Swiss pharmaceutical giant Roche said yesterday that it would acquire a majority of tumor-testing company Foundation Medicine for more than US$1 billion, in a deal aimed at improving both cancer treatment and drug development.
Foundation Medicine is the leader in the growing area of sequencing genes of tumor samples, looking for mutations that can help predict which drug would be most effective for a particular patient.
Roche, which is the world’s biggest seller of cancer drugs, said it would use some insights from that testing to develop drugs and better tailor them for specific groups of patients. In addition, Roche, which also has a huge diagnostics business, will sell Foundation Medicine’s tests outside the US.
“I think it just brings personalized healthcare in oncology to a new level,” Daniel O’Day, who runs Roche’s pharmaceutical business, said in an interview.
For its part, Foundation Medicine, which is based in Cambridge, Massachusetts, will get financial support and work with Roche on some new products. Roche will also help promote such testing to oncologists and pathologists in the US.
“We believe this approach will become the norm in oncology in the not-too-distant future, and this takes us another step in that direction,” Foundation Medicine chief executive Michael Pellini said in an interview.
Under the terms of the deal, Roche will invest US$250 million in Foundation Medicine by acquiring 5 million newly issued shares at US$50 a share, a 109 percent premium to Foundation’s closing price on Friday. Roche will also make a tender offer at the same price to acquire about 15.6 million shares.
In total, Roche would pay just over US$1 billion and end up with a stake of between 52.4 percent and 56.3 percent on a fully diluted basis, the companies said.
The transaction, which is subject to approval by Foundation Medicine’s shareholders, has been approved unanimously by Foundation’s board. Three venture capital companies holding a combined 31 percent of Foundation shares — Third Rock Ventures, Kleiner Perkins Caufield & Byers and Google Ventures — have agreed to vote for the transaction and to tender at least a majority of their shares.
Foundation Medicine’s main product, called FoundationOne, sequences more than 300 genes in a sample of a solid tumor, such as a lung or breast tumor. Often, a particular mutation indicates a tumor would be vulnerable to attack by a particular drug. A newer product, FoundationOne Heme, is for blood cancers.
Foundation Medicine, which went public in 2013, had US$61.1 million in revenue last year, up from US$29 million the year before. It performed more than 24,200 tests for patient treatment last year, up from only about 9,000 in 2013.
The company is still losing money, however.
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