Earnings Call Transcript - SGMO Q4 2023

Louise Wilkie, Vice President of Investor Relations

Good afternoon. Thank you for joining us on the call today, where we'll be not only sharing our progress across the business but also sharing exciting new data that we believe reinforce our decision to become a neurology-focused genomic medicine company. Slides from today's presentation, which are being screen shared through the live webcast link can be found on our website, sangamo.com, under the Investors and Media section of the Events & Presentations page. This call includes forward-looking statements regarding Sangamo's current expectations. These statements include, but are not limited to statements relating to the therapeutic and commercial potential of our product candidates and engineered capsids, the anticipated plans and timelines for Sangamo and our collaborators for regulatory submissions, initiating and conducting clinical trials, screening and dosing patients and presenting clinical data, advancement of our product candidates, anticipated submissions, feedback from and interactions with regulatory agencies, advancement of preclinical programs to the clinic, our strategic reprioritization and reallocation of resources and the anticipated benefits thereof, plans to partner certain of our programs, the sufficiency of our resources, cash runway and plans to seek additional capital and the timing of related updates, our initial financial guidance for 2024 and estimates of 2024 operating expenses, upcoming catalysts and milestones and other statements that are not historical facts. Actual results may differ materially from what we discuss today. These statements are subject to certain risks and uncertainties that are discussed in our filings with the SEC, specifically in our annual report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC. The forward-looking statements stated today are made out of this date, and we undertake no duty to update such information except as required by law. On this call, we discuss our non-GAAP operating expenses. Reconciliation of this measure to our GAAP operating expenses can be found in our press release, which is available on our website. Please note that all forward-looking statements about our future plans and expectations, including our financial guidance are subject to our ability to secure adequate additional funding. On today's call, I'm joined by Sandy Macrae, Chief Executive Officer; Prathyusha Duraibabu, Chief Financial Officer; Amy Pooler, Head of Research; Greg Davis, Head of Technology; and Nathalie Dubois-Stringfellow, Chief Development Officer. Now I'll turn the call over to our CEO, Sandy Macrae.

Sandy Macrae, CEO

Thank you, Louise, and good afternoon to everyone joining the call. Today, we are pleased to discuss Sangamo's recent pipeline advancements that solidify our sharpened strategic focus in neurology and help contextualize why we made this important decision to dedicate ourselves to addressing neurological disorders. On this call, we will explore our most recent announcement highlighting the remarkable preclinical data from our new intravenously administered capsid that demonstrated an ability to cross the blood-brain barrier and how our technology could potentially unlock value across our next-generation neurology programs. We will then outline how we plan to progress our neurology assets into the clinic. The advancement of neurological medicines has long been limited by their inability to achieve widespread central nervous system delivery, particularly across the blood-brain barrier. Due to this obstacle, many devastating conditions affecting millions of patients go untreated. With conviction in our science and the promise that it holds, we announced in the third quarter of 2023, having seen initial results from the capsid that we would prioritize our resources to focus on our neurology pipeline. We implement these changes because we believe that Sangamo holds great potential to unlock new treatments for patients with neurological diseases by pairing our highly potent epigenetic regulators with an additional key requisite for success in the neurological space, a capsid capable of crossing the blood-brain barrier to successfully deliver the drug where it needs to go. Today's announcement that we have engineered such a capsid, which demonstrated industry-leading blood-brain barrier penetration and brain transduction in nonhuman primates. This validates our conviction in such an important area, potentially taking us one step closer to helping patients who are suffering from devastating conditions. Sangamo is proud to be developing both epigenetic regulation cargo and advanced capsid delivery capabilities that could finally lead to new treatments for many neurological conditions. This differentiated approach underpins our wholly owned neurology pipeline. Our purpose is clear as we strive to unlock value as a strategic, highly focused company and an industry partner determined to help patients in need. As preclinical data from our new STAC-BBB delivery capsid will demonstrate in this presentation, our dual epigenetic regulation and capsid delivery capability showed the ability to cross the blood-brain barrier, which we believe is critically important in developing therapies to potentially treat prion disease, tauopathies and other neurological conditions. These data further support our advancement of our prion and tau programs, which are on track for regulatory submissions to enter the clinic by the end of 2025. Meanwhile, we continue to advance our lead candidate in chronic neuropathic pain, Nav1.7, which uses an intrathecally administered capsid towards an investigational new drug submission with the U.S. Food and Drug Administration expected in the fourth quarter of this year. It is also important to recognize the significance of our recent Fabry disease advancements. We recently presented compelling Phase I/II data at the 20th Annual World Symposium, showing enormous promise across many important biomarkers and measures of efficacy. Importantly, we also recently announced alignment with the agency on a remarkable abbreviated clinical pathway to potential approval. The FDA advised that a single study with up to 25 patients in combination with confirmatory evidence is an exceptional pathway to BLA submission for isaralgagene civaparvovec. This is a significant development as conducting a single study of this nature would enable a potentially abbreviated and more cost-effective pathway to potential approval than was ever originally anticipated. In addition, the European Medicines Agency granted priority medicine eligibility for the program, which could potentially further accelerate activities in Europe. We are thrilled with this progress and are in active discussions to partner this program, which, if successful, we anticipate could form the key source of non-dilutive funding. I continue to strongly believe that our Fabry disease program could be transformative for patients and the compelling clinical data presented at WORLD coupled with these highly encouraging regulatory updates underpin that belief. As the only biopharmaceutical company known to be internally involved in both the innovative genome targeting cargo and the required delivery capsids, we believe that Sangamo is well positioned to potentially usher in the future of neurology genomic medicines. Amy will share this in detail, but I first wanted to show you what got us so excited. Our zinc finger epigenetic regulators have demonstrated potency and selectivity across a variety of different indications. This is clearly seen in the left panels showing how expression of the zinc finger repressors in vivo in nonhuman primates, which are shown in green on the left, demonstrated nearly complete elimination of RNA expression in neurons from the targeted gene shown in white, in this case, tau. The panel to the right gives you a first glimpse of our new intravenously administered, AAV capsid variant that we're calling STAC-BBB where STAC stands for Sangamo Therapeutics AAV Capsid. A picture can tell a thousand words, and we were excited to see the dark purple staining in the brain image to the right of the slide, which shows that STAC-BBB mediated efficient blood-brain barrier crossing and widespread cargo delivery throughout the brain of nonhuman primates in important new preclinical studies. We're extremely encouraged that STAC-BBB, which we engineered through our sister capsid engineering platform significantly outperformed other known published capsids evaluated in our study. It achieved widespread brain delivery and transgene expression and was generally well tolerated. We look forward to telling you more about these remarkable findings today. First, I want to spend a moment highlighting our choicefulness in our lead neurology programs for Nav1.7 in prion disease. We are particularly pursuing these targets because, one, they are validated by human genetics; two, we have a well-defined patient population; three, they have a delivery we believe to be achievable using AAV capsids; and four, could lead to quantifying quicker patient outcomes. Importantly, they represent a significant medical need and commercial opportunity. Nav1.7 addresses a significant unmet need. With over 43,000 patients in the U.S. alone who face intractable pain resulting from small fiber neuropathy, these people live with constant debilitating pain that is unimaginable to most. In fact, these conditions have a higher suicide rate than in the broader population. With promising preclinical data for our Nav1.7 program, we believe we have a clear route to clinical proof of concept. We expect an IND submission in Q4 of this year and hope to be in the clinic next year with initial clinical data anticipated by the end of 2025. Importantly, Nav1.7 uses a well-known intrathecally administered capsid for delivering. Prion disease is a truly devastating condition with more than 1,500 patients diagnosed per year across the U.S. and Europe. It is a disease that progresses rapidly and is always fatal, usually within 12 to 15 months of symptom onset, and there are no currently effective treatment options available. However, we are hopeful we can advance treatment of this disease as the repression of prion in our preclinical models significantly extended survival in mice, which lived a normal mouse lifetime. We anticipate filing a clinical trial authorization submission in the U.K. because, thanks to mad cow disease, they have an excellent infrastructure for identifying and caring for prion patients. Our CTA-enabling studies are already underway, and we expect to submit the CTA in the fourth quarter of 2025. While we intend to progress our core programs towards regulatory submissions, we believe that the exciting STAC-BBB data we will discuss today also potentially unlock a number of other programs that were paused pending the identification of a suitable blood-brain barrier penetrant capsid. They were waiting for STAC-BBB. The first of these is the repression of the gene that produces tau, MAPT, to address tauopathies such as Alzheimer's disease. With the identification of STAC-BBB, we intend to resume the development of our tau program with an IND submission expected as early as the fourth quarter of 2025. In addition, STAC-BBB could also potentially unlock multiple other neurology epigenetic regulation programs that were paused pending the identification of such a capsid. Diseases such as Parkinson's disease and myotonic dystrophy type I. Sangamo is exploring avenues to resume development of these programs with new potential collaborators. With a reinvigorated neurology focus and our momentum already underway in 2024, we anticipate multiple potential near-term milestones now in the end of 2025. We also anticipate milestones for our later-stage non-neurology programs that could provide additional important non-dilutive funding. As we plan to partner our Fabry disease program, we expect to complete dosing in the Phase I/II STAAR study in the first half of this year. For our partnered hem A program, Pfizer expects to present Phase III results in the middle of this year, just a few months away, and anticipates potential regulatory submissions in the U.S. and Europe in early 2025, assuming that the pivotal readout is supportive. We are then eligible to earn up to $220 million in milestone payments and up to 14% to 20% royalties on potential sales from this program. Before we show you the detailed data, it's important to take a moment to talk about our current financial position. Over the course of 2023, we proactively made difficult decisions to preserve our most valuable assets. We declared our intention to become a focused neurology genomic medicine company, carefully aligned our resources and investments to that vision and advanced multiple reductions in force to significantly limit our spend. As a result, we have reduced our operating expenses by approximately 50% year-over-year. While it's difficult, these were the right decisions to make, as I'm sure you'll see in great detail very shortly. We ended 2023 with approximately $81 million in available cash, cash equivalents and marketable securities. We believe that these resources in combination with potential future cost reductions will be sufficient to fund our planned operations into the third quarter of 2024 without factoring in any additional capital raises. Given our streamlined structure, we expect our 2024 non-GAAP operating expenses to be in the range of $125 million to $145 million as we complete our strategic transformation, fulfill our responsibilities and we anticipate our operating expenses to further decrease to under $105 million in 2025 as we transition our legacy clinical programs. In the meantime, we continue to actively pursue a number of different opportunities to raise additional capital. I'll now turn it over to Amy to discuss our latest capsid data, along with other updates from our pipeline. Amy?

Amy Pooler, Head of Research

Thank you, Sandy, and hello to everyone joining today's call. We know that widespread CNS delivery is challenging with conventional AAVs, which is why we have developed our sister platform, which is designed to enable the selection of neurotropic AAV capsid variants. We do this by using a directed evolution process to create, refine and select the best possible capsid from a library of millions of unique capsids. When we set out to develop an industry-leading novel IV-administered capsid, we outlined the key characteristics needed for success, one that could solve the challenges that many drug developers have historically faced. We knew that this capsid needed to have broad brain coverage in all the key areas integral to disease pathology, enhanced enrichment in the brain compared to other published capsids as well as robust neuronal transduction. We also needed it to express the zinc finger therapeutic cargo and repress the target gene, all while being easily manufacturable at scale. Although this may seem like a lot of boxes to check, we believe each of these qualities is essential for a truly effective capsid that could be deployed into humans. That is why we are so pleased with the preclinical data from our recent nonhuman primate studies that demonstrate how well placed STAC-BBB is to potentially address these criteria. In these preclinical studies, we are encouraged to see that STAC-BBB demonstrated robust penetration of the blood-brain barrier and widespread gene expression throughout the brain, primarily targeting neurons regardless of the promoter and with the results that were consistent across individual animals and groups. We saw extensive expression of zinc finger cargo throughout the brain, including key disease-relevant regions, a clear dose response curve for zinc finger expression and a corresponding repression of the disease target. Vector genomes were enriched in the central nervous system, while detargeted from the dorsal root ganglia in liver. And as Sandy mentioned, crucially, we believe the STAC-BBB is also manufacturable at scale. So how did we assess this performance? In our latest experiments, we started with 100 million capsid variants, which were engineered with a specific peptide insertion and carefully barcoded to enable tracking. We then evaluated these capsid variants through progressive rounds of screening, enriching for the best performers through three rounds of selection until we identified STAC-BBB as the standout high performer. The visualization shown here is the final round of the sister screening process, where 1,260 novel capsids were all evaluated simultaneously in cynomolgus macaques. On this graph, the y-axis shows the relative level of enrichment of the capsid throughout the brain, with zero representing capsids that exhibited no comparative enrichment in the brain. What we're looking for here is a high degree of neuronal RNA expression indicating successful BBB crossing and delivery to neurons. We see on the x-axis, the overall coefficient variation or in other words, how consistent the full change enrichment is among the samples that were tested. We are looking for a capsid that is both highly enriched in the brain and that we are able to reliably detect across multiple tissues, showing that the results are reproducible and not a one-off chance outcome. The highest performing capsids will be found in the top left corner. So we were very encouraged to see the STAC-BBB capsid coming out on top, outperforming all the others in the library on this assessment. The library assessment also included known published neurotropic capsid variants that were evaluated head-to-head in addition to our own. We are very pleased that STAC-BBB was the top-performing capsid in this benchmarking study. Moreover, we also saw this performance was consistent across all three animals and multiple levels of the brain with STAC-BBB illustrated here in green, consistently outperforming the next best-published capsid here shown in orange. In fact, we saw a 700-fold better enrichment in the brain for STAC-BBB compared to the benchmark capsid AAV9 shown in blue on this graph, highlighting the superior neuronal expression needed by STAC-BBB. On this next graphic, you can see how this superior performance continues to be demonstrated across all key areas of the brain, including the hippocampus and deep brain regions, which traditionally have been so difficult to reach with intrathecal administration of antisense oligonucleotide also called ASO or more traditional capsids. The liver can act as a primary sink for intravenously administered capsids. However, we saw there was significant detargeting of STAC-BBB in the liver with a 100-fold lower expression compared to the benchmark AAV capsid when compared against historical Sangamo studies at the same dose. Low peripheral exposure in the liver is desired. We then conducted follow-on studies taking our lead capsid STAC-BBB and testing its individual performance. On the left of the slide, we see an image of a nonhuman primate brain. It is from an animal that was treated with a STAC-BBB capsid administered intravenously at a dose of 2e13 vector genomes per kilogram and packaged with both a nuclear localized green fluorescent protein or GFP, as well as the zinc finger repressor targeting the prion gene. We then used antibody labeling to stain for the GFP cargo as illustrated with the deep purple or almost black color you see on the left side. We are very pleased to see both a widespread and uniform expression of GFP mediated by STAC-BBB throughout all the gray matter, which is where the cell bodies reside in the brain. Conversely, you see no GFP expression in the white matter as we would anticipate because it primarily consists of myelinated axons. If you dive deeper into some of the cortical regions, you can see there are two types of staining. You see the darker purple staining, which is the GFP cargo being expressed by the STAC-BBB. And then the lighter blue is a Nissl stain that labels all the cell nuclei in the brain. It's important to note that there are many different cell types in the brain with neurons making up roughly 19% to 40% of all cells dependent on the brain region. Here, we clearly see that STAC-BBB is neurotropic with pronounced staining of the cell nuclei and in some places, even an overflow of GFP protein out into the cell body of the neuron. This transaction was consistent across the twelve other brain regions we analyzed with clear enrichment of STAC-BBB observed in the neurons in each of these areas. Because of the observed neurotropic nature of STAC-BBB, the level of enrichment seems to align with the number of corresponding neurons found in each brain region. The lateral geniculate nucleus, for example, is tightly packed with neurons than we saw striking STAC-BBB enrichment here. Extensive transduction is crucial because each area is linked to a whole range of diseases for which treatments are desperately needed. Based on this compelling data, we believe the diseases such as Huntington's disease, Parkinson's disease, ALS or Friedreich’s Ataxia could all be potentially unlocked by STAC-BBB and our zinc finger cargo. If we dive a little deeper into some of these brain regions, for example, the dentate nucleus, the deep cerebellar region is particularly hard to reach with CSF routes of administration. However, using an intravenous approach where we're leveraging the intimate relationship between the brain vasculature and neurons, we are able to transduce almost all the neurons in this region. As you see here, thirty out of thirty-one neurons visible in this field were transduced. We were thrilled to see this robust level of brain transduction. Moreover, this consistent transduction was reproducible across animals. Here, we show the dentate nucleus of three separate animals treated with STAC-BBB, all of which exhibited similar levels of GFP expression. Finally, we believe STAC-BBB is manufacturable at scale. Capsid manufacturability is critical to creating a successful commercial drug product for patients. We expect to leverage our long track record of AAV production and process development to manufacture STAC-BBB at scale. Our TechOps team has manufactured the capsid at 50 liters and are currently scaling up to 500 liters. We have been able to produce the capsid using both the HEK293 and Sf9 platforms. We believe STAC-BBB is manufacturable at commercial scale using standard cell culture and purification processes, is soluble using known excipients, and can be characterized using available analytics, which we consider to be crucial factors in the potential long-term success as we seek to scale up to the levels needed for clinical trials for potential commercialization.

Sandy Macrae, CEO

Thanks, Amy. As Amy emphasized, our latest STAC-BBB data demonstrate that we've engineered a capsid that exhibited brain-wide delivery in nonhuman primates. However, this is only half of the effect of neurology genomic medicine. I will now tell you that the other half is our potent zinc finger cargo, which can be combined with our delivery capsids to potentially create truly innovative genomic medicines. Our neurology pipeline leverages Sangamo's proprietary zinc finger gene targeting technology, a high-precision genomic engineering platform. Think of zinc fingers as the landing mechanism, which can identify the exact ZIP code within the genome to attach and regulate. This is what they do in the bodies and brains of all of us. Zinc fingers are highly versatile, extremely customizable, and very compact; they can easily be packaged into viral vectors. They’re roughly one-eighth the size of other editing modalities, so we believe we can package up to three repressors if necessary into one AAV capsid and repress several genes at any one time if we wanted to. They’re also derived from human proteins, which potentially avoids issues with immunogenicity that may arise with bacterial proteins. Think of our zinc finger platform as a Swiss Army knife which is flexible and offers different tools based on your needs. Broadly, zinc fingers recognize an 18-base pair piece of DNA to induce a variety of actions such as causing a double-stranded break via nuclease properties, activation, repression, base editing, epigenetic modification, and site-specific integration. Our base editing capabilities were highlighted last month in Nature Communications, showing that compact zinc finger architecture utilizes toxin derived citing deaminases for highly efficient base editing in human cells. We were pleased to read in Nature Communications that other groups consider zinc fingers the most capable epigenetic regulation tool, and we’re delighted with our partnership with Chroma Medicine who have licensed our zinc fingers exactly for this purpose. We are currently focusing on leveraging our epigenetic regulation capabilities in neurology, and the data that follows on prion, tau, and Nav1.7 will focus on that technology specifically. So Amy, can you now tell a little more about how the zinc fingers are leveraged in our prion and tau programs?

Amy Pooler, Head of Research

Thanks, Sandy. Turning now to prion disease, which affects approximately 600 patients a year in the U.S. and Canada and around 900 in Europe. Prion disease is an awful disease, typically fatal in 12 to 15 months. There are no approved disease-modifying therapies that currently exist. Prion is an excellent fit for zinc finger repression. We know that prion knockout animals do not get the disease, and prion reduction can delay or prevent disease, and neuronal prion production, a protein reduction also prevents disease. We, therefore, believe that the repression of prion expression may slow or halt disease progression and neurodegeneration. We knew that we wanted to achieve widespread delivery to the brain for prion disease, given that misfolded prion protein spreads throughout the brain as the disease progresses. As mentioned earlier, we therefore packaged our prion-targeted zinc finger repressor into the newly identified STAC-BBB capsid and administered it intravenously to three separate nonhuman primates. In order to assess which regions of the brain STAC-BBB delivers to, we collected 220 punches from each animal and conducted RT-qPCR analysis to measure how much prion-targeted zinc finger was expressed. Each dot on these brain images illustrates the location of one of the punches we collected, and each row represents one of the three animals that was dosed. The color represents the level of prion-targeted zinc finger expression that was measured. As you can see from the key in the top right, ZFR expression levels are indicated by the intensity of green for each one of the punches. These results confirmed the GFP protein expression data and support that STAC-BBB mediated consistent brain-wide expression of prion-targeted zinc finger repressor in all three animals. We next wanted to quantify if expression correlated with a corresponding reduction in prion mRNA in these brain punches. We were happy to see a reduction of prion expression in all 35 brain regions that we analyzed. As a reminder, these brain punches do not solely consist of neurons, but additional brain cell types as well, including oligodendrocytes, astrocytes, and microglia. Because prion is expressed in multiple brain cell types, when we are seeing total prion reduction here at the bulk brain level of 20% to 30%, the percent reduction in individual neurons must be significantly higher. When looking at the single-cell analysis of similar studies in the past, including the tau data, I will show you in a moment, we have seen upwards of 80% reduction at the individual neuron level. So how do we think the level of repression we saw in the green bar graph just now will impact disease progression? Based on this level of bulk repression observed in a mouse model of aggressive prion disease, we concluded that zinc finger repressors can significantly extend survival in prion-infected animals. In collaboration with the Broad Institute, we engineered a zinc finger repressor to target the mouse prion gene and administered these as a single dose in mice, either 60 or 122 days following prion infection. Without any intervention, you can see that clearly, the untreated mice consistently die around 160 days post infection. However, mice treated with a single administration of a prion zinc finger repressor showed notable extended survival compared to those control animals living to beyond 400 or 500 days after infection, which is within the normal lifespan of a mouse. This is an incredible alteration in disease progression. In a separate published study, performance of ASOs also illustrated on this graphic was evaluated in the same mouse model. These data show that multiple treatments were required, starting from approximately 70 days post-infection, as shown in graph 2, to be able to induce an extension in lifespan. And when ASOs were administered at a later time point post-infection, as shown in graph 4, when the disease was further progressed, there was only minimal extension in lifespan. Conversely, even when administered 122 days post-infection shown in graph 3, which is a timeline more aligned to what we believe we will see in the clinic, a single dose of the zinc finger repressor was still able to profoundly delay disease progression and extend survival in mice. These data reflect the 2e13 vg per kilogram dose level, which is considered a mid-dose of AAV, showing that we have the potential to dose higher, should we decide that that's appropriate. The prion program is progressing with our clinical lead zinc finger repressor that showed greater than 95% prion reduction per cell, with no detectable off-targets and meaningful potency, both in vitro and in vivo. We expect to begin clinical enabling toxicology studies in the second half of this year and anticipate submitting a clinical trial application in the U.K. for prion in the fourth quarter of 2025. Moving now to tau, a well-known target for the treatment of neurodegenerative diseases called tauopathies. Recent data from Biogen's ASO study shows stabilization of cognitive function with regular injections of ASOs addressing tau, which seems to cement tau's implication in Alzheimer's disease. In addition, there are also a host of tauopathy disorders that span more than twelve distinct indications, including progressive supranuclear palsy, frontotemporal dementia and account for a very large patient population with a high unmet medical need that we could potentially address with our zinc finger approach. Using a combination of STAC-BBB delivery capabilities in the tau zinc finger repressor, we see a potential ability to halt disease progression with a one-time IV administration for various taupathy indications, given the capsid's ability to demonstrate the ability to reach all the brain regions with high specificity in nonhuman primates. Here, we packaged our clinical lead tau zinc finger repressor, which shows fantastic repression of tau, exceptionally specific expression and no detectable off-targets in vitro. Into our STAC-BBB capsid and tested at three different intravenously administered doses: 5e12, 2e13, and 1e14 vector genomes per kilo. Similar to the slide we saw before on prion, here, we are looking for widespread expression of the zinc finger repressor throughout the brain. Here, we were also assessing the three dose levels, and we're very pleased to see dose-dependent expression with the intensity of green increasing as the dose increased, indicating a higher level of zinc finger expression. Importantly, and similarly to the prion study, we are not only looking at the level of zinc finger expression, but also the corresponding levels of tau repression. Here, we show these data for the deep brain thalamic region, including the lateral geniculate nucleus. Like prion, tau is a gene that is expressed not only in neurons, but also in astrocytes and oligodendrocytes. We know that tau expression in neurons is the critical driver of disease pathology, which is why we are so focused on repressing it in these cells. In this case, the clinical lead construct uses a synapsin promoter. So we know that we are only targeting zinc finger expression to neurons. We were pleased to see a dose-dependent increase in zinc finger expression that correlated with a dose-dependent decrease of tau expression. Like in the prion experiment, this is a bulk analysis of whole brain punches, which consists of many cell types, not just neurons. So to be able to achieve this level of tau repression at the bulk level, we must be achieving significantly higher repression at the single-cell level in neurons. Here, you'll see that we achieved an almost 50% reduction in tau at the bulk level and at the top dose in the lateral geniculate nucleus, which is likely correlated to the higher proportion of neurons we see in this region as illustrated by the dark staining in the image above from the same brain region in the GFP arms of the study. Let's take a moment to look more closely at the pons part of the brainstem and a key brain region in tauopathy called progressive supranuclear palsy. On the left is the bulk tissue punch analysis for this region. And like what I showed you on the previous slide, we saw a correlation between increased zinc finger expression and decreased tau expression in a dose-dependent manner. Because understanding the activity of the zinc finger at the single-cell level is so important, in addition to the bulk brain tissue analysis, we also utilized a multiplexed RNA scope and immunohistochemistry approach to visualize ZFR expression and tau repression in neurons. This data is beautiful and shows a high level of detail that is only recently possible, allowing us to understand what's going on at the single-cell level. On the top is the pons image from a control animal, and the bottom is from an animal treated with the top dose of STAC-BBB encoding the tau clinical lead zinc finger repressor. In purple are the neurons, which in the control animals robustly express tau mRNA shown in white. Conversely, in the bottom row of images, you can clearly see that where the zinc finger was expressed in green, we saw a striking corresponding reduction of tau. We calculate that approximately 80% of the neurons express zinc fingers in this region, which resulted in almost complete repression of tau in those cells. Here, we show more of this beautiful single-cell data demonstrating the power of both STAC-BBB and our tau zinc finger repressor working together in this instance in the motor cortex. On the top row, you see the vehicle control where tau mRNA was clearly expressed across the brain region, in particular, within neurons and purple, and glia in orange. Here, no zinc finger repressor was detected and the tau mRNA levels remain consistent between the different images. Conversely, at the bottom, we see a potent repression of tau mRNA across the image on the left. Zooming into this a little more in the middle image, and as indicated in green, we detected the zinc finger repressor particularly in neurons. Importantly, where we saw the zinc finger expression, we saw an almost complete elimination of tau mRNA, most visible in the bottom right panel. This is truly encouraging data that gives us great hope for the promise of a single administration of STAC-BBB and our tau zinc finger repressor. For our tau program, we have identified the clinical lead zinc finger and IND-enabling activities are well advanced, making this program well suited to move into the clinic either ourselves or with a potential partner. Toxicology studies could be initiated as early as the second quarter of this year with a potential IND submission as early as the fourth quarter of 2025. Finally, I'll outline our lead neurology indication, Nav1.7 and how we're using this program as a way to balance the portfolio through a diversified delivery approach. Our Nav1.7 program does not leverage STAC-BBB, but instead uses a known AAV delivery capsid that is already in the clinic. Our aim here was to develop a medicine capable of reaching the dorsal root ganglia as Nav1.7 is a voltage-gated sodium channel expressed there, and mutations in this channel play a critical role in pain perception. By potently reducing Nav1.7 in the DRG, we believe we can prevent the transmission of noxious pain signals in order to treat chronic neuropathic pain and a host of other indications. There is an urgent need for new therapies in this space and a potentially very large patient population to address. So we are very motivated to be moving forward with our Nav1.7 program and plan to initially focus on patients with small fiber neuropathy. As you see here, preclinical data from our clinical lead zinc finger repressor targeting SCN9A, the gene that encodes Nav1.7, demonstrated a meaningful repression in vitro with exquisite levels of specificity as we only saw a repression of Nav1.7 without impacting any other sodium channels. It's difficult to use small molecules to treat these channels because Nav channels share a lot of structural similarities at the protein level. However, at the DNA level, they are distinct, which makes them well suited to the zinc finger technology. Taking this into animal models on the left, you see a study targeting neurons in the DRG to groups of cells outside the spinal column and the blood-brain barrier. Using intrathecal injection of the zinc finger repressor in mice, we observed significant expression, which you see in red. This then resulted in an almost complete elimination of the SCN9A expression, shown by the absence of light, which indicated a potent knockdown of the Nav1.7 gene at the mRNA level. If you look at the pain response, you can understand what this looks like in a mouse model. We use the gold standard mouse model of neuropathic pain called the spared nerve injury model and performed a single injection of the zinc finger repressor intrathecally after the nerves were cut to induce pain. The single administration of our zinc finger repressor resulted in a full reversal of pain perception in these animals as indicated by the orange and dark red bars in the bottom middle pane, which are very similar to the results in those animals that have never received the surgery, as indicated in blue, which is very impressive. Finally, you see the nonhuman primate study on the far right, where we wanted to show that we can target the DRG and achieve potent repression of SCN9A. In the study, we administered three different doses of zinc fingers intrathecally and we saw dose-dependent and potent repression of Nav1.7. Importantly, there's a lot of research emphasis and peer-reviewed publications about identifying any potential DRG toxicity. And we did not find anything in these studies that would be indicative of such toxicity, which is crucial as we seek to advance this program into the clinic. We are very encouraged by the Nav1.7 program, and we look forward to completing these final toxicology studies. We expect to submit an IND for this program in the fourth quarter of this year.

Sandy Macrae, CEO

Thank you, Amy. Really appreciate everyone joining us today as we look forward to answering your questions. What we've outlined, we strongly believe in the power of our science to address devastating neurological conditions. We're advancing epigenetic regulation cargo and novel AAV capsid for a high-value gateway to neurological diseases like chronic neuropathic pain and prion disease. Today, we have shown we have a capsid that demonstrated the ability to penetrate the blood-brain barrier and exhibited industry-leading CNS tropism in nonhuman primates. The development of STAC-BBB potentially unlocks multiple neurology programs that could be advanced ourselves or with partners as a potential source of non-dilutive funding. And we have the prion disease program, which we believe could quickly validate STAC-BBB in humans. In addition, our Fabry disease program has continued to generate compelling Phase I/II data and is ready for a potential registration study with an abbreviated clinical pathway aligned with the FDA and multiple collaboration discussions in progress. We have transformed Sangamo into a focused neurology business with the potential to transform the lives of patients with debilitating neurological conditions. We have also made the necessary but very difficult decisions to focus our company and streamline our OpEx with the intention of reducing our burn but without impairing potential value. We believe these changes enable us to set forth an attractive opportunity to raise additional funds via additional potential collaborations. Alongside this, we have the Pfizer collaboration in hem A that brings revenue bearing opportunity, with $220 million in potential milestones. As you can see, we believe our company is well-positioned to change the lives of patients as a neurology genomic medicine company. Operator, please open the lines for questions.

Operator, Operator

And our first question comes from Patrick Trucchio from H.C. Wainwright.

Luis Santos, Analyst

This is Luis Santos on behalf of Patrick. Congratulations on the impressive data. We would like to learn more about what data remains to be completed for the CTA on the prion disease. Additionally, regarding the tau program, can you specify which tau epitope you are targeting? I may have a follow-up question.

Sandy Macrae, CEO

Thank you, Patrick. These are really good questions. It is beautiful data. For the team that has been working on this for several years, it's a fulfillment of their scientific careers truly. So I'm going to split into two. So the section on how do we get prion into the clinic, we'll go to Nathalie, Head of Development.

Nathalie Dubois-Stringfellow, Head of Development

Hi, everyone. For the CTA on prion, now that we have the STAC-BBB, we are gearing to do a GLP tox study, which will be required for the IND. In order to do this, we have to manufacture the product, put in the tox study, and we're going to do this year for filing an IND in the end of 2025. We also need to do a clinical manufacturing lot with the clinical candidate.

Sandy Macrae, CEO

You've had great discussions already in the U.K. with people about the enthusiasm to take this forward.

Nathalie Dubois-Stringfellow, Head of Development

Absolutely. There is a really good system here where patients that have prion disease are going to a common center, and we have linked to really the experts in prion disease in the U.K., and they have also direct communication with the regulatory authority in England. So we think that we're well-positioned to really move quickly in the U.K.

Sandy Macrae, CEO

Thank you, Nathalie. And then for types of tau, Amy, how do you think about that?

Amy Pooler, Head of Research

Sure. I'm happy to take that one. I think one of the advantages of the zinc finger platform is that we're targeting tau at the DNA level. We know that there is so much complexity for tau at a different splice variants at the RNA level and then many, many different configurations of tau at the protein level. Because we're targeting upstream of all of that, we believe that we're able to address really all different tauopathies and all of these different possible forms of toxic tau.

Sandy Macrae, CEO

Which would be a real competitive and patient advantage.

Luis Santos, Analyst

Just a very quick follow-up. On the dose response, what level of reduction of tau do you expect will be enough to be promising and translational into humans? What levels of tau reduction will we need to see, not just from the beautiful images, but at the pathological level and the physiological level in mice and humans so that we can be more confident in humans?

Amy Pooler, Head of Research

Yes, that's a great question. It depends on the different brain regions, really the level of repression that we're targeting. But we believe, especially when looking at the outstanding efficacy in the prion studies, that we're in the range that we would be expecting to see some clinical results. What's really important is that at the single cell level, we see almost complete repression of tau. And this is important because we know that the tauopathies are spreading throughout the brain. So not only is it important to have that widespread brain delivery, like what we're seeing with STAC-BBB, but also at a single cell level that we see this really complete repression of tau. That's a great question. And I think it depends on the indication. For some tauopathies, we think something between 10% to 30% depending on the brain region would be important.

Maurice Raycroft, Analyst

Congrats on the update today with the new capsid. I'm wondering, with the new capsid, have you looked at the relative immunogenicity of it and how that would compare to AAV9 or other published capsids? And based on this, do you see any potential to have a redosing option?

Amy Pooler, Head of Research

That's a great question. Thank you. These novel engineered capsids are being engineered in order to improve the crossing of the blood-brain barrier and brain penetrants. We believe that they have a similar profile compared to other natural capsids with a similar range of neutralizing antibody prevalence. Of course, another frontier of capsid engineering could be to evade that, but that was not what we set out to do in the study. And we are really excited with the penetrants that we saw in the brain of these animals.

Nathalie Dubois-Stringfellow, Head of Development

Yes, I think we don't expect to be very different from other AAVs. Of course, patients in the trial will be screened for preexisting antibody to our novel AAV capsid.

Maurice Raycroft, Analyst

Got it. Okay. Makes sense. And for your figure where you compared your capsid to other published capsids, can you say which capsids these were or what the screening or inclusion criteria was? And were any excluded, for example, the voyager capsid?

Sandy Macrae, CEO

Thanks, Maury. There are a lot of capsids that people are talking about, which I think reflects the interest in the field and trying to find that magic capsid. We know now from talking to many pharma companies that they have capsid search groups in place because it feels like a next-generation neurological disease set of medicines. So we just looked across the literature and identified the mutations that have been made in those capsids and then recreated them in our laboratory, which is something that everyone can do. So we're pleased that ours turned out on top, but what's more important is the characteristics of our capsid on its own that it's widespread, that it's easily manufacturable, that it hits all the spots that transduces the zinc fingers and reduces both tau and prion.

Maurice Raycroft, Analyst

Got it. That's helpful. And last question, and then I'll hop back in the queue. Just wondering if you could say anything additional on partnering conversations around these capsid data yet? And if you can provide any more perspective around the terms that you would aim to get for partnering any of your wholly owned CNS programs?

Sandy Macrae, CEO

Thanks, Maury. So we've known the ultimate screening results since the end of last year. And so we've been gradually talking and socializing this with our friends in pharma companies. When we showed the latest data and some of it, the single-cell data is only out in the last week or so. The word awesome was used often in this. So we continue to talk to them because we feel that both with the capsid itself, and the capsid with our cargo, there is no way that Sangamo can advance all of the potential indications with this and that we can only do it through the partnership with that kind of pharma ecosystem. Of course, the money is valuable, but it would be wrong for me to start talking about numbers here, and we look forward to finding ways to move this into as many indications as possible.

Alexander Xenakis, Analyst

This is Alex on for Nicole. Congrats on the data and all the progress. A couple from us. Can you remind us for your STAC-BBB, how would this fit into Alzheimer's, given the current focus on the amyloid plaque? And could STAC-BBB have any impact on existing plaque? Or do you think that this could be potentially used after approved antibodies? And then I have a follow-up.

Sandy Macrae, CEO

So I think we heard your question. It wasn't quite clear. Amy, can you repeat what you think we're answering and then take it from there?

Amy Pooler, Head of Research

Sure. I think I may have only caught the first part of your question, which is understanding how targeting tau fits in with the amyloid hypothesis for Alzheimer's disease.

Alexander Xenakis, Analyst

Yes.

Amy Pooler, Head of Research

Okay. Great. I think that there's been accumulating evidence over the past years, which again, the data that I showed today also from the Biogen trial with the ASOs targeting tau really have shown how important tau is in driving the pathology of the disease. There are patients with a lot of amyloid in their brains but actually don't have Alzheimer's disease. And it's only when you have this development of the tau, the tauopathies that's correlated with cognitive decline associated with the disease. So we believe, like others, actually, that tau is a critical step in that pathway and that its reduction will be really important for slowing or stopping the progression of the disease.

Sandy Macrae, CEO

And particularly when compared to those ASOs, you can give it, hopefully, we expect you'll be able to give it once and it will have a long-term effect.

Amy Pooler, Head of Research

That's right. Not only would it be a single administration but also be able to target all of the different brain regions that we think are involved in the disease.

Sandy Macrae, CEO

Which ASOs don't always do.

Luis Santos, Analyst

Where do you think that in the treatment landscape, this would play out, given the improved antibodies? And do you see this as sort of before antibodies afterwards, how do you think the community is doing it?

Sandy Macrae, CEO

We are currently in the preclinical stage, and the data looks very promising. We need to test it in humans to demonstrate its effectiveness. During this process, we will gather a lot of information on other types of tau antibodies and ASOs to better understand their benefits. Over time, I believe the advantages will become clearer, especially considering that this is a one-time treatment compared to ongoing intrathecal injections, which is very appealing. This approach not only benefits the patient but also simplifies the process for caregivers. Ultimately, it should be easier for any hospital or clinic to administer. This is why we are so excited. If tau is indeed as crucial as we believe, having a single intravenous injection that can cross the blood-brain barrier and effectively reduce tau production in cells presents a significant opportunity for addressing this devastating disease.

Nathalie Dubois-Stringfellow, Head of Development

Yes. Additionally, when comparing this treatment to an antibody, as Amy mentioned, we are focusing on the expression of tau. We are not targeting a specific form of the tau protein, given that there are many variations in Alzheimer's patients. It remains unclear which variant is most relevant for each individual. Therefore, we are pursuing a gene and epigenetic regulation approach.

Lisa Walter, Analyst

Great. This is Lisa on for Luca. Well, congrats on all the progress. I have a few questions on the Fabry program. Just wondering if you can add any color on how your conversations with potential partners just changed since you have reached alignment with the FDA on a registrational path forward? And on the Fabry pivotal study, can you share some more additional color on what the primary endpoint will be? Is it fair to assume the FDA will want to see a reduction in GL3 inclusions by kidney biopsy, similar to what we've seen with Fabrazyme? Any color here would be helpful.

Sandy Macrae, CEO

Nathalie, you've been having a lot of these discussions recently.

Nathalie Dubois-Stringfellow, Head of Development

Yes, we are very excited about our engagement with the FDA and the alignment we've reached on a well-controlled study that provides confirmatory evidence for our BLA submission and approval. At this time, we are not discussing the endpoint for this trial. Furthermore, this is very encouraging for the potential partner we are in talks with, as it significantly speeds up the path to BLA approval and also lowers the associated costs.

Sandy Macrae, CEO

Yes. I think a tremendous amount of credit goes to Peter Marks and his team at the agency. They have overcome a significant hurdle. They expressed a desire for more gene therapies for our genomic medicines related to rare diseases to advance. To achieve this, it is essential to examine studies that are feasible and endpoints that can be reached. This study has caught the attention of many who were previously unsure how to move forward with Fabry disease registration. It is a very feasible study that will assess not only biopsy results but also, as stated by the agency, the overall data and the benefits it provides to patients. This approach to medicine approval is very encouraging, and we look forward to moving this quickly into the hands of our partner and patients and achieving registration as soon as possible.

Juan, Analyst

Just a follow-up on the prior Fabry questions. Can you share what the potential partners might be looking for? And do we expect to see additional kidney biopsy data from the STAAR study? And I have a follow-up.

Sandy Macrae, CEO

The partners are simply looking for compelling clinical data that demonstrates a real benefit for patients that would encourage them to move away from enzyme replacement therapy (ERT). Currently, we have 13 patients who have been off ERT for over a year, and they show no desire to return to it, which I believe is quite significant. Some of these patients had been on ERT for a long period. In these cases, their SF-36 scores are notably strong, and they are moving into a different category on the FOS-MSSI scale, as evaluated by investigators. Even after receiving ERT, these patients are experiencing better outcomes with gene therapy. Additionally, of the seven patients who entered the study with antibodies, five have completely eliminated their antibodies, and two have seen significant reductions. These specific antibodies tend to limit the effectiveness of the treatment. This is what has impressed our partners and led them to view this as a promising medicine for advancement. They were initially cautious until we established a manageable regulatory pathway. Now, with our position as the only clinical-stage asset for Fabry disease, combined with our best-in-class data and a clear path forward with regulatory authorities, this represents an ideal opportunity for any pharmaceutical company seeking a Phase III asset.

Juan, Analyst

Got it. And my second question is on your capsid. So on the STAC-BBB capsid, can you share how you achieved the detargeting on the liver?

Amy Pooler, Head of Research

Yes, I'm happy to take that. You saw from the slides that I just presented, we started with a library of 100 million different novel capsids. And we went through a whole screening process using nonhuman primates in order to select for capsids that were enriched in the brain. Although we didn't design specifically the capsids to be detargeted to the liver, we do believe that there's some relationship between that liver detargeting and the really improved targeting of the brain that we saw in those studies. And that's possibly what enabled us to find a capsid that was so well transducing the nonhuman primate brain.

Sandy Macrae, CEO

And why is that important, Amy?

Amy Pooler, Head of Research

It's important because the liver is such a sink for intravenously administered AAVs. We know that the AAV can go to the liver and it can be potentially an issue for some patients. It's better if we can find a capsid that targets the tissue that we want to transduce to treat these diseases, which, in this case, is a central nervous system and limit that exposure to the peripheral tissue for safety.

Anvita Gupta, Analyst

This is Anvita on for Ritu today. Congrats on all the progress and the fantastic data presented today. What are your early thoughts on the potential clinical trial design for the first study with the Nav1.7 in chronic neuropathic pain? And then if you could also provide some color on maybe who would be the ideal patient for this program would be super helpful?

Nathalie Dubois-Stringfellow, Head of Development

Yes, thank you. We are planning to file an IND for Nav1.7 by the end of this year. We are completing our GLP toxicity study and our clinical manufacturing, and we will finalize our clinical protocol. At this point, we are not commenting on the design of the trial or the endpoints, but we are making good progress in planning those studies.

Sandy Macrae, CEO

Agree, Nathalie. I read the protocol last week or the version that's being circulated. And the bit that struck me is in one study, 17% of patients with intractable pain described their life as worse than death. This is not too thick or a bunionectomy that has been described for Nav1.8. This is the kind of intractable pain that dominates your life and makes these patients consider suicide, and that their life is just awful. We need to get this into patients as soon as possible. So we've got that protocol ready to go. We've had discussions with the agency about how to move forward, and once we get that IND done, and we're heading to the clinic, we will share that with you because I think it's important that patients get to hear that there's this opportunity coming that will replace, hopefully, all of these antiepileptics and opiates that are used in this dreadful condition.

Harshita Polishetty, Analyst

This is Harshita on for Gena. Most of them have been answered, but I just had a quick follow-up on Fabry. Given your recent update, I was curious, can you help categorize the importance of improvement in health scores, specifically for the SF-36 survey? Could you provide color on how the general health and physical component scores are rated? Are they equally rated? Or is there a higher rate to one of the components?

Nathalie Dubois-Stringfellow, Head of Development

In our Phase I/II study, we are primarily focused on safety, while also gathering extensive data on patients. Fabry is a complex disease, and we are examining various factors such as kidney function, heart function, pain scores, gastrointestinal scores, and overall health. Currently, we are collecting this data, and the encouraging news is that it consistently indicates improvement for patients. We are monitoring these patients, and as time goes on, the number of patients being observed continues to increase each month. The data from WORLD highlights that we are maintaining EGF for slope and showing enhancements in GI scores, FOS-MSSI, SF-36, and pain levels. Everything is moving in a positive direction, and at this stage, no single metric stands out as being more important than the others in the Phase I/II trial.

Louise Wilkie, Vice President of Investor Relations

Thank you once again for joining us today, and thank you for all your questions. As a reminder, you'll be able to access the presentation that we gave today on the Investor Relations section of the Sangamo website after this call. We look forward to keeping you updated on our future developments. Thank you.

Operator, Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.