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

Good morning. Thank you, everyone, for attending our Fourth Annual Genetic Medicines Conference, which has gone to a virtual format this year. My name is Keay Nakae, one of the senior health care analysts at Chardan, where our vision is to help identify companies with high potential for investment returns based on creating real value for society through disruptive innovation. Our compliance department has asked us to read this message, and this is effective for the whole conference. Ideas and recommendations presented are solely those of the presenter and not Chardan. Presenters have been advised not to discuss any confidential or material nonpublic information. Additionally, any KOLs speaking may have investments or other interests in the names they discuss. With that, it's my pleasure to introduce our first guest from Sangamo Therapeutics, Chief Executive Officer, Dr. Sandy Macrae. Welcome.

Pleasure to be with you.

[Operator Instructions] So let's get started. Sandy, could you provide a couple of minutes of introductory comments for Sangamo for investors new to the story?

Delighted to. So Sangamo is a fascinating company. It's a genomic medicine company, which means we do the full panoply of gene therapy, cell therapy and genomic engineering. We are a company that takes products forward ourselves, all the way through to registration, but partnership is an important part of the Sangamo story with 6 blue-chip partnerships. Our furthest advanced product is in -- together with Pfizer, it's a hemophilia A medicine, and it's about to go into Phase III. We, ourselves, have a medicine for Fabry, a gene therapy for Fabry that has just started Phase II [ and it's those ] 2 patients. But behind that, we have a fascinating range of cell therapy products, whether it was CAR-T with Gilead, [ whether that ] is in sickle and thalassemia with Sanofi. Our own proprietary program, Tregs, starting off with renal transplant next year with Sangamo and then followed up with multiple sclerosis and Crohn's disease. So it's really a fascinating company with a great potential.

Well, great. So starting with your zinc finger protein technology, how does this approach differentiate your genome editing capabilities from competitors?

[ Specifically ] people that has it. So the zinc fingers are fascinating. The commonest way to control your genes -- and all of us have our -- transcription of our genes controlled normally by zinc fingers. And Sangamo saw this technology some years ago and has coopted it either to cross double-stranded breaks or to control the transcription of the gene. Targeting genes that allow therapeutic advantage, and that's what led to the Biogen and Novartis deals that we announced this year. We believe the zinc fingers are a unique opportunity to control the genetic environment. We believe that they can target almost any nucleotide in the body. We believe they do it effectively. And we believe that they do it specifically so the off-target is a lot less. The classic way people think of gene editing is to meet double-stranded breaks to disable a gene or perhaps even to insert something else. The deals with Novartis and Biogen are interesting because they turned down gene expression, in the case of Biogen, for tau and synuclein for Alzheimer's and Parkinson's, or turn it up for the neurodevelopmental disorder deal we signed with Novartis. Now none of the other editing technologies do this. And this is important because it lets us get [ a type -- genes ] in the CNS. The reason that's important is because cells in the brain turnover very slowly. And to do double-stranded break editing, we really need the cell cycle to be active to repair any breaks. Transcription control, on the other hand, doesn't require that. And it's why that Sangamo technology is really perfect for diseases within the brain.

So you did mention a couple of your partnerships. And clearly, corporate partnerships are a key part of your strategy. With respect to partners, what do you think about in terms of what to keep and what to partner?

I'd like you to think of it slightly differently. The partners bring things to us. So the majority of the genes that Biogen or Novartis are now prosecuting with Sangamo are things that we have not considered. There are genes that they asked, "Could we attack that?" And of course, because it's just a bit of DNA, we can do that. So we feel we are adding to our pipeline, not taking from it. Most people, when they partner, give away a good chunk of their early pipeline. Sangamo adds to it. And the range of things that we now do are partly at the behest and created because of our partners. So there will be other companies come to us and ask us to attack a certain piece of DNA in the brain or in other tissues, and that will add to our pipeline. But it -- from a more fundamental point of view, we look for expertise in the partnering company. And Biogen and their expertise in Alzheimer's is a good example of that. We look at areas which are complicated or commercially competitive and feel that others will be better to push those forward. Oncology with the CAR -- with CAR-T cells and Gilead is a good example of that. We're not an oncology company, and so better is someone else prosecutes it. And we look to keep things that are Sangamo [ by size ], and that we have expertise and can push forward. And that's why Fabry was a sensible thing for us to do now. And the Tregs in the future, we can build an expertise. We can hire appropriate people with expertise in biology and in medicine around the autoimmune space and build a franchise in Tregs.

Your most advanced program is a gene therapy targeting hemophilia A, which is now under the direction of your partner, Pfizer. Earlier this month, they did provide new patient data from the highest dose cohort -- I should say, last month, September. From the high-dose cohort of the Phase I/II study, what stood out for these patients?

So I -- we're always very careful because now it's handed over to Pfizer, they do the communication on the interpretation of the results. We're very pleased with Pfizer's enthusiasm for this program. We've -- they've already started the lead-in study, which allowed them to recruit and observe patient journeys. And they're pushing forward with the next phase in the study, with the Phase III program. What is important to patients is predictability and reliability and safety, of course. And so far, our product has been very safe. Patients have been able to not take factor. They haven't had any bleeding events. And it's just [ a matter of letting ] the study run out, so as we understand the durability question. We know that there is an active discussion about our results and BioMarin's results looking at durability and reliability. It seems that's why the agency gave BioMarin their complete response letter for valrox. And I feel the agency is usually very predictable and reliable. I feel what the agency was looking for, for valrox, that they look for us is the studies are replicatable, that they can write a simple label based on the data. And that, I think, is why valrox have been asked to provide more data because the Phase III looks a little different from the Phase II.

How much of the hem A asset design and learnings translate to your Fabry gene therapy program?

Oh, I think a great deal to us. We talk about gene therapy as if it's a standard practice. And yet, these are medicines that all -- it's only over the past 3 or 4 years, that we understand how to design the vector, how to design the promoter. And then how to treat patients safely and effectively with it. Both hem A and our Fabry construct use AAV6. The Fabry one uses a different gene to provide the appropriate product, and it uses a better promoter. But the learnings from how we dose the patients and how we interpret the translatability from animals to humans allows us to go in at a higher dose and more likely to be effective dose. And it allows us to share safety data with investigators, which is what's the most important thing to them. Different from our hemophilia A, though. We will complete the study before we start to talk about the results. So there are 3 dose cohorts. The first cohort has been dosed with 2 patients, and we're now moving forward to the safety monitoring committee and the middle cohort. We feel it's most informative to wait until we've completed all 3 cohorts before we start to show data. So we're guiding that we'll show data towards the end of next year.

Okay. Well, let's switch to another program. Your ex vivo Phase I/II program targeting beta-thal and sickle cell disease, which are partnered with Sanofi. Can you summarize the interim beta-thal data presented in ASH last year? And what are you most encouraged about?

Well, I think our data and the CRISPR data shows that this technique works. That we were able to edit these stem cells, that they were able to produce fetal hemoglobin, that the patients were able to stop being transfused in beta-thalassemia. We haven't described our sickle cell data. That's in the hands of Sanofi, and they will report that next year. And what we intend to do is report both beta-thalassemia and sickle disease progress some point in 2021. What we learned from this is it's not about the editing, it's about the management of the cells. So it's important for a long-term effect to have as many long-term progenitors edited and transfused back into the patient. And that whole process from apheresis, editing, cell expansion and the return of the cells to the patient is something that Sanofi and we have been working intensely on over the past 6 months or nearly a year now. And we feel we have some ways to improve this technique. So we're very confident that we'll move forward with them next year.

Okay. Let's switch to your cell therapy initiatives. Your acquisition of TxCell in 2018 positions the company to utilize its zinc fingers editing technology to develop next-gen autologous and allogeneic CAR-Treg cell therapies for use in treating autoimmune and inflammatory diseases. Why does HLA-A2 mismatch kidney transplantation represent the best initial application here?

So we acquired TxCell in 2018, and they are now with Sangamo France, and the integration of that company has been incredibly successful. They continued along all the time lines that [ we promised when we acquired them ]. Tregs are fascinating because what they do is they are like CAR-T in oncology, they have a localizing CAR that takes into a specific antigen. That antigen localizes, and it doesn't need to be the causative antigen in an autoimmune condition. So for example, MOG takes you to the myelin sheath. It doesn't mean that MOG is the cause of the multiple sclerosis. But once it's there, you have an immunomodulatory cell that's localized to the site of inflammation. When we acquired TxCell, their lead program was an HLA-A2 mismatched renal transplant. And to explain that a little more, about 20% of renal transplants have an HLA-A2 mismatch. That means that the patient is HLA-A2 negative, and they're going to need [ to -- positive ] kidney. Now that's part of probably many antigens that are not quite matched up between the patient and the recipient. But the fact that there is an A2 antigen uniquely on the kidney of the patient now allows our CAR-Tregs to be guided to the kidney, to be activated in the kidney and to hopefully resolve some of the inflammation and transplant rejection. The advantage of renal transplant as well as the kidney has proved quite near the surface in the renal transplant and is biopsy to ensure transplant survival and health of the transplant. By doing this experiment, we then get to observe that the Tregs have gone to the kidney. They've been activated there, and they survived there. So as well as helping the patients and hopefully being a medicine for transplant, it also is a very good model system to let us know that the Treg hypothesis is correct. And then the Tregs -- the information we get from Tregs there can go to our other programs, which the 2 lead assets would be in Crohn's disease with IL-23 and multiple sclerosis with MOG as the antigen.

What potential safety concerns would you be on high alert to look for in this initial application?

We're at the cutting-edge of Tregs so -- or guided Tregs, and so the first study is largely a safety study. It's always, first and foremost, a safety study. Fortunately, patients have been given polyclonal Tregs on a number of occasions, including in the renal transplant setting. Those are [ apheresis ] from the patient concentrators and given back. And there have not been significant safety concerns. But as always, with Sangamo, safety's first and the patients first. And so there is a concern that there is -- there is -- we will be careful to look for infection, inflammation and our -- changes in the patient's immune system. The renal transplant study will allow us to biopsy the kidney and make sure that the Tregs are behaving as it should. So I think it's -- as always, with a new therapeutic area, one is being careful but we are confident that we haven't seen anything in animal studies and in polyclonal Treg studies, and so are very reassured by the safety [ up to now ].

And what can you learn from the various CAR-T development initiatives that can help you here with your CAR-Tregs?

There's a lot that is similar, but Tregs and T cells need -- manage slightly differently and culture slightly differently and expanded slightly differently. We've learned about the whole way of selection -- selecting CARs, the localizing -- the antigen localizing system on the cell, and that's very similar. And then the whole discussion about allogeneic versus autologous is very common between the 2. There are slight nuances about whether you need a T cell receptor, knockout and Tregs or not. But we have watched a lot of the learnings that we built in for Kite-Gilead with the T cells and can apply them to the Tregs. For Allogene, allogeneic cells are more important in autoimmune disease. In oncology, you have a moment of crisis with a patient where they are facing a life-threatening cancer. And therefore, the autologous process can -- is more appropriate for that as opposed to patients with long-standing, chronic autoimmune disease, where I really do believe that we need to head down the allogeneic line as the first direction. So we are developing allogeneic cells, both by editing down from healthy donors and then we're spending a lot of time looking at our iPSC cells and how we can transmogrify them to Tregs. And we signed a deal with a British company called Mogrify earlier this year that have got some fascinating data that suggest that they are able to take iPSCs and reprogram to a variety of different cell types, which would allow an off-the-shelf iPSC to drive Treg source that would allow us to treat many more patients with more common diseases.

Now you have made a considerable investment to scale up your manufacturing. What capabilities will this provide you? And what's the status of these initiatives?

The -- particularly for cell therapy, having your scientists and your process development engineers side-by-side allows for a much smoother transition of the product and also a mix ensures that what we develop in our research laboratories is scalable, and that they understand the requirements once this is in patients and then hopefully, in the marketplace. We made a strategic decision to build our own GMP manufacturing sites. And in Brisbane, California, we have -- by the end of this year, we will have GMP-approved AAV manufacturing. And later next year, we will have cell therapy. In Valbonne in France, we will also have a cell therapy manufacturing suite. We have a great relationship with our contract manufacturers, Brammer Bio that is now Thermo Fisher. And we have a dedicated suite there, and we have discussions ongoing already with them for what commercialization looks like. And we feel that our blended approach is the right way, where we will use our own facilities for clinical supplies and for early research. And then gradually, as the number of patients required gets larger, switch over to an external commercial manufacturer. We can, of course, do small-scale studies and even small-scale commercialization from our Brisbane plant, but it's a blended approach that we feel is the best way forward.

Okay. Well, let me ask you a quick question about your balance sheet. What is your cash position now? And how far out does that fund your operations?

We have a very healthy balance sheet. We've raised nearly $0.5 billion in upfronts this year. A total of $700-plus million in upfront since I've joined Sangamo. It gives us over $600 million in the bank at this point. And that, on our current run rate, takes us well past key catalyst and the Pfizer BLA. So it takes us out [ 23 ] and allows us to take the time to move forward what is a fascinating portfolio of projects.

So Sandy, what do you think that investors are missing most or underappreciating about the Sangamo story?

I understand the complexity and challenge of an investor life. I know that you have to focus on the things in front of you. I know that you have to focus on hemophilia A, which is looking good and it's in Phase III, and Fabry, which again is now in treatment and 2 patients have been dosed. And that really is how investors value Sangamo. Values -- I'm delighted with those products, but I think what's exciting about Sangamo is the portfolio of products to come. I think what the -- I would try and remind them of is 6 blue-chip pharma companies have chosen the Sangamo editing technology as opposed to all the others that are available. Each one was a [ payoff ]. Each one they chose Sangamo. And the Tregs, I think, has got a fascinating potential. If we can move forward into significant diseases, multiple sclerosis, renal transplant, Crohn's disease, that changes Sangamo from being an ultra-rare disease company, where we fret over patient -- small numbers of patients to being able to address significant medical disease in large conditions.

Okay. We have time for maybe 1 or 2 questions from our audience participants. The first one is, "Can you review the IP position for zinc fingers?"

It's a very important part of what we do. And so we have the IP that is a fundamental zinc finger IP. But with every asset that we create, we spend a lot of time to ensure we file appropriately and file early. My general counsel used to be head of IP at Genentech. And therefore, we have him and his team. We know we have a very good overview of what needs to be done to protect our IP.

"And when will your next gene therapy IND be filed?"

We haven't guided to that. We have a range of gene therapies that are in early development that will move us forward behind Fabry.

Okay. "Can you provide an update on the Maps 2 program?"

Map 2? MPS II.

SB-913.

Yes, MPS II. So MPS II is in vivo genome editing. And what we've said is we will come back next year and tell people the progress of that program, and when it should go back [ into the clinic ].

Okay. Then one final question, "Have the wildfires in California affected your operations at all?"

No, not at all. Our labs have been open since the start of the COVID. And it's remarkable what my team have done during COVID. The labs are open. The science is progressing, and the rest of us are at home, in our spare bedrooms [ working remote ].

Okay. Well, we've reached the end here of this presentation. Sandy, I want to thank you so much for joining us as well as all of the audience participation.

Thank you very much. Have a great day.

Thanks.