The FDA Just Approved a Game-Changing Therapy for Blindness

A decision on Spark Therapeutics' (NASDAQ: ONCE) vision-restoring gene therapy, Luxturna, was expected next month, but the Food and Drug Administration decided an early OK was warranted following a unanimous recommendation by its advisory committee in October. The approval is a big breakthrough for patients and the company, but Luxturna's price could raise some eyebrows.

A bit of backstory

Luxturna is a gene therapy that can restore functional vision in 90% of patients with biallelic RPE65 mutation-associated retinal dystrophy. Patients with this rare condition lose their vision because they fail to produce an adequate amount of RPE65, a protein that's critical to sight. Typically, patients with this genetic mutation lose their vision over time and many of these patients eventually become completely blind. There are approximately 1,000 to 2,000 patients in the U.S. with biallelic RPE65 mutation-associated retinal dystrophy.

Luxturna restores functional vision in these patients by using an inactivated and naturally occurring adeno-associated virus to deliver a normal copy of the RPE65 gene directly to retinal cells. It's both the first gene therapy to be approved for use in these patients and the only FDA-approved treatment for this indication, so doctors and patients are likely to embrace it.

A pricey proposition

Gene therapies are incredibly complex and Luxturna is no exception. The high cost of developing it for a small number of patients could result in its becoming one of the most expensive drugs on the planet.

As of the time of this writing, Spark Therapeutics hasn't disclosed pricing yet, but management told investors during its third-quarter earnings conference call that Luxturna could hit the market with a one-time price that's "in excess of $1 million per patient."

Management based that price on "reasonable assumptions" of the direct costs that are incurred by these patients over their lifetime. They may have a point. Because Luxturna is a one-and-done treatment, its high up-front cost may actually be a bargain over time, especially when you attach a value to the caregivers that patients often require. It shouldn't be ignored how this drug may improve patients' quality of life, either.

We'll know soon

Luxturna's approval validates Spark Therapeutics' approach to gene therapy, and it could provide meaningful revenue that the company can use to fund its other research and development programs, including research on gene therapies for hemophilia patients.

The exact amount of revenue that Luxturna generates will depend on pricing, the willingness of insurers to cover it, and how quickly treatment centers ramp up. Management expects Luxturna to be available in Q1 2018, so investors will want to keep an eye on second-quarter sales next year to see how they're shaping up. Industry analysts' sales forecasts should be taken with a grain of salt because they often miss the mark, but consensus estimates pegs Luxturna revenue at $75 million next year, before climbing into the hundreds of millions of dollars in 2019. If those estimates are anywhere near correct, then this approval is undeniably an important win for Spark Therapeutics.

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Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.