Selling the news? What’s going on with Sangamo (SGMO)
Today's Financial News - Posted June 8, 2009
“I know you are all likely to be crazy busy on a Monday morning but Sangamo (NASDAQ:SGMO) is dropping fast on what looked to be good news. Am I reading the news releases wrong or not reading thru the lines properly? Is this drop a chance to buy more? Thanks for your response if you can. TFN eNews reader and HSC Member Marshall M.”
by J. Christoph Amberger
Sangamo Biosciences (NASDAQ:SGMO) today gave an unofficial preview of the (yet unreleased) positive Phase 2 clinical data from its ZFP Therapeutic program to develop SB-509 as a treatment for diabetic neuropathy (DN). The data demonstrated that SB-509 treatment resulted in statistically significant and clinically relevant improvements in subjects with moderate and severe DN as compared to placebo.
In other words, they were tipping their hand, showing some good news was ahead.
Yet the stock dropped from an open of $4.25 to near $3.80.
Was someone buying the rumor and selling the news? Probably. The stock has been range-bound over the last couple of weeks, which could make things tough if the market decided not to keep moving forward.
For short-term traders, this was as good an opportunity as any to take last week’s modest gains off the table.
We regard today’s advance news, in combination with the sell-off, as an opportunity to reaffirm Laura Cadden’s original recommendation: “Buy at or under $4.20.”
We think biotech companies with good news regarding FDA approval etc. will benefit most from the market volatility we expect for the next three months. If you had missed the recommended entry price before, this is a good opportunity to get in. If you already hold a position in SGMO, we recommend to ride out this downturn, maybe with a 20-25% trailing stop.
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