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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Several quotes have been included below from the press release.

Dr. Alfred Sandrock, Jr. of Biogen said of the pact:

As a pioneer in neuroscience, Biogen will collaborate with Sangamo on a new gene regulation therapy approach, working at the DNA level, with the potential to treat challenging neurological diseases of global significance. We aim to develop and advance these programs forward to investigational new drug applications

Sandy Macrae, CEO of Sangamo, said of the pact:

There are currently no approved disease modifying treatments for patients with many devastating neurodegenerative diseases such as Alzheimer’s and Parkinson’s, creating an urgency for the development of medicines that will not just address symptoms like the current standards of care, but slow or stop the progression of disease. We believe that the promise of genomic medicine in neuroscience is to provide a one-time treatment for patients to alter their disease natural history by addressing the underlying cause at the genomic level.

Stephane Boissel, Head of Corporate Strategy at Sangamo, said:

The combination of Sangamo’s proprietary zinc finger technology, Biogen’s unmatched neuroscience research, drug development, and commercialization experience and capabilities, and our shared commitment to bring innovative medicines to patients with neurological diseases establishes the foundation for a robust and compelling collaboration. This collaboration exemplifies Sangamo’s commitment to our ongoing strategy to partner programs that address substantial and diverse patient populations in disease areas requiring complex clinical trial designs and commercial pathways, therefore bringing treatments to patients faster and more efficiently, while deriving maximum value from our platform.

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