Sangamo Therapeutics Inc (SGMO) 2018 Q4 法說會逐字稿

Good afternoon, and welcome to the Sangamo Therapeutics Teleconference to discuss fourth quarter and full year 2018 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.

Hello, and thank you for joining us. As we begin, I'd like to point out that we'll be referencing an accompanying slide presentation. A link to the slide presentation may be found on our website, sangamo.com, on the Events + Presentations page of the Investors + Media section of the site.

I'd also like to remind everyone that the projections and forward-looking statements that we'll discuss during this conference call are based upon information that we have available today. This information will likely change over time. By discussing the future performance of Sangamo with you today, we are not undertaking an obligation to provide updates in the future. Actual results may differ substantially from what we discuss today, and no one should assume at a later date that our comments from today are still valid. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions 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. The forward-looking statements stated today are made as of this date, and Sangamo undertakes no duty to update such information except as required under applicable law.

With me this afternoon on this call are several members of the Sangamo senior management team including: Sandy Macrae, Chief Executive Officer; Kathy Yi, Chief Financial Officer; Stéphane Boissel, Executive Vice President, Corporate Strategy; Adrian Woolfson, Executive Vice President and Head of Research and Development; and Ed Conner, Chief Medical Officer. Again, we'll refer to a slide presentation during this call. And those slides are to be found on the Events + Presentation page of the Investors + Media section of the site.

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

Thank you, McDavid. And good afternoon to everyone on the call. Thank you for joining us. At Sangamo, we are focused on the development of novel genomic medicines using scientific expertise we have developed over 2 decades. We have 5 active clinical trials. And at the end of this year, we'll have a total of 9 programs in our clinic.

Our pipeline of therapeutic genomic medicine candidates currently in clinical development encompass 3 complementary approaches: gene therapy, ex vivo genome medicine and in vivo genome medicine. We are sometimes asked why Sangamo, a company best known for genome editing, includes the gene therapy programs in its clinical development portfolio. The answer is simple: we believe that the application of a variety of mutually compatible approaches to the problem of treating genetic diseases is both necessary and appropriate.

Our use of gene therapy is, in one sense, pragmatic. We have a deep knowledge of AAV delivered in vivo gene therapy as a result of the extensive work that we carried out over the last 2 decades. And it's also scientifically and medically appropriate in the indications where we've elected to use this approach. In these programs, we use AAV vectors to deliver a therapeutic gene to the nucleus of hepatocytes. The new gene is then expressed episomally via liver-specific promoter.

Our gene therapy programs include our hemophilia A program, which is being developed in collaboration with Pfizer and from which we expect data later this year. We use gene therapy for hemophilia A because our scientists created the construct that performed well preclinically and because gene therapy has a well-defined path forward with a favorable probability of technical, regulatory and commercial success.

Our second gene therapy program is in Fabry disease. Following the recent FDA acceptance of our IND, we are on track to enter the clinic later this year. Here, we chose gene therapy as our preferred treatment modality for Fabry disease because we determined that it could be developed rapidly and because Fabry patients are typically diagnosed as adults, making gene therapy a suitable approach.

Our ex vivo genome editing clinical programs build on our foundational studies in HIV, which were the first trials to use ex vivo genome edited cells as a treatment approach. Utilizing recent improvements to our ZFN platform, we have established a highly efficient and specific ex vivo editing capability, which results in an important validation through our partnership with Gilead for the creation of allogeneic CAR-T therapies. This partnership incorporates a CD19 CAR-T that is expected to advance to an IND application later this year.

Our current ex vivo masses also include our genome editing therapies for beta-thalassemia and sickle cell disease, which we're developing in collaboration with Sanofi, formerly Bioverativ. We're additionally also excited by our wholly owned CAR-Treg program, which combines our ex vivo ZFN editing capabilities with the significant Treg cell expertise of our new colleagues who had joined us through the TxCell acquisition. This fascinating new platform technology has a potential to produce an entirely new class of therapeutic agents for the treatment of autoimmune and inflammatory disorders.

Our current clinical pipeline also includes in vivo genome editing, which is more technically challenging than other methods due simply to the need to deliver sufficient concentrations of the ZFNs to the target cells. We believe, however, that it holds a promise to open up a new frontier for clinical medicine and has the potential to deliver great benefit to patients, particularly, those with pediatric diseases.

A few weeks ago, we presented interim data from the first in vivo genome editing clinical trials, evaluating SB-913 and SB-318 for the lysosomal storage diseases, MPS II and MPS I. These data demonstrated preliminary evidence of the first ever in vivo genome editing in a human, building on Sangamo's distinguished legacy of a leadership in the field of genomic medicine. This was an important moment and represented our first step in the process of validating our in vivo genome editing zinc finger technology in the clinic. We are encouraged to see preliminary evidence of activity in the first iteration of this technology. We are in the start of a journey, developing in vivo genome editing treatments and recognize that greater efficacy will be required to provide the necessary clinical benefit. But we firmly believe that we have the technical abilities to get us there and get us to our destination.

We must also remember that the early data we've seen so far are interim results and that we will learn much more as additional data are gathered from the high-dose subjects. It is important to mention that over the last 2 years, we've developed a second-generation ZFN technology for our in vivo genome editing programs, which Ed Conner will discuss later in the call.

We anticipate commencing a clinical trial later this year using these second-generation ZFNs, and the information from the study should facilitate a Phase III decision for the MPS II program sometime in 2020.

Before I turn the call over to the other members of the team, I would just like to say how excited I am about where we find ourselves as a company in 2019. We are, for example, making this call today from a conference room in the third floor of Sangamo's brand-new, state-of-the-art building in Brisbane, located in the epicenter of the biotech cluster of South San Francisco. We have completed the first phase of our move here. And later this year, we'll finish the build-out of our AAV manufacturing facility on the ground floor, providing us with an expanded capacity to supply our clinical trials. Gaining control of our process development and manufacturing is critical for gene therapy companies. And we're delighted to be adding this facility. Our transformation to a clinical stage biotech company has proceeded rapidly. And this new building is a symbol of how far we have come.

Last year, we made significant progress in clinical trial enrollment across our studies. And as a result, we expect data from 5 different clinical programs over the course of the year, including not just our [Z] in vivo genome editing programs but also our gene therapy program for hemophilia A and our ex vivo gene edited cell therapy for beta-thalassemia.

Now I'd like to turn the call over to Ed Conner, our Chief Medical Officer.

Thanks, Sandy, and good afternoon, everyone. We believe that the MPS II and MPS I data presented at WORLDSymposium on February 7 are congruous and complementary and, together, provide preliminary evidence of in vivo human genome editing. Several lines of evidence support this conclusion, namely, first, we detected evidence of gene integration via RT-qPCR analysis of liver biopsy samples in both MPS II patients who received the mid-dose of SB-913; second, in patient 6, who was treated at the high dose in the MPS II study, a substantial increase in plasma IDS activity was observed, up to a level as high as 50% abnormal; third, we saw evidence suggesting a dose response across the low, medium and high doses in the MPS II trial; and fourth, we observed leukocyte IDUA activity increases within the normal range in the 3 MPS I patients treated in the EMPOWERS study as well as evidence of dose dependency.

As discussed at WORLDS, these and ARM data marked the first in a series of readouts from these 2 studies, which we expect in 2019. We are looking forward to analyzing IDS activity measurements in the high-dose cohort, which includes the 3 expansion patients from the CHAMPIONS Study. For EMPOWERS, we are eagerly awaiting longer-term data. Most importantly, for both studies, we look forward to ERT withdrawal data across all dose ranges. These data are an important step in validating our in vivo ZFN-mediated genome editing technology in the clinic and build a foundation for the future development of our in vivo genome editing programs. It is encouraging that our first-generation platform demonstrated this activity.

As Sandy mentioned earlier, we have developed a second-generation ZFN technology, which is a modified version of our first-generation reagents. The new ZFN constructs were designed amongst other things to increase editing efficiency. In vitro data presented last year showed 3 potential advantages of using these new reagents in the clinic: first, a five to thirtyfold improvement in efficiency and potency observed in vivo, and which results from protein engineering to the ZFNs; second, the ability to function equally well in the patient's both single nucleotide polymorphism and the target locus of the albumin gene, which represents approximately 20% of the population whom we were not previously able to treat; and third, improvements in specificity. A separate package of preclinical data has been reviewed by the FDA. And they have allowed us to submit protocol for a new study under the same IND for the SB-913 MPS II program.

Second-generation ZFNs are already being manufactured, and we expect to begin a clinical trial later this year using this product. We anticipate that this will allow us to make a Phase III decision for the MPS II program in 2020. With regards to adolescents and children, we want to give these patients the best opportunity to benefit and, therefore, plan on using our second-generation ZFNs.

Turning now to our gene therapy program, SB-525, our hemophilia A program in partnership with Pfizer, where we have enrolled 8 patients so far. Following the recommendation from the SMC in October to dose escalate, we have treated 2 patients at the recommended higher dose. As previously communicated, once we complete the dose escalation, we plan to report data that includes safety and factor expression levels as well as information relating to factor replacement use and bleeding events. This is a fast-moving field, and we do not believe that others have yet presented data that would support an optimal product profile for hemophilia A gene therapy.

Also, with regards to our gene therapy programs, we announced earlier this month that the FDA accepted the investigational new drug application for ST-920, our product candidate that is being evaluated for the treatment of adults with Fabry disease. We're excited to begin these trials to assess the hypothesis that the onetime administration of a gene therapy can fundamentally change the clinical course of these patients who have limited effective treatment options. We expect to open several sites later this year.

Turning to our gene edited cell therapies, starting with ST-400 for beta-thalassemia in partnership with Sanofi, we have enrolled 2 patients to date. In 2019, we expect to report initial safety and efficacy data, including levels of fetal hemoglobin and total hemoglobin. Regarding Sanofi's BIVV-003 for sickle cell disease, sites have been activated and patient identification is underway.

I'll now turn the call over to Adrian.

Well, thank you, Ed, and thank you to everyone on the line for dialing in to our call today. Today, I'd like to provide you with updates on some of our lead preclinical programs that are making their way into the clinic. And in particular, I'd like to highlight our cell therapy platform. Sangamo has a distinguished history of employing zinc finger nuclease mediated ex vivo genome editing technologies in the clinic. And these date back to our -- the time of our HIV studies in the mid-2000s.

So first, I'll mention our exciting work in multiplex ex vivo gene editing that's being performed with Kite-Gilead to generate allogeneic CAR-T cells. The use of multiplex gene editing in the generation of these agents plays to the high editing efficiency and specificity of ZFNs, which we believe make some uniquely well suited for this purpose. Kite-Gilead recently announced that the first asset to enter the clinic from this partnership will be the allogeneic anti CD19 CAR-T agent, Kite-037. They intend to file the IND in the latter half of the year.

Building further on our unique strengths in this field of multiplex ex vivo editing, we're also exploring the development of an entirely new class of therapeutics, known as CAR-Tregs. Now these are regulatory T cells that are being genetically modified with a chimeric antigen receptor to endow the cells with both antigen and tissue specificity. And we believe that CAR-Treg cell therapy will prove to be both as exciting and as important for immunology and also immune diseases as CAR-T cell therapies have turned out to be for oncology.

Now our first clinical Treg program, TX200, which we acquired as part of the TxCell acquisition will test these new therapeutic agents in the context of kidney organ transplantation. And this represents the first time that a CAR-Treg cellular therapy will have been tested in humans. We believe that the TX200 program will play an instrumental role in establishing a human proof-of-concept for the therapeutic viability of CAR-Tregs. And it will also pave the way for their broad application in both autoimmune and inflammatory diseases.

But on the TX200 program, an HLA-A2 CAR is engineered into Tregs. In a clinical setting of organ transplantation, mismatches of HLA alleles between the organ graft recipient and the donor are commonplace. So -- and such mismatches are the primary causes of transplant rejection. And as a result, transplant patients are typically reliant on global lifelong systemic immunosuppression in order to prevent graft rejection.

Now if you look Slide 20 in the presentation, you'll see that it outlines the concept and also shows, in the case where the recipient is HLA-A2 negative and the donor graft is HLA-A2 positive, the recipient T cells that recognize HLA-A2 on the graft can be selectively suppressed by the activity of infused CAR-Tregs.

Now this treatment intervention has the potential to facilitate the tapering and even perhaps the eventual removal of immunosuppressive agents. We plan to harvest Tregs from a recipient and then to engineer them with a CAR that recognizes the HLA-A2 presence on the cell surface of the donor organ. The engineered CAR-Treg cells are designed to selectively bind to HLA-A2 positive cells on a donor organ and then by providing localized, targeted immunosuppression and in so doing, inducing selective immune tolerance.

Now the core preclinical data supporting this study, which describes the developments of humanized HLA-A2 CAR, its transduction into Treg and the evaluation of the resulting HLA-A2 CAR-Treg cells in several preclinical trials transplantation models is summarized on Slide 21 for you.

Now this data was published in February 2019 in the journal, JCI Insight, and it represents the work which was done by our collaborator, Professor Megan Levings, of the University of British Columbia, UBC, and also work done at the Center for Drug Research and Development, or CDRD. And this is a Canadian translation center, which is located in UBC.

Now in this publication, the UBC team, led by Professor Megan Levings, in collaboration with CDRD, showed that HLA-A2 CAR-Treg cells rapidly migrated to and persisted within the HLA-A2 allografts and following which they eventually migrated to the draining lymph nodes. Interestingly, the HLA-A2 CAR-Tregs were then able to suppress rejection both in the graft-versus-host disease, GVHD model and also in a skin allograft model.

Now this work has enabled the identification of the optimal humanized single-chain variable fragments, or scFv fragment, which we then selected as our clinical candidate, TX200. This first-in-human study, in our view, actually defines the next frontier of cellular therapy. And it's our expectation that CAR-Treg cell therapy will, in the end, be as exciting for immunology and also immune disease as CAR-T cell therapies have been to oncology. And we hope to be recapitulating some of the successes that have been observed in this field to date.

Now as is the case with the CAR-T cell therapies used to treat human malignancies, precise and specific gene editing is required to realize the full potential of CAR-Tregs. And this T cell engineering will facilitate both the knock-ins and the knockouts that will enable us to manufacture allogeneic Treg cells and also to armor them with CARs and as well as additional edits to introduce novel properties into the CAR-Tregs.

Sangamo's zinc finger nuclease platform is certainly well suited to multiplex editing, and we expect to be able to engineer product candidates for a range of different indications in the first instance using autologous CAR-Tregs and then moving on to allogeneic agents.

Now the TX200 program facilitates 2 core goals: It has the potential to address an unmet medical need where there hasn't been an innovation in many years and will also provide invaluable learnings to help us to accelerate the development of CAR-Tregs in both autoimmune and in inflammatory diseases. And Sangamo's cellular therapy team in Valbonne, France, continues to make excellent progress in a range of CAR-Treg programs that target autoimmune and inflammatory disorders. And these indications include multiple sclerosis and Crohn's disease.

So I'll stop there now, and I'll turn the call over to Kathy, who'll give you a review of our financial results. Kathy?

Thank you, Adrian, and good afternoon, everyone. Detailed financial results for the fourth quarter and full year 2018 were included in the press release that we issued earlier this afternoon. And Q4 results are summarized on Slide 24. I will briefly review the most important components of our financials today and also discuss primary drivers of our growth and the investments for 2019.

We ended the fourth quarter with a strong balance sheet of $400.5 million in cash, cash equivalents and investments. Our 2019 operating expense guidance is in the range of $210 million to $220 million, and we project our current cash position to provide at least 2 years of runway. As discussed earlier by Ed, we're excited about the future progress achieved in our clinical programs this year and anticipate data readouts from hem A and beta-thal as well as the entry of Fabry into the clinic. While we continue to invest in expanding our capabilities and developing our future pipeline, we also plan to be prudent in our future capital allocations and investments.

We recently moved into the Brisbane facility and expect to complete the manufacturing and process development portion of the build-out by middle of this year. While this expansion is critical from a talent recruitment and capability perspective, we are excited about the AAV manufacturing capabilities in this facility and expanding capacity to supply clinical materials for our future pipeline. We also expect to continue to maintain capacity at our CMO while building out our own internal manufacturing capability.

Turning to our financials for the full year of 2018. The consolidated net loss was $68.3 million or $0.70 per share compared to a consolidated net loss of $54.6 million or $0.70 per share for the full year of 2017. Revenues were $84.5 million for the full year of 2018 compared to $36.6 million in 2017. The increase in revenue was primarily related to our collaboration and license agreements with Kite-Gilead and Pfizer. The total operating expenses were $161.6 million for 2018 compared to $92.9 million in 2017. The increase in operating expense was primarily related to manufacturing and R&D expenses related to the advancement of our clinical program.

As a final comment, in the fourth quarter of 2018, we successfully completed the TxCell acquisition for aggregate purchase consideration of approximately $80.4 million. We continue to be excited about developing the next-generation CAR-Treg cell therapy and expect a clinical trial initiation in 2019.

And with that, I'll now turn the call over to Sandy for closing remarks.

Thank you, Kathy. We are excited by the progress we've made across our key therapeutic programs. During the past few years, as our focus has been on gearing up our operations and moving our programs into the clinic, we are now seeing clinical data emerging from these programs. And this has the potential to validate our new therapeutic approaches that utilize our differentiated technologies in a series of high unmet medical needs. With our manufacturing facility in Brisbane and continued contracting with our CMO, we are preparing for the future. We look forward to bringing you further data throughout the year, which will continue to define how we develop our genomic medicines across our therapeutic portfolio.

We'll now turn to your questions. Operator?

(Operator Instructions) Our first question is from Qian Wang from Bank of America Merrill Lynch.

So if I may, just a couple. First of all, just on the MPS II program, I know you guys are starting the ZFN 2.0 trial soon. Can you just speak to what detailed design do you have? And what time could we expect clinical data updates? And a follow-up on that is, you said potentially you could trigger the pivotal trial in 2020 and what kind of data do you need to see? Have you spoken requirements with FDA yet?

Thank you for the question, both important questions. Can I maybe pass this on to Adrian, our new Head of R&D to address both of these?

Thank you, Sandy, yes. Yes, so we're very enthusiastic about this new study. We believe that the second-generation zinc finger agents might just be able to take us slightly further into the therapeutic window to realize the full power of this technology. To answer your question specifically, the design of the new study will recapitulate essentially the design of the first-generation study in MPS II. The data that we'll trigger are moved towards Phase III. It will be based upon the usual parameters, a combination of the data that evolves out of the existing first-generation studies in both MPS I and MPS II and also the new data pertaining to study safety, obviously, but also enzyme activity, evidence of integration and ERT withdrawal. But at this point, specifically I got to say we need the full house, where one of the other -- we will watch the data as it evolves, and we'll make a decision when we feel we have enough data to do that.

If I may, I can have another follow-up? So...

Sure.

Yes. So you are dosing a patient for beta-thalassemia. And you said, we potentially would expect data on the fetal hemoglobin expression as well as the total hemoglobin. I'm wondering how long of a follow-up that we can see? And potentially, can we see any data points on transfusion independence?

Ed, would you like to take this one?

Yes. So we're very excited about our ST-400 program in beta-thalassemia, and we will have data readouts throughout the course of the year. Predominantly, that will include, obviously, initial safety as well as fetal hemoglobin and overall hemoglobin values. As with all our programs, we -- the data will come in, and we'll present it as is appropriate.

Our next question is from Ritu Baral from Cowen.

I do have a follow-up to the last question, just about what you need to move to pivotal. Do you have an idea right now about how many patients that you want to treat or that you need to treat with the second-gen product before you'll have enough, I guess, critical mass of data to move into a pivotal portion? And how long do you need to follow them up for? And then I have a follow-up just on the second-gen potency?

Yes, thank you. Yes, I don't think today we want to discuss specifics about that. Those are really internal kind of go/no-go's that we're in the process of defining. But I think I can say that it should become fairly clear to us when we look at the totality of the data, if we begin to see really robust increases in enzyme activity, we don't really know what level of activity is necessary to get the clinical effect, but we will triangulate between the existing data and the new data and make a decision based upon what we've seen.

And we've said before and I think we've even had this conversation with you that enzyme -- being able to stop ERT is important. And we'll be learning about that from the many patients, the 3 patients in the expansion cohort, the 2 patients in cohort 3 for MPS II and the 3 patients in MPS I. Over the next coming months, they will all be withdrawing from the ERT, and we'll learn what the power and the utility of the first-generation ZFNs are. And then as Adrian said, we will gather data from the second generation. Again, we'll be moving those patients to ERT withdrawal. But throughout the process of their treatment, we will learn from the expression of enzyme and safety of that treatment. So lot of data to come, and it will be in the whole that we will make the decision to move forward.

Got it. And then my follow-up is just on the increased potency that you're seeing for the second gen. You said five to thirtyfold. Where is that coming from? Is that optimization of the vector that leads to better transfection? Is that the promoter, the actual -- is it the actual zinc finger construct and enzyme? What are the...

Yes. So I'll answer, it's Adrian here. So the data is in vitro data, and the modifications that we've made are twofold really or two broad categories. The first is a modification to the vector itself, which impacts expression at the transgene, which includes, for example, modifications to the 3 and 5 prime untranslated and 1 or 2 other changes. And then we've also made some changes to the zinc fingers themselves.

Obviously, one of the huge advantages of zinc fingers over other platforms is that we can redesign their proteins. And we've done some nice work to tune up the phosphate residues and get rid of some of the stickiness, which you occasionally see through nonspecific interactions between the phosphate backbone and the positively charged side chain residues that get on the beta-sheets. And we've also done some tuning in the characteristics playing with the FokI nuclease itself. And we're able to uniquely tune between these 2 different sites.

We've also made some additional changes to residues within the alpha-[helices] themselves, which contact the template. And those changes have contributed to some of the positive effects that we've seen with the second-generation technology and also enabled us to be agnostic to a common SNP, which occurs in 20% of patients. So the combination of the changes to the vector and to the zinc finger itself through protein engineering, together, enable us to get this projected increase in activity from the clinic.

Was that SNP present in any of the patients treated with the first gen, either at MPS II or I?

Yes. If we look across all our programs, there were a total of 5 patients who had the SNP that excluded them from participation.

I want to say that explicitly, again, patients with the SNP were excluded from the clinical trial, which was part the challenge of recruitment for this clinical trial we didn't talk about. We now can go back to those patients that were excluded because of the SNP and offer them a chance to enroll in the second-generation trial.

Right. And obviously, that will give us a bit of a head start when we're accruing this second-generation study as those patients are known to us.

Got it. And the stickiness that you referred to, Adrian, I guess, the improvement in recognition and reduction in nonspecific. Is that going to improve the safety aspect? Or was that stickiness impairing potency?

So the stickiness is a thing that we've talked about -- Ed Rebar has talked about, a lot about the nonspecific binding between phosphate residues on beta-pleated sheet and the negatively-charged part of the DNA. And that -- it largely reduces nonspecific binding and off-target cutting. So the effect of that part is largely about reducing off-target rather than increasing efficacy.

Our next question is from Gena Wang from Barclays.

This is actually Xiaobin dialing in for Gena. A couple from us. First question, just want to confirm that based on your slides, do you still plan to enroll the adolescent cohort for MPS II? If not, what's the reason? Then for the second question, so you mentioned the allo CD19 CAR-T, of course, it's run by your partner. Just wondered if you can speak to the aspect about the persistence of the allo CD19 CAR-T and if there's any divide implemented in the product.

So we have an agreement with our friends at Kite-Gilead that they comment on the CAR-T products. So you'll understand if we pass on that question. But for the first one -- the first part, I'll hand it over to Ed.

Yes. So for the adolescents, we plan on including them in the ZFN 2.0 trial. And just to be clear, after adult patients are treated.

And we feel like we're moving -- so we've said previously that we will understand the full dataset from the first-generation trial with efficacy and safety and ERT withdrawal, and we feel that as we're then going to move into the second generation, it is the right thing to do to offer the second-generation to the adolescents and children rather than treat them with the first generation.

Right.

I'm sure you would agree.

Our next question is from Jim Birchenough from Wells Fargo Securities.

Congrats on all the progress with the science here. A few questions. I guess, just first, in terms of optimizing the in vivo gene editing. Are you looking at unproductive editing? And specifically, I'm wondering if you can look at indels without the IDS gene insertion, whether those are occurring. And is there some way to avoid that? Is that something you can look at?

Adrian, in that sense, one for you.

Yes, it is something we can look at. And actually, we believe that we actually have the safest gene editing reagents of our time. I think occasionally, you hear some claims about specificity of CRISPR. But in our hands, if you take the on-target into account, we feel that we're really doing extremely well here with regard to safety in off-target, and that these are ideally suited for this purpose. We can measure the indels with the MiSeq assay, and we are confident that the off-target is extremely low now, but those -- but actually, the first-generation would be even more so now with the second generation.

But I think Jim's asking a very specific question about whether we can drive insertion of the transgene over indel.

Oh, I see, whether you can actually -- whether you can favor homologous recombination. I'm not -- I mean, there are a few ways to do that, which have been discussed. I just got back from Victoria, the one beating that. Broadly, it was something we're thinking about. But at the moment, we don't have a specific way -- if your question is how could we specifically bias the system to favor homologous recombination over indel generation, we don't have a specific method to do that at the moment. But you can...

Yes. And I guess, my question was really, to the extent you could look at indels off-target, I was wondering if you could look at indels in the albumin gene locus to see whether you're getting editing without the transgene insertion and if you can optimize to avoid that?

It's a good question. Sometime ago, we looked in animals and saw our ratio of indels to insertion. And that led to the current protocol, which has 1:1:8 as a ratio of transgene to ZFN. So you drive the equation by putting in more transgene. I think it's something that we will come back to and look at again with the new generation of the ZFNs. It may be something around timing of transgene generation compared to ZFN cutting or it may be just simply, again, the ratio of amount of each. Once we start to see editing, we can start to then improve on -- and it's one that -- your question very well -- presented is one that we...

Yes, it's one that we discussed, yes.

And then maybe just on the ex vivo gene editing. Should we assume that some of the advances that have been made in the transplant protocol in sickle cell disease, as an example, things like pretransfusion and recruitment of cells, that those have been optimized in your program with Sanofi?

Yes. So Sanofi, specifically for sickle cell, is responsible for that Phase I-II study. But yes, all current standard-of-care medical interventions are being included both in the beta-thalassemia as well as sickle cell protocols.

Our next question is from Maury Raycroft from Jefferies.

First question is just on the next-gen program. Is that a plug-and-play type situation where that could be incorporated into the hem B in MPS I studies? And I guess, what are the plans to do that?

Good question. We feel that it's prudent to do it with 1 initially. So that's why we're driving ahead with the MPS II. And part of the reason for choosing MPS II is a very pragmatic one as the team had already had discussions with the regulatory authorities, and we're ready to go with that. However, we will be watching the results of the MPS II, MPS I and hem B first-generation studies at the same time as doing the trial in MPS -- in second-generation and collecting that data. And the team are looking at what would be the trigger points to start the other studies with the second generation.

Got it. That's helpful. A specific question for MPS II. I'm just curious for the cells that you harvested from the patient biopsies. And I know you did the RT-qPCR in them. But I'm wondering if you stained any of those cells and if you get a sense as to the amount of IDS that was produced in a few of those cells. I guess, if you stain intracellularly, are those cells overloaded with IDS?

So we haven't done that kind of staining. The amount of tissue we get in these patients is very small. If you imagine that these patients are often smaller because of the disease, and these are not therapeutic biopsies, but clinical trial biopsies. So we try and use the very smallest needle. And the amount of tissue we get is perhaps half of the nib of your pen. And when we do the PCR, it was on something like 100,000 or a couple of hundred thousand cells. So we've done very little capability to define histological examination.

Okay, okay. And then last question is just on the Treg program and the publication, which looks pretty cool. I'm just wondering for the antigen, the HLA-A2 antigen that you're targeting, is that sequence in epitope proprietary? And can you talk about higher optimizing and going from mouse to humans with the antigen targeting?

Yes, thank you for that question. And it's excellent question. And we'd rather not, at this point, discuss the details of the IP around our targets. So with regards to your second question, it was the...

Optimizing between mouse and humans.

Optimization in mouse and humans. So moving from a mouse model to a human, is that what you're saying? And I think the answer to that question is that, really, one of the key purposes of our TX200 program is exactly to enable us to sort of, for the first time ever, really, to test this hypothesis, the Treg -- CAR-Treg hypothesis in humans and to see how efficiently we can translate what we're seeing in these animal models -- and we showed some of the data earlier -- into humans. And I think this is the first step which will pave the way forward for us to then move into some larger indications like, for example, Crohn's disease, multiple sclerosis and others. So I think the answer is we need to see. We expect it to translate. We're confident that it will. Obviously, there's been some data from polyclonal Treg studies with regards to safety. But we believe, we're in a completely different place when it comes to efficacy, obviously. So this is something I think -- which is the case of wait and watch. And we'll know pretty quickly. And that will really provide us with an important foundation for our future work.

But even this morning, we reviewed the landscape of Treg companies. And there seems to be a good groundswell of new companies interested in this space, which is why we feel that the acquisition of TxCell was so important because what we saw when we visited them was the very special product development that they have and the ability to purify Tregs. And that will turn out, we think, to be as important as the editing capability.

And we still expect, if I may comment, Sandy and Adrian. So we still expect to be the first company to put a Treg -- a CAR-Treg in the clinic this year. But we see more and more encouraging to that technology, so we can expect, let's say, more (inaudible) in the future. But we are still the first, and we expect to be keeping that first-mover advantage by investing as [effectively] as possible.

Well, I think it's fair to say that we feel the cellular therapy CAR-Treg is seen as the next frontier really. And I'm really delighted, as are we all, to be the people actually pushing this forward and to be the first company to actually take this concept into the clinic and test that.

(Operator Instructions) And our next question is from Whitney Ijem from Guggenheim Securities.

This is Evan Wang on for Whitney Ijem. We just had a question on hemophilia A. With respect to timing, I guess, with the fourth cohort completely enrolled, what is the timing of a SMC opinion? And if you need to enroll a higher dose, will you provide us an update on that? And then I have a follow-up.

So the SMC typically meets 8 weeks after the second patient is dosed. We expect that meeting to occur in the spring. And we will certainly update on actions following that as is appropriate.

Okay. And with respect to the Fabry program, I guess, what are your expectations for a competitive program?

Yes, I mean that's a really good question. And it's, obviously, a crowded field. But you can remember that Sangamo has been doing this kind of thing for many years. But the reasons why we believe we can be competitive, as Sandy said, we feel that gene therapy is part of a portfolio of approaches, including gene editing and genome editing. And it's a question of whether we can be best-in-class. And we believe, looking at the profile of what we're seeing preclinically, and without going into details about what we expect in this study, I think there's a good chance that we have everything to play for here and that we have best-in-class potential where we need to see the data obviously.

And our expectation is to be the next gene therapy program in the clinic.

We're uniquely placed -- we feel we're uniquely placed and having that balance of gene therapy, which is tractable, practical clinical development with ex vivo editing, which is something where you can control the quality and the QC before you give the stuff back to the patients, the cells back to the patient, with really cutting-edge frontier science on in vivo editing. And it's that balance of risk and benefit and clinical benefits, I think, is the big advantage that Sangamo has.

Our next question is from Eric Joseph from JPMorgan.

Just a couple on the 2.0 program from us. I just wanted to clarify whether there are any adaptations to the AAV vector design as part of 2.0 that you're seeking or that you've adapted in order to increase editing efficiency? And just as a follow-up to that, I guess, just going back to the biopsy -- liver biopsy analysis that you did in the MPS programs, I know that you looked at transgene insertion by PCR, but did you also look at zinc finger cassette levels by PCR? And do you see proportional increases in cell positivity, as you dose escalate?

So if I can answer that, and I'm not sure I fully understood the second question. But for the first question about AAV, it is something we're working on, and we've got some really interesting results that suggest we can -- may carry the AAVs transfection even better. That's not ready for this generation. But we feel it's important as any pharmaceutical, bio pharma company would do to constantly be improving the next generations. So that's for the future. And then the second question that you asked was around the liver biopsy. As I said, we have very little tissue. And all we can comment on was the presence of the transgene and the transgene being correctly around and in the correct place of the albumin locus. So that's all we can say.

And I'm just picking up on the statement, how we can improve the efficiency of editing in vivo. And I think the nice thing about Sangamo is that we have, what I would call, multiple levers that we can use to get there. And our second generation of zinc fingers is one of them. But we have some other approaches, too, in fact we've got a nice portfolio of approaches so that we believe that we have preliminary evidence, as we stated, that we have edited the human genome in vivo for the first time. And yes, as of today, just with the preliminary data we have, we might need a little bit more efficacy to get into the clinical range. We may be there. We may not be. We don't know. The data is still maturing. It's still evolving. And we'll know much better over the next few months. But I think the important point is that we have levers to take us to the next level of efficacy. And the first lever that you're going to see in the clinic is the second-generation zinc fingers. We expect that, that has a good chance of getting us there. And we have many other options beyond that as well.

At this time, I am showing no further questions. I would like to turn the call back over to Sandy Macrae for closing remarks.

We'd just like to thank you all. It's an exciting, fundamental year for Sangamo. And we're grateful for your continued support. And we'll wish you a good rest of the afternoon.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, you may now disconnect.