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 United States 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 (IPF) in Europe and Canada, and is undergoing
U.S. regulatory review.
Roche said on Sunday it would pay $74.00 a share through a tender
offer for InterMune, representing a premium of 38 percent to the
closing price on Aug. 22 and a 63 percent premium over Aug. 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 U.S. group Genentech
for around $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 $1.04 billion in 2019, according to consensus
forecasts compiled by Thomson Reuters Pharma.
Shares in Roche were up 0.5 percent at 267.2 Swiss francs by 0806
GMT on Monday.
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
onwards. It said guidance for this year remained unchanged.
Chief Executive Severin Schwan said he believed there was a good
strategic and cultural fit between Roche and the California-based
biotech firm, and that it would continue to pursue "targeted"
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
$7 billion pursuit of gene sequencing firm Illumina Inc two years
Roche may be accelerating efforts to bolster its presence in the
treatment of rare diseases. Speculation last year linked Roche to
Alexion Pharmaceuticals Inc and BioMarin Pharmaceuticals Inc.
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There has been talk that Roche may buy the shares in Japan's Chugai
Pharmaceutical Co Ltd that it does not already own for about $10
billion, although Chugai has denied it was in talks over a such a
Schwan declined to comment on whether the InterMune deal would make
a buyout of Chugai less likely.
Even after swallowing InterMune, Roche would still have the leverage
to "very easily" buy out the rest of Chugai and do something else,
said Kepler Cheuvreux analyst Fabian Wenner. But he conceded such a
move may now be "somewhat less likely".
On Monday, shares in Chugai fell 9 percent after Bloomberg reported
that Roche had decided against a buyout.
InterMune had considered selling itself about three years ago but
decided not to pursue a deal at that time due to uncertainty over
clinical data for pirfenidone, people familiar with the matter told
Roche said its interest in a deal was triggered following positive
late-stage trial results for the drug in May. The medicine also
received a "breakthrough therapy" designation from the U.S. Food and
Drug Administration (FDA). The term is reserved for drugs for
serious diseases that appear to offer a substantial advance on
The FDA is due to give is verdict on whether to approve pirfenidone
by Nov. 23 and Roche said it expected to launch the drug in the
United States this year.
Healthcare companies are merging at a record pace, with year-to-date
activity topping $346 billion, compared to $212 billion in the
year-ago period, Thomson Reuters data showed.
Recent large deals have included AbbVie Inc's $54 billion
acquisition of Shire Plc and Medtronic Inc's acquisition of Covidien
Plc for $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 U.S. firm no later than Aug. 29.
(Editing by Tom Pfeiffer)
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