Sangamo and Pfizer’s hemophilia A gene therapy candidate scored a Phase III victory last week. However, with the genomic medicine company soon to run out of cash, Sangamo’s short-term prospects look bleak but not unsalvageable, analysts say.
Sangamo Therapeutics and Pfizer announced last week that their co-developed investigational gene therapy to treat hemophilia A, giroctocogene fitelparvovec, showed positive topline results in a late-stage trial. While it’s good news for the genomic medicine company, Sangamo remains in a tenuous financial position with what little cash it has quickly running out.
Despite last week’s positive Phase III data readout, the company’s stock price still trades well below $1 per share and an analysis from Seeking Alpha noted that Sangamo is almost out of cash and potentially “at risk of bankruptcy.” According to Sangamo’s first-quarter 2024 financial results, it had around $54.4 million in cash and cash equivalents as of March 31, 2024, only enough to fund operations into the third quarter.
“For small, mid-cap biotech companies, the rule of thumb is that these companies should have about two years of cash just to make the cash issue not a constant near-term issue for them,” Maury Raycroft, an equity analyst at Jefferies, told BioSpace. “Sangamo being down to a few months of cash now that we’re in the third quarter, it really depresses the stock.”
Raycroft said Sangamo got to where it currently is by investing heavily in research and development, which can be a recurring expense every quarter. He also noted that it hasn’t had a major deal since inking a pact with Biogen in 2020, getting $350 million upfront to develop assets for neurological diseases—a partnership that was discontinued last year.
Sangamo previously had several programs that “weren’t going to be commercially successful” or generated concerns about commercial viability, Patrick Trucchio, senior healthcare analyst at H.C Wainright, told BioSpace.
While the lack of cash is a serious challenge for the biotech, Trucchio noted that having positive late-stage hemophilia A data could be Sangamo’s saving grace—at least for the time being.
Ultimately, the R&D spending plus a lack of cash has created a “do-or-die” situation for Sangamo made worse by a “history of burning cash and not being able to get a drug approved yet,” according to Seeking Alpha.
A Path Forward?
The good news for the biotech is its Pfizer-partnered gene therapy met its primary and secondary endpoints in a Phase III trial, showing non-inferiority and superiority to the prophylaxis treatment for patients with hemophilia A while being well-tolerated by patients. Raycroft noted that last week’s readout was positively received by investors. The therapy also compared well to BioMarin’s hemophilia A drug Roctavian, which was approved last year.
If its hemophilia A gene therapy candidate is ultimately approved, Sangamo may receive up to $220 million in milestone payments from Pfizer and eventual royalties on sales between 14% and 20%.
Given the market potential of giroctocogene fitelparvovec, there may be avenues for Sangamo to help recover its cash position. According to Raycroft, the peak sales for the hemophilia A gene therapy would be about $903 million, with Sangamo seeing around $360 million. Trucchio estimates that the drug could hit a peak of an estimated $700 million in 2031 or 2032.
Analysts also see other potential sources of revenue. Raycroft noted that Sangamo has indicated it is most open to partnering on its Fabry disease asset, isaralaggene civaparvovec. The therapy was given Fast Track designation by the FDA last year and Raycroft contends the candidate has shown durability and good proof-of-concept data.
The other asset analysts are bullish on is STAC-BBB, a capsid that can penetrate the blood-brain barrier and go after diseases in the central nervous system. Sangamo said it intends to use STAC-BBB in its wholly-owned prion disease and tauopathy programs, or in neurodegenerative diseases that have abnormal amounts of tau protein. Ultimately, Trucchio sees any future deal activity being in Sangamo’s neurology pipeline.
Seeking Alpha’s analysis noted that there are plenty of ”royalty-type companies” that would like to make a deal with Sangamo. While there’s always a risk that “management makes bad deals,” Sangamo’s current assets are “better/further along than some of the ones they had years ago.”
