Investing.com – Swiss-based Roche Holding's bumper offer to acquire Spark Therapeutics on Monday propped up the healthcare sector and fueled speculation on Wall Street that more merger activity is in the pipeline for gene therapy stocks.
Roche (OTC:RHHBY) said it will buy U.S.-based Spark Therapeutics (NASDAQ:ONCE) for $4.3 billion, or $114.50 per share, a premium of about 122% to Spark's closing price on Feb. 22, in a bid to strengthen its presence in gene therapy.
The deal is expected bolster Roche's hemophilia portfolio, which already includes Hemlibra, a drug that treats a rare disorder that stops blood from clotting normally.
At the onset of the year, market participants had said consolidation in the industry was likely, as large biotechnology and pharmaceutical companies will realize that they cannot survive if they are not in the gene therapy space.
“I think what we’ll start to see is big guys coming in and swooping in and taking over,” said Arthur Tzianabos, Ph.D., President and Chief Executive Officer, Homology Medicines
Following the Roche-Spark Therapeutics deal, Wall Street has also turned bullish on gene therapy names and suggested that speculation over merger activity could fuel a bull run.
"The deal may increase M&A interest among other gene therapy names in our coverage universe, which include BioMarin, Sarepta , Ultragenyx , PTC and Solid Biosciences ," Credit Suisse First Boston said in a note to clients.
Others on Wall Street see gene therapy stocks as offering a differentiated growth investment.
"Given advancements in manufacturing, de-risking on dosing safety and efficacy, fast development times for rare disease, and favorable regulatory environment, the space is appealing and differentiated as a growth investment," Jefferies said in a note.
Biomarin Pharmaceutical Inc (NASDAQ:BMRN), Sarepta Therapeutics Inc (NASDAQ:SRPT), Ultragenyx (NASDAQ:RARE), PTC (NASDAQ:PTC) and Solid Biosciences (NASDAQ:SLDB) were all sharply higher on the day.