10 Takeaways from Roche’s $4.8 Billion Offer to Acquire Spark Therapeutics
- Roche’s $114.5-a-share offer is a 122% premium over the closing price of Spark’s stock ($51.54) on February 22. On the day the offer was announced, Spark’s shares shot up to $113.48.
- In 2018, Spark shipped 75 vials of $425,000-per-eye Luxturna (voretigene neparvovec-rzyl) for treatment of biallelic RPE65 mutation-associated retinal dystrophy, the first Food and Drug Administration-approved treatment for a retinal disease and the first approved adeno-associated virus vector gene therapy.
- Gene therapy stocks in the ophthalmology space caught fire after the Roche-Spark deal was announced, led by REGENXBIO, which leapt 16% from $46.53 to $54.01 a share. Other gainers were:
- Investors Business Daily reported that other gene therapy biotech stocks skyrocketed on the news. uniQure jumped 34.3%, Audentes Therapeutics increased 11.4%, Solid Biosciences leapt 9.6%, and BioMarin Pharmaceutical rose 4%.
- In a note to clients, Leerink analyst Joseph Schwartz stated, “Although the price that Roche is paying for Spark seems steep, we see three potential rationales driving the deal: Attraction to genetic retinal diseases, fortification of hemophilia franchise or appreciation of in-house gene therapy manufacturing capabilities.”
- Roche may be more interested in Spark’s portfolio of the three hemophilia programs Spark now has in clinical trials. Commenting on the transaction, Roche CEO Severin Schwan said, “Spark Therapeutics’ proven expertise in the entire gene therapy value chain may offer important new opportunities for the treatment of serious diseases. In particular, Spark Therapeutics’ hemophilia A program could become a new therapeutic option for people living with this disease.”
- The acquisition could also give Roche a hedge in ophthalmology against an increasingly competitive market for anti-VEGF treatments for age-related macular degeneration , in which its Genentech unit is a major player with Lucentis. This year, Novartis is expected to rock the market with approval of brolucizumab expected. Leerink’s Schwartz said, “The competitive landscape for [wet] AMD is intensifying from approved agents, potential long-acting agents or curative gene therapy that constrain the economic viability of Lucentis. Luxturna could be a segue to ignite Roche’s ophthalmology business.”
- Children’s Hospital of Philadelphia invested $33 million in Spark since 2013. It stands to collect about $430 million in the Roche buyout, a 1,200% return on profit.
- Spark CEO Jeffrey Marrazzo’s shares are valued at approximately $70 million.
- Spark Therapeutics’ will continue its operations in Philadelphia as an independent company within the Roche Group, much as Genentech has continued in the Bay Area.
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