Roche to buy InterMune for $8.3 billion

Roche entered a definitive merger agreement to fully acquire InterMune for $74 per share in an all-cash transaction totaling $8.3 billion, the companies announced Sunday. According to the drugmakers, the acquisition, which is expected to close this year, will allow Roche "to broaden and strengthen its respiratory portfolio globally," notably through InterMune's sole marketed drug Esbriet (pirfenidone).

The merger proposal, which was approved by both boards, represents a premium of 38 percent to InterMune's closing price on August 22. Under the agreed terms, Roche will initiate a tender offer no later than August 29 to acquire all outstanding shares of InterMune common stock for $74 a share. Following completion of the tender offer, Roche will acquire all remaining shares at the same price through a second-step merger. The transaction is expected to be neutral to core earnings per share in 2015 and accretive from 2016 onwards, the companies said.

Esbriet, which was approved for idiopathic pulmonary fibrosis (IPF) in the EU and Canada in 2011 and 2012, respectively, is currently under review by the FDA. The US regulator declined to approve the drug in 2010, requesting data from an additional clinical trial to support its use in IPF.

Earlier this year, InterMune resubmitted its US application after reporting results from the Phase III ASCEND trial, which demonstrated that Esbriet significantly reduced disease progression in patients with IPF, compared with placebo. The FDA is expected to render its decision on the drug, which has been granted breakthrough therapy status, by November 23. Credit Suisse analysts expect Esbriet revenues will be $144 million this year and could reach $675 million by the end of 2016.

In addition to Esbriet, the companies noted that InterMune has research programmes investigating "new targets and pathways that may ultimately lead to improved treatment options for people with IPF, and other fibrotic diseases." Currently, Roche markets two respiratory products in the US, including Xolair (omalizumab) for patients with moderate-to-severe persistent allergic asthma, as well as the cystic fibrosis treatment Pulmozyme (dornase alfa).

Daniel O'Day, chief operating officer of Roche's pharmaceuticals business, said he was "very confident" the deal offered good value to the Swiss drugmaker's shareholders, adding there could be more bolt-on acquisitions ahead. The latest deal by Roche follows its acquisitions of Santaris Pharma for up to $450 million earlier this month, Seragon Pharmaceuticals for up to $1.7 billion in July, and Genia Technologies in June.

Recent speculation said Roche was negotiating to buy the nearly 40-percent of Chugai Pharmaceutical it does not already own, in a deal potentially worth about $10 billion, but the Japanese drugmaker has since denied the rumours (for related analysis, see ViewPoints: What might be driving Roche's reported interest in Chugai?) Meanwhile, InterMune was said earlier this month to be evaluating its strategic options, with sources saying several drugmakers, including Sanofi, Roche, GlaxoSmithKline and Actelion, were interested in buying the company.

For additional analysis on the acquisition, see ViewPoints: Roche wins bidding war for InterMune.

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