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

Thank you, everyone. My name is Gena Wang. I'm SMID Cap Biotech Analyst at the Barclays. I first hope everyone stay healthy. I would like to thank all the participants, investors, companies, especially our event team and the corporate access team who made this virtual healthcare conference possible. With that, I would like to introduce our next speakers from Sangamo, we have Sandy Macrae, Chief Executive Officer; Sung Lee, Chief Financial Officer; McDavid Stilwell, Senior VP Corporate Communication and Investor Relations; and also James Chen of Director of IR. Sandy, I will hand over to you.

Thanks, Gena, and thanks to you all for being on the call. I would refer you all as always to our forward-looking statements. And so I'm going to go through a short deck of slides here and then would be happy to answer some questions from Gena. So we are Sangamo, Sangamo Therapeutics, and we are delighted to talk about our proprietary suite of genomic medicines. So I'm on Slide 4. And what's the great strength of Sangamo is, is the company that can do gene editing -- genome editing through our zinc fingers has got a range of things that we can do from gene therapy, through cell therapy to genome regulation. And that's reflected on Slide 5, which shows the various assets and products that we have in each of these. And one of the things we've tried to do with the new management team at Sangamo is balance the portfolio across the different technologies, focusing on gene therapy now, but gradually pivoting the company and moving it back to its true love, which is genome editing. And if you look at Slide 6, which is -- reflects our portfolio. What I hope you can see is a portfolio that balances both preclinical and lead clinical assets. We are delighted with the energy and excitement from the Pfizer team as we move forward into Phase III with hemophilia A, and we look forward with them to showing an understanding of data that will hopefully demonstrate that our product, SB-525, has the potential to be best-in-class. But equally exciting are the earlier products that's -- many have paid less attention to. And the Biogen deal that we signed just over a week ago, I think, was the first reflection of our infinite pipeline, and the many products that are possible when you can target any part of the genome. And that leads to a company that is balanced between things that we'll take forward ourselves and things that we'll partner with other companies. And if I could actually just turn to Slide 7. You can see the spread of companies that we work with. And when I look at this slide, there are several things I see. The first is the names along the top, Biogen now joining Gilead, Pfizer, Sanofi and Takeda, all blue chip companies, all companies that looked at our technology, had the choice of ours or others. And when they're signed to spend time understanding our science, they always chose zinc fingers and always chose Sangamo. And then the other thing that one automatically sees is the amount of money. Since I've started and the leadership team have driven Sangamo forward, we have raised $700 million in upfront through these deals, and have a potential of over $6 billion in bio box. And those bio box are becoming real, with the line of sight of the milestones from the hemophilia A product of another $275 million to now and launch. And then high single digit, up to 20% of royalties and in the sale of that product, which in the end will finance Sangamo and will support our R&D. Partnerships are also important because they bring expertise as a company spread across so many therapy areas. We can't do everything ourselves. And that's what led us to join with Biogen. This was a competitive process. And we chose Biogen because of their passion and expertise in neuroscience. Not only did we get funding from them, but what we'll get is access to neurologists and neuroscientists and a commercial function that loves the area of neuroscience and feels the passion for -- particularly for Alzheimer's. So we announced the deal that partners Sangamo's, Alzheimer's and Parkinson's programs with Biogen's world-class neuroscience expertise. We feel there is -- our transcription factor, ZFN, ZFPs are ideal for this. Cells in the brain either don't turn over or turn over very slowly. And therefore, editing is more challenging and the transcription factors, which turned down the expression of a gene are more suited. If I would turn you then to Slide 10. It reflects the collaboration, scope and responsibility. So they will get right to 3 neurological targets that have been named, tau, alpha synuclein for Parkinson, and one other neuromuscular target. And an option for rights of up to 9 additional targets over 5 years. While this is a wonderful list of potential targets, we are -- it's clear that there are many other things that one can target in the brain. There are over 100 genes that we have been made aware of that are associated with disease. And so this is a very specific targeted relationship we will have with Biogen. That leaves options for us to prosecute other targets within the CNS, either ourselves or with others. They're going to use our ZFP transcription factors and potentially ZFNs and some of our novel AAV serotypes. And that was one of the things that encouraged all of those that looked, and there was over -- there was 5 companies looked to this -- at this deal was Sangamo's understanding that there was a necessity for us also to work on delivery. And some of the work that we showed at our R&D Day last year, from, yes, Michael, David Ojala, who has found ways to improve the delivery of our ZFNs and ZFPs into the brain with novel serotypes. In this relationship, we will lead to early research up to GMP talks and Biogen responsible for global development commercialization. Sangamo will also be responsible for GMP manufacturing activities, and that's one of the things that gave us great pleasure because [Audio Gap] of manufacturing is an important part of this ecosystem. And that's why we've invested and developed our own manufacturing here at Brisbane and at our facility in France. On Slide 11, we showed the deal finances with $125 million upfront and $225 million purchase of Sangamo shares at a 25% premium. The milestones are $925 million pre-commercially and $1.4 billion in commercial sales and first commercial sale and other sale-based milestones. And the royalties are high single to subteen double digits. This is a very attractive financial deal, particularly seeing only 2 of the assets have actually had work done on them. And only one that tau is really truly advanced. So it very much is a preclinical deal. So if I turn via Slide 14 to the Sangamo and the CNS, there are multiple ways that we can access the hundreds of genomic targets within the brain. We have spoken before about our Pan-Allele transcription factors that could do tauopathies synuclein and Prion disease, which is not part of the deal. We've also been very proud of our work in Allele-specific ZFPs, which are currently in a deal with Takeda for Huntington's and with Pfizer for C9ORF. But there are other things that we believe we can do, and we'll talk about in the months and years to come, epigenetic editing for Rett Syndrome or fragile X, the ability of our CAR-T Regs to control inflammation in multiple sclerosis. And the ability of -- the unique ability of ZFNs to edit mitochondrial disease. If I could ask you to turn to Slide 16. The advantage of the ZFP transcription factors is that they target DNA. There are antibodies out there targeting subtypes of proteins, phosphorylated multimeric forms that nobody knows which is the right one. There our ASOs going for the various sub-forms of RNA. But it's only by going directly to the DNA that you can be sure that you target upstream at the source. We believe and Biogen believe that tau accumulation tracks closely with Alzheimer's disease progression. And I would ask you to turn to Slide 18, which shows the -- which is now our standard way of demonstrating the ZFP effect. On the top right, you can see the many ZFPs that we're able to lay down, tiling the region of interest. In the bottom left, you'll be able to see the effect to turn completely off tau in cells, and with specificity that it's only 1 gene. On the next slide, what we want to demonstrate is the -- is -- and this is a slide called tuning gene expression with ZFP-TFs. What we can show is that we can turn it off completely or 50% or 30%. And that gives us an ability to choose how much of a gene you want to turn off. There will be some targets that we want to turn off a little and sometimes that we want to turn off a lot. And then in the final data slide on ZFP-TFs is Parkinson's. And again, we show the same pattern. The tiling that shows how we can target all the way across the promoter of this gene. And in the bottom right, example of 3 different ZFPs, where we can either completely turn off or turn off the gene by 50%. And I'm particularly proud of this one because between ideation and the data you're seeing here was about 3 months and then we repeated it, again, with the Prion disease. And it suggests an ability to target many other places within the genome and quickly come with a set of ZFPs that will allow us to understand the biology and then move quickly into the clinic. But that's the Biogen partnership. Delighted with it, delighted with Michelle's enthusiasm for it and his team's belief in our technology. This is -- I was getting back to the zinc fingers and getting back to the editing that we leave and love. If you look then at the slide part that takes us through clinical and preclinical pipeline. We can see gene therapy is no pipeline in itself. We have our hemophilia A asset with Pfizer. We have Fabry, which we ourselves are driving forward. It's in the clinic. We understand what led to recruitment challenges at the start, and we've made amendments that will allow us to have line of sight of patients. In this world of coronavirus, the patient recruitment will be an important thing to get right and an interesting challenge. But we now have confidence that the trial will recruit throughout 2020. But behind that, and we only show one here, PKU. And we have a series of other gene therapy targets that will allow Sangamo to do something that is tractable and now. Moving forward then to ex vivo's gene-edited cell therapy. We -- our friends at Kite have indicated that they will be in the clinic with Kite-037, the allogeneic CD19. We, in Sanofi, are learning about beta-thalassemia and sickle, and we'll guide towards that as the data matures throughout 2020 into '21. And we're very pleased that we will be the first company to use Treg technology solid organ transplant in the TX200. And then behind that is what I think is another part of Sangamo's pipeline that's completely unappreciated, IBD and multiple sclerosis, where the Tregs take you to the localizing antigen and will have an effect, no matter what the causative antigen, which then takes us to a projected pipeline of -- that is truly balanced across the now and the future, with partnered and with proprietary Sangamo products and to low risk and high risk. And I think it reflects very well for the future of the company. So if we go to the final Slide 26 and the key takeaways. We believe Sangamo is now becoming a genomic medicine company, building value through gene therapy, ex vivo edited therapy, in vivo editing and genome regulation. We do it through rare and large integrations across a number of therapy areas, partnering with other companies where we don't have the expertise. We are very pleased with our in-house GMP facility and our partnership with what was Brammer Bio and now it's Thermo Fisher. And we have a very strong balance sheet with this money we received from Biogen and the 5 validating biopharma partnerships. So Gena, I'd be very happy to take questions.

Thank you very much, Sandy. That's very helpful, very comprehensive overview. I believe there is some technical challenging, I think, our IT person is uploading the slides. I'm really sorry, but I think the -- hopefully, you will see the slide now. So Sandy, the question you mentioned, you actually had a so many partnerships, all of them are very reputable, either large cap company or a biotech or pharma partners. I'm wondering if you can discuss a little bit the uniqueness of the zinc finger protein versus other gene editing technology?

Yes. Yes, certainly. One of the benefits is we've been doing it for a lot longer. And we were the first sell to do -- first company to sell it and I think the first company to do editing in the human. So when I asked about this, I always talk about precision, efficiency and specificity. We can target, as you saw in the transcription factors, any part of the genome, and give you many options for any bit of DNA. Our friends or other technologies are limited by PAM sequences and access to the DNA, that's the first. We do it in cells at very high editing efficiencies. And equally important, we do it with great specificity. I think that tau slide, which shows that it's only tau gene is turned down and no other gene is affected is remarkable. The benefit of the zinc fingers as well is it's been very easy to add things onto the DNA recognition piece. So we're -- everyone thinks about editing as cutting DNA. We go back to the original use of zinc fingers, which are a transcription factor in your body, the commonest control of your genes. And the original repression of gene expression or encouragement of gene expression, we can do either of them. And we feel those tech -- those abilities are unique for our technology.

Great. And regarding the zinc finger transcription factor, I'm wondering how specific are these and also any more room for further improvement?

They're very specific. We -- I would, again, refer you to the tau slide, where we do this thing called a volcano plot or we call volcano plot, that shows that only tau is turned down. And we can choose zinc fingers that only turned down expression of a single gene. There -- with -- because it isn't a cut, we don't have to worry about off-target cuts like you would with an editing technology. This simply turns down the expression of the gene.

Okay. And for the transcription factor technology, you do have a partnership with both Pfizer and Biogen. Just wondering how progress from one partnership could benefit the other? And also, when will we be able to see the earliest R&D filing from both partnerships?

So one of the advantage of partnerships is they encourage us to do more and to do better. They allow us to have, if all we were doing was our own product, very soon our research organization would have handed it on to a preclinical and then to our clinical group. By doing partnerships, I can continue to fund and encourage innovative thinking within research and technology. It keeps the machinery running and it allows our scientists to work on new ways to edit. And we showed some signs of that at the R&D Day, where we talked about integrators as a potential way forward. But we're delighted with the partnerships. They are the lifeblood of Sangamo that allows us to take forward our own products.

Okay. And now switch gear regarding the gene therapy program. I understand that hemophilia A already transferred to Pfizer. Should we expect more data update later this year?

I am limited in what I can say because this is under Pfizer's control. But when we speak with Pfizer and we do regularly, they understand like we do the importance of sharing that data as it evolves. We understand our responsibility as patients choose if valrox is approved, and patients have to choose that knowing the data from our product and valrox is -- will allow them to choose wisely. So I think you can expect Pfizer to talk about this as often as they can and to share the data of the prolonged effect of the medicine.

Great. For the Fabry disease program, that's your wholly owned gene therapy program. Could you -- I believe you introduced some protocol amendment to optimize the inclusion criteria. Could you remind us the protocol amendment? And have you seen any improvement in terms of the enrollment?

So the amendment was brought in for -- to address a number of things. When you move into a new area, you learn more about the patients and more about what's actually in the medical notes and what patients are available. We've always lost about 30% of patients because of neutralizing antibodies to the capsid, and that's been true across all of our programs. But we were noticing that there were particular things around Fabry disease that we learned by moving into this area, and we've been able to change and address inclusion, exclusion criteria to allow us access to more patients. And we have line of sight of a great deal of more patients and are encouraged and believe that we will soon be able to recruit the first patient. But we're not going to give -- Gena, I know where your question is going, but we're not going to give specific details. But this is -- every time one moves into a new area, one learns and if you're wise, you use that learning to be better.

Okay. Okay. Did you modify the, say, tighter for the screening patient?

No. We haven't changed the neutralizing antibody criteria. That's been the same throughout. So it's nothing to do with the capsid. This is simply features of Fabry disease that we're learning, will allow us to bring in the right patients. And with recruitment, it's not about speed, it's about trying to get the best possible patient to benefit the patient and demonstrate your technology.

Could you remind us the first dose you will be using in Cohort 1?

We haven't told you that yet. We've said that there are 3 doses, low, medium and high.

Okay. Will low dose based on animal data, would that fall into therapeutic window?

This is always a discussion one has with the agency, where the agency and the company are trying to protect patients and ensure safety. And the company and the patient are always trying to find a dose that has efficacy in it. And so it's a balancing act. And until we go into the patient, we won't know.

Okay. Okay.

And we are going to be reporting this study once it's completed. So the low, medium and high doses, our intention is to be able to talk about all of them together, rather than do a dose at a time.

Okay. That leads to my next question. Like what time do you think that we should see the initial data, I understand it's enrollment-driven. And then if you were like low, medium and high, will we see -- or would that be 9-patient, 3-patient each cohort?

It's 2 patients per cohort. And then we add an additional patients beyond that. We expect to recruit throughout 2020. I'm old enough and wise enough to know, understand that sometimes one can't always predict recruitment. And I'm absolutely serious that the current changes in the world outside of this discussion, maybe meet challenge recruitment across everybody's clinical trial and one has to focus on what's most important. But our hope would be to be able to start talking about this data at the beginning of 2021.

Okay. Great. And then what kind of biomarker you will be -- both biomarker data and the functional data you will be thinking to collecting for the Phase I trial?

We'll be collecting as much data as possible. And the initial things that we report are likely to be plasma and biochemistry and enzyme levels.

Okay. Great. I think we are running out of time. Thank you very much, Sandy. Thank you, everyone.

Thank you very much, Gena, and be well.

Thank you. This concludes our call. Thank you.