Sangamo, With a Lock on Genetic Switch Technology, Seeks to Morph Into Drugmaker

10/18/10Follow @xconomy

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has a different way of working than RNA interference or viral-based gene therapies, which are more widely publicized for their potential to alter disease at the very specific, fundamental level of DNA or RNA. It may not make as many mainstream headlines, but punch “zinc finger protein” into the NIH’s PubMed database, and you’ll see what I mean about the scientific interest, as more than 12,000 publications pop up.

Sangamo went public in 2000, and while it still hasn’t yet turned zinc finger protein technology into a marketed drug, it has gotten some traction with laboratory uses. Sigma-Aldrich (NASDAQ: SIAL), the giant chemical supplier, has a license to market the Sangamo technology to life sciences and pharmaceutical labs that use them to turn on or off certain genes. Dow Chemical’s agriscience operation uses the technology to alter genetics of plants.

Those deals have brought in $75 million combined to Sangamo over the past five years, Lanphier says. It has given his company enough financial stability that it has never burned more than $25 million in cash in a year’s time, even though it has about 80 employees, and has completed about four mid-stage clinical trials, Lanphier says. In biotech, where companies burn lots of cash for many years before ever hoping to generate revenue from an actual product, that looks downright prudent. The company had $69 million in cash as of its most recent quarterly report, and expects to end the year with $60 million in the bank.

So the technology has some whiz-bang potential for academic labs, and there’s some cash flow from big partners to keep the house financially stable. But where’s the home-run potential for Sangamo’s investors? The company will have to make the transition from being thought of mainly as a technology provider into a drug company, Lanphier says.

The most important opportunity at the moment to do that comes from a drug called SB-509. Sangamo has developed this drug to have a novel mechanism, stimulating the growth of neurons and blood vessels for patients suffering from diabetic neuropathy—a numbing and tingling in the extremities that affects people with Type 2 diabetes. There is no other drug on the market that’s supposed to modify the underlying condition. Type 2 diabetes, in which people lose the ability to control blood sugar, currently effects an estimated 25 million people in the U.S., and its incidence is expected to boom over the next two decades now that an estimated two-thirds of people in the U.S. are overweight or obese.

Sangamo presented some results from … Next Page »

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