Roche/Spark: FTC Decision Awaits As Commissioners Go Silent on Questions

Published on Dec 16, 2019

FTC commissioners have no more questions for Roche (SWX: ROG) or Spark Therapeutics (ONCE) regarding their proposed $4.3 billion tie-up as anticipation builds about the agency’s pending decision, sources familiar with the matter said.

Typically, the lack of commissioner questions signals that the agency’s leadership is prepared to vote on a deal review. But as the U.S. markets opened this morning, the FTC still hadn’t announced a decision on the transaction.

For several weeks, sources have said the FTC wasn’t rushing to a vote due to coordination with the UK’s Competition and Markets Authority, whose staff was reviewing the deal. The CMA said today, though, it was clearing the merger unconditionally, noting in a statement that it had “cooperated closely” with its U.S. counterpart.

Investors are eagerly awaiting the outcome at the FTC—the deal’s last remaining regulatory hurdle—as Roche’s cash tender offer is set to expire at 5 p.m. today. Roche has repeatedly extended the offer to accommodate the CMA and FTC investigations while saying it expects to close the deal by year’s end.

The lack of an FTC announcement this morning took investors off guard because agency staff in October recommended the merger be cleared unconditionally. Commissioners usually take two to three weeks to consider staff recommendations on proposed mergers before voting.

But commissioners have taken longer with recommendations on some recent high-profile deals, mostly due to deep ideological divisions between the agency’s three Republicans and two Democrats. Commissioners Rohit Chopra and Rebecca Slaughter, the Democrats, have argued for more aggressive enforcement, particularly on healthcare mergers.

The agency’s decision on Bristol-Myers Squibb’s planned Celgene buyout took longer than expected before the FTC’s commissioners last month released polarized opinions and the agency cleared the $74 billion transaction on a 3-2 vote with divestitures.

The FTC delayed until February its clearance of the $2 billion Fresenius/NxStage Medical merger after the Democrats asked the staff to reopen parts of the investigation, sources said.

With regard to Roche/Spark, after the agency issued a second request, sources said staff couldn’t confirm a theory that the deal would eliminate potential competition between Roche’s Hemlibra, an emerging blockbuster hemophilia A treatment, and Spark’s SPK-8011, a gene-therapy pipeline project that might eliminate the need for Hemlibra infusions.

Further complicating an antitrust case to block the deal, rival Valrox said on July 8 it would submit marketing applications to the Food and Drug Administration later this year, vaulting its BioMarin pipeline project into the lead for bringing a gene-therapy hemophilia A treatment to market.

CMA concluded that a range of treatments either in development or on the market exist for the blood condition.

Spokespeople for the FTC and Spark declined to comment. A Roche spokesperson didn’t immediately respond to a request for comment.