Roche has announced that it will buy Ignyta, a San Diego-based biotech that has a pipeline of oncology drugs, for $1.7 billion.

Ignyta was formed by the University of California in 2011, with its lead candidate currently undergoing Phase 2 trials. Entrectinib is a small molecule tyrosine kinase inhibitor of NTRK family of receptors and ROS1 proteins, and the treatment is being examined to determine whether it can be effective as a treatment for solid tumours.

Interim data on the treatment of patients with ROS1 fusion-positive advanced NSCLC showed that 78% of patients had a confirmed objective response rate to the treatment. In those that responded, there was a median progression free survival of 29.6 months.

Roche has snapped up the company on the back of this data, clearly seeing enough potential in the biotech’s pipeline to consider it a suitable edition to Roche’s key oncology portfolio.

Commenting on the transaction, Daniel O’Day, CEO Roche Pharmaceuticals, said, "Cancer is a highly complex disease and many patients suffer from mutations which are difficult to detect and treat. The agreement with Ignyta builds on Roche’s strategy of fitting treatments to patients and will allow Roche to broaden and strengthen its oncology portfolio globally."

Looming patent expirations are no secret for Roche, which is also seeing its biggest products get hit by a number of biosimilar rivals – Herceptin, for instance, has seen biosimilar approvals in both the US and the EU. Losing sales for such drugs will put a significant dent in Roche’s sales, with Herceptin alone responsible for sales of $6.7 billion in 2016.

Roche expects the deal to conclude in the first half of 2018. The acquisition will be completed through an all-cash transaction, with Roche willing to pay a premium of 74% on the price of Ignyta’s share price to push the deal through.