RICHMOND, Calif. ( TheStreet) -- Sangamo BioSciences (SGMO) is a gene therapy company with a single product in human clinical studies and a market value of more than $500 million. The rest of the company's pipeline is still preclinical, meaning the only testing being done is in test tubes and rats.
Preclinical-stage drug companies don't typically carry market values of $500 million, which makes Sangamo's SB-728 HIV therapy -- the product in phase II studies -- really important. Sangamo won't trade at $10 per share, like it does today, if SB-728 blows up. Without any drugs in human studies, Sangamo's market cap might easily be cut in half or more, which would be appropriate, particularly for a company trying to develop something as challenging as gene therapies.
Keep this perspective in mind when you hear Sangamo executives talk about the potential for SB-728 to be a "functional cure" for HIV. Throwing the words "cure" and "HIV" into the same sentence generates serious buzz -- and rightly so -- because there is no current curative treatment for HIV. Unfortunately, the data presented on SB-728 to date, including Wednesday, do not match the hype.
It is unrealistic to believe SB-728 will ever become a "functional cure" for HIV because the scientific and regulatory bar for any drug to warrant that label is extremely high. Current HIV medicines aren't curative, but they do drop viral loads to undetectable levels and keep them there basically forever. HIV patients can take a single pill each morning and basically never have to worry about their disease getting worse. These patients will grow old and die of something else before they succumb to AIDS. That's an amazing achievement in a disease that was a certain death sentence 30 years ago.Sangamo's SB-728 is nowhere close to approaching the efficacy of HIV drugs like Gilead Sciences' (GILD) Stribild or Atripla. I suspect Sangamo executives know SB-728 is unlikely to succeed, but they soldier on because without it, the company's pipeline looks very anemic and can't support the stock's current valuation. -- Reported by Adam Feuerstein in Boston. Follow @AdamFeuerstein
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV