Sangamo Therapeutics Inc (SGMO) 2007 Q4 法說會逐字稿

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

This call is being recorded.

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

Please go ahead, ma'am.

Thank you very much.

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

Also present during this call are several members of Sangamo's senior management, including Edward Lanphier, President and Chief Executive Officer, and Ward Wolff, Executive Vice President and Chief Financial Officer.

Following this introduction, Edward will highlight the significant events from the past year as well as recent activities. Ward will then briefly review fourth quarter and year-end financial results. And, finally, Edward will update you on our goals for 2008. Following that we will open up the call for questions.

As we begin I'd like to remind everyone that the projections and forward-looking statements that we discuss during this conference call are based upon the information that we currently have available. This information will likely change over time. By discussing our current perception of the market and the future performance of Sangamo with you today, we are not undertaking an obligation to provide updates in the future. Actual results may differ substantially from what we discuss today, and no one should assume at a later date that our comments from today are still valid.

We alert you to be aware of risks that are detailed in documents that the Company files with the Securities and Exchange Commission, specifically our quarterly reports on Form 10-Q and our annual report on Form 10-K. These documents also include important factors that could include -- 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 fourth quarter and year end conference call.

On this call I will briefly highlight some of our most significant 2007 accomplishments and then ask Ward Wolff, our new Executive Vice President and Chief Financial Officer, to update you on our fourth quarter and year-end financial results and to outline our financial guidance for 2008. Finally, I will wrap up with a review of our 2008 objectives.

As you all know, 2007 was a year of significant milestones for Sangamo, as we advanced our clinical programs into Phase 2 trials, strengthened our therapeutic pipeline and continued to build value through strategic partnerships around our technology platform. Specifically, we presented our first top line clinical data from our Phase 1b clinical trial to evaluate our lead ZFP therapeutic, SB-509, for clinical effect in subjects with diabetic neuropathy, or DN.

The data demonstrated that SB-509, a ZFP transcription factor designed to upregulate the expression of the neurotropic and angiogenic growth factor, VEGF-A, showed disease-altering effects compared to placebo at six months post a single treatment. The data included statistically significant improvement in quantitative sensory testing, or QST, and improvements in both sensory and motor nerve conduction velocities, or NCVs, that are in a range considered to be clinically relevant to patients with this progressively degenerative nerve damage. The data, which were presented at the American Diabetes Association Scientific Sessions in June and updated at the Society for Neuroscience Meeting in November, form the basis of a larger Phase 2 repeat dosing trial in this mild-to-moderate DN subject population.

Regarding that trial, in December we completed enrollment of 110 subjects in a Phase 2 trial, SB-509-601. The placebo-controlled repeat dosing study is double-blind, meaning that the physician, subject and company do not know which subjects receive treatment and which receive placebo until the trial is complete and all the data collected and verified. We are now in the process of completing treatment and follow-up of these subjects and expect to have the data by the second half of 2008, but more about that later.

We have also initiated two additional Phase 2 trials of SB-509 designed to follow up on interesting observations made in earlier trials and preclinical studies. The second Phase 2 trial, SB-509-701, was initiated in April and is designed to assess our ZFP therapeutic's effect on clinical symptoms of a group of diabetic subjects with moderate-to-severe neuropathy, subjects with so-called blocked nerve, with unmeasurable NCVs. This study is designed to expand on observations from the Phase 1 study in which three out of three subjects with unmeasurable NCVs gained conduction velocity after a single treatment of SB-509.

The third Phase 2 trial, which started just last month and is designated SB-509-703, is a 20-subject study designed to follow up on several observations that suggest that SB-509 may mobilize stem cells into the bloodstream. Stem cells are thought to be an important part of the body's mechanism for repair and regeneration. We expect to complete accrual and treatment of both of these Phase 2 studies by the end of this year.

In July we announced a major new alliance with Sigma-Aldrich Corporation to develop and commercialize high-value laboratory research reagents based upon our ZFP and ZFN technology. As part of the agreement, we 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 dominant intellectual property and our high-throughput ZFP generation capabilities with a recognized leader in their market.

In 2007 our Dow AgroSciences collaboration moved from strength to strength with the achievement of research milestones in commercially relevant gene targets and crop plants and increasing evidence of a growing confidence in the technology on the part of the scientists and management at DAS. This was demonstrated by Dow's decision to feature our ZFP technology in public discussions about their plans in the plant biotechnology arena.

We also continued to monetize our technology platform by providing access to our proprietary ZFP technology and designing and engineering ZFP nucleases to use to generate cell lines with novel characteristics for protein pharmaceutical production purposes. We entered into an important research license agreement with Genentech in 2007, and we expect to announce additional collaborations in this area in 2008.

Another 2007 event with a significant financial impact was the completion of a $30 million financing in July. This transaction, along with the upfront payments from Sigma, significantly strengthened our balance sheet, enabling us to end 2007 with $81.4 million.

Finally, on December 5, we hosted our annual Investor and Analyst Briefing in New York. I would like to encourage any of you that haven't yet listened to the replay from that meeting to do so. It provides a great deal of detail about our therapeutic programs as well as an excellent explanation of the utility of our technology in plant genetics. Additionally, Jerome Peribere,, the CEO of Dow AgroSciences, spoke to the general applicability of and Dow's enthusiasm for the ZFP technology platform and their plans to use as well as sublicense our technology. A link to the briefing is still available on the Investor page of our website in the Events and Presentations section.

Again, as I think most of you know, 2007 was a very busy and productive year for Sangamo. Before we elaborate further on our progress and discuss our plans for 2008, I would like to introduce the newest member of our management team, Ward Wolff, who joined us in December in the newly created position of Executive Vice President and Chief Financial Officer. Ward joined Sangamo from Nuvelo, where he served as Senior Vice President, Finance and Chief Financial Officer. Prior to joining Nuvelo, Ward was CFO and Senior Vice President, Finance at Abgenix until 2006, when Abgenix merged with Amgen.

As many of you know, prior to joining our management team, Ward served for approximately 18 months on our Board of Directors and so already had a very good working knowledge of the Company. We are very pleased that he has made the transition to the management team. He is one of the most experienced and highly regarded financial executives in the biotechnology industry and has extensive experience developing and implementing successful financial, business development and capital market strategies. This experience will be invaluable to us as we move into the next phase of clinical and commercial development.

So let me hand the call over to Ward for an update on our financial results for the fourth quarter and 2007, as well as our financial guidance for 2008.

Thank you, Edward, for the introductory remarks, and good afternoon, everyone.

Let me first say that I have really enjoyed my first couple of months transitioning from the Board of Directors to the management role here at Sangamo. We have a terrific team and an exciting year in front of us. I am really looking forward to working with Greg and the finance team and all of our employees and business partners in executing on our collective company-wide objectives for 2008.

As you know, after the close of the market today we released our financial results for the fourth quarter and year ended December 31, 2007, and I am pleased to review the highlights of those results.

Revenues in the fourth quarter of 2007 were approximately $2.8 million, compared to $2.2 million for the same period in 2006. The increase in 2007 is primarily due to amortizing the upfront payments into revenue with respect to our laboratory research reagents license agreement with Sigma-Aldrich. Operating expenses for the fourth quarter of 2007 were $10.4 million, compared to $12 million for the same period in 2006.

Research and development expenses were $7.9 million in the 2007 quarter and $10.1 million in the prior year quarter. The decrease is primarily due to the one-time costs of Sangamo's acquisition of Edwards Lifesciences' ZFP therapeutic angiogenesis program in the fourth quarter of 2006, a transaction consisting of $5.8 million of restricted common stock. The increase in research and development expenses for the fourth quarter of 2007 of $3.6 million, after excluding the one-time 2006 charge, was primarily due to the expanded clinical development program in diabetic neuropathy and pre-IND programs in HIV/AIDS and glioblastoma, as well as increased R&D personnel costs and lab supply expenses.

General and administrative expenses were $2.5 million in the fourth quarter of 2007, compared to $1.9 million in the 2006 period. For the fourth quarter of 2007 we reported a consolidated net loss of $6.7 million, or $0.17 per share, compared to a net loss of $8.9 million, or $0.26 per share, for the same period in 2006.

For the full year 2007 revenues were $9.1 million, compared to $7.9 million in 2006. Total operating expenses were $33.9 million in 2007 and $28.6 million in 2006, again with the 2006 amount including the one-time charge of $5.8 million. The net loss was $21.5 million, or $0.58 per share, compared to $17.9 million, or $0.55 per share.

With respect to the balance sheet we ended the year with $81.4 million in cash, cash equivalents and short-term investments. Our net cash used in operating activities was $4.9 million for the fourth quarter of 2007 and $15.9 million for the full year 2007.

With respect to our financial guidance for 2008, we expect to have a cash and investment balance of at least $55 million at the end of 2008.

In summary, we look forward to executing on our 2008 goals with a strong balance sheet coming into the year. We will be focused on advancing our clinical and preclinical pipelines while maintaining our historical financial discipline.

Thank you, and I will now turn the call back over to Edward.

Thanks, Ward, and welcome aboard.

As you can see from our fourth quarter and year-end financial results, we began 2008 with a very solid cash position that will allow us to aggressively pursue our clinical development programs. As Ward said, looking forward, we expect to end 2008 with at least $55 million in cash and cash equivalents. This cash projection does not include any new agreements or partnerships that we may develop this year, but does include an assumption that Dow AgroSciences will exercise their option for a commercial license to our ZFP technology in the second half of 2008.

While 2007 was an exciting and busy year for Sangamo from both a clinical and business development perspective, we expect 2008 to be even more so. To be specific, in terms of therapeutic programs, we will continue to advance our lead therapeutic, SB-509, through several Phase 2 clinical trials while bringing new programs into the clinic and advancing our preclinical pipeline.

More specifically, in the first half of 2008 we expect to present final data from our placebo-controlled Phase 1b study of a single treatment of SB-509 in subjects with mild-to-moderate diabetic neuropathy. During this trial, we collected a significant amount of clinical data. The data comprises both qualitative data points and quantitative measurements, including quantitative sensory testing and electrophysiological data such as nerve conduction velocity. The data presented thus far suggests that a single treatment of SB-509 results in a statistically significant and clinically relevant improvement in quantitative measures of neurological health at 180 days after a single treatment. We look forward to completing the analysis of the data from all of the subjects in this study and sharing it with you at a relevant scientific or medical meeting in the first half of this year.

In the second half of 2008, we expect to complete the follow-up and present data from our first Phase 2 trial, SB-509-601, a double-blind placebo-controlled study designed to evaluate safety and clinical effects of repeat dosing of SB-509 in subjects with mild-to-moderate DN. We also expect to complete the enrollment and treatment and follow-up of subjects in our single-blind placebo-controlled Phase 2 trial, SB-509-701, in moderate-to-severe DN. As in our Phase 1 trial, we are collecting a wide range of data, including quantitative measurements such as QST and NCV. In addition, in the SB-509-601 study, the density of sensory nerves in the skin of subjects and potential changes that may occur after treatment with SB-509 will be assayed using skin biopsies.

We also expect to complete accrual and treatment on our Phase 2 study, SB-509-703, which is designed to evaluate the effects of different doses of SB-509 on the mobilization of stem cells into the bloodstream. While the trial is being conducted in a population of subjects that have mild-to-moderate DN, we are specifically looking at the mobilization of a class of cells that characteristically stain with a marker for an enzyme called aldehyde dehydrogenase. These so-called aldehyde dehydrogenase bright cells that have been observed in increased numbers in the circulation post treatment with SB-509 are highly enriched in cell types able to mediate tissue repair, including endothelial, mesenchymal, neural and hematopoietic regenerative cells.

We will also carry out the usual qualitative and quantitative measurements of neurological health that have been collected in our other DN trials, and we will look for correlations between increased stem cell numbers and improvements in symptoms. The cell mobilization effect may also serve as a pharmacodynamic surrogate marker, enabling physicians to easily monitor progress of this therapy after 509 administration.

In addition to completing and presenting data from our three Phase 2 studies of SB-509, we intend to initiate three new trials in 2008. The first is a Phase 2 study to evaluate SB-509 for the treatment of amyotrophic lateral sclerosis, or ALS. While we have more to say -- while we will have more to say about the specific design of this trial when it is initiated, Dale provided us a description of the nature of the disease and an example of the type of study that we are discussing with our clinical advisors during December's analyst briefing, and I once again encourage you to visit the Investor section of the website and listen to the replay.

We also expect to file the first INDs for our ZFN-based therapeutics and initiate Phase 1 clinical trials for the treatment of glioblastoma and for HIV/AIDS, and I look forward to giving you more information on both of these important programs on future calls.

During 2008, we will also continue to advance our ZFP therapeutic pipeline. We've initiated preclinical studies in validated animal models of stroke, traumatic brain injury and Parkinson's disease and expect to publish and present preclinical data in spinal cord injury, neuropathic pain and ZFN-mediated gene modification throughout the year, providing further evidence of the depth and breadth of the ZFP therapeutic platform.

Shifting gears, our business strategy has been to establish strategic collaborations that have enabled us to monetize our technology in non-core areas, enabling us to own and aggressively push our therapeutic programs forward. In 2008 you should expect to see new agreements around our ZFN technology for cell line engineering as well as increasing visibility of our DAS collaboration as we approach the exercise of the commercial license. Those of you who heard Jerome Peribere speak at our analyst briefing know that DAS and its parent company, Dow Chemical, have big plans for our ZFP technology platform broadly within the Dow organization and via sublicensing to other companies.

We also expect to see increased visibility for our ZFP technology as a result of our research reagents collaboration with Sigma-Aldrich. We anticipate the near-term launch of ZFP-based research products and the realization of revenues from product sales and from sublicensing later this year.

As I mentioned earlier, we view the establishment of additional strategic partnerships as core to our business model. We have been very successful at partnering the non-core areas of our business in plant agriculture, research reagents and cell line engineering. With the evident increasing interest in technology platforms that can be translated into therapeutic product development engines, we believe we are very well positioned for this wave of corporate collaborations. We currently own 100% of our therapeutic programs. However, our business model has always assumed that we will partner our therapeutic programs as they reach points of significant value inflection. For our lead therapeutic program, SB-509, Phase 2 data should represent such a point.

You can and should expect to see activity on all of these fronts throughout 2008, and I look forward to providing you with more information on our progress on future calls.

From a financial perspective, we have put ourselves in a strong position to start 2008, beginning the year with $81.4 million in cash and cash equivalents. You can expect us to continue to carefully manage our expenses while working hard to build value through clinical development and thoughtful strategic partnerships. While we expect our clinical development costs to increase somewhat in 2008, we still expect to end the year with at least $55 million in cash and cash equivalents.

In conclusion, 2007 was an exciting year of clinical development and commercial growth for Sangamo. Our first ZFP therapeutic top line clinical data were presented, and we completed enrollment of our first Phase 2 trial. We continued to stay focused on and make substantial progress towards our ultimate goal of establishing ZFP therapeutics as a new and highly differentiated class of human therapeutics.

Our accomplishments over the past 12 months have positioned us very well for what will likely be the most important and exciting year in our corporate history. Put simply, I have never entered a new year at Sangamo with the optimism and enthusiasm I have for 2008.

We sincerely appreciate your help and support along this journey, and we look forward to helping you -- keeping you informed of our progress. We will provide additional updates at the BIO CEO Conference in New York next week and at the SG Cowen Healthcare Conference in Boston in March.

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

Thank you.

(OPERATOR INSTRUCTIONS)

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

Thank you. When do you think you'll have the first data from SB-509-701, the blocked nerve Phase 2 trial?

Let me give you the guidance, then, Liana, and then ask Dale if he wants to comment any further. As you know, and as your question accurately suggests, it's a single-blind trial, and so we're in the process of collecting those data, and we do expect to have data available from that trial in 2008. Dale, do you want to be any more specific than that?

Probably the first opportunity would be a late breaker at the ADA.

Okay. And when do you think you'll have data from the stem cell mobilization trial, and when do you think you're -- are you still on track to start the Phase 1s for HIV and glioblastoma this year, and when do you think you'll start the ALS Phase 2?

You're not going to leave any room for any other questions, are you, Liana? Well, let's see if we can take them in that order and then maybe we should take another question. In terms of stem cell, that, as you know, just started up in January. We have -- we're getting geared up to begin accrual on that trial, and at this point I'd prefer to give more specific guidance on data out of that trial as we see how the accruals go forward, and Dale is shaking his head in agreement on that.

In terms of guidance on GR, or the glioblastoma and CCR5 program, we are on track to begin those programs in 2008, and I think that covers your questions.

ALS.

Oh, again, on track to start that trial or begin that trial in 2008, as well.

Thank you very much.

Thank you.

We'll go next with Charles Duncan, with JMP Securities.

Hi, guys, and congratulations on a good quarter of progress.

Thanks, Charles.

I had a question regarding some of the industrial biotech use of the technology platform. Specifically with regard to Dow AgSciences, Edward, can you give us some sense on the visibility on that collaboration? Is it that that will be done by October, or could it be done at any time? And give me some sense as to what would drive that.

Charles, thanks. As I think was discussed at the analyst briefing by Jerome Peribere, Dow has an option on a commercial license that expires in early October of this year. From his presentation, we believe that they have an intent to move forward with that commercial license. And with all options, Charles, it is at their discretion to exercise that any time before the expiration of the option. I have said before, I'll say again here, I do not expect them to exercise it significantly earlier than the third quarter of the year, but by definition the option can be exercised at any time.

And have you been having some ongoing interactions with the company?

Daily. No, not to be glib, Charles, but we have daily interactions with them. The program's going extremely well, and I think in terms of really good current color on that, Jerome did an excellent job of talking about the -- what I like to say are the differential technical advantages and the kinds of commercial rationale for the application of the technology in plant agriculture. And I think there's a great deal of enthusiasm both here in Richmond as well as in Indianapolis for just that. And, again, as I mentioned in the prepared remarks, I think as time gets closer we -- it's fair to expect that Dow and the scientific teams both here and at Dow will continue to present and publish the data from our collaboration with them.

Excellent. May I ask a question on Sigma-Aldrich then?

One more.

With regard to the -- perhaps the research product getting to market, can you give us some sense on timing on that, when we'll see some increased visibility on that program?

Yes, I think you'll see quite a bit throughout the year. And, as you know, with these sorts of partnerships I would like to leave the specifics of product launches and timing and specific programs to our partner, to Sigma. But we have a very clear sense, and I'll restate what I said earlier, that we will be receiving product royalties from product sales this year as well as research funding and milestones from that agreement this year. And we also expect Sigma-Aldrich, from a marketing perspective, to significantly increase the visibility and announcing the availability of these reagents quite broadly to the research community.

Thanks for that added color. I'll jump back in the queue.

Thanks, Charles.

And we'll go next to Joe Pantginis, with Canaccord Adams.

Hi, guys. Good afternoon. Just a couple of questions on SB-509, one clinical and one more corporate. As I understand it, the single-dose Phase 1b expression, or the expression of the plasmid itself and also the resulting ZFP, is pretty transient, though the clinical effect you saw was obviously assessed at the six-month time point at the end. So can you share your thoughts about why you believe the multi-dosing in the Phase 2 could be therapeutically advantageous?

Joe, thanks for the question. Let me ask Dale if he'd like to give you the answer there.

Yes, Joe, we evaluated the neurologic benefits and NCV/QSTs at baseline, 30, 60, 90 days and 180 days. So we have pretty good kinetics of the response. And the rationale for the three doses and measuring at six months is that we anticipate from the kinetics seen in the Phase 1 trial that should give us the maximal difference from baseline to six months to be seen with that particular treatment regimen.

Okay. And just a quick corporate question and then I'll jump back in the queue. Edward, obviously you've talked about looking to partner SB-509 for DN and potentially something else after the Phase 2 data. Should we view the release of data in the second half as sort of the starting clock for that process, or can you provide color as to whether you've had at least preliminary discussions with interested parties?

All of the above, Joe, and so, yes, I think you should view the Phase 2 data as really the starting clock for that, but David Ichikawa and Dale have been very active over the last six, nine months with several companies, multiple companies, in terms of preparing them and educating them using the Phase 1 data, using some of the interim data that Dale just referred to, to be prepared to evaluate in a relatively informed and expeditious way the Phase 2 data. So I would guide to the Phase 2 data as being the starting point, but rest assured that we have been active from a business development perspective preparing the field for that process.

Great. Thanks a lot, guys.

(OPERATOR INSTRUCTIONS)

We'll take our next question from Pamela Bassett, with Cantor Fitzgerald.

Hi. Thanks for taking my call.

Hi, Pamela.

Hi. Congratulations. I'm looking forward to this year. Edward, both you and Ward have spent a considerable amount of time in biotech and pharma. Can you talk a little bit about your views on how pharma is changing in general? What are the macro trends that are impacting pharma that are meaningful for Sangamo, and how do you see this playing out in biologicals, specifically?

Well, that's a thesis topic. But fortunately it's one that I've thought about a lot. So I'll dive into it and then see if Ward wants to add anything. You know, I think there's a clear trend, even more than a trend, Pamela, for pharmaceutical companies to really be looking for what I consider to be IND engines -- technology platforms that can really generate novel INDs, novel compounds that can be moved into clinical trials and can do that in a broad and predictable way.

And that's really, then, the rationale behind many of the targets we've selected, our strategy for pushing forward with partnering around non-core areas, retaining ownership of the entire platform. Because I can be wrong, but I deeply believe that we're sitting in the bull's eye of where pharma is going. And I think if we're successful in demonstrating the breadth and validity of this technology as a therapeutic product development engine that we are going to be extremely well positioned to take advantage of what really is a huge need in the area of big pharma. That may be a little more longwinded than what you wanted, but that's my point of view. Yes, it's more longwinded than you wanted.

No, no, no. That's great. I mean, thanks for sharing your perspective.

Thanks, Pamela.

And we'll take our next question from Ted Tenthoff, with Piper Jaffray.

Hey, Edward. I'd never say you're longwinded.

Hey, Ted, (inaudible).

So a lot of the questions have been answered. I was thinking a little bit back toward some of the initial work done by Edwards in revascularization with VEGF, and can you give us -- obviously some of the stem cell recruitment work, I think, has come out of the work at Yale, but can you give us a little bit more of an update there? Obviously you're starting to broaden the 509 program, and looking for applicability beyond just nerve and beyond diabetic neuropathy specifically, but can you tell us what your initial thoughts are yet on the revascularization potential of that ZFP?

Well, again, I'll start, and then I'll ask Dale to add. Yes, I think from the preclinical work and from what we've seen of the clinical work, the concept or the premise that activation of the endogenous VEGF-A gene can induce functional new blood vessels is true. And we're in the process of helping collect some of those data, and our goal is to see those data presented, and I'll let Dale speak to the specifics of that. Where we go from a new clinical program in that regard I think is probably a to-be-determined item, Ted.

You know, we're having -- I don't want to overstate it, but we're very enthusiastic about what we're seeing in terms of neurological activity, neuroprotection and possibly even neuroregeneration. And that opportunity is one that is highly differentiated and one where not only the outcome is unique from a medical perspective but the commercial opportunity really dwarfs the peripheral artery disease indication. So, again, I'm probably babbling a bit, but let me ask Dale if he wants to talk any more specifically about what we've seen from a clinical perspective in the PAD area.

Yes.

Hey, Dale.

In neurologic disease, I think we're a bit lucky in diabetic neuropathy in that the measurement of the severity of neuropathy is very, very quantitative, and it's basically an electrical test and a speed. The problem with peripheral arterial disease is that there is no such equivalent gold standard in terms of a single test that correlates very, very well with disease outcome, amputation, survival, etc. So I think we're seeing positive signals, evidence pro angiogenesis. We've submitted an abstract which we'll maybe present it maybe midyear. And we're still accruing and trying to finalize the second study.

Okay, good. That's helpful. And I guess maybe just as a quick follow-up, as you start to assemble the data package around 509 and present this to partners later this year going into 2009, how do you encapsulate all of these disparate areas of value, including the revascularization potential?

Well, it's -- I mean, sort of two parts, Ted. One, it's -- we are extremely transparent in this process with partners, potential partners, in terms of the breadth of the data that we have. Maybe the question you're asking is from a commercial perspective, from a licensing perspective, from a field perspective, how do we --

From a value retention perspective.

Yes, and I think it's fair to assume that -- or it's likely to be that we would link the diabetic neuropathy and the peripheral artery disease indications.

Okay, fair enough. Great. Thanks.

And we'll take our next question from Brian Rye, with Janney Montgomery.

Well, good afternoon, and thanks for taking my question, as well. I guess just, as you step back and we think about getting the data from 601 and potentially 701 later this year, we talked in the past about what's generally considered to be a clinically relevant improvement for a potential new therapy and dose settings, but maybe I was wondering, Edward, if you could expand on that a little bit and talk about how is the -- absent a statistically significant improvement across the board in every single endpoint that's being measured -- what you hope to see in order to sort of maximize your leverage at the negotiating table, and I guess put another way, what you think potential partners would hope to see at this stage given what we've already seen in the Phase 1b setting from these Phase 2 studies.

Sure. Good question, Brian. Thank you. I'll give a little color here, and then -- and Dale can give you some specifics here. But it's very clear what will drive and what the criteria are from a partner point of view, because it's very clear what the FDA is looking for in terms of clinical benefit. And those endpoints, as Dale discussed, are quite quantitative. So we have a very quantitative bar to jump over here. So far, the data we've seen in the 1b trial are above that bar, and we're optimistic going forward. But let me ask Dale to maybe be a little more specific about it.

Yes, so in terms of what previous precedents and Phase 3 trials have taught us -- because obviously there's no drug approved for regeneration in diabetic neuropathy, so the FDA has not defined specifically publically what that is -- so from -- but from previous Phase 3 trials that have been reviewed by the FDA and most likely approved, one would be a quantitative sensory testing improvement greater than 8%. We actually currently achieve 25 to 30% in the Phase 1b trial. That is statistically significant. NCV difference between placebo of 1 meters per second, and a total neuropathy score or a scale difference of at least one unit. So those are the three things that we're generally shooting for to be either in that magnitude with a trend or even better if it was statistically significant. But those are the usual three areas in a neuropathy trial that people evaluate as endpoints.

And, Brian, those correlate directly back to the areas of focus and interest of our potential corporate collaborators.

Great. Thank you. And then just one follow-up question on the glioblastoma and HIV programs, you talked about on the last conference call some additional preclinical work that the FDA had wanted you all to complete. Just curious if that's going according to plan and that nothing else has popped up.

Well, I'd say that that's exactly where we are. We're ongoing relative to the additional animal studies in the CCR5 program, and we're in a very similar situation on the glioblastoma in terms of cell banking and master cell banking for the final product.

Sounds great. Thanks, guys.

We'll take our next question from John Sullivan, with Leerink Swann.

Hey, guys. Good afternoon. Congratulations on your progress.

Thanks, John.

I just had a couple of quick questions. The first one, regarding the anti-HIV program, we've seen in the news some progress being made among other drug and biotech companies using the blocking the CCR5 receptor against HIV, including an orally available competing therapeutic candidate. How should investors think about the potential of a ZFN-based approach to blocking this cellular entry point?

Great. Thanks for the question, John. That's right in the bull's eye of the rationale for the program, so let me turn that over to Dale to talk about.

Yes, so the -- Pfizer has a product out now to block CCR5. What you must understand about the chemicals is that they have to maintain a fairly high concentration in the blood constantly to be able to prevent evolution of the virus. And the use of the modified T-cell to provide a protective reservoir is basically synergistic with this particular approach and can actually increase the -- possibly increase the efficacy of the CCR5 strategy and potentially decrease the escape [units] that could occur with a chemical CCR5. So we think that they're not mutually exclusive and actually -- may actually make that whole -- the whole strategy of CCR5 inhibition or blocking in HIV more potent.

Thanks very much for that. And then just shifting gears for one second, as we grow closer to the -- to important dates regarding the Dow AgroSciences partnership, are there particular crops that seem to be of the greatest interest to Dow AgroSciences as they contemplate using ZFP technology, just as we try to get some sense of the potential breadth of appeal of the ZFP approach as Dow AgroSciences sees it?

Yes, I think the two that they have talked about the most beyond just model systems like tobacco are maize, or corn, and canola. Those are the two where they've discussed the applications. But I think the point that I would make is while they're focused and have talked about those two crops, the application of the technology is really indifferent to the crop species.

Right. So you don't believe that they've ruled out any crops for biological reasons as candidates for ZFP-based modulation?

Absolutely correct, and actually it's exactly the opposite. They have data now to suggest that they do not need to rule out any crops.

Okay. Thanks so much.

Thanks, John.

We'll take our next question from Grant [Singh], with Zacks Investment Research.

My questions have been answered. Thank you.

Thank you, Grant.

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

I was wondering if Ward could break out the revenues into collaborative agreements and research grants.

Thank you for asking that question, Liana. I was getting exhausted here. Give Ward one.

The -- where we are on that, Liana, of the $2.8 million for the quarter, $2.3 million came from collaboration agreements and $500,000 from research grants.

Thank you very much.

And with no further questions, I would like to turn the call back over to you.

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

And this does conclude today's Sangamo conference call. We thank you for your participation and ask that you have a wonderful day.