Spark On Fire
25 February 2019
Spark On Fire
- One of our largest positions in the Biotechnology and Healthcare M&A certificates is making headlines today.
- Spark Therapeutics (ONCE US) has entered into a definitive agreement to sell out to Roche for $4.8B in cash or $114.50 per share, a 122% premium on Friday’s closing price.
- The news was first reported during the weekend by the WSJ in an article stating that another bidder was looking at Spark Therapeutics as well (Novartis likely in our view as Spark has a collaboration agreement with the Swiss giant on the commercialization of Luxturna for ex-US markets).
- With this in mind we believe that M&A activity is likely to remain sustained in coming weeks/months not only in the gene therapies space but also in the Healthcare space overall as another acquisition was announced this morning involving French drugmaker Ipsen SA which is to acquire the rare diseases Canadian player Clementia for $1.31B (70% premium).
- We time and again stated in our monthly reports and research notes that gene therapies and rare diseases were among the most interesting names to own in the current environment as this is where future growth stands for the larger players. Additionally, we stated that the healthcare industry was ripe for further consolidation as depressed valuations offered an opportunity for those players that were waiting for better entry points to take on the current opportunity. Apparently, this is what has driven Roche’s decision on Spark during the weekend according to the WSJ.
- Our strategy is to take profits on Spark Therapeutics today in both the Biotechnology and Healthcare M&A portfolios and to redeploy the proceeds into gene therapies names which are already part of our portfolios and to add some names which were on our “shopping” list and which are to benefit from such consolidation.
- In fact, this is the fourth acquisition in the space following Novartis buyout of AveXis, Celgene takeover of Juno Therapeutics and the acquisition of Celenex by Amicus Therapeutics. Finally, in late 2018, Novartis made an offer on CellforCure. This acquisition was made with the purpose of boosting Novartis’ CAR-T therapy manufacturing capacity as the Group had capacity and manufacturing issues in the past for Kymriah’s.
- It is quite clear to us that the two Swiss giants are making big bets in the gene therapy world and we are likely to see them active in the “gene-testing” world going forward.
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