There are 350 million people worldwide with rare diseases and about 80% of those diseases, including cystic fibrosis, are caused by faulty genes. In most cases, genetic disorders lack effective treatment options. But that could change thanks to advances in genome editing approaches, including TALEN, CRISPR/Cas9, and the oldest, and most researched approach: zinc-finger nuclease (ZFN).

Zinc-finger gene editing has been in development since the mid-1990s and it's already being evaluated in human clinical trials. Will Zinc-finger technology result in breakthrough treatments that save hundreds of millions of lives? Read on to learn how this gene-editing technique works and the one healthcare stock that could benefit most from its success.

First, what's gene editing?

DeoxyriboNucleic Acid (DNA) is a self-replicating material that's present in nearly all living organisms. It's the main constituent of chromosomes, and it carries the genetic information that's necessary to build proteins that can create living cells, tissues, and organs, and that help our bodies operate properly.

A researcher in a lab coat holding a double helix in one hand while snipping a piece of DNA from it using scissors in her other hand.


Sometimes, one or more mutations in DNA can produce genetic code that results in the overproduction or underproduction of proteins. When this happens, it can result in one of thousands of genetic diseases or disorders, many of which are debilitating or life-threatening.

In gene editing, researchers hope to fix these mutations by deleting, modifying, or replacing specific pieces of DNA so that proteins can be built correctly. If they're successful, gene editing therapies could offer patients with genetic disorders a functional cure.

Currently, gene-editing research is focused on three types of gene editing: clustered, regularly interspaced, short palindromic repeats/CRISPR-associated protein (CRISPR/Cas9), transcription activator-like effector nucleases (TALEN), and ZFN.

These three approaches differ from one another, but they all involve the use of an engineered nuclease that's guided to a precise location to make an edit. When thinking about gene editing, it may be helpful to picture the nuclease as a pair of scissors and the guide as dots on a piece of construction paper showing someone where to cut.

When an errant piece of genetic code is snipped away to create a break in both strands of DNA, the body's natural repair system fixes the damaged DNA. If a new piece of genetic information isn't replacing what's been snipped away, then a process called non-homologous end joining (NHEJ) reconnects the snipped ends. This repair process is error-prone and oftentimes, it results in mutations that halt a gene's activity. If, however, a new piece of genetic information is replacing what's been snipped away, then the repair work is done by a less common process called homology-directed repair, or HDR. When this happens, the fixed DNA serves as a template that HDR copies.

The limitations and risks of gene editing

As exciting as gene editing sounds, it remains to be seen if gene editing can be done effectively and safely in humans and if one gene-editing approach is better than another.

The process of cutting out faulty DNA and pasting in fixes is anything but easy. Identifying the correct piece of DNA requiring a fix is one challenge and engineering a nuclease so that it only targets the desired piece of DNA is difficult. Specific sequences of DNA are often found in many places throughout the human body and targeting the precise location to avoid off-target snipping that could cause problems is tough. Furthermore, keeping tabs on any unwanted changes that could occur because of off-target edits isn't simple, either. 

It also shouldn't be ignored that many genetic disorders are caused by multiple mutations. As a result, the complexity associated with creating gene editing therapies that fix multiple errant pieces of DNA simultaneously without increasing the risk of unintended edits could mean it's a long time before gene editing is used in those genetic disorders.

How ZFN works

ZFN uses zinc-finger DNA-binding proteins (ZFP) to guide a cutting enzyme, known as Fok1, to the desired piece of DNA to be edited.

A representation of a strand of DNA and how combining zinc-finger proteins with Fok1 can make a cut.


Zinc-finger proteins can each bind to about three DNA bases, which means researchers can use various combinations of them to precisely target and bind to different DNA sequences. For example, combining six zinc fingers allows the targeting of an 18 base sequence. 

To make a double strand DNA break for an edit, two ZFNs are constructed with each containing a half of the cutting enzyme, Fok1. Once the ZFNs bind to DNA on either side of the piece of DNA that's to be edited, the two halves of Fok1 combine, or dimerize, to make a cut between the two sets of zinc-finger proteins (see figure 1).

How ZFN is different than CRISPR and TALEN gene editing

Unlike ZFN, CRISPR technology stems from a bacterial form of adaptive immunity, which is a natural process to fight and recognize foreign invaders. Snippets of an invading virus are stored in CRISPR and then turned into short RNA sequences, a messenger that converts information stored in DNA into proteins. This helps the bacteria recognize these invaders should they return. If a virus does return, then the CRISPR system creates CRISPR associated proteins (Cas) to cut up the virus' DNA and destroy it.In gene editing research, CRISPR is engineered to spot a specific sequence of DNA bases for an edit and Cas9 is deployed to make the necessary DNA cut.

TAL effectors (TALEs) are proteins created by a type of plant bacteria, known as Xanthomonas, to infect plant cells to make them more susceptible to invasion. In TALEN, monomers in TALEs, not zinc finger proteins, are engineered to guide the cutting enzyme, Fok1, to the desired sequence of DNA to edit.

A businessman holding a double helix in the palm of his hand.


The gene-editing stock that can benefit from ZFN

Aside from companies that can supply researchers with ZFNs, such as Sigma-Aldrich, which is owned by Germany's Merck KGaA, the main way to invest in the promise of ZFNs is through the clinical-stage biotech company Sangamo Therapeutics (SGMO 2.73%), which has essentially cornered the market on the intellectual property associated with ZFN gene editing.

Sangamo Therapeutics has been at the forefront of ZFN research since its inception in 1995 and its pipeline of ZFN gene-editing therapies has already advanced from pre-clinical research in laboratories to trials in humans. Typically, human trials begin with small phase 1 trials to determine dosing and initial safety. Then, they advance to slightly larger phase 2 trials that inform researchers on safety and efficacy before finally entering phase 3 studies where efficacy and safety are evaluated in many people.

In Sangamo Therapeutics' case, its most advanced ZFN gene-editing trial is a combination phase 1/2 trial for MPS II, or Hunter Syndrome.

Hunter Syndrome is a rare genetic disease caused by a genetic mutation that prevents the breakdown of glycosaminoglycans (GAGs), a complex sugar important to cell growth. As GAGs build up in the body, Hunter Syndrome patients can suffer permanent, progressive damage to appearance, mental development, and organ function. Sangamo's ZFN attempts to correct Hunger Syndrome inside the body by using ZFN to insert into the liver a normal functioning copy of the gene that produces the enzyme that breaks down GAGs . 

Sangamo Therapeutics is also conducting earlier stage research on ZFN gene-editing approaches that may someday help patients with hemophilia B and MPS I, or Hurler syndrome, and it's using ZFN technology to help develop therapies for blood disorders, beta thalassemia and sickle cell disease. 

Additionally, in collaboration with Pfizer (PFE 0.76%)Sangamo Therapeutics is conducting an early phase 1/2 trial for SB-525 in hemophilia A, a genetic disorder caused by the inability to produce factor XIII, a special protein that helps the blood clot properly. SB-525 hopes to produce factor VIII in the liver using engineered viral vectors, or tools that help deliver genetic material into a cell.

Although this isn't a ZFN-gene editing approach, Pfizer recently expanded its relationship with Sangamo Therapeutics to include researching ZFN for amyotrophic lateral sclerosis (ALS), a progressive neurodegenerative disease, and frontotemporal lobar degeneration, a type of dementia caused by progressive nerve loss. In this agreement, Sangamo received a $12 million cash payment up front. It can also collect up to $150 million in various milestone payments, plus tiered royalties on sales if these ZFN solutions ever get commercialized.

Sangamo Therapeutics has also inked a collaboration with Gilead Sciences (GILD 1.06%) to work on ZFN approaches that may improve cancer treatment. As part of that deal, Sangamo received an upfront payment of $150 million from Gilead Sciences and it could receive up to $3.01 billion in potential milestones. If any therapies from this collaboration win approval, then Sangamo will receive tiered royalties on future sales.

These collaboration projects are particularly important to Sangamo Therapeutics because they provide it with a valuable source of funding, research expertise, and potentially, an opportunity to accelerate the commercialization of therapies that eventually secure regulatory approval.

Key developments to watch

Perhaps, the biggest advantage ZFN has over CRISPR/Cas9 and TALEN is that it's furthest along in trials; however, ZFN has disadvantages compared to these other approaches that shouldn't be ignored.

Specifically, ZFNs are highly complex to develop -- and that means it takes longer and costs more to engineer them. CRISPR/Cas9 is widely viewed as faster and cheaper to engineer than ZFN and TALEN, and because of that advantage, a flurry of research is underway that may allow CRISPR/Cas9 to close the gap on ZFN's lead.

Initial results from Sangamo Therapeutics MPS II trial is the most important upcoming development in ZFN research. The company expects to start reporting data in MPS II patients in 2018 and if the results are good, then it would go a long way to validating the efficacy and safety of ZFN gene editing. Positive data would also help ZFN maintain its lead over CRISPR and TALEN.

So should you invest in ZFN gene editing technology?

Rewriting genetic code to fix genetic disorders could reshape patient care and transform life-threatening diseases into manageable ones. Given there are over 6,000 genetic disorders affecting hundreds of millions of people worldwide, the potential commercial opportunity associated with ZFN gene editing is massive. Nevertheless, it remains to be seen if ZFN is a better approach than CRISPR/Cas9 or TALEN, so investors ought to keep some of their optimism in check until data in humans confirms ZFN's efficacy and safety.