Breakthrough gene therapy company snared by Japanese biopharma for $3 billion

Astellas Pharma Inc. will buy gene therapy pioneer Audentes Therapeutics Inc. for $3 billion cash, according to a definitive agreement the companies disclosed Monday afternoon.

The deal is notable for a couple of reasons. One, San Francisco-based Audentes (NASDAQ: BOLD) is one of the early startups in the gene therapy area, where companies are developing a single shot carrying the correct copy of a gene to cure patients of genetic diseases. Secondly, gene therapy has faced sharp highs and lows, but the $60-per-share price offered by Tokyo-based Astellas indicates that deep-pocketed biopharmaceutical companies see lots of hope in the field.

The offer is a 110% premium to Audentes' $28.61-per-share closing price Monday. The deal is expected to close in first-quarter 2020.

Audentes, which has more than 200 employees, certainly has been one of the brighter spots in gene therapy. Launched in 2012, the company was one of the first to build its own manufacturing facilities, in South San Francisco, and go public in 2016 with an $86 million offering.

The Bay Area has been a leader in gene therapy. Along with Audentes, gene therapies are pivotal for Adverum Biotechnologies Inc. (NASDAQ; ADVM) in Menlo Park, Orchard Therapeutics plc (NASDAQ: ORTX) in Fremont and privately held Encoded Therapeutics Inc. of South San Francisco. Also, rare disease companies such as BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) and Ultragenyx Pharmaceutical Inc. (NASDAQ: RARE) also have had gene therapy programs.

But there have been problems with translating the science of gene therapy into commercially viable cures and, more broadly, around the right price to charge for the life-saving therapies. For example, Zolgensma, a gene therapy approved earlier this year by the Food and Drug Administration and sold by Chicago's AveXis Inc. (NASDAQ: AVXS) for spinal muscular atrophy, costs $2.1 million.

A high-profile death in a clinical trial in the 1990s halted all gene therapy trials and investors soured on the space. Over the past decade, however, gene therapy companies such as Audentes have emerged with next-generation technologies; still, companies have stumbled in clinical trials while trying to show long-term efficacy.

Yet the promise of gene therapy is tantalizing. Using shelled-out, deactivated viruses to deliver a corrected copy of a gene, researchers have focused on rare genetic diseases that could extend the life of a baby, who might have months or days to live, potentially to a full life.

"Recent scientific and technological advances in genetic medicine have advanced the potential to deliver unprecedented and sustained value to patients and even to curing diseases with a single intervention," Astellas President and CEO Kenji Yasukawa said in a prepared statement. "Audentes has developed a robust pipeline of promising product candidates which are complementary to our existing pipeline."

For Audentes, the key has been picking diseases with clear genetic drivers. Its lead treatment, called AT-132, targets X-linked myotubular myopathy, a neuromuscular disorder. Its AT-845 focuses on the muscle-weakening disease known as Pompe disease, and the company's other preclinical treatments have zeroed in on skipping "exons" — a segment of DNA — to treat Duchenne muscular dystrophy patients.

"With its focus on innovative science and a global network of research, development and commercialization resources, we believe that operating as part of the Astellas organization optimally positions us to advance pipeline programs and serve our patients," Audentes Chairman and CEO Matthew Patterson said in a statement.