IPO preview: Spark Therapeutics (NASDAQ: ONCE)

Background

The field of gene therapy is red hot right now. Gene therapy companies such as Bluebird Bio (NASDAQ: BLUE), Celladon Corporation (NASDAQ: CLDN), Applied Genetic Technologies (NASDAQ: AGTC), and Avalanche Biotechnologies (NASDAQ: AAVL) have demonstrated how fast you can travel on this track. Now, Spark Therapeutics (NASDAQ ONCE) is ready to ring in the New Year.

Spark founded in 2013 is a leader in the field of gene therapy. Spark’s integrated platform builds on two decades of gene therapy expertise at The Children’s Hospital of Philadelphia (CHOP). FierceBiotech listed the company as one of 2014’s Fierce 15 biotechnology companies.

Gene therapy has gone through a roller coaster ride. The unexpected death of Jesse Gelsinger resulted from a massive immune response in 1999, and the risk of leukemia reported in 2003[1] hampered the development of gene therapy. But since then scientists have found more safe and effective vectors (e.g. AAV, lentiviral, SIN) for carrying healthy gene. In November 2012, the EMA approved uniQure (NASDAQ: QURE)’s Glybera for the treatment of lipoprotein lipase deficiency. Gene therapy has got a second wind.

Pipeline

Spark’s most advanced product candidate, SPK-RPE65, is in a pivotal Phase III trial for the treatment of inherited retinal dystrophies (IRDs) caused by mutations in the RPE65 gene. There are approximately 3,500 patients with RPE65-mediated IRDs in the U.S. and Europe.

SPK-RPE65 has received both breakthrough therapy and orphan product designation from the FDA. Phase III data is expected in the second half of 2015. Spark plans to submit a BLA to the FDA in 2016. If successful, SPK-RPE65 will be the first gene therapy approved in the U.S. and the first approved treatment for IRD.

Furthermore, Spark is developing a follow-on product candidate called SPK-CHM for the treatment of choroideremia (CHM). CHM is an X-linked disease affects approximately 12,500 patients in the U.S. and Europe. The company intends to initiate a Phase I/II trial for SPK-CHM during the first half of 2015.

In December 2014, Spark partnered with Pfizer to co-develop SPK-FIX for treating hemophilia B. The company received a $20 million upfront payment and is eligible to receive up to $260 million in aggregate milestone payments, as well as royalties. Approximately 4,000 patients in the U.S. and 28,000 patients worldwide suffer from hemophilia B. Spark intends to initiate a Phase I/II trial for SPK-FIX in the first half of 2015.

Clinical data

In October 2007, CHOP initiated the 101 trial of SPK-RPE65 in 12 patients with Leber’s congenital amaurosis (LCA) due to RPE65 mutations. Patients received a single dose of SPK-RPE65 (1.5 × 10^10 – 1.5 × 10^11 vg) in their worst eye. SPK-RPE65 was well tolerated, with no drug-related serious adverse events.

In November 2010, CHOP initiated the 102 trial of SPK-RPE65 in the uninjected eye of the 11 eligible patients from the 101 trial. The 102 trial used the same dose of SPK-RPE65 (1.5 × 10^11 vg) that is being used in the Phase III trial.

In the Phase I trial, patients had at least  a 100-fold improvement in light sensitivity[2]. Notably, an 8-year-old patient, Corey Haas, had nearly the same level of light sensitivity as did normal kids.

Financing

In May 2014, Spark completed a $72.8 million Series B financing led by CHOP ($22.5 million), Sofinnova Ventures ($15 million), Joining Sofinnova, Brookside Capital, Deerfield Management Company, and Rock Springs Capital. As early as October 2013, CHOP invested $10 million in Series A financing. Now, CHOP owns more than half (53.44%) of the company’s stock.

The company spent $10.2 million on R&D and $5.2 million on G&A during the first nine months of 2014. By September 2014, the company has $67.3 million in cash and cash equivalents.

[1] Science. 2003, 302(5644), 415-419.

[2] Lancet. 2009, 374(9701), 1597-1605.

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