* Deal boosts Roche's presence in respiratory medicine
* $74 per share cash offer represents 38 pct premium
* Roche sees transaction neutral for core EPS in 2015
* Consensus 2019 sales for InterMune lung drug $1.04 bln
(Adds additional analyst comment, shares)
By Ben Hirschler and Caroline Copley
LONDON/ZURICH, Aug 25 Roche Holding AG
has agreed to buy U.S. biotech company InterMune Inc
for $8.3 billion in cash, helping the world's leading maker of
cancer drugs expand into the treatment of rare or incurable
Roche's efforts to produce successful non-cancer drugs from
its own labs have been mixed, with setbacks in recent years for
experimental drugs against heart disease, diabetes and
The Swiss drugmaker already markets Pulmozyme for cystic
fibrosis and Xolair for severe asthma in the United States and
has other experimental respiratory products in clinical
development, including another severe asthma drug called
The InterMune deal brings it a promising new drug,
pirfenidone, for treating a progressive and ultimately fatal
scarring condition of the lungs. Pirfenidone is approved for
so-called idiopathic pulmonary fibrosis (IPF) in Europe and
Canada, and is undergoing U.S. regulatory review.
Roche said on Sunday it would pay $74.00 a share through a
tender offer for InterMune, representing a premium of 38 percent
to the closing price on Aug. 22 and a 63 percent premium over
Aug. 12 when takeover speculation around the stock began to
The acquisition, which has been recommended by the boards of
both companies, is the largest by Roche since 2009, when it
bought out the remaining stake it did not already own in U.S.
group Genentech for around $47 billion.
Analysts described InterMune's price tag as "hefty" given it
only has one marketed product in a field that is likely to
become increasingly competitive over time.
But Sanford C. Bernstein analyst Tim Anderson, who rates the
stock 'outperform,' praised the decision to beef up outside
oncology as a "smart tactical move."
Industry analysts expect pirfenidone, which is given as a
pill, to have sales of $1.04 billion in 2019, according to
consensus forecasts compiled by Thomson Reuters Pharma.
Shares in Roche were up 0.5 percent at 267.2 Swiss francs by
0806 GMT on Monday.
The large premium ascribed to InterMune is not unusual in
biotech takeovers, reflecting intense competition for promising
new drugs among larger companies, which rely on small innovative
firms for a growing proportion of their products.
Roche said the transaction was expected to be neutral for
its core earnings per share in 2015 but would boost profits from
2016 onwards. It said guidance for this year remained unchanged.
Chief Executive Severin Schwan said he believed there was a
good strategic and cultural fit between Roche and the
California-based biotech firm, and that it would continue to
pursue "targeted" bolt-on acquisitions.
Roche generates a large amount of cash, leading to
persistent speculation about deals. Its track record since
Genentech has been for a series of small-scale purchases. It
notably backed away from a $7 billion pursuit of gene sequencing
firm Illumina Inc two years ago.
Roche may be accelerating efforts to bolster its presence in
the treatment of rare diseases. Speculation last year linked
Roche to Alexion Pharmaceuticals Inc and BioMarin
There has been talk that Roche may buy the shares in Japan's
Chugai Pharmaceutical Co Ltd that it does not already
own for about $10 billion, although Chugai has denied it was in
talks over a such a deal.
Schwan declined to comment on whether the InterMune deal
would make a buyout of Chugai less likely.
Even after swallowing InterMune, Roche would still have the
leverage to "very easily" buy out the rest of Chugai and do
something else, said Kepler Cheuvreux analyst Fabian Wenner. But
he conceded such a move may now be "somewhat less likely".
On Monday, shares in Chugai fell 9 percent after Bloomberg
reported that Roche had decided against a buyout.
InterMune had considered selling itself about three years
ago but decided not to pursue a deal at that time due to
uncertainty over clinical data for pirfenidone, people familiar
with the matter told Reuters previously.
Roche said its interest in a deal was triggered following
positive late-stage trial results for the drug in May. The
medicine also received a "breakthrough therapy" designation from
the U.S. Food and Drug Administration (FDA). The term is
reserved for drugs for serious diseases that appear to offer a
substantial advance on existing therapies.
The FDA is due to give is verdict on whether to approve
pirfenidone by Nov. 23 and Roche said it expected to launch the
drug in the United States this year.
Healthcare companies are merging at a record pace, with
year-to-date activity topping $346 billion, compared to $212
billion in the year-ago period, Thomson Reuters data showed.
Recent large deals have included AbbVie Inc's $54
billion acquisition of Shire Plc and Medtronic Inc's
acquisition of Covidien Plc for $43 billion.
Citi is acting as financial adviser to Roche, while
Centerview Partners and Goldman Sachs are acting for InterMune.
Roche said it would commence a tender offer to acquire all
outstanding shares in the U.S. firm no later than Aug. 29.
(Editing by Tom Pfeiffer)