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Spark Therapeutics Reports 2018 Financial Results and Recent Business Progress

1229 Days ago

PHILADELPHIA, Feb. 19, 2019 (GLOBE NEWSWIRE) -- Spark Therapeutics (NASDAQ: ONCE), a fully integrated, commercial gene therapy company dedicated to challenging the inevitability of genetic disease, announced today corporate and financial results for 2018 and recent business progress.

“In 2018, we successfully launched LUXTURNA® (voretigene neparvovec-rzyl) in the U.S. and have demonstrated first-of-its-kind commercial expertise, including establishing the ability to deliver a gene therapy while securing patient access. We also obtained marketing authorization for LUXTURNA in the EU,” said Jeffrey D. Marrazzo, chief executive officer of Spark Therapeutics. “Additionally, we advanced our global hemophilia A franchise, with SPK-8011 entering Phase 3 and SPK-8016 entering Phase 1/2 clinical trials. In parallel, we proceeded with preparations to have two more investigational gene therapies ready for clinical trials in 2019, including SPK-3006 for Pompe disease.”

“Throughout this progress, we have built unique competencies in the discovery, development and delivery of genetic medicines that guide our portfolio strategy - from how we discover and develop gene therapies, to how we select targets and prioritize our programs, to how we manufacture and commercialize these novel therapies globally,” said Marrazzo. “We believe these competencies increase our ability to successfully break barriers by transforming the research in our labs into life-altering gene therapy products for patients and position us well for continued growth and success.”

2018 and recent business highlights
Launched LUXTURNA, the first gene therapy for a genetic disease and only pharmacologic treatment for inherited retinal disease in the U.S. and secured EU marketing authorization

  • Pioneered innovative pricing and distribution models in U.S. that secured access for patients and families
  • Shipped 75 vials of LUXTURNA in the U.S.
  • Entered into a licensing and supply agreement granting Novartis Pharmaceuticals exclusive rights to commercialize LUXTURNA in markets outside the U.S.

Expanded hemophilia portfolio to include multiple investigational gene therapies, with three programs now in clinical trials

  • Presented updated preliminary data, with a Nov. 2, 2018, data cutoff, on the first 12 participants in the ongoing Phase 1/2 clinical trial of SPK-8011 in hemophilia A at an oral presentation at the American Society of Hematology annual meeting
    • No inhibitors, no thrombotic events and no persistent or unresolved transaminase elevations were observed across a cumulative 9.7 years of data follow-up
    • Across all three doses, beginning four weeks after vector infusion, there was a 94-percent reduction in bleeds and a 95-percent reduction in factor VIII infusions
    • Among the five participants treated in the 2x1012 vg/kg cohort who did not experience an immune response-associated decline in FVIII expression, beginning four weeks after vector infusion, there was a 100-percent reduction in bleeds and a greater than 99-percent reduction in infusions, with up to 46 weeks of follow-up
    • All five participants in the 5x1011 vg/kg and 1x1012 vg/kg dose cohorts, with follow up of up to 78 weeks post SPK-8011 infusion, had shown persistent, stable factor VIII activity levels in this ongoing study
  • Initiated Phase 1/2 clinical trial expansion for SPK-8011 that incorporates a standardized, prophylactic steroid regimen and material made from our suspension manufacturing process
    • Received FDA clearance to use mammalian suspension culture material in the clinical trial
  • Initiated an observational Phase 3 six-month run-in study for SPK-8011
  • Initiated Phase 1/2 clinical trial for SPK-8016, a novel, internally developed adeno-associated viral (AAV) gene therapy candidate aimed at addressing segments of the hemophilia A inhibitor market
  • Completed transition of SPK-9001 for hemophilia B to Pfizer; Pfizer initiated a six-month run-in portion of Phase 3 clinical trial in July 2018

Progressed pipeline of investigational AAV gene therapies

  • Presented investigational new drug (IND)-enabling data for SPK-3006, a liver-directed AAV gene therapy for Pompe disease showing decreased glycogen accumulation, increased survival and improved cardiac, respiratory and muscle function in acid alpha-glucosidase knockout (Gaa-/-) mice at the 2018 World Muscle Society International Congress and at the 2019 15th Annual WORLDSymposium™
    • Administration of a single infusion at three ascending doses in non-human primates demonstrated dose-dependent expression of GAA in plasma, reaching plasma levels equivalent to those found to be therapeutically effective in Pompe disease mouse models
    • Uptake of secretable GAA has been demonstrated in both animal models and in vitro systems
  • Presented IND-enabling data for SPK-1001, an investigational AAV gene therapy for CLN2 disease, a form of Batten disease, at the 2019 15th Annual WORLDSymposium™
  • Showed preclinical proof-of-concept in non-human primates for SPK-miHTT, an investigational AAV gene therapy for Huntington’s disease, with knockdown of the mutant HTT up to 90 percent at the mRNA and protein level using a miRNA silencing approach. Evidence of cortical knockdown was also obtained in the brain of non-human primates.

Bolstered manufacturing capabilities, research platform and financial position as we expand our fully integrated organization

  • Own and operate first and only FDA- and EU-licensed AAV commercial manufacturing facility
  • Achieved targeted scale of 2x200-liter suspension upstream and 400-liter downstream manufacturing process to support anticipated clinical and commercial hemophilia A and Pompe disease supply requirements
  • Expanded our research and development facilities in West Philadelphia
  • Ended year with a strong balance sheet with $601.3 million in cash, cash equivalents, restricted cash and marketable securities

Financial results for the years ended December 31, 2018 and 2017
In the year ended December 31, 2018, we recognized $64.7 million in total revenue, of which $27.0 million was net product sales of LUXTURNA and $37.8 million was contract revenue associated with our agreements with Pfizer and Novartis. In the year ended December 31, 2017, we recognized $12.1 million in contract revenue, all of which was associated with our Pfizer agreement.

Cost of product sales for the year ended December 31, 2018, was $1.0 million, which consists of manufacturing, shipping and other costs, as well as royalties. A substantial portion of the inventory sold during the period was produced prior to FDA approval and, therefore, was expensed as research and development expense in 2017.

Cost of contract revenue for the year ended December 31, 2018, was $6.9 million, which consists of manufacturing and other costs associated with our agreements.

Our research and development expenses for the year ended December 31, 2018, were $125.3 million compared with $135.2 million for the year ended December 31, 2017. The $9.9 million decrease was due to a $13.3 million reduction in internal research and development expenses, partially offset by an increase of $3.4 million in external research and development expenses. The $13.3 million reduction in internal research and development expense was primarily the result of $20.5 million in salaries and other LUXTURNA costs being capitalized in inventory following FDA approval, as well as costs associated with contract revenue. These costs were partially offset by an increase of $7.5 million in salaries and other related benefits. The $3.4 million increase in external research and development expenses primarily resulted from $14.4 million in increased expenses related to our hemophilia A program and $0.7 million in programs in preclinical development. These costs were partially offset by $7.9 million less in expenses related to LUXTURNA and $3.8 million less in expenses related to the SPK-FIX and SPK-CHM clinical programs.

Our acquired in-process research and development (IPR&D) expense was $0.3 million during the year ended December 31, 2018. Our acquired IPR&D expense for the year ended December 31, 2017, was $8.6 million, which includes additional payments related to our Selecta Bioscience, Inc. license agreement entered into in 2016.

During the year ended December 31, 2017, we recorded a non-cash impairment charge of $15.7 million related to acquired IPR&D from a March 2016 acquisition. Additionally, we recognized an income tax benefit of $1.0 million related to the reversal of the deferred tax liability associated with the IPR&D during the year ended December 31, 2017.

Selling, general and administrative expenses for the year ended December 31, 2018 were $124.9 million compared with $111.1 million for the year ended December 31, 2017. Selling, general and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, legal and patent costs, facility costs and other professional fees. The $13.8 million increase primarily was due to $14.9 million in higher salaries and related costs, including stock-based compensation, and a $6.1 million increase in legal and patent expenses, professional fees and other operating costs. These increases were partially offset by a reduction of $6.9 million related to an early termination of one of our leases that was amended in 2017, and $0.3 million in launch activities for LUXTURNA.

We recognized $110.0 million of other income during the year ended December 31, 2018, from the sale of our rare pediatric disease priority review voucher (PRV).

Our net loss for the year ended December 31, 2018, was $78.8 million, or ($2.11) basic and diluted net loss per common share, as compared to a net loss of $253.5 million, or ($7.63) basic and diluted net loss per common share, for the year ended December 31, 2017. Our loss for the year ended December 31, 2018, was favorably impacted by the sale of our PRV in the second quarter.

As of December 31, 2018, we had cash and cash equivalents, restricted cash and marketable securities of $601.3 million, and 37.7 million shares outstanding.

Conference call details
Spark Therapeutics will host a conference call and audio webcast, today, Tuesday, Feb. 19, at 8:30 a.m. ET, to discuss corporate and financial results for 2018 and recent business highlights. The call can be accessed by dialing the numbers below or by visiting the “Investors” section at www.sparktx.com.

U.S. Dial-in Number: (855) 851-4526
International Dial-in Number: (720) 634-2901
Passcode: 1089969

A replay of the call will be available for one week following the call by dialing the numbers below or also available on our website.

Replay Dial-in Number: (855) 859-2056
Replay International Dial-in Number: (404) 537-3406
Passcode: 1089969

About Spark Therapeutics
At Spark Therapeutics, a fully integrated, commercial company committed to discovering, developing and delivering gene therapies, we challenge the inevitability of genetic diseases, including blindness, hemophilia, lysosomal storage disorders and neurodegenerative diseases. We have successfully applied our technology in the first gene therapy approved in both the U.S. and EU for a genetic disease, and currently have four programs in clinical trials, including product candidates that have shown promising early results in patients with hemophilia. At Spark, we see the path to a world where no life is limited by genetic disease. For more information, visit www.sparktx.com, and follow us on Twitter and LinkedIn.

Cautionary note on forward-looking statements
This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the company's product candidates, including LUXTURNA (voretigene neparvovec-rzyl), SPK-7001, SPK-9001 and SPK-8011. The words ‘‘anticipate,’’ ‘‘believe,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘may,’’ ‘‘plan,’’ ‘‘predict,’’ ‘‘will,’’ ‘‘would,’’ ‘‘could,’’ ‘‘should,’’ ‘‘continue’’ and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Any forward-looking statements are based on management's current expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially and adversely from those set forth in, or implied by, such forward-looking statements. These risks and uncertainties include, but are not limited to, the risk that: (i) our preliminary clinical results for our product candidate, SPK‐8011, for hemophilia A may not be sustained; (ii) our implementation of a prophylactic approach to steroid administration for subjects participating in our SPK‐8011 clinical trials may not sufficiently prevent immune responses; (iii) we may not successfully initiate a multinational Phase 3 clinical trial for SPK‐8011 and the timing and design of such trial may vary from our expectations; (iv) our initial evaluation of safety in non‐inhibitor patients for SPK‐8016 may not be successful; (v) our clinical equivalence testing for SPK‐8011 resulting from changes in our adherent manufacturing process to a suspension cell culture manufacturing process may not produce expected results; (vi) we may not achieve our expected objectives for commercialization for LUXTURNA; (vii) we may be unable to maintain or continue to enter into agreements with payers for the provision of LUXTURNA; (viii) we will not be able to reach agreement with the Centers for Medicare & Medicaid Services regarding LUXTURNA; (ix) Novartis may not be successful in commercializing or selling LUXTURNA in one or more markets; (x) we may not receive any additional milestone or royalty payments from Novartis, Pfizer or our other collaborators; (xi) we may not advance our SPK‐3006 program or other undisclosed programs into the clinic when anticipated, or at all; and (xii) any one or more of our product candidates in preclinical or clinical development will not successfully be developed and commercialized. For a discussion of other risks and uncertainties, and other important factors, any of which could cause our actual results to differ from those contained in the forward-looking statements, see the "Risk Factors" section, as well as discussions of potential risks, uncertainties and other important factors, in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and other filings we make with the Securities and Exchange Commission. All information in this press release is as of the date of the release, and Spark Therapeutics undertakes no duty to update this information unless required by law.

Investor Contact:       Media Contact:
Ryan Asay       Monique da Silva
Ryan.asay@sparktx.com       Monique.dasilva@sparktx.com
(215) 239-6424       (215) 282-7470

Spark Therapeutics, Inc.
Consolidated balance sheets (unaudited)
(in thousands, except share and per share data)
  December 31,
  December 31,
Current assets:      
Cash and cash equivalents $ 96,748     $ 95,247  
Marketable securities 423,419     358,359  
Trade and other receivables 7,906     47,385  
Inventory     25,637  
Prepaid expenses and other current assets 5,093     40,512  
     Total current assets 533,166     567,140  
Restricted cash     53,000  
Marketable securities 20,035     94,678  
Property and equipment, net 61,713     95,998  
Goodwill 1,254     1,198  
Other assets 628     2,338  
     Total assets $ 616,796     $ 814,352  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 14,183     $ 19,492  
Accrued expenses 24,697     34,790  
Current portion of long-term debt 312     4,822  
Current portion of deferred rent 969     1,365  
Current portion of deferred revenue 11,969      
Current other liabilities 1,557     1,885  
     Total current liabilities 53,687     62,354  
Long-term debt 912     46,090  
Long-term deferred rent 8,318     10,885  
Long-term deferred revenue     160,000  
Other liabilities 40,255     38,510  
     Total liabilities 103,172     317,839  
Stockholders’ equity:      
Preferred stock, $0.001 par value. Authorized, 5,000,000 shares; no shares issued or outstanding      
Common stock, $0.001 par value. Authorized, 150,000,000 shares; 37,131,626 shares issued and 37,111,404 shares outstanding as of December 31, 2017; 37,764,213 shares issued and 37,686,301 shares outstanding as of December 31, 2018 37     38  
Additional paid-in capital 1,026,590     1,091,873  
Accumulated other comprehensive loss
(5,914 )   (1,050 )
Treasury stock, at cost, 20,222 shares as of December 31, 2017 and 77,912 shares as of December 31, 2018 (1,226 )   (4,661 )
Accumulated deficit (505,863 )   (589,687 )
     Total stockholders’ equity 513,624     496,513  
     Total liabilities and stockholders’ equity $ 616,796     $ 814,352  

Spark Therapeutics, Inc.
Consolidated statements of operations (unaudited)
(in thousands, except share and per share data)
  For the Year Ended December 31,
  2016   2017   2018
Product sales, net $     $     $ 26,973  
Contract revenue 20,183     12,066     37,752  
Total revenues 20,183     12,066     64,725  
Operating expenses:          
Cost of product sales         1,008  
Cost of contract revenue         6,907  
Research and development 86,380     135,160     125,254  
Acquired in-process research and development 11,132     8,604     300  
Impairment of acquired in-process research and development     15,696      
Selling, general and administrative 48,070     111,124     124,895  
Total operating expenses 145,582     270,584     258,364  
Loss from operations (125,399 )   (258,518 )   (193,639 )
Unrealized loss on equity investments         (5,078 )
Interest income, net 1,746     4,073     9,994  
Other income         110,000  
Loss before income taxes (123,653 )   (254,445 )   (78,723 )
Income tax benefit (expense)     963     (99 )
Net loss $ (123,653 )   $ (253,482 )   $ (78,822 )
Basic and diluted net loss per common share $ (4.29 )   $ (7.63 )   $ (2.11 )
Weighted average basic and diluted common shares outstanding 28,804,133     33,242,072     37,366,782  


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