Date: 2015-01-12
Type of information: Collaboration agreement
Compound: genomic profile tests for cancer immunotherapies and for continuous blood-based monitoring
Company: Roche (Switzerland) Foundation Medicine (USA - MA)
Therapeutic area: Cancer - Oncology
Type agreement: collaboration
Action mechanism:
Disease:
Details: * On January 12, 2015, Roche has announced a broad strategic collaboration with Foundation Medicine (FMI) in the field of molecular information in oncology to further advance FMI’s market-leading position in molecular information and genomic analysis while providing Roche a unique opportunity to optimize the identification and development of novel treatment options for cancer patients.
The emerging field of molecular information and genomic analysis will play an increasingly important role for future medicines and diagnostic solutions, in particular for cancer patients. FMI supports physicians by providing comprehensive molecular information to characterize a tumor that is being matched with approved targeted therapy options and novel treatments under development. Understanding the comprehensive genomic profile of a cancer patient’s disease will enable better personalized healthcare solutions to optimize treatment outcomes for patients.
Under the terms of the R&D collaboration agreement, Roche is committing to R&D funding of potentially more than USD 150 million for a minimum of five years and will contribute its expertise and breadth in oncology. FMI will continue to operate independently and will contribute its experience in the development of comprehensive genomic profiling tests for oncology. The initial focus of the R&D collaboration will be on developing genomic profile tests for cancer immunotherapies and for continuous blood-based monitoring.
Roche will be able to utilize FMI’s proprietary molecular information platform to standardize clinical trial testing. This aspect of the relationship is designed to enable comparability of clinical trial results for R&D purposes, and ultimately in the clinic. FMI’s pharmaceutical business will not be impacted and could be enhanced as FMI capabilities increase with the investments and experience in working with Roche as a customer.
The R&D collaboration and FMI’s current and future tests are expected to deliver insights to support development of combination therapies, novel targets, more accurate patient population identification and inclusion in clinical trials, and next generation companion diagnostics. The intention is to improve decision making and support optimization of patient care as oncology management becomes more complex.
In addition to the R&D collaboration, both parties also agreed to a commercial collaboration agreement designed to broaden FMI’s position across clinical and molecular information markets. Specifically, Roche will obtain rights ex-US (under the FMI brand) to existing FMI products, as well as to future co-developed products. In the U.S., Roche will engage its U.S. medical education team in providing medical information to pathologists.
Financial terms: The collaboration agreements will become effective upon the completion of Roche’s direct investment in FMI and the tender offer, as described below. Under the terms of the contemplated transaction, Roche will invest $ 250 million in FMI at a per share issuance price of $ 50 (5 million shares) to fund FMI operations and development. In addition, Roche will commence a tender offer at a per share price of $ 50, which, when combined with Roche’s direct investment in FMI, will result in Roche owning a minimum of 52.4% and a maximum of 56.3% of FMI on a fully diluted basis. The offer price constitutes a 109% premium over the closing price of last Friday, January 9, 2015.
The completion of Roche’s direct investment in FMI, and the successful outcome of the tender offer, as well as the execution of the collaboration agreements are all cross-conditional subject to Foundation Medicine shareholder approval, clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.
The transaction has been unanimously approved by the FMI Board of Directors. In addition, Third Rock Ventures, Kleiner Perkins Caufield & Byers and Google Ventures, three shareholders owning a combined approximate 31% of FMI equity, have entered into a support agreement pursuant to which they have each committed to vote in favor of the transaction and to tender at least a majority of their shareholdings in the tender offer.
Upon the closing, FMI’s board of directors will be increased to 9 directors and will include three designees of Roche, including Daniel O’Day. Four existing independent directors of Foundation Medicine and Michael Pellini, MD, will continue as directors and one new independent director will be added. It is anticipated that Alexis Borisy will remain Chairman.
The transaction is expected to close in the second quarter of 2015
Citi is acting as financial advisor to Roche and Davis Polk & Wardwell LLP is acting as legal counsel to Roche. Goldman, Sachs & Co. is acting as financial advisor to FMI and Goodwin Procter LLP is acting as legal counsel to FMI.
Latest news: * On April 14, 2015, Roche announced the final results of the tender offer by Roche Holdings, its wholly owned subsidiary, to purchase up to 15,604,288 shares of common stock of Foundation Medicine, at USD 50.00 per share in cash, which expired at 12:00 midnight, New York City time, at the end of the day on 6 April 2015. The shares purchased by Roche in the tender offer, when added to the shares already owned by Roche and its affiliates (including 5,000,000 shares issued by FMI to Roche on 7 April 2015), total approximately 21,019,111 shares, representing approximately 57% of the outstanding shares of FMI’s common stock on a fully diluted basis as of 7 April 2015. Based on the final tabulation by Citibank, N.A., the depositary for the tender offer, a total of 18,758,256 shares of FMI’s common stock were validly tendered and not validly withdrawn in the tender offer. Because the tender offer was oversubscribed, the number of shares accepted for purchase by Roche from each of the tendering stockholders has been prorated. The final proration factor is 83.186197%. Payment for shares accepted for purchase by Roche will be made promptly in accordance with the terms of the tender offer. All shares tendered in the tender offer but not accepted for purchase will be returned to the tendering stockholders. In connection with the closing of the previously announced strategic collaboration, FMI’s board of directors now includes Daniel O'Day, Roche Pharmaceuticals Division, chief operating officer and member of the Roche corporate executive committee, Sandra J. Horning, M.D., global head, product development and chief medical officer for Roche/Genentech, and Michael D. Varney, Ph.D., head, Genentech Research and Early Development, and the previously announced research and development and commercial collaborations between the parties became effective. * On April 7, 2015, Roche announced the preliminary results of the tender offer by Roche Holdings, Inc., its wholly owned subsidiary, for up to 15,604,288 shares of common stock of Foundation Medicine at USD 50.00 per share in cash. The tender offer expired at 12:00 midnight, New York City time, at the end of the day on 6 April 2015 and was not extended. Based on the preliminary tabulation by Citibank, N.A., the depositary for the tender offer, a total of 17,484,326 shares of FMI’s common stock were validly tendered and not validly withdrawn in the tender offer (excluding shares tendered by notice of guaranteed delivery for which certificates have not yet been delivered), which, when added to the shares already owned by Roche and its affiliates and 5,000,000 shares that Roche will acquire directly from FMI, represent approximately 62.8% of the outstanding shares of FMI’s common stock on a fully diluted basis (taking into account the issuance of such 5,000,000 shares). In addition, Roche has been advised by the depositary that a total of 1,859,149 shares were tendered by notice of guaranteed delivery. Because the tender offer was oversubscribed, the number of shares that Roche will purchase from each tendering stockholder will be prorated to limit Roche’s aggregate purchase to 15,604,288 shares. Based on the preliminary information provided by the depositary, and including all shares tendered by notice of guaranteed delivery, Roche estimates that the proration factor for the tender offer will be approximately 80.7%. The shares of FMI’s common stock to be purchased and the proration factor are preliminary and subject to confirmation by the depositary of the proper delivery of shares tendered (including by notice of guaranteed delivery). The final results of the tender offer, including the final proration factor, will be announced following the expiration of the guaranteed delivery period and completion of the confirmation process. * On April 6, 2015, Foundation Medicine announced that its stockholders approved each proposal presented at the special meeting of stockholders held on April 2, 2015, in connection with the pending strategic transaction with Roche. More than 78% of the total outstanding shares of common stock eligible to vote at the meeting, and more than 99% of the shares voted at the meeting, were voted in favor of each proposal related to the Roche transaction. The stockholder approval of these proposals satisfies one of the remaining closing conditions for the proposed transaction. The transaction with Roche includes the pending tender offer by Roche to purchase up to 15.6 million shares of Foundation Medicine common stock at a price of $50 per share, and the purchase by Roche of 5 million newly issued shares of Foundation Medicine common stock at a price of $50 per share. The transaction with Roche also includes research & development and commercial collaborations between the parties. * On March 2, 2015, Roche announced that it has extended the expiration of its tender offer to purchase up to 15,604,288 of the outstanding common shares of Foundation Medicine, at a price of $50.00 per share in cash, to 12:00 midnight, New York City time, at the end of the day on Monday, April 6, 2015. All other terms and conditions of the tender offer remain unchanged. As of March 1, 2015, approximately 7,739,202 common shares of FMI (none of which were tendered by notice of guaranteed delivery) had been tendered and not withdrawn pursuant to the tender offer. Subject to satisfaction or waiver of the remaining conditions to the tender offer (including receipt at the special meeting, currently scheduled for April 2, 2015, of the required approval of FMI’s stockholders), Roche does not currently anticipate a further extension to the tender offer. * On February 2, 2015, Roche announced that it has commenced a cash tender offer for up to 15,604,288 outstanding shares of common stock of Foundation Medicine, at a price of $50.00 per share. The tender offer is being made pursuant to the previously announced transaction agreement dated as of January 11, 2015 between Foundation Medicine and Roche Holdings. The tender offer period will expire at 12:00 midnight (New York City time) at the end of the day on March 2, 2015, unless the offer is extended.
