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

Hello, everyone, and thank you for joining the H.C. Wainwright 2021 Global Life Sciences Conference. My name is Patrick Trucchio, and I'm a biotech analyst at H.C. Wainwright. While we're virtual this year, we're confident we're going to be able to provide value to you with more than 425 companies presenting at this conference as well as in interactions through one-on-one meetings. H.C. Wainwright is a full-service investment bank, dedicated to providing corporate finance, strategic advisory and related services to public and private companies, across multiple sectors and regions. We have a total of '18 publishing senior analysts and 493 companies covered across all sectors. Please visit hcwo.com for more details. From a logistics standpoint, please make sure to reference your virtual conference online portal that provides your individual links to your meetings and all presentations. Panels and all presentations are live and on-demand online from March 9 to March 10. With that said, have a productive and enjoyable day, and I'd like to introduce our next presenter. It's my pleasure to introduce to you Mark McClung, Chief Business Officer of Sangamo Therapeutics, a clinical stage genomic medicine company, committed to translating groundbreaking science to medicines to transform the lives of patients with serious diseases. Sangamo intends to deliver on its mission through development of clinical and preclinical candidates, its novel science and its in-house manufacturing capabilities. And with that, I'll turn over the presentation to Mark.

Thanks, Patrick, and thanks for having us here today. It's been a real pleasure. So these are our forward-looking statements. During today's presentation, please refer to the latest SEC filings. So we're Sangamo, a genomics medicines company committed to the development and transformation of disease by progressing our genomic medicines. We plan to deliver this mission through our novel science, execution on our clinical stage programs, advancing our wholly owned preclinical programs into the clinic and completing our in-house manufacturing capabilities. Here is our robust pipeline of genomic medicines. As you'll see, our lead clinical candidate is a hemophilia A program partnered in Phase III with Pfizer. Following in Phase I and II, we have our lead wholly owned Fabry disease candidate as well as beta-thalassemia and sickle cell disease candidates in partnership with Sanofi. We expect our clinical momentum to continue this year with our wholly owned CAR-Treg candidate, TX200 in solid organ transplant, expected to enter the clinic by the end of the year. We expect this to be the first-in-human CAR-Treg study. We also have a robust preclinical pipeline with programs in emerging areas such as genome engineering with our zinc finger transcription factors for regulation of neurologic disease and our CAR-Tregs for large autoimmune indications. We are proud of what we delivered in 2020 and how we executed in what was a challenging year with the pandemic. Transformational neurology collaborations were signed with Biogen and Novartis, the initiation of our Phase III hemophilia A trial with Pfizer, the initiation of our own wholly owned Fabry disease Phase I/II clinical study. We also brought in in-house AAV manufacturing capabilities online in our Brisbane facility here in San Francisco. And we built a strong cash position, reporting as $692 million in cash and cash equivalents as of December 31, primarily through upfront payments from our collaborations. In addition to our wholly owned programs, I'd like to remind you on how Sangamo has been building value through our pharmaceutical collaborations. Our collaboration strategy achieves important financial and strategic benefits. It fulfills commitment to patients by pursuing treatments and indications of significant unmet need in central nervous system, blood disorders and oncology, where our partners have the therapeutic area expertise, clinical trial and commercial infrastructure and resources. We've received approximately $815 million in upfront and milestone payments associated with these collaborations with a potential $7 billion that could be earned in milestones in addition to royalty payments. This is important as it provides Sangamo with the capital to advance our own wholly owned programs. And these partnerships are reflective of the value the industry sees in the Sangamo technology to address difficult diseases. The partnerships also expand Sangamo's addressable markets by leveraging our partners' resources and expertise in therapeutic areas. I'd now like to take you through more detail on our 2021 catalyst, beginning with our proprietary programs, and then we'll cover our partner programs in a little more detail. So our proprietary programs are made up of Fabry disease, ST-920 and solid organ transplant, TX200. ST-920 is our lead wholly owned product candidate being evaluated in the Phase I/II STAAR study. The first 2 patients were dosed in the second half of 2020, and this is the first of 3 dose escalation cohorts, and we announced recently that the first patient in the second cohort was also dosed. The primary goal of this study is to assess the safety and tolerability and secondary endpoints will include the key efficacy measures. We'll share initial data from the study at the end of the year, once the dose escalation has been completed, and we've selected the dose for our cohort expansion. We believe ST-920 has the potential to be a differentiated treatment. Fabry disease is caused by a mutation in the GLA gene, leading to low levels of alpha-Gal A in cells and the buildup of Gb3 that can result in impaired kidney, heart function, neuropathy and GI symptoms. The current standard of care for Fabry disease is enzyme replacement therapy, which aims to replace the missing alpha-Gal A enzyme in the blood through regular infusions usually once every 2 weeks. Our hope is that ST-920, which is a onetime IV infusion with no preconditioning regimen, may provide continuous and potentially lifelong expression, have endogenously expressed alpha-Gal A, with the potential to deliver preserved renal function, reduce cardiovascular morbidity and decrease neuropathy. I'd now like to highlight an emerging area for Sangamo, one that we're actually quite excited about our CAR-Treg cell therapy platform. So TX200 for renal transplant is expected to be our next wholly owned program to enter the clinic. This study is the first-in-human study of CAR-Tregs and will be critical for understanding CAR-Treg pharmacology and biology in patients as well as establishing process development and manufacturing know how. Recent publications show that the regulatory cell therapy space is gaining momentum and excitement in the scientific community. The one study published in May in the Lancet, in particular, supports our plan to evaluate CAR-Tregs in renal transplant population. The STEADFAST study will evaluate safety and mechanism of action for TX200 in renal transplant recipients. The goal for this study is the prevention of transplant rejection through the engineering of CAR-Tregs to express an HLA-A2 chimeric antigen receptor or CAR, allowing them to localize to the renal graft and activate upon recognition of the HLA-A2 antigen. We hope to regulate the immune system in a targeted manner, promote tolerance and preserve graft function. The HLA-A2 negative patient will be dosed with a personalized TX200 drug candidate from previously isolate cryopreserved Treg cells after transplantation surgery and following recovery period. As a result of this process, we expect dosing of patients will occur several months after their enrollment. This study is expected to be initiated by the end of the year. The goal of our TX200 program establishes really the foundation for a portfolio of CAR-Tregs for major autoimmune disease. We believe that allogeneic is the future of cell therapy and will overcome challenges of autologous approaches such as scaling and manufacturing. Our proof-of-concept autologous TX200 will have follow-on kidney transplant, multiple sclerosis and inflammatory bowel disease allogeneic programs, which are currently in preclinical development. There's tremendous potential from there to go into many large autoimmune areas, such as rheumatoid arthritis and diabetes. We're currently approaching our allogeneic programs in 2 ways: first, editing healthy donor Treg cells with our zinc fingers; and second, creating Tregs from induced pluripotent stem cells with our partners at Mogrify. I'll now provide an overview of our partnered programs that are in or nearing the clinic. So starting with hemophilia A program partnered with Pfizer, which is currently enrolling patients in Phase III. Pfizer dosed the first patient in October 2020 and they have guided to a pivotal data readout sometime in 2022. This slide provides an overview of the efficacy from Pfizer's ASH presentation. The box and whisker plots show mean and median Factor VIII levels over time for the 5 patients in the high dose cohort. Key takeaways include steady state Factor VIII activity achieved by week 9. Mean and median Factor VIII activity remained in the therapeutic range through week 52 for all patients and through the longest available follow-up of 82 weeks for the longest treated patient. There are no bleeds in the first year and only one target joint bleed during the second year following vector infusion. These results are only in 5 patients for 1 year, and it's important that we continue to watch these patients over time and understand the potential of this therapy when we see the larger patient sample in the Phase III study. This slide provides the overview of the safety data that Pfizer reported at ASH, showing at least 1 year follow-up for the high dose patients from the Phase I/II ALTA study. You'll see that gene therapy is generally well tolerated. All ALT elevations were resolved with steroids. There is -- no initiation of corticosteroid use was required after week 52, and all participants are currently off corticosteroids. We're also in the clinic with Sanofi for sickle cell disease and beta-thalassemia. We anticipate initial data readout from sickle cell later this year. And at that time, we'll be also providing an update on the 5 beta-thal patients that are going to be treated. Next is our oncology partnership with Kite-Gilead. This is a really exciting partnership for us as it brings our zinc finger editing capabilities to the table and Kite-Gilead bring their extensive industry-leading oncology expertise. The first product candidate is Kite-037, an allogeneic anti-CD19 CAR-T, and Kite's guided that an IND submission for 037 is planned for the first half of 2021, and they expect to initiate the clinical trial in 2021. Now I'd like to discuss an emerging area at Sangamo, our innovation in neurologic disease, which was the basis of our transformational Novartis and Biogen partnerships we announced last year. So we have a number of ways that we can use our technology to address CNS diseases. Our zinc finger protein transcription factors do not require double-stranded breaks that are, therefore, particularly well suited to the central nervous system. What we're doing with Biogen and Novartis, is single gene repression and activation in tauopathies, synucleinopathies, autism spectrum and many others. For Huntington's disease and ALS, we can turn down the mutant allele and leave the wild-type functioning. Excitingly, we are now into epigenetic editing, such as diseases for Rett and fragile X, where we believe we can actually demethylate and reactivate chromosomes. Beyond these, we're also doing preclinical work in multiple sclerosis with zinc finger edited CAR-Tregs. We believe zinc finger transcription factors have the potential to be a disease-modifying treatment for major areas of unmet needs such as Alzheimer's, Parkinson's, Huntington's, ALS and Crohn's disease. Zinc finger transcription factors enable us to circumvent the complexity of the treatments that work at the protein or RNA level by targeting the DNA source of the mutant protein, isoforms and complexes. We look forward to progressing these programs with many of our partners. So I'll now recap kind of the key points from Sangamo's 2021 story. I'd like to come back to our pipeline and specifically our clinical stage program and really underpin that we're focused on clinical execution to further unlock Sangamo's value. We are also investing in in-house manufacturing capability because we believe it can be a competitive advantage. We're pleased that the -- at the end of 2020 with our GMP AAV facilities in Brisbane. This was a tremendous achievement under any conditions and bringing our facility online during COVID was particularly impressive and truly is a testament to our dedicated manufacturing team. We're also working on GMP cell therapy facilities in our Brisbane and France offices, which we expect to be operational by the end of this year. Our strategy is to provide for greater flexibility, quality and control by building balanced and necessary capacity achieved through our in-house manufacturing and as well as our clinical manufacturing partnerships. We're going to invest in our manufacturing process and analytics and develop a strong supply chain. We're in a strong position to achieve many milestones and catalysts this year, including the initial data readout from our wholly owned Fabry study, the initiation of our potentially first-in-class CAR-Treg study and continued momentum with partnered programs. We look forward to keeping you updated as the year goes on. So what are the key takeaways? Well, really, I'd really like to stress these points. We're executing on our clinical stage pipeline. We have a broad portfolio with prioritized candidates, both in rare and large indications. We have technology validating partnerships with 6 accomplished biopharma companies. Our in-house GMP facility provides manufacturing, capacity, flexibility and control of our processes, and our balance sheet is stronger than ever. Really appreciate your time today, and thanks for your interest in Sangamo Therapeutics.

Terrific. And thank you so much for the presentation. We have time for a few questions. So I thought, first, if we could start with the Fabry program. And with the focus of the Phase I/II trial being on safety and tolerability, can you tell us what efficacy signal Sangamo is looking for in this trial?

So on the Fabry program, we're really ideally looking for predictable, durable expression of the alpha-Gal A enzyme as well as an impact on accumulation of the substrates of Gb3. And obviously, the primary focus will be on safety and tolerability. Over time, obviously, we'll continue to follow the patients once we've selected the final dose to go into the expansion cohort. And at that time, we'll consider on, obviously, the right and appropriate time with the patients to do biopsies to provide some of that other information.

Got it. And so 3 patients have been enrolled. Can you discuss where we are with the 6 patients to be enrolled in the first part of the study?

So there's a total of 2 patients in each of the three cohorts. As you rightly pointed out, we've dosed the first patient in the second cohort, and we've got line of sight on enrolling the remaining patients. Obviously, when we finish the second cohort, the Safety Monitoring Committee will evaluate when we can then go to the third dose cohort.

Got it. And then can you discuss what differentiates ST-920 from other programs in the gene therapy space?

Yes. So we're actually really excited about ST-920. I mean the -- obviously, if you take a look at some of the programs that are advancing, we expect Protalix, which is really an extended version of enzyme replacement therapy to get approval this year. But we think patients are still looking for something that's going to provide them with a more predictable and durable expression of the Alphagan. And more importantly, impacted down sequelae of the disease, like the cardiac morbidity and the impaired renal function and neuropathies and things like that. The cell therapeutic approaches, the data look interesting that were presented at World, but it still does require preconditioning, and it's a little bit harder to get to the broader patient population. You probably are aware, only about 45% of Fabry patients are actually treated. And so we think that a liver-directed gene therapy like ST-920, delivered by a onetime infusion that doesn't require preconditioning regimens has the opportunity to really fulfill that predictable, durable control of their disease and the downstream sequelae and has the potential, obviously, to expand the number of patients that get access to treatments that will affect the course of their disease.

Yes. Makes sense. And so now moving over to the TX200 program moving forward ahead first with autologous CAR-Treg. Why does HLA-A2 mismatch kidney transplantation represent the best initial indication here?

So it is an unmet need. And what's interesting about it is that a patient that is receiving a live donor kidney, which is HLA-2-positive and they're HLA-2-negative. It allows us to really target the CAR to the specific site of the kidney and where the graft is done. And so what we're hoping to be able to do there is do the biologic proof-of-concept that we can take a CAR and direct it to whatever tissue we want, in this case, the kidney, and that it will have an effect on managing the immune storm that happens when you potentially have rejections starting in the kidney. And so by looking at tolerance and hopefully a persistency of the graft survival, we think it's a great proof of concept, which will inform well beyond kidney transplant.

Got it. And then I'm wondering what the clinical development path forward to look like, specifically assuming a positive outcome in the STEADFAST study with the intention be to pursue additional indications such as MS, with an autologous compound or would the intention be to move forward with an allogeneic program? And related to this, what if any learnings could you take them from the allogeneic programs in oncology to your allogeneic CAR-Treg program in autoimmune disease?

Yes. So there's a lot there, Patrick. But what I would say is that there -- for obviously reasons of scale and manufacturing and just the ability to generate reasonably good cost of goods. Our focus is really to try to move as quickly as we can to allogeneic, which is why we're taking those 2 approaches, editing down and then also working on iPSCs with our partnership at Mogrify. So the intent would be to take allogeneic forms in kidney, multiple sclerosis as well as inflammatory bowel disease is our key priority. And that will be the focus as we begin to expand our leadership position here with CAR-Tregs. Obviously, we do take into consideration what's happening in the oncology space, but we're really focused on applying these to autoimmune disease.

Got it. And then maybe just one last question here is on the business development. The business development team was very active in 2020. And I'm wondering if we should expect a similar level of activity in 2021?

Well, I sort of touched on that. I mean, where someone comes to us with ideas in terms of how they can leverage our technology, in particular, the zinc finger transcription factors, recombinases and so on. In areas where they have the therapeutic or biologic expertise as well as the resources to move our technology towards patients. We'll obviously take a look at that and have those conversations. But we want to be very clear that we also have an intent to stand up a wholly owned genomic medicines company and take our own portfolio forward, which is really the priority and focus that we have for 2021 and 2022.

Yes. Terrific. Okay. Well, thank you, Mark, for the interesting discussion, and we look forward to further updates on Sangamo's broad and impressive pipeline in the months ahead. I want to also thank our present -- all of our presenters for taking part what's been a very productive and informative series of presentations. We appreciate the time and effort that has gone into preparing them. Hopefully, our next conference will be one that we can host in person rather than virtually. But in the meantime, we're very grateful for your flexibility and your presence online with us this year. Thank you again from the entire H.C. Wainwright team.

Thank you, Patrick.