Roche acquiring startup backed by Alphabet
Roche Holding will buy Flatiron Health and its cancer-focused medical records technology for $1.9 billion, as drugmakers increasingly mine data to develop new oncology treatments.
The Swiss oncology giant already owns 12.6 percent of closely held Flatiron, which is also funded by Google parent Alphabet, the companies said last week. The company was founded by Nat Turner and Zach Weinberg, who sold an ad tech business to Google almost a decade ago.
Drugmakers and the insurers that decide whether therapies will be reimbursed are looking for evidence to guide both the development of new products and the use of treatments after they’re approved. Flatiron allows doctors and researchers to comb through medical records, including gene sequences and insurance claims, to research the effectiveness of various approaches.
The deal is a “trailblazing move,” Oddo & Cie analysts Pierre Corby and Sebastien Malafosse wrote in a note to investors on Friday. “Whilst the price might initially appear high, it is very likely that within the next few years the price of good quality databases in the health-care domain will have soared (particularly in oncology).”
In 2016, Roche led a $175 million round of funding for Flatiron, a New York company that has raised more than $300 million from investors such as Alphabet and First Round Capital.
Flatiron “is best-positioned to provide the technology and data analytics infrastructure needed not only for Roche, but for oncology research and development efforts across the entire industry,” Daniel O’Day, the chief executive of Roche’s pharmaceutical unit, said in the statement.
Flatiron’s technology is also aimed at enabling doctors to look at how other patients fare with various therapies and use those results to customize treatment for patients with similar illnesses. These personalized approaches have become an important part of treating cancer, where therapies often have very different results in patients whose disease appears similar.
The pharma industry is turning to huge databases to gain understanding of complex interactions between drugs and organisms, and the overall impact that treatments have on the outcomes of health problems. Roche also holds more than half of the shares of Foundation Medicine, which helps doctors and patients choose treatments based on the genetic profiles of tumors.
Flatiron’s technology helps doctors to look at how patients fare with various therapies.