Rebuttal on Sangamo (SGMO)

On May 29 I posted about Sangamo Biosciences. A comment on that post alluded to an analyst (Jonathan Aschoff) who issued a Sell rating and several negative comments about the company.

I pointed out that JA works for a botique analyst firm that seems to specialize in hatchet jobs. He was actually fined and fired (oh ,sorry, left the firm) from a prior job for impersonating a doctor when trying to get information on a clinical trial.
Further, that analyst issued the reccommendation without having even talked to anyone at Sangamo -- and a careful reading of the article shows it is nearly all opinion and scarce on fact.

Today I see an update from GARP research that refutes JA. It reads in part:
"Last week, an analyst initiated coverage on SGMO with a Sell rating in a report that we feel offers inaccurate conclusions.
Key points:
• After reviewing the scientific literature and discussing the questions raised a practicing diabetologist and others, we do not concur with these pessimistic ideas. We detail our case with (somewhat technical) point-by-point rebuttals, offer our own perspective, and maintain our Buy rating on SGMO shares. "
...
and ends with:
"Risks
As a development-stage biotechnology company, Sangamo Biosciences is a risky investment. This is partly mitigated by management’s careful monitoring of the company’s spending, by the utility of the technology for many non-therapeutic purposes, and by the attractiveness to potential partners of the ZFP and ZFN approaches to genetic engineering. Assuming certain milestone payments are earned, GARP estimates Sangamo’s burn rate for 2008-2010 at about $28 million per year. With about $73 million of net cash in the bank at the close of 1Q08, Sangamo has the resources to operate for nearly three years without additional financing, according to our estimate. However, ambitious clinical trial plans may deplete this hoard more rapidly. As with all early-stage clinical therapies, unforeseen problems could delay any of Sangamo’s programs. If patients experience severe adverse events that are related to ZFP therapy itself, this approach to gene therapy could be crippled. Sangamo’s capitalization is too low to enable it to take any of its clinical programs through expensive Phase III trials by itself. Meanwhile, doubts about ZFPs could hamstring the search for suitable pharma partners. Through 2011, revenues will spring from partners’ licensing, milestone, and royalty payments, rather than from sales of therapeutic products. "

If anyone would like the full article, please email me at Trond24@gmail.com

The company is presenting tomorrow at the Canaccord Adams Diabetes and Obesity Conference and throughout the weekend at the American Diabetes Association 68th Annual Scientific Sessions, both in San Francisco. Today the share price is up about 6% -- I expect to see it very volatile but up to $16 - $20 by year's end.

Regards,
Trond