Sangamo Therapeutics Inc. (SGMO), a genomic medicine company, experienced a major setback as Pfizer Inc. (PFE) terminated their collaboration on a groundbreaking gene therapy for hemophilia A. The abrupt end to this partnership triggered Sangamo’s largest single-day share drop in more than 15 years. The decision came unexpectedly, with Sangamo’s CEO, Sandy Macrae, expressing both surprise and disappointment over Pfizer’s abrupt change of strategy, which was communicated to Sangamo on December 22.
Despite the experimental therapy, giroctocogene fitelparvovec, showing promising results in a pivotal late-stage trial, Pfizer decided not to proceed with the planned applications for US and European regulatory approval in early 2025. The therapy had aimed to offer a significant advancement in treating hemophilia A, a condition that predisposes individuals to bleeding episodes and necessitates ongoing treatment. The market already has over a dozen approved therapies for this condition, with BioMarin Pharmaceutical Inc.’s (BMRN) gene therapy not meeting commercial expectations, possibly influencing Pfizer’s decision.
The termination of the partnership has left Sangamo in a precarious financial position, with the company holding only $39.2 million in cash reserves as of September 30. The collaboration with Pfizer was not only a scientific venture but also a financial lifeline, potentially yielding up to $220 million in milestone payments. The news hit Sangamo’s stock hard, plummeting by more than 55% on the day of announcement, erasing the stock’s significant gains earlier in the year. This drop was the largest since a similar plunge in 2008, which was due to disappointing results from a drug intended for diabetic nerve damage.
In response to this development, Sangamo is now at a crossroads, considering all avenues to push forward with the drug’s development. This includes seeking a new partner to continue the research and development journey, a move that could be challenging given the current financial constraints and the industry’s cautious approach to investing in gene therapies after recent commercial disappointments.
Conversely, Pfizer’s shares saw a slight increase of 0.34% to $26.51 following the announcement. This move might be seen as strategic by Pfizer, especially as it navigates the post-Covid market where demand for its vaccine and related products has significantly decreased, pushing the company to reassess its pipeline to focus on drugs with more immediate commercial promise or less market saturation.
This situation highlights the volatile nature of biotech partnerships, where even promising treatments can be shelved based on market analysis, regulatory hurdles, or shifts in corporate strategy. For Sangamo, the path forward involves not only finding a new partner but also managing its liquidity while continuing to innovate in a highly competitive field. The broader implications for gene therapy development in hemophilia A and similar conditions might include a more cautious investment climate, where the focus turns towards therapies with clearer paths to commercial success or those addressing less contested therapeutic spaces.
h/t Bloomberg
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