It will pay $725 million in cash and may hand over up to another $1 billion based on the achievement of certain drug development milestones.
Roche is looking to bolster its offering of breast cancer drugs with the purchase. It has long had a dominant position in the field with Herceptin and recently won approval for Kadcyla and Perjeta, two other treatments for patients whose cancer cells contain increased amounts of the protein known as HER2.
Since walking away from a $6.8 billion deal to buy U.S gene sequencing company Illumina in 2012 Roche has eschewed multi-billion deals and instead snapped up a couple of smaller diagnostic companies so far this year.
It has also partnered with various companies to develop antibiotics and said last week it will work with Inception Sciences Inc and Versant Ventures on a new company to develop therapies for patients with multiple sclerosis.
Seragon is the second notable acquisition in as many months for Roche, which bought privately held U.S. gene-sequencing firm Genia Technologies for up to $350 million in June, securing access to a technology that should allow it to decipher human genes more quickly at a cheaper cost.
The San Diego-based biotech company was spun out from Aragon Pharmaceuticals last year when that firm was bought for up to $1 billion by Johnson & Johnson.
Seragon is focused on developing a new generation of oral medicines that it believes offer an improved way of tackling hormone receptor-positive breast cancer, and potentially other cancers. Its most advanced experimental drug, ARN-810, is currently in initial Phase I clinical trials for breast cancer patients who have not responded to current hormonal agents.
Roche said Seragon's so-called oral selective estrogen receptor degraders, or SERDs, would complement existing research and development programmes in breast cancer underway at the Swiss group's Genentech unit.
The transaction is expected to close in the third quarter of 2014.
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