SQZ, months after 80% layoffs, opts for liquidation and $11.8M asset fire sale to Stemcell

Three months after laying off most of its staff, SQZ Biotechnologies’ shareholders have opted to begin the process of liquidating and selling off what remains of the company’s assets to Stemcell Technologies for $11.8 million.

The proposals were voted through at a shareholder meeting yesterday, leading SQZ to confirm plans to file a certificate of dissolution with the secretary of state of the state of Delaware early next week.

Vancouver-based Stemcell will take ownership of SQZ’s more than 400 patents and trademarks, the company’s equipment and its license with the Massachusetts Institute of Technology, where the biotech’s origins lie.

SQZ ended September with $10 million left in the bank, having already spent $7.7 million on restructuring charges in the quarter. Money has been especially tight since Roche dropped an option on a solid tumor program back in July, taking with it the possibility of SQZ ever getting its hands on $1 billion in potential milestones.

The biotech spent the fall seeking out partners for the remaining programs, which include its Activating Antigen Carriers platform for oncology. Of the five patients treated so far, one has experienced a complete response and two saw their disease stabilize, SQZ explained in a November update.

SQZ had also completed enrollment in the highest-dose cohort of a dose-escalation trial for its enhanced Antigen Presenting Cell platform. Eight of the 20 patients have reported their cancer stabilizing so far, SQZ pointed out at the time.

Those programs were all that’s left of the company’s portfolio after a previous downsizing—which included a 60% workforce reduction—at the end of last year. What remained of its head count was cut by a further 80% in November “to reduce the company’s ongoing operating expenses while it pursues strategic alternatives.”

Stemcell’s relationship with SQZ dates back to 2020, when the Vancouver-based company secured the license to SQZ’s patent portfolio for use in developing its CellPore Transfection range for the research market. “With this new agreement, Stemcell will be able to exclusively commercialize these products for use in all markets, including clinical applications,” Stemcell explained yesterday.

That existing relationship meant that Stemcell was aware of SQZ’s “declining financial situation” from an early stage, and first began a dialogue in April 2023, according to a Securities and Exchange Commission filing from January 2024.

Months of negotiations culminated in a offer of $7.5 million for SQZ’s assets in September, which was subsequently bumped up to the $11.8 million cash proposal that was signed off by SQZ’s shareholders yesterday.

“This exciting acquisition means that Stemcell’s own instruments will have the potential to be used in the delivery of cell therapies to cure diseases, like cancer,” Stemcell CEO Allen Eaves said in a statement. “This transaction is an important achievement for Stemcell and a win for Canada’s economy and life sciences sector as it will support the development of innovative cell therapies.”

The latest move by Stemcell—which describes itself as Canada’s largest biotechnology company—comes weeks after it bought regenerative-medicine-focused Propagenix.