What happened

Shares of Sangamo Therapeutics, Inc. (NASDAQ:SGMO) were down 10.5% as of 3:34 p.m. EDT on Thursday. This marked the second consecutive day of double-digit percentage declines following the biotech's interim update from a phase 1/2 clinical study evaluating SB-913 in treating Hunter syndrome, which is also known as mucopolysaccharidosis type II (MPS II). Sangamo's update disappointed investors because SB-913 didn't demonstrate solid efficacy. 

So what

There are two primary reasons why the SB-913 interim update was such a letdown for investors. First, the study is the first to use zinc-finger nuclease (ZFN) in vivo (inside the body) gene editing in humans. There were high expectations that Sangamo's ZFN approach would be overwhelmingly effective. That wasn't the case.

Doctor with question mark over extended palm and DNA helix images in background and foreground

Image source: Getty Images.

The other reason the disappointment was so intense is that SB-913 is one of three Sangamo ZFN therapies that are currently in early-stage clinical studies. A failure in treating Hunter syndrome could hint at problems for the biotech's prospects in using ZFN to treat hemophilia B and MPS I.  

However, Sangamo's update didn't contain all bad news. The biotech administered a larger dose of SB-913 to a second patient cohort and is cautiously optimistic about the results seen thus far. Sangamo gave an even higher dose to a third cohort of patients. Also, it's important to note that we're only talking about two patients in the first cohort who didn't meet expectations.

Now what

It's simply too early to know for sure if SB-913 will be effective. And it's way too early to know if problems with this therapy will translate to issues for Sangamo's other ZFN candidates.

Meanwhile, Sangamo is working with Pfizer on a phase 1 study of a gene therapy (which doesn't involve actual editing of a gene like ZFN does) to treat hemophilia A. The company is also partnering with Bioverativ, which was acquired earlier this year by Sanofi, on a phase 1 study of a ZFN-based cell therapy targeting treatment of rare blood disorder beta thalassemia. 

Sangamo is a risky stock -- as all clinical-stage biotechs are, especially those with less advanced pipeline candidates. Most investors will probably want to watch from the sidelines for now. However, for those who are already Sangamo shareholders, I don't think the disappointing news this week is enough to warrant throwing in the towel on the biotech stock.

Keith Speights owns shares of Pfizer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.