Sangamo Therapeutics, Inc.

Good morning and thank you for standing by. Welcome to the Sangamo Third Quarter 2023 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 star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Louise Wilkie, Vice President of Investor Relations and Corporate Communications. Please go ahead.

Thank you. Good morning. I'm Louise Wilkie, Sangamo's Vice President of Investor Relations and Corporate Communications. Thank you for joining us on the call today. On this call are several members of the Sangamo executive leadership team, including Sandy McRae, Chief Executive Officer, Mark McClung, Chief Operating Officer, Pratusha Durrababu, Chief Financial Officer, Amy Pooler, Head of Research, Natalie Dubois-Stringfellow, Chief Development Officer, and Lisa Roycare, Chief Medical Officer. Slides from our corporate presentation can be found at our website, sangamo.com, under the Investors and Media section of 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 the therapeutic and commercial potential of our product candidates, the anticipated plans and timelines of Sangamo and our collaborators for regulatory submissions, initiating and conducting clinical trials, screening and dosing patients, and presenting clinical data, advancements of our product candidates, anticipated feedback from and interactions with the regulatory agencies, advancement of preclinical programs to the clinic, our strategic reprioritization and reallocation of resources and the anticipated benefits thereof, the sufficiency of our resources, cash runway, and plans to seek additional capital, and the timing of related updates, our estimated financial guidance for 2023 and estimates of 2024 operating expenses, upcoming catalysts and milestones, 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 in our annual report on Form 10-K for the fiscal year ended December 31, 2022, as supplemented by our quarterly report on Form 10-Q for the quarter ended September 30, 2023, followed yesterday with the SEC. The forward-looking statements dated 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 our press release, which is available on our website. Now, I'd like to turn the call over to our CEO, Sandy McRae.

Thank you, Louise, and good morning to everyone joining the call. Sangamo has a long, impressive history of scientific innovation, leading to new discoveries and industry firsts for genomic medicine. I am so honored to lead a company with such deep scientific expertise and a team so dedicated to our mission of transforming patients' life with our technology. While our programs are delivering promising results, the environment within which we are operating has been and is likely to remain challenging. In 2020, we shared our refresh company strategy, which aims to both maximize the potential of our proprietary genomic editing and delivering technology and to focus on areas where we believe we can apply that technology to be either first in class or best in class. That began with our decision to transition away from developing new traditional liver directed gene therapy several years ago and has continued into today. Our renewed focus has been to identify areas where we believe we can be market leaders and to prioritize our resources to those programs accordingly. The difficulties in accessing capital being experienced across the industry have accelerated the pace of our plans. And so today we're announcing the final stage in the strategic transformation of Sangamo to become a neurology focused genomic medicine company. As we have shared before, we strongly believe our technology is ideally suited to address a range of devastating neurological indications that are few, if any, treatment options available today. Over recent years, we've increased our focus on this important part of our business and have advanced exciting data from our epigenetic regulation programs for neurological diseases. The promising preclinical evidence from our zinc finger editing capabilities, coupled with the strong progress we're making in identifying novel capsids with enhanced delivery capabilities, demonstrates the potential for Sango to become a leader in this space. Our differentiated combination of precise, versatile, and compact genome targeting cargo, alongside our novel AAV capsid evolution engineering, which has the potential for meaningfully improved central nervous system transduction efficiency, forms the foundation from which we believe we can transform the lives of patients with neurodegenerative diseases, such as intractable pain conditions, prion disease, Alzheimer's, and many other neurological conditions. You will hear us say throughout this, it's capsid and cargo. You have to have capsid and cargo to be successful. We believe this combination of genome targeting cargo and delivery caps will be critical to a sustainable business model with our internal programs, as well as providing important potential partnership opportunities. I'll speak more about this in a moment. In order to set the neurology company up for success, We must truly focus and carefully allocate resources to those priority programmes that are central to our core strategy. This means deferring new investments related to Fabry and Urquhart T. Wright programmes, while continuing to seek ways to maximise their potential value. We're committed to these changes. It's an immensely difficult decision to deprioritise spending on our legacy clinical programmes, which have such clinical promise. I strongly believe that our Fabry disease program is potentially transformative for patients. The phase one two star study continues to generate a meaningful packet of data with 25 patients now dosed, 25 patients, including 14 at the planned phase three dose. All patients continue to demonstrate sustained elevated alpha-galli levels, with 12 patients having achieved at least one year of follow-up, and the longest treated patients having now achieved three years of follow-up is a significant achievement. Additionally, all 11 patients who were withdrawn from enzyme replacement therapy remain off enzyme replacement therapy for up to 24 months for the longest withdrawn patients. I think it's worth emphasising that these are patients who were on ERT and said to be treated. They've come off ERT and they're staying off ERT because they feel a benefit from our treatment. And they tell us about it. We have received testimonies from patients saying that the impact of ST920 has been transformative and who report real and meaningful improvements in the quality of life. Some even over and above the benefits that they were experiencing on ERT. We have shown and strongly believe in the promise of ST920 as a potential medicine for patients suffering with Fabry disease. This is first in class, currently the only gene therapy in the clinic for these patients. However, at this time we're deferring any additional investments in Phase 3 planning. The cost of progressing the program beyond the current Phase 1-2 study would constrain our resources and require significant development and commercial investments, which we do not have the ability to support at this time. We're doing everything in our power to maximise its value by actively seeking a potential partner or alternative financing to fund a potential phase three trial. We're confident that in the hands of a partner, ST920 will make an enormous difference to the Fabry community. I firmly believe Fabry patients deserve a better option than the current standard of care. We expect to complete dosing of the remaining enrolled patients in the first half of 2024 and anticipate presenting additional updated clinical data at a medical meeting in early 2024. Turning now to our regulatory T cell programs. We are proud of our efforts to advance innovation in the CAR T reg field. Since our acquisition of TXL five years ago, We have become the first known company to dose a human with an engineered CAR Treg, overcame significant manufacturing challenges that are known hurdles in this field, and deepened our clinical and preclinical expertise. From our Phase 1-2 Steadfast Study of TX200 for the prevention of immune-mediated rejection in HLA-A2 mismatched kidney transplantation, we have now dosed four patients, including the first patient in the second dose cohort. The product candidate continues to be well tolerated for all treated patients today, and we're encouraged by the early translational medicine data emerging from this study. This quarter, we also received approval for an accelerated dose escalation protocol that will allow us to advance significantly more quickly through the dose cohorts and which adds a new fourth dose level to the protocol. We've already successfully manufactured a dose for patient in cohort three and for the first patient in cohort four. These patients are enrolled, manufactured, and we know when they'll be dosed. And we expect to dose the first patient in this highest dose cohort in January, a meaningful year and a half earlier than originally planned. Acceleration to this top dose level, which is 18-fold higher than the starting dose, could allow potential partners or investors to view efficacy as early as early next year. While the progress being made in the clinical program is exciting, the real value of this business is in what lies beyond the proof of concept with TX200. We believe this technology is ideally suited to treat autoimmune conditions with high unmet medical need and significant commercial opportunities. And our preclinical work in multiple sclerosis and inflammatory bowel disease supports that potential. We have received external interest seeking ways to invest specifically in our CAR T reg pipeline. and have therefore been in active discussions with parties to explore ways that they can do so. We have shared initial TX200 data with the potential investors and will continue discussions in an effort to realise the true potential of this exciting science. If we are not successful in closing collaboration or financing transactions over the coming months, we will consider other alternatives for our CAR-T reg cell therapy programmes. And we plan to provide an update on these efforts at the beginning of next year. In the meantime, we've decided to defer new investments until we're able to successfully secure a collaboration partner or external investment. We believe that discontinuing spending beyond our current commitments while seeking potential partners and investors for both Fabry and CAR Tregs that are both better suited to develop each technology and have the resources needed to bring them to patients will also allow the market to better assess each business's value. As a result of all I have outlined today, we're announcing a reduction in our current US workforce. We also expect to close our Brisbane, California facility in early 2024 to conserve cash resources, and we'll transition our headquarters to our Richmond, California facility as of January 1st, 2024. Point Richmond is the original home of Zankamun where Zinkfinger editing and CAPSID development capabilities are based. These actions are designed to focus our cash resources in advancing our Zinkfinger platform and our CAPSID discovery engine. We believe these changes in combination with the cost savings expect from the restructuring, workforce reduction and other potential cost reduction initiatives will reduce our annual operating expenses by approximately 50% and allow us to fund our planned operations into the third quarter of 2024, assuming no other additional capital is raised. Alongside these announcements, and with real personal sadness, I share that Mark McClung, Executive Vice President and Chief Operating Officer, will also be leaving the company. In the context of a streamlined and more focused organisation, Mark and I felt it was important to align the leadership team with the changes being announced. I've known Mark for many years and have an enormous respect for his wisdom, judgment, and leadership. All of us have benefited from his business experience and constant reminder to focus on the patient. A trusted, confident, and colleague, he'll be enormously missed. Until his departure, Mark will continue to lead our search for partners and investors in our Fabry and CAR T-REC programs. Jason Fontenot, Senior Vice President and Chief Scientific Officer, will also be leaving the company. Jason's scientific expertise is well known in the industry. We have been lucky to have him guide our CAR-T reg and broader scientific efforts. He leaves a strong scientific legacy for which we will always be grateful. With our clear focus on neurology at the corner shown to Sangamo going forward, I'm pleased to welcome Amy Puller, Head of Research, and Greg Davis, our current Vice President of Genome engineering, design and technology as Sangamo's new head of technology. These roles will be critical as we continue to advance our neurology focused pipeline and continue to innovate in the potential life changing field of research. I look forward to having them both join the leadership team. These decisions were not made lightly, and it's incredibly hard to let go of such talented team members who've dedicated themselves to advancing our mission. However, we recognize in order to move forward and to protect our future, we must become a leaner, simpler organization focused on progressing our neurology programs with a simplified and purposeful capital allocation and in turn, increased flexibility to grow. We are committed to aligning our investment strategies to our goals going forward, which are more focused than ever. I believe in Sangamo. I believe in Sangamo as a standalone neurology-focused genomic medicine company, with our core pipeline and outlicensing opportunities as the foundation of our business model going forward. Through our neurology business, we aspire to apply our differentiated epigenetic editing capabilities and our novel engineered capsids to revolutionize the treatment of neurological disorders. Sangamo has both the differentiated genome-targeted cargo and the delivery capabilities of the capsid to be positioned favorably versus others in the field. The data we have shared for our NAV1.7 and prion disease programs provide promise for our program going forward. And we have encouraging data from other advanced preclinical programs, including tau for Alzheimer's disease and alpha-synuclein for Parkinson's disease, which were progressed extensively as part of prior collaborations. And we had simply paused pending the identification of a suitable delivery capsid. We believe we have made meaningful progress in identifying such a blood-brain barrier penetrant capsid through the work with our sifter platform. which we believe will open the door for many other high-value and unmet diseases that can be addressed uniquely with our editing capabilities. The neurology-focused genomic engineering business is the future of Sangamo and is the culmination of a strategy that has been in the works for some time because of the compelling focus business model it represents and the potential commercial opportunities we believe it affords. We are excited about the opportunities that lie ahead. Opportunities are best for patients, best for advancing our science, and best for the shareholders who have stayed with us through this journey. I'd now like to turn the call over to our new head of research, Amy, to discuss the strategy of our neurology program in more detail. Welcome, Amy.