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Caliper Aims to Become Microfluidics Mega-Manufacturer

NEW YORK, March 22 - Caliper Technologies wants to sell microfluidics chips the way Gillette sells razor blades -- and there is growing evidence that they are succeeding.

”The power in our technology is in the chip, not in the instrument that reads it,” Jim Knighton, Caliper's chief financial officer, recently told GenomeWeb. “This will distinguish us from a lot of current instrument manufacturers we will be competing with.”

The company said its microfluidics chips allow researchers to conduct laboratory experiments in a miniaturized, automated format that is designed to save time and reagent costs. Caliper reported $18.6 million in revenues last year from the sales of these systems and chips -- mostly from sales of the LabChip DNA separation system that Agilent sells with its 2100 Bioanalyzer.

In addition to this system, which is designed for general laboratory use, Caliper is currently developing a number of specialized applications for its chip technology, including a high-throughput DNA separation system, the AMS 90, it launched last week; and a SNP analysis system that will eliminate the PCR amplification step, which should be launched in prototype form by the end of 2001, according to Darren Mac, a biotechnology analyst who covers Caliper for Gruntal & Co. The company is also developing instrumentation for these systems.

Under the razor blade model, Caliper hopes to generate a steady stream of revenue from customers who buy the chips after they have bought the instruments to analyze them, said Mac.

However, this does not mean the chips will become a commodity, Mac said. The Agilent 2100 sells for about $100,000, which is 50 percent greater than cost. For the consumables, the chips and reagents that are added to them, the margins "north of 80 percent," Mac said.

Caliper's LabChips work by guiding a tiny amount of DNA, which is inserted into the chip through a straw-like device, through a network of microchannels.

At different points in the network, wells of pre-added reagents cause the DNA fragments to be separated into segments. A laser-induced fluorescent detection system measures the fragments’ length and nucleotide composition by the amount of time the fragment takes to reach a certain point on the microchannel. 

The new AMS 90 DNA separation system works on the same principle, but is designed to be a high-throughput niche product for labs that analyze more than 100 samples of DNA per day. The system, which performs automated analysis of DNA samples in 96-well plates, is designed to be used in quality control of microarray systems, so individual fragments can be analyzed to verify that their sequence fits with the sequence identifcation assigned to them.

The system stains the DNA fragments in the plates with a fluorescent dye and separates them into their components in a similar way to the other LabChips, then detects the separated bands using laser-induced fluorescence. 

Caliper also markets similar high-throughput chip systems to pharma, to do high throughput screening of compounds in drug target discovery.

“This is the area that the large pharmaceutical companies have expertise and interest in,” explained Knighton. “So we develop chips that do very specific types of testing in high throughput screening. With DNA separations, there is a completely different set of competitors.”

Currently, Caliper sells its LabChips through Agilent, as part of Agilent's Bioanalyzer 2100 system for DNA separation and analysis. While Caliper still receives the largest part of its revenue from the Agilent Bioanalyzer, the AMS 90 is a milestone for Caliper, as it is the first product Caliper has developed and commercialized on its own, Knighton added.

Caliper seeks to further develop its LabChip technology by introducing chips with 12 different sippers, tiny tubes through which a sample of the product to be tested is inserted into the chips, by late 2001 or early 2002. 

The company also plans to license out this technology to other microfluidics makers like Aclara, with whom Caliper favorably settled a patent infringement and trade secret battle at the end of last year.

Earlier this week, as Aclara’s stock dipped to $5 a share, Aclara’s board of directors approved a plan designed to prevent a hostile takeover, raising the question of whether Caliper might be plotting to swallow up its rival. But Knighton dismissed such speculation. “There’s no sense in buying the cow when I can get the milk for free,” he said.

Mac noted that neither Aclara nor Motorola biochips, the other significant player in the microfluidics arena, is developing the same types of applications for its chips as Caliper.

"The application range of microfluidics is extremely broad," he said. "There is little overlap the areas these companies are going after."

Caliper is facilitating development of specific applications for its LabChips by a diverse group of sectors, from life sciences to the petrochemical industry through an application development program that allows company researchers to access its basic technology for their R&D.

With Caliper’s chips, Knighton said, “it’s not one industry, one application. Not unlike microchips, we have applied our technology in a number of areas.”

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