Roche leads $175M investment in oncology software player Flatiron

Roche ($RHHBY) has led a $175 million investment in Flatiron Health, the oncology software player set up by a pair of former Google ($GOOG) employees in 2012. The deal, which also sees Roche sign up to use Flatiron's services, continues the Big Pharma's drive to connect its R&D teams to a broader pool of data.

The structure and intent of the agreement is reminiscent of the deal Roche struck with Foundation Medicine ($FMI) almost exactly one year ago. In both cases, Roche made an equity investment and entered into an R&D collaboration to gain access to a source of oncology data. Flatiron, which has a collaboration with FMI, was set up in 2012 with a view to using software to match patients to clinical trials, before broadening its scope and rolling out cloud-based products covering the entire cancer healthcare workflow. The software has positioned Flatiron to provide insights to drug developers.

Roche's Daniel O'Day

"Flatiron has tremendous data that helps us understand how medicine reacts in patients," Roche COO Daniel O'Day told the New York Times. Roche wanted to tighten its ties to Flatiron to secure a front-row look at the data and the insights they can deliver. "This is a long-term strategic investment, and the strategic collaboration benefits us. The value in the investment is not to generate a financial return," O'Day said. As part of the deal, Roche has agreed to buy services from Flatiron. The alliance is viewed as a way to speed clinical development and further personalized medicine.

The multiyear collaboration is nonexclusive, keeping Flatiron free to continue building out its life science services and pitching the offerings to Roche's rivals. Flatiron plans to use some of the $175 million Series C round, to which Allen & Company, Baillie Gifford and Casdin Capital also contributed, to expand its life science-focused services. The expectation is that 2016 will be the year in which the oncology software player steps up its life science business development activities, using the base of cancer care data it has built in recent years as a platform for the expansion.

Flatiron, which last raised money in 2014 through a Google Ventures-led $130 million Series B round, sees the broadening of its customer base as supporting its future financing plans. "We plan to go public in two to three years," Flatiron CEO Nat Turner told the NYT. "To do so, we'll have to meet certain financial metrics, and this investment sets us up to do that." Turner set up Flatiron in 2012 with Zach Weinberg. The pair sold their previous startup, Invite Media, to Google for $81 million in 2010, stuck around at the tech giant for a while and then honed in on cancer as the focus of their next venture. 

- read the NYT article
- here's the release