Research and Manufacturing Alliances
Sangamo’s business model, at least for the near term, is focused on the wide-spread acceptance of the ZFP technology, says Bassett. Sangamo has discovery and biomanufacturing partnerships, a broad agrosciences alliance with Dow, and ZFP may have an enabling technology position in Johnson & Johnson’s Lifescan diabetes therapeutic product, she adds.
“Sangamo’s enabling technology applies broadly across product platforms,” Bassett notes. “As the sole provider of ZFP technology, currently the only technology that can provide genome editing via transcription, Sangamo is in a unique position to enable manufacturing capabilities across multiple industries that both improve products and lower costs, including human biopharmaceuticals and new agricultural products.
“Genentech’s commercial license of Sangamo’s ZFP technology for biomanufacturing provides proof of technology concept by a leader in biotherapeutics manufacturing.” Other collaborations include Medarex, Pfizer, Amgen, Novo Nordisk, MedImmune, Novartis, and Kirin.
“There are no current commercial products based upon ZFP technology, and therefore market acceptance of such products is unknown,” Bassett notes. “Sangamo products could face significant competition in the future, which could diminish its revenue potential.”
“It is our view that Sangamo’s near monopoly intellectual property position combined with proof of technology value in human therapetics, agricultural products, and protein therapeutics manufacturing, could unlock a stream of revenue from multiple alliances plus proprietary product opportunities. As the sole provider of technology to access to regulation and modulation of the human genome via transcription factors, we expect Sangamo to have complete freedom to operate with the capability of widely leveraging its zinc finger transcription factor technology across numerous industries and products.”
Sangamo’s current market cap is approximately $250.6 million. On May 1, it reported first quarter EPS of $0.15, in line with Bassett’s consensus EPS of $0.13. It also had a net loss of $5.4 million on revenue of $1.4 million and cash and equivalents of $49 million. “At current price levels,” Bassett concludes, “we consider Sangamo a significant value opportunity and reiterate our Buy.”