Here’s What Was Behind Sangamo’s Horrendous Week

After reporting disappointing results from an early-stage study of its promising gene-editing therapy for mucopolysaccharidosis type II (MPS II) on Sept. 5, Sangamo Therapeutics (NASDAQ: SGMO) saw its shares tumble 29%. Does the data dash hope for this revolutionary approach?

What is MPS II?

MPS II, or Hunter syndrome, is a lysosomal storage genetic disorder caused by mutations that inhibit the production of iduronate-2-sulfatase (IDS), an enzyme that breaks down the complex-carbohydrate gylcosaminoglycans (GAGs) known as dermatan sulfate and heparan sulfate.

These GAGs are created normally when cells die, and because patients can't break them down, they build up in body tissues, causing life-shortening organ abnormalities. In severe cases, patients typically pass away in childhood or adolescence. In less severe cases, patients often pass away in their 20s or 30s. Usually, death is the result of cardiovascular failure or respiratory disease. Only about 2,000 people have Hunter syndrome worldwide, including about 500 people in America.

There isn't a cure for Hunter syndrome, so treatment usually relies upon Elaprase, an enzyme replacement therapy (ERT) developed by Shire that's given by infusion every week and that's selling at a quarterly clip of $177 million.

Pursuing a functional cure

Sangamo's been working on a gene-editing approach called zinc-finger nuclease (ZFN) since the 1990s.

In ZFN, zinc-finger DNA-binding proteins are used to guide a cutting enzyme, known as Fok1, to an errant DNA sequence. Once there, the ZFN cuts away the incorrect genetic code or replaces it with new code that restores genetic function.

In Hunter syndrome, Sangamo's goal is to use ZFN to insert a functioning copy of the gene responsible for producing IDS in the patient's liver. In doing so, Sangamo hopes its SB-913 therapy will allow patients to produce their own IDS, removing the need for ERT infusions.

More work to do

This week, Sangamo updated investors on the progress it's making in studying SB-913.

Specifically, it provided data from two patients participating in cohort 1 and two patients participating in cohort 2 of its phase 1/2 trial. Patients in cohort 1 received a single, low dose of SB-913, while patients in cohort 2 received a moderate dose of the therapy.

Unfortunately, the low-dose cohort didn't provide much benefit. There was a reduction in heparan sulfate in urine, but dermatan sulfate levels increased, as did total GAG levels. The performance in cohort 2 was better. Both of those patients saw a reduction in heparan, dermatan, and total GAG levels.

GAG levels are a biomarker used in diagnosing the disease, so cohort 2's data is intriguing. But patients were continuing to receive ERTs during this study, so it's inconclusive if the decline in cohort 2 was because of SB-913. Further muddying the data was the fact that Sangamo also reported that levels of plasma IDS activity were "below the level of quantification of the current assay." That appears to suggest that patients aren't producing IDS on their own yet.

What to watch next

Without evidence of plasma IDS activity, it's hard to believe that SB-913 patients are producing enough of the enzyme to displace their need for ERTs. This increases pressure for more-robust data from two patients who were recently enrolled in a third, high-dose cohort of the study. When their results are available later this year, Sangamo will be able to decide if SB-913 has a shot at reshaping MPS II treatment or if it's destined for the dustbin. If it decides it's the former, then SB-913 will advance into larger, more advanced trials.

Until then, it's a guessing game if SB-913 will succeed. And because of that, this is one stock that's best suited to risk-tolerant investors.

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Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.