Roche to acquire US biotech firm InterMune
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ROCHE Holding AG has agreed to buy United States biotech firm InterMune Inc for US$8.3 billion in cash, helping the world’s leading maker of cancer drugs expand into the treatment of rare or incurable diseases.
Roche’s efforts to produce successful non-cancer drugs from its own labs have been mixed, with setbacks in recent years for experimental drugs against heart disease, diabetes and schizophrenia.
The Swiss drugmaker already markets Pulmozyme for cystic fibrosis and Xolair for severe asthma in the US and has other experimental respiratory products in clinical development, including another severe asthma drug called lebrikizumab.
The InterMune deal brings it a promising new drug, pirfenidone, for treating a progressive and ultimately fatal scarring condition of the lungs. Pirfenidone is approved for so-called idiopathic pulmonary fibrosis in Europe and Canada, and is under US regulatory review.
Roche said on Sunday that it would pay US$74 a share through a tender offer for InterMune, representing a premium of 38 percent to the closing price last Friday and a 63 percent premium over August 12 when takeover speculation around the stock began to circulate. The acquisition, which has been recommended by the boards of both companies, is the largest by Roche since 2009, when it bought out the remaining stake it did not already own in US group Genentech for around US$47 billion.
Analysts described InterMune’s price tag as “hefty” given it only has one marketed product in a field that is likely to become increasingly competitive over time. But Sanford C Bernstein analyst Tim Anderson, who rates the stock “outperform,” praised the decision to beef up outside oncology as a “smart tactical move.”
Industry analysts expect pirfenidone, which is given as a pill, to have sales of US$1.04 billion in 2019, according to consensus forecasts compiled by Thomson Reuters Pharma.
The large premium ascribed to InterMune is not unusual in biotech takeovers, reflecting intense competition for promising new drugs among larger companies, which rely on small innovative firms for a growing proportion of their products.
Roche said the transaction was expected to be neutral for its core earnings per share in 2015 but would boost profits from 2016 onward.
Chief Executive Severin Schwan said he believed there was a good strategic fit between Roche and the California-based biotech firm, and that it would continue to pursue “targeted” bolt-on acquisitions.
Roche generates a large amount of cash, leading to persistent speculation about deals. Its track record since Genentech has been for a series of small-scale purchases. It notably backed away from a US$7 billion pursuit of gene sequencing firm Illumina Inc two years ago.
Healthcare companies are merging at a record pace, with year-to-date activity topping US$346 billion, compared with US$212 billion in the year-ago period, data showed.
Recent large deals include AbbVie Inc’s US$54 billion acquisition of Shire Plc and Medtronic Inc’s acquisition of Covidien Plc for US$43 billion.
Citi is acting as financial adviser to Roche, while Centerview Partners and Goldman Sachs are acting for InterMune.
Roche said it would commence a tender offer to acquire all outstanding shares in the US firm no later than Friday.
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