DealBook: Roche to Pay up to $1.7 Billion for Seragon Pharmaceuticals

Photo The deal is the latest in an string of smaller acquisitions by Roche Group, based in Basel, Switzerland.Credit Reuters

LONDON – The Swiss drug maker Roche Group said on Wednesday that it will pay up to $1.7 billion to acquire Seragon Pharmaceuticals, a privately held biotechnology firm focused on developing treatments for breast cancer.

Under the deal, Genentech, a unit of Roche based in San Francisco, will pay $725 million in cash, plus up to an additional $1 billion if Seragon's products reach certain milestones.

The transaction is expected to bolster Roche's portfolio of cancer treatments and comes amid a wave of consolidation in the pharmaceutical industry.

With rising costs in research and development, established pharmaceutical companies in search of the next blockbuster treatment are gobbling up smaller companies with promising products shortly before they are ready for wider distribution.

Seragon's most advanced drug in its pipeline, ARN-810, is currently in phase-one clinical trials.

Richard H. Scheller, an executive vice president and the head of Genentech's research and early development division, said Seragon's products could "one day redefine the standard of care" for certain types of breast cancers.

Seragon, based in San Diego, was spun off from Aragon Pharmaceuticals last year after Johnson & Johnson acquired Aragon for up to $1 billion.

The transaction is subject to regulatory approval and is expected to close in the third quarter. Seragon's portfolio of experimental drugs would be incorporated into Genentech following the acquisition.

The deal is the latest in an string of smaller acquisitions by Roche.

In June, Roche agreed to pay $350 million for Genia Technologies, a privately held DNA sequencing company. In May, the company agreed to pay up to $450 million for IQuum, a maker of medical testing equipment based in Massachusetts.

Founded in 1896, Roche, based in Basel, is one of the world's largest pharmaceutical companies. In 2013, the company posted sales of 46.8 billion Swiss francs, or about $52.8 billion, and employs more than 85,000 people worldwide.

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