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Sangamo BioSciences, Inc., (NASDAQ:SGMO)

Q1 2011 Earnings Call

April 26, 2011 5:00 pm ET

Executives

Edward Lanphier – President, Chief Executive Officer

H. Ward Wolff – Executive Vice President and Chief Financial Officer

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

Elizabeth Wolffe – Senior Director of Corporate Communications

Analysts

Charles Duncan – JMP Securities

Joseph Schwartz – Leerink

Liana Moussatos – Wedbush Securities

Operator

Good afternoon and welcome to the Sangamo BioSciences Teleconference to discuss First Quarter 2011 Financial Results. This call is being recorded.

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

Elizabeth Wolffe

Thank you. Good afternoon and thank you for joining Sangamo’s management team on our conference call to discuss the company’s first quarter 2011 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; and Dale Ando, Vice President, Therapeutic Development and Chief Medical Officer.

Following this introduction, Edward will highlight recent activities, Ward will then briefly review first quarter financial results for 2011. And finally, Dale and Edward will update you on our ZFP Therapeutic programs and our goals for 2011. Following that, we'll 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 the 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 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 first quarter results for 2011. Let me begin by briefly recapping the events of the past few months. We continued to make important progress in our ZFP Therapeutic clinical programs.

In January, we announced the completion of accrual of our Phase 2b clinical trial of SB-509 in subjects with moderate severity diabetic neuropathy. This double-blind, repeat-dosing, placebo-controlled, study SB-509-901 is designed to finalize dose, treatment schedule and primary and secondary approvable endpoints for future pivotal trials.

We accrued 170 subjects, slightly more than the initial objective of 150 and are on track to present top line efficacy data from this study in the second half of this year. As we have said before, with positive data from this trial, we intend to move forward with partnering discussions to efficiently move this first-in-class disease modifying drug to the market.

I look forward to updating you on the upcoming, on the outcome of this trial later this year. We've also presented very positive preliminary clinical data from our studies of our ZFP Therapeutic for HIV/AIDS at one of the most important scientific meetings for the HIV field, the Conference on Retroviruses and Opportunistic Infections or CROI.

We are evaluating SB-728-T, an autologous CD4 T-cell product in which the CCR5 gene is modified by our zinc finger nucleases in two Phase 1 studies. Data were presented from both Sangamo's dose escalation trial SB-728-T-902 as well as the single dose study of the drug, it is ongoing at the University of Pennsylvania.

Importantly, we observed that the infusion of the modified cells was fate and well tolerated. The sales were persistent and traffic normally and the treatment had positive effects on the subject’s immune system. These data give us tremendous confidence and the potential for this approach going forward as we complete these studies and prosecute our new Phase 1/2 study in HIV subjects that are not currently on anti-retroviral therapy and thus have active viral infections.

I’ll ask Dale to discuss the clinical data that we presented at CROI in more detail later in the call. In addition to the presentations of the clinical data at CROI, our collaborator Dr. Paula Cannon presented positive preclinical data from our studies that used the same CCR5 ZFNs in CD34 hematopoietic stem cells. The data demonstrated the ZFNs can be used to make stem cells resistant to HIV infection without affecting their ability to differentiate into all of the cells of the immune system.

Furthermore, in a mouse model of the HIV infection these ZFN modified cells that lack the functional CCR5 receptor have a selective advantage over the non-modified cells gradually taking over the entire population of the immune system cells and within the space of several weeks eliminating the virus.

This work is being carried out as part of the collaboration with Carl and scientist’s at City of Hope that is funded by CIRM or the California Institute for Regenerative Medicine. With the ultimate goal of advancing this program to an IND. In the summary, the four oral presentation, oral presentations of Sangamo’s programs at CROI provided a strong proof of concept for our clinical approach and showcase the full range of our programs in HIV/AIDS. If you have not done so already, I will encourage you to view the webcast and listen to the presentation which can be accessed via the CROI website.

In March, we announced a collaboration which further expands our pipeline of ZFP Therapeutics for monogenic diseases. We are working with the leading non-profit group in Huntington's Disease, the CHDI Foundation to develop a novel ZFP Therapeutic for this devastating disease. Our ZFP Therapeutic approach which will target the Huntington's gene mutations in which have been shown to be the cause of Huntington's Disease and inherited neurodegenerative disease for which there are currently no therapies which slow disease progress.

I look forward to updating you on our progress on future calls. Finally earlier this month we completed an underwritten public offering of 6.7 million shares of our common stock, which resulted in net proceeds to the company of approximately $50 million. This additional capital significantly strengthens our balance sheet enabling us to more aggressively advance our preclinical and clinical programs as well as strengthening our position and flexibility in future therapeutic partnering discussions.

And on that point, let me hand the call over to Ward who as well as giving you an update on our first quarter 2011 financial results and our financial guidance for 2011, will provide a bit more color on this offering and what it means for our company. Ward?

H. 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 first quarter ended March 31, 2011 and I’m pleased to review the highlights of the those results.

Revenues for the first quarter of 2011 were $2.2 million compared to $6.6 million for the 2010 quarter. The first quarter 2011 revenues were primarily comprised of revenue from Sangamo’s collaboration agreements with Sigma-Aldrich and Dow AgroSciences, enabling technology agreements and research grants.

The decrease in revenues between years was primarily due to the completion in July 2010 of the amortization period over which the $15 million and an expanded commercial license fees received from Sigma in October 2009 was recognized as revenue under generally accepted accounting principles or GAAP.

As a result, we recognized $4.8 million in associated deferred revenue in the prior-year first quarter in accordance with the amortization schedule that was completed in July of last year. Excluding this difference, the revenues for the first quarter of 2011 were $2.2 million compared to $1.8 million for the 2010 quarter.

Total operating expenses for the first quarter of 2011 were $11.8 million compared to $10.7 million for the same period in 2010.

Research and development expenses were $8.3 million for the 2011 quarter and $7.4 million for the prior-year quarter. General and administrative expenses were $3.5 million for the first quarter of 2011 compared to $3.3 million for the 2010 quarter. The increase in research and development was primarily due to increased trial expenses related to diabetic neuropathy and HIV studies.

For the first quarter of 2011, we reported a consolidated net loss of $9.6 million or $0.21 per share compared to a net loss of $4 million or $0.09 per share for the first quarter of 2010. Again, the principle difference impacting the net loss is the $4.8 million in deferred revenue recognized in the 2010 quarter.

Turning to the balance sheet, we ended the first quarter of 2011 with $49.2 million in cash, cash equivalents and marketable securities. Speaking of our cash position, I would like to make a few comments with respect to the financing we completed earlier this month shortly after the end of the first quarter.

On April 13, we completed an underwritten public offering of 6.7 million common shares with Barclays Capital which resulted in net proceeds of $50.2 million at the Sangamo. This financing was significant for the Sangamo for a number of reasons. First, it provides additional capital to prudently invest in our ZFP Therapeutic pipeline to bring these programs to points of optimal value inflection.

Secondly, it increases our balance, it strengthens our balance sheet as we evaluate ongoing partnership opportunities across our portfolio. Third, it continues our historical operating perspective of always having multiple years of cash burn on hand. We now expect to have a cash and marketable security balance at the end of 2011, in the range of $85 million to $90 million up from the earlier primary guidance of $35 million to $40 million with the only change due to the financing. Again this is exclusive if any new funding from a partnership but it does include anticipated milestones in 2011 from our existing partnership agreements.

I also want to reiterate our earlier secondary guidance provided on our fourth quarter and year-end call back in February that we expect 2011 operating expenses to be relatively flat compared to 2010 in the range of $43 million to $47 million for the year. To clarify a bit more with approximately $8 million to $10 million in non-cash expenses principally stock-based compensation, this guidance of year-end cash and resultant operating use of cash in the range of $20 million to $25 million for 2011 translates into $10 million to $12 million in cash revenues for the company in 2011 which we expect to be similar to the revenues recognized in accordance with GAAP. Again, the only change in the primary guidance of 2011 year-end cash is to increase it by the amount of financing.

In summary, with respect to finances and operating leverage to support our research in clinical development pipeline activities, I’m very pleased to report that first-quarter results, which struck to our 2011 operating plan, combined with the subsequent common stock offering have put us in an excellent financial position to start the year. We look forward to keeping you updated on our progress.

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

Edward Lanphier

Thanks, Ward. Our recent financing has significantly strengthened our cash position and as Ward mentioned, we now anticipate ending 2011with approximately $85 million to $90 million in cash. This puts us in a much stronger position as we make decisions regarding the progression of our preclinical pipeline of ZFP Therapeutics and look forward to data latter this year from our clinical programs. To take the obvious stronger cash position gives us greater flexibility around deal structures as we move forward with partnership discussions for various therapeutic programs.

As I mentioned earlier, I’ve asked Dale to provide you with more detail on the Phase 1 clinical data from our SB-728-T program in HIV/AIDS that we presented at CROI in early March. Dale?

Dale Ando

Thank you, Edward. Our product vision for SB-728-T is to provide ZFN-modified CCR5 negative CD4+ T-cells that are protected from viral infection, capable of mounting an infective anti-HIV immune response, thereby enabling a functional cure, analogous to elite controllers.

A group of HIV patients that are able to maintain undetectable levels of HIV RNA and normal CD4 counts without antiretroviral therapy were hard.

As Edward mentioned, we presented clinical data from our first studies at CROI earlier this year. While preliminary, these results were the best that we could have anticipated, based upon observations from previous HIV T-cell trials. To put more directly the data today provide mechanistic proof of concept that CCR5 ZFN modification makes T-cells resistant and enable selective expansion as we observed in our preclinical studies.

Data were presented by Dr. Carl June from both Sangamo’s dose escalation trial SB-728-T-902, which enrolls so called immunologic non-responders. Subjects with CD4 cell counts below 500 cells per microliter. Of the University of Pennsylvania trial, our single dose study of subjects with CD4 cell counts were above 500 cells per microliter, both coupes were [un-hard] and therefore had well controlled virus that was undetectable throughout the trial, although two subjects in the Penn study underwent treatment interruption and hopes their heart for a 12 week period.

The aim of these studies is to evaluate the safety and feasibility of this approach. The pharmacology specifically the engraftment, tissue distribution that persistence of these modified sales that evaluate the effect of the modified sales of the subjects immune systems.

First, the single infusion of SB-728-T at doses of either 10 billion or 20 billion total sales were safe and well tolerated. We did not observe any significant drug-related adverse events or SAEs. The only AEs were mild, reversible, transit infusion related systems.

In viremic subjects, who have no measurable HIV in the blood and who have CD4 T-cell counts less than 500 cells per microliter. The gut is the major tissue were HIV replicates and CD4 cells are being killed. Therefore, we are very interested in the pharmacology of the modified T-cells by how the cells behave once infused and whether they appear to be drastically normally by examining blood and rectal biopsy samples from these subjects.

We observed an unprecedented durable engraftment of SB-728-T in the peripheral blood of the majority 8 of out of 9 of the subjects as well as a significant increase in SB-728-T relative to total infused cells. In one subject, this increase was its highest 45 fold and therefore keen we observed a medium increase of 4.2 fold suggesting that there was an unprecedented rapid in vivo expansion of SB-728-T post infusion. This translates to a remarkable 6% to 8% of all CD4 T-cells measured in the peripheral blood.

Put in perspective, this means that 10 billion to 20 billion cells that we re-infuse into subjects increases to approximately 60 billion to 80 billion cells in two weeks. Importantly these levels remain persistently high with a median value at 90 days post infusion of 6%, demonstrating the durability of SB-728-T consistent with expansion of these modified cells in the peripheral circulation.

The data also demonstrated that SB-728-T traffics normally to the gut which speaks to the normal functioning of these cells and that the modification has not limited them in some way. In gut mucosa samples SB-728-T persists and these cells appear to undergo selective expansion in one subject approaching a 100% CCR modified CD4 T-cells. These data provide proof-of-concept that SB-728-T is resistant to HIV infection and able to selectively grow and divide the major site of active viral replication, the gut mucosa in the aviremic subjects.

In addition, we observed a direct improvement in immunologic health of these subjects as demonstrated by improvements of the normal range for a total CD4 cell counts and CD4, CD8 ratio. These are all significant interest at CROI as well as existing antiretroviral therapies have successfully reduced viral replication in patients. Their effect on the immune system has been to simply slow the decline in CD4 cell count.

Post the diffusion of SB-728-T, there was a remarkably high additional increase in total CD4 counts in the peripheral blood in all subjects and a persistent increase of greater than 100 cells (inaudible) improvement from their baseline CD4 count in the majority of the subjects. This improvement led to persistent normalization of the CD4 CD8 ratios below one. Of importance for the feasibility and scale up of this process, we presented data from two independent cell processing sites that demonstrated that we have a robust clinical scale manufacturing protocol for ZFN-modified CD4 T-cells SB-728-T that can be transferred.

Finally, we presented data from two subjects that underwent a brief 12-week treatment interruption. While ahead of the tape to make too much of this brief period of exposure of SB-728-T to detectable virus of the blood and doing it from just a couple of subjects, they did demonstrate interesting patterns of eight HIV RNA appearance and decreased prior to re-institution of HAART. We will obviously gain more information about the interaction of SB-728-T in the presence of the virus from our ongoing Phase 1/2 study SB-728-T-1002 in subjects that are viremic, but not currently on any antiretroviral therapy.

The compelling data in any viremic subjects that were presented at CROI set the stage for these next studies. In addition we are evaluating SB-728-T in a patient population at the other end of the spectrum of HIV infected individuals, those that are failing HAART. We have added a fourth cohort to our 902 study to evaluate SB-728-T in these multi-drug resistance subjects.

These additions mean that we are evaluating SB-728-T in subjects across the full range of the disease from newly infected individuals through subjects that are well controlled on HAART and through to individuals who are resistant to several antiretroviral drug regimens. Data from these populations will drive our next steps in this very exciting program.

Finally we expect to present the full data set from the 902 study and preliminary data for the 1002 trial at scientific (inaudible) meetings at the second half of 2011. And I look forward to updating you on these data on future calls.

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

Edward Lanphier

Thank you, Dale. As most of you know our presentation this CROI attracted a great deal of attention and some notable observations on the data and our novel therapeutic approach. Dr. Tony Fauci, Director of the National Institute of Allergy and Infectious Diseases and one of the most influential HIV scientists in the world noted that “this is elegant work, scientifically very sound and an important proof of concept.”

Dr. Jay Levy, the head of the Laboratory for Tumor and AIDS Virus Research at UCSF and one of the earlier pioneers of the HIV research, at HIV research was quoted in Business Week Magazine as saying that “our ZFN approach to HIV therapy is “a terrific way of looking for a long-term functional cure for the virus. This approach shows the most promise of any that I know of”. As we noted earlier, webcast of all of the presentations at CROI are available on the CROI website and I encourage any of you who are interested in a deeper dive into these very encouraging data to listen to the original presentations.

And while these clinical data generated significant interest in our ZFN approach to HIV, it also created a much greater appreciation for the potential of our ZFN technology as a therapeutic strategy in other diseases, particularly those with a defined genetic cause such as Hemophilia, hemoglobinopathies, and other monogenic diseases.

So in conclusion, we’ve had a great start to 2011 with all of our first quarter activities plus our recent financing. We continue to stay focused on and we’re making significant progress towards our goal of establishing the ZFP therapeutics, as a new and highly differentiated class of human pharmaceuticals.

As I mentioned at the beginning of the call, we are on track to have data from our Phase 2b trial SB-509, 901 in subject with moderate severity diabetic neuropathy in the second half of this year. Also in the second half of the year, we expect to present additional data from our Phase 1 HIV studies as well as preliminary data from our Phase 1/2 study in treatment naïve subjects.

We look forward to updating you on the progress of these clinical studies and appropriate medical meetings in on future calls. Finally, we'll be presenting a two investor conferences next month. The Bank of America Merrill Lynch Healthcare Conference in Las Vegas in Las Vegas and the JMP Securities Growth Conference here in San Francisco. We will also host our Annual Shareholder Meeting here at the company in Richmond, California at 9:00 AM on June 1, 2011.

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

Question-and-Answer Session

Operator

Thank you, sir. (Operator Instructions) Our first questioner in queue is Charles Duncan with JMP Securities. Your line is open.

Charles Duncan – JMP Securities

Hi, guys. First of all congratulations on a nice presentation at CROI earlier this year. And thanks for taking my questions. I had a couple. First is on the diabetic neuropathy trial. Edward you mentioned being able to enroll roughly a 170 patients or a slightly more than you had anticipated. Could you give us any color on the types of patients that more enroll where you able to get the type of patients that you had expected the amount to moderate. And why did you get a 170 and that stop it at 150 was at due to demand or the screening procedure?

Edward Lanphier

Yeah, quick questions Charles I’ll be happy to comment and then if they want anything we can do that. So the treatment the accrual criteria was very rigorous and a process that as you know from the data that we’ve presented at ADA and from the 601 trial and from the earlier 701 trial that we really aggressively sawn after a moderate severity population. The population that we had shown in a retrospective analysis for the 601 data to have a clinically relevant and statistically significant improvement or delta between placebo and treated and so there was a rigorous accrual process and we feel quite good about the quality of the patients that we accrued.

And in terms of the numbers, it really was a function of demand at the centers. We had planned to complete accrual by the end of the calendar year of 150 patients and we are able to increase that based upon demand and interest in the study to 170 also by the end of the calendar year. So Dale, do you want to add anything either on the patient accrual and inclusion criteria or the numbers.

Dale Ando

Yeah Charles so there was a quite a bit of interest as usual in this study at the end, and these patients have been consented and undergone certainly rigorous evaluation entry into the trial. So we basically over accrued by about 20 patients who are in the funnel of our accrual at the end of this period of time. And this is generally a good thing, because it actually increases the statistical power of the study by having those additional patients. So it is very standard for larger trials that have pretty rigorous accrual criteria and sort of a funnel of screening of patients they still allow the patients who have had significant evaluation that have been consented to end of trial to finally enter them if they qualify.

Charles Duncan – JMP Securities

And elsewhere on North American patient centers, correct?

Dale Ando

Correct. That’s correct.

Charles Duncan – JMP Securities

And then if I could hop over to the HIV side of the house you had mentioned your ongoing Phase 1, Phase 2 trial in patients that were viremic, can you help us understand how you will transition from the Phase 1 to the Phase 2, part of that trial, what will be the, call it, trigger for that?

Edward Lanphier

For the Phase 1 trial, the 901 trial, I’m sorry, 902 trial, we had completed the accrual on that, we did have a fourth cohort in the multidrug resistance category. But that’s a distinct separate trial from the 1002 trial. So the 1002 trial will accrue 14 subjects in a treatment naive setting, all by remix, so separate trials, Charles.

Charles Duncan – JMP Securities

I’m sorry, that’s the one I’m referring to, 1002, isn’t that the one that is a Phase 1/Phase 2 or is it just one that you did by 14 patients?

Edward Lanphier

It’s a Phase 1/12 and it’s 14 subjects.

Charles Duncan – JMP Securities

With those types, okay, defined by those types of patients. So when would you anticipate being able to start a, call it a classic Phase 2 or maybe it’s a Phase 2b study in those types of patients.

Edward Lanphier

Great question. And I think the short answer and I’m not sure it’s really a longer answer at this point. The short answer is that will be a data driven event and so with the data that we have on the aviremic population and now adding viremic population of at both treatment naïve as well as multi drug resistance. Those data will really drive the next steps in terms of Phase 2 or Phase 2B study. So they’ll think there is a longer answer to give you at this point. We do expect to hand data from the two Phase 1 trials presented later this year as well as pulmonary data from the Phase 1/2 treatment study. So I guess I just have to ask to stay tuned in terms of next steps.

Charles Duncan – JMP Securities

So if you had to guess or are you just going to wait until you see the data. If you look at the regulatory path and the clinical need would you consider perhaps some more capital efficient relatively declined by the patients which were multi-drug-resistant or were earlier on in their disease?

Dale Ando

Well, I try not to guess at this point. And so without trying to duck your question I would say that at later this year when we have data to discuss, we will be able to provide you and the rest of the street with a little more guidance in terms of next steps. At this point suffice it to say we are deliberately looking at this product across the full spectrum of disease severity in HIV and based upon data from both studies that will really drive our decisions and our guidance on this subject.

Charles Duncan – JMP Securities

Okay, that makes sense, thank you. I’ll hop back in the queue.

Dale Ando

Great, Charles.

Operator

Thank you, sir. Our next question in the queue is Joseph Schwartz with Leerink. Please go ahead.

Joseph Schwartz – Leerink

Thanks for taking the question. I was wondering if you could review for us the treatment regimen in the SB-509-901 trail and when should the last patient enrolled have their last visit? How long do you think it will take for you to collect and analyze the data?

Edward Lanphier

Hi, Joe. Good question. Let me, I will take the last part and then Dale can certainly discuss the treatment protocol. I think at this point our guidance is that we will have data from the trail top line efficacy data in the second half of the year. Beyond that we have not been specific in terms of when the last patient had its first treatment and when the last visit will be and so on and so forth. So I think that is as much granularity as I can give you on timing. Dale, do you want to talk about the treatment schedule regimen?

Dale Ando

Yeah. Well the treatment schedule is basically treatment at [positive] zero at two months and at four month, that’s either with the SB-509 treatment or placebo treatment with the primary for the analysis being at six months. So that’s the basic regimen.

Edward Lanphier

That cover your question, Joe?

Joseph Schwartz – Leerink

Yeah, that’s helpful, I think. Can you tell us has the DSMB charter been modified any from what you used in phase 2a based on any SAE that we are seeing there, and if we haven’t heard anything at. Does that mean that no similar SAE have that heard?

Edward Lanphier

Well again, without giving any guidance on the study at all at this point. We do not have any updates that we need to make on that subject.

Joseph Schwartz – Leerink

Okay. Maybe you can help us understand on the 728 program. How many patients if you could just summarize for us how many patients have been treated so far and do you expect to be treated by the end of the year?

Edward Lanphier

Yeah, good question. We presented the following at CROI and then I’ll give you a sense of the year end. We present a data from 9 subjects at CROI, 6 from the Sangamo study, 3 from the Penn study, and at that point I also believe that Carl June has said that there were total of 13 subjects that have been treated after that point, and he referred that’s what he refer to when he talked about the safety and tolerability data. But the efficacy data that were presented and the pharmacology data were presented from 9 subjects. Beyond that we’ve not given accrual updates or guidance, but what we have said is that at by the end of the year we expect to have treated approximately 39 subjects on the study.

Joseph Schwartz – Leerink

And then just one more on the 509-901 trial. Are you doing multiple comparisons for the various endpoints that you are evaluating and how does that work?

Edward Lanphier

Well, on the SB-509-901 study, we're very focused on several endpoints that have been used as approvable endpoints in previous pivotal trials of disease modifying therapies in peripheral diabetic neuropathy. In general terms, those are the nerve conduction velocities and particularly looking at sensory component or sural nerve. We're also very interested in the quantification of the normal neurological exam or the neuropathy impairment score in the lower limb and other composites of the neurological exam quantification’s of the neurological exam, as well as the most direct measurement of changes in nerve health for nerve fibers and that’s a direct biopsy in counting of nerve fibers densities. Dale, do you want to add anything on to that in terms of top-line efficacy endpoints. I think that covers it Joe.

Joseph Schwartz – Leerink

Okay, so you’ll be using or doing separate analyses and then choosing one for the Phase 3 any of those could be used for registration purposes?

Edward Lanphier

Again a very good question. In previous trials nerve conduction velocity has been used as both a primary and/or a secondary. And again composite scores of quantification’s of overall neurological health including the NIS-LL has been used as a primary and/or secondary in previous pivotal trials. And so based upon the data from the 901 trail, we would certainly review those data with the agency when we proposed the structure and treatment plan and statistics around a pivotal study.

Joseph Schwartz – Leerink

Very helpful, thanks.

Operator

Thank you, sir. (Operator Instructions) Our next questioner in queue is Liana Moussatos with Wedbush Securities. Your line is now open.

Liana Moussatos – Wedbush Securities

Thank you. What was stock based compensation expense in Q1 and are you going to roll out any new INDs this year?

Edward Lanphier

Hi, Liana.

Liana Moussatos – Wedbush Securities

Hi.

Edward Lanphier

I will leave the stock based compensation question to Ward, and we have not given any guidance on rolling out any new INDs this year.

Liana Moussatos – Wedbush Securities

Okay.

Edward Lanphier

So Ward, do you want to comment on…

H. Ward Wolff

Sure. Liana, the Q1 stock comp expense was $2 million even and that compared to about $8 million for the full year last year and $1.9 million for Q1 of last year.

Liana Moussatos – Wedbush Securities

And what do you think about I mean where are the transfer R&D expense from Q2 to Q4? Do you expect it to go up and then go down in Q4?

H. Ward Wolff

Liana you talking about total R&D. Yeah, I think that as you’ve seen we kind of fairly consistent a band of R&D expenses historically. So you know I think it’s the guidance we gave for total OpEx was pretty consistent with last year in total. So I think that figure that we reported for Q1 is fairly, is going to be fairly indicative for the rest of the year.

Liana Moussatos – Wedbush Securities

All right. Thank you very much.

Edward Lanphier

Thanks Liana.

Operator

Thank you. We do have a follow-up question from Charles Duncan of JMP Securities. Your line is open.

Charles Duncan – JMP Securities

Hi guys, thanks for taking my follow-up. Edward, I wondered if you had talked to us at all about the deal environment in terms of potential collaborators. I think you mentioned that following diabetic neuropathy data, you may either start or follow-up with potential collaboration conversations. I’m wondering if you’d be starting those or is that a follow-up to previous discussions and do you know that the data that you’ll be presenting, if positive, are going to be necessary and sufficient to perhaps for a collaboration for diabetic neuropathy.

Edward Lanphier

Again Charles, without getting as we would say, over the handlebars here, that’s I think that’s exactly what we think. There are many companies out there that have followed the Diabetic Neuropathy Program. There is a great deal of interest in a first-in-class disease-modifying drug in such a large market as diabetic neuropathy. And there are a number of companies that are quite up to speed on this program.

To the second part of your question as it relates to the DN program, positive data around the end points that we discussed earlier, I believe, will be sufficient to move forward from a partnering perspective.

Charles Duncan – JMP Securities

And you’re saying you’re more so focused right now in terms of collaborations, would you consider perhaps profit technology access deals for, call it, monogenic or defined genetic diseases?

Edward Lanphier

Again, without being specific on any one area, our goal, Charles, is to fully exploit and leverage the breadth and kinds of clinical outcomes that this technology platform can drive at monogenic diseases and the data that were presented at ASH and December highlights, the role of zinc finger nucleases in both gene correction and targeted insertion.

Certainly the CCR5 work highlights the ability to do targeted disruption and the SB-509 work highlights the ability to regulate endogenous genes. And our goal overtime is to leverage the breadth of this platform in multiple therapeutic targets. And so yes there is an increasing if not very broad appreciation for the kinds of biologies that this platform can drive.

There is a great deal of interest in it and we will look for partnerships beyond SB-509 going forward. And just on the subject of visibility, I think those of you who listened to the Sigma-Aldrich call earlier today and really great quarter that they had in the first quarter are also aware of the visibility that Sigma has created around the zinc finger nuclease and zinc finger platform. And there is not a pharmaceutical company really in the world anymore that’s not using this technology.

So there is a great deal of awareness about the platform, a great deal of appreciation for the unique biologies that can be driven and created by functioning at the DNA level and that’s only accelerated the interest in the technology from a therapeutic product development perspective.

Charles Duncan – JMP Securities

Well, you actually took my last question I was going to ask you because we have heard based on our diligence, some pretty positive feedback on the use of the technology. So I wondered if there was increased, any increase visibility you could offer from either at the Sigma or the [X] side from the business?

Edward Lanphier

I mean again as usual I would encourage, I would regularly talk to our partners, Sigma is obviously a lot more assessable to the street and I think they have been outspoken in their comments on Zinc Fingers and the importance, and role of that. Dow AgroSciences is being a wholly owned subsidiary Dow Chemical, who harder to get visibility there and it’s also more difficult for us to speak too to the efforts that they are making.

So we would really let our partners speak for those subjects. I will say, however, if you just do any kind of quantitative measurement if you look at zinc finger publications, if you look at the number of presentations and shown on that have been given, its really an enormous really ex-financial increase over the last several years and from what Sangamo’s doing and what others are doing I think you should expect to see that continue.

Charles Duncan – JMP Securities

Thanks for the added color.

Edward Lanphier

Thank you.

Operator

Thank you. And at this time, I’m showing no additional questions in the queue. I'd like to turn the program back over to Mr. 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 second quarter financial information will be available later today. If you have any follow up questions. Thank you very much.

Operator

Thank you. Ladies and gentlemen this does conclude today’s event. Thank you for your participation and have a wonderful day.

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Source: Sangamo BioSciences CEO Discusses Q1 2011 Results - Earnings Call Transcript

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