“The Next 8,539% Biotech Breakout … Beginning April 26”

By Travis Johnson, Stock Gumshoe, April 13, 2010

Ah, a good old promise of biotech riches — I haven’t dug into one of these in ages, nothing beats the wild biotech stocks that can see their share price climb 200% (or fall 90%) on a single bit of news.

This tease is from Marc Lichtenfeld, whose biotech stuff we’ve looked at several times before for a variety of newsletters he’s associated with — this time the ad is for his First Access Research membership, “normally” $2,750 per year (on super-sale right now, naturally). I always get the multiple layers of these newsletters confused (there’s always a pricier version to buy if you want the very very very best ideas, of course), but it sounds like this is a step up from his regular Access newsletter that I’ve written about before.

If the name sounds familiar to Gumshoe readers, there’s a good reason — Lichtenfeld’s most aggressive ad that I’ve seen so far teased MELA Sciences (MELA) more than two years ago, and to his credit he was certainly on that story before other folks I saw and might have ridden it to better than a double (the stock got a high profile mention in Barron’s last summer, and has been touted by others as the developer of the “algorithm gun” more recently, but got a surprising “need more data” response from the FDA last month that clobbered the share price).

So in exchange for taking a flier on this newsletter, what fabulous undercover biotech stock will they tell you about today? Let’s see if we can’t figure it out without subscribing, eh? Clues, please!

“Beginning April 26, 2010… The Next 8,539% Biotech Breakout

“In the coming days, this CA-based micro-cap will release important Phase IIb data that could revolutionize genetic medicine.”

So that’s exciting, right? Some more details? Of course!

“Any day now, the company will announce results for a new genetic therapy that could create the single-biggest return of any investment I’ve ever found.

“The President of the Research Biotech Business Unit at an S&P 500 company calls this technology ‘the holy grail.’

“According to the UK Times, ‘…scientists predict that the technique could change the way… diseases are treated, making genetic therapies a routine part of medicine for the first time.'”

If anyone ever does find the real (assuming there is one) holy grail, I hope that they say their mission was the “holy grail of archeology.” And I hope that’s the last time we hear that term.

Some more details that might help pin down this particular stock?

“How This Tiny Company’s Market Cap Could Explode Tenfold!

“I’ve been tracking this play for months.

“And quite frankly, I’m not sure if I’ve ever come across a company with this much moneymaking potential…

“Thanks to this company’s unique technology, it has developed a therapy for treating nerve damage in diabetics – a painful affliction affecting 12.5 million people in the United States alone.

“Currently, no therapies like it exist. Meaning this $250 million company could conceivably corner a $2.5 BILLION market. And it could happen sooner than you think.

“This drug is in Phase IIb trials right now. We expect data in the second quarter of this year. That’s right. Any day now. And when it happens, that news alone could cause the stock to immediately double…”

“In the case of our tiny biotech, we’re expecting very good news. We’ve already seen results from Phase I testing showing that the drug was effective for 75% of participants with moderate to severe symptoms. And there were no safety issues. But more importantly….

“We have quotes from some patients testing the drug:

“48-year-old participant Sharon revealed, ‘…it’s helping. I have more energy. I like it… The nerve test showed improvement.’

“Bob, a 59-year-old participant, reported early on, ‘…I am increasing mass in my arms and legs.’”

So who is it? Well, we throw that into the Thinkolator, and after quite a bit of sputtering and churning we get our answer out the other end … this must be:

Sangamo Biosciences (SGMO)

I’ve written about this stock before, following a Hot Stock Confidential teaser about a year ago (that promised “only” 1,100% gains — paltry compared to Lichtenfeld’s promise of 8,539%, though I’d settle for either myself), and it certainly is an interesting little “junior biotech” stock.

The clues match quite nicely — Sangamo is based in California, their most advanced compound is SB-509, which is in Phase IIb clinical trials right now for Diabetic Neuropathy, and at least that quote from Bob comes from a patient comment about an earlier SB-509 trial (though the name wasn’t really Bob, I don’t think — not unusual to switch them for “privacy”).

Their technology is called ZFN, for Zinc Finger Proteins, and it is a gene switching technology that does sound promising, at least to an idiot like myself who scraped through high school chemistry and biology with only a very basic level of comprehension. The quote from the Times is from this article, about two years old now, that describes the technology in more detail. And for a final little match on the clues, SGMO does have a current market cap of almost exactly $250 million.

As to whether it’s going to $2.5 billion, well, that I can’t help you with. Apparently Lichtenfeld is lining up this conference call, which includes the CEO, on April 26 — which is a bit surprising, because they release earnings on April 30 and usually CEOs are very cautious about making any public utterances anywhere near the earnings release date. Not that they’re actually going to have any earnings, of course, Sangamo has been losing money for years, and will continue losing money for at least a couple more years (absent any deals to sell or partner their drugs for upfront payments, of course). That said, they are in very nice shape financially, with about $80 million in cash (close to $2 per share), so they could keep losing money for a while at this pace and be just fine — and earnings are not exactly the best measure for a little biotech stock, if you insist on your companies being profitable you’re probably not lined up for the biotech and mining lottery tickets that so many investors crave.

Of course, if SB-509 makes it through this Phase II-b trial and is ready for phase III, the costs start to pile up as the size of the trials climbs in their effort to prove that the drug is safe (enough), and any effort to move the drug along for other applications as well (the II-b trial is for “moderate severity”, and they’re also studying it for “mild” and “severe” cases), and for other diseases (SB-509 is also in trials for ALS, Lou Gehrig’s disease — phase II results expected in the second half of this year), which means costs have every potential to escalate … which probably means that the company would be delighted to have a deep-pocketed partner to move the drug through the latter, most expensive stages before a hoped-for approval.

I’m far from being an expert on Sangamo or on the science behind their work, but given the platform of ZFN that they’re working on it does seem like any big moves to profitability would most likely come from partners who use their technology to advance other therapies — their own SB-509 is farther along than many drugs get, but it’s still in Phase II and things remain very uncertain, so if you’re interested in Sangamo you’re probably hoping either for a partnership to push forward these clinical programs, or a buyout from big pharma, or a series of licensing deals to use their ZFN technology in other areas. I lost a little bit of money in SGMO options last year, if memory serves, and for some reason the company just appeals to me — though I don’t own shares now, and of course I won’t trade in the stock during my three day blackout period after writing about them.

Lichtenfeld teases that there are three potential catalysts for this stock in the near future: the release of those IIb results; “news from a trusted source” that tells him that a partnership deal could be imminent; and he thinks the company could get a “takeover bid within the next 12 months.”

So … what do you think? Any genetic mavens out there who like Sangamo, or any of the many, many other small biotechs that are looking for the next hot drug? Let us know with a comment below.

And if you happen to be an early subscriber to First Access and want to let folks know what your experience has been like, just click here to review it for us. Thanks!


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27 Comments on "“The Next 8,539% Biotech Breakout … Beginning April 26”"

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Joe
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Joe
April 13, 2010 9:47 pm

Not a bad company but I think CYTR or it's sister company RXII have more to offer than this one. CYTR is a little farther along in there ALS drug. I do own shares in both of these. Plus I have an inside source on these. I would love to hear other opinions

Charlie
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Charlie
April 13, 2010 10:12 pm

I own shares of an Australian company called Prima Biomed (PRR):ASX? They have a product called C-Vac which, from what I understand, uses the same technology as Dendreon. They are currently evaluating C-Vac in the treatment of recurrent ovarian cancer following initial surgery. Having lost my sister a couple of years ago to this disease, I have a first hand awareness of how difficult this disease is to treat. If successful, I believe this stock currently trading at about $0.15 could be a blockbuster. I would be most interested in other opinions. Thanks.

Bill
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April 13, 2010 10:27 pm

Don't know about SGMO, but in a different area (bacteria and virus neutralization), CERS is likely to become a very interesting takeover candidate when (not if, but when, since many of the Western countries have already approved its system) it receives FDA approval.

Stock to buy
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0
April 13, 2010 10:53 pm

SGMO seems to be a good stock but i cant see it being as good a prospect as ISCO, this stock almost up 200% in last six months. It has amazing deals going on its way. We expect this stock to reach $5.00 by year end. Take a look

Teacher Tom
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Teacher Tom
April 13, 2010 11:21 pm

Don't see how Sangamo can be announcing anything now. According to Sangamo, phase 2b test began in Jan, and will last for 6 months. (see below)
Also, nothing from their website about an April 26 conference call.

From: http://investor.sangamo.com/releasedetail.cfm?Rel
Jan 11, 2010…Sangamo BioSciences, Inc. (Nasdaq: SGMO) announced the initiation of two new clinical trials of ZFP Therapeutics, a Phase 2b study in diabetic neuropathy (DN) and… over the 180 day test period

tomt
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tomt
April 14, 2010 1:32 am
The thing that caught my eye on their site was that for the diabetic nerophathy application the they are stimulating the production of a specific protien or compound that is described as a growth factor that counteracts the damage (by healing) caused by the diabetics condition (high glucose ) and they had to screen the trial candidates (for other conditions) to insure this protien didn't increase unwanted growth of say "cancer cells" or other possibilities. So it may face issues with this in the future. On the bright side- having a delivery mechanism for RNA is a big potential asset,… Read more »
Frank
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Frank
April 14, 2010 3:51 am

According to a SA Research Phase I report by Dr. Huang, the chances of getting a FDA approval at the later stages, are like about 20%; and 80% of the time they fail. It is better to buy the shares after the FDA approval. So why buy the stock now?

T-Town Yankee
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T-Town Yankee
April 14, 2010 4:40 pm

All I can say is "Finally I can retire !!"
My 25K will get me over 2 million.
Wooo Hooo no more work.

Maybe I'll go into the newsletter business, I hear it's easy to do.

rudy
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rudy
April 15, 2010 6:18 pm

I am not so sure that the "Zinc finger" technology has great therapeutic potential. Research potential is high though. Turning on and off transcription factors to reduce diabetic neuropathy is a stretch because the neuropathy arises from carbohydrate moieties and not from proteins.

Bill G - Phoenix
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Bill G - Phoenix
April 15, 2010 10:08 pm

I made some money on Sangamo several years ago on its last big run up. Sangamo states "Zinc Finger" technology is also applicable to cancer research and and eventual cure by overwriting cancer infected cells in the body. If the stock trades and consolidates above $7 again, I would buy a pullback.

Bill G. - Phoenix
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Bill G. - Phoenix
April 15, 2010 10:13 pm

P.S. Sangamo, if I remember correctly, has numerous patents on its technology and makes money licensing its process to top name research institutes for further development.

Jim - Mpls
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Jim - Mpls
April 16, 2010 3:24 am

Two of my favorite small Bio-techs are CYCC (6 abstracts being presented at AACR meeting this weekend into next week) and ARIA (also presenting at AACR meeting).

Ralph Armendariz
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Ralph Armendariz
April 17, 2010 3:17 am

thoughts on hdvy anybody have any

mike
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mike
April 18, 2010 3:43 pm

RNA / iRNA, is this not the same technology that Benitec, ltd. has and has a patent on? anybody hear anything about them lately?

Columbine
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Columbine
April 19, 2010 2:11 am

Does anyone know which biotech stem cell skincare company pATRICK cOX HAS TALKED ABOUT SEVERAL IS?nter text right here!

Write_Effort
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April 22, 2010 12:54 am

I've owned SGMO for about 5 years, buying shares between $5-$9. I believe at one point the stock was at $20. I originally found out about the company when I met an employee who casually said his company had a cure for AIDS. Then I met a guy about 3 years ago who evaluates biotech stocks for venture capitalists. When I told him I had SGMO he laughed derisively and said, "Those jokers…." I haven't bought a lot more shares since then, but I haven't sold either.

Jim
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Jim
September 2, 2010 10:03 am

has any heard of the small company that is using Cobra venom to control pain??

David
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David
January 6, 2012 8:33 am
Well – nearly 2 years on and Benitec have been fully re-awarded their seminal RNAi patents under re-exam in the US, Pfizer have done all the IND work for the HCV trial – but who knows when the button will be pushed, and City of Hope still have a patient with marking of gene modified HIV resistant immune cells 3 years on from the first safety trial. They are due to start efficacy trial this year. Benitec share price – 1.5c. But that’ll only be until the Pfizer HCV clinical trial starts then it will kick a bit. When they… Read more »
Gravity Switch
Admin
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April 13, 2010 6:55 pm

True, though the “any minute now” of newsletter teasers often liberally stretches the calendar. The conference call is something run by the newsletter — a lot of high end newsletters try to hold conference calls with subscribers and company management as a way to add value and a sense of being an “insider”. That’s what gives me more pause than anything else, that the CEO would be on a private investor call less than a week before earnings, but the rest of the clues are perfect
matches so I’m pretty confident that this is Sangamo.

KtgGroup
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KtgGroup
April 14, 2010 4:52 am

You buy the stock now when it is cheap. Guess correctly and it is like a lottery ticket payout (potentially). Vanda and DNDN are usually cited as extreme examples. After FDA approval the price tends to plateau for a relatively indefinite period of time. Biopharm drugs tend to have step-like chart patterns once they have an approved drug. That is my thinking and experience at least. I actually had shares of Vanda prior to approval and caught the spike. However, the shares were snatched from me at the stop I had set earlier that morning. Too bad, so sad.

blackjack
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April 14, 2010 5:41 am

ASX listed SPL already has RNA / iRNA delivery system in the market

Simon H
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Simon H
April 14, 2010 11:18 am

Charlie …I own Prima Biomed (PRR):ASX also…Interesting for similar reasons. However, this company is still a ways off FDA approval. I own another very interesting Biotech Australian Company closer to approval, cashed up and in Phase II and Phase III trials. Have a good look at AVEXA [AVX] ASX Australian Stock Exchange..Currently at A$0.14 and could also be a blockbuster??? Hope that helps

wes
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April 17, 2010 8:11 pm

Take a look at INO for their Cancer vaccine and treatment, flu and viral as well. When I saw the electrporation increasing immuogenicity I bought shares
http://www.inovio.com

okziff
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okziff
April 14, 2010 6:40 pm

So your money is on sgmo?

dr j
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dr j
April 18, 2010 8:51 pm
I am a physician and about 15 times a day, I am overrun by people with colds wanting antibiotics, which always leads to a discussion, at times a tense one. I used to tell them that the chances of the antibiotic being of any use was " less than 50%" Nine out of ten of them still demanded them. Now I tell them that the "data shows that the likelihood the antibiotic will work is "between 10.6 and 48.5 percent." Much fewer of them continue to demand the inappropriate Rx. So the question is, do numbers like 8539% come from… Read more »
stockcrazy10
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April 19, 2010 3:34 pm

It sounds like ISCO…

“Early indications are that the skin care product, developed through the efforts of the ISCO scientists who created Parthenogenic Stem Cells, has unique characteristics for skin rejuvenation. Our next step is to validate these findings through independent testing and execute our product launch “
http://www.stockgumshoe.com/2010/01/starting-feb-

Jim
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Jim
April 29, 2010 11:17 am
benitec, once $1.30, now 4c. All because USPTO re-exam of their core IP patent been going for 5 years and won't resolve most likely until later this year Benitec have a HIV stem cell safety trial at City of Hope just completed successfully – T Cell gene therapy trial has just begun recruitment. Sangemo's ZFP HIV trial is not dissimilar and being done out of City of Hope too. Benitec's ddrnai is far more advanced on the time line though. Pfizer have signed up deal with Benitec spin out Tacere for $145M to take HCV compound through clinic. for 4c… Read more »
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