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Major Customers, Partnerships and Strategic Alliances | 12 Months Ended
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Dec. 31, 2013
Organization Consolidation And Presentation Of Financial Statements [Abstract] |
Major Customers, Partnerships and Strategic Alliances | NOTE 5 – MAJOR CUSTOMERS, PARTNERSHIPS AND STRATEGIC ALLIANCES Collaboration Agreements Collaboration and License Agreement with Shire International GmbH, formerly Shire AG, in Human Therapeutics and Diagnostics In January 2012, the Company entered into a collaboration and license agreement (the Agreement) with Shire pursuant to which the Company and Shire collaborate to research, develop and commercialize human therapeutics and diagnostics for monogenic diseases based on Sangamo’s ZFP technology. Under the Agreement, the Company and Shire may develop potential human therapeutic or diagnostic products for seven gene targets. The initial four gene targets selected were blood clotting Factors VII, VIII, IX and X, and products developed for such initial gene targets will be used for treating or diagnosing hemophilia. In June 2012, Shire selected a fifth gene target for the development of a ZFP therapeutic for Huntington’s disease (HD), an inherited neurodegenerative disease for which there are currently no therapies available to slow the disease progression. Shire has the right, subject to certain limitations, to designate two additional gene targets. Pursuant to the Agreement, the Company granted Shire an exclusive, world-wide, royalty-bearing license, with the right to grant sublicenses, to use Sangamo’s ZFP technology for the purpose of developing and commercializing human therapeutic and diagnostic products for the gene targets. The initial research term of the Agreement is six years and is subject to extensions upon mutual agreement and under other specified circumstances. Under the terms of the Agreement, the Company is responsible for all research activities through the submission of an Investigative New Drug Application (IND) or European Clinical Trial Application (CTA), while Shire is responsible for clinical development and commercialization of products generated from the research program from and after the acceptance of an IND or CTA for the product. Shire reimburses Sangamo for its internal and external research program-related costs. Under the agreement, the Company received an upfront license fee of $13.0 million. In addition, the Company will also be eligible to receive $33.5 million in payments upon the achievement of specified research, regulatory, clinical development milestones, including payments for each gene target through the acceptance of an IND or CTA submission totaling $8.5 million, as well as $180 million in payments upon the achievement of specified commercialization and sales milestones. The total amount of potential milestone payments for each of the seven gene targets, assuming the achievement of all specified milestones in the Agreement, is $213.5 million. The Company will also be eligible to receive royalty payments that are a tiered double-digit percentage of net sales of licensed product sold by Shire or its sublicensees developed under the collaboration, if any. To date, no products have been approved and therefore no royalty fees have been earned under the Agreement with Shire. All contingent payments under the Agreement, when earned, will be non-refundable and non-creditable. The Company has evaluated the contingent payments under the Agreement with Shire based on the authoritative guidance for research and development milestones and determined that certain of these payments meet the definition of a milestone and that all such milestones are evaluated to determine if they are considered substantive milestones. Milestones are considered substantive if they are related to events (i) that can be achieved based in whole or in part on either the Company’s performance or on the occurrence of a specific outcome resulting from the Company’s performance, (ii) for which there was substantive uncertainty at the date the agreement was entered into that the event would be achieved and (iii) that would result in additional payments being due to the Company. Accordingly, revenue for the achievement of milestones that are determined to be substantive will be recognized in its entirety in the period when the milestone is achieved and collectability is reasonably assured. Revenue for the achievement of milestones that are not substantive will be recognized over the remaining period of the Agreement. The Company has identified the deliverables within the arrangement as a license to the technology and on-going research services activities. The Company has concluded that the license is not a separate unit of accounting as it does not have stand-alone value to Shire apart from the research services to be performed pursuant to the Agreement. As a result, the Company will recognize revenue from the upfront payment on a straight-line basis over a six-year initial research term during which the Company will perform research services. As of December 31, 2013, the Company has deferred revenue of $8.9 million related to this Agreement. Revenues recognized under the agreement with Shire for the years ended December 31, 2013 and 2012, were as follows (in thousands):
|  | Year ended December 31, |
|  | 2013 |  |  | 2012 |
Revenues related to Shire Collaboration: |  |  |  |  |  |  |  |
Amortization of upfront fee |  | $ | 2,167 |  |  | $ | 1,986 |
Research services |  |  | 14,286 |  |  |  | 9,026 |
Total |  | $ | 16,453 |  |  | $ | 11,012 |
Related costs and expenses incurred under the Shire agreement were $14.2 million and $7.7 million during the twelve months ended December 31, 2013 and 2012, respectively. Agreement with Sigma-Aldrich Corporation in Laboratory Research Reagents, Transgenic Animal and Commercial Protein Production Cell-line Engineering In July 2007, Sangamo entered into a license agreement with Sigma. Under the license agreement, Sangamo agreed to provide Sigma with access to its proprietary ZFP technology and the exclusive right to use the technology to develop and commercialize research reagent products and services in the research field, excluding certain agricultural research uses that Sangamo previously licensed to DAS. Under the agreement, Sangamo and Sigma agreed to conduct a three-year research program to develop laboratory research reagents using Sangamo’s ZFP technology during which time Sangamo agreed to assist Sigma in connection with its efforts to market and sell services employing the Company’s ZFP technology in the research field. Sangamo has transferred the ZFP manufacturing technology to Sigma. In October 2009, Sangamo expanded its license agreement with Sigma. In addition to the original terms of the license agreement, Sigma received exclusive rights to develop and distribute ZFP-modified cell lines for commercial production of protein pharmaceuticals and certain ZFP-engineered transgenic animals for commercial applications. Under the terms of the agreement, Sigma made an upfront cash payment of $20.0 million consisting of a $4.9 million purchase of 636,133 shares of Sangamo common stock, valued at $4.9 million, and a $15.1 million upfront license fee. Sangamo is also eligible to receive commercial license fees of $5.0 million based upon a percentage of net sales and sublicensing revenue and thereafter a reduced royalty rate of 10.5% of net sales and sublicensing revenue. In addition, upon the achievement of certain cumulative commercial milestones Sigma will make milestone payments to Sangamo up to an aggregate of $25.0 million. Revenues recognized under the agreement with Sigma for the years ended December 31, 2013, 2012 and 2011, were as follows (in thousands):
|  | Year ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Revenue related to Sigma Collaboration: |  |  |  |  |  |  |  |  |  |  |  |
Royalty revenues |  | $ | 824 |  |  | $ | 1,288 |  |  | $ | 938 |
License fee and milestone revenues |  |  | 1,351 |  |  |  | 1,000 |  |  |  | 671 |
Total |  | $ | 2,175 |  |  | $ | 2,288 |  |  | $ | 1,609 |
Related costs and expenses incurred under the Sigma agreement were $0.2 million, $0.3 million and $0.5 million during 2013, 2012 and 2011, respectively. Agreement with Dow AgroSciences in Plant Agriculture In October 2005, Sangamo entered into an exclusive commercial license with DAS. Under this agreement, Sangamo is providing DAS with access to its proprietary ZFP technology and the exclusive right to use the technology to modify the genomes or alter the nucleic acid or protein expression of plant cells, plants, or plant cell cultures. Sangamo has retained rights to use plants or plant-derived products to deliver ZFP transcription factors (ZFP TFs) or ZFP nucleases (ZFNs) into humans or animals for diagnostic, therapeutic or prophylactic purposes. The Company’s agreement with DAS provided for an initial three-year research term. In June 2008, DAS exercised its option under the agreement to obtain a commercial license to sell products incorporating or derived from plant cells generated using the Company’s ZFP technology, including agricultural crops, industrial products and plant-derived biopharmaceuticals. The exercise of the option triggered a one-time commercial license fee of $6.0 million, payment of the remaining $2.3 million of the previously agreed $4.0 million in research milestones, development and commercialization milestone payments for each product, and royalties on sales of products. Furthermore, DAS has the right to sublicense Sangamo’s ZFP technology to third parties for use in plant cells, plants, or plant cell cultures, and Sangamo will be entitled to 25% of any cash consideration received by DAS under such sublicenses. In December 2010, the Company amended its agreement with DAS to extend the period of reagent manufacturing services and research services through December 31, 2012. The agreement also provides for minimum sublicense fees each year due to Sangamo every October, provided the agreement is not terminated by DAS. Annual fees range from $250,000 to $3.0 million and total $25.3 million over 11 years. The Company does not have any performance obligations with respect to the sublicensing activities to be conducted by DAS. DAS has the right to terminate the agreement at any time; accordingly, the Company’s actual sublicense fees over the term of the agreement could be lower than $25.3 million. In addition, each party may terminate the agreement upon an uncured material breach of the agreement by the other party. In the event of any termination of the agreement, all rights to use the Company’s ZFP technology will revert to Sangamo, and DAS will no longer be permitted to practice Sangamo’s ZFP technology or to develop or, except in limited circumstances, commercialize any products derived from the Company’s ZFP technology. Revenues under the agreement were $3.0 million, $4.7 million and $4.5 million during 2013, 2012 and 2011, respectively. Related costs and expenses incurred under the agreement were $0.4 million, $0.6 million and $0.9 million during 2013, 2012 and 2011, respectively. Funding from Research Foundations California Institute for Regenerative Medicine - HIV In October 2009, CIRM, a State of California entity, granted a $14.5 million Disease Team Research Award to develop an HIV/AIDS therapy based on the application of ZFN gene editing technology in hematopoietic stem cells (HSCs). The four year grant supports an innovative research project conducted by a multidisciplinary team of investigators, including investigators from the University of Southern California, City of Hope National Medical Center and Sangamo BioSciences. Sangamo received funds totaling $5.2 million from the total amount awarded based on expenses incurred for research and development efforts by Sangamo as prescribed in the agreement, and subject to its terms and conditions. The award is intended to substantially fund Sangamo’s research and development efforts related to the agreement. The State of California has the right to receive, subject to the terms and conditions of the agreement between Sangamo and CIRM, payments from Sangamo resulting from sales of a commercial product resulting from research and development efforts supported by the grant, not to exceed two times the amount Sangamo receives in funding under the agreement with CIRM. As of December 31, 2013, all revenues under the award have been recognized and all funds have been received. Revenues attributable to research and development performed under the CIRM grant agreement were $1.2 million, $1.2 million and $1.7 million during 2013, 2012 and 2011, respectively. Related costs during 2013, 2012 and 2011 were $1.8 million, $1.2 million and $2.0 million, respectively. California Institute for Regenerative Medicine - Beta-Thalassemia In May 2013, CIRM granted the Company a $6.4 million Strategic Partnership Award to develop a potentially curative ZFP Therapeutic for beta-thalassemia based on the application of its ZFN gene editing technology in HSCs. The four year grant provides matching funds for preclinical work that will support an IND application and a Phase 1 clinical trial in transfusion-dependent beta-thalassemia patients. The State of California has the right to receive, subject to the terms and conditions of the agreement between Sangamo and CIRM, payments from Sangamo, or its collaborators, from sales of a commercial product resulting from research and development efforts supported by the grant, in accordance with Title 17, California Code of Regulations, Section 100600. Revenue attributable to research and development performed under the CIRM grant agreement for beta-thalassemia was $0.1 million in 2013. Related costs during 2013 were $0.4 million. CHDI Foundation, Inc. In April 2011, Sangamo entered into an agreement with the CHDI to develop a novel therapeutic for HD based on Sangamo’s proprietary ZFP technology. The ZFP therapeutic approach targets the gene that causes HD, an inherited neurodegenerative disease for which there are currently no therapies available to slow the disease progression. Under the agreement with CHDI, and subject to its terms and conditions, CHDI paid the Company $1.3 million, the total funds due under the agreement, over a period of one year which is intended to substantially fund the Company’s research efforts related to the agreement. During 2012, the agreement was amended to extend the project through August 2012 and to increase total potential funding from $1.3 million to $2.1 million, plus reimbursement for certain direct expenses related to the project. The agreement with CHDI terminated on August 31, 2012. Revenues attributable to research and development performed under the CHDI collaboration agreement were $1.1 million during 2012 and 2011. Related costs during 2012 and 2011 were $1.1 million and $1.2 million, respectively. There were no such revenues or related costs in 2013. The Juvenile Diabetes Research Foundation International In October 2006, Sangamo entered into an agreement with the Juvenile Diabetes Research Foundation International (JDRF) to provide financial support for one of Sangamo’s Phase 2 human clinical studies of the Company’s product candidate SB-509, a ZFP Therapeutic that was in development for the treatment of diabetic neuropathy. In January 2010, JDRF and Sangamo amended the agreement and, subject to its terms and conditions, JDRF agreed to provide additional funding of up to $3.0 million for a Phase 2b trial in diabetic neuropathy. In October 2011, the Company announced that it would not pursue additional clinical development of the SB-509 program. In March 2012, the Company received a final payment of $0.8 million for work performed under the agreement. The Company does not expect to receive additional funding under the agreement. Revenues attributable to research and development activities performed under the JDRF agreements were $0.8 million and $0.5 million during 2012 and 2011. There were no such revenues or related costs in 2013. The Michael J. Fox Foundation for Parkinson’s Research In January 2007, the Company entered into a partnership with the Michael J. Fox Foundation for Parkinson’s Research (MJFF) to provide financial support of the Company’s program to develop ZFP TFs to activate the expression of glial cell line-derived neurotrophic factor (GDNF). Under the agreement with MJFF and subject to its terms and conditions, MJFF paid the Company $1.0 million, the total funds due under the agreement. In June 2010, the Company received a commitment for additional funding of $0.9 million from MJFF to support further studies of ZFP TF activators of GDNF and intended to substantially fund Sangamo research efforts related to the agreement. The Company has received the entire $1.9 million in funding available under the agreements with MJFF and does not expect to receive any further funding under this agreement. Revenue attributable to research and development performed under the MJFF agreement was $0.4 million in 2011. There were no such revenues in 2013 or 2012.

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