• Gene therapy developer AGTC lost nearly half its market cap Thursday morning after Biogen exited a collaboration agreement on the heels of a big clinical failure.
• Interim six-month data on one of AGTC’s investigational therapies showed it was generally safe but ineffective at treating a rare eye disorder known as X-linked retinoschisis (XLRS). The company plans to complete patient monitoring activities on the XLRS program but will not develop it further.
• AGTC first linked up with Biogen in mid-2015, taking home $124 million upfront in exchange for licenses to programs targeting XLRS and X-linked retinitis pigmentosa (XLRP). Biogen also secured an option to license discovery programs for up to three additional indications. Over the last three years, payments from the collaboration have accounted for almost all of AGTC’s revenue.

Biogen’s gene therapy ambitions really began to show in January 2014, when it joined forces with Sangamo Therapeutics to develop treatments hemoglobin-centric illnesses. By September, the company brought on Olivier Danos, who previously worked at Kadmon Pharmaceuticals and the University College of London’s Gene Therapy Consortium, to serve as senior vice president of gene therapy.

The following year saw Biogen’s partnership with AGTC, short for Applied Genetic Technologies Corporation. Deal terms included upfront payments of $58.4 million for pre-funded activities, $35.6 million related to licenses and $30 million in an equity investment that gave Biogen an 8.1% stake in AGTC as of June 30, 2015.

There were also more than $1 billion in milestones on the line between the XLRS, XLRP and discovery programs.

AGTC won’t get its hands on most of that money, however, as early results from the XLRS program seem to have crushed Biogen’s hopes in the smaller biotech’s technology.

Prior to 2018, AGTC recognized $5 million worth of milestone payments from Biogen. It took in $2.5 million more this April and another $10 million in July for treating the first patient of a second cohort in the Phase 1/2 XLRP study. Contrasting its XLRS decision, AGTC plans to advance the XLRP program and “will determine next steps for the three discovery programs over the next several months,” according to a Dec. 13 statement.

At least for now, AGTC will be doing that work without the help of a well-financed partner. The company, which runs on a fiscal year ending June 30, recorded annual revenue of $46.8 million in 2016, $39.3 million in 2017 and $24.1 million in 2018. Aside from small amounts of grant funding, almost all of that revenue came from the Biogen collaboration.

AGTC’s cash and cash equivalents were $26.5 million by Sept. 30 while its investments were $79 million. Also as of that date, the company recorded $25.4 million in deferred revenue related to the Biogen deal which will “be recognized over the remaining performance period,” according to its most recent quarterly filing with the Securities and Exchange Commission.

AGTC expects the deal termination to take effect on March 8. The company’s stock value was down 38% to $4.07 per share at market’s open Thursday and fell further to $3.17 in late-morning trading.