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Sangamo Therapeutics Inc(NASDAQ:SGMO)Q12020 Earnings CallMay 11, 2020, 5:00 p.m. ET

Operator

Good afternoon, and welcome to the Sangamo Therapeutics Teleconference to discuss First Quarter 2020 Financial Results. This call is being recorded.

I will now pass you over to the coordinator of this event, McDavid Stilwell, Senior Vice President of Corporate Communications and Investor Relations.

McDavid Stilwell -- Senior Vice President of Corporate Communications and Investor Relations

Good afternoon, and thank you for joining us today. With me this afternoon on this call are several members of the Sangamo senior management team, including Sandy Macrae, Chief Executive Officer; Sung Lee, Chief Financial Officer; Stephane Boissel, Head of Corporate Strategy; Adrian Woolfson, Head of Research and Development; Mark McClung, Chief Business Officer; and Bettina Cockroft, Chief Medical Officer.

Slides from our corporate presentation can be found in our website sangamo.com under the Investors and Media section in 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 our pipeline of genomic medicine product candidates, our ability to develop, obtain regulatory approval for and commercialize therapies to treat certain diseases and the timing, availability and costs of such therapies, plans and timelines for Sangamo and our collaborators to conduct clinical trials and share clinical data and the potential for these trials to provide clinical benefit to patients, the potential to use certain technologies to develop our therapies, the financial and operational impacts of our collaboration, plans and timelines for building and opening manufacturing facilities, the evolving COVID-19 pandemic and our expectations regarding our financial performance and resources. Actual results may differ substantially from what we discuss today. In addition, these statements are not guarantees of future performance and are subject to certain risks and uncertainties that are discussed in documents that we file with the Securities and Exchange Commission. Specifically in our most recent quarterly report on Form 10-Q filed today and our annual report on Form 10-K. The forward-looking statements stated today are made as of this date and we undertake no duty to update such information, except as required under applicable law.

On this call, we discuss the non-GAAP financial measure. We believe this measure is helpful in understanding our past financial performance and our potential future results. This is not meant to be considered in isolation or as a substitute for the comparable GAAP measure. The comparable GAAP measure and reconciliations of GAAP to the non-GAAP measure discussed on this call are included in today's press release, which is available on our website.

And now, I'd like to turn the call over to Sandy.

Sandy Macrae -- President and Chief Executive Officer

Thank you, McDavid, and good afternoon to everyone on the call. Typically, when I come together with the Sangamo executive team to talk to you about our business every quarter, we are in the boardroom of the headquarters in Brisbane, California. Today, due to the COVID-19 pandemic, we're all in our home offices. One of the many adaptations we've all had to make in these unprecedented circumstances.

At Sangamo, over the last two months, we've worked together to minimize any impact of the pandemic on our business, and I believe that we are in a very strong position. Last month, we were very pleased to announce the closing of our collaboration agreement with Biogen to develop gene regulation therapies for Alzheimer's disease, Parkinson's disease, neuromuscular and other neurological diseases. We have received from Biogen $225 million in proceeds from the sale of stock and an additional $125 million upfront license fee payment. With this $350 million received from Biogen and in addition to the $363 million in cash resources that we reported on our March 31 balance sheet, we believe we have the financial strength to execute on our wholly owned and partnered development programs beyond multiple important milestones, including the potential filing of the BLA for SB-525 for hemophilia A.

In response to COVID-19, Sangamo has prioritized employee safety, and welfare, while responsibly advancing the business. Following the shelter-in-place guidance from government authorities in the middle of March, we asked all non-lab employees to work from home. We also implemented modified labs operations and updated safety protocols to continue critical research and manufacturing work while protecting employee safety and adhering to social distance guidelines. In the labs, we are strategically prioritizing projects to keep our business on track, including focusing on research activities for partnered programs. We are also conducting clinical activities cautiously, so as not to contribute unnecessarily to the current stream in the healthcare system, while seeing close communication with trial sites to protect the safety of the patients in our trial.

We continue to be optimistic that our AAV manufacturing facility in our Brisbane headquarters will be operational by the end of this year. We also expect our cell therapy manufacturing units in Brisbane, California and in Valbonne, France to be opened by the end of 2021. Furthermore, we are keeping in regular contact with our CDMO partners and as of now, do not anticipate any COVID-19-related manufacturing delays with our activities.

Despite the challenges of the current environment, we continue to actively pursue new partnerships both inbound to access new technology, as well as out-licensing deals such as established ones that we already have with Pfizer, Gilead, Sanofi, Biogen and Takeda. An important example of an inbound partnership is our recently announced collaboration and exclusive license with Mogrify, a Cambridge UK company developing novel cell conversion technology that has the potential to serve as a renewable cell source. Under the terms of this agreement, Sangamo aim to use Mogrify's proprietary cell conversion technology to develop allogeneic, zinc finger protein gene-engineered CAR-Treg cell therapies using iPSC-derived regulatory T-cells. This license agreement will diversify our options and complement our current efforts as we develop off-the-shelf allogeneic CAR-Treg cell therapies. We believe that this exciting collaboration has the potential to accelerate the development and manufacturing of novel renewable cell source, Treg therapies.

We are also continuing our discussions on out-licensing opportunities. As a reminder, our strategy for collaborations is to advance select development programs in partnership with biopharmaceutical companies in situations where we believe that our partners' financial resources or clinical and therapeutic area expertise may enable more rapid development and availability of new treatment to patients.

Before I turn the call over to the team, I want to update you on some recent transitions among my direct reports that are natural part of Sangamo's evolution, as we advance our clinical development and strategic partnering. Over the last three years, we've added Executive Vice Presidents to lead manufacturing, legal, finance and R&D. In our latest executive appointment, as we look to the future and perceive the need for commercial development expertise and capabilities, Mark McClung has joined Sangamo as Chief Business Officer and now leads commercial strategic planning, alliance management and corporate and business development. Mark has a distinguished career leading commercial organizations, including GSK, Onyx and Amgen in highly competitive therapeutic areas that require a deep scientific knowledge and where innovative products have disrupted the standards of care and where successful product development occurs as a result in a tightly integrating patient and physician insights into late stage clinical development programs.

Stephane Boissel, our EVP of Corporate Strategy will leave Sangamo at the end of in July and plans to return to an entrepreneurial project. Stephane joined Sangamo in 2018 after we acquired TxCell, now Sangamo France, which Stephane lead as CEO. His energy and vision resulted in our recent Biogen transaction, which is one of the largest pre-clinical collaboration deals ever in the biopharmaceutical industry. Stephane's impactful contribution to Sangamo will endure for many years.

With that, I will turn the call over to our Chief Medical Officer, Bettina.

Bettina Cockroft -- Senior Vice President and Chief Medical Officer

Good afternoon. In light of the COVID-19 pandemic, Sangamo is working very closely with all our clinical trial site partners to devise individualized plans to protect the safety of every patient enrolled in our studies, as well as the continued integrity of our trial data. After we have established a plan for each patient, we work with sites and IRBs to establish appropriate procedures. In some cases, trial site partners have been reducing or pausing clinical trial work to redirect capacity and resources to COVID-19 patients. At other sites, clinical trial patients are still being screened and enrolled, but may not be dosed until an appropriate time is identified.

In addition to adopting our clinical operations to this new situation, we are implementing procedures now, so that as the COVID-19 crisis subsides, we'll be able to resume operations as quickly and as efficiently as possible. To do this, we are keeping close contact with our trial site partners and continuing to identify potential patients that may be suitable for enrollment. In some cases, we're also using this time to further optimize clinical operations, processes and engage with regulatory agencies. We're also working closely with our collaboration partners to track the status of our joint development programs.

Turning now to some clinical updates commencing with SB-525 or PF-07055480, hemophilia A gene therapy. We transferred operations of the fully enrolled Phase 1/2 ALTA Study to Pfizer along with the IND at the end of last year. We're working closely together with Pfizer to identify an appropriate opportunity this year to provide an update on the results that we shared at ASH 2019 from the high-dose expansion cohort. Pfizer continues to target dosing the first patient in the Phase 3 study in H2 2020. Pfizer is working to minimize any potential disruptions to the schedule, due to the ongoing COVID-19 pandemic and continues to recruit patients into the Phase 3 lead-in study. Pfizer recently updated clinicaltrials.gov with the Phase 3 study protocol and have informed us that they plan to provide additional updates on the Phase 3 trial in due course.

Moving now to our wholly owned gene therapy, ST-920 for Fabry disease. We have successfully screened and enrolled patients into the STAAR study and we are awaiting for a safe and appropriate time to initiate dosing the first patient.

In conjunction with our partner Sanofi, we're evaluating gene-edited cell therapies for two hemoglobinopathies, ST-400 for beta thalassemia and BIVV003 for sickle cell disease. ST-400 and BIVV003 are both designed to induce the synthesis of fetal hemoglobin. This is achieved by gene-edited knock out of the erythroid-specific enhancer of the BCL11a gene, which encodes a strong repressor of the gamma globin gene. In beta thalassemia, if fetal hemoglobin is expressed at high enough levels, it may substitute for patients absent or impaired levels of beta globin. We have enrolled and dosed five patients into the THALES Study evaluating ST-400 for beta thalassemia.

In sickle cell disease, increased fetal hemoglobin synthesis may provide the patient with functional hemoglobin and help down regulate the abnormal sickle hemoglobin that results in painful sickle cell crisis and other disease features. Sanofi has also been enrolling patients into the PRECIZN-1 study evaluating BIVV003 in sickle cell disease and dosed the first patient last year. New analysis of the study's data will be shared when the two studies have accumulated a sufficient number of the patients and follow up. No additional beta thalassemia patients in the THALES Study will be treated until the data from both studies has been collected and analyzed. Sanofi, will in the meantime, continue enrolling sickle cell patients into the PRECIZN-1 study. We will look for an appropriate time to present data from both these studies at a future date.

I'd like to conclude by addressing a few programs that we are monitoring closely with regard to potential impact by COVID-19. We continue to make progress with additional regulatory approvals for the Phase 1/2 STEADFAST study, evaluating our first in human CAR-Treg cell therapy, TX200, in HLA-A2 mismatched kidney transplantation. We expect to dose the first patient in this study in 2021.

Moving on now to KITE-037, an allogeneic anti-CD19 CAR-T cell product being developed by Kite, a Gilead company. Kite has informed us that there is a potential for a COVID-related delay to the initiation of the KITE-037 clinical trial.

I will now turn the call over to Sung for an overview of the financial results. Sung?

Sung Lee -- Executive Vice President and Chief Financial Officer

Thank you, Bettina, and good afternoon, everyone. We're pleased to share our financial results for the first quarter of 2020. We reported a net loss of $42.9 million, or $0.37 per share, compared to a net loss of $42.2 million, or $0.41 per share for the same period in 2019. The revenues were $13.1 million, compared to $8.1 million for the same period in 2019.

Turning to expenses, non-GAAP operating expenses, which excludes stock compensation, were $52 million, compared to $47.4 million in 2019. The increase in operating expenses was primarily related to the Company's overall headcount growth and facilities expansion to support the advancement of Sangamo's therapeutic pipeline and manufacturing capabilities.

Moving to the balance sheet. We ended the quarter with $363 million in cash, cash equivalents and marketable securities. Following the end of Q1, we received $350 million from Biogen from the sale of stock and the upfront license fee. As Sandy mentioned earlier, we believe we have the balance sheet strength to take us through important R&D milestones, including the first potential filing of the BLA for SB-525 for hemophilia A.

Turning to 2020 full-year guidance. We are reiterating our previously shared financial guidance and anticipate non-GAAP operating expense, which excludes estimated stock compensation expense of $25 million to be in the range of $245 million to $260 million in 2020. At this time, we do not expect any material negative financial impact from COVID-19 to our operating expense guidance. We will continue to monitor the situation and provide an update in the future. In the meantime, we will continue to be good stewards of capital.

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

Sandy Macrae -- President and Chief Executive Officer

Thank you, Sung. This quarter marked an important milestone with the closing of the Biogen agreement, which will significantly strengthened our balance sheet and represents yet another vote of confidence in our highly differentiated zinc finger protein genomic medicine platform from a top biopharmaceutical company.

In these unprecedented times, I've observed tremendous resilience and adaptiveness from our employees. And this has kept our business moving forward, including ongoing business development discussions, continued research and technical operations in our laboratories and continued partnerships with our clinical trial sites. We feel a great sense of confidence in our business and in our ability to weather the COVID-19 crisis, due to our balance sheet strength, strategic investments in infrastructure, and to the prudent plans that we have established to facilitate our rapid return to more normal operations, as this crisis subsides.

Operator, we are ready for questions?

Operator

Thank you. [Operator Instructions] Our first question comes from Maury Raycroft with Jefferies. Your line is open.

Maury Raycroft -- Jefferies LLC -- Analyst

Hi, everyone. Thanks for taking my questions. First question is just on hemophilia A. So, with the Phase 3 trial posted to clinicaltrials.gov. Can you talk more about the design at this time, including dose, steroid use and what estimates are on how long it's going to take to enroll the study?

Sandy Macrae -- President and Chief Executive Officer

Maury, thanks for your question. As you can imagine that the Phase 3 trial is under the control and communication of Pfizer, and they will give all announcements about the design of the trial, and we want to respect that relationship with them. Everything they have told us so far guides to the trial moving ahead as planned. One of the advantages of our partnership with Pfizer is, they are a global organization that can take the trial to where the patients are available and where the COVID impact is less. So, we look forward to them sharing more information with you as the year progresses.

Maury Raycroft -- Jefferies LLC -- Analyst

Understood. Understood. And then, for Fabry, you guys have mentioned before that you had more patients screen failures than you initially expected. Just wondering if you've implemented enrollment criteria changes and have those been helping.

Sandy Macrae -- President and Chief Executive Officer

Bettina, would you be able to talk to that?

Bettina Cockroft -- Senior Vice President and Chief Medical Officer

Yes, of course. Hi, there. So, we have been looking at implementing some changes. And, as you will have noted from the communication today, we have actually enrolled patients into the Fabry study. Now, of course, during the COVID pandemic, we are being very cautious as to assessing the best timing for dosing the first subject. But we have had an uptick and that has resulted in inclusion of patients into the study.

Sandy Macrae -- President and Chief Executive Officer

And Bettina, you feel that the changes you made to the protocol have permitted that or facilitated that?

Bettina Cockroft -- Senior Vice President and Chief Medical Officer

Exactly. Absolutely, absolutely.

Maury Raycroft -- Jefferies LLC -- Analyst

Great. Okay. And then last quick one was just on, wondering if you have formalized plans to conduct a renal biopsy for Gb3 reduction in this initial part of the study. Or could that come in later on, maybe if you could just talk more about the plans are?

Sandy Macrae -- President and Chief Executive Officer

We haven't discussed our plans for the Gb3 and for renal biopsy. As you can imagine, that is a complex issue about patient benefit and the risk of a renal biopsy. We are very appreciative of the FDA trying to make medicines for Fabry, get to patients as quickly as possible by allowing registration quicker with the renal biopsy and are very aware of that and are incorporating it into our plans.

Maury Raycroft -- Jefferies LLC -- Analyst

Got it. Thank you for taking my questions.

Sandy Macrae -- President and Chief Executive Officer

Thanks, Maury. Do well.

Operator

Thank you. Our next question comes from Gena Wang of Barclays. Your line is open.

Gena Wang -- Barclays -- Analyst

Thank you for taking my questions. I have two questions. The first is regarding hemophilia A update, and second question is regarding Fabry disease. First, hemophilia A update, I understand Pfizer emphasized the importance of 18-month data. Given follow-up from last ASH, is it fair to say 4Q this year likely would be a good timing to show data? And for the Fabry disease, you did mention you enrolled several patients. Just wondering how many patients. And also, is this still possible to present initial data beginning of next year? Also, can you remind us the first dose for Fabry disease?

Sandy Macrae -- President and Chief Executive Officer

So, I'll let me take the first question before passing you on to Bettina, but warning you that we haven't talked about the first dose yet. But if I could do the hemophilia A, unfortunately, the world time moves at just the same rate, and patients are only now coming out of their 18-month point and that's very weak patients and it will take throughout the rest of the -- this and the next quarter for the majority of patients to reach their 18-month point. So, Pfizer will lead all communications as part of the deal for transition like this. You agree which company will lead all communications, and that is in Pfizer's hands and they will decide when they have data that they will share with you all. I know this is frustrating, but it's -- it has to be a single company that leads that.

And Bettina, can you talk about our enrollment in Fabry, please?

Bettina Cockroft -- Senior Vice President and Chief Medical Officer

Yes, absolutely. So, as far as Fabry is concerned, to address your last question first, we're going to be showing data after we've completed dose escalation across the three cohorts that we have in our protocol. We want to make sure that we present a mature dataset that can represent safety and efficacy of ST-920. And in terms of which doses we were planning to test, we have said low, medium and high. We will disclose specific doses at an appropriate point in the future. What I can say is, we've learned a lot about AAV6 through our SB-525 hemophilia A program and we've made protocol amendments to the Fabry program to take those learnings and also FDA guidance into account. So, we look forward to updating further on this in the future.

Gena Wang -- Barclays -- Analyst

Okay. How many patient already have enrolled?

Bettina Cockroft -- Senior Vice President and Chief Medical Officer

[Speech Overlap] I think we've not disclosed...

Sandy Macrae -- President and Chief Executive Officer

Yeah, exactly. We're not disclosing that. But we have patients enrolled. We have interest from sites and it's just a matter of us choosing when to dose the first patient. I'm sure you would agree that we need to choose wisely, because the patients will have to come in for monitoring and we want to make sure that they are safe and that their health service is not overstressed.

Gena Wang -- Barclays -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Whitney Ijem of Guggenheim. Your line is open.

Whitney Ijem -- Guggenheim Securities -- Analyst

Hey, guys. Thanks for taking the questions. Wanted to follow up on Fabry. So, I guess, first, can you give us any color on the entry criteria that were adjusted, that kind of facilitated enrollment, just curious if we could learn more there?

And then the second question is on the endpoints, you mentioned you won't present data until you have a complete dataset. I guess, what does that mean in terms of follow-up and kind of what endpoints are you tracking? Or is that the 12-month kind of safety follow-up that's reflected on clin-trials? Thanks.

Sandy Macrae -- President and Chief Executive Officer

So, Whitney, thank you for your question. The criteria that we adjusted were not things about antibody criteria like gene therapy things. They were more our understanding of what Fabry patients look like onboard, the right patients to put into the study. Each time, a company like our goes into a new disease, we learn from the first few patients and Bettina and her team done an excellent job in simply understanding what patients are available.

When we say we won't talk about the study until it's complete, what we mean is that, we've gone through the -- each of the dose cohorts. And as soon as we have biochemistry data from each of the dose cohorts, the low, medium and high as Bettina has said, we will share them with you. You're absolutely right that there will be follow-on data that will look at additional parameters, including in some patients' biopsy. But we hope to be able to share the biochemistry initially and talk to you about the results of our intervention.

Whitney Ijem -- Guggenheim Securities -- Analyst

Got it. And just a quick follow-up, in terms of the biochemistry what particular endpoints, I guess, are you looking at there and what's the cut-off? I guess, is it like three months or six months of biochemistry you want to have at that higher dose to kind of be the threshold for announcing the data?

Sandy Macrae -- President and Chief Executive Officer

We haven't described that. We -- you've been with us for a long time and you understand our cautiousness in speaking too soon and waiting for the results to stabilize. So, as we can most inform you and most inform the patient community.

Whitney Ijem -- Guggenheim Securities -- Analyst

Understood. Thanks very much.

Sandy Macrae -- President and Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] Our next question comes from Ritu Baral of Cowen. Your line is open.

Originally posted here:
Sangamo Therapeutics Inc (SGMO) Q1 2020 Earnings Call Transcript - The Motley Fool

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