(Bloomberg) — Small-cap drug developer Sangamo Therapeutics Inc. jumped after striking a deal with Novartis AG to develop gene therapies for disorders attacking the brain and central nervous system, including autism.
Sangamo will get $75 million in cash and is eligible for up to $720 million in development and commercial milestones and potential royalties. Royalties on drug sales from the deal may range from high-single digits to sub-teen double digits.
The deal gives Novartis exclusive rights to Sangamo’s zinc finger technology for three undisclosed genes that are associated with neurodevelopmental disorders such as autism spectrum disorder and intellectual disability.
“We aren’t giving away the Sangamo pipeline — what we’re doing is adding targets to the pipeline,” Sangamo Chief Executive Sandy Macrae said in a phone interview. “The three targets from Novartis, we’ve never considered and never done any work on.”
Shares of Sangamo jumped as much as 11% on Thursday, their biggest gain in more than two months. The stock has risen 30% so far this year.
Novartis will provide all of the funding to advance the partnership though Sangamo is responsible for certain research and associated manufacturing activities. Novartis will handle additional research activities, investigational new drug-enabling studies, clinical development, related regulatory interactions, manufacturing and global commercialization.
The pact marks Sangamo’s second deal this year with a major drug developer, after signing a partnership with Biogen Inc. in February. The Brisbane, California-based biotech has developed a gene therapy for the blood-clotting disorder Hemophilia A with Pfizer Inc. and also boasts agreements with Sanofi and Takeda Pharmaceutical Co., among others.
The deal with Novartis “underscores the growing interest from big pharma and biotech to leverage” Sangamo’s technology, SunTrust analyst Nicole Germino said in a note to clients.
“We are always interested in doing others,” Macrae said when asked if they plan to make other deals. At the same time, “we are absolutely determined to keep proprietary programs.”