Sangamo Therapeutics (NASDAQ:SGMO) made history on September 5 when it announced preliminary results from the first-ever clinical trial evaluating in vivo gene editing in humans, but the stock crashed, losing almost a quarter of its value that day. You would think from the market reaction that the trial was failure, but although the trial is not complete yet, so far, it's meeting the primary objective and two of the three secondary objectives. Is the market reaction an early indication that Sangamo's approach will end in disappointment?
The CRISPR/Cas9 gene-editing technology has garnered a lot attention from investors because it is a relatively new and very powerful technique that has the potential to revolutionize medicine by making the discovery of gene-based therapies relatively cheap and easy. But Sangamo uses a technology called zinc finger nuclease (ZFN) gene editing, and it has been working on developing it for 23 years. Far from outdated, ZFN technology is further down the road to producing a commercial therapy than is CRISPR, which manages to create occasional panic among investors as scientists work through potential issues and test the method in mice.
Editing the DNA of patients with a rare disease
Sangamo's ongoing phase 1/2 study, called Champions, is testing the company's SB-913 treatment for mucopolysaccharidosis type II (MPS II), or Hunter syndrome. Patients with MPS II have an inherited metabolic disorder caused by a mutation in a gene that encodes an enzyme called iduronate 2-sulfatase (IDS). IDS is responsible for breaking down complex sugars called glycosaminoglycans (GAGs), and the mutation causes a lack of IDS, resulting in a damaging buildup of GAGs. Children with Hunter syndrome often start showing symptoms by age two or three, and it can lead to damaged organs, skeletal abnormalities, cognitive impairment, and even death.
SB-913 is a single intravenous infusion that uses Sangamo's gene-editing technology to repair the DNA of cells in the liver, enabling them to start producing the IDS enzyme. An engineered virus delivery mechanism called AAV6 inserts into liver cells packages containing new copies of the IDS gene along with the ZFNs, which identify, bind to, and cut the cells' DNA in a specific location. The cells' natural DNA repair processes then insert the IDS gene in the exact location, allowing the production of the enzyme and the breakdown of the harmful GAGs.
The Champions trial is testing three dose levels with two patients at each level. The results announced this week were for patients in the low-dose and medium-dose cohorts 16 weeks after the infusion. The primary objective of the trial is to evaluate the safety and tolerability of SB-913, and the secondary objectives are measurements of GAG levels in urine, IDS enzyme levels in plasma, and clearance of the AAV6.
Results indicate that DNA was successfully edited, but some crucial evidence is missing
The safety objective was met, with none of the patients having a serious adverse event attributed to the treatment. The clearance of AAV6 out of the body with no negative effects was also achieved.
As far as the efficacy measures are concerned, the data showed little benefit to the low-dose cohort, but the medium-dose cohort had a decrease in the level of the damaging GAGs in their urine of over 50%. The patients in the study were already on long-term enzyme replacement therapy (ERT), which had brought their GAG levels down to the high end of the normal range, so the further reduction in GAG levels is a strong indication that the treatment worked.
What created concern among analysts on the call -- and jolted the stock price -- was the news that the IDS enzyme measurements did not show an increase in enzyme levels after the treatment. Since SB-913 is designed to insert working IDS genes into liver cells in order to get the liver producing the enzyme, everybody expected to see increased enzyme levels in the blood, but the lack of that data produced worry that it didn't work.
Sangamo officials weren't concerned. The baseline tests of IDS levels were taken long after patients had received their weekly ERT infusions, and it turned out that Sangamo's assays weren't sensitive enough to detect the low levels of IDS either in the baseline measurements or after treatment. The company is working on an improved assay that it hopes will be more sensitive. But the simple answer to the concerns raised on the conference call was that the important thing is that GAG levels were reduced, since it is GAG that causes tissue destruction.
Sangamo CEO Sandy Macrae said that not only is GAG reduction the actual goal, but there could be no other explanation for the lower levels of them in the test subjects other than that the treatment worked. GAG levels would not be reduced without the patients producing some IDS enzymes in their bodies, and there is no way their bodies could be producing IDS unless their DNA was repaired by SB-913.
The next few months will answer some questions
One of the next steps will be to wind down the subjects' enzyme replacement treatments to see if GAG levels stay low. If GAG levels remain at or below what was achieved with ERT once the treatments are withdrawn, that will be strong evidence that the gene editing worked, regardless of the ability to measure enzyme levels. In fact, Macrae made a strong statement that getting patients off ERT would be a big enough win without proving anything about IDS levels, saying:
I want to be clear and bold about this. If all we ever show is a reduction in GAGs, and patients withdraw their ERT and their GAG levels remain low, and the patients never need to take enzyme replacement ever again, I will not be hunting for higher doses to reduce [sic] the IDS. Because what we are solving for is the GAG level.
The next milestone that investors are anticipating is the data from the high-dose patients, who have been infused with five times the dose of the medium-dose patients. Sangamo said to expect those results in the next few months, and by that time, it's possible the company will be able to measure IDS levels. In any case, the impact on GAG levels of such a higher dosage should be revealing. Results from the experiment of reducing ERT could be available in the same time frame as well.
Investors aren't convinced
The market may continue to treat Sangamo with skepticism until there are more answers. But long-term investors shouldn't be too concerned about the dizzying drop in the stock price this week. The stock had run up in anticipation of these results, but the price is still above where it was a month ago. Investors have gone back to their wait-and-see posture for Sangamo.
CRISPR gets most of the headlines in the gene-editing space at this point in time, but Sangamo's clinical trial of SB-913 is the first time a company has attempted to alter the DNA of living human beings, and CRISPR isn't ready to try that. Nothing bad happened, and there is some strong evidence that it actually worked. Although there are still questions to be answered, and success is not certain, investors who want a stake in the future of gene editing would do well to sit up and take notice of the progress this company is making.