Regulatory T cell-focused Sonoma Biotherapeutics has been following a slow and steady path ever since bringing in a whopping $265 million in a 2021 fundraising round, one of the largest of the year.
But now, the company is making a leap forward, setting itself up to receive potentially up to $120 million in exchange for co-developing up to five autoimmune candidates with Regeneron. The majority of this haul—$75 million—is delivered upfront in the form of cash and a $30 million equity investment from Regeneron in Sonoma, with the remaining $45 million available in potential biobucks.
“It’s going to be a big bite,” Sonoma CEO Jeff Bluestone, Ph.D., said in an interview with Fierce Biotech. “We spent a lot of time crafting this deal to make sure that we wouldn't be overwhelmed by it.”
It’s a clear-eyed acknowledgment often underplayed by biotech CEOs who ink new licensing deals, which can be both validating and daunting as smaller teams of scientists grapple with a stack of new work. The structure of Sonoma’s deal is meant to be particularly considerate of workload.
The company will initially work on up to four therapies for Regeneron, including potential treatments for ulcerative colitis, Crohn’s disease and two undisclosed indications. There is also the option for Regeneron to opt for a fifth indication.
The two companies will co-fund R&D equally and similarly split future profits. But Regeneron will have the option to take the lead on late-stage development globally, with Sonoma retaining co-promotional rights in the U.S. Bluestone said he was “less interested in biobucks” and more interested in being able to execute the deal.
“This is just a perfect setup for us to be able to build our company, to be able to create value, to do it with a great partner,” the CEO said.
The deal centers on Sonoma’s gene-modified regulatory T-cell (known as Tregs) therapies, which the biotech also couples with a biologic therapy used to clear out rogue effector T cells. The one-two punch gives the modified Tregs an opportunity to “keep the immune system at bay.” Sonoma’s biologic is currently being tested in a phase 1 trial, and the first four cohorts have been recruited. Bluestone said Sonoma will have all the data it needs by the summer to select a dose that will be used in combination treatments.
Sonoma’s main asset is SBT-77-7101, which is slated to reach the clinic to treat patients with rheumatoid arthritis at some point later in 2023. Bluestone said the company may also be able to launch a second trial in another, undisclosed indication before year-end.
“It's very feasible by the end of this year that we'll have two trials going on,” the CEO added.
Both SBT-77-7101 and the biologic will be manufactured by CDMOs, Bluestone explained, but the 83,000-square-foot manufacturing and R&D facility the company just signed a lease for may be producing the first candidates from the Regeneron pact. The facility is expected to shorten and automate a host of functions in the cell therapy manufacturing process, from cell growth to assay usage.