Biotechs are gaining traction in the current buyout mania, with Big Pharma taking the lead. Merck (MRK ) has just acquired Sirna Therapeutics. Other buyers "are looking for biotechs with novel science behind their products," says Navdeep Jaikaria, a biotech analyst at Rodman & Renshaw. He thinks one that will entice Big Pharma is little-known Sangamo BioSciences (SGMO ), which has already partnered with some drug makers, including Pfizer (PFE ), Dow Chemical (DOW ) and Edwards Lifesciences (EW ) in developing its novel technology: It harnesses a natural cellular process aimed at regulating or modifying disease-related genes in humans and other organisms. The technology is broadly applicable for human therapeutics, agriculture, and protein manufacturing, says Pamela Bassett of Cantor Fitzgerald, who rates Sangamo, now trading at 6.81, a "buy," with a 12-month target of 17. Sangamo is developing potential products for diseases such as diabetic neuropathy, congestive heart failure, and HIV. She expects phase II clinical trials to start before yearend 2006 for Sangamo's lead product for diabetic neuropathy, and phase I trials on its new HIV treatment in early 2007.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial