- Spark Therapeutics Inc. will hand Novartis AG rights to its gene therapy Luxturna outside of the U.S. market, trading global reach for $105 million in upfront cash from the Swiss pharma.
- Under a licensing deal announced Jan. 24, Spark also stands to earn another $65 million in near-term milestone payments if Luxturna secures approval from the European Medicines Agency and upon initial ex-U.S. sales.
- Luxturna won an OK from the Food and Drug Administration in mid-December for a rare form of inherited blindness, becoming the first gene therapy approved in the U.S. to treat a hereditary condition. Spark later announced it would charge $850,000 per patient for the treatment, setting a precedent for the fast emerging field.
With this deal, Spark simplifies its life considerably. Dealing ex-U.S. rights to Luxturna (voretigene neparvovec) will enable the Philadelphia-based biotech to concentrate its resources around supporting the U.S. launch.
This is perhaps a greater consideration for a complex treatment like Luxturna, which will require deeper discussions around cost and value with payers.
"We think this deal is a positive for Spark, as the company will be able to focus on the U.S. launch of Luxturna, leaving the ex-U.S. launch and commercialization to Novartis, a leader in the ophthalmology space," wrote Jefferies equity analyst Michael Yee in a Jan. 24 note to investors.
The $105 million paid by Novartis upfront — along with the $65 million in milestones likely to be hit in the near future — are not an insignificant amount for Spark, representing about 10% of the company's enterprise value according to Yee.
Under the deal, Spark will remain responsible for handling regulatory matters with the EMA and has agreed to manufacture and supply Novartis with Luxturna.
Luxturna treats a condition known as RPE65 mutation-associated retinal dystrophy, the name referring to the malformed gene that causes affected individuals to progressively lose sight. Spark estimates there are between 1,000 and 2,000 patients in the U.S., with another 4,000 to 5,000 in Europe and select other markets in the Americas and Asia Pacific regions.
Jefferies estimates that peak annual sales of Luxturna in the largest five EU countries could eventually total between $125 and $150 million.
While that wouldn't move the needle much for a pharma giant like Novartis, commercializing Luxturna could afford it valuable opportunities while complementing its existing ophthalmology business.
Cell and gene therapies hold substantial promise for changing how a wide range of diseases are treated. At the same time, the high cost for such treatments poses a major hurdle for figuring out how to ensure patient access and secure reimbursement.
Novartis is already experimenting with outcomes-based contracting for its CAR-T cell therapy Kymriah (tisagenlecleucel). Commercializing Luxturna in Europe could build on that experience.
In the U.S., Spark has plans in place with regional insurer Harvard Pilgrim and the major PBM Express Scripts to better align Luxturna's price with patient outcomes and remove some of the operational hurdles for administering to hospitals.
Shares in Spark rose by more than 6% in Thursday morning trading on news of the deal with Novartis.