Sangamo: Modifying Genes

09/10/2013 8:00 am EST

Focus: STOCKS

John McCamant

Editor, Medical Technology Stock Letter

This biotech company was just issued a New Key Patent and a Notice of Allowance for the US patent application entitled "Novel DNA-binding Proteins and Uses Thereof", notes John McCamant, editor of The Medical Technology Stock Letter.

The claims cover core architectural aspects of engineered Transcription Activator-Like Effectors, or TALEs, which enable these proteins to be useful in potential therapeutic applications of genome editing or gene regulation, and for the efficient use of the technology in biomedical research and plant applications.

The company-Sangamo (SGMO)-expects that TALE architectures to be broadly adopted and become the industry standard.

When combined with Sangamo's proprietary engineered ZFP technology, or DNA cutting domains, the TALE technology can be harnessed to efficiently and precisely edit gene sequences.

The ability to modify the genome of plants and animals has already transformed cell biology and holds promise for the development of many more new medicines and agricultural products.

SGMO continues to create strong intellectual property (IP), which is the core strength of the company. We also expect SGMO to continue translating their strong IP into solid revenue streams.

The first area partnering class, that we expect the company to monetize TALE, would be in agriculture, where the theoretical risks are much lower than in animals or humans.

An obvious candidate for TALE licensure is DowAgro, which has already licensed SGMO's ZFP technology.

A late-breaker abstract for SGMO's HIV program has been accepted by the Interscience Conference on Antimcrobial Agents and Chemotherapy (ICAAC), being held September 10-13 in Denver.

ICAAC is an important conference for new HIV drugs, is very well attended, and should help attract more visibility for both the HIV program and SGMO's technology.

The HIV program remains controversial, expectations are low and, we believe it has been largely discounted by Wall Street.

Thus, there is the potential for stock appreciation as any favorable data might also goose the stock further by the large short position. SGMO is a buy under $10 with a target price of $20.

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