Analyst: Spark Therapeutics' $850K Blindness Drug Has Smaller-Than-Expected Market

Spark Therapeutics Inc (NASDAQ: ONCE), a gene therapy company that treats orphan diseases including a rare retinal disease that can lead to blindness, said in early January it will price its therapy at $850,000 for a one-time treatment of both eyes.

The Analyst

Wedbush's David Nierengarten downgraded Spark Therapeutics' stock rating from Neutral to Underperform with a price target slashed from $50 to $35.

The Thesis

Spark's wholesale acquisition cost for its therapy Luxturna of $850,000 for both eyes is "well below" what management hinted at in the past, Nierengarten said in the downgrade note. (See the analyst's track record here.) 

The company's estimate of addressing a population between 1,000 and 2,000 patients in the U.S. is likely overly optimistic based on a literature review conducted by the University of Iowa's Department of Ophthalmology and the Carver Lab, which estimates an addressable market of about 560 people.

Regardless of the total addressable market for Spark, only a "minority of prevalent cases" would be eligible for Luxturna treatment, as patients typically go blind by their 30s — which leaves less than one-third of patients as treatment candidates, the analyst said. 

Investors should expect multiple downward revisions to consensus estimates moving forward, Nierengarten said. 

Price Action

Shares of Spark Therapeutics were trading lower by more than 5 percent premarket Tuesday morning.

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