CANTOR FITZGERALD
Company Update
FEBRUARY 6, 2008
Sangamo BioSciences Inc. (SGMO-$11.87)
Rating: BUY
Target Price: $27.00
Building Year -- Expect Upside Breakout by Mid-2008 -- BUY
Yesterday, after the market close, Sangamo Biosciences reported EPS of
$(0.17) for 4Q:07 and $(0.58) for FY:07, lower than our estimates of $(0.11)
and $(0.52), respectively, and the consensus 4Q:07 estimate of $(0.13) for the
quarter.
As we highlighted earlier (SB-509 Stem Cell Mobilization -- 2 New Phase II
Trials -- BUY, October 25, 2007), we expect Sangamo to leverage neuro-related
data across multiple neuro-indications and to compound this quantitative data
with pharmacodynamic measurements of stem cell mobilization to develop
quantitative biomarkers that can be used in future neuro and cardiovascular
indications— a strategy that we think yields strong partnering profile potential.
We think Sangamo's clinical development strategy highlights the cost-savings
and development time condensation that is achievable with strong platform
technologies.
Per our note post-acquisition of the angiogenesis program (SGMO: Positioned
for Value Creation, December 4, 2006), we view the landscape for technology
platforms as very positive, with potential to provide broad product pipeline
expansion solutions while lowering risk and development costs versus single
products — exemplified by SB-509, now approaching 10 indications.
We think the need for pharma companies to cost-effectively innovate for
long-term sustainability — in particular to access intra-cellular targets and
condense development timelines — drives demand for ZFP technology. We
expect additional collaborations/out-licensing deals involving Sangamo's early
stage/other programs.
We expect partnering activity to increase Sangamo's cash position in 2008,
expanding the company's foundation for clinical pipeline advancement and
confirming clinical/commercial value potential. We think SGMO is oversold
and 2008 catalysts (Exhibit 1 below) will support increasing price momentum.
We reiterate our BUY rating.
Current Statistics
Market Cap ($Mil) $476.5
Avg. Daily Trading Volume (3 mo.): 554,850
Shares Out (Mil): 40.142
Float Shares (Mil): 34.177
Institutional Holdings: 63.0%
Technology Value (TV): $403.288
Cash (Mil): $84.412
Short Interest (Mil): 5.609 |
