Sangamo stock drops after J.P. Morgan downgrade

Sangamo Therapeutics Inc. shares dropped as much as 10% in Wednesday premarket trade before evening out to a 4.6% decline after the company was downgraded to "neutral" at J.P. Morgan, with analyst Eric Joseph citing "growing skepticism about the company's lead development programs and their potential for value creation over the foreseeable future." Joseph also cut the company's price target by nearly 70% to $11. (Company shares closed at $10.80 on Tuesday.) Sangamo is a buzzy biotechnology company that focuses on a type of cutting-edge gene editing that utilizes "zinc finger" proteins. But whether the company's SB-525 program for hemophilia A is working "continues to elude, now with indefinite timelines," Joseph said, questioning whether the company can beat further-along competitors like BioMarin Pharmaceutical Inc. and Spark Therapeutics Inc. . The analyst also had questions about the company's SB-913 program, being developed for a metabolic disorder called Hunter syndrome; early results from a trial were recently released to skepticism, causing Sangamo shares to plummet. "We do believe that the breadth of the pipeline offers several potential catalysts longer term (12-18 months), but with management credibility increasingly coming into play, net-net, we view SGMO as a show-me story from here," Joseph said. Sangamo shares have dropped 32.1% over the last three months, compared with a 3.5% decline in the S&P 500 .

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