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Roche Agrees to Buy InterMune for $8.3 Billion for Lung Drug

Aug. 24 (Bloomberg) -- Roche Holding AG agreed to buy InterMune Inc. for about $8.3 billion in cash, gaining access to what may be the first drug in the U.S. for a lung disease that can be fatal within five years of diagnosis.

Roche will pay $74 a share for InterMune, a biotechnology company with 450 employees, the Basel, Switzerland-based drugmaker said today in a statement. It is 38 percent more than the Aug. 22 closing price for Brisbane, California-based InterMune, and 63 percent higher than on Aug. 12, when news of a potential sale first emerged.

The purchase gains Roche pirfenidone, which analysts predict may generate $1 billion in global sales by 2019. The treatment targets idiopathic pulmonary fibrosis, a disease that causes tissue deep in the lungs to become thick and scarred over time. Roche, the biggest maker of cancer drugs, has struggled to expand outside of oncology, halting development of diabetes and heart disease drugs in recent years.

“Our offer provides significant value to InterMune’s shareholders,” said Roche Chief Executive Officer Severin Schwan, in the statement. “This acquisition will complement Roche’s strengths in pulmonary therapy.”

The purchase is Roche’s largest since 2009, when it acquired the 44 percent of Genentech Inc. that it didn’t already own for about $46.8 billion.

The boards of both companies have agreed to the deal, which is expected to close by the end of the year. It will be paid for with cash on hand and newly issued bonds, Roche said. The acquisition will have a neutral effect on core earnings per share next year and add to profitability starting in 2016.

Bidding War

The deal is the culmination of a bidding war for InterMune, with Sanofi, GlaxoSmithKline Plc and Actelion Ltd. all taking part as pirfenidone worked its way closer to the U.S. market. The drug, also known as Esbriet, is already sold in Europe and would be the first medicine available in the U.S. for the disease that kills 40,000 Americans annually.

Action by the U.S. Food and Drug Administration is expected by Nov. 23, based on regulatory requirements tied to when the company filed for approval. The drug received a breakthrough therapy designation from the FDA in July, a category reserved for medications designed to treat serious or life threatening diseases. The medicines typically offer significant improvements beyond existing therapies and often get faster FDA action.

Patients typically live two to five years after a diagnosis with IPF, a progressive disease with periods of stability interrupted by unpredictable bouts of disease progression, according to the National Heart, Lung and Blood Institute. About 128,000 Americans suffer from the condition, with another 48,000 diagnosed each year, according to the Coalition for Pulmonary Fibrosis.

There is no known cause of the disease.

Citigroup Inc. advised Roche and Davis Polk & Wardwell LLP provided legal counsel. InterMune worked with Centerview Partners LLC and Goldman Sachs Group Inc. as well as law firm Cravath, Swaine & Moore LLP.

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