A Brief History of the Roche/Genentech Partnership

Collaboration began in 1990 and was renegotiated in 1995.

A Brief History of the Roche/Genentech Partnership: 1990: Hobbled by the clot busting drug Activase's failure to quickly achieve blockbuster status, Genentech's share price dipped to a low of around $20. Roche played white knight: in a $2.1 billion deal, it purchased a 60% interest in Genentech and an option, exercisable until June 30, 1995, to purchase the remaining 40%. In addition, Roche directly invested $492 million in Genentech. 1995: As the June 1995 deadline approached, the two companies renegotiated their original deal. They agreed to a put/call provision that gave Roche the right to buy outstanding shares at $82.50 and allowed Genentech shareholders to force a buy-out at $60. In return for the put opportunity, which placed a floor on Genentech's share price, Roche received a first right of refusal on ex-US rights to Genentech products (except Herceptin and Omnitarg, which were covered under earlier deals). Under the terms, Roche paid 50% of Genentech's development costs any time through Phase II-or 75% if the drug reached Phase III-and ex-US development expenses. This opt-in deal expires in 2014. 1998: Roche licensed ex-US rights for Herceptin, an anti-HER2 mAB for metastatic breast cancer. Roche paid $40 million up-front, milestones, and royalties and split development costs. 1999: Using its call option, Roche bought up the 33% of Genentech shares if didn't own at $82.50-per-share and reissued 20 million shares in an IPO at $97 dollars a piece, an immediate gain of 18% on its investment. In a subsequent follow-on offering, Roche sold another 22 million shares at $143.50 for a 74% gain. For its original $5.8 billion investment in Genentech, Roche garnered $2.87 billion in cash and kept 56% of Genentech's shares. 2003: Roche licensed all ex-US rights to Avastin, in Phase III trials at the time for metastatic colon cancer, for $188 million up-front, plus 75% of the global development costs. Roche also paid royalties on the drug's net sales. The vascular endothelial growth factor inhibitor has since been approved to treat non-small cell lung cancer, renal cell cancer, and breast cancer. On-going Phase III studies in a range of cancers, including glioblastoma, ovarian cancer, and colon cancer offer additional label expansion opportunities for the drug.