Sangamo Therapeutics, Inc. (SGMO) Earnings Call Transcript & Summary

Good morning. I'm Eric Joseph, senior biotech analyst here at JPMorgan. And our next presenting company is Sangamo Therapeutics. I'm pleased to welcome CEO, Sandy Macrae, to tell us a little bit about the company. Following the presentation, the breakout Q&A will be across the hall in the Georgian room. With that, Sandy?

Thanks, Eric. Good morning. I'm Sandy. I have the privilege to lead Sangamo. I would refer you, of course, to our forward-looking statement. And I want to give a talk today that is about balance and about responsibility. We had an R&D day just last month, and there's some excellent presentations there that will give you the full detail on the programs. So I want to give an overview of how we think about Sangamo and the balance and responsibility that we have. And we have a responsibility to patients, of course. We have a responsibility to you all to make genomic medicines. But we also at Sangamo have responsibility to science. And what I'm trying -- going to try and show you is clinical programs and the future science to come. And the balance that we're trying to achieve is between the different modalities. We are the genomic medicines company and others are beginning to use that term. And we feel that we are genomic medicines because we can do everything from gene therapy through cell therapy to gene and genome editing. We're not a gene therapy company, but we do it now because it's practical, because there's an easy regulatory route and because we feel we have some very good candidates. But eventually, we will become more and more a cell therapy company. And then ultimately, we will do gene and genome editing. And this range of modalities that we have at our fingertips allows us a range of medicines that I will walk you through in the rest of the presentation. But put more traditionally, we have -- now have a pipeline that includes a Phase III asset. And I'm sure you can imagine for a company like Sangamo to have a Phase III asset is an exciting and important moment. It will be looked after by our friends at Pfizer, but we feel it is our child that has gone to college and we feel very proud of the work that we've done to get it there and get it into the right hands to get it to patients to take it through the regulatory process and make sure that we get appropriate reimbursement. But the pipeline takes us all the way through the Phase II assets in the clinic, which is the wave 1 of Sangamo; and then to wave 2, which is the preclinical programs. And there we are in CNS, autoimmune and in some rare diseases. That will be the work that we do over the next 3 or 4 years and lead to assets that will define the future of the company. And then behind that, we continue to work on the science behind Sangamo, the zinc finger technology that we believe is best in class for editing. And I'd refer you again to the R&D Day for some very interesting presentations there. So let me talk first about gene therapy because what we've tried to do in a very practical way is have about an IND a year going from hemophilia A to Fabry to PKU behind. And we presented at ASH the results of our hemophilia A study. This is the graph that you've all seen and everyone has spoken about that pleases us greatly. There's 3 things that you want in hemophilia A, you want it to be safe, you want it to be predictable, and you want it to be reliable. And we feel that we've achieved safe and predictable, and we are waiting to see that we're reliable because that's the debate that everyone is having. Everyone's seen the results of our friends at BioMarin and wonders about the reliability of that medicine. And so they're waiting, you're waiting to see that we will continue to have the best-in-class results. We can't hurry time up. It's going to take another 3 to 6 months to show that. And we will continue through our friends at Pfizer to update the results and hopefully convince everyone that we have that reliability. But when I look at this graph, what I see is a couple of things. I see a very rapid uptake. So we're up at peak effect within maybe 6 to 10 weeks as opposed to valrox at 26 weeks. I see a very close clustering of the data points, and we've actually joined our dots together. So as you can see that for each patient, there's a degree of reliability. There's 2 points I just want to explain. Subject 10, it's about 7 weeks. That's a hemolyzed sample. It isn't an actual result. And then there's this interesting patient, Subject 9, where everyone has assumed that that's some kind of LFT event, when in fact it's a reduction in the von Willebrand factor, which went from 118 to 48. von Willebrand factor, we've discovered, is a carrier for Factor VIII in the plasma and stabilizes it. So when that goes down, your Factor VIII activity goes down. We look forward to seeing if it will continue to rise again and understanding more about it. But in general, we're pleased, and this is adding the other patients at the other doses. We are very pleased with the predictability of it. Because as a physician, that's why I'd want -- I'd want to know what's going to happen to the patient. And the reliability, the only guide we have to that so far is for the patients at the lower doses, the 1e13, which trundle along very flat and very boring; and in the 3e13, which will be the therapeutic dose, so far, it looks reliable. So let's all wait and watch for the next 3 to 6 months. The biochemistry is interesting, but what's more important is the -- what the advantage it brings to patients. There have been no bleeding events in the high dose cohort. That's what patients seek. The patients are no longer using their Factor VIII. The one event is simply 2 days after the start of the trial. But since then, not a single person has had to use a factor replacement. Try and imagine the life of these patients. They were taking factor 2, 3, 5 times a week. Now they no longer have to carry factor with them. They no longer have to inject themselves. Their lives have fundamentally been changed. And that isn't just our medicine, but in -- it's the majority of the patients that BioMarin have treated, the majority of patients that Spark have treated. Together, we have changed the disease, and we've changed the future that these patients will have. It has to be safe. We've had 4 episodes of LFT elevations in each one of them. We've treated with a short course of steroids, and each one of them, they have continued to produce factor. I think that's important. We haven't required the use of prophylactic steroids. We may have to do it in subsequent trials. But in the trial that Sangamo has done, there has been no use or need for prophylactic steroids and no loss of factor production. And generally, the medicine is safe. It's an unremarkable event. The patients come in, they have a short infusion, and then they go out and their life will be changed by these medicines. It's a remarkable thing that we're doing here. So this is now advancing into Phase III, and we're delighted that our friends, Pfizer, have started the Phase III trial. The IND has been transferred. The tech has been tech transferred. And the economics now are very attractive to Sangamo. We get $300 million between the IND transfer and the first commercial patient. And then we get between low teens and 20% royalties. And one can imagine this having a substantial effect on the finances of Sangamo, and it really will pay for our research in years to come. I want to talk a minute, though, about responsibility because I've heard it said that the lead asset is going to sweep up all the patients and there's going to be no patients left for the second or the third gene therapy. What's important to patients is not getting the first one, it's getting the best one. This is not an antihypertensive where you can switch between them and depending on the strength of marketing or the commercialization. This is the one chance that these patients have. They will take this and get 5 to 10 years' benefit, we hope. And therefore, we and the other companies in this space have a responsibility for doing this well, for not overselling and over-marketing and for making sure that our patients that we serve hear the right data and understand what their choices should be. Switching now to our second gene therapy. I want to talk about Fabry disease, where we are going to give gene therapy, again, with a virus to replace the GLA to hopefully allow them to avoid the damage from the accumulation of Gb3 in the kidney and the heart and the blood vessels. We have shown preclinical data that is very encouraging, where in the GLAKO mouse, the model of Fabry disease, we can get 100x wild-type activity. And in the various tissues are affected by Fabry disease, we show clearance of the substrate that causes the damage to the organs. We have -- we have opened an IND. We have opened clinical sites. We're actively recruiting. And throughout 2020, we will recruit the study called STAAR, where, as always, the primary objective is safety. But we will be able to assess the pharmacodynamics of Gal A, we'll be able to measure the various indexes of renal function, et cetera. And eventually, we'll start including renal biopsies in this because Fabry was less attractive as a place to go if you had to do long outcome studies. The agency, I think, has been very creative in allowing us to do accelerated approval by renal biopsy, and I think it opens this as a much more tractable place to develop. We think that AAV delivery as a gene therapy is the best way to go. Our friends at AVROBIO are doing a great job and got some interesting results. But that's cell therapy and the patients would rather not go through apheresis and bone marrow conditioning. And I think providing we are equally as efficacious, we feel that the gene therapy is the right way to go. Switching now to the middle part of our future, which is cell therapy and gene-edited cell therapy. We have a range of medicines, both in oncology through Kite-Gilead; beta-thalassemia and sickle through Sanofi; and then the Treg platform that is first reflected with solid organ transplant, but has some very interesting indications to come. Again, at ASH, we presented the results of beta-thalassemia. Beta-thalassemia is a complicated disease, where you can have a range of severities of disease from the beta 0/beta 0 through non-beta 0/beta 0. And you can see the number of transfusion events these patients have, it is a significant important disease. And we showed early results that showed that we've been able to edit the BCL11A enhancer. We showed that we've been able to produce fetal hemoglobin. And we're at a very early stage of showing those results. 2 further patients have been treated. So there's a total of 5 now in the trial. There's a sixth that's in line. And we want to start a conversation about what impacts the level of fetal hemoglobin. It's something to do with the cell dose. It's something to do with the potency. It's something to do with the editing, the genotype. It's also something to do with age. And it's now increasingly clear, if you look at the bluebird data and the one CRISPR patient that going into teenagers is a much more accepting bone marrow. The patient we treated were in their 20s and 30s. And those -- for those, their bone marrow has got lots of hemosiderin and there's less accepting of transplant. And so those are all things that we can think about and gradually get this to the right stage. Again, safety is very important. So we go from T cells with a relationship with Gilead and Kite to Tregs. And we like Tregs because you don't need to know the causative antigen, you just need to know a localizing antigen. So we can target Tregs to reduce inflammation. And the first trial will be in renal transplant, and it will be looking at HLA-A2 mismatched renal transplant. And we do this because renal transplant is nice, you know where the inflammation is, you regularly biopsy it. And so we'll be able to detect where -- that the T cell -- the Treg cells have localized as they should and been activated as they should and survived as they should. 20% to 25% of transplants are HLA-A2 mismatched. 80,000 transplants happen a year. So there's a large patient population here. This was -- inform us greatly for our other indications. And if it works, it will be a real boon in transplant, where there hasn't been any new medicine for many years. And this is the animal data that gives us great hope for this. And what you're seeing here is 2 skin transplants in HLA-A2 positive and in A2 minus put in a mouse. And then you can see on the top right [ mousagram ] that the CAR-Tregs have gone specifically to the HLA-A2. And what we like particularly is in the long-term picture that the Tregs, not only the CAR-Tregs not only go to the skin graft, but they also track to the lymph nodes. And we feel that's the start of a memory population and will give us prolonged efficacy. This is simply the gateway. When we purchased TxCell, now Sangamo France, we did this because we saw a future that would take us into autoimmunity, would take us into multiple sclerosis or Crohn's disease. In multiple sclerosis, you don't need to know what causes it, but you just need something that will localize it to the myelin sheath. And that's why we believe in CAR-Tregs, and we will continue to improve them. We will create allogeneic, either growing them up from iPSC or editing them down from healthy donor Tregs. We are working closely to increase the function and controllability of it. And we're investing the platform in manufacturing. And I want to come to the third bit of the science, and I think one of the most interesting parts of Sangamo platform, which is genome regulation. This is a remarkable range of science. And we cannot do this alone. And we've guided that we will, at some point, likely partner this because there is so much can be done with zinc fingers in the CNS, whether it's pan-allelic suppression, allelic-selective, epigenetic editing, inflammation or uniquely mitochondria. CRISPR can't get into mitochondria, zinc fingers can. And in this part of our technology, what we do is instead of having a nucleus at the end of the zinc finger, we have a transcription factor. It's easily packaged, and we are on the cusp of being able to deliver it to the brain. Many people go for these diseases, and they go to the misfolded protein or with antisense oligos to the RNA, but we believe the place to go is DNA because that's the final control, and that's where you can cope with different splice variants, different phosphorylation. It's the simplest place to do the editing. And you can see a range of diseases, which are about misfolding that we will be able to control with our technology. And I'm showing you here the tau, and I'm showing you this as the kind of a classic example of what we do. The -- if you look at the top right, we call this a heat map of the bit of DNA that we want to reduce the transcription of. And what they do is they lay the tile they call it or lay down a series of zinc finger sets and look at them for which ones are the most effective at reducing the transcription of the gene. And I'm showing you this slide like this because it's now become a standard process. And within weeks of us picking a new target, we can come up with a series of tiled options for us to be able to turn down the gene. Now it's important, it only turned down one gene, which is why I'll then refer you to the bottom left. And you can see the volcano plot, as it's called, which shows that tau is really the only thing that's being turned down. So you get great effectiveness or precision and you get great specificity. And then over on the right is the efficacy. And you can see with these zinc finger transcription factors that we've got 80%, 90% reduction in tau. And we can choose the amount of reduction. So on the top right, you can see we can either turn it off completely or we can use the zinc finger set that is less effective and give you 50% reduction. So this allows us to control the amount of transcription reduction. And the efficacy is expressed both in mouse and in monkey. If you can do tau, the next one up is synuclein. So again, there's a similar pattern. The heat map at the top and then the efficacy showing a range of zinc fingers, where we can turn off synuclein. Great interest in this because you can turn off synuclein, it's on the pathway to Parkinson's disease, an important, important neurodegenerative condition. And the third one I'll show is Prion disease. And this is working with the Broad, again, heat map showing all the options that we have and then on target repression and global specificity. We're doing 3 because that's our bandwidth. We could do more, we can turn off genes in a very systematic way. And I think it's going to be a great future for Sangamo and potential partners. The next life of complexity is not just to turn off older gene, but only to turn off the mutant allele. We've shown this result -- these data before about Huntington's, where the zinc fingers get together cooperatively on the mutant allele and leaves the wild-type active. And you can see in the top right, blue being the wild-type that we don't want to touch and red being the expanded mutant allele where we show repression. I think this allows us to do Huntington's disease, which is now with my friends at Takeda. And then we were asked by Pfizer, could we do the same for ALS. And there's a subtype of ALS called -- that has a C9ORF mutation that is one of the most commonest familial forms, and there's also a few of the sporadic ones. Again, we want to turn off the mutant allele in red and leave the wild-type in blue healthy. And you can see in the bottom right graph, the green being the nonexpanded healthy allele is continuing to express, whereas the mutant expanded allele has been suppressed. So this is not just turning off a gene. It's only turning off one allele of a gene and it's leaving the wild-type going, which is important. So this is a lot of stuff and is a remarkable pipeline that Sangamo has got. And we need to fund this and fund it well. But I -- we also need to manufacture it. And one of the decisions we made very early on was to have a hybrid manufacturing strategy. We have a great relationship with our friends at Brammer Bio. Now that's no Thermo Fisher, but we have built our own manufacturing suite in Brisbane and it's just down the road in San Francisco. And we will have both AAV manufacturing in later this year, and at the turn of the year, cell therapy manufacturing in our control at GMP standard that will do clinical trials and could do small-scale commercial lots. And in our facility in France, we will also be building next year a cell therapy facility. It's important both to control your fate, but it's also important because you can then employ people that are experts and make sure you do the necessary process development. So I want to try and pull all this together and want again to talk about balance and responsibility. What we've tried to do at Sangamo is take a company that was a high science, remarkable innovating company and balance that by putting both the clinical development, the manufacturing and eventually the commercial pieces that are necessary to convert that into a therapeutic company. We want to balance that and ensure that we do things that are for now and things that are for the future. We want to make sure that we take advantage of gene therapy, which is a tractable way forward now. And that's why you've seen us show the great results in hemophilia, and hopefully, we'll replicate that with Fabry and with PKU to come. At that point, we will pivot from gene therapy because we believe it's got a limited window of opportunity. There are only so many gene therapy diseases in the liver that are sufficiently large to be able to do the clinical trials and make financial sense and the return on investment. We will pivot to gene editing and the zinc fingers that we know and love and uniquely have IP on and are the future of our editing platform. We will start that with cell therapy, where you can take the cells out and edit them and then give them back. But eventually, the goal is in vivo editing. A single infusion will take, and delivery is key here, will take the editing technology to the right cell in the body and make the necessary edits. So the things we want you to take away or I would like you to take away is that we are a genomic medicine company, that we have a technology and a platform that is precise, efficient and specific, that we have a broad portfolio across a range of indications that are both small and untargeted, but increasingly large and important, that we have the necessary infrastructure within Sangamo, and that we have a strong balance sheet with $400 million on the balance sheet at the end of the year and guiding to having resources to the end of '21 and partnerships that allow us not just to fund what we do, but have the expertise to get it to patients as quickly as possible. Thank you very much.