Sangamo Therapeutics Inc

NASDAQ:SGMO

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Operator]

Good afternoon, and welcome to the Sangamo Therapeutics Second Quarter 2024 Teleconference Call. 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.

[Louise Wilkie, executive]

Thank you. Good afternoon, everyone. 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; Prathyusha Duraibabu, Chief Financial Officer; Nathalie Dubois-Stringfellow, Chief Development Officer; Amy Pooler, Head of Research; and Greg Davis, Head of Technology.

Slides from our corporate presentation can be found on our website, sangamo.com under the Presentations page of the Investors & Media section.

This call includes forward-looking statements regarding Sangamo's current expectations. These statements include but are not limited to statements relating to Sangamo's cash runway, plans to obtain additional capital and ability to continue to operate as a going concern, the therapeutic and commercial potential of Sangamo's product candidates and technologies, Sangamo's ability to earn and receive payments from its collaboration and license agreements, including the Genentech and Pfizer agreements -- sorry, Sangamo's expectations regarding new collaboration and license agreements, the anticipated plans and timelines of Sangamo and its collaborators for clinical trials, clinical data presentations and regulatory submissions, 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, 2023, as supplemented by Sangamo's quarterly report on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024 and subsequent filings and reports that Sangamo makes from time-to-time with the SEC.

The forward-looking statements stated today are made as of today, and we undertake no duty to update such information except as required by law. Please note that all forward-looking statements about our future plans and expectations are subject to our ability to secure adequate additional funding.

Now, I'll turn the call over to our CEO, Sandy Macrae.

[Alexander Macrae, executive]

Thank you, Louise, and good afternoon to everyone joining the call today. This has been such an exciting and important quarter for Sangamo. At our last earnings call, we shared compelling preclinical data demonstrating the potential of our neurology epigenetic regulators, AAV capsid delivery platform and next generation genome engineering platform. Importantly, we also outlined our resolute focus on raising additional capital in order to progress these compelling assets into the clinic and supports patients in need.

To that end, this morning, we were thrilled to announce our first neurology epigenetic regulator and delivery capsid license agreement. This comes close on the heels of the highly compelling Phase III AFFINE data for the hemophilia A gene therapy we are co-developing with Pfizer. Both announcements demonstrate external interest in and validation of the potential of our science and both could meaningfully extend our cash runway, as we continue to advance our wholly-owned neurology epigenetic regulation pipeline.

Getting into the details of our STAC-BBB capsid deal, this morning, we announced a license agreement with Genentech to develop novel intravenously administered genomic medicines for neurodegenerative disease. We have granted Genentech, an exclusive license to our highly potent zinc finger repressors that are targeted to tau, a critical gene involved in Alzheimer's disease and other tauopathies, as well as an additional undisclosed second neurology target. For these same targets, we've also granted Genentech an exclusive license to our industry-leading neurotropic delivery capsid STAC-BBB, which has demonstrated potent blood-brain barrier penetration and brain transduction in non-human primates.

As we have shared before, we strongly believe that our powerful combination of proprietary genome targeting cargo paired with our neurotropic delivery capsid platform is critical to the successful development of neurology-focused genomic medicines. We believe this agreement with Genentech, a leader in the biotechnology and neurology space reinforces this potent combination and underscores how Sangamo is able to provide both.

We are delighted that Genentech chose our zinc finger and capsid delivery technologies to address their neurology needs. We expect to receive from Genentech $50 million in near-term upfront license fees and milestone payments, which we anticipate will extend our cash runway into early 2025 and are eligible to earn up to $1.9 billion in development and commercial milestone payments, as well as tiered royalties or net sales of such products under the agreement.

Our agreement with Genentech is significant as we believe it paves the way for others in the future. We anticipate this agreement could be the first of multiple capsid collaborations as we have ongoing discussions with other interested parties alongside our Fabry partnership discussions. Generating additional funding continues to be our top priority as we work to position Sangamo for long-term success and value creation and are hopeful to have news of additional transactions in the second half of this year.

I would now like to hand over to Nathalie, our Head of Development, who will share details on the positive topline Phase III AFFINE trial results and take us through other pipeline updates. Nathalie?

[Nathalie Dubois-Stringfellow, executive]

Thank you, Sandy. As Sandy outlined, we were thrilled to recently share positive topline results from the Phase III AFFINE trial of giroctocogene fitelparvovec, an investigational gene therapy we are developing with Pfizer for patients with moderately severe to severe hemophilia A. Hopefully, we had an opportunity to look at the results.

But to summarize the key point, the AFFINE trial achieved its primary objective of non-inferiority as well as superiority of total annualized bleeding rate or ABR, compared with routine Factor VIII replacement prophylaxis treatment. Following a single dose of giroctocogene fitelparvovec, demonstrated a statistically significant reduction in mean total ABR compared to the pre-infusion period.

Key secondary endpoints were met and also demonstrated superiority compared to prophylaxis, with 84% of participants maintaining Factor VIII activity greater than 5% at 15 months post-infusion and the majority having Factor VIII activity greater than or equal to 15%.

Furthermore, the mean treated ABR showed a 98.3% reduction post-infusion. Importantly, the product candidate was generally well tolerated. These impressive results further validate the potential of our genomic technologies and take us one step closer towards what could become Sangamo's first medicine commercially available to patients.

We greatly appreciate Pfizer's strong leadership of this important program and we're therefore pleased to see this update permanently profile in their second quarter earnings update last week. Pfizer reiterated that they plan to review this data with regulatory authorities in the coming months, which would take us a further step closer to unlocking a substantial first tranche of the anticipated milestone payments. As a reminder, we are eligible to earn up to $220 million in milestone payment from Pfizer upon the achievement of certain regulatory and commercial milestones and 14% to 20% royalty on potential sales for this program if approved and commercialized.

Positively impacting the lives of patients is our ultimate goal. So, selecting a partner with strong commercialization infrastructure and experience, as well as a broader franchise in this area was an essential criterion when selecting a partner for this program some years ago. We look forward to hearing Pfizer's progress on this program in the coming months.

This quarter, we also continue to advance our Fabry disease program, and I wanted to take a moment to share how the Fabry clinical data continues to evolve and demonstrate real patient benefit. As outlined previously, dosing is complete in the Phase I/II STAAR study of isaralgagene civaparvovec, an investigational gene therapy for the treatment of Fabry disease with a total of 33 patient dose. Since our last update, we are pleased that 3 additional patients have been able to stop enzyme replacement therapy or ERT, resulting in a total of 17 patients withdrawn from ERT to date. All 17 patients remain off ERT as of today. The one remaining patient dosed will begin the study on ERT has plans in place to withdraw ERT treatment at the appropriate time. To reiterate, 17 patients no longer have to undergo long ERT infusion session every second week. This is a life-changing development for those patients.

With the longest treated patient now at nearly 4 years and with 10 patients having at least 2 years of follow-up, we continue to amass important clinical data, including durability from this study. These data continue to look highly encouraging with patient achieving and maintaining physiological or supraphysiological level of plasma alpha-Gal A enzyme activity.

What particularly pleases me is that we are seeing evidence of improvement in kidney function. In contrast to the progressive decline in kidney function seen in untreated Fabry patients and even those on ERT. In the 18 patients treated for more than 1 year, we are seeing a statistically significant rise in both mean and median eGFR levels in male and female patient, those with isaralgagene civaparvovec. This reflects an important improvement in kidney function. We look forward to sharing a detailed data update in the coming months.

In June, we also held a productive meeting with the European Medicine Agency or EMA, on a proposed pathway to potential approval in Europe. In particular, we were impressed to be joined in that discussion with 9 members of the U.S. Food and Drug Administration. Finally, our engagement with potential Fabry collaboration partners continues with multiple discussions ongoing.

These advances allows us to focus on our mission as a genomic medicine company to treat debilitating neurological disorders. We believe our ability to combine potency zinc finger epigenetic regulation payloads with exciting new industry-leading capsid delivery technology could unlock significant potential for the treatment of devastating neurological diseases, indication for which delivery to the central nervous system has historically proved challenging.

This quarter, we continue to advance IND-enabling activities for our zinc finger repressor in chronic neuropathic pain, Nav1.7, as well as CTA enabling activity for our program to treat prion disease, which leverages our novel STAC-BBB capsid. And we also shared exciting development in our new next generation genomic engineering efforts to integrate larger sequences of DNA into the genome, an approach that could offer the potential to treat with single medicine patients who have unique mutations in the same gene.

I will now hand it back to Sandy for closing remarks.

[Alexander Macrae, executive]

Thank you, Nathalie. In closing, we're delighted with the important progress made this quarter, which can be summarized in 3 areas. First, we are proud that our epigenetic regulation and capsid delivery capabilities are being recognized by leaders in the field. We expect that the near-term payments to be received from Genentech will extend our cash runway into the first quarter of 2025, reinforcing the potential of our science and providing us with needed near-term financial resources. We believe this could be the first of multiple capsid collaborations to come with other partners, which we hope will create a stream of future non-dilutive funding opportunities.

Second, we are excited to have achieved important advances in our legacy gene therapy programs, which provide a foundation for our core neurology business. The positive topline data from the Phase III AFFINE trial take us one step closer toward what could be Sangamo's first medicine commercially available to patients and the resulting important potential milestones and royalties that would follow. The compelling clinical data emerging from our Fabry disease program, coupled with the encouraging potential regulatory pathway, further underscores the importance of our science, and we anticipate we'll further fund the company.

Third, this stream of non-dilutive funding opportunities provides the foundation to build our neurology epigenetic regulation pipeline and capsid delivery platforms, led by our chronic neuropathic pain and prion disease programs, both of which continue to advance towards potential IND and CTA submissions. We will continue to build on our progress in the second half of 2024 and look forward to continuing to achieve key milestones to bring our promising technology to patients in need.

Operator, please open the line for questions.

[Operator]

Thank you. At this time, we will conduct the question-and-answer session. [Operator Instructions] Our first question comes from the line of Nicole Germino of Truist Securities.

[Nicole Germino, analyst]

Great. Congrats on all the progress. You've noted that STAC-BBB is manufactured at scale. Can you elaborate on this a bit more and what this means potentially from a cost of goods perspective compared to the standard process -- compared to, sorry, the standard process?

[Alexander Macrae, executive]

Thank you for your question. Amy, can you help with that, please?

[Amy Pooler, executive]

Yes, sure, I'm happy to comment on that. Once the discovery of STAC-BBB was made, one of the first things that we did was look into the manufacturability of the capsid, knowing that that's an important consideration when scaling up in order to be able to make enough of the capsid to treat these devastating neurological diseases we mentioned earlier. What we found is that, by and large, the STAC-BBB capsid behaves very similarly to its parent capsid. So we believe that all of the expertise that we've developed for our previous programs in manufacturing AAV can be leveraged now for STAC-BBB.

[Alexander Macrae, executive]

Thanks, Amy. And it's one of the gating factors in choosing this capsid to move ahead.

[Operator]

Our next question comes from the line of Gena Wang of Barclays.

[Huidong Wang, analyst]

I wanted to congrats on the great deal with Genentech. So maybe, I wanted to ask regarding the partnership, they are open for additional indication beyond the 2 indications that already decided regarding this deal. And then second, regarding the Fabry disease, now you have a more compelling clinical data and also strengthened cash position. What is your latest thoughts on the Fabry program path forward, whether as a standalone asset or you want to still continue looking for the partner to divest this asset?

[Alexander Macrae, executive]

Sorry, you have to excuse us, you were very quiet. Can I make sure that we understood the questions? I think the first one was about STAC-BBB and was it available for other indications? And would we be doing partnering for other indications? Did I understand that correctly?

[Huidong Wang, analyst]

That's correct. Sorry. Can you hear me better now?

[Alexander Macrae, executive]

Yes, that's much better. Thank you. So the license we have with or the partnership we have with Genentech is for they have named their first indication as tau, which clearly applies to Alzheimer's and the various tauopathies and a second undescribed target. All other targets are unclaimed at the moment. Of course, we at Sangamo want to take forward prion and we have a range of -- I think there's 8 in our current pipeline on the website that we would consider depending on resources taking forward. We're really lucky that we've been inundated by other companies looking for opportunities to access the capsid and we're being very careful to hear the ones that they are interested in and make sure that, that fits with the ones that we want to take forward. So it really does speak to the importance of this capsid and the many neurological conditions that hopefully will be addressed with various cargos in this capsid.

And then the second question, I think, you asked was about Fabry. Nathalie, can you update us on where we are with the Fabry study, please?

[Nathalie Dubois-Stringfellow, executive]

So we have very encouraging data, but if I understand your question, you're wondering if we are still wanting to partner?

[Huidong Wang, analyst]

That's correct.

[Nathalie Dubois-Stringfellow, executive]

Yes. So we have very encouraging data and really a remarkable path forward. We've agreed with the agency, but it doesn't make sense for us to set up a commercial infrastructure around a single product. So we believe a company with the appropriate commercialization infrastructure would be best placed to take this medicine more quickly and effectively with patients.

[Alexander Macrae, executive]

What's really interesting is the longer we follow the Fabry data, the more interesting it becomes. We have patients out at 4 years, we have several out at 2 years, we have 17 patients now that have come off of ERT and none of them show any sign of going back on. And then, the more recent data that we got, that we described in this where we show an improvement in the eGFR. So this isn't a biopsy, this isn't a biomarker, this is what's important to patients and what determines the fate of patients and in some case literally their fate. And the eGFR drops year-on-year in patients with Fabry disease. ERT slows that somewhat but we've been told no one has ever seen an eGFR that actually statistically improves, both the mean and the median improves. And it really speaks to the clinical utility -- as a physician, the clinical utility of this medicine. So we have several companies that we're talking to now, they too have got very excited by this eGFR data. We see this as an important medicine. The team's driving goal is to get this to patients. However, it takes to do it, we will make sure that this is a medicine because it is making such a difference to patients with Fabry disease.

[Operator]

Our next question comes from the line of Yanan Zhu of Wells Fargo.

[Yanan Zhu, analyst]

Great. Congrats on the progress. So, maybe first a couple of questions for the Genentech collaboration, specifically on the technology front. I was wondering, are there new engineering features in the zinc finger repressor that Genentech licensed? Is repressor similar or different with any of the prior and/or current zinc finger repressor product candidates that has been worked on?

And secondarily, I was wondering how deep of a repression can zinc finger repressors achieve and how much repression is necessary for achieving therapeutic benefit in suppressing tau?

[Alexander Macrae, executive]

Thank you. Those are all great questions. And Amy, I'm sure you'll love to answer them.

[Amy Pooler, executive]

Yes, absolutely. Thank you for the question. The zinc finger repressor technology is something that Sangamo has been working on for some time and we are really confident in both the potency and the specificity of the platform. The zinc finger, especially for tau, is really a beautiful example of that zinc finger technology. Now, the thing that was missing in the past for the tau program really was a way to deliver. We know that these tauopathies, especially in Alzheimer's disease, affect the whole brain. And with a direct injection approach or an intrathecal CSF approach, we really weren't able to achieve that widespread brain distribution that we think would be critical for treating the disease. I think the important thing is to pair that potent and specific tau zinc finger repressor with the STAC-BBB capsid in order to achieve that. As we showed in ASGCT earlier this quarter, and also in our corporate deck, we have really outstanding distribution of the STAC-BBB capsid throughout key brain regions that are involved in Alzheimer's disease. So we're really excited about that.

[Yanan Zhu, analyst]

So in terms of...

[Alexander Macrae, executive]

And I think the other piece that we are delighted about in this is Genentech. Genentech and Casper, the Head of Neuroscience at Genentech, has always been a great fan of zinc fingers as a way to control gene expression. And they have a love and a passion for Alzheimer's. We feel in their hands it will get to patients as quickly as possible. So this, from a Sangamo point of view, is getting the right deal with the right partner. And for us, it validates both our cargo, the zinc finger repressor and our capsid. And we're delighted to partner with Genentech in this.

[Amy Pooler, executive]

And then to follow-up on the second part of the question about the potency of the repression, we see greater than 90% repression on a cell-by-cell basis in neurons, which are the key cell types that are affected in Alzheimer's disease. So that demonstrates this potency. We see that both in vitro and neurons that we can grow in the dish and also in vivo in animal studies that we've completed.

[Alexander Macrae, executive]

And Amy, what's necessary?

[Amy Pooler, executive]

Now that's the million-dollar question. What we see with the STAC-BBB repression -- mediated repression that we've demonstrated in non-human primates, we believe is that levels that is necessary, again, on the single-cell basis of over 90% in those neurons. So really excited about being able to move this program into development and get into patients.

[Yanan Zhu, analyst]

That's very, very helpful. If I may ask 2 additional questions. One on STAC-BBB, sounds like this capsid really has a lot of very intriguing features, not only for broad neuron transduction but also with impressive de-targeting of the liver. I was wondering, have you undertaken any work to characterize what might be the cell surface target that has been -- that is targeted by this engineered capsid?

And another question on the Fabry program. I was just wondering, hearing about the improvement in eGFR, could you give us a little bit more -- a little more color on how many patients do you have long-term eGFR data for, and also what might be the venue for this upcoming beta readout?

[Alexander Macrae, executive]

Thank you for your questions. Great questions. Again, Amy, can you talk a little bit about STAC-BBB?

[Amy Pooler, executive]

Sure. We presented some data on the possible mechanism of blood-brain barrier crossing of STAC-BBB at the ASGCT conference earlier this year. What we found was a potential mechanism where it's a highly conserved protein in both -- in mouse, non-human primate and human. Of course, the data that we've seen in the non-human primate is really compelling, but we also understand that the most important thing is the proof of principle in humans. And this is really why we're so excited to be driving forward the STAC-BBB capsid with our prion program. And that will give us the potential to make a difference in the lives of patients that have this fatal disease.

[Alexander Macrae, executive]

Nathalie, can you talk about the longer-term data that we have with Fabry, please?

[Nathalie Dubois-Stringfellow, executive]

Yes. So at this point, we have 18 patients at 1 year where we have followed the eGFR and we can see that there is the mean and -- both the mean and the median of eGFR is improved when you look at those 18 patients.

[Alexander Macrae, executive]

Statistically significantly...

[Nathalie Dubois-Stringfellow, executive]

Statistically significant, improving those 18 patients. In these patients, we have both male and female, so we're very excited with this data because we demonstrate for the first time an improvement in eGFR, which really does not happen on ERT.

[Alexander Macrae, executive]

And if you remember, in addition, the patients are coming off their ERT, their SF-36 is positive, they are sweating. Just the general symptomatology of these patients is all positive, and the capsid is incredibly well-tolerated. So we're very pleased and the patients and the patient support groups are very pleased with the progress of this asset.

[Yanan Zhu, analyst]

Got it. Looking forward to seeing the data.

[Operator]

Our next question comes from the line of Maury Raycroft of Jefferies.

[Maurice Raycroft, analyst]

I'll add my congrats on the Genentech deal as well. I have a question just on hemophilia A with Pfizer. Since the $70 million milestone payment is tied to the BLA filing, which seems like a lower-risk event for Pfizer, could you potentially accelerate that milestone payment? And for the commercial milestones, would you consider renegotiating earlier payments for those milestones as well?

[Alexander Macrae, executive]

Thanks for the comment, Maury. We look forward to Pfizer moving this forward into registration and beyond. We were particularly encouraged by the recent Pfizer, the quarterly call, where this was a core part of their pipeline and something that they spoke of and were excited about, particularly as it matches with their hemophilia B asset as well. We don't give details of when these milestones will be coming. We don't need to draw down these milestones or royalties. Of course, when the results were announced, we had inbound inquiries from royalty companies who were interested in talking about that with us. But we're so close to the registration that it's a balance between supporting Pfizer and believing in Pfizer and the need for cash now. And so we are blessed to have that choice.

With this money that we've brought in from Genentech, it gives us time and it gives us an opportunity to complete other business development deals. With the Fabry, we have the choice and the results are giving us incoming interest on the clinical benefit. With the capsid and cargo that Amy has created, we can do other capsid and cargo deals. So this has been a great turnaround from Sangamo. This is the beginning and we are fortunate to have so many assets that we can monetize and choose our own path.

[Maurice Raycroft, analyst]

Got it. That makes sense. That's helpful. And maybe one quick follow-up. I'm just wondering if there's more you can say about the STAC-BBB out-licensing process and the extent of diligence from Genentech and whether other parties were involved for tau specifically?

[Alexander Macrae, executive]

There's a limit to what we can see. We saw this data first about STAC-BBB in November and amongst a whole other library. We saw the date on the single capsid in March and the business development team did a great job of driving it forward. Of course, I wanted it sooner and they will be smiling at me saying what a great job they have because I was always asking them to do it sooner.

Why we particularly like Genentech as our partner is they did deep, deep diligence. They have turned over every stone. They worked closely with Amy and her team to make sure that they were making the right choice, both with the capsule and cargo. We have several other companies that we're talking to, and we're very careful to make sure that we know what they want as their intended target to make sure we can maximize the value that we can get from this capsid.

Amy, it really was significant scientific diligence, wasn't it?

[Amy Pooler, executive]

Yes, it was such an exciting process and really such an honor also to go through it with the Genentech team. They are really wonderful looking at the data together and working in such a collaborative way. So, really looking forward to working together.

[Operator]

[Operator Instructions] Our next question comes from the line of Lisa Walter of RBC.

[Lisa Walter, analyst]

Great. This is Lisa on for Luca. First on Fabry, it has been about 10 months since the search for a partner has started by my count. It sounds like there have been some fruitful discussions going on with strategic and as well as clinical data progress and progress risk, FDA and EMA regulators too. But just wondering if you can add any more color on what is holding a potential strategic back here from partnering with you on Fabry?

And my second question on hemophilia A, just wondering how the conversations with Pfizer are evolving on which regions will be most strategic to file a BLA? In the past, I believe the U.S., EU, and Japan were flagged. However, we saw yesterday that BioMarin is opting to limit their launch now to only 3 countries, the U.S., Italy, and Germany. So my question is, will a more focused launch be under consideration or do you need to go broad for hemophilia A, considering you'll be second to market? Any color here would be helpful.

[Alexander Macrae, executive]

So I'll answer the second question first. We can't comment and won't comment on Pfizer's marketing plans. That just is not appropriate. And it's also in the contract that Pfizer would be the people who would speak to that. We noted with interest BioMarin reducing the number of companies who are [ intending ] reducing the investment. It's really hard to relaunch a product and we're pleased that this gives Pfizer an opportunity to make this medicine available. Our data looks great, the efficacy looks good, the tolerability looks good. And in Pfizer's hands, I'm sure it will be an important medicine.

You asked an interesting question about Fabry. We are determined to do the right deal, not a quick deal, do the right deal. And with the money that we brought in from the Genentech deal, we have the time to work with the right partner to take Fabry forward. What's interesting is, as the discussions have continued is the data has matured, the data has improved. The biopsies are starting to come in, in the coming months. The eGFR is statistically significant and the partners are excited, and we look forward to solving this as soon as possible. It's an important medicine and it's important that we get it right.

[Operator]

I am showing no further questions. I would now like to turn the call back to Louise Wilkie for closing remarks.

[Louise Wilkie, executive]

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

[Operator]

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.