Foundation Medicine, Roche deal

Roche partnered with Foundation Medicine to develop diagnostics and will acquire 52.4-56.3% of Foundation through a $1 billion cash and stock deal expected to close next quarter. Roche will pay $780 million in cash and purchase 5 million new shares at $50, a 109% premium to Foundation’s close of $23.93 on Jan. 9, the last trading day before the deal was announced. Roche said Foundation will remain “operationally independent” and its management team will retain their positions. Foundation’s board unanimously approved the deal.

Roche also will pay Foundation up to $159 million under a five-year R&D collaboration. The agreement comprises a guaranteed $85 million for the molecular profiling of a minimum number of cancer samples and access to Foundation’s molecular information database; and up to $74 million for development related to Foundation’s immunotherapy testing, circulating tumor DNA and companion diagnostics platform programs. Additionally, Foundation granted Roche ex-U.S. rights to FoundationOne, FoundationOne Heme and products developed under their R&D deal. The rights will become exclusive after one year. Roche also holds the right of first negotiation for the commercialization of Foundation’s future clinical diagnostic products, excluding in vitro diagnostics and companion diagnostics developed for third parties. Foundation is eligible for commercialization milestones and royalties under the deal; specific terms were not disclosed. ...