Sangamo Biosciences' CEO Discusses Q4 2013 Results - Earnings Call Transcript

| About: Sangamo Therapeutics, (SGMO)

Sangamo Biosciences, Inc. (NASDAQ:SGMO)

Q4 2013 Earnings Conference Call

February 11, 2014 5:00 PM ET


Elizabeth J. Wolffe – Head-Investor Relations and Communications

Edward O. Lanphier – President and Chief Executive Officer

Henry Ward Wolff – Executive Vice President and Chief Financial Officer

Geoffrey M. Nichol, Executive Vice President-Research & Development

Philip D. Gregory – Vice President-Research and Chief Scientific Officer


Charles C. Duncan – Piper Jaffray, Inc.

Heather A. Behanna – JMP Securities LLC


Good afternoon and welcome to the Sangamo BioSciences Teleconference to discuss Fourth Quarter and Full Year 2013 Financial Results. This call is being recorded.

I would now like to pass you over to the coordinator of this event, Dr. Elizabeth Wolffe, Senior Director of Corporate Communications.

Elizabeth J. Wolffe

Thank you, Charlotte. Good afternoon and thank you for joining Sangamo’s management team on our conference call to discuss the company’s fourth quarter and full year 2013 financial results.

Also present during this call are several members of Sangamo’s senior management, including Edward Lanphier, President and Chief Executive Officer; Ward Wolff, Executive Vice President and Chief Financial Officer; Geoff Nichol, Executive Vice President of Research and Development; Philip Gregory, Vice President of Research and Chief Scientific Officer and Dale Ando, Vice President of Development and Chief Medical Officer.

Following this introduction, Edward will highlight recent activities and the significant events from the past quarter; Ward will then briefly review fourth quarter and full year financial results for 2013, as well as our financial guidance for 2014; Philip will provide an update on our ZFP Therapeutic programs and finally, Edward will update you on our goals for 2014 and beyond. Following that, we will open up the call for questions.

As we begin, I’d like to remind everyone that the projections and forward-looking statements that we discuss during this conference call are based upon the information that we currently have available. This information will likely change over time. By discussing our current perception of the market and the future performance of Sangamo with you today, we are not undertaking an obligation to provide updates in the future.

Actual results may differ substantially from what we discuss today and no one should assume at a later date that our comments from today are still valid. We alert you to be aware of risks that are detailed in documents that the company files with the Securities and Exchange Commission; specifically our quarterly reports on Form 10-Q and our Annual Report on Form 10-K. These documents include important factors that could cause the actual result for the company’s operations to differ materially from those contained in our projections or forward-looking statements.

Now, I’d like to turn the call over to Edward.

Edward O. Lanphier

Thank you, Liz. And thank you all for joining us for our conference call to discuss our fourth quarter and full year results for 2013, as well as our near and mid-term plans for the development of our ZFP Therapeutics pipeline.

The fourth quarter of 2013 was extraordinarily busy, which was a fitting and exciting end to a truly transformational year for Sangamo, a year in which we made significant progress in moving both our clinical and preclinical programs forward, bolstered our delivery core competencies with the acquisition of Ceregene, a company with valuable AAV and Neuroscience assets and completed a significant financing.

Importantly, this momentum was carried through into the New Year setting the pace for an even more eventful 2014. As most of you are aware, we began this year by announcing an important partnership with Biogen Idec to take our hemoglobinopathies programs to clinical trials and into commercialization.

I’d ask Philip to provide you with more details about the approach that we are taking forward with Biogen to address both sickle cell disease and beta-thalassemia and the important preclinical and the manufacturing data that we recently presented at the Annual Meeting of the American Society of Hematology or ASH.

Additionally, I’ve asked Philip to summarize one of our most important presentations at ASH, the proof of concept data in non-human primates for our In Vivo Protein Replacement Platform strategy. Like our approach to beta-thalassemia and sickle cell disease, this approach is also designed to cure, not just treat symptoms and is broadly applicable to a range of monogenic diseases that are currently treated by repeated administration of recombinant enzymes to replace those proteins that are defective or missing in patients with these diseases. The platform forms the basis of both our partnered program in hemophilia with Shire and our proprietary programs in lysosomal storage disorders or LSDs.

As we have said before, our goal is to file two INDs on our partnered hemophilia program in 2014, and a further two for our proprietary LSD programs in 2015. In addition to a very busy ASH, another fourth quarter scientific meeting that was an important venue for us was the Annual Meeting of the Society for Neuroscience or SFN, at which we presented data for the first time from animal models of Huntington’s disease.

These data were very well received and provided evidence of our progress in this exciting program. As I have mentioned before, we expect to file an IND application for our Huntington’s program, which is partnered with Shire in 2015. At a meeting accompanying SFN, the sixth clinical trials on Alzheimer’s disease meeting Phase I clinical trials – Phase I clinical trial data of CERE-110, an AAV gene therapy approach designed to deliver nerve growth factor or NGF for the treatment of Alzheimer’s disease were presented.

This novel product was developed by Ceregene, which we acquired in August. The data from this dose escalation study demonstrated the delivery of CERE-110 into the brain results in the long-term expression of bioactive NGF and as the treatment was well tolerated at all dose levels. While the sample size was too small to draw any statistically significant conclusions about efficacy; clinicians did observe stabilization of brain cell metabolic activity in treated subjects, which may reflect a slowing of cell deterioration.

These data from the CERE-110 study were sufficiently encouraging to support further testing, which is ongoing in a larger 50 subject Phase II clinical trial designed to evaluate efficacy. The trial was currently in the two-year follow-up phase and we look forward to presenting data from this clinical trial in 2015.

Also in December, we presented data from all cohorts of our ongoing Phase II studies in HIV, which were designed to maximize the engraftment of ZFN-modified CD4 T-cells in which both copies of the CCR5 gene are disrupted, so-called bialleleic modification, using either Cytoxan preconditioning in the study SB-728-1101 or treatment of CCR5 delta-32 heterozygotes in SB-728-902 Cohort 5.

The data supports the use of Cytoxan as a method to increase the engraftment of biallelically modified cells. They also consolidated our previous observation of a statistically significant relationship between levels of such cells and a reduction in viral load in SB-728-T-treated subjects during a treatment interruption from their [antiviral] (ph) therapy or ART. Studies are ongoing in a further six subjects to test higher doses of Cytoxan and we expect to report those data later this year.

As I discussed in our JPMorgan Conference Presentation, using these data and optimized inclusion criteria based upon cumulative responder analysis, we plan to expand the SB-728-1101 study at the most effective Cytoxan dose and treat an additional 12 subjects with the goal of generating clinical proof of concept data demonstrating functional control of HIV. Other data presented in December extended our observation of a reduction in the HIV viral reservoir and perhaps, most impressively, we observed reduction in the reservoir over a period of three years in nine out of nine HIV infected subjects.

Keep in mind that this is from a single infusion of SB-728-T and in subjects with a median duration of HIV infection of 21 years and baseline CD4 counts of less than 500 cells per microliter prior to SB-728-T treatment. This is a truly impressive and unprecedented observation.

We also presented new data demonstrating sustained control of HIV viral load at or below limits of detection for 20 weeks at last measurement in an SB-728-T-treated HIV infected subject who was on a treatment interruption from ART. This CCR5 delta-32 heterozygote subject is enrolled in the SB-728-902 Cohort 5 study and I’m pleased to report today that this treatment interruption is ongoing.

As I also mentioned at JPMorgan, we will update on our ongoing trials in presentations at the Conference on Retroviruses and Opportunistic Infections or CROI in early March, as well as provide an update on our specific program plans for the rest of this year. So as you can see, we had a very busy end to 2013 and began the New Year with a significant new partnership. Our collaborative agreements and last year’s financing have had an important positive impact on our financial picture, both for this year and as we successfully meet our development goals in the years ahead.

And on that note, let me hand the call over to Ward for an update on our fourth quarter and full year 2013 financial results, as well as our financial guidance for 2014. Ward?

Henry Ward Wolff

Thank you, Edward and good afternoon everyone. As you know, after the close of the market today, we released our financial results for the fourth quarter and full year ended December 31, 2013, and I am pleased to review the highlights of those results. Revenues in the fourth quarter of 2013 were $6.9 million, compared to $8.9 million for the same period in 2012. Fourth quarter 2013 revenues were comprised of revenue from Sangamo’s collaboration agreements with Shire, Dow AgroSciences, and Sigma-Aldrich, as well as approximately $260,000 of revenue from research grants.

As we mentioned in the press release, the decrease in collaboration agreement revenues from the year-ago quarter was primarily due to the timing of reimbursable research services from the company’s collaboration and license agreement with Shire.

Pursuant to the agreement, Sangamo received an upfront payment of $13 million, which is being amortized on a straight line basis over the initial six-year research term of which the company recognized $500,000 as revenue for the fourth quarter of 2013. Sangamo also recognized $2.9 million of revenues related to research services performed under the collaboration agreement with Shire in the fourth quarter.

Total operating expenses for the fourth quarter of 2013 were $15 million, compared to $12.3 million for the same period in 2012. Research and development expenses were $10.8 million in the fourth quarter of 2013 and $9.3 million for the prior year quarter. The increase was primarily due to increases in personnel-related expenses, including stock-based compensation, and external research expenses associated with our preclinical programs.

General and administrative expenses were $4.2 million in the fourth quarter of 2013 and $3 million for the same period in 2012. The increase was primarily related to increases in personnel-related expenses, including stock-based compensation and professional services expenses related to the Biogen agreement and the acquisition of Ceregene.

Non-cash stock-based compensation expense was $2 million for the quarter with approximately $1 million each in research and development, and general and administrative. For the fourth quarter of 2013, we reported a consolidated net loss of $8.1 million or $0.13 per share, compared to a net loss of $3.5 million or $0.07 per share for the fourth quarter of 2012.

For the full year 2013, revenues were $24.1 million, compared to $21.7 million in 2012 with the increase primarily due to Sangamo’s collaboration agreement with Shire. Total operating expenses were $50.8 million in 2013, compared to $43.9 million in 2012 with the increase primarily attributable to internal and external research expenses associated with our preclinical programs. The net loss for 2013 was $26.6 million or $0.48 per share, compared to a net loss of $22.3 million or $0.42 per share for 2012.

Turning to the balance sheet, I am pleased to report that as a result of our September financing and careful stewardship of our resources, we ended 2013 with $131.8 million in cash, cash equivalents, short-term investments and interest receivable. Our net cash used in operating activities was $19.5 million for the year.

Our ending cash position exceeded our financial guidance for 2013, which was to end the year with at least $125 million in cash and equivalents. similarly, our revenues for the full year 2013 came in at the high-end of the guidance range and our operating expenses likewise, again, due to our continued investment in the preclinical pipeline and professional services expenses related to the Biogen agreement and the acquisition of Ceregene.

With respect to financial guidance for this year, we expect to have a cash and investment balance of at least $135 million at the end of 2014, inclusive of research funding and milestones from Shire and Biogen, but exclusive of any new funding from a partnership or other sources.

We also expect 2014 operating expenses to be higher next year in the range of $65 million to $70 million and revenues to be in the range of $45 million to $50 million. This includes the research funding for internal and external research program related costs from Biogen and research funding and potential milestone payments from Shire.

For the purpose of revenue guidance, we will continue to ratably amortize the upfront fee from Shire into revenue over six years, the initial research team – term provided in the Shire agreement and will treat the upfront payment from Biogen in a similar manner, amortizing the $20 million fee on a straight-line basis over a period of approximately four years, which is approximately $5 million per year or $1.25 million per quarter.

In summary, 2013 was an eventful year for Sangamo and we are pleased to have realized our financial objectives with both with respect to both our operating results and use of cash. We are focused on advancing our clinical and preclinical pipeline, while maintaining our customary financial discipline.

Thank you. And I will now turn the call back over to Edward.

Edward O. Lanphier

Thank you, Ward. As you have heard, we ended 2013 with approximately $132 million, well above our guidance of at least $125 million. With the Biogen $20 million upfront payment, our cash position is very strong relative to our historic and projected burn rate. We believe that our balance sheet provides a very solid basis from which to work and will enable us to complete our ongoing clinical trials and to bring up to eight new products to IND by the end of 2015. These programs include our programs partnered and funded by Shire and Biogen, as well as our proprietary programs in LSDs that have significantly benefit from – that have significantly benefited from our partner funded work.

As Ward mentioned, while we are guiding the higher operating expenses, as we ramp up our activities to move these programs to IND. we are guiding to ending 2014 with a higher cash balance than the end of 2013, at least $135 million in cash, making 2014 a cash flow positive year for the company. This assumes no additional agreements or financing activities only that we maintain our historically thoughtful control of expenses and meet our goals of filing INDs for our two Shire programs by the end of the year, which will trigger a total of $8.5 million in milestones for each program.

These payments along with the research funding provide our – provided by our collaborations will ensure us to achieve these development and financial goals. So let’s turn these – let’s turn to those programs. I’ve asked Philip to outline the approach that we have – we will be taking forward with Biogen and to summarize, the data we presented at ASH in December and at SFN in November, and to highlight, why we believe our approach – approaches to treatment of these diseases has significant advantages over currently available therapies. Philip?

Philip D. Gregory

Thanks Edward. Before I go into detail, as to our approach and the data that we presented at ASH, let me provide a formal background on the diseases that we are addressing in our collaboration with Biogen. Both sickle cell disease and beta-thalassemia are results of mutations in the gene encoding beta-globin, a subunit of the hemoglobin protein that is found in red blood cells or RBCs and enables them to carry oxygen from the lungs to the tissues.

In sickle cell disease, the beta-globin gene defect results in abnormal hemoglobin, which causes the red blood cells to develop a sickle or crescent shape. These abnormal red blood cells are stiff and sticky, can block blood flow in the small blood vessels of the limbs and organs resulting in painful episodes called crises, progressive organ damage and an increased risk of infection, all of which result in a shortened life expectancy.

The current standard of care is to manage and control symptoms and to limit the number of crises; current treatments including blood transfusions, iron chelation therapy and administration of hydroxyurea, pain medications and antibiotics do not address the underlying cause of disease.

The gene defect responsible for beta-thalassemia while still associated with the beta-globin gene results in poor production or excess destruction of red blood cells leading to life-threatening anemia, enlarged spleen, liver and heart, and bone abnormalities.

Beta-thalassemia major is a severe form of thalassemia that requires regular, often monthly, blood transfusions and subsequent iron-chelation therapy to treat the resulting iron overload. Both diseases have been treated by a bone marrow transplant hematopoietic stem cells or HSCs from a matched donor or so called allogeneic transplant. However, this therapy is quite limited due to the scarcity of matched donors and the significant and serious risk of Graft versus Host Disease after transplantation of the foreign cells.

The ultimate goal of our ZFP Therapeutic approach, which is based on our highly specific ZFN or gene-editing platform, is to provide a safe, one-time curative treatment for both sickle cell disease and beta-thalassemia. We make use of the fact that these patients actually already have a normal functional copy of a form of hemoglobin in their genome that can be substituted for the mistake carrying adult beta-globin gene; neither sickle cell disease nor beta-thalassemia patients are born with symptoms of disease. This is because during early development, a fetal form of hemoglobin is made using a separate beta-like globin gene called gamma or fetal-globin.

In infancy, this fetal form of hemoglobin fully protects beta-thalassemia and sickle cell disease patients from developing disease symptoms. However, during development, production of fetal hemoglobin is turned off and is replaced by expression of the adult-type beta-globin that in these patients is defective and symptoms of disease soon appear. It is well established that the persistence of fetal hemoglobin beyond the newborn stage lessens the severity of both of these disorders in the adult.

The goal of our therapy is to enable continued production of fetal-globin and thus enumerate the disease in all patients. We’ve used our proprietary ZFN based genome-editing technology to precisely and specifically knock out a key regulator of the biological switch from fetal to adult beta-globin expression, the gene encoding BCL11A.

Without BCL11A expression, the switch to the use of the mutant adult beta-globin does not happen. Instead efficacious fetal hemoglobin continues to be made restoring the production of normal levels of hemoglobin and red blood cells. The data that we presented at ASH demonstrate that ZFN gene editing can be accomplished in beta-thalassemia patient cells, a clinical scale reproducibly achieving high levels up to 80% of gene edited HSC’s.

Unlike conventional gene therapy approaches that rely on the random insertion of replacement genes and powerful promoters to drive their expression, our approach is a precise and highly targeted modification that adds nothing into the genome and eliminates the risks of insertional mutagenesis.

Importantly, by performing our ZFN BCL11A knock out in hematopoietic stem cell that are isolated and returned to the same patient are so-called autologous transplant. Our approach can be used to treat any patient, eliminating both the need for a matched donor and the risk of acute and chronic graft versus host disease, which has limited to use of bone marrow transplant as a treatment for the hemoglobinopathies.

Needless to say, we are very pleased to be working with Biogen, as a proven leader in drug development with a history of successfully translating cutting edge science into treatments that provide life changing clinical benefit for patients. The company has a tremendous partner for our hemoglobinopathy programs and we look forward to working together to bring these potentially curative treatments to patients.

As Edward mentioned, we also presented very important proof of concept data at ASH from our In Vivo Protein Replacement Platform, which is designed to provide curative therapies for a wide range of monogenic diseases, including hemophilia and lysosomal storage diseases.

With this targeted approach, we can precisely insert a therapeutic gene for example the Factor IX gene for the hemophilia B or the enzyme for Fabry disease into a small portion of the albumin genes in a patient’s liver. This will enable patients to make continuous supply of replacement enzyme, rather than having to be treated repeatedly with recombinant enzyme injections; if successful, our approach may result in an engineered genetic cure.

The data presented at ASH specifically address this difference building on our previously published work in mouse models and demonstrates scale up into larger animals with efficient ZFN activity of the albumin locus in non-human primates. This enables targeted insertion of a therapeutic gene into this locus and we have obtained production of the inserted protein at levels that were up to threefold, the amount required for therapeutic effect. As our In Vivo Protein Replacement Platform approach is agonistic to the gene that insert downstream from the albumin promoter. these data are an important milestone for the success of our partnered programs and our own LSD programs.

Finally, we presented data from our Huntington’s program at the Society for Neurosciences; these data demonstrated positive effects of administration of our ZFP Therapeutic for Huntington’s on both molecular markets and physical indications of the disease. We have previously shown that in cell lines derived from Huntington’s patients, our ZFP Therapeutics selectively represses the expression of the mutant and disease causing form of the huntingtin gene, while leaving the normal gene unchanged.

At SFN, we reported that these data will recapitulated in mouse models of the disease. In addition, in the ZFP Therapeutic treated regions of the animal’s brain, we observed a reduction of mutant huntingtin protein aggregates, levels of which are associated with the severity of the disease in humans.

moreover, we also observed increased levels of biomarkers indicative of protection of critical nerve cells called medium spiny neurons, a key cell type that’s progressively lost in the brains of HD patients. Importantly, delivery of the ZFP Therapeutic to the brain of mice that carry the mutant huntingtin gene also resulted in a specifically significant reduction in clasping behavior compared to controls.

Clasping is an HD-associated symptom exhibited by this model that mimics the motor symptoms of the human disease. These are very encouraging observations and provide further support of the concept; the repression of the huntingtin gene can host or even reverse the progress of HD. We remain on track to file an IND on this program in 2015.

Taking together, our data presentations in Q4 across huntingtin, hemophilia and the hemoglobinopathies represent exciting and significant progress, and we look forward to updating you on further developments on medical and scientific meetings in the coming year.

And with that, I’ll turn the call back over to Edward.

Edward O. Lanphier

Thanks, Philip, great update. Let me follow-up with a quick summary of our agreement with Biogen. As we announced, we have granted Biogen an exclusive worldwide license to our technology platform and intellectual property for the treatment of hemoglobinopathies, specifically beta-thalassemia and sickle cell disease. For beta-thalassemia, Sangamo will be responsible for all research and development activities through the first clinical trial and patients.

For the sickle cell program both companies will perform activities to enable submission of an IND application. Biogen is responsible for subsequent worldwide clinical development, manufacturing and commercialization of products arising from our alliance. Importantly, Sangamo has retained an option to co-promote beta-thalassemia and sickle cell disease products in the United States.

As part of the agreement, Sangamo received a $20 million upfront payment and we will be reimbursed by Biogen for our internal and external research and development costs. We’ll also receive additional payments of approximately $300 million, based upon the achievement of certain development, regulatory, commercial and sales milestones, as well as tiered escalating double-digit royalties on product sales.

The nearest term milestone payments will be the Phase I related milestones of $7.5 million for each program. To state the obvious, this is a significant relationship for us and will enable us to move this program and the rest of our pipeline forward much more efficiently. We also expect to make significant progress in delivering on the promise of ZFP Therapeutics. We will complete our Phase II clinical trials in our SB-728-T HIV/AIDS program with positive data from these studies; we will partner this program for further development and commercialization.

As I mentioned earlier, you can expect an update on our ongoing trials at CROI, as well as additional guidance on the overall program. We’ll also continue to aggressively prosecute our partnered programs in hemophilia, Huntington’s disease and hemoglobinopathies and our proprietary programs in lysosomal storage disorders.

Our goal is to file four INDs in 2014 in hemophilia A and hemophilia B, beta-thalassemia and our HIV application in stem cells, which has been funded by a grant from the California Institute for Regenerative Medicine or CIRM. In 2015, our goal is to file INDs for our Huntington’s program, sickle cell disease and two lysosomal storage disorders. And it is now clear to virtually everyone, our technology platform is highly versatile and we have distinct therapeutic product development strategies that can be implemented to address a variety of well validated targets.

Our business development strategy is designed to create significant value, yet mitigate risk via diversification and leverage. We’ve established valuable non-therapeutic partnerships in areas outside of human healthcare applications as evidenced by our partnerships with Sigma-Aldrich and Dow AgroSciences, which have brought over $95 million into the company to-date.

We have leveraged the work funded by these partnered programs and advancements across our platform to develop our own proprietary programs that are focused primarily on monogenic diseases, in which proof of concept can be obtained in relatively small clinical studies and the required modest initial investment in manufacturing infrastructure.

We view these programs as one of several potential paths to further growth and forward integration into late-stage clinical development and commercialization. And finally, on the financial side, we are in very good shape. We ended 2013 with approximately $132 million and expect end – to end 2014 with cash and cash equivalents of at least $135 million.

Needless to say with all the progress we have made, we are looking forward to an exciting year of progress in 2014. there are strong interests in our genome-editing platform for potential – potentially curative approaches to genetic and rare disease – diseases from numerous constituencies including patients, clinicians, investors and pharmaceutical companies.

We look forward to keeping you informed of our progress, we will be presenting at the Leerink Swann Global Healthcare Conference later this week, the Cowen & Company 34th Annual Healthcare Conference in early March in Boston, the Bank of America Healthcare Conference in May in Las Vegas and also in May, the Deutsch Bank Healthcare Conference in New York. As far as the – as data from our programs goes, as we mentioned data from our HIV clinical trials we presented at CROI in early March.

And finally, on an internal note, I am very, very pleased to announce the promotion of Philip Gregory from Vice President to Senior Vice President of Research and our Chief Scientific Officer and Liz Wolffe, who all of you know is really the brain behind the operation here from Senior Director to the Vice President of Corporate Communications. I’m very pleased with both of them, but I am thrilled about the contributions that they have and continue to make for Sangamo. Congratulations, Philip and Liz.

This completes our prepared comments. I would now like to open up the call for your questions.

Question-and-Answer Session


(Operator Instructions) Our first question comes from the line of Charles Duncan from Piper Jaffray. Your line is open.

Charles C. Duncan – Piper Jaffray, Inc.

Hi, Edward. First of all, congratulations on a great year of progress and thanks for taking my questions.

Edward O. Lanphier

Sure, Charles.

Charles C. Duncan – Piper Jaffray, Inc.

So my first question is on HIV. I’m kind of wondering not to get ahead of the update at CROI, but wondering if you favor a broad patient population or if you favor a more, I’ll call it narrow approach, say to the CCR5 heterozygotes in terms of moving forward and what would you estimate the amount of cash that you would spend on that program over the course of the next say 12 to 18?

Edward O. Lanphier

Well, I’ll go first and Geoff and Dale are both here. in terms of the broad versus narrow, Charles, the fundamental hypothesis that we’re pursuing in terms of acute viral load control is really predicated on the observation that maximizing the engraftment of biallelically modified cells can lead to a significant impact on viral load, and the strategy that we’re pursuing, I’ll use the word narrow in discussing the CCR5 delta-32 heterozygote is focused on that population and we’ve seen activities there including the patients that we’ve discussed, as well as several other patients who have had one to two log reductions and those correlate again, directly to engraftment levels of biallelically modified cells.

but for the broader population, the strategy in really pushing towards a threshold of biallelically modified cells with a Cytoxan preconditioning, I think speaks to the ability – if successful to apply this to the entire population. Why don’t I stop there, come back in a moment to the financials and see if Geoff or Dale want to add or subtract in it into the issue of the application of this approach to a narrow or broader population.

Geoffrey M. Nichol

Charles, this is Geoff here. I think it’s a little early to be sort of pinning our flag to a particular patient group or approach as Edward has described. we have taken a broad view, I think the heterozygotes are a narrower group although that’s roundabout plus or minus 10% of the U.S. HIV population, but that's still a substantial group that allowed us to move forward to test up this proof of concept and we do have the Cytoxan strategy for broadening the approach. So a little too early to say where we’re going, I think we’ve got several ways to win here and we are moving forward to see whether in deed we can win. I’ll turn it back to Edward in terms of investments and other activities, but broadly, we’ve guided to certainly – this year up to 12 more patients in the program.

Edward O. Lanphier

Yes. and then that’s what I was going to say, I think Charles, if you look at where we are what we’ve completed the accrual of the additional six subjects in the dose escalation component and we’ve guided to another 12 subject. So the investment this calendar year really is relatively modest at this point. I don’t want to quantify around any specific program, but I can tell you relatively overall OpEx budget, it’s a relatively modest number and the goal really is to, as I said in the script, use the data that we’ve generated to-date in terms of the responder analysis. Those baseline characteristics with the optimized Cytoxan dose, in these additional 12 subjects to achieve the clinical proof of concept around functional control, and based upon that, our plans to partner in the program.

So I think there is a – well there is, I don’t have to think there is a finite and it’s a relatively modest percentage of – a very modest percentage of our OpEx this year that we plan to invest to move to a partner or not in the HIV program.

Charles C. Duncan – Piper Jaffray, Inc.

It’s helpful. Edward, one quick question on monogenic diseases or IVPRP platform, I know lots of people have asked you about timing of INDs and four INDs is pretty substantive piece of work, but I’m wondering if you could at least touch on one of them in terms of the triggers to the timing or to that filing of the IND and if you think that that could occur in the next, call it six months.

Edward O. Lanphier

Well, the guidance Charles and I updated the slide for this on, at JPMorgan, I don’t think I spoke directly to it here is that the HIV stem cell IND is likely to be in the midyear type of timeframe, and the guidance we’ve given related to beta-thal Factor VIII and Factor IX are definitely by the end of the calendar year, but I would certainly suggest everyone that they – it’s very close to the end of the year versus the middle of the second half.

Charles C. Duncan – Piper Jaffray, Inc.

Okay, last question, on technology regarding a fair amount of noise that we’ve been hearing on this CRISPR technology. I’m just wondering if you could explore that for a second and tell us what you think zinc fingers you may have over the CRISPR technology?

Edward O. Lanphier

Well, I would say it’s not an easy subject just to be – give you too short sound bites on, but it is a topic of which we’re extremely well versed. Philip, maybe you could try and be succinct on this.

Philip D. Gregory

Sure. So I think, I’d say, Charles, there is an enormous amount of interest in CRISPR in the academic world. obviously, we have demonstrated how powerful genome-editing can be in cells, in animals and in the dish. and this is another tool that achieves that outcome, and so it’s obviously getting a lot of – developing a lot of interest, largely because it is extremely simple to deploy, uses a – essentially a guide RNA, which can be designed essentially based on sort of Watson and Crick base pairing rules, as well as makes it very simple for people to design their own in a CRISPR/Cas9 system for a specific site.

There is a difference however between the application of this technology in the context of research application and in the context of the clinic. and we continue to believe that the ZFP approach is the appropriate one for therapeutic use. we think it has both the specificity that’s necessary, we think it has the potency on efficacy that’s necessary and of course, it’s a system developed from a – from man – it’s a system developed from the mammalian zinc finger proteins, not from bacteria. And these are the types of difference that make the zinc finger protein platform in our view, a superior at this stage for therapeutic use.

Charles C. Duncan – Piper Jaffray, Inc.

Thanks for the added color.

Edward O. Lanphier

Thanks, Charles.


Thank you. (Operator Instructions) Our next question comes from the line of Heather Behanna from JMP Securities. Your line is open.

Heather A. Behanna – JMP Securities LLC

Hi, and congratulations on a great year and a great start to 2014.

Edward O. Lanphier

Thanks, Heather.

Heather A. Behanna – JMP Securities LLC

I just wanted to get a little bit of color from you guys as far as medical meetings this year, we should expect or where we might expect to see some more potentially non-human primate data or any other data throughout the year to sort of support the INDs moving forward in either the end of this year and the ones for next year.

Edward O. Lanphier

Sure. Heather, I’ll take a shot at it, and then obviously Philip or Geoff can comment. I’ll start with 30,000 feet, our practice in the past has been to discuss meetings where we have a) submitted abstracts, and b) those abstracts have been accepted. So I was going to say rarely, I do recall the time about six, seven years ago, when I talked about a meeting, the abstract wasn’t accepted and that was a good learning experience for me. So we do try and learn from our mistakes, my mistakes. and so we are not going to guide to any specific meetings.

With that said, we have a pretty consistent track record of presenting at various meetings. I had mentioned several of them on this call in addition to that; we usually have a dozen plus kinds of presentation at the American Society for Cell and Gene Therapy. but at least at this point, I don’t want to get as – since we’re in the Olympic moment, too far out, over our sties here and guide any particular meetings at this time. Geoff and Philip, I’m sure you have nothing to add to that.

Philip D. Gregory

That’s correct.

Geoffrey M. Nichol

Yes, absolutely, absolutely right.

Heather A. Behanna – JMP Securities LLC

Fair enough.

Edward O. Lanphier

I mean expect perhaps, to add that, clearly, several of these INDs are with partnered programs. so we have partners whose interests will need to be reflected in our communication activities.

Heather A. Behanna – JMP Securities LLC

Okay. and for CROI coming up, is it too early for us to expect any data on the Cytoxan dose ranging, should we just expect a more general update or can you give any color on that?

Edward O. Lanphier

Give color on that, well, will we present data on the Cytoxan work? Yes, should I at this point, go into what cohorts and what dose levels and so on and so forth, I should probably wait three weeks and then comment extensively based upon on what we present.

Heather A. Behanna – JMP Securities LLC

Fair enough. Okay, thank you so much.

Edward O. Lanphier

Thank you, Heather.


Thank you. (Operator Instructions)

Edward O. Lanphier

Hearing none. We’d like to thank you for joining us and we look forward to speaking with you again, when we release our first quarter 2014 financial information. We will be available later today if you have any follow-up questions. Thank you.


Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone, have a great day.

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