Roche to acquire Foundation Medicine in a $1-bn deal
13 January 2015
Swiss drug maker Roche, the world's largest seller of oncology drugs, is entering into a deal to acquire over half of biotechnology diagnostics researcher Foundation Medicine (FMI), in a deal valued at $ 1 billion.
Under the terms of the transaction, Roche will pay FMI $ 250 million to acquire 5 million new shares at a per share issue price of $50. In addition, Roche will commence a tender offer at $50 per share - a 109 per cent premium over FMI's closing price on last Friday - which, when combined with Roche's direct investment in FMI, will result in Roche owning a minimum of 52.4 per cent and a maximum of 56.3 per cent of FMI on a fully diluted basis.
The transaction has been unanimously approved by FMI's board of directors.
In addition, Third Rock Ventures, Kleiner Perkins Caufield & Byers and Google Ventures, three shareholders owning a combined approximate 31 per cent of FMI equity, have entered into a support agreement to vote in favour of the transaction and to tender at least a majority of their shareholdings in the tender offer.
Roche said the deal would further advance FMI's "market-leading position in molecular information and genomic analysis" while providing Roche a unique opportunity to optimise the identification and development of novel treatment options for cancer patients.
''We are very pleased to enter into this collaboration with FMI, which has the potential to improve both the development of medicines and patient care,'' said Daniel O'Day, COO of Roche Pharma in a statement. ''By combining FMI's pioneering approach to genomics and molecular information with Roche's expertise in the field of oncology, we can bring personalised healthcare in oncology to the next level.''
Foundation Medicine is a molecular information company dedicated to a transformation in cancer care in which treatment is informed by a deep understanding of the genomic changes that contribute to each patient's unique cancer. The company's clinical assays, FoundationOne for solid tumors and FoundationOne Heme for haematologic malignancies, sarcomas and paediatric cancers, provide a fully informative genomic profile to identify the molecular alterations in a patient's cancer and match them with relevant targeted therapies and clinical trials.
The emerging field of molecular information and genomic analysis will play an increasingly important role for future medicines and diagnostic solutions, in particular for cancer patients. FMI helps physicians by providing comprehensive molecular information to characterise a tumour that is being matched with approved targeted therapy options and novel treatments under development.
Understanding the comprehensive genomic profile of a cancer patient's disease will enable better personalized healthcare solutions to optimize treatment outcomes for patients.
''We believe that putting molecular information at the center of cancer care will help transform the delivery of care for patients and speed the pace of drug discovery and development,'' said Michael J Pellini, MD, president and chief executive officer of Foundation Medicine. ''The structure of our agreement with Roche allows us to maintain the entrepreneurial spirit at Foundation Medicine and ensures that our business model, network of partnerships and objectives are not altered.''
Under the terms of the R&D agreement, Roche has committed to fund FMI's R&D to potentially over $150 million for at least five years and will contribute its own expertise and breadth in oncology.
FMI will continue to operate independently and will contribute its experience in the development of comprehensive genomic profiling tests for oncology. The initial focus of the R&D collaboration will be on developing genomic profile tests for cancer immunotherapies and for continuous blood-based monitoring.
Roche will be able to utilise FMI's proprietary molecular information platform to standardise clinical trial testing. FMI said its pharmaceutical business will not be impacted and could be enhanced as FMI's capabilities increase with the investments and experience in working with Roche as a customer.
In addition to the R&D collaboration, both parties also agreed to a commercial collaboration agreement designed to broaden FMI's position across clinical and molecular information markets. Specifically, Roche will obtain rights ex-US (under the FMI brand) to existing FMI products, as well as to future co-developed products. In the US, Roche will use its US medical education team in providing medical information to pathologists.
The collaboration agreements will become effective upon the completion of Roche's direct investment in FMI and the tender offer.
Upon the closing, FMI's board of directors will be increased to 9 directors and will include three from Roche, including Daniel O'Day. Four existing independent directors of Foundation Medicine and Michael Pellini, MD, will continue as directors and one new independent director will be added. It is anticipated that FMI's Alexis Borisy will remain chairman.
Roche expects to close the transaction in the second quarter of 2015.