The past year hasn't been easy for Sangamo Therapeutics (NASDAQ:SGMO), CRISPR Therapeutics (NASDAQ:CRSP), and their respective shareholders. The market has cleaved billions from their market values even though they hardly did anything.
Both are going to have some important clinical trial readouts in 2019 that could send their share prices screaming toward the moon again. Let's stack these biotechs side by side to see which has a better chance of coming out on top.
The case for CRISPR Therapeutics
There's no disputing the value of CRISPR-based gene editing in the world of academia, but the jury's still out on whether CRISPR is a useful drug discovery tool. Although investors are ready to leap to broad conclusions, we're going to receive the verdict in tiny baby steps.
In partnership with Vertex Pharmaceuticals (NASDAQ:VRTX), CRISPR Therapeutics treated its first patient with CTX001 in late February. This experimental gene therapy involves editing a patient's stem cells outside their body with CRISPR/cas9 technology before reintroducing the cells to patients who need help producing functional hemoglobin.
CTX001 edits stem cells in a way that allows production of fetal hemoglobin to begin again. That should help patients with transfusion-dependent thalassemia and severe sickle-cell disease to reduce their reliance on frequent blood transfusions. Frequent transfusions are inconvenient, painful, and so expensive that a one-time cure could be a big hit for patients and insurers.
The plan is to treat two thalassemia patients first, then wait for safety data before putting anyone else at risk. If CTX001 can get these patients to safely produce enough fetal hemoglobin to make transfusions unnecessary, CRISPR's stock will soar and trigger milestone payments from Vertex.
CRISPR Therapeutics also plans to begin clinical studies with two cellular cancer therapies that it still owns outright. Once the ball gets rolling with more clinical trials, the bills could start piling up.
By the time patients begin showing meaningful data, CRISPR will probably be ready for a cash injection. The company finished 2018 with $456 million in cash after losing $165 million last year. CRISPR is codeveloping the drug with Vertex, which could get expensive. CRISPR spent $114 million last year on research and development before a single patient had been dosed.
The case for Sangamo Therapeutics
Year after year, Sangamo publishes a study that proves its zinc-finger nuclease (ZFN) technology is superior to all other gene editing methods in one way or another. Before you get carried away by the possibilities, it's important to remember that this biotech has been going at it since the mid-1990s and it still hasn't sent a single new drug application to the FDA.
Sadly, the company's recent attempts with ZFN-based candidates haven't been too successful. Sangamo was able to show us that SB-913 successfully inserted a gene that should help patients with mucopolysaccharidosis type II (MPS II) produce iduronate-2-sulfatase (IDS), an important digestive enzyme they can't make on their own.
Sangamo detected a small amount of IDS production from just one patient who received the highest dose during a dose-determination study. Investigators noticed signs of possible liver damage from this patient, which means Sangamo probably won't be able to use a higher, possibly effective dosage in a larger study.
After a couple of fruitless decades with earlier versions, Sangamo plans on releasing next-generation ZFN treatments before the end of the year. Until we see data that says they work, you probably shouldn't pin any significant value to this company's ZFN-based pipeline.
The only reason to buy Sangamo is its proprietary synthetic liver-specific gene promoter that's also a part of SB-525, a candidate for the treatment of hemophilia A. Pfizer (NYSE:PFE) has agreed to take the reins for SB-525 if an ongoing trial hits the right mark.
It turns out that the hard part about gene editing isn't the editing, it's getting the target cells to do something with the new gene once it's been pasted into place. Pfizer's interested in Sangamo's synthetic liver-specific promoter because it looks like it did the trick for hemophilia A patients.
Hemophilia patients need regular infusions of blood-clotting factors that they can't produce themselves or they risk an uncontrolled bleeding event. During the first dose-ranging study with SB-525, patients produced more of the clotting factor than anyone imagined possible.
Sangamo promised to give us an interim look at the follow-up Alta study with SB-525 last December but decided at the last moment to hold these cards close to the vest. Instead, the complete results will be released sometime in 2019.
The better buy
At recent prices, Sangamo's market cap is just $935 million, so another success for SB-525 could send its stock price through the roof. Pfizer's already on the hook for development expenses, and Sangamo is entitled to milestones and royalty payments that the big pharma could avoid by simply acquiring Sangamo.
Right now CRISPR Therapeutics' market cap is at $1.8 billion, which is a lot for a company without any human proof-of-concept data yet. If the first two patients don't report amazing results, the stock will receive an awful beating. It's probably best to cheer for CRISPR from the sidelines, and put the better buy, Sangamo, in a diverse portfolio.