Sangamo BioSciences Inc.'s ability to regulate and modify genes using its zinc finger DNA-binding protein (ZFP) technology landed the company a potential $52 million deal with Dow AgroSciences LLC, a subsidiary of the Dow Chemical Co.

During an initial three-year agreement period, Sangamo will provide Dow exclusive access to its ZFP technology for use in plant agriculture and industrial products. On a non-exclusive basis, Dow can use the ZFP platform to develop products in the areas of animal health and biopharmaceuticals produced in plants.

The collaboration "marries gene regulation and gene inhibiting technology with the substantial expertise Dow has in the areas of plants and crop biotechnology," said Edward Lamphier, president and CEO of Richmond, Calif.-based Sangamo, which has been using the ZFP technology to develop a pipeline of therapeutics.

This license allows Dow to use the technology, Lamphier said, "to regulate the gene turn-on or turn-off in plants and be able to direct or augment pathways in plants so as to increase the value of a particular product."

In exchange, for the first three years, Dow agreed to pay Sangamo up to $27.5 million. That figure includes an up-front fee of $7.5 million, a $4 million investment in Sangamo's next financing round, up to $6 million in research funding, $4 million in potential milestones, and then $6 million if Dow exercises its option for a commercial license.

If the deal is extended past the three-year term, Sangamo could receive additional payments totaling up to $25.25 million, plus milestones and royalties on any product sales. Sangamo's technology is based on zinc finger proteins, a class of naturally occurring transcription factors found in the nucleus of cells that are able to bind to DNA to selectively control specific genes. ZFP TFs (transcription factors) are engineered ZFPs that are designed to recognize a specific DNA sequence.

The company also developed ZFP nucleases (ZFNs), which are designed to be DNA sequence-specific to make modifications to the gene. The nuclease technology "allows us to edit the plant genome in a way that we can disrupt or stop the expression of a gene," Lamphier said. "You can also use it to insert genes at various specific sites in the genome."

As the biotech crop market continues to grow, Lamphier told BioWorld Today that Sangamo's technology is "right in the bull's-eye of where that gene augmentation and trait-stacking is going."

Crop protection and agricultural biotechnology consultants with Phillips McDougall, of Edinburgh, Scotland, reported that transgenic traits were planted on an estimated 200 million acres - 29 percent of the global acres for soybean, cotton, maize and canola - and biotech crops in 2004 were valued at about $4.7 billion.

"That market is growing about 20 percent a year," Lamphier said, "so we can expect to see it double in five years."

Access to Sangamo's technology would help Dow keep up with that explosive growth. The ZFP platform could assist researchers in extending product life cycles, enable trait-stacking to reduce the costs of goods, and allow new product development through reduced cycle time.

"We're very excited about it," said Dan Kittle, vice president of research and development for Indianapolis-based Dow AgroSciences. "We're going to play an active role in translating the technology in some product areas. We'll be looking at a number of different applications, both from a regulating-gene standpoint, and by targeting specific genes and/or doing modification."

He added, "That's the exciting part about this technology, the diversity of what you can do with it."

At this time, Dow has not disclosed specific details of its upcoming work, but Kittle said the company would focus on "both a product-oriented dimension and a speed-to-market type of opportunity. We'll be conducting activities associated with what might be viewed as traditional products, as well as looking at our ability to get the desired traits to the marketplace."

For Sangamo, the collaboration with Dow fits well with its business strategy to out-license access to its ZFP technology for near-term revenue that can support the company's own product development. In May, the company started a Phase I trial of its SB-509, a ZFP TF activator of vascular endothelial growth factor (VEGF)-A, for the treatment of mild to moderate diabetic neuropathy. Other ZFP therapeutic programs are aimed at macular degeneration, ischemic heart disease, congestive heart failure, neuropathic pain, and infectious and monogenic diseases. In the area of ZFNs, Sangamo is investigating gene modification to treat diseases such as sickle cell anemia and HIV.

Shares of Sangamo (NASDAQ:SGMO) closed at $4.52 Wednesday, down 2 cents.