Roche bags antibiotics diagnostics tech in $425M GeneWeave buyout

Roche Diagnostics COO Roland Diggelmann

With Roche's ($RHHBY) R&D arm stepping back into antibiotics development, the pharma giant has struck a $425 million deal--with $190 million upfront--to buy a U.S. diagnostics outfit that's been developing some rapid-fire tech for matching the right antibiotic with the right bug.

The pharma giant has snagged GeneWeave Biosciences, which is based in Los Gatos, CA. GeneWeave developed what it calls Smarticles tech, which can analyze Gram-negative and Gram-positive bacteria and determine which antibiotic available is most likely to shut it down. That's a particularly important tool in light of a wave of drug-resistant bacteria that's taken a stubborn hold around the world. And GeneWeave boasts that its tech works on the spot in a matter of hours, short-circuiting the decision-making process in hospitals.

Just a few weeks ago GeneWeave lined up a $12 million Series B from Decheng Capital and two existing investors--Claremont Creek Ventures and XSeed Capital.

Strategically, Roche rarely does any kind of development work without a diagnostics angle to pursue. The Basel-based research group, pRED, has been inking a slate of smaller antibiotic deals, looking to reenter a field it left back in the '90s, as Big Pharma bowed out of a market known for thin margins. John Reed, who runs pRED, has expressed a keen interest in developing antibiotics that can be used in a hospital setting.

Early this year Roche struck a $750 million deal with Meiji Seika Pharma and Fedora for the ex-Japan rights to OP0595, a Phase I beta-lactamase inhibitor. The inhibitor is being tested as a combo with traditional antibiotics to fight drug-resistant infections caused by Enterobacteriaceae. About two years ago Roche signaled its interest in antibiotics with a $560 million deal on a midstage anti-infective in development at Polyphor. A discovery deal followed with Discuva and Roche partnered early with Atlas Venture startup Spero.

Roche isn't alone. Merck ($MRK) recently acquired Cubist in a $9.5 billion deal, while a lineup of biotech upstarts like Spero are making inroads on a new generation of superbug fighters.

Roche isn't just buying the tech. It's bringing GeneWeave staffers along as well.

"With GeneWeave, we further strengthen our microbiology diagnostics offerings with cutting-edge technology that will aid in the fight against drug-resistant bacteria," said Roland Diggelmann, COO of Roche Diagnostics, in a statement. "This technology has the potential to provide healthcare professionals access to quick and accurate diagnoses that can lead to rapid, informed treatment decisions. We welcome GeneWeave's employees, who will continue to focus on the development and manufacturing of diagnostics solutions based on the Smarticles™ technology."

- here's the release