Foundation Medicine Enters Strategic Collaboration with Roche in the Field of Molecular Information in Oncology

—Collaboration leverages both companies’ strengths to advance the progress of personalized treatments for patients with cancer—

Roche to acquire a majority interest in Foundation Medicine of up to 56.3% on a fully diluted basis through a tender and acquisition of newly issued shares. Roche will tender for approximately 15.6 million Foundation Medicine shares at USD 50 per share with an aggregate tender value of approximately USD 780 million. Roche will also invest USD 250 million in Foundation Medicine by acquiring 5 million newly issued shares at USD 50 per share.

Partnership includes both a broad R&D collaboration with the potential for more than USD 150 million funding by Roche to accelerate Foundation Medicine’s new product development initiatives, optimize treatments for oncology patients, and better design and understand the results of clinical trials based on molecular information, as well as commercial collaboration agreements aimed at expanding the global sales efforts for Foundation Medicine’s current and future products.

Michael J. Pellini, M.D., Foundation Medicine’s president and CEO, will continue to lead the Company post-closing, along with Foundation Medicine’s current management team; Company will maintain operational independence; Roche to obtain minority representation on the expanded Foundation Medicine Board of Directors; Roche and Foundation Medicine Boards of Directors have unanimously approved the transaction.

CAMBRIDGE, Mass.—(BUSINESSWIRE)— Foundation Medicine, Inc. (NASDAQ:FMI) and Roche (SIX: RO, ROG; OTCQX: RHHBY) announced today that they will enter into a broad strategic collaboration to further advance Foundation Medicine’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.

“We are very pleased to enter into this collaboration with Foundation Medicine, which has the potential to improve both the development of medicines and patient care,” said Daniel O’Day, chief operating officer of Roche Pharma. “By combining Foundation Medicine’s pioneering approach to genomics and molecular information with Roche’s expertise in the field of oncology, we can bring personalized healthcare in oncology to the next level.”

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. Foundation Medicine supports physicians by providing comprehensive molecular information to characterize a tumor that is being matched with approved targeted therapy options and novel treatments in development. Understanding the comprehensive genomic profile of a patient’s disease will enable better personalized healthcare solutions to optimize treatment outcomes for patients with cancer.

“We are excited to announce this strategic collaboration with Roche, which will help accelerate our business, and importantly, represents significant potential for individuals with cancer around the world. We believe that putting molecular information at the center of cancer care will help transform the delivery of care for patients and speed the pace of drug discovery and development,” said Dr. Pellini. “The structure of our agreement with Roche also allows us to maintain the entrepreneurial spirit at Foundation Medicine and ensures that our business model, network of partnerships and objectives are not altered.”

Novel approaches to R&D, Product Development and Commercialization

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. Foundation Medicine 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 Foundation Medicine’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. Foundation Medicine’s pharmaceutical services business will not be impacted and could be enhanced as its capabilities increase with the investments and experience in working with Roche as a customer.

The R&D collaboration and Foundation Medicine’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 Foundation Medicine’s position across clinical and molecular information markets. Specifically, Roche will obtain rights ex-U.S. (under the Foundation Medicine brand) to existing Foundation Medicine products, as well as to future co-developed products. In the U.S., Roche will engage its medical education team in providing medical information to pathologists. The collaboration agreements will become effective upon the completion of Roche’s direct investment in Foundation Medicine and the tender offer, as described below.

Transaction Structure and Governance

Under the terms of the contemplated transaction, Roche will invest USD 250 million in Foundation Medicine at a per share issuance price of USD 50 (5 million shares) to fund its operations and development. In addition, Roche will commence a tender offer at a per share price of USD 50, which, when combined with Roche’s direct investment in Foundation Medicine, will result in Roche owning a minimum of 52.4% and a maximum of 56.3% of Foundation Medicine 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 Foundation Medicine, 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 Foundation Medicine Board of Directors. In addition, Third Rock Ventures, Kleiner Perkins Caufield & Byers and Google Ventures, three shareholders owning approximately 31% of Foundation Medicine equity combined, 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, Foundation Medicine’s board of directors will be increased to nine directors and will include three designees of Roche, including Daniel O’Day. Four existing independent directors of Foundation Medicine and Michael Pellini, M.D., 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.

Goldman, Sachs & Co. is acting as financial advisor to Foundation Medicine and Goodwin Procter LLP is acting as legal counsel to Foundation Medicine. Citi is acting as financial advisor to Roche and Davis Polk & Wardwell LLP is acting as legal counsel to Roche.