Sangamo Therapeutics, Inc.

Hello, everyone, and thank you for standing by. Welcome to the Sangamo second quarter of 2021 teleconference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press the star 1 on your telephone. Please be advised that today's conference is being recorded, and if you require any further assistance, please press the star 0. I would now like to hand the conference over to our speaker today, the head of the Corporate Communications, Ms. Erin Feingold. Please go ahead.

Good afternoon, and thank you for joining us today. With me this afternoon on this call are several members of the Sangamo Executive Leadership Team, including Sandy McCray, Chief Executive Officer. Mark McClung, Chief Business Officer. Pratusha Durebabu, Chief Financial Officer. Jason Fontenot, Chief Scientific Officer. Rob Schott, Head of Development. And Bettina Cockroft, Chief Medical Officer. Slides from our corporate presentation can be found on our website Sangamo.com under the Investors and Media section on the Events and Presentations page. This call includes forward-looking statements regarding Sangamo's current expectations. These statements include, but are not limited to, statements relating to potential value drivers, clinical catalysts, and advancement of our preclinical pipeline, plans and timelines for enrolling and conducting clinical trials and presenting clinical data, potential clinical data outcomes, our 2021 financial guidance. our expectations regarding our financial performance and sufficiency of our cash resources, and other statements that are not historical facts. Actual results may differ materially from what we discussed today. These statements are subject to certain risks and uncertainties that are discussed in our filings with the SEC, specifically our annual report on Form 10-K for the fiscal year ended December 31, 2020, as supplemented by our quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2021. The forward-looking statements stated today are made as of this date, and we undertake no duty to update such information except as required by law. On this call, we discuss our non-GAAP operating expenses. Reconciliation of this measure to our GAAP operating expenses can be found in today's press release, which is available on our website. Now, I'd like to turn the call over to our CEO, Sandy McRae.

Thank you, Erin, and good afternoon to everyone on the call. This is an exciting time at Sangamon, as we look forward to multiple clinical catalysts over the next several quarters, representing potential near-term value drivers. At the same time, we're advancing our promising preclinical pipeline that focuses on our differentiated CAR-T reg approach for autoimmune diseases and genome engineering for CNS diseases towards INDs, referencing potential mid-term value drivers. Beyond that, we continue to invest in early-stage research to further mine value from our core zinc finger platform. We continue to make steady progress on our wholly owned Fabry Disease Phase 1-2 clinical study. During the quarter, we dosed a fourth patient, and based on initial safety data for patients dosed to date, the Safety Monitoring Committee endorsed dose escalating to the third dose as planned under the study protocol. We're currently screening patients for the third dose cohort and expect to dose the first two patients in this third cohort by the end of the year. We will make a decision on when to first present initial data from this study, depending on clinical timelines, and we'll publicly announce our plans when available. In addition, we currently have three sites open in what we believe is the first in human CAR T-REX study, and we plan to enroll the first patient by the end of this year. We're very excited about this study. We believe this proof-of-concept study evaluating TX200 in kidney transplant rejection will help us understand CAR Treg pharmacology and biology in humans, as well as advance process development knowledge. We hope this study establishes a foundation for a portfolio of wholly owned CAR Treg therapies for autoimmune indications. In the fourth quarter of this year, we in Pfizer expect to present two-year results from the Phase 1-2 ALTA study in haemophilia A. We look forward to having a clearer understanding of durability through two years from the five patients in the high-dose cohort from the Phase 1-2 ALTA study, as well as from the Phase 3 data from additional patients that we expect to read out in 2022. Together, these data will be highly informative about the potential product profile. In addition, later this year, we and our partner Sanofi expect to share initial Phase 1-2 data from our Precision 1 study at an upcoming medical meeting. The study is investigating SAR 445136 for the treatment of sickle cell disease. We expect to report interim efficacy and safety data for the first four patients dosed with at least three months of follow-up. Finally, Biogen recently selected a fourth neurological disease gene target under a collaboration agreement, and we have begun early research activities on therapies addressing this target. This quarter, our former General Counsel, Gary Lowe, made the personal decision to leave Sango for another opportunity. We thank him and wish him well in his future. However, we are pleased today to announce that we have promoted Scott Willoughby to General Counsel and Corporate Secretary. Scott has contributed significantly to Sangamon, overseeing all corporate law and compliance matters since he joined us in March 2020. Scott has over 20 years of legal experience with expertise in corporate governments, SEC reporting, corporate finance, compliance, mergers and acquisitions, and transactions. In addition to Scott's appointment, our executive team was recently strengthened by the appointment of our new Chief Financial Officer, Patricia Darre-Bambo. Patricia has served as Sangamwus Principal Accounting Officer for nearly two years. She has contributed significantly with her wealth of experience and her proven track record in optimising financial strategy and operations, driving organisational change and building diverse teams. It is so pleasing to promote from within talented individuals and I look forward to Scott and Patricia's leadership. And with that, I'll turn the call over to Patricia for a financial update.

Thank you, Sandy, and good afternoon. It has been my pleasure to serve as Sangamo's Chief Financial Officer for the past few months, and I look forward to continued interactions with all of you as we progress our business forward. Our financial results for this quarter are available in the press release issued this afternoon, which can be found on our website. This quarter, we continue to invest in the advancement of our clinical programs, our preclinical research pipeline, and expanding our in-house manufacturing capabilities. We ended the quarter with approximately $579 million in cash, cash equivalents, and marketable securities. We believe that our balance sheet remains strong and will allow us to reach several important R&D milestones, including the potential submission of a BLA for our Haemophilia A product candidates. Turning to 2021 full-year guidance, we would like to reiterate the guidance we provided in our prior call. We continue to expect non-GAAP operating expenses, which exclude estimated non-cash stock-based compensation expense of approximately $30 million, to be in the range of $255 million to $275 million for the year. We will now turn it over to the operator to open the line for questions.

Operator? Thank you. To all our phone participants, if you wish to ask a question, please press the star one on your telephone. Again, please press the star one on your telephone. Let's pause for a few seconds as we compile the Q&A roster. And our first question is from Maury Raycroft of Jefferies. Please go ahead.

Hi, this is Kevin on the line for Morrie today. Thank you for taking my questions. So for TX200, there were some prior disclosures, I think, from TXL, which discussed use of FOXP3 and use of Lentivirus. And there are a number of CAR T-reg competitors moving forward in the space. On the technical side, what should investors be focused on when trying to appreciate differentiation of Sangamo's approach with TX200 versus what competitors are doing?

So this, thank you for your question. I think this is one that would be best answered by Jason, our Chief Scientific Officer. Jason.

Yeah, thank you, Stanley. So Sangamo, the partnership partnership that Sangamo started with TXL with the acquisition of the legacy TXL group, brought together our extraordinary genomic engineering platform with the expertise that TXL had built in TREG biology over the years. And that work has only grown and matured over the last years as we've continued to push forward our TX200 program, as well as programs that we are advancing behind that for multiple sclerosis and inflammatory bowel disease. And in addition to that, we are very invested in moving from autologous cell therapies to allogeneic cell therapies through the use of our zinc finger genomic engineering platform and through our partnership with Mogrify and our internal work on IPSCs. So the real differentiator for me between what Sangamo is doing and what these new entrants into the field are is simply the breadth of expertise that we have and the time that we've invested here. And we're super excited about the programs and the potential to really transform the treatment of autoimmune disease.

Great, thanks. And then just on the AAV side. So, when considering discussion on AAV safety and evading the immune system, Sangamo has been an innovator there. Are there any new developments on the AAV side that you can talk about, particularly with AAVs that can be used with your neuro programs?

So, thank you for that question, too. We continue to invest in a group within jason's organization that are looking at optimizing aav use with the cns we spoke about this this year at asgct and we'll talk about it as the the data evolves we have some very smart scientists doing this and we we are of the opinion that delivery is so important for genomic engineering. It goes hand in hand with the molecular biology of the zinc fingers, and we look forward to sharing more data in the months to come.

Great. Thanks for taking my questions.

And our next question is from Yanen Zhu of Wells Fargo Securities. Please go ahead.

Hi, thanks for taking my questions. So a question on the Fabry's disease program. I guess I'm wondering, for you to determine a dose to move into the dose expansion, what data point or data points would you pay attention to, and what kind of a follow-up would you require in order to make that call? And also, you know, each dose level has only two patients. Do you feel that you have enough data point to make a determination of the dose for the expansion? And lastly, how many patients do you think you would enroll into the dose expansion study? Thank you.

Thank you. And important questions about a study that we're very passionate about. So can I turn this to Mark and then get Rob to add in from a clinical point? But let's start with Mark.

Yeah, so thanks for your question. You know, a lot of these questions are related to the trial. I mean, as you're probably aware, the STAR study's primary endpoint is safety and tolerability. The secondary endpoints are pharmacodynamics of alpha-GalA and the presence of the substrates in the plasma over time, as well as the impact eventually on ERT administration. What I'll do is maybe hand it over to Rob to answer the specific questions in terms of where we're at with the dosing cohorts and how we will progress into the expansion cohort.

Rob? Yes, thank you. Very good question. We have announced that the DMSB, the Data Safety and Monitoring Board has met and has endorsed our moving to the third dose cohort. So we have fulfilled the safety requirements and additional requirements for the independent DMSB to allow us to proceed to our highest dose cohort. We're not disclosing at this point the specifics of that, but we are moving to that cohort and plan to dose the next two patients in the cohort this year. And we'll be sharing data along the clinical timeline that are appropriate. But again, the most important piece of information that we're sharing with respect to your question is that the DMSB approved unanimously the third-dose card.

Okay, got it, got it. Thanks for the color.

And our next question is from Jeff Mecham, Bank of America. Please go ahead.

Hey, guys. It's Ashton from Jeff. Thanks for the questions. So just to kind of follow up on the last question, can you remind us on the dose levels, the three dose levels for Fabry? I know obviously in some other gene therapy trials in the past, you know, the lower doses weren't quite as adequate and higher doses kind of addressed the level of efficacy. Some other companies looking for different programs. I guess I'm just trying to get a sense of is that what we're seeing here or was this dose escalation always kind of part of the plan? And, you know, if based on this dose escalation, is the primary driver the alpha-gal levels that you're looking at to see? Yeah, thank you.

So let me tell you this, and I know this must be so frustrating for all of you. We have not revealed the dose levels for going in other than those three cohorts. We have learned a great deal from the Haemophilia A study about the kind of levels that are appropriate. And it's always a patient agency. about starting at a dose that gives the patient some hope of benefit versus being prudent for something that is the first time it's ever gone into human. And we are immensely grateful for patients coming and taking that first dose, not knowing until we see the results whether there's been any benefit to them. So we're going to have three doses, and we hope to be able to describe the dose effect across the three doses.

Okay, thanks. And maybe just one quick follow-up. So the FDA is hosting an adcom, I think, in early September on AAV. Maybe just help us frame what your expectations for that are, if you'll be at all involved in that meeting. We'd love to get your opinion on that.

We have a group of our staff that will be attending virtually or in person that meeting. Each company has dosed so few patients with AAV that the agency has the greatest store of knowledge on the safety and efficacy of AAV. And so I am looking forward to the meeting and looking forward to hearing the things that the agency sees across many programs so as we can all learn and that patients can be protected as much as possible okay great thanks sandy and our next question is from gina wang of barclays please go ahead thank you uh my first question also follow up on the february uh

disease program and just wanted to ask exactly what kind of level, if you can give a little bit more quantitative answer regarding what bar you are looking for to define as the right dose. For example, the Lysol GP3, are we talking about over 50% reduction or even below ERT level? So this is the first question. Second question is the hemophilia aid program. Just wondering if two-year factor A level has some decline, do you expect FDA will ask for longer than one-year follow-up for the phase three study?

Good afternoon, Gina. So let me answer those questions in reverse order. Pfizer is handling the communication and the regulatory interactions around team affiliate A, and I I am so pleased that our baby is being looked after, Pfizer, and I know that they'll do a great job in having those regulatory conversations. Around Fabry, Mark, do you want to discuss that, what we're looking for to determine success?

Sorry, apologies. The program goal is to, you know, to look for a predictable, durable expression of the alpha-gallate enzyme. And then, you know, to see whether or not the resulting accumulation of the substrate of GB3 and a soluble derivative, lyso-GB3, go down. We've not commented on the amounts that we're expecting to see. You know, as Sandy mentioned, you know, we've dosed the first four patients. We're moving into screening for the third dose cohort, which is terrific, and hopefully we'll have an update for you by the end of the year in terms of when you might start seeing some of that data.

I'm sorry to be pressing. Just wondering, I understand you cannot talk about the first two cohort data, but just wondering, what is your goal to determine, okay, that's the right dose?

We've not commented on that, Gina. I mean, I know some of the other companies have commented on that percent substrate reduction. AvroBio has done that, but we've, you know, our belief is obviously you'd want to see a fairly significant reduction in the substrate because that seems to, you know, link to the improvement or the, in the decline of the EGFR, which is really important for patients.

Okay, that's fair. Thank you.

But, Gina, I want to strike a note of caution as you interpret the aprobio data. The reduction in Gb3 will depend on where you start. So if you have a high level of Lysol Gb3 and your compound is effective, you'll get a reduction. If your Lysol Gb3 is already at a low level due to ERT or addition, it's to do a reduction. The dramatic graph that AvroBio shows is an artifact of the patient that they recruited.

Okay, thank you. And our next question is from Ritu Baral of Cowen. Please go ahead.

Hey, guys. I want to just follow-up on Fabri again. Can you – I know you can't really tell us about the safety findings, but can I ask if what has been observed and learned in the cohorts to date and the preclinical, I guess, investigation to date, what does it tell you about – the safety of the program, and not just the standard AV liver or complement issues, but also cardiac safety within the Fabry population, just given competitive programs have shown signals. Is this something worth weeding patients out for, or is this something that could be unique to various programs? And then I have a follow-up.

So let me answer that slightly tangentially. It's remarkable because we've now dosed with AV6 across a number of programs. And other than the occasional immune response, allergic response, or the occasional ALT, considering how much virus we're giving, it is remarkably safe. These viruses are, the safety of them is very encouraging. The second thing is that we do not determine the safety ourselves but have a DSMB that overviews all of the safety and allows us to carry on. I imagine that Freeline has a DSMB or some safety monitoring committee that would have judged their cardiac events and given them counsel on whether or not they could advance. We have had very clear, unanimous response from our DSMB.

Got it. That is very helpful. And then just because manufacturing build-out is prominently featured in the update, how should we be thinking about CapEx allocation for the manufacturing build-out across the lead programs?

Patricia, do you have thoughts on that?

Our manufacturing build-out is going to be based on what we need across the different programs, and we will assess it in the next six months to 18 months.

I am so glad we invested in manufacturing 18 months, two years ago. They have completed AV manufacturing. They're on track to do cell therapy manufacturing in Brisbane and Vauban by the end of the year. And the reason I say that is there is between idea and clinical material in manufacturing is over a year, no matter who does it. And the there is a queue now at the CMOs for manufacturing slots. But more importantly, if you look at what's happened with other AEV companies, it's about quality of manufacturing is the most important regulatory discussion. And I feel by having our research group side by side with our manufacturing group to do process development, we have the best chance of the best product and the process is the product. And so I think it was a wise investment we made.

Got it. And then, Sandy, I just want to triangulate your comments into the slides that were sent around today, especially in relation to the Biogen collaboration. You had mentioned progress in the Biogen program with an undisclosed target of I want to make sure it's that, like on slide 22, you have alpha-synuclein telepathies and undisclosed. You were referring specifically to that undisclosed neurology target, or should we be thinking about progress in one of the three?

Jason, can you help disentangle that? How many targets are on the go now in Biogen?

We now have four.

Sorry about that. We now have four targets in the Biogen collaboration, and we're thrilled to see them progressing. It's great to be working with a partner like Biogen. I think that the fact that we are progressing on all of these targets is a reflection of just how much confidence the Biogen team has in the work that the Sangamo team is doing to support these programs. So I'm really looking forward to when Biogen can tell everyone more about the targets and about the work that we're doing. And when it's appropriate, we'll certainly be able to publish the work that we've been doing to support the team.

And Jason, before you go back on mute, we recently had a a very positive meeting with Jay and the team from NIBR.

Yes, you know, yet another example of the work that we're doing in the CNS and another example of what I think is one of the really differentiated aspects of our platform, both from a functionality point of view and in our ability to use zinc finger transcriptional activators and transcriptional repressors to modify cells in a therapeutically relevant way. So we're really excited about that collaboration as well and we're looking forward to the output of both of those collaborations and you know, kind of building on the expertise in the CNS area that is supporting both of those programs. We are also advancing some internal effort in the CNS, and we'll be talking about those when it's appropriate as well.

Got it. So you've got two undisclosed neurology targets with Biogen, along with 502-alpha-synuclein and 501-talopathy, correct?

Correct. Correct.

Got it. Thank you.

You're welcome.

And for the last and final question from Ben Burnett of Steeple, please go ahead.

Hi, this is for Ben Burnett. Thanks for taking our question. We just have a question around TX200, and I was just wondering if you could elaborate on how the car is designed and if you've disclosed the co-stimulatory domain. as well as what you expect the expansion connects to be in the transplant setting relative to what's been seen in oncology. Thank you.

Jason, we haven't said much on this. Can you give whatever guidance you can?

Yeah, so I am not sure if we've disclosed the construct for our CAR, but Needless to say, we are leveraging the learnings from the oncology field, and the advancements that have been made in cell therapy and oncology is what we're building upon. Without that work, there would not be the CAR Treg programs that we're advancing. That being said, there is some very different biology at work within regulatory T cells, and that's where the work that the TXL program The TXL team did, and then since the acquisition, the Sangamo team have been doing over the years to really understand the optimal CAR construct and the optimal ways to purify ourselves and expand ourselves in advance of infusing into the patient. It's all really paying off because this is work that is specific to Tregs. And there are things that were not obvious based on the oncology experience. And that deep understanding of the Treg biology is what we're bringing to bear on the TH200 program. We're really excited to see it move forward.

Thank you. I was wondering also if you would be able to give any details of when you expect to disclose proof of concept data for this study?

I am very anxious.

Let me help you with that one, Jason. We haven't guided it.

Yeah, we haven't guided it, and we'll do that as soon as it's appropriate. The first thing that we're testing is the safety, obviously, and when we have data available, we will certainly share it, but we haven't disclosed that at the moment.

Thank you.

Thank you, everyone. And at this point, I would like to turn it over to Aaron Feingold, the head of the corporate communications.

Thank you once again for joining us today and for your questions. We look forward to keeping you updated on our future development.

And this concludes today's conference call. Thank you, everyone, for your participation. You may now all disconnect. Thank you so much.