Spark Stock Dips Despite Gene Therapy View In Europe

Spark Therapeutics‘ (ONCE) gene therapy is “about to go global,” an analyst said Friday after Europe came closer to approving the company’s Luxturna drug.




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If approved, Luxturna would be the first gene therapy used in both the U.S. and Europe, Raymond James analyst Reni Benjamin said in a note about Spark stock. Early Friday, the Committee for Medicinal Products for Human Use adopted a positive opinion on Luxturna.

Luxturna treats a genetic eye disease that can lead to blindness. Spark markets it in the U.S. while Novartis (NVS) will commercialize the gene therapy in international markets. Novartis noted in a news release that at one year following treatment, 93% of Luxturna patients in a late-stage study had improved vision.

Now, “the company awaits a marketing authorization from the European Commission within two months to become the first gene therapy for a genetic disease approved in both the U.S. and Europe,” Raymond James’ Benjamin said.

Novartis Trio Gets Positive View

In addition to Luxturna, Novartis gained positive opinions from European officials for multiple sclerosis drug Gilenya and a biosimilar of Amgen‘s (AMGN) bone-marrow stimulating drug Neulasta. Novartis entered an agreement for Luxturna outside the U.S. in January.

Under the terms of its deal with Novartis, Spark is responsible for obtaining European approval for Luxturna. Benjamin expects this to happen in November. Then, Novartis will assume responsibility of getting approvals in other countries.

Spark already has received an upfront $105 million payment. It’s expected to receive an additional $25 million upon European approval of Luxturna as well as an aggregate payment up to $40 million upon initial sales of Luxturna outside the U.S. Spark will also receive royalties on sales.

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Spark Stock Sell-Off Equals Opportunity?

But on the stock market today, Spark stock dipped 2.9%, to 55.55. Benjamin noted in a follow-up email to Investor’s Business Daily that Spark stock echoed a broader decline for biotech stocks. Biotechs broadly lost about 2%. Spark stock hit a record high in July but since has declined 41% from that point.

Benjamin said that the gene therapy’s U.S. launch is in line with Spark’s expectations. Further, Spark completed the transition of its hemophilia B program to Pfizer (PFE) and is still working on its own hemophilia A treatment.

“We believe the recent sell-off in shares presents an interesting opportunity for risk-tolerant, long-term investors,” Benjamin said in his note. He has an outperform rating on Spark stock.

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