JP Morgan encouraged to see the company executing so well; validating in a high profile therapeutic space PFE collab and Significant Pipeline Progress
Simply put, SGMO’s 1Q update was really good (slides here). The new collab with PFE for hemophilia A gene therapy is validating in a high profile (albeit highly competitive) therapeutic space; more on that below.
We're also happy to see pipeline progress is on track: hemophilia B, MPS I and MPS II programs are all in the clinic and enrolling with initial data from each expected later this year or early next. Beyond that, the co also announced plans to file a new IND next year in Fabry disease, and has presented some interesting preclinical data on the use of its ZF gene editing tech to reduce tau in Alzheimer's (another high profile space). Yes, much of this is early stages and we’re still waiting on clinical data, but following the recent management transition and new strategic direction we’re highly encouraged to see the company executing so well. Reiterate OW.
SGMO announced a global collab agreement with PFE for the development of hemophilia A gene therapies. SGMO will receive a $70M upfront and is eligible to receive an additional $475M in potential milestones. The collaboration includes SGMO’s AAV based program - SB-525 - which is expected to enter the clinic this Q. Recall that SB-525 makes use of an optimized AAV hFVIII cDNA vector cassette that results in a ~4x improvement in vector yields in addition to improving liver-specific hFVIII expression.
It’s early… but pre-clinical data suggests SB-525 could have the potential to be a best in class hemophilia A gene therapy. In non-human primates (n=3 per dose group), peak values of 110%, 494%, and 840% of normal were observed at the lower dose tested, and values of 450%, 623% and 887% were observed at the highest dose tested. While it is likely that levels of 10-20% of normal would be sufficient to significantly ameliorate disease, the supraphysiologic levels observed here could mean a lower dose (vg/kg) could be used, which might be meaningful from an immunogenicity perspective.
Meanwhile in IVPRP (see our review here)... the hemophilia B, MPS I and MPS II trials are open and enrolling; data is on track for later this year/early next. In line with timelines laid out earlier this year, SGMO has moved its lead in vivo gene editing programs into the clinic. While the co did note hemophilia B enrollment has been slow given competition from other trials and the small patient population (which isn’t a surprise), enthusiasm for MPS I and MPS II is high with no competition for patients.
Upcoming events. The first site in the hemophilia A trial is expected to open in 2Q17. Initial data from the hemophilia A and B and MPS I and II trials are expected later this year/early next. An IND for Fabry disease is expected in 2018. IND filings for the BIVV partnered B-thal and SCD programs are TBD.
$GILD Deal Further Validates The ZFN Platform; Broader Thoughts On The Story From Hereraising $SGMO PT to $35.00 We are encouraged by this update and the overall progess of the company and with a number of readouts expected in C18, we continue to see room for substantial upside. Aditi Singhania
JPMorgan Assumes Sangamo BioSciences (SGMO) at Overweight April 16, 2018 3:41 AM EDT Send to a Friend JPMorgan assumes coverage on Sangamo BioSciences (NASDAQ: SGMO) with a Overweight rating and a price target of $35.00. Analyst Eric Joseph assumes coverage and keeps the recommendation and the price target of the prior analyst
Downgrade Nov 2018 This report is clearly an intentional take down of the potential of SGMO. The SOTP calc shows how little this analyst thinks of the company today. He even added 30m shs to the current count by next year and only shows $300 cash. That seems to imply they will be selling 30m new shares for around $5m given the current spend rate and sh count
Recap: JPM SOTP valuation
MPS II $429m
MPS I $224
HemA $279 (royalties from Pfizer)
YE19 net cash $328m
Per share price $11
Recap of obvious errors
MPSI/II/HemB all IVPRP assets which validates the platform. No value of this asset
SB-525 is assumed to be successful given his valuation including royalties which are on net sales. Given that this is assumed to be commercially approved, the milestones would be up to $300m. Even if they didn't get the entire commercial portion given his attempt to low ball estimates, this would be at least $200m
Joseph must not know how to compute net cash as he added debt instead of subtracting it.
Sh count of 130m vs today of 102 suggest he believes they will add almost 30m new shares in next 15 months. Even if 5m for employees, that means they do an equity raise for 25m shs. The cash balance of $302 is $80m less than company guidance for CYE18. If the burn in C19 is 1/2 the bal would be $190m. So the JPM "model" is that SGMO will raise about $110m and have to issue 25m shs to do so. $4.40 per share for this raise makes his model and price target both look like it was done by a grade schooler.
He places zero value on the multiplex editing that GILD called best in class or the collaboration potential of over $3b tied to their use of it.
He places zero value on B-T or SCD. The collab agreement is almost 80% complete with BIVV, with NHP studies and other R&D of around $30m invested in these programs which has to be viewed as somewhat successful given the IND approvals for both. Milestone potential of $276m plus royalties may be too much to ask but some value on the assets is not.
Places zero value on all other preclinical assets including Fabry/Tau/etc
Places zero value on what is likely around 1,000 issued patents when you add in TxCell
Places no value on the other platforms for gene therapy, cell therapy or gene regulation.
This morning, we hosted Sangamo for an investor breakfast event in conjunction with the J.P. Morgan Healthcare Conference. Key points of discussion were the scope of near-term data updates from SB-913 / CHAMPIONS and SB-318 / EMPOWERS studies ahead of WORLD Symposium in February, and anticipated pipeline updates over the course of 2019 (including MPS and hemophilia A/B programs). Net takeaway: At WORLD symposium, anticipated datasets include SB-913 / MPS II 24-week safety and biochemical (changes in IDS and GAG levels) data from 6 patients, and 4-week safety data from 3 patients for SB-318 in MPS I. In management’s view, the ultimate bar for SB-913 success is maintaining suppressed GAG levels after removing ERT – a milestone not anticipated by WORLD but one that remains in focus for 2019. On SB-913 in MPS II / SB-318 in MPS I …for SB-913 updates at WORLD, we anticipate 24-week safety and biochemical efficacy data (changes in IDS and GAG levels) for 6 patients (2 patients per dose cohort). Two additional patients recently enrolled in the expansion cohort (1 dosed, the other enrolled) will lack sufficient follow up to be included within WORLD update. …for SB-318 in MPS I at WORLD, we can expect 4-week safety data on 3 patients (2 patients at 5e13 vg/kg, 1 patient at 1e13 vg/kg). …management views the success of the MPS programs relies upon continued suppression of GAG levels after ERT withdrawal. In MPS II, we can expect this milestone and data in 2019, however, with little to no precedent for systematically taking patients off ERT, timing is difficult to predict. In instances where patients have missed a dose, fatigue is the first symptom to manifest, but longer-term risks are unknown. As such, ERT removal will be an informed decision by both physician and patient. …while some MPS II patients have volunteered for pre- and 6-month post-treatment liver biopsies, the company noted that the invasiveness of the procedure could limit patient follow-through. It was also noted certain patients were medically contraindicated (on anticoagulants). We can expect additional color on biopsy data in 2019. …on the IDS assay, Sangamo plainly noted that assay sensitivity for plasma IDA has been optimized, however emphasis with respect to proof of concept remains on removing patients from ERT. On SB-525 in Hem A / SB-FIX in Hem B … for SB-525 in Hem A, 7 patients, and shortly 8 patients, have been dosed thus far in the study. Management noted initial recruitment headwinds from screening a disproportionate number of patients with AAV neutralizing antibodies who were likely screen-failures from BioMarin’s study. Data can be expected sometime in 2019. … for SB-FIX in Hem B, one patient has been dosed and a second to be dosed in the 5e13 vg/kg cohort. After 4 weeks of observation, Sangamo will convene with the SMC to make a determination about expanding the dose level and moving into adolescents. On partnerships… …across the partnerships (Pfizer, Sanofi, Gilead), Sangamo highlighted strategic alignment, and, in our view, partnership considerations are unlikely to have an impact on the company’s discretionary ability to disclose data for key partnered programs, and in particular, Hem A in 2019.
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