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Roche Buys $1 Billion Stake in Cancer Genetics Company

Wall Street signs

(A. Kotok)

12 January 2015. Pharmaceutical company Roche is acquiring a majority stake in Foundation Medicine, a company conducting personal genomic analyses for cancer patients. The investment, licensing, and collaboration deal is expected to bring Foundation Medicine, in Cambridge, Massachusetts more than $1 billion.

Foundation Medicine — founded by scientists at Dana-Farber Cancer Institute, Harvard Medical School, and MIT — offers genomic analysis tools for personalized cancer diagnosis and treatments. The company’s lead product, FoundationOne, produces a genomic profile that the company says expands treatment options for solid tumor cancers, by matching molecular changes in tumors to targeted therapies. A similar analysis, called FoundationOneHeme, is available for pediatric and blood-related cancers — leukemia, lymphoma and myeloma — as well as sarcomas or soft-tissue cancers.

The technology examines and reveals genes altered in human cancers, and offers potential targets for therapies. The results, says the company, makes it possible to align existing personalized treatments for the cancer, or to identify clinical trials with experimental therapies. The company is taking part in new types of clinical trials where cancer patients are screened for best molecular matches with experimental therapies, and offers a service to match cancer patients with trials of new treatments.

In their research collaboration, the companies plan to initially develop genomic profiles for cancer immunotherapies, and provide detailed genomic information for Roche to improve its clinical trial recruitment. Foundation Medicine says, however, that it will continue to operate as an independent company and provide genomic services to other pharmaceutical company clients. More accurate recruitment for clinical trials and improved diagnostics that result from the agreement, say the companies, are expected to benefit the industry and patient populations overall.

The deal provides Roche with rights to commercialize Foundation Medicine products outside the U.S., as well as to future products and services developed jointly. In the U.S., Roche will add information about Foundation Medicine services to its medical education teams serving pathologists.

Under the deal totaling nearly $1.2 billion, Roche is purchasing 15.6 million Foundation Medicine shares for $780 million, or $50.00 a share, more than double the closing price of $23.93 on Friday. Roche also plans to buy 5 million new shares of Foundation Medicine stock, also at $50.00, which when combined with the existing shares, is expected to give Roche from 52 to 56 percent of Foundation Medicine. In addition, Roche plans to spend up to $150 million to support the research collaboration.

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Hat tip: FirstWord Pharma

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