With An Iffy Non-Oncology Pipeline, Roche Pays Up For InterMune
Stephen Simpson, CFA • Yesterday, 7:18 PM
- Roche comes out on top in what was rumored to be a multi-party bidding process for InterMune, agreeing to pay over $8 billion for the developer of Esbriet (for IPF).
- Even with incremental free cash flow margins above 50%, Roche has to generate more than $2 billion/year in U.S. sales to justify the price paid for InterMune.
- Roche's past failures in developing drugs outside of oncology likely pushed management toward this deal, but the shares still look modestly undervalued on mid-single digit growth expectations.