Dive Brief:

• The gene editing company Metagenomi, which went public earlier this year, said a development partnership struck with Moderna in 2021 has ended after the two companies “mutually agreed” to part ways.
• As part of the original deal, Moderna gave Metagenomi an upfront cash payment and was set to pay fees and possible milestones it if chose to license a program that emerged from the collaboration. Moderna also made an investment in the company in 2021 and is still a shareholder, Metagenomi said Wednesday.
• Metagenomi has now regained full rights to its gene editing technologies, including base editors and RNA-mediated integration systems, the company said. The companies also ended their collaboration studying a condition called primary hyperoxaluria type 1, or PH1.

Dive Insight:

While Metagenomi executives said they were happy to regain rights to the technology involved in the Moderna collaboration, the company’s shares dropped nearly 20% in morning trading Thursday.

Losing Moderna as a partner removes a potential source of incoming cash in the form of milestone payments as well as the expertise that the larger company offered in messenger RNA, Chardan analyst Geulah Livshits wrote in a note to investors. Still, it does give Metagenomi more flexibility with its pipeline and for recruiting potential future partners, she said.

There were no data issues in the PH1 work that prompted the end of the collaboration, Metagenomi executives told investors and analysts on a conference call Wednesday. “We demonstrated very strong preclinical proof of concept,” Chief Medical Officer Sarah Noonberg said. Instead, the decision resulted from a “strategic prioritization” undertaken by Moderna, Metagenomi said.

In an email, a Moderna spokesperson said the company is still involved in gene editing research, pointing to the company’s other collaborations. Stat News reported Thursday that Eric Huang, previously head of Moderna’s genomics division, left the company earlier this year.

Metagenomi went public in February, raising almost $94 million in an initial offering by selling shares at $15 each. Its IPO was a rare instance of a preclinical biotech having success going public this year; most recent IPOs have been by more advanced drugmakers.

In the months since, the company’s shares have steadily dropped and are now worth about one-third of its offer price.

Metagenomi said it expects to report about $327 million in cash and cash equivalents as of the end of March when it finalizes its full financial results for the first quarter.