Brief:

• Spark Therapeutics has sold a priority review voucher (PRV) to Jazz Pharmaceuticals for $110 million, according to a Monday disclosure.
• While details were scant, Spark’s Chief Legal Officer Joseph La Barge said in a statement that his company intends to pump money from the deal back into R&D. The Philadelphia-based biotech’s pipeline is mostly pre-clinical, with a few assets in early- to mid-stage testing for hemophilia and choroideremia.

The Food and Drug Administration awards PRVs to drugmakers that bring to market treatments for tropical or rare pediatric diseases. The drugmakers can then use the vouchers as a sort of regulatory fast pass on other approval applications, spurring regulators to review them in about six months rather than the usual 10.

Insight:

PRVs are fairly uncommon and quite handy — characteristics that have made them attractive to the pharma industry. Novartis received the first one ever in 2009 for securing an FDA OK of its malaria medicine Coartem. Since then, the agency has given out 18 more, and about a dozen are still floating around unused.

Spark got its voucher with the approval of Luxturna (voretigene neparvovec), a gene therapy for an inherited form of vision loss. While the approval itself was historic, it naturally followed years of expensive R&D efforts. In 2017 alone, Spark racked up $135.2 million in R&D expenses, a 56% increase from the prior year.

The work is also far from over. Most of Spark’s candidates are years from approval, meaning a PRV is arguably not as useful as $110 million to advance the candidates to the registrational phase. Even with Luxturna returns starting to roll in, the biotech will have some pretty big bills to pay as its newer drugs move through the clinic.

Spark’s decision could be forward-looking in other ways as well.

Rare disease drug development has been ramping up as more companies recognize and pursue the business incentives provided through legislation like the Orphan Drug Act. EvercoreISI analysts Josh Schimmer and Steven Breazzano highlighted in an April 30 note that given the larger number of medicines in the global pipeline that target orphan diseases, it’s reasonable to expect the price they go for in a sale will continue to fall.

While every PRV deal can’t be like the one AbbVie did with United Therapeutics back in 2015 (which sported an eye-popping $350 million payment), the most recent examples still easily ticked over the $100 million valuation. If Jazz wanted, it could turn around and try to resell the PRV for a profit before the market becomes more saturated.

Outside of that option, it’s difficult to say on what drug Jazz would use its new fast pass. The Dublin-based biotech has a small number of assets at the registrational level: solriamfetol, for excessive sleepiness in adults with narcolepsy or obstructive sleep apnea; JZP-507, for narcolepsy; and the already marketed products Xyrem, for narcolepsy, and Vyxeos (daunorubicin and cytarabine), for high-risk acute myeloid leukemia.

The Vyxeos application is for Europe, however, and Jazz already filed a New Drug Application for solriamfetol in December. The JZP-507 NDA and the Xyrem supplemental NDA could each be ready as early as mid-2018.

Narcolepsy drugs wouldn’t exactly make the most sense for PRV use, especially one that cost $110 million. That’s because the market is pretty small; a recent report from Grand View Research predicted the global narcolepsy treatment market would reach $3.85 billion by 2025.