Roche (RHHBY) just announced an $8.3 billion acquisition of InterMune (ITMN) and its idiopathic pulmonary fibrosis drug Esbriet.
The all-cash deal values InterMune at $74 per share, or a 38% premium to Friday's closing stock price. Roche says the acquisition will be neutral to 2015 earnings and accretive in 2016.
InterMune's Esbriet is approved in Europe and is expected to be approved in the U.S. by Nov. 23 , based on the positive results of a phase III study.
Roche's acquisition is a very happy ending to the InterMune turnaround story long in the making. It was more than four years ago (May 2010, to be precise) when FDA rejected InterMune's application seeking Esbriet's approval in the U.S. But in late 2010, European regulators recommended the drug's approval as InterMune geared up to conduct another phase III study required for an FDA resubmission. Wall Street bulls and bears fought over the potential for InterMune to post positive results from the new phase III trial and whether or not Esbriet was better or worse than a rival drug from Boehringer Ingelheim. Last February, InterMune's phase III study hit a home run and Esbriet looked very good compared to the Boehringer drug.
Here's the text of the announcement made by the companies today:
Under the terms of the merger agreement, Roche will commence a tender offer no later than 29 August 2014, to acquire all outstanding shares of InterMune common stock, and InterMune will file a recommendation statement containing the unanimous recommendation of the InterMune board that InterMune's shareholders tender their shares to Roche. The transaction is expected to be neutral to core earnings per share in 2015 and accretive from 2016 onwards.
The acquisition of InterMune, a Brisbane, California based biotechnology company focused on the research, development and commercialization of innovative therapies in pulmonology and fibrotic diseases, will allow Roche to broaden and strengthen its respiratory portfolio globally. InterMune's lead medicine pirfenidone is approved for idiopathic pulmonary fibrosis (IPF) in the EU and Canada and under regulatory review in the United States. IPF is a progressive, irreversible and ultimately fatal disease characterized by progressive loss of lung function due to fibrosis, or scarring, in the lungs. Roche markets Pulmozyme and Xolair in the US and has other novel therapeutic medicines targeting respiratory diseases in clinical development.
Commenting on the transaction, Severin Schwan, CEO of Roche, said, "We are very pleased that we reached this agreement with InterMune. Our offer provides significant value to InterMune's shareholders and this acquisition will complement Roche's strengths in pulmonary therapy. We look forward to welcoming InterMune employees into the Roche Group and to making a difference for patients with idiopathic pulmonary fibrosis, a devastating disease."
Roche plans a smooth transition of InterMune employees and operations into the Roche organisation, ensuring readiness for an expected launch of pirfenidone in the US in 2014. Commenting on the transaction, InterMune's Chairman, CEO and President, Dan Welch, said, "This merger recognizes the significant value created by our team's commitment, hard work and execution for more than a decade to develop and commercialize treatment options for IPF patients and their families. Roche shares our passion and commitment to the IPF community and to ensuring that pirfenidone is available as quickly as possible to patients in the United States, pending FDA approval. Roche's global resources and scale will not only facilitate and accelerate our ability to deliver pirfenidone to more patients around the world, but also to realize our joint vision to bring additional innovative therapies to patients with respiratory diseases."
Pirfenidone has been marketed by InterMune in the EU and Canada as Esbriet® since regulatory approval in 2011 and 2012 respectively. After previous regulatory review in the USA in 2010, the Food and Drug Administration (FDA) recommended an additional Phase 3 clinical trial to support the efficacy of pirfenidone. The results of this study, the ASCEND trial, were part of the new drug application (NDA) resubmission that InterMune made in May 2014. On 17 July 2014 pirfenidone received breakthrough therapy designation from the FDA. This designation is reserved for drugs that are intended to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints. The target action date, also known as the PDUFA date, for the pirfenidone NDA is 23 November 2014.
In addition to pirfenidone, InterMune has research programmes exploring new targets and pathways that may ultimately lead to improved treatment options for people with IPF, and other fibrotic diseases.