Sangamo Therapeutics, Inc.
Q2 2009 Earnings Call Transcript

Published: 30 Jul 2009

[Operator:]

Good afternoon and welcome to the Sangamo BioSciences teleconference to discuss second quarter 2009 results. Today’s program is being recorded. At this time, I would like to turn things over to the coordinator of this event, Dr. Elizabeth Wolffe, Director of Corporate Communications. Please go ahead.

[Elizabeth Wolffe:]

Thank you, Kelly. Good afternoon and thank you for joining Sangamo’s management team on our conference call to discuss the company’s second quarter 2009 financial results. Also present during this call are several members of Sangamo senior management, including Edward Lanphier, President and Chief Executive Officer, Ward Wolff, Executive Vice President and Chief Financial Officer and Dale Ando M.D. Chief Medical Officer and Vice President of Therapeutic Development. Following his introduction, Edward will highlight the company's recent activities, Ward will briefly review second quarter financial results and finally Dale and Edward will update you on our therapeutic programs and goals for 2009. Following that, we will open up the call 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 up on the information that we currently have available. This information will likely change over time. By discussing our current perception of the market and the future performance of Sangamo with you today, we’re not undertaking an obligation to provide you 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 the 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, Liz, and thank you all for joining us for our 2009 second quarter conference call. As is our practice, I will briefly run through the highlights of the past quarter before turning the call over to other members of the management team to summarize some of our more significant recent accomplishments. On the clinical program front, we presented new positive data from two of our Phase II clinical trials of SB-509 in diabetic neuropathy at the American Diabetes Association scientific session in early June. I've asked Dale to review the data from these presentations and provide you with a relatively detailed explanation of their significance later in the call. As you will hear, our clinical trials to-date have aided in the definition of the upper and lower levels of disease severity that we believe are optimal for the measurement of an SB-509 response over a six month evaluation period. This information will greatly aid in the design of future trials for our lead ZFP therapeutic. In May, we were awarded a Grand Challenges Exploration Grant for Innovative Global Health Research from the Bill and Melinda Gates Foundation. Sangamo was one of a handful of successful grantees from more than 3000 applicants. The grant will support our ongoing program to develop an In Vivo application of our Zinc Finger Nuclease or ZFN approach to HIV AIDS. While this initial grant of $100,000 is small, it is a tremendous validation of this program and if we decide to move this forward, we have the opportunity to receive a significant follow-on grant. In the non-therapeutic applications of our Zinc Finger technology platform, we recently announced significant progress in our cell engineering agreement with Genentech with the achievement of a key development which triggered a milestone payment. The milestone represented a successful knockout of two pre-selected genes and Genentech's Chinese Hamster Ovary or CHO cell line with specifically designed ZFN. In addition, the lead Genentech scientists on this project gave a presentation at an industry conference, describing the impressive characteristics and performance of yet another knockout cell line generated by Genentech using our ZFN. We also published high profile papers in the Scientific Journals, Nature and Science demonstrating the use of our Zinc Finger Nuclease technology in plant agriculture and transgenic animal models. The techniques described are broadly applicable across PCs and establish new methods for rapid and precise development of novel crops and the generation of targeted gene knockouts in transgenic animals other than mice. Both of these publications represent major breakthroughs in these fields and have generated a great deal of interest in their respective communities. Our partners, Dow AgroSciences and Sigma-Aldrich are actively pursuing the development of our technologies in these areas; and, as you know, the monetization of the non-therapeutic aspects of our technology and intellectual property have and continues to provide us with valuable fungible capital. Speaking of our financials let me now hand the call over to Ward to review our second quarter 2009 results. Ward?

[Ward Wolff:]

Thank you, Edward, and good afternoon everyone. As you know, after the close of the market today, we released our financial results for the second quarter ended June 30, 2009 and I am pleased to review the highlights of those results. Revenues in the second quarter of 2009 were approximately $4.7 million compared to $2.8 million for the same period in 2008. The increase in 2009 is due to revenues from our collaboration agreements with Dow AgroSciences and Sigma-Aldrich, enabling technology agreements, and research grants. Total operating expenses for the second quarter of 2009 were $9.9 million compared to $10.8 million for the same period in 2008. Included in operating expenses were non-cash employee stock-based compensation costs of $1.5 million in the 2009 quarter compared to $1.3 million in the 2008 quarter. Research and development expenses were $6.9 million in the 2009 quarter and $8.3 million in the prior year quarter. As noted in our press release, the decrease in research and development expenses is primarily related to lower manufacturing and pre-clinical expenses partially offset by increased clinical trial expenses. General and administrative expenses were $3 million for the second quarter of 2009 compared to $2.5 million for the same period in 2008. For the second quarter of 2009, we reported a consolidated net loss of $4.5 million or $0.11 per share compared to a net loss of $7.4 million or $0.18 per share for the second quarter of 2008. With respect to the balance sheet, we ended the second quarter with $52.6 million in cash, cash equivalents, marketable securities and interest receivable. Our net cash used in operating activities was $6.1 million for the second quarter and $13.2 million for the first six months of the year. I am pleased to say that we are on track with respect to our operating plan for 2009 through the second quarter and we are maintaining our guidance reiterated at our first quarter call in April of having cash and investment balances on hand of at least $45 million at the end of 2009. As you will all recall, this guidance assumes no new financing or partnering, but it does include anticipated milestones in 2009 from our existing partnership agreements. We believe that our current cash position is sufficient to enable us to fund our current therapeutic development pipeline through 2011. Thank you and I will turn the call back over to Edward.

[Edward Lanphier:]

Thanks, Ward. As you have heard we have continued to advance our clinical and pre-clinical programs while maintaining tight control of expenses and offsetting costs using revenue from collaborations and research brands. Now let me turn you over to Dale to update you on our clinical programs and progress. Dale?

[Dale Ando:]

Thanks, Edward. As Edward mentioned this quarters major news from our clinical program was the presentation at the American Diabetes Association meeting of positive data from our Phase II clinical trial of SB-509 in subjects with diabetic neuropathy. Specifically we presented new data from our 601 trial in subjects with mild to moderate DN as well as the first cohort of our 701 trial, 701A in subjects with severe DN. First to remind you, SB-509-601 is a double-blind placebo-controlled repeat-dosing Phase II trial of 110 subjects with mild to moderate DN. Two thirds of the subjects were treated with drug and one third with placebo. All subjects received three treatments at 0, 60 and 120 days with a 180 days post initial treatment being the primary data announced at this point. Data were collected at multiple time points across multiple quantitative endpoints in order to study treatment kinetics as well as well response to the drug. Just the 110 patient database provides valuable information for the primary goal of this study, the identification of the optimal drug target population that responds best to SB-509 treatment. The data includes a follow-up on all the DN severity endpoints from baseline to the end of the study. This is particularly useful as DN encompasses a broad range of disease severity, were evaluated by quantitative measurements including the following, The Neuropathy Impairment Score of the Lower Limb or NISLL. This is perhaps the most validated and widely recognized instrument for evaluating changes in neurological health. NISLL is a quantification of the neuralgic exam the neurologists routinely perform on patients with neuropathy. It has been previously used at a primary endpoint in pivotal trials for the disease. We also measured the Nerve Conduction Velocity or NCV of the three major nerves of each leg. In addition, in collaboration with clinicians at Johns Hopkins, we have a nerve fiber density or NFD in skin biopsies taken from the leg. This aspect of the trial was funded by the Juvenile Diabetes Research Foundation. Our collaborators at Hopkins have demonstrated that the loss of these very fine nerves in the skin is a sensitive indicator of the primary sensory nerve damage caused by the onset and progress of DN. These biopsies also provide a direct histological measurement of nerves damaged by DN and allow us to detect increases in nerve density that would be consistent with the neuroregenerative properties of SB-509. At ADA we presented the first top line data from these NFD studies. You will remember that in November 2008, we released top line neurologic data from the broad range of subjects enrolled in the 601 study. These results do not reveal any significant differences between the treated and untreated subjects. This was surprising in the light of positive, statistically significant data from our Phase I trial SB-509-401, early positive interim data in our 701A study as well as numerous preclinical studies. However, upon further analysis of the 601 Phase II, our base line DN severity data, it was apparent that a major difference between the Phase I and II studies was that the subjects entering the 601 study had statistically, significantly milder DN disease severity as was measured by NISLL, NCV, QST and NFD that those entering the Phase I trial and the 701 A Phase II severe DN trial. This observation gave us a clear clinical basis to evaluate the effective base line DN severity in our further analysis of a 601 trial. A major goal of any Phase II trial is the definition of the optimal target population for the drug. This is particularly important in a disease like DN has a broad spectrum in disease severity from mild to severe disease. In the 601 study based on base line DN severity, a clear clinically evolving post tox hypothesis were generated to evaluate subjects by asking the question what is the difference in response to SB-509 between mild and moderate severity DN subject based upon the baseline quantitative measurements that we use, NISLL, NCV and NFD. Using this hypothesis we have seen a clear response to SB-509 treatment. The most objective measurement of baseline DN severity is still NCV. There was a clear separation of SB-509 improvement in the neurologic exam NISLL in patients entering the study with more severe NCV. This is the point as NCV have less than 47.5 meters per second and represented approximately 75% of the subjects in the 601 study. The NISLL improved by one point in the SB-509 treated patients and worsened by 0.2 in the placebo treated patients with a significant value P of 0.08. This improvement lasted at least one year, exhibiting remarkable durability from three treatments that ended at day 120. Further quantitative [ph] subjects accrued in to the trial with NISLL scores greater than 10, our QST scored greater than 7.5 vibration units, both of which established their disease as moderate versus mild and we look at the change from day point of their NISLL scores, we see clinically relevant magnitudes of improvement in SB-509 treated subjects compared with placebo subjects with similar disease severity. In addition, this effect is consistent with the results of the 401 trial which also evaluated at moderate severity subgroup and in both trials the improvement was durable and could be seen out well beyond the 180 day primary timeline. Then using clinically relevant criteria to establish a hypothesis of seeing this magnitude of neurologic exam and I have improvement across multiple quantitative DN severity dividing end points has been fundamental in defining a target population for future studies. Data obtained from the nerve fiber density studies conducted with John Hopkins also showed similar and confirmatory finding. Top-line data from Sural skin biopsies performed on day zero and 150 showed a statistically significant increase in nerve fiber density. Specifically there was a 54% improvement in SB-509 treated subjects versus an 11% decrease of the placebo group with a highly significant P value of 0.03. In addition stratification of subjects with moderate disease severity defined as pure than 18 fibers per millimeter. Skin biopsies showed statistically significant improvements in both Sural NCV and skin nerve fiber regrowth. The nerve fiber regrowth results provide direct histological evidence that SB-509 has a direct effect on nerve regeneration. Importantly this mechanism based subgroup also defines the SB-509 responsive population by clinical endpoint. The top-line data from these nerve fiber density study is showing increased number of fibers with SB-509 treatment provides an independent and direct assessment of the affect of the drug on nerve health and nerve fiber regrowth. As I said these statistically significant top-line data provide clear evidence of the neural regenerative properties of SB-509 and we look forward to presenting a more comprehensive analysis of this data with disease severity stratification and effects on other endpoints at the Society for Neurosciences meeting in October. As I mentioned earlier, the function of a Phase II clinical trial is to establish the perimeters that will inform design of later approvable trials. As one designs these pivotal clinical trials, one not only needs to establish a dose and dosing regimen, but in a progressive disease like DN, one also needs to establish the appropriate severity of the disease for the target responder population. We need to accrue, test and evaluate subjects whose diabetic neuropathy disease severity is such that over the test period the nerve health is deteriorating at a sufficiently rapid rate to allow a magnitude of difference to be observed between placebo and treatment. At first clients maybe somewhat counter intuitive that SB-509 appears to have more of an effect in subjects with more severe disease. In fact our advisors initially recommended that we focus on a mild severity DN population as they expected SB-509 to only have an effect on nerve protection. As you have heard, we believe that SB-509 has a restorative and regenerative function. Diabetes and hyperglycemia have major effects on the micro vascular compartment and later on affects the large vessels resulting in stroke, peripheral vascular disease and myocardial ischemia. DN is a result of both the toxic and metabolic effects of high glucose and will influence directly on the nerve as the disease progresses, on the microvasculature or small blood vessels which carry the oxygen and nutritional supply to the nerves. In a milder disease situation, there is minimal micro vascular degeneration compared with moderate or severe disease. From a mechanistic perspective, this plays ideally to the function of SB-509 which increases the expression of VEGF-A, a potent nerve and blood vessel growth factor. These data collectively provide a reason why SB-509 is more effective is a moderate to severe DN setting. So to summarize, SB-509 continues to be safe and well tolerated and we have shown a nerve regenerative mechanism along with multiple quantitative end points from the 601 study moving in the same direction which was defined in SB-509 responsive population in the modern severity DN patient setting. This is exactly what one wants from a Phase II study. We also presented data from our SB-509 701A trial and ADA. This is a study of 45 subjects, two thirds of whom we treated with SB-509 and one third with which we've seen placebo at zero and 90 days with the primary end point at 180 days. These are subjects with even more severe DNs than the group I just discussed. All subjects coming in to the 701A trial had at least one nerve for which a nerve conduction velocity could not be measured when a strong electrical current was applied. A few subjects had as many as six out of six unmeasurable nerves. In totally, all of the subjects had at least one Sural nerve that was unmeasurable. This is not surprising as the sensory nerve on the foot is the first to be affected. In the 701 trial, we measured the improvement and the recovery of NCV in all nerves at both QST and NISLL are not useful measures in this population due to the severity of their disease. One of the key findings from this trial is that in subjects with very severe neuropathy i.e. those with three or more block nerves it is very difficult to see any improvements over the 180 day analysis period. Therefore, we believe that one or two block nerves is the right responding group for future trials in this setting. The other key finding from the 701 data was the magnitude of the response of the treated group. We defined the responder as a subject with greater than seven meters per second recovery of nerves that were un-measurable at base line. The statistical rationale is that this is greater than two set of deviations of the variability in the NCV test itself and the clinical rationale is that 5 meters to 7 metes per second is the maximum improvement in NCV seen with normalization of glucose levels in a patient that has undergone a pancreas transplantation and that's effectively the cure of their diabetes. The magnitude of these improvements in NCV is remarkable and as otherwise never been achieved before in a therapeutic setting in the DN. Our data gave us two positive NCV endpoints. If one looks at a proportional change which is the proportionate responding subject, with a greater than 7 meters per second improvement or a measurable nerve that was un-measurable at base line, we observe roughly a two-fold improvement with SB-509 treatment, 46% compared to placebo of 26%. If one focuses on the Sural nerve and looks at the main change in Sural NCV, we observe that the main change that they when 80 compared to base line show the clinical relevant improvement in SB-509 treated subject of 3.1 meters per second compared to 1.5 meters per second in placebo treated subjects. This effect is persistent out to-date 240. Plus the individual digital patient Sural NCV improvement, clearly demonstrated the large magnitude of improvement in SB-509 treated patients compared to placebo over six months which is consistent with improved nerve function and long-term regeneration. The results of the 701 trial are unprecedented. The data received a great deal of attention from neurologist and key opinion leader at ADA as this is the clinical condition that had previously been considered irreversible and untreatable and this magnitude of response has never been seen before in this severe patient group. Recent discussions with our clinical and regulatory advisors highlight the importance of SB-509s effect on both nerves and blood vessels in DN. The drugs that have failed in DN clinical trials such as aldose reductase inhibitors nerve growth factors and protein kinase inhibitors have had a single mechanism of action. DN however is a complex disease and may require a therapy with multiple mechanism. Importantly, SB-509s regenerative effect on both nerves and blood vessels directly counter acts the persistent damage to nerve and blood vessels in diabetes and diabetic neuropathy. The improvement in top-line nerve fiber density data from baseline at day 150 in the 601 study has a long term sensory MCV improvement of 701 study, strongly support a mechanism of nerve regeneration and improved nerve function with SB-509 treatment. All in all these are very positive and informative to the dataset that will aid us greatly in moving forward with the development and potential partnering of these drug. To update you on our progress in some of other clinical programs, we expect to conclude the accrual and treatment phases of our expanded 701 Part B study in severe DN in 2009 and to present data from this study in the first half of 2010. Beyond our DN programs I am pleased to announce that we have completed recruitment of subjects in our Phase II study to evaluate SB-509 for the treatment of ALS. This was faster than we had anticipated and we expect to finish treatment and follow up in 2010. Finally the clinical trial of our ZFN based therapeutic SB-728-T for HIV/AIDS is ongoing at the University of Pennsylvania. As you may recall, we have planned to accrue 12 subjects on this open label Phase I trial. While we do not plan to provide accrual updates, you should expect to see interim data in 2010. We also remain on track to file an IND and begin a new clinical trial in the City of Hope in glioblastoma later this year. With that update, I will turn the call back to Edward.

[Edward Lanphier:]

Thanks, Dale. As Dale described, we have gained a great deal of insight into the elements that will drive the next steps in the clinical development of SB-509. As you know, our preferred approach is to take these next steps with a strategic partner and share in the future value of this program. We are actively engaged in this effort and look forward to updating you when we have something specific to announce. Turning to our non-therapeutic programs, our collaborations with both Dow AgroSciences and Sigma-Aldrich have allowed us to monetize our technology in non-core areas enabling us to own and aggressively push forward our therapeutic programs. In the near-term, this has been extremely useful as a source of capital and has validated our technology in multiple commercial settings. In the mid-term these relationships will generate income from product sales, sublicenses and milestone payments. We expect these revenues to increase as words spread about the technical advantages of the ZFP technology platform for regulating and modifying genes in cells and organisms and the potential utility in basic research, transgenic animal models, stem cell manipulation, cell line engineering and applications across plant species is fully realized. A case in point is the recent publication in Science Magazine of the application of our ZFNs generating novel transgenic graphs in which the gene has been specifically targeted and subsequently knocked out. The achievement of this result is, as one of our collaborators put it, this is "somewhat of a holy grail in the world of transgenic animal". This truly is a breakthrough in the transgenic animal field as until ZFNs there was no easy way to generate targeted knockouts in any other animal except the mouse. Our technology significantly expands the variety of animal species that can be used for human disease modeling and drug metabolism and toxicology experiments. Rats for example, are better citizen mice for examining many complex human illnesses such as cardiovascular disease, diabetes and neurological deficits such as Alzheimer's disease. In addition, virtually every drug on the market has been tested at some stage of development in rat and the ability to make targeted knockouts of specific genes in these animals will be very useful in drug metabolism and toxicology studies. One of our partners OMT is already using the technology in rats to develop a novel human monoclonal antibody platform. Currently, the mouse is the only genetically engineered animal commercially available for the generation of human monoclonal antibody and many targets have already been licensed in the mouse system. ZFN technology has created a new human monoclonal antibody platform in rats, with unrestricted development option. So, from non-therapeutic partner programs, we expect to see royalty and milestone revenues as well as significant value in the mid and longer-term a similarity of the technology and the breadth of its potential applications is recognized in industry and academic circles. You should also expect further visibility from DAS and Sigma in terms of publications, commercial activity and sublicensing activity as well as further progress from our ZFN technology in the cell line engineering during 2009. We are accomplishing all of this through our numerous partnerships. We remain focused on our goal with establishing ZFP Therapeutics, as a new and highly differentiated class of human pharmaceuticals. From a balance sheet perspective, we remain in very good shape. You could expect us to continue to carefully manage our expenses, while working hard to build value to a maturing clinical pipeline and strategic partnerships that are in the best interest of our shareholders. As such, we plan to end the year with at least $45 million in cash and cash equivalents, which we believe represents cash through 2011. Finally, it is with great pleasure that I am able to announce the promotion of Philip Gregory to Chief Scientific Officer. Philip joined us in 2000 as a scientist and has been running research at Sangamo since 2005. As you can see from the latest development of our technology and our success in translating those developments into commercial value, he is doing a great job. I know those of you, who have had opportunity to meet and speak with Philip, join me and congratulating him. Thank you for your attention this afternoon. We will provide additional updates of UBS Global Life Sciences Conference in September, with JMP Securities Healthcare Conference in October and on our third quarter call in October. This completes our prepared comments. I would now like to open up the call for your questions.

[Operator:]

(Operator instructions) We'll move first to Joe Pantginis with Merriman Curhan Ford.

[Joe Pantginis:]

Quick question on the 509 program and then a follow-up on the non-therapeutic platform. Just wondering if we can have a little glimpse into the future, now that you have all this meaningful data in identifying a population, what really the next step would be for studies? I know you said you'd like to do it in hand with a partner, but what a potential pivotal program might be?

[Edward Lanphier:]

Joe, this is Edward. I'll start now if Dale he wants to anything. I think at this point the best thing for us to do is continue with the guidance that we have given and that is that our plan in terms of next steps is preferably with a partner. With that said we have spent a great deal of time with advisors, with regulatory advisors, clinical advisors and I think Dale and his team have a very clear sense of what our different alternatives are not might be, could be, but are. However, at this time I think it’s probably pretty mature for us to get into any specifics with regard to next steps pivotal trials etcetera.

[Joe Pantginis:]

Just a quick question on the non-therapeutics obviously the science article was very exciting and you said it’s certainly a breakthrough with regard to the rat models. I’m asking you to speak for Sigma here, but how are you seeing Sigma looking to monetize in this breakthrough technology?

[Edward Lanphier:]

Well, your caveat to the question was exactly the right one. Let me give a short answer here and then not on the business side, but maybe on the technical elements of this. Philip might want to comment. Sigma I think will have more to say going forward about the application as a Zinc Finger Nucleases in transgenic animal models. So, quite frankly Joe, at this point I would rather punt on that. I certainly think by the time we update again there will be a lot more to say about it, but I would prefer to let Sigma take the lead on something relevant and significant as the data that are represented in the Science Paper and Philip actually in Washington D.C. and he is calling in. Philip, are you on?

[Philip Gregory:]

I think the only thing I would add is that the technology the Sigma have now up and running and are doing a tremendous job of providing to customers. Obviously it’s identical technology that was used in the generation of the knockout rate. So, from a purely creation of a ZFP specifically targeted to an investigators chosen side, that is genome independent and they are ready to go. I know they are very excited about the opportunity this paper generates.

[Operator:]

Moving next to Charles Duncan with JMP Securities.

[Charles Duncan:]

Hi guys. Congratulations on a good quarter of progress.

[Edward Lanphier:]

Thanks Charles.

[Charles Duncan:]

I had a quick question regarding the ALS trial. You had mentioned that you've completed the recruitment of that. Can you give us additional color on that in terms of the number of patients and any sense as to your perspective on why it recruited as quickly as it did?

[Edward Lanphier:]

I don’t know. Dale, can you give any additional color on why it went so quickly.

[Dale Ando:]

There’re going to a lot of new drugs treated, the trails I've been looking at. New drugs that has been validated or had efficacy in the animal MnSOD-deficient model of ALS. Unfortunately a lot of those studies have not worked. None of them have really work dependent that all. The excitement with what we have is that we have human data on of the peripheral nervous system with respect to improvements in the DN patient.

[Charles Duncan:]

DN?

[Dale Ando:]

It was one of the situations, where we had human data of peripheral nervous system in humans and not solely based on the screening from animal model. So, I think the excitement with the investigators and with the patient with that, we have a potential drug that actively that has been demonstrated in human.

[Edward Lanphier:]

Dale total patient recruited on that trial 45?

[Dale Ando:]

45.

[Charles Duncan:]

Just remind me the specific design of that Edward was, what's going to pop out of that in terms of data and when approximately?

[Dale Ando:]

Basically, the patients will be followed by the (inaudible) obviously clinical laboratory safety is a major primary endpoint is a new indication. Then there are a number of standard ALS endpoints which include, number one, survival, secondly is the ability for them to expand their lungs which is called the foresight of capacity. It’s a critical determinant of being able to breath. There's a quality of life scale that is being developed in ALS called function of rating scale and then we're looking at a series of muscle strength testing called the manual muscle testing that is a fairly exhaustive evaluation of the strength of all the muscles in the patient on a regular basis. Again, these are not new endpoints but as the new in previous ALS trial.

[Charles Duncan:]

Understand that, congrats on the recruitment looking forward to that data. With regard to the GBM IND, can you give us a little color on what's remaining? Is that clinical work or are you just preparing that IND and I think you said later on this year.

[Edward Lanphier:]

Yeah I think that's what we said. I think we're at this point -- really I put it in the heading of stay tuned. There's not really a whole lot specific to tell you and beyond the guidance we've already given.

[Charles Duncan:]

Edward could then open the door to other potential oncology applications for the platform?

[Edward Lanphier:]

No. I don't think we've talked a lot about that but I think characterizing it both oncology opportunities and platform is exactly the right way to characterize it. Ask Philip again, Philip without going into any specifics, is there anything we can add on that?

[Philip Gregory:]

I think you've said it. This is definitely a situation where Zinc Finger approaching can be designed to any particular gene. Obviously this modified T-cells is targeted to a specific tumor that could be for multiple tumors and it could be any gene that we're targeting, so it's a platform.

[Charles Duncan:]

So we may hear more about that later. Are you going to have an R&D day in December, do you think Edward?

[Edward Lanphier:]

No, that's going to be up to Dr. Wolf and I don't think we've decided on that yet.

[Charles Duncan:]

Okay, good day, I'll hop back in the queue.

[Edward Lanphier:]

Thanks, Charles.

[Operator:]

We'll be now to Liana Moussatos with Wedbush.

[Liana Moussatos:]

Thank you. I was just wondering the SB-509 affect improved in DN patients to have better blood sugar control.

[Edward Lanphier:]

Hi Liana, how are you?

[Liana Moussatos:]

Fine.

[Edward Lanphier:]

Dale, you want to take on …..

[Dale Ando:]

So basically what we're talking about is the severity of the diabetic neuropathy, not the current level of diabetic control. We're actually enrolling patients who have pretty mild to moderately good control hemoglobin A1c of nine normal is seven but 10 to 11 is awful. So I think the effect of the SB- 509, is not really related to the level of glucose control. It’s really related to the level of severity of Diabetic Neuropathy, those two are somewhat associated. The association is that the longer you have diabetes then the higher probability is that you have a Diabetic Neuropathy which really reflects years and years and years of hyperglycemia.

[Liana Moussatos:]

Okay so you don’t think that in patients that would have better blood sugar control that I mean wouldn’t the high hyperglycemia be kind of counter acting even indirectly the affect of SB-509 so that it would be destructive to the nervous system.

[Ward Wolf:]

Yes it would in general but typically higher Hemoglobin A1c that would be the case. So we are basically working in a setting up diabetes that is under mild to moderate control. The real practical question is there are not a lot of patients that can achieve very, very good control with normal Hemoglobin A1c that’s really a very small population, in the current population of diabetes that’s out there.

[Liana Moussatos:]

Did you do sub-analysis of patients who had HbA1c and to see if the effect was better?

[Ward Wolf:]

There was actually not a wide range because we had accrued under nine and normal a seven but there was only 1 to 2 point less than a 1 point difference in the range of Hemoglobin A1c.

[Liana Moussatos:]

Okay and are there other new non-therapeutic partnerships expected in 2009?

[Edward Lanphier:]

Well I think what we have said is in terms of non-therapeutics Liana is that you should expect to see more visibility from Dow and Sigma. I think we mentioned sublicensing and thing and I would relate specifically to Dow and then like we have also said that we expect to announce additional cell engineering collaborations in 2009. I’m going to think that would be the main areas in addition to publications and presentation analogous point, not quite as high profile as the nature paper and the science paper but certainly additional data in all of these areas. I expect announcements from our partners in these areas as well.

[Liana Moussatos:]

Thank you.

[Edward Lanphier:]

Thanks, Liana

[Operator:]

Pamela Bassett with Cantor Fitzgerald has your next question.

[Pamela Bassett:]

Hi, thanks for taking questions.

[Edward Lanphier:]

Hi, Pamela.

[Pamela Bassett:]

Hi, most of my questions have been answered. One remaining is I see that Dow has, is that Jerome Peribere is moving on to a new position from Dow Agro and there is going to be a new CEO of Dow Agro. How do you expect that to impact the relationship?

[Edward Lanphier:]

A short answer and I'll be happy to give you a longer answer. Short answer is I do not expect it to impact the relationship either positively or negatively. I have an expression I'd like to use and that is success has many parents, failure is an orphan and there are many, many, many parents Zinc Fingers in Indianapolis and at Dow AgroSciences. This has been a very, very successful collaboration technically, commercially, et cetera, et cetera. So this is well integrated into Dow and I’m sure they would tell you exactly the same thing. That’s the short version. I don’t know Pamela. The longer version is that Jerome, both professionally and personally I think is a wonderful talented guy and anybody with that kind of leadership and vision who is involved in our project is only a positive benefit and I think it speaks to his leadership and his successes that he has been asked to run probably the most visible, most significant area of the Dow Chemical company. So he will remain a good strong friend and advocate of Sangamo, perhaps at even higher levels within the Dow Chemical company.

[Pamela Bassett:]

Now, all those things said, is there an opportunity to leverage the ZFN, ZFN technology into some of the newer materials, bio-based material applications. Is that possibly on the forefront?

[Edward Lanphier:]

Great question, I would say that that's independent of Jerome’s move here but as you probably remember our agreement with Dow covers exclusivity in their right to our platform in what are called crop products, but also in industrial products and those cover quite a range of the areas that you're discussing and I can tell you those have been and are important lives and important areas to Dow Chemical.

[Pamela Bassett:]

Okay. And of course, I should say this because I don't think I mentioned before, right and Jerome Peribere is becoming the CEO of the Advanced Materials division. So, maybe seems like (inaudible) chemicals or is that already part of the program?

[Edward Lanphier:]

Well yeah, I would say that the rights in the industrial products area and the application or technology in that area has been a part of the existing agreement that’s been in place now for about five years. It’s certainly an area of interest to Dow historically and I think ongoing.

[Pamela Bassett:]

Okay, great. Just staying with Dow for another minute, what kind of feedback and reception are they getting with the technology among university based research organizations versus commercial organization you think?

[Edward Lanphier:]

There are two answers. One, I refer you to a lot of the press coverage that they had around the nature of paper. They actually did quite a bit of press activity and around the nature of publication and then also around bio the industry meeting. I don't know, Liz, I'm guessing, but they probably gave 30 interviews of which there were quite a bit of information about their commercialization strategy and timelines and so on and so forth. So I'd refer you to that. In short, however, trying to summarize what they have said, their reception to the technology in agriculture has been universally positive both in the academic community as well as in the planned agricultural industrial community.

[Pamela Bassett:]

Okay, great. Thank you.

[Edward Lanphier:]

Thanks, Liz.

[Operator:]

(Operator instructions) We'll move next to Joseph Schwartz with Leerink Swann.

[Joseph Schwartz:]

Hi. Thanks for taking the question. I was wondering, been intrigued by the potential in the agro area and your comments that you may be working closer or you think your partner may be advancing towards a sublicensing deal which would make sense since this technology seems to do everything that people want in the areas, trade tracking et cetera. So I was curious. With this view, do you have a sense of whether these would be the later stage crops that they're working on, the corn in the maize? Or is it an earlier stage program and is there a difference in terms of, like there is often in licensing deals in therapeutics where the earlier stage programs tend to bring in less milestones et cetera.

[Edward Lanphier:]

Look couple of things Joe, first you are absolutely correct Dow does intend to sublicense the technology and plan agriculture and they have publicly guided to this on several occasions, number one. Number two, in our agreement there are annual minimum payments that started last year when they exercised the commercial license and those increased overtime and are intended to encourage and are offset by sublicense. So, that’s certainly they have both the business interest as well as the financial interest in doing that and I think you've heard me say they will be doing that. One thing that I have learned over the last several years and more actively interacting with Dow and getting a little bit more about the plant agriculture community is, these guys make the way in which big pharma companies protect trade secrets make that look like an open system. These guys are very secretive about what they are doing, which crops they are going after, which traits they are developing and so on because it is a very competitive space. So I do not have a lot of guidance I can give you at this point in terms of what stage of development or what targets they are going to be going after. I can tell you that both internally at Dow and you have seen announcements of this over the last six months from now about accessing novel targets and novel platforms as well as other companies that I know they are talking to about sublicensing that you'll see an array of applications of the technology not just in so called row crops but in other plant species as well.

[Joseph Schwartz:]

Okay. Thank you.

[Operator:]

Everyone, I'll turn the conference back to you for closing remarks.

[Edward Lanphier:]

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

[Operator:]

That does conclude today's conference. Thank you all for joining us.