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Roche to Buy Drug Maker InterMune for $8.3 Billion

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Green Money 00   Sunday, 08/24/14 02:04:40 PM
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Roche to Buy Drug Maker InterMune for $8.3 Billion
By ANDREW POLLACK and MICHAEL J. DE LA MERCED
August 24, 2014 12:47 pmAugust 24, 2014 1:12 pm

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Updated, 1:05 p.m. |
The Swiss drug maker Roche agreed on Sunday to buy InterMune, sells a drug to treat a deadly lung disease, for $8.3 billion, as pharmaceutical companies continue to seek new products to bolster their offerings.

The price, $74 per share, represents a 38 percent premium to InterMune’s closing price on Friday and 63 percent to the price on Aug.12, before news reports started circulating that InterMune might be acquired.

InterMune, based in Brisbane, Calif., has one product on the market: a drug called pirfenidone to treat idiopathic pulmonary fibrosis, a fatal scarring of the lungs.

InterMune sells pirfenidone under the name Esbriet in Europe and Canada, where it won regulatory approved in 2011 and 2012, respectively. The drug could win approval in the United States by the end of this year. Sales of Esbriet were $35.7 million in the second quarter.

Roche said the acquisition would strengthen the company’s portfolio is respiratory diseases, which has until now not been a major strength for the company that is mainly known for its cancer treatments. Roche sells Xolair, a drug for asthma and Pulmozyme for cystic fibrosis but said it was developing other drugs for respiratory diseases.

“Our offer provides significant value to InterMune’s shareholders and this acquisition will complement Roche’s strength’s in pulmonary therapy, Severin Schwan, the chief executive of Roche, said in a statement.

The acquisition comes amid a flurry of deal-making and attempted deal-making in the pharmaceutical sector.

There were $87 billion in acquisitions in the sector in the first half of this year, eclipsing the total for all of 2013, according to Evaluate, a research firm. And the total for the first half does not include the $54 billion acquisition of Shire by AbbVie announced in July.

The mergers are partly driven by the need for some big companies to replace the revenue from products that have lost patent protection. In addition, some mergers are also being driven by the desire to achieve tax savings has prompted some American companies to buy or try to buy rivals based in Ireland or other jurisdictions with low tax rates.

Roche, however, has historically not relied much on acquisitions for its pharmaceutical business, though it has in its diagnostics business. The big exception was its acquisition of the part of biotechnology pioneer Genentech that it did not already own for $46.8 billion in 2009.

Idiopathic pulmonary fibrosis, which has no known cause, affects between 70,000 and 200,000 Americans, according to various estimates. As scarring builds up in the lungs, people gradually lose the ability to breathe, with death often occurring 2 to 5 years after diagnosis.

In the United States there are no approved treatments, though steroids and some other drugs are used off label and a relatively small number of patients can get lung transplants.
But Esbriet, if it wins approval, probably will not have the market to itself for long because Boehringer Ingelheim has also applied for approval of a drug called nintedanib.

Both drugs slowed the decline in lung function, according to papers published in The New England Journal of Medicine in May. There is evidence from clinical trials that pirfenidone can also help patients live longer, though it is not clear if the evidence is strong enough for that to be listed on the drug’s label should it win approval.

The deal is expected to close by year end.

Citigroup and the law firm Davis Polk & Wardwell advised Roche. Centerview Partners, Goldman Sachs and the law firm Cravath, Swaine & Moore advised InterMune.


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