Elizabeth Wolffe - Vice President, Corporate Communications Sandy Macrae - President and CEO Ward Wolff - EVP and CFO Geoffrey Nichol - EVP, Research and Development Dale Ando - Vice President, Therapeutic Development and Chief Medical Officer Mike Holmes - Vice President of Research.

Whitney Ijem - JPMorgan Ritu Baral - Cowen and Company Gena Wang - Jefferies Roy Buchanan - Janney Montgomery Scott Yanan Zhu - Wells Fargo.

Good afternoon, and welcome to the Sangamo BioSciences teleconference to discuss Second Quarter 2016 Financial Results. This call is being recorded. I will now pass you over to the coordinator of this event, Dr. Elizabeth Wolffe, Vice President of Corporate Communications..

Thank you, Shane. Good afternoon and thank you for joining Sangamo's management team on our conference call to discuss the company's second quarter 2016 financial results.

Also present during this call are several members of Sangamo's Senior Management, including Sandy Macrae, President and Chief Executive Officer; Ward Wolff, Executive Vice President and Chief Financial Officer; Geoff Nichol, Executive Vice President of Research and Development; and Michael Holmes, Vice President of Research.

Following this introduction, Sandy will highlight recent activities and the significant events from the past quarter. Ward will then briefly review second quarter 2016 results, as well as our financial guidance for the rest of 2016 and Geoff will provide an update on our Therapeutic programs.

Finally, Sandy will update you on our goals for 2016 and beyond and following that, we will open up the call for questions. As we begin, I'd like to remind everybody that the projections and forward-looking statements that we discuss during this conference call are based upon the information that we currently have available.

This information will likely change over time. By discussing our current perception of the market and the future performance of Sangamo with you today, we are not undertaking an obligation to provide updates in the future.

Actual results may differ substantially from what we discuss today, and no one should assume at a later date that our comments from today are still valid.

We alert you to be aware of risks that are detailed in documents that the company files with the Securities and Exchange Commission, specifically our quarterly reports on Form 10-Q and our annual report on Form 10-K.

These documents include important factors that could cause the actual results of the company's operations to differ materially from those contained in our projections or forward-looking statements. Now, I'd like to turn the call over to Sandy..

Thank you, Liz, and thank you all for joining us for our conference call to discuss our 2016 second quarter financial results, recent events and our plans for the development of our therapeutic pipeline. As you all know, I joined the company on June 1, which means, I've enjoyed just over two months.

This is long enough to have had a chance to meet everyone, to have reviewed all of our programs and to reaffirm my belief that I have joined a truly remarkable company, which I believe is very promising future.

I took this position because I saw a powerful technology being developed and pursued by talented and driven individuals, a technology with a potential to change the way medicine is practiced. And I realized that with my background, this could very well be my dream job.

And the company was at a stage where it could make a real difference to its future and to her ability to transform the lives of patients with some very difficult-to-treat diseases.

So what my background makes me qualified for this job as a stage of the company’s development? I spend several years as a bench scientist in molecular biology doing hardcore molecular biology, so I appreciate that we have a very talented discovery and research group and there is signs that forms the base of the company spectacular.

I understand and deeply appreciate how the genome editing technology is different. I looked to all of them and I chose Sangamo and the complicity of zinc finger DNA-binding technology is an asset and provides the best platform for the development of therapeutic Gen Editing.

From my time at GSK, I have direct experience running multiple clinical programs. I know what it takes from a process and personal perspective to initiative and run high quality clinical trials. I have developed medicines for a wide range of indications from malaria to oncology.

This broad experience is ideal for a company like Sangamo, developing a platform of therapeutics based on both our proprietary ZFP and Gen Therapeutic platforms with a potential to revolutionize the treatment of a broad range of indications.

And then in addition from time at both GSK and Takeda, I have experience in building and running world-class organizations. I look forward to building such an organization to enable Sangamo to maximize the promise of this technology in order to bring the novel medicines we are developing to patients as efficiently and effectively as possible.

And when I joined Sangamo, my mandate from the Board was to lead the company in its transition from a research focused company to a world-class clinical stage therapeutic product development organization, capable of building a personal portfolio of therapeutics.

And this September Sangamo has an all day strategic planning meeting of the Board of Directors and I've being tasked by the Board to come to that meeting with a plan for accomplishing this task.

So while I am going to update you today on several of our programs, we are still in the midst of implementing new procedures to ensure that we advance program strategically through a careful and thorough process.

I will be in a better position to more fully articulate our plan and the path forward for the time we have our third quarter call in October. And so I am going to ask for your patience and understanding, so as together we can make this happen.

As many of you know, we are bringing eight programs through therapeutic development in addition to our ongoing clinical trials to evaluate ZFN mediated Genome Editing approach for HIV AIDS. This is a phenomenon achievement for a company of this size.

As a result of the reviewed process, I began when I joined the company, we are prioritizing our efforts and programs to ensure that the therapeutics can be developed and trials executed to the highest possible standards. Let me tell you where I am in that process.

My first weeks have been spent listening, evaluating and beginning to make decisions of better future. I met with everyone in the company, reviewed all current development and research programs and the structure and health of the organization in general.

In addition to listening to the opinions and ideas of our employees, I have also listened to outside opinions including some of you in this call and learned that while company has a reputation for stellar science, it is yet to achieve an equally great reputation in clinical translation. I will work to change that.

I am therefore asking my senior management to ensure that we’ve the right people in the right roles and I am putting in place processes that will ensure that we have an organization with sufficient experienced personal to prosecute investigation on new drug or IND applications, navigate the contracts and processes, necessary to setup clinical trials and to carry out well designed and well executed studies.

We will focus on patient needs and the patients we serve. Unfortunately before we see the fruits of these efforts, I will have some difficult choices to make with respect to prioritizing our efforts to ensure success and I've begun by making some adjustments to the development timelines for several pre-clinical and clinical programs.

As we have outlined in our press release, our intention remains to file an investigational new drug, IND Application for our hemophilia A program in 2016.

This program is a product of Sangamo’s expertise in molecular biology and gene therapy and comprises an adeno-associated virus AAV cDNA human Factor 8 construct driven by Sangamo’s proprietary synthetic liver-specific promoter, which in pre-clinical studies is at least three times more potent than existing AAV-based cDNA construct currently under evaluation for the treatment of hemophilia A.

As was evident from our recent presentation at the World Federation of Hemophilia or WFH, the compelling pre-clinical data that we have generated suggest that this therapeutic has the potential to be best-in-class in this highly competitive field.

We are so proud of our reputation as the leading science and data-driven company and we will capitalize on our extensive knowledge and expertise in genome editing and gene therapy to develop the best therapeutic options for patients.

And with this program we demonstrate that we have the expertise to efficiently move new technological advances in therapeutic portfolio. I have asked Geoff to provide more details later in the call on the pre-clinical work that underlines this program.

While later than our original goal we also bring -- begin the Phase 1, 2 clinical trial of our In Vivo Genome Editing program in hemophilia B this year. The delays in this program where operational, reflecting a company moving into new areas and I am instituting processes that should ensure that this type of delay does not happen in the future.

The initiation of Phase 1, 2 clinical trials of our In Vivo Genome Editing programs for the treatment of MPS I and MPS II will be delayed until 2017 as we complete ongoing discussions and submit additional studies requested by the FDA.

I am not going to go into detail, this was a result of simple error that affected a subset of the In Vivo pre-clinical studies for both of these products and was not due to toxicology or safety findings. We identified the error and reported to the FDA ourselves before any sites have been opened or subjects treated.

Our path forward is to repeat the affected studies which are already well underway and submit them to the FDA for their review this year. While we are confident that the repeat results will be similar to original studies, until that process is complete, we cannot open clinical sites or treat subjects.

I will provide you with more detail on the timing of opening of this clinical trials but I have more information. Again we are putting in place processes to ensure that errors like this do not happen in the future.

As we work through this transition, I am also going to take this opportunity to reset expectations for the timing of both our Fabry and Gaucher IND filings. While we will continue our pre-clinical work in this programs as expected, under our new procedures, we will wait to provide IND filing guidance until later stage in the IND process.

We have eight programs in various stages of therapeutic development and I want to ensure that we take the necessary time to do each one well and to set expectations appropriately. I look forward to updating you in the future on these programs.

To complete the list of our proprietary pipeline programs, we also have ongoing clinical trials to evaluate our ZFP therapeutic SB-728 for the treatment and potential functional control of HIV.

The most advances of these two clinical study SB-728-1101 Cohort 3 designed to test and approach in which we knock out expression of the CCR5 gene and T-cells, using our zinc finger nucleases.

There is also investigator-sponsored study, which is ongoing at the City of Hope, partly funded by grant from the California Institute of Regenerative Medicine. Their employees are ZFN mediated Genome Editing and hematopoietic stem cells.

We expect to present data from these studies in 2017 and I will provide more information on the venue in future calls. Finally, I want to address our beta-thalassemia and sickle cell disease progress which are part of our collaboration with Biogen.

Like ours, the Biogen team is enthusiastic about our collaboration and we continue to work together to ensure we have the best therapeutic to take to patients. However it is very clear based on our recent interactions with them that the timelines repelling IND application for these programs are going to slip.

It’s important to say I’m very pleased with the progress that we have made in this program and we look forward to what came with the new Biogen Management team. Again I hope to provide you information on these programs as we move into later stages of the IND process. And as you are aware, our collaborators are undergoing some changes of their own.

Some of this is difficult but all of this is important news to develop, to deliver. However as I've outlined, we are undergoing a transition and refocusing resources to ensure that Sangamo’s clinical pipeline is set up to serve patients and validate the promise of both gene therapy and genome editing.

I truly believe that proceeding with the high standards in all stages of development process will ultimately lead to providing innovative medicines to patients and value to shareholders efficiently and effectively.

Before we go into more details on our new gene therapy program in hemophilia A, let me hand the call over to Ward, for an update on our second quarter 2016 financial results as well as our updated financial guidance for the rest of the year..

Thank you, Sandy and good afternoon, everyone. As you know, after the close of the market today we released our financial results for the second quarter ended June 30, 2016, and I’m pleased to review the highlights of those results with you now.

Revenues in the second quarter of 2016 were $3.7 million compared to $8.4 million for the same period in 2015. Second quarter 2016 revenues comprised revenue from Sangamo’s collaboration agreements with Biogen and Shire enabling technology agreements and $100,000 of revenue from research grants.

The decrease in collaboration agreement revenues was primarily due to a decrease in revenues after the amendment of our collaboration and licensing agreement with Shire in the third quarter of 2015, which returned the rights to the haemophilia programs to Sangamo.

In the second quarter of 2016, we recognized $1.9 million of revenues related to research services, performed under the collaboration agreement with Biogen and $400,000 of revenues related to research services performed under the collaboration agreement with Shire.

In addition pursuant to the agreements entered into with Shire in January 2012 and Biogen in January 2014, Sangamo received upfront payments of $13 million and $20 million respectively. The payment from Shire has being recognized on a straight line amortization basis of the initial six-year research term.

Beginning in January 2016, the payment from Biogen is being recognized on a straight-line amortization basis over approximately 42 months, which reflects the revised service period related to our deliverables under the agreement with Biogen.

Sangamo recognized $0.5 million of the Shire upfront payment and $600,000 of the Biogen upfront payment as revenue for the second quarter of 2016. Total operating expenses for the second quarter of 2016 were $30.5 million compared to $20.6 million for the same period in 2015.

Research and development expenses were $19.5 million in the second quarter of 2016 compared to $15.6 million for the second quarter of 2015. The increase in R&D expenses was primarily due to increases in manufacturing and clinical trial expenses, consulting and personal related expenses, including stock based compensation.

General and administrative expenses were $11.1 million in the second quarter of 2016, compared to $5 million for the same period in 2015. The increase in G&A expenses was primarily due to corporate costs and separation expenses associated with the recent CEO transition, the majority of which was non-cash stock-based compensation expense.

Total non-cash stock-based compensation expense was $7.2 million for the quarter with approximately $1.7 million in research and development and $5.5 million in general and administrative.

For the second quarter of 2016 the company reported a consolidated net loss of $26.6 million or $0.38 per share compared to a net loss of $12.1 million or $0.17 per share for the second quarter of 2015.

Turning to the balance sheet, Sangamo ended the second quarter of 2016 with $172.6 million in cash, cash equivalents, short-term investments and interest receivables.

Our net cash used in operating activities was $16.2 million for the second quarter ended June 30, 2016, resulting in $36.6 million net cash used in operating activities for the first half of 2016.

Regarding our financial guidance for 2016, we are reiterating our operating expense guidance from our previous earnings call and we are updating our guidance for revenue and our year-end cash position. We continue to expect operating expenses in the range of $85 million to $95 million for the full year 2016.

Revenues are now expected to be in the range of $12 million to $17 million for the full year of 2016, due to the timing of certain milestone payments associated with our programs in collaboration with Biogen. Revenues include partial recognition of upfront payments and reimbursement of research services from existing collaborations.

With respect to our year-end cash guidance, adjusting to the milestone timing that I referred to, we now expect to have cash an investment balances of at least $140 million at the end of 2016.

The yearend cash guidance is inclusive of research funding from existing collaborations as well as funding from grants, but exclusive of any new funding from a collaboration, partnership, equity financing or other new sources. Thank you and now I will turn the call back over to Sandy..

Thanks Ward.

So as you’ve heard, we ended the second quarter of 2016 with $173 million in cash and investment and believe that this balance sheet strength enables us to advance our preclinical pipeline, initiate the clinical trials I've told you about in hemophilia A and B as well as completing our HIV studies in T-cells and making significant progress on our HIV stem cell program.

Sangamo has been a constant innovator and is known for its work in pioneering the field of therapeutic genome editing, which is less appreciated by the outside world. Is that the company has been developing not just its ZFP technology, but broad capabilities in molecular engineering, gene delivery and manufacturing.

The data presented last week at the WFH 2016 Congress by one of our scientists, Dr. Brigitte Reilly, Director of Translational Research, really showcases the molecular engineering talents of Sangamo's scientific team and one of the core competencies of the company.

Before I say more of our clinical development strategy for our Hemophilia A program, I've asked Geoff to briefly summarize the data represented at the Congress.

Geoff?.

Thanks Sandy, and good afternoon, everyone. Hemophilia A is a monogenic disease, a disease caused by mutation in a single gene Factor VIII, which results in a deficiency in Factor VIII protein and essential factor for blood clotting. Hemophilia A occurs in one in 5,000 live male births.

The number of people with Hemophilia A in the United States is estimated to be about 16,000 individuals. As a monogenic disease with a significant affected population, it is a very attractive candidate for a gene therapy approach to treatment. However historically, the gene therapy field has encountered challenges with Factor VIII.

The primary issue has been the large size of the gene, which exceeds the packaging capacity of AIV. But in addition, previous efforts in the field have been plagued with low expression of therapeutic protein and poor manufacturing yields. We have solved these issues using a variety of proprietary strategies developed in-house.

These include designing a proprietary liver specific promoter and code on optimizing the vitamin B-domain deleted version of the Factor VIII gene, which is one form of the protein that is currently used in Recombinant factor therapies.

We presented the data to support our preclinical profile at the recent WFH World Congress, which was held last week in Orlando. In summary, in both wild type and Factor VIII deficient mice, we demonstrated very high levels of physiologically active Factor VIII expression at moderate vector doses.

We demonstrated similar findings in non-human primates or NHPs, which is important for clinical development as we are learning from other studies that there is a good correlation between dosing in non-human primates and in humans.

In our initial studies in NHPs mean levels of human Factor VIII several fold in excess of normal were obtained using research grade AIV. What was very gratifying was that we were also able to see this in animals treated with AAV manufactured using our scalable clinical grade process.

In these dose ranging studies, we observed main human Factor VIII level that ranged from 5% to 230% of normal over the range of AAV doses from 6 x 10 to 11 to 6 x 10 to 12 vector genomes per kilogram.

The most potent dose response in non-human primates thus far disclosed for a human factor cDNA and at least three fold more potent than any competing program.

This high potency of our novel therapeutic may enable clinically relevant levels of human Factor VIII to be obtained using lower vector doses, which potentially provides a better therapeutic risk benefit profile for patients.

We're conducting additional studies to define the minimal effective dose necessary to provide therapeutic benefit, which will guide us in determining our Phase I clinical dose range. We've made pediatric slides available on our website and when it is available, we'll also post a video of Dr. Riley's presentation from a meeting.

As Sandy mentioned earlier, we're a gene-based medicines company not just a genome editing company, and our mission is to develop the best products for patients.

We believe that this therapeutic has the potential to be best-in-class and while we continue to move in Vivo genome editing program for hemophilia A through preclinical development, we're moving quickly to file an IND application for this AAV cDNA program in 2016. I look forward to updating you on our progress in future calls.

And with that, I'll turn the call back over to Sandy..

Thanks, Geoff. The synergy of our technology capabilities in both gene delivery and genome editing allows us to diversify our therapeutic portfolio to include conventional gene therapy products as well as our ZFN-based genome editing products.

As we continue our evolution from a platform company to clinical stage therapeutic product company, we will capitalize on our extensive expertise in these fields to develop the best therapeutic option for patients.

In Hemophilia A specifically, we plan to develop a portfolio design to address the specific needs and characteristics of different patient populations including the prevalent and insulin populations.

We will focus on accelerating clinical development of our AAV cDNA potentially best-in-class approach for the treatment of hemophilia A with a goal of filing an IND application in 2016. We continue to optimize our in Vivo ZFN genome editing approach which maybe more suitable for certain groups of hemophilia A patients including pediatric patients.

As I complete my second month as CEO, I can honestly say I am even more excited about the opportunities in front of us as we embark on this organizational transition. From this very early stage Sangamo has been a true pioneer in our industry and we intent to build on that heritage.

We will continue to leverage our core competencies across relevant indications within our pipeline, expanding our capabilities in manufacturing, clinical development and new product commercialization.

We will be focused on the program and targets that will provide the utmost therapeutic benefit for patients and develop our therapeutics in the most efficient and effective manner possible. We look forward to enhancing our leadership position while maintaining the highest professional standards in advancing our clinical portfolio.

We've a significant task ahead. I truly believe that we can turn this organization into world-class medicine development company and I look forward to keeping informed of our progress.

In the immediate future, we will be making corporate presentation at the Wedbush Security Life Sciences Management Access Conference in New York on August 16 and the Wells Fargo 2016 Healthcare Conference in Boston on September 7, both of which we'll webcast and available on our website. This completes our prepared comments.

I'd now like to open the call up for questions..

[Operator Instructions] Our first question comes from the line of Whitney Ijem of JPMorgan. Your line is now open..

Hey guys. Thanks for taking the questions.

I guess first question is on the -- whatever issue happened with the MPS I and MPS II programs, is there any color you can give us on what happened there? And I guess have the other programs then I guess scrubbed so to speak that you are confident that any similar issues won't pop up in any other programs?.

Let me answer that one in reverse order. Firstly, we've made sure that it's not affecting any other program. Secondly, we're going to go through a process, bring someone external and to go through our processes to make sure that we have the most efficient, reliable process for that part of our preclinical development.

The actual problem itself is a very, very simple one about using a reagent that was designed for one form of delivery versus another delivery almost identical they have and to be honest they have amino acids different and we expect that the results will be identical. However, we have to repeat this. It's is very, very simple and we will repeat it.

The experiments are mostly completed. We'll be submitting this to the agency this year and we hope to be moving ahead into clinical studies. It just reflects the complexity of moving from being a platform company to being an IND submitting clinical company. I remain confident about this..

Okay, got it.

And then I guess can you give us your thoughts on and I know you attended the clinic, but does your potential differentiation in Hemophilia A obviously the data you guys presented/suggested has the potential to be more potent or lower dose, just given that you'll likely be third to clinic in hemophilia A with an AAV approach? And then the second part of that you mentioned that the IVPRP approach maybe is more appropriate in some population of hemophilia A, any plans to process that in parallel or just focused on the AAV cDNA approach there for now?.

So let me pass that question -- so that's about what our advantage be and then the question about on a more portfolio basis, let me pass on to Geoff..

Whitney, thanks for the question. Certainly, we see ourselves as having a major potency advantage which can be a very significant differentiator. As you know the potential need for example corticosteroid treatment does appear to be dose-related and the lower the dose, the less likely you are to need that and that can be a major differentiator.

I agree with you that there are -- there is already a leader in the field time wise. However they have a very high dose and we have nearly a log of potency as well as a different stereotype from them.

So we are seeing ourselves as essentially being in the leaders if you like of the Peloton and have no major concerns about the time given the differentiation that our product is likely to have dose wise. In terms of moving forward with the IVPRP, as I said we continue to work on that.

We've talked before at other calls about the durability, advantages that seem more likely with an integrated approach such as the IVPRP that would allow you to certainly get around any drop off of effect from AAV which has only been followed out for few years in adult patients and may indeed show some reduction later on.

And secondly, in key patient groups and especially in areas like hemophilia where much of the damage occurs very early in life, the potential to treat children without any risk of wash out of the effect..

Thanks for taking the questions..

Thank you. And our next question comes from the line of Ritu Baral of Cowen and Company. Your line is now open..

Hi, guys. Hi, Sandy. Thanks for taking the question. Just a general follow-up to Whitney on Hemophilia A, how do you think of dose ranging and dose finding in Hemophilia A given the BioMarin expression level, their dose response curve and discussion at the conference around the potency of all of the put on optimization done.

What are you targeting, what factor expression level or factor activity level are you targeting in your Hemophilia A program? And if I could extend that question to Hemophilia B as well as given some of the conversations at the conference from the long-acting factor investigators?.

So let me make some initial comments and I'll hand it over to Geoff for some finer detail. Firstly congratulation to colleagues at BioMarin for having driven forward solution into haemophilia. It really is important that we start to offer patient real life solutions and we hope that we will be competitor for this.

The only reviewed very little data at the current conference and I think until they’ve had more chance for more patients, we truly won’t understand what their dose response or understand the shape, the slightly unusual shape of their dose response curve.

What we are going to base our dosing in humans on is our NHP data because those seem to be a good correlation between NHP and humans. And that’s why we're encouraged by how much important our NHP data is.

Geoff do you want to take it further?.

Sandy, I think you’ve covered a great deal of it. Certainly as we look at NHP and emerging human dose responses, there is a certain similarity across range that may reflect AAV biology. There is a -- there is a relatively steep dose response.

Clearly patients who receive -- patients who actually receive factor replacement, vary between zero and perhaps even 200% of normal depending on what stage they are following the infusion. The therapeutic level can be as low as even 5%, 10%, 15%.

Clearly that’s where I think most people with gene therapy given that many problems with Factor VIII were heading in terms of their expectations, clearly our data and in non-human primates and the gathering data from BioMarin suggesting go higher than that.

I think the field in this area will be working very closely with advises to determine exactly the target that we should be aiming up, but it looks possible to titrate these therapies anywhere that you care to in the therapeutic range that is typically achieved with factor replacement..

And as a clinician it would be quite important to be able to have predictability about the correlation between dose and factor level. I think that will help in the treatment of patients..

Absolutely and I think that is clearly something that will be explored by us as we move forward in our clinical development program and will update as we move forward..

Does that answer your question?.

Sorry, I had myself muted. It does but from a 30,000 foot view as far as where you're targeting do you intend to turn severe haemophilia patients into mild haemophilia patients or would you rather target technology to get to a ABR zero..

So that’s a good -- it’s nice of question that is so strategic. I think we will -- I think our initial target is severe haemophilia patients.

However I think as the whole field moves forward and one understands the benefit risk balance that you have to take when you either do gene editing or gene therapy, one hopes an increasing number of patients will be the right patient to have this more important form of therapy.

So we're starting with patients the more severally affected patients then we will move with time to patients with lesser disease..

But as you look at those findings, do you aim to get about 5% to 10% factor level or would aiming for 40% abnormal?.

That’s another good question. We’ve said and we've discussed in many occasions that it's really hard to know whether its 5% or 50% that you should aim for.

I’m not sure it's 200% and the number we held at recent advisory panel around haemophilia meeting and the number that they spoke about was 20%, 30% as being a sensible number to ensure treatment with the wonders of what the consequences of over treatment are..

Great. Thanks. I've peppered you guys with a lot of questions. I appreciate the time..

No, this is important thank you..

Thank you. And our next question comes from the line of Gena Wang of Jefferies. Your line is now open..

Thank you.

And so for Factor VIII AAV program, wondering can you elaborate the differences between research grade and a clinical grade preparation and how the comparison of the final product?.

So Gena that’s an important question and I recall the conversation the stems from. As you move these products through development you start with smaller scale manufacturing or incubation and move to levels and levels of processes and GMP that allow for greater amount of product to be created.

And as you move through that spectrum, you can get changes in the final production and the final efficiency of the production and that's why I think one has to be very careful in making sure you're comparing like for like, that you're comparing clinical grade ready-to-go manufacture preparation between companies rather than stuff that’s done in a laboratory scale..

Okay.

So just wondering in terms of a final product is there any differences in terms of like percentage of empty captive versus the full or some other metrics that I don't know if you look at the comparison between research grade and a clinical grade?.

Let me let Mike, our Head of Discovery have a go at that..

Right. So I think that's a great question.

In terms of how we think about these vectors obviously as Sandy pointed out, the vector that we use during our initial studies were done using smaller scale research grade vector whereas the vector that was used in our leader dose ranging studies in NHPs were done using the same process that we use for making our clinical grade vector.

And so while I'm not going to go into the differences between the two vector systems what we're very confident about is that the vector that we use for these dose ranging studies were done using the same vectors and the same type and same quality of vector that we would move forward in the clinical studies.

And I think what was important is that vector is still showing significantly greater levels of Factor VIII than what's been shown using other types of vector systems that have been published either from academic or from other companies and I think that’s the real important thing is the take home message..

Okay.

So then just wondering if that AAV backbone from the Hemo A program, is that the same for hemo B, IVPRP program?.

The same..

Clinical manufacturing process is the same across all of our programs..

I see, so what about the liver-specific promoter enhancer and then the AAV type, I was in both our 2VI, so regarding the sequence wise are these like a very similar or the same….

It’s the same AAV 26..

AAV..

Okay. But then the year liver -- sorry I think the reason I’m asking was just thinking is it possible to I don't know you move forward the hemo B IVPRP program to the clinic, but also is it possible to use similar -- it seems like the vector you're using contribute significantly where we've seen very robust activity in the non-human primate.

And just wondering if you could use this similar same backbone apply to the Factor IX program even though it's a crowded space?.

In terms of just take to take it up a level, in terms of the vector systems both the IVPRP and Factor VIII programs use the same AV6 stereotype. The backbone is very similar in terms of the nucleic acid sequences.

I think the one thing to highlight is obviously in the case of the Factor VIII program, the factual vector itself encodes a liver specific promoter to drive expression of the trans gene.

that is the Factor VIII CDNA whereas in the case the IVPRP we're obviously integrating Factor IX into the argument locus and using this very powerful endogenous albumin promoter to drive expression. So there isn't really the same need to have a promoter present in the case of the hemophilia B program..

Okay. Thank you. I will hop back to the queue..

Thank you very much..

Thank you. And our next question comes from the line Roy Buchanan of Janney Montgomery Scott. Your line is now open..

Thanks for taking the questions.

I actually had a follow-on to Gena’s question about the Factor 8 construct, do you guys plan to manufacture that in-house? For how many patients do you expect to be able manufacture per year at clinical scale? And can we optimization that improve the manufacturing reported to other constructs like the ZFN constructs? Thanks..

Oh, those are lots of detail questions there. So we're very proud of the way Birgit and optimize both the promoter, the tale and the codon optimization of the Factor VIII and she works on many of her other projects and we will apply her knowledge wherever we can.

We are manufacturing strategy is not something we usually discuss, but it’s with a contract manufacturing organization and we have already ensured that we have sufficient plans and supplies to be able to address the plans for this project..

Yeah, Roy, it's Geoff. The process that we use is very scalable, several hundreds of liters of scale at this point which obviously we need to dose range in humans to make predictions.

But we are not seeing that there would be a significant scale issue with being able to satisfy probably anything like the believable market size for hemophilia A using the process that we have..

Okay. Thanks..

Thank you..

Thank you. [Operator Instructions] And our next question comes from the line of Jim Birchenough of Wells Fargo. Your line is now open..

Hi, thank you taking the questions. This is actually Yanan Zhu for Jim.

A question on the regent error that has led to the MPS I, II program delay, could you confirm that the same kind of error did not occur for the hemophilia B, IND?.

Yes. We confirm. We can confirm this was specifically for the MPS I and II. And it was an error that we have now rectified and confirmed the three experiments are underway..

And thanks and also a question on the operational delay for the hemophilia B program.

I know you probably are limited in what you can say, but could you talk or just comment on whether this delay operational delay is pertaining to such as concerns from the IRBs of the clinical side?.

Not such. There is nothing to do with -- this is a purely internal organizing the supply chain of this from our point of view. And we already have a solution in place and we are moving it forward..

Great.

And aside from the delays in the various IVPRP program, Sandy could you talk about your conviction or excitement about the IVPRP approach in general?.

Yes delighted to, I can. If I think back as I started this call, I said, I used to do hardcore molecular biology.

And in the 90s when I was doing that, if someone had told me that I would be able to drop a copy of anyone of any one of our genes until an albumin promoter and a human liver and a low replacement of therapy of injections of the burden of disease for patients.

It feels like the most pioneering futuristic clinical meds and it's something I think this company should be really proud, Edward and the people here who have created this company should be really proud of. We need to understand what levels will be produced.

This is clinical science, this is exploratory clinical science, but if the animal studies or anything or -- if the animal studies truly fulfill the promise in humans, I’m convinced that we have a very interesting solution for patients here..

Great, lastly just on the new Haemophilia A, CDNA gene therapy approach, looking at the recent presentation, the Factors VIII level has large fluctuations. They are even in the same animal.

of course there also differences in antibody production and therefore they're really between different animals, but even in the same animal we could have ups and down and then up and down. So, I wasn’t sure whether this has been also occurred in the other people's Haemophilia A approaches.

Could you -- you commented on the high potency of your vector, but in terms of your consistency and variability, could you make some comment comparing to other people's human primate models. Thanks. .

Happy to do so, but let me ask Mike to take this question. .

Happy to take this question, it's also is very important and something that’s often missed in terms of just looking at the data. As far as human factor is concerned it's what known within the field that its highly immunogenic within non-human primates.

And as you can imagine given that it’s a human origin, it's something that’s foreign -- it's a forum protein within these non-human primates and you can often seen immune response again human Factor VIII and this is usually manifest itself in the generation of antibodies that will bind to and clear out this trigger protein from the plasma.

And so this a general property when you look within the published literature in terms of studies that have evaluated human factor VIII, you normally see that there is a wide duration in terms of the of level expression, but you can see that very quickly you lose human Factor VIII expression by the generation of antibodies within non-human primates against the human vector itself.

And so when you look at our NHP studies and as you said there can be variety of expression levels seen between different animals, but when you look within an animal itself, you also see some variation in terms of a levels of Factor VIII going up and down.

And when you actually take a very close look at it and you monitor the amounts of antibodies that are present that are haematuria as human Factor VIII this variation that you see correlates very nicely with increases in antibody production within the animal.

So this has no reflection in terms of the performance of the vector, but really has to do with the normal immune responses that are seen with the non-human primates..

So just to be absolutely clear, this is artifact of animals and it's something that you’ve seen in another similar attempts and from other people..

I see, so I guess as you used instead of factor activities, you used just the factor protein level, you could show that actually it’s not changing that much over time..

In terms of we’ve certainly look both at levels as well as activities that are present and both the levels of activity are actually essentially are impacted by the level of antibodies that are present. So there is not a way for us to distinguish that the actual Factor VIII levels versus activity whether there is some sort of difference.

I will say that because of the levels of Factor VIII we're able to achieve with this vector, we’re actually able to monitor Factor VIII activity which is not normally possible using other gene therapy strategies that actually encode in expressing the Factor VIII in non-human primates, but this is something that these antibodies impact actually both the levels that are present as well as the amount of activity..

Thank you, thank you, Mike. So just again to reiterate this is not something that we see as a problem that will translate itself to humans. We think that is an animal-only problem so..

Got it thanks..

Thank you. And I’m showing no further questions in the queue at this time. I would now like to turn the call back to Sandy for any further remarks..

Thank you. So we’d like to thank you all for joining us. We look forward to speaking with you again when we release our third quarter financial information and we will be available later today if there are any follow-up questions..

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude today's program. You may all disconnect. Everyone, have a great day..