Sangamo BioSciences Restructuring Creates A Pipeline Gap, Merits 87% PT Decrease

Wedbush believes Sangamo BioSciences, Inc. SGMO lacks any upside potential until the year 2018, citing the pipeline gap in the face of the management’s overhauling efforts. Therefore, the firm thinks it proper to downgrade the stock from an Outperform to a Neutral rating and slashed the target price from $30 to just $4.

A week earlier, the company reported a loss per share of $0.27 on revenue of $2.8 million for the third quarter. For the second time in a row, Sangamo BioSciences delivered a negative surprise in the bottom line. Before the release, Piper Jaffray downgraded the stock from Overweight to a Neutral rating.

Analyst Liana Moussados and Kelechi Chikere noted that Zinc Finger platform might be the best-in-class as far as gene therapy is concerned. However, they want the commercial potentials to be established.

Referring to the overhauling of pipeline, the brokerage said, “While this solidified the company’s foundation it also created a gap between a potential partner for HIV and the first clinical data from monogenic diseases in 2018. We have reduced our value for HIV to only include CCR5 heterozygote HIV patients as they have been higher responders. Due to lack of royalties expected from non-medical collaborations we have also reduced our previous valuation for these programs to only include agricultural due to the recently announced DAAS sublicense with Monsanto.”

Wedbush thinks any possible upside rewards could be seen only in early 2018 citing the proof-of-concept clinical results from hemophilia.

At last check, Sangamo was down 2.82 percent at $3.45.