Why Sangamo Therapeutics Stock Is Tanking Today

What happened

Shares of Sangamo Therapeutics (NASDAQ: SGMO) fell by as much as 24.7% today on heavy volume. The company's shares are nosediving in response to a somewhat disappointing interim update for its zinc-finger nuclease gene therapy, SB-913, as a possible treatment for the rare metabolic disorder known as Hunter syndrome (aka "mucopolysaccharidosis type II"). The update took place at the 2018 Annual Symposium of the Society for the Study of Inborn Errors of Metabolism, being held in Athens, Greece.

Hunter syndrome is an inherited lysosomal storage disorder resulting from an insufficient level of an enzyme called iduronate-2-sulfatase (IDS for short). This key catabolic enzyme breaks down glycosaminoglycans (GAGs). Low levels of IDS thus result in a buildup of GAGs in the body, leading to enlarged organs that can't function properly.

So what

This trial marks the first time a gene-editing technique has been assessed inside a patient. As such, investors were clearly banking on stellar safety and efficacy results. Sangamo, however, noted that the trial's handlers were unable to quantify plasma IDS activity following treatment, because the level of quantification of the current assay was inadequate. So, while the marked reductions in GAGs observed in the study are certainly encouraging, this trial simply can't offer direct evidence of SB-913's efficacy as things stand now.

Now what

Sangamo hopes to rectify this glaring weakness by conducting another study in which Shire's enzyme-replacement therapy, Elaprase, is gradually replaced by treatment with SB-913. This way, researchers will have a better understanding of SB-913's therapeutic effect in this devastating genetic disorder. Sangamo also noted that it is working on improving the sensitivity of the IDS assay to allow for more precise measurements.

Unfortunately, these dual efforts will take a good bit of time to bear fruit. Investors, therefore, might have to wait another year or so to truly understand the real-world prospects of in vivo genome editing.

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George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.