Roche to buy Spark Therapeutics for $4.3 billion

Roche entered an agreement to buy gene therapy developer Spark Therapeutics for $114.50 per share in cash, or approximately $4.3 billion, the companies announced Monday, confirming an earlier report on a potential deal. The transaction, which represents a premium of around 122 percent to Spark's closing price on February 22, is expected to close in the second quarter. 

Severin Schwan, CEO of Roche, said Spark's "proven expertise in the entire gene therapy value chain may offer important new opportunities for the treatment of serious diseases." Schwan singled out the company's haemophilia A programme SPK-8011, which he indicated "could become a new therapeutic option for people living with this disease." 

Roche noted that SPK-8011 is expected to start Phase III testing this year, while Spark's gene therapy programmes also include SPK-8016 in Phase I/II development targeting the haemophilia A inhibitor population. The Swiss drugmaker currently markets Hemlibra (emicizumab-kxwh) for the treatment of patients with haemophilia A with or without factor VIII inhibitors, with the product generating sales of 111 million Swiss francs ($111 million) in the fourth quarter of 2018. 

Commenting on the deal, Bank Vontobel analysts said the purchase of Spark would give Roche a proven platform for getting gene therapies to market, but did not come without risks. Along with Spark, BioMarin Pharmaceutical, uniQure and Sangamo Therapeutics are also developing gene therapies for treating haemophilia. "We view BioMarin likely first to market," Vontobel analyst Stefan Schneider said, adding "we view the market opportunity big enough to accommodate more than one gene therapy, but a favourable safety profile will likely win gold." 

Spark currently markets Luxturna (voretigene neparvovec-rzyl), a one-time gene therapy product indicated for the treatment of patients with confirmed biallelic RPE65 mutation-associated retinal dystrophy. Luxturna was approved in the US in 2017, where it is priced at $425 000 per eye, or $850 000 in total, while the gene therapy gained clearance in Europe last year. Novartis licensed rights to the product outside the US from Spark in 2018 in a deal worth potentially more than $170 million. 

Spark's pipeline also includes the Pfizer-partnered, late-stage programme SPK-9001, also known as fidanacogene elaparvovec, for the potential treatment of haemophilia B, as well as SPK-7001 for choroideremia in Phase I/II development. In addition, the company is developing gene therapies for Pompe disease and CLN2 disease, which are expected to enter clinical testing in 2019, as well as preclinical assets for Huntington's disease and Stargardt disease. 

According to Roche, the merger agreement, which has a total equity value of approximately $4.8 billion, including about $500 million of projected net cash, has been unanimously approved by the boards of both companies. The Swiss drugmaker added that following the closing of the purchase, Spark will continue its operations in Philadelphia as an independent company within the wider group. 

Meanwhile, other gene-therapy companies saw their stock surge following news of the deal, with shares in uniQure, CRISPR Therapeutics and bluebird bio gaining as much as 30 percent, 21 percent and 14 percent, respectively. Jefferies analysts also weighed in on the gene-therapy space, saying that "given advancements in manufacturing, de-risking on dosing safety and efficacy, fast development times for rare disease, and favourable regulatory environment, the space is appealing and differentiated as a growth investment."

For further analysis, read ViewPoints: Roche pivots into gene therapy.

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