BERLIN: Roche Holding will buy Spark Therapeutics for US$4.8 billion, a deal that will transform the Swiss drugmaker from a laggard to a leader in the emerging field of gene therapy.
Along with French biopharmaceutical company Ipsen’s agreement Monday to acquire Clementia Pharmaceuticals for as much as US$1.3 billion, the Roche deal shows how drug companies are placing big bets on the fraught but lucrative field of rare diseases.
The deal for Spark, maker of the Luxturna eye treatment, plugs an important gap in Roche’s portfolio of experimental drugs, giving it a gene therapy for the rare bleeding disorder haemophilia. Roche broke into the haemophilia market in the last two years with Hemlibra, an antibody that mimics the action of the clotting factor needed to stop bleeding. Spark adds something new: an experimental treatment to repair the genes that cause the disease.
The deal adds to Roche’s franchise in haemophilia while giving access to the only platform “with a proven track record for getting gene therapy to the market, ” Stefan Schneider, an analyst at Vontobel Research said in a note to clients.
Roche was little changed in Zurich trading. Ipsen fell 1.7% in Paris.
Competing in haemophilia
Roche will pay US$114.50 a share for Philadelphia-based Spark, a 122% premium to the biotechnology company’s Friday close. While the price is rich, Spark shares were trading above US$90 as recently as last year. Roche said its offer was a 19% premium to Spark’s 52-week intraday high.
Investors have long questioned whether Roche could compete long-term in haemophilia without having a gene therapy. Spark’s treatment could be an important new option for people with the disease, Roche Chief Executive Officer Severin Schwan said in Monday’s statement.
Spark already has a licensing agreement with Roche’s crosstown rival, Basel-based Novartis AG, which has other gene therapies in development. Under an agreement struck in 2018, Novartis has the rights to sell Luxturna outside the US.
The Roche deal’s premium is an outlier, but recent pharmaceutical deals have come with rich valuations. Acquirers paid an average 45% premium in takeovers of listed pharmaceutical and biotechnology companies announced over the past five years, data compiled by Bloomberg show.
Gene therapies are a promising new area of medicine with the potential to cure a wide range of often-rare diseases by replacing or repairing errors in the body’s instruction manual. Their amazing potential has been matched by breakthrough prices, as companies have sought to charge hundreds of thousands of dollars for them — or more.
Shifting from cancer
The deal is part of Roche’s shift away from cancer treatments, where it’s long been the world’s biggest player. The company is grappling with competition from cheaper copies, known as biosimilars, for a trio of aging drugs in Europe and North America that accounted for almost half of its pharmaceutical sales last year. To do so, it’s branching out into new areas including multiple sclerosis and hemophilia.
The value of the one-time treatments that carry the potential for cure is still is a matter of debate. The Institute for Clinical and Economic Review, a Boston-based group that assesses the value of drugs, said last week that Zolgensma gene therapy for a potentially deadly muscle disease would be cost-effective at a price of as much as US$1.5 million. The company has said the treatment would be worth as much as US$4 million to US$5 million.
Spark’s therapy Luxturna treats a gene-driven form of blindness by injecting a working version of a gene called RPE65. In patients suffering from that condition, the working genes can help restore sight. After Luxturna was approved by US regulators in 2017, Spark said it would charge US$425,000 per eye for the treatment.