In a landmark deal that marks the march of gene therapies from med school labs to patients and the mainstream economy, the Swiss drug giant Roche says it has completed its $4.3 billion purchase of Philadelphia-based Spark Therapeutics Inc. after U.S. and British regulators approved the deal following a nine-month review.
“This is a day we have been excited about for a long time,” said CEO Jeffrey Marrazzo. “It was avoiding our grasp for a little while now. It’s a great day to think about the next era of genetic medicines, to treat genetic diseases and beyond” -- and to use Roche’s billions in capital to start planning in decades, instead of years.
Marrazzo says Spark “will be maintained as an independent operating company,” run by Marrazzo and his team, and accelerated by the global resources and reach of Roche, which will use Spark as the base for its expanding gene and cell therapy product development.
At $114.50 a share, the deal will enrich Children’s Hospital of Philadelphia, an early Spark investor that provided $35 million to start the company using science developed by Jean Bennett and Albert McGuire at the University of Pennsylvania and Katherine High and colleagues at CHOP. Marrazzo said CHOP — which made its first Spark investment in 2013 — stands to collect as much as $750 million from the sale, boosting its research resources. His own shares are worth around $80 million, and High’s around $40 million, according to company filings with the Securities and Exchange Commission.
The benefits to Philadelphia’s gene and cell therapy industry, which has been under development since the 1980s, could extend over decades, if Roche’s bet proves productive with profitable therapies.
“Their vision is very much, long-term oriented, to make Philadelphia the center of excellence for gene therapy within the Roche group” under the Spark name, said Marrazzo.
Spark currently employs 450, including 125 research scientists and support staff in the former Evening Bulletin building between Drexel University and the 30th Street train station, where Spark’s space is being expanded to house 350. Marrazzo said that may expand into thousands of employees someday.
Among other locations, the company is scouting for a gene products factory location, like the new Tmunity research and development and production center at the former Tengion labs near Norristown, or the WuXi AppTec labs at the former Navy Yard in South Philly.
“Manufacturing facilities you see historically outside major urban areas,” Marrazzo said. “But it all depends on how you design it, and what you are trying to achieve.” More than 3,000 Philadelphia-area workers labor for cell and gene therapy companies, according to a year-old survey.
Spark’s first product, approved in 2017, is Luxturna, a gene therapy treating a rare hereditary blindness, which the company licensed to Novartis early last year. Luxturna was the first gene therapy approved by the Food and Drug Administration to treat an inherited disease. The company is also working on therapies for hemophilia B, hemophilia A, Pompe disease, and for neurodegenerative and eye disorders.
The acquisition faced repeated delays, in part because regulators wanted to explore how Roche would manage Spark’s potential cure for hemophilia, the bleeding condition, for which Roche sells treatments.
“As you engage with new stakeholders [such as] insurance companies and regulators, there is a huge amount of education” that Spark has had to do, Marrazzo said. Like other pioneers, early developers face delays as they explain what they are doing.
“Decades of transitional research at Penn Medicine and CHOP made this dream a reality," said J. Larry Jameson, dean of Penn’s Perelman School of Medicine.
Doctors remember “the roadblocks and stumbles that occurred in the early days of gene therapy,” said Jonathan Epstein, chief scientific officer at the Penn medical school. In 2000, the FDA suspended research at Penn’s Institute for Human Gene Therapy after the death a year before of Jesse Gelsinger, a patient in a gene therapy trial. The university later paid a half-million-dollar fine, and a private settlement to the patient’s family.
Penn scientists "went back into the laboratory” and came up with safer ways to deliver the therapy, added Epstein. Today, "two-thirds of the [gene therapy] clinical trials in the world now use vectors that were derived here in Philadelphia.”
Now Philadelphia rivals the Boston and San Francisco areas as cradles of U.S. gene therapies, Esptein says. Philadelphia has lab clusters -- in University City, at Pennovation, at the Navy Yard, and at suburban sites. “Real estate here is more affordable than Boston or South San Francisco.” He’d like to see Pennsylvania match other states’ public funding of basic medical research.
Spark’s $4.3 billion price tag is “another sign that the successes in the field are convincing and gene therapy is here to stay. One by one we are going to cure inherited and incurable diseases,” Epstein added.
Spark “blazed a path and a trail” for other companies, said Joan Lau, managing partner at the biotech investor Milita Hill Ventures and a founder of companies including Talee Bio, a cystic fibrosis gene therapy company, now called Spirovant Sciences and recently acquired by Sumitomo Dai Nippon Pharma.“And I see these companies continuing to grow significantly in Philadelphia. We have a perfect nexus of seriously deep academic talent and research. And we have the deepest bench, with large pharma companies like Meck and Pfizer and GSK, who understand how to bring forward medicine to patients."
Compared with the early trials in the 1980s and 1990s, “today’s trials are at breakthrough levels, as opposed to incremental improvements,” said Philadelphia investor and biotech research donor Richard Vague.
The Roche deal “shows there is a path for multinational companies to acquire focused rare-disease companies,” added Barbara Schilberg, chief executive at BioAdvance.
“Great news for Philly,” noted Martin Lehr, founder of Philadelphia-based Context Therapeutics. The manufacturing challenges and intellectual-property development needed for gene therapy create lab and sales jobs “at all income scales,” he added, “not just the elite.”
Marrazzo praised former CHOP chief Steve Altschuler for backing Spark in its crucial early years, and added that CHOP will benefit with better treatments as well as cash.
Even with his own big payday, Marrazzo said he plans to stay on under Roche.
“The full potential of gene therapy is not fully realized. Not only can we apply the tech to rare genetic diseases,” but also to more widespread brain, eye, and other conditions, he added. “I am very interested in staying the course and making sure in 10, in 15 years there are medicines we can bring to patients because of what we do at Spark.”
He called it "a little bittersweet” that the company founded in 2013 will now become part of a global organization, relinquishing its independence. But “now we get to write the second chapter.”