Roche Holding AG (ROG) will pay more than $1 billion for a majority stake in Foundation Medicine Inc. (FMI), giving the drugmaker access to genomic tests to screen tumors and aiding the development of a new generation of treatments that use the body’s own immune system to fight cancer.

Roche will buy 5 million newly issued shares of Foundation for $50 each, then begin an offer for about half of the company’s existing shares for the same price, the companies said in a statement today. The offer is 109 percent above Foundation’s closing stock price last week. It will give Roche a stake of as much as 56 percent and the rights to sales of Foundation’s tests outside the U.S.

“This is a transformational relationship for us,” said Foundation Chief Executive Officer Michael Pellini in a telephone interview.

Foundation, based in Cambridge, Massachusetts, makes cancer genomic tests, one for solid tumors and the other for blood cancers. The diagnostic tests take a tissue sample from a patient’s cancer and analyze it for gene mutations that could be causing the tumor’s growth. That information can help doctors pick the best possible drug.

The tests are particularly attractive to drugmakers working on a new wave of cancer treatments that rely on personalized approaches. Foundation has sold about 35,000 of its tests worldwide, according to Pellini.

Roche shares rose 0.7 percent to 279.90 francs at 9:20 a.m. in Zurich.

Roche and Foundation are planning to develop a profiling test specifically to be used for what are known as immunotherapies, treatments that aid the immune system’s attack against tumor cells.

Foundation has partnerships with about 25 biotechnology firms and pharmaceutical companies, said Pellini, including Novartis AG (NOVN) and Johnson & Johnson. (JNJ) Current and future partnerships won’t be affected by the Roche deal, said Pellini, who will stay on as CEO.

Foundation sold shares at $18 each in an initial public offering in September 2013. The company’s largest shareholder is Third Rock Ventures LLC, the Boston-based venture-capital firm. Four of the company’s founding advisors hold positions in cancer research at Harvard Medical School.

(Source: Bloomberg)