A $1 billion deal for tests that can steer patients to the right drug.

The pharmaceutical giant Roche plans to spend $1 billion to acquire majority control of Foundation Medicine, a five-year old company that developed an innovative DNA test to match patients to specific cancer drugs.

We profiled Foundation in back in 2012 (see Foundation Medicine: Personalizing Cancer Drugs), highlighting how the spinout of the MIT-Harvard Broad Institute was one of the first to introduce tests to sequence the DNA of a tumor biopsy to pinpoint the exact mutations driving a persons tumor, and possibly steer treatment. At the time, we described Foundations pricey $5,800 cancer test, called FoundationOne, this way:

Foundations business model hinges on the convergence of three recent developments: a steep drop in the cost of decoding DNA, much new data about the genetics of cancer, and a growing effort by pharmaceutical companies to develop drugs that combat the specific DNA defects that prompt cells to become cancerous.

Foundation tried something new and important. But it turns out that its hard to make money in diagnostics, and the technology of DNA testing is developing and changing very quickly, too. All that helps explain why the company agreed to sell a little over half its shares to Roche, which sells more cancer drugs than anyone. As the New York Times says today:

Roche, which is the worlds largest seller of cancer drugs, said it would use some insights from that testing to develop drugs and better tailor them for specific groups of patients. In addition, Roche, which also has a huge diagnostics business, will sell Foundations tests outside the United States.

I think it just brings personalized health care in oncology to a new level, Daniel ODay, who runs Roches pharmaceutical business, said in an interview.

The Foundation deal appears to be the largest in a series of takeovers by Roche of innovative diagnostics firms. A few years back, Roche tried and failed to acquire Illumina, the sequencing machine company whose technology underlies the explosion in DNA research. But Roche is finding no shortage of companies that are willing to sell. During the last twelve months, it bought Ariosa, a prenatal testing company, as well as Genia Technologies, which Roche paid $350 million for, and Bina Technologies, which develops bioinformatics software.

Foundations test is used to analyze a tumor for several hundred cancer-linked genes. As we reported in 2013, an early and famous customer for this technology was Apple founder Steve Jobs (see Steve Jobs Left a Legacy on Personalized Medicine):

It turns out that Jobs was one of the first peopleand certainly the best-knownto try this kind of all-in genetic strategy to beat cancer. As recounted in Walter Isaacsons biography of the Apple CEO, Jobs spent $100,000 to learn the DNA sequence of his genome and that of the tumors killing him. Jobs was jumping between treatments and hoped DNA would provide clues about where to turn next.

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Roche Takes Control of Innovative DNA Test Maker Foundation Medicine