Upstart Spark is ready to ring in the New Year with $86M gene therapy IPO

Spark Therapeutics jumped into existence late in 2013 with a pipeline of gene therapy projects spawned by investigators at the Children's Hospital of Philadelphia (CHOP) and quickly followed up this year with a $73 million round, breakthrough drug status and a $280 million partnership with Pfizer ($PFE). Now it's ending its freshman year by filing to go public.

Technically, Spark filed for an $86 million raise. But gene therapy has been attracting glowing reviews about its market potential from analysts excited by the work that's been done at places like bluebird bio ($BLUE). And as Juno Therapeutics (Juno and Spark are both 2014 Fierce 15 companies) and Bellicum Pharmaceuticals ($BLCM) proved recently, investors still have a big appetite for IPOs touching on cutting-edge technologies, leaving some potential upside if Spark's offering catches fire on Wall Street.

Spark built its case for a quick IPO by displaying its most advanced programs. SPK-RPE65 is in a pivotal Phase III clinical trial targeting rare blinding conditions known as inherited retinal dystrophies caused by mutations in the RPE65 gene. Data from the Phase III is due in the second half of 2015, and Spark is planning to follow up with a licensing application--provided the data are positive.

Pfizer, meanwhile, recently handed over $20 million upfront to partner with Spark on SPK-FIX, one of a number of programs now angling to fix hemophilia B. Gene therapy is widely considered a key next-gen approach to hemophilia which can offer significant improvements over currently used drugs. And like SPK-RPE65, Spark plans to use an AAV delivery vehicle to deliver the gene therapy.

Spark Therapeutics CEO Jeffrey Marrazzo

CHOP has continued to be an active investor in Spark. The hospital put up $22.5 million of the recent $73 million round, leaving it with a 53% stake in the company. Sofinnova put up another $15 million and Elliott Sigal, a board member and advocate who is now a partner at New Enterprise Associates, chipped in a personal investment of $250,000. Jeffrey Marrazzo, the 36-year-old co-founder and CEO, owns 2 million shares of Spark. An IPO could make him a new paper millionaire, joining a roster of biotech execs who have been making a fortune during the current IPO boom.

Gene therapy has gone through a roller coaster ride in the clinic. Its early promise was dashed years ago by life threatening safety issues. But since then leading investigators feel that they have learned how to develop a safe and effective delivery vehicle for correcting genes that can either cure diseases or correct them for long stretches. Spark's proposed stock symbol is "ONCE."

Spark wasn't in the first wave of new biotechs to leap into the field. But it's banking on years of research at CHOP to quickly put them into the forefront.

J.P. Morgan Securities and Credit Suisse Securities will act as lead book-running managers for the offering. Cowen and Company will act as lead manager and Sanford C. Bernstein & Co. will act as co-manager.

- here's the S-1

Special Reports: FierceBiotech's 2014 Fierce 15 - Spark Therapeutics | The top 10 biotech IPOs of 2013 - bluebird bio

Suggested Articles

Genentech followed a $1 billion pact with Sosei Heptares with discovery deals around cancer and neurological diseases with Skyhawk and Convelo.

The partners will use wearable devices to assess how heart failure patients function and feel after being discharged from hospitals.

After spinning out two companies at the start of the year, Sosei Heptares has now inked a new deal with Roche biologics unit Genentech.