Sangamo: Making Gains in Gene Therapy

06/02/2017 2:54 am EST

Focus: HEALTHCARE

John McCamant

Editor, Medical Technology Stock Letter

In a very competitive bidding process Sangamo Therapeutics (SGMO)  has inked a significant global partnership with Pfizer (PFE), who brings a wealth of value to SGMO, and notably validates the latter company’s gene therapy platform, explains biotech expert John McCamant, editor The Medical Technology Stock Letter.

After repeated delays at SGMO  under the previous management, the new senior team is executing at a very high level – with 4 clinical trials either under way and/or about to start for the first time in company history.

With the consensus often suggests SGMO’s  proprietary technology has been made obsolete with the emergence of CRISPR, this Pfizer collaboration totally refutes that notion and reminds investors that SGMO remains a gene therapy/gene editing leader, with the largest patent portfolio in the field.

In our view, this could be just the beginning for SGMO as we see further deals of this size or even larger.

PFE will provide $70 million in upfront cash. The deal is broadly based for hemophilia A and provides up to another $300 million in development funds for the lead compound SB-525 and another $175 million for related and follow-up compounds.

Lastly, SGMO will receive tiered double-digit royalties on net sales. Additionally, the company will be collaborating with Pfizer on manufacturing and technical operations utilizing viral delivery vectors.

Importantly, the joint venture also gives SMGO  access to the Pfizer global hemophilia infrastructure, one that already has other hemophilia compounds under development.

Gene editing, along with cell and gene therapies are basically the most advanced technologies targeting a growing and competitive segment for many serious diseases that are otherwise not treatable/druggable with conventional pharmaceuticals.

SMGO  has several first and next-generation platform technologies and they are still optimizing their development programs which will include both adults and children.

The new management of SGMO  have really turned this company around, progressing in the lab, the clinic and this large collaboration with Pfizer validates this progress in one of the most competitive, blockbuster markets in the drug industry today.

With four clinical trials either underway and/or starting over the next twelve months, investors will hear a steady stream of clinical updates and potentially a major partnership for Alzheimer’s disease from SGMO .

Before today, the stock was trading at just a $312 million valuation – likely based on the years of stops and starts, the previous management’s reputation and the competitive noise around other technologies/companies.

With the recent slew of important, fundamental announcements – positive FDA designations, encouraging
Alzheimer’s data and now the big PFE deal validating the platform – in our view, the 40% after-market run-up in SGMO  shares is only the beginning. SGMO is a buy under $8 with a target price of $16.

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