Less than a week after shares of Sangamo BioSciences Inc. jumped 20 percent on a zinc finger DNA-binding protein (ZFP) collaboration with Sigma-Aldrich Corp., the Richmond, Calif.-based firm is padding its coffers with a $30 million stock sale.

Sangamo agreed to sell about 3.3 million shares to a group of institutional investors priced at $9.15 per share, a slight discount to Monday's closing price of $9.76. The company's stock got a shot in the arm last week on news of its alliance with St. Louis-based Sigma-Aldrich to develop laboratory research reagents using Sangamo's ZFP technology.

The companies intend the reagents for broad use in several laboratory applications, such as cell lines with enhanced protein production performance, panels of knockout cell lines for drug discovery and stem cell and transgenic animal models.

In exchange, Sangamo gets a $13.8 million up-front payment, with a little more than half of that - $7.75 million - coming from an equity investment. Sangamo also is eligible to receive up to $22 million in milestones and would receive royalties on any product sales or services developed using the ZFP technology. Shares of Sangamo (NASDAQ:SGMO) shot up 19.3 percent last week to close at $10.20.

The company's ZFP technology, which involves the engineering of proteins that can be targeted to specific genes or the creation of zinc finger nucleases designed to correct DNA at a precise sequence location, has brought Sangamo a number of partnership opportunities since its founding in 1995.

Earlier this year, the firm signed a deal with South San Francisco-based Genentech Inc. to engineer ZFP nucleases that the large biotech firm can use to generate cell lines for protein production, and entered a licensing agreement with California biomedical research facility City of Hope to develop a cell therapy for glioblastoma multiforme. (See BioWorld Today, May 1, 2007.)

Sangamo also uses the technology to create its own pipeline of ZFP transcription factor (ZFP TF)-based therapeutics aimed at regulating disease-related genes and ZFN-based therapeutics designed for disrupting or correcting genes. Its lead program, SB-509, is an injectable formulation of plasmid DNA that encodes ZFP TF to up-regulate the vascular endothelial growth factor (VEGF-A) gene. SB-509 is in development for diabetic neuropathy, and Sangamo initiated two Phase II trials earlier this year in patients with moderate to severe disease.

Earlier in the pipeline, the company is investigating targets for cancer, neuropathic pain, diseases that require a gene correction - sickle-cell disease, beta thalassemia and X-linked severe combined immunodeficiency (X-linked SCID) - and HIV/AIDS. Last month, Sangamo researchers reported preclinical data from its HIV/AIDS candidate showing that ZFN-modified T cells engrafted normally in the mouse model and that those cells are protected from HIV infection. A Phase I trial in that indication is expected to start in the second half of the year.

The company has not yet reported its second-quarter earnings. For the first three months of 2007, it posted a net loss of $5.4 million, or 15 cents per share. As of March 31, Sangamo had about $49 million in cash.

Sangamo's stock lost 8 cents Tuesday to close at $9.68.