100 REASONS TO OWN SANGAMO BIOSCIENCES
1) Exceptionally rare ground floor biopharmaceutical investment opportunity in a company that is developing a powerful proprietary PLATFORM that is yielding an extremely promising therapeutic product pipeline that, if successful, will result in the creation of the first new medical platform in the post-genomic era.
2) Sangamo has firmly established itself as the worldwide leader in the design and development of engineered zinc finger DNA-binding proteins for gene regulation (ZFPs) and gene modification (ZFNs) that possess broad therapeutic and commercial potential.
3) Zinc fingers are a potentially game-changing technology with a host of applications in medicine and biotechnology, including gene therapy, stem cell modification, protein production and plant breeding.
4) ZFPs are tools for gene-based information – their usefulness increases with every new genome sequenced. Currently, the genomes of about 180 organisms have been completely sequenced.
5) Success in one application will enhance excitement for the entire platform and the value of SGMO’s monopoly of intellectual property in the DNA/Zinc Finger area.
6) Sangamo is taking full advantage of the information acquired from the Human Genome Project and the sequencing of our genome. This allows the company to design therapeutics with high specificity for their target genes in order to exert desired biological effects.
7) Sangamo’s “potentially revolutionary” proprietary zinc-finger protein technology platform provides the company with what Janney Montgomery Scott says is “unparalleled potential in the area of gene regulation/modification.”
8) SGMO has maintained 100% ownership of a rapidly developing pipeline that includes angiogenesis, VEGF stimulation, nerve growth & regeneration and an entirely novel approach to treat HIV, cell lines for protein production, reagents for stem cell research, and ZFP for gene editing in plants/agriculture
9) One of Wall Street’s hottest areas the past few years have been biotech companies in the RNA-interference field - one was Sirna (RNAI) that doubled over night when Merck took them over for $1.1 billion. Another Alnylam Pharmaceuticals (ALNY) has soared and recently did a billion plus deal with Roche. As good as the RNAi technology is and it is certainly good, it appears that SGMO’s DNA/ZFP/ZFN technology may some definite advantages.
10) RNAi can only repress genes. With SGMO’s DNA/ZFP/ZFN technology, gene's can be activated, repressed, corrected, disrupted, and inserted. Targeted specificity is more powerful with ZFP as is activation efficacy and genome modification which is not possible with RNAi. ZFP have only 2 targets per cell while RNAi have tens of thousands. By functioning at DNA level – SGMO has enormously powerful and flexible technology that cannot be duplicated downstream at the RNA or protein level.
11) Merck’s $1.1 billion acquisition of Sirna values SGMO at $25 a share if it were acquired for a similar price. By comparison, SGMO offers the same ability to repress genes, the additional ability to activate them as well, and the unparalleled ability to correct or disrupt faulty genes by making changes to the actual DNA sequence. Furthermore, unlike Sirna, it has a dominant intellectual property position, promising clinical results as well as a potentially lucrative incremental agriculture business.
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12) Sangamo has established a virtual monopoly of an intellectual property position in the design, selection, composition and use of engineered ZFPs to support all of these commercial activities. The company either owns outright or has licensed the commercial rights to approximately 141 patents in the US and rest of the world, and has 190 patent applications owned and licensed pending worldwide. Sangamo has licensed intellectual property concerning the design, selection, and use of ZFPS, ZFP TFs and ZFNs for gene regulation and modification from MIT, J&J, Scripps Institute, Johns Hopkins, Harvard, The Medical Research Council (MRC), Caltech, and the University of Utah. These licenses grant Sangamo rights to make, use, and sell ZFPs and ZFP TFs under 13 families of patent filings. As of January 1, 2007, these patents filings have resulted in 16 issued US patents and 17 granted foreign patents. In addition, Sangamo has 56 families of Sangamo-owned patent filings, including 34 issued US patents, 74 granted foreign patents, 76 pending US patent applications and 85 pending foreign patent applications.
13) Janney Montgomery summarized SGMO’s DNA/ZFP intellectual property position as “Any gene, any cell type, any organism”
14) At the recent JP Morgan healthcare conf, SGMO CEO noted that since Sangamo was there at the beginning in 1995 - they locked up the IP from the 4 researchers involved in the space - EXCLUSIVE IP lock-ups from MIT, John Hopkins and Scripts domestically and a non-exclusive from MRC. Since MRC was foreign and non-exclusive, SGMO actually had a competitor at one time but then acquired the only competitor with IP rights in 2001. NOW THEY OWN IT ALL. He said that they have all the issued patents from composition of matter on and the key is they are for any cell type, any gene and any organism. He continued that while SGMO is an early stage biotech and hence still risky, the one thing he is confident there is no risk in is in the intellectual property. They own it all.
15) The intellectual property in the RNAi space is fragmented and not controlled by any one company. As noted above, SGMO has a virtual monopoly of the intellectual property in the DNA/ZFP space. Yet the technology value put on the DNA intellectual property is about $500 million vs. $3-4 billion plus for RNAi.
16) Merck recently paid $1.1 billion in cash for RNA-interference company Sirna and analysts who cover both companies agree that Sirna’s potential long-term prospects “pale in comparison to Sangamo’s” At the current $11 share price, SGMO’s market cap is less than $450 million, about 40% of what Merck paid for Sirna, whose prospects are nowhere near what SGMO’s are.
17) Savvy business management with deals and alliances in the non-human therapeutic area to help fund the therapeutic pipeline while concurrently maintaining ownership of all of the core intellectual property.
18) SGMO has partnered with approximately 60 companies while maintaining the intellectual property and future rights to all of its core technology and pipeline. Partners include Amgen, Genentech, Pfizer, Bristol Myers, Merck, AstraZeneca, Glaxco Smithkline, Sigma Aldrich, Dow Agrosciences & JNJ. The number of world-class biopharmaceutical and other firms that have been seeking to do business with SGMO is further validation of the veracity of their technology and confidence in their world-class abilities in this field.
19) Despite these partnerships, SGMO has maintained its dominant intellectual property position in the key human therapeutics area and still owns 100% of the WORLDWIDE IP in the core therapeutic area.
20) In 2007, Sangamo established a major alliance with Sigma-Aldrich Corporation to develop and commercialize high value laboratory research reagents based upon Sangamo's zinc finger DNA binding protein technology. In July 2007, as part of the agreement, Sangamo received an upfront payment of $13.5 million which included license fees and the purchase of one million shares of Sangamo stock. Sangamo is also eligible to receive development and commercial milestone payments of up to $24 million, sublicense payments and royalties on product sales.
21) This week on Feb 12, 2008, SGMO received this prominent mention in Sigma Aldrich’s earnings press release “Continuing to successfully integrate exciting new capabilities in our Research Biotech and SAFC business units. Efforts through our partnership with Sangamo Biosciences to fully exploit their leadership position in zinc finger protein technology are beginning to build a pipeline of orders for future delivery in Research Biotech.”
22) Recent results in stem cells promise widespread dissemination of the technology and royalties from Sigma Aldrich. Recently, a Nature Biotechnology article described delivery methods enabling a panel of different stem cell lines to be treated with ZFPs. Combining stem cells with ZFPs in this way, will enable SGMO and Sigma Aldrich to jointly develop cell lines for medical researchers on a worldwide basis.
23) Monetizing the technology in agriculture and biotechnology offsets the costs of clinical development. SGMO’s core business interest is in using the ZFP platform for human therapeutics. Monetizing the technology in agriculture and biotechnology offsets the costs of human therapeutics clinical development, helping the company delay its corporate collaborations until the “value inflection point” at the end of Phase II clinical trials and thereby increasing its ability to leverage the technology in subsequent deal execution.
24) While the company has not sold the rights in the key therapeutic area, the non-core collaborations have allowed the company to move their clinical and preclinical program forward efficiently while ending 2007 with $81.4 million in cash. Management has now guided that even with expense for the multiple Phase 2 and Phase 1 trials, the year end 2008 cash balance should be at least $55 million.
25) This cash balance will be after the Phase 2 Diabetic Neuropathy trial completion which will be the “value inflection point” that should result in a SUBSTANTIAL collaborative agreement with Big Pharma that will provide sufficient cash which will allow the company to operate without a dilutive secondary offering.
26) SGMO has a rare combination of a plain vanilla strong balance sheet, sufficient cash balance and dominant worldwide IP and ownership of all worldwide rights to its core therapeutic platform.
27) Sangamo’s management team has successfully developed a simple but solid capital structure that leaves the company in a strong financial position. Specifically, by prudently accessing the equity markets and entering into collaborations that have both expanded the commercial opportunities for its ZFP platform and provided a non-dilutive source of near-term funds, Sangamo finds itself in the enviable position of having no traditional or convertible debt, no outstanding warrants, and sufficient cash to allow management to execute its strategic plan in full for the next few years.
28) In 2006-7 Fidelity’s biotech/healthcare team performed extensive due diligence and established an initial position in SGMO. For the quarter ended 9/30/07, Fidelity increased its ownership 56% to 4,985,217 shares and became SGMO’s largest institutional holder.
29) Pacific Growth reiterated their Buy and $26.72 Fair Value on Feb 6, 2008 and said “We believe the major catalysts for 2008 are data releases for the two Phase II SB-509 treatment of diabetic neuropathy expected as early as June 2008 (SB-509-701) and in November 2008. We estimate SGMO could more than double with positive data from these two trials. With positive results, we anticipate Sangamo’s first potential therapeutic partnership could also occur in Q4:08. In addition, we believe DAS exercise of the commercial option to use ZFP technology for maize and canola product development could trigger +$0.97/share upside. We believe the DAS option may be exercised before the October 1, 2008 deadline based on recent positive comments from their Management”
30) Leerink Swann recently reiterated its Outperform on Sangamo and its $18 target stating SGMO “offers drug developers a differentiated and compelling approach to fighting disease” and that “SGMO's current stage of clinical development is an important value creation point for investors, and stands immediately before the late-stage clinical development stage that increases the universe of potential investors “
31) JMP Securities reiterated its Strong Buy recently and “anticipates multiple transformational clinical and corporate milestones for Sangamo in 2008” and noted “the realized broad therapeutic potential of SB-509 could be a very attractive drug to partner and anticipate the signing of a corporate collaboration in drug development later this year.” While due to the overall reduced market risk tolerance, JMP reverted back to a more conservative valuation methodology and $18 target, they reaffirmed that their $30 price target based on NPV analysis of SB-509 US Diabetic Neruopathy revenue potential still applies (discussed later in this list). SGMO remains a JMP “Top Pick for 2008.”
32) In Q407 Piper Jaffrey reiterated its Outperform and raised their target to $20 given the progress of the Diabetic Neuropathy trials, Dow Agro collaboration as well as the new Phase 2 trials announced with SB-509 including ALS and Stem Cell Mobilization.
33) In Dec 07, Cantor Fitzgerald raised their target from $17 to $27 based upon the breakthrough nature of SGMO’s ZFP technology and its singular position in this segment as well as the expectation of multiple significant Pharma and Dow collaborations in 2008.Cantor cited “Momentum Building -- Bio-powered Multi-sector Value Creation”
34) Last qtr, Janney Montgomery Scott initiated SGMO with a “Buy” and a $17 target noting “Powerful ZF Technology Represents Revolutionary Platform and Unparalleled Capabilities”. JMS noted that SGMO had “unparalleled capabilities and that the Therapeutic /commercial potential of the ZFP/ZFN platform actually exceeds that of the RNAi sector that has generated so much interest "
35) Canaccord Adams recently added Sangamo to the CA “Best Ideas List” with a $20 target stating “Sangamo represents an exciting biopharmaceutical development story based on 1) a broadly applicable platform with distinct business development opportunities; 2) Addressing large unmet medical needs for multiple indications with lead program in Phase 2; 3) Important news flow expected over the next 12 months.
36) Sangamo is pioneering the development of Zinc-Finger Proteins to treat disease. Sangamo's lead proprietary program is SB-509, a ZFP transcription factor of vascular endothelial growth factor (VEGF-A) to promote nerve growth. VEGF has been shown to grow and protect nerve cells with VEGF receptor expressed on both nerve and glial cells.
37) By the second half of 2008, SGMO expects to have data from two Phase 2 trials in patients with diabetic neuropathy, to have initiated two new trials of SB-509 in stem cell mobilization and ALS, and two new Phase 1 trials in patients with HIV infection and glioblastoma. Achievement of these objectives, as well as commercial progress in their collaboration with Sigma and entry into the commercial phase of our collaboration with Dow AgroSciences, will be key to further enhancing the market-leading presence for their technology. As has become increasingly evident, an innovation gap exists in the pharmaceutical sector, and SGMO’s progress in advancing their technology platform, which is unique in its generation of novel, highly differentiated therapies and products, will create interest among potential partners for their ZFP Therapeutic programs.
38) Product-enabling platform technologies are limited in their availability. Technology supply-demand favors Sangamo leverage in collaborations with Big Pharma and Dow AgroSciences.
39) ZFP technology appears to show efficacy in previously ‘undruggable’ disease targets. A prime example is diabetic neuropathy, where there are currently no drugs that can prevent or really treat the disease. SGMO’s SB-509, which stimulates the VEGF gene, appears to go beyond protecting nerves from the damage associated without diabetes and help patients actually regain nerve function. This appears to be a result that could not be achieved using even such intensive modern approaches as structure-based drug discovery.
40) Data from the Phase 1b clinical trial of SB-509 in subjects with Diabetic Neuropathy presented at the American Diabetes Association Meeting in June 07 and the Society for Neuroscience Meeting in November 07 demonstrate statistically significant improvement quantitative sensory testing and clinically relevant trends toward improvement in nerve conduction velocity in subjects with mild to moderate diabetic neuropathy over a six month period after a single administration of SB-509. SB-509 is an injectable formulation of plasmid DNA that encodes a zinc finger DNA-binding protein transcription factor (ZFP TF(TM)), designed to upregulate the vascular endothelial growth factor-A (VEGF-A) gene.
41) The data obtained in this clinical trial demonstrate that, six months after a single treatment, SB-509 appears to have not only a neuroprotective but also possibly a neuroregenerative effect.
42) In December, Sangamo announced that enrollment was complete in a randomized, double-blind, repeat-dosing, placebo-controlled, multi-center (at least 18 clinical sites) trial to evaluate SB-509 for the treatment of mild to moderate DN. The company expects to have data from this trial in the second half of 2008. Positive results will be a transformational value inflection point and begin to put focus on what the intellectual property could be worth.
43) Management and analysts appear confident that given that the Phase 1 trial was a single dose (no SAEs) which the data shows was transient that the triple-dosing Phase 2 trial will likely show increased efficacy above the great results of the Phase 1 trial. On the Feb 08 earnings call the CEO said he expects the multi-dosing should give maximum efficacy from baseline to 6 months based upon what they saw in the Phase 1 results.
44) While JMP Securities recently changed valuation methods, they reiterated that if successful, SB-509 in only the Diabetic Neuropathy indication in the U.S. alone could be worth $30 a share alone.
45) Type 2 diabetes mellitus is one of the fastest-growing diseases among Western cultures. In the US, it is estimated that 16 million people are living with diabetes, although only about 7.2 million have actually been diagnosed (source: National Institute of Diabetes and Digestive and Kidney Diseases). DN is a common side-effect of diabetes that affects almost all diabetic patients within 10 years of diagnosis. While medications are available for diabetic neuropathy, such as pregabalin, a GABA receptor agonist, and non-steroidal anti-inflammatory drugs (NSAIDs), these treatments are only symptomatic and do not address the underlying cause of the pain. Given SB-509’s neuroprotective and neuroregenerative effects, JMP believes SB-509 could become the first disease-modifying drug marketed for DN and would be entitled to this large commercial indication.
46) JMP’s SB-509 DN revenue model, assumes product launch in late 2010, in only the US market. Based on other novel biotechnology therapeutics (i.e., monoclonal antibodies) and the disease-modifying attributes of SB-509, they assign a $30,000 annual cost, which they believe could be a conservative estimate. They assume a peak penetration rate of 10% by 2015 and peak sales of $6.5-7.0 billion, with a gross margin of 40%.Their NPV is composed of net revenues from SB-509 sales through 2017, discounted back at 30% to the FY08 shares outstanding estimate, from which they derive a value of $30 for only the Diabetic Neuropathy indication alone.
47) Company management and most analysts that cover the company feel the completion of the Phase 2 Diabetic Neuropathy trials will be the “Significant Value Inflection Point” the company has discussed it is waiting for to enter into a large therapeutic collaboration with Big Pharma.
48) On the recent Feb 5 earnings call SGMO CEO said they currently own 100% of therapeutics rights. “We always assumed we would enter thoughtful strategic partnerships at proper value inflection points. You should assume Phase 2 results will be one of those inflection points”.
49) There are clearly already multiple firms interested in a possible collaboration in Diabetic Neuropathy this year. SGMO CEO stated on the Feb 5 earnings call that they have already met with several companies / potential partners - going over the detail of Phase 1 & Phase 2 expectations to prepare for quick follow up with potential partners immediately after Ph 2 data is available.
50) SGMO was recently mentioned in an analyst’s report as one of a few select biotechnology companies with game changing technology platforms that would be a prime acquisition candidate for Bristol Myers. Most industry experts feel that once the diabetic neuropathy Phase 2 results are released later this yr, there will be multiple Big Pharma companies that will inquire about acquiring the company and or execute an exclusive partnership for the Diabetic Neuropathy indication.
51) In October 2005, Sangamo and Dow AgroSciences (“DAS”) ,entered into a collaborative agreement to optimize the use of Sangamo’s ZFP technology in agriculture (plant cells and plant cell cultures). Under the terms of this agreement, DAS made an upfront cash payment of $7.5 million to Sangamo, along with a $3.9 million equity purchase. Additionally, during the initial three-year research term, DAS is providing an aggregate total of $4-6 million in research funding, with another $4 million in milestone-based payments possible. DAS has an option through Oct 2008 to exercise an option to obtain a commercial license; Sangamo would stand to receive a one-time exercise fee of $6 million and subsequent annual payments collectively totaling $25 million or more.
52) Agricultural biotechnology is poised for explosive development. As more developing countries grant approvals to these and other biotech crops in development, some studies estimate the global value of biotech crops will increase nearly fivefold to $210 billion. Adoption of ZFP technology to create plants with desired properties gives scientists the ability to make precise modifications in the plant genome, without permanently incorporating foreign DNA into the plant. The precision of the process, and the rapid way in which ZFPs can be applied to introduce these changes, makes it, according to DAS’ President & CEO, Jerome Peribere, a “game-changing” technology.
53) Recent public comments by Dow Agro executives have been extremely positive. In June 2007, DAS’ Vice President of Research and Development, Dr. Dan Kittle, stated that “we continue to be very impressed with our partnership with Sangamo and with the overall progress of our collaboration.”
54) That progress resulted in the achievement of several research milestones in 07 including the first demonstration of ZFN-mediated targeted integration of DNA into a native gene in maize and the first demonstration of targeting a native gene in canola with ZFNs.
55) DAS’ President & Chief Executive Officer, Jerome Peribere, at the SGMO analyst briefing in Dec 07, spoke highly of Sangamo’s platform; more specifically, the combination of a growing world food demand and a need to keep prices low/stable in the developing world results in a need to increase crop yield, and Mr. Peribere clearly stated that Sangamo’s zinc-finger technology will help DAS in its efforts to do just that.
56) Mr. Peribere also stated: "The opportunity that is ahead of us is ABSOLUTELY AMAZING! Last 10 yrs was really genetic brute force not genetic engineering. Genetic Engineering is now possible with SGMO technology”.
57) "We have met all of the SGMO/Dow milestones on or ahead of schedules. We are happy to send the checks to SGMO”. - J Peribere.
58) "The ZFP technology is incredible. The power of plant biotechnology is absolutely amazing. With SGMO technology we can go directly to the gene targeted-this will have HUGE and VERY WIDE applications.” Peribere.
59) Cantor Fitzgerald reminded investors that technology-driven growth is not linear - it is market-disruptive and that they consider the integration of Sangamo's ZFP technology into Dow's platform “game-changing.”
60) On Feb 12, 2008, Dow Agro CEO Peribere, at the Goldman Sachs Agriculture Biotech Forum praised the Sangamo Zinc Finger technology as extremely sophisticated technology that can up and down regulate genes very precisely stating “…we have achieved another significant milestone in the validation of zinc finger protein capabilities in plants, we have demonstrated the robust utility and flexibility of the Sangamo technology in precision editing of a native plant gene, confirming the power of zinc finger proteins to accomplish specific and targeted modifications of the plant's own genetic sequence. The technology shows potential to enable the delivery of 'designer' crops into new and existing markets."
61) The milestone is the first demonstration ever of the precise modification of the DNA sequence of an existing gene in canola designed to generate an improved trait. This further demonstrates the ability of ZFNs to act at their intended target in crops of commercial importance.
62) Sangamo has also developed sequence-specific ZFNs for precision gene modification and targeted gene insertion. These technologies have the potential to play a major role in bringing new discoveries in genomics forward to the marketplace. The use of Sangamo's ZFP technology to enable the efficient and reproducible generation of combinations or stacks of multiple traits and the insertion of new traits could address increasing demand.
63) At the analyst day, Dow Agro CEO stated that “Zinc fingers afford the broadest and most flexible range of capabilities and that’s why they were chosen.”
64) “Sangamo is the best partner as no other operation has assembled the expertise, capabilities and intellectual capacity” Jerome Peribere
65) "We envision ZFP...will become a major component of our plant biotechnology process and, as we enter commercialization and sublicensing, will have a 'game-changing' role in the future of plant breeding." Jerome Peribere
66) At both the Dec 07 SGMO investor day & at the Feb 08 Goldman Sachs conf, the Dow Agro CEO confirmed that they intend to exercise their option and sign the commercial agreement with SGMO this yr.
67) In late Jan 08, Canaccord Adams put out a report on SGMO’s “AG” business stating “Recent articles in the scientific and lay literature help to bolster the Sangamo approach in the agricultural sciences. While genetically modified organisms (GMO) remain controversial, Sangamo’s zinc finger technology could be the answer in answering many of the critics out there.”
68) CA believes one key area that should be gaining increasingly strong exposure is the collaboration between Sangamo and Dow AgroSciences. Much of the GMO controversies focus on “shotgun approach” mutations and inserting foreign genes into food crops to come up with better “strains.” Sangamo uses a highly targeted approach to gene expression that could even result in avoiding the term GMO, because it modulates endogenous host genes with no off-target mutations”. CA believes the “AG” factor is a great support for the therapeutic pipeline’s promise.
69) Cantor Fitzgerald agrees, stating in their report “Perhaps more importantly, Sangamo’s ZFN capabilities should assuage any political concerns regarding GMO (“genetically modified organism”) products, especially in Europe, as the zinc finger technology being employed does NOT involve the insertion of foreign genes into crops. Results come from the repression of a single gene”
70) SGMO's non-transgenic approach could allow crops grown with its products to avoid the genetically modified organism (GMO) designation. Using ZFPs to modify plants can be done without the need to permanently incorporate foreign DNA. The end result addresses the concerns of environmentalists for the uncontrolled release of foreign genes into the environment.
71) Recently Monsanto and Dow had a conference call with much fanfare that characterized their agro collaboration, which brings together their respective biotechnology platforms to create the first eight-gene stack offering, branded SmartStax, as the new industry-standard. Analysts think the transformative nature of the integrated Dow Agro technology platform - highly reliant on Sangamo's ZFP technology, - positions them to achieve sustainable top-line and bottom-line growth involving the world's largest and most lucrative markets - food/agro, bio-energy and bio-industrials - that will flow through to Sangamo.
72) At the Society for Neuroscience mtg in Nov 07, Sangamo announced positive preclinical data showing significant pain reduction in a mouse model of bone cancer pain. Mice injected with a ZFP TF repressor of the TrkA pain receptor gene showed a significant reduction in pain behaviors v. controls. These preclinical results represent yet another potential therapeutic application for Sangamo's ZFP platform. Based upon estimates that approximately 1 million cancer patients experience pain from their disease and this treatment could reach gross peak sales of at $750 million.
73) New product candidates can be developed in weeks. The ZFP platform enables SGMO to identify ZFPs from its proprietary archive using DNA sequence information, and testing them in cells in a matter of weeks if not days. By contrast, a structure-based drug design program depends on the capital and labor-intensive process of expressing and purifying a target protein, determining its structure by x-ray crystallography, screening thousands of compounds for activity and generating new lead compounds using clues from the structural information – a process that can take months or even years to culminate.
74) In HIV treatment, the ZFP is incorporated into a zinc finger nuclease (ZFN), which is used to stimulate cells into undergoing homologous recombination. The process can be controlled to introduce as little as a single base pair change in the cellular DNA, or multiple changes, insertions or deletions – providing doctors and scientists with the opportunity intervene into a disease process at the level of editing the patient’s DNA. At present, stem cells are obtained from the patient, grown and treated with the ZFN’s under laboratory conditions, and once modified, re-introduced into the patient. In AIDS, taking a cue from patients who are resistant to the spread of the virus, the CCR5 gene is disrupted, making the immune cells resistant to HIV infection.
75) On the Feb 08 earnings call, Ed Lanphier SGMO CEO stated “I have never entered a new yr at Sangamo with the optimism and enthusiasm I enter 2008 with. "Many analysts also feel 2008 will be "transformational".
76) Medical breakthroughs appear likely from combining ZFP technology with stem cell manipulation and gene therapy. Developments in stem cell research and new methods for delivering DNA to cells and tissues are currently in progress, and both will provide new avenues for using ZFPs to treat human disease. An example is the use of a ZFN to modify immune system stem cells to render them resistant to HIV infection. Another is the use of a ZFN to modify immune cells in the treatment of glioblastoma. In this instance, the ZFNs are used to disrupt the genes for receptors that cause brain inflammation during cancer treatment. A further example is the observed ability of SB509 to mobilize stem cells into the blood stream upon stimulation of the VEGF gene.
77) Promising results for SB-509 can be applied in multiple indications (including DN, ALS and PAD). – a “platform within a platform”. SB-509 activates a key gene in the body’s regenerative system, which in turn affects a number of disease related processes that include the growth of blood vessels, nerve function, lymph development and most remarkably, stem cell mobilization. SB-509 is currently being tested for its effects on nerve loss in diabetic neuropathy and amyotrophic lateral sclerosis, and on blood vessel development in peripheral arterial disease. Should it prove useful for stem cell mobilization, it will be used with any number of treatments that employ stem cells in regenerative medicine.
78) ZFP-enhanced pharmaceutical protein production offers multiple licensing opportunities in a $32 billion market. The market size for protein pharmaceutical production is likely to increase significantly over time. ZFP technology can be used to produce more protein by activating one or more copies of the corresponding gene, so that even a modest two-fold increase in yield has the potential to significantly reduce production costs. Additionally, ZFNs can be used to alter the characteristics of the producing cells – for example, reducing the number of antigenic sugar molecules that the cell covalently attaches to the protein.
79) In April 2007, Sangamo and Genentech announced the signing of a non-exclusive research and license agreement whereby Sangamo has agreed to (1) provide Genentech with access to the company’s ZFP technology and (2) engineer ZFP nucleases for DNA to use when generating cell lines for biopharmaceutical manufacturing purposes. Given Genentech’s size, reputation and its ongoing efforts to continually maximize its biopharmaceutical production processes, analysts universally considered this agreement a significantly positive development for Sangamo.
80) SGMO management has stated publicly that a new protein production deal is likely in the first half of 2008.
81) SGMO plans to initiate Phase 1 zinc finger nuclease therapeutic trials in HIV and glioblastoma this year.The clinical programs of both -- the clinical protocols of both programs received unanimous approval by the Recombinant DNA Advisory Committee, or RAC, in June 07.
82) In Sept 07, Sangamo announced positive preclinical data for its ZFN-HIV program at the 47th Annual Interscience conference on Antimicrobial Agents and Chemotherapy (ICAAC). Data showed that human CD4 T-cells could be made permanently resistant to HIV infection after treatment with the company’s proprietary zinc finger DNA-binding protein nucleases, and preferentially survive and expand in an animal model after HIV infection.
83) SGMO is in process of generating final product for use in the clinical trial and are working closely with the University of Pennsylvania to complete the necessary approvals prior to initiating the trial and is preparing an FDA requested novel long-term animal study with CCR-modified human T-cells.
84) Currently, Sangamo and investigators are continuing with safety and toxicity analyses and planning clinical development of SB-728 with a planned IND and Phase 1 initiation in H2/08. The overall clinical goal for the SB-728 program is to introduce a population of HIV infection- resistant T-cells through adoptive transfer with the presumption that this expanded T-cell population will help to fight off opportunistic infections, potentially the virus itself and progression to AIDS.
85) There are approximately 450,000 patients living with HIV in the US, with approximately 16,000 deaths per year. Worldwide, there are approximately 14,000 new infections daily. Sangamo’s initial target market for SB-728 will be those patients who are starting to fail current anti-retroviral therapies and are seeing their CD4 T cell counts decline. Approximately 10% to 20% of HIV-infected people in the US and Europe carry drug resistant strains, and that percentage appears to be increasing despite the approval of new drugs and a broad development pipeline of multiple companies. There are about 30 well-established mutations that can make HIV resistant to one of 25 drugs approved to treat this infection.
86) The median survival of recurrent glioblastoma multiforme patients treated with a second resection is 36 weeks. Sangamo is developing a ZFP to disrupt the expression of the gene encoding the glucocorticoid receptor in collaboration with City of Hope (COH). Scientists at COH have developed an IL-13 zetakine that, when expressed in cytotoxic or “killer” T-cells, enables them to seek out and destroy glioblastoma cells in the brain. In an investigator sponsored IND, patients have been treated with zetakine-modified T-cells which have shown significant anti-tumor activity. In the current clinical protocol, T-cells are removed from a patient with GM and modified to express the zetakine. These modified cells are infused into the brain following surgery for the targeted elimination of residual tumor cells. Frequently, however, a glucocorticoid such as Decadron must be administered to patients post-surgery to stop the brain from swelling. Glucocorticoids inactivate or kill the desirable T-cells through a protein known as the glucocorticoid receptor (GR). Cells without a functional GR are drug-resistant and are therefore available to destroy tumor cells. Sangamo is collaborating to generate zetakine positive, GR-negative T-cells, thus enabling the full treatment effect to occur even in the presence of Decadron. In December 2006, Sangamo entered into a broad, exclusive license agreement with COH for use of the zetakine with Sangamo’s technology. Sangamo retains commercialization rights and COH receives success-based milestone and downstream payments. Sangamo anticipates filing an IND and initiating Phase 1 studies for this therapeutic in by June 30 of this year.
87) As part of the Phase 1b study and the potential role of VEGF as a both a neuroprotective and a neuroregenerative, Sangamo has identified a potential role of increased stem cells recruited by VEGF as potentially being part of the “healing process.” Cells assessed were “aldehyde bright” stem cells. Aldehyde dehydrogenase is a characteristic enzyme in stem cells and functions to metabolize retinoic acid to prevent stem cell differentiation. Aldehyde bright stem cells have hematopoietic, mesenchymal, endothelial, and neural differentiation ability. Six patients (three treated, three placebo) were evaluated for circulating aldehyde bright stem cells in their peripheral mononuclear cells, and the results showed a maximal increase at day 30.
88) There is a growing amount of data supporting the role of VEGF in not only angiogenic processes but also in neuroprotective and neuroregenerative processes. Studies have shown that VEGF ligands and receptors allow for the therapeutic modulation of angiogenesis, collateral growth, hematopoiesis, atherosclerosis and inflammation. Based on Sangamo’s DN studies and preclinical studies, there appears to be an increase in stem cells in the peripheral bloodstream, which gives rise to new stem cells as well as differentiation. These cells are believed to be involved in the injury/tissue repair responses.The hypothesis is that SB-509 or a related VEGF activator can enhance the natural process of stem cell mobilization and nerve and blood vessel repair in peripheral limbs. There are already multiple clinical studies being conducted by others in such indications as myocardial infarction and chronic heart failure, with stem cells being injected directly into the leg or heart, for example.
89) As a result of the above, SGMO has commenced a Phase 2 trial announced the initiation of a randomized, single-blind, placebo-controlled, multi-center Phase 2 clinical trial in subjects with mild to moderate diabetic neuropathy (DN). The study is designed to evaluate the pharmacokinetics of stem cell mobilization into the bloodstream after treatment with varying doses of SB-509 as well as the clinical safety and clinical effects of SB-509 administration. In addition to Phase 1 clinical data that suggest neuroprotective, neuroregenerative and angiogenic effects of SB-509, they have preclinical and preliminary clinical data that suggest that treatment with SB-509 can mobilize stem cells into the circulation. Stem cells are of interest as potential therapeutic agents as they can be induced to become cells with a special function in the body such as nerves and blood vessels and can potentially migrate from the blood circulation into areas of injury or degeneration to participate in the body's repair response. The stem cells that have been observed post treatment with SB-509 are highly enriched in cell types that mediate tissue repair. In addition, early data suggests that SB-509 treatment may mobilize between 100 to 1000-fold more cells than are typically being introduced into subjects in many of the ex vivo stem cell therapeutic approaches that are currently being tested. Ultimately, this phenomenon may also serve as a pharmacodynamic surrogate biomarker enabling a physician to easily monitor progress of this therapy for DN after SB-509 administration.
90) Parkinson’s Disease, Stroke, Spinal Cord Injury, Neuropathic Pain and PAD preclinical updates expected in 2008 will show SGMO’s breadth and Depth of their technology.
91) In 2007, Sangamo announced the presentation of preclinical data from its ZFP Therapeutic program in nerve regeneration at the Fourteenth Annual Conference of the American Society for Neural Therapy and Repair. The data generated, in a model of spinal cord injury (SCI), demonstrate that treatment of the spinal cord at the time of injury with a VEGF ZFP TF had a statistically significant effect on recovery of hind-limb function as well as a number of other measures of nerve integrity and health. The work was carried out in the laboratory of Dr. Michael Fehlings who holds the Krembil Chair in Neural Repair and Regeneration at the Krembil Neuroscience Center, Toronto Western Hospital and the Division of Neurosurgery, Faculty of Medicine, University of Toronto, Ontario, Canada. Dr. Fehlings is a Christopher Reeve Foundation Scientific Advisory Council member and a leading expert in the molecular mechanisms and treatment of SCI. In collaboration with Dr. Fehlings and his colleagues, Sangamo is evaluating a zinc finger DNA-binding protein transcription factor (ZFP TF(TM)), designed to upregulate the expression of the gene encoding vascular endothelial growth factor (VEGF-A) in spinal cord injury (SCI) models. In addition to its effects on angiogenesis or blood vessel growth, VEGF-A has been demonstrated to have direct neurotrophic and neuroprotective properties in several models that assess nerve integrity and health.
92) In 2007, Sangamo was awarded funding by The Michael J. Fox Foundation for Parkinson's Research (MJFF) to support the development of a ZFP Therapeutic to treat Parkinson's disease (PD). The $950,000 award will be paid over a period of two years. Sangamo will develop zinc-finger DNA-binding protein transcription factors (ZFP TFs(TM)) to activate the expression of glial cell line-derived neurotrophic factor (GDNF), a potent neurotrophic factor that has shown promise in preclinical testing to slow or stop the progression of Parkinson's disease. The work is of particular interest given that Sangamo already has similar technology in clinical trials for diabetic neuropathy and peripheral artery disease and, with a positive result, could proceed rapidly into clinical trials for PD.Sangamo's technology platform permits the development of highly specific ZFP TFs that can be used to regulate or modify genes at the DNA level. Using a ZFP TF, a gene can be activated in a patient's own cells in its natural cellular context. Use of a ZFP TF to activate the GDNF gene in the brain -- as compared to addition of a GDNF cDNA or the recombinant protein -- may allow the delivery of a more physiologically relevant dose of the growth factor. This may be of particular significance when targeting potent natural growth factors such as GDNF, where sufficient but not super-physiological levels of the therapeutic protein are required to achieve potency with safety.
93) Blocked nerve trial is a single arm company sponsored trial so trial update may be available at the American Diabetes Association Annual meeting.
94) SGMO stock price is looking technically strong for a rebound. It closed over its 200 Day Moving Average today and one of the better technical guys on the CELG board, JRP, who has had a very accurate track record following CELG for years today posted that there is “a possible monumental breakout on the SGMO chart with $2 downside and $6.50 upside with longer term upside scenarios well north of $20 plus per share for SGMO.”
95) Short interest on this low float stock is near an all time high at 5,479,067 as of Jan 31 with an avg daily share volume of 472k and few natural large sellers. Shorts may find it difficult to find enough shares to cover especially if there is any positive news as expected this yr.
96) There appears to have been some illegal naked shorting with FTDs and some hidden shorting without identifying proper locate numbers and the SEC has been alerted to the situation.
97) SGMO is approaching the key $500 million market cap that will allow increased institutional ownership and additional analyst coverage by some larger firms. While at the JP Morgan conference this January, their analyst told me they were reviewing for possible coverage.
98) A positive Phase 2 Diabetic Neuropathy trial and Dow Agro commercial deal will be important value creation points for investors and analysts. If both are successful, Wall Street will be forced to access what this monopoly of intellectual property on the first new medical platform in the post-genomic era is worth. The answer could be STAGGERING.
99) So if this technology is proven out, it’s almost impossible to tell what this company, its future earnings stream and this PLATFORM producing pipeline is worth especially with the ownership of all of this intellectual property. A caller on Mad Money once asked about the generics as a play in the group. Cramer actually nailed this one and started screaming: "we don't need factories and pill makers, ITS ALL ABOUT OWNERSHIP OF THE INTELLECTUAL PROPERTY". Hmmmm, the intellectual property, the HOLY GRAIL of biotech/pharma investing. SGMO has a monopoly on the patents on this potentially game changing technology. SGMO’s brilliant management team has taken great care over the years to assemble patents that cover a wide variety of areas. Because they have the capability to finance new drug development from the revenue generated by previous equity offerings and non-core area collaborations, they've been able to retain full ownership of the rights to their core therapeutic properties. The result is that they will be able to realize the full financial potential by executing collaborations at points of key value inflection – like after the Diabetic Neuropathy trials. On there terms. In other words, the best financial rewards are yet to come, because of the ownership of the intellectual property.
100) The incredible series of posts on HIV and SGMO’s potential solution by “adenylyl” on the Investorvillage.com board (start with post 3449 and work up from there) at the following link:
www1.investorvillage.com |
