Take Long View

As investors rein in enthusiasm for Sangamo Biosciences (NASDAQ:SGMO) zinc finger therapies for HIV treatment, the company's shares dropped 17.5% in July, according to S&P Capital IQ data.

Reinventing care
Sangamo is attempting to revolutionize care for tough-to-treat diseases by developing therapies that promote or suppress gene activity.

The company's most advanced program is SB-728-T, a therapy that seeks to modify the gene encoding CCR5, a receptor used by HIV to infect healthy immune system cells.

Because people who are naturally immune to HIV are found to produce non-functional CCR5 proteins, Sangamo SB-728-T attempts mimic that genetic mutation, thereby removing the need to rely on daily HIV medication. Research into SB-728-T is currently in phase 2 studies.

Sangamo is also conducting pre-clinical research with Biogen to create therapies that address beta thalassemia and is working with Shire on therapies addressing hemophilia. Phase 1 studies resulting from its collaboration with Biogen are expected to begin in 2016. 

Challenges remain
Although Sangamo's approach is endlessly intriguing, investors are right to be cautious. Tough to treat diseases have a particularly high failure rate during clinical trials and Sangamo's operating expenses totaled $72.7 million in 2014 and $19.7 million in Q1, so losses are likely to continue into the foreseeable future.

Clearly, SB-728-T has game-changing potential that shouldn't be ignored, but overall, most investors will find Sangamo to be too risky to buy -- at least at this stage of SB-728-T's development. Instead, investors may want to keep checking in with Sangamo to monitor its progress, an update into which may be provided when the company reports second quarter results on August 5.

 

Todd Campbell has no position in any stocks mentioned.  Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.