Yesterday, Sangamo Biosciences, Inc. (NASDAQ:SGMO) announced it will be restructuring its collaboration with Shire PLC (ADR) (NASDAQ:SHPG) in order to speed up the development of ZFP Therapeutics, a pipeline drug for hemophilia and Huntington’s disease. Pursuant with the revisions, Sangamo will be in charge of developing and commercializing ZFP for hemophilia A and B while Shire will retain its rights to developing ZFP for Huntington’s disease and one additional gene target, which is yet to be named.

Yesterday, Cory Kasimov of J.P. Morgan reiterated an Overweight rating on Sangamo but lowered his price target from $22 to $16 in light of the restructuring revision. Kasimov commented “In our view, this development isn’t entirely surprising given the cadence of the Shire [collaboration] so far (over the last year SGMO has reiterated that timing of the programs was uncertain given the strategic developments for Shire over the past year).”

Kasimov noted the company’s new guidance, stating that Sangamo now expects FY15 revenue between $35 million and $40 million, down from its previous guidance of $60 million to $70 million. The analyst added, “We have increased our expense assumptions going forward now that SGMO will be fully funding this program, have updated for the new royalty/milestone structure, as well as lowered the value we assign to the tech platform.” Overall, Kasimov believes investing in SGMO is “an attractive way to gain exposure to the emerging field of gene therapy” thanks to its gene editing platform.

Cory Kasimov has a 44% success rate recommending stocks with a +2.8% average return per rating when measured over a one-year horizon and no benchmark.

Separately, Liana Moussatos of Wedbush weighed in on Sangamo yesterday, reiterating an Outperform rating with a $30 price target. After considering the agreement restructuring, Moussatos notes that “Sangamo is still on track to file an IND for hemophilia B before the end of this year.” She continues, “With the hemophilia program now in house, we anticipate the company could accelerate development and potentially start dosing patients in the first half of 2016. As for Sangamo’s other programs, we anticipate the company will file INDs for Hunter and Beta-thalassemia in the first half of 2016, and INDs for hemophilia A/factor 8, Gaucher, sickle cell, and one undisclosed lysosomal storage disease before the end of 2016.”

Moussatos also touched on the company’s reduced revenue outlook, commenting, “The loss in revenues is mostly due to the removal of estimated milestone payments from Shire to Sangamo. We have updated our model based on guidance and removed any potential milestone payments from the previous agreement.”

Liana Moussatos has a 38% success rate recommending stocks with a +19.8% average return per rating when measured over a one-year horizon and no benchmark.

According to the three analysts polled by TipRanks in the last three months, all of them are bullish on SGMO. The average 12-month price target on the stock is $21, marking an overwhelming 205% potential upside from where shares are currently trading.

SGMO consensus

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