UPDATED: Biogen beefs up gene therapy ops with $1B-plus AGTC pact

Biogen CEO George Scangos

Biogen ($BIIB) has taken another big step in building its new gene therapy operations, inking a comprehensive $1 billion-plus partnership--including an upfront of $124 million--with the Florida-based biotech AGTC on a few new programs for rare eye diseases.

Under this deal Biogen is committing up to $472.5 million in milestones for two lead programs with an additional $592.5 million up for grabs for a slate of discovery programs. In return Biogen gets rights to AGTC's lead early-stage drug for X-linked retinoschisis as well as a preclinical program for X-linked retinitis pigmentosa and an option on rights for three additional discovery-stage treatments. Biogen is also committed to helping fund AGTC's R&D work, leaving the smaller biotech in charge of the lead program while taking the reins for the second gene therapy after AGTC wraps the first human study.

Thirty million of the $124 million upfront will be used to buy AGTC stock at $20.63 a share. AGTC's shares closed at $16.26 on Monday, setting the stage for a 20% spike this morning.

Olivier Danos

The deal marks Biogen's careful march forward in gene therapy, which started with its recruitment of pioneering researcher Olivier Danos followed by a pact last January with the San Raffaele-Telethon Institute for Gene Therapy (TIGET) to develop what they believe promises to be a durable treatment for hemophilia.

Biogen doesn't do a multitude of deals like, say, Celgene ($CELG). But this pact with AGTC, which has been operating largely outside of the limelight reserved for a new wave of gene therapy startups, bears some classic features favored by the Big Biotech, which is led by CEO George Scangos.

The deal is comprehensive, closely integrating AGTC's work with Biogen's R&D operations, not unlike its relationship with Stockholm-based Sobi. And it allows for a bigger team to work with AAV viral vector technology, which Biogen R&D chief Doug Williams believes can make them a leader in the field of gene therapy.

Biogen's shares slid a bit in mid-day trading today.

"AGTC is an exceptional partner to help us advance our gene therapy capabilities by targeting diseases of the eye--an organ that provides an ideal setting for the localized, selective delivery of gene-based therapies," says Danos in a statement.

- here's the release