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Mergers & Acquisitions

Roche will pay $4.8 billion to acquire gene-therapy pioneer Spark Therapeutics

The premium price indicates drug companies’ growing interest in joining the gene-therapy field

by Ryan Cross
February 25, 2019

20190225lnp4-sparkmedia.jpg
Credit: Spark Therapeutics
Operators at Spark's manufacturing facility in Philadelphia.

The Swiss drug and diagnostics giant Roche has agreed to purchase the gene-therapy company Spark Therapeutics for $4.8 billion, more than double Spark’s stock market value of about $2 billion before the deal was announced. The premium price signals Roche’s determination to join the growing gene-therapy field, even when profits from the therapies seem distant.

Spark is currently the only company with a viral-based gene therapy on the market in the US. Its sole product, Luxturna, is a shot of viruses used to deliver corrective DNA into the eyes of people with a rare form of inherited blindness.

The US Food and Drug Administration approved Luxturna in December 2017. Last year, Spark sold only $27 million worth of the drug, which costs $425,000 per eye. Although sales are small, the drug was a victory for the gene-therapy field, which has struggled for decades to create safe and effective DNA-altering therapies.

Roche is likely looking past Luxturna to Spark’s other assets, including its experimental hemophilia therapies, its manufacturing prowess, and the broad potential of gene therapy for diseases of the eye and brain.

Spark is already testing a treatment for choroideremia, a progressive vision-loss condition that leads to blindness, in a Phase I/II clinical study. Spark is also developing a gene therapy for a form of juvenile macular degeneration called Stargardt disease, which affects about 30,000 people in the US.

The eye is a popular target for gene therapies because it is relatively straightforward for a surgeon to inject the therapy directly into the right tissue. The spine and brain also look like promising targets, and Spark has preclinical programs for two brain diseases, Batten disease and Huntington’s disease.

Moreover, Spark’s most advanced experimental gene therapies are for hemophilia A and B. Both treatments, which are in Phase III clinical studies, use an adeno-associated virus (AAV) to deliver a gene for a blood-clotting protein that is deficient in people with the disease.

In theory, the hemophilia therapies are supposed to be a one-and-done fix, but they may not work for everyone, and their effects may not be strong enough to completely eliminate the need for other hemophilia medicines. Roche may see them as a complement to its prophylactic hemophilia A treatment Hemlibra, which the FDA recently approved.

Roche will also benefit from the gene-therapy manufacturing capacity at Spark’s headquarters in Philadelphia. Each injection of Luxturna contains about 150 billion DNA-stuffed viral particles. Making those viruses at commercial scale has been a holdup for other companies entering the field. Spark’s in-house production will give Roche a head start on scaling up production of future hemophilia therapies. Those products could help about 20,000 people in the US, compared with the 2,000 people that Spark estimates could benefit from Luxturna.

Roche isn’t the first major drugmaker to see the benefit of acquiring gene-therapy expertise in advance of commercial success. Novartis purchased AveXis for $8.7 billion last year and anticipates that the experimental gene therapy it acquired—a treatment for spinal muscular atrophy called Zolgensma—will win FDA approval this year. In anticipation of the treatment’s commercial roll-out, AveXis is spending $115 million on a manufacturing plant in North Carolina.

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A note from the investment bank SVB Leerink suggests that the Spark acquisition bodes well for other gene-therapy companies that could become takeover targets, including Audentes Therapeutics, BioMarin Pharmaceutical, Nightstar Therapeutics, and Uniqure.

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