Roche acquires DNA sequencing firm for up to $350 mln

The logo of Swiss pharmaceutical company Roche is seen outside the Shanghai Roche Pharmaceutical Co. Ltd. headquarters in Shanghai May 22, 2014. REUTERS/Aly Song

ZURICH (Reuters) - Swiss drugmaker Roche said it was buying privately held U.S. gene-sequencing firm Genia Technologies for up to $350 million (209 million pounds), securing access to a technology that should allow it to decipher human genes more quickly at a cheaper cost.

Gene sequencing is vital to the development and use of new medicines by allowing researchers and physicians to better understand the human genome.

Under the deal announced on Monday, Genia's shareholders will receive $125 million in cash and up to $225 million in contingent payments depending on certain milestones, Roche said in a statement.

Dan Zabrowski, head of Roche's sequencing unit, said the new technology had the potential to be more accurate, faster and less expensive than existing systems.

Most systems currently on the market make copies of DNA in order to generate enough coherent data to be read by the sequencing platform, he said, comparing this technique to making thousands of copies of a book.

"Some of the words would come through better than others and potentially some of the sentences or words would be fragmented," he said. "At the end you have to take those thousand copies and use a lot of informatics analysis to be able to assemble the book and read it."

Instead, Genia's technology is based on the measurement of single DNA molecules reducing the amount of errors and information, he said.

Analysts at Helvea welcomed the deal.

"The company has managed with this acquisition to put its foot in the door of the so-called next generation sequencing," they wrote in a note, adding the smaller scale and lower costs should lead to a broader usage of the new technology than previously envisaged.

Other sequencing platforms also rely on expensive optical sensors, but Genia uses cheap electronic semiconductors, the same as those used in cell phones and computers, to measure changes in electrical currents and identify DNA sequences.

Zabrowski said Roche was still on the lookout for external partnering opportunities in sequencing as well as developing its offering in-house.

In 2012, Roche abandoned an attempt to buy gene-sequencing company Illumina for $6.7 billion after the U.S. firm's shareholders held out for a higher price.

Roche shares were up 1.9 percent at 3.43 p.m. BST, outperforming a slightly firmer European healthcare index <.SXDP>, helped also by positive drug data released at a big cancer conference in the U.S. over the weekend.

(Reporting by Silke Koltrowitz and Caroline Copley; Editing by Jane Baird and Sophie Walker)