Roche Holding (QX) (USOTC:RHHBY)
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1 Year : From Nov 2018 to Nov 2019
By Dana Cimilluca, Dana Mattioli and Jonathan D. Rockoff
Roche Holding AG is nearing a deal to buy Philadelphia biotechnology company Spark Therapeutics Inc., according to people familiar with the matter, as the Swiss drugmaker seeks to expand its presence treating hemophilia.
A deal for Spark could be announced Monday -- if not sooner -- at a price tag of nearly $5 billion, some of the people said. That would represent a big premium, given Spark had a market value of just under $2 billion as of Friday's close. As always, the deal could still fall apart before the companies manage to make it official.
There was at least one other bidder for Spark as of Friday, some of the people said, though it isn't clear who.
Therapies that replace a defective gene with a healthy one are an emerging class of treatment pioneered by companies including Spark. It was founded in 2013 out of gene-therapy research at Children's Hospital of Philadelphia.
Doctors and patients have been looking forward for years to gene therapies treating intractable inherited diseases, but development of the therapies has proven more challenging than initially thought, including the death in 1999 of a young man who received an experimental gene therapy.
Yet development of the therapies appeared to turn a corner in recent years, and big companies like Pfizer Inc. and Novartis AG have been making moves to offer such treatments. Pfizer has partnered with Spark on development of a hemophilia B treatment. Last year, Novartis paid $8.7 billion for gene-therapy developer AveXis.
In 2017, Spark's Luxturna, which treats a condition that can cause blindness, was the first gene therapy for an inherited disease to receive Food and Drug Administration approval. Spark is also developing gene therapies to treat the inherited blood disorder hemophilia.
The company generated just $64.7 million in revenue last year and a net loss of $78.8 million. Even though that represents dramatic improvement from the prior year on both counts, it underscores how much Roche is having to pay up to secure the acquisition.
Hemophilia is a new and emerging category for Roche. In 2017, the U.S. Food and Drug Administration approved the company's hemophilia A treatment Hemlibra, which analysts expect will have billions of dollars in yearly sales.
In January, the company described Hemlibra as one of its biggest growth drivers, with sales surpassing CHF100 million ($100 million) in the fourth quarter alone.
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 Pharmaceutical Co. Ltd. and Sanofi SA.
Among the challenges confronting companies like Roche seeking to sell the new gene therapies is gaining reimbursement. Spark has said it plans to sell Luxturna in the U.S. at a cost of $850,000 a patient, but it wants to offer partial refunds if patients don't meet recovery targets.
Roche is among a number of big drug companies hungry for biotechs that can help restock their pipelines and portfolios. There have been a raft of such deals already this year, including Bristol-Myers Squibb Co.'s roughly $74 billion planned purchase of Celgene Corp. and Eli Lilly & Co.'s agreement to pay $8 billion for cancer specialist Loxo Oncology Inc.
(END) Dow Jones Newswires
February 23, 2019 13:38 ET (18:38 GMT)
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