Good afternoon, and welcome to the Sangamo Therapeutics teleconference to discuss fourth quarter and full year 2017 financial results. This call is being recorded. I will now pass you over to the coordinator of this event, McDavid Stilwell, Vice President of Corporate Communications and Investor Relations.

Good morning, and thank you for joining us today. As we begin, I'd like to point out that we will be referring to a slide presentation this morning. You may find a link to the slide presentation on our website, sangamo.com, on the Events and Presentations page of the Investors and Media section of the site. I'd also like to remind everyone that the projections and forward-looking statements that we discuss during this conference call are based upon the information that we currently have available. This information will likely change over time. By discussing our current perception of the market and the future performance of Sangamo with you today, we are not undertaking an obligation to provide updates in the future. Actual results may differ substantially from what we discuss today, and no one should assume at a later date that our comments from today are still valid. We alert you to be aware of risks that are detailed in documents that we file with the Securities and Exchange Commission, specifically, our annual report on Form 10-K and our quarterly reports on Form 10-Q. These documents include important risk 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. Forward-looking statements stated today are made as of this date, and Sangamo undertakes no duty to update such information, except as required under applicable law. With me this morning on this call are several members of Sangamo senior management, including Sandy Macrae, Chief Executive Officer; Kathy Yi, Chief Financial Officer; Ed Conner, Chief Medical Officer; Michael Holmes, Vice President of Research; Curt Herberts, Chief Business Officer; and Heather Turner, Senior Vice President and General Counsel. Again, we'll refer to a slide presentation during this call. Those slides are to be found on the Events and Presentations page of the Investors and Media section of the Sangamo website. And now, I'll turn the call over to Sandy.

Thank you, McDavid, and good morning, everyone. I'm very pleased to announce today that Sangamo and Kite, a Gilead company, have entered into a collaboration to develop gene-edited cell therapy products for oncology. Next-generation autologous and allogeneic CAR-T and T-cell receptor therapies require precise, efficient and specific genome editing. Kite is investing heavily to win in this emerging field, and we're thrilled to be their chosen partner supplying gene-editing technology for the developments in new CAR-T and T-cell receptor treatments for patients with cancer. In a few moments, Curt will provide more details of this agreement and what it will mean for the evolution of Sangamo's business strategy. But first, I want to reflect on how the development of the technology has enabled this collaboration. Our zinc finger engineering capabilities have advanced rapidly in the last few years with improved zinc finger nuclease architectures. Novel enhancements have resulted in a 300-fold increase in potential design options for a given genetic sequence, yielding higher, on-target modification activity with ex vivo editing efficiencies now reaching as high as 99.5%, an off-target cleavage consistently below the level of detection. We have also made great strides towards industrializing production of ZFNs, which helps expedite our research and meets the needs of partners. The adjacencies of computing and sequencing technology enable rapid screening and the development of lead candidates. It takes us 10 days, 8, if we work through the weekend, to produce a 96-well plate of options that can be further tuned to increase efficiency and remove nonspecific binding contacts to reduce off-target cleavage to undetectable levels. We are combining these advancements in our technology with our experience spanning two decades in preclinical and clinical research in this field. To my delight, soon after joining Sangamo nearly 20 months ago, I learned that the…

Thanks, Sandy, and good morning, everyone. We're excited to announce that we will work with Kite, a Gilead company, on the development of new gene-edited cell therapies for cancer. Gene editing is a critical component in the development of next-generation autologous and allogeneic cell therapies. Sangamo has more than a decade of experience, developing cell therapy products and translating this cutting-edge research into clinical trials. As Sandy pointed out, in recent years, our technology has advanced very rapidly along the three critical dimensions of precision, efficiency, and specificity. We are now able to rapidly assemble ZFNs to precisely target any nucleoside in the genome. We have increased our ex vivo on-target efficiency to consistently above 90%. We have learned to engineer away nonspecific binding between the ZFN and the DNA, reducing off-target cleavage to below undetectable levels. This unique profile is being recognized by partners as setting the standard for what good looks like in terms of therapeutic genome editing. It enabled the recent gene regulation collaboration with Pfizer for C9ORF-linked ALS and frontotemporal lobar degeneration, and it was certainly recognized by Kite in the optimal way to gene edit cell therapies for cancer. After careful consideration, we determined that building an oncology business requires specialized and dedicated expertise and that patients will be best served by Sangamo lining ourselves with a leading partner in the oncology field with the resources, relationships and capabilities to advance new therapies rapidly into global development and commercialization. With the Kite collaboration, we believe we are working with the company most committed to transforming the space of new cell therapies and oncology. And we think this collaboration will optimally benefit both patients living with cancer and the use of Sangamo technology within this field. We are also excited that Kite, after publicly stating their…

Thank you, Curt. Good morning, everyone. Detailed financial results for the fourth quarter and full year 2017 were included in the press release we issued earlier this morning. They are summarized on Slide 15. I will briefly review the most important components of our financials today, and we'll focus on primary drivers of our growth and spending for 2018. We ended the fourth quarter with a strong balance sheet with $244.6 million in cash, cash equivalents and investments. The total net loss for the fourth quarter of 2017 was $13.1 million or $0.15 per share, compared with $9.6 million or $0.14 per share for the same period in 2016. Turning to today's announcement on the oncology collaboration agreement. This deal with Kite is significant from both financial and strategic considerations. It provides incremental cash of $150 million to further invest in new therapeutic areas beyond our current pipeline with fully funded R&D and manufacturing costs for oncology programs. As discussed earlier by Sandy and Kurt, we believe there are also tremendous opportunities for independent value creation in cell therapies outside of oncology, such as autoimmune disorders. In addition to investing in these new therapeutic areas, we intend to expand our clinical operations into Europe and build out our own GMP manufacturing capabilities in our new corporate headquarters in, Brisbane, California. Therefore, we expect a directional increase in R&D, clinical and manufacturing expenses, and also in G&A, as our organization grows to support expansion of our pipeline. We ended the year with $244.6 million, and since then, have received $12 million of funds from Pfizer. Once the Kite collaboration receives HSR clearance, we will receive an additional $150 million. We expect our cash resources will last into the second half of 2020. We will provide additional color and updated financial guidance in the next earnings call, as we incorporate the impact of the oncology deal. Our balance sheet is very strong as we enter this exciting next phase of Sangamo's growth. We have significant potential, corporate and clinical catalysts this year and next, including expected proof-of-concept data from 7 genome editing, gene therapy, and cell therapy clinical trials. Over the next few years, we will continue to advance new programs toward IND. While we plan to retain some programs to take forward ourselves, our strategy will also continue to include partnerships for certain programs, which may provide additional potentially significant sources of upfront cash and milestone payments in the future. And with that, I'll now turn the call over to Ed for clinical update.

Thank you, Kathy, and good morning to everyone on the call. We expect 2018 to be a very exciting year for Sangamo's clinical team, with data readouts from our lead programs expected throughout the year. We now have five clinical programs, and I'd like to begin by reviewing recent progress from our three clinical-stage, in vivo, genome-editing programs in MPS I, MPS II and hemophilia B, starting with the CHAMPIONS' MPS II clinical study for SB-913. This is a dose-ascending study, enrolling up to nine adults with attenuated MPS II into three dose cohorts. As a quick reminder, our gene-editing [ph] programs use our zinc finger nuclease technology to target a precise position in the DNA just downstream of the albumin promoter in liver cells to create a space to allow for insertion of new DNA as shown on Slide 17. In the case of MPS II, this new DNA codes for IDS, the enzyme deficient in MPS II patients. The goal then is to have liver cells produce a steady and consistent level of enzyme, which circulates throughout the body, enters into cells and performs its normal functions for the lifetime of the patient. Turning to Slide 18. As Sandy mentioned, we presented preliminary safety data on the first subject in the CHAMPIONS' study at the World Symposium in San Diego in early February. As of December 27, the subject has shown no drug-related severe adverse events and their liver function tests remained within the normal range. To date, two subjects have been treated in the first dose cohort and the infusion of a dose of 5.00E 12 vg/kg of SB-913 appears to be safe and well tolerated. We expect to dose the next patient early next month. For our MPS I program using SB-318 on Slide 19, we…

Thanks, Ed, and good morning. I want to take this opportunity to state how proud I am to see the hard work and achievements made by Sangamo's R&D teams being recognized with important collaborations exemplified by today's Kite announcements, as well as the C9ORF72 and hemophilia A deals with Pfizer. I've been at Sangamo now 17 years, focused on the development of our zinc finger protein base, genome editing and gene regulation platforms for the treatment of patients with significant unmet medical needs. Our technology has progressed over my tenure. In the last few years, it has advanced by leaps and bounds. I'm extremely proud of how our team continues to lead this field and the strong validation that our work has received recently from external parties. And I just want to stop here and say it's truly incredible what we've accomplished, especially over the last 12 months, and that these advancements are a result of the innovative and collaborative effort of our R&D teams. With that, I want to bring attention to a few of our scientists, whose teams have contributed to these collaborations. Ed Rebar's team for the enhanced architectures, which we have recently begun to sketch, which allow for the rapid generation of highly precise, efficient and specific zinc fingers. Gary Lee and his team for their exciting improvements in ZFN-mediated T-cell multiplex editing for next-generation CAR-T and TCR cell therapies. Bryan Zeitler's group for their recent work in gene regulation for CNS diseases that set the foundation for the C9ORF72 partnership. And Brigit Riley, for establishing a potentially best-in-class gene therapy approach for hemophilia A, which demonstrated the diversification of Sangamo's technical capabilities in the gene therapy and led to the first partnership with Pfizer last year. Turning to Slide 26. In the liver, where we've…

Thank you, Mike. These are indeed exciting times in the field of genome medicine and gene therapy, and especially, at Sangamo. We're thrilled to partner with Kite for oncology and believe this program will advance most quickly with the strong partners to reach the greatest number of patients. That, we believe, is the right thing to do for patients and for shareholders. We are a unique company. We have a history that extends back more than two decades. A history that includes many first in this field, the first to edit cells in vitro, the first to treat a patient with ex vivo-edited cells, the first to infuse a patient with an in vivo genome-editing treatment. We're very proud of this history, and also believe it's a firm foundation on to which to build the Sangamo of the future. From our experience, we have a deep knowledge of our field and have developed a diversified platform with nearly limitless possibilities. It's such an exciting time in genomic medicine and a thrilling time to be at Sangamo. Thank you. Operator, we are now ready for questions.

Thank you. [Operator Instructions] And the first question will come from the line of Charles Duncan with Piper Jaffray. Your line is now open.

Thanks for taking my questions, and secondly, congratulations on a [indiscernible] transaction with Kite. So, question for you, Sandy or Curt. I guess, this is almost a silly question, but can you provide us a little bit more color on the diligence process? And whether or not that deal with Kite was a competitive thing? Were they considering other technologies?

I'm delighted too. Because as you can imagine, over the past six months with Kite becoming part of the Gilead family, it's been a fascinating process, and truly, a competitive one. Curt, do you want to get some color on that?

Sure. Charles, it's a great question. So, I think as publicly stated by both Kite and Gilead and John and Norbert at Gilead, they scoured the field. A lot of the data that our team has been working on and publicly presenting, including Gary Lee as well as Sumiti, really has been best-in-class in terms of trying to look at multiplex genome editing for target knockout as well as target insertion. So, we're very excited about the overall process.

And Gilead, as you know, has got a reputation for doing really important transactions and choosing carefully where they invest. So, it's like pleasing the Sangamo that they partnered with.

Yes. I imagine it's been a rigorous process. So, congrats to you on that transaction. I guess, I'm wondering when would you anticipate the first opportunity to gauge progress on your selection of a candidate? Or what that might mean out of that collaboration?

Yes. Great question, Charles, and we expected those. So, we're going to let Kite take the first shot of that. But what we can tell you is there are some specific programs that we're working on.

And we have been working on that will make this a very smooth start.

Okay, sounds good. We'll look to them to be able to provide some additional visibility. Quick question for Kathy. When would you anticipate the Brisbane facility to be ready for visitors, or more importantly, you folks moving in and occupying it?

End of 2018.

By the end of the year, we hope - we look forward to hosting you.

Yes.

Super. We'll raise our hands. And then finally, for Ed, I'm really intrigued with the idea of using technology in pediatric patients. I'm wondering if you could provide a little bit more color on when that might be? And any additional information on your discussion with the European regulatory authorities that have encouraged you to move into those types of patients?

Yes. So, we've met with the EU authorities twice and they've both been very excited about the prospect of moving into pediatrics. So, having filed the CTA for the Factor IX program, we expect to get sites up and running for that program, as well as for the MPS I, MPS II programs this year and expect to enroll adult and pediatric patients in those programs.

In Europe.

Yes.

Very good. Thanks for taking my questions. Congrats on that pretty interesting collaboration.

Thanks Charles.

Thank you. And the next question will come from the line of Maury Raycroft with Jefferies. Your line is now open.

Good morning Maury.

Hi good morning Sandy and team and congrats on the update. Excellent news this morning. To start, I'm wondering if you can provide any specifics on how the process for the selection of the 10 products will work? Will Sangamo and Gilead have an equal opinion in those decisions?

I don't think how to describe. That's a good question. And in fact, one has to be very clear and honest that it's Kite, Gilead, that will be driving forward in the choice of the products. And part of the reason that we did this partnership was because we are - we want to work with a company that's in the oncology field, knows what oncologists and patients need and want. We bring a lot of technical experience to that and so can help them in the selection, but this will be driven by the Kite, Gilead.

Got it. Thank you. And second, just to clarify, this is for CAR-Ts, TCRs and NK cell receptors. So, this leaves you with B-cells, dendritic cells and other immune cell types to edit. I'm wondering if you can talk about the potential for those other immune cell types, particularly in autoimmune disease and maybe in other indications too? And I'm wondering if you'd still have the option to edit B-cells in oncology indications?

So, let me get two different answers or two similar answers, complementary answers for this. Curt, can you talk about the deal terms? And Mike, can you talk about where this takes us? So, Curt?

Sure. Absolutely. So, you're right. It's focused on - in terms of the cell types both T-cells as well as NK cells, and then you mentioned all the right target moieties, the CARs, the TCRs, and the NKRs. And that is all within the focus of oncology. So outside of those cell types and outside of those targeting moieties, basically we have the freedom to operate there. Mike can talk about other cell types and other therapeutic areas of interest.

So happy to. And sort of hopefully, I'm providing a complementary answer where - I think this leaves open where we can edit other hematopoietic cells and you certainly raised all the important ones that include T-cells and B-cells, as well as other types of blood cell types that you see for other non-oncology indications, such as autoimmune diseases and in infectious disease. So, I think this really leaves open a variety of areas for us to move into. And certainly, we will be providing more details in further calls.

And Maury, the way I thought about it or the teams thought about it when we constructed this deal is, we want to be absolutely clear that for T-cells and NK cells and oncology, our relationship is with Gilead and Kite and they will make this successful. But because of our experience in HIV and our ex vivo editing capability, it opens up a whole universe of other cell types for other indications and allow Sangamo, both to partner and to drive something forward ourselves, which is the essence of who we are.

Great. That’s very helpful. Thank you very much and congrats again.

Thanks Maury.

Thank you. [Operator Instructions] And the next question will come from the line of Gena Wang with Barclays. Your line is now open.

Good morning, Gena.

Hi, good morning. Thank you for taking my questions, and I also like to add my congrats as well, this is great news. Just maybe wanted to follow a little bit on the Kite collaboration. Could you give us a little more color in terms of like the single-digit royalty? Would that we in the low single-digit range or mid- to high single-digit range?

So, it's a great question. What we've disclosed in 8-K is escalating tier growth repayments that are not double digits, so it's on the single digit and that's extends between the two companies, so we can't say anymore.

Okay, okay. And also, within how many years does Kite have to choose all these 10 products?

So, again, that - there is a specified research term under the collaboration, but I don't believe we've disclosed that in the 8-K.

But to be more humanely positive about this, we've already started to talk about what the targets are. We already have people at Sangamo, who are planning how to do this, and so this deal will happen - the consequence of this deal will happen very quickly. And this is a field and we need to - both Sangamo and Kite, Gilead, need to get going on this promptly.

Okay, I think that makes sense. And then regarding the ongoing clinical programs, just wondering for the hem A program, you already dosed the third patient. Can you tell us which dose did the third patient receive?

So, we're not disclosing the dose information at this time. We will be looking to release our efficacy and safety data at a conference mid-year in 2018.

Okay. Will we be able to see data from more than four patients for the hem A program, mid, you know, [indiscernible]?

It will depend on the timing of enrollment.

Okay. And also, quick question regarding the MPS II. So, the midyear update, will you also report some biomarker data such as GAG reduction?

Yes. The data that we would expect to report would be the IDS activity levels in the serum as well as urine GAGs.

Okay, okay. And then lastly, very quick question regarding the cell therapy, allogeneic cell therapy multiplexed genome-editing data. Just wanted to confirm the editing efficiency mentioned in the slides, are these biallelic editing?

Mike, you want to comment on that?

Yes. No. So certainly the frequencies that are recorded here are total amounts of - total number of alleles modified. But as you can see, that as you are approaching numbers that are getting close to 100%, it is starting to achieve a point where it's also reporting on the number of cells that are biallelically modified.

Okay. Thank you very much.

Thank you. And the next question will come from the line of Jim Birchenough with Wells Fargo. Your line is now open.

Good morning, Jim.

Hi. This is Yanan in for Jim. Thank you for taking the question and congratulations on the deal. So just first question is in terms of the targets for the gene editing for oncology purposes. I think you have reported preclinical data on four targets from your preclinical studies, including CISH, TCR, beta-2M and in terms of the collaboration, I imagine there - more targets might be involved, like the TCR approach may involve TCR other than CAR-T construct. And also, the NKR program probably involves additional receptors. Have you had any preclinical data working on those novel - on those targets thus far that you haven't reported?

So, thank you for your question. I think the best way to think about that is to step further back. The reason we and Kite and Gilead chose this partnership rather than it being - mentioning specific targets is because we all believe that there is both - the targets are known now and targets that will be developed as this field evolves at such a rapid pace. And so, although the first few targets may be ones that we've all heard of, they and we wanted the opportunity for us to evolve with the field to be able to choose new targets that are learned from the exploration of this very new field and for Sangamo to provide editing capabilities for them, no matter what happens, whether it was checkpoint inhibitor switches, if that's necessary, novel targets. So, we are delighted to have a truly creative partnership rather than it being on target by target. Curt, you would agree?

I would agree. And the data that Sumiti and Gary have presented recently is spot on in terms of, kind of, leading the field.

Got it. That's very helpful. And also, just curious, in terms of the ability to sort cells after the genome editing process - I was just curious what would that - capability is in terms of both positively sort cells and negatively sort out cells. Just trying to get a sense because the genome editing efficiency is a key parameter, but also through sorting, I think, there's another level of enrichment that can be provided.

Mike, can you take that.

No. Certainly, I'm happy to take this one. As we've talked about, in our recent presentations, the levels of editing are approaching 99% or higher. So, in some sense, we know we can achieve levels of editing that may not really require any type of sorting or purification after the fact. And so, obviously, we are not at this point able to go into detail, but well I think that is a possibility, and certainly, the levels of editing that we're seeing right now, it wouldn't require much in the way of enrichment to really achieve a 100% of the population being edited.

Got it. And also, for that program, is the approach remaining to be mRNA delivery for a number of targets, and then combined with AAV delivery for the CAR-T construct, for example, a two-delivery approach?

Right. So, I think, all the work that we've shown, has involved the use of ZFN mRNA delivery in the T-cells combined with AAV delivery of the donor. And that has certainly achieved best-in-class levels of genome editing. And certainly, we would see, for the foreseeable future, to keep with that type of delivery modality.

I see. Last question. You mentioned potential areas in autoimmune diseases. I think that we've heard mainly something on Tregs, for example, that could be potentially an area for genome editing. Could you characterize the landscape for that field and the general progress that's being made in that field? Thank you.

Yes, I don't think I can probably, at this point in time, summarize the field with regards to Tregs and other cell types that people are using for autoimmunity. Tregs is certainly one. The field has also looked at cell types, such as mesenchymal stem cells as ways to use their natural properties to suppress the immune system. And certainly, you can see that the field is really looking at the potential for genome editing to further enhance, and re-target these different cells to try and further reduce or suppress the activity of immune system to recognize self-antigens. And so, this is something that we'll obviously be talking about more in subsequent calls, but this is based off of our expertise in oncology, as well as all the previous work in HIV. We're certainly looking at how we can leverage what we built so far in building this best-in-class genome-editing technology to move into areas, such as autoimmune diseases.

And we've got - I'd like to say we've got a great team and Gary and Sumiti and the team, and we just need to apply them to the next big problem. So, exciting times. But thank you for your questions.

Thanks.

Thank you. At this time, I would like to turn the conference back over to Mr. McDavid Stilwell, Vice President of Corporate Communications and Investor Relations, for further remarks.

Thank you, everybody, for joining us today. We look forward to further updates in the future. Goodbye.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude your program. You may all disconnect. Everyone, have a great day.