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Sangamo Biosciences Inc. (NASDAQ:SGMO)

Q2 2010 Earnings Call

July 28, 2010 09:04 AM ET

Executives

Dr. Elizabeth Wolffe – Director of Corporate Communications

Edward Lanphier – President and Chief Executive Officer

Ward Wolff – Executive Vice President and Chief Financial Officer

Dale Ando – Vice President of Therapeutic Development and Chief Medical Officer

Philip Gregory – Vice President of Research, Chief Scientific Officer

Analysts

Charles Duncan – JMP Securities

Chad Messer – Piper Jaffray

Liana Moussatos – Wedbush Securities

Operator

Good afternoon and welcome to the Sangamo BioSciences Teleconference to discuss Second Quarter 2010 Financial Results. This call is being recorded. I will now pass you over to the coordinator of this event, Dr. Elizabeth Wolffe, Director of Corporate Communications.

Elizabeth Wolffe

Thank you, Tiero [ph]. Good afternoon and thank you for joining Sangamo’s management team on our conference call to discuss the company’s second quarter 2010 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; Dale Ando, Vice President of Therapeutic Development and Chief Medical Officer and Philip Gregory, Vice President of Research and Chief Scientific Officer.

Following this introduction, Edward will highlight recent activities Ward will briefly review second quarter financial results for 2010. And Dale and Philip will update you on our ZFP-therapeutic and research program. Finally, Edward will summarize our current guidance and our goals for the rest of 2010. 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 markets 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 such 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 risk factors that could cause the actual results of 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 Lanphier

Thank you, Liz. And thank you all for joining us for our conference call to discuss our second quarter results for 2010. We reported important progress in both clinical and preclinical program this quarter. Let me begin by briefly recapping a few of the highlights. At the American Diabetes Association or ADA Meeting in June, we and our collaborators at Johns Hopkins presented positive Phase 2 clinical data from our ZFP-therapeutic program to develop SB-509 as a disease modifying treatment for diabetic neuropathy or DN. The data from our SB-509-601 and SB-509-701B trial demonstrated that SB-509 treatment resulted in statistically significant and clinically beneficial improvement in subjects with moderate and severe DN as compared to placebo; and provided direct histological evidence of SB-509’s dual affect on both blood vessel and nerve growth and regrowth.

As you will hear from Dale later in this call, these data provided direct evidence of both an angiogenic and neuroregenerative mechanism of action and further validates our strategy of using multiple endpoints to assess disease severity as we enrolled subjects with moderately severe diabetic neuropathy into our ongoing Phase 2b trial SB-509-901.

In early July, we had an important paper published in the scientific journal, Nature Biotechnology, an exciting preclinical data from our stem cell therapeutic strategy for HIV/AIDS. This approach is based upon the use of our proprietary zinc finger nuclease or ZFN technology to permanently disrupt the CCR5 gene in human hematopoietic stem cells or HSCs. Disrupting the gene in HSCs enables us to make this permanent change in all cell types in the immune system and forms the basis for a very promising therapeutic strategy. The work was carried out by Sangamo scientists and collaborators at the Keck School of Medicine of the University of Southern California.

You may recall that last September along with the third group from the City of Hope, we were awarded a $14.5 million grant from the California Institute for Regenerative Medicine or CIRM to bring this therapy to the clinic. I have asked Philip to summarize the details of the data and how it relates to the progress in this program later in this call. As you know, Sangamo has two ongoing Phase 1 clinical trials to evaluate the safety and clinical efficacy of ZFN disruption of the CCR5 gene in CD4 T-cells one at the University of Pennsylvania and one here in California.

During the second quarter, we received a second round of funding from the Michael J. Fox Foundation for Parkinson’s Research which was an important vote of confidence for our approach and for the positive preclinical data that we have already obtained in a rat model of Parkinson with our ZFP activator of the growth factor GDNF. The $895,000 award which will be paid over a two year period will support studies in non-human primates for the development of ZFP-therapeutic to treat Parkinson’s disease. Again I have asked Philip to briefly review this program later in the call.

Finally, Sangamo scientists and collaborators presented data from a wide range of research and preclinical programs focused on the development of the ZFP-therapeutics at the Annual Meeting of the American Society of Gene and Cell Therapy or ASGCT. Therapeutic areas included ZFP based approaches in primary human cells and stem cells, infectious diseases such as HIV/AIDS and CMV, monogenic diseases, oncology and traumatic brain injury. This is a useful scientific form for us and the range of presentation provides a good illustration of the breadth of potential therapeutic applications of our technology.

Before we go into more detail about our therapeutic and preclinical program, let me hand the call over to Ward for an update on our second quarter 2010 financial results as well as our financial guidance for the rest of the year. Ward?

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 second quarter ended June 30, 2010. And I am pleased to review the highlights of those results.

Revenues in the second quarter of 2010 were $6.5 million compared to 4.7 million for the 2009 quarter. The second quarter 2010 revenues were primarily comprised of revenue from our collaboration agreements with Sigma-Aldrich and Dow AgroSciences, and agreements in protein production, as well as $315,000 of revenue from research grants. The increase in revenues was primarily due to the $15 million license payment that we received from Sigma in the fourth quarter of 2009 as part of our expanded agreement which we are recognizing radiably into revenue through the end of this month. Total operating expenses for the second quarter of 2010 were $10.4 million compared to 9.9 million for the same period in 2009. Research and development expenses were 7.1 million in the 2010 quarter and 6.9 million for the prior year quarter.

General and administrative expenses were 3.3 million in the second quarter of 2010 compared to 3 million in the 2009 quarter. The increase in general and administrative expenses is primarily due to increased personnel cost including non-cash employee stock-based compensation. For the second quarter of 2010, we reported a consolidated net loss of 3.9 million or $0.09 per share compared to a net loss of 4.5 million or $0.11 per share for the second quarter of 2009.

Turning to the balance sheet, we ended the second quarter of 2010 with 69.3 million in cash, cash equivalents and short-term investments. Our net cash used in operating activities was 7.5 million for the second quarter. I’m pleased to say that we are on track with respect to our operating plan for 2010 for the second quarter and we are maintaining our financial guidance, reiterated on the first quarter call in April of having at least $60 million in cash and investment balances on hand at the end of 2010.

In our last call, we explained that the cash guidance and our usage estimate translated into anticipated GAAP revenues in the 18 million to 22 million range and GAAP operating expenses in the 43 to $47 million range for the full year 2010. These GAAP metrics remain in place supporting our year-end guidance of $60 million for cash. As you will recall this guidance assumes no new financings or partnerships, but it does include anticipated milestones in revenues in 2010 from our existing partnership agreement.

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

Edward Lanphier

Thanks Ward. Our partnerships with Sigma-Aldrich and Dow AgroScience continue to provide non-dilutive revenues which offset our ongoing investment in our ZFP-therapeutic programs. As such we are able to carefully manage our cash burn and with nearly 70 million in cash at the end of the second quarter, we are on track to meet our goal of ending 2010 with at least 60 million in cash and cash equivalents, all while prosecuting clinical trials in three different ZFP-therapeutic products.

As I mentioned earlier, I have asked Dale to provide you with the summary of the SB-509 clinical data that were presented in three oral presentations at the ADA Scientific Sessions last month. Dale?

Dale Ando

Thank you, Edward. To start with some background, SB-509 is a zinc finger activator of the vascular endothelial growth factor A gene or VEGF-A, which has been shown to have significant effects on both nerve and blood vessel growth in preclinical and clinical studies. We are evaluating this product clinically in two indications, diabetic neuropathy and amyotrophic lateral sclerosis or ALS. Currently we have an ongoing on 150 subject randomized, double-blind, placebo controlled, Phase 2b study, SB-509-901 in subjects with moderately severe DN.

The study is designed to finalize dose, schedule and primary and secondary end points for pivotal Phase 3 trials. And will accumulate data on a probable end points including nerve conduction velocity in the sural nerve or sural NCV neurological impairments score in the lower limbs or NIS-LL, as well as qualitative life assessments and intraepidermal nerve fiber density or IENFD. We have multiple inclusion criteria for this trial which are designed to exclude subjects with mild disease and select subjects with moderately severe DN to exhibit both neurologic and vascular disease. We believe that this group that will show the greatest benefits from the dual angiogenic and neurological effect of SB-509, and in a clinical trial demonstrate the greatest differences in disease outcome as measured by approval endpoints between treatment with drug or placebo.

In June at the ADA’s Scientific Sessions we made three oral presentations. Two of the presentations focused on data from our Phase 2 trial, SB-509-601 in subject with mild to moderate DN. And the third presentation was on data from our Phase 2 trial SB-509-701 Part B in subject with at least one unmeasurable nerve conduction velocity. Collectively the data provided us with valuable confirmatory evidence for an angiogenic as well as a nerve regenerative mechanism action of this drug. And further validation of our strategy to use multiple endpoints to assess subject disease severity, when recruiting into our on going Phase 2b trial.

The first presentation of the SB-509-601 data at the ADA was given by Dr. Michael Polydefkis, our collaborator at the John Hopkins University School of Medicine. As you may remember our SB-509-601 study was a double-blind, placebo-controlled study of a 110 subjects randomized at in two to one ratio in which subjects were administered three doses of SB-509 or placebo at day 0, 60 and 120 days. Various measures of nerve health were assayed throughout the study including NCV and NIS-LL.

In addition, as part of the JDRF funded collaboration with Dr. Polydefkis, we also measured the density of small unmyelinated sensory nerve fibers via direct examination or biopsy. Dr. Polydefkis and others have shown that this direct histological measurement correlates with the severity of disease in the end and other neuropathies. In our 601 study skin biopsies were taking like 0 and day 150, 30 days after the final treatment with SB-509 and at several time points through day 360 [ph]. After sessioning and histological stating of the skin biopsies nerve and blood vessels in the skin can be counted and their density is calculated. As we have previous reported SB-509 treatment of subjects on this study resulted in a statistically significant improvement from baseline in IENFD. The data presented at ADA were further analysis looking at the effects of SB-509 treatment on nerve regrowth and blood vessel regrowth in these subjects.

Nerve growth, regrowth was examined in all subjects using a standardized injury by “burning out the nerves” using a capsaicin patch. At the end of the capsaicin treatment the nerve fiber density under the patch is reduced to zero. Regenerative sprouting of the small sensory nerves after capsaicin treatment was measured by assessing their density from serial biopsies, obtained following the capsaicin treatment. The data demonstrated that treatment with SB-509 resulted in an improvement in regrowth of epidermal nerve fiber in subjects. In addition, we looked at growth of blood vessels into biopsies sites by taking a second biopsy over the site of a prior biopsy that have been allowed to heal and look for blood vessel sprouting into healed site. We observe increased blood vessel growth into a healing biopsy site in SB-509 treated compared with placebo treated subjects. Interestingly the timing of these effects on blood vessel and nerve regrowth demonstrated that the therapeutic benefit of SB-509 treatment will sustain several months after the last dose was administered.

The second oral presentation at ADA described an analysis of soluble VCAM-1 and soluble ICAM-1 levels in the serum of SB-509 and placebo treated patients with DN. These are soluble forms of proteins that are mediators of interactions between circulating blood cells and the endothelium in vascular walls and are secreted it into the blood as a consequent of the endothelial cell damage that occurs in inflammatory diseases such as type 2 diabetes. As such these secreted proteins are useful biomarkers of blood vessel damage and an indirect measurement of the severity of vascular disease. Along with the approval measures of changes in nerve health we can correlate subjects based on these biomarkers with a view to facilitating the identification of SB-509 responsive subjects. We observed that based on soluble V-CAM levels were significantly higher in subjects with DN compared to normal non-diabetics.

A statistically significant top line decrease or improvement in soluble V-CAM levels was observed at day 360 in SB-509 subjects compared to placebo treated subjects. We also observed a statistically significant positive correlation between baseline soluble ICAM levels and the improvement in sural NCV from baseline to day 180 in SB-509 treated subjects. Suggesting a linkage of baseline vascular disease with sural NCV improvement, again and consistent with the design of our ongoing Phase 2b trial, these observations suggest that elevated soluble ICAM levels may aid in the upfront identification of a target population with significant vascular disease and therefore responses to VEGF angiogenic effects. These biomarkers may also serve as a stratification variable to enable us to balance severity of vascular disease and treatment in placebo groups.

Our third presentation at ADA featured data from the Group B cohort of our SB-509-701 trial in subjects that have at least one major nerve for which NCV cannot be recorded. SB-509 has already shown activity in this population of patients. We’re starting an unmeasurable NCV in subjects in our early clinical studies in SB-509-401 and 701A. I should also mention that this is a population of subjects that has historically been excluded from clinical trials, disease modifying drug candidates as their nerve damage was considered to be too severe.

Surprisingly some subject that met the unmeasurable nerve conduction velocity criteria have relatively mild DN as measured by the standard Lower Extremity Neurologic Sensory Examination or LENSE which measures perception pinprick pressure and vibration at points from the great toe up to the knee. Employing this exam when subjects with clear sensory deficits were evaluated i.e. those with a LENSE score greater than 10 and therefore with moderate severity disease, we observed a substantial improvement in the mean change in sural NCV from baseline at the day 180 time point in the treated group.

With the mean increase of 1.42 meters per second compared to a mean decrease of 1.14 meters per second in the placebo group with a p value of 0.07. In the same group, we also observed a significant response to SB-509 treatment at day 180 with nine out of 23 or 39% subjects demonstrating a recovery of an unmeasurable sural NCV which is 0 out of 7 placebo treated subjects, again with the p value of 0.07.

Over the six-month period the greatest improvement in NCV were observed in those subjects treated with SB-509 who entered the study with the deficits in sensory function and not just an unmeasurable nerve. This emphasizes the importance of using multiple end points for assessment of DN disease severity for both subject enrollment and evaluation, as we’re doing in the Phase 2b 509-901 trial. Collectively the data presented at ADA confirm previous observation that point to SB-509 dual regenerative effects on both nerves and the blood vessels that supply and nourish these nerves making it a unique disease modifying approach to neurodegenerative conditions.

Finally, I am pleased to note that we will present data from our completed Phase 2 study of SB-509 in subjects with ALS at the Annual Meeting for the Society of Neuroscience in November as well as data from our HIV programs at an appropriate clinical meeting either later this year or early next year. As Edward mentioned, we expect to have data from our Phase 2b trial of SB-509-901 in the second half of 2011.

And with that update, I’ll hand you back to Edward.

Edward Lanphier

Thank you, Dale. As I mentioned earlier, this quarter has had some exciting news in two of our early stage ZFP-therapeutic development program. And HIV with the publication of an important paper in Nature Biotechnology, and in our preclinical Parkinson’s program with the renewal of funding support by the Michael J. Fox Foundation.

I’ve asked Philip to give you a brief overview of these events and how they move these respective programs forward. Philip?

Philip D. Gregory

Thanks Edward. Earlier this month, we published a significant paper in the scientific journal Nature Biotechnology. The work provides crucial concept for a stem cell therapy for human immunodeficiency virus, HIV based on our Zinc Finger Nucleases or ZFN technology.

The cells that we are using are human hematopoietic stem cells or HSCs, self-renewing cells that that give rise to all of the different types of immune cells in the body. Our ZFNs for this program are designed to permanently modify the DNA sequence in coding CCR5, a co-receptor that enables HIV to infect cells of the immune system. We know that from several observations that disrupting this receptor makes cells resistant to infection with the R5 strains of the virus, the most commonly transmitted strains of HIV.

Firstly, it is well documented that individuals carrying a naturally occurring mutation, which results the disruption of the CCR5 gene, a variant known as CCR5-delta32 are resistant to HIV infection. In addition, a study published in the New England Journal of Medicine 2009 reported a potential “cure” when an AIDS patient with leukemia known as the Berlin patient received a bone marrow transplant from a matched donor with this disrupted delta32 CCR5 mutation.

Transfer of the HSCs residing in the bone marrow from the delta32 donor provided a self renewable and potentially lifelong source of HIV resistant immune cells. After transplantation, this patient was able to discontinue all anti-HIV drug treatments, his CD4 counts increased and his viral load dropped to an undetectable level, demonstrating effective transplantation of protection from HIV infection with CCR5 disruptive stem cells.

The data reported in our Nature Biotechnology publication replicate these findings for a ZFN based treatment in a preclinical model. We demonstrate that a one-time exposure to our CCR5-specific ZFNs resulted in permanent genetic disruption of the CCR5 gene, resulting in the generation of an HIV resistant population of human HSCs. These ZFN-modified human stem cells were than engrafted into mice that lack a normal immune system and are able to tolerate engraftment of human cells and tissues. The engrafted ZFN-modified human cells produced all the different immune cell types in the peripheral blood, demonstrating that the ZFN-modified HSCs differentiated normally. Importantly the ZFN-modified HSCs could be harvested from one mouse and engrafted into a second animal confirming that the modified HSCs retain their ‘stemness’ or ability to differentiate.

In HIV challenge experiments, we found that had a selective advantage over unmodified HSCs and not only survived infection but expanded and appeared to traffic normally to various tissues in the mouse. Moreover, the presence of ZFN-modified cells controlled HIV replication in the animals. These data suggest that human HSCs can be modified with ZFNs, expand and differentiate and have a selective advantage in the presence of HIV allowing them to evade infection and destruction leaving them able fight opportunistic infections and potential HIV itself.

The work was carried out in collaboration with the group of scientists at the Keck School of Medicine of the University of Southern California who along with clinicians and scientists at City of Hope and Sangamo are part of the multidisciplinary team of investigators that was awarded a $14.5 million Disease Team Research Award by the California Institute for Regenerative Medicine or CIRM. The award funds the preclinical development of our ZFN CCR5-targeted HSC approach to the stage of completing an investigation of new drug or IND application for this potential stem cell therapy for HIV. The published work is an important first step and we’re now engaged in the formal pre-clinical development of this novel approach.

Due to their ease of isolation and their ability to differentiate into all cell types in the blood, there has been an explosion of research into therapeutic applications of HSCs, which are being developed for use in immuno deficiencies such as X-linked SCID, diseases of the blood such as sickle cell disease and other monogenic diseases such as ALD.

The data published in the Nature Biotechnology paper, demonstrate that we can achieve specific and efficient ZFN modification of HSCs which has broad potential therapeutic applications and other diseases.

This quarter, we were also pleased to report that we were awarded a second round of funding by the Michael J. Fox Foundation for Parkinson’s Research to support the development of our ZFP Therapeutics to treat Parkinson’s disease. Our approach uses the ZFP transcription factor to upregulate the gene for glial cell line-derived neurotrophic factor or GDNF. Our growth factor naturally produced by the body to support the growth and survival of nerve cells. In animal studies it is well documented that factors such as GDNF can protect dopamine producing nerve cells, the cells which are selectively lost in PD.

We have generated positive pre-clinical data demonstrating a neuro-protective effect of treatment with our GDNF activating ZFP transcription factors, which results in the release of Parkinson’s disease like symptoms and have validated rat model of the disease. These studies were supported by our first award from the Michel J. Fox Foundation. The latest award of $895,000 will fund studies of our ZFP GDNF activator and a primate model of Parkinson’s, which is the critical next phase in this drugs development as we move towards an IND. We are again working with the group of the University of California, San Francisco at the Department of Neurosurgery and Neurology, who have a great deal of experience in drug testing for Parkinson’s. We look forward to updating you on our progress in future calls. Edward?

Edward Lanphier

Thanks, Philip. In conclusion, our second quarter activities demonstrate our progress and continued focus and execution on our goal of establishing ZFP-therapeutics as a new and highly differentiated class of human pharmaceuticals. And we look forward to keeping you informed of our progress in the second half of this year.

In addition to data presentations for our ALS program at the Society for Neuroscience in November, we will be presenting at two Investor Conferences in September, UBS Global Life Sciences Conference and the JMP Securities Healthcare Conference, which are both being held in New York City.

This completes our prepared comments. We’d now like to open up the call for your questions.

Question-and-Answer Session

Operator: Thank you, sir. (Operator Instructions) Our first question is from Charles Duncan of JMP Securities. Your line is open, sir.

Charles Duncan – JMP Securities

Hi, guys, thanks for taking my questions and congratulations on a nice quarter of progress.

Edward Lanphier

Thanks, Charles.

Charles Duncan – JMP Securities

First question that I had was perhaps for Dale. First of all, thank you for that thorough overview of what was presented at ADA, but what we’d like to hear some more color on is perhaps what we didn’t see and that was maybe your impressions of meetings that may have been had with clinicians and their interest in this program and our corporate partners, could you let us know if you had any corporate interest that, not definitive but perhaps good point to an interest in the program as it matures?

Edward Lanphier

Charles, I’ll jump in first. Dale I think we’ll comment on the corporate partnering discussions or interest. However, accept to say that ADA was well attended by a lot of groups that follow this program very closely. But I think it is a good question to Dale in terms of the clinician and investigator and real key opinion leaders who do attend the conference and Dale maybe give a sense of the response to that population.

Dale Ando

Yeah, I think, people were quite excited in that, a lot of the findings that we showed really moved this product in two side [ph] the neuroregenerative type of product which is quite unique; most of the other parts being studied in diabetic neuropathy are really treat symptoms and the only other – when there is any effect on the nerve process is aldose reductase inhibitors; so, I think this sets us out as a very, very unique product in this field. And also, I think, the fairly comprehensive analysis of the multiple end points at baseline, I think for the first time we have a truly very, very accurate view point of what comprises a moderate severity or severe diabetic population. I think this supports our Phase 2 efforts in using these multiple baseline endpoints to select a patient population responsive.

Charles Duncan – JMP Securities

So you’re saying that you had pretty good interest from investigators, do you think that that could result in or at least cannot clinicians, do you think that could result in interest in enrolling patients in the program?

Edward Lanphier

Certainly this has been very, very useful in of getting investigators and sites interested in the program.

Dale Ando

And that Charles we absolutely know to be true.

Charles Duncan – JMP Securities

Okay. Then my next question was with regard to HIV, first of all thanks for the kind of overview on the rationale on that again, what’s your sense of data timing and secondly, have you ever given some thoughts I don’t know even of this is technologically feasible to basically doing trades stacking within their program and being able to look at putting several targets or upping the number of targets that you could target within an HIV oriented product?

Edward Lanphier

So Charles I’ll just repeat the guidance on the SB-509-728-T trial to say that we plan to...

Charles Duncan – JMP Securities

Yeah.

Edward Lanphier

Present interim data from that work in late this year or early next year, but a day an appropriate scientific or clinical meeting for those data. As it relates to the ability to use the events to do as you say trade stacking or plant term perspective, but multiple targets I’ll ask Phil to speak to that we have actually quite a bit of data around that.

Philip Gregory

Sure. So Charles we actually presented at the ASGCT meeting data demonstrating the ability to add genes in a size specific manner to, it’s the same cell type HSCs and so...

Charles Duncan – JMP Securities

Yeah.

Philip Gregory

And so it’s quite clear that one could, users approach to add genetic methods at least for further restriction of HIV entry. So yes this is an area of active research.

Edward Lanphier

And as you know Charles in other mammalian systems we have shown the ability to do one, two and even three knock-outs in this case in CHO cells when we publish that work and collectible last year with Genentech.

Philip Gregory

Genentech, yeah.

Charles Duncan – JMP Securities

And that presentation you mentioned you mentioned, could that be at the annual HIV meetings which are held in December or don’t you know yet?

Edward Lanphier

Well, again, I think, well as soon as we have clear confirmation on that we will announce that and we’ll notify people on the call.

Charles Duncan – JMP Securities

Okay. Good. Thanks for taking my questions.

Edward Lanphier

Sure.

Charles Duncan – JMP Securities

I’ll hop back in the queue.

Operator: And a question or comment is from Chad Messer of Piper Jaffray. Your line is open.

Chad Messer – Piper Jaffray

Hi, thanks for taking my question. So you mentioned you reiterated that your guidance were greater than $60 million cash at year-end and said that that includes some milestone payments. I was wondering if you could just remind us what milestone payments remain outstanding from your various collaborations?

Edward Lanphier

Well, I think what we said in the past, Chad is that milestones will be achieved based upon commercial activities from Sigma as well as Dow, and then in the Dow collaboration there are annual and minimum sub-license payments. Beyond that, I don’t think we have a whole lot of additional specificity to add. Ward is there anything else we can add to that?

Ward Wolff

No, I think that’s right Edward and Chad if this depends when in the calendar year did some of these kick in terms of minimums and those kinds of things. So that’s why our cash guidance is what it is in terms of expecting some increase from the first six months.

Edward Lanphier

Right, second half of that.

Ward Wolff

Right.

Chad Messer – Piper Jaffray

Thank you very much.

Edward Lanphier

Thanks Jeff.

Operator: (Operator Instructions). Our next question is from Liana Moussatos of Wedbush Securities. Your line is open.

Liana Moussatos – Wedbush Securities

Thank you. What was the stock-based compensation in Q2 and can you review the clinical data releases coming up again?

Edward Lanphier

Sure. Hi Liana, let’s start award with stock-based compensation or do you want me to jump into the guidance?

Ward Wolff

Yeah, why don’t you jump in and I’ll come back.

Philip Gregory

Okay. So I think the two guidance, in terms of additional clinical data are the data set from the ALS trial we presented at the Society for Neuroscience meeting in November and it will present interim data from the SB-509 728 T trial at an appropriate meeting either late this year or early next year.

Ward Wolff

And Liana on the stock comp it was 1.9 million in the quarter which was the same as Q1. So 3.8 million for the first six months.

Liana Moussatos – Wedbush Securities

Thank you very much.

Ward Wolff

Thanks Liana.

Operator: Thank you. We have a follow up from Charles Duncan of JMP Securities. Your line is open, Sir.

Charles Duncan – JMP Securities

Thanks for taking my follow-up. My question is related to the industrial use of the technology platform specifically Dow agriculture collaboration [ph], I know you don’t usually talk much about that but do you have a sense of what particular crops maybe in the lead in their development program, is it tomato or is it another one and when we might see increased visibility on that, Edward?

Edward Lanphier

Charles, I’m going to largely duck the question, but I’ll ask Philip if he wants to add to it and I really mean if there is more to add. I’ll go based upon what Dale [ph] said publicly and that’s maize and canola being the major internal efforts that they’ve talked about. I will also refer to some license agreements that they’ve done both in the vegetable space, tomatoes and vegetables as well as in the forest products space. And they’ve also announced, what I think is interesting although it’s an academic collaboration in neurobiology and biofuels. Philip, anything to add to that?

Philip Gregory

No, that’s pretty much the visibility that we have, yeah.

Edward Lanphier

But I do think well again, Dow AgroSciences is being a wholly owned subsidiary of Dow Chemical and Dow Chemical obviously being Fortune 50 type company it’s difficult to get a whole lot of visibility from a required disclosure perspective. But I think if you look at their website and you look at the number of presentations, publications and activities that are going on there you get a real sense of the centrality of word, okay centrality of this technology to their research and development and future commercial efforts.

Charles Duncan – JMP Securities

Yeah, that makes sense and I understand why you can’t say a lot, you don’t – there is a lot on that website. But what I guess one question that you could perhaps answer is, has there been any change in the interaction over the course of last call like a year or so in terms of the frequency or call it the group that you’re interacting with and how do you feel about that partnership at this point?

Philip Gregory

Hey, Charles, I think I can address that I mean, I can tell that the interaction has changed substantially since Dale took out the commercial license, that the – we interact with a much broader range of folks within the organization at this point, as the technology is deployed in different areas of their business. And so, there has been a material change I think, and so there was very, a very much focused project team initially and now it’s a much broader group.

Edward Lanphier

And Charles one thing I’ll kind of expand your question in terms of industrial applications just for a moment, because I think it’s important to note, I don’t how many people have had a chance to listen to or even normally would follow Sigma-Aldrich. But on their July 22nd call, both in their prepared remarks and in some questions at the end, I think there is good information there and good emphasis in terms of the role of the zinc fingers and zinc finger nucleases. In their internal and strategic development they put emphasis on the new P53 rat which has just been launched and coming out in the first half of this year. And spoke directly to the role of zinc finger nucleases in their SAFC division. One thing that I think is perhaps not completely understood about our royalty income from Sigma, is that the income that we report for instance in the second quarter is derivative of the revenues that they have in the quarter before, so royalties from income or revenues that they generated in this case in the first quarter. As you can hear or read from the Sigma transcript, there has been a great deal of activity in building up multiple models which are just really commercialized in the first part of this year. So – and fully back to, a full circle back to Chad’s question, we do expect to see a ramp up of both milestones and royalty revenues in the second half of this year.

Charles Duncan – JMP Securities

Excellent, that’s good news. Thanks for the added color guys.

Edward Lanphier

Yep, thanks Charles.

Operator: Thank you. And I’m showing no further questions or comments at this time. I would like to now turn the call over to Edward Lanphier for any closing remarks.

Edward Lanphier

We’d like to thank you for joining us, and we look forward to speaking with you again, when we release our third quarter financial information. We will be available later today, if you have any follow-up questions. Thanks very much.

Operator: Ladies and gentlemen thank you for your participation in today’s conference call. This concludes the program. You may now disconnect. Have a wonderful day.

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Source: Sangamo Biosciences Inc. Q2 2010 Earnings Call Transcript
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