Sangamo BioSciences, Inc. (NASDAQ:SGMO) 30th Annual J.P. Morgan Healthcare Conference January 12, 2012 10:30 AM ET
Edward Lanphier – President & CEO
Ipsita Smolinski – Capitol Street
Ipsita Smolinski – Capitol Street
We are going to hear next from Sangamo BioSciences and the presenter is CEO Edward Lanphier. There’s a breakout down the hall to the right in the Georgian room and with that I’ll turn it over to Ed.
Thank you, very much. Thank you all for coming out early on the last day. I thought I’d start since it is the last day, maybe just a little more informally and give you a little color on our week, it’s been as always a very productive week but this year I think there’s been at least from my perspective a different level of recognition for Sangamo, the collectively the team has had nearly 100 meetings during the week with the whole lot of the ecosystem that grows up around this conference with analysts and investors and bankers and probably the most ubiquitous new constituency, the security guards are – we’ve seen a lot of them.
But we’ve also had a very productive interaction with the so many pharmaceutical companies that are camped out around the conference and I think as I said there’s been a different level of recognition for the company and its really driven by and with all the meetings we have, there’s a clear signal, there’s a clear consistency of it and its driven by two things. One, an enthusiasm for HIV program and particularly driven by the data that were presented in September at ICAC and then the manifestation or direct consequences of those data for the two new phase, two trials that we announced on Monday.
And the second is a deeper understanding, a deeper appreciation and enthusiasm for our Zinc finger nuclease platform and its unique ability to address monogenic diseases. And I will talk a little bit more about that, but the recognition of what we can drive in terms of engineering genetic cures I think has been most recently presented at ASH in terms of our factor 9 data and I will cover that. So it’s been as always a productive week, but this week in particular I think for us has been unusually positive and I look forward to telling you more about that.
So my presentation will contain forward-looking statements. I’ll refer you to our forms 10-K and 10-Q file with the SEC. Again as I think most of you know, Sangamo was focused on a unique technology platform that allows us to engineer proteins Zinc finger DNA binding proteins to target exactly the DNA sequence we want and then use that ability to target the DNA to drive unique biology’s and I’ll obviously talk more about that.
Our goal internally is to apply this to the development of novel therapeutics by functioning at the DNA level, we can absolutely drive unique genotypes and subsequent clinical phenotypes and it’s that opportunity that I think is of greatest focus for us.
We’ve also been quite successful in leveraging this science into areas outside of therapeutics, partnerships with Dow AgroSciences in the plants space and with Sigma-Aldrich in the Research and Transgenic Animal space; I’ll briefly cover those at the end. But let me emphasize because you will hear about this in our goals that our business model including in the therapeutic space is to move things forward, establish their value and then move forward with partnership. And one of our major goals this year is to establish our first major therapeutic partnership. And lastly, as a consequence of our unique business model and our ability to finance last year, we ended the year with guided ending the year with approximately $85 million in cash and ending this year, assuming no partnerships with at least $60 million in cash and so a strong balance sheet.
So very quickly just to summarize the technology platform as I mentioned we can engineer Zinc finger proteins to target precisely the DNA sequence we want and then we can use that to drive biology’s by joining those Zinc fingers with so called functional domains that allow us to turn on or turn off an endogenous gene and linking these with enzymes nucleases that allow us to specifically target the DNA sequence and change that DNA sequence. And it’s a lot of the Zinc finger nuclease technology that I am going to be talking about today.
As I mentioned this platform is agnostic to the DNA sequence, is agnostic to the species and so we’ve been very successful in leveraging this outside of the therapeutic space with partners, but we are focused in the area of Human therapeutics and our pipeline is maturing. I will spend time today really focused on our HIV program and as I mentioned earlier our monogenic disease program and in particular the Hemophilia and Hemoglobinopathies.
So the HIV program is really a pipeline in a product, we are using our Zinc finger nucleases to target CCR5; I’ll discuss that gene target in a moment. Initially in T cells but also in hematopoietic cells. And I am not going to spend any time today talking about that program, the best available information on that I think is the presentation made by Paula Cannon at CROI and that presentation is still up on the CROI website.
I am going to focus on our CD4 program SB-728. So let me first start with the target. Again I think most of you are familiar with CCR5 but just to back up, it is a receptor that HIV must use to infect the immune system and people who have a natural mutation in both of their CCR5 genes don’t get infected. The so called homozygous pet subjects don’t get infected and the best human experiment in this space was a patient, the so called “Berlin Patient” who was treated with an halogenetic bone marrow transplant from a patient who was – had both of these CCR5 genes naturally mutated with stem cells those engrafted and four years later that person is HIV free.
And so it’s a great example of that of that but it’s a very onerous and rare event. We can use our Zinc finger nucleases to recapitulate that same genotype, a disrupted CCR5 gene and then subsequently evaluate that genotype in terms of no phenotypic expression of the CCR5 on the surface of T cells and it’s that opportunity that we’ve taken into the clinic and we are very excited about.
So goal, the vision of our product is the use the Zinc finger nuclease technology to modify autologous CD4 cells that are the principal target of HIV in the immune system to create T cells that cannot be infected but are capable of mounting any antiviral effect, and if we are able to do that, those patients can then go off their antivirals and this by definition would be an opportunity to create a so called functional cure. And that’s really the term I think that’s emerged over the last 12 months around this opportunity.
So two phase, one programs were conducted and last year or the year over the last several years and there’s a couple of very high level observations from those. One was done at the University of Pennsylvania with our collaborator Carl June and other under Sangamo YND out here in California. And they share a couple of common themes. One, all of these patients were on their HAART, on antiviral medication. So came into the trial with undetectable viral load.
So this gave us an opportunity to evaluate the safety of this product, the pharmacology of the product, its normal trafficking. Do we see a positive effect on the immune system? And so on. And so we presented data initially at CROI last year, summarizing the consistency of the manufacturing, the safety, the engraftment of these cells, the putting immunity they stay there, the enhanced CD4 counts that go with that as well as the normal trafficking of these cells to various such as the gut mucosa, where there are actually reservoirs of HIV even in these patients who are on HAART and have undetectable viral load.
But the N point that’s really critical if we are going to talk about functional cure is effects on viral load, and in antiviral effect. And so the first real opportunity to do that was in the University of Pennsylvania trial where these patients after receiving the modified cells while still on their HAART and having an undetectable viral load, then went off their antiviral. And the so called treatment interruption about four weeks after they received SP-728-T. They stayed off their HAART or their antiviral medication for 12 weeks and then by protocol went back on their medication.
And so this treatment interrupting gave us an opportunity to evaluate again the antiviral effects and to look more deeply at the correlation between SP-728 and antiviral effects. And again I would refer you to both our website and ICAC for you to go through those data, I won’t go through them now but just to summarize them our collaborator Carl June with the enthusiasm for what we saw in this study characterized the data as representing a significant progress towards this objective of a functional cure.
And to skip over a lot of the analysis, what we were able to find or what we saw was a statistically significant correlation between those cells that we re-infused where both of their genes were disrupted or modified and a reduction in viral load and in particular, there was one patient on this study who actually had was a so called Delta 32 Heterozygote. So had naturally one of his two CCR5 genes disrupted. That patient had the most biallelic modification and in that patient we actually saw undetectable viral load before going back on heart. So a very clear signal.
And so this signal really created again to use the same word, a clear strategy for following these opportunity to maximize biallelic modification and in more detail the engraftment, the maximum engraftment of biallelically modified CD4 cells. And so we’ve initiated two trials. One, in exactly that same population, this Delta 32 Heterozygote population which represents about 5% or 10% of the HIV community and then also in an engraftment enhancement settling.
So let me summarize those for you. This is what we announced on Monday of this week, two new phase, two clinical trials. The first we call 902, Cohort 5 is specifically accruing Delta 32 Heterozygotes and I am very pleased to announce today that not only is that trial open, but we’ve actually treated the first subject on this study well ahead of what we had anticipated in the fourth quarter.
So moving very quickly. This is a study that unlike the next one I will talk to you about, after six weeks of treatment, these patients – I am sorry, two months in this protocol, in this subject. After two months of infusion, of SB-728-T, they again go off their HAART medication. And then for a little bit longer, for 16 weeks. This protocol then allows us if we see undetectable viral load in these patients to continue to stay off their HAART medication and evaluate the longevity and durability of this response. So we are quite excited about not only initiating this but actually starting it and treating the first patient.
The second trial as I mentioned, actually takes advantage of a well established approach of preconditioning or treatment conditioning process where you can create an environment in Vivo that creates a very significant expansion of the cells that you put in. so we are looking to actually get instead of doubling the number of biallelic cells that we see in these so called Delta 32 Heterozygotes but actually a 10 to 100 times increase in these biallelically modified cells.
So again, basically the same structure patient on HAART, they go off their HAART therapy for 16 week treatment interruption and again we’ll be able to evaluate the antiviral effect during that period of time. This is a dose escalation study in terms of the preconditioning and so we look forward to – can starting that, the trial is open and accruing subjects on that study.
So just to summarize where we are in this program and as I mentioned, the opportunity to really look at a so called functional cure is of great interest not only in the clinical community and with patients but also in the pharmaceutical industry. We are well underway in terms of these two new trials and I guess the thing that I’d emphasize is as we talk about these studies is that there is a clear signal that came out of the phase one data and these trials are designed specifically to take advantage of that observation.
Turn now in – a few minutes I have left to the other area that I mentioned right up front that has really captured an enormous amount of attention and I’d point to the data that were presented at ASH just a few weeks ago in the factor 9 space and I will cover these. The approach really though is based upon this platform and so let me re-emphasize that. On the left hand side of your slide is what I have been talking about in terms of the CCR5 approach.
We can put Zinc Finger Nucleases in the target exactly the CCR5 gene and we can disrupt the expression, thereby creating as I mentioned this phenotype we don’t get a CCR5 gene express. We can also use Zinc Finger Nucleases in the context of a donor DNA, a DNA sequence that looks very, very similar to the target gene that we’re going after. But we can cause that donor to put in different nucleic acid sequences.
This is particularly relevant where there’s a disease that’s caused by a mistake in the gene, these so called Monogenic Diseases and we can actually physically go in, change the nucleic acid sequence and then by definition, create an opportunity for the correct protein to be produced. And as I mentioned upfront, the real goal here is to create or to use this opportunity to engineer genetic cures for monogenic diseases. And there are some very, very important differential technical advantages of starting at the DNA level and driving biologies and again I’ll go through this as we go through each one of the programs, but by getting a permanent modification at the site where the mistake is made, we can only correct the gene and get the correct protein, but we leave that gene under the control of its own promoter.
All of the normal mechanisms, all the normal biological feedback that go into regulating the expression of that gene are maintained, but we get the correct protein being produced. So this is really the method of choice for engineering genetic cures. So let me walk you through a couple of examples of what we’re doing, but again I’ll come back at the end and say this is really a very unique and powerful platform for addressing monogenic diseases.
I mentioned probably the current, most visible approach that we’re looking at or target that we’re looking at is in the area of hemophilia in Factor 9. This was a Nature publication that came out this summer where we talked about the work that we did in neonatal mice where we with a single systemic injection, systemic delivery of a Zinc Finger Nuclease, we were able to get permanent modification of the Factor 9 gene in the liver and then 5% expression or normal circulation of the Factor 9 in the plasma and near normalization of the coagulation time frames.
And so these are the data from that neonatal mouse model. On the left hand side of the slide you can see in units the number of human Factor 9 circulation and then on the right hand side statistically significant improvement or normalization of the coagulation timeframes. So these were data that were presented and published this summer and then in ASH and this is what I said – I just referred to earlier, we presented data from the adult mouse model and well, it’s well known that in this coagulation monogenic diseases, even 5% of normal circulating levels can have a therapeutic benefit.
On the slide on the left hand side or the figure on the left hand side, but the right hand side of that figure, you see the percentages of normal circulating Factor 9 and we’re getting stable expression near the 25% level. So very, very positive increase from a single systemic injection and on the right hand side you can see in the mock treatment in this model system, very slow coagulation timing and on the right hand side of the slide after two weeks of the initial treatment, absolute normalization of coagulation time.
So this is very exciting to us and one that we’re pushing forward very, very rapidly because it provides a couple of things. Systemic delivery of the Zinc Finger Nucleases, highly specific normalization and under the control of its own promoter and at the bottom of the slide and again this is a consistent general statement about the platform itself, long term expression under the control of its own promoter.
The other area we’ve talked a lot about and are very interested in are the hemoglobinopathies and particularly sickle cell anemia. This is caused by a single nucleic acid change in the beta globin gene that creates this misfolded protein in there for the sickling phenotype. We’ve shown and again going forward and the real target tissue here is in hematopoietic stem cells. If you can change this biology, change again the gene and get the correct protein produced, you can change the phenotype and so we’ve now in hematopoietic stem cells, CD34 hematopoietic stem cells, shown that we can get highly specific, permanent correction of the factor of the beta globin gene, expression of normal beta globin and normal expression from its endogenous promoter.
So again an example of not only an important disease, but also an example of extension and leveraging of the platform. One of the more recent publications that just came out again, not only emphasizing the generality of the approach, but also its ability to be applied across different cell types was published again in Nature in October this year. This target is the alpha1-antitrypsin gene which is an important liver disease particularly in Europe and I’d mentioned two things here to emphasize beyond what I’ve just talked about. One is that this was done in induced pluripotent stem cells and so I’ll talk about that in a second.
But the other key, key feature here and one that we are really very – it’s very important as we’ve developed therapeutics, is the pristine specificity that we’re able to achieve with these nucleases. The only change in the coding region of the genome of these induced pluripotent stem cells was the change induced by the Zinc Finger Nuclease at the alpha1-antitrypsin gene site and then correction of that.
So just a little bit more color in terms of this approach. We were able to use – the experiment was taking skin cells from a patient with this disease, reverse engineering those fibroblast back to a pluripotent cell, these induced pluripotent stem cell, making this change with the Zinc Finger Nuclease at the alpha1-antitrypsin gene and then taking those iPS cells, putting them back into the mouse model of this disease and showing that they not only – those iPS cells not only differentiate in a normal way, again the pristine specificity nor off target effects, but also then that that is a curative in terms of production of the normal alpha1-antitrypsin.
So again leveraging of the platform in a unique way in an important disease area. And lastly I just talk about of immune diseases X-linked SCID. I always like to put this up. It’s a little bit hard to see. You can see the title Highly Efficient Endogenous Gene Correction, but at the far left hand side of this you can see Nature’s characterization of this genome editing process, rewriting the rules of gene therapy, because again what we’re able to do is keep the gene at its site, under the control of its own promoter, but the permanent genotypic correction and therefore downstream phenotypic correction and again this is work that we’ve published extensively.
So this is just a few examples of the platform nature of this approach, but really there are many, many monogenic diseases to which the Zinc Finger Nuclease technology is agnostic to the target. And again, coming back to what I said upfront, there’s a great deal of recognition, much more so than in the past, not only of where we are in terms of some specific product approaches, but also in terms of the generality this platform and the unique biologies that can be driven at the DNA level with Zinc Finger Nucleases.
So just to summarize, again our goal here is to engineer genetic cures in the monogenic disease space, targeting any therapeutic genes across a range of cell types, including systemic delivery and again just short term transient expression or delivery of these nucleases allow us to correct the gene permanently to get that normal protein produced.
So that gives you a quick update on where we are in terms of our therapeutic programs and I think you get a sense of at least why we’re so enthusiastic about the upcoming year. Let me turn just briefly to I think what is a unique business model in the industry. Because of the generality of the technology and our broad intellectual property position in this area, we’ve been quite successful in leveraging this outside of human therapeutics.
Our partnership with Sigma-Aldrich is one of the best I’ve ever been associated with. We hosted a dinner on Monday night for our shareholders and analysts and the CEO of Sigma-Aldrich joined us and was very, very complimentary, not only about the importance of this collaboration, but the growth of Zinc Finger Nucleases and their business model and just commented specifically on their recent acquisition of BioReliance and being able to actually leverage the Zinc Finger Nuclease cell on engineering in that collaboration.
We also have an important collaboration with the Dow chemical company and specifically the Dow AgroSciences subsidiary and plants. They’re employing this not only internally but also continue to sublicense this technology in the plant field. The quantification or the manifestation of this is twofold, both quantitative and qualitative. I’d say particularly in terms of the qualitative for Sigma, this has really gotten the technology out into the hands of virtually every academic and industrial scientist interested in genome engineering. But quantitatively, this has had a very unique opportunity for us to access non-diluted funding, to date nearly a little over $80 million coming to the company and very importantly, ongoing milestones and royalties from both of these collaborations.
And one of the –and this is a bit of an anomaly, but one of the manifestations again of these collaborations can be seen in our cash position. We ended the third quarter of last year with $85 million in cash and as you’ll see on the next slide, I’m guiding to ending this year with $85 million in cash. So while running all of these clinical trials on our own nickel, we have significant revenues and milestones in the fourth quarter coming in from these partnerships.
So starting the year with $85 million in cash, assuming no additional financings or partnerships, we’ll end this year doing all the things we’ve discussed with at least $60 million in cash. But the goals for the year are really very straightforward and highly consistent with what we just discussed, execute, execute, execute on our SB-728-T HIV programs and I’m pleased to announce today that we’ll be presenting additional data at CROI in March and again a very important opportunity to continue to discuss the mechanism of this approach. You’ll also continue to see very important visibility around our monogenic disease platform and in the second half of this year, clear prioritization around new INDs to be filed in the future in these areas.
Another major goal for us this year and one that I’m very optimistic about is our ability to now move forward, having established value in the therapeutic space with therapeutic partnerships and so that’s a high priority for us, one that’s highly consistent with our business model and a goal for this year.
And lastly, just the financial guidance. As I mentioned beginning the year strong position with $85 million in cash, no debt, nothing but common stock on the balance sheet. We expect to end the year with at least $60 million in cash.
So A, thank you for your time and attention early this morning on the last day of the conference. Just to summarize, unique technology platform focused in unique clinical settings, a differentiated business model, a strong balance sheet and what I think is going to be a very exciting 2012. Thank you very much for your time.
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