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CORRECTED: Caliper Looks to Grow Business by Making Chips Smaller and Cheaper

This story has been corrected from a previous version that ran on March 22, which cited an anlyst as saying that the Agilent 2100 sold for $100,000. The company said the correct price is approximately $20,000.

NEW YORK, March 22 – Caliper Technologies of Mountain View, Calif., wants to sell microfluidics chips the way Gillette sells razor blades.

”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.”

Caliper’s microfluidics LabChips, which are designed to save time and reagent costs by allowing researchers to conduct laboratory experiments in a miniaturized, automated format, work by guiding a tiny amount of DNA, 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. 

Last year, revenues from the LabChips, which are sold by Agilent along with its 2100 Bioanalyzer, hit $18.6 million, up 54 percent from $12.1 million in 1999. Caliper’s main goal is to generate a steady stream of revenue from customers who buy the chips after they have bought the instruments to analyze them.

But unlike Gillette’s razors, the LabChips are not expected to become commodities. The Agilent 2100 Bioanalyzer sells for about $20,000, and the chips and reagents are expected to have "attractive"cost-price margins once they are in full production, said  Jane Green, a spokesperson for Caliper.

In addition to this system, which is designed for general laboratory use, Caliper is also in the process of developing a number of specialized applications for its chip technology, including a high-throughput DNA separation system, the AMS 90, which it launched last week. Caliper also has a SNP analysis system that will eliminate the PCR amplification step. A prototype of this system is scheduled to launch by the end of 2001.

The new AMS 90 DNA separation system, which sells for about $100,000 works on the same principle as the LabChips, but it 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 identification assigned to them.

The system, which Caliper has developed and commercialized on its own, 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.”

In order to build its market share, Caliper plans to license its 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.

Darren Mac, a biotechnology analyst who covers Caliper for Gruntal & Co., noted that neither Aclara nor Motorola biochips, another 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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