The Wall Street Journal: Roche Holding to pay $1.03 billion for stake in Foundation Medicine

Posted: January 12, 2015 at 9:42 am

Roche Holding AG agreed to pay $1.03 billion for up to a 56.3% stake in Foundation Medicine Inc. FMI, +109.03% in a collaboration that underscores the growing importance of genetic diagnostics in the treatment and development of drugs for cancer.

Under the agreement, Roche ROG, +2.23% RHHBY, +0.50% will launch a tender offer for about 15.6 million shares of the Cambridge, Mass., maker of molecular diagnostic tests for about $780 million, or $50 a share, and it will also acquire five million new shares of the company, also for $50 each. The amount is a 109% premium over Foundations closing price of $23.93 on Friday.

Foundation has developed and markets two testsone for solid tumors such as lung cancer and melanoma and one for blood cancers such as leukemiathat use next-generation genetic sequencing to identify mutations that are the drivers of a patients disease. Doctors can use the results to try to match patients with available drugs that target the identified mutations or with clinical trials testing such drugs.

This personalized medicine approach is helping to transform cancer treatment and prompting an intense search among drug and biotechnology companies for new driver mutations and drugs that take aim at them.

Under the agreement, in addition to the equity, Roche may invest at least an additional $150 million for research and development collaboration between the two companies. The R&D will include using the tests in the development of drugs in Roches pipeline, said Michael Pellini, Foundations president and chief executive officer.

As part of the agreement, Roche will market the tests outside the U.S. and support Foundations commercial efforts in the U.S., Dr. Pellini said.

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The Wall Street Journal: Roche Holding to pay $1.03 billion for stake in Foundation Medicine

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