An earlier version of this story was based on a conference call that was erroneously linked to today’s news release. Fierce Biotech has rewritten this story in its entirety as of 2:27 p.m. ET. The article was previously amended at 12:47 p.m. ET on Jan. 30, 2024, to clarify the number of people affected by the latest round of layoffs.
Once again, 2seventy bio is splitting in two, but this time the shift is seismic. The cell therapy company is offloading preclinical and clinical cell therapy programs to Regeneron to form a new unit and laying off staff.
The dramatic change will see 160 employees headed over to Regeneron, including Chief Scientific Officer Philip Gregory and Chief Medical Officer Steve Bernstein, M.D. Gregory will become the head of cell medicines at Regeneron. The remaining workforce, which will focus on approved med Abecma, will be downsized to only 65 employees, a significant reduction from the current 280, according to a spokesperson. This represents about 55 people leaving the company.
2seventy chief executive Nick Leschly—who refers to his role as Chief Kairos Officer rather than CEO—will also step down and become chairman of the board once the deal closes. His plans to move aside were previously communicated in September 2023. He will be replaced by Chief Operating Officer Chip Baird.
With the restructuring and layoffs, 2seventy expects annual cost savings of about $150 million in 2024 and $200 million in 2025, extending the cash runway beyond 2027. The company ended the third quarter of 2023 with $284.3 million on hand, which was expected to last about 12 months.
Regeneron will fully acquire 2seventy’s dual-targeted CAR T cell therapy bbT369 in B-cell non-Hodgkin lymphoma, SC-DARIC33 in acute myeloid leukemia, MUC16 for ovarian cancer, MAGE-A4, autoimmune and several unnamed targets, according to a release. After the deal closes, Regeneron will have 100% ownership over the programs, infrastructure and personnel costs.
Full financial details of the transaction were not disclosed, but 2seventy will receive $5 million upfront and a $10 million milestone payment from Regeneron for the first market approval of the first program resulting from the transaction. The milestone details were revealed in an accompanying regulatory filing (PDF).
Analysts questioned the low premium for the R&D program during a Tuesday morning conference call. All in all, Regeneron will assume complete development and commercialization rights for 2seventy’s pipeline of immune cell therapies, along with acquiring discovery and clinical manufacturing capabilities. These assets will be transitioned to a newly established research and development unit named Regeneron Cell Medicines, with a specific focus on oncology and immunology.
“The main driver here was not how many upfront dollars could we get. The main driver was to transform the cost structure of the company and make sure those products and people and platform land on fertile soil. So I think we’ve done that in spades,” Baird said, pointing to the cost savings.
The deal marks a new strategic path for 2seventy, which has struggled after spinning out from bluebird bio in 2021 to focus solely on oncology products. The company reformed around approved multiple myeloma med Abecma, which is partnered with Bristol Myers Squibb.
“These dramatic changes in cost structure give us time for Abecma to recover commercially and return to growth,” Baird said on Tuesday’s call.
The two companies have worked together before—albeit in a roundabout way. Regeneron signed a deal with bluebird in 2018 to work on cancer cell therapies. Under that deal, Regeneron had rights to opt into a co-development and co-commercialization agreement for the targets. This new deal sees Regeneron take up that option.
Leschly said that the R&D pipeline will be “in good hands with Regeneron.”
Baird said Regeneron was the right partner for the R&D work, given the previous relationship and the company’s capital resources. Leschly, who Baird said was the key driver behind the deal, said there is “scientific alignment” between the two companies.
“This space is complicated and it’s very much at the beginning. The concept of converging cell therapy with biologics is something that I know Regeneron feels very strongly about, we do as well, as sort of the ultimate way to really get after cancer in a big way,” Leschly said. “But you’re not going to get that right necessarily, the first time you ask that question. And so the key here I think … is making sure we have a durable timeframe and capability to ask and answer these types of questions—and that’s exactly what this does.”
Regeneron has also agreed to sublease a portion of 2seventy’s office, lab and manufacturing space in Cambridge, Massachusetts, and an entire facility in Seattle, Washington.
The deal is set to close in the first half of 2024.