Roche has recently launched a “fundamental reorganization” of Spark Therapeutics, the gene therapy unit the Swiss pharma bought for $4.3 billion in 2019.
Roche described the restructuring in its annual finance report (PDF) published in late January. The move is part of the company’s wider strategic change across its pharma division, a company spokesperson told Fierce Pharma.
The entire Spark team is subject to reshuffling, raising a question of whether the Spark brand itself will be preserved. Of the 647 employees that Spark employed as of April 17, 337 employees will be laid off, while the rest 310 will have their jobs integrated into the parent Roche, a Roche spokesperson told Fierce Pharma in an update.
Details of the plans, such as which functions those 310 people will assume at Roche, are still being finalized. In the January report, Roche said certain activities will remain at the current Spark site in Philadelphia, while others will be consolidated into the broader pharmaceuticals division.
“By fully integrating Spark into Roche, we more closely align,” the Roche spokesperson said.
Roche is currently working through the integration planning and expects to have details later this year, the spokesperson said.
In late 2021, Roche committed to a $575 million plan to build a new 500,000-square-foot gene therapy innovation center in Philadelphia. The multistory facility continues to be built, according to the spokesperson.
Roche was reorganizing Spark before the latest revelation, incurring 162 million Swiss francs ($184 million) in restructuring costs of the unit in 2024. For the new “fundamental reorganization,” Roche’s preliminary estimate suggests an additional cost of 300 million Swiss francs ($340 million) in 2025.
As a result of the major overhaul, Roche has completely written off Spark, with a full impairment of 2.12 billion Swiss francs ($2.4 billion) in goodwill. For the purpose of financial reporting, Roche no longer considers Spark a strategic transaction but a product transaction.
“There was no surplus from the estimated future revenues of the Spark Therapeutics business to support the carrying value of the goodwill, neither were there any significant future synergistic benefits to other products within the pharmaceuticals division,” Roche said in its January report.
In plain language, Roche doesn’t expect Spark to make enough money in the future to justify the value the unit used to carry. Luxturna, a gene therapy to treat a rare form of inherited vision loss and Spark’s sole commercial product since 2017, brought Roche 18 million Swiss francs (about $20 million) in sales last year, down 59% year over year.
The overhaul closely follows Roche's culled work on a hemophilia A gene therapy candidate, which was a focus of the Spark acquisition.
The Spark scenario marks the struggle the gene therapy sector is facing as a whole. Roche’s 2019 buyout was—at the time—viewed as a landmark event as gene therapy developers and industry watchers celebrated Big Pharma’s interest in the modality. However, these treatments have failed to live up to expectations on the market and, in some cases, in clinical development.
Pfizer a few days ago decided to pull its recently FDA-approved hemophilia B gene therapy Beqvez off the global market, effectively emptying its commercial and clinical gene therapy portfolio after its Duchenne muscular dystrophy candidate failed in a phase 3 trial. Before that, the New York pharma had sold a portfolio of preclinical gene therapy programs and related technologies to AstraZeneca.
Bluebird bio, a gene therapy pioneer once valued at $10 billion at its peak, is being sold for just $29 million to private equity firms as the company struggles to make inroads for three commercial products.
At least Roche isn’t leaving gene therapy altogether. The restructuring won’t affect Luxturna, the Roche spokesperson confirmed.
“In addition, we anticipate that new gene therapies will be initiated and entered into the R&D portfolio in the future,” the Roche spokesperson told Fierce Pharma.
In a deal inked in October, Roche paid Dyno Therapeutics $50 million upfront to design novel adeno-associated virus vectors to deliver gene therapies for neurological diseases. The deal could potentially worth north of $1 billion.
Editor's Note: The story was updated April 17 to include new layoff information related to the restructuring.