UPDATED: Sangamo scuttles lead drug program after it fails PhIIb

Just two weeks after impressing analysts with some intriguing initial efficacy data on a new approach to treating HIV, Sangamo BioSciences ($SGMO) today pulled the plug on its lead therapy after the treatment failed a crucial Phase IIb test for diabetic neuropathy.

The Richmond, CA-based developer says the drug flunked both its primary as well as secondary endpoints in the IIb trial, failing to beat out a placebo. According to investigators the drug worked just as well as it had in an earlier mid-stage study, but the placebo group did significantly better than before. By late morning shares of Sangamo shed 23% of their value on the news.

"Based on these results, we will discontinue further development of SB-509 and will focus our attention and resources on our pipeline of ZFP Therapeutics for HIV and monogenic diseases for which our genome editing technology is uniquely well positioned," said CEO Edward Lanphier. "We would like to thank the patients, investigators and the Juvenile Diabetes Research Foundation for their support and participation in the trial."

Now Sangamo plans to shift its focus to a more exciting arena. Just days ago UPenn's Carl June reviewed how SB-728-T worked in a study involving 10 volunteers. The researchers mimicked a natural defense mechanism in its program, extracting T cells from patients and then modifying them using zinc fingers to interfere with DNA found in the CCR5 gene.

- here's the Sangamo release