Sangamo BioSciences said it will acquire Ceregene, a developer of adeno-associated virus (AAV) gene therapies, in a deal that expands Sangamo’s capabilities in AAV manufacturing. The price was not disclosed.

Sangamo will acquire all of Ceregene’s preclinical and clinical therapeutic programs – including its ongoing Phase II trial to evaluate CERE-110, an AAV vector carrying the gene for nerve growth factor (NGF), in patients with Alzheimer’s disease. In March, Ceregene obtained from Roche’s Genentech subsidiary a license for exclusive worldwide rights to NGF and another gene, neurotrophic factor 4/5 (NT-4/5); financial terms were not disclosed.

CERE-110 is designed to address the loss of cholinergic neurons associated with memory loss and cognitive decline in Alzheimer’s by using AAV to produce a steady supply of NGF in the brain. The double-blind, placebo-controlled Phase II trial is in its follow-up stage, which will evaluate the effect of treatment on established clinical endpoints in cognitive function and quality of life. Results are expected to be released in 2015.

Ceregene and collaborators at the Alzheimer’s Disease Cooperative Study (ADCS), based at the University of California, San Diego (UCSD), won a $5.4 million grant in 2008 from NIH’s National Institute of Aging to support the trial of CERE-110 in 50 patients with mild to moderate Alzheimer’s.

With its acquisition, Sangamo will receive more than 120 issued, pending or in-licensed patents that include patent families covering the AAV vector platform and manufacturing methods, as well as therapeutic transgenes, and a Ceregene-developed needle device for direct administration of AAV to the brain. Sangamo said the deal will also give it access to, among other things, GMP master cell banks as well as a database of preclinical efficacy and toxicology studies and other documentation supporting Ceregene’s Investigational New Drug (IND) applications.

Sangamo said the documentation will help it prepare and file IND applications for its engineered class of DNA-binding proteins that the company calls zinc finger DNA-binding proteins or ZFP Therapeutics® – especially those that target the brain. By engineering ZFPs to recognize a specific DNA sequence, Sangamo has enabled creation of sequence-specific ZFP Nucleases (ZFNs) for gene modification and ZFP transcription factors capable of controlling gene expression, and thus cell function.

Sangamo’s lead pipeline product, SB-728, uses a ZFN-based approach to modify the gene encoding CCR5, the major co-receptor used by HIV to infect immune cells. The company’s first application of the technology is an autologous ZFN-CCR5-modified T-cell product (SB-728-T) that is the subject of an ongoing Phase II trial, and two Phase I/II and two Phase I studies in patients with HIV and AIDS. The company also has a preclinical program to develop an SB-728 hematopoietic stem-cell product, and a research-stage program to develop SB-728 as an in vivo product.

Sangamo said a subsidiary would merge into Ceregene, which would continue as a wholly owned subsidiary of the company. The acquisition is subject to customary conditions that include approval by Sangamo shareholders.

In a regulatory filing with the U.S. SEC, Sangamo said it is required to pay Ceregene stockholders a double-digit percentage of any up-front and milestone payments it receives if it grants a third-party license to develop and commercialize CERE-110 for Alzheimer’s or another Ceregene drug candidate, CERE-120 for Parkinson’s diseases or Huntington’s disease.

If Sangamo commercializes either product itself, it is required to pay Ceregene stockholders royalty-like “earn-out” payments as a percentage of net sales ranging “in the low double digits” depending upon the amount of net sales, subject to reductions by Sangamo, according to the filing.

The acquisition can be terminated by either company if it is not closed by Nov. 15, or sooner by mutual consent, the filing added.

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