Is Sangamo’s (SGMO) Stock Price Collapse Justified?

Sangamo’s (NASDAQ:SGMO) shares lost over a quarter of their value in the past two days, leaving investors at odds over when it will hit a bottom. The reason? The drug maker reveled interim update for its zinc-finger nuclease gene therapy, SB-913, as a possible treatment for a rare metabolic disorder called Hunter syndrome, which was somewhat disappointing.

However, Wedbush analyst Liana Moussatos believes the first two cohorts (low & mid dose) of the Phase 1/2 CHAMPIONS trial testing SB-913 have actually shown promising preliminary safety and efficacy profile.

Moussatos opined, “Initial data shows dose-dependent reduction in urinary glycosaminoglycans (GAGs) biomarkers (potential regulatory endpoint). Management believes that reduction in GAG indicates genome editing occurred in liver cells; however, the plasma iduronate 2-sulfatase (IDS) activity was below the fluorometric 4MU substrate assay’s lower limit of detection (5.2 nmol/hr/mL) at baseline and after 16 weeks SB-913 dosing. Investors were apparently concerned that the background weekly ERT may have caused the reduction in GAG biomarkers in the mid-dose (SB-913) cohort; however, we understand that ERT dosing was the same in both the low and mid-dose cohorts—so the only difference would be SB-913. Based on the relatively dramatic reduction of GAG biomarkers in the mid-dose group, we anticipate potentially detectable plasma IDS with higher dosing in Cohort 3 and longer treatment periods. We look forward to the longer-term and higher-dose results for SB-913 as well data from patients who have withdrawn from ERT. We are encouraged by the preliminary SB-913 data.”

While encouraging, Moussatos is not willing to bet on SGMO. The analyst rates the stock a Neutral, while raising her price target to $11.00 (from $10.00), which implies a 17% downside potential from current levels. (To watch Moussatos’ stock picks, click here)

Sangamo has a lot of disappointed bulls out today as the stock plummets, as according to TipRanks, out of 6 analysts polled in the last 12 months, five rate the stock a Buy, while one maintains a Hold. The 12-month average price target stands at $27.80, marking a nearly 100% upside from where the stock is currently trading. (See SGMO’s price targets and analyst ratings on TipRanks)

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