think Dale's done a nice job of reviewing for you both what we have actively moving in the clinic, moving into the clinic and in preclinical studies. But from a partnering perspective, I do believe we will be able to do both geographically specific as well as indication-specific types of collaborations in this area. So stay tuned.

Okay. Thank you so much.

And we'll take our next question from Liana Moussatos, from Pacific Growth Equities.

Congratulations on your great progress in this quarter.

Thanks, Liana.

The new Phase IIs, do you think you'll have data by the end of 2008, or should we be looking to 2009?

Yes, I mean, let us give you a little more guidance on that in December. I'd -- you know me, I'd love to blurt it out right now. But I think Dale and Philip would be a little happier if I waited and did what we agreed before this call, which is to give a little more color and details on that in December. But we're moving forward on that. And just to say a little bit more about it, and Joe's question earlier anticipated this a little bit, these both involve the plasmid SB-509 product, which is already manufactured. The toxicology studies are really already completed. So we believe we're going to be able to move quickly, efficiently, cost-effectively into these studies. In terms of more color on the exact trial design, endpoints and timing of data, I'd like to put that off to December.

Okay. And do you have a date in December for the analyst briefing?

Yes -- December 5.

Okay. Thank you very much.

Thanks, Liana.

We'll take our next question from Brian Rye, Janney Montgomery Scott.

Well, good afternoon, and thanks for taking my question, Edward. Most of my questions have been answered that you can answer on the clinical programs, but as you think about your cash situation, going to end the year with about $80 million or so, it looks like, and not expecting a burn rate to exceed really any more than $20 million or so next year, recognizing that you want to maintain that strong negotiating leverage at the table with potential partners, are there any other sort of gaps that you need to fill in either from an intellectual property perspective as you start exploring new indications or things that you might need to help make sure that as you proceed clinically and start generating more data that you're well protected on that front?

Well, Brian, it's a great question. We started with cash and covered the waterfront. But on the cash side, first, we're feeling really pleased with where we are. And, as I said, I think we've done a good job of managing this while generating quite a bit of value. And so the $84.2 million cash now, round numbers $80 million at the end of the calendar year, puts us in a strong position. But financial guidance relative to '08 is very, very high level -- round numbers, similar burn rate, but -- for '08, but we will give more complete guidance on that in our fourth quarter call.

In terms of incremental needs for the Company going forward, you know, quite frankly, and I'm not trying to be specific here on any individual thing, but I think the real driver for us are data -- data such as you've seen at ADA, data such as you'll see at the Society for Neuroscience and data such as we intend to generate and make available in the second half of next year. I think that's really the critical driver for us, and that's the -- both the opportunity and challenge.

Okay, sounds good. Thank you, Edward.

Thanks, Brian.

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Next we'll hear from Alastair Mackay, GARP Research.

Yes, good afternoon. Edward, I was wondering, if it turns out that in the second half of 2008 that the two Phase II with SB-509 for diabetic neuropathy give encouraging results, could you speculate as to what might follow? In other words, might there be a progression to Phase IIb or to Phase III, and then is this a clinical progression that Sangamo would do by itself or as a partnership?

Yes, it's -- let me just take the latter first. I think our plans are, Alastair, to, with positive data -- and I appreciate the assumption in the question -- to look for strategic partnerships that make sense around this program. It's a significant Phase III opportunity, it's a significant commercial opportunity, and one that we'd like to bring on a partner that has strong focus in the space as well as marketing and distribution capabilities to both endocrinologists and neurologists. So we would likely move forward into a Phase III trial with a partner, and obviously that clinical trial design in DN would be a function of that collaboration.

Great. And then a question that's perhaps related, which is that I think a few years ago there aren't very many people whose crystal balls were good enough to look at VEGF and say Sangamo, with a ZFN approach to VEGF, is going to come this far this fast. And that brings up the question, have you given thought to what the next major perhaps multipurpose target of a ZFP or a ZFN therapeutic might be looking beyond VEGF, and beyond the programs you've talked about today?

Yes, you know, I don't know that I can respond to the multivariant, multi-indication programs, but as we look at our preclinical pipeline, we're very, very excited about, obviously, moving HIV and the glioblastoma programs into the clinic. We think the approach that we're taking with glioblastoma in terms of targeted knockouts of modified cells that can be targeted to specific antigens is a broad opportunity. As you know, the neuropathic pain area is of great interest and focus in the area, in pharmaceutical companies, largely because many of these targets are non-druggable, and the non-druggable space is an area of great opportunity for us.

GDNF is another area of quite a bit of enthusiasm for us, and I'll look at Philip while I say this, but I think you should expect to see some data in 2008 out of our collaboration in that space. So I think we've got a pretty rich pipeline, and as our programs mature we'll be talking more about it. But it really is, and continues to be, a very powerful, very broad approach for creating what we are increasingly confident are novel, mechanistically novel drug programs.

Very good. And if I could ask one very quick one, will you end the year with about 40.5 to 41 million shares, fully diluted?

That's our current plan, Alastair.

Okay. Thanks very much.

We'll take a follow-up question from Pamela Bassett, Cantor Fitzgerald.

Thanks very much. Perhaps you covered this at the beginning of the call. I missed the first few minutes. Will you review for us what may be happening over the fourth quarter into the first half of '08 with Sigma-Aldrich, and what kinds of products we can look for coming out of that relationship?

Let me start, then maybe ask Philip Gregory to expand. I'm not sure we're going to, at this point, list off products, but maybe we can --

List categories or types.

-- yes, some areas of initial focus and interest. Philip, do you want to comment on that?

Sure. So obviously the Sigma-Aldrich relationship involves all aspects of zinc finger protein transcription factors and nucleases as they apply to research reagent opportunities. Obviously we have -- we're in the early stage of the relationship. We're building both proof of concept, internal and external research programs to demonstrate (inaudible) activity in different areas. We continue to be interested very heavily in cell engineering, for high-throughput screening, for [drug discovery] and in the areas of protein production, and I think that's probably the most -- the area likely to see the most activity initially.

So we should be expecting launches when?

Yes, we can't and shouldn't speak for Sigma, who will drive that, but the things that Philip outlined are certainly the areas of strong mutual agreement and strong mutual focus in terms of product development. You know me, Pamela. Yesterday was better than tomorrow in terms of moving this stuff out the door. So -- and the Sigma people feel exactly the same way. So we're all working hard to get that done.

Okay, so that's moving -- moving forward.

It is. It's --

Very good.

-- you know, I -- the analogy I drew early in the call was it's akin to our very successful --

(Inaudible).

-- it is. It's a very -- there's a lot of synergy --

I apologize if I'm repeating things here.

That's fine. There's a lot of synergy and a lot of, I think, mutual enthusiasm for the opportunities.

All right. Great. Thanks very much.

Thanks, Pamela.

And as there are no further questions at this time, I would like to turn the conference back over to the speakers for any additional or closing comments.

Thank you.

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

That does conclude today's conference. I think you all for joining us.