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

All right. Good morning, and welcome to day 4 of the BofA Virtual Vegas Health Care Conference. My name is Aspen Mori. I'm an associate on the large cap biopharma team at BofA. I'm joined by senior biopharma analyst, Geoff Meacham. And we're lucky today to be speaking to Sangamo's CEO, Sandy Macrae. Sandy, how are you doing today?

I'm doing very well. A pleasure to be here.

Great. So I think what we'll start off is maybe we can kick off at a high level, how Sangamo's -- how everything is going over at Sangamo? How the business is operating in the middle of the -- or I guess, coming out to the extent of the pandemic? And then we can talk about some of your programs.

Delighted to. I think it's also important when asked that question to pay tribute to the people that have kept the work going and lift the world of Zoom and yet make sure that we've achieved all the objectives. So we've had about 1/3 of our staff have been in the labs all the way through, and the labs have been fully functional. It is tested each week. They are socially distance, and they've been very productive. And at the same time, the rest of us have avoided the [ Bay Bridge ] commute and have worked from dawn to dusk and conducted the business up on Zoom meetings. Last year, we raised -- we do really profound deals with Biogen and Novartis, where much the negotiation was done virtually over Zoom. And so it shows that you can run a business virtually. And it teaches us of when we go back into the office, and we're likely to start heading back next month, that we need to embrace peer working, whether it is some at home and some in the office, whether it's trying to be more flexible with people's time. It really sets to me you can trust your employees. If you get them clear objectives and clear management, it will produce, and it doesn't really matter whether they're in a building or at home.

Great. That's good to hear. So it sounds like there's no real delays then on the operations. Anything from the regulatory side? Have you found that interactions with any of the agencies has slowed down in the middle of the pandemic? Or how about...

I think the one thing that has done with anyone that sets up the price is not kind of the full story is clinical trials have been harder to do. And that's appropriate because the hospitals should be focusing on people that are sick in the pandemic, and some countries and some institutions have just stopped doing recruitment for trials. So I'm so pleased that my Fabry team have now 3 patients and a fourth one to come because they have to be very flexible. And that flexibility involves things like virtual site initiation visits and a much more patient-centric approach to clinical trials, where we go to them rather than them come in into the institution because people don't want to go into hospitals at the moment. And we've found a way to adapt to them so as we can do much more at all. But the rest of the operation, it's remarkable, what we've achieved in this time of COVID. And the company is moving forward. This is a very important year for us. We have 2 significant catalysts at the end of this year, where we'll report the results of the Fabry trial and the result of -- or Sanofi will report the result of the sickle trial. In addition, Pfizer at the end of the year, will show more data from hemophilia A and they're progressing into Phase III. Those are 3 profound moments for Sangamo at the end of the year. But behind that, we're a company that is blessed with opportunity. We're doing those gene therapy things now because we can, because it's something we can address the patient need. But we've made a clear strategic choice to pivot the company back to our editing technology because that gives us a differentiating future. That's things like cell therapy with the great programs that we are really excited about. And then even further behind that is the [indiscernible] programs where -- whether it's with one of our 6 partners or stuff that we will do ourselves, we feel we have got a really great opportunity to acquire technology to important diseases. So I have a balanced company here. I have a company with late-phase clinical assets with near-term [indiscernible] and products to perform and a future that's based on a technology.

Sandy, I just want to follow-up on one of your comments. When you think about coming back into the office, are there any sort of resets that you think you could make from a footprint perspective or operations perspective? Because I think we all have sort of determine now that we can survive and thrive in a work-from-home situation. So there are sort of business edits that you could make so to speak coming out of the pandemic to make maybe to make Sangamo leaner and leaner and meaner.

It's a great question. I don't think we're going back to the way it was. So we have recruited about 150 people during the time of the pandemic and maybe nearly 100 of them have not been in the office yet. And they've managed to be field of their partners and meet all of our new employees, and they feel that they're part of the company. We would have had to at least a new building next year and would have had to have found more space for the company because the growth potential for us is really quite striking. And we don't need to do that now. It does. It does. An interesting point that people are there [ and you'll sense ] 3 days a week. Do they keep their seats for 3 days? Or do you think there are hot desking, as if we go to hot desking, the capacity of each building improves. What is more important for us in defining our footprint is lab space, both research lab space. And now that we have our own manufacturing capability is process development, product development. During the time of COVID, we've created GMP-accredited [indiscernible] in California. And by the end of this year, we'll have GMP cell therapy manufacturing, both in Brisbane, California and in Valbonne, France where our French facility is. That takes space, and it takes people to manage it and laboratories. And that will more determine our footprint rather than desk space for people with me.

Okay. Great. And maybe we can now jump into some of your programs. I think we'll start with your wholly-owned stuff, and then maybe later on with the talk about partnering stuff. But first on Fabry, maybe you can help put into context of data we're expecting in the fourth quarter. I guess what exact data point should we expect? And how many patients -- I guess what's the average follow-up, just kind of a high-level thoughts on that data coming up?

We're excited to show the data. We made a deliberate decision not to data out and to show it. That's one because I think it makes your job easier and it makes our job easier so as we really understand what we're doing. There are 3 cohorts. Each cohort has 2 patients. We've dosed all of Cohort 1, we've dosed 1 patient in Cohort 2. There's -- the second patient in Cohort 2 is enrolled and will be dosed soon. And we would hope to dose patients 5 and 6 in the third cohort by the end of this year. And we hope at the end of this year to report data on all 6 patients. So there will be a variety of different on lung cavities from the Cohort 1, which is kind of Q3 last year; Cohort 2, which is Q2 this year; and then a quarter's worth perhaps or less of Cohort 3. What we will show first is safety and tolerability, the most important thing and then the biochemical markers, alpha-gal and Gb3, lyso-Gb3 in the plasma. Once we've shown that the medicine works, and we will then, we can then move into the biopsies that are important in this disease. We didn't feel it was appropriate until we had conclusive data to start biopsy clinics. It's not a trivial thing. It has a certain morbidity to it and, therefore, you need to do it wisely and thoughtful. So we show that data at the end of the year and continue to start. We are already planning for success. We're already planning for the extension cohorts or expansion cohorts. And we're planning for success in driving forward into Phase III next year because with this -- with [ AEV ], you have to manufacture a long time in advance or start the manufacturing long-term advance. And in clinical studies in this therapy, you have to plan in advance. So those plans are all in place and driving forward. And we're going to show you data at the end of the year.

Got it. That's helpful. And on the biopsy point you brought up. So would the plan then be once you have this data in both your hands, would it be to go back to these original patients and then take biopsy and see what shows? Or is that for the extension expansion trial or so?

We haven't printed it. It would be hard to interpret the patients who are already treated because you don't know what/where they started. And the trial that is available to completely naive patients, super-naive patients who've been off treatment for 6 months and ERT issues. Some of these will have their -- the Gb3 and lyso-Gb3 levels already suppressed and others will be coming in with higher levels. So we really need to have a before and after biopsy to be able to do this well.

Okay. Got it. All right. Maybe you can help us understand, so a lot of the gene therapy regimens we've seen today have incorporated some degree of steroid regimens with the preconditioning or reactive. Maybe talk about how -- why that isn't necessarily part of the Fabry ST-920 program? And whether you think that or not, that will be a necessity in the future?

It's been interesting watch via adventure as people say you have to use one, you shouldn't. And at what point, it was a competitive advantage you did. And now there are many different views and some people give them and BioMarin, I think, give them now, and some people wait and just treat as required. We treated as required within our hemophilia program. And because we were recruiting Fabry in a time of COVID, it seemed thoughtful to use prophylactic steroids, if that was possible. Now we're learning as we go. And we may find that patients would benefit from the -- just from avoiding any LFT issues. But at the moment, the trial has been run without prophylactic steroids. At ASGCT, there was someone I'm told reviewing the pros and consequence, and they didn't come up with a definitive conclusion. So I don't think that -- I think the jury is still out on that.

Okay. Okay. Understood. All right. And maybe on more -- this is -- this could be a couple of years away, but how are you thinking about the competitive landscape for Fabry? How does ST-920 fit into the treatment paradigm given that there are some ERTs available? And I guess within the context of some of the other drugs in development as well.

These treatments have to show a benefit over existing standard of care for patients. And that benefit hopefully will show equal efficacy, equal safety. And then once you've done that, if it's a treatment that will last you for many years, the benefit is clear over ERTs. But they have to be safe and they have to be effective. Those are requirements of that equation. We are very pleased with our preclinical data. Marshall did some wonderful signs. In mice, we show great clearance of the substrate, but we have to show this in humans. There are other gene therapy versions of this in the clinic or just about to go into the clinic. We have the advantage that we feel further ahead, but the data will tell all. And until we show that data, we will be humble and wait for the results. AVROBIO are further ahead, using a different methodology, using a cell therapy that involves preconditioning. If the results are the same between us and AVROBIO, the preconditioning is something less attractive to patients. And the gene therapy is, I think, a better, easier solution. So we just need to drive forward and get those results.

Okay. Got it. You mentioned the durability is -- I mean, that's true for any gene therapy, that's theoretically the biggest differentiator. What is a, I guess, the necessary durability do you think for ST-920 to show to be commercially viable? Is there a specific year you see as like a threshold for durability to constitute a strong cost-benefit analysis?

I don't think we've ever done that. It has to be this many exact years to be -- to create an NPV, a number of sales that then makes it possible. But more importantly, it's what would a patient want. And because they're having to make a decision on which of the gene therapy, which is the [ various therapies constitute ]. And for them, the number that they -- most of them quote is 5, 10 years. So they want to be at least 5 to 10 years of treatment benefit for them to try something like this. The durability is somewhat colored by hemophilia A. Hemophilia B looks like it doesn't have any durability challenge. And so we've got hemophilia A in the BioMarin data. We've got hemophilia B, which looks good. And now we're starting Fabry, which one will Fabry look most like? We saw nothing in the animal models to suggest that those are durability challenged. And we just need to collect data to be able to convince.

Sandy, where do you think we are in that process? You're right. I mean in hemophilia, it's more straightforward. We've learned some lessons on SMA, but I don't -- do you think that in the U.S., payers are more in tuned to sort of curative intent type of therapies and the economics with that? Or do we still have a couple more years to go? Obviously, Europe will be probably a laggard from that -- in that context.

As both a European and an American, I can see both sides of it. I don't think this has been worked out. SMA is different. It's in -- children are dying, but nobody is going to question about the reimbursement around that. I think hemophilia is going to be the first test case for a gene therapy where there are alternatives that you could pay as you go with Factor compared to how do you pay upfront or over what period do you pay upfront for a gene therapy? If you look at the lives of these patients, the question that they have is -- the number I have in my head is, $6.5 million actual for their average life and maybe $30 million in cost of looking after them of the consequences of their disease. So there's no question that you're having to pay a large amount of money to keep someone on Factor. We need to show the benefit of gene therapy and then have a discussion about how do you amortize that over a period. And how do you cope with in countries like America, where a patient may move from payer to payer and payer 1 might say look after this person for 3 years or 5 years in period. Why should I pay the 10-year benefit the patient is going to? So I think it's a fair discussion, but it's one that requires us to rise above it and not just do the same solution for new challenges. In some way in Europe, it could be easier because it's a single health care system. And the people who pay for medicines also pay for hospitals also pay for social care. So there's a more holistic approach to the cost of illness than here. I have great faith that the American system will solve it. But the hemophilia discussion that BioMarin do and Pfizer do, I think, is the first time that this will really be understood in -- for a significant number of patients that are getting a real benefit.

Makes sense.

That's helpful, Sandy. And I have maybe one more question on what we're talking about, commercial liability of gene therapy. So we haven't seen a situation where there have been more than 1 gene therapy in the market we have seen indication. Assuming all looks the same for 2 androgen therapies, does this work out the same way as maybe in all of drugs in the I&I space where it comes down to rebating and contracting? Or is there some other factor involved that maybe we're not thinking of?

I think that's a great question because it's not -- I don't believe it's going to look like cycling between anti-hypertensives. That if you try one and then the new one comes along with an added benefit, and you will then switch to that one. These patients make a fundamental choice to because they probably have one goal at a gene therapy. Now my focus when the F-13 therapy, less than 5 to 10 years, they'll then be using [ same thing for editing ] to solve the problem completely at that point. But if you're a patient and you're standing looking at therapies, a new season, one company has got results that are compelling and another one says, "Well, mine is going to be better at our preclinical data." That's a difficult decision for them to make other than to take the one that's got the data rather than the same one to come. So I think there is one to be an early mover in transplanted or gene therapy. I think it's going -- particularly in small diseases and diseases like hemophilia B, I think, is the one that is supposed to account for this. If patients are getting a benefit in hemophilia B, the new therapies are going to find out are to come in and even find patients for clinical trials, never mind compete with the leader. That's why when we look at this space, we made a decision that gene therapy has a limited window, although there are 7,000 diseases that could be addressed with the liver through gene therapy. There's only 10 or 20 of them, they are big enough to make this sensible thing for a company to do. But that's even simple things like make it easy enough to do the clinical trial, have a small -- a large enough population that's homogeneous to be able to get a sensible answer. And then when you eventually put the drug on the market, that there's still a population there that meets your marketed drug. Rather than it just being the new patients are born, they're still a prevalent population. So that's why excited we'll make the decision that we've done hemophilia. We've done in Fabry. We have 1 or 2 other things in the pipeline that we're still looking at to decide on, but they really have to be either first-in-class or best-in-class to move into that space. And that strategically, we will move to things where we have a unique advantage of the users and fingers, such as the T ranks or the suppressors in the neuroscience space. We have the advantage of being able to do that. The gene therapy companies don't and can't, and so they're going to be stuck in the swirl of companies in the liver, slicing and dicing NPVs and the commercial sense of some of those indications.

Okay. Great. And that's a perfect transition. You mentioned that the Treg program. So still, I think it's still early, early days in that program. But maybe you can help characterize the safety profile, as you know. Any theoretical concerns there? And what that mean, maybe you could talk about the efficacy benefits as well to weigh on with that.

So it is very early days, but we have initiated the first ever CAR-Treg study. And we have sites open, and we have -- we're beginning to -- we're talking to the physicians of other patients when we're planning to enroll a patient this year. And it's remarkable. It's the start of a new -- a whole new therapy area, a whole new immune diseases. We -- because of that, because it's new and cutting-edge [ volumes of unmet ], we're going to do this carefully, prudently, and we'll have a safety monitoring committee overseeing what happens. And we're going to take the time to make sure the patients are safe because in the end, that's the only thing that matters. We have -- we acquired in 2018, a company called TxCell in France, who are looking after Tregs. Our Chief Scientific Officer is a man called Jason Fontenot, who's done a lot of the initial work on Tregs. So we have the expertise in-house. Tregs look very promising. There are polyclonal Treg studies in renal transplant that are encouraging and that they're able to withdraw the immunosuppression. So that gives us hope that the first trial we're doing which is an HLA-A2 mismatch renal transplant has the potential -- it's almost like -- and some kind of proof-of-concept that this could work. The most important thing with the Treg is that it stays as is, Treg. So there is a theoretical concern that Tregs could become effector cells. And we spent a lot of time making sure but the things we're doing to these Tregs, and the editing we're doing does not change their life cycle. And the ones we're making very clear that they're all remaining is Tregs, and there's no sign of them becoming effector cells. I think they have a potential to be safer than current treatment because your immunosuppression is confined to the place at the localizing antigens. I can just explain what I mean by that. We have a program for MS. We're using an antigen called MOG, which is only in the myelin sheath, and it attracts the Treg to that myelin sheath. We use a CAR that recognizes MOG, and at that point, is activated. And whether MOG is the cause of BMS, doesn't matter because anything in the myelin sheath now has Tregs there coming down many [indiscernible]. That to me is better than giving a global immunosuppressive that risks the consequences of that in the patient in places that you you've no interest in actual immunosup. So this is an exciting field. We have the first -- the HLA-A2 mismatch renal transplant study, which is autologous we have some allogeneic programs behind that in inflammatory bowel disease and multiple sclerosis, each of which have a couple of targets that we're prosecuting. The result from the renal transplant will educate us because the advantage of being transplant is you can biopsy the kidney. And you do it routinely. And therefore, when you biopsy the kidney, you can tell that the CAR-Tregs have gone to the kidney inactivated and are surviving. And so they will educate the rest of our programs. But we're very excited about this, and we feel is cutting-edge signs and it is -- it has the potential to take us from small ultra-rare diseases in the liver to diseases of such significance and medical need that they would define a future for Sangamo.

Got it. That's very helpful. Maybe one more on Tregs. So do you -- is the plan then to -- I guess, the current version is an autologous version. Is the plan to eventually commercialize that? Or is that more of a stepping stone to getting to an allogeneic model? And in that same vein, is there any sort of manufacturing gating factor to getting there? Or as one of -- as now the facilities you're building in Australia, I believe, taken care of that?

So we chose autologous because we wanted to tease a part of 2 parts of experiment, through the Tregs work and thus the allogeneic piece work. And we will make the decision about what we do with that trial and that profit once we see the results of the autologous product and our allogeneic program because in parallel to autologous, we have an allogeneic, we have a number of people working on creating allogeneic Tregs, either by taking healthy donors and editing them down to allogeneic or we have iPSC programs where we will create cell banks. If we can do that well, that's the obvious thing to do because the cell banks are easy to use and the cost of goods drop dramatical. And that would be a time when we would pivot to an allogeneic form. If I look at allogenecity is not as easy, it may be appropriate to go ahead with the autologous. But we have that optionality, and we can make a choice in the next couple of years.

Okay. Maybe one -- I think we can here I'll take one more, but I wanted to follow-up on the news. I think we announced on the earnings call that Kite and Gilead had decided not to file the IND for 047. And I believe you mentioned how to do with the considerations within the competitive landscape. I guess is that a fair characterization? And I just would love any more color you provide on from that program?

Yes. We have 6 blue-chip versus potentially 27 programs going on. We accept and understand that our partners will make choices about these programs and the competitive landscape as they take them forward. That's part of what you got to accept when you do partnerships. These programs wouldn't exist if we didn't part of. And so Kite Gilead, I think, correctly looked at the CD19 landscape. They have their autologous program, and it's moving forward successfully. And so they really have to understand that the allogeneic version has a significant advantage. And I think that's an appropriate decision. They have the time and the resources to pause and make sure they're either first-in-class or best-in-class in what they take forward. I mean I think we've seen this with Sanofi and Precision. It is a landscape that is -- that we're all learning. And I think allogeneic will be solved, and CD19 allogeneic will get better. But there -- but we learn from everyone's trial and they make the business decision.

Okay. Great. All right. I think we're just about out of time here. Well, if that's the case, Sandy, I appreciate you taking the time to speak with us. That's a very helpful discussion, and look forward to joining again.

Okay. Pleasure. Nice to see you both.

Thanks, Sandy.

Take care, Sandy.