Spark Therapeutics, Inc. (ONCE - Free Report) announced that the European Commission (“EC”) has approved the marketing authorization application (“MAA”) for its gene therapy, Luxturna (voretigene neparvovec). The MAA sought approval for the therapy in adult as well as pediatric patients as a one-time treatment for vision loss due to inherited retinal dystrophy caused by a genetic mutation in both copies of the RPE65-gene and who have enough viable retinal cells. The RPE65 mutations, a progressive disease, can lead to total blindness.
The EC decision was based on positive CHMP opinion. Data from a phase I clinical trial, its follow-up trial, and the first randomized, controlled phase III gene therapy trial for an inherited disease supported the decision. Data from the phase III trial showed that vision improvement was recorded as early as 30 days following the treatment.
Please note that Spark Therapeutics has a licensing and commercialization agreement with Novartis Pharma (NVS - Free Report) , which granted the latter rights to develop and commercialize Luxturna outside the United States. Thus, Novartis will be responsible for launch and distribution of the gene therapy in Europe. Spark Therapeutics will manufacture and supply Luxturna to Novartis under a supply agreement.
Under the terms of the agreement, Spark Therapeutics received an upfront payment of $105 million and is eligible to receive additional $65 million in milestone payments from Novartis. However, the majority of the total $170 million in upfront and anticipated milestone payment will be considered as revenues as and when Luxtarna is supplied to Novartis. Novartis will also pay royalties on ex-U.S. net sales of Luxturna.
Adoption of Luxtarna in Europe remains to be seen along with its impact on Spark Therapeutics’ revenues.
We remind investors that Luxturna was approved in December last year for a similar indication in the United States.
Spark Therapeutics’ shares were up 1.5% on Nov 23, following the news. However, shares of the company have declined 47.7% in the past six months compared with the industry’s decrease of 11.1%.
On its third-quarter earnings call, the company stated that Luxturna has done well since its launch in the United States with sales growing every quarter. The gene therapy is covered under all the major national payers, making it more accessible. Spark Therapeutics also has its own contracting model, Spark PATH, under which a patient can purchase directly or pay in installments based on the therapy’s outcome.
In the third quarter, the company recorded $8.9 million in sales of Luxturna, which was almost 32% higher than sales of $6.7 million achieved in the first six months of 2018. However, the company is concerned with timely identification of patients with RPE65 mutation. The company plans to shift its focus to support faster identification of patients in 2019.
The company also has a global collaboration agreement with Pfizer (PFE - Free Report) under which it is developing a gene therapy for the treatment hemophilia B. Per the terms of the agreement, Spark Therapeutics transitioned a gene therapy candidate to Pfizer for late-stage development. In July 2018, Pfizer initiated a phase III study to evaluate fidanacogene elaparvovec. Apart from this, Spark Therapeutics is also developing two gene therapies in early-stage studies for treating choroideremia, a progressive vision loss disorder and hemophilia A.
Zacks Rank & Stock to Consider
Spark Therapeutics currently carries a Zacks Rank #3 (Hold).
Exelixis, Inc. (EXEL - Free Report) is a better-ranked stock in the pharma sector carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Exelixis’ earnings estimates have moved up from $1.03 to $1.30 for 2018 and from $1.09 to $1.25 for 2019 over the past 30 days. The company delivered positive earnings surprise in all the trailing four quarters with the average beat being 83.43%.
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