Sangamo Therapeutics
Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 Form 10-K ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2018or☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission file number: 000-30171 SANGAMO THERAPEUTICS, INC.(Exact name of registrant as specified in its charter) Delaware 68-0359556(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.) 501 Canal Boulevard,Richmond, California 94804(Address of principal executive offices) (Zip Code)(510) 970-6000(Registrant’s telephone number, including area code)NoneSecurities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, $0.01 par value per share Nasdaq Global Select MarketSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, tothe best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company.See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer☒Accelerated filer☐ Non-accelerated filer☐ Smaller reporting company☐ Emerging growth company☐If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒The aggregate market value of the voting stock held by non-affiliates of the registrant based upon the closing sale price of the common stock on June 30, 2018 (the last businessday of the registrant’s most recently completed second fiscal quarter), as reported on the Nasdaq Global Select Market was $1,442,357,545. For purposes of this calculation, directorsand executive officers of the registrant have been deemed affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.As of February 15, 2019, a total of 102,273,353 shares of common stock $0.01 par value per share were outstanding.DOCUMENTS INCORPORATED BY REFERENCECertain information required by Part III, Items 10-14 of this Form 10-K is incorporated by reference to the registrant’s definitive Proxy Statement for the 2019 AnnualMeeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by thisForm 10-K, provided that if such Proxy Statement is not filed within such period, such information will be included in an amendment to this Form 10-K to be filed within such 120-day period. TABLE OF CONTENTS Page PART I Item 1. Business 4 Item 1A. Risk Factors 28 Item 1B. Unresolved Staff Comments 64 Item 2. Properties 64 Item 3. Legal Proceedings 64 Item 4. Mine Safety Disclosures 64 PART II Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 65 Item 6. Selected Financial Data 67 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 68 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 76 Item 8. Financial Statements and Supplementary Data 77 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 110 Item 9A. Controls and Procedures 110 Item 9B. Other Information 113 PART III Item 10. Directors, Executive Officers and Corporate Governance 113 Item 11. Executive Compensation 113 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 113 Item 13. Certain Relationships and Related Transactions, and Director Independence 113 Item 14. Principal Accounting Fees and Services 113 PART IV Item 15. Exhibits, Financial Statement Schedules 114 Item 16. Form 10-K Summary 117 2SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSSome statements contained in this report are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, asamended, or the Securities Act, and Section 21E of the Exchange Act. These statements relate to future events or to our future operating or financialperformance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to bematerially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-lookingstatements may include, but are not limited to, statements about: •our strategy; •anticipated product candidate development and potential commercialization of any resulting products; •the initiation, scope, rate of progress, enrollment, anticipated results and timing of our preclinical studies and clinical trials and those of ourcollaborators or strategic partners; •the therapeutic and commercial potential of, and the ability of Sangamo and our collaborators or strategic partners to advance thedevelopment of, product candidates using our ZFP technology platform, including our ability to effectively deliver our ZFNs and ZFP TFsto produce a beneficial therapeutic effect; •our ability to establish and maintain collaborative, licensing and other similar arrangements; •anticipated revenues from existing and new collaborations and the timing thereof; •our research and development and other expenses; •our ability to obtain adequate preclinical and clinical supplies of our product candidates from current and potential new suppliers andmanufacturers; •the ability of Sangamo and our collaborators or strategic partners to obtain and maintain regulatory approvals for product candidates usingour ZFP technology platform; •our ability to comply with, and the impact of, regulatory requirements, obligations and restrictions on our business; •our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others,including our ability to obtain rights to the gene transfer technologies required to develop and commercialize our product candidates; •our estimates regarding the sufficiency of our cash resources and our expenses, capital requirements and need for additional financing, andour ability to obtain additional financing; •our ability to manage the growth of our business; •our projected operating and financial performance; •our operational and legal risks; and •our plans, objectives, expectations and intentions and any other statements that are not historical facts.In some cases, you can identify forward-looking statements by terms such as: “anticipates,” “believes,” “continues,” “could,” “estimates,”“expects,” “intends,” “may,” “plans,” “seeks,” “should” and “will.” These forward-looking statements reflect our current views with respect to future eventsand are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance orachievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Giventhese risks and uncertainties, you should not place undue reliance on these forward-looking statements. We discuss many of these risks in greater detail underthe headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Results of Operations” in this Form 10-K. Accordingly, the forward-looking statements, speak only as of the date of this Form 10-K. Except as required by law, we undertake no obligation to update or publicly release anyrevisions to forward-looking statements to reflect events or circumstances arising after the date of this report. 3PART I ITEM 1 – BUSINESSOVERVIEWWe are a clinical stage biotechnology company focused on translating ground-breaking science into genomic medicines with the potential totransform patients’ lives using our platform technologies in genome editing, gene therapy, gene regulation and cell therapy. We are focused on threetherapeutic areas: inherited metabolic diseases, or IMDs, central nervous system diseases and inflammatory and autoimmune diseases.We are a leader in the research and development of zinc finger proteins, or ZFPs, a naturally occurring class of proteins found in humans. We haveused our knowledge and expertise to develop a proprietary technology platform in both genome editing and gene regulation. ZFPs can be engineered tomake zinc finger nucleases, or ZFNs, proteins that can be used to specifically modify DNA sequences by adding or knocking out specific genes, or genomeediting, and ZFP transcription factors, or ZFP TFs, proteins that can be used to increase or decrease gene expression, or gene regulation. In the process ofdeveloping this platform, we have accrued significant scientific, manufacturing and development capabilities and know-how that are generally applicable inthe broader field of gene therapy and have capitalized this knowledge into a conventional gene therapy platform.Our strategy is to maximize the value and therapeutic use of our technology platforms. In certain therapeutic areas we intend to capture the value ofour proprietary genome editing and gene therapy products by forward integrating into manufacturing, development and commercial operations. In othertherapeutic areas we intend to partner with biopharmaceutical companies to develop products as appropriate. Decisions to partner product candidates or notwill be based on the best way to bring new medicines to patients and on an evaluation of our capacity to bring such products to commercial stage rapidly andefficiently on our own. In August 2018, we announced positive preliminary data from the Alta Study, a Phase 1/2 clinical trial evaluating SB-525, a complementary DNA, orcDNA, gene therapy candidate for hemophilia A. SB-525 is being developed as part of a global collaboration between us and Pfizer Inc., or Pfizer, for thedevelopment and commercialization of potential gene therapy programs for hemophilia A. In October 2018, the independent safety monitoring committee, orSMC, of the Alta Study reviewed accumulated safety and efficacy data from the six patients enrolled in three dose cohorts. The SMC recommended that thestudy continue with escalation to an additional dose. We plan to present safety and efficacy data from the Alta Study in 2019 after dose escalation iscomplete and the clinical trial has progressed to the cohort expansion phase. In September 2018 we announced preliminary safety and efficacy data from the Phase 1/2 clinical trial evaluating SB-913 for the treatment of MPS II,or the CHAMPIONS Study. In October 2018, the SMC of the CHAMPIONS Study reviewed accumulated safety and efficacy data from all three cohorts. InFebruary 2019, we announced interim results from the CHAMPIONS Study. SB-913 showed preliminary evidence of in vivo genome editing in patients withMPS II and was generally well-tolerated with no treatment-related serious adverse events. We have an ongoing Phase 1/2 clinical trial evaluating SB-318 for the treatment of MPS I, or the EMPOWERS Study. In October 2018, the SMCreviewed accumulated safety and efficacy data from the EMPOWERS Study. In accordance with the recommendation of the SMC, the second patient enrolledin the EMPOWERS Study received the 5e13 vg/kg dose, or the highest dose. In February 2019, we announced interim results from the EMPOWERS Study.SB-318 demonstrated a dose-dependent increase in leukocyte alpha-L-iduronidase, or IDUA, enzyme activity in patients with MPS I and was generally well-tolerated with no treatment related serious adverse events. We are also evaluating SB-FIX in a Phase 1/2 open-label, ascending dose clinical trial which is designed to assess the safety, tolerability andpreliminary efficacy of SB-FIX in adults with severe hemophilia B. The study is currently screening subjects in the United States and the United Kingdom.Recently, we announced the treatment of the first patient in this trial and expect to announce preliminary safety and efficacy data in 2019.We are evaluating ST-400 in a Phase 1/2 open-label, single arm clinical trial to evaluate the safety and efficacy in up to six adult subjects with beta-thalassemia. Our IND submitted to the U.S. Food and Drug Administration, or the FDA, for ST-400 became effective in September 2017. The clinical trial wasinitiated in March 2018 and the first patient was enrolled in August 2018 and dosed in January 2019.In the fourth quarter of 2018, we acquired 98.2% of the outstanding share capital and voting rights of TxCell S.A., or TxCell, which we refer to in thisreport as the TxCell Acquisition, for aggregate purchase consideration of approximately $80.4 million. As of December 31, 2018 the fair value of theremaining outstanding free shares was approximately $1.3 million. The total fair value of the net assets acquired was approximately $81.7 million (see Note 6to our consolidated financial statements – Acquisition of TxCell, S.A.).4With the TxCell Acquisition, we can now accelerate our research and development of innovative, personalized T-cell immunotherapies for thetreatment of inflammatory and autoimmune diseases with high unmet medical need. In this regard, we expect that the TxCell Acquisition will accelerate ourentry into the clinic with a CAR-Treg (which is a regulatory T cell, or Treg, genetically modified with a chimeric antigen receptor, or CAR) therapy. We areevaluating the potential of the TxCell platform in solid organ transplantation as well as a range of autoimmune diseases, such as multiple sclerosis,rheumatoid arthritis, inflammatory bowel diseases and inflammatory skin diseases. In addition, we intend to use our ZFN gene editing technology topotentially develop next-generation autologous and allogeneic CAR-Treg cell therapies for use in treating autoimmune diseasesWe have a substantial intellectual property position including the design, selection, manufacture, composition and use of engineered ZFPs, CARTregs and cell therapies to support our research and development activities. We continue to license and file new patent applications that strengthen ourpatent portfolio. We believe that our intellectual property position is a critical element in our ability to research, develop, manufacture and commercializeproducts and services based on genome editing, gene therapy, gene regulation and cell therapy.INTRODUCTION TO TECHNOLOGYZFPs are Naturally Occurring Transcription Factors in HumansA transcription factor recognizes and binds to a specific DNA sequence within or near a particular gene and causes expression of that gene to be“turned on” (activated) or “turned off” (repressed). ZFPs are the most common class of naturally occurring transcription factors in organisms from yeast tohumans. To these naturally occurring transcription factors, we have added functional domains which enable genome editing at the site determined by the ZFPDNA-binding domain. Figure 1: Schematic of the two-domain structure of a ZFP and its therapeutic functional domainZFNs can be designed for genome editing and ZFP TFs can be designed for gene regulationConsistent with the modular structure of natural ZFPs, we take a modular approach to the design of the proteins that we engineer. The ZFP portion ofour engineered proteins, the DNA-recognition domain, is typically composed of four to six zinc fingers. Each individual finger recognizes and binds to athree or four base pair sequence of DNA and multiple fingers can be linked together to recognize longer stretches of DNA, thereby improving specificity. Bymodifying the amino acid sequence of a ZFP, we can engineer novel ZFPs capable of recognizing the DNA sequences of a chosen genomic target. We use theengineered ZFP DNA-binding domain to link to a functional domain. The ZFP DNA-binding domain brings the functional domain to the target of interest.Our ability to use our highly specific ZFP technology to precisely target a DNA sequence in a gene of interest provides us with a range of genome editing andgene regulation functions that we believe can be applied in many different cell types.5Our engineered ZFPs can be attached to a cleavage domain of a restriction endonuclease, an enzyme that cuts DNA, creating a ZFN. When a pair ofZFNs is bound to the DNA in the correct orientation and spacing, the DNA sequence is cut between the ZFP binding sites. DNA binding by both ZFNs isnecessary for cleavage, and both nuclease of the restriction endonuclease must be present in the correct orientation to interact with each other, in order tomediate DNA cleavage. This break in the DNA triggers a natural process of DNA repair in the cell. The repair process can be harnessed to achieve one ofseveral outcomes that may be therapeutically useful (Figure 2). If cells are simply treated with ZFNs alone, the repair process joins the two ends of the brokenDNA together and frequently results in the loss or addition of a small amount of genetic material at the site of the break. This disrupts the original DNAsequence and can result in the expression of a truncated or non-functional protein from the targeted gene, effectively “knocking out” the gene function. ZFN-mediated genome editing can be used to disrupt genes that are involved in disease pathology. We are using ZFN-mediated genome editing of the BCL11Aerythroid enhancer in hematopoietic stem progenitor cells, or HSPCs, which is designed to be a single long-lasting treatment for beta-thalassemia (ST-400)and sickle cell disease, or SCD (BIVV-003). Figure 2:Schematic of ZFP genome editing and gene regulationIn contrast, if cells with a mutation in a particular gene are treated not only with ZFNs, but also with a DNA sequence that encodes the correct genesequence (referred to as a “donor” DNA) and with ZFNs that recognize and bind to sequences flanking the mutation, the cell’s repair machinery can use thedonor as a template to correct the mutated gene. This ZFN-mediated gene correction enables the corrected gene to be expressed in its natural chromosomalcontext and may provide a novel approach for the precise repair of DNA sequence mutations responsible for certain monogenic diseases. In addition toproviding a donor sequence that encodes a complete gene, a new copy of a gene can also be precisely added into the genome at a specific location. Theability to precisely place a gene-sized segment of DNA specifically into a pre-determined location in the genome broadens the range of mutations of a genethat can be corrected in a single step. It also reduces the insertional mutagenesis concerns associated with traditional integrating gene replacementapproaches such as lentiviruses, in which the insertion of a new corrective copy of the gene typically occurs at random locations in the genome. Our ZFNtechnology is used to insert a gene encoding a therapeutic protein into a location such as the Albumin gene, is an approach that we are investigating for thetreatment of hemophilia B (SB-FIX) and MPS I and MPS II (SB-318 and SB-913), which we believe may potentially provide a single and potentially curativetreatment for these diseases.6We are also evaluating ZFP TFs with the potential to control or regulate the expression of a target gene in the desired manner (Figure 2). For instance,attaching an activation domain to a ZFP will cause a target gene to be expressed at enhanced levels, relative to expression in an untreated cell. Alternatively,a repression domain causes the gene to be downregulated or completely turned off. Pursuant to a collaboration agreement with Shire International GmbH, orShire, a wholly owned subsidiary of Takeda Pharmaceutical Company Limited, or Takeda, we have a preclinical program for Huntington’s disease in whichwe are evaluating a ZFP TF designed to differentially down regulate the mutated disease-causing Huntingtin, or HTT, gene, while leaving expression of thenormal gene unchanged.ZFPs provide the Opportunity to Develop a New Class of Human TherapeuticsWe believe that our ZFP technology provides a unique and proprietary basis for a broad new class of drugs that have differential technical advantagesover small-molecule drugs, protein pharmaceuticals, RNA-based therapeutics, conventional gene therapy approaches and other genome editing platforms,potentially enabling us to develop therapies for a broad range of unmet medical needs.We can generate highly specific ZFNs for genome editing and ZFP TFs for gene regulation and have developed multiple delivery strategies toadminister these therapeutics, including using mRNA, AAV, adenovirus, plasmid, and lipid nanoparticles. As more genes and DNA sequences are linked tospecific diseases, we believe that the clinical breadth and scope of our ZFP applications will continue to expand.New ZFN Architectures In 2017, our scientists reported on platform advancements that substantially enhanced the precision, efficiency and specificity of ZFNs for therapeuticgenome editing. We believe these advances enable rapid development of ZFNs to target chosen genomic sites with high levels of targeted modification andwith no detectable off-target activity. These advances include the development of new linkers that enable base skipping between adjacent zinc fingermodules as well as a reconfiguring of the ZFN architecture to allow optional placement of the Fok1 nuclease domain at either the carboxy terminal or theamino terminal end. The enhancements also include the identification of key amino acid substitutions that can be used to tune biochemical properties andremove non-specific binding contacts between the ZFN and the DNA backbone. In February 2019, we announced our development of second generation, potentially more potent ZFN constructs designed to increase editingefficiency. In vitro data of these second-generation ZFNs were reviewed by the FDA. The in vitro data showed three potential advantages for use in the clinic:(1) a five to thirty-fold improvement in efficiency and potency due to structural changes; (2) the ability to function equally well in the patients who have asingle nucleotide polymorphism in the target locus in the albumin gene (approximately 20% of the population); (3) improvements in specificity. The second-generation ZFNs are being manufactured and we expect to have them available for use in the clinic later this year. Additional data from our in vivo genomeediting programs will be assessed before potential integration plans for the second-generation ZFNs are finalized. Advancements in T Cell Editing Capabilities In May 2018, we presented preclinical data demonstrating our ability to accomplish highly efficient multiplex genome editing of T cells. Efficientmultiplex editing, the ability to make multiple genetic changes in a single step, enables simultaneous disruption of certain genes to prevent the body fromrejecting the treatment and integration of new genes to equip the modified T cells with targeted antitumor functions. In the presented data, we described a Tcell with four edits achieved in a single step. The four simultaneous edits included triple knockout of TCR (93% efficiency), b2 microglobulin, or B2M,(96% efficiency), CISH, a checkpoint gene (93% efficiency), and targeted insertion of green fluorescent protein, or GFP, (91% efficiency), resulting in 76% ofthe modified T cells with all four edits. Our T cell engineering capabilities have advanced rapidly in the last two years with improvements in our ZFN design capabilities. These novelarchitectural enhancements have resulted in a 300-fold increase in potential design options for a given genetic sequence, yielding higher on-targetmodification activity in preclinical testing, with ex vivo editing efficiencies now reaching as high as 99.5%, and off-target cleavage consistently below thelevel of detection. We believe these improvements potentially allow for the use of substantially reduced doses of mRNA and AAV, enabling a highlyefficient gene editing process that maintains T cell phenotypes, functions and proliferative capacity during ex vivo cell expansion.TxCell - Regulatory T Cells With the TxCell Acquisition, we can now accelerate our research and development of platforms for innovative, personalized T-cell immunotherapies forthe treatment of inflammatory and autoimmune diseases with high unmet medical need. Through our7subsidiary, TxCell, we believe we will accelerate our entry into the clinic with a CAR-Treg. We are evaluating the potential of the TxCell platform in solidorgan transplantation as well as a range of autoimmune diseases, such as multiple sclerosis, rheumatoid arthritis, inflammatory bowel diseases andinflammatory skin diseases. In addition, we intend to use our ZFN gene editing technology to potentially develop next-generation autologous and allogeneicCAR-Treg cell therapies for use in treating autoimmune diseases. Our CAR Tregs are composed of Tregs engineered with a CAR. The antigen specificity comes from the CAR receptor as shown below.After their isolation from the blood of patients, Tregs are genetically modified by transduction with CAR. The CAR introduced into Tregs is designedto allow Treg activation and immuno-modulation through in vivo recognition of a protein present in inflamed areas in patients suffering from autoimmuneand chronic inflammatory diseases. THERAPEUTIC PRODUCT DEVELOPMENTOur Product Development Programs Hemophilia A and BHemophilia is a rare bleeding disorder in which the blood does not clot normally. It is also a monogenic disease, or a disease that is caused by agenetic defect in a single gene. There are several types of hemophilia caused by mutations in genes that encode factors which help the blood clot and stopbleeding when blood vessels are injured. Individuals with hemophilia experience bleeding8episodes after injuries and spontaneous bleeding episodes that often lead to joint disease such as arthritis. The most severe forms of hemophilia affect males.The standard treatment for individuals with hemophilia is replacement of the defective clotting factor with regular infusion of recombinant clotting factors orplasma concentrates. These therapies are expensive and sometimes stimulate the body to produce antibodies against the factors that inhibit the benefits oftreatment. In these situations, other clotting factors such as Factor VII and X may be used to treat patients.The most prevalent form of the disease, hemophilia A, is caused by a defect in the clotting Factor 8 gene. According to the National HemophiliaFoundation and the World Federation of Hemophilia, hemophilia A occurs in about one in every 5,000 male births in the United States, with approximately16,000 males currently affected. Defects in clotting Factor 9 gene lead to hemophilia B. Hemophilia B occurs in about one in every 25,000 male births in theUnited States, with approximately 4,000 males currently affected.SB-525 – Hemophilia AWe are developing SB-525, a gene therapy product candidate utilizing an AAV carrying a clotting Factor 8 gene construct that is driven by ourproprietary synthetic liver specific promoter, as part of a global collaboration between us and Pfizer for the development and commercialization of potentialgene therapy programs for hemophilia A (See “—Collaborations—Pfizer Inc.”).In 2017, we initiated the Alta Study to evaluate the safety and efficacy of SB-525 in adults with severe hemophilia A. The Alta Study is an open-label,ascending-dose clinical trial to evaluate the safety and efficacy of SB-525 in up to 20 adults with severe hemophilia A. In August 2017, we announced thatthe first subject was treated in our Alta Study. In August 2018, we announced positive preliminary data from the Alta Study. In October 2018, the SMC of theAlta Study reviewed accumulated safety and efficacy data from the six patients enrolled in three dose cohorts. As of that review, SB-525 exhibited dosedependent efficacy on serum factor levels and was generally well-tolerated with no treatment-related serious adverse events and no use of tapering courses oforal steroids. The SMC recommended that the study continue with escalation to an additional dose. We plan to present safety and efficacy data from the AltaStudy in 2019 after dose escalation is complete and the clinical trial has progressed to the cohort expansion phase.SB-525 has been granted Orphan Drug and Fast Track designations by the FDA as well as Orphan Medicinal Product designation by the EuropeanMedicines Agency, or EMA.SB-FIX – Hemophilia BWe are developing SB-FIX, an in vivo genome editing product candidate, to treat hemophilia B. Utilizing our ZFN genome editing technology, we areadding a new therapeutic copy of the Factor 9 gene precisely into the Albumin gene locus in liver cells, and using the strong endogenous Albumin promoterto drive expression of the newly inserted gene. We believe the potential of this approach to provide a permanent correction for a patient may be optimal for apediatric population by potentially reducing or eliminating the need for chronic infusions of replacement proteins or clotting factor products. We havepublished data demonstrating the potential utility of this approach for several different monogenic disease applications in addition to hemophilia B.In 2016, we initiated a Phase 1/2, open-label, ascending dose clinical trial, the FIXtendz Study, to evaluate safety and efficacy of SB-FIX in adultmales with severe hemophilia B. The FIXtendz Study is designed to enroll up to 12 subjects across three dose cohorts. In February 2018, the Medicines andHealthcare Products Regulatory Agency, or MHRA, of the United Kingdom granted Clinical Trial Authorisation, or CTA, for enrollment of subjects into theFIXtendz Study. The CTA permits evaluation of SB-FIX in adults. Recently, we announced the treatment of the first adult patient in this study and expect toannounce safety and efficacy data in 2019.SB-FIX has been granted Orphan Drug and Fast Track designations by the FDA.Inherited Metabolic Diseases, or IMDsIMDs are a heterogeneous group of rare inherited metabolic disorders including: MPS I, MPS II, Fabry disease, Gaucher disease; and many others.These disorders are caused by defects in genes that encode proteins known as enzymes, which break down and eliminate unwanted substances in cells. Theseenzymes are found in structures called lysosomes which act as recycling sites in cells, breaking down unwanted material into simple products. A defect in alysosomal enzyme leads to the accumulation of toxic levels of the substance that the enzyme would normally eliminate. These toxic levels may cause celldamage which can lead to serious health problems.MPS I is caused by mutations in the gene encoding the alpha-L-iduronidase, or IDUA, enzyme, resulting in a deficiency of IDUA enzyme, which isrequired for the degradation of the glycosaminoglycans, or GAGs, dermatan sulfate and heparan sulfate. The inability to degrade GAGs leads to theiraccumulation within the lysosomes throughout the body. Individuals with this mutation experience multi-organ dysfunction and damage. Depending on theseverity of the mutations and degree of residual enzyme activity,9affected individuals may develop enlarged internal organs, joint stiffness, skeletal deformities, corneal clouding, hearing loss and cognition impairments.Three forms of MPS I, in order of increasing severity, include Scheie, Hurler-Scheie and Hurler syndromes. According to the National Organization for RareDisorders, one in 500,000 births in the United States will result in Scheie syndrome, one in 115,000 births will result in Hurler/Scheie, and one in 100,000births will result in Hurler syndrome. There are approximately 1,000 MPS I patients in the United States.MPS II is an X-linked disorder primarily affecting males and caused by mutations in the gene encoding the IDS enzyme. This results in a deficiency ofIDS enzyme, which is required for the degradation of GAGs. Similar to MPS I, the inability to degrade GAGs leads to their accumulation within the lysosomesthroughout the body. Individuals with this mutation experience multi-organ dysfunction and damage. Children with MPS II appear normal at birth but beginshowing symptoms of developmental delay by age 2 – 3 years. Depending on the severity of the mutations and degree of residual enzyme activity, affectedindividuals may develop delayed development, enlarged internal organs, cardiovascular disorders, stunted growth and skeletal abnormalities and hearingloss. The disorder is progressive, and symptoms range from mild (normal cognitive function) to severe (cognitively impaired). According to the National MPSSociety, approximately one in 100,000 to one in 170,000 births, primarily male births, in the United States will result in MPS II. There are approximately 500MPS II patients in the United States.Fabry disease is an X-linked disorder primarily affecting males and caused by a mutation in the gene encoding the alpha-galactosidase A, or alpha-GalA, enzyme, resulting in a deficiency of alpha-Gal A enzyme, which is required for the degradation of the ganglioside globotriaosylceramide, a particular typeof fatty substance. The inability to degrade this fatty substance leads to its accumulation within the lysosomes throughout the body. Individuals with thismutation experience multi-organ dysfunction and damage. Depending on the severity of the mutations and degree of residual enzyme activity, affectedindividuals may develop progressive kidney damage, heart attack, stroke, gastrointestinal complications, corneal opacity, tinnitus and hearing loss. Milderforms of the disorder present later in life and affect only the heart or kidneys. According to the National Institutes of Health, or NIH, U.S. National Library ofMedicine, one in 40,000 to one in 60,000 male births in the United States will result in Fabry disease. There are approximately 2,200 males with Fabrydisease in the United States. This mutation can also occur in females, however, is less common and the frequency is unknown.There are limited treatments currently available for MPS I, MPS II and Fabry disease. For individuals with MPS I, there are only two options:hematopoietic stem cell transplantation, or HSCT, for those with the most severe form of the disease (Hurler) and ERT for patients with the attenuated formsof the disease (Hurler-Scheie, Scheie). However, the reported mortality rate after HSCT is approximately 15% and the survival rate with successfulengraftment is 56%. Most patients with milder forms of the disease receive weekly ERT, usually in a doctor’s office. These IDUA enzyme infusions take onaverage four to six hours to administer. Weekly and bi-weekly ERT infusions are the only available approved treatment options for MPS II and Fabry disease,respectively. Because of the availability of few approved treatment options that effectively and safely treat these diseases, there remains significant unmetmedical need.SB-318 – MPS IWe are developing SB-318, an in vivo genome editing product candidate, to treat MPS I. Using the same approach as our hemophilia B productcandidate, SB-FIX, we are adding a new therapeutic copy of the IDUA gene precisely into the Albumin gene locus in the genome of liver cells, using thestrong endogenous Albumin promoter to drive expression of the newly inserted gene. We believe the potential of this approach to provide a permanentcorrection for a patient may be optimal for a pediatric population by potentially reducing or eliminating the need for chronic ERT infusions.In 2017, we initiated the EMPOWERS Study to evaluate SB-318 in adult subjects with attenuated MPS I. The EMPOWERS Study is designed toenroll up to nine subjects across three ascending dose cohorts. In October 2018, the SMC reviewed accumulated safety and efficacy data from the EMPOWERS Study. In accordance with the recommendation of theSMC, the second patient enrolled in the EMPOWERS Study received the 5e13 vg/kg dose, the highest dose. In February 2019, we announced the interim results of the EMPOWERS Study. SB-318 demonstrated increased leukocyte IDUA activity in patientswith MPS I. One patient has been dosed with 1e13 vector genomes per kilogram body weight (vg/kg) of SB-318 and two patients have been dosed with 5e13vg/kg of SB-318. The interim results suggest a dose-dependent increase in leukocyte IDUA activity, with activity levels rising above baseline and in thenormal range (normal range is 6.0-71.4 nmol/hr/mg). However, plasma IDUA activity was unchanged from baseline in all three patients. Baseline urine GAGmeasurements for the three patients in the EMPOWERS Study were in a range considered to be at or slightly above normal. Urine GAG measurements showedno meaningful change at the time of the announcement. Safety data were collected and analyzed for the three patients. Administration of SB-318 wasgenerally well-tolerated. No treatment related serious adverse events have been reported. Of the six total adverse events reported, all were mild or moderateand consistent with ongoing MPS I disease, and none were considered related to SB-318 treatment. The clinical relevance of the biochemical changesobserved following administration of SB-318 will be assessed as clinical data and patient outcomes are analyzed following a trial of withdrawal from ERT.ERT withdrawal is expected for these patients later in 2019. We expect to report analyses of liver biopsies later in 2019.10 We have developed second generation albumin locus ZFN constructs for potential use in the ongoing in vivo genome editing development programs.We plan to initiate a clinical trial this year using these second-generation ZFNs that should enable a Phase 3 decision for the MPS II program in 2020.SB-318 MPS I has been granted Orphan Drug, Rare Pediatric Disease and Fast Track designations by the FDA, as well as Orphan Medicinal Productdesignation by the EMA.SB-913 – MPS IIWe are developing SB-913, an in vivo genome editing product candidate, to treat MPS II. Similar to SB-318, we are using our ZFN genome editingtechnology to add a new therapeutic copy of the IDS gene precisely into the Albumin gene locus in the genome of liver cells, using the strong endogenousAlbumin promoter to drive expression of the newly inserted gene.In 2017, we initiated an open-label, dose-ascending Phase 1/2 clinical trial, the CHAMPIONS Study, to evaluate the safety and efficacy of SB-913 inadult male subjects with attenuated MPS II, designed to enroll up to nine subjects across three ascending dose cohorts. In November 2017, we announced thatthe first subject had been treated in the CHAMPIONS Study. Two patients are currently enrolled in each of cohort 1 (low-dose), cohort 2 (mid-dose) andcohort 3 (high-dose), along with an additional three patients, all of which have received the high dose, in an expanded cohort.In February 2018, we presented preliminary six-week safety data from the first subject enrolled in the CHAMPIONS Study. The data demonstrated thatthe subject tolerated the infusion well. Mild (Grade 1) adverse events related to the study drug were reported on the fourth day after dosing. These weredizziness, weakness and frequent urination, all of which resolved within one day without treatment. No other adverse events related to the study drug havebeen observed. Liver function tests have remained within normal limits for the patient since the infusion. In September 2018 we announced updatedpreliminary safety and efficacy data from the CHAMPIONS Study. In cohort 2 of the CHAMPIONS study, at 16 weeks post-dosing, mean reductions wereobserved in total urinary GAGs (which is a key biomarker of MPS II disease pathophysiology), dermatan sulfate, and heparan sulfate of 51%, 32%, and 61%,respectively. In October 2018, the SMC of the CHAMPIONS Study reviewed accumulated safety and efficacy data from all three cohorts and made thefollowing three recommendations: 1) proceed to the cohort expansion phase of the clinical trial with the dose used at the third dose cohort (5e13 vg/kg); 2)initiate screening and enrollment of adolescent subjects (12 to 17 years of age); and 3) initiate the withdrawal of ERT when appropriate.In February 2019, we announced interim study results from the CHAMPIONS Study. SB-913 showed preliminary evidence of in vivo genome editingin patients with MPS II. Small increases in IDS enzyme activity compared to baseline were recorded in one patient in cohort 1 (low-dose) and two patients incohort 2 (mid-dose) of the CHAMPIONS Study. At 24 weeks these measurements remained within the expected range for baseline values (less than 10nmol/hour/mL, as compared to the normal range which is estimated at greater than 82 nmol/hour/mL). A more substantial increase in plasma IDS activity wasmeasured in the second patient in cohort 3 (high-dose), with levels rising to approximately 50 nmol/hour/mL by week 6 following SB-913 administration.The plasma IDS activity levels subsequently decreased in the context of the development of a mild transaminitis – a known risk of AAV-based therapies –due to a suspected immune response. Grade 1 elevations in liver function tests were measured at Day 62, 111 and 128. The patent was hospitalized on Day121 for an incarcerated umbilical hernia considered unrelated to the SB-913. As of the date of our February 2019 announcement, the patent’s plasma IDSactivity measured 14 nmol/hour/mL, above the baseline value but below the normal range. Baseline GAG measurements for all six patients were in a rangeconsidered at or slightly above normal, except for heparan sulfate which was elevated in all patients at baseline. At 24 weeks post-dosing, urine GAG resultsdid not show a meaningful change. Safety data on eight patients were collected and analyzed. Administration of SB-913 was generally well-tolerated in alleight patients. Of the 18 total adverse events reported as related to SB-913, 16 were mild (Grade 1), two were moderate (Grade 2) and all adverse eventsresolved. There were no treatment-related serious adverse events reported. The clinical relevance of the biochemical changes observed followingadministration of SB-913 will be assessed as clinical data and patient outcomes are analyzed following a trial of withdrawal from ERT. Two mid-dose andone high-dose patients have initiated ERT withdrawal. One mid-dose patient was recommended to resume ERT approximately three months after initiation ofERT withdrawal due to fatigue and increasing GAG measurements. Analyses from these withdrawals will be available later this year.SB-913 has been granted Orphan Drug, Rare Pediatric Disease and Fast Track designations by the FDA, as well as Orphan Medicinal Productdesignation by the EMA.ST-920 — Fabry DiseaseWe are developing ST-920 for Fabry disease, a gene therapy product candidate utilizing an AAV, carrying a galactosidase alpha, or GLA, geneconstruct, coding for the alpha-Gal A enzyme, driven by our proprietary synthetic liver specific promoter. Our IND submitted to the FDA for ST-920 becameeffective in January 2019 and we expect to initiate a Phase 1/2 clinical trial in 2019.Hemoglobinopathies: Beta-thalassemia and Sickle Cell Disease11Mutations in the gene encoding beta-globin, the oxygen carrying protein of red blood cells, lead to hemoglobinopathies such as beta-thalassemia andSCD. Both diseases manifest in the months after birth, when patients switch from producing functional fetal gamma-globin to a mutant form of adult beta-globin, which results in their condition. Naturally occurring increased levels of fetal hemoglobin have been shown to reduce the severity of both beta-thalassemia and SCD.Beta-thalassemia is a rare disorder that results in greatly impaired production of healthy red blood cells despite bone marrow over activity, leading tolife-threatening anemia, enlarged spleen, liver and heart, and bone abnormalities. We are focused on Beta-thalassemia major, which is a severe form ofthalassemia that requires regular, often monthly, blood transfusions and subsequent iron-chelation therapy to treat iron overload. The Centers for DiseaseControl and Prevention, or CDC, estimates that 1,000 people have beta-thalassemia major in the United States, and an unknown number carry the genetictrait and can pass it on to their children.In SCD, the mutation causes the red blood cells to form an abnormal sickle or crescent shape. The cells are fragile and deliver less oxygen to thebody’s tissues. They can also get stuck more easily in small blood vessels and break into pieces that can interrupt healthy blood flow which further decreasesthe amount of oxygen flowing to body tissues. Almost all patients with SCD experience these painful vaso-occlusive crises, which can last from hours to daysand may cause irreversible organ damage. Current standard of care is to manage and control symptoms, and to limit the number of crises. Treatments includeadministration of hydroxyurea, blood transfusions, iron-chelation therapy, pain medications and antibiotics. The CDC estimates that there are 90,000 to100,000 Americans living with SCD, which occurs in approximately one out of every 365 African-American births and one out of every 16,300 Hispanic-American births.ST-400 – Beta-thalassemia; BIVV-003 — SCDWe are developing ST-400 for the treatment of beta-thalassemia and our collaboration partner, Bioverativ, Inc., or Bioverativ, a wholly ownedsubsidiary of Sanofi Genzyme Corporation, or Sanofi Genzyme, is developing BIVV-003 for the treatment of SCD. Both ST-400 and BIVV-003 are genome-edited cell therapies that use our ZFN genome editing technology to modify a patient’s own, or autologous, HSPCs to produce functional red blood cellsusing fetal hemoglobin. Our genome editing technology can be used in HSPCs to precisely disrupt regulatory sequences that control the expression of keytranscriptional regulators, such as the BCL11A erythroid enhancer sequence, to reverse the switch from expression of the mutant adult beta-globin back to theproduction of functional fetal gamma-globin.The current standard of care for beta-thalassemia includes chronic blood transfusions, while the standard of care for SCD is a bone marrow transplant,or BMT, of HSPCs from a “matched” related donor, or an allogeneic BMT. However, these therapies are limited due to the risk of iron overload with bloodtransfusions, requiring subsequent iron chelation therapy, and the scarcity of matched donors and the significant risk of Graft versus Host Disease, or GvHD,with BMTs after transplantation of the foreign cells. By performing genome editing in HSPCs that are isolated from and subsequently returned to the samepatient (i.e., an autologous HSPC transplant), our approach has the potential to address these limitations. The goal of this approach is to develop a one-timelong-lasting treatment for beta-thalassemia and SCD.Preclinical data from clinical-scale in vitro studies have demonstrated that ST-400 and BIVV-003 can be manufactured by reproducible, high-level,ZFN-mediated modification in HSPCs mobilized in peripheral blood at clinical production scale (>108 cells), with an on-target modification efficiency ofgreater than 80%. Furthermore, erythroid differentiation of enhancer targeted cells showed modification of both BCL11A erythroid enhancer alleles in morethan 50% of the erythroid colonies and resulted in a greater than four-fold increase in gamma globin mRNA and protein production, compared to controls.Preclinical specificity studies of ST-400 and BIVV-003 revealed no detectable off-target activity using state-of-the art, unbiased, highly sensitive oligo-capture assays. Preclinical data from in vivo studies in immune-deficient mice demonstrated robust long-term (19 weeks) engraftment and that targeted genemodification was maintained through multi-lineage differentiation in the bone marrow and peripheral blood.Our IND submitted to the FDA for ST-400 became effective in September 2017, and we have designed an open-label, single arm Phase 1/2 clinical trialto evaluate the safety and efficacy of ST-400 in up to six adult subjects with beta-thalassemia. This trial was initiated in February 2018 and the first patientwas enrolled in June 2018 and dosed in January 2019.Bioverativ is our partner for ST-400 and is responsible for the clinical development of BIVV-003 for sickle cell disease, or SCD. The Phase 1/2 clinicaltrial to evaluate the safety and efficacy of BIVV-003 in up to eight adult subjects with SCD was initiated in August 2018 and patients are currently beingscreened in the United States. For more information relating to our collaboration with Bioverativ, see “—Collaborations—Bioverativ, Inc.”CAR-Treg With the TxCell Acquisition, we can now accelerate our research and development of innovative, personalized T-cell immunotherapies for thetreatment of inflammatory and autoimmune diseases with high unmet medical need. In this regard, we expect12that the TxCell Acquisition will accelerate our entry into the clinic with a CAR-Treg (which is a regulatory T cell, or Treg, genetically modified with achimeric antigen receptor, or CAR) therapy. We are evaluating the potential of the TxCell platform in solid organ transplantation as well as a range ofautoimmune diseases, such as multiple sclerosis, rheumatoid arthritis, inflammatory bowel diseases and inflammatory skin diseases. In addition, we intend touse our ZFN gene editing technology to potentially develop next-generation autologous and allogeneic CAR-Treg cell therapies for use in treatingautoimmune diseases. We plan to initiate a Phase 1/2 clinical trial of for TX-200, our first CAR-Treg investigational product candidate for solid organtransplant, in 2019. Engineered Cell Therapies In February 2018, we entered into a worldwide collaboration with Kite Pharma, Inc., or Kite, a wholly owned subsidiary of Gilead Sciences, Inc., orGilead, using our ZFN technology platform for the development of next-generation ex vivo cell therapies in oncology.Central Nervous SystemTauopathies We are using our ZFP TF gene regulation platform to develop potential gene therapies for tauopathy disorders, including Alzheimer’s disease andother neurodegenerative diseases. We believe a reduction in tau protein levels can help reduce intracellular tau protein aggregation and the formation ofneurofibrillary tangles in neurons, potentially ameliorating or reversing disease progression. We believe this approach may have a significant advantagecompared to monoclonal antibody-based approaches to Alzheimer’s disease and other tauopathy disorders because it is designed to selectively down-regulate the tau gene in neurons with the goal of reducing all forms of the tau protein globally across the central nervous system, or CNS. In contrast,monoclonal antibody-based approaches are limited in that they can only bind to certain forms of tau proteins. Preclinical studies in wildtype mice demonstrated that a single administration of tau-targeting ZFP TFs resulted in up to 70% reduction of tau mRNAand protein expression across the entire CNS, as well as sustained and well-tolerated ZFP TF expression with minimal impact on inflammatory markers.Additional preclinical studies in amyloid mouse models of Alzheimer’s disease demonstrated up to 80% reduction of tau protein levels in the brain andcerebrospinal fluid, as well as significantly reduced neuritic dystrophy after a single administration of ZFP TFs in mice with established disease pathology. We are currently conducting preclinical studies in NHPs to evaluate our ZFP TFs in larger mammalian species. We intend to seek a partner withdisease area expertise for the clinical development and commercialization of this program.C9ORF72–linked ALS/FTLDIn December 2017, we entered into a research collaboration and license agreement with Pfizer to develop and commercialize gene therapy productsthat use our ZFP TFs to treat ALS and FTLD linked to mutations of the C9ORF72 gene. ALS and FTLD are part of a spectrum of neurodegenerative disorderscaused by mutations in the C9ORF72 gene that involve hundreds of additional repetitions of a six base pair sequence of DNA. This ultimately leads to thedeterioration of motor neurons, in the case of ALS, or neurons in the frontal and temporal lobes, in the case of FTLD. Currently, there are no cures to halt orreverse the progression of ALS or FTLD. The C9ORF72 mutation is linked to approximately one-third of cases of familial ALS. We and Pfizer plan toinvestigate allele-specific ZFP-TFs with the potential to differentiate the mutant C9ORF72 allele from the wildtype allele and to specifically down-regulateexpression of the mutant form of the gene.We also have research stage programs in other monogenic diseases, immunology and cancer immunotherapy. See “—Collaborations—Pfizer Inc.” formore information relating to this agreement.Huntington’s DiseaseHuntington’s disease is an inherited, progressive neurologic disease for which there is no treatment or cure. The disease is caused by a particular typeof mutation in a single gene, the HTT gene. Most patients inherit one normal and one defective or mutant copy of the HTT gene, which causes Huntington’sdisease. The mutation is characterized by expansion of a repeated stretch of DNA sequence within the gene called a “CAG repeat.” A normal copy of the HTTgene usually has 10 to 29 of these CAG repeats but a defective copy has many more — generally greater than 39 repeats. While the protein produced by thenormal copy of the gene appears to be essential for development (mice lacking the gene do not survive to birth), the product of the mutated gene is damagingto cells. Symptoms, which include deterioration of muscle control, cognition and memory, usually develop between 35 and 44 years of age. It is known thatthe greater the number of CAG repeats, the earlier the onset. Huntington’s disease is usually fatal within 15 to 20 years after the onset of symptoms. Thedisease has a high prevalence for an inherited disorder. According to the Huntington’s Disease Society of America, approximately 30,000 people in theUnited States have Huntington’s disease. In addition, it is estimated that approximately 200,000 people in the United States are at risk of developing thedisease.13Research in animal models of the disease has shown that lowering the levels of the mutant HTT protein can prevent, or even reverse, diseaseprogression. However, to date most “HTT-lowering” methods decrease levels of both the normal and mutant forms of HTT, raising potential safety concernsgiven the importance of normal HTT protein. In collaboration with Shire, we are developing ZFP TFs that can selectively repress the expression of the mutantdisease-causing form of HTT while leaving expression levels of the normal gene unchanged. Preclinical studies in animal models of the disease are ongoingand Shire is responsible for all clinical development activities including filing the IND application. For more information on our collaboration with Shire, see“—Collaborations—Shire International GmbH.”Legacy Clinical Research ProgramsHuman Immunodeficiency Virus, or HIV, and Acquired Immunodeficiency Syndrome, or AIDSHIV infection results in the death of immune system cells, particularly CD4+ T-cells, and thus leads to AIDS, a condition in which the body’s immunesystem is depleted to such a degree that the patient is unable to fight off common infections. Ultimately, these patients succumb to opportunistic infections orcancers.Current Treatments and Unmet Medical NeedCurrently, there are over 30 antiretroviral drugs approved by the FDA to treat people infected with HIV. While these drugs can suppress virus in theblood to undetectable levels, they cannot eliminate the reservoir of cells containing genomically-integrated HIV from the body. Hence, individuals infectedwith HIV need to take antiretroviral drugs continuously. The drugs are expensive and can have significant side effects over time. There is no therapeuticapproach available that protects CD4+ T-cells, suppresses viral load, reduces the viral reservoir and does not require daily dosing.SB-728 – HIV/AIDSSB-728 uses our ZFN-mediated genome editing technology to disrupt the CCR5 gene in cells of a patient’s immune system to make these cellspermanently resistant to HIV infection. CCR5 is a co-receptor for HIV entry into T-cells and if CCR5 is not expressed on the cell surface HIV cannot infectthem or infects them with lower efficiency. The aim of this approach is to provide the patient with a population of HIV-resistant cells that can fight HIV andopportunistic infections, by mimicking the naturally occurring CCR5 delta-32 mutation that renders a population of individuals largely resistant to infectionby the most common strains of HIV. We are evaluating this genome editing approach to disrupt the CCR5 gene in both T cells and HSPCs as two potentialtherapeutic candidates, SB-728-T and SB-728-HSPC, respectively.We have conducted several clinical trials with SB-728-T, which were designed to evaluate safety and tolerability of SB-728-T, as well as the effect ofSB-728-T on subjects’ CD4 T-cell counts, levels of CCR5-modified T-cells, viral burden during a treatment interruption (TI) from anti-retroviral therapy, orART, and measure of the viral reservoir. The data to date have demonstrated an ability to efficiently knock out the CCR5 gene in T-cells by ZFN-drivengenome editing and grow the cells ex vivo, that a single infusion of SB-728-T led to proven engraftment, expansion and persistence of T-cells in vivo,sustained increases in CD4 T-cell counts, a significant and continuous decay of the HIV reservoir and the ability of certain subjects to control their viral loadsfor prolonged periods in the absence of ART. Over 100 subjects have been treated to date and the treatment appears to be well-tolerated.In addition, we have an ongoing investigator-sponsored Phase 1/2 clinical trial (SB-728mR-HSPC) to investigate SB-728-HSPC as a self-renewableand potentially lifelong source of HIV-resistant immune cells.We plan to advance the SB-728 program through potential future externally-funded collaborations.COLLABORATIONSWe have established collaborative and strategic partnerships for several of our therapeutic programs and also for several non-therapeutic applicationsof our technology. We will continue to pursue further partnerships when appropriate with selected pharmaceutical and biotechnology companies to fundinternal research and development activities and to assist in product development and commercialization. Our partnering decisions will be based on the bestway to bring new medicines to patients and on an evaluation of our capacity to bring such products to commercial stage rapidly and efficiently on our own.We are applying our ZFN technology platform to several commercial applications in which our products provide us and our strategic partners andcollaborators with potential technical, competitive and economic advantages.Kite Pharma, Inc.In February 2018, we entered into a collaboration and license agreement with Kite, a wholly-owned subsidiary of Gilead, for the research,development and commercialization of potential engineered cell therapies for cancer. Kite will be responsible for all14clinical development and commercialization of any resulting products. The Kite agreement became effective on April 5, 2018, when the waiting periodsunder the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions were completed.Subject to the terms of this agreement, we granted Kite an exclusive, royalty-bearing, worldwide, sublicensable license, under our relevant patentsand know-how, to develop, manufacture and commercialize, for the purpose of treating cancer, specific cell therapy products that may result from the researchprogram and that are engineered ex vivo using selected ZFNs and AAVs developed under the research program, to express CARs, TCRs or NKRs directed tocandidate targets.During the research program term and subject to certain exceptions, except pursuant to this agreement, we will be prohibited from researching,developing, manufacturing and commercializing, for the purpose of treating cancer, any cell therapy product that, as a result of ex vivo genome editing,expresses a CAR, TCR or NKR that is directed to a target expressed on or in a human cancer cell. After the research program term concludes and subject tocertain exceptions, except pursuant to this agreement, we will be prohibited from developing, manufacturing and commercializing, for the purpose of treatingcancer, any cell therapy product that, as a result of ex vivo genome editing, expresses a CAR, TCR or NKR that is directed to a candidate target.We received a $150 million upfront payment from Kite when the Kite agreement became effective in April 2018. In addition, Kite will reimburse ourdirect costs to conduct the joint research program, and Kite will be responsible for all subsequent development, manufacturing and commercialization of anylicensed products. We are also eligible to receive contingent development- and sales-based milestone payments that could total up to $3.01 billion if all thespecified milestones set forth in this agreement are achieved. Of this amount, approximately $1.26 billion relates to the achievement of specified research,clinical development, regulatory and first commercial sale milestones, and approximately $1.75 billion relates to the achievement of specified sales-basedmilestones if annual worldwide net sales of licensed products reach specified levels. Each development- and sales-based milestone payment is payable (i)only once for each licensed product, regardless of the number of times that the associated milestone event is achieved by such licensed product, and (ii) onlyfor the first ten times that the associated milestone event is achieved, regardless of the number of licensed products that may achieve such milestone event. Inaddition, we will be entitled to receive escalating, tiered royalty payments with a percentage in the single digits based on potential future annual worldwidenet sales of licensed products. These royalty payments will be subject to reduction due to patent expiration, entry of biosimilar products to the market andpayments made under certain licenses for third-party intellectual property.Kite has the right to terminate this agreement, in its entirety or on a per licensed product or per candidate target basis, for any reason after a specifiednotice period. Each party has the right to terminate this agreement on account of the other party’s bankruptcy or material, uncured breach. Pfizer Inc. We have two separate collaboration agreements with Pfizer. In May 2017, we entered into an exclusive, global collaboration and license agreementwith Pfizer, pursuant to which we established a collaboration for the research, development and commercialization of SB-525, our gene therapy productcandidate for hemophilia A, and closely related products. Under this agreement, we are responsible for conducting the Phase 1/2 clinical trial and certain manufacturing activities for SB-525, while Pfizer isresponsible for subsequent worldwide development, manufacturing, marketing and commercialization of SB-525. We may also collaborate in the researchand development of additional AAV-based gene therapy products for hemophilia A. We received an upfront fee of $70.0 million and are eligible to receive development milestone payments contingent on the achievement of specifiedclinical development, intellectual property, regulatory and first commercial sale milestones for SB-525 and potentially other products. The total amount ofpotential clinical development, intellectual property, regulatory, and first commercial sale milestone payments, assuming the achievement of all specifiedmilestones in this agreement, is $475.0 million, which includes up to $300.0 million for SB-525 and up to $175.0 million for other products that may bedeveloped under the agreement, subject to reduction on account of payments made under certain licenses for third party intellectual property. In addition,Pfizer agreed to pay us royalties for each potential licensed product developed under the agreement that are an escalating tiered, double-digit percentage ofthe annual net sales of such product and are subject to reduction due to patent expiration, entry of biosimilar products to the market and payment made undercertain licenses for third party intellectual property. Subject to the terms of the agreement, we granted Pfizer an exclusive, worldwide, royalty-bearing license, with the right to grant sublicenses, to usecertain technology controlled by us for the purpose of developing, manufacturing and commercializing SB-525 and related products. Pfizer granted us a non-exclusive, worldwide, royalty free, fully paid license, with the right to grant sublicenses, to use certain manufacturing technology developed under theagreement and controlled by Pfizer to manufacture our products that utilize the AAV delivery system. During a specified period, neither we nor Pfizer will bepermitted to clinically develop or commercialize, outside of the collaboration, certain AAV-based gene therapy products for hemophilia A. 15Unless earlier terminated, the agreement has a term that continues, on a per product and per country basis, until the later of (i) the expiration of patentclaims that cover the product in a country, (ii) the expiration of regulatory exclusivity for a product in a country, and (iii) fifteen years after the firstcommercial sale of a product in a country. Pfizer has the right to terminate the agreement without cause in its entirety or on a per product or per country basis.The agreement may also be terminated by either party based on an uncured material breach by the other party or the bankruptcy of the other party. Upontermination for any reason, the license granted by us to Pfizer to develop, manufacture and commercialize SB-525 and related products will automaticallyterminate. Upon termination by us for cause or by Pfizer any country or countries, Pfizer will automatically grant us an exclusive, royalty-bearing licenseunder certain technology controlled by Pfizer to develop, manufacture and commercialize SB-525 in the terminated country or countries.In December 2017, we entered into a separate exclusive, global collaboration and license agreement with Pfizer for the development andcommercialization of potential gene therapy products that use ZFP-TFs to treat ALS and FTLD linked to mutations of the C9ORF72 gene. Pursuant to thisagreement, we agreed to work with Pfizer on a research program to identify, characterize and preclinically develop ZFP-TFs that bind to and specificallyreduce expression of the mutant form of the C9ORF72 gene.We received a $12.0 million upfront payment from Pfizer and are eligible to receive up to $60.0 million in development milestone payments fromPfizer contingent on the achievement of specified preclinical development, clinical development and first commercial sale milestones, and up to$90.0 million commercial milestone payments if annual worldwide net sales of the licensed products reach specified levels. In addition, Pfizer will pay usroyalties based on an escalating tiered, mid- to high-single digit percentage of the annual worldwide net sales of the licensed products. These royaltypayments are subject to reduction due to patent expiration, entry of biosimilar products to the market and payments made under certain licenses for thirdparty intellectual property. Each party will be responsible for the cost of its performance of the research program. Pfizer will be operationally and financiallyresponsible for subsequent development, manufacturing and commercialization of the licensed products.Subject to the terms of the agreement, we granted Pfizer an exclusive, royalty-bearing, worldwide, license under our relevant patents and know-how todevelop, manufacture and commercialize gene therapy products that use resulting ZFP-TFs that satisfy pre-agreed criteria. During a specified period, neitherour company nor Pfizer will be permitted to research, develop, manufacture or commercialize outside of the collaboration any ZFPs that specifically bind tothe C9ORF72 gene.Unless earlier terminated, the agreement has a term that continues, on a per licensed product and per country basis, until the later of (i) the expiration ofpatent claims that cover the licensed product in a country, (ii) the expiration of regulatory exclusivity for a licensed product in a country, and (iii) fifteenyears after the first commercial sale of a licensed product in a major market country. Pfizer has the right to terminate the agreement without cause in itsentirety or on a per product or per country basis. The agreement may also be terminated by either party based on an uncured material breach by the otherparty or the bankruptcy of the other party. The agreement will also terminate if we are unable to identify any lead candidates for development within aspecified period of time or if Pfizer elects not to advance a lead candidate beyond a certain development milestone within a specified period of time. Upontermination for any reason, the license granted by us to Pfizer to develop, manufacture and commercialize licensed products under the agreement willautomatically terminate. Upon termination by us for cause or by Pfizer without cause for any licensed product or licensed products in any country orcountries, we will have the right to negotiate with Pfizer to obtain a non-exclusive, royalty-bearing license under certain technology controlled by Pfizer todevelop, manufacture and commercialize the licensed product or licensed products in the terminated country or countries. Following termination by us for Pfizer’s material breach, Pfizer will not be permitted to research, develop, manufacture or commercialize ZFPs thatspecifically bind to the C9ORF72 gene for a period of time. Following termination by Pfizer for our material breach, we will not be permitted to research,develop, manufacture or commercialize ZFPs that specifically bind to the C9ORF72 gene for a period of time. Bioverativ Inc.In January 2014, we entered into an exclusive worldwide collaboration and license agreement with Bioverativ, a wholly-owned subsidiary of SanofiGenzyme, to develop therapeutics for hemoglobinopathies, focused on beta-thalassemia and SCD. Under the agreement, we are jointly conducting tworesearch programs: the beta-thalassemia program and the SCD program. In the beta-thalassemia program, we are responsible for all discovery, research anddevelopment activities through the first human clinical trial. In the SCD program, both parties are responsible for research and development activitiesthrough the submission of an IND application for ZFP therapeutics intended to treat SCD. Bioverativ reimburses us for agreed upon internal and externalprogram-related costs.Under both programs, Bioverativ is responsible for subsequent worldwide clinical development, manufacturing and commercialization of licensedproducts developed under the agreement. At the end of the specified research terms for each program or under certain specified circumstances, Bioverativ hasthe right to step in and take over any of our remaining activities. Furthermore, we have an option to co-promote in the United States any licensed products totreat beta-thalassemia and SCD developed under the agreement, and Bioverativ will compensate us for such co-promotion activities. Subject to the terms ofthe agreement, we have16granted Bioverativ an exclusive, royalty-bearing license, with the right to grant sublicenses, to use certain ZFP and other technology controlled by us for thepurpose of researching, developing, manufacturing and commercializing licensed products developed under the agreement. We have also granted Bioverativa non-exclusive, worldwide, royalty-free, fully paid license, with the right to grant sublicenses, under our interest in certain other intellectual propertydeveloped pursuant to the agreement. During the term of the agreement, we are not permitted to research, develop, manufacture or commercialize, outside ofthe agreement, certain gene therapy products that target genes relevant to the licensed products.Under the agreement, we received an upfront license fee of $20.0 million and are eligible to receive development and sales milestone payments uponthe achievement of specified regulatory, clinical development and sales milestones. The total amount of potential regulatory, clinical development, and salesmilestone payments, assuming the achievement of all specified milestones in the agreement, is $276.3 million. In addition, we will receive royalty paymentsfor each licensed product that are a tiered double-digit percentage of annual net sales of each product.The agreement may be terminated by (i) us or Bioverativ for the uncured material breach of the other party, (ii) us or Bioverativ for the bankruptcy orother insolvency proceeding of the other party; (iii) Bioverativ, upon 180 days’ advance written notice to us and (iv) Bioverativ, for certain safety reasonsupon written notice to, and after consultation with, us. As a result, actual future milestone payments could be lower than the amounts stated above.Shire International GmbHIn January 2012, we entered into a collaboration and license agreement with Shire, a wholly-owned subsidiary of Takeda, to research, developand commercialize human therapeutics and diagnostics for monogenic diseases based on our ZFP technology. We received an upfront license fee of $13.0million in 2012 and recognized a $1.0 million milestone payment in 2014. In September 2015, we amended and restated our agreement with Shire. Pursuantto the amended and restated agreement, Shire retained its exclusive, worldwide license to ZFP therapeutics for treating Huntington’s disease and returned tous the worldwide, exclusive rights to gene targets for the development and commercialization of ZFP therapeutics for hemophilia A and B.Under the amended and restated agreement, Shire has full control over, and full responsibility for the costs of, the Huntington’s disease programretained by Shire, subject to certain obligations, including the obligation to retain us to perform ZFP design, optimization and assessment services and toreimburse us for the costs of such services. Shire does not have any milestone payment obligations but is required to pay single digit percentage royalties tous, up to a specified maximum cap, on the commercial sales of ZFP therapeutic products for Huntington’s disease. During the term of the amended andrestated agreement, we are not permitted to research, develop or commercialize, outside of the agreement, certain products that target the HTT gene.Under the amended and restated agreement, we have full control over, and full responsibility for the costs of, the hemophilia A and B programsreturned to us by Shire, subject to certain diligence obligations. We also granted Shire a right of first negotiation to obtain a license to such programs undercertain circumstances. We are required to pay single digit percentage royalties to Shire, up to a specified maximum cap, on commercial sales of therapeuticproducts from the programs returned to us by Shire.The amended and restated agreement may be terminated by (i) us or Shire, in whole or in part, for the uncured material breach of the other party, (ii) usor Shire for the bankruptcy or other insolvency proceeding of the other party and (iii) Shire, in its entirety, effective upon at least 90 days’ advance writtennotice.Other PartnershipsIn addition to our partnerships for the development of human therapeutic applications, we have also licensed our technology in several other areas,such as plant agriculture and research reagents, including the production of transgenic animals and cell-line engineering. These license partners include DowAgroSciences LLC, Sigma-Aldrich Corporation, Genentech, Inc., Open Monoclonal Technology, Inc. and F. Hoffmann-La Roche Ltd and Hoffmann-LaRoche Inc.INTELLECTUAL PROPERTYPatents and licenses are important to our business. Our strategy is to file or license patent applications to protect technology, inventions andimprovements to inventions that we consider important for the development of our genome editing and gene regulation technology. We seek patentprotection and licenses that relate to our technology and candidates in our pipeline and/or may be important to our future. We have filed numerous patentsand patent applications with the United States Patent and Trademark Office, or U.S. PTO, and foreign jurisdictions. This proprietary intellectual propertyincludes methods relating to the design of zinc finger, Transcription Activator-Like Effector, or TALE, proteins and Clustered Regularly Interspaced ShortPalindromic Repeats, or CRISPR/Cas editing systems, therapeutic applications of genome editing technology, enabling technologies related to our platformand the use of genome editing across a variety of applications. We rely on a combination of patent, copyright, trademark, proprietary17know–how, continuing technological innovations, trade secret laws, as well as confidentiality agreements, materials transfer agreements, research agreementsand licensing agreements, to establish and protect our proprietary rights.In-Licensed TechnologyWe have exclusively licensed intellectual property directed to the design, selection, and use of ZFPs, ZFNs and ZFP TFs for genome editing and generegulation from the California Institute of Technology, or Cal Tech, and the University of Utah, or Utah. These licenses grant us exclusive rights to make, useand sell ZFPs, ZFNs and ZFP TFs under three families of patent filings. As of February 15, 2019, these patent filings have resulted in over nine issued U.S.patents and over 26 granted foreign patents and are still active, with one pending U.S. patent application and 2 pending applications in foreign patent offices.Our license agreement with CalTech granted us a worldwide exclusive license to certain patents related to chimeric nucleases for genome targeting forall fields of use, which expire in September 2023. Our license agreement with Utah granted us a worldwide exclusive license to technology and patentsrelating to the use of ZFNs for all fields of use, which expires in May 2025.We have also entered into licenses potentially useful for specific therapeutic uses of our genome editing technologies with the Regents of theUniversity of California or UC, and the Children's Medical Center Corporation or CMCC. The patents included in these licenses relate to CNS disorders andhemoglobinopathies, respectively. These licenses include three patent families, including three issued U.S. patents, 12 allowed or granted foreign patents,over 25 pending foreign patent applications and three pending U.S. patent applications. The UC patents expire in May of 2021, the first CMCC familyexpires in September 2029, and the second expires in November 2033.Our subsidiary, TxCell has a license agreement with the University of British Columbia pursuant to which it exclusively licensed the right to the CARfor use in TX-200. This license includes one patent family which expires in September 2038.Our Intellectual PropertyIn addition to our in-licensed patent portfolio, we have numerous issued patents and pending patent filings directed to the design, composition and useof ZFPs, ZFNs, ZFP TFs, TALE proteins and CRISPR/Cas systems and other technology related to our program.Some of the earliest zinc finger patents in our portfolio began expiring in 2015, with the average expiration of our currently issued patents expiringbeing late-2026. However, we have continued to build on this patent portfolio and have been issued additional patents and have applications pending thatprovide protection for our ZFP technology. These patents in our portfolio may be subject to Patent Term Adjustment (due to delays in patent prosecution bythe USPTO), Patent Term Extension (due to review of a patented product by a regulatory agency) or terminal disclaimer. Additionally, patents that may beissued from our pending applications will extend the patent exclusivity of our patent estate.We believe that our licensed patents and patent applications, as well as our issued patents and pending patent applications, in the aggregate, willprovide us with a substantial intellectual property position in our commercial development of our genome editing, gene therapy, cell therapy and generegulation programs. In this regard, patents issued to us, applied for by us, or exclusively and non-exclusively licensed to us, cover the following types ofinventions, processes and products: •ZFP and ZFN design, engineered nucleases, and compositions (four patents issued with expiration dates ranging from 2029 to 2036): includesDNA target site selection, zinc finger binding domain design, nuclease domain design, linker design, DNA nickases, ZFP libraries databases andmethods of construction, as well as methods to increase zinc finger binding specificity (see, e.g., US9982245, US10066242, US10113207); •ZFP Therapeutics (three patents issued with expiration dates ranging from 2028 to 2031): Methods relating to activation and inhibition ofendogenous genes, identification of accessible regions within chromatin, including treatment of Huntington’s disease, HIV, cancer therapeutics,modulation of cardiac contractility and methods to regulate the glucocorticoid receptor (see, e.g., US9943565); •Nuclease Therapeutics (12 patents issued with expiration dates ranging from 2031 to 2036): Treatments for HIV, beta-thalassemia and SCD,hemophilia IMDs, genome editing, Parkinson’s Disease, regulation of the expression of PD1; Immunomodulatory therapeutics; Cystic Fibrosis;CNS disease; Severe combined immunodeficiency, Modified T cells, including HLA knock out and methods of editing stem cells (see, e.g.,US9877988, US9963715, US10072066, US10081661, US10143760); and •Non-Therapeutic Applications of ZFPs and Nucleases (seven patents issued with expiration dates ranging from 2028 to 2035): Identification ofregulatory sequences, analysis of gene regulation, structure and biological function, methods of agricultural biotechnology, methods of alteringcellular differentiation state, development of cell lines for improved protein18 production, methods of transgenic animal development, engineering of stem cells, methods of genome editing (see, e.g., US9890395).The patent positions of pharmaceutical and biotechnology firms, including our patent position, are uncertain and involve complex legal and factualquestions for which important legal tenets are largely unresolved and are subject to interpretation and refinement by the court system. Patent applicationsmay not result in the issuance of patents and the coverage claimed in a patent application may be significantly reduced before a patent is issued. Although wehave filed for patents on some aspects of our technology, we cannot provide assurances that patents will be issued as a result of these pending applications orthat any patent that has been or may be issued will be upheld. The laws of some foreign countries may not protect our proprietary rights to the same extent asdo the laws of the United States. For example, our issued European patents EP2171052 and EP2527435 have been opposed in Europe. Our EP2281050 casewas revoked during Opposition in November 2016. EP2126054, which is exclusively licensed to TxCell, was revoked during Opposition in November 2018.Similarly, EP2171052 and EP2527435 underwent Opposition hearings in early 2017. Although these cases emerged from the Opposition hearings, theopponent filed appeals that are currently underway, and we do not know what the outcome of these procedures will be. The claims of these patents may beamended such that claim scope is reduced or the patents may be revoked as a result of these procedures.In the future, third parties may assert patent, copyright trademark, and other intellectual property rights to technologies that are important to ourbusiness. For example, TxCell has exclusively licensed the rights to technology related to redirected Treg cells from the Yeda Research and DevelopmentCompany, or Yeda. A patent included in this exclusive license agreement with Yeda was granted in Europe in July 2016. Subsequent to this grant, the patentwas opposed by several parties in May 2017 and revoked in November 2018. The outcome following legal assertions of invalidity and unenforceability isunpredictable. Any claims asserting that our products infringe or may infringe proprietary rights of third parties, if determined adversely to us, couldsignificantly harm our business. See “Risk Factors—Risks Relating to Our Intellectual Property”.COMPETITIONWe, and our licensed partners, are the leaders in the research, development, and commercialization of DNA binding proteins for genome editing andregulation of gene expression. We are aware of several companies focused on other methods for editing genes and regulating gene expression and a limitednumber of commercial and academic groups pursuing the development of ZFP gene regulation and genome editing technology. The field of applied generegulation and genome editing is highly competitive and we expect competition to persist and intensify in the future from a number of different sources,including pharmaceutical and biotechnology companies; academic and research institutions; and government agencies that will seek to develop ZFPs as wellas technologies that will compete with our ZFP technology platform, such as TALE proteins and the CRISPR/Cas9 system.Accordingly, our competitors may succeed in obtaining patent protection, receiving FDA approval, or commercializing competitive products beforeus. If we commence commercial product sales, we may be competing against companies with greater marketing, sales, distribution and manufacturingcapabilities, areas in which we have limited or no experience. In addition, any product candidate that we successfully develop may compete with existingproducts that have long histories of safe and effective use.Although we are in the clinical development phase of operations and have no current therapeutic product sales, we believe the following companies,products and/or technologies may potentially be competitive with our technology or our product candidates under development: •Protein pharmaceuticals under development at pharmaceutical and biotechnology companies such as Pfizer, Bayer AG, Novo Nordisk A/S,Genzyme Corp., Shire, BioMarin Pharmaceutical Inc., Biogen Inc., Acceleron Pharma Inc., ArmaGen, Inc., Protalix Biotherapeutics, Inc., F.Hoffman-LaRoche Ltd., Novartis AG, or Novartis, and numerous other pharmaceutical and biotechnology firms. •Gene therapy companies developing gene-based products in clinical trials. Orchard Therapeutics plc’s Strimvelis™ (acquired fromGlaxoSmithKline plc, or GSK) is approved in Europe and Spark Therapeutics, Inc.’s LUXTURNA™ is approved in the United States andEurope. Other competitors in this category may include, but not be limited to, uniQure N.V., BioMarin Pharmaceutical Inc., bluebird bio,Inc., REGENXBIO Inc., Ultragenyx Pharmaceutical Inc., Voyager Therapeutics, Inc., Shire, Pfizer, Freeline Therapeutics and Novartis. •Cell therapy companies developing cell-based products. Novartis’ Kymriah™ and Gilead’s Yescarta™, two gene-modified cell-basedtherapies, are approved in both the United States and Europe. Other competitors in this category may include, but not be limited to,Adaptimmune Therapeutics PLC, bluebird bio, Inc., Cellectis S.A., Juno Therapeutics, Inc., Kite / Gilead, AvroBio, Inc., MedeorTherapeutics, Inc., CRISPR Therapeutics AG, Intellia Therapeutics, Inc., Casebia Therapeutics, Targazyme, Inc., ZIOPHARM Oncology,Inc., Tmunity Therapeutics, Inc., Caladrius Biosciences, Inc., TRACT Therapeutics, Inc., Cellenkos™, Inc., Regcell Co., Ltd. and CelgeneCorporation, or Celgene.19 •Nuclease technologies under development for therapeutic applications of genome modification including companies such as EditasMedicine, Inc., CRISPR Therapeutics AG, Caribou Biosciences, Inc. and Intellia Therapeutics, Inc. developing the CRISPR/Cas9 system,Cellectis S.A. developing TALE nucleases and meganucleases, bluebird bio, Inc. developing Homing Endonucleases and MegaTALs andPrecision BioSciences, Inc. developing meganucleases. •Antisense therapeutics and RNA interference technology, including RNAi and microRNA, which are technologies that may compete withus in the development of novel therapeutic products acting through the regulation of gene expression. These technologies are beingdeveloped by several companies including Alnylam Pharmaceuticals, Inc., Ionis Pharmaceuticals, Inc., Sanofi Genzyme and RegulusTherapeutics Inc. •Small molecules in development from both in-house drug discovery programs of pharmaceutical companies such as Pfizer, GSK, NovartisAG and Merck & Co., Inc., as well as from biotechnology companies with expertise and capabilities in small molecule discovery anddevelopment such as Gilead, Sanofi Genzyme, Celgene and Global Blood Therapeutics, Inc., which has a small molecule product indevelopment for SCD. •Monoclonal antibody companies and product candidates from certain biotechnology firms such as Genentech, Inc. and Amgen Inc.We expect to face intense competition from other companies for collaborative arrangements with pharmaceutical and biotechnology companies forestablishing relationships with academic and research institutions, for licenses to proprietary technology and for subjects in our clinical trials of treatmentsfor rare diseases. These competitors, either alone or with their collaborative partners, may succeed in developing technologies or products that are moreeffective or less costly than ours.Our ability to compete successfully will depend, in part, on our ability to: •develop safe, efficacious and commercially attractive proprietary products; •obtain access to gene transfer technology on commercially reasonable terms; •obtain required regulatory approvals; •obtain reimbursement for our products in approved indications; •attract and retain qualified scientific and product development personnel; •enter into collaborative and strategic partnerships with others, including our competitors, to develop our technology and productcandidates; •obtain and enforce patents, licenses or other proprietary protection for our products and technologies; •formulate, manufacture, market and sell any product that we develop; •develop and maintain products that reach the market first and are technologically superior to or are of lower cost than other products in themarket; and •recruit subjects into our clinical trials in a timely fashion. MANUFACTURINGWe rely on contract manufacturing organizations, or CMOs, to produce our preclinical and clinical product candidates in accordance with FDA and EMAmandated regulations, also known as current good manufacturing practices, or cGMPs. We employ a technical operations staff in the areas of processdevelopment, analytical development, quality control, quality assurance, project management, and manufacturing to facilitate appropriate oversight of ourCMOs, support of our regulatory filings and execution of clinical trials. In 2017, we expanded our services agreement with Brammer Bio MA, LLC to providededicated capacity to supply our preclinical and clinical programs. Additionally, we plan to build a cGMP manufacturing facility in our new building inBrisbane, CA for which we are currently occupying the 2nd and 3rd floors. This facility will be designed to manufacture Phase 1/2 clinical trial supplies forour pipeline programs. We believe this balanced approach to manufacturing, investing in internal capacity/capabilities while strengthening our commitmentto external capacity, will enable us to meet our anticipated pipeline needs.We currently leverage three distinct manufacturing platforms: AAV vector production for our genome editing and gene therapy product candidates, HSPCmodification for our cell therapy product candidates and engineered T cell therapies. We use a commercial scale baculovirus manufacturing platform tomanufacture AAV vectors for genome editing and gene therapy, with each AAV vector packaging a different transgene specific to the target indication orZFN. The manufacturing process for our HSPC cell therapy product candidates utilizes the patient’s own HSPCs. These HSPCs are transfected using mRNA toproduce ZFNs that target specific DNA sites, resulting in modified HSPCs. The third platform utilizes our ZFN technology to transform CAR-Tregs forautologous and20allogeneic cell therapies. With the acquisition of TxCell, we also added capabilities to manufacture regulator T-cells in therapeutic quantities to be used totreat auto-immune disorders. GOVERNMENT REGULATIONWe operate within the heavily regulated pharmaceutical framework and much of our operations, including nonclinical and clinical trials, development,manufacturing, commercialization, marketing and reimbursement are subject to regulatory approvals. Relevant regulatory authorities include, but are notlimited to, the FDA, the EMA, Commission of the European Union, or EU member state agencies, including the UK Medicines and Healthcare ProductsRegulatory Agency, or MHRA.In the United States, the FDA regulates biologic products including gene therapy and human cellular therapy products under the Federal Food, Drug,and Cosmetic Act, or the FDCA, the Public Health Service Act, or the PHSA, and regulations and guidance implementing these laws. The FDCA, PHSA andtheir corresponding regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, packaging, storage, record keeping,distribution, reporting, advertising and other promotional practices involving biologic products. Applications to the FDA are required before conductinghuman clinical testing of biologic products and in the European Union approval must be obtained from the EMA. FDA approval also must be obtained beforemarketing of biologic products. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local andforeign statutes and regulations require the expenditure of substantial time and financial resources and we may not be able to obtain the required regulatoryapprovals.Accelerated AssessmentA number of agencies, including the FDA and the EMA, have accelerated approval programs, including for innovative products and in areas of highunmet medical need, such as PRIME in the EU. These programs require a certain level of evidence demonstrating safety and efficacy in patients from earlystage clinical trials. Entry into one of these accelerated schemes may result in assistance with the scientific opinion and faster approval timelines. Some ofthese programs may offer joint approval and reimbursement advice. It is noted that even applications in an accelerated assessment scheme may be assessedunder standard timelines, where the regulatory authority deems it necessary to address more questions.U.S. Biologic Products Development ProcessOur product candidates must be approved by the FDA before they may be legally marketed in the United States. The process required by the FDAbefore a biologic product candidate may be marketed in the United States generally involves the following: •completion of preclinical laboratory tests and in vivo studies in accordance with the FDA’s current Good Laboratory Practice, or GLP,regulations and applicable requirements for the humane use of laboratory animals or other applicable regulations; •submission to the FDA of an application for an IND exemption, which allows human clinical trials to begin unless FDA objects within30 days; •approval by an independent institutional review board, or IRB, reviewing each clinical site before each clinical trial may be initiated; •performance of adequate and well‑controlled human clinical trials according to the FDA’s GCP regulations, and any additional requirementsfor the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biologicproduct candidate for its intended use; •preparation and submission to the FDA of a biologics license application, or BLA, for marketing approval that includes substantial evidenceof safety, purity and potency from results of nonclinical testing and clinical trials; •review of the product by an FDA advisory committee, if applicable; •satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biologic product candidate is produced toassess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve the biologicproduct candidate’s identity, safety, strength, quality, potency and purity; •potential FDA audit of the nonclinical and clinical trial sites that generated the data in support of the BLA; and21 •payment of user fees and FDA review and approval, or licensure, of the BLA.Before testing any biologic product candidate in humans, including a gene therapy product candidate, the product candidate must undergopreclinical testing. Preclinical tests, also referred to as nonclinical studies, include laboratory evaluations of product chemistry, toxicity and formulation, aswell as in vivo studies to assess the potential safety and activity of the product candidate and to establish a rationale for therapeutic use. The conduct of thepreclinical tests must comply with federal regulations and requirements including GLPs.Concurrent with clinical trials, companies usually must complete some long‑term preclinical testing, such as animal tests of reproductive adverseevents and carcinogenicity, and must also develop additional information about the chemistry and physical characteristics of the drug and finalize a processfor manufacturing the drug in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistentlyproducing quality batches of the drug candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, qualityand purity of the final drug product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstratethat the drug candidate does not undergo unacceptable deterioration over its shelf life.Human gene transfer protocols are subject to the FDA’s oversight and other clinical trial regulations, and oversight at the local level as set forth inNIH Guidelines. Specifically, under the NIH Guidelines, supervision of human gene transfer trials includes evaluation and assessment by an institutionalbiosafety committee, or IBC, a local institutional committee that reviews and oversees research utilizing recombinant or synthetic nucleic acid molecules atthat institution. The IBC assesses the safety of the research and identifies any potential risk to public health or the environment, and such review may resultin some delay before initiation of a clinical trial. Compliance with the NIH Guidelines is mandatory for investigators at institutions receiving NIH funds forresearch involving recombinant DNA. However, many companies and other institutions, not otherwise subject to the NIH Guidelines, voluntarily followthem.The clinical trial sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any availableclinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. Some preclinical testing may continue even after the IND issubmitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA places the clinical trial on a clinical hold. In such acase, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA also may impose clinical holds on abiologic product candidate at any time before or during clinical trials due to safety concerns or non‑compliance. If the FDA imposes a clinical hold, trialsmay not recommence without FDA authorization and then only under terms authorized by the FDA. Accordingly, we cannot be sure that submission of anIND will result in the FDA allowing clinical studies to begin, or that, once begun, issues will not arise that suspend or terminate such studies.EU Drug Development ProcessSimilar to the United States, the EU regulatory framework sets both EU-wide and national, Member State-specific requirements for the developmentand approval of medicinal products. Article 8(3) of Directive 2001/83/EC sets out the contents of a marketing authorization, or MA, application and all theinformation that must be submitted for the evaluation of a medicinal product. Certain preclinical (also termed “non-clinical”) data is required in order toenable clinical trials and later be used in dossier for a marketing authorization application. All studies should take place in accordance with GLP and allapplicable EMA, Commission and European Pharmacopoeia guidelines on preclinical studies, including guidance on quality, non-clinical and clinicalaspects of medicinal products containing genetically modified cells.The requisite amount of preclinical data enables the design of a clinical trial, from Phase I (first-in-human clinical trials) through to Phases II andIII, which are safety and efficacy and dosing studies and similar restrictions and requirements apply as in the US regarding preclinical data, approvals for trialsusing vectors. The preclinical tests should establish parameters such as toxicity, pharmacodynamics and pharmacokinetic properties, the quality of genetransfer medicinal products. Due to the particular nature of gene therapy medicinal products, it is recognized that that it may not always be possible for thenon-clinical safety studies to be in conformity with the principles of GLP and a proper justification should be submitted where a pivotal non-clinical safetystudy has not been conducted under GLP rules.Clinical studies are crucial to obtaining the required data and the requirements governing the conduct of clinical trials are further analyzed below.All medicinal products and advanced therapy medicinal products, or ATMPs, must be manufactured in accordance with the guidelines on GMP,and in a GMP licensed facility, which can be subject to GMP inspections.22Human Clinical Trials Under an INDClinical trials involve the administration of the biologic product candidate to healthy volunteers or patients under the supervision of qualifiedinvestigators which generally are physicians not employed by, or under, the control of the trial sponsor. Clinical trials are conducted under written studyprotocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria and the parameters tobe used to monitor subject safety, including stopping rules that assure a clinical trial will be stopped if certain adverse events should occur. Each protocoland any amendments to the protocol must be submitted to the FDA as part of the IND. Clinical trials must be conducted and monitored in accordance with theFDA’s regulations comprising the GCP requirements, including the requirement that all research subjects provide informed consent.Further, each clinical trial must be reviewed and approved by an IRB at or servicing each institution at which the clinical trial will be conducted.An IRB is charged with protecting the welfare and rights of trial participants and considers items such as whether the risks to individuals participating in theclinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the form and content of the informed consent thatmust be signed by each clinical trial subject, or their legal representative, reviews and approves the study protocol, and must monitor the clinical trial untilcompleted.Human clinical trials typically are conducted in three sequential phases that may overlap or be combined: •Phase 1. The biologic product candidate initially is introduced into a small number of human subjects and tested for safety, dosage tolerance,absorption, metabolism, distribution, excretion and, if possible, to gain an early understanding of its effectiveness. Phase 1 clinical trials ofgene therapies are typically conducted in patients rather than healthy volunteers. •Phase 2. The biologic product candidate is evaluated in a limited patient population to identify possible adverse effects and safety risks, topreliminarily evaluate the efficacy of the product candidate for specific targeted diseases and to determine dosage tolerance, optimal dosageand dosing schedule. •Phase 3. Phase 3 clinical trials are commonly referred to as “pivotal” studies, which typically denotes a study which presents the data that theFDA or other relevant regulatory agency will use to determine whether or not to approve a biologic product. In Phase 3 studies, the biologicproduct candidate is administered to an expanded patient population, generally at multiple geographically dispersed clinical trial sites inadequate and well‑controlled clinical trials to generate sufficient data to statistically confirm the potency and safety of the product forapproval. These clinical trials are intended to establish the overall risk/benefit ratio of the product candidate and provide an adequate basisfor product labeling.Post‑approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial approval. These clinical trials are used togain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long‑term safety follow‑up. Sometimesapproval for a product is conditional upon the completion of post-marketing clinical studies.During all phases of clinical development, regulatory agencies (such as the FDA, the EMA and other comparable regulatory agencies) requireextensive monitoring and auditing of all clinical activities, clinical data and clinical trial investigators. Annual progress reports detailing the results of theclinical trials must be submitted to the FDA.Written IND safety reports must be promptly submitted to the FDA, the NIH and the investigators for: serious and unexpected adverse events; anyfindings from other trials, in vivo laboratory tests or in vitro testing that suggest a significant risk for human subjects; or any clinically important increase inthe rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety report within15 calendar days after the sponsor determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal orlife‑threatening suspected adverse reaction within seven calendar days after the sponsor’s initial receipt of the information.The FDA or the sponsor or its data safety monitoring board may suspend a clinical trial at any time on various grounds, including a finding that theresearch subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at itsinstitution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the biologic product candidate has been associated withunexpected serious harm to patients.The FDA usually recommends that sponsors observe subjects for potential gene therapy‑related delayed adverse events for a 15‑year period,including a minimum of five years of annual examinations followed by 10 years of annual queries, either in person or by questionnaire.23In the EU, clinical trials almost always require approval from a national competent authority of the relevant Member State and an approval from anEthics Committee. If the medicinal product is considered to be a genetically modified organism, or GMO, then GMO approval must also be obtained. There isno harmonization between Member States regarding the approach to and timelines of GMO approval, which results in significant challenges and timerestrictions.The conduct of clinical trials should follow the approved clinical trial protocol and be in accordance with the principles of GCP. Gene therapymedicinal products are in addition subject to the rules of GCP for ATMPs (currently in draft form), which outline specific additional safeguards andrequirements. Record retention requirements are increased for ATMPs and there are relevant long-term follow up and human safety and traceabilityrequirements.Compliance with cGMP RequirementsManufacturers of biologics must comply with applicable cGMP regulations, including quality control and quality assurance and maintenance ofrecords and documentation. Manufacturers and others involved in the manufacture and distribution of such products also must register their establishmentswith the FDA and certain state agencies. Both domestic and foreign manufacturing establishments must register and provide additional information to theFDA upon their initial participation in the manufacturing process. Any material changes to the manufacturing equipment, process or location of the approvedmanufacturing site must be reported to the relevant agency/authority. Establishments may be subject to periodic, unannounced inspections by governmentauthorities (including regulatory agencies) to ensure compliance with cGMP requirements and other laws. Discovery of problems may result in a governmententity placing restrictions on a product, manufacturer or holder of an approved BLA, and may extend to requiring withdrawal of the product from the market,issue warning or similar letters or seeking civil, criminal or administrative sanctions against the company. The FDA will not approve a BLA unless itdetermines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of theproduct within required specification.Concurrent with clinical trials, companies usually complete additional preclinical studies and must also develop additional information about thephysical characteristics of the biologic product candidate as well as finalize a process for manufacturing the product candidate in commercial quantities inaccordance with cGMP requirements. To help reduce the risk of the introduction of adventitious agents or of causing other adverse events with the use ofbiologic products, the PHSA emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined. Themanufacturing process must be capable of consistently producing quality batches of the product candidate and, among other requirements, the sponsor mustdevelop methods for testing the identity, strength, quality, potency and purity of the final biologic product. Additionally, appropriate packaging must beselected and tested and stability studies must be conducted to demonstrate that the biologic product candidate does not undergo unacceptable deteriorationover its shelf life.U.S. Review and Approval ProcessesThe results of the preclinical tests and clinical trials, together with detailed information relating to the product’s CMC and proposed labeling,among other things, are submitted to the FDA as part of a BLA requesting approval to market the product for one or more indications.Under the Prescription Drug User Fee Act, or PDUFA, as amended, each BLA must be accompanied by a significant user fee. The FDA adjusts thePDUFA user fees on an annual basis. The PDUFA also imposes an annual program fee for approved biologics. Fee waivers or reductions are available incertain circumstances, including a waiver of the application fee for the first application filed by a small business.The FDA reviews a BLA within 60 days of submission to determine if it is substantially complete before the agency accepts it for filing. The FDAmay refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In thatevent, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it forfiling. Once the submission is accepted for filing, the FDA begins an in‑depth, substantive review of the BLA.The FDA reviews the BLA to determine, among other things, whether the proposed product candidate is safe and potent, or effective, for itsintended use, has an acceptable purity profile and whether the product candidate is being manufactured in accordance with cGMP to assure and preserve theproduct candidate’s identity, safety, strength, quality, potency and purity. The FDA may refer applications for novel biologic products or biologic productsthat present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review,evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by therecommendations of an advisory committee, but it considers such recommendations carefully when making decisions. During the product approval process,the FDA also will determine whether a risk evaluation and mitigation strategy, or REMS, is necessary to assure the safe use of the product candidate. REMSuse risk minimization strategies beyond the professional labeling to ensure that the benefits of the product outweigh the24potential risks. To determine whether a REMS is needed, the FDA will consider the size of the population likely to use the product, seriousness of the disease,expected benefit of the product, expected duration of treatment, seriousness of known or potential adverse events, and whether the product is a new molecularentity. A REMS could include medication guides, physician communication plans and elements to assure safe use, such as restricted distribution methods,patient registries and other risk minimization tools. If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS; the FDAwill not approve the BLA without a REMS, if required.Before approving a BLA, the FDA will inspect the facilities at which the product candidate is manufactured. The FDA will not approve the productcandidate unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistentproduction of the product candidate within required specifications. Additionally, before approving a BLA, the FDA typically will inspect one or moreclinical sites to assure that the clinical trials were conducted in compliance with IND trial requirements and GCP requirements.On the basis of the BLA and accompanying information, including the results of the inspection of the manufacturing facilities, the FDA may issuean approval letter or a complete response letter. An approval letter authorizes commercial marketing of the biologic product with specific prescribinginformation for specific indications. A complete response letter generally outlines the deficiencies in the submission and may require substantial additionaltesting or information in order for the FDA to reconsider the application. If and when those deficiencies have been addressed to the FDA’s satisfaction in aresubmission of the BLA, the FDA will issue an approval letter.If a product candidate receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indicationsfor use may otherwise be limited. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling.The FDA may impose restrictions and conditions on product distribution, prescribing or dispensing in the form of a REMS, or otherwise limit the scope ofany approval. In addition, the FDA may require post‑marketing clinical trials, sometimes referred to as Phase 4 clinical trials, designed to further assess abiologic product’s safety and effectiveness, and testing and surveillance programs to monitor the safety of approved products that have been commercialized.The FDA has agreed to specified performance goals in the review of BLAs under the PDUFA. One such goal is to review standard BLAs in10 months after the FDA accepts the BLA for filing, and priority BLAs in six months, whereupon a review decision is to be made. The FDA does not alwaysmeet its PDUFA goal dates for standard and priority BLAs and its review goals are subject to change from time to time. The review process and the PDUFAgoal date may be extended by three months if the FDA requests or the BLA sponsor otherwise provides additional information or clarification regardinginformation already provided in the submission within the last three months before the PDUFA goal date.EU Review and Approval ProcessBefore a medicinal product can be placed on the market in the EU, it must have received an MA. This could either be at national or EU level undera mutual recognition, decentralized or centralized procedure. Our product candidates are innovative treatments, which will bear the classification of ATMPand/or orphan status. As such, the appropriate authorization procedure is the centralized procedure, which involves an MA being granted by the EuropeanCommission following a positive opinion by the EMA. A centralized MA is simultaneously valid in all EU Member States and the European Economic Area,or EEA, (Iceland, Liechtenstein and Norway). A centralized MA also results in a single set of product information (patient information leaflet, labelling andsummary of product characteristics) for all EU Member States.The timeline for the grant of a centralized MA since the time of the application is 210 days for the assessment of the application (including “clockstops” for the applicant to prepare answers to the questions from the EMA). The Committee for Medicinal Products for Human Use, or the CHMP, may eitherprovide a positive or negative opinion. Following a positive opinion, the European Commission will usually issue its legally binding MA after 67 days. Anegative opinion may be appealed by the applicant who must submit a request for re-examination within 60 days. There is the possibility for acceleratedtimelines of drug applications for eligible applicants, which can reduce the timeline to 150 days, if the applicant can produce sufficient justification.If the MA application contains less comprehensive than the required standard as at the time of the application, when there are public healthgrounds and often in the case of orphan medicinal products, the EMA may recommend to the European Commission that it issues a different type of an MA,as follows: (a) a Conditional MA (valid for one year and renewable), when the medicinal product shows a positive benefit-risk balance and targets an unmetmedical need and it is expected that the applicant will be able to provide comprehensive data in due course; or (b) an MA under ‘exceptional circumstances’,when it is not expected that the applicant will be able to provide comprehensive efficacy and safety data (often for very rare indications).25Post‑approval RequirementsRigorous and extensive FDA regulation of biologic products continues after approval, particularly with respect to cGMP requirements.Manufacturers are required to comply with applicable requirements in the cGMP regulations, including quality control and quality assurance andmaintenance of records and documentation. Other post‑approval requirements applicable to biologic products include reporting of cGMP deviations thatmay affect the identity, potency, purity and overall safety of a distributed product, record‑keeping requirements, reporting of adverse effects, reportingupdated safety and efficacy information and complying with electronic record and signature requirements. After a BLA is approved, the product also may besubject to official lot release. If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA,together with a release protocol, showing a summary of the history of manufacture of the lot and the results of all tests performed on the lot. The FDA alsomay perform certain confirmatory tests on lots of some products before releasing the lots for distribution. In addition, the FDA conducts laboratory researchrelated to the regulatory standards on the safety, purity, potency and effectiveness of biologic products.A sponsor also must comply with the FDA’s or appropriate national authority’s advertising and promotion requirements, such as the prohibition onpromoting products for uses or in patient populations that are not described in the product’s approved labeling (known as “off‑label use”). Discovery ofpreviously unknown problems or the failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product orwithdrawal of the product from the market as well as possible civil or criminal sanctions. In addition, changes to the manufacturing process or facilitygenerally require prior FDA approval before being implemented and other types of changes to the approved product, such as adding new indications andadditional labeling claims, are also subject to further FDA review and approval.Orphan designationWe maintain product candidates that have obtained FDA and EU orphan designation (see “Therapeutic Product Development” section above). These products areintended for treating rare conditions that affect fewer than 200,000 people in the U.S., or that affect more than 200,000 persons but are not expected torecover the costs of developing and marketing a treatment drug. In the EU, these rare conditions are defined as having a prevalence of no more than five inevery 10,000 people in the EU. Once a medicinal product with orphan designation obtains a marketing approval, it can benefit from a marketing exclusivityperiod in respect of the specific orphan indication for which the drug has been approved for a period of seven years in the U.S. and for up to ten years in theEU. This measure is intended at incentivizing the development of medicines for rare diseases. The product must be able to maintain its orphan designation,by reference to the criteria of (a) prevalence of the condition and (b) significant benefit of the product over competing products. If the manufacturer is nolonger able to assert that the product meets the orphan designation criteria or is not able to provide sufficient quantities, it may lose the orphan marketexclusivity.Clinical Trial Data DisclosureMany jurisdictions have mandatory clinical trial information obligations on sponsors. In the EU this is under the Transparency Regulation No. 1049/ 2001, EMAPolicy 0043, EMA Policy 0070, as well as the new Clinical Trials Regulation No. 536/2014, all of which impose on sponsors the obligation to make publiclyavailable certain information stemming from clinical studies. In the EU, the transparency framework provides for a wide right for (EU-based at the moment)interested parties to submit an access to documents request to the EMA for information included in the marketing authorization application dossier forapproved medicinal products. Only very limited information is exempted from disclosure, i.e. commercially confidential information (which is construedincreasingly narrowly) and protected personal data. It is possible for competitors to access and use this data in their own research and development programsanywhere in the world, once this data is in the public domain.Additional RegulationAlthough we currently do not have any products on the market, we may be subject to additional healthcare regulation and enforcement by the federalgovernment and by authorities in the states and foreign jurisdictions in which we conduct our business. Such laws include, without limitation, state andfederal anti-kickback, fraud, anti-bribery and abuse, false claims, privacy and security and physician transparency laws and regulations, many of which maybecome more applicable if our product candidates are approved and we begin commercialization. If our operations are found to be in violation of any of suchlaws or any other governmental regulations that apply to us, we may be subject to penalties, including, without limitation, civil and criminal penalties,damages, fines, the curtailment or restructuring of our operations, exclusion from participation in federal and state healthcare programs, individualimprisonment, suspension or withdrawal of our marketing and commercialization in respect of our commercially approved products, and additional reportingrequirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with theselaws, any of which could adversely affect our ability to operate our business and our financial results. See “Risk Factors—Our relationships with customersand third-party payors will be subject to applicable anti-26kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages,reputational harm and diminished profits and future earnings.”The United States and some foreign jurisdictions are considering enacting or have enacted a number of additional legislative and regulatory proposalsto change the healthcare system in ways that could affect our ability to sell our product candidates profitably, if approved. Among policy makers and payorsin the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcarecosts, improving quality and expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts, which includemajor legislative initiatives, such as the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education ReconciliationAct of 2010, to reduce the cost of care through changes in the healthcare system, including limits on the pricing, coverage, and reimbursement ofpharmaceutical and biopharmaceutical products, especially under government-funded health care programs, and increased governmental control of drugpricing. See “Risk Factors—Recently enacted and future legislation, including potentially unfavorable pricing regulations or other healthcarereform initiatives, may increase the difficulty and cost for us to obtain regulatory approval of and commercialize our product candidates and affect theprices we may obtain.”Pricing and reimbursement of a therapeutic product will largely determine the affordability of the product, and whether the product is prescribed andsupplied to patients and private insurance companies may take into account government reimbursement methodologies. Due to these proposed and enactedlaws, as well as other actions, significant uncertainty exists as to the coverage and reimbursement status of any product candidates for which we obtainregulatory approval, particularly for novel products. In both domestic and foreign markets, sales and reimbursement of any approved products will depend, inpart, on the extent to which third-party payors, such as government health programs, commercial insurance and managed healthcare organizations providecoverage, and establish adequate reimbursement levels, for such products. Third-party payors are increasingly challenging the prices charged for medicalproducts and services and imposing controls to manage costs. Third-party payors may limit coverage to specific products on an approved list, also known as aformulary, which might not include all of the FDA-approved products for a particular indication. Additionally, we may need to conduct expensivepharmacoeconomic studies in order to demonstrate the cost-effectiveness of our products. If third-party payors do not consider our products to be cost-effective compared to other therapies, these payors may not cover our products after approved as a benefit under their plans or, if they do, the level ofreimbursement may not be sufficient to allow us to sell our products on a profitable basis. See “Risk Factors—Even if we are able to commercialize ourproduct candidates, the products may not receive coverage and adequate reimbursement from third-party payors in the United States and in other countriesin which we seek to commercialize our products, which could harm our business.”In the EU, pricing and reimbursement are the prerogative of Member States. Therefore, the requirements around reimbursement of medicinal productscan vary widely. Each Member State can follow its own approach, subject to common rules of transparency, competition, and freedom of trade andmovement in the EU. Many Member States, including France, Germany and the United Kingdom, follow a health technology assessment, or HTA, procedurefor medicinal products in order to assess the cost-effectiveness of a product which could then be recommended for reimbursement under the national healthservices. There is increasingly exchange of information concerning HTAs on a voluntary basis among EU Member States. In the United Kingdom, theNational Institute for Health and Care Excellence is the body which conducts HTAs and issues guidance to be followed by the regional health bodies calledclinical commissioning groups.EMPLOYEESAs of February 15, 2019, we had 302 full-time employees. Approximately 247 of these employees are located in California, six of these employees arelocated in London, UK and the remaining employees are located in France. None of our employees located in California or London are represented by acollective bargaining organization or covered by a collective bargaining agreement, nor have we experienced work stoppages. Our employees located inFrance are represented by the Confédération Française de l'Encadrement - Confédération Générale des Cadres. We believe that our relations with ouremployees are good.AVAILABLE INFORMATIONOur website is located at www.sangamo.com. This Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are available (free of charge) on our websiteas soon as reasonably practicable after we electronically file this material with, or furnish it to, the SEC. Information found on, or accessible through, ourwebsite is not a part of, and is not incorporated into, this Annual Report on Form 10-K.27 ITEM 1A – RISK FACTORSAn investment in our common stock involves significant risk. This Form 10-K contains forward-looking information based on our currentexpectations. Because our actual results may differ materially from any forward-looking statements made by or on our behalf, this section includes adiscussion of important factors that could affect our actual future results, including, but not limited to, our revenues, expenses, net loss and net loss per share.You should carefully consider the information described in the following risk factors, together with the other information appearing elsewhere in this report,before making an investment decision regarding our common stock. Unless otherwise indicated or the context suggests otherwise, references in this AnnualReport on Form 10-K to “Sangamo,” “we,” “us,” and “our” refer to Sangamo Therapeutics, Inc. and our consolidated subsidiaries, including TxCell S.A., orTxCellRisks Relating to Development, Commercialization and Regulatory Approval of our Products and TechnologyOur success depends substantially on the results of clinical trials of our lead therapeutic programs, and we may not be able to demonstrate safetyand efficacy of our product candidates.We do not have any products that have gained regulatory approval. Our failure to enroll sufficient patients to conduct the trials, demonstrate safety orobtain positive clinical trial results, or our inability to meet the expected timeline of clinical trials or release of data for these programs, would have a materialadverse effect on our business operations and financial conditions, which may cause a significant decline in our stock price.Our ability to conduct clinical trials successfully and on a timely basis for these programs is subject to a number of additional risks, including but arenot limited to the following:•disagreement with the design or implementation of our clinical trials;•the ability to identify and recruit sufficient number of acceptable patients to complete enrollment of trials;•failure to demonstrate that a product candidate is safe and effective for its proposed indication;•the occurrence of unexpected adverse events or toxicity;•disagreement with the U.S. Food and Drug Administration, or FDA, or foreign regulatory authorities, on the interpretation of datafrom preclinical studies or our clinical trial results;•failure of clinical trials to meet the level of statistical significance required for approval;•the insufficiency of data collected from clinical trials of our product candidates to support the submission and filing of abiologics license application, or BLA, or other submission or to obtain regulatory approval;•changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval;•failure to obtain approval of our manufacturing processes or facilities of third-party manufacturers with whom we contract forclinical and commercial supplies or our own manufacturing facility;•defects in the preparation and manufacturing of our product candidates;•failure by third parties, including vendors, manufacturers and clinical trial organizations, to provide timely and adequate suppliesand services;•development of similar gene therapies by our competitors;•unexpected costs and expenses and lack of sufficient funding for these programs; and•loss of licenses to critical intellectual properties.We have ongoing Phase 1/2 clinical trials evaluating product candidates for the treatment of hemophilia A (SB-525), hemophilia B (SB-FIX), MPS I(SB-318), MPS II (SB-913), and beta-thalassemia (ST-400). We also plan to initiate a Phase 1/2 clinical trial of TxCell’s first CAR-Treg (which is a regulatoryT cell, or Treg, genetically modified with a chimeric antigen receptor, or CAR) investigational product candidate for solid organ transplant, or TX-200, in2019. 28Even if we are able to complete our Phase 1/2 clinical trials for these programs successfully, we will be required to conduct additional clinical trialswith larger patient populations, before obtaining the necessary regulatory approval to commercialize any products, which involves significantly greaterresources, commitments and expertise. We also have limited experience in conducting later stage clinical trials and may not possess the necessary resourcesand expertise to complete such trials. Therefore, we may be required to scale up our operations and enter into collaborative relationships with pharmaceuticalcompanies that could assume responsibility for late-stage development and commercialization. In this regard, while we have entered into collaborativeagreements to provide funding and assistance in the development of certain product candidates through the clinical trial process, there is no guarantee thatwe will be able to enter into future collaborative relationships with third parties that can provide us with the funding and expertise for later stage trials. Inaddition, there is no guarantee that any positive results achieved in our Phase 1/2 clinical trials will be indicative of long-term efficacy and safety in laterstage clinical trials. If a larger patient population does not demonstrate an acceptable safety and efficacy profile, or if any positive results in our Phase 1/2clinical trials are not reproducible, our products may not receive approval from the FDA or foreign regulatory authorities, which could have a materialadverse effect on our business that would cause our stock price to decline significantly.In addition, we have not yet reached agreement with regulatory authorities on the development pathway for our product candidates. As a result, wehave not yet determined what endpoints would support approval for certain of our programs. Due to the novelty of certain programs, such as SB-913 and SB-318, the endpoints needed to support regulatory approvals may be different than originally anticipated. For example, in order to support regulatory approvalfor SB-913 and SB-318, we may be required to detect certain levels of enzymes in patients. In this regard, in September 2018, we announced preliminarysafety and efficacy data from the Phase 1/2 clinical trial evaluating SB-913, or the CHAMPIONS study. In cohort 2 of the CHAMPIONS study, at 16 weekspost-dosing, mean reductions were observed in total urinary glycosaminoglycans, or GAGs (which is a key biomarker of MPS II disease pathophysiology),dermatan sulfate, and heparan sulfate of 51%, 32%, and 61%, respectively. Due to the sensitivity of the assay we used to measure plasma iduronate-2-sulfatase, or IDS, enzyme levels, we were unable to detect IDS in any of the patients over the 16 weeks following treatment with SB-913. In February 2019, weannounced interim results of the CHAMPIONS Study. A newly developed sensitive quantitative assay (lower limit of quantification of 0.78 nmol/hour/mL)was used to measure plasma IDS activity for these interim results. Small increases in IDS enzyme activity compared to baseline were recorded in the twopatients receiving the mid-dose and in one patient receiving the high-dose. At 24 weeks post-dosing, these measurements remained within the expected rangefor baseline values (less than 10 nmol/hour/mL, as compared to the normal range, which is estimated at greater than 82 nmol/hour/mL). While the newlydeveloped, more sensitive assay was able to detect IDS at lower levels, there can be no guarantee that we will be able to continue to be able to detect IDS inpatients or otherwise show direct evidence of efficacy or gene editing. Moreover, we also may never see a clinical benefit to patients from SB-913. This maydelay or preclude any regulatory approvals for SB-913. Even if a product candidate were to successfully obtain approval from the FDA and comparable foreign regulatory authorities, any approval mightcontain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject toburdensome post-approval study or risk management requirements. If we are unable to obtain regulatory approval for one of our product candidates in one ormore jurisdictions, or any approval contains significant limitations, we may not be able to obtain sufficient funding to continue the development of thatproduct or generate revenues attributable to that product candidate. Also, any regulatory approval of our current or future product candidates, once obtained,may be withdrawn.Success in preclinical studies or early clinical trials may not be indicative of results obtained in later trials. Likewise, preliminary data fromclinical trials should be considered carefully and with caution since the final data may be materially different from the preliminary data, particularly asmore patient data become available.Results from preclinical studies or previous clinical trials are not necessarily predictive of future clinical trial results, and interim results of a clinicaltrial are not necessarily indicative of final results. Our product candidates may fail to show the desired safety and efficacy in clinical development despitedemonstrating positive results in preclinical studies or having successfully advanced through initial clinical trials or preliminary stages of clinical trials. Inaddition, from time to time, we have and may in the future publish or report interim or preliminary data from our clinical trials, such as the preliminary datawe announced from the CHAMPIONS study and the Phase 1/2 clinical trial evaluating SB-525, or the Alta Study, as well as the interim data recentlyannounced for the CHAMPIONS study and the Phase 1/2 clinical trial evaluating SB-318, or the EMPOWERS Study. Interim or preliminary data fromclinical trials that we may conduct may not be indicative of the final results of the trial and are subject to the risk that one or more of the clinical outcomesmay materially change as patient enrollment continues and/or more patient data become available. Interim or preliminary data also remain subject to auditand verification procedures that may result in the final data being materially different from the interim or preliminary data. As a result, interim or preliminarydata should be considered carefully and with caution until the final data are available.We have ongoing Phase 1/2 clinical trials evaluating product candidates for the treatment of hemophilia A (SB-525), hemophilia B (SB-FIX), MPS I(SB-318), MPS II (SB-913), and beta-thalassemia (ST-400), and there is no guarantee that we can achieve positive final safety and efficacy results in our Phase1/2 clinical trials for these product candidates. Moreover, the interim results recently announced for SB-913 and SB318 casts doubt with regard to whetherthere will be evidence of a clinical benefit of29either product candidate. Furthermore, these programs (other than TX-200 that we acquired through the TxCell Acquisition) are novel in-vivo gene therapy orgenome editing therapies that utilize adeno-associated viral, or AAV, vector to deliver therapeutic levels of zinc finger nuclease, or ZFN, into the patient’sblood stream. The AAV delivery system has not been validated in human clinical trials previously, and if such delivery system does not meet the safetycriteria or cannot produce the desirable efficacy results we expect, we may be forced to suspend or terminate the affected program.There is a high failure rate for drugs, biologic products and cell therapies proceeding through clinical trials. Many companies in the pharmaceuticaland biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in preclinical testing andearlier-stage clinical trials. Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or preventregulatory approval. In addition, we may experience regulatory delays or rejections as a result of many factors, including due to changes in regulatory policyduring the period of our product candidate development. Any such delays could materially and adversely affect our business, financial condition, results ofoperations and prospects.Our potential products are subject to a lengthy and uncertain regulatory approval process in each jurisdiction where approval is sought.A regulatory authority such as the FDA or the European Medicines Agency, or EMA, must approve any human therapeutic product before it can bemarketed in such jurisdiction. The process for receiving regulatory approval is long and uncertain, and a potential product may not withstand the rigors oftesting under the regulatory approval processes.Before commencing clinical trials in humans, we must submit an Investigational New Drug application, or IND, to the FDA. Certain countries outsideof the United States have a similar process that requires the submission of a clinical trial application much like the IND prior to the commencement of humanclinical trials. In the European Union, for example, a clinical trial authorization application, or CTA, must be submitted for each clinical protocol to eachcountry’s national health authority and an independent ethics committee. Only after an IND becomes effective and/or the applicable CTA has been acceptedmay clinical trials begin. While we have stated our intention to submit additional IND and CTA applications in the future, this is only a statement of intent,and we may not be able to do so because the associated product candidates may not meet the necessary preclinical requirements. In addition, there can be noassurance that, once submitted, an IND or CTA will result in the actual initiation of clinical trials or that we will be able to meet our targeted timeline for theinitiation of clinical trials. Clinical trials are subject to oversight by institutional review boards, or IRBs, and the applicable regulatory authority. In addition,our proposed clinical studies in the United States may require review from the Recombinant DNA Advisory Committee, or RAC, which is the advisory boardto the NIH focusing on clinical trials involving gene transfer.Clinical trials:•must be conducted in conformance with the FDA’s good clinical practices, within the guidelines of the International Council forHarmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use, or ICH, and other applicable regulations;•must meet requirements for IRB oversight;•must follow Institutional Biosafety Committee, or IBC, and NIH RAC guidelines where applicable;•must meet requirements for informed consent;•are subject to continuing FDA or similar foreign government oversight;•may require oversight by a Data Monitoring Committee, or DMC;•may require large numbers of test subjects; and•may be suspended by a commercial partner, the FDA, applicable foreign regulatory authorities or us at any time if it is believedthat the subjects participating in these trials are being exposed to unacceptable health risks or if the FDA or applicable foreign regulatoryauthorities find deficiencies in our INDs or their foreign equivalents or the conduct of these trials.If we are not able to obtain the necessary regulatory approval to commercialize our products or if such approval is delayed or suspended, it wouldhave a material adverse effect on our business operations and trading price of our common stock.We may encounter difficulties that may delay, suspend or scale back our efforts to advance additional early research programs through preclinicaldevelopment, IND and foreign equivalent submissions and into clinical development.30We intend to advance early research programs through preclinical development and to submit new INDs, CTAs and equivalent filings in foreignregulatory jurisdictions necessary to commence and conduct human clinical trials evaluating the preclinical candidates in our pipeline. The preparation andsubmission of INDs and their foreign equivalents requires us to conduct rigorous and time-consuming preclinical testing, studies, and prepare documentationrelating to, among other things, the toxicity, safety, manufacturing, chemistry and clinical protocol of our product candidates. We may experience unforeseendifficulties that could delay or otherwise prevent us from executing this strategy successfully. For example, we may encounter problems in the manufacturingof our products and fail to demonstrate consistency in the formulation of the drug. Our preclinical tests may produce negative or inconclusive results, whichmay lead us to decide, or regulators may require us, to conduct additional preclinical testing. If we cannot obtain positive results in preclinical testing, wemay decide to abandon the projects altogether. In addition, our ability to complete and submit certain IND applications and foreign equivalent filingsdepends on the support of our partners and the timely performance of their obligations under relevant collaboration agreements. If our partners are not able toperform such obligations or if they choose to slow down or delay the progress, we may not be able to prepare and submit the intended INDs or their foreignequivalents on a timely basis or at all. Furthermore, the submission of several INDs and their foreign equivalents involves significant cost and labor, and wemay not have sufficient resources and personnel to complete the filing of all intended INDs and their foreign equivalents, which may force us to scale backthe number of INDs and their foreign equivalents or forego potential INDs and foreign equivalents that we believe are promising. Any delay, suspension orreduction of our efforts to pursue our preclinical and IND strategy could have a material adverse effect on our business and cause our stock price to decline.We may not successfully identify, acquire, develop or commercialize new potential product candidates.Part of our business strategy is to expand our product candidate pipeline by identifying and validating new product candidates, which we maydevelop ourselves, in-license or otherwise acquire from others. For example, through the TxCell Acquisition, we recently acquired the rights among others toTxCell’s first CAR-Treg product candidate, TX-200, and its CAR-Treg technology and know-how. In this regard, we intend to use our ZFN gene editingtechnology to potentially develop next-generation autologous and allogeneic CAR-Treg cell therapies for use in treating autoimmune diseases, and expectthat the TxCell Acquisition will accelerate our entry into the clinic with a CAR-Treg therapy. However, we are new to the field of immunology and to the useof CARs with Tregs, and we may not be successful at developing a CAR-Treg therapy that can be used in patients. Moreover, we may not achieve theexpected accelerated development timeline. If we are unable to successfully develop and obtain regulatory approval for TX-200 or other CAR-Treg therapiesand effectively commercialize them, or if we are unable to achieve the expected accelerated development timeline, we may not realize the anticipatedbenefits from the TxCell Acquisition, resulting in possible impairments or other charges or losses which may materially and adversely affect our results ofoperations and financial condition.In addition, in the event that our existing product candidates do not receive regulatory approval or are not successfully commercialized, then thesuccess of our business will depend on our ability to continue to expand our product pipeline through in-licensing or other acquisitions. We may be unableto identify relevant product candidates. If we do identify such product candidates, we may be unable to reach acceptable terms with any third party fromwhich we desire to in-license or acquire them. Even if we are able to successfully identify and acquire such product candidates, we may not be able tosuccessfully manage the risks associated with integrating acquired or in-licensed product candidates or technologies or the risks arising from anticipated andunanticipated problems in connection with an acquisition or in-licensing transaction. Further, while we seek to mitigate risks and liabilities of potentialacquisitions and in-licensing transactions through, among other things, due diligence, there may be risks and liabilities that such due diligence efforts fail todiscover, that are not disclosed to us, or that we inadequately assess. Any failure in identifying and managing these risks and uncertainties effectively,including in connection with the TxCell Acquisition, would have a material adverse effect on our business. Additionally, we may not realize the anticipatedbenefits of such transactions for a variety of reasons, including the possibility that acquired product candidates, such as TX-200, prove not to be safe oreffective in clinical trials, the integration of an acquired product candidate, technology or business gives rise to unforeseen difficulties and expenditures, orthat the expected benefits will not otherwise be realized or will not be realized within the expected timeframe.We may encounter substantial delays in our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applicableregulatory authorities.Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical trials todemonstrate the safety and efficacy of the product candidates. Clinical testing is expensive, time consuming and uncertain as to outcome. We cannotguarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials can occur at anystage of testing. Events that may prevent successful or timely completion of clinical development include:•delays in reaching a consensus with regulatory authorities on trial design;•delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites;•delays in opening clinical trial sites or obtaining required IRB or independent ethics committee approval at each clinical trialsite;31•delays in recruiting suitable subjects to participate in our clinical trials;•imposition of a clinical hold by regulatory authorities as a result of a serious adverse event or after an inspection of our clinicaltrial operations or trial sites;•failure by us, any CROs we engage or any other third parties to adhere to clinical trial requirements;•failure to perform in accordance with FDA good clinical practices, or GCP, or applicable regulatory guidelines in the EuropeanUnion and other countries;•delays in the testing, validation, manufacturing and delivery of our product candidates to the clinical sites, including delays bythird parties with whom we have contracted to perform certain of those functions;•delays in having subjects complete participation in a trial or return for post-treatment follow-up;•clinical trial sites or subjects dropping out of a trial;•selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data;•occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits;•occurrence of serious adverse events in trials of the same class of agents conducted by other sponsors; or•changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.Any inability to successfully complete preclinical and clinical development could result in additional costs to us or impair our ability to generaterevenues from product sales, regulatory and commercialization milestones and royalties. In addition, if we make manufacturing or formulation changes to ourproduct candidates, we may need to conduct additional studies to bridge our modified product candidates to earlier versions. Clinical trial delays also couldshorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products tomarket before we do, which could impair our ability to successfully commercialize our product candidates and may harm our business, financial condition,results of operations and prospects.Additionally, if the results of our clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our productcandidates, we may:•be delayed in obtaining marketing approval for our product candidates, if at all;•obtain approval for indications or patient populations that are not as broad as intended or desired;•obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;•be subject to changes in the way the product is administered;•be required to perform additional clinical trials to support approval or be subject to additional post-marketing testingrequirements;•have regulatory authorities withdraw, or suspend, their approval of the product or impose restrictions on its distribution in theform of a modified risk evaluation and mitigation strategy;•be subject to the addition of labeling statements, such as warnings or contraindications;•be sued; or•experience damage to our reputation.We may not be able to find acceptable patients or may experience delays in enrolling patients for our clinical trials, which could delay or preventus from proceeding with clinical trials of our product candidates.Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. The timing of our clinical trialsdepends on our ability to recruit patients to participate as well as completion of required follow-up periods. For example, hemophilia trials often take longerto enroll due to the availability of existing treatments. We have only recently begun to enroll patients into the Phase 1/2 clinical trials evaluating SB-FIX forthe treatment of hemophilia B, SB-318 for the treatment of MPS I and ST-400 for the treatment of beta-thalassemia. If we are not able to enroll the necessarynumber of patients in a timely manner, we may not be able to complete the clinical trial. We may face similar challenges or delays in our other or potentialfuture clinical trials. If patients are unwilling to participate in our gene therapy studies because of negative publicity from adverse events related to thebiotechnology or gene therapy fields, competitive clinical trials for similar patient populations or for other reasons, the timeline for32recruiting patients, conducting studies and obtaining regulatory approval of our product candidates may be delayed. These delays could result in increasedcosts, delays in advancing our product candidates, delays in testing the effectiveness of our product candidates or termination of the clinical trials altogether.We may not be able to identify, recruit and enroll a sufficient number of patients, or those with required or desired characteristics, to complete ourclinical trials in a timely manner. Patient enrollment and trial completion is affected by factors including:•size of the patient population and process for identifying subjects;•design of the trial protocol;•eligibility and exclusion criteria;•perceived risks and benefits of the product candidate under study;•perceived risks and benefits of gene therapy-based approaches to treatment of diseases;•availability of competing therapies and clinical trials;•severity of the disease under investigation;•availability of genetic testing for potential patients;•proximity and availability of clinical trial sites for prospective subjects;•ability to obtain and maintain subject consent;•risk that enrolled subjects will drop out before completion of the trial;•patient referral practices of physicians; and•ability to monitor subjects adequately during and after treatment.Our current product candidates are being developed to treat rare conditions. We may not be able to initiate or continue clinical trials if we cannotenroll a sufficient number of eligible patients to participate in the clinical trials required by regulatory authorities. We may need to expand the conduct of ourclinical trials to foreign countries so that we may be better able to access and enroll subjects. Our ability to successfully initiate, enroll and complete aclinical trial in any foreign country is subject to numerous risks unique to conducting business in foreign countries, including:•difficulty in establishing or managing relationships with contract research organizations, or CROs, and physicians;•different standards for the conduct of clinical trials;•absence in some countries of established groups with sufficient regulatory expertise for review of gene therapy protocols;•our inability to locate qualified local consultants, physicians and partners; and•the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including theregulation of pharmaceutical and biotechnology products and treatment.If we have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit or terminateongoing or planned clinical trials, any of which would have an adverse effect on our business, financial condition, results of operations and prospects. Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit thecommercial potential or result in significant negative consequences following any potential marketing approval.During the conduct of clinical trials, patients report changes in their health, including illnesses, injuries and discomforts, to their study doctor. Often,it is not possible to determine whether or not the product candidate being studied caused these conditions, particularly as many of the diseases we arestudying have complex comorbidities. If clinical experience indicates that our product candidates have side effects or cause serious or life-threatening sideeffects, the development of the product candidate may fail or be delayed, or, if the product candidate has received regulatory approval, such approval may berevoked, which would severely harm our business, prospects, operating results and financial condition.33There have been several significant adverse side effects in gene therapy treatments in the past, including reported cases of leukemia and death seen inother trials using other genomic therapies. Gene therapy is still a relatively new approach to disease treatment and additional adverse side effects coulddevelop. There also is the potential risk of significantly delayed adverse events following exposure to gene therapy products due to persistent biologicactivity of the genetic material or other components of products used to carry the genetic material. Possible adverse side effects that could occur withtreatment with gene therapy products include an immunologic reaction early after administration that, while not necessarily adverse to the patient’s health,could substantially limit the effectiveness of the treatment.As we cannot predict whether or when we will obtain regulatory approval to commercialize our product candidates, we cannot predict the timingof any future revenue from these product candidates.We cannot commercialize any of our product candidates to generate revenue until the appropriate regulatory authorities have reviewed and approvedthe marketing applications for the product candidates. We cannot ensure that the regulatory agencies will complete their review processes in a timely manneror that we will obtain regulatory approval for any product candidate that we or our collaborators develop. Satisfaction of regulatory requirements typicallytakes many years, is dependent upon the type, complexity and novelty of the product and requires the expenditure of substantial resources. Regulatoryapproval processes outside the United States include all of the risks associated with the FDA approval process. In addition, we may experience delays orrejections based upon additional government regulation from future legislation or administrative action or changes in FDA policy during the period ofproduct development, clinical trials and FDA regulatory review.We may be unable to obtain additional orphan drug designations or orphan drug exclusivity for any product. If our competitors are able to obtainorphan drug exclusivity for products that constitute the same drug and treat the same indications as our product candidates, we may not be able to havecompeting products approved by the applicable regulatory authority for a significant period of time.Regulatory authorities in some jurisdictions, including the United States and the European Union, may designate drugs for relatively small patientpopulations as orphan drugs. Under the Orphan Drug Act of 1983, the FDA may designate a product candidate as an Orphan Drug if it is intended to treat arare disease or condition, which is generally defined as having a patient population of fewer than 200,000 individuals in the United States, or a patientpopulation greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered fromsales in the United States. In the European Union, the European Medicines Agency’s Committee for Orphan Medicinal Products grants such designation topromote the development of products that are intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating conditionaffecting not more than five in 10,000 persons in the European Union. Additionally, orphan designation is granted for products intended for the diagnosis,prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition and when, without incentives, it is unlikely that sales ofthe drug in the European Union would be sufficient to justify the necessary investment in developing the drug or biologic product.Our four most advanced product candidates, SB-525, SB-FIX, SB-318 and SB-913 have all been granted Orphan Drug Designation by the FDA, andSB-525 and SB-318 and SB-913 have also been designated Orphan Medicinal Products by the European Medicines Agency, or EMA. If we request suchdesignation for our other current or future product candidates, there can be no assurances that the FDA or the EMA will grant any of our product candidatessuch designation. Additionally, such designation does not guarantee that any regulatory agency will accelerate regulatory review of, or ultimately approve,that product candidate, nor does it limit the ability of any regulatory agency to grant such designation to product candidates of other companies that treat thesame indications as our product candidates prior to our product candidates receiving exclusive marketing approval.Generally, if a product candidate with an orphan drug designation receives the first marketing approval for the indication for which it has suchdesignation, the product is entitled to a period of marketing exclusivity, which precludes the FDA or the EMA from approving another marketing applicationfor a product that constitutes the same drug treating the same indication for that marketing exclusivity period, except in limited circumstances. If anothersponsor receives such approval before we do (regardless of our orphan drug designation), we will be precluded from receiving marketing approval for ourproduct for the applicable exclusivity period. The applicable period is seven years in the United States and 10 years in the European Union. The exclusivityperiod in the United States can be extended by six months if the BLA sponsor submits pediatric data that fairly respond to a written request from the FDA forsuch data. The exclusivity period in the European Union can be reduced to six years if a product no longer meets the criteria for orphan drug designation or ifthe product is sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be revoked if any regulatory agencydetermines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the product to meet theneeds of patients with the rare disease or condition.Even if we obtain orphan drug exclusivity for a product candidate, that exclusivity may not effectively protect the product candidate fromcompetition because different drugs can be approved for the same condition. In the United States, even after an orphan drug is approved, the FDA maysubsequently approve another drug for the same condition if the FDA concludes that the latter drug is34not the same drug or is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care. In the European Union,marketing authorization may be granted to a similar medicinal product for the same orphan indication if:•the second applicant can establish in its application that its medicinal product, although similar to the orphan medicinal productalready authorized, is safer, more effective or otherwise clinically superior;•the holder of the marketing authorization for the original orphan medicinal product consents to a second orphan medicinalproduct application; or•the holder of the marketing authorization for the original orphan medicinal product cannot supply sufficient quantities of orphanmedicinal product.Commercialization of our technologies will depend, in part, on strategic partnering with other companies. If we are not able to find partners in thefuture or if our partners do not diligently pursue product development efforts, we may not be able to develop our technologies or product candidates, whichcould slow our growth and decrease the value of our stock.We expect to rely, to some extent, on our strategic partners to provide funding in support of our research and to perform independent research andpreclinical and clinical testing. Our technology is broad-based, and we do not currently possess the resources necessary to fully develop and commercializepotential products that may result from our technologies or the resources or capabilities to complete the lengthy marketing approval processes that may berequired for the products. Therefore, we plan to rely on strategic partnerships to help us develop and commercialize our products. We have entered intocollaborative agreements to provide funding and assistance in the development of certain product candidates through the clinical trial process. For example,we have an agreement with Kite for potential engineered cell therapies for cancer, two separate agreements with Pfizer, one for SB-525 for hemophilia A, andanother for amyotrophic lateral sclerosis and frontotemporal lobar degeneration linked to mutations of the C9ORF72 gene, and an agreement with Bioverativfor our beta-thalassemia and sickle cell disease product candidates.If we are unable to find additional partners or if the partners we are unable or unwilling to advance our programs, or if they do not diligently pursueproduct approval, this may slow our progress and adversely affect our ability to generate revenues. In addition, our partners may sublicense or abandondevelopment programs or we may have disagreements or disputes with our partners, which would cause associated product development to slow or cease. Inaddition, the business or operations of our partners may change significantly through restructuring, acquisition or other strategic transactions or decisionsthat may negatively impact their ability to advance our programs.There can be no assurance that we will be able to establish further strategic collaborations for our products. We may require significant time to securecollaborations or partners because we need to effectively market the benefits of our technology to these future collaborators and partners, which may directthe attention and resources of our research and development personnel and management away from our primary business operations. Further, eachcollaboration or partnering arrangement will involve the negotiation of terms that may be unique to each collaborator or partner. These businessdevelopment efforts may not result in a collaboration or partnership.The loss of partnering agreements may delay or terminate the potential development or commercialization of products we may derive from ourtechnologies, but it may also delay or terminate our ability to test our product candidates. If any partner fails to conduct the collaborative activitiessuccessfully or in a timely manner, the preclinical or clinical development or commercialization of the affected product candidates or research programscould be delayed or terminated.Under typical partnering agreements, we would expect to receive revenue for the research and development of our product candidates based onachievement of specific milestones, as well as royalties based on a percentage of sales of the commercialized products. Achieving these milestones willdepend, in part, on the efforts of our partner as well as our own. If we, or any partner, fail to meet specific milestones, then the partnership may be terminated,which could reduce our revenues. For more information on risks relating to our third-party collaborative agreements, see “Risks Relating to our Relationshipswith Collaborators and Strategic Partners.”We may be unable to license gene transfer technologies that we may need to commercialize our zinc finger protein technology.In order to regulate or modify a gene in a cell, the zinc finger protein, or ZFP, must be efficiently delivered to the cell. We have licensed certain genetransfer technologies for our ZFP in research including AAV and mRNA technology. We are evaluating these systems and other technologies that may needto be used in the delivery of ZFP into cells for in vitro and in vivo applications. However, we may not be able to license the gene transfer technologiesrequired to develop and commercialize our product candidates. We have not developed our own gene transfer technologies, and we rely on our ability toenter into license agreements to provide us with rights to the necessary gene transfer technology. Our approach has been to license appropriate technology asrequired. The inability to obtain a license to use gene transfer technologies with entities which own such technology on reasonable commercial35terms, if at all, could delay or prevent the preclinical evaluation, drug development collaborations, clinical testing, and/or commercialization of ourtherapeutic product candidates.Our gene regulation and genome editing technology is relatively new, and if we are unable to use this technology in all our intended applications,it would limit our revenue opportunities.Our technology involves a relatively new approach to gene regulation and genome editing. Although we have generated ZFPs for thousands of genesequences, we have not created ZFPs for all gene sequences and may not be able do so, which could limit the usefulness of our technology. In addition, whilewe have demonstrated the function of engineered ZFNs and ZFP transcription factors, or ZFP TFs, in mammalian cells, yeast, insects, plants and animals, wehave not yet demonstrated clinical efficacy of this technology in a controlled clinical trial in humans, and the failure to do so could restrict or preclude ourability to develop commercially viable products. If we, and our collaborators or strategic partners, are unable to extend our results to new commerciallyimportant genes, experimental animal models, and human clinical studies, we may be unable to use our technology in all its intended applications.The expected value and utility of our ZFNs and ZFP TFs is in part based on our belief that the targeted editing of genes or specific regulation of geneexpression may enable us to develop a new therapeutic approach as well as to help scientists better understand the role of genes in disease, and to aid theirefforts in drug discovery and development. We also believe that ZFP-mediated targeted genome editing and gene regulation will have utility in agriculturalapplications. There is only a limited understanding of the role of specific genes in all these fields. Life sciences companies have developed orcommercialized only a few products in any of these fields based on results from genomic research or the ability to regulate gene expression. We, ourcollaborators or our strategic partners, may not be able to use our technology to identify and validate drug targets or to develop commercial products in theintended markets.Effective delivery of ZFNs and ZFP TFs into the appropriate target cells and tissues is critical to the success of the therapeutic applications of our ZFPtechnology. In order to have a meaningful therapeutic effect, product candidates based must be delivered to sufficient numbers of cells in the targeted tissue.The ZFN or ZFP TF must be present in that tissue for sufficient time to effect either modification of a therapeutically relevant gene or regulation of itsexpression. In our current clinical and preclinical programs, we administer these product candidates as a nucleic acid that encodes the ZFN or ZFP TF. We usedifferent formulations to deliver the ZFN or ZFP TF depending on the required duration of expression, the targeted tissue and the indication that we intend totreat, including our proprietary AAV delivery system. However, there can be no assurances that we will be able to effectively deliver our ZFNs and ZFP TFs toproduce a beneficial therapeutic effect.In February 2019, we announced our development of second generation, potentially more potent ZFN constructs designed to increase editingefficiency. In vitro data of these second-generation ZFNs were reviewed by FDA. The in vitro data showed three potential advantages for use in the clinic: (1)a five to thirty-fold improvement in efficiency and potency due to structural changes; (2) the ability to function equally well in the patients who have asingle nucleotide polymorphism in the target locus in the albumin gene (approximately 20% of the population); (3) improvements in specificity. The secondgeneration ZFNs already being manufactured and we expect to be ready to use them in the clinic later this year; however, there can be no assurances that wewill be able to effectively deliver this second-generation ZFN to produce a beneficial therapeutic effect. Additional data from our in vivo genome editingprograms will be assessed before potential integration plans for the second-generation ZFNs are finalized. We are conducting proprietary research to discover new product candidates. These programs increase our financial risk of product failure, maysignificantly increase our research expenditures, and may involve conflicts with future collaborators and strategic partners.Our proprietary research programs consist of research that is funded solely by us or by grant funding and in which we retain exclusive rights totherapeutic products generated by such research. This is in contrast to certain of our research programs that may be funded by corporate partners in which wemay share rights to any resulting products. Conducting proprietary research programs may not generate corresponding revenue and may create conflicts withour collaborators or strategic partners over rights to our intellectual property with respect to our proprietary research activities. Any conflict with ourcollaborators or strategic partners could reduce our ability to enter into future collaborations or partnering agreements and negatively impact our relationshipwith existing collaborators and partners that could reduce our revenue and delay or terminate our product development. As we continue to focus our strategyon proprietary research and therapeutic development, we expect to experience greater business risks, expend significantly greater funds and requiresubstantial commitments of time from our management and staff.Even if our technology proves to be effective, it still may not lead to commercially viable products.Even if we, our collaborators or strategic partners are successful in using our ZFP technology in drug discovery, protein production, therapeuticdevelopment or other areas in which we have licensed our technology, such as plant agriculture, they may not be able to commercialize the resultingproducts or may decide to use other methods competitive with this technology. To date, no36company has received marketing approval or has developed or commercialized any therapeutic or agricultural products based on our ZFP technology.Should our technology fail to provide safe, effective, useful or commercially viable approaches to the discovery and development of these productcandidates, this would significantly limit our business and future growth and would adversely affect our value.Even if our product development efforts are successful and even if the requisite regulatory approvals are obtained, our products may not gainmarket acceptance among physicians, patients, healthcare payers and the medical community.Even if we obtain regulatory approval for any of our product candidates that we may develop or acquire in the future, the applicable product may notgain market acceptance among physicians, healthcare payors, patients or the medical community. Market acceptance of any of our product candidates forwhich we receive approval depends on a number of factors, including:•the efficacy and safety of such product candidates as demonstrated in clinical trials;•the clinical indications and patient populations for which the product candidate is approved;•acceptance by physicians, major cancer treatment centers and patients of the drug as a safe and effective treatment;•the adoption of novel gene therapies by physicians, hospitals and third-party payors;•the potential and perceived advantages of product candidates over alternative treatments;•the safety of product candidates seen in a broader patient group, including its use outside the approved indications;•any restrictions on use together with other medications;•the prevalence and severity of any side effects;•product labeling or product insert requirements of the FDA or other regulatory authorities;•the timing of market introduction of our products as well as competitive products;•the development of manufacturing and distribution processes for our product candidates;•the cost of treatment in relation to alternative treatments;•the availability of coverage and adequate reimbursement and the willingness of patients to pay out-of-pocket in the absence ofcoverage or inadequacy of reimbursement by third-party payors and government authorities;•relative convenience and ease of administration; and•the effectiveness of our sales and marketing efforts and those of our collaborators.If any of our product candidates are approved but fail to achieve market acceptance among physicians, patients, healthcare payors or treatmentcenters, we will not be able to generate significant revenues, which would compromise our ability to become profitable.Even if we are able to commercialize our product candidates, the products may not receive coverage and adequate reimbursement from third-partypayors in the United States and in other countries in which we seek to commercialize our products, which could harm our business.Our ability to commercialize any product successfully will depend, in part, on the extent to which coverage and adequate reimbursement for theseproducts and related treatments will be available from government health administration authorities, private health insurers and other organizations.Government authorities and third-party payors, such as private health insurers and health maintenance organizations, determine which medicationsthey will cover and establish reimbursement levels. A primary trend in the healthcare industry is cost containment. Government authorities and third-partypayors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party payors arerequiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. Third-party payors may also seek additional clinical evidence, beyond the data required to obtain regulatory approval, demonstrating clinical benefits and value inspecific patient populations before covering our products for those patients. We cannot be sure that coverage and adequate reimbursement will be availablefor any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Coverage and reimbursement may impactthe demand for, or the price of, any product candidate for which we obtain regulatory approval. If reimbursement is not available or is available only atlimited levels, we may not be able to successfully commercialize any product candidate for which we obtain regulatory approval.37There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than thepurposes for which the drug is approved by the FDA or comparable foreign regulatory authorities. Moreover, eligibility for coverage and reimbursement doesnot imply that any drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution.Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may only be temporary. Reimbursement rates mayvary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs andmay be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required bygovernment healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they maybe sold at lower prices than in the United States. Third-party payors in the United States often rely upon Medicare coverage policy and payment limitationsin setting their own reimbursement policies, but also have their own methods and approval process apart from Medicare determinations. Our inability topromptly obtain coverage and profitable reimbursement rates from both government-funded and private payors for any approved products that we developcould have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financialcondition.Recently enacted and future legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives, may increasethe difficulty and cost for us to obtain regulatory approval of and commercialize our product candidates and affect the prices we may obtain.The regulations that govern, among other things, regulatory approvals, coverage, pricing and reimbursement for new drug products vary widely fromcountry to country. In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changesregarding the healthcare system that could prevent or delay regulatory approval of our product candidates, restrict or regulate post-approval activities andaffect our ability to successfully sell any product candidates for which we obtain regulatory approval. In particular, in March 2010, the Patient Protection andAffordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively, the Affordable Care Act, was enacted, whichsubstantially changes the way healthcare is financed by both governmental and private insurers, and significantly impacts the U.S. pharmaceutical industry.The Affordable Care Act and its implementing regulations, among other things, addressed a new methodology by which rebates owed by manufacturers underthe Medicaid Drug Rebate Program are calculated for certain drugs and biologics, including products similar to our product candidates, that are inhaled,infused, instilled, implanted or injected, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program,extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations, subjectedmanufacturers to new annual fees and taxes for certain branded prescription drugs, created a new Patient Centered Outcomes Research Institute, whichprovides incentives to programs that increase the federal government’s comparative effectiveness research, established a new Medicare Part D coverage gapdiscount program, in which manufacturers must agree to offer 50% (and 70% commencing January 1, 2019) point-of-sale discounts off negotiated prices ofapplicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered underMedicare Part D, and created a licensure framework for follow-on biologic products.Some of the provisions of the Affordable Care Act have yet to be fully implemented, and there have been legal and political challenges to certainaspects of the Affordable Care Act. Since January 2017, President Trump has signed two executive orders and other directives designed to delay, circumvent,or loosen certain requirements mandated by the Affordable Care Act. Concurrently, Congress has considered legislation that would repeal or repeal andreplace all or part of the Affordable Care Act. While Congress has not passed repeal legislation, two bills affecting the implementation of certain taxes underthe Affordable Care Act have been signed into law. The Tax Cuts and Jobs Act of 2017 includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or partof a year that is commonly referred to as the “individual mandate”. Additionally, on January 22, 2018, President Trump signed a continuing resolution onappropriations for fiscal year 2018 that delayed the implementation of certain Affordable Care Act-mandated fees. Further, the Bipartisan Budget Act of2018, among other things, amends the Affordable Care Act, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, commonlyreferred to as the “donut hole”. More recently, in July 2018, the Centers for Medicare & Medicaid Services, or CMS, published a final rule permitting furthercollections and payments to and from certain Affordable Care Act qualified health plans and health insurance issuers under the Affordable Care Act riskadjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment. Congressmay consider other legislation to repeal, or repeal and replace, other elements of the Affordable Care Act.Other legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted. In August 2011, theBudget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction,tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, therebytriggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers of2% per fiscal year, which went into effect in April 2013, and, due to subsequent legislative amendments to the statute, including the Bipartisan Budget Act of2018, will remain in effect through 2027 unless additional Congressional action is taken. In January 2013, President Obama signed into law the American38Taxpayer Relief Act of 2012, or the ATRA, which, among other things, further reduced Medicare payments to several providers, including hospitals andcancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.Also, there has been heightened governmental scrutiny recently over pharmaceutical pricing practices in light of the rising cost of prescription drugsand biologics. Such scrutiny has resulted in several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, amongother things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform governmentprogram reimbursement methodologies for pharmaceutical products, some of which are included in the Trump administration’s budget proposal for fiscalyear 2019. Additionally, the Trump administration released a “Blueprint” to lower drug prices and reduce out of pocket costs of drugs that containsadditional proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturersto lower the list price of their products and reduce the out of pocket costs of drug products paid by consumers. The U.S. Department of Health and HumanServices has begun the process of soliciting feedback on some of these measures and, at the same, is immediately implementing others under its existingauthority. Although a number of these, and other potential, proposed measures will require authorization through additional legislation to become effective.Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs.At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological productpricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparencymeasures, and, in some cases, have been designed to encourage importation from other countries and bulk purchasing.There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at broadening theavailability of healthcare and containing or lowering the cost of healthcare. We cannot predict the initiatives that may be adopted in the future. Thecontinuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs ofhealthcare and/or impose price controls may adversely affect:•the demand for our product candidates, if we obtain regulatory approval;•our ability to set a price that we believe is fair for our products;•our ability to generate revenue and achieve or maintain profitability;•the level of taxes that we are required to pay; and•the availability of capital.Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors,which may adversely affect our future profitability.Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities forpharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance orinterpretations will be changed, or what the impact of such changes on the regulatory approvals of our product candidates, if any, may be.In the United States, the European Union and other potentially significant markets for our product candidates, government authorities and third-partypayors are increasingly attempting to limit or regulate the price of medical products and services, particularly for new and innovative products and therapies,which has resulted in lower average selling prices. Furthermore, the increased emphasis on managed healthcare in the United States and on country andregional pricing and reimbursement controls in the European Union will put additional pressure on product pricing, reimbursement and usage, which mayadversely affect our future product sales and results of operations. These pressures can arise from rules and practices of managed care groups, judicialdecisions and governmental laws and regulations related to Medicare, Medicaid and healthcare reform, pharmaceutical reimbursement policies and pricing ingeneral.Price controls may be imposed in foreign markets, which may adversely affect our future profitability.In some countries, particularly member states of the European Union, the pricing of prescription drugs is subject to governmental control. In thesecountries, pricing negotiations with governmental authorities can take considerable time after receipt of regulatory approval for a product. In addition, therecan be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures.Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursementhas been obtained. Reference pricing used by various European Union member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices. In some countries, we, or our collaborators, may be required to conduct a clinical trial or other studies thatcompare the cost-effectiveness of our product candidates to other available therapies in order to obtain or maintain reimbursement or39pricing approval. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within thecountry of publication and other countries. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactorylevels, our business could be adversely affected.Even if we complete the necessary preclinical and clinical studies, we cannot predict when or if we will obtain regulatory approval tocommercialize a product candidate or the approval may be for a more narrow indication than we expect.We cannot commercialize a product until the appropriate regulatory authorities have reviewed and approved the product candidate. Even if ourproduct candidates demonstrate safety and efficacy in clinical studies, the regulatory agencies may not complete their review processes in a timely manner, orwe may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory advisory group orauthority recommends non-approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional governmentregulation from future legislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical studiesand the review process. Regulatory agencies also may approve a treatment candidate for fewer or more limited indications than requested or may grantapproval subject to the performance of post-marketing studies. In addition, regulatory agencies may not approve the labeling claims that are necessary ordesirable for the successful commercialization of our treatment candidates. For example, the development of certain product candidates for pediatric use is animportant part of our current business strategy, and if we are unable to obtain regulatory approval for the desired age ranges, our business may suffer.Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny.Even if we obtain regulatory approval in a jurisdiction, the regulatory authority may still impose significant restrictions on the indicated uses ormarketing of our product candidates, or impose ongoing requirements for potentially costly post-approval studies, post-market surveillance or patient or drugrestrictions. For example, the FDA typically advises that patients treated with gene therapy undergo follow-up observations for potential adverse events for a15-year period. Additionally, the holder of an approved BLA is obligated to monitor and report adverse events and any failure of a product to meet thespecifications in the BLA. The holder of an approved BLA must also submit new or supplemental applications and obtain FDA approval for certain changesto the approved product, product labeling or manufacturing process. Advertising and promotional materials must comply with FDA rules and are subject toFDA review, in addition to other potentially applicable federal and state laws.In addition, products are subject to payment of annual program user fees and continual review and periodic inspections by the FDA and otherregulatory authorities for compliance with good manufacturing practices, or GMP, and adherence to commitments made in the BLA. If we or a regulatoryagency discovers previously unknown problems with a product such as adverse events of unanticipated severity or frequency, or problems with the facilitywhere the product is manufactured, a regulatory agency may impose restrictions relative to that product or the manufacturing facility, including requiringrecall or withdrawal of the product from the market or suspension of manufacturing.Moreover, if any of our product candidates is approved, our product labeling, advertising and promotion will be subject to regulatory requirementsand continuing regulatory review. The FDA and foreign regulatory authorities strictly regulate the promotional claims that may be made about drug andbiologic products. In particular, a product may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling.If we fail to comply with applicable regulatory requirements following approval of any of our product candidates, a regulatory agency may:•issue a warning letter asserting that we are in violation of the law;•seek an injunction or impose civil or criminal penalties or monetary fines;•suspend or withdraw regulatory approval;•suspend any ongoing clinical studies;•refuse to approve a pending marketing application, such as a BLA or supplements to a BLA submitted by us;•seize product; or•refuse to allow us to enter into supply contracts, including government contracts.Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generatenegative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generaterevenues.40Failure to obtain regulatory approval in international jurisdictions would prevent our product candidates from being marketed abroad.In addition to regulations in the United States, to market and sell our products in the European Union, many Asian countries and other jurisdictions,we must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements. The approval procedure varies amongcountries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. Theregulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. Clinical trials accepted inone country may not be accepted by regulatory authorities in other countries. In addition, many countries outside the United States require that a product beapproved for reimbursement before it can be approved for sale in that country. A product candidate that has been approved for sale in a particular countrymay not receive reimbursement approval in that country. We may not be able to obtain approvals from regulatory authorities outside the United States on atimely basis, if at all. Approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries orjurisdictions or by the FDA. We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products inany market. If we are unable to obtain approval of any of our product candidates by the FDA or regulatory authorities in the European Union, Asia orelsewhere, the commercial prospects of that product candidate may be significantly diminished, our business prospects could decline and this couldmaterially adversely affect our business, results of operations and financial condition.Our current and future relationships with healthcare providers, customers and third-party payors subject us to applicable anti-kickback, fraud andabuse and other healthcare laws and regulations. If we fail to comply with federal, state and foreign laws and regulations, including healthcare, privacyand data security laws and regulations, we could face substantial penalties and our business, results of operations, financial condition and prospects couldbe adversely affected.Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates forwhich we obtain regulatory approval. Our current and future arrangements with healthcare providers, third-party payors and customers may expose us tobroadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationshipsthrough which we would market, sell and distribute our products. As a biotechnology company, even though we will not control referrals of healthcareservices or bill directly to Medicare, Medicaid or other third-party payors, federal and state healthcare laws and regulations pertaining to fraud and abuse andpatients’ rights are and will be applicable to our business. Restrictions under applicable federal and state healthcare laws and regulations that may affect ourability to operate include the following:•the federal healthcare Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting,offering, receiving or providing remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for,either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under afederal healthcare program such as Medicare and Medicaid;•federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act, which can beenforced through civil whistleblower or qui tam actions, prohibits, among other things, individuals or entities from knowingly presenting, orcausing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment or approval that are falseor fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;•the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability forexecuting a scheme to defraud any healthcare benefit program and also created federal criminal laws that prohibit, among other things, knowinglyand willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of orpayment for healthcare benefits, items or services;•HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and theirimplementing regulations, impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security andtransmission of individually identifiable health information held by certain healthcare providers, health plans and healthcare clearinghouses,known as covered entities, and individuals and entities that perform services for them that involve individually identifiable health information,known as business associates;•the federal Physician Payments Sunshine Act created under the Affordable Care Act requires certain manufacturers of drugs,devices, biologics and medical supplies to report annually to the CMS information related to payments and other transfers of value to physiciansand teaching hospitals, and ownership and investment interests held by physicians and their immediate family members;•analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales ormarketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including privateinsurers; some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and therelevant compliance guidance promulgated by the federal41government, require drug manufacturers to report information related to payments and other transfers of value to other healthcare providers andhealthcare entities, or marketing expenditures; and/or ensure the registration and compliance of sales and medical personnel; and•state and foreign laws govern the privacy and security of health information in specified circumstances, many of which differfrom each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especiallyin light of the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactionsbetween healthcare companies, healthcare providers and other third parties, including charitable foundations, which has led to a number of investigations,prosecutions, convictions and settlements in the healthcare industry. Responding to investigations can be time-and resource-consuming and can divertmanagement’s attention from the business. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involvesubstantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes,regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any ofthese laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages,fines, disgorgement, personal imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, additional reportingrequirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with theselaws, and the curtailment or restructuring of our operations. If any physicians or other healthcare providers or entities with whom we expect to do business arefound to not be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusion from governmentfunded healthcare programs.In addition, the provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase,supply, order or use of medicinal products is also prohibited in the European Union. The provision of benefits or advantages to physicians is governed by thenational anti-bribery laws of European Union Member States, such as the U.K. Bribery Act. Infringement of these laws could result in substantial fines andimprisonment. Moreover, payments made to physicians in certain European Union Member States must be publicly disclosed. Agreements with physiciansoften must also be the subject of prior notification and approval by the physician’s employer, his or her competent professional organization and/or theregulatory authorities of the individual European Union Member States. These requirements are provided in the national laws, industry codes or professionalcodes of conduct, applicable in the European Union Member States. Failure to comply with these requirements could result in reputational risk, publicreprimands, administrative penalties, fines or imprisonment.The collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the European Union, including personal healthdata, is subject to the EU General Data Protection Regulation, or the GDPR, which became effective on May 25, 2018. The GDPR, which is wide-ranging inscope, imposes several requirements relating to the control over personal data by individuals to whom the personal data relates, the information provided tothe individuals, the documentation we must maintain, the security and confidentiality of the personal data, data breach notification and the use of third partyprocessors in connection with the processing of personal data. The GDPR also imposes strict rules on the transfer of personal data out of the European Union,provides an enforcement authority and authorizes the imposition of large penalties for noncompliance, including the potential for fines of up to €20 millionor 4% of the annual global revenues of the non-compliant company, whichever is greater. The GDPR requirements apply not only to third-party transactions,but also to transfers of information between us and our subsidiaries such as TxCell, including employee information. The GDPR has increased ourresponsibility and potential liability in relation to personal data that we process compared to prior European Union law, particularly in light of the TxCellAcquisition, and we may be required to put in place additional mechanisms to ensure compliance with the GDPR, which could divert management’s attentionand increase our cost of doing business. However, despite our ongoing efforts to bring our practices into compliance with the GDPR, we may not besuccessful either due to various factors within our control or other factors outside our control. It is also possible that local data protection authorities mayhave different interpretations of the GDPR, leading to potential inconsistencies amongst various European Union Member States. Any failure or allegedfailure (including as a result of deficiencies in our policies, procedures or measures relating to privacy, data security, marketing or communications) by us tocomply with laws, regulations, policies, legal or contractual obligations, industry standards or regulatory guidance relating to privacy or data security, mayresult in governmental investigations and enforcement actions, litigation, fines and penalties or adverse publicity. In addition, new regulation, legislativeactions or changes in interpretation of existing laws or regulations regarding data privacy and security (together with applicable industry standards) mayincrease our costs of doing business. In this regard, we expect that there will continue to be new proposed laws, regulations and industry standards relating toprivacy and data protection in the United States, the European Union and other jurisdictions, such as the California Consumer Privacy Act of 2018 that willgo into effect beginning January 1, 2020, and we cannot determine the impact such future laws, regulations and standards will have on our business.42Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements,which could cause significant liability for us and harm our reputation.We are exposed to the risk of employee fraud or other misconduct, including intentional failures to comply with FDA regulations or similarregulations of comparable foreign regulatory authorities, provide accurate information to the FDA or comparable foreign regulatory authorities, comply withmanufacturing standards we have established, comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulationsestablished and enforced by comparable foreign regulatory authorities, report financial information or data accurately or disclose unauthorized activities tous. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatorysanctions and serious harm to our reputation. It is not always possible to identify and deter employee misconduct, and the precautions we take to detect andprevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or otheractions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are notsuccessful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, includingthe imposition of significant civil, criminal and administrative penalties, damages, fines, disgorgement, personal imprisonment, exclusion from governmentfunded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject to a corporate integrityagreement or similar agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations..Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we maydevelop.We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and will face an evengreater risk if we commercially sell any products that we may develop. Product liability claims may be brought against us by subjects enrolled in our clinicaltrials, patients, healthcare providers or others using, administering or selling our products. If we cannot successfully defend ourselves against claims that ourproduct candidates or products caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:•decreased demand for any product candidates or products that we may develop;•termination of clinical trial sites or entire trial programs;•injury to our reputation and significant negative media attention;•withdrawal of clinical trial participants;•significant costs to defend the related litigation;•substantial monetary awards to trial subjects or patients;•loss of revenue;•diversion of management and scientific resources from our business operations; and•the inability to commercialize any products that we may develop.We currently hold product liability insurance coverage at a level that we believe is customary for similarly situated companies and adequate toprovide us with insurance coverage for foreseeable risks, but which may not be adequate to cover all liabilities that we may incur. Insurance coverage isincreasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that mayarise. We intend to expand our insurance coverage for products to include the sale of commercial products if we obtain regulatory approval for our productcandidates in development, but we may be unable to obtain commercially reasonable product liability insurance for any products that receive regulatoryapproval. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claimor series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.We currently rely on third parties to conduct some or all aspects of manufacturing of our product candidates for preclinical and clinicaldevelopment. If one of our third-party manufacturers fails to perform adequately or fulfill our needs, we may be required to incur significant costs anddevote significant efforts, to find new suppliers or manufacturers.We currently have limited experience in clinical-scale manufacturing of our product candidates and we rely upon third-party contract manufacturingorganizations to manufacture and supply drug product for our preclinical and clinical studies. The manufacture of pharmaceutical products in compliancewith the FDA’s current good manufacturing practices, or cGMP, requires significant expertise and capital investment, including the development of advancedmanufacturing techniques and process controls.43Manufacturers of pharmaceutical products often encounter difficulties in production, including difficulties with production costs and yields, quality control,including stability of the product candidate and quality assurance testing, shortages of qualified personnel, as well as compliance with strictly enforcedcGMP requirements, other federal and state regulatory requirements and foreign regulations. If our manufacturers were to encounter any of these difficulties orotherwise fail to comply with their obligations to us or under applicable regulations, our ability to provide study biologics in our clinical studies would bejeopardized. Any delay or interruption in the supply of clinical study materials could delay the completion of our clinical studies, increase the costsassociated with maintaining our clinical study programs and, depending upon the period of delay, require us to commence new studies at significantadditional expense or terminate the studies completely.All manufacturers of our product candidates must comply with cGMP requirements enforced by the FDA through its facilities inspection program.These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. Manufacturers of ourproduct candidates may be unable to comply with these cGMP requirements and with other FDA, state and foreign regulatory requirements. The FDA orsimilar foreign regulatory agencies may also implement new standards at any time, or change their interpretation and enforcement of existing standards formanufacture, packaging or testing of products. We have limited control over our manufacturers’ compliance with these regulations and standards. Failure tocomply with these requirements may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure orrecall or withdrawal of product approval. If the safety of any product supplied is compromised due to our manufacturers’ failure to adhere to applicable lawsor for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our products and we may be held liable for anyinjuries sustained as a result. Any of these factors could cause a delay of clinical studies, regulatory submissions, approvals or commercialization of ourproduct candidates, entail higher costs or impair our reputation.Our current agreements with our suppliers do not provide for the entire supply of the drug product necessary for all anticipated clinical studies or forfull scale commercialization. If we and our suppliers cannot agree to the terms and conditions for them to provide the drug product necessary for our clinicaland commercial supply needs, we may not be able to manufacture the product candidate until a qualified alternative supplier is identified, which could alsodelay the development of, and impair our ability to commercialize, our product candidates.The number of third-party suppliers with the necessary manufacturing and regulatory expertise and facilities is limited, and it could be expensive andtake a significant amount of time to arrange for alternative suppliers, which could have a material adverse effect on our business. New suppliers of anyproduct candidate would be required to qualify under applicable regulatory requirements and would need to have sufficient rights under applicableintellectual property laws to the method of manufacturing the product candidate. Obtaining the necessary FDA approvals or other qualifications underapplicable regulatory requirements and ensuring non-infringement of third-party intellectual property rights could result in a significant interruption ofsupply and could require the new manufacturer to bear significant additional costs which may be passed on to us.We are building a manufacturing facility that could support future clinical production of our product candidates. We have no experience as acompany manufacturing pharmaceutical products, and there can be no assurance that we will be able to build a compliant manufacturing facility or, ifbuilt, we will be able to successfully manufacture any of our product candidates.We expect to utilize both contract manufacturing organizations, or CMOs, and our own facility to meet our projected needs for clinical supply. Weintend to expand our manufacturing capacity by designing and building a manufacturing facility that we plan to initially use to support our clinical supplyneeds. To meet these objectives we will need to transition manufacturing processes and know-how of our product candidates to our own facility. Transferringmanufacturing processes and know-how is complex and involves review and incorporation of both documented and undocumented processes that may haveevolved over time. In addition, transferring production to different facilities may require utilization of new or different processes to meet the specificrequirements of a given facility. Additional studies may also need to be conducted to support the transfer of certain manufacturing processes and processimprovements. We cannot be certain that all relevant know-how and data has been adequately incorporated into the manufacturing process until thecompletion of studies (and the related evaluations) intended to demonstrate the comparability of material previously produced with that generated by ourCMOs. Although some of our employees have experience in the manufacturing of pharmaceutical products from prior employment at other companies, we, asa company, have no prior experience in pharmaceutical product manufacturing, and operating this facility would require us to comply with complexregulations and to continue to hire and retain experienced scientific, quality control, quality assurance and manufacturing personnel. Designing and buildinga manufacturing facility has been and will continue to be time-consuming and expensive, and we may experience delays or cost overruns. In addition,government approvals would be required for us to operate a manufacturing facility and can be time-consuming to obtain. As a manufacturer ofpharmaceutical products, we also would be required to demonstrate and maintain cGMP compliance. These requirements include, among other things,quality control, quality assurance and the maintenance of records and documentation. Furthermore, establishing manufacturing operations may require areallocation of other resources, particularly the time and attention of our senior management. Even if we are able to establish our own manufacturingcapabilities, we could encounter challenges in operating the manufacturing facility in compliance with cGMP, regulatory or other applicable requirements,resulting in potential negative consequences, including regulatory actions, which could undermine our ability to utilize this facility for our own44manufacturing needs. Any failure or delay in the development of our manufacturing capabilities could adversely impact the development of our productcandidates.There are risks associated with manufacturing for clinical and commercial use. Manufacturing biological components at the appropriate scaleand quality is complex and difficult.There are risks associated with manufacturing our product candidates including, among others, cGMP compliance, cost overruns, technical problemswith process scale-up, process reproducibility, stability issues, lot consistency, yields and timely availability of raw materials. Even if efficacy and safety datafrom our clinical trials would otherwise support regulatory approval for a product candidate, there is no assurance that we or any third-party manufacturer willbe able to manufacture our product candidates to specifications at levels necessary to support or maintain regulatory approval by the FDA or other regulatoryauthorities. In addition, we may not be able to manufacture our product candidates in sufficient quantities to meet the requirements for a potential launch orto meet potential future demand. If we or our third-party manufacturers are unable to produce sufficient quantities of the approved product forcommercialization, either on a timely basis or at all, our commercialization efforts would be impaired, which would have a material adverse effect on ourbusiness, financial condition, results of operations and growth prospects.We face uncertainties and risks associated with the manufacture of our product candidates. Our product candidates are biologics and theirmanufacture involves complex processes, including the development of cell lines or cell systems to produce the biologic, with the challenge of significantvariability. Further, there are difficulties in growing large quantities of such cells, consistently and sufficiently isolating certain types of cells and harvestingand purifying the biologic produced by them. The cost to manufacture biologics is generally far higher than traditional small molecule chemical compounds,and the manufacturing process can be difficult to reproduce. There is no guarantee we will be successful in establishing a larger-scale commercialmanufacturing process for our pipeline product candidates or obtaining the needed manufacturing capacity. Due to the high cost to manufacture, inherentuncertainty related to manufacturing costs, and uncertainty in our patient population, there is risk that some of our product candidates may not becommercially viable.We do not currently have the infrastructure or capability to manufacture, market and sell therapeutic products on a commercial scale.In order for us to commercialize our therapeutic products directly, we would need to develop, or obtain through outsourcing arrangements, thecapability to manufacture, market and sell our products on a commercial scale. Currently, we do not have the ability nor the financial resources to establishthe infrastructure and organizations needed to execute these functions, including such infrastructure needed for the commercialization of any product basedon our ZFP technology, which can be complex and costly. If we are unable to establish adequate manufacturing, sales, marketing and distributioncapabilities, we will not be able to directly commercialize our therapeutics products, which would limit our future growth.If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates,we may be unable to generate any revenue.We do not currently have an organization for the sale, marketing and distribution of pharmaceutical products and the cost of establishing andmaintaining such an organization may exceed the cost-effectiveness of doing so. In order to market any products that may be approved by the FDA andcomparable foreign regulatory authorities, we must build our sales, marketing, managerial and other non-technical capabilities or make arrangements withthird parties to perform these services. There are significant risks involved in building and managing a sales organization, including our ability to hire, retainand incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel and effectively manage ageographically dispersed sales and marketing team. Any failure or delay in the development of our internal sales, marketing and distribution capabilitieswould adversely impact the commercialization of any approved products. If we are unable to establish adequate sales, marketing and distributioncapabilities, whether independently or with third parties, we may not be able to generate product revenues and may not become profitable. We will becompeting with many companies that currently have extensive and well-funded sales and marketing operations. Without an internal commercial organizationor the support of a third party to perform sales and marketing functions, we may be unable to compete successfully against these more established companies.If we are not successful in commercializing our current or future product candidates either on our own or through collaborations with one or more thirdparties, our future product revenue will suffer and we would incur significant additional losses.We will need to grow the size of our organization, and we may experience difficulties in managing this growth.As of February 15, 2019, we had 302 full-time employees. We need to grow the size of our organization in order to support our continueddevelopment and potential commercialization of our product candidates. In particular, we will need to add substantial numbers of additional personnel andother resources to support our development and potential commercialization of our product candidates. In addition, we may not be able to attract or retainemployees with the appropriate levels of experience and to skills to accomplish our objectives. As our development and commercialization plans andstrategies continue to develop, or as a result of any45future acquisitions, our need for additional managerial, operational, manufacturing, sales, marketing, financial and other resources will increase. Ourmanagement, personnel and systems currently in place may not be adequate to support this future growth. Future growth would impose significant addedresponsibilities on members of management, including:•managing our preclinical studies and clinical trials effectively;•identifying, recruiting, maintaining, motivating and integrating additional employees;•managing our internal development efforts effectively while complying with our contractual obligations to licensors, licensees,contractors and other third parties;•improving our managerial, development, operational, information technology, and finance systems; and•expanding our facilities.As our operations expand, we will also need to manage additional relationships with various strategic partners, suppliers and other third parties. Ourfuture financial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability tomanage any future growth effectively. To that end, we must be able to manage our development efforts and preclinical studies and clinical trials effectivelyand hire, train and integrate additional management, research and development, manufacturing, administrative and sales and marketing personnel. Our failureto accomplish any of these tasks could prevent us from successfully growing our companyRisks Relating to our IndustryIf our competitors develop, acquire, or market technologies or products that are more effective than ours, this would reduce or eliminate ourcommercial opportunity.Any products that we or our collaborators or strategic partners develop by using our ZFP technology platform will enter into highly competitivemarkets. Even if we are able to generate products that are safe and effective for their intended use, competing technologies may prove to be more effective orless expensive, which, to the extent these competing technologies achieve market acceptance, will limit our revenue opportunities. In some cases, competingtechnologies have proven to be effective and less expensive. Competing technologies may include other methods of regulating gene expression ormodifying genes. ZFNs and ZFP TFs have broad application in the life sciences industry and compete with a broad array of new technologies and approachesbeing applied to genetic research by many companies. Competing proprietary technologies with our product development focus include but are not limitedto:•For genome editing and gene therapy products:•recombinant proteins;•other gene therapy/cDNAs;•antisense;•siRNA and microRNA approaches, exon skipping;•small molecule drugs;•monoclonal antibodies;•CRISPR/Cas technology; and•TALE proteins, meganucleases, and MegaTALs.•Our non-therapeutic applications compete against similar technologies:•For protein production: gene amplification, CRISPR/Cas technology, TALE technology, insulator technology, and mini-chromosomes;•For target validation: antisense, siRNA, TALE technology and CRISPR/Cas technology;•For plant agriculture: recombination approaches, mutagenesis approaches, TALE technology, CRISPR/Cas technology,mini-chromosomes; and•For transgenic animals: somatic nuclear transfer, embryonic stem cell, TALE, CRISPR/Cas technology and transposasetechnologies. In addition to possessing competing technologies, our competitors include pharmaceutical and biotechnology companies with:46•substantially greater capital resources than ours;•larger research and development staffs and facilities than ours; and•greater experience in product development and in obtaining regulatory approvals and patent protection.These organizations also compete with us to:•attract qualified personnel;•attract parties for acquisitions, joint ventures or other collaborations; and•license the proprietary technologies of academic and research institutions that are competitive with our technology, which maypreclude us from pursuing similar opportunities.Accordingly, our competitors may succeed in obtaining patent protection or commercializing products before us. In addition, any products that wedevelop may compete with existing products or services that are well established in the marketplace.Our product candidates are based on novel technologies, which makes it difficult to predict the timing and costs of development and ofsubsequently obtaining regulatory approval.We have concentrated our research and development efforts on genome editing, gene therapy, gene regulation and cell therapy. The regulatoryapproval process for novel product candidates such as ours is unclear and may be lengthier and more expensive than the process for other, better-known ormore extensively studied product candidates.Adverse developments in clinical trials of gene therapy products conducted by others may cause the FDA or other oversight bodies to change therequirements for approval of our product candidates.These regulatory review committees and advisory groups, and any new guidelines they promulgate, may lengthen the regulatory review process,require us to perform additional preclinical studies or clinical trials, increase our development costs, lead to changes in regulatory positions andinterpretations, delay or prevent approval and commercialization of our current or future product candidates or lead to significant post-approval limitationsor restrictions. As we advance our product candidates, we will be required to consult with these regulatory and advisory groups and comply with applicableguidelines. If we fail to do so, we may be required to delay or discontinue development of our product candidates. These additional processes may result in areview and approval process that is longer than we otherwise would have expected. Delay or failure to obtain, or unexpected costs in obtaining, theregulatory approval necessary to bring a potential product to market could decrease our ability to generate sufficient product revenue, and our business,financial condition, results of operations and prospects would be harmed. Even if our product candidates are approved, we expect that the FDA will require usto submit follow-up data regarding our clinical trial subjects for a number of years after any approval. If this follow-up data shows negative long-term safetyor efficacy outcomes for these patients, the FDA may revoke its approval or change the label of our products in a manner that could have an adverse impacton our business.In addition, adverse developments in clinical trials of gene therapy or cell therapy products conducted by others may cause the FDA or otheroversight bodies to change the requirements for approval of our product candidates. The FDA only recently approved the first in vivo gene therapy,LUXTURNA, and only two in vivo gene therapy products, uniQure N.V.’s Glybera and GlaxoSmithKline’s Strimvelis, have received marketing authorizationfrom the EMA. As a result, it is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for our product candidates.Our gene therapy approach utilizes vectors derived from viruses, which may be perceived as unsafe or may result in unforeseen adverse events.Negative public opinion and increased regulatory scrutiny of gene therapy may damage public perception of the safety of our product candidates andadversely affect our ability to conduct our business or obtain regulatory approvals for our product candidates.Gene therapy remains a novel technology, with only one in vivo gene therapy product approved for a genetic disease to date in the United States andonly two in vivo gene therapy products for genetic diseases approved to date in the European Union. Public perception may be influenced by claims thatgene therapy is unsafe, and gene therapy may not gain the acceptance of the public or the medical community. In particular, our success will depend uponphysicians who specialize in the treatment of genetic diseases targeted by our product candidates, prescribing treatments that involve the use of our productcandidates in lieu of, or in addition to, existing treatments with which they are familiar and for which greater clinical data may be available. More restrictivegovernment regulations or negative public opinion would have an adverse effect on our business, financial condition, results of operations and prospects andmay delay or impair the development and commercialization of our product candidates or demand for any products we may develop. For example, earliergene therapy trials led to several well-publicized adverse events, including cases of leukemia and death seen in other trials using other vectors. Seriousadverse events in our clinical trials, or other clinical trials involving gene therapy products or our competitors’ products, even if not ultimately attributable tothe relevant product candidates, and the resulting publicity,47could result in increased government regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our productcandidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates.Laws or public sentiment may limit the production of genetically modified agricultural products, and these laws could reduce our partner’s abilityto sell such products.Genetically modified products are currently subject to public debate and heightened regulatory scrutiny, either of which could prevent or delayproduction of agricultural products. We have exclusive right to use our ZFP technology to modify the genomes or alter the nucleic acid or protein expressionof plant cells, plants or plant cell cultures. The field-testing, production and marketing of genetically modified plants and plant products are subject tofederal, state, local and foreign governmental regulation. Regulatory agencies administering existing or future regulations or legislation may not allowproduction and marketing of our genetically modified products in a timely manner or under technically or commercially feasible conditions. In addition,regulatory action or private litigation could result in expenses, delays or other impediments to our product development programs or the commercializationof resulting products.The FDA currently applies the same regulatory standards to foods developed through genetic engineering as those applied to foods developedthrough traditional plant breeding. Genetically engineered food products, however, will be subject to pre-market review if these products raise safetyquestions or are deemed to be food additives. Governmental authorities could also, for social or other purposes, limit the use of genetically modified productscreated with our gene regulation technology.Even if the regulatory approval for genetically modified products developed using our ZFP technology is obtained, our success will also depend onpublic acceptance of the use of genetically modified products including drugs, plants, and plant products. Claims that genetically modified products areunsafe for consumption or pose a danger to the environment may influence public attitudes. Our genetically modified products may not gain publicacceptance. The subject of genetically modified organisms has received negative publicity in the United States and particularly in Europe, and suchpublicity has aroused public debate. The adverse publicity in Europe could lead to greater regulation and trade restrictions on imports of genetically alteredproducts. Similar adverse public reaction or sentiment in the United States to genetic research and its resulting products could result in greater domesticregulation and could decrease the demand for our technology and products.Risks Relating to our FinancesWe have incurred significant operating losses since inception and anticipate that we will incur continued losses for the foreseeable future.We have generated operating losses since we began operations in 1995. Our net losses for the years ended December 31, 2018, 2017 and 2016 were$68.9 million, $54.6 million and $71.7 million, respectively. The extent of our future losses and the timing of profitability are uncertain, and we expect toincur losses for the foreseeable future. We have been engaged in developing our ZFP technology since inception, which has and will continue to requiresignificant research and development expenditures. To date, we have generated our funding from issuance of equity securities, revenues derived fromcollaboration agreements, other strategic partnerships in non-therapeutic applications of our technology, federal government research grants and grantsawarded by research foundations. As of December 31, 2018, we had an accumulated deficit of $562.7 million. Since our initial public offering in 2000, wehave generated an aggregate of approximately $648.7 million in gross proceeds from the sale of our equity securities. We expect to continue to incuradditional operating losses for the next several years as we continue to advance our product candidates. If the time required to generate significant productrevenues and achieve profitability is longer than we currently anticipate or if we are unable to generate liquidity through equity financing or other sources offunding, we may be forced to curtail or suspend our operations.We may be unable to raise additional capital, which would harm our ability to develop our technology and product candidates.We have incurred significant operating losses and negative operating cash flows since inception and have not achieved profitability. We expectcapital outlays and operating expenditures to increase over the next several years as we expand our infrastructure and research and product developmentactivities. While we believe our financial resources will be adequate to fund our current operations for at least the next twelve months, we will need to raisesubstantial additional capital to fund the development, manufacturing and potential commercialization of our product candidates. We regularly considerfund raising opportunities and may decide, from time to time, to raise capital based on various factors, including market conditions and our plans ofoperation. In addition, as we focus our efforts on proprietary human therapeutics, we will need to seek FDA approvals of potential products, a process thatcould cost in excess of hundreds of millions of dollars per product. We may experience difficulties in accessing the capital market due to external factorsbeyond our control such as volatility in the equity markets for emerging biotechnology companies and general economic and market conditions both in theUnited States and abroad. We cannot be certain that we will be able to obtain financing on terms acceptable to us, or at all. Our failure to obtain adequate andtimely funding will materially adversely affect our business and our48ability to develop our technology and products candidates and to realize the anticipated benefits of the TxCell Acquisition. Furthermore, any sales ofadditional equity securities may result in dilution to our stockholders and any debt financing may include business and financial covenants that restricts ouroperations.We are at the development phase of operations and may not succeed or become profitable.We began operations in 1995, are in the early phases of product development for the most advanced candidates in our therapeutics pipeline, and wehave incurred significant losses since inception. To date, our revenues have been generated from collaboration agreements, other collaborations in non-therapeutic applications of our technology, federal government research grants and grants awarded by research foundations. Our focus on higher-valuetherapeutic product development and related collaboration requires us to incur substantial expenses associated with product development. In addition, thepreclinical or clinical failure of any single product may have a significant effect on the actual or perceived value of our stock. Our business is subject to all ofthe risks inherent in the development of a new technology, which includes the need to:•attract and retain qualified scientific and technical staff and management, particularly scientific staff with expertise to developour early-stage technology into therapeutic products;•obtain sufficient capital to support the expense of developing our technology platform and developing, testing andcommercializing products;•develop a market for our products; and•successfully transition from a company with a research focus to a company capable of supporting commercial activities.Comprehensive U.S. tax reform legislation could increase the tax burden on our orphan drug programs and adversely affect our business andfinancial condition.The U.S. government enacted comprehensive tax legislation in 2017 that includes significant changes to the taxation of business entities. Thesechanges include, among others, (i) a permanent reduction to the corporate income tax rate, (ii) a partial limitation on the deductibility of business interestexpense and net operating loss carryforwards, (iii) a shift of the U.S. taxation of multinational corporations from a tax on worldwide income to a territorialsystem (along with certain rules designed to prevent erosion of the U.S. income tax base) and (iv) a one-time tax on accumulated offshore earnings held incash and illiquid assets, with the latter taxed at a lower rate. Further, the comprehensive tax legislation, among other things, reduces the orphan drug taxcredit from 50% to 25% of qualifying expenditures. When and if we become profitable, this reduction in tax credits may result in an increased federal incometax burden on our orphan drug programs as it may cause us to pay federal income taxes earlier under the revised tax law than under the prior law and, despitebeing partially off-set by a reduction in the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, may increase our total federal tax liabilityattributable to such programs.Notwithstanding the reduction in the corporate income tax rate, the overall impact of this comprehensive tax legislation resulted in an overallreduction in our deferred tax assets, and our business and financial condition could still be adversely affected as additional guidance and regulations areissued with respect to the original tax law change. In addition, it is uncertain if and to what extent various states will conform to this comprehensive taxlegislation. The impact of this comprehensive tax legislation on holders of our common stock is also uncertain and could be adverse. Investors shouldconsult with their legal and tax advisors with respect to this comprehensive tax legislation and the potential tax consequences of investing in or holding ourcommon stock.Risks Relating to our Relationships with Collaborators and Strategic PartnersIf conflicts arise between us and our collaborators or strategic partners, these parties may act in their self-interest, which may limit our ability toimplement our strategies and otherwise harm our business and prospects.If conflicts arise between our corporate or academic collaborators or strategic partners and us, the other party may act in its self-interest, which maylimit our ability to implement our strategies. Some of our academic collaborators and strategic partners are conducting multiple product development effortswithin each area that is the subject of the collaboration with us. Our collaborators or strategic partners may develop, either alone or with others, products inrelated fields that are competitive with the products or potential products that are the subject of these collaborations. Competing products, either developedby the collaborators or strategic partners or to which the collaborators or strategic partners have rights, may result in the withdrawal of partner support for ourproduct candidates.Some of our collaborators or strategic partners could also become our competitors in the future. Our collaborators or strategic partners could developor invest in competing products, preclude us from entering into collaborations with their competitors, fail to obtain timely regulatory approvals, terminatetheir agreements with us prematurely, or fail to devote sufficient resources to the development and commercialization of product candidates covered by theapplicable agreement.49In addition, conflicts could arise between us and our collaborators resulting from disputes regarding our or our collaborators’ or strategic partners’performance under the applicable agreement, including disputes arising from alleged breaches of our agreements with our collaborators and strategic partners.For example, we have certain confidentiality obligations to our collaborators and strategic partners under our agreements with them, and it is possible that, inconnection with the data security incident we disclosed in April 2018, we could be subject to claims that we have breached our confidentiality obligations,which could result in damages payable by us and/or the affected collaborator or strategic partner seeking to terminate its agreement with us.Any of these developments could harm our product development efforts and otherwise adversely affect our business and prospectus.Our collaborators and strategic partners may control aspects of our clinical trials, which could result in delays and other obstacles in thecommercialization of our proposed products.We depend on third-party collaborators and strategic partners to design and conduct our clinical trials for some of our therapeutic programs. As aresult, we may not be able to conduct these programs in the manner or on the time schedule we currently contemplate, which may negatively impact ourbusiness operations. In addition, if any of these collaborators or strategic partners withdraws support for our programs or proposed products or otherwiseimpair their development; our business could be negatively affected.For example, under our agreements with Kite, Pfizer and Bioverativ, they have control and broad discretion over all or certain aspects of the clinicaldevelopment and commercialization of any product developed under the agreement, and we will have little, if any, influence on how these programs will beconducted. Our lack of control over the clinical development in such agreements could cause delays or other difficulties in the development andcommercialization of our product candidates, which may prevent us from completing the intended IND filings in a timely fashion and receiving anymilestone, royalty payments and other benefits under the agreement. In addition, under their respective agreements, our third-party collaborators have certainrights to terminate the agreements by providing us with advance notices, therefore, the actual milestone payments that we may receive under theseagreements may be substantially lower than the full amounts provided for under these agreements.Our collaborators or strategic partners may decide to adopt alternative technologies or may be unable to develop commercially viable productswith our technology, which would negatively impact our revenues and our strategy to develop these products.Our collaborators or strategic partners may adopt alternative technologies, which could decrease the marketability of ZFP technology. Additionally,because many of our collaborators or strategic partners are likely to be working on more than one development project, they could choose to shift theirresources to projects other than those they are working on with us. If they do so, this would delay our ability to test our technology and would delay orterminate the development of potential products based on our ZFP technology. Further, our collaborators and strategic partners may elect not to developproducts arising out of our collaborative and strategic partnering arrangements or to devote sufficient resources to the development, manufacturing,marketing or sale of these products. If they terminate the collaborative relationship with us, we will be required to seek the support of other partners orcollaborators. We may not have sufficient resources and expertise to develop these programs by ourselves, and we may not be able to identify a suitablepartner or negotiate a favorable collaboration agreement to allow us to continue the development of these programs. If any of these events occur, we may notbe able to develop our technologies or commercialize our products.If the licensed products under our non-therapeutic license agreements are not successfully commercialized, or our third-party licensees terminateour agreements, our ability to generate revenue under these license agreements may be limited.We have a number of collaboration agreements with third parties whereby we licensed our ZFP technologies to develop products in non- therapeuticfields, such as laboratory research reagents, protein pharmaceuticals, and, transgenic animals, as well as plant agricultureWe cannot be certain that we or our collaboration partners will succeed in the development of commercially viable products in these non-therapeuticfields of use, and there is no guarantee that we or our collaboration partners will achieve the milestones set forth in the respective license agreements. To theextent we or our collaboration partners do not succeed in developing and commercializing products or if we or our collaboration partners fail to achieve suchmilestones, our revenues and benefits under the license agreements will be limited. In the event our third party licensees decide to terminate the licenseagreements, our ability to generate revenue under such license agreements will cease.Our collaborations with outside scientists may be subject to change, which could limit our access to their expertise.We work with scientific advisors and collaborators at academic research institutions. These scientists are not our employees and may have othercommitments that would limit their availability to us. Although our scientific advisors generally agree not to do competing work, if a conflict of interestbetween their work for us and their work for another entity arises, we may lose their services.50Although our scientific advisors and academic collaborators sign agreements not to disclose our confidential information, it is possible that some of ourvaluable proprietary knowledge may become publicly known through them, which may cause competitive harm to our business.Risks Relating to our Intellectual PropertyBecause it is difficult and costly to protect our proprietary rights, and third parties may have filed patent applications that are similar to ours, wecannot guarantee the proprietary protection of our technologies and products.Our commercial success may depend in part on obtaining and enforcing patent protection for our technology and successfully defending any of ourpatents that may be challenged. Obtaining and enforcing pharmaceutical and biotechnology patents is costly, time consuming and complex, and we may notbe able to file and prosecute all necessary or desirable patent applications, or maintain, enforce and license any patents that may issue from such patentapplications, at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and developmentoutput before it is too late to obtain patent protection. The patent positions of pharmaceutical and biotechnology companies can be highly uncertain and caninvolve complex legal and factual questions. No consistent policy regarding the breadth of claims allowed in biotechnology patents has emerged to date.Accordingly, we cannot predict the breadth of claims that may issue from any patent applications that we own or license.We are a party to various license agreements that grant us rights under specified patents and patent applications. We are also party to various licenseagreements by which we grant third parties rights under specified patents and patent applications. Our current licenses contain performance obligations. If wefail to meet those obligations, the licenses could be terminated. If we are unable to continue to license these technologies on commercially reasonable terms,or at all, we may be forced to delay or terminate aspects of our product development and research activities.With respect to our present and any future sublicenses, because our rights derive from those granted to our sublicensor, we are subject to the risk thatour sublicensor may fail to perform its obligations under the master license or fail to inform us of useful improvements in, or additions to, the underlyingintellectual property owned by the original licensor.We are unable to exercise the same degree of control over intellectual property that we license from third parties as we exercise over our internallydeveloped intellectual property. We do not control the prosecution of certain of the patent applications that we license from third parties; therefore, thepatent applications may not be prosecuted as we desire or in a timely manner.The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that:•we or our licensors were the first to make the inventions covered by each of our pending patent applications;•we or our licensors were the first to file patent applications for these inventions;•the patents of others will not have an adverse effect on our ability to do business;•others will not independently develop similar or alternative technologies or reverse engineer any of our products, processes ortechnologies;•any of our pending patent applications will result in issued patents;•any patents issued or licensed to us, our collaborators or strategic partners will provide a basis for commercially viable productsor will provide us with any competitive advantages;•any patents issued or licensed to us will not be challenged and invalidated by third parties; or•we will develop additional products, processes or technologies that are patentable.Others have filed and in the future are likely to file patent applications that are similar to ours. We are aware that there are academic groups and othercompanies that are attempting to develop technology that is based on the use of zinc finger, TALE, CRISPR/Cas and other DNA-binding proteins, and thatthese groups and companies have filed patent applications. Several patents with claims directed to this technology have issued, although we have no currentplans to use the claimed inventions. If these or other patent applications issue as patents, it is possible that the holder of any patent or patents granted onthese applications may bring an infringement action against us, our collaborators, or strategic partners claiming damages and seeking to enjoin commercialactivities relating to the affected products and processes. The costs of litigating the claim could be substantial regardless of outcome. Moreover, we cannotpredict whether we, our collaborators, or strategic partners would prevail in any actions. In addition, if the relevant patent claims were upheld as valid andenforceable and our products or processes were found to infringe a patent or patents, we or our collaborators may have to pay substantial damages, includingtreble damages and attorneys’ fees for willful infringement, and we may be prevented from making, using, or selling the relevant product or process unless weor our collaborators could obtain a license or were able to design around the patent claims. We can give no assurance that such a license would be availableto us or our51collaborators on commercially reasonable terms, or at all, or that we would be able to successfully design around the relevant patent claims. There may besignificant litigation in the genomics or cell therapy industry regarding patent and other intellectual property rights, which could subject us to litigation. Ifwe become involved in litigation, it could consume a substantial portion of managerial and financial resources.We rely on trade secrets to protect technology where we believe patent protection is not appropriate or obtainable. Trade secrets, however, aredifficult to protect. While we require employees, academic collaborators and consultants to enter into confidentiality agreements, we may not be able toadequately protect our trade secrets or other proprietary information or enforce these confidentiality agreements.Our collaborators, strategic partners, and scientific advisors have rights to publish data and information in which we may have rights. If we cannotmaintain the confidentiality of our technology and other confidential information in connection with our collaborations and strategic partnerships, then wemay not be able to receive patent protection or protect our proprietary information.If we. are unable to obtain or protect intellectual property rights related to our product candidates, we may not be able to compete effectively in theintended markets.We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to ourproduct candidates. The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can beuncertain. The patent applications that we own or in-license may fail to result in issued patents with claims that cover our product candidates in the UnitedStates or in other foreign countries. There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has beenfound, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue and even ifsuch patents cover our product candidates, third parties may challenge their validity, enforceability or scope, which may result in such patents beingnarrowed or invalidated. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectualproperty, provide exclusivity for our product candidates or prevent others from designing around our claims. Our competitors may be able to circumvent ourpatents by developing similar or alternative product candidates in a non-infringing manner. Any of these outcomes could impair our ability to preventcompetition from third parties, which may have an adverse impact on our business.If the patent applications we hold or have in-licensed with respect to our programs or product candidates fail to issue, if their breadth or strength ofprotection is threatened, or if they fail to provide meaningful exclusivity for our product candidates, it could dissuade companies from collaborating with usto develop product candidates, and threaten our ability to commercialize, future products. We have filed several patent applications covering our productcandidates recently. We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patent or whether any issued patents willbe found invalid and unenforceable or will be threatened by third parties. Any successful challenge to these patents or any other patents owned by or licensedto us could deprive us of rights necessary for the successful commercialization of any product candidates that we may develop. Further, if we encounterdelays in regulatory approvals, the period of time during which we could market a product candidate under patent protection could be reduced. Since patentapplications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot becertain that we were the first to file any patent application related to a product candidate. Furthermore, if third parties have filed such patent applications, aninterference or derivation proceeding in the United States can be initiated by a third party to determine who was the first to invent any of the subject mattercovered by the patent claims of our applications.Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.Patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisionalfiling date or from the filing date of the corresponding international application. Various extensions may be available. However, the life of a patent, and theprotection it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired for a product, we may be opento competition from generic medications. Given the amount of time required for the development, testing and regulatory review of new product candidates,patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patentportfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected and ourbusiness would be harmed.52We rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent,processes for which patents are difficult to enforce and any other elements of our product candidate discovery and development processes that involveproprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. We seek to protect ourproprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors andcontractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises andphysical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems,agreements or security measures have been and may in the future be breached, and we may not have adequate remedies for any breach. See also the risk factortitled, “Significant disruptions of our information technology systems or data security incidents could result in significant financial, legal, regulatory,business and reputational harm to us.” In addition, our trade secrets may otherwise become known or be independently discovered by competitors.Although we expect all of our employees and consultants to assign their inventions to us, and all of our employees, consultants, advisors and anythird parties who have access to our proprietary know-how, information or technology to enter into confidentiality agreements, we cannot provide anyassurances that all such agreements have been duly executed or that our trade secrets and other confidential proprietary information will not be disclosed orthat competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques.Misappropriation or unauthorized disclosure of our trade secrets could impair our competitive position and may have a material adverse effect on ourbusiness. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties formisappropriating the trade secret. In addition, others may independently discover our trade secrets and proprietary information. For example, the FDA, as partof its Transparency Initiative, is currently considering whether to make additional information publicly available on a routine basis, including informationthat we may consider to be trade secrets or other proprietary information, and it is not clear at the present time how the FDA’s disclosure policies may changein the future, if at all.Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States.As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United States and abroad. If we areunable to prevent material disclosure of the non-patented intellectual property related to our technologies to third parties, and there is no guarantee that wewill have any such enforceable trade secret protection, we may not be able to establish or maintain a competitive advantage in our market, which couldmaterially adversely affect our business, results of operations and financial condition.Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. There is a substantialamount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology andpharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, ex parte reexaminations, post-grant review, and inter partesreview proceedings before the U.S. Patent and Trademark Office, or U.S. PTO, and corresponding foreign patent offices. Numerous U.S. and foreign issuedpatents and pending patent applications, which are owned by third parties, exist in the fields in which we are pursuing development candidates. As thebiotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims ofinfringement of the patent rights of third parties.Third parties may assert that we are employing their proprietary technology without authorization, and such parties may be able to sustain the costs ofcomplex patent litigation more effectively than we can because they have substantially greater resources. There may be third-party patents or patentapplications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our productcandidates. For example, we are aware of certain patents held by a third party related to certain vector manufacturing methods that are currently being used incertain of our product candidates. We have not yet finalized the commercial scale manufacturing process for any of our product candidates. If our commercialscale manufacturing process utilizes these vector manufacturing methods, and if these third-party patents are in force at the time of commercialization, wemay need to use or develop a non-infringing manufacturing method or seek a license to these patents. In any event, if any third-party patents were held by acourt of competent jurisdiction to cover the manufacturing methods of any of our product candidates, any molecules formed during the manufacturingprocess or any final product itself, the holders of any such patents may be able to block our ability to commercialize such product candidate unless weobtained a license under the applicable patents, or until such patents expire. Similarly, if any third-party patents were held by a court of competentjurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy, the holders of any such patentsmay be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license, or until such patents expires.In either case, such a license may not be available on commercially reasonable terms or at all. The inability to obtain required licenses on reasonablecommercial terms, if at all, could delay or prevent the preclinical evaluation, drug development collaborations, clinical testing, and/or commercialization ofthe affected product candidates. Moreover, because patent applications can take many years to53issue, there may be currently pending patent applications which may later result in issued patents that our product candidates may infringe. In addition, thirdparties may obtain patents in the future and claim that use of our technologies infringes upon these patents.Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop andcommercialize one or more of our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense andwould be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to paysubstantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one ormore licenses from third parties, which may be impossible or require substantial time and monetary expenditure. Furthermore, because of the substantialamount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk that some of our confidentialinformation could be compromised by disclosure. In addition, any uncertainties resulting from the initiation and continuation of any litigation could havematerial adverse effect on our ability to raise additional funds or otherwise have a material adverse effect on our business, results of operations, financialcondition and prospects.We may not be successful in obtaining or maintaining necessary rights to gene or cell therapy product components and processes for ourdevelopment pipeline through acquisitions and in-licenses.Presently, we believe we have rights to the intellectual property, through licenses from third parties and under patents that we own, to develop ourgene and cell therapy product candidates. Because our programs may involve additional product candidates such as our recently acquired TX-200 productcandidate and potential future CAR-Treg therapies that may require the use of proprietary rights held by third parties, the growth of our business will likelydepend in part on our ability to acquire, in-license or use these proprietary rights. In addition, our product candidates may require specific formulations towork effectively and efficiently and these rights may be held by others. We may be unable to acquire or in-license any compositions, methods of use,processes or other third-party intellectual property rights from third parties that we identify on commercially reasonable terms, if at all. The licensing andacquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to licenseor acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over usdue to their size, cash resources and greater clinical development and commercialization capabilities.For example, we sometimes collaborate with U.S. and foreign academic institutions to accelerate our preclinical research or development underwritten agreements with these institutions. Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights intechnology resulting from the collaboration. Regardless of such right of first negotiation for intellectual property, we may be unable to negotiate a licensewithin the specified time frame or under terms that are acceptable to us. If we are unable to do so, the institution may offer the intellectual property rights toother parties, potentially blocking our ability to pursue our program.In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license oracquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment. If we are unable to successfullyobtain rights to required third-party intellectual property rights, our business, financial condition and prospects for growth could suffer.If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwiseexperience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.We are a party to a number of intellectual property license agreements that are important to our business and expect to enter into additional licenseagreements in the future. Our existing license agreements impose, and we expect that future license agreements will impose, various diligence, milestone,royalty and other obligations on us. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, the licensor mayhave the right to terminate the license, in which event we would not be able to market products covered by the license.We may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates, and we have done sofrom time to time. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we may be required to expendsignificant time and resources to develop or license replacement technology. If we are unable to do so, we may be unable to develop or commercialize theaffected product candidates, which could harm our business significantly. We cannot provide any assurances that third-party patents do not exist that mightbe enforced against our current product candidates or future products, resulting in either an injunction prohibiting our sales, or, with respect to our sales, anobligation on our part to pay royalties and/or other forms of compensation to third parties.In many cases, patent prosecution of our in-licensed technology is controlled solely by the licensor. If our licensors fail to obtain and maintain patentor other protection for the proprietary intellectual property we license from them, we could lose our rights54to the intellectual property or our exclusivity with respect to those rights, and our competitors could market competing products using the intellectualproperty. In certain cases, we control the prosecution of patents resulting from licensed technology. In the event we breach any of our obligations related tosuch prosecution, we may incur significant liability to our licensing partners. Licensing of intellectual property is of critical importance to our business andinvolves complex legal, business and scientific issues and is complicated by the rapid pace of scientific discovery in our industry. Disputes may ariseregarding intellectual property subject to a licensing agreement, including:•the scope of rights granted under the license agreement and other interpretation-related issues;•the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to thelicensing agreement;•the sublicensing of patent and other rights under our collaborative development relationships;•our diligence obligations under the license agreement and what activities satisfy those diligence obligations;•the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and usand our partners; and•the priority of invention of patented technology.If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptableterms, we may be unable to successfully develop and commercialize the affected product candidates.In addition, the agreements under which we currently license intellectual property or technology from third parties are complex, and certainprovisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise couldnarrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial orother obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results ofoperations, and prospects. If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensingarrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates, which could have a materialadverse effect on our business, financial conditions, results of operations, and prospects. As an example, TxCell has exclusively licensed the right to the CARfor use in TX-200 from the University of British Columbia, or UBC. Should UBC terminate this license agreement, we may have to develop or acquire theappropriate CAR which would extend our anticipated development timeline and add expense, and which could result in our failure to realize the anticipatedbenefits of the TxCell Acquisition.We may be involved in lawsuits or similar proceedings to protect or enforce our patents or the patents of our licensors, which could be expensive,time-consuming and unsuccessful.Competitors may infringe our patents or the patents of our licensors. To counter infringement or unauthorized use, we may be required to fileinfringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours or ourlicensors is not valid, is unenforceable, in whole or in part, or may refuse to stop the other party from using the technology at issue on the grounds that ourpatents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk ofbeing invalidated, held unenforceable or interpreted narrowly and could put our patent applications at risk of not issuing. Moreover, if we or one of ourlicensing partners initiated legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant couldcounterclaim that the patent covering our product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendantcounterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any ofseveral statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegationthat someone connected with prosecution of the patent withheld relevant information from the U.S. PTO, or made a misleading statement, during prosecution.Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Suchmechanisms include re-examination, post grant review, inter partes review and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings).Such proceedings could result in revocation or amendment to our patents in such a way that they no longer cover our product candidate. For example, TxCellhas exclusively licensed the rights to technology related to redirected Treg cells from the Yeda Research and Development Company, or Yeda. A patentincluded in this exclusive license agreement with Yeda was granted in Europe in July 2016. Subsequent to this grant, the patent was opposed by severalparties in May 2017 and revoked in November 2018. The outcome following legal assertions of invalidity and unenforceability is unpredictable. Withrespect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unawareduring prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of thepatent protection on our product candidates. Such a loss of patent protection could have a material adverse impact on our business.55Interference or derivation proceedings provoked by third parties or brought by us or declared by the U.S. PTO may be necessary to determine thepriority of inventions or other matters of inventorship with respect to our patents or patent applications or those of our licensors. An unfavorable outcomecould require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if theprevailing party does not offer us a license on commercially reasonable terms or at all, or if a non-exclusive license is offered and our competitors gain accessto the same technology. Our defense of litigation, interference, derivation, or other proceedings may fail and, even if successful, may result in substantialcosts and distract our management and other employees. We may not be able to prevent, alone or with our licensors, misappropriation of our intellectualproperty rights, particularly in countries where the laws may not protect those rights as fully as in the United States.Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some ofour confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results ofhearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have amaterial adverse effect on the price of our common stock.We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidentialinformation of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.We employ individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including ourcompetitors or potential competitors. Although we try to ensure that our employees, consultants and independent contractors do not use the proprietaryinformation or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors haveinadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employee’s formeremployer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to payingmonetary damages, we may lose valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are successful indefending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.We may also be subject to claims that former employees, collaborators or other third parties have an ownership interest in our patents or otherintellectual property. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail in defending anysuch claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use,valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against suchclaims, litigation could result in substantial costs and be a distraction to management and other employees.Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and otherrequirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with theserequirements.Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to theU.S. PTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications. Wehave systems in place to remind us to pay these fees, and we employ an outside firm and rely on our outside counsel to pay these fees due to non-U.S. patentagencies. The U.S. PTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment andother similar provisions during the patent application process. We employ professionals to help us comply, and in many cases, an inadvertent lapse can becured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which non-compliance can result inabandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event,our competitors might be able to enter the market and this circumstance would have a material adverse effect on our business.Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.As is the case with other biotechnology companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining andenforcing patents in the biotechnology industry involve both technological and legal complexity, and is therefore costly, time-consuming and inherentlyuncertain. Changes in either the patent laws or interpretation of the patent laws in the United States or in other jurisdictions in which we seek patentprotection could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents.The United States enacted the Leahy-Smith America Invents Act, or the America Invents Act, which includes a number of significant changes that affect theway patent applications will be prosecuted and also may affect patent litigation. These include allowing third party submission of prior art to the U.S. PTOduring patent prosecution and additional procedures to attack the validity of a patent by U.S. PTO administered post-grant56proceedings, including post-grant review, inter partes review, and derivation proceedings. Because of a lower evidentiary standard in U.S. PTO proceedingscompared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidencein a U.S. PTO proceeding sufficient for the U.S. PTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim iffirst presented in a district court action. In addition, the challenged patents are not accorded the presumption of validity as they are in Federal District Court.Accordingly, a third party may attempt to use the U.S. PTO procedures to invalidate our patent claims that would not have been invalidated if first challengedby the third party as a defendant in a district court action. Therefore, the America Invents Act and its implementation could increase the uncertainties andcosts surrounding the prosecution of our owned or in-licensed patent applications and the enforcement or defense of our owned or in-licensed issued patents,all of which could have a material adverse effect on our business, financial condition, results of operations, and prospects. Moreover, recent U.S. SupremeCourt rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations.In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respectto the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, the U.S. PTO, and similar legislative, judicial andregulatory bodies in other jurisdictions, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability toobtain new patents or to enforce our existing patents and patents that we might obtain in the future.We may not be able to protect our intellectual property rights throughout the world.Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and ourintellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of someforeign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not beable to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using ourinventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patentprotection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, butenforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rightsmay not be effective or sufficient to prevent them from competing.Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legalsystems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual propertyprotection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing ofcompeting products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result insubstantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpretednarrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits thatwe initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectualproperty rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws maynot protect those rights as fully as in the United States.Risks Relating to our Business Operations Significant disruptions of our information technology systems or data security incidents could result in significant financial, legal, regulatory,business and reputational harm to us.We are increasingly dependent on information technology systems and infrastructure, including mobile technologies, to operate our business. In theordinary course of our business, we collect, store, process and transmit large amounts of sensitive information, including intellectual property, proprietarybusiness information, personal information and other confidential information. It is critical that we do so in a secure manner to maintain the confidentiality,integrity and availability of such sensitive information. We have also outsourced elements of our operations (including elements of our informationtechnology infrastructure) to third parties, and as a result, we manage a number of third-party vendors who may or could have access to our computernetworks or our confidential information. In addition, many of those third parties in turn subcontract or outsource some of their responsibilities to thirdparties. As a result, our information technology systems, including the functions of third parties that are involved or have access to those systems, is verylarge and complex. While all information technology operations are inherently vulnerable to inadvertent or intentional security breaches, incidents, attacksand exposures, the size, complexity, accessibility and distributed nature of our information technology systems, and the large amounts of sensitiveinformation stored on those systems, make such systems potentially vulnerable to unintentional or malicious, internal and external attacks on our technologyenvironment. Potential vulnerabilities can exploited from inadvertent or intentional actions of our employees, third-party vendors, business partners, or bymalicious third parties. Attacks of this nature are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted bysophisticated and organized groups and individuals with a wide range of motives (including, but not limited to, industrial espionage) and expertise,including organized criminal groups, “hacktivists,” nation states and others. In addition to the extraction of sensitive57information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means toaffect service reliability and threaten the confidentiality, integrity and availability of information. In addition, the prevalent use of mobile devices increasesthe risk of data security incidents.Significant disruptions of our, our third-party vendors’ and/or business partners’ information technology systems or other similar data securityincidents could adversely affect our business operations and/or result in the loss, misappropriation, and/or unauthorized access, use or disclosure of, or theprevention of access to, sensitive information, which could result in financial, legal, regulatory, business and reputational harm to us. For example, in April2018, we announced a data security incident involving the compromise of a senior executive’s company email account. Upon learning of the incident onMarch 28, 2018, external network security experts were promptly engaged, and the incident response team worked diligently to investigate the incident. Wealso promptly notified federal law enforcement of the incident. The investigation concluded that the incident was limited to the compromise of the seniorexecutive’s company email account for approximately 11 weeks. The investigation did not reveal any evidence that our network or other informationtechnology systems were otherwise compromised in connection with the incident or that the incident resulted in the disclosure of or access to personalinformation about patients or other individuals besides the holder of the company email account that was affected. However, proprietary, confidential andother sensitive information of ours and that of other entities was accessed and may have been compromised as a result of the incident. Unforeseendevelopments related to this incident could occur, which could have a further adverse impact on us. We do not maintain cyber liability insurance and willtherefore have no coverage for any losses resulting from this data security incident. Any litigation or regulatory review arising from this incident could resultin significant legal exposure to us. In addition, information technology system disruptions, whether from attacks on our technology environment or fromcomputer viruses, natural disasters, terrorism, war and telecommunication and electrical failures, could result in a material disruption of our developmentprograms and our business operations. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in ourregulatory approval efforts and significantly increase our costs to recover or reproduce the data.While we aware of the company email incident described above, there is no way of knowing with certainty whether we have experienced any otherdata security incidents that have not been discovered. While we have no reason to believe this to be the case, attackers have become very sophisticated in theway they conceal access to systems, and many companies that have been attacked are not aware that they have been attacked. Any event, including thecompany email incident described above, that leads to unauthorized access, use or disclosure of personal information, including but not limited to personalinformation regarding our patients or employees, could disrupt our business, harm our reputation, compel us to comply with applicable federal and/or statebreach notification laws and foreign law equivalents, subject us to time consuming, distracting and expensive litigation, regulatory investigation andoversight, mandatory corrective action, require us to verify the correctness of database contents, or otherwise subject us to liability under laws, regulationsand contractual obligations, including those that protect the privacy and security of personal information. This could result in increased costs to us, andresult in significant legal and financial exposure and/or reputational harm. In addition, any failure or perceived failure by us or our vendors or businesspartners to comply with our privacy, confidentiality or data security-related legal or other obligations to third parties, or any further security incidents orother inappropriate access events that result in the unauthorized access, release or transfer of sensitive information, which could include personallyidentifiable information, may result in governmental investigations, enforcement actions, regulatory fines, litigation, or public statements against us byadvocacy groups or others, and could cause third parties, including clinical sites, regulators or current and potential partners, to lose trust in us or we could besubject to claims by third parties that we have breached our privacy- or confidentiality-related obligations, which could materially and adversely affect ourbusiness and prospects. In addition, failure to maintain effective internal accounting controls related to security breaches and cybersecurity in general couldimpact our ability to produce timely and accurate financial statements and subject us to regulatory scrutiny. Moreover, data security incidents and otherinappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the type described above. While we haveimplemented security measures intended to protect our information technology systems and infrastructure, there can be no assurance that such measures willsuccessfully prevent service interruptions or further security incidents.We may not realize the anticipated benefits of the TxCell Acquisition or be able to successfully integrate the acquired TxCell operations.The TxCell Acquisition involves numerous uncertainties and risks, and has required, and will continue to require, significant efforts andexpenditures, including with respect to integrating the acquired TxCell operations with our operations. We may not be able to accomplish this integrationprocess smoothly or successfully. The integration of certain of the acquired TxCell operations will take time and will require the dedication of significantmanagement resources, which may temporarily distract our management’s attention from the routine business of the combined company. In any event, wemay encounter unexpected difficulties, or incur unexpected costs, in connection with our transition activities and integration efforts, which include: •the potential disruption of our historical core business;58 •the risk that our relative lack of historical experience in CAR-Treg development and developing product candidates and technology forimmunological diseases will not allow us to advance the development of CAR-Treg therapies, including TX-200, on the timeframes weexpect, or at all; •the strain on, and need to continue to expand, our existing operational, technical, financial and administrative infrastructure; •the difficulties in assimilating employees and corporate cultures; •the difficulties in effectively managing transition and integration activities given the distance between our headquarters and U.S.-basedmanagement team and TxCell’s offices in France; •the failure to retain key managers and other personnel, including the employees from the acquired TxCell business who might experienceuncertainty about their future roles with us; •the challenges in controlling additional costs and expenses in connection with and as a result of the TxCell Acquisition; •the diversion of our management’s attention to integration of operations and corporate and administrative infrastructures; and •any unanticipated liabilities for activities of or related to TxCell or its operations, technologies or product candidates.If any of these factors impairs our ability to integrate successfully, we may be required to spend time or money on integration activities thatotherwise would be spent on the development and expansion of our business. If we fail to integrate or otherwise manage the acquired TxCell businesssuccessfully and in a timely manner, the combined company’s potential to achieve the anticipated long-term strategic benefits of the TxCell Acquisitioncould be compromised and resulting operating inefficiencies could increase costs and expenses more than we planned, could negatively impact the marketprice of our common stock and could otherwise distract us from execution of our strategy. Failure to maintain effective financial controls and reportingsystems and procedures could also adversely affect our ability to produce timely and accurate financial statements. In addition, while we intend to availourselves of the French tax credit for certain research and development related expenses, we may not receive the anticipated amount and we may also berequired to make corrective actions upon any audit by the French tax authority with respect to such tax credit.In any event, there can be no assurance that we will integrate or otherwise manage the acquired TxCell business successfully or otherwise do sowithout experiencing operating inefficiencies or control deficiencies. In addition, because the historical business operations of TxCell differ from ourhistorical business operations, and the combined company has a different business mix than our historical business, we face different operational risks andchallenges and the complexity of our company has increased. Significant management time and effort is required to effectively manage the increasedcomplexity of our company following the TxCell Acquisition, and our failure to successfully do so could have a material adverse effect on our business,financial condition, results of operations and growth prospects.If we are unable to acquire 100% of the equity interests of TxCell, our business, financial condition and results of operations could be adverselyaffected.Although we completed the TxCell Acquisition, we may not be able to acquire the remaining ordinary shares of TxCell for some period of time, ifever. As of February 15, 2019, we have acquired a total of 25,047,671 ordinary shares of TxCell, representing approximately 98.2% of the outstanding sharecapital and voting rights of TxCell. Until such time, if ever, that we acquire 100% of the equity interests of TxCell, we will need to consider the rights of, andduties owed to, the minority shareholders of TxCell under French law when making future decisions that might impact TxCell, its business or its operations,which could adversely affect our business and our ability to realize the anticipated benefits of the TxCell Acquisition.We plan to continue to operate the acquired TxCell business in France, which may expose us to unanticipated costs or events.TxCell’s historical operations have been based in France and we plan to continue to operate the acquired TxCell business in France. Our operationof the acquired TxCell business in France involves significant risks, including: •difficulty hiring and retaining appropriate personnel due to intense competition for such limited resources; •disruptions in relations with our employees, including legacy TxCell employees; and •compliance with regulatory requirements, including local French employment regulations and organized labor in France.59In addition, as a result of our operations in France, we have become more exposed to fluctuations in currency exchange rates between the Euro andthe U.S. dollar. Given the volatility of currency exchange rates, there is no assurance that we will be able to effectively manage currency transaction and/orconversion risks. To date, we have not entered into derivative instruments to offset the impact of foreign exchange fluctuations, which fluctuations couldhave a material adverse effect on our financial condition and results of operations. In any event, difficulties resulting from these and other risks related to ouranticipated operations in France could expose us to increased expenses, impair our development efforts, adversely affect our financial condition and resultsof operations, and harm our competitive position.We are also exposed to general risks associated with our operations outside of the United States, which could adversely affect our business. In addition to our French operations as a result of the TxCell Acquisition, we also have operations and conduct business in other countries outside theUnited States, and have a UK subsidiary. We may plan to expand these activities or in to additional countries in the future. Consequently, we are, and willcontinue to be, subject to risks inherent with operating in foreign countries, in addition to those specific risks associated with TxCell, which include: •the increased complexity and costs inherent in managing international operations, including in geographically disparate locations; •diverse regulatory, financial and legal requirements, and any future changes to such requirements, in one or more countries where we arelocated or do business; •differing payor reimbursement regimes, governmental payors or patient self-pay systems and price controls; •adverse tax consequences, including changes in applicable tax laws and regulations; •applicable trade laws, tariffs, export quotas, custom duties or other trade restrictions, and any changes to them; •economic weakness, including inflation, or political or economic instability in particular foreign economies and markets; •compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; •foreign currency fluctuations, which could result in increased operating expenses or reduced revenues, and other obligations incident to doingbusiness or operating in another country; •liabilities for activities of, or related to, our international operations; •challenges inherent in efficiently managing employees in diverse geographies, including the need to adapt systems, policies, benefits andcompliance programs to differing labor and other regulations; •workforce uncertainty in countries where labor unrest is more common than in the United States; and •laws and regulations relating to data security and the unauthorized use of, or access to, commercial and personal information. Our foreign operations also expose us to risks associated with “Brexit.” In June 2016, UK voters approved a referendum to withdraw the UK'smembership from the EU, which is commonly referred to as "Brexit". In March 2017, the UK government initiated the exit process under Article 50 of theTreaty of the European Union, commencing a period of up to two years for the UK and the other EU member states to negotiate the terms of the withdrawal,such period ending on March 29, 2019 unless extended. There has been limited progress so far in the negotiations and continued uncertainty in the UKgovernment and Parliament, which increases the possibility of the UK exiting the EU on March 29, 2019 without a formal withdrawal agreement in place andof resulting significant market and economic disruption. We have operations in the UK and in France, which is in the EU, and as a result, we face risksassociated with the potential uncertainty and disruptions that may lead up to and follow Brexit, including with respect to volatility in exchange rates andinterest rates and potential material changes to the regulatory regime applicable to our operations in the UK. Brexit could adversely affect European orworldwide political, regulatory, economic or market conditions and could contribute to instability in global political institutions, regulatory agencies andfinancial markets. For example, depending on the terms of Brexit, the UK could also lose access to the single EU market and to the global trade dealsnegotiated by the EU on behalf of its members. Any of these effects of Brexit, and others we cannot anticipate or that may evolve over time, could adverselyaffect our business, results of operations and financial condition.If we use biological and hazardous materials in a manner that causes injury or violates laws, we may be liable for damages.Our research and development activities involve the controlled use of potentially harmful biological materials as well as hazardous materials,chemicals, and various radioactive compounds typically employed in the study of molecular and cellular biology. We routinely use cells in culture and genedelivery vectors, and we employ small amounts of radioisotopes in trace experiments. Although we maintain up-to-date licensing and training programs, wecannot completely eliminate the risk of accidental contamination or injury from the use, storage, handling, or disposal of these materials. In the event ofcontamination or injury, we could be held liable for damages that result, and any liability could exceed our resources. We currently carry insurance coveringcertain claims arising from our use of these materials. However, if we are unable to maintain our insurance coverage at a reasonable cost and with adequatecoverage, our insurance may not cover any liability that may arise. We are subject to federal, state, and local laws and regulations governing the use, storage,handling, and disposal of these materials and specified waste products.60Failure to attract, retain, and motivate skilled personnel and cultivate key academic collaborations will delay our product development programsand our research and development efforts.Our success depends on our continued ability to attract, retain, and motivate highly qualified management and scientific personnel and our ability todevelop and maintain important relationships with leading research and academic institutions and scientists. Competition for skilled and qualified personneland academic and other research collaborations is intense. If we lose the services of personnel with the necessary skills, including the members of our seniormanagement team, it could significantly impede the achievement of our research and development objectives. In addition, we expect to rely on theexperience and expertise of TxCell’s historical management team and other key personnel in the development of TX-200 and potential future CAR-Tregtherapies. If we were to lose the services of a significant portion or key individuals of this team, such development and our business could be adverselyaffected. Moreover, if we fail to negotiate additional acceptable collaborations with academic and other research institutions and scientists, or if our existingcollaborations are unsuccessful, our development programs may be delayed or may not succeed.Third parties on which we rely and we may be adversely affected by natural disasters and our business continuity and disaster recovery plans maynot adequately protect us from a serious disaster.Natural disasters could severely disrupt our operations and have a material adverse effect on our business, financial condition, results of operationsand prospects. If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, thatdamaged critical infrastructure or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for asubstantial period of time. The disaster recovery and business continuity plans we have in place currently are limited and may not prove adequate in theevent of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuityplans, which could have a material adverse effect on our business, financial condition, results of operations and prospects.Risks Relating to our Common Stock and Corporate OrganizationOur stock price has been volatile and may continue to be volatile, which could result in substantial losses for investors.Our stock price has been volatile and may continue to be volatile, which could cause stockholders to incur substantial losses. An active public marketfor our common stock may not be sustained, and the market price of our common stock may continue to be highly volatile. The market price of our commonstock has fluctuated significantly in response to various factors, some of which are beyond our control, including but not limited to the following:•announcements by us or collaborators providing updates on the progress or development status of product candidates;•data from clinical trials;•initiation or termination of clinical trials;•changes in market valuations of similar companies;•overall market and economic conditions, including the equity markets for emerging biotechnology companies;•deviations in our results of operations from the guidance given by us;•announcements by us or our competitors of new or enhanced products, technologies or services or significant contracts,acquisitions, strategic relationships, joint ventures or capital commitments;•announcement of changes in business and operations by our collaborators and partners, or changes in our existing collaborationagreements;•regulatory developments;•changes, by one or more of our security analysts, in recommendations, ratings or coverage of our stock;•additions or departures of key personnel;•future sales of our common stock or other securities by us, management or directors, liquidation of institutional funds thatcomprised large holdings of our stock; and decreases in our cash balances.Actual or potential sales of our common stock by our employees, including our executive officers, pursuant to pre-arranged stock trading planscould cause our stock price to fall or prevent it from increasing for numerous reasons, and actual or potential sales by such persons could be viewednegatively by other investors.61In accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, and our policies regarding stocktransactions, a number of our employees, including executive officers and members of our board of directors, have adopted and may continue to adopt stocktrading plans pursuant to which they have arranged to sell shares of our common stock from time to time in the future. Generally, sales under such plans byour executive officers and directors require public filings. Actual or potential sales of our common stock by such persons could cause the price of ourcommon stock to fall or prevent it from increasing for numerous reasons.Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could resultin additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.Additional capital will be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equitysecurities, our stockholders may experience substantial dilution. We may sell common stock, convertible securities or other equity securities in one or moretransactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities in more thanone transaction, investors may be materially diluted by subsequent sales. These sales may also result in material dilution to our existing stockholders, andnew investors could gain rights superior to our existing stockholders.Our stock price is also influenced by public perception of gene therapy and government regulation of potential products.Reports of serious adverse events in a retroviral gene transfer trial for infants with X-linked severe combined immunodeficiency (X-linked SCID) inFrance and subsequent FDA actions putting related trials on hold in the United States had a significant negative impact on the public perception and stockprice of certain companies involved in gene therapy. Stock prices of these companies declined whether or not the specific company was involved withretroviral gene transfer for the treatment of infants with X-linked SCID, or whether the specific company’s clinical trials were placed on hold in connectionwith these events. Other potential adverse events in the field of gene therapy may occur in the future that could result in greater governmental regulation ofour potential products and potential regulatory delays relating to the testing or approval of our potential products. These external events may have a negativeimpact on public perception of our business, which could cause our stock price to decline.If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price andtrading volume could decline.The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or ourbusiness. In the event securities or industry analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, ourstock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for ourstock could decrease, which might cause our stock price and trading volume to decline.We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock.We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings for thedevelopment, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return tostockholders will therefore be limited to the appreciation of their stock.Anti-takeover provisions in our certificate of incorporation, Delaware law and our bylaws could make an acquisition of our company moredifficult and could prevent attempts by our stockholders to remove or replace current management.Anti-takeover provisions of Delaware law and in our certificate of incorporation and our bylaws may discourage, delay or prevent a change in controlof our company, even if a change in control would be beneficial to our stockholders. In addition, these provisions may frustrate or prevent any attempts byour stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Inparticular, under our certificate of incorporation our board of directors may issue up to 5,000,000 shares of preferred stock with rights and privileges thatmight be senior to our common stock, without the consent of the holders of the common stock. Moreover, without any further vote or action on the part of thestockholders, the board of directors would have the authority to determine the price, rights, preferences, privileges, and restrictions of the preferred stock. Thispreferred stock, if it is ever issued, may have preference over, and harm the rights of, the holders of common stock. Although the issuance of this preferredstock would provide us with flexibility in connection with possible acquisitions and other corporate purposes, this issuance may make it more difficult for athird party to acquire a majority of our outstanding voting stock.Similarly, our authorized but unissued common stock is available for future issuance without stockholder approval. Our certificate of incorporationfurther provides that stockholders may not take action by written consent. 62In addition, our amended and restated bylaws:•establish advance notice requirements for nominations for election to the board of directors or proposing matters that can beacted upon at stockholders’ meetings; and•prohibit stockholders from calling a special meeting of stockholders.We are also subject to Section 203 of the General Corporation Law of the State of Delaware, which provides, subject to certain exceptions, that if aperson acquires 15% of our voting stock, the person is an “interested stockholder” and may not engage in “business combinations” with us for a period ofthree years from the time the person acquired 15% or more or our voting stock. The application of Section 203 may, in some circumstances, deter or prevent achange in control of our company even when such change may be beneficial to our stockholders.Our amended and restated bylaws provide that a state or federal court located within the State of Delaware will be the exclusive forum for theadjudication of certain disputes, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors,officers, or employees.Our amended and restated bylaws provide that a state or federal court located within the State of Delaware is the sole and exclusive forum for:•any derivative action or proceeding brought on our behalf;•any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee or stockholder ofSangamo to us or our stockholders;•any action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware, ourcharter or our bylaws, as to which the General Corporation Law of the State of Delaware confers jurisdiction on the Court of Chancery of the Stateof Delaware; and•any action asserting a claim governed by the internal affairs doctrine.This provision further provides that any person or entity that acquires any interest in shares of our capital stock will be deemed to have notice of andconsented to the provisions of such provision.This provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors,officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. If a court were to find this provisionto be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which couldseriously harm our business.63 ITEM 1B – UNRESOLVED STAFF COMMENTSNone. ITEM 2 – PROPERTIES Our corporate headquarters occupies approximately 45,600 square feet of research and office space located in Richmond, California, subject to leasesthat expire beginning in August 2019 through August 2026. We also have a build-to-suit lease located in Richmond, California to occupy approximately41,400 square feet of space that expires in December 2021. We also have a build-to-suit lease located in Brisbane, California that occupies approximately87,700 square feet of space that expires in May 2029 for which we are currently occupying the 2nd and 3rd floors. In addition, we have a property inValbonne, France with approximately 14,036 square feet of research and office space that expires in June 2022. ITEM 3 – LEGAL PROCEEDINGSWe are not a party to any material pending legal proceeding. From time to time, we may be involved in legal proceedings arising in the ordinarycourse of business. ITEM 4 – MINE SAFETY DISCLOSURESNot Applicable. 64PART II ITEM 5 – MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESMarket InformationOur common stock trades on the Nasdaq Global Select Market under the symbol “SGMO”. HoldersAs of February 15, 2019, there were 54 holders of record of our common stock. This number does not include “street name” or beneficial holders,whose shares are held of record by banks, brokers, financial institutions and other nominees.DividendsWe have not paid dividends on our common stock, and currently do not plan to pay any cash dividends in the foreseeable future.65Stock Performance Graph The above StockPerformance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission, norshall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each asamended, except to the extent that the Company specifically incorporates it by reference into such filing. 66ITEM 6 – SELECTED FINANCIAL DATAThe following Selected Financial Data should be read in conjunction with “Item 7—Management’s Discussion and Analysis of Financial Conditionand Results of Operations” and “Item 8—Financial Statements and Supplementary Data” included elsewhere in this Annual Report on Form 10-K. Selected Financial Data Year Ended December 31, 2018(1) 2017 2016 2015 2014 (In thousands, except per share data) Statement of Operations Data: Total revenues $84,452 $36,567 $19,389 $39,539 $45,870 Operating expenses: Research and development 114,866 65,728 65,618 67,198 56,974 General and administrative 46,736 27,200 26,330 19,197 15,677 Total operating expenses 161,602 92,928 91,948 86,395 72,651 Loss from operations (77,150) (56,361) (72,559) (46,856) (26,781)Interest and other income, net 8,261 1,793 887 431 364 Benefit from income taxes — — 14 5,722 — Net loss (68,889) (54,568) (71,658) (40,703) (26,417)Net loss attributable to non-controlling interest (555) — — — — Net loss attributable to Sangamo Therapeutics, Inc. stockholders $(68,334) $(54,568) $(71,658) $(40,703) $(26,417)Basic and diluted net loss per share attributable to SangamoTherapeutics, Inc. stockholders $(0.70) $(0.70) $(1.02) $(0.58) $(0.39)Shares used in computing basic and diluted net loss per shareattributable to Sangamo Therapeutics, Inc. stockholders 96,941 78,084 70,553 69,757 67,022 As of December 31, 2018 2017 2016 2015 2014 (In thousands) Balance Sheet Data: Cash, cash equivalents, marketable securities, and interest receivable $400,508 $244,560 $142,759 $209,307 $226,645 Working capital 332,010 203,538 136,289 192,485 169,997 Total assets 590,395 286,741 157,891 217,235 243,212 Accumulated deficit (562,696) (495,479) (440,911) (369,253) (328,550)Total stockholders' equity 367,257 187,900 136,195 192,439 206,633 Note:(1)TxCell was acquired in October 2018 and the results of operations have been included in the selected consolidated financial data since the date of acquisition (see Note 6 –Acquisition of TxCell, S.A. to our consolidated financial statements). 67ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains trend analysis, estimates andother forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities ExchangeAct of 1934, as amended. These forward-looking statements include, without limitation, statements containing the words “believes,” “anticipates,” “expects,”“continue,” “intend,” “plan,” “will,” and other words of similar import or the negative of those terms or expressions. Such forward-looking statements aresubject to known and unknown risks, uncertainties, estimates and other factors that may cause our actual results, performance or achievements, or industryresults, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actualresults could differ materially from those set forth in such forward-looking statements as a result of, but not limited to, the “Risk Factors” described in Part I,Item 1A. You should read the following discussion and analysis along with the “Selected Financial Data” and the financial statements and notes attached tothose statements included elsewhere in this report.OverviewWe are a clinical stage biotechnology company focused on translating ground-breaking science into genomic medicines with the potential totransform patients’ lives using our platform technologies in genome editing, gene therapy, gene regulation and cell therapy. We are focused on threetherapeutic areas: inherited metabolic diseases, or IMDs, central nervous system diseases and inflammatory and autoimmune diseases.We are a leader in the research and development of zinc finger proteins, or ZFPs, a naturally occurring class of proteins found in humans. We have usedour knowledge and expertise to develop a proprietary technology platform in both genome editing and gene regulation. ZFPs can be engineered to make zincfinger nucleases, or ZFNs, proteins that can be used to specifically modify DNA sequences by adding or knocking out specific genes, or genome editing, andZFP transcription factors, or ZFP TFs, proteins that can be used to increase or decrease gene expression, or gene regulation. In the process of developing thisplatform, we have accrued significant scientific, manufacturing and development capabilities and know-how that are generally applicable in the broader fieldof gene therapy and have capitalized this knowledge into a conventional gene therapy platform.In the fourth quarter of 2018, we acquired 98.2% of the outstanding share capital and voting rights of TxCell S.A., or TxCell, which we refer to in thisreport as the TxCell Acquisition, for aggregate purchase consideration of approximately $80.4 million. As of December 31, 2018, the fair value of theremaining outstanding free shares was approximately $1.3 million. The total fair value of the net assets acquired was approximately $81.7 million (see Note 6to our consolidated financial statements – Acquisition of TxCell, S.A.).With the TxCell Acquisition, we can now accelerate our research and development of innovative, personalized T-cell immunotherapies for thetreatment of inflammatory and autoimmune diseases with high unmet medical need. In this regard, we expect the TxCell Acquisition will accelerate our entryinto the clinic with a CAR-Treg (which is a regulatory T cell, or Treg, genetically modified with a chimeric antigen receptor, or CAR) therapy. We areevaluating the potential of the TX Cell platform in solid organ transplantation as well as a range of autoimmune diseases, such as multiple sclerosis,rheumatoid arthritis, inflammatory bowel diseases and inflammatory skin diseases. In addition, we intend to use our ZFN gene editing technology topotentially develop next-generation autologous and allogeneic CAR-Treg cell therapies for use in treating autoimmune diseases. We have an ongoing Phase 1/2 clinical trial evaluating SB-525, a gene therapy for the treatment of hemophilia A, a bleeding disorder. We also haveongoing Phase 1/2 clinical trials evaluating three product candidates using our proprietary in vivo genome editing approach: SB-FIX for the treatment ofhemophilia B, a bleeding disorder; SB-318, for the treatment of Mucopolysaccharidosis Type I, or MPS I; and SB-913 for the treatment ofMucopolysaccharidosis Type II, or MPS II. MPS I and MPS II are IMDs. We also have an ongoing Phase1/2 clinical trial evaluating ST-400, developed usingour proprietary ZFN-mediated ex vivo cell therapy platform, for the treatment of beta-thalassemia, a blood disorder. We also plan to initiate a Phase 1/2clinical trial of for TxCell’s first CAR-Treg investigational product candidate for solid organ transplant, or TX 200, in 2019.In February 2018, we entered into a global collaboration and license agreement with Kite Pharma, Inc., or Kite, a wholly owned subsidiary of GileadSciences, Inc., for the research, development and commercialization of potential engineered cell therapies for cancer. The Kite agreement became effective inApril 2018 when the waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and other customary closing conditionswere completed. In this collaboration, we are working together with Kite on a research program under which we are designing ZFNs and AAVs to disrupt andinsert certain genes in T cells and natural killer, or NK, cells, including the insertion of genes that encode chimeric antigen receptors, T-cell receptors, andNK-cell receptors directed to mutually agreed targets. Kite is responsible for all clinical development and commercialization of any resulting products.68In December 2017, we entered into a research collaboration and license agreement with Pfizer Inc., or Pfizer, for the development andcommercialization of potential gene therapy products that use ZFP TFs to treat amyotrophic lateral sclerosis, or ALS, and frontotemporal lobar degeneration,or FTLD, linked to mutations of the C9ORF72 gene. Under this agreement, we are working with Pfizer on a research program to identify, characterize andpreclinically develop ZFP TFs that satisfy pre-agreed criteria. Pfizer is responsible for subsequent development, manufacturing and commercialization oflicensed products.In May 2017, we entered into a global collaboration and license agreement with Pfizer for the research, development and commercialization of SB-525, our gene therapy product candidate for hemophilia A, and closely related products. Under this agreement, we are responsible for conducting the Phase1/2 clinical trial and certain manufacturing activities for SB-525, while Pfizer is responsible for subsequent worldwide development, manufacturing,marketing and commercialization of SB-525. We and Pfizer may also collaborate in the research and development of additional AAV-based gene therapyproducts for hemophilia A.We have also established a collaborative partnership with Bioverativ, Inc., or Bioverativ, a wholly owned subsidiary of Sanofi Genzyme Corporation,to research, develop and commercialize therapeutic gene-edited cell therapy products in hemoglobinopathies, including beta-thalassemia and sickle celldisease, or SCD. Bioverativ is responsible for subsequent development, manufacturing and commercialization of licensed products.We have incurred net losses since inception and expect to incur losses in the future as we continue our research and development activities. To date,we have funded our operations primarily through the issuance of equity securities, revenues from corporate collaborations and research grants.Our revenues have consisted primarily of revenues from our corporate partners for ZFN and ZFP TF programs, contractual payments from strategicpartners for research services and research milestones, and research grant funding. We expect revenues will continue to fluctuate from period to period andthere can be no assurance that new collaborations or partner funding will continue beyond their initial terms or that we are able to meet the milestonesspecified in these agreements.We expect to continue to devote substantial resources to research and development in the future and expect research and development expenses toincrease in the next several years if we are successful in advancing our gene therapy and our genome editing programs in the clinic and if we are able toprogress our earlier stage product candidates into clinical trials. Pursuant to the terms of the agreements with Kite and Bioverativ, certain expenses related toresearch and development activities will be reimbursed to us. The reimbursement funds to be received from Kite and Bioverativ will be recognized as revenueas the costs are incurred and collection is reasonably assured.General and administrative expenses consist primarily of salaries and personnel related expenses for executive, finance and administrative personnel,stock-based compensation expenses, professional fees, allocated facilities expenses, patent prosecution expenses and other general corporate expenses. As wecontinue to advance our product candidates into and through the clinic, we expect the growth of our business to require increased general administrativeexpenses.For the year ended December 31, 2018, we incurred a consolidated net loss of $68.9 million, or $0.70 per share, compared to a consolidated net loss of$54.6 million, or $0.70 per share, for the same period in 2017. As of December 31, 2018, we had cash, cash equivalents, marketable securities and interestreceivable totaling $400.5 million compared to $244.6 million as of December 31, 2017. As of December 31, 2018, we had an accumulated deficit of$562.7 million.Critical Accounting Policies and EstimatesThe accompanying discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statementsand the related disclosures, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation ofthese financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts in our consolidated financial statementsand accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under thecircumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent fromother sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following policies to be the mostcritical to an understanding of our financial condition and results of operations because they require us to make estimates, assumptions and judgments aboutmatters that are inherently uncertain. 69Revenue RecognitionEffective January 1, 2018, we adopted the provisions of Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts withCustomers (“Topic 606”) resulting in a change to our accounting policy for revenue recognition. Topic 606 establishes a unified model to determine howrevenue is recognized.Contract revenues consist of strategic partnering collaboration agreements and research activity grants and licensing. Research and licensingagreements typically include upfront signing or license fees, cost reimbursements, research services, minimum sublicense fees, milestone payments androyalties on future licensee’s product sales. We have both fixed and variable consideration. Non-refundable upfront fees and funding of research anddevelopment activities are considered fixed, while milestone payments are identified as variable consideration. Our research grants are typically multi-yearagreements and provide for the reimbursement of qualified expenses for research and development as defined under the terms of the grant agreement.Revenues under grant agreements are recognized when the related qualified research expenses are incurred. Deferred revenue represents the portion ofresearch or license payments received but not earned.In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under its agreements, we perform the following steps:(i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligationsincluding whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variableconsideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when(or as) we satisfy each performance obligation.A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Topic 606. Ourperformance obligations include license rights, development services, and services associated with regulatory submission and approval processes. Significantmanagement judgment is required to determine the level of effort required under an arrangement and the period over which we expect to complete ourperformance obligations under the arrangement. If we cannot reasonably estimate when our performance obligations either are completed or becomeinconsequential, then revenue recognition is deferred until we can reasonably make such estimates. We include the unconstrained amount of estimatedvariable consideration in the transaction price. The amount included in the transaction price is constrained to the amount for which it is probable that asignificant reversal of cumulative revenue recognized will not occur. At the end of each subsequent reporting period, we re-evaluate the estimated variableconsideration included in the transaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Revenue isthen recognized over the remaining estimated period of performance using the cumulative catch-up method. The estimated period of performance and projectcosts are reviewed quarterly and adjusted, as needed, to reflect our current assumptions regarding the timing of our deliverables.As part of the accounting for these arrangements, we must develop assumptions that require judgment to determine the stand-alone selling price ofeach performance obligation identified in the contract. We used key assumptions to determine the stand-alone selling price, which may include forecastedrevenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success.During 2018, revenues related to our hemophilia A collaboration agreement with Pfizer and the collaboration agreement with Kite represented 45%and 30%, respectively, of our total revenues. During 2017, revenues related to Pfizer and Bioverativ represented 47% and 34%, respectively, of our totalrevenues. During 2016 revenue related to Bioverativ, with Dow AgroSciences (“DAS”) and Shire International GmbH, or Shire, a wholly owned subsidiary ofTakeda Pharmaceutical Company Limited, or Shire, represented 46%, 26%, and 17%, respectively, of our total revenues. Receivables from collaborations aretypically unsecured and are concentrated in the biopharmaceutical industry. Accordingly, we may be exposed to credit risk generally associated withbiopharmaceutical companies or specific to our collaboration agreements. To date, we have not experienced any losses related to these receivables.Funds received from third parties under contract or grant arrangements are recorded as revenue if we are deemed to be the principal participant in thearrangements because the activities under the contracts or grants are part of our development programs. Contract funds received are not refundable and arerecognized when the related qualified research and development costs are incurred and there is reasonable assurance that the funds will be received. Fundsreceived in advance are recorded as deferred revenue. Business CombinationsIn accordance with ASC Topic 805, Business Combinations, we determine and allocate the purchase price of an acquired business to the tangible andidentifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the business combination date, including identifiableintangible assets that either arise from a contractual or legal right or are separable from goodwill. We base the estimated fair value of identifiable intangibleassets acquired in a business combination on independent valuations that use information and assumptions provided by management, which considermanagement’s best estimates of inputs and assumptions that a market participant would use. We allocate any excess purchase price over the estimated fairvalue assigned to the net tangible and identifiable intangible assets acquired and liabilities assumed to goodwill.70Transaction costs associated with acquisitions are expensed as incurred in general and administrative expenses. Results of operations and cash flowsof acquired companies are included in our operating results from the date of acquisition.Purchased Intangible AssetsAcquired intangible assets with indefinite useful lives are related to purchased in-process research and development (“IPR&D”), projects and aremeasured at their respective fair values as of the acquisition date. We do not amortize intangible assets with indefinite useful lives. Intangible assets related toIPR&D projects are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts. If and whendevelopment is complete, which generally occurs if and when regulatory approval to market a product is obtained, the associated assets would be deemedfinite-lived and would then be amortized based on their respective estimated useful lives at that point in time.We test IPR&D for impairment on an annual basis and in between annual tests if we become aware of any events or changes that would indicate thatit is more likely than not that the fair values of the assets are below their carrying amounts. If the fair value exceeds the carrying value, then there is noimpairment. Impairment losses on indefinite-lived intangible assets are recognized based solely on a comparison of the fair value of the asset to its carryingvalue, without consideration of any recoverability test. We have not identified any such impairment losses to date.GoodwillGoodwill represents the excess of the cost of an acquisition over the sum of the amounts assigned to tangible and identifiable intangible assetsacquired, less liabilities assumed. Goodwill is not subject to amortization, but is tested for impairment on an annual basis and whenever events or changes incircumstances indicate the carrying amount of these assets may not be recoverable.ComparabilityWe adopted Topic 606 on January 1, 2018, resulting in a change to our accounting policy for revenue recognition. We used the modifiedretrospective method and recognized the cumulative effect of initially applying Topic 606 as an adjustment to the opening balances of deferred revenues andaccumulated deficit at January 1, 2018. Accordingly, comparative information has not been adjusted and continues to be reported under previous accountingstandards (see Note 1 to our consolidated financial statements - Organization and summary of significant accounting policies, for additional information).As noted above, we completed the TxCell Acquisition in the fourth quarter of 2018. The TxCell Acquisition was accounted for as a businesscombination in accordance with the guidance ASC Topic 805, Business Combinations. The operating results of TxCell after the acquisition date have beenincluded in our consolidated financial statements. For the three months ended December 31, 2018, TxCell did not contribute any revenue. For the threemonths ended December 31, 2018, operating expenses related to TxCell were approximately $3.7 million.Results of OperationsYears Ended December 31, 2018, 2017 and 2016Revenues Year Ended December 31, % % 2018 2017 Change Change 2017 2016 Change Change (In thousands, except percentage values) Revenues: Collaboration agreements $84,065 $35,960 $48,105 134% $35,960 $18,881 $17,079 90%Research grants 387 607 (220) -36% 607 508 99 19%Total revenues $84,452 $36,567 $47,885 131% $36,567 $19,389 $17,178 89% Total revenues consisted of revenues from collaboration agreements and research grants. We anticipate revenues over the next several years will bederived primarily from our collaboration agreements with Kite, Pfizer and Bioverativ as we continue to recognize in revenues upfront payments receivedunder such agreements overtime.The increase of $48.1 million in revenues from collaborations in 2018 compared to 2017 was primarily attributable to $25.5 million in revenue relatedto our agreement with Kite, $20.8 million related to the hemophilia A Pfizer Agreement, $2.2 million71related to the C9ORF72 Pfizer agreement, and $1.3 million related to our agreement with Bioverativ. During 2018, revenues related to our collaborativeagreements with Pfizer, Kite and Bioverativ represented 45%, 30% and 16%, respectively, of total revenues.The increase of $18.9 million in revenues from collaborations in 2017 compared to 2016 was primarily due to increases of $17.0 million in revenuesrelated to the hemophilia A Pfizer agreement and $3.4 million related to our agreement with Bioverativ, partially offset by decreases of $2.1 million inroyalty revenue related to our agreement with DAS, $0.8 million related to research services provided to Shire, and $0.5 million in license and royalty feespursuant to our agreement with Sigma-Aldrich Corporation. During 2017, revenues related to our collaborative agreements with Pfizer and Bioverativrepresented 47% and 34%, respectively, of total revenues.Research grant revenues were $0.4 million, $0.6 million, and $0.5 million in 2018, 2017, and 2016, respectively. The changes in grant revenue from2017 to 2018 and from 2016 and 2017 were not significant.Operating Expenses Year Ended December 31, % % 2018 2017 Change Change 2017 2016 Change Change (In thousands, except percentage values) Operating expenses: Research and development $114,866 $65,728 $49,138 75% $65,728 $65,618 $110 0%General and administrative 46,736 27,200 19,536 72% 27,200 26,330 870 3%Total expenses $161,602 $92,928 $68,674 74% $92,928 $91,948 $980 1% Research and Development ExpensesThe increase of $49.1 million in research and development expenses in 2018 was primarily due to increases of $23.9 million in clinical trial andmanufacturing expenses as our programs move further into the clinic. We also had increase of $9.9 million in salaries and benefits expense, $3.8 million inlab supply expenses, $3.2 million in stock compensation expense, $2.7 million in research and pre-clinical expense, $1.3 million facilities expense and $1.0million in other operational and professional services. These increases were primarily due to the growth of our business to support the continuedadvancement of our product candidates into clinical trials, main increases were in our IMD and Hemophilia clinical programs which increased approximately$26.2 million and $8.3 million, respectively.The increase of $0.1 million in research and development expenses in 2017 was primarily due to increases of $5.5 million in salaries and benefits, $1.1million in clinical trial and manufacturing expenses related to our hemophilia B and MPS programs, and $1.1 million in facility and operating expenses. Thiswas primarily offset by decreases of $3.4 million in preclinical expenses, $2.5 million in lab supply expenses, $1.4 million in stock-based compensationexpense, and $0.3 million in other professional services.The table below shows research and development expenses related to our clinical and preclinical programs. Year Ended December 31, Programs 2018 2017 2016 (In thousands) Human Therapeutic Programs Hemophilia clinical programs $23,006 $14,715 $7,521 IMD clinical programs 37,668 11,428 9,046 Beta-thalassemia clinical program 12,317 11,354 — HIV (SB-728) clinical programs 1,612 2,473 4,271 Non-human Therapeutic Programs Preclinical and research programs 39,779 25,414 43,682 Other clinical programs and non-therapeutic programs 484 344 1,098 Total research and development expenses $114,866 $65,728 $65,61872 The length of time required to complete our development programs and our development costs for those programs may be impacted by the scope andtiming of enrollment in clinical trials for our product candidates, our decisions to pursue development programs in other therapeutic areas, and whether wepursue development of our product candidates with a partner or collaborator or independently. For example, our product candidates are being developed inmultiple therapeutic areas, and we do not yet know how many of those therapeutic areas we will continue to pursue. Furthermore, the scope and number ofclinical trials required to obtain regulatory approval for each pursued therapeutic area is subject to the input of the applicable regulatory authorities, and wehave not yet sought such input for all potential therapeutic areas that we may elect to pursue, and even after having given such input, applicable regulatoryauthorities may subsequently require additional clinical studies prior to granting regulatory approval based on new data generated by us or other companies,or for other reasons outside of our control. As a condition to any regulatory approval, we may also be subject to post-marketing development commitments,including additional clinical trial requirements. As a result of the uncertainties discussed above, we are unable to determine the duration of or complete costsassociated with our development programs.In any event, our potential therapeutic products are subject to a lengthy and uncertain regulatory process that may not result in our receipt of anynecessary regulatory approvals. Failure to receive the necessary regulatory approvals would prevent us from commercializing the product candidates affected.In addition, clinical trials of our product candidates may fail to demonstrate safety and efficacy, which could prevent or significantly delay regulatoryapproval. A discussion of the risks and uncertainties with respect to our research and development activities, including completing the development of ourproduct candidates, and the consequences to our business, financial position and growth prospects can be found in “Risk Factors” in Part I, Item 1A of thisAnnual Report on Form 10-K. General and Administrative ExpensesThe increase of $19.5 million in 2018 was primarily due to increases of $5.0 million in professional services to support compliance initiatives andexpansion strategies, $4.7 million in salaries and benefits, and $2.4 million in stock-based compensation in connection with headcount growth, $1.8 millionin other corporate expenses and $1.7 million in facilities and depreciation. The increases were primarily due to the growth of our business to support thecontinued advancement of our product candidates into clinical trials.The increase of $0.9 million in 2017 was primarily due to increases of $1.5 million in legal expenses, $1.5 million in corporate expenses, includingrebranding in connection with our name change, $1.0 million in salaries and benefits, and $1.0 million in facility expenses. This increase was primarily offsetby a decrease of $4.5 million in stock-based compensation expense, as 2016 included approximately $4.1 million of stock-based compensation expenserecognized in connection with the transition of our former chief executive officer.Interest and other income, netInterest and other income, net, was $8.3 million in 2018, $1.8 million in 2017, and $0.9 million in 2016 and primarily consisted of interest incomeresulting from our treasury strategy.Benefit from income taxesBenefit from income taxes was $0.0 million for 2018, 2017, and 2016. We recognized an immaterial amount of income tax expense/benefit duringeach of these years.As of December 31, 2018, we had net operating loss carryforwards for federal and state income tax purposes of approximately $535.0 million and$161.0 million, respectively. If not utilized, the net federal and state operating loss carryforwards will expire in 2018 and 2017, respectively. We also havefederal and state research tax credit carryforwards of $12.2 million and $13.0 million, respectively. The federal research credits began to expire in 2018 whilethe state research credits have no expiration date. Utilization of our net operating loss carryforwards and research tax credit carryforwards may be subject tosubstantial annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annuallimitation could result in the expiration of the net operating loss carryforwards and research tax credit carryforwards before use. Due to the carryforwardsrelated to the net operating losses and research and development tax credits, we do not expect to pay any taxes related to income in the near future.On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act ("Tax Reform") into legislation. The Tax Reform made significant changesto the U.S. corporate income tax law including, but not limited to, (1) reducing the U.S. federal corporate tax73rate to 21% from 35% and (2) requiring a one-time mandatory transition tax on previously deferred foreign earnings of U.S. subsidiaries. Under ASC Topic740, Income Taxes, the effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. In the case of U.S. federalincome taxes, the enactment date is the date the bill becomes law. In December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No.118 (“SAB 118”) to provide guidance on theapplication of the Tax Reform when a company does not have the necessary information available, prepared, or analyzed in reasonable to detail to reflect theeffects of the Tax Reform. SAB 118 provides guidance for companies under the three scenarios (1) measurement of certain income tax effects is complete, (2)measurement of certain income tax effect can be reasonably estimated, and (3) measurement of certain income tax effects cannot be reasonably estimated.Companies are to complete the accounting under ASC 740 in regards to the Tax Reform within a measurement period that does not extend one year from thedate of enactment (i.e., December 22, 2018). We completed the accounting assessment with regards to the tax effects associated with the enactment of the TaxReform. Our assessment resulted in no changes from the original estimates provided for the year ended December 31, 2017.Liquidity and Capital ResourcesLiquiditySince inception, we have incurred significant net losses and we have funded our operations primarily through the issuance of equity securities,payments from corporate collaborators and strategic partners and research grants. Our most significant use of capital pertains to funding our preclinical andclinical research and development programs, as well as salaries and benefits for employees.As of December 31, 2018, we had cash, cash equivalents, marketable securities and interest receivable totaling $400.5 million compared to $244.6million as of December 31, 2017, with the increase primarily attributable to $215.8 million net proceeds from our April 2018 issuance of common stock and$150.0 million from our February 2018 collaboration and license agreement with Kite, which became effective in April 2018. Our cash and investmentbalances are held in a variety of interest bearing instruments, including obligations of U.S. government agencies, U.S. Treasury debt securities, corporate debtsecurities and money market funds. Cash in excess of immediate requirements is invested in accordance with our investment policy with a view towardcapital preservation and liquidity.In May 2017, we entered into an amended and restated sales agreement with Cowen and Company, LLC (“Cowen”) pursuant to which we may offerand sell, in our sole discretion, shares of common stock having an aggregate offering price of up to $75.0 million through Cowen acting as our sales agent(“the ATM Facility”). Sales of our common stock, if any, will be made at market prices by any method that is deemed to be an “at the market offering” asdefined in Rule 415 under the Securities Act of 1933, as amended. We have not sold any common stock under the ATM Facility. As of December 31, 2018,the full $75.0 million provided for under the ATM Facility remained available for sale, subject to certain conditions as specified in the agreement.Since the beginning of 2017, we have received significant amounts of capital as upfront payments under the following collaboration arrangements: $70.0million received in May 2017 from Pfizer under our hemophilia A agreement, $12.0 million received in January 2018 from Pfizer under our C9ORF72agreement, and $150.0 million received in April 2018 under our collaboration agreement with Kite. Our collaboration agreements provide for the paymentof development, regulatory, and commercial milestones. For more information see “Business – Collaborations” in Part I of this Annual Report on Form 10-K.Cash FlowOperating activities. Net cash provided by (used in) operating activities primarily reflects our net operating losses adjusted for non-cash itemsincluding stock-based compensation expense. Net cash provided by operating activities was $37.2 million in 2018 compared to net cash provided byoperating activities of $11.2 million in 2017. The increase in net cash provided by operating activities in 2018 was primarily due to the increase in deferredrevenues due to the $150.0 million upfront license payment from Kite and stock-based compensation for the period offset by the net loss.Net cash provided by operating activities was $11.2 million in 2017 compared to net cash used in operating activities of $65.9 million in 2016. Theincrease in net cash provided by operating activities in 2017 was primarily due to the increase in deferred revenues related to the $70.0 million upfrontpayment from the hemophilia A agreement with Pfizer.Investing activities. Net cash used in investing activities was $178.1 million in 2018. Net cash used in investing activities was $77.4 million in 2017.Net cash provided by investing activities was $18.1 million in 2016. The increase in net cash used in 2018 was primarily due to the TxCell Acquisition.Additional cash flows from investing activities for all periods were primarily related to purchases, and maturities of marketable securities and also includesdeposits on cash related to lease commitments.74Financing activities. Net cash provided by financing activities was $231.7 million in 2018, $97.5 million in 2017, and $0.3 million in 2016. Net cashprovided by financing activities was primarily attributable to $215.8 million net proceeds from our April 2018 issuance of common stock and $16.2 millionin proceeds from the exercise of stock options. Net cash provided by financing activities in 2017 was primarily attributable to the completion of anunderwritten public offering of our common stock of $78.1 million, net of issuance costs, and $16.6 million in proceeds from the exercise of stock options.Net cash provided by financing activities in 2016 was primarily attributable to $1.1 million proceeds from the exercise of stock options, primarily offset by$0.8 million in taxes paid related to net share settlement of equity awards.Operating Capital and Capital Expenditure RequirementsWe anticipate continuing to incur operating losses for at least the next several years. While we expect our rate of cash usage to increase in the future,in particular to support our product development endeavors, we believe that the available cash resources as well as funds received from corporatecollaborators, strategic partners and research grants will enable us to maintain our currently planned operations through at least the next twelve months fromthe date the financial statements are issued. Future capital requirements will be substantial and if our capital resources are insufficient to meet future capitalrequirements, we will need to raise additional capital to fund our operations through equity or debt financing. We regularly consider fund raisingopportunities and may decide, from time to time, to raise capital based on various factors, including market conditions and our plans of operation. Additionalcapital may not be available on terms acceptable to us, or at all. If adequate funds are not available, or if the terms of potential funding sources areunfavorable, our business and our ability to advance our product candidate pipeline would be harmed. Furthermore, any sales of additional equity securities,including any sales under our ATM Facility, may result in dilution to our stockholders, and any debt financing may include covenants that restrict ourbusiness.Our future capital requirements will depend on many forward looking factors, including the following: •the initiation, progress, timing and completion of clinical trials for our product candidates and potential product candidates; •the outcome, timing and cost of regulatory approvals; •the success of our collaboration agreements; •delays that may be caused by changing regulatory requirements; •the number of product candidates that we pursue; •the costs involved in filing and prosecuting patent applications and enforcing and defending patent claims; •the timing and terms of future in-licensing and out-licensing transactions; •the cost and timing of establishing sales, marketing, manufacturing and distribution capabilities; •the cost of procuring clinical and commercial supplies of our product candidates; •the extent to which we acquire or invest in businesses, products or technologies; and •the possible costs of litigation. 75Off Balance Sheet ArrangementsWe do not have any off balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.Contractual Obligations and Commercial CommitmentsAs of December 31, 2018, we had contractual obligations and commercial commitments as follows (in thousands): Payments Due by Period Less Than 1-3 4-5 More Than Contractual Obligations Total 1 Year Years Years 5 Years Operating leases $56,418 $3,671 $17,600 $5,649 $29,498 License obligations 1,318 223 625 200 270 Manufacturing obligations 8,862 8,862 — — — Total contractual obligations $66,598 $12,756 $18,225 $5,849 $29,768 Operating leases consist of base rents for facilities we occupy in Richmond, California, Brisbane, California and Valbonne, France. Licenseobligations consist of ongoing license maintenance fees associated with cancelable in-licensed patent agreements. ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKOur exposure to market risk relates to our cash, cash equivalents and investments. The goals of our investment policy are preservation of capital,fulfillment of liquidity needs and capturing a market rate of return based on our investment policy parameters and market conditions. We select investmentsthat maximize interest income to the extent possible within these guidelines. To achieve our goals, we maintain a portfolio of cash equivalents andinvestments in securities of high credit quality and with varying maturities to match projected cash needs.The securities in our investment portfolio are not leveraged, are classified as available-for-sale and are, due to their short-term nature, subject tominimal interest rate risk. Our investments currently consist of U.S. Treasury securities, U.S. government-sponsored enterprise securities and corporate notes.Our investment policy, approved by our Board of Directors, limits the amount we may invest in any one type of investment issuer, thereby reducing creditrisk concentrations. All investments have a fixed interest rate and are carried at market value, which approximates cost. We do not use derivative financialinstruments in our investment portfolio. We do not believe that a change in interest rates would have a material negative impact on the value of ourinvestment portfolio. Foreign Currency Exchange Risk We have operations in United States as well as in Europe. The functional currency of each foreign subsidiary is generally the local currency. We areexposed to foreign currency risk, primarily through operations of our subsidiaries in Europe which conduct business primarily in Euros. We record gains andlosses within our stockholders’ equity due to the translation of the European branches’ financial statements into U.S. dollars. A 10% strengthening/(weakening) in the rates used to translate the results of our foreign subsidiaries would have increased/(decreased) net loss for theyear ended December 31, 2018 by approximately $0.4 million and would not have materially impacted our operating loss. Additionally, we incur foreign currency transaction gains and losses related to the level of activity between the U.S. and Europe. In 2018, we realizedforeign currency transaction losses, net of $0.6 million. A 10% unfavorable change in the Euro and U.S. dollar exchange rate on December 31, 2018 wouldhave had an immaterial impact on foreign currency transaction losses for 2018. 76ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATASANGAMO THERAPEUTICS, INC.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReport of Independent Registered Public Accounting Firm 78Consolidated Balance Sheets 79Consolidated Statements of Operations 80Consolidated Statements of Comprehensive Loss 81Consolidated Statements of Stockholders’ Equity 82Consolidated Statements of Cash Flows 83Notes to Consolidated Financial Statements 84 77REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders of Sangamo Therapeutics, Inc. Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Sangamo Therapeutics, Inc. (the Company) as of December 31, 2018 and 2017, therelated consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows for each of the three years in the period endedDecember 31, 2018, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financialstatements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its operations andits cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'sinternal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2019 expressed an unqualifiedopinion thereon. Adoption of New Accounting StandardAs discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for revenue as a result of the adoption ofAccounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts with Customers (Topic 606),” as amended, effective January 1, 2018 using themodified retrospective method.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Companyin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion./s/ ERNST & YOUNG LLP We have served as the Company’s auditor since 1997.Redwood City, CaliforniaMarch 1, 2019 78SANGAMO THERAPEUTICS, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except per share amounts) December 31, December 31, 2018 2017 ASSETS Current assets: Cash and cash equivalents $140,418 $49,826 Marketable securities 259,715 193,482 Interest receivable 375 240 Accounts receivable 4,673 3,343 Prepaid expenses and other current assets 5,340 1,506 Total current assets 410,521 248,397 Marketable securities, non-current — 1,012 Property and equipment, net 78,723 31,066 Intangible assets 54,866 — Goodwill 40,044 1,585 Other non-current assets 2,741 1,181 Non-current restricted cash 3,500 3,500 Total assets $590,395 $286,741 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $21,457 $11,035 Accrued compensation and employee benefits 9,490 5,479 Deferred revenues 47,564 28,345 Total current liabilities 78,511 44,859 Deferred revenues, non-current 108,273 29,244 Build-to-suit lease obligation 27,689 24,738 Deferred income tax 6,705 — Non-current liabilities 1,960 — Total liabilities 223,138 98,841 Commitments and contingencies Stockholders' equity: Common stock, $0.01 par value; 160,000,000 shares authorized, 102,187,471 and 85,598,534shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively 1,022 856 Additional paid-in capital 929,632 682,809 Accumulated deficit (562,696) (495,479)Accumulated other comprehensive loss (1,440) (286)Total Sangamo Therapeutics Inc. stockholders' equity 366,518 187,900 Non-controlling interest 739 — Total stockholders' equity 367,257 187,900 Total liabilities and stockholders' equity $590,395 $286,741 See accompanying Notes to Consolidated Financial Statements. 79SANGAMO THERAPEUTICS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts) Year Ended December 31, 2018 2017 2016 Revenues: Collaboration agreements $84,065 $35,960 $18,881 Research grants 387 607 508 Total revenues 84,452 36,567 19,389 Operating expenses: Research and development 114,866 65,728 65,618 General and administrative 46,736 27,200 26,330 Total operating expenses 161,602 92,928 91,948 Loss from operations (77,150) (56,361) (72,559)Interest and other income, net 8,261 1,793 887 Loss before income taxes (68,889) (54,568) (71,672)Benefit from income taxes — — 14 Net loss (68,889) (54,568) (71,658)Net loss attributable to non-controlling interest (555) — — Net loss attributable to Sangamo Therapeutics, Inc. stockholders $(68,334) $(54,568) $(71,658)Basic and diluted net loss per share attributable to SangamoTherapeutics, Inc. stockholders $(0.70) $(0.70) $(1.02)Shares used in computing basic and diluted net loss per shareattributable to Sangamo Therapeutics, Inc. stockholders 96,941 78,084 70,553 See accompanying Notes to Consolidated Financial Statements. 80SANGAMO THERAPEUTICS, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(in thousands) Year Ended December 31, 2018 2017 2016 Net loss $(68,889) $(54,568) $(71,658)Foreign currency translation adjustment (1,148) — — Net pension losses (21) — — Change in unrealized (loss) gain on available-for-sale securities (4) (306) 20 Comprehensive loss (70,062) (54,874) (71,638)Comprehensive loss attributable to non-controlling interest (574) — — Comprehensive loss attributable to Sangamo Therapeutics Inc. $(69,488) $(54,874) $(71,638) See accompanying Notes to Consolidated Financial Statements. 81SANGAMO THERAPEUTICS, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(in thousands, except share amounts) Accumulated Common Stock Additional Other Non- Total Paid-in Accumulated Comprehensive Controlling Stockholders' Shares Amount Capital Deficit Income/ (Loss) Interest Equity Balances at December 31, 2015 70,354,608 $703 $560,989 $(369,253) $— $— $192,439 Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax 314,583 3 (484) — — — (481)Issuance of common stock under employee stock purchase plan 202,711 3 815 — — — 818 Stock-based compensation — — 15,057 — — — 15,057 Comprehensive loss: Net unrealized gain on marketable securities, net of tax — — — — 20 20 Net loss — — — (71,658) — — (71,658)Comprehensive loss — — — — — (71,638)Balances at December 31, 2016 70,871,902 709 576,377 (440,911) 20 136,195 Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax 2,101,489 21 15,078 — — — 15,099 Issuance of common stock under employee stock purchase plan 253,994 2 816 — — — 818 Issuance of common stock under public offering, net of issuance costs 12,371,149 124 81,449 81,573 Stock-based compensation — — 9,089 — — — 9,089 Comprehensive loss: Net unrealized loss on marketable securities, net of tax — — — — (306) — (306)Net loss — — — (54,568) — (54,568)Comprehensive loss — — — — — — (54,874)Balances at December 31, 2017 85,598,534 856 682,809 (495,479) (286) — 187,900 Cumulative-effect adjustment of ASC Topic 606 on January 1, 2018 — — 1,117 — — 1,117 Issuance of common stock upon exercise of stock options and in connection with restricted stock units, net of tax 2,103,727 20 14,447 — — — 14,467 Issuance of common stock under employee stock purchase plan 328,710 4 1,480 — — — 1,484 Issuance of common stock under public offering, net of issuance costs 14,156,500 142 215,616 — — — 215,758 Stock-based compensation — — 14,677 — — — 14,677 Additional paid-in capital for Acquisition of TxCell — — 603 — — — 603 Non-controlling interest upon Acquisition of TxCell — — — — — 1,313 1,313 Comprehensive loss: Foreign currency translation adjustment — — — — (1,129) (19) (1,148)Net pension losses — — — — (21) — (21)Net unrealized loss on marketable securities, net of tax — — — — (4) — (4)Net loss — — — (68,334) — (555) (68,889)Comprehensive loss — — — — — — (70,062)Balances at December 31, 2018 102,187,471 $1,022 $929,632 $(562,696) $(1,440) $739 $367,257 See accompanying Notes to Consolidated Financial Statements.82SANGAMO THERAPEUTICS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) Year Ended December 31, 2018 2017 2016 Operating Activities: Net loss $(68,889) $(54,568) $(71,658)Adjustments to reconcile net loss to net cash provided by (used in) operatingactivities: Depreciation and amortization 2,359 1,498 997 Amortization of (discount) premium on marketable securities (5,829) (673) 221 Foreign currency transaction losses, net 602 — — Net loss on disposal of property and equipment — 12 — Stock-based compensation 14,677 9,089 15,057 Benefit from income taxes — — (14)Build-to-suit leases 966 80 99 Net changes in operating assets and liabilities: Interest receivable (135) (16) 83 Accounts receivable (1,330) 1,629 (2,144)Prepaid expenses and other assets (2,828) (669) (1,112)Accounts payable and accrued liabilities (6,372) 3,219 (2,335)Accrued compensation and employee benefits 2,604 2,594 137 Deferred revenues 99,364 48,984 (5,214)Non-current liabilities 1,963 — — Net cash provided by (used in) operating activities 37,152 11,179 (65,883)Investing Activities: Acquisition of TxCell, net of cash acquired (75,647) — — Purchases of marketable securities (451,239) (252,328) (218,640)Maturities of marketable securities 391,845 178,675 237,497 Purchases of property and equipment (43,065) (3,751) (732)Net cash (used in) provided by investing activities (178,106) (77,404) 18,125 Financing Activities: Proceeds from public offering of common stock, net of issuance costs 215,758 81,573 — Taxes paid related to net share settlement of equity awards (254) (654) (776)Proceeds from issuance of common stock 16,205 16,571 1,113 Net cash provided by financing activities 231,709 97,490 337 Effects of changes in foreign exchange rates (163) — — Net increase in cash, cash equivalents, and restricted cash 90,592 31,265 (47,421)Cash, cash equivalents, and restricted cash, beginning of period 53,326 22,061 69,482 Cash, cash equivalents, and restricted cash, end of period $143,918 $53,326 $22,061 Supplemental disclosure of non-cash investing activities: Non controlling interest for acquisition of TxCell $1,313 $— $— Property and equipment included in accrued liabilities $4,953 $1,214 $— Build-to-suit leases included in build-to-suit liabilities $2,950 $20,793 $3,876 See accompanying Notes to Consolidated Financial Statements. 83SANGAMO THERAPEUTICS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESOverviewSangamo Therapeutics, Inc. was incorporated in the State of Delaware on June 22, 1995 and changed its name from Sangamo Biosciences, Inc. inJanuary 2017 (“the Company” or “Sangamo”). Sangamo is focused on the research, development and commercialization of novel therapeutic strategies forunmet medical needs. Sangamo’s genome editing and gene regulation technology platform is enabled by the engineering of a class of transcription factorsknown as zinc finger DNA-binding proteins (“ZFPs”). Potential applications of Sangamo’s technology include development of human therapeutics, plantagriculture and enhancement of pharmaceutical protein production. Sangamo will require additional financial resources to complete the development andcommercialization of its products including ZFP Therapeutics.Sangamo is currently working on a number of long-term development projects that will involve experimental technology. The projects may requireseveral years and substantial expenditures to complete and ultimately may be unsuccessful. The Company plans to finance operations with available cashresources, collaborations and strategic partnerships funds, research grants and from the issuance of equity or debt securities. Sangamo believes that itsavailable cash, cash equivalents and investments as of December 31, 2018, along with expected revenues from collaborations, strategic partnerships andresearch grants, will be adequate to fund its operations at least through the next twelve months from the date the financial statements are issued. Sangamo willneed to raise substantial additional capital to fund subsequent operations and complete the development and commercialization of its products. Additionalcapital may not be available on terms acceptable to the Company, or at all. If adequate funds are not available, or if the terms of potential funding sources areunfavorable, the Company’s business and ability to develop its technology and ZFP Therapeutic products would be harmed. Furthermore, any sales ofadditional equity securities may result in dilution to the Company’s stockholders, and any debt financing may include covenants that restrict the Company’sbusiness.Basis of PresentationThe accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the UnitedStates of America (“U.S. GAAP”) and include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have beeneliminated in the consolidated financial statements. Business CombinationsThe Company accounts for acquisitions in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASCTopic 805”). ASC Topic 805 establishes principles and requirements for recognizing and measuring the total consideration transferred to and the assetsacquired, liabilities assumed and any non-controlling interests in the acquired target in a business combination. ASC Topic 805 also provides guidance forrecognizing and measuring goodwill acquired in a business combination; requires purchased in-process research and development to be capitalized at fairvalue as an intangible asset at the time of acquisition; requires acquisition-related expenses and restructuring costs to be recognized separately from thebusiness combination; expands the definition of what constitutes a business; and requires the acquirer to disclose information that users may need to evaluateand understand the financial effect of the business combination. Cash and Cash EquivalentsSangamo considers all highly-liquid investments purchased with original maturities of three months or less at the purchase date to be cashequivalents. Cash and cash equivalents consist of deposits in money market investment accounts. Marketable SecuritiesSangamo classifies its marketable securities as available-for-sale and records its investments at estimated fair value based on quoted market prices orobservable market inputs of almost identical assets, with the unrealized holding gains and losses included in accumulated other comprehensive loss.The Company’s investments are subject to a periodic impairment review. The Company recognizes an impairment charge when a decline in the fairvalue of its investments below the cost basis is judged to be other-than-temporary. The Company considers various factors in determining whether torecognize an impairment charge, including the length of time and extent to which the fair value has been less than the Company’s cost basis, the financialcondition and near-term prospects of the investee, and the Company’s84intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in the market value. Realized gains and losses onavailable-for-sale securities are included in other income, which is determined using the specific identification method.Fair Value MeasurementsThe carrying amounts for financial instruments consisting of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilitiesapproximate fair value due to their short maturities. Marketable securities are stated at their estimated fair values. The counterparties to the agreementsrelating to the Company’s investment securities consist of the U.S. Treasury, governmental agencies, various major corporations and financial institutionswith high credit standing.Property and EquipmentProperty and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is calculated using the straight-line methodbased on the estimated useful lives of the related assets (generally three to five years). For leasehold improvements, amortization is calculated using thestraight-line method based on the shorter of the useful life or the lease term. The Company reviews its property and equipment for impairment wheneverevents or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.Use of EstimatesThe preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions thataffect the amounts reported in the financial statements and the accompanying notes. On an ongoing basis, management evaluates its estimates, includingcritical accounting policies or estimates related to revenue recognition, clinical trial accruals, fair value of assets and liabilities, including from acquisitions,and stock-based compensation. Estimates are based on historical experience and on various other market specific and other relevant assumptions that theCompany believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets andliabilities that are not readily apparent from other sources. Actual results could differ from those estimates.Revenue RecognitionRevenues from research activities made under strategic partnering agreements and collaborations are recognized as the services are provided whenthere is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured.Revenue generated from research and licensing agreements typically includes upfront signing or license fees, cost reimbursements, research services,minimum sublicense fees, milestone payments and royalties on future licensee’s product sales.Effective January 1, 2018, the Company adopted the provisions of ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”) using themodified retrospective method, resulting in a change to its accounting policy for revenue recognition. Topic 606 establishes a unified model to determinehow revenue is recognized. The adoption of this pronouncement did not have material impact to the Company’s consolidated financial statements. Topic606 supersedes the revenue recognition requirements in Topic 605, Revenue Recognition (“Topic 605”) as detailed below.The Company’s contract revenues consist of strategic partnering collaboration agreements and research activity grants and licensing. Research andlicensing agreements typically include upfront signing or license fees, cost reimbursements, research services, minimum sublicense fees, milestone paymentsand royalties on future licensee’s product sales. The Company has both fixed and variable consideration. Non-refundable upfront fees and funding of researchand development activities are considered fixed, while milestone payments are identified as variable consideration. Sangamo’s research grants are typicallymulti-year agreements and provide for the reimbursement of qualified expenses for research and development as defined under the terms of the grantagreement. Revenues under grant agreements are recognized when the related qualified research expenses are incurred. Deferred revenue represents theportion of research or license payments received but not earned.In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its agreements, the Company performs thefollowing steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services areperformance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constrainton variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition ofrevenue when (or as) the Company satisfies each performance obligation.A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Topic 606. TheCompany’s performance obligations include license rights, development services, and services associated85with regulatory submission and approval processes. Significant management judgment is required to determine the level of effort required under anarrangement and the period over which the Company expects to complete its performance obligations under the arrangement. If the Company cannotreasonably estimate when its performance obligations either are completed or become inconsequential, then revenue recognition is deferred until theCompany can reasonably make such estimates. The Company includes the unconstrained amount of estimated variable consideration in the transaction price.The amount included in the transaction price is constrained to the amount for which it is probable that a significant reversal of cumulative revenuerecognized will not occur. At the end of each subsequent reporting period, the Company re-evaluates the estimated variable consideration included in thetransaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Revenue is then recognized over theremaining estimated period of performance using the cumulative catch-up method. The estimated period of performance and project costs are reviewedquarterly and adjusted, as needed, to reflect the Company’s current assumptions regarding the timing of its deliverables.As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the stand-alone sellingprice of each performance obligation identified in the contract. The Company uses key assumptions to determine the stand-alone selling price, which mayinclude forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatorysuccess.Funds received from third parties under contract or grant arrangements are recorded as revenue if the Company is deemed to be the principalparticipant in the arrangements because the activities under the contracts or grants are part of the Company’s development programs. Contract funds receivedare not refundable and are recognized when the related qualified research and development costs are incurred and there is reasonable assurance that the fundswill be received. Funds received in advance are recorded as deferred revenue.During 2018, revenues related to the hemophilia A collaboration agreement with Pfizer Inc. (“Pfizer”) and Kite Pharma, Inc. (“Kite”), a wholly-ownedsubsidiary of Gilead Sciences, Inc., represented 45% and 30%, respectively, of the Company’s total revenue. During 2017, revenues related to Pfizer andBioverativ represented 47% and 34%, respectively, of the Company’s total revenue. During 2016 revenue related to Bioverativ, Dow AgroScience, LLC(“DAS”) and Shire International GmbH, a wholly owned subsidiary of Takeda Pharmaceuticals Company Limited (“Shire”) represented 46%, 26%, and 17%,respectively, of total revenue. Receivables from collaborations are typically unsecured and are concentrated in the biopharmaceutical industry. Accordingly,the Company may be exposed to credit risk generally associated with biopharmaceutical companies or specific to its collaboration agreements. To date, theCompany has not experienced any losses related to these receivables.Research and Development ExpensesResearch and development costs are expensed as incurred. Research and development expenses consist of direct and research-related allocatedoverhead costs such as facilities costs, salaries and related personnel costs, and material and supply costs. In addition, research and development expensesinclude costs related to clinical trials, validation of the Company’s testing processes and procedures as well as related overhead expenses. Research anddevelopment costs incurred in connection with collaborator-funded activities are expensed as incurred. Costs to acquire technologies that are utilized inresearch and development that have no alternative future use are expensed as incurred.Stock-based CompensationThe Company measures and recognizes compensation expense for all stock-based payment awards made to Sangamo employees and directors,including employee share options, restricted stock units (“RSUs”) and employee stock purchases related to the Employee 2010 Stock Purchase Plan, asamended (“ESPP”), based on estimated fair values at the award grant date. The fair value of stock-based awards is amortized over the vesting period of theaward using a straight-line method.To estimate the fair value of an award, the Company uses the Black-Scholes option pricing model. This model requires inputs such as expected life,expected volatility and risk-free interest rate. These inputs are subjective and generally require significant analysis and judgment to develop. While estimatesof expected life and volatility are derived primarily from the Company’s historical data, the risk-free rate is based on the U.S. Treasury yield curve in effect atthe time of grant commensurate with the expected life assumption. Further, in the first quarter of 2017 the Company adopted Accounting Standards Update(“ASU”) 2016-09 and accounts for forfeitures in the period they occur. The adopted ASU did not have a material impact on the Company’s consolidatedfinancial statements.Indefinite-lived Intangible AssetsAs part of the acquisition of TxCell S.A (“TxCell”) (see Note 6 – Acquisition of TxCell, S.A ) the Company recognized indefinite-lived intangibleassets for in-process research and development and goodwill as further discussed below. ASC Topic 350, Intangibles-Goodwill and Other, and relatedupdates require companies to test indefinite-lived intangible assets for impairment86annually, and more frequently if indicators of impairment exist. ASC Topic 350 includes an optional qualitative assessment for testing indefinite-livedintangible assets for impairment that permits companies to assess whether it is more likely than not (i.e., a likelihood of greater than 50%) that an indefinite-lived intangible asset is impaired. If a company concludes based on the qualitative assessment that it is not more likely than not that the fair value of anindefinite-lived intangible asset or, in the case of goodwill, that the fair value of the related reporting unit, is less than carrying value, it would not have todetermine the asset’s or reporting unit’s fair value, as applicableIn-Process Research and DevelopmentIntangible assets related to in-process research and development costs (“IPR&D”), are considered to be indefinite-lived until the completion orabandonment of the associated research and development efforts. If and when development is complete, which generally occurs if and when regulatoryapproval to market a product is obtained, the associated assets would be deemed finite-lived and would then be amortized based on their respective estimateduseful lives at that point in time. Prior to completion of the research and development efforts, the assets are considered indefinite-lived. During this period,the assets will not be amortized but will be tested for impairment on an annual basis and between annual tests if the Company becomes aware of any eventsoccurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts.During the fourth quarter of 2018, the Company performed an assessment of the qualitative factors affecting the fair value of its IPR&D projects. If thefair value exceeds the carrying value, then there is no impairment. Impairment losses on indefinite-lived intangible assets are recognized based solely on acomparison of the fair value of an asset to its carrying value, without consideration of any recoverability test. The Company has not identified any suchimpairment losses to date.GoodwillGoodwill represents the excess of the consideration transferred over the estimated fair values of assets acquired and liabilities assumed in a businesscombination and is considered to be indefinite-lived. Goodwill is not amortized but is tested for impairment on an annual basis and between annual tests ifthe Company becomes aware of any events occurring or changes in circumstances that would indicate an impairment of goodwill has occurred. During thefourth quarter of 2018, the Company performed an assessment of the qualitative factors affecting the fair value of its reporting unit and concluded that it wasnot more likely than not that the fair value of its reporting unit was less than carrying value and that, as a result, it is not more likely than not that goodwill isimpaired. Balance as of December 31, 2017 $1,585 Goodwill acquired 38,995 Foreign currency translations adjustment (536)Balance as of December 31, 2018 $40,044 Foreign Currency TranslationThe functional currency of the Company’s foreign subsidiaries is primarily the Euro. Monetary assets and liabilities denominated in foreigncurrencies are translated to U.S. dollars using the exchange rates at the balance sheet date. Foreign currency translation adjustments are recorded as acomponent of Other Comprehensive Income within stockholders’ equity. Revenues and expenses from our foreign subsidiaries are translated using themonthly average exchange rates in effect during the period in which the transactions occur. Foreign currency transaction gains and losses are recorded inInterest and Other Income, net, on our Consolidated Statements of Operations.Income TaxesIncome tax expense has been provided using the liability method. Deferred tax assets and liabilities are determined based on the difference betweenthe financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. TheCompany provides a valuation allowance against net deferred tax assets if, based upon the available evidence, it is not more likely than not that the deferredtax assets will be realized. The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained onexamination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in The Company’s consolidated financialstatements from such positions are measured based on the largest benefit that has a greater than 50% likelihood of being realized. The Company recognizesinterest and penalties associated with tax matters as part of the income tax provision and include accrued interest and penalties with the related income taxliability on its consolidated balance sheets87 Net Loss Per ShareBasic net loss per share has been computed by dividing net loss by the weighted-average number of shares of common stock outstanding during theperiod. Diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock and potential dilutivesecurities outstanding during the period.Because Sangamo is in a net loss position, diluted net loss per share excludes the effects of common stock equivalents consisting of options and RSUs,which are all anti-dilutive. All stock options and RSUs outstanding were excluded from the calculation of diluted net loss per share for all periods presented.Stock options and RSUs outstanding at the end of 2018, 2017 and 2016 were 9,048,793, 8,367,628, and 9,578,322, respectively.SegmentsThe Company operates in one segment. Management uses one measure of profitability and does not segregate its business for internal reporting. As ofDecember 31, 2018, substantially all of the Company’s assets were maintained in the United States. As of December 31 2017, all of the Company’s assetswere maintained in the United States. For the years ended December 31, 2018, 2017 and 2016, substantially all of the Company’s revenues and operatingexpenses were generated and incurred in the United States.Recent Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”).This standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes mostcurrent revenue recognition guidance, including industry-specific guidance. The main principle of Topic 606 is to recognize revenues when promised goodsor services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Topic 606provides companies with two implementation methods: (i) apply the standard retrospectively to each prior reporting period presented (full retrospectiveapplication); or (ii) apply the standard retrospectively with the cumulative effect of initially applying the standard as an adjustment to the opening balance ofretained earnings of the annual reporting period that includes the date of initial application (modified retrospective application). The Company adoptedTopic 606 effective January 1, 2018, using the modified retrospective method with a cumulative effect adjustment of $1.1 million reflected as a decrease tothe opening balance of accumulated deficit and a decrease to deferred revenues, respectively. Prior period amounts are not adjusted and continue to bereported in accordance with our historical accounting under Topic 605.Refer below for a summary of the amount by which each financial statement line item that was affected by the impact of the cumulative adjustmentand as compared with the guidance that was in effect prior to the adoption: Impact of Topic 606 Adoption onConsolidated Balance Sheet as of January 1, 2018 (in thousands) As reported under Topic606 Adjustments Balances without adoption ofTopic 606 Deferred revenue, current portion $29,626 $1,281 $28,345 Deferred revenue, noncurrent portion 26,846 (2,398) 29,244 Accumulated deficit (494,362) 1,117 (495,479) Impact of Topic 606 Adoption onConsolidated Balance Sheet as of December 31, 2018 (in thousands) As reported under Topic606 Adjustments Balances without adoption ofTopic 606 Deferred revenue, current portion $47,564 $15,553 $63,117 Deferred revenue, noncurrent portion 108,273 (879) 107,394 Accumulated deficit (562,696) (14,674) (577,370) 88 Impact of Topic 606 Adoption on Consolidated Statement of Operations and Comprehensive Lossfor theYear Ended December 31, 2018 (in thousands, except per share amounts) As reported under Topic606 Adjustments Balances without adoption ofTopic 606 Collaboration revenue $84,065 $(13,558) $70,507 Net loss (68,334) (13,558) (81,892)Net loss per share - basic and diluted: (0.70) (0.14) (0.84) Impact of Topic 606 Adoption on Consolidated Statement ofCash Flows for the Year Ended December 31, 2018 (in thousands) As reported under Topic606 Adjustments Balances without adoption of Topic606 Net loss $(68,334) $(13,558) $(81,892)Changes in deferred revenue 99,364 13,558 112,922 In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (“Topic 230”). The Company adopted Topic 230 in the beginning of2018, which requires the statement of cash flows to explain the change during the period relating to total cash, cash equivalents, and restricted cash. TheCompany adopted this standard using the retrospective transition method by restating its consolidated statements of cash flows to include restricted cash of$3.5 million as of January 1, 2018 and in the ending cash, cash equivalents, and restricted cash balances for the year ended December 31, 2018. The restrictedcash balance consists of a letter of credit for $3.5 million established as a deposit for the Brisbane build-to-suit lease. Net cash flows for the year endedDecember 31, 2017, changed as a result of including restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts presented on the consolidated statements of cash flows.The following table provides a reconciliation of cash, cash equivalents, and restricted cash within the consolidated statements of cash flows that sumto the total of the same amounts in the statement of cash flows for the years ended December 31, 2018 and 2017, respectively (in thousands): Year Ended December 31, 2018 2017 Cash and cash equivalents $140,418 $49,826 Restricted cash 3,500 3,500 Total cash, cash equivalents, and restricted cash $143,918 $53,326Not yet adoptedIn November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 andTopic 606, which clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC Topic 606 whenthe counterparty is a customer. In addition, Topic 808 precludes an entity from presenting consideration from a transaction in a collaborative arrangement asrevenue from contracts with customers if the counterparty is not a customer for that transaction. This guidance will be effective for the Company beginningJanuary 1, 2020. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. In February 2016 the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 amends a number of aspects of lease accounting, includingrequiring lessees to recognize almost all leases with a term greater than one year as a right-of-use asset and corresponding liability, measured at the presentvalue of the lease payments. The guidance will become effective for the Company beginning in the first quarter of 2019 with early adoption permitted andwill be adopted using a modified retrospective approach. The Company is adopting the new standard on January 1, 2019 and using the effective date as thedate of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be providedfor dates and periods before January 1, 2019.The new standard provides a number of optional practical expedients in transition. The Company expects to elect the practical expedients to notreassess its prior conclusions about lease identification under the new standard, to not reassess lease classification, and to not reassess initial direct costs. TheCompany will not elect the practical expedient allowing the use-of-hindsight which would require the Company to reassess the lease term of its leases basedon all facts and circumstances through the effective date and will not elect the practical expedient pertaining to land easements as this is not applicable to thecurrent contract portfolio.The new guidance also provides practical expedients for ongoing lease accounting. The Company expects to elect the recognition exemption forshort-term lease for all leases that qualify. Under this exemption, the Company will not recognize right of89use (“ROU”) assets or lease liabilities for those leases that qualify as a short-term lease, which includes not recognizing ROU assets or lease liabilities forexisting short-term leases of those assets in transition. The Company also will elect the practical expedient to not separate lease and non-lease componentsfor all equipment and real-estate leases.The Company expects that this standard will have a material effect on the financial statements. While the Company continues to assess the variousimpacts of adoption, the most significant effects will primarily relate to (1) the recognition of a right-of-use assets and lease liabilities on the balance sheet forthe Company’s existing operating leases; (2) the derecognition of existing assets and liabilities for sale-leaseback transactions arising from build-to-suit leasearrangements for which construction is complete and the Company is leasing the constructed asset that currently do not qualify for sale accounting; (3) thederecognition of existing assets and liabilities for certain assets under construction in build-to-suit lease arrangements that the Company will lease whenconstruction is complete; and (4) providing significant new disclosures about leasing activities NOTE 2 –FAIR VALUE MEASUREMENTThe Company measures certain assets and liabilities at fair value on a recurring basis, including cash equivalents, available-for-sale securities and thefree share liability. Fair value is determined based on a three-tier hierarchy under the authoritative guidance for fair value measurements and disclosures thatprioritizes the inputs used in measuring fair value as follows:Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full termof the asset or liability; andLevel 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e.,supported by little or no market activity).The fair value measurements of cash equivalents, available-for-sale securities and the free share liability are identified at the following levels withinthe fair value hierarchy (in thousands): December 31, 2018 Fair Value Measurements Total Level 1 Level 2 Level 3 Assets: Cash equivalents: Money market funds $103,291 $103,291 $— $— Total 103,291 103,291 — — Marketable securities: Commercial paper securities 177,224 — 177,224 — Corporate debt securities 63,870 — 63,870 — U.S. government-sponsored entity debt securities 18,621 — 18,621 — Total 259,715 — 259,715 — Total cash equivalents and marketable securities $363,006 $103,291 $259,715 — Liabilities: Free share liability $154 — — $154 Total $154 — — $154 90 December 31, 2017 Fair Value Measurements Total Level 1 Level 2 Level 3 Assets: Cash equivalents: Money market funds $24,290 $24,290 $— $— Commercial paper securities 4,595 — 4,595 — Total 28,885 24,290 4,595 — Marketable securities: Commercial paper securities 110,247 — 110,247 — Corporate debt securities 75,755 — 75,755 — U.S. government-sponsored entity debt securities 8,492 — 8,492 — Total 194,494 — 194,494 — Total cash equivalents and marketable securities $223,379 $24,290 $199,089 $- InvestmentsThe Company generally classifies its marketable securities as Level 2. Instruments are classified as Level 2 when observable market prices for identicalsecurities that are traded in less active markets are used. When observable market prices for identical securities are not available, such instruments are pricedusing benchmark curves, benchmarking of like securities, sector groupings, matrix pricing and valuation models. These valuation models are proprietary tothe pricing providers or brokers and incorporate a number of inputs, including, listed in approximate order of priority: benchmark yields, reported trades,broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications. Forcertain security types, additional inputs may be used, or some of the standard inputs may not be applicable. Evaluators may prioritize inputs differently onany given day for any security based on market conditions, and not all inputs listed are available for use in the evaluation process for each securityevaluation on any given day. Free Share Liability As a result of the July 20, 2018 Share Purchase Agreement (“SPA”)(see Note 6 – Acquisition of TXCELL S.A.), the Company entered intoarrangements with the holders of approximately 477,000 “free shares” of TxCell pursuant to which the Company has the right to purchase (call option) suchshares from the holders thereof and such holders have the right to sell (put option) to the Company such shares from time to time through mid-2021 (the “FreeShares Options”). The purchase price for each such free share acquired by the Company upon exercise of a Free Shares Option will be based on theperformance of the Company’s stock price from the announcement of the transactions contemplated by the SPA and Tender Offer Agreement (“TOA”)through the time of purchase the Free Shares Options purchase price was valued at €2.58 per share or approximately $2.99 per share using an exchange rate of$1.16, as of the date of the Acquisition. For example, if the Company’s stock price increases during that time period, the Free Shares Options purchase priceper share will proportionately increase. However, if the Company’s stock price decreases the Free Shares Options purchase price is limited to a minimumpurchase price of €2.58 per share, subject to certain exceptions. The options were classified as liabilities within Level 3 of the Fair Value hierarchy as theCompany utilized a binomial-lattice pricing model (the “Monte Carlo simulation model”) that involved certain market conditions to estimate the fair valueof the options. The application of the Monte Carlo simulation model required the use of a complex assumptions including the Company’s stock price,TxCell’s stock price, EUR to USD exchange rate, estimated volatility of each stock price and exchange rate, and risk-free rates based on the implied yieldcurrently available through the European Central Bank with a remaining term equal to the expected life of the options. The assumptions used in thissimulation model are reviewed each reporting period and adjusted, as needed, with any change in estimated fair value recorded on the Company’sconsolidated statements of operations. There were no changes in the fair value of the free share liability in 2018. Free Shares Liability assumptions: December 31, 2018 Sangamo Stock Price (USD) 11.48 TxCell Stock Price (EUR) 2.58 EUR/ USD Exchange Rate 0.873 Sangamo Stock Price (USD) Volatility Estimate 79.90% TxCell Stock Price (EUR) Volatility Estimate 8.59% EUR/ USD Exchange Rate Volatility Estimate 7.66% Risk Free Rate Varies by expected exercise date 91NOTE 3 – MARKETABLE SECURITIESThe table below summarizes the Company’s cash equivalents and available-for-sale securities (in thousands): Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains (Losses) Fair Value December 31, 2018 Cash equivalents: Money market funds $103,291 $— $— $103,291 Total 103,291 — — 103,291 Available-for-sale securities: Commercial paper securities 177,353 — (129) 177,224 Corporate debt securities 63,981 — (111) 63,870 U.S. government-sponsored entity debt securities 18,640 — (19) 18,621 Total 259,974 — (259) 259,715 Total cash equivalents and available-for-sale securities $363,265 $— $(259) $363,006 December 31, 2017 Cash equivalents: Money market funds $24,290 $— $— $24,290 Commercial paper securities 4,595 — — 4,595 Total 28,885 — — 28,885 Available-for-sale securities: Commercial paper securities 110,365 — (118) 110,247 Corporate debt securities 75,886 — (131) 75,755 U.S. government-sponsored entity debt securities 8,498 — (6) 8,492 Total 194,749 — (255) 194,494 Total cash equivalents and available-for-sale securities $223,634 — $(255) $223,379 As of December 31, 2018, all of the Company’s investments had maturity dates within one year as of the balance sheet date. The Company had nomaterial realized losses from the sale of available-for-sale securities for the years ended December 31, 2018, 2017 or 2016. Sangamo has the intent and abilityto hold its investments for a period of time sufficient to allow for any anticipated recovery in market value. No investments were other-than-temporarilyimpaired at either December 31, 2018 or 2017. NOTE 4 – STOCK-BASED COMPENSATIONThe following table shows total stock-based compensation expense recognized in the accompanying consolidated statements of operations (inthousands): Year Ended December 31, 2018 2017 2016 Research and development $8,249 $5,031 $6,463 General and administrative 6,428 4,058 8,594 Total stock-based compensation expense $14,677 $9,089 $15,057 As of December 31, 2018, total stock-based compensation expense related to unvested stock options to be recognized in future periods was $35.4million, which is expected to be expensed over a weighted-average period of 2.68 years. As of December 31, 2018, total stock-based compensation expenserelated to unvested RSUs to be recognized in future periods was $4.1 million, which is expected to be expensed over a weighted-average period of 2.18 years.There was no capitalized stock-based employee compensation expense as of either December 31, 2018, 2017 or 2016.Valuation AssumptionsEmployee stock-based compensation expense was determined using the Black-Scholes option valuation model. Option valuation models require theinput of subjective assumptions and these assumptions can vary over time.92The Company bases its determination of expected volatility through its assessment of the historical volatility of its common stock. The Companyrelied on its historical exercise and post-vested termination activity for estimating its expected term for use in determining the fair value of these options.The weighted-average estimated fair value per share of options granted during 2018, 2017 and 2016 was $11.39, $4.10, and $3.14, respectively, basedupon the assumptions used in the Black-Scholes valuation model. The assumptions used for estimating the fair value of the employee stock options are asfollows: Year Ended December 31, 2018 2017 2016 Risk-free interest rate 2.53-2.96% 1.81-2.28% 1.13-1.61% Expected life of option (in years) 5.59-5.61 5.73-5.83 5.28-5.29 Expected dividend yield of stock 0% 0% 0%Expected volatility 0.72-0.75 0.71-0.72 0.68-0.70 Employees purchased approximately 328,710, 253,994 and 202,711 shares of common stock through the ESPP at an average exercise price of $4.51,$3.22, and $4.04 per share during 2018, 2017 and 2016, respectively. The weighted-average estimated fair value of shares purchased under the Company’sESPP during 2018, 2017 and 2016 were $7.07, $2.37 and $2.27, respectively, based upon the assumptions used in the Black-Scholes valuation model.The weighted–average assumptions used for estimating the fair value of the ESPP purchase rights are as follows: Year Ended December 31, 2018 2017 2016 Risk-free interest rate 2.16-2.80% 0.44-0.76% 0.41-0.80% Expected life of option (in years) 0.5-2 0.5-2.0 0.5-2.0 Expected dividend yield of stock 0% 0% 0%Expected volatility 0.73-0.83 0.66-0.82 0.71-0.76 NOTE 5 – MAJOR CUSTOMERS, PARTNERSHIPS AND STRATEGIC ALLIANCESCollaboration AgreementsKite Pharma, Inc.In February 2018, the Company entered into a collaboration and license agreement with Kite, for the research, development and commercialization ofpotential engineered cell therapies for cancer. Kite will be responsible for all clinical development and commercialization of any resulting products. The Kiteagreement became effective on April 5, 2018 when the waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, andother customary closing conditions were completed.Subject to the terms of this agreement, the Company granted Kite an exclusive, royalty-bearing, worldwide, sublicensable license, under theCompany’s relevant patents and know-how, to develop, manufacture and commercialize, for the purpose of treating cancer, specific cell therapy products thatmay result from the research program and that are engineered ex vivo using selected zinc finger nucleases (“ZFNs”) and adeno-associated viral vectors(“AAVs”) developed under the research program, to express chimeric antigen receptors (“CARs”), T-cell receptors (“TCRs”) or NK-cell receptors (“NKRs”)directed to candidate targets. During the research program term and subject to certain exceptions, except pursuant to this agreement, the Company is prohibited from researching,developing, manufacturing and commercializing, for the purpose of treating cancer, any cell therapy product that, as a result of ex vivo genome editing,expresses a CAR, TCR or NKR that is directed to a target expressed on or in a human cancer cell. After the research program term concludes and subject tocertain exceptions, except pursuant to this agreement, the Company will be prohibited from developing, manufacturing and commercializing, for the purposeof treating cancer, any cell therapy product that, as a result of ex vivo genome editing, expresses a CAR, TCR or NKR that is directed to a candidate target. Following the effective date, in April 2018, the Company received a $150.0 million upfront payment from Kite. In addition, Kite will reimburse theCompany’s direct costs to conduct service under the joint research program provisions of the agreement, and Kite will be responsible for all subsequentdevelopment, manufacturing and commercialization of any licensed products. Sangamo is93also eligible to receive contingent development- and sales-based milestone payments that could total up to $3.01 billion if all of the specified milestones setforth in this agreement are achieved. Of this amount, approximately $1.26 billion relates to the achievement of specified research, clinical development,regulatory and first commercial sale milestones, and approximately $1.75 billion relates to the achievement of specified sales-based milestones if annualworldwide net sales of licensed products reach specified levels. Each development- and sales-based milestone payment is payable (i) only once for eachlicensed product, regardless of the number of times that the associated milestone event is achieved by such licensed product, and (ii) only for the first tentimes that the associated milestone event is achieved, regardless of the number of licensed products that may achieve such milestone event. In addition, theCompany will be entitled to receive escalating, tiered royalty payments with a percentage in the single digits based on potential future annual worldwide netsales of licensed products. These royalty payments will be subject to reduction due to patent expiration, entry of biosimilar products to the market andpayments made under certain licenses for third-party intellectual property. The initial research term of the agreement is six years. Kite has an option to extend the research term for up to two additional one-year periods for aseparate fee of $10.0 million per year. All contingent payments under the agreement, when earned, will be non-refundable and non-creditable. The Companyconcluded the transaction price under this agreement is $185.9 million and includes the upfront license fee of $150.0 million and $35.9 million estimatedreimbursable service costs for identified research projects over the estimated performance period. Further the Company concluded estimated fees for thepresumed exercise of the research term extension options and all milestone amounts are fully constrained. As part of its evaluation of the constraint, theCompany considered numerous factors, including the fact that achievement of the milestones at this time is uncertain and contingent upon future periodswhen the uncertainty related to the variable consideration is resolved. The Company will re-evaluate the transaction price, including the estimated variableconsideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes incircumstances occur. None of the development and sales-based milestone payments have been included in transaction price.Kite has the right to terminate this agreement, in its entirety or on a per licensed product or per candidate target basis, for any reason after a specifiednotice period. Each party has the right to terminate this agreement on account of the other party’s bankruptcy or material, uncured breach. The Company has identified the primary performance obligations within the Kite agreement as a license to the technology and on-going services.The Company concluded that the license is not discrete as it does not have stand-alone value to Kite apart from the services to be performed by the Companypursuant to the agreement. As a result, the Company recognizes revenue from the upfront payment on a straight-line basis through June 2024, the estimatedperiod the Company will perform research services. The estimated period of performance and project cost is reviewed quarterly and adjusted, as needed, toreflect the Company’s current assumptions regarding the timing of its deliverables. As of December 31, 2018, the Company had deferred revenue of $131.5million related to this agreement. During the year ended December 31, 2018 the Company recognized revenue of approximately $18.5 million related to theupfront fee that was received upon effectiveness of the agreement and approximately $7.0 million from research services.Pfizer Inc.SB-525 Global Collaboration and License Agreement In May 2017, the Company entered into an exclusive, global collaboration and license agreement with Pfizer, pursuant to which it established acollaboration for the research, development and commercialization of SB-525, its gene therapy product candidate for hemophilia A, and closely relatedproducts. Under this agreement, the Company is responsible for conducting the Phase 1/2 clinical trial and certain manufacturing activities for SB-525, whilePfizer is responsible for subsequent worldwide development, manufacturing, marketing and commercialization of SB-525. Sangamo may also collaborate inthe research and development of additional AAV-based gene therapy products for hemophilia A.94The Company received an upfront fee of $70.0 million and is eligible to receive development milestone payments contingent on the achievement ofspecified clinical development, intellectual property, regulatory and first commercial sale milestones for SB-525 and potentially other products. In addition,Sangamo is eligible to receive up to $208.5 million in payments upon the achievement of specified clinical development, intellectual property andregulatory milestones and up to $266.5 million in payments upon first commercial sale milestones for SB-525 and potentially other products. The totalamount of potential clinical development, intellectual property, regulatory, and first commercial sale milestone payments, assuming the achievement of allspecified milestones in the hemophilia A Pfizer agreement, is up to $475.0 million, which includes up to $300.0 million for SB-525 and up to $175.0 millionfor other products that may be developed under the agreement, subject to reduction on account of payments made under certain licenses for third partyintellectual property. In addition, Pfizer agreed to pay the Company royalties for each potential licensed product developed under the agreement that are anescalating tiered, double-digit percentage of the annual net sales of such product and are subject to reduction due to patent expiration, entry of biosimilarproducts to the market and payment made under certain licenses for third party intellectual property. To date, no milestone payments have been received andno products have been approved and therefore no royalty fees have been earned under the hemophilia A Pfizer agreement. Sangamo is responsible for internaland external research costs as part of the upfront fee and has the ability to request additional reimbursement from Pfizer if certain conditions are met.None of the clinical or regulatory milestones have been included in the $70.0 million transaction price, as all milestone amounts are fully constrained.As part of its evaluation of the constraint, the Company considered numerous factors, including the fact that achievement of the milestones at this time isuncertain and contingent upon future periods when the uncertainty related to the variable consideration is resolved. The Company will re-evaluate thetransaction price, including its estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and asuncertain events are resolved or other changes in circumstances occur.Subject to the terms of the agreement, the Company granted Pfizer an exclusive, worldwide, royalty-bearing license, with the right to grantsublicenses, to use certain technology controlled by the Company for the purpose of developing, manufacturing and commercializing SB-525 and relatedproducts. Pfizer granted the Company a non-exclusive, worldwide, royalty free, fully paid license, with the right to grant sublicenses, to use certainmanufacturing technology developed under the agreement and controlled by Pfizer to manufacture the Company’s products that utilize the AAV deliverysystem. During a specified period, neither the Company nor Pfizer will be permitted to clinically develop or commercialize, outside of the collaboration,certain AAV-based gene therapy products for hemophilia A. Unless earlier terminated, the agreement has a term that continues, on a per product and per country basis, until the later of (i) the expiration of patentclaims that cover the product in a country, (ii) the expiration of regulatory exclusivity for a product in a country, and (iii) fifteen years after the firstcommercial sale of a product in a country. Pfizer has the right to terminate the agreement without cause in its entirety or on a per product or per countrybasis. The agreement may also be terminated by either party based on an uncured material breach by the other party or the bankruptcy of the other party. Upon termination for any reason, the license granted by the Company to Pfizer to develop, manufacture and commercialize SB-525 and related products willautomatically terminate. Upon termination by the Company for cause or by Pfizer in any country or countries, Pfizer will automatically grant the Companyan exclusive, royalty-bearing license under certain technology controlled by Pfizer to develop, manufacture and commercialize SB-525 in the terminatedcountry or countries. The Company has identified the performance obligations within the hemophilia A Pfizer agreement as a license to the technology and on-goingservices. The Company concluded that the license is not discrete as it does not have stand-alone value to Pfizer apart from the services to be performed by theCompany pursuant to the agreement. As a result, the Company recognizes revenue from the upfront payment based on proportional performance through2020, the estimated period the Company will perform research services. The estimated period of performance and project cost is reviewed quarterly andadjusted, as needed, to reflect the Company’s current assumptions regarding the timing of its deliverables. As of December 31, 2018, the Company haddeferred revenue of $10.0 million related to this agreement. During the year ended December 31, 2018 and 2017, the Company recognized revenue of $37.8million and $17.0 million, respectively, related to the upfront fee that was received.C9ORF72 Research Collaboration and License AgreementIn December 2017, the Company entered into a separate exclusive, global collaboration and license agreement with Pfizer for the development andcommercialization of potential gene therapy products that use ZFP TFs to treat ALS and frontotemporal lobar degeneration (“FTLD”) linked to mutations ofthe C9ORF72 gene. Pursuant to this agreement, the Company agreed to work with Pfizer on a research program to identify, characterize and preclinicallydevelop ZFP-TFs that bind to and specifically reduce expression of the mutant form of the C9ORF72 gene.95The Company received a $12.0 million upfront payment from Pfizer and is eligible to receive up to $60.0 million in development milestonepayments from Pfizer contingent on the achievement of specified preclinical development, clinical development and first commercial sale milestones, and upto $90.0 million commercial milestone payments if annual worldwide net sales of the licensed products reach specified levels. In addition, Pfizer will pay theCompany royalties based on an escalating tiered, mid- to high-single digit percentage of the annual worldwide net sales of the licensed products. Theseroyalty payments are subject to reduction due to patent expiration, entry of biosimilar products to the market and payments made under certain licenses forthird party intellectual property. Each party will be responsible for the cost of its performance of the research program. Pfizer will be operationally andfinancially responsible for subsequent development, manufacturing and commercialization of the licensed products.None of the clinical or regulatory milestones have been included in the $12.0 million transaction price, as all milestone amounts are fully constrained.As part of its evaluation of the constraint, the Company considered numerous factors, including the fact that achievement of the milestones at this time isuncertain and contingent upon future periods when the uncertainty related to the variable consideration is resolved. The Company will re-evaluate thetransaction price, including is estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and asuncertain events are resolved or other changes in circumstances occur.Subject to the terms of this agreement, the Company granted Pfizer an exclusive, royalty-bearing, worldwide, license under the Company’s relevantpatents and know-how to develop, manufacture and commercialize gene therapy products that use resulting ZFP-TFs that satisfy pre-agreed criteria. During aspecified period, neither the Company nor Pfizer will be permitted to research, develop, manufacture or commercialize outside of the collaboration any ZFPsthat specifically bind to the C9ORF72 gene.Unless earlier terminated, the agreement has a term that continues, on a per licensed product and per country basis, until the later of (i) the expiration ofpatent claims that cover the licensed product in a country, (ii) the expiration of regulatory exclusivity for a licensed product in a country, and (iii) fifteenyears after the first commercial sale of a licensed product in a major market country. Pfizer also has the right to terminate the agreement without cause in itsentirety or on a per product or per country basis. The agreement may also be terminated by either party based on an uncured material breach by the otherparty or the bankruptcy of the other party. The agreement will also terminate if the Company is unable to identify any lead candidates for developmentwithin a specified period of time or if Pfizer elects not to advance a lead candidate beyond a certain development milestone within a specified period oftime. Upon termination for any reason, the license granted by the Company to Pfizer to develop, manufacture and commercialize licensed products under theagreement will automatically terminate. Upon termination by the Company for cause or by Pfizer without cause for any licensed product or licensed productsin any country or countries, the Company will have the right to negotiate with Pfizer to obtain a non-exclusive, royalty-bearing license under certaintechnology controlled by Pfizer to develop, manufacture and commercialize the licensed product or licensed products in the terminated country or countries. Following termination by the Company for Pfizer’s material breach, Pfizer will not be permitted to research, develop, manufacture or commercializeZFPs that specifically bind to the C9ORF72 gene for a period of time. Following termination by Pfizer for the Company’s material breach, the Company willnot be permitted to research, develop, manufacture or commercialize ZFPs that specifically bind to the C9ORF72 gene for a period of time.The Company has identified the performance obligations within this agreement as a license to the technology and on-going services. The Companyconcluded that the license is not discrete as it does not have stand-alone value to Pfizer apart from the services to be performed by the Company pursuant tothe agreement. As a result, the Company recognizes revenue from the upfront payment based on proportional performance through March 31, 2019 theestimated period the Company will perform research services. The estimated period of performance and project cost is reviewed quarterly and adjusted, asneeded, to reflect the Company’s current assumptions regarding the timing of its deliverables. As of December 31, 2018, the Company had deferred revenueof $9.8 million related to this agreement. During the year ended December 31, 2018 the Company recognized revenue of $2.2 million related to the upfrontfee that was received upon entering into the agreement.Bioverativ, a Sanofi Genzyme company.In January 2014, the Company entered into an exclusive worldwide collaboration and license agreement with Bioverativ to develop therapeutics forhemoglobinopathies, focused on beta-thalassemia and sickle cell disease (“SCD”). Under the agreement, the Company is jointly conducting two researchprograms: the beta-thalassemia program and the SCD program. In the beta-thalassemia program, the Company is responsible for all discovery, research anddevelopment activities through the first human clinical trial. In the SCD program, both parties are responsible for research and development activitiesthrough the submission of an investigational new drug (“IND”) application for ZFP therapeutics intended to treat SCD. 96Under both programs, Bioverativ is responsible for subsequent worldwide clinical development, manufacturing and commercialization of licensedproducts developed under the agreement. At the end of the specified research terms for each program or under certain specified circumstances, Bioverativ hasthe right to step in and take over any of the Company’s remaining activities. Furthermore, the Company has an option to co-promote in the United States anylicensed products to treat beta-thalassemia and SCD developed under the agreement, and Bioverativ will compensate the Company for such co-promotionactivities. Subject to the terms of the agreement, the Company has granted Bioverativ an exclusive, royalty-bearing license, with the right to grantsublicenses, to use certain ZFP and other technology controlled by the Company for the purpose of researching, developing, manufacturing andcommercializing licensed products developed under the agreement. The Company also granted Bioverativ a non-exclusive, worldwide, royalty-free, fullypaid license, with the right to grant sublicenses, under the Company’s interest in certain other intellectual property developed pursuant to the agreement.During the term of the agreement, the Company is not permitted to research, develop, manufacture or commercialize, outside of the agreement, certain genetherapy products that target genes relevant to the licensed products.Under the agreement, the Company received an upfront license fee of $20.0 million and is eligible to receive development and sales milestonepayments upon the achievement of specified regulatory, clinical development and sales milestones. In addition, the Company will also be eligible to receiveup to $115.8 million in payments upon the achievement of specified clinical development and regulatory milestones, as well as up to $160.5 million inpayments upon the achievement of specified sales milestones. The total amount of potential regulatory, clinical development, and sales milestone payments,assuming the achievement of all specified milestones in the agreement, is up to $276.3 million. In addition, the Company will receive royalty payments foreach licensed product that are a tiered double-digit percentage of annual net sales of each product. Bioverativ reimburses Sangamo for agreed upon costsincurred in connection with research and development activities conducted by Sangamo. To date, no milestone payments have been received and noproducts have been approved and therefore no royalty fees have been earned under the Bioverativ agreement.The agreement may be terminated by (i) the Company or Bioverativ for the uncured material breach of the other party, (ii) the Company or Bioverativfor the bankruptcy or other insolvency proceeding of the other party; (iii) Bioverativ, upon 180 days’ advance written notice to the Company and(iv) Bioverativ, for certain safety reasons upon written notice to, and after consultation with, the Company. As a result, actual future milestone paymentscould be lower than the amounts stated above. All contingent payments under the agreement, when earned, will be non-refundable and non-creditable. The transaction price of $75.7 millionincludes the upfront license fee of $20.0 million and $55.7 million estimated reimbursable service costs for identified research projects over the estimatedperformance period, as all milestone amounts are fully constrained. As part of its evaluation of the constraint, the Company considered numerous factors,including the fact that achievement of the milestones at this time is uncertain and contingent upon future periods when the uncertainty related to the variableconsideration is resolved. The Company will re-evaluate the transaction price, including the estimated variable consideration included in the transactionprice and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur. None of the clinicalor regulatory milestones have been included in transaction price.The Company has identified the performance obligations within this arrangement as a license to the technology and on-going research servicesactivities. The Company concluded that the license is not discrete as it does not have stand-alone value to Bioverativ apart from the research services to beperformed pursuant to the agreement. As a result, the Company recognizes revenue from the upfront payment based on proportional performance through2022, the estimated period the Company will perform research services. The estimated period of performance and project cost is reviewed quarterly andadjusted, as needed, to reflect the Company’s current assumptions regarding the timing of its deliverables. As of December 31, 2018, the Company haddeferred revenue of $4.6 million related to this agreement.Revenues recognized under the Bioverativ Agreement for the years ended December 31, 2018, 2017 and 2016 are as follows (in thousands): Year Ended December 31, 2018 2017 2016 Revenue related to Bioverativ agreement: Recognition of upfront fee $4,013 $1,769 $2,321 Research services 9,503 10,489 6,565 Total $13,516 $12,258 $8,88697California Institute for Regenerative MedicineIn May 2018, the California Institute for Regenerative Medicine (“CIRM”) granted a Strategic Partnership Award for $8.0 million to fund the clinicalstudies of a potentially curative ZFP Therapeutic for the treatment of beta-thalassemia based on the application of Sangamo’s ZFN genome editingtechnology. The grant exists through December 31, 2022 and provides matching funds to support the evaluate ST-400, a gene-edited cell therapy candidatefor people with transfusion-dependent beta-thalassemia. As of December 31, 2018, the Company had received $1.7 million under the award. Under the terms of the CIRM grants, the Company is obligated to pay royalties and licensing fees based on a low single digit royalty percentage onnet sales of CIRM-funded product candidates or CIRM-funded technology. The Company has the option to decline any and all amounts awarded by CIRMand as an alternative to revenue sharing, the Company has the option to convert the award to a loan. No such election has been made as of the date of theissuance of these financial statements. In the event that the Company terminates a CIRM-funded clinical trial, it will be obligated to repay the remainingCIRM funds on hand, therefore as of December 31, 2018, the $1.8 million, including $0.1 million of interest, related to this award is recorded as a loan inother long-term liabilities on the accompanying consolidated balance sheetAmended Collaboration and License Agreement with Shire International GmbH in Human TherapeuticsIn January 2012, the Company entered into a collaboration and license agreement with Shire to research, develop and commercialize a ZFPtherapeutic for treating Huntington’s disease. The Company received an upfront license fee of $13.0 million. In 2014, Sangamo recognized a $1.0 millionmilestone payment related to the hemophilia program. Shire does not have any milestone payment obligations, but is required to pay single digit percentageroyalties to the Company, up to a specified maximum cap, on the commercial sales of therapeutic products for Huntington’s disease. The Company isrequired to pay single digit percentage royalties to Shire, up to a specified maximum cap, on commercial sales of therapeutic products from programs returnedunder the original agreement (which include blood clotting Factors VIII and IX) that use two zinc fingers.Pursuant to the agreement, the Company granted Shire an exclusive, world-wide, royalty-bearing license, with the right to grant sublicenses, to use theCompany’s ZFP technology for the purpose of developing and commercializing human therapeutic and diagnostic products for the HTT gene. During theterm of the agreement, the Company is not permitted to research, develop or commercialize, outside of the agreement, certain products that target the HTTgene. The Company satisfied the deliverables and research services responsibilities within the amended arrangement which were completed in 2017. Theagreement may be terminated by (i) the Company or Shire, in whole or in part, for the uncured material breach of the other party, (ii) the Company or Shire forthe bankruptcy or other insolvency proceeding of the other party and (iii) Shire, in its entirety, effective upon at least 90 days’ advance written notice.The Company has concluded that the license is not a separate unit of accounting as it does not have stand-alone value to Shire apart from the researchservices to be performed pursuant to the Shire agreement. The Company satisfied the deliverables and research services responsibilities within the amendedarrangement which were completed in 2017. As a result, the Company recognized the remaining $2.3 million of deferred revenue from the upfront paymentduring the year ended December 31, 2017.Revenues recognized under the Shire agreement for the years ended December 31, 2018, 2017 and 2016, were $0.0 million, $2.4 million and $3.3million, respectively. Agreement with Sigma-Aldrich Corporation (Sigma) in Laboratory Research Reagents, Transgenic Animal and Commercial Protein Production Cell-lineEngineeringIn 2007, Sangamo entered into a license agreement with Sigma to provide Sigma with access to Sangamo’s proprietary ZFP technology and theexclusive right to use the technology to develop and commercialize research reagent products and services in the research field, excluding certainagricultural research uses that Sangamo previously licensed to DAS. Sangamo developed laboratory research reagents using its ZFP technology over a three-year research services period. Sangamo has since transferred the ZFP manufacturing technology to Sigma. In October 2009, Sangamo expanded its license agreement with Sigma. In addition to the original terms of the license agreement, Sigma receivedexclusive rights to develop and distribute ZFP-modified cell lines for commercial production of protein pharmaceuticals and certain ZFP-engineeredtransgenic animals for commercial applications. Under the terms of the agreement, Sigma made an upfront cash payment of $20.0 million consisting of a $4.9million purchase of 636,133 shares of Sangamo common stock, valued at $4.9 million, and a $15.1 million upfront license fee. Sangamo is also eligible toreceive commercial license fees of $5.0 million based upon a percentage of net sales and sublicensing revenue and thereafter a reduced royalty rate of 10.5%of net sales and sublicensing revenue. In addition, upon the achievement of certain cumulative commercial milestones, Sigma will make milestone98payments to Sangamo up to an aggregate of $25.0 million. Sangamo does not have additional ongoing performance obligations under the agreement.Revenues recognized under the agreement with Sigma for the years ended December 31, 2018, 2017 and 2016, were $0.5 million, $0.7 million and$1.3 million, respectively. Agreement with Dow AgroSciences in Plant AgricultureIn 2005, Sangamo entered into an exclusive commercial license with DAS, with an initial three-year research term. Under this agreement, Sangamo isproviding DAS with access to its proprietary ZFP technology and the exclusive right to use the technology to modify the genomes or alter the nucleic acid orprotein expression of plant cells, plants, or plant cell cultures. Sangamo has retained rights to use plants or plant-derived products to deliver ZFP TFs or ZFNsinto humans or animals for diagnostic, therapeutic or prophylactic purposes. In 2008 DAS exercised its option and obtained a commercial license to sellproducts incorporating or derived from plant cells generated using the Company’s ZFP technology. The exercise of the option triggered a one-timecommercial license fee of $6.0 million, payment of the remaining $2.3 million of the previously agreed upon $4.0 million in research milestones,development and commercialization milestone payments for each product, and royalties on sales of products. Furthermore, DAS has the right to sublicenseSangamo’s ZFP technology to third parties for use in plant cells, plants, or plant cell cultures, and Sangamo will be entitled to 25% of any cash considerationreceived by DAS under such sublicenses. In December 2010 the Company amended its agreement with DAS to extend the period of reagent manufacturingservices and research services through December 31, 2012.The agreement with DAS also provides for minimum sublicense fees each year due to Sangamo every October, provided the agreement is notterminated by DAS. Annual fees range from $250,000 to $3.0 million and total $25.3 million over 11 years unless terminated at any time by DAS. TheCompany does not have any performance obligations. In the event of any termination of the agreement, all rights to use the Company’s ZFP technology willrevert to Sangamo, and DAS will no longer be permitted to practice Sangamo’s ZFP technology or to develop or, except in limited circumstances,commercialize any products derived from the Company’s ZFP technology.Revenues under the agreement with DAS were $3.0 million, $3.0 million, and $5.1 million during 2018, 2017 and 2016, respectively.NOTE 6 – ACQUISITION OF TXCELL S.A.On July 20, 2018, Sangamo entered into a SPA with certain shareholders of TxCell S.A., a French société anonyme (“TxCell”), and the Company andTxCell entered into a TOA, pursuant to which the Company agreed to acquire 100% of the equity interests of TxCell. On October 1, 2018 (the “AcquisitionDate”), the Company completed the acquisition of 13,519,036 ordinary shares of TxCell (“TxCell Ordinary Shares”), representing approximately 53% of theoutstanding share capital and voting rights of TxCell, pursuant to the SPA (the “Block Transaction”). TxCell specializes in developing cellularimmunotherapy platforms that use regulator T cells (“Tregs”) to treat severe autoimmune and inflammatory diseases and the Company expects that theacquisition of TxCell will accelerate its entry into the clinic with a CAR-Treg therapy. The Company also entered into arrangements with the holders of approximately 477,000 “free shares” of TxCell pursuant to which the Company hasthe right to purchase (call option) such shares from the holders thereof and such holders have the right to sell (put option) to the Company such shares fromtime to time through mid-2021 (the “Free Shares Options”). Of the 477,000 approximately 453,000 are related to vested free shares, with the remainingrelated to unvested free shares. The purchase price for each such free share acquired by the Company upon exercise of a Free Shares Option will be based onthe performance of the Company’s stock price from the announcement of the transactions contemplated by the SPA and TOA through the time of purchase (asof October 1, 2018 (“the Acquisition Date”) the Free Shares Options purchase price was valued at €2.58 per share or approximately $2.99 per share using anexchange rate of $1.16). For example, if the Company’s stock price increases during that time period, the Free Shares Options purchase price per share willproportionately increase. However, if the Company’s stock price decreases the Free Shares Options purchase price is limited to a minimum purchase price of€2.58 per share, subject to certain exceptions. The fair value of the Free Shares Options was estimated to be $0.2 million, based on an option pricing method,and such value is included in the purchase consideration. The fair value of the Free Shares Options will vary based on future changes in the Company’s stockprice during the option period with such changes in fair value being recognized in operations. The fair value of the outstanding shares of TxCell, to whichthe Free Share Options relate, is recorded as a noncontrolling interest (see further details related to noncontrolling interest below). 99In September 2018, the Company also provided TxCell with a $5.2 million loan (the “TxCell Loan”) that was deemed to be part of the purchaseconsideration for accounting purposes. The TxCell Loan, together with the cash paid to acquire the TxCell Ordinary Shares, $40.5 million, and the estimatedfair value of the Free Shares Options, $0.2 million, comprise the aggregate purchase consideration of $45.9 million, as of the Acquisition Date. Management estimated the fair value of tangible and intangible assets and liabilities in accordance with the applicable accounting guidance forbusiness combinations and utilized the services of third-party valuation consultants. Balances subject to adjustment primarily include the valuations ofacquired assets (tangible and intangible), liabilities assumed, as well as tax-related matters. During the measurement period, the Company may recordadjustments to the provisional amounts recognized. The Company expects the allocation of the consideration transferred to be final within the measurementperiod (up to one year from the Acquisition Date).The TxCell Acquisition was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations. The operatingresults of TxCell after the Acquisition Date have been included in the Company’s Consolidated Statements of Operations. For the three months endedDecember 31, 2018, TxCell did not contribute any revenue. For the three months ended December 31, 2018, operating expenses related to TxCell wereapproximately $3.7 million. Fair Value Estimate of Assets Acquired and Liabilities AssumedUnder ASC Topic 805, an acquirer recognizes and consolidates assets acquired, liabilities assumed, and any non-controlling interest at 100% of theirfair values as of the acquisition date (regardless of the acquirer’s percentage ownership in the acquiree). As goodwill is calculated as a residual, all goodwillof the acquired business, not just the acquirer’s share, is recognized under this “full-goodwill” approach. Recognized goodwill is allocated between thecontrolling and non-controlling interests. Although this allocation is not presented separately on the acquirer’s balance sheet, it is necessary so that agoodwill impairment charge recognized in a period following the business combination by an acquirer is appropriately allocated between controlling andnon-controlling interests. There were no goodwill impairments during 2018 and, as noted below, substantially all of the non-controlling interest on theAcquisition Date was subsequently acquired by the Company and, accordingly, substantially all of the goodwill is allocated to the Company as of December31, 2018.The following table summarizes the estimated fair value of the net assets acquired as of the Acquisition Date (in thousands): October 1, 2018 Consideration transferred $45,911 Fair value of non-controlling interest 35,829 Fair value of TxCell $81,740 Cash 4,779 Current assets 2,427 Property and equipment 1,857 IPR&D 55,019 Other assets 155 Current liabilities (9,761)Assumed debt liabilities (4,933)Deferred tax liability, net (6,798)Fair value of net identifiable assets acquired 42,745 Goodwill 38,995 Total fair value of net assets acquired $81,740 Consideration TransferredConsideration transferred as of October 1, 2018 consists of the 13,519,036 TxCell Ordinary Shares acquired by the Company on the Acquisition Dateof approximately $2.99 per share, the $5.2 million TxCell Loan and approximately $0.2 million for the fair value of the free shares. Noncontrolling InterestThe fair value of the non-controlling interest at the Acquisition Date was based on the $2.99 acquisition price per share for the 11,981,867 OrdinaryShares that were not purchased by the Company on the Acquisition Date.100On November 1, 2018, pursuant to the TOA, the Company commenced a cash tender offer (the “Offer”) to acquire all of the TxCell Ordinary Sharesnot held by the Company for the same per share price paid in the Block Transaction. Following the completion of the Offer on November 23, 2018, theCompany initiated compulsory squeeze-out procedures applicable to French public companies to acquire the remaining TxCell Ordinary Shares, other thanthe free shares that were subject to the Free Share Options. Subsequent to the Acquisition Date and through December 31, 2018, the Company acquired11,528,635 TxCell Ordinary Shares which, when aggregated with the 13,519,036 Ordinary Shares acquired at the Acquisition Date, resulted in the Companyowning 98.2% of all TxCell Ordinary Shares as of December 31, 2018. The 11,528,635 shares acquired subsequent to the Acquisition Date were acquired fortotal consideration of approximately $33.9 million, or $2.94 per share. As of December 31, 2018 the aggregate purchase consideration was approximately$80.4 million through the completion of this purchase, with approximately 453,000 Ordinary Shares (vested free shares), which remain outstanding and aresubject to purchase by the Company as noted above, with an estimated fair value of approximately $1.3 million. Non-controlling interest as of December 31, 2018 was as follows (in thousands): Total Non-controlling interest at January 1, 2018 $— Non-controlling interest at acquisition 35,829 Shares acquired post acquisition (34,516) Non-controlling interest of acquired entity 1,313 Foreign currency effect (19)Loss attributable to non-controlling interest (555)Non-controlling interest at December 31, 2018 $739 Intangible AssetsIdentified intangible assets of $55.0 million primarily relates to IPR&D. The fair value of this asset was determined utilizing a weighted market, cost,and income valuation approach. IPR&D is an intangible asset classified as indefinite-lived until the completion or abandonment of the associated researchand development effort, and will be amortized over an estimated useful life to be determined at the date the project is completed. The IPR&D is tested forimpairment annually and if the Company concludes the technology is no longer realizable, the asset will be immediately expensed. There was no impairmentfor the year ended December 31, 2018. GoodwillGoodwill of $39.0 million represents the excess of the fair value of the consideration transferred plus the fair value of the noncontrolling interest inTxCell over the fair value of the assets acquired and liabilities assumed. Goodwill represents the anticipated benefits of using TxCell’s expertise within theemerging fields of Treg and CAR-Treg (which are Tregs genetically modified with a chimeric antigen receptor).The Company tests goodwill for impairment on an annual basis or sooner, if deemed necessary. As of December 31, 2018, there were no changes in thegoodwill recorded from the TxCell Acquisition. This goodwill is not deductible for income tax purposes. There was no impairment or the year endedDecember 31, 2018. Pro Forma InformationThe following unaudited supplemental pro forma information presents the Company’s financial results as if the TxCell Acquisition had occurred onJanuary 1, 2017. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what wouldhave occurred had the TxCell Acquisition been made on January 1, 2017, nor are they indicative of any future results. Year Ended December 31, 2018 2017 (in thousands, except per share amounts) Revenue $86,182 $39,091 Loss from operations (86,253) (68,221)Net loss (79,735) (66,350)Net loss per share, basic (0.82) (0.85) To complete the purchase transaction, the Company incurred approximately $2.1 million of acquisition costs, which were recognized as general andadministrative expense for the year ended December 31, 2018.101 NOTE 7 – PROPERTY AND EQUIPMENT, NETProperty and equipment, net consist of the following (in thousands): December 31 , 2018 2017 Laboratory equipment $11,466 $7,572 Furniture and fixtures 3,840 1,494 Leasehold improvements 3,640 3,425 Buildings 3,876 3,876 Total 22,822 16,367 Less: accumulated depreciation and amortization (9,310) (6,951)Construction in progress 65,211 21,650 $78,723 $31,066 Depreciation and amortization expense was $2.4 million in 2018, $1.5 million in 2017 and $1.0 million in 2016. In 2018 the Company capitalized$2.0 million in interest related to the fair value of the Brisbane building and $41.8 million of construction costs in construction in progress under the build-to-suit lease guidance (see Note 14). In 2017 the Company capitalized $20.9 million related to the fair value of the Brisbane building and $0.3 million ofconstruction costs in construction in progress under the build-to-suit lease guidance. Build-to-suit properties are classified within property and equipment,net, along with a corresponding build-to-suit lease obligation for the same amount. The Brisbane and Point Pinole buildings will depreciate over the periodof their lease, respectively. NOTE 8 – COMMITMENTS AND CONTINGENCIESSangamo occupies office and laboratory space under operating leases in Richmond, CA. In May 2018, Sangamo amended its lease agreement for itscorporate headquarters wherein the lease was extended through August 2026. The Company has three additional properties located in Richmond, CA. Thisincludes two leases, one to occupy approximately 7,700 square feet of research and office space that expires in August 2019, and another to occupyapproximately 6,200 square feet of office space that expires in July 2021. Sangamo also has two build-to-suit leases to occupy approximately 41,400 squarefeet of space in Richmond, CA that expires in December 2021 and approximately 87,700 square feet of space in Brisbane, CA that expires in May 2029. Inaddition, the Company leases a property in Valbonne, France with approximately 14,036 square feet of research and office space that expires in June 2022.Rent expense related to these lease agreements was $2.3 million, $1.1 million, and $1.0 million for 2018, 2017 and 2016, respectively. Future minimumpayments under lease obligations at December 31, 2018 consist of the following (in thousands): Fiscal Year: 2019 $3,671 2020 5,950 2021 6,042 2022 5,608 2023 5,649 Thereafter 29,498 Total minimum payments $56,418 The Company also has $1.3 million of license obligations related to its intellectual property.ContingenciesSangamo is not party to any material pending legal proceeding. From time to time, Sangamo may be involved in legal proceedings arising in theordinary course of business. NOTE 9 – STOCKHOLDERS’ EQUITYPreferred StockThe Company has 5,000,000 preferred shares authorized, which may be issued at the discretion of the Company’s Board of Director’s discretion.102Common StockIn April 2018, Sangamo completed an underwritten public offering of its common stock, in which the Company sold an aggregate of 14.2 millionshares of its common stock at a public offering price of $16.25 per share. The net proceeds to Sangamo from the sale of shares in this offering, after deductingunderwriting discounts and commissions and other offering expenses, were approximately $215.8 million.In June 2017, Sangamo completed an underwritten public offering of its common stock, in which the Company sold an aggregate of 11.5 millionshares of its common stock at a public offering price of $7.25 per share. The net proceeds to Sangamo from the sale of shares in this offering, after deductingunderwriting discounts and commissions and other offering expenses, were approximately $78.1 million.At-the-Market Offering AgreementsOn December 7, 2016, the Company entered into an “at the market” offering agreement with Cowen and Company, LLC (“Cowen”), pursuant to whichthe Company may issue and sell from time to time up to $75.0 million of the Company’s common stock through the bank as the sales agent (“ATMAgreement”).In May 2017, the Company entered into an amended and restated sales agreement with Cowen and Company, LLC (“Cowen”) pursuant to which theCompany may offer and sell, in its sole discretion, shares of common stock having an aggregate offering price of up to $75.0 million through Cowen actingas the sales agent (the “ATM Facility”). Sales of the Company’s common stock, if any, will be made at market prices by any method that is deemed to be an“at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended. The Company has not sold any common stock under the ATMFacility. As of December 31, 2018, the full $75.0 million provided for under the ATM Facility remained available for sale, subject to certain conditions asspecified in the agreementStock Incentive PlanIn April 2013, the Company’s Board of Directors adopted, subject to stockholder approval, the Company’s 2013 Stock Incentive Plan (“the 2013Plan”) as the successor to the Company’s 2004 Stock Incentive Plan (the “2004 Plan”). At the Annual Meeting of Stockholders held on June 12, 2013, the2013 Plan was approved by the Company’s stockholders and became effective. In connection with the approval by stockholders of the 2013 Plan,outstanding awards under the 2004 Plan were transferred to the 2013 Plan. The 2004 Plan was terminated and no further awards will be made pursuant to the2004 Plan.Under the 2013 Plan, the exercise price per share of options granted will generally not be less than 100% of the fair value per share of common stockon the grant date, and the option term will not exceed ten years. If the person to whom the option is granted is a 10 percent stockholder, and the optiongranted qualifies as an Incentive Stock Option Grant, then the exercise price per share will not be less than 110 percent of the fair value per share of commonstock on the grant date, and the option term will not exceed five years. Options granted under the 2013 Plan generally vest over four years at a rate of 25%one year from the grant date and one thirty-sixth per month thereafter and expire ten years after the grant, or earlier upon employment termination. Certainoptions previously granted under the 2004 Plan to the Company’s non-employee directors are structured so that they may be exercised prior to vesting, withthe related shares subject to Sangamo’s right to repurchase any shares that have not vested pursuant to the vesting schedule in effect for such award at theexercise price paid if the option holder’s board service terminates. Approximately 14.1 million shares were initially reserved for issuance under the 2013Plan, including 9.7 million shares of common stock subject to outstanding awards previously granted under the 2004 Plan that were transferred to the 2013Plan, and an additional 4.4 million shares of common stock.The number of shares of common stock reserved for issuance under the 2013 Plan will be reduced: (i) on a 1-for-1 basis for each share of common stocksubject to a stock option or stock appreciation right granted under the plan, (ii) on a 1-for-1 basis for each share of common stock issued pursuant to a fullvalue award granted under the plan prior to the plan effective date, and (iii) by a fixed ratio of 1.33 shares of common stock for each share of common stockissued pursuant to a full-value award granted under the plan on or after the plan effective date.Shares subject to any outstanding options or other awards under the 2013 Plan that expire or otherwise terminate prior to the issuance of the sharessubject to those options or awards will be available for subsequent issuance under the 2013 Plan. Any unvested shares issued under the 2013 Plan that theCompany subsequently purchases, pursuant to repurchase rights under the 2013 Plan, will be added back to the number of shares reserved for issuance underthe 2013 Plan on a 1-for-1 basis or a 1.33-for-1 basis (depending on the ratio at which the share reserve was debited for the original award) and willaccordingly be available for subsequent issuance in accordance with the terms of the plan.103In June 2015, the Company’s stockholders were asked to vote to approve the amendment and restatement of the Company’s 2013 Plan in order toincrease the number of shares in our common stock reserved for issuance over the term of the 2013 Plan by 5,300,000 shares. At the Annual Meeting ofStockholders held on June 22, 2015, the amendment and restatement of the Company’s 2013 Stock Incentive Plan was approved by the Company’sstockholders and became effective. On November 10, 2017, the Compensation committee of the Company’s Board of Directors approved the amendment and restatement of the 2013Plan, to reserve an additional one million shares of the Company’s common stock to be used exclusively for grants of awards to individuals who were notpreviously employees or non-employee directors of the Company (or following a bona fide period of non-employment with the Company), as an inducementmaterial to each such individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the NASDAQ Listing Rules, or Rule5635(c)(4). The 2013 Plan was amended and restated by the Compensation Committee without stockholder approval pursuant to Rule 5635(c)(4).In April 2018, the Compensation Committee of the Company’s Board of Directors approved the Sangamo Therapeutics, Inc. 2018 Equity IncentivePlan (the “2018 Plan”), subject to approval by the Company’s stockholders. The 2018 Plan is the 2013 Plan. The 2018 Plan became effective onJune 11, 2018 upon approval at the Company’s Annual Meeting of Stockholders. In connection with the approval of the 2018 Plan, no additional equityawards will be granted under the 2013 Plan, however all outstanding equity awards under the 2013 Plan will continue to be subject to the terms andconditions as set forth in the agreements evidencing such awards and the terms of the 2013 Plan.The exercise price of a stock option granted under the 2018 Plan may not be less than 100% of the fair market value of our common stock subject tothe stock option on the date of grant, and the option term will not exceed ten years. If the person to whom the stock option is granted is a 10 percentstockholder of the Company, and the stock option granted qualifies as an Incentive Stock Option Grant, then the exercise price per share will not be less than110% of the fair market value of the Company’s common stock on the date of grant, and the option term will not exceed five years. Generally, stock optionsgranted under the 2018 Plan vest over four years at a rate of twenty-five percent (25%) on the one-year anniversary of the date of grant and one forty-eighth(1/48) per month thereafter and expire ten years after the date of grant, or earlier upon termination of employment or services to the Company.The number of shares of common stock reserved for issuance under the 2018 Plan will be reduced: (i) on a 1-for-1 basis for each share of common stocksubject to a stock option or stock appreciation right granted under the plan, (ii) by a fixed ratio of 1.33 shares of common stock for each share of commonstock issued pursuant to a full-value award granted under the plan. Shares subject to any outstanding stock options or other awards under the 2018 Plan that expire or otherwise terminate prior to the issuance of theshares subject to those stock options or awards will be available for subsequent issuance under the 2018 Plan. Any unvested shares issued under the 2018Plan that the Company subsequently purchases, pursuant to repurchase rights under the 2018 Plan, will be added back to the number of shares reserved forissuance under the 2018 Plan on a 1-for-1 basis or a 1.33-for-1 basis (depending on the ratio at which the share reserve was debited for the original award) andwill accordingly be available for subsequent issuance in accordance with the terms of the 2018 Plan.Employee Stock Purchase PlanIn June 2018, the Company’s stockholders approved the amendment and restatement of the ESPP. As amended, the ESPP provides a total reserve of4,600,000 shares of common stock for issuance under the ESPP. Eligible employees may purchase common stock at 85 percent of the lesser of the fair marketvalue of the Company’s common stock on the first day of the applicable two-year offering period or the last day of the applicable six-month purchase period.104Stock Option ActivityA summary of Sangamo’s stock option activity is as follows: Weighted- Average Weighted-Average Aggregate Number of Exercise per Remaining Intrinsic Shares Share Price Contractual Term Value (In years) (In thousands) Options outstanding at December 31, 2017 8,287,456 $7.77 Options granted 3,115,078 $17.78 Options exercised (2,028,328) $7.12 Options canceled (648,114) $11.15 Options outstanding at December 31, 2018 8,726,092 $11.23 7.35 $24,468 Options vested and expected to vest at December 31, 2018 8,726,092 $11.23 7.35 $24,468 Options exercisable at December 31, 2018 3,699,150 $8.91 5.39 $12,702 Newly created shares are issued upon exercises of options. There were no shares subject to Sangamo’s right of repurchase as of December 31, 2018.The intrinsic value of options exercised was $27.0 million, $12.3 million and $0.1 million during 2018, 2017 and 2016, respectively.At December 31, 2018, the aggregate intrinsic values of outstanding and exercisable options were $24.5 million and $12.7 million, respectively. Theaggregate intrinsic value of options vested and expected to vest as of December 31, 2018, 2017 and 2016 was $24.5 million, $71.7 million and $0.0 million,respectively. The following table summarizes information with respect to stock options outstanding at December 31, 2018: Options Outstanding and Exercisable Options Exercisable Number of Number of Shares of Shares of Common Stock Weighted-Average Common Stock subject to Remaining subject to Weighted-Average Range of Exercise Price options Contractual Life options Exercise Price (In years) $2.55 - $3.20 352,920 7.56 91,772 $3 $3.50 - $3.50 1,171,546 8.00 520,209 $4 $3.55 - $5.70 894,224 5.06 589,511 $5 $5.72 - $7.20 915,176 7.42 610,840 $7 $7.70 - $9.99 897,995 6.18 566,601 $9 $10.16 - $12.72 936,327 6.91 403,714 $12 $12.80 - $15.00 1,213,226 6.37 694,173 $14 $15.11 -$19.80 758,250 8.74 216,830 $16 $20.05 - $20.05 1,003,728 9.06 — $- $20.85 - $24.95 582,700 9.08 5,500 $21 8,726,092 7.35 3,699,150 $9 Restricted Stock UnitsDuring 2018, 2017 and 2016, the Company awarded 346,055, 12,600, and 60,000 RSUs, respectively. The RSUs awarded in 2018, 2017 and 2016 hadan average grant date fair value per award of $17.87, $15.85 and $5.16, respectively. These awards generally vest as follows: one-third of the award will vestin a series of three successive equal annual installments. The aggregate fair value of RSUs vested during 2018, 2017 and 2016 was $0.6 million, $1.2 millionand $4.8 million, respectively.105A summary of Sangamo’s RSU activity is as follows: Number Weighted-Average of Remaining Aggregate Intrinsic Shares Contractual Term Value (In years) (In thousands) RSUs outstanding at December 31, 2017 80,172 RSUs awarded 346,055 RSUs released (55,592) RSUs forfeited (47,934) RSUs outstanding at December 31, 2018 322,701 1.25 3,705 RSUs vested and expected to vest at December 31, 2018 322,701 1.25 $3,705 RSUs that vested in 2018, 2017 and 2016 were net-share settled such that the Company withheld shares with value equivalent to the employees’minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The totalshares withheld were approximately 20,193, 42,243, and 165,181 for 2018, 2017 and 2016, respectively, and were based on the value of the RSUs on theirrespective issuance dates as determined by the Company’s closing stock price. Total payments for the employees’ tax obligations to taxing authorities were$0.3 million, $0.7 million and $0.8 million in 2018, 2017 and 2016, respectively and are reflected as a financing activity within the accompanyingconsolidated statements of cash flows. These net-share settlements had the effect of share repurchases by the Company as they reduced and retired the numberof shares that would have otherwise been issued as a result of the vesting and did not represent an expense to the Company.As of December 31, 2018, there were 9,491,418 shares reserved for future awards under the Company’s 2013 Plan and 3,006,964 shares of commonstock reserved for future issuance under the Purchase Plan. NOTE 10 – INCOME TAXESThe domestic and foreign components of loss before income taxes were as follows (in thousands): December 31, 2018 2017 2016 Domestic $(65,695) $(54,568) $(71,672)Foreign (3,194) — — Loss before income taxes $(68,889) $(54,568) $(71,672) The benefit for income taxes consisted of the following (in thousands): Year Ended December 31, 2018 2017 2016 Benefit for income taxes: Current: Federal $— $— $— State — — — Foreign — — — Subtotal — — — Deferred: Federal — — (12)State — — (2)Foreign — — — Subtotal — — (14)Income tax benefit $— $— $(14)106 The difference between the benefit for income taxes and the amount computed by applying the federal statutory income tax rate (21%) to loss beforetaxes is explained as follows (in thousands): Year Ended December 31, 2018 2017 2016 Tax at federal statutory rate $(14,467) $(18,553) $(24,369)State taxes, net (2,849) 795 (747)Federal rate change — 53,045 — Foreign rate differential (177) — — Non-deductible stock-based compensation (2,729) 2,120 2,781 Research credits (1,005) (869) (1,424)Change in valuation allowance 20,271 (36,575) 23,773 Other 956 37 (28)Income tax benefit $— $— $(14) Note:(1)For the years ended December 31, 2016 and 2017 the statutory tax rate was 34%. For the year ended December 31, 2018, as a result of Tax Reform, the statutory tax rate wasdecreased to 21%. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reportingpurposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows (in thousands): December 31 , 2018 2017 Assets: Deferred tax assets: Net operating loss carryforwards $138,896 $91,308 Research and development tax credit carryforwards 16,829 15,147 Stock-based compensation 3,801 3,168 Deferred revenue 3,191 934 Build to suit lease liability 6,400 5,232 Other 604 366 Total deferred tax asset 169,721 116,155 Valuation allowance 158,150 112,833 Net deferred tax assets $11,571 $3,322 Liabilities: Intangible assets (14,100) — Fixed Assets (4,176) (3,322)Net deferred tax liability (18,276) (3,322)Total deferred tax liability $(6,705) $— In October 2018, the Company acquired TxCell incorporated in France. The Company recorded goodwill and intangible assets as part of accountingfor the acquisition of TxCell. There is no corresponding tax basis for the goodwill or intangible assets. A portion of the intangible assets acquired were for theuse in a particular research and development project IPR&D and are considered indefinite-lived assets with no tax basis. The changes in the fair value of the unrealized gain/loss on securities investment are recorded as a component of accumulated other comprehensiveincome, net of a provision for income taxes. A valuation allowance is recorded when it is more likely than not that all or some portion of the deferred income tax assets will not be realized. TheCompany regularly assesses the need for a valuation allowance against its deferred income tax assets by considering both positive and negative evidencerelated to whether it is more likely than not that the Company’s deferred income tax assets will be realized. In evaluating the Company’s ability to recover itsdeferred income tax assets within the jurisdiction from which they arise, the Company considers all available positive and negative evidence, includingscheduled reversals of deferred income tax107liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. Accordingly, based upon the Company’s analysis ofthese factors the net deferred tax assets have been substantially offset by a valuation allowance. The valuation allowance increase (decreased) by $45.3million, $(28.9) million and $23.8 million for the years ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, Sangamo had netoperating loss carryforwards for federal and state income tax purposes of approximately $535.0 million and $161.0 million, respectively. If not utilized, thenet federal and state operating loss carryforwards will expire in 2018 and 2017, respectively. The Company’s French NOL is $130.0 million which carriesover indefinitely. The Company also has federal and state research tax credit carryforwards of $12.2 million and $13.0 million, respectively. The federalresearch credits began to expire in 2018 while the state research credits have no expiration date. Utilization of the Company’s net operating losscarryforwards and research tax credit carryforwards may be subject to substantial annual limitations due to the ownership change limitations provided by theInternal Revenue Code and similar state provisions. The annual limitation could result in the expiration of the net operating loss carryforwards and researchtax credit carryforwards before utilization.On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act ("Tax Reform") into legislation. The Tax Reform makes significantchanges to the U.S. corporate income tax law including, but not limited to, (1) reducing the U.S. federal corporate tax rate to 21% from 35% and (2) requiringa one-time mandatory transition tax on previously deferred foreign earnings of U.S. subsidiaries. Under ASC Topic 740, the effects of changes in tax ratesand laws are recognized in the period in which the new legislation is enacted. In the case of U.S. federal income taxes, the enactment date is the date the billbecomes law. In the current year the Company has accounted for additional provisions that impact the Company including but not limited to “globalintangible low-taxed income (“GILTI”). The Company has completed an analysis for FDII and GILTI and due to the results of the Company, there is currentlyno impact for these provisions. In addition, the Company’s GILTI policy election is to treat GILTI as a period cost if and when incurred and does not plan oncalculating the deferred impact on GILTI.On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) which provides guidance on accounting for the taxeffects of the Tax Reform. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Reform enactment date forcompanies to complete the accounting under ASC Topic 740 for the year ended December 31, 2017. In accordance with SAB 118, a company must reflect theincome tax effects of those aspects of the Tax Reform for which the accounting under ASC Topic 740 is complete. The Company has finished their analysisas of the measurement period closing of December 22, 2018 after application of law changes were reviewed by the Company. There were no subsequentadjustments as the conclusions have remained the same.The Company intends to reinvest the earnings of its non-U.S. subsidiaries in those operations. The Company does not provide for U.S. income taxeson the earnings of foreign subsidiaries because the Company intends to reinvest such earnings offshore indefinitely. However, if these funds were repatriated,the Company would be required to accrue and pay applicable United States taxes (if any) and withholding taxes payable. It is not practicable to estimate theamount of the deferred tax liability associated with the repatriation of cash due to the complexity of its hypothetical calculation.The Company files federal and state income tax returns with varying statutes of limitations. The tax years from 2002 forward remain open toexamination due to the carryover of net operating losses or tax credits. The Company also files UK and French income tax returns, and the tax years from2008 and thereafter remain open in the UK and 2015 and thereafter in France are still subject to examination.The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2018, theCompany had no accrued interest and/or penalties. The unrecognized tax benefits may change during the next year for items that arise in the ordinary courseof business. In the event that any unrecognized tax benefits are recognized, the effective tax rate will not be affected.The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands): December 31, 2018 2017 2016 Beginning balance $5,659 $5,045 $8,330 Additions based on tax positions related to the current year 636 622 1,023 Additions for tax positions of prior years (7) (8) 27 Reductions for tax positions of prior years — — (4,335)Ending balance $6,288 $5,659 $5,045108 NOTE 11 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIESAccounts payable and accrued liabilities consist of the following (in thousands): December 31 , 2018 2017 Accounts payable $3,355 $16 Accrued research and development expenses 10,999 7,898 Accrued professional fees 1,930 1,318 Deferred rent 204 417 Other 4,969 1,386 Total accounts payable and accrued liabilities $21,457 $11,035 NOTE 12 – EMPLOYEE BENEFIT PLANThe Company sponsors a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code covering all full-time employees(“Sangamo 401(k) Plan”). The Sangamo 401(k) Plan is intended to qualify under Section 401 of the Internal Revenue Code.The Company matched employee contributions equal to 50% for the first 8% in 2018 and 2017 and 6% in 2016, up to a limit of $4,000 in 2018 and2017, and $3,000 in 2016. Matching funds are fully vested when contributed. Contributions to the Sangamo 401(k) Plan by the Company were $0.8 million,$0.5 million, and $0.3 million for the years ended December 31, 2018, 2017 and 2016, respectively. NOTE 13 – QUARTERLY FINANCIAL DATA (UNAUDITED)The following table sets forth certain unaudited quarterly financial data for the eight quarters ended December 31, 2018. The unaudited informationset forth below has been prepared on the same basis as the audited information contained herein and includes all adjustments necessary to present fairly theinformation set forth. The operating results for any quarter are not indicative of results for any future period. All data is in thousands except per share data. 2018 2017 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenues $12,637 $21,416 $23,562 $26,837 $3,425 $8,253 $11,812 $13,077 Expenses 33,634 40,556 39,803 47,609 20,217 21,021 24,847 26,843 Net loss (20,187) (16,640) (12,843) (19,219) (16,632) (12,491) (12,354) (13,091)Net loss attributable to non-controlling interest — — — (555) — — — — Net loss attributable to Sangamo Therapeutics, Inc. (20,187) (16,640) (12,843) (18,664) (16,632) (12,491) (12,354) (13,091)Basic and Diluted Net loss per share attributable toSangamo Therapeutics, Inc. (0.23) (0.17) (0.13) (0.18) (0.23) (0.17) (0.15) (0.15) NOTE 14 – BUILD-TO-SUIT LEASESBrisbane Build-to-Suit LeaseIn November 2017, the Company entered into a long-term property lease which includes construction by the lessor of a building with approximately87,700 square feet of space, in Brisbane, California. Substantial completion of the building is estimated to occur in the first half of 2019. The lease agreementexpires in May 2029, approximately ten years after substantial completion of the building. A letter of credit for $3.5 million was established as the depositand is classified within other non-current assets in the consolidated financial statements. The Company has two options to extend the lease term for up to acombined additional ten years.The Company is deemed, for accounting purposes only, to be the owner of the entire project including the building shell, even though it is not thelegal owner as a result of the cold shell condition of the building and involvement in the construction process. In connection with the Company’s accountingfor this transaction, the Company capitalized the costs of construction as a build-to-suit property within property and equipment, net, and recognize acorresponding build-to-suit lease obligation, including interest. Fair109value of the building was estimated at $20.9 million using comparable market prices per square foot for similar space for public real estate transactions in thesurrounding area and is considered a Level 2 fair value measurement. As of December 31, 2018, $2.0 million was capitalized related to interest with acorresponding build-to-suit lease obligation recognized related to this lease for the building and $41.8 million was capitalized related to the construction.Point Pinole Build-to-Suit LeaseIn December 2015, the Company entered into a long-term property lease which includes construction by the lessor of a building with approximately41,400 square feet of space, in Richmond, California. Substantial completion of the building was accomplished in December 2016 at which time the leasecommenced.Construction was completed on the facility and a portion of the monthly lease payment gets allocated to land rent and recorded as an operating leaseexpense and the non-interest portion of the amortized lease payments to the landlord related to the rent of the building is applied to reduce the build-to-suitlease obligation.The Company is deemed, for accounting purposes only, to be the owner of the entire project including the building shell, even though it is not thelegal owner. In connection with the Company’s accounting for this transaction, the Company capitalized the costs of construction as a build-to-suit propertywithin property and equipment, net, and recognized a corresponding build-to-suit lease obligation for the same amount. As of December 31, 2016, $3.9million of costs were capitalized in buildings with a corresponding build-to-suit lease obligation recognized related to this lease.In February 2019, the Company terminated the long term property lease, and will account for the termination in accordance with the new leasestandard in the first quarter of 2019. ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone. ITEM 9A – CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in ourExchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rulesand forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financialofficer, as appropriate, to allow timely decisions regarding required disclosure.Under the supervision of our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls andprocedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2018. Based on that evaluation, as of December 31, 2018,our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonableassurance level.Inherent Limitations on Controls and ProceduresOur management, including the principal executive officer and principal financial officer, does not expect that our disclosure controls and proceduresand our internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well designed and operated, can onlyprovide reasonable assurances that the objectives of the control system are met. The design of a control system reflects resource constraints; the benefits ofcontrols must be considered relative to their costs. Because there are inherent limitations in all control systems, no evaluation of controls can provideabsolute assurance that all control issues and instances of fraud, if any, for our company have been or will be detected. As these inherent limitations areknown features of the disclosure and financial reporting processes, it is possible to design into the processes safeguards to reduce, though not eliminate, theserisks. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns occur because of simple error ormistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of thecontrol. The design of any system of controls is based in part upon certain110assumptions about the likelihood of future events. While our disclosure controls and procedures and our internal control over financial reporting aredesigned to provide reasonable assurance of achieving their objectives, there can be no assurance that any design will succeed in achieving its stated goalsunder all future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance withthe policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not bedetected.Management’s Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining an adequate internal control over financial reporting (as such term is defined inRules 13a-15(f) and 15d-15(f) of the Exchange Act) for our company. Our management, including our principal executive officer and principal financialofficer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forth in the “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on an evaluationunder that framework, our management concluded that our internal control over financial reporting was effective at the reasonable assurance level as ofDecember 31, 2018.The effectiveness of our internal control over financial reporting as of December 31, 2018 has been audited by Ernst & Young LLP, an independentregistered public accounting firm, as stated in their report, which is included herein.In accordance with guidance issued by the Securities and Exchange Commission, companies are permitted to exclude acquisitions from their finalassessment of internal control over financial reporting for the first fiscal year in which the acquisition occurred. Our management’s evaluation of internalcontrol over financial reporting excluded the internal control activities of TxCell S.A., or TxCell, which we acquired on October 1, 2018, as discussed in Note6 to our Consolidated Financial Statements, “Acquisition of TxCell, S.A.”. We have included the financial results of TxCell in the consolidated financialstatements from the date of acquisition. Total operating expenses and net loss subject to TxCell’s internal control over financial reporting represented 2%and 5% of our consolidated results for the fiscal year ended December 31, 2018. Total assets subject to TxCell’s internal control over financial reportingconstituted 3% of our consolidated total assets as of December 31, 2018.Changes in Internal Control over Financial ReportingThere have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d)and 15d-15(d) of the Exchange Act that occurred during the three months ended December 31, 2018 that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting. 111Report of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders of Sangamo Therapeutics, Inc. Opinion on Internal Control over Financial ReportingWe have audited Sangamo Therapeutics, Inc.’s internal control over financial reporting as of December 31, 2018, based on criteria established in InternalControl – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).In our opinion, Sangamo Therapeutics, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as ofDecember 31, 2018, based on the COSO criteria. As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on theeffectiveness of internal control over financial reporting did not include the internal controls of TxCell S.A., which is included in the 2018 consolidatedfinancial statements of the Company and constituted 3% of total assets as of December 31, 2018 and 2% and 5% of operating expenses and net loss,respectively, for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internalcontrol over financial reporting of TxCell S.A. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2018 consolidatedfinancial statements of the Company and our report dated March 1, 2019 expressed an unqualified opinion thereon. Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing andevaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. /s/ ERNST & YOUNG LLP Redwood City, CaliforniaMarch 1, 2019 112ITEM 9B – OTHER INFORMATIONNonePART IIICertain information required by Part III is omitted from this Report on Form 10-K because we intend to file our definitive Proxy Statement for our nextAnnual Meeting of Stockholders, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, or the 2019 Proxy Statement, no laterthan April 30, 2019, and certain information to be included in the 2019 Proxy Statement is incorporated herein by reference. ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information required by this item is to be included in our 2019 Proxy Statement as follows: •The information relating to our directors and nominees for director is to be included in the section entitled “Proposal No. 1: Election ofDirectors;” •The information relating to our executive officers is to be included in the section entitled “Executive Officers;” •The information relating to our audit committee, audit committee financial expert and procedures by which stockholders may recommendnominees to our Board of Directors is to be included in the section entitled “Corporate Governance and Board Matters;” and •The information regarding compliance with Section 16(a) of the Exchange Act is to be included in the section entitled “Section 16(a)Beneficial Ownership Reporting Compliance.”Such information is incorporated herein by reference to our 2019 Proxy Statement, provided that if the 2019 Proxy Statement is not filed within 120days after the end of the fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to this AnnualReport on Form 10-K filed not later than the end of such 120-day period. ITEM 11 – EXECUTIVE COMPENSATIONThe information required by this item is to be included in our 2019 Proxy Statement under the sections entitled “Executive Compensation,” “DirectorCompensation,” “Corporate Governance and Board Matters—Compensation Committee Interlocks and Insider Participation” and “Corporate Governanceand Board Matters—Compensation Committee Report” and is incorporated herein by reference, provided that if the 2019 Proxy Statement is not filed within120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to thisAnnual Report on Form 10-K filed not later than the end of such 120-day period. ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSThe information required by this item with respect to equity compensation plans is to be included in our 2019 Proxy Statement under the sectionentitled “Equity Compensation Plan Information” and the information required by this item with respect to security ownership of certain beneficial ownersand management is to be included in our 2019 Proxy Statement under the section entitled “Security Ownership of Certain Beneficial Owners andManagement” and in each case is incorporated herein by reference, provided that if the 2019 Proxy Statement is not filed within 120 days after the end of thefiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to this Annual Report on Form 10-K filednot later than the end of such 120-day period. ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information required by this item is to be included in our 2019 Proxy Statement under the sections entitled “Certain Relationships and RelatedTransactions” and “Corporate Governance and Board Matters—Board Independence” and is incorporated herein by reference, provided that if the 2019Proxy Statement is not filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, the omitted information will beincluded in an amendment to this Annual Report on Form 10-K filed not later than the end of such 120-day period. ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICESThe information required by this item is to be included in our 2019 Proxy Statement under the section entitled “Proposal No. 2: Ratification ofIndependent Registered Public Accounting Firm” and is incorporated herein by reference, provided that if the 2019 Proxy Statement is not filed within 120days after the end of the fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to this AnnualReport on Form 10-K filed not later than the end of such 120-day period.113 PART IV ITEM 15 – EXHIBITS, FINANCIAL STATEMENT SCHEDULES(a) The following documents are included as part of this Annual Report on Form 10-K:1. Financial Statements—See Index to Consolidated Financial Statements in Item 8.2. Financial Statement Schedules—Not Applicable.3. Exhibits ExhibitNumberDescription of Document2.1Share Purchase Agreement dated July 20, 2018 among the Company and the Selling TxCell Shareholders named on the signature pagethereto (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed July 23, 2018).2.2Amendment Agreement to the Share Purchase Agreement dated October 1, 2018 between the Company and TxCell S.A. (incorporated byreference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed November 6, 2018).2.3Tender Offer Agreement dated July 20, 2018 between the Company and TxCell S.A. (incorporated by reference to Exhibit 2.2 to theCompany’s Current Report on Form 8-K filed July 23, 2018).2.4Amendment No. 1 to the Tender Offer Agreement dated October 1, 2018 between the Company and TxCell S.A. (incorporated byreference to Exhibit 2.4 to the Company’s Current Report on Form 8-K filed November 6, 2018).3.1Seventh Amended and Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Company’sQuarterly Report on Form 10-Q filed August 9, 2017).3.2Third Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed June15, 2018).4.1Form of Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-Kfiled January 6, 2017).10.1(+)Amended and Restated 2013 Stock Incentive Plan (the “2013 Plan”) (incorporated by reference to Exhibit 10.2 to the Company’sQuarterly Report on Form 10-Q filed May 10, 2018).10.2(+)2018 Equity Incentive Plan (the “2018 Plan”) (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement onForm S-8 (File No. 333-225552) filed June 11, 2018).10.3(+)2018 Equity Incentive Plan French Stock-Options Sub-Plan (the “French Options Sub-Plan”).10.4(+)2018 Equity Incentive Plan French Restricted Stock Unit Award Sub-Plan (the “French RSU Sub-Plan”).10.5(+)Form of Restricted Stock Unit Award Agreement under the 2013 Plan (incorporated by reference to Exhibit 10.2 to the Company’sCurrent Report on Form 8-K filed June 14, 2013).10.6(+)Form of Notice of Grant of Stock Option under the 2013 Plan (incorporated by reference to Exhibit 10.3 to the Company’s Current Reporton Form 8-K filed June 14, 2013).10.7(+)Form of Stock Option Agreement under the 2013 Plan (incorporated by reference to Exhibit 10.4 to the Company’s Current Report onForm 8-K filed June 14, 2013).10.8(+)Form of Notice of Grant of Stock Option – Director Initial Grant under the 2013 Plan (incorporated by reference to Exhibit 10.5 to theCompany’s Current Report on Form 8-K filed June 14, 2013).10.9(+)Form of Notice of Grant of Stock Option – Director Annual Grant under the 2013 Plan (incorporated by reference to Exhibit 10.6 to theCompany’s Current Report on Form 8-K filed June 14, 2013).10.10(+)Form of Automatic Stock Option Agreement under the 2013 Plan (incorporated by reference to Exhibit 10.7 to the Company’s CurrentReport on Form 8-K filed June 14, 2013).10.11(+)Form of Stock Option Grant Notice and Form of Option Agreement (U.S. employees) under the 2018 Plan (incorporated by reference toExhibit 99.2 to the Company’s Current Report on Form 8-K filed June 15, 2018).114ExhibitNumberDescription of Document10.12(+)Form of Stock Option Grant Notice and Form of Option Agreement (non-employee directors) under the 2018 Plan (incorporated byreference to Exhibit 99.3 to the Company’s Current Report on Form 8-K filed June 15, 2018).10.13(+)Form of Stock Option Grant Notice and Form of Option Agreement (U.K. employees) under the 2018 Plan (incorporated by reference toExhibit 99.4 to the Company’s Current Report on Form 8-K filed June 15, 2018).10.14(+)Form of Stock Option Grant Notice (French employees) under the 2018 Plan and the French Options Sub-Plan.10.15(+)Form of Stock Option Agreement (French Employees) under the 2018 Plan and the French Options Sub-Plan.10.16(+)Form of Restricted Stock Unit Grant Notice and Form of Restricted Stock Unit Award Agreement (U.S. employees) under the 2018 Plan(incorporated by reference to Exhibit 99.5 to the Company’s Current Report on Form 8-K filed June 15, 2018).10.17(+)Form of Restricted Stock Unit Grant Notice and Form of Restricted Stock Unit Award Agreement (non-employee directors) under the 2018Plan (incorporated by reference to Exhibit 99.6 to the Company’s Current Report on Form 8-K filed June 15, 2018).10.18(+)Form of Restricted Stock Unit Grant Notice and Form of Restricted Stock Unit Award Agreement (U.K. employees) under the 2018 Plan(incorporated by reference to Exhibit 99.7 to the Company’s Current Report on Form 8-K filed June 15, 2018).10.19(+)Form of Restricted Stock Unit Grant Notice and Form of Restricted Stock Unit Award Agreement (French employees) under the 2018 Planand the French RSU Sub-Plan.10.20(+)Amended and Restated Severance Plan.10.21(+)Amended and Restated Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report onForm 10-Q filed May 10, 2018).10.22(+)Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filedAugust 6, 2015).10.23(+)Employment Agreement between the Company and Alexander (Sandy) Macrae, dated May 17, 2016 (incorporated by reference to Exhibit10.1 to the Company’s Quarterly Report on Form 10-Q filed August 4, 2016).10.24(+)Employment Agreement between the Company and Kathy Yi, dated February 28, 2017 (incorporated by reference to Exhibit 10.1 to theCompany’s Quarterly Report on Form 10-Q filed May 10, 2017).10.25(+)Employment Agreement between the Company and Edward Conner, dated November 1, 2016 (incorporated by reference to Exhibit 10.3to the Company’s Quarterly Report on Form 10-Q filed May 10, 2017).10.26(+)Employment Agreement between the Company and Heather D. Turner, effective February 12, 2018.10.27(+)Employment Agreement between the Company and Stéphane Boissel, effective October 1, 2018.10.28(+)Employment Agreement between the Company and Adrian Woolfson, effective January 21 2019.10.29Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated May 23, 1997 (incorporated byreference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (Reg. No. 333-30314), as amended, filed February 24,2000).10.30First Amendment to Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated March 12,2004 (incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K filed February 23, 2005).10.31Second Amendment to Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated March 15,2007 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed November 4, 2013).10.32Third Amendment to Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated August 1,2013 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed November 4, 2013).10.33Fourth Amendment to Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated June 10,2016.115ExhibitNumberDescription of Document10.34Fifth Amendment to Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated July 10,2017.10.35Sixth Amendment to Triple Net Laboratory Lease between the Company and Point Richmond R&D Associates II, LLC, dated May 11,2018 (incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q filed August 8, 2018).10.36Lease Agreement between the Company and Marina Boulevard Property, LLC dated November 3, 2017 (incorporated by reference toExhibit 10.21 to the Company’s Annual Report on Form 10-K filed March 1, 2018).10.37First Amendment to Lease Agreement between the Company and Marina Boulevard Property, LLC dated January 1, 2019.10.38Amended and Restated Sales Agreement between the Company and Cowen LLC, dated May 26, 2017 (incorporated by reference toExhibit 1.1 to the Company’s Current Report on Form 8-K filed May 26, 2017).10.39†Amended and Restated Collaboration and License Agreement between the Company and Shire International GmbH, dated September 1,2015 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed October 30, 2015).10.40†Global Research, Development and Commercialization Collaboration and License Agreement between the Company and Biogen MA Inc.(Bioverativ Inc.), dated January 8, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filedMay 7, 2014).10.41†Letter Amendment to Global Research, Development and Commercialization Collaboration and License Agreement between theCompany and Biogen MA Inc. (Bioverativ Inc.), dated December 14, 2015 (incorporated by reference to Exhibit 10.63 to the Company’sAnnual Report on Form 10-K filed February 18, 2016).10.42†Letter Agreement and Waiver between the Company and Biogen MA Inc. (Bioverativ Inc.), dated March 24, 2016 (incorporated byreference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed May 5, 2016).10.43†Collaboration and License Agreement between the Company and Pfizer Inc., dated May 10, 2017 (incorporated by reference to Exhibit10.1 to the Company’s Quarterly Report on Form 10-Q filed August 9, 2017).10.44†Research Collaboration and License Agreement between the Company and Pfizer Inc., dated December 28, 2017 (incorporated byreference to Exhibit 10.40 to the Company’s Annual Report on Form 10-K filed March 1, 2018).10.45†Collaboration and License Agreement between the Company and Kite Pharma, Inc., dated February 20, 2018 (incorporated by referenceto Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed May 5, 2018).21.1Subsidiaries of the Company23.1Consent of Independent Registered Public Accounting Firm.24.1Power of Attorney (included on signature page).31.1Rule 13a-14(a) Certification of Principal Executive Officer.31.2Rule 13a-14(a) Certification of Principal Financial Officer.32.1*Certification Pursuant to 18 U.S.C. Section 1350.101.INSXBRL Instance Document101.SCHXBRL Taxonomy Extension Schema Document101.CALXBRL Taxonomy Extension Calculation Linkbase Document101.DEFXBRL Taxonomy Extension Definition Linkbase Document101.LABXBRL Taxonomy Extension Label Linkbase Document101.PREXBRL Taxonomy Extension Presentation Linkbase Document †Confidential treatment has been granted for certain information contained in this document pursuant to an order of the Securities and ExchangeCommission. Such information has been omitted and filed separately with the Securities and Exchange Commission. (+)Indicates management contract or compensatory plan or arrangement.116*The certifications attached as Exhibit 32.1 accompany this Annual Report on Form 10-K pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the SecuritiesExchange Act of 1934, as amended.ITEM 16 – FORM 10-K SUMMARYNone. 117 SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed onits behalf by the undersigned, thereunto duly authorized, on March 1, 2019. Date: March 1, 2019SANGAMO THERAPEUTICS, INC. By: / S / ALEXANDER MACRAE Alexander Macrae President, and Chief Executive OfficerKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Alexander Macrae, KathyY. Yi, and Heather Turner, and each of them, as his or her true and lawful attorneys-in-fact and agents, each with the full power of substitution, for him or herand in his or her name, place or stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Annual Reporton Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission,granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite andnecessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirmingall that said attorneys-in-fact and agents, or their, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated: Signature Title Date / S / ALEXANDER MACRAE President, Chief Executive Officer (Principal Executive Officer)and Director March 1, 2019Alexander Macrae / S / Kathy Y. Yi Executive Vice President andChief Financial Officer (Principal Financial and AccountingOfficer) March 1, 2019Kathy Y. Yi / S / H. STEWART PARKER Director and Chairman of the Board March 1, 2019H. Stewart Parker / S / Robert F. Carey Director March 1, 2019Robert F Carey / S / STEPHEN G. DILLY, M.B.B.S, PH.D Director March 1, 2019Stephen G. Dilly, M.B.B.S, Ph.D /s/ Roger Jeffs, PH.D Director March 1, 2019Roger Jeffs, Ph.D /s/ STEVEN J. MENTO, PH.D Director March 1, 2019Steven J. Mento, Ph.D / S / SAIRA RAMASASTRY Director March 1, 2019Saira Ramasastry / S / Joseph S. Zakrzewski Director March 1, 2019Joseph S. Zakrzewski / S / Karen Smith, M.D, PH.D, M.B.A., L.L.M. Director March 1, 2019Karen Smith, M.D., Ph.D, M.B.A., L.L.M. EXHIBIT 10.3SANGAMO THERAPEUTICS, INC.2018 EQUITY INCENTIVE PLANFRENCH STOCK-OPTIONS SUB-PLANOptions to purchase common shares of the CompanyThis French sub-plan (the "Sub-Plan") provides for a certain number of conditions or definitions which will apply to the Options topurchase shares of Sangamo Therapeutics, Inc. (the "Company") granted to Eligible Employees (as defined below) of TXCell SAa French joint stock company (société anonyme) organized under the laws of France1 of which the Company holds directly orindirectly at least 10% of the share capital under the Company’s 2018 Equity Incentive Plan (the "Plan") and the Sub-Plan.The additional terms and conditions provided for by the Sub-Plan are specific to the Eligible Employees of TXCell SA only and donot affect the rights granted to any other Participant who is granted Options under the Plan. The additional terms and conditionsprovided for by the Sub-Plan also do not affect the terms of Plan itself for purposes of compliance with US tax and securities laws.Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meaning in the Sub-Plan.It is intended that the Sub-Plan complies with French law and, in particular, with Sections L. 225- 177 to L. 225-187-1 of the FrenchCommercial Code, and its terms, together with the terms of the Plan, are to be construed accordingly.The provisions of this Sub-Plan shall form an integral part of the Plan and the Options granted by the Company to the EligibleEmployees shall consequently be governed by the provisions of the Plan and of this Sub-Plan. The provisions of the Plan shallremain applicable insofar as they do not contradict the provisions of the Sub-Plan.This Sub-Plan, in its entirety, was adopted by the Board on 24 September 2018 and became effective as of 1st October 2018.1.ARTICLE 1 – DEFINITIONS1.1Eligible Employee means (a)any person (i) employed by TXCell SA under the terms of a written or oral employment agreement and/or (ii)any person holding a corporate executive office of TXCell SA (i.e., Président du Conseil d'Administration,Directeur Général, Directeur Général Délégué, Membre du Directoire, Gérant d'une société en commanditepar actions) and who may be granted Options under French law; (b)furthermore, an employee or corporate executive officer of TXCell SA may qualify as an Eligible Employee onlyprovided that such person does not own directly, on 1With its registered office at Les Cardoulines, Allée de la Nertiere, Sophia Antipolis, 06560 Valbonne, registered with the registre ducommerce et des sociétés of Grasse, under registration number 435 361 2092. the applicable Grant Date, shares representing more than 10% of the issued share capital of the Company(including shares held legally but not beneficially by the Grantee); and (c)the official place of residence of the Eligible Employees on the Grant Date shall be located in France for incometax purposes.1.2Grantee means an Eligible Employee who has been granted an Option under the Plan.1.3Grant Date means the date on which an Option is granted to an Eligible Employee and on which the material terms andconditions of such Option Award are specified in the Award Agreement.1.4Shares means shares of Common Stock of the Company.1.5Vesting Date means the termination date of the Vesting Period.2.ARTICLE 2 – ELIGIBILITY2.1Options may only be granted to Eligible Employees and Eligible Employees can only be granted Options under this Sub-Plan.2.2Options may not be granted to corporate officers of TXCell SA, other than the corporate executive officers of TXCell SA(i.e., Président du Conseil d'Administration, Directeur Général, Directeur Général Délégué, Membre du Directoire, Gérantd'une société en commandite par actions), unless such corporate officer is otherwise employed by TXCell SA under theterms of a written or oral employment agreement, as defined under French law.Furthermore, no Option may be granted to any of the corporate executive officers of TXCell SA unless one of the conditions setforth in paragraph 1° to 3° of Section L. 225- 186-1 of the French Commercial Code is satisfied during the fiscal year in which theGrant Date intervenes2.3.ARTICLE 3 – CLOSED PERIODSOptions may not be granted during the following periods (together, the "Closed Periods"): (a)during the ten (10) trading sessions preceding and following the date on which the consolidated accounts orannual accounts of the Company are published; (b)during a period (i) starting from the date on which the corporate bodies of the Company become aware of anyinformation which, if published, could significantly affect the company’s market price and (ii) ending at the closeof the tenth trading session following the publication of the information; and 2I.e., that either (i) 90% of the employees of TXCell SA benefit from the granting of Options or (ii) if 90% of the TXCell SA 's employeesbenefit (x) from an effective profit-sharing agreement (within the meaning of Section L. 3312-2 of the French Labor Code) or (y) from aderogatory profit-sharing agreement (within the meaning of Section L. 3324-2 of the French Labor Code) or (z) from a voluntary profit-sharing agreement (within the meaning of Section L. 3323-6 of the French Labor Code).3. (c)during the twenty (20) trading sessions after a coupon giving a right to a dividend or to a capital increase hasbeen detached from the Shares.4.ARTICLE 4 – SHARES4.1Options cannot give rise to more than 10% of the share capital of the Company.4.2Shares acquired by the Grantees upon exercise of an Option must have been previously repurchased by the Companyat their fair market value.4.3Options must be granted over registered Shares of the Company (as opposed to bearer shares).5.ARTICLE 5 – EXERCISE PRICE5.1The exercise price of the Options (the "Exercise Price") shall be determined according to the provisions of the Plan,subject to the following limitations: (a)the Exercise Price may in no case be less than to eighty percent (80%) of the average of the closing salesprice for a Share as listed on a stock exchange during the twenty (20) market trading days prior to the GrantDate; and (b)in addition, the Exercise Price may not be less than to eighty percent (80%) of the average actual repurchaseprice paid by the Company in consideration for its own shares to be allocated to Eligible Employees.5.2The Exercise Price of the Option shall be determined on the Grant Date of the Option to the Eligible Employee andcannot be modified in any way. Any adjustment made to the Exercise Price and/or the number of Options awarded underthis Sub-Plan shall not provide more advantages to the Eligible Employee than those which would result from anyadjustments that would be made in accordance with the provisions of Article L. 225- 181 of the French Commercial Code(i.e. amortization or reduction of the share capital, modification of the sharing of the profits, allotment of free shares,capitalization of premiums or retained earnings or issuing premiums, issuance of share or securities giving a right to theallotment of shares, distribution of retained earnings). In the case of an adjustment of the Exercise Price, its amountcannot be less than the nominal value of the Shares.6.ARTICLE 6 – VESTING, TRANSFERABILITY OF OPTIONS AND SHARES6.1The rules regarding the Vesting of the Option will be the same as the ones provided by the Plan.6.2The Options may neither be assigned nor transferred. Notwithstanding the preceding sentence, the Options may betransferred to the heirs of the Eligible Employee and exercised by them within a period of six months computed as fromthe death of such Eligible Employee.6.3If Options are issued to corporate executive officers (i.e., Président du Conseil d'Administration, Directeur Général,Directeur Général Délégué, Membre du Directoire, Gérant d'une société par actions) of TXCell SA under the Sub-Plan,any such Grantee will4.be under a specific obligation to hold 1% of the Shares received upon the exercise of such Options in a nominative formuntil the termination of its functions as corporate executive officer (i.e., Président du Conseil d'Administration, DirecteurGénéral, Directeur Général Délégué, Membre du Directoire, Gérant d'une société par actions) of TXCell SA. Thisinformation shall be reported in the annual management report presented to the annual shareholder meeting of theCompany.7.ARTICLE 7 - BREACH7.1In the event that an Eligible Employee does not comply with any of the requirements set forth in the Sub-Plan, then suchEligible Employee shall be liable for all consequences to the Company and TXCell SA resulting from such breach andundertakes to indemnify TXCell SA in respect of all amounts payable by the Company and TXCell SA in connection withsuch breach. More generally, the Eligible Employee agrees to indemnify and keep indemnified the Company and TXCellSA from and against any liability for and obligation to pay any tax and social charges incurred by the Company or TXCellSA.8.ARTICLE 8 – MISCELLANEOUS8.1Every year, statements of issued Options under article L 225-177 to L 225-186-1 of the French Commercial Code mustbe reported to the annual meeting of Shareholders pursuant to article L 225-184 of the French Commercial Code.9.ARTICLE 9 - EMPLOYMENT RIGHTS9.1The adoption of this Sub-Plan shall not confer upon the Eligible employee or any employees of TXCell SA, anyemployment rights and shall not be construed as part of any employment contracts that TXCell has with its employees.10.ARTICLE 10 – DATA PRIVACY10.1The Company may process the personal data of Eligible Employees in connection with the Plan and the Sub-Plan inaccordance with the terms of the Plan and of the Personal Information Protection Notice for EU Employees. TheCompany may need to process information relating to the health of the Eligible Employees or the identity of the EligibleEmployees ' spouse or civil partner in order to operate the Plan and the Sub-Plan.In any event, the Company will need to obtain the written consent of each Eligible Employees prior to processing suchEligible Employees' personal data.Eligible Employee[Representative of the Board or the Committee(s)]By :By:Date:Date:Name:Name:EXHIBIT 10.4SANGAMO THERAPEUTICS, INC.2018 EQUITY INCENTIVE PLAN FRENCH RESTRICTED STOCK UNIT AWARD SUB-PLANRestricted Stock Unit Award This French RSU Award Sub-Plan (the "Sub-Plan") provides for a certain number of conditions or definitions which will apply to theRSU Award granted by Sangamo Therapeutics, Inc. (the "Company") to Eligible Employees (as defined below) of TXCell SA, aFrench joint stock company (société anonyme) organized under the laws of France1 of which the Company holds directly or indirectlyat least 10% of the share capital, under the Company’s 2018 Equity Incentive Plan (the "Plan") and the Sub-Plan. The additional terms and conditions provided for by the Sub-Plan are specific to the Eligible Employees of TXCell SA only and do notaffect the rights granted to any other Participant who is granted a RSU Award under the Plan. The additional terms and conditionsprovided for by the Sub-Plan also do not affect the terms of Plan itself for purposes of compliance with US tax and securities laws. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meaning in the Sub-Plan. It is intended that the Sub-Plan complies with French law and, in particular, with Sections L. 225-197-1 to L. 225-197-6 of the FrenchCommercial Code, and its terms, together with the terms of the Plan, are to be construed accordingly. The provisions of this Sub-Plan shall form an integral part of the Plan and the RSU Awards granted by the Company to the EligibleEmployees shall consequently be governed by the provisions of the Plan and of this Sub-Plan. The provisions of the Plan shall remainapplicable insofar as they do not contradict the provisions of the Sub-Plan. This Sub-Plan, in its entirety, was adopted by the Board on 24 September 2018 and became effective as of 1st October 2018. 1.DEFINITIONS1.1Eligible Employee means (a)any person (i) employed by TXCell SA under the terms of a written or oral employment agreement and/or (ii) anyperson holding a corporate executive office of TXCell SA (i.e., Président du Conseil d'Administration, DirecteurGénéral, Directeur Général Délégué, Membre du Directoire, Gérant d'une société en commandite par actions),and who may be granted RSU Awards under French law; (b)furthermore, an employee or corporate executive officer of TXCell SA may qualify as an Eligible Employee onlyprovided that such person: (i)does not own, directly, on the applicable Grant Date, shares representing more than 10% of the issuedshare capital of the Company (including shares held legally but not beneficially by the Grantee andRSU Awards previously granted to the Grantee); and 1With its registered office at Les Cardoulines, Allée de la Nertiere, Sophia Antipolis, 06560 Valbonne, registered with the registre du commerce et des sociétés ofGrasse, under registration number 435 361 209- 2 - (ii)would not become the owner of more than 10% of the share capital of the Company on the applicableGrant Date as a result of such grant; (c)the official place of residence of the Eligible Employees on the Grant Date shall be located in France for incometax purposes.1.2Grantee means an Eligible Employee who has been granted a RSU Award under the Plan.1.3Grant Date means the date on which a RSU Award is granted to an Eligible Employee and on which the material terms andconditions of such RSU Award are specified in the RSU Award Agreement.1.4Shares means shares of Common Stock of the Company.1.5Vesting Date means the termination date of the Vesting Period.1.6Vesting Period means a period of one year minimum, specified in the RSU Award Agreement and computed as from theGrant Date, during which the Grantees will only benefit from a conditional and provisional allocation of Shares under theSub-Plan.1.7Holding Period means a period of one year minimum, specified in the RSU Award Agreement and computed as from theVesting date, during which the Grantees are not entitled to sell, to rent or to dispose in any other way of the Shares receivedby them in payment of the RSU Award allotted to them under the Sub-Plan.2.SPECIFIC CONDITIONS APPLICABLE TO RSU AWARDS GRANTED TO ELIGIBLE EMPLOYEE2.1RSU Awards may only be granted to Eligible Employees under the Plan.2.2RSU Awards may not be granted under the Sub-Plan for a consideration in cash paid by the Eligible Employee.2.3RSU Awards granted under the Sub-Plan to Eligible Employees may only be settled by the issuance of Shares to the EligibleEmployees.2.4RSU Awards may not be granted to any corporate officer of TXCell SA other than the corporate executive officers of TXCellSA (i.e., Président du Conseil d'Administration, Directeur Général, Directeur Général Délégué, Membre du Directoire,Gérant d'une société en commandite par actions) unless such corporate officer is otherwise employed by TXCell SA underthe terms of a written or oral employment agreement, as defined under French law.2.5Notwithstanding any other provision of the Plan and the Sub-Plan to the contrary, the overall number of underlying Shareshereby reserved for delivery under the Sub-plan may not, in any case whatsoever, exceed 10% of the share capital of theCompany.2.6RSU Award(s) granted to Eligible Employees may not vest in prior to the expiration of a Vesting Period of at least one yearcomputed as from the Grant Date, during which the Grantees will only benefit from a conditional and provisional allocationof Shares under the Sub-Plan (i.e., no consideration and dividend or voting rights will be attached to the Award before theissuance of the underlying Shares at the Vesting date).As a result, Grantees will only be allowed to vest in the Shares received under the Sub-Plan on the Vesting Date specified inthe RSU Award Agreement which will intervene at least one year after the Grant Date.- 3 - 2.7However, notwithstanding the above, in the event of death or disability2 of a Grantee during the Vesting Period, all of his orher outstanding RSU Award shall immediately vest in.Accordingly, in case of death of the Grantee, his or her heirs may request to receive the aforementioned RSU Award(s),provided that they do so within a six month period, computed as from the date of the Grantee's death.2.8Moreover, during a Holding Period of at least one year, computed as from the Vesting Date, Grantees will not be entitled tosell, to rent or to dispose in any other way of the Shares issued to them upon the Vesting Date of any RSU Award allotted tothem under the Sub-Plan.However, in the event that the Vesting Period provided in the Grantee's RSU Award Agreement is equal to two years ormore, then such RSU Award Agreement may specify that no Holding Period will be imposed upon the Grantee with respectto Shares issued to him or her.Any Holding Period specified in a Grantee's RSU Award Agreement will continue to apply even after such Grantee is nolonger an employee or a corporate executive officer of TXCell SA, except in case of death or disability3 of the Grantee.2.9If Shares are issued to corporate executive officers (i.e., Président du Conseil d'Administration, Directeur Général, DirecteurGénéral Délégué, Membre du Directoire, Gérant d'une société en commandite par actions) of TXCell SA under the Sub-Plan, any such Grantee will be under a separate obligation to hold 1% of such Shares in a nominative form until thetermination of its functions as corporate executive officer (i.e., Président du Conseil d'Administration, Directeur Général,Directeur Général Délégué, Membre du Directoire, Gérant d'une société en commandite par actions) of TXCell SA.2.10Even after the termination of any applicable Holding Period, the Grantees will not be entitled to dispose in any way of theShares issued to them in application of a RSU Award received by them under the Sub-Plan, during any of the two followingperiods (together, the "Closed Periods"): (a)during the ten trading sessions preceding and following the date on which the consolidated accounts or annualaccounts of the Company are published; and (b)during a period (i) starting from the date on which the corporate bodies of the Company become aware of anyinformation which, if published, could significantly affect the company’s market price and (ii) ending at the close ofthe tenth trading session following the publication of the information.2.11Every year, statements of Shares issued under the Sub-Plan must be reported to the annual shareholder meeting pursuantto Section L. 225-197-4 of the French Commercial Code. 2As defined under the provisions of the French Social Security Code.- 4 - 3.ADJUSTMENT UPON CERTAIN EVENTS3.1During the Vesting Period and in the event of a change in capitalization or a corporate transaction (such as exchange ofShares resulting from a merger or a spin-off), the Board or the Committee(s), at its discretion, may determine to makeadjustments in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made availableunder the Sub-Plan. The Board or the Committee(s) shall, in such manner as it may deem equitable, adjust any or all of (i)the number and type of underlying Shares (or other securities or property of the Company or any person that is a party to areorganisation transaction with the Company) with respect to which RSU Awards may be granted, (ii) the number and typeof Shares (or other securities or property of the Company or any person that is a party of the reorganization transaction withthe Company) subject to outstanding RSU Awards; provided that the number of Shares subject to any RSU Awarddenominated in Shares shall always be a whole number.In the event of an exchange of shares resulting from a merger, a spin-off, public offering or any other corporate operationexecuted in accordance with applicable French commercial, corporate, tax and social law, the Vesting Period and theHolding Period will continue to apply to the conditional and provisional rights to receive Shares or to the Shares according toSection L. 225-197-1 of the French Commercial Code, as amended.4.BREACH4.1In the event that an Eligible Employee does not comply with any of the requirements set forth in paragraphs 2.8, 2.9 and2.10 of the Sub-Plan and transfers or otherwise disposes of Shares acquired prior to the termination of (i) the HoldingPeriod (either the general Holding Period referred to in paragraph 2.8 and/or the specific Holding Period for corporateexecutive officers referred to in paragraph 2.9) and/or (ii) any of the Closed Periods, then such Eligible Employee shall beliable for all consequences to Sangamo Therapeutics, Inc. and TXCell SA resulting from such breach and undertakes toindemnify TXCell SA in respect of all amounts payable by Sangamo Therapeutics, Inc. and TXCell SA in connection withsuch breach. More generally, the Eligible Employee agrees to indemnify and keep indemnified Sangamo Therapeutics, Inc.and TXCell SA from and against any liability for and obligation to pay any tax and social charges incurred by SangamoTherapeutics, Inc. or TXCell SA.5.EMPLOYMENT RIGHTS5.1The adoption of this Sub-Plan shall not confer upon the Eligible employee or any employees of TXCell SA, any employmentrights and shall not be construed as part of any employment contracts that TXCell has with its employees.6.DATA PRIVACY6.1The Company may process the personal data of Eligible Employees in connection with the Plan and the Sub-Plan inaccordance with the terms of the Plan of the Personal Information Protection Notice for EU Employees. The Company mayneed to process information relating to the health of the Eligible Employees or the identity of the Eligible Employees ' spouseor civil partner in order to operate the Plan and the Sub-Plan.In any event, the Company will need to obtain the written consent of each Eligible Employees prior to processing suchEligible Employees' personal data. - 5 - By:[Eligible Employee] By:[Representative of the Board orthe Committee(s)]Date: Date : Name: Name: EXHIBIT 10.14SANGAMO THERAPEUTICS, INC.STOCK OPTION GRANT NOTICE(2018 EQUITY INCENTIVE PLAN)Sangamo Therapeutics, Inc. (the “Company”), pursuant to its 2018 Equity Incentive Plan (the “Plan”) and its French Stock-Options Sub-Plan dated 24September 2018 (the "Sub-Plan"), has granted to Optionholder an option to purchase the number of shares of Common Stock set forth below (the“Option”). The Option is subject to all of the terms and conditions as set forth herein and in the Plan, the Sub-Plan, and the Option Terms and Conditions thethree of which are incorporated herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan, the Sub-Plan or the OptionTerms and Conditions shall have the meanings set forth in the Plan, the Sub-Plan or the Option Terms and Conditions. Optionholder: Date of Grant: Vesting Commencement Date: Number of Shares of Common Stock Subject to Option: Exercise Price (Per Share): Total Exercise Price: Expiration Date: Type of Grant:Nonstatutory Stock OptionExercise andVesting Schedule:Subject to the Optionholder’s Continuous Service through each applicable vesting date, the Option will vest as follows:[1/4th of the shares vest and become exercisable one year after the Vesting Commencement Date; the balance of the shares vestand become exercisable in a series of 36 successive equal monthly installments measured from the first anniversary of theVesting Commencement Date.]Optionholder Acknowledgements: By Optionholder’s acceptance, Optionholder understands and agrees that the Option is governed by this Stock OptionGrant Notice, and the provisions of the Plan, the Sub-Plan and the Option Terms and Conditions, all of which are made a part of this document. TheOptionholder acknowledges that copies of the Plan, the Sub-Plan, Option Terms and Conditions and the prospectus for the Plan are available on theCompany’s internal web site and may be viewed and printed by the Optionholder. Optionholder represents that he or she has read and is familiar with theprovisions of the Plan, the Sub-Plan, the Option Terms and Conditions and the prospectus for the Plan. Optionholder acknowledges and agrees that thisGrant Notice and the Terms and Conditions may not be modified, amended or revised except in a writing signed by Optionholder and a duly authorizedofficer of the Company. Optionholder further acknowledges that in the event of any conflict between the provisions in this Grant Notice, the Terms andConditions, or the Prospectus and the terms of the Plan and/or the Sub-Plan, the terms of the Plan and/or the Sub-Plan shall control. Optionholder furtheracknowledges that the Option Agreement sets forth the entire understanding between Optionholder and the Company regarding the acquisition of CommonStock and supersedes all prior oral and written agreements, promises and/or representations on that subject with the exception of other equity awardspreviously granted to Optionholder and Common Stock previously issued to Optionholder. Sangamo Therapeutics, Inc.By: Date:%%OPTION_DATE,'Month DD, YYYY'%-% 177337111 v2EXHIBIT 10.15SANGAMO THERAPEUTICS, INC.2018 EQUITY INCENTIVE PLANOPTION TERMS AND CONDITIONSAs reflected by your Stock Option Grant Notice (“Grant Notice”), Sangamo Therapeutics, Inc. (the “Company”) hasgranted you an option under its 2018 Equity Incentive Plan (the “Plan”) and the French Stock-Options Sub-Plan dated 24 September2018 (the "Sub- Plan") to purchase a number of shares of Common Stock at the exercise price indicated in your Grant Notice (the“Option”). Capitalized terms not explicitly defined herein but defined in the Grant Notice or the Plan or the Sub-Plan shall have thesame definitions as in the Grant Notice or Plan or the Sub-Plan, as applicable.The general terms and conditions applicable to your Option are as follows:1.GOVERNING PLAN DOCUMENT. Your Option is subject to all the provisions of the Plan and the Sub-Plan, including but not limited to the provisions in Section 6 of the Plan regarding the impact of a Capitalization Adjustment,dissolution, liquidation, or Change in Control on your Option, Section 10(f) of the Plan regarding the Company’s retained rights toterminate your Continuous Service notwithstanding the grant of the Option, Section 11(b) of the Plan regarding the tax consequencesof your Option and Article 7 of the Sub-Plan regarding the breach of the conditions provided under the Sub-Plan. Your Option isfurther subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adoptedpursuant to the Plan. In the event of any conflict between these Terms and Conditions and the provisions of the Plan or the Sub-Plan,the provisions of the Plan or the Sub- Plan shall control.2.EXERCISE.(a)You may generally exercise the vested portion of your Option at any time during its termby delivery of payment of the exercise price and applicable withholding taxes and other required documentation to the PlanAdministrator in accordance with the option exercise procedures established by the Plan Administrator, which may include anelectronic submission. Please review Sections 4(h), 4(j) and 8(b)(v) of the Plan and Article 3 of the Sub-Plan, which may restrict orprohibit your ability to exercise your Option during certain periods.(b)You may pay your Option exercise price by check, bank draft, bank transfer or moneyorder;3.TERM. You may not exercise your Option before the commencement of its term or after its term expires.The term of your option commences on the Date of Grant and expires upon the earliest of the following:(a)immediately upon the termination of your Continuous Service for Cause;1.(b)three months after the termination of your Continuous Service for any reason other thanCause, Disability or death;(c)12 months after the termination of your Continuous Service due to your Disability;(d)6 months after your death if you die during your Continuous Service;(e)immediately upon a Change in Control if the Board has determined that the Option willterminate in connection with a Change in Control;(f)the Expiration Date indicated in your Grant Notice; or(g)the day before the 10th anniversary of the Date of Grant.Notwithstanding the foregoing, if you die during the period provided in Section 3(b) or 3(c) above, the term of your Optionshall not expire until the earlier of (i) six months after your death, (ii) upon any termination of the Option in connection with a Changein Control, (iii) the Expiration Date indicated in your Grant Notice, or (iv) the day before the tenth anniversary of the Date of Grant.Additionally, the Post-Termination Exercise Period of your Option may be extended as provided in Section 4(h) of the Plan.4.WITHHOLDING OBLIGATIONS. As further provided in Section 9 of the Plan you may not exercise yourOption unless the applicable tax withholding obligations are satisfied.5.TRANSFERABILITY. Except as otherwise provided in Section 4(e) of the Plan and Article 6 of the Sub-Plan, your Option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life onlyby you. The terms and conditions of the Plan, the Sub-Plan and the hereby conditions will be binding for your successors, legatees,estate executors and/or estate administrators.Moreover, if your Option was granted to you in respect of your functions as a corporate executive officer (i.e., Président duConseil d'Administration, Directeur Général, Directeur Général Délégué, Membre du Directoire, Gérant d'une société par actions) ofTXCell SA, you will be under a specific obligation to hold 1% of the Shares received upon the exercise of such Options in anominative form until the termination of your functions as corporate executive officer (i.e., Président du Conseil d'Administration,Directeur Général, Directeur Général Délégué, Membre du Directoire, Gérant d'une société par actions) of TXCell SA, pursuant toArticle 6 of the Sub-Plan.6.TAX CONSEQUENCES. The subscription or the sale of the Shares may give rise to adverse tax consequencesfor the Beneficiaries. You are responsible for seeking advices, opinions and consultations from professionals of your choice, inparticular prior to the exercise of the Options and to the subscription or sale of the Shares, with respect to any applicable taxconsequences.2.The company does not warrant in any way the tax treatment which will be applied to operations that will be realized by theBeneficiary on the Options or the continuation of the current tax regime.7.QUESTIONS. If you have questions regarding these or any other terms and conditions applicable to yourOption, including the applicable income tax consequences please see the prospectus for the Plan which is available on the Company’sintranet site. You can request a paper copy of the prospectus for the Plan from the Plan Administrator.* * * *3.EXHIBIT 10.19SANGAMO THERAPEUTICS, INC.RESTRICTED STOCK UNIT GRANT NOTICE(2018 Equity Incentive Plan)Sangamo Therapeutics, Inc. (the “Company”), pursuant to its 2018 Equity Incentive Plan (the "Plan") and its French Restricted Stock Unit Sub-Plan dated 24September 2018 (the "Sub-Plan") has awarded to Participant the number of restricted stock units specified and on the terms set forth below (the“Award”). The Award is subject to all of the terms and conditions as set forth herein and in the Plan, the Sub-Plan and the Restricted Stock Unit Terms andConditions, the three of which are incorporated herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan, the Sub-Planor the Restricted Stock Unit Terms and Conditions shall have the meanings set forth in the Plan, the Sub-Plan or the Restricted Stock Unit Terms andConditions.Participant:Date ofGrant:VestingPeriodVestingDateHoldingPeriod:Number of Restricted StockUnits:Condition:Participant’s Services Vesting Schedule:Subject to the Participant’s Continuous Service through each applicable vesting date, the Award will vest as follows: [●] Issuance Schedule:One share of Common Stock will be issued for each restricted stock unit which vests at the Vesting Date.[Drafting Note: If an E*TRADE form of grant notice is used in lieu of this form of grant notice, the following “Participant Acknowledgements”language needs to be incorporated into the E*TRADE Award grant notification and affirmatively consented to and/or accepted by the Participant. Ifthere are any other outstanding agreements promising future grants of Company equity such agreements should be specifically listed as an exception tothe last acknowledgement.]Participant Acknowledgements: By Participant’s acceptance, Participant understands and agrees that the Award is governed by this Restricted Stock UnitGrant Notice, and the provisions of the Plan, the Sub-Plan and the Restricted Stock Unit Terms and Conditions, all of which are made a part of thisdocument. The Participant acknowledges that copies of the Plan, the Sub-Plan, the Restricted Stock Unit Terms and Conditions and the prospectus for thePlan are available on the Company’s internal web site and may be viewed and printed by the Participant. Participant represents that he or she has read and isfamiliar with the provisions of the Plan, the Sub-Plan, the Restricted Stock Unit Terms and Conditions and the prospectus for the Plan. Participantacknowledges and agrees that this Grant Notice and the Restricted Stock Unit Terms and Conditions may not be modified, amended or revised except in awriting signed by Participant and a duly authorized officer of the Company. Participant further acknowledges that in the event of any conflict between theprovisions in this Grant Notice, the Restricted Stock Unit Terms and Conditions, or the Prospectus and the terms of the Plan and/or the Sub-Plan, the terms ofthe Plan and/or the Sub-Plan shall control. Participant further acknowledges that the Award Agreement sets forth the entire understanding betweenParticipant and the Company regarding the acquisition of stock in the Company and supersedes all prior oral and written agreements, promises and/orrepresentations on that subject with the exception of other equity awards previously granted to Participant and Common Stock previously issued toParticipant. 177358886 v2Sangamo Therapeutics, Inc. By:Alexander D. Macrae, President and Chief Executive Officer Date: 177358886 v2 SANGAMO THERAPEUTICS, INC.2018 EQUITY INCENTIVE PLANRESTRICTED STOCK UNIT TERMS AND CONDITIONSAs reflected by your Restricted Stock Unit Grant Notice (“Grant Notice”) Sangamo Therapeutics, Inc. (the “Company”)has granted you a Restricted Stock Unit Award under its 2018 Equity Incentive Plan (the “Plan”) and the French Restricted StockUnit Sub-Plan dated 24 September 2018 (the "Sub-Plan") for the number of restricted stock units as indicated in your Grant Notice(the “Award”). Capitalized terms not explicitly defined herein but defined in the Grant Notice or the Plan or the Sub-Plan shall havethe same definitions as in the Grant Notice or Plan or the Sub-Plan, as applicable. The general terms and conditions applicable to your Award are as follows:1.Governing Plan Document. Your Award is subject to all the provisions of the Plan and the Sub-Plan,including but not limited to the provisions in Section 6 of the Plan regarding the impact of a Capitalization Adjustment, dissolution,liquidation, or Change in Control on your Award, Section 10(f) of the Plan regarding the Company’s retained rights to terminate yourContinuous Service notwithstanding the grant of the Award, Section 11(b) of the Plan regarding the tax consequences of your Awardand Article 4 of the Sub-Plan regarding the breach of the conditions provided under the Sub-Plan. Your Award is further subject to allinterpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. Inthe event of any conflict between these Terms and Conditions and the provisions of the Plan and/or the Sub-Plan, the provisions of thePlan and/or the Sub-Plan shall control. 2.Grant of the Award. This Award represents your right to be issued on a future date the number of sharesof Common Stock that is equal to the number of restricted stock units indicated in the Grant Notice subject to your satisfaction of thevesting conditions set forth therein (the “Stock Units”). Any additional Stock Units that become subject to the Award pursuant toCapitalization Adjustments as set forth in the Plan, if any, shall be subject, in a manner determined by the Board, to the same forfeiturerestrictions, restrictions on transferability, and time and manner of delivery as applicable to the other Stock Units covered by yourAward.3.Dividends. You shall receive no benefit or adjustment to your Award with respect to any cash dividend, stockdividend or other distribution that does not result from a Capitalization Adjustment as provided in the Plan; provided, however, that thissentence shall not apply with respect to any shares of Common Stock that are delivered to you in connection with your Award aftersuch shares have been delivered to you.4.Withholding Obligations. As further provided in Section 9 of the Plan, you hereby authorize withholding frompayroll and any other amounts payable to you, and otherwise agree to make adequate provision for, any sums required to satisfy the taxwithholding obligations, if any, which arise in connection with your Award (the “Withholding Taxes”). Unless the1.177358886 v2 Withholding Taxes are satisfied, the Company shall have no obligation to deliver to you any Common Stock in respect of the Award.5.Transferability.Your Award will only be definitively attributed at the end of the VestingPeriod computed as from the Date of Grant. During the whole Vesting Period, you will only benefit from a conditional and temporaryallocation of Common Stock pursuant to the terms and conditions of the Plan and the Sub-Plan (i.e., no consideration, dividend orvoting right will be attached to the Award). Common Stock will only be issued at the end of the Vesting Period, on the Vesting Date.Moreover, you will not be allowed to sell, rent or otherwise dispose of Common Stock issued to you until the end of the HoldingPeriod, if any, as provided in your Grant Notice and computed as from the Vesting Date. For more details regarding the Vesting Periodand the Holding Period, please refer to Article 2 of the Sub-Plan in particular.Moreover, if your Award was granted to you in respect of your functions as a corporate executive officer (i.e., Président duConseil d'Administration, Directeur Général, Directeur Général Délégué, Membre du Directoire, Gérant d'une société par actions) ofTXCell SA, you will be under a specific obligation to hold 1% of Common Stock received in application of your Award in anominative form until the termination of your functions as corporate executive officer (i.e., Président du Conseil d'Administration,Directeur Général, Directeur Général Délégué, Membre du Directoire, Gérant d'une société par actions) of TXCell SA, pursuant toArticle 2 of the Sub-Plan.Finally, even after the termination of the Holding Period, if any, your right to sell Common Stock issued in application ofyour Award may still be limited pursuant to Article 2 of the Sub-Plan.6.Tax consequences. The sale of Common Stock may give rise to adverse tax consequences for theBeneficiaries. You are responsible for seeking advices, opinions and consultations from professionals of your choice, in particular priorto the sale of Common Stock, with respect to any applicable tax consequences.The company does not warrant in any way the tax treatment which will be applied to operations that will be realized by theBeneficiary on the Award or the continuation of the current tax regime. 7.Questions. If you have questions regarding these or any other terms and conditions applicable to yourAward, including the applicable income tax consequences please see the prospectus for the Plan which is available on the Company’sintranet site. You can request a paper copy of the prospectus for the Plan from the Plan Administrator. 2.177358886 v2EXHIBIT 10.20SANGAMO THERAPEUTICS, INC.AMENDED AND RESTATED EXECUTIVE SEVERANCE PLANINTRODUCTIONThe Sangamo Therapeutics, Inc. Amended and Restated Executive Severance Plan (the “Plan”) is amended and restatedeffective as of February 6, 2019 (the “Effective Date”). As of the Effective Date, the Plan amends and restates in its entirety theCompany’s Executive Severance Plan that became effective as of March 14, 2017.The purpose of the Plan is to provide severance benefits to certain executive officers and other key employees whoseemployment with Sangamo Therapeutics, Inc. (the “Company) terminates under certain prescribed circumstances.This Plan is designed to be an “employee welfare benefit plan,” as defined in Section 3(1) of the Employee RetirementIncome Security Act of 1974, as amended (“ERISA”) and to meet the descriptive requirements of a plan constituting a “severance payplan” within the meaning of the Department of Labor regulations published at Title 29, Code of Federal Regulations, Section 2510.3-2(b). This Plan is intended to provide benefits to a select group of management or highly compensated employees from the generalassets of the Company within the meaning of Department of Labor regulations published at Title 29, Code of Federal Regulations,Section 2520.104-24.This Plan supersedes all severance pay plans, policies, programs, guidelines, practices, arrangements, agreements, lettersand/or other communication, whether formal or informal or written or unwritten, of the Company under which the Eligible Employeeis eligible to receive benefits. This Plan represents exclusive severance benefits provided to Eligible Employees and such individualsshall not be eligible for other benefits provided in other severance pay plans, policies, programs, guidelines, practices, arrangements,agreements (including any employment agreement with the Company), letters (including any offer letters from the Company) or othercommunications of the Company.Article 1Definitions1.1“Base Salary” means 1/12 of the amount of annual base salary payable to the Participant at the salary ratein effect on the last day of the Participant’s employment with the Company.1.2“Board of Directors” means the Board of Directors of the Company.1.3“Cause” means misconduct, including the following:(a)commission of a felony or commission of any other crime against or involving theCompany;(b)an act of fraud, dishonesty or misappropriation committed by the Participant with respectto the Company;(c)willful or reckless misconduct by the Participant that materially affects the Company orany of its officers, directors, employees, clients, partners, insurers, subsidiaries, parents, or affiliates; or(d)a material breach by the Participant of any employment agreement or the ProprietaryInformation, Inventions and Materials Agreement between the Participant and the Company.1.4“Change in Control” means a change in ownership or control of the Company effected through the closingof any of the following transactions:(a)a merger, consolidation or other reorganization approved by the Company’s stockholders,unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successorcorporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by thepersons who beneficially owned the Company’s outstanding voting securities immediately prior to such transaction;(b)a stockholder-approved sale, transfer or other disposition of all or substantially all of theCompany’s assets in complete liquidation or dissolution of the Company; or 197750978 v8(c)any transaction or series of related transactions pursuant to which any person or any groupof persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the Securities Exchange Act of 1934, as amended (otherthan the Company or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlledby or is under common control with, the Company) becomes directly or indirectly the beneficial owner (within the meaning of Rule13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing (or convertible into or exercisable for securitiespossessing) more than fifty percent (50%) of the total combined voting power of the Company’s securities (as measured in terms of thepower to vote with respect to the election of the members of the Board of Directors) outstanding immediately after the consummationof such transaction or series of related transactions, whether such transaction involves a direct issuance from the Company or theacquisition of outstanding securities held by one or more of the Company’s existing stockholders.1.5“Change in Control Period” means the twelve (12)-month period beginning on the date of a Change inControl.1.6“Code” shall mean the Internal Revenue Code of 1986, as amended.1.7“Eligible Employee” means an employee of the Company serving as (i) the Chief Executive Officer of theCompany, (ii) an Executive Vice President, (iii) a Senior Vice President or (iv) a Vice President, unless the Plan Administratordetermines otherwise.1.8“Employer Group” means the Company and any other corporation or business controlled by, controlling orunder common control with, the Company as determined in accordance with Sections 414(b) and (c) of the Code and the TreasuryRegulations thereunder, except that in applying Sections 1563(a)(1), (2) and (3) for purposes of determining the controlled group ofcorporations under Section 414(b) of the Code, the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each placethe latter phrase appears in such sections and in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determiningtrades or businesses that are under common control for purposes of Section 414(c) of the Code, the phrase “at least 50 percent” shall beused instead of “at least 80 percent” each place the latter phrase appears in Section 1.414(c)-2 of the Treasury Regulations.1.9“Good Reason” means a Participant’s resignation following any one or more of the following without theParticipant’s written consent:(a)a material diminution in the Participant’s base compensation or target amount of annualcash bonus;(b)a material relocation of the Participant’s principal place of business, with a relocation ofmore than fifty (50) miles to be deemed material for such purposes;(c)a material diminution in the Participant’s duties, responsibilities or authority, which in thecase of the Chief Executive Officer shall include a material change to his or her direct reporting relationship with the Board; or(d)a material breach by the Company of any employment agreement between the Participantand the Company.In order for a termination of employment to be for Good Reason, the Participant must provide written notice to the PlanAdministrator of the existence of one or more conditions described above and the Participant’s intent to resign for Good Reasonhereunder within a period not to exceed thirty (30) days of the Participant’s knowledge of the initial existence of the condition.Following the Participant providing this notice, the Company shall be provided a period of at least thirty (30) days during which toremedy the condition. The Participant shall continue to receive the Participant’s compensation and benefits during the cure period andif the condition is not cured during such period, then at the end of such period the Participant’s employment shall cease and theParticipant may become entitled to the severance benefits described in this Plan. If the condition is cured, the Participant shall not bedeemed to have “Good Reason” to terminate the Participant’s employment.1.10“Participant” means any Eligible Employee who has commenced participation in the Plan pursuant toArticle 2. An individual shall continue as a Participant in the Plan until such time as set forth in Article 2.1.11“Severance Period” means the period during which the Participant is receiving cash severance pay undereither Section 4.1 or Section 4.2. 197750978 v81.12“Separation from Service” shall mean the Participant’s cessation of Employee Status and shall be deemedto occur at such time as the level of the bona fide services the Participant is to perform in Employee Status (or as a consultant or otherindependent contractor) permanently decreases to a level that is not more than twenty percent (20%) of the average level of services theParticipant rendered in Employee Status during the immediately preceding thirty-six (36) months (or such shorter period for which theParticipant may have rendered such service). Any such determination as to Separation from Service, however, shall be made inaccordance with the applicable standards of the Treasury Regulations issued under Section 409A of the Code. For purposes ofdetermining whether the Participant has incurred a Separation from Service, the Participant will be deemed to continue in “EmployeeStatus” for so long as the Participant remains in the employ of one or more members of the Employer Group, subject to the control anddirection of the employer entity as to both the work to be performed and the manner and method of performance. In addition to theforegoing, a Separation from Service will not be deemed to have occurred while the Participant is on a sick leave or other bona fideleave of absence if the period of such leave does not exceed six (6) months or any longer period for which the Participant is providedwith a right to reemployment with one or more members of the Employer Group by either statute or contract; provided, however, thatin the event the Participant’s leave of absence is due to any medically determinable physical or mental impairment that can be expectedto result in death or to last for a continuous period of not less than six (6) months and that causes the Participant to be unable to performthe Participant’s duties as an employee, no Separation from Service shall be deemed to occur during the first twenty-nine (29) monthsof such leave. If the period of leave exceeds six (6) months (or twenty-nine (29) months in the event of disability as indicated above)and the Participant is not provided with a right to reemployment either by statute or contract, then the Participant will be deemed tohave a Separation from Service on the first day immediately following the expiration of such six (6)-month or twenty-nine (29)-monthperiod.1.13“Target Bonus” means 1/12 of the amount of the Participant’s target bonus for the year in which theSeparation from Service occurs.Article 2EligibilityAn Eligible Employee shall, upon execution of the General Release (as defined below) and the General Release becomingeffective and enforceable in accordance with Section 4.4 below, become eligible to receive the severance benefits upon the EligibleEmployee’s Separation from Service without Cause or for Good Reason as set forth in Section 4.1 or 4.2. Participants shall ceaseparticipation in the Plan upon the earliest of (i) the Participant’s Separation from Service for Cause or without Good Reason, (ii)Participant’s failure to comply with the General Release requirement or (iii) for a Participant eligible to receive severance benefitsunder Section 4.1 or 4.2, the end of the Severance Period.Article 3Plan AdministrationThe Compensation Committee of the Board of Directors shall serve as the Plan Administrator. The Plan Administrator isresponsible for the general administration and management of this Plan and shall have all powers and duties necessary to fulfill itsresponsibilities, including, but not limited to, the discretion to interpret and apply this Plan and to determine all questions relating toeligibility for benefits. This Plan shall be interpreted in accordance with its terms and their intended meanings. However, the PlanAdministrator shall have the discretion to interpret or construe ambiguous, unclear, or implied (but omitted) terms in any fashion itdeems to be appropriate in its sole discretion, and to make any findings of fact needed in the administration of this Plan. The validity ofany such interpretation, construction, decision, or finding of fact shall not be given de novo review if challenged in court, byarbitration, or in any other forum, and shall be upheld unless clearly arbitrary or capricious.Article 4Severance Benefits4.1Severance Benefits Upon Involuntary Termination. If a Participant has a Separation from Service due to atermination by the Company without Cause or a resignation by the Participant with Good Reason, in either case other than during theChange in Control Period, the Participant shall be entitled to receive the following benefits, provided that the General Release has beendelivered by the Participant pursuant to Section 4.4 below and is effective and enforceable following the expiration of the revocationperiod applicable to that General Release under law.(a)Cash Severance. The Company shall pay in cash an amount equal to the ApplicableMultiple (as set forth in subsection (c) below) of the Participant’s Base Salary. Such severance payment shall be paid in a series ofsuccessive equal installments over a period of months equal to the Applicable 197750978 v8Multiple. The first such payment shall be made within the sixty (60)-day period measured from the date of the Participant’s Separationfrom Service, provided however, should such sixty (60)-day period span two (2) taxable years, then the first such payment shall bemade during the portion of that sixty (60)-day period that occurs in the second taxable year. The remaining installments shall be madein accordance with the Company’s regular payroll schedule for its salaried employees.(b)Reimbursement for Health Coverage. If the Participant is eligible for and timely elects toreceive continued health coverage under the Company’s health plan under COBRA at a level of coverage at or below the Participant’slevel of coverage in effect on the date of the Participant’s Separation from Service, then for the period beginning on the date of theParticipant’s Separation from Service and ending on the earlier of (i) the date on which the Participant first becomes covered by anyother “group health plan” as described in Section 4980B(g)(2) of the Code or (ii) the last day of the Severance Period (the “CoveragePeriod”), the Company shall reimburse the Participant monthly an amount equal to the monthly COBRA premium paid by theParticipant, less the premium charge that is paid by the Company’s active employees for such coverage as in effect on the date of theParticipant’s Separation from Service. The payments shall commence within the sixty (60)-day period measured from the date of theParticipant’s Separation from Service. However, should such sixty (60)-day period span two (2) taxable years, then the first suchpayment shall be made during the portion of that sixty (60)-day period that occurs in the second taxable year. The remaining paymentsshall be made in accordance with the Company’s regular payroll schedule for its salaried employees. In order to receivereimbursements hereunder, the Participant must provide proof of payment of the applicable premiums prior to the applicablereimbursement payment date. The first payment shall include any payments for the period from the date of the Participant’s Separationfrom Service to the commencement date. The Company shall reimburse the Participant under this Section 4.1(b) only for the portion ofthe Coverage Period during which the Participant continues coverage under the Company’s health plan. The Participant agrees topromptly notify the Company of the Participant’s coverage under an alternative health plan upon becoming covered by such alternativeplan. The COBRA health care continuation coverage period under Section 4980B of the Code shall run concurrently with theCoverage Period. Notwithstanding the foregoing, the Company reserves the right to restructure the foregoing COBRA premiumreimbursement arrangement in any manner necessary or appropriate to avoid fines, penalties or negative tax consequences to theCompany or the Participant (including, without limitation, to avoid any penalty imposed for violation of the nondiscriminationrequirements under the Patient Protection and Affordable Care Act (or any other applicable laws and regulations) or the guidanceissued thereunder), as determined by the Company in its sole and absolute discretion, including treating such reimbursements as taxablebenefits subject to withholding.(c)Applicable Multiple. The Applicable Multiple under this Section 4.1 shall be as follow:(i)Chief Executive Officer: 18(ii)Executive Vice President: 15(iii)Senior Vice President: 12(iv)Vice President: 94.2Severance Benefits Upon Change in Control. If a Participant has a Separation from Service due to atermination by the Company without Cause or a resignation by the Participant with Good Reason, in either case during the Change inControl Period, the Participant shall be entitled to receive the following benefits, provided that the General Release has been deliveredby the Participant pursuant to Section 4.4 below and is effective and enforceable following the expiration of the revocation periodapplicable to that General Release under law.(a)Cash Severance. The Company shall pay in cash an amount equal to the sum of (i) theCIC Applicable Multiple (as set forth in subsection (d) below) of the Participant’s Base Salary plus (ii) the CIC Applicable Multiple (asset forth in subsection (d) below) of the Participant’s Target Bonus, subject to any reduction provided for in the IncentiveCompensation Plan (for purpose of which “Employment Agreement” shall include this Plan) or any successor bonus plan for anybonus paid to the Participant under such plan in connection with such Change in Control and based in whole or in part on the targetbonus amount. Such cash severance payments shall be made in the form and at the times set forth in Section 4.1(a) over a period ofmonths equal to (i) twelve for the Chief Executive Officer and (ii) the CIC Applicable Multiple set forth in Section 4.2(d) below for theother Participants.(b)Reimbursement for Health Coverage. If the Participant is eligible for and timely elects toreceive continued health coverage under the Company’s health plan under COBRA at a level of 197750978 v8coverage at or below the Participant’s level of coverage in effect on the date of the Participant’s Separation from Service, then for anumber of months equal to the CIC Applicable Multiple, the Company shall reimburse the Participant monthly an amount equal to themonthly COBRA premium paid by the Participant, less the premium charge that is paid by the Company’s active employees for suchcoverage as in effect on the date of the Participant’s Separation from Service. Such reimbursement shall be made in accordance withand subject to the conditions set forth in Section 4.1(b) (but based on the Severance Period determined under this Section 4.2(b)).(c)Accelerated Vesting. The Participant shall vest on an accelerated basis with respect to100% of the unvested shares subject to any option to purchase shares of the Company’s common stock or any other equity awardgranted to the Participant to the extent outstanding and unvested at the time of the Participant’s Separation from Service. Each of theParticipant’s stock options to the extent outstanding and as so vested at the time of the Participant’s Separation from Service under thisSection 4.2(c) shall remain exercisable for a period of twelve (12) months measured from the date of Separation from Service, but in noevent beyond the expiration of the maximum option term.(d)CIC Applicable Multiple. The CIC Applicable Multiple under this Section 4.2 shall be asfollows:(i)Chief Executive Officer: 18(ii)Executive Vice President: 15(iii)Senior Vice President: 12(iv)Vice President: 94.3No Duplication of Benefits. Notwithstanding anything to the contrary, under no circumstances shall aParticipant be eligible to receive payments under both Sections 4.1 and 4.2.4.4Release Requirement. Notwithstanding anything to the contrary in this Plan, in order to receive anyseverance payments or benefits under this Plan, the Participant must first execute and deliver to the Company, within twenty-one (21)days (or forty-five (45) days if such longer period is required under applicable law) after the effective date of the Participant’sSeparation from Service, a general settlement and release agreement in substantially the form attached hereto as Exhibit A (the“General Release”) and such General Release must become effective and enforceable in accordance with its terms following theexpiration of any applicable revocation period under federal or state law. If such General Release is not executed and delivered to theCompany within the applicable twenty-one (21) (or forty-five (45))-day period hereunder or does not otherwise become effective andenforceable in accordance with its terms, then no severance payments or benefits will provided to the Participant under this Plan.4.5Section 280G.(a)If any payment or benefit a Participant would receive from the Company pursuant to thisPlan or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii)but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall beequal to the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in noportion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment,whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax(all computed at the highest applicable marginal rate), results in the Participant’s receipt, on an after-tax basis, of the greater economicbenefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in a Payment isrequired pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (x) of the preceding sentence,the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for the Participant. Ifmore than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “ProRata Reduction Method”).(b)Notwithstanding any provision of Section 4.5(a) to the contrary, if the Reduction Methodor the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A of theCode that would not otherwise be subject to taxes pursuant to Section 409A of the Code, then the Reduction Method and/or the ProRata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A of theCode as follows: (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest economic benefit forthe Participant as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g., beingterminated without cause), shall be reduced (or 197750978 v8eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are "deferredcompensation" within the meaning of Section 409A of the Code shall be reduced (or eliminated) before Payments that are not deferredcompensation within the meaning of Section 409A of the Code.(c)In the event it is subsequently determined by the Internal Revenue Service that someportion of the Reduced Amount as determined pursuant to clause (x) in the preceding paragraph is subject to the Excise Tax, theParticipant agrees to promptly return to the Company a sufficient amount of the Payment so that no portion of the Reduced Amount issubject to the Excise Tax. For the avoidance of doubt, if the Reduced Amount is determined pursuant to clause (y) in Section 4.5(b),the Participant will have no obligation to return any portion of the Payment pursuant to the preceding sentence.(d)The accounting firm engaged by the Company for general tax compliance purposes as ofthe day prior to the effective date of the Change in Control shall perform the foregoing calculations unless otherwise determined by theCompany. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or groupeffecting the Change in Control, the Company shall appoint a nationally recognized accounting firm to make the determinationsrequired hereunder. The Company shall bear all expenses with respect to the determinations by such accounting firm required to bemade hereunder.Article 5Claims and Review Procedures5.1Claims Procedure. Any individual (“claimant”) who has not received benefits under the Plan that theclaimant believes should be paid shall make a claim for such benefits as follows:(a)Initiation - Written Claim. The claimant initiates a claim by submitting to the PlanAdministrator a written claim for the benefits.(b)Timing of Plan Administrator Response. The Plan Administrator shall respond to suchclaimant within ninety (90) days after receiving the claim. If the Plan Administrator determines that special circumstances requireadditional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days bynotifying the claimant in writing, prior to the end of the initial ninety (90)-day period, that an additional period is required. The noticeof extension must set forth the date by which the Plan Administrator expects to render its decision.(c)Notice of Decision. If the Plan Administrator denies part or all of the claim, the PlanAdministrator shall notify the claimant in writing of such denial. The Plan Administrator shall write the notification in a mannercalculated to be understood by the claimant. The notification shall set forth:(i)The specific reason for the denial;(ii)A reference to the specific provisions of the Plan on which the denial isbased;(iii)A description of any additional information or material necessary for theclaimant to perfect the claim and an explanation of why it is needed;(iv)An explanation of the Plan’s review procedures and the time limitsapplicable to such procedures; and(v)A statement of the claimant’s right to bring a civil action under theEmployee Retirement Income Security Act of 1974 (“ERISA”) Section 502(a) following an adverse benefit determination on review.5.2Review Procedure. If the Plan Administrator denies part or all of the claim, the claimant shall have theopportunity for a full and fair review by the Plan Administrator of the denial, as follows:(a)Initiation - Written Request. To initiate the review, the claimant, within sixty (60) daysafter receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.(b)Additional Submissions - Information Access. The claimant shall then have theopportunity to submit written comments, documents, records and other information relating to the claim. The Plan Administrator shallalso provide the claimant, upon request and free of charge, reasonable access 197750978 v8to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’sclaim for benefits.(c)Timing of Plan Administrator Response. The Plan Administrator shall respond to theclaimant’s request for review within sixty (60) days after receiving the request. If the Plan Administrator determines that specialcircumstances require additional time for processing the request, the Plan Administrator can extend the response period by anadditional sixty (60) days by notifying the claimant in writing, prior to the end of the initial sixty (60)-day period, that an additionalperiod is required. The notice of extension must set forth the date by which the Plan Administrator expects to render its decision.(d)Notice of Decision. If the Plan Administrator affirms the denial of part or the entire claim,the Plan Administrator shall notify the claimant in writing of such denial. The Plan Administrator shall write the notification in amanner calculated to be understood by the claimant. The notification shall set forth the specific reason for the denial and a reference tothe specific provisions of the Plan on which the denial is based.5.3Authority. In determining whether to approve or deny any claim or any appeal from a denied claim, thePlan Administrator shall exercise its discretionary authority to interpret the Plan and the facts presented with respect to the claim, and itsdiscretionary authority to determine eligibility for benefits under the Plan. Any approval or denial shall be final and conclusive upon allpersons.5.4Exhaustion of Remedies. Except as required by applicable law, no action at law or equity shall be broughtto recover a benefit under the Plan unless and until the claimant has: (a) submitted a claim for benefits, (b) been notified by the PlanAdministrator that the benefits (or a portion thereof) are denied, (c) filed a written request for a review of denial with the PlanAdministrator, and (d) been notified in writing that the denial has been affirmed.Article 6Amendment and TerminationIt is intended that the Plan shall continue from year to year, subject to periodic review by the Plan Administrator. However,the Plan Administrator reserves the right to modify, amend or terminate the Plan at any time; provided, that no amendment ortermination shall adversely affect the rights of any then Eligible Employee under the Plan without the consent of such EligibleEmployee.Article 7Miscellaneous7.1Section 409A.(a)The severance payments and other benefits under this Plan are intended, where possible,to comply with the “short term deferral exception” and the “involuntary separation pay exception” to Section 409A of the Code.Accordingly, the provisions of this Plan applicable to the severance payments described in Article 4 and the determination of theParticipant’s Separation from Service due to termination of the Participant’s employment without Cause or the Participant’s resignationfor Good Reason shall be applied, construed and administered so that those payments and benefits qualify for one or both of thoseexceptions, to the maximum extent allowable. However, to the extent any payment or benefit to which the Participant becomes entitledunder this Plan is deemed to constitute an item of deferred compensation subject to the requirements of Section 409A of the Code, theprovisions of this Plan applicable to that payment or benefit shall be applied, construed and administered so that such payment orbenefit is made or provided in compliance with the applicable requirements of Section 409A of the Code. In addition, should therearise any ambiguity as to whether any other provisions of this Plan would contravene one or more applicable requirements orlimitations of Section 409A of the Code and the Treasury Regulations thereunder, such provisions shall be interpreted, administeredand applied in a manner that complies with the applicable requirements of Section 409A of the Code and the Treasury Regulationsthereunder. The severance payments under Article 4 shall be treated as a right to a series of separate payments for purposes of Section409A of the Code.(b)Notwithstanding any provision in this Plan the contrary, no payment or distribution underthis Plan which constitutes an item of deferred compensation under Section 409A of the Code and becomes payable by reason of theParticipant’s termination of employment with the Company will be made to the Participant until the Participant incurs a Separationfrom Service in connection with such termination of employment. For purposes of this Plan, each amount to be paid or benefit to beprovided to the Participant shall be treated as a separate identified payment or benefit for purposes of Section 409A of the Code. Inaddition, no payment or benefit which constitutes an item of deferred compensation under 197750978 v8Section 409A of the Code and becomes payable by reason of the Participant’s Separation from Service will be made to the Participantprior to the earlier of (i) the first day of the seven (7)-month period measured from the date of such Separation from Service or (ii) thedate of the Participant’s death, if the Participant is deemed at the time of such Separation from Service to be a specified employee (asdetermined pursuant to Section 409A of the Code and the Treasury Regulations thereunder) and such delayed commencement isotherwise required in order to avoid a prohibited distribution under Section 409A(a)(2) of the Code. Upon the expiration of theapplicable deferral period, all payments and benefits deferred pursuant to this Section 7.1(b) (whether they would have otherwise beenpayable in a single sum or in installments in the absence of such deferral) shall be paid or provided to the Participant in a lump sum onthe first day of the seventh (7th) month after the date of the Participant’s Separation from Service or, if earlier, the first day of the monthimmediately following the date the Company receives proof of the Participant’s death. Any remaining payments or benefits due underthis Plan will be paid in accordance with the normal payment dates specified herein.(c)During the period the COBRA premium reimbursement arrangement remains in effect,the following provisions shall govern the arrangement: (i) the amount of the COBRA premiums eligible for reimbursement in any onecalendar year during the Coverage Period shall not affect the amount of such costs eligible for reimbursement in any other calendaryear for which such reimbursement is to be provided hereunder; (ii) no costs shall be reimbursed after the close of the calendar yearfollowing the calendar year in which those costs were incurred; and (iii) the Participant’s right to the reimbursement of such costscannot be liquidated or exchanged for any other benefit.7.2Not an Employment Contract. The adoption and maintenance of this Plan shall not be deemed to confer onany Participant any right to continue in the employ of the Employer Group, and shall not be deemed to interfere with the right of theEmployer Group to discharge any person, with or without cause, or treat any person without regard to the effect that such treatmentmight have on the person as a Plan participant.7.3Benefits Non‑Assignable. No right or interest of a participant in this Plan shall be assignable ortransferable, in whole or in part, either directly or by operation of law or otherwise, including but not by way of limitation, execution,levy, garnishment, attachment, pledge, bankruptcy, assignments for the benefit of creditors, receiverships, or in any other manner,excluding transfer by operation of law as a result solely of mental incompetency.7.4Tax Withholding. The Company shall withhold any applicable income or employment taxes that arerequired to be withheld from the severance benefits payable under this Plan.7.5Applicable Law. This Plan is a welfare plan subject to ERISA and it shall be interpreted, administered, andenforced in accordance with that law.7.6Gender and Number. Any masculine pronouns used herein shall refer to both men and women, and the useof any term herein in the singular may also include the plural unless otherwise indicated by context.7.7Severability. If any provision of this Plan is held invalid or unenforceable by a court of competentjurisdiction, all remaining provisions shall continue to be fully effective.7.8Binding Agreement. This Plan shall be binding upon and inure to the benefit of the Company, itssuccessors and assigns, and the Participants and their heirs, executors, administrators and legal representatives.IN WITNESS WHEREOF, Sangamo Therapeutics, Inc. has caused this Plan to be executed by its duly authorized officereffective as of the Effective Date.SANGAMO THERAPEUTICS, INC.By: /s/ Alexander D. MacraeIts: President and Chief Executive Officer 197750978 v8EXHIBIT 10.26EXECUTIVE EMPLOYMENT AGREEMENTEmployment Agreement (“Agreement”) made as of the 17th day of January, 2018 by and between Sangamo Therapeutics,Inc., a Delaware corporation (the “Company”), and Heather Turner (“Executive”) (2collectively, the “Parties”).R E C I T A L SWHEREAS, the Company desires to employ Executive, and Executive desires to be employed by the Company, on theterms and conditions set forth in this Agreement.NOW, THEREFORE, in consideration of the mutual promises set forth herein, the Parties agree follows:1.Employment.The Company hereby agrees to employ Executive and Executive hereby agrees to accept such employment, on the termsand conditions set forth in this Agreement, with a start date of February 12, 2018 (the “Effective Date”).2.At-Will Employment.Executive shall be employed on an at-will basis. Either Executive or the Company may terminate employment at any time,with or without cause, and with or without advance notice. 3.Position, Duties and Obligations.(a)Executive shall be appointed as the Company’s Senior Vice President and GeneralCounsel and Secretary. Executive shall serve in such position, and in such other positions as the Board and the Company may fromtime to time reasonably determine, subject at all times to the direction, supervision and authority of the Chief Executive Officer or suchother officer as designated by the Chief Executive Officer. (b)During Executive’s employment, Executive shall perform Executive’s duties faithfullyand to the best of Executive’s ability and shall devote substantially all of Executive’s business time, attention, knowledge, skills andinterests to the business of the Company (and its subsidiaries). (c)During Executive’s employment, Executive shall not, whether directly or indirectly,render any services of a commercial or professional nature to any other person or organization, whether for compensation or otherwise,without the prior written consent of the Chief Executive Officer.153466986 v4 (d)The foregoing in this Section 1 shall not preclude Executive from serving on anycorporate, civic or charitable boards or committees on which Executive is serving as of the Effective Date and discloses to the ChiefExecutive Officer prior to the Effective Date or on which Executive commences service following such date with the Chief ExecutiveOfficer’s prior written approval, so long as such activities do not interfere with the performance of Executive’s responsibilitieshereunder. (e)Executive’s principal place of business will initially be located in Richmond, Californiaand is anticipated to transition to Brisbane, California in connection with the Company’s planned relocation to a new facility.(f)Executive represents that Executive may enter into this Agreement, and as of theEffective Date, 1) accept employment with the Company under the terms of this Agreement, and 2) perform the duties andresponsibilities contemplated by this Agreement without violating any other agreement or agreements with other parties including butnot limited to prior employers.4.Compensation and Benefits.(a)Base Compensation. The Company shall pay to Executive an annual base salary offour hundred thousand dollars ($400,000), prorated for any partial employment period and payable in equal monthly installments inaccordance with the Company’s payroll schedule. The Compensation Committee of the Board shall annually review the then-currentlevel of Executive’s base salary to determine the amount, if any, of change to such salary.(b)Annual Performance Bonus. Executive is eligible to earn an annual performancebonus commencing with the 2018 calendar year performance period. The target amount of Executive’s annual cash bonus shall bethirty-five percent (35%) of Executive’s annual base salary. The Board shall have sole discretion to determine whether any annualcash bonus will be paid based upon achievement of both corporate objectives and Executive’s personal objectives, and the solediscretion to determine that actual amount of any such bonus. Executive must be an employee in good standing on the date that theBoard makes such determination in order to earn any such bonus, which determination shall be made by the Board between January 1and March 31 of the calendar year first following the performance period calendar year. Any bonus to which Executive becomesentitled for a particular calendar year shall be paid in accordance with the terms of the applicable bonus plan, but in no event later thanthe second payroll period following such Board determination. The Compensation Committee of the Board shall annually reviewExecutive’s then target amount for the annual cash bonus to determine the amount, if any, of change to such target amount.(c)Executive Severance Plan. Executive shall be deemed an Eligible Employee andentitled to receive certain severance benefits under the Sangamo Therapeutics, Inc. Executive Severance Plan dated March 14, 2017(the “Severance Plan”) subject to the terms and conditions of the Severance Plan. A copy of the Severance Plan has been provided toExecutive concurrently with this Agreement.2DB2/ 31050483.3 153466986 v4(d)Retention Bonus Advance. Executive shall be advanced a retention bonus (the"Retention Bonus") in the amount of one hundred fifty thousand dollars ($150,000), payable in the first regularly scheduled payrollafter the Effective Date. Although the Retention Bonus is advanced at the beginning of Executive's employment, it is expresslyconditioned on Executive not terminating employment prior to the first (1st) anniversary of the Effective Date under any circumstancesother than a termination that would entitle Executive to receive benefits under the Severance Plan, and such advanced Retention Bonusshall not be deemed earned by Executive until such service condition has been met. If Executive's employment terminates at any timeprior to the first (1st) anniversary of the Effective Date and Executive is not entitled to receive benefits under the Severance Plan (suchtermination, a “Disqualifying Termination”), then, Executive shall at the time of such Disqualifying Termination promptly repay theRetention Bonus to the Company. In the event Executive does not earn and fails to promptly repay the Retention Bonus in connectionwith a Disqualifying Termination, then the Company shall be further entitled to recover from Executive its costs and expenses incurredin enforcing Executive’s repayment obligation, including reasonable attorneys' fees and costs.(e)Benefits. Executive will be entitled to the employee benefits generally provided to otherexecutive officers of the Company. Under the Company’s vacation policy, Executive will have 10 sick days, 15 vacation days and 10Company holidays per year.(f)Equity. As an inducement to Executive’s commencement of employment, effective asof the last business day of the month in which the Effective Date occurs, the Compensation Committee of the Board shall grantExecutive a non-qualified stock option to purchase up to 200,000 shares of the Company’s Common Stock with an exercise price pershare equal to the fair market value of the Company’s Common Stock on the applicable date of grant (the “Option”) under theCompany’s 2013 Stock Incentive Plan (the “Plan”). The Option will be evidenced by the standard stock option agreement under thePlan and will be subject to the terms and conditions of that agreement and the Plan, with one-quarter of the Option shares vestingtwelve (12) months from the Effective Date and the remainder vesting in equal monthly installments for thirty-six (36) monthsthereafter, provided Executive remains a full-time employee through each such vesting date. Vesting of the Option and anysubsequent equity grants will cease upon termination of Executive’s service by either party for any reason.(g)Clawback. Notwithstanding anything to the contrary in this Agreement, allcompensation paid to Executive by the Company (whether payable pursuant to this Agreement or otherwise) will be subject toreduction, recovery and/or recoupment to the extent required and allowed by any present or future law, government regulation or stockexchange listing requirement (or any policy adopted by the Company which ensures compliance with the requirements of any suchlaw, government regulation or stock exchange listing requirement).(h)Resignation from Positions. Notwithstanding any other provision of this Agreement tothe contrary, upon any termination of employment (whether voluntary or involuntary), Executive, upon written request from the Board,shall immediately resign from any positions Executive has with the Company (or any subsidiary), whether as an executive, officer,employee, consultant, director, trustee, fiduciary or otherwise.3DB2/ 31050483.3 153466986 v45.Confidentiality. Executive agrees to abide by the terms and conditions of the Proprietary Information, Inventions andMaterials Agreement between Executive and the Company, a copy of which is attached as Exhibit A. Executive further agrees that atall times both during Executive’s employment by the Company and after Executive’s employment ends, Executive will keep inconfidence and trust, and will not use or disclose, except as directed by the Company, any confidential or proprietary information ofthe Company. 6.Tax Withholdings. Any and all cash compensation and other benefits (including without limitation, base salary, annualbonus and sign-on bonus) paid to Executive under this Agreement shall be subject to all applicable tax withholding requirements, andthe Company shall make such other deductions as may be required and/or allowed by applicable law and/or as authorized in writing byExecutive.7.Arbitration. Any dispute, controversy, or claim, whether contractual or non-contractual, between Executive and theCompany shall be resolved by binding arbitration before the Judicial Arbitration and Mediation Service (the “JAMS”), in accordancewith the JAMS Employment Arbitration Rules and Procedures, available at www.jamsadr.com. Executive and the Company eachagree that before proceeding to arbitration, they will mediate disputes before the JAMS by a mediator approved by the JAMS. Ifmediation fails to resolve the matter, any subsequent arbitration shall be conducted by an arbitrator approved by the JAMS andmutually acceptable to Executive and the Company. All disputes, controversies, and claims shall be conducted by a single arbitrator,who shall: (i) allow discovery authorized by California Code of Civil Procedure Section 1282, et seq., or any other discovery requiredby applicable law; and (ii) issue a written award that sets forth the essential findings of fact and conclusions of law on which the awardis based. The arbitrator shall have the authority to award any relief authorized by law in connection with the asserted claims ordisputes. Judgment upon the arbitrator’s award may be entered in any court having jurisdiction thereof. If Executive and theCompany are unable to agree on the mediator or the arbitrator, then the JAMS shall select the mediator/arbitrator. The resolution of thedispute by the arbitrator shall be final, binding, non-appealable, and fully enforceable by a court of competent jurisdiction under theFederal Arbitration Act. The arbitration award shall be in writing and shall include a statement of the reasons for the award. Thearbitration shall be held in San Francisco, California. The Company shall pay all JAMS, mediation, and arbitrator’s fees and costs,irrespective of who raised the claim and the outcome of arbitration.8.Miscellaneous.(a)Conditions to Agreement. This Agreement is contingent upon a background checkclearance, satisfactory reference check, and satisfactory proof of Executive’s legal right to work in the United States. Executive agreesto provide any documentation or information at the Company’s request to facilitate these processes. (b)Governing Law. This Agreement shall be interpreted, construed, governed andenforced according to the laws of the State of California.4DB2/ 31050483.3 153466986 v4(c)Attorneys’ Fees. In the event of any controversy, claim or dispute between the parties,arising out of or relating to this Agreement or the breach hereof, or the interpretation hereof, each party shall bear its own legal fees andexpenses. Notwithstanding the foregoing, in the event of a finding by any court having jurisdiction over such matter that any partyinitiating an action under this Agreement failed to have a reasonable prospect of prevailing on its claim, the court shall have discretionto award the prevailing party attorneys’ fees and costs incurred by it with respect to such claim or action. The "prevailing party" meansthe party determined by the court to have most nearly prevailed, even if such party did not prevail in all matters, not necessarily the onein whose favor a judgment is rendered.(d)Amendments. No amendment or modification of the terms or conditions of thisAgreement shall be valid unless in writing and signed by the Parties hereto.(e)Severability. If any provision of this Agreement as applied to any party or to anycircumstance should be adjudged by a court of competent jurisdiction (or determined by the arbitrator) to be void or unenforceable forany reason, the invalidity of that provision shall in no way affect (to the maximum extent permissible by law) the application of suchprovision under circumstances different from those adjudicated by the court or determined by the arbitrator, the application of any otherprovision of this Agreement, or the enforceability or invalidity of this Agreement as a whole. Should any provision of this Agreementbecome or be deemed invalid, illegal or unenforceable in any jurisdiction by reason of the scope, extent or duration of its coverage,then such provision shall be deemed amended to the extent necessary to conform to applicable law so as to be valid and enforceable or,if such provision cannot be so amended without materially altering the intention of the parties, then such provision will be stricken, andthe remainder of this Agreement shall continue in full force and effect.(f)Successors and Assigns. The rights and obligations of the Company under thisAgreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. Executive shall not beentitled to assign any of Executive’s rights or obligations under this Agreement.(g)Entire Agreement. This Agreement, along with any other agreements set forth herein,including without limitation, the Proprietary Information and Inventions Agreement, constitutes the entire agreement between theparties with respect to the employment of Executive.[signature page follows]5DB2/ 31050483.3 153466986 v4 SANGAMO THERAPEUTICS, INC. By:/s/ Sandy MacraeName: Sandy Macrae, MB, CH.B, Ph.DTitle: CEO HEATHER TURNER/s/ Heather Turner 153466986 v4  EXHIBIT AProprietary Information, Inventions and Materials Agreement 153466986 v4 EXHIBIT 10.27EXECUTIVE EMPLOYMENT AGREEMENTEmployment Agreement (“Agreement”) made as of the 1st day of October, 2018 by and between Sangamo Therapeutics,Inc., a Delaware corporation (the “Company”), and Stephane Boissel (“Executive”) (collectively, the “Parties”).R E C I T A L SWHEREAS, the Company desires to employ Executive, and Executive desires to be employed by the Company, on theterms and conditions set forth in this Agreement.NOW, THEREFORE, in consideration of the mutual promises set forth herein, the Parties agree follows:1.Employment.The Company hereby agrees to employ Executive and Executive hereby agrees to accept such employment, on the termsand conditions set forth in this Agreement, with a start date of October 2, 2018 (the “Effective Date”).2.At-Will Employment.Executive shall be employed on an at-will basis. Either Executive or the Company may terminate employment at any time,with or without cause, and with or without advance notice. 3.Position, Duties and Obligations.(a)Executive shall be appointed as the Executive Vice President, CorporateStrategy. Executive shall serve in such position, and in such other positions as the Board and the Company may from time to timereasonably determine, subject at all times to the direction, supervision and authority of the Chief Executive Officer. (b)During Executive’s employment, Executive shall perform Executive’s duties faithfullyand to the best of Executive’s ability. During the period from the Effective Date through December 31, 2018 (the “Part-Time Period”),Executive shall be employed on a part-time basis and shall devote approximately thirty percent of his business working time to theCompany. From January 1, 2019 until Executive’s employment with the Company terminates, Executive shall devote substantially allof Executive’s business time, attention, knowledge, skills and interests to the business of the Company (and its subsidiaries). (c)During Executive’s employment, Executive shall not, whether directly or indirectly,render any services of a commercial or professional nature to any other person or organization, whether for compensation or otherwise,without the prior written consent of the 186404221 v2Chief Executive Officer; provided, however, that Executive shall be entitled to continue his current employment with TxCell S.A.pursuant to his existing employment agreement with TxCell through the end of the Part-Time Period. On December 31, 2018,Executive shall sever his employment relationship with TxCell S.A. (d)The foregoing in this Section 3 shall not preclude Executive from serving on anycorporate, civic or charitable boards or committees on which Executive is serving as of the Effective Date and discloses to the ChiefExecutive Officer prior to the Effective Date or on which Executive commences service following such date with the Chief ExecutiveOfficer’s prior written approval, so long as such activities do not interfere with the performance of Executive’s responsibilitieshereunder. (e)Executive’s principal place of business will initially be located in Lyon and Valbonne,France and is anticipated to transition to Brisbane, California upon termination of the Part-Time Period.(f)Executive represents that Executive may enter into this Agreement, and as of theEffective Date, 1) accept employment with the Company under the terms of this Agreement, and 2) perform the duties andresponsibilities contemplated by this Agreement without violating any other agreement or agreements with other parties including butnot limited to TxCell S.A. and any prior employers.4.Compensation and Benefits.(a)Base Compensation. The Company shall pay to Executive an annual base salary offour hundred eighty thousand dollars ($480,000), prorated for any partial employment period and payable in equal monthlyinstallments in accordance with the Company’s payroll schedule; provided, however, that Executive’s annual base salary during thePart-Time Period shall be paid at the rate of one hundred forty thousand dollars ($140,000) . The Compensation Committee of theBoard shall annually review the then-current level of Executive’s base salary to determine the amount, if any, of change to such salary.(b)Annual Performance Bonus. Executive is eligible to earn an annual performancebonus commencing with the 2019 calendar year performance period. The target amount of Executive’s annual cash bonus shall beforty percent (40%) of Executive’s annual base salary. The Board shall have sole discretion to determine whether any annual cashbonus will be paid based upon achievement of both corporate objectives and Executive’s personal objectives, and the sole discretion todetermine that actual amount of any such bonus. Executive must be an employee in good standing on the date that the Board makessuch determination in order to earn any such bonus, which determination shall be made by the Board no later than March 31 of thecalendar year first following the performance period calendar year. Any bonus to which Executive becomes entitled for a particularcalendar year shall be paid in accordance with the terms of the applicable bonus plan, but in no event later than the second payrollperiod following such Board determination. The Compensation Committee of the Board shall annually2DB2/ 31050483.3 186404221 v2review Executive’s then target amount for the annual cash bonus to determine the amount, if any, of change to such target amount.(c)Executive Severance Plan. Executive shall be deemed an Eligible Employee and anExecutive Officer and entitled to receive certain severance benefits under the Sangamo Therapeutics, Inc. Executive Severance Plandated March 14, 2017 (the “Severance Plan”) subject to the terms and conditions of the Severance Plan. A copy of the Severance Planhas been provided to Executive concurrently with this Agreement.(d)Retention Bonus Advance. Executive shall be advanced a retention bonus (the"Retention Bonus") in the amount of one hundred thousand dollars ($100,000), payable in the first regularly scheduled payroll after theEffective Date. Although the Retention Bonus is advanced at the beginning of Executive's employment, it is expressly conditioned onExecutive not terminating employment prior to the first (1st) anniversary of the Effective Date under any circumstances other than atermination that would entitle Executive to receive benefits under the Severance Plan, and such advanced Retention Bonus shall not bedeemed earned by Executive until such service condition has been met. If Executive's employment terminates at any time prior to thefirst (1st) anniversary of the Effective Date and Executive is not entitled to receive benefits under the Severance Plan (such termination,a “Disqualifying Termination”), then, Executive shall at the time of such Disqualifying Termination promptly repay the full RetentionBonus to the Company. In the event Executive does not earn and fails to promptly repay the Retention Bonus in connection with aDisqualifying Termination, then the Company shall be further entitled to recover from Executive its costs and expenses incurred inenforcing Executive’s repayment obligation, including reasonable attorneys' fees and costs.(e)Benefits. Executive will be entitled to the employee benefits generally provided to otherexecutive officers of the Company pursuant to the terms of the applicable benefit plans. Under the Company’s vacation policy,Executive will have 10 sick days, 15 vacation days and 10 Company holidays per year.(f)Equity. Effective as of November 23, 2018 (the “Grant Date”), the CompensationCommittee of the Board shall grant Executive a non-statutory stock option to purchase up to 215,000 shares of the Company’sCommon Stock with an exercise price per share equal to the fair market value of the Company’s Common Stock on the Grant Date(the “Option”) under the Company’s 2018 Equity Incentive Plan (the “Plan”). The Option will be evidenced by the standard stockoption agreement under the Plan and will be subject to the terms and conditions of that agreement, the Plan and the French StockOptions Sub-Plan, with one-quarter of the Option shares vesting twelve (12) months from the Grant Date and the remainder vesting inequal monthly installments for thirty-six (36) months thereafter, provided Executive remains a full-time employee through each suchvesting date. Vesting of the Option and any subsequent equity grants will cease upon termination of Executive’s service by eitherparty for any reason.(g)Clawback. Notwithstanding anything to the contrary in this Agreement, allcompensation paid to Executive by the Company (whether payable pursuant to this3DB2/ 31050483.3 186404221 v2Agreement or otherwise) will be subject to reduction, recovery and/or recoupment to the extent required and allowed by any present orfuture law, government regulation or stock exchange listing requirement (or any policy adopted by the Company which ensurescompliance with the requirements of any such law, government regulation or stock exchange listing requirement).(h)Resignation from Positions. Notwithstanding any other provision of this Agreement tothe contrary, upon any termination of employment (whether voluntary or involuntary), Executive, upon written request from the Board,shall immediately resign from any positions Executive has with the Company (or any subsidiary), whether as an executive, officer,employee, consultant, director, trustee, fiduciary or otherwise.5.Confidentiality. Executive agrees to abide by the terms and conditions of the Proprietary Information, Inventions andMaterials Agreement between Executive and the Company, a copy of which is attached as Exhibit A. Executive further agrees that atall times both during Executive’s employment by the Company and after Executive’s employment ends, Executive will keep inconfidence and trust, and will not use or disclose, except as directed by the Company, any confidential or proprietary information ofthe Company. 6.Tax Withholdings. Any and all cash compensation and other benefits (including without limitation, base salary, annualbonus and sign-on bonus) paid to Executive under this Agreement shall be subject to all applicable tax withholding requirements, andthe Company shall make such other deductions as may be required and/or allowed by applicable law and/or as authorized in writing byExecutive.7.Arbitration. Any dispute, controversy, or claim, whether contractual or non-contractual, between Executive and theCompany shall be resolved by binding arbitration before the Judicial Arbitration and Mediation Service (the “JAMS”), in accordancewith the JAMS Employment Arbitration Rules and Procedures, available at www.jamsadr.com. Executive and the Company eachagree that before proceeding to arbitration, they will mediate disputes before the JAMS by a mediator approved by the JAMS. Ifmediation fails to resolve the matter, any subsequent arbitration shall be conducted by an arbitrator approved by the JAMS andmutually acceptable to Executive and the Company. All disputes, controversies, and claims shall be conducted by a single arbitrator,who shall: (i) allow discovery authorized by California Code of Civil Procedure Section 1282, et seq., or any other discovery requiredby applicable law; and (ii) issue a written award that sets forth the essential findings of fact and conclusions of law on which the awardis based. The arbitrator shall have the authority to award any relief authorized by law in connection with the asserted claims ordisputes. Judgment upon the arbitrator’s award may be entered in any court having jurisdiction thereof. If Executive and theCompany are unable to agree on the mediator or the arbitrator, then the JAMS shall select the mediator/arbitrator. The resolution of thedispute by the arbitrator shall be final, binding, non-appealable, and fully enforceable by a court of competent jurisdiction under theFederal Arbitration Act. The arbitration award shall be in writing and shall include a statement of the reasons for the award. Thearbitration shall be held in San Francisco, California. The Company shall pay all JAMS, mediation, and arbitrator’s fees and costs,irrespective of who raised the claim and the outcome of arbitration.4DB2/ 31050483.3 186404221 v28.Miscellaneous.(a)Conditions to Agreement. This Agreement is contingent upon a background checkclearance, satisfactory reference check, and satisfactory proof of Executive’s legal right to work in the United States. Executive agreesto provide any documentation or information at the Company’s request to facilitate these processes. (b)Governing Law. This Agreement shall be interpreted, construed, governed andenforced according to the laws of the State of California.(c)Attorneys’ Fees. In the event of any controversy, claim or dispute between the parties,arising out of or relating to this Agreement or the breach hereof, or the interpretation hereof, each party shall bear its own legal fees andexpenses. Notwithstanding the foregoing, in the event of a finding by any court having jurisdiction over such matter that any partyinitiating an action under this Agreement failed to have a reasonable prospect of prevailing on its claim, the arbitrator shall havediscretion to award the prevailing party attorneys’ fees and costs incurred by it with respect to such claim or action. The "prevailingparty" means the party determined by the arbitrator to have most nearly prevailed, even if such party did not prevail in all matters, notnecessarily the one in whose favor a judgment is rendered.(d)Amendments. No amendment or modification of the terms or conditions of thisAgreement shall be valid unless in writing and signed by the Parties hereto.(e)Severability. If any provision of this Agreement as applied to any party or to anycircumstance should be adjudged by a court of competent jurisdiction (or determined by the arbitrator) to be void or unenforceable forany reason, the invalidity of that provision shall in no way affect (to the maximum extent permissible by law) the application of suchprovision under circumstances different from those adjudicated by the court or determined by the arbitrator, the application of any otherprovision of this Agreement, or the enforceability or invalidity of this Agreement as a whole. Should any provision of this Agreementbecome or be deemed invalid, illegal or unenforceable in any jurisdiction by reason of the scope, extent or duration of its coverage,then such provision shall be deemed amended to the extent necessary to conform to applicable law so as to be valid and enforceable or,if such provision cannot be so amended without materially altering the intention of the parties, then such provision will be stricken, andthe remainder of this Agreement shall continue in full force and effect.(f)Successors and Assigns. The rights and obligations of the Company under thisAgreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. Executive shall not beentitled to assign any of Executive’s rights or obligations under this Agreement.(g)Entire Agreement. This Agreement, along with any other agreements set forth herein,including without limitation, the Proprietary Information and Inventions5DB2/ 31050483.3 186404221 v2Agreement, constitutes the entire agreement between the parties with respect to the employment of Executive.[signature page follows]6DB2/ 31050483.3 186404221 v2 SANGAMO THERAPEUTICS, INC. By:/s/ Sandy MacraeName: Sandy Macrae, MB, CH.B, Ph.DTitle:CEO STEPHANE BOISSEL/s/ Stephane Boissel 186404221 v2 EXHIBIT AProprietary Information, Inventions and Materials Agreement 186404221 v2EXHIBIT 10.28EXECUTIVE EMPLOYMENT AGREEMENTEmployment Agreement (“Agreement”) made as of the 18th day of November, 2018 by and between SangamoTherapeutics, Inc., a Delaware corporation (the “Company”), and Adrian Woolfson (“Executive”) (collectively, the “Parties”).R E C I T A L SWHEREAS, the Company desires to employ Executive, and Executive desires to be employed by the Company, on theterms and conditions set forth in this Agreement.NOW, THEREFORE, in consideration of the mutual promises set forth herein, the Parties agree follows:1.Employment.The Company hereby agrees to employ Executive and Executive hereby agrees to accept such employment, on the termsand conditions set forth in this Agreement, with a start date of January 21, 2019 (the “Effective Date”).2.At-Will Employment.Executive shall be employed on an at-will basis. Either Executive or the Company may terminate employment at any time,with or without cause, and with or without advance notice. 3.Position, Duties and Obligations.(a)Executive shall be appointed as the Executive Vice President, Research andDevelopment. Executive shall serve in such position, and in such other positions as the Board and the Company may from time totime reasonably determine, subject at all times to the direction, supervision and authority of the Chief Executive Officer. During hisemployment, Executive shall report solely and directly to the Chief Executive Officer.(b)During Executive’s employment, Executive shall perform Executive’s duties faithfullyand to the best of Executive’s ability and shall devote substantially all of Executive’s business time, attention, knowledge, skills andinterests to the business of the Company (and its subsidiaries). (c)During Executive’s employment, Executive shall not, whether directly or indirectly,render any services of a commercial or professional nature to any other person or organization, whether for compensation or otherwise,without the prior written consent of the Chief Executive Officer. 186404221 v2 (d)The foregoing in this Section 3 shall not preclude Executive from serving on anycorporate, civic or charitable boards or committees on which Executive is serving as of the Effective Date and discloses to the ChiefExecutive Officer prior to the Effective Date or on which Executive commences service following such date with the Chief ExecutiveOfficer’s prior written approval, so long as such activities do not interfere with the performance of Executive’s responsibilitieshereunder. (e)Executive’s principal place of business will be located in Brisbane, California.(f)Executive represents that Executive may enter into this Agreement, and as of theEffective Date, 1) accept employment with the Company under the terms of this Agreement, and 2) perform the duties andresponsibilities contemplated by this Agreement without violating any other agreement or agreements with other parties including butnot limited to and any prior employers.4.Compensation and Benefits.(a)Base Compensation. The Company shall pay to Executive an annual base salary offour hundred seventy-five thousand dollars ($475,000), prorated for any partial employment period and payable in equal monthlyinstallments in accordance with the Company’s payroll schedule. The Compensation Committee of the Board shall annually reviewthe then-current level of Executive’s base salary (for increase only) to determine the amount, if any, of change to such salary.(b)Annual Performance Bonus. Executive is eligible to earn an annual performancebonus commencing with the 2019 calendar year performance period. The target amount of Executive’s annual cash bonus shall beforty percent (40%) of Executive’s annual base salary. The Board shall have sole discretion to determine whether any annual cashbonus will be paid based upon achievement of both corporate objectives and Executive’s personal objectives, and the reasonablediscretion to determine that actual amount of any such bonus. Executive must be an employee in good standing on the date that theBoard makes such determination in order to earn any such bonus, which determination shall be made by the Board no later than March31 of the calendar year first following the performance period calendar year. The actual bonus may be more or less than the targetamount based upon the Company’s achievement over the year. Any bonus to which Executive becomes entitled for a particularcalendar year shall be paid in accordance with the terms of the applicable bonus plan, but in no event later than the second payrollperiod following such Board determination. The Compensation Committee of the Board shall annually review Executive’s then targetamount for the annual cash bonus (for increase only) to determine the amount, if any, of change to such target amount.(c)Executive Severance Plan. Executive shall be deemed an Eligible Employee and anExecutive Officer and entitled to receive certain severance benefits under the Sangamo Therapeutics, Inc. Executive Severance Plandated March 14, 2017 (the “Severance2DB2/ 31050483.3 186404221 v2 Plan”) subject to the terms and conditions of the Severance Plan. A copy of the Severance Plan has been provided to Executiveconcurrently with this Agreement. Notwithstanding the foregoing, in the event that the Company withdraws this offer after it is signedby Executive or terminates this Agreement prior to the Effective Date for any reason other than Executive’s failure to successfully passthe requirements for a background check clearance, satisfactory reference check, and satisfactory proof of Executive’s legal right towork in the United States required under Section 8(a) herein, then Executive shall be entitled to severance under the Severance Plan asthough his employment was terminated by the Company other than for Cause to the same extent as he would otherwise be entitled hadsuch termination occurred after the Effective Date; provided, however, that Executive shall not be entitled to such severance if he hasnot notified his current employer of his intent to resign his employment at the time the Company informs him of the withdrawal ortermination of this Agreement.(d)Retention Bonus Advance. Executive shall be advanced a retention bonus (the"Retention Bonus") in the amount of one hundred fifty thousand dollars ($150,000), payable in the first regularly scheduled payrollafter the Effective Date. Although the Retention Bonus is advanced at the beginning of Executive's employment, it is expresslyconditioned on Executive not terminating employment prior to the first (1st) anniversary of the Effective Date under any circumstancesother than a termination that would entitle Executive to receive benefits under the Severance Plan, and such advanced Retention Bonusshall not be deemed earned by Executive until such service condition has been met. If Executive's employment terminates at any timeprior to the first (1st) anniversary of the Effective Date and Executive is not entitled to receive benefits under the Severance Plan (suchtermination, a “Disqualifying Termination”), then, Executive shall at the time of such Disqualifying Termination promptly repay thefull Retention Bonus to the Company. In the event Executive does not earn and fails to promptly repay the Retention Bonus inconnection with a Disqualifying Termination, then the Company shall be further entitled to recover from Executive its costs andexpenses incurred in enforcing Executive’s repayment obligation, including reasonable attorneys' fees and costs.(e)Benefits. Executive will be entitled to the employee benefits generally provided to otherexecutive officers of the Company pursuant to the terms of the applicable benefit plans. Under the Company’s vacation policy,Executive will have 10 sick days, 15 vacation days and 10 Company holidays per year.(f)Equity. Effective as of February 25, 2019 or the trading day immediately precedingFebruary 25, 2019 in the event February 25, 2019 is not a trading day (the “Grant Date”), the Compensation Committee of the Boardshall grant Executive a non-statutory stock option to purchase up to 250,000 shares of the Company’s Common Stock with an exerciseprice per share equal to the fair market value of the Company’s Common Stock on the Grant Date (the “Option”) under theCompany’s 2018 Equity Incentive Plan (the “Plan”). The Option will be evidenced by the standard stock option agreement under thePlan and will be subject to the terms and conditions of that agreement and the Plan, with one-quarter of the Option shares vestingtwelve (12) months from the Grant Date and the remainder vesting in equal monthly installments for thirty-six (36) months thereafter,provided Executive remains a full-time employee through3DB2/ 31050483.3 186404221 v2 each such vesting date. Vesting of the Option and any subsequent equity grants will cease upon termination of Executive’s service byeither party for any reason.(g)Clawback. Notwithstanding anything to the contrary in this Agreement, allcompensation paid to Executive by the Company (whether payable pursuant to this Agreement or otherwise) will be subject toreduction, recovery and/or recoupment to the extent required by any present or future law, government regulation or stock exchangelisting requirement (or any policy adopted by the Company which ensures compliance with the requirements of any such law,government regulation or stock exchange listing requirement).(h)Resignation from Positions. Notwithstanding any other provision of this Agreement tothe contrary, upon any termination of employment (whether voluntary or involuntary), Executive, upon written request from the Board,shall immediately resign from any positions Executive has with the Company (or any subsidiary), whether as an executive, officer,employee, consultant, director, trustee, fiduciary or otherwise.5.Confidentiality. Executive agrees to abide by the terms and conditions of the Proprietary Information, Inventions andMaterials Agreement between Executive and the Company, a copy of which is attached as Exhibit A. Executive further agrees that atall times both during Executive’s employment by the Company and after Executive’s employment ends, Executive will keep inconfidence and trust, and will not use or disclose, except as directed by the Company, any confidential or proprietary information ofthe Company. 6.Tax Withholdings. Any and all cash compensation and other benefits (including without limitation, base salary, annualbonus and sign-on bonus) paid to Executive under this Agreement shall be subject to all applicable tax withholding requirements, andthe Company shall make such other deductions as may be required and/or allowed by applicable law and/or as authorized in writing byExecutive.7.Arbitration. Any dispute, controversy, or claim, whether contractual or non-contractual, between Executive and theCompany shall be resolved by binding arbitration before the Judicial Arbitration and Mediation Service (the “JAMS”), in accordancewith the JAMS Employment Arbitration Rules and Procedures, available at www.jamsadr.com. Executive and the Company eachagree that before proceeding to arbitration, they will mediate disputes before the JAMS by a mediator approved by the JAMS. Ifmediation fails to resolve the matter, any subsequent arbitration shall be conducted by an arbitrator approved by the JAMS andmutually acceptable to Executive and the Company. All disputes, controversies, and claims shall be conducted by a single arbitrator,who shall: (i) allow discovery authorized by California Code of Civil Procedure Section 1282, et seq., or any other discovery requiredby applicable law; and (ii) issue a written award that sets forth the essential findings of fact and conclusions of law on which the awardis based. The arbitrator shall have the authority to award any relief authorized by law in connection with the asserted claims ordisputes. Judgment upon the arbitrator’s award may be entered in any court having jurisdiction thereof. If Executive and theCompany are unable to agree on the mediator or the arbitrator, then the JAMS shall select the mediator/arbitrator. The resolution of thedispute by the arbitrator shall be final, binding, non-appealable, and fully4DB2/ 31050483.3 186404221 v2 enforceable by a court of competent jurisdiction under the Federal Arbitration Act. The arbitration award shall be in writing and shallinclude a statement of the reasons for the award. The arbitration shall be held in San Francisco, California. The Company shall pay allJAMS, mediation, and arbitrator’s fees and costs, irrespective of who raised the claim and the outcome of arbitration.8.Miscellaneous.(a)Conditions to Agreement. This Agreement is contingent upon a background checkclearance, satisfactory reference check, and satisfactory proof of Executive’s legal right to work in the United States. Executive agreesto provide any documentation or information at the Company’s request to facilitate these processes. (b)Governing Law. This Agreement shall be interpreted, construed, governed andenforced according to the laws of the State of California.(c)Attorneys’ Fees. In the event of any controversy, claim or dispute between the parties,arising out of or relating to this Agreement or the breach hereof, or the interpretation hereof, each party shall bear its own legal fees andexpenses. Notwithstanding the foregoing, in the event of a finding by any court having jurisdiction over such matter that any partyinitiating an action under this Agreement failed to have a reasonable prospect of prevailing on its claim, the arbitrator shall havediscretion to award the prevailing party attorneys’ fees and costs incurred by it with respect to such claim or action. The "prevailingparty" means the party determined by the arbitrator to have most nearly prevailed, even if such party did not prevail in all matters, notnecessarily the one in whose favor a judgment is rendered.(d)Amendments. No amendment or modification of the terms or conditions of thisAgreement shall be valid unless in writing and signed by the Parties hereto.(e)Severability. If any provision of this Agreement as applied to any party or to anycircumstance should be adjudged by a court of competent jurisdiction (or determined by the arbitrator) to be void or unenforceable forany reason, the invalidity of that provision shall in no way affect (to the maximum extent permissible by law) the application of suchprovision under circumstances different from those adjudicated by the court or determined by the arbitrator, the application of any otherprovision of this Agreement, or the enforceability or invalidity of this Agreement as a whole. Should any provision of this Agreementbecome or be deemed invalid, illegal or unenforceable in any jurisdiction by reason of the scope, extent or duration of its coverage,then such provision shall be deemed amended to the extent necessary to conform to applicable law so as to be valid and enforceable or,if such provision cannot be so amended without materially altering the intention of the parties, then such provision will be stricken, andthe remainder of this Agreement shall continue in full force and effect.(f)Successors and Assigns. The rights and obligations of the Company under thisAgreement shall inure to the benefit of and shall be binding upon the successors and5DB2/ 31050483.3 186404221 v2 assigns of the Company. Executive shall not be entitled to assign any of Executive’s rights or obligations under this Agreement.(g)Entire Agreement. This Agreement, along with any other agreements set forth herein,including without limitation, the Proprietary Information and Inventions Agreement, constitutes the entire agreement between theparties with respect to the employment of Executive.[signature page follows]6DB2/ 31050483.3 186404221 v2 SANGAMO THERAPEUTICS, INC. By:/s/ Sandy MacraeName: Sandy Macrae, MB, CH.B, Ph.DTitle: CEO ADRIAN WOOLFSON/s/ Adrian Woolfson 186404221 v2 EXHIBIT AProprietary Information, Inventions and Materials Agreement 186404221 v2EXHIBIT 10.33FOURTH AMENDMENT TO LEASE THIS FOURTH AMENDMENT TO LEASE ("Fourth Amendment") is entered into as of June 10, 2016 (the "EffectiveDate"), by and between POINT RICHMOND R&DASSOCIATES II, LLC, a California limited liability company ("Landlord"), and SANGAMO BIOSCIENCES, INC., a Delawarecorporation ("Tenant"), with reference to the following facts: A.Landlord and Tenant entered into that certain Triple Net Laboratory Lease dated as of May 23, 1997,together with an Addendum thereto dated May 28, 1997 (collectively, the "Original Lease"), as amended by those certain letteragreements dated June 15, 1999, April 21, 2000 and November 3, 2000, that certain First Amendment to Lease dated March 12,2004 (the "First Amendment"), that certain Lease Addendum dated December 12, 2006, that certain Second Amendment to Leasedated March 15, 2007 (the "Second Amendment"), that certain Lease Addendum III dated April 2, 2012, that certain ThirdAmendment to Lease dated August 1, 2013 (the "Third Amendment") and that certain Lease Addendum dated December 1, 2013,pursuant to which Tenant leases certain premises consisting of approximately 26,629 rentable square feet ("Existing Premises") andancillary storage space in the building located at 501 Canal Boulevard, Point Richmond, California (the "Building"). The OriginalLease, as so amended, is collectively referred to herein as the "Existing Lease". B.Tenant has requested to lease additional space in the Building containing approximately 6,153rentable square feet commonly known as Suite F and as shown on Exhibit A hereto (the "Suite F Expansion Space") andLandlord is willing to do the same on the following terms and conditions. NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt andadequacy of which are hereby acknowledged, Landlord and Tenant hereby agree as follows: 1.Incorporation of Recitals and Defined Terms. The Recitals above are hereby incorporated herein. As ofthe Effective Date, unless context clearly indicates otherwise, all references to "the Lease" or "this Lease" in the Existing Lease or inthis Fourth Amendment shall be deemed to refer to the Existing Lease, as amended by this Fourth Amendment. Capitalized termswhich are not otherwise defined in this Fourth Amendment shall have the meanings set forth in the Existing Lease. 2.Suite F Expansion and Expansion Space Term. Effective as of the earlier of (i) August 1, 2016 or (ii)the date that Tenant commences business operations within the Suite F Expansion Space (the "Suite F Commencement Date"), thePremises, as defined in the Existing Lease, shall be deemed to include the Suite F Expansion Space, subject to the terms providedherein. The term respecting the Suite F Expansion Space shall commence on the Suite F Commencement Date and continue for aperiod of sixty (60) months thereafter (the "Expansion Space Term"), plus any partial month for the month in which the Suite FCommencement Date occurs, if the Suite F Commencement Date occurs on other than the first day of a calendar month. If the SuiteF Commencement Date is other than the first day of a calendar month, then the first month shall include the remainder of thecalendar month in which the Suite F Commencement Date occurs plus the first full calendar month thereafter. Base Monthly Rent forany such partial month shall be prorated based on the number of days in such partial month. 00498\026\7752798.v3 Landlord and Tenant acknowledge that the Expansion Space Term shall not be co-terminous with the Term respecting theExisting Premises, and Tenant's options to extend the Term respecting the Existing Premises shall not apply to the Suite FExpansion Space. 3.Early Access to Suite F. Notwithstanding the provisions of Section 2 above, Tenant shall be permittedto enter upon the Suite F Expansion Space following mutual execution hereof, at all reasonable times for the purposes of readyingthe Suite F Expansion Space for Tenant's occupancy, including, without limitation, the design and construction of Suite F Alterations(as hereafter defined). Such entry upon the Suite F Expansion Space prior to the Suite F Commencement Date shall be subject to allof the provisions of the Existing Lease, except that Tenant shall not be required to pay Base Monthly Rent or Operating Expensesrespecting the Suite F Expansion Space prior to the Suite F Commencement Date. In the event, for any reason whatsoever, Landlordcannot deliver access to the Suite F Expansion Space upon mutual execution, this Fourth Amendment shall not be void or voidable,nor shall Landlord be liable for any loss or damage resulting therefrom. 4.Tenant's Use. The Suite F Expansion Space is subject to all the terms and conditions of the ExistingLease; provided, however, (i) the Suite F Expansion Space shall only be used for general office purposes, (ii) Tenant shall not beentitled to receive any allowances, abatements or other financial concessions granted with respect to the Existing Premises(including any Extended Term Allowance or first Option Term Allowance) except as otherwise expressly provide in this FourthAmendment. 5.Base Monthly Rent. In addition to Tenant's obligation to pay Base Monthly Rent for the ExistingPremises, from and after the Suite F Commencement Date Tenant shall pay Base Monthly Rent for the Suite F Expansion Space asfollows:APPROXIMATE MONTHSMONTHLY RATE PERSQUARE FOOTBASEMONTHLY RENT1 - 12$1.85$11,383.0513 - 24$1.91$11,724.5425 - 36$1.96$12,076.2837 - 48$2.02$12,438.5749- 60$2.08$12,811.72 6.Operating Expenses. From and after the Suite F Commencement Date and continuing through theremainder of the Expansion Space Term, in addition to the Operating Expenses payable by Tenant respecting the Existing Premises,Tenant shall also pay for Tenant's Pro Rata Share of Operating Expenses respecting the Suite F Expansion Space. Such amountsshall be payable in accordance with the terms of the Existing Lease; provided, however, any caps on increases in OperatingExpenses respecting the Existing Premises shall not apply to the Suite F Expansion Space. During the Expansion Space Term,Tenant's Pro Rata Share of Operating Expenses (exclusive of Taxes) respecting the Suite F Expansion Space shall not increase bymore than 5% per calendar year on a compounding and cumulative basis throughout the Expansion Space Term (e.g. Tenant's ProRata Share of Operating Expenses (other than Taxes) for 2017 2 00498\026\7752798.v3 shall not exceed 105% of Tenant's Pro Rata Share of Operating Expenses (other than Taxes) for 2016; Tenant's Pro Rata Share ofOperating Expenses (other than Taxes) for 2018 shall not exceed 105% of the maximum allowable amount of Tenant' s Pro RataShare of Operating Expenses (other than Taxes) permitted for 2017; etc.). By way of illustration, if Tenant's Pro Rata Share ofOperating Expenses (other than Taxes) respecting the Suite F Expansion Space for 2016 were to be $1.00 per rentable square footper month, then Tenant's Pro Rata Share of Operating Expenses (other than Taxes) respecting the Suite F Expansion Space for 2017would not exceed $1.05 per rentable square foot per month, and Tenant's Pro Rata Share of Operating Expenses (other than Taxes)respecting the Suite F Expansion Space for 2018 would not exceed$1.1025 per rentable square foot per month. For the avoidance of doubt, nothing contained herein shall limit in any way Tenant'sliability for Taxes respecting the Suite F Expansion Space. Landlord and Tenant acknowledge that for purposes of OperatingExpenses payable by Tenant respecting the Suite F Expansion Space, Tenant's Pro Rata Share shall equal 7.54%. 7.Condition of Premises. Tenant acknowledges that it has been, and continues to be, in possession of the ExistingPremises, is familiar with the condition of the Existing Premises and continues to occupy the Existing Premises in its "as is,where is" condition, with all faults, without any representation, warranty or improvement by Landlord of any kindwhatsoever, except as may otherwise be expressly provided in the Existing Lease. By accepting Landlord's delivery of theSuite F Expansion Space, Tenant shall be deemed to have accepted the same as suitable for Tenant's intended use and asbeing in good and sanitary operating order, in its "as is, where is" condition, with all faults, without any representation,warranty or improvement by Landlord of any kind whatsoever. As of the Effective Date, Landlord has not caused theExisting Premises or the Suite F Expansion Space to have undergone an inspection by a Certified Access Specialist (CASp). 8.Suite F Allowance. (a)Landlord agrees to contribute an amount equal to $307,650.00 (i.e., $50.00 for eachrentable square foot within the Suite F Expansion Space) (the "Suite F Allowance") toward Tenant's cost of performing Alterations inthe Suite F Expansion Space as performed in accordance with the terms and conditions of Section 7.3 of the Original Lease (the"Suite F Alterations"). In addition, Tenant shall have the option to utilize up to $75,000.00 of any available balance of the ExtendedTerm Allowance or first Option Term Allowance (as may exist from time-to-time, "Existing Allowance") toward the Suite FAlterations. Any portion of the Suite F Allowance that is not claimed by Tenant prior to August 1, 2017, shall accrue to the solebenefit of Landlord, and Tenant shall not be entitled to any credit, abatement or other concession in connection therewith. The SuiteF Allowance (and any Existing Allowance used by Tenant) may only be used for hard and/or soft costs in connection with the firstSuite F Alterations; and in no event shall the Suite F Allowance (or any Existing Allowance) be used for the purchase of tradefixtures, furniture, equipment, furnishings, telephone equipment, cabling , or other items of personal property of Tenant. Tenant shallbe responsible for all elements of the design of Tenant's plans for the Suite F Alterations (including, without limitation, compliancewith law, and functionality of design), and Landlord' s approval of Tenant's plans therefor shall in no event relieve Tenant of theresponsibility for such design. (b)The Suite F Allowance (and any Existing Allowance used by Tenant) shall be paid toTenant or, at Landlord' s option, to the order of the contractor that performed the 3 004981026\7752798.v3 applicable Suite F Alterations, within thirty (30) days following receipt by Landlord of receipted bills or invoices covering all laborand materials expended and used in such Suite F Alterations. Notwithstanding anything herein to the contrary, Landlord shall not beobligated to disburse any portion of the Suite F Allowance (or Existing Allowance) during the continuance of a default by Tenantunder the Lease (beyond the expiration of all applicable cure and notice periods), and Landlord's obligation to disburse shall onlyresume when and if such default is cured. Landlord and Tenant acknowledge that all Suite F Alterations shall, without compensationor credit to Tenant, become part of the Suite F Expansion Space and the property of Landlord at the time of their installation and shallremain in the Suite F Expansion Space, unless, at the time of Landlord's consent to the applicable Suite F Alterations, Landlordnotified Tenant in writing that Landlord would require removal of such Suite F Alterations from the Suite F Expansion Space uponthe expiration or earlier termination of the Expansion Space Term. Landlord shall not be entitled to receive (or deduct from the SuiteF Allowance or Existing Allowance) any construction management fee or oversight fee in connection with any Suite F Alterations.Notwithstanding the foregoing, Landlord and Tenant agree that if the property management company (currently Wareham PropertyGroup) provides construction management or administrative services in connection with any Suite F Alterations, such propertymanagement company shall be entitled to a construction management or administration fee in connection with any Suite FAlterations in accordance with the schedule contained on Exhibit D to the First Amendment. 9.Security Deposit. Concurrently with Tenant's execution of this Fourth Amendment, Tenant shall deliverto Landlord the sum of $12,812.00 as additional Security Deposit (which the parties agree is currently $10,000.00), such that thetotal amount of the Security Deposit held by Landlord shall be Twenty-Two Thousand Eight Hundred Twelve Dollars ($22,812.00).Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code, and all other provisions of law, now or hereafterin force, which provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults inthe payment of rent, to repair damage caused by Tenant or to clean the Premises, it being agreed that Landlord may, in addition,claim those sums reasonably necessary to compensate Landlord for any other loss or damage, foreseeable or unforeseeable, causedby the act or omission of Tenant or any officer, employee, agent or invitee of Tenant. 10.Parking. Effective as of the Suite F Commencement Date and continuing through the Expansion SpaceTerm, in addition to the parking spaces available to Tenant for the Existing Premises in accordance with the Existing Lease, Landlordshall also provide Tenant with the use of eighteen (18) unreserved off-street parking spaces in the surface lot serving the Building atno additional cost to Tenant. 11.Right of First Refusal. The right of first refusal contained in Section 9 of the First Amendment is herebyamended such that the definition of Refusal Space shall be limited to Suite C-2 (as shown on Exhibit B to the First Amendment). 12.Brokers. Tenant shall be solely responsible for any commission, fees or costs payable to any real estatebroker, sales person or finder claiming to have represented Tenant in connection with any future amendment to the Lease or Tenant'sexercise of any extension option or right of first refusal contained in the Lease. Tenant shall indemnify, defend and hold Landlordharmless from and against any and all claims by any real estate broker, salesperson or finder 4 00498\026\7752798.v3 claiming to have represented Tenant for a commission, finder's fee or other compensation in connection with this FourthAmendment. Landlord shall indemnify, defend and hold Tenant harmless from and against any and all claims by any real estatebroker, salesperson or finder claiming to have represented Landlord for a commission, finder ' s fee or other compensation inconnection with this Fourth Amendment. Landlord is represented by Newmark Comish & Carey in connection with this FourthAmendment and shall be responsible for any commission payable to Newmark Comish & Carey pursuant to separate writtenagreement. 13.Authority. This Fourth Amendment shall be binding upon and inure to the benefit of the parties, their respectiveheirs, legal representatives, successors and assigns. Each party hereto and the persons signing below warrant that theperson signing below on such party' s behalf is authorized to do so and to bind such party to the terms of this FourthAmendment. Signatures appear on following page 6 00498\026\7752798.v3  IN WITNESS WHEREOF, Landlord and Tenant have entered into this Fourth Amendment as of the date first set forthabove. LANDLORD:POINT RICHMOND R&D ASSOCIATES II, LLC,a California limited liability company By: Wareham- NZL, LLC, its Manager By: /s/ Richard K. RobbinsManager TENANT:SANGAMO BIOSCIENCES, INC.a Delaware corporation By: /s/ H. Ward HoffName: H. Ward HoffTitle: EVP & CFO 6 00498\026\7752798.v3 EXHIBIT A SUITE FEXPANSION SPACE , DI•GU/',,./,./_,..f•'.,/,,/././., ,,•••.,; •....1'/'...•/ /,•....:. •.•"''W .,,•,•',,/,09I.O  A-1 00498\026\7752798.v3 EXHIBIT 10.34FIFTH AMENDMENT TO LEASE THIS FIFTH AMENDMENT TO LEASE (this ''Fifth Amendment") is entered into as of July 10, 2017 (the "EffectiveDate"), by and between POINT RICHMOND R&D ASSOCIATES II, LLC, a California limited liability company ("Landlord"), andSANGAMO THERAPEUTICS, INC., a Delaware corporation (formerly known as Sangamo Biosciences, Inc., a Delawarecorporation) ("Tenant"), with reference to the following facts: A.Landlord and Tenant entered into that certain Triple Net Laboratory Lease dated as of May 23, 1997,together with an Addendum thereto dated May 28, 1997 (collectively, the "Original Lease"), as amended by those certain letteragreements dated June 15, 1999, April 21, 2000 and November 3, 2000, that certain First Amendment to Lease dated March 12,2004 (the "First Amendment"), that certain Lease Addendum dated December 12, 2006 ("Lease Addendum II"), that certainSecond Amendment to Lease dated March 15, 2007 (the "Second Amendment"}, that certain Lease Addendum Ill dated April 2,2012 ("Lease Addendum Ill"), that certain Third Amendment to Lease dated August I, 2013 (the "Third Amendment"}, that certainLease Addendum dated December I, 2013 ("Lease Addendum IV", and collectively with Lease Addendum II and Lease AddendumIII, the "Storage Space Lease Addenda"}, and that certain Fourth Amendment to Lease dated June I 0, 2016 (the "FourthAmendment"), pursuant to which Tenant leases certain premises consisting of approximately 32,782 rentable square feet, ("ExistingPremises") and ancillary storage space commonly known as Space Nos. 2, 4, 8 and 10 located within Suite C-2 (collectively, the"Storage Space"} in the building located at 50 I Canal Boulevard, Point Richmond, California (the "Building"). The Original Lease,as so amended, is collectively referred to herein as the "Existing Lease". B.Tenant has requested to lease additional space in the Building containing approximately 5,165 rentablesquare feet, which space shall include the Storage Space and is commonly known as Suite C-2, as shown on Exhibit A hereto (the"Suite C-2 Expansion Space") and Landlord is willing to do the same on the following terms and conditions. NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt andadequacy of which are hereby acknowledged, Landlord and Tenant hereby agree as follows: 1.lncorporation of Recitals and Defined Terms. The Recitals above are hereby incorporatedherein. As of the Effective Date, unless context clearly indicates otherwise, all references to "the Lease" or "this Lease" in theExisting Lease or in this Fifth Amendment shall be deemed to refer to the Existing Lease, as amended by this Fifth Amendment.Capitalized terms which are not otherwise defined in this Fifth Amendment shall have the meanings set forth in the Existing Lease. 2.Suite C-2 Expansion and Suite C-2 Term. Effective as of the earlier of (i) December 1, 2017 or(ii} the date that the City of Richmond (the "City") issues a certificate of occupancy for the Suite C-2 Expansion Space (the "Suite C-2 Commencement Date"), the Premises, as defined in the Existing Lease, shall be deemed toinclude the Suite C-2 Expansion Space, subject to the terms provided herein. The term of the Suite C-2 Expansion Space shallcommence on the Suite C-2 Commencement Date and expire as of November 30, 2019 (the "Suite C-2 Term"). If the SuiteC-2 Commencement Date is other than the first day of a calendar month, then the first month shall include the remainder of the calendar month in which the Suite C-2 Commencement Date occursplus the first full calendar month thereafter. Base Monthly Rent for any such partial month shall be prorated based on the number ofdays in such partial month. Landlord and Tenant shall enter into a commercially reasonable form of memorandum to confirm theactual Suite C-2 Commencement Date. Landlord and Tenant acknowledge that the Suite C-2 Term shall not be co-terminus with theTerm respecting the Existing Premises, and except as otherwise specifically set forth in this Fifth Amendment, Tenant's options toextend the Term respecting the Existing Premises shall not apply to the Suite C-2 Expansion Space. 3.Early Access to Suite C-2. Notwithstanding the provisions of Section 2 above, Tenant shall be permittedto enter upon the Suite C-2 Expansion Space following mutual execution hereof, at all reasonable times for the purposes of readyingthe Suite C-2 Expansion Space for Tenant's occupancy, including, without limitation, the design and construction of the Suite C-2Alterations (as hereafter defined). Such entry upon the Suite C-2 Expansion Space prior to the Suite C-2 Commencement Date shallbe subject to all of the provisions of the Existing Lease, except that Tenant shall not be required to pay Base Monthly Rent orOperating Expenses respecting the Suite C-2 Expansion Space prior to the Suite C-2 Commencement Date. In the event, for anyreason whatsoever, Landlord cannot deliver access to the Suite C-2 Expansion Space upon mutual execution of this FifthAmendment, this Fifth Amendment shall not be void or voidable, nor shall Landlord be liable for any loss or damage resultingtherefrom. 4.Tenant's Use. The Suite C-2 Expansion Space is subject to all the terms and conditions of the ExistingLease; provided, however, (i) the Suite C-2 Expansion Space shall only be used for general office, lab, storage and distribution, andmarketing purposes, and for other related legal uses, (ii) Tenant shall not be entitled to receive any allowances, abatements or otherfinancial concessions granted with respect to the Existing Premises (including the Existing Allowance or the Suite F Allowance, bothas defined in Section 8(a) of the Fourth Amendment) except as otherwise expressly provide in this Fifth Amendment. 5.Base Monthly Rent. In addition to Tenant's obligation to pay Base Monthly Rent for the ExistingPremises and the Storage Space (as specified in Section 12 below), from and after the Suite C-2 Commencement Date, Tenant shallpay Base Monthly Rent for the Suite C-2 Expansion Space as follows: PERIODMONTHLY RATEPER SQUARE FOOTBASEMONTHLY RENTSuite C-2 Commencement Date- 11/30/18$1.85$9,555.2512/01/18 - 11 /30 /19$1.90$9,813.50The Base Monthly Rent for the Suite C-2 Expansion Space shall be payable in accordance with the terms of the Lease; provided,however, Tenant shall remit payment for the first full month of Base Monthly Rent and Tenant's Pro Rata Share of OperatingExpenses (as referenced in Section 6 below) for the Suite C-2 Expansion Space prior to taking occupancy of the Suite C-2Expansion Space. 6.Operating Expenses. From and after the Suite C-2 Commencement Date and continuing through theremainder of the Suite C-2 Term, in addition to the Operating ExpensesOOOIU9la2 payable by Tenant respecting the Existing Premises, Tenant shall also pay for Tenant's Pro Rata Share of Operating Expensesrespecting the Suite C-2 Expansion Space. Such amounts shall be payable in accordance with the terms of the Existing Lease;provided, however, any caps on increases in Operating Expenses respecting the Existing Premises shall not apply to the Suite C-2Expansion Space. During the Suite C-2 Tenn, Tenant's Pro Rata Share of Operating Expenses (exclusive of Taxes) respecting theSuite C-2 Expansion Space shall not increase by more than 5% per calendar year on a compounding and cumulative basisthroughout the Suite C-2 Term (e.g. Tenant's Pro Rata Share of Operating Expenses (other than Taxes) for 2018 shall not exceed105% of Tenant's Pro Rata Share of Operating Expenses (other than Taxes) for 2017; Tenant's Pro Rata Shareof Operating Expenses (other than Taxes) for 2019 shall not exceed I 05% of the maximum allowable amount of Tenant's ProRata Share of Operating Expenses (other than Taxes) pennitted for 2018). By way of illustration, if Tenant's Pro Rata Share ofOperating Expenses (other than Taxes) respecting the Suite C-2 Expansion Space for 2017 were to be $1.00 per rentable square footper month, then Tenant's Pro Rata Share of Operating Expenses (other than Taxes) respecting the Suite C-2 Expansion Space for2018 would not exceed $1.05 per rentable square foot per month, and Tenant's Pro Rata Share of Operating Expenses (other thanTaxes) respecting the Suite C-2 Expansion Space for 2019 would not exceed $1. l 025 per rentable square foot per month. For theavoidance of doubt, nothing contained herein shall limit in any way Tenant's liability for Taxes respecting the Suite C-2 ExpansionSpace. Landlord and Tenant acknowledge that for purposes of Operating Expenses payable by Tenant respecting the Suite C-2Expansion Space, Tenant's Pro Rata Share shall equal 6.3%. 7.Electricity and Gas. Tenant shall pay for electricity and gas service to the Suite C-2 Expansion Space. Aspart of the Suite C-2 Alterations (as defined in Section 9 below), at Tenant's sole cost and expense, Tenant shall make diligent effortsto connect the Suite C-2 Expansion Space to the electricity meter for Suite C-1 (as defined in Section 10 below). If Tenant issuccessful in making such connection, Tenant shall pay the electric utility provider directly for the electricity charges for the Suite C-2 Expansion Space based upon the existing meter serving Suite C-1 and (following such connection) the Suite C-2 Expansion Space.If Tenant is unable to make such connection, then as part of the Suite C-2 Alterations, Tenant shall install a new electricity submeterfor the Suite C-2 Expansion Space, in which event Tenant would reimburse Landlord for the electricity usage for the Suite C-2Expansion Space based upon such submeter. Tenant also shall install a new gas meter for the Suite C-2 Expansion Space. 8.Condition of Premises. (a)Tenant acknowledges that it has been, and continues to be, in possession of theExisting Premises, is familiar with the condition of the Existing Premises and continues to occupy the Existing Premises in its "as is,where is" condition, with all faults, without any representation, warranty or improvement by Landlord of any kind whatsoever,except as may otherwise be expressly provided in the Existing Lease. By accepting Landlord's delivery of the Suite C-2 ExpansionSpace, Tenant shall be deemed to have accepted the Suite C-2 Expansion Space as suitable for Tenant's intended use and as being ingood and sanitary operating order, in its "as is, where is" condition, with all faults, without any representation, warranty orimprovement by Landlord of any kind whatsoever, except as may otherwise be expressly provided in the Lease. 3 (b)Notwithstanding the prov1s1ons of Section 8(a) above to the contrary, Landlordrepresents and warrants that (i) the exterior of the Building shall not violate any Regulations in effect and being enforced as of theEffective Date, and (ii) the roof of the Building shall be watertight as of the Suite C-2 Commencement Date. The foregoingnotwithstanding, Landlord shall not be deemed to have breached the obligations set forth in this Section 8(b) unless and untilLandlord has failed to perform the required work within the later of:(x) a reasonable period following written notice of the required work from Tenant or from a government entity/agency withjurisdiction to enforce the aforementioned Regulations; or (ii) a reasonable period following the date upon which any administrativeproceeding or litigation commenced by Landlord to object to a particular proposed requirement has been finally determined againstLandlord and becomes not subject to further appeal. In no event shall Landlord be liable for any special or consequential damagesfor any breach of the foregoing representation and warranty, nor shall such breach entitle Tenant to any rent abatement or the rightto terminate the Lease. Landlord may, to the extent any such costs are not covered by any contractor's, manufacturer's or other third-party warranty, include in Operating Expenses the cost of any repairs required in order to fulfill its obligations under this Section8(b). 9.Suite C-2 Alterations. (a)Tenant shall perform Alterations in the Suite C-2 Expansion Space (including removalof any and all "storage cages" within the Suite C-2 Expansion Space; the "Storage Cage Removal Work") at Tenant's sole cost andexpense in accordance with all applicable Regulations (including, without limitation, the Americans with Disabilities Act of 1990)and the terms and conditions of Section 7.3 of the Original Lease (the "Suite C-2 Alterations"). By way of clarification, Tenantacknowledges that it may not utilize any portion of any available balance of the Existing Allowance or the Suite F Allowancetowards any hard and/or soft costs in connection with the Suite C-2 Alterations. Tenant shall be responsible for all elements of thedesign of Tenant's plans for the Suite C-2 Alterations (including, without limitation, compliance with law, and functionality ofdesign), and Landlord's approval of Tenant's plans therefor shall in no event relieve Tenant of the responsibility for such design. (b)Following completion of the Suite C-2 Alterations, provided that the improvementplans approved by the City reflect that the Suite C-2 Expansion Space has been "combined with" the portion of the Existing Premisesdesignated as "Suite C" in the Second Amendment ("Suite C-1"), then the Suite C-2 Expansion Space and Suite C-1 shall thereafterbe collectively referred to as "Suite C" in the Lease, and shall be comprised of approximately 9,934 rentable square feet. (c)Landlord and Tenant acknowledge that all Suite C-2 Alterations shall, withoutcompensation or credit to Tenant, become part of the Suite C-2 Expansion Space and the property of Landlord at the time of theirinstallation and shall remain in the Suite C-2 Expansion Space, unless, at the time of Landlord's consent to the applicable Suite C-2Alterations, Landlord notified Tenant in writing that Landlord would require removal of such Suite C-2 Alterations from the Suite C-2 Expansion Space upon the expiration or earlier termination of the Suite C-2 Term. Landlord shall not be entitled to receive anyconstruction management fee or oversight fee in connection with any Suite C-2 Alterations. Notwithstanding the foregoing, Landlordand Tenant agree that if the property management company (currently Wareham Property Group) provides constructionmanagement or administrative services in connection with any Suite C-2 4 Alterations, such property management company shall be entitled to a construction management or administration fee in connectionwith any Suite C-2 Alterations in accordance with the schedule contained on Exhibit D to the First Amendment. 10.Security Deposit. Concurrently with Tenant's execution of this Fifth Amendment, Tenant shall deliverto Landlord the sum of $9,555.00 (the "Suite C-2 Security Deposit") as additional Security Deposit (which the parties agree iscurrently $22,812.00), such that the total amount of the Security Deposit held by Landlord shall be $32,367.00. Tenant herebywaives the provisions of Section 1950.7 of the California Civil Code, and all other provisions of law, now or hereafter in force,which provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in thepayment of rent, to repair damage caused by Tenant or to clean the Premises, it being agreed that Landlord may, in addition, claimthose sums reasonably necessary to compensate Landlord for any other loss or damage, foreseeable or unforeseeable, caused by theact or omission of Tenant or any officer, employee, agent or invitee of Tenant. Upon the expiration of the Suite C-2 Term, Landlordshall return the Suite C-2 Security Deposit to Tenant in accordance with Paragraph 4.3.2 of the Lease. 11.Parking. Effective as of the Suite C-2 Commencement Date and continuing through the Suite C-2 Term, inaddition to the parking spaces available to Tenant for the Existing Premises in accordance with the Existing Lease,Landlord shall also provide Tenant with the use of seventeen (17) unreserved off-street parking spaces in the surface lotserving the Building at no additional cost to Tenant. 12.Storage Space. Landlord and Tenant acknowledge and agree that the Storage Space is included withinthe Suite C-2 Expansion Space. Effective as of the date that the Storage Cage Removal Work is complete (of which completionTenant shall notify Landlord in writing, and Landlord shall have the right to verify via an inspection; as verified, the "Storage SpaceTermination Date"), the Storage Space Rent shall end, and (b) the Storage Space Lease Addenda shall be of no further force oreffect. 13.Clarification of Term for Existing Premises: Landlord and Tenant acknowledge and agree that, as to the ExistingPremises, the expiration dates of the current Term of the Lease are as follows: Suite NumberExl!iration DateA, Band Cl8/31/2019F7/31/2021 14.Extension Options. (a)The first sentence of Section 8(a) of the First Amendment (as amended by Section 2 ofthe Third Amendment) is hereby amended and restated in its entirety as follows: Landlord hereby grants Tenant options to extend the Extended Term (each, a "Suites A, B and C-1 ExtensionOption") as to the portions of the Premises designated as Suite A, Suite 8 and Suite C-1 (as defined in the FifthAmendment) only, consisting of approximately 26,629 rentable square feet, for two (2) additional periodsof five (5) years each (each, a "Suites A, 8 and C-1 Option 5 Term"), commencing immediately after the expiration of the first Option Term (as defined in the ThirdAmendment), in the case of the first Suites A, B and C-1 Extension Option, or the expiration of the first Suites A,B and C-1 Extension Option, in the case of the second Suites A, B and C-1 Extension Option. In the eventTenant exercises the first Suites A, B and C-1 Extension Option, Landlord and Tenant shall negotiate in goodfaith to agree upon the terms and conditions for including the Suite C-2 Expansion Space (as defined in theFifth Amendment) within the first Suites A, B and C-1 Extension Option, in which event that Extension Option,as well as the second Suites A, B and C-1 Extension Option, also shall apply to Suite C-2. (b)In the alternative, Landlord hereby grants to Tenant the option to extend the Term (the"Suite C Extension Option") solely as to Suite C-1 and Suite C-2 (alternatively known as "Suite C") for one (I) additional period oftwelve (12) months (the "Suite C Option Term") on all the terms and conditions of Section 8 of the First Amendment; provided,however, as to the Suite C Extension Option only, Tenant must elect to exercise not less than nine (9) months prior to the expirationof the Suite C-2 Term, and (y) Landlord must advise Tenant of Landlord's Fair Market Proposal no less than two hundred ten (210)days prior to the commencement of the Suite C Option Term. (c)For the avoidance of doubt, Landlord and Tenant herby agree that (i) the Suite CExtension Option may only be exercised by Tenant in the event (A) Landlord and Tenant are unable to reach agreement regardingthe terms for including the Suite C-2 Expansion Space within the first Suites A, Band C-1 Extension Option (as set forth in Section14(a) above), or (B) Tenant elects not to exercise the Suites A, B and C-1 Extension Option; and (ii) Tenant has no options to extendthe Term as to Suite F (as defined in the Fourth Amendment). (d)Defined Terms. The following terms shall have the following meanings for thepurposes of Section 8 of the First Amendment (as amended by Section 2 of the Third Amendment): (i)The "Extension Options" shall mean the Suite C Extension Option,collectively with the Suites A, B and C-1 Extension Option. (ii)The "Option Terms" shall mean the Suite C Option Term,collectively with the Suites A, B and C-1 Option Terms. (iii)For the purposes of Section 8 of the First Amendment (as amendedby Section 2 of the Third Amendment) only, all references to "Premises" shall refer either to Suites A, B and C (as to the Suites A, Band C-1 Extension Option) or to Suite C only (as to the Suite C Extension Option). I 5. Right of First Refusal. The right of first refusal contained in Section 9 of the First Amendment (as amended by Section11 of the Fourth Amendment) is hereby deleted. I6. Brokers. Tenant shall be solely responsible for any commission, fees or costs payable to any real estate broker, salesperson or finder claiming to have represented Tenant in connection with any future amendment to the Lease or Tenant's exercise ofany extension option or right of first refusal contained in the Lease. Tenant shall indemnify, defend and hold Landlord 6 harmless from and against any and all claims by any real estate broker, salesperson or finder claiming to have represented Tenantfor a commission, finder's fee or other compensation in connection with this Fifth Amendment. Landlord shall indemnify, defendand hold Tenant harmless from and against any and all claims by any real estate broker, salesperson or finder claiming to haverepresented Landlord for a commission, finder's fee or other compensation in connection with this Fifth Amendment. Landlord andTenant are both represented by Newmark Comish & Carey in connection with this Fifth Amendment, and Landlord shall beresponsible for any commission payable to Newmark Comish & Carey pursuant to separate written agreement. 17.Inspection by a CASp in Accordance with Civil Code Section 1938. To Landlord's actual knowledge,the property being leased or rented pursuant to the Lease (as amended by this Fifth Amendment) has not undergone inspection by aCertified Access Specialist (CASp). A Certified Access Specialist (CASp) can inspect the subject premises and determine whether thesubject premises comply with all of the applicable construction-related accessibility standards under state law. Although state Jawdoes not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the Jessee ortenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, ifrequested by the Jessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASpinspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations ofconstruction-related accessibility standards within the premises. The foregoing verification is included in this Fifth Amendmentsolely for the purpose of complying with California Civil Code Section 1938 and, except as otherwise expressly stated above, shallnot in any manner affect Landlord's and Tenant's respective responsibilities for compliance with construction related accessibilitystandards as provided under the Lease. 18.OFAC. Tenant represents and warrants to Landlord that Tenant is currently in compliance with andshall at all times during the first Option Term (including any extension thereof) (as defined in the Third Amendment) remain incompliance with the regulations of the Office of Foreign Asset Control ("OFAC") of the Department of the Treasury and any statute,executive order (including the September 24, 200I, Executive Order Blocking Property and Prohibiting Transactions with PersonsWho Commit, Threaten to Commit, or Support Terrorism), or other governmental action relating thereto. 19.Counterparts: PDF. This Fifth Amendment may be executed in multiple counterparts each of which is deemed anoriginal but together constitute one and the same instrument. This Fifth Amendment may be executed in so-called "pdf'format and each party has the right to rely upon a pdf counterpart of this Fifth Amendment signed by the other party to thesame extent as if such party had received an original counterpart. 20.Authority. This Fifth Amendment shall be binding upon and inure to the benefit of the parties, theirrespective heirs, legal representatives, successors and assigns. Each party hereto and the persons signing below warrant that theperson signing below on such party's behalf is authorized to do so and to bind such party to the terms of this Fifth Amendment. 21.Status of Existing Lease.Except as amended hereby, the Existing Lease 1sunchanged, and, as amended hereby, the Existing Lease remains in full force and effect. 7 [remainder of page intentionally left blank; signatures appear on following page]IN WITNESS WHEREOF, Landlord and Tenant have entered into this Fifth Amendment as of the date first setforth above. LANDLORD:POINT RICHMOND R&D ASSOCIATES II, LLC,a California limited liability company By: Wareham- NZL, LLC, its Manager By: /s/ Richard K. RobbinsManager TENANT:SANGAMO BIOSCIENCES, INC.a Delaware corporation By: /s/ Kathy YiName: Kathy YiTitle: CFO 6 00498\026\7752798.v3 EXHIBIT A SUITE C-2 EXPANSION SPACE WINE 8TR1!E1' RICHMONDCENTER II0E8IC•IC- 70 POINT TECH a,503 CANAL ..IiI 601 CANAL .. CANAi.Bl.VOA- I  EXHIBIT 10.37FIRST AMENDMENT TO LEASE AGREEMENT BETWEENMARINA BOULEVARD PROPERTY, LLC ANDSANGAMO THERAPEUTICS, INC. THIS FIRST AMENDMENT TO LEASE AGREEMENT (this "Amendment") ismade as of January I, 2019 ("Effective Date"), by and between MARINA BOULEYARD PROPERTY, LLC, aDelaware limited liability company ("Landlord''), and SANGAMO THERAPEUTICS, INC, a Delaware corporation("Tenant"). RECITALS WHEREAS, Landlord and Tenant are pat1ies to that certain Lease Agreement dated November 3, 2017 (the"Lease"), pursuant to which Landlord has leased to Tenant certain premises comprising the entire rentable square feet ofthe building located at 7000 Marina Boulevard, Brisbane, California (the ;'Building"), which contains approximately87,695 rentable square feet in the aggregate (the "Premises"). The Building is part of a multi-building complex known asMarina Landing. WHEREAS, Landlord and Tenant desire to amend ce11ain provisions of the Lease as set forth herein. NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good andvaluable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree that theLease is amended as follows: 1.DEFINED TERMS. Capitalized tenns used and not otherwise defined herein shall havethe same meanings ascribed to them in the Lease. 2.TENANT IMPROVEMENT ALLOWANCE REQUEST (a) Landlord and Tenant acknowledge that under Section 2. I of Exhibit D to the Lease (the "Tenant WorkLetter"), the deadline for Tenant to request disbursements of the Tenant Improvement Allowance, Additional TenantImprovement Allowance, HVAC Allowance and Roof Allowance currently expires on the date that is nine (9) monthsafter the Commencement Date (the "Allowance Expiration Date"). Section 2. I of the Tenant Work Letter is herebyamended to extend the Allowance Expiration Date to July 31, 2019. 3.TENANT CONTRIBUTION; ADDITIONAL TENANT IMPROVEMENT ALLOWANCE. (a)Each of Section 2.1.1 of Exhibit D to the Lease (Tenant Work Letter),and Exhibit N to the Lease, are hereby deleted in its entirety. f(b) Concurrently with the execution of this Amendment, and as a condition precedent to the effectiveness of thisAmendment, Tenant has elected to amortize an additional tenant improvement allowance in an amount equal to OneHundred Twenty Dollars ($120.00) WES'l'\21tl 61S.:t03 .5  per rentable square foot of the Premises (i.e., Ten Million Five Hundred Twenty-Three Thousand Four Hundred Dollars($10,523,400.00)) for additional costs of the Tenant Improvements (the "Add ition al Tenant Improvement Allowance"), asadditional Base Rent to be paid by Tenant to Landlord, which shall be amortized on a straight-line basis over the remaining initialTerm of the Lease (commencing upon the first ( I st) day of the full calendar month following the last day of the Abatement Period,together with interest at a rate of six percent (6%) per annum, and which shall be paid by Tenant to Landlord concurrently withmonthly Base Rent as set forth in Section 4(a) of the Lease (such amount, the "Additional Base Rent") in accordance with theamounts and schedule stated in the modified Base Rent schedule (attached hereto as Schedule I and incorporated herein byreference), which sets forth the new Base Rent to be paid by Tenant as increased to incorporate the Additional Base Rent requiredhereunder. (c) Concurrently with the execution of this Amendment, and as a condition precedent to the effectiveness ofthis Amendment, Tenant shall provide Landlord with an updated costs statement of all costs to be incurred, or which have beenincurred. in connection with the design and construction of the Tenant Improvements, which costs fo1m a basis for the amount ofthe construction contract with the Contractor (''Contractor Costs Statement"). Tenant shall promptly provide Landlord with anupdated Contractor Cost Statement in the event of any change in the Contractor Cost Statement, and Tenant's delivery of suchupdated Contractor Costs Statement shall be provided to Landlord with each request for disbursement of Tenant ImprovementAllowance or Additional Tenant Improvement Allowance as a condition precedent to such disbursement. Such updated ContractorCost Statement, and any future updated Contractor Cost Statement shall be in the form of the costs statement generated by theContractor for the Tenant Improvements. {d) In the event that the actual costs of the Tenant Improvements exceed the costs set fo11h in the Final CostsStatement provided to Landlord pursuant to Section 4.2.1 of Exhibit D to the Lease, Tenant shall, as a condition precedent to thedisbursement of the Tenant Improvement Allowance or Additional Tenant Improvement Allowance, provide Landlord withevidence reasonably satisfactory to Landlord that Tenant has paid to Contractor or other party requesting payment. the actual costsof the Tenant Improvements that are the subject of the request for disbursement. 4.CONSTRUCTION OF TENANT IMPROVEMENTS BY TENANT'S AGENTS (a)Section 4.?.I of Exhibit D to the Lease (Tenant Work Letter) is hereby deleted in itsentirety. (b)Cost Budget. Prior to the commencement of the construction of the TenantImprovements, and after Tenant has accepted all bids for the Tenant Improvements, Tenant shall provide Landlord with a writtendetailed cost breakdown (the ''Final Costs Statement"), by trade, of the final costs to be incurred, or which have been incurred, asset forth more particularly in Section 2.2.l. I through 2.2.1.8 above, in connection with the design and constrnction of the TenantImprovements to be performed by or at the direction of Tenant or the Contractor (which costs form a basis for the amount of theconstruction contract with the Contractor, if any (the "Final Costs"). Tenant shall be responsible for all the Final Costs, and Tenantshall pay all such costs directly to the Contractor or other party requesting payment as and when due, provided that nothingcontained in this sentence shall be construed to waive 2WEST\2!13625 0J.5  Tenant's right to receive the Tenant Improvement Allowance, the Additional Tenant Improvement Allowance, the HVAC Allowanceand the Roof Allowance. For each request for disbursement of Tenant Improvement Allowance or Additional Tenant ImprovementAllowance to pay Tenant Improvement costs, Landlord shall disburse to Tenant, Landlord's Pro Rata Share (defined below) until thefull amount of the Tenant Improvement Allowance and the Additional Tenant Improvement Allowance (less Final Retention) arepaid by Landlord subject to the terms of the Work Letter and this Amendment. Such disbursement shall be in accordance with theprocess set forth in Section 2.2.2 of this Work Letter, except that Tenant shall demonstrate that the cost of the work completedcomplies with the Final Cost Statement, as updated by the Construction Costs Statement or as otherwise agreed between the parties."'Landlord's Pro Rata Share" shall mean the amount equal to thirty and ninety-five hundredths percent (30.95%) of such TenantImprovement costs subject to such request., The Final Retention amounts for the Tenant Improvements shall be paid in accordancewith Sections 2.2.2.2 of this Work Letter. For purposes of illustration only, if the applicable bills and invoices submitted to Landlordfor disbursement for the costs of Tenant Improvements is $100,000, Landlord would disburse to Tenant the amount of $30,950($100,000 multiplied by the 30.95% Landlord's Pro Rata Share). 5.HVAC ALLOWANCE; ROOF ALLOWANCE. Notwithstanding the foregoing. and for avoidance of doubt,the Tenant's right to reimbursement for HVAC Work from the HVAC Allowance and for Roof Work from the Roof Allowance shallcontinue to be on a dollar for dollar basis, less Final Retention, in accordance with Section 2.2.3 of the Work Letter. 6.BROKERS. Tenant represents and warrants to Landlord that it has not engaged any broker, finder orother person who would be entitled to any commission or fees in respect of the negotiation, execution or delivery of thisAmendment, and shall indemnify, defend and hold harmless Landlord against any loss, cost. liability or expense incurred byLandlord as a result of any claim asserted by any such broker, finder or other person on the basis of any arrangements oragreements made or alleged to have been made by or on behalf of Tenant in connection with any engagement regarding thisAmendment. 7.CONTINUING EFFECTIVENESS. The Lease, except as amended hereby, remains unamended, and, asamended hereby, remains in full force and effect. 8.COUNTERPARTS. This Amendment may be executed in counterparts, each of which shall constitute anoriginal, and all of which, together, shall constitute one document. 9.EXECUTION BY Boni PARTIES. Submission of this instrument for examination or signature by Tenantdoes not constitute a reservation of or option to lease, and it is not effective as an amendment to lease or otherwise until executionby and delivery to both Landlord and Tenant. and execution and delivery hereof. 10.AUTHORIZATION. The parties signing on behalf of each party hereby represent and warrant that suchparties have the capacity set forth on the signature pages hereof and have full power and authority to bind Tenant or Landlord, asapplicable, to the terms hereof. (SIGNATURES ON NEXT PAGE)WESTI283625-103.53  IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written. PETER ARONSON AUTHORIZED SIGNERLANDLORD:MARINA BOULEV ARD PROPERTY, LLC. TENANT:SANGAMO THERAPEUTICS, INC..a Delaware corporation By: /s/ Kathy YiPrinted Name: Kathy YiTitle: CFO S-1WI.S 1"1.283625-103.5  Lease Month Annual Base Rent Monthly Base RentMonthly Rental RatePer RSFI - 12*$2.999.169.00 $249.930.75$2.8513 - 16*$3.814.895.80$257.428.67$2.9417 - 24$3.814.895.80$348.147.64$3.9725 - 36$4.270.446.00$355.870.50$4.0637 - 48$4.365.900.60$363,825.05$4.1549 - 60$4.464.218.76$372.018.23$4.2461 - 72$4.565.486.52$380.457.21$4.3473 - 84$4.669.792.32$389.149.36$4.4485 - 96$4,777.227.24$398. I02.27$4.5497 - 108$4.887.885.24$407.323.77$4.64109 - 120$5.001.862.92$416,821.91$4.75121 - 13 2$5.119.260.00$426.605.00$4.86 SCHEDULE l MODIFIED BASE RENT SCHEDULESchedule I\\ r s•1'2K3625-W3.5 Exhibit 21.1Subsidiaries of the CompanyGendaq Limited (U.K.)Ceregene Inc. (Delaware)TxCell S.A. (France)Exhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in the following Registration Statements: 1.Registration Statements (Forms S-8 No. 333-166220, 333-189621, 333-206173, 333-221827, and 333-225552) pertaining to the Amended andRestated 2013 Stock Incentive Plan, 2010 Employee Stock Purchase Plan, and 2018 Equity Incentive Plan of Sangamo Therapeutics, Inc., and 2.Registration Statements (Forms S-3 No. 333-218294 and 333-224418) and related prospectuses of Sangamo Therapeutics, Inc.;of our reports dated March 1, 2019, with respect to the consolidated financial statements of Sangamo Therapeutics, Inc. and the effectiveness of internalcontrol over financial reporting of Sangamo Therapeutics, Inc. included in this Annual Report (Form 10-K) of Sangamo Therapeutics, Inc. for the year endedDecember 31, 2018./s/ Ernst & Young LLP Redwood City, CaliforniaMarch 1, 2019 Exhibit 31.1CHIEF EXECUTIVE OFFICER CERTIFICATEI, Alexander Macrae, certify that:1.I have reviewed this annual report on Form 10-K of Sangamo Therapeutics, Inc. (the “registrant”);2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d –15 (f)) for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.Date: March 1, 2019 /s/ Alexander MacraeAlexander MacraePresident, Chief Executive Officer and Director(Principal Executive Officer) Exhibit 31.2PRINCIPAL FINANCIAL OFFICER CERTIFICATEI, Kathy Y. Yi, certify that:1.I have reviewed this annual report on Form 10-K of Sangamo Therapeutics, Inc. (the “registrant”)2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d –15 (f)) for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.Date: March 1, 2019 /s/ Kathy Y. YiKathy Y. YiExecutive Vice President and Chief Financial Officer(Principal Financial and Accounting Officer) Exhibit 32.1Certification Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to §906 of the Sarbanes-Oxley Act of 2002Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 18 U.S.C. §1350, asadopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, Alexander Macrae, Chief Executive Officer of Sangamo Therapeutics, Inc. (the “Company”),and Kathy Y. Yi, Chief Financial Officer of the Company, each hereby certifies in his or her capacity, that, to the best of his or her knowledge: (1)the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (the “Report”), to which this Certification is attached asExhibit 32.1, fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and (2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. /s/ Alexander MacraePresident, Chief Executive Officer and Director(Principal Executive Officer)March 1, 2019 /s/ Kathy Y. YiKathy Y. YiExecutive Vice President and Chief Financial Officer(Principal Financial and Accounting Officer)March 1, 2019 This certification accompanies the Annual Report on Form 10-K to which it relates, is not deemed filed with the Securities and ExchangeCommission and is not to be incorporated by reference into any filing of Sangamo Therapeutics, Inc. under the Securities Act of 1933, asamended, or the Exchange Act (whether made before or after the date of the Form 10-K), irrespective of any general incorporation languagecontained in such filing. A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been providedto Sangamo Therapeutics, Inc. and will be retained by Sangamo Therapeutics, Inc. and furnished to the Securities and Exchange Commission orits staff upon request. 

Continue reading text version or see original annual report in PDF format above