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Here's Why Spark Therapeutics, Inc. Fell 9.3% in October

By Cory Renauer - Nov 7, 2017 at 2:20PM

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It doesn't take much to drag down the stock price of a biotech as richly valued as this one.

What happened

Shares of Spark Therapeutics, Inc. (ONCE), a clinical-stage biotech advancing a once-and-done gene therapy approach to treating genetic disorders, have given back some of August's gains. Despite a triumphant result from a Food and Drug Administration advisory committee, the stock followed the industry-tracking iShares Nasdaq Biotechnology index lower, notching a 9.26% drop in October, according to data from S&P Global Market Intelligence.

So what

The FDA wanted to get some outside opinions regarding Spark's most advanced gene therapy candidate. The independent panel of physicians voted 16 to 0 in favor of approving Luxturna to treat a rare sight-robbing disorder. While the FDA will take the vote into account when making its decision, an approval is far from guaranteed, and the likelihood of a successful launch is even harder to predict.

Person in a suit making a frustrated gesture while looking at falling stock charts

Image source: Getty Images.

Last month, Gilead Sciences and Celgene shocked the market with a startling inability to predict product sales just a few months into the future. Although Spark Therapeutics isn't directly affected, settling on a price for revolutionary once-and-done therapies is expected to get messy.

Now what

Despite last month's slide, Spark Therapeutics still sports a hefty $2.9 billion market cap. Without any products to sell yet, rampant success for Luxturna and additional therapies in much earlier development stages are already baked into the price.

The company just added five more patients to an early-stage clinical trial with SPK-9001, a hemophilia candidate partnered with U.S. pharma giant Pfizer (PFE 2.15%). Patients with the bleeding disorder require a lifetime of inconvenient infusions with clotting factors they can't produce themselves. A single dose of the partnered candidate has already allowed one patient to go without factor replacement infusions for 32 weeks, suggesting the company has another potential blockbuster in its pipeline.

As we saw last month, the slightest adjustment to the company's forward outlook has a magnified effect. Although the Pfizer-partnered hemophilia candidate has shown promise, expect major excitement around the middle of January when the FDA is expected to issue an approval decision regarding Luxturna.

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