In an October 28 research note, Biotechnology Equity Research (BTIG LLC) advised that it is initiating coverage on Sigilon Therapeutics Inc. (SGTX:NASDAQ) with a "Buy" rating and a $14 per share price target. Sigilon Therapeutics is a biotech firm that is actively engaged in developing shielded living therapeutics (SLTs) as "functional cures" for genetic diseases. BTIG indicated that the use on a SLT approach offers a potential replacement for most existing protein replacement therapies.
BTIG Analysts Thomas Shrader, Ph.D., CFA, and Sung Jun Hong, Ph.D., explained that the key technology surrounding SLT is based upon innovations that improve the function and survival of polymer-encapsulated engineered cells. According to Dr. Shrader and Dr. Hong, "the resultant cell clusters are protected from the patient's immune system allowing them to function as intelligent protein production factories in patients deficient for essential enzymes and other biomolecules."
The analysts commented that Sigilon's "cell replacement in a bottle looks powerful and widely applicable." The analyst explained in greater detail that "based on the ability of cells to decode a patient's metabolic state, SLTs are also applicable to more sophisticated applications such as insulin replacement in response to a patient's elevated glucose levels."
The company's lead investigational and clinical programs are presently being conducted in the areas of autoimmune or Type 1 diabetes (T1D), hemophilia (HemA and HemB) and lysosomal storage disorders (LSDs). The report noted that initial clinical data is starting to be released from the company's HemA study and that additional data for participants administered higher doses in the trial is expected in Q4/21. The key metrics in the data readouts are designed to measure both the durability of treatments and level and stability of clotting factor replacement.
The BTIG report commented that the 800 pound "caged" gorilla for Sigilon Therapeutics is that a hold has been placed on its lead clinical program evaluating SIG-001 in hemophilia A. BTIG indicated that new enrollment has been frozen and that the reason for the hold, which was included in the study's protocol, is attributed to "the development of inhibitors (anti-drug antibodies or ADAs) to factor VIII (F8) in a hemophilia patient."
The analysts mentioned that BTIG anticipates that a resolution is forthcoming, though the current SIG-001 clinical hold does not come without some risks. BTIG said it appears that the current hold is being addressed and will be resolved and added that ~40% of hemophilia patients develop inhibitors.
The analysts cautioned that "SLTs are a new way to deliver proteins, but increased immunogenicity has not been seen in the preclinical development; therefore, we believe this could be a relatively rare incident and relevant to F8 replacement."
The BTIG report pointed out that encapsulated "replacement" cells are an obvious but not a new concept. Attempts have been made using this idea for several decades but most of these demonstrated that encapsulated cell implants have limited efficacy due to immune system response, fibrosis and poor oxygenation.
The analysts noted that "Sigilon and its partners at MIT have been successful in optimizing the polymer coating and particle size (to reduce fibrosis), the polymer density (to block immune attack but still allow cell oxygenation) and the site of the implant (to reduce clumping)."
The analysts mentioned that due to the current hold on the firm's lead investigative program SIG-001 in hemophilia A, they arrived at a valuation for the company employing a higher than normal 17.5% discount rate. The analysts added that "thought we don't see SLTs as particularly space aged, we used a 2% terminal growth rate to reflect the versatility of the SLT platform."
BTIG stated that that it is initiating coverage on Sigilon Therapeutics Inc. with a "Buy" rating and $14/share price target. The company's shares trade on the Nasdaq Exchange under the symbol "SGTX" and last closed for trading at $5.41/share on Tuesday, November 2, 2021.
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Disclosures from BTIG LLC, Sigilon Therapeutics, October 28, 2021
I, Thomas Shrader, hereby certify that the views about the companies and securities discussed in this report are accurately expressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report.
I, Sung Jun Hong, hereby certify that the views about the companies and securities discussed in this report are accurately expressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report.
The research analyst(s) responsible for the preparation of this report receives compensation based upon a variety of factors, including the quality and accuracy of research, internal/client feedback, and overall Firm revenues.
Company–Specific Regulatory Disclosures
BTIG LLC expects to receive or intends to seek compensation for investment banking services in the next 3 months from: Sigilon Therapeutics (SGTX)
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