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Roche's $4.8B deal for Spark cleared by FTC after long delay

Credit: Roche

The Federal Trade Commission on Monday cleared Roche's $4.8 billion buyouts of Spark Therapeutics, bringing to a close a 10-month investigation that had spurred concerns acquisitions of other gene therapy biotechs would be similarly scrutinized.  

Roche won't be required to sell any assets and has now received all the antitrust approvals it needed to complete the deal. Earlier Monday the U.K. Competition and Markets Authority gave Roche a go-ahead after finishing its own investigation

FTC commissioners voted 5-0 to close the agency's review, judging that the evidence it gathered "did not indicate that Roche would have the incentive to delay or terminate Spark's developmental effort for its hemophilia A gene therapy, or that the acquisition would affect Roche's incentives regarding Hemlibra." 

Hemlibra, which Roche sells, also treats hemophilia A and has fast become one of the Swiss drugmaker's top products. Regulators appeared to have been concerned that the overlap between Hemlibra and Spark's experimental therapy might have spurred Roche to alter its development plans, potentially hindering market competition.

Following the announcement of the deal in February, the FTC unexpectedly pushed Roche and Spark for further information on the takeover, which required greater document disclosure and testimony from executives. Only about 5% or fewer transactions are subjected to a so-called second request from the regulator.

The request was unusual because Spark's therapy remains some ways from the market, and big pharma deals for smaller biotechs rarely earn more than a routine review.

As a result, Roche was forced to repeatedly extend the window in which Spark shareholders could tender their shares. The disruption coincided with declining market valuations for many gene therapy biotechs, and some on Wall Street argued the tortuous review process was putting off other pharma from more aggressively pursuing takeovers of gene therapy companies.

A $3 billion bid earlier this month by Astellas for Audentes Therapeutics eased some of those concerns, and Monday's green light from the FTC could help further revive the market fortunes of gene therapy developers.

Spark owns the first-ever approval of gene therapy in the U.S., having won clearance from the Food and Drug Administration two years ago for its blindness treatment Luxturna. The condition it treats, however, is rare and sales are likely to remain modest.

Investors — and Roche — saw much more value in Spark's experimental therapy for hemophilia A. The biotech is one of three companies advancing a one-time treatment for the blood disorder through late-stage testing. (A gene therapy candidate for hemophilia B is licensed to Pfizer, and Spark is developing gene-based medicines for other liver, eye, and neurodegenerative diseases.)

The FTC noted the competition in hemophilia A in its decision to close the investigation.

"As the other companies endeavor to bring their gene therapies to market, Roche would have the incentive to accelerate, rather than decelerate the development for Spark's gene therapy in order to compete for gene therapy patients," the commissioners wrote in a brief two-page statement.

Because gene therapies are supposed to deliver benefit for decades, approval of one could disrupt the current market of hemophilia treatments, which consists of factor replacement therapies as well as newer drugs like Roche's Hemlibra.

Additionally, gene therapies use inactivated viruses to be delivered into the body. Redosing could be difficult as the body can develop antibodies to that particular virus type, rendering subsequent infusions ineffective.

Roche-Spark isn't the only deal the FTC has scrutinized this year. The agency required Bristol-Myers Squibb to sell off the psoriasis drug Otezla to close its deal for Celgene, while AbbVie offered to divest an experimental drug as part of its effort to buy Allergan.

Written by: Ned Pagliarulo

Published on: Dec. 16, 2019 | UPDATED Dec. 17 2019, 8:23 p.m. AST

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