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Roche agrees $2.4bn takeover of genomics player Foundation

Offers a 29% premium on the Foundation’s recent share price

Roche

Three years after taking a $1bn stake in Foundation Medicine, Roche has decided it wants to take complete control of the genomics specialist, which focuses on personalised cancer therapies.

In 2015, Roche took a 56% stake in Foundation as part of a drive into personalised cancer care, saying it wanted to tap into the company’s genomic and molecular profiling expertise to advance its oncology ambitions, and particularly its cancer immunotherapy pipeline.

Now, it’s launched a tender offer at $137 apiece for all the shares in the company it doesn’t already own for $2.4bn – valuing Foundation at $3.5bn overall. The price is a 29% premium on Foundation’s June 18 share price and almost three times what it paid per share for its majority stake three years ago.

At the moment the market for tests covering multiple genes associated with cancer is highly fragmented, but Foundation has nudged towards becoming a dominant player in the category, thanks to recent developments such as the FDA’s approval of its FoundationOne CDx (F1CDx) diagnostic last year that can detect mutations in 324 genes in solid tumours in a single test.

The availability of the wide-ranging test is expected to help increase the use of genomic profiling in cancer patients, which is estimated to occur only in around 10% of patients in the US at present, and help overcome reimbursement barriers. The results can be used to match patients with relevant targeted therapies, immunotherapies and clinical trials.

Prior to the approval of F1CDx, most companion diagnostics for cancer matched one test to one drug, but the FDA said that using Foundation’s test could identify which patients with five tumour types might benefit from 15 approved targeted treatment options and avoid patients having to undergo multiple biopsies.

There has also been movement at the federal level in the US, with the Centres for Medicare & Medicaid Services (CMS) issuing a policy of national coverage for FDA-approved companion diagnostics, and specifically F1CDx.

Roche Pharma chief executive Daniel O’Day said taking over Foundation is an important part of its personalised healthcare strategy as “we believe molecular insights and the broad availability of high quality comprehensive genomic profiling are key enablers for the development of, and access to, new cancer treatments”.

He said the intention is to preserve the independence of Foundation and its biotech nimbleness – in the same way that Roche took a hands-off approach to Genentech’s research and early  development (gRED) operations after it took over the company almost 10 years ago.

The deal has the backing of both boards but still needs to go through the tender process, which Roche says should complete in the second half of the year.

Article by
Phil Taylor

19th June 2018

From: Sales

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