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

Xconomy San Francisco — 

Quite a few biotech entrepreneurs would be happy to trade places with Sangamo Biosciences founder and CEO Ed Lanphier. His company has a hammerlock on the intellectual property for a leading-edge genetic technology that a lot of academic scientists love to write about in top peer-reviewed journals like Nature. Big partners like Dow Chemical and Sigma-Aldrich are shelling out cash to get licenses.

And while Richmond, CA-based Sangamo hasn’t yet proven that it can turn this technology into the basis for a drug company, it is about a year or so away from finding out if it has created a first-of-its-kind treatment for a common complication of diabetes, one of the biggest markets in the pharmaceutical business.

So what do investors think of all this? The stock chart (NASDAQ: SGMO) tells a pretty grim story. Sangamo has been on a steady downhill slide, falling from a 52-week high of $7.45 to $3.92 at last week’s close.

Lanphier, who founded the company 15 years ago, shrugs.

“There are things I know something about, and things I know little about. The stock market is one of the latter,” Lanphier says.

Of course, Lanphier does have some ideas about what’s going on. Many of the general-interest, diversified fund managers on Wall Street just don’t have the same appetite for biotechnology that they did when the Human Genome Project was all over the news. Even the mainstay biotech funds, with PhDs on staff comfortable with researching a company like Sangamo, have turned cautious in the downturn, placing safer bets on drugs and technologies that have already passed their critical experiments. Other companies with reputations for innovative science, like South San Francisco-based Exelixis (NASDAQ: EXEL), have also seen investors’ patience run thin.

Ed Lanphier

Ed Lanphier

So what does Sangamo have that’s interesting, yet hard to pin down with a quantitative value? It’s called zinc finger protein (ZFP) technology. The goal at the company, founded 15 years ago with science from MIT, Johns Hopkins University, Johnson & Johnson, is to develop biologic molecules that can specifically turn on, or turn off, certain genes through a biological mechanism that’s found in everything from yeast to worms to mice to human beings. This technology … Next Page »

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