Investors Sanguine About Sangamo Biosciences After HIV/AIDS Treatment Shows Early Results

Joel Anderson |

Clinical-stage biopharmaceutical small cap Sangamo Biosciences (SGMO) gained over 20 percent on Thursday after news that the results of the first in-man clinical study of its proprietary zinc finger nuclease (ZFN)-based genome editing technology is being published in the New England Journal of Medicine (NEJM).

The stock gapped up 17.2 percent to $22.98 a share at the opening bell, reacting to the news of the results being published that was released after market close on Wednesday. Shares briefly retreated to $21.76 apiece before rebounding and building on gains, reaching almost $24 each by noon. Trading volume was very heavy, reaching nearly six times its daily average by noon.

Study Demonstrates Engineered T-Cells Accepted, Could be Reducing Virus Load

The clinical study focused on HIV-positive patients and demonstrate that human T-cell genomes can be engineered to mimic a natural mutation that makes them resistant to HIV infection. The engineered cells were well tolerated by patients upon reintroduction and associated with decreased viral loads in several subjects.

"We have used Sangamo's ZFN technology to safely genetically engineer an HIV-infected individual's own T-cells and to make those cells resistant to infection by the virus," said one of the paper’s senior authors, Carl June, M.D., Richard W. Vague Professor in Immunotherapy in the department of Pathology and Laboratory Medicine at the Perelman School of Medicine at the University of Pennsylvania.  "This study demonstrates that ZFN-modified cells can be safely administered back to the individual; are able to persist and circulate throughout the body to key reservoirs of HIV infection; and show preferential survival over unmodified cells when antiviral drugs are withdrawn, potentially keeping the virus under control without the use of drugs. Our experience reinforces our belief that an immunological approach is a promising approach to enable functional control of HIV infection and eliminate the need for lifelong ART."

It’s a major development for Sangamo, which is developing a variety of zinc finger DNA-binding protein (ZFP) therapies for a variety of diseases that include HIV/AIDS, hemophilia, sickle cell disease, Huntington’s disease, and others.

“The two-component structure of our engineered ZFPs is modeled on the structure of naturally occurring transcription factors,” says the company’s website. “We can engineer ZFPs to bind to virtually any DNA sequence. We can combine the engineered ZFPs with a variety of different functional domains to generate novel ZFP transcription factors (ZFP TFs) which are proteins that can activate or repress gene expression. Additionally, we can create novel ZFP Nucleases (ZFNs) that enable us to specifically modify gene sequences in a variety of ways.”

Sangamo Breaks Through Long-, and Short-Term Resistance

While Sangamo’s big gains are clearly driven by news of these positive clinical results, the stock has also broken out of some technical patterns that could continue to instill confidence among investors and traders alike moving forward.

A look at Sangamo’s stock chart reveals two different channels. The first is a longer-term up channel with a rising resistance level that started in mid-September and a rising support level that can be tracked back to gains that began in early November and has advanced just ahead of the 50-day SMA since then.

However, since Jan. 9 when the company experienced a nearly 40 percent jump after announcing a partnership with Biogen Idec (BIIB) to develop treatments for disorders affecting hemoglobin, the stock entered into a short-term horizontal channel that had share prices bouncing sharply between support at $18 a share and resistance at $20 a share.

Thursday’s big gain, though, sent shares crashing past both the short- and long-term resistance levels. The stock is not trading with a 14-day RSI of close to 70 and above its upper Bollinger Band, potential signs of being overbought that may ultimately prove irrelevant if good news keeps pouring in about its gene-engineering technology.

It’s also worth noting that the stock’s 14-day stochastic RSI had dipped below 0.20 in late February and into early March, a traditional sign that a stock is oversold. This could have worked in conjunction with the NEJM story to help buoy investor enthusiasm.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
BIIB Biogen Inc. 297.19 1.41 0.48 1,429,360
SGMO Sangamo BioSciences Inc. 3.10 0.05 1.64 1,023,633
NCGDF North Country Gold Corp. n/a n/a n/a 0

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