Sangamo Therapeutics Inc (SGMO) 2017 Q3 法說會逐字稿

Good afternoon and welcome to the Sangamo Therapeutics teleconference to discuss third quarter 2017 financial results. This call is being recorded.

I will now pass you over to the coordinator of this event, McDavid Stilwell, Vice President of Corporate Communications and Investor Relations.

Good afternoon, and thank you for joining Sangamo's management team on our conference call to discuss the company's third quarter 2017 financial results.

As we begin, I'd like to point out that today we will be referring to a slide presentation. You may find a link to the slide presentation on our website, www.sangamo.com, on the Events and Presentations page of the Investors and Media section of the site.

I'd also 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're not undertaking an obligation to provide updates in the future. Actual results may differ substantially from what we discuss today, and no one should assume at a later date that our comments from today are still valid.

We alert you to be aware of the risks that are detailed in documents that the company files with the Securities and Exchange Commission, specifically our annual report on Form 10-K and our quarterly reports on Form 10-Q. 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.

With me today on this call are several members of Sangamo's senior management, including Sandy Macrae, Chief Executive Officer; Kathy Yi, Chief Financial Officer; Ed Conner, Chief Medical Officer; Michael Holmes, Vice President of Research; and Curt Herberts, Chief Business Officer.

And again, we will refer to a slide presentation during this call. Those slides are to be found on the Events and Presentations page of the Investors and Media section of our site.

And now I'd like to turn the call over to Sandy.

Thank you, McDavid, and welcome, everyone, to our conference call to review business and financial highlights from the third quarter of 2017.

We're pleased to share the progress from our clinical and preclinical programs with you all and take some time to discuss the continued growth and evolution of Sangamo, including plans for our new headquarters in Brisbane, California, in the heart of the Bay Area biotech community south of San Francisco and the steps we're taking to develop the manufacturing and product development capabilities we will need as we advance through clinical trials towards commercialization.

We've made great progress revitalizing Sangamo, improving our core technologies, establishing and renewing partnerships, strengthening the balance sheet and moving programs into the clinic. In the last few months we treated a second patient in the SB-525 program, and in our other clinical programs patients are advancing through the screening process.

Our Board of Directors has now encouraged us to be bold in planning for the company's successful future. The new headquarters in Brisbane, which we expect to occupy beginning late 2018, will provide more than just square footage. It will importantly provide us a more competitive location and workspace as we recruit the managerial, clinical, operational and manufacturing talent we need to achieve our long-term goals. Our roots are in Point Richmond and we are a top employer of scientists in the East Bay. We will retain our presence here and update the facility to be a research center for Sangamo.

Today we also announced improvements to our manufacturing and product development capabilities. We have a new head of our Technical Operations Group. I'm delighted to welcome Andy Ramelmeier, who comes to Sangamo with over 25 years of experience in pharmaceutical manufacturing, process development and technical operations at Merck, J&J, BioMarin and most recently served as Senior Vice President Biological Technical Operations at Portola Pharmaceuticals.

Andy's manufacturing experience and leadership will be extremely valuable as we continue to develop the capabilities and resources to control quality, time lines and costs of our manufacturing and product development. I'm very happy to welcome him to the team.

As Curt will discuss later in the call, we have contracted with Brammer Bio to establish dedicated manufacturing capacity for our therapeutic programs. Brammer has been our CMO for over ten years and is a leading clinical development and manufacturing organization providing clinical and commercial supply of vectors for both in vivo and ex vivo genomic therapies.

In addition, the new Brisbane headquarters will enable us to build our own state-of-the-art GMP manufacturing facility, initially focused on product development and Phase I/II clinical trial materials. Our goal is to establish a balanced approach for manufacturing. We're augmenting our current capacity with Brammer Bio and we're complementing their expertise in clinical- and commercial-scale vector production with our own in-house manufacturing facility to address ongoing business development discussions and to ensure the flexibility needed to meet our growing demand for manufacturing. This approach will allow us to take on a greater ownership of our product development process as we continue to expand our pipeline with a focus towards the future.

In addition to our -- the lease of our new headquarters, Slide 8 highlights other recent events and activities we'll be focused discussing on the call today. At the start of October we announced that the FDA accepted our IND application for ST-400, Sangamo's gene-edited cell therapy candidate for beta-thalassemia, being developed as part of a collaboration with Bioverativ. We believe the precision, efficiency and specificity of our zinc finger mediated approach has significant advantages over other genome editing approaches and the randomly integrating lentiviral-based gene therapies in development.

In a moment, Ed will provide an update on the progress of our clinical trials. Mike will then review the recent advances in our T-cell editing capabilities and novel delivery research. Curt will outline Sangamo's long-term operational plan for the new headquarters. And Kathy will summarize our financial results for the third quarter.

I'll now pass the call over to Ed Conner, our Chief Medical Officer, for an update on our clinical programs. Ed?

Thank you, Sandy, and good afternoon, everyone on the call. I'm very excited to share the progress we've made in the third quarter on our now 5 clinical programs. As expected, our activation of sites, scientific outreach and patient awareness campaigns are yielding results as we head into the end of the year. I'll go through each development program, starting with SB-525 for the treatment of severe hemophilia A.

For the SB-525 Phase I/II study, we continue to execute and have dosed the first few patients, with several more in screening to allow us to fill open slots as they become available. To date we've activated 6 sites and plan on opening 3 more by the end of the year. Our definition of success on this study is to produce sufficient levels of factor resulting in no spontaneous bleeds and no need for replacement factor products. We continue to be on track to have data from this program in the first half of 2018.

Enrollment for SB-FIX for the treatment of severe hemophilia B continues to be a challenge, but we are actively screening patients and anticipating activating one additional site by year-end. For the MPS I SB-318 and MPS II SB-913 programs, we are working closely with our principal investigators in academic centers around site initiation and patient enrollment for these studies.

We currently have 4 sites activated on SB-318 and will open 3 more by the end of the year, and 5 sites activated on SB-913 with 2 more opening by the end of the year. We are advancing several patients through this screening process and I'm confident we will treat our first patient very soon. We also have greater visibility into the formation of a pipeline of patients for these studies.

An important new development across the MPS programs is the movement toward enrollment of pediatric patients. Our development strategy is to include adolescents and children in our current Phase I/II studies after appropriate safety information is collected in adults. In recent discussions of scientific advice with European health authorities, they encouraged this approach and we plan to file a CTA to open a pediatric study in Europe next year. I'm very excited about this, because the greatest potential benefit for our gene-editing programs that integrate permanently into the genome is in the treatment of children, to treat them before they suffer permanent irreversible disability and to provide a lifelong benefit.

Success in the Phase I/II studies for SB-318 and SB-913 for MPS I and MPS II, respectively, means maintaining or lowering urine GAG levels to within the normal range while patients are off enzyme replacement therapy. Replacement of sufficient enzyme levels is what drives lowering of GAG.

A number of you have asked me what percentage of normal enzyme activity will lead to a clinically meaningful benefit. We believe consistent enzyme activity levels at above only 2% of normal may be the key threshold where patients could withdraw from ERT in our studies to evaluate our therapy's effects on urine GAG.

Current standard-of-care ERTs have never been able to achieve consistent enzyme activity levels above 2%, and truthfully, as no one has tested an approach like ours, they can lead to steady levels above this, but it's still unknown exactly what this would mean for a patient.

Our last and most recent program is ST-400, an autologous, gene-edited stem cell treatment for beta-thalassemia. We received IND clearance last month from the FDA. The IND was successful for 3 reasons. First, we have taken the time to develop the most precise, efficient and specific gene-edited product. Second, we have a wealth of experience with the FDA in demonstrating a robust preclinical characterization of our product, manufacturing and toxicology. Third, our close collaboration with Bioverativ leveraged years of experience and technical expertise between both organizations to ensure a successful submission.

As shown on Slides 15 through 17, ST-400 is a highly differentiated therapy that harnesses a natural protective mechanism of the body. In contrast to randomly integrating lentiviral-based gene therapies in development, our approach involves non-viral mRNA delivery of ZFNs, a strategic advantage that allows for more controlled and precise genome editing with a potentially superior long-term safety profile. We believe this therapeutic strategy has the potential to be a permanent lifelong treatment for beta-thalassemia with a single administration.

Turning to Slide 18, we expect to have sites initiated and to enroll our first patient in the first half of next year. With Bioverativ we are also continuing to work to advance the sickle cell disease program in 2018.

I'll now turn the call over to Michael Holmes, our head of research. Mike?

Thanks, Ed, and good afternoon to everyone on the call. Today I'll touch on recent work in 3 of our rapidly advancing research programs: T-cell engineering for immuno-oncology, non-viral delivery of genomic therapies using lipid nanoparticles particles and our gene regulation approach for tauopathy.

As with all the work we do at Sangamo, we evaluate therapeutic success for genome editing in the context of 3 attributes: precision, efficiency and specificity, shown on Slide 20. Everyone involved in therapeutic gene editing must consider these 3 attributes together when applied at clinical scale.

Precision is the ability to target a specific, clinically relevant nucleotide or sequence down to a single base pair. Efficiency describes the level of modification achieved at the desired target site. Specificity is a term used to describe the degree of off-target editing, and it must be considered in the context of precision and efficiency. With some other high-fidelity gene editing tools, pushing the system to increase specificity can come at the expense of precision and efficiency. I encourage everyone interested in therapeutic genome editing to continue to ask Sangamo and others in the field about all 3.

Turning to Slide 21, you'll find one recent relevant example where Sangamo has already demonstrated the precision, efficiency and specificity of our zinc finger nucleases in the application of our gene-edited cell therapy programs for beta-thalassemia and sickle cell disease. An even more recent example comes from our T-cell immuno-oncology program to produce allogeneic or universal cell therapies.

Turning to Slide 22, manufacturing the allogeneic CAR-T cell therapy not only requires the integration of our CAR gene construct into the cell genome but also the double knockout of the endogenous TCR and beta-2M genes to eliminate graft-versus-host disease and the host immune response. Thanks to the hard work of Gary Lee and his team, we are reliably achieving very high levels of editing efficiency. Earlier this year Gary presented data demonstrating greater than 90% double knockout of TCR and beta-2M and greater than 90% targeted integration of a gene into the TRAC locus, shown on Slide 23.

More recently, Gary's begun to reliably achieve greater than even 99% editing efficiency with no detectable off-target activity as analyzed with the gold-standard, highly-sensitive oligo capture assay. This is important for the production of an allogeneic cell product because of the compounding effects of multiple gene modifications.

As you can see from Slide 24, if the editing efficiency of each step is not well above 90%, the number of cells containing all 3 gene modifications significantly decreases. Even at levels of 50% gene-editing efficiency, the compounding effect results in only 13% of the treated cells actually having all 3 modifications that are required to generate a universal T cell. This inefficiency can result in a more expensive manufacturing process and runs the risk of not producing enough modified cells, making it more difficult to select for and expand the therapeutic cell population.

That is why we believe the improvements to our ZFN genome editing platform as well as the ten years of operational and clinical expertise we've attained throughout our legacy HIV programs uniquely positions Sangamo to drive the development of autologous and allogeneic best-in-class T-cell therapies for immuno-oncology.

Moving on now to our LNP delivery platform, I'd like to share our latest advancements, which were presented a couple of weeks ago at the ASGCT 2017 annual congress. Turning to Slide 26, Sangamo scientist Anthony Conway presented new data demonstrating that we can achieve 90% protein knockdown with close to 100% gene-editing efficiency in hepatocytes of mice, with no elevation in liver toxicity at LNP doses as low as 0.20 milligrams per kilogram. This is highly encouraging as it demonstrates extremely efficient genome editing in mice at over a log lower dose than other competing approaches.

Based on these data, we believe Sangamo is well within the therapeutically relevant dosing window with our non-viral LNP delivery platform. We're now moving forward and have already initiated a series of non-human primate studies to test the efficiency and potency of our ZFNs using non-viral LNP delivery in larger mammalian species.

Shifting to our tauopathies program, I'd like to take a moment to share some of our recent work on the development of our proprietary Sangamo AAV vector designed to more effectively cross the blood-brain barrier. As seen by the brown staining in the images on the right of Slide 27, our proprietary vector demonstrates superior neuronal transduction in 3 targeted regions of mouse brain in comparison to AAV9, an AAV serotype known to transduce brain cells.

In addition, Slide 28 demonstrates that a single administration of our tau-targeting zinc finger protein transcription factors, using Sangamo's new proprietary AAV vector, results in up to 70% reduction of tau protein in the motor cortex, hippocampus and brainstem of mice. Sangamo scientists and our collaborators from Massachusetts General Hospital will be presenting data from this program next week at the 2017 annual meeting of the Society of Neuroscience, and I look forward to providing further updates after the meeting.

I'll now turn the call to Curt Herberts, our Chief Business Officer, for a business update. Curt?

Thanks, Mike, and good afternoon, everyone. Building on the progress in our clinical programs and technology innovations, as Chief Business Officer I'm excited to discuss Sangamo's long-term corporate strategy and how we think about business operations and planning. As we've discussed before, we have a very strong platform and product pipeline and our core business strategy is to retain programs that are right-sized for Sangamo and to externalize others.

For those that we retain, we will forward-integrate the business into a sustainable, fully-integrated biopharmaceutical company. This strategy requires the appropriate location, people, infrastructure and capabilities to recruit top talent as we progress from an early-stage clinical company to a pre-commercial organization, and then into full-fledged commercial capabilities.

As Sandy mentioned earlier on the call, securing our new Bay Area headquarters in the heart of South San Francisco biotech cluster is an important first step towards the realization of this audacious vision. We expect this new facility to open in late 2018 with capacity to accommodate a growing number of employees. Our new headquarters will be strategically positioned to attract top talent across many functional areas, including business, clinical and technical operations.

Once our Brisbane, South San Francisco facility is up and running, Sangamo will transition to dual-site operational model, with our current offices and laboratories in Point Richmond to remain as the company's innovative research center. Today we also announced improvements in our manufacturing capabilities and capacity that will help us better control our portfolio strategy to improve quality, time lines and costs as we continue to advance our pipeline through clinical development and into commercialization.

There are 3 parts to this improvement. One, as Sandy highlighted, we have hired a talented and experienced leader, Andy Ramelmeier, who is our new Senior Vice President and head of technical operations and manufacturing.

Two, we have expanded our business relationship with Brammer Bio, a leading contract manufacturing organization focused on cell and gene therapy products with particular focus on large-scale GMP AAV manufacturing. It is important to note that we have been working with Brammer for the past ten years. Our new agreement provides Sangamo the dedicated GMP capacity as we advance our genomic products over the next several years.

Three, we are planning to build our own state-of-the-art GMP facility which will enable us to take greater control over the entire technical operations process and to manage large-scale AAVs to support our pipeline programs and portfolio strategy. This facility will be housed in the ground floor of the new headquarters in Brisbane. The corporate decision to build an in-house GMP manufacturing facility was a key component in planning for the evolution of the company from a strategic business operations perspective.

Over the past 12 months we have made tremendous strides in restructuring the company, focusing the pipeline, establishing key partnerships with companies such as Pfizer on SB-525 and hemophilia A and strengthening the balance sheet. Now with this investment in manufacturing and technical operations, we are laying the foundation for the future strategy of Sangamo, to take greater ownership in our products and to forward-integrate in areas where we believe we have a true competitive advantage based on our best-in-class genome editing and gene therapy pipeline.

Now we are establishing the necessary infrastructure for growth and a smooth transition when Sangamo is ready to forward-integrate to commercialize our own therapeutic products. I look forward to providing further updates on our growth and expansion plans as we make progress towards the opening of this new headquarters.

Looking ahead to new business development, we are evaluating opportunities to combine our T-cell gene editing capabilities with the right oncology partner who are committed to the application of genome editing for the future vision of adoptive cell therapy. We are also planning to partner our best-in-class gene regulation technology for several CNS indications. For the tau program we are currently initiating a non-human primate study and I look forward to providing updates on future calls. We believe strongly in this program and the additional investment in NHP studies will maximize the value of this asset.

I'll now turn the call over to our CFO, Kathy Yi, for our third quarter financial update.

Thank you, Curt, and good afternoon, everyone. We issued a press release earlier today that included detailed financial results for the third quarter of 2017, which are summarized on Slide 32. Total net loss for the third quarter of 2017 was $12.4 million or $0.15 per share compared with $19 million or $0.27 per share for the same period in 2016. We ended the current quarter with $253.5 million in cash, cash equivalents and investments.

Based on our current cash position and excluding any potential new business collaborations or milestone payments, we believe we have at least 24 months of capital to advance our 4 lead clinical assets towards pivotal studies, transition our middle pipeline programs into the clinic and continue to optimize our technology and novel delivery platforms.

More importantly, our strong cash position includes buildout of our Phase I/II manufacturing capability and facility in Brisbane, expected to be completed by late 2018. With this investment and recently secured manufacturing capacity at our CMO, we believe we are in a better position to ensure future clinical supply for our therapeutic pipeline.

As a final comment, we are maintaining our prior financial guidance and expect to end 2017 with at least $220 million in cash. We're in a solid financial position to fund our product pipeline and build out the necessary operational infrastructure for the new Brisbane facility.

This concludes my remarks for today. I'll now turn the call over to Sandy.

Thank you, Kathy. So in closing, I'm pleased to report that we're continuing to make progress on the goals we laid out at the beginning of 2017. Clinical sites are activated in our lead clinical trials and enrollment is commencing, with data expected in the first half of 2018. Our optimized zinc finger nuclease technology is setting the standards for the field of genome editing across the critical dimensions of precision, efficiency and specificity.

We're making headway in the development of novel forms of delivery of genomic therapies, including new AAVs and LNPs. Our collaborations in hemoglobinopathies and hemophilia A are successfully advancing these programs and we expect to continue to forge new partnerships for selected programs in the future.

With this progress along with our newly announced manufacturing plans and headquarters, we believe we are laying a strong foundation for the future of Sangamo and look forward to accelerate the -- our progress into 2018.

Operator, we're now ready for questions.

(Operator Instructions) And our first question comes from the line of Jim Birchenough with Wells Fargo.

So a couple of questions. The detail around the transfection efficiency for the beta-thalassemia program is really helpful. I've asked before, but just wondering if you could maybe go through in similar terms how you think about the transfection efficiency for the gene-editing programs that are in the clinic right now for MPS I and II and hemophilia B. And then I've got a follow-up.

Mike, do you want to take that one on?

So it's -- so I think, as you've sort of brought up in terms of the transfection efficiency, when it comes to IVPRP we're delivering 3 different vectors, where each of 2 vectors deliver the ZFNs and then the third vector delivers the donor. And in our preclinical studies, we evaluated 2 things: #1, what was the appropriate or optimal dose of each vector component, as well as what was the appropriate ratio to maximize the delivery of all 3 components, both the ZFNs as well as the donor, that would allow us to achieve efficient levels of targeted integration into the albumin locus and drive therapeutic levels of gene expression. And so that's at least, from the preclinical work, how we sort of came about with trying to optimize transfection efficiency and ensure that we were able to obtain at least very high efficient levels of targeted integration to the albumin locus.

It's Curt. Just to add a couple of comments -- so obviously the ex vivo cell therapy setting is a very different situation than in vivo genome editing. So as Mike was alluding to, for the albumin strategy we think we only need a 1% target integration in order to drive good therapeutic levels of protein expression.

In the ex vivo setting, what you're seeing for both our beta-thalassemia as well as the T-cell work we've done is, we're regularly achieving greater than 80%, now 90%, in terms of ex vivo gene modification and gene knockout. And we're very excited about the improvements in the technology as well as the optimization of the manufacturing process, and that really laid the foundation for the beta-thal IND that was submitted earlier this year.

And you have a follow-up question?

And then just on...

I'm sorry. Go ahead.

You have a follow-up question, Jim?

Yes. Just in terms of the clinical execution, could you maybe discuss some of the challenges in going from screening patients to actually dosing patients? And as you look at the pipeline of patients being screened in the MPS I and II trials and the hemophilia B trial, do you have some confidence that the kind of patients being screened are actually going to be converting into dosed patients?

Yes. And I should say that, like you, we want to get these patients into the trial. We want to dose them. Because recently we had some MPS patients round visiting us here at Point Richmond, and it's clear that the patients are waiting and need this as a solution. And I'm really confident in the work of the clinical group.

Ed, do you want to talk to that?

Yes. I mean, first, I think just to respond to Sandy's comment, I've gotten letters and just recently received a letter from patients who are really looking to enroll in the study. And I think, to your point, the screening activities -- there are a number of them, as this is a Phase I/II study, so we want to evaluate the safety in the best possible way that we can. But all the patients who are screening are committed to enrollment in the study, and there's broad awareness in the MPS community about these studies moving forward.

And our next question comes from the line of Charles Duncan with Piper Jaffray.

Sorry for the background noise. First of all, thanks for taking my questions and congratulations on the progress in the quarter. Also relative to first patient dose, [and granted on that] I can't ask you about that any more in the [515] trial. But I did have a couple of questions. In terms of the pediatric and adolescent patient work in MPS I and II, that's really intriguing to me. I think it really reflects a perspective on safety. When would you anticipate being able to announce something along those lines?

Ed, do you want to take that (inaudible)?

Yes. Sure. So as we mentioned, we met with the European health authorities, who were very enthusiastic about taking our therapies which permanently integrate into the genome and can provide lifelong factor or enzyme. And we realize that for all of these studies the greatest potential benefit is in the treatment of children. In terms of when we would announce anything, we're actively moving forward to identifying and working with sites. But I'm not prepared at this time to give any sort of time frame in when -- I'm not prepared at this time to give any sort of time frame regarding when we would announce activity in Europe.

But you mentioned we have to go through a CTA process, and that much of this is simply governed by that -- those time lines.

Right.

Okay. Well, look forward to that update. And then perhaps a couple of questions for Curt; not sure if this is appropriate for him or anyone else. Regarding the evolution of the company, great to see that you're taking on a different kind of headquarters. It certainly will be easier to visit with you when we're in San Francisco. But I'm wondering, if you consider the possible difference in price per square foot, does the competitive advantage gained in terms of people in hiring really justify that change in location? Can you help us understand were there perhaps other terms with regards to local incentives or distribution or other advantages gained?

Thanks for the question. So obviously, Point Richmond's up in the Northeast Bay here. We were actually quite surprised with the ability to take down this building and comfortable with the overall cost, and Kathy can speak to the individual financial aspect there.

So Charles, we issued our 8-K today and you'll see that our -- the -- for the length of the lease, if you look at the financial commitment that is laid out there, it's (inaudible) versus what's available in that marketplace. We're very pleased with how we negotiated this facility and the building.

Okay. That's helpful. And last question is regarding biz dev activities. Very excited to see you guys making traction, making progress with regard to oncology applications of the technology. And I'm wondering if you want to lay out any time lines for potential partnering either in that or certainly for the CNS activities.

So for both of them we continue to be very active in this area. For oncology -- as I think you and I have discussed before, the world of oncology is a rapidly-moving world with acquisitions and launches and prices constantly changing the environment. And so we are continuing to be very optimistic about this, and that we have the best-in-class T-cell editing that a number of people are really quite interested in.

For CNS, we have looked at some of the recent deal activity and appreciate the benefit of perhaps adding some more data to our package so as we can maximize the value of the asset. And that's why the recent raise that we did allows us to take this forward into non-human primates. And we feel that that will be extremely compelling data, because I'm sure you would agree that what we've seen in mice at the moment is very encouraging.

Yes. Absolutely. And may I add also, in terms of launches, also acquisitions in oncology making the world change quickly.

And our next question comes from the line of Maury Raycroft with Jefferies.

First question -- quick one on hemophilia A. I'm just wondering if the new patient dose -- is that the same site as the first patient or a different site?

Ed?

The new patient dose is at the same site.

Do you want to just underline the number of sites we have? Just remind us all.

Yes. Sure. So we have 6 sites currently. We're activating 3 more by the end of the year. There's been intense interest in the physician community. So we're -- and as I mentioned, we have a number of patients who are actively screening, so as slots open up in the study, we're...

And those patients are at different sites?

Able to fill them in. Correct. Yes. It's not one center, but these are patients that are across all sites nationally.

Got it. And then for the greater-than-90% ex vivo gene editing efficiency that you're seeing in T cells, and that's with the double knockout and targeted insertion, just -- can you remind me if you're using electroporation for that? And if you provide any comments into how the efficiency could translate into time and cost savings in the production process -- if you can provide any specifics on that.

Mike?

So I'll provide the specifics on the delivery. In terms of the ZFNs, we're using electroporation to deliver messenger RNA, and as far as the donor we're using AAV6 to promote the efficient insertion into the TRAC locus.

Curt?

Yes. So when we -- there's a slide in the presentation where we talk about compounded efficiencies. It's similar to compounded interest -- that you multiply the efficiencies by each other. So to Mike's point, when we're doing a double knockout plus the targeted integration, we are looking for the eventual therapeutic to have -- that cell to have all 3 modifications. And what that really means is, with our 90%-plus level of modification for all 3 levels, we get significant synergy and efficiency in making that product, which drives down the cost of goods significantly; but more importantly, we think we're going to get a more efficacious product and a greater number of products out of a single batch.

Got it. And last question is just on the LNP delivery data that you presented at the ASGCT. If you can remind me what thoughts are around incorporating LNPs into your strategy [are] and is it just exploratory or are you considering advancing LNPs closer to the clinic?

Mike, why don't you start this and then I'll follow up?

Right. So I think I'll start this by, at ASGCT we demonstrated that we could achieve nearly 100% editing in hepatocytes in mice with significantly lower levels of messenger RNA as compared to competing technologies, where we could achieve the significant levels of modification at greater than a log lower dose of messenger RNA.

And with -- this is a key part of our strategy. So we feel that the genome editing is in a very good place, but that the success of it will be down to successful delivery. And that's why we have dedicated efforts within our research group to look at both AAVs and novel AAVs and to drive forward the LNPs, because delivery is what will make our technology available to patients.

And our next question comes from the line of Ritu Baral with Cowen.

This is Alex on for Ritu. Just a couple of questions on the manufacturing facility. Can you tell us what sort of capacity we should be expecting there? Do you think that eventually we should expect the current clinical programs to transition to the in-house manufacturing product? And what would be the first product that we should expect to see first data with, with the in-house product?

Kathy, can you try and answer that?

Yes. So Alex, we are currently at -- in the design phase right now with the building. So we're going to release more information as we clear out our -- clean out our capacity, understanding what it can be. But the entire building is about 88,000 square feet, so it's a significant-sized building that has definitely possibility for future commercialization product.

And we're very pleased to be able to blend the work we do with Brammer and the dedicated resource that they're giving us with this future of having our own in-house capability. And without being rigid and "one does X and the other one does Y," I think it gives us a flexibility, and we're delighted the people -- Mark and the team out at Brammer have been very supportive of both us driving ahead with both capabilities.

(Operator Instructions) And we have a follow-up question from Jim Birchenough with Wells Fargo.

Just wondering if you'd be willing to give a little bit more detail on the timing of the 2 patients with SB-525. Just trying to get a sense of whether we've crossed the threshold of where we would expect to see liver enzyme elevations if we were going to see them, and what kind of efficacy expectations we would have at this current dose level.

So sorry, Ed. Perhaps you could take this on.

Yes. Sure. So we're not going to be discussing the timing of the patients just yet. But as I say, we're keeping on track with that study. I've been very pleased with the progress thus far in terms of getting patients in, moving them swiftly through the process and getting them enrolled. And we're on track for all the deliverables on that study that we've set out earlier this year.

And patient safety's very important to us, so we're constantly measuring liver function tests in these patients. We don't have any preconceived ideas of when you have to look, and so we will continue to look after these patients.

Correct.

And I'm showing no further questions at this time. I would now like to turn the call back to Dr. Sandy Macrae for closing remarks.

Thank you, and we'd just like to thank you all for your continued support and for your listening today and your questions, and wish you a very good afternoon.

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