Sangamo Therapeutics Inc (SGMO) 2015 Q4 法說會逐字稿

Good afternoon, and welcome to the Sangamo BioSciences teleconference to discuss fourth quarter and full year 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. Please go ahead.

Thank you, Karen. Good afternoon, and thank you for joining Sangamo's management team on our conference call to discuss the Company's fourth quarter and full year 2015 financial results. Also present during the 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; and Dale Ando, Vice President of Development and Chief Medical Officer.

Following this introduction, Edward will highlight recent activities and the significant events from the past quarter. Ward will then briefly review fourth quarter and full year financial results for 2015 as well as our financial guidance for 2016. Geoff will provide an update on our ZFP Therapeutic programs. And, finally, Edward will update you on our goals for 2016 and beyond. Following that, we'll 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 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 discussed today, and no one should assume at a later date that our comments from today are still valid. We alert you to be aware of risks that are detailed in documents that the Company files with the Securities and Exchange Commission, specifically our Quarterly Reports on Form 10-Q and our Annual Report on Form 10-K. These documents include important factors that could cause the actual results of the Company's operations to differ materially from those contained in our projections or forward-looking statements.

Now I'd like to turn the call over to Edward.

Thank you, Liz, and thank you all for joining us for our conference call to discuss our fourth quarter and full year results for 2015 as well as our near and midterm plans for the development of our ZFP Therapeutic pipeline.

The fourth quarter is always a busy time of the year for Sangamo, and this year Q4 was particularly productive, with the achievement of several important milestones. At the top of our list, we filed two new investigational new drug, or IND, applications in the fourth quarter, our Factor IX program for the treatment of hemophilia B and our first lysosomal storage disorder program for the treatment of MPS I, or Hurler syndrome. Both programs employ our In Vivo Protein Replacement Platform, or IVPRP, strategy.

In December we announced that the FDA had cleared our IND for Factor IX, enabling us to move forward with the first in vivo genome editing study in humans. And last week we announced that our MPS I program has also been cleared by the FDA to enter clinical trials.

For those of you who are keeping score at home, these are the first two in vivo genome editing protocols cleared by the FDA and represent an enormous amount of hard work over a number of disciplines by virtually all of my colleagues here at Sangamo. I want to take this opportunity to congratulate and thank each and every one of them for their skill, persistence and dedication.

In addition to the FDA review, both programs had gone through a public review by the NIH Recombinant DNA Advisory Committee, or RAC, in which our scientists and our clinical collaborators presented preclinical data and our clinical plans for each of these programs. In both cases, our presentations resulted in RAC's unanimous endorsement of our proposed protocols.

For those of you who want to get a closer look under the hood, so to speak, I would encourage you to do so. Links to the video presentations and slides for both RAC sessions are available on our website and provide a lot of detail on both programs.

Needless to say, these are historic accomplishments, as these programs represent the first applications of in vivo therapeutic genome editing and mark a major turning point for both Sangamo and the broader genome editing field. These milestones also highlight our established leadership in the therapeutic genome editing field.

We are working hard to open these Phase 1/2 dose escalation studies, and I've asked Geoff to provide more information about both trials later in the call.

Also in December we presented data from our SB-728-T program in HIV/AIDS. The presentation compared data on a variety of measures of HIV-infected subjects who, after Cytoxan preconditioning, received doses of ZFN-modified CD4 and CD8 T cells. We compared ZFN delivery -- two ZFN delivery methods, either mRNA delivery, which we used in our 1401 study, or adenoviral delivery, used in our 1101 Cohort 3* study.

While we achieved equivalent modification rates with both delivery methods, we saw the highest sustained rates of viral load control in the absence of antiretroviral medications in subjects treated on the Cohort 3* group, with two of the three treated subjects controlling their viral load and remaining off their antiretroviral medication for over a year. We have expanded this cohort by an additional five subjects and anticipate that we will have final data later this year.

As we have previously outlined, with additional positive clinical data for these ongoing trials we will seek a partner for pivotal studies and commercialization.

We also presented data at the annual meeting of the American Society of Hematology, or ASH, in December. The presentations included IND-enabling non-human primate data from our IVPRP-based hemophilia B program, and we and our collaborators at Biogen presented data from our hemoglobinopathies program documenting robust and efficient clinical-scale manufacturing of the BCL11A Enhancer disrupted stem cell product for our beta-thalassemia program.

We remain on track to file an IND application for the first of these collaborative programs, beta-thalassemia, in the first half of this year, and I look forward to updating you on this important milestone on future calls. Biogen has reported that they are on track to file the IND application for the second program of our collaboration for sickle cell disease in the second half of 2016.

Finally, we had two important publications in the fourth quarter which described efficient, targeted integration using AAV and mRNA delivery in hematopoietic stem cells and T cells. While these publications were not particularly high profile for investors, they are important demonstrations of the efficiency of our ZFN technology platform for targeted rather than random integration and have important implications for applications in the immuno-oncology space.

Specifically, they demonstrate that in addition to applications to improve a T-cell oncology product, our ZFN genome editing technology provides an alternative manufacturing approach that eliminates the need for lenti vectors in the generation of these cell-based therapeutics. This is an area in which we believe our ZFN technology can be applied and is potentially another area where we can leverage our technology platform.

All of these activities were the culmination of a very productive year, and we continued in that vein into the new year. 2016 began, as usual, with the annual JPMorgan Healthcare Conference, which, as many of you know, is not a sprint, but a marathon.

The shaky markets did not diminish attendance or enthusiasm at our meetings, and we had numerous productive discussions with investors, analysts, media and pharmaceutical companies about our ZFP platform and therapeutic programs, and not only the details of our program, but also the differential technical advantages of our ZFP genome editing approach versus conventional gene therapy applications as well as other, less mature genome editing technologies of bacterial origin, such as CRISPRs and TALENs. In addition to our RAC presentations, I would also refer you to our JPMorgan conference presentation, which remains posted on our website, as I devoted several slides to these topics.

So, as you can see, we had a busy end of 2015, and we began 2016 with important progress in our ZFP Therapeutics pipeline. We accomplished all of this and came in well ahead of our financial guidance.

So let me hand the call over to Ward for an update on our fourth quarter and full year 2015 financial results as well as our financial guidance for 2016. Ward?

Thank you, Edward, and good afternoon, everyone.

As you know, after the close of the market today we released our financial results for the fourth quarter ended December 31, 2015, and I am pleased to review the highlights of those results with you now.

Revenues in the fourth quarter of 2015 were $9.1 million, compared to $15 million for the same period in 2014. Fourth quarter 2015 revenues comprised revenue from Sangamo's collaboration agreements with Biogen, Shire and Dow AgroSciences, enabling technology agreements, including revenue from our agreement with Sigma-Aldrich and approximately $200,000 of revenue from research grants.

The decrease in collaboration agreement revenues was primarily due to a decrease in revenues after the amendment of our collaboration and licensing agreement with Shire in the third quarter of 2015, which returned the rights to the hemophilia programs to Sangamo. In the fourth quarter of 2015, Sangamo recognized $1.9 million of revenues related to research services performed under the collaboration agreement with Biogen, as well as $1.9 million of revenues related to research services performed under the collaboration agreement with Shire.

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 $1.6 million of the Biogen upfront payment as revenue for the fourth quarter of 2015.

Total operating expenses for the fourth quarter of 2015 were $24.8 million, compared to $19.4 million for the same period in 2014.

Research and development expenses were $19.9 million in the fourth quarter of 2015, compared to $15.1 million for the fourth quarter of 2014. The increase was primarily due to increases in manufacturing expenses, external research associated with our preclinical programs and personnel-related expenses, including stock-based compensation.

General and administrative expenses were $4.9 million in the fourth quarter of 2015, compared to $4.3 million for the same period in 2014. Noncash stock-based compensation expense was $3.1 million for the quarter, with $1.4 million in research and development and approximately $1.7 million in general and administrative.

For the fourth quarter of 2015 the Company reported a consolidated net loss of $14 million, or $0.20 per share, compared to a net loss of $4.3 million, or $0.06 per share, for the fourth quarter of 2014. For the full year 2015 revenues were $39.5 million, compared to $45.9 million in 2014, with the decrease primarily due to the strategic amendment of our collaboration agreement with Shire.

Total operating expenses were $86.4 million in 2015, compared to $72.7 million in 2014, with the increase primarily attributed to the expansion of our technical operations team and manufacturing, external research related to our research programs under the collaboration with Biogen and Shire, as well as our proprietary programs.

The net loss for the full year 2015 was $40.7 million, or $0.58 per share, compared to a net loss of $26.4 million, or $0.39 per share, for 2014.

Turning to the balance sheet, Sangamo ended the fourth quarter of 2015 with $209.3 million in cash, cash equivalents, short-term investments and interest receivables. Our net cash used in operating activities was $9.1 million for the fourth quarter, resulting in $33.8 million net cash used in operating activities for the full year 2015. Factoring in other cash flow items, the net cash decrease for the year 2015 was a modest $17.3 million.

Our ending cash position exceeded our financial guidance for 2015, which was to end the year with at least $200 million in cash and equivalents, while our revenues and operating expenses came within the ranges we previously guided to.

Regarding our financial guidance for 2016, we expect to end the year with at least $150 million in cash and equivalents, and we expect to incur operating expenses of $85 million to $95 million for the full year 2016.

As noted in our press release, in light of the amendment to our collaboration and license agreement with Shire that returned their rights to the hemophilia programs to Sangamo, we expect total revenues for 2016 to be in the range of $20 million to $25 million. Revenues include partial recognition of upfront payments and reimbursement of research services from existing collaborations.

The year-end cash guidance is inclusive of research funding from existing collaborations as well as funding from grants, but exclusive of any funding from the collaboration, partnership, equity financings or other new sources.

I am pleased to say that the Company is in solid financial position as we begin 2016. We look forward to an exciting and busy year ahead as we continue to advance our ZFP Therapeutics pipeline into the clinic.

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

Thank you, Ward.

As you have heard, we ended 2015 with approximately $210 million, and we are guiding to ending 2016 with at least $150 million in cash. As Ward mentioned, with our plans to advance our ZFP Therapeutic pipeline, including filing an additional six IND applications and bringing several new programs into the clinic, we expect our operating expenses to increase this year. However, with our ongoing funding and future milestones from our collaborations with Biogen our current balance sheet provides a solid runway for us to accomplish all of our 2016 goals.

So, let's move on to a more specific discussion of our ZFP Therapeutic program and our clinical plans. Geoff?

Thanks, Edward, and good afternoon. As Edward mentioned, we're very excited to be initiating Phase 1/2 clinical trials in two applications of our IVPRP strategy, hemophilia B and MPS I. Before I go into detail on the trials, let me give you some background on our disease focus areas, briefly summarize our approach, and then highlight what we believe are the advantages of our approach over the existing standard of care and other gene-based therapies in development.

Many of you are familiar with hemophilia. Hemophilia B is caused by a mutation in the Factor IX gene which results in a deficiency of Factor IX clotting factor protein. It's an X-linked disease, which means that it primarily affects males.

According to the National Hemophilia Foundation and the World Federation of Hemophilia, hemophilia B occurs in about 1 in every 25,000 male births, and there are about 4,000 patients in the US. Worldwide, the precise numbers of patients with hemophilia B are not well known, but are estimated at more than 80,000 people.

Lack of clotting factor has obvious consequences if a patient is injured. However, in severe cases, which represent about 60% of the affected population, individuals have less than 1% of normal clotting factor activity and experience spontaneous bleeding into their joints or muscles, which can lead to significant damage to these tissues over time. The current treatment, which is managed by most patients and their families in the home, requires self-infusion of recombinant clotting factor two to three times a week.

You may, however, be less familiar with MPS I, which is a lysosomal storage disorder, or LSD. The disorder is caused by mutations in the gene encoding the alpha-l iduronidase enzyme, or IDUA, and results in a deficiency of the enzyme in tissues.

IDUA is normally present in the cell in a structure known as the lysosome, which is like the recycling center of the cell. The enzyme is required to break down complex sugar chains called glycosaminoglycans , or GAGs, which are found in most tissues.

The inability to degrade GAGs leads to their accumulation within the lysosomes in cells throughout the body, and individuals with this mutation experience multiorgan dysfunction and damage. Depending on the severity of the mutations and degree of residual enzyme activity, affected individuals may develop enlarged organs, joint stiffness, skeletal deformities, corneal clouding, hearing loss and mental retardation.

There are three forms of MPS I in order of increasing severity. They include Scheie, Hurler-Scheie and Hurler syndromes. According to the National MPS Society, 1 in every 500,000 births in the US will result in Scheie syndrome, 1 in 115,000 births in Hurler-Scheie, and 1 in 100,000 births results in Hurler syndrome. There are approximately 2,000 MPS I patients in the US.

The current therapies for individuals with MPS I include hematopoietic stem cell transplant, or HSCT, for those with the most severe form of the disease. However, the reported mortality rate after HSCT is about 15%, and the survival rate with successful engraftment is about 50/50.

Most patients with milder forms of the disease receive weekly enzyme replacement therapy, or ERT infusions, usually in a doctor's office. One potential problem with ERT for MPS I is that enzyme infusions take, on average, four to six hours. However, the replacement enzyme cannot be detected in the circulation within a few hours of completing the treatment. We believe that there may be significant advantages to continuous exposure of tissues to circulating enzyme.

As most of you know, our IVPRP is designed to provide just that. With a single administration, we expect to provide a lifelong therapy for a wide range of monogenic diseases, including hemophilia and the LSDs. Using our zinc finger nuclease genome editing technology we can precisely insert a therapeutic gene, for example, the Factor IX gene for hemophilia B or the IDUA enzyme gene for MPS I, into the albumin gene of a patient's liver cells.

We chose the albumin gene as it has a very powerful promoter, which means that we don't need to edit many liver cells in order to produce therapeutic levels of the replacement protein. Our preclinical data suggests that this will enable patients to make a continuous supply of replacement enzymes, rather than having to be treated repeatedly with recombinant enzyme infusions.

The beauty of a genome editing approach is that the therapeutic gene is inserted permanently into the liver cell's genome, which means that any modified cell will pass that modification along to its daughter cells when it divides. This is in contrast to traditional gene therapy using adenoassociated virus, which simply delivers a copy of the gene into the cell but does not integrate into the genome and therefore can be diluted out when cells divide and turn over, as liver cells do, especially during periods of liver growth.

This is particularly important, then, when you consider the population that will benefit most from a permanent lifelong therapy, namely pediatric patients, in whom early treatment can prevent disease manifestations. The continuous production of any therapeutic protein using the IVPRP strategy provides the therapeutic benefit of the replacement protein, and, by eliminating the need for ERT, can also have a significant impact on quality of life -- in short, a one-time, lifelong, life-changing treatment.

The clinical trials for Factor IX and MPS I will be open-label dose-escalation studies in adult subjects with each disease and will have a very similar structure. Each study will have three dose cohorts, each with two subjects, with a waiting period of one month between each subject within a cohort and roughly two months between dose cohorts while the data are reviewed by a safety monitoring committee to determine if it is safe to proceed to the next higher dose. At the optimal dose we will recruit additional subjects, for a total of 9 to 12 subjects in each trial.

In both trials the primary objective will be to evaluate safety and tolerability. However, as we will be treating subjects who have the disease, we will also closely monitor them for signs of efficacy.

In the case of the hemophilia B study we will be looking at circulating levels of Factor IX, use of replacement Factor IX, as well as frequency and severity of bleeding episodes and clotting activity, such as the activated partial thromboplastin time. For MPS I, in addition to the change from baseline in IDUA activity in plasma and circulating white blood cells, we will also monitor GAG levels in urine, the six-minute walk test, forced vital capacity, which is a measure of lung function, joint range of motion and liver and spleen value.

For safety, we will closely monitor subjects for immune responses to AAV6, our delivery vector, and administer steroids to inhibit this response, if necessary.

For our Factor IX study, the principal investigators at the initial trial site are Dr. Nadia Ewing, Director of the Hemophilia and Sickle Cell Program at City of Hope and an expert in pediatric hemophilia, and Dr. John Zaia, Director of the Center for Gene Therapy, also at City of Hope, and an internationally recognized expert in gene therapy. We also plan to add other sites for this trial.

For MPS I the primary site will be the University of Minnesota Medical School, with principal investigator Dr. Chester Whitley, the Director of the Gene Therapy Center and an established expert in the field of lysosomal storage disorder research. Dr. Whitley has over 30 years of experience in treating patients with various LSDs and evaluating LSD therapies in clinical trials.

As Edward mentioned earlier, we are working hard to meet our goal to initiate the Factor IX study in the first half of this year and the MPS I study by midyear. We will be presenting new data for both our MPS I and MPS II programs at the upcoming 2016 World Symposium later this month and expect to file an IND application for the MPS II, or Hunter syndrome, program in the next few months.

In addition, we expect to file IND applications for two additional LSD programs, Gaucher disease and Fabry disease, as well as hemophilia A, in the second half of 2016. I look forward to updating you on those programs on future calls.

Turning to our partnered program with Biogen in beta-thalassemia and sickle cell disease, as you may remember, Sangamo is taking the lead in the beta-thalassemia program. We are on track to file that IND application in the first half of 2016, and Biogen plans to file the IND application for sickle cell disease in the second half of this year.

In these indications we believe that our ZFN genome editing approach has distinct advantages over both the current standard of care, which is allogeneic bone marrow transplant, and conventional gene therapy approaches that use a lentiviral vector to randomly insert a replacement copy of the beta-globin gene into a patient's CD34-positive stem cells.

In contrast to matched donor allotransplantation, our approach uses the patient's own cells, eliminating the risk of graft versus host disease. Also, the targeted nature of our approach avoids the risk of adverse events caused by the random insertion that occurs with lentivirus.

Finally, our approach involves the knockout of the BCL11A Enhancer, replacing production of mutant beta-globin with healthy fetal globin, which we know ameliorates the symptoms of both beta-thalassemia and sickle cell disease in infants prior to the switch to adult hemoglobin and when it arises from naturally occurring BCL11A mutations.

We've made an enormous amount of progress over the past 12 months and are confident we can achieve the important milestones in the months ahead. I look forward to updating you all on our R&D programs on future calls.

And with that I will return the call to Edward.

Thanks, Geoff.

As you've heard from Geoff's remarks and as you have observed from all of the academic and investor interest in genome editing, this is a defining period for Sangamo. I believe that when we collectively look back on Sangamo's history the next 12 to 24 months will prove to be the moment when we established the foundation for a new way for medicine to be practiced in hundreds of diseases.

Sangamo is leading and will continue to lead this paradigm-shifting scientific and medical revolution. And, not unimportantly, I also believe that this period will be viewed as one of the most durably value-creating moments in our history.

With the clearance of the first two in vivo genome editing INDs and another four more to come this year, we have demonstrated that we have the internal core competencies necessary to move groundbreaking genome editing programs through IND-enabling studies and into the clinic. We have retained or regained ownership of numerous proprietary programs which offer a clear path to significant near-term growth and future forward integration. We also retain ownership of several important fields in which we can leverage our ZFP technology platform into meaningful corporate partnerships.

So our immediate goals for 2016 are to initiate clinical trials for our Factor IX and MPS I programs and to file an additional six INDs for both our proprietary IVPRP programs and our Biogen-partnered programs. For our Biogen program in hemoglobinopathies, we will file the IND application for our beta-thalassemia program in the first half of 2016. While this program is partnered with Biogen, Sangamo is responsible for carrying out this first-in-man Phase 1/2 clinical trial. As I previously noted, Biogen will take the lead in the prosecution of the sickle cell disease IND, which we expect to be filed in the second half of 2016.

And, importantly on the financial side, we are in very good shape to fund and achieve these objectives. We ended 2015 with approximately $210 million and expect to end 2016 with cash and cash equivalents of at least $150 million, which is more than sufficient cash to enable us to accomplish all of these ambitious goals and move all of these programs into and through Phase 1/2 clinical studies.

Before I close, I also want to update you on some important and well-deserved internal organizational developments. I am very pleased to announce that we have made some key promotions in our management team.

Dr. Stewart Craig was promoted from Vice President to Senior Vice President of Technical Operations. Stewart joined us in mid-2014, with a wide range of experience in gene and cell therapy GMP manufacturing and has led the development of our successful and growing GMP manufacturing capabilities.

Dr. Fyodor Urnov, Senior Scientist, has been promoted to Vice President of Discovery & Translational Research. Fyodor has been central to the development of our ZFP technology platform for over 15 years and now leads our hemoglobinopathies collaboration with Biogen.

And, finally, Dr. Nathalie Dubois-Stringfellow has been promoted from Senior Director to Vice President of Product Development & Management. With her extensive background in preclinical drug development and project management, Nathalie has helped to establish an effective cross-functional team-based culture at Sangamo, enabling our successful and timely IND submissions.

Congratulations to all of you.

Finally, we look forward to keeping you informed of all of these activities. We will be presenting at the Leerink Global Healthcare Conference in New York later this week and at the Cowen and Company 36th Annual Health Care Conference in early March in Boston. In early May, just ahead of the annual ASGCT meeting, we will also present at the Deutsche Bank Healthcare Conference in Boston.

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

Thank you.

(Operator Instructions)

Charles Duncan, Piper Jaffray & Co.

Thanks for taking my question, and congratulations on the recent success with the RAC and IND filings.

Thanks, Charles.

So quick question, and I apologize if this was addressed on the call during the prepared remarks. I'm going back and forth between calls. But regarding the Factor IX hemophilia program, could you share with us, if you will, the trial design and when we might see some of the early activity-based data out of that study?

So, yes, Charles, I think we did discuss the trial design on the call, and also on the slides that I presented at JPMorgan. I think there's a good summary of the study. But if you would like, Geoff or Dale can go through that.

In terms of guidance on data, I think we'll have more to say about that on the next call or in the second half of the year. We need to get the trial up and running before we can really comment on timing for data.

Okay. And then, so I don't need to go through the design, really, so it's all about enrollment, and then you'll give us an update on that and data maybe later on this year.

Yes. I think that's probably the most prudent thing to do.

Okay. Makes sense. And then if we could move over to the 728 program, I see that you're going to have a presentation at the upcoming CROI conference. Looking forward to that. But I'm wondering at this point if you have any additional color on development plans for the 728 program, at least with regard to your plans with it.

Yes, I mean, we -- our plans are to complete the Cohort 3* study. We'll have data out of that in the second half of the year. And based upon those data our plans are to partner for pivotal studies and commercialization.

Separate from that, there are ongoing studies in the T-cell area with collaborators at the University of Pennsylvania. And we also have our stem cell program ongoing at City of Hope. But we expect to have data out of the Cohort 3* study by the end of the year or in the second half of the year, and our plans are to partner that program for pivotal studies and commercialization.

Okay. My last question is regarding one of the recent promotions. I'm curious. Don't know if this bears any or needs to be discussed, but you said that Dr. Stringfellow established an effective cross-functional team-based culture at Sangamo, enabling the IND submissions. You folks have been quite active there and expect some more soon. I'm wondering if you can provide any color on how that team is different than what it was or that practice is different, if at all, than in the past.

Well, I think I'd have to go back to when Geoff Nichol joined us four and a half years ago -- what's the number?

Yes, just four and a half, maybe five, yes.

Yes. And Geoff spent eight, nine years at Medarex, ran all of those programs there and both R&D side, and before that Geoff was in several large pharmas in terms of development, on the development side, and has brought a culture to the organization that really has, I guess the word I would use is industrialized the process. There's no way in hell we could move eight INDs in 14 months through a small company without that kind of structure and team-oriented kind of approach.

And so I'd say it's tone at the top, and Geoff's the top of that organization and has done a fantastic job. And Nathalie's an example of that on the project management side. Stewart Craig's an example of that on the technical operations and GMP manufacturing side. Mike Holmes is an example of that on the research side. So it's a very, very strong team, and I don't often get a chance to talk about it on calls like this, and so I appreciate the question.

And I appreciate the added color. Thanks.

Liana Moussatos, Wedbush Securities.

My question has been answered. Thank you.

I know. I should do a better job of managing this process. Sorry.

No problem.

Whitney Ijem, JPMorgan.

So I guess first question, can you just talk about the blocking and tackling, I guess, that needs to happen once you have IND approval to getting the trials up and running? For some reason it seems longer to me than I feel like I'm used to seeing from I guess the December 1 Factor IX IND approval to getting the trial up and running. So is that just a function of the complexity of your approach or centers, or what are the rate-limiting steps?

Well, Whitney, I'll ask Geoff and Dale, if he wants to, to comment on that. I have to say that my impatience can't be any greater than yours, and I'm convinced, no pun intended, in my bone marrow that we're doing everything that we can and should be doing to move these forward quickly, number one.

Number two, at least in my experience, and I am getting fairly long in the tooth here, we're not terribly different in terms of initiation of novel studies than most gene therapy and cell therapy studies. But, Geoff, do you want to tick off the laundry list of activities that we're working our way through?

Yes, there's a lot of things to do. And typically when we look at clinical development we draw a distinction between programs, Phase 1 programs that typically can be enacted at private clinical sites with central institutional review boards and so on. Those can often get set up relatively quickly. It's a little slower at the typical academic institution that we need to use for these very specialized programs.

Typically these sites don't want to be investing their scarce resources in activities until you actually have an IND, and then once you've got an IND they don't want to be talking contracts and budgets and so on until the IRB and often several other scientific committees at those sites have reviewed the protocol and often had one or two go-rounds in terms of finalizing the agreed protocol at that site. And then you get into just the contractual and budget activities as well as just the setup activities for the site.

So certainly when we talk with our collaborators and talk with other experienced folks and look into our own experience, most people come up with a number of around about six months from IND to starting to enroll patients at Phase 1 studies at academic sites. So that gives you probably as much color as I regularly give to Edward when he repeatedly asks exactly the same question.

Takes me a long time for it to sink in, Whitney, but I'm convinced we're doing everything we can to move this forward quickly. I appreciate, respect and probably embody the same impatience as everyone out there.

Got it. That's helpful. And then just last question on the starting dose in the Factor IX trial. I think in the RAC you mentioned you're going about half a log lower than you tested in animal studies. So I guess based on that do you expect to see any efficacy at the initial dose you're testing, or is there any color you can give as to what level of dose or how many step-ups you might need to take before you expect to start seeing efficacy?

Yes, good question. I think, as I've said before, the starting dose is purely a safety dose. And we are not expecting to see evidence of therapeutic activity at the starting dose. We will look for it, but I want to be very clear we're not expecting it.

The second dose is consistent with the very lowest doses where we did see the very lowest amount of activity. And our third dose is where we would expect to see an optimal efficacy outcome. So starting dose is purely a safety dose.

Got it. Thanks for taking the questions.

Gena Wang, Jefferies LLC.

Thank you for taking my questions. So my first question is for the MPS program clinical trial design, kind of follow the previous question. The starting dose is also actually the same as the hemo B program. Just wondering if there are any mouse data to support this dose, and, for example, what is the IDUA protein level or activity seen in the MPS mouse model at this dose level, and what's the therapeutic window in the mouse model, and was there any reduction in GAG at this dose.

Great questions. And so we did present quite a bit of the mouse dose escalation data. Boy, I think we did at the last year's World Symposium and then again at ASGCT.

But it's a good opportunity, Gena, for me to say stay tuned. Only, gosh, now a couple more weeks, the World Symposium, the big LSD meeting, is coming up, and we have two presentations there, one by Sangamo scientists, a second by our collaborators at the University of Minnesota. And I think I'll just flag that those are new data, important data that I think will be very informative relative to our strategy in both the MPS I and MPS II space.

Geoff, anything you want to add relative to the --

Yes, in terms of the clinical dosing, yes, we obviously, as Edward has said, we have extensive mouse data, and that actually runs very, very close to what we saw in mice with the Factor IX program, which is hardly surprising given that we're actually using essentially the same platform.

And so we have used that data, along with the scaling that occurs and the differences that you can sometimes see in the way that the AAV vector in terms of its PK/PD relationships in mice and non-human primates, to propose the clinical dose. And that's what leads to pretty much the same starting clinical dose in the MPS I program as with Factor IX.

Thank you. And I have one follow-up question on the MPS I program. What would be the percentage of eligible MPS patients, i.e., patients that will have a neutralizing antibody to AAV26 at its titers less than one to four?

I'm looking at Geoff and Dale. I'd say at this point we're going to have to do the screens to know that. I can keep talking about preexisting antibodies across AAV. I'll say I was pleasantly surprised by the observation that uniQure had relative to AAV5 in terms of the lack of neutralizing antibody, or at least from a screening perspective, in their Factor IX study. But unless you guys know something I don't know about patients already in MPS I are already screened for AAV6 antibodies, I think we're just going to have to do the screening to determine that.

That's correct, Edward.

Thank you. Okay, so my last question will be --

I'm doing a real bad job here.

So I think, Edward, I think you mentioned a little bit before, but just wanted to ask again, for 2016 there'll be like so many clinical trials ongoing for the both IVPRP programs and also Biogen partner programs.

Yes.

I understand that each enrollment will take quite some time, but just wondering which program will be the first we will see some data and when should we expect to see the initial data update.

Well, it's a great question. I'm going to say that it's likely to be in relatively the same order in which we open the studies that the data would come out. But, again, Gena, if you'd give me a pass for a couple of months or until we have a little more data in terms of patient accrual times and dose escalation and so on, but I think in general terms you should expect that the data will come out in relatively the same order as we open the studies.

Okay. Thank you.

Ritu Baral, Cowen and Company.

Thanks for the update. I only have one question, but I realize as I'm mapping it out it has four different parts, so you'll have to forgive me here in advance. You guys have talked about the optimal dose and how you expect the third dose to be the optimal dose in both trials. What will define that optimal dose? What level of factor expression or, I guess, rescue factor use are you looking for in your hemophilia study, and what thresholds for either plasma enzyme level or plasma GAG and CSS GAG do you think you're targeting with that dose?

Geoff, do you want to take a shot at these?

Yes, let me sort of take a -- have a shot at this. I think it's a little easier for Factor IX. As you know, you really start to get significant therapeutic advantages in more severe patients once you can get into the sort of three plus or minus percent range. So that certainly establishes a bar that we will want to get across as we go forward.

As you know, in the non-human primates we got well north of that, and we believe that based on other AAV studies that non-human primates are probably a good kind of bellwether for what is likely to happen in people. That's with a standard sort of cDNA approach. Obviously ours is a little different. So, again, I think it -- let's wait for the data and give you the update as we move forward.

Do you see any benefit to trying to target 5% or even 10%, as has been suggested by some of our KOLs?

I mean, within reason more is better. Right? So we'll target the highest level that we think we can achieve, and we certainly are not 100% tied to the doses that we're using in the initial Phase 1 study. Obviously, once we learn more we can move -- we can start looking at the dosing to refine things. That's the way clinical development works.

But, yes, once you get a little -- get higher, then you can start to treat a wide range -- a wider range of subjects. So, no question that higher is better. Everyone acknowledges that. But just to say that the initial hurdle to really start to get the bang for the buck is around about that 3% range.

Yes, and, Ritu, I think Geoff's being modest here. I mean, we've presented data on the Factor IX work in non-human primates, and I used a slide during my JPMorgan talk where I looked at a low, medium and high dose that correlate with the kind of dose escalation that we're looking at. And in the high dose we were in the 15% to 20% kind of range.

So I'm not guiding to that. I don't think anybody sitting here starting is going to guide to a given number. We'll look and see what we achieve based upon the dose escalation. And obviously if it's safe and well tolerated we'll consider looking at higher doses.

But I think what we're aiming at is really to do this dose escalation. As Geoff said, wouldn't be shocked if we see numbers that are fairly representative of what we saw in the non-human primate studies. And if we do, I think at least for me I'll be pretty pleased.

Got it. And then moving to MPS?

So there, clearly the great difference with the MPS is that we're replacing an episodic dosing with quite high levels of the actual ERT, which is very short-lived, with a continuous production. And it's going to be of great importance to see what amount of continuous production is going to make the difference.

Certainly when we look at our calculations and we look at the amount that we anticipate based on the preclinical studies, that ought to be having a very significant effect on the outcome of the disease. And in that respect I think you should wait for some more of the data that we are likely to be presenting very shortly, as Edward had said.

Yes, that's what I was going to say, is, Ritu, there's a lot of -- I mean, we've presented data on this constituent of expression of MPS I, MPS II, and the uptake of the enzyme into various tissues and so on. I think there is a lot more data now in the disease models that are going to be presented in a couple of weeks, and we'll have an opportunity after those data are presented, I think, to expand a lot more on why we think this approach of continuous expression at high levels has really distinctive advantages over the episodic delivery of ERTs.

Okay. And then just the quick flip side to that question, which is safety, and this obviously is going to be the focus of the study, what markers are you looking at most keenly for safety? I mean, obviously, with traditional AAV gene therapies you look at liver enzyme elevations. But I don't think we should be looking at it the same way. So what should we be looking at?

Yes, it's Geoff again. Actually, I think we should be looking at LFTs. We anticipate based on everything that we've seen in our development program, where really we did not see much if at all anything in the way of toxic findings in the species that we looked at. Our major expectation, if you like, is that we may see the same things that the AAV cDNA folks have seen, which is short-lived LFT elevations which can be treated by corticosteroids.

So we'll be monitoring that very, very closely simply to see. When that occurs, we'll be able to use the standard treatment with corticosteroids.

But if you did have elevations, it wouldn't necessarily -- I guess it wouldn't necessarily negate expression in the same way as the traditional gene therapies. Am I thinking about that right?

Well, I think if you look at what actually happens with -- what's happened in the past, what people believe is that CD8 cells are actually taking out the cells that are expressing probably proteins processed from the capsid of the adenoassociated virus. And that's going to be the same thing happening with us. So we're seeing it in very similar -- we're seeing it in very similar terms.

Okay. Got it. All right. That's really helpful. Thank you.

(Operator Instructions)

Jim Birchenough, Wells Fargo Securities, LLC.

Hi, this is actually (inaudible) in for Jim. Thank you for taking our question. So, just want to dig a little deeper on the hemophilia B study. As you said, this is the very first study that studies in vivo gene editing. So along that line I think could you give us some idea of some of the things that the study monitoring committee will be watching for during the one to two months of waiting period after one patient has been treated and before the next can be started treatment?

Sure.

Yes, there's actually no sort of magic or anything else to that. It just simply takes time to pull the data together, get it into a database, get it to the committee and have that discussion. That's why we've budgeted the two months. And it'll be standard labs and clinical observations that will be being collated and considered there.

There's nothing terribly different here than other standard gene therapy trials.

I see. I see. Great. And also can you tell us a little more about the AAV6 vector or capsid that will be used for delivery? I think we know more about AAV5 and 8. Those have been used in hemophilia B gene therapies. For AAV6 we're a little less familiar. Could you tell us -- we know that you have licensed both AAV6 and AAV5, but perhaps a little rationale on why you chose AAV6? And also in terms of manufacturing could you tell us where are you at? Thanks.

Sure. Good question. I'm glad you asked. So, we've done I'm going to say extensive work in AV serotype evaluation, probably a half a dozen of the major serotypes, and then have licensed exclusively AAV6 and nonexclusively AAV5. In our hands in mice there are differences that we see between AAV8, AAV9, AAV6, AAV5. Those begin to wash away a fair amount as you move into non-human primates.

But in terms, in our hands, in non-human primates, in terms of transfection efficiencies and then ultimately for us protein expression and secretion, AAV5 is slightly more efficient than -- I'm sorry, AAV6 is slightly more efficient in our hands than AAV5 or AAV8. Stop. Full stop.

In terms of manufacturing, we are obviously at full GMP scale, given the fact that the INDs are open. And we are running lot after lot after lot after lot of all of these albumin-based nucleases as well as the specific donors, again, in GMP. So hopefully that's responsive.

I see. Yes, so for the AAV6, is that in-house or contracted, the manufacturing?

The GMP manufacturing is contracted out at this point, although I think in our upcoming K we'll talk a little bit more about our new lease on a 41,000-square-foot facility that we will -- that we've taken down and will -- we have available for our own GMP manufacturing.

I see. I see. Do you have -- have you talked about what is the manufacturing cell system that you are using (inaudible)?

Yes, I think that was discussed at the RAC, wasn't it, that we're using baculo approaches?

Got it. And another question is kind of on the other, mirror side of some of the questions being asked earlier about dosing, because you have mentioned albumin promoter is very powerful. Is there any reason for concern of overshooting the target? I guess that depends on whether the re-expressed missing enzyme is toxic at a high level. So what's your thought on those -- along those lines?

Well, certainly not that we have seen or that we're aware of. Dale or Geoff, do you want to comment?

Yes, I mean, look, in terms of potential toxicity, there's really two. Could there be any toxicity of the protein being processed within the cytoplasm, and then extruded out and exteriorized into the circulation? And certainly our animal studies suggest that that isn't the case.

And then once it's in the circulation, will the protein be immunogenic in some way? And we anticipate producing the normal human protein from a human hepatocyte, so we, again, don't anticipate that there will be any immunogenicity related to those reagents. And those things have certainly been tested pretty much to destruction in the ERT and replacement factor settings.

Got it. Thank you.

Roy Buchanan, Janney Montgomery Scott.

I'll be super quick, a couple of quick ones. The World Symposium, is that going to have detailed non-human primate data? And then are we going to get an update on Cohort 3* at CROI?

Well, I'd say the answers to both, Roy, are stay tuned. I would say that the World data is important disease model data, and since I'm not aware of any non-human primate disease models in MPS I or MPS II I'd say it's probably mouse data. But I'd say stay tuned for that.

And in terms of CROI, I think Liz or somebody said, or somebody said in this thing it's primarily an update on the immunological side of things, but we do expect to update on the Cohort 3 data in the second half of the year.

Great. Thank you.

That concludes our question-and-answer session for today. I would like to turn the conference back to management for any additional comments.

Great. Thank you.

We'd like to thank you for joining us, and we look forward to speaking with you again when we release our first quarter 2016 financial information. We'll be available later today if you have any follow-up questions. Thank you.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone have a good day.