How Sangamo BioSciences, Inc. Is Partnering to Success

Sangamo’s disruptive lead compounds have been on the back burner for a while now. Can new partnerships provide the lift they need?

Jan 29, 2014 at 6:30PM

Several years ago, Sangamo BioSciences (NASDAQ:SGMO) made a big splash when it began clinical testing for its novel HIV therapy. Results so far have been promising, but this therapy is still in mid-stage development. Luckily, Sangamo's proprietary discovery platform has since attracted attention and licensing deals from the likes of Shire (NASDAQ:SHPG) and more recently Biogen Idec (NASDAQ:BIIB). Lets take a closer look at these partnerships and see if they can eventually allow Sangamo to advance its own pipeline.

Curing chronic blood disorders
When it comes to outcome-based medicine, Sangamo has a platform that should have a large market opportunity. The company owns a gene-editing technology based on zinc-finger proteins (ZFPs.) The fingertips can be engineered to bind a specific sequence of DNA. The company insists that it can permanently switch the expression of any gene on or off.

The whole idea sounds a little too good to be true, but innovative powerhouse Biogen has been convinced to the tune of a $20 million upfront payment. The companies recently announced a partnership to develop beta-thalassemia and sickle cell therapies. The basic terms of the deal leave Sangamo responsible for research and development activities until it can be proved to work in humans. Biogen Idec would take the reigns at that point, providing Sangamo with milestone payments up to $300 million and double-digit royalties if there are any sales.

In the laboratory, Sangamo has shown that its compound can enter the CD34 stem cells of patients with either beta-thalassemia or sickle cell and permanently knock out the BCL11A gene. This process allows those cells to produce fetal hemoglobin at therapeutic levels.

These chronic conditions require lifelong care or bone marrow transplants at a great expense. If this partnership manages to produce a functional cure, you can bet that cost-conscious health care providers will beat a path to Sangamo's door.

Curing hemophilia
In January 2012, Sangamo entered an agreement with Shire to research, develop, and commercialize ZFPs for the treatment of hemophilia, Huntington's disease, and other conditions. Similar to the recent deal with Biogen, Sangamo received an upfront fee and is eligible to receive milestone fees up to $213.5 million for each of seven specified targets. The company would receive royalties on sales as well.

Hemophilia is typically treated with regular infusions of clotting factors that patients are incapable of producing themselves. While Biogen has hemophilia therapies under review that would significantly reduce the frequency of infusions, Sangamo has therapies that may eliminate the need for infusions altogether.

At the annual meeting of the American Society of Hematology last December, Sangamo presented data from both mice and monkeys that shows its ZFNs can effectively splice a clotting factor gene next to the albumin gene in a tiny percentage of the liver cells. More importantly, the therapy results in a permanent continuous production of the required clotting factor. It's very early in the program, but there is a good chance that regulators will allow the company to go ahead and begin testing in people. This would allow it to trigger some milestone payments in the process.

Getting there
Sangamo might not be able to launch a large-scale Phase 3 program to advance its wholly owned HIV candidate in the next couple years. The good news is that it's in a financially stable position for the time being.

SGMO Revenue (TTM) Chart

SGMO Revenue (TTM) data by YCharts

During the 2014 J.P. Morgan Healthcare Conference, Sangamo CEO Edward Lanphier said that the company is likely to report cash at the end of 2013 between $125 million and $130 million. If the company can just get some compounds into the clinic then it could find itself teetering on the edge of profitability solely on the strength of its current partnerships for a couple of years.

For now, it looks like Sangamo has everything it needs to maintain its cash balance while generating more attention to its discovery platform. It's certainly a speculative stock, and company has a number of years of research and development ahead of it, but it's definitely one worth keeping an eye on.

The Motley Fool's Top Stock for 2014
There’s a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it’s one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Cory Renauer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information