On February 25th Roche has reached a $4,3 million agreement for the acquisition of the American biotech firm Spark Therapeutics.
F. Hoffmann-La Roche & Co. was founded in Europe during the second industrial revolution. On October 1st, 1896, Fritz Hoffmann-La Roche, when he was only 28 years old, started his business as the successor of the previous existing company called “Hoffmann, Traub & Co” in Basel, Switzerland. It can be considered as a pioneer in healthcare and the world’s largest biotech company; in fact, they report the following: “We are the world's number 1 in biotech with 17 biopharmaceuticals on the market. Over half of the compounds in our product pipeline are biopharmaceuticals, enabling us to deliver better-targeted therapies”. They are committed to innovation, indeed they invest around 9 billion Swiss francs in Research and Development every year because they believe that innovation itself constitutes their “lifeblood” -this is amongst the highest Research and Development expenditures in the world across all industries-.
They have a robust and diverse portfolio of highly effective treatments which helps them achieving their business purpose in being “the excellence in science”; again, as they highlight on their website, “Breakthroughs in science and technology increasingly allow us to find out precisely what is malfunctioning in the body and develop drugs to counter the problem. We focus on oncology, immunology, ophthalmology, infectious diseases and neuroscience, however we remain flexible and follow the science as new insights become available.”
Founded in March 2013 as a result of the technology and know-how accumulated over two decades at CHOP (Children’s Hospital of Philadelphia) Spark’s investigational therapies have the potential to provide long-lasting effects, changing radically the lives of patients.
Last year, the firm produced 64,7 million dollars of earnings with a clean loss of 78,8 million dollars. This, even though it has a negative impact, represents a clear improvement if compared with the preceding year, but it still makes us understand how much effort Roche will have to put forth in order to make the deal profitable. However, because of its know-how in research on gene therapies and its development of Luxturna, a medicine able to take care, perhaps forever, of a rare hereditary disease of the eye that can bring to blindness, Spark Therapeutics possesses a competitive advantage which allows it to be a leader in the pharmaceutical sector.
With this deal, the Swiss pharmaceutical company is therefore going to expand its market share and its presence in the treatment of certain diseases related to the previously mentioned one, thanks to the exploitation of common synergies between the firms.
The arranged sum represents a great premium on the market value of Spark, since at February 25th closing the biotechnological firm had a market value of a little less than 2 million dollars. Therefore, Roche officially announced its willingness to fully acquire Spark Therapeutics in a merger agreement by buying outstanding shares at a price of $114.50, and paying cash for the transaction. As a result, total equity value is going to be approximately equal to $4.8 billion on a fully diluted basis, including in our forecast projected net cash at close, which should be approximately equivalent to $500 million. The new share price therefore represents a premium of 122 percent above Spark’s closing price on February 22nd, 2019. The boards of directors of both Sparks and Roche voted unanimously in favor of the merger agreement to be carried out.
According to Spark’s terms of the agreement mentioned in its last press release, we know that “Following completion of the tender offer, Roche will acquire all remaining shares at the same price of $114.50 per share through a second step merger. The closing of the transaction is expected to take place in the second quarter of 2019.
Centerview Partners is acting as financial advisor to Spark Therapeutics and Goodwin Procter LLPis acting as legal counsel to Spark Therapeutics. Cowen also acted as a financial advisor in this transaction to Spark Therapeutics. Citi is acting as financial advisor to Roche and Davis Polk & Wardwell LLP is acting as legal counsel to Roche.”
In recent years the development of the genes therapies seems to have reached a turning point and large firms such as Pfizer and Novartis have made footsteps ahead to offer such treatments. Pfizer is collaborating with Spark for the development of a treatment against hemophilia B. Last year, Novartis paid 8,7 million dollars to acquire AveXis, a biotech company that has developed the gene therapy for SMA, the spinal muscular atrophy. In conclusion, we expect the biotech industry to grow at increasing rates in the near future as new treatments are discovered continually.
Giulia di Marco
F. Hoffmann-La Roche & Co. was founded in Europe during the second industrial revolution. On October 1st, 1896, Fritz Hoffmann-La Roche, when he was only 28 years old, started his business as the successor of the previous existing company called “Hoffmann, Traub & Co” in Basel, Switzerland. It can be considered as a pioneer in healthcare and the world’s largest biotech company; in fact, they report the following: “We are the world's number 1 in biotech with 17 biopharmaceuticals on the market. Over half of the compounds in our product pipeline are biopharmaceuticals, enabling us to deliver better-targeted therapies”. They are committed to innovation, indeed they invest around 9 billion Swiss francs in Research and Development every year because they believe that innovation itself constitutes their “lifeblood” -this is amongst the highest Research and Development expenditures in the world across all industries-.
They have a robust and diverse portfolio of highly effective treatments which helps them achieving their business purpose in being “the excellence in science”; again, as they highlight on their website, “Breakthroughs in science and technology increasingly allow us to find out precisely what is malfunctioning in the body and develop drugs to counter the problem. We focus on oncology, immunology, ophthalmology, infectious diseases and neuroscience, however we remain flexible and follow the science as new insights become available.”
Founded in March 2013 as a result of the technology and know-how accumulated over two decades at CHOP (Children’s Hospital of Philadelphia) Spark’s investigational therapies have the potential to provide long-lasting effects, changing radically the lives of patients.
Last year, the firm produced 64,7 million dollars of earnings with a clean loss of 78,8 million dollars. This, even though it has a negative impact, represents a clear improvement if compared with the preceding year, but it still makes us understand how much effort Roche will have to put forth in order to make the deal profitable. However, because of its know-how in research on gene therapies and its development of Luxturna, a medicine able to take care, perhaps forever, of a rare hereditary disease of the eye that can bring to blindness, Spark Therapeutics possesses a competitive advantage which allows it to be a leader in the pharmaceutical sector.
With this deal, the Swiss pharmaceutical company is therefore going to expand its market share and its presence in the treatment of certain diseases related to the previously mentioned one, thanks to the exploitation of common synergies between the firms.
The arranged sum represents a great premium on the market value of Spark, since at February 25th closing the biotechnological firm had a market value of a little less than 2 million dollars. Therefore, Roche officially announced its willingness to fully acquire Spark Therapeutics in a merger agreement by buying outstanding shares at a price of $114.50, and paying cash for the transaction. As a result, total equity value is going to be approximately equal to $4.8 billion on a fully diluted basis, including in our forecast projected net cash at close, which should be approximately equivalent to $500 million. The new share price therefore represents a premium of 122 percent above Spark’s closing price on February 22nd, 2019. The boards of directors of both Sparks and Roche voted unanimously in favor of the merger agreement to be carried out.
According to Spark’s terms of the agreement mentioned in its last press release, we know that “Following completion of the tender offer, Roche will acquire all remaining shares at the same price of $114.50 per share through a second step merger. The closing of the transaction is expected to take place in the second quarter of 2019.
Centerview Partners is acting as financial advisor to Spark Therapeutics and Goodwin Procter LLPis acting as legal counsel to Spark Therapeutics. Cowen also acted as a financial advisor in this transaction to Spark Therapeutics. Citi is acting as financial advisor to Roche and Davis Polk & Wardwell LLP is acting as legal counsel to Roche.”
In recent years the development of the genes therapies seems to have reached a turning point and large firms such as Pfizer and Novartis have made footsteps ahead to offer such treatments. Pfizer is collaborating with Spark for the development of a treatment against hemophilia B. Last year, Novartis paid 8,7 million dollars to acquire AveXis, a biotech company that has developed the gene therapy for SMA, the spinal muscular atrophy. In conclusion, we expect the biotech industry to grow at increasing rates in the near future as new treatments are discovered continually.
Giulia di Marco