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Sangamo Biosciences (NASDAQ:SGMO)

Q2 2014 Results Earnings Conference Call

July 23, 2014, 5:00 p.m. ET

Executives

Elizabeth Wolffe – VP, Corporation Communications

Edward Lanphier – President and CEO

Ward Wolff – EVP and CFO

Geoff Nichol – EVP, Research and Development

Philip Gregory - SVP, Research and Chief Scientific Officer

Analysts

Charles Duncan - Piper Jaffray

Joon Lee - Cowen & Company

Operator

Good afternoon, and welcome to the Sangamo BioSciences teleconference to discuss second quarter 2014 financial results. This call is being recorded. I will now pass you over to the coordinator of this event, Dr. Elizabeth Wolffe, Vice President of Corporate Communication.

Elizabeth Wolffe

Thank you, operator. Good afternoon, and thank you for joining Sangamo’s management team on our conference call to discuss the company’s second quarter 2014 financial results. Also present during this call are several members of Sangamo 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; and Philip Gregory, Senior Vice President of Research and Chief Scientific Officer.

Following this introduction, Edward will highlight recent activities and the significant events from the past quarter. Ward will then briefly review second quarter financial results as well as our financial guidance for 2014, and Philip will provide an update on our ZFP therapeutic programs. Finally, Edward will update you on our goal for 2014 and beyond. Following that, we will open up the call for questions.

As we begin, I’d like to remind everyone 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 any obligation to provide updates in the future.

Actual results may differ substantially from what we discussed 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 the 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 of the company’s operations to differ materially from those contained in our projections of forward-looking statements.

Now, I would 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 2014 second quarter financial results, recent accomplishments, and plans for the development of our ZFP therapeutic pipeline.

As we have previously outlined, 2014 is an important year for Sangamo, particularly the second half of the year as we work to meet our goals of completing recruitment of our ongoing Phase II clinical trial of SB-728-T for HIV AIDS and to file four new IND applications that will enable us to move the next wave of our ZFP therapeutic programs into clinical testing.

While trial enrollment and pre-IND activities are not highly visible to investors, rest assured that we have been working hard and are very focused on these objectives, and I am pleased to report we’ve continued to make good progress executing our plan in the second quarter of 2014.

Activities that have a bit more visibility to you all include data presentations from our programs in Huntington’s disease and HIV at the annual meeting of the American Society of Gene and Cell Therapy, or ASGCT. Dale Ando, our chief medical officer, was an invited speaker at this meeting and provided an update on subjects enrolled in our completed clinical trials of SB-728-T for HIV AIDS.

Our approach in this program is to use our zinc finger nuclease, or ZFN, technology to knock out the CCR5 gene, which encodes a co-receptor for HIV entry. Knocking out CCR5 makes a patient’s CD4T cells resistant to HIV infection and thus able to participate in the immunological control of viral infection.

As Dale reported at ASGCT, one subject enrolled in our SB-728-T 902 cohort 5 study demonstrated continued control of circulating viral load at low levels, that is, under 300 copies of the virus, for 45 weeks in a treatment interruption, or TI, from ART, their antiretroviral medicine.

I’m pleased to provide an update today on this subject, who now has sustained control of viral load for more than one year, which, as it relates to a provable endpoint, is more than the duration of control that ART had to meet to be approved.

For a second subject, enrollment in the 728-T 1101 Cytoxan preconditioning study at the 1 gram per meter squared dose has experienced a greater than 2 log sustained decrease in circulating viral load from peak during TI for over 34 weeks. Both subjects remain off ART.

I am also pleased to announce that we plan to update on these trials at the 54th Interscience Conference on Antimicrobial Agents in Chemotherapy, or ICAAC, in early September.

As we outlined on our first quarter call, we have designed a Phase II trial to further investigate sustained effects on viral load, reservoir reduction, and immune reconstitution that have been observed in our earlier studies of SB-728-T. Subjects will undergo preconditioning with Cytoxan at an optimal dose for enhancement of SB-728-T engraftment.

All 12 subjects will undergo a TI from their ART during which we will evaluate the effects of SB-728-T treatment on viral load. The study is also designed to evaluate the effects of SB-728-T on the viral reservoir, total CD4 levels, and other immunological parameters.

In addition, we will employ a new proprietary manufacturing process for SB-728-T using electroporation of messenger RNA encoding the zinc finger nucleases used for CCR5 gene modification.

ZFNs require only transient expression to achieve a permanent modification of their target gene and so this short lived, nonviral approach is ideal. This improved delivery method provides both process and cost saving advantages over viral delivery of the ZFNs, will enable retreatment if necessary, and offers the potential for greater CCR5 biallelic modification. As I said earlier, our goal is to complete enrolment of this study by the end of this year.

In addition to SB-728-T, our HIV program in T-cells, we also plan to use the same ZFNs and the same MRNA delivery method in stem cells. This is a program that we have developed in collaboration with scientists and clinicians at USC and City of Hope, and the pre-IND activities have been funded by a $15 million disease team award from the California Institute of Regenerative Medicine or CERM.

In early June, we announced that CERM had awarded us additional funding to enable the next stage of the program providing matching funds in the form of a strategic partnership award to support the Phase I clinical trial of this program at City of Hope.

In this stem cell HIV study, we plan to treat so-called immunological nonresponders, who represent about 20% of the HIV-1 infected patients, and who, despite optimal treatment and completely suppressed viral replication on ART, show poor recovery of CD4 cell counts and are at increased risk from progressive AIDS related symptoms.

Our stem cell approach is being developed as a new therapeutic strategy for this population, and we are on track to file an IND application for this program this summer.

We have also guided to filing an IND application by the end of this year for our Biogen partnered stem cell program in beta thalassemia. As you may recall, CERM also granted us a strategic partnership award to advance this program through a Phase I clinical trial.

Under the Biogen collaboration agreement, the Sangamo team is responsible for all the preclinical work and the Phase I clinical studies. This is an indication that has received a great deal of interest and press recently, and I’ve asked Philip to provide more details about how our ZFN-based approach differs from other strategies.

We also mentioned on our first quarter call that proceeds from our financing in March would be used in part to expand our internal manufacturing capabilities, and I want to update you on some of the developments in this area.

In May, we hired Dr. Stewart Craig into the newly created position of vice president of manufacturing. Stewart comes to us with 30 years of experience in the biotechnology industry, specifically in the development, manufacture, and regulation of biotherapeutics, including gene and cell-based therapies.

He has held executive roles leading and developing GMP manufacturing operations and facilities including overseeing the design, construction, and validation of numerous GMP manufacturing facilities. We are delighted to welcome Stewart to the Sangamo management team.

Finally, we recently appointed Stewart Parker to our board of directors. As the former CEO of Targeted Genetics, a pioneering gene therapy company focused on AAV, Stewart has unique experience in gene therapy, which is directly applicable to many of Sangamo’s programs that use AAV for delivery, including our in vivo protein replacement platform, or IVPRP.

As you will recall, in our IVPRP program, we are harnessing the power of the albumin promoter to enable a patient to produce therapeutic levels of replacement proteins such as Factor VII or Factor IX in the case of our collaborative programs with Shire in hemophilia A and B, and for replacement enzymes to treat lysosomal storage disorders or LSDs, programs that Sangamo is taking forward ourselves beginning with the first of the two IND apps in 2015.

So, it’s been a very busy second quarter, but before going on to more details on our ZFP therapeutic programs, and our plans for the rest of 2014 and beyond, let me hand the call over to Ward for an update on our second quarter 2014 financial results as well as our financial guidance for 2014. 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, 2014, and I am pleased to review the highlights of those results.

Revenues in the second quarter of 2014 were $10.4 million, compared to $6.9 million for the same period in 2013. Second quarter 2014 revenues were comprised of revenue from Sangamo’s collaboration agreements with Shire and Biogen Idec enabling technology agreements and approximately $700,000 of revenue from research grants.

The increase in collaboration agreement revenues was primarily due to the company’s collaboration and license agreements with Shire and Biogen. Sangamo recognized approximately $5.9 million of revenues related to research services performed under the collaboration agreement with Shire and $1.3 million of revenue related to research services performed under the collaboration agreement with Biogen in the second quarter of 2014.

In addition, pursuant to the agreements entered into with Shire in January 2012 and Biogen in January 2014, Sangamo received up-front payments of $13 million and $20 million respectively. These payments are being recognized on a straight line amortization basis over the initial six-year term for Shire and 40 months for Biogen.

The company recognized $500,000 of the Shire up-front payment and $1.5 million of the Biogen up-front payment as revenue for the second quarter of 2014. Total operating expenses for the second quarter of 2014 were $17.4 million, compared to $12.4 million for the same period in 2013.

Research and development expenses were $13.4 million in the second quarter of 2014 compared to $9.3 million for the second quarter of 2013. The increase was primarily due to increases in external research expenses associated with our preclinical programs and personnel related expenses, including stock based compensation.

General and administrative expenses were $4 million in the second quarter of 2014 compared to $3.1 million for the same period in 2013. Noncash stock based compensation expense was $2.1 million for the quarter, with $1.1 million in research and development and approximately $1 million in general and administrative.

For the second quarter of 2014, the company reported a consolidated net loss of $7 million or $0.10 per share, compared to a net loss of $5.5 million or $0.10 per share for the second quarter of 2013.

Turning to the balance sheet, Sangamo ended the second quarter of 2014 with $236.7 million in cash, cash equivalents, short term investments, and interest receivable. Our net cash used in operating activities was $8.6 million for the second quarter, resulting in $2.8 million net cash provided by operating activities for the year to date.

With respect to our financial guidance for 2014, we reiterate our guidance from the first quarter. We expect to have cash and investment balances of at least $225 million at the end of 2014, inclusive of research funding and milestone payments from Shire and Biogen, but exclusive of any new funding from the collaboration partnership, equity financing, or other sources.

Regarding operating expenses and revenues for 2014, we are reiterating our earlier guidance from the first quarter. The company expects operating expenses to be in the range of $65 million to $70 million and revenues in the range of $45 million to $50 million.

Revenues include partial recognition of the up-front payment and research funding for internal and external program-related costs from Biogen and partial recognition of the up-front payment research funding and potential milestone payments from Shire.

The company’s improved cash position in 2014 compared to 2013 and the strategic collaborations with Shire and Biogen Idec will allow us to aggressively drive our ZFP therapeutics programs forward to generate important products for patients and meaningful value for our shareholders.

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

Edward Lanphier

Thanks, Ward. As you have heard, we ended the second quarter of 2014 with $237 million, which, relative to our historic and projected burn rate, is a very strong cash position and enables us to advance our preclinical pipeline with the goal of filing up to eight IND applications and reading out of two Phase II trials in HIV and Alzheimer’s during 2015.

Over the past year or so, we have seen a growing interest from investors, big pharma, and the media in both gene therapy and genome editing. The potentially curative outcomes for diseases that these approaches could generate could be highly disruptive to existing markets.

We believe that our ZFP technology is differentiated from other approaches in both of these areas in several important ways. We have demonstrated that our ZFN-mediated genome editing can be efficiently deployed at any location in the genome with exquisite precision, enabling novel therapeutic approaches such as our in vivo protein replacement platform and novel hemoglobinopathy programs that result in permanent yet highly specific modification and potentially curative therapeutic outcomes.

I’ve asked Philip to provide more detail on how our hemoglobinopathy program is different from approaches that are based on the use of a viral vector and why we believe our ZFP approach can provide a safer and more effective solution to these disorders than the existing standard of care or treatments that are currently being evaluated. Philip?

Philip Gregory

Thanks, Edward, and good afternoon everyone. Before I go into detail as to our approach for the hemoglobinopathies, and how this differs from other gene therapy approaches, let me provide a little more background on the indications.

Both sickle cell disease and beta thalassemia are a result of mutations in the gene encoding beta globin, a subunit of the hemoglobin protein that is found in the 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 RBCs to develop a sickle, or crescent, shape. These abnormal RBCs are stiff and sticky and can block blood flow in the small 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 for the vast majority of patients is to manage and control symptoms and to limit the number of crises. The current treatments, which include 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, whilst still associated with the beta globin gene, results in overproduction of defective RBCs that fail to properly mature and die in the bone marrow, leading to life-threatening anemia and large 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 of hematopoietic stem cells, or HSCs, from a matched donor, a so-called allogeneic transplant. However, this therapeutic solution is quite limited due to the scarcity of matched donors and the significant risk of serious 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, modifying a patient’s stem cells in order to make the patient their own donor, thus eliminating the search for a match and the risk of graft versus host disease.

Classical gene therapy protocols are now being evaluated in so-called autologous or self bone marrow transplants. However, as I’ll explain later, there are disadvantages and significant risks with this approach, which uses a lentiviral vector to randomly introduce an extra copy of the beta globin gene into the genome of the stem cell.

Our approach is mechanistically and operationally different, and we believe safer. On the mechanistic front, we make use of the natural biology of the system, exploiting what nature has already elegantly designed for us. We use the fact that all these patients actually already have a normal, functional copy of a form of the hemoglobin in their genome. This can be substituted for the mistake carrying adult beta globin.

How do we know this? Neither sickle cell disease nor beta thalassemia patients are born with symptoms of disease, though symptoms develop during the first year of life. This is because during this period of early development, we all make a fetal form of hemoglobin using a separate, beta-like globin gene called gamma, or fetal globin.

Until early infancy, this fetal form of hemoglobin is expressed and serves to fully protect beta thalassemia and sickle cell disease patients from developing these symptoms. However, during the first six to nine months of life, a switch occurs in the hematopoietic system that turns expression of the fetal hemoglobin off, and the adult type beta globin on.

In sickle cell disease and beta thalassemia patients, that beta globin gene is mutated and encodes a defective protein, and so symptoms of disease soon appear. The goal of our therapy is therefore mechanistically unique, namely to enable continued production of fetal globin in the adult, and thus ameliorate the disease in all patients.

This concept is supported by human clinical data. There is a well-documented condition in which fetal hemoglobin is highly expressed, called hereditary persistence of fetal hemoglobin, or HPFH. Individuals with HPFH exhibit no symptoms and are usually only identified during screening for other hemoglobin disorders. More importantly, the persistence of fetal hemoglobin beyond the newborn stage lessens the severity of both beta thalassemia and sickle cell disease.

Our approach is also operationally distinct. We have used our proprietary ZFM-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 mutated, adult beta globin does not happen. Instead, efficacious fetal hemoglobin continues to be made sufficient to correct the sickle cell symptoms in mouse models of the disease.

Last year, at the annual meeting of the American Society of Hematology, we presented data demonstrating that ZFN gene editing can be accomplished in beta thalassemia patient cells at clinical scale, reproducibly achieving high levels, up to 80%, of gene editing in HSCs.

Conventional gene therapy approaches rely on random insertion of replacement genes and powerful promoters to drive their expression, which if present in the wrong place, can drive the expression of oncogenes and cause cancer.

In contrast, our approach is a precise and highly targeted modification. ZFNs are delivered using a nonviral method that we have developed in which they are encoded as a messenger RNA. Thus, nothing is inserted into the genome.

This approach eliminates the risks of insertion and mutagenesis, a further advantage. Not captured in the conventional approach is that as we are controlling the fetal adult switch, ZFN modified cells will produce the fetal form but not the mutant form of beta globin.

In contrast, particularly in the conventional lentiviral approach for sickle cell disease, where an extra copy of beta globin is made, the mutant [cycling] globin is also being produced. This competition between correct and mutant forms may have consequences for the effectiveness of the therapy, particularly in sickle cell disease.

As Edward mentioned earlier, we are currently on track to file the beta thalassemia IND in late 2014 and look forward to updating you as we begin clinical testing. Edward?

Edward Lanphier

Thanks, Philip. As I mentioned earlier, we are very focused on our development goals, and continue to execute on the key activities needed to achieve our goal of filing INDs in 2014 for our HIV application in stem cells, our Biogen-partnered program in beta thalassemia, and Shire-partnered programs in hemophilia A and hemophilia B.

As you might expect, during the third and fourth quarters of this year, we will be gathering and evaluating major amounts of the most important data necessary to achieve successful and timely IND submissions.

Speaking of Shire, not surprisingly, we have had numerous questions about the recently announced acquisition of Shire by AbbVie and the effect that this may have on our partnered programs and, more importantly, on our IND timelines.

First, from a contractual perspective, this potential change of control will have no effect on our agreement with Shire. Having said that, operationally these are partnered programs, and Shire has a specifying influence on the programs and the progress of the IND applications.

With that said, Shire has put the necessary people in place, and they are working closely with us in order to facilitate a smooth hand-off for Phase I clinical trials. Therefore, as it stands today, it remains our goal to file INDs for both our hemophilia A and hemophilia programs this year, with the caveat that the inevitable uncertainties created by the potential AbbVie merger may provide a measure of distraction that could slow the progress of our IND timelines.

I wish that I could be more specific, but the fact of the matter is, organizational changes and mergers create uncertainty. But, at the most important level, from a substantive, programmatic perspective, meaning all aspects of the IND process, our goal remains the filing of both the Factor IX and the Factor VIII INDs by the end of this year. We will, of course, keep you apprised of any changes to this guidance.

So, we remain focused on filing four INDs this year: our HIV program in stem cells, beta thalassemia, and hemophilia A and hemophilia B. In 2015, our goal is to file four more INDs for our Huntington’s program with Shire, our sickle cell disease program with Biogen, and two proprietary programs in lysosomal storage disorders. We also expect readouts from our Phase II studies in HIV AIDS and Alzheimer’s disease.

In conclusion, we have a very well developed core technology, which affords us diverse product development opportunities, a development pipeline of highly disruptive therapeutic products, and a strong financial foundation from which to pursue our ambitious goals.

Our strategy has always been to use our resources aggressively, yet as efficiently as possible, and we are working to accomplish these goals and bring our ZFP therapeutic pipeline into and through clinical proof of concept for multiple therapeutic uses.

Needless to say, we have a very busy second half of the year ahead of us, and we look forward to keeping you informed of our progress. In the immediate future, we will be making corporate presentations at the Wedbush Securities Life Sciences Management Access Conference on August 12 and the Morgan Stanley Global Healthcare Conference on September 10, both of which will be webcast and available on the Sangamo website. We will also participate in the JMP Securities Boston Biotech Day on September 5, which will not be webcast.

As far as scientific updates are concerned, our collaborator Rafick-Pierre Sekaly will present immunological data from subjects who were treated in our earlier studies of SB-728-T at the Conference on Cell and Gene Therapy for HIV Cure 2014 meeting, which is being held on August 26 and 27 in Seattle. Additional updates for our completed studies will also be provided at this year’s ICAAC

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

Question-and-Answer Session

Operator

[Operator instructions.] And our first question comes from the line of Charles Duncan of Piper Jaffray.

Charles Duncan - Piper Jaffray

My first question is on 728. I’m thinking a little bit about the ongoing Phase II. You said that you’d complete enrollment by the end of this year. What kind of efficacy measures or milestones would you be looking at? Would it be six month type milestones or something like that whereby you could start to decide whether or not to design and pursue the next step?

Edward Lanphier

The study design is quite similar to what we’ve done in the past. After eight weeks of engraftment, the subjects go off their antiretroviral therapies and it’s at that time that we will be able to evaluate the impact of the modified cells on viral load. And that’s really the key principal endpoint in the study, with sufficient engraftment of biallelically modified cells, the expected control of viral load, and functional control.

As I mentioned in the script, we’ll also be evaluating the impact of these modified cells on immune reconstitution and reduction of the reservoir. And I think those are the major endpoints. Geoff, anything you want to add?

Geoff Nichol

Not really, Edward. Charles, basically the paradigm that we’re following is the one that we’ve already established, of doing the treatment interruption and seeing what we have in terms of immunological control of the virus. And as we just said, we have been following one patient for over a year, with excellent control of viral load. So we’re looking for more of that.

Charles Duncan - Piper Jaffray

Thank you for addressing the question regarding the partner program with Shire. I’m just wondering if you could provide a little more color about Shire’s engagement in that program, and then address the question - it seemed like there’s no change of control provision, but is it possible that you would be interested in taking that program back? And how do you feel about AbbVie being a potential partner?

Edward Lanphier

[laughs] Well, at least one of those questions I intend to answer. All of them, I think, is maybe above my pay grade. But like I said in the script, and I don’t mean to be coy here, and certainly Geoff and Philip are on the front lines of this in terms of the joint steering committee, it’s just common sense that this kind of merger is going to be distracting to people, and I think we all know it from our own walks of lives.

And there have been quite a bit of change in personnel at Shire since we’ve initiated this study, and that creates challenges unto itself. I don’t know, Philip or Geoff, do you want to add to any of Charles’ questions about the Shire collaboration?

Geoff Nichol

Yeah, not a whole lot, Edward, but certainly yeah, we’re perceived over the past months, you know, as the one Shire has moved forward. We’ve seen turnover in the steering committee. We’ve seen new team members that we’ve needed to interact with. And we’re also seeing a certainly unfamiliar to us, you know, management decision making process and so on, which is good. We’re highly engaged with Shire. It’s a great relationship. But it certainly reminds us that this is another company. They have the determining vote on the program, and of course they have their own strategy and their own strategic priorities.

Charles Duncan - Piper Jaffray

Do you feel that you’ve provided them the necessary materials to file an IND or will be prepare to do so by the end of the year?

Edward Lanphier

Well, we’re responsible for filing the IND, and then the handoff is at that point, once the IND is successfully filed. Then they will execute on the clinical programs. And again, as I tried to say, from a substantive, programmatic perspective, we are absolutely driving to that guidance and to those objectives.

With that said, and I’ll just kind of reiterate what Geoff just said, we are not in the driver’s seat entirely on this. I think I used the words “specifying influence” in the script. Shire is funding the program, they make the decisions on the program, including the ultimate review and timing and acceptance of filing the IND.

Programmatically, things are fine. Things are good. We’re charging on this thing. And you know, there’s still data to be gathered, there’s still boxes to be checked. There’s still things to be done. But I don’t want people to think that we’re ignoring the 800 pound gorilla in the room, which is one, one of our major partners is being acquired, and two, we’re not making the sole decisions on this program.

Operator

And our next question comes from the line of Joon Lee of Cowen & Company.

Joon Lee - Cowen & Company

I was under the impression that the IND for the HIV stem cell program would be in mid-2014. So is that still on track? Or has that changed as a result of this?

Edward Lanphier

No, your impression, your recollection is exactly right, mid 2014, I think we said summer, is our guidance.

Joon Lee - Cowen & Company

And just another question on the Cytoxan conditioning study. It seems like the 1 mg per meter squared dosing seems to be efficacious. So how much higher can you go from there? Do you see any evidence of dose dependent efficacy? And any color on that?

Edward Lanphier

I’m just asking Geoff how much of this we have presented. I think at ASGCT, Dale presented work up to the 2 g per meter squared. And, you know, net-net, and Geoff can certainly speak to this in detail, but net-net we see the greatest benefit in terms of engraftment enhancement more at the 1 g per meter squared level than we do at those higher doses.

And going forward, into this new study, that’s where we’re really focused. Geoff, do you want to add to that?

Geoff Nichol

Yeah, certainly at 2 g, we see issues with tolerability, which you might expect. This is a treatment for cancer, after all, a chemotherapy. And as Edward says, we’re in the 1 g zone for what we think is the optimal dose, with well demonstrated enhancement of engraftment as well as excellent tolerability.

Joon Lee - Cowen & Company

I just can’t help but notice at the meetings three companies pursuing this platform of gene editing. Help us understand what kind of defensive strategies you have in this space, and what your strategies are for dominating or pursuing [crosstalk].

Edward Lanphier

It’s a big question. Let me start with, I don’t know that we have any defensive strategies. I think the best defense is a good offense, and I don’t think there’s any company, any platform, any space in the gene editing area that any of us would rather be pursuing than what we’re doing. I think there is an enormous - and whatever the greater word above enormous is - amount of noise, visibility, around [crispers]. And that’s, I think, if you look at technology cycles, that’s not surprising. It’s an area of great importance, one that we’d agree, genome editing will revolutionize medicine. I don’t think there’s any doubt about that.

I think over time, as the expression goes, the bloom will come off the rose and more data will emerge, and so on. And we’ve been through those cycles maybe a couple of times. So I guess I’m more responding to what are our defensive measures. We couldn’t be happier with where we are, and I think over time, there will be more clarity, more data, around some of these other platforms. Philip, you want to give any color or specificity on this?

Philip Gregory

Sure. Well, obviously, let me just second Edward’s point. I think that independent of the business interests, if we had any platform to choose from today, given our goals, which are to create therapeutics, we still feel, and the zinc finger nuclease approach, and the zinc finger platform offers the ideal blend of both activity, potency, and specificity. And those are often different metrics to the ones that one might select if one was thinking about a research reagent, for example.

And so I think we’re obviously very up to speed with all the technologies that are out there. We watch the space very carefully. But to date, we’ve continued to feel that the ZFP approach is the superior approach, given the goal of making human therapeutics.

Operator

And I’m showing no further questions at this time. I would now like to turn the call back to CEO Edward Lanphier for any further closing remarks.

Edward Lanphier

Thank you. 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. Thank you.

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