Microsoft, Dipping Toe Deeper into Life Sciences, Buys Rosetta Assets from Merck

6/1/09Follow @xconomy

Microsoft could be safely ignored on the biotech beat for years, but not anymore. The Redmond, WA-based software powerhouse, in another move to beef up its stake in the life sciences software business, said today it is acquiring the Seattle-based assets of Rosetta Biosoftware from Merck.

Financial terms of the deal were not disclosed, but Merck has agreed to become a customer of Microsoft’s new Amalga Life Sciences platform, which is supposed to help researchers better analyze the vast pools of genomic data now piling up in their hard drives. Merck, the drug giant based in Whitehouse Station, NJ, will also help Microsoft better understand the life sciences market so the software maker can develop new products to analyze all this emerging digital data on how genes and proteins interact with drugs in the body. The deal is expected to close by the end of this month, and Rosetta should be integrated into Amalga Life Sciences by early 2010, Microsoft said in a statement.

This is important news for Seattle biotechnology, because Merck announced last October that it is closing down its Rosetta Inpharmatics subsidiary in Seattle, with more than 300 employees. Some of the researchers have been offered transfers to a consolidated Merck cancer research facility in Boston. But that left an uncertain future for about 200 other people, including those at the biosoftware division that sells products to other drug companies, and a Rosetta group that does sophisticated work analyzing how genes are turned on or off in tissue samples. Rosetta was one of Seattle biotech’s big success stories, having been founded by Stephen Friend, Leroy Hood, and Lee Hartwell in 1996, before it was acquired by Merck for $630 million five years later.

Microsoft has made little headway in the life sciences market after years of strategizing about how to tap into this major segment of the national economy. Yet Microsoft co-founder Bill Gates has long personally had an intense interest in trying to come up with better software for drug development, and it’s a subject he’s long discussed with Leroy Hood, the high-speed gene sequencing pioneer. Last month, Microsoft introduced Amalga Life Sciences, which as far as I can tell from interviewing experts, is the first serious product Microsoft has introduced to help bring biologists out of the computing stone age of simply using old Excel spreadsheets and Access databases, which were never designed to corral all the complex data points from modern clinical trials.

“We’re excited to collaborate with Merck and augment the capabilities of Amalga Life Sciences with the complementary assets of Rosetta Biosoftware,” said Peter Neupert, corporate vice president of Microsoft’s Health Solutions Group, in a statement. “The newly combined offering will enable customers to improve the management and analysis of genomic, biological and research data, helping to bring lifesaving drugs and therapies to market faster and accelerate the realization of personalized medicine.”

I expect to gather more information from Microsoft and Merck later today, so stay tuned to this space for updates.

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