- Following a review of its research programs, the biotechnology company formerly known as Axovant is now considering a range of strategic alternatives, including a potential sale.
- Sio Gene Therapies said Wednesday afternoon that it intends to terminate the licensing agreements covering the last two programs in its pipeline, both of which target inherited metabolic diseases that progressively destroy nerve cells. With those programs ended, Sio's focus will turn to "maximizing shareholder value" by exploring potential transactions such as a sale or merger of the company.
- In a statement, CEO David Nassif said Sio will also make a "significant headcount reduction to conserve capital." The company had roughly $64 million in cash and cash equivalents at the end of March. Nassif added that the decision to wind down the business was, in part, due to the "current public financing environment."
Sio has changed significantly since its formation in 2014.
Then, it was Axovant, one of the many subsidiaries built around Roivant Sciences, a healthcare company created by the well-known hedge fund partner Vivek Ramaswamy. Like other "vant" companies, Axovant aimed to develop drugs that had been shelved by other pharmaceutical firms. Its initial lead program, licensed from GlaxoSmithKline, was an experimental, small molecule medicine tested against Alzheimer's disease.
As was the case with other Ramaswamy-founded biotechs, Axovant attracted considerable attention from investors. It went public in 2015, raising $315 million in one of the larger hauls seen in recent years for a drugmaking startup.
Yet, by 2017, tides began to turn for Axovant. The drug it acquired from GSK ended up failing a late-stage study in Alzheimer's, and not long after disappointed as a potential treatment for dementia.
Axovant then pivoted to gene therapy research, licensing one of the cutting-edge medicines from U.K.-based Oxford Biomedica to test in patients with Parkinson's disease. In early 2019, the company rebranded to Axovant Gene Therapies and spun its small molecule work into a separate biotech, Arvelle Therapeutics.
The pivot, though, brought new challenges. Axovant's share price plummeted in October 2020, for example, after disclosing issues with the manufacturing of its Parkinson's therapy — issues that, according to the company, would delay enrollment in a key mid-stage study until 2022. Weeks later, Axovant announced that it had changed its name to Sio Gene Therapies.
Early this year, Sio said it had chosen to terminate the licensing agreement for the Oxford gene therapy, citing, among other reasons, the "resource requirements and development timelines to reach meaningful value inflection for the program." Moving forward, the company would prioritize two gene therapies licensed from the University of Massachusetts that, respectively, attempt to treat the rare diseases GM1 gangliosidosis and GM2 gangliosidosis.
Following that decision, Mani Foroohar, an analyst at the investment firm SVB Securities, wrote to clients that his team expected Sio to have "a real challenge" producing "substantially value-generating clinical data" from those programs fast enough to support the company's balance sheet.
Now, Sio intends to scrap both programs in an effort to conserve cash.
"After a thorough review of our ongoing programs, and given the current public financing environment, we have decided to terminate our GM1 and GM2 licensing agreements with UMass and wind down our related clinical trials and manufacturing operations," Nassif said.
As for the layoffs, Sio reported in a regulatory filing that it expects to undergo a "significant" workforce reduction through the end of June. In relation to the job cuts, the company expects to incur aggregate costs in the range of approximately $900,000 to $1.5 million.