Swiss-based Roche Holding AG plans to pay up to $1.73 billion to buy Seragon Pharmaceuticals, a privately-held US biotech company that researches breast cancer treatments.

Roche has long dominated the field of breast cancer with drugs such as Herceptin and recently won approval for Kadcyla and Perjeta, two treatments for patients whose cancer cells contain increased amounts of the protein known as HER2.

San Diego-based Seragon was spun off from Aragon Pharmaceuticals last year when that company was bought by Johnson & Johnson. It is focused on developing a new generation of oral medicines that may offer an improved way of tackling hormone receptor-positive breast cancer, and potentially other cancers.

Seragon's 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 under way at the Swiss group's Genentech unit.

The Basel-based drugmaker will pay $725 million in cash and may hand over as much as $1 billion more if Seragon achieves drug development milestones.

Seragon is the second notable acquisition in as many months for Roche, which bought privately held US 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 acquisition represents a response to investors who wondered how Roche might use its cash after paying down debt from acquiring Genentech.

The transaction is expected to close in the third quarter.