Roche’s giant deal with Philly-based Spark is delayed by FTC queries

Shares of Spark Therapeutics, the most-prominent of the firms trying to translate gene therapies from Philadelphia researchers into one-dose cures, fell up to 11 percent in morning trading after Roche Holdings said a “Request for Additional Information” from the Federal Trade Commission would delay its planned $4.3 billion acquisition, beyond Friday’s target date.

Roche and Spark “remain committed to the transaction and are working cooperatively and expeditiously with the FTC" to complete the review, Roche added.

The stock fell Monday morning, from $109.35 before the market opened to as low as $97.35, before stabilizing around $100 at midday. In February, Roche agreed to pay $114.50 a share for Spark — more than double its recent price — pending government approvals. The discount below the sale price measures investors’ concern that the deal, already considered a landmark for gene therapy, might not get done as expected.

In its statement Monday, Roche said the company and Spark “have each received a request for additional information and documentary material (the ‘Second Request’) from the U.S. Federal Trade Commission in connection with the FTC’s review of Roche’s pending acquisition of Spark.” Roche had announced earlier delays: on May 14, “to provide the government with additional time to complete its current review"; on April 26, “for government to complete regulatory review”; on April 3, when Roche said it was “working with the government to conduct the review as expeditiously possible.”

“I would view this as the FTC trying to get more information about potential overlaps between the companies,” said Michael Carrier, a professor at Rutgers-Camden Law School and antitrust text author who has written and testified on drug competition. “A drug firm can get orphan exclusivity for a particular drug, but I’d view second requests as unique to the relation between the merging companies.”

Also, Roche says the U.K. Competition and Markets Authority “has opened an investigation" of the deal and whether it warrants a detailed review. Roche said both companies are cooperating with U.S. and U.K. investigators.

The FTC reviews mergers to consider their impact on competition. Spark is one of a group of firms that target relatively rare genetic diseases with treatments that, if successful, would cure patients. Spark trades under the stock ticker ONCE to underline that point.

Such treatments are expensive to develop and promise investors high prices and profit margins. Spark, founded in 2013 by doctors at Children’s Hospital of Philadelphia, is working on genetic treatments for the bleeding disorder hemophilia, the fatal brain disorder Huntington’s disease, and the fatal nervous-system condition Batten’s disease.

Under the 1983 U.S. Orphan Disease Act, companies that research genetic diseases that affect 250,000 or fewer people are eligible for tax incentives. The FTC has been studying potential abuses of orphan-disease status that could delay or restrict therapies in ways that increase profits without making the treatments more widely available, as has happened with other valuable treatments.