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Edited Transcript of SGMO earnings conference call or presentation 7-Aug-19 9:00pm GMT

Q2 2019 Sangamo Therapeutics Inc Earnings Call

RICHMOND Aug 15, 2019 (Thomson StreetEvents) -- Edited Transcript of Sangamo Therapeutics Inc earnings conference call or presentation Wednesday, August 7, 2019 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Adrian Woolfson

Sangamo Therapeutics, Inc. - EVP of Research & Development

* Alexander D. Macrae

Sangamo Therapeutics, Inc. - CEO, President & Director

* Edward Rebar

Sangamo Therapeutics, Inc. - Senior VP & CTO

* McDavid Stilwell

Sangamo Therapeutics, Inc. - VP of Corporate Communications & IR

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Conference Call Participants

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* Boran Wang

Guggenheim Securities, LLC, Research Division - Associate

* Eric William Joseph

JP Morgan Chase & Co, Research Division - VP & Senior Analyst

* Huidong Wang

Barclays Bank PLC, Research Division - Research Analyst

* Lyla Youssef

Cowen and Company, LLC, Research Division - Research Associate

* Maurice Thomas Raycroft

Jefferies LLC, Research Division - Equity Analyst

* Yanan Zhu

Wells Fargo Securities, LLC, Research Division - Associate Analyst

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Presentation

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Operator [1]

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Good afternoon, and welcome to the Sangamo Therapeutics teleconference to discuss second quarter 2019 financial results. The call is being recorded. I will now pass over to the coordinator of the event, McDavid Stilwell, Vice President of Corporate Communications and Investor Relations. The floor is yours.

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McDavid Stilwell, Sangamo Therapeutics, Inc. - VP of Corporate Communications & IR [2]

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Hello, and thank you for joining us. As we begin, I'd like to point out that we have posted our updated corporate presentation to the Sangamo website, and we'll be referencing several of these slides today. A link to the slide presentation may be found on our website, sangamo.com, on the Events + Presentations page of the Investors + Media section of the site.

I'd also like to remind everyone that the projections and forward-looking statements that we will discuss during this conference call are based upon the information that we have available today.

Forward-looking statements include, but are not limited to, statements related to the timing and scope of Sangamo's genomic medicine platform and products; the potential for Sangamo's product candidates to provide clinical benefit to patients; Sangamo's development and manufacturing plans; and Sangamo's expectations regarding its financial performance. 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.

These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are detailed in documents that the company files with the Securities and Exchange Commission, specifically in our most recent annual report on Form 10-K and in our most recent quarterly report on Form 10-Q. The forward-looking statements stated today are made as of this date, and Sangamo undertakes no duty to update such information, except as required under applicable law.

With me this afternoon on the call are several members of the Sangamo senior management team, including Sandy Macrae, Chief Executive Officer; Adrian Woolfson, Head of Research and Development; Gary Loeb, General Counsel; and Ed Rebar, Chief Technology Officer.

And again, as a reminder, during the call, we will refer to several slides in our corporate presentation. And the slides are to be found on the Events + Presentations page of the Investors + Media section of the site.

Now I'd like to turn the call over to Sandy.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [3]

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Thank you, McDavid, and good afternoon to everyone on this call. Thank you all for joining us. At Sangamo, our mission is to translate our groundbreaking science into genomic medicines that transform patients' lives. We are realizing this vision by developing capabilities that allow us to design therapeutic approaches to resolve the underlying genetic causes of disease using whatever technology is best suited to deliver that treatment, including gene therapy, ex vivo gene-edited cell therapy, in vivo genome editing and gene regulation.

We are accelerating near-term opportunities with gene therapies because gene therapy is tractable now and has defined regulatory pathways and well-documented manufacturing processes and because it can provide immense value to patients. It also leverages our extensive experience in transgene and cassette engineering.

We continue to advance ex vivo gene-edited cell therapy because we've shown that we can do it well with our foundational HIV cell editing studies. It has a relatively straightforward application that builds on the science of our core ZFN platform technology and because it's an emerging approach with a defined regulatory pathway and significant therapeutic potential, which is understood by both the medical and the patient communities.

Finally, we're building momentum towards in vivo genome editing and gene regulation as we believe that they are the therapeutic approaches that will define the future and transform the practice of clinical medicine. We are continuously learning from our experience and improving our technology and believe that we will solve the technical challenges associated with efficient delivery that are likely to be necessary to achieve successful in vivo editing.

Given the tremendous diversity and optionality inherent to our platform, we're sometimes asked how to prioritize our indications. The answer is that we select potential indications to satisfy 4 key criteria: firstly, that they address a significant unmet medical need; second, that the underlying biology is well understood; third, that our suite of genomic medicine technologies have the potential to efficiently address the relevant underlying molecular abnormalities; and finally, that there is sufficient potential commercial value.

In the context of this core criteria that inform and define our strategy, I would also like to discuss our portfolio prioritization within the context of the 3 principal developmental waves at Sangamo. Wave 1, or our near-term opportunities, includes programs that are in the clinic or close to entering the clinic and have the potential to deliver improved products within the next few years. These include the hemophilia A and Fabry disease gene therapy programs, our ex vivo gene editing programs in beta-thalassemia and sickle cell disease and our cellular therapies including our CD19 CAR-T, our TX200 CAR-Treg for HLA-A2 mismatched kidney renal transplant patients and our in vivo genome editing program. The experience gained in the clinical applications for various technologies and an understanding of delivery and engineering both informs our prioritization and enables us to build the path forward for strong next wave of clinical candidates.

Wave 2, or our midterm opportunities, are programs that we expect to progress into clinic within the coming years. These include follow-on gene therapy products for rare disease, CAR-Treg programs for autoimmune and inflammatory diseases and our CNS platform. These programs incorporate improvements to our platform technologies that build upon many of the lessons learned from our myriad of clinical studies.

Wave 3, or our long-term opportunities, will include projects that will utilize new technologies currently under development at Sangamo. We expect these to help define the long-term future of our company and to redefine the field of genomic medicine. These would include extensions to our core gene editing and genome targeting capabilities, including novel strategies for integrating and editing genes as well as an expanded set of options for efficient and precise in vivo delivery.

As a fully integrated clinical-stage company, it's clearly important to prioritize wave 1, the near-term value drivers, as these promise to bring medicines to patients who need soonest. This strategy enables us to realize near-term value of our portfolio while at the same time building a sustainable long-term pipeline.

This quarter's accomplishments illustrate how we continue to make progress across the 3 waves of Sangamo activities and how these progress has been informed by lessons and from our experiences in the new and emerging field for genomic medicine. By way of example, last month at the Congress of the International Society of Thrombosis and Haemostasis, or ISTH, in Melbourne, Australia, we presented updated Phase I/II results for SB-525, our investigational hemophilia A gene therapy candidate in partner with Pfizer. We were pleased that the data continues to look promising, and they represent a well-tolerated, predictable and reliable product candidate.

In the SB-525 program, we observed significant increases in efficacy above a defined vector dose thresholds as the dose was increased from 1e13, where a Factor VIII production was measurable but low, to 3e13 vg per kg, where Factor VIII activity rises well into the normal range. This taught us a lot about AAV6 transduction behavior and the efficiency of AAV 6 transduction in humans. These learnings are likely to be helpful for our in vivo genome editing studies, where we use the identical AAV6 vector as our delivery vehicle. We are using this information to help improve delivery in our in vivo genome editing clinical trials by increasing transduction efficiency, and thereby, the editing efficiency. And I've asked Adrian to speak more about the SB-525 results and how these insights are helping us to make improvements in our in vivo genome-editing platform later on in the year.

In addition to the compelling clinical data that we are obtaining, we've recently published 2 manuscripts in the high-impact journals Nature Medicine and Nature Biotechnology, which is very novel and powerful approaches for engineering zinc finger transcription factors for allele-specific repression as well as how zinc finger nucleases can be engineered to enhance their genome-wide editing specificity and it substantially extends the therapeutic utility. These publications illustrate how our commitment to innovative science enables new therapeutic opportunities. And I've asked Ed Rebar to describe these 2 papers in more detail later on in the call.

Before I turn the call over to the leadership team, I'd like to introduce our newest member, Gary Loeb, who has recently joined Sangamo as EVP and General Counsel. Gary will lead all of our legal affairs and has over 20 years of experience in biotechnology and pharmaceutical law, compliance, intellectual property and litigation. We are truly delighted to have him on board and look forward to working together with him as we continue to grow as a clinical-stage development company and then turn to the commercialization phase.

I'll now turn the call over to Adrian Woolfson, who will provide more detail on our clinical updates. Adrian?

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Adrian Woolfson, Sangamo Therapeutics, Inc. - EVP of Research & Development [4]

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Thank you, Sandy, and thanks to everybody on the call for joining us today. I want to start by elaborating on the SB-525 hemophilia A gene therapy results that we recently presented at

ISTH. And that was a meeting that I was fortunate enough to attend. And while in Melbourne, Australia, I was really struck by the palpable excitement in the room about the potential of gene therapy and by the way in which it provides such enormous improvement over the standard of care for hemophilia A patients and especially by the intensity of the medical communities' interest in our clinical data. And it's really remarkable to see how gene therapy, even in these earlier stages, has already transformed patients' lives. And it makes us more and more motivated to work with Pfizer to get the product into the market as swiftly as possible.

At the Alta study data are presented at ISTH (inaudible) results in 10 patients treated across 4 different ascending dose cohorts. These were 9e11, 2 patients treated; 2e12, 2 patients treated; 1e13, 2 patients treated; and the 3e13, 4 patients treated. SB-525 was generally well tolerated, and unlike other studies, patients on the Alta study were not treated with prophylactic steroids. A single treatment-related serious adverse event was reported, but this patient experienced hypotension and fever 6 hours after completing the SB-525 infusion but is fully resolved with treatment and the patient was discharged as planned within 24 hours of the onset of the event. And we've not seen any similar grade 3 hypotension events subsequently.

Treatment-related adverse events in the study are detailed on Slide 14. Patients treated with SB-525 had a loss of Factor VIII expression associated with an alanine aminotransferase elevation. In the 3e13 cohort, 2 subjects experienced a transient grade 1 ALT elevation, which was around greater than 1.5x the baseline. But both of these patients were successfully managed with a tapering course of oral steroids.

Slides 15 to 16 of our presentation shows Factor VIII activity across the different dose cohorts as measured by both the one stage and by the chromogenic assays. And as you can see, patients demonstrated a dose-dependent increase in Factor VIII activity with a pronounced increase in Factor VIII activity as the dose was increased from the 1e13 dose to 3e13. And we believe that this provides evidence of a threshold effect in the

AAV6 transduction and that this may be relevant towards the Sangamo clinical programs that you can sustain AAV6 better. And it's worth also noting that in the 2 patients treated at the 1e13 dose, Factor VIII activity levels have been durable through to the time of the data cutoff which is, respectively, 52 and 32 weeks.

Now turning now to Slide 17, which focuses on the Factor VIII activity levels of the 4 patients treated in the high-dose 3e13 cohort as measured using the chromogenic assay. For these patients, Factor VIII activity data were available through to 24, 19, 6 and 4 weeks of follow-up, respectively. The first 2 patients treated in the 3e13 dose cohorts, these are patients 7 and 8, remains within the Factor VIII activity normal range as measured using the chromogenic assay through weeks 24 and 19, respectively. The next 2 patients in the 3e13 cohort, patients 9 and 10, with 6 and 4 weeks of follow-up, respectively, demonstrated rapid Factor VIII activity kinetics, which generally appears consistent with those of patients 7 and 8, which were measured at similarly early time points.

As shown in Slides 18 and 19, no patients treated at the 3e13 dose cohort had any documented bleeding event at all at the time of the data cutoff. And none of the patients in this dose cohort required Factor VIII replacement following the initial use of prophylactic factor. It will clearly be important to continue to follow these patients in order to determine the long-term durability of the response to 525 and to determine whether these results recapitulated in subsequent patients.

Resistance to Factor VIII activity is important, and the data will need to mature for a longer duration to determine the durability of the response. And we plan to present longer-term follow-up data from these patients later on in the year. And I'm happy to say that based on these data, the program was recently granted regenerative medicine advanced therapy, or RMAT, status by the FDA. And this designation allows the FDA to be more responsive to our request for meeting and has the potential to expedite the regulatory process in the context of the planned Phase III registrational study. We've seen the discussions with the FDA regarding requirements for the registrational study are currently ongoing.

With regards to the current study status, patient 11, particularly the final patient treated in the 3e13 dose cohort, is now being dosed. Treatment at this high-dose cohort for patients complete for Phase I/II trial enrollment commitment to Pfizer. And as announced earlier, the transfer of the SB-525 manufacturing process from Sangamo to Pfizer has already been initiated. Pfizer is currently progressing the CMC work on schedule with a commercial process that is now being scaled up to 2,000 liters. We look forward to working with Pfizer on the registrational study and is very excited to see the program moving forward into late-stage development. And we think it's formed by Pfizer that the lead-in studies for registrational Phase III has already been submitted to ClinicalTrials.gov and is expected to post in the coming days.

So in summary then, the combination of achieving Factor VIII activity levels in the high and normal range, the rapid genetics and the durability of the Factor VIII response observed so far in patients treated at lower doses as well as the relatively low intra-cohort variability and the context of 0 bleeding events and the complete elimination of exogenetic Factor VIII usage in the patients treated at the highest dose suggest to us that we have the opportunity to move forward into late-stage development with potentially differentiated hemophilia A gene therapy that could have a meaningful clinical impact for patients with hemophilia A.

As mentioned by Sandy, our recent positive experience with SB-525 has helped inform the development of our wholly owned ST-920 Fabry gene therapy program, which is our next-gene therapy to enter the clinic. And we believe that our considerable know-how in AAV6 cassette engineering, AAV delivery and gene therapy dosing that we obtained from the ongoing SB-525 clinical trial has enabled us to design a Fabry gene therapy that has the potential to deliver a meaningful clinical impact to patients.

And I'm happy to say that our clinical operations team has recently activated the first 2 clinical study sites. And we expect to enroll the first patients into the STAAR study later this year. And I really look forward to providing the progress updates to you in due course.

I want to briefly move on now to update you on some of the other programs. And first, with regard to the ST-400 THALES study, which you'll remember is our investigational gene editing cell therapy study in beta-thalassemia, which is partnered with Sanofi. And 2 patients have to-date been treated in that study. Treatment in the third patient is imminent, and the fourth patient has recently entered into the study. We anticipate completing enrollment to the THALES study later this year with a total of 6 patients accrued. As a reminder, THALES is enrolling patients with severe transfusion-dependent beta-thalassemia that are either of ß0/ß0 or non-ß0/ß0 genotype and must have at least 8 documented red blood cell transfusion event per year in the 2 years prior to screening. We expect to have preliminary data available for the study by the end of the year.

And it's important to note that the collective evidence from other stem cell studies suggests that autologous stem cell transplants like ST-400 require long-term data of at least a year and data from multiple patients before a treatment effect may be understood.

I'll just move on now to our cell therapy portfolio. We currently remain on track to follow the CTA for CAR-Treg TX200 in HLA-A2 mismatch kidney transplantation later this year. And the tech transfer to our CMO is, I'm happy to say, nearly complete. This drug is important to us as we believe it will be the first CAR-Treg cell therapy to ever be tested in humans. And this small set event will represent yet another first for Sangamo and will comprise important catalyst as we believe that the TX200 program will play a key role in establishing a human proof of concept for the safety and therapeutic viability for CAR-Tregs in general. Now if successful, it promises to pave the way for the broader application of CAR-Tregs to one of the medically and commercially significant autoimmune and inflammatory indications.

Now the lastly, Kite, a Gilead company, is planning to initiate the clinical study of Kite-037, which is an allogeneic anti-CD19 CAR-T cell product in 2020.

Moving on now to our in vivo genome editing program, which I believe has the potential, if successful, to eventually redefine genomic medicine. We've previously mentioned that we plan to open a new MPS II study that utilizes our second-generation albumin locus targeted ZFN and incorporate engineered modification both to the zinc finger protein alpha helix recognition domains and also to the (inaudible) nuclease fragment as well as the expression (inaudible).

In cellular studies, these are [BRCA3 agents] that exhibited substantially improved gene editing activity. And in recent months, we've identified several additional potential improvement that may further enhance the potency of our in vivo genome-editing platform. Now each of these is anticipated to enhance the delivery of zinc finger to hepatocytes, which we believe is their main imaging step that must be overcome to achieve clinically meaningful levels of editing.

And as Sandy mentioned earlier, we've gained important insights into our AAV6 delivery vehicles through our various clinical studies, including the SB-525 gene therapy program in hemophilia A, where we observed significant increases in efficacy above a defined back to dose thresholds when the dose is increased from the 1e13 to the 3e13 dose level. And this may be seen clearly on Slide 16. And we believe that this suggests that AAV6 will be an effective delivery vehicle in the in vivo setting once the critical intracellular (inaudible) concentration has been achieved.

Now we already know from both in vitro and in vivo preclinical studies that zinc finger is an extremely efficient genome editor when sufficient intracellular levels have been obtained. And this understanding, combined with our knowledge of the AAV6 thresholds, is largely to consider several complementary methods for further increasing the efficiency of hepatocellular transduction.

And the key matters under consideration are as follows: first, increasing the total dose administered on AAV, which is supported by our current safety experience; second, adjusting the ratio of the zinc finger to the donor transgene to increase the concentration of each zinc finger containing AAV species; and third, engineering AAV6 for enhanced transduction efficiency; and finally, deploying our next generation of albumin locus constructs with updated zinc fingers to improve genome editing precision, efficiency and specificity. We're currently in the process of planning and initiating several new preclinical studies to evaluate these options. And based on our current assumptions, including the time frame to manufacturing AAV6, we believe that this program will be in the clinic by the end of 2020. We will update investors on this timing as and when we know more.

And I'd now like to turn the call over to our Chief Technology Officer, Ed Rebar, who will provide the preclinical and technology assay. Ed?

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Edward Rebar, Sangamo Therapeutics, Inc. - Senior VP & CTO [5]

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Thank you, Adrian, and good afternoon, everyone. At Sangamo, one of our foundational and most enduring commitments has been to advancing the science of genomic medicine. We feel strongly that the most impactful medical advances results not only from the scope or use of current knowledge but also by the application of new capabilities and insights developed through innovative research. This past quarter, we published 2 manuscripts that exemplify this philosophy and that demonstrate how scientific advances can enable new therapeutic opportunities.

For my comments today, I will provide a brief overview of each. I hope that you will be as excited as I am by their implications. I'll begin by describing the work of my colleague, Jeff Miller, who has developed a fundamentally new strategy for optimizing the specificity of gene editing nucleases. This work titled, "Enhancing gene editing specificity by attenuating DNA cleavage kinetics," was published just this last week in Nature Biotechnology. In the paper, Jeff and colleagues showed that zinc finger nucleases may be optimized for highly specific function via the novel approach of engineering their catalytic domain to slow down its cleavage rate.

In pursuing this approach, Jeff identified single-residue variants of the catalytic domain that could fully preserve on-target activity while globally suppressing off-target cleavage. By combining these substitutions with others within the zinc fingers' affinity Jeff developed ZFNs for a therapeutic target gene, T cell receptor alpha, that could mediate essentially complete editing with no detectable off targets under highly sensitive assay conditions with a median background signal of less than 0.1%.

This work has substantially improved our ability to rapidly engineer highly specific ZFNs for clinical use. More generally, the principles that Jeff has elucidated will likely find broad utility beyond the field of gene editing for optimizing the performance of other engineered protein systems.

In the second paper, my colleague, Bryan Zeitler, established a new approach for selectively eliminating expression of the pathological protein species in Huntington's disease. This fatal neurodegenerative condition is caused by a dominant gain-of-function mutation comprising an expanded trinucleotide repeat in the Huntington gene.

Bryan's article titled, "Allele-selective transcriptional repression of mutant HTT for the treatment of Huntington's disease," was published in the July issue of Nature Medicine. In the paper, Bryan and colleagues showed that they could selectively eliminate expression of disease alleles by the direct targeting of the zinc finger repressor proteins to the expanded trinucleotide repeat. In pursuing this approach, Brian's team identified zinc finger protein repressors that exhibited cooperative recognition of the expanded repeat, which enabled a high degree of allelic discrimination. In patient-derived fibroblasts and neurons, these ZFPs selectively repressed disease-causing alleles over 100-fold dose range while preserving expression of the healthy wild-type allele.

An important component of this work was this characterization of the repressors in preclinical disease models, which was performed in collaboration with the Cure Huntington's Disease Initiative Foundation. Using several different mouse models, Sangamo scientists and our collaborators showed the delivery of repressors to the CNS, central nervous system, could increase levels of neuronal markers, improve behavioral and electrophysiological deficits and reduce levels of Huntington aggregates and other molecular correlates on the disease.

More generally, the study has established transcriptional repression as an effective approach for eliminating protein drivers of central nervous system disease. This is significant given that many neurodegenerative conditions appear to be driven by apparently expressed or misfolded peptides whose genetic source may be known but whose exact molecular identity may be difficult to ascertain among the diversity of different isomers, confirmational variance and post-translationally modified products that may be generated from any given gene. The ability to side step this complexity via gene repression provides a powerful means for reducing technical risk as compared to protein-targeted technologies such as monoclonal antibodies and small molecule drugs in situations where the exact pathological species is unknown.

Our partner for this program, Takeda, is currently working with Sangamo on further engineered designs to selectively target the mutant Huntington gene and represses transcription. We understand that Takeda will evaluate the potential clinical candidate for the treatment of Huntington's disease in preclinical IND-enabling studies.

In summary then, this was an impactful quarter for Sangamo science with major publications in 2 high-impact journals. I'm very proud of these achievements by our colleagues and collaborators and look forward to providing further updates as our other research programs mature.

I'll now turn the call over to McDavid for a review of our second quarter 2019 financial results. McDavid?

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McDavid Stilwell, Sangamo Therapeutics, Inc. - VP of Corporate Communications & IR [6]

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Thank you, Ed. I'm filling in for our interim CFO and EVP of Corporate Strategy, Stéphane Boissel, who has obligations overseas today and is consequently unable to join us on the call. Detailed financial statements were included in the press release that we issued this afternoon and in the Form 10-Q that we filed just prior to this call. Accordingly, I will only address the highlights.

Revenues for the second quarter ended June 30, 2019, were $17.5 million compared to $21.4 million for the same period in 2018. The decrease was primarily due to a decline of $3.7 million in revenues related to our agreement with Pfizer and was due to a change in an estimate as a result of the expansion of the project scope of the hemophilia A collaboration.

As anticipated, operating expenses increased in the second quarter ended June 30, 2019, reflecting the company's growth through the acquisition of TxCell, increased U.S. headcount in support of growth of the preclinical pipeline and clinical development programs and manufacturing readiness activities.

Total operating expenses for the second quarter ended June 30, 2019, were $51.1 million compared to $40.6 million for the same period in 2018. Research and development expenses were $36.5 million for the second quarter of 2019 compared to $29.3 million for the same period in 2018. The increase in R&D spend was primarily due to manufacturing and clinical trial expenses.

General and administrative expenses were $14.6 million for the second quarter of 2019 compared to $11.3 million for the same period in 2018. The increase was primarily due to increased compensation costs due to headcount growth and increased facility expenses related to our new Brisbane and San Francisco Bay Area facility. Construction of our in-house manufacturing capability in Brisbane is proceeding on schedule, and we expect to commence GMP qualification procedures early next year.

As of June 30, 2019, the company had cash, cash equivalents and investments of $450.3 million.

As for our financial guidance for 2019, we continue to project operating expenses of $210 million to $220 million for the year. Regarding our cash runway, we need to project the current cash, cash equivalents and investments should provide funds for operations through year-end 2021.

And with that, I'll now turn the call back to Sandy for some closing remarks.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [7]

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Thank you, McDavid. I would like to close by saying that we're very pleased with the various accomplishments this quarter and excited about the future. Clinical data from our hem A gene therapy candidate continues to be promising, and we've made significant progress in initiating the transfer of the clinical program to Pfizer and in progressing registrational trial discussions with regulators. Pfizer is committed to taking the study into late-stage development, and we anticipate that this will result in our first licensed product. The favorable hem A data portends well for our gene therapy program in Fabry, for which the first clinical site was activated this quarter.

We are also proud of our 2 publications in Nature Family journals that help define the basis of our enhanced next-generation ZFN gene editing platform and illustrate the exquisite selectivity of our gene regulation platform that enables us to constantly address challenging CNS indications of high unmet medical need that affect large patient populations and have to-date provide intractable using conventional medicines.

We look forward to continuing to show updated data and to progressing new programs based on our discoveries into the clinic as part of our next wave of INDs. As mentioned, we, in parallel, continue to push ahead with our strategy to initiate our next in vivo genome editing trial that addresses perhaps the most challenging area of gene editing. It is important that we evaluate the potential improvements to our in vivo genome editing technologies, which is, we believe, the first step on the journey to successful in vivo gene editing that will help define the future of clinical medicine.

We look forward to updating you further on the key catalysts and milestones ahead. I would like to thank you once again for joining us on the call today. We'll now turn to your questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question in queue will come from the line of Gena Wang with Barclays.

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Huidong Wang, Barclays Bank PLC, Research Division - Research Analyst [2]

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Congratulation on all the progress. So just first question regarding the beta update, you mentioned like Q4 of this year, both hemophilia A and beta-thalassemia will have update. Should we expect this at ASH. And then we -- if yes, will we see some meaningful disclosure in the abstract?

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McDavid Stilwell, Sangamo Therapeutics, Inc. - VP of Corporate Communications & IR [3]

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It's McDavid. Thanks for the question. So we're not going to commit to that conference until we've actually had our abstracts accepted at the conference, but that would be a logical place to present the data.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [4]

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And we are emphasizing, Gena, that the patients, particularly patient 3 or 4, would have very little data acquired by that time by the end of the quarter. And that this feels -- it seems like from the bluebird experience, this may take some time before we fully understand the benefit to the patients.

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McDavid Stilwell, Sangamo Therapeutics, Inc. - VP of Corporate Communications & IR [5]

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You're referring to beta-thalassemia.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [6]

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Yes, exactly.

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Huidong Wang, Barclays Bank PLC, Research Division - Research Analyst [7]

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Regarding beta-thalassemia, did you enroll any more ß0/ß0 patient?

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McDavid Stilwell, Sangamo Therapeutics, Inc. - VP of Corporate Communications & IR [8]

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We haven't discussed the patients that we're enrolling.

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Huidong Wang, Barclays Bank PLC, Research Division - Research Analyst [9]

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Okay. And then just a quick question regarding the hemophilia A and the Fabry disease programs. So just wondering, for the Factor VIII level, when we look at the initial first combination it seems like the Factor VIII level continue increase. Just wondering if you have any scientific mechanisms or understanding that could explain the continued increase of the Factor VIII level in the first 6 months.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [10]

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I'm not sure we see that. I'm looking at the graph, which slide number is it?

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McDavid Stilwell, Sangamo Therapeutics, Inc. - VP of Corporate Communications & IR [11]

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Number 16.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [12]

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16. We feel looking both at the -- looking at the chromogenic, both at the linear and the logarithmic that within 10 to 12 weeks, are plateauing out. Do you see it still increasing at that point?

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Huidong Wang, Barclays Bank PLC, Research Division - Research Analyst [13]

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I see. So like if you look at Slide 15, that one stage assay and then maybe 16, also on the left side, kind of -- okay. So we will see -- like so you expecting this should plateau out, right? So basically, later this year, if we see a longer follow-up, we should see the protein level should stabilize, around 150 if we're using chromogenic assay or one stage assay will be like within 200 to 200 -- like 150 to 200 range, right?

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [14]

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I'm going to pass you on to Adrian in a moment, but we focus on the chromogenic assay. And more importantly, we just need to let this data play out over the course of the year to give everyone comfort and confidence in the levels that we're achieving. Adrian, do you have some comments?

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Adrian Woolfson, Sangamo Therapeutics, Inc. - EVP of Research & Development [15]

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Yes. I mean, just to say, Gena, when I look at the data, I mean, one never likes to say it's plateaued but it's looking a little bit like that to me. When you look at it closely it kind of moves up and down around a kind of mean, if you like, for each patient, but that's kind of an intrinsic probably a biological variability of having this episomal expression. But overall, at least when I look at the data, I'm not seeing an upward turn. I'm seeing a stabilization within the high normal range. So this is kind of like complete correction as far as I see it. And they kind of stabilized out. And that's what I'm seeing. Of course, by the end of the year, we'll have a minimum 6-month data for all patients in that cohort and up to around a year for the one who was first treated. So we'll know better, but that's how I see it, Gena, at the moment.

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Huidong Wang, Barclays Bank PLC, Research Division - Research Analyst [16]

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Great. And then one last very quick question regarding the Fabry disease. So based on the hemophilia A clinical data and also preclinical data for both hemophilia A and Fabry, could you remind us your first dose for Fabry disease? And are you aiming to achieve minimal -- if effective minimal -- within minimal (inaudible) window the low effective dose for the gene therapy?

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [17]

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Gena, we haven't set what that dose would be. So we will reveal more of that as the study evolves.

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Adrian Woolfson, Sangamo Therapeutics, Inc. - EVP of Research & Development [18]

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I'll just say one thing, though, and this is something we have talked about and actually you probably remember Gena, we presented some data at ASGCT in the glyco knockout model, which is the GLA knockout. And these mice like alpha-Gal A activity and they accumulate large amounts of substrate in the plasma and tissues, and then we use the same AAV2/6 encoding the human GLA with a lipo-specific promoter, and it was manufactured in the exact same way. Based on the clinical scale production method that we're currently using. And what we saw there is that we got a 1,500 fold increase in alpha-Gal A activity. So really pronounced expression. So as we said, just previously, we're expecting that all the learnings that we've obtained from our work in hemophilia A, which I hope you will agree really is an exemplary example of how gene therapy should look, right? We're hoping and expecting that those learnings will effectively transfer to Fabry and the preclinical data we saw in the glyco model to a really large extent, makes us confident that, that's the case. And we're also, of course, in that same data set that we presented at the ASGCT shows that we see the substrate reduction in all the key tissues like liver, heart and kidney. So we're really confident about where we're going here in Fabry.

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Operator [19]

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Our next question in queue will come from the line of Maury Raycroft with Jefferies.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [20]

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So I think Adrian mentioned earlier that Pfizer had submitted a lead-in study for the Phase III to clinicaltrials.gov. And so I'm just wondering if you can talk more about that study and what the purpose of it is. And as a follow-up for the Phase III design, what are some of the most likely scenarios that could happen with the Phase III? And how likely is it that an accelerated approval path will be an option there?

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [21]

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We -- so Maury, I thank you for your question. We rely on our friends at Pfizer to talk about this. We had hoped that the submitted clinicaltrials.gov thing would be live by now, and it's in the process, and you'll be able to see more of it when it becomes visible on the website, that they will be the ones who would talk about the Phase III study. They like us are excited by the data. And I think the fact that they are initiating this lead-in study is a sign of their commitment to this.

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Adrian Woolfson, Sangamo Therapeutics, Inc. - EVP of Research & Development [22]

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Yes. And as I said, we're actually expecting that to post literally even today actually, that they submitted it to clinicaltrials.gov a couple of days ago and we literally expect it to post in the next day or 2.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [23]

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Got it. And as far as the registrational study goes, any thoughts on whether that would look similar to valrox Phase III study? Or any perspective there would be helpful.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [24]

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We have an agreement, and in these kind of partnerships you have an agreement about who talks about what. And so they prefer that we don't talk about it and they lead those discussions, but I just want to reassure everyone, we speak to all of our partners on a regular basis. We have regular steering committees and clinical development committees. And we are -- with Pfizer and the excitement over the hemophilia A results, we're very aligned in where this is going and doing everything to help them move forward promptly.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [25]

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Got it. Okay. And I'm just wondering if you -- now that you're talking more about the Kite-037 program, and that's likely to advance in 2020. If you can just compare and contrast how that would look versus other allogeneic approaches out there.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [26]

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So again, the agreement with Kite-Gilead is that they talk about that piece. So we have an ongoing relationship with both Kite and through Kite with Gilead where we provide the editing capabilities to help them design the most effective allogeneic assets. And when they get that into the IND stage and beyond, I'm sure they will be openly talking about what editing has been done to meet this effect.

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Maurice Thomas Raycroft, Jefferies LLC, Research Division - Equity Analyst [27]

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Okay. And then maybe the last question, just on the TxCell trial, if you can comment on that design and number of patients that you plan on getting into that study. And if you're going to be using donor patients for the cells there? Any perspective there would be helpful.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [28]

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We really haven't said much about this trial. We will -- once the CTA is submitted and approved, and as we start to move into it, we'll talk more about the design of this trial. I really -- I'm sorry, Maury, that I can't be more helpful with the information. There's -- we're just very careful about how much planning and design we give out at this stage.

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Operator [29]

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Our next question in queue will come from Ritu Baral with Cowen.

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Lyla Youssef, Cowen and Company, LLC, Research Division - Research Associate [30]

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This is Lyla on for Ritu. I just want to follow up on the transfer of 525 to Pfizer. You said that it's been initiated. And I was wondering if you could provide any more color on how long the overall tech transfer process will take. And maybe any sort of guideline of when you think they'll start producing the products for the Phase III trial?

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [31]

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Lyla, I'm afraid I have to refer you to my previous answer with Maury. Let me assure you that we've been talking with Pfizer about the transfer of this for months, if not years, as we plan for how this would look when the project moves over. The whole process has become more energized by the pleasure that they and we see in the results. They have been talking with -- they have been designing their manufacturing plan for some time. So it is seamless. They have plans for the IND transfer for the clinical trial, for the regulatory strategy. And I wish I could say more, but it's up to them to share that with you.

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Operator [32]

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Our next question in queue will come from the line of Whitney Ijem with Guggenheim Securities.

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Boran Wang, Guggenheim Securities, LLC, Research Division - Associate [33]

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This is actually Evan Wang on for Whitney. First, I had a question on genome editing. How can we expect updates for that program or as progress progresses? Do you plan to share updates into the preclinical data?

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Unidentified Company Representative, [34]

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Well, yes, we'll share the information as we have more specific details about these plans. So just please stay tuned. As we said, we expect to initiate this next study towards the end of next year.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [35]

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And to be explicit, we have the -- we've already manufactured ZFN 2.0, but if we're to add in some of the additional advantages that we gained from what we have learned from hem A AAV6, it would take another manufacturing campaign, and it's really that, that drives the time line. But just to step back a little from it, we are very grateful for the help we've had from the lysosomal storage disease community. We feel an obligation to these patients to make sure that they have the best possible asset. And while I could rush ahead and go in with ZFN 2.0, which we all have great belief in, if I can add an extra chance for them for this to be successful, I think that's the right thing to do. And I am sure all of you on the phone would agree.

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Boran Wang, Guggenheim Securities, LLC, Research Division - Associate [36]

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Understood. And then I had a question on Huntington's. It seems like you guys said that -- you and Takeda are still kind of working on further designs. I thought at ASGCT that they chose a target, has that changed?

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [37]

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That's another one that is -- I'm sorry, if we left any confusion in this. That's Takeda's to drive forward and they're -- as we understand, they're in IND-enabling studies, which would suggest that they have -- they know what they're taking forward. Again, they will be able to talk to you more about that.

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Adrian Woolfson, Sangamo Therapeutics, Inc. - EVP of Research & Development [38]

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There's obviously a huge excitement about that data and I don't know if you saw the paper that Bryan authored at Sangamo. It's a truly remarkable paper. I mean it was almost binary switching off of the expression of the mutant Huntington gene with complete preservation of the wild type allele. And as you know, at the molecular level they're very similar, it's just the different numbers of the repeats, and yet, we were able to design zinc fingers just to discriminate between those different numbers of repeats. And I think that really speaks to the extraordinary diversity and optionality of the platform. And I can't imagine any other platform being able to deliver such a complex solution -- solution for such a complex problem so efficiently. And it obviously opens up a load of other possibilities for us with other repeat diseases and as a generalized proof-of-concept for the remarkable behavior that these reagents that Ed and his team has managed to bring to bear on these problems of these really intractable CNS diseases. So we're really, really excited by this, as are Takeda, as you'd imagine.

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Boran Wang, Guggenheim Securities, LLC, Research Division - Associate [39]

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Got it. And then we have one last question on the partnership with Kite. Have you had any regular interactions or have you met with Christy after she's become CEO? Any kind of changes in partnership or nature of the partnership there?

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [40]

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So we talk regularly with the team at Kite. And we talk with them through the various changes in their leadership. And my understanding is she just started this week. So I'm expecting to meet with her soon and work out how we can work as closely together. And she comes with a very good reputation. So we look forward to meeting her.

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Operator [41]

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Our Next question comes from the line of Eric Joseph with JPMorgan.

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Eric William Joseph, JP Morgan Chase & Co, Research Division - VP & Senior Analyst [42]

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Just a couple on Fabry with ST-920, and then we took a peek at the clinical trial posted on clinicaltrials.gov. I'm just curious to get a sense of the type of patient history or you're seeking to recruit in the dose escalation portion in terms of phenotypes severity or mutational background? And also whether you can at this point talk a little bit about how background ERT is going to factor into I guess, patient monitoring post infusion. I guess, really specifically, how you're going to be delineating alpha-Gal A expression by the transgene versus any background ERT use.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [43]

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Eric, it was a little difficult to hear you. But Adrian, did you manage to make out enough?

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Adrian Woolfson, Sangamo Therapeutics, Inc. - EVP of Research & Development [44]

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I think so yes. So we're basically taking patients into the study who've either been previously exposed to cyprosine or replagal. We're excluding patients who've been on chaperones. And they have to have a formal diagnosis of Fabry disease. And one of 3 other key parameters, which we haven't disclosed, but which are in the protocol, but I mean I can tell you, angiokeratoma is one of them, and hidrosis, GI symptoms acroparesthesia; they have to have at least 1 of those 4 symptom -- sign, sorry, physical signs. And classic Fabry, as defined by the plasma alpha-Gal A levels and 1 or more of those characteristics. So that's the kind of key inclusion/exclusion. We'll be looking, obviously, at safety is the key endpoint, and then we're going to be looking at plasma alpha-Gal activity as one of the key secondaries, Gb3 substrate levels in plasma, lyso-Gb3 and plasma in urine. Obviously, you asked about ERT, so yes, obviously, we're going to be looking at ERT frequency of use. And after 4 weeks of treatment, we're going to be looking at -- and, of course, the goal of all this is the ERT withdrawal. So if we see alpha-Gal A levels going up and Gb3 substrates and lyso-Gb3 substrate going down, that will make the patient eligible for ERT withdrawal at 4 weeks. And we're also obviously going to be looking at estimated GFR as referenced by their creatinine levels in the blood.

So I hope that answers your question. I didn't quite hear everything you said. But I'm hoping that will answer most of your questions.

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Eric William Joseph, JP Morgan Chase & Co, Research Division - VP & Senior Analyst [45]

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That's great. That's very helpful actually, yes. I'm also curious, Sandy, I guess, with all the progress that you made with the encouraging data that you've presented with 525. And really the kind of the read-through validation for the vector, I'm curious to get a sense of sort of the strategic interest with ST-920.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [46]

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Eric, it's very, very difficult to...

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McDavid Stilwell, Sangamo Therapeutics, Inc. - VP of Corporate Communications & IR [47]

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He asked about the level of strategic interest for ST-920.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [48]

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So you mean as in partnerships?

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Eric William Joseph, JP Morgan Chase & Co, Research Division - VP & Senior Analyst [49]

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As in, yes exactly, having partnerships, whether it's -- whether at this point, just internally, how are you thinking about advancing the program, go it alone versus seeking partnerships and at what point if partnerships were on the table, at what point you might look to do that?

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [50]

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So that's an important and complex strategic decision. We are -- we want to build a fully integrated company. We want to take products through to patients and eventually through to the market. ST-920 is our lead asset now that is wholly owned. Just as an aside, the hemophilia A asset although it's partnered with Pfizer will bring a significant return to Sangamo, more than many people's wholly-owned ultra rare disease. That's the advantage of partnering on a common disease like hemophilia A. Of course, there's many people interested in a Fabry program but we are at this moment are committed to driving it over to finding the clinical effect of this and hopefully bringing it to patients. And to -- as an aside as well on our partnering. We are very pleased with the partnerships we have with Pfizer, Sanofi, Gilead and now with Takeda. In the coming year, we will hand off the product to Pfizer then hopefully, the product to Sanofi. And we are always open to new partners for people that share our love for the science and the drive to make these into medicines for patients.

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Operator [51]

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(Operator Instructions) Our next question comes from the line of James Birchenough with Wells Fargo Securities.

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Yanan Zhu, Wells Fargo Securities, LLC, Research Division - Associate Analyst [52]

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This is Yanan Zhu dialing in for Jim. So firstly, just wanted to ask about the next-generation in vivo gene-editing program. You mentioned, I think, that you are in manufactured ZFN 2.2. So the question is, have you finalized all the improvements that you're going to put into the next-generation program into ZFN 2.2. And if that's finalized, then also, I was -- I'm interested in how long an IND-enabling study might take.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [53]

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So thank you for your question. And I realize I sometimes let people get confused about second-generation of the ZFN assets and the new generation zinc fingers themselves. Let me see if I can tease that out for you. The work that Ed describes in the paper, that he spoke about is a new generation of zinc fingers where the zinc fingers themselves, we have enhanced their binding capability and also reduced their off target. And that -- all that technology is described in a couple of papers that have been published in the past 6 months.

The second-generation of the ZFNs are appropriate for the albumin locus IVPRP. Using the new technology, but more importantly, they alter the 5 prime and the 3 prime of the cassette that deals with the transcription and the transduction of that set of zinc fingers. And our original plan had been to go into patients simply with that as the change from the previous IVPRP studies, and we had manufactured them, and they were ready to go. As we learned more from the hemophilia A study, we realized that the problem was most likely to be in delivery, not in editing. When we use our technology to edit in mouse, monkey or human cells, the editing is very reliable. So our belief is that the results we saw earlier this year, where there was some editing, but insufficient to provide enzyme from the patient was as a result of not having enough of the AAV transducing the cell. And the data points are both the hemophilia A study where it certainly becomes very effective between 1 and 3e13 and also the effect we saw in one patient, in patient 6 in the study itself. So we're looking at ways that we can increase the amount of zinc of AAV that we give either by simply increasing the dose or by increasing the effectiveness of AAV, and we haven't spoken about how we've done that, but we will in due course. Or about changing the ratio of the various AAVs that are part of this cocktail. And what we want you to think about is, although each one only improves the effectiveness by a few fold when you multiply together these 4 different improvements, it becomes much more significant, and we feel gives us confidence and gives us -- gives the patients confidence more importantly, that this truly will make a difference.

So we can agree if we use the new -- sorry, just to be absolutely explicit. Using the new improved AAV-6 that we will talk about at a later date will involve some manufacturing and, therefore, drives the time line for this project.

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Yanan Zhu, Wells Fargo Securities, LLC, Research Division - Associate Analyst [54]

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Yes. So to meet the goal for going into clinic by the year -- by year-end 2020, is there a time that you need to nominate the candidate for that next-generation program?

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [55]

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I would reassure you that Adrian and his team are looking at that time line all the time, and we would have -- we feel we can meet that. There's always things that can go wrong in science. For us to say that we think we can get there suggests that we are -- we believe that is doable with the manufacturing schedule that we use.

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Yanan Zhu, Wells Fargo Securities, LLC, Research Division - Associate Analyst [56]

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Got it. And then just want to ask a couple of questions on the CAR and Treg program. Looking at the diagram on Slide 32, it makes me think this might be an autologous candidate because the TCR was shown as a impact on the cell. You didn't knock it out. So can you confirm this is an autologous T cell product.

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Adrian Woolfson, Sangamo Therapeutics, Inc. - EVP of Research & Development [57]

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Yes.

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Yanan Zhu, Wells Fargo Securities, LLC, Research Division - Associate Analyst [58]

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Got it. Yes. Thanks for confirming that. And also in terms of the Treg lineage, how do you achieve making a cell truly Treg? Is it transgenic expression of Fox G3. And also is there a risk of doing damage to the transplant, in case some of the cells are not truly Treg, but rather effector -- T effector cells?

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Adrian Woolfson, Sangamo Therapeutics, Inc. - EVP of Research & Development [59]

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Thanks for the question. I'm going to be quite circumspect in how I answer because we've not disclosed a lot of the things you're asking. But I'll just simply say that, yes, you're very astute in noticing that this is certainly an autologous therapy. These are natural CAR-Tregs, which we transduce. I'm not sure that we've disclosed how we transduce them. Yes, I don't think we've disclosed that, so I won't say that, but I'll -- how we do it, but they're natural Tregs which we purify from the patients and transduce. And we're basically looking at renal transplant on HLA-A2 mismatch. And that's probably as much as I'll say at this point. But you're absolutely right this is an autologous play at the moment.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [60]

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And your question is fair, and one that we've thought of carefully and taking advice on because a renal transplant is a precious thing. And we don't want to do anything that puts the patient's safety or the longevity of the transplant at risk. So we're working very closely with some really smart renal centers to make sure that we do this carefully and well.

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Adrian Woolfson, Sangamo Therapeutics, Inc. - EVP of Research & Development [61]

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Yes. And we're really -- and I'm pleased you brought this program up, because we don't talk about it too much, because I don't think folks are really still that aware of what we're doing. But we're really excited by this. But we see this as potentially being a really groundbreaking platform. We're the first people to be putting Tregs into humans. So we're at the head of the pack and we're leveraging all of the experience that we've gained over the years in both our HIV editing but also through other projects that we're doing, obviously. And we're really confident that we can do something medically important. And this is a really good place to test the hypothesis of the CAR-Tregs as therapeutic agents and look at the safety, but also the localization of those cells into the grafts. And to look at the number of different biomarkers and potentially to see if we can reduce the immune suppression the patients get with steroids and [MMS] and tacrolimus. So this is going to be a very exciting study, and it's a kind of a case of watch the space, as it's going to be unfolding as a narrative next year.

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Yanan Zhu, Wells Fargo Securities, LLC, Research Division - Associate Analyst [62]

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CAR-Treg is certainly a very exciting area and congratulations on all the progress.

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Adrian Woolfson, Sangamo Therapeutics, Inc. - EVP of Research & Development [63]

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And you'll remember that Science actually published a review on CAR-Tregs actually stating it as the next frontier for engineered cellular therapy. And we see ourselves as really pioneering this field.

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Operator [64]

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And with that, this concludes our time for questions. I'd now like to turn the program back over to Sandy Macrae for any additional or closing remarks.

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Alexander D. Macrae, Sangamo Therapeutics, Inc. - CEO, President & Director [65]

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Thank you again to everyone for joining the call and for your questions today. We are pleased with the progress we've made in our clinical and preclinical programs and look forward to keeping you updated on future developments.

Have a great day.

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Operator [66]

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Thank you presenters, and thank you to all of our attendees for joining us today. This concludes today's call. You may now disconnect and have a wonderful day.