Sangamo Therapeutics Inc (SGMO) 2012 Q1 法說會逐字稿

Good afternoon, and welcome to Sangamo BioSciences teleconference to discuss first quarter 2012 financial results. This conference call is being recorded. I will now pass you over to the coordinator of this event, Dr. Elizabeth Wolffe, Senior Director of Corporate Communications.

Thank you, Mimi. Good afternoon, and thank you for joining Sangamo's management team on our conference call to discuss the Company's first quarter 2012 financial results. Also present during this call are several members of the Sangamo's senior management, including Edward Lanphier, President and Chief Executive Officer; Ward Wolff, Executive Vice President and Chief Financial Officer; Geoff Nichol, Executive Vice President of Research and Development; Philip Gregory, Vice President of Research and Chief Scientific Officer; and Dale Ando, Vice President of Development and Chief Medical Officer.

Following this introduction, Edward will highlight recent activities and the significant events from the past quarter. Ward will then briefly review first quarter financial results, as well as our financial guidance for 2012. Geoff will provide an update on our ZFP Therapeutic programs. And, finally, Edward will update you on our goals for the rest of 2012. 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 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 detailed in documents that the Company files with the Securities and Exchange Commission, specifically, our quarterly results 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 the turn the call over to Edward.

Thank you, Liz, and thank you for joining us for our conference call to discuss our first quarter results for 2012, as well as recent events and our plans for the rest of the year.

2012 is off to a great start. Let me begin by summarizing the important events of the quarter. In early February, we entered into a strategic alliance with Shire PLC, a global specialty biopharmaceutical company, to develop our ZFP Therapeutics for the treatment and potential genetic cure of hemophilia and other monogenic diseases. This alliance is a significant step towards our goal of establishing our ZFP technology as a major new platform for the development of innovative therapeutics for unmet medical needs.

In addition to the notable financial benefits of this agreement, which I will discuss in a moment, a partnership with a company as sophisticated and well positioned as Shire is terrific validation of the potential and promise of our technology.

As you all are aware Shire is one of the most highly respected and successful companies in the specialty pharma and rare disease space, and we are very excited to be working with them.

To remind you of a few of the details of the collaboration, we have licensed Shire the exclusive rights to develop and commercialize ZFP Therapeutics to seven gene targets -- 4 blood-clotting factors, Factors VII, VIII, IX and X, and 3 additional disease-related genes. Our collective goal is to develop ZFP Therapeutics targeted to these genes with the objective of establishing potentially curative therapies for these monogenic diseases. We look forward to keeping you updated on the progress of this important collaboration.

The agreement also establishes our respective roles and responsibilities. Sangamo will conduct all research and preclinical development activities for all 7 ZFP Therapeutics, up to the filing of an Investigational New Drug Application, or IND, or the European equivalent, a CTA.

Subsequently, Shire has the responsibility for moving these novel approaches through all clinical studies and into the market. The agreement provides significant near-term funding for us in the form of an upfront payment of $13 million, and funding for all of our internal and external research-related and preclinical program costs through IND filing.

We are also eligible to receive milestone payments of $8.5 million for each ZFP Therapeutic that we take to IND, and regulatory, clinical and commercial milestones that bring the total potential milestone payments to $213.5 million per ZFP Therapeutic. Additionally, and very important to us, we retain significant downstream value in the products we develop under this collaboration in the form of royalties that are an escalating, tiered, double-digit percentage of product sales. So, an important validating relationship and a great start to 2012.

We also made important progress this quarter in our HIV clinical programs. Early in the year we announced that we initiated two new Phase II trials. The design of these studies is based upon Phase I clinical data that demonstrated a statistically significant relationship between the reduction in HIV viral load in the blood of SB-728-T treated subjects, and the extent of engraftment of these ZFN-modified T cells in which both copies of the CCR5 gene had been disrupted, so-called biallelically-modified cells.

At CROI, the Conference on Retroviruses and Opportunistic Infections in early March, we presented further data from our Phase I trials. These data demonstrated durable engraftment of SB-728-T, prolonged trafficking, and dynamic immunological responses. I have asked Geoff to provide more information on these data and how they relate to our ongoing Phase II trials later in the call.

Finally, as promised, we continue to publish and present data from our preclinical programs. In early April, a preclinical study demonstrated in the use of zinc finger nucleases, or ZFNs, to engineer safer and more potent cancer immunotherapies, was published in Nature Medicine. Our collaborators also presented the data at a major European oncology conference, and the importance of this work was recognized by that community with the award for the best abstract submitted to the meeting.

The reason this work was selected for recognition is that the data significantly advanced the development of novel cell-based therapies for the treatment of a broad range of cancers, and further highlights the range of therapeutic applications of our technology. We expect to continue to publish and present data from our preclinical programs throughout the year, including 12 Sangamo presentations and numerous other ZFP-related talks at the upcoming annual meeting of the American Society for Gene and Cell Therapy, or ASGCT, later this month.

Before going into more detail on our ZFP Therapeutic programs and our plans for 2012, let me hand the call over to Ward for an update on our first quarter 2012 financial results, as well as our financial guidance for 2012. 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 first quarter ended March 31, 2012, and I am pleased to review the highlights of those results.

Revenues for the first quarter of 2012 were $3.2 million compared to $2.2 million for the 2011 quarter. The first quarter 2012 revenues were comprised of revenues from the Company's new collaboration and license agreement with Shire to develop ZFP Therapeutics for hemophilia and other monogenic diseases, existing collaboration agreements with Dow AgroSciences and Sigma-Aldrich Corporation, enabling technology agreements, as well as approximately $1.6 million of revenue from research grants.

As we mentioned in today's press release, the increase in collaboration agreement revenues was attributable to the Company's agreement with Shire executed during the quarter. We are amortizing the $13 million upfront license fee over the initial six-year research term resulting in $0.4 million recognized as related revenue in the first quarter of the two months that the agreement was in place.

In addition, we recognized approximately $0.6 million of revenue related to reimbursement of program-related costs from Shire during the quarter, also included in collaboration revenues.

The increase in research grant revenues was primarily due to the final milestone payment from the Juvenile Diabetes Research Foundation, JDRF, for activities related to the completion of our Phase IIb clinical trial of SB-509 in subjects with diabetic neuropathy, as well as funding from CHDI for the development of the ZFP Therapeutics for Huntington's disease.

Total operating expenses for the first quarter of 2012 were $10.5 million compared to $11.8 million for the same period in 2011.

Research and development expenses were $7.3 million for the 2012 quarter and $8.3 million for the prior year quarter, with the decrease primarily attributable to reduced clinical trial expenses related to our discontinued diabetic neuropathy studies.

General and administrative expenses were $3.2 million for the first quarter of 2012 compared to $3.5 million for the 2011 quarter. Non-cash stock-based compensation expense was $1.4 million for the quarter, with $0.8 million in research and development, and $0.6 million in general and administrative.

For the first quarter of 2012, we reported a consolidated net loss of $7.3 million, or $0.14 per share compared to a net loss of $9.6 million, or $0.21 per share for the first quarter of 2011.

Turning to the balance sheet, we ended the first quarter of 2012 with $87 million in cash, cash equivalents and marketable securities. Our financial guidance for the year remains unchanged from our year-end call in February. We expect to have cash and investment balances of at least $75 million at the end of 2012, inclusive of the Shire agreement but exclusive of any new funding from a partnership or other sources.

We also expect 2012 operating expenses to be in the range of $43 million to $47 million, and revenue to be in the range of $14 million to $18 million, again, inclusive of the research funding from Shire for internal and external research program-related costs.

In summary, we are pleased to report that the first quarter results are tracking to our 2012 operating plan. Our first therapeutic collaboration with Shire has enhanced our leverage in managing our finances and balance sheet and complements the business model established for our existing partnerships outside of human therapeutics.

We are in an excellent financial position to start the year, and we look forward to keeping you updated on our progress. Thank you, and I will now turn the call back over to Edward.

Thank you, Ward. As you have heard, we began 2012 with approximately $85 million, which relative to our cash used in operations, is a very strong cash position. The upfront payment and ongoing research funding from our strategic alliance with Shire further strengthens this position and enables us to aggressively and expeditiously move our ongoing clinical and preclinical stage therapeutic programs to points of significant value and flexion.

And, on that topic, I have asked Geoff to update you on the new data from our HIV clinical trials that were presented at CROI, and to update you on our preclinical pipeline, particularly our work in rare and monogenic diseases. Geoff?

Thanks, Edward. As most of you know, our zinc finger nuclease technology allows us to specifically modify and effectively knock out the CCR5 gene, which [encourages] a major co-receptor for HIV entry into cells. By doing this, we aim to create T cells that will be both protected from HIV infection and capable of mounting an effective immune response to HIV, similar to a naturally-occurring situation in individuals who carry a well characterized mutation, the CCR5 delta 32 mutation.

If successful, this approach would enable a functional cure in these patients such that they could control their HIV without taking antiviral medications. We call these ZFN-modified autologous CD4 positive T cells, SB-728-T.

Thus far, results from our Phase I studies of this product have been very encouraging. The data demonstrates there is a statistically significant relationship between the level of engraftment of ZFN-modified cells, in which both copies of the CCR5 gene are modified, so-called biallelic modification, and the levels of virus in the blood in HIV-infected subjects during a treatment interruption from their anti-retroviral medication.

This observation is consistent with the hypothesis under which we began this program, and with this clearly early signal, we have moved quickly into two Phase II studies, which I will describe later.

As Edward mentioned, in early March we presented new data from our Phase I clinical trial of SB-728-T at one of the major HIV meetings of the year, the Conference on Retroviruses and Opportunistic Infections, otherwise known as CROI. The data were collected from 21 HIV-infected subjects enrolled in Phase I clinical studies at the University of Pennsylvania and at Sangamo-sponsored sites in Northern and Southern California. All study subjects were taking highly active anti-retroviral therapy, or HAART, and had stably controlled, undetectable levels of HIV in their blood.

Subjects were classified into two groups based on their CD4 T-cell counts upon entering the study. 15 subjects with CD4 T-cell counts below 500 cells per microliter designated immunological nonresponders to HAART, and the second group of 6 subjects with CD4 T-cell counts of greater than 450 cells per microliter designated immunological responders.

One month after SB-728-T treatment, the 6 subjects in the immunological responder group underwent a 12-week treatment interruption, or TI, of their HAART therapy. The Phase I studies evaluated safety and tolerability, as well as changes in CD4 T-cell counts, and the ratio of CD4 to CD8 T cells, persistence of SB-728-T in the blood, and trafficking of the ZFN-modified cells into gut-associated lymph tissue in all subjects. In addition, proviral DNA and changes in viral load is determined by HIV RNA were measured during the TI in the 6 immune nonresponder subjects.

As we have previously reported, the study demonstrated that during the TI, after an initial increase in the viral load, there was a subsequent 0.82 over 2 log reduction from peak observed in 3 of 6 subjects with the highest estimated circulating levels of biallelically-modified cells.

One subject, subject 205, who entered the study carrying the natural CCR5 delta 32 mutation on one copy of the CCR5 gene was aviremic by the end of the TI period. By starting out with one CCR5 gene already naturally modified, this subject received an SB-728-T infusion estimated to have twice the percentage of biallelically-disrupted CCR5 genes than that of subjects entering the study with wild-type CCR5 gene.

This observation forms a basis for one of our two new Phase II studies, Cohort 5 SB-728-902, in which CCR5 heterozygotes are being recruited. The data from all subjects that completed the TI revealed that suppression of viral load as measured by HIV RNA correlated significantly with calculated levels of circulating CD4 T cells that have undergone biallelic modification of the CCR5 gene.

Using a new very sensitive measure, the level of circulating proviral DNA, a measure of the HIV reservoir, exhibited a very limited increase in five of six subjects over this period and was elevated in only one subject whose SB-728-T engraftment was the lowest of the group. We will investigate this observation further in future studies.

The studies presented at CROI also confirmed and extended our previous observations of unprecedented improvements in overall CD4 T-cell counts and CD4 to CD8 T-cell ratios, a measure of immune health for well over a year post-administration of SB-728-T. The levels of T-cell cytokines in the blood in the first few days post SB-728-T infusion may have a role in the dramatic post-infusion expansion of CD4 T cells and SB-728-T.

This is interesting in the light of our second recently initiated Phase II study, SB-728-1101, which employs a lymphopenic preconditioning regimen to expand the numbers of biallelically-modified cells in subjects post-infusion. This preconditioning regimen which transiently depletes lymphocytes is known to up-regulate the levels of growth factors in the system, including the cytokines that we measured.

As demonstrated in other settings, this approach is expected to increase the number of engrafted biallelically-modified cells potentially by orders of magnitude. Importantly, we also confirmed durable engraftment and persistence of SB-728-T in the peripheral blood for over a year in one subject out to 738 days, and the ability of SB-728-T to traffic to the gut mucosa, an important reservoir of active HIV infection.

And, finally, SB-728-T treatment continues to be safe and well tolerated with only mild reversible symptoms typical of infusion reactions.

I also want to briefly mention the second dataset selected for presentation at CROI, because it demonstrates, among other things, that our SB-728 T cells behave as if they are immunologically active. We observed one subject who received a single dose of SB-728-T and in whom we were able to identify and track the course of a presumed inflammatory event at the gut mucosa unrelated to 728-T infusion.

We noted an associated increase in total CD4 T cells and percent of ZFN CCR5 modified CD4 T cells in the gut mucosa in response to the inflammation event with a greater than one log increase in SB-728-T observed locally in the gut preceding resolution of the inflammation. Analysis of individual T-cell clones confirmed that this significant increase in SB-728-T was specific to the gut mucosa and suggested that there was a response by these cells to local gut inflammation.

We also observed that HIV DNA levels in both gut mucosa and the periphery decreased from peak levels by about one log, coinciding with the timeline of significantly increases in SB-728-T at the site of inflammation.

Taken together, these data suggest that SB-728-T is functionally active and capable of participating in an immunological response, and has the potential to maintain or restore health in the GI tract, a major reservoir of HIV.

We will present additional data from our HIV clinical program later this year. Regarding our recently initiated Phase II trials, as always, we will present data at a major medical meeting, and I expect to be able to give you more information on the timing of this as we continue to recruit subjects into these trials.

Moving on to our preclinical programs, our ZFN platform provides a range of powerful gene modification outcomes, including gene disruption, gene addition, and gene correction, and importantly can be designed to target an DNA sequence with singular specificity.

In monogenic diseases, which are diseases that are caused by a mistake in a single gene, we can use ZFNs to permanently correct that error. Furthermore, we have demonstrated that we can apply this technology systemically. This direct in vivo approach significantly expands our ZFP Therapeutic applications and the diseases for which our technology can provide genetic cures.

In our published Factor IX work, we target the liver in mice and demonstrate production of Factor IX with restoration of normal blood clotting times following a single systemic injection of our Factor IX specific ZFNs. Shire recognized the potential therapeutic applications of this remarkable technology and we are collaborating with them to develop ZFP Therapeutics for a total of 7 monogenic disease gene targets. The initial 4 gene targets are clotting Factors VII, VIII, IX and X, for which we are developing potentially curative approaches for hemophilia and A and B. While our alliance with Shire began very recently, our Factor IX program is furthest along and is already in animal testing on the path to an IND.

We sincerely look forward to updating you on the progress and timing of new INDs for several of our monogenic disease programs later this year.

As our most recent Nature Medicine publication demonstrates, our technology also has the potential to revolutionize another fast-moving therapeutic area, the field of cancer immunotherapy, which is being developed to address a broad range of malignancies.

Cancer immunotherapy uses the immune system and in its cell therapy manifestations, specifically, CD8 T cells that are genetically engineered to express new cell surface receptors that specifically recognize tumor cells. These engineered T cells can be redirected, seek out and destroy tumors. However, CD8 T cells already have a natural specificity for different nontumor targets -- expression of both receptors in the same cells limits the potency of this therapy and more importantly could also make the cells self-reactive leading to graft-versus-host disease.

Our ZFN technology can very specifically disrupt and/or insert genes into cells, and this enables the engineering of these immunotherapy cells to optimize their performance with a degree of precision and efficiency that was previously impossible.

In the Nature Medicine study published in April, ZFNs were used to specifically disrupt the native T-cell receptor, TCR genes in tumor-directed CD8 cells, resulting in an enhanced immunotherapeutic product with potent anticancer activity coupled with the elimination of graft-versus-host disease in a mouse model.

This is one of several oncology applications which uniquely leverage our ZFN platform. You can expect to see publications and data presentations from these and other preclinical programs the upcoming months including, as Edward mentioned, at the upcoming ASGCT annual meeting later this month.

As you see, this is a very exciting and very busy time at Sangamo, and I look forward to updating you on future calls on the progress of these programs, as well as our work on the gene targets that we are developing with Shire. With that, I'll turn the call back to Edward.

Thanks, Geoff. As you have heard, our clinical programs in HIV are progressing on schedule, and we have a rich pipeline of preclinical programs with Shire, as well as our own internal targets. In addition to the Shire named hemophilia targets, we are also advancing programs in Parkinson's and Huntington's disease, as well as numerous monogenic diseases including sickle cell anemia and several lysosomal storage diseases. We expect to have much more to say about these preclinical programs specifically regarding data, milestones and expected timing to IND filings by the end of the year.

Our partnerships in the nontherapeutic applications of our technology also continue to thrive. To give you an idea of the kinds of creative and thoughtful ways that Sigma-Aldrich is using our technology to drive growth, I encourage you to listen to the replay of the business review that they hosted on March 29. The webcast of this event can be found on their website.

During that briefing, executives from several of Sigma's business units highlighted the use of ZFN technology within their particular units for the generation of lab kits and reagents, cell lines and transgenic animals. In addition, Sigma highlighted the combination of our ZFN technology with their recently-acquired BioReliance group, a leader for safety testing of biological drugs, to expand their offering into novel animal models and new testing services, assays and cell lines.

Our collaboration with Dow Agro-Sciences also continues to go well. Dow is employing our ZFN technology in its core focus crops and marketing the technology as exact precision technology the company is working in other crops.

As many of you know, these collaborations have allowed us to access capital in a way that is very different from most biotechnology companies. Over the past five years, our Sigma and DAF collaborations have brought in over $84 million. Importantly and as in our Shire agreement, we have retained significant downstream value in the commercialization of these assets, including, in the case of Sigma, a 10.5% royalty on sales of ZFNs and ZFN-based products. Including the Shire agreement, in 2012, we estimate revenues will be in the range of $14 million to $18 million.

On the financial side, we expect to end 2012 with cash and cash equivalents of at least $75 million, which is more than sufficient capital to allow us to achieve our goals of aggressively advancing our clinical and preclinical therapeutic programs. This cash projection does not, however, include any new agreements or partnerships that we may develop beyond the recently announced agreement with Shire. And on that point, our business model is to establish partnerships to help drive our programs forward through the development process and into the market. Establishment of our first therapeutic partnership was a high priority goal for us, and I am delighted that we were able to achieve this objective so early in 2012.

As you might imagine, our alliance with Shire has further raised our visibility in the pharmaceutical industry and firmly established our ZFP technology as a new platform not just for novel therapeutic development but for potential genetic cures.

So, in the first quarter of 2012, we continued to make significant and very visible progress towards our goal of establishing ZFP Therapeutics as a new and highly differentiated class of human pharmaceuticals that can provide the potential for a genetic cure for many diseases and innovative approaches to intractable diseases such as Parkinson's disease and cancer.

I sincerely look forward to keeping you informed of our progress. To that end, we will be presenting at the JMP Securities Growth Conference in San Francisco on May 14, and the Bank of America Merrill Lynch Health Care Conference in Las Vegas on May 16.

Finally, I would like to invite you to attend our annual meeting of shareholders, which is scheduled for Thursday, June 21, at 9 a.m. here at the Company in Richmond, California.

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

Thank you. (Operator Instructions) Our first question comes from Charles Duncan of JMP Securities. Your line is open.

Hi, guys. Thanks for taking my questions, and congrats on some good progress in the quarter. Edward, I'm not sure if I heard it right from Geoff, but I'm wondering, in terms of dataflow out of the HIV program, it sounds like you might have some incremental data from the earlier studies, but that you would anticipate data perhaps in the first half of 2013 out of the Phase IIs?

Charles, let me see if I can repeat what we said on the script and then Geoff and Dale can certainly add any additional color. I think what we talked about was more data coming out of the Phase I studies later this year. I think we have some presentation at ASGCT in some of these data. But what Geoff said on the call here was that we are in the process and actively accruing on the Phase II study. That is going very well. I'll let Geoff comment on that a little more. But I think it's realistic to think that we will have those trials accrued by the end of the year and data in the first half of 2013 is a realistic expectation. Geoff, you want to give any more color on the trials themselves and the community interest in them?

Yes. Interest in -- hi, Charles -- amongst investigators and patients. It's a novel technology and we're aiming high here to move towards a functional cure in the design of the study. So, we are recruiting actively. As you know, these studies don't happen overnight, but as we accrue data, we will be -- as you would anticipate, we would put that out at appropriate meetings. But right for now, absolutely on target in terms of our progress.

Okay. And then my second question is around partnering strategy. Edward, you provided a lot of information in the last part of the call, but really, in particular, on the next therapeutic partnering that you could do. Congratulations on the Shire one, and I guess on Wall Street it's always what's next? But perhaps you can share some thoughts on HIV and whether or not there is value or interest. When do you think that will emerge? Is it going to be with the upcoming data and is it possible that you could identify a capital efficient route to market whereby you would take this further along in development than perhaps partnering it at the next stage?

There is a lot in there, Charles. Let me start at 30,000 feet from a strategy perspective and I'll drill down on the HIV program. So, as I said in the script, and I think it's worth repeating, our business model, as we've done in other areas and as the Shire deal further exemplifies, is to bring programs to points of value inflection. And those can be at different points for different types of programs. As you can see, the Shire deal was a preclinical program, but I think the data showing a single systemic delivery of a Factor IX zinc finger nuclease and giving correction of coagulation times and so on really drove that to a point of significant value inflection. And that's really what we intend to do around novel targets and novel areas.

We also intend to push programs forward for our own account, and so moving to the second part of your question, we will look for capital efficient ways to bring programs farther and farther forward. And as we evolve as a company, taking those forward potentially into pivotal trials.

As it relates to HIV, however, I think that's a program that we would view as something we would like to partner for pivotal trials and for commercialization. It's a large patient population, therefore, fairly significant commercial manufacturing undertaking, and it is something that we'd like to bring a partner on for pivotal trials and commercialization.

And my final question is related to the potential focus of the pipeline going forward. Is it possible that by year-end of this year you'll be able to talk more about plans or perhaps even identifying a development candidate? Maybe not an IND candidate but a development program?

Well, precisely, and so to reiterate what both Geoff and I said, by the end of the year we fully expect to lay out a real clear roadmap in terms of both specific therapeutic targets, timing around major milestones associated with those, and prioritization and timing of moving those programs into human clinical trials. And that's a data-driven process but one that we will be in a position to discuss in detail by the end of the calendar year.

Thanks for the added color, Ed.

Thank you. Our next question comes from Liana Moussatos of Wedbush Securities. Your line is open.

Thank you. Just following up on what you were just talking about. Do you anticipate enrolling patients in a trial for the Factor IX program next year?

Well, that's precisely what we were talking about, Liana, and that is what we intend to discuss in detail by the end of the calendar year. Again, maybe a little more color around it. These are very much data-driven decisions, and the team here is working overtime on multiple targets, multiple programs that we are driving forward. And we expect to have a very good clarity around those and the prioritization of those, the timing of those by the end of the calendar year. So, we look forward to giving you a direct answer to your question at that time.

Okay, thank you very much.

Thank you. (Operator Instructions) Our next question comes from Joseph Schwartz of Leerink Swann. Your line is open.

Hi. Thanks. You and your collaborators have already generated very positive preclinical data in hemophilia, and so I was wondering what additional work needs to be done in animal studies before you can file for an IND?

Thanks, Joe. I'll start and then ask the team here if they want to add more color, but it's really very, very much just the typical, almost generic kind of preclinical development. We are currently in large animal studies with the Factor IX work, and based upon doses that we see in that we will move into formal toxicology studies. And those will then be driven by the kinds of process development in GLP and GMP manufacturing that needs to go on in the CMC sections for INDs, along with, then, based upon the toxicology data, the efficacy data, the design of Phase I trials. So, it's really very much the kind of development steps and blocking and tackling for these programs as it is for any biologic. But, Geoff or Dale, do you want to comment further on the process here?

I think you've outlined it pretty accurately, Edward. The way for moving these things is to take them into larger animal models and larger animal situations to make sure that we are getting to the kind of scale that we need in humans and then obviously manufacturing, toxicology and all those other good steps, and we are very, very busy doing precisely that.

Great, thank you. That's very helpful. For a follow-up, could I just ask, is there any significance to the selection of the six-year research term over which you are amortizing, I think it's the upfront from Shire? For example, does that correspond to your expectations for the amount of time required to file an NDA or anything like that?

You know, Joe, the six-year period really is a function of giving the programs enough time to move forward. We certainly expect to see very material progress around numerous targets much, much earlier than that in terms of moving programs into clinical trials. And it was really part of the negotiations, part of the discussion, to make sure that there was more than sufficient time to get to points for all of the targets to IND filing for Shire to take it over. But I think six years, we certainly expect to move things forward into the clinic much, much sooner than that.

Gotcha. Okay, thank you.

Thank you. I'm showing no further questions in the queue at this time. I'll hand it back to the speakers for closing remarks.

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

Thank you. Ladies and gentlemen, this concludes our conference for today. You may all disconnect and have a wonderful day.