Sangamo Therapeutics Inc (SGMO) 2012 Q4 法說會逐字稿

Good afternoon, and welcome to the Sangamo BioSciences teleconference to discuss fourth quarter and full year 2012 financial results. This call is being recorded.

I will now pass you over to the coordinator of this event, Dr. Elizabeth Wolf, Senior Director of Corporate Communications. You may begin.

Thank you, Ashley. Good afternoon, and thank you for joining Sangamo's management team on our conference call to discuss the Company's fourth quarter and full year 2012 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; 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 significant events from the past quarter. Ward will then briefly review fourth quarter and full year financial results for 2012 as well as our financial guidance for 2013. Geoff and Philip will provide an update on our ZFP Therapeutic programs, and, finally, Edward will update you on our goals for 2013 and beyond. 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. So by discussing our current perception of the market and the future performance of Sangamo with you today we are not undertaking any 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 all for joining us for our conference call to discuss our fourth quarter and full year results for 2012 as well as our near and midterm plans for the development of our zinc -- ZFP Therapeutics pipeline.

We had a very busy fourth quarter and a great start to the new year, setting the pace for an eventful 2013. To this -- this end-of-year call provides us with an opportunity to reflect on the achievements and events of last year, but, more importantly, to look ahead and lay out our goals for the future.

We began to do just that in early December at our Analyst and Investor Briefing and followed that up in the first weeks of January during the annual JPMorgan Healthcare Conference. We used these two venues to accomplish a number of important goals, but, above all, to articulate our vision, albeit incredibly ambitious, of engineering genetic cures for diseases -- not incremental treatments, genetic cures.

During those meetings we provided insight into how we select disease targets for our ZFP Therapeutic platform. I've asked Geoff to expand on this later on the call. We also outlined our strategy for the next few years in terms of clinical and preclinical progress as well as our financial outlook. We discussed our preclinical programs and our goal to file seven INDs by the end of 2015 and explained how we expected to accomplish this within the framework of our current financial expectations. Finally, we articulated how our vision and strategy enables us to create value while mitigating, on several levels, some of the inherent risk in drug development.

If you have not had an opportunity to listen to our Analyst Briefing, I encourage you to do so. A webcast of the event is still available on our website on the Events and Presentations page in the Investor section of the site.

At the Analyst Briefing we also introduced our new In Vivo Protein Replacement Platform. This is a highly disruptive and broadly leveragable approach to the development of potentially curative ZFP Therapeutics for a variety of diseases that are currently being treated using protein replacement therapies. A few days after our briefing, at the American Society of Hematology meeting, or ASH, we gave a more detailed presentation of the data supporting the development of this platform. I've asked Philip to provide more information on this novel approach later on the call.

Looking back, the last 12 months have marked some important catalysts for Sangamo as a therapeutic product development company. Roughly a year ago we announced our first therapeutic collaboration with Shire to develop potentially curative ZFP Therapeutics for monogenic diseases. This alliance has brought further visibility to our product development platform, with a highly respected partner, as well as important financial benefits to Sangamo. You may recall that the agreement is for seven gene targets, and Shire initially chose four in hemophilia, Factors VII, VIII, IX and X. They also selected our Huntington's disease program later in 2012 as the fifth of their seven targets.

As you will hear from Philip, strategies that we have developed for our Shire targets, namely our In Vivo Protein Replacement Platform, can also be leveraged for our own proprietary programs in lysosomal storage diseases. The funding from Shire has allowed us to focus our resources on the advancement of our SB-728-T program in HIV/AIDS and other proprietary programs in our preclinical pipeline, including the development of ZFP Therapeutics for hemoglobinopathies such as sickle cell anemia and beta-thalassemia.

Speaking of SB-728-T, let me briefly update you on the current status of our lead clinical program. As most of you know, we have two ongoing Phase 2 clinical trials, SB-728-902, Cohort 5, and SB-728-1102. These trials represent two distinct approaches, both aimed at maximizing the engraftment of T cells in which both copies of the CCR5 gene are disrupted, so-called biallelically modified T cells. Modification of both copies of the CCR5 gene makes these cells resistant to infection by HIV. As we have previously stated, we anticipate presenting preliminary data in the first half of this year and expect to present full data sets by the end of 2013. We will also be presenting data from our earlier Phase 1 SB-728-T clinical trials at the Conference for Retroviruses and Opportunistic Infections, or CROI, in early March.

But before going into more detail on our ZFP Therapeutics programs and our plans for 2013, let me hand the call over to Ward for an update on our fourth quarter and full year 2012 financial results as well as our financial guidance for 2013. 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 fourth quarter and full year ended December 31, 2012, and I am pleased to review the highlights of those results. Revenues in the fourth quarter of 2012 were $8.9 million, compared to $4.7 million for the same period in 2011. Fourth quarter 2012 revenues were comprised of revenue from Sangamo's collaboration agreements with Shire, Dow AgroSciences and Sigma-Aldrich, as well as approximately $400,000 of revenue from research grants. As we mentioned in the press release, the increase in collaboration agreement revenues was primarily due to our agreement with Shire as well as an increase in the minimum annual sublicensing revenue from Dow AgroSciences.

Total operating expenses for the fourth quarter of 2012 were $12.3 million, compared to $11.1 million for the same period in 2011.

Research and development expenses were $9.3 million in the 2012 quarter and $7.9 million for the prior-year quarter. The increase was primarily due to increase in external research expenses associated with our preclinical programs, partially offset by lower clinical trials and manufacturing expenses associated with our SB-728-T HIV/AIDS program.

General and administrative expenses were $3 million for the fourth quarter of 2012 and $3.2 million for the same period in 2011.

Noncash stock-based compensation expense was $1.3 million for the quarter, with $700,000 in research and development and $600,000 in general and administrative.

For the fourth quarter of 2012 we reported a consolidated net loss of $3.5 million, or $0.07 per share, compared to a net loss of $6.4 million, or $0.12 per share, for the fourth quarter of 2011.

For the full year 2012 revenues were $21.7 million, compared to $10.3 million in 2011, with the increase again primarily due to Sangamo's collaboration agreement with Shire.

Total operating expenses were $43.9 million in 2012 and $46.1 million in 2011.

The net loss for 2012 was $22.3 million, or $0.42 per share, compared to a net loss of $35.8 million, or $0.71 per share, for 2011.

Turning to the balance sheet, I am pleased to report we ended 2012 with $76.3 million in cash, cash equivalents, short-term investments and interest receivable. Our net cash used in operating expenses was $8.1 million for the year.

With respect to financial guidance for this year, we expect to have a cash and investment balance of at least $55 million at the end of 2013, inclusive of research funding from Shire but exclusive of any new funding from a partnership or other sources. We also expect 2012 (sic - see Press Release) operating expenses to be in the range of $46 million to $50 million and revenues to be in the range of $20 million to $24 million. This includes the research funding from Shire for internal and external research program-related costs.

For the purpose of revenue guidance we will continue to ratably amortize the upfront fee from Shire into revenue over six years, the initial research term provided in the Shire agreement. We also expect that the spread of total revenue over the four quarters of 2013 will be generally in line with the pattern in 2012.

In summary, 2012 was an eventful year, and we are pleased to have realized our financial objectives with respect to both operating results and net cash usage. We are focused on advancing our clinical and preclinical pipeline while maintaining our customary financial discipline.

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

Thank you, Ward.

As you have heard, we ended 2012 with just over $76 million, in line with our guidance of at least $75 million, which, relative to our historic and projected burn rate, is a strong cash position. As we outlined in our Analyst Briefing, we believe that our balance sheet provides a solid basis from which to work and will enable us to complete our ongoing Phase 2 clinical trials and to bring up to seven products to IND by the end of 2015.

The platform nature of our technology enables us to leverage our work across multiple programs, partnered and proprietary. I have asked Geoff to outline our decisionmaking process and provide more insight into how we prioritize programs and determine how to apply our technology to therapeutic targets that we have chosen. Geoff?

Thanks, Edward.

As you know, our ZFP platform is unique in that it operates at the DNA level. We've shown this technology to be robust, highly specific and broadly applicable to target any gene that we choose. This gives us a very versatile toolbox, the scope of which cannot be duplicated by small molecules, antibodies or RNA-based technologies such as antisense and RNAi. Using ZFPs we can access a range of powerful gene modification outcome, including permanent gene disruption, gene addition or correction as well as the ability to regulate the expression of genes in the cells, turning them up or down to make more or less of a given protein. This gives us distinct technical advantages and enables us to think very differently about how we address disease, particularly so-called monogenic diseases caused by a mistake in a single gene, such as hemophilia, Huntington's disease or beta-thalassemia. This allows us to think not just about treating or alleviating symptoms, but about really engineering genetic cures, a whole new paradigm in medicine.

So, given the power and breadth of our platform, how does one begin to prioritize a therapeutic pipeline? How do we select targets that should our product strategy be to use this technology to its fullest potential? What characteristics do we need in a target disease before we [begin] to apply our toolbox in a way that can drive a genetic cure? And, very importantly, what is the best strategy for delivery in order to achieve the therapeutic effect we are looking for?

First, what is a qualified target? There are several essential criteria that we think about. The first is an unambiguous correlation between the gene and the disease. By definition that's a monogenic disease. For example, a mistake in an individual Factor IX gene results in that person having hemophilia B. Correction of the mistake in a mutated gene to provide a permanent source of a functional Factor IX protein will cure the disease. Our technology can do this as well as address other disease-related gene targets that are inaccessible to small molecules or biologics such as proteins and antibodies.

The next question that we ask is whether there is sufficient benefit to the patient in developing a therapy using our technology. The symptoms of hemophilia, uncontrolled bleeding, can be alleviated by providing replacement Factor IX, which helps the blood to clot normally. However, depending on the severity of the disease, this usually requires biweekly infusions of replacement protein, levels of which understandably follow a sawtooth curve, initially very high and gradually waning, unlike in a normal individual, who expresses a constant level of protein.

So, while in some cases there are current therapies, they are costly, have side effects and are not always efficient. An ideal approach is to engineer cures that permanently change the lives of our patients. If we can correct the person's own defective gene, or, as you will hear later, have the individual safely make sufficient amounts of the correct protein from a safe harbor site in the genome, we can potentially cure hemophilia.

The next question that we ask is around delivery. To which cells do we need to apply our technology for each indication? Are the target tissues blood or bone marrow cells, requiring an ex vivo approach, that is, treatment outside the body, such as in our HIV and hemoglobinopathy programs, or is the disease optimally addressed by systemic delivery, such as in our protein replacement applications, or directly into a specific tissue such as the brain, as in Huntington's disease?

Finally, what is the best method to deliver our ZFP Therapeutics to these locations, and what duration of effect do we require -- short, transient expression such as for a gene modification technology, or longer term expression, as in our gene repression application? We have developed a full range of delivery options for our ZFP Therapeutics, depending on the indication and the product strategy, and these are core competencies here at Sangamo.

The final question we ask is how quickly and decisively we can generate proof-of-concept data in animals and humans. One advantage of many monogenic diseases and protein replacement therapies is that animal studies and early small-scale human trials can be highly predictive of ultimate therapeutic outcome.

With that I would like to echo Edward in encouraging you all to listen to the replay of our Analyst Briefing if you'd like a deeper dive into our product development strategy. I'll now turn the call back to Edward.

Thanks, Geoff.

In addition to broadly covering how we think about our therapeutic product development platform and its applications to different disease targets, we also spoke for the first time about a new strategy that we have been developing, our In Vivo Protein Replacement Platform. This is an application that we feel truly represents our ability to reliably make highly specific and precise changes to the genome and one that can be leveraged across multiple monogenic diseases. I've asked Philip to provide you with more details. Philip?

Thanks, Edward.

Let me begin with some background. As many of you know, in 2012 we published in the journal Nature the use of our zinc finger nuclease, or ZFN, technology to permanently correct a mutation in the human Factor IX gene, effectively providing a genetic cure for hemophilia in a mouse model of the disease. In this instance we used ZFNs specific for the human Factor IX gene and a corrective DNA repair sequence, encoding a good copy of Factor IX. Systemic administration of these ZFNs resulted in the correction of the Factor IX gene and production of the corrected protein in the liver of the animal. It restored blood clotting times to normal.

We can, of course, design ZFNs that correct a variety of gene targets that are mutated in disease. X-linked SCID and alpha 1-antitrypsin deficiency are examples we also published in Nature. For each target we designed a specific set of ZFNs to precisely bind that individual gene and demonstrated highly efficient gene correction.

Thinking along the lines that Edward and Geoff have outlined, how do we maximize the value of this incredible technology? We asked ourselves, could we go one step further than doing this one gene at a time? Wouldn't it be more efficient if we could find a way of leveraging one single site in the genome to treat a host of monogenic diseases requiring enzyme or protein replacement? Could we design one set of ZFNs that would enable us to safely insert a correct copy of any gene at the single site and produce the encoded therapeutic protein from that site? What I'm going to describe is what we came up with, our In Vivo Protein Replacement Platform, which is a potentially highly leveragable method of using a single ZFN site to produce any secreted therapeutic protein that we desire from the liver.

We reasoned that the ideal gene would fit the following criteria. It needed to be highly expressed, only expressed in the liver, and a gene whose capacity was so high that coopting just a small percentage of that gene's output would be safely tolerated and provide a therapeutic dose of protein. We picked the albumin gene. It has all the properties that we desire. Very, very highly expressed, it's actually the most abundant protein found in the serum, so it's safe to coopt a small percentage of its expression, and it's highly tissue specific, as it's only made in the liver.

Just to give you some perspective, we produce about 80 grams of albumin per week, which is about nine pounds of albumin per year. So it's very clear, with that level of expression we would need to coopt very little of the total albumin production rate to achieve levels of stable protein production that will be sufficient to take on hemophilia or, indeed, many other diseases requiring enzyme replacement, including some lysosomal storage diseases.

The concept is therefore very simple. By delivering ZFNs designed to specifically target the albumin gene as well as a DNA template that encodes the therapeutic protein we wish to express, we can place the expression of this protein under the control of the albumin promoter in the liver. As we showed at ASH, this approach is agnostic to the protein payload encoded by the DNA repair template. So it could be Factor IX for hemophilia B or Factor VIII for hemophilia A or a lysosomal storage disease enzyme.

If we use hemophilia as an example, the goal in treating hemophilia with clotting factor infusions is to achieve about 5% of the normal levels of protein. Using our technology to correct the endogenous Factor IX locus, we achieved over 20% of the wild-type levels of Factor IX, which is corrective in terms of clotting time. Using the In Vivo Protein Replacement Platform powered by the albumin locus, we achieved up to 100% of the normal Factor IX levels in mouse models. Similar data were also presented at ASH demonstrating the feasibility of this approach with four different enzymes that are mutated in Fabry, Hunter, Hurler and Gaucher disease, all of which lysosomal storage diseases.

So, in summary, we've taken our highly disruptive technology platform, which enables us to specifically target a chosen location in the human genome, and achieved permanent genome editing, and we've developed an entirely new product strategy that has the potential to be applied to a wide range of monogenic diseases where the liver is the appropriate organ to deliver our therapeutic payload.

And on that note I'll hand you back over to Edward.

Thanks, Philip.

So, what we have tried to do today is give you insight into how we approach targets and implement our strategy in the development of our ZFP Therapeutic pipeline. Over the next year we expect to make significant progress in delivering on the promise of ZFP Therapeutics. We will complete our Phase 2 clinical trials in our SB-728-T HIV/AIDS program. With positive data from these studies we expect to partner this program for further development and commercialization. You can expect data presentations from these studies in the first and second half of 2013 as well as a presentation at CROI on further immunological data from our earlier trials.

Over the next year we will continue to present data from our partnered programs in hemophilia and Huntington's disease and our proprietary programs in hemoglobinopathies and lysosomal storage diseases. As we outlined in our Analyst Briefing in December, our goal is to file INDs in 2014 in hemophilia A and B, a hemoglobinopathy program and our HIV application in stem cells, which has been funded by a grant from the California Institute for Regenerative Medicine, or CIRM. In 2015 our goal is to file INDs for our Huntington's program with Shire and two lysosomal storage disease applications.

I also hope that our presentations over the past few months have provided you with a sense of how our technology platform and business development strategy can create significant value yet mitigate risk via diversification and leverage. We have distinct therapeutic product development strategies that can be implemented to address a variety of well-validated targets. We have a business development model that has enabled us to generate both nontherapeutic and therapeutic partnerships as well as proprietary programs, and, as we have a platform, we can and will seek out further therapeutic partnerships to bring selected programs through clinical studies to commercialization. This, along with our careful management of our resources and our ability to leverage advancements of our technology across the platform, has given us the balance sheet strength to pursue an ambitious therapeutic product development pipeline.

On the financial side, we began the year with just over $76 million after an essentially cash-burn-neutral fourth quarter and expect to end 2013 with cash and cash equivalents of at least $55 million. This cash projection does not, however, include any new agreements or partnerships that we may develop beyond our agreement with Shire.

Needless to say, we are looking forward to an exciting year of progress in what feels like a promising climate for Sangamo. There is strong interest from big pharma, patients and investors in potentially curative approaches to genetic and rare diseases and a growing appreciation for the potential of our ZFP Therapeutic platform.

We look forward to keeping you informed of our progress. We will be presenting at the Leerink Swann Global Healthcare Conference as well as the RBC Capital Markets Global Healthcare Conference in February in New York, the Cowen and Company 33rd Annual Health Care Conference in early March in Boston, and the Barclays Global Healthcare Conference in late March in Miami. And, as we mentioned, data from our Phase 1 HIV trials will be presented at CROI in early March.

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

Thank you.

(Operator Instructions)

Our first question is from Charles Duncan, at Piper Jaffray. Your line is open.

Hi, guys. Thanks for taking my question, and congratulations on a good year of progress.

Thanks, Charles.

So, my first question is on that upcoming data at CROI. It's clear that as you outlined that's going to be additional data from Phase 1. Can you help us understand how to think about that with regard to the ongoing Phase 2? What would you expect to see?

I don't know that -- I'll speak while Geoff and Dale collect their thoughts on this -- I mean, I would probably say we're not interested in particularly front running the actual presentation. I think the way I've characterized it before, Charles, and I'll certainly ask Dale or Geoff if they want to comment further, is that at ICAAC in September for the first time we really laid out the immunological underpinnings of this approach in terms of both durability as well as the type of T cells that are involved. And I think you should expect to see further analysis along those lines. I'll pause there and see, Dale, or Geoff, want to add to that or have any more color on that? No, I think that -- I mean, that about covers what I think we would highlight in terms of the expectations.

Okay. That makes sense, Edward. And just to be clear, you stated your strategy, then, if you have positive data out of Phase 2, is to seek a partnership for future development?

That's correct.

And then if we could move on to the INDs within the Shire partnership, could you help us understand some of the needed steps required to get to those INDs and whether or not you'll be increasing visibility on that progress?

Well, again, I'll start and happy to have Philip or Geoff or Dale provide more color. This is a -- and we've tried to lay out at the Analyst Briefing some of the major buckets here, Charles, and so refer people to the specific sections in the Analyst Briefing where we went through some of the next steps in detail. But essentially what we need to do, and starting with the hemophilia program, is scale up in -- from small animals to large animals, establish the delivery modalities and ratios in terms of delivery, and then with that in place move forward into standard GMP production, toxicology studies and IND filings. But that's a very high-level representation. Anybody want to drill down on any of that in any more detail? I mean, I think the critical steps are really showing that we can continue to move up in scale, both in terms of delivery efficiencies to large animals and then up in scale in terms of manufacturing, and that's the -- those are the sort of critical path items for us.

And then success will be defined by the actual filing of INDs, or do you anticipate being able to provide some additional information on progress? And, finally, is the filing of an IND pretty much Gantt chart driven or does it require some okay or buy-in by Shire?

Well, I think -- take them a step at a time. I think, as we mentioned, you'll continue to see us present and publish at appropriate disease-oriented meetings like the ASH meeting, like ASGCT, like Society for Neuroscience, on preclinical efficacy data. I think you'll also see major milestones announced as we move through programs such as initiation of toxicology studies or things like that. And, of course, in terms of the actual IND filing, this is a collaboration, so we will do and make those decisions in discussions with Shire, but I think we are equally motivated, both parties are motivated to move this forward in a high-quality way but also as efficiently as possible. So I think we're joined at the hip on that.

Sounds good. Thanks for the added color.

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

Thank you for taking my question. The two Phase 2 HIV trials, do you envision reporting them together, or if enrollment's different would you report one out and then the other?

Hi, Liana. Again, I'll start and Dale and Geoff can comment. These are independent studies, and so I don't see one -- I don't see them having to be linked in terms of when they're presented or anything like that. I'll give a little bit of color that I've given in the past to others.

The delta-32 heterozygote study is essentially the same process, the same treatment for all subjects on that study. The engraftment enhancement study is a dose-escalation study, starting at the lowest dose and then moving up. And so one might expect that you would see data from the delta-32 studies in sufficient numbers earlier than one might see the later stages of the higher dose in the dose-escalation Cytoxan studies. But that's a general statement about the process of the trials themselves. But I don't see them necessarily being presented together. Geoff or Dale, any --

I can't really add a whole lot more color to that, Liana. Edward's right that this probably is something of a temporal staggering of the two studies. But I can't really elaborate more in terms of exactly how much of each study we'll present in the preliminary presentation in the first half of the year, and obviously we do anticipate being done with both studies by the end of the year.

So you could have a press release on one and then a press release on the other, or would you have one press release with top-line data for both in the first half?

The possibilities are mindboggling. Yes, Liana, in seriousness, yes, yes and yes. I mean, I don't think that we're planning this to be -- not to be glib about it -- around press releases. We're really driven by the data and by a sufficient amount of data to make a sincere, legitimate, credible scientific presentation.

What do you mean by sufficient amount of data? Certain number of patients?

Yes, certain number of patients who have a sufficient amount of time that we can make a reasonable clinical observation.

And what number would that be?

That would be a sufficient number.

Okay. Can you repeat --

You're getting lots of grins around the table.

Yes. Okay, in 2014 you mentioned the INDs, and then another group of INDs. Was that 2013 or 2015 for Huntington's and lysosomal storage diseases?

I must've slurred my words. 2015 for Huntington's and two lysosomal storage disease targets.

And in 2014 what were the ones that you mentioned again?

Two hemophilia targets, Factor VIII and Factor IX, the stem cell-based HIV program that we're doing in collaboration with City of Hope and CIRM, and the hemoglobinopathies program [for the] CD34 cells.

All right. Thank you very much.

Thanks, Liana.

(Operator Instructions)

Our next question is from Elemer Piros, of Burrill Securities. Your line is open.

Yes. Good afternoon.

Good afternoon.

What I'd like to ask Edward is, and this is related to what Charles was asking about the IND-enabling studies, if you could give us an idea if there are any peculiarities, differences between when you're getting ready for an in vivo as opposed to an ex vivo trial, and, as you go from small animals to larger animals and to humans, the delivery system, would it remain the same?

So let me repeat the question just so that I have it. You're asking about sort of preclinical development path to IND filing and the differences, potential process or hurdles that might be different for an in vivo therapy versus an ex vivo therapy, is that right?

That is exactly correct, and if there are any changes, for example, as you walk up from mice to non-human primates to humans in terms of the way you deliver the therapy.

Yes, I mean, again, I'll go first here. I'm not sure that I'm the right person, but I'm also looking around the room to see who wants to raise their hand to jump on this. I mean, I think the path under CBER, and you know this is both under CBER, both in the Division of Cell and Gene Therapy, is well, well, well established, and, for instance, for our in vivo approaches, both Factor VIII, Factor IX, lysosomal storage diseases, Huntington's, we're using an AAV vector. This is -- there have been, I don't know what the right number is, I'll say thousands of patients who have been treated with AAV under dozens and dozens of INDs. And so there's a well-established path in terms of toxicology studies, CMC, release criteria for the vector and so on and so forth, and Dale has been through this dozens of times with the program.

On the cell therapy side, again, same sorts of issues, well-established path for characterization of the initial material, characterization of the release criteria and so on and so forth. So, and in terms of toxicology studies, again, well-established processes. With that said, I mean, Dale, are there any things that you would point out that differ between, I'll just take toxicology studies for cell-based therapies versus (inaudible) [vector] therapies?

I think in general human cell-based therapies, there's really no good animal model, per se, to show us exactly what's being done. And in general you put those cells into immunocompromised mice and look at safety and whatever parameters, if any, that can be evaluated. Whereas the direct viral vector therapies often can be mimicked in animals, and, where appropriate, we will do those for both preclinical and for safety. So that's the major difference.

And in terms, Dale, in terms of vectors used as you, for example, if you think about the Factor IX program, these are all scaling up? I mean, you use the same sort of delivery system used as you go from --

Yes, essentially for -- this is Philip -- for programs that -- for our in vivo programs, for example, we will be using the identical vector systems for both the small animal studies, the large animal studies, and obviously those will be the ones that we're modeling to ultimately take to clinic. So there's no change in the vector used between a small animal sort of safety testing and/or efficacy testing and the ones that we use for large animals or ultimately the clinic.

Okay.

And certainly, Elemer, in -- our in vivo vectors are adeno-associated virus, and we have access to at least two strains of AAV which are effective for delivery to the liver. So that's the approach there. The ex vivo approaches don't use an AAV. There are various other approaches that we can take to getting the encoded ZFNs and ZFPs into the cells. And clearly the toxicological issues with in vivo tend to deal with systemic delivery and so on. We still face the fact that we are targeting the human genome with our therapeutics and so that it's not usually possible to find exactly the same site in animals for the specific agent in the vivo setting. In the ex vivo setting we can modify human cells and put those into animals -- again, as Dale said, a highly artificial situation, but there the issues are engraftment and persistence and continued health of the cells and the animals during the time that you can maintain those human cells ex vivo in those immunodeficient animals.

Thank you so much for elaborating. Thank you, Edward.

Thank you.

Thank you. And I'm not showing any further questions in the queue. I'd like to turn the call back to management for any further remarks.

Great. This completes our prepared comments. I would now -- oops, wrong one -- we'd like to thank you for joining us, and we look forward to speaking with you again when we release our first quarter financial information. We'll be available later today if there are any follow-up questions. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.