Last week, a “mini-review” was published in the New England Journal of Medicine (NEJM) from hemophilia key opinion leaders discussing the use of Sangamo’s in vivo protein replacement program (IVPRP) for these indications. One key analyst believes that this kind of literature is important because Sangamo Biosciences Inc. (NASDAQ: SGMO) brings IVPRP into the clinic, particularly in crowded/competitive indications like the hemophilias.

As a result, Janney Montgomery Scott reiterated its Buy rating and $15 fair value estimate on Sangamo as it brings multiple programs to the clinic this year and on the company’s expertise with site-directed DNA nucleases.

In its report, Janney described why IVPRP might be the way to go:

The investigators point out the potential advantage of a genome-modifying approach like IVPRP vs. a non-integrating method that can be diluted by cell division. It should be noted that for IVPRP to work, the donor DNA has to be integrated either by homologous recombination (HR) or non-homologous end joining (NHEJ) behind the albumin promoter. This added integration step is probably an impediment to efficacy; however, as the albumin promoter is very powerful, this may be able to make up the difference (or more). Sangamo has demonstrated in non-human primates (NHPs) the ability to generate levels of factor 9 well above 1% of normal with vector doses (vg/kg) in the range of what is planned for human studies.

With market caps of about $1.5 billion for Editas Medicine Inc. (NASDAQ: EDIT) and $450 million for Sangamo, they have similar cash balances of roughly $200 million to $250 million and no debt. Sangamo is more advanced in clinical development with one program in phase 2 and active INDs and more expected this year, while Editas is about a year or so from the clinic.

Janney further detailed:

To reiterate our position, we suspect that there are situations or loci (genes) where Cas9 (or a variant) will work better, there are probably some where ZFNs will work better. Sangamo is also the only company with a program targeting the albumin locus in vivo to our knowledge and does have an uncontested patent estate for the ZFP technology. We think investors will need to see some good biomarker data from the IVPRP clinical trials to meaningfully resolve the valuation differential, most likely a 2017 event. A T-cell partnership could be an earlier catalyst.

Shares of Sangamo were trading up 3% at $6.51 on Wednesday, with a consensus analyst price target of $18.40 and a 52-week trading range of $4.63 to $16.10.

Editas shares were trading down 0.7% at $41.76, with a consensus price target of $37.00 and a 52-week range of $12.57 to $43.99.

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