West Coast Editor

Sangamo Biosciences Inc. hopes to further its early stage success in zinc-finger therapeutics with other important digits of a less figurative kind - about $20.2 million in net proceeds from a stock offering of 3.1 million shares at $6.50 each.

Zinc finger DNA-binding proteins (or ZFPs, so named for the shape of their fold) are engineered by Sangamo to recognize a specific DNA sequence, and the firm has created ZFP transcription factors to control gene expression.

"It's generally applicable to any gene we want to target," said Edward Lanphier, president and CEO of Richmond, Calif.-based Sangamo. The technology came from a handful of academic institutions, and was licensed by the company in the mid-1990s, he said.

"We focus on genes where, by regulating the gene at the DNA level - rather than downstream at the RNA or protein level - we can provoke a phenotype that cannot be created at any other level," Lanphier said.

Earlier this month, at the 66th Annual Scientific Sessions of the American Diabetes Association in Washington, Sangamo offered positive Phase Ib data with SB-509, an activator of VEGF-A, showing tolerability as well as improvements in pain and neurologic effects in patients with diabetic neuropathy.

Hailing the Phase I news, Charles Duncan, analyst with JMP Securities in New York, raised his price target from $8 to $9. Sangamo is getting ready for a Phase II trial with SB-509 in mild to moderate disease in the second half of this year.

"The main thing for us, as we begin this Phase II, is to make sure we have sufficient capital to get us all the way through," Lanphier said. As of March 31, Sangamo had about $42.5 million in cash, cash equivalents and marketable securities.

Sangamo, founded by Lanphier 11 years ago, also has a program targeting the CCR5 receptor in HIV, and an investigational new drug application in that area is expected by the end of the year. Other preclinical efforts involve neuropathic pain, congestive heart failure, spinal cord injury and macular degeneration.

In 2000, the company entered a partnership with Edwards Lifesciences Corp., of Irvine, Calif., and Edwards is taking a ZFP compound for critical limb ischemia into Phase II trials later this year.

Last year, Sangamo entered a $52 million agreement with Indianapolis-based Dow AgroSciences, a subsidiary of the Dow Chemical Co., to apply ZFP TFs and ZFNs in plant agriculture. Terms of that agreement called for a $4 million investment from Dow in a $20.5 million financing round in November. (See BioWorld Today, Oct. 6, 2005, and Nov. 14, 2005.)

Sangamo will be establishing more strategic partnerships, Lanphier said, and "active partnering discussions" are ongoing.

Thanks to the financing, Sangamo forecasts $50 million in reserves at year's end, rather than the $30 million predicted earlier. The latest offering's sole underwriter, New York-based Piper Jaffray & Co., has a 30-day option to buy up to 465,000 more shares to cover overallotments.

Sangamo's stock (NASDAQ:SGMO) closed Friday at $6.63, down 72 cents.