Shares in Richmond, CA-based clinical stage biopharmaceutical company Sangamo BioSciences (SGMO) spiked nearly 35 percent on Thursday on news of a partnership with Biogen Idec (BIIB) to develop treatments for disorders affecting hemoglobin.
Biogen made an initial payment of $20 million to Sangamo as part of a deal that will total some $300 million in funding as well as double-digit royalties for Sangamo.
Lucrative Deal Drives SGMO to 10-Year High
On the whole, the size and generosity of the deal appear to make this a major win for Sangamo.
"The deal terms are very lucrative for a pre-clinical platform,” said Wedbush analyst Liana Moussatos. “So I think Biogen must have been impressed with the pre-clinical data that Sangamo presented last month."
The spike drove Sangamo to close to $19 a share, its highest level since 2001. It also passed the previous five-year high the company reached when shares were touching $18.50 in 2007.
Hemoglobin Disorders Affect Blood’s Ability to Carry Oxygen
Hemoglobin is the component of blood that carries oxygen, and disorders affecting hemoglobin include sickle cell disease and beta thalassemia. Both are very serious conditions and included in the category known as hemoglobinopathies.
Sangamo has developed technology to replace defective genes in patients with a corrective one, and Biogen appears to believe that this method has the potential to create one treatment for both diseases.
Sangamo will be responsible for research and development of the treatment up to the initial proof-of-concept trial.
SGMO Product Pipeline Could Have Potential
While Thursday’s announced partnership clearly took Sangamo to new levels, boosting the company’s market cap from $843.57 million to almost $1.15 billion in a matter of hours, the company has several treatments in its product pipeline that could also be major developments.
Most notable is lead therapy SB-728, which has the potential to develop into a functional cure for HIV/AIDS. The treatment would function by drawing immune cells, removing the protein pathway used by HIV to infect them, and then returning them to the patient’s bloodstream.
Sangamo’s promise appears to have won over investors, with the stock jumping over 130 percent despite the company failing to turn a profit and garnering revenues under $25 million in each of the last five years.
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