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$SGMO court transcript from OpenAI Whisper and GPT 5.6. CLEANED TRANSCRIPT — SANGAMO THERAPEUTICS HEARING Recording length: approximately 30 minutes Hearing date: July 23, 2026 Court: U.S. Bankruptcy Court for the District of Delaware Case: In re Sangamo Therapeutics, Inc., Case No. 26-10989 Judge: Hon. Craig T. Goldblatt TRANSCRIPTION NOTE This is a best-effort, non-certified transcript prepared from the supplied courtroom audio. It has been lightly edited for punctuation, repetition, and readability. Speaker identifications were inferred from the audio and public docket appearances. Words that could not be determined reliably are marked [inaudible] or [unclear]. Where the substance is clear but the precise words are not, that is stated explicitly rather than presenting a reconstruction as verbatim speech. [00:00] THE COURT: Good morning. We are on the record in In re Sangamo Therapeutics, Inc., Case Number 26-10989. I am happy to hear from the debtor. Please make your appearance for the record. CULLEN SPECKHART, COUNSEL FOR THE DEBTOR: Good morning, Your Honor. Cullen Speckhart of Cooley LLP, appearing on behalf of Sangamo Therapeutics, Inc., the debtor in this case. I believe we have only one matter going forward today, which is our request for interim approval of the replacement DIP financing. Before we address the agenda, I thought it would be helpful to provide background regarding the events leading to the replacement financing and how we approached this topic since we were last before Your Honor on June 24, particularly because the first-day proceedings did not address the possibility of replacing the DIP lender. [01:00] At the first-day hearing, in connection with our original DIP motion, we advised Your Honor that the debtor had received an approach from FSI—Future Solution Investments—around the time of the filing. FSI expressed a strong desire to provide financing. At that stage, however, the debtor’s priorities were certainty and stability: obtaining approval of the stalking-horse agreements and entering Chapter 11 without the potential disruption of changing lenders at a delicate moment in the case. We also stated on the record that we remained interested in continuing discussions with FSI to the extent those discussions could be constructive for the estate and to better understand the contours of what FSI was proposing. [02:00] Those discussions continued. Immediately following the appointment of the creditors’ committee on July 2, we brought the committee into the conversations with FSI to determine whether a transaction could align incentives and create meaningful benefits for all stakeholders. After several rounds of negotiations, the company had two principal objectives. First, we needed to determine whether the terms of the debt proposed by FSI independently justified replacing Northridge as the DIP lender on an apples-to-apples economic comparison. Second, we wanted to understand whether other aspects of FSI’s proposal could produce potential additional value beyond the financing itself. [03:00] The negotiations resulted in an agreement with FSI containing several components. First, FSI will provide a financing facility that, as we will describe in detail, materially improves upon the Northridge facility economically, even after accounting for the costs of replacing Northridge. Second, FSI has agreed—subject to certain contingencies—to provide a credit bid for a portion of the debt, up to an amount that is [unclear/confidential], for assets for which the debtor does not currently have an identified stalking-horse purchaser. Third, FSI has committed to consider becoming a plan sponsor, so that it could pursue a transaction either under section 363 or through a reorganization. I am not at liberty to disclose the specific amount of the proposed credit bid or the terms of any potential plan proposal. [04:00] The consequence is that, if FSI uses part of the financing to purchase assets, the estate would be relieved of the obligation to repay that corresponding amount in cash. The debtor would retain the ability to select another bid as the highest or otherwise best bid if competing interest emerges. The assets and any plan proposal would remain subject to the ordinary competitive process. I do not want to get too far ahead of my colleagues, but another important feature is that the collateral package for the FSI facility is more limited than the collateral package under the Northridge DIP. Among other things, the FSI package excludes certain estate assets, including proceeds of avoidance actions and certain other claims or assets that were important to the committee. [05:00] The proposed facility also gives the debtor an unconditional ability to repay the financing from sale proceeds or other cash on hand at any time, for any reason, without a prepayment penalty. As described in the motion and supporting declarations, comparing the two DIP facilities directly, the FSI financing improves both economic and non-economic terms. The estimated cash savings are approximately $400,000, assuming the two facilities would be repaid on the same date. The savings would be greater if the replacement facility were repaid earlier because the estate would avoid additional interest expense. Stepping back from a strict apples-to-apples comparison, the FSI financing also creates opportunities for additional value that simply do not exist under the Northridge facility. [06:00] THE COURT: Let me ask about the mechanics. My understanding of the Northridge arrangement was essentially: obtain final approval of that facility, after having received interim approval, or Northridge could walk away. Is that essentially correct? DEBTOR’S COUNSEL: That is essentially correct. THE COURT: And what is contemplated here is that the Court would grant interim authority for the replacement DIP; the debtor would use that authority to repay Northridge; and then the replacement DIP would proceed to a final hearing? DEBTOR’S COUNSEL: Correct. Northridge has been given notice, and the interim draw under the new facility would be used to repay Northridge. [07:00] On the basis of all these considerations, the company, through its restructuring committee and in consultation with the creditors’ committee, determined that replacing the existing DIP with the FSI facility was the better choice for the future of the case. I also want Your Honor to understand the dynamics involving Northridge. At the first-day hearing, Northridge made material concessions to its proposed facility in the expectation that it would take the facility through a final hearing. We were concerned that Northridge might understandably react negatively after learning of the debtor’s intention to replace it. Instead, the Northridge team could not have been more gracious or professional. We thank them for being a good partner in providing the initial financing and for responding constructively to these developments. [08:00] In anticipation of today’s hearing, we worked with the U.S. Trustee and the creditors’ committee on a consensual proposed interim order. [Several words inaudible.] The parties agreed that the debtor needed immediate access to the replacement financing on an interim basis, while final approval would remain subject to normal notice and a later hearing. THE COURT: I understand. Ordinarily I would be reluctant to address something like this on such abbreviated notice. But if the U.S. Trustee and the committee are on board, and the new financing is more favorable, I understand the argument. I appreciate that the issues have been resolved consensually. [09:30] DEBTOR’S COUNSEL: Before turning to the motion, I would like to introduce Miriam Peguero Medrano to the Court. She is an associate in our New York office and has done an extraordinary job assisting with the effort to bring the replacement financing to fruition. We thought it appropriate for her to present the motion because she is among the people closest to this work. THE COURT: I am always happy to hear from the people closest to the matter. [10:00] MIRIAM PEGUERO MEDRANO, COUNSEL FOR THE DEBTOR: Good morning, Your Honor. Miriam Peguero Medrano of Cooley LLP, counsel for the debtor. The matter before the Court is the debtor’s motion for approval of replacement debtor-in-possession financing, filed at Docket Number 161. In support of the motion, the debtor filed two declarations. The first is the declaration of Geoffrey Richards, a senior managing director at Raymond James, the debtor’s proposed investment banker, filed at Docket Number 162. The second is the declaration of Raymond Li, a managing director at MERU, the debtor’s financial adviser, filed at Docket Number 163. Both declarants are available for cross-examination. THE COURT: Is there any objection to admission of the Richards and Li declarations into evidence? [11:00] (No response.) THE COURT: The declarations at Docket Numbers 162 and 163 will be admitted into evidence. Does any party wish to cross-examine either declarant? (No response.) THE COURT: All right. Please proceed. DEBTOR’S COUNSEL: As counsel described, the debtor is seeking authority to replace the original DIP facility provided by Northridge with the facility proposed by FSI. The replacement financing represents the best financing reasonably available under the circumstances. [12:00] The proposed facility is expected to save the estate approximately $400,000, even after accounting for the fees and expenses associated with repaying the original facility. The motion describes a number of improvements over the original DIP. I will briefly address the principal changes. First, total availability is increased by $5 million, from $30 million under the original facility to $35 million under the replacement facility. THE COURT: The budget you provided to chambers this morning—is that the same budget attached to the motion, or have there been changes? DEBTOR’S COUNSEL: It is the same budget. The version provided to chambers is simply a larger, easier-to-read copy. There are no changes to the budget. [13:00] THE COURT: And the availability under the facility is $35 million? DEBTOR’S COUNSEL: Correct. Up to $18 million would be available upon entry of the interim order. That amount is sufficient to repay the original DIP facility and provide the debtor with continued liquidity under the budget. The remaining availability would become available after entry of a final order. [14:00] The replacement facility also reduces the overall cost of financing. The interest rate is reduced from 12 percent to 9 percent. There is no commitment fee, no exit fee, and no work fee. The professional-fee carve-out is increased from approximately $2.5 million to $3 million. The debtor also receives additional flexibility because the minimum borrowing increment is reduced from $5 million to $2.5 million, allowing the debtor to borrow in smaller amounts as needed. [15:00] There are also two additional features worth noting. The replacement facility may provide a pathway for FSI to become a purchaser or plan sponsor, and FSI has expressed interest in pursuing a transaction involving assets not included in the existing stalking-horse transactions. [The next sentence concerning potential transaction structures is partially inaudible.] In addition, the replacement collateral package is narrower than the original package. It excludes avoidance actions and their proceeds and certain other claims or assets. The debtor also retains the ability to repay the facility without a prepayment premium. [16:00] Shortly before this morning’s hearing, the debtor filed a revised proposed interim order. The filing includes a blackline against the order attached to the motion and a redline against the original Northridge interim order, making it easier to follow the changes. [Docket number in the recording is unclear, likely the filing made immediately before the hearing.] THE COURT: I appreciate receiving the comparison. It was helpful in keeping track of the moving parts. DEBTOR’S COUNSEL: The revised proposed order reflects consensual changes reached with the U.S. Trustee, the creditors’ committee, and other interested parties. The U.S. Trustee has indicated that it does not object. THE COURT: I reviewed the revised order from the bench this morning. I understand that most of the changes are self-explanatory, so you do not need to walk through every redline unless you believe a particular point needs to be placed on the record. [17:30] DEBTOR’S COUNSEL: Thank you, Your Honor. For the reasons described in the motion, the declarations, and today’s presentation, the replacement facility represents the best financing reasonably available under the circumstances, is in the best interests of the debtor, its estate, and its stakeholders, and is a sound exercise of the debtor’s business judgment. Unless the Court has further questions, we respectfully request entry of the revised proposed interim order. THE COURT: Thank you. I think it would be useful to hear from other parties in interest. Is anyone else seeking to be heard? [18:15] DARREN AZMAN, COUNSEL FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS: Good morning, Your Honor. Darren Azman of McDermott Will & Schulte LLP, counsel for the Official Committee of Unsecured Creditors. The committee was appointed on July 2 and consists of five members. [Description of the committee’s membership is inaudible.] The committee has been extremely active in carrying out its fiduciary obligations and seeking to maximize value for unsecured creditors and all stakeholders. Since its appointment, the committee has worked closely with the debtor to address concerns relating to the bidding procedures, the case process, and the DIP financing. We greatly appreciate the debtor’s collaborative approach to the case thus far. [19:00] The committee and its professionals were involved in the discussions with FSI and in negotiating the replacement facility now before the Court. We believe the proposed replacement DIP is a material improvement over the existing financing and presently represents the best option for the estate and all stakeholders. Because of the timing of the replacement-DIP motion, the committee has filed or preserved certain reservations of rights. For the avoidance of doubt, the committee is not waiving any rights with respect to final approval of the replacement facility. Nevertheless, the committee fully supports entry of the revised proposed interim order filed this morning, including the consensual resolution of issues relating to the prior interim lender. I am happy to answer any questions. Otherwise, I simply want to state the committee’s support for entry of the interim order and the debtor’s use of the replacement facility. THE COURT: I have no further questions. I appreciate those comments. [20:30] THE COURT: Is there any other party wishing to be heard? LOCAL COUNSEL FOR THE AD HOC EQUITY-HOLDER GROUP: Good morning, Your Honor. [Name and firm inaudible], counsel to the ad hoc group of equity holders. I am joined by my co-counsel, Mark Franke of Orrick, Herrington & Sutcliffe LLP, who was admitted pro hac vice and will address the Court today. THE COURT: Mr. Franke, please proceed. MARK FRANKE, COUNSEL FOR THE AD HOC EQUITY-HOLDER GROUP: Good morning, Your Honor. For the record, Mark Franke of Orrick, counsel to the ad hoc group of equity holders in this case. I appreciate Your Honor’s indulgence. I will keep this to one or two minutes. We do not rise in opposition to the replacement DIP. We principally want to introduce our group’s presence in the case. Although individual equity holders have been following and participating in the proceedings, the group was only recently organized. We want to ensure that the Court is aware of us. We expect to submit a written statement in connection with final approval of the DIP. [21:30] It is often said that bankruptcy cases are for debtors and creditors and that equity holders are at the end of the line. But we believe the developments over the past several weeks validate the equity story in this case. From our perspective, the replacement DIP and FSI’s involvement validate that there may be capital available to support a plan-sponsorship transaction involving assets not subject to the existing stalking-horse bids, and that such a transaction could potentially preserve or monetize the debtor’s material tax attributes. [22:30] It is important to understand what those tax attributes represent. The debtor’s net operating losses are the product of capital invested in the company by management and by equity holders, including capital invested in the years immediately preceding the filing. These are not merely theoretical attributes or a financial-engineering exercise. They represent real losses of invested capital and need to be appropriately preserved and appropriately valued in any recapitalization of the business. [23:00] We view the recent developments as positive. It is not surprising to hear debtor’s counsel emphasize the savings under the replacement DIP, but FSI’s willingness to provide substantial financing and potentially invest further in a transaction involving the remaining assets also supports the possibility of an economic return. Those developments underscore the importance of official representation for equity holders in this case. We have submitted a request to the Office of the U.S. Trustee for appointment of an official equity committee. If the U.S. Trustee declines that request, we may seek relief from the Court in due course. [24:00] In general, equity needs to be in the room. Its interests include avoiding inappropriate dilution of existing equity; avoiding inappropriate backstop economics in any rights offering; avoiding inappropriate exclusion of existing or new equity holders from a rights offering; and ensuring appropriate consideration of alternative plan transactions. We will close by observing that the equity story is further supported by the debtor’s schedules. On their face, the schedules reflect [figures and claim composition partially inaudible]. Based on the capitalization and claims profile as we understand it, we believe there may be significant value for equity and the potential for meaningful distributions. [25:00] THE COURT: I understand what you are saying. You understand that I am not making a valuation determination today, correct? MR. FRANKE: That is correct, Your Honor. THE COURT: All right. Is there anything further you would like to add with respect to the specific relief before me today? MR. FRANKE: No, Your Honor. We are not objecting to the interim relief. We simply wanted our position and the equity holders’ interests reflected on the record. DEBTOR’S COUNSEL: Your Honor, the record and the debtor’s filings speak for themselves. The issues raised by Mr. Franke, and the debtor’s responses and reservations with respect to those issues, are fully preserved for another day. THE COURT: Understood. Everyone’s rights are preserved. [26:00] THE COURT: Is there anyone else who wishes to be heard regarding the relief presently before the Court? (No response.) I have reviewed the motion, the proposed form of order, and the supporting declarations, and I have benefited from today’s presentations. I am prepared to enter the revised proposed interim order. I am satisfied that the debtor has properly exercised its business judgment in determining what is best for the estate. I am pleased to hear that the debtor and the committee have cooperated in an effort to maximize value and minimize administrative expenses. [27:00] I am also satisfied that the decision to “change horses” in the manner proposed is a reasonable exercise of business judgment. The terms of the order strike me as appropriate, and I am happy to enter it. For what it is worth, one often wonders in Chapter 11 cases—particularly cases without substantial prepetition secured debt—whether a competitive process can function without the constraints created by secured claims, adequate-protection disputes, and similar issues. It is encouraging to see market forces working in this context when they are allowed to work. Where the process ultimately leads is not for me to predict. That is why we trust the market process to play itself out. [28:00] I have heard the questions raised by the equity holders. Those questions are not surprising, and they can be addressed at the appropriate time as the sale and plan processes develop. They do not prevent entry of the interim order today. The remaining question is scheduling a hearing on final approval of the replacement DIP. If I am not mistaken, we already have a hearing scheduled on August 3, and that appears to fit the proposed timeline. DEBTOR’S COUNSEL: That is correct, Your Honor. [Brief scheduling discussion partially inaudible.] THE COURT: Very well. We will use that date, subject to the details reflected in the order and notice. [29:00] Is there anything else from the debtor regarding this matter? Any other matter anyone wishes to raise while we are here? (No response.) This was a complex matter that came before the Court on an expedited basis but ultimately was not contested. I appreciate all of the work and cooperation that made today’s hearing straightforward. There were many issues that could have generated disputes. The parties’ cooperation made this much easier for the Court, and I appreciate it very much. Thank you. We are adjourned. [END OF RECORDING]