Lost in the CRISPR Hype, a Gene-Editing Giant Is Fighting Back

Danny Funt
FEBRUARY 21, 2018
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A Long Time Coming

THE GENESIS OF SANGAMO was not so much a scientific breakthrough as it was a shrewd observation by its founder, Edward Lanphier. After graduating from Knox College with a degree in biochemistry, Lanphier entered the business side of biotech and by 1995 was in charge of building the “patent estate” of Somatix, a California-based gene-therapy company. He was captivated by research at 4 labs studying the impressive DNA-binding utility of zinc fingers, especially work out of the Medical Research Council in London led by the Nobel laureate Aaron Klug, PhD. Somatix wasn’t interested, but Lanphier was: He licensed intellectual property from those 4 labs and set up laboratory operations of his own.

In 1997, Lanphier moved his company from Colorado to Richmond, about 20 miles north of San Francisco, and after a couple of rounds of financing took it public in 2000. One of his first hires was Edward Rebar, then just a year removed from receiving his PhD at the Massachusetts Institute of Technology, where he’d worked on the first system for selecting zinc fingers to bind to new DNA sequences. Rebar has been the leading architect behind zinc finger optimization at Sangamo and is now its vice president of technology. Another pivotal early hire was Philip Gregory, PhD, who recalls Sangamo’s thriftiness at that stage: As Lanphier used to say, “we were throwing dimes around like manhole covers.”

Two months after Sangamo raised $48.8 million in its initial public offering (IPO), the former New York Times (NYT) biotech reporter Andrew Pollack offered this sobering check on the industry: “The sequencing of the human genome is often described as a triumph akin to landing on the moon. For investors, that might not be the most comforting analogy. Three decades after Apollo 11, no one has yet made a profit going to the moon.” Investors were apparently undeterred. Later that year, the Times quoted a joke going around Wall Street: “If you want to cause a buying stampede among investors, just insert the prefix ‘gen’ into a company’s name.”

Indeed, a year after its IPO, Sangamo acquired Gendaq in a transaction valued at $40 million. Wall Street may have sniggered, but Sangamo got the last laugh—that was almost certainly the most lucrative business move the company would ever make. Cofounded by Aaron Klug, Gendaq had been researching zinc fingers for 15 years. Sangamo added 16 scientists to its roster and acquired 22 patent applications, 2 issued patents, and $6 million in cash. “This consolidation of intellectual property and scientific assets catapults Sangamo into a unique position,” Klug said at the time. That leverage would go on to empower the company and embolden its critics.
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Sangamo’s first decade was devoted to proving the efficacy of zinc fingers as a viable medicine, and Gregory led a team that sought to discover whether zinc finger nucleases could edit genes in human cells. After 2 years of research, their work led to a landmark 2005 paper in Nature revealing that site-specific gene modification with a nuclease was possible in a human T cell without suppressing anything else detectable in the genome.

“That was really the result everybody was waiting for,” Gregory says. “I have to say, we were very worried that we were getting tricked by the fantasy of the data. There had been a technology a few years earlier that had offered similar gene correction, but it turned out to be essentially an experimental artifact. So the supplementary data in our paper are just gigantic. We did every experiment imaginable to try to confirm that the data were real and not some artifact of the way we were measuring outcomes. 

“To date,” he points out, “that’s still the most rigorous evaluation, from a data perspective, of gene correction.”

Three months after that article was published, Sangamo was accused of controlling a “zinc finger nuclease monopoly” in a Nature article by Christopher Thomas Scott, a graduate student at Stanford who went on to direct the university’s Program on Stem Cells in Society. “[T]he secrets of a cutting-edge technology that could transform gene therapy lie hidden in the intellectual property vaults of a small biotech company.” The strategy makes financial sense, Scott wrote, but it could hinder advancement of the science and antagonize investigators, who might then pursue alternate technologies.

“When zinc finger nucleases were the only game in town, it rankled a number of people that Sangamo was keeping their technology close to the chest,” Dana Carroll, PhD, one of the leading scientists in the field, tells Healthcare Analytics News™. “They developed the technology within their own company to a very, very high standard. Then they pursued practical applications that I think are admirable. It’s hard to criticize a company too severely for protecting their investment in the platform that they were developing.” (Sangamo licenses a patent from the University of Utah for a technology Carroll developed.)

During the mid-2000s, Sangamo did well over 100 material transfer agreements to make its technology available to other labs. “What people don’t talk about when discussing our control of the IP was that it’s extraordinarily difficult to make the kind of high-quality zinc finger proteins that we were making,” says Lanphier, who retired from Sangamo last year. “So yes, there was a patent barrier to entry, but in reality there was a much greater technical barrier.” The threat, the company believed, was not only competition but also the potential of second-rate experiments to sully their product’s reputation.

Sangamo’s breakthrough with zinc finger nucleases in 2005 eventually yielded 4 treatment approaches: gene regulation, in which genes are knocked out or activated; genome editing, in which a new gene is delivered to the nucleus of a cell; gene therapy, in which DNA is cut and a new gene is inserted; and cell therapy, in which T cells or stem cells are edited outside the body. Macrae argues that conflating the company’s original and current zinc finger technology “is like comparing the Model T Ford to a Porsche. The modern car still has 4 wheels and an engine, but it’s a very different beast.”

And so, with this optimized technology in hand, Sangamo and investigators at the University of Pennsylvania launched clinical trials in 2009 for a treatment of HIV. Doctors removed T cells from 102 patients and used zinc fingers to disable their CCR5 gene, making it harder for the virus to take hold. Those edited T cells were allowed to multiply and then were transfused back into patients. NYT reported on one such patient who, a month after being treated, stopped taking his antiviral drugs for 12 weeks as part of the experiment: “As expected, the amount of HIV in his blood shot up. But then it fell back to an undetectable level just before the end of the 12-week period. The patient’s immune cell counts also shot up. ‘I felt like Superman,’ he said in an interview.”

Although the treatment “worked,” in a technical sense, Sangamo realized it wasn’t a sufficient approach and has since diverted its focus. “What we didn’t know was how many of the T cells needed to mutate, and was it just T cells? Was it stem cells?” Macrae explains. “Now we need to work out whether other people could take this forward for us and look for that ultimate cure for HIV. It’s not something we’re going to do, because we just don’t have the bandwidth.”

Wall Street, meanwhile, is less bullish on genomic medicine than when Sangamo went public. “Genomics as a field has ebbed and flowed in terms of investor enthusiasm,” says Gregory, who left Sangamo as chief scientific officer in 2015. “Around the sequencing of the human genome, there was all this enthusiasm about how it would change medicine forever. That, of course, took a long time to happen, and the investor community lost patience. It turns out things are very complicated.”

With about 175 employees and $90 million to $100 million in operating expenses, Sangamo is relatively small for its field, and so it must be, in Macrae’s words, “ruthlessly strategic.” When developing a treatment would be unreasonably expensive and beyond the biological expertise of in-house scientists, Sangamo has formed partnerships with other companies; for example, with Bioverativ for treatment of beta-thalassemia and sickle cell disease, with Shire for treatment of Huntington disease, and with Pfizer for treatment of hemophilia A. That Pfizer deal included an initial $70 million for Sangamo to search for candidate zinc finger proteins, the largest up-front payment for a gene therapy to date. 

In early January, Sangamo and Pfizer announced a collaboration to pursue treatment for a form of amyotrophic lateral sclerosis (ALS) that makes up about one-third of all ALS cases. Between its two deals with Pfizer, Sangamo is eligible to receive up to $625 million in milestone payments, along with royalties.

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