Sangamo Therapeutics Inc (SGMO) 2008 Q3 法說會逐字稿

Good afternoon and welcome to the Sangamo Biosciences Quarterly Teleconference. As a reminder, today's conference is being recorded. I will now patch you over to the coordinator of this event, Dr. Elizabeth Wolffe, Director of Corporate Communications. Please go ahead, 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 2008 Financial Results. Also present during this call are several members of Sangamo's senior management including Edward Lanphier, President and Chief Executive Officer; Ward Wolff, Executive Vice President and Chief Financial Officer; 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. Ward will briefly review third quarter financial results and, finally, Dale and Edward will provide more detail on our developments in several of our ZFP therapeutic clinical programs and our goals for the rest of 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 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 for joining us for our 2008 third quarter conference call. It's probably an understatement to say this has been a volatile and uncertain period for the markets, in general, and, from our perspective, a period in which it has been particularly important to keep focused and to continue to advance our technology platform and clinical leads while maintaining a firm hand on our expenses.

As such, we have accomplished several of our 2008 goals this quarter. In September, we initiated a Phase 2 clinical trial, SB-509-801 to evaluate our ZFP VEGF-A activator in subjects with amyotrophic lateral sclerosis, or ALS. ALS is a progressive, degenerative motor neuron disease for which there are limited treatment options and, as of yet, no cure.

Our Phase 2 trial is a randomized, repeat dosing, open-label, multicenter study designed to evaluate the effect of intramuscular administration of SB-509 on the progression of the disease in subjects with ALS.

In addition to gathering data on safety and tolerability of SB-509, the study will also evaluate stem cell mobilization. Dale will have more to say about the design and aims of this trial later in the call.

Also in September, we presented additional data from our Phase 1b study, SB-509-401, and interim data from our Phase 2 study, SB-509-701 in subjects with diabetic neuropathy, or DN. Data from the 401 trial were presented at the 44th Annual Meeting of the European Association for the Study of Database, or EASD, and demonstrated a positive correlation of two or more response endpoints in the SB-509-treated group compared with placebo-treated subjects at day 180, post a single a treatment.

This observation was statistically significant and provided further encouraging evidence that we are seeing a positive clinical effect with SB-509 treatment.

At the International Society for Cellular Therapy, or ISCT, meeting in Antwerp, Belgium, we also presented encouraging albeit early interim data from our Phase 2 701 trial, which is being conducted in subjects with moderate to severe DN, who have at least one blocked nerve. The interim analysis was intended, first and foremost, to assess the safety of repeat dosing with SB-509 and this population with advanced DN.

Additionally, the early clinical data suggested encouraging recovery at the sural nerve conduction velocity in 75% of SB-509-treated subjects compared to 25% of placebo-treated subjects and prompted us to expand this trial to test our most frequent dosing regimen. We look forward to presenting the complete data set in 2009.

In September, our partner, Sigma-Aldrich, the exclusive distributor of ZFP products for research applications, officially launched sales of zinc finger nuclease reagents for gene editing under the trademark "CompoZr." The CompoZr ZFN platform of reagents will provide researchers with the ability to target and precisely manipulate the genome of living cells resulting in cell lines or whole organisms with defined gene deletions, insertions, or corrections.

Initially offered as a custom service for developing ZFNs for specific gene targets, the CompoZr ZFN platform will soon include ZFN-based kits for targeted transgene insertion and a catalog of off-the-shelf reagents for commonly studied gene targets, gene families, and pathways.

For more information on Sigma-Aldrich's Composer zing finger nuclease technology platform, I encourage you to visit www.compozrzfn.com.

Finally, we published data in Nature Biotechnology describing the successful disruption of the CCR-5 gene in human T-cells and the positive effect of CD-4 T-cell counts and reduction in viral load in an animal model with HIV infection. These data were also presented yesterday at the 48th Annual InterScience Conference on Antimicrobial Agents and Chemotherapy, or ICAC, in Washington, D.C.

As you know, we are planning to file an IND on this program later this year, and we look forward to updating you on that program on future calls.

And, with that, I will now turn -- or ask Ward to summarize the third quarter financial results. Ward?

Thank you, Edward, and good afternoon, everyone. As you know, after the close of the market today, we released our financial results for the third quarter ended September 30, 2008, and I am pleased to review the highlights of those results.

Revenues in the third quarter of 2008 were approximately $3.7 million compared to $2.3 million for the 2007 quarter. The third quarter 2008 revenues were primarily comprised of revenue recognition from our collaboration agreements with Dow Agrosciences and Sigma-Aldrich enabling technology agreements in protein production as well as research grants including grants from the Juvenile Database Research Foundation and the Michael J. Fox Foundation.

The revenue recognized for the third quarter of 2008 consists of $3.2 million in collaboration agreements and $549,000 in research grants. Total operating expenses for the third quarter of 2008 were $10.1 million compared to $7.6 million for the same period in 2007. Included in operating expenses are noncash, stock-based compensation expenses of $1.3 million in the 2008 quarter compared to $600,000 in the 2007 quarter with the increase between years due primarily to increased grant activity, higher stock grant prices, and a lower estimated forfeiture rate.

Research and development expenses were $7.6 million in the 2008 quarter and $5.9 million in the prior-year quarter. The increase is primarily due to the clinical programs in diabetic neuropathy and pre-IND programs in HIV-AIDS and glioblastoma as well as increased R&D personnel costs.

Personnel-related R&D costs included noncash, stock-based compensation previously mentioned of $600,000 in the 2008 quarter compared to $400,000 in the 2007 quarter.

General and administrative expenses were $2.6 million in the third quarter of 2008 compared to $1.7 million in the 2007 quarter. The increase is primarily due to increased personnel costs including noncash, stock-based G&A compensation expenses of $700,000 in the 2008 quarter compared to $200,000 in the 2007 quarter.

For the third quarter of 2008, we reported a consolidated net loss of $6.3 million, or $0.15 per share, compared to a net loss of $4.3 million, or $0.11 per share for the third quarter of 2007.

For the first nine months of 2008, the consolidated net loss was $21.7 million, or $0.53 per share compared to a net loss of $14.8 million or $0.41 per share in the comparable period in 2007.

Revenues for the first nine months of 2008 were $9.4 million compared to $6.3 million in the same period of 2007.

Total operating expenses for the nine months ended June 30, 2008 and 2007, were $32.5 million and $23.5 million, respectively.

With respect to the balance sheet, we ended the third quarter of 2008 with $59.5 million in cash, cash equivalents, and short-term investments. Subsequent to the end of the third quarter, we received $8.5 million in scheduled payments from one of our important collaborators, Dow Agrosciences, representing $6 million for exercising its option for a commercial license in the second quarter as well as $2.5 million in milestones and other payments.

As we discussed in our call last quarter, with respect to revenue recognition of $8.3 million of the Dow payments, we are recognizing this revenue ratably over five quarters, which reflects the estimated timing over which the technology transfer is expected to occur as well as the period over which Sangamo will be compensated by DAS for additional research services.

I am pleased to say that with payments from collaborators this month and other cash inflows anticipated in the fourth quarter, we expect to be effectively cash flow neutral in the current quarter. As such, we expect to end 2008 with $59 million to $61 million in cash and investment balances having deployed $20 million to $22 million in total net cash usage in calendar 2008.

This updated year-end guidance, again, assumes no new financing or partnering in the remainder of 2008.

As we have previously noted, while we fully intend to continue to execute on our hybrid business model by establishing new corporate partnerships in our core ZFP therapeutics business as well as in noncore areas, independent of success in any of these areas, our current cash position is sufficient to enable us to fund out current therapeutic development pipeline through 2010.

In summary, we are pleased to have executed on our financial plan for the first nine months of 2008 with respect to our operating results and net cash used in operating activities. We will continue to be focused on advancing our clinical and preclinical pipelines while maintaining our historic financial discipline.

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

Thanks, Ward. In these uncertain markets, sufficient cash in one way are fundamentally important to preserving and building shareholder value. It is significant that we are revising our financial guidance and now expect to end 2008 with approximately $60 million in cash, which, as Ward said, enables us to fund our rapidly maturing therapeutic pipeline through 2010 independent of any new corporate partnerships or financings.

Having said this, we have been very successful in establishing and executing on a unique hybrid business model that maximizes the value of our ZFP technology platform. As you know, we have established high value agreements in the non-therapeutic aspects of our technology with Dow Agrosciences in plant agriculture, Sigma-Aldrich and research reagents, and Genentech and Pfizer in cell line engineering.

We also plan to establish strategic partnerships around our therapeutic programs at points of significant value inflection. As it relates to our most advanced therapeutic program, SB-509, data from our Phase 2 study, SB-509-601, will represent such a point of value inflection.

Post positive Phase 2 data, we plan to seek a focused strategic partnership to aggressively move this program into and through pivotal clinical trials and rapidly into the market.

Speaking of our clinical development activities, I've asked Dale to give you further details on progress in our lead therapeutic programs in diabetic neuropathy including the data we have recently presented at EASD and ICT meetings from our SB-509 401 and 701 trials and the design and rationale for our Phase 2 repeat dosing trial, SB-509-801 for ALS.

While we will not be presenting any data from the 601 trial on this call, we will remind you of the trial design and endpoints. Dale?

Thank you, Edward. In early June, the 180-day follow-up data from our SB-509-041 Phase 1b clinical trial of SB-509 for diabetic neuropathy were presented at the American Diabetes Association meeting. The data are very positive. In a population of subjects with mild-to-moderate DN, neurologic impairment score lower limbs, or NISLL, and quantitative sensory testing, or QST scores, both quantitative measures of nerve health, achieved statistical significance.

In addition, we observed transfer improvement in nerve conduction velocity in both the sensory nerve, the sural nerve, and the tibula and peroneal motor nerves. As this trial was designed primarily to be a safety study and not powered to achieve statistical significance for efficacy endpoints, it was particularly encouraging to observe this magnitude of effect.

All in all, the positive improvements in NISLL, QST, and sensory motor NCVs over the six months, with a single treatment of SB-509, are above the level that is generally considered clinically relevant.

In September at the EASD meeting, the major European diabetes meeting, we presented these conclusions from the 401 study as well as the further analysis of the data. We examined the concordance of endpoints in subjects as judged by improvements between QST, NCV, and NISLL at day 180 and found that eight out of 11 SB-509-treated subjects who were deemed responders by one measurement were also responders in one or both other measures, whereas only one of the 12 placebo-treated subjects showed this correlation.

This difference in the correlation of two or more response endpoints between treated and placebo is statistically significant with a p-value of 0.0016. It is apparent that in this group there was clinical benefit from treatment with SB-509 and while the numbers are small, this is very encouraging and reinforced our confidence in the data obtained in this trial.

As you are all aware, we have completed the treatment portion of our Phase 2 study, SB-509-601 in the same population of subjects with mild-to-moderate diabetic neuropathy. The trial is a double-blind, placebo-controlled repeat dosing study. Approximately 100 subjects have been enrolled and randomized to one of two groups in a 2:1 ratio.

The larger group of approximately 66 subjects was treated my intramuscular injections of 16 mg of SB-509, 30 mg per leg every two months. The remaining group of approximately 33 subjects has received an equal volume of placebo on the same schedule. Each subject received a total of three treatments at day zero, 60, and 120.

We conducted numerous tests to test the safety of SB-509 in this repeat dosing setting as well as to determine the subject's symptoms and nerve health including composite scoring systems of modified NISLL, a qualifications of the neurologic exam, and the total neuropathy score, or TNS, to assess finds and symptoms of the condition.

We are performing quantitative electrophysiologic testing both motor and sensory NCVs as well as the measurement of the subject's threshold of detection of vibration using QST. We have collected a broad range of data in this Phase 2 trial and we and our clinical advisors believe that these assays are the most quantitative and relevant tests of nerve health.

While our Phase 2 601 trial is not a pivotal study and therefore it does not have a predefined primary and secondary clinical endpoint beyond safety, NCV, QST and NISLL have all been used as primary or secondary endpoints in large pivotal trials of aldose reductase inhibitors and nerve growth factor in diabetic neuropathy.

NISLL was used as the primary endpoint in the 1,000-plus patient Phase 3 study of recombinant human nerve growth factor led by Genentech, and QST and NCV were used as corroborating secondary endpoints.

By way of an update, as I know this trial is of great interest to all of you, we remain on track and expect to have top-line data from our 601 study available before the end of this year. Specifically, once the data are collated and analyzed, we expect to present a summary in a press release and conference call and then prepare a more comprehensive analysis for presentation at a suitable clinical or scientific meeting in 2009.

I look forward to discussing the results of the 601 trial with you in the near future.

We'll be gone in September at the ICST meeting. We presented data from an early interim analysis on their single-blind, Phase 2 study, SB-509-701 in subjects with moderate-to-severe DN, but that leaves one "blocked" nerve. For the details, I refer you to the press release and teleconference that we hosted on September 15, 2008, which is still available on our website.

In summary, we did not observe any drug-related serious adverse events, or SAEs, associated with repeat dosing in this patient population with more advanced diabetic neuropathy, and we described recovery of nerve conduction velocity in subjects with blocked sural nerves, the nerve affected in the majority of the subjects analyzed.

The interim data supported our decision to expand this trial to include further 45 subjects who will receive our top-dosing regimen of either three treatments of 60 mg of SB-509 or placebo.

In September, we initiated a fourth Phase 2 study of SB-509, SB-509-801, in subjects with amyotrophic lateral sclerosis, or ALS. In ALS, the motor nerves comprise the nerve cells in the brain and spinal cord that control the body's voluntary muscles gradually degenerate. As the nerve cells begin to die, the muscles weaken and shrink. As the disease progresses, patients gradually lose the use of their limb and neck muscles ultimately becoming paralyzed and unable to breathe without assistance.

Fifty percent of patients with ALS die within three to five years of diagnosis. Currently, there is only one approved drug for ALS, riluzole, which has been demonstrated to slow the progression of this debilitating and fatal disease with only modest clinical benefit extending the survival of ALS patients by approximately three months.

Initiation of a Phase 2 study of SB-509 in subjects with a motor neuron and muscle disease such as ALS is an obvious next step in evaluation of SB-509 given the effects that we have seen, so far, with this drug. SB-509 is designed to activate the subject's on VEGF-A gene and there is mounting preclinical and clinical evidence to support a correlation between reduced VEGF-A levels and progression of ALS.

Furthermore, our Phase 1 clinical studies of SB-509 in diabetic neuropathy have shown that the drug is well tolerated and showed improvement in motor nerve conduction velocity.

Data for preclinical studies in animal models of nerve damage reveal positive effects of SB-509 on motor nerve function and muscle composition. Similar effects on motor nerves and muscles in these patients may slow the progression of ALS by preserving nerve function and improving muscle fiber composition and strength.

Specifically, this Phase 2 trial is a randomized repeat-dosing, open-label, multi-center study designed to evaluate the effect of intramuscular administration of SB-509 on the progression of the disease as measured by the ALS functional rating scale, ALS FRSR, a validated rating instrument for monitoring the progression of disability in patients with ALS.

Efficacy will be evaluated by comparing the rate of ALS disease progression in subjects treated with SB-509 to historic placebo control. In addition to gathering data on safety and tolerability of SB-509, data will be collected to evaluate the effect of SB-509 on additional clinical measures.

These measures include forced vital capacity, or FVC, a test of lung function; neurophysiologic index, NPI, a measure of electrophysiologic muscle impairment; manual muscle testing, a test of muscle strength and survival.

Finally, this study will also evaluate stem cell mobilization in subjects with ALS receiving SB-509. The majority of the 40 subjects entering the trial will receive intramuscluar injections of SB-509 bilaterally in relevant muscles of the neck, trunk, arms, and legs. However, in five subjects we will also test administration of an equal dose solely in the legs.

To conclude, we believe that SB-509 is a therapeutic agent, which, due to its unique mechanism, has potential applications in a number of conditions that, thus far, have been difficult to treat.

I look forward to updating you on the results of our clinical trials and, in particular, our 601 trial as the data become available. And, on that note, I'll hand the call back to Edward.

Thanks, Dale. As you have just heard, we continue to make significant progress in advancing our maturing clinical pipeline. Our next major clinical milestone of 2008 will be the presentation of top-line data from our double-blind Phase 2 SB-509-601 in subjects with mild-to-moderate DN. We look forward to presenting the top-line data before the end of the year via press release and conference call followed by a more complete analysis in an appropriate medical or scientific conference.

On the preclinical front, we recently published and presented data from our zinc finger nuclease preclinical program for HIV in the scientific journal, Nature Biotechnology. These are very powerful proof-of-concept data along with clinical scale self-processing data, and have also been presented from the scientific basis of our first ZFN therapeutic program.

We are currently finalizing the preclinical safety package for the FDA and are on track to file an IND for this program by the end of this year.

On the glioblastoma front, we have successfully generated the therapeutic product, a GR-modified CDA T-cell line that contains the glioblastoma-specific zetakine. This cell line has passed a battery of in vitro and in vivo tests including tumor-specific killing assays, and we are in the process of completing the remaining toxicology tests and manufacturing steps necessary for IND filing.

That being said, with our relatively limited resources, we have had to prioritize and focus our efforts on filing the IND for our most mature ZFN program, the HIV-AIDS program, and we are, therefore, pushing out the filing of the IND for our glioblastoma program into next year. This is a function of resources and priorities and not a reflection of our interest in or enthusiasm for this program. I will update you on our expected timing for this filing early next year.

As you have also seen, we continue to progress in the non-therapeutic ZFP and ZFN areas. Sigma-Aldrich officially launched its ZFN gene-editing platform under the trademark, "CompZr," and we expect this to stimulate an increased awareness and interest in the technology as well as significant future revenues to Sangamo.

In the current financial climate, we believe that our hybrid business model using ZFP technology in multiple fields stands us in good stead. Partnering the non-therapeutic applications of our technology and research reagents with Sigma and in exact precision traits with Dow Agrosciences, enables the development and marketing of high value products in these areas by experienced, dedicated leaders in their respective fields.

Importantly, the cost of these future revenues to Sangamo from the sales by these companies is essentially zero, and while this sum will be modest this year, we expect these revenues to increase significantly in the future.

We will, as we always have, continue to carefully manage our expenses. This philosophy is even more important in the current climate where cash is king, and where the markets are essentially closed to financings on favorable terms.

This, however, is not a cultural departure for us, and we are in the fortunate position of having a strong cash position and with expected cash now of approximately $60 million at year-end, efficient resources to prosecute our current programs through 2010.

Finally, before we open up the call for your questions, we look forward to providing additional updates on our progress in early December at the Piper Jaffray Healthcare Conference and in our annual analyst briefing, both of which will be webcast. We will make these webcasts available on the Investor section of our website.

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

(Operator Instructions) Charles Duncan, JMP Securities.

Hi, guys, congratulations on some good progress in the quarter and thanks for taking the call. I had, first, a question about the balance sheet. Can you give us a little bit of insight on the $7.6 million worth of R&D spend, approximately how much of that is spent in the diabetic neuropathy program?

Charles, it's Ward here. Yes, I know we disclosed that when we do the annual filing of the 10-K, but I think it's -- and we don't give specific updates on that during the quarters, but I think you can assume that it's in the neighborhood of 50%, you know, of the R&D spend.

Okay, so 50% or so of the R&D is spent on diabetic neuropathy, and your guidance on cash -- thanks a ton for the update on that. That assumes that you are prosecuting all the current diabetic neuropathy on trials, correct?

That's correct.

Okay. If I could ask a question on the ALS program -- I'm sure it was covered, but it was quick. Could you give us a little bit more information on the dosing regimen? I'm not sure if I missed it -- the frequency of dosing and then where the doses will be given?

We're using our top dose, which is 60 mg. Half of the patients will be injected in the legs exactly as they are in diabetic neuropathy. And the rest of the patients will be injected into the regional muscles of the parts of the spinal cord that are most affected by the ALS, in general. So the upper cervical segments, the limbs -- so the upper arms, which cover the upper thoracic segments and then in the legs, which covers the lumbar region. And the idea here is that we're saturating the muscle with the VEGF zinc finger expressing VEGF, and that's basically being taken up by the nerves that are just basically traversing or inserting into the muscle.

Okay, that makes sense. And then what are you -- you are injecting these weekly, monthly, one time?

Yes, we're injecting twice.

Okay, thanks. And then how long is the observation period of this study?

We'll be following them for a year.

Okay, good, that's a neat design. And then just one quick question on the Dow business development activities -- I'm sure you're not in a position to talk about them, but can you talk at all about any scientific progress on the Dow front?

Anymore on the business development side as we said before, you know, Dow exercised the commercial license early, four months early, and said that they did so in order to move forward with their sub-licensing and commercial development, and so that is a big part of the rationale.

Regarding the scientific side, Philip, is there anything we want to update on at this point?

No, we're basically making good progress, and, as you heard, we continue to -- and it's the fourth year relationship with the research side, we're helping the Dow and scientists to assimilate therapeutic technology and things continue to go very well. So at this stage -- I suggest you keep looking for published papers, but that's where we're headed with a lot of what we've been working on.

Thanks, Charles.

Ted Tenthoff, Piper Jaffray.

Great, thanks, guys. One quick question -- could you be a little bit more specific on the timing of when you'll be reporting the top-line results? If you've already finished dosing, can you make any clear assumptions on when we might get that data, and then a follow-up question on partnering, too.

So, Ted, just help me be more specific. When will we give data from which trial, sorry?

From the mild-to-moderate diabetic neuropathy trial.

From the Phase 2 601 trial? Yes, we will -- we've got it, as we said in the call, that we will be putting out an announcement, and then a conference call this year on that, and then we'll submit to present a more complete analysis at an appropriate scientific or clinical meeting in 2009 -- but the top-line data this year.

And should we have that data by the R&D day?

Ted, you're persistent. No -- this year, for sure.

Okay, great. A question on the partnering side -- have you begun discussions on 509 at this point? And have you seen either -- can you gauge interest, can you gauge, you know, is this environment impacting interest or potential economics? Or just kind of give us a general sense of where you are in the initial preliminary activities.

The answer is, Ted, have we started those discussions? Absolutely. Are there multiple parties out there, as I like to say, well-vaccinated on the program and prepared to receive the Phase 2 601 data, absolutely. So that's all I'm going to say about that right now.

In terms of the change in the climate, you know, I don't think I can give you a specific firsthand response there. My sense is it is changing, and it's going to be a tougher partnering environment given the access to capital in the equity markets. But, you know, quite frankly, as people have said to us, and I'll repeat, you know, good data moves you to the front of the queue no matter how tough the partnering market is.

And when you look at potential safety requirements from the FDA, obviously, we'll get a much better understanding post data and then post FDA meeting, but what are your current general assumptions of what may be required from a safety side for DNA plasmid for a VEGF expressor in sick patients?

All good questions, and you probably answered it for me right up front. I think post these data and then post a follow-up post Phase 2 meeting with the FDA, we'll be in an informed position to give you some real input on that. But at this point, Ted, I think I'd prefer to put that off until after we do have the data and after we have met with the FDA.

And just one quick one for Ward, if I may. You guys ended with $60 million-ish and said you'll end the year with $60 million-ish. What should we be anticipating? I'm not sure if you mentioned it on the call and I missed it, but will we be getting some cash payments coming in in the first quarter from Dow or someone else?

Basically, Ted, the -- as I mentioned, we did receive $8.5 million from Dow that came in at the beginning of the fourth quarter. So basically that's the infusion that will allow us to be effectively cash flow neutral for the full quarter.

Great, congrats, looking forward to the data.

Brian Rye, Janney Montgomery Scott.

Well, good afternoon, guys and thanks for taking my question. I guess, just one question -- on the Sigma-Aldrich collaboration, you talk about the potential expansion or the upcoming expansion of the CompoZr ZFN platform. I just was curious -- if all the scientific work to allow that expansion has been done, if there are certain tasks or steps that need to be fulfilled, if there is any, I guess, sort of scientific risk for the expansion of that program and even, if not, just curious what the potential timeline would be for the rollout of that expansion?

Sure. Well, good afternoon, to you, too, Brian. I think the short answer is that we have built into the contract development milestones that speak directly to the high throughput generation and characterization of nucleases, and we are moving forward on those expeditiously and, quite frankly, ahead of schedule.

But I think for the program to be everything it can be, we do need to achieve those milestones. That's why they're built into the agreement, and we're actually ahead of schedule to do that, and I'm optimistic that we will do that.

Let me, with that, ask Philip if there is anything else you want to say about that.

I think that summarizes it very well. We're in the process of working on the milestones that are part of the Sigma agreement. Those are largely throughput milestones so we can provide Sigma with a process that can meet the expected demands, and we're in the process of helping them build what we think are going to be a fairly large panel of off-the-shelf reagents and [kits]. And you'll see, I think you'll start to see some of those coming out very soon.

Great, thank you, Philip and Edward. And I guess just one last question -- on the Dow Agroscience collaboration, now that they've taken the commercial license and, obviously, they're very excited about what's going on -- I'm curious, from our standpoint, as either analysts or investors, how we should think about tracking the progress of that as it -- you know, it's going to be several years before there is probably a commercially viable product, you know, how should we be thinking about whether or not the collaboration continues to be a successful as you hope?

I'd say three ways. One is in scientific publications and presentations. I'll just say it bluntly -- we've published and presented the tip of the iceberg in terms of what has really has been done and is being done in terms of the science in this area. So you'll see a lot more data and publications and presentations going out.

Secondly, you'll be able to monitor it through some license agreements, and I'm hopeful -- I won't, you know, bet my life on it, but I'm hopeful that Dow will be announcing those sub-license agreements, or at least they'll allow us to announce those sub-license agreements.

And then, third, you'll see those progress in terms of payments to us both in terms of milestones from products developed by Dow itself, and then also, as you know, we receive 25% of any revenues from sub-licenses, and those payments will move through to us as well.

John Sullivan, Leerink Swann.

Hey, guys, good afternoon. Congratulations on your continued progress. I had a Dow question, as well, and somewhat overlapped with the one that was just asked, but I'm just wondering if there's any recent color from the Company or from individuals there regarding the value that they're seeing in the program -- any new color that you can share with us?

No, I think it's pretty much what we just said. Philip gave a fairly strong signal there that you ought to expect some publications in the next six, nine, 12 months that I think are, in my view, fundamental. I would default back to the words from Jerome Peribere and Dan Kittel in June when they hosted a press conference and videocast there -- the announcement. I think a lot of their enthusiasm is captured there, and that's about as much color as I think we can give you right now.

Okay, that's fine. And then just a couple of kind of looking-forward expense questions -- what was the headcount of the company as of September 30? And what does it have to be over the next year? What does it have to be a year from now in order to implement the Company's plans?

Well, I think the headcount as of September 30 was something like 78.

Right.

Wow, I got that one right.

Or 77.

77 -- but, you know, John, right now in terms of execution, I'll just fall back to the guidance we've given relative to the financial guidance -- so cash through 2010 and sufficient capital to execute on all of our ongoing clinical plans and programs that we've guided to starting -- we have the infrastructure to do that. You know, within -- certainly, within 5% to 10%. So we do not need to expand headcount to execute on the clinical plans that we have in place.

With that said, depending upon the Phase 2 data and depending upon the type of partnership that we structure, depending upon the next steps if it's a Phase 3 trial, you know, all bets are off. We will move expeditiously to expand particularly on the development side.

But in terms of execution with what we have on our plate now and the financial guidance that we've given, the headcount numbers are adequate.

Pamela Bassett, Cantor Fitzgerald.

I've already lost my voice, and it's early in the earnings season. I want to follow-up with Charles's question on the ALS trial. I want to be sure I understand -- half of the patients will receive 60 mg of 509 in each leg. Is that correct?

Not half, Pamela.

No, half of the patients.

No, not half of the patients -- five of the patients.

Five of the patients, okay.

Will receive exactly the kind of dosing that we're doing in the diabetic neuropathy trial, i.e., in the lower legs. The rest of the patients in the trial will receive injections in the pattern and frequency and dosing that Dale described in terms of muscle groups and location.

Okay, now that makes more sense to me. And they'll be injected twice, correct?

Yes.

And what's the time period between doses again?

Three months, 90 days.

Three months, okay, great. Thanks for recapping that.

Not at all, not at all.

Regarding -- we seem to have covered most of the programs except biomanufacturing.

Sure.

Is there anything new in biomanufacturing? Should we look for more relationships there, and how are those programs progressing?

Well, that's exactly the way to look at it. I do think there are a couple more publications coming out in this area, but the activity on the business front, I think, is the best way for analysts and shareholders to follow the progress there.

Is there anything close to commercialization?

Oh, commercialization.

You know, products that would be using the biomanufacturer -- this new process.

On that, I'd defer to our partners. I don't think we want to get out in front of them in terms of where and when they're using the cell lines. But from a financial perspective, maybe that's the other way just to describe it -- you know, I'm not guiding, we're not guiding to any revenues in, say, the next year or so from royalties or commercial milestones from cell line engineering agreements.

Okay. And if there is continued demand for access to the technology?

Yes.

Specifically for biomanufacturing?

Specifically for biomanufacturing.

So we might be seeing more commercial relationships?

Correct.

Or commercial licenses?

Correct.

Okay, great, congratulations on all the progress. Thank you.

Thanks, Pamela.

Alastair Mackey, Garp Research and Securities.

I had a question about the diabetic neuropathy trials, as a whole. Have you heard anything, one way or another, from any of the data safety monitoring committees?

Hi, Alastair. The short answer is no.

Great, well, that was fast. Do you have any updates on any of the clinical programs that you recovered back from Edwards in the PAD or critical limb ischemia?

Yeah, the critical limb ischemia is the most substantive, and for all practical purposes, Alastair, all of the data that really matter around that trial were presented this summer, I think it was, maybe it was May, at the ISCT meeting. And I know we announced that, but I'm happy to send you the presentation from that, if you'd like it. That was the data that essentially looked at, when you distilled it all down, this observation of aldehyde dehydrogenase stem cell mobilization and the correlation with clinical outcome in that trial, that open-label trial.

The PAD, the intermittent claudication trial, you know, to be perfectly honest, that trial never really took off. It was an NIH trial, accrual was very slow, and once we were really progressing in the diabetic neuropathy side of things, we really wrapped up that trial.

So I don't think, Dale, there is really anymore data that we should expect out of either one of those trials -- the clinical. Yeah, there's more preclinical work. You'll hear some more when we talk about the stem cell data in 2009, but nothing more to report on either one of those trials, Alastair.

Okay, and then if I can ask one question about the P&L -- considering that you have around $60 million in cash and short-term investments, it seems like the interest payments that you recorded are on the low side. Any comment on that?

No, that's a good observation, Alastair. We note in the press release that obviously we've had decreasing balances and a decreasing interest rate environment, but, that being said, we also did have a modest foreign exchange loss this quarter. We do have some funds still in our UK subsidiary, with respect to the Gendaq acquisition, going back a ways. So the strengthening of the pound -- excuse me -- the strengthening of the dollar, the pound, impacted the results in Q3.

So that's not reflective of any investment in any of the instruments that have had trouble in the market, as a whole.

Another good question -- we view our investment portfolio very much at the conservative end, and our advisor has been very successful in navigating us through whatever agency holdings we have, and US treasuries, et cetera. We have some very high quality corporate names, but we haven't had anything in the way of the more trouble sub-prime or all day type environment, and so we did spend a lot of time on that this quarter, but we've had no losses in the portfolio.

[Shonak Epak], Rodman.

I had just a few things to ask about the HIV program, so I understand right now you're currently finalizing a goal 50 package for the FDA and have reiterated the expectation to file an IND by year-end.

Correct.

Is there anything else that you need to do in order to prepare for a clinic trial?

Well, I think we've really listed the major items there. Certainly, post-filing, you have IRB approvals and that sort of thing but, no, I think we're well on track here.

Okay, and will the trial be like small enough such that manufacturing time is going to be trivial?

Well, I don't know if I'd call the process trivial. My scientific colleagues might not find that flattering. Is it well established and is it something that we feel that is well validated in the engineering runs and so on? Yes. We feel confident about that.

I think one of the things that we will do post-filing the IND, probably, come our fourth quarter call, our year-end call, is we'll give you a little more color on the trial design and so on. But we're moving forward with that and are very excited about it.

Okay, great, and just one last thing -- is it likely to be an HIV-positive patient?

Yes, definitely.

Charles Duncan, JMP Securities.

Hi, guys, thanks for taking this follow-up. I'm pretty interested in this ALS trial, as it seems to be -- it could be a fast-to-market strategy, and the orphan indication was high on the medical need. My question is, over the course of a year, Dale, perhaps the percentage change that you would expect in -- and you pick it -- whatever endpoint you want to highlight, and then, secondarily, what type of ALS patient will you be enrolling in that trial?

To answer the last question first, we're going to screen for -- basically, around 70% or greater lung function. We don't want the more severe patients who usually die quickly. And we're using some fairly standardized scales following these patients -- the functional status scale and, basically, you can view ALS as a study where the patients sort of entry level is their own control, because they actually never get better. So we can look at every muscle group, we can look at every function of daily activity, and basically track that deterioration over the course of a year.

And over a course of the year, what kind of percentage -- you said that there is about a 50% survival, at best, over five years, but how does that translate into a year's worth of progression?

Probably about a mean survival of about three years, and from the control database that we have, we have the slope of deterioration for time for all the trials and, actually, unfortunately, either treated or placebo have the same slope, and we can ferret out and compare the slopes of these patients to either case matched controls within that database, or as groups of the mean but, say, for instance, we could even look at a single muscle.

So the power of that database is quite good. Unfortunately, there are a lot of patients in that database, and nothing has worked. But we expect to -- new trials in ALS is really the only ethical way to start a -- look at a new product.

And you, of course --?

The first question last, Charles, I agree with you, this is an area of great unmet medical need, and if we are able to show activity, it is something that we think we could move forward with quickly.

And you allow for background riluzole dosing and kind of standard of care?

Yes. Riluzole actually does not alter that slope significantly at all.

Very good, thanks for the added color; looking forward to that one.

That will conclude today's question-and-answer session. I would now like to turn the conference back over to Mr. Edward Lanphier for any additional or closing remarks.

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

Ladies and gentlemen, this will conclude today's Sangamo Biosciences Conference Call. We appreciate your participation in today's conference. Have a wonderful day.