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business newsSangamo Drops After Positive HIV Drug Study
By
Brett Chase
Sep 19, 2011 12:45 pm
The results of the small study were positive and the company is going forward with more testing of its HIV treatment. So why are the shares dropping?
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According to study results released Sunday, the drug showed promise in treating the AIDS virus and the company plans to continue its research.
“Based on these data, Sangamo plans to continue to expand our clinical trials,” Sangamo’s R&D chief Geoff Nichol says in a statement.
The aim of Sangamo’s genetic therapy is to treat patients with a single infusion and eliminate the need for antiviral drugs. The Sangamo drug candidate, SB-728-T, is essentially being tested as a “functional cure” for HIV, company execs say. (See Sangamo Touts Cure for HIV.) Sangamo CEO Edward Lanphier plans to give more details on his company’s development plans at a UBS investor conference early Wednesday.
Despite the good news, shares of Sangamo are falling, dropping 3% to $5.82 in midday trading Monday. It’s important to keep in mind the tremendous rise this stock has seen in the past year -- it’s still up about 80% over the past 12 months. And note that these are very preliminary study data.
That said, the news is a very positive step for the company and its gene-targeting technology.
Leerink Swann analyst Joseph Schwartz recommends buying the stock and has a $9 price target on the shares for the next year.
Schwartz is a believer in Sangamo’s proprietary zinc finger DNA-binding protein technology, which also is being studied to treat other conditions such as diabetic nerve damage and brain cancer.
The technology is a “differentiated and compelling approach to fighting disease,” he says. “Sangamo’s current stage of clinical development is an important value creation point for investors.”
The next catalyst for Sangamo’s stock will be study data for the diabetic nerve damage treatment, SB-509. That data for mid-stage research is expected in the fourth quarter. The treatment is the lead drug candidate for Sangamo, which lost almost $20 million through the first six months of this year.
Twitter: @brettchase
No positions in stocks mentioned.
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