Novartis Pays Spark $105M Up Front for Gene Therapy Rights Outside U.S.

Xconomy National — 

Spark Therapeutics is licensing to Novartis the rights to its gene therapy outside of the U.S., a deal that puts the treatment for a rare, inherited form of blindness in the hands of a large pharmaceutical company with the resources to commercialize the drug globally.

Novartis (NYSE: NVS) is paying Spark (NASDAQ: ONCE) $105 million up front for those rights. Spark will be responsible for securing approval of its gene therapy, voretigene neparvovec, in Europe. The agreement calls for Novartis to pay the Philadelphia-based startup an additional $25 million upon European approval, and up to $40 million more depending on initial drug sales in certain markets outside of the U.S. Spark will also receive royalties from sales.

Spark is keeping its U.S. rights to voretigene neparvovec, and the deal does not include any other products in the company’s pipeline. In a prepared statement, Spark chief business officer Dan Faga said the company would use the proceeds from the deal to continue research and development of more gene therapies.

Voretigene neparvovec (Luxturna) won the FDA nod in December, marking the first approval for a treatment that delivers the functional version of a gene to the eye to correct for a faulty gene. Spark has since priced the treatment, an injection to the eye, at $425,000 per eye.

In a research note, Barclays said that the agreement with Novartis makes sense because it provides Spark with cash in the near term and also maximizes the potential for commercializing the drug globally. But Novartis will have to show the European market that a gene therapy is worth paying for. UniQure (NASDAQ: QURE) withdrew its gene therapy from Europe last year after the treatment for a rare metabolic disorder—priced at $1 million—failed to generate enough sales.

Spark has said it will begin providing the drug through select U.S. treatment centers by the end of the first quarter. Barclays said this rollout should be manageable for Spark, and eight to 10 centers should be sufficient to address the U.S. market.

The companies also reached a separate agreement that calls for Spark to manufacture and supply voretigene neparvovec to Novartis.

Photo by Flickr user Michael Gil via a Creative Commons license