SGMO - NASDAQ

Good morning, and thank you for standing by. Welcome to the Sangamo Third Quarter 2023 Teleconference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to turn the conference over to your speaker today, Louise Wilkie, Vice President of Investor Relations and Corporate Communications. Please go ahead.

Thank you. Good morning. I’m Louise Wilkie, Sangamo’s Vice President of Investor Relations and Corporate Communications. Thank you for joining us on the call today. On this call are several members of the Sangamo executive leadership team, including Sandy Macrae, Chief Executive Officer; Mark McClung, Chief Operating Officer; Prathyusha Duraibabu, Chief Financial Officer; Amy Pooler, Head of Research; Nathalie Dubois-Stringfellow, Chief Development Officer; and Lisa Rojkjaer, Chief Medical Officer. Slides from our corporate presentation can be found at our website, sangamo.com under the Investors & Media section on the Events and Presentations page. This call includes forward-looking statements regarding Sangamo’s current expectations. These statements include, but are not limited to, statements relating to the therapeutic and commercial potential of our product candidates, the anticipated plans and time lines of Sangamo and our collaborators for regulatory submissions, initiating and conducting clinical trials, screening, and dosing patients and presenting clinical data, advancements of our product candidates, anticipated feedback from and interactions with regulatory agencies, advancements of preclinical programs to the clinics, our strategic reprioritization and the anticipated benefits thereof, the sufficiency of our resources, cash runway, and plans to seek additional capital, our estimated financial guidance for 2023 and estimates of 2024 operating expenses, upcoming catalysts and milestones and other statements that are not historical facts. Actual results may differ materially from what we discuss today. These statements are subject to certain risks and uncertainties that are discussed in our filings with the SEC, specifically on our annual report on Form 10-K for the fiscal year ended December 31, 2022, as supplemented by our quarterly report on Form 10-Q for the quarter ended September 30, 2023 filed yesterday with the SEC. The forward-looking statements stated today are made as of this date, and we undertake no duty to update such information, except as required by law. On this call, we discuss our non-GAAP operating expenses. Reconciliation of this measure to our GAAP operating expenses can be found in our press release, which is available on our website. Now I’d like to turn the call over to our CEO, Sandy Macrae.

Thank you, Louise and good morning to everyone joining the call. Sangamo has a long impressive, history of scientific innovation, leading to new discoveries and industry first for genomic medicines. I am so honored to lead a company with such deep scientific expertise and a team so dedicated to their mission of transforming patients' life with our technology. While our programs are delivering promising results, the environment within which we are operating has been and is slightly to remain challenging. In 2020, we shared our refreshed company strategy, which aims to both maximize the potential of our proprietary genomic editing and delivering technology and to focus on areas where we believe we can apply that technology to be either first-in-class or best-in-class. That began with our decision to transition away from developing new traditional, liver-directed gene therapy several years ago and has continued into today. Our renewed focus has been to identify areas where we believe we can be market leaders and to prioritize our resources to those programs accordingly. The difficulties in accessing capital being experienced across the industry have accelerated the pace of our plans. And so today, we're announcing the final stage in the strategic transformation of Sangamo to become a neurology-focused, genomic medicine company. As we have shared before, we strongly believe our technology is ideally suited to address a range of devastating neurological indications that are few if any treatment options available today. Over recent years, we've increased our focus in this important part of our business and have advanced exciting data from our epigentic regulation programs for neurological diseases. The promising preclinical evidence from our

Thank you, Sandy, and good morning, everyone. As you've heard today, we are on a journey to transforming Sangamo into a pure play neurology genomic medicine company committed to driving forward development of potential treatments for neurological disorders in order to better serve patients. I'll go into more detail on the value we see in this business and the strategy behind our neurology program. At a high level, we have a differentiated platform that can create powerful genomic medicine that’s part of our genome targeting cargo, the preclinical data that demonstrates the potency, specificity and importantly, the efficacy we may be able to achieve. Our technology allows us to target neurological indications in the most direct and genetically validated way. In defining our pipeline and pathway forward, we choose to focus on indications where there is a clear driver of disease, not only do we believe the strengthening the likelihood of pre-clinical success, but we also believe it increases the speed to potential approval, because the drivers of disease are well understood meaning we know which genes cause the diseases, we're able to effectively target those genes that offer curative potential pursuing the fundamental drivers of disease within our view of very compelling approach. Sangamo has highly differentiated technology that we believe allows us to execute on our strategy. We're developing proprietary genome targeting cargo, as well as our own novel delivery caspids. Whereas, most other companies are really doing one or the other. The favorable AAC compatibility of

Thank you, Amy, and good morning. Over the course of 2023, we have proactively made difficult decisions to preserve our most valuable assets. The public biotech markets have been challenging for over two years now and we find ourselves in a similar position to many of our peers with limited capital resources and a tough path to navigate ahead. This has necessitated the exploration of our strategy execution, and the focus of spending in line with our mission as a neurology-focused genomic medicine company. As Sandy outlined earlier, this means optimizing our resources and continuing our assets in seeking investment alternatives for Fabry and T-Regs. Furthermore, as part of streamlining our spend, we expect to exit our Brisbane, California facility in early 2024. We will be scaling back our internal manufacturing capabilities and leveraging external partners to manufacture clinical supply for our neurology pipeline. These actions have resulted in the reduction of approximately 162 roles or 40% of our US workforce. The annual cost savings resulting from the workforce reduction, combined with other potential cost reductions is expected to reduce our annual operating and all non-GAAP operating expenses from $240 million to $260 million this year to around $150 million to $135 million in 2024, a decrease of approximately 50% year-over-year. We ended the third quarter with approximately $132 million in available cash, cash equivalents and marketable securities. We believe that these resources in combination with the cost savings expected from the restructuring and other potential cost reductions will be sufficient to fund our planned operations into the third quarter of 2024 without factoring in any additional capital raises. We continue to accumulate important Phase 1/2 data in the Fabry disease and Tx200, while we seek solutions to unlock the value within these programs, which could generate valuable capital for our neurology epigenetic regulation pipeline. Additionally, we continue to evaluate several avenues to raise capital and hope to have an update in the next few months. As a reminder, Pfizer continues to work towards a pivotal readout in mid-2024 in our Hemophilia A collaboration and anticipates potential BLA and MAA submissions in the second half of next year. This partnership agreement allows for potential milestones of up to $220 million and 14% to 20% in royalties, which could be a significant source of funds starting as early as the end of next year. We expect that 2024 operating expenses for the core neurology company to be in the range of $80 million to $100 million. This range excludes additional transition cost of approximately $30 million to $40 million in 2024, as we complete our strategic transformation, which are expected to significantly increase in the future years. We will provide official 2024 non-GAAP operating expense guidance as part of our fourth quarter update. I will now turn the call back to Sandy for closing remarks.

Thank you, Prathyusha. As you heard today, Sangamo continues to advance our transformation to becoming a neurology-focused genomic medicine company. This has been in progress since 2020. Against a challenging backdrop, we've needed to make incredibly hard decisions for our employees and our programs and development. In the coming months, we'll continue to work diligently to unpack - unlock value from our Fabry and CAR-Treg programs, and to drive forward our neurology pipeline. We will provide updates and on these processes when appropriate to do so. Thank you again to those very talented individuals, now to these friends and colleagues who will be leaving Sangamo. Your tireless efforts and dedication have helped to progress Sangamo’s science and support the organization and for that I am very grateful and I wish you the very best in your next chapters. As I look to the future, I am excited to the opportunities that lie ahead. We will progressively share more data and news from our neurology programs and anticipate sharing non-human primate data showing our progress identifying new novel delivery capsids early next year. The team continues to generate more pre-clinical data from NAV1.7 and has initiated final IND enabling studies. And so, it’s progressing towards an expected IND submission in 2024. We are still anticipating the pivotal readout for Hemophilia A in mid ‘24 with a first valuable milestone potentially coming as early as next year. As we work to raise additional capital, we hope to announce an update in the coming months. I'm very thankful to our leadership team and all my Sangamo colleagues for their hard work and dedication to our mission. I'd like to close by expressing my hope and excitement for the future, a future that lies ahead for Sangamo and as focused genomic medicine neurology company. At this time, we'd like to open it up for questions. Operator, please open the line for questions.

[Operator Instructions] The first question comes from Reena Patel with RBC Capital Markets. Your line is open.

Hi, thanks so much for taking my question. This is Reena on for Luca Issi. I just wanted to ask, would you be able to kind of walk us through what would be an ideal partner and ideal structure for the Fabry program partnership?

Good morning. Thank you. Thank you for your question. So, you're asking who does an ideal partner look like for Fabry? Mark, you’ve spent a lot of time working on this.

Yeah, ideal partner.

So I think from our standpoint, the partner would be someone that has a commitment to the patients with Fabry disease and sees that the pathway that we've agreed with the agency that has the capital resources to ensure that the study gets completed in a timely manner and commercialized globally to these patients. And there are a number of companies that fit that and we will provide updates when we've finished conversations with them.

Please standby.

Okay.

Please stand by for the next question. The next question comes from Andreas Argyrides with Wedbush. Your line is open.

Good morning. Thanks for taking our questions. Two from us here and kind of a follow-up to the last one. So just understanding capital constraints and the need to extend the cash runway, Fabry is the most advanced program and there's good data to-date. Can you also provide us an update on the Phase 3 design if there were any updates and you were in discussions with the regulatory agency there? And then, we’ve noticed that the Biogen has been selling a majority of their shares, if you could provide any color around that that'd be helpful as well. Thank you.

Thank you for your questions. Let me do the first one, the one about Fabry, and I'm going to ask Nathalie to help us think about the design of the Phase 3. I just want to retrieve what I said in the script, the results in Fabry are. I think the most compelling of any clinical program I've worked on in 25 years. It's a holistic benefit from the patient. And patients literally came up to us at the recent Fabry meeting and said, I have your gene inside of me and I've never felt better. My life is being transformed by that and that's why as Mark says finding a company that can take this into Phase 3 globally is so important. Nathalie, how are we doing with thinking about the Phase 3?

So, yeah, we were pleased to share last quarter the clarity we received from the agency on our proposed naive and pseudo-naïve study design. We continue to have productive conversation with the FDA and really are at good place on potential Phase 3 plan that can be activated in the future. We also received RMAT designation recently from the USFDA which really is a recognition that this potential medicine address significant unmet needs for Fabry patient population, but also a signal that the data produced so far has been highly encouraging. And those the RMAT designation really provide the opportunity to have live conversation with the FDA. So we're very pleased that we are - will be in a very good position for any potential partner to start our Phase 3 program.

Thank you, Nathalie and Prathyusha, can you comment in on the shares?

Sure Sandy. Your question on the Biogen sale, as you know, Biogen’s main business is like us getting medicines to patients. It's not really in the business of holding equity with other companies. So there – our understanding is their main intention of this sale was to get under the 10% threshold. And we're not expecting any future sales at this point.

Thank you.

Thank you guys. Thank you.

Please stand by for the next question. The next question comes from Maury Raycroft with Jefferies. Your line is open.

Hi, this is Kevin Strang on for Maury. Thanks for taking our questions. Just wanted to - you already touched on sort of the Fabry Phase 3 where you left off the talks with the FDA, but I wanted to switchover to CAR-Treg for that program. Can you talk about what went into your decision to not show cohort one data by the end of the year? Is that basically because you're getting to the potential efficacious dose earlier than you originally thought? And then, can you say whether or not you looked at any of the renal biopsy data? And then saw evidence of presence or expansion of T-Regs or any commentary you can share around safety so far?

Good morning. Yes. Thank you and you are spot on with why we are delaying showing the data. Originally, the study design was three patients per cohort and then an SMC and then another three patients. And with the with the complication of running a study in renal transplant that was driving the top doors way out into ‘25 with our really novel clinical design from the clinical team, they've managed to bring this in much quicker with a – design. And we will have doors patients in the top doors as early as January of next year. Therefore, we'll have a package of data that we can share next year, rather than dribbling it out cohort by cohort. And I'm sure you will agree that makes your job a lot easier. As to what we've seen so far, we've dosed three patients in cohort one and one patient in cohort two and, Nathalie, they're doing extremely well, aren’t they?

Yeah. The safety of the product has been demonstrated for those two cohorts. We have also in addition added a fourth cohort to our new design, which is a dose that is 18-fold higher than the dosing cohort one. So we are very excited about this and it also demonstrates our manufacture capability for the T-Reg platform.

And we're very careful to save - to hold off showing all the data until next year, but encouraged with what we've seen so far. But really what will be most compelling would be if we show you all those levels and for a larger group of patients. So we look forward to doing that next year.

Great. Thank you.

Please stand by for the next question. The next question comes from Nicole Germino with Truist. Your line is open.

Hi, this is Nishant. I'm on for Nicole. Thanks for taking our questions. Maybe talk a little bit about your focus – your efforts focusing on epigenetic regulation therapies, which you are focusing on now neurological disease and novel capsids. Is this an area of greater pharma very interest and is that why you're focusing on it?

So, I'm going to pass this over in a moment to Amy to say news, particularly good for our pharma regulation. Our decision is a very chosen one and it's, as I said, we've been on this journey internally for three years. Neurological diseases are an enormous burden to society and we feel that this fits with our longstanding technologies and allows us to make a difference. Amy, why does the

Thanks, Sandy. We believe that the approach we are using the

Amy, we are also using ASOs that we have to inject often or inject into the sequel in. Why will ours be once and done?

That's right, because neurons and other brain cells are usually terminally differentiated. It means that we predict that the expression of the

Thank you.

Please stand by for the next question. The next question comes from Patrick Trucchio with H.C. Wainwright. Your line is open.

Hi, everyone. Thank you for taking the call. This is Louis for Patrick. Just like to ask about the newer programs that you still have going on for Alzheimer's we tell and Parkinson's with Alpha-synuclein. You said, you have, you’ve announced because we have increased penetration with the brain capsids. So you're going to prioritize these programs now. When we're going to see more data from them?

Amy, can you talk about where we are with tauopa that’s been interesting data and so recently hasn't learned.

Absolutely. I mean, with our previous partnership, we're able to progress that program quite a long ways. We have our clinical lead,

And the results of those have shown in tau gives us reasons to believe in this as a target.

Yeah, absolutely. It's really been some fantastic data that's coming out in the field now showing that specific reduction of tau is able to remove some of the nervous ability tangles just some of the pathology that's related to tau. So we think that, that gives even more evidence that a tau targeted approach could be critical for treating something like Alzheimer’s disease, and also other tau is.

Thank you.

[Operator Instructions] Please stand by for the next question. The next question comes from Yanan

Hi, thanks for taking our question. This is [Indiscernible] for Yanan. So, our first question on Tx200. I wonder even though it's only like two cohorts, but I wonder if you have seen any dose response and any immunosuppressant tapering? And what are the potential partners might be looking for? Thanks you.

So there's two parts to that question. We've only dosed one patient in cohort two and they're only recently dosed. So it would not be possible to know if there's any benefit nor have this started any process of tapering. As I said, there is going to be so much more rich data set to show you the whole package next year. What our partners looking for, there are many CAR-Treg companies. I think I count over 10 of them and they've all been funded and founded on preclinical promise. And Sangamo is like the field here and we're the only patient - the only one that is publicly said we're in the clinic. And the fact that we've shown that we can dose four patients with CAR-Tregs and it is safe. I think is I really important thing for the whole field. The first time, the T-regulatory cell has been engineered and put into patients. We go from cohort one to cohort four, and it increases 18 fold. So we have a great range of amount of cells to add and we look forward to showing you that data next year.

Got it. Thank you. And on the AAV capsid, can you share what are you hoping to show or to achieve in NHP assuming that would be in the first quarter next year data?

Amy, what do people look for in NHPs? And what does good look like?

Thanks, Sandy. I'm so excited really about the work that's being progressed by our capsid evolution group. These capsids are essential really for delivering the genomic medicines to the right place in the nervous system and all of the engineering work that goes into solving these challenges that the brain is kind of thrown up at us. But that it's critical to engineer that, so that we're able to deliver the medicine. We're looking for capsids that are able to deliver the

So it's about expression of the capsid throughout the brain. It's about the activity of the

Absolutely. Yeah. Absolutely.

Got it. And last one from me. So on the Hemo A program, any comments on the potential of monetizing the royalty? Thank you.

So, we can't really comment on any financing or monetization efforts, but Nathalie, we really feel that Pfizer is doing a good job here, don't they?

Yes. All the patients in the pivotal trial has been dosed and really the Pfizer is still guiding to a pivotal readout expected in mid-2024 and submission of a BLA and MAA in the second half of 2024. As you know Hemophilia A as a whole and – is a big area for Pfizer and they have all the workforce to be able to advance this very efficiently into the market. So we're very encouraged and we have regular call with our Pfizer colleague and the momentum is palpable.

I know you’ll want to hear more about Pfizer, every signal Pfizer giving us are positive that they believe this is an important program for them. And as regards to the monetization of the royalties, if we monetize it now before the results are out, it would be an extremely discounted rate. The longer we can wait, before monetizing it, the better and more value it will be keeping it going all the way to the royalties and milestones coming directly to us would even be more valuable. And so it's just a decision that Prathyusha and I have to make it as we finance the company.

Got it. That's helpful. Thanks for all the color.

I show no further questions at this time. I would now like to turn the call back to Louise Wilkie for closing remarks.

Thank you. And once again thanks to everyone for joining us today and for your questions. As a reminder, you can access the earnings release and the presentation on the Investor Relations section of the Sangamo website. We look forward to keeping you updated on our future developments.