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What's in Store for Sangamo (SGMO) This Earnings Season?

Zacks Equity Research

Sangamo Therapeutics, Inc. SGMO will report fourth-quarter 2018 and full-year earnings results.

The company has a disappointing track record as its key metrics missed estimates in two of the last four reported quarters while coming in line with the same on one occasion and surpassing the mark in another, the average negative surprise being 43.99%. In the last reported quarter, Sangamo matched estimates at 0.00%.

Shares of Sangamo have plummeted 62.3% in the past year compared with the industry’s decrease of 16.7%.

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 is developing SB-525, its gene therapy product candidate in the phase I/II Alta study for hemophilia A, in partnership with Pfizer. Last November, the company announced that an independent Safety Monitoring Committee (SMC) recommended the continuation of the study to evaluate a higher dose following an analysis in October. The company clarified that the Committee’s recommendation was based on dose-dependent efficacy on serum factor levels and the favorable safety and tolerability profile of SB-525.

Shares of Sangamo shed value due to the company’s decision to delay data presentation rom the above-mentioned study, which was expected in fourth-quarter 2018.

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 the treatment of Mucopolysaccharidosis Type II (MPS II). Earlier this month, the company presented interim results from the study on SB-913 at a medical conference.

The interim data provided preliminary evidence that in-vivo genome editing occurred on treatment with SB-913 and that genome-edited liver cells are able to generate active (Iduronate 2-sulfatase) IDS enzyme in patients with MPS II. Additional data from the study is awaited later this year, which will help explain if the small increases in IDS enzyme activity observed can translate into improved outcomes in MPS II patients.

Another similar candidate, SB-318, is currently being examined in a phase I/II EMPOWERS program for treating MPS I. Earlier this month, the company also presented interim findings from the study on SB-318. Data from the same provided complementary evidence, supportive of a positive safety profile and the ZFN activity in in-vivo genome editing technology, used in both SB-913 and SB-318.

Last December, Sangamo treated the first patient during the phase I/II study on SB-FIX, an investigational in-vivo genome editing therapy for patients with hemophilia B.

Last October, Sangamo closed the previously announced acquisition of France’s TxCell S.A. Notably, TxCell develops innovative platforms for personalized T-cell immunotherapies to handle severe inflammatory and autoimmune diseases. 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.

Earnings Whispers

Our proven 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 the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of 20 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 some biotech stocks that you may want to consider as per our model, these have the right mix of elements to beat on earnings this season.

Aduro Biotech, Inc. ADRO has a Zacks Rank #2 and an Earnings ESP of +15.23%. You can see the complete list of today’s Zacks #1 Rank stocks here.

BioDelivery Sciences International, Inc. BDSI has an Earnings ESP of +38.46% and a Zacks Rank of 1.

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