BIOTECHNOLOGY

Sangamo BioSciences, Inc.

Development of Novel DNA-Binding Proteins as Antiviral Therapeutics

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In 1996, available treatments for viral diseases, such as HIV/AIDS and hepatitis B virus (HBV), relied on small-molecule drugs and vaccines. These drugs provided only partial or temporary relief and had some serious side effects. Sangamo BioSciences, Inc. had an innovative, technically risky strategy to treat patients by using zinc finger protein (ZFP) technology, which acts at the DNA level in order to regulate gene expression in the patient’s own cells.

Technical risks included the need to increase target site specificity from 9 base-pair (bp) DNA sequences to 18 bp to achieve singular specificity in the human genome. Also, the designed ZFPs must repress target genes with sufficient potency to produce therapeutically beneficial results. Because of the high risk, Sangamo was unable to secure commercial funding and applied to ATP for cost-shared support. ATP awarded funding for a three-year project, beginning in 1997.

By the end of the ATP-funded project in 2000, Sangamo had accomplished approximately 75 percent of its original technical goals for treating HBV and HIV/AIDS. The goal of engineering a DNA-binding protein to turn a gene on or off was successfully met and represented a huge technological leap. The company continued development on HIV and other therapeutic targets, went public in the same year (raising $60 million), subsequently received numerous corporate investments, and acquired a major competitor in 2001. Sangamo researchers published their results widely, received industry awards, and were awarded six patents for viral therapeutic development. The company has expanded development of ZFP therapeutics to a variety of disease targets.

This ATP-funded project led to the development of a ZFP platform technology, the ability to regulate endogenous human and viral genes. As of 2006, Sangamo was collaborating with several research institutions and pharmaceutical partners in developing ZFPs as enabling tools in cell engineering, as well as in human therapeutics. A ZFP Therapeutic¹ for diabetic neuropathy completed Phase I clinical trials in 2005, and a Phase II trial was initiated in November 2006. Sangamo expects to initiate a Phase I clinical trial for HIV in 2007. Although the development of ZFP-based viral therapeutics still includes risk, if any one of Sangamo’s ZFP Therapeutics succeeds and reaches commercialization, it has the potential to save thousands of lives.

COMPOSITE PERFORMANCE SCORE
    (based on a four star rating)
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Research and data for Status Report 96-01-0315 were collected during January – February 2006.

Viral Disease Was Treated with Small- Molecule Drugs As of 1996, the primary strategy to combat viral disease consisted of prescribing small-molecule drugs and

vaccines. These drugs and vaccines provided only partial or temporary relief and could induce serious side effects. In order to discover new small-molecule drugs, researchers and pharmaceutical companies relied on screening large numbers of compounds to find a viable

¹ZFP Therapeutic is a Sangamo registered trademark.

new drug, a laborious and expensive process. In addition, should the virus mutate, the afflicted individual might become resistant to the drug. Zinc Fingers Can Turn Genes On or Off Zinc finger DNA-binding protein transcription factors (ZFP TFs^2) occur naturally inside the nucleus of all organisms, where they bind to DNA to turn genes on or off. They are composed of a short chain of amino acids that are folded around and coordinated by a zinc atom. Each finger binds to a specific short run of DNA bases. By using different combinations of amino acids, zinc-finger proteins (ZFPs) can be designed to recognize and latch onto and a specific place on the DNA. A gene responsible for a disease can be turned off by a ZFP TF that is designed to bind to it. When a gene is turned on, it makes (expresses) proteins. When turned off, it stops expressing those proteins that would otherwise function in the cell. The human body is composed of specialized cells that perform different functions, organized into tissues and organs. All cells contain the same set of genes. However, only a fraction of these genes are turned on, or expressed, in an individual human cell at any given time. Genes are activated or repressed in response to a wide variety of stimuli and developmental signals. Distinct sets of genes are expressed in different cell types and organs. Importantly, the aberrant expression of certain genes can lead to disease. Transcription factors are natural proteins that bind to DNA and regulate gene expression. A transcription factor recognizes and binds to a specific DNA sequence within or near a particular gene and causes that gene to be activated or repressed. Engineered ZFP TFs function by emulating this natural mechanism of transcription factors by binding to DNA and regulating the expression of the target gene. A gene responsible for a disease can be turned off by a ZFP TF that is designed to bind to it. The ability to engineer ZFPs to specifically turn a gene function on or off stemmed from the discovery of the

zinc finger by Prof. Sir Aaron Klug (University of Cambridge) and the elucidation of its structure by Prof. Carl Pabo (Massachusetts Institute of Technology). Edward Lanphier, a business developer, noted several key works in the field from Prof. Sir Aaron Klug, Prof. Carl Pabo, Prof. Carlos Barbas, Prof. Jeremy Berg, as well as work of Dr. S. Chandrasegaran, a chemist at Johns Hopkins University, who had invented a method to fuse a DNA-binding domain of three zinc fingers to a restriction enzyme, FoII. Lanphier was interested in an enzyme that could bind DNA with such amazing precision, and had the potential to target a multitude of domains to a defined target stretch in DNA. He founded Sangamo BioSciences, Inc. in 1995 with $750,000 and licenses to the gamut of early patents in the field. In the same year, Sangamo began an ATP-funded project (95-08-0016, "Using Zinc-Finger Proteins in DNA Diagnostics") to develop DNA diagnostics using ZFPs. By 1996, Sangamo had demonstrated it could turn specific genes on or off using its engineered ZFP TFs. ZFPs Could Be Used to Treat Viral Disease CCR5 is the name of a protein, a cell surface receptor, which allows HIV to enter into cells. Sangamo proposed to disrupt the CCR5 gene in hematopoietic (blood-making) stem cells or T-cells (T-cells are white blood cells that play a significant role in the immune response). This choice of target was guided by the discovery of small percentage of the population (approximately one percent of Caucasians) with resistance to HIV infection due to a naturally occurring mutation of the CCR5 gene, called the delta32 mutation. This mutated gene produces a shortened CCR5 protein, which is no longer presented to the cell surface and thus cannot be used by HIV to gain entry to the cell. Sangamo proposed to use their ZFP technology to provide patients with an HIV-resistant T-cell population by suppressing the expression of the CCR5 protein using an engineered ZFP TF. The modified T-cells would be immune to infection by HIV, and this protected compartment of T-cells would therefore be able to help to fight progression of the disease to AIDS. Sangamo’s goal was to establish a technology capable of repressing the transcription of any gene whose expression leads to the onset or continuation of a variety of viral and other human diseases, including coronary

²ZFP TF is a Sangamo registered trademark.

heart disease, cancer, and autoimmune disorders. However, due to the high technical risk, the company was unable to obtain commercial funding. Therefore they applied to ATP for cost-shared funding in 1996. Project technical risks included the following: · No ZFPs had been designed to bind to the 18-base-pair (bp) DNA sequences targeted in this project. Only short ZFPs were available at the time, and they were not effective at hitting the right target. Longer ZFPs might be more successful for inactivating specific genes. Some of the DNA segments in Sangamo’s target sequences had never been used in any previous studies to design ZFPs. · ZFPs had to specifically target longer DNA sequences (increased from 9-bp DNA sequences to approximately 18 bp, or perhaps longer). Sangamo believed that it may be possible to increase recognition specificity by appending additional zinc fingers onto a three-finger zinc-finger protein (that is, to design 4, 5, or 6 ZFPs to recognize 12, 15, and 18 bps, respectively). · The designed ZFPs might not repress target genes sufficiently to produce therapeutically beneficial results. The ZFP TF would need to reduce expression of the target gene in sufficient numbers to reverse disease in the patient. If successful, ZFP technology could prevent and treat debilitating and fatal viral diseases, saving thousands of lives, providing enormous economic benefits to the U.S. economy (including insurance companies and health care providers), and improving the quality of life for successfully treated patients. ATP awarded cost-shared funding for a three-year project beginning in 1997. Researchers Develop Three-Year Strategy Sangamo’s ATP-funded viral therapeutics project would follow a challenging three-year plan: · Year 1: Develop the novel, virus-specific gene repressors. This plan required the ability to design and express ZFP TFs and then purify and characterize these proteins.

· Year 2: Express ZFP TFs in cells and quantify the expression levels of the transcription repressors and the mRNA levels of the genes they are designed to repress (mRNA, or messenger RNA, serves as a template for the cell to synthesize proteins). Sangamo would collaborate with two key subcontractors for this work: Dr. Alan McLachlan, leading researcher in hepatitis B virus (HBV) gene cell culture from Scripps Research Institute; and Dr. Nathaniel Landau, an expert on HIV infection from the Aaron Diamond AIDS Research Center. Dr. Landau had discovered the CCR5 mutation, which generates immunity to AIDS. The subcontractors would test the ability of the HBV and CCR5 repressors to inhibit gene transcription in cell culture. · Year 3: Test the most potent transcription repressors and their ability to inhibit selected gene transcription in mice. If successful, the second phase of animal studies would test the safety and efficacy of these ZFP TFs in non-human primates. Plans for further clinical development would be determined at that time. Project Achieves Impressive Technical Outcomes The ability to engineer a DNA-binding protein to turn a gene on or off represented a huge leap forward in ZFP technology. By the end of the ATP-funded project in 2000, Sangamo was able to demonstrate ZFP TFs were capable of regulating the expression of a specific target gene. Although the project’s HBV development represented the first real success in binding a specific viral sequence, it was not with perfect specificity. Sangamo’s HBV testing was put on hold in 2000, as the company was not able to reach sufficient specificity with this target to consider treatment in humans. The company has seen academic interest in the technology and believes it is still viable. It was difficult to get cells to express the CCR5 receptor needed for HIV study. Sangamo was able to down-regulate (reduce) receptor production; however, early attempts were unable to inhibit the CCR5 receptor expression sufficiently to prevent HIV infection in culture. This fact led to the development of related zinc finger nucleases (ZFN) approach to the treatment of this viral disease.

Sangamo Establishes Market Niche with ZFP Technologies According to Dr. Philip Gregory, Research Director for Sangamo, the company was very small when it received the first ATP award in 1995. In fact, Sangamo would likely not exist today without ATP. ZFPs represented a technological leap no one had ever made before. The company saw great potential for ZFP Therapeutics, so at the conclusion of the first ATP-funded diagnostics project in 1998, they made a strategic decision to focus on ZFP Therapeutics. The viral therapeutics ATP-funded project led to the development of a ZFP platform technology. The ability to regulate endogenous human and viral genes was the key to Sangamo’s success, made possible by early ATP support. Toward the end of the project, Sangamo raised $7 million from private investors, funding that was dedicated to therapeutics development. After the conclusion of the ATP-funded project, the company continued development of ZFP Therapeutics. Sangamo firmly established its ZFP dominance by acquiring London-based Gendaq in 2001, a highly respected gene-regulation firm founded by Sir Aaron Klug, a 1982 Nobel Prize winner and former director of the Medical Research Council Laboratory of Molecular Biology in London. Through this Gendaq acquisition, Sangamo gained a modular library of two zinc-finger sets, catalogued by amino acid substitutions in the protein's binding region. Company chemists added more ZFP sets and validated the library. Dr. Gregory said, "We're fortunate. Our intellectual property is very robust." The zinc-finger sets represent the foundation of Sangamo's intellectual property: a commercial library of combinations of one and two zinc-fingers modules which can be stringed together for targeting longer DNA sequences. The library can be searched for modules with the appropriate specificity, affinity, and binding characteristics for a chosen DNA target, and the selected modules joined to make three-, four-, five-, or six-finger proteins with increasing specificity. Sangamo continued to accumulate and generate numerous patents involving transcription factors and related zinc finger technologies. The company also

entered into exclusive licensing deals to capture new intellectual property in 2003 and 2004, which continued to secure Sangamo’s dominance in the field. This included work done by Dana Carrol’s group at Utah, who was the first to show the potential of ZFNs in genome editing using a frog model system. Carroll then perfected mutagenesis (changing the genetic information of an organism in a stable, heritable manner) and targeted gene replacement in whole organisms, including the fruit fly, which was used as a model organism to study genetics and development, while Nobel Prize winner David Baltimore’s lab translated these findings into human cells. Sangamo Develops Commercial Applications for ZFPs After years of work and collaboration with Johns Hopkins University on HIV, Sangamo started to see success with their ZFNs (ZFPs combined with the FokI nuclease enzyme) in 2003. By 2005, "they really seem[ed] to have solved the toxicity problem altogether," said Scott Wolfe, a zinc-finger researcher at the University of Massachusetts Medical School. Engineering a DNA-binding protein to turn a gene on or off represented a huge leap forward in ZFP technology. Sangamo published their findings in Nature in 2005, describing the application of ZFNs to endogenous human genes. Their goal was to target a precise location in the genome, and no other place, using zinc finger nucleases (enzymes that cut chains of nucleotides into smaller units) using the natural process of DNA repair. Cells have robust pathways for the repair of their own DNA by mending breaks in the DNA double helix of chromosomes. However, a targeted break in the DNA can be used to replace a patch of sequence (which may contain a defective gene for example). Sangamo intended to use ZFNs to correct mutant or disease-causing gene sequences in cells. By transiently providing synthesized ZFNs and an appropriate DNA template for repair, Sangamo scientists would instruct cells to perform nano-surgery on their own genes.

By 2005, Sangamo was able to target a specific DNA sequence of up to 18 bps, an accomplishment only dreamed of at the start of this project. The ability to manipulate gene expression with such specificity led to many unanticipated applications. For example, Sangamo developed a generation of cell lines for high-throughput drug screening, with specific genes activated or repressed. They tested chemical libraries to evaluate the effectiveness of potential drug compounds for specific genetic sequences for several pharmaceutical firms, including Johnson & Johnson and Wyeth. The technology allows the pharmaceutical company to quickly make decisions on which new drugs to pursue for a targeted gene. Regulating endogenous human and viral genes was the key to Sangamo’s success, made possible by early ATP support. Enhanced therapeutic protein production is a second unanticipated application of ZFP technology derived from this ATP-funded project. In 2005, Sangamo expanded the scope of its research collaboration with Pfizer, Inc. Pfizer will fund further research at Sangamo, and Sangamo will use its ZFP technology to develop additional cell lines for enhanced protein production. Sangamo has signed other agreements with such companies as Novo Nordisk and Medarex, Inc. "We have engineered ZFP TFs that can significantly increase production from genes expressing protein pharmaceuticals, and we can engineer ZFNs to facilitate the efficient generation of production cell lines with altered traits,” said Edward Lanphier, Sangamo's President and Chief Executive Officer. “With the increased approval and demand for protein pharmaceuticals, we believe that our technology has an important place in modern drug development." Following the successful conclusion of Sangamo’s first and second ATP-funded projects (in ZFP diagnostics and ZFP viral therapeutics, respectively), in 2004, Sangamo was awarded a third ATP-funded research project using ZFP technology in plants and plant cell cultures. The goal was to develop plant agriculture and industrial products, as well as animal health and biopharmaceutical products produced in plants (ATP project #00-00-5559,

titled “Targeted Activation of Multiple Genes in Plants Using a Single Engineered Transcription Factor”). Based on this project’s early success in gene targeting, in October 2005, Sangamo licensed its gene regulation technology to Dow AgroSciences LLC for use in plant research. Dow invested $7.5 million and purchased approximately $4.0 million of Sangamo common stock, is funding research at the company to the tune of $2.0 million per year, totalling approximately $4 to $10 million over the next three years, depending on the success of the program. The fundamental difference that the ZFP Technology brings to the table is that ZFPs function directly at the level of the DNA (or genome), which allows Sangamo to control the template for transcription (turn a gene on or off) with ZFP TFs or even the DNA sequence itself. The advantage of this is in the amplification process. DNA alteration goes to the very beginnings of a the generation of a particular protein, the very heart of the process, providing altered instructions to the cells at the DNA level. This is a major difference from RNA- or protein-based therapies, which must affect many more copies to exert a biologically meaningful outcome (see Figure 1). Figure 1. Each cell contains only one DNA molecule. That DNA instructs the cell to produce multiple RNA molecules (transcription). The RNA molecules produce many proteins (translation). Thus, a change in the DNA molecule can have a dramatic impact on cellular activity. Sangamo Announces Progress with Key Diseases In 2005, Sangamo made significant strides in the treatment of the diseases described below. HIV was the original planned target disease; the others have evolved through ongoing research and development.

· X-linked SCID (X-linked severe combined immunodeficiency, or “bubble boy” disease). In April 2005, Sangamo demonstrated for the first time that ZFNs could correct the gene-encoding human interleukin 2 receptor (IL2R), which underlies X-linked SCID. Such a therapy had been theorized for years, but Sangamo scientists were the first to show test-tube results with human cells, as reported in the April 2005 issue of Nature. Sangamo researchers showed that they were able to correct the defective gene in 18 percent of the human cells. These frequencies are thought to be sufficient to cure this disease, because the growth advantage of corrected stem cell means very few correction cells are necessary to repopulate a person's immune system with healthy cells, according to Sangamo.^3 · Congestive Heart Failure. In November 2005, Sangamo presented the results of a study on congestive heart failure (CHF) treatment using ZFPs. In CHF, the heart's ability to pump blood is decreased, leaving it unable to circulate enough blood to meet the body's needs. It can lead to the degeneration of health and stamina, and once severe symptoms develop, if left untreated, the five-year survival rate is 25 to 50 percent (worse than the survival rates for many cancers). Sangamo’s ZFP TFs repress the expression of the phospholamban (PLN) protein that regulates the pump in human and rat cardiac muscle cells. The PLN ZFP TF repressor enhanced both the rate and extent of relaxation and contraction of the heart muscle cells. Moreover, treatment demonstrated improved blood movement into and out of the heart. "Heart failure affects more than 5 million people and is associated with more than 300,000 deaths each year," said Edward Lanphier. "The cost of medical care, primarily resulting from hospitalization, is estimated to exceed $19 billion annually. The current standard of care aims at increasing the efficiency of the weakened heart… We believe that our approach to develop a therapeutic that directly decreases the expression of PLN in the heart provides a new way to address this significant problem.” · Diabetic Neuropathy. The company filed an Investigational New Drug application with the U.S. Food and Drug Administration for a ZFP

Therapeutic in diabetic neuropathy. In November 2005, Sangamo announced that it had enrolled and completed treatment in a Phase I clinical trial of this ZFP Therapeutics in diabetic neuropathy. Diabetic neuropathy symptoms include numbness, tingling sensations, and pain, particularly in the toes or feet; infection may progress, which often results in the amputation of the leg or foot. The American Diabetes Association estimates that about 60 to 70 percent of approximately 18.3 million people with diabetes in the United States have mild to severe forms of neuropathy. From 1980 through 2002, the number of Americans with diabetes more than doubled. SB-509 is a novel ZFP Therapeutic designed to up-regulate (stimulate) the expression of the patient's own vascular endothelial growth factor (VEGF)-A gene to protect and stimulate the regeneration of peripheral nerve function in diabetics suffering from peripheral neuropathy. SB-509 is administered as an injectable formulation of plasmid DNA that encodes a ZFP TF. The VEGF-A gene has been demonstrated in animal studies to have direct neurotrophic and neuroprotective properties. In the first half of 2006 results from the Phase I study were announced, demonstrating the product was well-tolerated in humans and anecdotal signs of efficacy had been reported. A Phase II clinical study was initiated in November 2006. Dale Ando, M.D., Sangamo's Chief Medical Officer said, “The current standard of care for these patients addresses only their symptoms with pain medications and antidepressants. In contrast, our ZFP Therapeutic has the potential to protect and stimulate the regeneration of peripheral nerves damaged by the build up of toxic metabolites in diabetes." The ability to manipulate gene expression with such specificity led to many unanticipated applications. · HIV/AIDS. In December 2005, Sangamo shared data from its HIV/AIDS program to develop a ZFP Therapeutic based upon zinc finger nucleases (ZFNs). The study demonstrated that cells can be made resistant to HIV infection by treating them

³Jaffe, S. “Giving Genetic Disease the Finger.” Wired, July 6, 2005. http://www.wired.com/news/medtech/0,1286,68019,00.html?tw=wn_tophead_4

with Sangamo's proprietary ZFNs designed to specifically disrupt the CCR5 gene. In its anti-HIV preclinical research program, Sangamo has designed ZFNs that can be used to disrupt the CCR5 gene, which encodes a receptor required for HIV entry into immune cells. The researchers found that ZFN-modified cells were resistant to HIV infection, whereas control cells were infected when challenged with the virus. Furthermore, when CCR5 expression was experimentally restored in the ZFN-modified cells, HIV was once again able to infect these cells. Sangamo has shown disruption of the CCR5 gene in a number of different cell types, including T-cells, the target cell for this therapeutic approach. According to Lanphier, “Several major pharmaceutical companies have initiated programs to develop small-molecule drugs to block HIV binding to CCR5, but in recent months two trials have been halted…due to reports of liver toxicity of the candidate drug [aplaviroc from GlaxoSmithKline and maraviroc from Pfizer]. We believe that using [ZFNs] to permanently modify the CCR5 gene specifically in T-cells and thus directly block the expression of the protein on the surface of these cells may have several advantages over the systemic effects of other drugs in development." Sangamo has been working closely with Dr. Carl June at the University of Pennsylvania School of Medicine with the goal of initiating a Phase I clinical trial to test the ZFP Therapeutic in late 2006. Dr. June is a leader in the field of research testing T-cell therapies for cancer and HIV infection. “By administering [ZFNs] to patients, we could potentially provide HIV-infected individuals with a reservoir of healthy and uninfectable T-cells that would be available to fight both opportunistic infections and HIV itself,” said Dr. Ando. Conclusion Sangamo BioSciences, Inc. used this 1996 ATP-funded project in “DNA Viral Therapeutics” to pioneer zinc-finger DNA-binding protein (ZFP) based treatments to address unmet human disease. ZFP Therapeutics became the company’s primary commercial focus after the ATP-funded project ended. The company went on to later work in plant genetics (with a subsequent ATP-funded project, 00-00-5559, “Targeted Activation of Multiple Genes in

Plants Using a Single Engineered Transcription Factor”). Sangamo published its findings extensively and received industry awards and six patents for work directly resulting from this project. Sangamo conducted an initial public offering in 2000, received commercial funding from outside investors, and acquired a competitor firm, Gendaq, in 2001. As of 2006, the company was collaborating with a variety of pharmaceutical and research institutions to find cures for HIV, diabetic neuropathy, peripheral artery disease, sickle cell disease, neuropathic pain, and cancer. Clinical trials in two of these indications are ongoing.

PROJECT HIGHLIGHTS
Sangamo BioSciences, Inc.

Project Title: Development of Novel DNA-Binding Proteins as Antiviral Therapeutics Project: To develop key methodologies to design and produce sequence-specific, DNA-binding proteins that target and repress any clinically relevant gene in human or viral DNA, leading to novel therapies for infectious viruses such as HIV and hepatitis B virus (HBV). Duration: 5/1/1997 - 4/30/2000 ATP Number: 96-01-0315 Funding (in thousands): ATP Final Cost              $2,000    74.6% Participant Final Cost      680    25.4% Total                            $2,680 Accomplishments: Sangamo BioSciences, Inc. accomplished 75 percent of its original technical goals to treat HBV and HIV/AIDS by relying on zinc-finger proteins (ZFPs). The company continued development after the ATP funding concluded in 2000, with the following results: · Demonstrated the ability to engineer a zinc-finger DNA-binding protein (ZFP) to turn a specific gene on or off. · Demonstrated the first real success in binding a specific viral sequence, HBV. However, the binding lacked perfect specificity. Sangamo’s HBV development was put on hold in 2000, because the company was not able to reach sufficient specificity to treat humans. They believe that improvement is still possible. · Demonstrated success with the zinc finger nucleases based on the natural FokI nuclease enzyme in 2003. The goal was to target a precise location on the genome, and no other locations, using nucleases for repair and correction. · By 2005, had targeted a specific DNA sequence of up to 18 base pairs (bp), an accomplishment only dreamed of at the start of this project. The ability to manipulate gene expression with such specificity led to additional unanticipated applications. · Developed cell lines for high-throughput drug screening. They tested chemical libraries to evaluate the effectiveness of potential drug compounds for specific genetic sequences for several pharmaceutical firms, including Johnson & Johnson and Wyeth.

· Enhanced protein production to increase production from genes expressing protein pharmaceuticals. Sangamo engineered ZFPs to facilitate the efficient generation of production cell lines with altered traits. Sangamo received two technology awards for its ATP-funded technology: · Finalist in the World Technology Summit & Awards, presented by World Technology Network, San Francisco, CA, June 2003. · One of 29 Technology Pioneers for 2005, nominated by the World Economic Forum and invited to their annual meeting in Davos, Switzerland, January 2004. Sangamo was awarded six patents from their ATP-funded ZFP therapeutics technology: · “Selection of sites for targeting by zinc finger proteins and methods of designing zinc finger proteins to bind to preselected sites” (No. 6,453,242: filed January 12, 1999, granted September 17, 2002) · “Functional genomics using zinc finger proteins” (No. 6,599,692: filed September 14, 1999, granted July 29, 2003) · “Regulation of endogenous gene expression in cells using zinc finger proteins” (No. 6,824,978: filed November 3, 2000, granted November 30, 2004) · “Cells for drug discovery” (No. 6,689,558: filed February 8, 2001, granted February 10, 2004) · “Pharmacogenomics and identification of drug targets by reconstruction of signal transduction pathways based on sequences of accessible regions” (No. 6,610,489: filed April 27, 2001, granted August 26, 2003) · “Functional genomics using zinc finger proteins” (No. 6,777,185: filed August 9, 2001, granted August 17, 2004)

PROJECT HIGHLIGHTS
Sangamo BioSciences, Inc.

Commercialization Status: Although no direct commercial products have yet resulted from ZFP Therapeutics, the technology holds tremendous promise. Sangamo has raised more than $100 million in research funding since 1995 and is in the midst of the following ongoing ZFP Therapeutic development projects as of 2006: · X-linked SCID (X-linked severe combined immunodeficiency, or “bubble boy” disease). In April 2005, Sangamo demonstrated that engineered ZFP nucleases (ZFNs) could correct the gene encoding human interleukin 2 receptor (IL2R), which underlies X-linked SCID. Such a therapy had been theorized for years, but Sangamo scientists were the first to show test-tube results with human cells. They were able to correct the defective gene in 18 percent of the cells. Sangamo believes that could be enough to treat the disease. · Congestive Heart Failure. Sangamo presented results of a study on congestive heart failure (CHF) treatment using ZFP TFs in November 2005. In CHF, the heart's ability to pump is decreased, leaving it unable to circulate enough blood to meet the body's needs. Sangamo’s ZFP TFs repress the expression of the phospholamban (PLN) in human cells and in rat heart cells. The ZFP PLN repressor enhanced both the rate and extent of relaxation and contraction of the heart muscle cells. Moreover, treatment demonstrated improved blood movement into and out of the heart. · Diabetic Neuropathy. Sangamo has completed a Phase I clinical trial of a ZFP Therapeutic in diabetic neuropathy (initiated in November 2005). The company designed SB-509, which is a novel ZFP therapeutic designed to up-regulate (stimulate) the expression of the patient's own vascular endothelial growth factor (VEGF) gene to regenerate peripheral nerve function in diabetics suffering from peripheral neuropathy. Sangamo initiated a Phase II clinical study in November 2006. · HIV/AIDS. Sangamo made an announcement about data from its HIV/AIDS program to develop a ZFP Therapeutic in December 2005. Their study demonstrates that cells can be made resistant to HIV infection by treating them with Sangamo's proprietary ZFNs designed to specifically disrupt the CCR5 gene. Sangamo expects to begin a Phase I clinical trial to test the ZFP Therapeutic in late 2007. “By administering [ZFNs] to patients, we could potentially provide HIV-infected individuals with a reservoir of healthy and uninfectable T-cells that would be available to fight both opportunistic infections and HIV itself,” said Dale Ando.

Outlook: The outlook for ZFP Therapeutics is strong. However, further development still poses technical challenges. The potential benefits from ZFP-based therapeutics are enormous. Sangamo continues to seek treatments for sickle cell disease, diabetic neuropathy, peripheral artery disease, diabetes, HIV, and other diseases. Composite Performance Score: * * * * Number of Employees: 33 employees at project start, 45 as of April 2000 (conclusion of this ATP project), 62 as of February 2006. Company: Sangamo BioSciences, Inc. Point Richmond Tech Center II 501 Canal Blvd., Suite A100 Richmond, CA 94804 Contact: Dr. Philip Gregory Phone: (510) 970-6000, x272 Subcontractors: · Aaron Diamond AIDS Research Center New York, NY · Johns Hopkins University Baltimore, MD · Scripps Research Institute La Jolla, CA Publications: Sangamo researchers disseminated their findings and received significant public attention through numerous publications: · Berg, J. M., and Y. Shi. “The Galvanization of Biology: a Growing Appreciation for the Roles of Zinc.” Science, 271, pp. 1081-5, 1996. · Berg, J. M. “Letting Your Fingers Do the Walking.” Nat Biotechnol 15, p. 323, 1997. · Choo, Y., A. Castellanos, B. Garcia-Hernandez, I. Sanchez-Garcia, and A. Klug. “Promoter-Specific Activation of Gene Expression Directed by Bacteriophage-Selected Zinc Fingers.” J Mol Biol, Vol. 273, pp. 525-32, 1997. · Greisman, H.A., and C. O. Pabo. “A General Strategy for Selecting High-Affinity Zinc Finger Proteins for Diverse DNA Target Sites." Science, Vol. 275, pp. 657-661, 1997.

PROJECT HIGHLIGHTS
Sangamo BioSciences, Inc.

· Kim, J. S., and C. O. Pabo. “Transcriptional Repression by Zinc Finger Peptides: Exploring the Potential for Applications in Gene Therapy.” J Biol Chem, Vol. 272, pp. 29795-800, 1997. · Kim, J. S., J. Kim, K. L. Cepek, P. A. Sharp, and C. O. Pabo. “Design of TATA Box-Binding Protein/Zinc Finger Fusions for Targeted Regulation of Gene Expression.” Proceedings of the National Academy of Sciences, Vol. 94, pp. 3616-20, 1997. · Liu, Q., D. J. Segal, J. B. Ghiara, and C. F. Barbas, III. “Design of Polydactyl Zinc-Finger Proteins for Unique Addressing within Complex Genomes.” Proceedings of the National Academy of Sciences, Vol. 94, pp. 5525-30, 1997. · Kim, J. S., and C. O. Pabo. “Getting a Handhold on DNA: Design of Poly-Zinc Finger Proteins with Femtomolar Dissociation Constants.” Proceedings of the National Academy of Sciences, Vol. 95, pp. 2812-7, 1998. · Nolte, R. T., R. M. Conlin, S. C. Harrison, and R. S. Brown. “Differing Roles for Zinc Fingers in DNA Recognition: Structure of a Six-Finger Transcription Factor IIIA Complex.” Proceedings of the National Academy of Sciences, Vol. 95, pp. 2938-2943, 1998. · Beerli, R. R., D. J. Segal, B. Dreier, and C. F. Barbas III. “Toward Controlling Gene Expression at Will: Specific Regulation of the erbB-2/HER-2 Promoter by Using Polydactyl Zinc Finger Proteins Constructed from Modular Building Blocks.” Proceedings of the National Academy of Sciences, Vol. 95, pp. 14628-33, 1998. · Zhang, L., S. K. Spratt, Q. Liu, B. Johnstone, H. Qi, E. E. Raschke, et al. “Synthetic Zinc Finger Transcription Factor Action at an Endogenous Chromosomal Site: Activation of the Human Erythropoietin Gene.” J Biol Chem, Vol. 275, pp. 33850-33860, 2000. · Bartsevich, V. V., and R. L. Juliano. “Regulation of the MDR1 Gene by Transcriptional Repressors Selected Using Peptide Combinatorial Libraries.” Mol Pharmacol, Vol. 58, pp. 1-10, 2000. · Beerli, R. R., B. Dreier, and C. F. Barbas, III. “Positive and Negative Regulation of Endogenous Genes by Designed Transcription Factors.” Proceedings of the National Academy of Sciences, Vol. 97, pp. 1495-1500, 2000.

· Pabo, C. O., E. Peisach, and R. A. Grant. “Design and Selection of Novel Cys2His2 Zinc Finger Proteins.” Annu Rev Biochem, Vol. 70, pp. 313-340, 2001. · Liu, P. Q., E. J. Rebar, L. Zhang, Q. Liu, A. C. Jamieson, Y. Liang, et al. “Regulation of an Endogenous Locus Using a Panel of Designed Zinc Finger Proteins Targeted to Accessible Chromatin Regions: Activation of Vascular Endothelial Growth Factor A.” J Biol Chem, Vol. 276, pp. 11323-11334, 2001. · Isalan, M., A. Klug, and Y. Choo. “A Rapid, Generally Applicable Method to Engineer Zinc Fingers Illustrated by Targeting the HIV-1 Promoter.” Nature Biotechnology, Vol. 19, pp. 656-660, 2001. · Urnov, F. D., and A. P. Wolffe. “Chromatin Remodelling and Histone Modification in Transcription Regulation.” Encyclopedia of Life Sciences, 2002. www.els.net · Urnov, F. D., and A. P. Wolffe. “Chromatin Structure and Modification.” Encyclopedia of Physical Science and Technology, Third Edition, Vol. 2, pp. 809-829, 2002. · Beerli, R. R., and C. F. Barbas, III. “Engineering Polydactyl Zinc-Finger Transcription Factors.” Nature Biotechnology, Vol. 20, pp. 135-141, 2002. · Rebar, E. J., Y. Huang, R. Hickey, et al. “Induction of Angiogenesis in a Mouse Model Using Engineered Transcription Factors.” Nat Med, Vol. 4, p. 4, 2002. · Ren D., T. N. Collingwood, E. J. Rebar, A. P. Wolffe, and H. S. Camp. “PPARgamma Knockdown by Engineered Transcription Factors: Exogenous PPARgamma2 but not PPARgamma1 Reactivates Adipogenesis.” Genes Dev, Vol. 16, pp. 27-32, 2002. · Snowden, A. W., P. D. Gregory, C. C. Case, and C. O. Pabo. “Gene-Specific Targeting of H3K9 Methylation Is Sufficient for Initiating Repression In Vivo.” Curr Biol, Vol. 12, pp. 2159-66, 2002. · Philipkoski, Kristen. "How to Turn On a Gene." Wired News, February 6, 2002. http://www.wired.com/news/medtech/1,50100-0.html · “Sangamo BioSciences Granted Patent Covering Methods for Identifying Target Sequences.” Biotech Patent News, September 2002.

PROJECT HIGHLIGHTS
Sangamo BioSciences, Inc.

· Jouvenot, Y., V. Ginjala, L. Zhang, P. Q. Liu, M. Oshimura, A. P. Feinberg, et al. “Targeted Regulation of Imprinted Genes by Synthetic Zinc-Finger Transcription Factors.” Gene Ther, Vol. 10, pp. 513-522, 2003. · Papworth, M., M. Moore, M. Isalan, M. Minczuk, Y. Choo, and A. Klug. “Inhibition of Herpes Simplex Virus 1 Gene Expression by Designer Zinc-Finger Transcription Factors.” Proceedings of the National Academy of Sciences, Vol. 100, pp. 1621-6, 2003. · Reynolds, L., C. Ullman, M. Moore, M. Isalan, M. J. West, P. Clapham, A. Klug, and Y. Choo. “Repression of the HIV-1 5' LTR Promoter and Inhibition of HIV-1 Replication by Using Engineered Zinc-Finger Transcription Factors.” Proceedings of the National Academy of Sciences, Vol. 100, pp. 1615-20, 2003. · Segal, D. J., R. R. Beerli, P. Blancafort, B. Dreier, K. Effertz, A. Huber, et al. “Evaluation of a Modular Strategy for the Construction of Novel Polydactyl Zinc Finger DNA-Binding Proteins.” Biochemistry, Vol. 42, pp. 2137-2148, 2003. · Jamieson, A. C., J. C. Miller, and C. O. Pabo. “Drug Discovery with Engineered Zinc-Finger Proteins.” Nat Rev Drug Discov, Vol. 2, pp. 361-368, 2003. · Porteus, M. H., and D. Baltimore, "Chimeric Nucleases Stimulate Gene Targeting in Human Cells." Science, Vol. 300, p. 763, May 2, 2003. · Pray, L. "A Finger on the Pulse of Transcriptional Control," The Scientist, Vol. 17, p. 33, July 14, 2003. http://www.the-scientist.com/2003/7/14/33/1 · Holding, C. "Fingering Single Genes," The Scientist, September 23, 2003. http://www.the-scientist.com/news/20030923/03 · Tan, S., D. Guschin, A. Davalos, Y. L. Lee, A. W. Snowden, Y. Jouvenot, H. S. Zhang, K. Howes, A. R. McNamara, A. Lai, C. Ullman, L. Reynolds, M. Moore, M. Isalan, L. P. Berg, B. Campos, H. Qi, S. K. Spratt, C. C. Case, C. O. Pabo, J. Campisi, and P. D. Gregory. "Zinc-Finger Protein-Targeted Gene Regulation: Genomewide Single-Gene Specificity." Proceedings of the National Academy of Sciences, Vol. 100, No. 21, pp. 11997-12002, October 14, 2003. · Liu, P.-Q., M. F. Morton, A. Reik, R. de la Rosa, M. C. Mendel, X.-Y. Li, C. C. Case, C. O. Pabo, V. Moreno, A. Kempf, J. Pyati, and N. P. Shankley. "Cell Lines for Drug Discovery: Elevating Target-Protein Levels Using Engineered Transcription Factors." Journal of Biomolecular Screening, Vol. 9, No. 1, pp. 44-51, February 2004.

· Roberts, J. P. "Gene Therapy's Fall and Rise (Again)," The Scientist, Vol. 18, p. 22, September 27, 2004. http://www.the-scientist.com/2004/09/27/22/1 · Constans, A. "Transcription by Design." The Scientist, November 18, 2004. http://www.the-scientist.com/2004/11/8/30/1 · Urnov, F.D., et al. "Highly efficient endogenous human gene correction using designed zinc-finger nucleases." Nature, DOI:10.1038/nature03556, April 3, 2005. http://www.nature.com · Biever, Celeste. "'Gene-Editing' Technique Cuts out Diseased DNA." NewScientist.com, April 4, 2005. http://www.newscientist.com/article.ns?id=dn7224 · “Highly Efficient Endogenous Human Gene Correction Using Designed Zinc Finger Nucleases.” Nature, Vol. 435, pp. 646-651, June 2005. · Liu, P. Q., S. Tan, M. C. Mendel, R. J. Murrills, B. M. Bhat, B. Schlag, R. Samuel, J. J. Matteo, R. de la Rosa, K. Howes, A. Reik, C. C. Case, F. J. Bex, K. Young, and P. D. Gregory. "Isogenic Human Cell Lines for Drug Discovery: Regulation of Target Gene Expression by Engineered Zinc-Finger Protein Transcription Factors." Journal of Biomolecular Screening, Vol. 10, No. 4, pp. 304-13, June 2005. · Jaffe, Sam. "Giving Genetic Disease the Finger." Wired.com, July 6, 2005. · Scott, C. T. “The Zinc Finger Nuclease Monopoly.” Nature Biotechnology, Vol. 23, No. 8, August 2005. Presentations: Sangamo researchers have given numerous talks on ZFPs at academic conferences: · Klug, A., P. Gregory, and F. Giordano. "Zinc Finger DNA-Binding Proteins for Gene Regulation and Gene Correction: A Novel Class of Human Therapeutics." Scientific symposium at the American Society of Gene Therapy (ASGT), Minneapolis, MN, June 2004. Based on this paper, they also made presentations highlighting progress in Sangamo's therapeutic programs in gene regulation and gene correction. Some of the presentations are listed here: o "A Novel Approach to Stem Cell Gene Therapy: Controlling Stem Cell Differentiation with Engineered Zinc-Finger Protein Transcription Factors" o "Gene Correction Therapy Using Designed Zinc Finger-Based Endonucleases"

PROJECT HIGHLIGHTS
Sangamo BioSciences, Inc.

o "Gene Control as a Therapeutic Intervention: Zinc-Finger Protein Transcription Factors as Regulators of the Molecular Determinants of Neuropathic Pain" o "Activation of VEGF by Engineered Zinc Finger Transcriptional Activators: A Novel Therapeutic Approach to Diabetic Neuropathy" o "An Oncolytic Adenovirus Armed with a GM-CSF Activating Designed Zinc-Finger Protein Transcription Factor: A Potential Cancer Vaccine Approach" o "Repression of Vascular Endothelial Growth Factor-A Over-Expression in Glioblastoma Cells Using Engineered Zinc-Finger Transcription Factors" o "Transactivation of Fetal Hemoglobin Genes by Engineered Zinc-Finger Protein Transcription Factors for the Treatment of Sickle Cell Disease" · Ando, Dale. "Gene Modulation of the HIV Co-receptor CCR5 Using CCR5 Specific Zinc Finger Nucleases." ASGT, St. Louis, MO, June 2005. Sangamo presented papers and posters, including the following: o "Targeting the Biology of Heart Disease: Engineered Zinc Finger Protein Repressors of Phospholamban as a Potential Therapy for Congestive Heart Failure" o "Development of Zinc Finger Nucleases for Therapeutic Gene Correction of Sickle Cell Anemia" o "Towards Gene Correction Therapy for Wiskott-Aldrich Syndrome (WAS) with Engineered Zinc Finger Nucleases" o "Gene Correction of X-Linked SCID Using Engineered Zinc Finger Nucleases and Integration Defective Lentiviral Delivery" o "Towards Gene Knockout Therapy for AIDS/HIV: Targeted Disruption of CCR5 Using Engineered Zinc Finger Protein Nucleases (ZFNs)"

· Lombardo, A. “Genome Editing in Human Stem Cells Using Engineered Zinc Finger Nucleases.“ International Society for Stem Cell Research (ISSCR), San Francisco, CA, June 2005. Sangamo gave presentations, including the following: o "Highly Efficient Endogenous Human Gene Correction Using Designed Zinc Finger Nucleases" o "Towards Gene Correction Therapy for Wiskott-Aldrich Syndrome With Engineered Zinc Finger Nucleases" o "Towards Gene Knock Out Therapy for AIDS/HIV: Targeted Disruption of CCR5 Using Engineered Zinc Finger Protein Nucleases" · Giordano, Frank. "Gene Expression/Molecular Biology II." American Heart Association, Dallas, TX, November 2005. · "The CCR5 Entry Inhibitors, Part 1: Zinc Finger Nucleases (ZFNs) and Aplaviroc." Interscience Conference on Antimicrobial Agents and Chemotherapy, Washington, DC, December 2005.

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Research and data for Status Report 96-01-0315 were collected during January – February 2006.