Eyes on the Spark - Roche ReOrganisation

Spark Therapeutics, the gene therapy division that Roche purchased for $4.3 billion in 2019, has undergone a significant reorganisation. The action is a component of Roche's broader strategy shift in its pharmaceutical business. The company cannot say how many employees would be impacted or whether the Spark brand will be maintained because the plans are still being finalised. Some operations will continue at the existing Spark location in Philadelphia, while others will be combined into the larger pharmaceuticals sector, according to Roche.

Roche agreed to spend $575 million in late 2021 to construct a brand-new, 500,000-square-foot gene therapy innovation centre in Philadelphia. The building of the multistory complex is still ongoing. Prior to the most recent disclosure, Roche was restructuring Spark, spending 162 million Swiss francs ($184 million) on the operation in 2024. Roche estimates that the proposed reorganisation will cost an additional 300 million Swiss francs ($340 million in 2025).

Due to the significant restructuring, Spark has been fully written down by Roche, with a goodwill impairment of 2.12 billion Swiss francs ($2.4 billion). Roche now views Spark as a product transaction rather than a strategic one for financial reporting purposes.The company does not anticipate Spark's future earnings will be sufficient to support the unit's previous value. Roche's sales of Luxturna, a gene therapy used to treat a rare kind of genetic vision loss and Spark's only commercial product since 2017, were 18 million Swiss francs (about $20 million) last year, a 59% decrease from the previous year. The change comes shortly after Roche's unsuccessful attempt to develop a gene therapy treatment for hemophilia A, which was the main focus of the Spark acquisition.

The Spark example illustrates the challenges the gene therapy industry faces. After its Duchenne muscular dystrophy candidate failed a phase 3 study, Pfizer took its newly FDA-approved haemophilia B gene therapy Beqvez off the international market, thus clearing out its commercial and clinical gene therapy portfolio. Prior to that, AstraZeneca purchased a portfolio of preclinical gene therapy initiatives and associated technology from the company. The gene therapy pioneer Bluebird Bio, which was once valued at $10 billion at its height, is being sold to private equity companies for just $29 million as it tries to gain traction with three commercial products.

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