Item 1.02 Termination of a Material Definitive Agreement.
Termination of Collaboration and License Agreement with Novartis
On March 13, 2023, Novartis Institutes for BioMedical Research, Inc.
("Novartis") notified Sangamo Therapeutics, Inc. ("Sangamo") of its termination
for convenience, effective June 11, 2023 (the "Novartis Termination Date"), of
the Collaboration and License Agreement (the "Novartis Agreement") by and
between Novartis and Sangamo dated July 27, 2020, pursuant to which Novartis and
Sangamo were engaged in programs to research gene regulation therapies to treat
three neurodevelopment disorders. Novartis has indicated to Sangamo that the
termination relates to a recent strategic review. Sangamo will investigate
alternative options to advance the neurodevelopmental disorder programs that
were subject to the Novartis Agreement, including potential development
internally or with a collaboration partner, dependent on the outcome of a
broader strategic review of its pre-clinical pipeline of therapies to treat
patients suffering from central nervous system ("CNS") disorders.
Under the Novartis Agreement, Sangamo granted to Novartis an exclusive, royalty
bearing and worldwide license, under its relevant patents and know-how, to
develop, manufacture and commercialize certain of its zinc finger protein
transcription factors ("ZFP-TFs"), also known as zinc finger transcriptional
regulators ("ZF-TRs"), targeted to three undisclosed genes that are associated
with neurodevelopmental disorders, including autism spectrum disorder and
intellectual disability. Over the three-year collaboration period, which was
scheduled to expire under the Novartis Agreement on July 27, 2023 in conjunction
with Sangamo's planned delivery to Novartis of ZFP-TFs for each of the three
programs, Sangamo has performed early research activities for each gene target
and manufactured the ZPF-TFs required for such research, the costs of which have
been fully reimbursed by Novartis. Subject to certain exceptions, Sangamo has
been prohibited from developing, manufacturing or commercializing any therapy
targeting any of the three genes that were the subject of the collaboration, and
this prohibition will terminate as of the Novartis Termination Date.
Under the Novartis Agreement, Novartis paid Sangamo a $75 million upfront
license fee and Sangamo was eligible to earn from Novartis up to $720 million in
milestone payments as well as tiered high single-digit to sub-teen double-digit
royalties on sales of products arising from the collaboration. As of the
Novartis Termination Date, the Novartis Agreement will be terminated in its
entirety and Sangamo will not be entitled to any milestone payments or royalties
from Novartis. In addition, as of the Novartis Termination Date, Novartis will
have no further obligations to develop or to reimburse the costs of any of the
neurodevelopmental disorder programs under the Novartis Agreement.
Termination of Collaboration and License Agreement with Biogen
On March 17, 2023, Biogen MA, Inc. and its affiliate, Biogen International GmbH
(together, "Biogen") notified Sangamo of its termination for convenience,
effective June 15, 2023 (the "Biogen Termination Date"), of the Collaboration
and License Agreement (the "Biogen Agreement") by and between Biogen and Sangamo
dated February 26, 2020, pursuant to which Biogen and Sangamo were engaged in
programs to research and develop gene regulation therapies to treat neurological
diseases. Biogen has indicated to Sangamo that the termination relates to a
recent strategic review. Sangamo will investigate alternative options to advance
the neurological disease programs that were subject to the Biogen Agreement,
including potential development internally or with a collaboration partner,
dependent on the outcome of a broader strategic review of its pre-clinical
pipeline of therapies to treat patients suffering from central nervous system
("CNS") disorders.
Under the Biogen Agreement, Sangamo granted to Biogen an exclusive, royalty
bearing and worldwide license, under its relevant patents and know-how, to
develop, manufacture and commercialize certain zinc finger protein ("ZFP")
and/or AAV-based products directed to up to 12 neurological disease gene targets
selected by Biogen. Biogen selected four of these: Sangamo's ST-501 product
candidate to treat tauopathies, Sangamo's ST-502 product candidate to treat
synucleinopathies including Parkinson's disease, a third product candidate
targeting Type 1 Myotonic Dystrophy (DM1), a neuromuscular disease, and a fourth
undisclosed neurological disease gene target. For each gene target selected by
Biogen, Sangamo performed early research activities, costs for which were shared
by the companies, aimed at the development of the combination of proprietary CNS
delivery vectors and ZFP-TFs (or potential other ZFP products) targeting
therapeutically relevant genes. For three of the four product candidates,
Sangamo had achieved predetermined proof of mechanism objectives and had
advanced research activities to late-stage preclinical testing with lead
candidates. Sangamo's research activities for all targets were scheduled to
conclude no later than April 2027. Subject to certain exceptions, Sangamo has
been prohibited from developing, manufacturing or commercializing any therapy
directed to the targets selected by Biogen, and this prohibition will terminate
as of the Biogen Termination Date.
Upon effectiveness of the Biogen Agreement, Biogen paid Sangamo a $125 million
upfront license fee. Concurrently with the execution of the Biogen Agreement,
Biogen and Sangamo entered into a stock purchase agreement pursuant to which
Biogen purchased 24,420,157 shares of Sangamo's common stock for an aggregate
purchase price of $225 million. Sangamo was eligible to earn from Biogen up to
$2.37 billion in milestone payments, assuming selection by Biogen of all 12
collaboration targets allowed under the Biogen Agreement, as well as tiered high
single-digit to sub-teen royalties on sales of products arising from the
collaboration. As of the Biogen Termination Date, the Biogen Agreement will be
terminated in its
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entirety and Sangamo will not be entitled to any milestone payments or royalties
from Biogen. In addition, as of the Biogen Termination Date, Biogen will have no
further obligations to develop or to reimburse the costs of any of the
neurological disease programs under the Biogen Agreement.
As previously disclosed in Sangamo's Annual Report on Form 10-K for the year
ended December 31, 2022 (the "Form 10-K"), Sangamo believes that its available
cash, cash equivalents, and marketable securities will be adequate to fund its
operations for at least 12 months from the date of its consolidated financial
statements included in the Form 10-K, and does not expect the termination of the
Novartis Agreement and Biogen Agreement to impact this estimate.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements regarding
Sangamo's current expectations. These forward-looking statements include,
without limitation, statements regarding the ability of Sangamo to identify and
secure alternative options to advance the programs that were subject to the
Novartis Agreement and Biogen Agreement, including its ST-501 and ST-502 product
candidates, whether internally or through a potential new collaboration partner;
Sangamo's broader strategic review of its development pipeline of therapies to
treat patients suffering from CNS disorders; the adequacy of Sangamo's cash,
cash equivalents and marketable securities to fund its planned operations and
the timing thereof; and other statements that are not historical fact. These
statements are not guarantees of future performance and are subject to certain
risks and uncertainties that are difficult to predict. Sangamo's actual results
may differ materially and adversely from those expressed in these
forward-looking statements. Factors that could cause actual results to differ
include, but are not limited to, risks and uncertainties related to: the impact
of macroeconomic factors, including the effects of the COVID-19 pandemic, the
ongoing conflict between Russian and Ukraine, and bank failures on the global
business environment, healthcare systems and the business and operations of
Sangamo and its collaboration partners; the research and development process;
the manufacturing of products and product candidates; the potential for
technological developments that obviate technologies used by Sangamo; the
potential for Novartis and Biogen to breach their respective Collaboration
Agreements; the potential that Sangamo will not be able to identify and secure
options or new collaborators for programs that were subject to the Novartis
Agreement and Biogen Agreement; the potential for Sangamo to cease development
of these programs, whether due to its inability to secure options to bring the
program forward or otherwise; Sangamo's lack of resources to fully develop,
obtain regulatory approval for and commercialize its product candidates;
Sangamo's cash position, including the risk that Sangamo's future viability
beyond one year from the date of issuance of its consolidated financial
statements included in the Form 10-K is dependent on its ability to raise
substantial additional capital to finance its operations; Sangamo's ability to
effectuate plans to address its liquidity needs, including cost-preservation
measures, and to continue as a going concern; and Sangamo's ability to raise
additional capital on acceptable terms or at all. These risks and uncertainties
are described more fully in Sangamo's filings with the U.S. Securities and
Exchange Commission, including its Annual Report on Form 10-K for the year ended
December 31, 2022. The information contained in this Current Report on Form 8-K
is as of March 17, 2022, and Sangamo undertakes no duty to update
forward-looking statements contained in this Current Report on Form 8-K except
as required by applicable laws.
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