Deals, M&A

Roche bags full control of Foundation Medicine in $2.4B follow-up buyout

Whatever Foundation Medicine has been doing since Roche threw its weight behind an R&D collaboration three years ago, both partners are liking it. And now, Roche wants all of it, putting $2.4 billion more on the table.

The valuation of Cambridge, MA-based Foundation has grown quite a bit since Roche acquired a majority stake in January 2015 at $50 a share — a hefty premium then — with each share now costing the Swiss pharma giant $137. That’s 29% more than its closing price on Monday. Roche’s assessment of the company value: $5.3 billion.

Daniel O’Day

With personalized medicine written all over it, this acquisition follows that of Flatiron, a tech startup building an electronic health record system used by oncologists. There, Roche also bought a stake in the company and cultivated a relationship before swooping in for a buyout. And last December they swooped in to buy Ignyta $RXDX for $1.7 billion, putting the pharma giant in direct competition with Loxo Oncology $LOXO, with its work in ROS1 and NTRK fusion-positive tumors.

While Foundation Medicine does have an FDA-approved diagnostic called FoundationOne CDx, Roche is choosing to highlight its broader potential in comprehensive genomic profiling of cancers, which can both guide development of treatments and match patients with the appropriate therapies. Meanwhile, Roche has carved out a place for itself in diagnostics, investing 12% of its entire R&D budget on the area.

“We will preserve FMI’s autonomy while supporting them in accelerating their progress,” said Daniel O’Day, CEO of Roche Pharmaceuticals and former diagnostics chief, in a statement.

It’s a big win for Foundation Medicine execs, who now get to operate as a “separate and autonomous” unit.

Troy Cox

“Joining forces with Roche as an independent operating company allows Foundation Medicine to continue its collaboration with Roche, as well as our biopharma partners, to drive ubiquitous access to CGP testing and innovative data services,” said Foundation Medicine CEO Troy Cox.

The deal is expected to close in second half of 2018. Citi and Davis Polk & Wardwell are the financial advisers and legal counsel to Roche, respectively, while Goldman Sachs and Goodwin Procter advised and counseled for Foundation Medicine.


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RAPS Convergence 2018

Director/Sr Director, Oncology/Immuno-Oncology
Aro Biotherapeutics Company Denver, CO
Director/Sr. Director Oncology
Aro BioTx Philadelphia, PA
Manufacturing Associate – Upstream
Molecular Templates Austin, TX
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Molecular Templates Austin, TX

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