by Travis Johnson, Stock Gumshoe | February 7, 2019 12:15 pm
The latest ad from Ray Blanco has been circulating and generating reader questions for about a week, though I just got it in my own email accounts for the first time yesterday evening… about an hour before the purported “catalyst” was about to come.
The ad is from Blanco’s FDA Trader (current $1,499, no refunds). Here’s the part that made me think I should check up on it:
“… on Wednesday, February 6…
“This tiny startup lab will stun the world with the biggest discovery in the history of capitalism…
“The discovery that has the $6.38 trillion medical industry speechless…
“The potential end of all diseases….
“… when they make this announcement this Wednesday at 6:15 P.M. Pacific Time…
“It could result in a surge in the company’s value by billions of dollars.”
Yes, twelve years of sifting through promises much like this has made me somewhat immune to the profit-lust that they’re designed to evoke… but still, who can resist wanting to at least find out what the company is?
I have some sad news, though, Wednesday was yesterday… so you’ve missed your chance at billions of dollars, and it’s all over. Capitalism changed, disease is over, and the company surged in value by billions of dollars.
Kidding! It’s OK, you didn’t miss anything.
Or, to be more precise, you missed the announcement about an hour ago about the preliminary results of this “secret” company’s clinical trial… and therefore, you missed out on the chance to see your shares drop in value by 25% at 11am today.
Why do we know this already without even going through the clues yet? Well, because Ray Blanco sent out essentially the same ad in September, promising that the “world would stand still” when this company announced its results on September 5. And that time, too, the results were really released at a scientific conference at a time fairly close to Blanco’s “world stands still” moment, but they didn’t provide the earthshaking news investors were hoping for.
So I won’t delay you by going through all the clues again, which are mostly unchanged from September. Yes, this is again Sangamo Therapeutics (SGMO), which is the most advanced (in terms of maturity of the science and progress in clinical trials) of the gene editing stocks — mostly because the technology they developed, zinc-finger gene editing, has been around and in development for decades longer than the CRISPR gene editing technology.
It’s still awfully new in terms of testing whether or not it can cure disease, though, and that’s the reason for the ugly stock performance — they released preliminary data on one of their clinical trials back in September which disappointed, and released more data this morning that also disappointed. Probably mostly because investors are hoping for Blanco-like “earthshaking” news and the science is not providing that, even with a bit of optimism from Sangamo.
The CEO described the data that Sangamo released as “an encouraging first step in the translation of genome editing technology from basic research to genomic medicine,” and the lead study investigator used words like “preliminary” and “more data are needed” in his note in one of the press releases:
“‘The interim results from the CHAMPIONS Study provide preliminary evidence that in vivo genome editing occurred and that genome-edited liver cells are able to generate active IDS enzyme in patients with MPS II,’ said Dr. Joseph Muenzer, a professor of pediatrics and genetics at the University of North Carolina School of Medicine in Chapel Hill and a lead study investigator. ‘More data are needed to understand whether the small increases in IDS enzyme activity observed can translate into improved outcomes in MPS II patients treated with this first generation of SB-913. I look forward to reviewing additional data later this year from the five patients who have received the high-dose of SB-913.'”
So yes, there is good news — the treatment from Sangamo apparently didn’t make the disease worse or kill anyone, though there were some side effects. You can see the detailed presentation slides from the two different trials that were released here (MPS I) and here (MPS II).
But these are also Phase 1 studies with tiny numbers of patients (nine patients, with data available about six of them — and that’s the big study in Hunter Syndrome (MPS II), the other one, for Hurler Syndrome (MPS I), had three patients enrolled). And there was no magic moment when all of those patients walked to a podium and said, “all better, it’s a miracle!”
That’s not what should have been expected, of course, but when you talk about investor expectations it can be like judging an ultra-marathon runner based on how fast he went during the 100 yard stretch that he ran while you could see him. It won’t make a difference in whether he wins or loses the race, or even whether or not he finishes it, but it makes all the difference in the world in forming your opinion about whether he’s going to win. With traders speculating on data releases all the time in biotech, looking for quick wins, sentiment shifts immediately and few speculators want to just plunk down their investment and wait five years to see if any of their treatments ever make it to Phase 3 trials or possible commercialization.
Which isn’t to say you should be patient with this particular company and technology… I have no idea, and have never owned Sangamo. I don’t like betting on futures that are this uncertain, particularly because even likely “winners” have an opacity when it comes to pricing and profitability that I find inscrutable, so I don’t typically invest in clinical-stage biotechs. That means I’ll miss lots of 500% gainers, but will also miss a lot of money-burning losers… I can live with the tradeoff, mostly because I don’t think researching the individual scientific stories and trying to handicap them is worth my time as a non-expert and non-scientist.
But perhaps you’re one of the many folks who does love speculating in biotech, or dreaming about the future world when disease has been eradicated. That’s a long way off, of course, and is not predicated on whether one company makes progress in a gene-editing treatment for a rare disease, but it’s a lovely goal to hope for — and, yes, it’s within the realm of possibility that Sangamo’s zinc-finger editing will become the most important gene-editing technology on earth someday, beating all the various CRISPR and TALEN technologies to market because it’s safer, or works better, or whatever… I would just say that we’re not much closer to knowing that then we were last summer before they started releasing this early clinical data.
Sangamo did raise a ton of money about a year ago, so they are not in any financial stress and can certainly keep moving as they look to get more data from these trials later in 2019 (they haven’t said exactly when yet), and from their hematology trials that are also in phase 1. They are hosting a conference call to discuss the results in more detail right about now, at 12:30 EST, so perhaps that will have some impact on future expectations… I’ll leave it to you to make your own call.
But hopefully this will at least provide another reminder not to buy into these “the world is changing tomorrow thanks to this secret stock” pitches… particularly when they come with high price tags and no refunds.
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