Roche to buy InterMune for €6.3bn as it expands into rare diseases

Roche Holding has agreed to buy US biotech company InterMune Inc for $8.3bn (€6.3bn) in cash, helping the world’s leading maker of cancer drugs expand into the treatment of rare or incurable diseases. 

Roche’s efforts to produce successful non-cancer drugs from its own labs have been mixed, with setbacks in recent years for experimental drugs against heart disease, diabetes and schizophrenia.

The Swiss drugmaker already markets Pulmozyme for cystic fibrosis and Xolair for severe asthma in the United States and has other experimental respiratory products in clinical development, including another severe asthma drug called lebrikizumab.

The InterMune deal brings it a promising new drug, pirfenidone, for treating a progressive and ultimately fatal scarring condition of the lungs. Pirfenidone is approved for so-called idiopathic pulmonary fibrosis (IPF) in Europe and Canada, and is undergoing U.S. regulatory review.

Roche said on Sunday it would pay $74.00 a share through a tender offer for InterMune, representing a premium of 38% to the closing price on August 22 and a 63% premium over August 12 when takeover speculation around the stock began to circulate. ]

The acquisition, which has been recommended by the boards of both companies, is the largest by Roche since 2009, when it bought out the remaining stake it did not already own in US group Genentech for around $47bn.

Analysts described InterMune’s price tag as “hefty” given it only has one marketed product in a field that is likely to become increasingly competitive over time.

But Sanford C Bernstein analyst Tim Anderson, who rates the stock ‘outperform’, praised the decision to beef up outside oncology as a “smart tactical move”.

Industry analysts expect pirfenidone, which is given as a pill, to have sales of $1.04bn in 2019, according to consensus forecasts compiled by Thomson Reuters Pharma.

The large premium ascribed to InterMune is not unusual in biotech takeovers, reflecting intense competition for promising new drugs among larger companies, which rely on small innovative firms for a growing proportion of their products.

Roche said the transaction was expected to be neutral for its core earnings per share in 2015 but would boost profits from 2016 onwards. It said guidance for this year remained unchanged.

Chief executive Severin Schwan said he believed there was a good strategic and cultural fit between Roche and the California-based biotech firm, and that it would continue to pursue “targeted” bolt-on acquisitions.

Roche generates a large amount of cash, leading to persistent speculation about deals. Its track record since Genentech has been for a series of small-scale purchases.