The biotech industry is currently seeing a massive, multi-billion-dollar merger that has both investors and traders excited over the potential for stock price movements. Roche Holdings (SWX: ROG), a Swiss drug company, has finalized an agreement to buy Philadelphia-based biotech company Spark Therapeutics Inc (NASDAQ: ONCE) in a $4.8 billion merger as the drugmaker looks to expand into the cutting-edge field of gene therapy.
The latest buyout is just another example of the rush seen in big pharma to scoop up many of the smaller, promising biotech firms. Roche has offered a significant premium to purchase the American company, offering $114.50 for each share as a premium that’s over 120 percent of Spark’s closing price. Spark’s total market capitalization is just under $2 billion.
“The price paid represents a very good opportunity for Roche to gain a foothold in gene therapy and to offer itself — at a more than reasonable price — a platform that has already been validated,” Corby said in a note to clients, according to Bloomberg. While there was another rival bidder to buy out Spark, the identity of the company is yet to be revealed.
Overall, big drug groups are throwing around massive amounts of money in an effort to outbid each other while snagging up potential biotech home runs in the form of smaller, cutting edge companies.
This is mainly taking place in the relatively new field of cell and gene therapy, with Spark Therapeutics being an early leader in this area alongside its breakthrough blindness treatment among the first of many products in development. Approved in both the US and the EU, the blindness treatment Luxturna would charge $425,000 per eye, making it the most expensive drug on the market.
Doctors and patients have been looking forward to gene therapies as a treatment to a variety of conventionally incurable diseases, but it’s become increasingly difficult to develop treatments. The death of one patient in 1999 after receiving experimental gene therapy set the industry back as it sought to handle potential health complications. According to The Wall Street Journal, other companies like Novartis AG and Pfizer Inc have been moving to get started in this area as well.
Overall, the deal adds to the $100 billion or so in biotech mergers arranged since the start of 2019. Back in January, Bristol-Myers Squibb decided to acquire Celgene in $90 billion deal back in January.
Roche Holdings Company Profile
Roche Holding AG (Roche), incorporated on April 13, 1966, is a research-based company. The Company’s operating businesses are organized into two divisions: Pharmaceuticals and Diagnostics. The Pharmaceuticals Division consists of two business segments: Roche Pharmaceuticals and Chugai.
The Diagnostics Division consists of four business areas: Diabetes Care, Molecular Diagnostics, Professional Diagnostics and Tissue Diagnostics. The Company develops medicines for various disease areas, including oncology, immunology, infectious diseases, ophthalmology and neuroscience. – Reuters
Spark Therapeutics Inc Company Profile
Spark Therapeutics, Inc. (Spark), incorporated on March 13, 2013, is a gene therapy company. The Company focuses on treating orphan diseases. It has a pipeline of product candidates targeting multiple rare blinding conditions, hematologic disorders and neurodegenerative diseases.
Its pipeline includes a product candidate targeting choroideremia (CHM), which is in a Phase I/II clinical trial and a product candidate for hemophilia A, which is in a Phase I/II clinical trial. –Reuters