Spark Therapeutics (NASDAQ:ONCE) is an interesting company with a unique drug pipeline potential that is being coveting as a takeover target according to what is being discussed by the financial media. Is there opportunity here?

Roche Holding (OTCQX:RHHBY) is nearing a deal to buy Philadelphia biotechnology company Spark Therapeutics, WSJ says.

A deal for Spark could be announced Monday, or sooner, at a price tag of nearly $5B. Spark’s valuation on Friday was just under $2B.

Spark generated just $64.7M in revenue in 2018, underscoring how much Roche must pay up to secure the acquisition.

Hemophilia is a new and emerging category for Roche. In 2017, the FDA approved the company’s hemophilia A treatment Hemlibra, which analysts expect will have billions of dollars in yearly sales.

If Spark’s hemophilia gene therapies pan out, Roche would be able to expand its offerings in the area, helping it compete with market rivals like Takeda (NYSE:TAK)  and Sanofi (NASDAQ:SNY).

Spark is a fully integrated, commercial gene therapy company dedicated to challenging the inevitability of genetic disease, announced today corporate and financial results for 2018 and recent business progress.

2018 and recent business highlights to be aware of:

Launched LUXTURNA, the first gene therapy for a genetic disease and only pharmacologic treatment for inherited retinal disease in the U.S. and secured EU marketing authorization

  • Pioneered innovative pricing and distribution models in U.S. that secured access for patients and families
  • Shipped 75 vials of LUXTURNA in the U.S.
  • Entered into a licensing and supply agreement granting Novartis Pharmaceuticals exclusive rights to commercialize LUXTURNA in markets outside the U.S.

Expanded hemophilia portfolio to include multiple investigational gene therapies, with three programs now in clinical trials

  • Presented updated preliminary data, with a Nov. 2, 2018, data cutoff, on the first 12 participants in the ongoing Phase 1/2 clinical trial of SPK-8011 in hemophilia A at an oral presentation at the American Society of Hematology annual meeting
    • No inhibitors, no thrombotic events and no persistent or unresolved transaminase elevations were observed across a cumulative 9.7 years of data follow-up
    • Across all three doses, beginning four weeks after vector infusion, there was a 94-percent reduction in bleeds and a 95-percent reduction in factor VIII infusions
    • Among the five participants treated in the 2×1012 vg/kg cohort who did not experience an immune response-associated decline in FVIII expression, beginning four weeks after vector infusion, there was a 100-percent reduction in bleeds and a greater than 99-percent reduction in infusions, with up to 46 weeks of follow-up
    • All five participants in the 5×1011 vg/kg and 1×1012 vg/kg dose cohorts, with follow up of up to 78 weeks post SPK-8011 infusion, had shown persistent, stable factor VIII activity levels in this ongoing study

  • Initiated Phase 1/2 clinical trial expansion for SPK-8011 that incorporates a standardized, prophylactic steroid regimen and material made from our suspension manufacturing process
    • Received FDA clearance to use mammalian suspension culture material in the clinical trial
  • Initiated an observational Phase 3 six-month run-in study for SPK-8011
  • Initiated Phase 1/2 clinical trial for SPK-8016, a novel, internally developed adeno-associated viral (AAV) gene therapy candidate aimed at addressing segments of the hemophilia A inhibitor market
  • Completed transition of SPK-9001 for hemophilia B to Pfizer; Pfizer initiated a six-month run-in portion of Phase 3 clinical trial in July 2018

Progressed pipeline of investigational AAV gene therapies

  • Presented investigational new drug (IND)-enabling data for SPK-3006, a liver-directed AAV gene therapy for Pompe disease showing decreased glycogen accumulation, increased survival and improved cardiac, respiratory and muscle function in acid alpha-glucosidase knockout (Gaa-/-) mice at the 2018 World Muscle Society International Congress and at the 2019 15th Annual WORLDSymposium™
    • Administration of a single infusion at three ascending doses in non-human primates demonstrated dose-dependent expression of GAA in plasma, reaching plasma levels equivalent to those found to be therapeutically effective in Pompe disease mouse models
    • Uptake of secretable GAA has been demonstrated in both animal models and in vitro systems
  • Presented IND-enabling data for SPK-1001, an investigational AAV gene therapy for CLN2 disease, a form of Batten disease, at the 2019 15th Annual WORLDSymposium™
  • Showed preclinical proof-of-concept in non-human primates for SPK-miHTT, an investigational AAV gene therapy for Huntington’s disease, with knockdown of the mutant HTT up to 90 percent at the mRNA and protein level using a miRNA silencing approach. Evidence of cortical knockdown was also obtained in the brain of non-human primates.

Bolstered manufacturing capabilities, research platform and financial position as we expand our fully integrated organization

  • Own and operate first and only FDA- and EU-licensed AAV commercial manufacturing facility
  • Achieved targeted scale of 2×200-liter suspension upstream and 400-liter downstream manufacturing process to support anticipated clinical and commercial hemophilia A and Pompe disease supply requirements
  • Expanded research and development facilities in West Philadelphia
  • Ended year with a strong balance sheet with $601.3 million in cash, cash equivalents, restricted cash and marketable securities

Financial results for the years ended December 31, 2018 and 2017
In the year ended December 31, 2018, we recognized $64.7 million in total revenue, of which $27.0 million was net product sales of LUXTURNA and $37.8 million was contract revenue associated with agreements with Pfizer and Novartis. In the year ended December 31, 2017, recognized $12.1 million in contract revenue, all of which was associated with Pfizer agreement.

Cost of product sales for the year ended December 31, 2018, was $1.0 million, which consists of manufacturing, shipping and other costs, as well as royalties. A substantial portion of the inventory sold during the period was produced prior to FDA approval and, therefore, was expensed as research and development expense in 2017.

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