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Spark Therapeutics Reports 2017 Financial Results and Recent Business Progress

U.S. Food and Drug Administration (FDA) grants breakthrough therapy designation to SPK-8011 for hemophilia A

PHILADELPHIA, Feb. 20, 2018 (GLOBE NEWSWIRE) -- Spark Therapeutics (NASDAQ:ONCE), a fully integrated gene therapy company dedicated to challenging the inevitability of genetic disease, announced today corporate and financial results for 2017 and recent business progress.

“The landmark approval of LUXTURNA™ (voretigene neparvovec-rzyl) in December as the first gene therapy for a genetic disease in the U.S. topped another year of great progress for Spark Therapeutics,” said Jeffrey D. Marrazzo, chief executive officer of Spark Therapeutics. “We have built a fully integrated company dedicated to discovering, developing and delivering one-time treatments that provide long-lasting, transformative outcomes to patients, families, society and the health care system. In 2018, we are focused on successfully launching LUXTURNA in the U.S. and securing marketing authorization in the EU, advancing our global development program for SPK-8011 in hemophilia A and continuing to progress our pipeline of other investigational gene therapies.

“Additionally, FDA recently has granted breakthrough therapy designation to SPK-8011 for hemophilia A. It marks the third time we have been granted this designation for as many investigational gene therapies, a signal of the strength of our expertise in gene therapy,” adds Marrazzo.

12-month highlights
Received FDA approval for LUXTURNA, a one-time gene therapy product indicated for the treatment of patients with confirmed biallelic RPE65 mutation-associated retinal dystrophy who have viable retinal cells as determined by their treating physicians:

  • Achieved product labeling for LUXTURNA that provides a genetically based indication with a clearly described safety profile from the clinical development program
  • Announced novel payer and patient offerings to help ensure that appropriate patients have access to LUXTURNA
  • First and only FDA-approved adeno-associated virus (AAV) product in the U.S.
  • First and only FDA-approved AAV commercial manufacturing facility

Entered into licensing and supply agreement granting Novartis Pharmaceuticals exclusive rights to commercialize voretigene neparvovec in markets outside the U.S. 

  • Received $105 million up front in January 2018
  • Eligible to receive an additional $25 million upon approval by European Medicines Agency (EMA) and total of $40 million in aggregate additional milestones on initial sales in multiple ex-U.S. markets
  • Receive a flat, mid-20 percent royalty on annual net sales outside the U.S. 
  • Spark Therapeutics retains exclusive commercial rights to LUXTURNA in the U.S.

Advanced two investigational hemophilia programs with no reported serious adverse events, thrombotic events or inhibitors to date and clinically meaningful reductions in annualized bleeding rate (ABR) and annualized infusion rate (AIR)

  • Showed predictable clinical outcomes one-year post-infusion of investigational SPK-9001 in hemophilia B without introducing new or unforeseen risks
    • Published interim Phase 1/2 clinical trial data of SPK-9001 in The New England Journal of Medicine
    • At American Society of Hematology (ASH), released more than 13 years of cumulative follow-up data on participants in the SPK-9001 Phase 1/2 trial demonstrating a 97-percent reduction in ABR and a 99-percent reduction in AIR calculated based on data after week four, as of the Nov. 29, 2017 data cutoff 
    • Entered into an amendment to the license agreement for SPK-9001 with Pfizer, Inc., in November 2017; including an initial $10 million cash payment and up to an additional $15 million in potential milestone payments upon completion of certain transitional activities in mid-2018
    • Entered into a supply agreement with Pfizer in February 2018 to begin production this quarter for one batch of drug substance expected to be used for Phase 3 development; Spark received $7 million up front and will receive up to $7 million upon delivery
       
  • Demonstrated initial human proof-of-concept for investigational SPK-8011 in hemophilia A
    • Presented early SPK-8011 Phase 1/2 clinical trial data at ASH for the first four participants who had been followed at least 12 weeks post infusion as of the Dec. 6, 2017 data cutoff 
      • Reported a 100-percent reduction in ABR and 98-percent reduction in AIR calculated based on data after week four
    • FDA granted orphan-disease designation to SPK-8011 in January 2018
    • FDA granted breakthrough therapy designation to SPK-8011 in February 2018

Progressed pipeline of investigational gene therapies

  • Completed enrollment of five earlier-stage choroideremia participants in Phase 1/2 clinical trial for SPK-7001
  • Licensed a liver-directed, AAV gene therapy candidate from Genethon for Pompe disease

Bolstered human capital, technology platform and financial position:

  • Added Robert J. Perez, a long-time biopharmaceutical executive, to the board of directors
  • Received a rare pediatric disease priority review voucher in conjunction with the approval of LUXTURNA
  • Strong balance sheet with $540.2 million in cash, cash equivalents and marketable securities as of Dec. 31, 2017, excluding the $105 million received from Novartis in January 2018

Financial results for the year ended Dec. 31, 2017 and 2016
In the year ended Dec. 31, 2017, we recognized $12.1 million in revenue, all of which was associated with our Pfizer agreement.  In the year ended Dec. 31, 2016, we recognized $20.2 million in revenue, which was all associated with our Pfizer agreement, and included a $15.0 million milestone payment that was earned in December 2016.  

Research and development expenses for the year ended Dec. 31, 2017 were $135.2 million versus $86.4 million for the year ended Dec. 31, 2016.  The $48.8 million increase was due to a $40.4 million increase in internal research and development expenses, due to increased effort and headcount in research, technical operations, diagnostics, quality assurance and quality control and an increase of $8.4 million in external research and development expenses, primarily driven by a $4.4 million increase in expenses related to our hemophilia A program. 

Our acquired in-process research and development expense for the year ended Dec. 31, 2017 was $8.6 million, which includes additional payments related to our Selecta Bioscience, Inc. (Selecta) license agreement entered into in 2016.  Our acquired in-process research and development (IPR&D) expense for the year ended Dec. 31, 2016 was $11.1 million. This amount represents the upfront payment related to the Selecta license agreement. 

During the year ended Dec. 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 Dec. 31, 2017.

General and administrative expenses for the year ended Dec. 31, 2017 were $111.1 million versus $48.1 million for the year ended Dec. 31, 2016. General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, legal and patent costs and other professional fees. The $63.0 million increase primarily was due to an increase of $27.8 million in salaries and related costs, including stock-based compensation linked to increased headcount, an increase of $11.9 million in launch preparation activities for LUXTURNA, $14.7 million in legal and patent expenses, professional fees and other operating costs, and $8.6 million in facility related costs.

Our net loss for the year ended Dec. 31, 2017 was $253.5 million, or ($7.63) basic and diluted net loss per common share, as compared with a net loss of $123.7 million, or ($4.29) basic and diluted net loss per common share for the year ended Dec. 31, 2016.

As of Dec. 31, 2017, Spark had cash and cash equivalents and marketable securities of $540.2 million.

Conference call details
Spark Therapeutics will host a conference call and audio webcast, today, Tuesday, Feb. 20, at 8:30 a.m. ET, to discuss corporate and financial results for 2017 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: 9596288

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: 9596288

About Spark Therapeutics
At Spark Therapeutics, a fully integrated company committed to discovering, developing and delivering gene therapies, we challenge the inevitability of genetic diseases, including blindness, hemophilia and neurodegenerative diseases. We have successfully applied our technology in the first FDA-approved gene therapy in the U.S. for a genetic disease, and currently have three 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, 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) we may not successfully launch LUXTURNA in the U.S., or our success may be delayed; (ii) our MAA for LUXTURNA may not be approved by EMA;  (iii) the data from our Phase 3 clinical trial of LUXTURNA may not support labeling for all biallelic RPE65 mutations other than Leber congenital amaurosis (LCA) in ex-US geographies; (iv) the improvements in functional vision demonstrated by LUXTURNA in our clinical trials may not be sustained over extended periods of time; (v) voretigene neparvovec may not be approved in any markets outside of the U.S.; (vi) upon approval, Novartis may not be successful in commercializing or selling voretigene neparvovec in one or more markets; (vii) we may not receive any additional milestone or royalty payments from Novartis, Pfizer, or our other collaborators; (viii) our early preliminary clinical results for our product candidate, SPK-8011, for hemophilia A may not be sustained or sufficient to support further development; (ix) we may be unsuccessful in achieving higher factor VIII activity levels through dose escalation in our Phase 1/2 clinical trial of SPK-8011; (x) we are unable to enter into agreements with payers for the provision of LUXTURNA; (xi) we will not be able to reach agreement with the Centers for Medicare & Medicaid Services (CMS) regarding LUXTURNA; (xii) our lead SPK-FIX product candidate, SPK-9001, may not produce sufficient data in our Phase 1/2 clinical trial to warrant further development; (xiii) interim data from our SPK-7001 Phase 1/2 clinical trial, including data to be generated from our recently expanded cohort, may not support further development of this product candidate; and (xiv) 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)
  December 31,
 2016
  December 31,
 2017
Assets      
Current assets:      
Cash and cash equivalents $ 58,923,097     $ 96,748,444  
Marketable securities 237,242,655     423,418,752  
Other receivables 16,780,917     7,905,653  
Prepaid expenses 1,647,008     5,092,877  
Total current assets 314,593,677     533,165,726  
Marketable securities 21,900,129     20,035,553  
Property and equipment, net 19,794,306     61,712,793  
Acquired in-process research and development 15,490,000      
Goodwill 1,160,104     1,254,005  
Other assets 924,579     628,235  
Total assets $ 373,862,795     $ 616,796,312  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 9,928,737     $ 14,182,804  
Accrued expenses 13,826,920     24,697,225  
Current portion of long-term debt 302,013     311,976  
Current portion of deferred rent 771,196     968,534  
Current portion of deferred revenue 5,168,674     11,968,915  
Current other liabilities     1,557,062  
Total current liabilities 29,997,540     53,686,516  
Long-term debt 1,224,003     912,027  
Long-term deferred rent 7,498,419     8,317,952  
Long-term deferred revenue 3,865,885      
Deferred tax liability 1,000,235      
Other liabilities     40,255,605  
Total liabilities 43,586,082     103,172,100  
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; 30,873,430 shares
issued and 30,864,224 shares outstanding as of December 31, 2016; 37,131,626 shares
issued and 37,111,404 shares outstanding as of December 31, 2017
30,874     37,132  
Additional paid-in capital 583,973,682     1,026,589,507  
Accumulated other comprehensive loss (794,296 )   (5,913,595 )
Treasury stock, at cost, 9,206 shares as of December 31, 2016 and 20,222 shares as of
December 31, 2017
(552,636 )   (1,225,949 )
Accumulated deficit (252,380,911 )   (505,862,883 )
Total stockholders’ equity 330,276,713     513,624,212  
Total liabilities and stockholders’ equity $ 373,862,795     $ 616,796,312  


Spark Therapeutics, Inc.
Consolidated statements of operations
(unaudited)
  For the Year Ended December 31,
  2015   2016   2017
Revenues $ 22,063,674     $ 20,182,835     $ 12,065,644  
Operating expenses:          
Research and development 46,029,314     86,379,405     135,160,047  
Acquired in-process research and development     11,132,146     8,604,258  
Impairment of in-process research and development         15,696,017  
General and administrative 23,352,171     48,070,317     111,123,247  
Total operating expenses 69,381,485     145,581,868     270,583,569  
Loss from operations (47,317,811 )   (125,399,033 )   (258,517,925 )
Interest income, net 192,033     1,746,506     4,072,912  
Loss before income taxes (47,125,778 )   (123,652,527 )   (254,445,013 )
Income tax benefit         963,041  
Net loss (47,125,778 )   (123,652,527 )   (253,481,972 )
Preferred stock dividends (634,794 )        
Net loss applicable to common stockholders $ (47,760,572 )   $ (123,652,527 )   $ (253,481,972 )
Basic and diluted net loss per common share $ (2.10 )   $ (4.29 )   $ (7.63 )
Weighted average basic and diluted common shares outstanding 22,710,105     28,804,133     33,242,072  

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Source: Spark Therapeutics, Inc.