Good afternoon, and welcome to the Sangamo Therapeutics Teleconference to discuss Third Quarter 2018 Financial Results. This call is being recorded. I will now pass over to the coordinator of the event, McDavid Stilwell, Vice President of Corporate Communications and Investor Relations.

Hello, and thank you for joining us. As we begin, I'd like to point out that we will be referring to a slide presentation today. And you may find a link to the slide presentation on our website, www.sangamo.com, on the Events and Presentations page of the Investors + Media section of the site. I'd also like to remind everyone that the projections and forward-looking statements that we discussed during this conference call are based upon the information that we have available today. This information will likely change over time. By discussing 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 discussed today, and no one should assume at a later date that our comments from today are still valid. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are detailed in the documents that the company filed with the Securities and Exchange Commission, specifically, our annual report on Form 10-K and our quarterly reports on Form 10-Q. The 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 afternoon 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; Ed Rebar, Chief Technology Officer; Stéphane Boissel, Executive Vice President of Corporate Strategy; and Heather Turner, Senior Vice President and General Counsel. And again, we refer to a slide presentation during the call. Those slides are to be found on the Events and Presentation page of the Investors + Media section of our website. And now I'd like to call over to Sandy.

Thank you, McDavid. Good afternoon, everyone. As we approach the final weeks of 2018. I've taken some time to reflect on how far we have come this year. Sangamo is a genomic medicines company, focused on clinical development of novel therapies with the potential to transform patients' lives. Genomic medicines is a new field with the potential to disrupt healthcare by shifting the emphasis of drug development from treating symptoms to pursuing cures. At Sangamo, we have the fortune of having the experience, the skills and the technology to lead the way. Sangamo is a remarkably different company now compared to the start of the year. We've made diligent progress in our transformation from biosciences to genomic medicines, and we are taking important steps to successfully execute our strategy to develop proprietary portfolios in 3 therapeutic areas: inherited metabolic diseases; CNS conditions; and immunology. We're advancing our clinical programs at MPS I and MPS II and moving our Fabry disease program towards the clinic. We're investing in IND-enabling studies for our zinc finger protein transcription factor gene regulation approach for CNS diseases. And through our acquisition of TxCell, we have the regulatory T-cell expertise to lead the field of CAR-Treg cell therapies for immunological and autoimmune diseases. 2018 is the year Sangamo became a clinical development organization. We have begun to report results for our most advanced clinical trials and we're making strong progress in building our earlier clinical studies and can now see forward to clinical data readouts from multiple programs in the coming months. As we expect a robust flow in the coming months, I want to remind you of a few important points of leverage across our pipeline. We are using the same AAV vector across five clinical programs. The albumin locus in vivo genome editing approach…

Thank you, Stéphane. And hello, everyone. Sandy earlier provided the update on the MPS I and MPS II trials, and I'm going to focus on progress in our other clinical pipeline programs. I'll begin with an update from our SB-525 gene therapy program for hemophilia A. The dashboard for this program is on Slide 11. In October, the independent SMC for the SB-525 Alta study met to review accumulated safety and efficacy data from the 6 subjects enrolled to date. As of that review, SB-525 continues to be generally well tolerated with no treatment-related serious adverse events and no use of tapering courses of oral steroids. Importantly, we continue to see dose-dependent therapeutic efficacy on factor levels in the serum. The SMC recommended that the study continue with an additional dose escalation, which we also strongly agree is the right next step. For the pivotal trial, we want to find the dose that balances the highest factor levels with an appropriate safety profile and low immune risk. We're excited that the SB-525 safety profile allows for continued dose escalation as we want to develop the gene therapy that best suits the needs of patients with hemophilia A. This is a field of competition, and we do not believe that others have yet presented data that would support an optimal product profile for hemophilia A gene therapy. For SB-525, I'm very encouraged with the safety, the lack of immunogenicity and the dose-dependent effect observed so far. We believe with this continued dose escalation, SB-525 has the potential to be a novel therapeutic approach for hemophilia A that is very well positioned among other gene therapies in development. We and Pfizer now plan to present safety and efficacy data from the Alta study only after dose escalation is complete and the clinical…

Thank you, Ed, good afternoon, everyone. The press release we issued earlier this afternoon includes detailed financial results for the third quarter of 2018, which are summarized on Slide 17. We ended the current quarter with $459 million in cash, cash equivalents and investments. And we're maintaining our previous year-end cash guidance of $380 million. As of October 1, we successfully completed the first stock purchase of TxCell ordinary shares, which represented 53% of the share rights of TxCell. And on November 1, we launched a simple tender offer to acquire the remaining ordinary shares. We expect to complete the tender offer before the end of this year and to release TxCell from the French stock exchange. Since the beginning of October, we have started integrating TxCell operations into Sangamo and look forward to developing the next generation CAR-T cell therapy for autoimmune diseases through the synergy of our ZFN gene editing technology. Our operating expense for the third quarter of 2018 was $39.8 million, including R&D cost of $28.8 million and G&A cost of $11 million. The increase of $10.4 million in Research and development cost versus prior year is mainly driven by manufacturing and clinical trial expenses, as we move further into the clinic. The G&A increase is primarily due to general support of the growth of our pipeline and clinical programs as well as onetime transaction costs associated with the TxCell acquisition. At year-end, we expect our 2018 operating expense to be in the range of $160 million to $165 million, inclusive of TxCell acquisition. The total net loss for the third quarter of 2018 was $12.8 million or $0.13 per share, basic and diluted, compared to $12.4 million or $0.15 per share, basic and diluted, for the same period in 2017. Revenue for the third quarter of 2018 was $23.6 million, which reflects an $11.8 million increase from the same period in the previous year. This increase is driven mainly by $9 million revenue from the Kite collaboration agreement, including reimbursement of $2.7 million in research services. As a final comment, we expect our cash runway to be approximately 2 years, taking into account the expansion of our autoimmune pipeline and further investments in our lead assets for MPS and hemophilia B in preparation for pivotal trial readiness. We believe we are in a strong financial position to continue to advance our extensive pipeline of genomic medicines, and we're very much looking forward to reporting our continued progress. And with that, I'll turn the call over to Sandy for closing remarks.

Thank you, Kathy. Before I turn the call over to questions, I'll conclude by saying what an exciting time this is at Sangamo as we solidify our transformation from an early biosciences focus into a leading genomic medicines company. In the last 2 years, we've made critical investments in people, in technology and in development, and we are now beginning to see the results of these efforts as we establish our clinical pipeline, which we believe to be unrivaled among gene therapy and gene editing companies. I very much look forward to the flow of clinical data in 2019 and beyond. And so we'll now turn to your questions. Operator?

[Operator Instructions]. Our first question comes from Qian Wang with Bank of America Merrill Lynch.

So I have a couple, if I may. The first question is actually on the MPS II program. So just curious like what is the consideration for these dose expansion decisions from the committee? Is it mostly on safety? And -- or it's also on the efficacy? And what kind of data they have seen so far do? Do they see GAG reduction, plasma, enzyme, biopsy with a certain dose cohort? Could you please just clarify on that?

So that's a very fair question, and I wish I could answer it more completely. But they see all the available data for safety and whatever efficacy data is available at that time and then they make a decision based on the benefit risk of the product and where they see the development should go. We will share the results with the broader community sometime in 2019. And until then, we're not able to comment on individual parts of the equation.

Got it. And you said that they recommend on taking off the ERT and in appropriate patients and under protocol guidance during your prepared remarks. I'm just curious what that really means? Does that mean that's still depending on the consent from the physicians and the patients?

So the SMC makes a recommendation we always talk -- we talk regularly with the various investigators, it's a small study there's very few investigators. They are very pleased with what they have seen so far. But then, it's a discussion between them and their patient about when and how they stop the ERT. I added under protocol guidance just to give everyone reassurance, that this wasn't each one doing it their own particular way. That there is a standardized way across each of the patients for the data that will be collected.

And lastly, if I may. On the hemophilia A I think a lot of investors are really expecting to see an abstract on November 1, which we didn't see. It's clear now you say that is because you decided not to submit for LBA. Just curious what is driving that decision? Is it the durability of the patients or you don't see a similar level of expression with the six patient? Or given the FDA guidance, you were thinking about I mean, the normal range rather than 12%? Can you just clarify, please?

Ed, can you deal with this one, please?

Sure, yes, so we're very excited with where we are. And as I said, earlier on the call, safety allows us to dose escalate. And in terms of items that you were talking about, as we talked about earlier before, we're continuing to see factor levels that are in the therapeutic range. We know that with our safety being as it is, and again just as a reminder, we haven't seen any patients who have had to take tapering courses of steroids. We've seen no drug-related SAE's. So given that, we do recognize with that with recent FDA guidance, they're is the possibility of accelerated approval with factor levels that are in the normal range. That and our discussions with our partner Pfizer, we want to release the data when we've -- when we are at the levels that would be going forward with in our pivotal trial.

Is that fair to say that you're aiming for normal range right now?

No, we're looking for the right balance of efficacy and safety. We want also to collect data that will allow us to make a good decision to go into Phase III and give the data time to mature, because in the end, the most important thing isn't to release a patient-by-patient but it's to get into Phase III and get it to patients as quickly as possible.

Our next question comes from Gena Wang with Barclays Bank .

I think I'll basically follow the similar line, the prior question. So regarding the MPS II, just wondering did you see any SAE in Cohort 3? And what makes you decided to dose expansion instead of dose higher?

So we haven't seen any SAE's in Cohort 3, and we continue -- thank you for asking because we continue to look at the safety that's treated very seriously. It's an SMC decision, and they see the available safety and efficacy data. The protocol allowed for 3 cohorts, so 5e13 is the third cohort, and we -- and if you remember there's only 2 patients in each cohort as well, so the expansion will give us more data the 5e13 level. And then, we hope to present a more holistic view of this at the beginning of next year.

Okay. So then for the expansion cohort, how many more patients are you planning to enroll? And then, is there a step that you will be also thinking to dose higher based on the efficacy?

So we would -- we are likely -- we are able to dose another 3 patients and as I said, we can dose them almost similar simultaneously just a matter of logistics. The SMC will then review the data and it interviews on a regular basis. And it will make a decision whether this is the right dose level or whether it needs to go to a higher level.

Okay. And then -- Sorry.

I just wanted to clarify one thing, that third cohort, there was an SAE, but it's not treatment related, so just clarifying that.

Okay. Okay. And then, another question is regarding hemophilia A, just wondering, what is the first cohort dose? I know like you share with us the doses for MPS programs. And just wondering what's the reason not sharing the hemophilia A doses?

Because it's a much more competitive space and each of the 3 companies is trying to position themselves as having the most competitive product. And that's why we're so pleased that the safety in our hemophilia A product allows us to dose escalate to this level. And the fact that we've had no long-term tapering doses off steroids, allows us to balance both the efficacy and safety to, we think, have the optimal product.

Okay. Just one last question. So what will be the bar for you to stop dose escalation for hemophilia A and then move to expansion phase?

That would be something that the SMC will advise on, and we and our partner, Pfizer, who will take over for the Phase III study will agree together.

Our next question comes from James Birchenough with Wells Fargo.

Congrats on all the clinical momentum. So on MPS II -- I know when you came out with the data initially and we saw the impressive urinary GAG reductions, but not really any enzyme level there was the thought that maybe the blood compartment might not be the right place to look for enzyme. And so just wondering with additional experience, is that still your view? Or have you interrogated other compartments? And maybe you could give us an updated thought on that?

So when we last talked about this, as you say rightly, we saw really impressive and consistent reductions in GAG in Cohort 2. We weren't able to report any changes in IDS. And what we discussed was the idea that it was being released from the liver and quickly taken up by the tissues and that was why there was an effect, because it was an enzyme effect, there was an enzyme, there must've been editing. And I think we're still in a very similar place with that. The team have done remarkable things in the past few months to look at new ways of measuring enzyme and GAGs and increasing the sensitivity of the assay and am very pleased that we will be able to talk more about that in the coming year, hopefully early next year, and give them a more holistic report on it. Our experience talking to analysts like yourself is those of you who have followed our story closely, understood the GAG effect and felt that it was representative of editing having happened. And we realize that there are others that will need the other pieces of the puzzle and so what we're try and do is hold on and come back next year with as many pieces as possible that will allow others that haven't followed us as closely as you have, Jim, to understand the effect.

That's very helpful, Sandy. And then, maybe, a question for Ed. Just on the beta-thalassemia program and as we look ahead to sickle cell disease any ex vivo gene therapy or gene editing, in general, one of the things we've seen as a potential explanation for lack of durability of effect is not transducing pure stem cells but actually, transducing cells that are already differentiated and aren't self-renewing. So can you speak to the vector you're using and whether you think it transduces the right cells better than others? Because I think that's becoming important.

So we're using electroporation to transduce with our mRNA. We've seen, and Ed Rebar the other Ed who has presented on that data previously, but we are very pleased with the cell yields that we're getting and the percent of edited CD34 stem cells as well.

That's helpful.

And Ed if you want to add to that?

Perhaps, 1 additional comment to add is that the type of modification we are doing, which is NHEJ-mediated knockout, that's a modification that -- okay, I know your question pertained to delivery, but there's a whole set of things that come into play, including does your modification occur optimally in those types of cells too. And I think NHEJ people have generally recognized if that occurs, that seems to be something that will occur fine in that cell type as opposed to HDR-type processes, which I think, are a little bit more -- a little bit less -- harder to get to go let's say.

So that's helpful. Maybe just final question on hemophilia A. Do you expect to get at ASH on the competitive landscape and what a true competitive profile will be? I guess, when we've asked in the past on what you think a competitive profile is? I think it's yet to be determined. Do you think we'll get better clarity? And is that part of the consideration in waiting to get a fuller data set, seeing what others are showing as well?

Yes, so I would say the short answer is, no. Because the other folks aren't either presenting any data or aren't presenting their high -- this cohort data, reflecting the competitiveness of this area.

Do you feel like you have a good sense of what the proper benchmark is? As we look to the fuller data set, do you feel like there is a clear benchmark to have a competitive profile?

I feel like there is a benchmark. But as I said on the last call, we can't overlook safety. Safety is critical and not just from the standpoint of having to take steroids but the monitoring that may be associated if you're having pretty significant immune reaction. So it's really the combination of the 2.

Our next question comes from Ritu Baral of Cowen.

My question is on 913 and 318. 318 is going to be dosed at the same dose, the 5e13, as 913, is there any differential PK or more specifically, PD of the enzymes in the 2 -- deficient enzymes in the two conditions that should lead us to believe that the doses should work differently in the two diseases as far as GAG reductions?

I think that's a level of sophistication that the clinical signs around this hasn't got to yet. So we are treating them similarly and it's only through doing this experiment that we'll be able to understand whether there are subtle differences in the PK/PD from these. As I said on the call, what we take from the SMC decision and what they've said to us is the highest safe dose is the sensible one to use because we want the patients to have as much enzyme as possible. We were delighted with the reduction in GAG in the cohort to patients in MPS II and we look forward to showing the world the Cohort 3 data and the data from MPS I when we have collected all together and made a, hopefully, compelling story.

And then, moving to 525, your hemophilia A program. You mentioned that you didn't want to unveil data until you had followed patients for a meaningful amount of time. What is that meaningful amount of time? Just given focus on durability of these gene therapies, especially the AV gene therapies? What is the right amount of time? And when do you think that a complete data set will give you a good idea of the durability of your -- of 525?

So we're not commenting on what the overall durability we're looking at, I mean, if you look at it from the patient perspective, of course, they want to see long-term stability in terms of the factor levels. And I think again, it's not just that the factor levels go up and stay up, but they're not varying even sometimes up to a high toxic range. And so it's really looking at the whole curve and understanding how the factor levels are performing week-to-week, month-to-month. It's consistency really at the end of the day.

Got it. And then for some other AV rare disease therapies, we've seen sort of an inconsistency of response across patients within a cohort. I mean, obviously, I'd love for you to comment on consistency of response across the cohorts that you've seen but barring your ability to answer that, can you comment on that pattern that we have seen? And whether you think that's a reflection of patient selection? Whether you think that's a function of the drug itself? Or just dose?

Can I have a go at this. There are so few data points between the studies and within a study to be able to see anything meaningful, because all view are different factor and a different construct, and we screen our patients in the ways that we don't share with each other. But if I try and pull back a little from this and think of it, because I'm a physician, and if I was thinking if I'd want to treat a patient, it isn't about a certain number. It's about knowing that the medicine was a safe as possible and I wouldn't have to worry about the patient getting long courses of steroids. But knowing that I could predict what dose was appropriate for the patient, so that's speak somewhat to your -- the within-a-cohort predictability and consistency. And then, it's about knowing that once I give the patient the medicine and they have a certain level of factor that it stays with them for a meaningful period of time, for years. And I think those are more important than focusing our obsessing on a number. It's about safety, predictability and consistency.

Got it. And then last question. Just -- how to look at the competitive space in beta-thal right now? Obviously, you have bluebird. You have some other alternative mechanism therapies moving forward. What do you think you can bring to the table to address the unmet need in beta-thals that others couldn't?

Yes, I was going to say first. I think I mean, it's exciting for patients that so many companies are trying so many different approaches. Why I am so excited about our approach is the level of editing we've seen. The no detectable off-targets, our manufacturing process, all of those I think, in my view, lead to a very robust product and, at the end of the day, that has the greatest potential, at least in my view, to help patients. I think as we look long-term, the precise editing that we're doing at the erythroid-specific enhancer of -- will, I think, not only provide the precision and specificity that we're looking for but in contrast to other approaches where they're doing random integration, I'm also very excited about the long-term safety products of our approach compared to some of the others that are currently out there.

[Operator Instructions]. Our next question comes from Whitney Ijem with Guggenheim.

First one is on hemophilia A. Regardless of what you're targeting, I guess, in terms of product profile, based on your preclinical work, is it your expectation that you could get there with the fourth dose cohort or is there potential to have to go to additional cohorts beyond that?

We are living one cohort at a time and we will gather that data the safety and efficacy and present it to the SMC.

Okay. And then for MPS II, you spoke about kind of looking for new ways to measure enzyme in developing more sensitive assay. And sorry if I missed this, but are any of those in practice now and has the SMC seen any of that data?

We are not commenting on when they will be ready, but I want to give you assurance that, that process of improving on the assay is working well.

Okay. And then, just last one, as we think about kind of additional data disclosures from other programs coming up in the next year or so, can you just help us understand how you think about sort of the materiality of clinical updates and kind of whether or not we could see similar changes in timeline as we look to additional updates in 2019?

I think we learned from the MPS II data. It's most useful to present the data when the story is as complete as possible rather than our excitement -- my excitement, because I'm accountable here for this, to share what we thought was really groundbreaking data that showed the GAG level reduction. And so I think you'll find as, and I think you will see from this conference call that we will present data when it's a complete story and it helps everyone understand the benefit this has to patients.

Our next question comes from Eric Joseph with JP Morgan.

I really just had one. I wanted to follow up on the earlier question on MPS II and get your thoughts on the utility of liver biopsy in determining whether editing is taking place and sort of filling in some of the pieces of the puzzle, as it were, for that program? And whether, liver biopsy is something patients, one, are willing to undergo, and whether that type of data is something that's on the table when you're updating the program next year?

So liver biopsies are invasive, so patients have to choose to have them and not all patients will have a liver biopsy. They're difficult to do, particularly in these kind of patients. We will share whatever data we have and hope to construct a story with all the different bits in it that would help people underpin the reduction in GAGs that we reported earlier this year.

Our next question comes from Maury Raycroft with Jefferies.

I'll be quick. I just have two quick questions. For MPS II, just wondering if you can comment -- and so the SMC met in October. I'm wondering if we can get -- clarify on whether the ERT has been withdrawn yet, if that decision has been made for any patients?

We said earlier that we wouldn't reveal the days that the ERT could be withdrawn, is withdrawn, was withdrawn, because we want to make sure that we have solid data to be able to present so as everyone can understand that.

Got it. Okay. And then just for hemophilia. For the next dose level, will you use any steroid with that dose?

No, it will be the same approach that we have taken before where patients are not given prophylactic steroids.

[Operator Instructions]. Our next question comes from Qian Wang of Bank of America.

I just have a quick follow-up. So it's encouraging that you guys see the safety profile with all these gene editing programs. For example, like the MPS I you were able to skip one of the dose. So I'm just curious because initially, you wanted to evaluate three doses. So is that possible they will go higher than the 5e13?

So we have the protocol is for three doses and the SMC have asked us to expand the cohort then we will present them all of the available data for that and they'll make the -- help us make the decision about whether this is the right dose or whether something else needs to be done.

Yes, I'm talking but MPS I, not MPS II?

It's the same there, so the MPS -- and we -- the MPS Safety Monitoring Committees overlap, so there are some people that are on both. So they are aware of what's happening on the other one because they're very reassuring and informative.

Yes. And can you just remind us initially, how do you decided to choose these 3 doses?

So that doses were chosen based of the preclinical work that was done and also, of course, in discussion with the FDA.

Yes, is there a feeling that people generally are thinking about from the FDA, for example, given we have heard some of the noises in terms of a high dose and that kind of signal?

It is very program dependent and very vector dependent.

Our next question comes from James Birchenough of Wells Fargo.

Just quickly, I just want to confirm the cohort expansion for MPS II, I just want to confirm that it's not related to the SAE that was not drug related? Sometimes you'll get a cohort expansion to get more experience around an adverse event. I just want to make sure that, that wasn't the reason for the cohort expansion?

Absolutely not.

Right, it was not.

I'm showing no further questions in the queue. I'd like to turn the call back over to Sandy for any closing remarks.

We would like to thank everyone for their interest and continued support and look forward to talking to you again in the new year. Bye-bye.

Ladies and gentlemen, that does conclude today's conference. Thank you for participation and have a wonderful day. You may all disconnect.