Spark Therapeutics, a Philly biotech pioneer, is being restructured amid financial write-downs

Philadelphia’s Spark Therapeutics is going through a “fundamental reorganization” by its owner, Swiss pharmaceutical giant Roche, which has written off the regional biotech leader as a financial loss following the termination of its work on a once-promising treatment for hemophilia.

A Spark gene therapy candidate for hemophilia A was the financial and clinical centerpiece of Roche’s $4.8 billion Spark acquisition in 2019. Roche ended the development work on the prospect designated as SPK-8011 as part of a rethinking of its approach to the blood disease, Endpoints News reported in December, though it continues to work on a different gene therapy approach to the disease.

Then, in a January financial report, Roche announced a “fundamental reorganization” of Spark. Already last year, Roche incurred $180 million in restructuring costs at Spark. This year, those efforts are expected to cost more than $300 million.

Roche has written off as a loss most of what it paid for Spark, which was based on research at Children’s Hospital of Philadelphia and the University of Pennsylvania.

The changes at Spark are happening at a difficult time for the gene therapy sector, as sales for the expensive treatments fail to meet Wall Street and company expectations. Massachusetts-based Bluebird Bio, a one-time leader in the sector, sold itself for just $29 million last month, a sliver of the $10 billion it was worth in 2018, according to Fierce Pharma, an online trade publication.

Spark’s breakthrough Luxturna cost $450,000 per eye when it was approved. It was the first gene therapy approved by the FDA for a disease caused by mutations in a specific gene, a milestone that played a key part in establishing Philadelphia as a biotech hub. But its sales history fits the industry pattern of disappointing revenue. Roche wrote down the balance-sheet value of Luxturna for three straight years through 2022, when sales were just shy of $50 million.

Roche said that some of Spark’s operations will be consolidated into the company’s overall pharmaceuticals division and some will stay in Philadelphia.

“The integration process has just been initiated and we are working to determine how to best preserve and deploy the unique capabilities we have in Spark in Philadelphia, and how we can more fully leverage the Roche network to support these efforts. It’s still too early to determine the overall impact,” Spark spokesperson Denise Bradley said in an email.

Spark had an unspecified number of layoffs last summer after discontinuing work on several early-stage products, Endpoints News reported. The company now employs “more than 600,” Bradley said.

That’s down from 800 in 2021, when Spark announced plans to spend $575 million on a 500,000-square-foot Gene Therapy Innovation Center at 30th and Chestnut Streets in University City. Construction is underway, and the laboratory and manufacturing facility is expected to open next year. Spark’s then-CEO Jeff Marrazzo predicted at the time that Spark would double its employee count by then.

Instead, Spark employs fewer people than it did then.

Roche typically allows companies it acquires to maintain their own identities, said Steven Altschuler, who was CHOP’s CEO when Spark was founded and was chairman of Spark’s board when it was sold. He is no longer associated with the company. That’s still the case, for example, with Genentech, based in South San Francisco, Calif., which Roche acquired for $46.8 billion in 2009, he said.

“Spark may be absorbed completely within Roche and not have its own separate identity,” said Altschuler, who left CHOP in 2015 and now works in biotechnology investing. “But Roche will use this huge manufacturing plant to support activities for Roche in general. That’s the way I see it moving ahead.”

Editor’s note: This story has been updated to clarify Spark’s approach to gene therapy for hemophilia A.