Sangamo Therapeutics Inc (SGMO) 2013 Q1 法說會逐字稿

Good afternoon, and welcome to Sangamo BioSciences Teleconference to Discuss First Quarter 2013 Financial Results. This call is being recorded.

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

Thank you, Ashley. Good afternoon, and thank you for joining Sangamo's management team on our conference call to discuss the Company's first quarter 2013 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, Research and Chief Scientific Officer, and Dale Ando, Vice President of Development and Chief Medical Officer.

Following this call, Edward will highlight recent activities and significant events from the past quarter. Ward will then briefly review first quarter 2013 results, as well as our financial guidance for 2013. And Geoff will provide an update on ZFP therapeutic program. 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 we discuss during this conference call are based on 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 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 first quarter results for 2013, as well as our near and mid-term plans fro development of our ZFP therapeutic pipeline.

This year, a major focus for Sangamo is the advancement of our lead clinical program, SB-728-T, an autologous T-cell therapy designed to provide a functional cure for HIV/AIDS. Using our zinc finger nuclease -- or ZFN -- technology, we can disrupt the gene for CCR5, a critical co-receptor for HIV infection of CD4 T-cells, and generate a population of T-cells that are protected from HIV infections.

The aim of the therapy is to provide a reservoir of HIV-resistant, immunologically active cells that are available to fight opportunistic infections and the virus itself.

We have ongoing Phase II trials of SB-728-T that 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, knocking out both copies of the CCR5 gene makes these cells resistant to infection by HIV.

In March, we presented new immunologic data from our Phase I clinical trial at the major scientific meeting for HIV research -- the Conference for Retroviruses and Opportunistic Infections, or CROI.

The data were enthusiastically received as they extended our understanding of the unprecedented improvement in the immune system of HIV-infected subjects after a single SB-728-T treatment. The data also showed that certain cell surface markets and gene expression profiles may predict which patients will likely respond best to SB-728-T treatment, giving us a valuable insight for subjects recruitment as we continue our clinical research.

I've asked Geoff to provide more details on these data later in the call.

As most of you know, our guidance has been that we will present preliminary data from our Phase II trials in the first half of 2013, and the full data set by the end of this year. The preliminary data will be presented next week at the annual meeting of the American Society for Gene and Cell Therapy, or ASGCT, by Dale Ando, our Vice President of Therapeutic Development and Chief Medical Officer.

Dale is an invited speaker and is chairing one of the first meeting sessions on Wednesday, May 15. I've asked Geoff to outline what you should expect from Dale's presentation.

ASGCT is an important meeting for us every year, and this year is certainly no exception. In addition to Dale's talk, we will have 12 other presentations, including eight abstracts that were chosen for oral presentations. Notably, these will include new data from our in vivo protein replacement platform that further demonstrate the breadth and leveragability of this approach.

By the way, I'm very pleased to note that this abstract was selected as one of the top six talks submitted to the entire meeting. I think that this is a good indication of the kind of attention our in vivo protein replacement strategy is garnering in both academic and pharmaceutical circles.

The other presentations and posters cover a wide range of programs and collaborations, including monogenic diseases, cancer, immunotherapy, technology development, and other aspects of our efforts in HIV.

However, before going into more detail on our ZFP therapeutic programs and our plans for 2013 and beyond, let me hand the call over to Ward for an update on our first quarter 2013 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 first quarter ended March 31, 2013. And I am pleased to review the highlights of those results.

Revenues in the first quarter of 2013 were $4.6 million, compared to $3.2 million for the same period in 2012. First quarter 2013 revenues were comprised of revenue from Sangamo's collaboration agreements with Shire and Sigma-Aldrich, as well as approximately $0.5 million 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.

Total operating expenses for the first quarter of 2013 were $11.5 million, compared to $10.5 million for the same period in 2012.

Research and Development expenses were $8.2 million in the [2012] quarter, and $7.3 million for the prior year quarter. The increase was primarily due to increase in external research expenses associated with our pre-clinical programs, partially offset by lower clinical trials and manufacturing expenses associated with our SB-728-T HIV/AIDS program.

General and administrative expenses were $3.3 million in the first quarter of 2013, and $3.2 million for the same period in 2012.

Non-cash stock base compensation expense was $1.3 million for the quarter, of which $700,000 is included in Research and Development expenses, and $600,000 is included in General and Administrative expenses.

For the first quarter of 2013, we reported a consolidated net loss of $6.9 million, or $0.13 per share, compared to a loss of $7.3 million, or $0.14 per share for the same period in 2012.

Turning to the balance sheet, I am pleased to report we ended the first quarter of 2013 with $70.3 million in cash, cash equivalents, short term investments, and interest receivable, reflecting net cash usage of $6 million for the quarter.

With respect to financial guidance for this year, we are on track 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 expected 2013 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 research funding from Shire for internal and external research program related costs.

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

In summary, we are focused on advancing our clinical and pre-clinical pipeline, while maintaining our customary financial discipline. And we are pleased to have realized our financial objectives for this quarter with respect to both operating results and net cash usage.

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

Thanks, Ward. As you have heard, we ended the first quarter with just over $70 million, which, relative to our historic and projected burn rate, is a strong cash position. This keeps us on path to meet our guidance of ending 2013 with at least $55 million in cash and cash equivalents.

Underpinning our balance sheet strength, our ZFP platform enables us to pursue a business model that maximizes the value of our technology across a broad range of applications. And allows us to efficiently leverage our efforts to develop ZFP therapeutics across multiple indications, both partnered and proprietary.

The collaborative agreements that we have established in non-therapeutic applications with Dow Agro Sciences and Sigma-Aldrich provide revenues for milestone payments, sub-licensing and royalties on product sales, all at no cost to Sangamo.

Even more significantly, our therapeutic partnership with Shire around the hemophilia target and Huntington's Disease provides ongoing funding for both internal and external research costs, as well as future milestone payments, including $8.5 million for each program that we take forward to an IND application.

We believe that this solid financial foundation will allow us to advance our pre-clinical pipeline at a rate that will enable us to file up to seven new IND applications by the end of 2015, including three as part of our Shire partnership, and to complete our ongoing Phase II clinical trials of SB-728-T by the end of this year.

And now, let's turn to that program -- our lead clinical program in HIV/AIDS. I've asked Geoff to discuss the data that we recently presented at CROI, and the implications for our ongoing studies, as well as to discuss what you should expect at ASGCT next week. Geoff?

Thanks, Edward, and good afternoon to everybody. As most of you know, our zinc finger nuclease technology allows us to specifically modify or disrupt any gene of our choosing.

In the case of our HIV program, we are targeting the CCR5 gene, which encodes the major co-receptor for HIV entry into CD4 cells.

CCR5 is a well-validated target for ZFN approach to HIV, as we know that there is a well-characterized natural mutation, CCR5-D-32, which makes the CCR5 protein non-functional. This enables individuals who carry that mutation on both copies of their CCR5 gene to resist HIV infection, despite repeated exposure to the virus.

As Edward said, in our ongoing clinical program, we are knocking out CCR5 and the CD4 cells of HIV-infected individuals with the aim of generating a population of these cells that will both be protected from HIV infection and capable of mounting an effective immune response against the virus and opportunistic infections.

However, before going much further, given current therapies, one might ask the question, "Why bother? Hasn't anti-viral therapy, or ART, made HIV a chronic and controllable infection? Don't these drugs which suppress new virus replication work just fine?" Certainly -- although chronic use of ART has significant side effects. The development of current anti-retrovirals is one of the great success stories of pharmacology.

With that said, however, even the best versions of these drugs only keep blood levels of the virus below detection. They do nothing to diminish the levels of the viral reservoirs, which exist deep in the body where the virus is integrated into the DNA of a specific sub-set of CD4 T-cells, the central memory T-cells.

That's why when subjects come off therapy, the viral load in their blood rapidly rebounds as the virus emerges from these reservoirs killing many of these cells in the process.

This is why many other groups in the HIV community are researching novel approaches to clear any HIV reservoirs. And why we are for viewing our promising immunological approach with the goal of protecting critical central memory T-cells from HIV entry, and thereby providing a functional cure for HIV.

As you are aware, one of the reasons that HIV has been such a difficult virus to thwart is that it kills the CD4 T-cells, including central memory T-cells, depriving the body of an immune cell type that is critical in the battle against infections and providing long term immunity. CD4 cells, also called T-helper cells, play a vital role in controlling viral and bacterial infections.

In simple terms, they circulate throughout the body in the blood and lymph tissue. And when they come across a pathogen, they become activated and divide.

Some of their progeny become what is known as effector T-cells that will secrete factors that will help another T-cell type, the CD-8 T-cell, to do the actual killing. Without this help, CD-8 T-cells are not effective killers.

Some of the cells will become memory T-cells. Memory T-cells persist in the circulation for long periods until they re-encounter the same pathogen. Then they quickly reactivate, reacting more rapidly than they did in their first encounter.

One of the central problems of HIV, however, is that once CD4 cells become activated, they also become better targets for the virus and are killed. This becomes a vicious cycle which cannot, for the reasons I just explained, be addressed by ART.

What we are trying to do is break this cycle and protect and empower the body's immune system to control the virus without anti-retroviral drugs.

We believe that our approach, like any other immunological response to an infection, does not require us to protect every single CD4 T-cell in the body -- just a sufficient number of cells of the right type that are capable of recognizing the virus and ultimately helping the CD-8 T-cells destroy it.

Results from our Phase I study suggest that we are doing just that, and have given us valuable insights into both the properties of SB-728-T and potential approaches to maximizing its effectiveness. The data to date demonstrate that our ZFN modified cells engraft well once infused back into the body.

And what I mean by that is they circulate, as normal T-cells do, through the blood stream, the lymphoid tissue, including the gut-associated lymphoid tissue which harbors much of the HIV reservoir. The ZFN modified cells appear to behave just like unmodified cells from an immunological perspective. And they are persistent -- in fact, increasing in number after infusion into the body in our most responsive subjects.

We can still detect ZFN modified cells in all of the subjects that we have treated, some of whom were infused over three years ago.

A further observation that was made in the Phase I studies was the unprecedented positive effects of SB-728-T on the immune system, and, particularly, increasing levels of CD4 T-cells, the cells that the HIV infection destroyed.

With SB-728-T treatment, we see a sustained increase in CD4 T-cell counts in the blood in the majority of subjects, which also leads to a normalization of the CD4 to CD-8 T-cell ratio, our marker of the overall health of the immune system.

This unique immunological reconstitution effect has not been seen to this degree with any other treatment, and occurred over and above any increases in T-cell counts induced by ART.

To try to better understand the mechanism of this increase, we looked more closely at the types of cells that were part of this phenomenon and the role that they play in immune function. This work was carried out in collaboration with the laboratory of Dr. Rafick-Pierre Sekaly, who is co-director and scientific officer of the Vaccine and Gene Therapy Institute of Florida and a leader in this area of immunology.

We presented initial findings at the Interscience Conference on Antimicrobial Agents in Chemotherapy -- or ICAAC -- in September last year. And further data at the CROI meeting in March.

We analyzed the types of CD4 cells in blood samples from the nine subjects enrolled in the first three cohorts of our SB-728-902 study. Samples were collected prior to and over the period of a year post-treatment with a single infusion of SB-728-T.

In all subjects, we saw durable increases in CD4 T-cell count over baseline over at least 12 months, which, overall, was statistically significant. Five of the nine subjects demonstrated a remarkable increase in CD4 counts, which improved to greater than 500 cells per micro liter, a level that was maintained for a year or more post-treatment. And which, for reference, is the usual T-cell count threshold for initiation of our HIV-infected individuals.

Perhaps even more importantly, when we look more closely at the types of CD4 T-cells in the SB-728-T product, and in the circulation post-treatment, we found increased levels of central memory T-cells. Long term increases in CD4 T-cell counts correlated with increased numbers of central memory T-cells. And, importantly, increased ZFN mediated CCR5 disrupted central memory T-cells.

We also observed that levels of CCR5 disrupted memory T-cells were stable or increased over time, compared to other T-cell sub-populations.

In addition, we saw that those subjects that had shown the greatest response in terms of an increase in their CD4 cells had a particular cell surface marker profile and gene expression signature.

Specifically, these higher levels of central memory T-cells were correlated with markers that indicated that there was less general inflammation in the immune cells, and less activation of central memory cells, which may provide useful clues as to which patients may respect best to SB-728-T. We continue to extend these studies.

Returning to our ongoing clinical studies, consistent with the biology and our original hypothesis for this program, in Phase I trials we saw a statistically significant relationship between the level of engraftment of ZFN modified cells in which both copies of the CCR5 gene had disrupted -- so called biallelic modification, which affords complete protection from HIV entry and the level of virus in the blood in HIV infected subjects during the treatment interruption from their anti-retroviral medication.

This observation prompted us to initiate two new clinical studies -- SB-728-902 Cohort 5, and SB-723-1101, both of which aim to maximize engraftment of biallelicly modified T-cells.

The former is in subjects that already have one of their CCR5 genes knocked out -- so called CCR5-D-32 tetra zygotes. And the latter, in the rest of the HIV-infected population in which we are using a conditioning regimen with Cytoxan designed to enhance engraftment of our ZFN modified cells.

In both of these studies, while subjects remain on ART therapy through initial SB-728-T treatment, they later undergo an interruption of their anti-retroviral drugs during which we can evaluate the relationship between the levels of engraftment of biallelicly modified cells and numerous immunological parameters, as well as the affect on viral load.

Why are data that we have generated thus far so important, and why are we so excited by our progress? If we consider the factors required for an immunological approach to a functional cure, we have successfully worked through the list of things that are necessary for us to be successful.

First, we have modified and protected a critical cell type -- CD4 central memory T-cells. These cells engraft, traffic throughout the body, appear to be immunologically active, and finally, persist, including in sights which harbor the HIV reservoir.

In addition, we have identified key immunological markers of inflammation that correlate with the degree of engraftment and can potentially aid in the selection of subjects for which SB-728-T maybe most effective.

Second, we see an unprecedented increase in total CD4 T-cell levels, which correlates with the levels of protected CD4 central memory T-cells, suggesting immune reconstitution in the subjects treated with SB-728-T. What else do we need?

Our ongoing studies aim to answer three further questions. First, how many biallelicly modified T-cells to we need and of what cell type, such as CD4 memory cells. Second, other cells HIV reactive and capable of supporting a response to the virus. And, third, are there biomarkers that can identify the best patients to treat with SB-728-T? These are precisely the questions that are being asked in their ongoing trials and immunological investigations.

Finally, before I turn the call back to Edward, as you know, we will present preliminary clinical data from these Phase II studies next week at ASGCT.

These are ongoing studies. Therefore, not all the subjects have been included. So, we will only include data from those subjects who have been enrolled in the studies for sufficient time for us to present a meaningful amount of clinical data.

Second, these Phase II studies, like all Phase I and Phase II trials, are, by definition, studies to evaluate safety and signs of efficacy.

As such, we plan to present a broad set of clinically important endpoints and observations, but are guiding our path forward toward the prosecution and completion of the trial. These will, of course, include data around the three questions that I proposed earlier, as well as viral load measurements and other relevant immunological data.

With that summary of our SB-728-T program, I look forward to seeing many of you at ASGCT next week, and to the opportunity to discuss our new HIV data with you shortly thereafter. With that, I'll hand the call back to Edward.

Thanks, Geoff. To state the obvious, this is a very exciting and important time at Sangamo.

Within the next week we'll have important data presentations from both our lead clinical program, as well as further validation of the leveraged ability and disruptive potential of our in vivo protein replacement platform.

As the year progresses, we expect to present further data from our partner programs in hemophilia and Huntington's Disease, and our proprietary programs in hemoglobinopathies and lysosomal storage disorders.

We are very focused on our development goals and plan to file up to seven INDs over the next three years, including INDs for 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 2014. And, in 2015, our goal is to file INDs for our Huntington's program with Shire and two proprietary programs in lysosomal storage disorders.

Later this year, we expect to complete our Phase II clinical trials of our SB-728-T HIV/AIDS program, and present the complete dataset. As we have said before, with positive clinical data we expect to partner our HIV program for further development and commercialization.

I should also note that we are developing a novel therapeutic platform. And, therefore, intend to establish additional therapeutic partnerships to help bring selected programs through clinical studies to commercialization.

In conclusion, I'm pleased with the progress we are making toward building substantial and sustainable shareholder value.

Our strategy remains focused on development of our ZFP genome editing and gene regulation technology platform to create value while attempting to mitigate risks via diversification and leverage. We are using distinct therapeutic product development strategies to address a variety of well-validated targets.

Our business model has enabled us to generate both non-therapeutic and therapeutic partnerships, while retaining significant value in our proprietary programs. And by carefully managing our resources and leveraging advancements of our technology across the platform, we have the balance sheet strength to pursue an ambitious but highly disruptive therapeutic product development pipeline.

So, as I said, these are both exciting and important times at Sangamo. And we look forward to keeping you informed of our progress.

In addition to the presentations at ASGCT next week, we will be presenting at the Bank of America Merrill-Lynch 2013 Healthcare Conference on May 16.

I also want to take this opportunity to announce that our annual shareholder meeting will be held at 10.00 a.m. Pacific Time, on June 12, here at our Company headquarters.

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 of Piper Jaffray. Your line is open.

Hello?

Mr. Duncan, please check your --

Hello.

Charles?

Hi. Sorry. Just hard time going back and forth between calls. And you may have addressed this in your prepared remarks, Edward, but I'm wondering if you could characterize it -- I know the data has yet to be presented. But help us understand preliminary data.

Do you think there's really mostly value in terms of technological validation? Or some clinical (inaudible) concept for next week's presentation at ASGCT?

Well, Charles, we did address the preliminary data aspect. And I'll just repeat what Geoff said. And that is that we will be looking at subjects that have had sufficient amount of data in order for us to have a meaningful clinical perspective on them. I'm not sure I caught the second part of the question. You were breaking up -- at least at this end.

Sorry about that. Do you see the value in the data as helping you to gain confidence from a technological perspective? Or for it to translate into clinical benefit? What is the key question that you'd like to have answered in your minds for the data next week?

Well, I'll start and then I'll defer to Geoff and Dale. My point of view would be both. Right? That, as Geoff discussed in some detail, we will be looking at a wide range of endpoints in these studies that, to date and going forward, truly help us learn and inform the mechanism of this immunological therapy.

And, obviously, throughout that, included in that, are elements of endpoints that speak to clinical benefit. So, Geoff, is there anything else to add?

Yes. Charles, I think, in terms of the question of validating the technology, we're feeling pretty confident about the technology at this point. We've got a pretty expansive Phase I dataset showing that, indeed, we can modify these cells and safely give them to patients where they can graft the [fifth], and do all those good things.

So, you know, I think this is an ongoing clinical development program. It's exploratory. And we will be looking to see progress in terms of measuring biallelic modified cells. How much do we need? What are the right cells? Are they HIV reactive? You know, clearly are they supporting a response to the virus? And also are we seeing biomarkers that will help us refine the program as we go forward?

So, again, to repeat Edward, it's really -- it's both. But you should see some progress in our ongoing clinical evaluation of SB-728-T.

That's helpful. Thanks for the added color, folks.

Yes.

Thank you. Our next question is from [Leanna Mistasos] of Wedbush. Your line is open.

Thank you. Since the goal you mentioned is for the HIV program is to partner it before Phase III, what are partners telling you they want to see in the data? Do they need to see -- like for drugs, a reduction viral load to undetectable for a period of time? Or is the reconstitution of the immune system enough for them to pull the trigger?

Well, Leanna, it's a good question. And it's a heterogeneous population out there. The most obvious and accepted endpoint in HIV is impact on viral load. And so, there's no question that that is the primary recognized endpoint and of greatest interest.

With that said, and I think we'll be speaking -- we have spoken to this at ICES and CROI -- we're speaking more to it going forward -- is really the unprecedented immune reconstitution that this product provides to these patients.

Then, ultimately, if you think about the disease in terms of the current ART therapy, and as Geoff commented in his program, there's been nothing that's been shown to have the kind of increase and durable increase in CD4 counts that this drug has accomplished with a single treatment.

So, I think both elements are important to partners. And one, obviously, has a more established clinical development pathway. The other has an absolutely unprecedented immunological benefit to HIV-infected subjects.

So, both, in other words. You need both?

Well, again, your question was in the context of partnering. But I think both are relevant. Yes.

Okay. Thank you very much.

Thank you. Our next question is from John Newman of JMP Securities. Your line is open.

Hi, guys. Thanks very much for taking my question. I just have two quick questions. The first one is can you give us as sense as to the type of data that we would see by year-end, versus the type of data that we would see next week on the HIV program?

And the second question that I had was -- I know that the number of subjects in these studies that you will be discussing next week is relatively modest. But might we see any information on viral tropism at all? Thank you.

Sure, John. Thanks for the question. Well, on the first question, what are the types of data that you'll see now, versus the types of data that you'll see at the end of the year -- it's the same answer.

Types of data -- and I won't repeat them now -- Geoff went through them in his prepared comments -- cover the gamut of relevant endpoints, both viral as well as immunologic, that are important for this immunological approach to the disease.

So, what you should expect to see is now preliminary. So, a fewer number of patients, and then at the end of the year, a complete dataset.

I'll also say that in one of the studies -- the Cytoxan study that's a dose escalation study -- and so, you'll obviously see at the end of the year more data around the higher doses than you'll see at the lower doses in preliminary data.

In terms of the question about antiviral data, I think again, that is certainly a part of what we'll be discussing, both for preliminary data as well as datasets at the end of the year.

Let me look at Geoff and Dale and see if they think that's responsive to your question.

(Inaudible) limited to the (inaudible).

Yes. And so, I apologize. Go ahead, Geoff.

Yes. So, in terms of tropism, the studies are designed to enroll patients who are infected exclusively with the R5 virus.

Okay. Thank you.

Thanks, John.

Thank you. Our next question is from Ryan Martin with Lazard Capital Markets. Your line is open.

Ryan?

Yes. Can you hear me?

I can now. Can't now.

Looks like our next question is from [Elmer Pierce] of Bureau of Securities. Your line is open.

Yes. Good afternoon.

Hi, Elmer. How are you?

Okay. This question is going back a little bit in time. I forget whether it was ILK or an IL7 therapy in a similar HIV patient population, which led to some degree of immune constitution of CD4 T-cells. But it eventually didn't lead to a viral -- impact on the viral load.

I don't know if you remember, Geoff or Edward, whether they characterized what types of CD4 positive T-cells they were able to boost?

Yes, Elmer. I think if you're talking about the [Silcap] study performed by [Kyron] --

Yes.

-- used low dose or medium dose [tetratiniatyl] for a year in HIV subjects. The endpoint there really is finding illnesses and not viral load.

Okay.

One of the problems with just using IL2 was that it provided a growth advantage for both T-helper cells and T-regulatory cells. So, there wasn't a bias for providing a growth signal for the CD4 T-helper cells.

And I think, in the long run, there was probably only a 50 cell per micro liter increment associated with the increase in total CD4s. But, again, I think in the more detailed analysis, more than half of those cells were not of the helper phenotype. They were more of the regulatory phenotype.

And so that was the big difficulty with IL2 as a growth factor. You know, IL7, again, that is a [cytokine] for homeostatic proliferation of central memory. And one of the issues there, in terms of the risk, is increasing the size of the reservoir and these viral blips that are seen even in patients on heart therapy.

So, those have been some of the features we expect to get T-cells cytokine growth factors without specificity in HIV trials.

I see. I see.

Did that address your question, Elmer?

Yes. Most definitely it does. And, Edward, I also notice that in both the abstracts you submitted and in general there is a significant growth in the [tau] nuclease related work.

Do you envision any of your seven INDs filed with that sort of molecular (inaudible) as opposed to zinc finger nucleases?

Well, let me ask Philip to talk a little about the first part of the question in terms of ASGCT. And then we can definitely come back and address the IND question.

We have, I think, 12 abstracts today ASGCT. At this time, the vast majority focusing on the zinc finger nuclease platform. And so, that's clearly where our focus is. As you know, we have continued to be pioneers in the application and development of other nuclease platforms, including tau nucleases.

With respect to our selection of program and of technology, at this stage we consider the zinc finger platform to be superior. And I don't see any reason to switch to the tau platform. So, as of today, I think you should anticipate that the INDs that we have in our sights will be zinc finger driven.

And just to echo that, that's certainly, I think, the right guidance. Although, I will say, from a technical perspective, that is a technically driven argument from an intellectual property perspective, we're arguably agnostic, given the efforts that we've made in talents.

Okay. And the question related to your stem cell program. I again see that there is quite a bit of work being done on optimizing the right method to introduce the piece of DNA in an a-viral manner or via virus.

Where are you in terms of optimizing and getting to the [five] on protocol that you would file an IND with?

Right. So, obviously, the lead stem cell application is also an HIV. And this is the work that Edward introduced that's funded by the California Institute of Regenerative Medicine.

And we have, as I think one of the abstracts at ASGCT describes, we've essentially selected messenger RNA as the delivery platform for the nuclease for that particular cell product. And we feel very happy about that selection.

Obviously, it eliminates the create GMP grade virus for those applications, and eliminates the use of viral components in the process. And so we think it's certainly simpler. But, perhaps, just in raw numbers, we see actually improved efficacy in stem cells using this transient m-RNA approach. And so that's certainly going to be our selection for the HSC program for the HIV program.

Got it. And the last question is, of the seven programs that you discussed, Edward, how many are perhaps in non-human primate studies at the moment?

Well, I think that what we've said before is the -- what we said before is the work that we're moving towards -- INDs in 2014 have moved to the non-human primate large animal models. And so that would be three programs -- two hemophilia programs and the hemoglobinopathy program.

Okay. Thank you for answering my questions. See you next week.

Thank you. (Operator instructions). Our next question is from Ryan Martin, with Lazard Capital Markets. Your line is open.

Hi. Can you hear me now?

We can.

Okay. Perfect. My question was just to follow up also on the HIV. I know you said you'll have patients that have sufficient -- been on the trials a sufficient amount of time. Do you see that sufficient amount of time being patients who've been through the 16-week treatment interruption and beyond? Or how do you see that being a sufficient amount of time?

Yes. I think that's more or less what we've -- I don't want to be too specific. But I think in order to make a clinical judgment or have something clinically meaningful to say about this, I think having gone through a significant part, if not completed, the initial 16 weeks of a TI are what we would look at as a good parameter for patients that are valuable, presentable at this point.

Okay. And also following up on that, at the end of the treatment interruption, you do have some clear parameters that need to be looked at in order to initiate patients on ART or leave them off ART.

Is there also some element of subjectivity allowed in terms of the (inaudible) and the evaluation of the patient?

Yes, Ryan. It's Geoff here. I think that's probably best left until we tell you about the patients at ASGCT.

Okay. No problem.

The protocol has guidelines for that. And we can speak more at ASGCT when we actually present some of the data.

Okay, thanks. And then in terms of the protein replacement platform, obviously, you've talked about the extent of the data for factor nine at ASH. You also had some initial data analyzed on (inaudible) diseases. In terms of factor nine, you had some functional data on plotting. Should we expect to see functional data here for the lysosomal storage enzyme? How should we think about this presentation? Clearly it's an update and you've been selected as one of the top six dogs, as you mentioned.

Ryan, I'll comment first. Philip may want to add. What we've said -- and I'll stick to this -- is that we will have more data at ASGCT next week that speaks directly to the breadth and leveragability of the in vivo protein replacement platform. And, obviously, the elements there aren't just albumin modification, but it extends towards these kinds of biological outcomes.

So, without running in front of the data at this point, I'll ask Philip if he wants to say anything more than that. But I think we have an awful lot coming out next week, including more data around the albumin strategy.

I don't have anything to add. I don't want to get ahead of the abstract and the data. So, you know, I think you're asking the right questions. And I look forward to talking to you after the data is described.

Okay. And you know, maybe, I'd rather, also, on the hemoglobinopathy program, clearly you are now using the m-RNA for delivery of (inaudible) delivery into the stem cells.

For your hemoglobinopathy programs, you're probably going to need a donor DNA, et cetera. Have you -- I don't know if you've talked about this, but are you thinking along the lines of plasma-based delivery, viral-based delivery? I was wondering if you could talk about that a little bit?

Well, we've obviously not spoken in great detail about our hemoglobinopathies programs. But just to end the suspense a little bit, there are ways of tackling this disease that do not require a donor DNA. And for those programs, we would envisage an m-RNA based delivery of the ZFN only.

With respect to provision of a donor DNA, we have not made a formal choice, but we continue to evaluate a number of different delivery devices, including plasma DNA as well as some viral vector based approaches as well at this stage. And some of those are described in abstracts with the ASGCT.

Okay, thanks. And just one final one. I noticed on the ASGCT abstracts there was some -- I guess with a collaborator -- on new (inaudible) stem cells using ZFNs there for the treatment for cystic fibrosis.

Is this an area that's just a collaboration or an area that's of strategic interest to the Company longer term?

Well, I think at this stage this work is a collaboration. We have a number of collaborations at this sort of early research phase with a number of different academic labs.

But, obviously, CFTR falls into a class of rare diseases that have very well-defined genetics. And there are common alleles which are the cause of the vast majority of disease. So, from that perspective, it remains a very interesting disease to us.

But at this stage, the information that's going to be presented at ASGCT is essentially a research stage program.

Okay. Thanks for taking the questions.

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

Right. Before I close out the call, let me correct myself.

Elmer, you asked about the three programs in non-human primates. I said hemophilia A and B. And I misspoke and said hemoglobinopathies. It's actually the Huntington's program. All those Hs got me confused.

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

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