Stock Update (NASDAQ:SGMO): Sangamo Biosciences, Inc. Reports Third Quarter 2015 Financial Results


Sangamo Biosciences, Inc. (NASDAQ:SGMO) reported its third quarter 2015 financial results and accomplishments.

For the third quarter ended September 30, 2015, Sangamo reported a consolidated net loss of $9.2 million, or $0.13 per share, compared to a net loss of $7.5 million, or $0.11 per share, for the same period in 2014. As of September 30, 2015, the Company had cash, cash equivalents, marketable securities and interest receivable of $219.7 million.

Revenues for the third quarter of 2015 were $8.6 million, compared to $12.4 million for the same period in 2014. Third quarter 2015 revenues were primarily generated from the Company’s collaboration agreements with Biogen Inc. (Biogen) and Shire International GmbH (Shire). The revenues recognized for the third quarter of 2015 consisted of $8.4 million in collaboration agreements, compared to $12.0 million for the same period in 2014.

The decrease in collaboration agreement revenues was primarily due to a decrease in revenues under the Company’s collaboration and license agreements with Biogen and Shire as a result of the advancement of our ZFP Therapeutic® programs. In the third quarter of 2015, Sangamo recognized $2.6 million of revenues related to research services performed under the collaboration agreement with Biogen, and $3.3 million of revenues related to research services performed under the collaboration agreement with Shire. In addition, pursuant to the agreements entered into with Shire in January 2012 and Biogen in January 2014, Sangamo received upfront payments of $13.0 million and $20.0 million, respectively. These payments are being recognized as revenue on a straight-line basis over the initial six-year research term for Shire and approximately 40 months for Biogen. The Company recognized $0.5 million of the Shire upfront payment and $1.6 million of the Biogen upfront payment as revenue for the third quarter of 2015.

Research and development expenses were $16.7 million for the third quarter of 2015, compared to $16.3 million for the same period in 2014. General and administrative expenses were $4.6 million for the third quarter of 2015, compared to $3.7 million for the same period in 2014. Total operating expenses for the third quarter of 2015 were $21.3 million, compared to $20.1 million for the same period in 2014.

During the third quarter of 2015, the Company received payment of $14.5 million as a settlement with certain investors who were beneficial owners of Sangamo common stock, related to the disgorgement of short-swing profits pursuant to Section 16 of the Securities and Exchange Act of 1934. Sangamo will recognize a $5.8 million tax benefit related to the settlement payment, of which $3.3 million was recognized in the third quarter of 2015. The remaining tax benefit will be recognized during the fourth quarter of 2015.

Nine Months Results
For the nine months ended September 30, 2015, the consolidated net loss was $26.7 million, or $0.38 per share, compared to a consolidated net loss of $22.1 million, or $0.33 per share, for the nine months ended September 30, 2014. Revenues were $30.4 million for the nine months ended September 30, 2015, compared to $30.9 million for the same period in 2014. Total operating expenses were $61.6 million for the nine months ended September 30, 2015, compared to $53.2 million for the same period in 2014.

Recent Highlights

  • Restructuring of Collaboration Agreement with Shire. In September, Sangamo and its collaborator, Shire, revised theirJanuary 2012 collaboration and licensing agreement to accelerate the development of ZFP Therapeutics® for hemophilia A and B and Huntington’s disease. Under the amended agreement, Shire returned to Sangamo the exclusive world-wide rights to gene targets for the development, clinical testing and commercialization of ZFP Therapeutics for hemophilia A and B. Shire will continue to develop ZFP Therapeutic clinical leads for Huntington’s disease and one additional gene target yet to be named. The amended agreement reflects a strategic decision by both Sangamo and Shire to focus efforts in areas of current interest and expertise for each company.
  • NIH Recombinant DNA Advisory Committee (RAC) Unanimously Recommends Phase 1 Study Protocol for ZFP Therapeutic for Hemophilia B. In September, Sangamo announced that the National Institutes of Health’s Recombinant DNA advisory Committee (RAC) unanimously approved the Phase 1 study protocol for its Factor IX hemophilia B program. The Factor IX program will be the first clinical study of in vivo genome editing and the first therapeutic application of Sangamo’s In Vivo Protein Replacement Platform™ (IVPRP™). Sangamo expects to file an Investigational New Drug (IND) application with the U.S. Food and Drug Administration (FDA) by the end of 2015 and, pending FDA clearance, initiate a Phase 1 clinical trial in 2016.
  • Publication and Presentation of ZFP Therapeutic Program Data Highlight Sangamo’s Genome Editing Platform and Clinical Translation Plans. In September, at this year’s ICAAC meeting, Sangamo presented updated clinical data demonstrating sustained functional control of viral load in the absence of antiretroviral drugs in two of three HIV-infected subjects treated in Cohort 3* of its SB-728-1101 Phase 1/2 study. The subjects remain on extended treatment interruption (TI), past the initial 16 week period. The subjects in Cohort 3* received an SB-728 product that included both CCR5-modified CD4 and CD8 T-cells, after Cytoxan preconditioning, in contrast to patients from other cohorts of the 1101 study who had received only CCR5-modified CD4 T-cells. Data from the Company’s ZFP Therapeutic pipeline were also presented at the annual European Society of Gene and Cell Therapy (ESGCT) Congress and the Annual Scientific Meeting of the International Society for Experimental Hematology. In addition, preclinical data supporting Sangamo’s hemoglobinopathy programs and its IVPRP program for hemophilia B were published in articles in Nature Methods and Blood, respectively.

Financial Guidance for 2015

The Company updates guidance as follows:

  • Cash and Investments: Sangamo expects that its cash, cash equivalents and marketable securities will be at least $200 million at the end of 2015, inclusive of research funding from Biogen and Shire but exclusive of funds arising from any additional new collaborations or partnerships, equity financings or other new sources. The increase in year-end cash balance is primarily due to the above mentioned payment of $14.5 million related to the disgorgement of short-swing profits from certain investors that were beneficial owners of Sangamo common stock.
  • Operating Expenses: Sangamo expects that operating expenses will be in the range of $85 million to $90 million for 2015, due to timing of research and manufacturing expenses related to our preclinical programs.

The Company reiterates its earlier guidance as follows:

  • Revenues: Sangamo expects that revenues will be in the range of $35 million to $40 million in 2015, inclusive of research funding from Biogen and Shire. (Original Source)

Shares of Sangamo Biosciences closed today at $7.14, up $0.27 or 3.93%. SGMO has a 1-year high of $19.25 and a 1-year low of $5.30. The stock’s 50-day moving average is $6.57 and its 200-day moving average is $9.72.

On the ratings front, Sangamo has been the subject of a number of recent research reports. In a report issued on September 28, Piper Jaffray analyst Charles Duncan reiterated a Buy rating on SGMO, with a price target of $17, which represents a potential upside of 150.0% from where the stock is currently trading. Separately, on September 4, Cowen’s Ritu Baral reiterated a Buy rating on the stock .

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Charles Duncan and Ritu Baral have a total average return of 7.5% and 16.2% respectively. Duncan has a success rate of 41.7% and is ranked #791 out of 3804 analysts, while Baral has a success rate of 46.0% and is ranked #127.

The street is mostly Bullish on SGMO stock. Out of 4 analysts who cover the stock, 4 suggest a Buy rating . The 12-month average price target assigned to the stock is $23.50, which represents a potential upside of 245.6% from where the stock is currently trading.

Sangamo BioSciences Inc is a clinical stage biopharmaceutical company. The Company is engaged in the research, development & commercialization of engineered DNA-binding proteins for the development of novel therapeutic strategies for unmet medical needs.