Sangamo Therapeutics Inc (SGMO) 2015 Q1 法說會逐字稿

Good afternoon and welcome to Sangamo BioSciences' teleconference to discuss First-Quarter 2015 Financial Results. This call is being recorded. I will now pass you over to the coordinator of this event, Dr. Elizabeth Wolffe, Vice President of Corporate Communications.

Thank you, Kevin.

Good afternoon and thank you for joining Sangamo's management team on our conference call to discuss the Company's first-quarter 2015 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, Senior Vice President of Research and Chief Scientific Officer; and Dale Ando, Vice President of Therapeutic 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 2015. Geoff will provide an update on our ZFP therapeutic programs. And finally, Edward will update you on our goals for 2015 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 will discuss during this conference call today are based upon the information that we currently have available. This information will likely change over time. By discussing our current perception of the market and the future performance of Sangamo with you today, we are not undertaking an obligation to provide updates in the future. Actual results may differ substantially from what we discuss today, and no one should assume at a later date that our comments from today are still valid.

We alert you to be aware of the 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.

Thanks, Liz.

And thank you all for joining us for our conference call to discuss our first-quarter results for 2015, as well as our recent progress and future plans for the development of our ZFP Therapeutics pipeline.

We began this year, as we usually do, with a very busy JPMorgan Week. However, this year was quite different from any other years, as there was a significant increase and interest in gene and genetically modified cell therapies from investors and large pharma; and for us, even more importantly, a granular understanding by these groups of the power and potential of genome editing.

Our zinc finger nuclease platform, with its proven specificity and efficiency and growing clinical database, is and remains the gold standard in targeted genome editing. With our highly specific targeted technology platform, we have the potential to address a broad range of unmet medical needs with distinct technical and clinical advantages over other gene or large molecule therapies, as well as any other genome editing approach.

More evidence of our leadership was on display earlier this year, when we announced that two IND applications that had been filed with the US FDA in late 2014 for stem cell applications of our ZFN genome editing technology were both accepted by the agency and became active. This enables us to begin Phase 1 clinical trials of both of these programs. The first is our HIV stem cell program, which employs the same mRNA delivered ZFNs that have been successfully used in our T-cell program. The second is our collaborative program with Biogen for beta thalassemia. Both clinical trials are partially supported by strategic partnership awards from CIRM, the California Institute for Regenerative Medicine. I look forward to providing more detail on the progress of both of these trials on future calls.

Additionally on the clinical front, in late February, we presented an update from our 1101 Phase 2 clinical study of our HIV T-cell program at the Conference on Retroviruses and Opportunistic Infections, or CROI. These new data were from a cohort of the 1101 study that incorporated Cytoxan pre conditioning combined with treatment with a ZFN-modified T-cell product incorporating both CD4 and CD8 cells. In one subject out of three, we observed a major reduction of viral load below the limit of quantification and a significant delay in onset of detectable virus during a treatment interruption in a second subject.

While we continue to follow these subjects to evaluate the durability of the antiviral response, we also have an ongoing Phase 2 study, the 1401 study, which incorporates Cytoxan pre conditioning, mRNA delivery, and a multi-dose treatment schedule. This trial is fully accrued, and we expect to have initial data later this year.

Also on the topic of our HIV program, I should mention that our March 2014 New England Journal of Medicine paper, which described data from our first Phase 1 clinical trial at the University of Pennsylvania, was chosen by the Clinical Research Forum as one of the top 10 most outstanding research papers of 2014. And earned for our collaborators at Penn, Carl June, Bruce Levine, and Pablo Tebas, the prestigious Clinical Research Award.

To quote Carl, "This study shows that we can safely and effectively engineer an HIV patient's own T-cells to mimic a naturally occurring resistance to the virus, infuse those engineered cells, have them persistent in the body, and potentially keep viral loads at bay without the use of drugs. This reinforces our belief that modified T cells are the key that could eliminate the need for lifetime antiviral drug therapy and potentially lead to functionally curative approaches for HIV/AIDS".

Well, we would certainly agree with that. Congratulations to all the scientists and clinicians at Sangamo who have worked so hard on this program, as well as our colleagues at Penn.

On the translational front, we are also progressing with IND enabling studies for programs that are based upon our in vivo protein replacement platform, or IVPRP, with the aim of filing several INDs later this year. These include INDs for our hemophilia B program, which is partnered with Shire, and our first two proprietary programs in lysosomal storage disorders, specifically Hunter and Hurler syndromes.

Some of our pre-clinical LSD data were presented at this year's World Symposium Meeting, a multidisciplinary forum presenting the latest information from basic science, translational research, and clinical trials for lysosomal diseases. I've asked Geoff to provide further details about the data and the progress of these programs later in the call.

Another application of our technology platform that we are developing is mRNA delivery of ZFNs for in vivo therapeutic applications. In January, we in-licensed mRNA delivery technology for in vivo or systemic therapeutic applications as part of our strategy to expand our delivery capabilities and, as a result, the application of our ZFP technology into new therapeutic opportunities. As many of you know, we used mRNA delivery for all of our ex vivo programs.

Over the past several years, non-viral nucleic acid delivery technologies have significantly matured. And while these are still early days, and our in vivo ZFN mRNA delivery programs are still part of our research portfolio, we see this strategy as an entree into an entirely new set of in vivo therapeutic genome editing targets.

More specifically, mRNA delivery in vivo could enable us to not only deliver repeat doses of our ZFNs, but allow us to address a whole new class of targets based on gene knockouts, including those that have been clinically validated and are currently being developed for RNAi and antisense approaches. I look forward to updating you on our progress in this new and very exciting area in the future.

Finally, academic investigators received the final data package from the clinical trial of CERE-110 in Alzheimer's disease. This was a program that was initiated by the Alzheimer's Disease Collaborative Group, a cooperative study group, with material from Ceregene, a privately held company with substantial AAV expertise that we acquired in 2013. Consistent with the design and size of the study, the only meaningful endpoint was, as expected, that the treatment was safe and well-tolerated.

So, an extremely eventful first quarter. And with that summary, let me hand the call over to Ward for an update on our first-quarter 2015 financial results, as well as our financial guidance for 2015.

Ward?

Thank you, Edward.

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, 2015. And I am pleased to review the highlights of those results with you now.

Revenues in the first quarter of 2015 were $13.5 million, compared to $8.1 million for the same period in 2014. First-quarter 2015 revenues comprised revenue from Sangamo's collaboration agreements with Shire, Biogen and Sigma-Aldrich, enabling technology agreements and $800,000 of revenue from research grants. The increase in collaboration agreement revenues was primarily due to our partnerships with Sigma-Aldrich and Biogen. The revenue recognized this quarter from our licensing agreement with Sigma-Aldrich was primarily based on a higher royalty rate on the first $5 million of net sales of ZFP-modified cell lines for commercial production of protein pharmaceuticals. All future commercial license fees from the agreement with Sigma-Aldrich will be based on the primary royalty rate of 10.5% of net sales and sub licensing revenue.

In the first quarter of 2015, Sangamo recognized $4.5 million of revenues related to research services performed under the collaboration agreement with Shire, and $1.5 million of revenues related to research services performed under the collaboration agreement with Biogen. In addition, pursuant to the agreements entered into with Shire in January 2012 and Biogen in January 2014, Sangamo received upfront payments of $13 million and $20 million, respectively. These payments are being recognized as revenue on a straight-line amortization basis over the initial six-year research term for Shire and approximately 40 months for Biogen. The Company recognized $500,000 of the Shire upfront payment and $1.5 million of the Biogen upfront payment as revenue for the first quarter of 2015.

Total operating expenses for the first quarter of 2015 were $19.7 million, compared to $15.7 million for the same period in 2014. Research and development expenses were $15 million in the first quarter of 2015, compared to $12.1 million for the first quarter of 2014. The increase was primarily due to increases in manufacturing expenses, external research associated with our pre clinical programs, and personnel-related expenses including stock-based compensation.

General and administrative expenses were $4.7 million in the first quarter of 2015, compared to $3.6 million for the same period in 2014. The increase was primarily due to increases in personnel-related expenses, including stock-based compensation, as well as increases in legal and professional services. Non-cash stock-based compensation expense was $3 million for the quarter, with $1.7 million in research and development and $1.3 million in general and administrative.

For the first quarter of 2015, the Company reported a consolidated net loss of $5.3 million, or $0.08 per share, compared to a net loss of $7.6 million, or $0.12 per share, for the first quarter of 2014.

Turning to the balance sheet, Sangamo ended the first quarter of 2015 with $226.1 million in cash, cash equivalents, short-term investments, and interest receivable. Our net cash used in operating activities was $1.8 million for the first quarter ended March 31, 2015.

Regarding our financial guidance for 2015, we reiterate our guidance from our February earnings call. We expect to end the year with at least $180 million in cash, inclusive of research funding and milestone payments from Shire and Biogen, as well as funding from existing grants awarded by CIRM, California's stem cell agency, but exclusive of any funding from a collaboration partnership, equity financings, or other sources.

With regard to operating expenses and revenues, we also reiterate our earlier guidance. We expect operating expenses in the range of $100 million to $110 million, and revenues in the range of $60 million to 70 million for the full year 2015. Revenues include partial recognition of upfront payments, reimbursement of research services, and milestone payments from Shire and Biogen. We also expect distribution of revenue to be weighted toward the second half of the year.

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

Thank you, Ward.

As you have heard, we had a very positive first quarter, scientifically and financially. Starting the year with approximately $227 million and ending the first quarter of 2015 with $226 million which, relative to our projected burn rate, is a very strong cash position. As a consequence of this balance sheet strength, funding from our collaborators and other revenue sources, we are in a very good position to complete our ongoing clinical trials and bring up to eight new products to IND by the end of 2016.

As Ward also mentioned, and as we have previously discussed, we are guiding to higher revenues and higher operating expenses this year, as we ramp up activities to move our own programs in lysosomal storage disorders into the clinic. In addition, as we advance products through pre clinical testing toward submission of multiple IND applications and subsequent clinical studies, we see a distinct advantage in building out our own internal capabilities in AAV and mRNA GMP manufacturing. This is something that we have been working on for over a year, taking on additional facility space and actively recruiting personnel into our new technical operations group.

Importantly, as we forward integrate into late-stage clinical development, GMP manufacturing, and ultimately commercialization, we are successfully leveraging the work and advancements that have been funded by our partnered programs and are able to use these advances to cost-effectively accelerate the development of our own proprietary programs.

So, as most of you know, we are largely focused on monogenic diseases, diseases in which there is no ambiguity between the mistake in a single gene and the resulting disease outcome. Initially, we have chosen to pursue proprietary programs in LSDs, many of which are currently being treated with frequent infusions of enzyme replacement therapies. These disorders provide opportunities for us to establish technical proof of concept relatively early in pre clinical animal models and in small human clinical studies. In addition, our therapeutic approaches, aimed at providing genetic cures for these monogenic diseases, require a relatively modest initial investment in GMP manufacturing infrastructure and, ultimately, commercial sales support.

As I mentioned, I've asked Geoff to briefly describe our in vivo protein replacement platform and its significant technical and clinical advantages, as well as the recent data that were presented on our LSD program at the World Symposium Meeting in February.

Geoff?

Thanks, Edward.

Our ZFN-mediated genome editing technology provides a powerful targeted approach which enables us to modify genomic DNA sequences that are directly linked to a specific disease. We can do this in a couple of different ways. One approach is to target and directly modify the actual mistake in the disease-related gene, as we have performed and published for numerous gene targets. This approach clearly works well. In all cases, we have demonstrated highly efficient gene correction.

However, the approach is, by definition, very target specific. For each of the gene targets described, we designed a specific set of ZFNs to precisely edit within each different individual gene. A much more efficient and leverageable approach would permit us to add a correct therapeutic replacement gene into a safe harbor, such as the albumin gene, as we are doing in our in vivo protein replacement platform, or IVPRP. Targeting the albumin locus in the liver has enabled us to develop a platform requiring a single set of ZFNs. This gives us flexibility to develop potentially curative ZFP therapeutics to address essentially any disease that is currently being treated using protein replacement therapy strategies.

We developed the IVPRP approach with substantial funding from our Shire collaboration in hemophilia A and B, and are now using the same strategy in our own programs in lysosomal storage disorders, or LSDs. As Edward mentioned, we have named the first two LSD targets Hunter and Hurler syndromes, and we are working hard to file INDs for these indications by the end of the year.

We picked the albumin gene as our safe harbor, as it has all the properties that we desire. First, it's very highly expressed, being the most abundant protein found in the sera. Adults produce about 80 grams of albumin every week, which is about 9 pounds of albumin per year. Second, it's a safe harbor, meaning it is safe to co-op the very small percentage of its expression we need to produce therapeutic quantities of a replacement protein. And third, it's highly tissue-specific, as albumin is made only in the liver.

The concept is, therefore, simultaneously very elegant and very simple. By delivering ZFNs designed to specifically target the albumin gene, along with a DNA sequence that encodes the therapeutic protein that we wish to express, we can place the expression of this protein under the control of the powerful albumin promoter in the liver. Very importantly, we have shown that this approach is agnostic to the protein payload encoded by the therapeutic DNA sequence.

So with the same set of ZFNs, we can insert and express genes for human factor IX for hemophilia B; factor VIII for hemophilia A; and replacement enzymes for the LSDs Hunter, Hurler and Gaucher, and potentially many others. Early pre clinical data from our LSD programs were presented at the World Symposium in early February. We demonstrated that the IVPRP approach can be used to express functionally-active proteins that are otherwise defective in Hunter, Hurler, and Gaucher LSDs.

Most importantly, the replacement gene expression was measured in tissues using a variety of techniques, including an enzymatic assay which demonstrated that the proteins were functionally active. Following ZFN-mediated genome editing, we observed robust levels of protein expression in the liver and protein in the plasma and spleen, resulting in up to 100-fold increases of the replacement protein for Hunter syndrome and up to 10-fold for Hurler in these tissues.

The important points here are that we are obtaining very robust levels of expression of these therapeutic proteins in the liver. The protein produced is enzymatically active, and the proteins are being secreted into the circulation and taken up from there into other tissues. Furthermore, elevated enzyme activity in the plasma was sustained over the course of the two-month study, pointing to a potential lifetime of activity. These data are now being extended into disease models, and we expect to update on these programs at the upcoming annual meeting of the American Society for Gene and Cell Therapy.

While bone marrow transplants are used to treat severe Hurler Syndrome, this treatment is only possible if a healthy match bone marrow donor can be identified and is associated with some acute mortality and a significant risk of long-term graft versus host disease. Many Hurler Syndrome patients, and most patients with Hunter Syndrome, are more commonly treated with weekly infusions of enzyme replacement therapies, which are very expensive and take several hours to complete. Our therapy, which makes a permanent change in the patient's liver cells so that they express the replacement enzyme at stable levels for the lifetime of the modified cells and their progeny, is designed to provide a single treatment with a long-lasting and possibly lifelong effect.

This is where our technology is materially different from traditional gene therapy approaches that are being developed to replace a variety of enzyme replacement therapies, including LSDs and hemophilia. These approaches deliver an AAV vector encoding a replacement gene. The AAV does not integrate its DNA into the genome, which makes it a very safe vector for gene therapy uses. However, the vector's DNA is maintained independently in the cell's nucleus. And when that cell divides, the AAV vector is distributed between the daughter cells and can and will eventually be diluted out of the system.

This is an important point when you consider that in order to most effectively prevent damage due to their disease, the ultimate target population for these treatments will be children whose livers are not just turning over and replacing cells, but are also actively growing. To intervene in the very young and achieve a lifelong therapeutic effect from a single administration demands stability of enzyme expression over the lifetime of the patient.

It is precisely this ability to drive a targeted, permanent change at the genomic DNA level that is enabled by our ZFN-driven in vivo protein replacement strategy. Thus, by harnessing a tiny fraction of the liver's powerful albumin promoter and synthesis and secretion pathway, we expect to be able to produce sustainable levels of therapeutic enzymes for virtually any enzyme replacement therapy.

As Edward noted, we are on track to file IND applications for our Shire partners Vector IX program, and for both of our programs in Hunter and Hurler syndromes this year. Additionally, we are working on other LSDs, including Gaucher syndrome; and our plan is to file two additional LSD INDs in 2016.

These are very busy and exciting times at Sangamo, and I look forward to updating you on our progress in future calls. And with that, I'll turn the call back to Edward.

Thanks, Geoff.

So as you have heard, 2015 is a very important year for Sangamo, as we advance programs in our therapeutic pipeline through a Phase 2 clinical trial in HIV; initiate two new clinical trials in stem cells for HIV and beta thalassemia; and move several programs through final pre clinical studies with the aim of filing three new IND applications by the end of the year.

We understand that the vast majority of the activities that are part of this process are not particularly visible to the outside world and that this can be a source of some frustration. However, be assured that we are 110% focused on and committed to achieving these very important, but ambitious, objectives.

Needless to say, we are looking at one of the most exciting periods in gene and cell therapy and, in particular, in Sangamo's history. And we look forward to keeping you updated on our progress. To that end, we will be presenting at the Bank of America Merrill Lynch Health Care Conference in Las Vegas on May 14, 2015; at the UBS Global Healthcare Conference in New York; as well as the Piper Jaffray Genome Rx Symposium focused on gene and cell therapies later in May. In June, we will also have presentations at the Jefferies Global Healthcare Conference and the JMP Securities Life Sciences Conference.

On the research and development side, we will be presenting data from a variety of programs and research collaborations in numerous monogenic diseases, HIV. and cancer T-cell editing at the annual meeting at of the American Society for Gene and Cell Therapy in New Orleans from May 13 through 16, 2015.

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

(Operator Instructions)

Charles Duncan, Piper Jaffray.

Hello, guys. Thanks for taking the question, also the update on the IVPRP, and congrats on the good revenue and research support in the quarter. Edward, I wanted to ask you a question around the IVPRP. You mentioned the LSDs. And given the mice data that was recently presented, I'm wondering what kind of work needs to be completed to move those programs into the clinic, or at least to filing an IND?

Well, I'm fortunate, and you're fortunate, that I'm surrounded by my colleagues who are spending every moment of every day working on that. I don't really know how granular we're going to be in terms of this experiment and that experiment and so on. I will say that -- I'll start off, and then Geoff or Philip or Dale, you're more than welcome to comment -- I will say that we are -- the Shire programs, particularly the Factor IX program, as we said in the script, have given us an absolute clear path towards what needs to be done from a CMC perspective, from a toxicology perspective, from an efficacy perspective. And we've had very productive and robust interactions with the agency across all of these areas.

So I would just simply say that while, as I said in the script, it's not terribly visible, and I know that can be, that lack of granularity or week-to-week, month-to-month sort of where are you in the process, can be a bit frustrating. We are working, and I think I'll add intelligently, on that list of tasks. And so let me just say, Geoff or Philip or Dale, is there anything on a more granular basis that is worth adding here?

Charles, it's a good question. But I would just reiterate that there is an experience curve effect here. Obviously, we've been working on the IVPRP with hemophilia A and B for some time now. So this has certainly given us a great deal of guidance to apply as we move forward with the subsequent programs, which are sort of based on a kind of plug-and-play approach, as we've described, with the same albumin target, but all we need to do is swap out the sequence for the actual corrected enzyme that we want and protein that we want to express from that locus.

Okay. And I appreciate not being able to be overly granular on a lot of these details, but I guess would you characterize the work as more Gantt chart type work that needs to be done, or are there significant experiments where there is technical risk that you're looking forward to getting the results from?

Well, you're probably not going to like my answer again any more here. But I'd say when you are eight years into commercial sales of a therapeutic, you still have expose to technical risk. So yes, we are Gantt charting the hell out of everything, and we all look at it on an hourly, if not more frequent, basis, and we all ask each other how we can chop time out of that and leverage our balance sheet in doing that, and all the things you'd want to know that we are doing.

But I'm certainly, nor are any of my colleagues, going to sit here and tell you that these things are risk free and so on. Do we have to change any laws of thermodynamics? No. But this is not the 19th time that something like this has been done. This is inventive, important science. I don't know if anybody wants to add to that. My colleagues are pleased that I didn't tell you that it was just a connect-the-dots Gantt chart exercise (laughter).

This approach, while it's extremely appealing, is, let's face it, it is new to the world.

It's inventive.

So everything needs to be seen in that light. But the good news is that we have significant experience, here, acquired over the past few years, and that is it enormously helpful to help us to manage some of those inventive steps.

And then one last question and I'll hop back in the queue, regarding the IVPRP program. Clearly this is potentially a paradigm shift, given the current or over the current standard of care, but also some of those that are contemplated with some of the gene therapy programs.

Edward, I'm sure that you've given some thought to this, but could you share with us some of your early thoughts on the commercial model and how you might, should you realize success with, say, a Hunters or Hurlers, establish clinical value and derive financial benefit from that?

Well, as you and I -- and Charles, you and I have discussed this and it's an important, important topic, and we could consume a great deal of this call or this period on this. I think that one of the things I will reiterate -- I'll just do two things -- one, I think these are areas, given the, as we've said before, the unambiguous relationship between the disease and the properly expressed protein, that we can establish clinical POC rapidly. And that's one of the things that we believe is a real advantage of what we are doing.

In terms of monetization and commercial value realization, that's a complex subject and one that is evolving. And I think there's going to be more than one model for these potentially curative outcomes. But I will say this, whatever model -- and we've spent a lot of time on this --but whatever model, ultimately, for any given program that is adopted, it has to make sense for three basic constituencies.

It has to make sense for the patient. The patient has to see great value and benefit in this. It has to make sense to the reimbursement organizations. They have to see real differential value in the replacement of these kinds of curative outcomes for alternative therapies.

And third, it has to make sense for the inventive company. And as time goes on, the balance and that multi-variable equation will be worked out. But I'm going to stop there and we'll have to take it up over a beer sometime.

No problem. Thanks for the added color. Looking forward to the progress.

Thanks.

Cory Kasimov, JPMorgan.

Good afternoon, guys, and thank you for taking my questions. I've got a few for you around the beta-thal program. I guess two easy ones first. When do you expect to start the Phase 1-2 trial, and how many patients do you plan to enroll? And then I'm curious about how you're thinking about the expected kinetics of the therapy. I think investors will naturally try to compare it with what Bluebird has demonstrated thus far with their lentiviral approach, and I'm wondering if you think that's appropriate for people to do? Thanks.

Sure, Cory. Thanks for the questions. So one of the things to say right up front is that this is a partnered program with Biogen. And so the kind of guidance that I'm going to be able to give is limited, is more limited. But, we've certainly said that our goal is to open the study, initiate the study in the first half of this year. And that continues to be our objective. And, we fully expect to accrue and treat patients in the second half of this year.

In terms of the total size of the study, I think we've publicly said that that's around 10 subjects on the study. But in terms of overall guidance and so on, I think I'm going to limit my comments to that. I guess I'll, Philip, maybe ask you to start with, and then Dale and Geoff pile on, if you will, in terms of kinetics and endpoints, transfusion independence, what we expect to see here.

Yes, sure. So on the science side, obviously there is an attraction to trying to compare the two approaches. And at some level, you'd think that would be relatively easy to do. The one difference is that in the studies by Bluebird and others, the transgene is identifiable as a separate protein to an endogenous protein that is expressed normally in these subjects. And so that makes it a little bit difficult for us to say that we have, for example, a target number of grams of our transgene that we are putting in.

Don't forget, in thalassemia patients, essentially the only cells that survive from the patient's own stem cells that are going through erythropoiesis are the ones that elevate fetal globin. And that's our strategy for reconstituting full erythropoiesis. So we tend to think about this a little differently. We think about how the approach will correct the erythropoietic deficit on a per-cell basis, and so making sure that a cell that has undergone the appropriate genetic modification that we instill, making sure that will correct erythropoiesis in the progenesis of that cell.

And then we think about how to make sure that enough of those cells engraft into the subject. And so that's how we think about how our approach will through the early stages of clinical development. But I'll pause here and see if Geoff or Dale want to add some color.

Geoff, anything else?

No. I mean, I think that we've -- clearly, the approach that we're going to be taking in terms of the bone marrow transplant is similar to other gene therapy approaches, including the Bluebird approach. The effect of the gamma-globin is again similar to a corrected beta-globin, to essentially allow a population of altered stem cells, the ones that we put in, once engrafted, to successfully erythropoese under the kind of very accelerated drive that these beta-thalassemia patients have, because they've got a lot of stem cells making almost no protein. So they've got the revs going, the rev counter is almost off in the red zone.

And if we can just get a few -- certainly, if you look at some of the data from transplant studies in mice, as well as in humans historically, you probably don't need more than, say, the order of 10% plus or minus of those cells with the revs up the red zone to actually be able to significantly correct the hemoglobin. So that's the theory on which we are operating. I think the rest will be down to the actual clinical results.

So, Cory, the only thing I would add is, with that said, from an efficacy perspective -- and as you've heard, I think they're likely, at least mechanistically, to be, I'll say, equivalent kinds of approaches. Where they are starkly different is in the mechanism, one being an integrating vector and one being a transient expression of a zinc finger nuclease. And so I think at the end of the day, if the outcomes, from an efficacy perspective, are largely equivalent, I think the differentiation may well be around the ultimate safety of these products.

Okay. Thank you, guys. Appreciate it.

Liana Moussatos, Wedbush.

Hello, Liana.

Hello, Edward. You mentioned releasing data from the 1401 trial later this year. Could you tell us what kind of endpoints and numbers of patients and types of data we should expect? And will any of it be granular, since that's the favorite word today?

It is the favorite word today, isn't it? Well, let's see, I think what we've guided to is initial data by the end of the year. I'm looking around the room for head nods. I think what we said is the 1401 study from an mRNA delivery perspective is nine subjects, and we've said that's fully accrued. The endpoints are absolutely the same ones that we've always talked about, obviously, safety. But the critical, critical endpoints are viral load control during treatment interruption and then subsequent durability of that viral load control. I am going to pause. And this time, I'm going to look at Dr. Ando and see if he wants to add or subtract.

Additional endpoints, CD4. The pentomer is what we refer to as the marked modified cells. Those are all, I'm going to say, important, but secondary endpoints relative to viral load control.

Thank you very much.

You bet. Thanks.

(Operator Instructions)

Ritu Baral, Cowen.

Hello. Thanks for taking my question. It's Ellie on for Ritu. Just a follow-up on the Shire question. It seems like there's still a fair amount of work to do before you file an IND, and you kind of guided to 2015 filing. Would you anticipate that would be towards the latter half of the year?

Well, Ellie, I'm reluctant to answer the question, because the assumptions of the question, I'm not sure where they come from. But yes, what we've guided to is the IND by the end of the year.

Okay. Good. Thank you.

Sure.

Ryan Martins, Jefferies.

Thanks. I just want to ask a question on manufacturing. I know you said you're obviously making some investments there. Can you talk about the system you're now using and maybe some more color on how you're thinking about manufacturing?

I'm just looking around the room to see how much we've ever talked about in terms of the systems. We haven't? I'm getting a lot of head shaking. So Ryan, we are doing a lot right now in terms of investing in both personnel and facilities, in process development, in assay development, in infrastructure, towards GMP, full GMP capabilities internally. Period, paragraph.

And that, both actually, as well as philosophically, I think, is an important core competency that we establish as we forward integrate into our own programs and so on. And we are doing that around two fundamental delivery platforms, one, AAV, and two, around mRNA delivery. We have discussed in the past that we are working with three basic AAV serotypes: AAV2, which was part of the acquisition through Ceregene, and then AAV5 and AAV6 that we've end licensed.

Full pause. Anything else that we've discussed? I don't think I'm going to get into specifics on the manufacturing process, particularly as it relates to AAV. There are well less than three established methods for that. And so you've got a 50-50 shot. But we're well down the path here in terms of CMC and GMP production on the AAV side of things.

Okay. Thanks. And then maybe once, I think you may have announced this, on the timeline for initiation of the beta-thalassemia trial did you say when that launched?

Say that again. Well down the path on what?

On beta-thalassemia.

I'm sorry. I missed the question. Say it again, Ryan.

I was just asking about beta-thalassemia. I think you may have been asked this before, but timeline for initiation of the trial and (inaudible)?

Yes, sorry. What we expect, and again, this is the Biogen-partnered program, so I'm not going to get into too much detail. But I think what we've said in the past is we expect to open that study, initiate that study, in the second quarter of this year and begin treating patients in the second half.

Okay. Thank you.

Sure. Thanks, Ryan.

And this concludes the question-and-answer portion of today's conference. I'd like to turn it back over to our host for closing remarks.

Great. Thanks. We'd like to thank you for joining us, and we look forward to speaking with you again when we release our second-quarter 2015 financial information. We will be available later today if you have any follow-up questions. Thanks very much.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.