Sangamo Therapeutics Inc (SGMO) 2015 Q3 法說會逐字稿

Good afternoon, and welcome to the Sangamo BioSciences teleconference to discuss third-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, Brian. Good afternoon, and thank you for joining Sangamo's management team on our conference call to discuss the Company's third-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; Dale Ando, Vice President of Therapeutic Development and Chief Medical Officer; Mike Holmes, Vice President of Research; and Fyodor Urnov, senior scientist and head of our hemoglobinopathies programs.

Following this introduction, Edward will highlight recent activities and the significant events from the past quarter. Ward will then briefly review third-quarter 2015 results, as well as our financial guidance for the remainder of 2015. And Geoff will provide an update on our ZFP Therapeutic programs. Finally, Edward will update you on our goals for the remainder of 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 discuss during this conference call are based upon the information that we currently have available. This information will likely change over time.

By discussing our current perception of the market and future performance of Sangamo with you today, we are not undertaking an obligation to provide updates in the future. Actual results may differ substantially from what we discuss today, and no one should assume at a later date that our comments from today are still valid.

We alert you to be aware of risks that 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 2015 third-quarter financial results, as well as our recent events; and most importantly, an update on the continued development of our ZFP Therapeutics pipeline.

The third quarter was a very productive period with -- for Sangamo, with a number of very significant accomplishments, some of them more visible internally than perhaps externally, all of which positively impacted the development and advancement of our ZFP Therapeutic programs.

In September, a very important -- some might even say historic -- milestone was achieved with respect to our in vivo protein replacement platform, or IVPRP. Our first IVPPRP therapeutic program, the Factor IX program for hemophilia B, was reviewed and received a unanimous positive recommendation from the NIH Recombinant Advisory Committee, or RAC.

Not only is this the first of our IVPRP programs to proceed towards clinical development, it is the first time any in vivo genome-editing program has been reviewed and approved by the RAC, further underscoring Sangamo's leadership in the development of genome-editing-based therapeutics.

We were obviously very pleased with the unanimous positive feedback that we've received from the RAC. The outcome reflects the -- an incredible amount of work that our team at Sangamo has put in over the past several years, and the thoughtful and very engaged dialog that we have had with the regulatory agencies during that period of time, to design not only potentially game-changing therapeutics, but state-of-the-art assays to test the safety and specificity of these therapies. I've asked Geoff to provide more detail later in the call on the RAC meeting, and our progress on our IVPRP development pipeline.

I'm also pleased to reiterate that we are on track to file the Investigational New Drug, or IND, application for our Factor IX hemophilia B program, as well as the first of our lysosomal storage disorder programs in MPS I or Hurler syndrome, by the end of 2015. And I look forward to updating you when those INDs are cleared by the FDA.

Making the RAC outcome that much more important to all of us, early in September we announced a significant restructuring of our collaborative agreement with Shire, returning to Sangamo all of the rights to the gene targets for hemophilia A and B.

Needless to say, and particularly in light of the RAC decision and our imminent clinical translation, this is a very positive development for Sangamo, as it now gives us full control of all of the programs based upon our IVPRP.

As you know, we believe this strategy is a highly disruptive, with the potential to be applied to numerous monogenic diseases, including hemophilia and lyososomal storage disorders, or LSDs, which are currently managed by protein or enzyme replacement therapies, or ERT.

Our goal with the IVPRP approach is to provide a one-time, permanent treatment that will eliminate the need and burden of ERT. Thus, the successful restructuring of our collaboration with Shire and the return of the hemophilia assets, could not have come at a better time, or be more important to our goal of creating substantial and sustainable shareholder value.

In other news, we were also very active at the scientific and medical meetings during the third quarter. In September, Dale Ando, our Chief Medical Officer, presented updated data at this year's conference on antimicrobial agents and chemotherapy, or ICAAC, for the Cohort 3* group of the 1101 clinical study of our autologous T-cell therapy for HIV, SB-728-T.

As you know, we have seen very significant, durable effects on antiviral load control in the subjects treated so far in this cohort. Two of the three subjects treated in the trial remain on an extended treatment interruption of their antiviral drugs, now out over one year, because they have shown the ability to control levels of the virus without drugs. I've asked Geoff to provide more detail as to the progress of our HIV program later in the call.

In addition to ICAAC, our scientists Mike Holmes, Ed Rebar, Fyodor Urnov, and Gary Lee, were to invited to present our zinc finger therapeutic platform at several international meetings, and our research team published preclinical data in high-impact journals, Nature Methods and Blood, supporting our ZFP therapeutic genome-editing programs in hemoglobinopathies and our IVPRP.

So, it's been a very busy and productive few months, with some activities externally visible and some not so visible. But we expect the pace of the progress to continue, and visibility to increase, as we head towards the end of the year and into 2016.

But before we go into more detail on our ZFP therapeutic programs, and what we have come up with to -- for the remainder of 2015 and beyond, let me hand the call over to Ward for an update on our third-quarter 2015 financial results as well as our financial guidance for the end of the year.

Thank you, Edward, and good afternoon, everyone. As you know, after the close of the market today we released our financial results for the third quarter ended September 30, 2015, and I am pleased to review the highlights of those results with you now.

Revenues in the third quarter of 2015 were $8.6 million, compared to $12.4 million for the same period in 2014. Third quarter 2015 revenues were comprised of revenue from Sangamo's collaboration agreements with Biogen, Shire and Sigma-Aldrich, enabling technology agreements, and approximately $200,000 of revenue from research grants.

The decrease in collaboration agreement revenues was primarily due to a decrease in revenues under the Company's collaboration and license agreements with Biogen and Shire as a result of advancing our collaborative programs through the research phase, and being positioned for clinical development.

In the third quarter of 2015, Sangamo recognized $2.6 million of revenues related to research services performed under the collaboration agreement with Biogen, and $3.3 million of revenues related to research services performed under the collaboration agreement with Shire.

In addition, pursuant to 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 on a straight-line amortization basis over the initial 6-year research term for Shire, and 40 months for Biogen.

The Company recognized $500,000 of the Shire upfront payment and $1.6 million of the Biogen upfront payment as revenue for the third quarter of 2015. The amendment of the Shire agreement in the quarter does not affect the amortization period for this collaboration at this time.

Total operating expenses for the third quarter were $21.3 million, compared to $20.1 million for the same period in 2014. Research and development expenses were $16.7 million in the third quarter of 2015, compared to $16.3 million for the third quarter of 2014.

Our proprietary programs continue to represent an increasing portion of the total research and development spend this quarter, compared to the third quarter of 2014. This is consistent with the distribution of R&D expenses for the first 9 months of 2015 when compared to the same period in the previous year.

General and administrative expenses were $4.6 million in the third quarter of 2015, compared to $3.7 million for the same period in 2014. Non-cash stock-based compensation expense was $2.8 million for the quarter, with $1.6 million in research and development and $1.2 million in general and administrative.

Additionally, during the third quarter of 2015 the Company received payment of $14.5 million as a settlement with certain investors who were beneficial owners of Sangamo stock, related to the disgorgement of short-swing profits pursuant to Section 16 of the Securities and Exchange Act of 1934.

Sangamo will recognize a $5.8 million tax benefit related to the settlement payment, of which $3.3 million was recognized in the income statement in the third quarter of 2015. The remaining tax benefit will be recognized during the fourth quarter of 2015.

From an accounting perspective, the payment will be reflected in equity as additional paid-in capital, APIC, on the balance sheet, net of the $5.8 million income tax benefit, and will not flow through the P&L.

For the third quarter of 2015, the Company reported a consolidated net loss of $9.2 million, or $0.13 per share, compared to a net loss of $7.5 million, or $0.11 per share, for the third quarter of 2014.

Turning to the balance sheet, Sangamo entered the third quarter of 2015 with $219.7 million in cash, cash equivalents, short-term investments, and interest receivables. Our net cash used in operating activities was $14.2 million for the third quarter, resulting in $24.6 million net cash used in operating activities for the year to date.

Having begun the year with $226.6 million in cash and investments, the total change in cash and investments for the first 9 months of 2015 was a net outflow of $6.9 million.

With respect to our financial guidance for 2015, we are reiterating our revenue guidance provided in September subsequent to the amended Shire agreement, and we are updating our guidance for operating expenses and our year-end cash position.

We continue to expect revenues of -- in the range of $35 million to $40 million the full-year 2015, including partial recognition of the upfront payment and research funding for internal and external research program-related costs from Biogen, and partial recognition of the upfront payment and research funding from Shire. So, no change with respect to the revenue guidance for the year.

Operating expenses are now expected to be in the range of $85 million to $90 million for the full-year 2015, due to the timing of research and manufacturing expenses related to our preclinical programs. So, a slight reduction from our earlier guidance of $90 million to $100 million for the year.

We are increasing our year-end cash guidance, and now expect to have cash and investment balances of at least $200 million at the end of 2015, inclusive of research funding from Biogen and Shire, but exclusive of any new funding from the collaboration partnership, equity financings, or other sources.

The increase in our year-end cash balance from our earlier guidance of $180 million, is primarily due to the above-mentioned payment of $14.5 million we received, related to the disgorgement of short-swing profits from certain investors that were beneficial owners of Sangamo common stock.

In summary, reflecting on the progress we have made over the first 9 months of 2015 in advancing the pipeline of our proprietary therapeutic programs as well as those in collaboration with our corporate partners, we are pleased to have had an outstanding year to date from a cash usage standpoint. We're well-capitalized to be able to take our near-term therapeutic programs forward into the clinic, while continuing to have the financial resources to prosecute our goal of filing multiple INDs in the next 14 months.

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

Thank you, Ward. As you have heard, we ended the third quarter of 2015 with approximately $220 million, and we expect to end 2015 with greater than $200 million, which gives us a very strong cash position as we rapidly advance our ZFP Therapeutic pipeline. We remain on track to file two new IND applications by the end of 2015 and another six new INDs in 2016; but more on that later.

With our focus on clinical translation in mind, let's turn our attention to our lead clinical program in HIV/AIDS, and our clinical development plans for our IVPRP over the next few months. I've asked Geoff to provide more detail on the data that we presented at ICAAC in September and how these studies relate to our strategy for this indication. I've also asked him to briefly cover the recent RAC meeting and our plans for the development of our IVPRP programs.

Thanks, Edward, and good afternoon, everyone. Our lead HIV program employs our ZFN technology to disrupt the CCR5 gene in T-cells of HIV-infected individuals. CCR5 is the major co-receptor for HIV entry into CD4 T-cells, and a well-validated clinical target for a ZFN approach to HIV.

The aim of our ongoing clinical programs in HIV/AIDS is to replicate a known protective phenotype in any HIV-infected individual. We have several clinical trials in progress. We're evaluating different ZFN delivery methods for modification of T-cells, and have an open Phase 1 clinical trial with the City of Hope to evaluate this same genome-editing approach in hematopoietic stem cells.

The idea in both T-cells and stem cells is to generate a population of cells that will be protected from HIV infection, and are capable of mounting an effective immune response against the virus throughout a patient's body, essentially providing functional control of the viral infection in the absence of antiretroviral drug therapy, or ART.

The data that we have generated in T-cells thus far are quite promising. We've demonstrated that SB-728-T treatment is directly associated with the reconstitution of the patient's immune system, control of viral load in the absence of ART, and a decrease in the all-important viral reservoir.

In September, at ICAAC, we presented an update on subjects in Cohort 3* of our 1101 study, which is designed to evaluate administration of both CD4 T-cells and CD8 T-cells that have been modified using adenoviral deliver of our CCR5-modifying ZFNs.

In addition, these subjects received Cytoxan preconditioning at an optimal dose to increase engraftment of the modified cells. In this cohort of three subjects, we've observed two individuals who have demonstrated clinically relevant reduction of their viral load in the absence of ART, which suggests that they are maintaining immunological control of the virus.

Both subjects remain on a prolonged treatment interruption, now out over one year. Given this very encouraging response, we are treating an additional five subjects with this protocol.

We also have an ongoing Phase 2 study, our 1401 study, which is designed to evaluate the effects of administration of CD4 and CD8 cells that were modified using mRNA delivery of our ZFNs, again with an optimal Cytoxan preconditioning dose.

This study will enable us to directly compare the effect of different ZFN delivery methods on the antiviral properties of the modified CD4 and CD8 T-cell population. MRNA delivery in the 1401 study, versus the encouraging adenoviral delivery approach which is being used in Cohort 3* of the 1101 study. We expect to have initial data from this analysis by the end of the year.

So, on to our IVPRP programs, which represent the first in vivo application of our genome-editing technology. In fact, as Edward noted, the first in vivo therapeutic application of any genome-editing technology. Our IVPRP approach is designed to add a corrective therapeutic replacement gene into a so-called safe harbor site in the genome.

We chose the albumin gene as our safe harbor site, as it has all the properties that we desire. First, albumin is very highly expressed, being the most abundant protein found in the serum. Second, it's safe to co-opt the very small percentage of its expression that we need to produce therapeutic quantities of a replacement protein. And third, it's highly tissue-specific, as it is produced only in the liver.

By delivering zinc-finger nucleases designed to specifically target the albumin gene, along with a DNA sequence that encodes a therapeutic protein that we wish to express, we can place the expression of the protein under the control of the powerful and constitutive albumin promoter in the liver, allowing us the flexibility to develop ZFP Therapeutics to essentially any disease currently being treated using protein replacement therapies.

Thus, with a single 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 LSDs including Hunter, Hurler, Gaucher, Fabry, and potentially many other diseases. This is an extremely powerful and disruptive therapeutic strategy.

As Edward also mentioned, we recently submitted and presented the preclinical data supporting this approach for the treatment of hemophilia B at a public meeting of the RAC. This is an NIH committee comprising a panel of national experts, representing various fields of science and medicine, that considers the current state of knowledge and technology, and reviews research with recombinant molecules.

All human gene transfer clinical trials occurring at institutions receiving NIH funding must be submitted for review by the RAC. The scope and purpose of the RAC review is different from that of the FDA, and we must still submit an IND application to the FDA for their review before being able to begin a clinical trial. However, members of the RAC conduct an in-depth written review of the clinical protocol and informed consent materials, and provide recommendations and advice.

We submitted and presented data on our preclinic efficacy and toxicology studies, off-target analyses, and proposed clinical protocol for our Factor IX hemophilia programs. The RAC recommendations are captured in a summary letter which is sent to us, the IRB and IBC reviewing our protocol, as well as the FDA.

A benefit of the RAC process is that it informs the discussions that these other bodies will undertake in reviewing our clinical protocol. In fact, members of the FDA review staff are usually present at the RAC meeting, as was the case at our recent review.

This was a critical milestone for Sangamo for a number of reasons. First, the Factor IX program represents the first application of the next wave of clinical ZFP Therapeutic development, in vivo genome editing.

Secondly, the work we have completed for our first programs in this pipeline, for hemophilia B and Hurler syndrome IND applications, has greatly informed and de-risked the path for our IVPRP approach for our other lysosomal storage disorders and hemophilia A.

And third, as we are treating subjects with each disease, we expect to be able to generate meaningful data from relatively small numbers of subjects, and positive clinical data generated in the first of these indications will be highly relevant predictors of the success of future IVPRP programs.

Also, by combining the safety experience gained in smaller studies across our initial IVPRP indications, we hope to be able accelerate our progress toward treatment of pediatric patients, in whom we believe the permanency of genome editing adds the greatest potential value.

Finally, as Edward mentioned, we are on track to file IND applications for the first two of these, hemophilia B and MPS I, or Hurler syndrome, by the end of 2015. And for MPS II, or Hunter syndrome, hemophilia A, Gaucher disease, and one other LSD, by the end of 2016.

We also remain on track to file INDs for our hemoglobinopathy programs partnered with Biogen. Specifically, we expect to file the beta-thalassemia IND in the first half of next year, and the IND for sickle cell disease in the second half of next year.

This represents an enormous amount of work and an enormous amount of progress, not much of which has been particularly visible in the outside world. But I sincerely look forward to updating you in the not-too-distant future after we've received clearance from the FDA on all of these submissions.

And with that, I'll hand the call back to Edward.

Thanks, Geoff. As you have heard, we have a lot of work ahead of us; but as Geoff said, we have also accomplished a great deal over the past few years. In addition to our six IVPRP INDs we expect to file over the next 14 months, as Geoff mentioned, we also plan to file INDs for our Biogen-partnered programs in beta-thalassemia and sickle cell disease next year.

These anticipated regulatory milestones should drive important progress in the clinic for eight new ZFF Therapeutic programs. And, based upon our increased cash guidance, we have more than sufficient capital to achieve all of these important goals.

In closing, while the past 6 months have not been particularly friendly to our stock, there's been a significant amount of accomplishments during this period -- unanimous RAC approval of our first IVPRP program; return of the lead assets in this area, Factor VIII and Factor IX, from Shire; and the very significant progress that we have made towards the clinical translation of our new ZFP therapeutic programs, all of which give us confidence that we are making significant strides in our goal of creating substantial and sustainable shareholder value.

I sincerely look forward, over the next few weeks and months, to showing you the progress we have made and the value we have created. To that end, we look forward to keeping you informed of our progress at several upcoming investment banking conferences.

We'll be presenting at the Jefferies Global Healthcare Conference in November, the Piper Jaffray Healthcare Conference in early December, and at the 33rd Annual JPMorgan Healthcare Conference in January 2016, all of which will be webcast and available on the Sangamo website.

We also will present data from both our hemoglobinopathies and IVPRP programs at the annual meeting of the American Society of Hematology, or ASH, in early December.

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

(Operator Instructions). Charles Duncan, Piper Jaffray.

This is Sarah Weber, on for Charles. In terms of visibility of your pipeline, what do you think will really best define progress in the next year? What is the most important question that you look forward to answering?

Well, Sarah, that sounds like a Charles question, doesn't it? I think, Sarah, the guidance that we've just given is a pretty clear roadmap to where we think value will be created. Starting, actually, if you want to know my opinion, with the meeting that we had at RAC around the Factor IX data. And I'll take this opportunity to say that that is a public meeting. The -- both the video and the audio are available on our -- on the RAC website.

But I think, as the programs in IVPRP unfold, one will be able to look back at the RAC data and say, that was quite useful in predicting how this will unfold. And so, as we've said, our goal is to file INDs for Factor IX and Hurler's this year, and then four more IVPRP programs next year.

And I think that kind of cascade of both regulatory milestones, and then initial clinical data, will be incredibly important for us to ask and answer those questions. Part of that is also our partnered program with Biogen. And we obviously look forward to getting the enhancer -- the BCL11A enhancer study started in beta-thal, and filing that IND in the first half; and then, with our partner Biogen, in sickle cell in the second half.

So, I think, over the next -- as we've talked about, the next few weeks, the next few months, there's going to be an enormous amount of visibility on the matriculation of this.

The other thing I'd add is that the other element of being a platform company -- and we've talked a lot about individual product translation; but the other part of that is that the platform is highly leverageable into many other areas. And we've talked about our strategy in partnering various programs. We've talked about our plan to partner for pivotal studies -- the HIV work. But the platform is highly leverageable into other areas.

And so, we continue to have, and publish around, the ability to use this technology to develop so-called universal donor cells or allogeneic cells in cancer immunotherapy. We're also very passionate about the use of zinc-finger nucleases directly for targeted knockouts, and using mRNA delivery. All of those provide opportunities to leverage the platform, forward-integrate with partners, and monetize the work.

So, at a high level, Sarah, it's data and deals. And I think you're going to see evidence of all of that over the next weeks and months.

Thanks. That's helpful. And then just one more -- you mentioned the beta-thalassemia program. Can you talk a little bit about how your program is differentiated, based on some that other companies are pursuing?

Sure. Sarah, I imagine your question is perhaps stimulated by some of the recent data that were just presented at Cooley's Anemia Conference. That's been the biggest catalyst for questions we've had around this.

I asked Fyodor Urnov, my colleague who runs our hemoglobinopathies program, who was at the Cooley Anemia Conference, to be here today, potentially anticipating a question about this. So, Fyodor, you were there. Anything you want to add in terms of those data and how we compare?

Sure. Thanks, Edward. Hi, Sarah. So, as Edward mentioned, I was just at the meeting of the Cooley's Anemia Foundation. And Cooley's anemia, of course, is the classical term for beta-thalassemia.

And Marina Cavazzana, who's one of the PIs on the Bluebird trial, showed some long-term followup findings from her patient with beta-thal. And 7 years ago, he was transplanted with his own hematopoietic stem cells carrying a disease-corrective beta-globin transgene. She gave a great talk, as always.

But I was particularly struck by two pieces of data. So, the first one was a loss of potency, which led to a loss of transfusion-independence for this subject. So, he's been, up until then, transfusion-independent for 6 years. And then recently, as Marina described, his hemoglobin dropped and he required two transfusions.

To be frank, I'm not sure what explains this loss of potency. But what I can say, based on the data she showed -- there is one other observation she described that, frankly, I think is concerning, and perhaps provides part of the explanation for this loss of potency.

So, the lentivirus -- as you know, that's what they use for their clinical program, that they use in their clinical trial -- it preferentially integrates into or next to expressed genes. So, in the case of this specific patient, what happened is, a cell carrying one such random integrant grew much better than the others.

And so, 2 years after transplant, as Bluebird have described, nearly -- well over half of virus-carrying cells had the virus in just one gene, called HMG2a. And we understand the biology here. What is happening is, the virus integrates into that gene, and that gives the cells a proliferative advantage over the other cells. And what that results in, is something called oligoclonality.

But these new data I saw were really striking. Because what they show is, concomitant with this drop in the subject's hemoglobin, the virus-carrying cells in his bloodstream also became oligoclonal again. And this time, a third of the marked cells had an integration into a gene called POLA2, and 20% had an integration into a gene called ZZEF1.

Now, I realize this is an earnings call. I don't want to get too technical. But I do want to point out that POLA2 encodes a subunit of DNA polymerase alpha primase, which is required for cell division.

So, to my eye, the simplest and most direct interpretation of these data is that the virus integrates in -- next to this gene, activates it, and that drives the oligoclonality of the cells, by giving them a proliferative advantage over the other cells.

So, you know, the question this raises in my mind is whether such an integration of the virus into a gene, that makes the cell divide faster than its siblings, is in fact required for this approach to work.

And so, the reason I bring this up is, again, to be frank, these multiple distinct oligoclonality events are a concern. Such oligoclonality that results from such a random insertional mutagenesis event, that gives the cell a proliferative advantage, is a known preleukemic event. In fact, as you know, leukemia that occurred several years after treatment, was in fact a major problem in a number of clinical trials of randomly-integrating virus-based gene therapy.

So, to answer your question about how we compare -- well, in fairly clear contrast, I think, our approach to both beta-thalassemia and to sickle cell disease is to use targeted genome-editing with engineered zinc-finger nucleases. And what we do is, we induce a highly specific, permanent genetic change at a genetic location that we define. And furthermore, we don't really leave any exogenous genetic material behind in the sell.

And so, to wrap up my -- sorry I went so long, but just to wrap up my answer to your question, from that specific perspective, my purely scientific assessment is, our approach should have a frankly much better long-term safety profile; while, we certainly hope, demonstrate robust efficacy.

That's my scientific summary of the -- sort of, the compare and contrast, and the recent data.

So, Sarah, hopefully that helped. There are others in the room that would like to pile on or comment as well, but I think we'll leave it there, and if there are other questions on this, happy to follow up. But thanks for the question.

Thanks.

Liana Moussatos, Wedbush Pacific Growth Equities.

Thank you for taking my question, and congratulations on your progress. Geoff mentioned data comparing delivery methods with the HIV program coming out by year end. I was wondering if he could go through the types of data we can expect to hear about?

Hi, Liana. Thanks for the question. Let me start, because I'm just going to repeat what was in the script; and then Geoff or Dale, if you want to add to this.

No, the goal has been what we've been talking about for the -- essentially the last half-year or so. And that is, at the end of the year, provide data on the 1101 Cohort 3* work, which involves the preconditioning of patients with Cytoxan, and then the use of both CD4 and CD8 cells with an adenoviral modification or delivery of the CCR5 nucleases.

And then the 1401 trial, which has exactly the same approach -- preconditioning; CD4; CD8 -- but uses an mRNA delivery of the nucleases. And so, the intent is to look at both of those studies and look at the outcomes. And, as you know, the principal endpoint in these is really durable viral load control in the absence of antiretrovirals.

So, Geoff or Dale, you want to add anything to that in terms of where we're headed on -- in terms of your own communications?

No, Edward; just to confirm that, yes, we'll -- as you know, we treat the patients; we observe the various cellular responses and the engraftment of the cells; and then we perform a treatment interruption to see how well the patient can control the virus following the treatment, in the absence of antiretroviral therapy. So, we'll be presenting that data from both studies.

Okay. So, will there be, like, so many patients have undetectable viral load? Or, is it more the steps getting there?

No, I think you should expect the latter. But let me modestly change the question. I don't think anybody's looking for undetectable. I think we're looking at functional control. So, that is the primary endpoint, and that's what we're trying to achieve, is durable functional control of the virus while off of antiretroviral therapy. So, that's the primary objective. And as Geoff said, we also will present, as we always do, on other elements of the therapy.

Okay. Thank you very much.

Cory Kasimov, JPMorgan.

This is Whitney, on for Cory. So, first question is, Biogen recently announced some workforce reductions and pipeline pruning; and it doesn't sound like it, but just wanted to check whether or not that affects, or you think will affect, your collaboration with them.

Thanks for the question, Whitney. I can categorically tell you, because we have asked and have clarity on the response, that it will not in any way affect our collaboration.

Got it. And then, just kind of bigger-picture, we've been hearing more and more from CRISPR/Cas9 -- from companies there, and I guess people in the field talking about that technology being sort of more user-friendly and easier to manufacture, et cetera.

So, can you just remind us kind of how you see the differences between zinc-finger nucleases and CRISPR/Cas9s, and maybe whether or not you see any specific advantages to ZFNs?

Well, it's a long but important question. And so, I'll give you very high-level, but happy to follow up, and I've given some recent talks, I think, that have a lot of slides on this. But you're absolutely right -- the CRISPR world has brought genome editing into enormous visibility. I mean, beyond enormous.

And that's a fantastic thing. Because the ability to do a targeted, double-stranded break in the DNA to drive permanent modification of a gene, allows one to drive biologies that have never existed before; and as Fyodor just pointed out, that really important differential technical advantages, clinical advantages, safety advantages, over previous gene therapy strategies. So, CRISPRs has really highlighted that and been very beneficial.

So, there are important pros and cons of every platform. CRISPRs are much simpler to engineer; much easier to make. Zinc fingers are proteins. They require, in order to make highly specific zinc fingers, an iterative process. But, quite frankly, that's what we've built here at Sangamo, and that's what we are very, very good at doing.

And on this point -- and this is really an opportunity for anybody who wants to have real clarity on that -- is please, please, go to the NIH RAC. Look at -- listen to the Factor IX presentation. Look at the data on the specificity of the albumin nucleases.

And I think that's precisely, and I think in a -- well, it's not in a nutshell; it's 2 hours. But that will give you a clear sense of how we think about the differential technical advantages of the zinc-finger platform and the ability to optimize the specificity of zinc-finger nucleases, versus the unoptimizable elements of a Watson and Crick base pair binding motif.

So, there is much, much more to say in terms of design density; in terms of delivery; in terms of the established regulatory status of zinc fingers versus CRISPRs. But I think a great starting point for people would be, if you're interested in human therapeutics -- if what is critical for any genome-editing platform is specificity -- I'd encourage you to look at the -- or, listen to the RAC presentation on Factor IX.

Got it. Thanks for taking the questions.

Ritu Baral, Cowen and Company.

How are you thinking about the design of the Phase 1 hemophilia B trial? Patient numbers; patient profile, after the RAC recommendations. And how fast do you think you can get that trial started?

Well, I'm not sure we'll be really specific until we talk about the IND, and being open, and so on. But again, you're right, Ritu. There's a lot of visibility to the trial design in the RAC meeting. And I don't think we'll comment, today at least, in terms of first patient visit and that sort of thing.

But Geoff, is there anything you want to add in terms of trial design, maybe beyond what we've discussed with the RAC?

Well, I mean, the design is pretty clear from the RAC presentation. It's a dose-escalating study where we'll escalate the dose of the adenoviral vector. And we'll be treating patients who are able to make only very, very, very tiny quantities of Factor IX themselves. So, it's not difficult to essentially stop their infusions and see whether the IVPRP therapy has led to ongoing production of Factor IX from the hepatocytes.

So, that's broadly how we're going to approach this. And we'll certainly provide you with greater details once we're through the IND process and have an open study.

Got it. And as you think of the upcoming Hurler study, how should we think about that potential design versus hemophilia B? Is it also pretty much going to be a dose escalation study, or can you be more direct with Hurler's patients?

It is likely also to be a dose escalation design. That's typically what you will do in Phase 1 studies. And again, the concept is that we will be able to detect the production of enzyme in patients in whom they lack the ability to produce the enzyme for themselves. And we can do that during the period between the infusions that they typically receive of the exogenous enzyme.

And so, we'll be looking for evidence that that enzyme is being produced during those gaps, or following discontinuation of the infusion of the enzyme.

Got it. Is there anything different about the patients that you could go after in Hurler's, whether -- possibly going after younger patients, and having any additional potential clinical therapeutic markers that you could look at? Not just enzyme levels, but biomarker levels, or any other function?

Yes. You can -- obviously, you can measure glycosaminoglycans in the urine, and various other markers that have traditionally been used to evaluate some of the pharmacodynamic effects of the infused enzymes. And obviously, if our enzymes are being produced and are being active, they will have those effects as well.

Certainly, in all of these programs, as I mentioned before, we are starting with patients who are older. But our plan is to accumulate, as rapidly as we can, sufficient data to start treating younger patients with our approach.

Because if we can actually change the genome of hepatocytes, and have that remain expressed during growth, then we have the opportunity to treat very young children -- even babies -- who have these various diseases, at the very time when those diseases are being potentially the most destructive and having their greatest sort of pathophysiological effects.

And unlike perhaps other gene therapy approaches, which may wash out during the growth of the liver, ours will not. So that, a single treatment in early childhood, we would, I think, looking at the way our therapy works, expect to be present for the lifetime of the patient.

And I think, just -- Ritu, just to emphasize Geoff's point, that really is, I think, a critical distinction between a genome-editing approach for these enzyme and protein replacement therapies, versus the standard AAV gene therapy approach. The permanence -- the durability of an integrated gene into the endogenous albumin locus -- when -- and those -- when those cells divide, that same gene is there.

And so, it's really, I think, an -- I won't say unappreciated, or -- but it's a less-recognized distinction between a genome-editing approach for in vivo enzyme and protein replacement, versus a standard gene therapy approach. So, I appreciate the questions.

Great. Thanks for the answers.

(Operator Instructions). Gena Wang, Jefferies.

Thank you for taking my questions. So, maybe I will start -- I have a few questions regarding IVPRP program. The first one -- maybe follow up Ritu's questions regarding the clinical trial design. For the phase 1 trial, will you include prophylactic treatment to control potential liver enzyme elevation?

Again, these are specifics of the clinical protocol that we intend to cover in great detail, but we'll do that once the trial is open. And that is not in the too-distant future, we hope. So, if you'll bear with me a couple more weeks, I think we'll have much more data around that, or much more details we'll provide.

Okay. Great. Also, will RAC recommendation for hemophilia B be applicable to other IVPRP programs such as hemophilia A in Hunter's? Maybe, in other words, do you need another RAC meeting in order to move these programs into clinic?

Yes. Well, it's a good question. The RAC is evolving. But all of these programs will be submitted to RAC individually. With that said, the RAC makes decisions on what they ask for public review or not. And so, going forward, that is to be determined. Geoff or Dale, you want to add anything to that in terms of RAC?

No. I mean, it's RAC's call, basically. We submit, and they invite us to present publicly. And not everyone who submits has to present or is asked to present publicly. So, we'll keep you posted.

With that said, Gena, the Factor IX RAC meeting, and the discussion we had about on-target activity, toxicology studies -- remember, these are the same nucleases. Right? So, it's the same basic strategy. And I think the difference here is the donor DNA; and obviously the disease population. But I think you can get a great deal of visibility about this strategy, and about the specificity of the nucleases, by looking or listening to the Factor IX RAC meeting.

Okay. So, does that mean you -- like, for the Hurler's, means you will file by the end of this year -- does that mean that you will not need a RAC meeting for Hurler's?

Well, again, our guidance is -- and we're quite comfortable with this -- that we will file the IND for Hurler's by the end of the year. The RAC submission and public presentation is, I'd say, something we haven't guided to, for exactly the reasons we just discussed. RAC makes the decision about whether things are publicly presented or not. So, I think the principal guidance to focus on here is the IND timelines. And we've -- we're guiding to filing that Hurler IND by the end of the calendar year.

Okay. Sounds good. And I have one last question. Just wondering when should we expect the initial data from hemophilia B program? I know it's very forward-looking. I know that [it normally] take some time, like [admit] one patient per month. But I just wanted to get a sense.

Yes. Again, I'd love to say it's going to X quarter or Y month or Z time period; but I think -- let us get to the other side of announcing that the trial is open; let us give you a little bit more specificity on the clinical trial design, and so on. And I think, in the context of that, we'll be looking to give you a little more visibility on our expectations about data presentations.

But you don't have to -- if we're looking at getting these INDs filed this year, certainly we're looking at a 12- to 18-month period for having initial data out of any studies that we start -- or, having data from the time we start those studies.

Thank you.

Thank you very much. That concludes our question-and-answer session for today. I will now turn the call over to Mr. Edward Lanphier for closing remarks.

This completes our prepared comments. I would now like -- oops, that's the wrong one. Anyway, thank you all for joining us today. We look forward to updating you at future conferences. Thanks very much.

Ladies and gentlemen, this does conclude today's program. You may all disconnect. Everybody, have a wonderful day.