Roche, the world’s largest maker of cancer drugs, is spending $1.03 billion to buy a 56.3% stake in Cambridge, Mass.-based Foundation Medicine, a company that uses genetics to help select drugs for cancer patients. Roche, based in Basel, Switzerland, will also market Foundation’s diagnostic tests outside the U.S., help educate doctors as to the value of the tests in the U.S., and provide another $150 million to support additional research on Foundation’s products.
Roche is buying 15.6 million Foundation shares at $50 each, about twice the current stock price, on the open market and will purchase another 5 million newly issued shares from Foundation at $50 per share. In a setup that echoes the one that Roche had for years with Genentech, the biotechnology company it later bought, Foundation will continue to function as an independent company. Despite its majority stake, Roche will have only 3 of 9 seats on Foundation’s board. “We both feel it’s important for Foundation to maintain its independenence and its entrepreneurial spirit,” says Michael Pellini, Foundation’s chief executive.