Sangamo Therapeutics Inc. (NASDAQ:SGMO) filed for Chapter 11 bankruptcy protection on Tuesday, as the gene therapy company seeks to sell its assets through a court-supervised process.
The gene-editing company has lined up affiliates of Eli Lilly and Co. (NYSE:LLY) and Astellas Pharma Inc. (OTC:ALPMF) (OTC:ALPMY) as stalking horse bidders for key assets while also securing a commitment for up to $30 million in debtor-in-possession financing.
Lilly, Astellas Set Floor Prices For Key Assets
Ahead of the bankruptcy filing, Sangamo entered into separate asset purchase agreements with Lilly and Gene Therapies Inc., a subsidiary of Astellas Pharma.
Under the agreement with Eli Lilly, Sangamo agreed to sell several of its technology platforms, including its AAV capsid engineering platform, zinc finger protein technology, Modular Integrase genome editing platform, and prion disease program ST-506.
Lilly’s bid carries a total consideration of $50 million, plus the assumption of certain liabilities.
The offer will serve as the minimum bid for those assets and remains subject to higher or better offers during the bankruptcy process.
Separately, Astellas agreed to acquire assets primarily related to isaralgagene civaparvovec, Sangamo’s Fabry disease candidate.
The transaction includes $25 million payable at closing, with up to an additional $25 million tied to specified milestones.
Both proposed transactions require bankruptcy court approval.
Company Seeks $30 Million In Bankruptcy Financing
To support operations during the restructuring, Sangamo secured a commitment from Northridge for debtor-in-possession financing of up to $30 million.
The financing, which remains subject to court approval, would provide working capital, fund bankruptcy-related expenses, and support ongoing operations.
Sangamo is seeking interim approval to immediately access up to $10.5 million, with final approval for the full facility expected at a later hearing.
Workforce Reduction Accompanies Restructuring
As part of its restructuring efforts, Sangamo’s board approved a workforce reduction that will eliminate approximately 51 U.S. positions, representing roughly 40% of its workforce.
Following the layoffs, Sangamo expects to retain approximately 77 employees to continue advancing the programs and platforms included in the proposed Lilly and Astellas transactions.
The company expects restructuring-related charges of approximately $3 million to $4 million, primarily tied to severance and employee benefits.
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