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

Great. Hello, everybody, and thank you for dialing in. My name is Luca Issi. I'm a senior biotech analyst here at RBC Capital Market. And today, it's our great privilege to have Sandy Macrae, CEO of Sangamo, for a fireside chat. Sandy, thanks so much for joining us today.

And maybe before we dive into the specifics, we'll love if you can share your thoughts on your platform. It feels to me that these days, all the headlines are on CRISPR/Cas9. But maybe can you talk about your zinc finger protease platform and some of the differentiating features versus CRISPR/Cas9?

Delighted to, and good morning. It's a privilege to lead Sangamo and a truly remarkable platform. Zinc fingers are the most common transcription factors in our body. And through its years of expertise, Sangamo has adapted them to be nucleases transcription factors, even base editors and recombinanators. And that's because we are able to target any nucleotide in the genome. The zinc fingers have the advantage over other platforms that are constrained by PAM sequences. We can do it with great specificity. And almost like a Swiss Army Knife, we can then attach a series of different things onto the zinc fingers to make double-stranded break or control the gene expression. It means that when other companies partner with us, they partner with us because they see us as the best editing technology. We now have 6 blue-chip partnerships where we're a potential of 27 different programs moving ahead with them. And it's one thing for the CEO to stand up and say we have the best platform, but I think what you should judge that truly by is when big pharma comes in does deep due diligence and decides to choose Sangamo. So we now have Takeda, Pfizer twice, Sanofi, Gilead, Biogen and Novartis as key partners for Sangamo. What it does is it allows us to build a platform within the company to drive forward with their own proprietary programs. So if you look at the overall balance of Sangamo, I think, we're a very balanced company now. We have -- we're in Phase III with Pfizer for hemophilia A. We have our own gene therapy Fabry, which results again this year. Our friends at Sanofi will show their results for editing at the end of this year, too. And then we move forward and we -- the company moves through gene therapy now to applying our technology, our unique proprietary technology, whether it's cell therapy, such as the Tregs or a platform of CNS adaptations that we are driving forward. It gives us a now and it gives us a future of time.

Yes. This is a very comprehensive overview and super helpful. You already probably touched upon a few of those. But again, exciting rest of the year for Sangamo, the multiple catalysts to upcoming the kind of lock value for shareholders. I think you have data from Fabry from the 2-year hemophilia A data as well. Maybe first look at Tregs, sickle cell disease also from your partners that's coming. Among all of these catalysts, which one do you think is the most underappreciated by investors?

All of them. The investors are excited for hemophilia, and I think, rightly. Hemophilia is a large patient population. We know the medicines work. We know ours works. We know BioMarin works, and it will be the first time that there has been significant competition in the gene therapy area and for a population of patients is significantly sized, and it will define the new future for gene therapy. But behind that, we have our Fabry program, and we are delighted that we've dosed 3 patients, and we're on track to do dose a fourth one. And we hope to show results for that at the end of the year. And between our way of treating [ in the alpha bio ] cell therapy, these patients are now getting options they never had before. And they'll be able to choose, and they'll choose on safety, certainly. Efficacy has to be as good as current treatment. But if that's through the Sangamo way of doing it, which is a single injection of [ NAV ], really fuels patient [indiscernible] and offers them a long-term benefit and a long-term avoidance of symptoms, avoidance of morbidity, mortality and the inconvenience of going in for ERT on a weekly or biweekly basis. It's -- I think it's very pleasing that there are so many companies are now targeting sickle cell disease. It's an awful disease. As a doctor, I've treated patients with -- in sickle crisis, and it truly is an awful diseases that occurs in African-Americans mainly in this country. And now with the work that bluebird and our friends at CRISPR have done, we have medicines for this. So we will have medicines for this. So we were excited that at the end of this year, Sanofi show the results of the sickle cell disease study. We're also excited that it's Sanofi because this is a global disease that requires a large company with a philosophy about social responsibility in global medicine. And I think Sanofi is the best company I could have wanted to lead this forward. So that's the now. And at the end of this year, we'll have 2 readouts that could lead to us having 3 products in Phase III, which for a company of Sangamo size is a remarkable turnaround in the just over 4 years I've been in charge of Sangamo. But the [ big ], I think, is the future that people are only now waking up to our Treg program. We will enroll in the first patient for HLA-A2 mismatched renal transplant by the end of this year. And that's patients who are HLA-A2 negative were getting an HLA-A2 positive kidney. We've created a CAR-Treg. So it's like a CAR-T in oncology, but this is on a Treg that will be targeted to the mismatched kidney, and there will be activated and they will form some degree of immunosuppression. And our hope is that the patient will have to back off their immunosuppression and have this CAR-Treg cells providing the tolerance to the new kidney. And we chose this as a first experiment because we biopsy the kidney as part of the renal transplant. And then we'll be able to demonstrate efficacy, safety, activation of cells, on cavity of cells. Because behind this, we have programs in multiple sclerosis and inflammatory bowel disease with more than IL-23 as 2 of the 4 targets that we're advancing. If Sangamo succeeds in showing CAR-Tregs work, if Sangamo succeeds in moving into MS and IBD, if Tregs are insignificant in those, those are enormous areas. It moves Sangamo out of ultra-rare diseases, which is a limited opportunity that is becoming very crowded, particularly diseases within the liver and gene therapy. It will define the future of Sangamo. And then behind that or in parallel with that, we have our CNS programs. Because we are doing CNS partnerships with Takeda, Pfizer, Biogen, Novartis, we've been able to build the CNS expertise, some really good biologists. We've now hired neurologists to understand where the medical need is, and it means that we can drive forward our own proprietary programs in parallel to those that we plan.

Got it. That's actually very helpful. Lots to unpack here, but maybe circle back on hemophilia A for 1 minute. I know the program is obviously partner, so there's only so much that you can say. But maybe at a high level, how do you see the field going forward? Again, BioMarin is ahead, but they receive a CRL. Roche is in the mix as well, however, there may be some disincentives for them to go too fast, given that product will cannibalize Hemlibra, which is one of the biggest selling products at this point. What's the strategy going forward? What are some of the differentiating feature of your programs versus Roche and BioMarin? How should we think about that?

So it's wonderful that hemophilia patients will have a choice. The gene therapy that BioMarin has shown will be approved at some point. I'm sure of that. The Pfizer study is fully enrolled and driving forward, and then they're moving forward into Phase III in the way that only a global company like Pfizer can, which is why we're pleased and proud to be part of that partnership. And then patients will have a choice that they -- and it isn't a choice of imitating Hemlibra or Factor or this mix and having to make that -- or gene therapy and having to make that choices every day or every week with their physician. We hope that treatment with gene therapy will give you long-lasting durability. What is long-lasting mean? When we talk to patients, they want 5 to 10 years' worth of benefit from gene therapy. That's the kind of number that they have. And the only way that we have signed on our friends with Pfizer will demonstrate this is in our Phase III. So although we have 5 patients in Phase II at about the targeted dose, I'm canceling everyone. Let's just wait to see what Phase III looks like because that will describe the patient promise, and that's what the agency will want to see. The BioMarin CRL, I think, partly was because the agency couldn't -- didn't know how to write a label between the 2 different studies, the Phase II and the Phase III. There was significant differences between them and differences in the outcome, which makes writing a label more difficult, which is why they're asking for more data. We hope that in the professionalism of Pfizer, they will run a great Phase III study. And I know that they will have very good -- they have very good relationships with the agency, and they will make sure that they're not surprised at the end of this process.

Got it. Got it. You're going to learn from other people's setbacks, and you're going to drive a strategy accordingly. Maybe circling back on Fabry, I want to make sure we get the first look at this data toward the year-end. What are some of the biomarkers that we should be focused on? And how should we think about the bar for success for that data? Any thoughts there?

So the study, as always, is showing that it's safe and tolerable. That's the most important thing. Beyond that, by the end of the year, what we will be able to show is safety data, we'll be able to show alpha-Gal, we'll be able to show Gb3 and lyso-Gb3 within the plasma. We won't have biopsy data by the end of the year, and we won't withdraw the patients from their ERT. One has to remember that this is the first time the series of products that are moving through, first time that people have expressed alpha-Gal from the liver that is in the circulation and taken up by the tissues. So no one will be able to tell you, no one should try and tell you what the right level in plasma is. But what we want to see is a level that is greater than the normal physiological level. We want to see Gb3 in the plasma, lyso-Gb3 probably better starting to come down, and we want to see a benefit to the patient. And then moving forward, we will be doing renal biopsies once we've shown that there is an effective product. And then what we'll be doing -- sorry, in parallel to that, we'll be withdrawing the patient from the ERT and showing that they can maintain benefit on the gene therapy despite the absence of ERT. But this is not just a scientific cutting-edge that we're at is a clinical one. It's the first time we've done these experiment -- clinical experiments. So we really need to be patient and learn from every experiment. AVROBIO's study, for example, they didn't increase the alpha-Gal a great deal. It went up, but it didn't go up as much as I would have expected. And yet, they were able to show a reduction in Gb3 in the kidney. So since we're learning about the relationship between exogenously-produced alpha-Gal and Gb3, and that's what we need to understand through these experiments.

Got it. Got it. That's actually helpful. And then maybe since you mentioned AVROBIO, how should we think about differentiation versus them? Again, total different approach, usually CD34 positive stem cells versus you're doing obviously in vivo. But like they're slightly ahead, obviously. But how should we think about differentiations versus them?

It's very simple. The 2 need to be -- the 2 medicines need to be equally safe. They need to be as effective. And then what they need to do is -- then the differentiation is we don't need to ask our patients to go through apheresis preconditioning and have kind of bone marrow transplant process. If ours is as safe and as effective or similarly safe and similarly effective, it's a very simple choice for patients and for physicians. In the physician discussions, we've been happy. Increasingly, they're saying, if it was only -- if AVROBIO was the only thing, it would be great. But if there's a choice, if there's an alternative, I know what I would choose.

Makes total sense. Maybe sticking to Fabry and maybe AVROBIO, which is one of your competitors here, they recently announced that they obviously need to run a trial head to head versus Fabrazyme, given that Fabrazyme got full approval. What was your reaction to that news? And how should we think about implication for your program there?

Each one of us has to go and have the discussion with the agency. There is a complicated medicine that brings a unique set of risks to the patient having to go through the conditioning that the agency will decide on the benefit risk and decide what we expect to see of them to show efficacy and white label. We will have the same conversations with the agency. To accelerate that approval is still there, but the agency needs to agree with you. So we look forward to those discussions. I find -- I say this in every column on. I find the FDA to be logical and predictable. You just need to listen very carefully to what they're saying, rather than hope that they will change their mind.

Got you. Got you. Yes. No, that's helpful. And maybe last question from Fabry before we pivot to other programs. It's my understanding that you have not disclosed the doses that you're using here for the program. However, given that this is the same vector, still going after the liver, so somewhat similar to hemophilia A, is it fair to assume that you're going to use similar doses or not necessarily?

We made a deliberate decision after previous studies we did that we would talk about everything at the end of the study, that we will show all 3 doses and avoid people guessing, betting on what the next story is and whether the next one will work. You won't be surprised. We're not doing something that will make you follow up here. It's sensible doses. And they are sensible doses because we have learned, we have experience in hemophilia A. We have experience from the NPS studies. And we're now gaining a true depth of knowledge of how AAV6 works, which allows us to move into Fabry with confidence.

Got it. Got it. That's actually very helpful. Maybe pivoting to sickle cell and beta tau, obviously, we've seen bluebird bio here running into troubles with these cases of AML and MDS. It feels to me, there are 2 camps. There's a camp that is blaming the patients and the fact that patients with sickle cell disease have hyperplastic bone marrow. So these patients are high risk of developing these cases. However, CAMP-2, just probably where the medical community is, seems to be blaming more of busulfan, which we know is an oscillating agent that can cause AML and MDS. Are you camp A or camp B? And how are you thinking about implications for your program?

It goes back to what I was saying with AVROBIO. The whole preconditioning thing at risk. And therefore, the benefit risk of what you do has to be substantially significantly greater than the risk of the process. Our friends at bluebird and -- the CSO of bluebird used to work at Sangamo. So we know there are good people there, and they are doing good signs. And they've gone about the whole process with great patient focus and attention. So I think that's important to say. The evidence they've shown is -- it looks as if that could be something to do with the patient's condition. It is well understood that patients with sickle cell have red blood cell lineage tumor. So that is recognized. Is it the preconditioning? It's often think for a long time and this form of tumor is in common. Is it linked to virus? Bluebird use a SIN lentivirus with an unusual promoter cassette, and there -- they put a lot of it in. But lentivirus has been going for a long time safely. The challenge we all face in this field is it's small numbers of patients with significant disease that has got its own things that will happen because of the disease. And it's only when we follow these patients -- enough of these patients for long enough that we understand the 2 safety, and that's why the focus for now should be in significant diseases with a high unmet medical need. I see things about -- we're going to do an edited form of PCSK9. That's not appropriate now. It's not going to replace your status. But let's gain any evidence from patients with truly awful diseases like sickle cell. And let's follow for a period of time, and at that point, we'll understand the benefit of this. I will continue to use preconditioning in our sickle trial. We will watch the patients carefully, and all of those will make good patient-focused physician and partnership with the agency and the investee.

Got you. Got you. That's very helpful. I know we're kind of running up against time. I had a couple of questions here from the audience. So maybe I'll ask those before wrap. The first one is on Huntington, actually. Do you have any update on Huntington? Where does the partnership stand? Is there any time line or anything that you can share on that program?

That -- unfortunately, I can't share a time line. We -- Huntington went to Shire and Shire got acquired by Takeda, my -- a company I was a Chief Medical Officer at. And they're driving it forward, and we have regular conversations with them, but it will be then that we'll announce it. I think the size behind that is exquisite, and I know people who've followed Sangamo for some time will love that program. But unfortunately, the deal was done before my time, I would have kept it. And if Takeda ever want to give us it back, we would be delighted to have it because it is a more unique piece of science that only Sangamo can do.

Can you elaborate a little bit more on that? What's unique about that program? I'm not maybe as [ informed ] as I should. But maybe -- yes, go ahead.

So in Huntington. There is an expansion of a CAG repeat that happens in one allele, and the other allele, the other strand of DNA is normal. And you cannot just cut out that piece of DNA because it's believed unique normal huntingtin expression to survive. And what the Sangamo asset does is it lands on the mutant allele in terms of off while leaving the wild-type expressing. And that is just a unique thing that zinc fingers can do.

Got it. Got it. That's actually super helpful. And then one other question we have from the audience. This is maybe -- go back to the first question that I asked you. There's a lot of companies in the space now doing gene editing. It feels to me that maybe Sangamo at this point is being overlooked. It looks there is obviously a pretty sizable delta in market cap versus some of the other comps. What do you think people are missing here? What will be your perspective?

So we are confident in our technology and believe that what we have to do is focus on our clinical trials and deliver them and people understand the benefit of the technology. And of course, CRISPR is an exciting thing, and there has been great venture investment in it. But it's not just about ideas. What we're here to do is make medicines. And that's why with our 3 late-phase assets that could be in Phase III next year, we will be judged by them and not by me telling you the benefits of our science. It's very easy. It's an early stage to talk about the potential and dream of pure science. What's more important to patients is what it does clinically. And my experience is once medicines are in the clinic, that's all that matters. But we have an advantage at Sangamo that not only do we have those medicines in the clinic for you to judge us by, but we have a future based on a platform that I think is better than CRISPR, is frankly better than CRISPR. And time will tell, and we hope to show results at the end of the year that will convince people and truly see the -- as the 6 partners have done, the advantage of Sangamo zinc finger technology.

That is very, very helpful. I know maybe one last question for me, I want to make sure I keep you on track with the rest of your day. Obviously, as you mentioned, the company has an impressive track record of partnerships on favorable economics. I think you have $7 billion potential milestone coming down the pike. How are you thinking about BD going forward? What are the key priorities? How should we think about that?

We're always being contacted by companies who are interested in working with us. We have to make sure we drive forward our own proprietary programs. We have to make sure that we service and provide what is needed for our 6 partners. But we're always open to other discussions. We're not giving away things from our pipeline, though. What we're doing is adding to their pipeline. Novartis come to us and say, "Can you do these autism spectrum disorder genes that we haven't ever thought of?" So they're adding 3 new targets to our pipeline and allowing us to use our technology in a way through their expertise that will make a difference to patients. So we will only talk about the deal when it's happened, and we will always be open to making our technology available to people that have deep expertise.

Got it. This is super helpful. Unfortunately, we are running out of time here. We're 1 minute over. But Sandy, really, really appreciate your time. This was very, very insightful conversation. Look forward to a dialogue at a different time. But again, thanks again for joining us, and I hope you have a fantastic day.

Okay. Thank you very much. Bye-bye.

Thanks so much. Bye.