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What: Shares of Sangamo Biosciences (NASDAQ:SGMO), a clinical-stage biopharmaceutical company developing zinc finger DNA binding proteins for gene regulation and modification, soared as much as 40% after announcing a collaborative agreement with Biogen Idec (NASDAQ:BIIB) to develop therapeutics for hemoglobinopathies.
So what: Under the terms of the deal, Biogen Idec will license Sangamo's proprietary genome-editing technology platform to develop therapies targeting sickle cell disease and beta-thalassemia. Sangamo's technology will allow Biogen to approach these diseases in two ways: either by knocking out the regulators that cause the disease, or to reinsert a corrective gene to replace the defective one. The deal nets Sangamo $20 million upfront, and Biogen Idec will reimburse Sangamo for any of its internal and external research. Sangamo also has the potential to earn an additional $300 million in milestone, development, and regulatory payments.
Now what: There's certainly nothing bad to say about either company with regard to this deal. Biogen Idec gets access to an exciting gene-altering platform for what I consider to be pennies on the dollar while Sangamo gets more cash added to the bank and has its research expenses paid for (with regard to sickle cell disease and beta-thalassemia) by Biogen Idec. I do believe the excitement of this deal, though, has been more than baked into Sangamo's share price and would caution even health-care-savvy investors to take a step back and let Sangamo's ongoing research do the talking from here on out.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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