Roche and InterMune reach definitive merger agreement

Roche to acquire InterMune for $74 per share, with eye toward expanding respiratory product portfolio

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BASEL, Switzerland—Looking in part to expand its respiratory product portfolio with InterMune Inc.’s lead product pirfenidone (for idiopathic pulmonary fibrosis), Roche has entered into a definitive merger agreement with the Brisbane, Calif.-based biotech under which Roche will fully acquire InterMune at a price of $74 per share in an all-cash transaction.
This corresponds to a total transaction value of $8.3 billion on a fully diluted basis and represents a premium of 38 percent to InterMune’s closing price on Aug. 22 and a premium of 63 percent to InterMune’s unaffected closing price on Aug. 12. The merger agreement has been approved by the boards of InterMune and Roche.
Under the terms of the merger agreement, Roche will commence a tender offer no later than Aug. 29 to acquire all outstanding shares of InterMune common stock, and InterMune will file a recommendation statement containing the unanimous recommendation of the InterMune board that InterMune’s shareholders tender their shares to Roche. The transaction is expected to be neutral to core earnings per share in 2015 and accretive from 2016 onwards.
The acquisition of InterMune, a company focused on the research, development and commercialization of innovative therapies in pulmonology and fibrotic diseases, will allow Roche to broaden and strengthen its respiratory portfolio globally. InterMune’s lead medicine pirfenidone is approved for idiopathic pulmonary fibrosis (IPF) in the European Union (EU) and Canada and is under regulatory review in the United States. IPF is a progressive, irreversible and ultimately fatal disease characterized by progressive loss of lung function due to fibrosis, or scarring, in the lungs. Roche markets Pulmozyme and Xolair in the United States and has other novel therapeutic medicines targeting respiratory diseases in clinical development.
“We are very pleased that we reached this agreement with InterMune. Our offer provides significant value to InterMune’s shareholders and this acquisition will complement Roche’s strengths in pulmonary therapy,” said Severin Schwan, CEO of Roche. “We look forward to welcoming InterMune employees into the Roche Group and to making a difference for patients with idiopathic pulmonary fibrosis, a devastating disease.”
Roche says it plans “a smooth transition of InterMune employees and operations into the Roche organization,” in part to help ensure readiness for an expected launch of pirfenidone in the United States in 2014.
Dan Welch, InterMune’s chairman, CEO and president, said, “This merger recognizes the significant value created by our team’s commitment, hard work and execution for more than a decade to develop and commercialize treatment options for IPF patients and their families. Roche shares our passion and commitment to the IPF community and to ensuring that pirfenidone is available as quickly as possible to patients in the United States, pending FDA approval. Roche’s global resources and scale will not only facilitate and accelerate our ability to deliver pirfenidone to more patients around the world, but also to realize our joint vision to bring additional innovative therapies to patients with respiratory diseases.”
Pirfenidone has been marketed by InterMune in the EU and Canada as Esbriet since regulatory approval in 2011 and 2012, respectively.
As we reported in the July issue of DDNews, InterMune Inc. resubmitted its 2010 New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA)—four years after the FDA asked for a more stringent Phase 3 clinical trial. On May 18, 2014, the biotech reported top-line results from ASCEND (Assessment of Pirfenidone to Confirm Efficacy and Safety in IPF), a controlled Phase 3 trial sponsored by InterMune. ASCEND data reportedly confirmed observations from other clinical studies that pirfenidone significantly reduced IPF disease progression, showed a favorable safety profile and was generally well tolerated.
On July 17, pirfenidone received breakthrough therapy designation from the FDA. This designation is reserved for drugs that are intended to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints. The target action date, also known as the PDUFA date, for the pirfenidone NDA is Nov. 23.
In addition to pirfenidone, InterMune has research programs exploring new targets and pathways that may ultimately lead to improved treatment options for people with IPF, and other fibrotic diseases.
We’ll have more detail on this merger story in our September issue of DDNews.

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