Roche To Pour $1B Into Genetic Diagnostics Company, Take Majority Share
By Jof Enriquez,
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Swiss pharmaceutical giant Roche recently announced that it is buying a majority stake in Foundation Medicine Inc. (FMI) in a deal worth over $1 billion. The financial transaction is part of an R&D collaboration agreement with FMI that gives Roche access to genomics tests that can be used to develop new drugs against cancer.
Roche will acquire 56.3 percent of FMI through a tender of 15.6 million shares at $50 per share for an aggregate value of $780 million, according to a recent statement from Roche. The company will also acquire 5 million new shares of FMI at $50 per share for an additional $250 million.
“We are very pleased to enter into this collaboration with FMI, which has the potential to improve both the development of medicines and patient care,” said Daniel O’Day, COO of Roche Pharma, in the statement. “By combining FMI’s pioneering approach to genomics and molecular information with Roche’s expertise in the field of oncology, we can bring personalized healthcare in oncology to the next level.”
By studying the unique genetic profile of each cancer patient using FMI’s proprietary genomic analysis tools, Roche plans to develop personalized cancer treatments and companion diagnostics that will deliver better outcomes than current methods.
Initially, the two companies plan to develop genomic profile tests for cancer immunotherapies and for continuous blood-based monitoring, according to the statement. Under the deal, Roche will provide $150 million of fresh R&D funding over five years to develop those tests. In return, Roche will be able to use FMI’s proprietary molecular information platform to standardize clinical trial testing. The agreement aims to develop “combination therapies, novel targets, more accurate patient population identification and inclusion in clinical trials, and next generation companion diagnostics.”
Roche recently acquired another genomics testing company, Ariosa Diagnostics, which has developed a test to detect the risk of genetic abnormalities in the fetus. The prenatal test can be administered to pregnant women as early as 10 weeks into pregnancy.
“Pharma companies are increasingly looking for patient populations that are going to benefit most from their drugs, and diagnostics is an integral part of that process,” Samir Devani, a biotech analyst at Rx Securities in London, recently told Bloomberg. “This shows that treatments will become more and more individualized.”
FMI markets one genetic test for solid tumors, such as lung cancer and melanoma, and another test for blood cancers, such as leukemia, according to a Wall Street Journal report. The company has sold about 35,000 tests since June 2012, and Roche will now help FMI market the tests outside the U.S.
The tests use next-generation sequencing methods to detect mutations that are precursors to many diseases. By studying these mutations, drug companies aim to develop more effective drugs using the personalized medicine approach.