Covance Buys Key Piece of Merck’s Rosetta Operation in Seattle

7/29/09Follow @xconomy

Covance, the giant drug development services company based in Princeton, NJ, said today it has agreed to acquire a Seattle laboratory run by Merck’s Rosetta operation that performs genomic analysis tests for biologists around the world.

Merck has been gradually winding down its Rosetta operations in Seattle since last October, when it said it would close the division, which had 300 local employees, as part of a global cost-cutting move. But it looks like Merck still wants access to some of the work being done by Rosetta. As part of the agreement announced today, it has committed to pay Covance $145 million over the next five years for genomic analysis services—presumably that includes services from the Seattle Gene Expression Laboratory, which looks at DNA sequences, slight individual variations in genetic code, and which genes are dialed up or down in a given biological sample.

Covance (NYSE: CVD) expects to offer jobs to the majority of the current employees in the Rosetta Gene Expression Laboratory, and expects to move into the company’s South Lake Union operation on Aug. 17. The work of the lab is considered valuable to drug developers as they continue to seek ways to find out a genetic basis for why certain patients respond to drugs, and some don’t. As this field of science progresses, researchers hope to better predict which drugs will succeed in clinical trials, saving time and money on the majority of drug candidates that fail.

“The acquisition of this laboratory brings world-class talent and technologies to Covance and further expands our capabilities in genomics testing and personalized medicine,” said Joe Herring, chairman and CEO of Covance, in a statement.

Rosetta, which was founded in 1996 by Stephen Friend, Leroy Hood, and Lee Hartwell, was one of the bigger success stories in Seattle biotech over the years, when it was acquired by Merck in 2001 for more than $600 million. Since Merck announced it was closing the Seattle operation last fall, it has moved some of its researchers to a consolidated research facility in Boston, while others have split off with Friend in a new nonprofit effort to create an open-source genetic database for researchers, called Sage Bionetworks. Another piece of Rosetta that marketed life sciences software was acquired last month by Microsoft.

I have an interview scheduled with Herring this afternoon, and will provide updates when I have more information.

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