We just got an inside look at the dramatic 10 weeks that sealed a cutting-edge, $4.8 billion biotech acquisition (ONCE)

REUTERS/Arnd Wiegmann

Swiss pharma giant Roche is acquiring the cutting-edge biotech Spark Therapeutics for nearly $5 billion, it announced late last month.
The courtship took place over 10 weeks, and was eventually sealed during a dramatic Friday in late February, according to details revealed in a new financial filing.
Spark played Roche off against another, very interested buyer to boost the size of the deal from $70 per share to $114.50 per share.
Read more about how the action-packed process took place.

It took 10 weeks for Swiss pharma giant Roche to agree to a nearly $5 billion acquisition of the biotech Spark Therapeutics. Most of the action, though, took place on one dramatic, eventful Friday in late February.

Spark played Roche off against another, very interested buyer that day, escalating the size of the deal as the day went on.

Roche had previously offered a lower bid of $91 a share that it said was its best and final offer. But the Swiss pharma giant would eventually relent, and win by bidding almost $10 per share more than its rival, $114.50 at the end of the day.

The process didn’t start as a search for a buyer. As far back as May of 2018, Spark, which develops cutting-edge treatments for serious inherited disorders, had been looking for partners on its products for the bleeding disorder hemophilia A.

Roche first got involved as a potential collaborator. But everything heated up later in the year when Roche offered to acquire Spark for $70 a share. The process continued on through February of 2019, as Spark repeatedly insisted that the offer was too low.

The two parties would later agree on a much larger amount: $114.50 a share. That represented a 122% premium to the biotechnology company’s close on the last trading day before the deal became public.

See: The inside story of Eli Lilly’s 18-day race to secure an $8 billion deal in time for the ‘Super Bowl’ of healthcare

These details are revealed in a new Spark financial filing about the transaction. Though the other bidders for Spark aren’t disclosed, Jefferies analyst Michael Yee has suggested they may have included Pfizer and Novartis, which have partnered with Spark on certain drug programs.

Here’s what we know:

It started with partnership talks

Spark started talking to three biopharmaceutical companies, a list that included Roche, between May and August of 2018 about hemophilia A partnerships. The discussions continued on through later in the year.
Roche upped the ante in mid-December, during a meeting in New Jersey between its CEO Severin Schwan and Spark CEO and co-founder Jeffrey Marrazzo. Roche was interested in potentially buying Spark, Schwan told Marrazzo.

Spark said Roche’s initial offer wasn’t big enough

A few days later, Roche offered the biotech about $70 a share in cash. Spark’s board decided that offer wasn’t even enough for Roche to move along to due diligence.
After an email from Roche CEO Schwan, Spark’s Marrazzo said they should talk after the "Super Bowl" of healthcare, the J.P. Morgan Healthcare Conference held in early January in San Francisco.
Spark’s board went over the whole thing in-person during the JPMorgan conference, and again decided that Roche’s original offer was "inadequate." They talked about ways to get a better offer from Roche, including having Spark’s senior management present to the Swiss drug giant and approaching other parties, though they decided at the time against it.

Spark brought two other companies in

A committee tasked with handling the deal process for Spark decided, in late January, to reach out to two other companies about an acquisition.
The filing doesn’t name those companies, calling them "Party A" and "Party C." Party A had been involved in the 2018 partnership process. Both were offered presentations from Spark management, which took place in late January.
Party A would later say it needed more time to "reach internal alignment" about interest in a deal.

Roche increased its offer, and ‘Party C’ made a bid

Roche had by now offered $73 a share, which Spark said was still not enough for due diligence. Party C offered $75 a share in early February, and Spark then gave it and Roche access to a virtual data room for due diligence.
All the while, by the way, Spark was still negotiating a partnership for its hemophilia A programs with a "Party B." The company offered Spark total upfront payments of $450 million, plus other milestone and royalty payments. Spark’s board decided to keep talking about the partnership in case the acquisition talks fell through.
Spark had been telling Roche and Party C that it wanted an offer in the $80s per share.

The deal was sealed on a pivotal Friday

During a jam-packed Friday, February 22, both parties submitted offers midday and then later that evening. Roche initially said that its best and final offer was $91 a share, while Party C submitted $84 a share and said it could go even higher.
Spark told them to come back with their best and final proposals that same evening, and said that the highest final bid would need to be at least $2 a share more than the other one. The losing bidder would likely not be hearing back from Spark, Spark said, so the two parties should put in their best offers.
Around 6 pm that Friday, Roche offered $114.50 per share. Party C offered $105 a share. That evening, Spark’s board approved the deal, and the merger agreement was executed.

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