How Sangamo BioSciences, Inc. Is Partnering to Success

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Several years ago, Sangamo BioSciences (NASDAQ:SGMO  ) made a big splash when it began clinical testing for its novel HIV therapy. Results so far have been promising, but this therapy is still in mid-stage development. Luckily, Sangamo's proprietary discovery platform has since attracted attention and licensing deals from the likes of Shire(NASDAQ: SHPG  ) and more recently Biogen Idec(NASDAQ: BIIB  ) . Lets take a closer look at these partnerships and see if they can eventually allow Sangamo to advance its own pipeline.

Curing chronic blood disorders
When it comes to outcome-based medicine, Sangamo has a platform that should have a large market opportunity. The company owns a gene-editing technology based on zinc-finger proteins (ZFPs.) The fingertips can be engineered to bind a specific sequence of DNA. The company insists that it can permanently switch the expression of any gene on or off.

The whole idea sounds a little too good to be true, but innovative powerhouse Biogen has been convinced to the tune of a $20 million upfront payment. The companies recently announced a partnership to develop beta-thalassemia and sickle cell therapies. The basic terms of the deal leave Sangamo responsible for research and development activities until it can be proved to work in humans. Biogen Idec would take the reigns at that point, providing Sangamo with milestone payments up to $300 million and...

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What You Should Listen for When Biogen Idec Inc. Reports Earnings

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Biogen Idec (NASDAQ: BIIB  ) will report earnings on Wednesday, January 29. The company's shares are up over 100% over the last twelve months, largely on the success of a new multiple sclerosis therapy that quickly elbowed past competition from both Sanofi (NYSE: SNY  ) and Novartis  (NYSE: NVS  ) . Highly effective new hemophilia therapies likely to be launched ahead of Novo Nordisk's (NYSE: NVO  ) also have investors excited.

Before getting caught up in posted figures versus expectations, it's always a good idea to make your own assessment of a company's long-term prospects. Let's take a closer look at a few key factors that we can listen for during the call. This way we can cut through the noise and measure the company's chances of continued success.

Insider selling
Before getting into critical factors that will affect Biogen's future profitability, we should address an issue that could cloud your judgement. You may have noticed news of insider selling at Biogen. This is true, but I don't think it's cause for alarm. As of January 23, 2014, five different directors, but not officers, have sold a combined 29,770 shares. The transactions represent just about 0.013% of total shares outstanding.

While it is certainly worth paying attention to insider transactions, viewed in context, I don't see any smoking gun here. At a recent price north of $310, the company's shares are trading at over 40 times trailing-twelve-month earnings. Generally in situations like these, without a real surprise to the upside, price gains made in anticipation of an earnings report are quickly wiped out. Given the odds, you can't blame insiders for taking some of their profits off the table beforehand.

Tecfidera launch
Insider transactions aside, we should take a good look at what to expect regarding Biogen's main sources of revenue. First up is the wildly successful oral multiple sclerosis therapy Tecfidera. Introduced in the beginning of April 2013, after six months it had already beat out Sanofi's Aubagio, and Novartis's Gilenya in terms of market share. According to Biogen Idec CEO, George Scangos, there are about 8,000-9,000 prescribing physicians for MS in the US. Six months after its launch, Tecfidera had been prescribed by...

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Innovation is king, copycats be damned

Alright the title is a bit harsh, but it's true. Regulators and payers have had it up to here with incremental advances. I fully understand that what seems like "me too" drugs aren't as devious and underhanded as they seem. Innovation really pays big for companies like Biogen Idec (NASDAQ: BIIB). Here's a snip:

The financial risks associated with getting a drug out of the lab and into the market are astronomical. It's easy to understand the tendency for the Drug Majors to play it safe and funnel their limited resources toward programs likely to win approval. Sadly, with the string of big expiring patents over the past few years, this has been happening far too often.

Consider sodium glucose co-transporter 2 (SGLT2) inhibitors for treatment of type 2 diabetes. There are at least half-a-dozen late stage programs all trying to fit in this space. During the latest annual meeting of the American Diabetes Association,Boehringer Ingelheim clinical development director, Dr. Maximilian von Eynatten, said "I think probably from a clinical perspective, there is no big difference between the SGLT2 compounds so far, at least from everything we have seen." His employer is partnered with Eli Lilly to develop these compounds, and even he admits the program isn't accomplishing anything significant.

Government and private payers are getting fed up with the lack of innovation coming out of Big Pharma. During Q3 2013, Express Scripts Holding Company implemented a far more aggressive design of its National Preferred Formulary. Government payers in the Eurozone have long been austere, but are increasingly flexing their muscles. Demanding heavy discounts for non-breakthrough therapies in return for reimbursement approvals is on the rise.

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