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

Good morning, everyone, and thank you for joining us for the fireside chat for Sangamo Therapeutics. A quick note before we get started. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Very pleased this morning to be joined by the CEO of Sangamo, Sandy Macrae. And Sandy, I'll turn it over to you. And perhaps we can maybe just get a brief overview of Sangamo before we start talking, going into some Q&A.

Good morning, Ashwin, and thank you for introducing me, and it's a pleasure to be here with Morgan Stanley. And it's a pleasure to present Sangamo Therapeutics. Sangamo is a fascinating company. It's a genomic medicines company with 3 medicines in pivotal clinical trials. But behind that is a platform of genomic editing and genomic manipulation that allows us to choose amongst a range of diseases and apply our groundbreaking science to important medical problems and translate that into medicines for patients. So as I say, this is a very important year for Sangamo. At the end of this year, we will have 3 products that have the potential to get into Phase III. They are a hemophilia A medicine that's in trial with Pfizer. And Pfizer are very pleased with the recruitment for their Phase III trial that will start next year, and they'll show longer-term data on that hemophilia A medicine at the end of the year. We also have a partnership with Sanofi, and Sanofi have guided that they'll show data from the sickle cell study at ASH at the end of this year. Now, that has an enormous potential for an important disease. And hopefully Sanofi will move it forward into Phase III next year. And finally, at Sangamo, we have a wholly owned Fabry medicine. We've recruited 4 patients into that trial. The SMC has told us we can move into the higher dose cohort. We have patients -- line of sight to patients for that cohort. And we hope to be able to share the data with you as soon as those patients have been recruited and dosed and have had enough time to show the clinical effect. But those are 3 exciting things for a company that has an enormous future behind those. But there's a reality now. It's a reality of clinical medicines that are making a difference to patients. We're often asked what makes you excited about at Sangamo. And it's the potential of the company. Because behind those 3 medicines is a range of scientific endeavors that we think will make an enormous difference to patients and to shareholders. The first one I want to touch on is the Treg program. In 2018, we bought a company called Txcell in France and have applied our editing capability to their understanding of Tregs and then married that with a GMP facility, both in Brisbane, California and in Valbonne in France that allows them to be able to manufacture high-quality Treg medicines -- CAR-Treg medicines. And by the end of the year, both those facilities will be at GMP readiness. Now, our first endeavor in the Treg space is HLA-A2 TX200, which is looking at mismatched renal transplants. And we plan to enroll the first patient this year. And that will allow us to understand that the CAR-Tregs are localized to the kidney, activated in the kidney and give us a whole range of biomarker data on the activity and the potential of Tregs. Because behind that, we have a number of important programs in both multiple sclerosis and in inflammatory bowel disease. And if Tregs fulfill their promise, they have the potential to be paradigm changing in the field of immunotherapy, as important as CAR-Ts seem to be in oncology, but with much broader indications, and we're very excited by that potential. And then finally, we have our zinc finger platform, which grows in leaps and bounds and has been evolved and adapted by the team in the time I've been at Sangamo. So, as we can attach a range of things to the zinc fingers and allow whether it's editing, transcription control, base editing, recombinators, allows us to a whole range of features that would take many of our competitor companies to all roll into one. We have licensed that to partners. Last year, we did the Biogen and Novartis deal, which takes us into neuroscience. But we, in total, we've done 6 partnerships that brought in, in my time at Sangamo, $815 million in upfront, $7 billion in buy box. And those milestones and buy box are near-term and real. Hemophilia is going to start in late phase studies and start giving money and revenue to the company, sickle cell too. But if we focus on the -- the early work is in neuroscience, and we feel that with our technology and the transcription control, we have a unique opportunity to control the expression of genes in the brain. It's not as simple as editing them because the brain cells don't turn over as rapidly as cells -- or if they do, as rapidly as cells elsewhere in the body. And therefore, the transcription control of the zinc finger oppressors and enhancers have a unique advantage in being able to control non-dividing cells and control the expression of tau as an [ nuclein ] for Biogen or for a range of targets for autism spectrum disorder for Novartis. Our partners look at our technology and compare it to others and choose Sangamo, and I think that's one of the greatest validations. And because we've built a neuroscience group to support our partners, we can also drive forward the targets ourselves. And we have a number of targets using the oppressor activity in development in Sangamo that will be proprietary owned neuroscience targets. So if you wrap all this together, you have a well-capitalized company with $579 million in the bank at our last quarterly call, with GMP manufacturing for AAV for cell therapy both here and in France, with near-term assets providing catalysts at the end of the year, with a future that is so exciting in Tregs but underpinning all incredible signs that creates a platform that is future protected and can take us into all kinds of areas of importance. So I think Sangamo is in great position, and I'm so excited to be leading it.

That's a great overview. Thank you, Sandy. And maybe we'll start with a couple of broader topics before honing in on some of the programs. It would be great if you could just describe a little bit of the zinc finger platform, why it's different than CRISPR, how one should view some of the other technologies that are out there relative to the zinc finger -- the ZFN platform.

It's so exciting to see how this field has evolved and the progress of our technology and our friends at the various CRISPR companies. Why do I believe zinc finger is the right one to do? I like it because it is modular, unlike CRISPR, we can attack any nucleotide in the gene. We're not constrained by PAM sequence because CRISPR -- each of the different CRISPR forms can only attack a percentage of sites, maybe 10% of the sites in the genome. It's small. It's about 1/10 the size of CRISPR, and that makes it easier to package. But it also means that it's easier to get within the genome -- underneath the chromatin, put it simply. We can -- if you give us a target, within 7 to 10 days we can come up with a range of options, and that allows us to choose the best one, and that allows us to minimize our target, and it allows us to tune our technology to give the best clinical asset because it isn't about doing a quick experiment on a postdoc lab. This is about making medicines that will go into patients and that you need to take the time to come up with the best industrialized technology. And in our time at Sangamo, what we've done is ask the scientists to move from being scientists in a postdoc lab to being -- to creating an industrial machine that allows us to support 20 subtle projects across 6 partners and our own internal regime. So we're moving increasingly to robotics and multiplexing so as we can drive our technology forward. So what's important in editing. It's about efficacy, and our efficacy is great. We show 90% efficacy to editing. It's about off-target and ours is at the level of detection. And it's about which nucleotide you can access, and we think we can access more than anyone else.

That's great. Okay. Great. I'd like to spend a few minutes on the CAR-T program, the CAR-Treg program, maybe just understand a little bit of what edits you make, what kind of engineering you're doing here to the CAR-Tregs to get them to be efficacious. Maybe we can spend a second on that and what proprietary technology you brought to bear and what you can share on that.

So the first program that's moving into the clinical study is active at the moment and it's enrolling. It's an HLA-A2 mismatched renal transplant. So this doesn't use zinc fingers. It puts -- it's an autologous program and it uses lentivirus to put CAR for HLA-A2 into Tregs. So the patient is due for a renal transplant, healthy donor renal transplant, the patient is HLA-A2 negative, and they're getting an A2-positive kidney. Surprisingly, that happens in 20% of renal transplants. So it's a very common event. Before the transplant, we [ pharese ] the patient, we add the CAR for HLA-A2 into the Tregs. The patient has the transplant, they're allowed to recover and then we give them back their Treg cells, which are now honed and will home into any tissue in the patient that is HLA-A2 positive. And the only tissue in the patient that's A2 is the transplanted kidney. The CAR-Tregs go there, they're activated, they expand because of that activation and we hope that they reduce any immune reaction and inflammation and that the patient eventually will be able to back off on their immunosuppression. There's good data looking at polyclonal Tregs without a CAR attached that suggests that this is possible in renal transplants, study called the [ ONE ] study published in the Lancet that gives us hope. Future projects, we hope to move from an autologous approach to allogeneic, and that's where the zinc fingers come in because we're then able to edit parts of the Treg to make it as allogeneic as possible and allow us to combine the Treg understanding of the staff in France with the editing of the people in California here and manufacturing. And I want to emphasize the manufacturing piece. There are now 6 Treg companies that have appeared in the time that we've been doing this. And so there's a great excitement in this field. My challenge to them all is make sure you think about process development and manufacturing because that's the piece that is most important in cellular therapy. And it's where we've invested significantly ahead of time because we understand the industrial nature of what we're doing.

Terrific. Thank you, Sandy. So maybe we can spend a second just in terms of -- you nicely described the autologous to allogeneic. Could you just talk about why you picked this mismatched kidney transplantation is the best first indication and what one could hope to learn from that that would allow you to move then into some of the other indications you described?

So these projects are running in parallel. So we have started a huge amount of work on CAR-Tregs for MS with [indiscernible] and inflammatory bowel disease with IL-23R. So that -- and also creating allogeneic Tregs. So that work is ongoing. In parallel to that, we're doing the work with autologous HLA-A2 mismatched renal transplant. And that will inform so many things. And there's always 2 pieces to the experiment for CAR-Tregs is, does the CAR-Treg go to the antigen of choice? Is it activated? And does it have a biological effect? And then the second part of that experiment is, does allogeneic work in Tregs. And so the advantage of the real transplant study is we ask only one of the questions. It's only the one about the effectiveness of the CAR-Tregs. We like renal transplant because it's very clear what the target of the tissue is, it's very clear that there's one organ that we need to focus on and it's very clear that we can do biopsies of that kidney, that transplanted kidney and be able to look at the localization, activation and persistence of the Tregs in the kidney itself. So it has several great advantages. My hope is that this will be a real benefit for renal transplant patients and be a medicine in its own right. But in the time frame that we get the data from that, it will inform us on the likely chance of success and the [ routes ] to that success will be the Treg programs. I'm afraid you're on mute or your...

Sorry, you're right. One question from the audience here. Are there any other things besides being allogeneic that you're looking at? Are there things like kill switches, phenotype blocks, et cetera, that might make sense? Or how do you think about what other edits might be possible in the future here? Or what other modifications might be possible?

That's a great question. And as we can edit any nucleotide, any gene in the genome, the range of things that we can do is legion. So the world of -- this is the first time anyone selling CAR-Tregs. I think we need to keep the experiment simple and logical to be able to answer it in stages. What makes a Treg allogeneic is an interesting question, and we're doing a lot of work to better understand that. And you can create allogeneic Tregs either by taking healthy donor [ cells ] and editing them to be allogeneic or by converting IPSCs into Tregs and in that process making them allogeneic and which has the advantage of scale, but also that you're able to choose specific clones that have all the edits that you've chosen to [ fit in ]. Now we haven't said specifically what it is we're doing to the cells to make them allogeneic. That is a competitive landscape that each company has slightly different views. And I think if you look at the CAR-T oncology space, you'll see that everyone has a different view what allogeneic is. Allogeneic is even more important in Tregs. In oncology, you probably want an effect for a short time, kill the tumor, and then it doesn't matter if the cell survives. In Tregs, you want a long-term effect because the patient's condition can be controlled over the long term. And therefore, the allogeneic part of it is really important, and we will learn from oncology, but we're doing fundamental work to understand that in our labs in California and France.

Thank you, Sandy. Great.

We haven't talked -- and just to answer the question specifically, we have not added any switches or gadgets within the cells that would allow us to control them. One day that will be possible. I think we're a long way from having things that can switch on and off cells at this point.

Thank you. Understood. Maybe now I'll switch gears to the hem A program. Would love to just understand a little bit more on the background, including the vector, how is it potentially differentiated from others that are out there. And then would also like to get your take just on the recent FDA AdCom on the AAV gene therapies and what you make of that and what it means...

Sure. So let me start with Factor VIII. So Factor VIII [ hemo stability ] program that's partnered with Pfizer is AAV6, and it includes the truncated form of the hemophilia A gene. And nowhere in the clinic we have data from the 5 patients of the [ CE13 ] 13 dose. It has a -- looks like it has an effect that is beneficial for patients. And Pfizer is going to show the data from 2 years at the end of this year. And so I'll leave it to our friends at Pfizer to show that data and discuss what they see in the results. They are already recruiting rapidly through the Phase III study, and they've guided that they'd like to show some pivotal data by the end of next year. Switching to the FDA general AdCom that they held. I thought that was a good meeting. I thought it was an important meeting for them to hold because each company only has a small piece of the pie and only a few patients to be able to understand. And therefore, having a forum where everyone can come together and have those discussions is a good thing. It's one of the roles of the agency. Were there any great aha moments? I don't think so. There weren't any -- there wasn't anything that will fundamentally change what we're doing at Sangamo. The things that we talked about, integration of AAV, is something that we think has only been really seen in mice, and it isn't something we've ever been able to see in larger species with our vector. And in fact, we use that as a negative control. The safety and hepatotoxicity is an important thing to look at. Again, we do very careful safety studies to make sure that there is no problem. The dorsal ganglion effect is fascinating and important. But one wonders that it is something to do with particular vectors, particular promoters and whatever is that the transgene is being expressed. But it's something that we look at with every program that we do and make sure that there's no impact on the dorsal root ganglion. So I think it was a good discussion to have. And it shows how seriously the agency is looking at this field. And we have people attending it, and we're very pleased with where it ended up.

Great. And maybe we'll shift to Fabry disease for a second. Obviously, you mentioned at the start, we've got a study ongoing here. What efficacy signal are you looking for? I know safety and tolerability is part of this, obviously, but I'd love to just understand what you're looking for in efficacy, what gives you confidence in the program.

Yes. We're very excited at this program. We've dosed 4 patients in 2 cohorts, and we have line of sight to the patients. So we will dose in the third cohort. As you say, safety and tolerability is the most important thing, that our patients are safe is core to who we are at Sangamo. There are many ways to measure effectiveness of -- in a Fabry trial. The obvious one is alpha-gal. And so we want to see production of alpha-gal. [ I get asked ] what number is the magic number that says that it's worked. Our construct in mice showed remarkable efficacy with multiple, hundredfold greater effectiveness compared to the control. This is the first time that anyone has looked at the levels of production of alpha-gal from the kidney released into the circulation and taken up by the tissues. And so it can't be directly compared to the normal physiological state because in normal physiological state, it's produced in the tissues and leaks out into the plasma fluids and eliminated. So you're not comparing apples with apples. I was very intrigued by the AVROBIO data where very small increases in alpha-gal translated to effects on Gb3 in the kidney. And so I don't have a value that I'm going to decide is the cutoff for success or not. I need to see a reliable effect, I want to see that it's sustained and then I'll look at other things such as the lyso-Gb3, if a patient comes in with a lyso-Gb3 that's high enough to see a decrease. I want to hear what the patient feels. And eventually, we'll move forward into renal biopsies that will help assure that it's been cleared for the kidney.

Thank you, Sandy. I think a lot of people -- switching gears again for a second here. I think a lot of people took notice of the Biogen partnership, and you walked through a little bit about that. Would love to just hear, are there other things that you would consider partnering. Are there other partnerships you might strike? Just your general approach to partnerships would be great to understand.

We're trying to build a fully integrated genomic medicines company. And so we will take things forward to eventually take them through registration and commercialization, but it has to be the right medicine to set up a company. Setting up a sales force around a single asset is not always the wisest thing to do. And therefore, we need to choose carefully what are the things that we can look after ourselves. We did partnerships for the upfront, certainly because that's helped fund the company with $815 million in the past 5 years. But it's also because they bring biology, they bring an understanding and bring the clinical expertise that gets us to patients quicker. We're always happy to talk to people about potential partnerships because we want to apply our science to clinical problems as often as possible, and a company our size can't do that alone. You have to do it with partnerships. Now, whether that's with our -- with new partners or with our existing partners, we just did a survey of our existing partners, and they described their relationship with Sangamo as I think it was 85% -- 85% of those questions said we were either above-average or their best partner. And that's important to us because they've looked at us, decided our technology is the best, and we are putting our technology in their hands. So that -- those relationships are very important.

Great. And you walked through the Biogen partnership and obviously, great to open up CNS for this. I was just wondering if you could give us any sense of progress in the partnership now that it's been -- it's initiated and anything that we should watch for in the kind of coming months and beyond.

So, it's making great progress, both the Biogen and Novartis ones. One of the clauses in any deal like this is that the partner talks of a progress because it's their medicine, and they want to control the -- how they tell and what they say. So Biogen continues to choose targets from us, which is excellent. We met with Novartis 2, 3 months ago and with Jay from the head of [indiscernible]. They are very pleased with our progress as well. So things are moving forward. We're pleased with our science and our partners will talk about the progress publicly.

Great. And then just one last question I think we have time for. This comes from the audience. Just curious about in vivo editing and how you think about that broadly and also with the Sangamo platform.

In vivo editing is where we're all headed. The -- to do cell editing, particularly to do autologous is a solution for now, but it cannot be the long-term solution. It doesn't allow you to do large diseases at scale. We showed with our MPS trial that we had achieved editing, but it wasn't good enough. It wasn't sufficient to give the patient the benefit that they deserved. And we believe that we just didn't deliver enough of each of the 3 components to the cells. I think the Intellia data is wonderful and congratulations to them, but that's because they've used a different form of delivery. And that, to me, is the whole solution here. It's all about delivery. It's whether you have an AAV that can get enough into cell or use something like LMP and RNA purification. But I would suggest to you that Sangamo is still in in vivo editing, but the work we're doing with Biogen, Novartis [indiscernible] opportunities is in vivo editing because editing isn't just making a double-strand to break. It's about editing, it's about controlling genes. And that's what's our [ TOE ] program, our [indiscernible] program, our Huntington's program, our internal CNS programs all do. So I think the idea that editing is a nucleus making a double-stranded break is a very simple view of what editing looks like and the future is much more complicated than that or much more sophisticated than that.

Thank you, Sandy. That was great clarification and color, and very much enjoyed having you today. And I think that's going to wrap our session.

Thank you very much, Ashwin.