Sangamo Partners With Biogen to Target Alzheimer’s and Parkinson’s Development

Many of the larger biotechnology and pharmaceutical companies have changed strategies from making acquisitions of speculative biotech outfits. In many cases it is far cheaper to just partner up with these smaller and more nimble companies than to make an acquisition, and the larger partners still often get massive upside opportunities if the partnerships blossom into major drug sales. Biogen Inc. (NASDAQ: SGMO) has announced a global collaboration with Sangamo Therapeutics, Inc. (NASDAQ: SGMO). The plan is to develop gene regulation therapies targeting Alzheimer’s, Parkinson’s and other neuromuscular and neurological diseases.

Sangamo closed with a $772 million market cap on Thursday, but barring anything more major in the stock market meltdown that market cap is likely to be much higher on Friday. Biogen is set to pay Sangamo $350 million in an upfront payment that includes a licensing fee and an equity investment into Sangamo shares. Perhaps the biggest part of the news is that Sangamo is entitled to receive up to more than $2.3 billion in milestone payments and additional royalties on potential net commercial sales.

According to the joint press releases, the initial focus will be on the development of ST-501 for tauopathies including Alzheimer’s disease, as well as ST-502 for synucleinopathies including Parkinson’s disease and a neuromuscular target with exclusive rights for nine additional undisclosed neurological targets.

This will be a potential game-changer for Sangamo. Refinitiv was calling for collaboration and revenues of just $85 million in 2020. The company already had capital reserves but has been burning cash each year on R&D and operations. As of last September, it had accumulated an earnings deficit of about -$661 million since inception.

Shares of Sangamo Therapeutics closed down 3.25 at $6.66 on Thursday, but the stock popped over 45% to $9.80 in the after-hours trading session as the deal was announced. Its 52-week trading range was $6.43 to $13.91.

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