Roche Nears Deal to Buy Spark -- WSJ
February 25 2019 - 3:02AM
Dow Jones News
By Dana Cimilluca, Dana Mattioli and Jonathan D. Rockoff
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 25, 2019).
Roche Holding AG has agreed to buy Philadelphia biotechnology
company Spark Therapeutics Inc., as the Swiss drugmaker seeks to
expand its presence treating hemophilia.
The companies said Monday that Roche would acquire Spark for
$114.50 a share and that the deal is expected to close in the
second quarter.
The deal corresponds to a total equity value of about $4.8
billion on a fully diluted basis, inclusive of approximately $500
million of projected net cash expected at the transaction's
closing, Spark said.
The per-share price represents a premium of 122% to Spark's
closing price Friday, Spark said. The company had a market value of
just under $2 billion as of Friday's close.
The Wall Street Journal reported on the planned deal
Saturday.
The companies said Spark would continue to operate as an
independent company within the Roche group.
Under the terms of the deal, Roche will file a tender offer to
acquire all outstanding shares of Spark common stock, and Spark
will file a recommendation statement containing the unanimous
recommendation of the Spark board that its shareholders tender
their shares to Roche, the companies said.
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 proved 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 joined 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 also is 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 100 million Swiss francs
($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.
--Anthony Shevlin contributed to this article.
Write to Dana Cimilluca at dana.cimilluca@wsj.com, Dana Mattioli
at dana.mattioli@wsj.com and Jonathan D. Rockoff at
Jonathan.Rockoff@wsj.com
(END) Dow Jones Newswires
February 25, 2019 02:47 ET (07:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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