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November 11, 2000 Lively battle in DNA chips" BY PAUL JACOBS The unlikely battleground is a tiny square of glass spotted with millions of pieces of DNA, the chemical of life -- the stuff that genes are made of. This is the DNA chip, and many scientists believe that it will bring about a revolution in medicine by helping to unravel the fundamental mysteries of life and produce a host of new drugs and diagnostic tests. But there is a war raging over this miniature terrain. For several years, one company, Affymetrix Inc. of Santa Clara, has dominated a growing commercial market for what has become a vital research tool -- one that must be manufactured with the precision of a computer chip and with all the tender handling required by fragile molecules. The company is widely credited as a visionary -- for its ingenious translation of computer chip-making technology to the world of biology and for anticipating a market that has only come of age with the deciphering of the human genetic code. Suddenly, however, Affymetrix has some serious competition -- formidable combatants like Motorola and Corning and the Hewlett-Packard spinoff Agilent Technologies. Each of these challengers is applying its industrial expertise to making its own DNA microarrays, as these chips are formally known. And there are smaller companies too, many with promising new approaches. All of them, large and small, hope to win a share of a growing market for a product with broad practical applications -- from identifying criminals by their DNA to determining the best treatment for a specific kind of cancer or predicting who is a risk for Alzheimer's or heart disease. Most expect the overall market for DNA chips -- now estimated at $300 million a year -- to grow to $1 billion or $2 billion over the next few years, and even higher by the end of the decade. Hot product The belated entry into the field by large corporations ``is a validation of our technology,'' said Affymetrix spokeswoman Anne Bowdidge. ``We've got a very hot product.'' The founders of Affymetrix ``were in there very early when other people were thinking, `Why is this company doing this?' '' said Ron W. Davis, director of the Stanford Genome Technology Center. ``They had the vision that this would work.'' The large corporations, on the other hand, ``are such big players,'' Davis said, ``they can be in it for the long haul. And there's a chance that Affymetrix will stumble, and they'll be there to take over the market.'' Among the problems facing the company are patent lawsuits that challenge its hold on the technology. And some argue that all the competition will undoubtedly lead to technical breakthroughs that will change the way chips are manufactured -- speeding production, increasing accuracy, and sharply reducing price. A single, standardized Affymetrix chip can cost as much as $2,000 before discounts, but the company has been packing more and more DNA onto every chip, and its charges have been dropping with the increase in production. At the heart of the chip revolution -- and the competition it has engendered -- is the ability to decipher the genetic code of humans and other organisms. That requires determining the correct sequence of chemical letters in each organism's DNA -- the As, Ts, Gs and Cs that spell out the genetic instructions present in every cell. In June, the international Human Genome Project and PE Corp.'s Celera Genomics Group announced that each had completed rough drafts of the human code -- more than 3 billion letters long. But that milestone only underscored the huge job still ahead in understanding how this multi-volume instruction manual for the species actually works in early development and old age, in illness and in health. Using Affymetrix chips, scientists from the Whitehead Institute in Cambridge, Mass., and their collaborators reported last year that they were able to distinguish between two types of adult leukemia that can be confused with one another -- each requiring a different drug regimen for treatment. And this year, researchers from Whitehead and the Massachusetts Institute of Technology were able to identify a gene in melanoma cells that appears to play a crucial role in the spread of cancer throughout the body. Affymetrix builds its gene fragments on glass plates, one chemical letter at a time using techniques borrowed from the semiconductor industry. The company can rightfully claim leadership in the field. It was first to mass market DNA chips and now enjoys revenues approaching $200 million a year, and it just completed its first profitable quarter since going public in 1996. None of its competitors yet operates on that scale. Agilent Technologies in Palo Alto makes use of technologies that were developed by its more famous parent, Hewlett-Packard Co. Specifically, it uses a giant inkjet printer to build gene fragments on a glass plate, one chemical building block at a time. Instead of spewing ink in different colors, the printer shoots out the As, Ts, Gs and Cs of DNA. Genes on glass Hewlett-Packard printers ``are squirting dots on paper; we're squirting genes on glass and it works really well,'' said Vince Dauciunas, a senior director of business development at Agilent. Agilent is already shipping its first chips to researchers -- chips that can detect the 6,000-plus genes found in baker's yeast, which is widely used in research laboratories and which has a surprising number of genes that are like those found in humans. Electronics giant Motorola Inc. has also taken the plunge, assembling the needed technology through partnerships and acquisitions. ``The historical legacy of Motorola is pioneering new industries,'' said Nicholas Naclerio, vice president and general manager of Motorola BioChip Systems. Now, he said, the company wants ``to take a new science and harness it and apply it to practical products.'' Naclerio sees a multi-billion-dollar market developing over the next five to 10 years for a whole range of chips -- low-density products that can detect up to 1,000 different gene fragments for diagnosing diseases like cystic fibrosis or distinguishing a particular form of breast cancer; and higher density chips capable of identifying thousands of genetic variations that are predictive of future disease. ``The big market we're all talking about is health care and health care is a regulated market that changes slowly. It will take five or 10 years to have a major impact on medicine,'' he said. Corning active Corning Inc., once known for its glass cookingware, has translated its expertise in glass to become a world leader in fiber optics. Now it is applying those earlier technologies to biochips. The company has a method for packing extremely narrow glass capillaries into a printing head that can deposit thousands of gene fragments at a time on 1 inch by 3 inch glass slides. ``This whole industry is going to explode with the understanding of the molecular basis of the gene,'' said Thomas R. Hinman, vice president and general manager of Corning Microarray Technology. ``Genetics is going to revolutionize the whole drug discovery process and ultimately medicine.'' For the time being, at least, Affymetrix will continue to dominate the market, said Scott Greenstone, an analyst at Thomas Weisel Partners LLC. ``Most of the companies making noise don't have a product out there,'' he said. ``For them it's an uphill fight.'' But later, as high-density chips allow medical researchers to identify specific genes that play a role in specific illnesses, he said, there will be a need for low-density chips that look at hundreds of genes at a time, not tens of thousands. And that market remains up for grabs. In the meantime, however, Affymetrix is working on a set of DNA chips that will allow researchers at drug companies and academic labs to study all the human genes simultaneously. Said Affymetrix President Susan E. Siegel: ``Affymetrix is going whole genome.''
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