Jefferies PT 14.00 Strong presence at ASGCT highlights continued technological progress PFE Deal on HemoA Key Platform Validation; Four Clinical Programs Moving Ahead
SGMO announced yesterday formation of collaboration with PFE on four hemoA AAV gene therapy programs (including SB-525 -- ph.I initiation in 2Q17) with favorable financial terms. We see the deal as a validation of the promising hemoA program and SGMO’s tech platform. Three additional gene editing ph.I/ II programs are enrolling pts with initial data expected by YE17/early-'18. We see substantial upside potential with the PFE validation.
The PFE deal on hemoA gene therapy validates the promise of SB-525 and tech platform. SGMO and PFE announced collaboration for hemoA AAV gene therapy, which includes the lead program SB-525 (1/4 lead product candidates).
Mgmt commented that SB-525 NHP data mid-last year attracted multiple suitors and PFE was selected because of their capacities and expertise in hemophilia as well their aligned development vision. Given the crowded competition landscape in hemoA, we believe the deal makes solid strategic sense. The SB-525 ph.I/II study is set to open for enrollment this quarter with data expected by YE17 or early-'18.
Favorable financial terms. The terms include $70M upfront payment, up to $300M development/commercialization milestones for SB-525 and a $175M milestone for potential follow-on programs as well as tiered double-digit royalties on net sales. SGMO will be responsible for conducting the SB-525 ph.I/II trial and certain manufacturing activities, and PFE will take over for subsequent development and commercialization.
Additional three gene editing ph.I/II programs moving forward with initial data expected by YE17 or early-'18. The ph.I/II studies for the in vivo genome editing treatment SB-318 (for MPS I), SB-913 (for MPS II) and SB-FIX (for hemoB) have been opened for enrollment. Mgmt noted special challenges in the SB-FIX trial enrollment due to small population and competition with other gene therapy programs, and >3 more sites were added to compensate. Enrollment for SB-318 and SB-913 was expected to proceed smoothly given no competitor programs. Recall, due to safety considerations, initial ph.I/II studies for MPS I/II are conducted in adult pts although the future addressable market would be in pediatric pts. Thus for the initial data, mgmt would primarily focus on biochemical biomarkers (IDUA/IDS enzymatic activities and urinary GAG levels) for proof-of-concept and expect no major improvement in neurocognitive function.
Strong presence at ASGCT highlights continued technological progress. SGMO presented data on multiple aspects of the zinc finger protein/nuclease platform.
1) Further engineering of ZFN (via removing non-specific phosphate contacts) achieved increased targeting specificity (level undetectable) while maintaining >80% on-target cutting activity.
2) Application of ZFP transcriptional regulation led to 65-90% tau reduction in the mouse hippocampus. Though early, the program holds long-term promise to address tau-related diseases (such as Alzheimer’s) and mgmt noted interest in seeking partnership.
3) Delivery of alpha-Gal A (for Fabry disease) by AAV vector showed 10-100x wild type enzymatic activity level in mice. IND-enabling studies are expected to complete in 1H18 with IND filing in 2H18.
Jefferies SGMO/BIVV (Yang, Buy): First-in-human clinical trial in beta thal expected to start early'18 -- we caught up with mgmt at the meeting to learn more about the technology and approach.
SGMO/BIVV (Yang, Buy): First-in-human clinical trial in beta thal expected to start early'18 -- we caught up with mgmt at the meeting to learn more about the technology and approach.
We had a chance to catch up with SGMO at poster and they discussed the new ZFN architecture being used with this program in their ex vivo approach for β-thal.
Key takeaways included: Summary of new ZFN architecture used to disrupt the BCL11A enhancer region included increasing specificity by skewing ZFN-L vs -R delivery ratios, removal of ZFN DNA-binding phosphate contacts as well as mutations in Fok nucleases that reduce off-target activity.
Regarding hemophilia programs, most notable competitive update came from ONCE, whose shares dropped substantially on concern of factor VIII variability and lack of dose response in data shown for 2 additional patients at the meeting (data on n=4 total available now).
Jefferies: Top SMID ideas 2018 **** SGMO **** upside scenario: Target Price: $31 ▪ We view SGMO, with their ZFN technology, as the current leader in gene editing and a good hedge investment to CRISPR/Cas9 technology (SGMO has 5 programs currently in clinic) ▪ First patient has been treated with SGMO’s ZFN-based in vivo protein replacement platform as well as with MPS II gene-editing somewhat derisking the platforms; any additional clinical validation could provide significant upside to the stock ▪ Early clinical data will solidify SGMO’s first mover advantage as well as platform validation for a broad approach (gene therapy, gene editing, ex vivo)
Upside Scenario ▪ Good safety profile and better initial efficacy signal (vs competitors) for gene editing ph.I/II in MPS I/II and hemoB and AAV gene therapy in hemoA ▪ Earlier than expected initial data for BCL11A and other early programs ▪ Target Price: $31 (using a blend of DCF & EPS multiple) ▪ Early’18 – ph.I/II data for SB-525 in hemophilia A ▪ Early’18 – ph.I/II data for SB-318 in MPS I ▪ Early’18 – ph.I/II data for SB-913 in MPS II ▪ Early’18 – ph.I/II ST-400 initiation for beta-thal ▪ 2018 – ph.I/II data for SB-FIX in hemophilia B ▪ 2018 – ‘318 and ‘913 EU CTA to open pediatric study ▪ 2018 – BIVV-003 IND filing in sickle cell ▪ 2018 – ST-920 IND filing in Fabry Investment Thesis / Where We Differ
Sangamo Therapeutics 2018-19 Thoughts For SGMO SGMO’s recent dosing of the first in vivo gene editing program for MPS II and gene therapy dosing in hemophilia A help set up the company for a critical 2018 with expected updates on 4 out of their 5 clinical programs. The 5 clinical programs are impressive, and we believe POC success with one could enable the stock to break out.
In November 2017, SGMO treated the first patient with an in vivo gene editing therapy with SB-913 (MPS II). We believe the first dosing, with no disclosures so far, helps de-risk and could raise the profile of the program. The increased attention should enhance enrolment for MPS II and even their other clinical programs. Data are expected early'18 -- could include several biomarkers indicative of successful editing/enzyme insertion including urinary GAG levels.
▪ SB-525 hemophilia A gene therapy data are expected early/1H18; they are looking for sufficient factor levels with no spontaneous bleeds and ability to eliminate patient need for factor replacement. According to the 3Q update, two heme A patients have been dosed so far, and SGMO is screening several more.
Based on preclinical data, we continue to believe SGMO-PFE's SB-525 could have best-in-class potential. Results for the wholly-owned SB-FIX gene editing program in hemophilia B are expected later in 2018.
▪ Data for SB-318 MPSI are also expected early/1H18; we view the current trials as important proof-of concept that will unlock broader potential, as pediatric studies will bolster the commercial potential/patient benefit for both '318 and '913.
▪ The company is enthusiastic about ST-400, their 5th clinical program in collaboration with BIVV. The trial will initiate in early’18, and promising preclinical data was presented at ASH.
In addition, they are pursing ex vivo strategy in oncology for which they are using a double KO + one insertion approach and seem to be getting impressive efficiency. We continue to believe this and their tauopathies program (moving into NHPs seemingly soon) are appealing partnership opportunities. A new corporate HQ and cGMP manufacturing facility are in the works as well.
Bull Case Arguments • SGMO is the most advanced gene editing company on the market; successful editing in MPS II validates the technology and company
• SGMO/PFE demonstrates best-in-class data in hemophilia A
• They have no IP issues (vs CRISPR) – ZFN is wholly owned and licensed technology
• ZFN design and adaptation has been refined over time and process now relatively less cumbersome – and SGMO can rapidly optimize ZFNs to target a specific sequence (in ~10 days)
• Knowledge needed for customization of ZFN creates a high barrier to entry and other competitors pursuing a similar method are highly unlikely
• ZFN editing technology -- unlike CRISPR -- can introduce a dsDNA break into any sequence of complex genomes, theoretically having unlimited editing potential
• New management has been aggressively moving programs along and focuses on prioritization of most favorable indications
Product Event Timeline SB-525 Clinical data for ph.I/II trial in hemophilia A early-'18 SB-FIX Clinical data for ph.I/II trial in hemophilia B 2018 Clinical data for ph.I/II trial in MPS I early-'18 EU CTA to open pediatric study 2018 Clinical data for ph.I/II trial in MPS II early-'18 EU CTA to open pediatric study 2018 Ph.I/II trial in beta-thal to initiate early-'18 First ph.I/II patient to enroll mid-'18 BIVV-003 IND filing in sickle cell disease 2018 ST-920 IND filing in Fabry 2018 ST-400 SB-318 SB-913 Drug (partner) Indication Status SB-525 (PFE) Hemophilia A Phase I/II SB-FIX Hemophilia B Phase I/II SB-318 Hurler syndrome (MPS I) Phase I/II SB-913 Hunter syndrome (MPS II) Phase I/II ST-400 (BIVV) BCL11A enhancer knockout program -- beta-thalassemia Preclinical BIVV-003 (BIVV) BCL11A enhancer knockout program -- sickle cell disease Preclinical ST-920 Fabry disease Preclinical
Jefferies - Biotechnology: Roadmap To 2018: More Repair In Large-Cap; Growing Money Flow Into SMID-Cap - SGMO top pick by Maury R - mentioned also in slide deck as M&A candidate
Americas / Biotechnology: Roadmap To 2018: More Repair In Large-Cap; Growing Money Flow Into SMID-Cap Key Takeaway
In this 500+pg report, we review the outlook and dynamics of the biotech sector and summarize key thoughts on 90+ biotechs under coverage. We believe large-cap biotechs are in a repair mode for 2018 but highlight that money flow seems to be going down-cap towards SMIDs given innovative new medicines and M&A potential. **We're hosting a conf call with the JEF Biotech team on 12/21 @ 10am ET with a detailed slide deck summary (contact sales for dial-in info).**
Big picture for 2018: We are fundamentally positive on the innovation in the Biotechnology sector and believe investor interest will continue to pick up through 2018. On one side we are relatively optimistic given the group has been a laggard and under-weight by institutions, is not expensive vs other HC groups and the market, and prior scary headlines and rhetoric over the last 1-2 years, should continue to clear up. In addition, we believe the market will be favorable for biotech and tax repatriation is one tailwind that could stimulate a more positive view as large-caps are likely to react well to M&A and SMID-cap is likely to benefit on a more positive Street view towards M&A (hence win-win for large and small biotech). That said, although biotech is mostly idiosyncratic, we want to delineate that large-cap biotech could be relatively tougher sledding as investors are finding it tough to have conviction to want to own mostly decelerating top-line stories and uncertainty on biosimilars and generics coming against legacy franchises. However, SMID-cap biotech could be a lot better given high innovation, new technologies, and increasing likelihood for M&A. Smid cap companies don’t face generics or biosimilars. Our top large-cap ideas are VRTX and CELG for those big upcoming product cycles. Top SMID ideas include: ABEO, ANAB, ASMB, DBVT, DOVA, EIGR, ESPR, FGEN, HRTX, NBIX, PRTA, RIGL, RXDX, SGMO.
We think IBB will move up another 10-15% in 2018 as repair continues. In 2017 we saw the IBB break out of its 90-100 range (10-15% band); it has recently traded in a 115-120 range (8% band). We predict the IBB or XBI will go up another 10-15% next year, driven by implications from stronger balance sheets with tax reform, incremental healthcare rotation, and because we see continued innovation in SMID-cap and a growing anticipation for a better year in 2019 for large-cap new product cycles coming. H1:18 seems more driven by sentiment around tax reform but we think investors will start warming up more in H2:18 and into 2019 which is a big year as well as a much more exciting period of “big data” and new product cycles coming: (1) BIIB Phase III Alzheimer’s data, (2) GILD Phase III filgotinib and Phase III NASH data, (3) CELG Phase II pivotal bb2121 and JCAR17 CAR-T data and Phase III Ozanimod UC data, (4) VRTX Phase III triple pill data and launch.
Top ideas from the JefCo biotech team include: (1) Michael Yee: CELG for rebound on negative pipeline and guidance settlement and four big datasets now coming (BLUE, JUNO, XLRN, Ozanimod); VRTX for huge product cycle coming for one of biggest biotech franchises launching 2019-2020; (2) Eun Yang: DBVT potential FDA acceptance of its BLA (likely by ~mid-2018) will be a key driver for the stock; DOVA for potential approval for avatrombopag for thrombocytopenia in chronic liver disease (PDUFA 5/21/18); (3) Biren Amin: NBIX for the Phase II tiral of NBI-74788 in CAH and PDUFA for Elagolix in endometriosis in 2Q:18; ANAB for several key readouts in 2018, including peanut allergy data, eosinophilic asthma data and atopic dermatitis data, all expected in the first half of the year; (4) Maury Raycroft: SGMO for upcoming in-vivo gene editing data in MPS II patients and gene therapy in heme. A patients; RXDX for topline data of entrecitinb in TRK fusion population. Important catalysts for Matthew Andrews' coverage include AMRN REDUCE-IT data in Q3:18; IMMU IMMU-132 BLA submission in late Q1/early Q2:18; SPPI Rolontis Phase II readouts in Q1 and Q3:18 with a BLA filing in late 2018, as well as Poziotinib updated MDACC data at ASCO in early June 2018.
Jan 3 2018 Sangamo Therapeutics (SGMO): New SGMO-PFE Collaboration in ALS -- Another Example of Execution; More in 1H18 Rating BUY Price Target $18.00 Price $17.55
Key Takeaway SGMO announced a new development partnership with PFE for ZFN-based gene regulation of a common mutation found in ALS. SGMO will receive $12M upfront with potential milestones up to $150M plus royalties. The collaboration provides additional validation for SGMO's ZFN approach and is another example of mgmt execution; also, we view the partnership as a good strategic fit for both SGMO and PFE. We would Buy SGMO, esp. ahead of clinical data expected 1H18.
Expansion of partnership with PFE leverages SGMO's gene regulation technology in ALS/FTLD -- provides further validation of ZFN technology. SGMO and PFE are collaborating on the "gene regulation" application (not editing or gene therapy) of ZFN technology -- they will use ZFP-TFs, which are chimeric transcription factors (DNA-specific ZFP + transcription factor), to repress expression of mutated C9ORF72, while potentially preserving expression of the wild-type allele. The program is preclinical and no timeline details were provided in the press release. Recall, SGMO and PFE entered a collaboration in May 2017 to jointly develop SB-525 for hemophilia A, which is now in the clinic (data expected 1H18). The collaboration may also be a good strategic fit for PFE, given their neuroscience and gene therapy interest/pipeline.
Single administration of ZFP-TF likely with AAV (potentially their proprietary AAV.SGMO) could be used to suppress/eliminate toxic accumulation of protein and delay progressive neurodegeneration in ALS. Though there is some debate around how C9ORF72 mutations/repeats drive disease progression, evidence suggests it is caused by an accumulation of toxic protein. Designing a ZFP-TF to specifically interact with a repeat region of C9ORF72 would allow for repression of the dysfunctional allele while preserving WT expression. Planned single-dose administration of ZFP-TF implies that an AAV delivery would be used. Although co did not specify, preclinical data shown on SGMO's 3Q call highlighted impressive neuro-tropism w/ AAV.SGMO even compared to AAV9. Notably, the neuronal transduction (with both AAV9 and AAV.SGMO) was superior with IV administration vs intracerebroventricular delivery.
ALS/FTLD market opportunity and understanding around C9ORF72: ALS is mostly sporadic, and familial represents up to 10% of all ALS with ~1/3 of these patients having mutated C9ORF72 -- most common mutated gene implicated in ALS. We estimate U.S. incidence of ~200 ALS and ~100 FTLD eligible patients; U.S. eligible prevalence is ~600-800. The mutation can involve hundreds of hexanucleotide repeats, which expand/increase in subsequent generations. A higher number of repeats can lead to younger disease onset. Patients can die within 3-5 years of diagnosis, and currently there is no effective treatment available for ALS.
This is SGMO's second CNS partnership (first was with Shire for Huntington's), and the company has been vocal about tauopathies, which we believe could be the next CNS partnership opportunity. SGMO provided an update on the ZFP-TF tauopathy program at ASGCT'17, and this program has now moved into NHP studies. The tauopathy program also uses ZFP-TF technology -- used to repress tau expression. SGMO also partnered with Shire in Huntington's disease in 2012; partnership was revised in 2015.
Next up: MPS II clinical data unlikely at upcoming WORLDSymposium; abstract for poster most likely a placeholder. Co has guided to providing meaningful clinical updates in hem A and MPS I/II in 1H18. β-thal ph.I/II expected to initiate early '18.
Financials: SGMO will receive a $12M upfront from PFE and could receive milestone payments up to $150M as well as royalties. SGMO will be responsible for development of ZFP-TFs, while PFE will be responsible for subsequent R&D, manufacturing and commercialization for any successful C9ORF72 program candidates.
Company Description Sangamo Therapeutics, Inc. (SGMO) is a clinical stage biotechnology company focusing on development of engineered zinc finger DNAbinding proteins (ZFPs) as therapeutics targeting various diseases. Lead therapeutic candidate of the company, SB-728, modifies HIV coreceptor CCR5 in T cells or stem cells to treat HIV infection. The company developed In Vivo Protein Replacement Platform (IVPRP) to insert copies of normal gene into a safe-harbor site in liver. Initial indications for IVPRP include hemophilia and lysosomal storage disorders. Additionally, Sangamo is developing therapies for hemoglobinopathies with BIVV and Huntington disease with Shire based on the ZFP technologies.
Analyst report Biotechnology Set-Up Thoughts into January Conf...and 30 Key Stock-Moving Events for 2018 EQUITY RESEARCH AMERICAS Michael J. Yee *
Key Takeaway Below, we identified 10 pot'l disclosures or announcements that could come in the next two weeks to start the year. Separately we have compiled at least 30 biotech events in a chart (see inside page 2) that have the pot'l to move the stock at least 10% and in some cases 20-50% this year. Please contact us for the spreadsheets or for add'l detailed thoughts on risk/reward into each event. Turning the page to 2018 and into a January conference we're modestly optimistic that large-cap biotech picks up a bit given recent pullback and taxreform and investor low expectations so laggards could bounce. But we reiterate the big biotech stories are working to a much bigger H2:18 and 2019 product cycle and latestage data read out period. INCY Phase III melanoma data coming is probably the biggest sentiment swing factor for big biotech along with ALXN '1210 (better/worst) data, and GILD Yescarta reimbursement commentary and sales results have the pot'l to swing GILD given low expectations. The good news is expectations are low on the large biotechs and generalist interest remains modest but more positive than a year ago. Thinking outside the box, we'd say the key upside "wild-card" is whether "big consolidation" actually occurs in the big caps based on pharma buying pharma or...pharma buying a "big biotech" (don't rule it out in our view, and consistent w/ our pharma analyst Jeff Holford's pharma view). Top ideas in large biotech remain CELG, VRTX. In addition, smid-biotech (<$10B) is where all the institutional money flow has been going based on at least three key themes we expect will likely continue into 2018: (1) likely bid in smid-biotech stocks continues based on pot'l for M&A to pick up after tax reform (two biotech M&A deals recently though <$2B each announced in last two weeks ironically), (2) breakthrough data and big innovation going on in CAR-T, gene therapy, cell therapy, and neurology, (3) smid biotech doesn't face generics or biosimilars and has way less pushback....our top conviction ideas within the "30 top events" on page 2 include: ASMB, ESPR, FGEN. Other than surprise M&A deals that could swing sentiment in biotech, going into a major industry conference in two weeks we see pot'l for at least ten stockmoving announcements within our coverage to look out for: 1) CELG – Is likely to pre-announce Q4 (we think good result) and provide new 2018 guidance though investors should assume could be conservative. It's encouraging the stock didn't actually go down much on RELEVANCE data recently. 2) BIIB - Could disclose color around Spinraza USA or EMA patient numbers and update aducanumab Alzheimer's enrollment, but also remind that Q4 includes at least $70MM+ in BD ($0.20-0.25 EPS) that wasn't in consensus or guidance. 3) VRTX – Could pre-announce Q4 but may not provide 2018 CF guidance until '661 combo is approved in February. More importantly, could disclose Phase III triple plans and update on the Phase II data. 4) ALNY -- (1) Path forward for ALN-TTRsc02 guided to initiate ph.III in 2018 -- we are waiting on a potential renegotiation of economics w/ SNY, (2) update on the PH-1 program (ALN-GO1) which had initial data at ASN, or (3) announcement of a new program. 5) AVXS - May provide FDA meeting updates and next steps post recent regulatory discussions. 6) ICPT – May pre-announce Q4 Ocaliva sales or initiation of Phase III cirrhosis study, or color on upcoming FDA label change. 7) ASMB - Possible announcement of Phase Ib HBV data on viral knockdown. 8) AXON - May report Phase IIB data for intepiridine in dementia w/ Lewy bodies and nelotansersin in visual hallucinations. 9) ACOR – Is likely to preannounce 2017 Ampyra net sales and provide 2018 financial guidance. 10) FGEN - Could disclose HRCT imaging IPF data or Phase II pancreatic cancer data for pamrevlumab.
30 events: SGMO 1H data on first in vivo editing +30%/-20%
Jefferies - Final Thoughts from San Francisco: RARE, ABEO, SGMO, and ALNY
Americas / Biotechnology: Final Thoughts from San Francisco: RARE, ABEO, SGMO, and ALNY
Key Takeaway We met with management teams in San Francisco this week including with RARE, ALNY, ABEO, and SGMO. Each of these companies has key events ahead in 2018, which we believe could lead to significant upside.
RARE's OTC deficiency gene therapy and UX007 are two underappreciated programs that could pick up the pace in 2018 and provide upside to RARE. Though the stock reaction has been somewhat muted, we believe recently reported DTX301 OTC deficiency data provided proof-of-concept on efficacy as well as derisked safety. Interestingly, during our conversation with mgmt, they pointed out that the patient who showed the greatest efficacy on ureagenesis actually received the most DTX301 on an absolute basis (based on the patient's weight) providing some support that efficacy may increase at the higher doses. Also, in their updated slide deck they reported details for the individual pts in cohort 1 showing potential for rapid steroid tapering, which is important given risks of steroid use in urea cycle disorders. Next for DTX301 -- RARE will dose three patients at a 3X higher dose and evaluate the potential for ureagenesis normalization, dose reductions of scavenger medications, and potentially even diet liberalization -- data expected in 2H18. For UX007 in LC-FAOD, they emphasized the number of compassionate use requests they are receiving, highlighting the unmet need and urgency in getting an effective therapy to market in LC-FAOD. Based on their EOP2 meeting, they will submit add'l info to FDA, then they will make a decision on potentially filing based on the ph.II data in mid-2018 -- we believe this could be an important upcoming catalyst. The ph.III in LC-FAOD would start by YE18 and could be registrational or confirmatory. Finally, we remain enthusiastic about DTX401 in GSD1a (as highlighted here). Mgmt emphasized again how a minimum of 3% added enzyme activity could be sufficient in alleviating disease in pts. Overall, we view RARE's pipeline/assets as underappreciated -- with 2017 setbacks weighing on the stock and little credit given to the clinical stage and late preclinical pipeline we would Buy the stock.
Near-term data expected; 1H18 regulatory updates for ABEO could de-risk path forward and drive substantial upside -- BTD and/or RMAT designation for ABO-102 in MPS IIIA are a priority (RMAT for EB-101 is a possibility too). We are expecting a data update from the first patient dosed with ABO-101 in MPS IIIB in 1Q18 -- we believe they will report 30-day proof-of-efficacy data as well as a safety update. For ABO-102 in MPS IIIA data at WORLD in February in cohort 2 (younger pts with higher dose) may show and help characterize cognitive benefit. ABEO continues to look at data on a whole and is in the process of deciding whether to file for RMAT for both ABO-102 and EB-101 -- RMAT will allow them to include real-world experience. Recall, ABEO has collected and reported positive PRO data in MPS IIIA, which could be included in RMAT filing along with potential journal/video examples. They mentioned ongoing work to assess therapeutic benefit in MPS IIIA-treated pts including biomarker data and mentioned markers of neuroinflammation, which we believe could provide additional supportive rationale if associated with other trending biomarkers/outcomes. EB-101 in a ph.III in RDEB is still expected to start 1H18, and mgmt commented that the last few patients enrolled are expected to be treated with CMC/commercially manufactured grafts -- important validation of commercial capabilities. They are enthusiastic about their AIM vectors (tropism for specific organs like brain, kidney, lungs, and muscle), and we may see an update on these in 1H18, likely at ASGCT.
In addition to expected 1H18 clinical data, we discussed SGMO’s ex vivo capabilities and platform improvements along with optimal balance of portfolio focus/diversification -- underappreciated parts to the SGMO story. MPS II patients are screened/ready for treatment and the next patient will be dosed in a few weeks. They also mentioned that MPS I recruitment and screening is accelerating. For their ex vivo editing, they showed us some new data they reported that demonstrated triple KO and one insertion at 76% efficiency -- we see clear rationale for how this technology could be applied to cell therapies including CARTs -- having the potential to make these therapies off-the-shelf that would maximize the market opportunity for a CAR-T company like GILD/KITE. Further, we discussed their legacy HIV program, which built the technology and process foundation, which is being leveraged for their ex vivo programs such as Beta-thal, for which sites are being opened with potential to apherese and then treat a patient mid-year. Given the large mkt indication, the company views hemophilia A as a potential best-in-class opportunity -- they discussed their engineered promoter used for FVIII, which is a potential reason why their non-human primate data looked superior to ONCE and BMRN when compared sideby-side. We continue to believe their AAV.SGMO vector, which is neuro-tropic and uses a neuro-restrictive promoter could be a game-changer for current gene therapies using AAV9.
ALNY emphasized upside w/ SNY renegotiation (our note here) and the upcoming patisiran launch. Pricing strategies were discussed, and ALNY is willing to get creative about the way they think of patisiran pricing. ALNY drew some parallels between hATTR and multiple sclerosis, with prophylaxis therapy potentially able to be used to prevent disease development upon early symptoms such as nerve conduction or increasing BNP (as optic neuritis was used as an early symptom indicating need for treatment in MS). ALN-TTRsc02 development may be ideal for the prophylactic setting, given dosing. Lumasiran -- last of SNY's potential program opt-in decisions -- could come 1H18; an increased focus of SNY on global rights and the attractive diagnosed space with good clinical data (though early) could make it an ideal candidate. If not an attractive market (i.e., too small) for SNY, ALNY will develop lumasiran, which would provide upside to our estimates. Givo strategy was discussed, with fast movement to market in the U.S. being a priority; mgmt commented they may wait for a full ph.III data set for the EU approval, which could aid in obtaining a more favorable reference price
We summarize important recent updates/thoughts for KPTI, SGMO, NTLA, and IMDZ: For KPTI, though key selinexor multiple myeloma data is expected soon, we view sel's potential in DLBCL as an under-the-radar opportunity among the CAR-T hype. We continue to like gene-editing platforms (e.g. SGMO and NTLA) in light of SNY, GILD, CELG M&A. IMDZ presented some supportive updated G100 data at ASCO-SITC.
KPTI: Key MM data are expected in April, but selinexor's value proposition in DLBCL, among the CAR-T hype, is underappreciated in our view -- though likely on the radar of heme-onc players (as discussed here). Jefferies hosted a conference call last week with two CAR-T experts involved in Yescarta's launch -- one expert mentioned how she is actually turning pts away from her site because they are too sick to undergo treatment. Hence, we see clear, underappreciated benefit for using tolerable, safe and effective therapies like selinexor in DLBCL pts who do not qualify for CAR-T or who fail CAR-T. Recall, the co's updated DLBCL ph.IIb SADAL data at EHA in August showed single-agent selinexor activity with 33.3% ORR in all-comers (i.e. double/triple hit pts, refractory, 4L-6L, and transformed DLBCL), suggesting potential broad use of selinexor in this indication. Additionally, similar to combo potential in MM, several investigator-led combo studies in DLBCL (we count at least four active trials w/ sel+R-CHOP/RICE/R-DHAOx/R-GDP/ibrutinib) are underway, demonstrating KOL enthusiasm and likelihood of data that will inform a registration path. Though multiple myeloma is the near-term readout in focus w/ STORM penta-refractory data expected in April, we continue to view the DLBCL opportunity as underappreciated (SADAL expansion data not too far off -- expected 2H18).
SGMO and NTLA: We find SNY’s proposed acquisition of ABLX yesterday as another sign of the time -- and on the SNY conference call there was much discussion pertaining to the ABLX platform, which we believe underscores the value of earlier-stage, versatile technologies (i.e. gene-editing). We recently discussed the rationale for using gene-editing to augment CAR-T/cell therapies (discussed here) and highlighted rationale for GILD, CELG/JUNO, and NVS as suitors. Specifically, we believe companies developing CAR-T/cell therapies can leverage gene-editing platforms to unlock an allogeneic or "off-the-shelf" approach, which would overcome the commercial/execution challenges involved with an autologous or personalized approach. SNY's acquisition of ABLX reminds of the appetite for M&A, and the conf call emphasized consideration around ABLX's nanobody platform and multi-targeting approach.
IMDZ reported updated data for G100 in soft tissue sarcoma (STS) in a ASCO-SITC poster. The poster includes updated data on 15 pts (previously reported on at AACR'17), and in 13 evaluable pts (w/ mean 156 days of follow up) there was 1 CR, 1 PR, and 11 SDs (vs 1 CR and 6 SDs at AACR'17), indicating some improvement over time; local tumor control was demonstrated in 13/13 evaluable tumors. The abstract also showed that G100 with or without radiation increased tumor-specific CD4 immunity, including an increase in clonality of PBMCs in 8 of 14 pts with TILs increased in all patients. Interestingly, they reported some details on single-cell cytokine analyses in the abstract indicating that 7 of 13 pts had increased polyfunctionality in CD4 T cells – the poster gives additional granularity on responses in individual patients. The authors concluded that G100 may sensitize tumors to radiation, and clonal overlap of CD4 and CD8 cells in pre-treatment TILs could serve as a potential predictor of response to G100. The maturing STS data provide additional confirmation of G100’s activity when injected into tumor. Recall, IMDZ reported G100+Keytruda data at ASH’17 that showed an ORR ~38.5% with G100+radiation+Keytruda (n=13) in FL (see our note here).
Jefferies: We look forward to the updates from ABEO, SGMO, and RARE and would Buy ahead of WORLD (2/5-2/9) and ASGCT (5/16-5/19). We look forward to the updates from ABEO, SGMO, and RARE and would Buy ahead of WORLD (2/5-2/9) and ASGCT (5/16-5/19).
SGMO: A poster presentation for ph.I/II studies for MPS I/II in vivo gene editing programs may provide a general update w/ potentially some details on safety, but we are not expecting efficacy data. In conversations w/ mgmt, they did not anticipate having enough mature efficacy data by the mtg. We continue to expect data in 1H18, and SGMO has indicated last month that screening of pts was ongoing and picking up, and they expected to have add'l pts dosed soon, though it will not be announced.
There will be some competitor MPS I/II data of interest as well (i.e. CNS-active ERTs using an insulin- ERT fusion to cross the BBB).
SGMO will also present precllin Fabry data.
Tuesday, February 06, 2018 SGMO Poster 4:30 PM 6:30 PM 4:30 PM 6:30 PM SB-318/SB-913 134 Update on phase 1/2 clinical trials for MPS I and MPS II using ZFN-mediated in vivo genome editing
Tuesday, February 06, 2018 SGMO Poster 4:30 PM 6:30 PM 4:30 PM 6:30 PM ST-920 158 Liver-based expression of the human alpha-galactosidase A gene in a murine Fabry model results in continuous therapeutic levels of enzyme activity and effective substrate reduction
Wednesday, February 07, 2018 SGMO Oral 1:00 PM 4:30 PM 1:00 PM 1:15 PM SB-318/SB-913 Translational Research II 397 ZFN-mediated in vivo genome editing of hepatocytes results in phenotypic correction in murine MPS I and MPS II models
Wednesday, February 07, 2018 SGMO Oral 1:00 PM 4:30 PM 1:15 PM 1:30 PM ST-920 Translational Research II 293 ZFN-mediated in vivo genome editing results in therapeutic levels of α-galactosidase A and effective substrate reduction in Fabry knockout mice
Jefferies SGMO Key De-Risking Event at WORLD; More M&A Read-Through To Gene Editing Key De-Risking Event at WORLD; More M&A Read-Through To Gene Editing
An update from SGMO's ph.I/II in vivo gene-editing trial was provided -- SGMO has dosed an add'l patient and no tolerability or major safety issues (details for first patient dosed were in the poster) were reported -- a key de-risking event for the co and gene tx space. SGMO also announced an $11M grant from NIH for HIV. Lastly, we continue to like synergies with gene-editing and CAR-T/T cell therapy cos and highlight comments from GILD's recent conf call.
SGMO: AAV and in vivo gene-editing safety data were presented -- an important de-risking program update providing add'l support to bolster the case for AAV safety (weaknesses in a recent publication discussed here). Overall, the update indicates to us the trial is proceeding well with safety being an underappreciated aspect of the innovative gene-editing therapy. With the initial safety data from the ph.I/II CHAMPIONS trial for SB-913 in MPS II, they also reported that another patient had been dosed (treated in mid-Jan). Recall, they announced dosing of the first patient in Nov'17. Both pts were dosed at 5E12 vg/kg. Detailed safety data from the initial patient were reported showing that AAV2/6 administration appeared to be tolerable with no major safety issues. We spoke with the lead investigator of the study, who was encouraged by the progress and reiterated the need for an option that would be a permanent solution to ERT. Importantly, LFTs remained in the normal range for the first patient dosed and were managed with prophylactic steroids (used first 20 wks post dosing)/steroid tapering over time. The poster noted that the initial patient dosed had an SAE unrelated to study drug, which consisted of an upper respiratory tract infection and hospitalization for acute bronchitis. The lead investigator commented to us that, in MPS II, respiratory infections are not uncommon, and this pt had a history of chronic pulmonary disease and has since recovered.
SGMO disclosed the higher doses in the poster -- next dose will be 1E13 vg/kg and then 5E13 vg/kg. There are 2 pts per dose cohort and SGMO could expand at a preferred dose to up to 9 pts. The poster also noted that the more recent patient dosed tolerated the treatment well. At the poster, mgmt mentioned they had identified all add'l pts who could be included in the MPS II trial, and they believe the safety update at WORLD should help with enrollment for MPS I too (EMPOWERS study). They remain confident that the MPS II biomarker (urinary GAG) and efficacy data are on track for mid-2018 -- the co will wait for "relevant and reliable" data prior to reporting.
Comments on GILD's 4Q conf call yesterday have positive read through to the gene-editing space (SGMO, NTLA, EDIT, CRSP) in general -- supportive of how editing can augment cell therapy approaches. Specifically, GILD mentioned on their call they will be looking to augment their KITE acquisition with technology that could expand the range of targets for CAR-Ts, improve safety (particularly neurotox) and/or create universal donor CAR-Ts (specifically w/ gene editing). SGMO has spoken openly about partnering in oncology. We believe an editing platform could provide a valuable addition to a range of companies interested in developing modified cell therapies -- T cells and beyond and in oncology and beyond. For example, a potential underappreciated side to the KITE acquisition is KITE's TCR platform, which may re-emerge as GILD moves past the Yescarta launch. The TCR platform could also be augmented by gene editing (CRISPR-edited TCR in clinic now through UPenn), including NTLA's wholly-owned TCR editing platform.
New grant to cure HIV demonstrates further execution and revives another shot on goal, which also has relevance to biotechs w/ expertise in infectious diseases. SGMO had commented previously they would not move ahead in HIV without external support -- the new grant from NIH should help revive the HIV program, which leverages SGMO's ex vivo gene-editing in an autologous approach. Recall, SGMO has shown initial safety and efficacy success from this program. The grant will fund a new trial w/ Case Western, and SGMO currently has an active trial ongoing w/ City of Hope (NCT02500849).
Key Takeaway A collaboration w/ GILD for ZFN use in cell therapies (autologous & off-the-shelf) was announced. We view $150M upfront and $3.01B in potential milestones as favorable. The deal unlocks substantial potential for SGMO, validating and leveraging ZFN tech, while leaving several immune cell types/indication paths unencumbered. For GILD, the potential to create next-gen autologous and broad off-the-shelf therapies should provide a comp advantage. SGMO PT to $33.
Today's collab provides GILD (Buy, $80.69) with the oppty to develop allogeneic and fine-tuned next-gen autologous T/NK cell therapies in oncology, expanding and improving on KITE's platform -- though, notably, cell therapy remains wholly-owned for SGMO ex-oncology. We believe a key point is that GILD's access to specific edited T and NK cell therapies is meaningful for GILD in the near term but narrow overall; it leaves a range of development paths intact for SGMO (also relevant for other gene-editing cos w/ partnered assets). Essentially, the deal will give GILD the tool they need to effectively translate the KITE acquisition and overcome commercial challenges w/ allogeneic approaches. The deal also unlocks value for SGMO; it provides add'l validation for their platform ZFN technology, which is supportive of the co's other clinical programs and longer-term value. Most importantly, it reveals downstream development paths in a range of indications, which opens the potential for more partnerships/deals.
Though we have been discussing rationale and large biotech interest to use gene-editing to augment cell therapies here, we believe the partnership update today is unique. The deal reflects SGMO's strategic success and execution as well as add'l technology validation. For the tech, SGMO presented an update on 2/13 demonstrating high editing efficiency (up to 99.5%), specificity (undetectable off-targets), and ability to multiplex. These ex vivo capabilities and SGMO's quick turnaround time in engineering are a result of SGMO's tech improvements (i.e., new linkers, dimer architectures, and phosphate contact tuning), and make it clear that ZFN editing has made substantial progress.
After the recent safety update at WORLD, anticipation builds around efficacy/biomarker data in MPS II; hemophilia A update also expected 1H18. Low-dose cohort data from MPS II in mid-'18 is expected to...…include urinary GAG and serum enzyme activity (measured at ERT trough) -- and SGMO believes the dose has the potential to be active. Heme A gene tx data could come at WFH in May, which could include several dose levels (three patients treated so far); we still believe room for improvement exists in heme A and note that NHP data has been strong for SB-525 vs competitors.
Tau partnership potential is still on the table, recent HIV update and thoughts, and other SGMO programs continue to advance – recall, they now have five programs in the clinic. SGMO's diversified pipeline is rooted in its efforts to improve delivery (LNPs, AAV engineering) and improve ZFN constructs. We expect several readouts beyond MPS I/II and hemophilia A this year. An update from legacy HIV program SB-728-HSPC could improve on results of its T cell program, potentially increasing durability -- reinvigoration of interest in this program could drive value in the next 12mos. Additionally, path forward update for BIVV program in hemoglobinopathies has not yet been clarified following acquisition -- though we view Sanofi (SAN FP, €64.89, Hold) as maintaining interest given the large rare disease footprint. Next programs for Huntington's (Shire) and Tau could highlight SGMO's AAV platform for CNS disorders, which we view as under the radar, and PFE ($35.76, Hold) partnership in ALS further validates CNS programs. We believe the deal terms with GILD could be the best yet for a gene-editing program – sets a precedent and supports the value of SGMO’s approach. Here are several prior comparative deals: 1) JNJ/Transposagen (2014): JNJ will pay up to $292M per CAR-T; 2) PFE/CLLS (2014): PFE will pay up to $185M per product (up to 15 targets) and paid $80M upfront; 3) JUNO/EDIT (2015): JUNO will pay up to $230M per program (three programs) and paid $25M up front; and 4) NVS/NTLA (2015): NVS will pay up to $230M per product (five-year term) and paid $10M upfront.
Financials and model adjustments/updates: SGMO ended FY17 w/ $245M ($395M pro forma) in cash. For model adjustments based on the new partnership and annual update, we added Beta-thal and one allogeneic royalty stream to our model. We also increased probability of success slightly for MPS II (25% vs 15% prior), heme A (40% vs 35% prior), and Fabry (20% vs 15% prior). We added the upfront payment for GILD amortized over a five-year period and added out-year estimated collaboration milestone payments. Lastly, based on the 4Q/2017 update, we rolled revenues out one year, consistent with how we update other companies after annual reporting.
PT to $33 -- blends DCF and prob-adjust EPS analyses. Risks: efficacy, tox, competition. Base Case On-track enrollment for MPS II and hemophilia A Initial clinical data for MPS II and hemophilia A is expected mid-2018 and should provide proof-ofconcept for gene-editing Continued development of the BCL11A program in Beta-thal/SCD with partner BIVV Tauopathies partnership sometime in 2018 MPS I and hemophilia B accelerate in 2H18 Fabry and SCD INDs filing/acceptance Target Price: $33 (blend of DCF & EPS multiple)
Upside Scenario Better clinical efficacy and safety than expected in the lowest dose MPS II cohort Trending efficacy based on dose in MPS II and hemophilia A and durability data too With increasing breadth of clinical presence, they find more MPS I and hemophilia B patients Earlier than expected initial data for BCL11A programs Fabry and SCD INDs and clinical ramp-up faster than expected Additional ex vivo partnerships and/or advancements of innovative non-oncology programs Target Price: $48 (blend of DCF & EPS multiple
Downside Scenario Limited efficacy/signal at highest MPS II dose, suggesting challenges with in vivo editing Efficacy that is subordinate to competitors in hemophilia A Discontinuation of MPS I and hemophilia B because of enrollment hurdles Safety/efficacy or enrollment issue observed in BCL11A or Fabry programs Target Price: $10 (using a blend of DCF & EPS multiple)
Investment Thesis / Where We Differ We view SGMO’s ZFN technology as more de-risked after recent validating partnerships and believe the company is the current leader in the clinic with in vivo gene-editing We believe SGMO is a reasonable hedge investment to CRISPR/Cas9 technology and estimate long-term potential w/ ex vivo editing capabilities Although SGMO’s ZFN-based in vivo approach still has some uncertainties in respect to editing efficiency, we believe a recent safety update in MPS II and extensive preclinical review (i.e. RAC) were de-risking; clinical validation could provide significant upside
Long Term Financial Model Drivers LT Earnings CAGR NA Organic Revenue Growth 100% Acquisition Contribution 0% Operating Margin Expansion NA
Catalysts Mid-2018 – Clinical data for SB-913 in ph.I/II trial in MPS II Mid-2018 – Clinical data for SB-525 in ph.I/II trial in hemophilia A Mid-2018 – First ST-400 patient enrolled in ph.I/II in Beta-thal 2018 – Clinical data for SB-318 in ph.I/II in MPS I 2018 – IND filings for BIVV-003 in sickle cell disease and ST-920 in Fabry in 2018
Long Term Analysis Long Term Financial Model Drivers LT Earnings CAGR NA Organic Revenue Growth 100% Acquisition Contribution 0% Operating Margin Expansion NA
Product Event Timeline SB-525 Clinical data for ph.I/II trial in hemophilia A mid-'18 (possibly WFH in May) SB-FIX Clinical data for ph.I/II trial in hemophilia B 2018 Clinical data for ph.I/II trial in MPS I mid-'18 EU CTA to open pediatric study 2018 Clinical data for ph.I/II trial in MPS II mid-'18 EU CTA to open pediatric study 2018 Ph.I/II trial in beta-thal to initiate early-'18 First ph.I/II patient to enroll mid-'18 BIVV-003 IND filing in sickle cell disease 2018 ST-920 IND filing in Fabry 2018 ST-400 SB-318 SB-913 Drug (partner) Indication Status SB-525 (PFE) Hemophilia A Phase I/II SB-FIX Hemophilia B Phase I/II SB-318 Hurler syndrome (MPS I) Phase I/II SB-913 Hunter syndrome (MPS II) Phase I/II ST-400 (BIVV) BCL11A enhancer knockout program -- beta-thalassemia Preclinical BIVV-003 (BIVV) BCL11A enhancer knockout program -- sickle cell disease Preclinical ST-920 Fabry disease Preclinical
Sangamo price target raised to $33 from $18 at Jefferies Jefferies analyst Maury Raycroft raised his price target for Sangamo Therapeutics (SGMO) citing the "favorable" terms of the Gilead Sciences (GILD) collaboration. The deal unlocks "substantial potential" for Sangamo, Raycroft tells investors in a research note. He keeps a Buy rating on the shares.
Under: Been on the sidelines for a bit holding (building) cash. Now that "BIGLEY" has rolled out the tax plan its time to jump in.
Dec 21, 2017 19:06:02 GMT -6
martyc: Looks like you are buying Msft again!
Dec 15, 2017 11:23:29 GMT -6
martyc: The news that Trump called Rupert to congratulate him sure seems to indicate that this is heading to approval
Dec 15, 2017 11:22:23 GMT -6
Under: DIS finally getting some traction.?
Dec 14, 2017 17:08:45 GMT -6
martyc: I took an entry level position in DIS. Will add eventually to overweight when it becomes clearer that the deal will go thru. Can't believe how well positioned they will be. 60% Hulu. 20% of content watched on NFLX they can pull. More in thread
Dec 14, 2017 11:05:16 GMT -6
Under: Great posts on $DIS
Dec 13, 2017 17:50:49 GMT -6
Under: $ROKU Citron on a war path.
Nov 28, 2017 15:11:20 GMT -6
Under: $HAS takeover bid for $MAT?
Nov 10, 2017 16:16:07 GMT -6
martyc: Not looking like the market will provide any discounted opp for SGMO. Call was just too professional and all signs indicate they are on a great path for commercialization. Happy with core but wish I had some trading shs
Nov 10, 2017 9:04:05 GMT -6
martyc: For anyone looking to find an entry point into SGMO, I'm almost hoping is sells off in next few days so I can add more. They are really clicking but the fact they haven't signed new deals might cause some to exit. Watching as I have room for trading shs
Nov 9, 2017 18:28:09 GMT -6
martyc: Been an interesting ride so far. I figured the Bears would be about this good but hoped the O wouldn't look so lame. Another building yr but still possible to get to 8-8 IMO
Nov 9, 2017 18:26:08 GMT -6
Under: whats up with your Bears this year Marty?
Nov 9, 2017 17:35:25 GMT -6
martyc: Hope you were long ROKU. I wanted to see Q first so missed out
Nov 9, 2017 7:08:53 GMT -6