There are two biotech stocks that are set-up for a perfect parlay in the 1st half of 2019.  The first stock is Sangamo (NASDAQ: SGMO) and the second is CytomX (NASDAQ: CTMX).   Sangamo is a leader in gene-editing using zinc finger nucleases.   CytomX is the leader in anti-body masking with its Probody technology.  Both companies are platform companies whereby success in 1 indication will transfer to other indications.

Sangamo is due to reveal the latest results (3rd cohort) of its gene-editing technology for the treatment of Hurler syndrome (MPS I) and Hunter syndrome (MPS II) at the WorldSymposium on Thursday, Feb. 7th.   In a press release on September 5th, 2018, Sangamo released data from the 1st 2 cohorts of the study:


Total GAG

% Change at

16 weeks

Mean (SD)

Dermatan Sulfate

% Change at

16 weeks

Mean (SD)

Heparan Sulfate

% Change at

16 weeks

Mean (SD)

Cohort 1 (Subject 1)

+13.0

-14.5

-15.6

Cohort 1 (Subject 2)

+4.8

+22.6

-31.4

Cohort 1 Mean (SD)

 +8.9 (5.8)

+ 4.1 (26.2)

 -23.5 (11.2)





Cohort 2 (Subject 3)

-62.5

-47.4

-69.9

Cohort 2 (Subject 4)

-39.1

-16.3

-53.0

Cohort 2 Mean (SD)

-50.8 (16.5)

-31.8 (22.0)

-61.5 (12.0)

The second cohort which was 2x the initial cohorts dose saw sustained decreases in glycosaminoglycans (GAGS).  However, the assay they were using was unable to detect iduronate 2-sulfatase (IDS).  The stock subsequently sold off over 31% in the two trading days following the release.  The data from the 3rd cohort (5x the second cohort) was reviewed in October by the independent Safety Monitoring Committee (SMC).  After reviewing the data, the SMC made the following recommendations:

  • 1) proceed to the cohort expansion phase of the clinical trial with the dose used at the third dose cohort (5e13 vg/kg);
  • 2) initiate screening and enrollment of adolescent subjects (12 to 17 years of age); and
  • 3) initiate the withdrawal of enzyme replacement therapy (ERT) when appropriate.

In addition, the SMC made the recommendation to dose the other 2 gene editing studies for MPS I and Hemophilia B at the same 5e13 vg/kg dose.   Sangamo subsequently dosed the first patient in the Hemophilia B trial on December 17th, 2019.  

Sangamo has developed a new assay for IDS that will detect the low levels in diseased tissue and should be able to demonstrate definitively that IDS is being generated from the edited liver cells at the WorldSymposium.

The FDA has also granted Sangamo the ability to use their new ZFN 2.0 technology without submitting new INDS.   The ZFN 2.0 technology enables: 300-fold more design options; editing efficiency as high as 99.5%; and >1000 fold reduction in off-target cleavage (to undetectable levels).

The much higher dose level (5x); The more sensitive assay; and the potential use of ZFN 2.0 technology should yield extremely impressive results on February 7th.  If patients were able to stop ERT successfully then part I of the 2 biotech Parlay should yield a phenomenal return in a very short period.

Part II of the Parlay - CytomX is due to release results from CX-2009 (CD166-directed Probody drug conjugate) in the 1st half of 2019.  While CD166 is widely and highly expressed on solid tumor cells, it has been previously considered “undruggable” given its expression on normal tissues.   The Probody technology masks the anti-body so that it only binds to the target within the tumor microenvironment.  On November 6th, 2018, as part of its quarterly results CytomX announced that it had dose escalated CX-2009 to 10mg/kg.   The top anticipated dose was 6mg/kg.    In pre-clinical studies of CX-2009, 5mg/kg was highly efficacious.   If the clinical trial results of CX-2009 show efficacy then it would likely mean success of their other first-in-class programs (CX-2029) and their immunotherapy targets (PD-L1/PD-1/CTLA-4).  

At SITC on November 9th, 2018, CytomX presented translational data showing that an increasing dose of their probodies lead to a proportionally higher amount of the unmasked antibody within the tumor in humans.   However, efficacy data released to date has mostly been at lower levels (3mg/kg and less) of their PD-L1 inhibitor in PD-L1 negative cancers.   Data released in 2019 will be at the 10mg/kg level in tumors that are PD-L1 positive.

Considering they may have the best-in-class PD-1/PD-L1/CTLA-4 inhibitors and the best-in-class drug conjugates (PDCs) - the upside is massive based on the potential data released in 1H 2019.  

DISCLOSURE:  I am very long both SGMO and CTMX.  I have a 70/30 weighting of SGMO/CTMX in my portfolio.  I expect Sangamo to release data before CTMX.   After data release by SGMO, I expect to re-balance to a 30/70 weighting to prepare for the CTMX data release.