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Applied Biosystems Evolution Eyes Affy s Market

SAN FRANCISCO, May 2 - Applied Biosystems is looking to the human genome for a second harvest.


The company found success in selling the tools that helped researchers sequence the human genome. But revenue from sequencer instruments sales is down 35 percent in the company's third quarter, and sales of its workhorse ABI 3700 are depressed by 61 percent.


ABI is now looking to gene-based assays stemming from the human genome sequence to provide another wave of growth. "We've believed that our whole applied-genomic assays business has the potential of becoming the largest part of our overall business," Michael Hunkapiller, ABI's president, said last week.


To get there, the firm plans to begin rolling out off-the-shelf gene-expression and SNP assays sometime this summer, David Dailey, an ABI marketing manager for genotyping systems, recently told a GenomeWeb reporter at the company's bayside campus in Foster City, Calif. ABI is betting this will be the start of a new phase of growth.


"How does this become a huge piece of the pie?" Dailey asked. "Because it enables a brand new very large reagent stream that was unavailable previously because researchers were not able to one lab at a time go in and design 100 or 200 of these assays for their targets."


"There's money in instruments and reagents," he added.


Applera, ABI's parent, has invested $100 million and assigned more than 50 bioinformaticists across its three businesses--ABI, Celera Genomics, and Celera Diagnostics--to develop the assays business, according to an ABI spokesperson.

Spoils, if they come, will also be divided: ABI will realize profits from selling the assays, Celera Diagnostics will use the arrays for its diagnostics development, and Celera Genomics will have access to data to put into its drug-development programs, the spokesperson said.


The question, of course, is if they build it, will customers come.


"We see existing customers growing their visions and customers who have never even thought of this before moving into the area," said Dailey. He mentioned epidemiologists as well as a growth within the medical community of gathering samples for testing. If people learn a gene name, he said, they "can actually do something with it."


It democratizes gene-expression analysis and SNP hunting and allows large and small institutions alike to run specific studies simply by ordering an assay--a tube containing two PCR primers and two Taq-Man probes--and running the test, said Dailey.


Which sounds like the business model of another Silicon Valley stalwart--Affymetrix.


"I would say that we're moving ourselves closer to their world," Dailey said, referring to Affy. "It's not a whole-genome approach, but we're moving in that direction.


"Our system to this point has really complemented their system," added Dailey. "You can get very many answers from their chip, but the quality of those answers is somewhat challenged by the fact that you're trying to get a lot of different answers in the same reaction.


"But people are willingly to sacrifice that often because they're getting so many answers," he went on. "Once they get an answer from the Affy chip they very quickly want to verify that it's actually a meaningful answer, and for that they have a side-by-side system that runs Taq-Man. And the Taq-Man platform serves as the high-quality answer for a very small number of targets. What we're saying is that number of targets is going to grow."


The goal, Dailey said, is an expression assay for every expressed human gene and major splice variants.


Initially, ABI plans to offer assays for NCBI reference sequences for highly categorized genes, said Dailey. The company is also running approximately 40,000 assays per month on 92 human individuals and a chimpanzee to figure out the number of polymorphism in populations in order to build its SNP assays.


And what about beyond the human genome?


"We haven't decided that yet," Dailey conceded. "Obviously, the next compelling thing would be the mouse. There's some pretty obvious opportunities in model organisms, and it just remains to be seen how we'll go about that."

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