Sangamo Therapeutics, Inc.
Q3 2008 Earnings Call Transcript

Published: 30 Oct 2008

[Operator:]

Good afternoon and welcome to the Sangamo BioSciences quarterly teleconference. As I reminder today’s call is being recorded. I will now pass it over to the coordinator of this event, Dr. Elizabeth Wolffe, Director of Corporate Communications. Please go ahead ma’am.

[Elizabeth Wolffe:]

Good afternoon and thank you for joining Sangamo’s management team on our conference call to discuss the company’s third quarter 2008 financial results. Also present during this call are several members of Sangamo’s senior management, including Edward Lanphier, President and Chief Executive Officer; Ward Wolff, Executive Vice President and Chief Financial Officer; and Dr. Dale Ando, Vice President of Therapeutic Development and Chief Medical Officer. Following this introduction, Edward will review third quarter activities, highlighting Sangamo’s recent events. Ward will briefly review third quarter financial results, and finally Dale and Edward will provide more detail on our developments in several of our ZFP Therapeutics clinical programs and our goals for 2008. Following that, we will open the call up for questions. As we begin, I’d like to remind everyone 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 future performance of Sangamo with you today, we are not undertaking any 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 Edward.

[Edward Lanphier:]

Thank you for joining us for our 2008 third quarter conference call. Is probably an under statement to say this is been a volatile and uncertain period for markets in general and from our prospective a period which it is been particularly important, to keep focused and to continue to advance our technology platform and clinical leads while maintaining a firm hand in our expenses. As such we have accomplished several of our 2008 goals this quarter. In September we initiated a Phase II clinical trail SB-509-801 to evaluate our ZFP, VEGF activator in subjects with amyotrophic lateral sclerosis or ALS. ALS is progressive, degenerative motor-neuron disease for which there are limited treatment options and as of yet no cure. Our Phase II trial is a randomized, repeat-dosing, open-label, multi-center study designed to evaluate the effect of intramuscular administration of SB-509 on the progression of the disease in subjects with ALS. In addition to gathering data on safety and tolerability of SB-509, the study will also evaluate stem cell mobilization. Dale will have more to say about the design and aims of this trial later in the call. Also in September, we presented additional data from Phase 1b study SB-509-401 and interim data from Phase 2 study SB-509-701 in subjects with diabetic neuropathy or DN. Data from the 401 trial were presented at the 44th Annual Meeting of the European Association for the Study of Diabetes or EASD and demonstrated a positive correlation of two or more response endpoints in the SB-509 treated group compared with placebo treated subjects at day 180 post a single treatment. This observation was statistically significant and provided further encouraging evidence that we are seeing a positive clinical effect with SB-509 treatment. At the International Society for Cellular Therapy or ISCT Meeting in Antwerp, Belgium, we also presented encouraging or be it early interim data from the Phase 2, 701 trial, which is being conducted in subjects with moderate to severe DN who have at least to one blocked nerve. The interim analysis was intended first and foremost to asses the safety of repeat dosing with SB-509 in this population with advanced DN. Additionally the yearly clinical data suggested encouraging recovery at the central nerve conduction velocity. In 75% of SB-509 treated subjects compared to 25% of placebo treated subjects, and prompted us to expand this trial to test our most frequent dosing regiment. We look forward to presenting the complete data set in 2009. In September, our partner Sigma-Aldrich, the exclusive distributor of ZFP products for research applications officially launched sales of zinc finger nuclease reagents for gene-editing under the trademark CompoZr. The CompoZr ZFN platform of reagents will provide researchers with the ability to target and precisely manipulate the genome of living cells, resulting in cell lines or whole organisms with defined gene deletions, insertions or corrections. Initially offered as a custom service for developing ZFNs for specific gene targets the CompoZr ZFN platform will soon include ZFN-based kits for targeted transgene insertion and a catalog of off-the-shelf reagents for commonly studied gene targets, gene families, and pathways. For more information on Sigma-Aldrich’s CompoZr zinc finger nuclease technology platform I encourage you to visit www.compozrzfn.com. Finally, we’ve published data in Nature Biotechnology describing a successful disruption of the CCR5 gene and human T-cells and the positive effect of CD4 T-cell counts and reduction in viral load in an animal model of HIV infection. These data were also presented yesterday at the 48th Annual Interscience Conference on Antimicrobial Agents and Chemotherapy or ICAAC in Washington DC. As you know, we are planning to file an IND on this program later this year and we look forward to updating you on that program on future calls. With that I’ll now turn or ask Ward to summarize the third quarter financial results. Ward.

[Ward Wolff:]

Thank you Edward and good afternoon everyone. As you know after the close of the market today, we’ve released our financial results for the third quarter ended September 30, 2008 and I’m pleased to review the highlights of those results. Revenues in the third quarter of 2008 were approximately $3.7 million compared to $2.3 million for the 2007 quarter. The third quarter 2008 revenues were primarily comprised of revenue recognition from our collaboration agreements with Dow AgroSciences and Sigma-Aldrich, enabling technology agreements in protein production, as well as research grants including grants from the Juvenile Diabetes Research Foundation and the Michael of J. Fox Foundation. The revenue recognized for the third quarter of 2008 consists of $3.2 million in collaboration agreements and $549,000 in research grants. Total operating expenses for the third quarter of 2008 were $10.1 million compared to $7.6 million for the same in 2007. Included in operating expenses our non-cash, stock-based compensation expenses of $1.3 million in the 2008 quarter compared to $600,000 in the 2007 quarter. With the increase between years due to primarily to increased grant activity, higher stock grant prices and a lower estimated forfeiture rate. Research and development expenses were $7.6 million in the 2008 quarter and $5.9 million in the prior year quarter. The increase is primarily due to the clinical programs in diabetic neuropathy and pre-IND programs in HIV/AIDS and glioblastoma as well as increased R&D personal costs. Personal related R&D cost included non-cash stock-based compensation previously mentioned of $600,000 in the 2008 quarter compared to $400,000 in the 2007 quarter. General and administrative expenses were $2.6 million in the third quarter of 2008, compared to $1.7 million in the 2007 quarter. The increase is primarily due to increased personnel costs, including non-cash stock-based G&A compensation expense of $700,000 in the 2008 quarter compared to $200,000 in the 2007 quarter. For the third quarter of 2008, we’ve reported a consolidated net loss of $6.3 million or $0.15 per share compared to a net loss of $4.3 million or $0.11 per share for the third quarter of 2007. For the first nine months of 2008, the consolidated net loss was $21.7 million or $0.53 per share compared to a net loss of $14.8 million or $0.41 per share in the comparable period in 2007. Revenues for the first nine months o 2008 were $9.4 million compared to $6.3 million in the same period of 2007. Total operating expenses for the nine months ended June 30, 2008 and 2007 were $32.5 million and $23.5 million respectively. With respect to the balance sheet, we ended the third quarter of 2008 with $59.5 million in cash, cash equivalents and short-term investments. Subsequent to the end of the third quarter we received $8.5 million in scheduled payments from one of our important collaborators Dow AgroSciences, representing $6 million for exercising its option for commercial license in the second quarter as well as $2.5 million in milestones and other payments. As we discussed in our call last quarter, with respect to revenue recognition of $8.3 million of the Dow payments, we are recognizing this revenue ratably over five quarter. With reflects the estimated timing of which the technology transfer is expected to occur as well as the period over which Sangamo will be compensated by DAS for additional research services. I am please to say that with payments from collaborators this month and other cash inflows anticipated in the fourth quarter, we expect to be effectively cash flow neutral in the current quarter. As such we expect to end 2008 with $59 million to $61 million in cash and investment balances having deployed $20 million to $22 million in total net cash usage in calendar 2008. This updated year-end guidance again assumes no new financing or partnering in the remainder of 2008. As we have previously noted, while we fully intend to continue to execute on our hybrid business model, by establishing new corporate partnerships in our core ZFP therapeutics as well as in non-core areas. Independent of success in any of these areas our current cash position is sufficient to enable us to fund our current therapeutic development pipeline through 2010. In summary, we are pleased to have executed on our financial plan for the first nine months of 2008 with respect to our operating results and net cash used in operating activities. We will continue to be focused on advancing our clinical and pre-clinical pipelines, while maintaining our historic financial discipline. Thank you and I’ll now turn the call back over to Edward.

[Edward Lanphier:]

Thanks, Ward. In these uncertain markets, sufficient cash in one way are fundamentally important to preserving and building shareholder value. It is significant that we are revising our financial guidance and now expect to end 2008 with approximately $60 million in cash, which as Ward said, enables us to fund our rapidly maturing therapeutic pipeline through 2010 independent of any new corporate partnerships or financings. Having said this, we have been very successful in establishing and executing on a unique hybrid business model that maximizes the value our ZFP technology platform. As you know, we’ve established high value agreements in the non-therapeutic aspects of our technology with Dow AgroSciences and Plant Agriculture, Sigma-Aldrich and Research Reagents and Genentech and Pfizer and cell line engineering. We also planned to establish strategic partnerships around our therapeutic programs at points of significant value inflection. As it relates to our most advanced therapeutic program, SB-509, data from our Phase 2 study, SB-509-601, will represent such a point of value inflection. Post positive Phase 2 data, we plan to seek a focused strategic partnership to aggressively move this program into and through pivotal clinical trials and rapidly into the market. Speaking of our clinical development activities, I’ve asked Dale to give you further details on progress in our lead therapeutic programs in diabetic neuropathy, including the data we have recently presented at EASD and ISCT meetings from our SB-509-401 and 701 trials in the design and rational for our Phase 2 repeat dosing trial SB-509-801 for ALS. While we will not be presenting any data from the 601 trial on this call, we will remind you of the trial design and end points. Dale.

[Dale Ando:]

Thank you, Edward. In early June there are 180 days follow-up data from our SB-509-0401, Phase 1b clinical trial of SB-509 for diabetic neuropathy were presented at the American Diabetes Association Meeting. The data are very positive, in a population of subjects with mild to moderate DN Neuropathy Impairment Scale – Lower Limbs or NIS-LL and quantitative sensory testing or QST scores both quantitative measures of nerve health achieves statistical significant. In addition we observe trends for improvement in nerve conduction velocity in both the sensory nerve the sural nerve and the turbulent peroneal motor nerves. As this trial is designed primarily to be a safety study and our part to achieve statistical significance for efficacy endpoint, it wasn’t particularly encouraging to observe this magnitude of effect. All in all the positive improvement in NIS-LL, QST and sensory motor NCVs over six months with the single treatment of SB-509 are above the level that is generally considered clinically relevant. In September, at the EASD meeting, the major European Diabetes Meeting, we presented these conclusions from the 401 study as well as the further analysis of the data. We examine the concordance of endpoints and subjects as judged by improvement between QST, NCV and NIS-LL at day 180 and found that eight out of 11 SB-509 treated subjects DN responders by one measurement we are also responders in one or both other measures. It was only one of the 12, placebo treated subjects show this correlation. This difference in a correlation of two or more response endpoints between treated and placebo is statistically significant with the p-value of 0.0016. It is apparent that in this group there was clinical benefit from treatment with SB-509 and while the numbers is a small this is very encouraging and reinforces our confidence the data obtained in this trial. As you are all aware we have completed the treatment portion of our Phase 2 study SB-509-601, in the same population of subjects with mild to moderate diabetic neuropathy. The trial is a double blind placebo control the repeat-dosing study. Approximately 100 subjects have been enrolled and randomized to one of two groups in the 2-to-1 ratio. The larger group were approximately 66 subjects was treated by intramuscular injection of 60 milligrams of SB-509, 30 milligram per leg, every two months. The remaining group of approximately 33 subjects has received an equal volume of placebo on the same schedule. Each subject received a total of three treatments at days 0, 60, and 120. We conducted numerous tests, to test the safety of SB-509 with this repeat-dosing study as well as to determine the subject’s symptoms in nerve health, including composites scoring systems of modified NIS-LL, a quantification of the neurologic exam and the total neuropathy score or TNS to assess sings and symptoms of the condition. We are performing quantitative electrophysiological testing both motor and sensory NCVs, as well as measurement of the subjects threshold of detection of vibration using QST. We are collecting a broad range of data in this Phase 2 trial, and we and our clinical advisors believe that these assays are the most quantitative and relevant current tests of nerve health. While our Phase 2 601 trial is not a pivotal study and therefore does not have a predefined primary and secondary clinical endpoint beyond safety. NCV, QST and NIS-LL have all been used as primary or secondary endpoint in large pivotal trials of aldose reductase inhibitors and nerve growth factors in diabetic neuropathy. NIS-LL was used as the primary endpoint in the 1000-plus patient Phase 3 study of recombinant human nerve growth factor run by Genentech and QST and NCV were used as collaborating secondary endpoint. We have an update, as I know this trial is a great interest to all of you, we’ve remain on track and expect to have top-line data from our 601 study available before the end of this year. Specifically, once the data are correlated and analyzed, we expect to present in summary and the press release and conference call and then prepare a more comprehensive analysis for presentation at a suitable clinical or scientific meeting 2009. I look forward to discussing the results of this 601 trial with you in the near future. Moving on in September at the ISCT meeting, we presented data from an early interim analysis under single-blind Phase 2 study SB-509-701 in subjects with moderate to severe DN with at least one clot blocked nerve. For the details I refer you to the press release and teleconference that we hosted on September 15, 2008, which is still available on our website. In summary we did not observe any drug-related serious adverse events or SAEs associated with repeat-dosing in this patient population with more advanced diabetic neuropathy and we described recovery of nerve conduction velocity in subjects with blocked sural nerve, the nerve effected in the majority of this subjects analyze. The interim data supported our decision to expand this trial to include a further 45 subjects who will receive our top dosing regiment of either three treatment or 60 milligrams of SB-509 or placebos. In September, we initiated a fourth Phase 2 study of SB-509, SB-509-801 in subjects with Amyotrophic Lateral Sclerosis or ALS. In ALS the motor nerves comprised of nerve cells in the brain and spinal cord that controls the bodies voluntary muscles gradually degenerate. As the nerve cells begin to die, the muscles weaken and shrink. As the disease progresses patients gradually loose the use of their limb and neck muscles, ultimately becoming paralyzed and unable to breathe without assistance. 50% of patients with ALS die within three to five years of diagnosis. Currently, there is only one approved drug for ALS; Riluzole, which has been demonstrated to slow the progression of this debilitating and fatal disease with only modest clinical benefit, extending the survival of ALS patients by approximately three months. Initiation of a Phase 2 study of SB-509 in subjects with a motor neuron and muscle disease such as ALS is an obvious next step in the evaluation of SB-509, given the effect that we have seen so far with this drug. SB-509 is designed to activate the expression of the subject’s own VEGF-A gene and there is mounting pre-clinical and clinical evidence to support a correlation between reduced VEGF-A levels and progression of ALS. Furthermore our Phase 1 clinical studies of SB-509 in diabetic neuropathy have shown that the drug is well tolerated and shown improvements in motor nerve conduction velocity. Data from pre-clinical studies and animal models of nerve damage reveal positive effects of SB-509 on motor nerve function and muscle composition. Similar effects on motor nerves and muscles in these patients may slow the progression of ALS by preserving nerve function and improving muscle fiber composition and strength. Specifically this Phase 2 trial is a randomized repeat-dosing, open-label, multi-center study designed to evaluate the effect of intramuscular administration of SB-509 on the progression of the disease as measured by the ALS Functional Rating Scale ALSFRS-R, a validated rating instrument for monitoring the progression of disability in patients with ALS. Efficacy will be evaluated by comparing the rate of ALS disease progression in subjects treated with SB-509 to historical placebo controls. In addition to gathering data on safety and tolerability of SB-509, data will be collected to evaluate the effect of SB-509 on additional clinical measures. These measures include Forced Vital Capacity or FVC a test of lung function; Neurophysiologic Index NPI, a measure of electro physiological muscle impairment; Manual Muscle Testing, a test of muscle strength and survival. Finally, the study will also evaluate stem cell mobilization in subjects with ALS receiving SB-509. The majority of the 40 subjects entering the trial will receive intramuscular injections of SB-509, bilaterally relevant muscles with the neck, trunk, arms and legs. However, in five subjects, we will also test the administration of an equal dose solely in the legs. To conclude we believe that SB-509 is a therapeutic agent, which due to its unique mechanism has potential applications in the number of conditions that this for have been difficult to treat. I look forward to updating you on the result of our clinical trials and particularly our 601 trial as date become available and on that note I’ll hand the call back to Edward.

[Edward Lanphier:]

Thanks, Dale. As you have just heard, we continue to make significant progress and advancing our interim clinical pipeline. Our next major clinical milestone of 2008 will be the presentation of top-line data from our double-blind Phase 2 SB-509-601 in subjects with mild to moderate DN. We look forward to presenting the top-line data before the end of the year via press release and conference call followed by more complete analysis and appropriate medical or scientific conference. On the preclinical front, we’ve recently published and presented data from our zinc finger nuclease preclinical programs for HIV in a scientific journal and Nature Biotechnology. These are very powerful proof-of-concept data, along with clinical scale cell processing data and that have also been presented from the scientific basis of our first ZFN therapeutic program. We are currently finalizing the preclinical safety package for the FDA and our on track to file an IND for this program by the end of this year. On the glioblastoma front, we’ve successfully generated the therapeutic product GR-modified CDA T-cell line that contains the glioblastoma specific data trial. The cell line has past to battery of vitro and in vivo tests including tumor specific killing assays and we’re in the process of completing the remaining toxicology test and manufacturing steps necessary for IND filing. That being said, with our relatively limited resources we have had to prioritize and focus our efforts on filing the IND for our most matures ZFN program, the HIV/AIDS program and we are therefore pushing out the filing of the IND for our glioblastoma program into next year. This is a function of resources and priorities and not a reflection of our interest in or enthusiasm for this program. I’ll update you on our expected timing for this filing early next year. As you have also seen, we continued progress in the non-therapeutic ZFP and ZFN areas. Sigma-Aldrich efficiently launched the ZFN, gene-editing platform under the trademark composer and we expected this to stimulate an increased awareness and interest in the technology as well as significant future revenues to Sangamo. In the current financial climate, we believe that our high end business model, using ZFP technology and multiple fields stands us in good stead. Partnering the non-therapeutic applications of our technology, in Research Reagents with Sangamo and an the EXZACT Precision Traits with Dow AgroSciences, enables with the development and marketing of high value products in these areas, by experienced dedicated leaders in their respective fields. Importantly, the cost of these future revenues to Sangamo and the sales by these companies is essentially zero and while this some will be modest this year, we expect these revenues to increase significantly in the future. We will, as we always have continued to carefully manage our expenses, this philosophy is even more important in the current climate, where cash is king and where the markets are essentially closed to financings on favorable terms. This however is not a cultural departure for us and we are in the fortunate position of having a strong cash position and with expected cash now of approximately $60 million at year-end, sufficient resources to prosecute our current programs through 2010. Finally, before we open up the call for your questions, we look forward to providing additional updates on our progress, in early December at the Piper Jaffray Health Care Conference and in our Annual Analyst Briefing both of which will be webcast. We’ll make these webcast available on the investor section of our website. This completes our prepared comments. I would now like to open the call up for your questions.

[Operator:]

(Operator instructions) Your first question comes from Charles Duncan with JMP Securities.

[Charles Duncan:]

Congratulations on some good progress in the quarter and that’s for taking the call. I had a first question about the balance sheet. Can you give us a little bit of insight on the $7.6 million worth of R&D spend, approximately how much of that is spent in the diabetic neuropathy program?

[Ward Wolff:]

Charles is Wars here, yes. I know we disclosed that, we do the annual filing of the 10-K, and we don’t give specific updates on that during the quarters, but I think you can assume that it’s in the neighborhood of 50%, the R&D spent.

[Charles Duncan:]

So, 50% or so of the R&D spent on diabetic neuropathy and your guidance on cash, thanks to Tom for the update on that. That assumes that you are prosecuting all the current diabetic neuropathy trials, correct?

[Ward Wolff:]

That’s correct.

[Charles Duncan:]

If I could ask a question on the ALS program, I’m sure it was covered, but Dale was quick. Could you give us a little bit more information on the dosing regiment? I’m not sure, if I missed it, the frequency of dosing and then where the doses will be given?

[Edward Lanphier:]

Basically, we are using our top dose, which is 60 milligrams. Half of the patients will be injected in the legs exactly as they are diabetic neuropathy and the rest of the patients will be injected into the regional, muscles of these parts of the spinal cord that are most effected by ALS in general. So, the upper cervical segments, the limbs, so the upper arms, which cover the upper thoracic segments and then in the legs, which cover the lumbar region. The idea here is that, we are saturating the muscle with the VEGF zinc finger, expressing VEGF and that basically being taken up by the nerves that are just basically traversing or inserting into the muscle.

[Charles Duncan:]

Okay. That makes sense, and then are you’re injecting these weekly, monthly, onetime?

[Edward Lanphier:]

We are injecting twice.

[Charles Duncan:]

And then how long is the observation period of this study?

[Edward Lanphier:]

We will be following them for a year.

[Charles Duncan:]

Okay good it’s a neat design. Then just one quick question on the Dow business development activities, I am sure you are not in a position to talk about them, but can you talk it all about any scientific progress on the Dow firm?

[Edward Lanphier:]

We are on the business development side as we have said before, Dow exercise the commercial license early, four months early and said that they did so in order to move forward with their sublicensing and commercial development and so that is a big part of the rational. In regarding the scientific side, Pabo if there anything you want to update on at this point?

[Carl Pabo:]

No, we are basically making good progress and as you’ve heard we continue to and it’s our fourth year relationship with the research side. We are helping the Dale scientist to sort of symbolizing the ZFP technology and I think it continue to go very well. So, at this stage I suggest you keep looking for published papers, but that’s where we had put a lot of working on.

[Operator:]

Your next question comes from Ted Tenthoff with Piper Jaffray.

[Ted Tenthoff:]

One quick question, can you be a little bit more specific on the timing of when you’ll be reporting the top line results? If you’ve already finished dosing, can you make any clear assumptions on when we might get that data, and then a follow-up question on partnering too?

[Edward Lanphier:]

So, Ted just help me be more specific, when we will give data from which trial, sorry?

[Ted Tenthoff:]

From the mild to moderate diabetic neuropathy trial?

[Edward Lanphier:]

For the Phase 2 601 trial, yes we’ve guided as we’ve said in the call that we will be putting out an announcement and then the a conference call this year on that and then we will submit to present more complete analysis that are appropriate scientific or clinical meeting in 2009, but the top-line data this year.

[Ted Tenthoff:]

When should we have that data by, the R&D day?

[Edward Lanphier:]

Ted you’re persistent, this year for sure.

[Ted Tenthoff:]

Question on the partnering side, have you begun discussions on 509 at this point and can you gauge interest, can you gauge. Is this environment impacting interest or potential economic? So just kind of give us a general sense of where you are and in the short preliminary activities?

[Edward Lanphier:]

We started those discussions? Absolutely; are there multiple parties out there, as I’d like to say well vaccinated on the program and prepared to receive the Phase 2 601 data? Absolutely, so, that’s all I’m going to say about that right now. In terms of the change in the climate, I don’t think I can give a specific first hand response there, my sense is it is changing and its going to be a tougher partnering environment given the access to capital in the equity markets, but quite frankly as people said to us and I’ll repeat, good data moves is the firm of the queue no matter how tough the partnering market is.

[Ted Tenthoff:]

When you look at potential safety requirements from the FDA, obviously we’ll get a much better understanding post data and then post FDA meeting, but what are your current general assumptions of what maybe required from a safety side for again a plasmid for a VEGF expresser inject patients?

[Edward Lanphier:]

All good questions and I think you have probably answered it for me right up front. I think post these data and then post a follow-up, post Phase 2 meeting with the FDA will be in a informed position to give you some real input on that, but at this point Ted, I think I preferred to put that off until after we do have the data and after we have now with the FDA.

[Ted Tenthoff:]

Just one quick one for Ward if I may, you guys ended with $60 million and schedule in the year was $60 million. What should we be anticipated, I’m not sure if you mentioned it on the call and I’m missed it, but when will be getting some cash payments coming in the fourth quarter from Dow or someone else?

[Ward Wolff:]

Basically Ted, as I mentioned we did receive $8.5 million from Dow that came in at the beginning of the fourth quarter. So, basically that’s the infusion that we will allow us to be effectively cash flow neutral for the fourth quarter.

[Operator:]

Your next question comes from Brian Rye with Janney Montgomery Scott.

[Brian Rye:]

I guess just one question on the Sigma-Aldrich collaboration. You talk about the potential expansion and the upcoming expansion of the CompoZr ZFN platform. I was curious if all the, I guess the scientific work to allow that expansion has been done, if there is certain tasks or steps that need to be fulfilled if there is any I guess sort of scientific risk for the expansion that program and even if not just curious what the potential timeline would be for the rollout of that expansion?

[Edward Lanphier:]

I think that the short answer is, that we have build into the contract development milestones that speak directly to the high throughput generation and characterization of nucleases and we are moving forward on those expeditiously and quite frankly ahead of schedule, but I think for the program to be everything it can be, we do need to achieve those milestone, that’s why they are built into the agreement and we are actually ahead of schedule to do that and I’m optimistic that we will do that, but let me ask Philip if there is anything else you want to say about that.

[Philip Gregory:]

That summarized it very well. We are in the process of working on the milestones that a part of the Sigma agreements. Those are largely throughput milestone, so we can provide Sigma with the process they can meet the extracted demand and when the process is helping them to build, what we think are going to be at a fairly large panel about the shelf reagents and kits so, and you’ll see I think you’ll start to see some of those coming out very soon.

[Brian Rye:]

Great thank you Philip and Edward, I guess just there is one last question on the Dow AgroSciences collaboration now that they’ve taking the commercial license and obviously they’re very excited about what’s going on. I’m curious from our standpoint is either analyst or investors, how we should think about tracking the progress of that. It’s going to be several years before there is probably commercially viable product. How should, we be thinking about whether or not did the collaboration continues to be a successful as you hope?

[Edward Lanphier:]

I would say three ways. One is, in scientific publications and presentations. I’ll just say it bluntly, we’ve publish and presented the tip of the iceberg in terms of what is really had been done and its being done in terms of science and material. So, you’ll see a lot more data and publications presentations going our. Secondly, you’ll be able to monitor through sublicense agreements and I’m hopeful that my life on it, but I’m hopeful that Dale, will have will be announcing those sublicense agreements or at least we’ll allow us to announce those sublicense agreements Third, you will see those progresses in terms of payment to us both in terms of milestones from products developed by Dale itself and then also as you know we’ve received a 25% of any revenues from sublicenses and those payments will move through to us as well.

[Operator:]

Your next question comes from John Sullivan with Leerink Swann.

[John Sullivan:]

I had a Dow question as well and someone over allowed with one, who is just asked, but I’m just wondering if there is any recent color from the company, from individuals they’re regarding the value that they are seeing in the program, any new color that you can share with us?

[Edward Lanphier:]

No, I think its pretty much with we just said, Philip gave a fairly strong signal they are expect some publications in the next six, nine, twelve months, but I think in my view fundamental. I would default back to the words from John Barry [ph] there and Dan Kittle in June when they hosted a press conference and video cast the announcement. I think a lot of their enthusiasm is capture there and that’s about as much color as I think we can give you right now.

[John Sullivan:]

And then just a couple of kind of looking forward expense questions; what was the headcount of the company as of September 30, and what is that have to be over the next year, what is that have be a year for now in order to implement the company’s plan?

[Edward Lanphier:]

I think their headcount as of September 30, was something like 78?

[Ward Wolff:]

Right.

[Edward Lanphier:]

77, but John right now in terms of execution I’ll just call back to the guidance we’ve given relative to the financial guidance of cash through 2010 and sufficient capital to execute on all of our ongoing clinical plans and the programs that we’ve guided at the starting. We have the infrastructure to do that, certainly within 5% to 10%. So, we do not need to expand headcount to execute on the clinical plan that we have in place. Now that said, depending upon the Phase II data and depending upon the type of partnership that restructure, depending upon the next steps if it’s a Phase III trail, all that’s are off. We will move expeditiously to expand particular on a development side, but in terms of execution what we have on our plate now in the financial guidance that we’ve given, the headcount numbers are adequate.

[Operator:]

Your next question comes from Pamela Bassett with Cantor Fitzgerald

[Pamela Bassett:]

I wanted to follow-up with Charles’s question on the ALS trial. I wanted to sure you understand at half of the patient will receive 60 milligrams of 509 in each leg. Is that correct?

[Edward Lanphier:]

Not half, Pamela

[Pamela Bassett:]

No, half of the patients

[Edward Lanphier:]

No, not half of the patient; five of the patients will receive exactly the kind of dosing that we are doing in the diabetic half of the trail in the lower legs. The patients in the trial, we will receive injections in the pattern, and frequency and dosing that Dale described by in terms of muscle groups and locations.

[Pamela Bassett:]

And there will be injected twice, correct?

[Edward Lanphier:]

Yes.

[Pamela Bassett:]

And what’s the time period between doses?

[Edward Lanphier:]

Three months, 90 days.

[Pamela Bassett:]

Three months okay. Great thanks for recapping that and regarding we seem to cover most of the program expect bio-manufacturing. Is there anything new in bio-manufacturing should we look for more relationship there and how are those programs progressive?

[Edward Lanphier:]

Well, that’s exactly the way to look at it. I do think there are couple more publication coming out in this area, but the activity on the business part I think is the best way for analyst and shareholders to fall the progress there.

[Pamela Bassett:]

Is there anything close to commercialization, product that would be using the bio-manufacturer, this new process.

[Edward Lanphier:]

On that I defer to, our partners I don’t think we want to get out in front of them in terms of where and when they’re using the cell lines, but from the financial perspective maybe that’s the other way just to describe it. We are not guiding to any revenues say the next year or so from royalties or commercial milestones from cell line engineering agreements.

[Pamela Bassett:]

And is there a continued demand for access to the technology?

[Edward Lanphier:]

Yes.

[Pamela Bassett:]

Specifically for bio-manufacturing?

[Edward Lanphier:]

Specifically for bio-manufacturing,

[Pamela Bassett:]

So we might to see more commercial relationships?

[Edward Lanphier:]

Correct.

[Pamela Bassett:]

Or commercial licenses?

[Edward Lanphier:]

Correct.

[Operator:]

Your next question comes from Alastair Mackay with GARP Research & Securities.

[Alastair Mackay:]

I had a question about the buy-back neuropathy trials as a whole. Have you heard anything one way or another from any of the data safety monitoring committees?

[Edward Lanphier:]

Hi Alastair, the short answer is no.

[Alastair Mackay:]

Great, but that was fast. Do you have any updates on the any of clinical programs that you recovered back from Edwards, in PAD or critical limb ischemia?

[Edward Lanphier:]

Yes, the critical limb ischemia is the most subsentive and for all practical purposes Alastair, all of the data that really matter around that trial we presented it, this summer I think it was, maybe it was May at the ISCT meeting and I know we announced that, but I’m happy to send you there the presentation from that if you would like it. That was the data that essentially looked at when you distill it at all down, this observation of aldehyde dehydrogenase stem cell mobilization and the correlation with clinical outcome in that trial that open-label trial. The PAD, the interim and quantification trial to be perfectly on as a trial never really took-off. It was an NIH trial accrual was very slow and once we’re really progressing in the diabetic neuropathy side of things, we really wrapped up that trial. So, I don’t think, Dale there is really anymore data we should expect on either one of those trials?

[Dale Ando:]

Yes, there is more preclinical work. You’ll here some more when we talk about the stem cell data in 2009, but nothing more report on either one of those trials, Alastair.

[Alastair Mackay:]

Okay and then if I ask one question about the P&L. Considering you have around $60 million in cash and short term investments. It seems like the interest payments that you’ve recorded on the low side, any comment on that?

[Ward Wolff:]

Yes, that’s a good observation Alastair. We note in the press release that obviously we’ve had a decreasing balances and a decreasing interest rate environment, but that being said, we also did have a modest foreign exchange loss this quarter. We do have some funds still in our U.K. subsidiary with respect to the Genentech acquisition going back ways. So, the strengthening of the dollar to the pound impacted the results in Q3.

[Alastair Mackay:]

So, that’s not reflective of any investments in any of the instruments that you’ve had trouble in the market as a whole?

[Ward Wolff:]

Another good question, we view our investment portfolio very much of the conservative and our advisors has been very successful in navigating us through whatever agency holdings we have in U.S. Treasuries etc. We have some very high quality corporate names, where we have not anything in the way of the more trouble sub-prime or Alt-A type environment and so, we did spend a lot time on that this quarter, but we’ve had no losses in the portfolio.

[Operator:]

Your next question comes from Shaunak Deepak [ph] with Rodman.

[Shaunak Deepak:]

I had just few thinks to ask about the HIV program. So, I understand right now you’re currently finalizing the preclinical safety package for the FDA and how reiterated the expectations to file in our IND by year-end? Is there anything else that you need to in order to very an upcoming file?

[Edward Lanphier:]

Well I think that we’ve really listed the major items there, certainly post filing IRB approvals and that sort thing, but we’re well on track here.

[Shaunak Deepak:]

Okay and move the trial do you like small enough such that any fracturing time that which review?

[Elizabeth Wolffe:]

Well, I don’t know if I could call the process trivial, my scientific colleagues might not mind that flattering. Is it well established and is it something that we feel that is a well validated in the engineering runs and so on? Yes, we feel full confident about that. I think one of the things what we will do a post filing in the IND probably come our fourth quarter call, our year-end call, so, we’ll give you a little more color on the trial design and so on, but we’re moving forward that we are very excited about it.

[Shaunak Deepak:]

Okay and just one last thing. Is it likely to be an HIV positive patient?

[Elizabeth Wolffe:]

Yes, definitely.

[Operator:]

Your final question comes from Charles Duncan with JMP securities.

[Charles Duncan:]

Hi guys thanks for taken the follow up. I’m pretty interested in the ALS trial, as it seem to be, could be a fast to market strategy and often indication of what’s high on that note for need. My question is over the course of the year Dale perhaps the percentage change that you would expect in, and you pick it whatever endpoint you want to highlight? And then secondarily what type of ALS patients will you are enrolling in that trial?

[Dale Ando:]

To answer the last question first, we are going to screen for basically at around 78% are greater lung function. We don’t want the more severe patients who usually die quickly and we’re using some fairly standardize scales following these patients. The functional status scale and basically you can view ALS of the study where the patient’s sort of entry level is their own control because they absolutely never get better. So, we can look at every muscle grew, we can look at every function of daily activity and basically track that deterioration over the course of the year.

[Charles Duncan:]

And over a course of year, what kind of percentage you said that there was about a 50%, survival at best over five years, but how was that translated into years with the progression?

[Dale Ando:]

Probably about a mean survival of about three years and from the controlled database that we have, we have the slope of deterioration per time for all the trials, unfortunately either treated or placebo will have the same slope and we can fair it out and compare the slops of these patients to either case match controls within that database or as groups as that mean, but say for instance we could even look at our single muscle. So, the power of that database is quite good. Unfortunately there is lot of patients in that database and nothing has worked, but we expect to do trials in ALS. That’s rally the only ethical way to look at a new product.

[Charles Duncan:]

And you of course

[Elizabeth Wolffe:]

First question last Charles, I agree with you this is an area of great unmet medical need and if we are able to show activity, it is something that we think we could move forward real quickly.

[Charles Duncan:]

And you will allow for background realize [ph] dosing and kind of standard appears.

[Elizabeth Wolffe:]

Realize actually does not alto that slope significantly at all.

[Charles Duncan:]

Thanks for the added color, looking forward to that one.

[Elizabeth Wolffe:]

Thanks Charles.

[Operator:]

That will conclude today’s our question-and-answer session. I would now like to turn the conference back to our Mr. Edward Lanphier for any additional or closing comments.

[Edward Lanphier:]

We’d like to thank you for joining us and we look forward to speaking with you in December. Again our release and our fourth quarter and year end financial information will be available later today if you have any follow up questions. Thank you very much.

[Operator:]

Ladies and gentlemen this will conclude today Sangamo BioSciences conference call we appreciate you participation in today’s conference. Have a wonderful day.