Applied Genetic Technologies’ $1 billion-plus gene therapy pact with Biogen has been torn up after their lead candidate failed a phase 1/2 trial.

Six-month data from the study of rAAV2tYF-CB-hRS1 in patients with an inherited retinal disorder called X-linked retinoschisis (XLRS)—the centrepiece of the two companies' 2015 collaboration—showed no signs of clinical activity and has been shelved. Biogen has now handed back rights to five clinical and preclinical programs to AGTC and terminated the deal.

The biotech’s CEO, Sue Washer, put a brave face on the trial outcome during a conference call, saying that the therapy was well tolerated and the trial provided a lot of information to take forward in other programs, but wasn’t able to stop a swift sell-off in the stock. Trading in AGTC was suspended ahead of the announcement but plummeted almost 39% after hours.

AGTC’s attention must now shift to two other clinical-stage projects in inherited retinal diseases—gene therapies for X-linked retinitis pigmentosa (XLRP) and achromatopsia (ACHM)—which have progressed to the phase 1/2 testing stage.

The XLRS gene therapy was designed to deliver retinoschisin, a protein encoded by the RS1 gene which is mutated in people with the disease, which is the leading cause of macular degeneration in males. Without normal retinoschisin, the layers of the retina split and vision is lost.

The failure to show efficacy with rAAV2tYF-CB-hRS1 is a massive blow to the 35,000 people or so in the U.S. and Europe with the disorder, who suffer progressive loss in vision that can lead to blindness. The National Eye Institute is also conducting a phase 1/2 trial of a gene therapy for XLRS but that isn’t due to read out until 2021.

Washer said on the call that while the XLRS therapy was injected into the vitreum of the eye, the XLRP and ACHM candidates are delivered by subretinal injections which could improve their clinical activity. There are also better animal models for these diseases which were not available for the XLRS program.

She was tight-lipped about the reasons for Biogen’s decision to terminate the entire collaboration after one trial read-out, but suggested this may have been because of "a shift of strategic investments into other areas." She confirmed however that the big biotech could have retained rights to some programs under the terms of their agreement but chose not to.

Biogen has already paid out around $146 million during the collaboration and will contribute funding through to March 8 of next year, when the contract comes to an end.

Washer said that AGTC still has around $105 million in cash, which should be enough to support the company through the readouts for its XLRP and ACHM programs, and advance an optogenetic gene therapy/device combination partnered with Bionic Sight into the clinic.

It has competition looking for the XLRP program, however, as U.K. biotech Nightstar recently posted positive results in a phase 1/2 trial of its NSR-RPGR gene therapy candidate.

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