Sangamo Therapeutics Announces Capsid License Agreement With Lilly to Deliver Genomic Medicines for Diseases of the Central Nervous System

Rhea-AI Summary

Sangamo Therapeutics (SGMO) has entered into a license agreement with Eli Lilly for its proprietary neurotropic AAV capsid, STAC-BBB, which demonstrates strong blood-brain barrier penetration capabilities. The agreement includes:

- An $18 million upfront license fee
- Potential earnings of up to $1.4 billion in additional fees and milestone payments across five possible disease targets
- Tiered royalties on potential net sales

Lilly receives worldwide exclusive rights to use STAC-BBB for one initial target, with the option to add four additional targets for treating central nervous system diseases. This marks Sangamo's third agreement since announcing STAC-BBB in March 2024. Sangamo will handle the technology transfer, while Lilly will be responsible for research, development, manufacturing, and commercialization of resulting gene therapy products.

Positive

• Secured $18 million upfront payment from Eli Lilly
• Potential for up to $1.4 billion in milestone payments and fees
• Additional revenue stream through tiered royalties on future sales
• Third partnership agreement for STAC-BBB technology, demonstrating strong market demand

Negative

• Milestone payments and royalties are contingent on successful development and commercialization
• Company transfers control of development and commercialization to Lilly

Insights

Biotechnology Licensing Expert

Sangamo's licensing deal with Eli Lilly represents a significant value-creation event for the company. The $18 million upfront payment is substantial for Sangamo, representing approximately 14% of their $128.6 million market capitalization. This non-dilutive funding provides immediate capital without shareholder dilution.

The agreement's structure is particularly favorable - Sangamo transfers technology but bears no further development costs while maintaining substantial upside exposure through up to $1.4 billion in milestone payments plus tiered royalties. This efficient capital-light model allows Sangamo to monetize their STAC-BBB capsid platform without the substantial R&D expenditures typically required in therapeutic development.

Most compelling is that this marks Sangamo's third STAC-BBB licensing agreement since March 2024, demonstrating exceptional industry demand for their technology. The blood-brain barrier has been a persistent challenge in CNS-targeted therapeutics, making effective delivery vehicles highly valuable.

Lilly's specific interest in obtaining rights for potentially five targets suggests they see broad applicability across multiple CNS indications. For Sangamo, creating multiple partnership channels with different companies pursuing distinct targets maximizes the probability of success while diversifying risk across multiple development programs.

Financial Analyst

This licensing agreement materially strengthens Sangamo's financial position through a $18 million upfront payment that significantly bolsters their balance sheet. For context, this single payment represents approximately 14% of Sangamo's entire market capitalization ($128.6 million), making it an exceptionally material transaction.

The deal's structure is particularly advantageous for Sangamo, as it creates asymmetric upside with minimal ongoing costs. The company effectively retains a carried interest in Lilly's development efforts without the substantial R&D burn typically associated with CNS therapeutic development. The potential $1.4 billion in milestone payments across five targets ($280 million per target on average) provides substantial long-term value optionality.

This represents Sangamo's third STAC-BBB licensing agreement in approximately one month, suggesting the company has established a replicable business model monetizing their delivery technology platform. The rapid succession of deals indicates multiple pharmaceutical companies competed for access to this technology, typically resulting in improved terms for the licensor.

For a small-cap biotech, securing partnership with Lilly provides both revenue diversification and validation from a major pharmaceutical company with extensive CNS development expertise. This transaction reinforces the substantial disconnect between Sangamo's intellectual property value and its current market capitalization.

• Agreement grants Lilly rights to employ Sangamo’s novel proprietary capsid, STAC-BBB, for up to five potential disease targets

• Sangamo to receive an $18 million upfront license fee and is eligible to earn up to $1.4 billion in additional licensed target fees and milestone payments across all five potential disease targets, as well as tiered royalties on potential net sales

RICHMOND, Calif.--(BUSINESS WIRE)-- Sangamo Therapeutics, Inc. (Nasdaq: SGMO), a genomic medicine company, today announced it has entered into a license agreement with Eli Lilly and Company (“Lilly”), allowing Lilly to leverage Sangamo’s novel proprietary neurotropic adeno-associated virus (AAV) capsid, STAC-BBB, which has demonstrated potent blood-brain barrier penetration and neuronal transduction in nonhuman primates. The agreement grants Lilly a worldwide exclusive license to utilize the STAC-BBB capsid for one initial target, with the right to add up to four additional targets after paying additional licensed target fees, to deliver their intravenously administered genomic medicines to treat certain diseases of the central nervous system.

“We believe STAC-BBB, our industry-leading intravenously delivered AAV capsid, has the potential to play an important role in the treatment landscape by addressing longstanding challenges associated with delivering therapies to the central nervous system,” said Sandy Macrae, Chief Executive Officer of Sangamo. “We are pleased to be sharing STAC-BBB with Lilly to advance potential treatments for neurological diseases with significant unmet medical needs. This marks the third agreement with a pharmaceutical company since we announced the discovery of STAC-BBB in March 2024 and demonstrates the continued industry interest in our capsid delivery technology.”

Under the terms of the agreement, Sangamo is responsible for completing a technology transfer related to the STAC-BBB capsid. Lilly is responsible for all research, preclinical and clinical development, regulatory interactions, manufacturing, and global commercialization of any resulting gene therapy products. Sangamo will receive an $18 million upfront license fee from Lilly and is eligible to earn up to $1.4 billion in additional licensed target fees and milestone payments across the five potential neurology disease targets, as well as tiered royalties on potential net sales of such products, subject to certain specified reductions.

About Sangamo Therapeutics

Sangamo Therapeutics is a genomic medicine company dedicated to translating ground-breaking science into medicines that transform the lives of patients and families afflicted with serious neurological diseases who do not have adequate or any treatment options. Sangamo believes that its zinc finger epigenetic regulators are ideally suited to potentially address devastating neurological disorders and that its capsid discovery platform can expand delivery beyond currently available intrathecal delivery capsids, including in the central nervous system. Sangamo’s pipeline also includes multiple partnered programs and programs with opportunities for partnership and investment. To learn more, visit www.sangamo.com and connect with us on LinkedIn and Twitter/X.

Forward Looking Statements

This press release contains forward-looking statements based on Sangamo's current expectations. These forward-looking statements include, without limitation, statements relating to the potential for Lilly to develop genomic medicines to treat neurodegenerative diseases by leveraging Sangamo’s capsid delivery capabilities, the potential for STAC-BBB to play an important role in the treatment landscape and address challenges in delivering therapeutics to the central nervous system, the potential of Sangamo’s capsids to deliver therapies treating neurological diseases, the potential for Lilly to expand its license to include additional targets and to perform research, preclinical and clinical development, manufacturing and global commercialization of licensed gene therapy products for each licensed target, expectations concerning Sangamo’s receipt of an upfront license fee, the potential for Sangamo to receive additional licensed target fees, milestone payments, and royalties, 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. Factors that could cause actual results to differ include, but are not limited to, the research and development process, including the results of preclinical studies and clinical trials; the regulatory approval process for product candidates; the potential for technological developments that obviate technologies used by Sangamo and its partners; the potential discontinuation of industry interest in Sangamo’s capsid delivery technology; any breach or termination of the Lilly agreement; and the potential for Sangamo to fail to realize its expected benefits from the Lilly agreement; Sangamo’s inability to secure additional collaboration partners; and Sangamo’s need for substantial additional funding to operate as a going concern. There can be no assurance that Sangamo will earn any milestone or royalty payments under the Lilly agreement or that Lilly will obtain regulatory approvals for product candidates arising from this agreement. Actual results may differ from those projected in forward-looking statements due to risks and uncertainties that exist in Sangamo's and Lilly’s operations and businesses. Sangamo’s risks and uncertainties are described more fully in Sangamo’s Securities and Exchange Commission, or SEC, filings and reports, including in its Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC, and future filings and reports that Sangamo makes from time to time with the SEC. Forward-looking statements contained in this announcement are made as of this date, and Sangamo undertakes no duty to update such information except as required under applicable law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250403023818/en/

Sangamo Contact

Investor Relations & Media Inquiries

Louise Wilkie

ir@sangamo.com

media@sangamo.com

Source: Sangamo Therapeutics, Inc.

FAQ

What is the value of Sangamo's (SGMO) licensing deal with Eli Lilly?

The deal includes an $18 million upfront fee and potential earnings up to $1.4 billion in additional fees and milestone payments, plus tiered royalties on potential sales.

What technology is Sangamo (SGMO) licensing to Eli Lilly?

Sangamo is licensing STAC-BBB, a proprietary neurotropic AAV capsid that demonstrates effective blood-brain barrier penetration for CNS disease treatments.

How many disease targets does the SGMO-Lilly agreement cover?

The agreement covers one initial target with rights to add up to four additional targets, totaling five potential CNS disease targets.

How many similar agreements has Sangamo (SGMO) secured for STAC-BBB?

This is Sangamo's third agreement with a pharmaceutical company for STAC-BBB since its announcement in March 2024.