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

Hello, and welcome to the 2020 Annual Stockholder Meeting of Sangamo Therapeutics. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Sandy Macrae, President and Chief Executive Officer of Sangamo Therapeutics, who is serving as Chair of today's meeting. Dr. Macrae, the floor is yours.

Good morning, everyone, and welcome to the 2020 Annual Stockholder Meeting of Sangamo Therapeutics. I am Sandy Macrae, and I'm the President and CEO of Sangamo Therapeutics, and I'm the chair of today's meeting. Also present virtually is Gary Loeb, Sangamo's General Counsel, who is serving as the secretary of this meeting. It is my pleasure on behalf of Sangamo Therapeutics, its Board of Directors and its officers to extend to you a warm welcome and to express our appreciation for you attending this annual meeting. We especially appreciate your attendance during these unusual and challenging times, and we hope that you and your families are staying healthy and faring well as we go through these tough times together. The meeting will now officially come to order. The time is now 9:01 Pacific Time on Monday, May 18, 2020, and the polls are now open for voting on all matters to be presented. I will now ask Gary Loeb to cover some background materials. Gary?

Thanks, Sandy. Before we get started, please be sure to review the meeting's general procedural rules that can be found in the online meeting center. In order to conduct an orderly meeting, we ask that you follow these rules. As you know, we are hosting today's meeting through a virtual online meeting center hosted by Computershare. You can find and view certain company materials, including the proxy statement and the annual report for fiscal 2019 in the online meeting center. In addition, stockholders of record and registered beneficial owners can also cast their votes and submit questions in the online meeting center. To submit a question, click on the Messages icon on the top of your screen. We will try to answer questions submitted that are germane to the proposals and/or this meeting as time permits. McDavid Stilwell, our Senior Vice President of Corporate Communications and Investor Relations, will be screening incoming questions. And during the appropriate Q&A portions of the meeting, we'll read the questions that are germane to the meeting and the proposals presented out loud before we respond.

Before we proceed with the formal business of the meeting, I'd like to introduce you to the members of the Board and the leadership team who are with us today. Attending the meeting from our Board of Directors are our Board Chair, Ms. H. Stewart Parker; Mr. Robert F. Carey, Mr. Stephen G. Dilly, Dr. John Markels, Mr. James Meyers, Ms. Saira Ramasastry, Dr. Karen L. Smith and Mr. Joseph S. Zakrzewski. Other officers of the company in attendance today are Mr. Stéphane Boissel, Dr. Adrian Woolfson, Mr. Sung Lee, Mr. Gary Loeb, Dr. Andy Ramelmeier and Mr. Mark McClung. I'd also like to introduce Fran Schulz from our independent registered public accounting firm, Ernst & Young; and Chad Mills of Cooley LLP, the company's outside legal counsel, who are also in attendance virtually. Mr. Schulz is available to respond to appropriate questions as needed. Gary, can you cover the meeting logistics, please?

Of course, Sandy. We will now proceed with the formal business as set forth in the notice of annual meeting and proxy statement and in the agenda posted in the meeting center. We will first present the 5 proposals submitted for approval by our Board. We then plan to hold a brief Q&A session after we present the proposals to answer any appropriate questions that are germane to the proposals presented. After which, we will close the polls. Additionally, after the formal portion of the meeting has concluded, Sandy will give a brief presentation regarding our business. After which, time permitting, we'll hold another brief Q&A session to answer any appropriate questions submitted by stockholders of record or registered beneficial owners. You can view the presentation slides in the online meeting center as Sandy presents them. Please submit any appropriate questions as soon as possible in the meeting center to make sure they are received in a timely fashion for our review and response. As Sandy mentioned earlier, the polls are now open for voting on all matters to be presented. Only stockholders of record and registered beneficial owners can cast their votes in the meeting center. To cast your vote, please do so by clicking on the Cast Your Vote link in the meeting center. We will not accept ballots, proxies, revocations or changes after the closing of the polls. If you have already submitted your vote by proxy and do not wish to change your vote, you do not need to vote now and your shares will be voted as previously instructed. If you intend to vote and have not already done so, you must submit your vote online now in order for it to be counted. If you have not yet voted, I encourage you to vote in the meeting center now.

Gary, could you please report at this time with respect to the mailing of the notice of the meeting and the stockholders list.

Yes, I have at this time, a complete list of the holders of record of the company's common stock as of March 20, 2020, the record date for this meeting. A list of stockholders of record is available for inspection by stockholders of record and registered beneficial owners in the meeting center during this meeting for any reason germane to this meeting. I also have Affidavit certifying that on April 7, 2020, and May 11, 2020, notices of the annual meeting of stockholders of the company were deposited in the United States Mail or otherwise legally provided to all stockholders of record as of the record date.

Thank you, Gary. At this time, I'd like to appoint Chad Mills to act as inspector of election at this meeting. Mr. Mills has taken and subscribed the customary oath of office to execute his duties with strict impartiality. We'll file this oath with the records of the meeting. This function is to decide upon the qualifications of voters, accept their votes and when balloting on all matters is completed, to tally the final votes. Gary, will you please report at this time with respect to the existence of a quorum.

I have been informed by the inspector of election that proxies have been received for 91,918,330 of the 116,189,835 shares of common stock outstanding on the record date which represents approximately 79% of the total number of outstanding shares. This constitutes a quorum for the meeting today, and we may now carry out the official business of the meeting.

Thanks, Gary. On the basis of the affidavit and report of the inspector of elections, I find that proper notice has been given and that a quorum is present. Accordingly, this meeting has been properly convened and is open for business. After all the proposals have been described, we will answer any questions related to the proposals submitted online. Because no stockholder proposals or stockholder nominations of directors were properly raised in advance of the meeting, the business of the meeting is limited to the 5 matters on the agenda as described in the proxy statement. The first item of business is the election of 9 nominees for directors to serve until the next annual meeting and until their successors are duly elected and qualified. The nominees for directors are: Mr. Robert F. Carey, Dr. Stephen G. Dilly, Dr. John H. Markels, Mr. James R. Meyers, Dr. Alexander de Macrae, Ms. H. Stewart Parker, Ms. Saira Ramasastry; Dr. Karen L. Smith; Mr. Joseph Zakrzewski. Information concerning their principal occupations or service with the company and other matters which may be of interest are contained in the proxy statement. Gary?

Okay. Great. The second item of business today is to approve on a nonbinding advisory basis, the compensation of our named executive officers for the fiscal year ended December 31, 2019. This advisory vote is known as a say-on-pay proposal. The stockholders have been asked to vote on an advisory basis on the following resolution resolved that the company's shareholders hereby approve, on an advisory basis, the compensation of the company's named executive officers as disclosed in the proxy statement pursuant to the compensation disclosure rules of the SEC including the compensation discussion and analysis, the various compensation tables and the accompanying narrative discussion and any related material included in the proxy statement.

The third item of business today is the approval of the amendment and restatement of the Sangamo Therapeutics, Inc. 2018 equity incentive plan to, amongst other things, increase the aggregate number of shares of our common stock reserve for issuance under the plan by 9,900,000 shares. A full discussion of the amendment and restatement of the 2018 equity incentive plan is set forth in the proxy statement, along with the complete plan as an attachment to the proxy statement. Gary?

The fourth item of business today is the approval of the certificate of amendment to our seventh amendment -- amended and restated certificate of incorporation, as amended, to increase the total number of authorized shares of common stock from 160 million to 320 million shares. The certificate of amendment is fully described in the proxy statement, along with the reasons for the increase in the authorized shares. Sandy?

The fifth item of business today is the ratification of the selection by the Audit Committee of the Board of Directors of Ernst & Young LLP as the independent registered public accounting firm of the company for the fiscal year ending December 31, 2020. An explanation of this proposal is contained in the proxy statement for this meeting. That was the final proposal for today's meeting. We will now review if there are any questions submitted with proposals before we close the polls. As a reminder, at this time, we will only review and answer questions that pertain to these proposals.

Please note that our discussion today may include forward-looking statements. And our actual results may differ materially from those discussed here. Additional information concerning factors that could cause actual results to differ materially can be found in our most recently filed quarterly report on Form 10-Q. McDavid, please advise if there are any questions on the proposals.

There are no questions that have been registered regarding the proposals.

I have been advised that there are no further questions. The time is now 9:12 -- 9:12 Pacific time, and the polls are now closed for voting. Gary, may we have the preliminary voting results.

Yes, Sandy. The report of the inspector of election covering the proposals presented at this meeting is as follows: One, the proposal to elect each of the 9 nominees for directors of the company's Board of Directors is carried. Two, the resolution concerning the advisory vote on the executive compensation of the company's named executive officers is approved. Three, the amendment and restatement of the Sangamo Therapeutics, Inc. 2018 equity incentive plan to, among other things, increase the aggregate number of shares of our common stock reserved for issuance under the plan by 9,900,000 shares is approved. Four, the amendment to the certificate of incorporation to provide for an increase in the number of authorized shares of common stock to an aggregate of 320 million shares is approved. Five, the selection of Ernst & Young as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020, is approved. We expect to report our preliminary voting results or, if available to us on a timely basis, our final voting results on a current report on Form 8-K to be filed with the SEC within 4 business days after the end of this meeting. If not earlier reported, we expect to report our final voting results in an amendment to our Form 8-K within 4 business days after the final results are known to us.

Thank you, Gary. This concludes the formal portion of today's meeting and the 2020 Annual Stockholder Meeting of Sangamo Therapeutics is now adjourned.

Great. We would now I'd like to report to you on the status of our business. I now direct your attention to the first slide related to a legal disclaimer that will follow the title slide, which I request that you read. As with most presentations, the following discussion contains forward-looking statements, and our actual results may differ materially from those discussed here. Additional information concerning factors that could cause actual results to differ can be found in the company's SEC filings, including its recently filed quarterly report on Form 10-Q for the quarter ended March 31, 2020. Over to you, Sandy, for the corporate update.

Thank you. And for those of you who are trying to follow with the slides as I talk through them, I will do my very best to see which slide we're on. As always, we refer you to our forward-looking statements on Slide 2. And then if I take you to Slide 3, the mission statement for Sangamo Therapeutics. What I'm going to describe, hopefully, weaves together the 3 critical pillars of who we are. It's about ground-breaking science. It's about translating that into genomic medicines and that the diseases that we will address are ones where our medicines will transform patients' lives. If we go to Slide 4, we have a suite of genomic medicine technologies. We are known as an editing company. But that allows us to apply our molecular biology and genomic technology to gene therapy, gene-edited cell therapy, genome editing and genome regulation. For many of these, there is a great deal of commonality in the technology we use and the vectors we use and the experience of our staff. On Slide 5, we you begin to get the impression of the number of important diseases that these can be applied to. And the balance between the different parts of our portfolio. And that just sync to in Slide 6, which talks about a robust pipeline of genomic medicines. And it gives me great pleasure that Pfizer is giving all the indications that they are heading into Phase III as soon as they can drive through the COVID moment. But what I hope you can see is there is a balance between assets that are owned by Sangamo and assets that are owned by partners. There is a balance of gene therapy, which is tractable and a more straightforward path now, and gene editing and gene regulation, which is the future for the company. We are very pleased with this pipeline, which I think would be the envy of many. But I also want you to remember that there's an invisible pipeline of bits of DNA that are very tractable to our technology that led to the Biogen deal, and we hope will lead to others as outside companies realize the potential of our technology. And also, we work with them to make our medicine -- let our medicines get to patients as quickly as possible. And I think the next slide, Slide 7, is when we are very proud of. With the addition of Biogen, we now have 5 blue-chip pharma partners, each one of which has come to us to access our technology, in a world where they've looked at all other available editing techniques, and they've chosen Sangamo. And the cash received through license fees, milestones and equity is approximately $700 million, and that is what is funding the growth of Sangamo. In addition, royalties and net product sales could be as high as $6.34 billion in potential milestones. They bring more than money though. They bring expertise in translational signs, clinical development, and we hope the eventual launch and commercialization of these products. And the one that we announced most recently was a Biogen collaboration, which is a process that we had been running for over a year and became very focused over the last 6 months, where we partnered Sangamo's Alzheimer's and Parkinson's programs with Biogen's world-class neuroscience expertise. There were 5 companies involved in the process. There was 2 term sheets at the end. And we chose Biogen partly because of the -- how excited they were by our technology and the offer they made, but because they're a company who lives for Alzheimer's disease, and we feel that's most likely to get it to patients. They get exclusive global rights to 3 neurological targets, tau, alpha-synuclein and one neuromuscular target, an option for up to 9 additional targets over 5 years. I just want to put some color on it. Alzheimer is something we've been working on for 3, 4 years, alpha-synuclein for 3 months, and then 1 year muscular target that they've declared is one that we have yet to [ leave the pencil ]. And the other 9 are targets that are not at all in the Sangamo pipeline. So it's not that we're giving away our pipeline. It's that we are partnering pieces of the genome that other people are interested in and that they can only access through the Sangamo technology. The deal significantly strengthens our balance sheet with $125 million upfront and Biogen's $225 million investment in Sangamo's common stock. If I could now walk through the pipeline that you're aware of, on Slide 9, talks about our gene therapy pipeline. As I said, this is a practical, pragmatic approach for Sangamo. This is a competitive area, and it's an area where eventually the number of targets available will decline as others come in, and there's competition for the more common rare diseases. But we're pleased with hemophilia, and we have now passed that on both the IND has been transferred, and the plans for manufacturing are in good hands, and Pfizer have started their pre-study study. But behind that, we also have Fabry and PKU and a number of other identified targets. Slide 10 talks to Pfizer's development, and you will understand that Pfizer now are responsible for the study and responsible for communications on the study. So there's very little that we can tell you other than guide you to ask Pfizer. They continue to target dosing the first patient in the second half. And enrollment in the Phase III lead-in study commenced in October of last year and is ongoing. And that allows them to get 6 months of prospective efficacy data and allow them to best inform their study going ahead. And we wish them well and look forward to hearing about the progress of the study. Falling behind that, ST-920, which is the wholly owned Sangamo gene therapy for Fabry, offers a potentially differentiated treatment. It's got good, I would say, exciting animal data, and it would allow a single IV infusion, which may provide continuous potentially lifelong expression of endogenously expressed alpha-Gal A. It has the advantage of no preconditioning and it has potential to deliver efficacy across a range of symptoms that the patients have. The FDA guidance about how these could be registered may considerably shorten time to approval and allow ST-920 among the first Fabry disease gene therapies on the market. We have talked in a number of places about the STAAR study, where the primary objective is to assess safety and tolerability. And the second objectives will be to describe the biochemistry of alpha-Gal A and assess the impact then on ERT on renal function and on DNA shedding. We intend to complete this study, the biochemical part of it, for all 3 cohorts before we share the results. We hope you understand this because we feel that it will provide a much better overall picture of the effectiveness of the product. We have enrolled patients but are waiting for the COVID medical emergency to pass before we dose the first patient. My clinical operations group are doing an absolutely fantastic job staying in contact with the investigators to allow us to dose the first patient at the first possible moment. If we then move to Slide 13, ex vivo gene-edited cell therapy. This describes a pipeline that is both with our partner, Sanofi, for beta-thalassemia and sickle. And we have dosed 5 patients in beta-thalassemia. And Sanofi will describe the sickle patients, and they're guiding this year. But also behind that, we have our partnership with Kite-Gilead for CD19 and for other oncology agents. And the work that we do since we acquired TxCell, now Sangamo France, in the world of Tregs. If we move to Slide 14, Sanofi continue to screen and enroll subjects for their PRECIZN-1 clinical trial for sickle disease, and Sangamo earned a $7.5 million milestone statement with the first subject dose in 4Q 2019. 5 patients we dosed in are Thales study, evaluating ST-400 for transfusion-dependent beta-thalassemia. No additional beta-thalassemia subjects will be treated until data from PRECIZN-1 and Thales have been collected and analyzed. And we will look to present both BIVV003 and ST-400 data once sufficient of patients have been rolled and follow-up has been accumulated. And on Slide 15, we -- reviews the KITE-037, which is a CD19 allogeneic CAR-T. KITE-037 clinical trial plan for 2020 is potentially delayed due to COVID-19. And now if I move on to Slide 16, which talks about harnessing Tregs for CAR-Treg therapy. We like CAR-Tregs for a couple of reasons because they are tissue targeted, not antigen targeted. So they go to where they're localized to where a source of inflammation is, and you do not have to know the specific antigen that is causing the inflammation. They're antigen activated and expanded. And they release multiple mechanisms of immune regulation. Sangamo, in Slide 17, is pioneering this new frontier with TX200 for solid organ transplantation. In this study, we will treat patients with autologous HLA-A2 specific CAR-Treg cell therapy, and it will identify patients where there's an HLA-A2 mismatch, where they're getting a A2-positive kidney into an A2-negative patient. There are 80,000 renal transplants per year and 20% to 25% of them are actually A2 mismatched. The therapeutic hypothesis goals is to make the immune system in a targeted manner. And the advantage of renal transplant is the kidneys are biopsied regularly to assess the health of the transplant. And so we think that this will allow us to show that the CAR-Tregs have being traffic to the kidney, have been activated in the kidney and survive. And on Slide 18, we believe that this then will give us a gateway to major autoimmune indications. At the moment, our pipeline includes assets for Crohn's disease and for multiple sclerosis. But should this be successful, you can see on Slide 18, the range of diseases that may be possible to be treated with this form of therapy. It's a very exciting way forward, and we are looking forward to being able to share data with us in the coming years. And then if I take you to Slide 19, it talks about the basis for the Biogen deal, the in vivo genome regulation for neurological diseases. And there is such a range of things that are opening up within the CNS. The Biogen deal was largely around Pan-Allele, zinc finger transcription factors for tauopathies and synuclein, but we will show you something on prime enrollment. There's an allele-specific that we've all been so pleased to see with Huntington's. It's now with Takeda. But C9ORF is partnered with Pfizer and going very well. We see a possibility to do epigenetic editing and to use our transcription factors to demethylate select sites. And then in the genome editing field, both the CAR-Tregs takes us into the world of multiple sclerosis and other inflammatory diseases. And something we haven't spoken about much, but was published in a paper last year is our ability -- unique ability for ZFNs to edit mitochondria, it's something that is just not possible with CRISPR and a large number of somewhat rare diseases in that -- where there are mutant mitochondrial genomes. And why we like the transcription factors? It's a very natural solution. We all have transcription factors as the commonest regulatory element of our genes. We like them because for many of the diseases described here in Slide 21, it is unclear which protein form is to blame. It's even unclear which RNA form or sense, antisense or mis-spliced as to blame. And that is why going right back to the source and controlling the transcription of the DNA at the genome level is the part that opens out a world of disease control across Alzheimer's, Parkinson's, Huntington's, ALS and prime. And just as an exemplar of that, I want to show you 2, 3 months' worth of work that was done on prime disease as some of you know there are a couple of forms of prime. There's a dreadful hereditary form, and there's an acquired form often linked to animals and neuro tissue from the animals. On the top right, you can see our tiling of the area. And the darker the red, the more active the suppression of the prime and expression has been. And on the right, you can see 2 examples where we've managed to turn down the gene. And also do it with great specificity. This gives us great hope. We have an exciting partnership with the Broad Institute. This is a Sangamo wholly-owned asset, and we look forward to sharing more data with us in the times to come. So it takes me back to where I started, a robust pipeline of genomic medicines. These are the ones that we are working on, either ourselves or in partnership with the great companies to get our medicines to patients. But remember, there is a pipeline beyond this of DNA that is tractable and associated with disease that we will partner when we feel the moment is right and the partner is the best possible. And to get there, on Slide 24, it's important that we build the infrastructure of the company. And the picture you see is the picture of our Brisbane facility, ground floor. It's the GMP facility, and we expect to have in-house Phase I/II GMP facilities for AAV at -- by the end of this year. And for cell therapy and -- in Brisbane and in Valbonne in France. This will be largely for our clinical development manufacturing. But for small-scale indications, this is GMP ready and could go even up to commercialization. In addition, with our CDMO Thermo Fisher once Brammer, we have dedicated access to AV capacity up to 2,000-liter bioreactor scale. And that allows us to do larger studies, and we are already planning for commercialization. So if we go to the final slide, Slide 25, the key takeaways. We are building a genomic medicine company. We're building value with gene therapy, ex vivo gene edited cell therapy, in vivo genome editing and genome regulation. We remain committed to our technology. And each time our partners come and look at it, they leave excited and they choose Sangamo because it is precise, efficient and specific. We have a broad portfolio of indications across inherited metabolic diseases, and we're looking to expand into larger indications, such as autoimmune. We have in-house CGMP facility and a dedicated CDMO, and we have a very strong balance sheet with 5 validating biopharma partnerships. So with that, I will pause, and we'll now address the questions that were submitted by our stockholders that are germane to this part of the meeting. McDavid?

We'll pause for just one moment for questions to assemble. Sandy, at this time, there are no questions.

Okay. That is all then for today. I'd like to -- it appears there's no questions, I'd like to thank you again for your virtual attendance in today's meeting and for your continued support of Sangamo Therapeutics. I hope you and your families remain well, and we look forward to meeting again in other times and better times. Operator, this concludes all parts of the meeting.

Thank you. This concludes the 2020 Annual Stockholder Meeting of Sangamo Therapeutics You may now disconnect.