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

Hello, and welcome to the 2021 Annual Stockholder Meeting of Sangamo Therapeutics. Please note that today's meeting is being recorded. During the meeting, we will have a question-and-answer session. Stockholders of record and registered beneficial owners who logged on to the meeting center with a control number can submit questions at any time by clicking on the message icon. 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 2021 Annual Stockholder Meeting of Sangamo Therapeutics. 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 Executive Vice President and General Counsel, who is serving as the Secretary of the 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 to you for attending this annual meeting. We especially appreciate your attendance during these unusual and challenging times. We hope that you and your families are staying healthy and faring well as we get through these tough times together. The meeting will now officially come to order. The time is now 08:31 Pacific time on Tuesday, May 25, 2021, 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.

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 our transfer agent, Computershare. You can find and view certain company materials, including the proxy statement and the annual report for fiscal 2020, in the online meeting center. In addition, stockholders of record and registered beneficial owners can 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 relevant to the proposals and/or this meeting as time permits. Aron Feingold, our Head of Communications, will be reviewing incoming questions, and during the appropriate Q&A portions of the meeting we will read any questions germane to the meeting and the proposals presented out loud before we respond. Now Sandy, can you introduce the additional Sangamo representatives present?

Thanks, Gary. Yes, I would like to identify the members of the Board and the leadership team who are with us today. A majority of our Board of Directors is here, including our Board Chair, Ms. Stewart Parker; Mr. Robert Carey; Dr. Kenneth Hillan; Dr. John Markels; Ms. Saira Ramasastry; and Dr. Karen Smith. Other officers of the company in attendance today are Mr. Mark McClung, Dr. Andy Ramelmeier, Dr. Jason Fontenot, Dr. Bob Schott and Ms. Prathyusha Duraibabu. I would also like to introduce Mr. [ Royce Minazsis ] 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. [ Minazsis ] 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 4 proposals submitted for approval by our Board. We then plan to hold a brief Q&A session, after which we present the -- 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 will 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.

Thank you. 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 access at this meeting to a complete list of the holders of record of the company's common stock as of March 31, 2021, 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 access to affidavit certifying that on April 12, 2021, 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 would like to appoint Audrey Matheny from Computershare, the company's transfer agent, to act as inspector of election at this meeting. Ms. Matheny has taken and subscribed the customary oath of office to execute her duties with strict impartiality. We will file this oath with the records of the meeting. Her 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?

Yes. I have been informed by the inspector of election that proxies have been received for 108,505,193 of the 143,711,917 shares of common stock outstanding on the record date, which represents approximately 75.5% 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.

Thank you, Gary. On the basis of the affidavit and the 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. We will now describe each of the proposals up for vote. 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 this meeting, the business of this meeting is limited to the 4 matters on the agenda as described in the proxy statement. The first item of business is the election of the 9 nominees for director 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. Kenneth J. Hillan; Mr. John H. Markels; Mr. James R. Meyers; Dr. Alexander D. Macrae; Ms. H. Stewart Parker; Ms. Saira Ramasastry; Dr. Karen L. Smith; and Mr. Joseph S. Zakrzewski. Information concerning their principal occupations, their service with the company and other matters which may be of interest, are contained in the proxy statement.

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, 2020. 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 stockholders 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 of various compensation tables and the accompanying narrative discussion and any related material included in the proxy statement. Back to you for the third, Sandy.

The third item of business today is the approval of Sangamo Therapeutics, Inc., 2020 Employee Stock Purchase Plan or the 2020 ESPP. Approval of the 2020 ESPP will allow us to provide our employees with the opportunity to acquire an ownership interest in the company through their participation in the 2020 ESPP. If approved, the maximum number of shares of our common stock that may be sold and issued to employees under the 2020 ESPP will be 5 million shares, subject to adjustment for certain changes in our capitalization. A full discussion of the 2020 ESPP is set forth in the proxy statement, along with a complete plan as an attachment to the proxy statement. Gary, can you now describe the fourth matter?

Yes, Sandy. The fourth 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, 2021. 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 about the proposals before we close the polls. As a reminder, at this time, we will only review and answer questions that are pertained 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 annual report on Form 10-K. Aron, please advise if there are any questions?

There are no questions at this time.

I have been advised that there are no questions. The time is now 08:42 Pacific Time, and the polls are now closed for voting. Gary, may we have the preliminary voting results.

The preliminary report of the inspector of election covering the proposals presented at this meeting is as follows. The proposal to elect each of the 9 nominees for directors of the company's Board of Directors is carried. Number two, the resolution concerning the advisory vote on the executive compensation of the company's named executive officers is approved. Number three, the Sangamo Therapeutics, Inc. 2020 Employee Stock Purchase Plan, wherein 5 million shares of our common stock will be reserved for issuance and sale to our employees who choose to participate, is approved. Number four, the selection of Ernst & Young as the company's independent registered public account firm for the fiscal year ended -- ending December 31, 2021, is approved. We expect to report our preliminary voting results or, if available to us on a timely basis, our final voting results on the 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. And this concludes the formal portion of today's meeting, and the 2021 Annual Meeting of Stockholders of Sangamo Therapeutics is now adjourned.

We would now 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, which I will 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 annual report on Form 10-K for the year ended December 31, 2020. Over to you, Sandy, for the corporate update.

Thank you, and it gives me enormous pleasure to give you an overview of where we are as a company and then to take any questions that you have on this presentation. Can I get the next slide, please? We believe we are the leading genomic medicine company. We believe that this is composed of 3 parts: our novel science, our ability to execute clinically, and our ownership of in-house manufacturing, because we're committed to translating the groundbreaking science into medicines that transform the lives of patients. And this has been the mission statement of Sangamo since I took over in 2016. And it's our lodestar still, and it is what we are now delivering on. Can I get the next slide, please? When I say we, it's because we now have a remarkable management team with the addition of Prathyusha as our Chief Financial Officer, a moment that gives me great pleasure. Prathyusha has done a remarkable job in running our finance organization, and it is only logical that she becomes the Chief Financial Officer, and I hope you all get a chance to meet her in time to come. But if you look at the people here, what I have -- what we have created is a group of people with deep experience across a range of drug development and with the scientific understanding that is necessary for leading a company like Sangamo. And in the next slide, we are also guided by a great Board of Directors who are very supportive and understand our mission to be the genomic medicine company. I'm grateful to Stewart as our Chair of the Board. But I think -- I hope you can see when you look across this Board of Directors, that it's both people with the expertise in gene therapy and cell therapy, but also people with pharma experience, manufacturing experience, clinical development experience that I find gives me great guidance and support and moves the company forward. Next slide. We felt it was useful to put in a reflection on the governance processes within the company. We've got a Board that is both young and fresh, and 33% of them are women, and we have a diverse Board in many other ways. That's important to us at Sangamo, where 51% of the employees are women and 57% of employees identify as known point. We have compliance and ethics, and we have no legal liability. So we are in a very good governance, compliance and legal place. Next slide. We also felt it was important to reflect on COVID. And first of all, I want -- on behalf of all of the Board of Directors, I want to say a great thanks to the Sangamo staff who have continued to work throughout COVID. Our lab staff have been going in, and they have test once a week to be able to come into the building. They're socially distance. And on the few occasions where we've had cases of COVID, the facility staff have deep cleaned the facilities and less than a day has been lost to science or manufacturing. COVID has had a greater impact on our clinical trials as our hospitals and doctors turn to look after patients with this dreadful disease. But I'm pleased that the clinical team have moved forward with the Fabry trial, and that the TX200 trial is hopefully going to start recruitment later this year. Next slide. And this shows the quality of our portfolio. And what pleases me enormously is that it now has a Phase III asset with Pfizer moving ahead into hemophilia A; that we have real clinical assets in Phase I/II; 2 of which, Fabry disease and renal transplant, are run by Sangamo; and then the sickle and thalassemia by our friends at Sanofi. And behind that are a group of assets that reflect the pivot in Sangamo from gene therapy to application of our zinc finger technology. We believe that this gives us a unique advantage and leverages our science to make groundbreaking medicines. Next slide. And this drive forward with the portfolio, will be reflected in a series of catalysts in 2021. By the end of the year, we hope to be able to show you data from the 3 cohorts in Fabry disease. We hope to be able to show you good data with our friends at Sanofi on sickle disease and the long-term outcome of the thalassemia patients. We hope that, with Pfizer, we will show you the hemophilia data now in -- over the longer-term and update you on the enrollment and progress of the Phase III study. The renal transplant study will hopefully enroll the first patient later this year, and we will complete the manufacturing site. So we've announced previously, we have the AAV manufacturing completed at the end of last year, and we have cell therapy manufacturing in both Brisbane, California and in Valbonne. So 5 important events in the second half of this year. Next slide, please. I think it's important to reflect on the partnerships, which have brought to Sangamo $815 million received in cash, $7 billion in bio box and a diversity of big pharma established companies, and we love these partners. And what I want you to reflect on is 3 things. These projects would not be able to go ahead without our partners. There are only so many things that Sangamo can do ourselves. And therefore, we are able to take our technology and put it in the hands of others. And I think that is -- allows so many more diseases to be addressed and so many patient need to be solved. Each one of these companies brings an expertise. Biogen, we all know, is an expert in Alzheimer's. And I think it's the best way to move that medicine forward is to give it to a company that has biology, clinical and commercial expertise in that disease area. And we gained from this as well by not just in the financial partnership, but in the diligence that they do, gives us the credibility. Because each one of these companies spent months looking at our technology and deciding who they were going to choose, where they going to choose some of the other editing mentalities or where they going to choose Sangamo. And I think this is -- rather than my words, this is the best representation of the quality of our science and the potential of our platform. So if we now move to talk about the programs, can we move 2 slides on, please? And again. Thank you. So the first program that I want to talk about is Fabry disease, ST-920, which is AAV-mediated gene therapy for Fabry disease. Fabry where there's lack of alpha-Gal leads to all kinds of consequences in life expectancy, renal disease, cardiovascular disease. And we've shown some very encouraging preclinical data that we can put AAV in the liver, which then produces alpha-Gal, which is taken up in all the tissues. And in the most studies that we've previously reported is able to ameliorate the disease and get rid of Gb3, which is a substrate. We've dosed 3 patients. We've guided that we had enrolled a fourth patient. We will do the third cohort by the end of the year, and we'll show you the data there. Now the patient promise here is this is a onetime IV infusion and no preconditioning regime. There are others moving in this area that are behind us. And there's also AVROBIO, which is a cell therapy medicine. We believe that this onetime IV infusion and no preconditioning regime, if our product is seemed to be safe and effective, has got the potential to deliver enormous benefits to patients. Next slide, please. Later this year, we will enroll the first patient with TX200, which is the first autologous CAR-Treg for renal transplant. So these are patients that are getting a live donor of renal transplant, where the kidneys that are being given is actually A2 positive and the patients are HLA-A2 negative. And we give them, after the transplant, a CAR-Treg from their own Treg cells, as being engineered with a CAR for HLA-A2. The only place that this Treg will be activated is in the kidney. And we hope that we'll be able to demonstrate that the CAR-Tregs go to the kidney are activated there, survive there. And we hope to be able to eventually back off on the immunosuppression and really demonstrate the effectiveness of CAR-Tregs. But as you can see on this slide, that's only the first step. That is the most important first step, but it's only the first step. From there, we go to allogeneic CAR-Tregs where we are able to create a much more accessible off-the-shelf version of the CAR-Tregs to many more patients. And that will take us into allogeneic HLA-A2 mismatch renal transplant to multiple sclerosis and to inflammatory bowel disease. And the work on those is ongoing in parallel to the autologous program. And finally, the autoimmune world is a our oyster if this works. If we can show that it works in any of these indications, that will be defining for the future of the company. And it takes us into things like hepatitis, Crohn's disease, rheumatoid arthritis, enormous unmet medical needs where we feel our CAR-Tregs can make a difference. Next slide, please. And we're already making a difference. Our friends at Pfizer are driving forward with giroctocogene fitelparvovec. And having seen how Pfizer have dealt with the coronavirus vaccine, it is an enormous pleasure to watch such a professional organization drive forward globally into Phase III. And so we look forward to continue to show you data from this. But until we see the Phase III data, I think we need to hold fire. And the patient benefit will be demonstrated with the substantial number of patients in Phase III. The primary endpoint is annual bleeding rate through 12 months, and we'll be measuring Factor VIII replacement. I look forward to seeing the study, and I know it's in very good hands. Next slide, please. Finally, in the product review is our CNS portfolio, which truly leverages our ZFP technology, and this is instead of using nucleases to make a double-stranded break, it's using zinc finger repressors or in the case of Novartis enhancers to control gene expression. And the specificity and exquisite effectiveness of this is really remarkable, whether it's Pan-Allele for 1,000 Alzheimer's alpha synuclein in Parkinson's; or turning the gene on for autism spectrum disorders with Novartis; or allele specific, where only touches one allele for Huntington's with Takeda; or [ CI North ] with Pfizer; or epigenetic editing or inflammation or mitochondria, the number of things that we can do here is legion, and we are building a CNS team that will not only support our partnership programs, but allow us to drive forward things ourselves. Next slide, please. And again, if we go to Slide 18, please. So what are the key points in our story for 2021. We understand that you support and love our science and the potential for our science. But we know that this year, it's about executing on our clinical stage pipeline. It's about Pfizer making sure that they're driving forward with hemophilia A. It's about Sangamo showing the results of Fabry disease at the end of the year. It's about Sangamo, with its wholly owned CAR-Treg program in renal transplant, starting that journey at the end of this year by enrolling the first patient. And it's about Sanofi talking about sickle, which is enormous potential to treat a dreadful disease and beta-thalassemia at the end of the year. This is what our focus is. This is what we talk about on a daily basis. Next slide, please. It's all underpinned by manufacturing. I'm often asked, has the agency's view on gene therapy and genomic medicines changed? And I say no, but now the reality is setting in. And the reality is that you -- the standards for manufacturing these are high, and it's something new for all of us to be learning, where I have a great manufacturing team. But more than that, we now own our own fate and manufacturing. We have in-house Phase I/II GMP facilities for AAV manufacturing in Brisbane. And by the end of the year, we will have cell therapy, GMP approved facilities, both in Brisbane, California and in Valbonne, France. The reason for doing that is the processes of product so much in these genomic medicines, and therefore, having our manufacturing facility cheek by jowl with our research scientists, allows us to minimize the time and maximize the quality of the product. We can't do this alone. And we have a long-standing, excellent relationship with the CDMO, Thermo Fisher as well as Brammer Bio and dedicated access to AAV capacity up to 2,000 liters. Next slide. So what I want you to take away from today's presentation is a company that has grown and a company that is delivering, a company that has a broad portfolio with prioritized candidates in rare and large indications, a technology that we continue to develop that is validated from biopharma partners. We have a strong balance sheet. We have approximately $630 million as of March 31 that will allow us to go through these catalysts and allow us to make investments in manufacturing and science that will take us to the future. Our in-house cGMP facility provides us capacity flexibility, but most importantly, control. And I think we truly have become a genomic medicine company that is executing on a clinical stage pipeline. We will now address the questions that were submitted by our stockholders that are germane to the meeting.

We have no questions at this time.

Thank you. And that is -- thank you again for your attendance at today's meeting and for your continued support of Sangamo Therapeutics.

This concludes the 2021 Annual Meeting of Stockholders of Sangamo Therapeutics. You may now disconnect.