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Sangamo (SGMO) Q1 Earnings: What's in Store for the Stock?

Zacks Equity Research

Sangamo Therapeutics, Inc. SGMO will report first-quarter 2019 earnings results.

The company’s performance over the last four quarters has been disappointing so far with two earnings miss, one beat and an in-line result on another count. The average negative surprise over the trailing four quarters is 46.85%. In the last reported quarter, Sangamo delivered a positive surprise of 5.26%.

Shares of Sangamo have risen 5.3% so far this year, outperforming the industry’s increase of 5%.

Let’s see, how things are shaping up for this announcement.

Factors to Consider

With no approved product in its portfolio at the moment, Sangamo primarily generates collaboration revenues from agreements with Pfizer PFE, Kite Pharma — a subsidiary of Gilead — and Bioverativ, a unit of Sanofi. During the upcoming conference call, investor focus will be on the company’s update pertaining to its main pipeline candidates.

Sangamo, in partnership with Pfizer is developing SB-525, its gene therapy product candidate in the phase I/II Alta study for hemophilia A. Earlier this month, the companies announced encouraging interim data from the program, which showed the gene therapy candidate to hold potential.

Meanwhile, Sangamo’s investigational new drug (IND) application for ST-920, a gene therapy candidate, was accepted by the FDA and the company plans to initiate a phase I/II analysis on the same for the treatment of Fabry disease later this year.

Sangamo’s zinc finger nuclease (ZFN) in-vivo genome editing candidate, SB-913, is currently being evaluated in a phase I/II CHAMPIONS study for Mucopolysaccharidosis Type II (MPS II). In February this year, the company presented interim results from the study on SB-913 at a medical conference. Additional data from the investigation is awaited later this year, which will help explain if the small increases in IDS enzyme activity observed can translate to improved outcomes in MPS II patients.

Another similar candidate, SB-318, is currently being examined in a phase I/II EMPOWERS program for addressing MPS I. Sangamo expects to report longer-term safety and biochemical measurements on the candidate any time this year.

The company is evaluating SB-FIX, an investigational in-vivo genome editing therapy in a phase I/II study, for treating patients with hemophilia B. It expects to report safety data from the probe later this year.

Last October, Sangamo closed the previously announced acquisition of France’s TxCell S.A. The company plans to submit a clinical trial authorization application (CTA) in Europe this year for TxCell's first CAR-Treg investigational product candidate regarding solid organ transplant and activate clinical sites by this year-end.

Sangamo in collaboration with Sanofi is developing ST-400 and BIVV003, its gene-edited cell therapies for the treatment of beta thalassemia and sickle cell disease, respectively. Earlier this April, the company announced promising early results from the phase I/II THALES study on ST-400.

We expect management to provide an update on the same during the upcoming conference call.

Earnings Whispers

The proven Zacks model does not conclusively show that Sangamo is likely to beat estimates this to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a top Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Sangamo has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of 27 cents each. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Sangamo currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP in the combination makes surprise prediction difficult for the stock this reporting cycle.

We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Sangamo Therapeutics, Inc. Price and EPS Surprise

Sangamo Therapeutics, Inc. Price and EPS Surprise | Sangamo Therapeutics, Inc. Quote

Stocks That Warrant a Look

Here are a few health care stocks worth considering as our model shows that these have the right mix of elements to beat estimates this time around.

Aduro Biotech, Inc. ADRO has a Zacks Rank #2 and an Earnings ESP of +82.00%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead Sciences, Inc. GILD has a Zacks Rank of 2 and an Earnings ESP of +1.54%. The company is scheduled to release first-quarter results on May 2, after the market closes.

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