Genentech said today it agreed to acquire Seragon Pharmaceuticals for up to $1.725 billion, in a deal that complements the Roche subsidiary’s breast cancer products and R&D with a portfolio led by an early-stage clinical candidate for hormone receptor-positive breast cancer.

Seragon lead candidate ARN-810 is in Phase I clinical trials for patients who have hormone receptor-positive breast cancer and have failed current hormonal agents. ARN-810 is an oral selective estrogen receptor degrader (SERD), a new class of medicines designed to block estradiol action at the estrogen receptor, then change the receptor’s shape in a manner that targets it for elimination by the cell.

The companies reason that SERDs may offer an improved approach to treating hormone receptor-positive breast cancer, which accounts for up to 60% of breast cancers, and potentially other cancers driven by the estrogen receptor.

“We believe these investigational oral SERDs could one day redefine the standard of care for hormone receptor-positive breast cancer,” Richard Scheller, Ph.D., evp and head of Genentech Research and Early Development, said in a statement.

Genentech and parent company Roche is among top-tier breast cancer drug developers, with marketed products that include Herceptin as well as approvals in recent years for drugs targeting the HER2 protein. The company won FDA approval in 2012 for Perjeta (pertuzumab) in combination with Herceptin® (trastuzumab) and docetaxel, then last year won accelerated approval for a new indication, becoming the first FDA-approved drug for the neoadjuvant treatment of breast cancer.

Also last year, Genentech/Roche introduced to market Kadcyla® (T-DM1 or ado-trastuzumab emtansine), which racked up $266.214 million in sales last year—good enough for #3 on GEN’s list of Top 18 Best-Selling Drugs Launched in 2013.

Genentech agreed to pay $725 million cash upfront, plus additional contingent payments of up to $1 billion tied to achieving undisclosed predetermined milestones.

“We assume that Genentech's scientists see considerable potential in SERDs, because otherwise they would not have accepted this relatively high price,” analysts at Zuercher Kantonalbank said in a note to investors reported by Reuters.

The deal is subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act. The transaction is expected to close in the third quarter of 2014.  

Genentech Research and Early Development will integrate the portfolio of Seragon, a spinout of Aragon Pharmaceuticals established just last year to commercialize SERDs for breast cancer just before Aragon and its prostate cancer R&D were acquired by Johnson & Johnson for up to $1 billion. At the time, J&J neither took any stake in Seragon nor retained any rights to ARN-810.

Previous articleMajor New Role for B Cells Discovered
Next articleJazz Nabs Rights to Defibrotide in the Americas