SAN FRANCISCO - Illumina, the leading manufacturer of DNA sequencing machines, said on Monday that it would buy the privately held Verinata Health for at least $350 million in cash to expand its push into the diagnostics business.
Verinata, based in Redwood City, Calif., sells a test that uses only a blood sample from a pregnant woman to determine if her baby will have Down syndrome or some other chromosomal abnormalities.
Such tests, which have been available for only about a year, have been rapidly catching on as an alternative, in some situations, to invasive tests like amniocentesis that carry a slight risk of inducing a miscarriage.
Illumina's stock fell almost 8 percent in early trading on Monday, though that was probably more because of reports that Illumina itself would not be acquired by Roche Holding, the Swiss pharmaceutical and diagnostics company.
Roche's chairman, Franz B. Humer, was quoted on Sunday by a Swiss newspaper, Sonntags Zeitung, as saying a deal was off because Illumina wanted too high a price.
In April, Roche had dropped a hostile bid for Illumina, valued at $51 a share, or about $6.7 billion.
But a different Swiss newspaper had reported in December that Roche was trying to buy Illumina again, this time for $66 a share. Neither Illumina nor Roche publicly commented on that report.
Both Roche's interest in Illumina and Illumina's acquisition of Verinata suggest that DNA sequencing, which until now has mai nly been used for research studies like the Human Genome Project, is now moving toward being used for medical diagnosis.
Illumina wants to be more than a seller of sequencing machines. It already offers a service sequencing the genomes of people to help diagnose rare diseases or figure out the best treatment for a cancer. In September, it bought BlueGnome, a British company that uses sequencing to screen for various genetic abnormalities.
รข€œThe agreement with Verinata demonstrates Illumina's commitment to developing innovative diagnostic solutions and providing our partners with the most advanced technologies for improved patient care,'' Jay T. Flatley, chief executive of Illumina, said in a statement.
Verinata's test, called verifi, uses sequencing to analyze fragments of fetal DNA that can be found in a pregnant women's blood. That allows for detection of Down syndrome, in which a person has three copies of chromosome 21 instead of the usual two.
S uch noninvasive tests for Down syndrome appear to be catching on rapidly. Verinata, however, is believed to substantially lag behind the market leader, Sequenom, in market share.
Sequenom, a publicly traded company, introduced the first noninvasive Down syndrome test in October 2011.
It said on Sunday that it had performed 60,000 of its MaterniT21 Plus tests in 2012, and by the end of the year was operating at an annualized run rate of 120,000 tests.
Others selling or developing such tests include Ariosa Diagnostics and Natera. The companies are involved in various patent lawsuits against one another. They are also broadening their tests to detect chromosomal abnormalities beyond Down synd rome, including those linked to abnormalities in the sex chromosomes.
Some of these other companies use Illumina sequencers to perform their tests. It is possible they may now become more reluctant to rely on machines made by a company that is a competitor.
Illumina said there were about 500,000 high-risk pregnancies a year in the United States that would be candidates for a noninvasive prenatal test. It said the potential market for such tests would be more than $600 million in 2013.
Verinata said on its Web site that it would continue to operate as a subsidiary of Illumina. Beyond the initial payment of $350 million, Verinata shareholders would be eligible to receive up to an additional $100 million in milestone payments through 2015.
Illumina said the deal would dilute its earnings per share by 20 cents in 2013 but add to them in 2014.
Bank of America Merrill Lynch and Covington & Burling advised Ilumina on the deal.
Illumina made its announcement on the eve of the J.P. Morgan Healthcare Conference in San Francisco, an annual Wall Street and medical industry gathering at which numerous companies make announcements.
