Sangamo Therapeutics Inc (SGMO) 2009 Q2 法說會逐字稿

Good afternoon, and welcome to the Sangamo BioSciences teleconference to discuss second quarter 2009 results. Today's program is being recorded.

At this time, I'd like to turn things over to the coordinator of this event, Dr. Elizabeth Wolffe, Director of Corporate Communications. Please go ahead.

Thank you, Kelly. Good afternoon, and thank you for joining Sangamo's management team on our conference call to discuss the Company's second quarter 2009 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 Dale Ando, M.D., Chief Medical Officer and Vice President of Therapeutic Development.

Following this introduction, Edward will highlight the Company's recent activities, Ward will briefly review second quarter financial results, and, finally, Dale and Edward will update you on our therapeutic programs and goals for 2009. 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 you 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 all for joining us for our 2009 second quarter conference call.

As is our practice, I will briefly run through the highlights of the past quarter before turning the call over to other members of the management team to summarize some of our more significant recent accomplishments.

On the clinical program front, we presented new, positive data from two of our Phase 2 clinical trials of SB-509 in diabetic neuropathy at the American Diabetes Association scientific sessions in early June. I've asked Dale to review the data from these presentations and provide you with a relatively detailed explanation of their significance later in the call.

As you will hear, our clinical trials to date have aided in the definition of the upper and lower levels of disease severity that we believe are optimal for the measurement of an SB-509 response over a six-month evaluation period. This information will greatly aid in the design of future trials for our lead ZFP therapeutic.

In May, we were awarded a Grand Challenges Exploration Grant for Innovative Global Health Research from the Bill and Melinda Gates Foundation. Sangamo was one of a handful of successful grantees from more than 3,000 applications. The grant will support our ongoing program to develop an in vivo application of our zinc finger nuclease, or ZFN, approach to HIV/AIDS. While this initial grant of $100,000 is small, it is a tremendous validation of this program. And, if we decide to move this forward, we have the opportunity to receive a significant follow-on grant.

In the non-therapeutic applications of our zinc finger technology platform, we recently announced significant progress in our cell engineering agreement with Genentech, with the achievement of a key development which triggered a milestone payment. The milestone represented a successful knockout of two preselected genes in Genentech's Chinese hamster ovary, or CHO, cell line, with specifically designed ZFN.

In addition, the lead Genentech scientist on this project gave a presentation at an industry conference, describing the impressive characteristics and performance of yet another knockout cell line generated by Genentech using our ZFN.

We also published high-profile papers in the scientific journals, "Nature" and "Science," demonstrating the use of our zinc finger nuclease technology in plant agriculture and transgenic animal models. The techniques described are broadly applicable across species and establish new methods for rapid and precise development of novel crops and the generation of targeted gene knockouts in transgenic animals other than mice. Both of these publications represent major breakthroughs in these fields and have generated a great deal of interest in their respective communities.

Our partners, Dow AgroSciences and Sigma-Aldrich, are actively pursuing the development of our technologies in these areas. And, as you know, the monetization of the non-therapeutic aspects of our technology and intellectual property has and continues to provide us with valuable, fungible capital.

And, speaking of our financials, let me now hand the call over to Ward to review our second quarter 2009 results.

Thank you, Edward. And good afternoon, everyone. As you know, after the close of the market today, we released our financial results for the second quarter ended June 30, 2009, and I am pleased to review the highlights of those results.

Revenues in the second quarter of 2009 were approximately $4.7 million, compared to $2.8 million for the same period in 2008. The increase in 2009 is due to revenue from our collaboration agreements with Dow AgroSciences and Sigma-Aldrich, enabling technology agreements, and research grants.

Total operating expenses for the second quarter of 2009 were $9.9 million, compared to $10.8 million for the same period in 2008. Included in operating expenses were noncash employee stock-based compensation costs of $1.5 million in the 2009 quarter, compared to $1.3 million in the 2008 quarter.

Research and development expenses were $6.9 million in the 2009 quarter and $8.3 million in the prior-year quarter. As noted in our press release, the decrease in research and development expenses is primarily related to lower manufacturing and preclinical expenses, partially offset by increased clinical trial expenses.

General and administrative expenses were $3 million for the second quarter of 2009, compared to $2.5 million for the same period of 2008.

For the second quarter of 2009, we reported a consolidated net loss of $4.5 million, or $0.11 per share, compared to a net loss of $7.4 million, or $0.18 per share, for the second quarter of 2008.

With respect to the balance sheet, we ended the second quarter with $52.6 million in cash, cash equivalents, marketable securities, and interest receivable. Our net cash used in operating activities was $6.1 million for the second quarter and $13.2 million for the first six months of the year.

I am pleased to say that we are on track with respect to our operating plan for 2009 for the second quarter, and we are maintaining our guidance, reiterated at our first quarter call in April, of having cash and investment balances on hand of at least $45 million at the end of 2009. As you will recall, this guidance assumes no new financing or partnering, but it does include anticipated milestones in 2009 from our existing partnership agreements.

We believe that our current cash position is sufficient to enable us to fund our current therapeutic development pipeline through 2011.

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

Thanks, Ward. As you have heard, we have continued to advance our clinical and preclinical programs while maintaining tight control of expenses and offsetting costs using revenue from collaborations and research grants.

Now let me turn you over to Dale to update you on our clinical programs and progress.

Thanks, Edward. As Edward mentioned, this quarter's major news from our clinical programs was the presentation at the American Diabetes Association meeting of positive data from our Phase 2 clinical trial of SB-509 in subjects with diabetic neuropathy. Specifically, we presented new data from our 601 trial in subjects with mild to moderate DN, as well as the first cohort of our 701 trial-- 701-A in subjects with severe DN.

First, to remind you, SB-509-601 is a double-blind, placebo-controlled, repeat-dosing, Phase 2 trial of 110 subjects with mild to moderate DN. Two-thirds of the subjects were treated with drug and one-third with placebo. All subjects received three treatments at 0, 60, and 120 days, with 180 days post-initial treatment being the primary data analysis point. Data were collected at multiple time points across multiple, quantitative endpoints in order to study treatment kinetics, as well as response to the drug. This 110-patient database provides valuable information for the primary goal of the study, the identification of the optimal drug target population that responds best to SB-509 treatment. The data includes follow up on all the varied endpoints, from baseline through the end of the study.

This is particularly useful, as DN encompasses a broad range of disease severities when evaluated by quantitative measurement, including the following - the neuropathy impairment score in the lower limbs, or NIS-LL. This is perhaps the most validated and widely recognized instrument for evaluating changes in neurological health. NIS-LL is a quantification of the neurologic exam that neurologists routinely perform on patients with neuropathy and has been previously used as the primary endpoint in pivotal trials for this disease. We also measured the nerve conduction velocity, or NCV, of the three major nerves of each leg.

In addition, in collaboration with clinicians at Johns Hopkins, we assayed nerve fiber densities, or NFD, in skin biopsies taken from the leg. This aspect of the trial was funded by the Juvenile Diabetes Research Foundation. Our collaborating at Hopkins has demonstrated that the loss of these very fine nerves in the skin is a sensitive indicator of the primary sensory nerve damage caused by the onset and progress of DN. These biopsies also provide a direct, histological measurement of nerves damaged by DN and allow us to detect increases in nerve density that would be consistent with the neuro-regenerative properties of SB-509. At the ADA, we presented the first top line data from these NFD studies.

You will remember that, in November 2008, we released top line neurologic data from the broad range of subjects enrolled in the 601 study. These results did not reveal any significant differences between the treated and untreated subjects. This was surprising in the light of positive, statistically significant data from our Phase 1 trial SB-509-401, early positive interim data in our 701-A study, as well as numerous preclinical studies.

However, upon further analysis of the 601 Phase 2 baseline DN severity data, it was apparent that a major difference between the Phase 1 and 2 studies was that the subjects entering the 601 study had statistically significantly milder DN disease severity as measured by NIS-LL, sural NCV, QST, and NFD than those entering the Phase 1 trial and the 701-A Phase 2 severe DN trial. This observation gave us a clear, clinical basis to evaluate the effective baseline DN severity in our further analysis of the 601 trial.

A major goal of any Phase 2 trial is the definition of the optimal target population for the drug. This is particularly important in a disease like DN that has a broad spectrum in disease severity, from mild to severe disease. In the 601 study, based on baseline DN severity, a clear, clinically relevant, post hoc hypothesis was generated to evaluate subjects by asking the question - What is the difference in response to SB-509 between mild and moderate severity DN subjects, based upon the baseline, quantitative measurements that we use, NIS-LL, NCV, and NFD? Using this hypothesis, we have seen a clear response to SB-509 treatment.

The most objective measurement of baseline DN severity is sural NCV. There was a clear separation of SB-509 improvement in the neurologic exam, NIS-LL, in patients entering the study with more severe NCV. This is defined as NCVs of less than 47.5 meters per second and represented approximately 75% of the subjects in the 601 study. The NIS-LL improved by one point in the SB-509-treated patients and worsened by 0.2 in the placebo-treated patients, with a significant value p of 0.08. This improvement lasted at least one year, exhibiting remarkable durability from three treatments that ended at day 120.

Further (inaudible) subjects accrued into the trial with NIS-LL scores greater than 10 or QST scores greater than 7.5 vibration units, both of which establish their disease as moderate versus mild. And we look at the change from baseline of their NIS-LL scores. We see clinically relevant magnitudes of improvement in the SB-509-treated subjects compared with placebo subjects with similar disease severity. In addition, this effect is consistent with the results of the 401 trial, which also evaluated a moderate severity sub-group. And, in both trials, the improvement was durable and could be seen out well beyond the 180-day primary time point.

Then, using clinically relevant criteria to establish a hypothesis of seeing this magnitude of neurologic exam, NIS-LL, improvement across multiple quantitative DN severity dividing endpoints, has been fundamental in defining a target population for future studies.

Data obtained from the nerve fiber density studies conducted with Johns Hopkins also showed similar and confirmatory findings. Top line data from sural skin biopsies performed on days 0 and 150 showed a statistically significant increase in nerve fiber density. Specifically, there was a 54% improvement in the SB-509-treated subjects versus an 11% decrease in the placebo group with a highly significant p value of 0.03.

In addition, stratification of subjects with moderate disease severity, defined as fewer than 18 fibers per millimeter in skin biopsies, showed statistically significant improvements in both sural NCV and skin nerve fiber regrowth. The nerve fiber regrowth results provide direct, histological evidence that SB-509 has a direct effect on nerve regeneration.

Importantly, this mechanism-based sub-group also defines the SB-509-responsive population by clinical endpoint. The top line data from these nerve fiber density studies show an increased number of fibers with SB-509 treatment provides an independent and direct assessment of the effects of the drug on nerve health and nerve fiber regrowth.

As I said, these statistically significant top line data provide clear evidence of the neuro-regenerative properties of SB-509. And we look forward to presenting a more comprehensive analysis of these data with disease severity stratification and effects on other endpoints at the Society for Neurosciences meeting in October.

As I mentioned earlier, the function of a Phase 2 clinical trial is to establish the parameters that will inform design of later approvable trials. As one designs these clinical trials, one not only needs to establish a dose and dosing regimen, but, in a progressive disease like DN, one also needs to establish the appropriate severity of disease for the target responder population. We need to accrue, test, and evaluate subjects whose diabetic neuropathy disease severity is such that, over the test period, their nerve health is deteriorating at a sufficiently rapid rate to allow a magnitude of difference to be observed between placebo and treatment.

At first glance, it may be somewhat counterintuitive that SB-509 appears to have more of an effect in subjects with more severe disease. In fact, our advisors initially recommended that we focus on a mild-severity DN population, as they expected SB-509 to only have an effect on nerve protection. As you have heard, we believe that SB-509 has a restorative and regenerative function. Diabetes and hyperglycemia have major effects on the microvascular compartment, and, later on, affects some large vessels, resulting in stroke, peripheral vascular disease, and myocardial ischemia. DN is the result of both the toxic and metabolic effects of high glucose and low insulin directly on the nerve as the disease progresses, on the microvasculature, or small blood vessels which carry the oxygen and nutritional supply to the nerves. In a milder disease situation, there is minimal microvascular degeneration compared with moderate or severe disease. From a mechanistic perspective, this plays ideally to the function of SB-509, which increases the expression of VegF-A, a potent nerve and blood vessel growth factor. These data collectively provide a reason why SB-509 is more effective in the moderate to severe DN setting.

So, to summarize, SB-509 continues to be safe and well tolerated, and we have shown a neuro-regenerative mechanism, along with multiple quantitative endpoints from the 601 study moving in the same direction which has defined an SB-509-responsive population in the moderate severity DN patient setting. This is exactly what one wants from a Phase 2 study.

We also presented data from our SB-509-701-A trial at ADA. This is a study of 45 subjects, two-thirds of whom were treated with SB-509 and one-third of which received placebo at 0 and 90 days, with the primary endpoint at 180 days. These are subjects with even more severe DN than the group I just discussed.

All subjects coming into the 701-A trial had at least one nerve for which a nerve conduction velocity could not be measured when a strong electrical current was applied. A few subjects had as many as six out of six unmeasurable nerves. Importantly, all of the subjects had at least one sural nerve that was unmeasurable. This is not surprising, as this sensory nerve on the foot is the first to be affected.

In the 701 trial, we measured the improvement and the recovery of NCV in all nerves, as both QST and NIS-LL are not useful measures in this population due to the severity of their disease.

One of the key findings from this trial is that, in subjects with very severe neuropathy - i.e., those with three or more blocked nerves - it is very difficult to see any improvement over the 180-day analysis period. Therefore, we believe that one or two blocked nerves is the right respondent group for future trials in this setting.

The other key finding from this 701 data was the magnitude of the response of the treated group. We defined a responder as a subject with greater than 7 meters per second recovery of their nerve or recovery of nerves that were unmeasurable at baseline. The statistical rationale is that this is greater than two standard deviations of the variability in the NCV test itself. And the clinical rationale is that 5 to 7 meters per second is the maximum improvement in NCV seen with normalization of glucose levels in a patient that has undergone a pancreas transplantation and, thus, effectively been cured of their diabetes. The magnitude of these improvements in NCV is remarkable and has otherwise never been achieved before in a therapeutic setting in DN.

Our data gave us two positive NCV endpoints. If one looks at a proportional change, which is the proportion of responding subjects with a greater than 7 meters per second improvement or a measurable nerve that was unmeasurable at baseline, we observed roughly a twofold improvement with SB-509 treatment - 46%, compared to placebo at 26%.

If one focuses on the sural nerve and looks at the mean change in sural NCV, we observe that the mean change at day 180 compared to baseline showed a clinically relevant improvement in SB-509-treated subjects of 3.1 meters per second, compared to 1.5 meters per second in placebo-treated subjects. This effect is persistent out to day 240. Plus, the individual patient's sural NCV improvement clearly demonstrated the large magnitude of improvement in SB-509-treated patients compared to placebo over six months, which is consistent with improved nerve function and long-term regeneration.

The results of the 701 trial are unprecedented. The data received a great deal of attention from neurologists and key opinion leaders at ADA, as this is a clinical condition that had previously been considered irreversible and untreatable. And this magnitude of response has never been seen before in this severe patient group.

Recent discussions with our clinical and regulatory advisors highlight the importance of SB-509's effect on both nerves and blood vessels in DN.

The drugs that have failed in DN clinical trials, such as aldose reductase inhibitors, nerve growth factor, and protein kinase C inhibitors, have had a single mechanism of action. DN, however, is a complex disease and may require a therapy with multiple mechanisms. Importantly, SB-509's regenerative effect on both nerves and blood vessels directly counter acts the persistent damage to nerve and blood vessels in diabetes and diabetic neuropathy.

The improvement in top line nerve fiber density data from baseline at day 150 in the 601 study and the long-term sensory NCV improvements in the 701 study strongly support a mechanism of nerve regeneration and improved nerve function with SB-509 treatment.

All in all, these are very positive and informative data sets that will aid us greatly in moving forward with the development and potential partnering of this drug.

To update you on our progress in some of our other clinical programs, we expect to conclude the accrual and treatment phases of our expanded 701 Part B study in severe DN in 2009 and to present data from this study in the first half of 2010.

Beyond our DN programs, I am pleased to announce that we have completed recruitment of subjects in our Phase 2 study to evaluate SB-509 for the treatment of ALS. This was faster than we anticipated, and we expect to finish treatment and follow up in 2010.

Finally, the clinical trial of our ZFN-based therapeutic, SB-728-T, for HIV/AIDS is ongoing at the University of Pennsylvania. As you may recall, we plan to recruit 12 subjects on this open-label phase one trial. While we do not plan to provide accrual updates, you should expect to see interim data in 2010.

Now we also remain on track to file an IND and begin a new clinical trial with the City of Hope in glioblastoma later this year.

With that update, I will turn the call back to Edward.

Thanks, Dale. As Dale described, we have gained a great deal of insight into the elements that will drive the next steps in the clinical development of SB-509. As you know, our preferred approach is to take these next steps with a strategic partner and share in the future value of this program. We are actively engaged in this effort, and I look forward to updating you when we have something specific to announce.

Turning to our non-therapeutic programs, our collaborations with both Dow AgroSciences and Sigma-Aldrich have allowed us to monetize our technology in noncore areas, enabling us to own and aggressively push forward our therapeutic programs.

In the near term, this has been extremely useful as a source of capital and has validated our technology in multiple commercial settings. In the midterm, these relationships will generate income from product sales, sub-licenses, and milestone payments. We expect these revenues to increase as word spreads about the technical advantages of the ZFP technology platform for regulating and modifying genes in cells and organisms and the potential utility in basic research, transgenic animal models, stem cell manipulation, cell line engineering, and applications across plant species is fully realized.

A case in point is the recent publication in "Science" magazine on the application of our ZFNs to generate novel transgenic rats in which a gene has been specifically targeted and subsequently knocked out. The achievement of this result is-- As one of our collaborators put it, this is, "somewhat of a holy grail in the world of transgenic animals." This truly is a breakthrough in the transgenic animal field, as, until ZFNs, there was no easy way to generate targeted knockouts in any other animal, except the mouse. Our technology significantly expands the variety of animal species that can be used for human disease modeling and drug metabolism and toxicology experiments. Rats, for example, are better suited than mice for examining many complex human illnesses, such as cardiovascular disease, diabetes, and neurological deficits, such as Alzheimer's disease. In addition, virtually every drug on the market has been tested at some stage of development in a rat. And the ability to make targeted knockouts of specific genes in these animals will be very useful in drug metabolism and toxicology studies.

One of our partners, OMT, is already using the technology in rats to develop a novel human monoclonal antibody platform. Currently, the mouse is the only genetically engineered animal commercially available for the generation of human monoclonal antibodies. And many targets have already been licensed in the mouse system. The ZFN technology has created a new monoclonal antibody platform in rats, with unrestricted development options.

So, from non-therapeutic, partnered programs, we expect to see royalty and milestone revenues, as well as significant value in the mid and longer term, as familiarity of the technology and the breadth of its potential applications is recognized in industry and academic circles.

You should also expect further visibility from DAS and Sigma in terms of publications, commercial activity, and sub-licensing activity, as well as further progress from our ZFN technology in cell line engineering during 2009.

While accomplishing all of this through our numerous partnerships, we remain focused on our goal of establishing ZFP therapeutics as a new and highly differentiated class of human pharmaceuticals.

From a balance sheet perspective, we remain in very good shape. You can expect us to continue to carefully manage our expenses while working hard to build value through a maturing clinical pipeline and strategic partnerships that are in the best interest of our shareholders. As such, we plan to end the year with at least $45 million in cash and cash equivalents, which we believe represents cash through 2011.

Finally, it is with great pleasure that I am able to announce the promotion of Philip Gregory to Chief Scientific Officer. Philip joined us in 2000 as a scientist and has been running research at Sangamo since 2005. As you can see from the rate of development of our technology and our success in translating those developments into commercial value, he is doing a great job. I know those of you who have had the opportunity to meet and speak with Philip join me in congratulating him.

Thank you for your attention this afternoon. We will provide additional updates at the UBS Global Life Sciences Conference in September, the JMP Securities Healthcare Conference in October, and on our third quarter call in October.

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

Thank you. (Operator Instructions). Joe Pantginis, Merriman Curhan Ford.

A quick question on the 509 program and then a follow-up on the non-therapeutic platform. Just wondering if we can sort of have a little glimpse into the future, now that you have all this meaningful data in identifying a population, what, really, the next steps would be for studies. I know you said you'd like to do it in hand with a partner. But what a potential pivotal program might be.

Well, Joe, this is Edward, I'll start and then I'll see if Dale really wants to add anything.

I think at this point the best thing for us to do is continue with the guidance that we've given, and that is that our plan in terms of next steps is preferably with a partner. With that said, we have spent a great deal of time with advisors, with regulatory advisors, clinical advisors. And I think Dale and his team have a very clear sense of what our different alternatives are-- not might be, could be, but are.

However, at this time, I think it's probably premature for us to get into any specifics with regard to next steps, pivotal trials, et cetera, et cetera.

Okay. That's fair. And just a quick question on the non-therapeutics. Obviously, the "Science" article was very exciting. And you said it's certainly a breakthrough with regard to the rat models. I know I'm sort of asking you to speak for Sigma here, but how are you seeing Sigma looking to monetize this breakthrough technology?

Well, your caveat to the question was exactly the right one. Let me give a short answer here, and then, not on the business side but maybe on the technical elements of this, Philip might want to comment.

Sigma, I think, will have more to say going forward about the application of zinc finger nucleases in transgenic animal models. And so, quite frankly, Joe, at this point, I'd rather punt on that. I certainly think by the time we update again, there will be a lot more to say about it. But I'd prefer to let Sigma take the lead on something as, I think, relevant and significant as the data that are presented in the "Science" paper.

And, Philip, are you on? Philip's actually in Washington D.C. and is calling in. Philip, are you on?

Yes, sure. I think the only thing I'd add is that the technology that Sigma have now up and running and are doing a tremendous job of providing to customers, obviously, is the identical technology that was used in the generation of the knockout rat. So, from a purely creation of a ZFP specifically targeted to an investigator's chosen site-- that is genome-independent, and they are ready to go. And I know they're very excited about the opportunity this paper generates.

Great. Thanks a lot, guys. It was very helpful.

Charles Duncan, JMP Securities.

Congratulations on a good quarter of progress. I had a quick question regarding the ALS trial. You had mentioned that you've completed recruitment of that. Can you give us additional color on that in terms of the number of patients and any sense as to your perspective on why it recruited as quickly as it did?

I don't know. Dale, can you give any additional color on why it went so quickly?

Well, there have been a lot of new drugs-- or trials that have been looking at new drugs that have been validated or have efficacy in this animal MnSOD-deficient model of ALS. And, unfortunately, a lot of those studies have not worked, and none of them have really worked or panned out at all. So I think the excitement with what we have is that we have human data on the peripheral nervous system with respect to improvements in the DN patients.

But one of the situations where we had human data on the peripheral nervous system is in humans and not solely based on the screening of sort of an animal model.

So I think the excitement with the investigators and with the patients was that we have a potential drug with activity that has been demonstrated in humans.

And, Dale, the total patients accrued on that trial is 35?

45.

45.

And just remind me the specific, I guess, design of that, Edward was-- What's going to pop out of that in terms of data and when, approximately?

Basically, the patients will be followed by the standard. And, of course, obviously, safety is-- clinical laboratory safety is a major primary endpoint in this new indication. And then there are a number of standard ALS endpoints, which include, number one, survival. Secondly is the ability for them to expand their lungs, which is called the (inaudible) capacity. So there's a critical determinant of being able to breathe. There's a quality of life scale that has been developed in ALS called the functional rating scale. And then we're looking at the experience of muscle strength testing called the manual muscle testing that is a fairly exhaustive evaluation of the strength of all the muscles in the patient on a regular basis.

Again, these are not new endpoints but have been used in previous ALS trials.

I understand that. Congrats on the recruitment. Looking forward to that data.

With regard to the GBM IND, can you give us a little color on what's remaining? Is that clinical work, or are you just preparing that IND? And I think you said later on this year.

Yes, I think that's what we said. I think we're, at this point-- It's really-- I'd put it in the heading of "Stay Tuned." There's not really a whole lot specific to tell you beyond the guidance we've already given.

Edward, could that open the door to other potential oncology applications for the platform?

You know, I don't think we've talked a lot about that. But I think characterizing it both oncology opportunities and platform is exactly the right way to characterize it. Let me ask Philip again. Philip, without going into any specifics, is there anything you think we can add on that?

I think you've said it. You know, this is definitely a situation where our zinc finger protein can be designed to any particular gene. And, obviously, this modified T cell-- this targeted (inaudible) tumor-- that could be for multiple tumors, and it could be any gene that we're targeting. So it's a platform.

So we may hear more about that later on. Are you going to have an R&D in December, do you think, Edward?

That's going to be up to Dr. Wolffe, and I don't think we've decided on that yet.

Okay. Good deal. I'll hop back in the queue.

Thanks, Charles.

Liana Moussatos, Wedbush.

I was just wondering-- Is SB-509, in fact, improved in DN patients who have better blood sugar control?

Dale, do you want to take on--?

So, basically, what we're talking about is the severity of the diabetic neuropathy, not the current level of diabetic control. And, actually, we're actually enrolling patients who have pretty-- I would say moderately good control. (Inaudible) of 9; normal is 7. 10 to 11 if awful. So I think the effect of the SB-509 is not really related to the level of glucose control. It's really related to the level of severity of the diabetic neuropathy. Those two are somewhat disassociated.

The association is that the longer you have diabetes, then the higher probably is that you have a diabetic neuropathy, which really reflects years and years and years of hyperglycemia.

Okay. So you don't think that, in patients that would have better blood sugar control, that-- Wouldn't the hyperglycemia be kind of counteracting, even indirectly, the effect of SB-509, because it would be destructive to the nervous system?

Yes, it would, in general. But, typically, at higher hemoglobin A1cs that would be the case. So we're basically working in a setting of diabetes that is under mild to moderate control.

The real practical question is-- There are not a lot of patients that can achieve very, very good control with normal hemoglobin A1cs. That's really a very small population in the current population of diabetes that's out there.

Did you do a sub-analysis of patients who had lower HBA1cs to see if the effect was better?

There was actually not a wide range because we had accrued under 9, and normal is 7. So there was only 2 points. There was less than a 1-point difference in the range of hemoglobin A1cs.

Okay. And are there other new, non-therapeutic partnerships expected in 2009?

I think what we said is, in terms of non-therapeutics, Liana, is that you should expect to see more visibility from Dow and Sigma. I think we mentioned sub-licensing, and that would relate specifically to Dow. And then I think we've also said that we expect to announce additional cell engineering collaborations in 2009. I think that would be the main areas in addition to publications and presentations analogous-- probably not quite as high profile as the "Nature" paper and the "Science " paper but certainly additional data in all of these areas. And I expect announcements from our partners in these areas as well.

Thank you.

Pamela Bassett, Cantor Fitzgerald.

Most of my questions have been answered. One remaining is-- I see that Dow has-- Jerome Peribere is moving on to a new position from Dow Agro, and there's going to be a new CEO of Dow Agro. How do you expect that to impact the relationship?

The short answer, and I'll be happy to give you a longer answer-- The short answer is I do not expect it to impact the relationship either positively or negatively. I have a expression I like to use, and that is - Success has many parents; failure is an orphan. And there are many, many, many parents of zinc fingers in Indianapolis and at Dow AgroSciences. This has been a very, very successful collaboration - technically, commercially, et cetera, et cetera. So this is well integrated into Dow, and I'm sure they would tell you exactly the same thing. That's the short version, Pamela.

The longer version is that Jerome, both professionally and personally, I think, is a wonderfully talented guy. And anybody with that kind of leadership and vision who is involved in a project is only a positive benefit. And I think it speaks to his leadership and his successes that he's been asked to run, probably, the most visible, most significant area of the Dow Chemical Company.

So he will remain a good, strong friend and advocate of Sangamo, perhaps at even higher levels within the Dow Chemical Company.

All of those good things said, is there an opportunity to leverage the ZFN/ZFP technology into some of the newer materials-- bio-based material applications? Is that possibly on the forefront?

I would say that that's independent of Jerome's move here. But, as you probably remember, our agreement with Dow covers exclusivity in their rights to our platform in what are called [Cronk] products but also in industrial products. And those cover quite a range of the areas that you're discussing. And I can tell you those have been and are important rights and important areas to Dow Chemical.

Okay. Of course, I should say this because I don't think I mentioned before-- Jerome Peribere is becoming the CEO of the advanced materials division. So maybe things like C4 chemicals-- or is that already part of the program?

What I'd say is that the rights in the industrial products area-- Any application or technology in that area has been-- is part of the existing agreement that's been in place now for about five years. And it's certainly an area of interest to Dow historically and, I think, ongoing.

Okay. Great. And just staying with Dow for another minute, what kind of feedback and reception are they getting with the technology among university-based research organizations versus commercial organizations, do you think?

I think that-- Two answers. One, I refer you to a lot of the press coverage that they had around the "Nature" paper. They actually did quite a bit of press activity around the "Nature" publication and, then, also around "Bio," the industry meeting. And I don't know, Liz. I'm guessing that they probably gave 30 interviews, of which there were quite a bit of information about their commercialization strategy and timelines and so on and so forth. So I'd refer you to that.

In short, however, trying to summarize what they have said from their reception to the technology in plant agriculture has been universally positive, both in the academic community as well as in the plant agricultural industrial community.

Okay. Great. Thank you.

(Operator Instructions). Joseph Schwartz, Leerink Swann.

I was wondering-- I've been intrigued by the potential in the Agro area. And your comments that you may be working closer-- or you think your partner may be advancing towards a sub-licensing deal, which would make sense, since this technology seems to do everything that people want in the areas of trait-stacking, et cetera. So I was curious. With this, do you have a sense of whether these would be the later-stage crops that they're working on - the corn and the maize? Or is it an earlier-stage program? And is there a difference in terms of-- like there is often in licensing deals in therapeutics, where the earlier-stage programs tend to bring in less milestones, et cetera?

Well, a couple things, Joe. First, you're absolutely correct. Dow does intend to sub-license the technology in plant agriculture. And they have publicly guided to this on several occasions, number one.

Number two, in our agreement, there are annual minimum payments that started last year when they exercised the commercial license. And those increase over time and are intended to encourage and are offset by sub-licenses. So that's-- Certainly, they have both a business interest, as well as a financial interest in doing that. And I think you heard me say they will be doing that.

One thing that I have learned over the last several years and more, acting with Dow and getting a little bit more about the plant agricultural community, is these guys make the way in which big pharma companies protect trade secrets-- make that look like an open system. These guys are very secretive about what they're doing, which crops they're going after, which traits they're developing, and so on, because it's a very competitive space.

So I do not have a lot of guidance I can give you at this point in terms of what stage of development or what targets they're going to be going after. I can tell you that, both internally at Dow, and you've seen announcements of this over the last six months from them about accessing novel targets and novel platforms, as well as other companies that I know they're talking to about sub-licensing-- You'll see an array of applications of the technology, not just in so-called row crops but in other plant species as well.

Okay. Thank you.

Everyone, I'll turn the conference back to you for closing remarks.

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

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